<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-Q

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

     For Quarter Ended September 30, 2001    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 September 30, 2001 is as follows:

                      Voting Common Stock      7,078,304
                                               ---------

                                       1
<PAGE>

    PART I.     FINANCIAL INFORMATION
    Item  1.    Financial Statements


                EMONS TRANSPORTATION GROUP, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                   September 30,           June 30,
                                                                       2001                  2001
                                                                  ---------------       ---------------
                                                                    (unaudited)
     <S>                                                     <C>                   <C>
     ASSETS
           Current Assets:
               Cash and cash equivalents                          $    1,662,827        $    2,310,933
               Accounts receivable, net                                2,708,785             2,842,333
               Materials and supplies                                    410,177               278,198
               Prepaid expenses                                          570,591               589,486
               Deferred income taxes                                     567,000               567,000
                                                                  ---------------       ---------------
                  Total current assets                                 5,919,380             6,587,950
                                                                  ---------------       ---------------

           Property, plant and equipment                              44,840,963            44,375,160
               Less accumulated depreciation                         (16,275,196)          (15,822,102)
                                                                  ---------------       ---------------
                  Property, plant and equipment, net                  28,565,767            28,553,058
                                                                  ---------------       ---------------

           Deferred financing costs and other assets                     406,811               520,857
           Deferred income taxes                                       1,171,000             1,284,000
                                                                  ---------------       ---------------
     TOTAL ASSETS                                                 $   36,062,958        $   36,945,865
                                                                  ===============       ===============

     LIABILITIES AND STOCKHOLDERS' EQUITY
           Current Liabilities:
               Current portion of long-term debt                  $    2,561,849        $    2,456,084
               Accounts payable                                        1,511,643             1,518,885
               Accrued payroll and related expenses                    1,316,614             1,678,806
               Other accrued expenses                                  1,700,393             1,637,319
                                                                  ---------------       ---------------
                  Total current liabilities                            7,090,499             7,291,094

           Long-term debt                                             10,028,072            10,885,794
           Other liabilities                                             927,851               870,508
                                                                  ---------------       ---------------
                  Total Liabilities                                   18,046,422            19,047,396
                                                                  ---------------       ---------------

           Stockholders' Equity:
               Common stock                                               79,111                79,093
               Additional paid-in capital                             23,635,880            23,636,401
               Deficit                                                (3,952,380)           (4,146,203)
                                                                  ---------------       ---------------
                                                                      19,762,611            19,569,291
               Treasury stock, at cost                                (1,368,690)           (1,368,690)
               Cumulative other comprehensive income (loss)             (105,839)              (16,184)
               Unearned compensation - restricted stock awards          (271,546)             (285,948)
                                                                  ---------------       ---------------
                  Total Stockholders' Equity                          18,016,536            17,898,469
                                                                  ---------------       ---------------
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $   36,062,958        $   36,945,865
                                                                  ===============       ===============
</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
                                                                              September 30,
                                                                  -------------------------------------
                                                                        2001                  2000
                                                                  --------------        ---------------
  <S>                                                        <C>                   <C>
     Operating revenues                                         $     5,770,997       $      6,696,246

     Operating expenses:
         Cost of operations                                           4,224,836              4,616,389
         Selling and administrative                                     921,849                907,767
                                                                  --------------        ---------------
            Total operating expenses                                  5,146,685              5,524,156
                                                                  --------------        ---------------
     Income from operations                                             624,312              1,172,090

     Other income (expense):
         Interest income                                                 14,595                 28,327
         Interest expense                                              (234,348)              (283,414)
         Other, net                                                     (72,736)               (17,919)
                                                                  --------------        ---------------
            Total other income (expense)                               (292,489)              (273,006)
                                                                  --------------        ---------------

     Income before income taxes                                         331,823                899,084

     Provision for income taxes                                         138,000                335,000
                                                                  --------------        ---------------

     Net income                                                 $       193,823       $        564,084
                                                                  ==============        ===============

     Weighted average number of common shares (Note 2):

            Basic                                                     7,073,976              7,185,636
                                                                  ==============        ===============
            Diluted                                                   7,243,554              7,355,728
                                                                  ==============        ===============
     Earnings per common share (Note 2):
             Basic                                              $          0.03       $           0.08
                                                                  ==============        ===============
             Diluted                                            $          0.03       $           0.08
                                                                  ==============        ===============
</TABLE>

      See accompanying notes to consolidated financial statements.

                                       3
<PAGE>

                EMONS TRANSPORTATION GROUP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (unaudited)
<TABLE>
<CAPTION>
                                                                           Three Months Ended
                                                                              September 30,
                                                                  -------------------------------------
                                                                       2001                  2000
                                                                  ---------------       ---------------
  <S>                                                           <C>                   <C>
     Cash flows from operating activities:
         Net income                                             $        193,823      $        564,084
            Adjustments to reconcile net income to net
               cash provided by operating activities:
                 Depreciation                                            477,997               465,743
                 Amortization                                             30,984                27,560
                 Gain on forgiveness of debt                             (54,498)              (50,102)
                 Change in deferred income taxes                         113,000               284,500
                 Changes in assets and liabilities:
                     Accounts receivable, materials and
                       supplies and prepaid expenses                     (24,648)             (562,529)
                     Accounts payable and accrued expenses              (282,714)              256,082
                     Other assets and liabilities, net                    92,338                 6,249
                                                                  ---------------       ---------------
     Net cash provided by operating activities                           546,282               991,587
                                                                  ---------------       ---------------
     Cash flows from investing activities:
         Additions to property, plant and equipment                     (710,458)             (900,163)
         Investment in acquired rail properties                                -              (685,039)
                                                                  ---------------       ---------------
     Net cash used in investing activities                              (710,458)           (1,585,202)
                                                                  ---------------       ---------------
     Cash flows from financing activities:
         Proceeds from issuance of long-term debt                              -                 2,595
         Borrowings from long-term debt                                  441,000               700,000
         Reduction in long-term debt                                    (960,122)             (390,253)
         Purchase of treasury stock                                            -              (172,350)
                                                                  ---------------       ---------------
     Net cash provided by (used in) financing activities                (519,122)              139,992
                                                                  ---------------       ---------------
     Effect of exchange rate changes on cash                              35,192                14,914
                                                                  ---------------       ---------------
     Net increase (decrease) in cash and cash equivalents               (648,106)             (438,709)
     Cash and cash equivalents at beginning of period                  2,310,933             2,092,073
                                                                  ---------------       ---------------
     Cash and cash equivalents at end of period                 $      1,662,827      $      1,653,364
                                                                  ===============       ===============
</TABLE>


      See accompanying notes to consolidated financial statements.

                                       4
<PAGE>

                EMONS TRANSPORTATION GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  For the Three Months Ended September 30, 2001
                                   (unaudited)

Note 1.  Quarterly Financial Statements

         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 Share

         Basic earnings per common share is computed by dividing income
applicable to common shareholders by the weighted average number of common
shares outstanding during the period. Diluted earnings per common share is
computed by dividing income applicable to common shareholders by the weighted
average number of common shares and dilutive potential common shares outstanding
during the period.

         Earnings per share amounts are computed as follows:
<TABLE>
<CAPTION>
                                                         For the Three Months Ended September 30,
                                         -------------------------------------------------------------------------
                                                       2001                                   2000
                                         ----------------------------------     ----------------------------------
                                           Income       Shares       EPS          Income       Shares     EPS
                                           ------       ------       ---          ------       ------     ---
<S>                                   <C>          <C>           <C>         <C>          <C>          <C>
Basic EPS
   Income applicable to
     common shareholders                 $  193,823    7,073,976    $0.03       $  564,084   7,185,636     $0.08
                                                                    =====                                  =====
Effect of Dilutive Securities
   Stock options and warrants                     -      169,578                        -      170,092
                                         ----------   ----------                ----------   ---------
Diluted EPS
   Income applicable to common
     shareholders plus assumed
     conversions                         $  193,823    7,243,554    $0.03       $  564,084   7,355,728     $0.08
                                         ==========    =========    =====       ==========   =========     =====
</TABLE>
Note 3.  Long-Term Debt

         The Company did not meet one of its debt covenants as of September 30,
2001, and has obtained a waiver from its lender. The Company and its lender have
agreed to meet during the Company's second fiscal quarter to discuss the
restructuring of certain covenants contained in the loan agreement. The Company
intends to amend the loan agreement by December 31, 2001.

Note 4.  Derivatives

         On July 1, 2000, the Company adopted Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("FAS 133"). The Company has entered into two interest rate hedging
transactions that constitute cash flow hedges under FAS 133. The Company's
objective for entering into these interest rate hedging transactions is to hedge
the Company's exposure to fluctuations in variable interest rates as required by
the Company's loan agreements with its lender. As a result, on July 1, 2000, the
Company designated these instruments as cash flow hedging instruments and,
accordingly, the net gain or loss on such instruments is reported in
comprehensive income in accordance with FAS 133. The gain (loss), net of income
taxes, for the three-month periods ended September 30, 2001 and 2000 is as
follows:

                                       5
<PAGE>

<TABLE>
<CAPTION>
                                                                  For the Three Months Ended
                                                                        September 30,
                                                               ---------------------------------
                                                                    2001             2000
                                                                    ----             ----
  <S>                                                          <C>                 <C>
     Cumulative effect of change in accounting
         principal for derivatives - July 1, 2000                 $      -          $ 60,302

     Change in fair value                                           (70,271)         (22,109)

     Reclassification to earnings                                    12,928          ( 4,188)
                                                                  ---------         --------

     Net gain (loss) for period                                   $ (57,343)        $ 34,005
                                                                  =========         ========
</TABLE>
The Company has reported the fair value of its cash flow hedging derivatives as
of September 30, 2001 in Other liabilities in the accompanying Consolidated
Balance Sheets, and expects to reclassify approximately $70,000, net of income
taxes, of the existing losses in comprehensive income to earnings in the next
twelve months.

Note 5.  Comprehensive Income

     Comprehensive income for the three-month periods ended September 30,
2001 and 2000 is as follows:
<TABLE>
<CAPTION>
                                                                 For the Three Months Ended
                                                                       September 30,
                                                              ---------------------------------
                                                                    2001          2000
                                                                    ----          ----
  <S>                                                        <C>             <C>
     Net income                                                 $ 193,823      $ 564,084

     Other comprehensive income (loss):
        Cash flow hedging derivatives                             (95,570)        56,675
        Income tax expense (benefit)                               38,227        (22,670)
                                                                ---------      ---------
            Cash flow hedging derivatives, net of taxes           (57,343)        34,005
        Foreign currency translation adjustment                   (32,312)       (11,524)
                                                                ---------      ---------
     Total other comprehensive income (loss)                      (89,655)        22,481
                                                                ---------      ---------
     Total comprehensive income                                 $ 104,168      $ 586,565
                                                                =========      =========
</TABLE>

Note 6.  Contingencies

     Certain subsidiaries of the Company are currently subject to a number of
claims and legal actions that arise in the ordinary course of business,
including claims under the Federal Employers' Liability Act, a fault-based
system under which injuries to and deaths of railroad employees are settled by
negotiations or litigation based upon comparative negligence. The Company
believes that it has adequate insurance coverage and has provided adequate
reserves for any liabilities which may result from the ultimate outcome of these
claims, and that such claims will not have a material impact on the Company's
consolidated financial position or results of operations.

     Emons Industries, Inc. ("Industries"), a subsidiary of the Company, is
currently a defendant in numerous product liability actions. In addition, one of
the Company's railroads is in the process of remediating a fuel oil spill 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

                                       6
<PAGE>

which had been distributed was diethylstilbestrol ("DES"), which was taken by
women during pregnancy to prevent miscarriage.

     As of September 30, 2001, Industries was one of numerous defendants
(including many of the largest pharmaceutical manufacturers) in 160 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. Industries filed a petition for reorganization
under Chapter 11 of the United States Bankruptcy Code. Of the DES lawsuits, 155
were commenced after confirmation by the United States Bankruptcy Court for the
Southern District of New York (the "Bankruptcy Court") of Industries'
Reorganization Plan in December 1986 (the "Plan"), while the remaining five
lawsuits are claims which will be treated under the Plan. These actions are
currently in various stages of litigation. Of these 160 lawsuits, 62 have been
settled in principle at no liability to Industries with one attorney
representing all 62 plaintiffs. Industries is currently awaiting execution of
the settlement documents in these cases.

     On April 16, 1998, the Bankruptcy Court granted Industries' motion for
summary judgment declaring that the post-confirmation lawsuits represent claims
which should be asserted against Industries' Chapter 11 estate and are not
post-reorganization liabilities. A formal judgment was entered by the court on
May 6, 1998. In September 1998, one counsel representing multiple DES claimants
appealed the Bankruptcy Court's judgment to the United States District Court. On
April 3, 2001, the District Court dismissed this appeal as moot. On May 2, 2001,
these claimants filed a Notice of Appeal to the United States Court of Appeals
for the Second Circuit. This appeal is currently pending. If the Bankruptcy
Court and District Court's judgments are upheld on appeal, amounts payable for
settlements of or judgments on these post-confirmation lawsuits will be paid
from the escrow account established under the Plan.

     With the Bankruptcy Court's confirmation of the Plan in December 1986, the
Company became the parent of Industries. 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 exhausted insurance
coverage for the 1954 policy year, in which 11 cases remained pending as of
September 30, 2001. Industries, and not its insurer, will be required to pay the
direct legal expenses in connection with claims in policy years for which
coverage has been exhausted. However, to the extent that the Bankruptcy Court
and District Court's judgments referred to above are upheld (with the result
that post-confirmation claims must be asserted against Industries' Chapter 11
estate), Industries will not be required to pay any amounts for settlements of
or judgments on such claims in excess of the amounts already set aside in escrow
under the Plan. During the period July 1, 2001 to September 30, 2001, two new
actions were commenced in which Industries was named as a defendant.

     The following table sets forth the states and courts in which DES cases
were pending, and the number of DES cases pending against the Company in each
jurisdiction as of September 30, 2001:

<TABLE>
<CAPTION>
        State                              Court                           Number of Cases
----------------------     ---------------------------------------    --------------------------
<S>                     <C>                                                   <C>
California                 Los Angeles County                                      1
                           San Francisco County                                    4

New York                   New York County                                       143
                           Bronx County                                            1
                           Eastern District of New York                            1

Pennsylvania               Philadelphia County                                     9

Texas                      Travis County                                           1
</TABLE>

     These cases seek, as relief, compensation for injuries that plaintiffs
allegedly have sustained as a result of in utero DES exposure and punitive
damages. The amounts sought are not specified.

                                       7
<PAGE>

     Management intends to vigorously defend all of these actions. In the event
that the Bankruptcy Court and District Court's decisions referred to above are
reversed by the Court of Appeals, it is possible that Industries could
ultimately have liability in these actions in excess of its product liability
insurance coverage described above. However, based upon 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 in the pending cases, if any, in
excess of insurance coverage and existing reserves, 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's Maryland and Pennsylvania Railroad, which
was merged into York Railway Company ("YRC") on December 1, 1999, discovered a
diesel fuel oil spill at its locomotive maintenance facility in York,
Pennsylvania resulting from the fueling of its locomotives. YRC has been
performing additional testing and has been working with the Pennsylvania
Department of Environmental Protection ("PADEP") to investigate and, to the
extent necessary, remediate the contaminated area. In January 1997, as a result
of these testing activities, YRC discovered free product in some of its
monitoring wells. The Company estimates that the cost to remediate the free
product could potentially range from $130,000 to $225,000, although the final
costs have not yet been determined. The Company has provided sufficient reserves
for the anticipated remediation costs. PADEP could also potentially require
further investigation and, to the extent necessary, remediation of ground water
and/or soils at this facility at some point in the future. However, the Company
cannot determine at this time whether PADEP will require further investigation
and remediation, or what the ultimate costs of addressing this matter may be or
what effect, if any, they could have upon the Company's consolidated financial
position or results of operations.

Note 7.  Related Party Transactions

     In February 2001, the Company entered into a short-term lease agreement for
the lease of eight locomotives from a leasing company, of which a director of
the Company is a vice president. The original lease term, which commenced in
March 2001, was for 120 days at a rate of $255 per day per locomotive. In June
2001, the Company extended the lease term for an additional 60 days and provided
for the continuation of this lease on a month-to-month basis thereafter.

     In September 2001, the Company entered into a five year lease agreement for
the lease of nine locomotives from the same leasing company at rates ranging
from approximately $120 to $134 per day per locomotive, subject to adjustment
based upon the amount of additional work performed on the locomotives at the
request of the Company. The lease agreement also includes an option to purchase
the locomotives at the end of the lease term. The Company will continue to lease
the eight locomotives referred to above at a reduced rate of $200 per day until
the locomotives under the five year lease are delivered, which is scheduled to
take place prior to the end of calendar 2001.

     The Company also leases four other locomotives from the same lessor under a
lease agreement that was entered into prior to the time the director of the
Company commenced employment with the lessor. In July 2001, the Company
renegotiated the lease agreement to extend the lease term on three of the four
locomotives for an additional 7 year period at rates ranging from approximately
$124 to $142 per day per locomotive. The fourth locomotive is currently being
leased at a rate of $125 per day through August 2008.

Note 8.  Reclassifications

     Certain prior period amounts have been reclassified to conform with the
current year presentation.

                                       8
<PAGE>

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

     This Form 10-Q contains certain "forward-looking" statements regarding
future events and the future performance of Emons Transportation Group, Inc.
that are generally noted by terms such as "believe," "expectations," "foresee,"
"goals," "potential," and "prospects." These forward-looking statements involve
risks and uncertainties that could cause actual results to differ materially.
Those risks and uncertainties include, but are not limited to, economic
conditions, continued or reduced operations at customers' facilities, service of
connecting Class I rail carriers, increased competition in the relevant market,
government regulation, and other factors described herein and in other filings
with the Securities and Exchange Commission that could cause the Company's
results to differ from its current expectations.

     General

     Operating results for the first quarter of fiscal 2002 continued to be
adversely affected by a downturn in economic conditions in the United States.
Income from operations decreased $548,000, or 47%, for the three-month period
ended September 30, 2001 as compared to the same period in the prior year, while
income before income taxes decreased $567,000, or 63%, during these same
periods. Operating results for the first quarter of fiscal 2002 were also
adversely affected by financial difficulties encountered by Pulp & Paper of
America LLP ("PPA"), a paper manufacturer in New England and one of the
Company's larger customers, which accounted for approximately 9% of fiscal 2001
operating revenues. PPA, which owns and operates both a pulp and a paper mill
located on the Company's St. Lawrence & Atlantic Railroad ("SLR") in New
England, filed for protection under Chapter 11 of the United States Bankruptcy
Code on September 10, 2001. SLR ceased handling any business for PPA and ceased
performance under lease and operating agreements for the Berlin Mills Railway
("BMS"), a railroad located inside these mills, in mid-August 2001. There can be
no assurance that PPA will be successful in its efforts to emerge from
bankruptcy and that business will return to customary levels. In addition, while
the Company cannot anticipate future economic conditions, it is taking steps to
control operating costs to adjust to the current lower levels of business.

     In response to the downturn in business, the Company implemented a number
of operating initiatives during the first quarter of fiscal 2002 to reduce costs
and improve cash flow from operations. These include, among other things,
reducing the number of daily through trains on New England/Quebec operations
from two trains to one train by combining the freight and intermodal trains,
staff reductions where possible, and elimination of costs to operate the BMS and
service PPA. In October 2001, the Company implemented the following additional
initiatives to control costs and improve cash flow until business conditions
improve:

   -  The Company implemented a wage freeze for all employees not subject to
      a controlling agreement, and has requested that employees subject to
      such agreements voluntarily accept a wage freeze for the next year.

   -  The Company will not fill a number of open operating and
      administrative positions.

   -  The Company has cancelled all profit sharing and incentive
      compensation plans for fiscal 2002.

   -  The Company has eliminated or deferred discretionary spending,
      eliminated all but essential overtime, and is continuing to monitor
      costs to identify other expenses that can be eliminated or deferred.

   -  The Company has curtailed capital expenditures that are not
      immediately necessary to run operations efficiently and safely.

The Company believes that these measures, which are not expected to negatively
impact our commitment to on-time and consistent customer service, will enable
the Company to continue to operate profitably and generate sufficient cash to
fund operations in the near term, providing business levels do not materially
deteriorate below levels experienced in the quarter ended

                                       9
<PAGE>

September 30, 2001. However, there can be no assurance that business levels will
not materially deteriorate from current levels.

     Liquidity and Capital Resources

     On August 15, 1997, the Company entered into a Loan and Security Agreement
which provided a $7,775,000 seven-year revolving term loan (the "A Term Loan")
and a $2 million working capital facility. On December 21, 1998, the Company
entered into an Amended and Restated Loan and Security Agreement with its lender
which provided an additional $4,469,450 seven-year term loan and a $2 million
three-year term loan (the "B Term Loan") to finance the acquisition of a rail
line in Quebec, Canada.

     In August 2001, the Company and its lender amended the Amended and Restated
Loan and Security Agreement to modify the payment due date of the $1,441,000
balance outstanding under its B Term Loan facility, to extend the expiration
date of its working capital facility through March 31, 2004, and to amend
certain covenants, in return for minor rate adjustments. Under the amendment,
the Company is required to pay $441,000 of the B Term Loan balance on or before
December 31, 2001, the original due date, and the remaining $1 million will be
repaid in quarterly installments of $55,000 through December 31, 2005, at which
time any remaining balance outstanding is due.

     The Company's primary sources of liquidity include its cash and accounts
receivable, which aggregated $4,372,000 and $5,153,000 at September 30, 2001 and
June 30, 2001, respectively, the balance available under the Company's $2
million working capital facility, and the amount prepaid on the A Term Loan,
which is available for future borrowings. As of September 30, 2001, the Company
had no borrowings under the working capital facility and had approximately $1.5
million available in accordance with the facility's eligibility criteria. As of
September 30, 2001, the Company prepaid $59,000 of its A Term Loan, which is
also available for future borrowings.

     In March 2000, the Company's Board of Directors authorized a stock
repurchase program for the Company's Common Stock up to an aggregate price of $2
million. As of September 30, 2001, the Company had repurchased a total of
861,788 shares of its Common Stock for $1,416,000, of which 832,788 shares were
held in treasury and 29,000 shares were retired, and had paid $20,000 to retire
warrants to purchase 50,000 shares of Common Stock. The Company did not
repurchase any shares of its Common Stock in the period July 1, 2001 to
September 30, 2001, and does not currently anticipate further repurchases until
business conditions improve. As of September 30, 2001, the Company had
approximately $564,000 authorized to repurchase additional shares of Common
Stock.

     The Company intends to utilize the $2 million working capital facility and
balance available under the A Term Loan to help fund the Company's internal
growth activities, future acquisitions, and the Company's stock repurchase
program. The Company does not currently have any commitments nor is the Company
involved in substantive negotiations for any acquisitions.

     The Company's cash and cash equivalents decreased $648,000 for the quarter
ended September 30, 2001. The net decrease includes $546,000 of cash provided by
operations and a $35,000 exchange rate impact relating to the Company's Canadian
operations. These increases were more than offset by $710,000 of capital
investments and a $519,000 net decrease in long-term debt.

     The Company generated $546,000 of cash from operations for the quarter
ended September 30, 2001, as compared to $992,000 for the corresponding quarter
in the prior year. Excluding changes in assets and liabilities, cash provided by
operations decreased $531,000 from $1,292,000 for the three months ended
September 30, 2000 to $761,000 for the three months ended September 30, 2001, as
a result of the decline in operating performance in the current year. Cash used
by changes in assets and liabilities aggregated $215,000 for the first quarter
of fiscal 2002, primarily as a result of a reduction in accounts payable and
accrued expenses.

                                       10
<PAGE>

     The Company invested $710,000 in capital expenditures during the first
three months of fiscal 2002, including $669,000 of investments in railroad track
structures (net of $359,000 of government grants) and $41,000 of other capital
investments. As of September 30, 2001, the Company had approximately $900,000 of
state government grants and approximately $390,000 of Quebec government grants
available for future track rehabilitation and other track improvement projects.

     In February 2001, the Company entered into a short-term lease agreement for
the lease of eight locomotives at a rate of $255 per day per locomotive. In
September 2001, the Company entered into a five year lease agreement for the
lease of nine locomotives from the same leasing company at rates ranging from
approximately $120 to $134 per day per locomotive, subject to adjustment based
upon the amount of additional work performed on the locomotives at the request
of the Company. The lease agreement also includes an option to purchase the
locomotives at the end of the lease term. The Company will continue to lease the
eight locomotives referred to above at a reduced rate of $200 per day until the
locomotives under the five year lease are delivered, which is scheduled to take
place prior to the end of calendar 2001. In addition, in July 2001, the Company
renegotiated a lease agreement for three currently leased locomotives to
rehabilitate the locomotives and to extend the lease term for an additional 7
year period at rates ranging from approximately $124 to $142 per day per
locomotive.

     In March 2001, the Company entered into an agreement to purchase rail and
related materials for approximately $1.5 million over the next four years in
conjunction with a rail replacement project on SLR in New England. As of
September 30, 2001, the Company had purchased approximately $385,000 of
materials under this agreement. In June 2001, SLR entered into a purchase
contract with its primary fuel supplier to purchase 546,000 gallons of diesel
fuel in the period November 1, 2001 through April 30, 2002 at prices ranging
from $0.8544 to $0.8794 per gallon. The Company has no other material
commitments for capital expenditures or other purchase commitments.

     The Company's net long-term debt obligations decreased $519,000 during the
three-month period ended September 30, 2001, including a $337,000 excess cash
flow payment as required under the Company's loan agreements, a $104,000 advance
payment on the B Term Loan due December 31, 2001, and $519,000 of scheduled debt
repayments. These decreases were partially offset by a $441,000 draw on the
prepaid portion of the A Term Loan to fund the excess cash flow payment and
advance payment of the B Term Loan.


      Analysis of operations for the three months ended September 30, 2001
              compared to the three months ended September 30, 2000

                              Results of Operations
                              ---------------------

     The Company generated net income of $194,000 for the three-month period
ended September 30, 2001, as compared to net income of $564,000 for the
three-month period ended September 30, 2000. Income before income taxes
decreased $567,000, or 63%, from $899,000 for the quarter ended September 30,
2000, to $332,000 for the corresponding quarter in the current year. Operating
revenues decreased $925,000 and operating expenses decreased $377,000 from the
prior year's quarter. Interest expense decreased $49,000, interest income
decreased $13,000, and the provision for income taxes decreased $197,000 from
the prior year, while other non-operating expense increased $55,000 over the
prior year.

                                    Revenues
                                    --------

     Operating revenues decreased $925,000, or 13.8%, from $6,696,000 for the
three-month period ended September 30, 2000 to $5,771,000 for the three-month
period ended September 30, 2001. The decrease consists of a $446,000 decrease in
freight and haulage revenues (excluding intermodal freight), a $146,000 decrease
in intermodal freight and handling revenues, a $9,000 decrease in logistics
revenues, and a $324,000 decrease in other operating revenues.

                                       11
<PAGE>

     Freight and haulage revenues (excluding intermodal freight) decreased
$446,000, or 8.8%, consisting of an 11% decrease in the number of carloads
handled partially offset by a 2.4% increase in average revenues per carload.
Traffic handled decreased approximately 1,800 carloads from 16,800 for the
quarter ended September 30, 2000 to 15,000 for the quarter ended September 30,
2001. Traffic for the quarters ended September 30, 2001 and 2000 includes
approximately 4,600 and 5,100 overhead carloads, respectively, between SLR in
New England and the St. Lawrence & Atlantic Railroad (Quebec) ("SLQ") in Quebec
that are counted as revenue carloads for both SLR and SLQ. Freight and haulage
revenues on New England/ Quebec operations decreased $488,000 and traffic
decreased approximately 1,600 carloads, while freight and haulage revenues on
Pennsylvania operations increased $42,000 while traffic decreased approximately
200 carloads.

     The 1,600 carload decrease in New England/Quebec traffic includes a
decrease of approximately 675 PPA carloads in conjunction with its bankruptcy, a
decrease of approximately 300 other paper-related carloads as a result of
unfavorable economic conditions, a decrease of approximately 200 salt carloads
on SLQ that were lost to an alternative route, and a decrease of approximately
500 overhead carloads between SLR and SLQ as a result of the decrease in
business on SLR, and a variety of other less significant increases and decreases
in other business.

     The 200 carload decrease in Pennsylvania rail operations includes a
reduction of approximately 400 agricultural carloads as a result of the residual
additional carloads in the prior year from local drought conditions two years
ago, partially offset by approximately 200 additional coal carloads as a result
of the timing of such shipments. Freight and haulage revenues increased despite
the decrease in traffic as a result of a more favorable mix of business, which
included fewer low rated agricultural carloads in the current year, and as a
result of price adjustments.

     Intermodal freight and handling revenues generated by the Company's rail
intermodal terminal in Auburn, Maine decreased $146,000, or 26%, from $557,000
for the three months ended September 30, 2000 to $411,000 for the corresponding
period in the current year. Intermodal volume decreased 1,125 trailers and
containers, or 24%, from 4,625 trailers and containers for the first quarter of
the prior year to 3,500 trailers and containers for the first quarter of the
current year. The Company handled approximately 120 international steamship
containers in the first quarter of fiscal 2002 as compared to 470 such
containers in the prior year. This decrease is largely attributable to customs
processing issues encountered between Canadian National Railway ("CN"), the
Company's primary connecting carrier in New England/Quebec, and a steamship
carrier. The Company believes that these problems have been resolved and has
recently resumed handling this business. The remainder of the decrease in
intermodal trailers and containers is primarily attributed to the unfavorable
economic conditions in the current year as compared to the previous year. The
Company doubled the size of its intermodal terminal using a combination of state
funding under TEA-21 (Transportation Equity Act for the 21st Century) and local
funding in fiscal 2001 in anticipation of continued long-term growth in its
intermodal business. SLR and SLQ, in conjunction with CN, offer the only
hi-cube, double stack, cleared route in northern New England for intermodal
trains, and provide the Company's intermodal terminal with access to ports
served by CN including Vancouver, Montreal, Halifax, New Orleans and Mobile.

     Logistics revenues generated by the Company's operations in York,
Pennsylvania, decreased $9,000, from $66,000 for the three-month period ended
September 30, 2000 to $57,000 for the three-month period ended September 30,
2001, and the number of railcars handled decreased 28%. The net decrease
reflects business lost due to competitive and unfavorable economic conditions,
partially offset by new business added as a result of marketing efforts to
promote the Company's bulk transfer facility constructed in fiscal 2000.

     Other operating revenues decreased $324,000 from the prior year, including
a $161,000 reduction in demurrage and railcar storage revenues due to a
reduction in business with customers that generally incur demurrage charges, a
$79,000 decrease in BMS operating revenues as a result of PPA's bankruptcy, a
$68,000 decrease in CN blocking and trackage rights fees in conjunction with the
reduction in traffic in New England/Quebec operations, and a variety of other
less significant increases and decreases in other operating revenues.

                                       12
<PAGE>

                                    Expenses
                                    --------

     Operating expenses decreased $377,000, or 6.8%, from $5,524,000 for the
three-month period ended September 30, 2000 to $5,147,000 for the three-month
period ended September 30, 2001. The net decrease consists of a $391,000
reduction in cost of operations partially offset by a $14,000 increase in
selling and administrative expenses.

     Cost of operations decreased $391,000, or 8.5%, from $4,616,000 for the
three-month period ended September 30, 2000 to $4,225,000 for the three-month
period ended September 30, 2001. This decrease includes a $372,000 reduction in
railroad operating expenses and $32,000 reduction in logistics operating
expenses, partially offset by a $13,000 increase in intermodal operating
expenses.

     Railroad operating expenses decreased $372,000, or 8.6%, for the quarter
ended September 30, 2001 as compared to the corresponding quarter in the prior
year, consisting of a $305,000 decrease in expenses for New England/Quebec rail
operations and a $67,000 decrease in expenses for Pennsylvania rail operations.

     The $305,000 decrease in railroad operating costs for New England/Quebec
rail operations is primarily attributable to a reduction in transportation
operating expenses as a result of combining the freight and intermodal trains
into a single train in August 2001 and the overall reduction in carloads
handled. The decrease in transportation operating expenses includes a $137,000
reduction in fuel costs consisting of both fuel usage and reduced prices, as
well as less significant reductions in transportation labor costs, oil transload
fees related to the discontinuation of the PPA oil move business, and accident
and injury expenses. The decrease in railroad operating expenses also includes a
reduction in locomotive repair and maintenance expenses, which was offset by
increases in short-term locomotive rental costs, a reduction in safety
consulting fees related to the Company's loss control program in the prior year,
and a reduction in profit sharing expenses as a result of the discontinuation of
such plans in the current year and otherwise lower operating results.

     The $67,000 net decrease in railroad operating costs for Pennsylvania rail
operations includes an $83,000 reduction in car hire expense related to the
decrease in demurrage revenues, a reduction in accident and injury expenses, and
a reduction in profit sharing expenses as a result of the discontinuation of
such plans in the current year and otherwise lower operating results. These
decreases were partially offset by additional track maintenance costs and the
addition of an operations manager to fill a position that was vacant in the
prior year.

     Rail intermodal operating expenses increased $13,000, from $141,000 for the
first quarter of the prior year to $154,000 for the first quarter of the current
year. This increase consists of additional rental fees associated with the
expansion of the intermodal terminal in fiscal 2001, partially offset by a
reduction in fees paid to the terminal's independent operator as a result of a
24% volume decrease from the prior year.

     Logistics operating expenses decreased $32,000, or 24%, from $135,000 for
the first quarter of fiscal 2001 to $103,000 for the first quarter of the
current year as a result of a 28% volume decrease from the prior year.

     Selling and administrative expenses increased $14,000, or 1.6%, from
$908,000 for the quarter ended September 30, 2000 to $922,000 for the quarter
ended September 30, 2001. The net increase includes additional labor, benefits
and other expenses associated with the hiring of a president and chief operating
officer for the Company's New England/Quebec operations in May 2001 for a
position that was vacant in the prior year, additional costs incurred to pursue
strategic initiatives and projects in the current year, additional bank fees in
conjunction with the amendment to the Company's bank loan agreement to
restructure certain debt payments in the current year, and expenses incurred in
the current year to promote the Company's intermodal terminal expansion. These
cost increases were partially offset by a reduction in profit sharing and
incentive compensation expenses as a result of the discontinuation of such plans
in the current year and otherwise lower operating results.

                                       13
<PAGE>

     Interest expense decreased $49,000 for the three-month period ended
September 30, 2001 as compared to the corresponding period in the prior year.
The decrease is attributable to declining interest rates on variable rate debt
and a reduction in the amount of debt outstanding as a result of scheduled
principal payments.

     Other non-operating expense, which consists of foreign currency exchange
losses in connection with the Company's Canadian operations, increased $55,000
in the first quarter of fiscal 2002 over the corresponding period in the prior
year due to continued strengthening of the U. S. dollar over the Canadian dollar
during the quarter.

     The provision for income taxes decreased $197,000, from $335,000 for the
quarter ended September 30, 2000 to $138,000 for the quarter ended September 30,
2001. The effective tax rate increased from 37.3% for the first quarter of
fiscal 2001 to 41.6% for the first quarter of the current year as a result of
the mix between United States and foreign taxable income and the mix of taxable
income among the various states in which the Company conducts business. The
provision for income taxes for the first quarters of both fiscal 2002 and fiscal
2001 includes $108,000 and $286,000, respectively, of deferred federal tax
expense relating to the amortization of deferred tax assets which will not
require any tax payments by the Company currently or in the future.


Item 3.     Quantitative and Qualitative Disclosure about Market Risk

     The Company has various debt obligations and therefore is exposed to
changes in market interest rates. Refer to Note 5 to the Company's Consolidated
Financial Statements included in the Company's Form 10-K for the year ended June
30, 2001 for further information regarding the Company's long-term debt. The
Company does not hold or issue derivative financial instruments for trading
purposes. In order to manage the Company's interest rate risk, management
monitors the interest rate market on a regular basis and reacts to changes while
considering their long-term goals and financial position.

                                       14
<PAGE>

PART II.   OTHER INFORMATION


Item 1.     Legal Proceedings

     As previously discussed in "Note 6. Contingencies" to the Company's
Consolidated Financial Statements included in this Form 10-Q, which is
incorporated by reference herein, as of September 30, 2001, Emons Industries,
Inc. was a defendant in approximately 160 product liability actions, and one of
the Company's railroads is in the process of remediating a fuel oil spill at its
locomotive maintenance facility in York, Pennsylvania.


Item 2.     Changes in Securities

     None.


Item 3.     Default Upon Senior Securities

     None.


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

     None.


Item 5.     Other Information

     None.


Item 6.     Exhibits and Reports on Form 8-K

     (a) There are no exhibits being filed as a part of this report.

     (b) No reports on Form 8-K were filed during the three-month period ended
         September 30, 2001.

                                       15
<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:   November 13, 2001              By:   /s/Scott F. Ziegler
        -----------------                    -------------------
                                       Scott F. Ziegler
                                       Senior Vice President and Chief Financial
                                       Officer (signing on behalf of the
                                       registrant as its duly authorized officer
                                       and its principal financial and
                                       accounting officer)

                                       16