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

                                   FORM 10-QSB

               Quarterly Report Pursuant to Section 13 or 15 (d)
                     of the Securities Exchange Act of 1934

                    For the quarter ended September 30, 2001

                        Commission File Number 33-6658-C

                                Pioneer Railcorp
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

              Iowa                                                37-1191206
-------------------------------                              -------------------
(State or other jurisdiction of                              (IRS Employer ID #)
 incorporation or organization)

     1318 S. Johanson Rd Peoria, IL                                 61607
----------------------------------------                         ----------
(Address of principal executive offices)                         (Zip code)

                   Registrant's telephone number: 309-697-1400

           Securities registered pursuant to Section 12(g) of the Act:

 Title of each  Class                Name of each  exchange  on which registered
--------------------------------------------------------------------------------
Common Stock, Class A                      NASDAQ, Chicago Stock Exchange

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. YES X NO.

                                    4,529,077
           ----------------------------------------------------------
           (Shares of Common Stock outstanding on September 30, 2001)

<PAGE>

PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS



                        PIONEER RAILCORP AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

                   Quarters Ended September 30, 2001 and 2000

                                    UNAUDITED
<TABLE>
                                               Three Months     Nine Months    Three Months     Nine Months
                                                  Ended           Ended           Ended           Ended
                                               September 30,   September 30,   September 30,   September 30,
                                                   2001            2000           2001            2000
                                               ------------------------------------------------------------
<S>                                            <C>             <C>             <C>             <C>
Operating revenue ..........................   $  3,679,983    $  3,841,288    $ 10,811,493    $ 11,297,580
                                               ------------------------------------------------------------

Operating expenses
   Maintenance of way ......................        251,336         358,868       1,017,681       1,152,489
   Maintenance of equipment ................        376,181         370,982       1,230,818       1,055,442
   Transportation expense ..................        733,792         879,192       2,444,851       2,490,204
   Administrative expense ..................      1,069,793         952,879       3,201,701       2,786,036
   Depreciation  & amortization ............        517,717         474,445       1,550,034       1,432,285
                                               ------------------------------------------------------------
                                                  2,948,819       3,036,366       9,445,085       8,916,456
                                               ------------------------------------------------------------

Operating income ...........................        731,164         804,922       1,366,408       2,381,124
                                               ------------------------------------------------------------

Other income & expense
   Other (income) expense ..................        (55,526)        (54,941)       (200,662)       (267,281)
   Interest expense, equipment .............        140,011         200,669         494,157         602,052
   Interest expense, other .................        171,043         189,952         559,219         567,684
   Net (gain) loss on sale of fixed assets .        (17,728)        (57,096)     (1,938,331)        (54,549)
                                               ------------------------------------------------------------
                                                    237,800         278,584      (1,085,617)        847,906
                                               ------------------------------------------------------------

Income before income taxes .................        493,364         526,338       2,452,025       1,533,218

Provision for income taxes .................        208,700         216,600       1,030,700         602,600
                                               ------------------------------------------------------------

Income before minority interest in preferred
   stock dividends of consolidated
   subsidiaries ............................   $    284,664    $    309,738    $  1,421,325    $    930,618

Minority interest in preferred stock
  dividends of consolidated subsidiaries ...   $     31,308    $     31,308    $     93,924    $     93,924
                                               ------------------------------------------------------------

Net income .................................   $    253,356    $    278,430    $  1,327,401    $    836,694
                                               ============================================================

Basic earnings per common share ............   $       0.06    $       0.06    $       0.29    $       0.18
                                               ============================================================

Diluted earnings per common share ..........   $       0.06    $       0.06    $       0.29    $       0.18
                                               ============================================================

Cash dividends per common share ............   $     0.0000    $      0.000    $     0.0000    $      0.025
                                               ============================================================
</TABLE>
<PAGE>

                        PIONEER RAILCORP AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                    SEPTEMBER 30, 2001 and DECEMBER 31, 2000

                                    UNAUDITED
<TABLE>
                                                          September 30    December 31
                                                               2001          2000
                                                          ----------------------------
<S>                                                       <C>             <C>
ASSETS
Current Assets

   Cash ...............................................   $    323,463    $    564,490
   Accounts receivable, less allowance
     for doubtful accounts 2001 $139,528; 2000 $120,099      3,711,208       3,687,738
   Inventories ........................................        230,967         237,091
   Prepaid expenses ...................................        278,151          96,357
   Income tax refund claims ...........................        147,601         206,915
   Deferred taxes .....................................         59,800          59,800
                                                          ----------------------------
        Total current assets ..........................      4,751,190       4,852,391
                                                          ----------------------------

Property and Equipment less accumulated
  depreciation 2001 $9,899,656; 2000 $8,909,343 .......     25,975,419      25,451,459
                                                          ----------------------------

Intangible Assets, less accumulated amortization
  2001 $326,428; 2000 $288,984 ........................      1,063,144       1,091,403
                                                          ----------------------------

Investments, cash value of life insurance .............        176,321         156,702
                                                          ----------------------------

Total assets ..........................................   $ 31,966,074    $ 31,551,955
                                                          ============================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
   Accounts payable ...................................   $  2,384,508    $  2,307,663
   Notes payable ......................................        115,425               0
   Income taxes payable ...............................        278,311           4,099
   Current maturities of long-term debt ...............      2,354,387       2,953,155
   Accrued liabilities ................................        538,475         643,743
                                                          ----------------------------
        Total current liabilities .....................      5,671,106       5,908,660
                                                          ----------------------------

Long-term debt, net of current maturities .............     12,819,455      14,103,682
                                                          ----------------------------

Deferred income taxes .................................      5,425,200       4,825,200
                                                          ----------------------------

Minority interest in subsidiaries .....................      1,103,000       1,106,000
                                                          ----------------------------

Stockholders' Equity
   Common stock .......................................          4,612           4,612
   In Treasury 2001 83,440 shares; 2000 81,240 ........            (83)            (81)
                                                          ----------------------------
   Outstanding 2001 4,529,077; 2000 4,531,277 .........          4,529           4,531
   Additional paid-in capital .........................      2,044,041       2,044,041
   Retained earnings ..................................      4,898,743       3,559,841
                                                          ----------------------------
        Total stockholders' equity ....................      6,947,313       5,608,413
                                                          ----------------------------

Total liabilities and equity ..........................   $ 31,966,074    $ 31,551,955
                                                          ============================
</TABLE>
<PAGE>

                        PIONEER RAILCORP AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

               First Nine Months Ended September 30, 2001 and 2000

                                    UNAUDITED
<TABLE>
                                                                  First Nine     First Nine
                                                                    Months         Months
                                                                     2001           2000
                                                                 --------------------------
<S>                                                              <C>            <C>
Cash Flows From Operating Activities
Net income ...................................................   $ 1,327,401    $   836,694
Adjustments to reconcile net income to net cash
provided by operating activities:
        Minority interest in preferred stock dividends of
          consolidated subsidiaries ..........................        93,924         93,924
        Depreciation .........................................     1,519,334      1,394,724
        Amortization .........................................        30,700         37,562
        Increase in cash value life insurance ................       (19,619)       (14,534)
        (Gain) on sale of property & equipment ...............    (1,938,331)       (54,549)
        Deferred taxes .......................................       600,000              0
Change in assets and liabilities, net of effects from
        acquisition of subsidiaries
        (Increase) decrease accounts receivable ..............       (23,470)       178,021
        (Increase) decrease inventories ......................         6,124              0
        (Increase) decrease prepaid expenses .................      (181,794)       (68,789)
        (Increase) decrease intangible assets ................        (2,351)        (1,435)
        Increase (decrease) accounts payable .................        76,845     (1,588,622)
        (Increase) decrease income tax refund claims .........        59,314              0
        Increase (decrease) income tax payable ...............       274,212       (267,266)
        Increase (decrease) accrued liabilities ..............      (105,268)      (154,559)
                                                                 --------------------------
        Net cash provided by (used in) operating activities ..     1,717,021        391,171
                                                                 --------------------------

Cash Flows From Investing Activities
        Proceeds from sale of property & equipment ...........     2,811,679        597,557
        Purchase of property & equipment .....................    (2,916,642)    (3,514,646)
        Business acquisitions, net of cash acquired ..........             0        (55,000)
                                                                 --------------------------
        Net cash provided by (used in) investing activities ..      (104,963)    (2,972,089)
                                                                 --------------------------

Cash Flows From Financing Activities
        Proceeds from short-term borrowings ..................     1,407,858      4,101,719
        Proceeds from long-term borrowings ...................     4,499,891      5,504,773
        Payments on short-term borrowings ....................    (1,292,433)    (4,911,719)
        Payments on long-term borrowings .....................    (6,382,886)    (3,256,253)
        Repurchase of minority interest ......................        (3,000)       (21,000)
        Purchase of common stock for treasury ................        (2,600)       (84,655)
        Cash dividends paid ..................................             0       (113,393)
        Preferred stock dividend payments to minority interest       (79,915)       (79,915)
                                                                 --------------------------
        Net cash provided by (used in) financing activities ..    (1,853,085)     1,139,557
                                                                 --------------------------

Net increase (decrease) in cash ..............................      (241,027)    (1,441,361)

Cash, beginning of period ....................................       564,490      2,356,844
                                                                 --------------------------

Cash, end of period ..........................................   $   323,463    $   915,483
                                                                 ==========================
</TABLE>
<PAGE>

SEGMENT INFORMATION

Description of products and services from reportable segments:

Pioneer Railcorp has two reportable segments,  railroad operations and equipment
leasing  operations.  All other  operations are classified as corporate  support
services for purposes of this disclosure.

Measurement of segment profit or loss and segment assets:

The accounting  policies of the segments are the same as those  described in the
summary of significant  accounting policies.  Pioneer Railcorp evaluates segment
profit based on operating income  including  intersegment  revenues,  but before
provision  for income  taxes,  items of other income and  expense,  and minority
interest in preferred stock dividends of consolidated subsidiaries.

Intersegment transactions:

Intersegment transactions are recorded at cost.

Factors management used to identify the reportable segments:

Pioneer  Railcorp's  reportable  segments  consist  of  wholly-owned  short line
railroad  subsidiaries  that offer  similar  services  and a railroad  equipment
subsidiary that leases railcars,  locomotives,  and other railroad  equipment to
affiliated  and  unaffiliated  entities.  The  corporate  operations  consist of
support services provided to the operating segments.

                                                  Third Quarter    Third Quarter
                                                       2001             2000
                                                  ------------------------------
Revenues from external customers
   Railroad operations ..........................  $  2,872,640    $  2,976,953
   Equipment leasing operations .................       795,117         856,613
   Corporate support services ...................        12,226           7,722
                                                   -----------------------------
      Total revenues from external customers ....     3,679,983       3,841,288
                                                   =============================

Intersegment revenues
   Railroad operations ..........................             0               0
   Equipment leasing operations .................        99,600          99,600
   Corporate support services ...................     1,512,410       1,615,481
                                                   -----------------------------
      Total intersegment revenues ...............     1,612,010       1,715,081
                                                   =============================

Segment profit
   Railroad operations ..........................     1,167,227       1,314,807
   Equipment leasing operations .................       447,283         503,966
   Corporate support services ...................       728,664         701,231
                                                   -----------------------------
      Total segment profit ......................     2,343,174       2,520,004

Reconciling items
    Intersegment revenues .......................    (1,612,010)     (1,715,081)
    Income taxes ................................      (208,700)       (216,600)
    Minority interest ...........................       (31,308)        (31,308)
    Other income(expense), net ..................      (237,800)       (278,585)
                                                   -----------------------------
       Total consolidated net income (loss) .....  $    253,356    $    278,430
                                                   =============================
<PAGE>


                                                    Nine Months    Nine Months
                                                       Ended          Ended
                                                      9/30/01        9/30/00
                                                   -----------------------------
Revenues from external customers
   Railroad operations ..........................  $  8,464,782    $  8,893,195
   Equipment leasing operations .................     2,322,214       2,392,812
   Corporate support services ...................        24,497          11,573
                                                   -----------------------------
      Total revenues from external customers ....    10,811,493      11,297,580
                                                   =============================

Intersegment revenues
   Railroad operations ..........................             0               0
   Equipment leasing operations .................       298,800         294,300
   Corporate support services ...................     5,049,355       4,695,231
                                                   -----------------------------
      Total intersegment revenues ...............     5,348,155       4,989,531
                                                   =============================

Segment profit
   Railroad operations ..........................     3,070,678       3,834,876
   Equipment leasing operations .................     1,167,060       1,355,695
   Corporate support services ...................     2,476,825       2,180,084
                                                   -----------------------------
      Total segment profit ......................     6,714,563       7,370,655

Reconciling items
    Intersegment revenues .......................    (5,348,155)     (4,989,531)
    Income taxes ................................    (1,030,700)       (602,600)
    Minority interest ...........................       (93,924)        (93,924)
    Other income(expense), net ..................     1,085,617        (847,906)
                                                   -----------------------------
       Total consolidated net income ............  $  1,327,401    $    836,694
                                                   =============================
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PIONEER RAILCORP AND SUBSIDIARIES

NOTE 1.   STATEMENTS

The  accompanying   Consolidated  Statements  of  Income,  Balance  Sheets,  and
Statements of Cash Flows are unaudited. The interim financial statements reflect
all adjustments (consisting only of normal recurring accruals) which are, in the
opinion of  management,  necessary  for a fair  statement of the results for the
interim  periods   presented.   These  interim  statements  should  be  read  in
conjunction with the latest  financial  statements and notes thereto included in
the Company's  latest Annual  Report on Form 10-KSB and  subsequent  Form 10-QSB
filings.  The  results  of  operations  for the  interim  period  should  not be
considered indicative of results to be expected for the full year.

NOTE 2.   SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements include Pioneer Railcorp (Pioneer) and its
wholly-owned  and controlled  subsidiaries  (collectively,  "the Company").  The
Company's  railroad  operations  segment  consists  of  wholly-owned  short line
railroad  subsidiaries  that offer  similar  services and includes the following
wholly-owned  subsidiaries:  West Michigan Railroad Co. (WMI), Michigan Southern
Railroad  Company  (MSO),  Fort Smith Railroad Co. (FSR),  Alabama  Railroad Co.
(ALAB),  Mississippi Central Railroad Co. (MSCI), Alabama & Florida Railway Co.,
Inc. (AF), Decatur Junction Railway Co. (DT),  Vandalia Railroad Company (VRRC),
Keokuk  Junction  Railway Co. (KJRY),  Shawnee  Terminal  Railway Company (STR),
Pioneer  Industrial  Railway Co. (PRY),  The Garden City Western  Railway,  Inc.
(GCW), Indiana Southwestern Railway Co. (ISW), Kendallville Terminal Railway Co.
(KTR) (a spin off  from the  Michigan  Southern  Railroad  Company),  Elkhart  &
Western  Railroad  Co.  (EWR) (a spin off from the  Michigan  Southern  Railroad
Company),  and the Gettysburg & Northern Railroad Co. (GET) (operating effective
2/20/01). The Company's equipment leasing segment leases railcars,  locomotives,
and other  railroad  equipment  to  affiliated  and  unaffiliated  entities  and
includes only the wholly-owned  subsidiary  Pioneer Railroad Equipment Co., Ltd.
(PREL). All other Company operations are classified as corporate and include the
following wholly-owned subsidiaries: Pioneer Resources, Inc. (PRI), Pioneer Air,
Inc.  (PAR),  and  Pioneer  Railroad  Services,   Inc.  (PRS).  All  significant
intercompany balances and transactions have been eliminated in consolidation.

NOTE 3. CONTINGENCIES

As of the date of this Form  10-QSB,  management  is not  aware of any  incident
which is likely to  result in a  liability  that  would  materially  affect  the
Company's consolidated financial position or results of operation.

NOTE 4. PURCHASES OF RAILROAD FACILITIES

On February 20, 2001, the Company through its wholly-owned subsidiary Gettysburg
& Northern  Railroad Co. (GET),  acquired in a transaction  accounted for by the
purchase  method of  accounting,  the railroad  assets of the former  Gettysburg
Railway,  Inc.  (GBRY) and the Gettysburg  Scenic Railway  (GSRX),  from various
corporate entities owned by John H. Marino of Manassas, Virginia. The line is 25
miles in length  running from  Gettysburg,  PA to Mount Holly  Springs,  PA. The
primary  commodities  are canned goods,  pulpboard and scrap paper. In addition,
the GET generates revenues from a scenic passenger operation. The total purchase
price was  $1,604,700.  There  was no  goodwill  recognized  as a result of this
transaction.

NOTE 5. SIGNIFICANT DISPOSAL OF ASSETS

On June 11, 2001, the Company's  Alabama & Florida  Railway Co. (AF)  subsidiary
sold a 34 mile segment of its track from Georgiana, AL to Andalusia,  AL, to the
Three  Notch  Railroad  Co.  (TNR),  a wholly  owned  subsidiary  of Gulf & Ohio
Railways.  The sale price was $2.5  million and the  Company  realized a pre-tax
gain of $1,738,000 on the transaction.  The AF is retaining 43 miles of the line
and will continue operations on the remaining  trackage,  but is seeking a buyer
for the remaining rail facilities.  Also, the West Michigan  Railroad Co. sold 3
small parcels of commercial  development  land to one of its online  patrons for
$280,000 and the pre-tax gain realized on the sale was $183,000.

Item 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

This management's  discussion and analysis of financial condition and results of
operations  references  the  Company's  two  operating  segments.  The Company's
railroad  operations  segment  consists  of  wholly-owned  short  line  railroad
subsidiaries  that offer similar  services and the Company's  equipment  leasing
segment leases railcars, locomotives, and other railroad equipment to affiliated
and  unaffiliated  entities.  All other  operations  are classified as corporate
support services for purpose of these discussions.  All information provided for
each  operating  segment is  presented  after  elimination  of all  intersegment
transactions, therefore reflecting its share of consolidated results.
<PAGE>

Pioneer Railcorp, an Iowa corporation, is a railroad holding company. As used in
this Form 10-QSB,  unless the context requires otherwise,  the term "Company" or
"PRC" refers to the parent, Pioneer Railcorp and its subsidiaries: West Michigan
Railroad  Co.  (WMI),  Michigan  Southern  Railroad  Company  (MSO),  Fort Smith
Railroad Co. (FSR),  Alabama Railroad Co. (ALAB),  Mississippi  Central Railroad
Co. (MSCI),  Alabama & Florida Railway Co., Inc. (AF),  Decatur Junction Railway
Co. (DT), Vandalia Railroad Company (VRRC),  Keokuk Junction Railway Co. (KJRY),
Shawnee Terminal Railway Company (STR),  Pioneer  Industrial  Railway Co. (PRY),
The Garden City Western Railway,  Inc. (GCW),  Indiana  Southwestern Railway Co.
(ISW),  Kendallville  Terminal  Railway Co.  (KTR) (a spin off from the Michigan
Southern  Railroad  Company),  Elkhart & Western  Railroad Co. (EWR) (a spin off
from the Michigan Southern Railroad Company), Gettysburg & Northern Railroad Co.
(GET) (operating  effective  2/20/01),  Pioneer Resources,  Inc. (PRI),  Pioneer
Railroad  Equipment  Co.,  Ltd.  (PREL),  Pioneer Air, Inc.  (PAR),  and Pioneer
Railroad Services, Inc. (PRS).

Summary: Third Quarter 2001 Compared to Third Quarter 2000.

The Company's  net income in the third quarter 2001 was $253,000,  a decrease of
$25,000 from the third  quarter  2000 which had net income of $278,000.  Revenue
decreased by $161,000,  or 4%, to $3,680,000  from $3,841,000 in the same period
last year.  Operating  expense  decreased by $87,000,  or 3%, to $2,949,000 from
$3,036,000 in the same period last year.  Operating income decreased by $74,000,
or 9%, to $731,000 from $805,000 in the same period last year..

Operating  income  was  decreased  in the third  quarter  2001 by the  Company's
railroad  operations by $147,000,  of which $168,000 is directly  related to the
Alabama & Florida Railway Co. operations. Operating income was decreased $57,000
in the  third  quarter  2001  by the  Company's  equipment  leasing  operations,
primarily from a $90,000 decrease in revenue from the utilization of its railcar
fleet by  non-affiliated  railroads,  offset by an increase in locomotive  lease
income of $28,000.  Corporate  support  services  increased  operating income by
$131,000  resulting from decreased  insurance expenses and decreased payroll for
support services from a reduction in the corporate support staff.

Revenue:

Revenue  decreased in the third  quarter 2001 by $161,000,  or 4%, to $3,680,000
from $3,841,000 in the same period last year. The railroad operations  decreased
revenue by $104,000, of which $329,000 relates directly to the Alabama & Florida
Railway Co. In addition,  the Company began  operating the Gettysburg & Northern
Railroad  Co. on February  20, 2001 which  generated  $211,000 of revenue in the
third quarter 2001. Overall,  the Company has experienced a moderate decrease in
rail traffic as a result of the current economic and political environment.  The
equipment  leasing  operations  had a $62,000  decrease in revenue in the period
resulting from a $90,000 decrease in revenue from the utilization of its railcar
fleet by  non-affiliated  railroads,  offset by an increase in locomotive  lease
income of $28,000.

Operating Expense:

Operating  expense  decreased in the third  quarter  2001 by $87,000,  or 3%, to
$2,949,000 from $3,036,000 in the same period last year. The railroad operations
increased  operating expense by $43,000 in the period which included $148,000 of
increased  operating  expense related to the Gettysburg & Northern Railroad Co.,
which the Company  began  operating on February 20, 2001.  The Alabama & Florida
Railway Co. had a decrease in operating  expense of $162,000 in the period.  The
equipment leasing operations decreased operating expense $5,000,  primarily from
decreased maintenance costs offset by increased  depreciation expense related to
the  acquisition of railcars and  locomotives.  In addition,  corporate  support
services  decreased  operating  expense  by  $125,000  in the  period  resulting
primarily from decreased  insurance  expenses and decreased  payroll for support
services from a reduction in the corporate support staff.

Maintenance of way and structures expense (MOW) decreased  $108,000,  or 30%, to
$251,000 from $359,000 in the same period last year.  Railroad  operations had a
decrease of $82,000,  of which $47,000  relates to the Alabama & Florida Railway
Co., and the remaining decrease primarily relates to the capitalization of labor
for track  improvements.  Corporate support services decreased MOW by $26,000 in
the period from reductions in staff.

Maintenance of equipment  expense (MOE) increased only $5,000,  to $376,000 from
$371,000 in the same period last year.  The equipment  leasing  operations had a
decrease  in MOE of  $46,000  as a result of  decreased  costs  associated  with
maintaining the Company's  railcar fleet. The railroad  operations had increased
MOE of  $55,000,  most of which  relates  to  expenses  for  material  needed to
generate revenues from authorized repairs to unaffiliated  railcars while on the
Company's  rail lines.  In addition,  MOE was  decreased  $4,000 from  corporate
support services.
<PAGE>

Transportation  expense  (TRAN)  decreased  $145,000,  or 17%, to $734,000  from
$879,000 in the same period last year.  The railroad  operations  had  decreased
TRAN of $112,000,  of which a $77,000  decrease relates to the Alabama & Florida
Railway  Co.  Also,  TRAN was  increased  $67,000 by the  Gettysburg  & Northern
Railroad Co. The equipment leasing operations had an increase in TRAN of $21,000
resulting  from  increased  costs  associated  with  maintaining  the  Company's
locomotive fleet. In addition, TRAN was decreased $54,000 from corporate support
services  primarily from a reduction in the use of the Company airplane and also
staff reductions.

General  &  administration  expense  (ADMIN)  increased  $117,000,  or  12%,  to
$1,070,000  from $953,000 in the same period last year. The railroad  operations
had an increase of $170,000  in ADMIN  expense in the period,  of which  $35,000
relates to the Gettysburg & Northern Railroad Co. Most of the remaining increase
in ADMIN from railroad  operations relates to legal services for various matters
before the  Surface  Transportation  Board.  The  equipment  leasing  operations
decreased ADMIN $13,000 from reduced cost  associated with relocating  railcars.
Corporate  support  services  decreased  ADMIN  expense by $40,000 in the period
resulting primarily from decreased insurance expenses.

Depreciation and amortization expense increased $44,000, or 9%, to $518,000 from
$474,000 in the same period last year.  Approximately $24,000 of the increase is
related to the  Gettysburg  & Northern  Railroad  Co. and the  Alabama & Florida
Railway  Co. had a  decrease  of $14,000 as a result of the sale of track in the
second quarter 2001. The equipment  leasing  operations  increased  depreciation
expense $34,000 due to the acquisition of railcars and locomotives.

Other Income and Expense Income Statement Line Item Discussion:

In the third quarter 2001, other income and expense remained constant at $56,000
of income compared to $55,000 of income the same period last year.  Other income
relates primarily to lease income for the use of railroad property.  The Company
continues to place a strong emphasis on identifying and collecting revenues from
third parties  occupying Company  property.  In addition to lease income,  other
income and expense  includes  revenues  generated  from scrap  sales,  and other
miscellaneous  non-operating  revenues and expenses,  primarily generated by the
Company's railroad operations.

Interest expense related to equipment  financing  decreased $61,000 in the third
quarter 2001 to $140,000  compared to $201,000 in the same period last year.  In
the  second  quarter  2001 the  Company  repaid  approximately  $1.4  million of
equipment debt. In addition,  the Company refinanced  approximately $2.2 million
of  equipment  debt  in  the  third  quarter  2001,   taking  advantage  of  the
historically  low  corporate  lending  rates  prevalent in the current  economic
environment.  The Company is in the process of  refinancing  any remaining  debt
significantly  above current market  interest  rates,  but some of the Company's
debt is subject to fixed pricing  agreements  and can not be refinanced  without
penalties that would offset any savings from the reduced  interest rates.  Other
interest  expense,  which  primarily  relates to the  financing of the Company's
railroad operations, decreased $19,000 in the quarter.

In the third quarter 2001 the Company had gains on fixed asset  dispositions  of
$18,000,  compared to gains of $57,000 in the same period last year. The gain in
the third quarter 2001 relates to the disposition of several railcars.

Summary: First Nine Months 2001 Compared to First Nine Months 2000.

The  Company's  net  income in the first nine  months  2001 was  $1,327,000,  an
increase  of  $490,000  from the first nine  months 2000 which had net income of
$837,000. Included in this increase is the gain on the sale of a 34 mile segment
of track by the Alabama & Florida Railway Co., and the sale of 3 parcels of land
on the West  Michigan  Railroad Co.  Revenue  decreased  by $486,000,  or 4%, to
$10,811,000  from  $11,297,000 in the same period last year.  Operating  expense
increased by $529,000,  or 6%, to $9,445,000  from $8,916,000 in the same period
last year. Operating income decreased by $1,015,000,  or 43%, to $1,366,000 from
$2,381,000 in the same period last year.

Operating  income was  decreased in the first nine months 2001 by the  Company's
railroad  operations by $764,000 in the period.  Approximately  $503,000 of this
decrease  directly relates to the Alabama & Florida Railway Co. operations which
sold  trackage  that  handled a majority  of its rail  business.  The  remaining
operating income decrease of $261,000 from the railroad  operations relates to a
moderate  decrease  in rail  traffic  as a result of the  current  economic  and
political  environment and legal services relating to various matters before the
Surface  Transportation Board.  Operating income was decreased in the first nine
months 2001 by the Company's  equipment leasing operations by $193,000 primarily
from a $70,000  increase in expenses  associated with maintaining the locomotive
fleet, and an increase in depreciation expense of $82,000. The equipment leasing
operations also generated  increased  revenue from locomotive leases of $172,000
in the first nine months 2001 which was offset by a $244,000 decrease in revenue
from the  utilization  of its  railcar  fleet by  non-affiliated  railroads.  In
addition,  corporate support services  decreased  operating income by $57,000 in
the period  resulting  primarily from increased  health  insurance  expenses and
increased payroll for support services.
<PAGE>

Revenue:

Revenue  decreased  in the  first  nine  months  2001  by  $486,000,  or 4%,  to
$10,811,000  from  $11,297,000  in the  same  period  last  year.  The  railroad
operations  decreased  revenue by $428,000,  which included a $734,000  decrease
directly  related  to lost  revenues  due to the sale of the  Alabama  & Florida
Railway  Co.,  offset by a  $355,000  increase  from the  Gettysburg  & Northern
Railroad  Co.  which the Company  began  operating  on February  20,  2001.  The
equipment  leasing  operations  had a $72,000  decrease in revenue in the period
resulting  from a decrease in revenue of $244,000  from the  utilization  of its
railcar  fleet by  non-affiliated  railroads,  offset by an  increase in revenue
generated from locomotive leases of $172,000.

Operating Expense:

Operating  expense increased in the first nine months 2001 by $529,000 or 6%, to
$9,445,000 from $8,916,000 in the same period last year. The railroad operations
increased operating expense by $337,000 in the period which included $318,000 of
increased  operating  expense related to the Gettysburg & Northern  Railroad Co.
which the Company began operating on February 20, 2001.

The  Alabama & Florida had a decrease  in  operating  expense of $230,000 in the
period. The remaining  increased  operating expense from the railroad operations
relates  primarily to legal fees.  The equipment  leasing  operations  increased
operating  expense  $122,000,  primarily  from increased  maintenance  costs and
increased  depreciation  expense  related to the  acquisition  of  railcars  and
locomotives. In addition, corporate support services increased operating expense
by $70,000 in the first nine  months 2001  resulting  primarily  from  increased
health insurance expenses and increased payroll for support services.

Maintenance of way and structures expense (MOW) decreased  $134,000,  or 12%, to
$1,018,000  from  $1,152,000 in the same period last year, the majority of which
relates to the railroad operations .

Maintenance of equipment expense (MOE) increased $176,000, or 17%, to $1,231,000
from $1,055,000 in the same period last year. The equipment  leasing  operations
had  increased  MOE of $8,000 as a result of  increased  costs  associated  with
maintaining the Company's  railcar fleet. The railroad  operations had increased
MOE of  $135,000,  most of which  relates to  expenses  for  material  needed to
generate revenues from authorized repairs to unaffiliated  railcars while on the
Company's  rail lines.  In addition,  MOE was increased  $33,000 from  corporate
support services.

Transportation  expense  (TRAN)  decreased  $45,000,  or 2%, to $2,445,000  from
$2,490,000 in the same period last year.  The railroad  operations had decreased
TRAN of $36,000,  including an increase of $136,000 relating to the Gettysburg &
Northern Railroad Co. offset by a decrease of $144,000 relating to the Alabama &
Florida Railway Co. The equipment leasing  operations had an increase in TRAN of
$72,000  from  increased  costs   associated  with   maintaining  the  Company's
locomotive fleet. In addition, TRAN was decreased $81,000 from corporate support
services.

General  &  administration  expense  (ADMIN)  increased  $416,000,  or  15%,  to
$3,202,000 from $2,786,000 in the same period last year. The railroad operations
had an increase of $311,000 in the period, which includes an increase of $79,000
from the  Gettysburg  & Northern  Railroad  Co. The  majority  of the  remaining
increased  ADMIN from the  railroad  operations  relates to legal  services  for
various matters before the Surface  Transportation  Board. The equipment leasing
operations  decreased ADMIN $40,000.  Corporate support services increased ADMIN
expense by $145,000 in the period  resulting  primarily  from  increased  health
insurance expenses and increased payroll for support services.

Depreciation and amortization  expense increased $118,000,  or 8%, to $1,550,000
from  $1,432,000  in the same  period  last year.  Approximately  $47,000 of the
increase is related to the Gettysburg & Northern  Railroad Co. while the Alabama
& Florida Railway Co. had a decrease of $18,000 as a result of the sale of track
in  the  second  quarter  2001.  The  equipment  leasing  operations   increased
depreciation  expense  $81,000  related  to  the  acquisition  of  railcars  and
locomotives.
<PAGE>

Other Income and Expense Income Statement Line Item Discussion:

In the first nine months  2001 other  income and  expense  decreased  $67,000 to
$200,000  of income in the period  compared  to  $267,000  of income in the same
period last year. Included in this decrease is approximately  $79,000 of expense
the Company incurred in the second quarter 2001 as a guarantor on an outstanding
loan by the Minnesota  Central Railroad Co., which the Company sold in 1999. The
remaining other income relates primarily to lease income for the use of railroad
property.  The Company  continues to place a strong  emphasis on identifying and
collecting  revenues from third parties occupying Company property.  In addition
to lease income, other income and expense includes revenues generated from scrap
sales, and other  miscellaneous non- operating revenues and expenses,  primarily
generated by the Company's railroad operations.

Interest expense related to equipment  financing decreased $108,000 in the first
nine months 2001 to $494,000  compared to $602,000 in the same period last year.
In the second  quarter  2001 the Company  repaid  approximately  $1.4 million of
equipment debt. In addition,  the Company refinanced  approximately $2.2 million
of  equipment  debt  in  the  third  quarter  2001,   taking  advantage  of  the
historically  low  corporate  lending  rates  prevalent in the current  economic
environment.  The Company is in the process of  refinancing  any remaining  debt
significantly  above current market  interest  rates,  but some of the Company's
debt is subject to fixed pricing  agreements  and can not be refinanced  without
penalties that would offset any savings from the reduced  interest rates.  Other
interest  expense,  which  primarily  relates to the  financing of the Company's
railroad operations, decreased $8,000 in the period.

In the first nine months 2001 the Company had a significant  gain on fixed asset
dispositions of $1,938,000 compared to a gain of $55,000 in the same period last
year.  On June 11,  2001,  the  Company's  Alabama & Florida  Railway  Co.  (AF)
subsidiary sold a 34 mile segment of its track from Georgiana,  AL to Andalusia,
AL, to the Three Notch Railroad Co. (TNR),  a wholly owned  subsidiary of Gulf &
Ohio Railways. The sale price was $2.5 million and the pre-tax gain realized was
$1,738,000.  In addition, the West Michigan Railroad Co. sold 3 small parcels of
commercial  development  land to one of its online  patrons for $280,000 and the
pre-tax gain  realized on the sale was $183,000.  The remaining  gain relates to
the disposition of several railcars.

Impact of New Accounting Pronouncements:

In July 2001, the FASB issued  Statement of Financial  Accounting  Standards No.
141,  "Business   Combinations"  (SFAS  No.  141)  and  Statement  of  Financial
Accounting  Standards No. 142,  "Goodwill and Other Intangible Assets" (SFAS No.
142).  SFAS No. 141 addresses  financial  accounting  and reporting for business
combinations and is effective for all business combinations initiated after June
30, 2001. SFAS No. 142 addresses financial accounting and reporting for acquired
goodwill and other intangible assets and is effective for fiscal years beginning
after December 15, 2001. The Company has not yet completed its assessment of the
effects of these new pronouncements on its financial statements.  In August 2001
the  Financial  Accounting  Standards  Board (FASB)  issued  Statement  No. 143,
"Accounting  for Asset  Retirement  Obligations."  This  statement  amends  FASB
Statement No. 19,  "Financial  Accounting and Reporting by Oil and Gas Producing
Companies",  it addresses  financial  accounting  and reporting for  obligations
associated with the retirement of tangible  long-lived assets and the associated
asset  retirement  costs, and is effective for financial  statements  issued for
fiscal  years  beginning  after June 15,  2002.  In October  2001 the  Financial
Accounting  Standards Board (FASB) issued Statement No. 144, "Accounting for the
Impairment or Disposal of Long-Lived  Assets." This  statement  supersedes  FASB
Statement No. 121,  "Accounting for the Impairment of Long-Lived  Assets and for
Long-Lived  Assets to Be Disposed  Of", and APB Opinion No. 30,  "Reporting  the
Results  of  Operations-Reporting  the  Effects  of  Disposal  of a Segment of a
Business,  and  Extraordinary,  Unusual and  Infrequently  Occurring  Events and
Transactions",  for the disposal of a segment of a business. This statement also
amends ARB No. 51,  "Consolidated  Financial  Statements"  and is effective  for
financial  statements issued for fiscal years beginning after December 15, 2001,
and interim periods within those fiscal years. The Company has not yet completed
its  assessment  of the  effects of these new  pronouncements  on its  financial
statements.

The Company is not aware of any other recent accounting standard issued, but not
yet required to be adopted by the Company,  that would have a material effect on
its financial position or results of operations.
<PAGE>

Liquidity and Capital Resources:

The Company  primarily  uses cash  generated  from  operations  to fund  working
capital  needs and relies on long-term  financing  for  railcars,  new operating
subsidiaries,  and other  significant  capital  expenditures.  The  Company  has
working capital facilities totaling  $1,100,000,  all of which was available for
use at the end of the third quarter 2001.

On June 23, 2000, the Company entered into a credit agreement with National City
Bank of Michigan/Illinois to provide a $5 million revolving  acquisition line of
credit for railroad  acquisitions at a variable  interest rate of prime plus 1%,
renewable every 2 years.  Amounts drawn on the line are amortized over a 10 year
period.  This  credit  line is  secured  by all non real  estate  assets  of the
Mississippi  Central  Railroad  Co.,  the Alabama  Railroad Co. and all non real
estate assets of any company  acquired  using  proceeds from the credit line. In
the first nine months 2001,  $1,604,700  was borrowed on the line in  connection
with the asset  purchase by the  Gettysburg & Northern  Railroad Co. The monthly
principal and interest payment currently required to be repaid on the Gettysburg
& Northern Railroad Co. financing is approximately $21,000. In addition, monthly
principal and interest of approximately  $8,300 is currently being repaid on the
credit  line for the  funding  of the  Indiana  Southwestern  Railway  Co. As of
September 30, 2001, $2,259,000 was drawn on the credit line leaving an available
balance of $2,741,000.

Long-term  equipment  financing has historically  been readily  available to the
Company for its railcar  acquisition  program.  The Company  believes it will be
able to continue obtaining  long-term equipment financing should the need arise.
The Company's  plans for new debt in the  foreseeable  future is contingent upon
new railroad acquisitions and increased needs and/or opportunities for railcars.

On July 1, 1995, the Company's  stock split and warrant  issuance became payable
to  shareholders.  The 2 for 1 stock split increased the number of shares issued
and  outstanding  from  2,099,142 to  4,198,284.  At the same time  shareholders
became  entitled  to purchase  an  additional  4,198,284  shares  through  stock
warrants  issued by the  Company as  dividends.  One warrant was issued for each
share of common stock held after the split,  entitling  the holder to purchase 1
share of common  stock for $2.00 per share.  The shares  purchased  through  the
exercise of the warrants  must be held for 1 year from date of  purchase.  As of
September  30,  2001,  a total of 68,766  warrants  originally  issued  had been
exercised to date since the warrants issuance, and the Company realized $137,532
on the exercise of those warrants.

On June 26,  1996,  the  Company's  shareholders  approved a stock  option  plan
permitting the issuance of 407,000 shares of common stock. Options granted under
the plan are  incentive  based  except for the options  granted to the CEO whose
options  are  non-qualified.  The  options  will be  fully  vested  and  will be
exercisable  as of July 1, 2001. The exercise date can be accelerated if Pioneer
Railcorp common shares reach a closing price of $7.25 per share, or higher,  for
any  consecutive  10-day  period,  as reported in the Wall Street  Journal.  The
options will be exercisable  at prices  ranging from $2.75 to $3.03,  based upon
the trading price on the date of the grant,  in whole or in part within 10 years
from the date of grant. As of September 30, 2001, a total of 175,000 options are
outstanding under this plan.

The Company was contingently  liable as a guarantor on an outstanding  loan. The
loan was the primary responsibility of the Minnesota Central Railroad Co., which
the Company sold in 1999, however,  the Company had guaranteed the debt prior to
the sale of the Minnesota  Central  Railroad Co. In the second  quarter 2001 the
Company was required to pay approximately $79,000 to satisfy this obligation.

On June 11, 2001, the Company's  Alabama & Florida  Railway Co. (AF)  subsidiary
sold a 34 mile segment of its track from Georigiana, AL to Andalusia, AL, to the
Three  Notch  Railroad  Co.  (TNR),  a wholly  owned  subsidiary  of Gulf & Ohio
Railways  in  Knoxville,  TN. The cash sale price was  $2,500,000.  The  Company
estimated  the sale of the track  segment will result in a decrease in operating
income and cash flow of  approximately  $250,000 during the second half of 2001.
However,  the  proceeds  from this  transactions  were used to pay off  selected
long-term  debt  obligations  and the Company  estimates that it will realize an
increase  in  monthly  cash flows of  approximately  $80,000  through  May 2002,
$50,000  from June 2002  through  December  2002,  and $23,000 from January 2003
through December 2003, as a result of the early repayment of debt.
<PAGE>

The Company refinanced approximately $2.2 million of equipment debt in the third
quarter 2001,  taking advantage of the historically low corporate  lending rates
prevalent in the current economic environment.  The Company is in the process of
refinancing  any remaining  debt  significantly  above current  market  interest
rates, but some of the Company's debt is subject to fixed pricing agreements and
can not be refinanced  without  penalties that would offset any savings from the
reduced interest rates.

The Company  anticipates that the outcomes  involving  current legal proceedings
will not  materially  affect the Company's  consolidated  financial  position or
results of operation.

The Company  believes its cash flow from  operations  and its available  working
capital  credit  lines,  will be more than  sufficient to meet  liquidity  needs
through at least the next twelve months.

Balance Sheet and Cash Flow Items:

The  Company's  operating  activities  in the first nine months  2001  generated
positive  cash flow of  $1,832,000.  Net cash from  operating  activities in the
first nine months 2001 was generated from $1,327,000 of net income, increased by
$1,550,000 of  depreciation  and  amortization,  an increase in notes payable of
$115,000, an increase in income tax payable of $274,000, an increase in deferred
taxes of  $600,000,  and an  increase  in net cash of  $86,000  from  changes in
various  other  operating  assets  and  liabilities.  Net  cash  from  operating
activities  was  reduced  in the  period  by a gain on  sales  of  property  and
equipment of $1,938,000 and an increase in prepaid expenses of $182,000.

In  the  first  nine  months  2001,  the  Company  made  $2,917,000  of  capital
expenditures.  Capital expenditures  included $1,605,000 for the railroad assets
of the former Gettysburg Railway,  Inc. (GBRY) and the Gettysburg Scenic Railway
(GSRX) by  Pioneer  Railcorp's  wholly-owned  subsidiary  Gettysburg  & Northern
Railroad  Co.  Allocations  of the  Gettysburg  & Northern  Railroad  Co.  asset
purchase include  approximately  $1,007,000 for track  structures,  $316,000 for
land,  $146,000  for  buildings  and $136,000 for  equipment.  In addition,  the
Company purchased 2 locomotives for approximately  $110,000 of which $78,000 was
financed by the Company's  acquisition  credit line.  The Company  purchased 159
covered  hoppers at a cost of  $550,000  and 19 wood rack  railcars at a cost of
$68,000.  Both of these railcar purchases were financed with long term debt. The
Company spent approximately $285,000 to upgrade bridge and track structures.  In
addition,  the  Company  made  capital  expenditures  of  $125,000  for  railcar
betterments, $62,000 for locomotive betterments, and the remaining capital asset
expenditures  of  approximately  $112,000  relates  to  miscellaneous  equipment
purchases.

PART II.  OTHER INFORMATION

Item 1.   LEGAL PROCEEDINGS

In the course of business, the Company experiences crossing accidents,  employee
injuries,  delinquent and/or disputed accounts, and other incidents,  which give
rise to claims  that may result in  litigation.  Management  vigorously  pursues
settlement and release of such claims, but at any one time, some such incidents,
which could  result in lawsuits by and against the Company,  remain  unresolved.
Management believes it has valid claims for, or good defenses to, these actions.
Management considers such claims to be a routine part of the Company's business.
<PAGE>

In a letter dated  November 13, 1998 Keokuk  Junction  Railway  (KJRY)  notified
Burlington  Northern  Santa  Fe  Railway  that it  desired  to  negotiate  a new
agreement  for  BNSF's  access to its  Mooar  Line in  Keokuk,  Iowa or the then
current agreement and supplements thereto would be terminated effective March 1,
1999. No new agreement was reached and KJRY put in place an interchange  between
BNSF and KJRY for movement of BNSF cars and  locomotives to the Mooar Line for a
charge of $85 per car. On April 27, 1999 BNSF filed a Petition  for  Declaration
or Prescription of Crossing,  Trackage or Joint use Rights and for Determination
of  Compensation  and Other  Terms in  Finance  Docket  Numbers  33740 and 33740
(Sub-No-1).  In a  decision  dated  June 20,  2001 the STB ruled that BNSF had a
right to cross the KJRY's track to access the Mooar Line. It ordered the parties
to negotiate  compensation  for the  crossing  and if a settlement  could not be
reached then the STB would set the  compensation.  No settlement was reached and
BNSF filed a Petition  to  Establish  Compensation  and Other  Terms on July 23,
2001. In addition to asking the STB to set the compensation for the crossing the
BNSF  also  asked  the STB to  order a  refund  of the  difference  between  the
compensation  set by the STB and the amount paid by BNSF  between  March 1, 1999
and May 1, 2001.  The total amount paid by BNSF between March 1, 1999 and May 1,
2001 is approximately $663,255. Mediation has been conducted but has not reached
a resolution  to this point.  The STB has not ruled on the Petition to Establish
Compensation.  The KJRY has filed a notice  of  appeal of the June 20,  2001 STB
decision  with the United  States  Court of Appeals for the District of Columbia
Circuit.  KJRY's  brief  is due on  January  15,  2002.  Management  has made no
provision  for  estimated  losses  associated  with this matter in the financial
statements as of September 30, 2001 as management and internal legal council are
unable to determine  what the outcome of the litigation may be and whether there
will be any adverse financial consequences.

As of the  date of this  Form  10-QSB,  management  is not  aware  of any  other
incident which is likely to result in a liability that would  materially  affect
the Company's consolidated financial position or results of operation.

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters  were  submitted to a vote of security  holders in the third  quarter
2001.

Item 5.   OTHER INFORMATION

On  February  1,  2001,  the  Company  separated  1.1 miles of track  located in
Kendallville, Indiana from its Michigan Southern Railroad Company subsidiary and
is operating as a  wholly-owned  subsidiary of Pioneer  Railcorp  under the name
Kendallville Terminal Railway Co. (KTR). On May 1, 2001, the Company separated 9
miles of track  located  in the  Indiana  counties  of Elkhart  and St.  Joseph,
Indiana from its Michigan Southern Railroad Company  subsidiary and is operating
as a  wholly-owned  subsidiary  of  Pioneer  Railcorp  under the name  Elkhart &
Western  Railroad Co. (EWR).  These  actions were taken to simplify  interchange
with the Norfolk Southern,  the connecting carrier,  and to enhance marketing of
the railroad by creating a local identity of the rail line.

On June 11, 2001, the Company's  Alabama & Florida  Railway Co. (AF)  subsidiary
sold a 34 mile segment of its track from Georgiana, AL to Andalusia,  AL, to the
Three  Notch  Railroad  Co.  (TNR),  a wholly  owned  subsidiary  of Gulf & Ohio
Railways.  The sale price was $2.5  million and the  Company  realized a pre-tax
gain of $1,738,000 on the transaction.  The AF is retaining 43 miles of the line
and will continue operations on the remaining  trackage,  but is seeking a buyer
for the remaining rail facilities.  Also, the West Michigan  Railroad Co. sold 3
small parcels of commercial  development  land to one of its online  patrons for
$280,000 and the pre-tax gain realized on the sale was $183,000.

Item 6.   EXHIBITS AND REPORTS ON FORM 8-K

Exhibit # 11 - Statement regarding computation of per share earnings.

No reports were filed on Form 8-K during the first nine months 2001

SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report to be  signed  on it's  behalf by the
undersigned thereunto duly authorized.

PIONEER RAILCORP
(Registrant)
                                            /s/ Guy L. Brenkman
       10/31/01                             ------------------------------------
        DATE                                GUY L. BRENKMAN
                                            PRESIDENT & CEO

                                            /s/ J. Michael Carr
      10/31/01                              ------------------------------------
       DATE                                 J. MICHAEL CARR
                                            TREASURER & CHIEF
                                            FINANCIAL OFFICER