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 June 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 June 30, 2001)


<PAGE>

PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS



                            PIONEER RAILCORP AND SUBSIDIARIES

                            CONSOLIDATED STATEMENTS OF INCOME
                          Quarters Ended June 30, 2001 and 2000
                                        UNAUDITED
<TABLE>
                                                           Three Months                   Six Months
                                                               Ended                         Ended
                                                           June 30, 2000                 June 30, 2001
                                                    --------------------------    --------------------------
<S>                                                 <C>            <C>            <C>            <C>
Operating revenue ...............................   $ 3,620,638    $ 3,850,570    $ 7,131,510    $ 7,456,292
                                                    --------------------------------------------------------
Operating expenses

   Maintenance of way ...........................       430,119        432,487        766,345        793,621
   Maintenance of equipment .....................       459,599        351,501        854,637        684,460
   Transportation expense .......................       845,716        784,721      1,711,059      1,611,012
   Administrative expense .......................     1,129,886        960,223      2,131,908      1,832,484
   Depreciation  & amortization .................       521,103        489,861      1,032,317        958,513
                                                    --------------------------------------------------------
                                                      3,386,423      3,018,793      6,496,266      5,880,090
                                                    --------------------------------------------------------

Operating income ................................       234,215        831,777        635,244      1,576,202
                                                    --------------------------------------------------------

Other income & expense

   Other (income) expense .......................        59,988        (58,361)      (145,135)      (212,340)
   Interest expense, equipment ..................       171,257        207,059        354,146        401,383
   Interest expense, other ......................       205,555        194,619        388,176        377,732
   Net (gain) loss on sale of fixed assets ......    (1,920,144)        88,033     (1,920,603)         2,547
                                                    --------------------------------------------------------
                                                     (1,483,344)       431,350     (1,323,416)       569,322
                                                    --------------------------------------------------------

Income before income taxes ......................     1,717,559        400,427      1,958,660      1,006,880

Provision for income taxes ......................       714,500        151,200        822,000        386,000
                                                    --------------------------------------------------------

Income before minority interest in preferred

   stock dividends of consolidated subsidiaries .   $ 1,003,059    $   249,227    $ 1,136,660    $   620,880

Minority interest in preferred stock dividends of
    consolidated subsidiaries ...................   $    31,308    $    31,308    $    62,616    $    62,616
                                                    --------------------------------------------------------


Net income ......................................   $   971,751    $   217,919    $ 1,074,044    $   558,264
                                                    ========================================================

Basic earnings per common share .................   $      0.22    $      0.05    $      0.24    $      0.12
                                                    ========================================================

Diluted earnings per common share ...............   $      0.22    $      0.05    $      0.24    $      0.12
                                                    ========================================================

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

                                          PIONEER RAILCORP AND SUBSIDIARIES

                                             CONSOLIDATED BALANCE SHEETS
                                         JUNE 30, 2001 and DECEMBER 31, 2000
                                                      UNAUDITED
<TABLE>
                                                             June 30       December 31
                                                               2001           2000
                                                          ----------------------------
<S>                                                       <C>             <C>
ASSETS
Current Assets
   Cash ...............................................   $    614,861    $    564,490
   Accounts receivable, less allowance
     for doubtful accounts 2001 $150,762; 2000 $120,099      3,373,200       3,687,738
   Inventories ........................................        225,802         237,091
   Prepaid expenses ...................................        137,128          96,357
   Income tax refund claims ...........................        153,413         206,915
   Deferred taxes .....................................         59,800          59,800
                                                          ----------------------------
        Total current assets ..........................      4,564,204       4,852,391
                                                          ----------------------------

Property and Equipment less accumulated
  depreciation 2001 $9,416,479; 2000 $8,909,343 .......     25,587,923      25,451,459
                                                          ----------------------------

Intangible Assets, less accumulated amortization
  2001 $314,560; 2000 $288,984 ........................      1,075,500       1,091,403
                                                          ----------------------------

Investments, cash value of life insurance .............        167,597         156,702
                                                          ----------------------------

Total assets ..........................................   $ 31,395,224    $ 31,551,955
                                                          ============================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
   Accounts payable ...................................   $  2,505,769    $  2,307,663
   Income taxes payable ...............................        755,932           4,099
   Current maturities of long-term debt ...............      2,272,830       2,953,155
   Accrued liabilities ................................        504,490         643,743
                                                          ----------------------------
        Total current liabilities .....................      6,039,021       5,908,660
                                                          ----------------------------

Long-term debt, net of current maturities .............     12,748,054      14,103,682
                                                          ----------------------------

Deferred income taxes .................................      4,825,200       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 ..................................      4,631,379       3,559,841
                                                          ----------------------------
        Total stockholders' equity ....................      6,679,949       5,608,413
                                                          ----------------------------

Total liabilities and equity ..........................   $ 31,395,224    $ 31,551,955
                                                          ============================
</TABLE>
<PAGE>

                        PIONEER RAILCORP AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  First Six Months Ended June 30, 2001 and 2000
                                    UNAUDITED
<TABLE>
                                                                    First Six Months
                                                                 --------------------------
                                                                     2001          2000
                                                                 --------------------------
<S>                                                              <C>            <C>
Cash Flows From Operating Activities
Net income ...................................................   $ 1,074,044    $   558,265
Adjustments to reconcile net income to net cash
provided by operating activities:
        Minority interest in preferred stock dividends of
          consolidated subsidiaries ..........................        62,616         62,616
        Depreciation .........................................     1,004,936        934,105
        Amortization .........................................        27,381         24,527
        Increase in cash value life insurance ................       (10,895)        (9,148)
        (Gain) on sale of property & equipment ...............    (1,920,603)         2,547
Change in assets and liabilities, net of effects from
        acquisition of subsidiaries
        (Increase) decrease accounts receivable ..............       314,538        260,091
        (Increase) decrease inventories ......................        11,289              0
        (Increase) decrease prepaid expenses .................       (40,771)       (65,654)
        (Increase) decrease intangible assets ................        (2,749)          (600)
        Increase (decrease) accounts payable .................       198,106     (1,661,331)
        (Increase) decrease income tax refund claims .........        53,502              0
        Increase (decrease) income tax payable ...............       751,833       (371,451)
        Increase (decrease) accrued liabilities ..............      (139,253)       (24,392)
                                                                 --------------------------
        Net cash provided by (used in) operating activities ..     1,383,974       (290,425)
                                                                 --------------------------

Cash Flows From Investing Activities
        Proceeds from sale of property & equipment ...........     2,783,241        130,257
        Purchase of property & equipment .....................    (2,012,675)    (2,894,654)
        Business acquisitions, net of cash acquired ..........             0        (55,000)
                                                                 --------------------------
        Net cash provided by (used in) investing activities ..       770,566     (2,819,397)
                                                                 --------------------------

Cash Flows From Financing Activities
        Proceeds from short-term borrowings ..................       488,000      3,961,719
        Proceeds from long-term borrowings ...................     2,948,055      5,504,773
        Payments on short-term borrowings ....................      (488,000)    (4,771,719)
        Payments on long-term borrowings .....................    (4,984,008)    (2,574,517)
        Repurchase of minority interest ......................        (3,000)       (16,000)
        Purchase of common stock for treasury ................        (2,600)       (82,605)
        Cash dividends paid ..................................             0       (115,288)
        Preferred stock dividend payments to minority interest       (62,616)       (62,616)
                                                                 --------------------------
        Net cash provided by (used in) financing activities ..    (2,104,169)     1,843,747
                                                                 --------------------------

Net increase (decrease) in cash ..............................        50,371     (1,266,075)

Cash, beginning of period ....................................       564,490      2,356,844
                                                                 --------------------------
Cash, end of period ..........................................   $   614,861    $ 1,090,769
                                                                 ==========================
</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.
<TABLE>
                                                                                           Second Quarter
                                                                                      ------------------------
                                                                                         2001          2000
                                                                                      ------------------------
<S>                                                                                   <C>           <C>
Revenues from external customers
   Railroad operations ............................................................    2,798,742     3,068,945
   Equipment leasing operations ...................................................      815,572       777,864
   Corporate support services .....................................................        6,324         3,761
                                                                                      ------------------------
      Total revenues from external customers ......................................    3,620,638     3,850,570
                                                                                      ========================

Intersegment revenues
   Railroad operations ............................................................            0             0
   Equipment leasing operations ...................................................       99,600        99,600
   Corporate support services .....................................................    1,867,271     1,567,796
                                                                                      ------------------------
      Total intersegment revenues .................................................    1,966,871     1,667,396
                                                                                      ========================

Segment profit
   Railroad operations ............................................................      858,683     1,338,192
   Equipment leasing operations ...................................................      376,326       430,335
   Corporate support services .....................................................      966,077       730,646
                                                                                      ------------------------
      Total segment profit ........................................................    2,201,086     2,499,173

Reconciling items
    Intersegment revenues .........................................................   (1,966,871)   (1,667,396)
    Income taxes ..................................................................     (714,500)     (151,200)
    Minority interest .............................................................      (31,308)      (31,308)
    Other income(expense), net ....................................................    1,483,344      (431,350)
                                                                                      ------------------------
       Total consolidated net income (loss) .......................................      971,751       217,919
                                                                                      ========================
</TABLE>
<PAGE>

<TABLE>
                                                                                         Six Months June 30
                                                                                      ------------------------
                                                                                         2001          2000
                                                                                      ------------------------
<S>                                                                                   <C>           <C>
Revenues from external customers
   Railroad operations ............................................................    5,592,145     5,916,242
   Equipment leasing operations ...................................................    1,527,094     1,536,199
   Corporate support services .....................................................       12,271         3,851
                                                                                      ------------------------
      Total revenues from external customers ......................................    7,131,510     7,456,292
                                                                                      ========================

Intersegment revenues
   Railroad operations ............................................................            0             0
   Equipment leasing operations ...................................................      199,200       194,700
   Corporate support services .....................................................    3,536,945     3,079,750
                                                                                      ------------------------
      Total intersegment revenues .................................................    3,736,145     3,274,450
                                                                                      ========================

Segment profit

   Railroad operations ............................................................    1,903,451     2,520,069
   Equipment leasing operations ...................................................      719,777       851,730
   Corporate support services .....................................................    1,748,161     1,478,853
                                                                                      ------------------------
      Total segment profit ........................................................    4,371,389     4,850,652

Reconciling items
    Intersegment revenues .........................................................   (3,736,145)   (3,274,450)
    Income taxes ..................................................................     (822,000)     (386,000)
    Minority interest .............................................................      (62,616)      (62,616)
    Other income(expense), net ....................................................    1,323,416      (569,322)
                                                                                      ------------------------
       Total consolidated net income ..............................................    1,074,044       558,264
                                                                                      ========================
</TABLE>
<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 will generate  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.
<PAGE>

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.

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: Second Quarter 2001 Compared to Second Quarter 2000.

The Company's net income in the second quarter 2001 was $972,000, an increase of
$754,000  from the second  quarter 2000 which had net income of  $218,000.  This
increase relates  primarily to the gain on 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 $230,000 or 6% to $3,621,000  from
$3,851,000 in the same period last year. Operating expense increased by $367,000
or 12%, to $3,386,000  from  $3,019,000 in the same period last year.  Operating
income  decreased  by  $598,000,  or 72% to $234,000  from  $832,000 in the same
period last year.

Operating  income was  decreased  in the second  quarter  2001 by the  Company's
railroad operations by approximately  $437,000.  Approximately  $209,000 of this
decrease is directly  related to the Alabama & Florida Railway  operations,  and
the  remaining  decrease of $228,000  primarily  relates to increased  operating
expenses by the railroads.  Operating income was decreased in the second quarter
2001 by the Company's  equipment  leasing  operations by approximately  $54,000,
primarily from a $35,000 decrease in revenue from the utilization of its railcar
fleet by non-affiliated railroads, an increase of $70,000 in expenses associated
with  maintaining  the  railcar  and  locomotive   fleet,  and  an  increase  in
depreciation expense of $21,000. The equipment leasing operations also generated
increased revenue from locomotive leases of $72,000 in the quarter. In addition,
corporate support services increased operating expense by approximately $107,000
in the period resulting  primarily from increased health insurance  expenses and
increased  payroll for support  services needed as a result of the growth of the
Company's equipment and railroad properties.

Revenue:

Revenue decreased in the second quarter 2001 by approximately  $230,000,  or 6%,
to  $3,621,000  from  $3,851,000  in the same  period  last year.  The  railroad
operations  decreased  revenue  by  approximately  $270,000,  of which  $265,000
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  $107,000 of revenue in the second  quarter 2001. The equipment
leasing  operations  had a $37,000  increase in revenue in the period  resulting
from an increase in revenue  generated from locomotive  leases of $72,000 offset
by a decrease in revenue of $35,000 from the utilization of its railcar fleet by
non-affiliated railroads.
<PAGE>

Operating Expense:

Operating  expense  increased in the second  quarter 2001 by $367,000 or 12%, to
$3,386,000 from $3,019,000 in the prior year. The railroad operations  increased
operating  expense  by  approximately  $167,000  in the  period  which  included
$125,000 of increased  operating  expense  related to the  Gettysburg & Northern
Railroad  Co.,  which the Company  began  operating on February  20,  2001.  The
equipment leasing operations increased operating expense approximately  $91,000,
primarily  from an  increase in  maintenance  costs and  increased  depreciation
expense  related to the  acquisition of railcars and  locomotives.  In addition,
corporate support services increased operating expense by approximately $109,000
in the period resulting  primarily from increased health insurance  expenses and
increased  payroll for support  services needed as a result of the growth of the
Company's equipment and railroad properties.

Maintenance of way and structures  expense (MOW) decreased  slightly to $430,000
from $432,000 in the same period last year.  Railroad operations had an increase
of $9,000 offset by a decrease of $11,000 of MOW by corporate services.

Maintenance of equipment  expense (MOE) increased  $108,000,  or 31% to $460,000
from $352,000 in the same period last year. The equipment leasing operations had
an  increase  in MOE of  approximately  $39,000 as a result of  increased  costs
associated with maintaining the Company's railcar fleet. The railroad operations
had  increased  MOE of $48,000,  of which  $6,000  relates to the  Gettysburg  &
Northern  Railroad Co. Most of the additional  increase in MOE from the railroad
operations  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 $21,000 from corporate support services.

Transportation expense (TRAN) increased $61,000, or 8% to $846,000 from $785,000
in the same period last year. The equipment  leasing  operations had an increase
in TRAN of approximately  $25,000 as a result of increased costs associated with
maintaining  the  Company's   locomotive  fleet.  The  railroad  operations  had
increased  TRAN of $51,000,  including  an  increase of $52,000  relating to the
Gettysburg & Northern Railroad Co. In addition,  TRAN was decreased $15,000 from
corporate support services.

General  &  administration  expense  (ADMIN)  increased  $170,000,  or  18%,  to
$1,130,000  from $960,000 in the same period last year. The railroad  operations
had an increase  of $49,000 in ADMIN  expense in the  period,  of which  $31,000
relates  to the  Gettysburg  &  Northern  Railroad  Co.  The  equipment  leasing
operations  increased ADMIN  approximately  $7,000.  Corporate  support services
increased  ADMIN  expense by  approximately  $114,000  in the  period  resulting
primarily from increased  health  insurance  expenses and increased  payroll for
support services needed as a result of the growth of the Company's equipment and
railroad properties.

Depreciation and amortization expense increased $31,000, or 6%, to $521,000 from
$490,000 in the same period last year.  Approximately $18,000 of the increase is
related  to the  Gettysburg  &  Northern  Railroad  Co.  The  equipment  leasing
operations increased  depreciation expense  approximately $21,000 related to the
acquisition of railcars and locomotives.

Other Income and Expense Income Statement Line Item Discussion:

In the second  quarter  2001,  other  income and expense  decreased  $118,000 to
$60,000 of expense in the quarter  compared to $58,000 of income the same period
last year.  Included in this  decrease is  approximately  $79,000 of expense the
Company incurred  resulting from a payment made as a guarantor on an outstanding
loan of 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 $36,000 in the second
quarter 2001 to $171,000 compared to $207,000 in the same period last year. This
decrease is the result of reduction of principal  balances  related to equipment
financing in the absence of  additional  financing  activities.  Other  interest
expense,  which  primarily  relates to the financing of the  Company's  railroad
operations,  increased  $11,000  in the  quarter  primarily  related to the $1.6
million  financing of the  Gettysburg & Northern  Railroad  which was  purchased
February 20, 2001.
<PAGE>

In the second  quarter  2001 the Company had a  significant  gain on fixed asset
dispositions of approximately  $1,920,000 compared to an $88,000 loss on sale of
fixed  assets 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 in Knoxville,  TN. The
sale price was $2.5 million and the pre-tax gain realized was $1,738,000. 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. 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.

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

The  Company's  net  income in the  first six  months  2001 was  $1,074,000,  an
increase  of  $516,000  from the first six  months  2000 which had net income of
$558,000. 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  $324,000  or 4% to
$7,132,000  from  $7,456,000  in the same  period last year.  Operating  expense
increased by $616,000 or 10%, to $6,496,000  from  $5,880,000 in the same period
last year.  Operating  income  decreased  by $941,000,  or 60% to $635,000  from
$1,576,000 in the same period last year.

Operating  income was  decreased  in the first six months 2001 by the  Company's
railroad  operations  by  approximately  $617,000 in the  period.  Approximately
$335,000 of this decrease is directly  related to the Alabama & Florida  Railway
operations,  and  the  remaining  decrease  of  $282,000  primarily  relates  to
increased  operating expenses by the railroads of $362,000,  offset by increased
revenues from the remaining railroad operations of $80,000. Operating income was
decreased  in the first  six  months  2001 by the  Company's  equipment  leasing
operations by approximately  $131,000 in the period,  primarily from an increase
of $105,000 in expenses  associated with  maintaining the railcar and locomotive
fleet, and an increase in depreciation expense of $49,000. The equipment leasing
operations also generated  increased  revenue from locomotive leases of $145,000
in the first six  months  2001  which was  offset by a  decrease  in  revenue of
$153,000 from the utilization of its railcar fleet by  non-affiliated  railroads
in the first six months 2001. In addition,  corporate support services decreased
operating  income by approximately  $193,000 in the period  resulting  primarily
from  increased  health  insurance  expenses and  increased  payroll for support
services  needed  as a result  of the  growth  of the  Company's  equipment  and
railroad properties.

Revenue:

Revenue decreased in the first six months 2001 by approximately $324,000, or 4%,
to  $7,132,000  from  $7,456,000  in the same  period  last year.  The  railroad
operations  decreased  revenue  by  approximately  $324,000,  which  included  a
$405,000  decrease directly related to the Alabama & Florida Railway Co., offset
by a $144,000  increase  from the  Gettysburg & Northern  Railroad Co. which the
Company began operating on February 20, 2001, and a decrease of $63,000 from the
remaining  operating  railroads.  The equipment leasing  operations had a $5,000
decrease  in  revenue  in the  period  resulting  from an  increase  in  revenue
generated from locomotive  leases of $145,000 offset by a decrease in revenue of
$150,000 from the utilization of its railcar fleet by non-affiliated railroads.

Operating Expense:

Operating  expense increased in the first six months 2001 by $616,000 or 10%, to
$6,496,000 from $5,880,000 in the prior year. The railroad operations  increased
operating  expense  by  approximately  $292,000  in the  period  which  included
$171,000 of increased  operating  expense  related to the  Gettysburg & Northern
Railroad  Co.  which the Company  began  operating  on February  20,  2001.  The
equipment leasing operations increased operating expense approximately $127,000,
primarily  from an  increase in  maintenance  costs and  increased  depreciation
expense  related to the  acquisition of railcars and  locomotives.  In addition,
corporate support services increased operating expense by approximately $197,000
in the period of which  approximately  $100,000  relates  primarily to increased
health insurance expenses provided to all subsidiary employees.
<PAGE>

Maintenance of way and structures  expense (MOW)  decreased  $28,000 to $766,000
from $794,000 in the same period last year, the majority of which relates to the
railroad operations.

Maintenance of equipment  expense (MOE) increased  $171,000,  or 25% to $855,000
from $684,000 in the same period last year. The equipment leasing operations had
an  increase  in MOE of  approximately  $54,000 as a result of  increased  costs
associated with maintaining the Company's railcar fleet. The railroad operations
had  increased  MOE of $78,000,  of which  $17,000  relates to the  Gettysburg &
Northern  Railroad Co. Most of the additional  increase in MOE from the railroad
operations  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 $38,000 from corporate support services.

Transportation  expense  (TRAN)  increased  $100,000,  or 6% to $1,711,000  from
$1,611,000 in the same period last year. The equipment leasing operations had an
increase  in TRAN of  approximately  $50,000  as a  result  of  increased  costs
associated  with  maintaining  the  Company's  locomotive  fleet.  The  railroad
operations  had  increased  TRAN of  $75,000,  including  an increase of $68,000
relating  to the  Gettysburg  &  Northern  Railroad  Co. In  addition,  TRAN was
decreased $15,000 from corporate support services.

General  &  administration  expense  (ADMIN)  increased  $300,000,  or  16%,  to
$2,132,000 from $1,832,000 in the same period last year. The railroad operations
had an increase of $140,000 in the period, which includes an increase of $44,000
from the Gettysburg & Northern Railroad Co. In addition, the railroad operations
had  increased  ADMIN  relating to outside legal fees for various  matters.  The
equipment leasing operations  decreased ADMIN approximately  $26,000 . Corporate
support  services  increased  ADMIN  expense by  approximately  $185,000  in the
period,  which included  approximately  $100,000 of increased  health  insurance
expense,  and also increased  payroll for support services needed as a result of
the growth of the Company's equipment and railroad properties.

Depreciation and amortization  expense increased  $73,000,  or 8%, to $1,032,000
from  $959,000  in the same  period  last  year.  Approximately  $24,000  of the
increase is related to the  Gettysburg  & Northern  Railroad  Co. The  equipment
leasing operations increased  depreciation expense approximately $49,000 related
to the acquisition of railcars and locomotives.

Other Income and Expense Income Statement Line Item Discussion:

In the first six months  2001  other  income and  expense  decreased  $67,000 to
$145,000  of income in the period  compared  to  $212,000  of income in the same
period last year. Included in this decrease is approximately  $79,000 of expense
the Company  incurred 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 $47,000 in the first
six months 2001 to  $354,000  compared to $401,000 in the same period last year.
This  decrease  is the result of  reduction  of  principal  balances  related to
equipment  financing in the absence of additional  financing  activities.  Other
interest  expense,  which  primarily  relates to the  financing of the Company's
railroad  operations,  increased  $11,000 in the period primarily related to the
financing of the Gettysburg & Northern Railroad which was purchased February 20,
2001.

In the first six months 2001 the Company had a  significant  gain on fixed asset
dispositions of approximately  $1,921,000  compared to an $3,000 loss on sale of
fixed  assets 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.

Impact of New Accounting Pronouncements:

The Company is not aware of any 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 second 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 six 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 June
30, 2001,  $2,272,000 was drawn on the credit line leaving an available  balance
of $2,728,000.

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
June 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 June 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
estimates  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.

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

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 six  months  2001  generated
positive cash flow of  $1,384,000.  Net cash from  operating  activities for the
first six months 2001 was generated from $1,074,000 of net income,  increased by
$1,032,000 of  depreciation  and  amortization,  decreased by a gain on sales of
property  and  equipment  of  $1,921,000,  an increase  in  accounts  payable of
$198,000,  a decrease of accounts receivable of $315,000,  an increase in income
tax  payable of  $752,000,  and a decrease  in net cash of $66,000 by changes in
various other operating assets and liabilities.

In the first six months  2001,  the Company  made  approximately  $2,013,000  of
capital expenditures improvements.  Capital expenditures included $1,604,700 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 spent  approximately  $105,000 to upgrade bridge  structures and the
majority of the remaining capital asset  expenditures of approximately  $193,000
relate to equipment purchases and railcar betterments

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.

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.

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

The  Annual  Meeting  of the  Shareholders  was  held  on June  26,  2001 at the
Company's  headquarters  in  Peoria,  Illinois.  All five  seats on the Board of
Directors were up for election at this meeting.  Directors Guy L.  Brenkman,  J.
Michael Carr,  Orvel L. Cox, Timothy F. Shea, and John S. Fulton were re-elected
for a one year term.

The vote totals for the Directors were as follows:

    Proposal                                         Votes For    Votes Withheld
--------------------------------------------------------------------------------

Nomination of Guy L. Brenkman
to the Board of Directors ..................         3,461,593        260,482

Nomination of Orvel L. Cox
to the Board of Directors ..................         3,508,774        213,302

Nomination of Timothy F.Shea
to the Board of Directors ..................         3,496,194        225,881

Nomination of John S. Fulton
to the Board of Directors ..................         3,505,994        216,081

Nomination of J. Michael Carr
to the Board of Directors ..................         3,505,923        216,152

In addition to the election of the Board of Directors, shareholders ratified the
appointment of McGladrey & Pullen,  LLP,  Certified Public  Accountants,  as the
Company's  independent  public  accountants  for the coming year with  3,575,222
votes for and 139,400 votes against.
<PAGE>

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.

Exhibit # 20.1  Notice of Annual  Meeting  and Proxy  Statement  used to solicit
votes for the Annual Meeting of Shareholders, held June 26, 2001.

Exhibit # 20.2 Form of Ballot used at the Annual Meeting on June 26, 2001.

Exhibit # 20.3 Annual  Report for 2000 sent to  shareholders  with the Notice of
Annual Meeting and Proxy Statement.

No reports were filed on Form 8-K during the first six 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)





       08/09/01                        /s/ Guy L. Brenkman
       --------                        -----------------------------------------
         DATE                          GUY L. BRENKMAN
                                       PRESIDENT & CEO



       08/09/01                        /s/ J. Michael Carr
       --------                        -----------------------------------------
         DATE                          J. MICHAEL CARR
                                       TREASURER & CHIEF
                                       FINANCIAL OFFICER