NOTICE OF ANNUAL MEETING TO BE HELD JUNE 18, 1997


                                PIONEER RAILCORP
                             Peoria, Illinois 61607




                              To the Stockholders:

The Annual Meeting of Stockholders will be held at Pioneer Railcorp's Corporate
Office, 1318 S.Johanson Road, Peoria, Illinois, on Wednesday, June 18, 1997,
commencing at 9:00 a.m. local time, for the purpose of considering and voting
on the following matters as described in the attached Proxy Statement:

-    To elect five directors for a one year term;

-    To  consider  and  act  upon  a  proposal  to  ratify  the  appointment  of
     independent public accountants for 1997;

-    Any other matters that may properly come before the meeting.

Only  stockholders of record at the close of business on April 30, 1997, will be
entitled  to  vote at  this  meeting.  A copy  of the  Company's  Annual  Report
containing  financial  data and a summary of operations for 1996 is being mailed
to the Company's stockholders with this Proxy Statement.

In order that your stock may be  represented  at the meeting in case you are not
personally  present,  please complete,  sign and date the enclosed  proxy/voting
instruction card and return it promptly in the accompanying addressed envelope.

By order of the Board of Directors.




/s/ Daniel A. LaKemper
----------------------
Daniel A. LaKemper
Secretary


May 12, 1997

<PAGE>

                                Pioneer Railcorp
                              1318 S. Johanson Road
                             Peoria, Illinois 61607
                                  309-697-1400


                                 Proxy Statement

This Proxy Statement and the accompanying  proxy will be sent to stockholders of
Pioneer  Railcorp on our about May 12, 1997, in connection with the solicitation
by the  Board of  Directors  of  proxies  to be used at the  Annual  Meeting  of
Stockholders of the Company to be held at Pioneer  Railcorp's  corporate office,
1318 S. Johanson Road,  Peoria,  Illinois  61607,  on Wednesday,  June 18, 1997,
commencing  at 9:00 a.m.  local  time.  The  Company's  Annual  Report for 1996,
including financial statements, is also included herein.

The record date for stockholders entitled to vote at the Annual Meeting is April
30, 1997. As of April 30, 1997, the Company had issued and outstanding 4,588,263
shares of common stock, of which 4,588,263 are entitled to one vote per share.

It is the Company's  policy that all proxies,  ballots,  and voting  tabulations
that identify  shareholders will be kept  confidential,  except where disclosure
may be required by applicable  law, where  shareholders  write comments on their
proxy cards, or where disclosure is expressly requested by a shareholder.

The Proxy

Any  person  giving a proxy has the power to revoke it at any time  before it is
voted,  upon written notice to J. Michael Carr,  Chief Financial  Officer of the
Company.

Any proxy cards returned without specification will be voted as to each proposal
in accordance with the recommendations of the Board of Directors.

The  Company  will bear the costs of  solicitation  of  proxies.  Following  the
mailing of proxy  soliciting  material,  proxies may be solicited by  directors,
officers and regular  employees of the Company in person or by telephone or fax.
The Company will also reimburse  persons holding stock for others in their names
or in those of their  nominees for their  reasonable  expenses in sending  proxy
material to their principals and obtaining their proxies.

Beneficial Ownership of Stock

There are no  shareholders,  as of March 26,  1997,  known by the  Company to be
beneficial  owners of more than 5% of its  outstanding  common  stock other than
Company directors and officers.



<PAGE>


Nominees for Election as Directors

Guy L.  Brenkman,  age 50,  Chairman of the Board of Directors  and President of
Pioneer  Railcorp and its  subsidiaries  was the incorporator of the Company and
has been a member of the Board of Directors  and  President of the Company since
its formation.  Mr.  Brenkman's  past business  experience  includes real estate
sales and management,  securities sales, and seven years of operational railroad
industry  experience  before  managing  the day to day  railroad  operations  of
Pioneer  in 1988.  Mr.  Brenkman,  acting as agent of the Issuer  conducted  the
public  offering of Pioneer  Railcorp,  which  raised its initial  capital,  and
secondary capital for expansions.

Orvel L. Cox, age 53,  Director,  also serves as same for each of the  Company's
subsidiaries and Superintendent of Transportation for same. Mr. Cox has 37 years
of active  railroading  experience  with 31 of those  years  working for Class I
railroads.  Mr. Cox has been a director  and officer of Pioneer  Railcorp  since
it's inception and has been involved in all phases of the development and growth
of the Company.

John S. Fulton,  age 63, Director,  was elected to the Board in 1993. Mr. Fulton
has 18 years  experience  in the real estate  business  concentrating  in retail
sales, real estate  development and appraising.  Mr. Fulton's previous positions
include  Industrial  Appraising  with Cole,  Layer Trumble of Dayton,  Ohio. Mr.
Fulton holds a BS degree in Public  Administration  from Bradley  University  in
Peoria, Illinois.

J. Michael Carr, age 33, Assistant Treasurer,  also serves as Treasurer for each
of the Company's subsidiaries and Chief Financial Officer for same. Mr. Carr has
been employed by the Company since March 1993.  Before joining the Company,  Mr.
Carr worked in public  accounting and banking for seven years,  most recently as
Controller for United Federal Bank. Mr. Carr is a CPA and holds a  BS-Accounting
from Illinois State University, Normal, Illinois.

Timothy  F.  Shea,  age 48, is  employed  by RE/MAX  and has been a real  estate
property  manager with RE/MAX since 1984. Mr. Shea has a BS-business  management
from Bradley University, Peoria, Illinois.

General Information Relating to the Board of Directors

The Board of Directors of the Corporation consists of five members, each elected
for a term of one year.  The board met a total of 2 times in 1996, at which time
all directors were present.

Compensation of Directors

Directors  of  the  Company  were  compensated   $1,000  in  1996  and  received
reimbursement for out of pocket expenses.

Committees

The Audit  Committee is the only  standing  committee of the Board of Directors.
The purpose of the Audit Committee is to recommend to the Board of Directors the
engagement of, and the fee to be paid to, the  independent  public  accountants.
The Audit  Committee  also reviews with the  independent  accountants  as deemed
necessary, the Corporation's  accounting policies,  conflict of interest policy,
internal control systems and financial  operations and reporting.  The committee
met once in 1996 and current members of this committee are John P. Wolk, John S.
Fulton, and Orvel L. Cox.

Security Ownership of Directors and Executive Officers

The following table sets forth information, as of March 26, 1997, the beneficial
ownership of all directors and officers of the Company as a group. These figures
include  shares of Common Stock that the  executive  officers  have the right to
acquire  within 60 days of March 26,  1997  pursuant  to the  exercise  of stock
options and warrants.
<PAGE>


Title of Class:  Common Stock ($.001 par value)

                                                     Beneficial      Percent
        Name Of Beneficial Owner                     Ownership       Of Class
-------------------------------------------          ----------      --------

Guy L. Brenkman (2) .......................          3,511,948         35.8%
Orvel L. Cox (3) ..........................            235,844          2.4%
Daniel A. LaKemper (4) ....................            144,393          1.5%
John P. Wolk (5) ..........................            144,000          1.5%
John S. Fulton (6) ........................             42,000           .4%
J. Michael Carr (7) .......................             67,716           .7%
Kevin Williams (8) ........................             11,100           .1%
                                                     ---------         -----
Directors and Executive
Officers as a Group: ......................          4,157,001         42.4%(1)

FOOTNOTES:

(1)  Based on 9,814,053 shares of Common Stock and Equivalents outstanding as of
     March 26, 1997.

(2)  Of the total number of shares shown as owned by Mr. Brenkman, 60,606 shares
     represent the number of shares Mr. Brenkman has the right to acquire within
     60 days upon the exercise of options granted under the Company's 1994 Stock
     Option  Plan,  and  1,740,800  shares  represent  the  number of shares Mr.
     Brenkman  has the right to acquire  within 60 days  through the exercise of
     Warrants.  Mr.  Brenkman owns all shares in joint tenancy with his wife. In
     addition 10,142 shares are held by Mr. Brenkman under the Pioneer  Railcorp
     Retirement  Savings Plan and 2,340 shares are held by Mr.  Brenkman's wife,
     in which he disclaims beneficial ownership.

(3)  Of the total  number of shares  shown as owned by Mr.  Cox,  66,666  shares
     represent  the number of shares Mr. Cox has the right to acquire  within 60
     days upon the exercise of options  granted under the  Company's  1994 Stock
     Option Plan, and 101,770 shares  represent the number of shares Mr. Cox has
     the right to acquire  within 60 days through the  exercise of Warrants.  In
     addition  2,538  shares  are held by Mr.  Cox  under the  Pioneer  Railcorp
     Retirement  Savings Plan.  Mr. Cox's shares are owned in joint tenancy with
     his wife. Mr. Cox and his wife own one Preferred  Share in the  Mississippi
     Central  Railroad  Co. 

(4)  Of the total number of shares shown as owned by Mr. LaKemper, 66,666 shares
     represent the number of shares Mr. LaKemper has the right to acquire within
     60 days upon the exercise of options granted under the Company's 1994 Stock
     Option Plan, and 40,000 shares  represent the number of shares Mr. LaKemper
     has the right to acquire  within 60 days  through the exercise of Warrants.
     In addition 727 shares are held by Mr. LaKemper under the Pioneer  Railcorp
     Retirement  Savings Plan. Mr.  LaKemper's shares are owned in joint tenancy
     with his wife.

(5)  Of the total  number of shares shown as owned by Mr.  Wolk,  22,000  shares
     represent the number of shares Mr. Wolk has the right to acquire  within 60
     days upon the exercise of options  granted under the  Company's  1994 Stock
     Option Plan, and 61,000 shares  represent the number of shares Mr. Wolk has
     the right to acquire within 60 days upon the exercise of Warrants. Mr. Wolk
     has 60,000  shares held in joint  tenancy  with his wife.  Mr. Wolk and his
     wife jointly own ten Preferred Shares of the Alabama Railroad Co.

(6)  Of the total number of shares shown as owned by Mr.  Fulton,  22,000 shares
     represent the number of shares Mr.  Fulton has the right to acquire  within
     60 days upon the exercise of options granted under the Company's 1994 Stock
     Option Plan,  and 10,000  shares  represent the number of shares Mr. Fulton
     has the right to acquire within 60 days upon the exercise of Warrants.

(7)  Of the total  number of shares shown as owned by Mr.  Carr,  66,666  shares
     represent the number of shares Mr. Carr has the right to acquire  within 60
     days upon the exercise of options  granted under the  Company's  1994 Stock
     Option Plan,  and 1,000 shares  represent the number of shares Mr. Carr has
     the right to acquire within 60 days through the exercise of Warrants.

(8)  Of the total number of shares shown as owned by Mr. Williams, 11,000 shares
     represent the number of shares Mr. Williams has the right to acquire within
     60 days upon the exercise of options granted under the Company's 1994 Stock
     Option Plan, and 100 shares represent the number of shares Mr. Williams has
     the right to acquire within 60 days through the exercise of Warrants.

There are no  shareholders  known by the  Registrant to be beneficial  owners of
more than 5% of its outstanding common stock other than Mr. Brenkman.

<PAGE>


Compensation of the Chief Executive Officer

Summary Compensation Table

                            Annual
                         Compensation               Long Term Compensation
                       ---------------    --------------------------------------
                                          Restricted
Name &                                      Stock                      Other
Position               Year    Salary       Award   Options/SARs    Compensation
--------               ----   --------    --------------------------------------

Guy L. Brenkman, CEO   1996   $350,098       ----      80,000        $ 4,750 (a)
                       1995   $310,546       ----      37,000        $ 4,500 (a)
                       1994   $227,609     $125,000   150,000        $ 4,500 (a)

(a) - Registrant's contribution to the Company's defined contribution plan.

Option/SAR Grants in Last Fiscal Year
<TABLE>

                                                                       Potential Realizable
                                                                        Value at Assumed
                                   % of Total                            Annual Rates
                                 Options Granted                         of Stock Price
                                  to Employees                            Appreciation
                         Options  in the Fiscal  Exercise Expiration    For Option Term
Name                     Granted      Year        Price      Date         5%       10%
----                     -------  -------------  -------- ----------   --------  --------
<S>                      <C>      <C>            <C>      <C>          <C>       <C>

Guy L. Brenkman - CEO    80,000        20%         $3.03   6/26/07     $133,874  $385,285
</TABLE>

Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values

                                                Number
                                           of Securities          Value of
                                             Underlying          Unexercised
                                             Unexercised         In-the-Money
                                               Options/          Options/SARs
                     Shares                 SARs at FY-End        At FY-End
                    Acquired      Value      Exercisable/        Exercisable/
Name               On Exercise  Realized    Unexercisable       Unexercisable
----------------   -----------  --------   ---------------     ---------------
Guy Brenkman-CEO       0           0       60,606/ 206,394     $51,515/$16,485

In December  1993,  the Company  entered into a five-year  executive  employment
contract with the Company's  president.  The five-year  agreement provides for a
base salary with annual  inflation  adjustments  based upon the  Consumer  Price
Index. Should the Company acquire or form additional railroads,  the base salary
will increase $25,000 for the acquisition of railroads of 125 miles or less, and
$50,000 for railroads over 125 miles. At December 31, 1996, the president's base
salary was  $329,230.  Should the  president's  employment  be  terminated,  the
contract  requires a lump sum payment  equal to three years of his then  current
salary. Should the president retire, he is entitled to a lump sum payment of one
year's salary.

Proposal 1 - Ratification of Appointment of Independent Public Accountants

The  Board  of  Directors,  upon  recommendation  of its  Audit  Committee,  has
appointed McGladrey & Pullen, LLP, Certified Public Accountants and Consultants,
as independent  public accountants of the Company with respect to its operations
for the year 1997, subject to ratification by the holders of common stock of the
Company. In taking this action, the members of the Board and the Audit Committee
considered  carefully  McGladrey's  performance  for the Company with respect to
services  performed  in the  years  1994-1996  and its  general  reputation  for
adherence to professional auditing standards.

The Board of Directors recommends a vote FOR this proposal.
<PAGE>



Stockholder Proposals

Stockholders  are  entitled  to submit  proposals  on  matters  appropriate  for
stockholder  action  consistent with  regulations of the Securities and Exchange
Commission.  In order for a stockholder  proposal for the 1998 Annual Meeting of
Stockholders to be eligible for inclusion in the  Corporation's  Proxy Statement
and form of proxy, it must be received by the Corporate  Secretary no later than
January 13, 1998.

Other Matters

The Board of  Directors  does not know of any  matters  to be  presented  at the
Annual Meeting other than as set forth above. However, if any other matters come
before the Meeting,  the proxies received  pursuant to this solicitation will be
voted  thereon in accordance  with the judgment of the person or persons  acting
under the proxies.


/s/ Pioneer Railcorp