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** **

| **UNITED STATES**                       | OMB APPROVAL                                        |
|-----------------------------------------|-----------------------------------------------------|
| **SECURITIES AND EXCHANGE  COMMISSION** | OMB Number: 3235-0416                               |
| **Washington,  D.C. 20549**             | Expires: April 30, 2003                             |
|                                    | Estimated average burden  hours per response: 32.00 |
| **FORM 10-QSB**                         |                                                |

** **

**(Mark One)**
| ý | **QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|--------|----------------------------------------------------------------------------------------|

**For the quarterlyperiod ended June 30, 2001**
| **o** | **TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT** |
|-------|----------------------------------------------------------------------|

**For the transitionperiod from _________________ to _________________**

**Commission filenumber: 0-30185**

| **Gasel Transportation  Lines, Inc.**                              |
|--------------------------------------------------------------------|
| (Exact name of small business issuer as specified in its  charter) |

 

| **Ohio**                                                                            | **31-1239328**                    |
|-------------------------------------------------------------------------------------|-----------------------------------|
| ****                                                                                |                                   |
| (State or other jurisdiction of incorporation or organization)                      | (IRS Employer Identification No.) |
|                                                                                |                              |
| **County Road 10, Route 4, Box 181A, Marietta, OH**                                 | **45750**                         |
|                                                                                     |                                   |
| (Address of principal executive offices)                                            | (zip code)                        |
|                                                                                |                              |
| **(740) 373-6479**                                                                  |
|                                                                                     |
| (Issuer's telephone number)                                                         |
|                                                                                |
|                                                                                     |
| (Former name, former address and former fiscal year, if changed  since last report) |

----

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**APPLICABLE ONLY TO CORPORATEISSUERS**

Statethe number of shares outstanding of each of the issuer's classes of commonequity, as of thelatest practicable date:         2,412,966 common shares, no par value

TransitionalSmall Business Disclosure Format (Check one): Yes o No ý

**INDEX**

| Consolidated Balance  Sheet at June 30, 2001 (Unaudited)                                                                                                                  |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                      |
| Statements  of Consolidated Income (Loss) for the Three Months Ended June 30, 2001 and  2000 (Unaudited) and  for the Six Months Ended June 30, 2001 and 2000 (Unaudited) |
|                                                                                                                                                                      |
| Statements  of Consolidated Cash Flows for the Six Months Ended June 30, 2001 and 2000  (Unaudited)                                                                       |
|                                                                                                                                                                      |
| Notes  to Consolidated Financial Statements                                                                                                                               |

 

**PART I — FINANCIALINFORMATION**

**Item 1. Financial Statements.**

GASEL TRANSPORTATIONLINES, INC.AND ITS SUBSIDIARYCONSOLIDATED BALANCE SHEET

|                                       | June  30, 2001              |       |
|--------------------------------------------|-----------------------------|------------|
|                                       | (Unaudited)                 |       |
|                                       |                             |       |
|                                       |                        |       |
| ASSETS                                     |                        |       |
|                                       |                        |       |
| Current  Assets                            |                        |       |
| Cash and Cash  Equivalents                 | $                           | 34,193     |   |
| Accounts  Receivable-Trade                 | 2,472,975                   |       |
| Inventory                                  | 185,387                     |       |
| Prepaid Expenses and  Other Current Assets | 229,360                     |       |
|                                       |                             |       |
|                                       | Total Current Assets        | 2,921,915  |   |
|                                       |                        |       |   |
| Property  and Equipment                    |                        |       |
| Land and Buildings                         | 1,051,842                   |       |
| Tractors                                   | 12,042,520                  |       |
| Trailers                                   | 5,676,000                   |       |
| Shop Equipment                             | 405,285                     |       |
| Office Equipment                           | 217,400                     |       |
|                                       |                             |       |
|                                       | 19,393,047                  |       |
| Less Accumulated  Depreciation             | 6,627,908                   |       |
|                                       |                             |       |
|                                       | Net Property and  Equipment | 12,765,139 |   |
|                                       |                        |       |
| Other  Assets                              |                        |       |
| Goodwill                                   | 350,417                     |       |
| Other                                      | 52,580                      |       |
|                                       |                             |       |
|                                       | Total Other Assets          | 402,997    |   |
|                                       |                             |       |
| TOTAL ASSETS                               | $                           | 16,090,051 |   |
|                                       |                             |       |

Seeaccompanying notes to consolidated financial statements.

 

GASELTRANSPORTATION LINES, INC.AND ITS SUBSIDIARYCONSOLIDATED BALANCE SHEET

|                                                                                                  | June  30, 2001              |       |
|-------------------------------------------------------------------------------------------------------|-----------------------------|------------|
|                                                                                                  | (Unaudited)                 |       |
|                                                                                                  |                             |       |
| LIABILITIES AND  STOCKHOLDERS' EQUITY                                                                 |                        |       |
|                                                                                                  |                        |       |
| Current  Liabilities                                                                                  |                        |       |
| Cash Overdraft                                                                                        | $                           | 79,963     |   |
| Notes Payable                                                                                         | 1,644,591                   |       |
| Accounts Payable-Trade                                                                                | 661,201                     |       |
| Accrued Contract  Labor, Interest and Other Expenses                                                  | 213,425                     |       |
| Current Portion of  Long Term Debt                                                                    | 3,603,245                   |       |
|                                                                                                  |                             |       |
|                                                                                                  | Total Current  Liabilities  | 6,202,425  |   |
|                                                                                                  |                        |       |
| Long  Term Debt                                                                                       | 8,373,824                   |       |
|                                                                                                  |                        |       |
| Deferred  Income Taxes                                                                                | 47,156                      |       |
|                                                                                                  |                             |       |
|                                                                                                  | Total Liabilities           | 14,623,405 |   |
|                                                                                                  |                        |       |   |
| Stockholders'  Equity                                                                                 |                        |       |
| Common Stock, no par  value, 3,000,000 shares authorized, 2,412,966 issued and 2,405,066  outstanding | 1,539,640                   |       |
| Additional Paid in  Capital                                                                           | 223,229                     |       |
| Retained Earnings  (Deficit)                                                                          | (222,848                    | )          |
| Less: Treasury Stock,  at cost, 7,900 shares                                                          | (17,833                     | )          |
| Less: Notes Receivable                                                                                | (55,542                     | )          |
|                                                                                                  |                             |       |
|                                                                                                  | Total Stockholders'  Equity | 1,466,646  |   |
|                                                                                                  |                             |       |
| TOTAL LIABILITIES AND  STOCKHOLDERS' EQUITY                                                           | $                           | 16,090,051 |   |
|                                                                                                  |                             |       |

Seeaccompanying notes to consolidated financial statements.

 

GASELTRANSPORTATION LINES, INC.AND ITS SUBSIDIARY STATEMENTS OF CONSOLIDATED INCOME (LOSS)

|                                         | Three  Months Ended |      | Six  Months Ended |      |
|----------------------------------------------|---------------------|-----------|-------------------|-----------|
|                                         | June  30,  2001     |      | June  30,  2000   |      | June  30,  2001 |   | June  30,  2000 |   |
|                                         | (Unaudited)         |      | (Unaudited)       |      | (Unaudited) |   | (Unaudited) |   |
|                                         |                     |      |                   |      |  |   |  |   |
|                                         |                |      |              |      |   |   |   |   |
| Revenues                                     |                |      |              |      |   |   |   |   |
| Freight Income                               | $                   | 4,989,226 |              | $         | 3,230,950 |   | $ | 9,937,577 |   | $ | 6,396,539 |   |
| Training School  Revenue                     | 223,581             |      | 90,071            |      | 450,789 |   | 176,757 |   |
|                                         |                     |      |                   |      |  |   |  |   |
|                                         | 5,212,807           |      | 3,321,021         |      | 10,388,366 |   | 6,573,296 |   |
|                                         |                |      |              |      |   |   |   |   |
| Cost of Revenue                              | 4,222,765           |      | 2,773,200         |      | 8,507,702 |   | 5,592,016 |   |
|                                         |                     |      |                   |      |  |   |  |   |
|                                         |                |      |              |      |   |   |   |   |
| Gross Profit                                 | 990,042             |      | 547,821           |      | 1,880,664 |   | 981,280 |   |
|                                         |                |      |              |      |   |   |   |   |
| Operating  Expenses                          |                |      |              |      |   |   |   |   |
| Garage Expenses                              | 74,643              |      | 70,220            |      | 147,616 |   | 147,599 |   |
|                                         |                |      |              |      |   |   |   |   |
| General and  Administrative Expenses         | 530,220             |      | 269,604           |      | 1,064,371 |   | 713,106 |   |
|                                         |                     |      |                   |      |  |   |  |   |
|                                         | 604,863             |      | 339,824           |      | 1,211,987 |   | 860,705 |   |
|                                         |                |      |              |      |   |   |   |   |
| Operating Income                             | 385,179             |      | 207,997           |      | 668,677 |   | 120,575 |   |
|                                         |                |      |              |      |   |   |   |   |
| Other  Income (Expense)                      |                |      |              |      |   |   |   |   |
| Interest Income                              | 1,517               |      | 8,696             |      | 1,589 |   | 8,896 |   |
| Other Income                                 | 20,529              |      | 18,772            |      | 78,966 |   | 19,553 |   |
| Interest Expense                             | (334,426            | )         | (220,578          | )         | (607,378 | ) | (421,353 | ) |
|                                         |                     |      |                   |      |  |   |  |   |
|                                         | (312,380            | )         | (193,110          | )         | (526,823 | ) | (392,904 | ) |
|                                         |                |      |              |      |   |   |   |   |
| Income (Loss) Before  Tax Provision          | 72,799              |      | 14,887            |      | 141,854 |   | (272,329 | ) |
|                                         |                |      |              |      |   |   |   |   |
| Provision for Income  Taxes                  | 25,000              |      | 5,000             |      | 48,000 |   | (89,000 | ) |
|                                         |                     |      |                   |           |  |   |  |   |
| Net Income (Loss)                            | $                   | 47,799    |              | $         | 9,887 |   | $ | 93,854 |   | $ | (183,329 | ) |
|                                         |                     |      |                   |      |  |   |  |   |
| Basic Earnings Per  Share                    | $                   | .020      |              | $         | .004 |   | $ | .039 |   | $ | (.082 | ) |
|                                         |                     |      |                   |      |  |   |  |   |
| Diluted Earnings Per  Share                  | $                   | .019      |              | $         | .004 |   | $ | .038 |   | $ | (.077 | ) |
|                                         |                     |      |                   |      |  |   |  |   |
| Weighted Average  Common Shares Outstanding: |                |      |              |      |   |   |   |   |
|                                         | Basic               | 2,405,066 |              | 2,230,066 |   | 2,405,066 |   | 2,230,066 |   |
|                                         |                     |      |                   |      |  |   |  |   |
|                                         | Diluted             | 2,465,066 |              | 2,373,399 |   | 2,465,066 |   | 2,373,399 |   |
|                                         |                     |      |                   |      |  |   |  |   |

 

Seeaccompanying notes to consolidated financial statements.

 

GASELTRANSPORTATION LINES, INC.AND ITS SUBSIDIARY STATEMENTS OF CONSOLIDATED CASH FLOWS

|                                                                           | Six  Months Ended                                                   |      |
|--------------------------------------------------------------------------------|---------------------------------------------------------------------|-----------|
|                                                                           | June  30, 2001                                                      |      | June  30, 2000 |   |
|                                                                           | (Unaudited)                                                         |      |  (Unaudited) |   |
|                                                                           |                                                                     |      |  |   |
| Cash  Flows From Operating Activities                                          |                                                                |      |   |   |
| Net Income (Loss)                                                              | $                                                                   | 93,854    |   | $ | (183,329 | ) |
| Adjustments to  reconcile net income to cash provided by operating activities: |                                                                |      |   |   |
|                                                                           | Deferred Taxes                                                      | 48,000    |   | (89,000 | ) |
|                                                                           | Depreciation and  Amortization                                      | 1,174,114 |   | 880,748 |   |
|                                                                           | (Increase) Decrease  in:                                            |      |   |   |   |
|                                                                           | Accounts  Receivable-Trade                                          | (992,335  | ) | (194,776 | ) |
|                                                                           | Inventory                                                           | (15,625   | ) | 2,338 |   |
|                                                                           |                                                                |      |   |   |
|                                                                           | Prepaid Expenses and  Other Assets                                  | (51,351   | ) | (122,839 | ) |
|                                                                           |                                                                |      |   |   |
|                                                                           | Increase (Decrease)  in:                                            |      |   |   |   |
|                                                                           | Accounts Payable and  Accrued Expenses                              | 455,128   |   | 87,722 |   |
|                                                                           |                                                                     |      |  |   |
|                                                                           | Net Cash Provided by  Operating Activities                          | 711,785   |   | 380,864 |   |
|                                                                           |                                                                |      |   |   |   |
| Cash  Flows From Investing Activities                                          |                                                                |      |   |   |
| Purchases of Property  and Equipment                                           | (162,866                                                            | )         | (42,489 | ) |
| Repayment of Accounts  Receivable- Affiliate                                   | –                                                              |      | 61,356 |   |
|                                                                           |                                                                |      |   |   |
| Proceeds from Sale of  Equipment                                               | –                                                              |      | – |   |
| Purchase of Securities                                                         | –                                                              |      | – |   |
|                                                                           |                                                                     |      |  |   |
|                                                                           | Net Cash Provided  (Used) by Investing Activities                   | (162,866  | ) | 18,867 |   |
|                                                                           |                                                                |      |   |   |
| Cash  Flows From Financing Activities                                          |                                                                |      |   |   |
| Increase (Decrease) in  Cash Overdraft                                         | (662,908                                                            | )         | – |   |
| Line of Credit (Net)                                                           | 362,298                                                             |      | 334,616 |   |
| Proceeds from Long  Term Borrowing                                             | 655,789                                                             |      | – |   |
| Proceeds from Capital  Lease Agreements                                        | 142,136                                                             |      | – |   |
| Repayment of Notes  Receivable                                                 | 9,377                                                               |      | – |   |
| Payment for Stock  Issuance Costs                                              | –                                                              |      | (3,785 | ) |
| Principal Payments on  Long Term Borrowing                                     | (839,375                                                            | )         |  (663,748 | ) |
| Principal Payments  Under Capital Lease Agreements                             | (189,779                                                            | )         | (79,156 | ) |
|                                                                           |                                                                     |      |  |   |
|                                                                           | Net Cash Provided  (Used) by Financing Activities                   | (522,462  | ) | (412,073 | ) |
|                                                                           |                                                                |           |   |  |   |
| Net Increase  (Decrease)in Cash                                                | 26,457                                                              |      | (12,342 | ) |
|                                                                           |                                                                |      |   |   |
| Cash & Cash  Equivalents-Beginning of Period                               | 7,736                                                               |      | 20,612 |   |
|                                                                           |                                                                     |      |  |   |
| Cash & Cash  Equivalents-End of Period                                     | $                                                                   | 34,193    |   | $ | 8,270 |   |
|                                                                           |                                                                     |      |  |   |
|                                                                           |                                                                |      |   |   |
|                                                                           |                                                                |      |   |   |
| Supplemental  Disclosures:                                                     |                                                                |      |   |   |
|                                                                           |                                                                |      |   |   |
|                                                                           | Interest Paid                                                       | $         | 512,817 |   | $ | 421,353 |   |
|                                                                           |                                                                     |      |  |   |
|                                                                           | Non-Cash Investing and  Financing Activities                        |      |   |   |   |
|                                                                           |                                                                |      |   |   |
|                                                                           | Purchases of Property  and Equipment with Proceeds of Notes Payable | $         | 1,244,530 |   | $ | 2,353,245 |   |
|                                                                           |                                                                     |      |  |   |
|                                                                           | Payoff Various Notes  With Proceeds from New Financing              | $         | 2,565,632 |   | $ | 849,234 |   |
|                                                                           |                                                                     |      |  |   |
|                                                                                |                                                                     |           |  |  |  |  |  |  |  |  |

Seeaccompanying notes to consolidated financial statements.

 

GASELTRANSPORTATION LINES, INC.AND ITS SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

**NOTE 1 - BASIS OF PRESENTATION**

The accompanying unaudited consolidatedfinancial statements of Gasel Transportation Lines, Inc. and its subsidiary (the“Company”) have been prepared in accordance with generally accepted accountingprinciples for interim financial information and with the instructions to Form10-QSB and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotesrequired by generally accepted accounting principles for complete financialstatements.  In the opinion ofmanagement, all adjustments considered necessary for a fair presentation(consisting of normal recurring accruals) have been included.  The preparation of financial statements inconformity with generally accepted accounting principles requires management tomake estimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenues and expensesduring the reporting period.  Actualresults could differ from those estimates. Operating results for the six month period ended June 30, 2001 are notnecessarily indicative of the results that may be expected for the year endingDecember 31, 2001.  For furtherinformation, refer to the consolidated financial statements and footnotesthereto included in the Company’s Report on Form 10-SB for the year ended December31, 2000.

**Item 2.  Management’sDiscussion and Analysis of Financial Condition and Results of Operations.**

Overview.

The following discussion should be readin conjunction with the Financial Statements, including footnotes, containedherein.  The discussion is qualified inits entirety by the foregoing. Historical results of operations and the percentage relationships amongany amounts in the Financial Statements, and any trends that may appear to beinferable therefrom, should not be taken as necessarily indicative of trends ofoperations or results of operations for any future periods.

The discussion contains forward-lookingstatements.  These forward-lookingstatements involve risks and uncertainties, and the cautionary statements setforth below identify important factors that could cause actual results todiffer materially from those predicted in the forward-looking statements.  These factors include, but are not limitedto, adverse changes in general economic conditions, including adverse conditionsto the companies that are the Company’s core of shippers, fuel prices, drivercosts, the ability to have enough drivers to utilize the Company equipment, theability to finance equipment, interest rates, the ability to borrow workingcapital, and other factors.

The interim financial information for thequarters and six months periods ended June 30, 2001, and June 30, 2000, areunaudited.  The statements includedreflect all adjustments that the Company considers necessary for a fairpresentation of the results of operations for the interim periods covered andof the financial condition of the Company at the date of the interim balancesheet.  The results of the interimperiods are not necessarily indicative of the results for the entire year.

Three Months Ended June30, 2001.

Freight revenues for the three monthsended June 30, 2001, were $4,989,226, an increase of $1,758,276 (54.4%) fromthe $3,230,950 in revenues for the second quarter of 2000.  The increase in freight revenues was basicallyattributable to the Company having acquired Eagle Transportation Services, Inc.(“Eagle”) effective January 2001, which included the purchase of 10 tractors,and its brokerage and logistics business, including 8 owner-operators whoformerly worked for Eagle.  Revenuesincreased from all of these sources, plus better utilization of Company ownedequipment on business generated from the Eagle customer base.

Training school revenues for the secondquarter of 2001 were $223,581, a 148.2% increase from the second quarter 2000revenues of $90,071.  Training schoolrevenue increases were due to having opened a school in Lima, Ohio since thesame period last year, increased tuition costs to the students and an overallincrease in the number of students.

Equipment operating expenses increased inthe second quarter of 2001 to $4,222,765 from $2,773, 200 for the secondquarter of 2000.  This was an increaseof $1,449,565 (52.3%) from the prior year. The increase in expenses was primarily due to the increase in the amountof equipment being operated and the added costs associated with operating theformer Eagle operations as a division of the Company.  Operating expenses were also up, going to $604,863 for the secondquarter of 2001 compared to $339,824 for the like period of 2000, which is anincrease of $265,039 (80.0%).

Operating income for the second quarterof 2001 was $385,179, an increase of $177,182 (85.2%) from the $207,997 for thesecond quarter of 2000.  Operatingincome as a percentage of total revenues went up from 6.3% in the quarterlyperiod ended  June 30, 2000, to 7.4% forthe same period in 2001.  Contributingfactors to the improvement were primarily the reduced cost of diesel fuel resultingfrom various cost control measures and increased revenues per tractor andprofits from brokered freight, which were partially offset by increased generaland administrative costs on both an absolute basis and as a percentage of totalrevenue.

The net results were that the Company hadnet income after provision for income taxes for the second quarter of 2001 of$47,799 compared to $9,887 for the second quarter of 2000, which is an increaseof $37,912 (383.5%) from the prior year.

Six months Ended June30, 2001.

Freight revenues for the six months endedJune 30, 2001, increased $3,541,038 (55.4%) to $9,937,577 from $6,396,539 atthe end of the six months period ending June 30, 2000.  Training school revenues for the six monthsended June 30, 2001, increased $274,032 to $450,789 (155.0%) from $176,757 forthe six months period ended June 30, 2000. The increase in freight revenues was, as stated for the quarterlyresults, basically attributable to the Eagle acquisition and the attendantincreases in operating equipment, brokerage revenues from Eagle’s brokerageoperation, and increased revenues per mile resulting from better rates obtainedfrom Eagle’s customer base and increased revenues from the contract customerbase of  Company prior to the Eagleacquisition resulting from an across-the-board increase in freight rates thatwas instituted in January 2001**.**

Training school revenue increases weredue to the additional school, increased tuition costs and increased numbers ofstudents.

Equipment operating expenses increased inthe six months period ended June 30, 2001, by $2,915,686 (52.1%) to $ 8,507,702from $5,592,016 for the same period in 2000. The increase in expenses was basically proportional to the increase inrevenues, which as stated for the 2nd quarter results, was primarilydue to the increase in the amount of equipment being operated, and increasedoperations with the attendant expenses associated therewith.  Operating expenses increased $351,282(40.8%) to $1,211,987 for the six months ended June 30, 2001, compared to$860,705 for the same period of 2000. The increase was entirely attributable to the increases in the  general and administrative costs, mostof  which is attributable to theoperation of the Eagle division.

Operating income for the six months endedJune 30, 2001, was $668,677, an increase of $548,102 (454.6%) from $102,575 forthe same period in 2000.  Operatingincome as a percentage of total revenues went up from 1.8% for the six monthsending June 30, 2000, to 6.4% for the same period in 2001.  The factors for the increase for this periodwere basically the same as for the quarterly period, being increased fuelefficiency, increased revenues per mile, and higher profit margins frombrokering freight, reduced in part by the increased general and administrativecosts.

The net results were that the Company hada net profit after provision for income taxes for the six months period endedJune 30, 2001, of  $93,854 compared to anet loss of  ($183,329) for the sameperiod of 2000, which is an increase of $277,183 from the prior year.

Capital and Liquidity.

The significant turnaround in operationsfrom the year end 2000, when the Company had a net loss after provision forincome taxes of $1,045,402,  to the sixmonths ended June 30, 2001, when the Company had income of  $93,854, has helped in many ways to reduce thecapital deficit from year end.  Theearnings helped to increase cash flow from operations from the prior year, andthe turnaround  helped the Company torefinance some equipment and to obtain new bank financing.  Cash at the end of the six months periodending June 30, 2001, was $34,193, compared to $8,270 for 2000.  More significantly, the cash overdraft wasreduced by $662, 908 to $79,963.

However, the Company is still in need ofcapital to build its working capital so that it can pay its bills timely andcan operate without dealing with constant cash flow problems.

The Company continues to work with itslong term lenders to reach solutions to its capital needs.  It has also sought ways of generating equitycapital, although it has not settled on a solution.  Internally, the Company needs to continue to operate at a profit,and to continue to improve its operating efficiencies.

Some recent steps to improve theseefficiencies has been to close the Florida owned terminal and the Paulsboro,New Jersey rented terminal.  Both ofthese were cash drains, and their closings should substantially stop the cashcosts associated with their operations. Additionally, the equipment that was formerly domiciled in Florida hasbeen moved to Ohio, where it should be able to operate more profitably.  Changes in operations and dispatching arehoped to be able to increase revenues per mile, and the Company is constantlylooking for ways to improve operating efficiencies.  While policies instituted last year to increase the averagerevenue miles per tractor and to decrease the amount of deadhead miles (milestraveled without carrying freight) have helped to increase profits, there isstill room for further improvement. Reduced fuel prices have also helped theCompany to operate profitably.  TheCompany is hopeful that fuel prices will continue to get lower, or at leastremain constant, so that it can continue its profitable operations.

The transportation industry is stillfeeling the pains of  the economicslowdown in the United States for the past year, and many companies have goneout of business during that time.  Thishas resulted in an excess of used equipment that has reduced the market valueof the Company equipment, which makes it more difficult to refinance it.  However, the Company is still hopeful ofbeing able to reach new arrangements with its long term equipment lenders tohelp alleviate the monthly cash flow drain to them.

**PART II — OTHERINFORMATION**

**Item 6. Exhibits and Reports on Form 8-K**

| (B) Reports on Form 8-K                                                           |
|-----------------------------------------------------------------------------------|
|                                                                              |
| There were no reports filed on Form 8-K during the quarter  ending June 30, 2001. |

**SIGNATURES**

Inaccordance with the requirements of the Exchange Act, the registrant causedthis report to be signed on its behalf by the undersigned, thereunto dulyauthorized.

|   |                 |   | Gasel Transportation Lines, Inc        |
|--------|----------------------|--------|----------------------------------------|
|   |                 |   | (Registrant)                           |
|   | Date August 14, 2001 |   | /s/ Michael J. Post                    |
|   |                      |   |                                        |
|   |                 |   | (Signature)*Michael J. Post, President |
|   | Date                 |   |                                   |
|   |                      |   |                                        |
|   |                 |   | (Signature)*                           |
|   |                 |   |                                   |