2

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB
(Mark One)
(X)  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

For the Fiscal Year Ended December 31, 2002

                                       OR

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


                          Commission File No. 000-28583

                       NEW YORK REGIONAL RAIL CORPORATION
                       ----------------------------------
                 (Name of Small Business Issuer in Its Charter)

           Delaware                                         13-3881577
   ---------------------------                        ------------------------
   (State or Other Jurisdiction of                         (IRS Employer
   Incorporation or Organization)                        Identification No.)

                     4302 First Avenue, Brooklyn, NY, 11232
                    (Address of Principal Executive Offices)


Registrant's telephone number, including Area Code: (718) 788-3690

Securities registered pursuant to Section 12(b) of the Act: None

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

                         Common Stock, par value $.0001
                                (Title of Class)

Check whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the 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.
                                      X
                                     YES        NO

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of the Registrant's   knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]

The Company's revenues for the most recent fiscal year were $5,431,871.

The aggregate market value of the voting stock held by non-affiliates of the
Company, (138,759,620 shares) based upon the closing price of the Company's
Common Stock on March 31, 2003 was approximately $ 6,937,981.

As of March 31, 2003 the Company had 182,822,876 issued and outstanding shares
of common stock.

<PAGE>

                                     PART I

Item 1. Description of Business.

BUSINESS DEVELOPMENT

 The Company was incorporated in Delaware on April 19, 1994 under the name Best
Sellers Group, Inc. Between April 1994 and May 1996 the Company was involved in
a number of businesses, all of which have since been discontinued.

 In May 1996 the Company acquired the entire issued and outstanding common stock
of New York Regional Rail Corporation ("NYRR"), a Delaware Corporation, in
consideration for the issuance of approximately 87,000,000 shares of the
Company's common stock. NYRR is a short-line railroad, which transports freight
via barges across New York Harbor. As a result of this acquisition, the Company
changed its name to "New York Regional Rail Corp". NYRR currently owns 93% of
New York Cross Harbor Railroad, Inc. ("NYCH"), a corporation which transports
freight via barges across New York Harbor, and a 95% interest in CH Proprietary,
Inc. ("CHP"), a corporation which owns substantially all of the equipment used
by NYCH in conducting its rail/barge freight transportation operation.

 In April 1999, in an arm's length transaction, the Company purchased a 51%
interest in JS Transportation, Inc. ("JST"), in exchange for 5,000,000 shares of
unregistered common stock, and escrowed an additional 1,000,000 shares to settle
outstanding JST liabilities. JST, which was incorporated in New Jersey in 1998,
is a regional trucking company in the business of short-haul freight
transportation and landfill management. Unless otherwise indicated, any
reference to the Company also includes NYCH, CHP and JST. As of March 21, 2003,
160,000 of shares escrowed had been used to satisfy JST liabilities of $175,300
to non-affiliates of the Company. Once the parties determine that the
liabilities no longer exist or upon acquisition of the remaining 49% of JST, any
remaining shares will be returned to treasury. There is no time limit on the
events of return.

 The number of shares that the Company issued for the 51% interest in JST was
based upon the following considerations:

               (1) the market value of the Company's common stock;
               (2) the capital contributed to JST by JST's shareholders; and
               (3) JST's monthly revenues.

  The Company acquired only 51% of JST because the Company wanted Todd Sage,
JST's General Manager, to retain a financial interest in JST for a period of
time following the acquisition. Although the Company does not have any formal
agreements concerning the acquisition of additional shares in JST, the Company
can acquire the remaining 49% interest in JST for 7,000,000 shares of the
Company's common stock. At its next annual meeting the Company may request its
shareholders to approve the acquisition of the remaining 49% interest in JST.

          The following persons own the remaining 49% of JST:

               Todd Sage                         14.7%
               Darryl Caplan                      9.6%
               John Marsala                       9.0%
               Michael Hausman custodian
               UGMA for Daniel Marsala            8.4%
               Aspen Gold Corp.                   7.3%

                                       2

<PAGE>

Todd Sage is JST's general manager. Darryl Caplan was an officer and director
and corporate counsel of the Company until January 2002. John Marsala is the
beneficial owner of more than 5% of the Company's common stock and has the right
to cast a majority vote of the shares, which are entitled to vote at any meeting
of the Company's shareholders. Mr. Marsala was the largest shareholder of JST
and owned approximately $300,000 of the Company's convertible notes, which were
issued between December 1997 and January of 1999 and were purchased for cash.
John Marsala disclaims all beneficial interest in Michael Hausman custodian UGMA
for Daniel Marsala, his son other than that which may be attributed to him by
operation of law. Aspen Gold Corp. is not affiliated with the Company.

 In February 2000, the Company purchased a 100% interest in OSK Capital I Corp.
("OSK") in exchange for 480,000 shares of common stock and $18,000 in cash. The
Company's current business plan for OSK is to seek, investigate and, if
warranted, acquire one or more properties or businesses, and to pursue other
related activities intended to enhance shareholder value. The acquisition has
been accounted for as a purchase and accordingly the acquired assets and
liabilities have been recorded at their estimated fair values. No financial
information is presented, as the operations of OSK are not material.

 In September 2000, JST acquired the assets of MHT Incorporated ("MHT"), in an
arm's length transaction. MHT is a small regional trucking company engaged in
waste transportation. MHT's assets included three tractors and two trailers and
a customer base generating over $500,000 in annual sales. The assets of MHT were
acquired for 200,000 restricted shares of the Company's common stock and the
assumption of liabilities in the amount of $156,000.

 The Company's headquarters are located at 4302 First Avenue, Brooklyn, NY,
11232. The Company's telephone number is (718) 788-3690 and its fax number is
(718) 788-4462.


BUSINESS OF REGISTRANT

   RAILROAD OPERATIONS

 The Company is part of the national railroad system and holds a Surface
Transportation Board certificate of convenience and necessity for the movement
of rail freight by rail barge across New York Harbor. The Company operates from
its Greenville Terminal Yard in Jersey City, New Jersey, and Bush Terminal Yard
in Brooklyn, New York. On the West Side of New York Harbor, the Company
exchanges (interchanges) rail cars with the Canadian Pacific ("CP"), CSX
Transportation ("CSX") and Norfolk Southern ("NS") railroads at Conrail Shared
Assets Operation's ("CSAO") Oak Island interchange yard, New Jersey. On the East
Side of New York Harbor, the Company interchanges rail cars with CP and the New
York and Atlantic Railroad ("NYA") at Bayridge Junction interchange yard and the
65th Street Intermodal Yard, Brooklyn, NY.

The Company has historically functioned as a transfer station for freight onto
and from the national railroad system. Most of the Company's "bridge traffic"
(defined below) or "transfer" freight arrives at its Greenville yard and is
destined for points East. The primary commodities that the Company "transferred"
from West to East, during 2002 and 2001 were forest products, such as paper and
lumber, plastic resins, and gases, such as propane and freon. The chief
commodities that the Company "transferred" from East to West, during 2002 and
2001 were scrap products, such as scrap metal and recycled paper. For the year
ended December 31, 2002, cocoa shipments accounted for approximately 10% of
NYCH's revenue and were the only commodity that "originated" from NYCH's
facilities. Cocoa arrives at the New York ports from the producing countries and
is stored for future deliveries.

Beginning in April 2000, the Company changed the focus of its rail operations.
The Company began a multi-phase project that included site clearance, paving and
lighting to expand and fully utilize the resources at its Greenville Yard.
Previously the Company was only utilizing approximately 7 acres, which contain
the Company's track, leaving 15-acres of property unused.

                                       3

<PAGE>

This project was completed in March 2001 and upon completion, the Company began
expanding its terminal facility for transloading, warehousing and distribution
activities. Transloading involves the unloading of freight from rail cars onto
trucks for delivery or the loading of freight from trucks onto rail cars for
shipment. The Company intends to warehouse commodities, expected to be
distributed within 30 days from arrival.


         Management chose to change the Company's focus because:

1.       it provided the most advantageous use of the Company's resources;
2.       conventional rail growth is facilitated by manufacturing,  mining or
         agricultural activities that occur in a close geographic proximity to
         rail. (These activities are not present in the NYC metropolitan region,
         so the Company studied alternatives which would allow the growth in its
         rail segment);
3.       by creating new  "origination"  business,  the Company would have the
         potential for a strong stable foundation to grow the other areas of its
         business;
4.       such new focus would decrease the Company's traditional dependency on
         other railroads to provide the Company its revenue;
5.       such long-term, built-in business would make the Company less
         susceptible to economic and market forces;
6.       creation of this type of business would facilitate assimilation of JST;
7.       with JST's involvement, the Company would have a complete turn-key
         solution for its customer's potential needs; and
8.       such new focus would provide an opportunity for revenue growth for both
         JST and NYCH.

 In March 2001, the Company began to set-up transload areas in its Greenville
Yard and signed its first agreement, with Unified Services Group, for the
transload of bio-solids in June 2001. In December 2001, the Company signed an
additional agreement with Transload Services, L.L.C for the transload, warehouse
and distribution of structural steel products. In March 2002, the Company began
to receive carloads of steel for distribution. Additionally, in March 2002, the
Company began the transloading and shipment of additional containerized freight.
In June 2002, the Company entered into a long-term agreement, with Balfour
Beatty, for the storage and shipment of structural steel for bridge
construction. In September 2002, the Company renewed its multi-year agreement
for the transportation of bio-solids. These transload areas allow the Company to
utilize its Greenville Yard more productively and engage the Company's trucking
subsidiary, JST, in the operations. The Company anticipates it will be able to
continue to grow this facility and to duplicate its successes at its yard in
Brooklyn. (See Item 6 - Management's Discussion and Analysis or Plan of
Operation for further details).

         The Company now has four distinct areas of business:

     1) Bridge Traffic. At both its terminals, the Company receives rail cars,
     which are loaded onto float barges, and are ferried by tugboat between
     Greenville Terminal (NJ) and Bush Terminal Yard (NY).

          a) Westbound Freight: Railcars arrive either from local customers or
          from the Bayridge Junction interchange yard. They are then loaded onto
          float barges, and are ferried by tugboat to Greenville Terminal where
          they are sorted for local New Jersey delivery or are interchanged with
          CSAO for destinations on the national rail network.

          b) Eastbound Freight. When the railcars arrive at the Greenville Yard
          from the national rail network they are loaded onto float barges, and
          are ferried by tugboat to Bush Terminal where they are sorted for
          local New York delivery or are interchanged with the NYA for
          destinations in Long Island or the Northeast.

                                       4

<PAGE>

     2) Transload Operations.  At both its terminals,  the Company receives rail
     cars that are destined for transload operation.

          a) Greenville Operations:

               i) Bio-solids. Rail cars arrive at Greenville Terminal and are
               set aside on holding tracks. Trucks carrying loaded containers
               from various locations throughout the City of New York arrive at
               the Greenville facility where the containers are loaded onto the
               rail cars by means of a forklift. Empty containers are then
               placed on the trucks for reloading. Once the rail cars are loaded
               they are interchanged with CSAO for destinations on the national
               rail network.

               ii) Steel. Loaded rail cars arrive at Greenville Terminal and are
               set aside on warehouse tracks. Trucks are loaded with the steel
               using a crane and commence local delivery. Steel is sometimes
               warehoused for future delivery. Once the rail cars are emptied
               they are interchanged with CSAO for their reload destination.

               iii) Other containerized freight.

                    (1) Empty rail cars. Rail cars with empty containers arrive
                    at Greenville where they are placed on holding tracks.
                    Trucks with loaded containers are unloaded directly onto the
                    rail cars. The empty containers are then placed on the
                    trucks for reloading. Once the rail cars are completely
                    loaded they are interchanged for final shipping.

                    (2) Loaded rail cars. Rail cars with loaded containers
                    arrive at Greenville where they are placed on holding
                    tracks. The loaded containers are placed on empty trucks
                    which then set out for their local deliveries. Once the rail
                    cars are emptied they are interchanged with CSAO for their
                    reload destination.

          b) Bush Terminal:

               i) Pipe. Loaded rail cars arrive at Bush Terminal and are set
               aside on warehouse tracks. Trucks are loaded with the pipe using
               a crane and commence local delivery. Pipe is sometimes warehoused
               for future delivery. Once the rail cars are emptied they are
               interchanged with CSAO for their reload destination.

               ii) Scrap Metal. Empty rail cars arrive at Bush Terminal where
               they are placed on holding tracks. Truckloads of scrap metal are
               unloaded into the waiting rail cars by means of a magnetic crane.
               Once the rail cars are loaded they are interchanged for final
               shipping.

               iii) Lumber. Loaded rail cars arrive at Bush Terminal and are set
               aside on warehouse tracks. Using a forklift, trucks are loaded
               with lumber in order to commence local delivery.

 3) Shipside & Dockside. The Company can, by means of its float barges, anchor
shipside or dockside for receipt or delivery of various types of cargo. If the
cargo is destined for local delivery it can then be ferried to the appropriate
terminal for offloading or transported to its final destination. During 2002,
the Company used the shipside method of transfer for large electrical
transformers, structural steel for a multi-year contract with Balfour Beatty and
regularly uses the dockside method for cocoa.

                                       5

<PAGE>

          a) Cocoa- The Company is the "originating" railroad for the majority
          of the country's supply of Cocoa. Empty rail cars arrive in Greenville
          where they are loaded onto float barges for ferrying to the Brooklyn
          docks at Redhook. At Redhook, the Company in conjunction with American
          Stevedoring and the Port Authority of New York & New Jersey have
          developed an efficient system whereby the Company's float barges are
          docked pier-side. Then, using a system of ramps or conveyor belts, the
          beans are loaded directly from the warehouses. Once loaded they are
          ferried back to Greenville Terminal and are placed on the national
          rail network for final destination across the country. During the year
          ended December 31, 2002, cocoa shipments accounted for approximately
              10% of NYCH's revenue.

          b)Bridge Steel- The Company is the "destination" railroad for
oversized steel beams and other heavy steel structures used in the
re-construction of a bridge over the Housitanic River in Connecticut. Railcars
laden with oversized and over weight structural steel are received at the
Company's Greenville Yard facility by rail from the foundry. These railcars are
stored until needed at the project. Then they are loaded on to the Company's
carfloat and ferried to a ship anchored in the Harbor for loading and
transportation to the project site.

     4) Local Deliveries. At both its Greenville and Bush Terminal facilities
     the Company receives rail cars destined for its local customers in
     Brooklyn. Rail cars received in Greenville are transported via float barge
     to Bush Terminal. From Bush Terminal, all rail cars are delivered directly
     to the Company's rail served customers.


     CURRENT BUSINESS

 Since Norfolk Southern and CSX Transportation acquired Conrail's operations in
June 1999, both NS and CSX have used the Company more frequently to transport
freight between New Jersey and the New York/Long Island areas. The Company
believes this trend will continue as the Company continues to prove it has a
fast and reliable delivery system able to fulfill their customer's needs.

 Most freight that is transported by rail travels substantial distances, usually
over more than one railroad. To facilitate pricing, Class 1 railroads, such as
NS and CSX, price and collect freight charges on behalf of all railroads along
the route. The portion that belongs to each railroad is known as their tariff
division. The Company comprises part of the traffic route for most rail freight
transported across the New York City harbor.

 During the year ended December 31, 2002, NS and CSX collected approximately 52%
and 13%, respectively of NYCH's receivables. During the year ended December 31,
2001, NS and CSX collected approximately 66% and 14%, respectively of NYCH's
receivables. These percentage declines are not indicative of a drop in business;
rather they were directly caused, by the Company's ability to offer new services
to certain large customers, such as transloading and warehousing. (See Item 6 -
"Management's Discussion and Analysis or Plan of Operation" ... "General" for
further discussion).

As of December 31, 2002, the Company's rail operation had approximately 52
active customers. During the periods listed below the following customers
accounted for more than 10% of the Company's revenues from its railroad
operations:

                                       6

<PAGE>

                                         Year ended December 31,
                                        -----------------------

                                           2002           2001
                                          ------         ------
               Hershey Foods                 5%           16%
               Balfour Beatty               15%           **
               Transload Services           11%          ***
               Unified Services (1)         12%           10%*


   * Unified Services began to transport freight via the Company in August 2001.
   ** Balfour Beatty began shipments in May 2002.
   *** Transload Services began shipments in March 2002.

  (1) Does not include the JST portion of the revenue.

     The Company's current cross-harbor operating capacity is approximately
2,000 carloads per month. For the month ended March 31, 2003, the Company was
transporting approximately 203 carloads per month (a carload refers to one
loaded rail car). This is a decrease from periods prior to February 28, 2001,
when the Company was transporting approximately 322 carloads per month. (This
decrease in monthly car volume was due to mechanical failure of the Company's
Bush Terminal Float Bridge. The Company is evaluating its options on the repair
of this bridge.) The Company charges between $250 and $1,500 per carload
depending upon the length and weight of the railcar, and the type of commodity
being shipped and method of shipment. The Company estimates that depending on
the mix, it needs to handle between 250 to 300 carloads per month in order to be
profitable.


     OPERATING PROPERTY AND EQUIPMENT

       The Company's rail equipment, including leased equipment, consists of the
       following;

                                       Operational           Non-Operational

      Locomotives                           3                       2
      Float bridges                         2                       4
      Float barges                          4                       -


The Company has approximately 13 miles of track on the New Jersey and Brooklyn
waterfronts. The Company's track is operational and in good working order. Float
bridges serve as the rail link between the Company's float barges and the
Company's land-based rail tracks. Two of the Company's float barges are 40 ft.
by 290 ft. and two are 41 ft. by 360 ft. Each float barge contains three rail
tracks and can hold between seven and eighteen railcars depending upon the size
of the railcars being loaded and the size of the car float used.

Diesel-fueled locomotives are used by the Company to switch railcars at its Bush
Terminal and Greenville facilities. The Company currently leases two (2)
locomotives, on a month-to-month basis, from BDL Enterprises, Inc. Tugboat
services are subcontracted from McAllister Marine Towing & Transportation
Company on a monthly basis.

The Company on a month-to-month permit with New York City operates the Bush
Terminal. Although this facility is fully operational, it currently operates at
less than 10% of its total capacity. The monthly rental of the Bush Terminal is
$2,200. (See Note H and Note I of the Financial Statements). The Greenville Yard
serves as the primary rail car float facility in New Jersey and connects by rail
to the Oak Island freight yard in Newark, New Jersey. The Greenville Yard is
situated on a one-mile long, 22.14-acre parcel leased to the Company until 2023
at a rental rate of $30,000 for 2003, with annual escalations thereafter. The
lease agreement with Conrail also transferred all real property associated with
the operation of the rail yard to the Company for $1.00. (See Note H of the
Financial Statements).

                                       7

<PAGE>

     THE FUTURE POTENTIAL OF RAIL

The Company also believes there is an emerging market for rail shipment of
hazardous and non-hazardous waste. The City of New York has completed a
long-term plan for the removal of the 26,000 tons of waste that it produces
daily. The main impetus for the plan was the closure of the Fresh Kills Landfill
in March 2001. In the past, this facility was the primary recipient of this
waste. The City's plans call for the waste to be trucked, barged and railed to
out-of-state landfills. From the outset this plan has been hampered with
problems, litigation and public outcry. First, the planned site of the barge
operations in Linden, New Jersey has been the subject of litigation and has not
been approved. Second, the already fragile highway and bridge infrastructure has
now been hindered by an additional 1,000 garbage truck crossings daily. Third,
there has been a tremendous public outcry from the "not in my backyard" and
other public advocacy groups, as well as, environmental groups who object to the
various methods contemplated for the removal of the waste. The Company believes
that use of its system can help alleviate some of the City's waste while
properly addressing the advocacy and environmental groups' concerns.

  In May 2000 the City of New York published a Major Investment Study entitled
"Cross Harbor Freight Movement". The study was conducted by the New York City
Economic Development Corporation to address shortcomings in New York City's
freight transportation network and sighted specific problems due to the region's
reliance on trucking. Among the findings of the study were:

     * The New York City metropolitan region is the only major economic area in
     the United States that has a freight transportation system that is almost
     completely dependent on its highway system. In the New York City
     metropolitan area, 97% of freight is moved via truck versus 3% by rail. All
     other major metropolitan regions are roughly balanced at 60% truck versus
     40% via rail,

     * 10,950,000 estimated truck crossings per year in the New York City
     metropolitan area (a truck crossing occurs when a truck travels over a
     bridge or through a tunnel). In contrast, rail traffic into the New York
     City metropolitan area is estimated to be 19,500 railcars per year (a
     railcar holds the equivalent of three to four truckloads),

     * The region has  significant  traffic  congestion,  which causes delays in
     freight shipments,

     * The substantial truck traffic causes excess burdens on the regions'
     infrastructure and results in additional maintenance costs on its roadways
     and brides,

     * Modern "high-cube" cargo containers on trailers reach 13' in height,
     exceeding Lincoln and Holland Tunnel vertical clearances, forcing more
     heavy-duty truck traffic onto the George Washington and Verazanno Narrows
     Bridges, increasing distance, time and truck freight costs into the region,

     * Increased use of a cross-harbor rail/float operation, such as that
     provided by the Company, is the most efficient means of moving rail freight
     throughout the New York City region. The 2.5 mile float barge trip across
     the New York City harbor takes approximately 45 minutes and eliminates a 35
     to 50 mile truck trip across the New York City regional bridge, highway and
     tunnel system, and

     * The study's analytical findings on the alternatives evaluated, stipulated
     that a railcar float operation, such as the Company's, provides an 8.38 to
     1 benefit to cost ratio. This ratio was over 223% higher than any other
     alternative evaluated.

                                       8

<PAGE>

  As a result of this study and other studies done by the U.S. Army Corps of
Engineers and the Port Authority of New York and New Jersey a complete
rehabilitation program for the Port of New York and New Jersey was begun and is
expected to continue until 2010. The first phase of this plan was in March 2000;
the City of New York completed more than $20 million in improvements on the 65th
Street Rail Yard facility, including construction of two new rail transfer
bridges. This facility includes not only the float bridges but also, intermodal
tracks and loading docks.

 The Company believes that based upon these study's recommendations and by
providing a faster, lower cost service for the movement of freight between New
York and New Jersey, significant opportunities to increase revenues will arise.
The study's recommendations included methods that would help caused a
substantial portion of the freight presently transported by truck to be
transported by rail. (The full text of the Major Investment Study can be found
on the internet at www.crossharborstudy.org/reports.html).

  In March 2002, the City of New York leased the 65th Street Rail Yard to the
Canadian Pacific Railroad. However, Canadian Pacific informed the City that it
would not use the float bridges. The City and the Company are in final
negotiations for use of the float portion of the yard. However, if the Company
is not successful in these negotiations, the operator chosen for the float
portion of the yard will have to contract with the Company because its
Greenville yard is currently the only facility on the New Jersey side of the
harbor which is capable of handling rail cars transported by float barges.

In March 2003, the City of New York unveiled the Brooklyn Waterfront Rail
improvement Plan. This plan calls for the reconstruction and development of a
majority of the South Brooklyn waterfront. Under the Plan the City in
cooperation with the Federal Government under TEA-21 (Transportation Equity Act
for the 21st Century) and New York State Rail Preservation Fund will spend
approximately $19 million to remove all of the street access trackage on 41st
Street and that along 2nd Avenue. They will construct new rail access along 1st
Avenue to the South Brooklyn Marine Terminal at 29th to 39th Streets, as well a
on-dock rail access and the yard itself. In addition, the plan calls for the
rehabilitation of the trackage at the Brooklyn Army Terminal between 58th and
65th Streets and the links between these two yards.

In March 2003 the Port Authority of New York and New Jersey ("PANYNJ") announced
plans to enhance the Howland Hook Marine Terminal in Staten Island, NY. The
plans includes building a ship to rail facility at the terminal. PANYNJ has
allocated $72.5 million to build this facility, has allocated an additional $32
million to the New York City Economic Development Corporation ("NYCEDC") to
rehabilitate portions of the Staten Island Railroad, for restoration of freight
service from Staten Island to the national freight network in New Jersey, and
has set aside $57 million additional to build a new connection to the national
freight network in New Jersey. PANYNJ's overall plan for the reconstruction of
the Port of New York and New Jersey will call for over a $1.5 billion dollar
investment and is expected to be completed in 2005.

PANYNJ has also announced that it will spend up to $75 million for enhanced
railcar float operations in the Port of New York and New Jersey. These funds are
expected to allow connections between all the existing and new on-dock rail
systems planned for the greater Metropolitan New York region.

                                       9

<PAGE>

If additional capacity in Greenville Yard is needed, the Company plans to repair
one of its float bridges and lay four to five miles of additional track, at a
cost of approximately $8,000,000, to increase capacity to approximately 4,000
carloads per month. If more capacity is still needed the Company can add two
float bridges, at a cost of approximately $10,000,000, to increase capacity to
10,000 carloads per month. The Company plans to apply for these and many other
funds being earmarked for rail rehabilitation and construction. (See Item 6 -
Management's Discussion and Analysis or Plan of Operation... "Liquidity and
Capital Resources").


   TRUCKING OPERATIONS

     CURRENT BUSINESS

JST is a short-haul regional trucking company, which has historically hauled and
disposed of commercial and residential trash (a.k.a. municipal solid waste
("MSW")). JST collects trash and other solid waste from transfer stations
operated by collection companies, such as Waste Management and Republic Waste
Services. JST does not collect the MSW directly from residential or commercial
customers. The waste collected from the transfer stations is then hauled to
various waste dumps and landfills.

In addition to its core MSW business, in May 1999, JST entered into landfill
contracts to handle construction and demolition ("C & D") debris. JST collects
the C & D from either on-site excavations or from C & D transfer stations and
then hauls it to various C & D dumps and landfills.

Since 2001, management has been successfully diversifying the freight handled by
JST from primarily MSW and C & D. In conjunction with NYCH, the Company's rail
subsidiary, JST entered into a long-term contract for the movement of bio-solids
in July 2001. JST picks up containers at various locations throughout the New
York metropolitan area and transports them to either the Company's Greenville
rail facility for further shipment by NYCH or directly to Virginia landfills. In
December 2001, JST entered into a long-term contract for the movement of
structural steel and related products, with Transload Services, LLC. JST picks
up loads of steel at the Company's Greenville facility for local destinations in
New Jersey, New York and Long Island. During 2002, the Company also transported
various other types of containerized freight. Currently the freight handled by
JST consists of MSW, C & D, crushed rock, pipe, structural steel, rolled steel
and bio-solids.

JST services customers and transfer stations in New Jersey, the New York City
metropolitan area, Virginia, Pennsylvania, Maryland, and Delaware.

As of December 31, 2002, the Company's trucking operation had approximately 38
active customers. During the periods listed below the following customers
accounted for more than 10% of the Company's revenues from its trucking
operations:

                                       Year ended December 31,
                                       -----------------------

                                          2002             2001
                                         ------           ------
      Waste Management                      1%              15%
      Construction Demolition Recycling     2%              26%
      Transload Services(1)                11%               *%
      Unified Services (1)                 65%               *

  *  Transportion of freight via the Company began during 2001.
 (1) Does not include the NYCH portion of the revenue.

                                       10

<PAGE>

     OPERATING EQUIPMENT & PERSONNEL


        The Company's Trucking equipment, including leased equipment,
        consists of the following;

                                                  Not in used and/or
                                Operational         non Operational
                                -----------       -------------------
                 Tractors           14                    12
                 Dump Trucks         2                     3
                 Trailers           20                    16


As of March 31, 2003, JST owns twenty-five (23) tractor and twenty-six (26)
trailers. The Company is currently evaluating the vehicles that are either not
used or are non-operational. It is the Company's intention to either repair or
dispose of this equipment. In addition to owned equipment, JST leases five (5)
tri-axle dump trucks, one (1) walking floor trailer, nine (9) dump trailers and
three (3) tractors.

The majority of equipment owned by JST is leased to a subcontractor, GM Trucking
Inc. ("GM"), on a month-to-month basis. GM hauls and disposes of the waste for
JST's customers and bills JST for the drivers and related expenses. JST is not
required to maintain any licenses or permits, which are material to its
operations as subcontractors perform the waste hauling and disposal services. By
subcontracting its personnel requirements, JST is able to reduce administrative
expenses and avoid the need to obtain the licenses and permits required to haul
and dispose of waste.

The equipment maintained by JST is used primarily in the movement of steel
products under its contract with Transload and others as well as other
non-regulated containerized and non-containerized freight.

During 2002, the Company regularly employed several additional union and
non-union subcontracting companies to facilitate its freight operations. These
companies run between four (4) and eighteen (18) additional tractor/trailers to
service the Company's business needs.

In January 2002, JST signed a collective bargaining agreement with the
International Brotherhood of Teamsters, Local 701. This union agreement allows
JST to service its customer's sites where union drivers are required. JST uses a
professional employer organization ("PEO") to "lease" these union drivers. A PEO
is an organization that provides an integrated and cost effective approach to
the management and administration of the human resources and employer risk of
its clients, by contractually assuming substantial employer rights,
responsibilities, and risks. JST then pays the PEO, who in turn pays the payroll
taxes and the drivers directly. The Company finds that leasing its drivers from
the PEO provides it with a very cost effective solution to the normal
administrative requirements and the additional costs, which would normally be
needed to administer its own personnel. Additionally, by leasing its employees
the Company is better able to focus on its core business.

 FUTURE OF TRUCKING

JST believes it can further expand its business and/or meet its future equipment
needs by subcontracting with additional companies, by directly leasing the
equipment or by acquiring other smaller trucking companies. As of March 31,
2003, JST did not have any definitive agreements relating to the acquisition of
any other trucking companies. (See Item 6 Management's Discussion and Analysis
or Plan of Operation ... "Liquidity and Capital Resources").

                                       11

<PAGE>

COMPETITION

 Although the Company is the only carrier transporting rail cars across New York
Harbor, the Company faces intense competition from other railroads for the
movement of commodities and bulk freight. The Company also competes with medium
and short-haul trucking companies for the transportation of commodities. Any
improvement in trucking legislation, for example, allowing increases in truck
size or allowable weight, could increase competition and may adversely affect
the Company's business. The Company believes that competition for the freight
transported by the Company is based, in the long term, as much upon service and
efficiency as on rates. As a result, the Company strives to offer shippers
greater convenience and better service than competing forms of transportation
and at lower costs.

 The trucking industry is extremely fragmented. In the past years, periods of
over-capacity in the trucking industry have led to intense competition and price
discounting, resulting in decreased margins and a significant number of business
failures. JST competes with three large national waste management companies:
Allied Waste Services, Waste Management, Inc., and Republic Services, Inc. as
well as numerous regional and local trucking companies. In addition, many
counties and municipalities operate their own waste collection and disposal
facilities, have the benefits of tax-exempt financing and may control the
disposal of waste collected within their jurisdictions. JST also competes with
alternatives to landfill disposal, (such as waste incinerators) because of state
requirements to reduce landfill disposal. JST competes with other motor carriers
for the services of independent operators. Larger waste disposal customers tend
not to change haulers on pricing alone. Consequently, the Company is of the
opinion that JST's competitive advantage lies in customer service and
reliability. Further, the Company believes that it has reduced the effects of
competition by its transportation of freight in conjunction with the Company's
rail operations, thus increasing its competitive advantage.

REGULATION

 The Company's rail operations are subject to regulation by the Surface
Transportation Board (STB), the Federal Railroad Administration (FRA), state
departments of transportation and some state and local regulatory agencies. The
STB has jurisdiction over, among other things, service levels and compensation
of carriers for use of railcars by other carriers. The STB also authorizes
extension or abandonment of rail lines, the acquisition of rail lines and the
consolidation, merger or acquisition of control of railroads. The STB may review
rail carrier pricing in response to a complaint concerning rates charged for
transportation where there is an absence of effective competition. The FRA has
jurisdiction over safety and railroad equipment standards and regularly monitors
the maintenance of the Company's equipment. The Company is of the opinion that
it is in compliance with all applicable regulations of the STB and the FRA.

 Since l980, federal regulatory policy has emphasized the promotion of revenue
adequacy (e.g., the opportunity to earn revenues sufficient to cover costs and
attract capital) for the railroads and has allowed competition to determine to a
great extent rail prices and route and service options. As a result of this
legislative policy, the railroad industry's rate structure has evolved from a
system of interrelated prices that applied over different routes between the
same points to a combination of market-based prices. While federal regulation of
rail prices has been significantly curtailed, federal regulation of services
continues to have a material effect on profitability and competitiveness in the
railroad industry.

 The Company's trucking operations are subject to regulation by various federal
and state departments of transportation and some state and local regulatory
agencies. However since JST utilizes the services of subcontractors to transport
waste, JST is not currently required to have any permits or licenses from any
federal, state or local government agencies.

                                       12

<PAGE>

ENVIRONMENTAL MATTERS

 The operations of the Company and JST are subject to various federal, state and
local laws and regulations relating to the protection of the environment. These
environmental laws and regulations, which have become increasingly stringent,
are implemented principally by the United States Environmental Protection Agency
and comparable state agencies that govern the management of hazardous wastes,
the discharge of pollutants into the air and into surface and underground
waters, and the manufacture and disposal of certain substances. The Company
believes that its operations are in compliance in all material respects with
current laws and regulations. The Company estimates that any expenses incurred
in maintaining compliance with current laws and regulations will not have a
material effect on the Company's earnings or capital expenditures.

However, there is always the possibility that current regulatory requirements
may change, currently unforeseen environmental incidents may occur, or past
non-compliance with environmental laws may be discovered on the Company's
properties. In any of such events, the business, prospects, financial condition
and results of operations of the Company could be materially adversely affected.

 NYCH received a Phase I environmental clearance report prior to signing its
lease on the Greenville yard in 1993. In addition, the Company received a letter
from Conrail indemnifying the Company with respect to environmental claims that
pertain to activities prior to 1993.

 Pursuant to the Emergency Planning and Community Right to Know provisions of
the Superfund Amendments and Reauthorization Act the Company has adopted
procedures that employees will follow in case of any inadvertent release of
hazardous materials. The Company periodically conducts training exercises with
respect to these procedures as required by FRA.

 Although neither NYCH nor JST transports or disposes of toxic, hazardous or
medical waste, NYCH, transports hazardous materials (primarily propane and
freon) across New York Harbor. The Company has a permit from the US Department
of Transportation to transport hazardous materials.

 See Item 3 of this report for information concerning a lawsuit filed against
the Company, which alleges that the Company disposed of hazardous waste at the
Company's Bush Terminal.

 See Item 3 of this report for information concerning a lawsuit filed against
the Company, which alleges that the Company disposed of waste at the Company's
Greenville Yard.

EMPLOYEES

As of March 31, 2003, the Company had fifteen (15) employees, thirteen (13)
full-time employees and two (2) part time employees.

Of these employees, two (2) serve as executive officers, one (1) on a full time
basis as President, and one (1) on a part time basis, as Chief Financial
Officer. Two (2) other employees work in administration, one (1) full-time for
the rail subsidiary and one (1) part-time bookkeeper with time allocations to
both subsidiaries. Of the remaining eleven (11) employees, six (6) work in rail
and one (5) in trucking operations.

                                       13

<PAGE>

The Company allocates three (3) employees' services to both its rail operation
and trucking operations, they are its President, Chief Financial Officer and
bookkeeper.

The Company has a collective bargaining agreement with a union, which was signed
in August 2001 and expires in August 2004, for four (4) of the operational
employees. They consist of a locomotive engineer, two conductors and a
bridgeman. In addition to the full-time employees, the Company employs numerous
"fill-in employees" who are used to fill temporary vacancies in its operations
caused by peak demand, sickness, vacations or other contingencies.

The Company has a collective bargaining agreement with a union, which was signed
in July 2001 and expires in July 2004, for four (4) of the operational
employees. All other personnel used in the Company's trucking operations are
either leased or subcontracted.


CAUTIONARY STATEMENTS FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.

 Investment in the securities of the Company involves a high degree of risk. In
evaluating an investment in the Company's Common Stock, Company stockholders and
prospective investors should carefully consider the information contained in
this Form 10-KSB for the fiscal year ended December 31, 2002 including, without
limitation, Item 1 "Business" and Item 6 "Management's Discussion and Analysis
or Plan of Operation".

 This Form 10-KSB includes forward-looking statements that reflect the Company's
current views with respect to future events and financial performance, including
capital expenditures, strategic plans and future cash sources and requirements.
These forward-looking statements are subject to certain risks and uncertainties,
which could cause actual results to differ materially from historical results of
those anticipated. The words, "believe", "expect", "anticipate", "estimate" and
similar expressions identify forward-looking statements. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of their dates. The Company undertakes no obligation to publicly update
or revise any forward-looking statements whether as a result of new information,
future events or otherwise.


Item 2. Description of Property.

 (See Item 1 of this report.)

Item 3 Legal Proceedings.

 a. On November 19, 1998, the City of New York filed a lawsuit entitled "the
City of New York v. New York Cross Harbor Railroad Terminal Corp., Robert
R. Crawford and New York Regional Rail Corporation". United States District
Court Southern District of New York case no. 98 Civ. 7227, against the Company
and Robert Crawford, the Company's former President, for the purpose of
recovering the cost of the removal and cleanup of certain hazardous substances
and petroleum at the Company's Bush Terminal facility. The suit alleges that
certain parties were instructed by the Company to dispose of hazardous and toxic
materials in an illegal manner. The plaintiff is seeking recovery of
approximately $700,000, which it claims to have spent on the investigation and
cleanup of the alleged disposal, as well as all future investigation and cleanup
costs, and the cost of this litigation. The Company intends to vigorously defend
this action. The lawsuit is presently in the final stages of discovery. No
provision has been made in the financial statements related to this matter.

                                       14

<PAGE>

 b. On November 2, 2001, NYCEDC filed an adverse abandonment petition with the
Surface Transportation Board against the Company's rail subsidiary NYCH. NYCEDC
acting on behalf of the City of New York seeks to remove NYCH, from Bush
Terminal yard in Brooklyn, NY. The reasons stated within the City's STB filing
are (i) the Company's financial condition, specifically that it has had late
fees on rent since 1995 of over $20,000,(ii) the alleged dumping of pesticides
and oil on the Bush Terminal property by Robert Crawford, which is the subject
of ongoing litigation and (iii)
ongoing failure to install a properly working sprinkler system at the Bush
Terminal office building. However, if the decision is appealed, the process
could ake an additional year. If the ruling of the STB is adverse to the Company
it is the Company's intention to immediately appeal the decision and during the
appeal process, request a stay of judgment. The Company intends to vigorously
defend this action. In March 2002, the City of New York, with the Company's
consent, requested that the STB hold the proceeding in abeyance for 60 days
while the parties engage in discussions to resolve the matters. This abeyance
was granted by the STB. On October 31, 2002 the City requested that the STB
grant the application for abandonment. On January 31, 2003 the Company requested
additional time as negotiations were proceeding on a lease for use of the float
bridges at 65th Street Intermodal Yard. As of April 14, 2003 no ruling has been
issued.

c. Fraser, McIntyre and Spartz v NYCH. Supreme Court of the State of New York,
County of Kings, Index no. 45966/99 action commenced November 23, 1999. This
lawsuit was filed by three persons alleging ownership in NYCH. One of the
individuals, Stephen H. Fraser is a shareholder of NYCH. The other two
individuals sold their interest to Robert R. Crawford in 1993. These two
individuals claim that Crawford did not pay them. They allege that NYCH has
guaranteed the performance of Mr. Crawford. The plaintiffs are seeking the
restoration of their equitable interest in the subsidiary (NYCH) and unspecified
monetary damages to be determined by the court. The term "restoration of their
equitable interest" is the exact wording used in the "claim for relief" section
of the complaint. The term is not defined within the complaint. The Company
intends to vigorously defend this action. The Company has satisfied its retained
portion of the costs of this litigation, any additional costs will be borne by
the Company's insurance carrier.

d. Ben-Ami Friedman v NYCH, CH Partners, a Limited Partnership. Supreme Court,
New York County Index No. 602932/96. The suit alleges breach of employment
agreements in 1990, 1991 and 1994 and is seeking $261,390. After a lengthy pause
in its prosecution of this lawsuit the plaintiff has re-commenced documentation
discovery activity. Depositions have yet to be scheduled The Company intends to
vigorously defend this action. The ultimate resolution of this matter is not
ascertainable at this time. No provision has been made in the financial
statements related to this matter.


e. New York Cross Harbor Railroad Terminal Corp. v Jersey City, Federal District
Court, Index No. 02-cv-1884 and Jersey City Health Division v New York Cross
Harbor Terminal Corp., Superior Court of New Jersey. These two related matters
concern the Company's intermodal operations in Jersey City and the recent land
filling and leveling activities. Jersey City seeks an injunction alleging a
public nuisance and violations of certain environmental statutes including the
New Jersey Solid Waste Management Act. Both matters continue to be litigated
with NYCH vigorously defending the affirmative claims of Jersey City and in
pursuing counterclaims for various causes of action. NYCH's attorneys are of the
position that the claims of Jersey City are without merit and believes there to
be a significant likelihood of success in these matters.

f. The Company is also a party to routine claims and suits brought against it in
the ordinary course of business. Some of these matters are covered by insurance.
In the opinion of management, the outcome of these claims is not expected to
have a material adverse effect on the Company's business, financial condition,
or results of operations.

                                       15

<PAGE>

g. In April 2002, the Company entered into an agreement with the Port Authority
of New York and New Jersey ("PANYNJ"). Under the agreement the Port Authority
will be paid five percent (5%) of the Company's revenues collected by Norfolk
Southern Corporation. All payments will be applied to the amounts owed to PANYNJ
by virtue of their judgments. As of December 31, 2002, this amount is estimated
to be $375,000 and assumes no interest charges. The term of the repayment
agreement is eighteen months. During the term of the agreement the parties
intend to continue negotiations on a final settlement.


h. Platinum Funding Corp. ("Platinum") v. New York Regional Rail, New York Cross
Harbor Railroad Terminal Corp. and CH Partners, Inc., Superior Court of New
Jersey, Law Division, Bergen County Docket No.: BER-L-10413-98 on December 24,
1998. Its former factoring agent named the Company in a lawsuit for
approximately $250,000. The balance resulted from a dispute involving a
factoring agreement, which the Company entered into in December 1995. The
arrearage represents a combination of uncollected accounts receivable, factoring
fees and fees charged due to the Company's inability to meet certain
predetermined minimum factoring levels. In March 1999, the case was dismissed.
In December 1999, the Company entered into an agreement whereby the Company
issued 300,000 shares of its common stock into escrow in the name of Platinum.
These shares were to be registered and sold on behalf of Platinum until $250,000
was attained from said sale. Any unsold balance of the 300,000 shares would be
returned to treasury. If the proceeds of $250,000 were not attained, the Company
would issue additional shares to be registered and sold until the total proceeds
to Platinum would be $250,000. The Company has been unable to register these
shares for sale and they still remain in escrow. Platinum refiled the lawsuit in
October 2000. In June 2001, they received a judgment in the amount of $250,000
plus interest, which the Company appealed. In December 2001, the Company lost
this appeal. In March 2002, NYCH's bank account was the subject of a levy by
Platinum. In September 2002, the Company entered into a settlement agreement
with Platinum. Under the agreement Platinum was paid eighty-five thousand
dollars ($85,000) upon signing, plus the release of the 300,000 shares of NYRR
common stock held in escrow plus an additional 250,000 shares of treasury stock
and $3,000 paid monthly for 33 months with a final payment of $4,000 in month
34. The initial payment of $85,000 was made upon execution of the settlement.
The Company is current on all payments under this settlement.

i. In September 2002, the Company entered into a settlement agreement with
Ziegler, Ziegler and Altman ("ZZA"). ZZA had previously received a judgment for
approximately $90,000. Under the terms of the settlement ZZA received $60,000.

j. The Company's Board of Directors is reviewing transactions by former
management, the Crawford family, as related to the litigation in the matters
referred to in (a) and (b) above, as well as, separate issues surrounding the
cancellation of shares and attempted issuance of Series "B" preferred shares.
The Company does not anticipate that there will be any adverse material effects
on it as a result of its review.


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

 The Company intends to request a vote from its shareholders to resolve the
potential insufficiency of its authorized shares. (See Item 5. Market for Common
Equity and Related Stockholders Matters - "SHARES RESERVED FOR POTENTIAL FUTURE
ISSUANCE" for additional information.)

                                       16

<PAGE>

 At its next annual meeting the Company may request its shareholders to approve
the acquisition of the remaining 49% interest in JST, which can be acquired for
approximately 7,000,000 shares of the Company's common stock.

 The Company has established a tentative date in late June 2003 for holding its
Annual Meeting of Stockholders for fiscal year ended December 31, 2002 with the
intention that it be held in New York, New York. Specific plans as to exact
date, location and agenda have not yet been finalized but once a more definitive
time frame and agenda have been arrived at all stockholders of record, as of the
chosen record date, shall be properly notified.



                                     PART II

ITEM 5.  Market for Common Equity and Related Stockholders Matters.

(a)      Market Information

(1) Our common stock, $.0001 par value is listed on the Electronic
Over-the-Counter Bulletin Board and traded under the symbol NYRR. (2) From March
21, 2001 until May 8, 2002 the Company's common stock was listed on the National
Quotation Data Service ("pink sheets") under the same symbol. (3) Prior to March
21, 2001, the Company's common stock was listed on the Electronic
Over-the-Counter Bulletin Board and traded under the symbol NYRR.

The following table sets forth, for the periods indicated, the closing high and
low prices on the dates indicated below for our common stock for each full
quarterly period within the two most recent fiscal years.


         Fiscal Year Ended December 31, 2002     Quarterly Common Stock Price
         By Quarter                                       Ranges (1)
         ------------------------------------     ----------------------------
                                                         High      Low
                                                        ------    -----
           March 31, 2002 (2)                           $0.07     $0.03
           June 30, 2002 (1) & (2)                       0.11      0.03
           September 30, 2002 (1)                        0.11      0.07
           December 31, 2002 (1)                         0.11      0.06



         Fiscal Year Ended December 31, 2001      Quarterly Common Stock Bid
         By Quarter                                     Price  Ranges (2)&(3)
         ------------------------------------     ----------------------------
                                                         High      Low
                                                        ------    -----
           March 31, 2001(2)&(3)                        $0.17     $0.09
           June 30, 2001 (2)                             0.16      0.08
           September 30, 2001 (2)                        0.12      0.06
           December 31, 2001 (2)                         0.10      0.04



          1) The Registrant's Common Stock resumed trading on the Electronic
          Over-the-Counter Bulletin Board on May 9, 2002. The following
          statement specifically refers to the Common Stock activity, if any,
          since May 9, 2002. The existence of limited or sporadic quotations
          should not of itself be deemed to constitute an "established public
          trading market." To the extent that limited trading in the
          Registrant's Common Stock took place, such transactions have been
          limited to the over-the-counter market. The over-the-counter market
          and other quotes indicated reflect inter-dealer prices without retail
          mark-up, mark-down or commission and do not necessarily represent
          actual transactions. On the date of relisting from the National
          Quotation Data Service (May 9, 2002) the common stock price was $.06
          per share.

                                       17

<PAGE>

          2) From March 22, 2001 to May 8, 2002,  all bid prices indicated are
          as reported to the Registrant by broker-dealer(s) making a market in
          its common stock in the National Quotation Data Service
          ("pink sheets"). During such dates the Registrant's Common Stock was
          not traded or quoted on any automated quotation system other than as
          indicated herein.

          3) The Registrant's Common Stock traded on the Electronic Over-the-
          Counter Bulletin Board prior to March 21, 2001. The following
          statement specifically refers to the Common Stock activity, if any,
          prior to March 22, 2001. The existence of limited or sporadic
          quotations should not of itself be deemed to constitute an
          "established public trading market." To the extent that limited
          trading in the Registrant's Common Stock took place, such transactions
          have been limited to the over-the-counter market. The over-the-counter
          market and other quotes indicated reflect inter-dealer prices without
          retail mark-up, mark-down or commission and do not necessarily
          represent actual transactions. On the date of delisting from the
          Electronic Over-the-Counter Bulletin Board (March 21, 2001) the common
          stock price was $.16 per share


(b)      Holders

 As of the close of business on March 31, 2003 there were 1,692 stockholders of
record of the Registrant's Common Stock and 182,822,876 shares issued and
outstanding.

(c)      Dividends

 The payment by the Registrant of dividends, if any, in the future rests within
the discretion of its Board of Directors and will depend, among other things,
upon the Company's earnings, its capital requirements and its financial
condition, as well as other relevant factors. The Registrant has not paid or
declared any dividends upon its Common Stock since its inception and, by reason
of its present financial status and its contemplated financial requirements,
does not contemplate or anticipate paying any dividends upon its Common Stock in
the foreseeable future. Holders of common stock are entitled to receive such
dividends as may be declared by the Board of Directors out of funds legally
available therefore and, in the event of liquidation, to share pro rata in any
distribution of the Company's assets after payment of liabilities. The Company
has not paid any dividends on its common stock and the Company does not have any
current plans to pay any common stock dividends.

  The provisions in the Company's Certificate of Incorporation relating to the
Company's Preferred Stock would allow the Company's directors to issue Preferred
Stock with rights to multiple votes per share and dividends rights which would
have priority over any dividends paid with respect to the Company's common
stock. The issuance of Preferred Stock with such rights may make more difficult
the removal of management even if such removal would be considered beneficial to
shareholders generally, and will have the effect of limiting shareholder
participation in certain transactions such as mergers or tender offers if such
transactions are not favored by incumbent management.

                                       18

<PAGE>

RECENT ISSUANCE OF UNREGISTERED STOCK AND OPTIONS.

a) In September 2002, $33,729 principal balance of convertible notes plus
accrued interest were converted into 393,505 shares of common stock at $.09 per
shares, which was the closing price of the common stock.

b) On June 30, 2002, approximately $146,000 of accrued legal fees was converted
into 1,220,033 shares of common stock valued at $97,602 the fair value of the
stock at date of issuance.

b)On June 30, 2002, 165,667 shares of common stock were issued to Tad Mahoney, a
former officer of the Company, in accordance with the terms of his employment
and settlement agreements.

a)On February 21,2002, $18,733 principal balance of convertible notes plus
accrued interest were converted into 655,741 shares of common stock, upon
conversion the holder received an option to purchase an additional 685,381
shares at $.12 per share.

a)On February 21, 2002, $105,000 principal balance of convertible notes plus
accrued interest were converted into 3,963,340 shares of common stock, upon
conversion the holders received an option to purchase an additional 1,981,671
shares at $.18 per share.

a)On February 21, 2002, $60,000 in principal balance of the Preferred "C" stock
plus accrued interest of $86,301 was converted into 4,358,099 shares of common
stock. Upon conversion the holder received an option to purchase an additional
4,555,085 shares at $.12 per share.

a) In October 2001, two holders of the Company's previously issued convertible
promissory notes converted the principal value of $55,000 and accrued interest
of $8,401 into 640,302 shares of common stock. Upon conversion the holders
received options to purchase 64,033 shares at $.18 per share and 165,704 shares
at $.60 per share. These options will expire 90 days from the effective date of
a registration. (See the Company's Form 10-KSB for the year ended December 31,
2000, filed on March 28, 2000 for further disclosure on convertible notes
issued).

b) On March 22, 2001, the Company issued 9,500 shares of restricted stock,
pursuant to its "Stock Bonus Plan", to employees of its rail subsidiary. These
grants were issued on the basis of years employed. On the date of the grant the
Company's Common stock was valued at $0.10. The Company has recorded $950 as
compensation expense.

b) On March 21, 2001, the Company issued 1,000,000 shares in the name of W.
Robert Bentley. These shares will be distributed to Mr. Bentley in accordance
with his 1997 employment and 2000 settlement agreement with the Company. These
shares were valued at their fair market value on the date of the settlement
agreement at $180,000. The Company released 333,333 of these shares in March
2001 and 333,333 in April 2002. The remaining 333,334 shares are expected to be
released in March 2003.

a) The sale of these securities was exempt from registration pursuant to Section
4 (2) of the Securities Act of 1933. The shares issued in these transactions
were acquired for investment purposes only and without a view to distribution.
The persons that acquired these shares were fully informed about matters
concerning the Company, including its business, financial affairs and other
matters and acquired the securities for their own accounts. The securities
referred to in this paragraph are "restricted" securities as defined in Rule 144
of the Securities and Exchange Commission. No underwriters were used and no
commissions were paid in connection with the issuance of these shares.

                                       19

<PAGE>

b) The issuance of these shares was exempt pursuant to Section 3 (a) (9) of the
Securities Act of 1933. The shares issued in reliance upon the exemption
provided by Section 3 (a) (9) are restricted securities as that term is defined
in Rule 144 of the Securities and Exchange Commission.


SHARES RESERVED FOR POTENTIAL FUTURE ISSUANCE.

Shares outstanding of the Company's common stock, if all securities (including
but not limited to Options, Preferred Shares and Convertible Notes) were to be
issued in accordance with their respective terms, would increase from
182,822,876 on March 31, 2003 to 234,999,583. The potential issuance of
additional shares has been computed based upon the closing bid price for the
Company's common stock on March 31, 2003 and would necessarily increase or
decrease dependent upon fluctuations on such bid price on any given date.

 At December 31, 2002, there were 17,029,202 Options outstanding, which are
exercisable at various prices between $.12 and $.60 per share. (See Note J
-"COMMON Stock options").

 At December 31, 2002, there were $948,724 of convertible promissory notes
outstanding. (See Item 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION - "Liquidity and Capital Resources", Note F - "SHORT-TERM DEBT" and
Note).

 At December 31, 2002, there were 440,000 convertible Preferred "C" shares
outstanding. (See Note J - "Preferred STOCK").


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

SELECTED FINACIAL DATA

 The following discussion contains forward-looking statements that involve a
number of risks and uncertainties. While these statements represent the
Company's current judgment in the future direction of the business, such risks
and uncertainties could cause actual results to differ materially from any
future performance suggested in this report. Certain factors that could cause
results to differ materially from those projected in the forward looking
statements include level of freight shipments, competition, future contractual
terms with landfill authorities, impact of government regulations, availability
of capital to finance growth and general economic conditions.

The following should be read in conjunction with the Company's financial
statements and related notes, which are a part of this report.

                         Balance Sheet Data

                                            Years Ending December 31,
                                             2002               2001
                                           ----------       ------------

 Current Assets                           $1,114,842        $   513,869
 Total Assets                              5,135,486          4,955,579
 Current Liabilities                       4,517,666          5,430,979
 Total Liabilities                         6,270,707          6,477,397
 Temporary Equity                          1,512,500          1,512,500
 Working Capital (Deficit)                (3,402,824)        (4,917,110)
 Stockholders' (Deficit)                  (2,667,566)        (3,034,318)

                                       20

<PAGE>

                           Operating Data
                                           Years Ending December 31,
                                             2002               2001
                                           ----------       ------------
Operating revenues                        $5,431,871         $4,289,740
Operating expenses                        (3,704,561)        (3,606,904)
Administrative expenses                   (1,547,261)        (1,398,067)
Interest and other expenses                 (211,731)          (207,080)
Minority interest in income/(loss)            19,854            (85,234)
Extraordinary gain on debt forgiveness          --                --
                                          -----------       ------------
Net loss                                  $ (51,527)       $  (837,077)
                                          ===========       ============

GENERAL

 The Company has incurred substantial losses since it was formed. Management has
taken many steps to increase revenues and attain profitability. The Company has
reduced outstanding liabilities substantially, which has in turn reduced
interest expense.

Since Norfolk Southern and CSX Transportation acquired Conrail's operations in
June 1999, both NS and CSX have used the Company more frequently to transport
freight between New Jersey and the New York/Long Island areas. The Company
believes this trend will continue as the Company continues to prove it has a
fast and reliable delivery system able to fulfill their customers' needs. During
the year ended December 31, 2002, NS and CSX collected approximately 66% and
14%, respectively of NYCH's receivables as compared to the year ended December
31, 2001 when these collections were approximately 52% and 13%, respectively.
These percentage declines are not indicative of a drop in business; rather they
were directly caused, by the Company's ability to offer new services to certain
large customers, such as transloading and warehousing.

Beginning in April 2000, the Company changed the focus of its rail operations.
The Company began a multi-phase project that included site clearance, paving and
lighting to expand and fully utilize the resources at its Greenville Yard.
Previously the Company was only utilizing approximately 7 acres, which contain
the Company's track, leaving 15-acres of property unused. This project was
completed in March 2001 and upon completion, the Company began expanding its
terminal facility for transloading, warehousing and distribution activities.
Transloading involves the unloading of freight from rail cars onto trucks for
delivery or the loading of freight from trucks onto rail cars for shipment. The
Company intends to warehouse commodities, expected to be distributed within 30
days from arrival.

 Management chose to change the Company's focus because:

1. it provided the most advantageous use of the Company's resources;
2. conventional rail growth is facilitated by manufacturing, mining or
 agricultural activities that occur in a close geographic proximity to rail.
 (These activities are not present in the NYC metropolitan region, so the
 Company studied alternatives which would allow the growth in its rail segment);
3. by creating new "origination" business, the Company would have the
 potential for a strong stable foundation to grow the other areas of its
 business;
4. such new focus would decrease the Company's traditional dependency on
 other railroads to provide the Company its revenue;
5. such long-term, built-in business would make the Company less
 susceptible to economic and market forces;
6. creation of this type of business would facilitate assimilation of JST;

                                       21

<PAGE>

7. with JST's involvement, the Company would have a complete turn-key
 solution for its customer's potential needs; and
8. such new focus would provide an opportunity for revenue growth for both
 JST and NYCH.

 As a direct result of this new focus, the Company entered into the following
ongoing multi-year agreements:

 1. With Unified Services Group, for the transload of bio-solids. The Company
began shipments under this contract in August 2001. The terms of this contract
include an annual contract minimum of 540 rail cars to be handled by NYCH. This
minimum railcar guarantee should result in over 3,200 containers to be handled
by JST. The contract expires in 2013.

 2. With Transload Services, L.L.C for the transload, warehouse and distribution
of structural steel products. In March 2002, the Company began to receive
carloads of steel for distribution. The terms of this contract included an
up-front payment of $53,000 (as reimbursement for work performed by the Company
preparing the site), and an annual contract minimum of 600 rail cars, to be
handled by NYCH. The contract grants JST first right of refusal on all truck
transportation required. The contract calls for the construction of over 500
linear feet of new rail. The contract expires in 2011 but contains a 10-year
optional extension.

3. With Balfour Beatty for the transportation and storage of oversized steel
beams and overweight steel structures used for the re-construction of a bridge
over the Housitanic River in Connecticut.

 In addition to the above, in March 2002, the Company began the transloading and
shipment of additional containerized freight. These transload areas allow the
Company to utilize its Greenville Yard more productively and engage the
Company's trucking subsidiary, JST, in the operations. The Company anticipates
it will be able to continue to grow this facility and add additional commodity
transload areas such as lumber, aggregate and solid waste and that it will be
able to duplicate its successes at its yard in Brooklyn.

The Company also believes there is an emerging market for rail shipment of
hazardous and non-hazardous waste. The City of New York has completed a
long-term plan for the removal of the 26,000 tons of waste that it produces
daily. The main impetus for the plan was the closure of the Fresh Kills Landfill
in March 2001. In the past, this facility was the primary recipient of this
waste. The City's plans call for the waste to be trucked, barged and railed to
out-of-state landfills. From the outset this plan has been hampered with
problems, litigation and public outcry. First, the planned site of the barge
operations in Linden, New Jersey has been the subject of litigation and has not
been approved. Second, the already fragile highway and bridge infrastructure has
now been hindered by an additional 1,000 garbage truck crossings daily. Third,
there has been a tremendous public outcry from the "not in my backyard" and
other public advocacy groups, as well as, environmental groups who object to the
various methods contemplated for the removal of the waste. The Company believes
that use of its system can help alleviate some of the City's waste while
properly addressing the advocacy and environmental groups' concerns.

The Company believes that based upon the aforementioned studies recommendations
and by providing a faster, lower cost service for the movement of freight
between New York and New Jersey, significant opportunities to increase revenues
will arise. The studies' recommendations included methods that would help cause
a substantial portion of the freight presently transported by truck to be
transported by rail. This is also evidenced by the numerous projects announced
by the Port Authority of New York and New Jersey, as well as, New York City
Economic Development Corp for reconstruction and expansion of the rail
infrastructure, which is of paramount importance to the governing authorities
that expect substantial increases in rail freight transportation in the
immediate future.

                                       22

<PAGE>

 At year-end December 2002, the Company has four distinct areas of business:
bridge traffic, transload operations, shipside & dockside and local deliveries.
Based upon the foregoing discussion, the Company projects that the rail
operation revenues will increase substantially during the coming year barring
any unforeseen circumstances. (See Item 1 Description of Business. "Rail
Operation" for further details).

 The Company has continued to improve its margins in its rail freight operation,
while adding new operations, such as transloading and warehousing, which have
profitable margins. However, revenues during 2002 were impacted by the Company's
cocoa customer, which had to shut down its facility due to fire, in May 2001,
which caused all rail shipments to halt. This cocoa customer's facility was
on-line again in October 2002. The Company's rail operations have been able to
attract new business, for both itself and the trucking operation. The Company
anticipates that it will continue to be able to add new customers, which will
allow the Company to meet its cash obligations.



YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001

RESULTS OF OPERATIONS


The components of the Company's operating revenues and expenses by business
segment during the year ending December 31, 2002 were:

                                   Railroad             Trucking

         Operating revenues       $ 1,685,899          $ 3,745,972
         Operating expenses           595,244            3,109,317
         Gross profit               1,090,655              636,655


The components of the Company's operating revenues and expenses by business
segment during the year ending December 31, 2001 were:

                                    Railroad             Trucking

         Operating revenues       $ 1,305,375          $ 2,984,365
         Operating expenses           788,918            2,817,986
         Gross profit                 516,457              166,379


Year Ended December 31, 2002

     During the year ended December 30,  2002,  the Company had  $5,431,871 in
revenue compared to $4,289,740 in revenue during the corresponding prior year,
an increase of 26.6%. This increase was due to an increase in the trucking
operations to $3,745,972 from $2,984,365 for the prior period in 2001, a
increase of 25.5%. The increase was primarily due to an increase in transload
revenue.

     Operating expenses for the year ended December 31, 2002 were $3,704,561
compared to $3,606,904 an increase of $97,657 or 2.7% over the corresponding
year.

     Operating expenses as a percentage of operating revenues were 84.1% for the
year ended December 31, 2001. In 2002 operating expenses decreased to 68.2% of
operating revenues due to modernization and to the larger percentage of revenue
coming from the railroad, the more profitable segment. Rail's operating expense,
as a percent of rail revenue was 35.3%. Trucking's operating expense, as a
percent of trucking revenue was 83.0%.

                                       23

<PAGE>

     Administrative  expenses  increased in the year ended  December 31, 2002 by
$149,194. However, as a percentage of operating revenues, administrative
expenses decreased to 28.5% for the year ended December 31, 2002, from 32.6% for
the year ended December 31, 2001. The increase of $149,194 comes from higher
professional and legal fees as a result of settlement and litigation expenses.

     Interest expense was $211,731 for the year ended December 31, 2002, as
compared to $207,080 for the year ended December 31, 2001.

     During the year ended December 31, 2002, the Company had a "gain on sale of
fixed assets" of $29,234. During the year ended December 31, 2001, the Company's
incurred a "loss on disposal of fixed assets" in the amount of $46,403.
FINANCIAL CONDITION

LIQUIDITY AND CAPITAL RESOURCES

     Total assets of the Company on December  31, 2002  increased by $179,907 to
$5,135,486 from $4,955,579 on December 31, 2001, primarily due to recovery in
the reserve for possible bad debt of approximately $120,000 and fixed asset
additions. Current assets increased $600,973 to $1,114,842 on December 31, 2002
from $513,869 on December 31, 2001. The increase in current assets is
attributable to a reclassification of approximately $255,000 of long-term
receivables to current receivables, and an increase in accounts receivable by
approximately $275,000. Other assets decreased $333,630 to $384,226 on December
31, 2002 from $717,856 on December 31, 2001. The decrease is attributable to a
reclassification of approximately $255,000 of long-term receivables to current
receivables. On December 31, 2002, the Company had total liabilities of
$6,270,707 compared to $6,477,397 on December 31, 2001. On December 31, 2002,
current liabilities were $4,517,666 compared to $5,430,979 on December 31, 2001.
The Company's working capital on December 31, 2001 increased by $1,514,286 to
$(3,402,824) from $(4,917,110) on December 31, 2001, primarily due to a
reclassification of approximately $255,000 of long-term receivables to current
receivables, an increase in accounts receivables, and a reclassification of
approximately $800,000 current liabilities to long-term liabilities as a result
of settlement agreements.

     During the year ended December 31, 2002, the Company had cash provided by
operating activities of $315,203 compared to $329,009 in the previous year.
During 2002, the Company acquired $360,425 of property and equipment and paid
down long-term debt by $129,632.

     The Company has needed to fund its working capital deficit. The Company has
raised these funds though issuance of floating rate convertible debentures. In
periods prior to December 31, 2000, the Company sold convertible notes to
various private investors, in the principal amount of $3,892,000, which funds
were used to pay liabilities, purchase assets, and fund the Company's
operations. In June 2000 the Company issued 500,000 shares of its Series C
Convertible Preferred stock to John Marsala in payment of $500,000 in past due
convertible notes and accrued interest owed. (See the Company's amended report
on Form 10-KSB for year ended December 31, 2000 filed March 28, 2002, for
further information on convertible note and Preferred "C"). As of March 31,
2003, convertible notes in the principle amount of $948,724 remained
outstanding. As of March 31, 2003, 17,029,202 options, issued as a result of
prior note conversions that entitle the holders to purchase 1 share of the
Company's common stock per option held, remain outstanding. If these outstanding
options are exercised at their respective strike prices, the Company will
receive proceeds of approximately $2,435,000. (See Item 5 of this report, as
well as, Notes J).

                                       24

<PAGE>

     In March and April 2000, the Company sold convertible notes in the
principal amount of $60,000 to two (2) private investors. The notes bear
interest at 10% per year. Notes in the principle amount of $20,000 converted to
equity in October 2001. The remaining notes in the principle amount of $40,000
are currently in default. At the option of the note holder, each note, plus any
accrued interest, may be converted into shares of the Company's common stock at
the lower of the conversion price or 90% of the average closing price of the
Company's common stock for the ten trading days preceding the date of
conversion. The conversion price for $12,000 of the convertible notes was $.14
per share and the conversion price for $48,000 was $.60 per share. In connection
with the sale of these notes, the Company will issue options upon conversion of
the notes into shares of common stock. The options allow the holders of the
notes to acquire additional shares of the Company's common stock but are only
issuable upon the conversion of the notes. The amounts raised from the sale of
the notes were used to pay liabilities, purchase assets, and fund the Company's
operations.

     Between March and May 2000, the various holders of the Company's
convertible promissory notes converted the principal value of $899,493 and
accrued interest into 7,169,045 shares of common stock. Upon conversion the
holders received options to purchase 3,191,084 shares at ranges between $.12 and
$.60 per share. These options will expire 90 days from the effective date of a
registration. (See the Company's Form 10-KSB for the year ended December 31,
2000, filed on March 28, 2002 for further disclosure on convertible notes
issued).

     In October 2000, the Company exchanged a $30,000 accounts payable for a
convertible note in the principal amount of $30,000 to BDL Enterprises. The note
bears interest at 10% per year and is due and payable October 31, 2001. At the
option of the note holder, the note, plus any accrued interest, may be converted
into shares of the Company's common stock at $.20 per share, which was the
market price on the date of the notes issuance. This note has not been converted
and no demand for payment has been made.

     In October 2001, two holders of the Company's convertible promissory notes
converted the principal value of $55,000 and accrued interest of $8,401 into
640,302 shares of common stock. Upon conversion the holders received options to
purchase 64,033 shares at $.18 per share and 165,704 shares at $.60 per share.
These options will expire 90 days from the effective date of a registration.
(See the Company's Form 10-KSB for the year ended December 31, 2000, filed on
March 28, 2002, for further disclosure on convertible notes issued).

     On February 21,2002, $18,733 principal balance of convertible notes plus
accrued interest were converted into 655,741 shares of common stock, upon
conversion the holder received an option to purchase an additional 685,381
shares at $.12 per share.

     On February 21, 2002, $105,000 principal balance of convertible notes plus
accrued interest were converted into 3,963,340 shares of common stock, upon
conversion the holders received an option to purchase an additional 1,981,671
shares at $.18 per share.

     On February 21, 2002, $60,000 in principal balance of the Preferred "C"
stock plus accrued interest of $86,301 was converted into 4,358,099 shares of
common stock. Upon conversion the holder received an option to purchase an
additional 4,555,085 shares at $.12 per share.

     On June 30, 2002, approximately $146,000 of accrued legal fees was
converted into 1,220,033 shares of common stock valued at $97,602 the fair value
of the stock at date of issuance.

                                       25

<PAGE>

     In September 2002, $33,729 principal balance of convertible notes plus
accrued interest were converted into 393,305 shares of common stock at $.09 per
shares, which was the closing price of the common stock.

     The sale of these securities was exempt from registration pursuant to
Section 4 (2) of the Securities Act of 1933. The shares issued in these
transactions were acquired for investment purposes only and without a view to
distribution. The persons that acquired these shares were fully informed about
matters concerning the Company, including its business, financial affairs and
other matters and acquired the securities for their own accounts. The securities
referred to in this paragraph are "restricted" securities as defined in Rule 144
of the Securities and Exchange Commission. No underwriters were used and no
commissions were paid in connection with the issuance of these shares.

     The issuance of these shares were exempt pursuant to Section 3 (a) (9) of
the Securities Act of 1933. The shares issued in reliance upon the exemption
provided by Section 3 (a) (9) are restricted securities as that term is defined
in Rule 144 of the Securities and Exchange Commission.


         As of December 31, 2002 the Company had the following current
liabilities:

             Accounts payable and accrued expenses   $1,718,941

             Notes payable and current maturities    $1,732,533
              of long-term debt

             Payroll taxes payable                    1,066,192

     Accounts payable and accrued expenses include approximately $310,000 owed
for accrued interest on convertible notes, and for accrued legal fees. The
Company anticipates that most of the accrued interest and legal fees will be
satisfied through the issuance of common shares.

     Accounts payable and accrued expenses also include $995,090 for accrued
real estate taxes for New York and New Jersey.

     The City of New York has billed the Company in excess of $3,200,000 for
property taxes dating back to 1984. The Company claims that the tax assessments
are for the most part erroneous because they relate either to real property that
the Company does not own or lease, or to property that is not subject to the
real property tax. The Company further claims that New York City taxing
authorities have assessed taxes based on flawed valuations, resulting in
substantial overcharges. The New York State Board of Equalization and Assessment
has proposed significant reductions to these valuations, subject to the approval
of the New York City Corporation Counsel. Management expects, but cannot give
assurance, that the outstanding liabilities will be settled for a lesser amount.
Pending a settlement of the tax arrears, the Company has recorded a liability on
its books of $518,700 for these real estate taxes. Based upon recent discussions
the Company has had with local taxing authorities, the Company believes that its
liability for real estate taxes can be settled for approximately $150,000. As of
March 31, 2003 this dispute has not yet been settled.

     The State of New Jersey has assessed the Company approximately $63,000 per
year since 1996 for real estate taxes. The Company believes that the assessment
is incorrect and the proper tax should be approximately $17,000 annually.
Pending a settlement, the Company has recorded a liability on its books of
$476,390 for these real estate taxes. The Company is working to resolve this
dispute. (See Note J of the Financial Statements for additional information in
regards to these matter.)

                                       26

<PAGE>

     The Company has an accrual for payroll taxes payable in the amount of
$1,066,192. The dispute regarding the payroll taxes stems from 1996 and prior,
when the Company was first delinquent in payment of such taxes. The past due
taxes then had interest and penalties applied. Subsequently, the Company began
paying its payroll taxes, however these payments were applied to the past due
amounts, causing penalties and interest to be imposed on the current liability.
If properly applied only interest would have been charged on the older past due
taxes. This misapplication continued until 1998 when the Company was successful
in obtaining relief for a portion of this misapplication. The Company received a
refund in 1999. The Company feels they are still due a substantial refund for
past-misapplied payments and expects that the final settlement will be
substantially less than amount, which it has accrued. In October 2002, the
Company began paying current period taxes and is working to resolve the previous
tax dispute.

     The Company has accrued $129,494 as deferred rent. In February 2001 both
the Company and Conrail Shared Assets Operation ("CSAO"), the successor to
Conrail, submitted its appraisal of the fair market rental value of the property
subject to the terms of the 1993 lease agreement. The agreement contains rent
concessions early in the lease term, but eventually requires the Company to pay
a maximum of 10% of the fair market rent, determined on the basis of an average
of appraised values supplied by independent appraisers selected by each party.
Based upon different interpretations of the rent calculation per the lease
agreement, CSAO contends that the Company has a rent arrearage of approximately
$1,800,000. Based upon the Company's legal counsel's interpretation of the rent
calculation, rent arrearages total approximately $104,000 at December 31, 2002.
As of March 31, 2003, the Company and Conrail are finalizing an amount for the
credit to alleged amounts owed for the period from 1993 to 2002 lease. The
Company anticipates that during the second quarter of 2003 the parties may
resolve this disputed amount.

        Long-term liabilities include a perfected judgment by the Port Authority
of New York and New Jersey ("PANYNJ"). In April 2002, the Company entered into
an agreement with the Port Authority of New York and New Jersey ("PANYNJ").
Under the agreement the Port Authority will be paid five percent (5%) of the
Company's revenues collected by Norfolk Southern Corporation. All payments will
be applied to the amounts due PANYNJ by virtue of their judgments. As of March
31, 2003, this amount is estimated to be $375,000 and assumes no interest
charges. The term of the repayment agreement is eighteen months. During the term
of the agreement the parties intend to continue negotiations on a final
settlement.

     There are administrative remedies available to the Company's creditors
including, but not limited to, judgments, liens and levies, which can be placed
on the Company's bank accounts. Historically, these remedies have been used by
the creditors of the Company and have resulted in additional cash flow hardships
for the Company. In March 2002, NYCH's bank account was the subject of a levy by
Platinum Funding.  (See Note I - Legal Matters in the financial statements for
additional information).  There can be no assurance that these remedies may not
be used in the future.

     There are approximately $1.4 million in convertible or related party debts.
Holders of these debts have not demanded payment and it is expected that the
majority of the convertible note holders will opt for conversion into the
Company's common stock. Additionally, $350,035 of current maturities of
long-term debt is primarily for equipment leases and are payable over 12 months;
and trade payables, which are being paid in accordance with their terms. The
Company reasonably expects to continue to pay these amounts from cash flow from
operations. The remaining liabilities are accruals for what the Company believes
the liability for settlement of pending tax disputes and lawsuits could be.
Absent resolution of these matters and assuming the agencies, vendors and taxing
authorities fully prevail in court proceedings, monetary damages could
approximate $7 million, but management currently anticipate that these matters
will be amicably resolved at a comparatively lower sum and further believes
absent satisfactory resolution it would ultimately prevail in the judicial
process.

                                       27

<PAGE>

     The Company expects that based on projected sales volume it anticipates
that its operations will generate net income. The Company expects that it will
be able to meet all its routine working capital needs and operational costs from
new business created during the current year.

     The Company rail operations do not have any available credit, bank
financing or other external sources of liquidity. Due to historical operating
losses, the Company's rail operations have not been a source of liquidity. Until
such time as the Company becomes profitable, the Company's continued operations
will depend upon the availability of additional funding. In order to obtain
capital, the Company may need to sell additional shares of its common stock or
borrow funds from private lenders. There can be no assurance that the Company
will be able to obtain additional funding, if needed, or, if available, on terms
satisfactory to the Company. There can be no assurance that the Company will be
able to generate sufficient revenues to be profitable.

     Long-range plans considered by management include application for low
interest loans through the Federal Rail Administration ("FRA") for short-line
railroad's and grants from New York and New Jersey State Department of
Transportation.

     The Company has no commitments for capital expenditures over the next
twelve months. The Company expects that any additional tractors or trailers
required by JST can be acquired through capital leases or similar types of
equipment financing. JST has been able to arrange these types of financing since
January of 2000.


NEW ACCOUNTING PRONOUNCEMENTS

In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." The standard requires entities to record the fair value of a
liability for an asset retirement obligation in the period in which it is
incurred. When the liability is initially recorded, the entity capitalizes a
cost by increasing the carrying amount of the related long-lived asset. Over
time, the liability is accreted to its present value each period, and the
capitalized cost is depreciated over the useful life of the related asset. Upon
settlement of the liability, an entity either settles the obligation for its
recorded amount or incurs a gain or loss upon settlement. The standard is
effective for fiscal years beginning after June 15, 2002. The adoption of SFAS
No. 143 is not expected to have a material impact on the Company's consolidated
financial statements.

In July 2002, the FASB issued Statement No. 146 (SFAS 146), "Accounting for
Costs Associated with Exit or Disposal Activities." This Standard supercedes the
accounting guidance provided by Emerging Issues Task Force Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity" (including "Certain Costs Incurred in a Restructuring").
SFAS No. 146 requires companies to recognize costs associated with exit
activities when they are incurred rather than at the date of a commitment to an
exit or disposal plan. SFAS No. 146 is to be applied prospectively to exit or
disposal activities initiated after December 31, 2002. The Company is currently
evaluating this Standard.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation -- Transition and Disclosure -- an Amendment of FASB Statement No.
123." SFAS No. 148 provides alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. The Company does not currently intend to adopt the fair value
based method of measuring compensation associated with stock awards and grants.
As a consequence of continuing to utilize the intrinsic value method of
measuring such compensation, the Company will be required to provide additional
disclosures in its quarterly financial statements which will reflect the impact
on net income and earnings per share on a pro forma basis as if the Company had
applied the fair value method to stock-based employee compensation.

                                       28

<PAGE>

Item 7.  Financial Statements.

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


The Board of Directors and Stockholders
New York Regional Rail
New York, NY

We have audited the accompanying consolidated balance sheet of New York Regional
Rail Corporation and Subsidiaries as of December 31, 2002 and the related
consolidated statements of operations, changes in stockholders' deficit,
and cash flows for the years ended December 31, 2002 and 2001. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of New
York Regional Rail Corporation and Subsidiaries as of December 31, 2002, and the
results of their operations and their cash flows for the years ended December
31, 2002 and 2001, in conformity with accounting principles generally accepted
in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note A to the
consolidated financial statements, the Company has suffered losses from
operations and has a working capital deficiency and an accumulated deficit that
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note A. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.




                                                    Feldman Sherb & Co., P.C.
                                                    Certified Public Accountants
April 9, 2003
New York, New York

                                      F-1

<PAGE>

               NEW YORK REGIONAL RAIL CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                                DECEMBER 31, 2002

                                   (UNAUDITED)

                                     ASSETS

Current assets
     Cash                                                           $    86,148
     Accounts receivable, net of allowance for doubtful
      accounts of $258,145                                              991,145
     Prepaid expenses and other current assets                           37,549
                                                                      ---------
     Total current assets                                             1,114,842

Property and equipment, net                                           3,636,418

Other assets                                                            384,226
                                                                      ---------
                                                                    $ 5,135,486
                                                                      =========

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
     Current maturities of long term debt                           $   505,883
     Convertible promissory notes:
      Related parties                                                   608,586
      Others                                                            340,138
     Other short-term debt:
      Related parties                                                    43,717
      Others                                                            234,209
     Accounts payable                                                   466,485
     Accrued expenses                                                 1,252,456
     Payroll taxes payable                                            1,066,192
                                                                      ---------
       Total current liabilities                                      4,517,666

Deferred rent payable                                                   129,494

Deferred revenue                                                         80,000

Long term debt                                                        1,543,547

Minority interest                                                        19,845

Temporary equity                                                      1,512,500

Stockholders' deficit:
     Series C Convertible Preferred Stock, $.001 par value,
      500,000 shares authorized; 440,000 shares issued
       and outstanding                                                  440,000
     Common stock, $.0001 par value, 200,000,000 shares
      authorized; 182,822,876 shares issued and outstanding              18,282
     Additional paid-in-capital                                      12,879,930
     Accumulated deficit                                            (16,005,778)
                                                                    -----------
      Total stockholders' deficit                                    (2,667,566)
                                                                    -----------
                                                                   $  5,135,486
                                                                    ===========




                 See notes to consolidated financial statements.

                                       F-2

<PAGE>


               NEW YORK REGIONAL RAIL CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                     AUDITED



                                                     FOR THE YEARS ENDED
                                                         DECEMBER 31
                                                --------------------------------
                                                   2002                 2001
                                                -----------         ------------

Operating revenues                            $   5,431,871       $   4,289,740

Operating expenses                                3,704,561           3,606,904
                                                -----------         ------------

Gross Profit                                      1,727,310             682,836

Administrative expenses                           1,547,261           1,398,067
                                                -----------         ------------

Income/ (loss) from operations                      180,049            (715,231)

Interest expense, net                              (211,731)           (207,080)
                                                ------------        ------------
Loss before  minority interest                      (31,682)           (922,311)

Minority interest in income/( loss)
 of subsidiary                                       19,845             (85,234)
                                                ------------        ------------

Net loss                                            (51,527)           (837,077)

Deemed preferred stock dividend                      44,567              50,000
                                                ------------        ------------

Gain/(loss) applicable to common
 shareholders                                 $     (96,094)      $    (887,077)
                                                ============        ============

Loss per share - basic and diluted:           $       (0.00)      $       (0.01)
                                                ============        ============

Weighted average common shares outstanding
     basic and diluted                          180,378,101         170,836,175
                                                ============        ============



                 See notes to consolidated financial statements.

                                       F-3

<PAGE>


               NEW YORK REGIONAL RAIL CORPORATION AND SUBSIDIARIES

           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT

                     YEARS ENDED DECEMBER 31, 2002 AND 2001

<TABLE>
<CAPTION>

                                             Common Stock        Preferred Series C     Additional     Accumulated
                                      ------------------------ ---------------------
                                         Shares       Amount    Shares       Amount   Paid-in Capital     Deficit            Total
                                      -----------  ----------- ---------  ----------  ---------------  --------------  -------------
<S>                                       <C>          <C>         <C>         <C>            <C>           <C>              <C>
Balances at January 1, 2001           170,416,689  $   17,042   500,000   $  500,000  $   12,072,239   $ (15,030,873)  $ (2,441,592)

Conversion of debt into common stock      640,302          64      -            -             63,337            -            63,401

Common stock issued for services            9,500           1      -            -                949            -               950

Common stock issued for settlement
   of employment agreemnet              1,000,000         100      -            -            179,900            -           180,000

Net loss                                     -           -         -            -               -           (837,077)      (837,077)

                                      -----------  ----------- ---------  ----------  ---------------  --------------  -------------
Balances at December 31, 2001         172,066,491  $   17,207   500,000   $  500,000  $   12,316,425   $ (15,867,950)  $ (3,034,318)
                                      ===========  =========== =========  ==========  ===============  ==============  =============

Conversion of debt into common stock    4,619,081         462      -            -            154,601            -           155,063

Common stock issued for services        1,220,033         122      -            -             97,480            -            97,602

Common stock issued for settlement
   of employment agreemnet                165,667          17      -            -             13,236            -            13,253

Conversion of Pfd 'C" into
 common stock                           1,787,310         179   (60,000)     (60,000)         59,821            -            60,000

Conversion of dividend into
 common stock                           2,570,789         256      -            -             86,045         (86,301)        86,301

Common stock issued for options           393,505          39      -            -             35,376            -            35,415

Note cotributed to capital                   -           -         -            -             93,196            -            93,196

Treasury stock issued to settle debt         -           -         -            -             23,750            -            23,750

Net loss                                                                                                     (51,527)       (51,527)

                                      -----------   ---------- ---------  ----------  ---------------  --------------  -------------
Balances at December 31, 2002         182,822,876   $  18,282   440,000   $  440,000  $   12,879,930   $ (16,005,778)  $ (2,521,265)
                                      ===========   ========== =========  ==========  ===============  ==============  =============


</TABLE>

                See notes to consolidated financial statements.

                                       F-4

<PAGE>

                NEW YORK REGIONAL RAIL CORPORATION AND AFFILIATES

                             STATEMENT OF CASH FLOWS

                                   (UNAUDITED)


                                                         FOR THE YEARS ENDED
                                                             DECEMBER 31,
                                                        -----------------------
                                                            2002        2001
                                                        ----------- -----------
Increase in cash and cash equivalents

Cash flows from operating activities:
  Net loss                                              $  (51,527) $  (837,077)
                                                        ----------- ------------
  Adjustments to reconcile net loss to net cash
   provided by operating activities:
   Depreciation and amortization                           596,464      574,340
   Bad debt expense (recovery)                             130,595      315,278
   Gain (loss) on exchange of fixed assets                 (29,234)      46,403
   Minority Interest in subsidiary earnings                 19,845      (85,234)
   Stock issued for services                                  -             950
   Changes in operating assets and liabilities:
    Accounts receivable                                   (404,973)     196,900
    Increase in other current assets                        (7,926)     (22,623)
    (Increase)/decrease in other assets                     14,422     (287,385)
    Increase/(decrease) in accounts payable                178,979      (14,374)
    Increase/(decrease)in accrued expenses                (179,117)     417,964
    Payroll taxes payable                                  136,740       23,867
    Deferred rent                                          (89,065)        -
                                                        -----------  -----------
  Total adjustments                                        366,730    1,166,086
                                                        -----------  -----------
Net cash provided by operating activities                  315,203      329,009
                                                        ===========  ===========

Cash flows from investing activities:
  Proceeds from sale of fixed assets                          -         (65,013)
  Purchase of property and equipment                      (360,425)    (177,892)
                                                        -----------  -----------
Net cash used in investing activities                     (360,425)    (242,905)
                                                        ===========  ===========

Cash flows from financing activities:
  Payments of long term debt                              (129,632)    (118,225)
  Common stock issued for options                           33,729         -
  Proceeds from other current
   debt - nonrelated party                                  41,409         -
  Proceeds from other current
   debt - related party                                    163,296       13,619
                                                         ----------  -----------
Net cash provided by (used in) financing activities        108,802     (104,606)
                                                         ==========  ===========

Net increase in cash and cash equivalents                   63,580      (18,502)
Cash at beginning of year                               $   22,568       41,070
                                                         ----------  -----------
Cash and cash equivalents at end of period                  86,148   $   22,568
                                                         ==========  ===========



                 See notes to consolidated financial statements.

                                       F-5

<PAGE>

               NEW YORK REGIONAL RAIL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A -    NATURE AND ORGANIZATION OF BUSINESS AND SUMMARY OF SIGNIFICANT
            ACCOUNTING POLICIES

               Description of the Merger with New York Regional Rail Corporation
New York Regional Rail Corporation (the Company), formerly known as Bestsellers
Group, Inc. (BSLR) was incorporated on April 19, 1994 under the laws of the
state of Florida.

               In May 1996, BSLR merged with New York Regional Rail Corporation
(NYRR)  pursuant to an Agreement to Exchange Stock dated May 20, 1996 by and
between BSLR and NYRR (the "Merger Agreement"). Under  terms of the Merger
Agreement, NYRR exchanged all of its issued and outstanding shares for
87,000,000 Company shares.  After the merger, the Company owned 84.57% of the
outstanding common stock of the combined entity, changed its state of
incorporation to Delaware, and became the surviving corporation to the merger.
The merger has been accounted for as a reverse acquisition under the purchase
method for business combinations.  Accordingly, the combination of the two
companies is recorded as a recapitalization of NYRR to which NYRR is treated as
the continuing entity.

     Description of Business

               The Company operates an ICC certified railroad through its
majority-owned subsidiary, New York Cross Harbor Railroad Terminal Corporation
("NYCH").  NYCH's business is to transport and deliver rail traffic via barges
across New York Harbor and the East River, thus connecting the Long Island
Railroad and other lines.  In addition, it receives and delivers railcars at
certain industrial facilities located on partially owned and partially leased
track located in Brooklyn, New York and Jersey City, New Jersey.   Another
majority-owned   subsidiary, CH Proprietary, Inc., formerly CH Partners, Inc.
("CHP") holds title to the railroad, marine and terminal equipment used in the
business.  At December 31, 2002 the Company owned 93.4% and 94.5% of NYCH and
CHP, respectively.

               In April 1999, the Company purchased a 51% interest in J.S.
Transportation, Inc. ("JST") in exchange for 5,000,000 shares of unregistered
common stock and escrowed an additional 1,000,000 shares to settle outstanding
JST liabilities. JST, formed in 1998, is a regional trucking company in the
business of short-haul freight transportation and landfill management. The
acquisition has been accounted for as a purchase and accordingly the acquired
assets and liabilities have been recorded at their estimated fair values.

               In February 2000, the Company purchased a 100% interest in OSK
Capital I Corp. ("OSK") in exchange for 480,000 shares of common stock and
$18,000 in cash. The acquisition has been accounted for as a purchase and
accordingly the acquired assets and liabilities have been recorded at their
estimated fair values. The $205,200 excess of purchase price over net assets
acquired was recorded as goodwill. No pro forma financial information is
presented as the operations of OSK were immaterial.

                                      F-6

<PAGE>

               Principles of Consolidation

               The consolidated financial statements include the accounts of the
Company and its majority owned subsidiaries, NYCH, CHP, JST, and OSK. All inter-
company transactions and balances have been eliminated.

               Basis of Presentation

               The Company has a working capital deficiency of $3,402,824 at
December 31, 2002, and has incurred significant recurring operating losses which
raise substantial doubt about its ability to continue as a going concern without
the raising of additional debt and/or equity financing to fund operations.
Management is actively pursuing new debt and/or equity financing and
continually evaluating the Company's profitability, however any results of their
plans and actions cannot be assured. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.


               Revenue Recognition

               The Company's Railroad operations recognize revenue on the date
of the freight delivery to the consignee or the other commercial carrier.

               The Company's Trucking operations recognize revenue in three ways
depending upon the scope of work performed.

               1) Transportation Services - Revenue is recognized on the date
               the freight is delivered to the customer consignee.

               2) Transportation and Landfill Services - Revenue is recognized
               on a per ton basis, subject to a minimum charge when the freight
               is delivered to the Company's contracted landfill.

               3) Landfill Services - Revenue is recognized on a per ton basis
               when the freight is delivered to one of the Company's contracted
               landfills. The Company recognizes revenue as earned on the date
               of freight delivery to the consignee or other commercial carrier
               or waste to the landfill.

               Property and Equipment

               Property and equipment are stated at cost, less accumulated
               depreciation. The cost of additions and improvements are
               capitalized, while maintenance and repairs are charged to expense
               when incurred.

               Depreciation and amortization is calculated using the
               straight-line method over the estimated useful lives of the
               assets. The estimated depreciable lives are 5 years for machinery
               and transportation equipment, 20 years for marine assets, between
               10 and 40 years for track and roadbed and between 10 and 20 years
               for operating equipment.

               Concentration of Credit Risk

                                      F-7
<PAGE>

               At December 31, 2002, 17.3% of accounts receivable was
concentrated in one customer while 12.6% was concentrated in a second customer.
Credit is extended to customers based on an evaluation of each customer's
financial condition, generally without requiring collateral or other security.
Due to the historical concentration of receivables and relatively small customer
base, the Company could be exposed to a large loss if one of its major customers
were not able to fulfill its financial obligations.

               Minority Interests

               The minority interest accounts representing the investments in
NYCH and CHP have been reduced to zero for all periods presented as a result of
cumulative operating losses. Accordingly, the portion of the losses that would
normally be assigned to the minority interest stockholders' ("excess losses")
for NYCH and CHP are recognized by the Company. The Company will recognize 100%
of any subsequent profits until such time as the excess losses previously
recognized by the Company have been recovered. In 2002, the Company realized
full payment on all previous losses of JST and incurred a net minority interest
liability of $19,845.

               Beneficial Conversion Feature of Convertible Securities

               From 1996 to 2000, the Company issued convertible debt and equity
securities with non-detachable conversion features that have intrinsic value at
the date of issue. In accordance with applicable accounting rules, the Company
measures this beneficial conversion feature at the issue date by multiplying the
number of shares into which the security can be converted by the spread between
the market price of its common stock and the conversion price of the security.
The resulting discount is recognized by allocating a portion of the proceeds
equal to the discount to additional paid-in capital. For convertible debt
securities, the discount is amortized to interest expense over the period ending
on the date the security first becomes convertible. For convertible preferred
stock, the discount is amortized as a dividend charge. Additionally, upon
conversion of the notes issued, the Company issued options to the investors to
purchase shares of common stock. The fair value of the options issued is
determined by use of a Black-Scholes valuation model.


               Income Taxes

               The Company accounts for its income taxes using the liability
method, which requires the establishment of a deferred tax asset or liability
for the recognition of future deductible or taxable amounts and operating loss
carry forward. Deferred tax expense or benefit is recognized as a result of the
changes in the assets and liabilities during the year. Valuation allowances are
established when necessary to reduce deferred tax assets to amounts expected to
be realized. At December 31, 2002 there were no impairments.

                                      F-8

<PAGE>

               Long-lived Assets

               In accordance with SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of", the Company
records impairment losses on long-lived assets used in operations, when events
and circumstances indicate that the assets might be impaired and the
undiscounted cash flows estimated to be generated by those assets are less than
the carrying amounts of those assets.

               Use of Estimates

               The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the year.
Actual results could differ from those estimates.

               Loss Per Share

               Basic loss per share is computed using the weighted average
number of shares of outstanding common stock. Diluted loss per share for the
years ended December 31, 2002 and 2001 is based on the weighted average number
of common shares outstanding during that period including common stock
equivalents. Common stock equivalents are not included in the calculation of
diluted earnings per share because such inclusion would have been anti-dilutive.
Common stock equivalents consist of stock options, convertible preferred stock,
and convertible debt.

               Stock-Based Compensation

                       Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," ("SFAS 123"), encourages, but does
not require, companies to record compensation cost for stock-based employee
compensation plans at fair value. The Company has chosen to account for stock-
based compensation using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and
related Interpretations. Accordingly, compensation cost for the Company's stock
at the date of the grant over the amount of an employee must pay to acquire the
stock. The Company has adopted the "disclosure only" alternative described in
SFAS 123 and SFAS 148, which require pro forma disclosures of net income and
earnings per share as if the fair value method of accounting had been applied.


               Recent Pronouncements

                  In August 2001, the FASB issued SFAS No. 143, "Accounting for
Asset Retirement Obligations." The standard requires entities to record the fair
value of a liability for an asset  retirement  obligation in the period in which
it is incurred. When the liability is initially recorded, the entity capitalizes
a cost by increasing the carrying amount of the related  long-lived  asset. Over
time,  the  liability  is  accreted to its present  value each  period,  and the
capitalized cost is depreciated over the useful life of the related asset.  Upon
settlement of the  liability,  an entity either  settles the  obligation for its
recorded  amount or  incurs a gain or loss  upon  settlement.  The  standard  is
effective for fiscal years  beginning  after June 15, 2002. The adoption of SFAS
No. 143 is not expected to have a material impact on the Company's  consolidated
financial statements.

                                      F-9

<PAGE>

                  In July 2002, the FASB issued Statement No. 146 (SFAS 146),
"Accounting  for  Costs  Associated  with  Exit or  Disposal  Activities."  This
Standard  supercedes the accounting  guidance  provided by Emerging  Issues Task
Force Issue No. 94-3,  "Liability  Recognition for Certain Employee  Termination
Benefits and Other Costs to Exit an Activity" (including "Certain Costs Incurred
in a  Restructuring").  SFAS No.  146  requires  companies  to  recognize  costs
associated  with exit  activities when they are incurred rather than at the date
of a  commitment  to an exit or  disposal  plan.  SFAS No.  146 is to be applied
prospectively to exit or disposal activities  initiated after December 31, 2002.
The Company is currently evaluating this Standard.

                  In December 2002, the FASB issued SFAS No. 148, "Accounting
for  Stock-Based  Compensation  -- Transition  and Disclosure -- an Amendment of
FASB Statement No. 123." SFAS No. 148 provides alternative methods of transition
for a  voluntary  change  to the fair  value  based  method  of  accounting  for
stock-based  employee  compensation.  The Company does not  currently  intend to
adopt the fair value based  method of  measuring  compensation  associated  with
stock awards and grants. As a consequence of continuing to utilize the intrinsic
value method of  measuring  such  compensation,  the Company will be required to
provide additional  disclosures in its quarterly financial statements which will
reflect the impact on net income and  earnings per share on a pro forma basis as
if the  Company  had  applied  the fair  value  method to  stock-based  employee
compensation.



NOTE B -    PROPERTY AND EQUIPMENT

               Property and equipment consists of the following:

                Marine equipment and dock facilities          $2,726,144
                Railroad locomotive cars and equipment           172,898
                Track and related land improvements            1,278,898
                Transportation equipment                       1,828,699
                Other                                            497,375
                                                            ---------------
                                                               6,504,014
                 Less: Accumulated depreciation                2,867,596
                                                             ---------------
                                                              $3,636,418
                                                             ===============

               Fixed assets include certain railroad operating assets acquired
under a Lease and Asset  Agreement  dated January 20, 1993 between  Consolidated
Rail  Corporation  ("Conrail"),  CRC  Properties,  Inc., an affiliate of Conrail
("CRCP") and NYCH. Under terms of the agreement,  Conrail sold to NYCH for $1.00
all of the assets located on  Conrail-owned  property in Greenville,  New Jersey
that NYCH is renting  pursuant  to a 30-year  lease.  (See Note H). The  assets,
consisting principally of float bridges,  roadbeds and track, and marine mooring
cells,  were recorded on the Company's books at the $1.00 purchase price. In the
event that it cancels or  otherwise  terminates  the lease,  the Company will be
obligated to remove the assets from the property. Conrail, however, may elect at
its sole option to  repurchase  the assets for $1.00,  in which case the Company
would be relieved of the removal obligation.

                                      F-10
<PAGE>

               Depreciation expense totaled $596,464 and $511,000 for the years
ended year ended December 31, 2002 and 2001, respectively.

NOTE C -    OTHER ASSETS

            Other assets consist of the following:

            Deposits                                   $ 13,115
            Permits and licenses                         56,349
            Goodwill from acquisitions, net             206,019
            Long-term receivable                        108,743
                                                       --------
                                                       $384,226
                                                       ========

NOTE D -    PAYROLL TAXES PAYABLE

               Payroll taxes payable includes overdue federal, state and local
taxes, plus estimated penalties and interest.

NOTE E -    ACCRUED EXPENSES

            Accrued expenses consist of the following:


            Accrued interest                         $  263,549
            Property taxes - City of New York           518,700
            Property taxes - New Jersey                 476,390
            Other accrued expenses                       (6,183)
                                                      ---------
            Total                                    $1,252,456
                                                      =========

               The Company is involved in a long-standing dispute with the City
of New York over property tax assessments dating back to 1984 (See Note H).

               New Jersey property tax accruals as of December 31, 2002 cover
the periods from 1996 to 2002.  The Company has estimated the annual  assessment
to be $63,000 and has accrued $38,390 in interest. (See Note H).


NOTE F -  SHORT-TERM DEBT

            A.  Convertible Notes Payable

            RELATED PARTIES

            Former CEO                                   40,000
            Former officer/wife of former CEO           250,400
            Private investment company                  318,186
                                                       --------
                                                      $ 608,586
                                                       ========
                                      F-11
<PAGE>

               Former CEO

               Note payable in the amount of $40,000 bearing interest at 10% per
annum, this note is currently in default. The note is convertible into shares of
common stock at the lower of $.08 per share, based on the lowest debt conversion
price subsequently offered to a third party, or 90% of the average closing price
of the common shares for the five trading days preceding the date of conversion.

               Former officer/wife of former CEO

               Note payable issued in 1997 in the amount of $60,000 bearing
interest  at 10% per  annum,  this note is  currently  in  default.  The note is
convertible  into shares of common stock at the lower of $.075 per share, or 90%
of the average  closing  price of the common  shares for the five  trading  days
proceeding the date of conversion.

               Note payable in the amount of $35,000 bearing interest at 10% per
annum, currently in default. The note is convertible into shares at the lower of
$.08 per share, based on the lowest debt conversion price  subsequently  offered
to a third party,  or 90% of the average  closing price of the common shares for
the five trading days preceding the date of conversion.

               Note payable in the amount of $80,000 bearing interest at 10% per
annum, currently in default. The note is convertible into shares of common stock
at the  lower of $.08 per  share,  based on the  lowest  debt  conversion  price
subsequently  offered to a third party,  or 90% of the average  closing price of
the common shares for the five trading days preceding the date of conversion.

               Notes payable in the amount of $75,400 bearing interest at 10%
per annum,  this note is  currently  in default.  The note is  convertible  into
shares of common stock at the lower of $.14 per share,  based on the lowest debt
conversion  price  subsequently  offered to a third party, or 90% of the average
closing price of the common shares for the five trading days  preceding the date
of conversion.

               Private investment company

               Notes payable in the amount of $150,000 bearing interest at 10%
per annum.  Note is on a month to month  basis and is secured by a fixed  asset.
The notes are convertible  into shares of common stock at $.14 per share, or 90%
of the  average  closing  price of the common  shares for the ten  trading  days
preceding the date of conversion.  In the event of  conversion,  the note grants
the holder an option to purchase at $.18 per share,  one-half of one  additional
share of common stock, for each share acquired in the conversion which expire 90
days from the effective date of a SEC stock registration.

                                      F-12
<PAGE>

               Notes payable in the amount of $5,000 bearing interest at 10% per
annum. The Note is on a month to month basis.

               OTHER LENDERS

               Notes payable in the amount of $290,000 bearing interest at 10%
per annum, currently in default. The notes are convertible into shares of common
stock at the lower of various  set  conversion  prices or at 90% of the  average
closing price of the common  shares for the ten trading days  preceding the date
of conversion. In the event of conversion, certain of the note grants the holder
an Option to purchase from one half to three quarters of an additional  share of
common  stock,  at a range  between  $0.12 to $0.18 per  share,  for each  share
acquired in the conversion. These options will expire 90 days from the effective
date of a SEC stock registration.

                       Notes payable to existing option holders in the amount of
$213,324, of which $163,186 are to the private investment company included above
in related  parties,  bear interest at 10% per annum, and mature March 2003. The
notes are  convertible  into shares of common stock at 100% of the closing price
of the common shares.  For each share of common  received by conversion of these
notes the option holdings will be reduced by one share.



            B. Other Current Debt

            Related parties

           Unsecured non-interest bearing advances from the
            Company's Director Mr. Bridges; due on demand          3,717
           Unsecured non-interest bearing advances from the
            Company's Director Mr. Bridges; due on demand         40,000
                                                                 --------
                                                                $ 43,717
                                                                 ========
            Other lenders

           Notes payable - investors; non-interest
            bearing, currently in default                       $234,209
                                                                ========

NOTE G -    LONG-TERM DEBT

               Note in the amount of $51,069 of which $39,069 is long-term,
payable to the Seafarers Union for dues in arrears;  monthly  payments of $1,000
due through October 2006.Interest is payable at 5% per annum.

               Various notes payable in the amount of $1,154,816 of which
$872,254 is long-term;  collateralized  by  transportation  equipment;  interest
payable at rates  between 5% to 18%;  monthly  payments vary and are due through
February 2004.

                                      F-13
<PAGE>

               Notes payable, related parties in the amount of $632,224;
(principal of $475,000 plus accrued interest of $157,224). Interest accrues at a
rate of 10% per annum and due December 31, 2004.

               Maturities of long-term debt are as follows:

                    Year ending
                    December 31,

                     2003               $  294,562
                     2004                1,087,886
                     2005                  420,662
                     2006                   35,000
                     Thereafter               -


NOTE H -    COMMITMENTS

               EMPLOYMENT AGREEMENT

               On October 1, 2002, the Company entered into a new employment
agreement with its President. This agreement provides for annual compensation of
$84,000.  In addition,  the  President is eligible for an incentive  bonus.  The
bonus is in the form of stock cash and  options.  The  incentive  bonus is based
upon  performance  related to sales  increases of NYCH.  This agreement is for a
period of one year and is automatically  renewable for one year at the option of
the parties.


               UNION AGREEMENT

               On August 1, 2001 the Company entered into a long-term union
contract with the Seafarers  International Union of North America.  The contract
expires July 31, 2005 but is  automatically  renewed for one-year periods unless
either party  submits  sixty-day  written  notification.  Under the contract the
Company is required to pay health  benefits  for all its union  employees at the
rate of  approximately  $540 per person.  (At  December 31, 2002 the Company had
four (4) union employees.)

               LEASE COMMITMENT

               The lease portion of the 2003 Agreement signed with Conrail (see
Note B) provides a 20-year land lease, with a 10 year option, to the Company for
the use of Conrail's railroad operating property and water rights in Greenville,
New Jersey. The agreement contains rent concessions early in the lease term then
bases at $135,000 annually in 2008.

                       In February 2001 both the Company and Conrail Shared
Assets Operation ("CSAO"), the successor to Conrail,  submitted its appraisal of
the fair market  rental value of the property in  accordance  with the terms and
conditions of the lease agreement.  Based upon different  interpretations of the
rent calculation per the lease  agreement,  CSAO contends that the Company has a
rent  arrearage of  approximately  $1,800,000.  Based upon the  Company's  legal
counsel's  interpretation  of  the  rent  calculation,   rent  arrearages  total
approximately  $129,494.  Such amount has been accrued at December 31, 2002.  At

                                      F-14

<PAGE>

December  2002, the Company and Conrail  entered into a settlement  agreement on
alleged rental amounts owed under the lease and entered into a new 20-year lease
with an optional 10-year extension. This lease also grants an option whereby the
Company may increase its rental property by approximately 5 additional acres. If
chosen this option will  increase the annual  rental by the Company 25%. Per the
settlement  agreement the company has submitted its rental credit request and is
awaiting final approval on the credits.

               Rent expense under the lease has been recognized on a
straight-line  basis to account  for the rent  concessions  provided  during the
lease term, resulting in no deferred rent liability as of December 31, 2002.

                       Estimated future rents payments utilizing the
straight-line basis under this lease as of December 31, 2002 are as follows:

                     Year ending
                     December 31,

                        2003         $ 119,000
                        2004           119,000
                        2005           119,000
                        2006           119,000
                        2007           119,000
                        Thereafter   2,025,000
                                     ---------
                                    $2,620,000
                                     =========

               NYCH leases its Bush Terminal property in Brooklyn, New York from
the Economic Development  Corporation of New York City on a month-to-month basis
at $2,200 per month. (See Note H).

               Aggregate rent expense for the year ended December 31, 2002 and
2001 was $26,400 and $51, 270, respectively.

               OTHER COMMITMENTS

               The City of New York has billed the Company in excess of
$3,200,000  for property  taxes dating back to 1984. The Company claims that the
tax  assessments  are for the most part erroneous  because they relate either to
real property that the Company does not own or lease,  or to property,  which is
not subject to the real property tax. The Company  further  claims that New York
City  taxing  authorities  have  assessed  taxes  based  on  flawed  valuations,
resulting in substantial  overcharges.  The New York State Board of Equalization
and Assessment has proposed significant reductions to these valuations,  subject
to  the  approval  of  the  New  York  City  Corporation  Counsel.   Preliminary
negotiations  are underway between the Company's  representatives,  the New York
City Real Estate Tax Assessor,  and the Corporation Counsel's office.  Pending a
settlement of the tax arrears, the Company has recorded a liability on its books
of $518,700,  representing the tax due on the Bush Terminal  property,  the only
parcel currently used in the rail  operations.  Management  expects,  but cannot
give assurance,  that the outstanding  liabilities  will be settled for a lesser
amount.

                                      F-15
<PAGE>

               The State of New Jersey has assessed the Company approximately
$63,000 per year since 1996 for real estate taxes. The Company believes that the
assessment  is  incorrect  and the proper tax  should be  approximately  $17,000
annually. Pending a settlement the Company has recorded a liability on its books
of approximately $476,390 for these real estate taxes. The Company is working to
resolve this dispute.

NOTE I -    LEGAL MATTERS

                  On November 19, 1998, the City of New York filed a lawsuit
entitled "the City of New York v. New York Cross Harbor Railroad Terminal Corp.,
Robert R.  Crawford  and New York  Regional  Rail  Corporation".  United  States
District Court Southern District of New York case no. 98 Civ. 7227,  against the
Company and Robert Crawford, the Company's former President,  for the purpose of
recovering the cost of the removal and cleanup of certain  hazardous  substances
and petroleum at the Company's  Bush  Terminal  facility.  The suit alleges that
certain parties were instructed by the Company to dispose of hazardous and toxic
materials  in  an  illegal  manner.   The  plaintiff  is  seeking   recovery  of
approximately  $700,000,  which it claims to have spent on the investigation and
cleanup of the alleged disposal, as well as all future investigation and cleanup
costs, and the cost of this litigation. The Company intends to vigorously defend
this  action.  The lawsuit is presently  in the final  stages of  discovery.  No
provision has been made in the financial statements related to this matter.

                  On November 2, 2001, NYCEDC filed an adverse abandonment
petition  with the  Surface  Transportation  Board  against the  Company's  rail
subsidiary NYCH. NYCEDC acting on behalf of the City of New York seeks to remove
NYCH,  from Bush  Terminal yard in Brooklyn,  NY. The reasons  stated within the
City's STB filing are (i) the Company's financial  condition,  specifically that
it has had late fees on rent since 1995 of over $20,000,(ii) the alleged dumping
of pesticides and oil on the Bush Terminal property by Robert Crawford, which is
the  subject  of  ongoing  litigation  and (iii)  ongoing  failure  to install a
properly working sprinkler system at the Bush Terminal office building. However,
if the decision is appealed,  the process could ake an  additional  year. If the
ruling of the STB is adverse to the  Company it is the  Company's  intention  to
immediately appeal the decision and during the appeal process, request a stay of
judgment.  The Company intends to vigorously  defend this action. In March 2002,
the City of New York,  with the Company's  consent,  requested that the STB hold
the  proceeding in abeyance for 60 days while the parties  engage in discussions
to resolve the  matters.  This  abeyance  was granted by the STB. On October 31,
2002 the City requested that the STB grant the application for  abandonment.  On
January 31, 2003 the Company  requested  additional  time as  negotiations  were
proceeding  on a lease for use of the float  bridges at 65th  Street  Intermodal
Yard. As of April 14, 2003 no ruling has been issued.

                  Fraser, McIntyre and Spartz v NYCH. Supreme Court of the State
of NewYork,  County of Kings,  Index no. 45966/99 action commenced  November 23,
1999. This lawsuit was filed by three persons alleging ownership in NYCH. One of
the  individuals,  Stephen H.  Fraser is a  shareholder  of NYCH.  The other two
individuals  sold  their  interest  to Robert  R.  Crawford  in 1993.  These two
individuals  claim that  Crawford  did not pay them.  They  allege that NYCH has
guaranteed  the  performance  of Mr.  Crawford.  The  plaintiffs are seeking the
restoration of their equitable interest in the subsidiary (NYCH) and unspecified

                                      F-16

<PAGE>

monetary damages to be determined by the court.  The term  "restoration of their
equitable  interest" is the exact wording used in the "claim for relief" section
of the  complaint.  The term is not defined  within the  complaint.  The Company
intends to vigorously defend this action. The Company has satisfied its retained
portion of the costs of this  litigation,  any additional costs will be borne by
the Company's insurance carrier.

                  Ben-Ami Friedman v NYCH, CH Partners, a Limited Partnership.
Supreme Court, New York County Index No.  602932/96.  The suit alleges breach of
employment  agreements in 1990, 1991 and 1994 and is seeking  $261,390.  After a
lengthy pause in its prosecution of this lawsuit the plaintiff has  re-commenced
documentation  discovery  activity.  Depositions  have yet to be  scheduled  The
Company  intends to vigorously  defend this action.  The ultimate  resolution of
this matter is not ascertainable at this time. No provision has been made in the
financial statements related to this matter.

                  New York Cross Harbor Railroad Terminal Corp. v Jersey City,
Federal District Court,  Index No.  02-cv-1884 and Jersey City Health Division v
New York Cross Harbor  Terminal Corp.,  Superior Court of New Jersey.  These two
related matters concern the Company's  intermodal  operations in Jersey City and
the recent land filling and leveling activities. Jersey City seeks an injunction
alleging a public  nuisance and  violations  of certain  environmental  statutes
including the New Jersey Solid Waste Management Act. Both matters continue to be
litigated with NYCH vigorously  defending the affirmative  claims of Jersey City
and in pursuing counterclaims for various causes of action. NYCH's attorneys are
of the  position  that the claims of Jersey City are without  merit and believes
there to be a significant likelihood of success in these matters.

                  The Company is also a party to routine claims and suits
brought against it in the ordinary course of business. Some of these matters are
covered by insurance. In the opinion of management,  the outcome of these claims
is not expected to have a material  adverse  effect on the  Company's  business,
financial condition, or results of operations.

                  In April 2002, the Company entered into an agreement with the
Port  Authority of New York and New Jersey  ("PANYNJ").  Under the agreement the
Port  Authority  will be  paid  five  percent  (5%)  of the  Company's  revenues
collected by Norfolk Southern  Corporation.  All payments will be applied to the
amounts  owed to PANYNJ by virtue of their  judgments.  As of December 31, 2002,
this amount is  estimated to be $375,000  and assumes no interest  charges.  The
term of the  repayment  agreement  is  eighteen  months.  During the term of the
agreement the parties intend to continue negotiations on a final settlement.


                  Platinum Funding Corp. ("Platinum") v. New York Regional Rail,
New York Cross Harbor Railroad  Terminal Corp. and CH Partners,  Inc.,  Superior
Court of New Jersey, Law Division,  Bergen County Docket No.:  BER-L-10413-98 on
December 24, 1998. Its former factoring agent named the Company in a lawsuit for
approximately  $250,000.  The  balance  resulted  from  a  dispute  involving  a
factoring  agreement,  which the  Company  entered  into in December  1995.  The
arrearage represents a combination of uncollected accounts receivable, factoring
fees  and  fees  charged  due  to  the  Company's   inability  to  meet  certain
predetermined  minimum  factoring levels. In March 1999, the case was dismissed.
In December  1999,  the Company  entered into an  agreement  whereby the Company
issued  300,000  shares of its common stock into escrow in the name of Platinum.
These shares were to be registered and sold on behalf of Platinum until $250,000

                                      F-17

<PAGE>

was attained from said sale.  Any unsold  balance of the 300,000 shares would be
returned to treasury. If the proceeds of $250,000 were not attained, the Company
would issue additional shares to be registered and sold until the total proceeds
to Platinum  would be  $250,000.  The Company has been unable to register  these
shares for sale and they still remain in escrow. Platinum refiled the lawsuit in
October 2000.  In June 2001,  they received a judgment in the amount of $250,000
plus interest,  which the Company  appealed.  In December 2001, the Company lost
this  appeal.  In March 2002,  NYCH's bank  account was the subject of a levy by
Platinum.  In September  2002, the Company  entered into a settlement  agreement
with  Platinum.  Under the  agreement  Platinum  was paid  eighty-five  thousand
dollars  ($85,000) upon signing,  plus the release of the 300,000 shares of NYRR
common stock held in escrow plus an additional  250,000 shares of treasury stock
and $3,000 paid  monthly  for 33 months with a final  payment of $4,000 in month
34. The initial  payment of $85,000 was made upon  execution of the  settlement.
The Company is current on all payments under this settlement.

                  In September 2002, the Company entered into a settlement
agreement with Ziegler,  Ziegler and Altman ("ZZA"). ZZA had previously received
a judgment for  approximately  $90,000.  Under the terms of the  settlement  ZZA
received $60,000.

                  The Company's Board of Directors is reviewing transactions by
former  management,  the Crawford  family,  as related to the  litigation in the
matters  referred  to in  (a)  and  (b)  above,  as  well  as,  separate  issues
surrounding  the  cancellation  of shares and  attempted  issuance of Series "B"
preferred shares. The Company does not anticipate that there will be any adverse
material effects on it as a result of its review.

NOTE J -    CAPITAL TRANSACTIONS

               PREFERRED STOCK

               In December 1999, the Board of Directors established the
Company's Series C Preferred Stock, ("Series C"), by authorizing the issuance of
up to 500,000  shares.  The Series C has an annual  dividend of $0.10 per share.
Dividends  not  declared by the Board  cumulate  and accrue  interest at 10% per
annum.  Upon liquidation or dissolution,  each share is entitled to distribution
of $1.20 plus unpaid  dividends prior to distribution to holders of common.  The
shares  contain a provision  whereby the holder has a 300 to 1 voting  right per
share.  The shares are  convertible  into common at the  election of the holder,
subsequent  to June 1, 2000.  Each share of Series C is  convertible  into 12.82
shares  of  common  stock  or 90%  of the 5 day  average  closing  price  of the
Company's  common  stock plus accrued  dividend.  For each share of common stock
received on  conversion,  the holder is entitled to purchase 1.042 shares of the
Company's common stock at $0.12 per share.

               In June 2000, 500,000 shares of Series C were issued to John
Marsala in exchange  for $500,000 in  delinquent  notes due him. On February 21,
2002,  $60,000  principal balance plus accrued interest of $86,301 was converted
into 4,358,099  shares of common stock,  upon  conversion the holder received an
option to purchase an additional 4,555,085 shares at $.12 per share.

                                      F-18

<PAGE>

               COMMON STOCK

               On March 22, 2001 the Company issued 9,500 shares of restricted
stock,  pursuant to its "Stock Bonus Plan", to employees of its rail subsidiary.
These  grants  were  issued on the basis of years  employed.  On the date of the
grant the Company's  Common stock was valued at $0.10.  The Company has recorded
$950 as compensation expense.

               On March 21, 2001, the Company issued 1,000,000 shares in the
name of W. Robert  Bentley.  These shares will be  distributed to Mr. Bentley in
accordance  with his 1997  employment  and 2000  settlement  agreement  with the
Company.  These shares were valued at their fair market value on the date of the
settlement  agreement at $180,000.  The Company released 333,333 of these shares
in March 2001 and 333,333 in March 2002.  The remaining  333,334  shares will be
issued in March 2003.

               In October 2001, two holders of the Company's promissory notes
converted  the  principal  value of $55,000 and accrued  interest of $8,401 into
640,302 shares of common stock.  Upon conversion the holders received options to
purchase  64,033 shares at $.18 per share and 165,704  shares at $.60 per share.
These options will expire 90 days from the effective date of a registration.

                       In September 2002, $33,729 principal balance of
convertible  notes plus accrued  interest were  converted into 393,305 shares of
common  stock at $.09 per  shares,  which was the  closing  price of the  common
stock.

                       On June 30, 2002, approximately $146,000 of accrued legal
fees was converted into  1,220,033  shares of common stock valued at $97,602 the
fair value of the stock at date of issuance.

                       On June 30, 2002, 165,667 shares of common stock were
issued to Tad Mahoney,  a former officer of the Company,  in accordance with the
terms of his employment and settlement agreements.

                       On February 21,2002, $18,733 principal balance of
convertible  notes plus accrued  interest were  converted into 655,741 shares of
common  stock,  upon  conversion  the holder  received  an option to purchase an
additional 685,381 shares at $.12 per share.

                       On February 21, 2002, $105,000 principal balance of
convertible  notes plus accrued interest were converted into 3,963,340 shares of
common  stock,  upon  conversion  the holders  received an option to purchase an
additional 1,981,671 shares at $.18 per share.

                       On February 21, 2002, $60,000 in principal balance of the
Preferred  "C" stock  plus  accrued  interest  of  $86,301  was  converted  into
4,358,099 shares of common stock.  Upon conversion the holder received an option
to purchase an additional 4,555,085 shares at $.12 per share.

                       In September 2002, the Company received donated treasury
stock of  250,000  shares  of the  common  stock,  which  was then  reissued  in
settlement  of the  Platinum  Funding  lawsuit.  (See  Note  I of the  Financial
Statements for further information.)


                                      F-19

<PAGE>

               COMMON STOCK OPTIONS

               The Company's 1999 Stock Option Plan (the "Plan") provides for
granting  to the  Company's  employees,  directors  and  consultants,  qualified
incentive and nonqualified  options to purchase common shares of stock. The plan
provides  options  exercisable for a maximum of 4,000,000 shares of common stock
to be granted.  Both  incentive  and  nonqualified  stock options may be granted
under the Plan. The exercise price of options  granted  pursuant to this plan is
determined by a committee but may not be less than 100% of the fair market value
on the day of  grant.  The  term of  each  option  is  fixed  by the  committee;
provided,  however,  that the term of an Incentive Stock Option shall not exceed
ten years from the grant date.

               For holders of 10% or more of the combined voting power of all
classes of the Company's stock,  options may not be granted at less than 110% of
the fair value of the  common  stock at the date of grant and the option may not
exceed 5 years from the date of grant.

               During 2002, the Company granted options to purchase 30,000
shares of common stock an employee of the Company.  The options are  exercisable
at per share prices ranging from $.088 to $.066 per share, which was the 110% of
the fair market value of the common stock at the grant date. Accordingly,  under
APB 25, no compensation  expense was recognized.  These options vest immediately
from the date of grant.

               During 2001, the Company granted options to purchase 67,862
shares of common  stock to certain  employees  of the  Company.  The options are
exercisable at per share prices  ranging from $.16 to $.19 per share,  which was
the fair  market  value of the common  stock at the grant  date,  these  options
expired  unexercised.  Accordingly,  under APB 25, no  compensation  expense was
recognized. These options vest immediately from the date of grant.

               During 2001, the Company issued options to purchase 320,182
shares  of  common  stock  to in  connection  with its  convertible  note of the
Company.  The options are  exercisable  at per share prices ranging from $.18 to
$.60 per share.  On December 31, 2001,  90,445  options  exercisable at $.60 per
share expired.  The Company utilizes the Black-Scholes  option-pricing  model to
calculate  the fair  value  of each  individual  issuance  of  options  with the
following  assumptions  used for grants during the year ended  December 31, 2001
and 2000:  The per-share  weighted  average fair value of stock options  granted
during  2001 and 2000 was [$.0] and  $0.23,  respectively,  on the date of grant
using the Black-Scholes pricing model and the following assumptions:

                                            Years Ended December 31,
                                                2002        2001
                                                -----      ------

                  Expected dividend yield          0%         0%
                  Risk-free interest rate          3%         3%
                  Annualized volatility           25%        25%
                  Expected life, in years          1          1

                                      F-20
<PAGE>

               Stock option activity for the years ended December 31, 2002 and
               2002 is summarized as follows:

                                          Number of     Weighted average
                                           shares        exercise price
                                          --------      ----------------
   Outstanding at December 31, 2000      12,312,524           0.19
              Granted                       388,044           0.46
              Exercised                       (-)             0.00
              Canceled                   (2,432,135)          0.32
                                         -----------          ----
   Outstanding at December 31, 2001      10,268,433          $0.17
              Granted                     7,222,136           0.14
              Exercised                       (-)             0.00
              Canceled                     (461,367)          0.14
                                         -----------          ----
  Outstanding at December 31, 2001       17,029,202           0.16
                                         ==========          =====

               The following table summarizes the Company's stock options
outstanding at December 31, 2002:

                    Options outstanding                   Options exercisable
                   -----------------------                -------------------
                                 Weighted     Weighted                  Weighted
                                  average     average                   average
    Range of                     remaining    exercise                  exercise
 exercise price      Number        life (1)    price        Number       price
----------------    ---------    ----------   --------    ----------    -------

     $ 0.12         9,031,764         1        $ 0.12     9,031,764     $  0.12
       0.15           550,000         1        $ 0.15       550,000     $  0.15
       0.18         6,150,229         1        $ 0.18     6,150,229     $  0.18
       0.20           800,000         1        $ 0.20       800,000     $  0.20
       0.25           287,360         1        $ 0.25       287,360     $  0.25
       0.60           209,850         1        $ 0.60       209,850     $  0.60
                   -----------                 ------     ----------    --------
                   17,029,202                  $ 0.16    17,029,202     $  0.16
                   ===========                 ======    ==========     ========


               (1) The Company used the "Weighted average remaining life" of 1
year for  purposes of this table,  however the terms for the  expiration  of the
majority  of all  options is 90 days  after the  effective  registration  of the
securities underlying the options.

               The Company applies APB No. 25, "Accounting for Stock Issued to
Employees," and related  interpretations in accounting for its stock options. As
a result no  compensation  expense has been recognized for employee and director
stock options.  Had the Company  determined  compensation cost based on the fair
value at the grant date for its stock  options  under SFAS No. 123,  "Accounting
for Stock-Based Compensation," the Company's net loss would have effected in the
following way. In 2001, net loss would have increase from reported by $1,524 and
by $0 in 2002.

                                      F-21
<PAGE>

NOTE K -    INCOME TAXES

               The Company has not recorded any provision for federal and state
income taxes through December 31, 2002. The actual tax expense for 2002 and 2001
differs from  "expected"  tax expense  (computed by applying the statutory  U.S.
federal corporate tax rate of 34% to income before income taxes) as follows:

                                                     2001        2002

                Computed "expected" tax benefit    $(293,000)  $(17,000)
                State income tax benefit, net of
                 federal income tax benefit          (83,000)   ( 3,000)
                Change in valuation allowance
                 for deferred tax assets allocated
                 to income tax expense               376,000      20,000
                                                    ---------   ---------
                                                   $     -     $    -
                                                    =========   =========


               The sources and tax effects of temporary differences giving rise
to the Company's  deferred tax assets  (liabilities) at December 31, 2002 are as
follows:

                  Net operating losses                     $ 3,732,000

                  Valuation allowance                       (3,732,000)
                                                          -------------
                  Total deferred tax asset                 $     -
                                                          =============

               As a result of significant pretax losses, management cannot
conclude  that it is more  likely than not that the  deferred  tax asset will be
realized.  Accordingly,  a valuation  allowance has been established against the
total net  deferred  tax asset for all  periods  presented.  The Company has net
operating losses of approximately $10,700,000 available to offset future taxable
income.  The  losses  expire at various  dates  ranging  between  2000 and 2020.
Utilization   of  these   losses  may  be   limited   based  on  IRS  and  state
change-of-ownership rules.

               The Company and its subsidiaries file separate federal and state
income tax returns.


NOTE L - TEMPORARY EQUITY

               In 1998, the Company reversed the issuance of 12,500 shares of
Series B Cumulative  Convertible Preferred Stock ("the Preferred Shares") to the
Company's  former  president  which were  issued in  exchange  for his return of
10,000,000  common shares.  Counsel  determined  that the preferred  shares were
invalidly  issued  because  an  amendment  to the  terms of the  Series B shares
required shareholder approval, which the Company never obtained. The Company has
not returned the 10,000,000  shares to the former  president and accordingly has
recorded the redemption value of the common shares in a temporary equity account
pending resolution of the transaction.

                                      F-22
<PAGE>

NOTE M -    SEGMENT INFORMATION

               The following information is presented in accordance with SFAS
No. 131,  Disclosure  About Segments of an Enterprise  and Related  Information,
which was adopted by the Company during 1999.

               NYCH operates in the transportation and delivery of rail traffic
via barges segment. During 1999 the Company acquired a 51% interest in JST which
operates in the regional trucking business of short-haul freight  transportation
and landfill management segment.

               The Company's reportable segments are strategic business units
that offer different services. They are managed separately because each business
requires different technology and marketing strategies.

               The accounting policies of the segments are the same as those
described in the summary of significant accounting policies.

               The following tables provide summarized information concerning
the Company's reportable segments.



                                     Railroad         Trucking
                                    Operations       Operations       Total
                                  ---------------    ------------  ------------
Year ended December 31, 2002

  Operating revenues               $  1,685,899      $ 3,745,972   $ 5,431,871

  Gross profit                        1,090,655          636,655     1,727,310

  Segment (loss)                       (126,231)          74,704       (51,527)

  Interest expense                      109,498          102,233       211,731

  Depreciation and                      288,886          307,578       596,464
   amortization



Year ended December 31, 2001

  Operating revenues               $    1,305,375    $ 2,984,365   $ 4,289,740

  Gross profit                            516,457        166,379       682,836

  Segment (loss)                         (616,765)      (220,312)     (837,077)

  Interest expense                        100,542       106,538        207,080

  Depreciation and                        283,446       290,894        574,340
   amortization

                                      F-23
<PAGE>

               MAJOR CUSTOMER

               As of December 31, 2002, sales to the following customers
accounted for more than 10% of the Company's revenues from operations.

                                                      Year ended December 31,
                                                      -----------------------

                                                           2002      2001
                                                          ------    ------
                   Waste Management                         *        15%
                   Construction Demolition Recycling        2%       18%
                   Republic Services                        4%       11%
                   Transload Services                      10%       n/a
                   Unified Services (1)                    45%       11%

               (1) Unified Services began to transport freight via the Company
in August 2001.

               * Less than 1%

NOTE M -    SUBSEQUENT EVENTS

            On March 7, the Company entered into a payment agreement with the
law offices of Kenneth Wasserman,  who represents NYRR and NYCH in various legal
matters.  The terms of the  payment  agreement  was that all  invoices  prior to
February 1, 2003,  approximately  $81,000,  was exchanged for 800,000  shares of
restricted  common stock of NYRR a $10,000  immediate  cash payment and four (1)
$1,000  payments  over a two month  period.  The closing  price of the Company's
common stock on March 7, was $.053 per share.




                                      F-24
<PAGE>

Item 8.  Changes In and Disagreements With Accountants on Accounting and
         Financial Disclosure

In May 2002, the Company changed its accountants to Sherb & Company, LLP. During
the Company's two most recent fiscal years, the Company did not have any
disagreements with its accounts, Feldman Sherb & Company, P.C. (See Form 8-K -
filed September 30, 2002, with date of report of May 11, 2002, incorporated by
reference for further detail concerning changes in and disagreements with
accountants).
                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons, Compliance
        With Section 16(a) of the Exchange Act

     Directors are elected to serve until the next annual meeting of
stockholders and until their successors have been elected and have qualified.
Officers are appointed by the Board to serve until the expiration of their
employment agreements. (See Item 10. Executive Compensation - "Employment
Contracts").

Set forth below is certain information concerning the management of the Company:

      Name                   Age       Position

      Ronald W. Bridges       54       Director
      Darryl Caplan *         39       VP of Corporate Affairs and a Director
      Joel Marcus             60       Chief Financial Officer and a Director
      Sabato Catucci          63       Director, Chairman of the Board
      Gordon Kuhn             51       Director
      Wayne A. Eastman        51       President


* In January 2002, Mr. Caplan resigned as an officer, director and corporate
  counsel of the Company.

     Ronald W.  Bridges was the  President of the Company  from  September
2000 until his retirement in October 2002.  From October  2001,  Mr.  Bridges
was the C.E.O. until his retirement in October 2002. Since October 2001, Mr.
Bridges has been a director of the Company. Between May 1999 and September 2000,
Mr. Bridges was an independent consultant to numerous transportation  companies.
Mr. Bridges served as Conrail's  Assistant Vice President,  Forest and
Manufactured  Goods Business Group, from April 1994 until his retirement in May
1999.

     Joel Marcus,  CPA,  has been an officer and  director of the Company  since
June 2000. Mr. Marcus has been  self-employed as a certified  public  accountant
since  1974.

                                       29

<PAGE>

     Sabato  Catucci  has been a director of the  Company  since July 1999.  Mr.
Catucci also serves as the Chairman of the Company's Board of Directors. Mr.
Catucci is the founder of American Warehousing and American Stevedoring
("American") and has been American's Chief Executive Officer since 1965.
American currently runs the Redhook Marine Terminal for the City of New York and
The Port Authority of NY/NJ, as well as the majority of the piers on the
Brooklyn waterfront. American's piers are the world's largest cocoa port and are
actively engaged in the movement of containerized freight. Mr. Catucci is one of
the persons responsible for establishing the New York Task Force on Port, Rail
and Industrial Development. He sits on the Advisory Committee of the New York
City Economic Development Corporations Cross Harbor Major Investment Study
(MIS).

     Gordon Kuhn has been a director of the Company since September 2000. Since
October 1997 Mr. Kuhn has been an independent consultant to corporations in the
railroad industry. From November 1992 until his retirement in October 1997 Mr.
Kuhn was Conrail's Senior Vice President in charge of its Core Business Group,
with annual sales of over $1,800,000,000. As Senior Vice President Mr. Kuhn, was
a key figure in Conrail's monumental restructuring, whereby management turned a
$1 million per day loss into a $2 million per day profit. While employed by
Conrail his responsibilities included all aspects of Sales, Marketing, Customer
Service, Billing & Collecting, Car Management, as well as, Industrial
Development.

     Wayne A. Eastman was Chief Operating Officer of the Company's rail
subsidiary, (NYCH), from October 2001 until his appointment as President of NYRR
in October 2002. From September 2000 until October 2001, Mr. Eastman served as
NYCH's Vice President of Operations. Mr. Eastman was the District Superintendent
of Conrail's Oak Island Terminal and Yard Operations in Newark, NJ from 1998 to
2000. From 1987 To 1988 Mr. Eastman was superintendent of two regional railroads
in the Midwest. Between 1969 and 1987 Mr. Eastman held various positions with
the Illinois Central Railroad.

     The Board of Directors has responsibility for establishing broad corporate
policies and for overseeing the performance of the Registrant. Members of the
Board of Directors are kept informed of the Registrant's business by various
reports and/or documents sent to them in anticipation of Board meetings as well
as by operating and financial reports presented at Board meetings.

     The Registrant currently does not compensate its directors, in their
capacity as directors.

     The Board does not currently have a standing nominating or executive
committee or any committee or committees performing similar functions, but acts,
as a whole, in performing the functions of such committees. The Board's
compensation committee during the year ended December 31, 2002, consisted of Mr.
Mr. Marcus and Mr. Catucci.  A member of a Committee may be removed at any time
by action of the Board of Directors. The  Board's audit committee during the
year ended December 31, 2002, consisted of Mr. Mr. Marcus and Mr. Bridges.  A
member of a Committee may be removed at any time by action of the Board of
Directors.


Item 10. Executive Compensation

     The following table sets forth in summary form the compensation received by
(i) the Chief Executive Officer of the Company and (ii) by each other executive
officer of the Company who received in excess of $100,000 during the fiscal
years indicated.

30

<PAGE>

<TABLE>
<CAPTION>
                                                        Other       Restricted
       Name and                                         Annual        Stock      Options
       Principal          Fiscal    Salary     Bonus  Compensation    Awards     Granted
       Position            Year       (1)       (2)      (3)           (4)         (5)
       ----------         ------    ------     -----    ------       -------     -------
          <S>               <C>       <C>       <C>      <C>            <C>        <C>

       Ronald Bridges,     2002    $108,000     --       --             --         --
       President           2001    $ 92,000   $8,931     --             --       $ 454
       September 2000,     2000    $ 28,000     --       --             --         --
       C.E.O. October
       2001 until
       October 2002.

       Wayne Eastman,      2002    $ 21,000     --       --             --         --
       President Since
       October 2002

</TABLE>

          (1) The dollar value of base salary (cash and non-cash) received.
          Amounts include the compensation paid by the Company's subsidiaries.

          (2) The dollar value of bonus (cash and non-cash) received. Mr.
          Bridges bonus covers the period from September 1, 2000 to August 31,
          2001 and resulted from an increase in revenues from the Company's rail
          operations by $178,620 over the prior period.

          (3) Any other annual compensation not properly categorized as salary
          or bonus, including perquisites and other personal benefits,
          securities or property. Amounts in the table represents housing and
          automobile allowances.

          (4) The dollar value of any stock awards granted to the employee.

          (5) Black-Scholes  value of 17,862 options  granted to Mr. Bridges in
          September 2001 as a result of his employment agreements.

* Mr. Eastman became President October 2002 and has an annual salary of $84,000.


STOCK OPTIONS

  The following sets forth certain information concerning the grant of options
to purchase shares of Company common stock to each of the executive officers of
the Registrant for the fiscal years listed, as well as certain information
concerning the exercise and value of such stock options for each of such
individuals. Options generally become exercisable upon issuance and expire no
later than one year from the date of grant.

                                       31

<PAGE>

           STOCK OPTIONS GRANTED IN FISCAL YEAR ENDED DECEMBER 31, 2002

                      Number of
                      securities      % of Total
                      underlying    Options Granted   Exercise
                      Options to     Employees in     Price Per   Expiration
    Name               Granted       Fiscal Year      Share        Date
    -------           ----------     -------------   ----------   --------
    Joel Marcus (A)     10,000           33  %         $.088        4/03
    Joel Marcus (A)     10,000           33  %         $.077        5/03
    Joel Marcus (A)     10,000           33  %         $.066        5/03



           STOCK OPTIONS GRANTED IN FISCAL YEAR ENDED DECEMBER 31, 2001

                       Number of
                       securities     % of Total
                       underlying   Options Granted   Exercise
                       Options to     Employees in    Price Per   Expiration
    Name                Granted       Fiscal Year      Share        Date
    -------           ----------     -------------   ----------   --------
    Ronald Bridges      17,862           26%           $0.19       9/1/2002
    Wayne Eastman       25,000           37%           $0.16      4/18/2002
    Wayne Eastman       25,000           37%           $0.16      9/17/2002


A. For each of the three months ending December 31, 2002, for performing
accounting and bookkeeping services Mr. Marcus received 10,000 stock purchase
options, under the Company's qualified plan, and $500, which accrues and can
only be used to exercise these options. The options are exercisable at various
prices between $.088 and $.066 per share, (which was 110% the market price of
the Company's common stock on the date of each grant). These options expire six
months after grant.

  The following tables set forth information concerning the options granted,
during the fiscal years ended December 31, 2002, to the Company's present
officers and directors during the year, and the value as of December 31, 2002 of
all unexercised options (regardless of when granted) held by these persons. In
each case the exercise price of the option was greater than or equal to the
market price of the Company's common stock on the date the option was granted.
The options listed below were granted pursuant to the Company's incentive or
non-qualified stock option plans.

                                          Underlying
                                          Unexercised      Value of Unexercised
                 Shares              In-the-Money Options  In-the-Money Options
               Acquired on   Value       Exercisable/          Exercisable/
Name            Exercise    Realized     Unexercisable         Unexercisable
                   (1)         (2)            (3)                    (4)
------------   ---------    -------- -------------------- ---------------------
Joel Marcus         --          --         30,000/--        $       0/--


          (1) The number of shares of common stock received upon exercise of
          options during the fiscal year ended December 31, 2002.

          (2) With respect to options exercised during the Company's fiscal year
          ended December 31, 2002 the dollar value of the difference between the
          option exercise price and the market value of the option shares
          purchased on the date of the exercise of the options.

          (3) The total number of unexercised options held as of December 31,
          2002, separated between those options that were exercisable and those
          options not exercisable.

          (4) For all unexercised options held as of December 31, 2002, the
          excess of the market value of the stock underlying those options (as
          of December 31, 2002) and the exercise price of the option.

                                       32

<PAGE>

EMPLOYMENT CONTRACTS

  On October 1, 2002, the Company entered into a new employment agreement with
its President, Wayne Eastman. This agreement provides for annual compensation of
$84,000. In addition, he is eligible for incentive bonus. The bonus is in the
form of stock options. The incentive bonus is based upon performance related to
sales increases of NYCH. This agreement is for a period of one year and is
renewable for one year upon mutual agreement.


Long Term Incentive Plans - Awards in Last Fiscal Year

      None.

Employee Pension, Profit Sharing or Other Retirement Plans

     Except as provided in the Company's employment agreements with its
executive officers, the Company does not have a defined benefit, pension plan,
profit sharing or other retirement plan, although the Company may adopt one or
more of such plans in the future.

Compensation of Directors

  At present the Company does not pay its directors for attending meetings of
the Board of Directors, although the Company expects to adopt a director
compensation policy in the future. The Company has no standard arrangement
pursuant to which directors of the Company are compensated for any services
provided as a director or for committee participation or special assignments.

  Except as disclosed elsewhere in this 10-KSB, no director of the Company
received any form of compensation from the Company during the year ended
December 31, 2002.

Stock Option and Bonus Plans.

  The Company has an Incentive Stock Option Plan, a Non-Qualified Stock Option
Plan and a Stock Bonus Plan. A summary description of these Plans follows. In
some cases these Plans are collectively referred to as the "Plans".

Incentive Stock Option Plan.

 The Incentive Stock Option Plan collectively authorizes the issuance of up to
2,000,000 shares of the Company's Common Stock to persons that exercise options
granted pursuant to the Plan. Only Company employees may be granted options
pursuant to the Incentive Stock Option Plan.

 To be classified as incentive stock options under the Internal Revenue Code,
options granted pursuant to the Plans must be exercised prior to the following
dates:

          (a) The expiration of three months after the date on which an option
     holder's employment by the Company is terminated (except if such
     termination is due to death or permanent and total disability);

          (b) The expiration of 12 months after the date on which an option
     holder's employment by the Company is terminated, if such termination is
     due to the Employee's permanent and total disability;

          (c) In the event of an option holder's death while in the employ of
     the Company, his executors or administrators may exercise, within three
     months following the date of his death, the option as to any of the shares
     not previously exercised;

                                       33

<PAGE>

     The total fair market value of the shares of Common Stock (determined at
the time of the grant of the option) for which any employee may be granted
options, which are first exercisable in any calendar year, may not exceed
$100,000.

     Options may not be exercised until one year following the date of grant.
Options granted to an employee then owning more than 10% of the Common Stock of
the Company may not be exercisable by its terms after five years from the date
of grant. Any other option granted pursuant to the Plan may not be exercisable
by its terms after ten years from the date of grant.

     The purchase price per share of Common Stock purchasable under an option is
determined by the Committee but cannot be less than the fair market value of the
Common Stock on the date of the grant of the option (or 110% of the fair market
value in the case of a person owning more than 10% of the Company's outstanding
shares).

Non-Qualified Stock Option Plan.

  The Non-Qualified Stock Option Plan authorizes the issuance of up to 2,000,000
shares of the Company's Common Stock to persons that exercise options granted
pursuant to the Plan. The Company's employees, directors, officers, consultants
and advisors are eligible to be granted options pursuant to the Plan, provided
however that bona fide services must be rendered by such consultants or advisors
and such services must not be in connection with the offer or sale of securities
in a capital-raising transaction. The option exercise price is determined by the
Committee but cannot be less than the market price of the Company's Common Stock
on the date the option is granted.

Stock Bonus Plan.

 Up to 1,000,000 shares of Common Stock may be granted under the Stock Bonus
Plan. Such shares may consist, in whole or in part, of authorized but unissued
shares or treasury shares. Under the Stock Bonus Plan, the Company's employees,
directors, officers, consultants and advisors are eligible to receive a grant of
the Company's shares, provided however that bona fide services must be rendered
by consultants or advisors and such services must not be in connection with the
offer or sale of securities in a capital-raising transaction.

Other Information Regarding the Plans.

 The Plans are administered by the Company's Compensation Committee ("the
Committee"), each member of which is a director of the Company. As of March 31,
2003, the Compensation Committee was made up of Joel Marcus and Sal Catucci. The
Committee is vested with the authority to interpret the provisions of the Plans
and supervise the administration of the Plans. In addition, the Committee is
empowered to select those persons to whom shares or options are to be granted,
to determine the number of shares subject to each grant of a stock bonus or an
option and to determine when, and upon what conditions, shares or options
granted under the Plans will vest or otherwise be subject to forfeiture and
cancellation.

                                       34

<PAGE>

 In the discretion of the Committee, any option granted pursuant to the
Plans may include installment exercise terms such that the option becomes fully
exercisable in a series of cumulating portions. The Committee may also
accelerate the date upon which any option (or any part of any options) is first
exercisable. Any shares issued pursuant to the Stock Bonus Plan and any options
granted pursuant to the Incentive Stock Option Plan or the Non-Qualified Stock
Option Plan will be forfeited if the "vesting" schedule established by the
Committee administering the Plan at the time of the grant is not met. For this
purpose, vesting means the period during which the employee must remain an
employee of the Company or the period of time a non-employee must provide
services to the Company. At the time an employee ceases working for the Company
(or at the time a non-employee ceases to perform services for the Company), any
shares or options not fully vested will be forfeited and cancelled. At the
discretion of the Committee, payment for the shares of Common Stock underlying
options may be paid through the delivery of shares of the Company's Common Stock
having an aggregate fair market value equal to the option price provided such
shares have been owned by the option holder for at least one year prior to such
exercise. A combination of cash and shares of Common Stock may also be permitted
at the discretion of the Committee.

 Options are generally non-transferable except upon death of the option holder.
Shares issued pursuant to the Stock Bonus Plan will generally not be
transferable until the person receiving the shares satisfies the vesting
requirements imposed by the Committee when the shares were issued.

 The Board of Directors of the Company may at any time, and from time to time,
amend, terminate, or suspend one or more of the Plans in any manner they deem
appropriate, provided that such amendment, termination or suspension will not
adversely affect rights or obligations with respect to shares or options
previously granted. The Board of Directors may not without shareholder approval:
make any amendment, which would materially modify the eligibility requirements
for the Plans; increase or decrease the total number of shares of Common Stock
which may be issued pursuant to the Plans except in the case of a
reclassification of the Company's capital stock or a consolidation or merger of
the Company; reduce the minimum option price per share; extend the period for
granting options; or materially increase in any other way the benefits accruing
to employees who are eligible to participate in the Plans.

Summary.

 The following sets forth certain information, as of December 31, 2002,
concerning the stock options and stock bonuses granted by the Company and the
remaining Options/Shares that can be issued under the respective plans. Each
option represents the right to purchase one share of the Company's common stock.

                            Total       Shares
                            Shares     Reserved for    Shares     Remaining
                           Reserved   Outstanding    Issued as  Options/Shares
 Name of Plan            Under Plans    Options     Stock Bonus   Under Plans
 -------------           -----------  -----------   -----------  ------------
 Incentive Stock Option
  Plan                    2,000,000      30,000         N/A        1,782,138
 Non-Qualified Stock
  Option Plan             2,000,000        --           N/A        2,000,000
 Stock Bonus Plan         1,000,000        --           --           833,335


Item 11.   Security Ownership of Certain Beneficial Owners and Management.

  The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of March 31, 2003(except where otherwise noted)
with respect to (a) each person known by the Registrant to be the beneficial
owner of more than five percent of the outstanding shares of Common Stock, (b)
each director of the Registrant, (c) the Registrant's executive officers and (d)
all officers and directors of the Registrant as a group. Except as indicated in
the footnotes to the table, all of such shares of Common Stock are owned with
sole voting and investment power. The title of class of all securities indicated
below is Common Stock with $.0001 par value per share.

                                       35

<PAGE>

      Share Ownership Assuming Exercise or Conversion of all Notes, Preferred
      Shares, Options.
                                    Shares of
Name                                Common Stock            Percent of Class

Ronald Bridges                        100,000                     *
Wayne Eastman                         110,000                     *
Joel Marcus                            30,000                     *
Sabato Catucci                          --                        --
Gordon Kuhn                             --                        --
Citrus Springs Trust               31,738,256                   17.3%
John Marsala                       25,701,649                   12.7%
Steven Hirsch (1)                  13,108,047                    6.9%

All Officers and Directors
  as a Group (five persons)           240,000                    *

*    Less than 1%

          (1) Includes shares held by CCC Financial,  Inc. and the Hi-Tel Group,
          Inc., corporations controlled by Mr. Hirsch.


Item 12.  Certain Relationships and Related Transactions.

As of December 31, 2001, legal fees of approximately $146,000 were due and owing
to Mr. Caplan's law firm. In January 2002, the Company entered into an agreement
whereby the Company would pay all future legal fees and $1,220 monthly in
interest on the prior balance. On June 30, 2002, approximately $146,000 of
accrued legal fees was converted into 1,220,033 shares of common stock.

On February 21,2002, $18,733 principal balance of convertible notes plus accrued
interest were converted into 655,741 shares of common stock, upon conversion the
holder received an option to purchase an additional 685,381 shares at $.12 per
share. Also on February 21, 2002, $60,000 in principal balance of the Preferred
"C" stock plus accrued interest of $86,301 was converted into 4,358,099 shares
of common stock. Upon conversion the holder received an option to purchase an
additional 4,555,085 shares at $.12 per share. (See Note F - "SHORT-TERM DEBT",
Note J - "Preferred STOCK").

During the year ended December 31, 2002, Ronald Bridges, the Company's President
and C.E.O., made short-term loans to JST and NYCH for cash flow purposes. These
loans were later repaid from working capital. At December 31, 2001, the loan
balance due to Ronald Bridges was approximately $3,000. Mr. Bridges also
purchased a tractor used in the Company's operation, which he sold to the
Company for $48,000 payable $6,000 per month. Mr. Bridges purchased this tractor
for $44,000. On this purchase at December 31, 2002, the Company owed Mr. Bridges
$33,000. Also at December 31, 2002 the Company owed Mr. Bridges' company, Blue
Ribbon Group, $40,000 for accrued compensation. Mr. Bridges also purchased a two
(2) trailers used in the Company's operation, which he bought for $40,000 and
sold to the Company for $40,000. This loan has been fully repaid.

Beginning October 1, 2002, for performing accounting and bookkeeping services.
Mr. Marcus, monthly will be granted 10,000 stock purchase options, under the
Company's qualified plan, and will also have accrued $500 per month. This
accrual can only be used to exercise granted options. The options will be
granted on the first day of each month in which Mr. Marcus remains the Company's
Chief Financial Officer at 110% of the closing price of the Company's common
stock. These options will expire six months after grant.

                                       36

<PAGE>

Item 13.  Exhibits and Reports on Form 8K

(a)      Exhibits


Exhibit 99.1    CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
                        PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002 by Wayne Eastman, President * Filed Herewith


Exhibit 99.2    CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
                        PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF
                        2002 by Joel Marcus, Chief Financial Officer * Filed
                        Herewith


(b)      Reports on Form 8K

         Form 8-K "Item 4. Changes in Registrant's Certifying Accountant" filed
         September 30, 2002, with date of report of May 11, 2002.

Item 14. Controls and Procedures.

The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Company's Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and communicated to the Company's management, including its Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure based closely on the definition of "disclosure
controls and procedures" in Rule 13a-14(c). In designing and evaluating the
disclosure controls and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.

Within 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and the Company's
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based on the foregoing, the
Company's Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures were effective.

There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect the internal controls subsequent
to the date the Company completed its evaluation.

                                       37

<PAGE>

                                   SIGNATURES


In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf on April 14, 2003
by the undersigned, thereunto duly authorized.


                                           New York Regional Rail Corp.



                                           /s/ Wayne A. Eastman, Jr.
                                           --------------------------
                                               Wayne A. Eastman, Jr.
                                               President



                                           /s/ Joel Marcus
                                           --------------------------
                                               Joel Marcus
                                               Chief Financial Officer


In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.




     Signatures                     Title                   Date
     -----------                -------------             --------

/s/ Ronald W. Bridges         Director                April 14, 2003
-----------------------


/s/ Gordon Kuhn               Director                April 14, 2003
----------------------


/s/ Sabato Catucci            Director                April 14, 2003
----------------------


/s/ Joel Marcus               Director                April 14, 2003
---------------------

                                       38

<PAGE>

                                  CERTIFICATION
            Pursuant to Section 302 of the Sarbanes Oxley Act of 2002

I, Wayne Eastman, certify that:

1.         I have reviewed this annual report on Form 10-KSB of New York
           Regional Rail Corporation;

2.         Based on my knowledge, this quarterly report does not contain any
           untrue statement of a material fact or omit to state a material fact
           necessary to make the statements made, in light of the circumstances
           under which such statements were made, not misleading with respect to
           the period covered by this quarterly report;

3.         Based on my knowledge, the financial statements, and other financial
           information included in this quarterly report, fairly present in all
           material respects the financial condition, results of operations and
           cash flows of the registrant as of, and for, the periods presented in
           this quarterly report;

4.         The registrant's other certifying officer and I (herein the
           "Certifying Officers") are responsible for establishing and
           maintaining disclosure controls and procedures (as defined in
           Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

             a)       designed such internal controls to ensure that material
                      information relating to the registrant, including its
                      consolidated subsidiaries (collectively the "Company"), is
                      made known to the Certifying Officers by others within the
                      Company, particularly during the period in which this
                      quarterly report is being prepared;

             b)       evaluated the effectiveness of the registrant's internal
                      controls as of a date within 90 days prior to the filing
                      date of this quarterly report (the "Evaluation Date"); and

             c)       presented in this quarterly report the conclusions of the
                      Certifying Officers about the effectiveness of the
                      disclosure controls and procedures based on our evaluation
                      as of the Evaluation Date;

5.         The registrant's Certifying Officers have disclosed, based on our
           most recent evaluation, to the registrant's auditors and the audit
           committee of the registrant's board of directors:

             a)       all significant deficiencies (if any) in the design or
                      operation of internal controls which could adversely
                      affect the registrant's ability to record, process,
                      summarize and report financial data and have identified
                      for the registrant's auditors any material weaknesses in
                      internal controls; and

             b)       any fraud, whether or not material, that involves
                      management or other employees who have a significant role
                      in the registrant's internal controls; and

6.         The registrant's Certifying Officers have indicated in this quarterly
           report whether or not there were significant changes in internal
           controls or in other factors that could significantly affect internal
           controls subsequent to the date of our most recent evaluation,
           including any corrective actions with regard to significant
           deficiencies and material weaknesses.

Date: April 16, 2000

/s/ Wayne Eastman
--------------------
    Wayne Eastman
    President

<PAGE>

                                  CERTIFICATION
            Pursuant to Section 302 of the Sarbanes Oxley Act of 2002

I, Joel Marcus, certify that:

1.         I have reviewed this annual report on Form 10-KSB of New York
           Regional Rail Corporation;

2.         Based on my knowledge, this quarterly report does not contain any
           untrue statement of a material fact or omit to state a material fact
           necessary to make the statements made, in light of the circumstances
           under which such statements were made, not misleading with respect to
           the period covered by this quarterly report;

3.         Based on my knowledge, the financial statements, and other financial
           information included in this quarterly report, fairly present in all
           material respects the financial condition, results of operations and
           cash flows of the registrant as of, and for, the periods presented in
           this quarterly report;

4.         The registrant's other certifying officer and I (herein the
           "Certifying Officers") are responsible for establishing and
           maintaining disclosure controls and procedures (as defined in
           Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

             a)       designed such internal controls to ensure that material
                      information relating to the registrant, including its
                      consolidated subsidiaries, (collectively the "Company") is
                      made known to the Certifying Officers by others within the
                      Company, particularly during the period in which this
                      quarterly report is being prepared;

             b)       evaluated the effectiveness of the registrant's internal
                      controls as of a date within 90 days prior to the filing
                      date of this quarterly report (the "Evaluation Date"); and

             c)       presented in this quarterly report the conclusions of the
                      Certifying Officers about the effectiveness of the
                      disclosure controls and procedures based on our evaluation
                      as of the Evaluation Date;

5.         The registrant's Certifying Officers have disclosed, based on our
           most recent evaluation, to the registrant's auditors and the audit
           committee of the registrant's board of directors:

             a)       all significant deficiencies (if any) in the design or
                      operation of internal controls which could adversely
                      affect the registrant's ability to record, process,
                      summarize and report financial data and have identified
                      for the registrant's auditors any material weaknesses in
                      internal controls; and

             b)       any fraud, whether or not material, that involves
                      management or other employees who have a significant role
                      in the registrant's internal controls; and

6.         The registrant's Certifying Officers have indicated in this quarterly
           report whether or not there were significant changes in internal
           controls or in other factors that could significantly affect internal
           controls subsequent to the date of our most recent evaluation,
           including any corrective actions with regard to significant
           deficiencies and material weaknesses.

Date: April 16, 2003

/s/ Joel Marcus
---------------------------
    Joel Marcus
    Chief Financial Officer