SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB/A
(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, 2001

                                       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
                                (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 $4,289,740.

The aggregate market value of the voting stock held by non-affiliates of the
Company, (126,708,451 shares) based upon the closing price of the Company's
Common Stock on March 27, 2002 was approximately $ 6,335,423.

As of March 27, 2002 the Company had 172,066,491 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 all of the issued and outstanding  common
stock of New York Regional Rail Corporation ("NYRR"), a Delaware Corporation, in
consideration  for the issuance of  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 27, 2002,
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%

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.  The $205,200
excess of purchase  price over net assets  acquired  was  recorded as  goodwill.
Goodwill  is being  amortized  over four  years.  No  financial  information  is
presented, as the operations of OSK are not material.

                                       1

<PAGE>

     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,
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 2001 and 2000 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 2001 and
2000 were scrap products,  such as scrap metal and recycled paper.  For the year
ended December 31, 2000,  cocoa  shipments  accounted for  approximately  45% of
NYCH's  revenue  and  was 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.
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.



                                       2

<PAGE>
     In March 2001, the Company began to set-up  transload areas in its yard and
signed a multi-year agreement,  with Merco Joint Venture, LLC, for the transload
of bio-solids. Although this contract terminated shortly thereafter, the Company
was able to sign another multi-year agreement,  with Unified Services Group, for
the transload of  bio-solids in June 2001. In August 2001,  the Company began to
transport  freight under this contract.  In December 2001, the Company signed an
additional   multi-year  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.  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 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.

     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.

                                       3

<PAGE>
               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  2001,  the Company  used the  shipside  method of the
     transfer of large  electrical  transformers and regularly uses the dockside
     method for cocoa.

          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, 2001,  cocoa shipments  accounted for 30% of NYCH's
          revenue.

     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  Conrail's  operations  were  acquired  by Norfolk  Southern  and CSX
Transportation  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, 2001, NS and CSX collected approximately
66% and 14%,  respectively  of NYCH's  receivables.  (See Item 6 - "Management's
Discussion  and  Analysis  or  Plan  of  Operation" ...  "General"  for  further
discussion on the reason for the decline in NS's  percentage  during fiscal year
2001).   During  the  year  ended  December  31,  2000  these  collections  were
approximately 78% and 7%, respectively.

     As of December 31, 2001, the Company's rail operation had  approximately 48
active  customers.  During the  periods  listed  below the  following  customers
accounted  for  more  than  10% of the  Company's  revenues  from  its  railroad
operations:

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

                                           2001           2000
                                          ------         ------
               Hershey Foods                16%            23%
               Bloomer Chocolates (1)        9%            16%
               Star Corrugated               7%            12%
               Unified Services (2)         10%             *

   * Unified Services began to transport freight via the Company in August 2001.
  (1) Bloomers main facility was closed during the year due to a fire. (See
      Item 6 - "Management's Discussion and Analysis or Plan of Operation" ...
      "General" for further information).
  (2) Does not include the JST portion of the revenue.

     The Company's  current operating  capacity is approximately  2,000 carloads
per month.  For the month ended February 28, 2002, the Company was  transporting
approximately  322 carloads per month (a carload refers to one loaded rail car).
This is an increase  from periods  prior to February 28, 2000,  when the Company
was transporting an average of approximately 290 carloads per month. The Company
charges between $250 and $1,250 per carload depending upon the length and weight
of the railcar,  and the type of commodity being shipped.  The Company estimates
that depending on the mix, it needs to transport at least 300 carloads per month
in order to be marginally profitable.


                                       4
<PAGE>

     OPERATING PROPERTY AND EQUIPMENT

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

                                       Operational           Non-Operational

      Locomotives                           3                       4
      Float bridges                         2                       4
      Float barges                          3                       1


     The  Company  has  approximately  13 miles of track on the New  Jersey  and
Brooklyn  waterfronts.  All of 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  three
operational float barges are 40 ft. by 290 ft. and one is 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 Bush  Terminal is operated  by the Company on a  month-to-month  permit
with New York City.  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 an annual  rental  rate of $28,825  per year.  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).

     THE FUTURE POTENTIAL OF RAIL

     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,

     * That 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.

                                       5

<PAGE>

     The Company  believes that based upon this 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  causes  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).

     As a result of the study,  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.

     In  addition  to the  foregoing,  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 calls 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 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 March  2002,  the City of New York gave the  Canadian  Pacific  Railroad
final approval to operate the 65th Street Rail Yard.  However,  Canadian Pacific
has informed the City that it will not use the float  bridges.  The City and the
Company are currently  negotiating  for use of the float portion of the yard. 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 the only facility on the New Jersey side of the harbor which
is capable of handling rail cars transported by float barges.

     If additional capacity is needed in the future, the Company plans to repair
one of its float bridges and lay four to five miles of  additional  track at the
Greenville yard, 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 four float bridges, at a cost of approximately  $18,000,000,  to
increase  capacity  to 10,000  carloads  per month.  (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 began entering 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.

     During 2001, management has further diversified the freight handled by JST.
In July 2001,  JST in  conjunction  with NYCH,  the Company's  rail  subsidiary,
entered into a long-term  contract for the movement of  bio-solids.  The Company
picks up containers  at various  locations  throughout  the City of New York and
transports them to the Greenville rail facility for further shipment by NYCH. In
December 2001, the Company entered into a long-term contract for the movement of
structural  steel  and  related  products.  JST  picks  up loads of steel at the
Company's Greenville facility for local destinations in New Jersey, New York and
Long Island.  During 2001, the Company also  transported  various other types of
containerized freight. Despite the fact that MSW and C & D makes up the majority
of the freight handled,  other freight such as pipe,  structural  steel,  rolled
steel and bio-solids have begun to make up a greater percentage of the Company's
business.

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

                                       6

<PAGE>

     As of December 31, 2001, the Company's trucking operation had approximately
41 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,
                                       -----------------------

                                          2001           2000
                                         ------           ------
      Waste Management                     15%              15%
      Construction Demolition Recycling    26%              10%
      Republic Services                     7%               4%
      Unified Services (1)                 10%               *

  *  Unified Services began to transport freight via the Company in August 2001.
 (1) Does not include the NYCH portion of the revenue.


     OPERATING EQUIPMENT & PERSONNEL


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

                                                  Not in used and/or
                                Operational         non Operational
                                -----------       -------------------
                 Tractors           13                    13
                 Dump Trucks         5                     0
                 Trailers           25                    11


     As of March 27,  2002,  JST owns  twenty-five  (25)  tractor/trailers.  The
Company is currently  evaluating the vehicles that are either not used in 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 seven (7) flatbed
trailers,  five (5)  tri-axle  dump trucks,  four (4) dump  trailers and one (1)
tractor.

     The 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 any  licenses or permits  which are  material to its  operations  since
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.

     During 2001, the Company  regularly  employed five (5) additional union and
non-union subcontracting  companies to facilitate its freight operations.  These
companies run approximately  twelve (12) additional  tractor/trailers to service
the Company's business needs.  During periods of peak demand the Company employs
the services of various other  subcontractors for use of ten (10) to twelve (12)
additional  tractor/trailers  and has verbal  understandings  with several other
subcontractors on an "as needed" basis.

     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 customers sites where union drivers are required.  JST uses a
professional employer organization ("PEO") to "lease" these union drivers. A PEO
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 27,
2002, 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").

                                       7

<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.


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 in 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.


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 effected.


                                       8
<PAGE>
     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.


EMPLOYEES

     As of March 27, 2002, the Company had ten (10) total  employees,  seven (7)
full-time employees and three (3) part time employees.

     Of these  employees,  three (3) serve as executive  officers,  one (1) on a
full time basis as C.O.O. of the rail operations,  one (1) on a full time basis,
as  President  & C.E.O.,  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 five (5) employees,  four (4) work in rail
and one (1) in trucking operations.

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

     In  addition to the  allocated  personnel,  the  Company's  rail  operation
employs six (6) full-time employees. Of these, one (1) serves as C.O.O., one (1)
in  administration  and  four  (4)  operational  personnel.  The  Company  has a
collective  bargaining agreement with the union, which was signed in August 2001
and expires in August 2004,  for the Company's four (4)  operational  employees.
They consist of a  locomotive  engineer,  two  conductors  and a  bridgeman.  In
addition to the full and part time  employees,  the Company  employees  numerous
"fill-in  employees" who are used to fill temporary  vacancies in its operations
caused by peak demand, sickness, vacations or other contingencies.

     In  addition  to the  allocated  administrative  personnel,  the  Company's
trucking  operation has one (1) part-time  employee,  who serves as  operational
manager.  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, 2001 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.)


                                       9

<PAGE>

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 $600,000, 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 early stages of  discovery;  accordingly  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.

     b. 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.

     c. 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.  The  Company  was  named in a lawsuit  by its  former
     factoring agent 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 judgement  in the amount of $250,000
     plus interest,  which the Company  appealed.  In December 2001, the Company
     lost this appeal. In March 2002, the NYCH's bank account was the subject of
     a levy by  Platinum  Funding.  Currently,  the  Company  is  negotiating  a
     settlement  with  Platinum and believes a  settlement  may be reached.  The
     Company has reflected  the liability to Platinum as a current  liability in
     the  Company's  financial  statements.   Depending  on  the  terms  of  the
     settlement,  these shares may be returned to treasury and/or this liability
     may be changed.

     d. 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.  The anticipated  timeframe for a final decision
     from the STB is  expected  in  April  2002.  However,  if the  decision  is
     appealed,  the process could take 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.



                                       10

<PAGE>

     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.

     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.  The Company has established
     a reserve of $56,000 for the estimated costs of litigation and settlements.


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)

     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 2002 for holding
its Annual Meeting of Stockholders  for fiscal year ended December 31, 2001 with
the  intention  that same 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.





                                       11




<PAGE>

                                     PART II

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

(a)      Market Information

          The Registrant's  common stock,  $.0001 par value (the "Common Stock")
     was listed on the  Electronic  Over-the-Counter  Bulletin  Board and traded
     under the symbol NYRR until March 21, 2001  delisting  (2). Since March 22,
     2001 the Company's  common stock has been listed on the National  Quotation
     Data Service  ("pink  sheets") under the same symbol.  The following  table
     sets forth, for the periods indicated, the range of high and low bid prices
     on the dates indicated for the Registrant's  securities indicated below for
     each full quarterly period within the two most recent fiscal years.


         Fiscal Year Ended December 31, 2000     Quarterly Common Stock Price
         By Quarter                                       Ranges (1)
         ------------------------------------     ----------------------------
                                                         High      Low
                                                        ------    -----
           March 31, 2000                               $0.63     $0.22
           June 30, 2000                                 0.49      0.24
           September 30, 2000                            0.32      0.16
           December 31, 2000                             0.22      0.09


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


          1)  The   Registrant's   Common   Stock   traded  on  the   Electronic
          Over-the-Counter  Bulletin  Board until 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

          2) Since March 22, 2001,  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.


(b)      Holders

          As of the  close of  business  on March  27,  2002  there  were  1,402
     stockholders  of record of the  Registrant's  Common Stock and  172,066,491
     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.


                                       12


<PAGE>

(d)      Delisting

          On October 7, 1998, the National  Association  of Securities  Dealers,
     Inc.  ("NASD"),  through  its  wholly-owned  subsidiary,  the NASDAQ  Stock
     Market, Inc. ("NASDAQ") submitted to the Securities and Exchange Commission
     ("SEC" or  "Commission"),  pursuant to Section  19(b)(1) of the  Securities
     Exchange  Act of  1934  ("Exchange  Act"  or  "Act")  \1\  and  Rule  19b-4
     thereunder,\2\  proposed  amendments  to NASD  Rules 6530 and 6540 to limit
     quotations  on the OTC Bulletin  Board(R)  ("OTCBB") to the  securities  of
     issuers  that are  current  in their  reports  filed  with the SEC or other
     regulatory  authority,  and to prohibit a member from quoting a security on
     the OTCBB unless the issuer has made current filings, respectively.

          On March 20, 2001,  NASDAQ  determined to delist Company's  securities
     from the  Electronic  Over-the-Counter  Bulletin  Board  effective with the
     close of business  March 21,  2001.  The  decision  opined that the Company
     failed to comply with all requirements for continued  listing on Electronic
     Over-the-Counter Bulletin Board, specifically, Rule 6530.

     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.


RECENT ISSUANCE OF UNREGISTERED STOCK AND OPTIONS.

     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.

     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.

     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).

     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 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
(included but not limited to Options,  Preferred  Shares and Convertible  Notes)
were to be issued in accordance with their respective terms, would increase from
172,066,491  on  March  27,  2002 to  211,994,675.  The  potential  issuance  of
additional  shares has been  computed  based upon the  closing bid price for the
Company's  common  stock on March 27,  2002 and would  necessarily  increase  or
decrease  dependent upon  fluctuations  on such bid price on any given date. The
Company intends to take the necessary steps so as to have sufficient  authorized
shares to cover contingencies listed above.

                                 13

<PAGE>

     At December 31, 2001, there were 10,268,433  Options  outstanding which are
exercisable  at various  prices  between $.12 and $.60 per share.  (See Note J -
"COMMON Stock options" and Note N - SUBSEQUENT EVENTS for additional information
on options issued on convertible promissory notes).

     At December 31, 2001,  there were $937,000 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 N -  SUBSEQUENT  EVENTS  for  additional  information  on  the  convertible
promissory Notes).

     At December 31, 2001, there were 500,000  convertible  Preferred "C" shares
outstanding.  (See Note J - "Prefeered STOCK" and Note N - SUBSEQUENT EVENTS for
additional information on the 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,
                                             2001               2000
                                                             (restated)
                                           ----------       ------------

 Current Assets                           $  513,869        $ 1,088,399
 Total Assets                              4,955,579          5,270,089
 Current Liabilities                       5,430,979          4,937,604
 Total Liabilities                         6,477,397          6,113,947
 Temporary Equity                          1,512,500          1,512,500
 Working Capital (Deficit)                (4,917,110)        (3,849,205)
 Stockholders' (Deficit)                  (3,034,318)        (2,441,592)


                           Operating Data
                                           Years Ending December 31,
                                             2001               2000
                                                             (restated)
                                           ----------       ------------
Operating revenues                        $4,289,740        $ 8,626,093
Operating expenses                        (3,606,904)        (7,613,144)
Administrative expenses                   (1,398,067)        (1,802,773)
Interest and other expenses                 (207,080)        (1,123,674)
Minority interest                             85,234            (36,127)
Extraordinary gain on debt forgiveness          --              263,271
                                          -----------       ------------
Net loss                                  $ (837,077)       $(1,686,354)
                                          ===========       ============

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.  During 2001, the Company further reduced its  administrative
expenses  by a  reduction  of  employees  from  its  workforce  and has  reduced
operating  costs through  better  utilization  of manpower,  equipment and other
expense reductions.

     Since  Conrail's  operations  were  acquired  by Norfolk  Southern  and CSX
Transportation  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, 2001, NS and CSX collected
approximately 66% and 14%, respectively of NYCH's receivables as compared to the
year ended December 31, 2000 when these  collections were  approximately 79% and
7%, respectively.


                                 14

<PAGE>
     The  Company  has  continued  to improve  its  margins in its rail  freight
operation's, while adding a new operation,  transload, which has lower but still
profitable  margins.  However,  revenues  during 2001 were  impacted by problems
encountered in trucking  operations  and by the  following:  During the six-week
period between April 10 and May 21, 2001 the Company  transported  approximately
twenty-five  carloads for a local food  producer.  These cars'  freight was then
emptied and the freight was re-loaded  into waiting  trucks for local  delivery.
The gross revenue per car was  approximately  $1,400.  In order to maintain this
business the Company  needed to build a permanent  loading dock  facility at its
Brooklyn  terminal.  Due to costs and permits  required,  the Company has yet to
construct  this facility and until it does,  this business can no longer be done
at the  Company's  facilities.  The  Company  anticipates  the  return  of  this
business,  sometime in the future,  by utilizing either its own yard or Canadian
Pacific's yard at 65th Street,  which has a permanent  loading dock. The Company
entered into a long-term freight transportation agreement, to transport New York
City bio-solids for Merco, a sub-contractor for the City. This contract began in
May 2001.  The gross  rail  revenue on this  agreement,  from May 15 to June 15,
2001, was approximately  $46,000.  In July 2001, the City of New York terminated
Merco's agreement and thereby the Company's agreement.  In July 2001, one of the
Company's  cocoa customers had to shutdown its facility due to fire, this caused
all rail shipments of cocoa to halt. This customer's shipments were interchanged
by the Company to NS causing a decline in the receivable  collection by NS. This
cocoa  customer's  facility is expected  to be on-line  again  during the second
quarter of 2002.

     The  Gloucester  contract  terminated  on  December  31,  2000  as per  the
agreement.  The contract was not renewed because  Gloucester,  which was selling
excess  capacity to  out-of-county  waste suppliers - ran out of spare space and
was unable to renew the contract.  The Company verbally  sub-contracted  with an
in-county  waste  supplier to  Gloucester  to dump the  Company's  out-of-county
waste.  The rate per ton was only  slightly  higher than the  Company's  expired
agreement  with  Gloucester.  This  agreement  only  lasted  one  month  due  to
Gloucester  informing  the  contractor  that if it wanted to renew its agreement
upon expiration it would have to terminate  immediately all out-of-county  waste
dumping.  The  Company  has also  negotiated  additional  contracts  with  other
landfills;  DRP in DE, Eagle Land  Management  in PA and  Recovermat  in MD. The
agreements are at slightly  higher rates than previous  agreements.  The Company
was able to convert some of its customers to these landfills, however due to the
extra distance,  lack of the Company providing credit terms and increased costs,
other  landfills  became  cost  competitive  and the  Company  began to lose its
marketshare.

     The  Company had based its  expectations  for the year ended  December  31,
2001, on the operational  profit  anticipated from these customers.  The loss of
these three  customers,  two of which  utilized both trucking and rail services,
and the additional  problems we have  encountered in the landfill portion of our
trucking  operations  have  caused  cash flow to  diminish.  Based on actual and
projected  volumes,  these customers would have accounted for more than $100,000
in monthly revenues for the trucking and rail operations. In late June, we added
a new customer for both our rail and trucking  operations.  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.

     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;
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.

                                 15
<PAGE>


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

     1. In March 2001 the Company signed its first  multi-year  agreement,  with
     Merco  Joint  Venture,  LLC,  for the  transload  of the City of New York's
     bio-solids. In July 2001, the City of New York terminated Merco's agreement
     and thereby the Company's agreement.

     2. In June 2001,  the Company signed a multi-year  agreement,  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 2,100 containers to be handled by JST
     and 300 rail cars to be handled by NYCH.  The term of the contract  expires
     in 2013.

     3. In  December  2001,  the  Company  signed a  multi-year  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.  The terms of this contract include 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  expires in 2011 but
     contains a 10-year optional extension.

     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.

     In the May  2000,  City of New  York  completed  a Major  Investment  Study
entitled "Cross Harbor Freight  Movement".  The Company believes that based upon
this 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 causes 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  addition  to the  foregoing,  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 calls 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.

     At year-end  December  2001,  the Company  now 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).


YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

RESULTS OF OPERATIONS

     The Company's  current operating  capacity is approximately  2,000 carloads
per month.  For the month ended February 28, 2002, the Company was  transporting
approximately  322 carloads per month (a carload refers to one loaded rail car).
This is an increase  from periods  prior to February 28, 2000,  when the Company
was transporting an average of approximately 290 carloads per month. The Company
charges between $250 and $1,250 per carload depending upon the length and weight
of the railcar,  and the type of commodity being shipped.  The Company estimates
that depending on the mix, it needs to transport at least 300 carloads per month
in order to be marginally profitable.

                                 16

<PAGE>
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


The components of the Company's operating revenues and expenses by business
segment during the year ending December 31, 2000 were:

                                   Railroad             Trucking

         Operating revenues       $ 1,301,087          $ 7,325,006
         Operating expenses           580,879            7,032,265
         Gross profit                 720,208              292,741

     During the year ending December 31, 2000 the Company  recorded  significant
expenses  as the  result of the  issuance  of (1) common  stock at below  market
prices, (2) options with exercise prices below market prices and (3) convertible
debt which was convertible  into shares of the Company's  common stock at prices
below the then prevailing  market prices.  These charges did not require the use
of cash and were offset by corresponding  credits to stockholders'  equity.  The
amounts  expensed by the Company,  as a result of the foregoing was $734,371 for
the year ended December 31, 2000.

     Restated Financial Statements.  The accompanying  financial statements have
been restated to properly reflect  restatements made to the financial statements
of 2000.

     The 2000 financial statements have been restated to reflect the issuance of
options  on  conversion  of  notes in March  and May  2000 of  $717,038  and the
beneficial  conversion feature on $60,000 of notes issued in March/April 2000 of
$17,333.

     The effect of such restatement on the Company's financial  statements is as
follows:

                                             As                          As
                                          Reported    Adjustments     Restated
Statement of Operations
 Adjustments Year ended December 31, 2000
 Loss from operations                    $ 789,824    $            $    789,824
 Net loss                                  915,856      734,371       1,650,227
 Net loss per common share basic         $   (0.01)   $            $      (0.01)

(See  Note O to the  Company's  financial  statements  for  further  information
concerning this restatement.)


Year Ended December 31, 2001

     During the year ended  December 30,  2001,  the Company had  $4,289,740  in
revenue  compared to $8,626,093 in revenue during the  corresponding  prior year
period, a decrease of 50.3%. This decrease was due to a decrease in the trucking
operations  to  $2,984,365  from  $7,325,006  for the prior  period  in 2000,  a
decrease of 59.3%.  The decrease was primarily due to the loss of the Gloucester
Landfill  contract  offset by a corresponding  increase in transload  revenue of
$598,450.

     Operating  expenses for the year ended  December  31, 2001 were  $3,606,904
compared to $7,613,144 a decrease of $4,006,240 or 52.6% over the  corresponding
year. This decrease in expense is due to the corresponding  decrease in revenues
from the loss of the Gloucester Landfill contract.

     Operating expenses as a percentage of operating revenues were 88.3% for the
year ended December 31, 2000. In 2001 operating  expenses  decreased to 84.1% 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 60.4%.  Trucking's  operating  expense,  as a
percent of trucking revenue was 94.4%.

     Administrative  expenses  decreased in the year ended  December 31, 2001 by
$404,706.  As  a  percentage  of  operating  revenues,  administrative  expenses
increased to 32.6% for the year ended December 31, 2001, from 20.9% for the year
ended December 31, 2000.  The decrease of $404,706,  comes as a direct result of
the success in the  Company's  cost cutting  measures  including  reductions  in
manpower,  tugboat,  maintenance and repair expense (due to previous replacement
of older  equipment with newer  equipment) and the decrease would have been more
substantial,  had  it  not  been  for  a  reserve  for  possible  bad  debts  of
approximately $315,000.

                                 17

<PAGE>

     Interest  expense was  $207,080 for the year ended  December  31, 2001,  as
compared  to  $1,123,674  for the year  ended  December  31,  2000.  This  major
reduction of $916,594 was due to the fact that much of the Company's convertible
notes (issued in previous  periods) had been converted to equity and a reduction
of equipment  leases payable (these leases contain interest at rates between 10%
to 21% per annum), thereby substantially reducing interest expense. In addition,
the Company did not raise any money during the year and  therefore did not issue
any  convertible  debt.  In the prior period the Company  recognized  beneficial
conversion  feature  and  interest  on the  issuance  of  options on the sale of
promissory  notes,  which were  convertible  into shares of the Company's common
stock at prices below  prevailing  market rates.  During the year ended December
31, 2000 the Company  recorded  $734,000  of these types of  expenses,  of which
$221,351 was to related parties.

     During the year ended December 31, 2001, the Company's  incurred a "loss on
disposal of fixed assets" in the amount of $46,403.  In 1999, the Company agreed
to purchase  three  locomotives  for $126,000,  under the  condition  that these
locomotives were to be put into a usable condition.  The seller failed to comply
and in 2001  negotiated a settlement,  in which the Company was granted title to
the  locomotives  in an "as is"  condition  for  the  previously  paid  $84,000.
However,  the Company could not find the parts needed to fix these units and was
being  charged  daily  storage.  The Company sold these  locomotives  during the
period for $19,500,  resulting in a loss  totaling  $64,500.  In July 2001,  the
Company sold a refrigerated  trailer not used in its operations for $20,000. The
book value of this  trailer was  $12,500,  resulting  in a gain in the amount of
$7,500. In August 2001, the Company received $5,263 scrap value for a trailer no
longer  used in its  operation.  The book  value  of this  trailer  was  $1,971,
resulting in a gain in the amount of $3,292. In September 2001, the Company sold
a  locomotive,  which was no longer used in its  operations  for $28,000,  which
included  a payment  of  $2,000  and a note  receivable  for  $26,000.  The note
receivable is payable at the rate of $2,000 per month for thirteen  months.  The
book value of the locomotive  was $20,695,  resulting in a gain in the amount of
$7,305.

     During the year ended  December 31, 2000 the  Company's  expenses  included
"Loss on  Disposal  of Fixed  Assets" in the amount of  $365,002.  In 2000,  the
Company was made aware of judgments  by PANYNJ,  listed  above.  The Company had
facilities on Port  Authority  property,  which was part of the  judgment.  This
property  contained a float bridge and rail track.  The Company has  written-off
the book value of these  assets.  In addition,  the Company had a survey done on
its second float bridge,  which sank, at its Bush Terminal facility in Brooklyn.
As a result of this survey the Company  decided to  write-off  the book value of
this bridge.

     The  Company  began to focus its sales on its rail  operations,  because of
difficulties  experienced in the trucking operations and the basic nature of the
rail  industry.  In the rail  industry it takes time to  negotiate  and finalize
agreements,  yet  when  finalized  these  agreements  are  often  for  extremely
long-terms.  The Company  believes sales of joint  movements,  both trucking and
rail, will make the business grow and be profitable.  Additionally,  the Company
sees the ability to make these joint movements as a competitive advantage.

     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. The anticipated timeframe
for a final  decision  from the STB is expected in April 2002.  However,  if the
decision is appealed,  the process could take 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.


                                18

<PAGE>
FINANCIAL CONDITION

LIQUIDITY AND CAPITAL RESOURCES

     Total assets of the Company on December  31, 2001  decreased by $314,510 to
$4,955,579 from  $5,270,089 on December 31, 2000,  primarily due to reserves for
possible bad debt of approximately  $315,000.  Current assets decreased $574,530
to $513,869 on December  31, 2001 from  $1,088,399  on December  31,  2000.  The
decrease  in  current  assets  is   attributable   to  a   reclassification   of
approximately  $377,000  of current  receivables  to  long-term  receivables,  a
decrease in deposits by $84,000,  which was  reclassified  to fixed  assets that
were subsequently sold, a $79,000 reserve for doubtful accounts receivable and a
decrease in accounts receivable.  Other assets increased $234,341 to $717,856 on
December  31,  2001  from  $483,515  on  December  31,  2000.  The  increase  is
attributable  to  a  reclassification  of  approximately   $377,000  of  current
receivables to long-term  receivables,  offset by an annual amortization expense
of $63,517 and a reserve on long-term  receivables.  On December  31, 2001,  the
Company had total  liabilities of $6,477,397  compared to $6,113,947 on December
31, 2000. On December 31, 2001, current  liabilities were $5,430,979 compared to
$4,937,604 on December 31, 2000. The Company's  working  capital on December 31,
2001 decreased by $1,067,905 to $(4,917,110)  from  $(3,849,205) on December 31,
2000,  primarily due to a reclassification of approximately  $377,000 of current
receivables to long-term  receivables,  a decrease in deposits by $84,000, which
was reclassified to fixed assets that were  subsequently  sold,  $79,000 reserve
for  doubtful  accounts  receivable,  a decrease  in  accounts  receivables,  an
increase in current  maturities of long-term debt of $180,000 and an increase in
accrued expenses of $362,504.

     For the first time in the Company's history as a public Company, during the
year ended  December 31,  2001,  had  positive  operating  cash flow of $326,695
compared to cash used in  operations  of $450,021 in the previous  year.  During
2001,  the Company  acquired  $177,892 of property and  equipment  and paid down
long-term debt by $118,225.

     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 27,
2002,   convertible   notes  in  the  principle  amount  of  $939,000   remained
outstanding.  As of March 27, 2000,  10,268,433  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  $1,735,000.  (See Item 5 of this report,  as
well  as,  Notes  J and  Note  N of  the  financial  statements  for  additional
information).

     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.

                                       19
<PAGE>

     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).

     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, 2001 the Company had the following current
liabilities:

             Accounts payable and accrued expenses   $ 2,806,903

             Notes payable and current maturities
              of long-term debt                        1,694,624

             Payroll taxes payable                       929,452

     Accounts payable and accrued expenses include  approximately  $228,000 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  include  approximately  $264,000 for
the  Platinum  Funding  judgment  received  in June 2001.  (See Item 4(c) "Legal
Proceedings" - Platinum Funding Corp. of this report for further information.)

     Accounts payable and accrued expenses include a perfected  judgement by the
Port  Authority  of  New  York  and  New  Jersey  ("PANYNJ")  in the  amount  of
approximately  $719,000 including  interest.  As of November 15, 2001 management
and the PANYNJ have  finalized  terms of a possible  agreement.  This  agreement
calls  for  36  monthly  payments  of  $2,250.  This  agreement  is  subject  to
ratification and approval of the Board of Directors of the PANYNJ. Management is
hopeful that such an approval will be forthcoming.

     Accounts  payable and accrued  expenses  also include  $905,000 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 $488,700 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 27, 2002 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
$416,300  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.)


                                       20

<PAGE>

     The  Company  has an accrual  for  payroll  taxes  payable in the amount of
$929,452.  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.

     The Company has accrued  $218,559 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  $76,000 at December 31, 2001.
As of March 27, 2002, the Company and Conrail are finalizing mutually acceptable
terms for  resolution of all  outstanding  issues  between the two parties.  The
Company  anticipates  that  during the second  quarter of 2002 the  parties  may
resolve their differences in a mutually acceptable 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 and Note N - Subsequent Events in
the financial statements for additional information).  There can be no assurance
that these remedies may not be used in the future.

     There is approximately  $1.3 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,   $379,986  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 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 $9 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.

     The Company  expects that based on projected  sales volume it will suffer a
loss during the first quarter of 2002. However, for the year ending December 31,
2002, the Company  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.


                                       21

<PAGE>

NEW ACCOUNTING PRONOUNCEMENTS

     In July 2001,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement of Financial Accounting  Standards (SFAS) 141, Business  Combinations,
and SFAS 142,  Goodwill and  Intangible  Assets.  SFAS 141 is effective  for all
business  combinations  completed after June 30, 2001. SFAS 142 is effective for
the year beginning January 1, 2002; however certain provisions of that Statement
apply to goodwill and other intangible assets acquired between July 1, 2001, and
the  effective  date of SFAS 142.  The Company  does not believe the adoption of
these  standards  will  have  a  material  impact  on  the  Company's  financial
statements.

     In July 2001,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset
Retirement  Obligations.  This  statement  addresses  financial  accounting  and
reporting for obligations  associated with the retirement of tangible long-lived
assets and the associated asset retirement  costs. This Statement applies to all
entities.  It applies to legal  obligations  associated  with the  retirement of
long-lived  assets that result from the acquisition,  construction,  development
and  (or) the  normal  operation  of a  long-lived  asset,  except  for  certain
obligations  of lessees.  This  Statement is effective for financial  statements
issued for fiscal  years  beginning  after June 15,  2002.  The Company does not
believe  the  adoption  of these  standards  will have a material  impact on the
Company's financial statements.

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. This statement addresses financial  accounting
and reporting for the impairment or disposal of long-lived assets and supersedes
FASB Statement No. 121,  Accounting for the Impairment of Long-Lived  Assets and
for  Long-Lived  Assets to Be  Disposed  Of. The  Company  does not  believe the
adoption  of these  standards  will  have a  material  impact  on the  Company's
financial statements.


Item 7.  Financial Statements.

      See the financial statements attached to this report.


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

     In June 2000,  the  Company  changed  its  accountants  to Feldman  Sherb &
Company, P.C. 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  December  28,  2000,  with  date of  report  of June 8,  2000,
incorporated   by  reference  for  further  detail   concerning   changes  in  a
disagreements with accountants).


                                       22


<PAGE>

                                    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       President, C.E.O. and 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       Chief Operating Officer (NYCH)


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

     Ronald W.  Bridges has been the  President of the Company  since  September
2000.  In October  2001,  Mr.  Bridges was also  appointed  as the C.E.O.  and 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.

     Darryl  Caplan had been an officer and  director of the Company from August
1999 to January 2002. Mr. Caplan has been an attorney in private  practice since
1986. Mr. Caplan is a graduate of Rutgers University and a member the New Jersey
Bar. In January 2002, Mr. Caplan resigned as an officer,  director and corporate
counsel of the Company.

     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.  Mr.  Marcus is Chief  Financial  Officer  and a  director  of SMLX
Technologies  Inc. a publicly  traded company  involved in medical  research and
development.

     Sabato  Catucci  has been a director of the  Company  since July 1999.  Mr.
Catucci 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 has been Chief  Operating  Officer of the  Company's  rail
subsidiary,  (NYCH), since October 2001. 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.


                                       23

<PAGE>

ADVISORY COMMITTEE

     The Company has an Advisory Committee,  which is comprised of the following
persons:

     Anthony Riccio has been the Vice  President of the Harlem River  intermodal
rail yard since 1990.  From 1988 to 1989, Mr. Riccio served as  Commissioner  of
the Department of Ports &  International  Trade,  the predecessor to today's New
York City Economic  Development  Corporation  (NYC/EDC).  The NYC/EDC guides and
overseas policies relating to intermodal rail freight for the City of New York.

     Dominick  Massa is the property  manager for the Bush Terminal on which the
Company  operates  in  Brooklyn,  NY,  but  which is owned by the New York  City
Economic  Development  Corporation.  Mr.  Massa also serves on the Cross  Harbor
Major Investment Study (MIS) Advisory Committee.

     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, 2001, consisted of Mr.
Caplan, Mr. Marcus and Mr. Catucci.  Since his resignation the Board has not yet
appointed a replacement  for Mr. Caplan.  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.

<TABLE>
                                                        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,     2001     $ 92,000   $8,931     --           --         $ 454
       President since     2000     $ 28,000     --       --           --           --
       September 2000,
       C.E.O. Since
       October 2001.

       W. Robert Bentley,  2000     $ 75,000     --      $11,400    $180,000        --
       President from
       January 1999 to
       September 2000

</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) Amounts  reflect the value of the 1,000,000  shares Mr.  Bentley's
          received by virtue of his 1997-employment agreement.

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


                                       24

  <PAGE>
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.


           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       9/1/2001
    Wayne Eastman        25,000           37%          $0.16      4/18/2001
    Wayne Eastman        25,000           37%          $0.16      9/17/2001


           STOCK OPTIONS GRANTED IN FISCAL YEAR ENDED DECEMBER 31, 2000

                     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)      120,000          28%          $0.20       12/31/2001
    Darryl Caplan (B)    302,286          72%          $0.21        9/30/2000


          A. For the six months  ending  December 31,  2000,  the Company used a
          consulting  company  affiliated  with Joel  Marcus to perform  certain
          accounting and bookkeeping services. For these services the consulting
          company  was  granted  options  to  purchase  120,000  shares  of  the
          Company's common stock and $30,000.  The options were exercisable at a
          price of $0.20 per share, (which was the market price of the Company's
          common stock on the date of the consulting  agreement).  These options
          expired December 31, 2001.

          B. The Company did not  compensate Mr. Caplan for acting as an officer
          and director of the Company.  Mr. Caplan's law firm billed the Company
          for legal  services  rendered.  In September  2000, the Company issued
          302,286 shares of its common stock to Mr. Caplan's law firm in payment
          of $63,480 in legal fees.

     The following tables set forth information  concerning the options granted,
during the fiscal  years ended  December  31,  2001,  to the  Company's  present
officers and directors during the year, and the value as of December 31, 2001 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)
--------------  ---------    --------     --------------         -------------
Wayne Eastman      --           --           50,000/--             $    0/--
Ronald Bridges     --           --           17,862/--             $    0/--


          (1) The number of shares of common  stock  received  upon  exercise of
          options during the fiscal year ended December 31, 2001.

          (2) With respect to options exercised during the Company's fiscal year
          ended December 31, 2001 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,
          2001,  separated between those options that were exercisable and those
          options not exercisable.

          (4) For all  unexercised  options held as of December  31,  2001,  the
          excess of the market value of the stock  underlying  those options (as
          of December 31, 2001) and the exercise price of the option.

                                       25
<PAGE>

EMPLOYMENT CONTRACTS

     On October 1, 2001,  the Company  entered into a new  employment  agreement
with Ronald W. Bridges, its President and C.E.O. of NYRR, NYCH, JST and CHP. The
agreement  stipulates  that he or his  designated  affiliate will receive annual
compensation of $108,000.  In addition,  the President is eligible for incentive
bonuses.  These  bonuses  are a  combination  of cash  and  stock  options.  The
incentive bonuses are based upon performance related to sales increases of NYRR,
NTCH,  CHP and JST. This  agreement is for a period of one year and is renewable
for one year upon mutual agreement.

     On October 1, 2001,  the Company  entered into a new  employment  agreement
with its Vice  President of  Operations  of NYCH.  This  agreement  provides for
annual compensation of $48,000. In addition,  the Vice President is eligible for
an 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.

     W. Robert Bentley had an employment  contract with the Company  whereby Mr.
Bentley was employed as the  President  of the  Company's  subsidiary,  New York
Cross Harbor Railroad,  until January 5, 2001 at an annual salary of $75,000 per
year. In September  2000,  Mr.  Bentley  agreed to an early  termination  of his
contract.  As part of the termination  agreement,  the Company agreed to pay Mr.
Bentley  $21,630 plus  unreimbursed  expenses and Mr.  Bentley  agreed to cancel
options to purchase  500,000 shares of the Company's  common stock. In addition,
the Company  agreed to issue Mr.  Bentley  1,000,000  shares of common  stock in
three  equal  annual  installments  beginning  in March  2001.  The  Company has
released  333,333 in both March 2001 and April 2002.  The remaining  333,334 are
expected to be released in March 2003.

     In April 2000 the Company  entered  into a five-month  employment  contract
with Tad  Mahoney,  the  Company's  former Vice  President  of  Operations.  The
contract  provided for the issuance of 166,665  shares of the  Company's  common
stock plus monthly payments of $7,500.  The Company issued the 166,665 shares to
Mr. Mahoney in April 2002.

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, 2001.

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;

                                       26

  <PAGE>


          (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;

     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 27,
2002, 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.

     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.


                                       27

<PAGE>
     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, 2001,
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        --           N/A        1,812,138
 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 27, 2002(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.


      Share Ownership Assuming Exercise or Conversion of all Notes, Preferred

      Shares, Options.
                                    Shares of
Name                                Common Stock            Percent of Class

Ronald Bridges                        117,862                     *
Darryl Caplan (1)                   2,084,924                    1.2%
Wayne Eastman                         110,000                     *
Sabato Catucci                          --                        --
Gordon Kuhn                             --                        --
Crawford Family (3)                48,336,302                   26.7%
John Marsala                       26,711,023                   13.6%
Steven Hirsch (2)                  15,636,050                    8.5%

All Officers and Directors
  as a Group (five persons)          2,042,625                   1.3%

*    Less than 1%

          (1) Includes shares held by Mr. Caplan's law firm.

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

          (3) Includes shares held by members of the Crawford  immediate family.
          Absent  proper  disclaimer  information  and content  satisfactory  to
          satisfy the applicable rules and regulations of the Commission.

                  Robert R. Crawford               3,486,137          2.0%
                  Arline C. Crawford (a)           4,656,253          2.6%
                  R. Bruce Crawford (b)            5,400,689          3.1%
                  Estate of A. S. Daniels (a),(b)  1,654,944          1.0%
                  Citrus Springs Trust (a),(b)    33,138,279         19.0%

               (a) Arline C.  Crawford  is the  executrix  of the estate of A.S.
               Daniels and the Citrus Springs Trust and is therefore  considered
               to be the beneficial owner of these shares.

               (b) R.  Bruce  Crawford  is the son of Robert and Arline and is a
               beneficiary of the trusts.

                                       28
<PAGE>

Item 12.  Certain Relationships and Related Transactions.

     Mr. Caplan's law firm bills the Company for legal services at hourly rates.
In March 2000,  200,000 options,  originally  granted in 1999, were exercised at
$.40 per share,  in payment  of $80,000 in legal fees owed to Mr.  Caplan's  law
firm. In September  2000,  the Company  issued  302,286 shares of the its common
stock to Mr.  Caplan's  law firm in  payment of  $63,480  in legal  fees.  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.  The Company on July 1, 2002 may pay the balance
owed in cash or at its  option,  convert  the  amount  owed  into  shares of the
Company's common stock, valued at $.12 per share.

     In January  1999,  the board of directors  approved  option grants to three
employee members of the board of directors for services  rendered to the Company
in 1998. The former president, former CEO, and his wife each received a two-year
option to purchase  500,000 shares at $.12 per share. In September 2000, as part
of an overall termination  agreement,  the former president,  W. Robert Bentley,
agreed to cancel  500,000  of these  options.  The  remaining  balance  of these
options expired in January 2001.

     In September 2000, the former  President,  Mr. Bentley,  agreed to an early
termination of his contract. As part of the termination  agreement,  the Company
agreed to pay Mr.  Bentley  $21,630 plus  unreimbursed  expenses and Mr. Bentley
agreed to cancel  options to purchase  500,000  shares of the  Company's  common
stock. In addition,  the Company agreed to issue Mr. Bentley 1,000,000 shares of
common stock in three equal  annual  installments  beginning in March 2001.  The
Company has released  333,333 in both March 2001 and April 2002.  The  remaining
333,334 are expected to be released in March 2003.

     In January 2000, John Marsala, holder of the Company's Preferred "C" stock,
loaned JST  $155,000  in cash for  working  capital  purposes.  For this loan he
received a guaranteed  promissory  note with 10%  interest per annum  compounded
annually secured by the Company's  assets.  In January and May 2000, Mr. Marsala
personally  guaranteed loans for JST's equipment leases of $100,000 and $75,000,
respectively. He did not receive any compensation for these personal guarantees.
(See  Note F -  "SHORT-TERM  DEBT",  Note J -  "Prefeered  STOCK"  and  Note N -
SUBSEQUENT EVENTS for additional information on transactions with Mr. Marsala).

     During the year ended  December 31, 2001,  Ronald  Bridges,  the  Company's
President and C.E.O., made short-term loans to JST for cash flow purposes. These
loans were later repaid from  working  capital.  At December 31, 2001,  the loan
balance due to Ronald  Bridges was $8,619.  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, 2001, the Company owed Mr. Bridges $39,000.



                                 29

<PAGE>


Item 13.  Exhibits and Reports on Form 8K

(a)      Exhibits


                                                           Index to Exhibits

Exhibit
  No.    Description
-----    ------------

10.1     Transportation Agreement between Merco Joint Venture, LLC , NYCH
         Railroad Company dated February 12, 2001. (Incorporated by reference to
         Exhibit 10.1 of the Registrant's quarterly report on Form 10-QSB
         Registration No.028583 filed December 3, 2001).

10.2     Truck Transportation Agreement between Unified Services Group and NYCH
         Railroad Company dated June 15, 2001. (Incorporated by reference to
         Exhibit 10.2 of the Registrant's quarterly report on Form 10-QSB
         Registration No.028583 filed December 3, 2001).

10.3     Employment  Agreement between Wayne A. Eastman, Jr. and New York Cross
         Harbor Railroad Terminal  Corporation,  dated October 1, 2001. *

10.4     Employment Agreement between Ronald W. Bridges and New York Cross
         Harbor Railroad Terminal Corporation, NYRR, JST and CH Propriety dated
         October 1, 2001.*

10.5     Transportation and  Occupancy  Agreement  between  Transload  Services,
         L.L.C.,  New York  Cross  Harbor  Railroad  Terminal Corporation and JS
         Transportation dated November 19, 2001. *

10.6     Union Agreement between the Searfares International Union of North
         America and NYCH Railroad Company dated August 1, 2001.*

*      Filed herewith.

(b)      Reports on Form 8K

         Form 8-K/A "Item 2. Acquisition or Disposition of Assets" filed
         December 31, 2001, with date of report of February 24, 2000.


                                       30
<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 10, 2002
by the undersigned, thereunto duly authorized.


                                           New York Regional Rail Corp.



                                           /s/ Ronald W. Bridges
                                           -----------------------------
                                           President and Chief Executive Officer



                                           /s/ 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 10, 2002
---------------------


/s/ Gordon Kuhn               Director                 April 10, 2002
---------------------


/s/ Sabato Catucci            Chairman of the Board    April 10, 2002
---------------------


/s/ Joel Marcus               Director                 April 10, 2002
---------------------







                                       32




<PAGE>
               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, 2001 and the related
consolidated statements of operations, changes in stockholders' deficit,
and cash flows for the years ended December 31, 2001 and 2000. 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, 2001, and the
results of their operations and their cash flows for the years ended December
31, 2001 and 2000, 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
March 27, 2002
New York, New York


<PAGE>


               NEW YORK REGIONAL RAIL CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                                DECEMBER 31, 2001

                                     ASSETS

Current assets
     Cash                                                     $       22,568

     Accounts receivable, net
      of allowance for doubtful accounts of $91,463                  461,678

     Prepaid expenses and other current assets                        29,623
                                                                ------------
                            Total current assets                     513,869

Property and equipment, net                                        3,723,854

Other assets                                                         717,856
                                                                ------------
                                                                $  4,955,579
                                                                ============

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
     Current maturities of long term debt                       $    419,710
     Convertible promissory notes:
        Related parties                                              464,173
        Others                                                       475,000
     Other short-term debt:
        Related parties                                              101,532
        Others                                                       234,209
     Accounts payable                                                511,666
     Accrued expenses                                              2,295,237
     Payroll taxes payable                                           929,452
                                                                  -----------
             Total current liabilities                             5,430,979

Deferred rent payable                                                218,559

Long term debt                                                       827,859

Temporary equity                                                   1,512,500

Stockholders' deficit:
     Series C Convertible Preferred Stock, $.001 par value,
      500,000 shares authorized;
      500,000 shares issued and outstanding                          500,000
     Common stock, $.0001 par value,
      200,000,000 shares authorized;
      172,066,491 shares issued and outstanding                       17,207
     Additional paid-in-capital                                   12,316,425
     Accumulated deficit                                         (15,867,950)
                                                                  -----------
     Total stockholders' deficit                                  (3,034,318)
                                                                 ------------
                                                                $  4,955,579
                                                                =============


                 See notes to consolidated financial statements.

                                       F-2

<PAGE>

               NEW YORK REGIONAL RAIL CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                   FOR THE YEARS ENDED
                                                           DECEMBER 31,
                                                   --------------------
                                                   2001            2000
                                                 -----------     ----------

Operating revenues                         $     4,289,740      $  8,626,093
                                           ----------------   ----------------

Operating expenses                               3,606,904         7,613,144

Administrative expenses                          1,398,067         1,802,773
                                           ----------------   ----------------

Total expenses                                   5,004,971         9,415,917
                                           ----------------   ----------------

Loss before other expenses
  extraordinary item,
  and minority interest                           (715,231)         (789,824)

Other expenses:
     Interest expense, net                         207,080         1,123,674
                                           ----------------   ----------------
         Total other (income) expenses             207,080         1,123,674
                                           ----------------   ----------------

Loss before extraordinary item
 and minority interest                            (922,311)       (1,913,498)

Extraordinary gain - forgiveness of debt              -             (263,271)
                                           ----------------   ----------------

Loss before minority interest                     (922,311)       (1,650,227)

Minority interest in (income)/loss
 of subsidiary                                     (85,234)           36,127
                                            ----------------   ----------------

Net loss                                          (837,077)       (1,686,354)

Deemed preferred stock dividend                     50,000            29,167
                                             ----------------   ----------------

Loss applicable to common shareholders      $     (887,077)    $   (1,715,521)
                                             ================   ================

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

Weighted average common shares outstanding
     basic and diluted                          170,836,175        167,658,274
                                             ================   ================

                 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, 2001 AND 2000
<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>
Balances at January 1, 2000          161,686,169     16,169       --     --         9,913,471     (13,344,519)      (3,414,879)

Exercise of stock options                101,924         10       --     --            12,221          --               12,231

Conversion of debt into common stock   7,531,012        753       --     --         1,022,108          --            1,022,861

Common stock issued for services         502,086         50       --     --           143,430          --              143,480

Common stock issued for acquisition      480,000         48       --     --           187,152          --              187,200

Common stock issued for shares of New
 York Cross Harbor and CH Proprietary     49,498          5       --     --            49,493          --               49,498

Common stock issued for interest          50,000          5       --     --             9,995          --               10,000

Other                                     16,000          2       --     --                (2)         --                --

Series C Convertible Preferred
 Stock issued for debt                      --          --    500,000  500,000          --             --              500,000

Value of benificial conversion feature
   of convertible notes                     --          --        --     --            17,333          --               17,333

Warrants and options issued for debt        --          --        --     --           717,038          --              717,038

Net loss                                    --          --        --     --             --         (1,686,354)      (1,686,354)

                                     ------------   --------  ------- --------- --------------  --------------    -------------
Balances at December 31, 2000        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 agreement             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)
                                     ============   ========  ======= ========  ==============   ==============   =============

</TABLE>

                 See notes to consolidated financial statements.

                                       F-4




<PAGE>
             NEW YORK REGIONAL RAIL CORPORATION AND SUBSIDIARIES

                             STATEMENT OF CASH FLOWS


                                                   FOR THE YEARS ENDED
                                                        DECEMBER 31,
                                                    ------------------------
                                                     2001               2000
                                                --------------  ----------------
Cash flows from operating activities:
  Net loss                                      $  (837,077)    $    (1,686,354)
                                                --------------  ----------------
 Adjustments to reconcile net loss to
  net cash (used in) operating activities:
  Bad debt expense                                  315,278               -
  Depreciation                                      510,823            444,001
  Amortization of goodwill                           63,517             42,750
  Loss on disposal of property and equipment         46,403            365,002
  Stock issued for services                             950            143,480
  Beneficial conversion feature of
   convertible debt                                    -                17,333
  Warrants and options issued for debt                 -               717,038
  Minority interest                                 (85,234)            36,127
 Changes in operating assets and liabilities:
  Accounts receivable                               196,900           (298,472)
  Other current assets                              (22,623)             5,015
  Other assets                                     (287,385)           143,058
  Accounts payable                                  (14,374)          (684,578)
  Accrued expenses                                  417,964            102,749
  Payroll taxes payable                              23,867            195,580
  Deferred rent                                        -                 7,250
                                                --------------   ---------------
     Total adjustments                            1,166,086          1,236,333
                                                 -------------   ---------------
Net cash provided by (used in)
 operating activities                               329,009           (450,021)
                                                 =============   ===============
Cash flows from investing activities:
 Purchase of property and equipment                (177,892)          (359,603)
 Proceeds from sale of property and equipment       (65,013)              -
                                                --------------   ---------------
Net cash used in investing activities              (242,905)          (359,603)
                                                ==============   ===============
Cash flows from financing activities:
 Long term debt                                    (118,225)           522,500
 Convertible notes - other                             -               115,149
 Convertible notes - related parties                  5,000             54,851
 Other current debt - related parties                 8,619             (3,740)
 Other current debt - other                            -               (53,271)
 Proceeds from issuance of capital stock
  for options                                          -                12,231
                                                -------------     --------------
Net cash provided by (used in) financing
 activities                                        (104,606)           647,720
                                                =============     ==============
Net decrease in cash                               (18,502)           (161,904)
Cash at beginning of year                           41,070             202,974
                                                -------------     --------------
Cash and cash equivalents at end of year        $   22,568        $     41,070
                                                =============     ==============



                 See notes to consolidated financial statements.

                                       F-5
<PAGE>
               NEW YORK REGIONAL RAIL CORPORATION AND SUBSIDIARIES
                             STATEMENT OF CASH FLOWS (con't)


                                                   FOR THE YEARS ENDED
                                                        DECEMBER 31,
                                                    ----------------------
                                                     2001               2000
                                                --------------  ----------------
Supplemental cash flow information:
 Cash paid during the year for:
  Interest and Income Taxes                     $     -           $       -
                                                =============    ===============
Non-Cash Transactions
 Common shares issued in exchange for
  interest in subsidiary                        $     -           $    236,698
                                                =============    ===============
 Property and equipment received for
  accounts receivable                           $  131,568        $       -
                                                =============    ===============
 Notes received for property and equipment      $   28,000        $       -
                                                =============    ===============
 Property and equipment exchanged for
  accounts payable and acrrued expenses         $  260,000        $       -
                                                =============    ===============
 Property and equipment exchanged for debt      $   12,500        $       -
                                                =============    ===============
 Property and equipment purchased for debt      $   39,000        $       -
                                                =============    ===============
 Conversion of debt into common stock           $   55,000        $  1,022,861
                                                =============    ===============
 Conversion of debt into convertible
  preferred series C                            $     -           $    500,000
                                                =============    ===============
 Debt issued for supplies                       $     -           $     50,000
                                                =============    ===============
 Common shares issued in exchange for
  accrued interest                              $    8,401        $     10,000
                                                =============    ===============
 Stock issued for accrued compensation          $  180,000        $       -
                                                =============    ===============




                See notes to consolidated financial statements.


                                       F-6
<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, 2001 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. The $440,000 excess of purchase price over
               net assets  acquired was recorded as goodwill.  Goodwill is being
               amortized over four years.

               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.  Goodwill is being  amortized  over four years.  No pro
               forma financial information is presented as the operations of OSK
               were immaterial.

               Principles of Consolidation

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

               Basis of Presentation

               The Company has a working  capital  deficiency  of  $4,917,110 at
               December  31,  2001,  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.

                                       F-7

<PAGE>
               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

               At  December  31,  2001,   18.3%  of  accounts   receivable   was
               concentrated  in one customer while 11.8% 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,  CHP and JST and 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, CHP and JST 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.

               Beneficial Conversion Feature of Convertible Securities

               From 1996 to 2000,  the Company has issued  convertible  debt and
               equity  securities with  nondetachable  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.

                                       F-8

<PAGE>
               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.

               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,  2001 and 2000 is based
               only 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,
               options, convertible preferred stock, and convertible debt.

               Stock-Based Compensation

               The Company  accounts for stock  transactions  in accordance with
               APB Opinion No. 25,  "Accounting  For Stock Issued to Employees."
               In accordance  with Statement of Financial  Accounting  Standards
               ("SFAS") No. 123, "Accounting for Stock-Based Compensation",  the
               Company  adopted the pro forma  disclosure  requirements  of SFAS
               123.

               Recent Pronouncements

               In July 2001,  the Financial  Accounting  Standards  Board (FASB)
               issued  Statement of Financial  Accounting  Standards (SFAS) 141,
               Business  Combinations,  and SFAS 142,  Goodwill  and  Intangible
               Assets.  SFAS  141 is  effective  for all  business  combinations
               completed after June 30, 2001. SFAS 142 is effective for the year
               beginning  January 1, 2002;  however  certain  provisions of that
               Statement apply to goodwill and other intangible  assets acquired
               between  July 1, 2001,  and the  effective  date of SFAS 142. The
               Company  does not believe the  adoption of these  standards  will
               have a material impact on the Company's financial statements.

               In July 2001,  the Financial  Accounting  Standards  Board (FASB)
               issued  Statement of Financial  Accounting  Standards  (SFAS) No.
               143, Accounting for Asset Retirement Obligations.  This statement
               addresses  financial  accounting  and reporting  for  obligations
               associated with the retirement of tangible  long-lived assets and
               the associated asset retirement  costs. This Statement applies to
               all entities. It applies to legal obligations associated with the
               retirement of long-lived assets that result from the acquisition,
               construction,  development  and (or) the  normal  operation  of a
               long-lived asset, except for certain obligations of lessees. This
               Statement is effective for financial statements issued for fiscal
               years beginning after June 15, 2002. The Company does not believe
               the adoption of these  standards  will have a material  impact on
               the Company's financial statements.

               In August 2001, the FASB issued SFAS No. 144,  Accounting for the
               Impairment  or  Disposal of  Long-Lived  Assets.  This  statement
               addresses  financial  accounting and reporting for the impairment
               or disposal of long-lived  assets and  supersedes  FASB Statement


                                       F-9
<PAGE>
               No. 121,  Accounting for the Impairment of Long-Lived  Assets and
               for  Long-Lived  Assets to Be Disposed  Of. The Company  does not
               believe  the  adoption  of these  standards  will have a material
               impact on the Company's financial statements.

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           213,638
                Track and related land improvements            1,278,898
                Transportation equipment                       1,647,197
                Other                                            256,863
                                                            ---------------
                                                               6,122,740
                 Less: Accumulated depreciation                2,398,886
                                                             ---------------
                                                              $3,723,854
                                                             ===============

               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.

               In December  2000,  the Company  wrote off fixed assets  totaling
               $365,002  during the year in response  to property  lost from the
               PANYNJ judgments (See Note I) and the sinking of a float bridge.

               Depreciation  expense totaled $511,000 and $444,000 for the years
               ended year ended December 31, 2001 and 2000, respectively.

NOTE C -    OTHER ASSETS

            Other assets consist of the following:

            Deposits                                   $  9,115
            Permits and licenses                         68,868
            Goodwill from acquisitions, net             257,319
            Long-term receivable,
              net of $236,682 reserve                   382,554
                                                       --------
                                                       $717,856
                                                       ========

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                         $  227,634
            Property taxes - City of New York           488,700
            Property taxes - New Jersey                 416,390
            Port Authority judgments (including
              accrued interest)                         721,188
            Other accrued expenses                      441,325
                                                      ---------
            Total                                    $2,295,237
                                                      =========

               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, 2001 cover
               the periods  from 1996 to 2001.  The Company  has  estimated  the
               annual  assessment  to be  $63,000  and has  accrued  $38,390  in
               interest. (See Note H).

                                       F-10
<PAGE>

NOTE F -  SHORT-TERM DEBT

            A.  Convertible Notes Payable


            RELATED PARTIES

            Private investor                          $  18,773
            Former CEO                                   40,000
            Former officer/wife of former CEO           250,400
            Private investment company                  155,000
                                                       --------
                                                      $ 464,173
                                                       ========

               Private investor

               On June 1,  2000,  the  Company  issued a note in the  amount  of
               $18,773 bearing  interest at 10% per annum,  with a maturity date
               of December 31, 2001. The note is convertible into non-restricted
               shares of common  stock at the value of the note divided by $.078
               or 90% of the average  closing price of the common shares for the
               ten trading days  preceding the date of  conversion.  The note is
               convertible at the holder's option, at any time subsequent to the
               effective date of the Company's registration statement filed with
               the  Securities  and  Exchange  Commission.  If the  note  is not
               converted  by  December  31,  2001,  it  shall  automatically  be
               extended for 60 days.  In the event of conversion by December 31,
               2001,  the note  grants an option to  purchase  1.0452  shares of
               non-restricted  shares  of  common  stock for $0.12 per share for
               every  share that holder  acquires  through  conversion  for each
               share  acquired in the  conversion  through the later of December
               31,  1999 or 90 days  from  the  effective  date of an SEC  stock
               registration.  On February 21, 2002, $18,733 principal balance of
               the 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.

               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.


                                       F-11

<PAGE>
               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.

               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 $475,000  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,  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 $0.75 per
               share,  for each share acquired in the conversion.  These options
               will  expire  90 days  from  the  effective  date of a SEC  stock
               registration. On February 21, 2002, $105,000 principal balance of
               the notes plus accrued  interest were  converted  into  3,963,340
               shares of common stock,  upon  conversion the holder  received an
               option to purchase  an  additional  1,981,671  shares at $.18 per
               share.


            B. Other Current Debt

            Related parties

                Unsecured non-interest bearing advances from the
                 Company's former CEO; due on demand                 $ 92,913

                Unsecured non-interest bearing advances from the
                 Company's CEO; due on demand                           8,619
                                                                     --------
                                                                     $101,532
                                                                     ========
            Other lenders

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


NOTE G -    LONG-TERM DEBT

               Note in the  amount of $63,554  of which  $23,830  is  long-term,
               payable  to the  Seafarers  Union  for dues in  arrears;  monthly
               payments of $3,500 due through July 2003.  Interest is payable at
               5% per annum.

               Various notes payable in the amount of $544,558 of which $229,281
               is  long-term;   collateralized  by   transportation   equipment;
               interest  payable at rates  between 5% to 18%;  monthly  payments
               vary and are due through February 2004.

               Notes  payable,  related  parties  in  the  amount  of  $574,748;
               (principal  of  $475,000  plus  accrued  interest  of $  99,748).
               Interest  accrues at a rate of 10% per annum and due December 31,
               2003.

               Maturities of long-term debt are as follows:

                    Year ending
                    December 31,

                     2002                 $419,710
                     2003                  748,596
                     2004                   39,845
                     2005                   15,584
                     Thereafter                  0


                                       F-12

<PAGE>

NOTE H -    COMMITMENTS

               EMPLOYMENT AGREEMENT

               On September 12, 2000, the Company terminated the services of its
               former President (Mr. Robert Bentley). As part of the termination
               agreement,  the Company agreed to compensate the former president
               for wages due from the date of termination  through  December 31,
               2000. In addition,  the Company agreed to issue common shares per
               the original employment  agreement.  The Company will issue share
               grants  of  333,333  shares  per  year  for a three  year  period
               beginning  March 2001.  The Company  issued 333,333 in March 2001
               and 2002.  The  Company  has  accrued  $180,000  as  compensation
               expense for the year ended December 31, 2000.

               On October 1, 2001,  the Company  entered  into a new  employment
               agreement  with its President and C.E.O.  of NYRR,  NYCH, JST and
               CHP. The  agreement,  whereby the  President  and his  designated
               affiliate  will  receive  annual  compensation  of  $108,000.  In
               addition,  the President is eligible for incentive bonuses. These
               bonuses  are  a  combination  of  cash  and  stock  options.  The
               incentive  bonuses  are based upon  performance  related to sales
               increases of NYRR,  NTCH,  CHP and JST.  This  agreement is for a
               period of one year and is automatically renewable for one year at
               the option of the parties.

               On October 1, 2001,  the Company  entered  into a new  employment
               agreement  with its Vice  President of Operations  of NYCH.  This
               agreement  provides  for  annual   compensation  of  $48,000.  In
               addition,  the Vice President is eligible for an 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  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 Seafares  International Union of North America.
               The contract expires July 31, 2005 but is  automatically  renewed
               of 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, 2001 the Company
               had four (4) union employees.)

               LEASE COMMITMENT

               The lease portion of the 1993 Agreement  signed with Conrail (see
               Note B) provides a 30-year  land lease 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, 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.

               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  $76,000.  Such  amount has been
               accrued at December  31,  2001.  Both  parties are  currently  in
               negotiations.

               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 a deferred rent liability of
               $218,559 as of December 31, 2001.

                                       F-13

<PAGE>
               Estimated  future  minimum lease  payments under this lease as of
               December 31, 2002 are as follows:

                     Year ending
                     December 31,

                        2002        28,825
                        2003        28,825
                        2004        28,825
                        2005        28,825
                        2006        28,825
                        Thereafter 461,200
                                   -------
                                   $605,325
                                    =======

               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, 2001 was
               $51,270.

               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  $488,700,
               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.

               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  $416,390 for these real estate taxes.  The Company
               is working to resolve this dispute.

               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  $76,000.  Such  amount has been
               accrued at  December  31,  2001.  (See Note H) Both  parties  are
               currently in negotiations.

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  $600,000,  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 early  stages  of  discovery;
               accordingly  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.

                                       F-14
<PAGE>
               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.

               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. The Company was
               named  in  a  lawsuit   by  its   former   factoring   agent  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 judgement  in the
               amount of $250,000 plus interest,  which the Company appealed. In
               December 2001,  the Company lost this appeal.  In March 2002, the
               NYCH's  bank  account  was  the  subject  of a levy  by  Platinum
               Funding.  Currently, the Company is negotiating a settlement with
               Platinum and believes a  settlement  may be reached.  The Company
               has reflected the liability to Platinum as a current liability in
               the Company's financial statements. Depending on the terms of the
               settlement,  these shares may be returned to treasury and/or this
               liability may be changed.

               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.  The anticipated timeframe for
               a final decision from the STB is expected in April 2002. However,
               if the decision is appealed, the process could take 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.

               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.

               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.  The Company has  established a reserve of
               $56,000 for the estimated costs of litigation and settlements.

                                       F-15

<PAGE>
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.

               COMMON STOCK

               In September  2000,  the Company  issued 377,920 shares of common
               stock in payment of convertible  notes for repair services valued
               at  $60,000  and  accrued  interest  of $9,031.  Upon  conversion
               holders received options  exercisable at $.75 to purchase 188,959
               shares  exercisable  through  December  31, 2000.  These  options
               expired on January 1, 2001.

               On December 31, 1999, the Company reached a settlement  agreement
               with its former  factor for the sum of $250,000.  The funds would
               be paid within one year of the agreement.  In order to secure the
               payment,  the  Company  issued  300,000  shares of the  company's
               common  stock to the  factor.  The  stock is to be held in escrow
               with the  Company's  attorneys  and  liquidated  at the Company's
               option  in  order  to  fund  the  payable.  If  said  shares  are
               insufficient  to fund the  payable in full,  the Company has been
               authorized by the board of directors to issue  additional  shares
               until the  liability is satisfied.  In January 2001,  the Company
               was in default of the  agreement.  The  Company is  currently  in
               negotiations to satisfy the obligation.  (See Note I and Note - P
               for additional information).

               In February  2000, the Company  acquired 100% of the  outstanding
               shares of OSK Capital 1 Corporation in return for an $18,000 cash
               payment  and the  issuance  of  480,000  shares of the  Company's
               common stock valued at $187,200.

               In March 2000, the Company  exchanges 49,498 shares of its common
               stock to one  person  in  exchange  for 31  shares  of CHP and 30
               shares of NYCH.

               In March 2000,  options to purchase 39,424 shares of common stock
               were exercised for $4,731.

               Between  April and May 2000,  the  Company  converted  the sum of
               $937,625  (including  accrued interest of $69,564) in convertible
               notes  payable into shares of common  stock.  The Company  issued
               common  shares  totaling   7,037,558.   Upon  conversion  holders
               received 4,574,413 options  exercisable between $, 12 and $.18 to
               purchase shares, these options expire 90 days after the effective
               date of a SEC stock registration.

               In July 2000,  the  Company  issued  50,000  shares of its common
               stock in payment of  additional  interest  owed to two persons in
               the amount of $10,000.

               In September  2000,  the Company's  corporate  counsel  exercised
               302,086 options at $.21 per share.  The options were exercised in
               order to satisfy  accrued  legal  fees in the amount of  $63,438,
               incurred by the Company through August 2000.

               In October 2000, the private investment company exercised options
               to purchase 62,500 shares of common stock for $7,500.

               In December  2000,  the holder  converted the principal  value of
               $14,000  and  accrued  interest  of $2,205 in  convertible  notes
               payable  into 115,534  shares of common  stock.  Upon  conversion


                                       F-16
<PAGE>
               holders received options  exercisable at $.18 to purchase shares,
               these options  expire 90 days after the  effective  date of a SEC
               stock registration.

               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.

               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  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.   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,
                                                2001        2000
                                                -----      ------

                  Expected dividend yield          0%         0%
                  Risk-free interest rate          3%         7%
                  Annualized volatility           25%        50%
                  Expected life, in years          1          1


                                       F-17
<PAGE>


               Stock option  activity for the years ended  December 31, 2001 and
               2000 is summarized as follows:

                                          Number of     Weighted average
                                           shares        exercise price
                                          --------      ----------------
   Outstanding at December 31, 1999      12,281,000         $ 0.24
              Granted                     5,243,225           0.19
              Exercised                    (604,010)          0.26
              Canceled                   (4,607,691)          0.31
                                         -----------          ----
   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
                                         ==========          =====

               The  following  table  summarizes  the  Company's  stock  options
               outstanding at December 31, 2001:

                    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         4,082,965         1        $ 0.12     4,082,965     $  0.12
       0.15           550,000         1        $ 0.15       550,000     $  0.15
       0.16            50,000         1        $ 0.16        50,000     $  0.16
       0.18         3,020,396         1        $ 0.18     3,020,396     $  0.18
       0.19            17,862         1        $ 0.19        17,862     $  0.19
       0.20         2,050,000         1        $ 0.20     2,050,000     $  0.20
       0.25           287,360         1        $ 0.25       287,360     $  0.25
       0.60           209,850         1        $ 0.60       209,850     $  0.60
                   -----------                 ------     ----------    --------
                   10,268,433                  $ 0.17    10,268,433     $  0.17
                   ===========                 ======    ==========     ========


               (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 2000 since
               options granted in 2000 were exercised in the same day.


NOTE K -    INCOME TAXES

               The Company has not recorded any  provision for federal and state
               income taxes  through  December 31, 2001.  The actual tax expense
               for 2001 and 2000 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:

                                                     2000        2001

                Computed "expected" tax benefit    $(346,187)  $(293,000)
                State income tax benefit, net of
                 federal income tax benefit          (61,092)   ( 83,000)
                Change in valuation allowance
                 for deferred tax assets allocated
                 to income tax expense               353,528     376,000
                Permanent differences                 53,751        -
                                                    ---------   ---------
                                                   $     -     $    -
                                                    =========   =========


                                       F-18

<PAGE>

               The sources and tax effects of temporary  differences giving rise
               to the Company's  deferred tax assets  (liabilities)  at December
               31, 2001 are as follows:

                  Net operating losses                     $ 3,700,000

                  Valuation allowance                       (3,700,000)
                                                          -------------
                  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.


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, 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-19

<PAGE>

Year ended December 31, 2000

  Operating revenues               $  1,301,087      $ 7,325,006   $ 8,626,093

  Gross profit                          720,208          292,741     1,012,949

  Segment (loss)                     (1,873,254)         186,900    (1,686,354)

  Interest expense                      958,045          165,629     1,123,674

  Depreciation and                      238,693          248,058       486,751
   amortization


               MAJOR CUSTOMER

               As of  December  31,  2001,  sales  to  the  following  customers
               accounted  for  more  than  10% of the  Company's  revenues  from
               operations.

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

                                                           2001      2000
                                                          ------    ------
                   Waste Management                         15%       13%
                   Construction Demolition Recycling        18%       **
                   Republic Services                        11%       **
                   Unified Services                         11%       *

               * Unified Services began to transport  freight via the Company in
               August 2001.

               ** Less than 10%

NOTE N - SUBSEQUENT EVENTS

               In January  2002,  Mr. Caplan  resigned as officer,  director and
               Corporate Counsel of the Company.

               On February 21, 2002, "the private  investor"  converted  $18,733
               principal  balance  of  the  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,  "other  lenders"   converted   $105,000
               principal  balance  of  the  notes  plus  accrued  interest  were
               converted into 3,963,340 shares of common stock,  upon conversion
               the holder 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 March  2002,  Platinum  Funding  ("Platinum")  levied the bank
               account  of NYCH as a  result  of a  judgment  in the  amount  of
               $250,000 plus interest and fees. As a result of the levy Platinum
               recovered $58,011.  The Company is currently working on a payment
               plan with Platinum.  (See NOTE I - "LEGAL MATTERS" for additional
               information).

NOTE O - RESTATEMENT

               The 2000 financial  statements  have been restated to reflect the
               issuance of options on  conversion of notes in March and May 2000
               of $717,038 and the beneficial  conversion  feature on $60,000 of
               notes issued in March/April 2000 of $17,333.

               The  effect  of  such  restatements  on the  Company's  financial
               statement is as follows:
                                           As                            As
                                        Reported      Adjustments     Restated
                                      ------------------------------------------
Statement of Operations
 Adjustments
Year ended December 31, 2000
 Loss from operations                $    789,824   $             $    789,824
 Net loss                                 915,856       734,371      1,650,227
 Net loss per common share basic     $     (0.01)   $             $     (0.01)


                                       F-20