U. S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB

         [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
              SECURITIES EXCHANGE ACT OF 1934

         For the fiscal year ended January 31, 2002

         [  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
              SECURITIES EXCHANGE ACT OF 1934

         For the transition period from            to
                                        ----------    ----------

                  Commission File Number 0 - 14835

                         TRANSNATIONAL INDUSTRIES, INC.
                 (Name of small business issuer in its charter)


              Delaware                                 22-2328806
      (State or Other Jurisdiction                   (I.R.S. Employer
    of Incorporation or Organization)             Identification Number)



          Post Office Box 198                            19317
               U.S. Route 1                            (Zip Code)
        Chadds Ford, Pennsylvania
         (Address of principal
           executive offices)



Issuer's telephone number (610) 459-5200

Securities Registered Pursuant to Section 12(b) of the Exchange Act:   None

Securities Registered Pursuant to Section 12(g) of the Exchange Act:

                                  Common Stock
                           ($0.20 par value per share)
                                (Title of class)

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  Registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. YES X NO



<PAGE>


     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  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  Issuer's  revenues for the fiscal year ended  January 31,  2002,  were
$9,936,599.

     The aggregate  market value of the voting stock held by  non-affiliates  of
Registrant as of March 31, 2002 was approximately  $722,374 based on the average
of bid and asked  price of these  shares.  Shares of Common  Stock  held by each
executive  officer  and  director  and by each person who owns 5% or more of the
outstanding  Common Stock have been  excluded in that such persons may be deemed
to be affiliates.

     As of March 31, 2002, 456,760 shares of Common Stock were outstanding.


                      DOCUMENTS INCORPORATED BY REFERENCE:

     The issuer's definitive proxy statement to be filed with the Securities and
Exchange  Commission  within 120 days after January 31, 2002, is incorporated by
reference into Part III of this Form 10-KSB.

     Transitional  small business  disclosure format (check one) YES   NO X



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<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS


General Development of Business

Transnational  Industries,  Inc.  (the  "Company"),  is a holding  company.  The
Company  specializes  through its  subsidiary,  Spitz,  Inc.  ("Spitz"),  in the
design,   manufacture   and   integration   of   computer-controlled   immersive
visualization  systems and domed projection screens.  Spitz, under a predecessor
corporation, was founded in 1944.

Narrative Description of Business

Products

--Video projector systems

In 1997  Spitz  introduced  ImmersaVision(TM),  a new  line of  video  projector
products.  ImmersaVision(TM)  uses the latest  advances in video  projection and
desktop video graphics  combined with other panoramic  visual displays and sound
effects in dome  theaters to create an  immersive  virtual  reality  experience.
Markets targeted include existing and new planetarium theaters and various other
applications  that will benefit  from  immersive  multi-media  displays for wide
audiences.  ElectricSky(TM) is an  ImmersaVision(TM)  system configured for dome
theaters   in  the   planetarium   market   and  other   special   applications.
ElectricHorizon(TM)  is an  ImmersaVision(TM)  system  configured  for immersive
video theaters using wide curved projection screens.  ImmersaVision(TM) products
can be configured for interactive virtual reality applications.  Through the end
of the  Company's  fiscal year ended  January 31,  2002,  eight  ElectricSky(TM)
systems were installed and are currently  operating,  and three more systems are
scheduled for  installation  in calendar 2002. The  ElectricSky(TM)  systems are
being sold and marketed to both tourist  attractions and science museums.  Spitz
has also delivered an  ElectricHorizon(TM)  system for a temporary  exhibit at a
domestic science museum. The temporary ElectricHorizon(TM) exhibit was owned and
funded by Spitz and various  suppliers of the hardware and software  content for
the purpose of demonstration. At the end of the exhibit, the ElectricHorizon(TM)
components were dismantled and returned to the various owners. Spitz has not yet
sold an  ElectricHorizon(TM)  system  but there  are  several  sales  prospects.
Product  development  efforts  have been  directed  to produce a new  version of
ElectricHorizon(TM).  The new version will take advantage of advancing projector
technologies and is expected to be ready for demonstration  soon. In 2000, Spitz
entered into a joint venture  agreement to  participate in the  development  and
ownership of a new ElectricHorizon(TM)  theater for a tourist attraction.  Local
economic and tourist industry developments have delayed progress on the project,
however, efforts continue to follow through as planned.

--Planetarium projector systems

Spitz is the world's  leading  producer of planetarium  systems.  Spitz designs,
manufactures,   installs,   repairs,   and  maintains  (under  renewable  annual


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<PAGE>

contracts)  planetarium  projector  systems.  Systems  currently  sold by  Spitz
emphasize  computer  controls,   integrated  sound  and  lighting  systems,  and
peripheral  special  effects such as video  projection.  Systems are designed to
meet  individual  customer  preferences,  through the selection of  standardized
basic  systems and various add on options.  Spitz is capable of providing all of
the interior  furnishings and equipment for the  planetarium  theater as well as
complete planetarium show productions.  Additionally, Spitz's experience enables
it to  advise  on  the  theater  design  and  architectural  integration  of the
planetarium  equipment.  Spitz believes that these skills and  capabilities  are
important to buyers of  planetarium  systems.  The  principal  customers for the
Company's planetarium business are entities in the entertainment and educational
markets such as museums and schools.

--Domed Structures

Spitz is also the world's leading  producer of domed projection  screens.  Spitz
designs,  manufactures,  and installs domed projection screens which are used in
planetarium   theaters  and  a  variety  of  other  applications  such  as  ride
simulators,  special or large format film theaters,  simulation training systems
and architectural  treatments.  Spitz's  experience  enables it to advise on the
architectural  integration of domed projection screens and solve complex optical
problems  involving  reflectivity  and image  distortion  on  compoundly  curved
surfaces.  Spitz  believes  that these  skills are  important to buyers of domed
projection  screens.  The  principal  customers  in Spitz's  dome  business  are
entities  in  the   entertainment,   educational  and  commercial  and  military
simulation  markets.   Customers  include  major  theme  parks,  casinos,  world
expositions, museums, schools, and military defense contractors.

Materials and Supplies

ImmersaVision(TM)  systems,  Planetarium  systems and domes are manufactured and
assembled  from standard  metal  materials,  complex  electronic  components and
computer  controls.  The  majority of the  components  are standard but some are
custom made by vendors at the direction of Spitz. The components, as well as the
metal materials, are readily available from numerous supply sources.

Patents and Licenses

Spitz has relied  principally on a combination of contracts and trade secrets to
protect its proprietary  interests in its production processes and its business.
Patents  protect none of the products  currently  sold by Spitz.  Spitz plans to
apply for patents for certain new  products and to license  patented  technology
from other  parties.  As new  products  are  developed,  Spitz will  continue to
evaluate the feasibility of patents to protect its new inventions.

Principal Customers

During fiscal 2002,  revenues of $3,633,486 (37% of total revenues) were derived
from sales to the five largest customers.  No customer accounted for 10% or more
of total revenues. Users of Spitz's products generally have not had the need for
recurring purchases except for maintenance and parts. Accordingly,  Spitz relies
on sales to new projects or replacement of, or enhancement to, existing systems.
Spitz domed  projection  screens are  sometimes  sold to the  suppliers of large


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<PAGE>

format film  projectors for inclusion with systems sold to their  customers,  as
opposed  to Spitz  selling  directly  to the end  user.  While  this  creates  a
competitive  strength for Spitz because of its strong support  capabilities  and
preference among the system suppliers,  it will also result in reliance on sales
to a few system suppliers.

Competition

While Spitz  believes  that it is the world's  leading  producer of  planetarium
systems and domed projection  screens,  its business is competitive.  Management
estimates  that  there  are one  domestic  and  four  foreign  competitors  that
manufacture   competing   planetarium  systems.   Competition  is  evolving  for
ImmersaVision(TM)  from existing planetarium  competitors and other suppliers of
virtual reality  display  mediums  resulting in two known domestic and one known
foreign  competitor.  There is  currently  one known  domestic  competitor  that
manufactures  domed  projection  screens.  In  addition,  construction  or metal
fabrication  contractors  will  occasionally  supply domed  projection  screens,
particularly in foreign markets.  The many competitive  factors  influencing the
markets for Spitz's products include price,  performance,  customer preferences,
design and integration support, and service capabilities.

Spitz is unique among its  competitors  by virtue of its  capability as a single
source  that can  directly  supply and  integrate  all of the  equipment  in the
planetarium theater, including the projection system, sound, lighting,  computer
control system and domed projection  screen.  Years of involvement in the design
of  domed  theater  systems  for many  different  applications  and dome  market
distribution channels provide Spitz competitive strength in the markets targeted
by  ImmersaVision(TM).  As a single source,  capable of  integrating  all of the
equipment in the theater from the screen through show production, Spitz attracts
customers  who are  unwilling  to take on such  complex  tasks.  Also,  Spitz is
developing proprietary  programming tools while maintaining strong compatibility
with  various  formats  to keep a  competitive  advantage  in  ImmersaVision(TM)
markets.  The Company believes that Spitz's long history and proven  performance
as the supplier of the vast majority of the world's domed projection screens are
also competitive strengths.

Competitors  selling  planetarium  projector systems have significantly  greater
financial  resources  than the  Company,  putting  the  Company  at a  potential
disadvantage in new system development and sales promotion.  Competitors selling
domed projection screens continue to provide strong price  competition.  Foreign
currency fluctuations affect Spitz's pricing against its foreign competitors.  A
strengthening  U.S.  dollar would weaken  Spitz's  price  competitiveness  among
foreign competitors.  Also, future fluctuations and indirect economic effects of
the foreign currency markets remain uncertain.  The continued success of Spitz's
products  will depend on keeping pace with  competing  technologies  and selling
efforts while  maintaining price  competitiveness  and good  relationships  with
system suppliers in the large format film and military training markets.

Research and Development

Spitz conducts  research and  development  and the costs of such activities were
$951,000 in fiscal 2002 and $1,128,000 in fiscal 2001.

                                       5
<PAGE>


Environmental Compliance

Spitz routinely  improves and maintains  various systems designed to control the
quality of air and water  discharged from its plant,  including dust control and
ventilation.  Spitz  anticipates  that it will continue to make similar  routine
expenditures  to comply with current  federal,  state,  and local  environmental
regulations.  The Company does not believe, however, that such expenditures will
be significant or materially affect its earnings or competitive position.

Employees

At January 31, 2002, the Company and Spitz had 64 permanent  employees,  of whom
58 were employed full time.

ITEM 2.  DESCRIPTION OF PROPERTIES

The  Company  and  Spitz  are  located  in  a  46,525  square-foot  building  on
approximately  16.7 acres on U.S. Route 1, Chadds Ford,  Pennsylvania,  which is
leased to Spitz by an unrelated  third party through April 2006,  with an option
to  renew  for  an  additional  eight  years.  The  building  houses  all of the
companies'  administrative  offices  and  production  facilities  and is in good
operating condition.


ITEM 3.  LEGAL PROCEEDINGS

There was no material litigation pending at the date of this filing.

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

There  were no  matters  submitted  to a vote of  stockholders  during the three
months ended January 31, 2002.


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<PAGE>

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information for Common Stock

The principal  market on which the Company's  common stock is traded is the over
the counter  market.  Various  market  dealers make the market for the Company's
stock and  trades are made  through  the OTC  Bulletin  Board.  The table  below
presents the high and low bid over-the-counter  market quotations by quarter for
fiscal  2002  and  2001.  The  quotations,  obtained  from  OTC  Bulletin  Board
statistics,  reflect inter-dealer prices, without retail mark-up,  mark-down, or
commission   and   may   not   necessarily    represent   actual   transactions.

                                     Fiscal 2002       Fiscal  2001
                               ------------------- -------------------
                                    High      Low      High        Low
                               --------- --------- --------- ---------
         First Quarter            $11.50     $3.69    $4.00      $2.00
         Second Quarter             8.50      8.00     6.00       2.50
         Third Quarter              8.00      4.00     7.00       3.50
         Fourth Quarter             5.00      4.00     6.88       2.00

Holders

At March 31,  2002,  there were  approximately  100  holders of record of common
stock.

Dividends

The Company has never paid cash  dividends on its common stock,  and the current
policy of its Board of Directors is to retain all earnings to provide  funds for
the growth of the Company.  In addition,  the loan agreements of the Company and
its subsidiary prohibit the payment of cash dividends,  except and to the extent
that the Company satisfies certain financial covenants.  In addition,  the terms
of the  Company's  Series B Preferred  Stock  prohibit  the Company  from paying
dividends  on its  common  stock  until  it pays  to  holders  of the  Company's
preferred stock all accrued and unpaid dividends thereon.

Preferred  Stock

The holders of the Series B Cumulative  Convertible  Preferred Stock ("Preferred
B") are  entitled to receive  quarterly  dividends,  when and if declared by the
Company's  Board of  Directors,  at an annual per share  amount of  $27.50.  The
payment of such dividends would be prior and in preference to the payment of any
dividends on the Company's  common stock.  At January 31, 2002,  accumulated but
undeclared and unpaid  dividends with respect to the 318  outstanding  shares of
Preferred B amounted to $98,381.  The  Preferred B shares may be redeemed by the
Company at $250 per share plus  accumulated  unpaid dividends of $309 per share.
The 318 shares of Preferred B are convertible into 1,871 shares of the Company's
common stock.


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<PAGE>

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

Results of Operations

The following table presents for the periods  indicated (i) the percentage which
certain items in the  consolidated  financial  statements of the Company bear to
revenues and (ii) the percentage  change in the dollar amount of such items from
year to year in the two-year period ended January 31, 2002.


                                                                 Percentage
                                         Percentage of Revenues    Change
                                         Year ended January 31,     2002
                                         ----------------------      vs.
                                             2002        2001       2001
                                       -----------------------------------------

      Revenues                              100.0%       100.0%     (25.8) %
      Cost of sales                           69.1        68.1      (24.8)
      Gross margin                            30.9        31.9      (28.0)
      Selling expenses                         8.4         6.5       (4.3)
      Research and development                 9.6         8.4      (15.7)
      General and administrative              12.5         7.8       19.0
      Operating income                         0.4         9.1      (96.9)
      Interest expense                         0.7         0.9      (38.1)
      Income (loss) before income taxes      (0.4)         8.2     (103.2)
      Income taxes - current                     -         0.6     (100.0)
      Net Income (loss)                      (0.4)         7.6     (104.2)

Revenues  in the year ended  January  31,  2002  (fiscal  2002) were  $9,937,000
compared to  $13,397,000  in the year ended  January 31, 2001 (fiscal  2001),  a
decrease  of  $3,460,000   (26%).  The  decrease  was  primarily  due  to  lower
ImmersaVision(TM)  and dome  sales  which  offset  an  increase  in  planetarium
revenue.

ImmersaVision(TM)  revenue for fiscal 2002 was $2,220,000 compared to $3,475,000
for fiscal 2001,  a decrease of  $1,255,000.  The decrease in  ImmersaVision(TM)
revenues was  attributable  to the winding down of work on several  successfully
installed  systems during the past year.  Five  ImmersaVision(TM)  installations
were completed in fiscal 2002,  two at  universities  in North  America,  two at
science  museums in Europe and one at a major  educational  center in the Middle
East. Three  ImmersaVision(TM)  systems are scheduled for delivery in the fiscal
year ended January 31, 2003 (fiscal 2003) at science  museums in North  America.
All of the  ImmersaVision(TM)  sales to date have been  ElectricSky(TM)  systems
used in planetarium  theaters.  Each system sold included a planetarium dome and
all but one included an optical planetarium system provided by the Company.  The
one  ElectricSky(TM)  system  sold  without  an optical  planetarium  system was
integrated  with  another  company's  optical  planetarium  system.  The Company
expects more opportunities to sell  ElectricSky(TM)  systems with or without its
optical  planetarium  systems.  It is expected that some future  customers  will


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<PAGE>

prefer the digital projection of the ElectricSky(TM) for their planetarium while
others may still prefer to integrate ElectricSky(TM) with an optical planetarium
system.

Dome  revenues  were  $3,990,000 in fiscal 2002 compared to $6,806,000 in fiscal
2001, a decrease of $2,816,000.  The decrease in dome revenues was  attributable
to the  completion  of  several  major  dome  projects,  which  had  contributed
significantly to fiscal 2001 revenue.  Completed  projects included a dome for a
special  effects  attraction  for a casino,  a special  theater dome for a major
European  automobile  maker for use in a visitor center,  and two ride simulator
domes for major theme parks. In fiscal 2002 as compared with fiscal 2001,  there
were fewer special dome  projects and no new major ride  simulator  domes.  Also
there was lower  revenue from film theater domes in fiscal 2002 as compared with
fiscal 2001. Otherwise,  revenue from planetarium domes increased in fiscal 2002
as compared with fiscal 2001. The increase in revenue from planetarium domes was
attributable to the domes included in the sales to customers  purchasing optical
planetarium and ImmersaVision(TM) systems.

Planetarium  revenues  were  $3,727,000 in fiscal 2002 compared to $3,116,000 in
fiscal  2001,  an  increase  of  $611,000.  Planetarium  revenues  from  new and
refurbished   optical  systems  were  $2,487,000  in  fiscal  2002  compared  to
$1,853,000  in fiscal 2001,  an increase of  $634,000.  The increase in revenues
from optical  planetarium  systems was  attributable  to several systems sold to
various   educational   institutions.   Planetarium   revenues  include  amounts
attributable  to the sale of maintenance  and parts of $1,240,000 in fiscal 2002
compared to  $1,263,000  in fiscal 2001, a decrease of $23,000.  The decrease in
maintenance  and parts  revenues  was due to lower  sales of  service  visits to
customers without preventive maintenance agreements.

Revenue  growth will be influenced by several  factors.  Except for  maintenance
sales  and  occasional  upgrades,  the  Company's  revenues  do  not  come  from
repetitive sales to an existing  customer base. Most revenues come from the sale
of  theater  systems,   both  as  replacements  for  existing  systems  and  new
installations,  or from a new construction  project.  The Company's products are
sometimes  sold alone as  components  of an attraction or together as a complete
system.  This capability leads to growth  opportunities by providing each of the
Company's  products  with  efficient  direct access to a wide breadth of markets
that might  otherwise  be  difficult to reach.  The  ImmersaVision(TM)  products
generate  more sales  opportunities  for domes and optical  planetarium  systems
since  systems are often sold with a dome and  optical  planetarium  system.  In
addition,  ImmersaVision(TM)  products and their use in planetarium theaters are
creating new opportunities beyond the Company's  traditional markets. Dome sales
can lead to unique  opportunities  to present the  Company's  projection  system
products  as a  solution  among  the  various  equipment  configurations  that a
customer may be considering. Research and development efforts will continue with
the goal to promote the creation of software  content and new  applications  for
ImmersaVision(TM) that will enhance existing products and provide entry into new
entertainment and other commercial  markets.  While this strategy is expected to
maintain  long-term  revenue growth,  uncertainty in the timing and delivery for
new customer projects will cause revenue levels to fluctuate. This is evident in
the latter part of fiscal  2002 and into fiscal  2003,  as sales  bookings  have
dropped.  The drop in sales  bookings  is due more to  customer  delays  than to
competition.

The  backlog  of  unearned  revenue  as of January  31,  2002 was  approximately


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<PAGE>

$5,700,000,  all of which is scheduled  to be earned in fiscal  2003.  There are
many promising sales prospects for all of the Company's products. The successful
operations of the new  ImmersaVision(TM)  theaters combined with enhancements to
the product are expected to lead to more sales of dome theaters.  Also there has
been  progress in product  development  efforts  directed  toward  promising new
applications of ImmersaVision(TM)  outside of the Company's traditional markets.
New  efforts to expand  upon  recent  successes  on special  dome  projects  are
expected to yield significant  revenue  opportunities.  The Company expects that
this will lead to significant  orders which will impact revenues;  however,  the
initial  impact on  revenues  will be  limited  due to the  timing  of  expected
deliveries  for such orders.  As a result,  the Company  expects  lower  revenue
levels to continue into fiscal 2003. The Company  expects this to be a temporary
fluctuation in the sales booking cycle.  Strong sales  prospects are expected to
replenish  the  revenue  backlog in fiscal 2003 and  sustain  long-term  revenue
growth.

Gross  margins  decreased  slightly to 30.9% in fiscal 2002 compared to 31.9% in
fiscal 2001 due to the loss of the volume related  efficiencies  of fiscal 2001.
Otherwise,  dome margins  remained strong while gross margins on planetarium and
ImmersaVision(TM)  improved but still lagged. Selling expenses decreased $38,000
(4%) in fiscal 2002 due to lower incentive  compensation  awards and fewer trade
conferences.  Selling  expenses  in fiscal 2002 are  expected  to increase  with
marketing  efforts for new products and additional trade  conferences.  Research
and development  expenses  decreased $177,000 (16%) in fiscal 2002. The decrease
in research and development  expenses was due to the use of engineering personal
for the development of computer software and installation of new shop machinery.
Research and  development  expenses are expected to increase in fiscal 2003 with
efforts to modify and improve  ImmersaVision(TM)  products,  create  proprietary
programming tools for software content  development for  ImmersaVision(TM),  and
improve  optical  planetarium  products.  General  and  administrative  expenses
increased $199,000 (19%) in fiscal 2002 primarily due to consulting  engagements
for strategic planning and improvements to the Company's management  information
systems.

Net interest  expense amounted to $73,000 in 2002 compared to $118,000 in fiscal
2001. The $73,000 reported in fiscal 2002 consisted of $25,000 paid on bank debt
plus  $54,000  paid on capital  lease  obligations  offset by $6,000 of interest
income earned on cash invested.  The $118,000  reported in fiscal 2001 consisted
of $70,000  paid on bank debt plus  $49,000  paid on capital  lease  obligations
offset by $1,000 of interest income earned on cash invested.

The  Company  paid no  federal  income  taxes in fiscal  2002 or fiscal  2001 as
federal  taxable  income was offset by the  utilization  of net  operating  loss
carryforwards.  Income tax expense - current  consists of state  income taxes of
$76,000 in fiscal  2001.  There was no income tax  expense in fiscal 2002 as the
Company  generated no taxable income. At January 31, 2002 it was determined that
the outlook for the future  utilization of the net operating loss  carryforwards
resulted in no change to the $368,000  deferred tax asset therefore there was no
deferred tax expense or benefit  recorded for fiscal 2002. Net operating  losses
are expected to continue to offset federal  taxable  income for the  foreseeable
future  resulting in no payment of federal income taxes.  However,  deferred tax
expense is expected in future years as the net operating loss  carryforwards are
extinguished and the deferred tax asset is reduced. The Company expects to incur
state income taxes in future years.

                                       10
<PAGE>

As a result of the above,  the Company  reported a net loss of $35,000 in fiscal
2002 compared to net income of $1,021,000 in fiscal 2001.

New accounting pronouncements

In July 2001, the FASB also issued Statement of Financial  Accounting  Standards
No. 142,  "Accounting  for Goodwill and Intangible  Assets" ("SFAS 142").  Under
SFAS 142, goodwill is no longer amortized but rather is tested for impairment at
least  annually at the reporting unit level.  A recognized  intangible  asset is
amortized  over its useful life and reviewed for  impairment in accordance  with
Statement  of  Financial  Accounting  Standards  No.  121,  "Accounting  for the
Impairment of  Long-Lived  Assets and for  Long-Lived  Assets to be Disposed Of"
(SFAS 121"). A recognized intangible asset with an indefinite useful life is not
amortized until its life is determined to be finite.  The provisions of SFAS 142
are required to be applied  starting with fiscal years  beginning after December
15, 2001. The Company adopted SFAS 142 on February 1, 2002.  Upon adoption,  the
Company will no longer record  amortization on goodwill of $67,800 per year. The
Company has not yet made a  determination  of how much, if any, of the Company's
existing  goodwill is impaired  under SFAS No. 142 or what charges would have to
be recorded upon the Company's adoption of SFAS No. 142.

Liquidity and Capital Resources

The Company  funds its  continuing  operations  primarily by cash  provided from
operating  activities.  The Company also uses a revolving  credit agreement with
its bank to fund its working capital requirements.  The Company usually receives
progress  payments  under  the terms of its  customer  contracts.  Payments  are
typically  based on the  completion  of various  chronological,  production  and
installation  milestones.  Timing and the level of progress  payments vary among
contracts  depending upon many factors.  The cumulative progress payments can be
more or less  than the cost and  estimated  earnings  recognized  on a  contract
during the period of performance. The nature and timing of progress payments can
cause  cash flow from  operations  to  fluctuate  from  period to  period.  Some
customer  contracts  require the Company to provide standby letters of credit as
performance security.

Net cash provided by operating  activities was $808,000 in fiscal 2002, compared
to $927,000 in fiscal  2001.  The  Company's  net loss of $35,000 in fiscal 2002
produced  $808,000 of net cash provided  from  operating  activities  due to the
effects  of  $51,000  of cash  provided  by  changes  in  operating  assets  and
liabilities  and  $792,000  of  non-cash  charges.  By  way of  comparison,  the
Company's  $1,021,000 of net income in fiscal 2001 produced $927,000 of net cash
provided from operating  activities.  This was due to the effects of $749,000 of
cash used by changes in  operating  assets  and  liabilities,  offset in part by
$655,000 of non-cash  charges.  The change in operating assets from time to time
is primarily  attributable  to progress  payment  terms on  particular  customer
contracts, and the Company expects changes in operating assets from year to year
to remain both material and variable.

The  $808,000  provided  by  operations  in fiscal  2002 was reduced by $315,000
invested  in  capital  additions  and  $446,000  used by  financing  activities.
Financing activities included payments of $258,000 on capital leases and monthly
principal  payments  on the bank  term  note of  $188,000.  Non  cash  financing


                                       11
<PAGE>

transactions  in fiscal  2002  consist of $437,000 of  machinery  and  equipment
acquired through capital leases.

The  $927,000  provided  by  operations  in fiscal  2001 was reduced by $285,000
invested  in  capital  additions  and  $240,000  used by  financing  activities.
Financing  activities  included net proceeds of $245,000 on the revolving credit
note  offset by  payments  of  $178,000  on capital  leases,  monthly  principal
payments on the bank term note of $170,000  and the  purchase of treasury  stock
for cash of $137,000.  Non cash financing transactions in fiscal 2001 consist of
$127,000 of machinery and equipment acquired through capital leases.

Total  debt at January  31,  2002 was  $1,217,000,  a  decrease  of $9,000  from
$1,226,000 at January 31, 2001. The decrease resulted from $188,000 of scheduled
payments  applied to term debt and $258,000 of payments applied to capital lease
obligations offset by new capital lease obligations of $437,000.

Capital  additions  consisting of the purchase and  fabrication of machinery and
equipment  and  the  development  of  computer  software  amounted  to  $752,000
($437,000 by capital lease) and $412,000  ($127,000 by capital  lease),  in 2002
and 2001,  respectively.  Future opportunities are expected to require continual
investments  in  hardware  and  software  in order  to  benefit  from  advancing
technologies. When appropriate, the Company will fund the acquisition of capital
assets through  capital leases or equipment  financing  notes.  The Company will
continue to finance  capital  investments  through  operations and external debt
sources.

The balance on the revolving credit note was $600,000 at January 31, 2002 and at
January 31, 2001. This resulted in unused borrowing  capacity of $500,000.  Cash
balances of $556,000 provided additional  liquidity at January 31, 2002 compared
to  $509,000  at  January  31,  2001.  The next  source of  liquidity,  accounts
receivable,  decreased to  $1,857,000 at January 31, 2002 compared to $3,485,000
at January 31,  2001.  This  resulted  in a  $1,581,000  decrease  in  liquidity
available from cash,  borrowing capacity and accounts  receivable at January 31,
2002  compared to January 31, 2002.  Funding from  contracts in progress did not
change  significantly  as  billings  exceeded  revenue  recorded  by $415,000 at
January 31, 2002  compared to  $568,000  at January  31,  2001.  Since  billings
exceeded revenue recorded by $415,000 at January 31, 2002, contracts in progress
are expected to absorb  liquidity  during fiscal 2003. While there is a decrease
in liquidity  available,  liquidity  demands have also lowered  substantially as
accounts payable decreased to $486,000 at January 31, 2002 compared to 1,452,000
at January 31, 2001.  Still,  near term  liquidity  pressures are  expected,  as
revenues remain low and efforts to book new customer contracts increase.  Timing
of bookings and payments on prospective  customer  contracts will be critical to
maintain liquidity.

At January  31,  2002 the Company was  contingently  liable for  $112,310  under
various  standby  letters  of  credit  issued  on its  behalf  by its  bank  and
correspondents  of its bank.  The letters of credit were issued as security  for
performance  on customer  contracts.  The Company's bank  underwrites  letter of
credit  requirements  on an individual  approval basis  independent of its other
bank agreements in order to make the revolving  credit  agreement  available for
working capital requirements.

                                       12
<PAGE>

The Company's debt  agreements,  combined with current assets and cash flow from
operations,  assuming reasonably  consistent revenue levels,  should provide the
Company with adequate liquidity for the foreseeable future.  However, new growth
opportunities  for  the  Company's  business  may  require  funding  beyond  the
capabilities of the Company's current capital structure.

Critical Accounting Policies and Estimates

The financial statements and related disclosures,  which are prepared to conform
with accounting  principles  generally accepted in the United States of America,
require  estimates and assumptions  that affect the reported  amounts of assets,
liabilities,  revenues and accounts  receivable  and expenses  during the period
reported.  Also required is the disclosure of contingent  assets and liabilities
at the date of the financial statements.  Actual results in future periods could
differ  from  those   estimates.   Estimates   and   assumptions   are  reviewed
periodically,  and the effects of revisions  are  reflected in the  Consolidated
Financial  Statements in the period they are determined.  The Company  considers
the following  accounting policies  significant to the financial  statements and
may involve a higher degree of judgment and complexity.

Revenues  from sales of domes,  planetarium  and  ImmersaVision(TM)  systems are
recognized in accordance  with the  percentage of completion  method.  Under the
percentage of completion method, revenue is computed by measuring the percentage
of cost incurred to the  estimated  total cost for each  customer  contract.  As
such, the amount of revenue and earnings  recognized is affected by the estimate
of the cost to complete each customer  contract.  Contract  billing terms do not
necessarily  mirror the  revenue  recognized.  Often,  the timing of billings is
significantly  different  than the  timing  of the  revenue  recorded.  Revenues
recognized  but not yet billed are recorded with inventory as Cost and Estimated
Earnings  in Excess of  Billings.  Conversely,  billings  in  advance of revenue
recognized  are recorded with current  liabilities as Billings in Excess of Cost
and Estimated Earnings.

Forward-Looking Information

The  statements in this Annual Report on Form 10-KSB that are not  statements of
historical fact constitute  "forward-looking  statements." Said  forward-looking
statements  involve risks and uncertainties  which may cause the actual results,
performance or achievements  of the Company to be materially  different from any
future results, performances or achievements,  expressly predicted or implied by
such forward-looking statements. These forward-looking statements are identified
by  their  use of forms of such  terms  and  phrases  as  "expects,"  "intends,"
"goals," "estimates,"  "projects," "plans,"  "anticipates,"  "should," "future,"
"believes," and "scheduled."

The  important  factors  which  may cause  actual  results  to  differ  from the
forward-looking statements contained herein include, but are not limited to, the
following:  general economic and business  conditions;  competition;  success of
operating initiatives; operating costs; advertising and promotional efforts; the
existence  or absence of adverse  publicity;  changes in  business  strategy  or
development plans; the ability to retain key management; availability, terms and
deployment   of  capital;   business   abilities   and  judgment  of  personnel;
availability  of  qualified   personnel;   labor  and  employee  benefit  costs;
availability and costs of raw materials and supplies; and changes in, or failure
to comply with, government  regulations.  Although the Company believes that the


                                       13
<PAGE>

assumptions  underlying  the  forward-looking  statements  contained  herein are
reasonable, any of the assumptions could be inaccurate, and therefore, there can
be no assurance that the forward-looking statements included in this filing will
prove to be accurate. In light of the significant  uncertainties inherent in the
forward-looking  statements  included herein,  the inclusion of such information
should not be regarded as a  representation  by the Company or any other  person
that the objectives and expectations of the Company will be achieved.

                                       14
<PAGE>

                    ITEM 7. CONSOLIDATED FINANCIAL STATEMENTS



                                      INDEX

                                                                        Page



         Report of Independent Auditors                                   16

         Consolidated Balance Sheets                                      17

         Consolidated Statements of Operations                            19

         Consolidated Statements of Changes in Stockholders' Equity       20

         Consolidated Statements of Cash Flows                            21

         Notes to Consolidated Financial Statements                       22




                                       15
<PAGE>

Report of Independent Auditors



To the Stockholders and
the Board of Directors
Transnational Industries, Inc.
Chadds Ford, Pennsylvania

We have audited the  accompanying  consolidated  balance sheets of Transnational
Industries,  Inc. as of January 31, 2002 and 2001, and the related  consolidated
statements of operations, changes in stockholders' equity and cash flows for the
years then ended.  These  financial  statements  are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  These  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statements  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
Transnational   Industries,   Inc.  at  January  31,  2002  and  2001,  and  the
consolidated  results  of its  operations  and its cash flows for the years then
ended, in conformity with accounting principles generally accepted in the United
States of America.






                                            STOCKTON BATES, LLP





Philadelphia, Pennsylvania
April 22, 2002

                                       16
<PAGE>

                         Transnational Industries, Inc.

                           Consolidated Balance Sheets

                             (Dollars in thousands)
<TABLE>
<CAPTION>

                                                                             January 31,
                                                                      ------------- -------------
                                                                              2002          2001
                                                                      ------------- -------------
Assets

Current Assets:
 <S>                                                                      <C>           <C>
  Cash                                                                      $  556        $  509
  Accounts receivable                                                        1,857         3,485
  Inventories                                                                2,348         2,393
  Deferred taxes                                                               368           368
  Other current assets                                                         341           315
                                                                      ------------- -------------

Total current assets                                                         5,470         7,070



Machinery and equipment:
  Machinery and equipment                                                  $ 3,732       $ 3,182
  Less accumulated depreciation                                              2,613         2,231
                                                                      ------------- -------------

Net machinery and equipment                                                  1,119           951



Other assets:
  Repair and maintenance inventories, less provision
    for obsolescence (2002--$652; 2001--$1,221)                                107            74
  Computer software, less amortization                                         409           505
  Excess of cost over net assets of business acquired,
    less amortization                                                        1,622         1,689
                                                                      ------------- -------------

Total other assets                                                           2,138         2,268
                                                                      ------------- -------------

Total assets                                                               $ 8,727       $10,289
                                                                      ============= =============
</TABLE>

See notes to consolidated financial statements.


                                       17
<PAGE>


                                          Transnational Industries, Inc.

                                      Consolidated Balance Sheets (continued)

                                              (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                              January 31,
                                                                       ------------- -------------
                                                                            2002           2001
                                                                       ------------- -------------
Liabilities and stockholders' equity

Current liabilities:
 <S>                                                                     <C>           <C>
 Accounts payable                                                        $     486      $   1,452
  Deferred maintenance revenue                                                 680            671
  Accrued expenses                                                             373            581
  Billings in excess of cost and estimated earnings                          1,410          1,768
  Current portion of long-term debt                                            320            385
                                                                       ------------  -------------

Total current liabilities                                                    3,269          4,857

Long-term debt, less current portion                                           897            841


Stockholders' equity:
  Series B cumulative convertible preferred stock,
   $0.01 par value - authorized 100,000  shares;
   issued and outstanding 318 shares
   (liquidating value $177,881)                                                 73             73
 Common stock, $0.20 par value -authorized
   1,000,000 shares; issued and outstanding 456,760
   (excluding 45,710 shares held in treasury)                                  100            100
 Additional paid-in capital                                                  8,521          8,516
 Accumulated deficit                                                        (3,996)        (3,961)
                                                                       ------------  -------------
                                                                             4,698          4,728
Less: Treasury stock                                                          (137)          (137)
                                                                       ------------  -------------
Total stockholders' equity                                                   4,561          4,591
                                                                       -------------  -------------

Total liabilities and stockholders' equity                               $   8,727     $   10,289
                                                                       ============  =============

</TABLE>

See notes to consolidated financial statements.


                                       18
<PAGE>








                                       Consolidated Statements of Operations

                                       (In thousands, except per share data)
<TABLE>
<CAPTION>

                                                                       Year ended January 31,
                                                                 ----------------------------------
                                                                             2002             2001
                                                                 ----------------- ----------------

<S>                                                                      <C>             <C>
Revenues                                                                  $ 9,937         $ 13,397
Cost of sales                                                               6,862            9,129
                                                                 ----------------- ----------------
Gross margin                                                                3,075            4,268

Selling expenses                                                              839              877
Research and development                                                      951            1,128
General and administrative expenses                                         1,247            1,048
                                                                 ----------------- ----------------
                                                                            3,037            3,053
                                                                 ----------------- ----------------
Operating Income                                                               38            1,215

Interest expense, net                                                          73              118
                                                                 ----------------- ----------------
Income (loss) before income taxes                                             (35)           1,097

Income tax expense - current                                                    -               76

                                                                 ----------------- ----------------

Net income (loss)                                                             (35)           1,021

Preferred dividend requirement                                                  8                8
                                                                 ----------------- ----------------
Income (loss) applicable to common shares                                   $ (43)         $ 1,013
                                                                 ================= ================

Basic earnings (loss) per common share                                  $   (0.09)        $   2.22
                                                                 ================= ================
Diluted earnings (loss) per common share                                    (0.09)        $   2.11
                                                                 ================= ================

</TABLE>

See notes to consolidated financial statements.



                                       19
<PAGE>

                         Transnational Industries, Inc.

           Consolidated Statements of Changes in Stockholders' Equity

                                 (In thousands)


<TABLE>
<CAPTION>


                                         Preferred                     Additional
                                           Stock          Common        Paid in          Treasury       Accumulated
                                          Series B        Stock          Capital           Stock           Deficit
                                       --------------- ------------- ---------------- ------------- -------------------
<S>                                             <C>          <C>            <C>           <C>               <C>
Balance at January 31, 2000                      $ 73         $ 100          $ 8,505            --           $ (4,982)


Compensation from stock options                                                   11

Purchase of treasury stock                                                                   (137)

Net Income                                                                                                       1,021
                                       --------------- ------------- ---------------- ------------- -------------------
Balance at January 31, 2001                      $ 73         $ 100          $ 8,516       $ (137)           $ (3,961)


Compensation from stock options                                                    5

Net loss                                                                                                          (35)
                                       --------------- ------------- ---------------- ------------- -------------------
Balance at January 31, 2002                      $ 73         $ 100          $ 8,521       $ (137)           $ (3,996)
                                       =============== ============= ================ ============= ===================

</TABLE>





See notes to consolidated financial statements.



                                       20
<PAGE>

                         Transnational Industries, Inc.

                      Consolidated Statements of Cash Flows

                                 (in thousands)
<TABLE>
<CAPTION>

                                                                         Year ended January 31,
                                                                       -------------------------
                                                                               2002        2001
                                                                       ------------- -----------

Operating activities
<S>                                                                       <C>         <C>
Net income (loss)                                                           $  (35)    $  1,021
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
    Depreciation and amortization                                               700         532
    Write down of computer software costs                                        47          72
    Provision for obsolescence                                                   40          40
    Compensation from stock options                                               5          11
    Changes in operating assets and liabilities, net:
        Accounts receivable                                                   1,628      (1,312)
        Inventories                                                            (232)       (297)
        Other current assets                                                    (26)       (166)
        Billings net of cost and estimated earnings on contracts               (154)        514
        Accounts payable                                                       (966)        409
        Accrued expenses                                                       (199)        103
                                                                       ------------- -----------
Net cash provided by operating activities                                       808         927
                                                                       ------------- -----------

Investing activities
Capital expenditures                                                           (315)       (285)
                                                                       ------------- -----------
Net cash used by investing activities                                          (315)       (285)
                                                                       ------------- -----------

Financing activities
Proceeds from revolving line of credit                                        1,150       1,960
Payments on revolving line of credit                                         (1,150)     (1,715)
Payments on capital leases                                                     (258)       (178)
Scheduled payments on long term debt                                           (188)       (170)
Purchase of treasury stock                                                        -        (137)
                                                                       ------------- -----------
Net cash used by financing activities                                          (446)       (240)
                                                                       ------------- -----------

Increase in cash                                                                 47         402
Cash at beginning of year                                                       509         107
                                                                       ------------- -----------
Cash at end of year                                                         $   556     $   509
                                                                       ============= ===========

</TABLE>

See notes to consolidated financial statements.


                                       21
<PAGE>

                         Transnational Industries, Inc.
                   Notes to Consolidated Financial Statements


1.  Summary of Significant Accounting Policies

Nature of Business

Transnational  Industries,  Inc.  (the  "Company")  is a  holding  company.  The
Company, through its subsidiary, Spitz, Inc. ("Spitz") manages its business as a
single operating  segment,  supplying visual immersion theaters with systems and
subsystems  for simulation  applications  used in  entertainment,  education and
training.  In its fifty-two year history,  Spitz has predominantly  manufactured
astronomical  simulation  systems  (planetariums),  projection  domes, and other
curved projection  screens.  Projection domes and curved projection  screens are
used for various  applications  including  large  format film  theaters  such as
Omnimax theaters and various simulation systems. Spitz also services the systems
it sells under maintenance contracts.  In recent years, Spitz has introduced new
video and computer  graphics  projection  products for planetarium  theaters and
other  applications  using  immersive  multimedia  displays for wide  audiences.
Principal customers are domestic and international  museums,  schools,  military
defense  contractors,  theme  parks  and  other  entities  in the  entertainment
industry.

Consolidation and Basis of Presentation

The consolidated  financial  statements  include the accounts of the Company and
its  wholly  owned  subsidiary,  Spitz.  Upon  consolidation,   all  significant
intercompany transactions have been eliminated.

Revenue Recognition

Revenues from sales of equipment are  recognized on the percentage of completion
method,  measured by the percentage of cost incurred to estimated total cost for
each contract.  Estimated  losses under the percentage of completion  method are
charged  to  operations   immediately.   Revenues  from  maintenance   contracts
representing  the  estimated  portion for  preventive  service  (40% of contract
value) are recognized upon completion of the preventive service.  The balance of
revenues from maintenance contracts  representing covered services is recognized
over the one-year term of the contract.  Revenues from parts and other  services
are recognized upon shipment or completion of the service, respectively.

Inventories

Inventories  are  stated  at the  lower  of  cost,  determined  by the  first-in
first-out  method, or market value.  Certain repair and maintenance  inventories
having  realization  cycles  longer  than  one  year  have  been  classified  as
long-term.  Inventories  include  amounts  related  to long  term  contracts  as
determined by the percentage of completion method of accounting.

                                       22
<PAGE>

Machinery and Equipment

Machinery  and  equipment  are stated at cost,  which is  depreciated  using the
straight-line method over the estimated useful lives of the assets.

Computer Software

Computer  software  consists  of  costs  of  developing  software  products  for
automated  control  systems  and show  production  tools  sold  with  projection
systems.  Costs are amortized  over the estimated  sale of units not to exceed a
period of 5 years.  Amortization of costs related to computer  software products
held for sale  amounted to $251,000 and $165,000 in fiscal 2002 and fiscal 2001,
respectively.

Excess of Cost Over Net Assets of Business Acquired

The excess of cost over net assets of  business  acquired  is  amortized  on the
straight-line  basis over forty years.  The Company  continually  evaluates  the
carrying amount of this asset.  Accumulated  amortization of excess of cost over
net assets of business acquired amounted to $1,127,000 and $1,059,000 at January
31, 2002 and 2001, respectively.

Income Taxes

Income taxes are accounted for by the asset and liability approach in accordance
with Statement of Financial  Accounting  Standard No. 109 "Accounting for Income
Taxes".  Deferred  taxes will  arise,  subject to a  valuation  allowance,  from
differences  between  the  financial  reporting  and tax  bases  of  assets  and
liabilities  and are adjusted for changes in the tax laws when those changes are
enacted.

Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting  principles require management to make estimates and assumptions that
affect certain  reported amounts and  disclosures.  Accordingly,  actual results
could differ from those estimated.

Earnings  Per Share

Earnings per share have been computed in accordance  with Statement of Financial
Accounting  Standards  No. 128.  Basic  earnings per share reflect the amount of
income  available  for each share of common stock  outstanding  during the year.
Diluted  earnings  per share  reflects the amount of income  available  for each
share of common stock  outstanding  during the year assuming the issuance of all
dilutive potential shares.


                                       23
<PAGE>

The following table sets forth the computation of basic and diluted earnings per
share (dollars in thousands except per share data):

<TABLE>
<CAPTION>

                                                                       Year ended January 31,
                                                                    ------------------------
                                                                           2002        2001
                                                                    ------------ -----------
Numerator (same for basic and dilutive):
 <S>                                                                     <C>         <C>
       Net income (loss)                                                $  (35)    $ 1,021
        Preferred dividend requirement                                        8           8
                                                                    ------------ -----------
        Net income (loss) available to common  stockholders              $  (43)    $ 1,013
                                                                    ============ ===========
Denominator:
        Weighted average shares outstanding for basic earnings
        per share                                                       456,760     456,760
        Dilutive effect of employee stock options                             -      22,600
                                                                    ------------ -----------
        Weighted average shares outstanding and assumed
        conversions for dilutive earnings per share                     456,760     479,360
                                                                    ============ ===========

Basic earnings (loss) per share:                                        $ (0.09)     $ 2.22
                                                                    ============ ===========
Diluted earnings (loss) per share:                                      $ (0.09)     $ 2.11
                                                                    ============ ===========
</TABLE>

Common shares  potentially  issuable under the contractual  conversion rights of
the Preferred B shares would have an  antidilutive  effect on earnings per share
and therefore have not been included in the above computations. Weighted average
common shares issuable under the contractual  conversion rights of the Preferred
B shares amounted to 1,871 shares in fiscal year 2002 and fiscal 2001.

Recent accounting pronouncements

In July 2001, the FASB also issued Statement of Financial  Accounting  Standards
No. 142,  "Accounting  for Goodwill and Intangible  Assets" ("SFAS 142").  Under
SFAS 142, goodwill is no longer amortized but rather is tested for impairment at
least  annually at the reporting unit level.  A recognized  intangible  asset is
amortized  over its useful life and reviewed for  impairment in accordance  with
Statement  of  Financial  Accounting  Standards  No.  121,  "Accounting  for the
Impairment of  Long-Lived  Assets and for  Long-Lived  Assets to be Disposed Of"
(SFAS 121"). A recognized intangible asset with an indefinite useful life is not
amortized until its life is determined to be finite.  The provisions of SFAS 142
are required to be applied  starting with fiscal years  beginning after December
15, 2001. The Company adopted SFAS 142 on February 1, 2002.  Upon adoption,  the
Company will no longer record  amortization on goodwill of $67,800 per year. The
Company has not yet made a  determination  of how much, if any, of the Company's
existing  goodwill is impaired  under SFAS No. 142 or what charges would have to
be recorded upon the Company's adoption of SFAS No. 142.

Classifications

Certain  prior year  amounts  have been  reclassified  to conform to the current
year's presentation.


                                       24
<PAGE>




2.             Inventories

Inventories consist of (in thousands):
<TABLE>
<CAPTION>
                                                                             January 31,
                                                                       -------------------------
                                                                              2002         2001
                                                                       ------------ ------------
<S>                                                                        <C>          <C>
Raw materials, parts, and subassemblies                                    $ 1,370      $ 1,210
Work-in-process                                                                 90           57
Cost and estimated earnings in excess of billings                              995        1,200
                                                                       ------------ ------------
Total inventories                                                            2,455        2,467
Repairs and maintenance inventories recorded with other assets                 107           74
                                                                       ------------ ------------
Inventory recorded within current assets                                   $ 2,348      $ 2,393
                                                                       ============ ============
</TABLE>

3.  Costs and Estimated Earnings on Contracts in Progress

Costs and estimated earnings on contracts in progress consist of:

<TABLE>
<CAPTION>

                                                                             January 31
                                                                       ------------------------
                                                                              2002        2001
                                                                       ------------ -----------
<S>                                                                      <C>          <C>
Costs incurred on contracts in progress                                   $  5,634    $  7,643
Estimated earnings                                                           1,869       3,243
                                                                       ------------ -----------
Total costs and estimated earnings on contracts in progress                  7,503      10,886
Less billings to date                                                       (7,918)    (11,454)
                                                                       ------------ -----------
Total billings net of costs and estimated earnings on contracts
in progress                                                                $  (415)    $  (568)
                                                                       ============ ===========

</TABLE>

Included in the  accompanying  balance  sheet or footnotes  under the  following
captions:

<TABLE>
<CAPTION>
                                                                             January 31,
                                                                       ------------------------
                                                                              2002        2001
                                                                       ------------ -----------
<S>                                                                         <C>         <C>
Costs and estimated earnings in excess of billings recorded
with inventory                                                             $   995    $ 1 ,200
Billings in excess of costs and estimated earnings recorded with
liabilities                                                                 (1,410)     (1,768)
                                                                       ------------ -----------
Total billings net of costs and estimated earnings on contracts
in progress                                                                $  (415)    $  (568)
                                                                       ============ ===========
</TABLE>


                                       25
<PAGE>

4.  Debt

Current and long term debt consists of (in thousands):

<TABLE>
<CAPTION>

                                                                                January 31,
                                                                           ----------- -----------
                                                                                 2002        2001
                                                                           ----------- -----------

   <S>                                                                       <C>         <C>
   Capitalized lease obligations (Note 7)                                     $   523     $   345

   Revolving credit note payable to First Keystone Federal Savings
   Bank, due July 6, 2005 with monthly interest at prime plus 0.5%
   (5.25% at January 31,2002)                                                     600         600

   Term note payable to First Keystone Federal Savings Bank, payable
   in equal monthly installments of $17,122 including interest at 9.25%
   through July 1,2002                                                             94         281
                                                                           ----------- -----------
   Total debt                                                                   1,217       1,226

   Less current portion                                                           320         385
                                                                           ----------- -----------
   Long term debt, less current portion                                       $   897     $   841
                                                                           =========== ===========
</TABLE>

On July 7, 2000 the Company's  Revolving  Credit  Agreement  with First Keystone
Federal Savings Bank (First Keystone)  originally  executed on June 12, 1997 was
amended.  Under the amendment the borrowing limit was increased from $800,000 to
$1,100,000,  the rate of  interest  was  lowered  from prime plus two percent to
prime plus one-half percent and the maturity date was extended from July 1, 2002
to July 6, 2005.  The security  and all other terms of the bank debt  agreements
remain unchanged.

The balance on the term note payable to First  Keystone  represents  the balance
due on an $820,000 note issued on June 12, 1997. The note is payable  jointly by
the  Company and Spitz with  interest at 9.25% over five years in equal  monthly
installments  of $17,122.  The balance on the  revolving  credit note payable to
First Keystone represents the balance due under the $1,100,000  Revolving Credit
Agreement  executed on July 7, 2000.  The Revolving  Credit Note is also jointly
payable by the Company and Spitz,  requires monthly  interest  payments at prime
plus 0.5% and matures on July 6, 2005. The Revolving  Credit  Agreement  permits
borrowing,  subject to an asset based formula, of up to $1,100,000  resulting in
unused  borrowing  capacity of $500,000 at January 31, 2002. The debt agreements
with First  Keystone are secured by virtually  all of the  Company's  assets and
require the maintenance of certain financial covenants.

5.  Preferred Stock

The holders of the Series B Cumulative Convertible Preferred Stock ("Preferred")
are  entitled  to  receive  quarterly  dividends,  when and if  declared  by the
Company's  Board of  Directors,  at an annual per share  amount of  $27.50.  The
payment of such dividends would be prior and in preference to the payment of any
dividends on the Company's  common stock.  At January 31, 2002,  accumulated but
undeclared and unpaid  dividends with respect to the 318  outstanding  shares of


                                       26
<PAGE>

Preferred  amounted  to  $98,381.  The  Preferred  shares may be redeemed by the
Company at $250 per share plus  accumulated  unpaid dividends of $309 per share.
The 318  shares of  Preferred  are  convertible,  at the  option of the  holders
thereof, into 1,871 shares of the Company's common stock, and such common shares
have been reserved by the Company for issuance upon conversion.

Upon  liquidation,  dissolution,  or  winding  up of  the  Company,  before  any
distribution  with  respect to the common  stock,  the  holders of shares of the
Preferred are entitled to receive an amount equal to the  aggregate  liquidation
value,  which would include any accumulated and unpaid dividends.  The Preferred
has no voting  rights except as to any change in the  Company's  Certificate  of
Incorporation  adversely  affecting  the  preferences  of  the  holders  of  the
Preferred and as required by law. In such instances, each holder of Preferred is
entitled  to the number of votes  equal to the number of shares of common  stock
that would be obtained upon conversion of the Preferred.


6. Treasury Stock

In February  2000,  the Company  completed a  transaction  whereby it  purchased
45,710 shares of its common  stock,  consisting of all of the shares of a single
shareholder,  for cash of $3 per share or a total of  $137,130.  Such shares are
held in treasury, reducing the number of common shares outstanding to 456,760.


7. Leases

Spitz leases its office and  production  facilities  under an  operating  lease.
Total rent expense under the lease amounted to $262,200 in fiscal years 2002 and
2001.  The current term under the lease,  which  commenced May 1, 1998, is for a
period of eight years.  Upon  expiration  of the current term on April 30, 2006,
the lease provides  Spitz with a renewal  option for an additional  eight years.
Annual rent is $262,200  through the first five years of the current  eight-year
term. Rent for the remaining  three years and the optional  renewal term will be
escalated based on the Consumer Price Index.  Minimum rental  commitments  under
the operating lease are as follows for the fiscal years ended: 2003 through 2006
-- $262,200; 2007 -- $65,550.

Spitz  finances  purchases of certain  machinery and equipment  through  capital
leases.  Assets under capital  lease  included in Machinery and Equipment are as
follows (in thousands):

                                              January 31,
                                          --------------------
                                               2002      2001
                                          ---------- ---------
    Machinery and equipment                $  1,115    $  709
    Less accumulated depreciation               409       265
                                          ---------- ---------
    Net book value                           $  705    $  444
                                          ========== =========

                                       27
<PAGE>



The asset and  liability  are recorded at the present value of the minimum lease
payments based on the interest rates imputed in the leases at rates ranging from
8.3% to 12.8%.  Depreciation  on the assets under  capital  lease is included in
depreciation expense.

Future  minimum  annual  rentals under  capital lease  agreements at January 31,
2002, are as follows (in thousands):

                                             Fiscal 2003         $  265
                                             Fiscal 2004            149
                                             Fiscal 2005             85
                                             Fiscal 2006
                                                                     45
                                             Fiscal 2007
                                                                     44
                                                             -----------
Total payments
                                                                    588
Less amount representing interest
                                                                     65
                                                             -----------
Present value of capital lease obligations
                                                                    523
Less current portion
                                                                    226
                                                             -----------
Long term obligation                                              $ 297
                                                             ===========


8.  Stock Compensation Plan

Under the 1995 Stock  Option and  Performance  Incentive  Plan,  the Company may
grant stock  options,  stock  appreciation  rights or shares  aggregating  up to
100,000  shares of the  Company's  common  stock to employees of the Company and
Spitz. On May 20, 1996, 10,500 stock options were granted to certain  management
employees  at an  exercise  price of $2.25,  the market  price of the  Company's
common  stock on the grant date.  On July 8, 1997,  39,500  stock  options  were
granted to certain management and other employees at an exercise price of $2.50.
The market price of the  Company's  common stock on July 8, 1997 was $3.63.  The
options vest ratably over four years from the date of grant and expire ten years
from the date of grant. The following table summarizes the activity:

<TABLE>
<CAPTION>

                                                           Fiscal year ended January 31,
                                            -------------------------------------------------------------
                                                          2002                            2001
                                           -----------------------------  -------------------------------
                                                             Weighted                        Weighted
                                               Number         Average          Number        Average
                                              of shares      exercise         of shares   exercise price
                                                               price
                                            -------------- -------------- --------------- ---------------

<S>                                            <C>            <C>              <C>            <C>
Options outstanding at beginning of year       50,000         $ 2.45           50,000         $ 2.45

Options granted                                  --                              --
                                            --------------                   ------------

Options outstanding at end of year             50,000         $ 2.45           50,000         $ 2.45
                                            ==============                   ============

Options exercisable at end of year             50,000         $ 2.45           40,125         $ 2.43
                                            ==============                   ============
</TABLE>

                                       28
<PAGE>

The weighted average remaining  contractual life of the 50,000 outstanding stock
options at January 31, 2002 is 5.2 years.

The Company has elected to follow  Accounting  Principles  Board  Opinion No. 25
("APB 25") in accounting for its employee stock options  because the alternative
fair value  accounting  provided  under  Financial  Accounting  Standards  Board
Statement No. 123 ("FAS 123") requires the use of option  valuation models that,
in management's  opinion,  do not necessarily  provide a reliable measure of the
value of its employee  stock  options.  Under APB 25,  compensation  is measured
under the intrinsic value method at the grant date and recorded ratably over the
vesting period. Intrinsic value is measured by the difference between the option
exercise  price and the market price of the  underlying  stock at the grant date
for the options granted by the Company.  The options granted in July 1997 had an
exercise  price  ($2.50)  below  market  value  ($3.63) at the grant date.  As a
result,  compensation  expense from stock  options,  in accordance  with APB 25,
amounted to $4,806 and $11,132 in of fiscal years 2002 and 2001, respectively.

Pro forma  information  regarding  net income and earnings per share is required
under FAS 123 and has been  determined  as if the Company had  accounted for its
employee stock options under the fair value method of that  statement.  The fair
value  for  the  options  granted  was  estimated  at the  grant  date  using  a
Black-Scholes  option  pricing model with the following  assumptions:  risk free
interest rate 6%; dividend yield 0%, expected  volatility of 40%; and a weighted
average  expected life of 7.62 years.  Under FAS 123 the estimated fair value of
the options is amortized to expense over the vesting period.

The following pro forma  information  reflects net income and earnings per share
had the Company  accounted  for the  employee  stock  options  under FAS 123 (in
thousands except per share data):

<TABLE>
<CAPTION>
                                                                        Year ended January 31,
                                                                       -----------------------
                                                                              2002       2001
                                                                       ------------ ----------

      <S>                                                                  <C>       <C>
       Net income (loss)                              As reported          $ ( 35)    $ 1,021
                                                      Pro forma               (40)      1,008

       Basic earnings (loss) per common share         As reported           (0.09)       2.22
                                                      Pro forma             (0.11)       2.19

       Diluted earnings (loss) per common share       As reported           (0.09)       2.11
                                                      Pro forma             (0.11)       2.10

</TABLE>

9.  Profit Sharing Plan

The  Company  has  a  funded  profit-sharing  plan  covering  substantially  all
employees.  The plan permits the Company to make discretionary  contributions to


                                       29
<PAGE>

the  accounts  of  participants.  Under the plan,  the  Company  makes a partial
matching  contribution to each participant's  account equal to 50 percent of the
participant's   contribution,   subject  to  a  maximum  of  3  percent  of  the
participant's  total  cash  compensation  and  subject  to  certain  limitations
contained in the Internal  Revenue Code.  Profit-sharing  expense related to the
plan was $92,000 and $86,000 in fiscal 2002 and 2001, respectively.

10.   Income Taxes

Current income tax expense for 2001 consists of applicable state income taxes on
the income before taxes of Spitz.  Current  federal  income tax expense for 2001
has  been   eliminated  by  the   utilization  of  federal  net  operating  loss
carryforwards. There was no current income tax expense in 2002 because there was
no taxable income.

The Company recognizes a liability or asset for the deferred tax consequences of
temporary  differences  between the tax bases of assets or liabilities and their
reported amounts in the financial  statements.  These temporary differences will
result in  taxable or  deductible  amounts  in future  years  when the  reported
amounts of the assets or liabilities are recovered or settled.

Significant  components of the Company's  deferred taxes at January 31, 2002 and
2001 are as follows: (in thousands)
                                                 January 31,
                                          --------------------------
                                                 2002         2001
                                          ------------ -------------

Net Operating Loss Carryforwards             $  3,460      $  3,599
Obsolescence Reserve                              222           415
                                          ------------ -------------
                                                3,682         4,014
Valuation Allowance                            (3,314)       (3,646)
                                          ------------ -------------
Deferred tax asset                            $   368        $  368
                                          ============ =============


The valuation allowance is intended to represent the corresponding amount of net
deferred tax assets  which may not be  realized.  The  Company's  provision  for
income taxes may be impacted by adjustments to the valuation allowance which may
be  required  if  circumstances  change  regarding  the  utilization  of the net
deferred tax assets in future  periods.  The valuation  allowance was reduced in
2000 to reflect  management's  belief  that it was more  likely  than not that a
certain amount of the deferred tax asset relating to the  utilization of the net
operating loss carryforwards would be realized. This realization was measured by
the Company's then current backlog and  management's  belief that taxable income
would  result as the then backlog was run out.  Management  continues to believe
that  existing  backlog at January 31, 2002 and the  realization  of other known
sales  prospects  will more  likely  than not  result in future  taxable  income
against  which the existing  recorded  deferred tax asset will be utilized.  The
reduction in the valuation allowance from 2001 to 2002 reflects the reduction in
the deferred tax asset  relating to the decrease in the  inventory  obsolescence
reserve and the  utilization of the federal net operating loss  carryforward  in
2001 offset by the increase in the federal net operating loss  carryforwards and


                                       30
<PAGE>

the creation of a Pennsylvania net operating loss carryforward.  The federal net
operating  loss created in 2002  approximates  $457,000.  The  Pennsylvania  net
operating loss carryforward created in 2002 approximates  $229,000.  Federal net
operating loss utilization in 2001 amounted to $1,051,000.

At January 31,  2002,  the  Company had net  operating  loss  carryforwards  for
federal tax purposes of  $10,111,000  expiring 2008 through 2017.  For financial
reporting purposes, the net operating loss carryforwards at January 31, 2002 was
approximately  $10,716,000.  The difference relates to the nondeductible reserve
for inventory valuation not recognized for tax purposes.

The Internal  Revenue  Service has not examined the Company's tax returns during
the years in which net operating  losses were  generated or since that time. The
effects of such  examinations on the Company's tax loss  carryforwards,  if any,
cannot currently be determined.


11. Financial Instruments

Risk Management

Spitz's  financial  instruments  subject  to  credit  risk are  primarily  trade
accounts  receivable  and cash.  Credit is granted to  customers in the ordinary
course of business but the Company usually receives  progress payments under the
terms of its  customer  contracts.  Additionally,  letters  of credit  are often
arranged to secure payment from international customers.

The  Company  and its  subsidiary  maintain  cash  balances  at three  financial
institutions  located in Maryland and Pennsylvania.  Accounts are secured by the
Federal  Deposit  Insurance  Corporation.  During the normal course of business,
balances may exceed the insured amount.

Spitz customer contracts are generally payable in U.S.  currency.  Occasionally,
foreign  currency will be required to purchase goods and services related to the
installation of products at foreign  customers  sites.  Spitz generally does not
use  derivative  financial  instruments  with respect to such  foreign  currency
requirements  as their  amounts  are  generally  minor  relative  to the overall
contract costs. air Value of Financial  Instruments  SFAS No. 107,  "Disclosures
About Fair Value of Financial Instruments",  requires disclosures about the fair
value of certain  financial  instruments for which it is practicable to estimate
that  value.  For  purposes of such  disclosures,  the fair value of a financial
instrument is the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced sale or liquidation.
Management  believes  that  the  fair  value  of its  financial  instruments  is
generally equal to its book value.

12.  Supplemental Cash Flow Information

Non cash financing  transactions  consist of machinery and equipment of $437,000
and  $127,000   acquired  through  capital  leases  in  fiscal  2002  and  2001,
respectively.

Interest paid on debt including capital lease obligations amounted to $79,000 in


                                       31
<PAGE>

fiscal 2002 and  $119,000 in fiscal  2001.  The Company  paid no federal  income
taxes in fiscal 2002 and 2001.

13.  Significant Customers and Geographic Information

In fiscal year 2002, no customer  accounted for more than 10% of total  revenue.
In fiscal year 2001, one customer  accounted for 16.3% of total revenue.  Export
revenues  by  geographic  area for the years  ended  January  31  consist of (in
thousands):

                                             Year ended January 31,
                                           --------------------------
                                                   2002         2001
                                           ------------- ------------
                 Canada                           $   6       $   15
                 Mexico                              15            -
                 Europe                           1,825        3,324
                 Middle East                        821        1,650
                 Far East                           653        1,321
                                           ------------- ------------
                 Total export revenues          $ 3,320      $ 6,310
                                           ============= ============

14.  Commitments and contingencies

At January  31,  2002 the Company was  contingently  liable for  $112,310  under
various  standby  letters  of  credit  issued  on its  behalf  by its  bank  and
correspondents  of its bank.  The letters of credit were issued as security  for
performance and advances on customer  contracts.  The Company's bank underwrites
the letter of credit requirements independent of its other debt agreements.


                                       32
<PAGE>



ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.


                                                     PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16 (a) OF THE EXCHANGE ACT

The information required by this Item is incorporated herein by reference to the
sections entitled  "Proposal No. 1 -- Election of Directors - Executive Officers
of the Company" and "-- Section 16(a) Beneficial Ownership Reporting Compliance"
of the  Company's  Definitive  Proxy  Statement to be filed with the  Commission
within 120 days after January 31, 2002.


ITEM 10.  EXECUTIVE COMPENSATION

The information required by this Item is incorporated herein by reference to the
sections  entitled  "Proposal No. 1 -- Election of Directors --  Compensation of
Directors" and "-- Executive  Compensation"  of the Company's  Definitive  Proxy
Statement  to be filed with the  Commission  within 120 days after  January  31,
2002.



ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this Item is incorporated herein by reference to the
section  entitled   "Security   Ownership  of  Certain   Beneficial  Owners  and
Management"  of the Company's  Definitive  Proxy  Statement to be filed with the
Commission within 120 days after January 31, 2002.


ITEM 12.  CERTAIN RELATIONSHIPS AND TRANSACTIONS

The information required by this Item is incorporated herein by reference to the
section   entitled   "Proposal  No.  1  --  Election  of  Directors  --  Certain
Relationships and  Transactions" of the Company's  Definitive Proxy Statement to
filed with the Commission within 120 days after January 31, 2002.

                                       33
<PAGE>



                                     PART IV

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)            Exhibits

Exhibit
 No.     Description of Document

3.1   Certificate of  Incorporation  of Registrant,  as amended  (Exhibit 3.1 to
      Registrant's  Registration  Statement No. 33-6826 on Form S-1 incorporated
      herein by reference).

3.2   Certificate of Amendment of Certificate  of  Incorporation  of Registrant,
      filed  August 31,  1990  (Exhibit  3.2 to  Registrant's  Form 10-K for the
      fiscal year ended January 31, 1991 (the "1991 10-K")  incorporated  herein
      by reference).

3.3   Certificate of Designations, Preferences and Rights of the Preferred Stock
      (Exhibit 4(b) to Registrant's  1989 Form 8-K filed with the Securities and
      Exchange  Commission  on February 15, 1989 ("1989 Form 8-K")  incorporated
      herein by reference).

3.4   Certificate  of   Designations,   Rights  and   Preferences  of  Series  B
      Convertible  Preferred  Stock  of  Registrant,  filed  September  5,  1990
      (Exhibit 3.4 to the 1991 10-K, incorporated herein by reference).

3.5   By-laws of Registrant,  as amended (Exhibit 3.3 to Registrant's  Form 10-K
      for the fiscal year ended  January 31,  1989  ["1989  10-K")  incorporated
      herein by reference).

4.1   Certificate of Incorporation of Registrant,  as amended, listed as Exhibit
      3.1 above and incorporated herein by reference.

4.2   Certificate of Amendment of Certificate  of  Incorporation  of Registrant,
      listed as Exhibit 3.2 above and incorporated herein by reference.

4.3   Certificate  of  Designations,  Preferences  and  Rights of the  Preferred
      Stock, listed as Exhibit 3.3 above and incorporated herein by reference.

4.4   Certificate  of   Designations,   Rights  and   Preferences  of  Series  B
      Convertible Preferred Stock of Registrant, listed as Exhibit 3.4 above and
      incorporated herein by reference.

4.5   Convertible  Subordinated  Debenture  Purchase  Agreement,   dated  as  of
      November 22, 1989,  between  Registrant  and the purchasers of convertible
      subordinated  debentures set forth therein  (Exhibit 4(a) to  Registrant's
      Quarterly  Report on Form 10-Q for the quarter ended October 31, 1989 (the
      "10/31/89 10-Q") incorporated herein by reference).

10.1  Transnational  Industries Inc. 1995 Stock Option and Performance Incentive
      Plan  (Exhibit "A" to  Registrant's  Proxy  Statement  dated June 16, 1995
      incorporated herein by reference).

10.2  Employment  Agreement  dated May 1, 1995 between  Charles Holmes and Spitz
      Inc  (Exhibit  10.2 to  Registrant's  1996  10-K  incorporated  herein  by
      reference).
                                       34
<PAGE>

10.3  Employment  Agreement dated May 1, 1995 between Paul Dailey and Spitz Inc.
      (Exhibit  10.3H  to  Registrant's   1996  10-K   incorporated   herein  by
      reference).


10.4  Employment  Agreement  dated May 1, 1995 between  Jonathan  Shaw and Spitz
      Inc.  (Exhibit  10.4 to  Registrant's  1996  10-K  incorporated  herein by
      reference).

10.5  Employment  Agreement  dated May 1, 1995 between  John  Fogleman and Spitz
      Inc.  (Exhibit  10.5 to  Registrant's  1996  10-K  incorporated  herein by
      reference).

10.6  Line of Credit  Agreement,  dated June 12, 1997,  between  First  Keystone
      Savings Bank, the Company and Spitz,  Inc.  (Exhibit 10.1 to  Registrant's
      Form 10-QSB for the  quarterly  period ended July 31, 1997 (the "7/97 Form
      10-QSB") incorporated herein by reference).

10.7  Line of Credit Note,  dated June 12, 1997, of the Company and Spitz,  Inc.
      to First  Keystone  Savings  Bank  (Exhibit  10.2 to the 7/97 Form  10-QSB
      incorporated herein by reference).

10.8  Term Note,  dated June 12, 1997,  of the Company and Spitz,  Inc. to First
      Keystone  Savings Bank (Exhibit 10.3 to the 7/97 Form 10-QSB  incorporated
      herein by reference).

10.9  Purchase and sale of shares of  Transnational  Industries Inc. between the
      Estate of Alan W. Drew and Transnational Industries Inc. dated January 28,
      2000 (Exhibit 10.1 to  Registrant's  Form 10-QSB for the quarterly  period
      ended April 30, 2000 (the "4/2000  Form  10-QSB")  incorporated  herein by
      reference).

10.10 Goldbelt  Electric  Theater  LLC  Operating  Agreement  between  Goldbelt,
      Incorporated  and Spitz Inc.  dated  April 10, 2000  (Exhibit  10.2 to the
      4/2000 Form 10-QSB incorporated herein by reference).

10.11 Letter  Agreement  to Amend  Revolving  Line of Credit dated July 7, 2000,
      between First Keystone Federal Savings Bank, Transnational Industries Inc.
      and Spitz Inc (Exhibit 10.1 to Registrant's  Form 10-QSB for the quarterly
      period ended July 31, 2000 (the "7/2000 Form 10-QSB")  incorporated herein
      by reference).

10.12 Line of Credit  Modification  Agreement dated July 7, 2000,  between First
      Keystone Federal Savings Bank, Transnational Industries Inc. and Spitz Inc
      (Exhibit 10.2 to the 7/2000 Form 10-QSB incorporated herein by reference).

10.13 Renewal  Line  of  Credit  Note  dated  July  7,  2000,  of  Transnational
      Industries  Inc.  and Spitz Inc. to First  Keystone  Federal  Savings Bank
      (Exhibit 10.3 to the 7/2000 Form 10-QSB incorporated herein by reference).

21    Subsidiaries of Registrant (a Delaware corporation):

                                   Spitz, Inc.

   (b)   Reports on Form 8-K for the quarter ended January 31, 2002.

                  None


<PAGE>


SIGNATURES


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


Dated: April 27, 2002                            Transnational Industries, Inc.


By:       /s/ Jonathan A. Shaw                   By:    /s/ Paul L. Dailey
          --------------------------------              ------------------------
          Jonathan A. Shaw                              Paul L. Dailey
          President and                                 Vice President and
          Chief Executive Officer                       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.

    Signature                 Title                                     Date

By: /s/ Jonathan A. Shaw
    -------------------------
    Jonathan A. Shaw          President and                      April 27, 2002
                              Chief Executive Officer
                              (Principal Executive Officer)

By: /s/ Paul L. Dailey
    -------------------------
    Paul L. Dailey            Vice President and                 April 27, 2002
                              Chief Financial Officer
                              (Principal Financial Officer)
                              (Principal Accounting Officer)

By: /s/ Charles F. Huber
    -------------------------
    Charles F. Huber          Chairman of the Board              April 27, 2002
                              of Directors

By: /s/ Charles H. Holmes Jr.
    -------------------------
    Charles H. Holmes Jr.     Vice-Chairman of the Board         April 27, 2002
                              of Directors
By: /s/ William D. Witter
    -------------------------
    William D. Witter         Director                           April 27, 2002

By: /s/ Michael S. Gostomski
    -------------------------
    Michael S. Gostomski      Director                           April 27, 2002

By: /s/ Calvin A. Thompson
    -------------------------
    Calvin A. Thompson        Director                           April 27, 2002

By: /s/ Mason Carter
    -------------------------
    Mason Carter              Director                           April 27, 2002