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

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended April 30, 1997

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

                       For the transition period from to .

                        Commission File Number 0 - 14835

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


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


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

                                 (610) 459-5200
                           (Issuer's telephone number)

Check  whether the Issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the Securities Act during the past 12 months (which is the period
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

State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.

                          Common stock, $0.20 par value
                      Outstanding at May 31, 1997: 324,220

Transitional Small Business Disclosure Format (check one):
YES           NO    X


                                      (1)
<PAGE>

                         TRANSNATIONAL INDUSTRIES, INC.

                                   INDEX                              PAGE


Part I.    FINANCIAL INFORMATION

         Item 1.    Financial Statements

                    Condensed consolidated balance sheets -- 
                    April 30, 1997, and January 31, 1997.              3-4

                    Condensed consolidated statements of 
                    operations -- Three months ended 
                    April 30, 1997, and 1996.                          5

                    Condensed consolidated statements of 
                    cash flows -- Three months ended 
                    April 30, 1997, and 1996.                          6

                    Notes to condensed consolidated 
                    financial statements -- April 30, 1997.            7-8

         Item 2.    Management's Discussion and Analysis 
                    of Financial Condition and Results of Operations   9-11


Part II.   OTHER INFORMATION

         Item 6.    Exhibits and Reports on Form 8-K                   12


SIGNATURES                                                             12

                                      (2)
<PAGE>



I.       FINANCIAL INFORMATION

                         TRANSNATIONAL INDUSTRIES, INC.

                      Condensed Consolidated Balance Sheets

                             (Dollars in thousands)

                                                        April 30,    January 31
                                                          1997          1997
                                                       ------------------------
                                                       (Unaudited)   (Audited)

Assets

Current Assets
    Cash                                                $   849       $   953
    Accounts receivable                                     953         1,077
    Inventories                                             935           983
    Other current assets                                    119           123
                                                       ------------------------
Total Current Assets                                      2,856         3,136


Machinery and Equipment
    Machinery and equipment, at cost                      2,543         2,308
    Less accumulated depreciation                         1,767         1,723
                                                       ------------------------
Net Machinery and Equipment                                 776           585


Other Assets
    Repair and maintenance inventories, less
     provision for obsolescence                             190           190
    Computer software, less amortization                    197           187
    Excess of cost over net assets of business
     acquired, less amortization                          1,944         1,961
                                                       ------------------------
Total Other Assets                                        2,331         2,338
                                                       ------------------------
Total Assets                                             $5,963        $6,059
                                                       ========================

See notes to condensed consolidated financial statements.

                                      (3)
<PAGE>


                         TRANSNATIONAL INDUSTRIES, INC.

                      Condensed Consolidated Balance Sheets

                             (Dollars in thousands)

                                                        April 30,    January 31
                                                          1997          1997
                                                       ------------------------
                                                       (Unaudited)   (Audited)


Liabilities and stockholder's equity

Current Liabilities:
     Accounts payable                                   $   189     $   228
     Deferred maintenance revenue                           478         574
     Other current liabilities                              398         287
     Billings in excess of cost and estimated earnings      724         940
     Current maturities of long-term debt                   167         542
                                                       ------------------------
Total Current Liabilities                                 1,956       2,571

Long-Term Debt, less current maturities                   1,307         979

Stockholders' Equity
     Series B Cumulative  Convertible  Preferred Stock,
      $0.01 par value - 1,744 shares authorized, issued
      and outstanding (liquidating value $747,740)          399         399
     Common Stock,  $0.20 par value - authorized  
      1,000,000  shares;  issued and outstanding:
      324,420 shares                                         65          65
     Additional paid-in capital                           8,502       8,502
     Accumulated deficit                                 (6,266)     (6,457)
                                                       ------------------------
Total stockholders' equity                                2,700       2,509
                                                       ------------------------
Total liabilities and stockholders' equity               $5,963      $6,059
                                                       ========================

See notes to condensed consolidated financial statements.

                                      (4)
<PAGE>


                         TRANSNATIONAL INDUSTRIES, INC.

                 Condensed Consolidated Statements of Operations

                                   (Unaudited)
                      (In thousands, except per share data)


                                                          Three Months Ended
                                                                April 30,
                                                       ------------------------
                                                          1997           1996
                                                       ------------------------
Revenues                                                  2,324         $1,710
Cost of Sales                                             1,709          1,207
                                                       ------------------------
Gross Margin                                                615            503

Selling expenses                                            126            121
Research and development                                     73            105
General and administrative expenses                         186            183
                                                       ------------------------
                                                            385            409
                                                       ------------------------
Operating income                                            230             94
                         
Interest expense (income)                                    28             23
                                                       ------------------------
Income before income tax                                    202             71



Provision for income taxes                                   11              6
                                                       ------------------------
Net income                                                  191             65


Preferred dividend requirement                               12             12
                                                       ------------------------
Income  applicable to common shares                         179             53
                                                       ========================

Income per common share                                   $0.41          $0.12
                                                       ========================
Weighted average common shares outstanding              433,133        433,133
                                                       ========================

See notes to condensed consolidated financial statements.

                                      (5)
<PAGE>



                         TRANSNATIONAL INDUSTRIES, INC.

                        Condensed Consolidated Statements
                                  of Cash Flows

                                   (Unaudited)
                                 (In thousands)


                                                          Three Months Ended
                                                                April 30,
                                                       ------------------------
                                                          1997           1996
                                                       ------------------------
                                                
Net cash provided (used) by operating activities           197        $   112 
                                                
Net cash provided (used) by investing activities          (254)           (27)
                                                 
Net cash provided (used) for financing activities          (47)          (214)
                                                       ------------------------
                           
Increase (decrease) in cash                               (104)          (129)
Cash at beginning of period                                953            339
                                                       ------------------------
Cash at end of period                                   $  849        $   210
                                                       ========================

See notes to condensed consolidated financial statements.

                                      (6)
<PAGE>


                         TRANSNATIONAL INDUSTRIES, INC.

              Notes to Condensed Consolidated Financial Statements

                                   (Unaudited)

                                 April 30, 1997


Note A -- BASIS OF PRESENTATION

        The accompanying  unaudited condensed  consolidated financial statements
have been prepared in accordance with generally accepted  accounting  principles
for interim  financial  information and with the instructions to Form 10-QSB and
Regulation  S-B.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements.  In the opinion of management,  all adjustments considered
necessary for a fair presentation  have been included.  All such adjustments are
of a normal recurring nature. Operating results for the three-month period ended
April 30, 1997, are not necessarily indicative of the results to be expected for
the fiscal year. For further  information,  refer to the consolidated  financial
statements and footnotes thereto for the year ended January 31, 1997,  contained
in the Registrant's  Annual Report on Form 10-KSB for the year ended January 31,
1997.


Note B -- CONTINGENCIES

         In the fiscal year ended January 31, 1996,  Spitz became  involved in a
dispute in connection with a public bid for the supply of planetarium  equipment
for an expansion project at a public community college.  Spitz's subcontract bid
was the lowest  submitted and the general  contractor for the project  allegedly
used Spitz's pricing in submitting its total contract bid to the college.  After
the total contract was awarded to the general contractor, however, the college's
architect   alleged  that  Spitz's   equipment   did  not  conform  to  the  bid
specifications.  The bid for the equipment  which the architect  deemed to be in
conformance with the specifications was allegedly  approximately $150,000 higher
than  Spitz's  bid.  Because the  Contractor  has been forced to supply the more
expensive equipment, it is attempting to recover the $150,000 price differential
plus alleged related amounts due to adverse impacts on the project schedule from
various  parties.  At various times, the Contractor has threatened to assert its
claim against Spitz because it has been  unsuccessful in its attempts to recover
its alleged  damages from the College or other involved  parties.  The Company's
management  believes the bid  specifications,  to the extent that they  excluded
Spitz's  equipment,  constituted  an improper  sole-source  of  equipment  which
violates competitive bidding laws because the specifications appear to have been
copied from a competitor's  equipment.  The Company's  management  also believes
that the Spitz equipment meets all of the valid  functional  requirements in the
bid  specifications.  No lawsuit has been filed against Spitz or the Company and
the  parties  have  discussed  settling  the  matter.  The  Contractor  has  not
threatened to carry out its assertion nor has it  communicated  with the Company
since July 1996.  The Company's  management  believes that it is likely that the
parties will reach an agreement to resolve the dispute short of  litigation.  It
is too early to estimate a probable  outcome  and its effect,  if any, on Spitz.
Accordingly,  no liability for the  potential  claim has been recorded at April,
1997.

        Spitz had an  outstanding  standby  letter  of  credit in the  amount of
$129,000 at April 30, 1997 and January 31, 1997 which  served as  collateral  on
outstanding  surety bonds  required to  guarantee  the  performance  of Spitz on
certain  customer  contracts.  In June 1997,  the Surety  Company  returned  the
standby letter of credit for cancellation.

                                      (7)
<PAGE>

Note C  -- SUBSEQUENT EVENT

        On June 12, 1997, the Company and Spitz executed a series of agreements,
whereby the proceeds from two new  promissory  notes issued by a new lender were
used to retire all existing  debt and a Stock  Subscription  Warrant held by the
Company's  previous  lender.  Under an agreement with the previous  lender,  all
existing  debt  amounting  to  $1,373,000  and a Stock  Subscription  Warrant to
purchase  108,913 shares of the Company's  Common Stock for $0.20 per share were
retired for a cash payment of $1,230,000.  Debt agreements executed with the new
lender  consist  of an  $820,000  term  loan and an  $800,000  Revolving  Credit
Agreement.  The term loan is payable  with  interest at 9.25% over five years in
equal monthly  installments of $17,122.  The Revolving Credit Agreement  permits
borrowing,  subject  to an  asset  based  formula,  of up to  $800,000  under  a
Revolving  Credit Note.  The  Revolving  Credit Note requires  monthly  interest
payments  at  prime  plus 2% and  also  matures  in  five  years.  The new  debt
agreements are secured by virtually all of the assets of Company and Spitz. Upon
execution of the new debt  agreements,  proceeds of $820,000  from the term note
and  $410,000  from  the  revolving  credit  agreement  were  used to  fund  the
$1,230,000 payment to the previous lender. The current portion of long term debt
at April 30, 1997 reflects the maturity of the new debt agreements.

        The   retirement  of  the  previous  debt   agreements   and  the  Stock
Subscription  Warrant for $1,230,000  results in a redemption of Additional Paid
in Capital of $196,000 and an extraordinary gain from the forgiveness of debt of
approximately  $250,000,  net of related expenses,  to be recorded in the second
quarter of fiscal year ended January 31,1998.

        The  retirement of the Stock  Subscription  Warrant will also reduce the
common  stock  equivalents  used in computing  earnings per share.  Supplemental
earnings per share data  illustrating  the proforma  effect of the retirement of
the Stock Subscription Warrant for the three month periods ending April 30, 1997
and 1996 are as follows:


                                                          1997           1996
                                                       ------------------------
      As reported:

      Income per common share                            $0.41           $0.12
      Weighted average common shares outstanding        433,133         433,133

      Proforma:

      Income per common share                            $0.55           $0.16
      Weighted average common shares outstanding        324,220         324,220


                                      (8)
<PAGE>


                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Results of operations

Revenues  for the first  quarter  of fiscal  1998 were  $2,324,000  compared  to
$1,710,000 for the first quarter of fiscal 1997, an increase of $614,000  (36%).
The increase  resulted from higher revenues from all of the Company's  products.
Revenues  from  ImmersaVision,  the  Company's  new  line  of  video  projection
products,  amounted  to  $155,000 in the first  quarter of fiscal  1998,  as the
Company   successfully   completed  its  first   installation   of  ElectricSky.
Planetarium  revenues were $850,000 in the first quarter of fiscal 1998 compared
to $476,000 in the first  quarter of fiscal 1997 an increase of $374,000  (79%).
The  increase in  planetarium  revenues  was  primarily  due to sales of new and
refurbished  systems for the educational  market.  Planetarium  revenues include
$327,000 for the sale of  maintenance  and parts in the first  quarter of fiscal
1998  compared to $281,000 in the first  quarter of fiscal 1997,  an increase of
$46,000  (16%).  The increase in  maintenance  and parts  revenues was due to an
increase in sales to customers without preventive maintenance agreements as well
as the timing of performance on preventive maintenance agreements. Dome revenues
were  $1,319,000  in the first  quarter of fiscal 1998 compared to $1,234,000 in
the first  quarter of fiscal  1997,  an increase of $85,000  (7%).  Dome revenue
levels were high for both periods compared to prior quarterly  levels.  The high
level of dome  revenue  in first  quarter  of fiscal  1998 was  attributable  to
installation  activity  on a dome  for a  large  ride  simulator,  exterior  and
interior domes for a special  museum,  and a dome used for a special  projection
application  at a retail  complex.  This  increase  was largely  offset by lower
revenue  from film  theater  domes,  which was higher  than  normal in the first
quarter of fiscal 1997.  Revenue levels in the first quarter are not necessarily
indicative  of the levels  expected for the  remaining  quarters of fiscal 1998.
While sales  prospects  remain good,  the revenue  backlog has been  depleted by
recent  deliveries.  Uncertainty  in the  timing and  delivery  of new sales are
expected to result in fluctuating  revenue  levels in the remaining  quarters of
fiscal 1998.

Gross margins were on the low side of historical  averages at 26.5% in the first
quarter  of fiscal  1998 and 29.4% in the first  quarter of fiscal  1997.  Gross
margins  in the first  quarter  of fiscal  1998  improved  from  volume  related
efficiencies  in  production  but were  offset by lower  gross  margins  on dome
installation  activity  and  introductory  pricing  on the  sale  of  the  first
ImmersaVision  system.  The low margins on dome  installation  activity resulted
from the lower  profit  margins on change  orders to recover  costs  overruns as
dictated  by  construction  contract  terms  inherent  in many of the  Company's
customer contracts.  Selling expenses increased by only $5,000 (4%) in the first
quarter of fiscal 1998 as increased costs of introducing  the new  ImmersaVision
products were offset in the comparison of fiscal 1997  promotional  expenditures
related  to  Spitz's  fiftieth  anniversary.   Research  and  development  costs
decreased  32,000  (31%) in the first  quarter of fiscal 1998 as compared to the
first quarter of fiscal 1997. The decrease in research and development  expenses
was due to the high  utilization of engineering  resources on customer  contract
activities  and a $19,000  investment of  engineering  resources in  capitalized
computer software  production in the first quarter of fiscal 1998.  Research and
development  expenses are expected to increase in subsequent quarters as efforts
continue in the  development  and  enhancement  of  ImmersaVision  and  existing
planetarium  products.  General  and  administrative  expenses  were  relatively
constant, increasing by only $3,000 (2%).

Reported net interest expense amounted to $28,000 in the first quarter of fiscal
1998  compared  to $23,000  in the first  quarter of fiscal  1997.  The  $28,000
reported in the first  quarter of fiscal 1998  consisted of $36,000 paid on bank
debt agreements and $3,000 paid on capital lease obligations,  offset by $11,000
of interest income earned on cash invested. In the first quarter of fiscal 1997,
$42,000 was paid on bank debt  agreements (of which $18,000 was applied  against
the book value of debt and $24,000 was charged to expense). The $23,000 reported
in the first  quarter of fiscal 1997  consisted  of the  $24,000  from bank debt
agreements  and $2,000 paid on capital  lease  obligations,  offset by $3,000 of
interest income earned on cash invested. The Company continues to pay no 
   
                                   (9)
<PAGE>

federal income taxes as federal  taxable income is offset by the  utilization of
net operating  loss  carryforwards.  The provision for income taxes  consists of
state income taxes.

As a result of the  above,  net income of  $191,000  was  recorded  in the first
quarter of fiscal 1998  compared to $65,000 in the first quarter of fiscal 1997.
As stated  above,  revenue  levels are expected to  fluctuate  in the  remaining
quarters of fiscal 1998.  Accordingly,  the profit recorded in the first quarter
should not be considered  indicative  of the results  expected for the remaining
quarters of fiscal 1998.


Liquidity and Capital Resources

Net cash provided by operating  activities  was $197,000 in the first quarter of
fiscal  1998  compared  to $112,000  in the first  quarter of fiscal  1997.  The
$197,000 provided by operations in the first quarter of fiscal 1998 consisted of
$271,000  provided from earnings  offset by $74,000 used by changes in operating
assets and liabilities. The $112,000 provided by operations in the first quarter
of fiscal 1997 consisted of $139,000 provided from earnings offset by $18,000 of
interest  payments  booked  against debt and $9,000 used by changes in operating
assets and liabilities.

The $197,000  provided by  operations in first quarter of fiscal 1998 was offset
by $47,000  principal paid on term debt and capital leases and $254,000 invested
in capital  assets.  The $112,000  provided by  operations  in first  quarter of
fiscal 1998 was offset by $169,000  principal paid on the revolving credit note,
$45,000  principal paid on term debt and capital leases and $27,000  invested in
capital assets.  The net result was a $104,000 reduction in cash balances during
the first quarter of fiscal 1998 compared to a reduction of $129,000  during the
first quarter of fiscal 1997.

Most of the $254,000  invested in capital  assets in the first quarter of fiscal
1998   consisted  of  equipment   to  create  an  in  house   demonstration   of
ImmersaVision.  Financing alternatives for the ImmersaVision demo equipment were
heavily  influenced by the outcome of efforts to extend or replace existing bank
debt  agreements.  Therefore  the  equipment  was  purchased  for  cash  and the
financing  was  deferred.  On June 12, 1997 the existing  debt  agreements  were
replaced.  The Company is currently  evaluating  financing lease proposals which
will provide approximately  $240,000 to retroactively fund the purchase of the
ImmersaVision demo equipment.

There was no balance  outstanding  under the revolving credit agreement at April
30,  1997 and  January  31,1997.  At April 30,  1997 and  January  31,  1997 the
$500,000  borrowing  limit under the existing  revolving  credit  agreement  was
reduced by $129,000 for standby letters of credit  resulting in unused borrowing
capacity of  $371,000.  Additional  liquidity  was  provided by  remaining  cash
balances of $849,000 at April 30, 1997 compared to $953,000 at January 31, 1997.
The next source of liquidity,  trade accounts receivable,  decreased to $953,000
at April 30, 1997 compared to $1,077,000 at January 31, 1997.

Total debt at April 30, 1997 was  $1,474,000,  of which  $1,393,000  represented
balances under bank debt agreements  which were scheduled to mature on August 1,
1997.  The bank debt was  subsequently  reduced  to  $1,373,000  by a  scheduled
payment, then on June 12, 1997, proceeds from two new promissory notes issued by
a new lender were used to retire the bank debt and a Stock Subscription  Warrant
held by the bank.  The  previous  lender  agreed to  accept  $1,230,000  in full
satisfaction  for all  existing  debt  and the  Stock  Subscription  Warrant  to
purchase 108,913 shares of the Company's Common Stock for $0.20 per share.  Debt
agreements  executed with the new lender consist of an $820,000 term loan and an
$800,000  Revolving Credit Agreement.  The term loan is payable with interest at
9.25% over five years in equal monthly  installments  of $17,122.  The Revolving
Credit Agreement permits borrowing,  subject to an asset based formula, of up to
$800,000  under a Revolving  Credit Note.  The  Revolving  Credit Note  requires
monthly interest  payments at prime plus 2% and also matures in five years. Upon
execution of the new debt  agreements,  proceeds of $820,000  from the term note
and  $410,000  from  the  revolving  credit  agreement  were  used to  fund  the
   
                                   (10)
<PAGE>

$1,230,000  payment to the previous  lender.  The initial  advance under the new
revolving credit agreement also included an additional  amount to partially fund
closing cost,  which  increased  the total to $429,000.  This resulted in unused
borrowing  capacity  under  the  new  $800,000  revolving  credit  agreement  to
$371,000,  which matches the unused  capacity on the previous  revolving  credit
agreement. Principal and interest payments over the next year required under the
new  loan  agreements  will  be  approximately  $40,000  lower  than  previously
scheduled payments under the old loan agreements.

The  retirement  of the  previous  debt  agreements  and the Stock  Subscription
Warrant for $1,230,000  results in a redemption of Additional Paid in Capital of
$196,000 and an extraordinary gain from the forgiveness of debt of approximately
$250,000,  net of related  expenses,  to be  recorded  in the second  quarter of
fiscal year ending January  31,1998.  The  retirement of the Stock  Subscription
Warrant will also eliminate the  corresponding  twenty-five  percent dilution of
common shareholders equity.

In summary,  as a result of the replacement of the debt  agreements,  total debt
was lowered by $124,000  while  maintaining  overall  credit  capacity,  payment
schedules  were  favorably  adjusted,  near term maturity dates were extended to
five years, and the Company's common  shareholders  benefited by the return of a
beneficial ownership of twenty five percent of their equity in the Company.

The new  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.  The strengthening
financial condition of the Company should also improved the Company's ability to
raise  additional  funds for  expansion of its products  through  other  capital
resources.



                                      (11)

<PAGE>


II.  OTHER INFORMATION

6.   Exhibits and Reports on Form 8-K

(a)  Exhibits

Exhibit
   No.   Description of Document

   27     Financial Data Schedules


(b) The  Registrant did not file any reports on Form 8-K during the three months
ended April 30, 1997.



                                   SIGNATURES

     In accordance  with the  requirements  of the Exchange Act, the  Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



                                              TRANSNATIONAL INDUSTRIES, INC.

                                              /s/   Paul L. Dailey, Jr.
                                              --------------------------
        Date:  June 20, 1997                  Paul L. Dailey, Jr.
             ----------------
                                              Secretary-Treasurer

                                              Signing on Behalf of Registrant
                                              and as Chief Financial Officer