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 October 31, 1996

         [  ] 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
         (State or Other Jurisdiction of Incorporation or Organization)


                                   22-2328806
                                (I.R.S. Employer
                             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 November 30, 1996: 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 --               3-4
                    October 31, 1996, and January 31, 1996. 

                    Condensed  consolidated  statements  of                  5
                    operations -- Three months ended October 31, 
                    1996, and 1995; nine months ended
                    October 31, 1996 and 1995.

                    Condensed consolidated statements of cash                6
                    flows -- Nine months ended October 31, 1996,
                    and 1995.

                    Notes to condensed consolidated financial              7-8
                    statements -- October 31, 1996.

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

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)

                                              October 31,           January 31
                                                 1996                 1996
                                            -------------          -----------
                                             (Unaudited)            (Audited)
Assets

Current Assets
    Cash                                          $   442              $   339
    Accounts receivable                             1,727                1,178
    Inventories                                     1,040                1,197
    Other current assets                              190                  111
                                             -------------         -----------
Total Current Assets                                3,399                2,825

Machinery and Equipment
    Machinery and equipment, at cost                2,270                2,147
    Less accumulated depreciation                   1,680                1,563
                                             -------------         -----------
    Net Machinery and Equipment                       590                  584


Other Assets
    Repair and maintenance inventories, less
     provision for obsolescence                       206                  206
    Computer software, less amortization              184                  199
    Excess of cost over net assets of business
     acquired, less amortization                    1,977                2,028
                                             -------------         -----------
Total Other Assets                                  2,367                2,433
                                             -------------         -----------
Total Assets                                       $6,356               $5,842
                                             =============         ===========

See notes to condensed consolidated financial statements.

                                       3
<PAGE>
                         TRANSNATIONAL INDUSTRIES, INC.
                      Condensed Consolidated Balance Sheets

                             (Dollars in thousands)

                                                October 31,        January 31,
                                                   1996               1996
                                              ------------          ----------
                                               (Unaudited)          (Audited)
Liabilities and stockholder's equity

Current Liabilities:
     Accounts payable                              $   406            $   408
     Deferred maintenance revenue                      612                536
     Other current liabilities                         316                297
     Billings in excess of cost and                  1,042                441
     estimated earnings
     Current maturities of long-term debt            1,475                190
                                               ------------         ----------
Total Current Liabilities                            3,851              1,872

Long-Term Debt, less current maturities                 65              1,734

Stockholders' Equity
     Series B Cumulative  Convertible  
     Preferred  Stock,$0.01  par value - 1,744
     shares authorized, issued and outstanding
     (liquidating value $723,760)                      399                399
     Common Stock, $0.20 par value - authorized
     1,000,000 shares; issued and outstanding:
     324,220 shares                                     65                 65
     Additional paid-in capital                      8,502              8,502  
     Accumulated deficit                            (6,526)            (6,730) 
                                               ------------         ----------

Total stockholders' equity                           2,440              2,236
                                               ------------         ----------
Total liabilities and stockholders' equity          $6,356             $5,842
                                               ============         ==========

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   Nine Months Ended
                                         October 31,          October 31,
                                      -------- --------   -------- --------
                                         1996    1995       1996     1995
                                      -------- --------   -------- --------


Revenues                               $ 1,648   $1,385    $ 4,844  $ 3,982
Cost of Sales                            1,096      960      3,282    2,769
                                      -------- --------   -------- --------
Gross Margin                               552      425      1,562    1,213

Selling expenses                           148      115        396      320
Research and development                    93       64        303      279
General and administrative expenses        190      205        552      561
                                      -------- --------   -------- --------
                                           431      384      1,251    1,160
                                      -------- --------   -------- --------
Operating income                           121       41        311       53



Interest expense (income)                   36      (5)        101     (15)
                                      -------- --------   -------- --------
Income before income tax                    85       46        210       68

Provision for income taxes                  --       --          6       --
                                      -------- --------   -------- --------
Net income                                  85       46        204       68

Preferred dividend requirement              12       12         36       36
                                      -------- --------   -------- --------
Income  applicable to common shares       $ 73     $ 34      $ 168     $ 32
                                      ======== ========   ======== ========

Income per common share                  $0.16    $0.07     $ 0.38    $0.07
                                      ======== ========   ======== ========
Weighted average common 
shares outstanding                     443,633  433,133    438,966  433,133
                                      ======== ========   ======== ========

See notes to condensed consolidated financial statements.

                                       5
<PAGE>



                         TRANSNATIONAL INDUSTRIES, INC.

                        Condensed Consolidated Statements
                                  of Cash Flows

                                   (Unaudited)
                                 (In thousands)

                                                       Nine Months Ended
                                                          October 31,
                                                     ---------------------
                                                       1996         1995
                                                     ---------------------
Net cash provided (used) by operating activities       $  604       $  (15)
Net cash provided (used) by investing activities          (99)        (116)
Net cash provided (used) for financing activities        (402)        (106)
                                                      -------      -------
Increase (decrease) in cash                               103         (237)
Cash at beginning of period                               339          670
                                                      -------      -------
     Cash at end of period                             $  442       $  433
                                                      =======      =======

See notes to condensed consolidated financial statements.

                                       6
<PAGE>


                         TRANSNATIONAL INDUSTRIES, INC.

              Notes to Condensed Consolidated Financial Statements

                                   (Unaudited)

                                October 31, 1996


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 and nine
month  periods  ended October 31, 1996,  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, 1996, contained in the Registrant's Annual Report on Form 10-KSB for
the year ended January 31, 1996.


Note B -- DEBT MATURITIES

     The convertible  term note and revolving  credit  agreement  payable to the
Company's  primary  lender mature on May 1, 1997. The maturity date requires any
amounts  due  under  the  debt  agreements  to  be  reclassified   with  current
liabilities as of October 31, 1996. The balance of the convertible  term note at
October  31, 1996 was  $1,450,000.  There was no balance  outstanding  under the
revolving credit agreement at October 31, 1996. Both debt agreements  originally
matured on February 1, 1996 but were  extended to May 1,1997.  The Company is in
the process of evaluating the  availability of alternative  financing from other
sources.  It is  expected  that the note  will be  extended  under  new terms or
refinanced prior to the May 1, 1997 maturity date.


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
                                       
                                       7
<PAGE>
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
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  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  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 October 31, 1996.

     The  Company had  outstanding  standby  letters of credit of  $129,000  and
$267,000  at October  31,  1996 and  January  31,  1996,  respectively.  Cash of
$138,000 was pledged as collateral for outstanding  standby letters of credit at
January 31, 1996. No cash was pledged as collateral for the outstanding  standby
letter of credit at October 31, 1996.


                                       8
<PAGE>

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


Results of operations

Revenues  in the third  quarter  and  first  nine  months  of  fiscal  1997 were
$1,648,000  and  $4,844,000   compared  to  $1,385,000  and  $3,982,000  in  the
comparable  periods of fiscal  1996.  The  increases  of $263,000  (19%) for the
quarter and $862,000 (22%) for the nine month period were due to a high level of
work  on  recent  orders  for  planetarium   systems  and  film  theater  domes.
Planetarium revenues were $602,000 and $1,032,000 in the third quarter and first
nine months of fiscal 1997  compared to $472,000 and $913,000 in the  comparable
periods of fiscal  1996,  an  increase  of $130,000  (28%) and  $480,000  (37%),
respectively.  Also contributing to revenues in the third quarter of fiscal 1997
was the first  order  received  for one of the  Company's  new video  projection
products,  ElectricSky(TM).  ElectricSky is a video projection system which uses
the new Spitz  ImmersaVision(TM)  video format to enhance traditional mechanical
optical  planetarium  theaters.  Revenue from work completed on the  ElectricSky
order  amounted to $15,000 in the third  quarter of fiscal 1997.  The first sale
was for a new planetarium theater scheduled to open in 1997 and includes a Spitz
planetarium system and dome for a total contract value of $923,000.  ElectricSky
represents  approximately  50% of the total  contract  value.  The  increase  in
planetarium  revenues was due to  production  activity on new systems for recent
orders  from  the  educational  market.  Planetarium  revenues  include  amounts
attributable  to the sale of  maintenance  and parts of $289,000 and $854,000 in
the third  quarter and first nine months of fiscal 1997 compared to $304,000 and
$840,000  in  the  comparable  periods  of  fiscal  1996.  The  fluctuations  in
maintenance and parts revenues was primarily due to the timing of performance on
preventive maintenance agreements.  Dome revenues were $1,032,000 and $3,046,000
in the third  quarter and first nine months of fiscal 1997  compared to $913,000
and $2,678,000 in the comparable  periods of fiscal 1996, a increase of $119,000
(13%) and  $368,000  (14%),  respectively.  The  increase in dome  revenues  was
attributable to a high level of production and  installation  activity on orders
for film and  planetarium  theaters.  This was  partially  offset by lower  dome
revenues from military simulation projects.

Gross margins were 33.5% and 32.2% in the third quarter and first nine months of
fiscal  1997  compared  to 30.7% and 30.5% in the  comparable  periods of fiscal
1996.  The higher margins in the third quarter of fiscal 1997 resulted from more
profitable  revenues on the sale of planetarium  systems and film theater domes.
Also improving  gross margins in the third quarter of fiscal 1997 was the volume
related  reduction of  inefficiencies.  The  improvement in the third quarter of
fiscal 1997 offset low margins in the first quarter on simulator  domes sold for
military  training and high costs of temporary  labor used to install  domes for
film theaters. Selling expenses increased $33,000 (29%) and $76,000 (24%) in the
third  quarter and first nine months of fiscal 1997  compared to the  comparable
periods  of  fiscal  1996.  The  increase  in  selling  expenses  was due to the
restoration of selling staff levels, promotional expenditures related to Spitz's
fiftieth anniversary,  and costs of introducing the new ImmersaVision  products.
Research and development  expenses  increased  $29,000 (45%) and $24,000 (9%) in
the  third  quarter  and  first  nine  months of  fiscal  1997  compared  to the
comparable  periods  of  fiscal  1996.  The  increase  was due to third  quarter
development  efforts  on  ImmersaVision  products.  General  and  administrative
expenses  decreased  $15,000 (7%) and $9,000 (2%) in the third quarter and first
nine months of fiscal 1997  compared to the  comparable  periods of fiscal 1996.
The decrease was due to reductions  in  professional  fees and costs  associated
with the annual shareholders meeting.

Reported  interest  expense was reduced in fiscal 1997 and  eliminated in fiscal
1996 as a result of the  accounting  in accordance  with  Statement of Financial
Accounting  Standards No. 15  (Accounting  by Debtors and Creditors for Troubled
Debt  Restructuring)  by which interest payments on modified debt agreements are
not expensed but applied to the adjusted  book value of the debt. At January 31,
1996, debt book value included $18,000 of expected interest  payments  remaining
from the  estimate  based on the  original  maturity  date of  February 1, 1996.

                                       9
<PAGE>
Interest  paid on modified debt  agreements  amounted to $39,000 and $124,000 in
the third  quarter and first nine months of fiscal 1997. In the first quarter of
fiscal  1997,  $18,000 of interest  payments  were  applied  against the balance
carried as debt,  reducing reported interest expense on modified debt agreements
to $106,000 for the first nine months of fiscal  1997.  Combined  with  interest
paid on capital  lease  obligations  and  interest  income from  temporary  cash
investments,  this  resulted in net  interest  expense of $36,000  and  $101,000
reported for the third  quarter and first nine months of fiscal  1997.  Interest
paid on modified debt  agreements  amounted to $44,000 and $136,000 in the third
quarter and first nine months of fiscal 1996. In fiscal 1996,  the entire amount
of interest  paid on modified debt  agreements  was applied to the book value of
the debt eliminating reportable interest expense. Interest income from temporary
cash  investments  combined  with  interest  paid on capital  lease  obligations
resulted  in net  interest  income of $5,000 and  $15,000  reported in the third
quarter and first nine months of fiscal 1996.

No federal income tax expense was recorded, as federal taxable income was offset
by net operating loss  carryforwards.  In fiscal 1996,  state taxable income was
also offset by prior net operating  losses.  A $6,000 provision for income taxes
was recorded for the estimated  state income tax  attributable to the net income
in the first nine months of fiscal 1997.  As a result of the above,  the Company
reported net income of $85,000 and $204,000 in the third  quarter and first nine
months of fiscal 1997 compared to $46,000 and $68,000 for the comparable periods
of fiscal 1996.

Liquidity and Capital Resources

Net cash provided by operating  activities was $604,000 in the first nine months
of fiscal 1997 compared to $15,000 used in the first nine months of fiscal 1996.
The  $604,000  provided  by  operations  in the first nine months of fiscal 1997
consisted  of  $429,000  provided  from  earnings  offset by $18,000 of interest
payments  booked  against  debt plus  $193,000  provided by changes in operating
assets and liabilities.  The $15,000 used by operations in the first nine months
of fiscal 1996 consisted of $301,000  provided from earnings  offset by $136,000
of  interest  payments  and  $180,000  used by changes in  operating  assets and
liabilities.

Of the $604,000  provided by operations in the first nine months of fiscal 1997,
$268,000  was used to make  principal  payments on the  revolving  credit  note,
$134,000 was used to make principal payments on term debt and capital leases and
$99,000 was invested in capital assets.  Additional capital assets were acquired
through a new $36,000  lease  obligation.  In  addition  to the $15,000  used by
operations  in first  nine  months of  fiscal  1996,  $106,000  was used to make
principal  payments  on debt and capital  leases and  $116,000  was  invested in
capital assets.  The net result was a $103,000  increase in cash balances during
the first nine months of fiscal 1997 compared to a $237,000  decrease during the
first nine months of fiscal 1996.

Total debt at October 31,  1996 was  $1,540,000,  a decrease  of  $384,000  from
$1,924,000 at January 31, 1996. In summary,  this decrease was achieved  through
net cash payments of $268,000 applied to the revolving credit note plus $152,000
(including  $18,000 of interest payments) applied to term debt and capital lease
obligations offset by $36,000 from a new capital lease obligation.

At October 31, 1996 there was no balance  outstanding  on the  revolving  credit
note  compared to $269,000 at January 31, 1996.  At October 31, 1996 and January
31, 1996 the $500,000  borrowing limit under the revolving  credit agreement was
reduced by  $129,000  for  standby  letters of credit.  This  resulted in unused
borrowing  capacity of  $371,000  at October  31,  1996  compared to $102,000 at
January 31, 1996.  Additional  standby letters of credit totaling  $138,000 were
collateralized  by cash at January 31,  1996.  There were no standby  letters of
credit  collateralized  by cash at October 31, 1996.  Additional  liquidity  was
provided by unrestricted  cash balances of $442,000 at October 31, 1996 compared
to $201,000 at January 31, 1996.  Other sources of liquidity are trade  accounts
receivable  and contracts in progress.  Trade accounts  receivable  increased to
$1,727,000 at October 31, 1996 from  $1,178,000  at January 31, 1996.  Liquidity
continues  to be aided by advanced  payments  from  customers as net billings in

                                       10
<PAGE>
excess of costs and profit on  contracts  in  progress  amounted  to $747,000 at
October  31,  1996  compared  to  $25,000 of costs and  profit on  contracts  in
progress in excess of billings at January 31,  1996.  The changes in the various
liquidity  sources are due  primarily to changes in operating  assets  resulting
from the timing of work and progress payments on customer contracts. The Company
is in  compliance  with all  material  covenants  required  under its new credit
agreements.

The Company  believes its cash flow from  operations  and existing cash balances
will be  sufficient to meet its cash  requirements  through the maturity date of
its debt  agreements,  May 1, 1997.  Liquidity  beyond  May 1, 1997 will  likely
depend on the Company's ability to refinance its debt agreements. The Company is
seeking new  financing to replace its existing  debt  agreements  and to provide
added liquidity for the expansion of its products. The Company believes that the
ability to refinance the existing debt  agreements  will be influenced by future
revenue levels as well as external credit markets.

                                       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 October 31, 1996.



                                   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.
 
           Date: December 13, 1996               /s/   Paul L. Dailey, Jr.
                -------------------              -------------------------
                                                  Paul L. Dailey, Jr.
                                                  Secretary-Treasurer

                                                 Signing on Behalf of Registrant
                                                 and as Chief Financial Officer
                                       12