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

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

         For the quarterly period ended October 31, 2001

         [  ] 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.
        (Exact name of small business issuer as specified in its charter)


            Delaware                                        22-2328806
  (State or Other Jurisdiction of                        (IRS 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  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

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, 2001: 456,760

Transitional Small Business Disclosure Format (check one):
YES           NO    X
     -----        -----
<PAGE>
                          TRANSNATIONAL INDUSTRIES, INC.

                                   INDEX                                  PAGE


Part I.    FINANCIAL INFORMATION

 Item 1.    Financial Statements

            Condensed consolidated balance sheets -- October 31, 2001,
            and January 31, 2001.                                           3-4

            Condensed consolidated statements of operations -- Three
            months ended October 31, 2001 and 2000; nine months ended
            October 31, 2001 and 2000.                                        5

            Condensed consolidated statements of cash flows -- Nine
            months ended October 31, 2001 and 2000.                           6

            Notes to condensed consolidated financial statements --
            October 31, 2001.                                               7-8

 Item 2.    Management's Discussion and Analysis of Financial
            Condition and Results of Operations                            9-12


Part II.   OTHER INFORMATION

 Item 6.    Exhibits and Reports on Form 8-K                                 13


SIGNATURES                                                                   13


                                       2
<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements


                         Transnational Industries, Inc.

                      Condensed Consolidated Balance Sheets

                             (Dollars in thousands)
<TABLE>
<CAPTION>

                                                                    October 31,    January 31,
                                                                        2001           2001
                                                                   -------------- -------------
Assets                                                                (Unaudited)    (Audited)
<S>                                                                   <C>           <C>
Current Assets:
  Cash                                                                     $ 135         $ 509
  Accounts receivable                                                      1,331         3,485
  Inventories                                                              2,470         2,393
  Deferred taxes                                                             368           368
  Other current assets                                                       372           315
                                                                   -------------- -------------

Total current assets                                                       4,676         7,070



Machinery and equipment:
  Machinery and equipment                                                $ 3,676       $ 3,182
  Less accumulated depreciation                                            2,516         2,231
                                                                   -------------- -------------

Net machinery and equipment                                                1,160           951



Other assets:
  Repair and maintenance inventories, less provision
    for obsolescence                                                          74            74
  Computer software, less amortization                                       393           505
  Excess of cost over net assets of business acquired,
    less amortization                                                      1,639         1,689
                                                                   -------------- -------------

Total other assets                                                         2,106         2,268
                                                                   -------------- -------------

Total assets                                                              $7,942       $10,289
                                                                   ============== =============
</TABLE>

See notes to condensed consolidated financial statements.


                                       3
<PAGE>

                         Transnational Industries, Inc.

                Condensed Consolidated Balance Sheets (continued)

                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                                   October 31,     January 31,
                                                                        2001           2001
                                                                  -------------- -------------
Liabilities and stockholders' equity                                (Unaudited)      (Audited)

<S>                                                                   <C>           <C>
 Current Liabilities:
  Accounts payable                                                      $    436    $   1,452
  Deferred maintenance revenue                                               720          671
  Accrued expenses                                                           307          581
  Billings in excess of cost and estimated earnings                        1,119        1,768
  Current portion of long-term debt                                          407          385
                                                                  -------------- -------------

Total current liabilities                                                  2,989        4,857

Long-term debt, less current portion                                         335          841


Stockholders' equity:
  Series B cumulative convertible preferred stock,
  $0.01 par value - authorized 100,000 shares;
  issued and outstanding 318 shares
  (liquidating value $175,695)                                                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                                                     (3,939)      (3,961)
                                                                  -------------- -------------
                                                                           4,755        4,728
Less: Treasury stock                                                       (137)        (137)
                                                                  -------------- -------------
Total stockholders' equity                                                 4,618        4,591
                                                                   ------------- -------------

Total liabilities and stockholders' equity                                $7,942      $10,289
                                                                   ============= =============

</TABLE>

See notes to condensed consolidated financial statements.



                                       4
<PAGE>

                         Transnational Industries, Inc.

                 Condensed Consolidated Statements of Operations

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

                                                Three Months Ended                   Nine Months Ended
                                                    October 31                          October 31
                                             ---------------------------       ---------------------------
                                                     2001          2000                2001          2000
                                             ------------- -------------       ------------- -------------
<S>                                              <C>            <C>                <C>           <C>
Revenues                                           $ 1,935        $ 3,329           $ 8,069       $ 9,534
Cost of Sales                                        1,389          2,313             5,681         6,582
                                             -------------- --------------     ------------- -------------
Gross Margin                                           546          1,016             2,388         2,952

Selling expenses                                       201            231               633           653
Research and development                               309            275               763           743
General and administrative expenses                    358            247               910           756
                                             -------------- --------------     ------------- -------------
                                                       868            753             2,306         2,152
                                             -------------- --------------     ------------- -------------
Operating income (loss)                              (322)            263                82           800

Interest expense                                        16             28                53            94
                                             -------------- --------------     ------------- -------------
Income (loss) before income tax                      (338)            235                29           706

Provision for income taxes                            (18)             15                 7            44
                                             -------------- --------------     ------------- -------------
Net income (loss)                                    (320)            220                22           662

Preferred dividend requirement                           2              2                 6             6
                                             -------------- --------------     ------------- -------------
Income applicable to common shares                 $ (322)        $   218             $  16        $  656
                                             ============= ==============      ============ =============

Basic income (loss) per common share              $ (0.70)         $ 0.48            $ 0.04        $ 1.44
                                             ============== ==============     ============= =============
Diluted income (loss) per common share            $ (0.70)         $ 0.45            $ 0.03        $ 1.38
                                             ============== ==============     ============= =============
</TABLE>

         See notes to condensed consolidated financial statements.



                                       5
<PAGE>

                        Transnational Industries, Inc.

                        Condensed Consolidated Statements
                                  of Cash Flows

                                   (Unaudited)
                                 (In thousands)
<TABLE>
<CAPTION>

                                                               Nine Months Ended
                                                                 October 31,
                                                            --------------------
                                                                 2001      2000
                                                            ---------- ---------
<S>                                                           <C>       <C>
       Net cash provided (used) by operating activities        $ 638    $  769


       Net cash provided (used) by investing activities          (91)     (105)


       Net cash provided (used) for financing activities        (921)     (748)
                                                            ---------- ---------

       Increase (decrease) in cash                              (374)      (84)
       Cash at beginning of period                               509       107
                                                            ---------- ---------
            Cash at end of period                             $  135    $   23
                                                            ========== =========
 </TABLE>

See notes to condensed consolidated financial statements.



                                       6
<PAGE>

                         Transnational Industries, Inc.

              Notes to Condensed Consolidated Financial Statements

                                   (Unaudited)

                                October 31, 2001

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, 2001,  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, 2001,
contained in the  Registrant's  Annual  Report on Form 10-KSB for the year ended
January 31, 2001.

Note B - EARNINGS PER SHARE

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

<TABLE>
<CAPTION>
                                                                      Three Months Ended           Nine Months Ended
                                                                          October 31                  October 31
                                                                  --------------------------   -------------------------
                                                                         2001         2000            2001         2000
                                                                  ------------ -------------   ------------ ------------
<S>                                                                   <C>          <C>             <C>          <C>
Numerator (same for basic and diluted):
Net income (loss)                                                     $ (320)          $ 220          $ 22         $ 662
Preferred dividend requirement                                              2              2             6             6
                                                                  ------------ --------------  ------------ -------------

Net income (loss) available to common  stockholders                   $ (322)          $ 218          $ 16         $ 656
                                                                  ============ ==============  ============ =============

Denominator:
Weighted average shares outstanding for basic earnings per
share                                                                 456,760        456,760       456,760       456,760
Dilutive effect of employee stock options                              32,830         29,273        35,159        18,997
                                                                  ------------ --------------  ------------ -------------
Weighted average shares outstanding and assumed conversions
for diluted earnings per share                                        489,590        486,033       491,919       475,757
                                                                  ============ ==============  ============ =============

Basic income (loss) per share                                         $(0.70)          $ .48         $ .04        $ 1.44
                                                                  ============ ==============  ============ =============
Diluted income (loss) per share                                      $ (0.70)          $ .45         $ .03        $ 1.38
                                                                  ============ ==============  ============ =============
</TABLE>

                                       7
<PAGE>

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 in each of periods ended October 31, 2001 and 2000.

Note C - Supplemental Cash Flow Information

Non-cash financing  transactions  consist of machinery and equipment of $437,000
acquired through capital leases in the nine months ended October 31, 2001.



                                       8
<PAGE>

        Item 2. 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 the fiscal year ending
January 31, 2002 ("Fiscal  2002") were  $1,935,000  and  $8,069,000  compared to
$3,329,000  and  $9,534,000 in the  comparable  periods of the fiscal year ended
January 31, 2001 ("Fiscal  2001").  The  decreases of  $1,394,000  (42%) for the
quarter and $1,465,000  (15%) for the  nine-month  period were due to lower dome
and ImmersaVision  revenues,  which were partially offset by higher  planetarium
revenues.  ImmersaVision  revenues  were  $316,000 and  $1,898,000  in the first
quarter  and first  nine  months of Fiscal  2002,  compared  to  $1,251,000  and
$2,640,000 in the first quarter and first nine months of Fiscal 2001, a decrease
of $935,000 (75%) and $742,000 (28%) for the quarter and the nine-month  period,
respectively.  The decrease in  ImmersaVision  revenues was  attributable to the
winding down of work on several  successfully  installed systems during the past
year.  Dome revenues were $689,000 and $3,114,000 in the third quarter and first
nine  months of  Fiscal  2002  compared  to  $1,233,000  and  $4,581,000  in the
comparable  periods of Fiscal 2001, a decrease of $544,000  (44%) and $1,467,000
(32%) for the quarter and the nine-month period,  respectively.  The decrease in
dome  revenues  was  principally   attributable  to  lower  revenues  from  ride
simulation  attractions  and special  projects.  Otherwise,  dome  revenues from
planetarium  theaters  increased and dome  revenues from film theaters  remained
relatively  constant.  Special  project  domes  consisted  of a special  effects
attraction for a casino completed in May 2001 which followed the revenues in the
previous  year from the special  theater  dome for a major  European  automobile
maker.  Planetarium  revenues were $930,000 and  $3,057,000 in the third quarter
and first nine months of Fiscal 2002 compared to $845,000 and  $2,313,000 in the
comparable  periods of Fiscal  2001,  an increase of $85,000  (10%) and $744,000
(32%) for the quarter and the nine-month period,  respectively.  The increase in
planetarium  revenues was attributable to higher volume from the sale of systems
for the educational  market.  Planetarium  revenues  attributable to the sale of
maintenance and parts  decreased  slightly to $356,000 and $944,000 in the third
quarter and first nine months of Fiscal 2002  compared to $382,000  and $980,000
in the comparable periods of Fiscal 2001.

The  backlog  of  unearned  revenue  as of October  31,  2001 was  approximately
$6,000,000.  There are many promising  sales  prospects for all of the Company's
products.  The Company  expects that this will lead to significant  orders which
will  impact  revenues  during the next year;  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 for
the remainder of Fiscal 2002 and into the early part of Fiscal 2003.  This is an
example of the  temporary  fluctuations  resulting  from the timing of  customer
projects.  The strong sales prospects combined with the successful operations of
the new ImmersaVision  theaters are expected to sustain long-term revenue growth
beyond Fiscal 2003.

Gross  margins  decreased  to 28.2%  and 29.6% in the  third  quarter  and first
nine-months of Fiscal 2002 compared to 30.5% and 31.0% in the comparable periods
of Fiscal 2001. The decrease in gross margins was attributable to inefficiencies
from  lower dome  volume and  unanticipated  costs of  completing  ImmersaVision
installations.  Overall,  dome gross margins continued to lead ImmersaVision and


                                       9
<PAGE>

improving  planetarium margins.  Selling expenses decreased $30,000 (13%) in the
third  quarter and $20,000 (3%) in the first nine months of Fiscal 2002 compared
to the comparable  periods of Fiscal 2001.  The decrease in selling  expense was
due  to  lower  sales  travel  and  independent  agent  expenses.  Research  and
development  expenses  increased  $34,000  (12%) and  $20,000  (3%) in the third
quarter and first nine months of Fiscal 2002 compared to the comparable  periods
of Fiscal 2001.  The increase in research  and  development  expenses was due to
efforts  in  ImmersaVision  product  development  for  markets  outside  of  the
planetarium market. General and administrative expenses increased $111,000 (45%)
and  $154,000  (20%) in the third  quarter  and first nine months of Fiscal 2002
compared to the  comparable  periods of Fiscal 2001. The increase in general and
administrative  expenses was due  primarily to  strategic  planning  efforts and
information system improvements.

Net interest  expense  amounted to $16,000 and $53,000 in the third  quarter and
first  nine  months of Fiscal  2002  compared  to  $28,000  and  $94,000  in the
comparable  periods  of  Fiscal  2001.  The  decrease  in  interest  expense  is
attributable  to the  scheduled  pay down of term debt and lower use of the bank
line of credit.  The $16,000 and $53,000 reported in the first quarter and first
nine months of Fiscal  2002  consisted  of $4,000 and $19,000  paid on bank debt
agreements plus $15,000 and $40,000 paid on capital lease obligations  offset by
$3,000 and $6,000 of interest  income.  The $28,000 and $94,000  reported in the
first  quarter  and first nine months of Fiscal  2001  consisted  of $13,000 and
$57,000  paid on bank debt  agreements  plus $15,000 and $37,000 paid on capital
lease  obligations.  The Company  continues  to pay no federal  income  taxes as
federal  taxable  income is  offset by the  utilization  of net  operating  loss
carryforwards.  The  provision  for state  income  taxes  amounted to an $18,000
intra-period credit in the third quarter and $7,000 of tax expense for the first
nine months of Fiscal 2002 compared to $15,000 and $44,000 of tax expense in the
comparable  periods  of Fiscal  2001.  As a result  of the  above,  the  Company
reported a net loss of $320,000  and net income of $22,000 in the third  quarter
and first nine months of Fiscal  2002,  respectively,  compared to net income of
$220,000 and $662,000 for the comparable periods of Fiscal 2001.

Liquidity and Capital Resources

Net cash provided by operating  activities  was $638,000 in first nine months of
Fiscal 2002,  compared to $769,000 in the first nine months of Fiscal 2001.  The
$638,000 of net cash  provided by operating  activities in the first nine months
of Fiscal 2002 was produced by adding $516,000 of non-cash  charges and $100,000
of cash provided by changes in operating  assets and  liabilities  to $22,000 of
net income.  The $769,000 of net cash  provided by operating  activities  in the
first nine  months of Fiscal 2001 was  produced  by adding  $411,000 of non-cash
charges  to  $662,000  of net income and  subtracting  $304,000  of cash used by
changes in operating assets and liabilities. 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
period to period to remain both material and variable.

The $638,000  provided by operations in the first nine months of Fiscal 2002 was
offset by $921,000  used by financing  activities  and $91,000 used by investing
activities.  The  $769,000  provided by  operations  in the first nine months of
Fiscal 2001 was offset by $748,000  used by  financing  activities  and $105,000
used by  investing  activities.  The net result was a $374,000  decrease in cash
balances  during the first nine months of Fiscal 2002  compared to a decrease of
$84,000 during the first nine months of Fiscal 2001.

Financing  activities  in the first nine months of Fiscal 2002  consisted of net
payments of  $600,000  on the  revolving  credit  note,  payments of $182,000 on


                                       10
<PAGE>

capital leases and monthly principal payments on the bank term note of $139,000.
Non cash  financing  transactions  in the  first  nine  months  of  Fiscal  2002
consisted  of $437,000 of  machinery  and  equipment  acquired  through  capital
leases.  Financing  activities in the first nine months of Fiscal 2001 consisted
of net payments of $355,000 on the revolving  credit note,  payments of $128,000
on capital leases,  monthly principal payments on the bank term note of $128,000
and the purchase of treasury stock at a cost of $137,000.

Total debt at October 31,  2001 was  $742,000,  a decrease of $484,000  from the
$1,226,000 at January 31, 2001. In summary,  the decrease resulted from $600,000
of net payments on the  revolving  credit note,  $139,000 of scheduled  payments
applied  to term  debt  and  $182,000  of  payments  applied  to  capital  lease
obligations, offsetting a new capital lease of $437,000.

Investing  activities  in the first  nine  months of Fiscal  2002  consisted  of
$91,000 of various machinery and equipment and software  additions,  compared to
$105,000 of the same in the first nine months of Fiscal 2001.

At October 31, 2001 there was no balance on the revolving credit note,  compared
to a $600,000  balance at January 31, 2001.  This  resulted in unused  borrowing
capacity of  $1,100,000  at October 31, 2001 compared to $500,000 at January 31,
2001.  Cash balances of $135,000  provided  additional  liquidity at October 31,
2001  compared to $509,000 at January 31,  2001.  The next source of  liquidity,
accounts  receivable,  decreased to  $1,331,000  at October 31, 2001 compared to
$3,485,000  at January  31,  2001.  This  resulted in a  $1,928,000  decrease in
liquidity  available from cash,  borrowing  capacity and accounts  receivable at
October 31, 2001 compared to January 31, 2001.  Contributing  to the decrease in
liquidity available from cash, borrowing capacity and accounts receivable was an
$800,000  reduction in funding from contracts in progress,  as recorded  revenue
exceeded  billings by $232,000 at October 31, 2001 compared to a $568,000 excess
of billings over recorded revenue at January 31, 2001.  Also,  noteworthy is the
decreased  demand for  liquidity  resulting  from the reduced  level of customer
contracts.

The bank  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.


Forward-Looking Information

The statements in this  Quarterly  Report on Form 10-QSB 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  (without  limitation)
"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


                                       11
<PAGE>

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
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.

                                       12
<PAGE>

                              II. OTHER INFORMATION

Items 1-5

  None

6.   Exhibits and Reports on Form 8-K

(a)  Exhibits



(b)  The Registrant did not file any reports on Form 8-K during the three months
     ended October 31, 2001.






                                   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:  December 15, 2001              Paul L. Dailey, Jr.
                                              Secretary-Treasurer

                                              Signing on Behalf of Registrant
                                              and as Chief Financial Officer


                                       13