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, 1999

         [ ]  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                        (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 Exchange 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, 1999: 502,470

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, 1999,
           and January 31, 1999.                                           3-4

           Condensed consolidated statements of operations -- Three
           months ended October 31, 1999 and 1998; nine months ended
           October 31, 1999 and 1998.                                        5

           Condensed consolidated statements of cash flows -- Nine
           months ended October 31, 1999 and 1998.                           6

           Notes to condensed consolidated financial statements --
           October 31, 1999.                                               7-8

Item 2.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations                            9-13


Part II.   OTHER INFORMATION

Item 4.    Submission of Matters to a Vote of Security Holders              14

Item 6.    Exhibits and Reports on Form 8-K                                 14


SIGNATURES                                                                  15


                                       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,
                                                                      1999          1999
                                                                   ------------ ------------
Assets                                                              (Unaudited)    (audited)

<S>                                                                  <C>           <C>
Current Assets:
  Cash                                                                   $  90        $ 455
  Accounts receivable                                                    1,943        1,712
  Inventories                                                            1,432        1,281
  Other current assets                                                     170           85
                                                                   ------------ ------------

Total current assets                                                     3,635        3,533



Machinery and equipment:
  Machinery and equipment                                                2,988        2,784
  Less accumulated depreciation                                          2,342        2,172
                                                                   ------------ ------------

Net machinery and equipment                                                646          612



Other assets:
  Repair and maintenance inventories, less provision
    for obsolescence                                                       165          165
  Computer software, less amortization                                     748          501
  Excess of cost over net assets of business acquired,
    less amortization                                                    1,774        1,825
                                                                   ------------ ------------

Total other assets                                                       2,687        2,491
                                                                   ------------ ------------

Total assets                                                            $6,968       $6,636
                                                                   ============ ============
</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,
                                                                      1999          1999
                                                                   ------------ ------------
Liabilities and stockholders' equity                                (Unaudited)     (Audited)

<S>                                                                   <C>           <C>
Current liabilities:
  Accounts payable                                                       $ 900         $ 366
  Deferred maintenance revenue                                             659           686
  Accrued expenses                                                         340           338
  Billings in excess of cost and estimated earnings                      1,130         1,447
  Current portion of long-term debt                                        272           238
                                                                   ------------ -------------

Total current liabilities                                                3,301         3,075

Long-term debt, less current portion                                       665           731

Stockholders' equity:
  Series B cumulative convertible preferred stock,
  $0.01 par value - authorized 100,000  shares;
  issued and outstanding 318 shares (liquidating value
  $158,205)                                                                 73            73
Common stock, $0.20 par value - authorized
  1,000,000 shares; issued and outstanding 502,470
  shares                                                                   100           100
Additional paid-in capital                                               8,502         8,493
Accumulated deficit                                                    (5,673)        (5,836)
                                                                   ------------ -------------

Total stockholders equity                                               3,002          2,830
                                                                   ------------ -------------

Total liabilities and stockholders' equity                              $6,968        $ 6,636
                                                                   ============ =============
</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,
                                            -----------------------------          ------------------------------
                                                     1999           1998                      1999          1998
                                            -------------- --------------          ---------------- -------------
<S>                                               <C>            <C>                       <C>           <C>
Revenues                                          $ 2,481        $ 2,064                   $ 7,145       $ 5,431
Cost of Sales                                       1,911          1,461                     5,208         3,772
                                            -------------- --------------          ---------------- -------------
Gross Margin                                          570            603                     1,937         1,659

Selling expenses                                      203            176                       599           571
Research and development                              117            115                       467           352
General and administrative expenses                   207            205                       636           606
                                            -------------- --------------          ---------------- -------------
                                                      527            496                     1,702         1,529
                                            -------------- --------------          ---------------- -------------
Operating income                                       43            107                       235           130

Interest expense                                       21             26                        58            96
                                            -------------- --------------          ---------------- -------------
Income before income tax                               22             81                       177            34

Provision for income taxes                              3              6                        14             6
                                            -------------- --------------          ---------------- -------------
Net income                                             19             75                       163            28

Preferred dividend requirement                          2              2                         6             6
                                            -------------- --------------          ---------------- -------------
Net income                                             19             75                       163            28
                                            ============== ==============          ================ =============

Basic income per common share                      $ 0.03         $ 0.15                    $ 0.31        $ 0.04
                                            ============== ==============          ================ =============
Diluted income per common share                    $ 0.03         $ 0.14                    $ 0.31        $ 0.04
                                            ============== ==============          ================ =============
</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,
                                                            --------------------
                                                                 1999      1998
                                                            ---------- ---------
<S>                                                           <C>         <C>
       Net cash provided (used) by operating activities          220       399


       Net cash provided (used) by investing activities         (370)     (237)


       Net cash provided (used) for financing activities        (215)     (167)
                                                            ---------- ---------

       Increase (decrease) in cash                              (365)       (5)
       Cash at beginning of period                               455       471
                                                            ---------- ---------

            Cash at end of period                             $   90    $  466
                                                            ========== =========
</TABLE>

     See notes to condensed consolidated financial statements.

                                       6
<PAGE>


                         Transnational Industries, Inc.

              Notes to Condensed Consolidated Financial Statements

                                   (Unaudited)

                                October 31, 1999

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, 1999,  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, 1999,
contained in the  Registrant's  Annual  Report on Form 10-KSB for the year ended
January 31, 1999.

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,
                                                                  ---------------------------    --------------------------
                                                                           1999         1998            1999          1998
                                                                  -------------- ------------    ------------ -------------
<S>                                                                     <C>          <C>             <C>           <C>

Numerator (same for basic and dilutive):
Net income                                                                 $ 19        $  75           $ 163         $  28
Preferred dividend requirement                                                2            2               6             6
                                                                  -------------- ------------    ------------ -------------
Net income available to common  stockholders                               $ 17           73           $ 157         $  22
                                                                  ============== ============    ============ =============

Denominator:
Weighted average shares outstanding for basic earnings per
share                                                                   502,470      502,470         502,470       501,470
Dilutive effect of employee stock options                                11,070        1,951           7,911         8,524
                                                                  -------------- ------------    ------------ -------------
Weighted average shares outstanding and assumed conversions
for dilutive earnings per share                                         513,540      504,421         510,381       509,994
                                                                  ============== ============    ============ =============

Basic income per share                                                    $ .03        $ .15           $ .31         $ .04
                                                                  ============== ============    ============ =============
Dilutive income per share                                                 $ .03        $ .14           $ .31         $ .04
                                                                  ============== ============    ============ =============
</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 and 1,941 in each of periods  ended October 31, 1999
and 1998, respectively.

Note C -- CONTINGENCIES

In 1995,  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 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 communicated  any threats to carry out its assertion  against
Spitz since July 1996, but it has indicated to Spitz that  proceedings  continue
in an effort to recover  damages from the other  parties  involved.  The Company
believes that the parties will reach an agreement to resolve the dispute without
litigation  involving  Spitz. 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, 1999.

                                       8
<PAGE>



Item 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS



Revenues  in the third  quarter  and  first  nine  months  of  fiscal  2000 were
$2,481,000  and  $7,145,000   compared  to  $2,064,000  and  $5,431,000  in  the
comparable  periods of fiscal  1999.  The  increase  of  $417,000  (20%) for the
quarter was due to higher ImmersaVision and dome revenues,  which were partially
offset by lower planetarium  revenues.  The increase of $1,714,000 (32%) for the
nine-month  period  resulted  from  higher  revenues  from all of the  Company's
products.  ImmersaVision  revenues  were  $534,000 and  $1,294,000  in the third
quarter and first nine months of Fiscal 2000, respectively,  compared to $13,000
of  ImmersaVision  revenue in the third  quarter and first nine months of Fiscal
1999.  The  ImmersaVision  revenue in Fiscal  2000 was  attributable  to the two
orders  received  at the end of  Fiscal  1999.  Revenue  from  ImmersaVision  is
expected to continue at this level  through  Fiscal 2000 and into the  following
year as work  continues  on the two  current  orders as well as other new sales.
Planetarium revenues were $733,000 and $2,286,000 in the third quarter and first
nine  months of  Fiscal  2000  compared  to  $1,045,000  and  $2,229,000  in the
comparable  periods of Fiscal 1999, a decrease of $312,000 (30%) for the quarter
and an increase of $57,000 (3%) for the six-month period.  Planetarium  revenues
from the sale of systems decreased in Fiscal 2000 while revenue from maintenance
and  parts  increased.   Planetarium  revenues   attributable  to  the  sale  of
maintenance  and parts were $333,000 and $961,000 in the third quarter and first
none months of Fiscal 2000  compared to $308,000 and $890,000 in the  comparable
periods  of  Fiscal  1999,  an  increase  of  $25,000  (8%)  and  $71,000  (8%),
respectively.  The increase in maintenance  and parts revenues was due to higher
sales to customers  without  preventive  maintenance  agreements  as well as the
timing of performance on preventive maintenance  agreements.  Dome revenues were
$1,214,000  and  $3,565,000 in the third quarter and first nine months of fiscal
2000 compared to $1,006,000 and  $3,189,000 in the comparable  periods of fiscal
1999, an increase of $208,000  (21%) for the quarter and $376,000  (12%) for the
nine-month period. The higher dome revenues were attributable to higher revenues
from ride simulator and planetarium  domes, which were partially offset by lower
revenues from film and military simulator domes.

Revenues  are  expected to continue  at higher  than  historical  levels for the
remainder of Fiscal 2000 as work  continues on sales booked  through late Fiscal
1999. The backlog of unearned  revenue remains healthy by historical  comparison
at $8,324,000, with several recent bookings of new sales. Sales prospects remain
strong and the Company  still expects  significant  revenue  contributions  from
ImmersaVision  products  in future  years as the  installed  base  grows and new
applications of the product are developed.  While revenue levels are expected to
continue at  historically  high levels  over the next year,  uncertainty  in the
timing and delivery of sales may cause  revenue  levels to continue to fluctuate
in interim periods.

Gross  margins  decreased to 23.0% and 27.1% in the third quarter and first nine
months of Fiscal 2000 compared to 29.2% and 30.5% in the  comparable  periods of
Fiscal 1999. The lower margins were mostly  attributable to  unanticipated  cost
incurred  on  the  completion   and   installation   of  the  Company's   second
ImmersaVision  sale.  The increased  costs were  attributable  to the first time
completion of newly designed components, additional installation effort required

                                       9
<PAGE>

by Company  technicians and  unanticipated  high labor costs at the installation
site.  The knowledge  gained from this  experience is expected to aid efforts in
reducing  costs on future  ImmersaVision  sales.  Compounding  the effect of the
unanticipated  costs,  ImmersaVision  systems include many purchased  components
that command a lower mark-up than the Company's manufactured products.  Although
the gross  margins  on  ImmersaVision  sales are  generally  lower,  significant
profits result from the revenue volume  generated from the sale of the high cost
components.  Also,  as the Company  develops  more  proprietary  technology  for
ImmersaVision,  it expects more sales of higher margin  software and integration
services to the new markets that open up for ImmersaVision. Otherwise, in Fiscal
2000,  margin  improvements   resulted  from  volume-related   efficiencies  and
successful efforts on many dome projects.

Selling expenses  increased  $27,000 (15%) and $28,000 (5%) in the third quarter
and first nine  months of Fiscal  2000  compared  to the  comparable  periods of
Fiscal 1999 due to greater sales and marketing  efforts through the reassignment
of personnel and a sales staff  addition.  The increase  resulting  from the new
sales and  marketing  activities  was  partially  offset by the reduction of the
Fiscal 1999 high use of engineering resources for selling efforts.  Research and
development  expenses  increased  $2,000  (2%) and  $115,000  (33%) in the third
quarter and first nine months of Fiscal 2000 compared to the comparable  periods
of Fiscal  1999.  The increase in research  and  development  expenses is due to
product   development   efforts  to  meet  delivery   obligations  for  existing
ImmersaVision  customers  as well as  continuing  research  and  development  of
proprietary   programming   tools   for   software   content   development   for
ImmersaVision,  improvements to  ImmersaVision  subsystems,  and improvements to
optical  planetarium  products.  Research and  development  efforts in the third
quarter of Fiscal 2000 were reduced due to the use of  engineering  personnel on
the ImmersaVision  installation.  General and administrative  expenses increased
$2,000 (1%) and $30,000  (5%) in the third  quarter and the first nine months of
Fiscal  2000  compared to the  comparable  periods of Fiscal  1999.  General and
administrative  expenses  increased  due  primarily  to the use of  professional
services for information system improvements and strategic planning.  The effect
of the  increase  was less  obvious  due to a $25,000  charge  for  questionable
accounts receivable in fiscal 1999.

Net interest  expense  amounted to $21,000 and $58,000 in the third  quarter and
first  nine  months of Fiscal  2000  compared  to  $26,000  and  $96,000  in the
comparable  periods  of Fiscal  1999.  The  decrease  in  interest  expense  was
attributable  mainly to lower use of the bank line of credit.  The  $21,000  and
$58,000  reported  in the first  quarter  and first nine  months of Fiscal  2000
consisted of $12,000 and $40,000 paid on bank debt  agreements  plus $10,000 and
$21,000  paid on  capital  lease  obligations,  offset by $1,000  and  $3,000 of
interest income earned on cash invested. The $26,000 and $96,000 reported in the
first  quarter  and first nine months of fiscal  1999  consisted  of $19,000 and
$73,000  paid on bank debt  agreements  plus $7,000 and $23,000  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 income taxes consists of state income taxes on
net income reported through the nine-month periods.

As a result of the  above,  the  Company  reported  net  income of  $19,000  and
$163,000 in the third  quarter and first nine months of Fiscal 2000  compared to
$75,000 and $28,000 in comparable periods of Fiscal 1999.

Liquidity and Capital Resources

Net cash provided by operating  activities was $220,000 in the first nine months
of Fiscal 2000 compared to $399,000  provided in the first nine months of Fiscal


                                       10
<PAGE>

1999.  The $220,000  provided by  operations  in the first nine months of fiscal
1999  consisted of $525,000  provided from  earnings  offset by $305,000 used by
changes in operating assets and liabilities. The $399,000 provided by operations
in the first nine months of fiscal 1999  consisted  of  $334,000  provided  from
earnings plus $65,000 provided from changes in operating assets and liabilities.

The $220,000  provided by operations in the first nine months of Fiscal 2000 was
offset by $215,000 of  scheduled  principal  payments  on debt  obligations  and
$370,000 invested in capital assets.  The $399,000 provided by operations in the
first nine months of fiscal 1999 was offset by $167,000 of  scheduled  principal
payments on debt  obligations and $237,000  invested in capital assets.  The net
result was a $365,000  decrease in cash balances during the first nine months of
Fiscal 2000 compared to a $5,000 decrease during the first nine months of Fiscal
1999.

The $370,000  invested in capital assets in the first nine months of Fiscal 2000
consisted of $253,000 in computer software and $117,000 of various machinery and
equipment  additions.  Also  in  the  first  nine  months  of  Fiscal  2000  the
installation of a new computer infrastructure began for the purpose of improving
the Company's  information systems.  Initial hardware installation was completed
in August 1999 at a cost of $87,000.  The Company is  financing  this cost along
with new  computer  software to be  installed  in Fiscal 2000  through a capital
lease.  Under a master  lease  agreement,  the  $87,000 in  hardware  costs plus
$96,000 in software  costs were financed in the third quarter of Fiscal 2000. An
additional  $132,000 of hardware  and  software  costs were  financed  under the
master lease agreement in November 1999. The master lease  agreement  allows for
the  financing  of up to $118,000 in  additional  hardware  and  software  costs
through early 2000.  The $237,000  invested in capital  assets in the first nine
months of Fiscal 1999 consisted of $168,000 of computer  software and $69,000 of
various  machinery and  equipment  additions.  In addition,  $32,000 of computer
hardware for the  development  of  ImmersaVision  software was financed  through
capital leases in the first nine months of fiscal 1999.

At October,  1999 the balance on the revolving credit note was $125,000 compared
to $150,000 at January 31, 1999. This resulted in unused  borrowing  capacity of
$675,000 at October 31, 1999 compared to $650,000 at January 31, 1999. Remaining
cash balances of $90,000 at October 31, 1999 compared to $455,000 at January 31,
1999 provided additional liquidity. The next source of liquidity, trade accounts
receivable,  increased to  $1,943,000 at October 31, 1999 compared to $1,712,000
at January 31, 1999. The demand on liquidity by contracts in progress  decreased
as billings  exceeded  revenue recorded by $452,000 at October 31, 1999 compared
to $763,000 at January 31, 1999.  Contracts in progress at October 31, 1999 will
use the other  sources of  liquidity as  performance  catches up to the billings
through the  completion  of each  project.  The payment  terms on new  contracts
remain uncertain and will also affect liquidity.

Total  debt at July 31,  1999 was  $937,000,  a  decrease  of  $32,000  from the
$969,000 at January 31, 1999.  The decrease  resulted from $190,000 of scheduled
principal  payments on debt and lease obligations and $25,000 in net payments on
revolving credit debt, offset by a new lease obligation for $183,000.

The existing 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.
                                       11
<PAGE>


Year 2000 Impact

The Year  2000  Issue  is the  result  of  computer  programs  being  unable  to
distinguish  between  the year  1900 and  2000.  This  could  result in a system
failure or miscalculations causing disruptions of operations,  including,  among
other  things,  a  temporary  inability  to process  transactions,  or engage in
similar normal business activities.

The Company has used a combination of mini computer applications,  microcomputer
applications  and  manual  procedures  to account  for and  manage its  business
processes. The very unique nature of the Company's business, its small size, and
the  variety  of  activities  it is  involved  in,  along  with  past  financial
constraints,  have perpetuated the use of the current systems. The mini computer
applications are not Year 2000 compliant.  Vendors and consultants have proposed
year 2000 corrections to the mini computer  applications;  however,  the Company
believes that such changes could be costly and  uncertain.  Improvements  in the
Company's financial  condition,  the availability of more affordable  technology
solutions  and  anticipated  increases  in  business  volume now  justify  major
improvement to the Company's  information  systems.  Therefore,  the Company has
concluded that it would be better served by an alternative  solution. As part of
this wider  objective  to improve  its  information  systems,  the  Company  has
evaluated its overall data processing resources and has made substantial changes
in the fiscal year ending  January 31, 2000.  In this  process,  the Company has
selected new products that are Year 2000 compliant. The Company has completed an
analysis of its business  processes and requirements,  which were matched to the
capabilities of available  enterprise  software  products.  A list of enterprise
software  products  best suited for the  Company's  business  was compiled and a
determination was made on the basic computer  infrastructure required to run the
list of software products.  Installation of the new computer  infrastructure was
completed in August 1999 at an initial cost of $82,000.  An enterprise  software
system was selected  after an evaluation  of several  products,  which  required
additional   computer  hardware  installed  in  September  1999  at  a  cost  of
approximately  $40,000.  Cost  of  the  enterprise  software,  installation  and
implementation  is  estimated  at $300,000.  The cost is being  capitalized  and
funded  through  operating  cash  flow and  leasing  of  computer  hardware  and
software.  Implementation  of  the  enterprise  software  is in  process  and is
scheduled  for  completion  over the next nine  months.  The first  phase of the
implementation, which replaced critical financial applications, was completed on
December 1, 1999.  In  addition,  modifications  have been made to certain  date
sensitive  applications  of the current  minicomputer  system in order to ensure
that other critical  business  processes  continue through the completion of the
implementation of the new enterprise software in year 2000.

The  Company  is not  integrated  with and does not rely  heavily  on  vendors',
clients'  and other third  parties'  data  processing  systems.  The bulk of the
Company's  revenue  is  generated  from  new  public  or  commercial   projects.
Maintenance  and parts revenue comes from repeat  customers,  mainly museums and
schools.  As such,  revenue is  generally  not  dependent  upon repeat  sales to
commercial  customers'  inventory  management  systems  or  enterprise  resource
planning  systems the way many  businesses may be. The Company uses a network of
vendors  to  obtain  its  parts  and  supplies.  Many  parts  and  supplies  are
commodities  available from numerous  sources.  The effect of critical  vendors'
ability  to  continue  to  supply  the  Company  though  Year  2000 has not been
determined.  However,  the Company  believes that the lack of  integration  with
vendors  systems  and  numerous  available  sources  will  reduce  the risk from
vendors' Year 2000 potential problems.

The  Company's  products  rely on a number of widely used third  party  software
products,  which claim to be Year 2000 compliant or do not perform date-oriented


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<PAGE>

tasks.  Evaluation  and testing of the Year 2000 impact on software  used in the
Company's  products has been  conducted in  conjunction  with other research and
development  efforts over the past year and no  significant  problems  have been
detected.

As a contingency  plan,  in the event that all of the necessary  changes are not
completed,  the portions of the operations  that rely on date sensitive data can
be accommodated by manual procedures and date adjustments to selective  existing
software  applications.  The Company  believes  this  contingency  plan could be
accomplished without a material interruption to the Company's business.

In addition to the specific  anticipated costs described above, the Company will
incur additional costs as salaried  personnel utilize their time to work on Year
2000 matters. The Company does not anticipate that the use of internal personnel
will have a material  adverse effect upon the Company's  operations or earnings;
however,  the  Company is not yet able to quantify  such costs and,  because the
Company has not reserved  any amounts  therefore,  any amounts so expended  will
reduce the Company's earnings.  In addition,  in the event that the economy as a
whole is materially and adversely  effected by widespread  interruptions,  or by
failures of key  infrastructure  providers (such as banks and utilities),  it is
likely that the Company's financial condition and results of operations would be
materially adversely effected.

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  "expects,"  "intends,"
"goals," "estimates,"  "projects," "plans,"  "anticipates,"  "should," "future,"
"believes," and "scheduled."

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

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<PAGE>


                              II. OTHER INFORMATION


4.   Submission of Matters to a Vote of Security Holders

On August 19, 1999, the Company held its annual meeting of stockholders. At such
meeting, the Company's five nominees for director, Michael S. Gostomski, Charles
H. Holmes,  Jr., Charles F. Huber, Calvin A. Thompson and William D. Witter were
elected to the Company's Board of Directors by the vote specified below:

                                       Number of Votes

Nominee                       For       Against/Withheld   Abstentions

Michael S. Gostomski        425,910            88               0
Charles H. Holmes, Jr.      425,910            88               0
Charles F. Huber            425,910            88               0
Calvin A. Thompson          425,910            88               0
William D. Witter           425,910            88               0

Also at such annual meeting, the company's stockholders approved an amendment to
the Company's 1995 Stock Option and  Performance  Incentive Plan to increase the
number of shares of Common Stock available for awards under the Option Plan from
50,000 shares to 150,000  shares.  The vote on such amendment was 325,008 shares
in favor, 798 shares against, 35 shares abstaining and 100,157 broker non-votes.


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, 1999.


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<PAGE>


                                    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, 1999                 Paul L. Dailey, Jr.
                                               Secretary-Treasurer

                                               Signing on Behalf of Registrant
                                               and as Chief Financial Officer



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