================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    FORM 10-Q


[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

                     For the period ended February 28, 2005


[ ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

             For the transition period from __________ to __________


                         Commission File Number: 0-8656
                                                 ------


                                    TSR, Inc.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                      13-2635899
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

                      400 Oser Avenue, Hauppauge, NY 11788
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                  631-231-0333
--------------------------------------------------------------------------------
                         (Registrant's telephone number)

                                      None
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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.
[X] Yes     [ ]  No

Indicate by check mark whether the Registrant is an accelerated filer (as
defined by Rule 12b-2 of the Exchange Act).
[ ] Yes     [X]  No

                               SHARES OUTSTANDING
                               ------------------

4,568,012 shares of common stock, par value $.01 per share, as of March 31, 2005
--------------------------------------------------------------------------------

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                                     Page 1
<PAGE>

                           TSR, INC. AND SUBSIDIARIES
                                      INDEX


                                                                           Page
                                                                          Number
                                                                          ------
Part I.  Financial Information:


Item 1.    Financial Statements:


           Condensed Consolidated Balance Sheets -
                February 28, 2005 and May 31, 2004..........................  3


           Condensed Consolidated Statements of Income -
                For the three months and nine months ended
                February 28, 2005 and 2004..................................  4


           Condensed Consolidated Statements of Cash Flows -
                For the nine months ended February 28, 2005 and 2004........  5


           Notes to Condensed Consolidated Financial Statements.............  6


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


Item 3.    Quantitative and Qualitative Disclosure About Market Risk........ 14


Item 4.    Controls and Procedures.......................................... 15


Part II.   Other Information................................................ 15

Item 6.    Exhibits and Reports on Form 8-K................................. 15

Signatures.................................................................. 15

                                     Page 2
<PAGE>

Part I.  Financial Information
         Item 1.  Financial Statements

                           TSR, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE><CAPTION>
ASSETS                                                              February 28,     May 31,
                                                                        2004          2005
                                                                    -----------   -----------
                                                                    (Unaudited)
<S>                                                                 <C>           <C>
Current Assets:
     Cash and cash equivalents (Note 3) .........................   $ 4,385,419   $ 2,268,796
     Marketable securities (Note 5) .............................     5,948,143     6,498,839
     Accounts receivable (net of allowance for
          doubtful accounts of $430,000) ........................     7,708,989     9,904,620
     Other receivables ..........................................        37,460        29,700
     Prepaid expenses ...........................................        37,123        38,918
     Prepaid and recoverable income taxes .......................        13,795        15,483
     Deferred income taxes ......................................       180,000       180,000
                                                                    -----------   -----------
          Total current assets ..................................    18,310,929    18,936,356

Equipment and leasehold improvements, at cost (net of accumulated
     depreciation and amortization of $744,002 and $731,581) ....        29,460        24,001
Other assets ....................................................        49,893        84,893
Deferred income taxes ...........................................       148,000       143,000
Acquired client relationships, (net of accumulated amorization
      of $171,608 and $157,308) .................................          --          14,300
                                                                    -----------   -----------
                                                                    $18,538,282   $19,202,550
                                                                    ===========   ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
     Accounts and other payables ................................   $   275,497   $   144,391
     Accrued expenses and other current liabilities .............     1,776,952     2,139,799
     Advances from customers ....................................     1,510,635     1,532,642
     Income taxes payable .......................................       178,835       143,553
                                                                    -----------   -----------
          Total current liabilities .............................     3,741,919     3,960,385
                                                                    -----------   -----------

Minority Interest ...............................................        22,134        50,161
                                                                    -----------   -----------

Stockholders' Equity:
     Preferred stock, $1 par value, authorized
          1,000,000 shares; none issued .........................          --            --
     Common stock, $.01 par value, authorized
          25,000,000 shares; issued 6,228,326 shares ............        62,283        62,283
     Additional paid-in capital .................................     5,090,627     5,079,027
     Retained earnings ..........................................    21,652,620    22,081,995
                                                                    -----------   -----------
                                                                     26,805,530    27,223,305
     Less: Treasury Stock, 1,660,314 shares, at cost ............    12,031,301    12,031,301
                                                                    -----------   -----------
                                                                     14,774,229    15,192,004
                                                                    -----------   -----------

                                                                    $18,538,282   $19,202,550
                                                                    ===========   ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.

                                     Page 3
<PAGE>

                           TSR, INC. AND SUBSIDIARIES
                  CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
   FOR THE THREE AND NINE MONTHS ENDED FEBRUARY 28, 2005 AND FEBRUARY 29, 2004
                                   (UNAUDITED)
<TABLE><CAPTION>

                                                                     Three Months Ended              Nine Months Ended
                                                                February 28,    February 29,    February 28,    February 29,
                                                                    2005            2004            2005            2004
                                                                ------------    ------------    ------------    ------------
<S>                                                             <C>             <C>             <C>             <C>
Revenues, net ...............................................   $ 12,432,714    $ 12,570,591    $ 38,951,953    $ 38,304,036

Cost  of  sales .............................................      9,841,597       9,903,894      30,526,592      29,792,770

Selling, general and administrative expenses ................      1,856,245       1,925,110       5,629,414       5,801,298
                                                                ------------    ------------    ------------    ------------
                                                                  11,697,842      11,829,004      36,156,006      35,594,068
                                                                ------------    ------------    ------------    ------------

Income from  operations .....................................        734,872         741,587       2,795,947       2,709,968

Other income (expense):
     Interest and dividend income ...........................         49,076          25,774         110,555          92,040
     Realized and unrealized gain (loss) from marketable
         securities, net ....................................            704            (255)         (3,124)          9,778

     Minority interest in subsidiary operating profits ......        (13,367)        (13,863)        (49,148)        (51,421)
                                                                ------------    ------------    ------------    ------------

Income before income taxes ..................................        771,285         753,243       2,854,230       2,760,365

Provision  for income taxes .................................        319,000         317,000       1,228,000       1,182,000
                                                                ------------    ------------    ------------    ------------

  Net  income ...............................................   $    452,285    $    436,243    $  1,626,230    $  1,578,365
                                                                ============    ============    ============    ============

Basic and diluted net income per common share ...............   $       0.10    $       0.10    $       0.36    $       0.35
                                                                ============    ============    ============    ============

Weighted average number of basic common shares outstanding ..      4,568,012       4,548,012       4,568,012       4,538,345
                                                                ============    ============    ============    ============

Weighted average number of diluted common  shares outstanding      4,571,019       4,550,772       4,570,112       4,544,718
                                                                ============    ============    ============    ============
</TABLE>

The accompanying notes are an integral part of these consolidated condensed
financial statements.

                                     Page 4
<PAGE>

                           TSR, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
        FOR THE NINE MONTHS ENDED FEBRUARY 28, 2005 AND FEBRUARY 29, 2004
                                   (UNAUDITED)
<TABLE><CAPTION>
                                                                                   Nine Months Ended
                                                                              February 28,    February 29,
                                                                                  2005            2004
                                                                              ------------    ------------
<S>                                                                           <C>             <C>
Cash flows from operating activities:
     Net  income ..........................................................   $  1,626,230    $  1,578,365

Adjustments to reconcile net income to net cash provided by operating
  activities:
        Depreciation  and amortization ....................................         26,721          58,666

        Realized and unrealized loss (gain) from marketable securities, net          3,124          (9,778)

        Stock based compensation expense ..................................         11,600          80,100

        Minority interest in subsidiary operating profit ..................         49,148          51,421

        Deferred income taxes .............................................         (5,000)           --

Changes in assets and liabilities:
          Accounts receivable .............................................      2,195,631         446,990
          Other receivables ...............................................         (7,760)         31,996
          Prepaid expenses ................................................          1,795           9,640
          Prepaid and recoverable income taxes ............................          1,688         (36,005)
          Other assets ....................................................         35,000             911
          Accounts payable and accrued expenses ...........................       (231,741)       (207,847)
          Income taxes payable ............................................         35,282         (56,006)
          Advances from  customers ........................................        (22,007)       (240,954)
                                                                              ------------    ------------
     Net cash provided by operating activities ............................      3,719,711       1,707,499
                                                                              ------------    ------------

Cash flows from investing activities:
        Proceeds from maturities and sales of marketable securities .......      9,450,593      12,925,210
        Purchases of marketable securities ................................     (8,903,021)     (5,472,505)
        Purchases of fixed assets .........................................        (17,880)         (5,205)
                                                                              ------------    ------------

     Net cash provided by investing activities ............................        529,692       7,447,500
                                                                              ------------    ------------

Cash flows from financing activities:
        Distribution to minority  interest ................................        (77,175)        (57,644)
        Proceeds from exercise of stock options ...........................           --           829,688
        Cash dividends paid ...............................................     (2,055,605)    (10,451,228)
                                                                              ------------    ------------
    Net cash used in financing activities .................................     (2,132,780)     (9,679,184)
                                                                              ------------    ------------

Net increase (decrease) in cash and cash equivalents ......................      2,116,623        (524,185)
Cash and cash equivalents at beginning of period ..........................      2,268,796       5,063,098
                                                                              ------------    ------------

Cash and cash equivalents at end of period ................................   $  4,385,419    $  4,538,913
                                                                              ============    ============

Supplemental Disclosures:
       Income tax payments ................................................   $  1,196,000    $  1,274,000
                                                                              ============    ============
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.

                                     Page 5
<PAGE>

                           TSR, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 28, 2005
                                   (UNAUDITED)

1.   BASIS OF PRESENTATION

     The accompanying condensed consolidated interim financial statements
     include the accounts of TSR, Inc. and its subsidiaries (the "Company"). All
     significant inter-company balances and transactions have been eliminated in
     consolidation. These interim financial statements have been prepared in
     accordance with accounting principles generally accepted in the United
     States of America applying to interim financial information and with the
     instructions to Form 10-Q of Regulation S-X of the Securities and Exchange
     Commission. Accordingly, certain information and footnote disclosures
     required by accounting principles generally accepted in the United States
     of America and normally included in the Company's annual financial
     statements have been condensed or omitted. These interim financial
     statements as of and for the nine months ended February 28, 2005, are
     unaudited; however, in the opinion of management, such statements include
     all adjustments (consisting of normal recurring accruals) necessary to
     present fairly the consolidated financial position, results of operations,
     and cash flows of the Company for the periods presented. The results of
     operations for the interim periods presented are not necessarily indicative
     of the results that might be expected for future interim periods or for the
     full year ending May 31, 2005. These interim financial statements should be
     read in conjunction with the Company's consolidated financial statements
     and notes thereto included in the Company's Annual Report on Form 10-K for
     the year ended May 31, 2004.

2.   NET INCOME PER COMMON SHARE

     Basic net income per common share is computed by dividing income available
     to common stockholders (which for the Company equals its net income) by the
     weighted average number of common shares outstanding, and diluted net
     income per common share adds the dilutive effect of stock options and other
     common stock equivalents. Options covering 6,993 and 7,240; and 7,900 and
     19,627 shares of common stock have been omitted from the calculations of
     diluted net income per common share for the three month and nine month
     periods ended February 28, 2005 and 2004, respectively, as their effect
     would have been antidilutive.

3    CASH AND CASH EQUIVALENTS

     The Company considers short-term highly liquid investments with maturities
     of three months or less at the time of purchase to be cash equivalents.
     Cash and cash equivalents were comprised of the following as of February
     28, 2005:

          Cash in banks...............................      $   846,203
          Money Market Funds..........................        3,539,216
                                                            -----------
                                                            $ 4,385,419
                                                            ===========

4.   REVENUE RECOGNITION

     The Company's contract computer programming services are generally provided
     under time and materials agreements with customers. Accordingly, the
     Company recognizes such revenues as services are provided. Advances from
     customers represent amounts received from customers prior to the Company's
     provision of the related services and credit balances from overpayments.

                                     Page 6
<PAGE>

                           TSR, INC. AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
                                FEBRUARY 28, 2005
                                   (UNAUDITED)


5.   MARKETABLE SECURITIES

     The Company accounts for its marketable securities in Accordance with
     Statement of Financial Accounting Standards No. 115 "Accounting for Certain
     Investments in Debt and Equity Securities." Accordingly, the Company
     classifies its marketable securities at acquisition as either (i)
     held-to-maturity, (ii) trading, or (iii) available-for-sale. Based upon the
     Company's intent and ability to hold its US Treasury securities to maturity
     (which maturities are less than one year), such securities have been
     classified as held-to-maturity and are carried at amortized cost. The
     Company's equity securities are classified as trading securities, which are
     carried at fair value with unrealized gains and losses included in
     earnings. The Company's marketable securities are summarized as follows:

                                                         Gross        Gross
                                                       Unrealized   Unrealized
                                 Amortized   Holding    Holding      Recorded
                                   Cost       Gains      Losses        Value

     United States Treasury
     Securities                 $5,928,871       --           --      5,928,871
     Equity Securities              16,866     2,406          --         19,272
                                ----------   -------   ----------   -----------

                                $5,945,737   $ 2,406   $      --    $ 5,948,143
                                ==========   =======   ==========   ===========

6.   RECENT ACCOUNTING PRONOUNCEMENTS

     In December 2004, the FASB issued a revision of SFAS No. 123, "Statement of
     Financial Accounting Standards No. 123 (revised 2004)," which requires that
     the cost resulting from all share based payment transactions be recognized
     in the financial statements. This Statement establishes fair value as the
     measurement objective in accounting for share based payment arrangements
     and requires all entities to apply a fair value based measurement method in
     accounting for share based payment transactions with employees except for
     equity instruments held by employee share ownership plans. This Statement
     is effective as of the beginning of the first interim or annual reporting
     period that begins after June 15, 2005. The Company does not expect the
     adoption of the revised SFAS No. 123 to have a material impact on its
     consolidated financial statements.

                                     Page 7
<PAGE>

                           TSR, INC. AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
                                FEBRUARY 28, 2005
                                   (UNAUDITED)

7.   STOCK OPTIONS

     On July 28, 2003 the Company paid a large nonrecurring cash dividend of
     $2.00 per share to shareholders of record as of July 11, 2003. The dividend
     paid amounted to $9,088,024. Guidance under Emerging Issues Task Force
     (EITF) 00-23, ISSUES RELATED TO THE ACCOUNTING FOR STOCK COMPENSATION UNDER
     APB OPINION NO.25 AND FASB INTERPRETATION NO.44, requires modification for
     outstanding stock options by adjusting the price and/or the number of
     shares under a fixed stock option award as a result of a large nonrecurring
     cash dividend. The Company did not adjust the terms of any outstanding
     stock options and, given the circumstances, a new measurement date and
     variable accounting treatment was required for its outstanding options at
     the dividend payment date. The Company had 10,000 such outstanding options,
     all of which were vested, as of February 28, 2005 and 2004 respectively
     which are now subject to variable accounting treatment. Accordingly, the
     Company recorded a non-cash compensation charge of $8,700 and $36,580 for
     the three months ended February 28, 2005 and 2004 and $11,600 and $80,100
     for the nine months ended February 28, 2005 and 2004 and will continue to
     adjust the compensation charge associated with these options through the
     earlier of their exercise, forfeiture or expiration dates.

     The Company has one stock-based employee compensation plan in effect. The
     Company accounts for all transactions under which employees receive shares
     of stock or other equity instruments in the Company based on the price of
     its stock in accordance with the provisions of Accounting Principles Board
     Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES. All options
     granted under the plan had an exercise price equal to the market value of
     the underlying common stock, and the number of shares represented by such
     options were known and fixed, on the date of grant. However, as a result of
     the large nonrecurring cash dividend, the remaining outstanding 10,000
     options are now treated as variable options. The following table
     illustrates the effect on net income and earnings per share if the Company
     had applied the fair value recognition provisions of Statement of Financial
     Accounting Standards (SFAS) No. 123 ACCOUNTING FOR STOCK-BASED
     COMPENSATION.


<TABLE><CAPTION>
                                                 Three Months Ended            Nine Months Ended
                                             February 28,   February 29,   February 28,   February 29,
                                                 2005           2004           2005           2004
                                             -----------    -----------    -----------    -----------
<S>                                          <C>            <C>            <C>            <C>
Net income:
  As reported............................    $   452,285    $   436,243    $ 1,626,230    $ 1,578,365
Deduct: Total stock-based  employee
compensation expense determined under
fair value method for all awards, net
of minority interest and related tax
effects..................................            --             --             --             --
Add:  Stock based employee
compensation expense included in
reported net income, net of related tax
effect...................................          8,700         36,580         11,600         80,100
  Proforma net income....................    $   460,985    $   472,823    $ 1,637,830    $ 1,658,465
                                             ===========    ===========    ===========    ===========
Basic net income per share:
  As reported............................    $      0.10    $      0.10    $      0.36    $      0.35
                                             ===========    ===========    ===========    ===========
Proforma.................................    $      0.10    $      0.10    $      0.36    $      0.37
                                             ===========    ===========    ===========    ===========
</TABLE>

There were no options granted in fiscal 2005 and 2004.

                                     Page 8
<PAGE>

PART I.  FINANCIAL INFORMATION
         ITEM 2.

                           TSR, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the
condensed consolidated financial statements and the notes to such financial
statements.

FORWARD-LOOKING STATEMENTS

Certain statements contained in Management's Discussion and Analysis of
Financial Condition and Results of Operations, including statements concerning
the Company's future prospects and the Company's future cash flow requirements
are forward looking statements, as defined in the Private Securities Litigation
Reform Act of 1995. Actual results may differ materially from those projections
in the forward looking statements which statements involve risks and
uncertainties, including but not limited to the following: risks relating to the
competitive nature of the markets for contract computer programming services;
the extent to which market conditions for the Company's contract computer
consulting services will continue to adversely affect the Company's business;
the concentration of the Company's business with certain customers; uncertainty
as to the Company's ability to maintain its relations with existing customers
and expand its contract computer consulting services business; the impact of
changes in the industry, such as the use of vendor management companies in
connection with the consulting procurement process, the increase in customers
moving IT operations offshore, uncertainty as to the operating results of the
Company's new legacy systems migration service and the impact of the change in
pricing methodology of the Company's largest customer and other risks and
uncertainties set forth in the Company's filings with the Securities and
Exchange Commission.

RESULTS OF OPERATIONS

The following table sets forth for the periods indicated certain financial
information derived from the Company's condensed consolidated statements of
earnings. There can be no assurance that trends in operating results will
continue in the future:

THREE MONTHS ENDED FEBRUARY 28, 2005 COMPARED WITH THREE MONTHS ENDED FEBRUARY
29, 2004
<TABLE><CAPTION>
                                                      (Dollar amounts in Thousands)
                                                            Three Months Ended
                                                 February 28, 2005     February 29, 2004
                                                 -----------------     -----------------
                                                             % of                  % of
                                                 Amount    Revenues    Amount    Revenues
                                                 ------    --------    ------    --------
<S>                                             <C>        <C>        <C>        <C>
Revenues ....................................   $12,433      100.0    $12,571      100.0
Cost of sales ...............................     9,842       79.2      9,904       78.8
                                                -------    -------    -------    -------
Gross profit ................................     2,591       20.8      2,667       21.2

Selling, general, and administrative expenses     1,856       14.9      1,925       15.3
                                                -------    -------    -------    -------
Income from operations ......................       735        5.9        742        5.9

Other income ................................        36        0.3         11        0.1
                                                -------    -------    -------    -------
Income before income taxes ..................       771        6.2        753        6.0
Provision for income taxes ..................       319        2.6        317        2.5
                                                -------    -------    -------    -------
Net income ..................................   $   452        3.6    $   436        3.5
                                                =======    =======    =======    =======
</TABLE>

                                     Page 9
<PAGE>

                           TSR, INC. AND SUBSIDIARIES

REVENUES

Revenues consist primarily of revenues from computer programming consulting
services. Revenues for the quarter ended February 28, 2005 decreased $138,000 or
1.1% from the comparable period in fiscal 2004. At the beginning of the current
calendar year, the Company experienced more consultants not being extended on
projects than were hired on new assignments causing the average number of
consultants on billing with customers to decrease 4.1% from 389 for the quarter
ending February 28, 2004 to 373 for the current quarter. A change in the
business mix toward placing consultants with higher skill levels and therefore
higher billing rates lessened the decrease in revenues and earnings.

The Company's largest customer, AT&T, which accounted for approximately 20% of
revenues for the quarter, is changing its procurement practices and instituting
a program under which it will only pay for consulting services on a cost
(subject to a cap) plus basis. This change will reduce the amount the Company
can bill for each consultant. It is expected that this change will significantly
reduce revenues and gross profit from this client. The Company is currently
discussing this change with the client and anticipates that the change will be
implemented by the end of April, 2005.

COST OF SALES

Cost of sales for the quarter ended February 28, 2005, decreased $62,000 or 0.6%
to $9,842,000 from $9,904,000 in the prior year period. Cost of sales as a
percentage of revenues increased from 78.8% in the quarter ended February 29,
2004 to 79.2% in the quarter ended February 28, 2005. These increases are
primarily attributed to the increased costs resulting from a higher percentage
of the consultants on billing being direct employees of the Company rather than
employees of subcontractors and continued competitive market pressures on rates
and discounts.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses consist primarily of expenses
relating to account executives, technical recruiters, facilities costs,
management and corporate overhead. These expenses decreased $69,000 or 3.6% from
$1,925,000 in the quarter February 29, 2004 to $1,856,000 in the quarter ended
February 28, 2005. This decrease was primarily attributable to a decrease in
legal expenses. Also, the decrease would have been higher except for $43,000 in
expenses incurred in establishing the Company's new "Transformer" service
offering.

The Company is in the process of developing a new service, "Transformer", aimed
at companies with large investments in legacy systems, which will use an
automated process to transform the code of older legacy applications into more
modern, flexible applications that are less expensive to operate and maintain.
The Company has begun to market the service to potential customers. The first
transformation project has commenced for a data services provider in the
brokerage industry. In performing this project, the Company will transform the
major modules in a financial instruments pricing application from a dated
architecture and programming language (FORTRAN) to a well structured
object-oriented language (C++). While the Company believes that the new service
offers the potential to generate revenues in the future, the Company cannot
predict whether it will be successful in completing the development and
marketing of this service or whether it will realize significant revenues from
this service offering.

OTHER INCOME

Other income resulted primarily from interest and dividend income, which
increased by $23,000 to $49,000 due to higher interest rates in the quarter
ended February 28, 2005. Additionally, the Company had a net unrealized loss of
$255 in the quarter ended February 29, 2004 versus a gain of $704 in the quarter
ended February 28, 2005 from marketable securities due to mark to market
adjustments of its trading securities equity portfolio.

INCOME TAXES

The effective income tax rate of 41.4% for the quarter ended February 28, 2005
decreased from a rate of 42.1% in the quarter ended February 29, 2004.

                                     Page 10
<PAGE>

                           TSR, INC. AND SUBSIDIARIES

Nine months ended February 28, 2005 compared with nine months ended February 29,
2004

                                             (Dollar amounts in Thousands)
                                                   Nine Months Ended

                                        February 28, 2005     February 29, 2004
                                        -----------------     -----------------
                                                    % of                  % of
                                        Amount    Revenues    Amount    Revenues
                                        ------    --------    ------    --------

Revenues                               $ 38,952     100.0    $ 38,304     100.0
Cost of sales                            30,527      78.4      29,793      77.8
                                       --------    ------    --------    ------
Gross profit                              8,425      21.6       8,511      22.2

Selling, general, and administrative
  expenses                                5,629      14.4       5,801      15.1
                                       --------    ------    --------    ------
Income from operations                    2,796       7.2       2,710       7.1

Other income                                 58       0.1          50       0.1
                                       --------    ------    --------    ------
Income before income taxes                2,854       7.3       2,760       7.2
Provision for income taxes                1,228       3.1       1,182       3.1
                                       --------    ------    --------    ------
Net income                             $  1,626       4.2    $  1,578       4.1
                                       ========    ======    ========    ======


REVENUES

Revenues consist primarily of revenues from computer programming consulting
services. Revenues for the nine months ended February 28, 2005 increased
$648,000 or 1.7% from the comparable period in fiscal 2004. Increased
opportunities to place consultants on billing with existing clients in the first
quarter of the current nine month period was partially offset by a budget
reduction at the Company's largest client in the second quarter of the current
period and a less than expected rate of contract extensions in the third quarter
of the current period. This resulted in the average number of consultants on
billing with clients decreasing to 382 for the nine months ended February 28,
2005 from 384 in the nine months ended February 29, 2004. A change in business
mix toward clients using consultants with higher level skill levels and
therefore higher billing rates resulted in the revenue increase.

COST OF SALES

Cost of sales for the nine months ended February 28, 2005, increased $734,000 or
2.5% to $30,527,000 from $29,793,000 in the prior year period. Cost of sales as
a percentage of revenues increased from 77.8% in the nine months ended February
29, 2004 to 78.4% in the nine months ended February 28, 2005. These increases
are primarily attributable to utilizing a higher percentage of consultants as
direct employees of the Company rather than employees of subcontractors and
continued competitive market pressures on rates and discounts.

                                     Page 11
<PAGE>

                           TSR, INC. AND SUBSIDIARIES

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses consist primarily of expenses
relating to account executives, technical recruiters, facilities costs,
management and corporate overhead. These expenses decreased $172,000 or 3.0%
from $5,801,000 in the nine months ended February 29, 2004 to $5,629,000 in the
nine months ended February 28, 2005. This decrease was primarily attributable to
decreased legal, technical recruiting and amortization expenses. The decrease in
these expenses was offset to some extent by approximately $168,000 of expenses
incurred in establishing the Company's new "Transformer" service offering.

The Company is in the process of developing a new service, "Transformer", aimed
at companies with large investments in legacy systems, which will use an
automated process to transform the code of older legacy applications into more
modern, flexible applications that are less expensive to operate and maintain.
The Company has begun to market the service to potential customers. The first
transformation project has commenced for a data services provider in the
brokerage industry. In performing this project, the Company will transform the
major modules in a financial instruments pricing application from a dated
architecture and programming language (FORTRAN) to a well structured
object-oriented language (C++). While the Company believes that the new service
offers the potential to generate revenues in the future, the Company cannot
predict whether it will be successful in completing the development and
marketing of this service or whether it will realize significant revenues from
this service offering.

OTHER INCOME

Other income resulted primarily from interest and dividend income, which
increased by $19,000 to $111,000 due to higher interest rates in the nine months
ended February 28, 2005. Additionally, the Company also had a net unrealized
gain of $10,000 in the nine months ended February 29, 2004 from marketable
securities due to mark to market adjustments of its trading securities equity
portfolio. The Company also had a realized loss of $4,000 in the nine months
ended February 28, 2005 from the sale of marketable securities due to a merger.

INCOME TAXES

The effective income tax rate of 43.0% for the nine months ended February 28,
2005 increased from a rate of 42.8% in the nine months ended February 29, 2004.






                                     Page 12
<PAGE>

                           TSR, INC. AND SUBSIDIARIES


LIQUIDITY AND CAPITAL RESOURCES

The Company expects that cash flow generated from operations together with its
cash and marketable securities will be sufficient to provide the Company with
adequate resources to meet its liquidity requirements for the foreseeable
future.

At February 28, 2005, the Company had working capital of $14,569,000 and cash
and cash equivalents of $4,385,000 as compared to working capital of $14,976,000
and cash and cash equivalents of $2,269,000 at May 31, 2004. The Company's
working capital also included $5,948,000 and $6,499,000 of marketable securities
at February 28, 2005 and May 31, 2004, respectively.

Net cash provided by operating activities of $3,720,000 for the nine months
ended February 28, 2005, compared to cash provided of $1,707,000 for the nine
months ended February 29, 2004. The cash provided by operating activities
resulted primarily from the Company's net income and a decrease in accounts
receivable. This decrease occurred due to increased collections from a major
customer who had delayed payments due to administrative issues at May 31, 2004.
All amounts outstanding at May 31, 2004 for this client have been collected.

Net cash provided by investing activities of $530,000 for the nine months ended
February 28, 2005 primarily resulted from allowing US Treasury Bills to mature
without reinvesting all of the proceeds.

Net cash used in financing activities resulted primarily from the payment of a
cash dividend of $2,056,000 and distributions to the minority interest of
$77,000.

The Company's capital resource commitments at February 28, 2005 consisted of
lease obligations on its branch and corporate facilities. The Company intends to
finance these lease commitments from cash flow provided by operations, available
cash and short-term marketable securities.

The Company's cash and marketable securities were sufficient to enable it to
meet its cash requirements during the nine months ended February 28, 2005. The
Company has available a revolving line of credit of $5,000,000 with a major
money center bank through October 6, 2005. As of February 28, 2005, no amounts
were outstanding under this line of credit.

                 TABULAR DISCLOSURE OF CONTRACTURAL OBLIGATIONS
                 ----------------------------------------------
<TABLE><CAPTION>
                                                             Payments Due By Period
---------------------------------------------------------------------------------------------------------
     Contractural Obligations
     ------------------------                         LESS THAN                                MORE THAN
                                          TOTAL         1 YEAR      1-3 YEARS    3-5 YEARS      5 YEARS
                                       ----------    ----------    ----------    ----------    ----------
<S>                                    <C>           <C>           <C>           <C>           <C>
Long-Term Debt......................         --            --            --           --            --
Capital Lease Obligations...........         --            --            --           --            --
Operating Leases....................      388,000       245,000       143,000         --            --
Purchase Obligations................         --            --            --           --            --
Employment Agreements...............    1,640,000       779,000       861,000         --            --
Other Long-Term Liabilities
Reflected on the Registrant's
Balance Sheet under GAAP............         --            --            --           --            --
                                       ----------    ----------    ----------    ----------    ----------
Total...............................   $2,028,000    $1,024,000    $1,004,000    $    --       $    --
                                       ==========    ==========    ==========    ==========    ==========
</TABLE>

                                     Page 13
<PAGE>

                           TSR, INC. AND SUBSIDIARIES


RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the FASB issued a revision of SFAS No. 123, "Statement of
Financial Accounting Standards No. 123 (revised 2004)," which requires that the
cost resulting from all share based payment transactions be recognized in the
financial statements. This Statement establishes fair value as the measurement
objective in accounting for share based payment arrangements and requires all
entities to apply a fair value based measurement method in accounting for share
based payment transactions with employees except for equity instruments held by
employee share ownership plans. This Statement is effective as of the beginning
of the first interim or annual reporting period that begins after June 15, 2005.
The Company does not expect the adoption of the revised SFAS No. 123 to have a
material impact on its consolidated financial statements.

CRITICAL ACCOUNTING POLICIES

The Securities and Exchange Commission ("SEC") issued disclosure guidance for
"critical accounting policies." The SEC defines "critical accounting policies"
as those that require the application of management's most difficult, subjective
or complex judgments, often as a result of the need to make estimates about the
effect of matters that are inherently uncertain and may change in subsequent
periods.

The Company's significant accounting policies are described in Note 1 to the
Company's consolidated financial statements, contained in its May 31, 2004
Annual Report on Form 10-K, as filed with the SEC. The Company believes that the
following accounting policies require the application of management's most
difficult, subjective or complex judgments:

ESTIMATING ALLOWANCES FOR DOUBTFUL ACCOUNTS RECEIVABLE
We perform ongoing credit evaluations of our customers and adjust credit limits
based upon payment history and the customer's current credit worthiness, as
determined by our review of their current credit information. We continuously
monitor collections and payments from our customers and maintain a provision for
estimated credit losses based upon our historical experience and any specific
customer collection issues that we have identified. While such credit losses
have historically been within our expectations and the provisions established,
we cannot guarantee that we will continue to experience the same credit loss
rates that we have in the past. A significant change in the liquidity or
financial position of any of our significant customers could have a material
adverse effect on the collectibility of our accounts receivable and our future
operating results.

VALUATION OF DEFERRED TAX ASSETS
We regularly evaluate our ability to recover the reported amount of our deferred
income taxes considering several factors, including our estimate of the
likelihood of the Company generating sufficient taxable income in future years
during the period over which temporary differences reverse. Presently, the
Company believes that it is more likely than not that it will realize the
benefits of its deferred tax assets based primarily on the Company's history of
and projections for taxable income in the future. In the event that actual
results differ from our estimates or we adjust these estimates in future
periods, we may need to establish a valuation allowance against a portion or all
of our deferred tax assets, which could materially impact our financial position
or results of operations.

VALUATION OF LONG-LIVED AND INTANGIBLE ASSETS
We assess the recoverability of long-lived assets and intangible assets whenever
we determine that events or changes in circumstances indicate that their
carrying amount may not be recoverable. Our assessment is primarily based upon
our estimate of future cash flows associated with these assets. Although there
has been a sustained weakness in our operating results, through February 28,
2005, we have continued to generate net income. Accordingly, we have not
determined that there has been an indication of impairment of any of our assets.
However, should our operating results deteriorate, we may determine that some
portion of our long-lived assets or intangible assets are impaired. Such
determination could result in non-cash charges to income that could materially
affect our financial position or results of operations for that period.

                                     Page 14
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company's earnings and cash flows are subject to fluctuations due to (i)
changes in interest rates primarily affecting its income from the investment of
available cash balances in money market funds and (ii) changes in market values
of its investments in trading equity securities. Under its current policies, the
Company does not use interest rate derivative instruments to manage exposure to
interest rate changes. The Company's present exposure to changes in the market
value of its investments in equity securities is not significant.

ITEM 4. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES. The Company conducted an evaluation, under
the supervision and with the participation of the principal executive officer
and principal financial officer, of the Company's disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of
1934 (the "Exchange Act")). Based on this evaluation, the principal executive
officer and principal financial officer concluded that, as of the end of the
period covered by this report, the Company's disclosure controls and procedures
are effective.

INTERNAL CONTROL OVER FINANCIAL REPORTING. There was no change in the Company's
internal control over financial reporting (as such term is defined in Rule
13a-15(f) under the Exchange Act) during the Company's most recently reported
completed fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the Company's internal control over financial reporting.


PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8K

(a). Exhibit 31.1 - Certification by J.F. Hughes pursuant to 18 U.S.C. Section
     1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

     Exhibit 31.2 - Certification by John G. Sharkey pursuant to 18 U.S.C.
     Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
     of 2002.

     Exhibit 32.1 - Certification by J.F. Hughes pursuant to 18 U.S.C. Section
     1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

     Exhibit 32.2 - Certification by John G. Sharkey pursuant to 18 U.S.C.
     Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
     of 2002.

(b). Reports on Form 8K:

     None

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                                  TSR Inc.
                                                (Registrant)


Date: April 5, 2005              /s/ J.F. Hughes
                                 ---------------------------------------------
                                 J.F. Hughes, Chairman, President and Treasurer


Date: April 5, 2005              /s/ John G. Sharkey
                                 ---------------------------------------------
                                 John G. Sharkey, Vice President Finance


                                Page 15