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 August 31, 2002
                                            ---------------


                 [  ]  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
       incorporation or organization)                Identification No.)


                      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

                               SHARES OUTSTANDING

           4,418,012 shares of common stock, par value $.01 per share,
                            as of September 30, 2002
           -----------------------------------------------------------





                                     Page 1


<PAGE>




                           TSR, INC. AND SUBSIDIARIES
                                      INDEX


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

Item 1.  Financial Statements:

   Condensed Consolidated Balance Sheets -
    August 31, 2002 and May 31, 2002 ........................................  3

   Condensed Consolidated Statements of Earnings -
    For the three months ended August 31, 2002 and 2001 .....................  4

   Condensed Consolidated Statements of Cash Flows -
    For the three months ended August 31, 2002 and 2001 .....................  5

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

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

Part II.  Other Information.................................................. 14

Signatures................................................................... 14



                                     Page 2


<PAGE>




Part I.  Financial Information
         Item 1.  Financial Statements
<TABLE>

                           TSR, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>

                                                                     August 31,    May 31,
ASSETS                                                                 2002          2002
                                                                    ------------  -----------
                                                                         (Unaudited)
<S>                                                                 <C>           <C>
Current Assets:
     Cash and cash equivalents (Note 3) .........................   $ 5,471,932   $ 5,793,896
     Marketable securities (Note 5) .............................     8,940,007     8,941,535
     Accounts receivable (net of allowance for
      doubtful accounts of $430,000) ............................    11,470,617    10,131,579
     Other receivables ..........................................        54,222        49,819
     Prepaid expenses ...........................................        45,782        50,926
     Prepaid and recoverable income taxes .......................        15,857        69,357
     Deferred income taxes ......................................       180,000       180,000
                                                                    -----------   -----------
         Total current assets ...................................    26,178,417    25,217,112

Equipment and leasehold improvements, at cost (net of accumulated
 depreciation and amortization of $725,000 and $704,000) ........        55,341        76,044
Other assets ....................................................        52,182        52,182
Deferred income taxes ...........................................       123,000       123,000
Acquired client relationships, (net of accumulated amorization
 of $57,203 and $42,902) (Note 6) ...............................       114,405       128,706
                                                                    -----------   -----------
                                                                    $26,523,345   $25,597,044
                                                                    ===========   ===========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
     Accounts and other payables ................................   $   133,743   $   119,176
     Accrued expenses and other current liabilities .............     2,507,682     2,529,264
     Advances from customers ....................................     1,755,227     1,814,611
     Income taxes payable .......................................       562,907       235,888
                                                                    -----------   -----------
         Total current liabilities ..............................     4,959,559     4,698,939
                                                                    -----------   -----------

Minority Interest ...............................................         4,486         2,578
                                                                    -----------   -----------

Shareholders' Equity:
     Preferred stock, $1 par value, authorized
      1,000,000 shares; none issued .............................        --            --
     Common stock, $.01 par value, authorized
      25,000,000 shares; issued 6,078,326 shares ................        60,783        60,783
     Additional paid-in capital .................................     4,134,053     4,134,053
     Retained earnings ..........................................    29,395,765    28,731,992
                                                                    -----------   -----------

                                                                     33,590,601    32,926,828
     Less: Treasury Stock, 1,660,314 shares, at cost ............    12,031,301    12,031,301
                                                                    -----------   -----------
                                                                     21,559,300    20,895,527
                                                                    ------------  -----------
                                                                    $26,523,345   $25,597,044
                                                                    ===========   ===========
</TABLE>

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

                                     Page 3




<PAGE>
<TABLE>

                                           TSR, INC. AND SUBSIDIARIES
                                  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                               FOR THE THREE MONTHS ENDED AUGUST 31, 2002 AND 2001
                                                   (UNAUDITED)
<CAPTION>

                                                                                       Three Months Ended
                                                                                           August 31,
                                                                              ---------------------------------
                                                                                  2002                 2001
                                                                              ------------         ------------
<S>                                                                           <C>                  <C>
Revenues, net ............................................................    $ 13,680,766         $ 17,467,396
Cost of sales ............................................................      10,699,608           13,610,277
Selling, general and administrative expenses .............................       1,851,031            2,405,124
                                                                              ------------         ------------
                                                                                12,550,639           16,015,401

Income from operations ...................................................       1,130,127            1,451,995
Other income:
         Interest and dividend  income ...................................          61,991               75,688
         Unrealized loss from marketable securities, net .................         (10,437)              (2,189)
         Minority interest in subsidiary operating profits ...............          (1,908)
                                                                              ------------         ------------
Income before income taxes ...............................................       1,179,773            1,525,494
Provision for income taxes ...............................................         516,000              664,000
                                                                              ------------         ------------
         Net income ......................................................    $    663,773         $    861,494
                                                                              ============         ============
Basic and diluted net income per common share ............................    $       0.15         $       0.19
                                                                              ============         ============
Weighted average number of basic and diluted common shares outstanding ...       4,418,012            4,418,012
                                                                              ============         ============

</TABLE>

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


                                                     Page 4
<PAGE>

<TABLE>


                                           TSR, INC. AND SUBSIDIARIES
                                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                               FOR THE THREE MONTHS ENDED AUGUST 31, 2002 AND 2001
                                                   (UNAUDITED)
<CAPTION>

                                                                                   Three Months Ended
                                                                                        August 31,
                                                                              -------------------------------
                                                                                  2002                2001
                                                                              -----------         -----------
<S>                                                                           <C>                 <C>
Cash flows from operating activities:
      Net income .....................................................        $   663,773         $   861,494
      Adjustments to reconcile net income to net cash provided by
       (used in) operating activities:
        Depreciation and amortization ................................             35,004              22,219
        Deferred income taxes ........................................               --                15,000
        Unrealized loss from marketable securities, net ..............             10,437               2,189
        Minority interest in subsidiary operating profits ............              1,908                --
Changes in assets and liabilities:
           Accounts receivable .......................................         (1,339,038)             92,384
           Other receivables .........................................             (4,403)             21,156
           Prepaid expenses ..........................................              5,144               2,131
           Prepaid and recoverable income taxes ......................             53,500             121,757
           Accounts payable and accrued expenses .....................             (7,015)            221,541
           Income taxes payable ......................................            327,019             360,904
           Advances from customers ...................................            (59,384)           (131,665)
                                                                              -----------         -----------
Net cash provided by (used in) operating activities ..................           (313,055)          1,589,110
                                                                              -----------         -----------
Cash flows from investing activities:
         Proceeds from maturities and sales of marketable securities .          3,964,590           2,439,441
         Purchases of marketable securities ..........................         (3,973,499)         (2,948,140)
         Purchase of net assets, net of cash acquired ................               --              (274,564)
                                                                              -----------         -----------
Net cash used in investing activities ................................             (8,909)           (783,263)
                                                                              -----------         -----------
Cash flows from financing activities
         Proceeds from sale of minority interes ......................               --                 1,000
                                                                              -----------         -----------
Net cash provided by financing activities ............................               --                 1,000
                                                                              -----------         -----------
Net increase (decrease) in cash and cash equivalents .................           (321,964)            806,847
Cash and cash equivalents at beginning of period .....................          5,793,896           6,208,361
                                                                              -----------         -----------
Cash and cash equivalents at end of period ...........................        $ 5,471,932         $ 7,015,208
                                                                              ===========         ===========
Supplemental Disclosures:
        Income tax payments ..........................................        $   135,000         $   166,000
                                                                              ===========         ===========

</TABLE>

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


                                     Page 5

<PAGE>


                           TSR, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2002
                                   (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 three months ended August 31, 2002, 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, 2003. 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, 2002.

2.   Net Income Per Common Share

     Basic net income per common share is computed by dividing income available
     to common shareholders (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 160,000 and 190,000 shares of
     common stock have been omitted from the calculations of diluted net income
     per common share for the three month periods ended August 31, 2002 and
     August 31, 2001 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 August 31,
     2002:

             Cash in banks ...................   $  609,199
             Money Market Funds ..............    4,862,733
                                                 ----------
                                                 $5,471,932
                                                 ==========

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. Such amounts are expected to be settled
     within the next fiscal year.

     Effective March 1, 2002, the Company adopted Emerging Issues Task Force
     Issue No. 01-14, "Income Statement Characterization of Reimbursements
     Received for `Out-of-Pocket' Expenses Incurred." Accordingly,
     reimbursements received by the Company for out-of-pocket expenses are
     characterized as revenue. Prior to adoption of EITF 01-14, the Company
     characterized such amounts as a reduction of cost of sales. Accordingly,
     amounts previously reported for revenues and cost of sales have been
     increased by $49,504, for fiscal year 2001.

                                     Page 6

<PAGE>

                           TSR, INC. AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
                                 AUGUST 31, 2002
                                   (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, (iii) available-for-sale. Based upon the
     Company's intent and ability to hold its US Treasury securities to maturity
     (which maturities range between three months and two years), 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:

<TABLE>
<CAPTION>

                                                                           Gross          Gross
                                                            Amortized    Unrealized      Unrealized           Fair
                                                              Cost       Holding Gains  Holding Losses        Value
                                                           -----------   -------------  --------------      ----------
<S>                                                         <C>           <C>            <C>                 <C>
United States Treasury Securities .................        $ 8,924,058        --                 --            8,924,058
Equity Securities .................................             28,287        --              (12,338)            15,949
                                                           -----------     ---------      -----------        -----------
                                                           $ 8,952,345     $  --          $   (12,338)       $ 8,940,007
                                                           ===========     =========      ===========        ===========
</TABLE>


6.   Acquisition

     In August 2001, the Company capitalized a newly formed subsidiary with
     $4,000 and simultaneously sold a 20% interest to a third party for $1,000.
     On August 14, 2001, this subsidiary acquired substantially all of the
     assets and assumed certain liabilities of a computer-consulting firm for
     cash of $286,500 (including cash acquired of $11,936). In accordance with
     Statement of Financial Accounting Standards No. 141, "Accounting for
     Business Combinations" (SFAS No. 141), this transaction was accounted for
     as a purchase business combination. Accordingly, the purchase price has
     been allocated to the assets acquired and liabilities assumed based on
     their estimated fair values, summarized as follows:

                     Cash .................................    $ 11,936
                     Other current assets .................     303,520
                     Equipment ............................      16,235
                     Acquired client  relationships .......     171,608
                     Current  liabilities .................    (216,799)
                                                               --------
                                                               $286,500
                                                               ========

     In connection with the acquisition, the Company acquired certain
     contractual client relationships. The related intangible asset is being
     amortized over a three-year period, reflecting the estimated average life
     of the underlying client relationships. Amortization expense for the three
     months ended August 31, 2002 was $14,301.

     The results of operations of the acquired business have been included in
     the Company's consolidated financial statements from the date of
     acquisition. Had the acquisition been completed as of June 1, 2001,
     unaudited pro forma consolidated revenues, net income and net income per
     common share would have been $17,900,000, $872,000, and $0.20,
     respectively, for the three months ended August 31, 2001.

                                     Page 7


<PAGE>



                           TSR, INC. AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
                                 AUGUST 31, 2002
                                   (UNAUDITED)

7.   Recent Accounting Pronouncements

     In June 2001, the Financial Accounting Standards Board issued Statement of
     Financial Accounting Standards No. 142 "Goodwill and Other Intangible
     Assets" (SFAS No. 142), which is effective for fiscal years beginning after
     June 15, 2001. SFAS No. 142 establishes accounting and reporting standards
     for goodwill and intangible assets. Under SFAS No. 142, amortization of
     goodwill will be terminated. However, goodwill will be subject to periodic
     assessments for impairment by applying a fair-value-based test. Intangible
     assets must be separately recognized and amortized over their useful lives.
     The Company's adoption of SFAS No. 142 on June 1, 2002 had no impact on its
     consolidated financial statements.

     In July 2001, the Financial Accounting Standards Board issued Statement of
     Financial Accounting Standards No. 143, "Accounting for Asset Retirement
     Obligations"(SFAS No. 143). SFAS No. 143 addresses financial accounting
     requirements for retirement obligations associated with retirement of
     tangible long-lived assets and for the associated asset retirement costs.
     SFAS No. 143 requires a company to record the fair value of an asset
     retirement obligation in the period in which it incurred a legal obligation
     associated with the retirement of tangible long-lived assets that results
     from the acquisition, construction, development and/or normal use of the
     asset. The Company is also to record a corresponding increase to the
     carrying amount of the related asset and to depreciate that cost over the
     life of the asset. The amount of the liability is changed at the end of
     each period to reflect the passage of time and changes in estimated future
     cash flows. SFAS No. 143 is effective for fiscal years beginning after June
     15, 2002. The Company has not yet determined the impact of its planned
     adoption of SFAS No. 143 (anticipated for June 1, 2003).

     In August 2001, the Financial Accounting Standards Board issued Statement
     of Financial Accounting Standards No. 144, "Accounting for the Impairment
     or Disposal of Long-Lived Assets" (SFAS No. 144), which became effective
     for the Company on June 1, 2002. As applicable to the Company, SFAS No. 144
     replaces SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
     and for Long-Lived Assets to be Disposed Of", and provides guidelines on
     how long-lived assets should be evaluated for impairment and establishes
     criteria for when long-lived assets are held for sale, and prescribes the
     accounting for long-lived assets that will be disposed of other than by
     sale. Unlike SFAS No. 121, an impairment assessment under SFAS No. 144 will
     never result in a write-down of goodwill. Rather goodwill will be evaluated
     for impairment under SFAS No. 142, "Goodwill and Other Intangible Assets."
     The Company's adoption of SFAS No. 144 had no impact on its consolidated
     financial statements.

     In July 2002, the FASB issued Statement No. 146, "Accounting for Costs
     Associated with Exit or Disposal Activities" (SFAS 146). SFAS 146 requires
     companies to recognize costs associated with exit or disposal activities
     when they are incurred rather than at the date of commitment to an exit or
     disposal plan. SFAS 146 will be applied to exit or disposal activities
     after December 31, 2002 and is not expected to have a material effect on
     the Company.

                                     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, on the Company's business,
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 August 31, 2002 compared with three months ended August 31,
2001

<TABLE>
<CAPTION>

                                                                   Three Months Ended
                                                                      August 31,
                                                     ---------------------------------------------------
                                                             2002                        2001
                                                     ----------------------      -----------------------
                                                                    % of                         % of
                                                      Amount       Revenues       Amount        Revenues
                                                     -------       --------      -------        --------
                                                             (Dollar amounts in Thousands)
<S>                                                  <C>             <C>        <C>              <C>
Revenues* ...................................        $13,681          100.0      $17,467          100.0
Cost of sales* ..............................         10,700           78.2       13,610           77.9
                                                     -------          -----      -------          -----
Gross profit ................................          2,981           21.8        3,857           22.1
Selling, general, and administrative
 expenses ...................................          1,851           13.5        2,405           13.8
                                                     -------          -----      -------          -----
Income from operations ......................          1,130            8.3        1,452            8.3
Other income ................................             50            0.3           73            0.4
                                                     -------          -----      -------          -----
Income before income taxes ..................          1,180            8.6        1,525            8.7
Provision for income taxes ..................            516            3.8          664            3.8
                                                     -------          -----      -------          -----
Net income ..................................        $   664            4.8      $   861            4.9
                                                     =======          =====      =======          =====

</TABLE>

* For fiscal 2001, amounts revised to reflect the Company's adoption of EITF
01-14, "Income Statement Characterization of Reimbursements Received for
`Out-of-Pocket' Expenses Incurred", effective March 1, 2002.

                                     Page 9



<PAGE>

                           TSR, INC. AND SUBSIDIARIES

Revenues

Revenues consist primarily of revenues from computer programming consulting
services. Revenues for the quarter ended August 31, 2002 decreased $3,786,000 or
21.7% from the comparable period in fiscal 2002. This decrease resulted from an
overall decrease in the number of programmers on billing with clients from
approximately 400 at August 31, 2001 to approximately 360 at August 31, 2002.
The continuing weak economic environment has significantly reduced the IT
spending levels of many of our major customers, limiting opportunities to place
new consultants on billing.

The calendar year end budget and planning process at many of our clients
normally results in projects ending at year end, resulting in a reduction in
programmers on billing. In prior years, much of this effect was offset by
consultants starting new projects. At the end of calendar 2001, however, new
starts were down significantly as a result of the economic condition referred to
above, resulting in the number of consultants on billing being reduced. Although
the level of consultants on billing has stabilized, new placements have been
concentrated at one major account. It is still uncertain what further impact the
current economic conditions will have on our operations.

The Company's revenues from programmers on billing have also been affected by
discounts required by major customers as a condition to remaining on their
approved vendor lists, such as discounts for prompt payment and volume
discounts. In addition, some major customers have retained a third party to
provide vendor management services and centralize the consultant hiring process.
Under this system, the third party retains the Company to provide contract
computer programming services and the Company bills the third party and the
third party bills the ultimate customer. This process weakens the relationship
the Company has built with its client contacts, the project managers, who the
Company would normally work directly with to place consultants. Instead the
Company is required to interface with the vendor management provider, making it
more difficult to maintain its relationships with its customers and preserve and
expand its business. These changes have also reduced the Company's profit
margins. The Company is unable to predict the long-term effects of these
changes.

Cost of Sales

Cost of sales for the quarter ended August 31, 2002, decreased $2,910,000 or
21.4% to $10,700,000 from $13,610,000 in the prior year period. The decrease in
costs resulted primarily from the decrease in amounts paid to programmers
resulting from the decrease in contract computer programming services revenues.
Cost of sales as a percentage of revenues increased from 77.9% in the quarter
ended August 31, 2001 to 78.2% in the quarter ended August 31, 2002. This
increase is primarily attributable to customers requiring rate reductions and
discounts, as discussed above.

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 $554,000 or 23.0%
from $2,405,000 in the quarter ended August 31, 2001 to $1,851,000 in the
quarter ended August 31, 2002. This decrease was primarily attributable a
reduction of account executives, technical recruiting professionals and
administrative assistants, as well as a reduction of commissions paid to the
remaining account executives and recruiters.

Other Income

Other income resulted primarily from interest and dividend income, which
decreased by $14,000 to $62,000 due to lower interest rates in the quarter ended
August 31, 2002. Additionally, the Company also had a net unrealized loss of
$10,000 in the quarter ended August 31, 2002 versus a net unrealized loss of
$2,000 in the quarter ended August 31, 2001 from marketable securities due to
mark to market adjustments of its trading securities equity portfolio.

                                     Page 10

<PAGE>

                           TSR, INC. AND SUBSIDIARIES

Income Taxes

The effective income tax rate of 43.7% for the quarter ended August 31, 2002
increased from a rate of 43.5% in the quarter ended August 31, 2001.

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 August 31, 2002, the Company had working capital of $21,219,000 and cash and
cash equivalents of $5,472,000 as compared to working capital of $20,518,000 and
cash and cash equivalents of $5,794,000 at May 31, 2002. Working capital
increased primarily due to the Company's net income of $664,000 in the three
months ended August 31, 2002.

Net cash used by operating activities amounted to $313,000 for the three months
ended August 31, 2002, compared to cash provided of $1,589,000 for the three
months ended August 31, 2001. The cash used by operating activities and the
increase in accounts receivable primarily resulted from reduced collections of
receivables as compared to the prior year period. The comparative reduction in
collections occurred primarily because of delays associated with collections
from a major customer due to the implementation of a vendor management system,
and associated reconciliation difficulties. However, we do not believe that the
ultimate collectibility of the amounts due from this customer are subject to
greater than normal collection risks.

Net cash used in investing activities amounted to $9,000 for the three months
ended August 31, 2002, compared to $783,000 for the three months ended August
31, 2001. The decrease in net cash flows used in investing activities primarily
resulted from purchases of marketable securities in excess of sales and proceeds
from maturities of marketable securities in the prior year period and the
purchase of the net assets of an acquired business in August 2001.

The Company's capital resource commitments at August 31, 2002 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. A summary of non-cancelable long-term
operating lease commitments as of August 31, 2002 follows:

<TABLE>
<CAPTION>
<S>                                <C>           <C>           <C>          <C>         <C>             <C>
                                      FY 03         FY 04        FY 05        FY 06      Thereafter       Total
                                    --------       -------      --------     ---------   ----------     -----------
    Operating Leases ............   $259,000       $343,000     $349,000     $ 170,000     $118,000     $ 1,239,000
</TABLE>

The Company's cash and marketable securities were sufficient to enable it to
meet its cash requirements during the three months ended August 31, 2002. The
Company has available a revolving line of credit of $5,000,000 with a major
money center bank through October 6, 2003. As of August 31, 2002, no amounts
were outstanding under this line of credit.

                                     Page 11

<PAGE>

                           TSR, INC. AND SUBSIDIARIES

Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets"
(SFAS No. 142), which is effective for fiscal years beginning after June 15,
2001. SFAS No. 142 establishes accounting and reporting standards for goodwill
and intangible assets. Under SFAS No. 142, amortization of goodwill will be
terminated. However, goodwill will be subject to periodic assessments for
impairment by applying a fair-value-based test. Intangible assets must be
separately recognized and amortized over their useful lives. The Company's
adoption of SFAS No. 142 on June 1, 2002 had no impact on its consolidated
financial statements.

In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations"(SFAS No. 143). SFAS No. 143 addresses financial accounting
requirements for retirement obligations associated with retirement of tangible
long-lived assets and for the associated asset retirement costs. SFAS No. 143
requires a company to record the fair value of an asset retirement obligation in
the period in which it incurred a legal obligation associated with the
retirement of tangible long-lived assets that results from the acquisition,
construction, development and/or normal use of the asset. The company is also to
record a corresponding increase to the carrying amount of the related asset and
to depreciate that cost over the life of the asset. The amount of the liability
is changed at the end of each period to reflect the passage of time and changes
in estimated future cash flows. SFAS No. 143 is effective for fiscal years
beginning after June 15, 2002. The Company has not yet determined the impact of
its planned adoption of SFAS No. 143 (anticipated for June 1, 2003).

In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" (SFAS No. 144), which became effective for the
Company on June 1, 2002. As applicable to the Company, SFAS No. 144 replaces
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of", and provides guidelines on how long-lived
assets should be evaluated for impairment and establishes criteria for when
long-lived assets are held for sale, and prescribes the accounting for
long-lived assets that will be disposed of other than by sale. Unlike SFAS No.
121, an impairment assessment under SFAS No. 144 will never result in a
write-down of goodwill. Rather goodwill will be evaluated for impairment under
SFAS No. 142, "Goodwill and Other Intangible Assets." The Company's adoption of
SFAS No. 144 had no impact on its consolidated financial statements.

In July 2002, the FASB issued Statement No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" (SFAS 146). SFAS 146 requires
companies to recognize costs associated with exit or disposal activities when
they are incurred rather than at the date of commitment to an exit or disposal
plan. SFAS 146 will be applied to exit or disposal activities after December 31,
2002 and is not expected to have a material effect on the Company.

                                     Page 12



<PAGE>

                           TSR, INC. AND SUBSIDIARIES

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, 2002
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 August 31, 2002,
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.

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.

                                     Page 13

<PAGE>

Item 4.  Procedures and Controls

Within the 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based
upon that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective.
There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation.

Part II. Other Information

Item 6.  Exhibits and Reports on Form 8K

          (a)  Exhibit 99.1 - 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 99.2 - 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:    October 2, 2002          /s/ J.F. Hughes
                              --------------------------------------------------
                              J.F. Hughes, Chairman, President and Treasurer

Date:    October 2, 2002         /s/ John G. Sharkey
                              --------------------------------------------------
                              John G. Sharkey, Vice President Finance



                                Page 14


<PAGE>

  CERTIFICATION BY J.F. HUGHES PURSUANT TO SECURITIES EXCHANGE ACT RULE 13A-14


I, J.F. Hughes, certify that:

1. I have reviewed this quarterly report on Form 10-Q of TSR, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: October 2, 2002

                                           /s/ J.F. Hughes
                                           -------------------------------------
                                           J.F. Hughes
                                           Chairman, President and Treasurer

                                     Page 15


<PAGE>

                  CERTIFICATION BY JOHN G. SHARKEY PURSUANT TO
                       SECURITIES EXCHANGE ACT RULE 13A-14


I, John G. Sharkey, certify that:

1. I have reviewed this quarterly report on Form 10-Q of TSR, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: October 2, 2002

                                             /s/ John G. Sharkey
                                             -----------------------------------
                                             John G. Sharkey
                                             Vice President, Finance





                                     Page 16