U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   Form 10-QSB


(Mark One)

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

                For the quarterly period ended September 30, 2001

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

       For the transition period from __________________ to ______________

Commission file number: 1-14219

                      Transnational Financial Network, Inc
-------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

        California                                      94-2964195
-------------------------------------------------------------------------------
(State  or  other   jurisdiction
 of  incorporation  or  organization)       (IRS Employer Identification No.)

401 Taraval Street, San Francisco, CA                   94116
-------------------------------------------------------------------------------
 (Address of principal executive offices)               (Zip Code)

                                 (415) 242-7800
-------------------------------------------------------------------------------
                         (Registrant's telephone number)


         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No ___


                      APPLICABLE ONLY TO CORPORATE ISSUERS

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of November 14, 2001: 5,181,732



<PAGE>




                      TRANSNATIONAL FINANCIAL NETWORK, INC.

                               SEPTEMBER 30, 2001

                                    UNAUDITED



                        TABLE OF CONTENTS                            PAGE NUMBER


PART 1    ITEM 1        Financial Information

                        Condensed Balance Sheets as of
                        September 30, 2001 and December 31, 2000          2

                        Condensed Statements of Operations
                        For the Three and Nine Months Ended
                        September 30, 2001 and 2000                       3

                        Condensed Statements of Cash Flows for the
                        Nine Months Ended September 30, 2001 and 2000     4

                        Notes to Condensed Financial Statements           5

          ITEM 2        Management's Discussion and Analysis of
                        Financial Condition and Results of Operations     7


PART 2    ITEM 2        Changes in Securities and Use of Proceeds        11

                        SIGNATURES                                       11






                                      -1-
<PAGE>



Item 1.  Financial Information


                      TRANSNATIONAL FINANCIAL NETWORK, INC.

                            CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                          September 30,                       December 31,
                                                                   2001                               2000
                                                                   ----                               ----
                                                            (Unaudited)

ASSETS
<S>                                                         <C>                               <C>
         Cash and cash equivalents                          $ 1,238,093                       $    492,938
         Restricted cash and cash equivalents                 1,041,834                            400,000
         Mortgage loans held for sale                           319,169                         20,307,222
         Accrued interest receivable                             59,683                             41,733
         Due from Shareholders                                        -                             11,613
         Receivable from Loan Link, LLC                         300,000                            300,000
         Notes receivable                                       136,322                            136,322
         Goodwill                                             3,126,162                          3,428,321
         Property and equipment, net                            190,008                            296,913
         Other assets                                         1,055,675                          1,477,077
                                                            -----------                       ------------

TOTAL ASSETS                                                $ 7,466,945                       $ 26,892,139
                                                            ===========                       ============


LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES:
         Warehouse notes payable                            $         -                       $ 19,645,445
         Accrued interest payable                                77,230                            219,602
         Accounts payable and accrued liabilities             1,080,688                            556,209
         Subordinated debt                                    2,007,000                            712,000
                                                            -----------                       ------------

TOTAL LIABILITIES                                             3,164,917                         21,133,256
                                                            -----------                       ------------


SHAREHOLDERS' EQUITY:
         Preferred stock, no par value: 2,000,000 shares
            authorized, no shares issued and outstanding              -                                  -
         Common stock, no par value: 20,000,000 shares
            authorized: 5,180,603 shares issued and
            outstanding,as of September 30, 2001,
            and 4,279,310 issued and outstanding
            as of December 31, 2000                          11,540,182                         10,594,450
         Accumulated deficit                                 (7,238,154)                        (4,835,567)
                                                            -----------                       ------------

TOTAL SHAREHOLDERS' EQUITY                                    4,302,028                          5,758,883
                                                            -----------                       ------------


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                  $ 7,466,945                       $ 26,892,139
                                                            ===========                       ============
</TABLE>



           See accompanying notes to condensed financial statements.


                                      -2-
<PAGE>


                      TRANSNATIONAL FINANCIAL NETWORK, INC.

                       CONDENSED STATEMENTS OF OPERATIONS

                                   (Unaudited)

<TABLE>
<CAPTION>

                                                            For the Three                      For the Nine
                                                            Months Ended                       Months Ended
                                                            September 30,                      September 30,

                                                          2001         2000                  2001              2000

INCOME

<S>                                                 <C>          <C>                  <C>               <C>
         Net gain on sale of mortgage loans         $  804,472   $  561,696           $ 2,657,289       $ 1,435,302
         Production income                           2,072,353    1,268,356             6,118,924         3,910,249
         Interest Income                               499,234      538,651             2,657,920         1,415,468
         Other                                          29,226       43,976               607,552           250,129
                                                    ----------   ----------           -----------       -----------

                                                     3,405,285    2,412,679            12,041,685         7,011,148


EXPENSES

         Interest expense                              642,259      613,156             3,509,693         1,542,222
         Salaries, benefits and commissions          2,573,969    1,725,181             7,909,218         5,698,424
         General and administrative                    741,029      655,666             2,506,867         2,143,222
         Occupancy                                     179,418      164,190               518,493           534,099
                                                    ----------   ----------           -----------       -----------

                                                     4,136,675    3,158,193            14,444,272         9,917,967
                                                    ----------   ----------           -----------       -----------


LOSS BEFORE INCOME TAXES                              (731,390)    (745,514)           (2,402,587)       (2,906,819)


INCOME TAX (BENEFIT) EXPENSE                                 -     (219,190)                    -          (219,190)
                                                    ----------   ----------           -----------       -----------


NET LOSS                                            $ (731,390)  $ (526,324)          $(2,402,587)      $(2,687,629)
                                                    ==========   ==========           ===========       ===========


NET LOSS PER SHARE

         Basic and diluted                          $    (0.15)  $   (0.12)           $    (0.54)       $    (0.63)


WEIGHTED AVERAGE SHARES OUTSTANDING

         Basic and diluted                           4,756,226    4,279,310             4,440,029         4,279,310
</TABLE>



           See accompanying notes to condensed financial statements.

                                      -3-
<PAGE>



                      TRANSNATIONAL FINANCIAL NETWORK, INC.

                       CONDENSED STATEMENTS OF CASH FLOWS

                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                           For the Nine
                                                                                    Months Ended September 30,
                                                                                        2001              2000

Cash flows from operating activities:
<S>                                                                             <C>                    <C>
         Net loss                                                               $      (2,402,587)     $ (2,687,629)
         Adjustments to reconcile net loss to net cash provided
         By (used in) operating activities:
                  Gain on sale mortgage loans                                          (2,657,289)       (1,294,033)
                  Gain on sale investment in Loan Link, LLC                              (300,000)                -
                  Provision for early payoffs and loan losses                             264,713           141,269
                  Issuance of stock warrants for services and subordinated debt            45,732            35,741
                  Depreciation and amortization                                           442,959           477,498
                  Mortgage loans originated for sale                                 (582,214,201)     (435,605,766)
                  Proceeds from sales of mortgage loans                               604,823,543       411,543,556
                  Net gain on sale of investment property                                       -           (65,298)

                  Changes in assets and liabilities:
                           Accrued interest receivable                                    (17,950)          (29,270)
                           Due from shareholder                                            11,613                 -
                           Notes receivable                                                     -            35,819
                           Other assets                                                   421,402           117,867
                           Accrued interest payable                                      (142,372)           92,561
                           Accounts payable and accrued liabilities                       295,766           433,054
                                                                                -----------------      ------------

         Net cash provided by (used in) operating activities                           18,571,329       (26,804,632)

Cash flows from investing activities:
         Purchases of property and equipment                                              (33,895)          (12,391)
         Repayment of advances by Loan Link, LLC                                                -           200,000
         Proceeds from sale of equity interest in Loan Link, LLC                          300,000                 -
         Additional cost to acquire LRS                                                         -           (30,438)
                                                                                -----------------      ------------

         Net cash provided by investing activities                                        266,105           157,171

Cash flows from financing activities:
         Borrowings on warehouse notes payable                                        590,566,148       316,490,191
         Payments on warehouse notes payable                                         (610,211,593)     (289,625,438)
         Payments on real estate mortgage                                                       -            (1,156)
         Borrowings on subordinated debt                                                1,295,000           560,000
         Sale of common stock                                                             900,000                 -
         Short-term borrowings                                                            759,491                 -
         Repayments of short-term borrowings                                             (759,491)                -
                                                                                -----------------      ------------


         Net cash provided by (used in) financing activities                          (17,450,445)       27,423,597
                                                                                -----------------      ------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                    1,386,989          (776,137)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                            892,938           862,257
                                                                                -----------------      ------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                        $       2,279,927      $  1,638,394
                                                                                =================      ============


Cash paid during the period for:

         Interest paid                                                          $       3,835,321      $  1,386,465

         Income taxes paid (refund)                                             $           1,540      $   (597,278)
</TABLE>


                                      -4-
<PAGE>


                      TRANSNATIONAL FINANCIAL NETWORK, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2001
                                   (Unaudited)


NOTE 1     The accompanying financial statements of Transnational Financial
           Network, Inc. (the "Company") as of and for the three and nine month
           periods ending September 30, 2000, and September 30, 2001, are
           unaudited and have been prepared without audit pursuant to the rules
           and regulations of the Securities and Exchange Commission. Certain
           information and financial disclosures normally included in financial
           statements prepared in accordance with generally accepted accounting
           principles have been condensed or omitted pursuant to such rules and
           regulations. Accordingly, these unaudited condensed financial
           statements should be read in conjunction with the audited financial
           statements included in the Company's Form 10-KSB for the year ended
           December 31, 2000. These statements include all adjustments
           consisting only of normal recurring accruals, which are, in the
           opinion of management considered necessary for a fair presentation of
           financial position and results of operations.

           The preparation of financial statements in conformity with generally
           accepted accounting principles requires management to make estimates
           and assumptions that affect certain reported amounts and disclosures.
           Accordingly, actual results could differ from those estimates.

NOTE 2     The results of operations of the Company for the three and
           nine-month periods ended September 30, 2001 and 2000 are not
           necessarily indicative of the results to be expected for the full
           year.

NOTE 3     Net Loss Per Share -

           Basic net loss per share is computed by dividing net loss by the
           weighted average common shares outstanding during the period. Diluted
           net loss per share is computed based on the weighted average number
           of common shares outstanding adjusted for potentially dilutive
           securities. For the three and nine months ended September 30, 2001
           and 2000, the effect of including potentially dilutive securities in
           the calculation of diluted net loss per share would be antidilutive.
           As a result, the effect of potentially dilutive securities of 783,000
           has not been included in the calculations.

NOTE 4     Warehouse Loans -

           The transfer of assets under the warehouse facilities has been
           accounted for as gain on sale of mortgage loans since they satisfy
           the condition to be accounted for as a sale under Statement of
           Financial Accounting Standards No. 140 Accounting for Transfers and
           Servicing of Financial Assets and Extinguishments of Liabilities. As
           of September 30, 2001 the Company was in default under certain
           financial covenants of these lines that require the maintenance of
           minimum levels of net worth and the attainment of positive earnings.

NOTE 5     Subordinated Debt and Notes Payable -

           During the first six months of 2001, the Company received additional
           subordinated debt in the amount of $1,295,000. The subordinated debt
           bears interest at 15% and has five-year detachable warrants to

                                      -5-
<PAGE>

           purchase 35,000 shares of common stock at $.75 per share. The
           maturity dates of this subordinated debt range from August 14, 2002
           to June 11, 2004.

           Also during the first quarter of 2001, the Company raised short-term
           borrowings of $759,491 from various members of management and
           shareholders. The interest rate on these short-term borrowings was
           12%. As of September 30, 2001, all of these amounts had been repaid.

NOTE 6     Sale of Equity Securities -

           During the third quarter of 2001 the Company sold 900,000 shares of
           common stock to several investors for aggregate proceeds of $900,000.
           The agreement covering approximately $50,000 of such proceeds
           specifies that shareholder approval is required before monies can be
           released to the Company, in order to comply with American Stock
           Exchange listing requirements.

           Also, during the third quarter of 2001 the Company issued 50,000
           options to a consultant in exchange for services. The options have a
           term of 2 1/2 years and are exercisable at $1.20 per share. The fair
           value of these options has been expensed during the third quarter.
           The fair value of these options of $28,000 has been expensed in the
           third quarter.

NOTE 7     New Accounting Standards -

           In June 2001, the Financial Accounting Standards Board (the "FASB")
           adopted SFAS No. 141 Business Combinations and SFAS No. 142 Goodwill
           and Intangible Assets. SFAS No. 141 addresses the methods used to
           account for business combinations and requires the use of the
           purchase method of accounting for all combinations after June 30,
           2001. SFAS No. 142 addresses the methods used to amortize intangible
           assets and to assess impairment of those assets, including goodwill
           resulting from business combinations accounted for under the purchase
           method. SFAS No. 142 is effective for fiscal years beginning after
           December 15, 2001. Included in our assets at September 30, 2001, is
           goodwill related to an acquisition in 1999 with a net carrying value
           of $3,126,162. Upon adoption of SFAS No. 142, we will no longer
           amortize this goodwill, decreasing our amortization expense by
           approximately $400,000 per year. We are required to assess this
           goodwill for impairment in the year of adoption. We will not be able
           to determine the full effect of these new pronouncements on our
           financial position or our results of operations until we are able to
           complete our analysis of the impairment provisions of the new
           standards.

NOTE 8     In connection with the previously disclosed litigation involving
           the former pricipals of LRS, Inc., cash in the amount of $137,612 is
           being held by the San Francisco Sheriff's Department pursuant to a
           writ of attachment. Although no assurances can be made, the Company
           believes that it will prevail in this matter, and accordingly, no
           accrual has been made for a loss contingency in this matter.


                                      -6-
<PAGE>



                 ITEM 2. 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 financial statements and the notes thereto included as Item 1 of this
Report. The discussion of results and trends does not necessarily imply that
these results and trends will continue.

Forward-Looking Information

The Management's Discussion and Analysis of Financial Condition and Results of
Operations and other sections of the Form 10-QSB contain forward-looking
information. The forward-looking information involves risks and uncertainties
that are based on current expectations, estimates, and projections about the
Company's business, management's beliefs and assumptions made by management.
Words such as "expects", "anticipates", "intends", "plans", "believes", "seeks",
"estimates", and variations of such words and similar expressions are intended
to identify such forward-looking information. Therefore, actual outcomes and
results may differ materially from what is expressed or forecasted in such
forward-looking information due to numerous factors, including, but not limited
to, availability of financing for operations, successful performance of internal
operations, impact of competition and other risks detailed below as well as
those discussed elsewhere in this Form 10-QSB and from time to time in the
Company's Securities and Exchange Commission filings and reports. In addition,
general economic and market conditions and growth rates could affect such
statements.

GENERAL

Transnational Financial Network, Inc. ("Transnational Financial Network, Inc."
or the "Company") is a wholesale and retail mortgage banker which originates,
funds and sells mortgage loans secured by one to four family residential
properties principally in the San Francisco Bay area, Southern California, and
Arizona. Since 1985, when the Company was incorporated, it has been engaged in
the retail origination of mortgage loans, and currently maintains retail offices
in San Francisco and Campbell, California. In 1995, the Company began a
wholesale division to close and fund loans originated by mortgage brokers as
well as those originated through the Company's retail division. The Company
maintains wholesale offices in San Francisco, Campbell, and Tustin, California
as well as Phoenix, Arizona. The Company operates in one business segment -
mortgage banking.

The Company's loan production and results of operations are strongly affected by
mortgage interest rates. Increasing mortgage rates raises the qualifying income
required of a homebuyer and reduces housing affordability. It also causes
mortgage refinance activity to decline because fewer homeowners can successfully
obtain a mortgage at a lower interest rate than their original mortgage. Higher
interest rates increase the cost of home ownership resulting in diminished
demand for mortgage loans, whether the purpose of the mortgage loan was for the
purchase of a home, refinancing of a home to obtain a lower rate or longer term,
home improvement, debt consolidation, or obtaining cash. When rates are high,
the mortgage loan financing that does occur usually takes the form of roll over
mortgages loans, that is, mortgage loans that have interest rates that
frequently change and, consequently, lower interest rates than that charged on
longer term fixed interest rate mortgage loans.

Throughout 1999 mortgage interest rates increased. In January 1999, 30-year
mortgage interest rates were 6.74%, reaching 7.55% at the end of the second
quarter and 7.91% at year-end. During the first quarter of 2000 the 30-year
mortgage rate went up to 8.24%, then peaked at 8.54% in the middle of September.
Rates dropped steadily over the remainder of the year, and as of December 31,
2000 the 30-year fixed rate average had dropped to approximately 7.13%. Rates
continued to drop during the first nine months of 2001, reaching 6.82% in
September 2001.

                                      -7-
<PAGE>

As a consequence, the Company saw its volume of mortgage originations pick-up
(as rates dropped) during the 4th quarter of 2000 and into the first quarter of
2001. During the second and third quarter the Company's wholesale mortgage
originations were constrained due to reductions in available warehouse
facilities. Origination volume during the third quarter was also significantly
affected by the terror attacks that occurred on September 11, 2001.

To diminish the overall effects of a variable interest rate market, the Company
has employed other measures to stabilize business. Some of these measures are
the offering of a broader menu of products, delivering mortgages to the
secondary market in volume packages, and expanding both the nature and scope of
mortgage originations. Further changes were implemented operationally, such as
the centralization of operations in two regional centers, for conventional and
government programs.

The following table sets forth the wholesale and retail production for the
periods indicated (in thousands):
<TABLE>
<CAPTION>
                 1st Qtr-00    2nd Qtr-00       3rd Qtr-00     4th Qtr-00     1st Qtr-01      2nd Qtr-01     3rd Qtr-01

<S>               <C>           <C>              <C>            <C>            <C>             <C>           <C>
Wholesale         $ 144,044     $ 130,879        $ 154,914      $ 181,745      $ 241,780       $ 187,462     $  152,973
Retail               77,406        82,928           67,974         87,598        108,327         136,115     $  140,241
Total             $ 221,450     $ 213,807        $ 222,887      $ 269,343      $ 350,106       $ 323,577     $  293,214
</TABLE>


Overall, the Company's mortgage loan volume increased by $308.8 million or 47%
for the first nine months of 2001 when compared to the first nine months of
2000. Wholesale mortgage loan production through September 30 of this year was
$152.4 million or 35% greater than in the same period in 2000. Retail loan
production was $156.4 million or 68% more compared to the first nine months of
2000.

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
2000

The Company incurred a net loss of $2,402,587 for the nine months ended
September 30, 2001 compared to a net loss of $2,687,629 during the comparable
period last year. Overall, the smaller net loss in the first nine months of 2001
compared to the same period last year was the result of (1) a 47% increase in
loan volume, (2) an 11% drop in operating costs as a percentage of loan volume,
and (3) a $357,423 increase in other income. These factors offset a $725,019
increase in net interest expense over the prior year, and a $219,190 income tax
benefit in 2000 that did not recur in 2001.

Net gain on sale of mortgage loans increased $1,221,987 or 85%. The increase in
net gain on sale arose from higher wholesale loan production, as well as higher
profitability per loan. Total wholesale loans closed were $582.2 million, or 35%
greater than in the same period last year.

Production income increased by $2,208,675 or 56%. Production income increased
because of an increase in retail and wholesale loan production. Retail loan
production was $156.4 million or 68% greater than in the first nine months of
2000.

Other income was higher by $357,423 or 143% for the first nine months of 2001
compared to the totals for the same period last year. Other income increased
because of recovery of a previously written off loan, and the sale of 50% of the
Company's ownership interest in Loan Link, LLC.

During the first nine months of 2001, the Company incurred a net interest
expense of $851,773 compared to a net interest expense in the first nine months
of 2000 of $126,754. The unfavorable result in 2001 reflects (1) greater levels
of loans warehoused by the company in the first nine months of 2001 - this is a
result of increasing business volumes and longer dwell times for those loans,

                                      -8-
<PAGE>

and (2) the negative gap between the initial interest rates on mortgage loans
funded and the interest rate on the Company's warehouse lines has increased as
the Company began using new, higher priced, warehouse lenders beginning in the
fourth quarter of 2000.

Excluding interest expense, total expenses were $10,934,578 or 31% higher during
the first nine months of 2001 compared to the same period in 2000. This compares
favorably to a 47% increase in loan volumes over the same period. Commissions
increased by $1,555,157 or 63% and salaries and benefits increased by $655,637
or 20%, as a result of higher loan volumes. General and administrative expenses
increased by $363,645 or 17%, mainly as a result of increased loan volume.
Occupancy costs decreased by $15,606 or 3%, mainly as a result of cost reduction
efforts.

THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 2000

The Company incurred a net loss of $731,390 for the three months ended September
30, 2001 compared to a net loss of $526,324 during the comparable period last
year. Overall, the greater net loss in the third quarter of 2001 compared to the
same period last year was the result of an increase of $68,521 in net interest
expense, a $978,482 increase in operating expenses, and a $219,190 income tax
benefit in 2000 that did not recur in 2001. These factors were offset by
increased gain on sale and production income resulting from a 32% increase in
loan volume.

Net gain on sale of mortgage loans increased $242,776 or 43%. The bulk of the
increase in net gain on sale arose from higher profitability on wholesale loan
production. Total wholesale loans closed were $153.0 million, or 1% less than in
the same period last year.

Production income increased by $803,997 or 63%. Production income increased
because of an increase in retail and wholesale loan production. Retail loan
production was $72.3 million or 106% greater than in the third quarter of 2000.

Other income was lower by $14,750 or 34% for the third quarter of 2001 compared
to the totals for the same period last year.

During the third quarter of 2001, the Company incurred a net interest expense of
$143,026 compared to a net interest expense in the third quarter of 2000 of
$74,505. The unfavorable result in 2001 reflects the negative gap between the
initial interest rates on mortgage loans funded and the interest rate on the
Company's warehouse lines that increased as the Company began using new, higher
priced, warehouse lenders beginning in the fourth quarter of 2000.

The Company has taken steps to better manage expenses since the beginning of
2001. These steps have included reducing the number of support staff, placing
wholesale account executives on straight commission so that compensation will
vary with loan production, renegotiating vendor contracts, prioritizing
technology projects. As a result of the growth of retail production, total
expenses (not including interest expense) increased to 1.19% of loan volume
during the third quarter of 2001 compared to 1.14% during the same period in
2000.

Excluding interest and taxes, total expenses were $3,494,415 or 37% higher
during the third quarter of 2001 compared to the same period in 2000. This
compares to a 32% increase in loan volumes over the same period. Commissions
increased by $621,642 or 78% and salaries and benefits increased by $227,146 or
24%, as a result of higher loan volumes and the acquisition of two new branches.
General and administrative expenses increased by $85,363 or 13%, mainly as a
result of increased loan volume. Occupancy costs decreased by $15,228 or 9%,
mainly as a result of the previously discussed cost reduction efforts.

                                      -9-
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company's capital resources are substantially provided by warehouse lenders
that fund (through a sale as defined under SFAS 140) the mortgage loans pending
the mortgage loan's final sale to investors. The size of the Company's warehouse
facilities is based on the Company's net worth and cash resources. The Company's
operating losses have eroded this net worth and cash position. As of September
30, 2001 the Company had two financing facilities for a maximum of $65 million.
These warehouse facilities have various financial and operational covenants with
which the Company must comply. One of the warehouse facilities requires a
deposit of $1 million be maintained in a collateral bank account. As of
September 30, 2001 the Company was in default under certain financial covenants
of these lines that require the maintenance of minimum levels of net worth and
the attainment of positive earnings.

As a result of changes in the industry, and the contraction of warehouse
facilities, the Company has been forced to reduce its levels of loan production.
Wholesale production in October 2001 totaled $60.4 million, a 34% decline over
February's peak volume of $91.7 million. Failure to obtain warehouse lines or
additional financing facilities would limit the Company's ability to grow, and
failure to maintain the existing facilities would have a material adverse effect
on the Company's operations and financial performance.

During the third quarter of 2001, the Company sold common stock in the amount of
$900,000. As a result of this cash infusion, the Company's cash position during
the third quarter of 2001 improved despite operating losses.

To facilitate its business activities over the remainder of 2001, the Company
has undertaken the following operating and financing activities:

1.       Expanded it's product mix to include more profitable product types.
2.       Strengthened mortgage broker pricing policies and procedures to reduce
         price concessions and increase loan margins.
3.       Restructured funding and shipping procedures in order to reduce
         warehouse time. As a result, the period of time between a mortgage
         loan's closing and its final sale to investors has decreased from a
         high of approximately 30 days to current levels of 15-18 days with an
         achievable target of 10-15 days.
4.       Began implementing new loan origination software to improve
         productivity.
5.       Continues to seek additional capital through the sale of equity and
         debt securities.
6.       Is actively seeking new warehouse lines.

If the Company receives the additional equity funds it is seeking, this would
both provide additional cash and allow the Company to renegotiate the interest
rates it pays on current warehouse facilities, as well as obtain additional
warehouse facilities. This would result in a reduction in the Company's negative
net interest margin that has been a significant contributor to operating losses.
No guarantees can be made that the preceding activities will result in a return
to profitability and/or an improvement in the Company's cash position.


                                      -10-
<PAGE>



PART II

Item 1.  Legal Proceedings

There have been no new material developments in connection with legal
proceedings. See the Form 10-QSB for the period ending June 30, 2001 for further
information regarding legal proceedings.


Item 2.  Changes in Securities and Use of Proceeds.

During the third quarter of 2001 the Company sold 900,000 shares of common stock
to several investors for aggregate proceeds of $900,000. The agreement covering
approximately $50,000 of such proceeds specifies that shareholder approval is
required before monies can be released to the Company, in order to comply with
American Stock Exchange listing requirements.

During the third quarter of 2001 the Company issued 50,000 options to a
consultant in exchange for services. The options have a term of 2 1/2 years and
are exercisable at $1.20 per share.

During the third quarter, 8,000 previously issued warrants were exercised in a
cashless transaction, resulting in the issuance of 1,293 shares of common stock.

These sales of securities were exempt from registration under the Securities Act
pursuant to Section 4(2) thereunder as transactions not involving a public
offering.



                                   SIGNATURES


         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                        Transnational Financial Network, Inc.



November 14, 2001                       /s/ Joseph Kristul
                                        Joseph Kristul, Chief Executive Officer
                                        And Principal Financial Officer



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