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

                                  Form 10-QSB/A


(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                 (IRS Employer Identification No.)
 of incorporation or organization)

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           9


PART 2    Item 1      Legal proceedings                                      13

          Item 2      Changes in Securities and Use of Proceeds              13


                      SIGNATURES                                             14


                                      -1-
<PAGE>



Item 1.  Financial Information


                      TRANSNATIONAL FINANCIAL NETWORK, INC.

                            CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                          September 30,                       December 31,
                                                                   2001                               2000
                                                                   ----                               ----
                                                             (restated)                          (audited)

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                         6,495,859                         20,307,222
         Accrued interest receivable                              1,363                             41,733
         Due from Shareholders                                     -                                11,613
         Receivable from Loan Link, LLC                            -                               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                                         1,233,202                          1,477,077
                                                              ---------                          ---------

TOTAL ASSETS                                                $13,462,843                        $26,892,139
                                                            ===========                        ===========


LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES:
         Warehouse notes payable                            $ 6,176,690                        $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                                             9,341,608                         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                                 (7,418,947)                        (4,835,567)
                                                             -----------                        -----------

TOTAL SHAREHOLDERS' EQUITY                                    4,121,235                          5,758,883
                                                              ---------                          ---------


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                  $13,462,843                        $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
                                                    (restated)                         (restated)
INCOME

<S>                                                 <C>         <C>                   <C>                <C>
         Net gain on sale of mortgage loans         $  837,673  $   561,696           $ 2,618,561        $ 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                                          67,304       43,976               151,487            250,129
                                                    ----------  -----------            ----------        ------------

                                                     3,476,564    2,412,679            11,546,892          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 and cumulative
effect of change in accounting principle              (660,111)    (745,514)           (2,896,380)        (2,906,819)

INCOME TAX (BENEFIT) EXPENSE                              -        (219,190)                 -              (219,190)
                                                    ----------     --------           -----------          ---------
NET LOSS before cumulative effect of
change in accounting principle                        (660,111)    (526,324)           (2,896,380)        (2,687,629)

Cumulative effect of change in accounting principle       -            -                  314,000               -

NET LOSS                                            $ (660,111) $  (526,324)          $(2,582,380)       $(2,687,629)
                                                    ==========  ===========           ===========        =============

NET LOSS PER SHARE - Basic and diluted:
   Before cumulative effect of change in
   accounting principle                             $   (0.14)$      (0.12)           $    (0.65)        $    (0.63)
   Cumulative effect of change in accounting
      principle                                          0.00        (0.00)                 0.07               0.00
   Net loss per share                                   (0.14)       (0.12)                (0.58)             (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
                                                                                         (restated)
Cash flows from operating activities:
<S>                                                                                 <C>               <C>
         Net loss                                                                   $  (2,582,380)    $  (2,687,629)
         Adjustments to reconcile net loss to net cash provided
         by (used in) operating activities:
                  Gain on sale mortgage loans                                          (2,618,561)       (1,294,033)
                  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                                 (581,953,929)     (435,605,766)
                  Proceeds from sales of mortgage loans                               598,646,853       411,543,556
                  Net gain on sale of investment property                                    -              (65,298)

                  Changes in assets and liabilities:
                           Accrued interest receivable                                     40,370           (29,270)
                           Due from shareholder                                            11,613              -
                           Notes receivable                                                  -               35,819
                           Other assets                                                   243,875           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                           12,694,639       (26,804,631)

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

         Net cash provided by (used in) investing activities                              (33,895)          157,171

Cash flows from financing activities:
         Warehouse notes payable - net borrowings (repayments)                        (13,468,755)       26,864,753
         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                          (11,273,755)       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>


See accompanying notes to condensed financial statements.

                                      -4-
<PAGE>


                      TRANSNATIONAL FINANCIAL NETWORK, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2001
                                   (unaudited)

NOTE 1   General - 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   Quarterly Results - 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   Financing Facilities - The Company accounts for the transfer of
         assets under one of its financing facilities as gain on sale of
         mortgage loans since they satisfy the condition to be accounted for as
         a sale.

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 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.


                                      -5-

<PAGE>

NOTE 6   Restatement - The Company has restated its financial statements for
         the three and nine months ended September 30, 2001 with adjustments to
         the net loss of a $71,279 decrease and a $180,793 increase,
         respectively. The restatements for the first, second and third quarters
         of 2001 have no effect on the audited results for the year ended
         December 31, 2001 as these adjustments have been reflected therein. The
         restatement for the three and nine months ended September 30, 2001 is
         presented as follows:
<TABLE>
<CAPTION>


                                                          As Originally      Restatement
           Balance Sheet - Captions                            Reported      Adjustments       As Restated  Ref.
           ------------------------                            --------      -----------       -----------  ----
<S>                                                     <C>                <C>              <C>             <C>
           Mortgage loans held for sale                 $       319,169    $   6,176,690    $    6,495,859  C,D
           Accrued interest - receivable                         59,683         (58,320)             1,363  E,F
           Receivable from Loan Link, LLC                       300,000        (300,000)              -     F,E
           Other assets                                       1,055,675          177,527         1,233,202  A,B,C
           Warehouse lines of credit                               -            6,176,690         6,176,690 D,C
           Accumulated deficit                               (7,238,154)        (180,793)       (7,418,947)

           For Three Months ended September 30, 2001      As Originally      Restatement
           Statement of Operations - Captions                  Reported      Adjustments       As Restated  Ref.
           ----------------------------------                  --------      -----------       -----------  ----
           Gain on sale of loans                        $       804,472    $      33,201     $     837,673  C
           Other income (expense)                                29,226           38,078            67,304  B,E,F,G
           Net loss - before income taxes                      (731,390)          71,279          (660,111)
           Cumulative effect of accounting change                  -                -                 -     A
           Net loss                                            (731,390)          71,279          (660,111)
           Net loss per share - basic and diluted:               (0.15)            0.01             (0.14)

           For Nine Months ended September 30, 2001       As Originally      Restatement
           Statement of Operations - Captions                  Reported      Adjustments       As Restated  Ref.
           ----------------------------------                  --------      -----------       -----------  ----
           Gain on sale of loans                        $     2,657,289    $     (38,728)    $   2,618,561  C
           Other income (expense)                               607,5526        (456,065)          151,487  B,E,F,G
           Net loss - before income taxes                    (2,401,586)        (494,793)       (2,896,379)
           Cumulative effect of accounting change                  -             314,000           314,000  A
           Net loss                                          (2,401,586)        (180,793)       (2,582,379)
           Net loss per share - basic and diluted:
                Before cumulative effect of change in
                accounting principle                             (0.54)           (0.11)            (0.65)
                Cumulative effect of change in
                accounting principle                              0.00             0.07              0.07
                Net Loss per share                               (0.54)           (0.04)            (0.58)

           For Nine Months ended September 30, 2001       As Originally      Restatement
           Statement of Cash Flows - Captions                  Reported      Adjustments       As Restated  Ref.
           ----------------------------------                  --------      -----------       -----------  ----
           Net loss                                     $    (2,402,587)   $    (180,793)    $  (2,583,380)
           Gain on sale of investment in Loan Link             (300,000)         300,000              -     F
           Other assets                                         421,402         (177,527)          243,875  A,B,C
           Accrued interest - receivable                        (17,950)          58,320            40,370  E
           Gain on sale of loans                             (2,657,289)          38,728        (2,618,561) C
           Mortgage loans - proceeds from sale              604,823,543       (6,176,690)      598,646,853  D
           Warehouse notes payable - net
             Borrowings (repayments)                        (19,645,445)       6,176,690       (13,468,755) D
</TABLE>

                                      -6-

<PAGE>

NOTE 6   Restatement (continued) - the following footnotes relate to the
         restatement of the financial statements for the three and nine months
         ended September 30, 2001:

         A.  The cumulative effect of change in accounting principle related to
             the adoption of FAS 133 should have been recognized during the
             first quarter of 2001 with a $314,000 favorable impact to net
             income (also see ref. B. for current year impact in 2001).
         B.  The current year effect related to the adoption of FAS 133 should
             have been recognized during the third quarter of 2001 with a
             $44,127 favorable impact to net income.
         C.  Loans funded through the Imperial Bank warehouse line of credit
             were recorded as sales transactions during the first, second and
             third quarters of 2001. Further analysis of this facility during
             the fiscal 2001 year end audit resulted in this line of credit
             being accounted for as a financing facility, and so loans funded
             through this facility should have been accounted for as borrowing
             transactions. To record the effect of this restatement, Gain on
             Sale of Loans was increased by $33,201 and decreased by $38,728 for
             the three and nine months ending September 30, 2001, respectively.
             (also see ref. D. for balance sheet impact).
         D.  As a result of the accounting in Note 6.C. wherein the Imperial
             Bank line of credit facility was recorded as a financing facility,
             Mortgage Loans Held for Sale and Warehouse Lines of Credit were
             both increased by $6,176,690 as of September 30, 2001.
         E.  A receivable due from Loan Link, LLC became impaired during the
             first quarter of 2001 with a $6,049 adverse impact to net income
             relative to the write-off of accrued interest (also see ref. F).
         F.  An investment in Loan Link, LLC, which was carried at no cost, and
             $300,000 receivable due from Loan Link, LLC were both sold for
             $300,000 during the first quarter of 2001. The transaction was
             originally recorded as a $300,000 gain on sale of investment and
             the $300,000 receivable remained in the books, although the note
             had become impaired during the first quarter of 2001. During the
             year end audit it was determined that the gain recognized during
             the first quarter 2001 should be reversed and the $300,000 cash
             received should be applied against the $300,000 receivable. As a
             consequence, a $300,000 adverse impact to net income relative to
             the reversal of the gain arose during the first quarter.
         G.  The company had previously written off a receivable in the amount
             of $230,126 based on the belief that it was not collectable. During
             the first quarter of 2001, events occurred that indicated full
             recovery of the amount previously written off was probable. As a
             result, management incorrectly reversed the previously written off
             receivable and the corresponding bad debt expense during the first
             quarter of 2001. The amended financial statements for three and
             nine months ended September 30, 2001 have been corrected to reflect
             the receivable at its zero basis and to reverse the gain from
             anticipated recovery. The Company will recognize any gain from
             recovery of this receivable when received. Note that the company
             did recover $75,000 from this receivable during January, 2002.

NOTE 7   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.

                                      -7-
<PAGE>

NOTE 8   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 9   Litigation - In connection with the previously disclosed litigation
         involving the former principals 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.

                                      -8-
<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.

                                      -9-
<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.

During the course of the Company's year end audit, management evaluated the
accounting treatment of transactions recorded during the quarter ended September
30, 2001. Upon further consideration of all relevant transaction details,
management determined that the accounting treatment of several transactions was
not appropriate. In order to ensure appropriate accounting and reporting
treatment for all material transactions during the quarter ended September 30,
2001, management has restated and amended the Company's Form 10Q for that
quarter. For details of the restated transactions, see Note 6. to the unaudited
Condensed Financial Statements.

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

The Company incurred a net loss of $(2,582,379) 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 $98,642 decrease 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 by $1,183,259 or 82%. 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.

                                      -10-

<PAGE>

Other income was lower by $98,642 or 40% for the first nine months of 2001
compared to the totals for the same period last year.

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,
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 $660,111 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 $275,977 or 49%. 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 higher by $23,328 or 53% 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.

                                      -11-

<PAGE>

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.

LIQUIDITY AND CAPITAL RESOURCES

The Company's capital resources are substantially provided by warehouse lenders
(one of the lenders funds through a purchase as defined under SFAS 125) who fund
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 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.

                                      -12-
<PAGE>



PART 2

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.


















                                      -13-
<PAGE>



                                   SIGNATURES


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


                                         Transnational Financial Network, Inc.



July 24, 2002                            /s/ Joseph Kristul
                                         Joseph Kristul, Chief Executive Officer
                                         and Principal Financial Officer






                                      -14-