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 March 31st, 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            (IRS Employer Identification No.)
 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 May 10, 2001: 4,279,310



<PAGE>

                      TRANSNATIONAL FINANCIAL NETWORK, INC.

                                 MARCH 31, 2001

                                    UNAUDITED



                                TABLE OF CONTENTS                   PAGE NUMBER


PART 1     ITEM 1      FINANCIAL INFORMATION


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


                       Condensed Statements of Operations
                       For the Three Months Ended
                       March 31, 2001 and 2000                                3

                       Condensed Statements of Cash Flows for the
                       Three Months Ended March 31, 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


                       SIGNATURES                                            14





                                      -1-
<PAGE>



ITEM I.  FINANCIAL INFORMATION

                      TRANSNATIONAL FINANCIAL NETWORK, INC.

                            CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                     March 31,    December 31,
                                                                                          2001            2000
                                                                             ------------------ ---------------
                                                                             ------------------ ---------------

                                                                                    (restated)         (audited)
ASSETS
<S>                                                                                <C>              <C>
               Cash and cash equivalents                                           $     595,488    $   892,938
               Mortgage loans held for sale                                           17,791,047     20,307,222
               Accrued interest receivable                                                 1,364         41,733
               Due from Shareholders                                                       6,284         11,613
               Receivable from Loan Link, LLC                                               -           300,000
               Notes receivable                                                          136,322        136,322
               Goodwill                                                                3,327,601      3,428,321
               Property and equipment, net                                               266,586        296,913
               Other assets                                                            2,429,841      1,477,077
                                                                                   -------------    ------------

TOTAL ASSETS                                                                       $  24,554,533    $26,892,139
                                                                                   =============    ============



LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES:
              Warehouse notes payable                                              $  16,109,105    $19,645,445
              Accrued interest payable                                                   390,739        219,602
              Accounts payable and accrued liabilities                                   893,429        556,209
              Notes payable                                                              759,491              0
              Subordinated debt                                                        1,327,000        712,000
                                                                                   -------------    -----------

TOTAL LIABILITIES                                                                     19,479,764     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: 10,000,000 shares
                 authorized: 4,279,310 shares issued and outstanding,
                 as of March 31, 2001 and December 31, 2000                           10,612,155     10,594,450
              Accumulated deficit                                                     (5,537,386)    (4,835,567)

                                                                                   -------------    -----------

TOTAL SHAREHOLDERS' EQUITY                                                             5,074,769      5,758,883

                                                                                   -------------    ------------


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                         $  24,554,533    $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
                                                                      Months Ended
                                                                        March 31,
                                                              ------------------------------

                                                                       2001            2000
                                                                       ----            ----
                                                                 (restated)
    INCOME

<S>                                                           <C>               <C>
                 Net gain on sale of mortgage loans           $   1,061,561     $   397,164
                 Production income                                2,004,432       1,302,488
                 Interest Income                                  1,249,883         474,757
                 Other                                               22,848          28,925


                                                              -------------     -----------

                                                                  4,338,724       2,203,334
                                                              -------------     -----------


   EXPENSES

                 Interest expense                                 1,665,982         493,807
                 Salaries, benefits and commissions               2,766,226       2,085,717
                 General and administrative                         744,590         790,797
                 Occupancy                                          177,745         179,512
                                                              -------------     -----------

                                                                  5,354,543       3,549,833
                                                              -------------     -----------


LOSS BEFORE INCOME TAXES and cumulative effect                   (1,015,819)     (1,346,499)
of change in accounting principle

INCOME TAXES                                                           -               -
                                                              -------------     -----------
NET LOSS before cumulative effect of change in                $  (1,015,819)    $(1,346,499)
accounting principle
Cumulative effect of change in                                      314,000            -
accounting principle
                                                              =============     ===========
NET LOSS                                                      $    (701,819)    $(1,346,499)

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

NET LOSS PER SHARE - basic and diluted:
   Before cumulative effect of change in
   accounting principle                                       $      (0.23)     $    (0.31)
   Cumulative effect of change in accounting principle                0.07            0.00
   Net loss per share                                                (0.16)          (0.31)

WEIGHTED AVERAGE SHARES OUTSTANDING:
   Basic and fully diluted                                        4,279,310       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 Three
                                                                                     Months Ended March 31,

                                                                                           2001            2000
                                                                                ----------------  ----------------
                                                                                ----------------  ----------------
                                                                                      (restated)
Cash flows from operating activities:
<S>                                                                                 <C>             <C>
            Net loss                                                                $   (701,819)   $  (1,346,499)
            Adjustments to reconcile net loss to net cash provided
            By (used in) operating activities:
                   Gain on sale mortgage loans                                        (1,061,561)        (368,412)
                   Provision for early payoffs and loan losses                            44,000           28,752
                   Issuance of stock warrants for subordinated debt                       17,705             -
                   Depreciation and amortization                                         149,445          155,010
                   Mortgage loans originated for sale                               (258,121,286)    (152,070,208)
                   Proceeds from sales of mortgage loans                             261,955,545      133,735,137
                   Changes in assets and liabilities:
                        Accrued interest receivable                                       40,369           10,148
                        Due from shareholder                                               5,329             -
                        Notes receivable                                                    -              35,819
                        Other assets                                                    (952,764)         279,721
                        Accrued interest payable                                         171,137          (68,449)
                        Accounts payable and accrued liabilities                         336,697          (70,804)
                                                                                    ------------    -------------

            Net cash provided by (used in) operating activities                        1,882,797      (19,679,785)
                                                                                    ------------    -------------


Cash flows from investing activities:
            Purchases of property and equipment                                          (18,398)          (2,967)
            Repayment of advances by Loan Link, LLC                                         -             200,000
                                                                                    ------------    -------------

            Net cash provided by (used in) investing activities                          (18,398)         197,033
                                                                                    ------------    -------------

Cash flows from financing activities:
            Warehouse notes payable - net borrowings (repayments)                     (3,536,340)      20,358,746
            Payments on real estate mortgage                                                -                (709)
            Borrowings on subordinated debt                                              615,000             -
            Short-term borrowings                                                        759,491             -
                                                                                    ------------    -------------

            Net cash provided by (used in) financing activities                       (2,161,849)      20,358,037
                                                                                    ------------    -------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                    (297,450)         875,285
                                                                                    ------------    -------------

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


CASH AND CASH EQUIVALENTS, END OF PERIOD                                            $    595,488    $   1,737,542
                                                                                    ============    =============


Cash paid during the period for:
            Interest paid                                                           $  1,569,438    $     562,255

            Income taxes paid                                                              1,540             -
</TABLE>


See accompanying notes to condensed financial statements.

                                      -4-
<PAGE>


                      TRANSNATIONAL FINANCIAL NETWORK, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

                                 MARCH 31, 2001
                                   (unaudited)

NOTE 1   General - The accompanying financial statements of Transnational
         Financial Network, Inc. (the "Company") 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-month periods ended March 31, 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 months ended March 31, 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 703,500 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 quarter of
         2001, the Company received additional subordinated debt in the amount
         of $615,000. 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 March 31, 2003 to March 31, 2004. Also during the first quarter of
         2001, the Company raised short-term borrowings of $759,491 from various
         members of management and shareholders. These short-term borrowings
         bear interest at 12% and have maturity dates ranging from April 30,
         2001 to May 15, 2001. As of May 10, 2001, all but $109,491 of these
         amounts had been repaid.

                                      -5-
<PAGE>


NOTE     6 Restatement - The Company has restated its financial statements for
         the quarter ended March 31, 2001 with an adjustment to increase net
         loss by $(309,396). The Company has also restated its financial
         statements for the second and third fiscal quarters of 2001. 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
         quarter ended March 31, 2001 is presented as follows:
<TABLE>
<CAPTION>


                                                          As Originally      Restatement
           Balance Sheet - Captions                            Reported      Adjustments       As Restated  Ref.
           ------------------------                            --------      -----------       -----------  ----
<S>                                                   <C>                 <C>              <C>
           Mortgage loans held for sale               $       1,681,942   $   16,109,105   $    17,791,047  C,D
           Accrued interest - receivable                         47,651          (46,287)            1,364  E,F
           Receivable from Loan Link, LLC                       300,000         (300,000)             -     F,E
           Other assets                                       2,392,950           36,891         2,429,841  A,B,C
           Warehouse lines of credit                               -          16,109,105        16,109,105  D,C
           Accumulated deficit                               (5,227,990)        (309,396)       (5,537,386)

           For Three Months ended March 31, 2001          As Originally      Restatement
           Statement of Operations - Captions                  Reported      Adjustments       As Restated  Ref.
           ----------------------------------                  --------      -----------       -----------  ----
           Gain on sale of loans                      $       1,152,671   $      (91,110)  $     1,061,561  C
           Other income (expense)                               555,134         (532,286)           22,848
           B,E,F,G
           Net loss - before income taxes                      (392,423)        (623,396)       (1,015,819)
           Cumulative effect of accounting change                  -             314,000           314,000  A
           Net loss                                            (392,423)        (309,396)         (701,819)
           Net loss per share - basic and diluted:
                Before cumulative effect of change
                in accounting principle                          (0.09)           (0.14)            (0.23)
                Cumulative effect of change in
                accounting principle                              0.00             0.07              0.07
                Net Loss per share                               (0.09)           (0.07)            (0.16)

           For Three Months ended March 31, 2001          As Originally      Restatement
           Statement of Cash Flows - Captions                  Reported      Adjustments       As Restated  Ref.
           ----------------------------------                  --------      -----------       -----------  ----
           Net loss                                   $        (392,423)  $     (309,396)  $      (701,819)
           Gain on sale of investment in Loan Link             (300,000)            -                 -     F
           Other assets                                        (915,873)         (36,891)         (952,764) A,B,C
           Accrued interest - receivable                         (5,918)          46,287            40,369  E
           Gain on sale of loans                             (1,152,671)          91,110        (1,061,561) C
           Mortgage loans - proceeds from sale              278,064,650      (16,109,105)      261,955,545  D
           Warehouse notes payable - net
             Borrowings (repayments)                        (19,645,445)      16,109,105        (3,536,340) D
</TABLE>



                                      -6-


NOTE 6   Restatement (continued) - the following footnotes relate to the
         restatement of the financial statements for the three months ended
         March 31, 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 first 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 quarter 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.
             Accordingly, Gain on Sale of Loans was reduced by $91,110 for the
             first quarter of 2001 to record the effect of this restatement.
             (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 the amount $16,109,105 as of March 31, 2001.
         E.  A receivable due from Loan Link, LLC became impaired during the
             first quarter of 2001 with a $46,287 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.
         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 the quarter
             ended March 31, 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 in January 2002.

                                      -7-
<PAGE>

NOTE 7   Significant Events - During the first quarter of 2001, the Company
         was informed by The Federal Bureau of Investigation that as part of a
         Department of Justice plea bargain, $230,126 in fraudulent loan losses
         and collection expenses the Company incurred during 1998 and 1999 would
         be paid by the defendant. This amount, as restated, has not been
         recorded as Income. Also, during the first quarter of 2001, the Company
         sold 50% of its 30% interest in Loan Link LLC for $300,000. Since the
         investment was carried at "zero" value on the Company's books, the
         entire amount of the premium was offset against a $300,000 note
         receivable from Loan Link LLC. This transaction, as restated, has not
         been recorded as Income.

                                      -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.

                                      -9-
<PAGE>

         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 June. 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 remained at these favorable
         levels during the first quarter of 2001, ranging between 6.95% and
         7.05%.

         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.

         The following table sets forth the wholesale and retail production for
         the periods indicated:
<TABLE>
<CAPTION>

                           1st Qtr-00     2nd Qtr-00     3rd Qtr-00     4th Qtr-00     1st Qtr-01

<S>                        <C>            <C>            <C>            <C>            <C>
               Wholesale   $144,043,724   $130,878,546   $154,913,511   $181,744,512   $241,779,524

                  Retail     77,405,856     82,928,025     67,973,925     87,598,298    108,326,735
                           -------------  -------------  -------------  -------------  ------------

                  Total    $221,449,580   $213,806,571   $222,887,436   $269,342,810   $350,106,259
</TABLE>


         Overall, the Company's mortgage loan volume increased by $128.7 million
         or 58% for the first three months of 2001 when compared to the first
         three months of 2000. Wholesale mortgage loan production through March
         31st of this year was $97.7 million or 68% greater than in the same
         period in 2000. Retail loan production was $30.9 million or 40% more
         compared to the first quarter of 2000.

         During the course of the Company's year end audit, management evaluated
         the accounting treatment of transactions recorded during the quarter
         ended March 31, 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 March 31, 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.

                                      -10-
<PAGE>

         THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH
         31, 2000

         The Company incurred a net loss of $701,819 for the three months ended
         March 31, 2001 compared to a net loss of $1,346,499 during the
         comparable period last year. Overall, the smaller net loss in the first
         quarter of 2001 compared to the same period last year was the result of
         (1) a 58% increase in loan volume, (2) a 24% drop in operating costs as
         a percentage of loan volume, and (3) a $40,210 increase in other
         income. These factors offset a $397,049 increase in net interest
         expense over the prior year.

         Net gain on sale of mortgage loans increased by $664,397 or 167%. The
         bulk of the increase in net gain on sale arose from higher wholesale
         loan production and better overall prices on loans sold. Total
         wholesale loans closed were $97.7 million or 68% greater than in the
         same period last year.

         Production income increased by $701,944 or 54%. Production income
         increased because of an increase in retail origination fees and retail
         and wholesale "junk" fees posted during the first quarter this year.
         Retail loan production was $30.9 million or 40% greater than in the
         first quarter of 2000.

         Other income was lower by $6,077 or 21% for the first quarter of 2001
         compared to the totals for the same period last year.

         During the first quarter of 2001, the Company incurred a net interest
         expense of $416,099 compared to a net interest expense in the first
         quarter of 2000 of $19,050. The unfavorable result in 2001 reflects (1)
         greater levels of loans warehoused by the company in the first quarter
         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.

         The Company has taken steps to better manage expenses since the
         beginning of 2000. These steps have included reducing the number of
         support staff, placing account executives on straight commission so
         that compensation will vary with loan production, renegotiating vendor
         contracts, prioritizing technology projects, and managing down delivery
         and fax expenses by limiting distribution of rate sheets to only active
         brokers. The effect of these cost cutting measures has reduced
         operating expenses (not including interest expense) to 1.05% of loan
         volume during the first quarter of 2001 compared to 1.38% during the
         same period in 2000.

         Excluding interest expense, total expenses were $632,535 or 21% higher
         during the first quarter of 2001 compared to the same period in 2000.
         This compares favorably to a 58% increase in loan volumes over the same
         period. Commissions increased by $487,545 or 60% and salaries and
         benefits increased by $192,964 or 15%, as a result of higher loan
         volumes. General and administrative expenses decreased by $46,207 or
         6%, and occupancy costs decreased by $1,767 or 1%, mainly as a result
         of the previously discussed cost reduction efforts.


                                      -11-
<PAGE>



         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 Company's
         operating losses have eroded this net worth and cash position. As of
         March 31, 2001 the Company had four financing facilities for a total of
         $70 million. These warehouse facilities have various financial and
         operational covenants with which the Company must comply. As of March
         31, 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.

         On April 17, 2001 the Company was informed by one of its warehouse
         lenders providing a $20 million facility that as a result of certain
         events of default, the lender was ceasing further purchases under the
         line. The Company has informed its other warehouse lenders of the
         events of default and each has informally stated that although the
         Company was in violation of certain of their covenants, there have been
         significant operational improvements during the quarter and as such the
         current relationship would continue.

         As a result of the above-mentioned freeze on one of its warehouse
         lines, the Company has been forced to reduce its levels of loan
         production. Wholesale production in April, 2001 totaled $68.1 million,
         a 26% decline over February's peak volume of $91.7 million. Failure to
         replace this warehouse line will adversely affect its financial
         performance and will limit the Company's ability to grow.

         During the first quarter of 2001, the Company raised additional
         subordinated debt in the amount of $615,000. Despite this cash
         infusion, the Company's cash position during the first quarter of 2001
         was strained as a result of: (1) a significant increase in mortgage
         loan originations, (2) an increase in the period of time between a
         mortgage loan's closing and its final sale to investors, and (3)
         operating losses. As of March 31, 2001 the Company had to rely on
         short-term borrowings of $759,491 from various members of management
         and shareholders in order to support its business activities. As
         previously discussed, during April, 2001 the Company experienced a
         reduced level of loan originations and, therefore, related cash needs,
         allowing all but $109,491 of these short-term borrowings to be repaid
         by May 10, 2001.

         In order to fund its business activities over the remainder of 2001,
         the Company has undertaken the following operating and financing
         activities:

         1.  Strengthened broker pricing policies and procedures to reduce price
             concessions and increase loan margins. As a result, gain-on-sale in
             the month of April 2001 increased approximately 15bps over March
             2001.
         2.  Restructured underwriting and processing activities involving loan
             applications in order to better match staffing levels with loan
             volumes. As a result, staff levels are 22% lower when compared to
             March 31, 2001 levels, and overtime and temporary help expenses
             have been reduced.
         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

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<PAGE>

             high of approximately 30 days to current levels of 20 days with a
             target of 15 days.
         4.  Raised an additional $120,000 in subordinated debt as of May 10,
             2001 and received a commitment for an additional $300,000 to be
             infused during the week of May 14, 2001.

         In addition, the Company has been seeking additional equity funds that,
         if received, would both provide additional cash and allow the Company
         to renegotiate the interest rates it pays on current 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. The Company's net interest margin has been improving
         since the end of the first quarter of 2001 due to the Federal Reserve
         Bank's lowering of short-term rates without a corresponding drop in
         fixed rate mortgage yields.

         The Company believes that the result of these activities combined with
         cash flows from operations and continuing efforts to optimize on
         current resources will improve the Company's cash position to a level
         adequate to support its operations through the remainder of the year.
         However, there are no guarantees that these steps will result in a
         return to profitability.




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<PAGE>


                                   SIGNATURES


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



                                    Transnational Financial Network, Inc.



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








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