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

                               Amendment No. 1 to
                                  Form 10-QSB



(Mark One)

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

                  For the quarterly period ended July 31, 2002

[ ]      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 September 12, 2002: 6,760,181

<PAGE>

                      TRANSNATIONAL FINANCIAL NETWORK, INC.

                                  JULY 31, 2002

                                    Unaudited


                      TABLE OF CONTENTS                                     PAGE

PART 1    Item 1      Financial Information

                      Condensed Balance Sheets as of July 31, 2002
                      and April 30, 2002                                       2

                      Condensed Statements of Operations
                      for the Three Months Ended
                      July 31, 2002 and June 30, 2001                          3

                      Condensed Statements of Cash Flows for the
                      Three Months Ended July 31, 2002 and
                      June 30, 2001                                            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                                       12


          Item 2      Changes in Securities and Use of Proceeds               12

                      Certification Required by 18 U.S.C. Section 1350
                      Section 906 of the Sarbanes - Oxley Act of 2002         13

                      SIGNATURES                                              14

                                      -1-
<PAGE>

PART 1

Item 1.  Financial Information

                      TRANSNATIONAL FINANCIAL NETWORK, INC.

                            CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                     July 31,        April 30,
                                                                       2002            2002
                                                                   ------------    ------------
                                                                    (unaudited)     (audited)
<S>                                                                <C>             <C>
ASSETS:
  Cash and cash equivalents                                        $  2,272,976    $  3,076,422
  Restricted cash                                                     1,250,000       1,000,000
  Mortgage loans held for sale                                        9,887,853       5,790,315
  Notes receivable from shareholder                                      84,438          84,438
  Goodwill                                                            3,023,792       3,023,792
  Property and equipment, net                                           179,833         148,553
  Other assets                                                        1,321,269       1,029,472
                                                                   ------------    ------------

TOTAL ASSETS                                                       $ 18,020,161    $ 14,152,992
                                                                   ============    ============

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES:
  Warehouse lines of credit                                        $  9,585,838    $  5,740,367
  Accrued interest payable                                               60,205          44,271
  Accounts payable and accrued liabilities                              669,753         656,837
  Capital lease obligations                                              54,275          17,427
  Subordinated debt                                                   2,207,000       1,957,000
                                                                   ------------    ------------

TOTAL LIABILITIES                                                  $ 12,577,071    $  8,415,902
                                                                   ------------    ------------

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: 6,760,181 shares issued and outstanding
     as of July 31, 2002 and April 30, 2002                          13,456,182      13,456,182
  Accumulated deficit                                                (8,013,092)     (7,719,092)
                                                                   ------------    ------------

TOTAL SHAREHOLDERS' EQUITY                                            5,443,090       5,737,090
                                                                   ------------    ------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                         $ 18,020,161    $ 14,152,992
                                                                   ============    ============
</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
                                                  ---------------------------------
                                                  July 31, 2002      June 30, 2001
                                                  -------------     ---------------
                                                                        (Restated)
<S>                                                <C>                 <C>
REVENUE:
  Net gain from sale of loans                      $   701,712         $ 1,063,449
  Production income                                  3,212,897           2,242,759
  Loan interest income                                 275,541             908,803
  Other income                                          21,140              16,883
                                                   -----------         -----------
  TOTAL REVENUE                                    $ 4,211,290         $ 4,231,894
                                                   -----------         -----------

DIRECT EXPENSE:
  Commissions                                       (2,025,119)         (1,325,675)
  Production                                          (309,039)           (416,480)
  Early loan payoff penalties expense                  (45,000)           (127,713)
  Interest expense on warehouse financing             (306,387)         (1,201,452)
                                                   -----------         -----------
  TOTAL DIRECT EXPENSE                             $(2,685,545)        $(3,071,320)
                                                   -----------         -----------

GROSS PROFIT                                         1,525,745           1,160,574

INDIRECT EXPENSE:
  Salaries and benefits                             (1,061,214)         (1,243,349)
  General and administrative                          (595,758)           (793,284)
  Occupancy                                           (187,575)           (161,331)
  Depreciation and amortization                        (24,474)           (147,930)
                                                   -----------         -----------
  TOTAL INDIRECT EXPENSE                           $(1,869,021)        $(2,345,894)
                                                   -----------         -----------

OPERATING LOSS                                     $  (343,276)        $(1,185,320)

NON-OPERATING INCOME (EXPENSE):

  Income (loss) from derivative instruments        $   101,594         $  (184,365)
  Other interest expense                               (84,608)            (80,032)
  Other income                                          32,290                 325
                                                   -----------         -----------

  TOTAL NON-OPERATING INCOME (EXPENSE)             $    49,276         $  (264,072)
                                                   -----------         -----------

LOSS BEFORE INCOME TAXES                           $  (294,000)        $(1,449,392)

  Income tax (provision) benefit                          --                  --
                                                   -----------         -----------

NET LOSS                                           $  (294,000)        $(1,449,392)

NET LOSS PER SHARE:
  Basic and diluted                                $     (0.04)        $     (0.34)

WEIGHTED AVERAGE SHARES OUTSTANDING:
  Basic and diluted                                  6,760,181           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
                                                                ------------------------------------
                                                                  July 31, 2002        June 30, 2001
                                                                ---------------       --------------
                                                                                         (Restated)
<S>                                                             <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                      $    (294,000)        $  (1,449,392)
  Adjustments to reconcile net loss to net cash provided
    by (used in) operating activities:
    Depreciation and amortization                                      24,474               147,930
    Net effect of changes in assets and liabilities:
      Shareholders' receivable                                           --                   6,285
      Other assets                                                   (263,395)            1,265,770
      Accrued interest payable                                         15,934              (284,640)
      Accounts payable and accrued liabilities                         19,618                91,769

      Net effect of changes in mortgage loan activities:
         Mortgage loans - originated for sale                     (94,640,604)         (187,461,931)
         Mortgage loans - proceeds from sale                       90,543,066           193,195,001
         Provision for early payoffs and loan losses                  (34,302)             (143,904)
                                                                -------------         -------------
    NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES         $  (4,629,209)        $   5,366,888

CASH FLOWS FROM INVESTING ACTIVITIES:
  Property and equipment - purchases                                  (13,365)              (13,167)
  Net increase in restricted cash                                    (250,000)             (581,837)
                                                                -------------         -------------
    NET CASH USED IN INVESTING ACTIVITIES                       $    (263,365)        $    (595,004)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Warehouse notes payable - net borrowings (repayments)             3,845,471            (4,518,655)
  Repayments of short-term borrowings                                    --                (868,982)
  Issuances of subordinated debt                                      400,000               680,000
  Repayments of subordinated debt                                    (150,000)                 --
  Repayments on capital lease obligations                              (6,343)                 --
                                                                -------------         -------------
    NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES         $   4,089,128         $  (4,707,637)
                                                                -------------         -------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                 (803,446)               64,247

CASH AND CASH EQUIVALENTS, BEGINNING OF QUARTER                     3,076,422               595,488
                                                                -------------         -------------

CASH AND CASH EQUIVALENTS, END OF QUARTER                       $   2,272,976         $     659,735
                                                                =============         =============

CASH PAID DURING THE QUARTER FOR:
  Interest                                                      $     375,061         $   1,566,125
  Taxes                                                         $        --           $        --

SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Property and equipment acquired under capital lease             $      42,389         $        --
</TABLE>

            See accompanying notes to condensed financial statements.

                                      -4-
<PAGE>

                      TRANSNATIONAL FINANCIAL NETWORK, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

                                  July 31, 2002

                                   (unaudited)

     NOTE 1 General - The  accompanying  financial  statements of  Transnational
     Financial  Network,  Inc.  (the  "Company")  as of and for the three months
     ended  July 31,  2002 and for the three  months  ended June 30,  2001,  are
     unaudited and have been prepared  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  accounting  principles  generally  accepted in the United
     States of America 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 four months ended April 30,
     2002 and for the year ended December 31, 2001.  These unaudited  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   accounting
     principles  generally  accepted  in the United  States of America  requires
     management to make estimates and assumptions  that affect certain  reported
     amounts and  disclosures.  Accordingly,  actual  results  could differ from
     those  estimates.  The results of  operations  of the Company for the three
     months ended July 31, 2002 and June 30, 2001 are not necessarily indicative
     of the results to be expected for the full year.

     Effective April 26, 2002, the Company changed its year-end from December 31
     to April 30. For  purposes of this  Quarterly  Report on Form  10-QSB,  the
     Company's condensed  statements of operations and cash flows consist of the
     quarters  ended  July  31,  2002  and  June  30,  2001.  The   Management's
     Discussions  and Analysis of Financial  Condition and Results of Operations
     section  of  this  Quarterly  Report  on  Form  10-QSB  compares  financial
     information  for the quarter ended July 31, 2002 and the quarter ended June
     30, 2001.

     Certain  amounts  reflected in the condensed  financial  statements for the
     three month period ended June 30, 2001 have been reclassified to conform to
     the presentation for the three month period ended July 31, 2002.

     NOTE 2 New  Accounting  Standards  - The  Company  adopted  SFAS  No.  142,
     "Accounting  For  Goodwill  and Other  Intangible  Assets" as of January 1,
     2002. The standard  requires that goodwill arising from an acquisition of a
     business be  periodically  assessed for  impairment  rather than  amortized
     periodically.  The Company has  performed an  assessment  of goodwill as of
     January 1, 2002 and determined  that no impairment has arisen.  Included in
     the  Company's  assets  as of July  31,  2002  is  goodwill  related  to an
     acquisition in 1999 with a net carrying  value of $3,023,792.  The adoption
     of SFAS No. 142 has  resulted  in a  decrease  of  amortization  expense by
     approximately $400,000 per year, which amortization is a non-cash item. The
     impact of SFAS No. 142 on net loss for the quarters ended July 31, 2002 and
     and June 30, 2001 follows:

--------------------------------------------------------------------------------
    Financial statement caption         July 31, 2002             June 30, 2001
    ---------------------------         -------------             -------------

                                                                   (Restated)
                                                                   ----------
--------------------------------------------------------------------------------
Reported net loss                        $  (294,000)            $  (1,449,392)
--------------------------------------------------------------------------------
Add back:  Goodwill amortization                   0                   100,720
                                         -----------             -------------
--------------------------------------------------------------------------------
Adjusted net loss                        $  (294,000)            $  (1,348,672)
                                         ===========             =============
--------------------------------------------------------------------------------
Basic and diluted loss per share:
--------------------------------------------------------------------------------
Reported net loss                        $     (0.04)         $          (0.34)
--------------------------------------------------------------------------------
Add back: Goodwill amortization                 0.00                      0.02
                                         -----------             -------------
--------------------------------------------------------------------------------
Adjusted net loss                        $     (0.04)         $          (0.32)
                                         ===========             =============
--------------------------------------------------------------------------------

                                      -5-
<PAGE>

     In June  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for  Costs
     Associated with Exit or Disposal  Activities",  which addresses  accounting
     for  restructuring  and similar  costs.  SFAS No. 146  supersedes  previous
     accounting guidance, principally Emerging Issues Task Force Issue No. 94-3.
     The Company  will adopt the  provisions  of SFAS No. 146 for  restructuring
     activities  initiated  after December 31, 2002.  SFAS No. 146 requires that
     the liability  for costs  associated  with an exit or disposal  activity be
     recognized  when the  liability  is  incurred.  Under  Issue  No.  94-3,  a
     liability  for an exit  cost was  recognized  at the date of the  Company's
     commitment  to an exit  plan.  SFAS  No.  146  also  establishes  that  the
     liability  should  initially  be  measured  and  recorded  at  fair  value.
     Accordingly,  SFAS No.  146 may affect  the  timing of  recognizing  future
     restructuring costs as well as the amounts recognized. The Company does not
     expect  the  adoption  of SFAS No.  146 to have an impact on its  financial
     position or results of operations  since it does not  currently  anticipate
     any restructuring activities.

     NOTE 3 Financing Facilities -

     A. Warehouse Lines Of Credit - As of July 31, 2002, the Company  maintained
     two revolving  warehouse lines of credit with a total borrowing capacity of
     $20  million  to fund  mortgage  loan  originations.  There are  geographic
     restrictions  on $15 million of this borrowing  capacity,  with $10 million
     restricted  to loans on Arizona  properties  and $5 million  restricted  to
     loans on California  properties.  Advances are made on the warehouse  lines
     for  residential  real  estate  loans,  which are  pledged  as  collateral.
     Interest  accrues  monthly on outstanding  warehouse line borrowings and is
     due at settlement when the underlying  loans are sold. All advances must be
     repaid  within one year.  The lines of credit  bear  interest  at one month
     LIBOR plus a margin  ranging  from  4.43% to 5.43% for an  average  rate of
     6.04% at July 31, 2002, and at Prime, which was 4.75% at July 31, 2002. The
     lines do not have an expiration  date,  but are cancelable at any time upon
     written notice by either party. In connection with these lines, the Company
     is required to maintain cash  deposits  with the  warehouse  lenders of not
     less than $250,000 as  additional  collateral.  The Company has  classified
     these cash deposits as restricted cash in the financial statements.

     B. Master Sale  Agreement - In  November  2000 the Company  entered  into a
     Quick Sale Master Loan  Participation  and Custodian  Agreement (Quick Sale
     Gestation  Line) with a financial  institution.  This agreement was amended
     and  renewed  on April  22,  2002.  Under the  terms of the  agreement,  as
     amended,  the  financial  institution  purchases a 100% loan  participation
     interest upon the Company obtaining a firm forward sale delivery commitment
     from  investors and upon the financial  institutions'  approval of the loan
     quality based on its underwriting  standards.  The Company recognizes loans
     transferred  under  this line as a gain on sale  immediately  upon the loan
     being purchased and funded by the financial institution. In connection with
     this  agreement,  the Company is required to repurchase  certain loans that
     subsequent to acquisition by the financial institution fail to meet certain
     representations  and  warranties  set forth in the agreement at the date of
     the sale.  During the three month  periods ended July 31, 2002 and June 30,
     2001,  the  Company  was not  required  to  repurchase  any loans  from its
     financing facilities. Loan interest charges incurred in connection with the
     sale  are  estimated  and  recognized  as a  reduction  in  sales  proceeds
     immediately  upon the loan  being  transferred.  Loan  interest  expense is
     calculated  based on the number of days the loan remains with the financial
     institution  until it is ultimately  resold to a third party investor,  and
     during  this  intermediate  period the  Company  sub-services  the loans on
     behalf of the  financial  institution.  The agreement was $30 million as of
     July 31,  2002.  Interest  on the line is at Prime  Rate plus 1.0% when the
     balance is less than $30 million  (Prime was 4.75% at July 31,  2002).  The
     line can be increased by up to $10 million on an interim  basis at the sole
     discretion of the  institution  at a higher  interest  rate.  To date,  the
     Company has not utilized this interim bulge  capacity.  In connection  with
     this Master  Sale  Agreement,  the  Company is  required  to maintain  cash
     deposits of not less than $1,000,000 as additional collateral.  The Company
     has  classified  these cash  deposits as  restricted  cash in the financial
     statements.

     C.  Master  Mortgage  Loan  Purchase  Agreement  - In June 2002 the Company
     entered into a Master  Mortgage  Loan Purchase  Agreement  with a financial
     institution.  Under the terms of the agreement,  the financial  institution
     purchases a 100% loan  participation  interest upon the Company obtaining a
     firm forward sale delivery commitment from investors and upon the financial
     institution's  approval  of the  loan  quality  based  on its  underwriting
     standards.  In connection with this  agreement,  the Company is required to
     repurchase  certain loans that  subsequent to  acquisition by the financial
     institution fail to meet certain  representations  and warranties set forth
     in the agreement at the date of the sale.  The agreement was $15 million as
     of July 31,  2002 and bears  interest  at the  greater  of LIBOR or Federal
     Funds plus  2.75%.  As of July 31,  2002,  LIBOR was 1.818% and the Federal
     Funds  rate was  1.72%.  The  Company  must  provide  $1.5  million in cash
     collateral  upon accessing this facility.  As of July 31, 2002, the Company
     had not accessed this facility.

     The financing  facilities,  as disclosed above,  have various financial and
     operational  covenants  with which the Company must comply.  As of July 31,
     2002 the Company  was in  violation  of two  financial  covenants  with two
     facilities. The lenders have acknowledged the financial covenant violations
     and have  continued to make  warehouse  financing

                                      -6-
<PAGE>

     available  to  the  Company  under  the  terms  of the  existing  financing
     facilities.  There  is  a  risk  that  these  providers  of  the  financing
     facilities could terminate the financing facility agreements as a result of
     the debt covenant  violations.  Not withstanding  the covenant  violations,
     existing  provisions  included  in both  agreements  give both  lenders the
     ability to terminate the agreements without cause upon 30 day notification.
     Therefore,  these  covenant  violations do not give the lenders any greater
     contractual  right or power to terminate the  agreements  than exist within
     the terms of the agreements when the Company is in full compliance with the
     financial covenants.  Termination of these facilities could have a material
     adverse effect on the Company's  operations and its financial  performance.
     The loss of these facilities would constrain the Company's  ability to fund
     loans until  alternative  sources of financing  were found,  which could be
     under less favorable  terms.  The Company was in compliance  with all other
     financial  covenants in respect of its financing  facilities as of July 31,
     2002.  Both  the CEO and  the  President  of the  Company  have  personally
     guaranteed the above described financing facilities.

     NOTE 4 Other Assets - As of July 31 and April 30, 2002, the Company's other
     assets consisted of the following:

                                         July 31, 2002        April 30, 2002
                                         -------------        ---------------
        Receivables                        $  742,876           $  605,124
        Forward Delivery Commitments           16,451              (25,156)
        Commitments to Extend Credit          381,740              321,753
        Deposits and Prepaids                 180,202              127,751
                                         -------------        ---------------
        Total                              $1,321,269           $1,029,472
                                         =============        ===============

     Receivables  consist of amounts to be received from the subsequent  sale of
     mortgage loans held for sale, commissions, and other miscellaneous mortgage
     related receivables.  Additionally,  included in receivables as of July 31,
     2002 is a loan in the amount of $100,000  extended to AMCI during May 2002.
     AMCI notified the Company that it is experiencing  financial difficulty and
     has provided  certain assets to the Company in fulfillment of the principal
     amount of the loan.  Management of the Company expects to recover this loan
     with the assets pledged and therefore has not provided an allowance against
     the principal balance.  The Company has not recorded any interest income in
     connection with this loan. Mr. Eugene  Kristul,  a former employee of AMCI,
     has recently become an employee of the Company and is the CEO's son.

     Forward delivery commitments and commitments to extend credit represent the
     fair value of the contractual  loan and forward  delivery  commitments,  as
     required under SFAS No. 133.

     NOTE 5 Subordinated  Debt and Notes Payable - On July 24, 2002, the Company
     issued new subordinated  debt in the aggregate amount of $400,000.  On July
     29,  2002,  the  Company  repaid  $150,000  of the  previously  outstanding
     subordinated  debt.  All  subordinated  debt bears  interest at 15% and has
     maturity dates ranging from August 14, 2002 to June 11, 2004.  Subordinated
     debt interest expense of $81,906,  and $80,032 was incurred in the quarters
     ended July 31, 2002 and June 30, 2001.

     As of July 31, 2002, there were 88,500 warrants  outstanding related to the
     Company's  subordinated  debt with  exercise  prices  ranging from $0.75 to
     $1.00.

     NOTE 6 Stock  Option  Activity - During the  quarter  ended July 31,  2002,
     common stock option  activity under the Company's 2000 Stock Incentive Plan
     (the "Plan") was as follows;  150,000  common stock options with a weighted
     average  strike  price of $1.98 were  cancelled  and 100,000  common  stock
     options were issued at a strike price of $0.68.  There were 363,941 options
     outstanding under the Plan as of July 31, 2002.

     During the quarter ended July 31, 2002,  the  Company's  board of directors
     agreed to issue 300,000  common stock options at a strike price of $0.73 to
     the CEO. The shares will be  unregistered  and the options  carry a term of
     four years from the date then  granted.  The  options  were not part of the
     Company's existing option plans and are subject to shareholder approval.

     NOTE 7 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 July 31, 2002 and June 30,
     2001,  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  934,941  and
     869,000 has not been included in the  calculations  as of July 31, 2002 and
     June 30, 2001.

                                      -7-
<PAGE>

     NOTE 8 Fair Value of  Financial  Instruments  - A summary  of the  contract
     amount of the  Company's  exposure to  off-balance  sheet credit risk as of
     July 31, 2002 and April 30, 2002,  including  financial  instruments  whose
     contract amount represents credit risk only is as follows:

                                          July 31, 2002        April 30, 2002
                                        -----------------    -----------------
     Commitments to extend credit          $64,158,050          $41,953,193
     Forward delivery commitments            7,237,566            5,000,000

     Commitments to extend credit are contractual  agreements  entered into with
     customers  as long as there is no violation  of any  condition  established
     under the contract.  Commitments  generally have fixed  expiration dates or
     other termination  clauses and may require payment of a fee by the Company.
     Since many of the  commitments  are expected to expire  without being drawn
     upon, the total commitment amounts do not necessarily represent future cash
     requirements. The Company is exposed to credit risk on its forward delivery
     commitments  when  the  Company's  position  in these  instruments  becomes
     positive  (i.e.  "in-the-money")  and the Company is a net  creditor to the
     counter party to the agreement.

     NOTE 9  Restatement  -During the quarter  ended July 31, 2002,  the Company
     determined  that  the  methodology  used to  calculate  the  fair  value of
     derivative  instruments  was  incorrect.  The Company  adopted SFAS No. 133
     beginning on January 1, 2001 and determined  that its rate lock and forward
     commitments were considered  derivatives  instruments.  Upon adoption,  the
     Company determined that the fair value of these derivative  instruments was
     $314,000, or $0.07 per share , which was recorded as a cumulative effect of
     change in  accounting  principle.  The fair value of these  instruments  is
     included in other assets.  The Company has  determined  that it incorrectly
     stated the estimated fair value of these instruments upon adoption and that
     the correct amount should have been $500,463, or $0.12 per share.

     Additionally, the Company estimated the fair value of these instruments for
     each  period  thereafter  and  recognized  the  change in fair value in the
     statement  of  operations.  Subsequently,  the Company  determined  that it
     incorrectly  stated  the  estimated  fair  value of these  instruments  and
     intends to restate its financial  statements  for the quarters  ended March
     31, June 30, and  September  30, 2001 and for the year ended  December  31,
     2001. The  restatement of the statement of operations for the quarter ended
     June 30, 2001 has been reflected in these financial statements.  The effect
     of this restatement on the fair value of the rate lock and forward delivery
     commitments  and  the  related  financial   statements   captions  for  the
     respective periods during 2001 is as follows:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
                              At and for the      At and for the        At and for the    At and for the
                              year ended:         3 months ended:       3 months ended:   3 months ended:
---------------------------------------------------------------------------------------------------------
                              December 31, 2001   September 30, 2001    June 30, 2001     March 31, 2001
                              -----------------   ------------------    -------------     --------------
<S>                             <C>               <C>                   <C>               <C>
---------------------------------------------------------------------------------------------------------
Fair value of derivatives -     $    480,508      $    446,381          $    402,254      $    358,127
as reported

---------------------------------------------------------------------------------------------------------
Fair value of derivatives -     $    287,360      $    305,521          $    399,651      $    584,016
as adjusted

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

---------------------------------------------------------------------------------------------------------
Total assets - as reported      $ 23,880,633      $ 13,462,843          $ 18,350,796      $ 24,554,533

---------------------------------------------------------------------------------------------------------
Total assets - as adjusted      $ 23,687,485      $ 13,321,983          $ 18,348,193      $ 24,780,422

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

---------------------------------------------------------------------------------------------------------
Total shareholders' equity      $  4,500,338      $  4,121,235          $  3,853,319      $  5,074,769
- as reported

---------------------------------------------------------------------------------------------------------
Total shareholders' equity      $  4,307,190      $  3,980,375          $  3,850,716      $  5,300,658
- as adjusted

---------------------------------------------------------------------------------------------------------
</TABLE>

                                      -8-
<PAGE>

<TABLE>
<S>                             <C>               <C>                   <C>               <C>
---------------------------------------------------------------------------------------------------------
Other income - as reported      $    130,186      $     67,304          $     61,335      $     22,848

---------------------------------------------------------------------------------------------------------
Other income - as adjusted      $   (249,425)     $    (70,953)         $   (167,157)     $     62,274

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

---------------------------------------------------------------------------------------------------------
Net loss - as reported          $ (2,204,277)     $   (660,911)         $ (1,220,900)     $   (701,819)

---------------------------------------------------------------------------------------------------------
Net loss - as adjusted          $ (2,397,425)     $   (798,368)         $ (1,449,392)     $   (475,930)

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

---------------------------------------------------------------------------------------------------------
Net loss per share - as         $      (0.51)     $      (0.14)         $      (0.29)     $      (0.16)
reported

---------------------------------------------------------------------------------------------------------
Net loss per share - as         $      (0.55)     $      (0.17)         $      (0.34)     $      (0.11)
adjusted

---------------------------------------------------------------------------------------------------------
</TABLE>

     Finally,  the Company has determined  that the  cumulative  effect of these
     adjustments  on the four month period ended April 30, 2002 would reduce the
     accumulated  deficit in the amount of  $193,148  and would  increase  other
     income by the same amount.

     NOTE 10 Contingencies - On February 23, 2001, two former principals of LRS,
     Inc.  filed a  complaint  in the  Superior  Court  of Santa  Clara  County,
     California  alleging  that,  among other claims,  the Company  violated its
     agreement  whereby the Company  purchased  LRS,  Inc. in 1999.  The Company
     terminated  its employment of the two principals on March 8, 2001. On April
     4, 2001 the two former  principals filed a second complaint in the Superior
     Court of Santa  Clara  County  against  the  Company  based upon  breach of
     contract,  wrongful  termination in violation of public  policy,  breach of
     covenant of good faith and fair dealing, and declaratory relief.

     The  Company  filed  a  cross-complaint   asserting  that  the  two  former
     principals  violated  their  employment  agreement,  breached their duty of
     loyalty,   intentionally   interfered  with  economic   relationships   and
     negligently  interfered  with economic  relationships.  The issues have now
     been  moved  to an  arbitration  proceeding  and  the  Company  intends  to
     vigorously  pursue its claim in this action.  The Company believes that the
     claims of the former  principals of LRS, Inc. are without  merit.  However,
     the costs of a negative outcome could exceed $400,000 from attorney's fees,
     compensatory and punitive damages and other costs.

     NOTE 11 Subsequent  Events - On September 3, 2002, Robert A. Shuey resigned
     as a member of the Company's Board of Directors. Alex Rotzang was appointed
     to fill Mr.  Shuey's  position  on the Audit  Committee.  The  Company  had
     previously provided a loan to Mr. Shuey in the amount of $25,000. As of the
     date of Mr. Shuey's resignation from the Company's Board of Directors,  the
     Company  determined  that the  note  was  uncollectible.  The  Company  has
     provided a 100%  allowance  against the principal  amount of the loan as of
     July 31,  2002.  No interest  income was recorded in  connection  with this
     note.

     During August 2002, the Company repaid $660,000 of the principal  amount of
     the  subordinated  debt and issued new  subordinated  debt in the amount of
     $500,000  with  substantially  the same terms as the existing  subordinated
     debt.

     Subsequent to July 31 2002, the Company  accessed the Master  Mortgage Loan
     Purchase  Agreement  and was required to set aside cash  collateral  in the
     amount of $1,500,000 as restricted cash.

                                      -9-
<PAGE>

PART 1

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.

Change in Fiscal Year

The  Company  changed  its fiscal  year end from  December  31st to April  30th,
effective  April 26,  2002.  The fiscal  years are referred to using the year in
which the end of the fiscal year falls.  Unless  otherwise noted, all references
in this Form 10-QSB to 2003, 2002 or 2001 are to the fiscal year ending on April
30th in the year named. This means that the fiscal year ending April 30, 2002 is
referred to as "2002."

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  originations  of mortgage  loans,  and  currently  maintains  retail
offices  in San  Francisco  and  Campbell,  Rancho  Cucamonga  and  Victorville,
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 has recently  commenced certain  brokerage and consulting  services to a
real estate  developer in Spain.  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,  with  origination  volumes  increasing in periods of
declining  interest rates, and declining  during periods of increasing  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  variable  rate  mortgage
loans,  that is, mortgage loans that have interest rates that frequently  change
and,  consequently,  have lower  initial  interest  rates than those  charged on
longer term fixed interest rate mortgage loans.

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.  Nonetheless,  the Company's origination volume trends have
been and will  continue to be heavily  influenced by both the level and trend of
interest rates.

                                      -10-
<PAGE>

The following table shows the Company's wholesale and retail production trends:
<TABLE>
<CAPTION>
                                                    Origination Volumes
                                                    -------------------
                                                       ($ millions)

Three Months Ending        7-31-02    3-31-02   12-31-01    9-30-01   6-30-01    3-31-01   12-31-00    9-30-00
-------------------        -------    -------   --------    -------   -------    -------   --------    -------
<S>                           <C>      <C>        <C>        <C>       <C>        <C>        <C>        <C>
Wholesale                     $95      $ 116      $ 195      $ 153     $ 188      $ 249      $ 182      $ 155
Retail                        205        172        202        145       136        108         88         68
                              ---        ---        ---        ---       ---        ---        ---        ---
Total                       $ 300      $ 288      $ 397      $ 298     $ 324      $ 357      $ 270      $ 223
</TABLE>

The decline in wholesale mortgage originations during the period from January 1,
2002 through July 31, 2002 was largely due to turnover  among our senior account
executives and a restructuring of our production management.  This restructuring
was  largely  completed  by the end of June,  2002,  and we have  seen  positive
results in our originations since that time.

THREE MONTHS ENDED JULY 31, 2002 COMPARED TO THREE MONTHS ENDED JUNE 30, 2001

The Company  incurred a net loss of $294,000 for the three months ended July 31,
2002 compared to a net loss of $1,449,392 during the three months ended June 30,
2001. The Company's  operating loss for the respective  periods was $343,276 and
$1,185,320.

Revenues were affected by increased  retail  production and decreased  wholesale
production. Retail production increased by 50.7% for the three months ended July
31, 2002 compared to the three month period ended June 30, 2001 with  production
income increasing 43.3%. For the same periods,  wholesale  production,  however,
declined 49.5% with net gain from sale of loans declining 34.0%. The increase in
retail  production is attributable to the decrease in interest rates between the
two periods and the decrease in wholesale production is attributable to the loss
of wholesale brokerage personnel.  These personnel have since been replaced. Net
gain on sale declined less than  wholesale  production  because in the summer of
2001 the Company changed its product mix.  Accordingly,  the net gain on sale in
the earlier  period was 56 basis points and 73 basis points in the later period.
The effect of these trends was that revenues were essentially  unchanged between
the two periods,  $4,231,894 in the earlier  period and  $4,211,290 in the later
period.

Gross profit  increased in the later period by $365,171 or 31.5%.  The Company's
net  interest  expense  was $30,846  during the quarter  ended July 31, 2002 and
$292,649 during the quarter ended June 30, 2001, a favorable  decline in expense
of  $261,803  caused by both lower  interest  rates in the later  quarter  and a
shorter time in the later quarter that the Company held mortgage  loans prior to
the mortage loans being sold.

Total  indirect  expenses  declined  $476,873  largely  reflecting the Company's
efforts to reduce expenses.  Salaries and benefits declined $182,135 and general
and  administrative  expenses  declined  $197,526.  Indirect  expenses were also
favorably affected by a reduction of $100,720 in amortization expense related to
goodwill in the later quarter which, pursuant to different accounting treatments
between the two quarters, the Company no longer amortizes.

LIQUIDITY AND CAPITAL RESOURCES

During the quarter ended July 31, 2002, the Company was cash flow negative, with
the Company's cash and cash equivalents decreasing by $803,446, to $2,272,976 as
of July 31, 2002 as compared to $3,076,422  as of April 30, 2002.  The Company's
$269,526 net loss (as adjusted for depreciation and amortization of $24,474) for
the  quarter  ended  July 31,  2002  was cash  consuming,  and  other  operating
activities used cash of $4,359,683,  primarily from more loans being funded than
loans  being sold.  Financing  activities  provided  cash of  $4,089,128  as net
borrowings on financing  facilities of $3,845,471 and new  subordinated  debt of
$400,000 exceeded repayments of subordinated debt of $150,000.

The  capital  resources  utilized by the  Company to fund its  mortgage  lending
activity  are  primarily  provided by  warehouse  lenders that fund the mortgage
loans  through  a  Master  Sale  Agreement,  a  Master  Mortgage  Loan  Purchase
Agreement,  or traditional  warehouse lines of credit. 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 its net worth and cash position,  making
it more difficult to obtain adequate  financing  facilities as needed to support
further business  expansion.  As of July 31 2002, the Company had four financing
facilities for a maximum financing capacity of up to $75 million.

                                      -11-
<PAGE>

These warehouse facilities have various financial and operational covenants with
which the  Company  must  comply,  including  the  requirement  that the Company
maintain  cash  deposits   with  certain   lenders  as  additional   collateral.
Collectively these facilities require deposits of $2.75 million to be maintained
as collateral in separate bank accounts. As of July 31, 2002 the Company was not
in compliance  with two financial  covenants  with two  facilities.  The lenders
acknowledged  the  financial  covenant  violations  and have  continued  to make
warehouse  financing  available to the Company  under the terms of the financing
facilities.  There is a risk that the  providers of these  financing  facilities
could  terminate  the  financing  facility  agreements  as a result  of the debt
covenant violations. However the existing provisions included in both agreements
give both  lenders the ability to  terminate  such  related  agreements  without
cause; in one case immediately  upon  notification and in the other with 30 days
written notice. Therefore, these covenant violations do not give the lenders any
greater  contractual  right or power to terminate  their  agreements than exists
within the terms of the agreements  when the Company is in full  compliance with
all  financial  convenants.  Termination  of either or both of these  facilities
could  have a  material  adverse  effect  on the  Company's  operations  and its
financial  performance by constraining its ability to fund loans. If termination
was to occur,  the Company would have to seek  alternative  sources of financing
possibly  under less  favorable  terms.  The Company was in compliance  with all
other  financial   covenants   contained  in  its  various  warehouse  financing
facilities.   Joseph  Kristul,  CEO  and  Maria  Kristul,  President  have  both
personally guaranteed the four facilities in place at July 31, 2002.

To expand its operations, the Company needs to obtain additional warehouse lines
of credit or additional financing facilities.  The level of financing facilities
that the  Company can obtain is a multiple of the  Company's  equity.  For every
dollar  increase  in the  Company's  equity,  the  Company  expects a $12 to $15
increase in financing facility capacity.  Conversely,  every dollar reduction in
equity has the potential to constrain the Company's financing  facilities by $12
to $15. If the  Company  receives  the  additional  equity  funds it is seeking,
management of the Company will attempt to renegotiate the interest rates it pays
on existing financing facilities, and to obtain additional financing facilities.
If  successful,  this  would  increase  the  Company's  funding  capacity  while
continuing  to  improve  the  current  net  interest  margin  that  has  been  a
significant  contributor to operating losses in prior years. Failure to maintain
the existing  facilities  would have a material  adverse effect on the Company's
operations  and  its  financial  performance.   However,  we  believe  that  our
relationship with our institutional lenders is adequate at the present time.

Our overall funding  strategy is to use committed  facilities,  summarized as of
July 31, 2002:

--------------------------------------------------------------------------------
Type                            Committed Facility          Outstanding Balance
--------------------------------------------------------------------------------
Master Sale Agreement               $40,000,000                $ 8,266,000(1)
--------------------------------------------------------------------------------
Master  Mortgage  Loan Purchase      15,000,000                          0
Agreement
--------------------------------------------------------------------------------
Warehouse Line of Credit              5,000,000                  1,195,692
--------------------------------------------------------------------------------
Warehouse Line of Credit             15,000,000                  8,390,146
--------------------------------------------------------------------------------
                                    $75,000,000                $17,851,838
                                    ===========                ===========
--------------------------------------------------------------------------------

(1)      The Company  accounts for the loans  underlying  this facility as sold.
         See financial statement footnotes for additional  discussion about this
         facility. Of the total $40 million facility,  $10 million is defined as
         a "bulge" amount that is available to the Company if requested, subject
         to the absolute, sole discretion of the lender.

The Company is a party to financial  instruments with off-balance  sheet risk in
the normal  course of business  to meet the  financing  needs of its  customers.
These financial  instruments include commitments to extend credit in the form of
loans and mandatory forward delivery commitments.  These instruments involve, to
varying  degrees,  elements  of credit and  interest  rate risk in excess of the
amounts  recognized  in  the  balance  sheet.  The  mandatory  forward  delivery
commitments  also involve the risk of  nonperformance.  The Company manages this
risk  by  entering  into  these  agreements  with  major,  well-known  financial
institutions.  The contract amounts of those  instruments  reflect the extent of
involvement the Company has in particular classes of financial instruments.

                                      -12-
<PAGE>

Financial  instruments,  whose contract amounts represent credit and risk at the
indicated dates, are as follows:

                                      July 31, 2002        April 30, 2002
                                     ---------------      -----------------
   Commitments to extend credit        $64,158,050          $41,953,193
   Forward delivery commitments          7,237,566            5,000,000

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally  have fixed  expiration  dates or other  termination  clauses  and may
require  payment of a fee.  Since many of the  commitments  to extend credit are
expected to expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements.

To  facilitate  its business  activities,  the Company  undertook  the following
activities during the year ended December 31, 2001:

     1.   Expanded its 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,  which is the period of time between a mortgage loan's
          closing and its final sale to investors.

     4.   Began   implementing   new  loan   origination   software  to  improve
          productivity.

     5.   Continued to seek  additional  capital  through the sale of equity and
          debt securities.

     6.   Actively sought new warehouse lines.

During the period  from  January 1, 2002  through  July 31,  2002,  the  Company
continued  to  refine  its  efforts  with the  above  described  activities.  No
guarantees  can be made that these  activities  will result in an elimination of
historical operating losses and generation of sustained  profitability and/or an
improvement in the Company's cash position. During March 2002 the Company raised
$1.9 million, net of issuance costs, by issuing 1,503,750 new common shares.

As a result of this cash  infusion,  the Company's cash position  improved.  The
Company continues to actively seek additional capital through the sale of equity
and debt securities.

During August 2002, the Company repaid  $660,000 of the principal  amount of the
subordinated  debt and issued new  subordinated  debt in the amount of  $500,000
with substantially the same terms as the existing subordinated debt.

During  May 2002,  the  Company  provided a loan in the  amount of  $100,000  to
America's Mortgage Center, Inc. ("AMCI"). AMCI subsequently notified the Company
that it is experiencing financial difficulty, and has provided certain assets to
the Company in  fulfillment of the principal  amount of the loan.  Management of
the Company  expects to recover this loan with the assets  pledged and therefore
has not provided an allowance against the principal balance. The Company has not
recorded any interest income in connection with this loan. Mr. Eugene Kristul, a
former  employee of AMCI, has recently  become an employee of the Company and is
the CEO's son.

Subsequent  to July 31 2002,  the  Company  accessed  the Master  Mortgage  Loan
Purchase  Agreement and was required to set aside cash  collateral in the amount
of $1,500,000.

Critical Accounting Policies

                                      -13-
<PAGE>

The  Company's  critical  accounting  policies,  including the  assumptions  and
judgments  underlying  them,  are  disclosed  in  the  Notes  to  the  Financial
Statements  included in the Form 10-KSB for the year ended April 30, 2002. These
policies  have been applied  consistently  in all material  respects and address
matters such as: revenue recognition, loan inventory valuation, asset impairment
recognition   and  stock  based   compensation   and  fair  value  of  financial
instruments.  While the estimates and judgments  associated with the application
of these  accounting  policies  may be  affected  by  different  assumptions  or
conditions, the Company believes the estimates and judgments associated with the
reported amounts are appropriate in the circumstances.

                                      -14-
<PAGE>

PART 2

Item 1. LEGAL PROCEEDINGS

On February 23, 2001, William Russell and Teresa Saldivar,  former principals of
LRS,  Inc.,  filed a complaint  in the  Superior  Court of Santa  Clara  County,
California alleging that, among other claims, the Company violated its agreement
whereby  the  Company  purchased  LRS,  Inc.  This  complaint  alleges  that  in
connection with the  acquisition,  the Company failed to pay William Russell and
Teresa  Saldivar a percentage of profits from certain loans of LRS, Inc. held at
the  time of the  acquisition  as  required  by the  contracts  relating  to the
acquisition.

On March 8, 2001, the Company  terminated its employment of William  Russell and
Teresa Saldivar.  On April 4, 2001,  William Russell and Teresa Saldivar filed a
second complaint in the Superior Court of Santa Clara County against the Company
based upon breach of  contract,  wrongful  termination  in  violation  of public
policy,  breach of  covenant  of good faith and fair  dealing,  and  declaratory
relief.  The  Company  filed a  cross-complaint  in this action  asserting  that
William  Russell  and  Teresa  Saldivar  violated  their  employment  agreement,
breached  their  duty  of  loyalty,   intentionally   interfered  with  economic
relationships and negligently interfered with economic relationships.

The issues  have now been moved to an  arbitration  proceeding  and the  Company
intends to vigorously pursue its claim in this action. The Company believes that
the claims of the former principals of LRS, Inc. are without merit. However, the
costs  of a  negative  outcome  could  exceed  $400,000  from  attorney's  fees,
compensatory and punitive damages and other costs.

The  Company is  involved in other  legal  proceedings  arising in the  ordinary
course  of  business.  The  ultimate  outcome  of these  proceedings  cannot  be
determined   because  of  the  uncertainties  that  exist.  In  the  opinion  of
management,  the  disposition  of all these  other  matters  that are pending or
asserted will not have a materially  adverse effect on the financial position of
the Company.

Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

During  March 2002 the Company  sold  1,503,750  shares of common  stock to five
investors  for  aggregate  proceeds,  net of issuance  costs,  of  approximately
$1,900,000.

During  February 2002,  88,500  previously  issued  warrants were exercised in a
cashless  transaction,  resulting  in the  issuance  of 54,699  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.

                                      -15-
<PAGE>

                Certification Required by 18 U.S.C. Section 1350
                 Section 906 of the Sarbanes - Oxley Act of 2002


In connection  with the filing by  Transnational  Financial  Network,  Inc. (the
"Company")  of the  Quarterly  Report on Form 10-QSB for the three  months ended
July 31, 2002 (the "Report"),  the undersigned hereby certifies,  to the best of
his knowledge:


     1.   The Report fully complies with the  requirements  of Section 13(a) and
          15(d) of the Securities Exchange Act of 1934, and


     2.   The  information  contained  in the  Report  fairly  presents,  in all
          material respects,  the financial  condition and results of operations
          of the Company.


Transnational Financial Network, Inc.


/s/ Joseph Kristul
Joseph Kristul
Chief Executive Officer and
Principal Financial Officer

                                      -16-
<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.


October 11, 2002                     /s/ Joseph Kristul
                                     Joseph Kristul, Chief Executive Officer and
                                     Principal Financial Officer

                                      -17-