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


                                  Form 10-QSB/A
                                 Amendment No. 1


                                   (Mark One)

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

                  For the fiscal period ended October 31, 2005

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

             For the transition period from __________________ to ______________

                         Commission file number: 1-14219


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



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

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

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



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


Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer (Check one):

Large accelerated filer       Accelerated filer          Non-accelerated filer X

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

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 December 9, 2005. 6,791,360



<PAGE>




                      TRANSNATIONAL FINANCIAL NETWORK, INC.
                                October 31, 2005
                                    UNAUDITED


                              Explanatory Paragraph


This Amendment No. 1 to our Quarterly Report on Form 10-QSB for the quarter
ended October 31, 2005 initially filed with the Securities and Exchange
Commission on December 15, 2005 is being filed to reflect restatements of
Transnational Financial Network's (TFN) Condensed Balance Sheets as of October
31, 2005 and April 30, 2005, the related Condensed Statements of Operations for
the three months and six months ended October 31, 2005 and 2004, and the related
Condensed Statements of Cash Flows for the six months ended October 31, 2005 and
2004. These restatements reflect the effects of adjustments for the accounting
related to various matters detailed in Note 9 to the Condensed Financial
Statements. These restatements reflect adjustments for transactions related to
the proper accounting for mortgage-related financial instruments under FAS 133.
Except with respect to these matters, the Financial Statements in this Form
10-QSB/A do not reflect any events that have occurred after the Form 10-QSB for
the quarter ended October 31, 2005 was filed.




                                TABLE OF CONTENTS

PART I.    FINANCIAL INFORMATION

<TABLE>
                                                                                                              Page
Item 1.  Financial Statements

<S>                                                                                                     <C>
         Condensed Balance Sheets as of October 31, 2005 (Unaudited) and April 30, 2005                        F-2
         Condensed Statements of Operations for the six months ended October 31, 2005 and 2004                 F-3
         Condensed Statements of Cash Flow for the six months ended October 31, 2005 and 2004                  F-4
         Notes to the Condensed Financial Statements                                                        F-5 - F-9


Item 2   Management's Discussion and Analysis of Financial Condition and Results of Operations          MD - 1 - MD - 17

Item 3.  Controls and Procedures                                                                               O-1

Part II. OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8K                                                                       O-1



Signatures                                                                                                     O-2


</TABLE>

                                       F-1

<PAGE>



PART I. FINANCIAL INFORMATION

ITEM 1.
FINANCIAL STATEMENTS

<TABLE>
                      TRANSNATIONAL FINANCIAL NETWORK, INC.
                            CONDENSED BALANCE SHEETS
                    As of October 31, 2005 and April 30, 2005


                                                                       October 31, 2005          April 30, 2005
                                                                       ----------------          --------------

                                                                       (As Restated)             (As Restated)

                                                                       (unaudited)

ASSETS

<S>                                                                    <C>                       <C>
Cash and cash equivalents                                              $   3,604,077             $   3,058,140
Restricted cash                                                            1,025,000                 1,020,000
Short-term mortgage related receivables, net of allowance
   for early loan payoff penalties of $20,406 and $18,313
   respectively                                                              868,505                   639,550
Mortgage loans held for sale                                                 890,130                 1,721,450
                                                                                                             -
Goodwill                                                                   1,257,789                 1,257,789
Property and equipment, net of accumulated depreciation of

     $940,794 and $904,678, respectively                                     107,989                    94,999
Fair value of derivative financial instruments                                52,467                    14,905
Other assets                                                                 316,384                   313,234
                                                                         -----------               -----------
TOTAL ASSETS                                                           $   8,122,341             $ 8,120,067
                                                                         ===========               =========


LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES


Accrued interest payable                                               $      76,097             $      62,184
Accounts payable and other liabilities                                       585,564                   682,411
Income taxes payable                                                             336                       336
Fair value of derivative financial instruments                                51,273                    56,136
Subordinated debt                                                          3,737,700                 3,737,700
                                                                         -----------               -----------
TOTAL LIABILITIES                                                        4,450,970                   4,538,767
                                                                         -----------               -----------


STOCKHOLDERS' EQUITY


Preferred stock, no par value: 2,000,000 shares
   authorized; no shares issued or outstanding                                     -                         -
Common stock, no par value: 20,000,000 shares
   authorized; 6,791,360 shares issued and outstanding

   at October 31, 2005 and April 30, 2005 respectively.                   13,559,038                13,559,038
Accumulated deficit                                                       (9,887,667)               (9,977,738)
                                                                          -----------               ----------
TOTAL STOCKHOLDERS' EQUITY                                                 3,671,371                 3,581,300
                                                                         -----------               -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                             $   8,122,341             $   8,120,067
                                                                           =========                 =========




</TABLE>

                                       F-2

              See accompanying notes to these financial statements.




<PAGE>


                      TRANSNATIONAL FINANCIAL NETWORK, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                For the Periods Ending October 31, 2005 and 2004

                                   (Unaudited)
<TABLE>


                                               For the 3 Months Ended 10-31            For the 6 Months Ended 10-31
                                               ----------------------------            ----------------------------
                                                 2005         2004    % Chg              2005         2004    % chg
                                                 ----         ----    -----              ----         ----    -----

                                          As Restated  As Restated                As Restated  As Restated

Revenue:

<S>                                        <C>          <C>          <C>           <C>          <C>          <C>
Net Gain on Sale of Loans                  $1,394,892   $1,355,058     2.9%        $3,291,919   $2,458,199    33.9%
Production Income                           1,524,186    1,074,001    41.9%         3,019,037    2,432,722    24.1%
Other Income                                   49,721       20,899   137.9%            70,004       50,424    38.8%
                                               ------       -------                    ------       -------

Total Revenue                               2,968,799    2,449,958    21.2%         6,380,960    4,941,345    29.1%


Direct Expenses:

Commissions & Production Incentives           921,874      657,892    40.1%         1,965,627    1,484,771    32.4%
Production Expenses                           208,319      152,140    36.9%           417,099      306,596    36.0%
Early Loan Payoff Penalties                      -          15,000       nm            15,000       18,500   -18.9%
Pair-Off Fees                                                1,500       nm                          3,000       nm
                                                             ------                                  ------


Total Direct Expenses                       1,130,193      826,532    36.7%         2,397,726    1,812,867    32.3%

Interest Income (Expenses):

Interest Income from loans in warehouse       353,418      254,586    38.8%           821,788      492,471    66.9%
Interest Expense on loans in warehouse       (309,237)    (206,974)   49.4%          (714,978)    (371,901)   92.2%
Warehouse transaction fees                    (31,700)                   nm           (77,174)                   nm
                                             ---------

Net warehouse interest income (expense)        12,481       47,612   -73.8%            29,636      120,570   -75.4%


Interest Expense - Subordinated Debt          (87,081)     (39,890)  118.3%          (174,162)     (99,205)   75.5%

Net Interest Income (Expense)                 (74,600)       7,722       nm          (144,526)      21,365       nm

Gross Profit on Mortgage Activities         1,764,006    1,631,148     8.2%         3,838,708    3,149,843    21.9%


Indirect Expenses:

Salaries & Benefits                         1,221,904      895,453    36.5%         2,340,700    1,846,062    26.8%
General & Administrative                      520,847      550,879    -5.5%         1,107,125    1,110,340    -0.3%
Occupancy                                     175,502      174,406     0.6%           350,143      348,215     0.6%
Depreciation and Amortization                  17,960       17,244     4.2%            36,116       36,100     0.0%

Total Indirect Expenses                     1,936,213    1,637,982    18.2%         3,834,084    3,340,717    14.8%

Other Interest Income (Expense)                24,649        6,275       nm            43,022        5,887       nm
Change in fair value of financial instruments  (4,754)      30,115       nm            42,425       58,609   -27.6%
                                                ------      ------                     ------       ------   ------
Total Other Income (Expense)                   19,895       36,390   -45.3%            85,447       64,496    32.5%
Net Operating Income (Loss)                 $(152,312)     $29,556       nm           $90,071    $(126,378)      nm

Basic net income (loss) per share             $(0.02)        $0.00                      $0.01      ($0.02)
Fully diluted income (loss) per share         $(0.02)        $0.00                      $0.01      ($0.02)


Weighted-average shares outstanding

Basic                                       6,791,360    6,794,787                  6,791,360    6,794,787
Diluted                                     6,791,360    6,806,234                  6,795,905    6,794,787





</TABLE>

                                       F-3

              See accompanying notes to these financial statements.


<PAGE>


                      TRANSNATIONAL FINANCIAL NETWORK, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
               For the Six Months Ended October 31, 2005 and 2004
                                   (Unaudited)

<TABLE>
                                                                         2005                      2004
                                                                  ------------------         -----------------

                                                                  (As Restated)              (As Restated)


Cash flows from operating activities:


<S>                                                               <C>                        <C>
Net income (loss)                                                 $           90,071         $        (126,378)
Adjustments to reconcile net (loss) income to net cash
   provided (used) by operating activities:
     Depreciation & amortization                                              36,116                    36,100
     Provision for early loan payoffs                                                                   18,500
     Changes in Restricted Cash Requirement                                   (5,000)                  900,000
     Fair Value of Financial Instruments                                     (42,425)                  (58,609)

Net effect of changes in assets and liabilities:
     Other assets                                                             (3,150)                   63,399
     Accrued interest payable                                                 13,913                    (6,672)
     Accounts payable and other liabilities                                  (96,847)                 (129,345)
                                                                                   -
Net effect of changes in mortgage lending activities:
     Short-term mortgage related receivable                                 (228,955)                 (119,992)
     Mortgage loans originated for sale                                 (230,456,551)             (192,323,930)
     Proceeds from sales of mortgage loans                               231,287,871               191,308,646
                                                                     ---------------           ---------------

Net cash provided (used) by operating activities:                            595,043                  (438,281)
                                                                     ---------------           ----------------


Cash flows from investing activities:

Purchases of property and equipment                                          (49,106)                   (8,069)

Proceeds from Securities Held to Maturity                                                              915,234
                                                                     ---------------           ---------------
Net cash (used) provided by investing activities:                            (49,106)                  907,165
                                                                     ---------------           ---------------

Cash flows from financing activities:

Borrowing on Subordinated debt                                                                         144,000
Repayments on Subordinated debt                                                                       (400,000)
Warehouse Payable - Net of Borrowings                                                                  159,263
Payment on Settlement payable                                                      -                  (564,603)
Payment on Capital Leases obligations                                              -                   (12,245)
Repurchase Common Stock                                                            -                   (37,198)
                                                                     ---------------           ---------------


Net cash (used) by financing activities:                                           -                  (710,783)
                                                                     ---------------           ---------------


Net increase (decrease) in unrestricted
     cash and cash equivalents                                               545,937                  (241,899)

Unrestricted cash and cash equivalents, beginning of period                3,058,140                 1,585,034
                                                                     ---------------           ---------------

Unrestricted cash and cash equivalents, end of period             $        3,604,077         $       1,343,135
                                                                     ===============           ===============

Interest paid                                                     $          813,044         $         490,984
Income taxes paid                                                 $               -0--       $          20,918

</TABLE>

                                       F-4

              See accompanying notes to these financial statements.

<PAGE>



Note 1 - Description of Operations and Summary of Significant Accounting
Policies


The accompanying financial statements of Transnational Financial Network, Inc.
(the "Company") as of and for the six-month periods ended October 31, 2005 and
2004 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 year ended April 30, 2005, in addition to our most recently filed
Form 8-K relating to non-reliance on previous financial statements as well as
Note 9 - Restatements. 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 six-months
ended October 31, 2005 and 2004 are not necessarily indicative of the results to
be expected for the full year. The Company operates in one business segment -
mortgage banking.


Note 2 - Summary of Significant Accounting Policies

Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make certain estimates and assumptions, including the
depreciable lives of assets, the fair value of goodwill and financial
derivatives, and the realizable portion of deferred tax assets, that affect the
reported amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

Statement of Cash Flows - For purposes of the statement of cash flows, the
Company considers cash equivalents to be short-term, highly liquid investments
used in its cash management activities and generally having a remaining maturity
of three months or less from the date of purchase.

Income Taxes - The Company uses the asset and liability method in accounting for
deferred income taxes. Deferred tax assets and liabilities are calculated by
applying applicable tax laws to the differences between the financial statement
base and the tax base of assets and liabilities. The effect on deferred taxes of
a change in tax rates is recognized in income in the period that includes the
enactment date.


Stock-Based Compensation - The Company follows Accounting Principles Board (APB)
25 in accounting for its employee stock options. The disclosure provisions of
Statement of Financial Accounting Standards (SFAS) 148 have been incorporated
into these financial statements and accompanying footnotes.

The following table illustrates the effect on net income (loss) that would have
resulted if the Company had applied the fair value recognition provisions of
Financial Accounting Standard No. 123, Accounting for Stock-Based Compensation,
as amended by SFAS 148, Accounting for Stock-Based Compensation - Transition and
Disclosure, to stock-based employee compensation:



                                      F-5
<PAGE>


                      Transnational Financial Network, Inc.

                    Notes to Financial Statements (Continued)


<TABLE>

                                   Three Months Ended              Six Months Ended
                                   ------------------              ----------------
                                 October 31   October 31          October 31    October 31
                                   2005         2004                2005          2004
                                   ----         ----                ----          ----


                           As Restated      As Restated       As Restated       As Restated

<S>                               <C>              <C>               <C>         <C>
Net (loss) income:

As reported                       (152,312)        29,556            90,071      (126,378)

Deduct:  fair value amount                0      (41,380)                 0       (98,187)
                                  ---------     ---------           ---------    --------
Pro forma                         (152,312)      (11,824)            90,071      (224,565)


Basic (loss) income per
  common share:

As reported                           (0.02)        0.00               0.01         (0.02)
Deduct:  fair value amount             0.00         0.00               0.00         (0.01)
                                       ----         ----               ----         ------
Pro forma                             (0.02)        0.00               0.01         (0.03)


Diluted (loss) income per
  common share:

As reported                           (0.02)        0.00               0.01        ( 0.02)
Deduct:  fair value amount             0.00        (0.00)              0.00         (0.01)
                                       ----        ------              ----        -------
Pro forma                             (0.02)        0.00               0.01         (0.03)

</TABLE>

There were no options granted during the quarter ended October 31, 2005. There
were 29,000 options granted during the quarter ended October 31, 2004. As
mentioned in Note 6 below, the Board of Directors on March 10, 2005, elected to
accelerate the vesting of all outstanding options as of that date. All
outstanding options were fully vested as of April 30, 2005.


Reclassification - With the reexamination of the application of SFAS 133 and
related pronouncements to our operations, we have made the following changes to
the form of our presentation:

-             On the Balance Sheet, we show both the asset and liability amounts
              related to SFAS 133 calculations with respect to mortgage-related
              financial instruments. In the past we netted these two figures
              against one another and showed only the net amount.

-             On the Statement of Operations, we have moved back to the
              presentation form we used prior to April 30, 2005. I.e., we now
              report a separate category of Other Income (Expense) below the
              operating income line wherein we report both non-warehouse
              interest income and changes in fair value of financial
              instruments.

Note 3 - Financing Facilities

As of October 31, 2005, the Company had a maximum mortgage loan financing
capacity of $75 million through two master sale agreements, or warehouse lines
of credit. Under these arrangements, the lending financial institutions purchase
a 100% loan participation interest in each loan upon the Company obtaining a
firm forward sale delivery commitment from investors and upon the financial
institutions' approval of the loan based on their underwriting criteria. The
Company recognizes income from loans transferred under these lines as a gain on
sale immediately upon the purchase and funding of the loans by the financial
institutions.

In connection with these agreements, the Company may be required to repurchase
certain loans that, subsequent to acquisition by the financial institutions,
fail to meet certain representations and warranties set forth in the agreements
at the date of the sale. During the six-month period ended October 31, 2005 the
Company was required to repurchase three loans in the total amount of $395,500.
All of the loans were refinanced by the borrowers and the Company recovered its
entire principal, as well as the direct and

                                      F-6
<PAGE>

                      Transnational Financial Network, Inc.

                    Notes to Financial Statements (Continued)

carrying costs associated with these loans. During the six-month period ended
October 2004, the Company was required to repurchase one loan in the amount of
$295,548. Loan interest charges incurred in connection with the purchase of
loans 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. During the intervening period the
Company sub-services the loans on behalf of the financial institutions.

The first master sale agreement provides a credit facility of $15 million as of
October 31, 2005. Under this arrangement, an additional bulge capacity of $20
million is available if needed, bringing the total capacity under this
arrangement to $35 million. The Company has not used this interim bulge capacity
to date. Interest on the $15 million portion of the line is at the Prime Rate or
3.99%, whichever is higher. Prime was 6.75% at October 31, 2005. Interest on the
remaining $20 million of the line is 0.05% higher than that charged on the $15
million portion. The rate paid by the Company on this line as of October 31,
2005 was 6.75%. The Company is required to maintain a non-interest bearing cash
collateral deposit with this lender of $1,000,000, which has been included as
restricted cash in the balance sheets.

The second master sale agreement provides a credit facility of $40 million as of
October 31, 2005. Interest on the facility is at 1 month LIBOR plus a margin
ranging from 1.875% to 2.50%. The rate paid by the Company on this line as of
October 31, 2005 was between 6.08% and 6.58%. The Company is required to
maintain a non-interest bearing cash collateral deposit with this lender of
$25,000, which has been included as restricted cash in the balance sheets.

These two master sale agreements are each for a one-year period and are
typically renewed annually. However, the agreements give each party the right to
terminate the agreement upon 30 days' written notice.


These financing facilities have various customary covenants including minimum
liquidity, profitability and net worth requirements, and limitations on other
indebtedness. If we fail to comply with any of these covenants or otherwise
default, the lender has the right to terminate the facility and require
immediate repayment that may require sale of the collateral at less than optimal
terms. As of October 31, 2005 the Company was not in compliance with its
quarterly net income financial covenant but anticipates compliance prior to its
fiscal year end, April 30, 2006.


The CEO and the President of the Company have both personally guaranteed the
above financing facilities.

Note 4 - Goodwill

Goodwill is attributable to the purchase of the Company's Campbell branch
(formerly LRS, Inc.) in 1999.

Note 5 - Subordinated Debt

As of October 31, 2005, the Company had a total of $3,737,700 of subordinated
debentures outstanding. In January, 2005, we received $2,687,700 of convertible
subordinated debt that is due on January 12, 2015, bears interest at 8.50% and
is convertible into common shares at $1.00 per share. The remaining $1,050,000
of subordinated debt bears interest at 10%, and has maturities ranging from
October 31, 2006 to October 1, 2007.

Subordinated debt interest expense of $87,081 and $39,890 was incurred in the
three-month periods ended October 31, 2005 and 2004, respectively.

Note 6 - Stock Option Programs and Warrants to Purchase Common Stock

On March 10, 2005, the Board of Directors of the Company accelerated the vesting
of all outstanding options, such that on that date, all outstanding options are
fully vested. The Company accelerated the vesting of the options principally to
avoid the administrative complexities of required disclosures associated with
SFAS 123. The Board of Directors continues to evaluate the situation with
respect to future option issuance. The acceleration of options resulted in the
immediate vesting of options to purchase 228,989 shares of the Company's common
stock. Using the intrinsic value method for valuing these accelerated employee
options, compensation expense of $2,010 was recognized in the year ended April
30, 2005. Using


                                      F-7
<PAGE>

                      Transnational Financial Network, Inc.

                    Notes to Financial Statements (Continued)

the fair value method for valuing these accelerated independent
contractors' options, an additional $4,402 in expense was recognized in the year
ended April 30, 2005.

Information about stock options outstanding as of October 31, 2005 is summarized
as follows:



<PAGE>

<TABLE>

                                                                       Weighted                           Weighted
                                                                        Average                            Average
                                                       Average         Exercise                           Exercise
                  Range of                            Remaining        Price of                           Price of
                  Exercise           Options         Contractual        Options           Options          Options
                   Prices          Outstanding      Life in Years     Outstanding       Exercisable      Exercisable

<S>             <C>                 <C>                 <C>              <C>             <C>                <C>
                $0.22 - $1.00        692,345            6.04             $0.73            692,345           $0.73
                $1.01 - $2.45        243,201            7.23             $1.24            243,201           $1.24
                    $7.50            258,000            3.53             $7.50            258,000           $7.50
                                     -------                                              -------
                                    1,193,546           6.15             $2.30           1,193,546          $2.30
                                    =========                                            =========
</TABLE>

As of October 31, 2005, the Company had options outstanding under the programs
described herein.

The Company has two stock option plans: the 1998 Stock Compensation Plan ("1998
Plan") for employees and the 2000 Stock Incentive Plan ("2000 Plan") for
directors, officers and other employees which replaced the 1998 Plan in February
2000.

Options issued and outstanding from the 1998 Plan will continue to be honored,
but no additional options may be issued under the 1998 Plan. As October 31,
2005, there were a total of 18,000 share options outstanding under the 1998
Plan, all with an exercise price of $7.50 per option, which expire in June 2009.

In March 1999, four Directors of the Company were granted 240,000 non-qualifying
options to purchase common stock at an exercise price of $7.50 per share. The
options were vested on the grant date and expire ten years from the date of
issuance. Of the total grant, 180,000 options may be exercised only in the event
of a change in control as defined in the option agreement. There are no
forfeiture provisions associated with the options granted, accordingly, the
option granted to three of the four directors who subsequently resigned remain
outstanding until they are exercised or expire.

In June 2002, the Board of Directors of the Company unanimously granted to
Joseph Kristul, the Chief Executive Officer of the Company, an option to
purchase 300,000 shares of the Company's common stock at an exercise price of
$0.73 per share. The shares will be unregistered. The options are vested as of
April 30, 2005 and as noted above expire in four years. Under the 2000 Plan, a
total of 750,000 shares were initially reserved. The share reserve increases by
4% of total common shares outstanding each year, beginning on January 1, 2001.
The maximum annual increase in the share reserve is limited to 400,000 shares.

Accordingly, the following table is a roll forward of the share reserve limit
through October 31, 2005:

                                                       Number of Options

                  Initially Reserved                      750,000
                  January 1, 2001                         171,172
                  January 1, 2002                         205,503
                  January 1, 2003                         270,407
                  January 1, 2004                         272,640
                  January 1, 2005                         271,654
                                                         --------
                  Reserve amount at October 31, 2005    1,941,376


                                      F-8
<PAGE>
                      Transnational Financial Network, Inc.

                    Notes to Financial Statements (Continued)

The table below summarizes aggregate activity for all options programs for the
three-month period ended October 31, 2005:
                                              All Programs
                                     ------------------------------------
                                                                 Weighted
                                                                  Average
                                         Stock                   Exercise
                                         Options                    Price

Outstanding at April 30, 2005           1,193,546                   $2.30
Grants and Adjustments                          -                       -
Forfeitures                                     -                       -
                                      -----------                 -------
Outstanding at October 31, 2005         1,193,546                   $2.30
                                      ===========                 =======

As of October 31, 2005, there were 45,000 warrants to purchase shares of the
Company's common stock outstanding. The exercise prices of the warrants ranged
from $0.55 to $7.50.


Note 7 - Basic and Diluted Net Income (Loss) Per Share


Basic net income (loss) per share is based on net income (loss) divided by the
weighted-average common shares outstanding. Diluted net income (loss) is
computed based on the weighted-average number of common shares outstanding
adjusted for potentially dilutive securities, which include stock options,
warrants and contingently convertible subordinated debt. The computations of
basic and diluted net income per share are as follows:
<TABLE>
                                                         Three Months Ended                  Six Months Ended
                                                         ------------------                  ----------------
                                                      October 31      October 31         October 31       October 31
                                                          2005           2004                2005           2004
                                                          ----           ----                ----           ----

<S>                                                   <C>             <C>                <C>             <C>
Net (loss) income                                     $ (152,312)     $   29,556         $   90,071      $ (126,378)
Weighted average of shares outstanding                 6,791,360       6,794,787          6,791,360       6,794,787
Basic net (loss) income per share                       $ (0.02)        $ 0.00                $0.01        $ (0.02)
Effect of dilutive options                                     -          11,447              4,545                -
Diluted weighted average of shares outstanding         6,791,360       6,806,234          6,795,905        6,794,787
Diluted net income (loss) per share                     $ (0.02)        $ 0.00               $ 0.01        $ (0.02)
</TABLE>

For the three months ending October 31, 2005 and for the six months ending
October 31, 2004, the effect of potentially dilutive securities in the
calculation of net loss per share was anti-dilutive. Potentially dilutive
securities were 4,166,772 and 726,166 as of October 31, 2005 and 2004,
respectively.

Note 8 - Fair Value of Financial Instruments
A summary of the total contract value of the Company's exposure to off-balance
sheet credit risk as of October 31, 2005 and April 30, 2005, including financial
instruments whose contract amount represents credit risk only is as follows:
                                              October 31, 2005    April 30, 2005

Commitments to extend credit                    $  27,874,715      $  21,772,820
Mandatory forward delivery commitments              3,471,550          2,741,500

Commitments to extend credit are contractual agreements entered into with
customers to fund mortgage loans, which remain valid as long as there is no
violation of any condition established in the contract. These commitments
generally have fixed expiration dates or other termination clauses. 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 mandatory 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. If the Company cannot deliver the agreed-upon loans into the
commitment

                                      F-9
<PAGE>
                      Transnational Financial Network, Inc.

                    Notes to Financial Statements (Continued)

by the expiration date, the Company is subject to a financial penalty
("pair-off fee").

Note 9 - Restatements

As disclosed in a Form 8-K filing dated February 23, 2006, pursuant to internal
management review, our management, audit committee, and outside independent
accountant, Burr, Pilger & Mayer, LLP have concluded that our accounting for the
fair value of financial instruments pursuant to SAB 105, which we adopted at the
end of fiscal year 2004, and SFAS 133 has been incorrect.

There were two errors detected. First, there was an error in the underlying
worksheets calculating the change in value of our locked pipeline of mortgage
loan commitments to borrowers. This error resulted in a reversal of the sign of
the change in value the Locked Pipeline. Second, we did not properly account for
the derivative value of the Best Efforts loan locks we secure with secondary
market investors upon making loan commitments to borrowers.

We report the "Fair value of derivative financial instruments" as an asset or
liability on our balance sheet. The change in this amount from period to period
is included in our statement of operations.

These matters affect our Annual Report on Form 10-KSB for the years ended April
30, 2004 and 2005 and our Quarterly Reports on Form 10-QSB for the quarters
ended July 31, October 31, 2004 and 2005 and our Quarterly Report on Form 10-QSB
for the quarter ended January 31, 2005.

Upon completion of this filing of our Form 10-Q/A for the period ended October
31, 2005, we will file the following amended filings:

o        Form 10-KSB for the year ended April 30, 2005 with amended financial
         reports for the fiscal year ended April 30, 2004.

o        Form 10-QSB for the quarter ended July 31, 2005 with amended financial
         reports for the comparable prior year period.

Within this current filing, we are restating the balance sheet at October 31,
2005 and 2004 and the results of operations for the quarter and six months ended
October 31, 2005 and 2004 and the balance sheet for April 30, 2005. The effects
of these restatements are immaterial to Revenues, Assets, Liabilities and
Equity. Because of the volatility of our net income, the restatements are
material on percentage basis to net income.

The table below presents the changes to the Statement of Operations for the
second quarter and six months for the period ended October 31, 2005 and the
changes to the balance sheet for the period ending October 31, 2005 and 2004 and
April 30, 2005.

<TABLE>
                                    Second Quarter ended October 31, 2005          Six Months ended October 31, 2005
                                    -------------------------------------          ---------------------------------
                                 As Reported          Restated     % Chg.    As Reported          Restated     % Chg.
                                 -----------          --------     ------    -----------          --------     ------
Changes in fair value
<S>                               <C>               <C>          <C>            <C>               <C>       <C>
 of financial instruments         $  (38,836)       $   (4,754)   87.8%         $ 32,111          $ 42,425    32.2%
Net Loss                          $ (186,394)       $ (152,312)  -18.3%         $ 79,757          $ 90,071    12.9%
Earnings per Share                  $ (0.03)          $ (0.02)     0.0%            $ 0.01           $ 0.01   -22.2%
</TABLE>

<TABLE>
                                    Second Quarter ended October 31, 2004          Six Months ended October 31, 2004
                                    -------------------------------------          ---------------------------------
                                 As Reported          Restated     % Chg.    As Reported          Restated     % Chg.
                                 -----------          --------     ------    -----------          --------     ------
Changes in fair value
<S>                               <C>               <C>          <C>            <C>              <C>         <C>
 of financial instruments         $   33,000        $   30,115    -8.7%         $(124,900)       $  58,609    146.9%
Net Loss                          $   32,441        $   29,556    -8.9%         $(309,887)       $(126,378)   -59.2%
Earnings per Share                  $  0.00          $   0.00      0.0%           $(0.05)           $(0.02)   -60.0%
</TABLE>



                                      F-10
<PAGE>
                      Transnational Financial Network, Inc.

                    Notes to Financial Statements (Continued)

Balance Sheet Items at:
October 31, 2005             As Reported          Restated         %Chg
----------------             -----------          --------         ----
Fair Value
of financial Instruments-
Asset                                  -            52,467           nm
(Liability)                      (15,385)          (51,273)          nm
                                  -------          --------          --
Net                              (15,385)            1,194         -107.8%
Accumulated Deficit            9,904,246         9,887,667             .2%

Balance Sheet Items at:
April 30, 2005               As Reported          Restated        % Chg
----------------------------------------          --------        -----
Fair value
of financial instruments-
Asset                                  -           $14,905
(Liability)                     $(47,496)         $(56,136)
                                  -------           -------
Net                             $(47,496)         $(41,231)    -13.2%
Accumulated Deficit           $9,984,003        $9,977,738      nm


Balance Sheet Items at
October 31, 2004             As Reported          Restated    %Chg
----------------             -----------          --------
 Fair value
of financial instruments-
Asset                            $50,100           $70,627      41.0%
Liability                              -            (7,840)      nm
                                 -------           -------
Net                              $50,100           $62,787      25.3%
Accumulated Deficit           $6,395,195        $6,382,508      -0.2%


                                      F-11
<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.

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 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.

QUARTER AND SIX MONTHS ENDED OCTOBER 31, 2005 COMPARED TO QUARTER AND SIX
MONTHS ENDED OCTOBER 31, 2004


For the recently ended quarter, year-over-year revenues increased 21%, gross
profits increased 8% and net income swung from a profit of about $30,000 to a
loss of $152,000. For the six months, revenues increased 29%, gross profits
increased 22% and net income swung from a loss of about $126,000 to a profit of
$90,000.


The following table shows the Company's wholesale and retail production trends
by fiscal quarter for the last nine fiscal quarters:

<TABLE>
                                     TABLE 1
                               ORIGINATION VOLUMES
                                  ($ millions)

Quarter Ended           10-31-05    7-31-05    4-30-05   1-31-05   10-31-04 7-31-04   4-3-04     1-31-04   10-31-03
-------------           --------    -------    -------   -------   -------- -------   ------     -------     ------

<S>                      <C>        <C>        <C>     <C>         <C>       <C>       <C>       <C>        <C>
Wholesale                $  100     $  130     $  84   $    91     $   94    $    98   $   128   $   103    $  135
Retail                       69         79        71        72         64         83       144        88       183
                         ------     ------     -----   -------     ------    -------   -------   -------    ------

Total                    $  169     $  209     $ 155    $  163    $   158    $   181   $   272   $   191    $  318
                         ======     ======     =====    ======    =======    =======   =======   =======    ======
</TABLE>

REVENUE ANALYSIS

In the second quarter, our overall Revenues increased 18%, higher than the 7%
increase in our total mortgage originations. The two principal factors why our
year-over-year revenue comparisons in the second quarter differ from our 7%
increase in the dollar value of loans are:

1.       Production Income increased by 42%. Production Income is heavily driven
         by loan unit volume, rather than loan dollar volume. We experienced a
         25% increase in our wholesale loan unit volume and a 23% increase in
         our retail loan unit volume year-over-year. This loan unit volume
         growth is largely the result of our increased expansion in the Arizona
         and Kansas markets where our average loan sizes are approximately half
         of what they have historically been in our established territories of
         the San Francisco Bay area and Southern California.

                                      MD-1
<PAGE>

2.       We received about $184,000 less in foward commmitment payout fees in
         the recently ended quarter than in the previous year, thus limiting the
         increase in our Gain on Sale of Loans to only 1%, about a 7% reduction.

Our established markets in Northern and Southern California may be beginning to
experience the effects of higher interest rates. These effects are being
manifest in loan volumes being under pressure and average loan sizes possibly
diminishing as interest rates increases lower loans' affordability.


In the first six months of our current fiscal year, Revenues increased by 30%,
higher than our 7% increase in the dollar value of our total mortgage
originations. Here are the major reasons why:

1.       Our Gain on Sale of Loans increased 35% in the first six months of the
         year, with nearly the entire gain having occurred in our first quarter.
         As explained in our last report, this was the result of a loan mix
         shift toward higher margin types of loans. Clearly, this mix shift
         effect on our year-over-year results waned substantially in the second
         quarter.

2.       The geographic mix of our loans is shifting to markets (Arizona and
         Kansas) with lower average loan sizes as we expand in these markets and
         hold ground in our established markets. Thus Production Income for the
         first half increased 24% year-over-year, largely reflecting the effects
         in the second quarter, explained above.


As we noted in our last two reports, about half way through our last fiscal
year, we set up a wholesale origination operation (Alt Funding) that operates in
parallel to our existing one. The purpose is to focus on a different market
segment than the Alt-A borrowers of our traditional focus. This market is for
borrowers with lower credit scores, but higher than what normally sees in
sub-prime mortgage lending. We consider them to be Alt-A-Minus borrowers. We
initially set this operation up on a pilot basis in our Arizona office, and are
rolling it out to our other markets.

The growth in our Alt Funding business has two effects on the types of loans we
originate. First, since they are smaller, on average, than our traditional
business, our average loan size is declining. This is shown in the MD&A Appendix
in Table 11. Second, the average credit scores of our loans are going down in
parallel.

Specifically, the percentage of our loans (by principal loan balance) where the
borrower's FICO score is 700 or above has declined from 64.8% to 49.4% over the
last year. The most significant increase occurred among borrowers with FICO
scores in the 600 to 649 range, rising from 6.1% to 16.6% in the same period of
time.

This is shown below in Table 2, a condensation of Table 15 in the MD&A Appendix.

<TABLE>
                                     TABLE 2
                                    CONDENSED
                        WHOLESALE FICO SCORE DISTRIBUTION

                  Quarter Ended         10/31/05     07/31/05    04/30/05    01/31/05     10/31/04
                  -------------         --------     --------    --------    --------     --------

<S>               <C>                    <C>          <C>         <C>         <C>          <C>
                  Above 700               49.4%        54.3%       54.6%       57.4%        64.8%
                  650-699                 30.0         31.9        27.6        35.4         28.6
                  600-649                 16.6         12.3        11.8         5.9          6.1
                  550-599                  2.6          0.2         3.0         0.4          0.2
                  Below 550                1.2          0.2         2.1         0.2          0.0
                  Not available            0.2          1.1         0.9         0.7          0.3
                                           ---         -----       -----        ----        -----
                  Total                  100.0%       100.0%      100.0%      100.0%       100.0%

</TABLE>

The large year-over-year improvements in our Gain on Sale of Loans margin are
beginning to diminish, and year-over-year comparisons may be increasingly
affected by the timing of Forward Commitment Payout Fees (Table 4) received.

                                      MD-2
<PAGE>



<TABLE>

                                     TABLE 3
                          WHOLESALE GAIN ON SALE MARGIN
                                 (Basis Points)

Quarter Ended         10-31-05    7-31-05   4-30-05    1-31-05  10-31-04    7-31-04    4-30-04   1-31-04   10-31-03
-------------         --------    -------   -------    -------  --------    -------    -------   -------   --------


<S>                       <C>       <C>        <C>       <C>        <C>       <C>        <C>       <C>        <C>
Gain on Sale              136       146        142       119        145       126        106       140        133
</TABLE>


<TABLE>

                                     TABLE 4
                     FORWARD COMMITMENT PAYOUT FEES RECEIVED
                                    ($ 000's)

Quarter Ended         10-31-05    7-31-05   4-30-05    1-31-05  10-31-04    7-31-04    4-30-04   1-31-04   10-31-03
-------------         --------    -------   -------    -------  --------    -------    -------   -------   --------

<S>                      <C>       <C>        <C>      <C>         <C>        <C>       <C>      <C>        <C>
Fees Received            $ 87      $125       $ 98     $ 105       $271       $ 0       $ 51     $ 335      $ 528
</TABLE>

GROSS PROFIT ANALYSIS


Gross profits for the quarter just ended were5% higher than what we generated in
the comparable quarter a year ago, less than the 18% increase in our revenues.
The following factors held our gross profit growth back in the quarter:

1.       Our Direct Expenses increased 37% while revenues increased 18%. This
         was driven by an increasingly competitive environment for individuals
         who can originate and process mortgage loans, forcing us to raise our
         compensation levels to recruit and retain people.


2.       Our Net Interest Income/(Expense) showed a negative comparison, one
         that slowed our gross profit growth by 4 percentage points and reduced
         our Gross Profit Margin by 2 percentage points. The largest part of
         this was due to a $47,000 swing in our subordinated debt interest
         expense, reflective of the offering we completed in January of this
         year. Secondarily, but not unimportant to the trend, was the effect of
         generally higher interest rates, combined with a longer period of time
         our mortgages remain financed before they are purchased by investors
         increasing the overall cost of our warehouse financings.


<TABLE>
                                     TABLE 5
                           GROSS PROFIT MARGIN TRENDS

Quarter Ended           10-31-05    7-31-05   4-30-05   1-31-05*  10-31-04*   7-31-04*   4-30-04*  1-31-04*   10-31-03*
-------------           --------    -------   -------   -------   --------    -------    -------   -------    --------


<S>                        <C>       <C>        <C>       <C>        <C>       <C>        <C>       <C>        <C>
Gross Profit Margin        59.4%     60.8%      57.6%     61.7%      65.2%     61.0%      52.3%     59.8%      52.0%

</TABLE>

         * - These margins are different than previously reported because we are
         now reporting Subordinated Debt Interest above the Gross Profit line
         going forward from January 31, 2005.

INDIRECT EXPENSE ANALYSIS

Our Indirect Expenses increased 21% on a year-over-year basis during the
recently ended quarter. We have been suggesting since the Fall of last year that
we believed we had reached a bottom in how low we could take our Indirect
Expenses. As the table below clearly shows, this has been the case.

The sole driver of our increasing Indirect Expenses in the last year has been
the Salaries and Benefits paid to non-production personnel. These have increased
for two reasons:

                                      MD-3
<PAGE>

First, we have been expanding our operations in Arizona throughout this period
of time and we opened an office in Overland Park, Kansas at the beginning of the
recently ended quarter. This requires us to pay for support staff and guaranteed
salary draws for production personnel in advance of seeing mortgage loan
production and funding.

Second, we are starting to experience inflationary pressures on compensation
generally.

<TABLE>
                                     TABLE 6
                         INDIRECT EXPENSE AND COMPONENTS
                                    ($ 000s)

Quarter Ended           10-31-05    7-31-05    4-30-05   1-31-05  10-31-04   7-31-04  4-30-04     1-31-04    10-31-03
-------------           --------    -------    -------   -------  ---------------------------     -------    --------


<S>                     <C>        <C>         <C>        <C>       <C>        <C>     <C>        <C>        <C>
Total Indirect Exp.     $1,936     $1,898      $1,823     $1,661    $1,638     $1,703  $1,771     $1,700     $1,800
    Percent of Rev.      65.2%      55.6%        65.0%    75.6%      65.5%      68.3%   48.4%      57.7%      40.6%


Selected Components:

    Salaries and Ben.   $1,222     $1,119      $1,087      $949        $895     $951      $1,013     $1,032   $1,097
    Percent of Rev.      41.2%      32.8%        38.8%     43.2%       36.5%    38.2%      27.7%      34.7%    24.7%

    Gen. and Admin.      $521       $586        $515       $520        $551     $559       $559       $473     $503
    Percent of Rev.      17.5%      17.2%        18.3%     23.7%       22.4%    22.5%      15.3%      16.1%    11.4%
</TABLE>


OTHER COMMENTARY

During the quarter just ended and in preparation for a change in our accounting
system which we implemented November 1, 2005, we subjected our balance sheet to
another round of detailed scrutiny beyond that which was done at our last
year-end. We found a total of about $61,000 of various Accrued Payables and
other liabilities (which had been previously expensed) that we determined are
not subject to future payment. Approximately $25,000 of these other liabilities
related to periods substantially prior to the end of our last fiscal year, and
about $35,000 of these accrued liabilities related to the first quarter of this
fiscal year.

There is not a single line item on our Income Statement (Condensed Statement of
Operations) where these accruals were reversed out. They show up in various
revenue and expense line items, no one of which changes that line item
materially, either in the current financial statements or in the periods when
these accruals had been made.

The net result is that our operating loss for the quarter, in the absence of
these accrual reversals, would have been $213,644 instead of the the $152,312
loss actually shown.

LIQUIDITY AND CAPITAL RESOURCES

Our unrestricted and restricted cash position as of October 31, 2005, increased
by $183,742 from what it was at the end of our last fiscal quarter, July 31,
2005. Management and the Company's board of directors believe this is a more
appropriate figure to examine than unrestricted cash alone. The restricted cash
is cash held on deposit with the Company's warehouse lenders and represent a
management decision and strategy. We can negotiate for lower deposit
requirements, but at the expense of other variables associated with the lending
facility, including, but not limited to, nominal interest rate, per transaction
fees, and loan haircuts. Hence, the total of unrestricted and restricted cash
plus short-term (cash-like) investments is what we measure in evaluating our
overall liquidity.


The principal changes to our aggregate cash and investments positions during the
year are shown in Table 7, "Simplified Sources/(Uses) of Cash," below. The
statements of cash flows is included with the other financial statements in Item
1 of this filing. The sum of the cash flow from operations in Table 7 below is
$5,000 higher than that shown in the statements of cash flows because Table 7
includes changes in all forms of cash, including restricted, while the
statements of cash flows only addresses unrestricted forms of cash. The
short-form table below is how management and the Company's board of directors
monitor the Company's changes in cash and investments position.



                                      MD-4
<PAGE>

<TABLE>

                                     TABLE 7
                        SIMPLIFIED SOURCES/(USES) OF CASH

                                                                                          Change from Prior Period End
                                                                                   Quarter           Quarter          Quarter
         Sources (Uses)                                                           10-31-05           7-31-05          4-30-05
         --------------------------------------------------------------------------------------------------------------------

          Operating Cash Flows
          Income Statement Related Cash Flows

<S>                                                                          <C>               <C>              <C>
          Net Income/(Loss)                                                  $  (152,312)      $   242,384      $(3,256,815)
          Add back non-cash charges/(income)
          Depreciation & Amortization                                             17,960            18,156           21,054
          Accrued liability write-down                                           (61,332)
          Impairment of goodwill                                                       0                 0        2,714,516
          Fair value of financial derivatives changes                              4,754           (47,179)          69,540
          Stock option expense                                                         0                 0          136,762
          Deferred income taxes                                                        0                 0          291,365
          Provision for early payoff penalties, net of payments                        0            15,000           14,000
                                                                                                                           -
          Actual early payoff penalties paid                                     (20,475)           (1,850)          (5,333)
                                                                                 --------           -------           ------
          Operational Cash Flows from the Income Statement                    $ (211,405)         $226,511         $(14,911)


          Balance Sheet Related Cash Flows
          Mortgages held for sale                                              $ 574,032         $ 257,288       $ (229,706)
          Short-term mortgage receivables                                       (133,495)          (88,135)         (71,292)
          Other Assets                                                            16,108           (19,258)          26,479
          Accounts payable and other accrued liabilities                         (30,548)            8,945          121,958
                                                                                 --------            -----          -------
          Operational Cash Flow from the Balance Sheet                       $   426,097         $ 158,840       $ (152,561)

          Total Cash Flow Generated/(Used) in Operations                     $   214,692         $ 385,351       $ (167,472)

          Financing Activity Cash Flows
          Issuance of subordinated debt                                              $ 0               $ 0              $ 0
          Repayments of subordinated debt                                              0                 0         (250,000)
          Stock purchases                                                              0                 0                0
          Settlement paid                                                              0                 0                0
          Capital lease obligations change                                             0                 0           (3,252)
                                                                                  ------            ------           ------

          Total Cash Flow from Financings Activities                                 $ 0               $ 0       $ (253,252)

          Investing Activity Cash Flows
          Purchase of property and equipment                                   $ (30,950)        $ (18,156)        $ (3,560)

          Total Cash Flow from Investing Activities                            $ (30,950)        $ (18,156)        $ (3,560)

          Net Change to Aggregate Cash                                         $ 183,742         $ 367,195       $ (424,284)
</TABLE>

In summary form, this table says the following regarding the changes in the
Company's aggregate cash resources in the recently ended quarter.

                                      MD-5
<PAGE>


1.            The Company lost about $211,000 in cash flow from income
              statement-related operations during the recently ended quarter.

2.            The Company decreased the total of Mortgage Loans Held for Sale
              and Short-Term Mortgage-Related Receivables by about $440,000.
              This merely reflects timing differences in when pools of mortgages
              are sold and not some underlying change in policy, practice or
              strategy.

3.            The Company spent about $30,950 on purchases of property and
              equipment during the quarter just ended.

4.            The paying down of Accounts Payable and other Accrued Liabilities
              in the quarter resulted in the use of about $31,000 of cash.

SUMMARY OF FINANCING FACILITIES

The capital resources utilized by the Company to fund its mortgage lending
activities are primarily provided by warehouse lenders that fund the mortgage
loans through Master Sales Agreements ("warehouse facilities"). The size of the
Company's warehouse facilities is based on the Company's net worth and cash
resources. As of October 31, 2005, the Company had a total of two financing
facilities for a maximum financing capacity of up to $75 million.

The funding 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 compensating balances.
Collectively, these facilities currently require compensating balances of $1.025
million.

More detailed data on these facilities is presented in Note 3 to the Financial
Statements presented in Item 1.

Our overall funding strategy is to use committed facilities, summarized as of
October 31, 2005:

<TABLE>
                                     TABLE 8
                          LOAN FACILITIES AND BALANCES

                             Committed        Outstanding     Required        Interest Rate
Type of Facility             Facility           Balance     Cash Deposit    October 31, 2005     Maturity
----------------           -------------    --------------  ------------    ----------------     --------

<S>                            <C>          <C>             <C>              <C>            <C>
Master sales agreement         $35,000,000  $7,792,600      $1,000,000          6.75%(1)    Annual or 30 days notice
Master sales agreement          40,000,000      19,885,324      25,000       6.08-6.58%(2)  Annual or 30 days notice
                                ----------  --------------    -----------
Totals                         $75,000,000   $  27,677,924   $1,025,000
                               ===========   =============   ==========

</TABLE>

(1)  For the first $15 million of this facility, the contractual interest rate
     facility was 3.99% or Prime, whichever is greater. The rate for the next
     $20 million is 0.05% greater than the rate for the first $15 million.

(2)  The contractual interest rate on this facility is one month LIBOR plus a
     margin ranging from 1.875% to 2.50%.


FUTURE NON-OPERATIONAL CASH REQUIREMENTS

The Company has certain non-operational requirements for cash in the future. The
material requirements are those for repayment of the subordinated debt issued in
recent years to bolster our capital position. The schedule of maturities for
these is as follows:

                                     TABLE 9
                   NON-OPERATIONAL CASH REPAYMENT REQUIREMENTS

                            October 31, 2006        $   50,000
                            March 31, 2007          $  800,000
                            May 31, 2007            $  200,000
                            January 12, 2015        $2,687,700

                                      MD-6
<PAGE>

OFF BALANCE SHEET RISKS

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 on the part of the Company.
The Company manages these risks 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.

The notional value of financial instruments, whose contract amounts represent
credit and risk at the indicated dates, are as follows:

                                    TABLE 10
                     NOTIONAL VALUE OF FINANCIAL INSTRUMENTS


                                                October 31,        April 30,
                                                  2005               2005
                                            -----------------------------------

Commitments to extend credit                $  27,874,715      $  21,772,820
Mandatory forward delivery commitments          3,471,550          2,741,500




                                      MD-7
<PAGE>

ITEM 3.  CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Company's Securities
Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and
forms, and that such information is accumulated and communicated to the
Company's management, including its Chief Executive Officer, who also is Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. During the 90-day period prior to the date of this report, an
evaluation was performed under the supervision and with the participation of the
Company's management, including the Chief Executive Officer, who also is the
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based upon that evaluation, the
Chief Executive Officer, and the Chief Financial Officer concluded that the
Company's disclosure controls and procedures were effective. There have been no
significant changes in the Company's internal controls or in other factors that
could significantly affect these controls, and no corrective actions taken with
regard to significant deficiencies or material weaknesses in such controls,
subsequent to the date of our most recent evaluation of internal controls.

The conditions leading to the restatements referred to in this filing were
discovered by management and the Audit Committee as part of their normal review
processes. Management and the Audit Committee believe the errors that lead to
the aforementioned restatements were neither significant nor material because
the figures were immaterial by any reasonable standard, did not affect cash
flows and did not affect the company's ability to conduct its business.
Furthermore, the issues discovered revolved around relatively arcane accounting
issues where there tends not be general agreement in its application.



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
(a)      EXHIBITS

31.1     Certification  of the Chief  Executive  Officer  pursuant  to 18 U.S.C.
         Section  1350 as  adopted pursuant to Section 302 of the Sarbanes-Oxley
         Act of 2002

32.1     Certification of the Chief Executive Officer pursuant to 18 U.S.C.
         Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley
         Act of 2002

     (b) REPORTS ON FORM 8-K

                  NONE




                                   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.

Date: March 31, 2006                 /s/ Joseph Kristul
      -----------------              ------------------------------------------
                                     Joseph Kristul,
                                     Chief Executive Officer


Date: March 31, 2006                 /s/ Thomas Schott
      -----------------              ------------------------------------------
                                        Thomas Schott,
                                        Chief Financial Officer