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

                                   Form 10-QSB


(Mark One)

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

                  For the quarterly period ended March 31, 1999

[ ]     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 Corporation
        (Exact name of small business issuer as specified in its charter)

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

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

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

--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

         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 the latest practicable date: 3,700,000


<PAGE>

                       TRANSNATIONAL FINANCIAL CORPORATION

                                 MARCH 31, 1999

                                    UNAUDITED



                       TABLE OF CONTENTS                             PAGE NUMBER

PART 1     ITEM 1      FINANCIAL INFORMATION

                       Condensed Balance Sheets as of March 31, 1999
                       And December 31, 1998                               3

                       Condensed Statements of Income
                       For the Three Months Ended March 31, 1999
                       And 1998                                            4

                       Condensed Statements of Cash Flows for the
                       Three Months Ended March 31, 1999 and 1998          5

                       Notes to Condensed Financial Statements             6

           ITEM 2      Management's Discussion and Analysis of
                       Financial Condition and Results of Operations       9

PART II    OTHER INFORMATION                                              12






                                       2
<PAGE>

                       TRANSNATIONAL FINANCIAL CORPORATION

                            CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                        March 31,         December 31, 
                                                                                           1999               1998
                                                                                       (unaudited)
<S>                                                                                  <C>               <C>
ASSETS
             Cash and cash equivalents                                               $   1 ,183,983    $       990,115
             Mortgage loans held for sale, pledged (net of allowance for
               loan losses: March 31, 1999, $7,500; December 31, 1998, $0)               29,766,868         62,540,846
             Accrued interest receivable                                                     45,379             45,524
             Notes receivable                                                               135,819            135,819
             Real estate held for investment, net                                           194,149            195,308
             Property and equipment, net                                                    400,337            271,441
             Other assets                                                                   311,124            287,342
                                                                                     ----------------- ----------------

TOTAL ASSETS                                                                         $   32,037,659    $    64,466,395
                                                                                     ================= ================


LIABILITIES AND STOCKHOLDERS' EQUITY
            Warehouse notes payable                                                  $   21,524,243    $    53,587,740
            Accrued interest payable                                                        260,023            462,487
            Real estate mortgage                                                            142,906            143,975
            Accounts payable and accrued liabilities                                        638,452          1,026,378
            Distributions payable to "S" corporation stockholders                                 0             65,742
                                                                                     ----------------- ----------------

TOTAL LIABILITIES                                                                    $   22,565,624    $    55,286,322
                                                                                     ================= ================


STOCKHOLDERS' EQUITY
            Preferred stock, no par value: 2,000,000 shares
               authorized, no shares issued or outstanding                           $            0    $             0

            Common stock, no par value: 10,000,000 shares authorized:
               3,700,000 and 2,500,000 shares issued and outstanding as of
               March 31, 1999 and December 31, 1998,respectively                          8,453,059          8,453,059
            Retained earnings                                                             1,018,976            727,014
                                                                                     ----------------- ----------------

TOTAL STOCKHOLDERS' EQUITY                                                           $    9,472,035    $     9,180,073
                                                                                     ================= ================


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                           $  32,037,659     $    64,466,395
                                                                                     ================= ================
</TABLE>


                  See accompanying notes to condensed financial
                                  statements.


                                       3
<PAGE>


                       TRANSNATIONAL FINANCIAL CORPORATION

                         CONDENSED STATEMENTS OF INCOME

                             MARCH 31, 1999 AND 1998
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                      For the Three
                                                                                      Months Ended
                                                                                        March 31,
                                                                            ----------------------------------

INCOME                                                                            1999             1998
                                                                                  ----             ----
<S>                                                                         <C>               <C>            
                Net gain from sales of mortgage loans                       $    1,717,427    $       753,013
                Interest income                                                  1,029,531            636,758
                Production income                                                  692,296            522,468
                Other                                                                9,855              5,526
                                                                            ----------------- ----------------

                                                                            $    3,449,109    $     1,917,765
                                                                            ----------------- ----------------

EXPENSES

                Interest expense                                            $    1,000,158    $       785,506
                Salaries and benefits                                            1,431,075            513,473
                General and administrative                                         422,893            313,084
                Office occupancy                                                    91,601             39,041
                                                                            ----------------- ----------------

                                                                            $    2,945,727    $     1,651,104
                                                                            ----------------- ----------------

INCOME BEFORE INCOME TAXES                                                  $      503,382    $       266,661


INCOME TAXES                                                                       211,420              4,000
                                                                            ----------------- ----------------

NET INCOME                                                                  $      291,962    $       262,661
                                                                            ================= ================


EARNINGS PER SHARE
                Basic                                                       $          .08
                Diluted                                                     $          .08

WEIGHTED AVERAGE SHARES OUTSTANDING
                Basic                                                            3,700,000
                Diluted                                                          3,700,000

PRO FORMA
                Historical income before income taxes                                         $       266,661
                Pro forma income taxes                                                                105,064
                                                                                              ----------------

                PRO FORMA NET INCOME                                                          $       161,597
                                                                                              ================


PRO FORMA EARNINGS PER SHARE
                Basic                                                                         $           .06
                Diluted                                                                       $           .06


PRO FORMA WEIGHTED AVERAGE SHARES OUTSTANDING
                Basic                                                                               2,468,750
                Diluted                                                                             2,468,750
</TABLE>


            See accompanying notes to condensed financial statements

                                       4
<PAGE>


                       TRANSNATIONAL FINANCIAL CORPORATION

                       CONDENSED STATEMENTS OF CASH FLOWS

                          ENDED MARCH 31, 1999 AND 1998
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                             For the Three
                                                                                             Months Ended
                                                                                               March 31,
                                                                                         1999            1998
                                                                                    --------------- ----------------
<S>                                                                                 <C>             <C>           
Cash flows from operating activities:
            Net income                                                              $      291,962  $      262,661
            Adjustments to reconcile net income to net cash provided
            by operating activities:
                  Gain on sale mortgage loans                                           (1,727,402)       (753,013)
                  Provision for loan losses                                                 (7,500)              0
                  Depreciation and amortization                                             25,678           8,180
                  Mortgage loans originated for sale                                  (269,810,903)   (166,206,276)
                  Proceeds from sales of mortgage loans                                304,202,129     180,267,068
                  Net effect of changes in:
                       Net deferred loan fees                                              117,654         (34,077)
                       Accrued interest receivable                                             145          13,663
                       Other assets                                                        (23,782)       (115,430)
                       Accounts payable and accrued liabilities                           (387,926)         46,688
                       Accrued interest payable                                           (202,464)        (50,618)
                                                                                    --------------- ----------------

            Net cash provided by operating activities                                   32,477,591      13,438,846
                                                                                    --------------- ----------------

Cash flows from investing activities:
            Proceeds from sales and maturities of certificates of deposit                        0           5,589
            Purchases of property and equipment                                           (153,415)        (13,804)
                                                                                    --------------- ----------------

            Net cash used by investing activities                                         (153,415)         (8,215)
                                                                                    --------------- ----------------

Net cash flows from financing activities:
            Borrowings on warehouse notes payable                                      265,273,574     162,882,150
            Payments on warehouse notes payable                                       (297,337,071)   (176,255,263)
            Payments on distributions payable to S corporation stockholders                (65,742)       (139,661)
            Borrowings on note payable, subordinated                                             0       1,000,000
            Receipt of note receivable, stockholders                                             0         250,000
            Payments on real estate mortgage                                                (1,069)           (663)
                                                                                    --------------- ----------------

            Net cash used by financing activities                                      (32,130,308)    (12,263,437)
                                                                                    --------------- ----------------


NET INCREASE IN CASH AND CASH EQUIVALENTS                                                  193,868       1,167,194
                                                                                    --------------- ----------------

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                               990,115         482,558
                                                                                    --------------- ----------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                            $    1,183,983  $    1,649,752
                                                                                    =============== ================

Cash paid During the Period for:
            Interest paid                                                           $    1,202,602  $      834,541
                                                                                    =============== ================
            Income taxes paid                                                       $      340,746  $            0
                                                                                    =============== ================
</TABLE>

            See accompanying notes to condensed financial statements



                                       5
<PAGE>

                       TRANSNATIONAL FINANCIAL CORPORATION

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

                                 MARCH 31, 1999

                                   (Unaudited)


NOTE 1                       The accompanying financial statements of
                             Transnational Financial Corporation (the "Company")
                             are unaudited and have been prepared without audit
                             pursuant to the rules and regulations of the
                             Securities and Exchange Commission. Certain
                             information and financial disclosures normally
                             included in financial statements prepared in
                             accordance with generally accepted accounting
                             principles have been condensed or omitted pursuant
                             to such rules and regulations. Accordingly, these
                             unaudited condensed financial statements should be
                             read in conjunction with the audited financial
                             statements included in the Company's Form 10-KSB
                             for the year ended December 31, 1998. These
                             statements include all adjustments consisting only
                             of normal recurring accruals, which are, in the
                             opinion of management, considered necessary for a
                             fair presentation of financial position and results
                             of operations.

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

NOTE 2                       The results of operations of the Company for the
                             three month periods ended March 31, 1999 and 1998
                             are not necessarily indicative of the results to be
                             expected for the full year.

NOTE 3                       On June 24, 1998, the Company completed an initial
                             public offering of its common stock, which became
                             listed on the American Stock Exchange under the
                             symbol TFN. $1,200,000 shares were sold for net
                             proceeds of $7,419,719

NOTE 4                       On April 30, 1998, the Company changed its
                             corporate charter from an "S" Corporation to that
                             of a "C" Corporation for taxation purposes.

                             During the first four months of 1998, the Company
                             distributed Subchapter "S" earnings in the form of
                             cash dividends to its existing stockholders of
                             $493,180. On April 30, 1998, the termination date
                             of the subchapter "S" election, the Company's
                             stockholders equity contained dividends of $286,028
                             to which existing shareholders, as of April 30,
                             were entitled to the distribution. These dividends
                             were distributed during the remainder of 1998,
                             except for $65,742 which was distributed in 1999.


                                       6
<PAGE>

NOTE 5                       Pro Forma Information

                             Income Taxes - Effective April 30, 1998, the
                             Company terminated its S corporation status and
                             became a C corporation for tax purposes. The
                             Company is now subject to federal and state income
                             taxes and recognizes deferred taxes in accordance
                             with Statement of Financial Accounting Standards
                             (SFAS) No. 109, Accounting for Income Taxes. SFAS
                             No. 109 requires companies subject to income taxes
                             to adjust their deferred tax assets and liabilities
                             based on temporary differences between financial
                             statement and tax basis of assets and liabilities
                             using enacted tax rates in effect in the years in
                             which the differences are expected to reverse. For
                             information purposes, the statements of income
                             includes an unaudited pro forma income tax
                             provision on income before income taxes for
                             financial reporting purposes using federal and
                             state rates that would have resulted if the Company
                             had filed corporation tax returns during the period
                             in which the Company was an S corporation.

                             Earnings Per Share - Pro forma earnings per share
                             is computed by dividing pro forma net income by the
                             pro forma number of shares of common stock
                             outstanding during the respective period.

                                       7
<PAGE>

NOTE 6                       Net Income Per Share

                             Basic net income per share is computed by dividing
                             net income by the weighted average common shares
                             outstanding during the period. Diluted net income
                             per share is computed based on the weighted average
                             number of common shares outstanding adjusted for
                             the common stock equivalents, which include stock
                             options. The following table presents a
                             reconciliation of basic and diluted net income per
                             share for the three months ended March 31, 1999 and
                             1998. For the three months ended March 31, 1999 and
                             1998, the effect of including outstanding options
                             in the calculation of diluted earnings per share
                             would be antidilutive. As a result, the effect of
                             those outstanding options has not been included in
                             the calculations.
<TABLE>
<CAPTION>
                                                                                              For the Three
                                                                                               Months Ended
                                                                                                 March 31,
                                                                                           1999           1998
                                                                                                      (pro forma)
<S>                                                                                      <C>           <C>       
                                 Calculation of Basic Net Income Per Share:
                                 Numerator - net income                                  $  291,962    $  161,597
                                 Denominator - weighted average common
                                    shares outstanding                                    3,700,000     2,500,000
                                                                                         ----------    ----------

                                 Basic net income per share                                 $0.08          $0.06
                                                                                            =====          =====

                                 Calculation of Diluted Net Income Per Share:
                                 Numerator - net income                                  $  291,262    $  161,597
                                 Denominator:
                                    Weighted average common shares outstanding            3,700,000     2,500,000
                                    Dilutive effect of outstanding options                     -             -
                                                                                         ----------    ----------
                                                                                          3,700,000     2,500,000

                                 Diluted net income per share                               $0.08          $0.06
                                                                                            =====          =====
</TABLE>


NOTE 7                       Recently Issued Accounting Pronouncements

                             In June 1998, the Financial Accounting Standards
                             Board issued SFAS No. 133, Accounting for
                             Derivative Instruments and Hedging Activities. The
                             Statement establishes accounting and reporting
                             standards for derivative instruments and hedging
                             activities. The Statement is effective for fiscal
                             quarters of fiscal years beginning after June 15,
                             1999. The Company is in the process of determining
                             the impact of SFAS No. 133 on the Company's
                             financial statements.



                                       8
<PAGE>


                                     ITEM 2

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF

                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

                The following discussion and analysis should be read in
                conjunction with the 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 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, such statements
                could be affected by general economic and market conditions and
                growth rates.

GENERAL

                Transnational Financial Corporation ("TFN" 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 in the San Francisco Bay area and
                Southern California. The Company sells all of its mortgage loans
                and the related servicing rights in the secondary market. Since
                May 1995, the Company's growth has been focused and driven by
                the wholesale loan division. The wholesale division's mortgage
                loan volume increased to $269,810,903 for the first three months
                of 1999 compared to $166,206,276 for the same three month period
                of 1998. The retail division's volume was approximately
                $27,053,889 for the first three months of 1999, compared to
                volume of $28,328,830 for the first three months of 1998.
                Overall, the Company's loan volume grew by 53% for the first
                three months of 1999 compared to the first three months of 1998.

THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998

                The Company's pretax income increased during the first quarter
                of 1999 to $503,382 from pretax income of $266,661 in the first
                quarter of 1998, an increase of 89%. Gross revenues grew as
                mortgage loan production for the company grew 53% during the
                first quarter of 1999 as compared to the first quarter of 1998.
                Gross revenues for the first quarter for 1999 were $3,449,109
                compared to the first quarter of 1998 of $1,917,765 or an
                increase of 80%. 


                                       9
<PAGE>

                Expenses in the first quarter of 1999 were 85% of revenues and
                were 86% of revenues in the first quarter of 1998. As a result
                of better interest rates on warehouse lines of credit, during
                the quarter ended March 1999, the Company realized an excess of
                interest income over interest expense of $29,373. During the
                quarter ended March 1998, interest expense exceeded interest
                income by $121,748. Interest expense as a percentage of gross
                revenues was 29% for the first quarter of 1999 compared to 41%
                for the first quarter of 1998. The Company pays interest to its
                warehouse lender from the time that the mortgage loan is closed
                until the mortgage loan is sold to an investor. During the same
                time period, the Company receives interest income on the funded
                mortgage loan. During the first quarter of 1999, the Company had
                a net interest income because the interest rate charged on its
                warehouse line of credit was less than the note rate on the
                mortgage to which the Company is entitled to receive from the
                time the loan is funded until sold to an investor.

                While gross revenues increased 80% in the first quarter of 1999
                compared to the first quarter of 1998, salaries and employee
                benefits increased by 179% and office occupancy expenses grew by
                135%. Much of these increases are due to the Company's expansion
                by the hiring of additional senior management. However, the
                Company's Chief Executive Officer and President were compensated
                through S corporation stockholder draws in the earlier period
                and were paid salaries in the 1999 quarter, and the increase
                would have been 147% without the compensation of the Chief
                Executive Officer and President. The Company also occupied new
                space in the fall of 1998 resulting in an increase of 135% in
                the period ended March 1999 when compared to the period ended
                March 1998. In September 1998 the Company occupied new office
                space for additional staff to handle the increase in loan
                volume. General and administrative expenses grew 35% because of
                obligations of being a publicly held entity as well as some
                increased marketing expenses.

                It is the belief of management of the Company, the results of
                operations for the quarter ending June 30, 1999 will fall short
                of expectations set forth by the analyst following the Company.
                Management believes that the entire industry is experiencing a
                slowdown in loan applications. In addition, the Company will
                incur costs setting up offices in Phoenix and Houston and
                operating expenses associated with the development of new
                E-Commerce technology, all of which will adversely impact the
                Company's financial performance by reducing gross margins,
                increasing operating expenses and resulting in a decrease in net
                income for the quarter ended June 30, 1999.

LIQUIDITY AND CAPITAL RESOURCES

                On June 24, 1998 the Company successfully completed an Initial
                Public Offering adding net proceeds of $7,419,719 to its
                stockholders' equity to provide the capital infusion necessary
                to facilitate additional growth of the wholesale division as
                well as to lower the Company's overall cost of borrowing.

                As a result of the public offering, during the third quarter of
                1998, the Company began the use of new warehouse lines of credit
                with the execution of a facility syndicated with several banks
                providing up to $105 million and agented by Guaranty Federal
                Bank of Dallas. In addition, the Company has been able to secure
                a Whole Loan Purchase and Sales Agreement ("Gestation Repo
                Line") with Greenwich Capital for $30 million and as additional
                Whole Loan Purchases and Sales Agreement ("Gestation Repo Line")
                with Gateway Bank for $50 million. These new credit facilities
                have begun to reduce the Company's interest expense beginning in
                the third month of the third quarter of 1998 due to its
                borrowings now being based on LIBOR plus 1.50% for the warehouse
                line and LIBOR plus 1% on the Gestation Repo Lines, both of
                which have reduced interest expense.


                                       10
<PAGE>

YEAR 2000

                The Company recognizes the need to ensure its operations will
                not be adversely impacted by Year 2000 software failures. If the
                Company or other entities not affiliated with the Company do not
                address this issue successfully, the Company's business could be
                materially affected. Accordingly, the Company has completed a
                review of its internal computer systems and believes that its
                operations will not be adversely affected by Year 200 software
                failures.

                The Company depends upon the effective operations of the
                financial institutions with which the Company deals as well as
                of the United States financial system as administered by the
                United States Federal Reserve Board. To the extent that these
                institutions fail to have software that effectively deals with
                the Year 2000 issue, the Company's business could lose
                materially and be adversely affected. Similarly, the Company has
                extensive dealings with mortgage brokers that submit mortgage
                loans to the Company. The Company is in the process of
                determining whether financial institutions, mortgage brokers or
                others will be adversely affected by computer software that
                fails to execute correctly after January 1, 2000, and the
                consequences of those possible failures on the Company. The
                Company does not believe that the cost to complete this inquiry
                and rectify any problems uncovered will exceed $5,000.




                                       11
<PAGE>


                           PART 11 - OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

         (a) Exhibits Index
                  Exhibit 27 - Financial Data Schedule

         (b) Reports on Form 8-K: None





                                       12
<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 Corporation

May 12, 1999                            /s/  Joseph Kristul
                                        ---------------------------------------
                                        Joseph Kristul, Chief Executive Officer
                                         and Principal Financial Officer





                                       13