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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                         COMMISSION FILE NUMBER: 0-19615

                      TRANSAMERICAN WASTE INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)

         DELAWARE                                      13-3487422
 (State or other jurisdiction of                    (I.R.S. Employer
  incorporation or organization)                   Identification No.)

       314 NORTH POST OAK LANE
            HOUSTON, TEXAS                               77024
(Address of principal executive offices)               (Zip Code)

       Registrant's telephone number, including area code: (713) 956-1212

            Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter periods 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 the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.

                                            Outstanding at
          Class of Common Stock            November 14, 1996
          ---------------------            -----------------
            $.001 par value                    30,473,041

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<PAGE>
                      TRANSAMERICAN WASTE INDUSTRIES, INC.

                                      INDEX


                                                                        PAGE NO.
PART I.  FINANCIAL INFORMATION

       Item 1. Financial Statements

               Consolidated Balance Sheets -
                     December 31, 1995 and September 30, 1996 ..............  3
               Consolidated Statements of Operations -
                     Three and Nine Months Ended September 30, 1995 and 1996  4
               Consolidated Statements of Cash Flows -
                     Nine Months Ended September 30, 1995 and 1996 .........  5
               Notes to Unaudited Consolidated Financial Statements ........  6

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations ...................... 12

PART II. OTHER INFORMATION

       Item 1. Legal Proceedings ........................................... 17

       Item 2. Changes in Securities ....................................... 17

       Item 6. Exhibits and Reports on Form 8-K ............................ 17

       Signatures .......................................................... 18

                                        2
<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

              TRANSAMERICAN WASTE INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                          DECEMBER 31, SEPTEMBER 30,
                                                             1995          1996
                                                           --------      --------
                                                                        (UNAUDITED)
<S>                                                        <C>           <C>     
ASSETS                                                                 
                                                                       
CURRENT ASSETS                                                         
    Cash and cash equivalents ...........................  $  1,532      $  2,038
    Restricted cash .....................................       783         1,702
    Accounts receivable, less allowance for doubtful                   
        accounts of $143 and $203, respectively .........     2,271         2,545
    Other current assets ................................       904         1,238
                                                           --------      --------
              TOTAL CURRENT ASSETS ......................     5,490         7,523
Restricted cash .........................................     8,931        13,923
Property and equipment, net of accumulated depreciation .    20,927        26,584
Deferred financing costs, net of accumulated amortization              
    of $403 and $549, respectively ......................     2,101         2,538
Net noncurrent assets transferred under                                
    contractual arrangements ............................     7,520         6,783
Other assets, net .......................................     1,102         2,497
                                                           --------      --------
              TOTAL ASSETS ..............................  $ 46,071      $ 59,848
                                                           ========      ========
                                                                       
                                                                       
LIABILITIES AND STOCKHOLDERS' EQUITY                                   
                                                                       
CURRENT LIABILITIES                                                    
    Accounts payable ....................................  $  1,229      $  1,003
    Accrued liabilities and other .......................     1,789         2,566
    Current portion of long-term debt ...................     1,426         3,054
    Net current liabilities transferred under                          
        contractual arrangements ........................       268          --
    Reserve for closure and post-closure costs,                        
        less current portion ............................       307           273
                                                           --------      --------
    TOTAL CURRENT LIABILITIES ...........................     5,019         6,896
Long-term debt, less current portion and                               
    unamortized discount ................................    29,603        38,843
Reserve for closure and post-closure costs,                            
    less current portion ................................     3,569         4,013
Other noncurrent liabilities ............................       447         1,818
                                                           --------      --------
   TOTAL LIABILITIES ....................................    38,638        51,570
                                                           --------      --------
Commitments and contingencies                                          
                                                                       
STOCKHOLDERS' EQUITY                                                   
                                                                       
Common stock, $.001 par value; 100,000,000 shares                      
   authorized; 29,649,124 and 30,473,041, shares                       
   issued and outstanding, respectively .................        30            30
Additional paid-in capital ..............................    25,074        25,724
Retained earnings (deficit) .............................   (17,671)      (17,476)
                                                           --------      --------
  TOTAL STOCKHOLDERS' EQUITY ............................     7,433         8,278
                                                           --------      --------
  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............  $ 46,071      $ 59,848
                                                           ========      ========
</TABLE>
                                                                     
            See Notes to Unaudited Consolidated Financial Statements

                                        3
<PAGE>
              TRANSAMERICAN WASTE INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED SEPTEMBER 30,   NINE MONTHS ENDED SEPTEMBER 30,
                                                                   -------------------------         -------------------------
                                                                     1995             1996             1995             1996
                                                                   --------         --------         --------         --------
                                                                          (Unaudited)                       (Unaudited)
<S>                                                                <C>              <C>              <C>              <C>     
Revenue ....................................................       $  2,505         $  4,085         $  5,997         $ 12,074

Expenses:
   Cost of services ........................................          1,426            2,284            3,740            6,369
   Depreciation and amortization ...........................            371              398              859            1,206
   General and administrative ..............................            768              782            2,462            2,495
   Cost of completed acquisition ...........................            150             --                300             --
   Cost of terminated acquisitions and contracts ...........              7             --                233             --
                                                                   --------         --------         --------         --------

      Operating income (loss) ..............................           (217)             621           (1,597)           2,004

Other income (expense):
   Interest expense ........................................           (552)            (800)          (1,650)          (2,155)
   Exchange offer charge ...................................           --               --             (1,644)            --
   Loss on investment ......................................            360             --               (563)            --
   Gain on sale of assets ..................................           --               --               --                437
   Interest and other income, net ..........................            201              195              223              636
                                                                   --------         --------         --------         --------

      Total other income (expense) .........................              9             (605)          (3,634)          (1,082)
                                                                   --------         --------         --------         --------

Solid waste income  (loss) before income taxes .............           (208)              16           (5,231)             922

Income tax benefit (expense) ...............................            573              (12)             508              (37)

Loss from oil recovery and disposal operations .............            (98)            (279)            (336)            (690)
                                                                   --------         --------         --------         --------
      Net income (loss) ....................................       $    267         $   (275)        $ (5,059)        $    195
                                                                   ========         ========         ========         ========

Income (loss) per common share .............................       $   0.01         $  (0.01)        $  (0.21)        $   0.01
                                                                   ========         ========         ========         ========

Weighted average common equivalent shares
    outstanding ............................................         28,008           30,472           23,633           31,413
                                                                   ========         ========         ========         ========
</TABLE>

            See Notes to Unaudited Consolidated Financial Statements

                                        4
<PAGE>
              TRANSAMERICAN WASTE INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                             NINE MONTHS ENDED SEPTEMBER 30,
                                                                   -------------------
                                                                    1995        1996
                                                                   -------    --------
                                                                        (Unaudited)
<S>                                                                <C>        <C>     
Cash flows from operating activities:
      Net income (loss) ........................................   $(5,059)   $    195
      Adjustments to reconcile net income (loss) to
         net cash provided (used) by operating activities:
            Depreciation and amortization ......................       859       1,206
            Amortization of debt discount and deferred
                 financing costs ...............................       259         283
            Closure and post-closure costs .....................       203         (24)
            Cost of completed acquisition ......................       300        --
            Gain on sale of assets .............................      --          (437)
            Loss on investment .................................       563        --
            Loss from oil recovery and disposal operations .....       336         690
            Cost of terminated acquisitions and contracts ......       233        --
            Exchange offer charge ..............................     1,644        --
            Changes in assets and liabilities:
                 Accounts receivable ...........................      (848)        162
                 Other current assets ..........................        68         145
                 Accounts payable and accrued liabilities ......       611         143
                 Change in long-term contracts in progress .....       228        --
                 Other, net ....................................        77         (17)
                                                                   -------    --------
                                                                     4,533       2,151
                                                                   -------    --------

                     Net cash provided (used) by
                         operating activities ..................      (526)      2,346
                                                                   -------    --------
Cash flows from investing activities:
      Cost of completed management contracts and acquisition ...    (1,825)     (1,603)
      Costs incurred on possible acquisitions ..................      (549)       (199)
      Purchases of property and equipment ......................    (4,898)     (3,099)
      Proceeds from sale of assets .............................       644         649
      Payments to oil recovery and disposal operations .........      (199)       (221)
      Other ....................................................      --            (6)
                                                                   -------    --------
                     Net cash used by investing
                         activities ............................    (6,827)     (4,479)
                                                                   -------    --------
Cash flows from financing activities:
      Proceeds from debt .......................................     4,285      10,027
      Payments of debt .........................................      (880)     (1,175)
      Proceeds from issuance of stock ..........................     2,519          75
      Stock issuance costs .....................................      (298)       --
      Deferred financing costs and other .......................      (489)       (378)
      Increase in  restricted cash .............................      (499)     (9,370)
      Use of restricted cash ...................................     2,604       3,460
                                                                   -------    --------
                     Net cash provided by financing
                         activities ............................     7,242       2,639
                                                                   -------    --------
Increase (decrease) in cash and cash equivalents ...............      (111)        506
Cash and cash equivalents:
      Beginning of period ......................................     1,436       1,532
                                                                   -------    --------
      End of period ............................................   $ 1,325    $  2,038
                                                                   =======    ========
</TABLE>

            See Notes to Unaudited Consolidated Financial Statements

                                        5
<PAGE>
              TRANSAMERICAN WASTE INDUSTRIES, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


1.             Basis of Presentation and Principles of Consolidation

               The accompanying unaudited consolidated financial statements
include the accounts of TransAmerican Waste Industries, Inc. and its
wholly-owned subsidiaries (the "Company") and have been prepared by the Company
without audit pursuant to the rules and regulations of the Securities and
Exchange Commission. All significant intercompany accounts and transactions have
been eliminated. These unaudited consolidated financial statements reflect, in
the opinion of management, all adjustments (all of which are normal and
recurring in nature, except as disclosed herein) necessary to fairly state the
financial position and the results of operations for the interim periods
presented, and the disclosures herein are adequate to make the information
presented not misleading. Operating results for interim periods are not
necessarily indicative of the results that can be expected for a full year.
Certain information related to the Company's organization, significant
accounting policies and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
has been condensed or omitted in this Form 10-Q.

               In February 1996, the Company changed its fiscal year end from
August 31 to December 31 and accordingly filed a Transition Report on Form 10-K
for the four month period ended December 31, 1995. The comparative unaudited
interim financial statements for 1995 included in this Form 10-Q have been
recast to conform to the change in fiscal year, and therefore represent a
quarterly period that has not been previously presented. These interim financial
statements should be read in conjunction with the audited consolidated financial
statements and notes thereto contained in the Company's Transition Report on
Form 10-K for the four month period ended December 31, 1995.

               As further discussed in Note 3, the Company has sold its oil
recovery and disposal operations under contractual arrangements to two separate
parties. The Consolidated Financial Statements therefore present the oil
recovery and disposal operations as an equity investment to reflect the
relinquishment of management and legal control over these businesses. Certain
prior period amounts have been reclassified to conform to the current
presentation.

2.             TERMINATION OF PROPOSED MERGER WITH WASTE INDUSTRIES, INC.

               On July 18, 1996, the Company signed a letter of intent to merge
with Waste Industries, Inc. ("Waste Industries"), pursuant to which the Company
and Waste Industries would have combined in a transaction that would have
resulted in the shareholders of Waste Industries controlling approximately 75%
of the common stock of the resulting entity. In September 1996, the Company and
Waste Industries mutually agreed to terminate the letter of intent.

3.             TRANSFER OF ASSETS UNDER CONTRACTUAL ARRANGEMENTS

               On September 30, 1996, the Company entered into two agreements to
sell the stock of its oil recovery and disposal subsidiaries, Controlled
Recovery, Inc. ("CRI") and Inland Products, Inc. ("Inland"), to two separate
parties, respectively. Under the terms of the agreements, the Company will
receive as consideration an amount equal to: (i) 47.5 % and 48.5 % of CRI's and
Inland's respective cash flow up to $150,000 per calendar quarter, plus (ii)
38.4 % and 39.2 % of their respective cash flow in excess of $150,000 per
calendar quarter. These payments will continue for the life of the businesses.
Cash flow for purposes of the calculation are subject to certain adjustments as
specified in the terms of the respective agreements.

               In conjunction with these transactions, the Company has
relinquished its management and legal control

                                        6
<PAGE>
              TRANSAMERICAN WASTE INDUSTRIES, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


over the operations of the oil recovery and disposal operations. The
Consolidated Financial Statements therefore present, retroactively, the oil
recovery and disposal operations as an equity investment. Certain prior period
amounts have been restated to conform to the current presentation. Based upon
the Company's current estimate of undiscounted future cash flows of the
businesses, which incorporate certain operational improvements expected to be
implemented by the new owners, no gain or loss has been recorded for these
transactions. However, it is reasonably possible that the Company's estimate of
undiscounted cash flows could change in the future if operations under the
management of the new owners do not meet current expectations, which could
result in the need to write-down the Company's investment.


4.             COMPLETED ACQUISITIONS

               HALEYVILLE LANDFILL. On April 10, 1996, the Company completed the
acquisition of the assets of Haleyville Sanitary Landfill, Ltd. ("HSLL") and the
common stock of Peerless Landfill Company ("Peerless"). HSLL and Peerless
managed and held the permits for the Haleyville Landfill (the "Landfill") which
consists of approximately 114 acres located approximately 80 miles northwest of
Birmingham, Alabama. The Company will manage the Landfill, which is owned by the
Solid Waste Disposal Authority for the City of Haleyville (the "Authority")
under a 20-year management agreement. The Landfill is permitted to accept 1,500
tons per day of municipal solid waste in addition to certain types of
non-hazardous industrial waste. The landfill site includes an active eleven acre
construction and demolition landfill which currently accepts approximately 150
tons per day of inert material. Before municipal solid waste can be accepted at
the site, the Company will be required to construct a new cell complying with
Subtitle D of the Resource Conservation and Recovery Act of 1976. The Company
does not intend to initiate construction of this facility until waste disposal
contracts to support the operations have been arranged. There can be no
assurances that such contracts will be obtained.

               The purchase price for the acquisition included (i) $1,500,000
cash at closing, (ii) a royalty of 2.5% of the site's revenue during 1999 and
2000 increasing to 5% of revenue thereafter, and (iii) an earnout of up to
1,166,667 shares of common stock of the Company issuable once the Landfill
reaches certain volumes of waste per day, subject to adjustment in cash or stock
in 1999 if the value of the shares of common stock issued by the Company does
not achieve a certain minimum value target. The Company has financed the
acquisition and development of this project with Solid Waste Revenue Bonds
("Bonds") consisting of $7,945,000, 20-year, 8.5% tax-exempt bonds, and
$1,000,000, 5-year, 11.5% taxable bonds. Proceeds from the financing have been
used for the initial purchase price, the establishment of debt service and
interest funds, and debt issuance and other costs for the Haleyville Landfill.
If the Company enters into waste disposal contracts, the proceeds will also be
used for construction of the new cells, purchase of equipment, purchases of the
adjoining properties for which the Company has an option, and bonding for
closure and post-closure obligations. The Bonds are secured by a pledge of
revenue derived from the Landfill and, until certain criteria are met by the
Landfill, by the management fee income from the Company-managed Chastang
landfill.

               CENTRAL LANDFILL. The Company completed the acquisition of the
Central Landfill in May 1996. Pursuant to an interim agreement, the Company
operated the facility and provided construction and improvement capital as well
as landfill development expertise since March 1995. Operations under the interim
agreement were included in the Consolidated Statements of Operations beginning
March 31, 1995. Consideration, paid in May 1996, for the landfill included
$50,000 cash and 333,000 shares of restricted common stock of the Company
(valued at $325,000). If certain revenue targets are obtained and an expansion
permit is received, the Company will pay additional consideration over the next
two years valued at $1.7 million, payable in cash and restricted common stock of
the Company.

                                        7
<PAGE>
              TRANSAMERICAN WASTE INDUSTRIES, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

5.             SALE OF SABINE COMMERCIAL COLLECTION OPERATIONS

               In April 1996, the Company sold its commercial collection
operations in Sabine Parish for $909,000, consisting of cash, the retirement of
certain liabilities and a promissory note for $437,000. The promissory note
bears interest at 8% per annum and is payable in monthly installments beginning
in May 1996 and continuing through April 1, 2004 and is collateralized by
certain assets of the purchaser. The Company recognized a gain on sale of assets
of $437,000.

               The Company and the purchaser of the commercial collection
operations (the "Purchaser") entered into a subcontract ("Subcontract") for the
residential collection contract with the Sabine Parish Police Jury. Under the
terms of the Subcontract, the Company will retain all requirements specified in
its contract with the Sabine Parish Police Jury with regard to performance bonds
and insurance.

               The Company has also entered into agreements with the Purchaser
to sell a portion of the airspace at the Sabine Parish Landfill and to sell a
portion of the airspace at the LaSalle-Grant Landfill, including transfer
service from the Company's transfer station in Alexandria, Louisiana. Revenue
has been deferred and will be recognized as the airspace is utilized. As
consideration for these agreements, the Company received a promissory note for
$240,000 bearing interest at 8% per annum payable in monthly installments
through April 2004, and a promissory note for $1,595,000 bearing interest at 8%
per annum payable in monthly installments through April 2001, respectively. The
notes are partially secured by certain assets of the Purchaser.

               At the option of the Purchaser, the Company may be required to
purchase the assets of the Purchaser used in its Louisiana operations, excluding
the commercial collection operations in Sabine Parish recently sold as noted
above, for $2,600,000, provided that a certain minimum level of revenue is
generated by such operations for the year ended January 31, 1999.

6.             SHORT-TERM BORROWING

               In August 1996, the Company issued a promissory note, bearing
interest at 12% per annum, to an investment limited partnership in exchange for
$1,500,000. The promissory note matures on February 8, 1997 and is payable in
twelve equal monthly installments beginning thirty days following the maturity
date, unless the Company completes certain other debt or equity financing at
which time the outstanding balance becomes due. The Company also issued warrants
entitling the holder to purchase an aggregate of 275,000 shares of the Company's
common stock for $2.16 per share (valued at $55,000). The warrants expire on
August 9, 1999. Proceeds from the financing, which is secured by certain
receivables, will be used for general corporate purposes.


7.             EARNINGS PER COMMON SHARE

               Earnings per common share ("EPS") have been computed based on the
weighted average number of common equivalent shares outstanding during the
applicable periods. For the nine months ended September 30, 1995 and the three
months ended September 30, 1996, common equivalent shares, including stock
options and warrants, did not impact net loss per share as they were
anti-dilutive.

               The Company's convertible subordinated debentures ("Debentures")
are not considered common equivalent shares and, therefore, are excluded from
the primary presentation of EPS. Assumed conversion is considered for the
calculation of fully diluted EPS. For the three and nine months ended September
30, 1995 and 1996, the assumed conversion of the Debentures has an anti-dilutive
effect on the fully diluted EPS computation

                                        8
<PAGE>
              TRANSAMERICAN WASTE INDUSTRIES, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

and is excluded from the presentation herein.

               The following table reconciles the number of common shares
outstanding with the number of shares used in computing EPS (in thousands):

<TABLE>
<CAPTION>
                                                                                  Three months                     Nine months
                                                                                ENDED SEPTEMBER 30,            ENDED SEPTEMBER 30,
                                                                               ----------------------        ----------------------
                                                                                1995           1996            1995          1996
                                                                               -------        -------        -------        -------
<S>                                                                             <C>            <C>            <C>            <C>   
Common shares outstanding, end of period ...............................        29,647         30,473         29,647         30,473
Effect of shares issued during the period using
               weighted average common shares ..........................        (1,639)            (1)        (6,014)          (266)
Effect of shares issuable for stock options and warrants
               based on the treasury stock method ......................          --             --             --            1,206
                                                                               -------        -------        -------        -------
Common shares used in computing earnings per share .....................        28,008         30,472         23,633         31,413
                                                                               =======        =======        =======        =======
</TABLE>

8.          COMMITMENTS AND CONTINGENCIES

            ENVIRONMENTAL MATTERS AND REGULATION. The Company is subject to
numerous rules and regulations at the federal, state and local levels. The
Company has not experienced any significant regulatory problems in the past and
believes that it is in substantial compliance with all applicable rules and
regulations. The Company cannot predict what laws or regulations might exist in
the future, and no assurance can be given that future changes in the law will
not have an adverse impact on the Company's operations. The Company's business
generally requires certain operating permits in order to conduct its operations.
The Company believes it is in material compliance with all of its operating
permits. In recent years, environmental groups and others have pressured
applicable regulatory authorities and have instituted judicial proceedings, to
overturn or block the grant of certain operating permits, or to impose
restrictions on disposal practices. For a description of litigation involving
permits relating to the Chilton County landfill see "Litigation" below. The
Company does not carry insurance coverage for environmental liability related to
its waste disposal operations. In the event uninsured losses occur, the
Company's financial condition and results of operations could be adversely
affected.

            CLOSURE AND POST-CLOSURE COSTS. The Company has material financial
obligations relating to closure and post-closure costs for the disposal
facilities it owns or operates. While the precise amount of these future
obligations cannot be determined, the Company has estimated for all its existing
facilities that the total costs for final closure and post-closure monitoring
for an estimated period of up to 30 years after closure for cells currently
being utilized will approximate $6.0 million. At September 30, 1996, the Company
had accrued approximately $4.3 million for such estimated costs based on
airspace utilized to date. The Company will continue to provide accruals based
on engineering estimates, as the available airspace is utilized. The estimate of
the total future liability is subject to change as it is based on current
economic conditions, operational results, existing regulations and a combination
of internal and external engineering specifications which may not yet have been
approved by the appropriate regulatory authorities.

            FINANCIAL ASSURANCE OBLIGATIONS. From time to time, the Company may
be required to provide performance bonds or bank letters-of-credit to secure
performance of landfill management and hauling contracts or to secure its
closure and post-closure obligations with respect to its landfills. At September
30, 1996, the Company has provided performance bonds totaling $8.0 million and
letters-of-credit totaling approximately $200,000 to secure its obligations. The
Company has arranged a $20 million performance bond line of credit, subject to
review of each contract bonded and certain other conditions. In certain cases,
the Company may be required to provide cash deposits.

                                        9
<PAGE>
              TRANSAMERICAN WASTE INDUSTRIES, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

            SETTLEMENT WITH LOWELL HARRELSON. In August 1995, Lowell L.
Harrelson entered into a consulting agreement with the Company to provide solid
waste acquisition and development opportunities to the Company, and
contemporaneously resigned as an officer and director of the Company. In
December 1995, the Company filed a lawsuit against Mr. Harrelson for, among
other things, failing to fully and faithfully execute his duties as an officer
and director of the Company and discontinued making the consulting payments. Mr.
Harrelson filed counterclaims against the Company for breach of contract and
fraud claiming unspecified damages. In February 1996, a settlement was reached
between the Company and Mr. Harrelson whereby both parties released all claims
and the consulting agreement was deemed terminated effective November 30, 1995.
Under the terms of the agreement, the Company received $275,000. Additionally,
all of Mr. Harrelson's vested options were exercised and all outstanding
warrants and unvested stock options were canceled.

            LITIGATION. McGinnes Industrial Maintenance Corporation ("MIMC"), a
wholly owned subsidiary of the Company, has been named as one of approximately
40 co-defendants in a lawsuit styled TAMMY FISHER WHALEN, ET AL. V. AES, INC.,
ET AL., Cause No. 93-CV0211, filed in the District Court of Galveston County,
Texas, 10th Judicial District. The suit consolidated four separate proceedings
filed by seventy-four persons currently or formerly residing on real property
situated approximately five miles or more from the Company's former wastewater
sludge treatment facility located in Galveston County, Texas, and names as
defendants, in addition to MIMC, a former director and principal stockholder of
the Company (now deceased), and approximately 40 industrial companies and cities
located along or near the Houston Ship Channel. The suit alleges personal injury
and property damages resulting from alleged releases of hazardous and toxic
substances from the Company's former wastewater sludge treatment facility. In
September 1994, seventeen of the original plaintiffs were dismissed with
prejudice from the litigation. The Company, as well as the other defendants,
reached an out-of-court settlement with the majority of the remaining
plaintiffs. The Company's contribution toward settlement of the consolidated
lawsuit was approximately $30,000. In March 1994, nine additional plaintiffs
filed a petition in intervention in Cause No. 93- CV0211. In October 1995, the
plaintiff-intervenors amended their petition to delete a number of allegations
and causes of actions against defendants. Although there can be no assurance as
to the outcome of any lawsuit, the Company believes that the claims made by
plaintiff-intervenors in this suit are without merit and that the exposure of
the Company in such litigation is minimal. The Company has been advised by its
outside counsel, Ford & Ferraro, L.L.P., to such effect. The Company is
vigorously defending these actions.

            In June 1995, certain citizens of Chilton County, Alabama filed a
complaint against the Chilton County Commission ("Commission") and the Company,
which claimed that the Commission failed to comply with certain statutorily
mandated procedures pertaining to (i) the transfer of the Chilton County
Landfill from the County to the Company and (ii) the approval of certain
subsequent permit modifications. Each of the parties filed a motion for summary
judgment. On January 11, 1996, the Circuit Court of Chilton County, Alabama
entered a final order granting in part and denying in part each parties' motion
for summary judgment. The transfer of the landfill to the Company was upheld.
However, the claims for which plaintiffs were granted summary judgment relate to
certain permit modifications that increased the allowable daily volume and
expanded the permissible service area of the facility. The Company has appealed
that portion of the order granting partial summary judgment to the plaintiffs.
On January 12, 1996, the Circuit Court of Chilton County, Alabama granted a stay
of its order pending appeal, but as a condition of granting the stay imposed a
daily volume limit which is less than the amount reflected on the Company's
permit, as modified. Oral arguments were heard in October 1996 and a ruling on
the appeal is expected in early 1997. Although there can be no assurance as to
the outcome of any litigation, the Company believes the claims brought by the
citizens are without merit and will vigorously pursue its appeal. If the Company
is unsuccessful in its appeal, it would limit the landfill's volume to the
original permitted amount, thereby reducing volume and revenue below the current
level generated under the court's stay.

            In addition to the foregoing, the Company is involved in other
litigation incidental to the conduct of its business, none of which management
believes is, individually or in the aggregate, material to the Company's
financial condition or results of operations.

                                       10
<PAGE>
              TRANSAMERICAN WASTE INDUSTRIES, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

9.        SUPPLEMENTAL CASH FLOW INFORMATION

            Noncash investing and financing activities for the nine months ended
September 30, 1996 were as follows (in thousands):

       Equipment acquired with debt financing ..................   $1,601
       Financing of insurance premiums .........................      607
       Note receivable from sale of Sabine commercial operations      437
       Debt retired by purchaser of Sabine commercial operations      286
       Stock issued for acquisition of Central landfill ........      325

10.         DEVELOPMENT SERVICES AGREEMENT

            In March 1996, the Company entered into a Development Services
Agreement with E.C. Development, L.P. ("ECD"), a company controlled by a
director of the Company, whereby ECD will provide the Company with certain
development services related to locating landfill facilities. The agreement has
a five-year term and may be terminated by either party upon 90 days prior
notice. In consideration for these services, ECD received warrants to purchase
two million shares of common stock at $1.50 per share. The warrants vest fully
on March 1, 2001 as long as ECD is providing services to the Company on that
date, however, the vesting accelerates one warrant for every one dollar of
direct costs incurred by ECD in performing services under the agreement. The
fair value of the warrants is being amortized over the term of the agreement.
ECD is also entitled to additional compensation upon the closing of each
transaction related to landfill facilities identified for the Company by ECD.
This additional compensation consists of (i) 50,000 shares of common stock of
the Company, subject to adjustment under certain conditions, (ii) a warrant to
purchase 100,000 shares of common stock of the Company at the market price on
the trading day immediately preceding the transaction date, and (iii) $250,000
cash upon the closing of the financing for the facility or twelve months
following the closing, whichever is sooner.


11.         ADOPTION OF NEW ACCOUNTING PRINCIPLE

            The Company has adopted Statement of Financial Accounting Standards
("SFAS") No. 121 "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" as of January 1, 1996. SFAS No. 121
requires that if a long-lived asset is not expected to generate sufficient cash
flow (undiscounted) to recoup its invested cost, then the asset value should be
written down to fair value. Fair value is typically defined as the discounted
value of the assets expected cash flow. There was no impact on the Company's
Consolidated Financial Statements as a result of the adoption of this new
accounting principle. However, reference is made to Note 3 for discussion of the
Company's investment in oil recovery and disposal operations.


12.         SUBSEQUENT EVENT

            The Company has extended the expiration date of the Company's Class
A warrants and Class B warrants from November 11, 1996 until November 11, 1997.
The Class A warrant entitles each holder to receive one share of common stock
and a Class B warrant for $4.50. The Class B warrant entitles each holder to
receive one share of common stock at an exercise price of $6.53.

                                       11
<PAGE>
ITEM 2.               MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

            TransAmerican Waste Industries, Inc. (the "Company") is engaged in
the processing and disposal of nonhazardous industrial and municipal solid
waste. The Company has expanded its operations primarily by obtaining long-term
contracts to manage existing municipal landfills and through the acquisition of
existing businesses. The Company believes that recent trends in the regulation
of waste management have created significant opportunities for growth through
acquisition of facilities and operations currently owned by public and private
entities that lack the funding or the expertise to comply with the increasingly
stringent regulation of waste management services.


            The following table summarizes the Company's management contracts
and acquisitions completed during the years ended August 31, 1994 and 1995 and
through November 14, 1996:

<TABLE>
<CAPTION>
                                                                                   Type of                     Total      Permitted
 Date         Name of Business        Type of Business             Location        Transaction                 Acres      Acreage
 ----         ----------------        ----------------             --------        -----------                 -----      -------
<S>           <C>                     <C>                          <C>             <C>                         <C>          <C>
October       Chastang Landfill       Municipal solid waste        Mobile,         20-year management           467         102
1993                                  ("MSW") and                  Alabama         contract
                                      industrial waste landfill

April         Sabine Parish           MSW landfill                 Many,           25-year management           107          71
1994          Landfill                                             Louisiana       contract

April         Sabine Parish           MSW collection               Many,           10-year hauling              ---         ---
1994          Hauling (a)                                          Louisiana       contract

May           Chilton County          MSW landfill                 Thorsby,        Purchase                     97           97
1994          Landfill                                             Alabama

September     LaSalle-Grant           MSW landfill                 Jena,           25-year management           39           39
1994          Parish Landfill                                      Louisiana       contract

February      Central Landfill        MSW landfill                 Carriere,       Purchase                     20           20
1995                                                               Mississippi

April         Mobile C&D              Construction and             Mobile,         2-year management            142          25
1995          Landfill                demolition ("C&D")           Alabama         contract with
                                      landfill                                     purchase option

June          TransWaste, Inc.        Transfer station,            Alexandria,     Purchase                     20           20
1995                                  materials recovery           Louisiana
                                      facility and hauling
                                      operation

June          Hancock County          MSW and                      Hancock         20-year management           96           96
1995          Landfill                C&D landfill                 County,         contract
                                                                   Mississippi     


July          Union County            MSW landfill                 Knoxville,      20-year management           90           55
1995          Landfill                                             Tennessee       contract

April         Haleyville              MSW and                      Haleyville,     20-year management
1996          Landfill                C&D landfill                 Alabama         contract                     113          11
</TABLE>

(a)      This operation was subsequently subcontracted to a third party in April
         1996, as further discussed in Note 5 of Notes to Unaudited Consolidated
         Financial Statements.

                                       12
<PAGE>
            The Company had previously announced that it had signed a letter of
intent to merge with Waste Industries, Inc. ("Waste Industries"), pursuant to
which the Company and Waste Industries would have combined in a transaction that
would have resulted in the shareholders of Waste Industries controlling
approximately 75% of the common stock of the resulting entity. As discussed in
Note 2, the Company and Waste Industries mutually agreed to terminate the letter
of intent in September 1996.

            As discussed in Note 3, the Company has entered into two agreements
to sell the stock of its oil recovery and disposal subsidiaries, Controlled
Recovery, Inc. ("CRI") and Inland Products, Inc. ("Inland"), to two separate
parties, respectively. Under the terms of the agreements, the Company will
receive as consideration an amount equal to (i) 47.5 % and 48.5 % of CRI's and
Inland's respective cash flow up to $150,000 per calendar quarter, plus (ii)
38.4 % and 39.2 % of their respective cash flow in excess of $150,000 per
calendar quarter. These payments will continue for the life of the businesses.
The Company has relinquished its management and legal control over the
operations of these businesses, therefore the oil recovery and disposal
operations have been presented, retroactively, as an equity investment in the
Consolidated Financial Statements.


RESULTS OF OPERATIONS

            Revenue for the three months ended September 30, 1996 was $4,085,000
compared to $2,505,000 for the three months ended September 30, 1995,
representing an increase of 63%. Revenue for the nine months ended September 30,
1996 was $12,074,000, representing an increase of 101% compared to revenue of
$5,997,000 for the nine months ended September 30, 1995. The increase in revenue
is primarily due to the acquisition of additional management contracts and
businesses since the beginning of 1995 in addition to increased waste volumes at
existing landfills. Although there can be no assurance, the Company anticipates
that landfill revenue will continue to increase as the Company continues to
implement its strategy of obtaining additional volume at existing sites and
obtaining additional facilities.

            Cost of services increased from $1,426,000 for the third quarter of
1995 to $2,284,000 for the third quarter of 1996, representing an increase of
60%. Year-to-date cost of services increased from $3,740,000 for 1995 to
$6,369,000 for 1996, representing an increase of 70%. The increase is primarily
due to the recently acquired management contracts and businesses, however
operating costs are primarily fixed in nature and do not increase
proportionately with the increase in revenue. The increase in year-to-date cost
of services attributable to the additional management contracts and businesses
was partially offset by a decrease in certain post-closure cost estimates.

            For the three months ended September 30, 1996, general and
administrative costs of $782,000 were consistent with $768,000 for the
corresponding period of the prior year. General and administrative costs for the
nine months ended September 30, 1996 were $2,495,000 compared to $2,462,000 for
the nine months ended September 30, 1995. General and administrative cost for
the nine months ended September 30, 1996 was partially offset by a portion of
the settlement of the lawsuit with a former director/officer of the Company as
discussed in Note 8 of Notes to Unaudited Consolidated Financial Statements.

            Interest expense for the third quarter of 1996 was $800,000 compared
to the prior year amount of $552,000. Year-to-date interest expense for 1996 was
$2,155,000 compared to the prior year amount of $1,650,000. The increase in
interest expense is primarily due to additional debt incurred by the Company in
connection with the acquisition of additional landfills and management
contracts, partially offset by a reduction resulting from the exchange of
Debentures for equity in March 1995.

            The gain on sale of assets for the nine months ended September 30,
1996 is related to the sale of the commercial collection operations in Sabine
Parish as discussed in Note 5.

            Interest and other income, net for the third quarter of $195,000 for
1996 was consistent with $201,000 for the corresponding period of the prior
year. For the nine months ended September 30, 1996 compared to 1995, interest
and other income, net increased from $223,000 to $636,000. The increase is
primarily due to interest income on additional restricted cash balances. The
nine months ended September 30, 1996 also includes a portion of the settlement
of the lawsuit with the former director/officer of the Company discussed above.

            Loss from oil recovery and disposal operations for the three months
ended September 30, 1996 was

                                       13
<PAGE>
$279,000 compared to $98,000 for the three months ended September 30, 1995. For
the nine months ended September 30, 1996, the loss from oil recovery and
disposal operations was $690,000 compared to $336,000 for the corresponding
period of the prior year. The decreases are primarily due to lower volumes
processed at the facility. Revenues of these operations were $866,000 for the
three months ended September 30, 1996 compared to $1,044,000 for the
corresponding period of the prior year. Year-to-date revenues of these
operations were $2,228,000 for 1996 compared to $2,596,000 for 1995.


LIQUIDITY AND CAPITAL RESOURCES

            The Company's strategy for growth has been the privatization or
acquisition of municipal solid waste landfills. The Company has recently
expanded its growth strategy to include acquisitions of collection operations.
This growth strategy has required, and will require, a significant investment of
cash for the initial acquisition of management contracts and businesses, the
subsequent upgrade and expansion of the sites and the start-up of operations
under the Company's management. Completion of the Company's various debt and
equity financings over the past two years has enabled the Company to fund this
corporate development and to favorably position the Company's future operations.
For the nine months ended September 30, 1996, cash flow from operations was
$2,346,000.

            The Company intends to fund its cash requirements, including capital
projects, for the foreseeable future through cash on hand, cash generated from
its operations and the completion of additional debt or equity financings. If
additional debt or equity were not available in the future, it could have an
adverse effect on the Company's liquidity.

            In April 1996, an offering was completed of $7,945,000 principal
amount Tax-Exempt Solid Waste Revenue Bonds and $1,000,000 principal amount
Taxable Solid Waste Revenue Bonds in conjunction with the Haleyville Landfill
acquisition. In addition to the initial purchase price, proceeds from the
financing will be used for (i) construction of new cells, (ii) purchase of
equipment and the purchase of the adjoining properties for which the Company has
an option, (iii) bonding for closure and post-closure obligations, (iv) debt
service and interest funds, and (v) debt issuance and certain other costs for
the Haleyville Landfill, depending upon the entry into waste disposal contracts
adequate to support construction and operation of the project.

            Although the Company will continue to seek additional facilities,
the Company is pursuing additional waste streams for its existing facilities.
Additional volumes at competitive market prices will enhance the Company's
results of operations as a substantial amount of the landfill operating costs
are fixed in nature and will, therefore, not increase proportionately as volumes
and revenue increase. During the latter part of 1995, the Company entered into
contracts at several of its sites with large national providers of hauling
services which has had a favorable impact on revenue and results of operations
since that time. As is customary in the industry, these contracts generally do
not guarantee a minimum volume.

            The Company plans to obtain additional landfill management contracts
and to acquire additional businesses in the future. As in the past, the Company
intends to fund this growth through a combination of its cash on hand,
short-term bridge financing, long-term tax-exempt or other debt financing, or by
issuing its Common Stock. The Company's recent financing strategy has included
the use of short-term financing until long-term, low-interest financing could be
arranged. As the Company continues its growth, it will consider all financing
alternatives that may become available.

            In August 1996, the Company issued a promissory note, bearing
interest at 12% per annum, to an investment limited partnership in exchange for
$1,500,000. The promissory note matures on February 8, 1997 and is payable in
twelve equal monthly installments beginning thirty days following the maturity
date, unless the Company completes certain other debt or equity financing at
which time the outstanding balance becomes due. Proceeds from the financing,
which is secured by certain receivables, will be used for general corporate
purposes.

            The Company expects that the operating results of certain of the
Company's landfills will be positively impacted for the balance of fiscal 1996
and 1997 by recent regulatory approval of the Company's application for vertical
expansion, which allows these sites to continue to dispose of waste in existing
available areas of the landfill rather than move to fully-lined areas. This will
result in the deferral of certain capital expenditures while allowing the
Company to utilize existing space which otherwise would be lost.

                                       14
<PAGE>
            The Company made $4.8 million in capital expenditures for the nine
months ended September 30, 1996, a portion of which was financed, and estimates
that it may make up to an additional $6.5 million in capital expenditures during
the next twelve months, primarily for landfill expansion and improvements and
equipment purchases, depending upon the level of new business obtained by the
Company. The Company intends to seek long-term financing for a majority of its
capital expenditure requirements. If additional financing should not be
available, the Company would restrict its capital expenditures to the amount
available for such purposes.

            In the future, the Company will also have material financial
obligations relating to closure and post- closure costs for disposal facilities
it owns or operates. While the precise amount of these future obligations cannot
be determined, the Company has estimated that total costs for final closure of
its existing facilities and post-closure monitoring for an estimated period of
up to 30 years after closure will approximate $6.0 million. See Note 8 of the
Notes to Unaudited Consolidated Financial Statements included herein for
information regarding these obligations.

            The Company has and will be required from time-to-time to obtain
financial assurance security for performance, closure and post-closure
obligations, a portion of which may be funded with cash deposits or other
collateral. The Company has arranged a $20 million performance bond line of
credit subject to review of each contract bonded and to certain other
conditions. In certain cases, the Company may be required to provide cash
deposits. The Company has also entered into various compensation and consulting
commitments which require significant cash payments for 1996.


FINANCIAL CONDITION AT SEPTEMBER 30, 1996 COMPARED TO DECEMBER 31, 1995

            Cash and cash equivalents were $1,532,000 at December 31, 1995 and
$2,038,000 at September 30, 1996, representing an increase for the nine months
ended September 30, 1996 of $506,000. The increase is primarily attributable to
the $1,500,000 promissory note issued in August 1996.

            Current and non-current restricted cash in the aggregate increased
from $9,714,000 at December 31, 1995 to $15,625,000 at September 30, 1996,
primarily due to the proceeds from the issuance of Solid Waste Revenue Bonds in
conjunction with the Haleyville Landfill acquisition.

            Property and equipment, net, increased $5,657,000 from December 31,
1995 to September 30, 1996 primarily due to the completion of the acquisition of
the Central and Haleyville landfills in addition to capital expenditures during
the period for cell development and equipment purchases.

            Net assets transferred under contractual arrangements reflects the
Company's investment in the oil recovery and disposal operations. As discussed
in Note 3, the Company sold the stock of the subsidiaries engaged in these
operations and will receive as consideration a percentage of the future cash
flows of these businesses.

            Other noncurrent assets, net at September 30, 1996 were $2,497,000
compared to $1,102,000 at December 31, 1995. The increase is primarily
attributable to the promissory notes received in conjunction with the sale of
the commercial collection operations in Sabine Parish and the sale of a portion
of the airspace at the Sabine Parish and LaSalle-Grant landfills, as further
discussed in Note 5.

            Accrued liabilities and other increased from $1,789,000 to
$2,566,000, and other noncurrent liabilities increased from $447,000 to
$1,818,000, from December 31, 1995 to September 30, 1996, respectively. The
increases are primarily attributable to the deferred revenue related to the sale
of the portion of the airspace at the Sabine Parish and LaSalle-Grant landfills,
as further discussed in Note 5.

            The increase in aggregate current and long-term debt from
$31,029,000 at December 31, 1995 to $41,897,000 at September 30, 1996, is
primarily due to the offering of $8,945,000 Solid Waste Revenue Bonds completed
in conjunction with the Haleyville Landfill acquisition and the $1,500,000
promissory note issued in August 1996.

            Management believes that there is substantial unrecognized equity in
its long-term management contracts since these contracts are recorded at
historical cost which management believes is significantly less than the market
value of these contracts.

                                       15
<PAGE>
ADOPTION OF NEW ACCOUNTING PRINCIPLE

            The Company has adopted Statement of Financial Accounting Standards
("SFAS") No. 121 "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" as of January 1, 1996. SFAS No. 121
requires that if a long-lived asset is not expected to generate sufficient cash
flow (undiscounted) to recoup its invested cost, then the asset value should be
written down to fair value. Fair value is typically defined as the discounted
value of the assets expected cash flow. There was no impact on the Company's
Consolidated Financial Statements as a result of the adoption of this new
accounting principle.

            As discussed in Note 3, the Company sold the stock of its oil
recovery and disposal operations and will receive as consideration a percentage
of the future cash flows of these businesses. Based upon the Company's current
estimate of undiscounted cash flows of these businesses, which incorporate
certain operational improvements expected to be implemented by the new owners,
no gain or loss was recorded. However, it is reasonably possible that the
Company's estimate of undiscounted cash flows could change in the future if
operations under the management of the new owners do not meet current
expectations, which could result in the need to write-down the Company's
investment to fair value.

                                       16
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

            Reference is made to Note 8 of Notes to Unaudited Consolidated
Financial Statements for a discussion of certain legal proceedings involving the
Company.


ITEM 2.  CHANGES IN SECURITIES

            The Company has extended the expiration date of the Company's Class
A warrants and Class B warrants from November 11, 1996 until November 11, 1997.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

            (a)         The following exhibits are included herein:

            10.1        Stock Purchase Agreement between TransAmerican Waste
                        Industries, Inc., Controlled Recovery, Inc, and Johnny
                        D. Cope and KRM Inc., dated as of September 30, 1996

            10.2        Stock Purchase Agreement between TransAmerican Waste
                        Industries, Inc., Inland Products, Inc., and The Inland
                        Group, LLC, dated as of September 30, 1996

            27.1        Financial Data Schedule

            (b)      Reports on Form 8-K

            None

                                       17
<PAGE>
                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                         TRANSAMERICAN WASTE INDUSTRIES, INC.

                                         By: /s/ LANCE C. RUUD
                                                 Lance C. Ruud, 
                                                 Senior Vice President and 
                                                 Chief Financial Officer

November 14, 1996

                                       18