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 December 31, 2008
                              ------------------

                                       Or

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

For the transition period from ________________to _________________

Commission File No. 0-8693
                    ----------------------

                              TRANSNET CORPORATION
             (Exact name of registrant as specified in its charter)

        DELAWARE                                         22-1892295
--------------------------------            ------------------------------------
(State or other jurisdiction of             (IRS Employer Identification Number)
incorporation or organization)

45 Columbia Road, Somerville, New Jersey                         08876-3576
----------------------------------------                    --------------------
(Address of principal executive offices)                          (Zip Code)

Registrant's Telephone Number, Including Area Code:             908-253-0500
                                                                ------------

--------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last Report

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 period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
                                                                Yes  X    No
                                                                    ---      ---

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company (as
defined in Rule 12b-2 of the Act)

         Large Accelerated Filer __          Accelerated Filer ___
         Non-accelerated Filer ____          Smaller Reporting Company  X
                                                                       ---

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act)
    Yes   X   No
---      ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of February 12, 2009: 4,823,304.


<PAGE>


                              TRANSNET CORPORATION
                                    FORM 10-Q

                                TABLE OF CONTENTS


                                                                      Page No.
                                                                      --------
PART I.  FINANCIAL INFORMATION
-------  ---------------------

      Consolidated Balance Sheets
               December 31, 2008 (unaudited) and June 30, 2008           1


      Consolidated Statements of Operations (unaudited)
               Three Months Ended December 31, 2008 and 2007             2
               Six Months Ended December 31, 2008 and 2007               3


      Consolidated Statements of Cash Flows (unaudited)
               Six Months Ended December 31, 2008 and 2007               4


      Notes to Consolidated Financial Statements                         5


  Item 2.  Management's Discussion and Analysis                          9


  Item 4.  Controls and Procedures                                      15


PART II.  OTHER INFORMATION
-------   -----------------
  Item 6.  Exhibits and Reports on Form 8-K                             16

  Signatures                                                            16
  Certifications                                                        17



                                       i.
<PAGE>


                       TRANSNET CORPORATION AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>


                                                                        December 31,      June 30,
                                                                           2008             2008
                                                                        ------------    ------------
                                                                        (unaudited)
<S>                                                                          <C>             <C>
ASSETS:
CURRENT ASSETS
Cash and Cash Equivalents                                               $    449,568    $    314,618
Restricted Cash                                                              850,248         837,010
Accounts Receivable - Net                                                  4,335,816       6,477,948
Inventories - Net                                                            164,167         265,977
Other Current Assets                                                          50,706          17,974
                                                                        ------------    ------------

TOTAL CURRENT ASSETS                                                    $  5,850,505    $  7,913,527

PROPERTY AND EQUIPMENT - NET                                                 203,396         271,695

OTHER ASSETS                                                                 206,207         204,162
                                                                        ------------    ------------

TOTAL ASSETS                                                            $  6,260,108    $  8,389,384
                                                                        ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts Payable                                                           1,249,457    $    845,579
Accrued Expenses                                                             498,664         410,729
Lines of Credit                                                              514,296       1,955,042
                                                                        ------------    ------------

TOTAL CURRENT LIABILITIES                                               $  2,262,417    $  3,211,350

STOCKHOLDERS' EQUITY:
Capital Stock - Common, $.01 Par Value, Authorized 15,000,000 Shares;
Issued 7,408,524 at December 31, 2008 and June 30, 2008 [of which
2,585,220 are in Treasury at
December 31, 2008 and June 30, 2008]                                          74,085          74,085

Additional Paid-in Capital                                                10,574,670      10,574,670

Retained Earnings                                                            501,771       1,682,114
                                                                        ------------    ------------

Totals                                                                    11,150,526      12,330,869

Less: Treasury Stock - At Cost                                            (7,152,835)     (7,152,835)
                                                                        ------------    ------------

TOTAL STOCKHOLDERS' EQUITY                                                 3,997,691       5,178,034
                                                                        ------------    ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                              $  6,260,108    $  8,389,384
                                                                        ============    ============
</TABLE>


See Notes to Consolidated Financial Statements.

                                                                               1

<PAGE>


                       TRANSNET CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>


                                                           THREE MONTHS ENDED DECEMBER 31,
                                                           -------------------------------
                                                                2008           2007
                                                             -----------    -----------
<S>                                                          <C>            <C>
REVENUE
Equipment                                                    $ 3,432,586    $ 3,532,053
Services                                                       1,711,386      3,743,344
                                                             -----------    -----------

Total Revenue:                                                 5,143,972      7,275,397
                                                             -----------    -----------
COST OF REVENUE
Equipment                                                      3,321,014      3,152,269
Services                                                       1,595,834      2,453,921

Total Cost of Revenue                                          4,916,848      5,606,190
                                                             -----------    -----------

Gross Profit                                                     227,124      1,669,207

Selling, General and Administrative Expenses                   1,451,398      1,652,177
                                                             -----------    -----------

Operating  Income (Loss)                                      (1,224,274)        17,030
                                                             -----------    -----------

Interest Income                                                    6,678         13,410
Interest Expense                                                 (13,178)       (54,364)
                                                             -----------    -----------

Income (Loss) Before Tax Expense                              (1,230,774)       (23,924)

Income Tax (Benefit)                                                  --             --
                                                             -----------    -----------

Net (Loss)  Income                                           $(1,230,774)   $   (23,924)
                                                             ===========    ===========

Basic Net Income (Loss)  Per Common Share                    $     (0.26)   $     (0.00)
                                                             ===========    ===========

Diluted Net Income (Loss) Per Common Share                   $     (0.26)   $     (0.00)
                                                             ===========    ===========

Weighted Average Common Shares Outstanding - Basic             4,823,304      4,823,304
                                                             ===========    ===========

Weighted Average Common Shares Outstanding - Diluted           4,823,304      4,823,304
                                                             ===========    ===========


</TABLE>

See Notes to Consolidated Financial Statements.

                                                                               2

<PAGE>


                       TRANSNET CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                       SIX MONTHS ENDED DECEMBER 31,
                                                       -----------------------------
                                                           2008           2007
                                                       ------------    ------------
<S>                                                    <C>             <C>
REVENUE
Equipment                                              $  9,360,914    $  9,268,145
Services                                                  4,348,322       7,014,249
                                                       ------------    ------------

Total Revenue:                                           13,709,236      16,282,394
                                                       ------------    ------------

COST OF REVENUE
Equipment                                                 8,305,615       8,262,208
Services                                                  3,344,727       4,663,306
                                                       ------------    ------------
Total Cost of Revenue                                    11,650,342      12,925,514
                                                       ------------    ------------

Gross Profit                                              2,058,894       3,356,880

Selling, General and Administrative Expenses              3,217,549       3,317,414
                                                       ------------    ------------

Operating Income (Loss)                                  (1,158,655)         39,466
                                                       ------------    ------------


Interest Income                                              13,345          27,782
Interest Expense                                            (35,033)        (59,276)

Income (Loss)  Before Tax Expense                        (1,180,343)          7,972

Provision for Income Tax (Benefit)                               --              --
                                                       ------------    ------------

Net Income (Loss)                                      $ (1,180,343)   $      7,972
                                                       ============    ============

Basic Net Income (Loss) Per Common Share               $      (0.24)   $       0.00
                                                       ============    ============

Diluted Net Income (Loss)  Per Common Share            $      (0.24)   $       0.00
                                                       ============    ============

Weighted Average Common Shares Outstanding - Basic
                                                          4,823,304       4,823,304
                                                       ============    ============

Weighted Average Common Shares Outstanding - Diluted
                                                          4,823,304       4,904,440
                                                       ============    ============

</TABLE>

See Notes to Consolidated Financial Statements.

                                                                               3

<PAGE>


                       TRANSNET CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                     SIX MONTHS ENDED DECEMBER 31,
                                                     -----------------------------
                                                         2008           2007
                                                      -----------    -----------
<S>                                                   <C>            <C>
OPERATING ACTIVITIES:
Net (Loss) Income                                     $(1,180,343)   $     7,972
                                                      -----------    -----------
Adjustments to Reconcile Net Income
    to Net Cash:

Depreciation and Amortization                              76,453        115,499

Changes in Assets and Liabilities:
(Increase) Decrease in:
Restricted Cash                                           (13,238)            --
Accounts Receivable                                     2,142,132       (386,026)
Inventory                                                 101,810       (307,279)
Other Current Assets                                      (32,732)       (58,640)
Other Assets                                               (2,130)        (1,958)

Increase (Decrease) in:
Accounts Payable and Accrued Expenses                     491,813        368,593
                                                      -----------    -----------

Total Adjustments                                     $ 2,764,108    $  (269,811)
                                                      -----------    -----------

NET CASH - OPERATING ACTIVITIES - FORWARD             $ 1,583,765    $  (261,839)
                                                      -----------    -----------

INVESTING ACTIVITIES:
Capital Expenditures                                  $    (8,069)   $   (30,530)
                                                      -----------    -----------

NET CASH - INVESTING ACTIVITIES                       $    (8,069)   $   (30,530)
                                                      -----------    -----------

FINANCING ACTIVITIES -
Lines of Credit - Net                                  (1,440,746)       232,191


NET (DECREASE) INCREASE IN CASH                       $   134,950    $   (60,178)

CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIODS                                  $   314,618    $ 2,462,442
                                                      -----------    -----------

CASH AND CASH EQUIVALENTS AT
END OF PERIODS                                        $   449,568    $ 2,402,264
                                                      -----------    -----------

Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for:
Interest                                              $    35,033    $    59,276

Income Taxes                                          $     1,457    $        --


</TABLE>

See Notes to Consolidated Financial Statements.

                                                                               4
<PAGE>



                       TRANSNET CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

(1.)   BASIS OF PRESENTATION

       The accompanying unaudited financial statements have been prepared in
       accordance with accounting principles generally accepted in the United
       States of America for interim financial information and with the
       instructions to Form 10-Q and Article 8 of Regulation S-X. They do not
       include all of the information and footnotes required by accounting
       principles generally accepted in the United States of America for
       complete financial statements. In the opinion of management, all
       adjustments (consisting of normal recurring accruals) considered
       necessary in order to make the interim financials not misleading have
       been included and all such adjustments are of a normal recurring nature.
       The operating results for the three months end December 31, 2008 are not
       necessarily indicative of the results that can be expected for the year
       ending June 30, 2009.

       The balance sheet as of June 30, 2008 has been derived from the audited
       financial statements at such date, but does not include all of the
       information and footnotes required by accounting principles generally
       accepted in the United States of America for complete financial
       statements.

       The accounting policies followed by TransNet Corporation (the
       "Corporation") are set forth in Note 2 to the Corporation's consolidated
       financial statements in the Form 10-K for the fiscal year ended June 30,
       2008.

       For further information, please refer to the consolidated financial
       statements and footnotes thereto included in the Corporation's Annual
       Report on Form 10-K for the year ended June 30, 2008.

       All material intercompany transactions have been eliminated in
       consolidation.

       Certain reclassifications have been made to prior period financial
       statements to conform to the current year presentation.

(2.)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       (a) Consolidation: The consolidated financial statements include the
       accounts of the Corporation and its wholly owned subsidiary, Century
       American Corporation. Intercompany transactions and accounts have been
       eliminated in consolidation.

       (b) Inventory: Inventory consists of finished goods. The Corporation's
       inventory is valued at the lower of cost (determined on the average cost
       basis) or market.

       (c) Cash and Cash Equivalents: For the purposes of the statement of cash
       flows, the Corporation considers highly liquid debt instruments,
       purchased with a maturity of three months or less, to be cash
       equivalents.

       (d) Revenue Recognition: Revenues related to our equipment sales are
       recognized when evidence of an arrangement exists, delivery of equipment
       has occurred, the sales price of the equipment being sold to our
       customers is both fixed and determinable and collectability of the
       accounts receivable related to the equipment sale is reasonably assured
       in accordance with SEC Staff Accounting Bulletin No. 104 Topic 13.

       Revenues related to our services are recognized as the service is
       performed using the percentage of completion method of accounting under
       which the total contract revenue during the term of an agreement is
       recognized on the basis of the percentage that each contract's
       proportional




                                                                               5
<PAGE>

       performance to date bears to the total completion of performance.
       Estimates of proportional performance are continuously monitored during
       the term of the contract, and recorded revenues and costs are subject to
       revision as the contract progresses.

       (e) Earnings Per Share: Earnings per common share - basic and diluted are
       based on 4,823,304 weighted shares outstanding for the three and six
       months ended December 31, 2008 and 2007. The options to purchase an
       aggregate of 297,500 shares of our common stock at a price of $0.88 per
       share were not included in the computation of diluted earnings per share
       for the periods ended December 31, 2008 because the options' exercise
       price was greater than the average market price of the common shares.

(3.)   NEW ACCOUNTING PRONOUNCEMENTS

       In September 2006, the Financial Accounting Standards Board ("FASB")
       issued Statement of Financial Accounting Standards ("SFAS") No. 157, FAIR
       VALUE MEASUREMENTS ("SFAS 157"). SFAS 157 establishes a single definition
       of fair value and a framework for measuring fair value, sets out a fair
       value hierarchy to be used to classify the source of information used in
       fair value measurements, and requires new disclosures of assets and
       liabilities measured at fair value based on their level in the hierarchy.
       This statement applies under other accounting pronouncements that require
       or permit fair value measurements. In February 2008, the FASB issued
       Staff Positions ("FSPs") No. 157-1 and No. 157-2, which, respectively,
       remove leasing transactions from the scope of SFAS 157 and defer its
       effective date for one year relative to certain nonfinancial assets and
       liabilities. As a result, the application of the definition of fair value
       and related disclosures of SFAS 157 (as impacted by these two FSPs) was
       effective for the Corporation beginning July 1, 2008 on a prospective
       basis with respect to fair value measurements of all financial assets and
       liabilities. This adoption did not have a material impact on the
       Corporation's consolidated results of operations or financial condition.
       The remaining aspects of SFAS 157 for which the effective date was
       deferred under FSP No. 157-2 are currently being evaluated by the
       Corporation. Areas impacted by the deferral relate to nonfinancial assets
       and liabilities that are measured at fair value, but are recognized or
       disclosed at fair value on a nonrecurring basis. This deferral applies to
       items such as long-lived asset groups measured at fair value for an
       impairment assessment. The effects of the remaining aspects of SFAS 157
       are to be applied by the Corporation to fair value measurements
       prospectively beginning July 1, 2009. The Corporation does not expect
       them to have a material impact on its consolidated results of operations
       or financial condition. In October 2008, the FASB issued Staff Position
       No. FAS 157-3, DETERMINING THE FAIR VALUE OF A FINANCIAL ASSET WHEN THE
       MARKET FOR THAT ASSET IS NOT ACTIVE ("FSP 157-3"). FSP 157-3 clarifies
       the application of SFAS 157, which the Corporation adopted as of July 1,
       2008, in cases where a market is not active. The Corporation has
       considered the guidance provided by FSP 157-3 and determined that the
       impact was not material on estimated fair values as of September 30,
       2008. See Note 4 for disclosures required by this new pronouncement.

       In December 2007, the FASB issued SFAS No. 141R, BUSINESS COMBINATIONS.
       SFAS No. 141R establishes principles and requirements for how the
       acquirer of a business recognizes and measures in its financial
       statements the identifiable assets acquired, the liabilities assumed, and
       any noncontrolling interest in the acquiree. The statement also provides
       guidance for recognizing and measuring the goodwill acquired in the
       business combination and determines what information to disclose to
       enable users of the financial statement to evaluate the nature and
       financial effects of the business combination. SFAS 141R is effective for
       fiscal years beginning on or after December 15, 2008. The Corporation
       does not expect the adoption of SFAS 141R to have a material impact on
       its financial statements.

       In December 2007, the FASB issued SFAS No. 160, NONCONTROLLING INTERESTS
       IN CONSOLIDATED FINANCIAL STATEMENTS, AN AMENDMENT OF ARB 51. SFAS No.
       160 changes the accounting and



                                                                               6
<PAGE>


       reporting for minority interests. Minority interests will be recorded
       initially at fair market value and will be recharacterized as
       noncontrolling interests and will be reported as a component of equity
       separate from the parent's equity, and purchases or sales of equity
       interests that do not result in a change in control will be accounted for
       as equity transactions. In addition, net income attributable to the
       noncontrolling interest will be included in consolidated net income on
       the face of the income statement and upon a loss of control, the interest
       sold, as well as any interest retained, will be recorded at fair value
       with any gain or loss recognized in earnings. SFAS 160 is effective for
       fiscal years beginning on or after December 15, 2008. The Corporation
       does not expect the adoption of SFAS 160 to have a material impact on its
       financial statements.

       In March 2008, the FASB issued SFAS No. 161, DISCLOSURES ABOUT DERIVATIVE
       INSTRUMENTS AND HEDGING ACTIVITIES--AN AMENDMENT OF FASB STATEMENT NO.
       133. SFAS No. 161 applies to all derivative instruments and related
       hedged items accounted for under SFAS No. 133, ACCOUNTING FOR DERIVATIVE
       INSTRUMENTS AND HEDGING ACTIVITIES, and requires entities to provide
       greater transparency about (a) how and why an entity uses derivative
       instruments, (b) how derivative instruments and related hedged items are
       accounted for under SFAS No. 133 and its related interpretations, and (c)
       how derivative instruments and related hedged items affect an entity's
       financial position, results of operations, and cash flows. SFAS No. 161
       is effective for fiscal years and interim periods beginning after
       November 15, 2008. This standard is not expected to have a material
       impact on the Corporation's future consolidated financial statements.
       Additionally, because SFAS No. 161 applies only to financial statement
       disclosures, it will not have a material impact on the Corporation's
       consolidated financial position, results of operations, and cash flows.

       In May 2008, the FASB issued SFAS No. 162, THE HIERARCHY OF GENERALLY
       ACCEPTED ACCOUNTING PRINCIPLES. SFAS No. 162 is intended to improve
       financial reporting by identifying a consistent framework, or hierarchy,
       for selecting accounting principles to be used in preparing financial
       statements that are presented in conformity with generally accepted
       accounting principles in the United States for non-governmental entities.
       SFAS No. 162 is effective 60 days following approval by the SEC of the
       Public Company Accounting Oversight Board's amendments to AU Section 411,
       THE MEANING OF PRESENT FAIRLY IN CONFORMITY WITH GENERALLY ACCEPTED
       ACCOUNTING PRINCIPLES. The Corporation does not expect SFAS No. 162 to
       have a material impact on the Corporation's consolidated financial
       statements.

       In May 2008, the FASB issued SFAS No. 163 ACCOUNTING FOR FINANCIAL
       GUARANTEE INSURANCE CONTRACTS--AN INTERPRETATION OF FASB STATEMENT NO.
       60. SFAS 163 resolves existing inconsistencies in accounting for
       financial guarantee insurance contracts by insurance enterprises under
       FASB Statement No. 60, ACCOUNTING AND REPORTING BY INSURANCE ENTERPRISES.
       SFAS 163 requires that an insurance enterprise recognize a claim
       liability prior to an event of default (insured event) when there is
       evidence that credit deterioration has occurred in an insured financial
       obligation and clarifies how Statement No. 60 applies to financial
       guarantee insurance contracts, including the recognition and measurement
       to be used to account for premium revenue and claim liabilities. SFAS 163
       also requires expanded disclosures about financial guarantee insurance
       contracts. SFAS 163 is effective for financial statements issued for
       fiscal years beginning after December 15, 2008, and all interim periods
       within those fiscal years, except for some disclosures about the
       insurance enterprise's risk-management activities. SFAS 163 is not
       expected to have a significant impact on our consolidated financial
       statements.

(4.)   FAIR VALUE MEASUREMENTS

       We adopted SFAS No. 157 on July 1, 2008 for all financial assets and
       liabilities and nonfinancial assets and liabilities that are recognized
       or disclosed at fair value in the financial statements on a recurring
       basis (at least annually). SFAS No. 157 defines fair value, establishes a
       framework for measuring fair value, and expands disclosures about fair
       value measurements.



                                                                               7
<PAGE>

       SFAS No. 157 defines fair value as the price that would be received upon
       sale of an asset or paid upon transfer of a liability in an orderly
       transaction between market participants at the measurement date and in
       the principal or most advantageous market for that asset or liability.
       The fair value should be calculated based on assumptions that market
       participants would use in pricing the asset or liability, not on
       assumptions specific to the entity. In addition, the fair value of
       liabilities should include consideration of non-performance risk
       including our own credit risk.

       In addition to defining fair value, SFAS No. 157 expands the disclosure
       requirements around fair value and establishes a fair value hierarchy for
       valuation inputs. The hierarchy prioritizes the inputs into three levels
       based on the extent to which inputs used in measuring fair value are
       observable in the market. Each fair value measurement is reported in one
       of the three levels which is determined by the lowest level input that is
       significant to the fair value measurement in its entirety. These levels
       are:

       o     Level 1 - inputs are based upon unadjusted quoted prices for
             identical instruments traded in active markets.
       o     Level 2 - inputs are based upon quoted prices for similar
             instruments in active markets, quoted prices for identical or
             similar instruments in markets that are not active, and model-based
             valuation techniques for which all significant assumptions are
             observable in the market or can be corroborated by observable
             market data for substantially the full term of the assets or
             liabilities. o
       o     Level 3 - inputs are generally unobservable and typically reflect
             management's estimates of assumptions that market participants
             would use in pricing the asset or liability. The fair values are
             therefore determined using model-based techniques that include
             option pricing models, discounted cash flow models, and similar
             techniques.

The following table presents assets that are measured and recognized at fair
value on a recurring basis.

      DESCRIPTION        DECEMBER 31, 2008     LEVEL 1      LEVEL 2      LEVEL 3
      -----------        -----------------     -------      -------      -------
Certificate of Deposit       $ 850,248          $   -      $ 850,248      $   -


(5.)   INCOME TAXES

       The following reconciles the tax provision with the U.S. statutory tax
       rates:
<TABLE>
<CAPTION>

                                                                           SIX MONTHS ENDED DECEMBER 31,
                                                                          -------------------------------
                                                                             2008                 2007
          <S>                                                               <C>                  <C>
          Income taxes at U.S. statutory rate                               (35.0)%              (35.0)%
          State taxes, net of federal tax benefit                            (6.0)                (6.0)
          Tax benefit of federal net operating tax loss carryforward         41.0                 41.0
          TOTAL EXPENSE (BENEFIT)                                               0%                   0%
                                                                            -----                -----
</TABLE>

       At June 30, 2008, the Corporation had a federal net operating tax loss
       carryforward of approximately $6,855,000 expiring on June 30, 2028. The
       Corporation has provided a valuation allowance of $2,800,881 against its
       deferred tax assets; this represents a full valuation allowance due to
       the uncertainty about the realization of the deferred tax asset.



                                                                               8
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

SPECIAL NOTE ABOUT FORWARD LOOKING STATEMENTS

Certain statements in Management's Discussion and Analysis ("MD&A"), other than
purely historical information, including estimates, projections, statements
relating to our business plans, objectives, and expected operating results, and
the assumptions upon which those statements are based, are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These forward-looking statements generally are
identified by the words "believe," "project," "expect," "anticipate,"
"estimate," "intend," "strategy," "plan," "may," "should," "will," "would,"
"will be," "will continue," "will likely result," and similar expressions
identify forward-looking statements, but are not the exclusive means of
identifying such statements and their absence does not mean that a statement is
not forward-looking. Forward-looking statements are based on current
expectations and assumptions that are subject to risks and uncertainties, which
may cause actual results to differ materially from the forward-looking
statements. We undertake no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information, future
events, or otherwise.

RESULTS OF OPERATIONS

Overall revenues decreased in the quarter ended December 31, 2008 as compared to
the same period in the prior year, primarily due to a decrease in service
revenues, as discussed below. Revenues from equipment sales remained relatively
constant. Revenues for the quarter ended December 31, 2008 were $5,143,972, as
compared to $7,275,397 for the quarter ended December 31, 2007. For the quarter
ended December 31, 2008 the Corporation reported a net loss of $1,230,774 as
compared with a net loss of $23,924 for the similar period in the prior fiscal
year. Revenues for the six-months ended December 31, 2008 were $13,709,236 as
compared with $16,282,394 for the same period ended December 31, 2007, with a
net loss of $1,180,343 for the six-month period ended December 31, 2008,
compared with net income of $7,972 for the same period in the prior fiscal year.

The loss for the quarter ended December 31, 2008 was primarily attributable to
the decrease in service revenues. Revenues from hardware sales in both the
fiscal 2009 quarter and six-month period remained relatively constant as
compared to the same periods in fiscal 2008, although the product mix for the
2009 periods discussed, particularly the December quarter, was largely comprised
of lower profit margin equipment. The reduction in service revenues was due to a
number of factors, including an overall slowdown in new orders, an "on hold"
status of several projects pending third party progress on the projects, and the
completion of projects during the quarter resulting in downtime of some
technical personnel. Management notes that construction related delays are
inherent in a number of projects because the Corporation's portion of the
project cannot be performed until a specified amount of the construction has
been completed and/or certain determinations made as to specifics of the project
due to customer-originated change orders. These gaps are generally offset by new
business. The Corporation's higher profit margin staffing services, although not
a material source of revenues, were also adversely impacted by the economic
slowdown as hiring on either a permanent or temporary basis virtually ground to
a halt. In addition, the Corporation absorbed expenses related to
under-utilization of its technical staff during the slowdown. This is
particularly significant regarding the compensation levels for the more highly
skilled members of the staff, whose skills demand higher wages. Management
believes that the slowdown is attributable to general economic conditions, as
well as uncertainty of our governmental and educational clients regarding the
proposed federal stimulus

                                                                               9

<PAGE>

package. The stimulus package is expected to provide an influx of capital for
these clients to use for programs such as security and first-responder
technology. Once the plan has been approved and implemented, these clients
anticipate initiation of spending on these programs. During the quarter and six
month period ended December 31, 2008, spending on many of these projects was on
hold awaiting funding parameters. These delays and reductions also impacted the
profit margin on revenues from equipment sales because clients postponed
purchases of higher profit margin equipment such as Voice over IP ("VoIP")
systems. As a result of these factors, overall profit margins were significantly
impacted and declined to 4% for the quarter and 15% for the six-month period
ended December 31, 2008, as compared to 23% for the quarter and 21% for the
six-month period in the prior year. The loss for the six-month period ended
December 31, 2008 was attributable to the results of the December quarter.

Despite the results reported herein, management is cautiously optimistic about
the results for the remainder of fiscal 2009. Although revenues decreased as a
result of the general slowdown in the economy and the budgetary constraints of
state and municipal entities and educational clients within New Jersey, based
upon orders received in January 2009, it appears that these constraints have
lessened and our open orders have increased. Initial reaction to the federal
stimulus plan indicate that the proposed stimulus package will infuse funds into
public sector clients, including governmental and educational clients, and to
clients in healthcare for products sold and supported by the Corporation.
Requests for quotations have already been received, and have outpaced requests
at this time last year, particularly with respect to the educational market.
Management notes that recent changes instituted by the State of New Jersey will
modify the channels through which the State purchases certain equipment and
services sold by the Corporation. In anticipation of these changes and their
implementation, the State's purchasing during the past three quarters was
significantly reduced. Based upon preliminary indications management believes,
however, that these changes will be finalized shortly, and will restart the
purchasing process and provide new opportunities to the Corporation. Due to
uncertainties regarding the economy, however, no assurances can be given.

In light of the economic slowdown, the Corporation's clients restricted their IT
budgetary spending and scrutinized their IT spending and the related returns on
investments before incurring new expenses, often delaying purchases. This was
particularly the case in the December 2008 quarter, as general economic
conditions declined, credit tightened, and clients cut budgets. As a result,
management has directed attention to new service offerings that take into
account clients' cost constraints. Management believes that as single source
provider, the Corporation will be in a better position to satisfy client demands
for cost-effectiveness and a suitable return on investment. The VoIP networks
marketed by TransNet are designed with the capacity for "optimization" through
the subsequent addition of layers of solutions, for example, physical security
solutions. We are confident that our strategy of being an advanced solutions
provider will result in future revenues from clients' optimization of already
installed networks. In conjunction with these solutions, we note the
technologies of the integration of voice, video, and data that provide clients
with new levels of operating efficiencies.

Service related revenues, a material segment of revenues, are significant
because these operations yield a higher profit margin than equipment sales.
Services include planning, design, configuration, installation and
implementation, testing, and optimization of systems. Because of industry
changes over the past few years, project work became the major source of revenue
generation, as legacy services diminished. The transition to project work is
complete and the lower level of legacy services had no impact on the results of
operations during the fiscal 2009 periods as compared to the prior year. The
Corporation modified its service offerings in response to these industry
fluctuations, and employs experienced and specially certified systems engineers

                                                                              10

<PAGE>

and project managers to respond to VoIP projects. We believe our focus upon
higher margin services related to VoIP/IP Telephony and security will lead to
growth and opportunities for the Corporation. Revenues are also generated by a
variety of support contracts for these networks. Under these agreements,
TransNet's Support Center provides troubleshooting, diagnostic and remedial
services performed by skilled system engineers, remotely or on-site, if
necessary. The agreements provide a range of guaranteed response times, based
upon the client's specific response requirements or the nature of the outage.
The availability of these services is determined by the client, from 24/7 to
next business day. In addition, our system engineers and service technicians
provide service and support on an on-call basis. Service contracts, with a
number of corporate and educational customers, provide service and support for
the customer's personal computers, peripherals, and networks. These contracts
are short-term, and contain provisions which permit early termination. Although
the contracts generally contain renewal terms, there is no assurance that such
renewals will occur.

In addition to the challenging economic environment, the computer industry has
experienced a continuing trend of decreasing prices of computers and related
equipment. Management believes that this trend will continue. Industry-wide, the
result of price erosion has been lower profit margins on sales, which require
businesses to sell a greater volume of equipment to maintain past earning
levels. Another result of the price decreases has been intensified competition
within the industry, including the consolidation of businesses through merger or
acquisition, as well as the increased initiation of sales by certain
manufacturers directly to the end-user and the entrance of manufacturers into
technical services business. Management believes that the adoption of policies
by many larger corporate customers, which limit the number of vendors permitted
to provide goods and services for specified periods of time, has further
increased price competition.

To meet these competitive challenges and to maximize the Corporation's profit
margin, management has modified its marketing strategy and has enforced expense
controls. Management also utilizes approaches such as manufacturers' direct
shipment and billing of the customers in exchange for payment to the Corporation
of an "agency fee" as a means to reduce equipment related costs while increasing
profits. These direct ship sales are an alternative to sales through traditional
channels. Management's current marketing strategy is designed to shift its focus
to provision of technical services and to sales of higher profit margin products
related to service and support operations. Management's efforts include
targeting commercial, educational, and governmental customers who provide
marketplaces for a wide range of products and services at one time, a
cost-effective approach to sales. These customers often do not have their own
technical staffs and outsource their computer service requirements to companies
such as TransNet. Management believes it maximizes profits through concentration
on sales of value-added applications; promotion of the Corporation's service and
support operations; and strict adherence to cost cutting controls. In light of
the above, management emphasizes and continues the aggressive pursuit of an
increased volume of sales of VoIP systems, and related technical service and
support programs, and has introduced new technical support programs offering a
wide variety of alternatives of remote and on-site network support and
monitoring. Management believes that product sales will continue to generate a
significant percentage of the Company's revenues. In addition, the Corporation's
buying agreement with Ingram Micro, Inc. enhances the Corporation's competitive
edge through product discounts unavailable through other sources.

The Corporation's performance is also impacted by other factors, many of which
are not within its control. These factors include: industry and general economic
conditions; the short-term nature of client commitments; patterns of capital
spending by clients; the timing and size of new projects; pricing changes in
response to competitive factors; the availability and related costs of

                                                                              11

<PAGE>

qualified technical personnel; timing and customer acceptance of new product and
service offerings; trends in IT outsourcing; and product constraints.

During the quarter ended December 31, 2008, selling, general and administrative
expenses increased to 28% from 23% of revenues for the comparative quarter in
the prior year as a function of decreased revenues. Similarly, selling, general
and administrative expenses for the six-month period of fiscal 2009 increased to
23% from 20% of revenues for the comparative period in the prior year because of
decreased revenues. Actual expenses decreased for both 2009 periods as the
Corporation undertook a number of staff reductions, and implemented salary
freezes, salary reductions, and other cost reduction programs. The results of
these cost-saving measures will be realized more fully through the remainder of
fiscal 2009 and forward. Management continues its efforts to control expenses,
despite increasing personnel related costs, such as health benefits.

Interest income decreased in the quarter and six-month period ended December 31,
2008 as compared to the comparative periods in fiscal 2008 as a result of lower
interest rates and lower amounts invested. Interest expense decreased in the
comparative periods of 2009 from those in 2008 due to decreased financing for
working capital needs.

LIQUIDITY AND CAPITAL RESOURCES

There are no material commitments of the Corporation's capital resources, other
than leases, lines of credit, and employment contracts.

Cash and cash equivalents increased in the six-month period ended December 31,
2008, partially as a result of decreased selling, general and administrative
expenses. Cash levels continue to be impacted by the slow payment cycles of
public sector clients. The Corporation has entered into a credit arrangement to
assist in funding operations, as necessary. The borrowing is secured by certain
of the Corporation's assets.

Accounts receivable decreased during the six-months ended December 31, 2008, due
to reduced revenues. Although the Corporation continues to be impacted by the
extended and slower payment cycles of governmental agencies, management has
initiated vigorous efforts to expedite payments from the governmental bodies and
is working to implement more favorable payment schedules where possible. Efforts
during the period expedited some payments. Management notes that payment terms
with governmental clients are usually dictated by the client.

The increase in accounts payable in the six-month period ended December 31, 2008
period is directly attributable to the product orders placed near the end of the
December quarter and purchases made outside our credit lines.

The Corporation currently finances the purchases of portions of its inventory
through credit line arrangements with third-party lenders, under which certain
of the Corporation's assets secure the financed purchases. The arrangements
provide for specified interest free payment periods. Outstanding balances under
the credit line arrangements decreased in the six-month period ended December
31, 2008 because purchases were made outside the credit line arrangement.
Inventory decreased for the period ended December 31, 2008 because of a reduced
number of open orders at the end of the period.

We require access to working capital third party lines of credit and vendor
credit to fund our day-to-day operations, particularly at the end of our fiscal
quarters when demand for our products and

                                                                              12

<PAGE>

services increase. In conjunction with the tightening of credit in the US
economy, management has reviewed the Corporation's lines of credit and available
vendor credit and has taken steps to obtain the most favorable credit
arrangements available. Management believes that its current available credit
will be sufficient to meets its requirements going forward. The unavailability
of such credit going forward may have an adverse impact upon the operations of
the Corporation.

CRITICAL ACCOUNTING POLICIES

The Corporation's financial statements are prepared in accordance with
accounting principles that are generally accepted in the United States. The
methods, estimates, and judgments used in applying these most critical
accounting policies have a significant impact on the results reported in the
financial statements. The Securities and Exchange Commission has defined
critical accounting policies as policies that involve critical accounting
estimates that require (a) management to make assumptions that are highly
uncertain at the time the estimate is made and (b) different estimates that
could have been reasonably used for the current period, or changes in the
estimates that are reasonably likely to occur from period to period, which would
have a material impact on the presentation of our financial condition, changes
in financial condition or in result of operations. Based on this definition, the
most critical policies include: revenue recognition, allowance for doubtful
accounts, and valuation of deferred tax assets.

REVENUE RECOGNITION

Revenues related to our equipment sales are recognized when evidence of an
arrangement exists, delivery of equipment has occurred, the sales price of the
equipment being sold to our customers is both fixed and determinable, and
collectability of the accounts receivable related to the equipment sale is
reasonably assured in accordance with SEC Staff Accounting Bulletin No. 104
Topic 13.

Revenues related to our services are recognized as the service is performed
using the percentage of completion method of accounting under which the total
contract revenue during the term of an agreement is recognized on the basis of
the percentage that each contract's proportional performance to date bears to
the total completion of performance. Estimates of proportional performance are
continuously monitored during the term of the contract, and recorded revenues
and costs are subject to revision as the contract progresses.

ACCOUNTS RECEIVABLE

Accounts receivable are reported at their outstanding unpaid principal balances
reduced by an allowance for doubtful accounts, based on certain percentages of
aged receivables. We estimate doubtful accounts based on historical bad debts,
factors related to specific customers' ability to pay and current economic
trends.

INCOME TAX ACCOUNTING

The Corporation determines its provision for income taxes using the asset and
liability method. Under this method, deferred tax assets and liabilities are
recognized for the future tax effects of temporary differences of existing
assets and liabilities and their respective tax bases. Future tax

                                                                              13

<PAGE>

benefits of tax loss and credit carryforwards also are recognized as deferred
tax assets. When necessary, deferred tax assets are reduced by a valuation
allowance to the extent the Corporation concludes there is uncertainty as to
their ultimate realization. Deferred tax assets and liabilities are measured
using enacted tax rates in effect for the year in which those temporary
differences are expected to be recovered or settled. The effect on deferred
taxes of a change in tax rates is recognized in income in the period that the
change is enacted.

For the six-month period ended December 31, 2008 and fiscal year ended June 30,
2008, the Corporation had no current or deferred income tax provision. Deferred
taxes are based upon differences between the financial statement and tax basis
of assets and liabilities and available net operating loss carryforwards. A full
valuation allowance has been established due to the uncertainty about the
realization of the deferred tax asset.

INVESTMENT CONSIDERATIONS AND UNCERTAINTIES

THE MATTERS DISCUSSED IN MANAGEMENT'S DISCUSSION AND ANALYSIS AND THROUGHOUT
THIS REPORT THAT ARE FORWARD-LOOKING STATEMENTS ARE BASED ON CURRENT MANAGEMENT
EXPECTATIONS THAT INVOLVE RISK AND UNCERTAINTIES. POTENTIAL RISKS AND
UNCERTAINTIES INCLUDE, WITHOUT LIMITATION: THE IMPACT OF ECONOMIC CONDITIONS
GENERALLY AND IN THE INDUSTRY FOR IT PRODUCTS AND SERVICES; DEPENDENCE ON KEY
VENDORS AND CUSTOMERS; CONTINUED COMPETITIVE AND PRICING PRESSURES IN THE
INDUSTRY; PRODUCT SUPPLY SHORTAGES; OPEN-SOURCING OF PRODUCTS OF VENDORS,
INCLUDING DIRECT SALES BY MANUFACTURERS; RAPID PRODUCT IMPROVEMENT AND
TECHNOLOGICAL CHANGE, SHORT PRODUCT LIFE CYCLES AND RESULTING OBSOLESCENCE
RISKS; TECHNOLOGICAL DEVELOPMENTS; CAPITAL AND FINANCING AVAILABILITY; AND OTHER
RISKS SET FORTH HEREIN.




                                                                              14
<PAGE>



ITEM 4.  CONTROL AND PROCEDURES

The Chief Executive Officer and Chief Financial Officer of the Corporation have
concluded, based on their evaluation as of December 31, 2008, that the
Corporation's disclosure controls and procedures are not effective to ensure
that information required to be disclosed by the Corporation in the reports
filed or submitted by it under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), is recorded, processed, summarized and reported within the
time periods specified in the SEC's rules and forms, and include controls and
procedures designed to ensure that information required to be disclosed by the
Corporation in such reports is accumulated and communicated to the Corporation's
management, including the Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required disclosure.

In light of this conclusion, the Corporation has initiated documentation of its
policies and procedures, and will institute compensating procedures and
processes as necessary to ensure the reliability of its financial reporting.
Management intends to remediate weaknesses in the control environment through
new resources and processes in its accounting department. Management believes
that its actions will continue to improve the Corporation's internal control
over financial reporting, as well as its disclosure controls and procedures.

There were no significant changes in the Corporation's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of such evaluation. The Corporation has commenced a review by its internal
staff, including its accounting staff, of new processes to provide an evaluation
of the level of controls and related procedures currently in place for each
process.





                                                                              15
<PAGE>


                                     PART II
                                OTHER INFORMATION
                                -----------------



ITEM 6:  EXHIBITS AND REPORTS ON FORM 8-K

         A. Exhibits -
             31.1 Certification required by Section 302
             31.2 Certification required by Section 302
             32 Certification required by Section 906

         B. Reports on Form 8-K -
            On November 18, 2008, TransNet Corporation filed a Form 8-K under
            Item 7.01.



                                   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.

                                  TRANSNET CORPORATION
                                  (Registrant)


                                  /s/ Steven J. Wilk
                                  --------------------------------------
                                  Steven J. Wilk, President and
                                  Chief Executive Officer


                                  /s/ John J. Wilk
                                  --------------------------------------
                                  John J. Wilk,
                                  Principal Financial and Accounting Officer
                                  And Chairman of the Board of Directors



DATE: February 14, 2009