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 March 31, 2006
                               --------------

                                       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 an accelerated filed (as
defined in Rule 12b-2 of the Exchange Act)

                                                         Yes _____ No __X__

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of May 3, 2006: 4,823,304.


<PAGE>


                              TRANSNET CORPORATION
                                    FORM 10-Q

                                TABLE OF CONTENTS

                                                                  Page No.

PART I.  FINANCIAL INFORMATION

         Consolidated Balance Sheets

                  March 31, 2006 (unaudited) and June 30, 2005       1


         Consolidated Statements of Operations (unaudited)

                  Three Months Ended March 31, 2006 and 2005         2
                  Nine Months Ended March 31, 2006 and 2005          3


         Consolidated Statements of Cash Flows (unaudited)

                  Nine Months Ended March 31, 2006 and 2005          4


         Notes to Consolidated Financial Statements                  5


     Item 2.  Management's Discussion and Analysis                   8


     Item 4.  Controls and Procedures                               12


PART II.  OTHER INFORMATION

     Item 4.  Submission of Matters to a Vote of Shareholders       13

     Item 6.  Exhibits and Reports on Form 8-K                      13

     Signatures                                                     13
     Certifications                                                 14


                                       i.


<PAGE>


                       TRANSNET CORPORATION AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

                                                   March 31,      June 30,
                                                     2006           2005
                                                  -----------    -----------
                                                  (unaudited)

ASSETS:
CURRENT ASSETS
Cash and Cash Equivalents                         $ 2,549,215    $ 5,752,404
Accounts Receivable - Net                           4,703,070      3,522,831
Inventories                                         2,923,954      1,579,353
Other Current Assets                                  186,104         92,469
Deferred Tax Asset                                     23,513         98,183
                                                  -----------    -----------

TOTAL CURRENT ASSETS                              $10,385,856    $11,045,240

PROPERTY AND EQUIPMENT - NET                          606,176        701,563

OTHER ASSETS                                          264,652        262,297
                                                  -----------    -----------

TOTAL ASSETS                                      $11,256,684    $12,009,100
                                                  ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts Payable                                  $   269,528    $   465,656
Accrued Expenses                                      265,332        291,177
Income Taxes Payable                                    7,090         19,992
Floor Plan Payable                                    608,704      1,284,905
                                                  -----------    -----------

TOTAL CURRENT LIABILITIES                         $ 1,150,654    $ 2,061,730

DEFERRED TAX LIABILITY                                 11,712         11,712

COMMITMENT AND CONTINGENCIES                             --             --

STOCKHOLDERS' EQUITY:

Capital Stock - Common, $.01 Par Value,
Authorized 15,000,000 Shares; Issued
7,408,524 at December 31, 2005 and June
30, 2005 [of which 2,585,200 are in
Treasury at December 31
and June 30, 2005]                                     74,085         74,085

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

Retained Earnings                                   6,598,398      6,439,738
                                                  -----------    -----------


Totals                                             17,247,153     17,088,493
Less: Treasury Stock - At Cost                     (7,152,835)    (7,152,835)
                                                  -----------    -----------


TOTAL STOCKHOLDERS' EQUITY                         10,094,318      9,935,658
                                                  -----------    -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $11,256,684    $12,009,100
                                                  ===========    ===========


See Notes to Consolidated Financial Statements.

                                                                               1


<PAGE>


                       TRANSNET CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                    THREE MONTHS ENDED MARCH 31,
                                                    ----------------------------
                                                           2006         2005
                                                        ----------   ----------

REVENUE
Equipment                                               $4,304,840   $3,600,863
Services                                                 4,038,218    3,814,034
                                                        ----------   ----------

Total Revenue:                                           8,343,058    7,414,897
                                                        ----------   ----------

COST OF REVENUE
Equipment                                                3,788,689    3,387,951
Services                                                 2,787,221    2,833,612

Total Cost of Revenue                                    6,575,910    6,221,563
                                                        ----------   ----------

Gross Profit                                             1,767,148    1,193,334

Selling, General and Administrative Expenses             1,751,862    1,752,618
                                                        ----------   ----------

Operating Income                                            15,286     (559,284)
                                                        ----------   ----------

Interest Income                                             27,881       14,602
                                                        ----------   ----------

Income Before Tax Expense                                   27,881     (544,682)

Income Tax                                                       0     (124,403)
                                                        ----------   ----------

Net Income                                              $   27,881   $ (420,279)
                                                        ==========   ==========

Basic Net Income Per Common Share                       $     0.01   $    (0.09)
                                                        ==========   ==========

Diluted Net Income Per Common Share                     $     0.01   $    (0.09)
                                                        ==========   ==========

Weighted Average Common Shares Outstanding - Basic       4,823,304    4,818,304
                                                        ==========   ==========

Weighted Average Common Shares Outstanding - Diluted     4,925,992    4,943,751
                                                        ==========   ==========


See Notes to Consolidated Financial Statements.

                                                                               2


<PAGE>


                       TRANSNET CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                     NINE MONTHS ENDED MARCH 31,
                                                     ---------------------------
                                                         2006          2005
                                                      -----------   -----------

REVENUE
Equipment                                             $16,282,505   $14,089,878
Services                                               11,646,447    11,681,524
                                                      -----------   -----------

Total Revenue:                                         27,928,952    25,771,402
                                                      -----------   -----------

COST OF REVENUE
Equipment                                              14,415,618    12,992,094
Services                                                8,128,151     8,494,606

Total Cost of Revenue                                  22,543,769    21,486,700
                                                      -----------   -----------

Gross Profit                                            5,385,183     4,284,702

Selling, General and Administrative Expenses            5,190,806     5,076,809
                                                      -----------   -----------

Operating Income                                          194,377      (792,107)
                                                      -----------   -----------

Interest Income                                            32,875        35,429
                                                      -----------   -----------

Income Before Tax Expense                                 227,252      (756,678)

Provision for Income Tax                                   55,471      (359,587)
                                                      -----------   -----------

Net Income                                            $   171,781   $  (397,091)
                                                      ===========   ===========

Basic Net Income Per Common Share                     $      0.04   $     (0.08)
                                                      ===========   ===========

Diluted Net Income Per Common Share                   $      0.03   $     (0.08)
                                                      ===========   ===========

Weighted Average Common Shares Outstanding - Basic      4,823,304     4,818,304
                                                      ===========   ===========

Weighted Average Common Shares Outstanding - Diluted    4,925,992     4,818,304
                                                      ===========   ===========


See Notes to Consolidated Financial Statements.

                                                                               3


<PAGE>


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

                                                    NINE MONTHS ENDED MARCH 31,
                                                    ---------------------------
                                                        2006           2005
                                                     -----------    -----------

OPERATING ACTIVITIES:

Net Income                                           $   171,781    $  (397,091)
                                                     -----------    -----------
Adjustments to Reconcile Net Income
to Net Cash:
Depreciation and Amortization                            180,769        110,713
Provision for Doubtful Accounts                           33,977           --
Deferred Tax Benefit                                      74,670       (386,830)

Changes in Assets and Liabilities:
(Increase) Decrease in:
Accounts Receivable                                   (1,214,217)      (551,068)
Inventory                                             (1,344,601)      (526,658)
Other Current Assets                                     (93,635)      (141,796)
Other Assets                                              (3,102)       (98,756)
Increase (Decrease) in:
Accounts Payable and Accrued Expenses                   (235,098)        56,875
Other Current Liabilities                                   --             --
Deferred Tax Liabilities                                    --           27,244
Income Tax Payable                                       (12,902)        (1,826)
                                                     -----------    -----------
Total Adjustments                                    $(2,614,139)   $(1,512,102)
                                                     -----------    -----------
NET CASH - OPERATING ACTIVITIES - FORWARD            $(2,442,358)   $(1,909,193)
                                                     -----------    -----------
INVESTING ACTIVITIES:
Capital Expenditures                                 $   (84,630)   $  (219,768)
                                                     -----------    -----------
NET CASE - INVESTING ACTIVITIES                      $   (84,630)   $  (219,768)
                                                     -----------    -----------
FINANCING ACTIVITIES -
Floor Plan Payable - Net                             $  (676,201)   $  (822,230)
Stock Options Exercised                              $      --           15,400
                                                     -----------    -----------
NET CASH - FINANCING ACTIVITIES                      $  (676,201)   $  (806,830)
                                                     -----------    -----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS $(3,203,189)   $(2,935,791)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIODS    $ 5,752,404    $ 7,064,644
                                                     -----------    -----------
CASH AND CASH EQUIVALENTS AT END OF PERIODS          $ 2,549,215    $ 4,128,853
                                                     -----------    -----------
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest                                             $      --      $      --
Income Taxes                                         $      --      $      --

See Notes to Consolidated Financial Statements.

                                                                               4


<PAGE>


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

(1.)   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) Earnings Per Share: Earnings per common share - basic are based on
       4,823,304 weighted shares outstanding for the three and nine month
       periods ended March 31, 2006 and 4,818,304 weighted shares outstanding
       for the three and nine months periods ended March 31, 2005. For the three
       and nine month periods ended March 31, 2006, the Corporation had
       outstanding options that were not included in the computation of diluted
       EPS as they are considered anti-dilutive.

       (e) In the opinion of management, the accompanying unaudited consolidated
       financial statements contain all adjustments consisting only of normal
       recurring adjustments necessary to present fairly the financial position,
       the results of operations and cash flows for the periods presented.

       (f) These statements should be read in conjunction with the summary of
       significant accounting policies and notes contained in the Corporation's
       annual report on Form 10-K for the year ended June 30, 2005.

       (g) The results of operations for the three months ended March 31, 2006
       are not necessarily indicative of the results to be expected for the
       entire year.

       (h) In November 2004, the Financial Accounting Standards Board ("FASB")
       issued SFAS No. 151, "Inventory Costs - an amendment to ARB No. 43." This
       statement provides guidance to clarify the accounting for abnormal
       amounts of idle facility expense, freight handling costs, and wasted
       material (spoilage), among other production costs. Provisions of ARB No.
       43 stated that under some circumstances, items such as idle facility
       expense, excessive spoilage and other costs "may" be so abnormal as to
       require treatment as current period charges. This statement requires that
       those items be recognized as current period charges regardless of whether
       they meet the criterion of so abnormal. In addition, SFAS 151 requires
       that allocation of fixed production overheads to the costs of conversion
       be based on the normal capacity of the production overheads to the costs
       of conversion be based on the normal capacity of the production
       facilities. Adoption of the Statement is not expected to have a material
       impact on the financial statements of the Company.

       In November 2004, the FASB issued SFAS No. 152 "Accounting for Real
       Estate time-Sharing Transactions - An amendment of SFAS No. 66 and 67.
       This Statement amends SFAS No. 66. "Accounting for Sales of Real Estate,
       to reference the financial accounting and

                                                                               5


<PAGE>


       reporting guidance for real estate time-sharing transactions that is
       provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real
       Estate Time-Sharing Transactions. This Statement also amends SFAS No. 67,
       "Accounting for Costs and Initial Rental Operations of Real Estate
       Projects," to state the guidance for (a) incidental costs and (b) costs
       incurred to sell real estate projects does not apply to real estate
       time-sharing transactions. The accounting for those operations and costs
       is subject to guidance in SOP 04-2. Effective for financial statements
       with fiscal years beginning after June 15, 2005. Adoption of this
       Statement is not expected to have a material impact on the financial
       statements of the Company.

       In November 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
       Assets - an amendment to APB No. 29." This Statement amends Opinion No.
       29 to eliminate the exception for nonmonetary exchanges of similar
       productive assets and replaces it with a general exception for exchanges
       of nonmonetary assets that do not have commercial substance. A
       nonmonetary exchange has commercial substance if the future cash flows of
       the entity expected to change significantly as a result of the exchange.
       Adoption of this statement is not expected to have a material impact on
       the financial statements of the Company.

       In December 2004, the FASB issued SFAS No. 123 (revised 2004),
       "Share-Based Payment" (SFAS No. 123R). SFAS No 123R requires companies to
       recognize in the income statement the grant date fair value of stock
       options and other equity-based compensation issued to employees. SFAS No.
       123R eliminates the intrinsic value-based method prescribed by Accounting
       Principles Board Opinion No. 25, "Accounting for Stock Issued to
       Employees", and related interpretations, that the Company currently uses.
       SFAS No. 123R requires the Company to adopt the new accounting provisions
       beginning on July 1, 2005.

       (i) At March 31, 2006, the Corporation had a stock-based employee
       compensation plan. The Corporation accounts for the plan under the
       measurement principals of APB Opinion No. 25, Accounting for Stock Issued
       to Employees, and related Interpretations. No stock-based employee
       compensation cost is reflected in net income, as all options granted
       under those plans had an exercise equal to the market value of the
       underlying common stock on the date of grant. The following tables
       illustrate the effect on net income and earnings per share if the
       Corporation had applied the fair value recognition provisions of FASB
       Statement No. 123 to stock based employee compensation.

                                                                               6


<PAGE>



                                                      THREE MONTHS ENDED
                                                           MARCH 31,
                                                     ----------------------
                                                       2006         2005
                                                     ---------   ----------

NET INCOME [LOSS]:
As Reported                                          $  27,881   $ (420,279)

DEDUCT:
Stock Based Employee Compensation Expense

Determined under the Fair Value Based Method -
Net of Tax                                                --           --
                                                     ---------   ----------

PRO FORMA NET INCOME [LOSS]                             27,881     (420,279)
                                                     ---------   ----------
BASIC EARNINGS PER SHARE:
As Reported                                          $    0.01   $    (0.09)
Pro-Forma                                            $    0.01   $    (0.09)

DILUTED EARNINGS PER SHARE:
As Reported                                          $    0.01   $    (0.09)
Pro-Forma                                            $    0.01   $    (0.09)


                                                        NINE MONTHS ENDED
                                                            MARCH 31,
                                                     ----------------------
                                                       2006         2005
                                                     ---------   ----------

NET [LOSS] INCOME:
As Reported                                          $ 171,781   $ (397,091)

DEDUCT:
Stock Based Employee Compensation Expense

Determined under the Fair Value Based Method -
Net of Tax                                                --         (7,929)
                                                     ---------   ----------



PRO FORMA NET INCOME                                   171,781     (405,020)
                                                     ---------   ----------

BASIC EARNINGS PER SHARE:
As Reported                                          $    0.04   $    (0.08)
Pro-Forma                                            $    0.04   $    (0.08)

DILUTED EARNINGS PER SHARE:
As Reported                                          $    0.03   $    (0.08)
Pro-Forma                                            $    0.03   $    (0.08)


(2.) INCOME TAXES

       The Corporation has a deferred tax benefit of $10,390 and a deferred tax
       liability of $11,712 based upon temporary timing differences including
       inventory capitalization, allowance for doubtful accounts, vacation pay
       accruals and depreciation.

                                                                               7


<PAGE>


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

RESULTS OF OPERATIONS

Revenues and earnings increased in the quarter and nine-month period ended March
31, 2006, as compared to the same quarter in the prior year, primarily due to an
increase in equipment sales. Revenues for the quarter ended March 31, 2006 were
$8,343,058, an increase from $7,414,897 for the quarter ended March 31, 2005.
For the quarter ended March 31, 2006, the Corporation reported net income of
$27,881 as compared with a net loss of $420,279 for the similar period in the
prior fiscal year. Revenues for the nine months ended March 31, 2006 were
$27,928,952 as compared with $25,771,402 for the same period ended March 31,
2005, with net income of $171,781 for the nine-month period ended March 31,
2006, compared with a net loss of $397,091 for the same period in the prior
fiscal year. Results for the three and nine month periods ended March 31, 2005,
included tax benefits of $124,403 and $359,587, respectively.

During the quarter and nine month periods ended March 31, 2006, revenues from
hardware sales increased due to increased demand, primarily from the educational
market. The pre-tax earnings for the quarter ended March 31, 2006 increased to
$41,001 from an operating loss of $544,682 in the same period in the prior year,
and for the nine months ended March 31, 2006 to $240,372 from an operating loss
of $756,678 in the prior year's period, due to the increased revenues and
increased profit margins on both hardware and service revenues. As a result of
these increased revenues and profit margins, gross profit increased by
approximately 48% for the quarter and 26% for the nine month period ended March
31, 2006. Despite a sluggish IT environment, the Corporation was able to
increase revenue levels in the 2006 quarter and nine month period as compared to
same periods in 2005, an increase attributable to increased demand, primarily
from the educational market, particularly with respect to Internet protocol
communications ("IPC") products and services [including Voice over Internet
Protocol ("VoIP" and IP Telephony products and services]. Service related
revenues for the three and nine month periods continued to be impacted by
project delays and a reduction in business from a major customer, as discussed
below.

During the March 2006 quarter, the Corporation initiated new projects and
continued work on existing awards for IPC products and services. The performance
of these projects will extend over several quarters. Management notes that the
start dates for some of these projects have been postponed as a result of
construction delays beyond the Corporation's control, and these delays have
resulted in inventory increases and an order backlog. None of these delays have
had any significant impact upon the operations of the Corporation. In addition
to orders and awards already received, indications of interest have been
received by existing and prospective clients with respect to IPC products and
services and security technology, areas which management has targeted as growth
areas for the Corporation. Although requests for quotations have increased in
the past few months and management is cautiously optimistic, assurances cannot
be given that all quotations will produce orders.

The net loss for the quarter and nine months ended March 31, 2005 was primarily
attributable to increased selling, general and administrative expenses, which
increased primarily as a result of the Corporation's expansion of its sales
staff based upon its anticipated growth in the Internet telephony marketplace.
The income tax benefit for those periods was primarily derived from the
Corporation decreasing the deferred tax asset valuation allowance recorded at
June 30, 2004. The decrease in the deferred tax asset valuation allowance was
recorded in proportion to those existing

                                                                               8


<PAGE>


net operating losses that the Corporation currently expects to realize in
connection with certain IRS carry back provisions.

With respect to selling, general and administrative expenses, expenses decreased
to approximately 21% of revenues for the March 2006 quarter, as compared to
approximately 24% of revenue for the March 2005 quarter due to the increase in
revenues, as well as a slight decrease in actual expenses. For the nine months
ended March 31, 2006, selling, general, and administrative costs decreased to
approximately 19% of revenue, as compared to 21% for the nine month period ended
March 31, 2005. The decrease the nine month period is due to the increase in
revenues. Expenses for all the referenced periods include the Corporation's
expansion of its sales staff based upon its anticipated growth, particularly in
business related to the convergence of voice, video, and data networks in the
IPC marketplace. Management continues its efforts to control and reduce
administrative and personnel related costs.

As part of the industry competition pressures discussed herein, management
continues to see certain erosion in business related to Fortune 500 customers as
those customers enter into and/or expand business relationships with large
global partners. As part of this erosion, the Corporation's largest customer, a
Fortune 500 company, signed an agreement with a global support organization that
encompasses some lower margin work previously awarded to TransNet. While the
Corporation will still have a significant presence at this client's locations,
overall service billing to this client will be reduced. The overall reduction
and resulting effects on the Corporation's operations are not known at this
time. Although management believes that its focus on higher margin services
related to IPC and security will lead to continued growth and opportunities that
will help compensate for this reduction, no assurances can be given that the
Corporation will be able to replace the loss of a significant amount of business
from this customer, should that occur, or that such operations will not be
adversely effected.

Management continues its concentration on sales of sophisticated network and
system integration products which yield higher profit margins, and continues
adherence to and implementation of cost control measures. To maximize profit
margins, management consistently works to obtain the best discounts available to
it on hardware purchases from its distributors. Management also utilizes new
trends 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. Management believes that this
approach, although it may impact revenues, insulates the corporation from
challenges which may accompany sudden price decreases, hardware obsolescence and
delays collection of receivables.

During the last several years, the computer industry has experienced a trend of
decreasing prices of computers and related equipment. Management believes that
this trend will continue, but hopes to offset these decreases by expansion of
its IPC sales. 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, the initiation of sales by many
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.

During the periods discussed, the IT industry as a whole was impacted by a
significant slowdown in client spending. Clients have begun to scrutinize their
IT spending and the related returns on investments before incurring new
expenses. Management believes that future spending will be subject to specific
criteria, but also believes that as single source provider, the Corporation will
be

                                                                               9


<PAGE>


in a better position to satisfy client demands for cost-effectiveness and a
suitable return on investment. Service related revenues, a material segment of
revenues, are significant in their contributions to net income because these
operations yield a higher profit margin than equipment sales. For the fiscal
quarters discussed, revenue from the provision of service, support, outsourcing
and network integration was largely attributable to the Corporation's service
contracts with a number of corporate customers to provide service and support
for the customer's personal computers, peripherals and networks. Most of these
contracts are short-term, usually twelve months or less, and contain provisions
which permit early termination. Although the contracts generally contain renewal
terms, there is no assurance that such renewals will occur. Recently, management
has noted a transition to project-based rather than contract based business with
respect to certain support services. Accordingly, the Corporation must rely more
upon projects as a source of revenues. Industry changes have also diminished the
demand for certain legacy support services, such as help desk, as demand for
services such as those related to VoIP systems and call centers has increased.
The Corporation has modified its service offerings in response to these industry
fluctuations, and has recruited experienced systems engineers and project
managers to respond to increased VoIP projects.

The Corporation's performance is also impacted by other factors, many of which
are not within its control. These factors include: the short-term nature of
client's 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 qualified technical personnel; timing and
customer acceptance of new product and service offerings; trends in IT
outsourcing; product constraints; and industry and general economic conditions.

LIQUIDITY AND CAPITAL RESOURCES

There are no material commitments of the Corporation's capital resources.

The Corporation currently finances a portion of its accounts receivable and
finances purchases of portions of its inventory through floor-planning
arrangements under which such inventory secures the amount outstanding. Floor
planning payables decreased in the 2006 period compared to the same period in
2005 as the result of purchases conducted through other channels. Inventory
increased in the quarter and nine months ended March 31, 2006, as compared to
the corresponding periods in 2005 as a result of open orders pending at the end
of the periods.

Accounts receivable increased for the quarter and nine months ended March 31,
2006 as compared to the same periods in 2005 as a result of increased sales.
Corresponding with the increased accounts receivables, cash levels decreased in
the three and nine months ended March 31, 2006 as compared to the same period in
2005, as funds were used to finance hardware sales and inventory required to
full customer orders. Accounts payable decreased in the March quarter of fiscal
2006 as compared to the same quarter in fiscal 2005 as a result of payments made
during the quarter.

Management continues its efforts to control administrative and personnel related
costs.

Interest income, not a material source of income, decreased in the quarter and
nine months ended March 31, 2006 as compared to the same periods in fiscal 2005,
due to lesser amounts invested.

Cash levels decreased in the three and nine-months periods ended March 31, 2006
as compared to the corresponding periods in 2005 as a result of increased
accounts receivables and payables as a result of increased hardware sales and
increased inventory.

                                                                              10


<PAGE>


For the fiscal quarter and nine months ended March 31, 2006, as in the similar
periods in the prior year, the internal resources of the Corporation were
sufficient to enable the Corporation to meet its obligations.

IMPACT OF INFLATION

The effects of inflation on our operations were not significant during the
periods presented.

Contractual Obligations
<TABLE>
<CAPTION>

                                            Less than         1-3          3-5          More than
Contractual Obligations    Total            One year          Years        Years        5 Years
-----------------------    -----            --------          -----        -----        -------

<S>                        <C>              <C>               <C>          <C>          <C>
Real Estate Lease          $1,036,847       $170,690          $371,210     $371,210     $123,737

Office Equipment              $12,560         $7,010            $5,550           --           --
</TABLE>


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

TransNet recognizes revenue in accordance with SEC Staff Accounting Bulletin No.
104. Revenue from sales of hardware is recognized when the rights and risks of
ownership have passed to the customer, who is upon shipment or receipt by the
customer, depending on the terms of the sales contract. Revenue from services is
recognized upon performance and acceptance after consideration of all the terms
and conditions of the customer contract. Service contracts generally do not
extend over one year, and are billed periodically as services are performed.
Shipping and handling costs are included in the cost of sales.

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.

                                                                              11


<PAGE>


VALUATION OF DEFERRED TAX ASSETS

At June 30, 2005, we have a valuation allowance of approximately $808,918
primarily to reduce our deferred tax asset, which is based on a net operating
loss carry forwards of $2,020,000 to an amount that will more likely than not be
realized. These net operating loss carry forwards have varying carry forward
periods and restrictions on usage. The estimation of future taxable income and
our resulting ability to utilize net operating loss and tax credit carry
forwards can significantly change based on future events, including our
determinations as to the feasibility of certain tax planning strategies. Thus,
recorded valuation allowances may be subject to material future changes.

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 MICROCOMPUTER PRODUCTS AND SERVICES;
DEPENDENCE ON KEY VENDORS; CONTINUED COMPETITIVE AND PRICING PRESSURES IN THE
INDUSTRY; PRODUCT SUPPLY SHORTAGES; OPEN-SOURCING OF PRODUCTS OF VENDORS; 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.

ITEM 4.  CONTROL AND PROCEDURES

The Chief Executive Officer and Chief Financial Officer of the Corporation have
concluded, based on their evaluation as of March 31, 2006, that the
Corporation's disclosure controls and procedures are 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.

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.

                                                                              12


<PAGE>


                                     PART II

                                OTHER INFORMATION

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

On January 5, 2006, the Corporation held its annual meeting of shareholders for
the purpose of considering and acting upon the election directors. At the
meeting, the election of both nominated directors was approved.

Election of Directors:

                                                 Shares Voted
                                    ----------------------------------------
         Name                          For                Authority Withheld
         ----                       ---------             ------------------
Earle Kunzig                        3,819,274                 320,401
Jay A. Smolyn                       3,817,164                 322,511


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 February 15, 2006, TransNet Corporation filed a Form 8-K under
              Item 7.

                                   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:  May 15, 2006

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