UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                              Washington D.C. 20549
                                    ---------

                                    FORM 10-Q

                Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

For the quarter ended     December 31, 1997    Commission File Number     0-8693

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

               Delaware                                      22-1892295
            (State or other jurisdiction of              (I.R.S. Employer
            incorporation or organization)              Identification No.)

            45 Columbia Road
            Somerville, New Jersey                           08876-3376
            (Address of principal executive offices)        (Zip code)

Registrant's telephone number, including area code:             (908) 253-0500
                                                        ----------------------


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  and  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 the number of shares outstanding of each of the issuer's classes of 
common stock as of February 5, 1998: 5,216,804.


<PAGE>



TRANSNET CORPORATION AND SUBSIDIARY
------------------------------------------------------------------------------


INDEX TO FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 1997.
------------------------------------------------------------------------------





PART I:  FINANCIAL INFORMATION

Item 1.  Financial Statements

   Consolidated Balance Sheets as of December 31, 1997 [Unaudited]
   and June 30, 1997 ............................................... 1.....

   Consolidated Statements of Operations for the three and six months
   ended December 31, 1997 and 1996 [Unaudited]..................... 2.....

   Consolidated Statements of Cash Flows for the six months ended
   December 31, 1997 and 1996 [Unaudited]........................... 3.....

   Notes to Consolidated Financial Statements [Unaudited]........... 4.....  5

Item 2.  Managements' Discussion and Analysis of the Financial
         Condition and Results of Operations........................ 6.....  7

PART II: OTHER INFORMATION.......................................... 8.....

SIGNATURES.......................................................... 9.....





                    .   .   .   .   .   .   .   .   .   .   .


<PAGE>



TRANSNET CORPORATION AND SUBSIDIARY
------------------------------------------------------------------------------


CONSOLIDATED BALANCE SHEETS
------------------------------------------------------------------------------
<TABLE> 



                                                          December 31,    June 30,
                                                             1 9 9 7       1 9 9 7
                                                           [Unaudited]
Assets:
                                                       
Current Assets:
<S>                                                        <C>          <C>        
  Cash and Cash Equivalents                                $2,760,264   $ 3,336,917
  Accounts Receivable - Net                                11,409,624     8,986,318
  Inventories                                               3,196,336     3,274,462
  Other Current Assets                                        297,166       324,546
  Deferred Tax Asset                                           94,700       334,700
  Mortgage Receivable                                         590,000            --
                                                           ----------   -----------

  Total Current Assets                                     18,348,090    16,256,943

Property and Equipment - Net                                  785,094       916,254

Other Assets                                                  999,927     1,051,101
                                                           ----------   -----------

  Total Assets                                             $20,133,111  $18,224,298
                                                           ===========  ===========

Liabilities and Stockholders' Equity:
Current Liabilities:
  Accounts Payable                                         $2,071,558   $   965,340
  Accrued Expenses                                            800,010       650,242
  Floor Plan Payable                                        4,142,919     4,384,040
  Deferred Income                                             228,820       162,576
  Other Current Liabilities                                   302,626       264,481
                                                           ----------   -----------

  Total Current Liabilities                                 7,545,933     6,426,679
                                                           ----------   -----------

Deferred Tax Liability                                         97,700        97,700
                                                           ----------   -----------

Commitments and Contingencies                                      --            --
                                                           ----------   -----------

Stockholders' Equity:
  Capital Stock - Common, $.01 Par Value, Authorized
   15,000,000 Shares; Issued 7,469,524 Shares
   [of which 2,252,720 are in Treasury]                        74,695        74,695

  Paid-in Capital                                          10,686,745    10,686,745

  Retained Earnings                                         7,945,681     7,156,122
                                                           ----------   -----------

  Totals                                                   18,707,121    17,917,562
  Less:  Treasury Stock - At Cost                          (6,217,643)   (6,217,643)
                                                           ----------   -----------

  Total Stockholders' Equity                               12,489,478    11,699,919
                                                           ----------   -----------

  Total Liabilities and Stockholders' Equity               $20,133,111  $18,224,298
                                                           ===========  ===========



The Accompanying Notes are an Integral Part of these Consolidated Financial Statements.
</TABLE>

                                         1

<PAGE>



TRANSNET CORPORATION AND SUBSIDIARY
------------------------------------------------------------------------------


CONSOLIDATED STATEMENTS OF OPERATIONS
[UNAUDITED]
------------------------------------------------------------------------------
<TABLE>



                                       Three months ended       Six months ended
                                          December 31,            December 31,
                                          ------------            ------------
                                       1 9 9 7     1 9 9 6     1 9 9 7     1 9 9 6
                                       -------     -------     -------     -------

<S>                                 <C>         <C>         <C>         <C>        
Revenue                             $20,282,544 $19,496,903 $39,796,129 $36,036,011

Cost of Revenue                      18,016,064  17,415,384  35,590,181  32,112,304
                                    ----------- ----------- ----------- -----------

  Gross Profit                        2,266,480   2,081,519   4,205,948   3,923,707

Expenses:
  Selling, General and Administrative
   Expenses                           2,006,104   1,728,848   3,687,876   3,296,485
                                    ----------- ----------- ----------- -----------

  Operating Income                      260,376     352,671     518,072     627,222
                                    ----------- ----------- ----------- -----------

Other Income [Expense]:
  Interest Income                        26,288      17,740      69,998      45,772
  Interest Expense                           --     (30,681)         --     (35,983)
  Gain on Sale                          466,489          --     466,489          --
                                    ----------- ----------- ----------- -----------

  Other Income [Expense] - Net          492,777     (12,941)    536,487       9,789
                                    ----------- ----------- ----------- -----------

  Income Before Provision for Income
   Taxes                                753,153     339,730   1,054,559     637,011

Provision for Income Taxes              257,000          --     265,000          --
                                    ----------- ----------- ----------- -----------

  Net Income                        $   496,153 $   339,730 $   789,559 $   637,011
                                    =========== =========== =========== ===========

  Income Per Common Share           $       .10 $       .07 $       .15 $       .12
                                    =========== =========== =========== ===========



The Accompanying Notes are an Integral Part of these Consolidated Financial Statements.

</TABLE>



                                         2

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TRANSNET CORPORATION AND SUBSIDIARY
------------------------------------------------------------------------------


CONSOLIDATED STATEMENTS OF CASH FLOWS
------------------------------------------------------------------------------
<TABLE>



                                                                Six months ended
                                                                  December 31,
                                                               1 9 9 7     1 9 9 6
                                                               -------     -------
                                                             [Unaudited]
Operating Activities:
<S>                                                         <C>         <C>        
  Net Income                                                $   789,559 $   637,011
                                                            ----------- -----------
  Adjustments  to  Reconcile  Net  Income  to Net Cash 
    Provided  by [Used  for]
   Operating Activities:
   Depreciation and Amortization                                155,160     177,606
   Gain on Sale of Land                                        (466,489)         --
   Deferred Taxes                                               240,000          --

  Changes in Assets and Liabilities:
   [Increase] Decrease in:
     Accounts Receivable                                     (2,423,306) (1,888,161)
     Inventory                                                   78,126     316,807
     Other Current Assets                                        27,380     310,944
     Other Assets                                               (96,337)    (43,458)

   Increase [Decrease] in:
     Accounts Payable and Accrued Expenses                    1,255,986    (103,266)
     Deferred Income                                             66,244    (165,637)
     Other Current Liabilities                                   38,145      50,782
                                                            ----------- -----------

   Total Adjustments                                         (1,125,091) (1,344,383)
                                                            ----------- -----------

  Net Cash - Operating Activities                              (335,532)   (707,372)

Investing Activities:
  Capital Expenditures                                               --     (21,237)

Financing Activities:
  Floor Plan Payable                                           (241,121)    446,148
                                                            ----------- -----------

  Net [Decrease] in Cash and Cash Equivalents                  (576,653)   (282,461)

Cash and Cash Equivalents - Beginning of Periods              3,336,917   2,383,741
                                                            ----------- -----------

  Cash and Cash Equivalents - End of Periods                $ 2,760,264 $ 2,101,280
                                                            =========== ===========

Supplemental Disclosures of Cash Flow Information:
  Cash paid during the periods for:
   Interest                                                 $        -- $    35,983
   Income Taxes                                             $     8,878 $     7,500
</TABLE>

Supplemental Disclosures of Non-Cash Investing Activities:
  During 1996,  $520,790 of other assets were placed into service and classified
as property and equipment.

  During 1997, the Company  disposed of $138,126 of fully  depreciated  property
and equipment.



The Accompanying Notes are an Integral Part of these Consolidated Financial 
Statements.

                                         3

<PAGE>



TRANSNET CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------------------------------------------




[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.  During the prior year, the Corporation  liquidated four inactive
subsidiaries whose activities were previously merged with the Corporation.

[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 are based on  5,216,804
weighted shares outstanding for the period ended December 31, 1997 and 1996.

[2] Income Taxes

The  Corporation  has a deferred tax asset of $94,700 based on temporary  timing
differences including inventory capitalization, allowance for doubtful accounts,
vacation pay accruals and net operating loss carryforwards.

The Company  anticipates  fully utilizing its net operating loss carryforward of
approximately $948,000 during the current year.

[3] Reclassification

Certain items from prior year's financial  statements have been  reclassified to
conform to the current year's presentation.

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.

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, 1997.



                                        4

<PAGE>



TRANSNET CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #2
------------------------------------------------------------------------------



[4] Asset Purchase Agreement

On October  31,  1997,  the  Corporation  executed an Asset  Purchase  Agreement
providing  for the sale for a  maximum  $20.5  million  cash  purchase  price of
substantially all of its operating assets, subject to certain liabilities,  to a
wholly-owned  subsidiary of GE Capital Information  Technology  Solutions,  Inc.
["GEITS"].  GEITS is an  affiliate  of GE  Capital  Services  which in turn is a
wholly-owned  subsidiary of General Electric Company. The sale is subject to the
approval of TranNet's  stockholders at a stockholder  meeting anticipated in the
first  quarter of calendar  1998,  as well as the  occurrence  of certain  other
conditions.

[5] Sale of Land

On November 11,1997, the Corporation executed an agreement to sell approximately
6.32 acres of unimproved  real property in  Mountainside,  New Jersey [the "real
property"] to W Realty LLC ["W Realty] for the appraised value of $1,000,000.  W
Realty is a partnership  consisting of John J. Wilk,  Chairman of the Board, and
Raymond J. Rekuc, a Director of the  Corporation.  The purchase price is payable
through  a credit  extended  by W Realty as  sub-lessor  to the  Corporation  as
sub-lessee for the $410,000 of rent payable by the Corporation over the last two
years of its sublease for its principal facility in Somerville, New Jersey and a
$590,000  promissory  note  executed  by W Realty  payable  in  installments  of
$150,000 in February 1998 and $440,000 in November 1998. The note bears interest
at the rate of 8% per annum and is secured by a mortgage  on the Real  Property.
The  Real  Property  was  specifically   excluded  from  the  assets  which  the
Corporation agreed,  subject to stockholder approval, to sell to GEITS [See Note
4].






                .   .   .   .   .   .   .   .   .   .   .   .  .


                                        5

<PAGE>



Item 2:

TRANSNET CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
------------------------------------------------------------------------------



Results of Operations

Revenues  for the three  months  ended  December  31, 1997 were  $20,282,544  as
compared  with  $19,496,903  for the quarter  ended  December 31, 1996.  For the
quarter ended December 31, 1997 the Corporation  reported net income of $496,153
as  compared  with net  income  of  $339,730  for the  similar  period  in 1996.
Operating  income  totaled  $260,376 in the more  recent  quarter as compared to
$352,671 in the similar  period in 1996.  For the six months ended  December 31,
1997,  revenues were  $39,796,129,  as compared to $36,036,011  reported for the
similar  period  in 1996,  with net  income of  $789,559  for the  period  ended
December 31, 1997, compared with net earnings of $637,011 for the same period in
1996.  Operating  income in the six months ended  December 31, 1997 was $518,072
compared to $627,222 in the prior year's  corresponding  period. The increase in
revenues  is  primarily  due to  increases  in  the  sale  of the  Corporation's
technical services (such as technical support,  technical repair and maintenance
services, system integrations,  network design and installation,  and training),
and to a lesser extent to an increased volumes of hardware sales. The portion of
revenues  attributed to equipment sales remained relatively constant compared to
prior  periods  due  to the  impact  of  decreases  in the  prices  of  computer
equipment.

Net income for the quarter ended December 31, 1997 are attributable to increased
service  revenues,  management's  concentration  on sales of network  and system
integration  products which yield higher profit margins,  and to a non-recurring
profit of $466,489 from the sale during the quarter of certain  unimproved  real
property.  Service  related  revenues,  though  not a  material  source  of  the
Corporation's  revenues,  are  significant  in their  contributions  to earnings
because these  operations yield a higher profit margin than equipment sales. The
Corporation  continued to increase its technical staff in response to the demand
for its services,  encountering an industry-wide shortage of qualified technical
personnel, resulting in a high level of competition to hire and retain technical
staffs.  Management  anticipates these trends to continue. For the quarter ended
December  31,  1997,  the  increase in revenues  from the  provision of service,
support,  outsourcing  and  network  integration  is  largely  the result of the
Corporation  renewing  and/or  entering into service  contracts with a number of
large  corporate  customers.  The majority 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.

The  computer  industry  continually  faces  a trend  of  decreasing  prices  of
computers  and  related  equipment.  Management  believes  that this  trend will
continue.  Industrywide,  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 and the entrance of manufacturers into
technical services business.  Management  believes that the adoption of policies
by many larger corporate  customers to 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's  current  marketing  strategy is
designed  to  increase  sales of lower  revenue/higher  profit  margin  products
related  to  service  and  support  operations.   Management's  efforts  include
targeting  commercial,  educational  and  governmental  customers  which provide
marketplaces  for a  wide  range  of  products  and  services  at  one  time,  a
cost-effective  approach  to sales.  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 equipment  sales,
technical service and support programs, and promotion of its training services.


                                        6

<PAGE>



TRANSNET CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
------------------------------------------------------------------------------


Results of Operations [Continued]

Interest  income for the quarter and six month  period  increased as compared to
the  corresponding  periods in the prior year  because  of the  increase  in the
amount of funds invested and higher yields.  Interest  expense was eliminated in
the quarter and six-month period ended December 31, 1997 as compared to the same
periods in 1996 as a result of  management's  efforts to shorten the  collection
cycles of accounts  receivables  and  payables,  with a resulting  reduction  in
related financing costs.

Although  actual expenses  increased in 1997 due to the expenses  related to the
significant  increase in the  Corporation's  technical staff (discussed  above),
selling,  general and administrative  expenses remained  relatively  constant at
approximately  9% of revenues for the quarter and six-months  ended December 31,
1997 and 1996, due to management's  strict  adherence to cost-control  measures,
although  the  expenses  were  slightly  elevated  in the  1997  quarter  due to
professional expenses related to matters discussed below.

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.
Inventory  decreased in the quarter and six-month period ended December 31, 1997
as  compared  to the  corresponding  period  in 1996 in  response  to  increased
inventory turns related to the higher volume of sales. Management shall continue
its efforts to increase  turnover and to provide the Corporation with protection
against inventory  obsolescence  resulting from the rapid technological advances
of the computer industry, as well as minimize floor plan financing.

Accounts  receivable and payable  increased for the quarter and six-month period
ended  December 31, 1997  compared  with the same periods in 1996 as a result of
increased  sales.  Cash levels  decreased in the six month period ended December
31, 1997 as compared to the corresponding period in 1996. The decrease is due to
scheduled payment requirements under the floor planning arrangements

For the fiscal quarter and six months ended December 31, 1997, as in the periods
ended  December  31,  1996  the  internal  resources  of  the  Corporation  were
sufficient to enable the Corporation to meet its obligations.

Management  has recently  been  appraised  of an  unasserted  possible  claim or
assessment  involving the  Corporation's  Pension Plan.  The Plan was adopted in
1981 as a defined  benefit  plan.  In 1989,  various  actions  were taken by the
Corporation to terminate the Plan, to convert it to a defined  contribution plan
and to freeze benefit accruals. No filing for plan termination was made with the
Pension Benefit Guaranty Corporation (the "PBGC"). Additionally, a final amended
and restated plan document  incorporating  the  foregoing  amendments  and other
required  amendments  including  those required by the Tax Reform Act of 1986 do
not appear to have been properly  adopted.  In addition,  since 1989, it appears
that certain  operational  violations occurred in the administration of the Plan
including the failure to obtain spousal  consent in certain  instances  where it
was required.

The Corporation  currently  intends to (i) take corrective  action under the IRS
Walk-in  Closing  Agreement   Program  ("CAP"),   (ii)  apply  for  a  favorable
determination  letter with respect to the Plan from the IRS, and (iii) terminate
the Plan.  The CAP program  provides a correction  mechanism for "non  amenders"
such as the  Corporation.  Under  CAP,  the  Corporation  will be  subject  to a
monetary sanction (which could range from $1,000 to approximately  $40,000).  In
addition,   the  Corporation   will  be  required  to  correct,   retroactively,
operational violations,  and to pay any resulting excise taxes and PBGC premiums
and penalties that may be due.  Special counsel has advised the Corporation that
although  it  believes  that  the  Corporation  will  incur  some  liability  in
connection  with  the  correction  of  such  operational  violations,  it is not
possible to estimate the  potential  amount of or the range of liability at this
time. Such counsel has also advised that depending on the corrections  required,
such liability could range from an insignificant to a material amount,  but that
due to the uncertainties  involved, any estimate in dollar terms of the range of
any such liability at this time would be speculative and potentially misleading.


                                        7

<PAGE>



TRANSNET CORPORATION AND SUBSIDIARY
PART II - OTHER INFORMATION
------------------------------------------------------------------------------




Item 5:Other Information

       Pursuant to the decision of a NASDAQ Listing  Qualifications  Panel,  the
       Company's  common  stock was  deleted  from the  NASDAQ  Stock  Market on
       February 4, 1998.  The cited  cause of the  delisting  was the  Company's
       failure to hold its shareholder meeting (currently called for March 1998)
       prior to January 31, 1998. The Company  believes  there were  justifiable
       reasons for the delay in holding the meeting attributable to negotiations
       in connection with the Company's  proposed  transaction with an affiliate
       of GE  Capital,  and has  appealed  the  decision  to the NASDAQ  Listing
       Council. Pending determination of the appeal, the common stock will trade
       on the OTC Bulletin Board under the symbol "TRNT."

Item 6:Exhibits and Reports on Form 8-K

       A. Exhibits - None required to be filed for Part II of this report.

       B.  Reports on Form 8-K - None filed  during the  quarter  for which this
report is submitted.



                                        8

<PAGE>


SIGNATURES
------------------------------------------------------------------------------






Pursuant to the  requirements of Section 13 or 15(d) 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


Date: February 13, 1998               By: /s/ Steven J. Wilk
                                          -------------------
                                          Steven J. Wilk,
                                          Chief Executive Officer



Date:  February 13, 1998              By: /s/ John J. Wilk
                                          -------------------
                                          John J. Wilk,
                                          Chief Financial and Accounting Officer



                                        9