<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>tra10k06.txt
<TEXT>
                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D. C.  20549

                                    FORM 10-K

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
      SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

For the fiscal  year ended  June 30,  2001 [ ]  TRANSITION  REPORT  PURSUANT  TO
SECTION 13 OR 15 (d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the Transition period from       to
                              ------    ---------------

                          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 Identification
incorporation or organization)      Number)

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

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

Securities registered pursuant to Section 12 (b) of the Act:  NONE
                                                              ----

Securities registered pursuant to Section 12 (g) of the Act:

                          Common Stock, $.01 par value

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 ninety days.

                              YES   X     NO
                                 -----      ----

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference in Part III of this From 10-K or in any  amendment to
this Form 10-K.
                                    [     ]

The  aggregate   market  value  of  the   registrant's   common  stock  held  by
non-affiliates of the registrant was  approximately  $5,289,296 on September 21,
2001 based upon the  closing  sales price on the OTC  Bulletin  Board as of said
date.

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)
The number of shares of the registrant's  common stock  outstanding on September
21, 2001 was 4,774,804 shares (exclusive of Treasury shares).


<PAGE>




ITEM 1.  BUSINESS

      TransNet Corporation ("TransNet" or the "Corporation") was incorporated in
the State of Delaware in 1969. The  Corporation is a  single-source  provider of
information  technology products and technology  management services designed to
enhance the  productivity of the information  systems of its customers.  Through
its own sales and service departments,  TransNet provides information technology
and network  solutions for its customers by combining  value-added  professional
technical  services  with the sale of PC hardware,  network  products,  computer
peripherals and software.  As used herein, the term "Corporation" shall refer to
TransNet  and  where  the  context  requires,  shall  include  TransNet  and its
wholly-owned   subsidiary,   Century  American  Corporation.   Century  American
Corporation, formerly a leasing subsidiary, is currently inactive.

Description of Business

      Products, Sources, and Markets: The sale of computer and related equipment
for local area networks  ("LAN's") and personal computers ("PC's") accounted for
the significant  portion of the Corporation's  revenues,  accounting for 75% and
72% of sales  for  fiscal  2001  and  2000,  respectively.  The  Corporation  is
primarily a value added reseller.  During the past year, management continued to
implement a shift in the  Corporation's  focus for business growth from hardware
sales to marketing a wider array of  technical  services to its clients in order
to  maximize  profits.  In  addition,  building  on  its  expertise  in  network
installation,  the Corporation  expanded its marketing and sales of IP telephony
products.  These  products  provided for the operation of highly  reliable phone
systems  over  data  networks.  The  resulting  economies  of  installation  and
maintenance have generated  increased demand for these products.  As part of its
single source  approach,  the  Corporation  is a systems  integrator,  combining
hardware  and  software  products  from  different  manufacturers  into  working
systems.

      The   equipment   sold  by  the   Corporation   includes   microcomputers,
workstations,  servers,  monitors,  printers and operating systems software.  In
addition,  the Corporation  sells wireless  networking  products.  The principal
markets  for  the  Corporation's  products  are  commercial,  governmental,  and
educational  customers.  These  markets  are reached by direct  sales  conducted
through the corporate  sales  department  based in Branchburg,  New Jersey.  The
Corporation's  direct sales staff  enables  TransNet to establish  relationships
with major  corporate  and  educational  clients  through  which it markets  the
Corporation's technical services.

      The  Corporation is selective in choosing the products that it markets and
its  product  mix is  geared  primarily  to  the  requirements  of its  business
customers.  The products sold by the Corporation  include  business and personal
desktop  computer  systems  manufactured  by  International   Business  Machines
("IBM"), Acer, Apple Computer, Inc. ("Apple"),  Nortel Networks, Compaq Computer
Corporation ("Compaq"), NEC Technologies, Inc. ("NEC"),  Hewlett-Packard Company
("Hewlett-Packard"), and Toshiba American Information Systems, Inc. ("Toshiba");
related peripheral products such as network products of Compaq,  Intel,  Novell,
Inc. ("Novell"),  3Com, and Cisco Systems,  Inc. ("Cisco");  telephony products;
selected software products;  and supplies produced by other  manufacturers.  The
Corporation does not manufacture or produce any of the items it markets.

      The  Corporation  is  currently  an  authorized  dealer for Apple,  Nortel
Networks,  Compaq (including authorizations as a Compaq Enterprise Partner and a
Compaq Certified  Education  Partner),  Hewlett-  Packard,  IBM, Intel, NEC, and
Toshiba,  Microsoft Corporation ("Microsoft") as a Microsoft Certified Solutions
Provider,  Cisco,  Novell,  and 3COM. The  Corporation  also offers a variety of
products  manufactured  by  other  companies  including  Lexmark,  Okidata,  and
Xerox/Tektronix.  Occasionally,  the Corporation will order specific products to
satisfy a particular customer requirement. The Corporation evaluates its product
line and new products  internally and through  discussions  with its vendors and
customers.

      Software sold by the Corporation  includes  software  designed for general
business  applications  as well as  specialized  applications  such as research,
pharmaceuticals, and education; and integrated packages.



                                        1

<PAGE>



      The  Corporation  maintains  an  inventory  of its product line to provide
shipments  to  customers  or  arranges  for  direct  shipment  of product to the
customer.  Back orders are  generally  immaterial,  but  manufacturers'  product
constraints  occasionally  impact the  Corporation's  inventory  levels. No such
constraints have affected the Corporation in the past three years,  however.  In
an effort to reduce costs,  the  Corporation  has  instituted a direct  shipping
program,  through  which  product is  shipped  directly  from the  Corporation's
suppliers  to  the   customer.   In  addition,   shipments  are  made  from  the
Corporation's  warehouse in  Branchburg,  New Jersey  primarily  through  common
carriers.

      The  marketing of computers and  peripherals  is generally not seasonal in
nature.

      Technical   Support  and  Service:   Service   operations  have  become  a
significant  source of revenues,  comprising 25% of revenues in fiscal 2001, and
28% of revenues in fiscal 2000.  Although hardware sales account for the bulk of
the  Corporation's  revenues,  management's  focus  emphasizes  the provision of
sophisticated  technical services, as discussed in "Management's  Discussion and
Analysis." Because many businesses do not have their own computer technicians on
staff,  they "outsource"  these services and obtain  technical  services from IT
solutions providers such as TransNet. The Corporation provides a wide variety of
outsourced  network services,  personal  computer  support,  repair and standard
equipment  maintenance to assist customers in obtaining technology that enhances
the customers'  productivity.  These services,  which are generally performed at
customer  sites,  include  LAN  and PC  hardware  support,  systems  integration
services,  help  desk  services,  asset  management,  relocation  services,  and
installation or installation coordination. The Corporation assists its customers
in determining each customer's  standard  hardware  technology,  application and
operating system software, and networking platform requirements. The Corporation
employs specially  certified and trained technical systems engineers who perform
high-end technology  integration services. In addition,  the Corporation's staff
of specially  trained system engineers and service  technicians  provide service
and support on an on-call basis for file  servers,  personal  computers,  laptop
computers,  printers and other peripheral equipment.  The Corporation's in-house
technical staff performs  system  configurations  to customize  computers to the
customers'  specifications.  The Corporation also provides  authorized  warranty
service on the equipment it sells. TransNet is an authorized service and support
dealer for the following  manufacturers:  by Apple, Cisco, Compaq, Dell, Hewlett
Packard, IBM, Microsoft (as a Certified Solution Provider), NEC, and Novell.

      The Corporation seeks highly qualified  personnel and employs  experienced
system  engineers and  technicians to whom it provides  authorized  manufacturer
training and certification  programs on an on- going basis.  During fiscal 2001,
the Corporation  continued its efforts to expand its technical staff in response
to the increased demand for technical services and the increasing  complexity of
network   systems.   The   Corporation   competes   with  other   resellers  and
manufacturers,  as well as some  customers,  to  recruit  and  retain  qualified
employees from a relatively small pool of available candidates.

      The  Corporation's  technical  services  are  available  to  business  and
individual customers. Through a variety of alternatives,  the Corporation offers
repair or  maintenance  services at the  customer  site or on the  Corporation's
premises.  Maintenance  and service  contracts  are  offered to maintain  and/or
repair computer hardware.  Technical support and services are performed pursuant
to  contracts  of  specified  terms and  coverage  (hourly  rates or fixed price
extended contracts) or on a time and materials basis. Services are available for
a variety of  products  marketed  by the  Corporation.  In  connection  with its
"TechNet" program, through which the Corporation stations service personnel at a
customer's  location on a full-time  basis,  the  Corporation  has entered  into
individual  agreements with several large corporate customers to provide support
and repair and  maintenance  services.  Most agreements are for twelve months or
less. These agreements contain provisions  allowing for termination prior to the
expiration of the agreements.  Although the agreements generally contain renewal
terms, there is no assurance that the agreements will be renewed.

      In  addition to services  pursuant to a contract,  repair and  maintenance
services are also available on a "time and materials" basis. The repair services
usually consist of diagnosing and identifying  malfunctions in computer hardware
systems and  replacing any defective  circuit  boards or modules.  The defective
items are generally  repaired by in-house  bench  technicians or returned to the
manufacturer for repair or replacement.


                                        2

<PAGE>



      To improve its  efficiency  and  facilitate  service to its  clients,  the
Corporation  implemented  procedures to allow its clients to place service calls
through the Internet, as a supplement to the phone and/or fax service requests.

      In addition to servicing  its own customers  within its service area,  the
Corporation has entered into  arrangements  with other service providers outside
the Corporation's service area. Through these arrangements,  the Corporation can
provide  services in  instances in which a customer  has  locations  outside the
Corporation's  service  areas and can assure  its  customers  quality  technical
service at their locations nationwide.

      Training: The Corporation's headquarters houses its Training Center, which
provides  training for  customers.  The  Corporation  also provides  training at
customer sites. The Corporation  offers  comprehensive  training on hardware and
software,  including a wide variety of DOS,  Windows,  and Macintosh systems and
network applications,  operation,  and maintenance.  The Corporation's  Training
Center has its own dedicated network. The training activities of the Corporation
are not a material source of revenues.

      Suppliers:  In  order  to  reduce  its  costs  for  computer  and  related
equipment,  the Corporation  entered into a buying  agreement with Ingram Micro,
Inc.  Under the  agreement,  the  Corporation  is able to purchase  equipment of
various  manufacturers  at discounts  currently  unavailable to it through other
avenues.   The  agreement  provides  that  the  Corporation  may  terminate  the
arrangement  upon sixty days notice.  During  fiscal  2001,  the majority of the
revenues  generated by the Corporation  from product sales were  attributable to
products  purchased by the Corporation from Ingram Micro,  Inc.  pursuant to the
Agreement.  The balance of the Corporation's  product sales were attributable to
products  purchased  from a variety  of  sources  on an as needed  order  basis.
Alternate  suppliers  include Tech Data Corp.,  as well as Compaq and IBM,  from
whom the Corporation purchases direct. Management anticipates that Ingram Micro,
Inc. will be a major supplier during fiscal 2002.

      Customers:  The  majority of the  Corporation's  corporate  customers  are
commercial users located in the New Jersey - New York City metropolitan area.

      During fiscal 2001, one customer, Merck/Medco Managed Care, LLC ("Medco"),
accounted for approximately 22% of the Corporation's  revenues, and an affiliate
of that customer,  Merck & Co. accounted for 16% of the Corporation's  revenues.
During fiscal 2000, Medco accounted for  approximately  41% of the Corporation's
revenues.  The loss of these  customers may have a material  adverse impact upon
the Corporation if the business could not be replaced from alternate customers.

      No  other  customer  accounted  for  more  than  10% of the  Corporation's
revenues in fiscal 2001.

      Competition:  The sale and service of personal  computer systems is highly
competitive  and may be affected by rapid  changes in  technology  and  spending
habits in both the business and  institutional  sectors.  The  Corporation is in
direct competition with any business which is engaged in information  technology
management, specifically the sale and technical support and service of networks,
personal  computers  and related  peripherals.  Competitors  include  larger and
longer  established   companies  possessing   substantially   greater  financial
resources and substantially larger staffs,  facilities and equipment,  including
several  computer  manufacturers  which  have  begun to deal  directly  with the
end-users.  With respect to IP telephony products, the Corporation competes with
similar  businesses as well as directly with several product  manufacturers  and
national telecommunication  businesses.  During the past few years, the industry
has   experienced   and  continues  to   experience  a  significant   amount  of
consolidation.  In the future, TransNet may face fewer but larger competitors as
the result of such consolidation.

      Management  believes that commercial  customers require significant levels
of  sophisticated  support  services such as those provided by the  Corporation.
TransNet's   services  benefit  the  customers  by  providing  in-depth  product
knowledge and  experience,  competitive  pricing and the high level of technical
services.  Management  believes that TransNet's  ability to combine  competitive
pricing with responsive and sophisticated  support services allows it to compete
effectively  against  a wide  variety  of  alternative  microcomputer  sales and
distribution   channels,   including   independent  dealers,   direct  mail  and
telemarketing,  superstores and direct sales by manufacturers (including some of
its own suppliers).


                                        3

<PAGE>



      Technological  advances  occur  rapidly  in  computer  technology  and new
products are often announced prior to  availability,  sometimes  creating demand
exceeding   manufacturers'   expectations  and  thereby   resulting  in  product
shortages.   When  this  occurs,   resulting   product   constraints   intensify
competition,  depress  revenues because  customers  demand the new product,  and
increase order backlogs.  In the Corporation's  experience,  these backlogs have
been immaterial.

      In the past several  years,  there have been  frequent  reductions  in the
price of computers.  As a result,  competition has increased and the Corporation
lowered  its  prices to remain  competitive.  In  addition,  businesses  able to
purchase in larger volume than the Corporation  have received  higher  discounts
from manufacturers than the Corporation.  These factors have resulted in a lower
profit margin on the  Corporation's  equipment  sales. As a result of its buying
agreement with Ingram Micro, Inc., the Corporation is able to purchase equipment
at discounts  otherwise  unavailable to it,  enabling the Corporation to be more
price competitive.  In a cost-effective  marketing approach, the Corporation now
targets larger customers with more  diversified  product needs for its marketing
efforts in order to sell a greater  number and variety of products  and services
at one or a limited  number of  locations,  thereby  improving  its gross profit
margins.

      The Corporation does not believe that it is a significant factor in any of
its fields of activity.

      Trademarks:  Other  than the  trademark  of its  name,  TransNet  holds no
patents or trademarks.

      Employees:  As  of  September  15,  2001,  the  Corporation  employed  200
full-time  employees  and 16  part-time  employees.  None of its  employees  are
subject to collective bargaining agreements.

ITEM 2.  PROPERTIES

      The Corporation's executive, administrative,  corporate sales offices, and
service  center are located in  Branchburg,  New Jersey,  where the  Corporation
leases a building of  approximately  21,000 square feet.  This "net-net"  lease,
which currently provides for an approximately $13,810 monthly rental, expires in
February 2006. The building is leased from a non-affiliated party.

      See Note  [8A] of the  Notes to  Consolidated  Financial  Statements  with
respect to the Corporation's commitments for leased facilities.

ITEM 3.  LEGAL PROCEEDINGS

      The Corporation is not currently a party to any legal  proceeding which it
regards as material.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

      None.

                                        4

<PAGE>



                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SECURITYHOLDERS MATTERS

      TransNet's  common  stock is quoted and traded on the OTC  Bulletin  Board
under the symbol "TRNT." The following  table indicates the high and low closing
sales prices for TransNet's  common stock for the periods  indicated  based upon
information supplied by the National Quotation Bureau Incorporated.

Calendar Year                              Closing Sales Prices
                                            High        Low
1999
     Third Quarter                           4          2.50
     Fourth Quarter                       3.50        2.1875

2000
     First Quarter                       $2.75      $1.96875
     Second Quarter                      2.375         1.625
     Third Quarter                      2.1875         1.625
     Fourth Quarter                     2.0625             1

2001
     First Quarter                     $1.6875       $1.0625
     Second Quarter                       1.92       1.09375

     As of  September  15, 2001,  the number of holders of record of  TransNet's
common stock was 2,888.  Such number of record  owners was  determined  from the
Company's  shareholder  records and does not  include  beneficial  owners  whose
shares are held in nominee  accounts with brokers,  dealers,  banks and clearing
agencies.

     TransNet  has  not  paid  any  dividends  on its  common  stock  since  its
inception.

                                        5

<PAGE>




ITEM 6.  SELECTED FINANCIAL DATA

The  selected  consolidated  financial  data set forth  below  should be read in
conjunction   with,   and  is  qualified  in  its  entirety  by,  the  Company's
consolidated financial statements, related notes and other financial information
included elsewhere in this Annual Report on Form 10-K.
<TABLE>

                                             Year Ended June 30,
                            2001       2000         1999       1998         1997
                            ----       ----         ----       ----         ----

Statement of Income Data
Net Sales
<S>                     <C>         <C>         <C>         <C>          <C>
  Equipment             42,137,322  33,503,234  28,231,540  60,333,109   61,043,320
  Services              14,280,047  13,063,267  16,074,600  10,091,700    7,588,002
                        56,417,369  46,566,501  44,306,140  70,424,809   68,631,322

Cost of Sales
  Equipment             38,893,267  31,230,050  25,844,701  55,243,196   56,078,869
  Services              10,084,170   9,687,659   9,882,921   7,068,517    5,081,596
                        48,977,437  40,917,709  35,727,622  62,311,713   61,160,465

Gross Profit
   Equipment             3,244,055   2,273,184   2,386,839   5,089,913    4,964,451
   Services              4,195,877   3,375,608   6,191,679   3,023,183    2,506,406
                         7,439,932   5,648,792   8,578,518   8,113,096    7,470,857

Selling, General &
  Administrative         6,800,202   5,980,830   7,073,487   7,529,093    6,465,912

Income before Income
  Taxes                    897,012      26,270   1,836,052   1,274,791    1,088,067

Net Income                 563,012       8,270   1,172,462     923,891    1,032,567

Income (Loss) Per Common
  Share - Basic               0.12           -        0.23        0.18         0.20

Income (Loss) Per Common
  Share - Diluted             0.12           -        0.23        0.18         0.20

Weighted average shares
  outstanding - Basic    4,815,872   4,903,804   5,183,141   5,216,804    5,216,804

Weighted average shares
  outstanding - Diluted  4,884,853   4,903,804   5,183,141   5,216,804    5,216,804

Balance Sheet Data:
Working Capital         12,540,263  11,886,844  11,887,050  11,200,198    9,830,264
Total Assets            17,152,151  17,450,367  17,118,880  15,396,518   18,224,298
Long-Term Obligations            -           -           -           -           -
Shareholders Equity     13,276,997  12,813,126  13,449,272  12,623,810   11,699,919
</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Results of Operations

      Revenues  for the  fiscal  year ended June 30,  2001 were  $56,417,369  as
compared  with  $46,566,501  for the  fiscal  year  ended  June  30,  2000,  and
$44,306,140  for the fiscal year ended June 30,  1999.  The increase in revenues
for both fiscal 2001 and 2000 as  compared  to fiscal 1999 was  attributable  to
respective   increases  in  hardware  sales.  In  addition,   several   computer
manufacturers shipped product

                                        6

<PAGE>



directly to and direct-billed TransNet customers,  paying TransNet a fee similar
to a commission.  Although this reduced revenues from hardware sales, it yielded
increased  profits.  Service  revenues  increased  in fiscal 2001 as a result of
increased demand for the Corporation's  technical services  (technical  support,
repair and  maintenance,  network  integration and training).  Service  revenues
decreased in fiscal 2000 compared to the prior year due to the reduction  and/or
postponement of projects as a result of clients' focus on Y2K remediation.

      For fiscal  2001,  the  Corporation  reported  net income of  $563,012  as
compared with net income of $8,270 for fiscal 2000, and net income of $1,172,462
for fiscal  1999.  The increase in income for fiscal 2001 over the prior year is
the result of increase in hardware sales and the provision of higher-end network
integration  and IP telephony  services,  as well as improved  profit margins on
both  equipment  sales and  services.  The decrease in income for fiscal 2000 is
attributed  to a number of  factors,  including  losses in the  second and third
fiscal quarters which resulted from postponements of software implementation and
system  upgrade   projects  by  major  customers  due  to  their  focus  on  Y2K
remediation;  decreased profit margins on hardware sales;  decreased  margins on
services due in part to increased salaries of technical personnel; and decreased
training  revenues  resulting  from  Y2K  remediation  focus.   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 years discussed,  revenue from the provision of
service,  support,  outsourcing and network integration is largely the result of
the  Corporation  entering  into  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.

      During the fiscal years discussed, the computer industry has experienced 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,  the
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.

      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.

      To meet these  competitive  challenges  and to maximize the  Corporation's
profit margin, management has modified its marketing strategy during these years
and has enforced expense  controls.  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's current marketing strategy
is designed to shift its focus to provision  of technical  services and to sales
of lower  revenue/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  technical  service and
support programs,  and promotion of its training services. In the near term, the
Corporation  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.


                                        7

<PAGE>



      During fiscal 2001, selling, general and administrative expenses decreased
to 12% of  revenues,  which  reflects  continued  efforts to  control  expenses,
despite  increased  personnel related costs. This compares to 13% of revenue for
fiscal  2000,  a decrease  over the prior  year's  16% due to  several  factors,
including a restructured  commission plan, and reduced administrative  expenses,
such as personnel related expenses, as well as reduced shipping costs due to the
direct-ship program.

      Interest  income  decreased  in fiscal  2001 due to lower  amount of funds
invested and lower interest rates.  Interest income increased in fiscal 2000 and
1999,  respectively,  as  compared to the prior  years  primarily  due to higher
interest  rates and stronger cash  positions,  which allowed the  Corporation to
invest larger amounts than in prior years.

Liquidity and Capital Resources

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

      The  Corporation  currently  finances  the  purchases  of  portions of its
inventory through floor planning  arrangements  with a third-party  lender and a
manufacturer's  affiliate  under  which  such  inventory  secures  the  financed
purchases. Inventory increased for fiscal 2001 and 2000 as a result of increased
sales volume.

      Accounts receivable decreased in fiscal 2001 compared to the prior year as
a result of management's  efforts to reduce customers' payment cycles.  Accounts
receivable  increased  in fiscal 2000  compared to the prior year as a result of
large fiscal  year-end  hardware  orders from  customers and increased  past due
amounts  from certain  customers.  Accounts  payable  decrease in fiscal 2001 as
compared  to fiscal  2000 as a result  of  purchasing  cycles  at year end,  and
increased for the both fiscal 2000 and 1999, in each case, compared to the prior
year due to the  purchase of  equipment in late June of each year related to the
above referenced  customer orders.  Floor planning payables  increased in fiscal
2001, 2000 and 1999 as a direct result of equipment  purchases  required to meet
increased hardware orders.

      For the fiscal year ended June 30, 2001, as in the fiscal years ended June
30,  2000 and  1999,  the  internal  capital  sources  of the  Corporation  were
sufficient to enable the Corporation to meet its obligations.

      In the first  quarter  of  fiscal  1998,  management  was  apprised  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  decided  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. In this regard,  in connection  with  settlement
negotiations with the IRS, during the December 2000 quarter the Corporation made
a contribution to the Plan and made payment of specified  sanctions.  During the
March quarter, the Corporation finalized a settlement agreement with the IRS and
is awaiting resolution with the PBGC.



INVESTMENT CONSIDERATIONS AND UNCERTAINTIES

                                        8

<PAGE>



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 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.





ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      Attached.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

      There were no disagreements on accounting and financial disclosure between
the  Corporation and its  independent  public  accountants nor any change in the
Corporation's accountants during the last fiscal year.



                                        9

<PAGE>




                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The executive officers and directors of the Corporation are as follows:

      Name                     Age       Position
John J. Wilk (a)               73        Chairman of the Board and Treasurer
Steven J. Wilk (a)             44        President and Director
Jay A. Smolyn                  45        Vice President, Operations and Director
Vincent Cusumano (b)(d)        66        Secretary and Director
Earle Kunzig (b)(e)            62        Director
Raymond J. Rekuc (c)           55        Director
Susan Wilk-Cort (a)                      Director
--------------------------
   (a) Steven J. Wilk and Susan Wilk-Cort are respectively, the son and daughter
       of John J. Wilk.
   (b) Member of the Audit Committee
   (c) Chairman of the Audit Committee.
   (d) Member of the Compensation Committee.
   (e) Chairman of the Compensation Committee.

      The Audit Committee reviews,  evaluates and advises the Board of Directors
in matters relating to the  Corporation's  financial  reporting  practices,  its
application of accounting principles and its internal controls. In addition, the
Audit  Committee  reviews  transactions  regarding  management  remuneration  or
benefits.

      The  Compensation  Committee  reviews,  evaluates and advises the Board of
Directors in matters  relating to the  Corporation's  compensation  of and other
employment   benefits  for  executive   officers.   The  Board  established  its
Compensation  Committee  in  December  1994.  Prior  to that  time  compensation
decisions were subject to oversight by the entire Board of Directors.

      The Corporation does not have an Executive  Committee.  The term of office
of each director expires at the next annual meeting of stockholders. The term of
office of each executive officer expires at the next  organizational  meeting of
the Board of Directors following the next annual meeting of stockholders.

      The  following  is a brief  account  of the  business  experience  of each
TransNet director during the past five years.

      John J. Wilk was  president,  a director  and chief  executive  officer of
TransNet  since  its  inception  in 1969  until May  1986,  when he was  elected
Chairman of the Board.

      Steven J. Wilk was elected a vice  president  of TransNet in October  1981
and in May 1986 was  elected  President  and  Chief  Executive  Officer.  He was
elected a director of TransNet in April 1989.

      Jay A. Smolyn has been  employed at TransNet  since 1976 and in April 1985
became  Vice  President,  Operations.  He was  elected a director of TransNet in
January 1990.

      Vincent  Cusumano,  who was elected a TransNet director in April 1977, is,
and for the past five years has been,  president and chief executive  officer of
Cusumano  Perma-Rail  Corporation of Roselle Park, New Jersey,  distributors and
installers of exterior iron railings.  Mr.  Cusumano is not actively  engaged in
the business of the Corporation.

      Earle  Kunzig,  who was elected a TransNet  director in November  1976, is
Vice President of Sales and a principal of Hardware Products Sales, Inc., Wayne,
New  Jersey,  a broker of used  computer  equipment  and  provider  of  computer
maintenance  services.  He was  director of  hardware  operations  for  Computer
Maintenance Corporation, a business computer servicing organization in Secaucus,
New Jersey from 1978 through July 1985.  Mr.  Kunzig is not actively  engaged in
the business of the Corporation.


                                       10

<PAGE>



      Raymond J. Rekuc,  who was elected a TransNet  director in August 1983, is
currently the principal in Raymond J. Rekuc,  Certified  Public  Accountant,  an
accounting firm located in Washington,  New Jersey.  He was a partner with Hess,
Keeley & Company,  Accountants and Auditors,  Millburn,  New Jersey from October
1980 until September 1986,  when he became  treasurer of Royalox  International,
Inc. of Asbury,  New Jersey,  an importer of luggage and luggage  hardware.  Mr.
Rekuc provided financial  consulting  services to TransNet in 1990 through 1993.
Mr. Rekuc is a member of the American  Institute of Certified Public Accountants
and the New Jersey Society of Certified Public Accountants,  and is not actively
engaged in the business of the Corporation.

      Susan Wilk-Cort  joined TransNet in November 1987. Prior to that time, she
was a  Senior  Attorney  with  the U. S.  Securities  and  Exchange  Commission,
Washington,  D.C.,  and then the Office of General  Counsel of The Federal  Home
Loan Bank Board. She was elected a director of TransNet in January 1990.

      None of the Corporation's directors are directors of any other Corporation
with a class of securities  registered  pursuant to Section 12 of the Securities
Exchange  Act of 1934 or subject to the  requirements  of Section 15 (d) of that
Act.

Compliance with Section 16(a) of the Exchange Act

      Based  solely  on a  review  of Forms 3 and 4 and any  amendments  thereto
furnished to the  Corporation  pursuant to Rule  16a-3(e)  under the  Securities
Exchange Act of 1934,  or  representations  that no Forms 5 were  required,  the
Corporation  believes that with respect to fiscal 2001, its officers,  directors
and  beneficial  owners of more than 10% of its equity timely  complied with all
applicable Section 16(a) filing requirements.

ITEM 11.  EXECUTIVE COMPENSATION

      The following  table sets forth  information  concerning the  compensation
paid or accrued by the  Corporation  during  the three  years  ended on June 30,
2001, to its Chief Executive  Officer and each of its other  executive  officers
whose total  annual  salary and bonus for the fiscal  year ended June 30,  2001,
exceeded $100,000. All of the Corporation's group life, health,  hospitalization
or medical  reimbursement  plans, if any, do not discriminate in scope, terms or
operation,  in favor of the executive  officers or directors of the  Corporation
and are generally available to all full-time salaried employees.
<TABLE>

                             SUMMARY COMPENSATION TABLE

                            Annual Compensation                         Long-Term
                                                                       Compensation
                    ---------------------------------   --------------------------------------------
                                                         Securities
                    Year                                 Underlying
Name and            Ended                   Other Annual  Options    Restricted    LTIP    All Other
Principal Position June 30,  Salary  Bonus  Compensation    SARs    Stock Awards  Payouts Compensation
---------------------------  ------  -----  ------------    ----    ------------  --------------------

<S>                  <C>   <C>       <C>          <C>     <C>             <C>       <C>         <C>
Steven J. Wilk       2001  $266,167  $32,880      $0      100,000         0         $0          0
 President and Chief 2000  $250,000      $0       $0            0         0         $0          0
 Executive Officer   1999  $250,000  $82,603      $0            0         0         $0          0

Jay Smolyn           2001  $163,166  $25,645      $0       50,000         0         $0          0
  Vice President     2000  $148,542      $0       $0            0         0         $0          0
  Operations         1999  $135,000  $59,822      $0            0         0         $0          0


</TABLE>


                                         11

<PAGE>




                          OPTION GRANTS IN LAST FISCAL YEAR
                                 (individual grants)

      The  following  table sets forth  information  with respect to  individual
grants of stock options to the Named Executive Officer during fiscal 2001.


<TABLE>


                  Number of Securities    Percent of Total        Exercise or
                      Underlying        Options/SAR Granted to    Base Price     Expiration
Name of Officer  Options/SAR Granted    Employees in Fiscal      Year ($/Share)     Date
---------------  -------------------    -------------------      --------------     ----

<S>                      <C>                    <C>                  <C>           <C> <C>
Steven J. Wilk           100,000                28%                  $0.88         1/4/11
Jay A. Smolyn             50,000                14%                  $0.88         1/4/11
</TABLE>


                   AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                          AND FISCAL YEAR-END OPTION VALUES

      The  following  table sets  forth  information  with  respect to the Named
Executive Officer  concerning the exercise of options during fiscal 2001 and the
number and value of unexercised options held as of the end of fiscal 2001.
<TABLE>

                                                  Number of Securities  Value of Unexercised
                                                        Underlying          In-the-Money
                                                   Unexercised Options    Options at Fiscal
                       Number of                   at Fiscal Year End;      Year End ($);
Name of Executive   Shares Acquired                  (Exercisable/         (Exercisable/
   Officer            on Exercise   Value Realized   ($)Unexercisable)     Unexercisable)
   -------            -----------   ---------------  -----------------     --------------

<S>                        <C>             <C>          <C>                <C>
Steven J. Wilk             0               0            50,000/50,000         $31,000/0
Jay A. Smolyn              0               0            25,000/25,000         $15,500/0
</TABLE>

Employment Contracts with Executive Officers

      TransNet has employment contracts in effect with Steven J. Wilk and Jay A.
Smolyn  which  expire on June 30, 2005.  Pursuant to the  employment  contracts,
Steven J. Wilk's annual salary is "at least" $300,000 and Mr. Smolyn's salary is
"at least"  $165,000 or, in each case,  such  greater  amount as may be approved
from time to time by the Board of  Directors.  The  contracts  also  provide for
additional   incentive   bonuses  to  be  paid  with  respect  to  each  of  the
Corporation's  fiscal years based upon varying  percentages of the Corporation's
consolidated  pre-tax income exclusive of  extraordinary  items (3% of the first
$500,000,  4% of the next $500,000,  5% of the next $4,000,000 and 6% of amounts
in excess of $5,000,000  for Steven J. Wilk,  and 2% of pre-tax income in excess
of $100,000 to the first  $500,000 and 3% in excess of $500,00 for Mr.  Smolyn).
Steven J. Wilk's employment  contract provides for a continuation of full amount
of salary  payments for 6 months and 50% of the full amount for the remainder of
the term in the  event  of  illness  or  injury.  In  addition,  the  employment
contracts  contain terms  regarding the event of a hostile  change of control of
the Corporation and a resultant  termination of the employee's  employment prior
to expiration of the  employment  contract.  These terms provide that Mr. Smolyn
would receive a lump sum payment equal to 80% of the greater of his then current
annual  salary  or his  previous  calendar  year's  gross  wages  including  the
additional incentive compensation multiplied by the lesser of five or the number
of years remaining in the contract.  In the case of Steven J. Wilk, the contract
provides that in the event of  termination of employment due to a hostile change
in  control,  he may elect to serve as  consultant  at his  current  salary  and
performance bonus for a period of five years beginning at the date of the change
in  control,  or he may elect to receive a lump sum  payment  which would be the
greater of 80% of his then current  salary or 80% of his  previous  year's gross
wages times five. The contract for Mr. Smolyn  provides that the Corporation may
terminate his employment,  with or without cause. If said termination is without
cause,  the  Corporation  shall pay the Employee an amount equal to compensation
payable for a period of one-half of the contract period remaining, not to exceed
compensation for 18 months.  Steven J. Wilk's employment agreement provides that
should

                                         12

<PAGE>



the  Corporation  terminate  his  employment  (other than for the  commission of
willful  criminal  acts),  he may  elect  to  continue  as a  consultant  to the
Corporation at his then current  compensation  level,  including the performance
bonus,  for the lesser of two (2) years or the remainder of the contract term or
he may elect to receive a lump sum payment  equal to eighty  percent of his then
current  salary  plus  incentive  bonus times the lesser of two (2) years or the
remainder of the contract.

Directors' Compensation

      During fiscal 2001, the Company paid $5,000 in directors'  fees to each of
its three outside directors.

Stock Options

      The Plan  provides for the grant of both  Non-qualified  Stock Options and
Incentive Stock Options, as the latter is defined in Section 422 of the Internal
Revenue Code of 1986,  as amended  (the  "Code"),  as well as providing  for the
granting  of  Restricted  Stock and  Deferred  Stock  Awards,  covering,  in the
aggregate, 500,000 shares of the Company's Common Stock. The purpose of the Plan
is to advance the  interests  of the Company and its  shareholders  by providing
additional  incentives to the Company's management and employees,  and to reward
achievement of corporate goals.

      Awards  under  the Plan may be made or  granted  to  employees,  officers,
Directors and consultants, as selected by the Board. The Plan is administered by
the entire  Board of  Directors.  All  full-time  employees  and officers of the
Company are eligible to participate in the Plan.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

      The  following  table sets  forth,  as of August 31,  2001,  the number of
shares of  TransNet's  common stock owned  beneficially  to the knowledge of the
Corporation,  by each beneficial  owner of more than 5% of such common stock, by
each director owning shares and by all officers and directors of the Corporation
as a group.


Name of Beneficial                  Amount of Shares              Percent of
Owner                              Beneficially Owned              Class (a)
-----                              ------------------              ---------

Directors
Steven J. Wilk (b)                   443,500 shs (c)                  9%
John J. Wilk (b)                     200,500 shs (d)                  4%
Jay A. Smolyn (b)                    108,000 shs (e)                  2%
Susan Wilk-Cort (b)                  93,200 shs (f)                   2%
Vincent Cusumano (b)                 17,000 shs (g)                  ----
Earle Kunzig (b)                     15,000 shs (h)                  ----
Raymond J. Rekuc (b)                 15,000 shs (i)                  ----

All officers and directors            892,200 shs                     17%
as a group (seven persons)
-----------------------------------------
(a)   Based on 4, 934,804 shares outstanding.

(b) The address of all  directors is 45 Columbia  Road,  Branchburg,  New Jersey
08876.

(c)   Includes  50,000  shares that Mr.  Wilk is  entitled to purchase  upon the
      exercise of incentive  stock options.  The options were granted on January
      4, 2001 under the Corporation's 2000 Stock Option Plan. The exercise price
      is $0.88 per share.  Does not included 50,000 shares that Mr. Wilk will be
      entitled to purchase upon the exercise of similar  options which will vest
      on January 4, 2003.

(d)   Includes  25,000  shares that Mr.  Wilk is  entitled to purchase  upon the
      exercise of incentive  stock options.  The options were granted on January
      4, 2001 under the Corporation's 2000 Stock Option Plan. The exercise price
      is $0.88 per share.  Does not included 25,000 shares that Mr. Wilk will be
      entitled to purchase upon the exercise of similar  options which will vest
      on January 4, 2003.

                                         13

<PAGE>




(e)   Includes  25,000  shares that Mr.  Smolyn is entitled to purchase upon the
      exercise of incentive  stock options.  The options were granted on January
      4, 2001 under the Corporation's 2000 Stock Option Plan. The exercise price
      is $0.88 per share.  Does not included  25,000 shares that Mr. Smolyn will
      be entitled to purchase  upon the exercise of similar  options  which will
      vest on January 4, 2003.

(f)   Includes 15,000 shares that Ms. Wilk-Cort is entitled to purchase upon the
      exercise of incentive  stock options.  The options were granted on January
      4, 2001 under the Corporation's 2000 Stock Option Plan. The exercise price
      is $0.88 per share.  Does not included  15,000  shares that Ms.  Wilk-Cort
      will be entitled to purchase  upon the exercise of similar  options  which
      will vest on January 4, 2003.

(g)   Includes  15,000 shares that Mr. Cusumano is entitled to purchase upon the
      exercise of incentive  stock options.  The options were granted on January
      4, 2001 under the Corporation's 2000 Stock Option Plan. The exercise price
      is $0.88 per share.

(h)   Includes  15,000  shares that Mr.  Kunzig is entitled to purchase upon the
      exercise of incentive  stock options.  The options were granted on January
      4, 2001 under the Corporation's 2000 Stock Option Plan. The exercise price
      is $0.88 per share.

(i)   Includes  15,000  shares that Mr.  Rekuc is entitled to purchase  upon the
      exercise of incentive  stock options.  The options were granted on January
      4, 2001 under the Corporation's 2000 Stock Option Plan. The exercise price
      is $0.88 per share.

      John J. Wilk and Steven J. Wilk,  chairman of the board of  directors  and
president  of  the  Corporation  as  well  as  beneficial  owners  of 4%  and 9%
respectively,  of TransNet's common stock may each be deemed to be a "parent" of
the Corporation within the meaning of the Securities Act of 1933.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      On  November  11,  1998,  the  Company   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,  which at the time of sale consisted of
John J. Wilk,  Chairman of the Board,  and  Raymond J. Rekuc,  a Director of the
Company. The purchase price was payable through a credit extended by W Realty as
sub-lessor to the Company as sub-lessee  for the $410,000 of rent payable by the
Company over the last two years of its sublease  (through February 2001) 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 was at an interest rate of 8% per annum and
was  secured by a mortgage on the Real  Property.  The  $150,000  payment due in
February 1998 was paid and $190,000 of the payment due in November 1998 was paid
with interest.  Payment of the $250,000 balance was renegotiated under a revised
Note which provides for payment of the principal on November 1, 2000,  which has
been  extended  until June 30, 2002, at an interest rate of 6.5%. At the time of
issuance of the new Note,  the Company  released its  mortgage  lien on the Real
Property in order to permit W Realty,  which now includes an unaffiliated  third
partner,  to lease the Real  Property to another  third  party.  In place of the
mortgage lien, the new Note is secured by the partnership  interests of W Realty
owned by Messrs. Wilk and Rekuc.


                                         14

<PAGE>



                                       PART IV

ITEM 14.  EXHIBITS, FINANCIAL SCHEDULES AND REPORTS ON FORM 8-K

(a)  1.  Financial Statements
         --------------------
  o   Independent Auditor's Report.
   o Consolidated Balance Sheets as of June 30, 2000 and June 30, 1999.
   o  Consolidated  Statements of Operations  for the Years Ended June 30, 2000,
   1999 and 1998. o  Consolidated  Statements  of  Stockholders'  Equity for the
   Years Ended June 30, 2000,  1999 and 1998. o Consolidated  Statements of Cash
   Flows  for the  Years  Ended  June  30,  2000,  1999  and  1998.  o Notes  to
   Consolidated Financial Statements

   3.  Exhibits

10.3  Employment Agreements expiring on June 30, 2005 with Steven J. Wilk and
      Jay A. Smolyn

    Exhibits                                 Incorporated by Reference to
    --------                                 ----------------------------

    3.1(a) Certificate of Incorporation,     Exhibit 3(A) to Registration
    as amended                               Statement on Form S-1 (File No.
                                             2-42279)

    3.1(b) October 3, 1977 Amendment         Exhibit 3(A) to Registration
    to Certificate of Incorporation          Statement on Form S-1 (File No.
                                             2-42279)

    3.1 (c) March 17, 1993 Amendment
    to Certificate of Incorporation

    3.2 (a) Amended By-Laws                  Exhibit 3 to Annual Report on Form
                                             10-K for year ended June 30, 1987

    3.2 (b) Article VII, Section 7 of the    Exhibit to Current Report on
    By-Laws, as amended                      Form 8-K for January 25, 1990

    4.1 Specimen Common Stock                Exhibit 4(A) to Registration
    Certificate                              Statement on Form S-1 (File No.
                                             2-42279)

    10.1 March 1, 1991 lease agreement       Exhibit 10.1 to Annual Report on
    between W.  Realty and the               Form 10-K for year ended June 30,
    Corporation  for premises at 45          1991
    Columbia Road, Somerville (Branchburg),
    New Jersey

    10.2  February 1, 1996  amendment to     Exhibit 10.2 to Annual  Report on
    Lease Agreement  between W.  Realty and  Form 10-K for year ended June 30,
    the Corporation for premises at 45       1996
    Columbia Road, Somerville, New Jersey

    10.4 Form of Rights  Agreement dated     Exhibit to Current Report on Form
    as of February 6, 1990  between          8-K for January 25, 1990
    TransNet  and The Trust Company of
    New Jersey, as Rights Agent

    10.5 Acquisition  Agreement dated        Exhibit to Current Report on Form
    March 6, 1990  between  TransNet and     8-K for March 6, 1990
    Selling  Stockholders  of Round Valley
    Computer Center, Inc.


                                         15

<PAGE>




(b)   Reports on Form 8-K
      -------------------
    The  Corporation  did not file any  reports  on Form 8-K with  respect to or
    during the quarter ended June 30, 2000.

    (22)  Subsidiaries  - The following  table  indicates the sole  wholly-owned
active subsidiary of TransNet Corporation and its state of incorporation.

    Name                                     State of Incorporation
    ----                                     ----------------------

    Century American Corporation             Delaware


                                         16

<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.

Registrant:                                  TransNet Corporation

Date:   September 27, 2001                By /s/ Steven J. Wilk
                                          ------------------------------------
                                          Steven J. Wilk
                                          Chief Executive Officer


Date:   September  27, 2001               By /s/ John J. Wilk
                                          ------------------------------------
                                          John J. Wilk
                                          Chief Financial and Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the date indicated.

By /s/ Steven J. Wilk                     Date:  September 27, 2001
------------------------------------
       Steven J. Wilk, Director


By /s/ John J. Wilk                       Date:  September 27, 2001
------------------------------------
     John J. Wilk, Director


By /s/ Jay A. Smolyn                      Date:  September 27, 2001
------------------------------------
     Jay A. Smolyn, Director


By /s/ Raymond J. Rekuc                   Date:  September 27, 2001
------------------------------------
     Raymond J. Rekuc, Director


By /s/ Vincent Cusumano                   Date:  September 27, 2001
------------------------------------
     Vincent Cusumano


By /s/ Earle Kunzig                       Date:  September 27, 2001
------------------------------------
     Earle Kunzig


By /s/ Susan M. Wilk-Cort                 Date:  September 27, 2001
------------------------------------
     Susan M. Wilk-Cort, Director




                                         17

<PAGE>




                            INDEPENDENT AUDITOR'S REPORT


To the Stockholders and Board of Directors of
  TransNet Corporation
  Somerville, New Jersey


            We have  audited the  accompanying  consolidated  balance  sheets of
TransNet  Corporation  and its  subsidiary as of June 30, 2001 and 2000, and the
related consolidated  statements of operations,  stockholders'  equity, and cash
flows for each of the three  fiscal  years in the period  ended  June 30,  2001.
These consolidated  financial statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

            We  conducted  our  audits in  accordance  with  auditing  standards
generally accepted in the United States of America. Those standards require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
consolidated  financial statements are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the  consolidated  financial  statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall consolidated  financial statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

            In our opinion,  the consolidated  financial  statements referred to
above present  fairly,  in all material  respects,  the  consolidated  financial
position  of TransNet  Corporation  and its  subsidiary  as of June 30, 2001 and
2000, and the consolidated  results of their operations and their cash flows for
each of the three fiscal years in the period ended June 30, 2001,  in conformity
with accounting principles generally accepted in the United States of America.








                                          MOORE STEPHENS, P. C.
                                          Certified Public Accountants.

Cranford, New Jersey
August 3, 2001


                                        F-1

<PAGE>



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


CONSOLIDATED BALANCE SHEETS
------------------------------------------------------------------------------


                                                              June 30,
                                                              --------
                                                         2 0 0 1      2 0 0 0
                                                         -------      -------
Assets:
Current Assets:
  Cash and Cash Equivalents                           $ 6,301,210   $5,208,558
  Accounts Receivable - Net                             7,566,102    9,357,398
  Inventories                                           1,886,988    1,377,729
  Mortgage Receivable - Related Party                     250,000      250,000
  Other Current Assets                                    125,358       86,500
  Deferred Tax Asset                                      256,055      231,900
                                                      -----------   ----------

  Total Current Assets                                 16,385,713   16,512,085

Property and Equipment - Net                              530,969      569,000

Other Assets                                              235,469      369,282
                                                      -----------   ----------

  Total Assets                                        $17,152,151   $17,450,367
                                                      ===========   ===========

Liabilities and Stockholders' Equity:
Current Liabilities:
  Accounts Payable                                    $   674,896   $2,055,484
  Accrued Expenses                                        409,872      378,858
  Accrued Payroll                                         220,551      175,614
  Income Taxes Payable                                    310,979           --
  Floor Plan Payable                                    2,229,152    2,015,285
                                                      -----------   ----------

  Total Current Liabilities                             3,845,450    4,625,241
                                                      -----------   ----------

Deferred Tax Liability                                     29,704       12,000
                                                      -----------   ----------

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

Stockholders' Equity:
  Capital Stock - Common, $.01 Par Value,  Authorized
   15,000,000 Shares; Issued 7,469,524 Shares in 2001
   and 2000 [of which 2,694,720 are in Treasury in 2001
   and 2,614,220 in 2000]                                  74,695       74,695

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

  Retained Earnings                                     9,823,757    9,260,745
                                                      -----------   ----------

  Totals                                               20,585,197   20,022,185
  Less:  Treasury Stock - At Cost                      (7,308,200)  (7,209,059)
                                                      -----------   ----------

  Total Stockholders' Equity                           13,276,997   12,813,126
                                                      -----------   ----------

  Total Liabilities and Stockholders' Equity          $17,152,151   $17,450,367
                                                      ===========   ===========

See Notes to Consolidated Financial Statements.

                                        F-2

<PAGE>



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


CONSOLIDATED STATEMENTS OF OPERATIONS
------------------------------------------------------------------------------



                                                  Y e a r s   e n d e d
                                           ----------------------------------
                                                     J u n e   3 0,
                                           ----------------------------------
                                             2 0 0 1     2 0 0 0      1 9 9 9
                                             -------     -------      -------

Revenue:
  Equipment                               $42,137,322 $ 33,503,234 $28,231,540
  Services                                 14,280,047   13,063,267  16,074,600
                                          ----------- ------------ -----------

  Total Revenue                            56,417,369   46,566,501  44,306,140
                                          ----------- ------------ -----------

Cost of Revenue:
  Equipment                                38,893,267   31,230,050  25,844,701
  Services                                 10,084,170    9,687,659   9,882,921
                                          ----------- ------------ -----------

  Total Cost of Revenue                    48,977,437   40,917,709  35,727,622
                                          ----------- ------------ -----------

  Gross Profit                              7,439,932    5,648,792   8,578,518

Selling, General and Administrative
  Expenses                                  6,800,202    5,980,830   7,073,487
                                          ----------- ------------ -----------

  Operating Income [Loss]                     639,730     (332,038)  1,505,031
                                          ----------- ------------ -----------

Interest Income:
  Interest Income                             234,782      333,908     296,310
  Interest Income - Related Party              22,500       24,400      33,000
  Other Income                                     --           --       1,711
                                          ----------- ------------ -----------

  Total Interest Income                       257,282      358,308     331,021
                                          ----------- ------------ -----------

  Income Before Income Tax Expense            897,012       26,270   1,836,052

Income Tax Expense                            334,000       18,000     663,590
                                          ----------- ------------ -----------

  Net Income                              $   563,012 $      8,270 $ 1,172,462
                                          =========== ============ ===========

  Basic Net Income Per Common Share       $       .12 $         -- $       .23
                                          =========== ============ ===========

  Diluted Net Income Per Common Share     $       .12 $         -- $       .23
                                          =========== ============ ===========

  Weighted Average Common Shares
   Outstanding - Basic                      4,815,872    4,903,804   5,183,141
                                          =========== ============ ===========

  Weighted Average Common Shares
   Outstanding - Diluted                    4,884,853    4,903,804   5,183,141
                                          =========== ============ ===========



See Notes to Consolidated Financial Statements.



                                        F-3

<PAGE>



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


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
------------------------------------------------------------------------------
<TABLE>


                                                                                                          Total
                                       Common Stock   Paid-in       Retained        Treasury Stock   Stockholders'
                                    Shares    Amount     Capital    Earnings     Shares      Amount      Equity

<S>                             <C>        <C>        <C>         <C>         <C>        <C>          <C>
Balance - June 30, 1998          7,469,524  $   74,695 $10,686,745 $8,080,013  (2,252,270)$(6,217,643) $12,623,810

  Treasury Shares Purchased             --          --         --          --    (150,000)   (347,000)   (347,000)

  Net Income                            --          --         --   1,172,462          --          --   1,172,462
                                ----------  ---------- ----------  ---------- ----------- -----------  ----------

Balance - June 30, 1999          7,469,524      74,695 10,686,745   9,252,475  (2,402,720) (6,564,643) 13,449,272

  Treasury Shares Purchased             --          --         --          --    (211,500)   (644,416)   (644,416)

  Net Income                            --          --         --       8,270          --          --       8,270
                                ----------  ---------- ----------  ---------- ----------- -----------  ----------

Balance - June 30, 2000          7,469,524      74,695 10,686,745   9,260,745  (2,614,220) (7,209,059) 12,813,126

  Treasury Shares Purchased             --          --         --          --     (80,500)    (99,141)    (99,141)

  Net Income                            --          --         --     563,012          --          --     563,012
                                ----------  ---------- ----------  ---------- ----------- -----------  ----------

Balance - June 30, 2001          7,469,524  $   74,695 $10,686,745 $9,823,757  (2,694,720)$(7,308,200) $13,276,997
                                ==========  ========== =========== ========== =========== ===========  ===========



See Notes to Consolidated Financial Statements.

</TABLE>


                                        F-4

<PAGE>



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


CONSOLIDATED STATEMENTS OF CASH FLOWS
------------------------------------------------------------------------------


                                                   Y e a r s   e n d e d
                                            ----------------------------------
                                                      J u n e   3 0,
                                            ----------------------------------
                                              2 0 0 1     2 0 0 0      1 9 9 9
                                              -------     -------      -------
Operating Activities:
  Net Income                                $  563,012  $    8,270  $1,172,462
                                            ----------  ----------  ----------
  Adjustments  to  Reconcile  Net  Income  to
   Net Cash  Provided  by [Used  for]
   Operating Activities:
   Depreciation and Amortization               186,225     324,787     375,702
   Loss on Sale of Equipment                        --          --       2,517
   Provision for Doubtful Accounts              40,247      35,000      30,000
   Discounting of Deferred Charges                  --      64,000      64,000
   Deferred Income Taxes                        (6,000)     18,000    (141,000)

  Changes in Assets and Liabilities:
   [Increase] Decrease in:
     Accounts Receivable                     1,750,598  (2,656,047)   (438,917)
     Inventories                              (509,259)   (490,793)    520,746
     Other Current Assets                      (38,858)    (30,470)     80,591
     Other Assets                              119,842     130,366      (5,473)
     Mortgage Receivable - Related Party            --          --      24,429

   Increase [Decrease] in:
     Accounts Payable and Accrued Expenses  (1,349,574)    816,056     346,295
     Other Current Liabilities                  44,937          --    (156,653)
     Deferred Income                                --          --    (100,649)
     Income Taxes Payable                      310,979    (664,161)    453,955
                                            ----------  ----------  ----------

   Total Adjustments                           549,137  (2,453,262)  1,055,543
                                            ----------  ----------  ----------

  Net Cash - Operating Activities            1,112,149  (2,444,992)  2,228,005
                                            ----------  ----------  ----------

Investing Activities:
  Capital Expenditures                        (134,223)   (134,117)   (256,152)
  Mortgage Receivable Proceeds - Related
   Party                                            --          --     190,000
                                            ----------  ----------  ----------

  Net Cash - Investing Activities             (134,223)   (134,117)    (66,152)
                                            ----------  ----------  ----------

Financing Activities:
  Floor Plan Payable - Net                     213,867     814,842     423,542
  Treasury Shares Repurchased                  (99,141)   (644,416)   (347,000)
                                            ----------  ----------  ----------

  Net Cash - Financing Activities              114,726     170,426      76,542
                                            ----------  ----------  ----------

  Net Increase [Decrease] in Cash and
   Cash Equivalents                          1,092,652  (2,408,683)  2,238,395

Cash and Cash Equivalents - Beginning
  of Years                                   5,208,558   7,617,241   5,378,846
                                            ----------  ----------  ----------

  Cash and Cash Equivalents - End of Years  $6,301,210  $5,208,558  $7,617,241
                                            ==========  ==========  ==========

See Notes to Consolidated Financial Statements.

                                       F-5

<PAGE>



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


CONSOLIDATED STATEMENTS OF CASH FLOWS
------------------------------------------------------------------------------


                                                   Y e a r s   e n d e d
                                            ----------------------------------
                                                      J u n e   3 0,
                                            ----------------------------------
                                              2 0 0 1     2 0 0 0      1 9 9 9
                                              -------     -------      -------

Supplemental Disclosures of Cash Flow Information:
  Cash paid during the years for:
   Interest                                 $       --  $       --  $       --
   Income Taxes                             $   17,000  $       --  $  384,019

Supplemental Disclosures of Non-Cash Investing Activities:
  During  2001,  the  Company  disposed  of   approximately   $38,500  of  fully
depreciated property and equipment.





See Notes to Consolidated Financial Statements.

                                       F-6

<PAGE>



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


[1] Nature of Operations

TransNet  Corporation  [the "Company"] was incorporated in the State of Delaware
in 1969 and is engaged in the sale and service of personal  computer systems and
peripheral equipment,  software,  and supplies primarily in the New Jersey - New
York City Metropolitan area. The sale of products and the promotion of technical
services,  including outsourcing,  are conducted through the Company's sales and
service departments.

The sale and service of personal computer systems is highly  competitive and may
be affected  by rapid  changes in  technology  and  spending  habits in both the
business and institutional sectors.

[2] Summary of Significant Accounting Policies

[A] Consolidation - The consolidated  financial  statements include the accounts
of the Company and its wholly-owned  subsidiary,  Century American  Corporation.
Intercompany transactions and accounts have been eliminated in consolidation.

[B] Cash and Cash Equivalents - Cash equivalents are comprised of certain highly
liquid  investments  with a maturity of three months or less when purchased [See
Note 3].

[C] Accounts  Receivable - Accounts receivable have been reduced by an allowance
for doubtful accounts of approximately $191,000 and $150,000 as of June 30, 2001
and 2000, respectively.  The receivables secure a floor plan agreement [See Note
8C].

[D]  Inventories  - The  Company's  inventory  is  valued  at the  lower of cost
[determined on the moving  average-cost  basis] or market. The inventory secures
borrowings under a floor plan financing agreement [See Note 8C].

[E]  Property  and  Equipment,  Depreciation  and  Amortization  - Property  and
equipment are stated at cost.  Depreciation and amortization are computed by use
of the  straight-line  method  over the  estimated  useful  lives of the various
assets ranging from five to ten years. Leasehold improvements are amortized over
the shorter of the life of the lease including renewal option periods,  or their
estimated useful life.

[F] Intangible  Assets - Goodwill  representing the excess of the purchase price
over the fair value of identifiable  net assets acquired is being amortized over
20 years by using the straight-line method. Licenses and other intangible assets
are amortized using the  straight-line  method over their estimated useful lives
ranging from five to twenty years.  The Company  reviews  long-lived  assets for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying amount of an asset may not be recoverable.

[G]  Revenue  Recognition  -  Revenue  is  recognized  at time of  shipment  for
equipment  sold directly to customers.  Revenues  from  non-contracted  customer
support  services are  recognized as services are provided.  The Company  offers
contracted support service  agreements to its customers.  Services under support
contracts,  are generally provided ratably over the term of the customer support
contracts and are included in services revenue in the accompanying statements of
operations.

[H]  Earnings  Per Share - Basic  earnings  per  share is based on the  weighted
average  number of common shares  outstanding  without  consideration  of common
stock  equivalents.  Diluted earnings per share is based on the weighted average
number of common and common  equivalent shares  outstanding.  The calculation of
common equivalent shares issued takes into account the shares that may be issued
upon exercise of stock options, reduced by the shares that may be purchased with
the funds  received  from the  exercise,  based on the average  price during the
year.  Certain  rights and options  listed in Note 10 and 12 may be  potentially
dilutive in the future.


                                       F-7

<PAGE>



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



[2] Summary of Significant Accounting Policies [Continued]

[I]  Concentrations  of Credit  Risk - At June 30,  2001 and 2000,  the  Company
maintained cash balances [excluding  repurchase  agreements discussed in Note 3]
in excess  of FDIC  insured  limits  of  approximately  $350,000  and  $226,000,
respectively.

The Company routinely assesses the financial strength of its customers and based
upon  factors  surrounding  the  credit  risk of its  customers  establishes  an
allowance for  uncollectible  accounts and, as a consequence,  believes that its
accounts   receivable  credit  risk  exposure  beyond  such  allowances  is  not
significant.  The  Company  does not  require  collateral  or other  security to
support financial instruments subject to credit risk.

[J] Business  Concentrations  - The Company is engaged in the sale and technical
support and  service of local area  networks,  personal  computer  systems,  and
peripheral  equipment,  software,  and supplies to companies  and  organizations
located  primarily  in the New Jersey - New York City  Metropolitan  area and is
currently  an  authorized  dealer  for  several  computer  products   suppliers,
including Apple, Compaq, Hewlett Packard, IBM, Intel, NEC, Toshiba and Microsoft
Corporation.  If the Company were to lose any of its dealer authorizations or if
it were to experience  significant  delays,  interruptions  or reductions in its
supply of hardware and  software,  the  Company's  revenues and profits could be
adversely affected.

[K]  Advertising  Costs - The Company  participates  in cooperative  advertising
programs with its vendors,  whereby the vendors absorb the costs of advertising.
During  the year  ended  June 30,  2001,  2000 and 1999,  the  Company  incurred
additional  advertising  expense of $73,113,  $80,526 and $4,987,  respectively.
Advertising costs are expensed as incurred.

[L] Use of Estimates - The  preparation  of financial  statements  in conformity
with  generally  accepted  accounting  principles  requires  management  to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.

[M] Stock  Options  Issued to  Employees  - The  Company  adopted  Statement  of
Financial   Accounting   Standards   No.  123,   "Accounting   for   Stock-Based
Compensation," for financial note disclosure purposes and continues to apply the
intrinsic  value method of Accounting  Principles  Board ["APB"] Opinion No. 25,
"Accounting  for Stock Issued to Employees,"  for financial  reporting  purposes
[See Note 12].

[3] Repurchase Agreements

Repurchase  agreements included in cash equivalents as of June 30, 2001 and 2000
consisted of:


                                         Cost        Fair Value
                                         ----        ----------
June 30, 2001:
  Repo 3.0%, Due July 1, 2001       $ 5,677,017     $ 5,790,557

This security is backed by $5,729,365  of G.N.M.A.  bonds  maturing May 16, 2016
with a variable interest rate of 6.50%.

                                         Cost       Fair Value
                                         ----       ----------
June 30, 2000:
  Repo 5.35%, Due July 1, 2000      $ 4,397,070    $ 4,397,070

This security is backed by $4,761,655 of F.N.M.A.  bonds  maturing June 18, 2028
with an interest rate of 6.50%.

                                       F-8

<PAGE>



TRANSNET CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #3
------------------------------------------------------------------------------




[4] Inventories

Inventories consist of:
                                                    June 30,
                                                    --------
                                              2 0 0 1      2 0 0 0
                                              -------      -------

Product Inventory                           $1,631,182   $1,027,271
Service Parts                                  255,806      350,458
                                            ----------   ----------

  Totals                                    $1,886,988   $1,377,729
  ------                                    ==========   ==========

[5] Mortgage Receivable - Related Party

In November 1998, the Company sold  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 partially
owned by an officer and a director of the Company.  The original  purchase price
was  payable  through a $410,000  credit  extended by W. Realty as lessor to the
Company  covering  the last two years of its lease  [See Note 8A] and a $590,000
promissory note payable.

In February 1999, the remaining  $250,000 principal balance owed on the mortgage
was  refinanced.  Repayment  terms under the  refinanced  note payable  included
monthly  interest only payments and full principal  balance due November 2000 at
an interest  rate of 9.0% per annum.  Under an agreement  entered into in fiscal
2001,  the repayment of $250,000 in principal has been extended  until June 2002
at an interest rate of 6.5% per annum. The note is secured by an interest in the
partnership of W. Realty.  During the years ended June 30, 2001,  2000 and 1999,
the Company recorded approximately  $22,500,  $24,400 and $33,000 of interest on
the mortgage receivable obligation, respectively.

[6] Property, Equipment, Depreciation and Amortization

Property and equipment and accumulated  depreciation and amortization as of June
30, 2001 and 2000 are as follows:

                                                         June 30,
                                                         --------
                                                    2 0 0 1      2 0 0 0
                                                    -------      -------

Automobiles                                       $  211,622   $ 230,598
Office Equipment                                   1,636,619   1,526,181
Furniture and Fixtures                               321,161     316,976
Leasehold Improvements                               273,102     273,102
                                                  ----------   ---------

Totals                                             2,442,504   2,346,857
Less:  Accumulated Depreciation and Amortization   1,911,535   1,777,857
                                                  ----------   ---------

  Property and Equipment - Net                    $  530,969   $ 569,000
  ----------------------------                    ==========   =========

Total depreciation and amortization  expense amounted to $172,254,  $310,816 and
$361,731 for the years ended June 30, 2001, 2000 and 1999, respectively.



                                       F-9

<PAGE>



TRANSNET CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #4
------------------------------------------------------------------------------



[7] Intangible Assets

Intangible assets and accumulated  amortization as of June 30, 2001 and 2000 are
as follows:

                                                     June 30,
                                                     --------
                                                2 0 0 1     2 0 0 0
                                                -------     -------

Licenses                                       $   20,000 $   20,000
Goodwill                                          259,422    259,422
                                               ---------- ----------

Totals                                            279,422    279,422
Less:  Accumulated Amortization                   159,838    145,867
                                               ---------- ----------

  Intangible Assets - Net                      $  119,584 $  133,555
  -----------------------                      ========== ==========

Intangible assets are included in other assets for financial reporting purposes.
Amortization  expense for fiscal 2001,  2000 and 1999 was  $13,971,  $13,971 and
$13,971, respectively.

[8] Commitments and Related Party Transactions

[A] Leasing  Agreements - During  fiscal 1991,  the Company  entered into a five
year lease with three five year renewal options with W. Realty,  an affiliate of
an officer and a director of the Company,  for its primary  office and warehouse
facility. In fiscal 2001, the Company renewed its leases of office and warehouse
space under this operating lease agreement  through  February 2006. Terms of the
agreement  provide for annual base rent of $165,718  which is adjusted  annually
based on a cost of living calculation.

In addition to the annual base rent, the office and warehouse lease requires the
Company to pay for certain  contingent  expenses  such as building  maintenance,
insurance and real estate taxes.  Total  contingent lease expenses were $77,008,
$92,161  and  $63,911  for the  years  ended  June  30,  2001,  2000  and  1999,
respectively.

The fixed annual base rent [exclusive of an annual cost of living adjustment] of
the office and warehouse lease for the next five (5) years are as follows:

2002                                           $  165,718
2003                                              165,718
2004                                              165,718
2005                                              165,718
2006                                              110,472
Thereafter                                             --
                                               ----------

  Total                                        $  773,344
  -----                                        ==========

Total rent expense was $200,352,  $203,960 and $201,840 for the years ended June
30, 2001, 2000 and 1999, respectively.

Included in other assets at June 30, 2001 and 2000, the Company had prepaid rent
of  approximately  $-0-  and  $123,800,   respectively,   which  represents  the
discounted  present  value of the last two years of the above  lease  commitment
pursuant to the sale of land [See Note 5].


                                      F-10

<PAGE>



TRANSNET CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #5
------------------------------------------------------------------------------

[8] Commitments and Related Party Transactions [Continued]

[B] Employment  Agreements - Effective July 1995, the Company  entered into five
[5] year  employment  agreements  with two officers of the Company which provide
for salaries of $135,000 and  $250,000.  In January 2001,  these two  employment
agreements  were  renewed for an  additional  five [5] year period  through June
2005.  Provisions  of the  renewed  agreements  provide  for annual  salaries of
$165,000 and $300,000.  In addition,  the renewed agreements continue to provide
for a  "Performance  Bonus" based on  percentages  of two (2) to six (6) percent
applied to certain  levels of the Company  pre-tax  profits.  The bonus  expense
recorded was approximately  $50,000, $-0-, and $125,000 for the years ended June
30, 2001, 2000 and 1999, respectively.

In addition,  the employment agreements contain provisions providing that in the
event of a hostile change of control of the Company and a resultant  termination
of the employees' employment prior to expiration of the agreement, the employees
would be entitled to receive  certain lump sum payments  ranging from 80% of the
officers  current  salary to 80% of the prior year's  salary times the remaining
years of the related employment agreement.

[C] Floor Plan  Payable - The Company  finances  inventory  purchases  through a
floor plan  wholesale  credit line with a finance  company,  which is secured by
substantially  all assets of the Company.  At June 30,  2001,  the Company had a
maximum credit line of $4,500,000, of which $2,271,000 was unused. Provisions of
the floor plan agreement provide that the lender may at its sole discretion from
time to time determine the maximum amount of financing which it elects to extend
based on certain  eligible  inventory  and  accounts  receivable  balances.  The
outstanding  borrowing  under  the  credit  line at June  30,  2001 and 2000 was
approximately  $2,229,000 and $2,015,000,  respectively.  Payments on the credit
line are due currently and are interest free for a 30 day period.  If not repaid
in full,  interest is calculated based on the average daily outstanding  balance
under  the line of  credit at a rate of the  greater  of 6% or the  prime  rate.
Purchases  made under the credit  lines  were  repaid in full  within the 30 day
interest  free  repayment  period.  Accordingly,  no  interest  expense has been
incurred  for the years ended June 30, 2001,  2000 and 1999.  The prime rate and
the weighted average interest rate were 6.75% and 7.5%, respectively at June 30,
2001,  9.50% and  7.50%,  respectively  at June 30,  2000,  and 8.50% and 7.50%,
respectively at June 30, 1999.

[9] Income Taxes

The provision for income taxes is summarized as follows:
                                                     Y e a r s   e n d e d
                                             ---------------------------------
                                                        J u n e   3 0,
                                             ---------------------------------
                                               2 0 0 1     2 0 0 0     1 9 9 9
                                               -------     -------     -------
Federal:
  Current                                    $ 271,000   $      --  $  680,590
  Deferred                                      (4,900)     13,500    (120,000)
                                             ---------   ---------  ----------

  Federal Provision                            266,100      13,500     560,590
                                             ---------   ---------  ----------

State:
  Current                                       69,000          --     124,000
  Deferred                                      (1,100)      4,500     (21,000)
                                             ---------   ---------  ----------

  State Provision                               67,900       4,500     103,000
                                             ---------   ---------  ----------

  Income Tax Expense                         $ 334,000   $  18,000  $  663,590
  ------------------                         =========   =========  ==========

Deferred income taxes arise from temporary differences  including  depreciation,
inventory reserves, allowance for doubtful accounts and expense accruals.


                                      F-11

<PAGE>



TRANSNET CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #6
------------------------------------------------------------------------------


[9] Income Taxes [Continued]

The deferred tax asset and liability in the  accompanying  consolidated  balance
sheets include the following components:
                                                           June 30,
                                                           --------
                                                      2 0 0 1     2 0 0 0
                                                      -------     -------

Accounts Receivable Allowance                      $    76,400 $    60,000
Inventory Allowance                                     32,000      28,000
Accrued Expenses                                       115,355     111,300
Other Temporary Differences                             32,300      32,600
                                                   ----------- -----------

  Deferred Tax Assets                                  256,055     231,900
Deferred Tax Liabilities - Depreciation and
 Amortization                                           29,704      12,000
                                                   ----------- -----------

  Net Deferred Tax Asset                           $   226,351 $   219,900
  ----------------------                           =========== ===========

The following is a reconciliation of income taxes at the U.S. statutory tax rate
to the taxes actually provided:
                                                     Y e a r s   e n d e d
                                             ---------------------------------
                                                        J u n e   3 0,
                                             ---------------------------------
                                                2 0 0 1    2 0 0 0     1 9 9 9
                                                -------    -------     -------

U.S. Statutory Rate Applied to Pretax Income $ 283,900   $   9,000  $  624,000
State Taxes                                     47,800       1,800     132,000
Other Permanent Differences                      2,300       7,200     (92,410)
                                             ---------   ---------  ----------

  Income Tax Expense                         $ 334,000   $  18,000  $  663,590
  ------------------                         =========   =========  ==========

[10] Earnings Per Share

The following table reconciles the denominator of the diluted earnings per share
computation as shown in the consolidated statement of operations.

                                                      Years ended June 30,
                                               ---------------------------------
                                                 2 0 0 1    2 0 0 0     1 9 9 9
                                                 -------    -------     -------
Diluted EPS Calculation:
  Basic Common Shares Outstanding              4,815,872   4,903,804   5,183,141
  Effect of Common Stock Options                  68,981          --          --
                                               ---------  ---------- -----------

  Diluted Common and Common Equivalent Shares  4,884,853   4,903,804   5,183,141
  -------------------------------------------  =========  ========== ===========

Options to purchase 75,000 shares of the Company's common stock were outstanding
during the year ended June 30, 2001 but were not included in the  computation of
diluted  EPS  because the  exercise  price of the  options was greater  than the
average market price of the common stock for the periods reported.

[11] Defined Contribution Plans

The  Company  maintains  a  defined   contribution  pension  plan  which  covers
substantially  all  of the  Company's  employees.  The  contribution  amount  is
determined at the  discretion of  management.  There was no expense for the plan
for the years ended June 30, 2001, 2000 and 1999.

Effective  January 1, 1995, the Company  adopted  another  defined  contribution
[401(k)]  plan  covering  all eligible  employees.  Under the terms of the Plan,
participating  employees  elect to contribute a portion of their salaries to the
Plan.  The  Company  matches  up  to a  certain  percentage  of  the  employees'
contribution.  Expense  for the years  ended  June 30,  2001,  2000 and 1999 was
$44,363, $44,978 and $34,625, respectively.

                                      F-12

<PAGE>



TRANSNET CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #7
------------------------------------------------------------------------------




[12] Stockholders' Rights Plan and 2000 Stock Option Plan

On February 6, 1990, the Board of Directors adopted a Stockholders' Rights Plan,
which  entitles the Right holder,  upon the  occurrence of specified  triggering
events,  i.e., the  acquisition by a person or group of beneficial  ownership of
20% or more of outstanding shares; the commencement of a tender offer for 20% or
more of outstanding  shares [unless an offer is made for all outstanding  shares
at a price deemed by the Continuing Board to be fair and in the best interest of
stockholders]  and the  determination  by the Board that a person is an "Adverse
Person,"  as defined in the Rights  Agreement  to  purchase  one share of common
stock at an  exercise  price of $7.50  per  share,  or in  certain  "take  over"
situations,  common  stock  equal in  value to two  times  the  exercise  price.
Subsequent  to a  triggering  event,  if the  Company is acquired in a merger or
other business transaction in which the Company is not the surviving corporation
[unless Board approved], or 50% or more of the Company's assets or earning power
is sold or  transferred,  each holder of a Right shall have the right to receive
upon exercise, common stock of the acquiring company having a value equal to two
times the exercise price of the Right. The Rights may be redeemed by the Company
for $.01 per Right at any time  prior to the  determination  of the Board that a
person is an Adverse Person or ten days following a public  announcement  of the
acquisition  of, or  commencement  of a tender offer for, 20% of the outstanding
common stock. The Rights  initially  expired in February 2000, but were extended
to February 2010.

Under terms of the  Company's  2000 Stock Option Plan ["the  Plan"],  employees,
directors,  and consultants  may be granted  incentive stock options to purchase
the Company's  common stock at no less than 100% of the market price on the date
the option is granted  [110% of fair market value for  incentive  stock  options
granted to holders of more than 10% of the  voting  stock of the  Company].  The
Plan also provides for non-qualified stock options to be issued with an exercise
price of not less than 85% of the fair  market  value of the common  stock.  The
Company  has  reserved   500,000  shares  of  the  Company's  common  stock  for
distribution  under the Plan. Shares of common stock under the Plan may consist,
in whole or in part, of authorized  and unissued  treasury  stock.  Options vest
over a 5 year period and are exercisable over a 10 year period.

Information related to all stock options granted by the Company is as follows:

                                                                Weighted Average
                                             Weighted            Exercise Price
                              Number of      Average     Options   of Options
                                Shares  Exercise Price  Exercisable Exercisable
                                ------  --------------  ----------- ------------
Outstanding - June 30, 1998           --   $      --           --    $     --
  Granted                             --          --           --          --
  Exercised                           --          --           --
  Forfeited/Canceled                  --          --           --          --
                               ---------   ---------    ---------    --------

Outstanding - June 30, 1999           --          --           --          --
  Granted                             --          --           --          --
  Exercised                           --          --           --
  Forfeited/Canceled                  --          --           --          --
                               ---------   ---------    ---------    --------

Outstanding - June 30, 2000           --          --           --          --
  Granted                        437,000        1.01      246,750        1.09
  Exercised                           --          --           --
  Forfeited/Canceled                  --          --           --          --
                               ---------   ---------    ---------    --------

  Outstanding - June 30, 2001    437,000   $    1.01      246,750    $   1.09
  ---------------------------  =========   =========    =========    ========


                                      F-13

<PAGE>



TRANSNET CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #8
------------------------------------------------------------------------------



[12] Stockholders' Rights Plan and Incentive Stock Option Plan [Continued]

The following table summarizes  information  about stock options  outstanding at
June 30, 2001:

                                 Options Outstanding         Options Exercisable
                                         Weighted-
                                          Average  Weighted-           Weighted-
                                         Remaining  Average             Average
           Range of        Number       Contractual Exercise   Number  Exercise
        Exercise Prices  of Options        Life     Price    of Options  Price
        ---------------  ----------        ----     -----    ----------  -----

             $.88         362,000          4.6       $.88     171,750     $.88
            $1.59          75,000           --      $1.59      75,000    $1.59

The exercise  price for each of the above grants was  determined by the Board of
Directors  of the  Company  to be equal to the fair  market  value of the common
stock on the day of grant [110% of the fair  market  value for  incentive  stock
option  grants to holders of more than 10% of the voting stock of the  Company].
Pursuant to the  required  pro forma  disclosure  under the fair value method of
estimating  compensation  cost,  the Company has estimated the fair value of its
stock option grants by using the  Black-Scholes  option  pricing method with the
following weighted-average assumptions:

                                                  2 0 0 1    2 0 0 0   1 9 9 9
                                                  -------    -------   -------

Expected Option Term (Years)                      5 years       --        --
Risk-Free Interest Rate (%)                         6.0%        --        --
Expected Volatility (%)                              64%        --        --
Dividend Yield (%)                                    0%        --        --
Weighted Average Fair Value of Options Granted    $  .52    $   --    $   --

The Company applies APB Opinion No. 25 and the related Interpretations for stock
options issued employees.  Accordingly, no compensation cost has been recognized
for option grants.  Had compensation cost for these awards been determined based
on the fair value at the grant dates  consistent  with the method  prescribed by
SFAS No. 123, the Company's net income would have been adjusted to the pro forma
amounts indicated below:

                                              2 0 0 1     2 0 0 0      1 9 9 9
                                              -------     -------      -------

Net Income:
  as Reported                             $    563,012  $    8,270   $1,172,462
  Compensation Expense for Stock Options      (189,267)         --           --
                                          ------------  ----------   ----------

  Pro Forma Net Income                    $    373,745  $    8,270   $1,172,462
                                          ============  ==========   ==========

Basic Earnings Per Share as Reported      $        .12  $       --   $      .23
Pro Forma Basic Earnings Per Share        $        .08  $       --   $      .23
Diluted Earnings Per Share as Reported    $        .12  $       --   $      .23
Pro Forma Diluted Earnings Per Share      $        .08  $       --   $      .23



                                      F-14

<PAGE>



TRANSNET CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #9
------------------------------------------------------------------------------



[13] Contingencies

Management  has been  notified of an  unasserted  possible  claim or  assessment
involving the Company's  pension plan. The pension plan was adopted in 1981 as a
defined  benefit  plan.  In 1989,  various  actions were taken by the Company to
terminate the pension plan, to convert it to a defined  contribution plan and to
freeze benefit accruals.  However,  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
have not 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 consents in certain instances where it was required.

The Company decided 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 Company.  Under
CAP,  the Company may be subject to monetary  sanctions  ranging  from $1,000 to
$40,000.  In addition,  the Company will be required to correct,  retroactively,
operational violations,  and to pay any resulting excise taxes and PBGC premiums
and penalties that may be due. In December 2000, the Company made a contribution
to the Plan along with payments of specified  sanctions in  connection  with the
IRS settlement. The Company is awaiting resolution with the PBGC.

The  Company  from  time to time  becomes  involved  in  various  routine  legal
proceedings in the ordinary  course of its business.  Management of the Company,
believes  that the legal  matters  mentioned  above and the outcome of remaining
pending legal proceedings and unasserted claims in the aggregate will not have a
material  effect  on its  consolidated  statement  of  operations,  consolidated
balance sheet, or liquidity.

[14] Significant Customer

During  the years  ended  June 30,  2001,  2000 and 1999,  the  Company  derived
approximately  $23,000,000,  $19,000,000,  $16,400,000,   respectively,  of  its
revenue from a significant customer.

At June 30, 2001,  2000 and 1999,  one customer and its affiliate  accounted for
approximately $3,500,000,  $4,850,000 and $2,100,000,  respectively, of accounts
receivable.

[15] Buying Agreement

During  the year  ended  June 30,  2001,  the  Company  purchased  approximately
$20,000,000  of hardware  from one vendor at  discounted  prices  under a buying
agreement.  Should the buying  agreement be  terminated,  the Company may not be
able to obtain purchases from another supplier at comparable terms.

[16] Fair Value of Financial Instruments

The Company adopted  Statement of Financial  Accounting  Standards  ["SFAS'] No.
107,  "Disclosure  About Fair Value of  Financial  Instruments"  which  requires
disclosing fair value to the extent practicable for financial  instruments which
are  recognized  or  unrecognized  in the balance  sheet.  The fair value of the
financial instruments disclosed herein is not necessarily  representative of the
amount  that  could be  realized  or  settled,  nor does the fair  value  amount
consider the tax consequences of realization or settlement.

In  assessing  the fair value of  financial  instruments,  the Company  used the
following  methods  and  assumptions,  which were based on  estimates  of market
conditions and risks existing at that time. For certain  instruments,  including
cash and cash equivalents,  trade payables,  mortgage  receivable and floor plan
payable it was estimated that the carrying  amount  approximated  fair value for
these instruments because of their short maturities.


                                      F-15

<PAGE>



TRANSNET CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #10
------------------------------------------------------------------------------




[17] New Authoritative Pronouncements

In  April  2000,  the  Financial  Accounting  Standards  Board  ["FASB"]  issued
Interpretation No. 44 ["FIN 44", "Accounting for Certain Transactions  Involving
Stock  Compensation,"  an  interpretation  of  APB  Opinion  No.  25.  FIN 44 is
effective for transactions  occurring after July 1, 2000. The application of FIN
44 did not have a material impact on the Company's financial position or results
of operations.

The FASB has issued Statement No. 141, "Business Combinations, and Statement No.
142,  "Goodwill and Other Intangible  Assets in July 2001. These statements will
change the accounting for business  combinations and goodwill in two significant
ways.  First,  Statement 141 requires that the purchase  method of accounting be
used for all business  combinations  initiated  after June 30, 2001.  Use of the
pooling-of-interests  method will be prohibited.  Second,  Statement 142 changes
the accounting for goodwill from an  amortization  method to an  impairment-only
approach.  Thus,  amortization of goodwill,  including goodwill recorded in past
business combinations,  will cease upon adoption of that Statement.  The Company
expects that adoption of the new statements  will not have a significant  impact
on its financial statements,  however, it is not possible to quantify the impact
until the newly issued statements have been studied.





                    .   .   .   .   .   .   .   .   .   .   .

                                      F-16

<PAGE>














                                  EXHIBIT 10.3



<PAGE>



                              EMPLOYMENT AGREEMENT

      AGREEMENT  made in  Branchburg,  New Jersey on January 23,  2001,  between
TransNet  Corporation,  45  Columbia  Road,  Somerville,  New Jersey  08876 (the
"Corporation")  and Steven J. Wilk residing at 16 Nottingham  Way,  Warren,  New
Jersey 07059 (the "Employee").

      WHERE IT IS MUTUALLY AGREED, AS FOLLOWS:

1.    The  Corporation  hires the  Employee  as  President  and Chief  Executive
      Officer,  and the Employee agrees to serve as of the Corporation,  to June
      30,  2005  subject  to the  direction  of the  Board of  Directors  of the
      Corporation.

2.    The  Employee  shall  devote his full time and  attention to the duties of
      President and Chief Executive Officer of the Corporation.

3.    During  the period  that this  employment  agreement  is in full force and
      effect and provided the Employee is available to and  diligently  performs
      the above  duties,  the  Corporation  shall pay the  Employee  for service
      rendered a salary of at least three hundred  thousand  dollars  ($300,000)
      per annum, payable in equal semi-monthly  installments;  or greater amount
      as approved from time to time by the Board of Directors.

4.    The Employee  shall also be eligible to receive a performance  bonus.  The
      "Performance  Bonus" will be a three  percent (3%) share of  "consolidated
      pre-tax  profits"  (as  defined  below)  of the first  $500,000,  and four
      percent (4%) share of "consolidated pre-tax profits" (as defined below) in
      excess of $500,000 to  $1,000,000,  and five percent (5%) of the amount in
      excess  of  $1,000,000  and six  percent  (6%) of the  amount in excess of
      $5,000,000  (for each of the fiscal years  commencing with the fiscal year
      ending June 30,  2001.  Such  "Performance  Bonus" shall be paid within 30
      days after the  completion of the  independent  auditor's  report for each
      said fiscal period.

      "Consolidated  pre-tax profits" shall include the net consolidated pre-tax
      profits of all of the  consolidated  entities  (including the Corporation,
      all of these corporations which are the Corporation's  subsidiaries at the
      date  of  this  employment  agreement)  before  "extraordinary  items"  as
      determined  by  such  auditors  in  accordance  with  Generally   Accepted
      Accounting  Principles  consistently  applied  (unless  the  inclusion  or
      exclusion  of  such  items  is  otherwise   determined  by  the  Board  of
      Directors).

      The Employee will also share in profits or losses of entities  acquired by
      the Corporation after the date of this employment agreement, provided that
      Employee  is  directly  involved  in the  day-to-day  management  of  that
      entity's operations.

      The  Performance  Bonus  described  herein  does not  preclude  any  other
      incentive  compensation to the Employee.  Furthermore,  during the term of
      this employment agreement, the percentages of Consolidated Pre-tax Profits
      on which the Performance Bonus is based may be increased at the discretion
      of the Corporation's Board of Directors but may not be reduced.

      In the event of a termination of  employment,  with or without a severance
      payment to Employee upon  termination  of his  employment  contract,  such
      Performance  Bonus shall be allocated ratably to the portion of the fiscal
      year for which the Employee was employed and only the amount  allocated to
      the  remainder  of the fiscal  year in which the  payment is made shall be
      deductible in computing  "consolidated  pre-tax  profits"  hereunder,  the
      balance being deemed an "extraordinary  item." In addition, no losses from
      any such  period  shall be  carried  over to reduce  profits  in any other
      fiscal period.


<PAGE>




5.    The Corporation  agrees for the term of this Agreement to pay the premiums
      on a life insurance policy in his name with  Manufacturers  Life Insurance
      Company,  Policy number 38 670 279, for the benefit of persons  designated
      by the Employee.

6.    During  the period  that this  employment  agreement  is in full force and
      effect,  the  Corporation  shall  provide  the  Employee  with  group life
      insurance,  major medical coverage and any other insurance  coverage which
      it provides for the bulk of its  employees  and in the same manner that it
      provides such coverage. In addition,  the Corporation shall have the right
      from  time to time to  apply  for and  take out in its name and at its own
      expense,  life,  health or other insurance upon the Employee in any sum or
      sums which may be deemed  necessary  by the  Corporation  to  protect  its
      interest under this Agreement and the Employee shall do all such things as
      may be  necessary to assist in the  procuring of such  insurance by making
      proper  application  therefor as may be required by any insurance  company
      and submitting to the usual and customary medical examination(s).

7.    In addition to the  compensation  provided for in  Paragraphs 3 and 5, the
      Employee  shall be entitled to  participate  in any pension  plan,  profit
      sharing  plan,  or  other  type of plan  adopted  by the  Corporation  and
      maintained  on a  company-wide  basis for the  benefit  of the bulk of its
      employees.

8.    In the  event  that  the  Employee  becomes  ill or is  injured  and  such
      disability  prevents the Employee from performing the services required of
      him  under  this  Agreement,  then  the  Corporation  shall  continue  the
      employment  of the  Employee  at a rate of pay  equal to his then  current
      salary  for six (6)  months  from  the date  said  disability  began,  and
      continue at a rate of one-half of his then current salary and  performance
      bonus for the remainder of the term of this Agreement.

9.    In the event of a change of control of the  Corporation  precipitated by a
      hostile,  unfriendly or unsolicited takeover and the Employee's employment
      is  subsequently  terminated for any reason (other than for the commission
      of willful  criminal acts) prior to the expiration date of this Agreement,
      the Employee may elect to serve as a consultant to the  Corporation at his
      then current salary,  including the performance  bonus, for five (5) years
      from the date of such change in control, or he may elect to receive a lump
      sum payment  equal to eighty  percent (80%) of his then  currently  annual
      salary or eighty  percent (80%) of his previous  fiscal year's gross wages
      as defined above, whichever is greater, times five(5).

10.   Notwithstanding  anything to the contrary contained  elsewhere herein, the
      Corporation shall have the unrestricted right in its sole discretion, with
      or without  cause,  exercisable  by written notice to the Employee at this
      address written above, to terminate his employment  hereunder.  Should the
      Corporation  terminate  the  Employee's  employment  (other  than  for the
      commission  of willful  criminal  acts),  prior to the  expiration of this
      Agreement,  the  Employee  may  elect to  continue  as  consultant  to the
      Corporation  at  his  then  current  compensation  level,   including  the
      performance bonus, for the lesser of two (2) years or the remainder of the
      contract  or he may elect to  receive a lump sum  payment  equal to eighty
      percent of his then current salary plus  incentive  bonus times the lesser
      of two (2) years or the remainder of the contract.

      In the event of any such termination  through resignation of the Employee,
      the  Employee  shall  provide the  Corporation  with not less than six (6)
      weeks notice of the effective  termination  date. The  Corporation's  sole
      obligation  hereunder  shall be to pay the  Employee's  salary through the
      date of such termination.


                                       -2-

<PAGE>



      In the  event  of any such  termination  based  on the  commission  by the
      Employee of any willful  criminal  acts,  the effective  termination  date
      shall be the last day of the week in which the Corporation mails notice of
      termination and the  Corporation's  sole obligation  hereunder shall be to
      pay the Employee's salary up to such last day of the week.

11.   The  Corporation  shall provide an automobile  for the use of the Employee
      during  the term of this  employment  agreement,  provided  that  Employee
      devotes his full time and attention to the Corporation. The Employee shall
      reimburse  the  Corporation  for  personal  use  of  the  automobile.  The
      Corporation  will retain  ownership  of such  automobile  and will pay the
      associated ownership costs (i.e., insurance, repairs).

12.   This  Agreement  may be assigned by the  Corporation  to any  successor in
      interest to its  business or any part  thereof,  and the  Employee  hereby
      agrees  to work  for any  such  assignee  as  though  such  assignee  were
      originally named herein.

13.   The  foregoing  contains the entire  Agreement of the parties  hereto with
      respect to the subject matter hereof, and no modification of the Agreement
      shall be binding  upon any party  unless the same is in writing and signed
      by  both  parties.  The  invalidity  of any  particular  provision  of the
      Agreement  shall not affect any other  provision  hereof and the Agreement
      shall  be  construed  in all  respects  as if the  invalid  provision  was
      omitted.

14.   This Agreement shall be construed and enforced in accordance with the laws
      of the State of New Jersey existing on the date hereof.

      IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as of
the day and year first above written.

                              TransNet Corporation

                                        By:  /s/
------------------------------------         ----------------------------------
 Attest                                      John J. Wilk, Chairman of the Board


                                             /s/
                                             -------------------------------
                                              Employee:  Steven J. Wilk


                                       -3-

<PAGE>



                              EMPLOYMENT AGREEMENT


      AGREEMENT  made in  Branchburg,  New Jersey on January 23,  2001,  between
TransNet  Corporation,  45  Columbia  Road,  Somerville,  New Jersey  08876 (the
"Corporation") and Jay A. Smolyn residing at 82 Old Mountain Road, Lebanon,  New
Jersey 08833 (the "Employee").

      WHERE IT IS MUTUALLY AGREED, AS FOLLOWS:

      1.) The Corporation hires the Employee as Vice President - Operations, and
the Employee  agrees to serve as Vice President - Operations of the  Corporation
to June 30,  2005 under and subject to the  direction  of the  President  of the
Corporation.

      2.) The Employee shall devote his full time and attention to the duties of
Vice  President - Operations of the  Corporation as directed by the President of
the Corporation.

      3.) During the period that this employment  agreement is in full force and
effect and provided the  Employee is  available to and  diligently  performs the
above  duties,  the  Corporation  shall pay the Employee for service  rendered a
salary of at least one hundred sixty-five thousand dollars ($165,000) per annum,
payable in equal semi-monthly  installments;  or greater amount as approved from
time to time by the Board of Directors  and the following  "Performance  Bonus."
The  "Performance  Bonus"  will be a two  percent  (2%)  share of  "consolidated
pre-tax  profits" (as defined  below) in excess of $100,000,  and three  percent
(3%) share of  "consolidated  pre-tax  profits" (as defined  below) in excess of
$500,000  for each of the fiscal  years  commencing  with the fiscal year ending
June 30, 2001. Such  "Performance  Bonus" shall be paid within 30 days after the
completion of the independent auditor's report for each said fiscal period.

      "Consolidated  pre-tax profits" shall include the net consolidated pre-tax
profits of all of the consolidated  entities (including the Corporation,  all of
these corporations which are the Corporation's  subsidiaries at the date of this
employment  agreement)  before  "extraordinary  items"  as  determined  by  such
auditors  in  accordance   with   Generally   Accepted   Accounting   Principles
consistently applied (unless the inclusion of such items is otherwise determined
by the Board of Directors).

      The Employee will also share in profits or losses of entities  acquired by
the  Corporation  after the date of this  employment  agreement,  provided  that
Employee is directly  involved in the  day-to-day  management  of that  entity's
operations.

      The  Performance  Bonus  described  herein  does not  preclude  any  other
incentive  compensation  to the Employee.  Furthermore,  during the term of this
employment  agreement,  the percentages of Consolidated Pre-tax Profits on which
the  Performance  Bonus is  based  may be  increased  at the  discretion  of the
Corporation's Board of Directors but may not be reduced.

      In the event of a termination of  employment,  with or without a severance
payment  to  Employee  upon  termination  of  his  employment   contract,   such
Performance  Bonus  shall be  allocated  ratably  portion of the fiscal year for
which the Employee was employed and only the amount  allocable to the  remainder
of the fiscal year in which the payment is made shall be deductible in computing
"consolidated   pre-tax  profits"   hereunder,   the  balance  being  deemed  an
"extraordinary  item." In  addition,  no losses  from any such  period  shall be
carried over to reduce profits in any other fiscal period.

4.)  During  the  period  that this  employment  agreement  is in full force and
effect,  the  Corporation  shall provide the Employee with group life insurance,
major medical coverage and any other insurance

                                       -4-

<PAGE>



coverage  which it provides for the bulk of its employees on a  Corporation-wide
basis  in the  same  manner  that  it  provides  such  coverage  for  all of its
employees.  In addition,  the Corporation shall have the right from time to time
to apply for and take out in its name and at its own  expense,  life,  health or
other  insurance  upon  the  Employee  in any sum or sums  which  may be  deemed
necessary  by the  Corporation  to its  interest  under this  Agreement  and the
Employee shall do all such things as may be necessary to assist in the procuring
of such insurance by making proper  application  therefor and may be required by
any  insurance  company  and  submitting  to the  usual  and  customary  medical
examination.

      5.) In addition to the  compensation  provided in  paragraph  hereof,  the
Employee shall be entitled to  participate  in any pension plan,  profit sharing
plan, or other type of similar plan adopted by the Corporation and maintained on
a company-wide basis for the benefit of the bulk of its employees.

      6.) In consideration of the execution of this employment  agreement by the
Corporation,  the Employee  covenants that until the earlier of June 30, 2001 or
one  (1)  year  after  termination  of this  employment  agreement  pursuant  to
paragraph  (7) herein,  he will not  "compete"  with the  Corporation  as herein
defined.  In the event of termination of this employment  agreement  pursuant to
paragraph (7.a) herein,  the Corporation  shall waive the non-compete  covenant.
For purposes of this  paragraph 6, the Employee will be deemed to be "competing"
if he  directly  or  indirectly  owns more than one  percent  (1%) of the equity
ownership  in, or  operates,  participates  or  engages in any  capacity  (as an
employee,  consultant or otherwise) in for any firm, organization,  partnership,
joint  venture  or  corporation  which  competes  with  the  Corporation  or  is
substantially  similar to the business engaged in by the Corporation  and/or its
subsidiaries,  successors  or  assigns.  This  clause  shall apply to any entity
within a  radius  of 100  miles  from any of the  Corporation's  locations.  For
purposes of this paragraph 6, any firm, organization, partnership, joint venture
or  corporation,  or other entity which  derives its primary  source of revenues
from manufacturing  shall not be considered in competition with the Corporation,
unless it is  engaged in  operations  which are in direct  competition  with the
Corporation.

      7.)  Notwithstanding  anything to the contrary contained elsewhere herein,
the Corporation shall have the unrestricted  right in its sole discretion,  with
or without cause,  exercisable by written notice to the Employee at this address
written above, to terminate his employment hereunder.

      a.) In the event of any such  termination  based on the  commission by the
Employee of any willful  criminal acts, the effective  termination date shall be
the last day of the week in which the  Corporation  mails notice of  termination
and the Corporation's  sole obligation  hereunder shall be to pay the Employee's
salary up to such last day of the week.

      b.) In the  event  of any such  termination  by the  Corporation  which is
deemed "without  cause",  the effective  termination date shall also by the last
day of the week in which the Corporation  mails notice of  termination,  and the
Corporation's  sole obligation  hereunder shall be to pay the Employee an amount
equal to  compensation  payable for a period of one-half of the contract  period
remaining,  provided,  however,  that in no instance  shall such payment  exceed
compensation  for 18 months.  Said  payment  shall be paid in a lump sum 90 days
after said termination.  Any Performance Bonus payment due the Employee shall be
paid within 30 days after the completion of the independent auditor's report for
the fiscal year.

      c.) In the event of any such termination by the Corporation  "with cause",
i.e, for insubordination,  the effective  termination date shall be the last day
of the week in  which  the  Corporation  mails  notice  of  termination  and the
Corporation's sole obligation hereunder shall be to pay the Employee's salary up
to such last day of the week.


                                       -5-

<PAGE>


      d.) In the  event  of any  such  termination  through  resignation  of the
Employee,  the Employee shall provide the Corporation with not less than six (6)
weeks  notice  of  the  effective   termination  date.  The  Corporation's  sole
obligation  hereunder shall be to pay the Employee's  salary through the date of
such termination.

      e.) In the event of a change of control of the Corporation precipitated by
a hostile,  unfriendly or unsolicited takeover and the Employee's  employment is
subsequently terminated for any reason (other than for the commission of willful
criminal acts) prior to the expiration date of this Agreement, the Employee will
receive a lump sum payment equal to eighty  percent (80%) of his then  currently
annual salary or eighty percent (80%) of his previous  fiscal year's gross wages
as defined above,  whichever is greater, times five(5) or the number of years to
the termination date of this employment agreement, whichever is less.

      8.) The  Corporation  shall provide an automobile for the exclusive use of
the  Employee  during  the  term of this  employment  agreement,  provided  that
Employee devotes his full time and attention to the Corporation. The Corporation
will retain  ownership of such automobile and will pay the associated  ownership
costs  (i.e.,  insurance,  repairs).  Should  the  employment  of  the  Employee
terminate for any reason,  said automobile  shall be returned to the Corporation
immediately after said termination.

      9.) This Agreement may be assigned by the  Corporation to any successor in
interest to its business or any part thereof,  and the Employee hereby agrees to
work for any such assignee as though such assignee were originally named herein.

      10.) The  foregoing  contains the entire  Agreement of the parties  hereto
with respect to the subject matter hereof,  and no modification of the Agreement
shall be binding upon any party unless the same is in writing and signed by both
parties.  The invalidity of any particular  provision of the Agreement shall not
affect any other  provision  hereof and the Agreement  shall be construed in all
respects as if the invalid provision was omitted.

      11.) This Agreement shall be construed and enforced in accordance with the
laws of the State of New Jersey existing on the date hereof.

      IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as of
the day and year first above written.

                              TransNet Corporation

                                          By:  /s/
------------------------------------           -------------------------------
 Attest                                           Steven J. Wilk, President


                                               /s/
                                               -------------------------------
                                               Employee:  Jay A. Smolyn


                                       -6-

<PAGE>



</TEXT>
</DOCUMENT>
