Transtech Industries Inc - Quarterly Report of Financial Condition (10QSB)

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

FORM 10-QSB
(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2007

or

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File No. 0-6512

TRANSTECH INDUSTRIES, INC.
(Exact name of small business issuer as specified in its charter)

Delaware 22-1777533 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.)

200 Centennial Avenue, Piscataway, New Jersey 08854
(Address of principal executive offices)

[phone]
(Issuer's telephone number)

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No

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

APPLICABLE ONLY TO ISSUERS INVOLVED

IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the issuer filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes___ No___

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 2,979,190 shares of common stock, $.50 par value, outstanding as of November 12, 2007. In addition, at such date, the issuer held 1,885,750 shares of common stock, $.50 par value, in treasury.

Transitional Small Business Disclosure Format (Check One): Yes No X
Page 1 of 50 pages

TRANSTECH INDUSTRIES, INC.

AND SUBSIDIARIES

FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2007

I N D E X
Page(s)

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (Financial Statements for the periods
ending September 30, 2007 and 2006 are unaudited):

Consolidated Balance Sheets as of September 30, 2007 and December 31, 2006 3 - 4 Consolidated Statements of Operations and Comprehensive Income (Loss) for the Nine Months Ended September 30, 2007 and 2006 5 Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three Months Ended September 30, 2007 and 2006 6 Consolidated Statements of Cash Flows for the Nine months Ended September 30, 2007 and 2006 7 - 8 Notes to Consolidated Financial Statements 9 - 20 Item 2. Management's Discussion and Analysis or Plan of Operation 21 - 39 Item3A(T). Controls and Procedures 40

PART II - OTHER INFORMATION

Item 1. Legal Proceedings 41 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 42 Item 3. Defaults Upon Senior Securities 42 Item 4. Submission of Matters to a Vote of Security Holders 42 Item 5. Other Information 42 Item 6. Exhibits 43 SIGNATURES 44 EXHIBITS 45 - 50 TRANSTECH INDUSTRIES, INC. AND SUBSIDIARIES

PART I - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS
(In $000's)

ASSETS

September 30, December 31, 2007 2006 (Unaudited) CURRENT ASSETS Cash and cash equivalents $ 724 $ 1,601 Marketable securities 3,626 4,645 Accounts receivable - trade 60 29 Refundable income taxes 386 88 Prepaid expenses and other 92 25 Restricted escrow accounts for post-closure costs 1,012 1,013 Total current assets 5,900 7,401 PROPERTY, PLANT AND EQUIPMENT Land 1,067 1,067 Buildings and improvements 567 354 Machinery and equipment 3,370 3,421 Total gross assets 5,004 4,842 Less accumulated depreciation 3,005 2,997 Net property, plant and equipment 1,999 1,845 OTHER ASSETS Restricted escrow accounts for post-closure costs 6,816 6,543 Other 191 142 Total other assets 7,007 6,685 TOTAL ASSETS $14,906 $15,931

See Notes to Consolidated Financial Statements

TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES

PART I - FINANCIAL INFORMATION, Cont'd

CONSOLIDATED BALANCE SHEETS, Cont'd
(In $000's)

LIABILITIES AND STOCKHOLDERS' EQUITY

September 30, December 31, 2007 2006 (Unaudited) CURRENT LIABILITIES Current portion of long-term debt $ 10 $ 14 Accounts payable 310 217 Current portion of income taxes payable 209 219 Accrued income taxes 48 48 Accrued professional fees 362 326 Accrued miscellaneous liabilities 75 66 Deferred taxes 14 - Current portion of accrued post- closure costs 1,030 1,013 Total current liabilities 2,058 1,903 OTHER LIABILITIES Long-term debt 20 27 Income taxes payable 778 933 Accrued post-closure costs 7,864 8,399 Total other liabilities 8,662 9,359 STOCKHOLDERS' EQUITY Common stock, $.50 par value, 10,000,000 shares authorized, 4,864,940 shares issued 2,432 2,432 Additional paid-in capital 1,450 1,450 Retained earnings 11,164 11,821 Accumulated other comprehensive income (loss) 154 (20) Subtotal 15,200 15,683 Treasury stock, at cost - 1,885,750 shares (11,014) (11,014) Total stockholders' equity 4,186 4,669 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $14,906 $15,931

See Notes to Consolidated Financial Statements

TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES

PART I - FINANCIAL INFORMATION, Cont'd

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In $000's, except per share data)

(Unaudited) For the Nine months Ended September 30, 2007 2006 NET OPERATING REVENUES $ 400 $ 277 COST OF OPERATIONS Direct operating costs 224 216 Selling, general and administrative expenses 1,317 1,208 Accretion expense 274 296 Total cost of operations 1,815 1,720 LOSS FROM OPERATIONS (1,415) (1,443) OTHER INCOME (EXPENSE) Investment income 136 192 Investment income on restricted escrow account 224 188 Interest expense (2) (6) Rental income 6 61 Proceeds from insurance claims 56 435 Miscellaneous income, net of miscellaneous expenses 40 136 Total other income 460 1,006 LOSS BEFORE INCOME TAX BENEFIT (955) (437) Income tax benefit (298) (141) NET LOSS $ (657) $ (296) NET LOSS PER COMMON SHARE $ (.22) $ (.10) NUMBER OF SHARES USED IN CALCULATION 2,979,190 2,979,190 COMPREHENSIVE LOSS: NET LOSS $ (657) $ (296) Change in unrealized loss, net of tax 174 83 NET COMPREHENSIVE LOSS $ (483) $ (213)

See Notes to Consolidated Financial Statements

TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES

PART I - FINANCIAL INFORMATION, Cont'd

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In $000's, except per share data)

(Unaudited) For the Three Months Ended September 30, 2007 2006 NET OPERATING REVENUES $ 189 $ 110 COST OF OPERATIONS Direct operating costs 71 77 Selling, general and administrative expenses 450 339 Accretion expense 91 99 Total cost of operations 612 515 LOSS FROM OPERATIONS (423) (405) OTHER INCOME (EXPENSE) Investment income 34 57 Investment income on restricted escrow account 80 60 Interest expense - (4) Rental income - 20 Proceeds from insurance claims 56 89 Miscellaneous income, net of miscellaneous expenses 40 2 Total other income 210 224 LOSS BEFORE INCOME TAX BENEFIT (213) (181) Income tax benefit (42) (69) NET LOSS $ (171) $ (112) NET LOSS PER COMMON SHARE $ (.06) $ (.04) NUMBER OF SHARES USED IN CALCULATION 2,979,190 2,979,190 COMPREHENSIVE LOSS: NET LOSS $ (171) $ (112) Change in unrealized gain (loss), net of tax 207 165 NET COMPREHENSIVE LOSS $ 36 $ 33

See Notes to Consolidated Financial Statements

TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES

PART I - FINANCIAL INFORMATION, Cont'd

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In $000's)

(Unaudited)

For the Nine months Ended September 30, 2007 2006 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS: CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers $ 369 $ 312 Cash paid to suppliers and employees (1,474) (1,368) Interest and dividends received 136 192 Other income received 102 633 Interest paid (2) (6) Income taxes paid, net of refunds (165) (281) Payment of post-closure costs, net of proceeds from escrow of $84 and $424, respectively (675) (102) Net cash used in operating activities (1,709) (620) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale and maturity of marketable securities 7,004 6,589 Purchase of marketable securities (5,945) (4,507) Collection of notes receivable - 1 Proceeds from sale of equipment 16 - Purchase of property, plant and equipment (232) (358) Net cash provided by investing activities 843 1,725 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from vehicle financing - 25 Principal payments on vehicle financing (11) (35) Net cash used in financing activities (11) (10) NET DECREASE IN CASH AND CASH EQUIVALENTS (877) 1,095 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR 1,601 2,071 CASH AND CASH EQUIVALENTS AT END OF THE QUARTER $ 724 $ 3,166 TRANSTECH INDUSTRIES, INC. AND SUBSIDIARIES

PART I - FINANCIAL INFORMATION, Cont'd

CONSOLIDATED STATEMENTS OF CASH FLOWS, Cont'd
(In $000's)

(Unaudited)

For the Nine months Ended September 30, 2007 2006 RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES: NET LOSS $ (657) $ (296) ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES: Depreciation 62 34 Accretion expense 274 296 Earnings on restricted escrow accounts (224) (188) (Increase) decrease in assets: Accounts receivable net (31) 35 Refundable income taxes (298) 272 Prepaid expenses and other (67) (8) Deposits (49) - Increase (decrease) in liabilities: Accounts payable and accrued miscellaneous expenses 85 43 Income taxes payable (165) (164) Accrued income taxes - (529) Accrued professional fees 36 (13) Accrued post-closure costs, net of proceeds from escrow of $84 and $424, respectively (675) (102) NET CASH USED IN OPERATING ACTIVITIES $(1,709) $ (620)

See Notes to Consolidated Financial Statements

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements are presented in accordance with the requirements of Form 10-QSB and consequently do not include all of the disclosures normally required by accounting principles generally accepted in the United States of America or those normally made in the Company's annual Form 10-KSB filing. Accordingly, the reader of this Form 10-QSB may wish to refer to the Company's Form 10-KSB for the year ended December 31, 2006 for further information.

The financial information has been prepared in accordance with the Company's customary accounting practices except for certain reclassifications to the 2006 consolidated financial statements in order to conform to the presentation followed in preparing the 2007 consolidated financial statements.

Quarterly financial information has not been audited. In the opinion of management, the information presented reflects all adjustments necessary for a fair statement of interim results. All such adjustments are of a normal and recurring nature except as disclosed herein.

In preparing the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reporting period. Actual results could differ from those estimates. See Part I, Item 2. Management's Discussion and Analysis or Plan of Operation for additional information regarding the estimates and assumptions the Company makes that affect its consolidated financial statements.

The Company sells the electricity it generates to a local utility. Such sales account for 100% of the Company's Net Operating Revenues for both the nine and three month periods ended September 30, 2007 and 2006, and represented 100% of the Company's Accounts Receivable - Trade as of September 30, 2007 and December 31, 2006.

In July 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48 ("FIN 48"), Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109, which clarifies the accounting and disclosure for uncertainty in tax positions, as defined. FIN 48 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes. This interpretation is effective for fiscal years beginning after December 15, 2006. The adoption of FIN 48 has not resulted in a material effect on the Company's financial condition or results of operations.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS 157"). SFAS 157 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, with earlier application encouraged. Any amounts recognized upon adoption as a cumulative effect adjustment will be recorded to the opening balance of retained earnings in the year of adoption. The Company has not yet determined the impact of this statement on its results of operations or financial condition.

In February 2007, the FASB issued SFAS No. 159, "Establishing the Fair Value Option for Financial Assets and Liabilities" to permit all entities to choose to elect to measure eligible financial instruments at fair value. The decision whether to elect the fair value option may occur for each eligible item either on a specified election date or according to a preexisting policy for specified types of eligible items. However, that decision must also take place on a date on which criteria under SFAS 159 occurs. Finally, the decision to elect the fair value option shall be made on an instrument-by-instrument basis, except in certain circumstances. An entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date, and recognize upfront costs and fees related to those items in earnings as incurred and not deferred. SFAS No. 159 applies to fiscal years beginning after November 15, 2007, with early adoption permitted for an entity that has also elected to apply the provisions of SFAS No. 157, Fair Value Measurements. An entity is prohibited from retrospectively applying SFAS No. 159, unless it chooses early adoption. SFAS No. 159 also applies to eligible items existing at November 15, 2007 (or early adoption date). The Company has not yet determined the impact of this statement on its results of operations or financial condition.

NOTE 2 - MARKETABLE SECURITIES

At September 30, 2007, the Company's marketable securities consisted primarily of U. S. Treasury bills classified as available-for-sale and are carried at their fair value of $3,626,000, with a cost of $3,585,000 and unrealized gains of $41,000. At December 31, 2006, the Company's marketable securities consisted primarily of U.S. Treasury bills classified as available-for-sale and are carried at their fair value of $4,645,000, which approximated cost. The unrealized gains related to the Company's marketable securities are included in stockholders' equity, net of income tax (stockholders' equity also includes net unrealized gains related to the restricted escrow accounts discussed in Note 3). Proceeds from the maturity of marketable securities for the nine months ended September 30, 2007 were $7,004,000. No marketable securities were sold prior to their maturity during the period in either 2007 or 2006.

NOTE 3 - RESTRICTED ESCROW ACCOUNTS FOR POST-CLOSURE COSTS

At September 30, 2007 and December 31, 2006 the Company held $7,828,000 and $7,556,000, respectively, in restricted escrow accounts which are to be used to fund post-closure costs at Kinsley's Landfill (the "Kinsley's Landfill"). The escrow funds are legally restricted for purposes of settling closure and post-closure costs, and were established to provide financial assurance through the deposit of a portion of the tipping fee charged when the landfill was operating. The balance of funds, if any, remaining after the end of the post-closure activities will revert to the State of New Jersey. The escrow for post-closure costs primarily consists of U.S. Treasury Notes and government backed debt securities. At September 30, 2007 the securities are carried at their fair value of $7,828,000, with a cost of $7,701,000, gross unrealized gains of $151,000 and gross unrealized losses of $24,000. At December 31, 2006 the securities had a fair market value of $7,556,000, with a cost of $7,576,000, gross unrealized gains of $55,000 and gross unrealized losses of $75,000. The net unrealized gains and losses are included in stockholder's equity for the respective periods (stockholders' equity also includes net unrealized gains related to the Company's marketable securities discussed in Note 2). The portion of the restricted escrow funds reported as current equals the current portion of accrued post-closure costs related to the Kinsley's Landfill (see Note 5).

NOTE 4 - INCOME TAXES

The Company recognized a federal income tax benefit for the nine months ended September 30, 2007 due to its ability to carry-back net operating losses to 2006 and 2005 for credit against federal income taxes paid with respect to such year. Federal tax laws limit the carry-back of losses to two preceding years.

The provision for income tax expense (benefit) for the nine months ended September 30, 2007 and 2006 is based upon the Company's anticipated annual effective tax rate and consists of the following (table in 000's):

2007 2006 Provision for operations Currently payable (refundable): Federal $(315) $(141) State 17 - (298) (141) Deferred: Federal - - State - - - - Total income tax provision (benefit) $(298) $(141)

Income taxes payable represents the amount due the United States Internal Revenue Service (the "Service") in settlement of litigation concluded during October 2000 regarding the Company's tax liability for taxable years 1980-88 and certain issues from taxable years 1989-91. The Company settled all of the issues before the Tax Court and reached agreement with the Service as to its tax liability for all taxable years through 1996. During July 2004, the Service accepted the Company's Offer in Compromise (the "Offer") which requested a reduction in the amount payable with respect to such settlements and permission to pay the reduced obligation in installments. The Offer committed the Company to pay a total of $2,490,000 in satisfaction of the assessed federal income taxes and interest of approximately $4,800,000. A payment of $810,000 was made during October 2004 and the balance due is being paid in monthly installments over nine years as follows: (a) $18,230 per month for each of the forty-eight months beginning August 2004, and (b) $13,416 per month for each of the sixty months beginning August 2008. The total of the installments paid from inception through September 30, 2007 equals approximately $693,000. The approximate amounts due for the five years subsequent to September 30, 2007 are as follows: $209,000; $161,000; $161,000; $161,000 and $161,000. The Service does not impose interest on amounts payable pursuant to the Offer. The Company is permitted to receive refunds of prior tax overpayments and from the carryback of losses. Should the Company default in any of the terms of the Offer, the Service may initiate suit to impose one or more remedies available to it, including the reinstatement of the total amount previously assessed and/or impose interest.

The sum of the payments due during the twelve months subsequent to September 30, 2007 has been classified as a current liability and the balance of the payments due have been classified as a long-term liability.

The Company has also paid state income taxes and interest due, in accordance with its calculations, as a result of the settlements with the Service. However state tax authorities may assert that additional interest and penalties are owed in connection with the state tax liability arising from these settlements. The accrued income taxes classified as current as of September 30, 2007 includes $48,000 for accrued state interest.

NOTE 5 - POST-CLOSURE COSTS AND CONTINGENT ENVIRONMENTAL LIABILITIES

Post-Closure Costs

The Company has future obligations for post-closure costs with respect to a landfill it owns and operated, the Kinsley's Landfill, and a landfill it operated on real property leased from others, the MAC Landfill. Kinsley's Landfill ceased accepting solid waste at its landfill in Deptford Township, New Jersey during February 1987 and commenced closure of that facility. Mac Sanitary Land Fill, Inc. ("Mac"), a wholly owned subsidiary of the Company, operated a landfill in Deptford Township, New Jersey that ceased operations in 1977.

Post-closure costs include estimated costs to be incurred for providing required post-closure monitoring and maintenance of the landfill. Post-closure activities occur after the entire landfill ceases to accept waste and closes. These activities involve methane gas control, leachate management and groundwater monitoring, surface water monitoring and control, and other operational and maintenance activities that occur after the site ceases to accept waste. The post-closure period generally runs for up to 30 years after final site closure for municipal solid waste landfills. Obligations associated with monitoring and controlling methane gas migration and emissions are set forth in applicable landfill permits and these requirements are based upon the provisions of the Clean Air Act of 1970, as amended.

The Company has accrued for such post-closure costs in accordance with Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143"). Pursuant to SFAS 143, a liability for an asset retirement obligation should be initially measured at fair value. In situations where quoted market prices are unavailable, the estimate of fair value should be based on the best available information, including the results of present value techniques in accordance with Statement of Financial Accounting Concepts No. 7, "Using Cash Flow and Present Value in Accounting Measurements" ("SFAC 7"). Changes in the liability due to the passage of time are recognized as operating items in the statement of operations and are referred to as accretion expense. Changes in the liability due to revisions to estimated future cash flows are recognized by increasing or decreasing the liability, with, in the case of closed landfills, an offset to the statement of operations.

The Company relies on third parties to provide certain materials, supplies and professional services for post-closure activities. Accordingly, the fair market value of these future obligations is based upon quoted and actual prices paid for similar work. The Company's personnel perform the majority of the services required for its post- closure obligations. The Company has added a profit margin onto the cost of such services to better reflect their fair market value as required by SFAS 143.

The Company's estimates of costs to discharge asset retirement obligations for landfills are developed in today's dollars. The estimated costs are inflated to the expected time of payment and then discounted back to present value. The estimated costs in current dollars were inflated to the expected time of payment using an inflation rate of 2.5%, and the inflated costs were discounted to present value using a credit-adjusted, risk-free discount rate of 4.5%. The credit-adjusted, risk-free rate is based on the risk-free interest rate on obligations of similar maturity and adjusted for the risk associated with investments permitted and typically held in the Company's post-closure escrow accounts discussed in Note 3. Changes in the credit-adjusted, risk-free rate do not change recorded liabilities, but subsequently recognized obligations are measured using the revised credit-adjusted, risk-free rate.

The following tables summarize the actual activity in the Company's asset retirement obligation liabilities for post-closure costs for the nine months ended September 30, 2007 and 2006 (table in $000):

2007 2006 Asset retirement obligation liability, beginning of period $ 9,412 $ 9,746 Accretion expense 274 296 Obligations settled during the period (752) (742) Other adjustments (discussed below) (40) 186 Asset retirement obligation liability, end of period 8,894 9,486 Less: Current portion (1,030) (1,007) Long-term portion $ 7,864 $ 8,479

The amount reported as current portion represents the estimate of the cost to be incurred during the subsequent twelve months.

The Company's total and current portion of accrued post-closure costs by site as of September 30, 2007 and December 31, 2006 are as follows (table in $000's):

September 30, December 31, 2007 2006 Kinsley's landfill $ 8,876 $ 9,385 Mac landfill 18 27 Total $ 8,894 $ 9,412 Kinsley's landfill $ 1,012 $ 986 Mac landfill 18 27 Current portion $ 1,030 $ 1,013

The post-closure maintenance costs of the Kinsley's Landfill are funded from a restricted escrow account (see Note 3).

The Company annually reviews its calculations with respect to landfill asset retirement obligations unless there is a significant change in the facts and circumstances related to a landfill during the year, in which case the Company will review its calculations after the significant change has occurred.

The Company began re-grading a section of the Kinsley's Landfill in 2006 in accordance with a plan approved by the New Jersey Department of Environmental Protection ("NJDEP"). The re-grading plan calls for the use of both recycled and non-recycled materials to fill and re-contour the areas of the mound containing depressions. The Company receives a fee to accept certain of the recycled materials. The costs incurred for re- grading activities shall be paid from such fees. However, costs incurred for re-grading activities in excess of such fees, if any, will be submitted to NJDEP for reimbursement from the Kinsley's Escrow. The amounts reported as Other adjustments in the above tables equal the proceeds generated from the materials received in the re-grading project at the Kinsley's Landfill, less related re-grading expenses.

During July, 2007 the Company received notice from the NJDEP that it has modified its approval of the re-grading plan. Such modifications may negatively impact the quantity of the fee producing materials the Company may accept for the re-grading project and increase the cost of utilizing such materials. The Company has challenged the NJDEP's modification to the re-grading plan and has requested to present its objections before an administrative hearing.

Contingent Environmental Liabilities

During November 2004, the Company along with fourteen other potentially responsible parties was named as respondents to an Unilateral Administrative Order issued by the United States Environmental Protection Agency ("EPA") regarding a site located in Carlstadt, New Jersey. The site is known as the Scientific Chemical Processing Superfund Site (the "SCP Site") and has been undergoing remediation pursuant to an Administrative Order issued by the EPA in 1990. The November 2004 Unilateral Administrative Order seeks contribution from the fifteen respondents, and a group of sixty nine other potentially responsible parties, toward the remediation of an area designated Operable Unit 2, estimated to cost $7.5 million, and reimbursement to the EPA of $2.0 million of alleged past oversight and administrative costs (see Part II, Item 1. Legal Proceedings). The Company ceased operations of a solvents recovery facility at the site in 1970 and had been named as a respondent to the Administrative Order issued regarding the SCP site in 1990. The Company, together with the property owner, have contributed cash and proceeds from insurance settlements toward the remediation of the SCP Site. Such contributions total $16.4 million through December 31, 2006, plus interest earned thereon, which the Company believes should satisfy the share of remediation costs which could be found attributable to the Company for the SCP Site.

The Company was one of 158 recipients of a Notice of Potential Liability and Request to Perform Remedial Investigation/Feasibility Study (the "Notice"), issued by the EPA on March 9, 2006, regarding the contamination of the Berry's Creek Study Area (the "Creek Area") located in Bergen County, N.J. A tributary adjacent to the SCP Site flows into Berry's Creek. The Creek Area includes the approximately seven mile long water body known as Berry's Creek, a canal, all tributaries to Berry's Creek and related wetlands. Tidal areas of the river into which Berry's Creek empties are also subject of the Notice. Each recipient of the Notice is designated as a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), and may be held liable for the cleanup of the Creek Area and costs the EPA has incurred with regard to the Creek Area. The investigation and feasibility study regarding the scope of the remediation of the Creek Area is ongoing. The selection of the ultimate remediation methodology from alternative approaches is expected to be made by the EPA in 2010. Since no discovery has taken place concerning allegations against the Company, it is not possible to estimate the Company's ultimate liability, if any, with respect to the Creek Area and consequently no liability has been recorded on the Company's financial statements.

The Kin-Buc Landfill, located in Edison, New Jersey, was operated on property both owned and leased by the Company's subsidiary, Kin-Buc, Inc. ("Kin-Buc"). Operations at the Kin-Buc Landfill ceased in 1977. The operation and maintenance of remedial measures implemented at the Kin-Buc Landfill continue pursuant to the provisions of Administrative Orders issued by the EPA to the Company and other respondents, including SCA Services, Inc. ("SCA"), an affiliate of Waste Management, Inc. ("WMI"). During December 1997, the Company entered into four agreements that settled lawsuits related to the allocation of costs of remediation of the Kin-Buc Landfill and substantially relieved the Company from certain future obligations with respect to the site. As part of the settlement, SCA agreed to defend and indemnify Transtech, Kin-Buc and another subsidiary, Filcrest Realty, Inc. ("Filcrest") from claims by non-settling non-municipal waste and municipal waste potentially responsible parties in the litigation. SCA also agreed to defend and indemnify the Company from certain liabilities in connection with the remediation of the Kin-Buc Landfill. However, the Company remains a responsible party under the Administrative Orders issued by the EPA discussed above, and continues to incur administrative and legal costs for issues and activities related to the site.

The impact of future events or changes in environmental laws and regulations, which cannot be predicted at this time, could result in material increases in remediation and closure costs related to these sites, possibly in excess of the Company's available financial resources. A significant increase in such costs could have a material adverse effect on the Company's financial position, results of operations and net cash flows. The costs of litigation associated with a site are expensed as incurred.

NOTE 6 - LONG-TERM DEBT

Long-term debt consists of the following as of September 30, 2007 and December 31, 2006 (table in $000's, except for monthly installment amounts):

September 30, December 31, 2007 2006 Note payable to bank due in monthly installments of $691, including interest at 7.0% per annum, to August 2007 $ - $ 5 Note payable to a finance company, due in monthly installments of $459, including interest at 7.99% per annum, to August 2009; secured by a vehicle carried at a net book value of $13 10 13 Note payable to a bank, due in monthly installments of $505, including interest at 7.75% per annum, to June 2011; secured by a vehicle carried at a net book value of $21 20 23 Total long-term debt 30 41 Less: Current portion (10) (14) Long-term portion $ 20 $ 27

NOTE 7 - SEGMENT INFORMATION

The Company's continuing operations are grouped into three segments:
(a) operations which generate electricity from recovered methane gas, (b) operations which perform maintenance, remediation, closure, post-closure and related services on landfill sites, and (c) corporate and other. Corporate and other includes selling, general and administrative expenses not specifically allocable to the other segments. Corporate assets are represented primarily by cash and cash equivalents, marketable securities and real estate held for investment and sale. Financial information by segment for the nine months ended September 30, 2007 and 2006 follows.

(table in $000's) Electricity Environmental Corporate Generation Services and Other Total 2007 Gross operating revenues $ 400 $ 745 $ - $ 1,145 Eliminations (a) - (745) - (745) Net operating revenues 400 - - 400 Depreciation expense 37 19 6 62 Income (loss) from operations (b) 153 (297) (1,271) (1,415) Capital expenditures 2 227 3 232 2006 Gross operating revenues $ 277 $ 951 $ - $ 1,228 Eliminations (a) - (951) - (951) Net operating revenues 277 - - 277 Depreciation expense 7 18 9 34 Income (loss) from operations (b) 68 (53) (1,458) (1,443) Capital expenditures 260 86 12 358

(a) Eliminations include intercompany sales, billings to the Kinsley's Escrow and fees received in conjunction with the Kinsley's Landfill re- grading project.

(b) Income (loss) from operations of the Environmental Services segment includes accretion expense of $274,000 and $296,000 for 2007 and 2006, respectively.

NOTE 8 - LEGAL PROCEEDINGS

See Part II, Item 1. Legal Proceedings of this Form 10-QSB for a discussion of recent developments with respect to the Company's legal matters.

TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES

PART I - FINANCIAL INFORMATION, Cont'd

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion and analysis should be read in conjunction with the Company's Consolidated Financial Statements and related notes, which provide additional information concerning the Company's financial activities and condition.

Forward-Looking Statements

Certain statements in this report which are not historical facts or information are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. These statements relate to future events or the Company's future financial performance. In some cases, forward-looking statements can be identified by terminology such as may, will, should, expect, plan, anticipate, believe, estimate, intend, potential or continue, and similar expressions or variations. These statements are only predictions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, levels of activity, performance or achievement of the Company, or industry results, to be materially different from any future results, levels of activity, performance or achievement expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions; the ability of the Company to implement its business strategy; the Company's ability to successfully identify new business opportunities; changes in the industry; competition; the effect of regulatory and legal proceedings; and other factors discussed herein. As a result of the foregoing and other factors, no assurance can be given as to the future results and achievements of the Company. All forward-looking statements included in this document are based on information available to the Company and its employees on the date of filing, and the Company and its employees assume no obligation to update any such forward-looking statements. In evaluating these statements, the reader should specifically consider various factors.

Discussion of Critical Accounting Policies

For a discussion of the Company's critical accounting policies, see the Company's Annual Report on Form 10-KSB for the year ended December 31, 2006.

Results of Operations

Results for the nine months ended September 30, 2007 and 2006

Consolidated net operating revenues were $400,000 for the nine months ended September 30, 2007, an increase of $123,000 or 44%, compared to $277,000 reported for the period ended September 30, 2006. Consolidated operating revenues by business segment for the nine months ended September 30, 2007 and 2006 were as follows (table in $000):

2007 2006 Environmental Svcs. $ 745 $ 951 Electricity Generation 400 277 Subtotal 1,145 1,228 Eliminations (745) (951) Net Operating Revenues $ 400 $ 277

The environmental services segment provides construction, remedial and maintenance services at landfills, commercial and industrial sites, and manages methane gas recovery operations. The environmental services segment reported $745,000 of gross operating revenues for the period in 2007 (prior to eliminations) compared to $951,000 for the period in 2006.

The Company's environmental services segment performs post-closure activities on landfills previously operated by the Company's subsidiaries. Post-closure work performed on a landfill owned by the Company, the Kinsley's Landfill, is submitted for reimbursement to a restricted escrow account established to finance the post-closure activities at the site (the "Kinsley's Escrow") (see Notes 3 and 5 to the Company's Consolidated Financial Statements). The Company billed the Kinsley's Escrow approximately $725,000 and $616,000 for post-closure maintenance performed during the nine months ended September 30, 2007 and 2006, respectively. The Company is also re-grading a section of the Kinsley's Landfill in accordance with a plan approved by the New Jersey Department of Environmental Protection ("NJDEP"). The re-grading plan calls for the use of both recycled and non-recycled materials to fill and re-contour the areas of the mound containing depressions. The Company receives a fee to accept certain of the recycled materials. The costs incurred for re- grading activities shall be paid from such fees. However, costs incurred for re-grading activities in excess of such fees, if any, will be submitted to NJDEP for reimbursement from the Kinsley's Escrow. The Company intends to utilize recycled materials to the fullest extent possible in order to minimize the amount of re-grading costs paid from the Kinsley's Escrow, if any. The Company competes with certain landfills and development projects for the revenue producing materials on the basis of the fee imposed for accepting the materials and transportation cost, and must obtain NJDEP approval prior to utilizing material from a new source. The gross revenue reported for the environmental services segment for the period in 2007 and 2006 includes $12,000 and $184,000 from such fees (see Note 5).

The decline in the revenue associated with the recycled material is due to competition for such materials from a nearby re-development project and delays in the receipt of approvals of materials from the NJDEP. During July, 2007 the Company received notice from the NJDEP that it has modified its approval of the re-grading plan. Such modifications may continue to negatively impact the quantity of the fee producing materials the Company may accept for the re-grading project and increase the cost of utilizing such materials. The Company has challenged the NJDEP's modification to the re-grading plan, and has requested to present its objections before an administrative hearing.

Billings to the Kinsley's Escrow and for services provided to members of the consolidated group, and the fees received in conjunction with the re-grading project, are eliminated in the calculation of net operating revenue. The Company is continuing its efforts to expand the customer base of the environmental services segment to additional entities beyond the consolidated group. The definition of the scope, commencement and duration of one such opportunity, involving the potential beneficial use of landfill gas generated at a site located in New Jersey, and owned by a third-party, is on-going. There are no assurances such efforts will result in work for the Company.

Revenues from the segment that generates electricity using methane gas as fuel were approximately $400,000 and $277,000 for the nine months ended September 30, 2007 and 2006, respectively. Methane gas is a component of the gas generated by landfills. The electricity generating facility is located at the Kinsley's Landfill and consists of four trailer mounted diesel engine/electricity generator units ("Gen-set(s)") each capable of generating approximately 11,000 kilowatt hours ("kWh") per day when operating at 85% capacity. Two of the four Gen-sets were operational during 2006. The third Gen-set was refurbished during 2006 and became operational during January 2007. Repairs to the fourth Gen-set have been deferred. Electricity generated is sold pursuant to a contract with a local utility. Revenues are a function of the number of kWh sold, the rate received per kWh and capacity payments. The Company sold 5.78 million kWh during the nine months ended September 30, 2007 compared to 4.64 million kWh sold in the period of the prior year. The average combined rate (kWh and capacity payments) received per kWh for the nine months ended September 30, 2007 and 2006 equaled $.0692 and $.0579, respectively. The kWh produced during the second quarter in 2007 was adversely impacted by a failure in the operation's switch gear. The facility did not generate power for approximately 41 days as temporary equipment was located and installed. The Company anticipates replacement equipment will be installed during the fourth quarter of 2007 and cannot predict the amount of time the facility may be idle for such purpose. Engineering studies indicate that the quantity of gas generated by the landfill is declining but project sufficient landfill gas to continue the operation of three of the existing Gen-sets through 2011 and two of the existing Gen-sets for the period of 2012 through 2017. Elements of the landfill gas are more corrosive to the equipment than traditional fuels, resulting in more off-line hours dedicated to repair and maintenance than with equipment utilizing traditional fuels.

Cost of Operations

Consolidated direct operating costs for the nine months ended September 30, 2007 were $224,000, an increase of $8,000 or 4% when compared to $216,000 reported for the period in 2006. All the direct operating costs related to the environmental services segment for the period in 2007 were incurred for the intercompany transactions described above and, therefore, eliminated in consolidation. The environmental segment reported costs of $8,000 after the elimination of intercompany activity for the period in 2006. The direct operating costs of the electricity generating segment for the period in 2007 and 2006 were $224,000 and $208,000, respectively. The increase in operating costs is primarily attributable to work performed toward the start-up of the third Gen-set.

Consolidated selling, general and administrative expenses for the nine months ended September 30, 2007 and 2006 were $1,317,000 and $1,208,000, respectively. Components of selling, general and administrative expenses for the nine months ended September 30, 2007 and 2006 were as follows (table in $000):

2007 2006 Legal expenses $ 302 $ 293 Other professional fees 157 121 Non-operating subsidiary expenses 40 42 All other administrative expenses 818 752 Total $1,317 $1,208

Legal expenses reported for the period in 2007 and 2006 include approximately $169,000 and $168,000, respectively, of fees for matters related to the Company's landfills or the remediation of sites to which the Company has been named as a potentially responsible party ("PRP") or potential PRP. Such fees in the periods for both 2007 and 2006 were primarily attributable to matters related to the Kin-Buc Landfill and the Berry's Creek Study Area. Other professional fees include fees due to accountants, engineers, consultants and directors. The increase in other professional fees for the period in 2007 is due in part to services associated with documentation and evaluation of the Company's financial reporting controls as required pursuant to the Sarbanes-Oxley Act of 2002. The operating costs of the non-operating subsidiaries, consisting primarily of insurance premiums, franchise, corporate and real estate taxes, aggregated approximately $40,000 and $42,000 for the period in 2007 and 2006, respectively. All other administrative expenses increased $66,000 to $818,000 for the period in 2007 from $752,000 for the period in 2006. This increase was primarily attributable to rent paid to occupy the building sold in October 2006 which houses the environmental services operations, labor hours spent toward the relocation of operations to the newly constructed facility and general operating expenses. Professional fees and administrative costs also continue to be incurred in regard to the Company's business development and asset divestiture efforts (see Liquidity and Capital Resources below). The Company also incurs legal and other professional fees, and administrative expenses, during the course of evaluating businesses for possible acquisition.

Consolidated accretion expense recognized on the Company's asset retirement obligation for landfill post-closure costs was $274,000 and $296,000 for the nine months ended September 30, 2007 and 2006, respectively.

Operating Loss

The Company's consolidated operating loss for the nine months ended September 30, 2007 decreased to $1,415,000 from a loss of $1,443,000 reported for the period in 2006.

Other Income (Expense)

Consolidated investment income was $136,000 for the nine months ended September 30, 2007 versus $192,000 reported for the period in 2006.

Consolidated investment income earned on the restricted escrow accounts dedicated to the funding of the Company's landfill post-closure costs was $224,000 and $188,000 for the nine months ended September 30, 2007 and 2006, respectively.

Consolidated interest expense was $2,000 and $6,000 for the nine months ended September 30, 2007 and 2006, respectively.

Consolidated rental income, net of related expenses, was $6,000 and $61,000 for the nine months ended September 30, 2007 and 2006, respectively. Income included in this category consists of royalty payments, reported net of commission, received from the lessee of certain of the Company's real property situated beneath the lessee's landfill and income earned from the rental of certain of the Company's property. The decrease in rental income is primarily attributable to the sale of certain real estate during October 2006 (see "Liquidity and Capital Resources - Sale of Real Property" below).

Proceeds from insurance claims of $56,000 and $435,000 reported for the nine months ended September 30, 2007 and 2006, respectively, represent proceeds received from claims filed against certain of the Company's insolvent excess insurance carriers. See "Liquidity and Capital Resources
- Insurance Claims for Past Remediation Costs" for further discussion of this issue.

Consolidated net miscellaneous income for the nine months ended September 30, 2007 and 2006 was $40,000 and $136,000, respectively. The income reported for the period in 2007 reflects $40,000 received in settlement of litigation initiated by the Company to recover a portion of the costs incurred during the Company's evaluation of a business for possible acquisition. The income reported for the period in 2006 includes $129,000 received in settlement of litigation initiated by the Company regarding its interest in a former real estate partnership.

Loss before Income Tax Benefit

The consolidated loss before income tax benefit was $955,000 for the nine months ended September 30, 2007, compared to a loss of $437,000 for the period in 2006.

Income Tax Benefit

The provision for federal and state income tax benefit for the nine months ended September 30, 2007 and 2006 equaled $298,000 and $141,000, respectively. The Company recognized federal income tax benefit for the periods due to its ability to carry-back net operating losses to 2006 and 2005 for credit against federal income taxes paid with respect to such years.

Net Income (Loss)

Net loss for the nine months ended September 30, 2007 was $657,000 or $.22 per share, compared to a net loss of $296,000 or $.10 per share, for the nine months ended September 30, 2006.

Results for the three months ended September 30, 2007 and 2006

Consolidated net operating revenues were $189,000 for the three months ended September 30, 2007, an increase of $79,000 or 72%, compared to $110,000 for the period ended September 30, 2006. Consolidated operating revenues by business segment for the three months ended September 30, 2007 and 2006 were as follows (table in $000):

2007 2006 Environmental Svcs. $ 209 $ 334 Electricity Generation 189 110 Subtotal 398 444 Eliminations (209) (334) Net Operating Revenues $ 189 $ 110

The environmental services segment reported $209,000 of gross operating revenues for the period in 2007 (prior to eliminations) compared to $334,000 for the period in 2006. The Company billed the Kinsley's Escrow approximately $205,000 and $190,000 for post-closure services performed during the three months ended September 30, 2007 and 2006, respectively. Revenues of the environmental services segment for the period in 2006 also includes $139,000 of fees received for accepting re-cycled materials utilized in conjunction with the re-grading project at the Kinsley's Landfill. Billings to the Kinsley's Escrow and for services provided to members of the consolidated group, and fees received in conjunction with the re-grading project are eliminated in the calculation of net operating revenue.

Revenues from the electricity generation segment were approximately $189,000 and $110,000 for the three months ended September 30, 2007 and 2006, respectively. The Company sold 2.43 million kWh during the three months ended September 30, 2007 compared to 1.75 million kWh sold in the period of the prior year. The average combined rate (kWh and capacity payments) received per kWh for the three months ended September 30, 2007 were $.078 and $.062, respectively. Two of the four Gen-sets were operational during the period in 2006, and three of the four Gen-sets were operational during the period in 2007.

Cost of Operations

Consolidated direct operating costs for the three months ended September 30, 2007 were $71,000, a decrease of $6,000 or 8% when compared to $77,000 reported for the period in 2006. Substantially all the costs of operations related to the environmental services segment for the period in 2007 and 2006 were incurred for the intercompany transactions described above and, therefore, eliminated in consolidation. Therefore, the consolidated direct operating costs represent the direct operating costs of the electricity generating segment for the period in 2007 and 2006.

Consolidated selling, general and administrative expenses for the three months ended September 30, 2007 and 2006 were $450,000 and $339,000, respectively. Components of selling, general and administrative expenses for the three months ended September 30, 2007 and 2006 were as follows (table in $000):

2007 2006 Legal expenses $ 79 $ 60 Other professional fees 74 24 Non-operating subsidiary expenses 11 10 All other administrative expenses 286 245 Total $450 $339

Legal expenses reported for the period in 2007 and 2006 include approximately $15,000 and $29,000, respectively, of fees for matters related to the Company's landfills or the remediation of sites to which the Company has been named as a potentially responsible party ("PRP") or potential PRP. Such fees in the periods for both 2007 and 2006 were primarily attributable to matters related to the Kin-Buc Landfill and the Berry's Creek Study Area. The increase in other professional fees for the period in 2007 is due in part to services associated with documentation and evaluation of the Company's financial reporting controls as required pursuant to the Sarbanes-Oxley Act of 2002. The operating costs of the non-operating subsidiaries, consisting primarily of insurance premiums, franchise, corporate and real estate taxes, aggregated approximately $11,000 and $10,000 for the period in 2007 and 2006, respectively. All other administrative expenses increased $41,000 to $286,000 for the period in 2007 from $245,000 for the period in 2006. This increase was primarily attributable to rent expense, labor hours spent toward the relocation of operations to the newly constructed facility and general operating expenses.

Consolidated accretion expense recognized on the Company's asset retirement obligation for landfill post-closure costs was $91,000 and $99,000 for the three months ended September 30, 2007 and 2006, respectively.

Operating Loss

The Company's consolidated operating loss for the three months ended September 30, 2007 increased to $423,000 from a loss of $405,000 reported for the period in 2006.

Other Income (Expense)

Consolidated investment income was $34,000 for the three months ended September 30, 2007 versus $57,000 reported for the period in 2006.

Consolidated investment income earned on the restricted escrow accounts dedicated to the funding of the Company's landfill post-closure costs was $80,000 and $60,000 for the three months ended September 30, 2007 and 2006, respectively.

Consolidated interest expense was less than $1,000 for the three months ended September 30, 2007 and $4,000 for the period in 2006.

Consolidated rental income, net of related expenses, was less than $1,000 for the three months ended September 30, 2007 and $20,000 for the period in 2006. The decrease in rental income is primarily attributable to the sale of certain real estate during October 2006 (see "Liquidity and Capital Resources - Sale of Real Property" below).

Proceeds from insurance claims of $56,000 and $89,000 reported for the three months ended September 30, 2007 and 2006, respectively, represents the proceeds received from claims filed against certain of the Company's insolvent excess insurance carriers.

Consolidated net miscellaneous income for the three months ended September 30, 2007 and 2006 was $40,000 and $2,000, respectively. The income reported for the period in 2007 reflects $40,000 received in settlement of litigation initiated by the Company to recover a portion of the costs incurred during the Company's evaluation of a business for possible acquisition.

Loss before Income Tax Benefit

The consolidated loss before income tax benefit was $213,000 for the three months ended September 30, 2007, compared to a loss of $181,000 for the period in 2006.

Income Tax Benefit

The provision for federal and state income tax benefit for the three months ended September 30, 2007 and 2006 equaled $42,000 and $69,000, respectively. The Company recognized federal income tax benefit for the periods due to its ability to carry-back net operating losses to 2006 and 2005 for credit against federal income taxes paid with respect to such years.

Net Income (Loss)

Net loss for the three months ended September 30, 2007 was $171,000 or $.06 per share, compared to a net loss of $112,000 or $.04 per share, for the three months ended September 30, 2006.

Liquidity and Capital Resources

General

As discussed herein, the Company faces significant short-term and long-term cash requirements for (i) funding its professional and administrative costs, (ii) federal income taxes payable, and (iii) funding post-closure costs and other expenses associated with sites of past operations. The Company's past participation in the waste handling, treatment and disposal industries subjects the Company to additional claims that may be made against the Company for the remediation of sites in which the Company is deemed a potentially responsible party. In addition, future events or changes in environmental laws or regulations, which cannot be predicted at this time, could result in material increases in post-closure costs, and other potential liabilities, that may ultimately result in costs and liabilities in excess of the Company's available financial resources. In addition, the Company cannot ascertain if its operations and funding sources will be adequate to satisfy its future cash requirements.

Statement of Cash Flow

Net cash used in operating activities for the nine months ended September 30, 2007 was $1,709,000 versus a use of $620,000 reported for the period in 2006. The primary sources of cash from operating activities for the period in 2007 was $369,000 received from customers, and the primary sources of cash from operating activities for the period in 2006 were $312,000 received from customers, and $633,000 of other income which includes $435,000 of proceeds from claims filed against certain of the Company's insolvent excess insurance carriers and $129,000 received in settlement of litigation related to an investment in a real estate partnership. The primary use of cash from operating activities for the period in both 2007 and 2006 were payments totaling $1,474,000 and $1,368,000, respectively, made to suppliers and employees. A significant use of cash in operating activities for the period in 2006 was the payment of $531,000 toward income taxes accrued in 2005, reported net of a $436,000 federal income tax refund, and for both 2007 and 2006, $165,000 and $164,000, respectively, in installments paid pursuant to the Company's Offer in Compromise discussed below. Payments of landfill post-closure costs related to the Kinsley's Landfill and the Mac Landfill were $675,000 and $102,000 for the period in 2007 and 2006, respectively, reported net of reimbursements of $84,000 and $424,000, respectively, received from the Kinsley Escrow. Certain post-closure maintenance costs of the Kinsley's Landfill are initially paid by the Company, such as personnel costs and other necessary materials or services for which credit terms are limited. The Company seeks reimbursement for such payments from the restricted escrow accounts dedicated to fund the post-closure costs of the Kinsley's Landfill. Post-closure costs of the Mac Landfill are funded from the Company's general funds, and equaled $4,000 and $8,000 for the period in 2007 and 2006, respectively. See "Post-Closure Costs" below for further discussion of the Company's landfill post-closure cost obligations.

Net cash flow provided by investing activities equaled $843,000 for the period in 2007 versus $1,725,000 reported for the period for 2006. Funds provided by investing activities for the period in 2007 were primarily utilized to fund operating activities. Capital expenditures of $232,000 for the period in 2007 include $215,000 expended toward the construction of a maintenance facility at Kinsley's Landfill, and the balance for miscellaneous equipment. Capital expenditures of $358,000 for the period in 2006 include $260,000 expended for refurbishing a Gen-Set, $54,000 expended toward the construction of the new maintenance facility, $28,000 for a vehicle and the balance for miscellaneous equipment. Financing activities used $11,000 and $10,000 of cash for the period in 2007 and 2006, respectively.

As a result of these activities, funds held by the Company in the form of cash and cash equivalents decreased $877,000 for the nine months ended September 30, 2007 from December 31, 2006, versus an increase in cash and cash equivalents held of $1,095,000 reported for the period in the prior year. The sum of cash, cash equivalents and marketable securities as of September 30, 2007 decreased to $4,350,000 from $6,246,000 reported as of December 31, 2006.

Working capital equaled $3,842,000 and $5,498,000 as of September 30, 2007 and December 31, 2006, respectively, and the ratio of current assets to current liabilities was 2.9 to 1 as of September 30, 2007 versus 3.9 to 1 as of December 31, 2006.

Taxes

During October 2000 the Company concluded litigation it began in 1994 against the United States Internal Revenue Service (the "Service") in Tax Court regarding the Company's tax liability for taxable years 1980-88 and certain issues from taxable years 1989-91. The Company settled all of the issues before the Tax Court and reached agreement with the Service as to its tax liability for all taxable years through 1996. During July 2004, the Service accepted the Company's Offer in Compromise (the "Offer") which requested a reduction in the amount payable pursuant to such settlements and permission to pay the reduced obligation in installments. The Offer committed the Company to pay a total of $2,490,000 in satisfaction of the assessed federal income taxes and interest of approximately $4,800,000. A payment of $810,000 was made during October 2004 and the balance due is being paid in monthly installments over nine years as follows: (a) $18,230 per month for each of the forty-eight months beginning August 2004, and (b) $13,416 per month for each of the sixty months beginning August 2008. The total of the installments paid from inception through September 30, 2007 equals approximately $693,000. The approximate amounts due for the five years subsequent to September 30, 2007 are as follows: $209,000; $161,000; $161,000; $161,000 and $161,000. The Service does not impose interest on amounts payable pursuant to the Offer. The Company is permitted to receive refunds of prior tax overpayments and from the carry-back of losses. Should the Company default in any of the terms of the Offer, the Service may initiate suit to impose one or more remedies available to it, including the reinstatement of the total amount previously assessed and/or impose interest.

During September 2007, the Service completed an examination of the Company's federal income tax return filed for the year ended December 31, 2005. No change to the reported tax was proposed.

Post-Closure Costs

As of September 30, 2007, the Company has accrued approximately $8.9 million for its estimated share of post-closure costs related to two of the Company's former landfill operations; the Kinsley's Landfill and Mac Landfill. Approximately $7.8 million is held in a restricted escrow account to provide funding of the post-closure costs of the Kinsley's Landfill (see Notes 3 and 5 to the Company's Consolidated Financial Statements). All disbursements from such escrow must be approved by the NJDEP. The NJDEP had suspended disbursements from such escrow until it completes its review of the Company's projection of the costs of post- closure activities at the Kinsley's Landfill through 2017. However, during October 2007 the NJDEP approved a disbursement which reimbursed a portion of funds expended by the Company on post-closure activities at the Kinsley's Landfill. The timing of future approvals of outstanding reimbursement requests is uncertain. See Note 5 to the Company's Consolidated Financial Statements for further discussion of the Company's landfill post-closure cost obligations.

Contingent Environment Liabilities

During November 2004, the Company along with fourteen other potentially responsible parties were named as respondents to an Unilateral Administrative Order issued by the United States Environmental Protection Agency ("EPA")regarding the Scientific Chemical Processing Superfund Site (the "SCP Site") located in Carlstadt, New Jersey, which has been undergoing remediation pursuant to Unilateral Administrative Order issued in 1990. The November 2004 Unilateral Administrative Order seeks contribution from the fifteen respondents, and a group of sixty nine other potentially responsible parties, toward the remediation of an area designated Operable Unit 2, estimated to cost $7.5 million, and $2.0 million of past oversight and administrative costs. The Company ceased operations of a solvents recovery facility at the site in 1970. The Company, together with the property owner, have contributed cash and proceeds from insurance settlements toward the remediation of the SCP Site. Such contributions total $16.4 million through December 31, 2006, plus interest earned thereon, which the Company believes should satisfy the share of remediation costs which could be found attributable to the Company for the SCP Site and any contamination or damage caused offsite. During October 2007 the Company filed a motion in a previously reported action requesting the Court to compel the group of potentially responsible parties controlling the remediation of the SCP Site to provide the Company with an accounting of the use of the $16.4 million contributed by the Company toward the remediation of the SCP Site (see Part II, Item 1. Legal Proceedings).

The Company was one of 158 recipients of a Notice of Potential Liability and Request to Perform Remedial Investigation/Feasibility Study (the "Notice"), issued by the EPA on March 9, 2006, regarding the contamination of the Berry's Creek Study Area (the "Creek Area") located in Bergen County, N.J. A tributary adjacent to the SCP Site in Carlstadt, N.J. flows into Berry's Creek. The Creek Area includes the approximately seven mile long water body known as Berry's Creek, a canal, all tributaries to Berry's Creek and related wetlands. Tidal areas of the river into which Berry's Creek empties are also subject to the Notice. Each recipient of the Notice is designated as a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), and may be held liable for the cleanup of the Creek Area and costs the EPA has incurred with regard to the Creek Area. The investigation and feasibility study regarding the scope of the contamination of the Creek Area is ongoing. The selection of the ultimate remediation methodology from alternative approaches is projected to be made by the EPA in 2010. Since no discovery has taken place concerning allegations against the Company, it is not possible to estimate the Company's ultimate liability, if any, with respect to the Creek Area.

The Kin-Buc Landfill, located in Edison, New Jersey, was operated on property both owned and leased by the Company's subsidiary, Kin-Buc, Inc. ("Kin-Buc"). Operations at the Kin-Buc Landfill ceased in 1977. The operation and maintenance of remedial measures implemented at the Kin-Buc Landfill continue pursuant to the provisions of Administrative Orders issued by the EPA to the Company and other respondents, including SCA Services, Inc. ("SCA"), an affiliate of Waste Management, Inc. ("WMI"). During December 1997, the Company entered into four agreements which settled lawsuits related to the allocation of costs of remediation of the Kin-Buc Landfill and substantially relieved the Company from certain future obligation with respect to the site. As part of the settlement, SCA agreed to defend and indemnify Transtech, Kin-Buc and another subsidiary, Filcrest Realty, Inc. ("Filcrest") from claims by non-settling non-municipal waste and municipal waste potentially responsible parties in the litigation. SCA also agreed to defend and indemnify the Company from certain liabilities in connection with the remediation of the Kin-Buc Landfill. However, the Company remains a responsible party under the Administrative Orders issued by the EPA discussed above, and continues to incur administrative and legal costs for issues and activities related to the site.

The impact of future events or changes in environmental laws and regulations, which cannot be predicted at this time, could result in material increases in remediation and closure costs related to these sites, possibly in excess of the Company's available financial resources. A significant increase in such costs could have a material adverse effect on the Company's financial position, results of operations and net cash flows. The costs of litigation associated with a site are expensed as incurred.

Sale of Real Property

On October 19, 2006, the Company completed the sale of approximately 60 acres of real property located in the Township of Deptford, N.J. (the "Township") pursuant to the contract with BWF Development, Inc. ("BWF"). The property adjoins the Kinsley's Landfill. The real estate sold consists of approximately 45 acres of usable land and 15 acres of wetlands upon which two metal buildings and two private residences are situated. The Company continues to own approximately 364 contiguous acres in the Township, adjacent to the property sold, of which approximately 110 acres is occupied by the closed Kinsley's Landfill. The building currently utilized to store the Company's machinery and equipment is located on the property sold. The Company entered into an agreement to rent the building through October 2007, and is constructing a replacement building. The Company reported a net gain of $1,852,000 from the sale in its results for the year-ended December 31, 2006.

The Company is pursuing the disposition of its remaining property through the sale of individual parcels and/or groups of parcels. The Company is unable to determine when sale(s) of the remaining parcels will ultimately be consummated and proceeds received given the proximity of the properties to the Kinsley's Landfill, access issues and the location of wetlands on certain properties.

On August 8, 2007, the Deptford Township Planning Board approved a study prepared by the Township's planner entitled "Five Points Study Area, Preliminary Investigation: Determination of an Area in Need of Redevelopment". The Five Points Study Area includes all property owned by the Company in Deptford Township, including the Kinsley's Landfill. The study concluded that the area should be designated a redevelopment area pursuant to the New Jersey Local Housing and Redevelopment Law.

The designation of a redevelopment area under the New Jersey Local Housing and Redevelopment Law grants a municipality many options to achieve its objectives regarding the ultimate redevelopment of property located within the redevelopment area. For example, municipalities have the authority to designate a third party (generally a land developer) to redevelop the redevelopment area in a manner consistent with the municipalities' redevelopment plan for the area. In addition, in order to advance the redevelopment project, municipalities may acquire property in the redevelopment area for redevelopment through good faith negotiations between the property owner and the designated redeveloper or through their powers of eminent domain, compensating the property owner for its fair market value.

The process of declaring an area a redevelopment area and to determine the ultimate redevelopment plan for that redevelopment area may take years to complete, and impact the use or sale of property located within the redevelopment area during the process. The process begins with the institution of a study by the planning board to determine whether or not an area should be designated a redevelopment area. The planning board is required by law to make a recommendation to the municipality's governing body. After the municipality formally designates the area a redevelopment area, the redevelopment agency which may, as in the case in Deptford, be the municipality's agency, executes a redevelopment agreement with the redeveloper (i.e. land developer), which sets forth, among other items, a schedule for the redevelopment project. There is no specific time frame set forth in the Local Housing and Redevelopment Law for completion of a redevelopment project. The owner of property included in a redevelopment area may initiate suit against a municipality to challenge the creation of the redevelopment area, the designation of a redeveloper, the adoption of a redevelopment plan and/or the amount of compensation offered for property.

The declaration of the Five Points Study Area as a redevelopment area requires the approval of the Deptford Township's governing body, and requires that certain procedures and public hearings occur prior to the Township's approval. Deptford Township has informed the Company that it has not finalized its intentions with respect to the Five Points Study Area, or if all or any of the Company's property will ultimately be included in the Redevelopment Area. The Company has notified the Deptford Township Planning Board and Deptford Township Council of the Company's objections to certain errors and mischaracterizations contained within the Five Points Study, as well as it's the Planning Board's conclusion to approve the Five Points Study and recommend that the Township declare the Five Points Study Area a redevelopment area pursuant to the Local Housing and Redevelopment Law. During September 2007 the Company filed suit against the Township's Planning Board seeking, among other remedies, to set aside the Planning Board's approval of the Study(see Part II, Item 1. Legal Proceedings).

Insurance Claims for Past Remediation Costs

In February 2002, the Company consummated a settlement of litigation it had commenced in 1995 against its excess insurers who provided coverage during the period of 1965 through 1986 (the "Lloyds Suit"). Many of the non-settling insurance companies are insolvent, however the estates of some of these insolvent companies have sufficient assets to make a partial contribution toward claims filed by the Company. During the third quarter of 2007, the Company received $56,000 of proceeds related to claims filed against the estates of insolvent insurers. During the second, third and fourth quarters of 2006, the Company received proceeds totaling $600,000 related to such claims. The Company has resolved claims against its excess insurers representing approximately 98% of the value assigned to the coverage provided under the policies that were the subject of the Lloyds Suit.

TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES

PART I - FINANCIAL INFORMATION, Cont'd

Item 3A(T). CONTROLS AND PROCEDURES

The Company's management evaluated, with the participation of its principal executive officer and principal financial officer, the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and the principal financial officer of the Company concluded that its disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and regulations of the Securities and Exchange Commission and is operating in an effective manner.

No change in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Securities Exchange Act of 1934) occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES

PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

On October 2, 2007, the Company filed a motion under the previously reported action in the Superior Court of New Jersey, Middlesex County, entitled Transtech Industries, Inc. et. al v. Certain Underwriters at Lloyds et al, (Docket No. MSX-L-10827-95). This lawsuit had been brought by the Company to obtain indemnification from its excess insurers who provided coverage during the period 1965 through 1986 against costs incurred in connection with the remediation of sites in New Jersey (the "Lloyds Suit")(see Part I - Financial Information, Item 2. Management's Discussion and Analysis or Plan of Operation, Liquidity and Capital Resources, Contingent Environmental Liabilities). The Company had assigned certain rights under excess insurance policies to the SCP Cooperating PRP Group in conjunction with the September 1995 settlement of litigation related to allocation of liability for the remediation of the Carlstadt SCP Site located in Carlstadt, New Jersey. The Company paid $4,200,000 to the SCP Cooperating PRP Group as part of that settlement. During 1998, the Company and the SCP Cooperating PRP Group, agreed to cooperate in the pursuit of the excess insurance claims addressed in the Lloyd's Suit. A settlement with the majority of the defendants to the Lloyd's Suit was consummated in February 2002, resulting in the payment of $9,513,000 to the Company, $3,500,000 to an escrow account established in settlement of litigation among the Company and affiliates of Waste Management, Inc., and $12,000,000 to a Qualified Settlement Fund established to fund costs incurred for the remediation of the Carlstadt SCP Site which is administered by the SCP Cooperating PRP Group. The Company paid an additional $250,000 to the SCP Cooperating PRP Group from the proceeds of the Company's claim against certain insolvent excess insurers. The motion filed on October 22, 2007 seeks an Order compelling the SCP Cooperating PRP Group to account for how and how much it has spent of the $16,450,000 paid by the Company to it as recited above.

During September 2007, two subsidiaries of Transtech commenced litigation entitled Kinsley's Landfill, Inc., and Birchcrest, Inc. v. Planning Board of the Township of Deptford (No. L-001536-07) in the Superior Court of New Jersey, Law Division, Gloucester County. The suit seeks, among other remedies, to set aside the Planning Board of the Township of Deptford's approval of a 2007 study prepared by the Township's planner entitled "Five Points Study Area, Preliminary Investigation: Determination of an Area in Need of Redevelopment" (see Part I - Financial Information, Item 2. Management's Discussion and Analysis or Plan of Operation, Liquidity and Capital Resources, Sale of Real Property).

No material developments have occurred with respect to the other litigation, or the other pending legal proceedings involving the Company, subsequent to that reported in the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2006. Reference is made thereto for a description of such litigation and to the discussion contained in Part I, Item 2. Management's Discussion and Analysis or Plan of Operation - Liquidity and Capital Resources of this Form 10-QSB.

In the ordinary course of conducting its business, the Company becomes involved in certain lawsuits and administrative proceedings (other than those referred herein), some of which may result in fines, penalties or judgments being assessed against the Company. The management of the Company is of the opinion that these proceedings, if determined adversely individually or in the aggregate, are not material to its business or consolidated financial position.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

None

Item 6. Exhibits

Exhibit 31(a) Certification Pursuant to Rules 13a-14(a) and 15d- 14(a) of the Securities Exchange Act of 1934 and
Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer

Exhibit 31(b) Certification Pursuant to Rules 13a-14(a) and 15d- 14(a) of the Securities Exchange Act of 1934 and
Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer

Exhibit 32(a) Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer

Exhibit 32(b) Certification Pursuant to 18 U.S.C. Section 1350,as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer

TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TRANSTECH INDUSTRIES, INC.
(Registrant)

Date: November 14, 2007 By: /s/ Robert V. Silva Robert V. Silva, President and Chief Executive Officer (Principal Executive Officer)

and

Date: November 14, 2007 By: /s/ Andrew J. Mayer, Jr. Andrew J. Mayer, Jr. Vice President-Finance, Chief Financial Officer and Secretary (Principal Financial and Accounting Officer)