U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB

Mark One

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

                   For the fiscal year ended December 31, 2007

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

                For the transition period from ______ to _______

                           COMMISSION FILE NO. 0-27845

                          TRANSAX INTERNATIONAL LIMITED
                          -----------------------------
                 (Name of small business issuer in its charter)

               Colorado                                       90-0287423
               --------                                       ----------
    (State or other jurisdiction                           (I.R.S. Employer
  of incorporationor organization)                        Identification No.)

             5201 Blue Lagoon Drive, 8th Floor, Miami, Florida 33126
             -------------------------------------------------------
                    (Address of principal executive offices)

                                 (305) 629-3090
                          ---------------------------
                          (Issuer's telephone number)

Securities registered pursuant to Section         Name of each exchange on which
            12(b) of the Act:                              registered:

                   None
                   ----

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

                             Common Stock, $0.00001
                             ----------------------
                                (Title of Class)

Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. [ ]

Check whether the issuer (i) 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 (ii) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]

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

State issuers revenues for its most recent fiscal year $5,173,544.

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State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. April 8, 2008: $192,828.63

     ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS

                                       N/A

Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 and 15(d) of the Securities Exchange Act of 1934 after
the distribution of securities under a plan confirmed by a court. Yes[ ] No[ ]

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.

Class                                         Outstanding as of  March 31, 2008
Common Stock, $0.00001                        39,774,341

Indicate by checkmark whether the issuer is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes [ ] No [X]

                       DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference, briefly describe them
and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (i) any annual report to security holders;
(ii) any proxy or information statement; and (iii) any prospectus filed pursuant
to Rule 424(b) or (c) of the Securities Act of 1933 (the "Securities Act"). The
listed documents should be clearly described for identification purposes (e.g.
annual reports to security holders for fiscal year ended December 24, 1990).

                                       N/A

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]

<PAGE>

                          TRANSAX INTERNATIONAL LIMITED
                        2007 ANNUAL REPORT ON FORM 10-KSB
                                TABLE OF CONTENTS

                                                                            PAGE
PART I.                                                                     ----

Item 1.     Description of Business ........................................   1

Item 2.     Description of Property ........................................  24

Item 3.     Legal Proceedings ..............................................  24

Item 4.     Submission of Matters to a Vote of Security Holders ............  24

PART II.

Item 5.     Market for Common Equity and Related Stockholder Matters .......  24

Item 6.     Management's Discussion and Analysis and Results of Operations .  27

Item 7.     Financial Statements ........................................... F-1

Item 8.     Changes In and Disagreements With Accountants on Accounting
             and Financial Disclosure .....................................   38

Item 8A.
and 8A(T).  Controls and Procedures ........................................  39

Item 8B.    Other Information ..............................................  41

PART III.

Item 9.     Directors, Executive Officers, Promoters and Control Persons;
              Compliance With Section 16(a) of the Exchange Act ............  41

Item 10.    Executive Compensation .........................................  43

Item 11.    Security Ownership of Certain Beneficial Owners and
              Management and Related Stockholder Matters ...................  46

Item 12.    Certain Relationships and Related Transactions .................  48

Item 13.    Exhibits .......................................................  48

Item 14.    Principal Accountant Fees and Services .........................  51

                                        i

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                           FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-KSB contains forward-looking statements regarding
our business, financial condition, results of operations and prospects. Words
such as "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates" and similar expressions or variations of such words are intended to
identify forward-looking statements, but are not deemed to represent an
all-inclusive means of identifying forward-looking statements as denoted in this
Annual Report on Form 10-KSB. Additionally, statements concerning future matters
are forward-looking statements.

Although forward-looking statements in this Annual Report on Form 10-KSB reflect
the good faith judgment of our management, such statements can only be based on
facts and factors currently known by us. Consequently, forward-looking
statements are inherently subject to risks and uncertainties and actual results
and outcomes may differ materially from the results and outcomes discussed in or
anticipated by the forward-looking statements. Factors that could cause or
contribute to such differences in results and outcomes include, without
limitation, those specifically addressed under the headings "Risks Factors" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." You are urged not to place undue reliance on these forward-looking
statements, which speak only as of the date of this Annual Report on Form
10-KSB. We file reports with the SEC. The SEC maintains a website (www.sec.gov)
that contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC, including us. You can
also read and copy any materials we file with the SEC at the SEC's Public
Reference Room at 100 F Street, NE, Washington, DC 20549. You can obtain
additional information about the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330.

We undertake no obligation to revise or update any forward-looking statements in
order to reflect any event or circumstance that may arise after the date of this
Annual Report on Form 10-KSB, except as required by law. Readers are urged to
carefully review and consider the various disclosures made throughout the
entirety of this Annual Report, which are designed to advise interested parties
of the risks and factors that may affect our business, financial condition,
results of operations and prospects.

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

We are an international provider of information network solutions, products and
services specifically designed for the healthcare providers and health insurance
companies (collectively, the "Health Information Management Products").

ORGANIZATION

Transax International Limited is a Colorado corporation and currently trades on
the OTC Bulletin Board under the symbol "TNSX.OB" and the Frankfurt and Berlin
Stock Exchanges under the symbol "TX6". Please note that throughout this report,
and unless otherwise noted, the words "we," "our," "us," or the "Company" refer
to Transax International Limited.

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We were originally incorporated under the laws of the State of Colorado in 1987
under the name "Vega-Atlantic Corporation". Our Board of Directors approved the
execution of an agreement dated June 19, 2003 and a subsequent merger agreement
and its ancillary documents dated July 22, 2003 (collectively, the "Merger
Agreement") among us (then known as Vega-Atlantic Corporation), Vega-Atlantic
Acquisition Corporation, our wholly-owned subsidiary ("Vega-Atlantic"), Transax
Limited, a Colorado corporation ("Transax Limited"), and certain selling
shareholders of Transax Limited. The Merger Agreement and our acquisition of
Transax Limited by way of merger was completed effective as of August 14, 2003
(the "Effective Date").

In accordance with the completion of the terms and conditions of the Merger
Agreement: (i) Vega-Atlantic merged with Transax Limited (so that Transax
Limited became the surviving company and our wholly-owned subsidiary and,
correspondingly, the shareholders, warrant holders and option holders of Transax
Limited became our shareholders, warrant holders and option holders; (ii) our
business operations became that of Transax Limited , primarily consisting of the
development, acquisition, provider and marketing of information network
solutions for healthcare providers and health insurance companies world-wide;
and (iii) we changed our name to "Transax International Limited" and we changed
our trading symbol.

Together with our wholly-owned subsidiary, Medlink Conectividade em Saude Ltda
("Medlink Conectividade"), formerly known as TDS Telecommunication Data Systems
LTDA, we are an international provider of information network solutions,
products and services specifically designed for the healthcare providers and
health insurance companies (collectively, the "Health Information Management
Products").

On March 26, 2008, our board of directors, pursuant to unanimous written consent
resolutions approved the execution of a stock purchase and option agreement (the
"Agreement") with Engetech, Inc., a Turks & Caicos corporation controlled and
owned 20% by Americo de Castro, director and President of Medlink Conectividade,
and 80% by Flavio Gonzalez Duarte (the "Buyer"). In accordance with the terms
and provisions of the Agreement, we sold to the Buyer 45% of the total issued
and outstanding stock of our wholly-owned subsidiary, Transax Limited. Transax
Limited owns 100% of the total issued and outstanding share of: (i) Medlink
Conectividade; and (ii) Medlink. (See details below).

SUBSIDIARIES

MEDLINK CONECTIVIDADE EM SAUDE LTDA.

Medlink Conectividade, formerly known as TDS Telecommunication Data Systems, was
incorporated under the laws of Brazil on May 2, 1998. On April 4, 2006, the name
was changed to Medlink Conectividade. Medlink Conectividade is our wholly-owned
subsidiary and assists us in providing information network solutions, products
and services within Brazil. Through Medlink Conectividade, our wholly-owned
subsidiary, we provide information network solutions, products and services
specifically designed for the healthcare providers and health insurance
companies information network solutions, products and services within Brazil. We
generate all of our revenues through Medlink Conectividade.

TRANSAX AUSTRALIA PTY LTD.

Transax Australia Pty Ltd. was incorporated under the laws of New South Wales,
Australia on January 19, 2003, and is our wholly-owned subsidiary ("Transax
Australia"). Transax Australia assisted us in seeking marketing opportunities to
provide information network solutions, products and services within Australia
and regionally. Effective April 17, 2007, Transax Australia was dissolved and
formal documentation has been signed and filed.

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<PAGE>

MEDLINK TECHNOLOGIES, INC.

Medlink Technologies, Inc. was incorporated under the laws of Mauritius on
January 17, 2003, and is our wholly-owned subsidiary ("Medlink"). Medlink holds
the intellectual property developed by us and is responsible for initiating
research and development.

CURRENT BUSINESS OPERATIONS

STOCK PURCHASE AND OPTION AGREEMENT

On March 26, 2008, our board of directors, pursuant to unanimous written consent
resolutions approved the execution of a Stock Purchase and Option Agreement (the
"Agreement") with Engetech, Inc., a Turks & Caicos corporation controlled and
owned 20% by Americo de Castro, director and President of Medlink Conectividade,
and 80% by Flavio Gonzalez Duarte (the "Buyer"). In accordance with the terms
and provisions of the Agreement, we sold to the Buyer 45% of the total issued
and outstanding stock of our wholly-owned subsidiary, Transax Limited. Transax
Limited owns 100% of the total issued and outstanding share of: (i) Medlink
Conectividade; and (ii) Medlink.

The purchase price for the 45% or 45 shares ("Initial Shares") is $3,200,000. Of
this amount, $220,000 was to have been paid by December 31, 2007. Approximately
$188,000 was received by the Company by December 31, 2007 and is reflected as a
liability on the accompanying consolidated balance sheet as a deposit on sale of
minority interest. The remaining balance is to be paid as follows i) $32,000 of
the initial deposit is due immediately; ii) $480, 000 is to be paid on March 31,
2008, and iii) the balance of $2,400,000 is due in twelve equal monthly payments
of $200,000 commencing April 2008. The $2,880,000 balance due and owing by the
Buyer is evidenced by an installment note secured by a pledge of all of the
Initial Shares. As of the date of this report, the Buyer has not paid the March
31, 2008 payment or the remaining initial deposit.

The Buyer has an option to purchase the remaining 55% of Transax Limited. The
Option is exercisable by the Buyer during March and April 2009, subject to
shareholder approval, to acquire the balance of the Company's Medlink operations
(and its corresponding debt) by way of the acquisition of the remaining 55
shares of Transax Limited and certain licensing rights for Latin America, Spain
and Portugal in exchange for further payments to the Company of approximately
$2,400,000 in the form of twelve equal monthly payments of $200,000

In accordance with the further terms and provisions of the Agreement, a
performance bonus shall also be payable by the Buyer to the Company (the
"Bonus") equal to 50% of the revenues received by Medlink Conectividade
(converted monthly to US Dollars at the monthly average exchange rate as
provided by the Central Bank of Brazil) with respect to transactions in excess
of an aggregate of 678,076 executed during 2008 for Medlink Conectividade's
customer, Brandesco Saude. Buyer shall pay the Bonus due as follows: 40% on
January 31, 2009, 20% on April 30, 2009, 20% on July 31, 2009, and 20% on
October 31, 2009. The Bonus shall be payable regardless of whether or not the
Buyer elects to exercise the Option.

Additionally, in accordance with the terms and provisions of the Agreement, MTI
shall grant to the Company a perpetual, exclusive and sub-license to use all of
the software and other intellectual property owned by MTI in all territories
other than (i) Latin America (defined as all mainland countries in the Western
Hemisphere south of the USA/Mexico border; and (ii) Spain and Portugal.

As of the date of this report, the Buyer is in default by $480,000 of the
payment due on March 31, 2008.

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<PAGE>

GENERAL

As of the date of this Annual Report, through Medlink Conectividade, we are an
international provider of health information management products (collectively,
the "Health Information Management Products"), as described below, which are
specifically designed for the healthcare providers and health insurance
companies. We are dedicated to improving healthcare delivery by providing to
hospitals, physician practices and health insurance companies with innovative
health information management systems to manage coding, compliance, abstracting
and record management's processes.

Our strategic focus is to become a premier international provider of health
information management network solutions for the healthcare providers and health
insurance companies, enabling the real time automation of routine patient
transactions. We believe that our unique combination of complimentary solutions
is designed to significantly improve the business of healthcare. Our Health
Information Management Products and software solutions are designed to generate
operational efficiencies, improve cash flow and measure the cost and quality of
care. In general, the Health Information Management Products and software
solutions, including the MedLink Solution, fall into four (4) main areas: (i)
compliance management; (ii) coding and reimbursement management; (iii)
abstracting; and (iv) record management.

We believe that hospitals and other healthcare providers must implement
comprehensive coding and compliance programs in order to minimize payer
submission errors and assure the receipt of anticipated revenues. We believe
that an effective program should include clear, defined guidelines and
procedures, which combined with our Health Information Management Products, will
enhance an organization's system and effectively increase revenues and reduce
costs. Our Health Information Management Products include compliance management
and coding and reimbursement products and software, which are designed to
conduct automated prospective and retrospective reviews of all in-patient and
out-patient claims data. Management tools include internally designed targets
aimed to provide data quality, coding accuracy and appropriate reimbursement.
These tools work in conjunction with an organization's coding and billing
compliance program to:

   (i)   identify claims with potential errors prior to billing;

   (ii)  screen professional fees and services; and

   (iii) identify patterns in coding and physician documentation.

Results of the auditing and monitoring activities are represented in executive
reports summarizing clinical and financial results as well as detailed reports
providing information needed to target specific areas for review. Billing
practices for health care services are under close scrutiny by governmental
agencies as high-risk areas for Medicare fraud and abuse. We believe that the
Health Information Management Products will increase an organization's progress
in reducing improper payments and ensuring that medical record documentation
support services are provided.

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The Health Information Management Products are also designed to:

   o  include abstracting solutions, which enable healthcare facilities to
      accurately collect and report patient demographic and clinical
      information.

   o  provide the organization with the ability to calculate in-patient and
      out-patient hospital reimbursements and customize data fields needed for
      state, federal or foreign governmental regulatory requirements. Standard
      and custom reports will provide the customer with the ability to generate
      facility-specific statistical reporting used for benchmarking, outcomes
      and performance improvement, marketing and planning.

   o  provide healthcare organizations the flexibility to customize abstracting
      workflow to meet data collection reporting and analysis needs.

   o  provide the organization with the ability to customize workflow by
      creating fields and rules and designing screen navigation.

   o  provide record management, which will automate the record tracking and
      location functions, monitor record completeness and facilitate the release
      of information process within health information management departments.

   o  assist healthcare organizations in properly completing records pursuant to
      state, federal, foreign governmental and medical staff requirements. The
      management tools are designed to monitor a facility's adherence to patient
      privacy, disclosure and patient bill of rights requirements, if
      applicable.

MEDLINK SOLUTION/MEDLINK WEB SOLUTION

We have developed a proprietary software trademarked (Brazil only) "MedLink
Solution", which was specifically designed and developed for the healthcare and
health insurance industries enabling the real time automation of routine patient
eligibility, verifications, authorizations, claims processing and payment
functions that are currently performed manually (the "MedLink Solution"). A
transaction fee is charged to the insurer for use of the MedLink Solution. The
MedLink Solution hosts its own network processing system (the "Total
Connectivity Solution"), whereby we are able to provide an insurer with the
ability to cost effectively process all of the transactions generated regardless
of location or method of generation.

An initial version of MedLink Solution that is Health Insurance Portability and
Accountability Act ("HIPAA") compliant for the USA market was previously
developed in-house by our professional using the Microsoft.NET platform (the
"MedLink Web Solution"). Medlink Conectividade became a member of the Microsoft
Partnership program, therefore, the initial design and specification of the
MedLink Web Solution was undertaken in collaboration with engineers from the
Microsoft Development and Training Center in Brazil. Our new MedLink Web
Solution offers all functionalities already available in our other capture
solutions, but in an Internet-based application that can be accessed by
providers through a standard Internet browser. The MedLink Web Solution allows
providers to capture medical and dental exams, procedures, therapies, visits,
laboratory tests and doctor referrals without complicated software conversion,
utilizing an existing Internet connection. MedLink Web Solution contains a
number of important security procedures following international standards,
utilizing an intrusion detection system and SSL security to encrypt
transactions. Additional security features are available at the application
level to individual users.

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<PAGE>

We believe that the MedLink Solution and the MedLink Web Solution solves
technological and communication problems within the healthcare systems by
creating a virtual "paperless office" for the insurer and total connectivity,
regardless of method, for the health provider. The MedLink Solution replaces
manual medical claims systems and provides insurance companies and healthcare
providers significant savings through a substantial reduction in operational
costs. The MedLink Solution allows users to collect, authorize and process
transaction information in real-time for applications including, but not limited
to, patient and provider eligibility verification, procedure authorization and
claims and debit processing. Participants of the MedLink Solution include
private health insurance companies, group medical companies, and healthcare
providers.

During fiscal years ended December 31, 2007 and 2006, respectively, we installed
approximately 1,395 and 1,050 MedLink Solutions into healthcare provider
locations throughout Brazil. At the end of fiscal year 2007, we had an aggregate
of approximately 7,400 MedLink Solutions installed into healthcare provider
locations throughout Brazil inclusive of "overlapping solutions".

MEDLINK SOLUTION ARCHITECTURE AND DESIGN

We believe that the MedLink Solution is the total connectivity system that
allows hospitals, clinics, medical specialists and other healthcare providers to
easily capture, route, and authorize medical, hospital, and dental claims in
"real time". The MedLink Solution addresses pre-existing technological and
communication problems by creating a universal virtual link between the insurer
and the care provider.

The MedLink Solution's architecture and design is as follows: (i) seven capture
methods; (ii) a network processor; and (iii) an authorizer.

CAPTURE METHODS. The MedLink Solution is tailored to the specific care
provider's environment and needs usage based upon its technological resources,
physical installation and volume of claims. The MedLink Solution offers seven
different methods to capture data. The health care provider can select which of
these seven methods best suit its operational needs and technological abilities.
Regardless of the capture method chosen, transactions are seamless and
efficient. The MedLink Solution's capture methods are:

   o  MedLink Solution POS Terminal;
   o  MedLink Solution Phone;
   o  MedLink Solution PC Windows
   o  MedLink Solution PC Net
   o  MedLink Solution Server Labs
   o  MedLink Solution Server Hospitals
   o  MedLink Solution Web

NETWORK PROCESSOR. The MedLink Solution network processor routes the
transactions captured by the MedLink Solution (the "Network Processor") to the
authorization system of the healthcare plan (the "Authorization System"). For
example, in Brazil this process is carried out either using Embratel's Renpac
service or the Internet. The Network Processor offers uninterrupted twenty-four
(24) hour, seven days a week operation and service.

The Network Processor is secured from the Renpac and Internet communication
channels to the communication channels with the Authorization System, passing
through the elements of local network, processors and unities of storage of
data. It is implemented on a RAID5 disk array architecture.

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AUTHORIZATION SYSTEM. The Authorization System's software is composed of a
control module and a group of storage procedures that validate the specific
rules of the health plan or insurer. It is responsible for: (i) receiving and
decoding the messages sent by the Network Processor, containing the
solicitations of the MedLink Solution installed at the provider; (ii)
identification of the kind of the message (claim, refund, settlement, etc) and
of the service provider; (iii) validation or denial of the transaction; (iv)
updating the historical database of the claims; and (v) replying to the request
by sending a message to the Network Processor.

PRODUCT TARGET MARKET STRATEGY

MARKET STRATEGY

Our key marketing strategy is to position ourselves as a market leader in
providing total information management network processing solutions for the
healthcare industry worldwide. We believe that our Health Information Management
Products encompass a variety of solutions for healthcare provider locations, a
complete network processing service for the health insurance companies, and
in-house software and systems development to address specific and unique
customer requirements, and the ability to operate the systems through a variety
of communication methods.

The promotional and marketing strategy is based on creating a proactive "push
pull" effect on the demand for the Health Information Management Products and
services within the healthcare industry. We have been focusing on the promotion
and marketing of its products to the Brazilian healthcare providers and
insurance companies by demonstrating: (i) the benefits of the MedLink Solution
application and services; (ii) real-time cash visibility; (iii) nominal to no
capital investment; (iv) the established Network Processor facility; (v) custom
software development support; and (vi) option of immediate payment of
outstanding claims.

We believe that this commonly used marketing and promotional model will be
suitable and used for market penetration. In addition we attend a number of
conferences and trade shows in Brazil on an annual basis to "show case" our
products. International marketing and promotional strategies will be developed
and adapted on a country-to-country basis to meet different market environments
and governmental requirements, build business and political relationships, and
obtain domestic media exposure and high visibility within the local healthcare
industry to establish credibility.

PRODUCT TARGET MARKET

We have identified two initial target markets for our products. They are: (i)
healthcare providers, such as physicians, clinics, hospitals, laboratories,
diagnosis centers, emergency centers, etc.; and (ii) health insurance and group
medicine companies.

We are currently focused primarily on the marketing and sale of our Health
Information Management products in Brazil and have commenced to seek other
opportunities in certain South American countries. We believe that there is a
significant global market opportunity for our Healthcare Information Management
Products and services and software technology.

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STRATEGIC ALLIANCES

We have developed key strategic alliances with the following technology
providers to support the MedLink Solution's unique system architecture and
design. We believe that the establishment of these strategic alliances has given
us a significant competitive advantage in Brazil.

CENTRO BRASILERIO DE INFORMATICA MEDICA S/A

On February 14, 2006, we entered into an agreement (the "CEBIM Agreement") with
Centro Brasilerio De Informatica Medica S/A, a Brazilian company ("CEBIM").
CEBIM is the developer of Brazil's Amigo premier medical practice management
system ("Amigo PMS"). Pursuant to the terms and provisions of the CEBIM
Agreement, CEBIM was to integrate our MedLink Web Solution real time online
claims adjudication with the Amigo PMS software to provide users with a new
version of the Amigo PMS, including connectivity. As of the date of this Annual
Report, CEBIM has undertaken development of the technical aspects of the
integration of our MedLink Web Solution. Under a proposal we received from
CEBIM, the net fee per transaction would be less than our current contracts.
Therefore, there is no financial benefit for MedLink and we have not proceeded
with this relationship.

S1 CORPORATION - NETWORK PROCESSOR SYSTEM

On November 25, 2002, we entered into a supplier agreement (the "Mosaic Supplier
Agreement") with S1 Corporation of Atlanta Georgia, formerly Mosaic Software,
Inc. ("S1"), to develop the Network Processor software package, known as the
"Position", for use in the MedLink Solution. We believe that S1 is the supplier
of the most modern technology for network control software, based on a low cost
hardware platform (PC's) and Windows NT software. Management believes the
Position software is the best cost effective solution for this kind of system..
We own the current license and undertake optional maintenance payments to S1 on
a quarterly basis to receive software updates and access to support.

HYPERCOM CORPORATION

On December 1, 2003, we entered into a servicing agreement (the "Hypercom
Service Agreement") with Hypercom Corporation, a publicly traded multinational
company ("Hypercom'"). Pursuant to the terms and provisions of the Hypercom
Service Agreement Hypercom would provide leasing arrangements for POS (Point of
Sale) terminals in Brazil.

On April 30, 2002, we entered into a service agreement with Netset, Inc.
("Netset"), a wholly-owned subsidiary of Hypercom (the "Service Agreement").
Pursuant to the terms and provisions of the Service Agreement, Netset will (i)
provide to us installation, servicing, training, customer service and technical
support (Call Center) for its terminal network in Brazil; and (ii) allow us to
use the entire Hypercom structure to serve its clients.

RESEARCH AND DEVELOPMENT

Our research and development department is responsible for the definition,
design and implementation of our products. This comprises three main areas of
activity: research of electronic transaction product trends both in Brazil and
around the world as it applies to the healthcare industry, definition of
products and services required for MedLink Solution services and implementation
of the hardware and software products to support MedLink Solution services.
Products to be offered by MedLink Solution involves interactive discussions with
the marketing and sales team in order to identify the market needs, costs and
timing to introduce such products and solutions. We have entered into agreements
with Hypercom and Dione PLC, of the United Kingdom, to utilize their terminals
for the MedLink Solution.

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During fiscal year 2005, we developed a biometric (fingerprint reader) version
of our MedLink Solution on behalf of a major health insurance group in Brazil,
which is currently piloting the solution in that region (the "Biometric
Solution"). The Biometric Solution is a new biometric security technology, which
is rendered from the first time a patient visits a medical provider location.
The patient passes a magnetic card through a reader for verification and then
provides a fingerprint and his/her biometric identity is stored in the MedLink
Solution authorizer. The Biometric Solution will be used in conjunction with
magnetic stripe or smart cards issued by the health insurer to its policyholders
in such a way that through the MedLink Solution real time adjudication system,
information on the magnetic stripe card and fingerprint recognition must match
each time a patient requires authorization and adjudication of medical claims.

As of the date of this Annual Report, the Biometric Solution continues to be
operated as a pilot program and negotiations continue regarding
commercialization of the Biometric Solution on behalf of the health insurance
group.

During 2007, we spent significant time and expense reconfiguring all of our
terminals in Brazil to conform to the new Brazil Health Standard (TISS). We
believe that our product fully complies with the standards of TISS in Brazil
though no independent verification is required.

MATERIAL REVENUE AGREEMENTS

BRADESCO INSURANCE

On October 17, 2002 Medlink and Bradesco Insurance ("Bradesco"), Brazil's
largest health insurance company, entered into an agreement for a pilot program
contract for the testing of its "MedLink" Solution, which ended in September
2003. On October 1, 2003, Medlink and Bradesco entered into a contract pursuant
to which we would undertake and install our MedLink Solution into the Bradesco
healthcare provider's network. In order to undertake this program, Bradesco
agreed to set up a stand alone processing facility to hold its database, which
was subsequently contracted to a third party. Phase one of the program went live
during March 2004. At the end of fiscal year December 31, 2007, we had installed
955 solutions including 882 POS terminals into the Bradesco provider network.
During fiscal years ended December 31, 2007 and 2006, respectively, we processed
3,845,000 and 3,800,000 transactions for Bradesco. For the year ended December
31, 2007 and 2006, Bradesco account for approximately 49% and 52% of our
revenues, respectively. During December 2007, due to operational reasons,
Bradesco only provided a renewal of the company's current contract to provide
connectivity services for six months until to June 2008. There is no guarantee
that we will provide connectivity services to Bradesco after June 2008. The loss
of this client will have a adverse effect on our financial position and results
of operations.

GOLDEN CROSS

On August 9, 2002, Medlink and Golden Cross, ("Golden Cross"), one of Brazil's
largest health insurance companies entered into an agreement (the "Golden Cross
Agreement"). The agreement expired in August 2007, and is currently in
re-negotiation. Pursuant to the terms and conditions of the Golden Cross
Agreement, we have committed to supply to Golden Cross a total of 5,500
installations consisting of more than 1500 MedLink Solution POS terminals with
the balance being MedLink PC and MedLink Solution servers. The Golden Cross
Agreement also provides for MedLink Solution WEB and MedLink Solution phone
solutions, which will be used as appropriate by the healthcare provider. We have
approximately 5,085 MedLink Solutions in Golden Cross Provider's locations.
During fiscal years ended December 31, 2007 and 2006, respectively, we processed
3,642,412 and 3,300,000 transactions for Golden Cross. For the year ended
December 31, 2007 and 2006, Golden Cross accounted for approximately 39% of our
revenues.

                                       9
<PAGE>

CAMED

On October 17, 2002, Medlink and Camed, a self-insured company based in northern
Brazil ("Camed"), entered into an agreement (the "Camed Agreement") pursuant to
which we installed MedLink Solution POS terminals for pilot testing.

During fiscal years ended December 31, 2007 and 2006, respectively, we completed
the installation of approximately 371MedLink Solution POS terminals and 193 IVR
Phone solutions. The Camed Agreement also provides for MedLink Solution WEB and
MedLink Server Solution solutions to be used as appropriate by the healthcare
providers. We have approximately five hundred and seventy(570) MedLink Solutions
in Camed providers' locations. During fiscal years ended December 31, 2007 and
2006, respectively, we processed 573,329 and 600,000 transactions for Camed.
Camed generated approximately $398,000, or 7.7% and $369,000, or 8.9% of
revenues during each of the years ended December 31, 2007 and 2006,
respectively.

CAIXA BENEFICENTE DOS FUNCIONARIOS DO BANESPA

On April 20 2006, we entered into a contract to provide real time adjudication
services to Caixa Beneficente dos Funcionarios do Banespa ("CABESP"), a self
insured managed scheme based in Sao Paulo, Brazil with approximately 110,000
members. On August 1, 2006, the contract became effective. At the end of fiscal
year December 31, 2007, we had installed 167 POS terminals into CABESP provider
locations and 255 IVR and 297 Web solutions. When fully rolled out, we
anticipate that the CABESP installed base will consist of 900 POS terminals and
up to 900 IVR (Interactive Voice Response) solutions and is expected to produce
70,000 transactions per month. During fiscal year ended 2007, we processed
297,097 transactions for CABESP. The current contract with CABESP expired in
March 2008 is currently under re-negotiation.

OTHER CONTRACTS

During 2007, we signed three contracts for the provisions of Connectivity
services covering approximately 225,000 lives. As of December 31, 2007 none of
these contracts have become "live" to generate any revenues. However,
preliminary consulting work in respect for development of an authorizer for
these companies had commenced.

COMPETITION

The information network solutions market for the healthcare providers and health
insurance companies is characterized by rapidly evolving technology and intense
competition. Many companies of all sizes, including a number of large technology
companies, such as IBM, Siemens, Visanet and EDS, as well as several specialized
healthcare information management companies, are developing various products and
services. There may be products on the market that do or will compete directly
with the products and services that we are seeking to develop. These companies
may also compete with us in recruiting qualified personnel. Many of our
potential competitors have substantially greater financial, research and
development, human and other resources than we do.

Furthermore, the larger companies may have significantly more experience than we
do in developing such products and services. Such competitors may: (i) develop
more efficient and effective products and services; (ii) obtain patent
protection or intellectual property rights that may limit our ability to
commercialize our products or services; or (iii) commercialize products and
services earlier than we do.

We expect technology developments in the healthcare information management and
technology industry to continue to occur at a rapid pace. Commercial
developments by any competitors may render some or all of our potential products
or services obsolete or non-competitive, which could materially harm our
business and financial condition.

                                       10
<PAGE>

We believe that the following Brazilian companies, which have developed or are
developing various types of similar products or services, could be our major
competitors: (i) Polimed Ltda, which offers two modalities for the authorization
software. During November 2006, Polimed Ltda was acquired by a wholly-owned
subsidiary of Visanet in Brazil . Visanet is 40% owned by Bradesco Bank, our
largest client (ii) Connectmed, which offers Internet connectivity services; and
(iii) Salutia, which offers a connectivity system with software to be installed
and integrated to the management systems, similar to our MedLink Solution Web
and MedLink Solution Server and related technologies.

We believe, however, that our Health Management information Products and related
services and solutions for the healthcare providers and health insurance
companies represent an unique approach and has certain competitive advantages as
follows:

i)    the MedLink Solution significantly reduces medical administrative
      procedures and costs through connecting in real time individual healthcare
      provider locations to health insurance companies;

ii)   irrespective of the choice of connectivity or the method of transmission,
      MedLink provides a secure and reliable service where healthcare providers
      can automatically verify patient eligibility, receive authorization for
      the performance of approved medical procedures and process a paperless
      claim electronically with each insurance provider it interacts with,
      provided they are subscribed to the network;

iii)  once connected to the network, MedLink Solution provides numerous benefits
      to doctors and private health insurance companies including the automation
      of their paper-based clerical duties; and;

iv)   by using MedLink Solution, many of these cumbersome tasks can be processed
      electronically in seconds, virtually eliminating processing costs,
      paperwork, and the high risks associated with fraud.

GOVERNMENT REGULATION

As of the date of this Annual Report, none of our software products or services
are regulated by the U.S. Department of Health. However, there is substantial
state and federal regulation of the confidentiality of patient medical records
and the circumstances under which such records may be used, disclosed to or
processed by us as a consequence of our contacts with various healthcare
providers and health insurance companies. Although compliance with these laws
and regulations is presently the principal responsibility of covered entities,
including hospitals, physicians or other healthcare providers, regulations
governing patient confidentiality rights are rapidly evolving.

Additional federal and state legislation governing the dissemination of medical
record information may be adopted which could have a material effect on our
business. Those laws, including HIPAA and ICD 10 implementation, may
significantly affect our future business and materially impact our product and
service development, revenue and working capital. During the past several years,
the healthcare industry also has been subject to increasing levels of
governmental regulation of, among other things, reimbursement rates and certain
capital expenditures. We are unable to predict what, if any, changes will occur
as a result of such regulation.

                                       11
<PAGE>

INTELLECTUAL PROPERTY, PATENTS AND TRADEMARKS

Patents and other proprietary rights are vital to our business operations. Our
policy is to seek appropriate copyright and patent protection both in the United
States and abroad for our proprietary technologies and products. We have
acquired the license to certain intellectual property as follows:

   (i)   "MedLink" registered trade name in Brazil Registration number 820986160
         filed on August 17, 1998 with INPI Brazil; and

   (ii)  Source code for all of the MedLink Solutions, source nodes and Network
         processor source code.

Through intellectual property attorneys in the United States, we have been
advised not to apply for copyright protection for our products but possibly to
seek a process patent at a future date.

EMPLOYEES

Our subsidiary, Medlink Conectividade, employs approximately thirty-eight (37)
staff and contract personnel. Seventeen of these personnel are involved in
Operations, eleven personnel are in development, seven personnel are classified
as Administrative and finance and two are involved in Sales and Marketing of our
products. As of the date of this Annual Report, we do not employ management on a
full-time or on a part-time basis. Our President/Chief Executive Officer and
Chief Financial Officer are primarily responsible for all day-to-day operations.
Other services are provided by outsourcing and verbal management contracts. As
the need arises and funds become available, however, management may seek
employees as necessary in our best interests.

RISK FACTORS

AN INVESTMENT IN OUR COMMON STOCK INVOLVES A NUMBER OF VERY SIGNIFICANT RISKS.
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS AND UNCERTAINTIES IN ADDITION
TO OTHER INFORMATION IN EVALUATING OUR COMPANY AND ITS BUSINESS BEFORE
PURCHASING SHARES OF OUR COMMON STOCK. OUR BUSINESS, OPERATING RESULTS AND
FINANCIAL CONDITION COULD BE SERIOUSLY HARMED DUE TO ANY OF THE FOLLOWING RISKS.
THE RISKS DESCRIBED BELOW ARE ALL OF THE MATERIAL RISKS THAT WE ARE CURRENTLY
AWARE OF THAT ARE FACING OUR COMPANY. ADDITIONAL RISKS NOT PRESENTLY KNOWN TO US
MAY ALSO IMPAIR OUR BUSINESS OPERATIONS. YOU COULD LOSE ALL OR PART OF YOUR
INVESTMENT DUE TO ANY OF THESE RISKS.

RISKS RELATED TO OUR INDUSTRY

OUR BUSINESSES ARE SUBJECT TO FLUCTUATIONS IN OPERATING RESULTS DUE TO GENERAL
ECONOMIC CONDITIONS, SPECIFIC ECONOMIC CONDITIONS IN THE INDUSTRIES IN WHICH IT
OPERATES AND OTHER EXTERNAL FORCES.

         Our businesses and operations could be affected by the following, among
other factors:

   o  changes in general economic conditions and specific conditions in
      industries in which our businesses operate that can result in the deferral
      or reduction of purchases by end-use customers;
   o  the loss of significant customers;
   o  market acceptance of new products and product enhancements;
   o  announcements, introductions and transitions of new products by us or our
      competitors;
   o  changes in pricing in response to competitive pricing actions;
   o  the level of expenditures on research and development and sales and
      marketing programs;
   o  our ability to achieve cost reductions; and
   o  rising interest rates; and

                                       12
<PAGE>

IF WE FAIL TO INTRODUCE ENHANCEMENTS TO OUR EXISTING PRODUCTS OR TO KEEP ABREAST
OF TECHNOLOGICAL CHANGES IN OUR MARKETS, OUR BUSINESS AND RESULTS OF OPERATIONS
COULD BE ADVERSELY AFFECTED.

       Although certain technologies in the industries that we occupy are well
established, we believe our future success depends in part on our ability to
enhance our existing products and develop new products in order to continue to
meet customer demands. Our failure to introduce new or enhanced products on a
timely and cost-competitive basis, or the development of processes that make our
existing technologies or products obsolete, could harm our business and results
of operations.

THE HEALTHCARE INFORMATION MANAGEMENT AND TECHNOLOGY MARKET IS HIGHLY FRAGMENTED
AND CHARACTERIZED BY ON-GOING TECHNOLOGICAL DEVELOPMENTS, EVOLVING INDUSTRY
STANDARDS AND RAPID CHANGES IN CUSTOMER REQUIREMENTS AND WE MAY NOT
SUCCESSFULLY, OR IN A TIMELY MANNER, DEVELOP, ACQUIRE, INTEGRATE, INTRODUCE OR
MARKET NEW PRODUCTS OR PRODUCT ENHANCEMENTS.

The healthcare information management and technology market is highly fragmented
and characterized by on-going technological developments, evolving industry
standards and rapid changes in customer requirements. Our success depends on our
ability to timely and effectively: (i) offer a broad range of software products;
(ii) enhance existing products and expand product offerings; (iii) respond
promptly to new customer requirements and industry standards; (iv) remain
compatible with popular operating systems and develop products that are
compatible with the new or otherwise emerging operating systems; and (v) develop
new interfaces with healthcare provider organizations to fully integrate our
products and services in order to maximize features and functionality.

Our performance depends in large part on our ability to provide the increasing
functionality required by its customers through the timely development and
successful introduction of new products and enhancements to existing products.
We may not successfully, or in a timely manner, develop, acquire, integrate,
introduce or market new products or product enhancements.

Product enhancements or new products developed by us may not meet the
requirements of hospital or other healthcare providers or health insurance
companies or achieve or sustain market acceptance. Our failure to either
estimate accurately the resources and related expenses required for a project,
or to complete its contractual obligations in a manner consistent with the
project plan upon which a contract is based, could have a material adverse
effect on our business, financial condition, and results of operations. In
addition, our failure to meet a customer's expectations in the performance of
our services and products could damage our reputation and adversely affect our
ability to attract new business.

THE BRAZILIAN GOVERNMENT REGULATES THE OPERATIONS OF BRAZILIAN INSURANCE
COMPANIES, AND CHANGES IN PREVAILING LAWS AND REGULATIONS OR THE IMPOSITION OF
NEW ONES MAY ADVERSELY AFFECT OUR PERATIONS AND RESULTS

Brazilian insurance companies are subject to extensive and continuous regulatory
review by the Brazilian Government. We have no control over government
regulations which may affect our industry and our operations. The regulatory
structure governing Brazilian insurance companies is continuously evolving, and
the laws and regulations could be amended. Besides, the enforcement or
interpretation of laws and regulations could change, and new laws and
regulations could be adopted. Such changes could materially affect in a negative
manner our operations and our results.

                                       13
<PAGE>

WE MAY BE REQUIRED TO MAKE SUBSTANTIAL CHANGES TO OUR PRODUCTS IF THEY BECOME
SUBJECT TO GOVERNMENTAL REGULATION.

None of our Health Information Management Products are subject to regulation by
the United States' federal government or Brazil. Computer products used or
intended for use in the diagnosis, cure, mitigation, treatment or prevention of
disease or other conditions or that affect the structure or function of the body
are subject to regulation by the U.S. Department of Health. In the future,
however, the U.S. Department of Health could determine that some of our products
(because of their predictive aspects) may be clinical decision tools and subject
them to regulation. Compliance with Brazilian and U.S. Department of Health
regulations such as Brazil TISS and HIPAA could be burdensome, time consuming
and expensive. In Brazil, TISS is a national standard for electronic form
interchange proposals, based on XML technology, known as the supplementary
health information interchange (TISS - "Troca de Informacao em Saude
Suplementar").

Other new laws and regulations affecting healthcare software development and
marketing could also be enacted in the future. If so, it is possible that our
costs and the length of time for product development and marketing could
increase and that other unforeseeable consequences could arise.

GOVERNMENT REGULATION OF HEALTHCARE INFORMATION DELIVERY SYSTEMS MAY AFFECT
HEALTHCARE PROVIDERS' DECISIONS WHICH COULD RESULT IN UNPLANNED PRODUCT
ENHANCEMENTS, DELAYS, OR CANCELLATIONS OF PRODUCT ORDERS OR SHIPMENTS, OR REDUCE
THE NEED FOR CERTAIN SYSTEMS.

During the past several years, the healthcare industry within the United States
and other countries has been subject to changing political, economic and
regulatory influences and to increasing levels of governmental regulation. These
regulations, if enacted, could change the operating environment for any of our
customers within Brazil that could have a negative impact on our business,
financial condition and results of operations. We are unable to predict what, if
any, changes will occur.

Changes in current healthcare financing, reimbursement systems and procurement
practices could result in unplanned product enhancements, delays, or
cancellations of product orders or shipments, or reduce the need for certain
systems.

Consolidation in the healthcare industry, particularly in the hospital and
managed care markets, could decrease the number of potential purchasers of our
Health Information Management Products and adversely affect our business. In
addition, the decision to purchase such products generally involves a committee
approval. Consequently, it is difficult for us to predict the timing or outcome
of the buying decisions of our potential customers.

WE MAY EXPERIENCE PRICE REDUCTIONS, REDUCED GROSS MARGINS AND LOSS OF MARKET
SHARE IT WE ARE UNABLE TO SUCCESSFULLY COMPETE.

Competition for our products and services is intense and is expected to
increase. Increased competition could result in reductions in our prices, gross
margins and market share, and could have a material adverse effect on our
business, financial condition and results of operations. We compete with other
providers of healthcare information software and services, as well as healthcare
consulting firms. Some competitors may have formed business alliances with other
competitors that may affect our ability to work with some potential customers.
In addition, if some of our competitors merge, a stronger competitor may emerge.
Some principal competitors include: Polimed (Visanet), Connectmed and Salutia,
major software information systems companies, including those specializing in
the healthcare industry, may not presently offer competing products but may in
the future enter our market. Many of our competitors and potential competitors
have significantly greater financial, technical, product development, marketing
and other resources, and market recognition than we have.

                                       14
<PAGE>

Many of these competitors also have, or may develop or acquire, substantial
installed customer bases in the healthcare industry. As a result of these
factors, our competitors may be able to respond more quickly to new or emerging
technologies, changes in customer requirements, and changes in the political,
economic or regulatory environment in the healthcare industry. These competitors
may be in a position to devote greater resources to the development, promotion
and sale of their products than we can. We may not be able to compete
successfully against current and future competitors, and such competitive
pressures could materially adversely affect our business, financial condition
and operating results.

RISKS RELATING TO OUR BUSINESS

WE HAVE BEEN THE SUBJECT OF A GOING CONCERN OPINION FROM OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM, WHICH MEANS THAT WE MAY NOT BE ABLE TO
CONTINUE OPERATIONS UNLESS WE OBTAIN ADDITIONAL FUNDING.

Our independent registered public accounting firm has added a "going concern"
statement to their audit report for fiscal years ended December 31, 2007 and
2006, which states that we will need additional working capital to be successful
and to service our current debt for the coming year and, therefore, our
continuation as a going concern is dependent upon obtaining the additional
working capital necessary to accomplish our objectives. Our inability to obtain
adequate financing will result in the need to curtail business operations and
you could lose your entire investment. Our financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

Our management anticipates that we will incur net losses for the immediate
future, and expect our operating expenses to increase significantly, and, as a
result, we will need to generate monthly revenue if we are to continue as a
going concern. To the extent that we do not generate revenue, that we do not
obtain additional funding, that our stock price does not increase, and that we
are unable to adjust operating expense levels accordingly, we may not have the
ability to continue on as a going concern.

WE HAVE A WORKING CAPITAL DEFICIT AND IF WE ARE UNABLE TO RAISE ADDITIONAL
CAPITAL WE WILL NEED TO CURTAIL BUSINESS OPERATIONS.

We had a working capital deficit of $4,626,920 and $4,394,389 at December 31,
2007 and 2006, respectively, and continue to need cash for operations. At
December 31, 2007, we have an accumulated deficit of $13,313,435. We have relied
on external financing and cash flow from operations to fund our working capital
needs. As at December 31, 2007, we had $175,938 in cash on hand, total current
assets were $941,327, and our total current liabilities were $5,568,247. We will
need to raise additional capital to fund our anticipated operating expenses and
future expansion. Among other things, external financing may be required to
cover our operating costs. Unless we achieve profitable operations, it is
unlikely that we will be able to secure additional financing from external
sources. If we are unable to secure additional financing, we believe that we
will not have sufficient funds to continue operations. We estimate that we will
require $1,000,000 to $3,000,000 of financing to fund our anticipated operating
expenses for the next twelve (12) months. The sale of our common stock to raise
capital may cause dilution to our existing shareholders. Any of these events
would be materially harmful to our business and may result in a lower stock
price. Our inability to obtain adequate financing will result in the need to
curtail business operations and you could lose your entire investment. Our
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

                                       15
<PAGE>

WE WILL REQUIRE ADDITIONAL FUND AND FUTURE ACCESS TO CAPITAL IS UNCERTAIN AND WE
MAY HAVE TO DELAY, REDUCE OR ELIMINATE CERTAIN BUSINESS OPERATIONS.

It is expensive to develop and commercialize Health Information Management
Products. We plan to continue to conduct research and development, which is
costly. Our product development efforts may not lead to new commercial products,
either because our products fail to be found effective or because we lack the
necessary financial or other resources or relationships to pursue
commercialization. Our capital and future revenues may not be sufficient to
support the expenses of its business operations and the development of
commercial infrastructure. We may need to raise additional capital to: (i) fund
operations; (ii) continue the research and development of Health Information
Management Products; and (iii) commercialize our products.

We may not be able to obtain additional financing on favorable terms or at all.
If we are unable to raise additional funds, we may have to delay, reduce or
eliminate certain business operations. If we raise additional funds by issuing
equity securities, further dilution to our existing stockholders will result.

BECAUSE WE ARE DEPENDENT UPON A FEW MAJOR CUSTOMERS FOR SUBSTANTIALLY ALL OF OUR
CURRENT SALES, THE LOSS OF ANY ONE OF THEM WOULD REDUCE OUR REVENUES, LIQUIDITY
AND HINDER OUR ABILITY TO BECOME PROFITABLE, AS SUCH, WE MAY HAVE TO CEASE
OPERATIONS AND INVESTORS MAY LOSE THEIR INVESTMENT.

Significant portions of our revenues to date have been, and will continue to be,
made through a small number of significant customers. We had net revenues to two
major customers during each of the years ended December 31, 2007 and 2006 that
accounted for approximately 88%, or $4,548,000 and 91% or $3,787,000 of the net
revenues for the years 2007 and 2006, respectively. In 2007, these two major
customers accounted for 49% and 39% of net revenues, respectively. In 2006,
these two major customers accounted for 52% and 39% of net revenues,
respectively. At December 31, 2007, these two major customers accounted for 47%
and 35%, respectively, of the total accounts receivable balance outstanding.
During December 2007, due to operational reasons, Bradesco, our largest
customer, only provided a renewal of the company's current contract to provide
connectivity services for six months until to June 2008. There is no guarantee
that we will provide connectivity services to Bradesco after June 2008.Any
disruption in our relationships with one or more of these customers, or any
significant variance in the magnitude or the timing of orders from any one of
these customers, may result in decreases in our results of operations, liquidity
and cash flows. Any such adverse operating results will likely decrease the
market price of our common stock.

MEDLINK CONECTIVIDADE, OUR WHOLLY-OWNED SUBSIDIARY, OWES TO THE BRAZILIAN
GOVERNMENT MONEY FOR PAYROLL TAXES AND SOCIAL SECURITY TAXES. FAILURE TO PAY
SUCH PAYROLL AND SOCIAL SECURITY TAXES TO THE BRAZILIAN AUTHORITIES WHEN
REQUIRED TO DO SO COULD RESULT IN ADDITIONAL LIABILITIES.

Since fiscal 2000, we have been deficient in the payment of Brazilian payroll
taxes and social security taxes. At December 31, 2007 and 2006, these
deficiencies (including interest and fines) amounted to approximately $1,080,000
and $758,900, respectively. These tax liabilities are included as part of the
accounts payable and accrued expenses within the consolidated balance sheets.

We entered into a number of payment programs with the Brazilian authorities
whereby the social security taxes due, Severance Fund Taxes due, plus other
taxes and applicable penalties and interest will be repaid over periods of
between eighteen (36) and sixty (60) months. The payment program requires us to
pay a monthly fixed amount of the four taxes negotiated. Discussions are
currently ongoing for us to enter into a similar payment plan for the remainder
of the payroll tax liabilities. We continue to make the required payments. As of
the date of this Annual Report, we are current in all monthly payments. However,
there is no certainty that the Brazilian authorities will enter into a similar
plan in the future.

                                       16
<PAGE>

FAILURE TO ACCURATELY ASSESS, PROCESS OR COLLECT HEALTHCARE CLAIMS OR ADMINISTER
CONTRACTS COULD SUBJECT US TO COSTLY LITIGATION AND FORCE US TO MAKE COSTLY
CHANGES TO OUR PRODUCTS.

Our products and services are used in the payment, collection, coding and
billing of healthcare claims and the administration of managed care contracts.
If our products and services fail to accurately assess, possess or collect these
claims, customers could file claims against us. As of the date of this Annual
Report, we do not carry insurance coverage to cover such claims or, if we carry
such insurance coverage in the future, such insurance coverage may not be
adequate to cover such claims. A successful claim that is not covered by or is
in excess of insurance coverage could adversely affect our business, financial
condition, and results of operations. Even a claim without merit could result in
significant legal defense costs and could consume management time and resources.

In addition, claims could increase insurance premiums such that appropriate
insurance cannot be found at commercially reasonable rates. Furthermore, if we
were found liable, we may have to significantly alter one or more of our
products, possibly resulting in additional unanticipated research and
development expenses.

THE NATURE OF OUR PRODUCTS MAKES US VULNERABLE TO UNDETECTED ERRORS THAT COULD
REDUCE REVENUES, MARKET SHARE OR DEMAND.

Health Information Management Products may contain errors or failures,
especially when initially introduced or when new versions are released. Although
we conduct extensive testing of our products and services, software errors could
be discovered in certain enhancements and products after their introduction.
Despite such testing by us and by our current and potential customers, products
under development, enhancements or shipped products may contain errors or
performance failures resulting in, among other things: (i) loss of customers and
revenue; (ii) delay in market acceptance; (iii) diversion of resources; (iv)
damage to our reputation; or (v) increased service costs. Any of these
consequences could have a material adverse effect on our business, financial
condition and results of operations.

THE INABILITY TO PROTECT OUR INTELLECTUAL PROPERTY COULD LEAD TO UNAUTHORIZED
USE OF OUR PRODUCTS.

We rely on a combination of trade secrets, copyright and trademark laws,
nondisclosure, non-compete and other contractual provisions to protect our
proprietary rights. Measures taken by us to protect our intellectual property
may not be adequate, and our competitors could independently develop products
and services that are substantially equivalent or superior to our products and
services. Any infringement or misappropriation of our proprietary software and
databases could put us at a competitive disadvantage in a highly competitive
market and could cause us to lose revenues, incur substantial litigation
expense, and divert management's attention from other operations. Intellectual
property litigation is increasingly common in the software industry.

Therefore, the risk of an infringement claim against us may increase over time
as the number of competitors in the industry segment grows and the functionality
of products overlaps. Third parties could assess infringement claims against us
in the future. Regardless of the merits, we could incur substantial litigation
expenses in defending any such asserted claim. In the event of an unfavorable
ruling on any such claim, such an infringement may result in significant
monetary liabilities that could have a material adverse effect on the business.

In the event of an unfavorable ruling on any such claim, a license or similar
agreement may also not be available to use on reasonable terms, if at all. We
may not be successful in the defense of these or similar claims.

                                       17
<PAGE>

FAILURE TO RETAIN KEY PERSONNEL COULD IMPEDE OUR ABILITY TO COMMERCIALIZE OUR
PRODUCTS, MAINTAIN THE LICENSE AGREEMENT OR OBTAIN SOURCES OF FUNDS.

We depend to a significant extent on the efforts of Mr. Stephen Walters, our
President, Chief Executive Officer and a director, and on the efforts of our
research and development personnel. The development of Health Information
Management Products requires expertise from a number of different disciplines,
some of which are not widely available. The quality and reputation of our
research and development personnel, including our executive officers, and their
success in performing their responsibilities, may directly influence our
success. In addition, Mr. Walters is involved in a broad range of critical
activities, including providing strategic and operational guidance. The loss of
Mr. Walters or our inability to retain or recruit other key management and
research and development personnel may delay or prevent us from achieving our
business objectives. We face intense competition for personnel from other
companies, public and private research institutions, government entities and
other organizations. We do not employ management on a full-time or part-time
basis and do not have a written employment agreement with Mr. Walters. In
addition, we do not maintain any key man life insurance policies on Mr. Walters.

IF WE FAIL TO MAINTAIN THE ADEQUACY OF OUR INTERNAL CONTROLS, OUR ABILITY TO
PROVIDE ACCURATE FINANCIAL STATEMENTS AND COMPLY WITH THE REQUIREMENTS OF THE
SARBANES-OXLEY ACT OF 2002 COULD BE IMPAIRED, WHICH COULD CAUSE OUR STOCK PRICE
TO DECREASE SUBSTANTIALLY.

We have committed limited personnel and resources to the development of the
external reporting and compliance obligations that would be required of a public
company. Recently, we have taken measures to address and improve our financial
reporting and compliance capabilities and we are in the process of instituting
changes to satisfy our obligations in connection with joining a public company,
when and as such requirements become applicable to us. Prior to taking these
measures, we did not believe we had the resources and capabilities to do so. We
plan to obtain additional financial and accounting resources to support and
enhance our ability to meet the requirements of being a public company. We will
need to continue to improve our financial and managerial controls, reporting
systems and procedures, and documentation thereof. If our financial and
managerial controls, reporting systems or procedures fail, we may not be able to
provide accurate financial statements on a timely basis or comply with the
Sarbanes-Oxley Act of 2002 as it applies to us. Any failure of our internal
controls or our ability to provide accurate financial statements could cause the
trading price of our common stock to decrease substantially.

RISKS RELATED TO DOING BUSINESS IN BRAZIL

BRAZILIAN POLITICAL AND ECONOMIC CONDITIONS HAVE DIRECT IMPACT ON OUR BUSINESS
AND ON THE MARKET VALUE OF OUR STOCK

All of our operations and clients are located in Brazil. Accordingly, our
financial condition and results of operations are substantially dependent on the
Brazilian economy, which in the past has been characterized both by frequent
intervention of the Brazilian Government and volatile economic cycles. In
addition, our financial condition and the market value of our stock may also be
adversely affected by changes in policies involving exchange and tax controls,
as well as factors such as: fluctuations in exchange rates, interest rates,
inflation rates and other political, diplomatic, social and economic events
inside and outside Brazil that affect the country.

We cannot control or predict which measures or policies the Brazilian Government
may take in response to the current or future situation of the Brazilian economy
or how these measures or policies may affect the Brazilian economy and, both
directly and indirectly, our operations and revenues.

                                       18
<PAGE>

IF BRAZIL UNDERGOES A PERIOD OF HIGH INFLATION IN THE FUTURE, OUR REVENUES AND
THE MARKET VALUE OF OUR STOCK MAY BE REDUCED

In the last 15 years, Brazil has faced periods of extremely high inflation
rates. Moreover, recently, Brazil's inflation rates were 1.2% in 2005, 3.8% in
2006 and 7.9% in 2007. Inflation and governmental measures to combat it have had
in past years significant negative effects on the Brazilian economy. In
addition, public speculation about possible future measures has also contributed
to economic uncertainty in Brazil and to heightened volatility in the Brazilian
securities markets. If Brazil suffers a period of high inflation in the future,
our costs may increase, our operating and net margins may decrease and, if
investor's confidence lags, the price of our stocks may drop. Inflationary
pressures may curtail our ability to access foreign financial markets and may
occasionally lead to further government interventions in the economy, including
the implementation of policies that may adversely affect the overall performance
of the Brazilian economy.

ACCESS TO INTERNATIONAL CAPITAL MARKETS BY COMPANIES OPERATING IN BRAZIL IS
INFLUENCED BY THE PERCEPTION OF RISK IN EMERGING ECONOMIES WHICH MAY HARM OUR
ABILITY TO FINANCE OUR OPERATIONS

The market of securities issued by companies operating in Brazil is influenced
by economic and market conditions in Brazil and, at different levels, by the
market conditions in other Latin American countries and other emerging
countries. Although economic conditions in these countries may significantly
differ from the Brazilian economic conditions, the investors' reaction to events
in these countries may have an adverse effect on the market value of the
Brazilian companies' securities. Crises in other emerging countries or economic
policies in other countries, especially in the United States and European Union
countries, may reduce the demand of investors for Brazilian companies'
securities, including ours. Any of the events described above may negatively
affect the market price of our stocks and make harder, or even prevent, our
access to capital markets and our financing in future operations in acceptable
conditions.

RISKS RELATED TO OUR COMMON STOCK

MARKET VOLATILITY MAY AFFECT OUR STOCK PRICE AND THE VALUE OF A SHAREHOLDER'S
INVESTMENT IN OUR COMMON STOCK MAY BE SUBJECT TO SUDDEN DECREASES.

The trading price for our shares of common stock has been, and we expect it to
continue to be, volatile. The price at which our common stock trades depends on
a number of factors, including the following, many of which are beyond our
control:

   (i)   historical and anticipated operating results, including fluctuations in
         financial and operating results;

   (ii)  the market perception of the prospects for health information
         management network solutions companies as an industry sector;

   (iii) general market and economic conditions;

   (iv)  changes in government regulations affecting product approvals,
         reimbursement or other aspects of our and/or competitors' businesses;

   (v)   announcements of technological innovations or new commercial products
         by us or our competitors;

   (vi)  developments concerning our contractual relations with our executive
         officers, executive management and intellectual property rights

   (vii) announcements regarding significant collaborations or strategic
         alliances.

                                       19
<PAGE>

In addition, the stock market has from time to time experienced extreme price
and volume fluctuations. These broad market fluctuations may lower the market
price of our common stock and affect the volume of trading in the stock. During
periods of stock market price volatility, share prices of many health
information management network solution companies have often fluctuated in a
manner not necessarily related to their individual operating performance.
Accordingly, our common stock may be subject to greater price volatility than
the stock market as a whole. See "Item 5. Market for Common Equity and Related
Stockholder Matters."

FUTURE SALES BY OUR STOCKHOLDERS MAY ADVERSELY AFFECT OUR STOCK PRICE AND OUR
ABILITY TO RAISE FUNDS IN NEW STOCK OFFERINGS.

Sales of our common stock in the public market could lower the market price of
our common stock. Sales may also make it more difficult for us to sell equity
securities or equity-related securities in the future at a time and price that
our management deems acceptable or at all. Of the 39,774,341 shares of common
stock outstanding as of the date of this Annual Report, 19,282,863 shares are
freely tradable without restriction, unless held by our "affiliates". The
remaining 20,491,478 shares of common stock which will be held by existing
stockholders, including the officers and directors, are "restricted securities"
and may be resold in the public market only if registered or pursuant to an
exemption from registration. Some of these shares may be resold under Rule 144.
In addition, as of December 31, 2007, if exercised or converted, we may issue
6,250,000 shares underlying the Debenture, up to 11,902,500 shares of common
stock underlying the warrants, up to 3,425,000 shares underlying stock options,
31,141,815 shares underlying our Series A Preferred stock, and up to 1,400,000
shares of common stock upon conversion of related party debt.

THERE ARE A LARGE NUMBER OF SHARES UNDERLYING OUR SERIES A PREFERRED STOCK THAT
MAY BE AVAILABLE FOR FUTURE SALE AND THE SALE OF THESE SHARES MAY DEPRESS THE
MARKET PRICE OF OUR COMMON STOCK.

As of the date of this Annual Report, we have 39,774,341 shares of common stock
issued and outstanding and 14,788 shares of our Series A Preferred stock issued
and outstanding. In addition, the number of shares of common stock issuable upon
conversion of the outstanding Series A Preferred stock may increase if the
market price of our stock declines. All of the shares, including all of the
shares issuable upon conversion of the Series A Preferred Shares, may be sold
without restriction. The sale of these shares may adversely affect the market
price of our common stock.

THE CONTINUOUSLY ADJUSTABLE CONVERSION PRICE FEATURE OF OUR SERIES A PREFERRED
STOCK COULD REQUIRE US TO ISSUE A SUBSTANTIALLY GREATER NUMBER OF SHARES, WHICH
WILL CAUSE DILUTION TO OUR EXISTING SHAREHOLDERS.

The number of shares of common stock issuable upon conversion of our Series A
Preferred Stock will increase if the market price of our common stock declines,
which will cause dilution to our existing stockholders. Our obligation to issue
shares upon conversion of our Series A Preferred stock is essentially limitless
if the trading price per common share declines towards zero as the number of
Series A Preferred stock convertible into common stock is based on the trading
price per common share.

THE CONTINUOUSLY ADJUSTABLE CONVERSION PRICE FEATURE OF OUR SERIES A PREFERRED
STOCK MAY ENCOURAGE INVESTORS TO MAKE SHORT SALES IN OUR COMMON STOCK, WHICH
COULD HAVE A DEPRESSIVE EFFECT ON THE PRICE OF OUR COMMON STOCK.

The shares of Series A Preferred stock are convertible into common stock at any
time by dividing the dollar amount being converted by the lower of $0.192 or
eighty percent (80%) of the lowest daily volume weighted average of our common
stock, as determined by price quotations from Bloomberg, LP, during the ten (10)
trading days immediately preceding the date of conversion.

                                       20
<PAGE>

The significant downward pressure on the price of the common stock as the
selling stockholder converts and sells material amounts of common stock could
encourage short sales by investors. This could place further downward pressure
on the price of the common stock. In addition, not only the sale of shares
issued upon conversion of preferred stock, but also the mere perception that
these sales could occur, may adversely affect the market price of the common
stock.

THE HOLDER OF THE DEBENTURE AND SERIES A PREFERRED STOCK HAVE THE OPTION OF
CONVERTING THE PRINCIPAL OUTSTANDING UNDER THE DEBENTURE INTO SHARES OF OUR
COMMON STOCK. IF THE HOLDER CONVERTS THE DEBENTURE AND THE SERIES A PREFERRED
STOCK, THERE WILL BE DILUTION OF YOUR SHARES OF OUR COMMON STOCK.

The conversion of the Debenture and the Series A Preferred Stock will result in
dilution to the interests of other holders of our common stock since the holders
may ultimately convert the full amount of the Debenture and the Series A
Preferred Stock and sell all of these shares into the public market.

The following table sets forth the number and percentage of shares of our common
stock that would be issuable if the holders of the Debenture and the shares of
Series A Preferred Stock converted at conversion prices of $0.20, $0.15, $0.10,
$0.05, $0.03 and $0.01 (the conversion price shall be equal to the lesser of (i)
one hundred twenty percent (120%) of the closing bid price of our common stock
on April 1, 2005 and (ii) eighty percent (80%) of the lowest closing bid price
of the common stock for five (5) trading days immediately preceding the
conversion date):

                             NUMBER OF SHARES
                                 ISSUABLE              PERCENTAGE OF ISSUED
    CONVERSION PRICE         ON CONVERSION (1)         AND OUTSTANDING (2)
    ----------------         -----------------         --------------------
         $0.20                    8,790,000                   18.09%
         $0.15                   11,720,000                   22.76%
         $0.10                   17,580,000                   30.65%
         $0.05                   35,160,000                   46.92%
         $0.03                   58,600,000                   59.57%
         $0.01                  175,800,000                   81.55%

(1) Represents the number of shares issuable if the principal amount of the
Debenture and the shares of Series A Preferred Stock were converted at the
corresponding conversion price.

(2) Represents the percentage of the total outstanding common stock that the
shares issuable on conversion of the Debenture and the shares of Series A
Preferred Stock without regard to any contractual or other restriction on the
number of securities the stockholder may own at any point in time (including a
4.99% ownership limitation set forth in the Debenture) and based on 39,774,341
shares issued and outstanding as of the date of this Annual Report.

OUR COMMON STOCK IS SUBJECT TO THE "PENNY STOCK" RULES OF THE SECURITIES AND
EXCHANGE COMMISSION AND THE TRADING MARKET IN OUR SECURITIES IS LIMITED, WHICH
MAKES TRANSACTIONS IN OUR STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN
INVESTMENT IN OUR STOCK.

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes
the definition of a "penny stock", for the purposes relevant to us, as any
equity security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions. For
any transaction involving a penny stock, unless exempt, the rules require: (i)
that a broker or dealer approve a person's account for transactions in penny
stocks; and (ii) the broker or dealer receive from the investor a written
agreement to the transaction, setting forth the identity and quantity of the
penny stock to be purchased.

                                       21
<PAGE>

In order to approve a person's account for transactions in penny stocks, the
broker or dealer must: (i) obtain financial information and investment
experience objectives of the person; and (ii) make a reasonable determination
that the transactions in penny stocks are suitable for that person and the
person has sufficient knowledge and experience in financial matters to be
capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prescribed by the SEC relating to the penny stock
market, which, in highlight form: (i) sets forth the basis on which the broker
or dealer made the suitability determination; and (ii) that the broker or dealer
received a signed, written agreement from the investor prior to the transaction.

Generally, brokers may be less willing to execute transactions in securities
subject to the "penny stock" rules. This may make it more difficult for
investors to dispose of our common stock and cause a decline in the market value
of our stock.

Disclosure also has to be made about the risks of investing in penny stocks in
both public offerings and in secondary trading and about the commissions payable
to both the broker-dealer and the registered representative, current quotations
for the securities and the rights and remedies available to an investor in cases
of fraud in penny stock transactions. Finally, monthly statements have to be
sent disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stocks.

WE MAY BE EXPOSED TO POTENTIAL RISKS RELATING TO OUR INTERNAL CONTROLS OVER
FINANCIAL REPORTING AND OUR ABILITY TO HAVE THOSE CONTROLS ATTESTED TO BY OUR
INDEPENDENT AUDITORS.

As directed by Section 404 of the Sarbanes-Oxley Act of 2002 ("SOX 404"), the
Securities and Exchange Commission adopted rules requiring small business
issuers, such as us, to include a report of management on our internal controls
over financial reporting in our annual reports for fiscal years ending on or
after December 15, 2007. Such report is contained later in this Annual Report
under Item 8A(T). Controls and Procedures. In addition, unless the pending one
year delay proposed by the SEC is adopted, for our fiscal year ending December
31, 2008, the independent registered public accounting firm auditing our
financial statements must also attest to and report on management's assessment
of the effectiveness of our internal controls over financial reporting as well
as the operating effectiveness of our internal controls. In the event we are
unable to receive a positive attestation from our independent auditors with
respect to our internal controls, investors and others may lose confidence in
the reliability of our financial statements and our ability to obtain financing
as needed could suffer.

A DECLINE IN THE PRICE OF OUR COMMON STOCK COULD AFFECT OUR ABILITY TO RAISE
FURTHER WORKING CAPITAL AND ADVERSELY IMPACT OUR OPERATIONS.

A decline in the price of our common stock could result in a reduction in the
liquidity of our common stock and a reduction in our ability to raise additional
capital for our operations. Because a portion of our operations to date have
been financed through the sale of equity securities, a decline in the price of
our common stock could have an adverse effect upon our liquidity and our
continued operations. A reduction in our ability to raise equity capital in the
future would have a material adverse effect upon our business plan and
operations, including our ability to continue our current operations. If our
stock price declines, we may not be able to raise additional capital or generate
funds from operations sufficient to meet our obligations.

                                       22
<PAGE>

THE TRADING PRICE OF OUR COMMON STOCK ON THE OTC BULLETIN BOARD HAS BEEN AND MAY
CONTINUE TO FLUCTUATE SIGNIFICANTLY AND STOCKHOLDERS MAY HAVE DIFFICULTY
RESELLING THEIR SHARES.

During 2007, our common stock has traded as low as $0.035 and as high as $0.13
In addition to volatility associated with Bulletin Board securities in general,
the value of your investment could decline due to the impact of any of the
following factors upon the market price of our common stock: (i) changes in the
world wide price for oil or natural gas; (ii) disappointing results from our
discovery or development efforts; (iii) failure to meet our revenue or profit
goals or operating budget; (iv) decline in demand for our common stock; (v)
downward revisions in securities analysts' estimates or changes in general
market conditions; (vi) technological innovations by competitors or in competing
technologies; (vii) lack of funding generated for operations; (viii) investor
perception of our industry or our prospects; and (ix) general economic trends.

In addition, stock markets have experienced price and volume fluctuations and
the market prices of securities have been highly volatile. These fluctuations
are often unrelated to operating performance and may adversely affect the market
price of our common stock. As a result, investors may be unable to sell their
shares at a fair price and you may lose all or part of your investment.

A MAJORITY OF OUR DIRECTORS AND OFFICERS ARE OUTSIDE THE UNITED STATES, WITH THE
RESULT THAT IT MAY BE DIFFICULT FOR INVESTORS TO ENFORCE WITHIN THE UNITED
STATES ANY JUDGMENTS OBTAINED AGAINST US OR ANY OF OUR DIRECTORS OR OFFICERS.

A majority of our directors and officers are nationals and/or residents of
countries other than the United States, and all or a substantial portion of such
persons' assets are located outside the United States. As a result, it may be
difficult for investors to effect service of process on our directors or
officers, or enforce within the United States any judgments obtained against us
or our officers or directors, including judgments predicated upon the civil
liability provisions of the securities laws of the United States or any state
thereof. Consequently, you may be effectively prevented from pursuing remedies
under U.S. federal securities laws against them. In addition, investors may not
be able to commence an action in a foreign court predicated upon the civil
liability provisions of the securities laws of the United States. The foregoing
risks also apply to those experts identified in this prospectus that are not
residents of the United States.

COLORADO LAW AND OUR ARTICLES OF INCORPORATION MAY PROTECT OUR DIRECTORS FROM
CERTAIN TYPES OF LAWSUITS.

Colorado law provides that our officers and directors will not be liable to us
or our stockholders for monetary damages for all but certain types of conduct as
officers and directors. Our Bylaws permit us broad indemnification powers to all
persons against all damages incurred in connection with our business to the
fullest extent provided or allowed by law. The exculpation provisions may have
the effect of preventing stockholders from recovering damages against our
officers and directors caused by their negligence, poor judgment or other
circumstances. The indemnification provisions may require us to use our limited
assets to defend our officers and directors against claims, including claims
arising out of their negligence, poor judgment, or other circumstances.

WE DO NOT ANTICIPATE PAYING ANY CASH DIVIDENDS.

We presently do not anticipate that we will pay any dividends on any of our
capital stock in the foreseeable future. The payment of dividends, if any, would
be contingent upon our revenues and earnings, if any, capital requirements, and
general financial condition. The payment of any dividends is within the
discretion of our Board of Directors. We presently intend to retain all
earnings, if any, to implement our business plan; accordingly, we do not
anticipate the declaration of any dividends in the foreseeable future.

                                       23
<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTIES

Except as described above, we do not own any other real estate or other
properties. We lease office space in several locations as follows:

   (i)   United States: 8th Floor, 5201 Blue Lagoon Drive, Miami, Florida,33126
         USA;

   (ii)  Brazil: Praia de Botafogo # 440, 4 andar, Botafogo 22250 040, Rio de
         Janeiro, RJ Brazil; and

   (iii) Brazil: Av, Paulista, 726, conj. 1707, Bela Vista Sao Paulo, Brazil.

ITEM 3.  LEGAL PROCEEDINGS

Our Brazilian subsidiary, Medlink Conectividade, is involved litigation
pertaining to a previous provider of consultancy services regarding "breach of
contract" and two labor law suits involving employees for "unfair dismissal'
claims. At December 31, 2007, we have accrued approximately $199,000 related to
these lawsuits. The outcome of these clams is uncertain at this time.

Other than as disclosed above, we are not aware of any legal proceedings
contemplated by any governmental authority or other party involving us or our
subsidiaries or our intellectual properties. None of our directors, officers or
affiliates is: (i) a party adverse to us in any legal proceedings; or (ii) has
an adverse interest to us in any legal proceedings. We are not aware of any
other legal proceedings pending or that have been threatened against us, our
subsidiaries or our properties.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During fiscal year ended December 31, 2007, no matters were submitted to our
stockholders for approval.

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET FOR COMMON EQUITY

Shares of our common stock are traded on the Over-the-Counter Bulletin Board
under the symbol "TNSX.OB". The market for our common stock is limited, and can
be volatile. The following table sets forth the high and low sales prices
relating to our common stock on a quarterly basis for the last two fiscal years
as quoted by the FINRA. These quotations reflect inter-dealer prices without
retail mark-up, mark-down, or commissions, and may not reflect actual
transactions.

                               2006               2007               2008
                           -------------     ---------------     ---------------
                            High    Low       High     Low        High     Low
                           -----   -----     ------   ------     ------   ------
First quarter ..........   $0.16   $0.10     $0.13    $0.06      $0.067   $0.005
Second quarter .........    0.21    0.10      0.072    0.048          -        -
Third quarter ..........    0.19    0.12      0.072    0.04           -        -
Fourth quarter .........    0.17    0.07      0.062    0.035          -        -

As of the date of this Annual Report, we have approximately 186 shareholders of
record, which does not include shareholders whose shares are held in street or
nominee names. We believe that there are approximately 800 beneficial owners of
our common stock.

                                       24
<PAGE>

DIVIDEND POLICY

No dividends have ever been declared by the Board of Directors on our common
stock. Our losses do not currently indicate the ability to pay any cash
dividends, and we do not indicate the intention of paying cash dividends either
on our common stock in the foreseeable future. There are no restrictions in our
articles of incorporation or by-laws that prevent us from declaring dividends.
The Nevada Revised Statutes, however, do prohibit us from declaring dividends
where, after giving effect to the distribution of the dividend, we would not be
able to pay our debts as they become due in the usual course of business or our
total assets would be less than the sum of our total liabilities plus the amount
that would be needed to satisfy the rights of stockholders who have preferential
rights superior to those receiving the distribution.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER COMPENSATION PLANS

We have one equity compensation plan, the Transax International Limited Stock
Option Plan (the "Stock Option Plan"). The table set forth below presents the
securities authorized for issuance with respect to the Stock Option Plan under
which equity securities are authorized for issuance as of December 31, 2007:
<TABLE>
<CAPTION>
                                                                           NUMBER OF
                                                                           SECURITIES
                                                                           REMAINING
                                           NUMBER OF        WEIGHTED       AVAILABLE FOR
                                           SECURITIES TO    AVERAGE        FUTURE ISSUANCE
                                           BE ISSUED UPON   EXERCISE       UNDER EQUITY
                                           EXERCISE OF      PRICE OF       COMPENSATION
                                           OUTSTANDING      OUTSTANDING    PLANS (EXCLUDING
                                           OPTIONS,         OPTIONS,       SECURITIES
                                           WARRANTS AND     WARRANTS AND   REFLECTED IN
                                           RIGHTS (A)       RIGHTS (B)     COLUMN (A)) (C)
                                           --------------   ------------   ----------------
<S>                                        <C>              <C>            <C>
Plan category
Plans approved by shareholders:
  2004 Incentive Stock Option Plan .....      3,425,000        $ 0.25          275,000
Plans not approved by shareholders:
  Warrants .............................     11,902,500        $ 0.50             n/a
</TABLE>
STOCK OPTION PLAN

On July 22, 2003, our Board of Directors unanimously approved and adopted a
stock option plan, and during fiscal year 2004, our Board of Directors
unanimously approved and adopted a 2004 incentive stock option plan
(collectively, the "Stock Option Plan"). The purpose of the Stock Option Plan is
to advance our interests and those of our shareholders by affording our key
personnel an opportunity for investment and the incentive advantages inherent in
stock ownership. Pursuant to the provisions of the Stock Option Plan, stock
options (the "Stock Options") will be granted only to our key personnel,
generally defined as a person designated by our Board of Directors upon whose
judgment, initiative and efforts we may rely including any of our directors,
officers, employees or consultants. The Stock Option Plan provides authorization
to our Board of Directors to grant Stock Options to purchase a total number of
shares of our common stock not to exceed 4,500,000 shares and, in accordance
with the provisions of the 2004 incentive stock option plan, an additional
2,500,000 shares for an aggregate of 7,000,000 shares.

                                       25
<PAGE>

The Stock Option Plan is to be administered by our Board of Directors, which
shall determine (i) the persons to be granted Stock Options under the Stock
Option Plan; (ii) the number of shares subject to each option, the exercise
price of each Stock Option; and (iii) whether the Stock Option shall be
exercisable at any time during the option period of ten (10) years or whether
the Stock Option shall be exercisable in installments or by vesting only. At the
time a Stock Option is granted under the Stock Option Plan, our Board of
Directors shall fix and determine the exercise price at which shares of our
common stock may be acquired; provided, however, that any such exercise price
shall not be less than that permitted under the rules and policies of any stock
exchange or over-the-counter market which are applicable.

In the event an optionee who is one of our directors or officers ceases to serve
in that position, any Stock Option held by such optionee generally may be
exercisable within up to ninety (90) calendar days after the effective date that
his position ceases, and after such 90-day period any unexercised Stock Option
shall expire. In the event an optionee who is one of our employees or
consultants ceases to be employed by us, any Stock Option held by such optionee
generally may be exercisable within up to sixty (60) calendar days (or up to
thirty (30) calendar days where the optionee provided only investor relations
services to us) after the effective date that his employment ceases, and after
such 60- or 30-day period any unexercised Stock Option shall expire.

No Stock Options granted under the Stock Option Plan will be transferable by the
optionee, and each Stock Option will be exercisable during the lifetime of the
optionee subject to the option period of ten (10) years or limitations described
above. Any Stock Option held by an optionee at the time of his death may be
exercised by his estate within one (1) year of his death or such longer period
as our Board of Directors may determine.

Unless restricted by the option agreement, the exercise price shall by paid by
any of the following methods or any combination of the following methods: (i) in
cash; (ii) by cashier's check, certified check, or other acceptable banker's
note payable to us; (iii) by net exercise notice whereby the option holder will
authorize the return to the Stock Option Plan pool, and deduction from the
option holder's Stock Option, of sufficient Stock Option shares whose net value
(fair value less option exercise price) is sufficient to pay the option price of
the shares exercise (the fair value of the shares of the Stock Option to be
returned to the pool as payment will be determined by the closing price of our
shares of common stock on the date notice is delivered); (iv) by delivery to us
of a properly executed notice of exercise together with irrevocable instructions
(referred to in the industry as `delivery against payment') to a broker to
deliver to us promptly the amount of the proceeds of the sale of all or a
portion of the stock or of a loan from the broker to the option holder necessary
to pay the exercise price; of (v) such other method as the option holder and our
Board of Directors may determine as adequate including delivery of acceptable
securities (including our securities), set-off for wages or invoices due,
property, or other adequate value. In the discretion of our Board of Director,
we may grant a loan or guarantee a third-party loan obtained by an option holder
to pay part of all of the exercise option price of the shares provided that such
loan or our guaranty is secured by the shares of common stock.

INCENTIVE STOCK OPTIONS

The Stock Option Plan further provides that, subject to the provisions of the
Stock Option Plan and prior shareholder approval, our of Board of Directors may
grant to any one of our key personnel who is an employee eligible to receive
options one or more incentive stock options to purchase the number of shares of
common stock allotted by our Board of Directors (the "Incentive Stock Options").

                                       26
<PAGE>

The option price per share of common stock deliverable upon the exercise of an
Incentive Stock Option shall be no less than fair market value of a share of
common stock on the date of grant of the Incentive Stock Option. In accordance
with the terms of the Stock Option Plan, "fair market value" of the Incentive
Stock Option as of any date shall not be less than the closing price for the
shares common stock on the last trading day preceding the date of grant.

The option term of each Incentive Stock Option shall be determined by our Board
of Directors, which shall not commence sooner than from the date of grant and
shall terminate no later than ten (10) years from the date of grant of the
Incentive Stock Option, subject to possible early termination as described
above.

STOCK OPTIONS GRANTED AND EXERCISED

As of the date of this Annual Report, there are an aggregate of 3,425,000 Stock
Options granted and outstanding. During the year ended December 31, 2007, we
granted 600,000 Stock Options to our officers and directors. See "Item 10.
Executive Compensation."

COMMON STOCK PURCHASE WARRANTS

As of the date of this Annual Report, there are an aggregate of 11,902,500
common stock purchase warrants issued and outstanding.

RECENT SALES OF UNREGISTERED SECURITIES

On October 7, 2007, we issued 1,250,000 shares of its common stock upon
conversion of 550 shares of Series A preferred stock.

On November 25, 2007, we entered into a consulting agreement with Andrew
Barwicki and issued 50,000 shares of common stock for investor relations
services rendered. The Company valued these common shares at the fair market
value of $0.055 per share on the dates of grant, based on the quoted trading
price and recorded consulting expense of $2,750.

On November 25, 2007, pursuant to a Management Consulting Services Agreement
with our chief executive officer, Stephen Walters, we issued 1,000,000 shares of
common stock for services rendered. We valued these common shares at the fair
market value of $0.055 per share on the dates of grant, based on the quoted
trading price and recorded management and consulting fees - related party of
$55,000.

The shares were issued pursuant to an exemption from registration under Section
4(2) of the 1933 Securities Act.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The summarized consolidated financial data set forth in the tables below and
discussed in this section should be read in conjunction with our consolidated
financial statements and related notes for fiscal years ended December 31, 2007
and 2006, which financial statements are included elsewhere in this Annual
Report.

                                       27
<PAGE>

RESULTS OF OPERATION

YEAR ENDED DECEMBER 31, 2007 COMPARED TO YEAR ENDED DECEMBER 31, 2006

                                                          For the Year Ended
                                                             December 31,
                                                      -------------------------
                                                         2007           2006
                                                      -----------   -----------
REVENUES ...........................................  $ 5,173,544   $ 4,164,429
                                                      -----------   -----------

OPERATING EXPENSES
  Cost of product support services .................    2,072,326     1,576,563
  Compensation and related benefits ................    1,127,287     1,018,196
  Professional fees ................................      116,075       191,174
  Management and consulting fees - related partiers       471,761       498,325
  Investor relations ...............................       30,878       253,947
  Depreciation and amortization ....................      343,531       237,341
  General and administrative .......................    1,282,539     1,136,071
                                                      -----------   -----------

TOTAL OPERATING EXPENSES ...........................    5,444,397     4,911,617
                                                      -----------   -----------

LOSS FROM OPERATIONS ...............................     (270,853)     (747,188)
                                                      -----------   -----------

OTHER INCOME (EXPENSES)
  Other expenses ...................................       (6,393)      (32,843)
  Foreign exchange loss ............................      (27,348)      (16,966)
  Debt settlement and offering costs ...............            0      (153,671)
  Gain (loss) from derivative liabilities ..........      662,127      (257,560)
  Registration rights penalty ......................            0      (160,000)
  Interest expense .................................     (497,855)     (606,963)
  Interest expense - related parties ...............      (60,418)      (36,162)
                                                      -----------   -----------
                                                           70,113    (1,264,165)
                                                      -----------   -----------

LOSS BEFORE INCOME TAXES ...........................     (200,740)   (2,011,353)

PROVISION FOR INCOME TAXES .........................     (194,478)            0
                                                      -----------   -----------

NET LOSS ...........................................     (395,218)   (2,011,353)

OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized foreign currency translation gain .......      (68,690)       79,902
                                                      -----------   -----------

COMPREHENSIVE LOSS .................................  $  (463,908)  $(1,931,451)
                                                      -----------   -----------

Our net loss for the year ended December 31, 2007 was $395,118 compared to
$1,931,451 for the year ended December 31, 2006 (a decrease of $1,616,135 or
80.35%).

                                       28
<PAGE>

During fiscal year ended December 31, 2007, we generated $5,173,544 in revenues
compared to $4,164,429 in revenues generated during fiscal year ended December
31, 2006 (an increase of $1,009,115 or 24.23%). The significant increase in
revenues is due to the continue installation of our software and/or hardware
devices containing our software at the healthcare providers' locations in
Brazil. Upon installation, we begin the processing of applications submitted by
healthcare providers for approval of patients for healthcare services from the
insurance carrier. We charge for these services on a per transaction basis. We
undertook approximately 7,700,000 "real time" transactions during fiscal year
ended December 31, 2007, of which 4,900,000 were from POS terminals, 2,000,000
from PC servers, and 800,000 from interactive voice response.

During fiscal year ended December 31, 2007, we incurred operating expenses in
the aggregate amount of $5,444,397 compared to $4,911,617 incurred during fiscal
year ended December 31, 2006 (an increase of 532,780 or 10.8%). The increase in
operating expenses incurred during fiscal year ended December 31, 2007 compared
to operating expenses incurred during fiscal year ended December 31, 2006
resulted from: (i) an increase of $495,763 or 31.4% in cost of product support
services resulting from the increase in revenues; (ii) an increase of $109,091
or 10.7% in compensation and related benefits associated with the increased
operations of our MedLink operations; (iii) a decrease of $75,099 or 39.3% based
upon the significant amount of legal fees incurred during fiscal year 2006
relating to our registration statement filed on Form SB-2; (iv) an decrease of
$26,564 or 5.3% in management and consulting fees-related parties due to a
decrease in use of management and a director/consultant needed to handle our
operations; (v) a decrease in investor relations of $223,069 or 87.8% in
investor relations primarily related to a decrease in stock-based compensation
of approximately $182,000; (vi) an increase of $106,108 or 44.7% in depreciation
and amortization; and (vii) an increase of $146,468 or 12.9% in general and
administrative expenses resulting from an increase in operating costs associated
with increased operations and increased travel expenses. We anticipate that our
operating expenses may increase during fiscal year 2008 as compared to fiscal
year 2007 primarily from an increase in professional fees. We are, however,
unable to predict at this time the amount of any such increase in operating
expenses.

We reported a loss from operations of ($270,853) for fiscal year ended December
31, 2007 as compared to a loss from operations of ($747,188) for fiscal year
ended December 31, 2006 (a decrease of $476,335 or 63.7%).

During fiscal year ended December 31, 2007, we earned other income in the
aggregate of $70,113 compared to the incurrence of other expenses in the
aggregate of ($1,264,165) during fiscal year ended December 31, 2006 (an
increase of $1,334,278 or 105.6%). The increase in other income (expenses)
incurred during fiscal year ended December 31, 2007 compared to other income
(expenses) incurred during fiscal year ended December 31, 2006 resulted from:
(i) a decrease of $26,450 or 80.5% in other expenses; (ii) a decrease of
$109,108 or 18.0% in interest expense, which reflects the amortization of debt
discounts and debt offering costs; (iii) an increase of $919,687 or 357.1% in
gain from derivative liabilities, which relates to the revaluation of the
embedded conversion feature and related warrants issued in connection with our
Series A Preferred Stock and debenture payable; (iv) a decrease of $153,671, or
100% in debt settlement and offering costs, which relates to the issuance during
2006 of warrants to the debenture holder and amortization of certain debt
offering costs; (v) a decrease of $160,000, or 100% in registration rights
penalty incurred during 2006 relating to the liquidated damage clause in the
Investor Registration Rights Agreement. See "Y.A. Global Investments L.P.
(Formerly Cornell Capital Partners)", (vi) an increase of $10,382 or 61.2% in
loss on foreign exchange and (vii) an increase in interest expense - related
parties of $24,256 or 67.1% due to the record of loan costs and increased
related party borrowings.

During fiscal year ended December 31, 2007, we also incurred $194,478 in income
taxes compared to $0 during fiscal year ended December 31, 2006. In 2007, we
were required to pay income taxes related to our Medlink Conectividade
operations due to the calculation of taxable income pursuant to Brazilian tax
regulations.

                                       29
<PAGE>

For fiscal year ended December 31, 2007, our net loss was ($395,218) compared to
a net loss of ($2,011,353) for fiscal year ended December 31, 2006.

During fiscal year ended December 31, 2007, we recorded a deemed and cumulative
preferred stock dividend of $110,621 compared to $1,662,444 during fiscal year
ended December 31, 2006, which related to our Series A Preferred Stock. These
non-cash items relate to the embedded beneficial conversion features of those
securities and the fair value of the warrants issued with those securities and
to reflect preferred dividends payable, if declared..

We reported a net loss attributable to common shareholders of ($505,839) for
fiscal year ended December 31, 2007 as compared to a net loss attributable to
common shareholders of ($3,673,797) for fiscal year ended December 31, 2006.
This translates to an overall per-share loss available to shareholders of
$0.021and $0.12 for fiscal years ended December 31, 2007 and 2006, respectively.

We recorded an unrealized foreign currency translation gain (loss) of ($68,690)
and $79,902 for the years ended December 31, 2007 and 2006, respectively. This
resulted in a comprehensive net loss during fiscal year ended December 31, 2007
of ($463,908) compared to ($1,931,451) during fiscal year ended December 31,
2006.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2007, our current assets were $941,327 and our current
liabilities were $5,5,568,247, which resulted in a working capital deficit of
$4,626,920. As of December 31, 2007, our total assets were $2,050,863 consisting
of: (i) $175,938 in cash; (ii) $277,992 in prepaid expenses and other current
assets; (iii) $487,397 in accounts receivable; (iv) $347,063 in net software
development costs; (v) $757,673 in net property and equipment; and (vi) $4,800
in other assets..

As of December 31, 2007, our total liabilities were $5,907,918 consisting of:
(i) $2,471,985 in long-term and current portion of accounts payable and accrued
expenses; (ii) $406,052 due to related parties; (iii) $238,621 in convertible
loan to related party; (iv) $292,475 in loan payable to related party; (v)
$225,000 in net convertible debenture payable; (vi) $652,804 in long-term and
current portion of loans payable; (vii) $153,134 in warrant liability; (viii)
$1,280,100 in convertible feature liability; and (ix) $187,747 in deposit on
sale of minority interest. As at December 31, 2007, our total liabilities were
$5,907,918 compared to $5,590,591 at December 31, 2006. The increase in total
liabilities is due primarily to an increase in accounts payable and accrued
expenses and increases in related party loans.

Stockholders' deficit increased from ($3,528,064) for fiscal year ended December
31, 2006 to ($3,857,055) for fiscal year ended December 31, 2007.

For fiscal year ended December 31, 2007, net cash flow provided by operating
activities was $123,955 compared to net cash used in operating activities of
($483,996) for fiscal year ended December 31, 2006. For the year ended December
31, 2007, net cash provided by operating activities of $123,955 primarily
consisted of our net loss of ($395,218) , the add back of non-cash items
including a gain from derivative liabilities of ($662,127), depreciation and
amortization of $578,780, and stock-based compensation of $84,440, and an
increase in accounts payable of accrued expenses of $257,766 and an increase in
due to related parties of $160,678. For the year ended December 31, 2006, net
cash used in operating activities of ($483,996) primarily consisted of our net
loss of ($2,011,353), the add back of non-cash items including a loss from
derivative liabilities of $257,560, depreciation and amortization of $452,014,
stock-based compensation of $255,589, and amortization of debt discounts and
deferred debt costs of $251,116, and an increase in accounts payable of accrued
expenses of $315,254.

                                       30
<PAGE>

Net cash flows used in investing activities amounted to ($135,455) for fiscal
year ended December 31, 2007 compared to ($776,047) for fiscal year ended
December 31, 2006. During fiscal year ended December 31, 2007 and 2006, we
capitalized software development costs; however, during fiscal year ended
December 31, 2006, we acquired more equipment for our hardware and software
installations. Additionally, in 2007, we received a deposit on sale of minority
interest of $187,747 related to the sale of 45% of our operating subsidiaries,
which occurred in March 2008

Net cash flows provided by financing activities for fiscal year ended December
31, 2007 were $99,319 compared to net cash flows provided by financing
activities of $1,322,931 for fiscal year ended December 31, 2006. For the year
ended December 31, 2007, net cash provided by financing activities resulted from
the receipt of $80,000 in loan from related party and proceeds from loans of
$19,319. During the year ended December 31, 2006, net cash provided by financing
activities resulted from $1,478,971 in net proceeds from the sale of shares of
Series A Preferred Stock and $201,932 in proceeds from loans, offset by
repayment of capital lease obligations of $17,735, the satisfaction of a note
payable of $255,237, and the repayment of related party loans of $85,000.

Since our inception, we have funded operations through short-term borrowings and
equity investments in order to meet our strategic objectives. Our future
operations are dependent upon external funding and our ability to increase
revenues and reduce expenses. Management believes that sufficient funding will
be available from additional related party borrowings to meet our anticipated
cash needs for working capital, for a reasonable period of time. However, there
can be no assurance that we will be able to obtain sufficient funds to continue
the development of our software products and distribution networks.

As of the date of this Annual Report, there is substantial doubt regarding our
ability to continue as a going concern as we have not generated sufficient cash
flow to fund our business operations and material commitments. Our future
success and viability, therefore, are dependent upon our ability to consummate
the sale of our subsidiary, Transax Limited and to subsequently further develop,
provide and market our information network solutions to healthcare providers,
health insurance companies and other end-users, and the continuing ability to
generate capital financing. We are optimistic that we will be successful in our
business operations and capital raising efforts; however, there can be no
assurance that we will be successful in generating revenue or raising additional
capital. The failure to generate sufficient revenues or raise additional capital
may have a material and adverse effect upon us and our shareholders.

We anticipate an increase in operating expenses over the next three years to pay
costs associated with such business operations. We may need to raise additional
funds. We may finance these expenses with further issuances of our common stock.
We believe that any anticipated private placements of equity capital and debt
financing, if successful, may be adequate to fund our operations over the next
twelve months. Thereafter, we expect we will need to raise additional capital to
meet long-term operating requirements. If we raise additional funds through the
issuance of equity or convertible debt securities other than to current
shareholders, the percentage ownership of our current shareholders would be
reduced, and such securities might have rights, preferences or privileges senior
to our existing common stock. In addition, additional financing may not be
available upon acceptable terms, or at all. If adequate funds are not available,
or are not available with acceptable terms, we may not be able to conduct our
business operations successfully. This eventuality could significantly and
materially restrict our overall business operations.

Based upon a twelve (12) month work plan proposed by management, it is
anticipated that such a work plan would require approximately $1,000,000 to
$3,000,000 of financing designed to fund various commitments and business
operations.

                                       31
<PAGE>

Y.A. GLOBAL INVESTMENTS L.P. (FORMERLY CORNELL CAPITAL PARTNERS)

On January 13, 2006, we entered into the Investment Agreement with Cornell
Capital Partners. In accordance with the terms and provisions of the Investment
Agreement: (i) we sold to Cornell Capital Partners 16,000 shares of our Series A
Preferred for a total price of up to $1,600,000; (ii) the Series A Preferred
Shares are senior to all common stock and all series of preferred stock; (iii)
the holders of Series A Preferred Shares are entitled to receive dividends or
distribution on a pro rata basis in the amount of seven percent (7%) per year
which shall be paid in cash and shall be cumulative; and (iv) each Series A
Preferred Share can be converted into shares of our common stock equal to the
sum of the Liquidation Amount, which is defined as an amount equal to $100 per
shares of Series A Preferred, plus accrued but unpaid dividends thereon, divided
by the conversion price (which conversion price is defined to be equal to the
lower of (a) $0.192 or (b) eighty percent (80%) of the lowest daily volume
weighted average price of our common stock as determined by price quotations
from Bloomberg, LP during the ten (10) trading days immediately preceding the
date of conversion.

In connection with the Investment Agreement, the parties entered into an
Investor Registration Rights Agreement (the "IRRA"), dated January 13, 2006,
pursuant to which the parties agreed that, in the event a registration statement
on Form SB-2 is not filed within thirty (30) days from the date we filed our
Annual Report on Form 10-KSB for the year ended December 31, 2005 (the "Filing
Deadline") or is not declared effective by the Securities and Exchange
Commission within ninety (90) days of the date of the IRRA (the "Effective
Deadline"), or if after the registration statement has been declared effective
by the Securities and Exchange Commission, sales cannot be made pursuant to the
registration statement, then as relief for the damages to any holder of
Registrable Securities (as defined in the IRRA) by reason of any such delay in
or reduction of its ability to sell the underlying shares of common stock (which
remedy shall not be exclusive of any other remedies at law or in equity), we
will pay as liquidated damages to the holder, at the holder's option, either a
cash amount or shares of our common stock equal to two percent (2%) of the
Liquidation Amount (as defined above) outstanding as liquidated damages for each
thirty (30) day period or any part thereof after the Filing Deadline or the
Effective Deadline as the case may be. Any liquidated damages payable hereunder
shall not limit, prohibit or preclude the holder from seeking any other remedy
available to it under contract, at law or in equity. We shall pay any liquidated
damages hereunder within three (3) business days of the holder making written
demand. It shall also become an event of default under the IRRA if the
registration statement is not declared effective by the Securities and Exchange
Commission within one-hundred twenty (120) days from the date of the IRRA. We
initially filed a registration statement with the SEC on May 9, 2006 and filed
amended registration statements on July 28, 2006 and October 11, 2006. As of the
date of this Annual Report, the registration statement has not been declared
effective.

In December 31, 2006, we recorded a $160,000 penalty that is included in accrued
expenses on the accompanying balance sheets. Although the registration statement
has not been declared effective, we believe we made our best efforts to have the
registration statement declared effective prior to the effective deadline. We
will vigorously defend any additional claims against us.

Certain negative covenants in the Investment Agreement could substantially
impact our ability to raise funds from alternative sources in the future. For
example, so long as any Series A Preferred Shares are outstanding, we shall not,
without the prior written consent of Cornell Capital Partners (a) directly or
indirectly consummate any merger, reorganization, restructuring, reverse stock
split consolidation, sale of all or substantially all of our assets or any
similar transaction or related transactions; (b) incur any indebtedness for
borrowed money or become a guarantor or otherwise contingently liable for any

                                       32
<PAGE>

such indebtedness except for trade payables or purchase money obligations
incurred in the ordinary course of business; (c) file any other registration
statements on any form (including but not limited to forms S-1, SB-2, S-3 and
S-8); (d) issue or sell shares of common stock or preferred stock without
consideration or for a consideration per share less than the bid price of the
common stock determined immediately prior to its issuance or issue any preferred
stock, warrant, option, right, contract, call, or other security or instrument
granting the holder thereof the right to acquire common stock without
consideration or for a consideration per share less than the bid price of the
common stock determined immediately prior to the issuance of such convertible
security or (e) enter into any security instrument granting the holder a
security interest in any and all of our assets.

Of the 16,000 Series A Preferred Shares to be sold to Cornell, 8,000 Series A
Preferred Shares had a purchase price of $800,000, which consisted of $255,237
from the surrender of a Promissory Note (as described below) and $544,763
consisting of new funding of which we received net proceeds of $495,734 after
the payment of placement fees of $49,029. Additionally, we paid approximately
$25,000 in legal fees with the proceeds of this financing. On May 8, 2006, we
sold the remaining 8,000 shares of Series A Preferred Shares to Cornell for the
purchase price of $800,000 and received net proceeds of $728,000 (net of
placement fees of $72,000).

In connection with the sale of the Series A Preferred Shares, on January 13,
2006, the Parties agreed that Cornell will surrender the Promissory Note issued
by us to Cornell on May 17, 2005, in the principal amount of $255,237, in
exchange for $255,237 of Series A Preferred Shares. As of January 13, 2006, the
full amount outstanding under the Promissory Note was $255,237, plus accrued and
unpaid interest of $0. As a result of the Parties' agreement, the Promissory
Note was retired and canceled. The Parties also agreed to terminate the
Securities Purchase Agreement and the Investor Registration Rights Agreement,
each dated as of October 25, 2004, as well as the Pledge and Escrow Agreements,
each dated as of October 21, 2004, that were entered into by the Parties in
connection with the issuance of the Promissory Note.

On January 13, 2006, we also issued to Cornell warrants to purchase up to
5,000,000 shares of our common stock. The first warrant issued to Cornell
exercisable for 2,500,000 shares of common stock at an exercise price of $0.30
per share shall terminate after the five (5) year anniversary of the date of
issuance. The second warrant issued to Cornell exercisable for 2,500,000 shares
of common stock at an exercise price of $0.20 per share shall terminate after
the five (5) year anniversary of the date of issuance.

CONVERTIBLE DEBENTURE

In April 2005, we entered into a financing agreement with Scott and Heather
Grimes, Joint Tenants with Right of Survivorship (the "Investor"). Under the
terms of the financing arrangement with the Investor, we issued convertible
debentures to the Investor in the original principal amount of $250,000. The
debentures are convertible at the Investor's option any time up to maturity at a
conversion price equal to the lower of: (i) 120% of the closing bid price of our
common stock on the date of the debentures, or (ii) 80% of the lowest closing
bid price of our common stock for the five trading days immediately preceding
the conversion date. The debentures have a two-year term and accrue interest at
5% per year. At maturity, the debentures will automatically convert into shares
of our common stock at a conversion price equal to the lower of: (i) 120% of the
closing bid price of our common stock on the date of the debentures, or (ii) 80%
of the lowest closing bid price on our common stock for five trading days
immediately preceding the conversion date. On July 13, 2006, the Investor
converted $15,000 of the Debenture into 104,167 shares of our common stock and
on October 31, 2006, the Investor converted $10,000 of the debenture into
151,515 shares of our common stock.

                                       33
<PAGE>

Certain negative covenants in the Securities Purchase Agreement could
substantially impact our ability to raise funds from alternative sources in the
future. For example, for as long as the convertible debenture remains
outstanding and without the written consent of the debenture holder, we (a)
shall not directly or indirectly consummate any merger, reorganization,
restructuring, reverse stock split consolidation, sale of all or substantially
all of our assets or any similar transaction or related transactions; (b) shall
not issue or sell shares of common stock or preferred stock without
consideration or for a consideration per share less than the bid price of the
common stock determined immediately prior to its issuance or issue any warrant,
option, right, contract, call, or other security or instrument granting the
holder thereof the right to acquire common stock without consideration or for a
consideration per share less than the bid price of the common stock determined
immediately prior to the issuance of such convertible security; (c) shall not
enter into any security instrument granting the holder a security interest in
any or all of our assets; (d) shall not file any registration statement on Form
S-8 except we may file one registration statement on Form S-8 for up to
2,500,000 shares of common stock and provided however, anyone receiving shares
pursuant to such permitted Form S-8 registration shall be restricted from
selling such shares for a period of ninety (90) days after the registration
statement becomes effective and (e) shall not, and shall cause each of its
subsidiaries not to, enter into, amend, modify or supplement, or permit any
subsidiary to enter into, amend, modify or supplement any agreement,
transaction, commitment, or arrangement with any of its subsidiary's officers,
directors, person who were officers or directors at any time during the previous
two years, stockholders who beneficially own five percent (5%) or more of our
common stock, or Affiliates (as defined in the Securities Purchase Agreement) or
with any individual related by blood, marriage, or adoption to any such
individual or with any entity in which any such entity or individual owns a five
percent (5%) or more beneficial interest, except for (i) customary employment
arrangements and benefit programs on reasonable terms, (ii) any investment in
one of our Affiliates, (iii) any agreement, transaction, commitment, or
arrangement on an arms-length basis on terms no less favorable than terms which
would have been obtainable from a person other than such related party and (iv)
any agreement transaction, commitment, or arrangement which is approved by a
majority of our disinterested directors.

On February 1, 2006, we and the debenture holder mutually agreed to extend the
term of the debentures until December 1, 2007. We are currently renegotiating
the due date of this debenture. In addition, we granted a warrant to purchase
400,000 shares of our common stock to the debenture holder. The warrant has a
term of 2 years and is exercisable at $0.20 per share. We agreed to register
3,571,429 shares of our common stock underlying the conversion of the Debentures
and the exercise of the warrant on a best efforts basis not later than 30 days
after we filed our Annual Report on Form 10-KSB/A for the fiscal year ended
December 31, 2005. We initially filed a registration statement with the SEC on
May 9, 2006 and filed amended registration statements on July 28, 2006 and
October 11, 2006. As of the date of this Annual Report, the registration
statement been not been declared effective.

We believe that we can satisfy our cash requirements for the next twelve (12)
months based on our ability to consummate the sale of our subsidiary, Medlink
Conectividade, and to enter into additional financing arrangements as necessary.
Our future success and viability are primarily dependent upon our current
management to generate revenues from business operations and raise additional
capital through further private offerings of our stock or loans from private
investors. There can be no assurance, however, that we will be able to raise
additional capital. Our failure to successfully raise additional capital will
have a material and adverse affect upon us and our shareholders.

                                       34
<PAGE>

MATERIAL COMMITMENTS

CONVERTIBLE LOANS - RELATED PARTY

A significant material liability for us for fiscal year 2008 is the aggregate
principal amount of $175,000 and $63,621 in accrued interest due and owing to a
related party in accordance with two convertible promissory notes (collectively,
the "Convertible Promissory Note(s)"). During March 2005, we modified the terms
of the Convertible Promissory Notes: (i) $200,000 is due on March 31, 2007 and
convertible into shares of our common stock at $0.125 per share together with a
warrant per share to purchase our common stock at $0.25 per share for a period
of two years; and (ii) $100,000 is due on April 30, 2007 and convertible into
shares of our common stock at $0.125 per shares together with a warrant per
share to purchase our common stock at $0.25 per share for a period of two years.
On June 28, 2005 and September 30, 2005, the holders of the Convertible
Promissory Notes partially exercised the respective conversion rights. As at
December 31, 2007, an aggregate principal amount of $175,000 and interest in the
amount of $63,621 remains due and owing under the Convertible Promissory Notes
and is due on demand.

LOAN - RELATED PARTY

A significant material liability for us for fiscal year 2008 is the aggregate
amount of $169,384 in principal due and owing to Stephen Walters, our Chief
Executive Officer (collectively, the "Loans"). The Loans are evidenced by a
promissory note with an interest rate of 0.8% per month compounded, had an
initial term of twelve months and was repayable quarterly in arrears. On
September 25, 2007, Mr. Walters agreed to extend the Loans for an additional
twelve months until March 4, 2008 and the loan is currently due on demand.
Additionally, during fiscal year 2007, we borrowed $80,000 from Mr. Walters. We
incurred a loan fee of $5,000 and ad additional fee of approximately $7,756,
which has been included in interest expense. At December 31, 2007, $43,091in
interest and loan fees were due on these Loans. At December 31, 2007, the
aggregate principal and interest amount due is $292,475.

CONSULTING AGREEMENT

A significant and estimated material liability for us for fiscal year 2008 is
the aggregate amount of $371,932 in management fees due and owing to Stephen
Walters, our Chief Executive Officer. In accordance with the terms of an
agreement effective April 2006, we pay monthly to Mr. Walters an aggregate
amount of $17,500 as compensation for managerial and consulting services he
provides. As at December 31, 2007, $371,932 in management fees and other
expenses are due and owing Mr. Walters. See "Item 10. Executive Compensation -
Management Consulting Services Agreement".

CONVERTIBLE DEBENTURE

A significant material liability for us for fiscal year 2008 is the convertible
debenture payable in the amount of $225,000. On April 1, 2005, we entered into a
financing agreement with Investor. Under the terms of the financing arrangement
with the Investor, we issued convertible debentures to the Investor in the
original principal amount of $250,000, of which $25,000 was converted into
255,682 shares of our common stock during fiscal year 2006. The debentures are
convertible at the Investor's option any time up to maturity at a conversion
price equal to the lower of: (i) 120% of the closing bid price of our common
stock on the date of the debentures, or (ii) 80% of the lowest closing bid price
of our common stock for the five trading days immediately preceding the
conversion date. The debentures have a two-year term and accrue interest at 5%
per year. At maturity, the debentures will automatically convert into shares of
our common stock at a conversion price equal to the lower of: (i) 120% of the
closing bid price of our common stock on the date of the debentures, or (ii) 80%
of the lowest closing bid price on our common stock for five trading days
immediately preceding the conversion date. On February 1, 2006 we agreed to
extend the term of the debentures to December 1, 2007 and issued 400,000
warrants at 0.20 per share valid for two (2) years. We are currently
renegotiating the terms of this debenture.

                                       35
<PAGE>

ACCRUED TAXES AND RELATED EXPENSES

A significant and estimated material liability for us for fiscal year 2008 is
the aggregate amount of $1,080,085 due and owing for Brazilian payroll taxes and
Social Security taxes.

We entered into a payment program with the Brazilian authorities whereby the
Social Security ("INSS") taxes due and applicable penalties and interests will
be repaid over a period of up to sixty months and are due as follows:

                  Year
                  ----
                  2008     $ 1,023,726
                  2009          45,684
                  2010           9,860
                  2011             815
                           -----------

                            $1,080,085
                           ===========

MEDLINK CONECTIVIDADE LOAN PAYABLE

A significant and estimated material liability for us are the several loans and
credit lines with financial institutions. The loan require monthly installment
payments, bear interest at rates ranging from 30% to 50% per annum, are secured
by certain receivables of Medlink Conectividade, and are due through July 2009.
As at December 31, 2007, the loans payable to these financial institution
aggregated $652,804.

PURCHASE OF SIGNIFICANT EQUIPMENT

We do not intend to purchase any significant equipment during the next twelve
months.

OFF-BALANCE SHEET ARRANGEMENTS

As of the date of this Annual Report, we do not have any off-balance sheet
arrangements that have or are reasonably like to have a current or future effect
on our financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources that are material to investors. The term "off-balance sheet
arrangement" generally means any transaction, agreement or other contractual
arrangement to which an entity unconsolidated with us is a party, under which we
have: (i) any obligation arising under a guarantee contract, derivative
instrument or variable interest; or (ii) a retained or contingent interest in
assets transferred to such entity or similar arrangement that serves as credit,
liquidity or market risk support for such assets.

CRITICAL ACCOUNTING POLICIES

Our financial statements and accompanying notes are prepared in accordance with
generally accepted accounting principles in the United States. Preparing
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenue and expenses. These
estimates and assumptions are affected by management's application of accounting
policies. Critical accounting policies for Transax International Limited include
the following:

We review the carrying value of property and equipment for impairment at least
annually or whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of long-lived
assets is measured by the comparison of its carrying amount to the undiscounted
cash flows that the asset or asset group is expected to generate. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the property, if any, exceeds its
fair market value.

                                       36
<PAGE>

Under the criteria set forth in SFAS No. 86, "Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed", capitalization of
software development costs begins upon the establishment of technological
feasibility of the software. The establishment of technological feasibility and
the ongoing assessment of the recoverability of these costs require considerable
judgment by management with respect to certain external factors, including, but
not limited to, anticipated future gross product revenues, estimated economic
life, and changes in software and hardware technology. Capitalized software
development costs are amortized utilizing the straight-line method over the
estimated economic life of the software not to exceed three years. We regularly
review the carrying value of software development assets and a loss is
recognized when the unamortized costs are deemed unrecoverable based on the
estimated cash flows to be generated from the applicable software.

Accounting for Stock Based Compensation - Effective January 1, 2006, we adopted
Statement of Financial Accounting Standards No. 123 (revised 2004), "Share Based
Payment" ("SFAS No. 123R"). SFAS No. 123R establishes the financial accounting
and reporting standards for stock-based compensation plans. As required by SFAS
No. 123R, we recognize the cost resulting from all stock-based payment
transactions including shares issued under its stock option plans in the
financial statements. The adoption of this pronouncement may have a material
effect on our results of operations.

Revenue Recognition - Our revenues, which do not require any significant
production, modification or customization for the Company's targeted customers
and do not have multiple elements, is recognized when (1) persuasive evidence of
an arrangement exists; (2) delivery has occurred; (3) the Company's fee is fixed
and determinable, and; (4) collectibility is probable.

Substantially all of our revenues are derived from the processing of
applications by healthcare providers for approval of patients for healthcare
services from insurance carriers. Our software or hardware devices containing
our software are installed at the healthcare provider's location. We offer
transaction services to authorize and adjudicate identity of the patient and
obtain "real time" approval for any necessary medical procedure from the
insurance carrier. Our transaction-based solutions provide remote access for
healthcare providers to connect with contracted insurance carriers. Transaction
services are provided through contracts with insurance carriers and others,
which specify the services to be utilized and the markets to be served. Our
clients are charged for these services on a per transaction basis. Pricing
varies depending on the type of transactions being processed under the terms of
the contract for which services are provided. Transaction revenues are
recognized in the period in which the transactions are performed.

RECENT ACCOUNTING PRONOUNCEMENTS

NEW AUTHORITATIVE PRONOUNCEMENTS

In September 2006, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 157, "Fair Value Measurements" (SFAS 157), which provides guidance for how
companies should measure fair value when required to use a fair value
measurement for recognition or disclosure purposes under generally accepted
accounting principle (GAAP). SFAS 157 is effective for fiscal years beginning
after November 15, 2007. The Company is currently assessing the impact, if any,
the adoption of SFAS 157 will have on our financial statements.

In December 2006, FASB Staff Position No. EITF 00-19-2, "Accounting for
Registration Payment Arrangements," was issued. The FSP specifies that the
contingent obligation to make future payments or otherwise transfer
consideration under a registration payment arrangement, whether issued as a
separate agreement or included as a provision of a financial instrument or other
agreement, should be separately recognized and measured in accordance with SFAS
No. 5, "Accounting for Contingencies." The Company believes that its current
accounting is consistent with the FSP. Accordingly, adoption of the FSP had no
effect on our financial statements.

                                       37
<PAGE>

In September 2006, the EITF reached a consensus on EITF Issue No. 06-1,
Accounting for Consideration Given by a Service Provider to Manufacturers or
Resellers of Equipment Necessary for an End-Customer to Receive Service from the
Service Provider (EITF 06-1). EITF 06-1 provides that consideration provided to
the manufacturers or resellers of specialized equipment should be accounted for
as a reduction of revenue if the consideration provided is in the form of cash
and the service provider directs that such cash be provided directly to the
customer. Otherwise, the consideration should be recorded as an expense. The
provisions of EITF 06-1 will be effective on January 1, 2008. The adoption of
EITF 06-1 will not have any effect on the Company's financial position or
results of operations.

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities, Including an Amendment of FASB
Statement No. 115", under which entities will now be permitted to measure many
financial instruments and certain other assets and liabilities at fair value on
an instrument-by-instrument basis. This Statement is effective as of the
beginning of an entity's first fiscal year that begins after November 15, 2007.
Early adoption is permitted as of the beginning of a fiscal year that begins on
or before November 15, 2007, provided the entity also elects to apply the
provisions of SFAS 157. The Company is currently assessing the impact, if any,
the adoption of SFAS 159 will have on its financial statements.

In December 2007, the FASB issued Statement of Financial Accounting Standards
No. 141R, Business Combinations (SFAS 141R) and Statement of Financial
Accounting Standards No. 160, Accounting and Reporting of Non-controlling
Interests in Consolidated Financial Statements, an amendment of ARB No. 51 (SFAS
160). These two standards must be adopted in conjunction with each other on a
prospective basis. The most significant changes to business combination
accounting pursuant to SFAS 141R and SFAS 160 are the following: (a) recognize,
with certain exceptions, 100 percent of the fair values of assets acquired,
liabilities assumed and non-controlling interests in acquisitions of less than a
100 percent controlling interest when the acquisition constitutes a change in
control of the acquired entity, (b) acquirers' shares issued in consideration
for a business combination will be measured at fair value on the closing date,
not the announcement date, (c) recognize contingent consideration arrangements
at their acquisition date fair values, with subsequent changes in fair value
generally reflected in earnings, (d) the expensing of all transaction costs as
incurred and most restructuring costs, (e) recognition of pre-acquisition loss
and gain contingencies at their acquisition date fair values, with certain
exceptions, (f) capitalization of acquired in-process research and development
rather than expense recognition, (g) earn-out arrangements may be required to be
re-measured at fair value and (h) recognize changes that result from a business
combination transaction in an acquirer's existing income tax valuation
allowances and tax uncertainty accruals as adjustments to income tax expense.
The Company anticipates these new standards will significantly affect the
Company's accounting for future business combinations following adoption on
January 1, 2009.

ITEM 7.  FINANCIAL STATEMENTS

See our Financial Statements beginning on page F-1.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

Our independent registered public accounting firm is Moore Stephens, P.C., 708
Third Avenue, New York, New York 10017-4109, telephone no. 212.682.1234.

                                       38
<PAGE>

ITEM 8A. AND 8A(T). CONTROLS AND PROCEDURES

FINANCIAL DISCLOSURE CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

We maintain "disclosure controls and procedures" as such term is defined in Rule
13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating
our disclosure controls and procedures, our management recognized that
disclosure controls and procedures, no matter how well conceived and operated,
can provide only reasonable, not absolute, assurance that the objectives of
disclosure controls and procedures are met. Additionally, in designing
disclosure controls and procedures, our management necessarily was required to
apply its judgment in evaluating the cost-benefit relationship of possible
disclosure controls and procedures. The design of any disclosure controls and
procedures is also based in part upon certain assumptions about the likelihood
of future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions.

Our management, including our Chief Executive Officer and our Chief Financial
Officer, have evaluated the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this annual report. Based on
such evaluation, and as described in greater detail below, our CEO and CFO have
concluded that, as of the end of the period covered by this Annual Report on
Form 10-KSB, our disclosure controls and procedures were not effective:

   o  to give reasonable assurance that the information required to be disclosed
      by us in reports that we file under the Securities Exchange Act of 1934 is
      recorded, processed, summarized and reported within the time periods
      specified in the Securities and Exchange Commission's rules and forms, and

   o  to ensure that information required to be disclosed in the reports that we
      file or submit under the Securities Exchange Act of 1934 is accumulated
      and communicated to our management, including our Chief Executive Officer
      and our Chief Financial Officer, to allow timely decisions regarding
      required disclosure.

However, giving full consideration to the material weaknesses described below,
we performed adequate analyses and procedures, including among other things,
transaction reviews, and account reconciliations, in order to provide assurance
that our Consolidated Financial Statements included in this annual report were
prepared in accordance with generally accepted accounting principles ("GAAP")
and present fairly, in all material respects, our financial position, results of
operations and cash flows for the periods presented in conformity with GAAP. As
a result of these procedures, we concluded that the Consolidated Financial
Statements included in this annual report present fairly, in all material
respects, our financial position, results of operations and cash flows for the
periods presented in conformity with GAAP.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
under the Securities Exchange Act. Our management is also required to assess and
report on the effectiveness of our internal control over financial reporting in
accordance with Section 404 of the Sarbanes-Oxley Act of 2002 ("Section 404").
Management assessed the effectiveness of our internal control over financial
reporting as of December 31, 2007. In making this assessment, we used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control - Integrated Framework. During our
assessment of the effectiveness of internal control over financial reporting as
of December 31, 2007, management identified significant deficiencies related to
(i) the U.S. GAAP expertise of our internal accounting staff, (ii) our internal
audit functions; (iii) the absence of an Audit Committee as of December 31,
2007, and (iv) a lack of segregation of duties within accounting functions.

                                       39
<PAGE>

We began preparing to be in compliance with the internal control obligations,
including Section 404, for our fiscal year ending December 31, 2007. Our
internal accounting staff was primarily engaged in ensuring compliance with
Brazil accounting and reporting requirements for our operating subsidiary and
their U.S. GAAP knowledge was limited. As a result, majority of our internal
accounting staff, on a consolidated basis, is relatively inexperienced with U.S.
GAAP and the related internal control procedures required of U.S. public
companies. Although our accounting staff is professional and experienced in
accounting requirements and procedures generally accepted in Brazil, management
has determined that they require additional training and assistance in U.S. GAAP
matters. Management has determined that our internal audit function is also
significantly deficient due to insufficient qualified resources to perform
internal audit functions. Finally, management determined that the lack of an
Audit Committee of our Board of Directors also contributed to insufficient
oversight of our accounting and audit functions.

In order to correct the foregoing weaknesses, we have taken the following
remediation measures:

   o  We have committed to the establishment of effective internal audit
      functions, however, due to the scarcity of qualified candidates with
      extensive experience in U.S. GAAP reporting and accounting in the region,
      we were not able to hire sufficient internal audit resources before the
      end of 2007. However, we will increase our search for qualified candidates
      with assistance from recruiters and through referrals.

   o  We will consider searching for independent directors, with one qualified
      to serve on an audit committee to be established by our Board of Directors
      and we anticipate that our Board of Directors will also establish a
      compensation committee to be headed by one of the independent directors.

Due to our size and nature, segregation of all conflicting duties may not always
be possible and may not be economically feasible. However, to the extent
possible, we will implement procedures to assure that the initiation of
transactions, the custody of assets and the recording of transactions will be
performed by separate individuals.

We believe that the foregoing steps will remediate the significant deficiencies
identified above, and we will continue to monitor the effectiveness of these
steps and make any changes that our management deems appropriate. Due to the
nature of these significant deficiencies in our internal control over financial
reporting, there is a remote likelihood that misstatements which could be
material to our annual or interim financial statements could occur that would
not be prevented or detected.

A material weakness (within the meaning of PCAOB Auditing Standard No. 5) is a
deficiency, or a combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be prevented
or detected on a timely basis. A significant deficiency is a deficiency, or a
combination of deficiencies, in internal control over financial reporting that
is less severe than a material weakness, yet important enough to merit attention
by those responsible for oversight of the company's financial reporting.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies and procedures may deteriorate.

AUDITOR ATTESTATION

This Annnual Report on Form 10-KSB does not include an attestation report of our
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by our registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit us to provide only management's report in this
Annual Report on Form 10-KSB.

                                       40
<PAGE>

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in our internal control over financial reporting
during our fourth fiscal quarter that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.

ITEM 8B. OTHER INFORMATION

Not applicable.

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS

All of our directors hold office until the next annual general meeting of the
shareholders or until their successors are elected and qualified. Our officers
are appointed by our board of directors and hold office until their earlier
death, retirement, resignation or removal.

Our directors and executive officers, their ages, positions held are as follows:

NAME                  AGE      POSITION WITH THE COMPANY
----                  ---      -------------------------
Stephen Walters        49      President, Chief Executive Officer and a Director
Laurie Bewes, BBA      55      Director
Adam Wasserman         43      Chief Financial Officer
David Sasso            33      Vice President Investor Relations

The following describes the business experience of each of our directors and
executive officers, including other directorships held in reporting companies:

STEPHEN WALTERS is our President/Chief Executive Officer and a director. Mr.
Walters currently is the President/Chief Executive Officer and a director of
Transax. Mr. Walters has more than fifteen (15) years of business experience in
the Asia-Pacific Region. He is responsible for corporate development initiatives
that have seen a successful restructuring of the predecessor company. Mr.
Walters is also the founder and principal of the Carlingford Group of companies
based in Singapore. In the past thirty-six (36) months, Mr. Walters has raised
over $6,000,000 for investment in promising early stage technology companies
principally from North America and to expand their operations to the
Asia-Pacific region through the establishment of joint ventures with strategic
partners and licensing arrangements. The Carlingford Group focuses on companies
in the biomedical, computer network and wireless telecommunications industries.
Mr. Walters possesses an in depth knowledge of the public markets having
previously acted as President and Chief Executive Officer of a US public
company. Mr. Walters currently is a director of a publicly traded company in
Canada.

LAURIE BEWES is one of our directors. Mr. Bewes currently is a director of
Transax. Mr. Bewes has a Bachelor of Business Administration (RMIT) and is a
member of the Australian Institute of Company Directors (MAICD). His business
background over the past twenty (20) years includes joint ventures, business
development, mergers, infrastructure privatization and start-ups across South
America (Argentina and Brazil), Asia (Indonesia, Singapore and Malaysia) and
Australia/New Zealand. Mr. Bewes has worked in various senior executive
positions for companies such as P & O, ANL and TNT.

ADAM WASSERMAN has served as our Chief Financial Officer since February 2005
under the terms of the consulting agreement with his firm, CFO Oncall, Inc. Mr.
Wasserman devotes a portion of his time to our company. Since November 1999, Mr.
Wasserman has been CEO of CFO Oncall, Inc., a Weston, Florida based provider of
consultant accounting services specializing in financial reporting, budgeting
and planning, mergers and acquisitions, audit preparation services, accounting,

                                       41
<PAGE>

automated systems, banking relations and internal controls. Mr. Wasserman has
also served as the chief financial officer of Lotus Pharmaceuticals, Inc. since
October 2006, Gold Horse International, Inc. since July 2007 and China Wind
Systems, Inc. since March 2008. Mr. Wasserman has also served as the chief
financial officer of Explorations Group Inc. (January 2002 until December 2005)
Colmena Corp. (May 2003 until June 2004) and Genesis Pharmaceuticals
Enterprises, Inc. (October 2001 until October 2007), all client companies of CFO
Oncall, Inc. From June 1991 to November 1999 he was Senior Audit Manager at
American Express Tax and Business Services, in Fort Lauderdale, Florida where
his responsibilities included supervising, training and evaluating senior staff
members, work paper review, auditing, maintaining positive client relations,
preparation of tax returns and preparation of financial statements and the
related footnotes. From September 1986 to May 1991, he was employed by Deloitte
& Touche, LLP. During his employment, his significant assignments included
audits of public (SEC reporting) and private companies, tax preparation and
planning, management consulting, systems design, staff instruction, and
recruiting. Mr. Wasserman holds a Bachelor of Science from the State University
of New York at Albany. He is a CPA (New York) and a member of The American
Institute of Certified Public Accountants and is a director, the treasurer and
an executive board member of Gold Coast Venture Capital Association.

DAVID SASSO is our Vice-President Investor Relations. Mr. Sasso has over ten
years of public and private market experience in investor relations and
corporate governance. Throughout his career, Mr. Sasso has been an integral
member of executive management responsible for investor relations. Previously,
Mr. Sasso was the managing director of Marketing Services Group in New York
City, New York, as well as managing director of investor relations at KCSA
Public Relations Worldwide, representing several emerging growth companies.
Prior to KCSA Public Relations Worldwide, he was vice president at the Abernathy
MacGregor Group, a financial communications agency. Earlier in his career, Mr.
Sasso worked with Merrill Lynch in their worldwide headquarters. Mr. Sasso
earned a degree from the State University of New York at Albany, New York.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

As of the date of this Annual Report, none of our directors or executive
officers is or has been involved in any legal proceeding concerning (i) any
bankruptcy petition filed by or against any business of which such person was a
general partner or executive officer either at the time of the bankruptcy or
within two years prior to that time; (ii) any conviction in a criminal
proceeding or being subject to a pending criminal proceeding (excluding traffic
violations and other minor offenses) within the past five years; (iii) being
subject to any order, judgment or decree permanently or temporarily enjoining,
barring, suspending or otherwise limiting involvement in any type of business,
securities or banking activity; or (iv) being found by a court, the SEC or the
Commodity Futures Trading Commission to have violated a federal or state
securities or commodities law (and the judgment has not been reversed, suspended
or vacated).

AUDIT COMMITTEE

As of the date of this Annual Report, we have not appointed members to an audit
committee and, therefore, the respective role of an audit committee has been
conducted by our Board of Directors. When established, the audit committee's
primary function will be to provide advice with respect to our financial matters
and to assist our Board of Directors in fulfilling its oversight
responsibilities regarding finance, accounting, tax and legal compliance. The
audit committee's primary duties and responsibilities will be to: (i) serve as
an independent and objective party to monitor our financial reporting process
and internal control system; (ii) review and appraise the audit efforts of our
independent accountants; (iii) evaluate our quarterly financial performance as
well as its compliance with laws and regulations; (iv) oversee management's
establishment and enforcement of financial policies and business practices; and
(v) provide an open avenue of communication among the independent accountants,
management and our Board.

                                       42
<PAGE>

Our Board has considered whether the regulatory provision of non-audit services
is compatible with maintaining the principal independent accountant's
independence.

AUDIT COMMITTEE FINANCIAL EXPERT

As of the date of this Annual Report, our Board has determined that we do not
have an audit committee financial expert nor do we have an audit committee.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Section 16(a) of the Exchange Act, requires our directors and officers, and the
persons who beneficially own more than ten percent of our common stock, to file
reports of ownership and changes in ownership with the SEC. Copies of all filed
reports are required to be furnished to us pursuant to Rule 16a-3 promulgated
under the Exchange Act. Based solely on the reports received by us and on the
representations of the reporting persons, we believe that these persons have
complied with all applicable filing requirements during the fiscal year ended
December 31, 2007.

ITEM 10. EXECUTIVE COMPENSATION

The following table summarizes all compensation recorded by us in each of the
last two completed fiscal years for our principal executive officer, each other
executive officer serving as such whose annual compensation exceeded $100,000
and up to two additional individuals for whom disclosure would have been made in
this table but for the fact that the individual was not serving as an executive
officer of our company at December 31, 2007. The value attributable to any
option awards is computed in accordance with FAS 123R.
<TABLE>
<CAPTION>
                                              SUMMARY COMPENSATION TABLE
                                              --------------------------
                                                                 NON-EQUITY
                                                                 INCENTIVE      NONQUALIFIED   ALL
NAME AND                                       STOCK    OPTION   PLAN           DEFERRED       OTHER
PRINCIPAL                    SALARY    BONUS   AWARDS   AWARDS   COMPENSATION   COMPENSATION   COMPENSATION   TOTAL
POSITION              YEAR   ($)       ($)     ($)      ($)      ($)            EARNINGS ($)   ($)            ($)
(A)                   (B)    (C)       (D)     (E)      (F)      (G)            (H)            (I)            (J)
-------------------   ----   -------   -----   ------   ------   ------------   ------------   ------------   -------
<S>                   <C>    <C>       <C>     <C>      <C>      <C>            <C>            <C>             <C>
Stephen Walters (1)   2007         0       0   55,000   13,348              0              0        234,327   302,675
President, CEO,       2006         0       0        0   22,304              0              0        181,679   203,983
Director

Laurie Bewes (1)      2007         0       0        0    4,449              0              0         72,000    76,449
Director              2006         0       0        0   11,152              0              0        130,000   141,152

Adam Wasserman        2007         0       0        0    4,449              0              0         46,737    51,186
Chief financial       2006         0       0        0        0              0              0         51,732    51,732
officer

Americao de Castro    2007   165,000       0        0        0              0              0              0   165,000
President of          2006   129,000       0        0        0              0              0              0   129,000
Medlink
</TABLE>
(1) Mr. Walters' fiscal year 2007 compensation includes: (i) Stock Options to
purchase 300,000 shares of our common stock with an exercise price of $0.06 per
share; and (ii) the issuance of 1,000,000 shares at a fair value of $55,000. Mr.
Walters fiscal year 2006 compensation includes Stock Options to purchase 150,000
shares of our common stock with an exercise price of $0.15 per share. Other
compensation includes fees paid for Mr. Walters directly and not as a salaried
employee.

(2) Mr. Bewes' fiscal year 2007 compensation includes Stock Options to purchase
100,000 shares of our common stock with an exercise price of $0.06 per share.
Mr. Bewes' fiscal year 2006 compensation includes Stock Options to purchase
75,000 shares of our common stock with an exercise price of $0.15 per share.
Other compensation includes fees paid for Mr. Bewes directly and not as a
salaried employee.

                                       43
<PAGE>

(3) Mr. Wasserman's fiscal year 2007 compensation includes Stock Options to
purchase 150,000 shares of our common stock with an exercise price of $0.15 per
share. Other compensation for fiscal years 2006 and 2005 includes fees paid to
Mr. Wasserman's Company, CFO Oncall, Inc. and not as a salaried employee.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table provides information concerning unexercised options, stock
that has not vested and equity incentive plan awards for each named executive
officer outstanding as of December 31, 2007:
<TABLE>
<CAPTION>
                                                                                                              EQUITY
                                                                                                              INCENTIVE
                                                                                                              PLAN
                                                                                                  EQUITY      AWARDS:
                                                                                         MARKET   INCENTIVE   MARKET
                                                                                NUMBER   VALUE    PLAN        OR
                                          EQUITY                                OF       OF       AWARDS:     PAYOUT
                                          INCENTIVE                             SHARES   SHARES   NUMBER OF   VALUE OF
                                          PLAN                                  OR       OR       UNEARNED    UNEARNED
                                          AWARDS:                               UNITS    UNITS    SHARES,     SHARES,
            NUMBER OF     NUMBER OF       NUMBER OF                             OF       OF       UNITS OR    UNITS OR
            SECURITIES    SECURITIES      SECURITIES                            STOCK    STOCK    OTHER       OTHER
            UNDERLYING    UNDERLYING      UNDERLYING                            THAT     THAT     RIGHTS      RIGHTS
            UNEXERCISED   UNEXERCISED     UNEXERCISED   OPTION                  HAVE     HAVE     THAT HAVE   THAT
            OPTIONS       OPTIONS         UNEARNED      EXERCISE   OPTION       NOT      NOT      NOT         HAVE NOT
            (#)           (#)             OPTIONS       PRICE      EXPIRATION   VESTED   VESTED   VESTED      VESTED
NAME        EXERCISABLE   UNEXERCISABLE   (#)           ($)        DATE         (#)      ($)      (#)         (#)
(A)         (B)           (C)             (D)           (E)        (F)          (G)      (H)      (I)         (J)
---------   -----------   -------------   -----------   --------   ----------   ------   ------   ---------   ---------
<S>         <C>           <C>             <C>           <C>        <C>          <C>      <C>      <C>         <C>
Stephen         750,000               -             -       0.50      8/14/08        -        -           -           -
Walters         250,000               -             -       0.20     12/30/09        -        -           -           -
                400,000               -             -       0.15      5/05/10        -        -           -           -
                100,000               -             -       0.15     12/25/10        -        -           -           -
                150,000               -             -       0.15      8/17/11        -        -           -           -
                300,000               -             -       0.06     11/24/12        -        -           -           -

Laurie          200,000               -             -       0.50      8/14/08        -        -           -           -
Bewes           125,000               -             -       0.20     12/30/09        -        -           -           -
                175,000               -             -       0.15      5/05/10        -        -           -           -
                 50,000               -             -       0.15     12/25/10        -        -           -           -
                 75,000               -             -       0.15      8/17/11        -        -           -           -
                100,000               -             -       0.06     11/24/12        -        -           -           -

Americo         100,000               -             -       0.50      8/14/08        -        -           -           -
de Castro        50,000               -             -       0.20     12/30/09        -        -           -           -
                 50,000               -             -       0.15      5/05/10        -        -           -           -

Adam            150,000               -             -       0.15      5/05/10        -        -           -           -
Wasserman       100,000               -             -       0.06     11/24/12        -        -           -           -
</TABLE>

COMPENSATION OF DIRECTORS

In 2006, David Bouzaid received cash compensation for his services as a member
of our Board of Directors. In 2007, we did not pay any directors fees.

EMPLOYMENT AND CONSULTING AGREEMENTS

WALTERS CONSULTING AGREEMENT

We entered into a month-to-month consulting services agreement with Stephen
Walters, our President/Chief Executive Officer (the "Walters Consulting
Agreement"). On July 1, 2007, our Board of Directors approved an amendment to
the Walters Consulting Agreement to increase the compensation from $15,000 per
month to $17,500 per month. Pursuant to the terms and provisions of the Walters
Consulting Agreement: (i) Mr. Walters provides managerial services to us; and
(ii) Mr. Walters shall be paid a monthly fee of $17,500 plus reimbursement of
expenses. Mr. Walters derived remuneration from us as compensation under the
terms and provisions of the Walters Consulting Agreement. During fiscal years
ended December 31, 2007 and 2006, $234,327 and $181,268 was incurred by us to
Mr. Walters for management and consulting services rendered.

                                       44
<PAGE>

During fiscal year ended December 31, 2006, we granted Mr. Walters 150,000 Stock
Options to purchase 150,000 shares of our common stock at $0.15 per share
expiring on August 17, 2011. The fair value of these Stock Options was estimated
at $22,304. Additionally, on November 25, 2007, we granted Mr. Walter 300,000
Stock Options to purchase 300,000 shares of our common stock at $0.06 per share
expiring on November 24, 2012. The fair value of these Stock Options was
estimated at $13,348. On November 25, 2007, in accordance with the terms and
provisions of the Walters Consulting Agreement, we issued Mr. Walters an
aggregate of 1,000,000 shares of our common stock for services rendered. These
common shares were valued at the trading price of $0.055 of $55,000. At December
31, 2007 and 2006, $371,932 and $222,992 in management fees and other expenses
are due and owing to Mr. Walters.

BEWES CONSULTING AGREEMENT

We entered into a month-to-month consulting services agreement with Laurie
Bewes, one of our directors (the "Bewes Consulting Agreement"). Pursuant to the
terms and provisions of the Bewes Consulting Agreement: (i) Mr. Bewes agreed to
provide managerial and developmental services to our Brazilian subsidiary and
act as its Executive Director; and (ii) Mr. Bewes shall be paid a monthly fee of
$12,000 for a potential annual salary of $144,000 plus reimbursement of
expenses. Mr. Bewes derived remuneration from us as compensation under the terms
and provisions of the Bewes Consulting Agreement. As at fiscal years ended
December 31, 2007 and 2006, an aggregate of $46,737 and $51,732 was incurred by
us in consulting fees due and owing to Mr. Bewes. Additionally, on November 25,
2007, we granted to Mr. Bewes 100,000 Stock Options to purchase 100,000 shares
of our common stock at $0.06 per share expiring on November 24, 2012. The fair
value of this Stock Options was estimated at $4,449. As at December 31, 2007 and
2006, $34,120 and $16,382 in fees is due and owing to Mr. Bewes. Since July 2007
we have no contract with Mr. Bewes.

SASSO INVESTOR RELATIONS AGREEMENT

On January 17, 2006 we entered into a twelve month consulting agreement with
David Sasso for provision of investor relations services (the "Sasso Consulting
Agreement"). Pursuant to the terms of the Sasso Consulting Agreement, Mr. Sasso
was paid a monthly fee of $7,000. Mr. Sasso agreed to act as our Vice President
of Investor Relations and Corporate Communications. For fiscal years ended
December 31, 2007 and 2006, we incurred $37,000 and $75,600 in consulting fees
to Mr. Sasso. On January 26, 2006, we granted Mr. Sasso Stock Options to
purchase 100,000 shares of our common stock at $0.15 per share. These Stock
Options expire on February 5, 2011. The fair value of these Stock Options
granted was estimated at $12,834. Additionally, on November 25, 2007, we granted
to Mr. Sasso 50,000 Stock Options to purchase 50,000 shares of our common stock
at $0.06 per share expiring on November 24, 2012. The fair value of these Stock
Options was estimated at $2,225. During 2007, we amended our arrangement with
Mr. Sasso who provides part time services and is paid a monthly fee of US$2,500.

WASSERMAN FINANCIAL SERVICES AGREEMENT

We entered into an engagement letter with Adam Wasserman in February 2005.
Pursuant to the terms of this engagement letter, Mr. Wasserman is paid a monthly
retainer fee of $2,500 plus hourly fees at a standard rate of $95 per hour for
services performed. Mr. Wasserman agreed to act as our Chief Financial Officer
and principal accounting office. During fiscal year ended December 31, 2007 and
2006, fees amounted to $72,000 and $130,000, respectively. On August 18, 2006,
we granted Mr. Wasserman 75,000 Stock Options to purchase 75,000 shares of our
common stock at $0.15 per share. These Stock Options expire on August 17, 2011.
The fair value of these Stock Options was estimated at $12,834. Additionally, on
November 25, 2007, we granted Mr. Wasserman 100,00 Stock Options to purchase
100,000 shares of common stock at $0.06 per share. The fair value of these Stock
Options was estimated at $4,449.

                                       45
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

The following table sets forth certain information with respect to the
beneficial ownership of our common stock by each stockholder known by us to be
the beneficial owner of more than 5% of our common stock and by each of our
current directors and executive officers. Each person has sole voting and
investment power with respect to the shares of common stock, except as otherwise
indicated. Beneficial ownership consists of a direct interest in the shares of
common stock, except as otherwise indicated. As of the date of this Annual
Report, there are 39,774,341 shares of common stock issued and outstanding.

NAME AND ADDRESS OF                              NUMBER OF          PERCENTAGE
BENEFICIAL OWNER(1)                           SHARES OWNED(1)       OF CLASS(1)
---------------------------------------       ---------------       -----------
DIRECTORS AND OFFICERS:

Stephen Walters .......................         4,884,819 (2)          11.71%
Bali View Block A4/7
Jl. Cirendeu Raya 40 Jakarta Selatan
13419 Indonesia

Laurie Bewes ..........................         1,183,333 (3)           2.92%
429 Willawrong Road
Caringbah, Australia NSW 2229

David Sasso ...........................           200,000 (4)               *
1330 West Avenue #1703
Miami Beach, Florida 33139

Adam Wasserman ........................           250,000 (5)               *
1643 Royal Grove Way
Weston, Florida 33327

All executive officers and directors
 as a group (4 persons), including
holdings of Carlingford Investments
Limited ...............................        15,236,940 (6)          33.42%

MAJOR SHAREHOLDERS:

Carlingford Investments Limited .......         8,718,788 (7)          20.50%
80 Raffles Place
#16-20 UOB Plaza II
Singapore 048624

* Less than one percent.

(1) Under Rule 13d-3, a beneficial owner of a security includes any person who,
directly or indirectly, through any contract, arrangement, understanding,
relationship, or otherwise has or shares: (i) voting power, which includes the
power to vote, or to direct the voting of shares; and (ii) investment power,
which includes the power to dispose or direct the disposition of shares. Certain
shares may be deemed to be beneficially owned by more than one person (if, for
example, persons share the power to vote or the power to dispose of the shares).
In addition, shares are deemed to be beneficially owned by a person if the
person has the right to acquire the shares (for example, upon exercise of an
option) within 60 days of the date as of which the information is provided. In
computing the percentage ownership of any person, the amount of shares
outstanding is deemed to include the amount of shares beneficially owned by such
person (and only such person) by reason of these acquisition rights. As a
result, the percentage of outstanding shares of any person as shown in this
table does not necessarily reflect the person's actual ownership or voting power
with respect to the number of shares of common stock actually outstanding as of
the date of this Annual Report. As of the date of this Annual Report, there are
32,030,511 shares issued and outstanding.

                                       46
<PAGE>

(2) This figure includes: (i) 2,934,819 shares of common stock held of record by
Mr. Walters; (ii) an assumption of the exercise by Mr. Walters of 750,000 Stock
Options granted to Mr. Walters to acquire 750,000 shares of common stock at
$0.50 per share expiring on August 14, 2008; (iii) an assumption of the exercise
by Mr. Walters of 250,000 Stock Options to acquire 250,000 shares of common
stock at $0.20 per share expiring on December 30, 2009; (iv) an assumption of
the exercise by Mr. Walters of 400,000 Stock Options to acquire 400,000 shares
of common stock at $0.15 per share expiring on May 5, 2010; (v) an assumption of
the exercise by Mr. Walters of 100,000 Stock Options to acquire 100,000 shares
of common stock at $0.15 per share expiring on December 25, 2010; (vi) an
assumption of the exercise by Mr. Walters of 150,000 Stock Options to acquire
150,000 shares of common stock at $0.15 per share expiring on August 17, 2011;
and (vii) an assumption of the exercise by Mr. Walters of 300,000 Stock Options
to acquire 300,000 shares of common stock at $0.06 per share expiring on
November 24, 2012. As of the date of this Annual Report, no Stock Options have
been exercised.

(3) This figure includes: (i) 458,333 shares of common stock held of record;
(ii) an assumption of the exercise by Mr. Bewes of 200,000 Stock Options to
acquire 200,000 shares of common stock at $0.50 per share expiring on August 14,
2008; (iii) an assumption of the exercise by Mr. Bewes of 125,000 Stock Options
to acquire 125,000 shares of common stock at $0.20 per share expiring on
December 30, 2009; (iv) an assumption of the exercise by Mr. Bewes of 175,000
Stock Options to acquire 175,000 shares of common stock at $0.15 per share
expiring on May 5, 2010; (v) an assumption of the exercise by Mr. Bewes of
50,000 Stock Options to acquire 50,000 shares of common stock at $0.15 per share
expiring on December 25, 2010; (vi) an assumption of the exercise by Mr. Bewes
of 75,000 Stock Options to acquire 75,000 shares of common stock at $0.15 per
share expiring on August 17, 2011; and (vii) an assumption of the exercise by
Mr. Bewes of 100,000 Stock Options to acquire 100,000 shares of common stock at
$0.06 per share expiring on November 24, 2012. As of the date of this Annual
Report, no Stock Options have been exercised.

(4) This figure includes: (i) 50,000 shares of common stock held of record; (ii)
an assumption of the exercise by Mr. Sasso of 100,000 Stock Options to acquire
100,000 shares of common stock at $0.15 per share expiring on January 26, 2011;
and (iii) an assumption of the exercise by Mr. Sasso of 50,000 Stock Options to
acquire 50,000 shares of common stock at $0.06 per share expiring on November
24, 2012. As of the date of this Annual Report, no Stock Options have been
exercised.

(5) This figure includes: (i) an assumption of the exercise by Mr. Wasserman of
150,000 Stock Options to acquire 150,000 shares of common stock at $0.15 per
share expiring on May 4, 2010; and (ii) an assumption of the exercise by Mr.
Wasserman of 100,000 Stock Options to acquire 100,000 shares of common stock at
$0.06 per share expiring on November 24, 2012. As of the date of this Annual
Report, no Stock Options have been exercised.

(6) This figure includes: (i) 9,413,607 shares of common stock held of record;
(ii) an assumption of the exercise of an aggregate of 2,748,333 Warrants to
acquire 2,748,333 shares of common stock; and (iii) an assumption of the
exercise of an aggregate of 3,075,000 Stock Options to acquire 3,075,000 shares
of common stock.

(7) This figure includes: (i) 5,970,455 shares of common stock held of record by
Carlingford Investments Limited, over which Mr. Walters has sole voting and
disposition rights; (ii) an assumption of the exercise by Carlingford
Investments Limited of an aggregate of 2,700,000 warrants held of record by
Carlingford Investments Limited, over which Mr. Walters has sole voting and
disposition rights, into 2,700,000 shares of common stock at a price of $1.00
per share expiring on August 14, 2008; and (iii) an assumption of the exercise
by Carlingford Investments Limited of an aggregate of 48,333 warrants held of
record by Carlingford Investments Limited, over which Mr. Walters has sole
voting and disposition rights, into 48,333 shares of common stock at a price of
$0.20 per share expiring on September 29, 2009. As of the date of this Annual
Report, no warrants have been exercised.

                                       47
<PAGE>

CHANGES IN CONTROL

We are unaware of any contract, or other arrangement or provision, the operation
of which may be at a subsequent date result in a change of control of our
company.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
         COMPENSATION

With the exception of the current month-to-month contractual relations between
us and certain of our executive officers and the loans made by certain of our
officers all as described above, as of the date of this Annual Report, we have
not entered into any contractual arrangements with related parties other than
those transactions resulting primarily from advances made by related parties to
us and the consulting contractual arrangements. Our Board has not adopted or
approved any policy regarding possible future transactions with related third
parties.

Our executive officers and directors may be engaged in other businesses, either
individually or through partnerships and corporations in which they may have an
interest, hold an office or serve on the boards of directors. Our executive
officers and directors may have other business interests to which they may
devote a portion of their time. Certain conflicts of interest, therefore, may
arise between us and our executive officers and directors. Such conflicts can be
resolved through the exercise by such executive officers and directors of
judgment consistent with their fiduciary duties to us.

Our executive officers and directors intend to resolve such conflicts in the
best interests of us. Moreover, the executive officers and directors will devote
his time to our affairs as they deem necessary.

ITEM 13. EXHIBITS

The following exhibits are filed with this Annual Report on Form 10-KSB:

Exhibit
Number                          Description of Exhibit
-------    ---------------------------------------------------------------------

3.1      Articles of Incorporation - incorporated by reference to the Company's
         Report filed on Form 10-SB filed on October 27, 1999.

3.2      By Laws - Incorporated by reference to Exhibit 3.2 to the Company's
         Registration Statement on Form SB-2 as filed with the SEC on May 9,
         2006.

3.3      Certificate of Designation of Series A Convertible Preferred Stock of
         Transax International, Ltd. Incorporated by reference to Exhibit 10.3
         to the Company's Current Report on Form 8-K as filed with the SEC on
         January 20, 2006.

4.1      2004 Stock Option Plan, effective January 1, 2004 incorporated by
         reference to the Company's Annual Report on Form 10-KSB for the year
         ended December 31, 2004 as filed with the SEC on April 18, 2005.

10.1     Merger Agreement, dated July 22, 2003, by and among the Company,
         Vega-Atlantic Acquisition Corporation, Transax Limited and certain
         selling shareholders of Transax International Limited Incorporated by
         reference to the Company's Annual Report filed on Form 10-KSB for the
         year ended December 31, 2003 as filed with the SEC on April 14, 2004.

                                       48
<PAGE>

10.2     Securities Purchase Agreement, dated April 1, 2005, by and between the
         Company and Scott and Heather 10.2 Grimes - Joint Tenants With Rights
         of Survivorship - Incorporated by reference to the Company's Current
         Report on Form 8-K as filed with the SEC on April 6, 2005.

10.3     Investors Registration Rights Agreement, dated April 1, 2005, by and
         between the Company and Scott and Heather Grimes - Joint Tenants With
         Rights of Survivorship - Incorporated by reference to the Company's
         Current Report on Form 8-K as filed with the SEC on April 6, 2005.

10.4     Secured Convertible Debenture, dated April 1, 2005, issued to Scott and
         Heather Grimes - Joint Tenants with Rights of Survivorship -
         incorporated by reference to the Company's Current Report on Form 8-K
         as filed with the SEC on April 6, 2005.

10.5     Termination Agreement, dated May 17, 2005, related to the 2004 Standby
         Equity Distribution Agreement by and between the Company and Cornell
         Capital Partners, LP - Incorporated by reference to the Company's
         Current Report on Form 8-K as filed with the SEC on May 20, 2005.

10.6     Standby Equity Distribution Agreement, dated May 17, 2005, by and
         between the Company and Cornell Capital Partners, LP - Incorporated by
         reference to the Company's Current Report on Form 8-K as filed with the
         SEC on May 20, 2005.

10.7     Registration Rights Agreement, dated May 17, 2005, by and between the
         Company and Cornell Capital Partners, LP - Incorporated by reference to
         the Company's Current Report on Form 8-K as filed with the SEC on
         May20, 2005.

10.8     Placement Agent Agreement, dated May 17, 2005, by and between the
         Company and Monitor Capital, Inc. Incorporated by reference to the
         Company's Current Report on Form 8-K as filed with the SEC on May 20,
         2005.

10.9     Promissory Note, dated May 17, 2005, issued by the Company to Cornell
         Capital Partners, LP - Incorporated by reference to the Company's
         Current Report on Form 8-K as filed with the SEC on May 20, 2005.

10.10    Securities Purchase Agreement, dated October 25, 2005, by and between
         the Company and Cornell Capital Partners, LP - Incorporated by
         reference to the Company's Current Report on Form 8-K as filed with the
         SEC on November 3, 2004.

10.11    Termination Agreement, dated as of January 13, 2006, by and between
         Transax International, Ltd. and Cornell Capital Partners, LP -
         Incorporated by reference to Exhibit 10.9 to the Company's Current
         Report on Form 8-K as filed with the SEC on January 20, 2006.

10.12    Letter from Cornell Capital Partners, LP, regarding the surrender of a
         Promissory Note - Incorporated by reference to Exhibit 10.8 to the
         Company's Current Report on Form 8-K as filed with the SEC on January
         20, 2006.

10.13    Investment Agreement, dated as of January 13, 2006, by and between
         Transax International, Ltd. and Cornell Capital Partners, LP -
         Incorporated by reference to Exhibit 10.1 to the Company's Current
         Report on Form 8-K as filed with the SEC on January 20, 2006.

10.14    Investor Registration Rights Agreement, dated as of January 13, 2006,
         by and between Transax International, Ltd. and Cornell Capital
         Partners, LP - Incorporated by reference to Exhibit 10.2 to the
         Company's Current Report on Form 8-K as filed with the SEC on January
         20, 2006.

                                       49
<PAGE>

10.15    Warrant, dated as of January 13, 2006, issued to Cornell Capital
         Partners, LP - Incorporated by reference to Exhibit 10.4 to the
         Company's Current Report on Form 8-K as filed with the SEC on January
         20, 2006.

10.16    Warrant, dated as of January 13, 2006, issued to Cornell Capital
         Partners, LP - Incorporated by reference to Exhibit 10.5 to the
         Company's Current Report on Form 8-K as filed with the SEC on January
         20, 2006.

10.17    Escrow Agreement dated January 13, 2006, by and among Transax
         International, Ltd., Cornell Capital Partners, LP and David Gonzalez,
         Esq. - Incorporated by reference to Exhibit 10.6 to the Company's
         Current Report on Form 8-K as filed with the SEC on January 20, 2006.

10.18    Irrevocable Transfer Agent Instructions, dated as of January 13, 2006,
         by and between Transax International, Ltd. and Cornell Capital
         Partners, LP - Incorporated by reference to Exhibit 10.7 to the
         Company's Current Report on Form 8-K as filed with the SEC on January
         20, 2006.

10.19    Investor Relations Agreement, dated January 17, 2006, by and between
         Transax International Limited and David Sasso - Incorporated by
         reference to Exhibit 10.11 to the Company's Amended Annual Report on
         Form 10-KSB/A as filed with the SEC on July 10, 2006.

10.20    Consulting Agreement, dated July 15, 2005, by and between Transax
         International Limited and Geoff Eiten Incorporated by reference to
         Exhibit 10.12 to the Company's Amended Annual Report on Form 10-KSB/A
         as filed with the SEC on July 10, 2006.

10.21    Consulting Agreement, dated March 31, 2005, by and between Transax
         International Limited and Aiden Capital Management - Incorporated by
         reference to Exhibit 10.13 to the Company's Amended Annual Report on
         Form 10-KSB/A as filed with the SEC on July 10, 2006.

10.22    Consulting Agreement, dated January 14, 2005, by and between Transax
         International Limited and Mirador Consulting, Inc. - Incorporated by
         reference to Exhibit 10.14 to the Company's Amended Annual Report on
         Form 10-KSB/A as filed with the SEC on July 10, 2006.

10.23    Service Agreement and Proposal, dated March 20, 2006 by and Between the
         Company and ROI Group Associates, Inc. - Incorporated by reference to
         Exhibit 10.23 to the Company's Registration Statement on Form SB-2 as
         filed with the SEC on May 9, 2006.

10.24    Management Consulting Services Agreement dated July 1, 2007 among
         Transax International Limited, Transax Limited, and Carlingford
         Investments Limited - Incorporated by reference to Exhibit 10.1 to the
         Company's Form 10-QSB as filed with the SEC on November 19, 2007.

10.25    Stock Purchase And Option Agreement dated March 26, 2008 between
         Transax International Limited and Engetech, Inc.- Incorporated by
         reference to Exhibit 10.1 to the Company's Form 8-K as filed with the
         SEC on March 31, 2008.

10.26    Escrow Agreement dated March 26, 2008 among Engetech, Inc., Transax
         International Limited and Carlton Fields PA. - Incorporated by
         reference to Exhibit 10.2 to the Company's Form 8-K as filed with the
         SEC on March 31, 2008.

10.27    Intellectual Property License Agreement dated March 26, 2008 between
         Medlink Technologies Inc., and Transax International Limited -
         Incorporated by reference to Exhibit 10.3 to the Company's Form 8-K as
         filed with the SEC on March 31, 2008.

                                       50
<PAGE>

10.28    Promissory Note dated March 26, 2008 between Engetech, Inc., and
         Transax International Limited. - Incorporated by reference to Exhibit
         10.4 to the Company's Form 8-K as filed with the SEC on March 31, 2008.

10.29    Stock Pledge Agreement dated March 26, 2008 between Engetech, Inc. and
         Transax International Limited - Incorporated by reference to Exhibit
         10.5 to the Company's Form 8-K as filed with the SEC on March 31, 2008.

14.1     Code of Ethics - Incorporated by reference to Exhibit 14.1 to the
         Company's Registration Statement on Form SB-2 as filed with the SEC on
         May 9, 2006.

31.1     Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or
         15d-14(a) of the Securities Exchange Act. *

31.2     Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a)
         or 15d-14(a) of the Securities Exchange Act *

32.1     Certification of Chief Executive Officer pursuant to Section 906 of the
         Sarbanes-Oxley Act of 2002 *

32.2     Certification of Chief Financial Officer pursuant to Section 906 of the
         Sarbanes-Oxley Act of 2002 *

* File herein.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

During fiscal year ended December 31, 2007, we incurred approximately $49,500 in
fees to our principal independent accountant for professional services rendered
in connection with the audit of our financial statements and for the review of
our financial statements for each quarter..

During fiscal year ended December 31, 2006, we incurred approximately $50,300 in
connection with the audit of our financial statements for fiscal year ended
December 31, 2005 and for the review of our financial statements for the
quarters ended March 31, 2006, June 30, 2006 and September 30, 2006.

During fiscal year ended December 31, 2007, we did not incur any other fees for
professional services rendered by our principal independent accountant for any
non-audit services which may include, but is not limited to, tax-related
services, actuarial services or valuation services.

                                       51
<PAGE>

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                        TRANSAX INTERNATIONAL LIMITED

Dated: April 18, 2008                   By: /s/ STEPHEN WALTERS
                                            -------------------
                                            Stephen Walters, President/Chief
                                            Executive Officer and Director


Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this amended report has been signed by the following persons in the capacities
and on the dates indicated.

     Signature                         Title                            Date
     ---------                         -----                            ----

/s/ Stephen Walters     Chief Executive Officer and Director      April 18, 2008
-------------------
Stephen Walters

/s/ Adam Wasserman      Chief Financial Officer and               April 18, 2008
------------------      Principal Accounting Officer
Adam Wasserman

/s/ Laurie Bewes        Director                                  April 18, 2008
----------------
Laurie Bewes

                                       52
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                    CONTENTS


Report of Independent Registered Public Accounting Firm .....................F-2

 Consolidated Financial Statements:

     Consolidated Balance Sheets ............................................F-3

     Consolidated Statements of Operations ..................................F-4

     Consolidated Statements of Changes in Stockholders' Deficit ............F-5

     Consolidated Statements of Cash Flows ..................................F-6

Notes to Consolidated Financial Statements ..........................F-7 to F-32

                                      F-1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders'
of Transax International Limited.

We have audited the accompanying consolidated balance sheet of Transax
International Limited and Subsidiaries as of December 31, 2007and 2006 and the
related consolidated statements of operations, changes in stockholders' deficit,
and cash flows for each of the two years in the period then ended. 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 the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purposes of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amount 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 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 financial position of Transax
International Limited and Subsidiaries as of December 31, 2007 and 2006 and the
results of their operations and their cash flows for each of the two years in
the period then ended in conformity with accounting principles generally
accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has accumulated losses from
operations of approximately $13.3 million, a working capital deficiency of
approximately $4.6 million and a net capital deficiency of approximately $3.9
million at December 31, 2007. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 2. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

The Company changed its method of accounting for stock-based compensation during
2006 (See Note 1).


                                           Moore Stephens, P.C.
                                           Certified Public Accountants
New York, New York
April 17, 2008

                                       F-2
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                           December 31,
                                                    ---------------------------
                                                        2007           2006
                                                    ------------   ------------
                                     ASSETS

CURRENT ASSETS:
  Cash .........................................    $    175,938   $     71,501
  Accounts receivable (net of allowance for
    doubtful accounts of $0) ...................         487,397        377,502
  Prepaid expenses and other current assets ....         277,992        243,627
                                                    ------------   ------------

     TOTAL CURRENT ASSETS ......................         941,327        692,630

SOFTWARE DEVELOPMENT COSTS, net ................         347,063        327,903
PROPERTY AND EQUIPMENT, net ....................         757,673      1,032,411
DEFERRED DEBT OFFERING COSTS, NET ..............               -          4,783
OTHER ASSETS ...................................           4,800          4,800
                                                    ------------   ------------

     TOTAL ASSETS ..............................    $  2,050,863   $  2,062,527
                                                    ============   ============

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
  Current portion of loans payable .............    $    600,440   $    504,519
  Convertible debenture payable, net ...........         225,000        193,750
  Accounts payable and accrued expenses ........       2,184,678      1,624,415
  Deposit on sale of minority interest .........         187,747              -
  Due to related parties .......................         406,052        245,374
  Warrant liability ............................         153,134        307,570
  Convertible feature liability ................       1,280,100      1,838,262
  Loan payable - related party .................         292,475        155,508
  Convertible loan - related party .............         238,621        217,621
                                                    ------------   ------------

     TOTAL CURRENT LIABILITIES .................       5,568,247      5,087,019

LOANS PAYABLE, NET OF CURRENT PORTION ..........          52,364         17,679
ACCOUNTS PAYABLE AND ACCRUED EXPENSES, NET
  OF CURRENT PORTION ...........................         287,307        485,893
                                                    ------------   ------------

     TOTAL LIABILITIES .........................       5,907,918      5,590,591
                                                    ------------   ------------

STOCKHOLDERS' DEFICIT:

Series A convertible preferred stock, no par
  value; 16,000 shares authorized; 15,330 and
  16,000 shares issued and outstanding at
  December 31, 2007 and 2006 ,respectively;
  liquidation preference $1,533,000 at
  December 31, 2007 ............................       1,417,039      1,478,971
Common stock $.00001 par value; 100,000,000
  shares authorized; 34,632,778 and 32,030,511
  shares issued and outstanding at
  December 31, 2007 and 2006, respectively .....             346            320
Paid-in capital ................................       8,013,632      7,816,809
Accumulated deficit ............................     (13,313,435)   (12,918,217)
Accumulated other comprehensive income .........          25,363         94,053
                                                    ------------   ------------

     TOTAL STOCKHOLDERS' DEFICIT ...............      (3,857,055)    (3,528,064)
                                                    ------------   ------------

     TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT    $  2,050,863   $  2,062,527
                                                    ============   ============

              The accompanying notes are an integral part of these
                        consolidated financial statements

                                       F-3
<PAGE>

                   TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                         FOR THE YEAR ENDED
                                                            DECEMBER 31,
                                                    ---------------------------
                                                        2007           2006
                                                    ------------   ------------

REVENUES .........................................  $  5,173,544   $  4,164,429
                                                    ------------   ------------

OPERATING EXPENSES:
  Cost of product support services ...............     2,072,326      1,576,563
  Compensation and related benefits ..............     1,127,287      1,018,196
  Professional fees ..............................       116,075        191,174
  Management and consulting fees - related parties       471,761        498,325
  Investor relations .............................        30,878        253,947
  Depreciation and amortization ..................       343,531        237,341
  General and administrative .....................     1,282,539      1,136,071
                                                    ------------   ------------

     TOTAL OPERATING EXPENSES ....................     5,444,397      4,911,617
                                                    ------------   ------------

LOSS FROM OPERATIONS .............................      (270,853)      (747,188)
                                                    ------------   ------------

OTHER INCOME (EXPENSES):
  Other income (expenses) ........................        (6,393)       (32,843)
  Foreign exchange loss ..........................       (27,348)       (16,966)
  Debt settlement and offering costs .............             -       (153,671)
  Gain (loss) from derivative liabilities ........       662,127       (257,560)
  Registration rights penalty ....................             -       (160,000)
  Interest expense ...............................      (497,855)      (606,963)
  Interest expense - related party ...............       (60,418)       (36,162)
                                                    ------------   ------------

     TOTAL OTHER INCOME (EXPENSES) ...............        70,113     (1,264,165)
                                                    ------------   ------------

LOSS BEFORE INCOME TAXES .........................      (200,740)    (2,011,353)

PROVISION FOR INCOME TAXES .......................      (194,478)             -
                                                    ------------   ------------

NET LOSS .........................................      (395,218)    (2,011,353)

DEEMED AND CUMULATIVE PREFERRED STOCK DIVIDENDS ..      (110,621)    (1,662,444)
                                                    ------------   ------------

NET LOSS AVAILABLE TO COMMON STOCKHOLDERS ........  $   (505,839)  $ (3,673,797)
                                                    ============   ============

COMPREHENSIVE INCOME (LOSS):
  NET LOSS .......................................  $   (395,218)  $ (2,011,353)

  OTHER COMPREHENSIVE INCOME (LOSS):
    Unrealized foreign currency translation
      (loss) gain ................................       (68,690)        79,902
                                                    ------------   ------------

  COMPREHENSIVE LOSS .............................  $   (463,908)  $ (1,931,451)
                                                    ============   ============

NET LOSS PER COMMON SHARE:
  BASIC AND DILUTED ..............................  $      (0.02)  $      (0.12)
                                                    ============   ============

WEIGHTED AVERAGE SHARES OUTSTANDING:
  BASIC AND DILUTED ..............................    32,569,263     31,801,854
                                                    ============   ============

              The accompanying notes are an integral part of these
                       consolidated financial statements

                                      F-4
<PAGE>
<TABLE>
                                           TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                                     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
                                           For the Years Ended December 31, 2007 and 2006
<CAPTION>
                                                                                                          Accumulated
                             Series A                                                                        Other
                         Preferred Stock         Common Stock                                 Deferred      Compre-        Total
                       -------------------   -------------------    Paid-in     Accumulated    Compen-      hensive    Stockholders'
                       Shares     Amount       Shares     Amount    Capital       Deficit      sation       Income        Deficit
                       ------   ----------   ----------   ------  ----------   ------------   ---------   -----------  -------------
<S>                    <C>      <C>          <C>          <C>     <C>          <C>            <C>         <C>          <C>
BALANCE,
 DECEMBER 31, 2005 ..       -   $        -   31,640,949   $ 316   $7,602,313   $ (9,244,420)  $       -   $   14,151   $ (1,627,640)

Common stock issued
 for debt ...........       -            -      255,682       3       24,997              -           -            -         25,000

Derivative liability
 reclassified to
 paid-in capital ....       -            -            -       -       26,926              -           -            -         26,926

Common stock issued
 for services .......       -            -      998,270      10      122,355              -    (108,000)           -         14,365

Grant of stock
 options and warrants
 for services .......       -            -            -       -      289,056              -    (221,998)           -         67,058

Cancellation of
 shares .............       -            -     (864,390)     (9)    (248,838)             -     155,832            -        (93,015)

Deemed preferred
 stock dividend .....       -            -            -       -            -     (1,600,000)          -            -     (1,600,000)

Cumulative dividend
 on preferred shares        -            -            -       -            -        (62,444)          -            -        (62,444)

Sale of series A
 preferred stock, net  16,000    1,478,971            -       -            -              -           -            -      1,478,971

Amortization of
 deferred
 compensation .......       -            -            -       -            -              -     174,166            -        174,166

Comprehensive Loss:
 Net loss for period        -            -            -       -            -     (2,011,353)          -            -              -
 Foreign currency
  translation
  adjustments .......       -            -            -       -            -              -           -       79,902              -
 Total comprehensive
  loss ..............       -            -            -       -            -              -           -            -     (1,931,451)
                       ------   ----------   ----------   -----   ----------   ------------   ---------   ----------   ------------

BALANCE,
 DECEMBER 31, 2006 ..  16,000    1,478,971   32,030,511     320    7,816,809    (12,918,217)          -       94,053     (3,528,064)

Common stock issued
 for preferred stock     (670)     (61,932)   1,552,267      16       61,916              -           -            -              -

Derivative liability
 reclassified to
 paid-in capital ....       -            -            -       -       50,471              -           -            -         50,471

Common stock issued
 for services .......       -            -    1,050,000      10       57,740              -           -            -         57,750

Grant of stock
 options and warrants
 for services .......       -            -            -       -       26,696              -           -            -         26,696

Comprehensive Loss:
 Net loss for period        -            -            -       -            -       (395,218)          -            -              -
 Foreign currency
  translation
  adjustments .......       -            -            -       -            -              -           -      (68,690)             -
 Total comprehensive
  loss ..............       -            -            -       -            -              -           -            -       (463,908)
                       ------   ----------   ----------   -----   ----------   ------------   ---------   ----------   ------------

BALANCE,
 DECEMBER 31, 2007 ..  15,330   $1,417,039   34,632,778   $ 346   $8,013,632   $(13,313,435)  $       -   $   25,363   $ (3,857,055)
                       ======   ==========   ==========   =====   ==========   ============   =========   ==========   ============

                                        The accompanying notes are an integral part of these
                                                 consolidated financial statements.

                                                                 F-5
</TABLE>
<PAGE>
<TABLE>
                            TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
                                                                                 For the Year
                                                                               Ended December 31,
                                                                          --------------------------
                                                                              2007           2006
                                                                          -----------    -----------
<S>                                                                       <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ..............................................................   $  (395,218)   $(2,011,353)
Adjustments to reconcile net loss to net cash
  provided by (used in) operating activities:
    Depreciation and amortization .....................................       343,531        237,341
    Amortization of software maintenance costs ........................       235,249        214,673
    Stock-based compensation and consulting ...........................        84,446        255,589
    Grant of warrants in connection with debt extension ...............             -         46,686
    Amortization of deferred debt issuance costs ......................         4,783        126,116
    Amortization of debt discount .....................................        31,250        125,000
    (Gain) loss from derivative liabilities ...........................      (662,127)       257,560

Changes in assets and liabilities:
    Accounts receivable ...............................................       (27,309)       (25,663)
    Prepaid expenses and other current assets .........................        12,939        (67,038)
    Other assets ......................................................             -         (2,400)
    Accounts payable and accrued expenses .............................       515,154        263,023
    Accrued interest payable, related party ...........................        77,967         27,798
    Due to related parties ............................................       160,678         16,441
    Accounts payable and accrued expenses - long-term .................      (257,388)        52,231
                                                                          -----------    -----------

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ...................       123,955       (483,996)
                                                                          -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Deposit on sale of minority interest ................................       187,747              -
  Capitalized software development costs ..............................      (254,409)      (217,011)
  Acquisition of property and equipment ...............................       (68,793)      (559,036)
                                                                          -----------    -----------

NET CASH USED IN INVESTING ACTIVITIES .................................      (135,455)      (776,047)
                                                                          -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net proceeds from sale of Series A preferred stock ..................             -      1,478,971
  Repayments under capital lease obligations ..........................             -        (17,735)
  Proceeds from loan payable ..........................................             -        201,932
  Proceeds from (repayment of) of loans ...............................        19,319       (255,237)
  Proceeds from loan - related party ..................................        80,000              -
  Repayment of loan - related party ...................................             -        (85,000)
                                                                          -----------    -----------

NET CASH PROVIDED BY FINANCING ACTIVITIES .............................        99,319      1,322,931
                                                                          -----------    -----------

EFFECT OF EXCHANGE RATE CHANGES ON CASH ...............................        16,618            738
                                                                          -----------    -----------

NET INCREASE IN CASH ..................................................       104,437         63,626

CASH, BEGINNING OF YEAR ...............................................        71,501          7,875
                                                                          -----------    -----------

CASH, END OF YEAR .....................................................   $   175,938    $    71,501
                                                                          ===========    ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid for interest ..............................................   $   405,572    $   324,211
                                                                          ===========    ===========

  Cash paid for income taxes ..........................................   $   194,478    $         -
                                                                          ===========    ===========

NON-CASH INVESTING AND FINANCING ACTIVITIES:
  Common stock issued for debt and accrued interest ...................   $         -    $    25,000
                                                                          ===========    ===========
  Common stock and options issued for services ........................   $    84,446    $   255,589
                                                                          ===========    ===========
  Loan paid with preferred stock proceeds .............................   $         -    $   255,237
                                                                          ===========    ===========
  Derivative liabilities recorded for deemed preferred stock dividend .   $         -    $ 1,600,000
                                                                          ===========    ===========
  Seres A preferred stock converted to common stock ...................   $    61,932    $         -
                                                                          ===========    ===========
  Derivative liability reclassified to equity upon conversion .........   $    50,471    $    26,926
                                                                          ===========    ===========

                         The accompanying notes are an integral part of these
                                  consolidated financial statements

                                                 F-6
</TABLE>
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

Transax International Limited ("TNSX" or the "Company") (formerly Vega-Atlantic
Corporation) was incorporated in the State of Colorado in 1999. The Company
currently trades on the OTC Bulletin Board under the symbol "TNSX" and the
Frankfurt and Berlin Stock Exchanges under the symbol "TX6".

On June 19, 2003, as amended on July 22, 2003 and effective August 14, 2003, the
Company entered into a Merger Agreement (referred to as the "Agreement" or the
"Merger") with Transax Limited ("Transax"), a Colorado private corporation,
whereby the Company issued 11,066,207 restricted common shares of the Company in
exchange for all of its outstanding shares of Transax. For financial accounting
purposes, the exchange of stock was treated as a recapitalization of Transax
with the former shareholders of the Company retaining 1,406,710, or
approximately 11%, of the outstanding stock. The stockholders' deficit section
reflects the change in the capital structure of Transax due to the
recapitalization.

On August 8, 2003, the shareholders of both TNSX and Transax held meetings.
TNSX's shareholders approved the following ratifications: (i) name change from
Vega-Atlantic Corporation to Transax International Limited; (ii) the 2004 Stock
Option Plan, and; (iii) a reverse Stock Split. Moreover, on August 8, 2003, the
shareholders of Transax approved the terms and conditions of the Agreement in
Principal and of the Merger Agreement.

The Company, primarily through its wholly-owned subsidiary, Medlink
Conectividade em Saude Ltda ("Medlink Conectividade") (formerly TDS
Telecommunication Data Systems Ltda. through April 4, 2006), is an international
provider of information network solutions specifically designed for healthcare
providers and health insurance companies. The Company's MedLink Solution (TM)
enables the real time automation of routine patient eligibility, verification,
authorizations, claims processing and payment functions. The Company has offices
located in Miami, Florida and Rio de Janeiro, Brazil.

On March 26, 2008, the Company executed a stock purchase and option agreement
(the "Agreement") with Engetech, Inc., a Turks & Caicos corporation controlled
and owned 20% by Americo de Castro, director and President of Medlink
Conectividade, and 80% by Flavio Gonzalez Duarte (the "Buyer"). In accordance
with the terms and provisions of the Agreement, the Company sold to the Buyer
45% of the total issued and outstanding stock of its wholly-owned subsidiary,
Transax Limited, which owns one hundred percent of the total issued and
outstanding share of: (i) Medlink Conectividade, and (ii) Medlink Technologies,
Inc., a Mauritius corporation ("MTI") (See Note 11).

Principles of Consolidation

The consolidated financial statements are prepared in accordance with generally
accepted accounting principles in the United States of America. The consolidated
financial statements include the Company and its wholly-owned subsidiaries,
Transax Limited, Medlink Conectividade, Transax (Australia) Pty Ltd., and
Medlink Technologies, Inc. All material intercompany balances and transactions
have been eliminated in the consolidated financial statements.

                                      F-7
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 dates of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates. In 2007 and 2006, significant
estimates used in the preparation of the accompanying financial statements
include the allowance for doubtful accounts receivable, the estimated lives and
recoverable value of property, equipment and software development costs, and the
assumptions used to calculate stock-based compensation and derivative
liabilities.

Fair Value of Financial Instruments

Accounting principles generally accepted in the United States of America require
disclosing the fair value of financial instruments to the extent practical 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 these financial instruments, we used
a variety of methods and assumptions, which were based on estimates of market
conditions and risks existing at that time. For certain instruments, including
cash, receivables, and current liabilities, it was estimated that the carrying
amount approximated fair value for the majority of these instruments because of
their short maturity. The fair value of property and equipment Is estimated to
approximate their net book values. The fair value of our debt instruments
approximate their carrying values based on rates currently available to us.

Concentrations of Credit Risk

Financial instruments that potentially subject us to significant concentrations
of credit risk consist principally of cash and accounts receivable. The Company
performs certain credit evaluation procedures and does not require collateral
for financial instruments subject to credit risk. The Company believes that its
credit risk is limited because 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 limited.

The Company recognizes an allowance for doubtful accounts to ensure accounts
receivable are not overstated due to uncollectability and are maintained for all
customers based on a variety of factors, including the length of time the
receivables are past due, significant one-time events and historical experience.
An additional reserve for individual accounts is recorded when the Company
becomes aware of a customer's inability to meet its financial obligation, such
as in the case of bankruptcy filings or deterioration in the customer's
operating results or financial position. If circumstances related to customers
change, estimates of the recoverability of receivables would be further
adjusted. As of December 31, 2007 and 2006, the allowance for doubtful accounts
was $0.

                                      F-8
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Concentrations of Credit Risk (continued)

The Company's principal business activities are located in Brazil. Although
Brazil is considered to be economically stable, it is always possible that
unanticipated events in foreign countries could disrupt the Company's
operations.

The Company had net revenues from two major customers during each of the years
ended December 31, 2007 and 2006 that accounted for approximately 88%, or
$4,548,000 and 91% or $3,787,000 of the net revenues for the years 2007 and
2006, respectively. In 2007, these two major customers accounted for 49% and 39%
of net revenues, respectively. In 2006, these two major customers accounted for
52% and 39% of net revenues, respectively. At December 31, 2007, the same major
customers accounted for 47% and 35%, respectively, of the total accounts
receivable balance outstanding.

The Company maintains its cash in accounts with major financial institutions in
the United States, and Brazil in the form of demand deposits and money market
accounts. Deposits in these banks may exceed the amounts of insurance provided
on such deposits. As of December 31, 2007 and 2006, the Company had no deposits
subjected to such risk. We have not experienced any losses on our deposits of
cash and cash equivalents.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents. The Company had no
cash equivalents at December 31, 2007 and 2006.

Property and Equipment, net

Property and equipment, net is stated at cost less accumulated depreciation and
amortization. Depreciation and amortization is computed generally by the
straight-line method at rates adequate to allocate the cost of applicable assets
over their estimated useful lives, which range from 2 - 10 years. Expenditures
for maintenance and repairs that do not improve or extend the lives of the
related assets are expensed to operations, while major repairs are capitalized.

Long-Lived Assets

Long-lived assets are reviewed annually for possible impairment, or whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. When such factors and circumstances exist, we compare
the projected undiscounted future cash flows associated with the future use and
disposal of the related asset or group of assets to their respective carrying
amounts. Impairment, if any, is measured as the excess of the carrying amount
over the fair value, based on market value when available, or discounted
expected cash flows, of those assets and is recorded in the period in which the
determination is made. Management recorded no impairment charges of long-lived
assets during each of the years ended December 31, 2007 and 2006.

                                      F-9
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes

The Company files federal and state income tax returns in the United States for
its domestic operations, and files separate foreign tax returns for the
Company's foreign subsidiaries in the jurisdictions in which those subsidiaries
operate. The Company accounts for income taxes under Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." Under SFAS
No.109, deferred tax assets and liabilities are determined based on differences
between the financial statement and tax basis of assets and liabilities and net
operating loss and credit carryforwards using enacted tax rates in effect for
the year in which the differences are expected to affect taxable income. A
valuation allowance is established, when necessary, to reduce deferred tax
assets to the amount that is more likely than not to be realized. If it becomes
more likely than not that a deferred tax asset will be used, the related
valuation allowance on such assets would be reversed. Management makes judgments
as to the interpretation of the tax laws that might be challenged upon an audit
and cause changes to previous estimates of tax liability. In management's
opinion, adequate provisions for income taxes have been made for all years. If
actual taxable income by tax jurisdiction varies from estimates, additional
allowances or reversal of reserves may be necessary. Under SFAS No. 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. Due to net
operating loss carry forwards available, no provision for income taxes has been
recorded for the U.S. entities for the years ended December 31, 2007 and 2006.

On January 1, 2007, we adopted the provisions of FIN 48, "Accounting for
Uncertainty in Income Taxes - an interpretation of SFAS Statement No. 109 which
provides a financial statement recognition threshold and measurement attribute
for a tax position taken or expected to be taken in a tax return. Under FIN 48,
we may recognize the tax benefit from an uncertain tax position only if it is
more likely than not that the tax position will be sustained on examination by
the taxing authorities, based on the technical merits of the position. The tax
benefits recognized in the financial statements from such a position should be
measured based on the largest benefit that has a greater than 50% likelihood of
being realized upon ultimate settlement. FIN 48 also provides guidance on
de-recognition of income tax assets and liabilities, classification of current
and deferred income tax assets and liabilities, accounting for interest and
penalties associated with tax positions, and income tax disclosures. The
adoption of FIN 48 did not have a material impact on our consolidated financial
statements. The Company is no longer subject to federal and state income tax
examinations by tax authorities for years prior to 2003.

Foreign Currency Translation

Transactions and balances originally denominated in U.S. dollars are presented
at their original amounts. Transactions and balances in other currencies are
converted into U.S. dollars in accordance with SFAS No. 52, "Foreign Currency
Translation," and are included in determining net income or loss.

                                      F-10
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

For foreign operations with the local currency as the functional currency,
assets and liabilities are translated from the local currencies into U.S.
dollars at the exchange rate prevailing at the balance sheet date. Revenues and
expenses are translated at the weighted average exchange rates for the period to
approximate translation at the exchange rates prevailing at the dates those
elements are recognized in the financial statements. Translation adjustments
resulting from the process of translating the local currency financial
statements into U.S. dollars are included in determining comprehensive loss. As
of December 31, 2007 and 2006, the exchange rate for the Brazilian Real (R$) was
$1.00 US for 1.7713 R$ and $1.00 US for 2.138 R$, respectively.

Although the economic situation in Brazil has remained relatively stable in
recent years, a return to higher levels of inflation, and currency fluctuations
could adversely affect the Company's operations. The devaluation or valuation of
the Brazilian Real in relation to the U.S. dollar may have significant effects
on the Company's consolidated financial statements.

Revenue Recognition

The Company's revenues, which do not require any significant production,
modification or customization for the Company's targeted customers and do not
have multiple elements, are recognized when (1) persuasive evidence of an
arrangement exists; (2) delivery has occurred; (3) the Company's fee is fixed
and determinable, and; (4) collectability is probable.

Substantially all of the Company's revenues are derived from the processing of
applications by healthcare providers for approval of patients for healthcare
services from insurance carriers. The Company's software or hardware devices
containing the Company's software are installed at the healthcare provider's
location. The Company offers transaction services to authorize and adjudicate
identity of the patient and obtains "real time" approval for any necessary
medical procedure from the insurance carrier. The Company's transaction-based
solutions provide remote access for healthcare providers to connect with
contracted insurance carriers. Transaction services are provided through
contracts with insurance carriers and others, which specify the services to be
utilized and the markets to be served. The Company's clients are charged for
these services on a per transaction basis. Pricing varies depending on the type
of transactions being processed under the terms of the contract for which
services are provided. Transaction revenues are recognized in the period in
which the transactions are performed.

Accounting for Conversion Features and Warrants issued with Preferred Stock

The Company issued $1,600,000 of convertible Series A preferred stock, which
contained an Embedded Conversion Feature ("ECF") and warrants to purchase common
stock. In accordance with the guidance in paragraph 12 of SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," it was necessary
to evaluate the conversion option separately from the debt host and account for
it separately as a derivative if the conversion option met certain criteria. The
conversion option met all three criteria of paragraph 12: (1) the conversion
feature is not clearly and closely related to the host component, (2) the
convertible instrument is not accounted for at fair value, and (3) the embedded
conversion option meets the definition of a derivative in paragraph 6 of SFAS
No. 133.

                                      F-11
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

To assess whether or not the ECF would be classified as stockholders' equity if
it were freestanding, management considered the guidance in EITF 00-19,
"Accounting for Derivative Financial Instruments Indexed to, and Potentially
Settled in, a Company's Own Stock". In assessing whether or not the conversion
option would be classified as equity or a liability if it were freestanding,
management determined whether or not the Series A convertible preferred stock is
considered "conventional". EITF 00-19 and EITF 05-2, "The Meaning of
Conventional Convertible Debt Instruments in issue No. 00-19", defines
conventional convertible debt as debt whereby the holder will, at the issuer's
option, receive a fixed amount of shares or the equivalent amount of cash as
proceeds when he exercises the conversion option. Management determined that
Series A convertible preferred stock was not "conventional," and the Company
considered all aspects of EITF 00-19, paragraphs 12-33.

This caused the ECF of the Series A convertible preferred stock to be classified
as a derivative financial instrument under SFAS No. 133. In addition, all
warrants to purchase common stock issued with the preferred stock were then
deemed to be classified as derivative instruments under SFAS No. 133. The
accounting treatment of derivative financial instruments requires that the
Company record the ECF and warrants at their fair values as of each reporting
date. Any change in fair value is recorded as non-operating, non-cash income or
expense at each reporting date. The derivatives were valued using the
Black-Scholes option pricing model and are classified in the consolidated
balance sheet as current liabilities at December 31, 2007 and 2006.

Basic and Diluted Loss per Share

Basic loss per share is computed by dividing the net loss by the weighted
average number of shares of common stock outstanding during the period. Diluted
loss per share reflects the basic loss per share, while giving effect to all
dilutive potential common shares that were outstanding during the period, such
as common shares that could result from the potential exercise or conversion of
securities (options or warrants) into common stock. The computation of diluted
loss per share does not assume conversion, exercise, or contingent issuance of
securities that would have an anti-dilutive effect on loss per share (i.e.
reducing loss per share). The dilutive effect of outstanding options and
warrants and their equivalents are reflected in dilutive earnings per share by
the application of the treasury stock method which recognizes the use of
proceeds that could be obtained upon the exercise of options and warrants in
computing diluted earnings per share. It assumes that any proceeds would be used
to purchase common stock at the average market price of the common stock during
the period. The Company's common stock equivalents at December 31, 2007 and 2006
include the following:

                                                      2007         2006
                                                   ----------   ----------
      Options ..................................    3,425,000    3,425,000
      Warrants .................................   11,902,500   12,902,500
      Preferred stock ..........................   31,141,815   29,090,909
      Convertible loans payable - related party     1,400,000    1,400,000
      Debenture payable ........................    6,250,000    4,687,500
                                                   ----------   ----------
           Total ...............................   54,119,315   51,505,909
                                                   ==========   ==========

For the years ended December 31, 2007 and 2006, all of the above common stock
equivalents are anti-diluted and dual presentation of loss per share is not
presented. Such items may dilute earnings per share in the future.

                                      F-12
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Stock Based Compensation

Effective January 1, 2006, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 123R (revised 2004), "Share Based Payment" ("SFAS No.
123R") on a prospective basis. SFAS No. 123R establishes the financial
accounting and reporting standards for stock-based compensation plans at fair
values. As required by SFAS No. 123R, the Company recognizes the cost resulting
from all stock-based payment transactions including shares issued under its
stock option plans in the financial statements.

Advertising

Advertising costs are expensed when incurred. For the years ended December 31,
2007 and 2006, advertising expense was deemed not material.

Comprehensive Loss

The Company has adopted SFAS No. 130, "Reporting Comprehensive Income".
Comprehensive loss represents the change in stockholders' deficit resulting from
transactions other than stockholders investments and distributions. Included in
accumulated other comprehensive loss are changes in stockholders' deficit that
are excluded from our net earnings, specifically foreign currency translation
adjustments.

Research and Development

Research and development costs are expensed as incurred. For the year ended
December 31, 2007 and 2006, research and development costs were deemed not
material.

Reclassifications

Certain 2006 items have been reclassified to conform to the December 31, 2007
presentation.

New Authoritative Pronouncements

In September 2006, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 157, "Fair Value Measurements" (SFAS 157), which provides guidance for how
companies should measure fair value when required to use a fair value
measurement for recognition or disclosure purposes under generally accepted
accounting principle (GAAP). SFAS 157 is effective for fiscal years beginning
after November 15, 2007. The Company is currently assessing the impact, if any,
the adoption of SFAS 157 will have on its financial statements.

In December 2006, FASB Staff Position No. EITF 00-19-2, "Accounting for
Registration Payment Arrangements", was issued. The FSP specifies that the
contingent obligation to make future payments or otherwise transfer
consideration under a registration payment arrangement, whether issued as a
separate agreement or included as a provision of a financial instrument or other
agreement, should be separately recognized and measured in accordance with SFAS
No. 5, "Accounting for Contingencies". The Company believes that its current
accounting is consistent with the FSP. Accordingly, adoption of the FSP had no
effect on its financial statements.

                                      F-13
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

New Authoritative Pronouncements (continued)

In September 2006, the EITF reached a consensus on EITF Issue No. 06-1,
"Accounting for Consideration Given by a Service Provider to Manufacturers or
Resellers of Equipment Necessary for an End-Customer to Receive Service from the
Service Provider" (EITF 06-1). EITF 06-1 provides that consideration provided to
the manufacturers or resellers of specialized equipment should be accounted for
as a reduction of revenue if the consideration provided is in the form of cash
and the service provider directs that such cash be provided directly to the
customer. Otherwise, the consideration should be recorded as an expense. The
provisions of EITF 06-1 will be effective on January 1, 2008. The adoption of
EITF 06-1 will not have any effect on the Company's financial position or
results of operations.

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities, Including an Amendment of FASB
Statement No. 115", under which entities will now be permitted to measure many
financial instruments and certain other assets and liabilities at fair value on
an instrument-by-instrument basis. This Statement is effective as of the
beginning of an entity's first fiscal year that begins after November 15, 2007.
Early adoption is permitted as of the beginning of a fiscal year that begins on
or before November 15, 2007, provided the entity also elects to apply the
provisions of SFAS 157. The Company is currently assessing what impact, if any,
the adoption of SFAS 159 will have on its financial statements.

In December 2007, the FASB issued Statement of Financial Accounting Standards
No. 141R, "Business Combinations" (SFAS 141R) and Statement of Financial
Accounting Standards No. 160, "Accounting and Reporting of Non-controlling
Interests in Consolidated Financial Statements", an amendment of ARB No. 51
(SFAS 160). These two standards must be adopted in conjunction with each other
on a prospective basis. The most significant changes to business combination
accounting pursuant to SFAS 141R and SFAS 160 are the following: (a) recognize,
with certain exceptions, 100 percent of the fair values of assets acquired,
liabilities assumed and non-controlling interests in acquisitions of less than a
100 percent controlling interest when the acquisition constitutes a change in
control of the acquired entity; (b) acquirers' shares issued in consideration
for a business combination will be measured at fair value on the closing date,
not the announcement date; (c) recognize contingent consideration arrangements
at their acquisition date fair values, with subsequent changes in fair value
generally reflected in earnings; (d) the expensing of all transaction costs as
incurred and most restructuring costs; (e) recognition of pre-acquisition loss
and gain contingencies at their acquisition date fair values, with certain
exceptions; (f) capitalization of acquired in-process research and development
rather than expense recognition; (g) earn-out arrangements may be required to be
re-measured at fair value and (h) recognize changes that result from a business
combination transaction in an acquirer's existing income tax valuation
allowances and tax uncertainty accruals as adjustments to income tax expense.
The Company anticipates these new standards will significantly affect the
Company's accounting for future business combinations following adoption on
January 1, 2009.

                                      F-14
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 2 - GOING CONCERN

Since inception, the Company has incurred cumulative net losses of $13,313,435,
a stockholders' deficit of $3,857,055 at December 31, 2007 and a working capital
deficit of $4,626,920. Since its inception, the Company has funded operations
through short-term borrowings and equity investments in order to meet its
strategic objectives. The Company's future operations are dependent upon
external funding and its ability to increase revenues and reduce expenses.
Management believes that sufficient funding will be available from additional
related party borrowings and private placements to meet its business objectives,
including anticipated cash needs for working capital, for a reasonable period of
time. However, there can be no assurance that the Company will be able to obtain
sufficient funds to continue the development of its software products and
distribution networks. Further, since fiscal 2000, the Company has been
deficient in the payment of Brazilian payroll taxes and Social Security taxes.
At December 31, 2007 and 2006, these deficiencies (including interest and
penalties) amounted to approximately $1,080,000 and $759,000, respectively. This
payroll liability is included as part of the accounts payable and accrued
expenses (short-term and long-term) within the consolidated balance sheet. As a
result of the foregoing, there exists substantial doubt about the Company's
ability to continue as a going concern. These consolidated financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at December 31, 2007 and 2006:

                                                  2007            2006
                                              -----------     -----------
      Computer Equipment .................    $ 1,501.682     $ 1,235.872
      Software ...........................        607,919         501,916
      Office Furniture and Equipment .....         22,685          20,329
      Vehicle ............................         46,011          38,120
      Other ..............................         19,232          15,348
                                              -----------     -----------
                                                2,197,529       1,811,585
      Accumulated Depreciation ...........     (1,439,856)       (779,174)
                                              -----------     -----------
                                              $   757,673     $ 1,032,411
                                              ===========     ===========

For the years ended December 31, 2007 and 2006, depreciation expense amounted to
$343,449 and $237,341, respectively.

                                      F-15
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 4 - SOFTWARE DEVELOPMENT COSTS

Under the criteria set forth in SFAS No. 86, "Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed," capitalization of
software development costs begins upon the establishment of technological
feasibility of the software. The establishment of technological feasibility and
the ongoing assessment of the recoverability of these costs require considerable
judgment by management with respect to certain external factors, including, but
not limited to, anticipated future gross product revenues, estimated economic
life, and changes in software and hardware technology. Capitalized software
development costs are amortized utilizing the straight-line method over the
estimated economic life of the software not to exceed three years. The Company
regularly reviews the carrying value of software development assets and a loss
is recognized when the unamortized costs are deemed unrecoverable based on the
estimated cash flows to be generated from the applicable software. Software
development costs consisted of the following at December 31, 2007 and 2006:

                                                   2007            2006
                                                ---------       ---------
      Software development costs .........      $ 707,823       $ 669,952
      Accumulated amortization ...........       (360,760)       (342,049)
                                                ---------       ---------
                                                $ 347,063       $ 327,903
                                                =========       =========

For the years ended December 31, 2007 and 2006, amortization of development
costs amounted to approximately $235,000 and $215,000, respectively, and has
been included in cost of product support services on the accompanying
consolidated statements of operations. Amortization expense attributable to
future periods is as follows: 2008: $169,478; 2009: $109.384; 2010: $68,201.

NOTE 5 - RELATED PARTY TRANSACTIONS

Convertible Loans Payable- Related Party
----------------------------------------

At December 31, 2007, the Company had aggregate loans payable for $175,000 to a
related party company whose officer is an officer of the Company. In 2005, the
Company modified the terms of its convertible loans to this related party. Under
the modified terms, $75,000 of principal due under the convertible loans was due
on March 31, 2007 and the remaining principal of $100,000 was due on April 30,
2007. These loans are convertible into the Company's common stock at $0.125 per
share. For each common share received upon conversion of the principal balance,
the related party is entitled to receive one warrant to purchase the Company's
common stock at $0.25 per share for a period of two years from the conversion
date. The interest rate of the loan is 12% per annum compounded monthly. At
December 31, 2007 and 2006, interest due on these two loans amounted to $63,621
and $42,621 and the aggregate principal amount due is $175,000. During the years
ended December 31, 2007 and 2006, the Company incurred $21,000 and $21,000,
respectively, in interest expense related to these two loans. These two loans
are in default and are currently under re-negotiation with the lender.

                                      F-16
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 5 - RELATED PARTY TRANSACTIONS (CONTINUED)

Due to Related Parties
----------------------

For the years ended December 31, 2007 and 2006, the Company incurred $234,327
and $181,268, respectively, in management fees to an officer/director of the
Company, which has been included in management and consulting fees - related
party on the accompanying consolidated statements of operations. Effective July
1, 2007, pursuant to a Management Consulting Services Agreement, the Company's
board of directors agreed to increase the compensation of this officer/director
from $15,000 per month to $17,500 per month. On August 18, 2006, the Company
granted this officer 150,000 options to purchase 150,000 shares of the Company's
common stock at $0.15 per share, expiring on August 17, 2011. Additionally, on
November 25, 2007, the Company granted this officer 300,000 options to purchase
300,000 shares of the Company's common stock at $0.06 per share, expiring
November 24, 2012. The fair value of these option grants were estimated at
$13,348 and $22,304 on the date of grant using the Black-Scholes option-pricing
model. Accordingly, for the years ended December 31, 2007 and 2006, the Company
recorded stock-based compensation expense of $13,348 and $22,304, which has been
included in management and consulting fees - related party on the accompanying
consolidated statement of operations. On November 25, 2007, pursuant to the
Management Consulting Services Agreement, the Company issued 1,000,000 shares of
common stock for services rendered. These common shares were valued at fair
value on date of grant based on the quoted trading price of $0.055 per share or
$55,000, which has been included in management and consulting fees - related
party on the accompanying consolidated statement of operations. At December 31,
2007 and 2006, $371,932 and $222,992 in management fees and other expenses are
payable to this officer/director and are included in due to related parties on
the accompanying consolidated balance sheet. The amount due is unsecured,
non-interest bearing and is payable on demand.

For the years ended December 31, 2007 and 2006, the Company incurred $46,737 and
$51,732, respectively, in accounting fees to a company whose officer is an
officer of the Company. The fees are included in management and consulting fees
- related party on the accompanying consolidated statements of operations.
Additionally, on November 25, 2007, the Company granted this officer 100,000
options to purchase 100,000 shares of the Company's common stock at $0.06 per
share, expiring November 24, 2012. The fair value of this option grant was
estimated at $4,449 on the date of grant using the Black-Scholes option-pricing
model. Accordingly, for the year ended December 31, 2007, the Company recorded
stock-based compensation expense of $4,449, which has been included in
management and consulting fees - related party on the accompanying consolidated
statement of operations. At December 31, 2007 and 2006, $34,120 and $16,382 in
these fees is payable to this officer and are included in due to related parties
on the accompanying consolidated balance sheet.

For the year ended December 31, 2007 and 2006, the Company incurred $37,000 and
$75,600, respectively, in consulting fees to an officer of the Company. On
January 26, 2006, the Company granted this officer 100,000 options to purchase
100,000 shares of the Company's common stock at $0.15 per share. The options
expire on February 5, 2011. The fair value of this option grant was estimated at
$12,834 on the date of grant using the Black-Scholes option-pricing model.
Additionally, on November 25, 2007, the Company granted this officer 50,000
options to purchase 50,000 shares of the Company's common stock at $0.06 per
share, expiring November 24, 2012. The fair value of this option grant was
estimated at $2,225 on the date of grant using the Black-Scholes option-pricing
model. Accordingly, for the years ended December 31, 2007 and 2006, the Company
recorded stock-based compensation expense of $2,225 and $12,834, which has been
included in management and consulting fees - related party on the accompanying
consolidated statement of operations.

                                      F-17
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 5 - RELATED PARTY TRANSACTIONS (CONTINUED)

Due to Related Parties (continued)
----------------------------------

For the years ended December 31, 2007 and 2006, the Company incurred $72,000 and
$130,000, respectively, in consulting fees to a director of the Company that has
been included in management and consulting fees - related party on the
accompanying consolidated statements of operations. On August 18, 2006, the
Company granted this officer 75,000 options to purchase 75,000 shares of the
Company's common stock at $0.15 per share. The options expire on August 17,
2011. The fair value of this option grant was estimated at $11,152 on the date
of grant using the Black-Scholes option-pricing model. Additionally, on November
25, 2007, the Company granted this officer 100,000 options to purchase 100,000
shares of the Company's common stock at $0.06 per share, expiring November 24,
2012. The fair value of this option grant was estimated at $4,449 on the date of
grant using the Black-Scholes option-pricing model. Accordingly, for the years
ended December 31, 2007 and 2006, the Company recorded stock-based compensation
expense of $4,449 and $11,152, which has been included in management and
consulting fees - related party on the accompanying consolidated statement of
operations.

For the year ended December 31, 2006, the Company incurred $6,000 in director's
fees to a former director of the Company. At December 31, 2006, $6,000 in
directors fees were payable to this director and were included in due to related
parties on the accompanying balance sheet. Additionally, on August 18, 2006, the
Company granted this director 50,000 options to purchase 50,000 shares of the
Company's common stock at $0.15 per share. The options expire on August 18,
2011. The fair value of this option grant was estimated at $7,435 on the date of
grant using the Black-Scholes option-pricing model. Accordingly, for the year
ended December 31, 2006, the Company recorded stock-based compensation expense
of $7,435, which has been included in management and consulting fees - related
party on the accompanying consolidated statement of operations.

Loans Payable - Related Party
-----------------------------

On March 5, 2004, the Company borrowed Euro 115,000 ($169,384 and $151,834 at
December 31, 2007 and 2006, respectively) from an officer of the Company for
working capital purposes. The loan accrues 0.8% interest, compounded monthly
(9.6% per annum), had an initial term of twelve months, and was repayable
quarterly in arrears. On September 25, 2007, the officer agreed to extend this
loan for an additional twelve months until March 4, 2008. This loan has not been
repaid and is currently payable on demand. Additionally, during fiscal 2007, the
Company borrowed $80,000 from this officer. This loan accrues 1.0% interest,
compounded monthly (12% per annum), and are due on demand. Additionally, in
connection with the two loans, the Company incurred a loan fee of $5,000 and an
additional fee of 5,500 EURO (approximately $7,756) which has been included in
interest expense - related party on the accompanying statement of operations.
For the years ended December 31, 2007 and 2006, the Company incurred $39,418 and
$15,162, respectively, in interest related to these loans. At December 31, 2007
and 2006, $43,091 and $3,674 in interest and loan fees was accrued on these
loans and the aggregate principal and interest amount due is $292,475 and
$155,508, respectively, and is included in loan payable - related party on the
accompanying balance sheet.

                                      F-18
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 6 - FINANCING ARRANGEMENTS

Loans Payable
-------------

The Company's subsidiary, Medlink Conectividade, has several loans and credit
lines with financial institutions. The loans require monthly installment
payments, bear interest at rates ranging from 30% to 50% per annum, are secured
by certain receivables of Medlink Conectividade, and are due through July 2009.
At December 31, 2007 and 2006, loans payable to these financial institutions
aggregated $652,804 and $522,198, respectively.

Convertible Debentures Payable
------------------------------

On April 1, 2005, the Company entered into a Securities Purchase Agreement with
Scott and Heather Grimes, Joint Tenants - with Rights of Survivorship (the
"Investor"). Pursuant to the Securities Purchase Agreement, the Company issued
convertible debentures to the Investor in the original principal amount of
$250,000. The debentures are convertible at the holder's option any time up to
maturity at a conversion price equal to the lower of (i) 120% of the closing bid
price of the common stock on the date of the debentures or (ii) 80% of the
lowest closing bid price of the common stock for the five trading days
immediately preceding the conversion date. The debentures have a two-year term
and accrue interest at 5% per year. On February 1, 2006, the Company and the
debenture holder mutually agreed to extend the term of the debentures until
December 1, 2007 or the debentures will automatically convert into shares of
common stock at a conversion price equal to the lower of (i) 120% of the closing
bid price of the common stock on the date of the debentures or (ii) 80% of the
lowest closing bid price of the common stock for five trading days immediately
preceding the conversion date. Currently, the Company is renegotiating the
payment terms of this convertible note. In connection with the probable loan
repayment to occur in 2008, for the year ended December 31, 2007, the Company
has recorded additional interest expense of $45,000.

The Company determined that the conversion feature of the convertible debentures
represents an embedded derivative since the debentures are convertible into a
variable number of shares. Accordingly, the convertible debentures are not
considered to be conventional debt under EITF 00-19 and the embedded conversion
feature must be bifurcated from the debt host and accounted for as a derivative
liability. The Company believes that the aforementioned embedded derivative
meets the criteria of SFAS 133 and EITF 00-19, and should be accounted for as a
separate derivative with a corresponding value recorded as a liability.
Accordingly, the fair value of this derivative instrument has been recorded as a
liability on the consolidated balance sheet.

The change in the fair value of the liability for derivative contracts has been
recorded as other income / (expense) in the consolidated statements of
operations. In connection with the loan extension, in February 2006, the Company
granted a warrant to purchase 400,000 shares of the Company's common stock to
the debenture holder. The warrant has a term of two years and is exercisable at
$0.20 per share. The fair value of this warrant grant was estimated at $46,686
on the date of grant using the Black-Scholes option-pricing model. In connection
with these warrants, on February 1, 2006, the Company recorded debt settlement
expense of $46,686 and a warrant liability of $46,686.

On July 17, 2006, in connection with the conversion of $15,000 of outstanding
principal on this convertible debenture, the Company issued 104,167 shares of
common stock. On October 31, 2006, in connection with the conversion of $10,000
of outstanding principal on this convertible debenture, the Company issued
151,515 shares of common stock.

                                      F-19
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 6 - FINANCING ARRANGEMENTS (CONTINUED)

Convertible Debentures Payable (continued)
------------------------------------------

At the end of each reporting period, the Company revalues the warrant and
convertible feature of these derivative liabilities. For the years ended
December 31, 2007 and 2006, the Company recorded a gain on valuation of the
derivative liability and warrants of $29,865 and $43,049, respectively, and in
2006 reclassified $26,926 of the derivative liability to paid-in capital due to
the partial repayment of the debenture. Amortization of debt discount for the
years ended December 31, 2007 and 2006 was $31,250 and $125,000, respectively,
and is included in interest expense. Amortization of debt offering costs for the
years ended December 31, 2007 and 2006 was $4,783 and $19,131, respectively, and
is included in interest expense. At December 31, 2007, the estimated fair values
of the convertible feature derivative liabilities and warrants are $215,119 and
$239, respectively. At December 31, 2006, the estimated fair values of the
convertible feature derivative liabilities and warrants were $229,176 and
$16,047. These liabilities are reflected as a conversion feature liability and
warrant liability, respectively, on the accompanying consolidated balance
sheets.

At the valuation date of December 31, 2007 and 2006, the following assumptions
were applied to the convertible debt and warrants:

                                           2007               2006
                                     -----------------      --------
      Market price ..............         $0.065             $0.061
      Exercise price of debt ....     $0.036 to $0.20        $0.048
      Term ......................    0.25 - 0.50 years       1 year
      Volatility ................          114%               240%
      Risk-free interest rate ...      3.36% - 3.49%          4.82%


The convertible debenture liability is as follows at December31, 2007 and 2006:


                                                       2007        2006
                                                    ---------   ---------
      Convertible debentures payable ............   $ 225,000   $ 225,000
      Less: unamortized discount on debentures ..           -     (31,250)
                                                    ---------   ---------
                                                    $ 225,000   $ 193,750
                                                    =========   =========

                                      F-20
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 6 - FINANCING ARRANGEMENTS (CONTINUED)

Convertible Debentures Payable (continued)
------------------------------------------

For the years ended December 31, 2007 and 2006, the related gain or loss from
derivative liabilities is as follows:
<TABLE>
<CAPTION>
                                                                Preferred
                                                Convertible       stock
                                                   debt       (See Note 8)      Total
                                                -----------   ------------   -----------
<S>                                             <C>           <C>            <C>
                    2007
                    ----
Change in fair value of derivative liabilities  $    29,865   $   632,262    $   662,127
                                                -----------   -----------    -----------

Total gain from derivative liabilities .......  $    29,865   $   632,262    $   662,127
                                                ===========   ===========    ===========

                    2006
                    ----
Initial  loss on derivative valuation .....     $         -   $  (680,498)   $  (680,498)
Change in fair value of derivative liabilities       43,049       379,889        422,938
                                                -----------   -----------    -----------

Total loss from derivative liabilities .......  $    43,049   $  (300,609)   $  (257,560)
                                                ===========   ===========    ===========
</TABLE>

NOTE 7 - INCOME TAXES

As of December 31, 2007, the Company had approximately $7,800,000 of U.S.
federal and state net operating loss carryforwards available to offset future
taxable income which, if not utilized, begin expiring in 2011. In addition, the
Company has approximately $5,155,000 of foreign net operating loss carryforwards
related to the Company's Brazilian subsidiary. Current Brazilian tax legislation
imposes no time period for the utilization of the losses, although it does limit
the annual usage of the losses to 30% of taxable profits.

Under the Tax Reform Act of 1986, the utilization of a corporation's net
operating loss carryforward is limited following a greater than 50% change in
ownership. Due to prior transactions, the Company's net operating loss carry
forwards are subject to an annual limitation. Any unused annual limitation may
be carried forward to future years for the balance of the net operating loss
carryforward period. The Company has not yet determined the limitation as
defined by the Tax Reform Act of 1986. Additionally, because U.S. tax laws limit
the time during which these carryforwards may be applied against future taxes,
the Company may not be able to take full advantage of these attributes for
Federal income tax purposes.

                                      F-21
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 7 - INCOME TAXES (CONTINUED)

Deferred income taxes reflect the net tax effects of operating loss and tax
credit carry forwards and temporary differences between carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes. In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that some portion or all
of the deferred tax assets will not be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable income
during the periods in which temporary differences representing net future
deductible amounts become deductible. Due to the uncertainty of the Company's
ability to realize the benefit of the deferred tax assets, the deferred tax
assets are fully offset by a valuation allowance at December 31, 2007 and 2006.

The Company's tax benefit differs from the "expected" tax benefit for the years
ended December 31, 2007 and 2006 as follows:

                                                          2007         2006
                                                       ---------    ---------

      Computed "expected" tax benefit ..............   $ (68,200)   $(546,400)
      State income taxes benefit ...................      (8,000)     (44,000)
      Permanent differences ........................      (6,700)           -
      US effective rate in excess of Brazil tax rate     (22,900)           -
      Change in valuation allowance ................     300,300      590,400
                                                       ---------    ---------
                                                       $ 194,500    $       -
                                                       =========    =========

The tax effects of temporary differences that give rise to significant portions
of deferred tax assets and liabilities at December 31, 2007 and 2006 are as
follows:

                                                  2007            2006
                                              -----------     -----------
      Deferred tax assets:
      Net operating loss carry forward ...    $ 4,730,500     $ 4,243,600
                                              -----------     -----------

      Total gross deferred tax assets ....      4,730,500       4,243,600

      Less valuation allowance ...........     (4,730,500)     (4,243,600)
                                              -----------     -----------

      Net deferred tax assets ............    $         -     $         -
                                              ===========     ===========

The valuation allowance at December 31, 2007 was $4,730,500. The increase during
2007 was approximately $486,900, including the effect of foreign exchange
translations of approximately $186,600.

                                      F-22
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 8 - STOCKHOLDERS' DEFICIT

On January 13, 2006, the Company's Board of Directors approved the creation of
16,000 shares of Series A Convertible Preferred Stock having the following
rights, preferences and limitations:

  (a) each share has a stated value of $100 per share and no par value;

  (b) With respect to the payment of dividends and other distributions on the
      capital stock of the Company, including distribution of the assets of the
      Company upon liquidation, the Series A Preferred Shares shall be senior to
      the common stock of the Company, par value $.00001 per share and senior to
      all other series of Preferred Shares (the "Junior Stock").

  (c) The holders of Series A Preferred Shares shall be entitled to receive
      dividends or distributions on a pro rata basis according to their holdings
      of shares of Series A Preferred Shares in the amount of seven percent (7%)
      per year (computed on the basis of a 365-day year and the actual days
      elapsed). Dividends shall be paid in cash. Dividends shall be cumulative.
      No cash dividends or distributions shall be declared or paid or set apart
      for payment on the Common Stock in any calendar year unless cash dividends
      or distributions on the Series A Preferred Shares for such calendar year
      are likewise declared and paid or set apart for payment. No declared and
      unpaid dividends shall bear or accrue interest.

  (d) Each share of Series A Preferred Shares shall be convertible, at the
      option of the holder thereof, at any time after the date of issuance of
      such shares, into such number of fully paid and non-assessable shares of
      Common Stock equal to the sum of (i) the Liquidation Amount of the Series
      A Preferred Shares plus (ii) all accrued but unpaid dividends thereon,
      divided by the Conversion Price, as defined. The Conversion Price shall be
      equal to the lower of (i) $0.192 ( the "Fixed Conversion Price"), or (ii)
      eighty percent (80%) of the lowest daily volume weighted average price
      ("VWAP") of the Common Stock during the ten (10) Trading Days immediately
      preceding the date of conversion (the "Market Conversion Price"). The VWAP
      shall be determined using price quotations from Bloomberg, LP. "Trading
      Day" shall mean any day during which the FINRA OTC Bulletin Board shall be
      open for trading. Additionally, each share of Series A Preferred Shares
      shall automatically convert into shares of Common Stock at the Conversion
      Price then in effect immediately upon the consummation of the occurrence
      of a stock acquisition, merger, consolidation or reorganization of the
      Company into or with another entity through one or a series of related
      transactions, or the sale, transfer or lease of all or substantially all
      of the assets of the Company. Each share of Series A Preferred Shares
      shall automatically convert into shares of Common Stock at the Conversion
      Price then in effect immediately upon the third anniversary of the date of
      Investment Agreement.

  (e) The Series A Preferred Shares shall not have any voting rights except as
      provided under the laws of the state of Colorado.

                                      F-23
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 8 - STOCKHOLDERS' DEFICIT (CONTINUED)

Preferred Stock (continued)
---------------------------

  (f) The shares are not subject to redemption. However, the Company, at its
      option, shall have the right to redeem (unless otherwise prevented by
      law), with three (3) business days advance written notice (the "Redemption
      Notice"), any shares of Series A Preferred Shares provided that the
      closing bid price of the of the Company's Common Stock, as reported by
      Bloomberg, LP, is less than the Fixed Conversion Price at the time of the
      Redemption Notice. The Company shall pay an amount equal to One Hundred
      Fifteen percent (115%) of the Liquidation Amount, plus accrued but unpaid
      dividends thereon (the "Redemption Amount"). The Company shall deliver to
      the holder the Redemption Amount on the third (3rd) business day after the
      Redemption Notice. After receipt of a Redemption Notice, the holder shall
      be entitled to continue to convert outstanding shares of Series A
      Preferred Shares until the Redemption Price is received, subject to the
      conversion limitations as defined.

On January 13, 2006, the Company entered into an Investment Agreement with YA
Global Investments LP (formerly Cornell Capital Partners, LP) ("Cornell"), and,
together with the Company, (the "Parties"), pursuant to which the Company agreed
to sell to Cornell up to 16,000 shares of Series A Convertible Preferred Stock,
no par value, (the "Series A Preferred Shares") which shall be convertible, at
Cornell's discretion, into shares of the Company's common stock, par value
$.00001 (the "Common Stock") for a total price of up to $1,600,000.

Of the 16,000 Series A Preferred Shares to be sold, 8,000 were sold to Cornell
on January 13, 2006 and had a purchase price of $800,000, which consisted of
$255,237 from the surrender of a Promissory Note and $544,763 consisting of new
funding, from which the Company received net proceeds of $495,734 after the
payment of placement fees of $49,029. Additionally, the Company paid
approximately $25,000 in legal fees with the proceeds of this financing. On May
8, 2006, the Company sold the remaining 8,000 shares to Cornell, at the purchase
price of $800,000 and received proceeds of $728,000 (net of placement fees of
$72,000).

On January 13, 2006, the Company also issued to Cornell warrants to purchase up
to 5,000,000 shares of Common stock. The first warrant issued to Cornell is for
2,500,000 shares of Common Stock at an exercise price of $0.30 per share and
shall terminate after the five (5) year anniversary of the date of issuance. The
second warrant issued to Cornell is for 2,500,000 shares of Common Stock at an
exercise price of $0.20 per share and shall terminate after the five (5) year
anniversary of the date of issuance.

Subject to the terms and conditions of an Investor Registration Rights
Agreement, the Company was required to prepare and file in 2006 and shall cause
the Registration Statement to remain effective until all of the Registerable
Securities have been sold. The Company filed its initial registration statement
on Form SB-2 on May 9, 2006 and it has not been declared effective.

In the event the Registration Statement is not declared effective by the SEC on
or before the Scheduled Effective Deadline, or if after the Registration
Statement has been declared effective by the SEC, sales cannot be made pursuant
to the Registration Statement, the Company will pay as liquidated damages (the
"Liquidated Damages") to the holder, at the holder's option, either a cash
amount or shares of the Company's Common Stock equal to two percent (2%) of the
Liquidation Amount (as defined in the Certificate of Designation of Series A
Convertible Preferred Shares) outstanding as Liquidated Damages for each thirty
(30) day period or any part thereof after the Scheduled Filing Deadline or the
Scheduled Effective Deadline as the case may be.

                                      F-24
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 8 - STOCKHOLDERS' DEFICIT (CONTINUED)

Preferred Stock (continued)
---------------------------

In 2006, the Company recorded a registration rights penalty expense of $160,000
that is included in accrued expenses on the accompanying consolidated balance
sheet. Based on management's analysis, the Company does not believe that any
additional penalty is due under the Investor Registration Rights Agreement.

In accordance with SFAS No. 133, the Company is required to record the fair
value of the ECF and warrants as a liability. In connection with the initial
sale of the Series A Preferred Stock on January 13, 2006, the initial estimated
fair value of the ECF and warrants was $588,363 and $689,000, respectively. The
aggregate fair value of the ECF and warrants of $1,277,363 was recorded as
follows: i) the Company recorded a deemed preferred stock dividend of $800,000
an; and ii) the $477,363 excess value of the fair values of the ECF and warrants
over the gross proceeds received of $800,000 from the Preferred Stock was
charged to loss from derivative liabilities upon sale. In connection with the
final sale of the Series A Preferred Stock on May 8, 2006, the initial estimated
fair value of the ECF was $1,003,135 and was recorded as follows: i) the Company
recorded a deemed preferred stock dividend of $800,000; and ii) the $203,135
excess value of the fair values of the ECF over the gross proceeds received from
the Preferred Stock was charged to loss from derivative liabilities upon sale.
At December 31, 2007 and 2006, the Company revalued the ECF and warrants
resulting in a gain on derivative liability of $632,262 and $379,889 for the
years ended December 31, 2007 and 2006, respectively (See Note 6).

At December 31, 2007, the estimated fair value of the ECF and warrants was
$1,064,981 and $152,895, respectively. At December 31, 2006, the estimated fair
value of the ECF and warrants was $1,609,086 and $291,523, respectively. These
derivative liabilities are reflected as a conversion feature liability and a
warrant liability, respectively, on the accompanying consolidated balance
sheets.

At the valuation date of December 31, 2007 and 2006, the fair value of the ECF
and warrants were estimated using the Black-Scholes option pricing model with
the following assumptions:

                                           2007                2006
                                    ------------------    ------------
      Dividend rate ............            0%                 0%
      Term (in years) ..........    1.05 to 3.05 years    2.05 to 4.05
      Volatility ...............           114%               240%
      Risk-free interest rate ..      3.05% - 4.03%           4.82%

On July 10, 2007, the Company issued 302,267 shares of its common stock upon
conversion of 120 shares of Series A preferred stock.

On October 7, 2007, the Company issued 1,250,000 shares of its common stock upon
conversion of 550 shares of Series A preferred stock.

                                      F-25
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 8 - STOCKHOLDERS' DEFICIT (CONTINUED)

Common Stock
------------

On March 20, 2006, the Company entered into a one-year consulting contract for
investor relations services. In connection with the agreement, the Company
issued 900,000 shares of common stock. The Company valued these common shares at
the fair market value of $0.12 per share on the dates of grant based on the
quoted trading price and recorded deferred consulting expense of $108,000 to be
amortized over the service period. In addition, the Company granted a warrant to
purchase 2,000,000 shares of the Company's common stock. The warrant has a term
expiring January 31, 2009. 1,000,000 of the warrants are exercisable at $0.20
per share and 1,000,000 of the warrants are exercisable at $0.25 per share. The
fair value of this warrant grant was estimated at $221,998 or $0.11 per warrant
on the date of grant using the Black-Scholes option-pricing model. In connection
with these warrants, the Company recorded deferred consulting expense of
$221,998, which will be amortized over the contract period. On December 27,
2006, the Company entered a settlement agreement with the consultant, whereby
the consultant returned 200,000 shares of the Company's common stock and the
Company cancelled the 2,000,000 warrants previously granted to the consultant.
For the year ended December 31, 2006, the Company recorded consulting expense of
$174,166 in connection with the issuance and cancellation of these common shares
and warrants.

On July 17, 2006, in connection with the conversion of $15,000 of the
convertible debenture outstanding, the Company issued 104,167 shares of common
stock.

On August 18, 2006, the Company granted 43,270 shares of common stock under the
Company's 2004 Incentive Stock Option Plan for legal services performed. The
Company valued these common shares at the fair market value on the dates of
grant or $0.16 per share based on the quoted trading price and recorded legal
fees of $6,940.

On October 5, 2006, the Company entered into a consulting contract for investor
services. In connection with the agreement, the Company issued 55,000 shares of
common stock. The Company valued these common shares at the fair market value of
$0.135 per share on the dates of grant, based on the quoted trading price and
recorded consulting expense of $7,425.

On October 31, 2006, in connection with the conversion of $10,000 of the
convertible debenture outstanding, the Company issued 151,515 shares of common
stock.

On July 10, 2007, the Company issued 302,267 shares of its common stock upon
conversion of 120 shares of Series A preferred stock.

On October 7, 2007, the Company issued 1,250,000 shares of its common stock upon
conversion of 550 shares of Series A preferred stock.

On November 25, 2007, the Company issued 50,000 shares of common stock for
investor relations services rendered. The Company valued these common shares at
the fair market value of $0.055 per share on the dates of grant, based on the
quoted trading price and recorded consulting expense of $2,750.

                                      F-26
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 8 - STOCKHOLDERS' DEFICIT (CONTINUED)

Common Stock (continued)
------------------------

On November 25, 2007, pursuant to a Management Consulting Services Agreement
with the Company's CEO, the Company issued 1,000,000 shares of common stock for
services rendered. The Company valued these common shares at the fair market
value of $0.055 per share on the dates of grant, based on the quoted trading
price and recorded management and consulting fees - related party of $55,000.

Stock Options
-------------

On November 28, 2004, the Company adopted a 2004 Incentive Stock Option Plan
(the "Plan"). The Plan, as amended, provides options to be granted, exercisable
for a maximum of 7,000,000 shares of common stock. Both incentive and
nonqualified stock options may be granted under the Plan. The exercise price of
options granted, the expiration date, and the vesting period, pursuant to this
plan, are determined by a committee.

On January 26, 2006, the Company granted an officer of the Company 100,000
options to purchase 100,000 shares of the Company's common stock at $0.15 per
share. The options expire on February 5, 2011. The fair value of this option
grant was estimated at $12,834 on the date of grant using the Black-Scholes
option-pricing model. In connection with these options, the Company recorded
stock-based compensation expense of $12,834, which has been included in
management and consulting fees - related party on the accompanying consolidated
statement of operations.

On February 5, 2006, the Company granted options to purchase 100,000 shares of
common stock to a consultant for business development services rendered. The
options are exercisable at $0.15 per share and expire on February 5, 2011. The
fair value of this option grant was estimated at $13,333 on the date of grant
using the Black-Scholes option-pricing model. In connection with these options,
the Company recorded consulting expense of $13,333.

On August 18, 2006, the Company granted options to purchase an aggregate of
275,000 shares of common stock to an officer and directors of the Company. The
options are exercisable at $0.15 per share and expire on August 17, 2011. The
Company valued these options utilizing the Black-Scholes options pricing model
at approximately $0.149, or $40,891. For the year ended December 31, 2006, in
connection with these options, the Company recorded stock-based compensation
expense of $40,891.

On November 25, 2007, the Company granted options to purchase an aggregate of
600,000 shares of common stock to officers, directors and a consultant of the
Company. The options are exercisable at $0.06 per share and expire on November
24, 2012. The Company valued these warrants utilizing the Black-Scholes options
pricing model at approximately $0.045, or $26,696. For the year ended December
31, 2007, in connection with these options, the Company recorded stock-based
compensation expense of $26,696.

                                      F-27
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 8 - STOCKHOLDERS' DEFICIT (CONTINUED)

Stock Options (continued)

A summary of the status of the Company's outstanding stock options as of
December 31, 2007 and 2006 and changes during the periods ending on that date is
as follows:
<TABLE>
<CAPTION>
                                       Year Ended December 31, 2007    Year Ended December 31, 2006
                                       ----------------------------    ----------------------------
                                                       Weighted                        Weighted
                                                       Average                         Average
                                          Number of    Exercise           Number of    Exercise
                                           Options      Price              Options       Price
                                          ---------    --------           ---------    --------
<S>                                       <C>          <C>                <C>          <C>
Stock options
-------------
Balance at beginning of year ........     3,425,000    $   0.29           3,225,000    $   0.31
Granted .............................       600,000        0.06             475,000        0.15
Exercised ...........................             -           -                   -           -
Forfeited ...........................      (600,000)       0.38            (275,000)       0.38
                                          ---------    --------           ---------    --------
Balance at end of year ..............     3,425,000    $   0.25           3,425,000    $   0.29
                                          =========    ========           =========    ========

Options exercisable at end of year ..     3,425,000    $   0.25
                                          =========    ========
Weighted average fair value of
options granted during the year .....                  $   0.045                       $   0.15
                                                       =========                       ========
</TABLE>

The following table summarizes information about employee and consultants stock
options outstanding at December 31, 2007:
<TABLE>
<CAPTION>
                  Options Outstanding                         Options Exercisable
------------------------------------------------------   ----------------------------
                                 Weighted
                                  Average     Weighted                       Weighted
Range of         Number          Remaining     Average         Number         Average
Exercise     Outstanding at     Contractual   Exercise     Exercisable at    Exercise
 Price     December 31, 2007   Life (Years)    Price     December 31, 2007    Price
--------   -----------------   ------------   --------   -----------------   --------
<S>        <C>                 <C>            <C>        <C>                 <C>
$   0.50       1,050,000           0.62       $   0.50       1,050,000       $   0.50
$   0.20         425,000           2.00           0.20         425,000           0.20
$   0.15       1,350,000           2.75           0.15       1,350,000           0.15
$   0.06         600,000           4.90           0.06         600,000           0.06
           -----------------                  --------   -----------------   --------
               3,425,000                      $   0.25       3,425,000       $   0.25
           =================                  ========   =================   ========
</TABLE>

As of December 31, 2007 and 2006, there are no unrecognized compensation costs
since all options granted under the stock option plans are completely vested.

                                      F-28
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 8 - STOCKHOLDERS' DEFICIT (CONTINUED)

Stock Options (continued)
-------------------------

At the valuation dates of December 31, 2007 and 2006, the following assumptions
were applied to the stock options:

                                            2007                 2006
                                      -----------------     --------------
      Dividend rate ..............           0%                   0%
      Term .......................    0.25 - 0.50 years         5 year
      Volatility .................          114%              222% - 231%
      Risk-free interest rate ....      3.36% - 3.49%        3.75% - 4.78%

In utilizing the Black-Scholes option-pricing model, the Company calculates
volatility using the historical volatility of our stock, the expected term is
based on our estimate of when the options will be exercised, and the risk free
interest rate is based on the U.S. Treasury yield in effect at the time of the
grant.

Stock Warrants
--------------

On February 1, 2006, the Company and the debenture holder (See Note 6) mutually
agreed to extend the term of the debentures until December 1, 2007. In addition,
the Company granted a warrant to purchase 400,000 shares of the Company's common
stock to the debenture holder. The warrant has a term of two years and is
exercisable at $0.20 per share. The fair value of this warrant grant was
estimated at $46,686 on the date of grant using the Black-Scholes option-pricing
model. In connection with these warrants, the Company recorded debt settlement
expense of $46,686.

On March 20, 2006, the Company entered into a one-year consulting contract for
investor relations services. In connection with the agreement, the Company
granted warrants to purchase 2,000,000 shares of the Company's common stock. The
warrant had a term expiring January 31, 2009. 1,000,000 of the warrants were
exercisable at $0.20 per share and 1,000,000 of the warrants were exercisable at
$0.25 per share. The fair value of this warrant grant was estimated at $221,998
or $0.11 per warrant on the date of grant using the Black-Scholes option-pricing
model. In connection with these warrants, the Company recorded deferred
consulting expense of $221,998, which was being amortized over the contract
period. On December 27, 2006, the Company entered a settlement agreement with
the consultant, whereby the Company cancelled the 2,000,000 warrants previously
granted to the consultant.

On January 13, 2006, the Company issued to Cornell warrants to purchase up to
5,000,000 shares of Common stock. The first warrant issued to Cornell for
2,500,000 shares of Common Stock at an exercise price of $0.30 per share, shall
terminate after the five (5) year anniversary of the date of issuance. The
second warrant issued to Cornell was for 2,500,000 shares of Common Stock at an
exercise price of $0.20 per share, and shall terminate after the five (5) year
anniversary of the date of issuance.

                                      F-29
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 8 - STOCKHOLDERS' DEFICIT (CONTINUED)

Stock Warrants (continued)
--------------------------

A summary of the status of the Company's outstanding stock warrants as of
December 31, 2007 and 2006 and activities during the periods then ended is as
follows:
<TABLE>
<CAPTION>
                                       Year Ended December 31, 2007    Year Ended December 31, 2006
                                       ----------------------------    ----------------------------
                                                       Weighted                        Weighted
                                            Number      Average             Number      Average
                                              of       Exercise               of       Exercise
                                           Warrants      Price             Warrants      Price
                                          ----------   --------           ----------   --------
<S>                                       <C>          <C>                <C>          <C>
Warrants
--------
Balance at beginning of year ........     12,902,500   $   0.48            9,502,500   $   0.57
Granted .............................              -          -            7,400,000       0.24
Exercised ...........................              -          -                    -          -
Forfeited ...........................     (1,000,000)      0.10           (4,000,000)      0.26
                                          ----------   --------           ----------   --------
Balance at end of year ..............     11,902,500   $   0.50           12,902,500   $   0.48
                                          ==========   ========           ==========   ========
</TABLE>
The following information applies to all warrants outstanding at December 31,
2007:

                 Warrants Outstanding                      Warrants Exercisable
-----------------------------------------------------    -----------------------
                              Weighted
                              Average        Weighted                   Weighted
Range of                     Remaining        Average                    Average
Exercise                    Contractual      Exercise                   Exercise
Prices         Shares       Life (Years)       Price       Shares        Price
--------     ----------     ------------     --------    ----------     --------
$   1.00      4,100,000         0.62         $   1.00     4,100,000     $   1.00
$   0.30      2,500,000         3.04             0.30     2,500,000         0.30
$   0.20      5,302,500         2.23             0.20     5,302,500         0.20
             ----------                      --------    ----------     --------
             11,902,500                      $   0.50    11,902,500     $   0.50
             ==========                      ========    ==========     ========

                                      F-30
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 9 - FOREIGN OPERATIONS

The Company identifies its operating segments based on its business activities
and geographical locations. The Company operates within a single operating
segment, being a provider of information network solutions specifically designed
for healthcare providers and health insurance companies. The Company operates in
the United States, Brazil, Australia and Mauritius, and has a registered mailing
address in Singapore. Substantially all of the Company's assets are located in
Brazil.

                                                    Year ended December 31,
                                                  --------------------------
                                                      2007          2006
                                                  -----------    -----------
      Net revenues to unaffiliated customers:
              Brazil ..........................   $ 5,173,544    $ 4,164,429
                                                  -----------    -----------
      Operating Expenses:
              Brazil ..........................     4,618,185      3,514,999
              USA .............................       786,693      1,299,926
              Australia .......................             -          2,497
              Mauritius .......................        39,519         94,195
                                                  -----------    -----------
                                                    5,444,397      4,911,617
                                                  -----------    -----------
      Loss from operations ....................      (270,853)      (747,188)
                                                  -----------    -----------
      Other income (expenses) and income taxes:
              Brazil ..........................      (661,407)      (496,355)
              USA .............................       546,841       (767,810)
              Australia .......................        (9,799)             -
                                                  -----------    -----------
                                                     (124,365)    (1,264,165)
                                                  -----------    -----------
      Net loss as reported ....................   $  (395,218)   $(2,011,353)
                                                  -----------    -----------

NOTE 10 - COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company has an operating lease for rental of office space in Brazil,
renewable on an annual basis. Additionally, the Company leases office space in
Miami, Florida on a month-to-month basis. Rent expense amounted to approximately
$50,000 and $59,900 and is classified as part of general and administrative
expenses in the statement of operations for each of the years ended December 31,
2007 and 2006, respectively.

Legal Proceedings

The Company's subsidiary, Medlink Conectividade, is involved litigation
pertaining to a previous provider of consultancy services regarding "breach of
contract" and two labor law suits involving employees for "unfair dismissal'
claims. At December 31, 2007, the Company has accrued approximately $199,000
related to these lawsuits. The outcome of these clams is uncertain at this time.

                                      F-31
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 10 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

Accrued Taxes and Social Contribution

Since 2000, the Company has been deficient in the payment of Brazilian payroll
taxes and Social Security taxes. At December 31, 2007 and 2006, these
deficiencies, plus interest and penalties, amounted to approximately $1,080,000
and $759,000, respectively. This liability is included as part of the accounts
payable and accrued expenses (short-term and long-term) within the consolidated
balance sheet. During years 2006 and 2005, the Company entered into a number of
payment programs with the Brazilian authorities whereby the Social Security
("INSS") taxes due, plus applicable penalties and interests are to be repaid
over a period of up to 60 months. For the year ended December 31, 2007 and 2006,
penalties amounted to $107,168 and $97,101, respectively, and have been included
in interest expense on the accompanying statements of operations. However, there
is no certainty that the Brazilian authorities will enter into a similar plan in
the future. At December 31, 2007, future payments due to the Brazilian
authorities are follows:

                    Year
                    ----
                    2008 ...................    $1,023,726
                    2009 ...................        45,684
                    2010 ...................         9,860
                    2011 ...................           815
                                                ----------
                                                $1,080,085
                                                ==========

The current portion due, which is included in current liabilities, also includes
amounts whose payment terms have not been negotiated with the Brazilian
authorities.

NOTE 11 - SUBSEQUENT EVENTS

On January 17, 2008, the Company issued 245,098 shares of its common stock upon
conversion of 100 shares of Series A preferred stock.

On January 24, 2008, the Company issued 1,388,889 shares of its common stock
upon conversion of 250 shares of Series A preferred stock.

On March 4, 2008, the Company issued 1,712,121 shares of its common stock upon
conversion of 113 shares of Series A preferred stock.

On April 7, 2008, the Company issued 1,795,455 shares of its common stock upon
conversion of 79 shares of Series A preferred stock.

                                      F-32
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2007 and 2006

NOTE 11 - SUBSEQUENT EVENTS (CONTINUED)

On March 26, 2008, the board of directors of the Company, pursuant to unanimous
written consent resolutions, approved the execution of a stock purchase and
option agreement (the "Agreement") with Engetech, Inc., a Turks & Caicos
corporation controlled and owned 20% by Americo de Castro, director and
President of Medlink Conectividade and 80% by Flavio Gonzalez Duarte (the
"Buyer"). In accordance with the terms and provisions of the Agreement, the
Company sold to the Buyer 45% of the total issued and outstanding stock of its
wholly-owned subsidiary, Transax Limited ("Transax Sub"). Transax Sub owns one
hundred percent of the total issued and outstanding shares of: (i) Medlink
Conectividade and (ii) MTI.

The purchase price for the 45%, or 45 shares, ("Initial Shares") is $3,200,000.
Of this amount, $220,000 was to have been paid by December 31, 2007. Of this
amount, approximately $188,000 was received by the Company by December 31, 2007
and is reflected as a liability on the accompanying consolidated balance sheet
as a deposit on sale of minority interest. The balance is to be paid as follows
i) $32,000 of the initial deposit is due immediately; ii) $480, 000 is to be
paid on March 31, 2008, and iii) the balance of $2,400,000 is due in twelve
equal monthly payments of $200,000 commencing April 2008. The $2,880,000 balance
due and owing by the Buyer is evidenced by an installment note secured by a
pledge of all of Initial Shares. As of the date of this report, the Buyer has
not paid the March 31, 2008 payment or the remaining initial deposit.

The Buyer has an option to purchase the remaining 55% of Transax Sub. The Option
is exercisable by the Buyer during March and April 2009, subject to shareholder
approval, to acquire the balance of the Company's Medlink Conectividade
operations (and its corresponding debt) by way of acquisition of the remaining
55 shares of the Transax Sub and certain licensing rights for Latin America,
Spain and Portugal in exchange for further payments to the Company of
approximately $2,400,000 in the form of twelve equal monthly payments of
$200,000.

In accordance with the further terms and provisions of the Agreement, a
performance bonus shall also be payable by the Buyer to the Company (the
"Bonus") equal to 50% of the revenues received by Medlink Conectividade
(converted monthly to US Dollars at the monthly average exchange rate as
provided by the Central Bank of Brazil) with respect to transactions in excess
of an aggregate of 678,076 executed during 2008 for Medlink Conectividade's
customer, Brandesco Saude. The Buyer shall pay the Bonus due as follows: 40% of
January 31, 2009, 20% on April 30, 2009, 20% on July 31, 2009, and 20% on
October 31, 2009. The Bonus shall be payable regardless of whether or not the
Buyer elects to exercise the Option.

Additionally, in accordance with the terms and provisions of the Agreement, MTI
shall grant to the Company a perpetual, exclusive and sub-license to use all of
the software and other intellectual property owned by MTI in all territories
other than (i) Latin America (defined as all mainland countries in the Western
Hemisphere south of the USA/Mexico border; and (ii) Spain and Portugal.

As of the date of this report, the Buyer is in default by $480,000 of the
payment due on March 31, 2008.

                                      F-33