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

                                    FORM 10-K
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, 2008

[ ]      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 of             (I.R.S. Employer Identification No.)
 incorporation or organization)

               950 S. Pine Island Road, Plantation, Florida 33324
               --------------------------------------------------
                    (Address of principal executive offices)

                                 (888) 317-6984
                                 --------------
                           (Issuer's telephone number)

Securities registered pursuant to Section         Name of each exchange on which
            12(b) of the Act:                              registered:
                   None                                   Not Applicable
                   ----                                   --------------

           Securities registered pursuant to Section 12(g) of the Act:
                             Common Stock, $0.00001
                             ----------------------
                                (Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. [ ] Yes [X] No

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. [ ] Yes [X] No

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

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

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company:

   Large accelerated filer [ ]                  Accelerated filer         [ ]
   Non-accelerated filer   [ ]                  Smaller reporting company [X]
   (Do not check if smaller reporting company)

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

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 prices of such common equity, as of the
last business day of the registrant's most recently completed second fiscal
quarter. $348,395 on June 30, 2008.

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date. 57,402,089 shares of common
stock are issued and outstanding as of April 14, 2009.

                       DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980). None.

<PAGE>

                          TRANSAX INTERNATIONAL LIMITED
                         2008 ANNUAL REPORT ON FORM 10-K
                                TABLE OF CONTENTS

                                                                            Page
                                                                             No.
                                                                            ----
                                     Part I

Item 1.  Business. .........................................................   2

Item 1A. Risk Factors. .....................................................  12

Item 1B. Unresolved Staff Comments. ........................................  24

Item 2.  Properties. .......................................................  24

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

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

                                    Part II

Item 5.  Market for Registrant's Common Equity, Related Stockholder
         Matters and Issuer Purchases of Equity Securities. ................  24


Item 6.  Selected Financial Data. ..........................................  27

Item 7.  Management's Discussion and Analysis of Financial Condition
         and Results of Operation. .........................................  27

Item 7A. Quantitative and Qualitative Disclosures About Market Risk. .......  36

Item 8.  Financial Statements and Supplementary Data. ......................  37

Item 9.  Changes In and Disagreements With Accountants on Accounting
         and Financial Disclosure. .........................................  37

Item 9A. Controls and Procedures. ..........................................  37

Item 9B. Other Information. ................................................  39

                                   Part III

Item 10. Directors, Executive Officers and Corporate Governance. ...........  40

Item 11. Executive Compensation. ...........................................  42

Item 12. Security Ownership of Certain Beneficial Owners and Management
         and Related Stockholder Matters. ..................................  45

Item 13. Certain Relationships and Related Transactions, and
         Director Independence. ............................................  47

Item 14. Principal Accountant Fees and Services. ...........................  47

                                    Part IV

Item 15. Exhibits, Financial Statement Schedules. ..........................  47

<PAGE>

           CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements in this annual report contain or may contain forward-looking
statements that are subject to known and unknown risks, uncertainties and other
factors which may cause actual results, performance or achievements to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. These forward-looking
statements were based on various factors and were derived utilizing numerous
assumptions and other factors that could cause our actual results to differ
materially from those in the forward-looking statements. These factors include,
but are not limited to, our ability to raise sufficient capital to fund our
ongoing operations and satisfy our obligations as they become due, our ability
to implement our strategic initiatives, economic, political and market
conditions and fluctuations, government and industry regulation, interest rate
risk, U.S. and global competition, and other factors. Most of these factors are
difficult to predict accurately and are generally beyond our control. You should
consider the areas of risk described in connection with any forward-looking
statements that may be made herein. Readers are cautioned not to place undue
reliance on these forward-looking statements and readers should carefully review
this annual report in its entirety, including the risks described in Part I.
Item 1A. Risk Factors. Except for our ongoing obligations to disclose material
information under the Federal securities laws, we undertake no obligation to
release publicly any revisions to any forward-looking statements, to report
events or to report the occurrence of unanticipated events. These
forward-looking statements speak only as of the date of this annual report, and
you should not rely on these statements without also considering the risks and
uncertainties associated with these statements and our business.

                           OTHER PERTINENT INFORMATION

         When used in this annual report, the terms "Transax," " we," "our," and
"us" or the "Company" refers to Transax International Limited, a Colorado
corporation.

                                       1
<PAGE>

                                     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".

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").

Together with our 55%-owned subsidiary, Medlink Conectividade em Saude Ltda
("Medlink Conectividade"), 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., (the "Buyer"), a Turks & Caicos corporation
controlled and owned 20% by Americo de Castro, director and President of Medlink
Conectividade, and 80% by Flavio Gonzalez Duarte. 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 Technologies, Inc. ("Medlink" or "MTI"). As of
March 31, 2009, the Agreement is in default and we are not receiving any
payments due under the principal note pursuant to the Agreement (See STOCK
PURCHASE AND OPTION AGREEMENT below).

SUBSIDIARIES

MEDLINK CONECTIVIDADE EM SAUDE LTDA.

Medlink Conectividade was incorporated under the laws of Brazil on May 2, 1998.
Medlink Conectividade assists us in providing information network solutions,
products and services within Brazil. Through Medlink Conectividade, we provide
Health Information Management Products within Brazil. We generate all of our
revenues through Medlink Conectividade.

MEDLINK TECHNOLOGIES, INC.

Medlink Technologies, Inc. was incorporated under the laws of Mauritius on
January 17, 2003, and is our 55%-owned subsidiary. Medlink holds the
intellectual property developed by us and a number of third party software
licenses.

                                       2
<PAGE>

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 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,
$220,000 of which was to have been paid by December 31, 2007 as a deposit. Of
this amount, approximately $188,000 was received by the Company and, at December
31, 2007, was reflected as a liability on the accompanying consolidated balance
sheet as a deposit on sale of minority interest. During 2008, we collected an
additional $749,700 of the purchase price.

In May 2008, the Agreement was amended. Accordingly, the remaining balance of
$2,262,300 was due in monthly payments through April 2009.

Through December 31, 2008, we received an aggregate of $937,700. The 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 is in default
on its payments of principal and interest. At December 31, 2008, pursuant to the
terms of the Agreement, as amended, we have a remaining note receivable of
$2,262,300 due from the Buyer. Since collection of the remaining purchase price
is not reasonably assured, we recorded the full amount of the purchase price of
$3,200,000 as deferred revenue on the accompanying consolidated balance sheet at
December 31, 2008, which reflects the deferred revenue net of the remaining note
receivable. Accordingly, at December 31, 2008, our consolidated balance sheets
reflect a deferred gain on the sale of minority interest of $937,700, which will
be recognized as other income when collection is reasonably assured and all of
the risks and other incidents of ownership have been passed to the buyer. At
December 31, 2008, the deferred gain on sale of minority interest consists of
the following:

      Sale price of 45% interest in Transax Limited ..........   $ 3,200,000
      Less: note receivable balance at December 31, 2008 .....    (2,262,300)
                                                                 -----------

      Deferred gain on sale of minority interest in subsidiary   $   937,700
                                                                 ===========

The Buyer had an option to purchase the remaining 55% of Transax Limited. The
Option was 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 additional consideration 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. As of the date of this report, no part of
this bonus has been paid.

                                       3
<PAGE>

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.

We have issued default notices to the Buyer in respect of non-payment under the
Agreement. On November 6, 2008 the Buyer indicated a desire to restructure the
payment terms and bonus due under the contract. We are currently in discussion
with the Buyer and its assignee and plan to conclude any renegotiation of
contract terms by June 30, 2009. We cannot predict the outcome of these
negotiations. If the negotiations are successful, we may sell the remaining 55%
of our operating subsidiary and we will have no continuing operations. As a
result of the foregoing, there exists substantial doubt about our 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.

GENERAL

As of the date of this Annual Report, through Medlink Conectividade, we are an
international provider of Health Information Management Products, 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 innovative health
information management systems to assist in the coding, compliance, abstracting
and recording of management's processes.

Currently, we are 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 recording and processing of healthcare data
transactions. 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.

                                       4
<PAGE>

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 reports 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 (in Brazil only) as
"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. A transaction fee
is charged to the insurer for use of the MedLink Solution. The MedLink Solution
hosts its own network processing system, 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 staff 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.

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.

                                       5
<PAGE>

During fiscal years ended December 31, 2008 and 2007, respectively, we installed
approximately 2,200 and 1,395 MedLink Solutions into healthcare provider
locations throughout Brazil. At the end of fiscal year 2008, we had an aggregate
of approximately 9,600 MedLink Solutions installed into healthcare provider
locations throughout Brazil inclusive of "overlapping solutions". 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; and
   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"). In
Brazil this process is carried out using either 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.

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.

                                       6
<PAGE>

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 our 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.

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.

S1 CORPORATION - NETWORK PROCESSOR SYSTEM

On November 25, 2002, we entered into a 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
most 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.

                                       7
<PAGE>

HYPERCOM CORPORATION

On December 1, 2003, we entered into a servicing 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 our 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 (i) research of electronic transaction product trends both in Brazil
and around the world as it applies to the healthcare industry; (ii) definition
of products and services required for MedLink Solution services; and (iii)
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.

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, 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). 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"). We believe that our product fully
complies with the standards of TISS in Brazil though no independent verification
is required or has been performed.

During 2008, we incurred research and development costs on new technical
developments in order to introduce new services and to maintain our
competitiveness in the Brazil market.

E-TISS - This product is developed for medical providers that do not have
electronic management systems and allows data entry of manual TISS forms to
American National Standard formats acceptable in Brazil, and sending of these
files in acceptable electronic format to healthcare insurance companies. The
product is principally used by hospitals for the sending of invoices in an
electronic format.

                                       8
<PAGE>

PORTAL - The Medlink portal provides a platform for medical providers and health
insurance companies to generate files in acceptable electronic format, capture
electronic transactions, and undertake auditing of medical billings. The
platform also allows access to a number of third party services.

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 the fiscal years ended December 31, 2008 and 2007, respectively, we
processed 3,257,837 and 3,845,000 transactions for Bradesco. For the years ended
December 31, 2008 and 2007, Bradesco accounts for approximately 38% and 49% of
our revenues, respectively. During December 2007, due to their ownership
interest in Visanet Brazil, a competitor and to Visanet's acquisition of a
competitor's product, Bradesco only renewed its contract with us to provide
connectivity services until December 31, 2008. The loss of this client will have
an adverse effect on our financial position and results of operations in the
first six months of 2009 and we are currently assessing the extent of the loss
of this client. Medlink is actively seeking insurance companies to replace
Bradesco.

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 automatically renews on
an annual basis. Golden Cross has renewed the contract each year. 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
1,500 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 5,679 MedLink
Solutions in Golden Cross Provider's locations and in 2008 installed over 1,350
Web solutions. During fiscal years ended December 31, 2008 and 2007,
respectively, we processed 4,558,799 and 3,642,412 transactions for Golden
Cross. For the years ended December 31, 2008 and 2007, Golden Cross accounted
for approximately 40% and 39% of our revenues respectively.

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 the year ended December 31, 2008, we completed the installation of
approximately 312 MedLink Solution POS terminals and 199 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 of
which we installed 5 solutions as of December 31, 2008. We have approximately
five hundred and fifteen(515) MedLink Solutions in Camed providers' locations.
During fiscal years ended December 31, 2008 and 2007, respectively, we processed
398,822 and 573,822 transactions for Camed. Camed generated approximately
$323,000 or 4.5% and $398,000, or 7.7% of revenues during each of the years
ended December 31, 2008 and 2007, respectively.

                                       9
<PAGE>

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. At the end of fiscal year ended December 31, 2007, we had installed 167
POS terminals into CABESP provider locations and 255 IVR and 297 Web solutions.
During 2008, the IVR solutions were replaced by our web solution . As of
December 31, 2008, a total of 626 solutions were operational. When fully rolled
out, we anticipate that the CABESP installed base will consist of 900 solutions
and is expected to produce 70,000 transactions per month. During the years ended
December 31, 2008 and 2007, respectively, we processed 534,651 and 297,097
transactions for CABESP.

ECONOMUS INSTITUTIODE SEGURIDADE SOCIAL ("ECONOMUS")

During January 2008, we entered into a 60-month contract with Economus, a
self-insured managed health care scheme of Bank Nossa Caxia based in Sao Paulo,
Brazil with approximately 70,000 members. We also provided medical transcription
services to Economus taking paper claims and converting these to the electronic
TISS format acceptable to the Company's solution. Electronic claims went live in
June 2008. As of December 31, 2008, we had installed a 158 Web and 92 POS
solutions into Economus medical provider locations and had undertaken over
100,000 transactions. The contract generated approximately 10% of the company's
revenues for 2008, principally from the medical transcription service.

OTHER CONTRACTS

During 2008, two other contracts for the provisions of Connectivity services
covering approximately 270,000 lives became operational generating 40,000
transactions. As of December 31, 2008, we signed three other contracts that have
not yet generated any transaction revenues. However, preliminary consulting work
with respect to the development of customized authorization software for these
companies has commenced.

COMPETITION

The information network solutions market for 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 similar products and
services. There may be products on the market that do or will compete directly
with the products and services that we have developed and 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, 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 and Dativa Ltda, now owned by Orizon, a
wholly-owned subsidiary of Visanet, offer two modalities for authorization
software.. Visanet is 40% owned by Bradesco Bank, our former 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 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 a 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 forty five (45)
staff and contract personnel. Nineteen of these personnel are involved in
Operations, fourteen personnel are in development, eight personnel are
classified as Administrative and finance and four are involved in Sales and
Marketing of our products. Our subsidiary added an additional eight staff during
2008. Our President/Chief Executive Officer and Chief Financial Officer are
retained on a consulting basis and they are primarily responsible for all
day-to-day operations.

ITEM 1A. RISK FACTORS

You should carefully consider the risks described below together with all of the
other information included in this report before making an investment decision
with regard to our securities. The statements contained in or incorporated into
this annual report that are not historic facts are forward-looking statements
that are subject to risks and uncertainties that could cause actual results to
differ materially from those set forth in or implied by forward-looking
statements. If any of the following risks actually occurs, our business,
financial condition or results of operations could be harmed. In that case, the
trading price of our common stock could decline, and you may lose all or part of
your investment.

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
THEY OPERATE 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.

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<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
human 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 TISS in Brazil and HIPAA in the U.S. could be
burdensome, time consuming and expensive.

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 IF 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: Orizon, 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 financial statements have been subject to a "going concern" opinion by our
independent registered public accounting firm for fiscal years ended December
31, 2008 and 2007. Management believes 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 may result in the need to curtail
business operations and you could lose your entire investment. Our consolidated
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 expects our operating expenses to increase. As a result, we will
need to generate increased monthly revenue if we are to continue as a going
concern. To the extent that we do not generate sufficient revenues, 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 $4,581,205 and $4,626,920 at December 31,
2008 and 2007, respectively. At December 31, 2008, we have an accumulated
deficit of $14,410,077. We have relied on external financing and cash flow from
operations to fund our working capital needs. As at December 31, 2008, we had
$25,676 in cash on hand, total current assets were $679,295, and our total
current liabilities were $5,260,500. 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. If we do not sell our operating subsidiary, 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 our 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 from
three and two major customers during the years ended December 31, 2008 and 2007
that accounted for approximately 88%, or $5,410,000 ,and 88% or $4,548,000 of
the net revenues for the years ended December 31, 2008 and 2007, respectively.
In 2008, these three major customers accounted for 38%, 40% and 10% of net
revenues, respectively. In 2007, these two major customers accounted for 49% and
39% of net revenues, respectively. At December 31, 2008, these two major
customers accounted for 18% and 48%, respectively, of the total accounts
receivable balance outstanding.

During December 2008, Bradesco, our second largest customer, terminated its
relationship with the Company. The Company has entered into a number of new
contracts that are expected to begin generating revenue in 2009. These revenues
will partially offset the loss of Bradesco revenue.

MEDLINK CONECTIVIDADE HAS AN OUTSTANDING LIABILITY TO THE BRAZILIAN GOVERNMENT
FOR PAYROLL TAXES AND SOCIAL SECURITY TAXES IN ARREARS. FAILURE TO PAY SUCH
PAYROLL AND SOCIAL SECURITY TAXES TO THE BRAZILIAN AUTHORITIES WHEN REQUIRED TO
DO SO COULD RESULT IN ADDITIONAL LIABILITIES.

Since 2000, we have been deficient in the payment of Brazilian payroll taxes and
social security taxes. At December 31, 2008 and 2007, these deficiencies
(including interest and fines) amounted to approximately $1,180,000 and
$1,080,000, 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. 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 costs.

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 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 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 being a public company.
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. Brazil's inflation rates were 1.2% in 2005, 3.8% in 2006, 7.9% in 2007
and 6.3% in 2008. Inflation and governmental measures to combat it have had
significant negative effects on the Brazilian economy in past years. 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; and

      (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 Registrant's Common Equity,
Related Stockholder Matters and Issuer Purchases of Equity Securities."

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 57,402,089 shares of common
stock outstanding as of the date of this Annual Report, 41,934,971 shares are
freely tradable without restriction. The remaining 15,467,118 shares of common
stock 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, 2008, if exercised
or converted, we may issue up to 7,402,500 shares of common stock underlying the
warrants, up to 2,375,000 shares underlying stock options, 2,892,000,000 shares
underlying our Series A Preferred stock, and up to 1,400,000 shares of common
stock upon conversion of related party debt. Currently, we only have 100,000,000
common shares authorized and we may be required to increase the number of common
shares authorized by the Company.

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 57,402,089 shares of common stock
issued and outstanding and 14,410 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 SERIES A PREFERRED STOCK HAS THE OPTION OF CONVERTING THE
PRINCIPAL OUTSTANDING INTO SHARES OF OUR COMMON STOCK. IF THE HOLDER CONVERTS
THE SERIES A PREFERRED STOCK, THERE WILL BE DILUTION OF YOUR SHARES OF OUR
COMMON STOCK.

The conversion of 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 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 shares of Series A Preferred
Stock converted at conversion prices of $0.15, $0.10, $0.05, $0.03, $0.01 and
$0.005 (the conversion price shall be equal to the lesser of (i) $0.192 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):

                             NUMBER OF SHARES
                                 ISSUABLE              PERCENTAGE OF ISSUED
    CONVERSION PRICE         ON CONVERSION (1)         AND OUTSTANDING (2)
    ----------------         -----------------         --------------------
         $0.15                    9,606,667                   14.34%
         $0.10                   14,410,000                   20.07%
         $0.05                   28,820,000                   33.42%
         $0.03                   48,033,333                   45.57%
         $0.01                  144,100,000                   71.51%
         $0.005                 288,200,000                   83.39%
         $0.001               1,441,000,000                   96.17%

(1) Represents the number of shares issuable if 14,410 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 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 and based on 57,402,489 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, 2008. We are in the process of instituting changes to satisfy
our obligations in under the Sarbanes-Oxley Act. 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. 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.

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 2008, our common stock has traded as low as $0.0006 and as high as $0.067
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.
THEREFORE, IT MAY BE DIFFICULT FOR INVESTORS WITHIN THE UNITED STATES TO ENFORCE
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 1B. UNRESOLVED STAFF COMMENTS

         Not applicable.

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: 950 S. Pine Island Road, Suite A-150, Plantation,
         Florida, 33324 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, 2008, we have accrued approximately $151,000 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, 2008, no matters were submitted to our
stockholders for approval.

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

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, for the periods indicated, the
reported high and low closing bid quotations for our common stock by calendar
quarters during 2007 and 2008 and the first quarter of 2009 as quoted on FINRA.
These quotations reflect inter-dealer prices without retail mark-up, mark-down,
or commissions, and may not reflect actual transactions.

                            2007                2008                 2009
                            ----                ----                 ----
                        Low      High       Low       High       Low       High
                        ---      ----       ---       ----       ---       ----
First quarter          $0.13    $0.160    $0.005     $0.067    $0.0005    $0.002
Second quarter          0.05     0.090     0.002      0.030
Third quarter           0.04     0.072     0.002      0.010
Fourth quarter          0.04     0.080     0.0006     0.004

On April 6, 2009, the last sale price of our common stock as reported on the
OTCBB was $0.0005.

                                       24
<PAGE>

SHAREHOLDERS

As of the date of this Annual Report, we have approximately 177 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.

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, 2008:
<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      2,375,000        $0.14          1,575,000
Plans not approved by shareholders:
  Warrants                              7,402,500        $0.23                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 2,375,000 Stock
Options granted and outstanding.

COMMON STOCK PURCHASE WARRANTS

As of the date of this Annual Report, there are an aggregate of 7,402,500 common
stock purchase warrants issued and outstanding.

RECENT SALES OF UNREGISTERED SECURITIES

During fiscal year 2008, we issued 17,735,978 shares of its common stock upon
conversion of 870 shares of Series A preferred stock.

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

ITEM 6.  SELECTED FINANCIAL DATA

As a smaller reporting company, we are not required to provide the information
called for by Item 6 of Form 10-K.

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

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, 2008
and 2007, which financial statements are included elsewhere in this Annual
Report.

                                       27
<PAGE>

RESULTS OF OPERATION

YEAR ENDED DECEMBER 31, 2008 COMPARED TO YEAR ENDED DECEMBER 31, 2007

                                                          For the Year Ended
                                                             December 31,
                                                      -------------------------
                                                         2008           2007
                                                      -----------   -----------

REVENUES ...........................................  $ 6,119,046   $ 5,173,544
                                                      -----------   -----------

OPERATING EXPENSES
  Cost of product support services .................    2,752,757     2,072,326
  Compensation and related benefits ................    1,701,001     1,127,287
  Professional fees ................................      108,990       116,075
  Management and consulting fees - related partiers       299,087       471,761
  Investor relations ...............................        1,000        30,878
  Depreciation and amortization ....................      265,278       343,531
  General and administrative .......................    1,809,713     1,282,539
                                                      -----------   -----------

TOTAL OPERATING EXPENSES ...........................    6,937,826     5,444,397
                                                      -----------   -----------

LOSS FROM OPERATIONS ...............................     (818,780)     (270,853)
                                                      -----------   -----------

OTHER (EXPENSES) INCOME
  Other expenses ...................................            -        (6,393)
  Foreign exchange loss ............................        7,268       (27,348)
  Gain from derivative liabilities .................      116,912       662,127
  Interest expense .................................     (316,409)     (497,855)
  Interest expense -related parties ................      (42,068)      (60,418)
                                                      -----------   -----------
                                                         (234,297)       70,113
                                                      -----------   -----------

LOSS BEFORE INCOME TAXES ...........................   (1,053,077)     (200,740)

PROVISION FOR INCOME TAXES .........................      (43,565)     (194,478)
                                                      -----------   -----------

NET LOSS ...........................................   (1,096,642)     (395,218)

OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized foreign currency translation gain (loss)       473,758       (68,690)
                                                      -----------   -----------

COMPREHENSIVE LOSS .................................  $  (622,884)  $  (463,908)
                                                      -----------   -----------

                                       28
<PAGE>

Our net loss for the year ended December 31, 2008 was $1,096,642 compared to
$395,218 for the year ended December 31, 2007 (an increase of $701,424 or 177%).

During fiscal year ended December 31, 2008, we generated $6,119,046 in revenues
compared to $5,173,544 in revenues generated during fiscal year ended December
31, 2007 (an increase of $945,502 or 18.3%). The significant increase in
revenues is due to the continuing installation of our software and/or hardware
devices containing our software at 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 8,900,000 "real time" transactions during fiscal year
ended December 31, 2008, of which 4,800,000 were from POS terminals, 2,100,000
from PC and PC servers, 1,100,000 were via our proprietary WEB solution, and
900,000 from our Interactive Voice Response solution. 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 the year ended December 31, 2008, we incurred operating expenses in the
aggregate amount of $6,937,826 compared to $5,444,397 incurred during the year
ended December 31, 2007 (an increase of $1,493,429 or 27.4%). The increase in
operating expenses incurred during the year ended December 31, 2008 compared to
the year ended December 31, 2007 resulted from: (i) an increase of $680,431 or
32.8% in cost of product support services resulting from the increase in
revenues; (ii) an increase of $573,714 or 50.9 % in compensation and related
benefits associated with the increased operations of our MedLink operations;
(iii) a decrease of $7,085 or 6.1% based on a decrease in the amount of
professional fees incurred; (iv) a decrease of $172,674 or 36.6% in management
and consulting fees-related parties due to a decrease in use of certain
management and a director/consultant needed to handle our operations; (v) a
decrease in investor relations of $29,878 or 96.8% in investor relations; (vi) a
decrease of $78,253 or 22.8% in depreciation and amortization; and (vii) an
increase of $527,174 or 41.1% in general and administrative expenses primarily
resulting from an increase in operating costs associated with our increased
business revenues in 2008.

We reported a loss from operations of ($818,780) for fiscal year ended December
31, 2008 as compared to a loss from operations of ($270,853) for fiscal year
ended December 31, 2007 (an increase of $547,927 or 202.3%).

During the year ended December 31, 2008, we incurred other expense of $234,297,
compared to other income of $70,113 during the year ended December 31, 2007 (a
decrease of $304,410). The variance for year ended December 31, 2008, compared
to the year ended December 31, 2007 resulted primarily from the change in the
fair value of the Company's derivative liabilities which was a gain of $116,912
in 2008, as compared to a gain in 2007 of $662,127. This change is related to
the classification of the embedded conversion feature and related warrants
issued in connection with our Series A Preferred Stock and debenture payable as
derivative instruments.

For the year ended December 31, 2008, our loss before income taxes was
$1,053,077 compared to loss before taxes of $200,740 for the year ended December
31, 2007. During the year ended December 31, 2008, we recorded a tax provision
of $43,565 for Brazilian income taxes (2007: $194,478), resulting in a net loss
of $(1,096,642) compared to net loss of $395,218.

During fiscal year ended December 31, 2008, we recorded a deemed and cumulative
preferred stock dividend of $77,476 compared to $110,621 during fiscal year
ended December 31, 2007, which is related to our Series A Preferred Stock.

                                       29
<PAGE>

We reported a net loss attributable to common shareholders of ($1,174,118) for
fiscal year ended December 31, 2008 as compared to a net loss attributable to
common shareholders of ($505,839) for fiscal year ended December 31, 2007. This
translates to a loss per common share available to shareholders of $0.03 and
$0.02 for fiscal years ended December 31, 2008 and 2007, respectively.

We recorded an unrealized foreign currency translation gain (loss) of $473,758
and ($68,690) for the years ended December 31, 2008 and 2007, respectively. This
resulted in a comprehensive net loss during fiscal year ended December 31, 2008
of ($622,884) compared to ($463,908) during fiscal year ended December 31, 2007.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2008, our current assets were $679,295 and our current
liabilities were $5,260,500, which resulted in a working capital deficit of
$4,581,205. As of December 31, 2008, our total assets were $1,284,033 consisting
of: (i) $25,676 in cash; (ii) $279,080 in prepaid expenses and other current
assets; (iii) $374,539 in accounts receivable; (iv) $147,896 in net software
development costs; and (v) $456,842 in net property and equipment. As at
December 31, 2008, our total assets were $1,284,033 compared to $2,050,863 at
December 31, 2007.

As of December 31, 2008, our total liabilities were $5,458,442 consisting of:
(i) $1,909,027 in long-term and current portion of accounts payable and accrued
expenses; (ii) $303,126 due to related parties; (iii) $259,679 in convertible
loan to related party; (iv) $306,218 in loan payable to related party; (v)
$663,854 in current portion of loans payable; (vi) $3,321 in warrant liability;
(vii) $1,007,472 in convertible feature liability; (viii) capital lease
obligations of $68,045 and (ix) $937,700 in deferred gain on sale of minority
interest in subsidiary. As at December 31, 2008, our total liabilities were
$5,458,442 compared to $5,907,918 at December 31, 2007.

Stockholders' deficit increased from ($3,857,055) for fiscal year ended December
31, 2007 to ($4,174,409) for fiscal year ended December 31, 2008.

For the year ended December 31, 2008, net cash flow used in operating activities
was ($919,011) compared to net cash provided by operating activities of $123,955
for the year ended December 31, 2007. The change in cash flows provided by
operating activities is principally due to funding our net loss of $1,096,642,
the add back of non-cash items including a gain from derivative liabilities of
($116,912), depreciation and amortization of $464,117, deposit on sale of
minority interest of ($20,000), an increase in prepaid expense and other current
assets of ($86,824), an increase in accounts payable and accrued expenses of
$7,099 and a decrease in due to related parties of $102,926. 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 $84,446, and an
increase in accounts payable of accrued expenses of $257,766 and an increase in
due to related parties of $160,678.

Net cash flows provided by investing activities amounted to $909,356 for the
year ended December 31, 2008 compared to net cash used in investing activities
of ($135,455) for the year ended December 31, 2007. During the year ended
December 31, 2008, we received proceeds of $937,700 from the sale of a minority
interest ownership in Transax Limited offset by the acquisition of property and
equipment of $28,344. During the year ended December 31, 2007, we capitalized
software development costs of $254,409 and acquired property and equipment of
$68,793. 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.

                                       30
<PAGE>

Net cash flows used in financing activities for fiscal year ended December 31,
2008 were $9,674 compared to net cash flows provided by financing activities of
$99,319 for fiscal year ended December 31, 2007. For the year ended December 31,
2008, cash used in financing activities was attributable to $215,326 in proceeds
from loans and the higher repayment of debt in 2008 of $225,000. During the year
ended December 31, 2007, net cash provided by financing activities resulted
$19,319 in proceeds from loans, and the proceeds of related party loans of
$80,000.

PLAN OF OPERATION

Since our inception, we have funded operations through borrowings and equity
sales 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 and private placements to meet our business
objectives including 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.

YA GLOBAL INVESTMENTS ("YA GLOBAL")

On January 13, 2006, we entered into an Investment Agreement with YA Global
(collectively, the "Parties"), pursuant to which we sold YA Global up to 16,000
shares of Series A Convertible Preferred Stock, no par value, (the "Series A
Preferred Shares") for a total price of up to $1,600,000. The Series A Preferred
Shares shall be convertible, at YA Global's discretion, into shares of our
common stock.

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 the Registration
Statement is not filed within thirty (30) days from the date we file 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 had 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
would 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 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 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 our Registration Statement with the Securities and Exchange Commission on
May 9, 2006. As of the date of this Quarterly Report, the Registration Statement
has not been declared effective by the Securities and Exchange Commission. We do
not have any intent to re-file our Registration Statement and on November 13,
2008, we formally withdrew the Registration Statement by filing form RW with the
Securities and Exchange Commission. In 2006, pursuant to FASB Staff Position, or
FSP, EITF 00-19-2, "Accounting for Registration Payment Arrangements", 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.

                                       31
<PAGE>

Certain 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 YA Global (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 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.

During the year ended December 31, 2008, we issued 17,735,978 shares of our
common stock to YA Global in connection with the conversion of 870 shares of
Series A Preferred Stock. Subsequent to the year ended December 31, 2008, we
issued a further 5,033,333 shares of our common stock to YA Global. See "PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES".

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, Medlink Connectividade 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.

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
Connectividade, 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.

                                       32
<PAGE>

MATERIAL COMMITMENTS

CONVERTIBLE LOANS - RELATED PARTY

A material liability for us at December 31, 2008 is the aggregate principal
amount of $175,000 and $84,679 in accrued interest due and owing to a related
party in accordance with two convertible promissory notes (collectively, the
"Convertible Promissory Note(s)"). The Convertible Promissory Notes were 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. As of December 31, 2008, an aggregate
principal amount of $175,000 and interest in the amount of $84,679 remains due
and owing under the Convertible Promissory Notes. As of the date of this Annual
Report, the Convertible Promissory Notes are deemed in default and are under
re-negotiation with the lender.

LOAN - RELATED PARTY

A material liability for us at December 31, 2008 is the aggregate amount of
$306,218 in principal and interest 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, 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. During the 2007 period, we incurred a loan fee of $5,000 and an
additional fee of approximately $7,756, which has been included in interest
expense. For the year ended December 31, 2008 and 2007, we incurred $21,011 and
$39,418, respectively, in interest related to these loans. At December 31, 2008
and 2007, $64,102 and $43,091 in interest and loan fees was accrued on these
loans and the aggregate principal and interest amount due is $306,218 and
$292,475, respectively.

CONSULTING AGREEMENT

A material liability for us at December 31, 2008 is the amounts due and owing as
management fees to Stephen Walters, our Chief Executive Officer. For the year
ended December 31, 2008 and 2007, we incurred $215,727 and $234,327,
respectively, in management fees. At December 31, 2008 and 2007, $274,646 and
$371,932 in management fees and other expenses are payable to Mr. Walters. In
accordance with the terms of an agreement effective July 2007, we pay monthly to
Mr. Walters an aggregate amount of $17,500 as compensation for managerial and
consulting services he provides.

ACCRUED TAXES AND RELATED EXPENSES

A material estimated liability for us for fiscal year 2008 is the amount due and
owing for Brazilian payroll taxes and Social Security taxes. At December 31,
2008 and 2007, these deficiencies, plus interest and penalties, amounted to
approximately $1,180,000 and $1,080,000, respectively.

Effective April 1, 2004, 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. At
December 31, 2008, approximately $1,180,000 of our INSS and other taxes are to
be repaid within a 12 month period. At December 31, 2008, the future payments
due to the Brazilian authorities are as follows: (i) 2009 - $1,172,496; (ii)
2010 - $7,899.

MEDLINK CONNECTIVIDADE LOAN PAYABLE AND OTHER LOANS PAYABLE

At December 31, 2008, significant liabilities for us are the several loans and
credit lines with financial institutions in Brazil. The Brazil loans require
monthly installment payments, bear interest at rates ranging from 30% to 90% per
annum, are secured by certain receivables of Medlink Connectividade, and are due
through October 2009. As at December 31, 2008 and 2007, the loans payable to
these financial institutions and others aggregated $663,854 and $652,804,
respectively.

                                       33
<PAGE>

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 discussion and analysis of our financial condition and results of operations
are based upon our consolidated financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United
States. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. We continually evaluate our estimates, including those related to
bad debts, recovery of long-lived assets, income taxes, and the valuation of
equity transactions. We base our estimates on historical experience and on
various other assumptions that we believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Any future changes to these estimates and assumptions could cause
a material change to our reported amounts of revenues, expenses, assets and
liabilities. Actual results may differ from these estimates under different
assumptions or conditions. We believe the following critical accounting policies
affect our more significant judgments and estimates used in the preparation of
the financial statements

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.

Under the criteria set forth in SFAS 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.

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.

                                       34
<PAGE>

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 December 2007, the FASB issued SFAS 141(R), "Business Combinations", which
replaces SFAS 141. SFAS 141(R) establishes principles and requirements for how
an acquirer recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, any non-controlling interest in the
acquiree and the goodwill acquired. The Statement also establishes disclosure
requirements which will enable users to evaluate the nature and financial
effects of the business combination. SFAS 141(R) is effective for fiscal years
beginning after December 15, 2008, and applies to any business combinations
which occur after December 31, 2008. The adoption of SFAS 141(R), effective
January 1, 2009, may have an impact on accounting for future business
combinations.

In December 2007, the FASB issued SFAS 160, "Non-controlling Interests in
Consolidated Financial Statements - an amendment of Accounting Research Bulletin
No. 51", which establishes accounting and reporting standards for ownership
interests in subsidiaries held by parties other than the parent, the amount of
consolidated net income attributable to the parent and to the non-controlling
interest, changes in a parent's ownership interest and the valuation of retained
non-controlling equity investments when a subsidiary is deconsolidated. The
Statement also establishes reporting requirements that provide sufficient
disclosures that clearly identify and distinguish between the interests of the
parent and the interests of the non-controlling owners. SFAS 160 is effective
for fiscal years beginning after December 15, 2008. The Company does not expect
SFAS 160 to have a material impact on the preparation of its consolidated
financial statements.

In March 2008, the FASB issued SFAS 161, "Disclosures about Derivative
Instruments and Hedging Activities". The new standard is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity's financial position, financial performance, and cash
flows. It is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. The Company does not expect SFAS 161 to have a material impact on
the preparation of its consolidated financial statements.

In May 2008, the FASB issued Staff Position ("FSP") APB 14-1, Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement). FSP APB 14-1 clarifies that convertible
debt instruments that may be settled in cash upon either mandatory or optional
conversion (including partial cash settlement) are not addressed by paragraph 12
of APB Opinion No. 14, "Accounting for Convertible Debt and Debt issued with
Stock Purchase Warrants." Additionally, FSP APB 14-1 specifies that issuers of
such instruments should separately account for the liability and equity
components in a manner that will reflect the entity's non-convertible debt
borrowing rate when interest cost is recognized in subsequent periods. FSP APB
14-1 is effective for financial statements issued for fiscal years beginning
after December 15, 2008, and interim periods within those fiscal years. The
Company has adopted FSP APB 14-1 beginning January 1, 2009, and this standard
must be applied on a retroactive basis. The Company is evaluating the impact the
adoption of FSP APB 14-1 will have on its consolidated financial position and
results of operations.

                                       35
<PAGE>

In May 2008, the FASB issued SFAS 162, "The Hierarchy of Generally Accepted
Accounting Principles." This standard is intended to improve financial reporting
by identifying a consistent framework, or hierarchy, for selecting accounting
principles to be used in preparing financial statements that are presented in
conformity with generally accepted accounting principles in the United States
for non-governmental entities. SFAS 162 is effective 60 days following approval
by the U.S. Securities and Exchange Commission of the Public Company Accounting
Oversight Board's amendments to AU Section 411, "The Meaning of Present Fairly
in Conformity with Generally Accepted Accounting Principles." The Company does
not expect SFAS 162 to have a material impact on the preparation of its
consolidated financial statements.

On June 16, 2008, the FASB issued FSP No. EITF 03-6-1, "Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities," to address the question of whether instruments granted in
share-based payment transactions are participating securities prior to vesting.
The FSP determines that unvested share-based payment awards that contain rights
to dividend payments should be included in earnings per share calculations. The
guidance will be effective for fiscal years beginning after December 15, 2008.
The Company is currently evaluating the requirements of FSP No. EITF 03-6-1 as
well as the impact of the adoption on its consolidated financial statements.

In June 2008, the FASB ratified Emerging Issues Task Force Issue No. 07-5,
"Determining Whether an Instrument (or Embedded Feature) is Indexed to an
Entity's Own Stock" . EITF 07-5 mandates a two-step process for evaluating
whether an equity-linked financial instrument or embedded feature is indexed to
the entity's own stock. Warrants that a company issues that contain a strike
price adjustment feature, upon the adoption of EITF 07-5, are no longer being
considered indexed to the company's own stock. Accordingly, adoption of EITF
07-5 will change the current classification (from equity to liability) and the
related accounting for such warrants outstanding at that date. EITF 07-5 is
effective for fiscal years beginning after December 15, 2008, and interim
periods within those fiscal years. The Company is currently evaluating the
impact the adoption of EITF 07-5 will have on its financial statement
presentation and disclosures.

In December 2008, the FASB issued FSP FAS 140-4 and FIN 46(R)-8, "Disclosures by
Public Entities (Enterprises) about Transfers of Financial Assets and Interests
in Variable Interest Entities". FSP FAS 140-4 and FIN 46(R)-8 amends FAS 140 and
FIN 46(R) to require additional disclosures regarding transfers of financial
assets and interest in variable interest entities. FSP FAS 140-4 and FIN 46(R)-8
are effective for interim or annual reporting periods ending after December 15,
2008. The adoption of FSP FAS 140-4 and FIN 46(R)-8 did not have an impact on
our consolidated financial position and results of operations.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We do not use derivative financial instruments in our investment portfolio and
we have no foreign exchange contracts. Our financial instruments consist of cash
and cash equivalents, trade accounts receivable, accounts payable and long-term
obligations. We consider investments in highly liquid instruments purchased with
a remaining maturity of 90 days or less at the date of purchase to be cash
equivalents. However, in order to manage the foreign exchange risks, we may
engage in hedging activities to manage our financial exposure related to
currency exchange fluctuation. In these hedging activities, we might use
fixed-price, forward, futures, financial swaps and option contracts traded in
the over-the-counter markets or on exchanges, as well as long-term structured
transactions when feasible.

Foreign Exchange Rates. All of our sales are denominated in Brazilian Real
("R$"). As a result, changes in the relative values of U.S. Dollars and R$
affect our reported levels of revenues and profitability as the results are
translated into U.S. Dollars for reporting purposes. In particular, fluctuations
in currency exchange rates could have a significant impact on our financial
stability due to a mismatch among various foreign currency-denominated sales and
costs. Fluctuations in exchange rates between the U.S. dollar and R$ affect our
gross and net profit margins and could result in foreign exchange and operating
losses.

                                       36
<PAGE>

Our exposure to foreign exchange risk primarily relates to currency gains or
losses resulting from timing differences between signing of sales contracts and
settling of these contracts. Furthermore, we translate monetary assets and
liabilities denominated in other currencies into R$, the functional currency of
our operating business. Our results of operations and cash flow are translated
at average exchange rates during the period, and assets and liabilities are
translated at the unified exchange rate at the end of the period. Translation
adjustments resulting from this process are included in accumulated other
comprehensive income in our statement of shareholders' equity. We have not used
any forward contracts, currency options or borrowings to hedge our exposure to
foreign currency exchange risk. We cannot predict the impact of future exchange
rate fluctuations on our results of operations and may incur net foreign
currency losses in the future. As our sales denominated in foreign currencies,
such as R$ continue to grow, we will consider using arrangements to hedge our
exposure to foreign currency exchange risk.

Our financial statements are expressed in U.S. dollars but the functional
currency of our operating subsidiary is R$. The value of your investment in our
stock will be affected by the foreign exchange rate between U.S. dollars and R$.
To the extent we hold assets denominated in U.S. dollars, including the net
proceeds to us from this offering, any appreciation of the R$ against the U.S.
dollar could result in a change to our statement of operations and a reduction
in the value of our U.S. dollar denominated assets. On the other hand, a decline
in the value of R$ against the U.S. dollar could reduce the U.S. dollar
equivalent amounts of our financial results, the value of your investment in our
company and the dividends we may pay in the future, if any, all of which may
have a material adverse effect on the price of our stock.

Inflation. In the last 15 years, Brazil has faced periods of extremely high
inflation rates. Brazil's inflation rates were 1.2% in 2005, 3.8% in 2006, 7.9%
in 2007 and 6.3% in 2008. Inflation and governmental measures to combat it have
had significant negative effects on the Brazilian economy in past years. 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.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements begin on page F-1.

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

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Our management does not expect that our disclosure controls or our internal
controls over financial reporting will prevent all error and fraud. A control
system, no matter how well conceived and operated, can provide only reasonable,
but not absolute, assurance that the objectives of a control system are met.
Further, any control system reflects limitations on resources, and the benefits
of a control system must be considered relative to its costs. These limitations
also include the realities that judgments in decision-making can be faulty and
that breakdowns can occur because of simple error or mistake. Additionally,
controls can be circumvented by the individual acts of some persons, by
collusion of two or more people or by management override of a control. A design
of a control system is also based upon certain assumptions about potential
future conditions; over time, controls may become inadequate because of changes

                                       37
<PAGE>

in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and may not be detected.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Disclosure controls and procedures refer to controls and other procedures
designed to ensure that information required to be disclosed in the reports we
file or submit under the Securities Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the rules and forms
of the SEC and that such information is accumulated and communicated to our
management, including our chief executive officer and chief financial officer,
as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, our management has carried out an evaluation, with the participation and
under the supervision of our Chief Executive Officer and our Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures as of December 31, 2008. As discussed in more detail
below, our Chief Executive Officer and our Chief Financial Officer concluded
that our disclosure controls and procedures are ineffective as of December 31,
2008, due to material weaknesses that we identified in internal control over
financial reporting.

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, 2008. 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. In our assessment
of the effectiveness of internal control over financial reporting as of December
31, 2008, our management determined that material weaknesses existed as outlined
below. 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 the annual or interim financial statements will not be prevented
or detected in 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.
Management identified material weaknesses 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, 2008, and (iv) a lack of
segregation of duties within accounting functions.

We began preparing to be in compliance with the internal control obligations,
including Section 404, for our fiscal year ending December 31, 2008. 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, a majority of our internal
accounting staff 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.

                                       38
<PAGE>

In order to correct the foregoing material 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 2008. 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 material
weaknesses 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 material weaknesses 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.

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 annual report 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.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in our internal controls over financial reporting during
the fourth quarter of fiscal year 2008 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.

ITEM 9B. OTHER INFORMATION

None.

                                       39
<PAGE>

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCES

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        50      President, Chief Executive Officer and a Director
Laurie Bewes           56      Director
Adam Wasserman         44      Chief Financial Officer

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 has more than twenty (20) years of business experience. 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 a private
investment group undertaking investments in early stage companies. Mr. Walters
possesses an in depth knowledge of the public markets having previously acted as
President and Chief Executive Officer of US public company's since 2001.

LAURIE BEWES: Mr. Bewes currently is a director of Transax. Mr. Bewes hold a
Bachelor of Business Administration 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,
automated systems, banking relations and internal controls. Mr. Wasserman has
also served as the chief financial officer of Lotus Pharmaceuticals, Inc. since
October 2006 and Gold Horse International, Inc. since July 2007. 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),
China Wind Systems, Inc. (November 2007 to December 2008) 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 in Accounting 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,
treasurer and executive board member of Gold Coast Venture Capital Association.

                                       40
<PAGE>

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.

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, 2008.

                                       41
<PAGE>

ITEM 11. 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 $100,000
and up to two additional individuals for whom disclosure would have been made in
this table but for the fact that the individual was not serving as an executive
officer of our company at December 31, 2008. The value attributable to any
option awards is computed in accordance with FAS 123R.
<TABLE>
<CAPTION>
                                              SUMMARY COMPENSATION TABLE
                                              --------------------------
                                                                 NON-EQUITY
                                                                 INCENTIVE      NONQUALIFIED   ALL
NAME AND                                       STOCK    OPTION   PLAN           DEFERRED       OTHER
PRINCIPAL                    SALARY    BONUS   AWARDS   AWARDS   COMPENSATION   COMPENSATION   COMPENSATION   TOTAL
POSITION              YEAR   ($)       ($)     ($)      ($)      ($)            EARNINGS ($)   ($)            ($)
(A)                   (B)    (C)       (D)     (E)      (F)      (G)            (H)            (I)            (J)
-------------------   ----   -------   -----   ------   ------   ------------   ------------   ------------   -------
<S>                   <C>    <C>       <C>     <C>      <C>      <C>            <C>            <C>             <C>
Stephen Walters (1)   2008         0       0        0        0              0              0        215,727   215,727
President, CEO,       2007         0       0   55,000   13,348              0              0        234,327   302,675
Director

Laurie Bewes (2)      2008         0       0        0        0              0              0          6,000     6,000
Director              2007         0       0        0    4,449              0              0         72,000    76,449

Adam Wasserman (3)    2008         0       0        0        0              0              0         47,360    47,360
Chief financial       2007         0       0        0    4,449              0              0         46,737    51,186
officer

Americao de Castro    2008   164,000       0        0        0              0              0              0   164,000
President of          2007   165,000       0        0        0              0              0              0   165,000
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.

(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.

(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. Compensation for Mr. Wasserman was paid to CFO Oncall, Inc., a company
where Mr. Wasserman serves as chief executive officer. Mr. Wasserman works for
us on a part-time basis pursuant to an agreement with CFO Oncall.

                                       42
<PAGE>

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, 2008:
<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         250,000               -             -       0.20     12/30/09        -        -           -           -
Walters         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          125,000               -             -       0.20     12/30/09        -        -           -           -
Bewes           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          50,000               -             -       0.20     12/30/09        -        -           -           -
de Castro        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 2008 and 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, 2008 and 2007, $215,727 and $234,327 was incurred by us to
Mr. Walters for management and consulting services rendered.

                                       43
<PAGE>

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, 2008 and 2007, $274,646 and
$371,932 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, 2008 and 2007, an aggregate of $6,000 and $72,000 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. 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, 2008 and 2007, we incurred $30,000 and $37,000 in consulting fees
to Mr. Sasso. 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 $2,500. Effective December 1, 2008
the Company terminated the consulting arrangement with Mr. Sasso.

WASSERMAN FINANCIAL SERVICES AGREEMENT

Mr. Wasserman has served as our chief financial officer since February 2005.
Compensation for Mr. Wasserman was paid to CFO Oncall, Inc., a company where Mr.
Wasserman serves as chief executive officer. Mr. Wasserman works for us on a
part-time basis pursuant to an agreement with CFO Oncall. Pursuant to the terms
of this engagement letter, CFO Oncall 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, 2008 and 2007, fees amounted to
$47,360 and $46,737, respectively. 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.
As at December 31, 2008 and 2007, $28,480 and $34,120 in fees is due and owing
to CFO Oncall.

                                       44
<PAGE>

ITEM 12. 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 57,402,089 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 .......................         4,134,819 (2)           7.20%
Bali View Block A4/7
Jl. Cirendeu Raya 40 Jakarta Selatan
13419 Indonesia

Laurie Bewes ..........................           758,333 (3)           1.32%
429 Willawrong Road
Caringbah, Australia NSW 2229

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 ...............................        15,784,742 (6)          27.06%

MAJOR SHAREHOLDERS:

Carlingford Investments Limited .......        10,641,590 (7)          18.54%
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
57,402,089 shares issued and outstanding.

                                       45
<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 250,000 Stock
Options to acquire 250,000 shares of common stock at $0.20 per share expiring on
December 30, 2009; (iii) 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; (iv) 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; (v) 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 (vi) 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) 233,333 shares of common stock held of record;
(ii) 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; (iii 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; (iv) 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; (v) 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 (vi) 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.

(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) 10,593,257 shares of common stock held of record
by Carlingford Investments Limited, over which Mr. Walters has sole voting and
disposition rights; and (ii) 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.

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, except that ownership limitations of 4.99% pursuant to our Series A
Preferred Stock has been waived effective May 21, 2009.

                                       46
<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE.

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 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

During fiscal year ended December 31, 2008, we incurred approximately $60,400 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, 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, 2008 and 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.

ITEM 15. EXHIBITS

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

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.

                                       47
<PAGE>

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.

10.2     Securities Purchase 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.

10.3     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.

                                       48
<PAGE>

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
         January20, 2006.

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
         January20, 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.

                                       49
<PAGE>

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.

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.

                                       50
<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 15, 2009               By: /s/ STEPHEN WALTERS
                                        --------------------------------
                                        Stephen Walters, President/Chief
                                        Executive Officer and Director


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

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

/s/ Stephen Walters     Chief Executive Officer and Director      April 15, 2009
-------------------
Stephen Walters

/s/ Adam Wasserman      Chief Financial Officer and Principal     April 15, 2009
------------------      Accounting Officer
Adam Wasserman

/s/ Laurie Bewes        Director                                  April 15, 2009
----------------
Laurie Bewes

                                       51
<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-30


                                       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, 2008 and 2007 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, 2008 and 2007 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 $14.4 million, a working capital deficiency of
approximately $4.6 million and a stockholders' deficiency of approximately $4.2
million at December 31, 2008. 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.


                                               MSPC Certified Public Accountants
                                               and Advisors, PC


New York, New York
April 14, 2009

                                       F-2
<PAGE>
<TABLE>
                                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                                           CONSOLIDATED BALANCE SHEETS
<CAPTION>
                                                                                           December 31,
                                                                                   ----------------------------
                                                                                       2008            2007
                                                                                   ------------    ------------
<S>                                                                                <C>             <C>
                                     ASSETS

CURRENT ASSETS:
  Cash .........................................................................   $     25,676    $    175,938
  Accounts receivable, net .....................................................        374,539         487,397
  Prepaid expenses and other current assets ....................................        279,080         277,992
                                                                                   ------------    ------------

     TOTAL CURRENT ASSETS ......................................................        679,295         941,327

SOFTWARE DEVELOPMENT COSTS, net ................................................        147,896         347,063
PROPERTY AND EQUIPMENT, net ....................................................        456,842         757,673
OTHER ASSETS ...................................................................              -           4,800
                                                                                   ------------    ------------

     TOTAL ASSETS ..............................................................   $  1,284,033    $  2,050,863
                                                                                   ============    ============

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
  Current portion of loans payable .............................................   $    663,854    $    600,440
  Current portion of capital lease obligations .................................         30,943               -
  Convertible debenture payable, net ...........................................              -         225,000
  Accounts payable and accrued expenses ........................................      1,748,187       2,184,678
  Deposit on sale of minority interest .........................................              -         187,747
  Deferred gain on sale of minority interest in subsidiary .....................        937,700               -
  Due to related parties .......................................................        303,126         406,052
  Warrant liability ............................................................          3,321         153,134
  Convertible feature liability ................................................      1,007,472       1,280,100
  Loans payable - related party ................................................        306,218         292,475
  Convertible loan - related party .............................................        259,679         238,621
                                                                                   ------------    ------------

     TOTAL CURRENT LIABILITIES .................................................      5,260,500       5,568,247

LOANS PAYABLE, NET OF CURRENT PORTION ..........................................              -          52,364
CAPITAL LEASE OBLIGATION. NET OF CURRENT PORTION ...............................         37,102               -
ACCOUNTS PAYABLE AND ACCRUED EXPENSES, NET OF CURRENT PORTION ..................        160,840         287,307
                                                                                   ------------    ------------

     TOTAL LIABILITIES .........................................................      5,458,442       5,907,918
                                                                                   ------------    ------------

STOCKHOLDERS' DEFICIT:
  Series A convertible preferred stock, no par value; 16,000 shares authorized;
  14,460 and 15,330 shares issued and outstanding at December 31, 2008 and 2007,
  respectively; liquidation preference $1,446,000 at December 31, 2008 .........      1,330,039       1,417,039
  Common stock $.00001 par value; 100,000,000 shares authorized;
  52,368,756 and 34,632,778 shares issued and outstanding at December 31, 2008
  and December 31, 2007, respectively ..........................................            524             346
  Paid-in capital ..............................................................      8,405,984       8,013,632
  Accumulated deficit ..........................................................    (14,410,077)    (13,313,435)
  Accumulated other comprehensive income .......................................        499,121          25,363
                                                                                   ------------    ------------

     TOTAL STOCKHOLDERS' DEFICIT ...............................................     (4,174,409)     (3,857,055)
                                                                                   ------------    ------------

     TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT ...............................   $  1,284,033    $  2,050,863
                                                                                   ============    ============

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

                                                       F-3
</TABLE>
<PAGE>
<TABLE>
                     TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
                                                                FOR THE YEARS ENDED
                                                                   DECEMBER 31,
                                                           ----------------------------
                                                               2008            2007
                                                           ------------    ------------
<S>                                                        <C>             <C>
REVENUES ...............................................   $  6,119,046    $  5,173,544
                                                           ------------    ------------

OPERATING EXPENSES:
  Cost of product support services .....................      2,752,757       2,072,326
  Compensation and related benefits ....................      1,701,001       1,127,287
  Professional fees ....................................        108,990         116,075
  Management and consulting fees - related parties .....        299,087         471,761
  Investor relations ...................................          1,000          30,878
  Depreciation and amortization ........................        265,278         343,531
  General and administrative ...........................      1,809,713       1,282,539
                                                           ------------    ------------

     TOTAL OPERATING EXPENSES ..........................      6,937,826       5,444,397
                                                           ------------    ------------

LOSS FROM OPERATIONS ...................................       (818,780)       (270,853)
                                                           ------------    ------------

OTHER INCOME (EXPENSES):
  Other income (expenses) ..............................              -          (6,393)
  Foreign currency exchange loss .......................          7,268         (27,348)
  Gain from derivative liabilities .....................        116,912         662,127
  Interest expense,net .................................       (316,409)       (497,855)
  Interest expense - related party .....................        (42,068)        (60,418)
                                                           ------------    ------------

     TOTAL OTHER INCOME (EXPENSES) .....................       (234,297)         70,113
                                                           ------------    ------------

LOSS BEFORE INCOME TAXES ...............................     (1,053,077)       (200,740)

PROVISION FOR INCOME TAXES .............................        (43,565)       (194,478)
                                                           ------------    ------------

NET LOSS ...............................................     (1,096,642)       (395,218)

DEEMED AND CUMULATIVE PREFERRED STOCK DIVIDENDS ........        (77,476)       (110,621)
                                                           ------------    ------------

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS ...........   $ (1,174,118)   $   (505,839)
                                                           ============    ============

COMPREHENSIVE LOSS:
  NET LOSS .............................................   $ (1,096,642)   $   (395,218)

  OTHER COMPREHENSIVE INCOME (LOSS)
     Unrealized foreign currency translation gain (loss)        473,758         (68,690)
                                                           ------------    ------------

  COMPREHENSIVE LOSS ...................................   $   (622,884)   $   (463,908)
                                                           ============    ============

NET LOSS PER COMMON SHARE:
BASIC AND DILUTED ......................................   $      (0.03)   $      (0.02)
                                                           ============    ============

WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC AND DILUTED ......................................     43,869,691      32,569,263
                                                           ============    ============

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

                                           F-4
</TABLE>
<PAGE>
<TABLE>
                                     TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                               CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
                                     For the Years Ended December 31, 2008 and 2007
<CAPTION>
                                                                                              Accumulated
                              Series A                                                           Other
                          Preferred Stock         Common Stock                                  Compre-        Total
                       ---------------------   ------------------   Paid-in     Accumulated     hensive    Stockholders'
                        Shares      Amount       Shares    Amount   Capital       Deficit       Income        Deficit
                       --------   ----------   ----------  ------  ----------  ------------   -----------  -------------
<S>                    <C>        <C>          <C>         <C>     <C>          <C>           <C>          <C>
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)

Common stock issued
 for preferred stock       (870)     (87,000)  17,735,978     178      86,822             -             -             -

Derivative liability
 reclassified to
 paid-in capital ....         -            -            -       -     305,530             -             -       305,530

Grant of stock
 options and warrants
 for services .......         -            -            -       -           -             -             -             -

Comprehensive Loss:
  Net loss for period         -            -            -       -           -    (1,096,642)            -
  Foreign currency
   translation
   adjustments ......         -            -            -       -           -             -       473,758             -
  Total comprehensive
   loss .............         -            -            -       -           -             -             -      (622,884)
                       --------   ----------   ----------  ------  ----------  ------------   -----------  ------------

BALANCE,
 DECEMBER 31, 2008 ..    14,460   $1,330,039   52,368,756  $  524  $8,405,984  $(14,410,077)  $   499,121  $ (4,174,409)
                       ========   ==========   ==========  ======  ==========  ============   ===========  ============

                 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 Years
                                                                            Ended December 31,
                                                                        -------------------------
                                                                            2008          2007
                                                                        -----------   -----------
<S>                                                                     <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .............................................................  $(1,096,642)  $  (395,218)
Adjustments to reconcile net loss to net cash (used in)
  provided by operating activities:
    Depreciation and amortization ....................................      265,278       343,531
    Amortization of software maintenance costs .......................      199,167       235,249
    Stock-based compensation and consulting ..........................            -        84,446
    Deposit on sale of minority interest  applied to professional fees      (20,000)            -
    Amortization of deferred debt issuance costs .....................            -         4,783
    Amortization of debt discount ....................................            -        31,250
    Gain from derivative liabilities .................................     (116,912)     (662,127)

Changes in assets and liabilities:
    Accounts receivable ..............................................       (6,524)      (27,309)
    Prepaid expenses and other current assets ........................      (86,824)       12,939
    Other assets .....................................................        4,800             -
    Accounts payable and accrued expenses ............................       79,264       515,154
    Accrued interest payable, related party ..........................       34,801        77,967
    Due to related parties ...........................................     (102,926)      160,678
    Accounts payable and accrued expenses  - long-term ...............      (72,493)     (257,388)
                                                                        -----------   -----------

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES ..................     (919,011)      123,955
                                                                        -----------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sale of minority interest ............................      937,700       187,747
  Capitalized software development costs .............................            -      (254,409)
  Acquisition of property and equipment ..............................      (28,344)      (68,793)
                                                                        -----------   -----------

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES ..................      909,356      (135,455)
                                                                        -----------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from loans ................................................      215,326        19,319
  Repayment of convertible debt ......................................     (225,000)            -
  Proceeds from loan - related party .................................            -        80,000
                                                                        -----------   -----------

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES ..................       (9,674)       99,319
                                                                        -----------   -----------

EFFECT OF EXCHANGE RATE CHANGES ON CASH ..............................     (130,933)       16,618
                                                                        -----------   -----------

NET (DECREASE) INCREASE IN CASH ......................................     (150,262)      104,437

CASH, BEGINNING OF YEAR ..............................................      175,938        71,501
                                                                        -----------   -----------

CASH, END OF YEAR ....................................................  $    25,676   $   175,938
                                                                        ===========   ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid for interest .............................................  $   281,608   $   405,572
                                                                        ===========   ===========
  Cash paid for income taxes .........................................  $         -   $   194,478
                                                                        ===========   ===========

NON-CASH INVESTING AND FINANCING ACTIVITIES:
  Series A preferred stock converted to common stock .................  $    87,000   $    61,932
                                                                        ===========   ===========
  Common stock and options issued for services .......................  $         -   $    84,446
                                                                        ===========   ===========
  Derivative liability reclassified to equity upon conversion ........  $   305,530   $    50,471
                                                                        ===========   ===========

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

                                                F-6
</TABLE>
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

Transax International Limited ("TNSX" or the "Company") was incorporated in the
State of Colorado in 1987. The Company currently trades on the OTC Bulletin
Board under the symbol "TNSX" and the Frankfurt and Berlin Stock Exchanges under
the symbol "TX6".

The Company, primarily through its 55% owned subsidiary, Medlink Conectividade
em Saude Ltda ("Medlink Conectividade") is an international provider of
information network solutions specifically designed for healthcare providers and
health insurance companies. The Company's MedLink Solution enables the real time
automation of routine patient eligibility, verification, authorizations, claims
processing and payment functions. The Company has offices located in Plantation,
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 (the
"Buyer") controlled and owned 20% by Americo de Castro, director and President
of Medlink Conectividade, and 80% by Flavio Gonzalez Duarte. 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
shares of: (i) Medlink Conectividade, and (ii) Medlink Technologies, Inc.,
("MTI") a Mauritius corporation (See Note 9).

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 55% owned subsidiary, Transax
Limited, and Transax Limited's wholly-owned subsidiaries Medlink Conectividade,
and MTI. All significant intercompany balances and transactions have been
eliminated in the consolidated financial statements.

Use of estimates

The preparation of the financial statements in conformity with accounting
principles generally accepted in the U.S. requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues, expenses, and the related disclosures at the date of the financial
statements and during the reporting period. Actual results could materially
differ from these estimates. Significant estimates in 2008 and 2007 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.

                                       F-7
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

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

Fair Value of Financial Instruments

Effective January 1, 2008, the Company adopted Statement of Financial Accounting
Standards ("SFAS") 157, Fair Value Measurements. SFAS 157 clarifies the
definition of fair value, prescribes methods for measuring fair value, and
establishes a fair value hierarchy to classify the inputs used in measuring fair
value as follows:

      Level 1 - Inputs are unadjusted quoted prices in active markets for
      identical assets or liabilities available at the measurement date.

      Level 2 - Inputs are unadjusted quoted prices for similar assets and
      liabilities in active markets, quoted prices for identical or similar
      assets and liabilities in markets that are not active, inputs other than
      quoted prices that are observable, and inputs derived from or corroborated
      by observable market data.

      Level 3 - Inputs are unobservable inputs which reflect the reporting
      entity's own assumptions on what assumptions the market participants would
      use in pricing the asset or liability based on the best available
      information.

The adoption of SFAS 157 did not have a material impact on the Company's fair
value measurements. The carrying amounts reported in the balance sheet for cash,
accounts receivable, loans payable, accounts payable and accrued expenses, and
amounts due from related parties approximate their fair market value based on
the short-term maturity of these instruments. The Company uses level 2 inputs to
value its derivative liabilities (See Note 6).

In February 2008, the Financial Accounting Standards Board ("FASB") issued FASB
Staff Position FAS 157-2, "Effective Date of FASB Statement No. 157" ("FSP FAS
157-2"), which delays the effective date of SFAS 157 for all nonrecurring fair
value measurements of nonfinancial assets and liabilities until fiscal years
beginning after November 15, 2008. The Company has elected to defer the adoption
of the nonrecurring fair value measurement disclosures of nonfinancial assets
and liabilities. The adoption of FSP FAS 157-2 is not expected to have a
material impact on the Company's results of operations, cash flows or financial
positions.

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, 2008 and 2007.

                                       F-8
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

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

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, 2008 and 2007, the allowance for doubtful accounts
was $0.

The Company's operations are carried out in Brazil. Accordingly, the Company's
business, financial condition and results of operations may be influenced by the
political, economic and legal environment in Brazil, and by the general state of
Brazil's economy. The Company's operations Brazil are subject to specific
considerations and significant risks not typically associated with companies in
North America. The Company's results may be adversely affected by changes in
governmental policies with respect to laws and regulations, anti-inflationary
measures, currency conversion and remittance abroad, and rates and methods of
taxation, among other things.

The Company had revenues from three major customers during each of the year
ended December 31, 2008 and 2007 that accounted for approximately 88%, or
$5,410,000 and 88%, or $4,548,000 of the revenues, respectively. For the year
ended December 31, 2008, these three major customers accounted for 38%, 40% and
10% of net revenues, respectively. For the year ended December 31, 2007, there
are two major customers that accounted for 49% and 39% of revenues,
respectively. At December 31, 2008, the same major customers accounted for 18%,
48% and 12%, respectively, of the total accounts receivable balance outstanding.
At December 31, 2007, the two 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. Deposits in these banks may exceed the amounts of
insurance provided on such deposits. As of December 31, 2008, bank deposits in
the United States did not exceed federally insured limits of $250,000. At
December 31, 2008, the Company had deposits of $25,676 in banks in Brazil which
may not be insured. Historically, we have not experienced any losses on our
deposits of cash.

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 to 10 years.

                                       F-9
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

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

Property and Equipment, net (continued)

Expenditures for maintenance and repairs that do not improve or extend the lives
of the related assets are expensed as incurred, while major repairs are
capitalized.

Impairment of long-Lived Assets

In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets", the Company
reviews long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be fully
recoverable. The Company recognizes an impairment loss when the sum of expected
undiscounted future cash flows is less than the carrying amount of the asset.
The amount of impairment is measured as the difference between the asset's
estimated fair value and its book value. The Company did not record any
impairment charges during the years ended December 31, 2008 and 2007.

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 SFAS 109, "Accounting for
Income Taxes." Under SFAS 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 carry forwards 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 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.

On January 1, 2007, the Company adopted the provisions of the FASB's
Interpretation Number 48, "Accounting for Uncertainty in Income Taxes - an
interpretation of SFAS Statement No. 109", ("FIN 48"), 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.

                                      F-10
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

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

Foreign Currency Translation

The reporting currency of the Company is the U.S. dollar. The functional
currency of the Company's operating subsidiary, Medlink Conectividade, is its
local currency, the Brazilian Real ("R$"). Results of operations and cash flows
are translated at average exchange rates during the period, assets and
liabilities are translated at the unified exchange rate at the end of the
period, and equity is translated at historical exchange rates. Translation
adjustments resulting from the process of translating the local currency
financial statements into U.S. dollars are included in determining comprehensive
loss. The cumulative translation adjustment and effect of exchange rate changes
on cash for the year ended December 31, 2008 and 2007 was ($130,933) and
$16,618, respectively. Transaction gains and losses that arise from exchange
rate fluctuations on transactions denominated in a currency other than the
functional currency are included in the results of operations as incurred.

Asset and liability accounts at December 31, 2008 and 2007 were translated at
1.83496 R$ to $1.00 and at 1.7713 R$ to $1.00, respectively. Equity accounts are
translated at their historical rate. In accordance with SFAS 95, "Statement of
Cash Flows," cash flows from the Company's operations are calculated based upon
the local currencies using the average translation rate. As a result, amounts
related to assets and liabilities reported on the statement of cash flows will
not necessarily agree with changes in the corresponding balances on the balance
sheet.

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 52, "Foreign Currency
Translation," and are included in determining net loss.

Although the economic situation in Brazil has remained relatively stable in
recent years, a return to higher levels of inflation, and currency exchange rate
volatility could adversely affect the Company's operations. Changes in the
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
the 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.

                                      F-11
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

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

Accounting for Conversion Features and Warrants issued with Preferred Stock

In 2006, the Company issued 16,000 shares of convertible Series A preferred
stock, (see Note 8), which contained an Embedded Conversion Feature, ("ECF"),
and warrants to purchase common stock. In accordance with the guidance in
paragraph 12 of SFAS 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 133.

To assess whether or not the ECF would be classified as stockholders' equity if
it were freestanding, management considered the guidance in Emerging Issues Task
Force ("EITF") issue No. 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 issue No. 05-2, "The Meaning of Conventional Convertible Debt
Instruments in issue No. 00-19," define 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 the conversion option
is exercised. Management considered all aspects of EITF 00-19, paragraphs 12-33
and determined that Series A convertible preferred stock was not conventional as
defined.

This caused the ECF of the Series A convertible preferred stock to be classified
as a derivative financial instrument under SFAS 133. In addition, all warrants
to purchase common stock issued with the preferred stock were then deemed to be
derivative instruments under SFAS 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 a gain or loss from derivative liabilities within the consolidated
statements of operations for all periods presented. The derivatives are valued
using the Black-Scholes-Merton option pricing model and are classified in the
consolidated balance sheets as current liabilities at December 31, 2008 and
2007.

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
potentially dilutive shares of common stock that were outstanding during the
period, such as common stock issuances that could result from the exercise or
conversion of securities (options or warrants). 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.

                                      F-12
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

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

The following were excluded from the computation of diluted shares outstanding
as they would have had an anti-dilutive impact. In periods where the Company has
a net loss, all dilutive securities are excluded. In periods where the Company
has net income, the dilutive securities are excluded when, for example, their
exercise prices are greater than the average fair value of the Company's common
stock as follows:

                                                       Year ended
                                                      December 31,
                                             -----------------------------
                                                  2008            2007
                                             -------------   -------------
      Stock options ......................       2,375,000       3,425,000
      Stock warrants .....................       7,402,500      11,902,500
      Convertible debt ...................               -       6,250,000
      Convertible debt-related party .....       1,400,000       1,400,000
      Convertible preferred stock ........   2,892,000,000      31,141,815
                                             -------------   -------------
           Total .........................   2,903,177,500      54,119,315
                                             =============   =============

Stock Based Compensation

Stock based compensation is accounted for under SFAS 123R, "Share-Based
Payment." SFAS 123R requires recognition in the financial statements of the cost
of employee and director services received in exchange for an award of equity
instruments over the period the employee or director is required to perform the
services in exchange for the award (presumptively the vesting period). SFAS 123R
also requires measurement of the cost of employee and director services received
in exchange for an award based on the grant-date fair value of the award. The
Company accounts for non-employee share-based awards in accordance with EITF No.
96-18, "Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquisition, or in Conjunction with Selling, Goods or Services."

Advertising

Advertising costs are expensed when incurred. For the year ended December 31,
2008 and 2007, advertising expense was deemed to be not material.

Comprehensive Loss

The Company follows Statement of Financial Accounting Standards 130 "Reporting
Comprehensive Income" to recognize the elements of comprehensive loss.
Comprehensive loss is comprised of net loss and all changes to the statements of
stockholders' equity, except those due to investments by stockholders, changes
in paid-in capital and distributions to stockholders. For the Company,
comprehensive loss for the years ended December 31, 2008 and 2007 included net
loss and unrealized gains (losses) from foreign currency translation
adjustments.

Research and Development

Research and development costs are expensed as incurred.

                                      F-13
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

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

Recent Authoritative Pronouncements

In December 2007, the FASB issued SFAS 141(R), "Business Combinations" which
replaces SFAS 141. SFAS 141(R) establishes principles and requirements for how
an acquirer recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, any non-controlling interest in the
acquiree and the goodwill acquired. The Statement also establishes disclosure
requirements which will enable users to evaluate the nature and financial
effects of the business combination. SFAS 141(R) is effective for fiscal years
beginning after December 15, 2008, and applies to any business combinations that
occur after December 31, 2008. The adoption of SFAS 141(R), effective January 1,
2009, may have an impact on accounting for future business combinations.

In December 2007, the FASB issued SFAS 160, "Non-controlling Interests in
Consolidated Financial Statements - an amendment of Accounting Research Bulletin
No. 51", which establishes accounting and reporting standards for ownership
interests in subsidiaries held by parties other than the parent, the amount of
consolidated net income attributable to the parent and to the non-controlling
interest, changes in a parent's ownership interest and the valuation of retained
non-controlling equity investments when a subsidiary is deconsolidated. The
Statement also establishes reporting requirements that provide sufficient
disclosures that clearly identify and distinguish between the interests of the
parent and the interests of the non-controlling owners. SFAS 160 is effective
for fiscal years beginning after December 15, 2008. The Company does not expect
SFAS 160 to have a material impact on the preparation of its consolidated
financial statements.

In March 2008, the FASB issued SFAS 161, "Disclosures about Derivative
Instruments and Hedging Activities". The new standard is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity's financial position, financial performance, and cash
flows. It is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. The Company does not expect SFAS 161 to have a material impact on
the preparation of its consolidated financial statements.

In May 2008, the Financial Accounting Standards Board issued FASB Staff Position
("FSP") APB 14-1, "Accounting for Convertible Debt Instruments That May Be
Settled in Cash upon Conversion (Including Partial Cash Settlement)." FSP APB
14-1 clarifies that convertible debt instruments that may be settled in cash
upon either mandatory or optional conversion (including partial cash settlement)
are not addressed by paragraph 12 of APB Opinion No. 14, "Accounting for
Convertible Debt and Debt issued with Stock Purchase Warrants." Additionally,
FSP APB 14-1 specifies that issuers of such instruments should separately
account for the liability and equity components in a manner that will reflect
the entity's non-convertible debt borrowing rate when interest cost is
recognized in subsequent periods. FSP APB 14-1 is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years. The Company will adopt FSP APB 14-1
beginning January 1, 2009, and this standard must be applied on a retroactive
basis. The Company is evaluating the impact the adoption of FSP APB 14-1 will
have on its consolidated financial position and results of operations.

                                      F-14
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

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

In May 2008, the FASB issued SFAS 162, "The Hierarchy of Generally Accepted
Accounting Principles." This standard is intended to improve financial reporting
by identifying a consistent framework, or hierarchy, for selecting accounting
principles to be used in preparing financial statements that are presented in
conformity with generally accepted accounting principles in the United States
for non-governmental entities. SFAS 162 is effective 60 days following approval
by the U.S. Securities and Exchange Commission ("SEC") of the Public Company
Accounting Oversight Board's amendments to AU Section 411, "The Meaning of
Present Fairly in Conformity with Generally Accepted Accounting Principles." The
Company does not expect SFAS 162 to have a material impact on the preparation of
its consolidated financial statements.

On June 16, 2008, the FASB issued final FSP No. EITF 03-6-1, "Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities," to address the question of whether instruments
granted in share-based payment transactions are participating securities prior
to vesting. The FSP determines that unvested share-based payment awards that
contain rights to dividend payments should be included in earnings per share
calculations. The guidance will be effective for fiscal years beginning after
December 15, 2008. The Company is currently evaluating the requirements of FSP.
EITF 03-6-1 as well as the impact of the adoption on its consolidated financial
statements.

In June 2008, the FASB ratified Emerging Issues Task Force Issue No. 07-5,
"Determining Whether an Instrument (or Embedded Feature) is Indexed to an
Entity's Own Stock." EITF 07-5 mandates a two-step process for evaluating
whether an equity-linked financial instrument or embedded feature is indexed to
the entity's own stock. Warrants that a company issues that contain a strike
price adjustment feature, upon the adoption of EITF 07-5, are no longer being
considered indexed to the company's own stock. Accordingly, adoption of EITF
07-5 will change the current classification (from equity to liability) and the
related accounting for such warrants outstanding at that date. EITF 07-5 is
effective for fiscal years beginning after December 15, 2008, and interim
periods within those fiscal years. The Company is currently evaluating the
impact the adoption of EITF 07-5 will have on its financial statement
presentation and disclosures.

In December 2008, the FASB issued FSP FAS 140-4 and FIN 46(R)-8, "Disclosures by
Public Entities (Enterprises) about Transfers of Financial Assets and Interests
in Variable Interest Entities." FSP FAS 140-4 and FIN 46(R)-8 amends FAS 140 and
FIN 46(R) to require additional disclosures regarding transfers of financial
assets and interest in variable interest entities. FSP FAS 140-4 and FIN 46(R)-8
is effective for interim or annual reporting periods ending after December 15,
2008. The adoption of FSP FAS 140-4 and FIN 46(R)-8 did not have an impact on
the Company's consolidated financial position and results of operations.

NOTE 2 - GOING CONCERN

Since inception, the Company has incurred cumulative net losses of $14,410,077,
and has a stockholders' deficit of $4,174,409 and a working capital deficit of
$4,581,205 at December 31, 2008. 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.

                                      F-15
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

NOTE 2 - GOING CONCERN (CONTINUED)

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, 2008 and 2007, these deficiencies (including interest and
penalties) amounted to approximately $1,180,000 and $1,080,000, respectively.
This payroll liability is included as part of the accounts payable and accrued
expenses (short-term and long-term) within the consolidated balance sheets.
Additionally, the Company had sold 45% of its operating subsidiary and the Buyer
had an option to acquire the remaining 55%. However, the Buyer has defaulted on
payments and the Company is negotiating with the Buyer and its assignee to
restructure the contract. At December 31, 2008, the Company cannot determine the
outcome of these negotiations. If the negotiations are successful, the Company
may sell the remaining 55% of its operating subsidiary, at which point the
Company will have no continuing operations. 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, 2008 and 2007:

                                                  2008            2007
                                              -----------     -----------
      Computer Equipment .................    $ 1,251,416     $ 1,501,682
      Software ...........................        379,107         607,919
      Office Furniture and Equipment .....         18,045          22,685
      Vehicle ............................         59,050          46,011
      Other ..............................         17,142          19,232
                                              -----------     -----------
                                                1,724,760       2,197,529
      Accumulated Depreciation ...........     (1,267,918)     (1,439,856)
                                              -----------     -----------
                                              $   456,842     $   757,673
                                              ===========     ===========

For the years ended December 31, 2008 and 2007, depreciation expense amounted to
$265,278 and $343,531, respectively.

NOTE 4 - SOFTWARE DEVELOPMENT COSTS

Under the criteria set forth in SFAS 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. Capitalized
software development costs consisted of the following at December 31, 2008 and
2007:

                                      F-16
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

NOTE 4 - SOFTWARE DEVELOPMENT COSTS (CONTINUED)

                                                   2008            2007
                                                ---------       ---------
      Software development costs .........      $ 471,419       $ 707,823
      Accumulated amortization ...........       (323,523)       (360,760)
                                                ---------       ---------
                                                $ 147,896       $ 347,063
                                                =========       =========

For the year ended December 31, 2008 and 2007, amortization of development costs
amounted to $199,167 and $235,000, respectively, and has been included in cost
of product support services on the accompanying consolidated statements of
operations.

NOTE 5 - RELATED PARTY TRANSACTIONS

Convertible Loan- Related Party
-------------------------------

At December 31, 2008 and 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 and under the modified terms, payment in full was due by April 30, 2007.
These loans are convertible into the Company's common stock at $0.125 per share.
For each share of common stock 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 computed at
simple interest. At December 31, 2008 and 2007, interest due on these loans
amounted to $84,679 and $63,621 and the aggregate principal amount due is
$175,000. During the year ended December 31, 2008 and 2007, the Company incurred
$21,058 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.

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

For the year ended December 31, 2008 and 2007, the Company incurred $215,727 and
$234,327, 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. At December 31, 2008 and 2007,
$274,646 and $371,932 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 sheets. The amount due is unsecured, non-interest bearing
and payable on demand.

For the year ended December 31, 2008 and 2007, the Company incurred $47,360 and
$46,737, 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. At
December 31, 2008 and 2007, $28,480 and $34,120 in these fees is payable to this
officer and are included in due to related parties on the accompanying
consolidated balance sheets.

For the year ended December 31, 2008 and 2007, the Company incurred $30,000 and
$37,000, respectively, in consulting fees to an officer of the Company which has
been included in management and consulting fees - related party on the
accompanying consolidated statements of operations.

                                      F-17
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

NOTE 5 - RELATED PARTY TRANSACTIONS (CONTINUED)

For the year ended December 31, 2008 and 2007, the Company incurred $6,000 and
$72,000, respectively, in director and consulting fees to a director of the
Company 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 115,000 Euros (translated to $162,116 and
$169,384 at December 31, 2008 and 2007, respectively) from an officer of the
Company for working capital purposes. The loan accrues 0.8% non-compounding
interest per month, (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% non-compounding interest per month, (12% per annum), and is due on demand.
In connection with the two loans, for the year ended December 31, 2007, the
Company incurred a loan fee of $7,756 which has been included in interest
expense - related party on the accompanying statement of operations. For the
year ended December 31, 2008 and 2007, the Company incurred $21,011 and $39,418,
respectively, in interest related to these loans. At December 31, 2008 and 2007,
$64,102 and $43,091 in interest and loan fees was accrued on these loans and the
aggregate principal and interest amount due is $306,218 and $292,475,
respectively, and is included in loan payable - related party on the
accompanying consolidated balance sheets.

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 90% per annum, are secured
by certain receivables of Medlink Conectividade, and are due through October
2009. At December 31, 2008 and 2007, loans payable to these financial
institutions aggregated $663,854 and $652,804, respectively.

Convertible Debenture Payable
-----------------------------

On April 1, 2005, the Company entered into a Securities Purchase Agreement with
Scott and Heather Grimes, Joint Tenants - with Rights of Survivorship
("Grimes"). Pursuant to the Securities Purchase Agreement, the Company issued
convertible debentures to Grimes in the original principal amount of $250,000.
The debentures were 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 had a two-year term and accrue interest at
5% per year.

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 were not
considered to be conventional debt under EITF 00-19 and the embedded conversion
feature was required to be bifurcated from the debt host and accounted for

                                      F-18
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

NOTE 6 - FINANCING ARRANGEMENTS (CONTINUED)

Convertible Debenture Payable (continued)
-----------------------------------------

as a derivative liability. The Company believed that the aforementioned embedded
derivative met the criteria of SFAS 133 and EITF 00-19, and was 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 sheets. The gains and losses recorded from
changes in the fair value of the liability for derivative contracts has been
recorded as a component of other income/(expense) in the consolidated statements
of operations.

At the end of each reporting period and through May 15, 2008, the Company
revalued the convertible feature of these derivative liabilities and the
unexpired warrant. For the years ended December 31, 2008 and 2007, the Company
recorded a gain (loss) on valuation of these derivative liability and warrants
of $(41,939) and $29,865, respectively. Amortization of debt discount for the
years ended December 31, 2008 and 2007 was $0 and $31,250, respectively, and is
included in interest expense. Amortization of debt offering costs for the years
ended December 31, 2008 and 2007 was $0 and $4,783, respectively, and is
included in interest expense. At May 15, 2008, pursuant to an agreement, the
convertible debt was payable in cash. Accordingly, the remaining derivative
liability at May 15, 2008 of $257,058 was reclassified to paid-in capital. At
December 31, 2008, the estimated fair values of the convertible feature
derivative liabilities and warrants are $0 and $0, respectively. At December 31,
2007, the estimated fair values of the convertible feature derivative
liabilities and warrants were $215,119 and $239. These liabilities were
reflected as a conversion feature liability and warrant liability, respectively,
on the accompanying consolidated balance sheets.

On May 15, 2008, the Company entered into an agreement with Grimes to repay the
outstanding convertible debenture payable including interest and fees as
follows: i) $106,902 on May 16, 2008; ii) $100,000 on June 16, 2008; and iii)
$100,000 on July 16, 2008. As of December 31, 2008, all remaining debt was paid
in full.

At the valuation date of May 15, 2008 and 2007, the following assumptions were
applied to the convertible debt and warrants:

                                              2008             2007
                                           ----------    -----------------
      Market price ....................      $0.004           $0.065
      Exercise price of debt ..........      $0.002       $0.036 to $0.20
      Term ............................    0.25 years    0.25 - 0.50 years
      Volatility ......................       174%             114%
      Risk-free interest rate .........       1.55%        3.36% - 3.49%

The convertible debenture liability is as follows at December 31, 2008 and 2007:

                                                        2008        2007
                                                      --------    --------
      Convertible debentures payable .............    $      -    $225,000

      Less: unamortized discount on debentures ...           -           -
                                                      --------    --------
                                                      $      -    $225,000
                                                      ========    ========

                                      F-19
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

NOTE 6 - FINANCING ARRANGEMENTS (CONTINUED)

Convertible Debenture Payable (continued)
-----------------------------------------

For the years ended December 31, 2008 and 2007, the related gain or (loss) from
derivative liabilities is as follows:

                                    Convertible    Preferred stock
                                       debt          (See Note 8)         Total
                                    -----------    ---------------      --------
         2008
Change in fair value of
derivative liabilities -
(loss) gain ................         $(41,939)         $158,851         $116,912
                                     --------          --------         --------

         2007
Change in fair value of
derivative liabilities -
gain (loss) ................         $ 29,865          $632,262         $662,127
                                     --------          --------         --------

NOTE 7 - INCOME TAXES

As of December 31, 2008, the Company had approximately $8,661,000 of U.S.
federal and state net operating loss carry forwards available to offset future
taxable income which, if not utilized, begin expiring in 2011. In addition, the
Company has approximately $3,775,000 of foreign net operating loss carry
forwards related to the Company's Brazilian subsidiaries. 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 offset no more than 30% of
taxable profits.

Under the Tax Reform Act of 1986, the utilization of a corporation's net
operating loss carry forward 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
carry forward 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 carry forwards may be applied against future taxes,
the Company may not be able to take full advantage of these attributes for
Federal income tax purposes.

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, 2008 and 2007.

                                      F-20
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

NOTE 7 - INCOME TAXES (CONTINUED)

The Company's tax benefit differs from the "expected" tax benefit for the years
ended December 31, 2008 and 2007 as follows:

                                                           2008          2007
                                                        ---------     ---------

Computed "expected" tax benefit ....................    $(358,000)    $ (68,200)
State income taxes benefit .........................      (42,100)       (8,000)
Permanent differences ..............................      135,400        (6,700)
US effective rate in excess of Brazil tax rate .....       (5,100)      (22,900)
Change in valuation allowance ......................      313,400       300,300
                                                        ---------     ---------

                                                        $  43,600     $ 194,500
                                                        =========     =========

The tax effects of temporary differences that give rise to significant portions
of deferred tax assets and liabilities at December 31, 2008 and 2007 are as
follows:

                                                   2008           2007
                                               -----------    -----------
      Deferred tax assets:
        Net operating loss carry forward ...   $ 4,575,000    $ 4,730,500
                                               -----------    -----------

        Total gross deferred tax assets ....     4,575,000      4,730,500

        Less valuation allowance ...........    (4,575,000)    (4,730,500)
                                               -----------    -----------

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

The valuation allowance at December 31, 2008 was $4,575,000. The decrease during
2008 was approximately $155,500, including the effect of foreign exchange
translations of approximately $469,000.

NOTE 8 - STOCKHOLDERS' DEFICIT

Preferred stock
---------------

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

                                      F-21
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

NOTE 8 - STOCKHOLDERS' DEFICIT (CONTINUED)

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

        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 ($100 per share) plus (ii) all accrued but
        unpaid dividends thereon, divided by the "Conversion Price", which is
        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. A "Trading Day" is any day during which the FINRA OTC
        Bulletin Board is 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.

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

   (f)  The Company has 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. Upon 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. The Company
        may not redeem these shares under any other circumstances.

Initially, there was an automatic conversion clause associated with the Series A
Preferred Shares which would cause them to automatically convert into shares of
common stock at the Conversion Price then in effect upon the third anniversary
of the date of the Investment Agreement. On January 8, 2009, the Company amended
the certificate of designation for the Series A Preferred shares to eliminate
this provision.

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

                                      F-22
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

NOTE 8 - STOCKHOLDERS' DEFICIT (CONTINUED)

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

Of the 16,000 Series A Preferred Shares to be sold 8,000 were sold to YA Global
on January 13, 2006 and had a purchase price of $800,000, which consisted of
$255,237 from the surrender of a pre-existing promissory note and $544,763 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 YA Global, 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 YA Global warrants to purchase
up to 5,000,000 shares of common stock. The first warrant issued to YA Global 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 YA Global 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.

In 2006, subject to the terms and conditions of an Investor Registration Rights
Agreement, the Company was required to prepare and file with the SEC a
registration statement and 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 an amended SB-2/A
registration statement on October 18, 2006. The registration statement was never
declared effective. On November 13, 2008 the Company filed a Form RW withdrawing
the registration statement.

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.

In 2006, pursuant to FASB Staff Position, or FSP, EITF 00-19-2, "Accounting for
Registration Payment Arrangements," the Company recorded a registration rights
penalty expense of $160,000 that is included in accrued expenses on the
accompanying consolidated balance sheets. 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 133, the Company is required to record the fair value of
the ECF and warrants as a liability. At December 31, 2008 and 2007, the Company
revalued the ECF and warrants resulting in gains on derivative liability of
$380,096 and $632,262 for the year ended December 31, 2008 and 2007,
respectively (See Note 6).

At December 31, 2008, the estimated fair value of the ECF and warrants were
liabilities of $1,007,471 and $3,321, respectively. At December 31, 2007, the
estimated fair value of the ECF and warrants were liabilities of $1,280,100 and
$153,134, respectively. These derivative liabilities are reflected as a

                                      F-23
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

NOTE 8 - STOCKHOLDERS' DEFICIT (CONTINUED)

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

conversion feature liability and a warrant liability, respectively, on the
accompanying consolidated balance sheets.

At the valuation date of December 31, 2008 and 2007, the fair value of the ECF
and warrants were estimated using the Black-Scholes-Merton option pricing model
with the following assumptions:

                                          2008                 2007
                                   -----------------    ------------------
      Dividend rate ...........            0%                   0%
      Term (in years) .........    .50 to 2.03 years    1.05 to 3.05 years
      Volatility ..............           208%                 114%
      Risk-free interest rate .      0.11% - 0.76%         3.05% - 4.03%

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 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.

On April 18, 2008, the Company issued 1,875,000 shares of its common stock upon
conversion of 60 shares of Series A preferred stock.

On May 14, 2008, the Company issued 1,900,000 shares of its common stock upon
conversion of 38 shares of Series A preferred stock.

In July 2008, the Company issued 4,168,622 shares of its common stock upon
conversion of 173 shares of Series A preferred stock.

In November 2008, the Company issued 4,650,793 shares of its common stock upon
conversion of 57 shares of Series A preferred stock.

                                      F-24
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

NOTE 8 - STOCKHOLDERS' DEFICIT (CONTINUED)

Common 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 date 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 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 date of grant, based on the quoted trading
price and recorded management and consulting fees - related party of $55,000.

During fiscal year 2007, the Company issued 1,552,267 shares of its common stock
upon conversion of 670 shares of Series A preferred stock.

During fiscal year 2008, the Company issued 17,735,978 shares of its common
stock upon conversion of 870 shares of Series A preferred stock.

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 of the Board of Directors.

A summary of the status of the Company's outstanding stock options as of
December 31, 2008 and 2007 changes during the period ending on that date is as
follows:
<TABLE>
<CAPTION>
                                  Year Ended December 31, 2008    Year Ended December 31, 2007
                                  ----------------------------    ----------------------------
                                                   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    $   0.25          3,425,000    $   0.29
Granted ..........................            -           -            600,000        0.06
Exercised ........................            -           -                  -           -
Forfeited ........................   (1,050,000)       0.50           (600,000)       0.38
                                     ----------    --------          ---------    --------
Balance at end of year ...........    2,375,000    $   0.14          3,425,000    $   0.25
                                     ==========    ========          =========    ========

Options exercisable at end of year    2,375,000    $   0.14          3,425,000    $   0.25
                                     ==========    ========          =========    ========

Weighted average fair value of
options granted during the year ..                 $      -                       $  0.045
                                                   ========                       ========
</TABLE>

                                      F-25
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

NOTE 8 - STOCKHOLDERS' DEFICIT (CONTINUED)

Stock Options (continued)

The following table summarizes information about employee and consultant stock
options outstanding at December 31, 2008:
<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, 2008   Life (Years)    Price     December 31, 2008    Price
--------   -----------------   ------------   --------   -----------------   --------
<S>        <C>                 <C>            <C>        <C>                 <C>
$   0.20         425,000           1.00           0.20         425,000           0.20
$   0.15       1,350,000           1.75           0.15       1,350,000           0.15
$   0.06         600,000            3.9           0.06         600,000           0.06
           -----------------                  --------   -----------------   --------
               2,375,000                      $   0.14       2,375,000       $   0.14
           =================                  ========   =================   ========
</TABLE>

As of December 31, 2008 and 2007, there are no unrecognized compensation costs
since all options granted under the stock option plan are vested.

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

A summary of the status of the Company's outstanding stock warrants as of
December 31, 2008 and 2007 activities during the period then ended is as
follows:
<TABLE>
<CAPTION>
                                       Year Ended December 31, 2008    Year Ended December 31, 2007
                                       ----------------------------    ----------------------------
                                                       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 ........     11,902,500   $   0.50           12,902,500   $   0.48
Granted .............................              -          -                    -          -
Exercised ...........................              -          -                    -          -
Forfeited ...........................     (4,500,000)      0.93           (1,000,000)      0.10
                                          ----------   --------           ----------   --------
Balance at end of year ..............      7,402,500   $   0.23           11,902,500   $   0.50
                                          ==========   ========           ==========   ========
</TABLE>

                                      F-26
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

NOTE 8 - STOCKHOLDERS' DEFICIT (CONTINUED)

The following information applies to all warrants outstanding at December 31,
2008:


                       Warrants Outstanding               Warrants Exercisable
             ----------------------------------------    -----------------------
                              Weighted
                              Average        Weighted                   Weighted
Range of                     Remaining        Average                    Average
Exercise                    Contractual      Exercise                   Exercise
Prices         Shares       Life (Years)       Price       Shares        Price
--------     ----------     ------------     --------    ----------     --------
$   0.30      2,500,000         2.04             0.30     2,500,000         0.30
$   0.20      4,902,500         1.41             0.20     4,902,500         0.20
             ----------                      --------    ----------     --------
              7,402,500                      $   0.23     7,402,500     $   0.23
             ==========                      ========    ==========     ========


NOTE 9 - SALE OF MINORITY INTEREST IN SUBSIDIARY

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 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,
$220,000 of which was to have been paid by December 31, 2007 as a deposit. Of
this amount, approximately $188,000 was received by the Company by December 31,
2007 and at December 31, 2007 was reflected as a liability on the accompanying
consolidated balance sheet as a deposit on sale of minority interest. In March
2008, the Company collected an additional $120,000 of the purchase price. The
remaining balance was to be paid as follows i) $32,000 of the initial deposit
was due immediately; ii) $480,000 was due on March 31, 2008 and was paid in May
2008, and iii) the balance of $2,400,000 was due in twelve equal monthly
payments of $200,000 commencing April 2008. In May 2008, the Agreement was
amended and payments were due through April 2009.

Through December 31, 2008, the Company received additional proceeds of $175,000.
The 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 remaining initial deposit and is in default on its
payments of principal and interest. At December 31, 2008, pursuant to the terms
of the Agreement, as amended, the Company has a remaining note receivable of
$2,262,300 due from the Buyer. Since collection of the remaining purchase price
is not reasonably assured, the Company recorded the full amount of the purchase
price of $3,200,000 as deferred revenue and is reflecting the deferred revenue
net of the remaining note receivable on the accompanying consolidated balance
sheets.

                                      F-27
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

NOTE 9 - SALE OF MINORITY INTEREST IN SUBSIDIARY (CONTINUED)

Accordingly, at December 31, 2008, the Company's consolidated balance sheets
reflect a deferred gain on the sale of minority interest of $937,700, which will
be recognized as other income when collection is reasonably assured and when all
of the risks and other incidents of ownership have been passed to the buyer. At
December 31, 2008, deferred gain on sale of minority interest consists of the
following:

      Sale price of 45% interest in Transax Limited ..........   $ 3,200,000
      Less: note receivable balance at December 31, 2008 .....    (2,262,300)
                                                                 -----------

      Deferred gain on sale of minority interest in subsidiary   $   937,700
                                                                 ===========

In accordance with the further terms and provisions of the Agreement, a
performance bonus was 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 largest customer. The Company
has not recorded the bonus receivable since the collection of this receivable is
not reasonably assured. 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 on the remaining notes
receivable balance of $2,262,300.

The Company has issued default notices to the buyer in respect of non-payment
under the Agreement.. The Company is currently in discussion with the Buyer
and/or assignees and plans to conclude any renegotiation of contract terms by
June 30, 2009.

                                      F-28
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

NOTE 10 - FOREIGN OPERATIONS

The Company identifies its operating segments based on its geographical
locations. The Company operates in the United States, Brazil and Mauritius.
Substantially all of the Company's assets are located in Brazil.

                                                          Year ended
                                                         December 31,
                                                 -------------------------
                                                     2008         2007
                                                 -----------   -----------
      Revenues to unaffiliated customers:
              Brazil ..........................  $ 6,119,046   $ 5,173,544
                                                 -----------   -----------
      Operating Expenses:
              Brazil ..........................    6,393,787     4,618,185
              USA .............................      542,756       786,693
              Australia .......................            -             -
              Mauritius .......................        1,283        39,519
                                                 -----------   -----------
      Total Operating Expenses ................    6,937,826     5,444,397
                                                 -----------   -----------
      Loss from operations ....................     (818,780)     (270,853)
                                                 -----------   -----------
      Other income (expenses) and income taxes:
              Brazil ..........................     (355,810)     (661,407)
              USA .............................       77,948       546,841
              Australia .......................            -        (9,799)
                                                 -----------   -----------
                                                    (277,862)     (124,365)
                                                 -----------   -----------

      Net loss as reported ....................  $(1,096,642)  $  (395,218)
                                                 -----------   -----------

NOTE 11 - COMMITMENTS AND CONTINGENCIES

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, 2008 and 2007, these
deficiencies, plus interest and penalties, amounted to approximately $1,180,000
and $1,080,000, 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
taxes due, plus applicable penalties and interests are to be repaid over a
period of up to 60 months. However, there is no certainty that the Brazilian
authorities will enter into similar plans in the future for the remaining
non-negotiated balances due or any future taxes due. The current portion due,
which is included in current liabilities, also includes amounts whose payment
terms have not been negotiated with the Brazilian authorities.

                                      F-29
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                           December 31, 2008 and 2007

NOTE 11 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

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, 2008 and 2007, the Company has accrued approximately
$151,000 and $199,000, respectively, related to these lawsuits. The outcome of
these clams is uncertain at this time.

NOTE 12 - SUBSEQUENT EVENTS

On February 27, 2009, the Company issued 2,533,333 shares of its common stock
upon conversion of 14 shares of Series A preferred stock.

On March 16, 2009, the Company issued 2,500,000 shares of its common stock upon
conversion of 12 shares of Series A preferred stock.

                                      F-30