FORM 10-KSB
December 31, 2004
                                                Transax International Limited




                    U.S. SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C. 20549

                                  FORM 10-KSB

(Mark One)

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

        For fiscal year ended December 31, 2004.

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



                        Commission file number 0-27845

                        TRANSAX INTERNATIONAL LIMITED
        ---------------------------------------------------------------
       (Exact name of small business issuer as specified in its charter)

      COLORADO                                                 84-1304106
------------------------------                               -----------------
 (State or other jurisdiction of                              (I.R.S. Employer
incorporation of organization)                             Identification No.)



                      8th Floor 5201 Blue Lagoon Drive
                              Miami , FL, 33126
                    --------------------------------------
                   (Address of Principal Executive Offices)

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

                                      N/A
              ---------------------------------------------------
  (Former name, former address and former fiscal year, if changed since last
                                    report)

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

                                ___  None_____
                               (Title of class)

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

                        Common Stock, Par Value $0.00001
                               (Title of class)


Check  whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d)  of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

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

State the issuer's revenues for its more recent fiscal year ended December  31,
2004: $1,199,900.

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 December 31, 2004: $ 660,706.20.


   Applicable Only to issuers Involved in Bankruptcy Proceedings During the
                             Preceding Five Years.


                                      N/A


Indicate by check mark whether the issuer has filed all documents and reports
required to be filed by Section 12, 13 and 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by
a court.


                                     Yes           No


                                -------      -------


                   Applicable Only to Corporate Registrants


Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:


Class                         Outstanding as of March 31, 2005
------                          -----------------------------------

Common Stock, $.001 par value                       28,537,211










TABLE OF CONTENTS


    Item 1. Description of Business...........................................6
        Business History and Development......................................6
        Subsidiaries
        Current Business Operations...........................................7
              Product Target Market Strategy..................................9
              Strategic Alliances............................................10
              Research and Development Agreements............................12
              Material Agreements............................................
              Competition....................................................13
              Government Regulation..........................................14
              Intellectual Property, Patents and Trademarks..................14
        Employees............................................................14
        Risk Factors.........................................................14
        Transfer Agent.......................................................20
    ITEM 2. Description of Properties........................................20
    ITEM 3. Legal proceedings................................................20
    ITEM 4. Submission of Matters to a Vote of Securities Holders............21

 PART II.....................................................................21
    ITEM 5. Market for Common Equity and Related Stockholders Matters........21
        Market Information...................................................
             Holders.........................................................21
             Dividends.......................................................21
        Securities Authorized for Issuance under Equity Compensation Plans...22
              Stock Option Plan..............................................22
              Common Stock Purchase Warrants.................................
        Recent Sales of Unregistered Securities and Changes in Control of the
        Company..............................................................25
     ITEM 6. Management's Discussion and Analysis or Plan of Operation.......32
        Results of Operations................................................32
        Liquidity and Capital Resources......................................
             Plan of Operations..............................................
        Material Operating Liabilities.......................................
        Off-Balance Sheet Arrangements.......................................
     ITEM 7. Financial Statements............................................37
        Index to Financial Statements........................................37
          Consolidated Balance Sheet.........................................
          Consolidated Statements of Operations..............................
          Consolidated Statements of Stockholders' Equity  [Deficit].........
          Consolidated Statements of Cash Flows..............................
          Notes to the Consolidated Financial Statements.....................
    ITEM 8. Changes in and Disagreements with Accountants on Accounting and
    Financial ITEM 8A. Controls and Procedures ..............................40
    ITEM 8B. Other Information ..............................................

 PART III....................................................................40
    ITEM 9. Directors, Executive Officers, Promoters and Control persons;
    Compliance with 16(a) of the Exchange Act................................40
        Identification of Directors and Executive Officers...................40
        Involvement in Certain Legal Proceedings.............................41
        Audit Committee......................................................41
        Compliance with Section 16(a) of the Exchange Act....................42
    ITEM 10. EXECUTIVE COMPENSATION..........................................42
        Compensation of Officers and Directors...............................42
              Summary Compensation Table.....................................44
         Stock Option/SAR Grants in Last Fiscal Year ........................
    ITEM 11. Security Ownership of Certain Beneficial owners and Management..45
    ITEM 12. Certain Relationships and Related Transactions..................47
        Indemnification Provisions...........................................47
    ITEM 13. Exhibits and Reports on Form 8-K................................49
    ITEM 14. Professional Accountant Fees and Services.......................49
       SIGNATURES............................................................49


 EXHIBIT 99.1................................................................52

 EXHIBIT 99.2................................................................53

 EXHIBIT 99.3................................................................54





<PAGE>
Form 10-KSB
December 31, 200 4
Consolidated Financial Statements                  Transax International Limited






                          FORWARD LOOKING STATEMENTS

Statements made in this Form 10-KSB that are  not  historical  or current facts
are "forward-looking statements" made pursuant to the safe harbor provisions of
Section 27A of the Securities Act of 1933 (the "Act") and Section  21E  of  the
Securities  Exchange  Act  of 1934. These statements often can be identified by
the  use of terms such as "may,"  "will,"  "expect,"  "believe,"  "anticipate,"
"estimate,"  "approximate"  or "continue," or the negative thereof. The Company
intends that such forward-looking statements be subject to the safe harbors for
such statements. The Company  wishes  to  caution  readers  not  to place undue
reliance  on any such forward-looking statements, which speak only  as  of  the
date made.  Any forward-looking statements represent management's best judgment
as to what may  occur  in  the  future. However, forward-looking statements are
subject to risks, uncertainties and important factors beyond the control of the
Company that could cause actual results  and  events  to differ materially from
historical results of operations and events and those presently  anticipated or
projected.  The  Company  disclaims  any obligation subsequently to revise  any
forward-looking statements to reflect events or circumstances after the date of
such statement or to reflect the occurrence  of  anticipated  or  unanticipated
events.

AVAILABLE INFORMATION

Transax  International  Limited  files  annual,  quarterly and current reports,
proxy  statements  and  other  information  with  the Securities  and  Exchange
Commission (the "Commission"). You may read and copy  documents  referred to in
this  Annual Report on Form 10-KSB that have been filed with the Commission  at
the Commission's  Public  Reference  Room,  450 Fifth Street, N.W., Washington,
D.C.  You may obtain information on the operation  of the Public Reference Room
by calling the Commission at 1-800-SEC-0330.  You can also obtain copies of our
Commission filings by going to the Commission's website at http://www.sec.gov.


<PAGE> 5


PART  1

ITEM 1. DESCRIPTION OF BUSINESS

BUSINESS HISTORY AND DEVELOPMENT

Transax  International  Limited,  a  Colorado  corporation   (the   "Company"),
currently  trades  on the OTC Bulletin Board under the symbol "TNSX"".  Transax
International Limited  is  referred  to  in  this  Form  10-KSB  as "we" or the
"Company".

We were incorporated under the laws of the State of Colorado in 1999  under the
name  "Vega-Atlantic  Corporation". Previously, we were engaged in the business
of minerals and oil and gas exploration, acquisition and development within the
United States and worldwide.

Our Board of Directors  approved  the  execution  of  an agreement in principle
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"),  and certain selling shareholders of Transax.
The Merger Agreement and our acquisition  of  Transax  by  way  of  merger  was
completed effective as of August 14, 2003 (the "Effective Date").

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

SUBSIDIARIES

      TDS TELECOMMUNICATIONS DATA SYSTEMS LTDA

TDS  Telecommunication  Data Systems LTDA. ("TDS") was incorporated  under  the
laws of Brazil on May 2,  1998, and is our wholly-owned subsidiary. TDS assists
us in providing information  network  solutions,  products  and services within
Brazil.

      TRANSAX AUSTRALIA PTY LTD.

Transax Australia Pty Ltd. was incorporated under the laws of  New South Wales,
Australia  on  January  19, 2003, and is our wholly-owned subsidiary  ("Transax
Australia"). Transax Australia assists us in seeking marketing opportunities to
provide information network  solutions,  products and services within Australia
and regionally.

      MEDLINK TECHNOLOGIES, INC.

<PAGE> 6

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

CURRENT BUSINESS OPERATIONS

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

Our  strategic  focus  is  to become a premier international provider of health
information management network  solutions  for  the  healthcare  providers  and
health  insurance  companies,  enabling  the  real  time  automation of routine
patient transactions. We believe that our unique combination  of  complimentary
solutions is designed to significantly improve the business of healthcare.  Our
Health  Information  Management Products and software solutions are designed to
generate operational efficiencies,  improve  cash flow and measure the cost and
quality  of care. In general, the Health Information  Management  Products  and
software solutions,  including the MedLink Solution, fall into four 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  will  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.

The  Health  Information  Management  Products  are  also  designed  to include
abstracting solutions, which enable healthcare facilities to accurately collect
and  report  patient demographic and clinical information. We believe that  the
Health Information  Management  Products will provide the organization with the
ability to calculate in-patient and  out-patient  hospital  reimbursements  and
customize  data  fields  needed  for  state,  federal  or  foreign governmental
regulatory requirements. Standard and custom reports will provide  the customer
with the ability to generate facility-specific statistical reporting  used  for
benchmarking,  outcomes and performance improvement, marketing and planning. We
believe that the  Health  Information  Management Products will further provide
healthcare organizations the flexibility  to  customize abstracting workflow to
meet  data  collection  reporting and analysis needs.  The  Health  Information
Management Products will provide the organization with the ability to customize
workflow by creating fields and rules and designing screen navigation.

<PAGE> 7

We also believe that the  Health  Information  Management Products will 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. The
Health Information Management Products will 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

We  have developed a proprietary software trademarked  (Brazil  only)  "MedLink
Solution", which was specifically designed and developed for the healthcare and
health  insurance industry enabling the real time automation of routine patient
eligibility,  verifications,  authorizations,  claims  processing  and  payment
functions  that  are  currently performed manually (the "MedLink Solution").  A
transaction fee is charged to the insurer for use of the MedLink Solution.

The MedLink Solution hosts  its  own  network  processing  system  (the  "Total
Connectivity  Solution"),  whereby  we  are able to provide an insurer with the
ability  to  cost  effectively  process  all  of   the  transactions  generated
regardless  of location or method of generation. We believe  that  the  MedLink
Solution solves  technological and communication problems within the healthcare
systems by creating  a  virtual  "paperless  office"  for the insurer and total
connectivity,  regardless  of  method,  for  the health provider.  The  MedLink
Solution  replaces  manual  medical  claims  systems   and  provides  insurance
companies  and healthcare providers significant savings through  a  substantial
reduction in  operational  costs. The MedLink Solution allows users to collect,
authorize and process transaction  information  in  real-time  for applications
including,  but not limited to, patient and provider eligibility  verification,
procedure authorization  and  claims  and debit processing. Participants of the
MedLink  Solution include private health  insurance  companies,  group  medical
companies, and healthcare providers.

During fiscal year ended December 31, 2003 and 2004, we installed approximately
1,900 and 2,500 solutions into healthcare provider locations throughout Brazil,
respectively.

   MEDLINK SOLUTION ARCHITECTURE AND DESIGN


We believe that the MedLink Solution is the total connectivity system that will
allow 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  will  address 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.

<PAGE> 8

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:

            - MedLink Solution POS Terminal;


            - MedLink Solution Phone;


            - MedLink Solution PC Windows


            - MedLink Solution PC Net


            - MedLink Solution Server Labs


            - MedLink Solution Server Hospitals


            - MedLink Solution Web


Network  Processor.  The  MedLink   Solution   network   processor  routes  the
transactions captured by the MedLink Solution (the "Network  Processor") to the
authorization system of the healthcare plan (the "Authorization  System").  For
example,  in  Brazil this process is carried out either using Embratel's Renpac
service or the  Internet.  The  Network Processor offers uninterrupted 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.

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   its   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.

<PAGE> 9

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

We believe that this commonly used marketing  and  promotional  model  will  be
suitable  and  used  for  initial  market  penetration.  However, 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 have been  successfully  short-listed  by  the Australian Federal Government
through its Health Insurance Commission (the "HIC"), to supply an authorization
and eligibility solution for the Australian health  insurance  market.  We  are
currently  engaged in negotiations with the HIC regarding the sale and purchase
of its Health  Information  Management  products  for use in Australia's health
insurance reimbursement system. On January 19, 2003, we established our wholly-
owned  subsidiary, Transax Australia, to seek additional  opportunities  within
Australia.

We are currently  focused  primarily  on  the  marketing and sale of our Health
Information  Management  products  in  Brazil.  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.

   GENS INFORMATION  - PMS/ASP

On  February  19,  2001,  we  entered  into  an  operating agreement (the "GENS
Operating Agreement") with GENS Information ("GENS"). Pursuant to the terms and
provisions of the GENS Operating Agreement: (i) GENS will provide to us a basic
product  called "Personal Med", which is a Windows  client-server  application,
running with  Delphi  front-end  and  Paradox  and  Oracle DB; and (ii) we will
incorporate the MedLink Solution transaction services  within  the Personal Med
allowing for its users to use the MedLink Solution services from  within  their
PMS.

We  believe that GENS is the leading Brazilian developer of practice management
software  with  over  50% of the market share. Personal Med is the name of GENS
basic   product,   with  some   thirty   variations   according   to   doctor's
specialization. The  variations  are  designed around specific exams data to be
acquired and stored in each medical specialization.

<PAGE> 10

We estimate that current installed basis  is  approximately  10,600 copies sold
directly  to  doctors,  plus approximately 500 copies sold to corporations.  We
believe that GENS has approximately  50%  of  the  Brazilian market in practice
management  systems. The current structure sells an average  of  200  copies  a
month, plus special events.

GENS is currently  implementing  versions  to  its  Personal  Med  based on SQL
server,  and  is  further  developing  a web enabled version, which will  allow
doctors to select patients they want to  have  access  through the InternetWeb,
and  a tool to access the database of each patient for this  centralized  base.
GENS is also iimplementing access to doctor's agenda and some direct news to be
directed to Internet enabled doctors.

   VIDALINK, INC. - DRUG MANAGEMENT

On August  29,  2001,  we  entered into an operational agreement (the "Vidalink
Operational  Agreement"),  with  Vidalink,  Inc.  ("Vidalink"),  to  allow  the
Vidalink Health Portal access  to  the  MedLink Solution connectivity services,
creating  the first authorization and claims  processing  Internet  service  in
Brazil. The  Vidalink  Health  Portal offers doctors, the most extensive set of
information  on  pathologies  and  medication  practices,  with  complete  drug
interaction  analysis  and  alert  functionality.   It  offers  also  extensive
continuous education programs, with selection of doctor's areas of interest and
automatic issuing news on selected subjects.

Pursuant to the terms and provisions of the Vidalink Operational Agreement, the
MedLink Solution connectivity capabilities will be added to the Vidalink Health
Portal,  which  will  give  the  MedLink  Solution  access to  Vidalink's  drug
management services and Internet content, thus creating a synergic relationship
between the two portals and allow doctors access to each portal reaching a much
broader range of services.

Vidalink  is  a health portal focused in offering the premier  drug  management
service package in Latin America, with operations in Mexico and Brazil. Through
Vidalink, health  plans  have  access  to drug discount programs, as well as an
extensive drug usage management service,  capable  of monitoring consumption of
specific drugs by patients. We believe that the Vidalink programs are supported
by  agreements  with  approximately  twenty-two  of the largest  pharmaceutical
industries in Brazil, offering discount packages for drugs covering over 85% of
total chronic diseases. We further believe that Vidalink  also  offers  a  drug
delivery  scheme  from  an  extensive  network of pharmacies reaching over 5000
points of presence nationwide.

      MOSAIC SOFTWARE, INC. - NETWORK PROCESSOR SYSTEM

On November 25, 2002, we entered into supplier  agreement (the "Mosaic Supplier
Agreement")  with  Mosaic Software, Inc. ("Mosaic"),  to  develop  the  Network
Processor software package,  known as the "Positllion ", for use in the MedLink
Solution.

We believe that Mosaic is the  supplier  of  the  most  modern  technology  for
network  control  software,  based  on  a low cost hardware platform (PC's) and
Windows NT software. Management believes the Position software is the best cost
/effect solution for this kind of system.

<PAGE> 11

      HYPERCOM CORPORATION

On  December  1,  2003, we entered into a servicing  agreement  (the  "Hypercom
Service Agreement")  with Hypercom Corporation, a publicly traded multinational
company ("Hypercom'").  Pursuant  to  the  terms and provisions of the Hypercom
Service Agreement Hypercom would provide leasing arrangements for POS (Point of
Sale) terminals in Brazil.  We subsequently  entered  into  lease  for  255 POS
units and currently have outstanding leases for a further 1000 POS units

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


RESEARCH AND DEVELOPMENT

Our  research  and  development  department  is responsible for the definition,
design and implementation of our products. This  comprises  three main areas of
activity: research of electronic transaction product trends both  in Brazil and
around  the  world  as  it  applies  to the healthcare industry, definition  of
products and services required for MedLink Solution services and implementation
of the hardware and software products  to  support  MedLink  Solution services.
Products  to  be offered by MedLink iSolution 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.

MATERIAL AGREEMENTS

      GOLDEN CROSS

On  August  9,  2002,  TDS  and  Golden Cross, one of Brazil's  largest  health
insurance companies ("Golden Cross")  entered  into  an  agreement (the "Golden
Cross Agreement"). The agreememt was extended in August 2004  for  a  period of
two  years. 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 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
2,800 Medlink Solutions  in  Golden  Cross  Provider's locations. During fiscal
year ended December 31, 2004, we processed 1.9million  transactions  for Golden
Cross.

      CAMED

On  October  17,  2002, TDS and Camed, a self-insured company based in northern
Brazil ("Camed"), entered into an agreement (the "Camed Agreement") pursuant to
which we installed  MedLink  Solution  POS  terminals for pilot testing. During
fiscal year ended December 3,1 2004, we completed the installation of more then
120 MedLink Solution POS terminals and 250 IVR  Phone. The Camed Agreement also
provides for MedLink Solution WEB and MedLink  Server  Solution solutions which
will be used as appropriate by the healthcare providers.  We have approximately
400 Medlink Solutions in Camed providers' locations. During  fiscal  year ended
December 31, 2004, we processed 220,000 transactions for Camed.

      BRADESCO HEALTH

<PAGE> 12

On  October 17, 2002 TDS and Bradesco Insurance ("Bradesco"), Brazil's  largest
health  insurance  company,  entered  into an agreement  for the provision of a
four month pilot program contract for the  testing  of  its "Medlink" Solution.
Subsequently, in February 2003, the pilot program was extended  for  a  further
six  months  at  the  request of Bradesco. On October 1, 2003, TDS and Bradesco
entered into a contract  pursuant  to  which we would undertake and install its
"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. Current roll out
plans indicate that  we  will  install  up to 5,000 solutions into the Bradesco
provider's network in order to achieve Bradesco's  initial  target of 1,000,000
transactions  per  month.  During  fiscal  year  ended  December 31,  2004,  we
processed 570,000 transactions for Bradesco.


COMPETITION

The  information  network  solutions  market for the healthcare  providers  and
health insurance companies is characterized  by rapidly evolving technology and
intense competition. Many companies of all sizes,  including  a number of large
technology companies, such as IBM, siemens, Visanet and EDS, as well as several
specialized healthcare information management companies, are developing various
products  and  services. There may be products on the market that  do  or  will
compete directly with the products and services that we are seeking to develop.
These companies  may  also  compete  with us in recruiting qualified personnel.
Many  of  our  potential  competitors  have  substantially  greater  financial,
research and development, human and other  resources  than  we do. Furthermore,
the  larger  companies  may have significantly more experience than  we  do  in
developing such products  and  services. Such competitors may: (i) develop more
efficient and effective products and services; (ii) obtain patent protection or
intellectual property rights that  may  limit  our ability to commercialize our
products or services; or (iii) commercialize products and services earlier than
we do.

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

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, which  offers  two  modalities  for the authorization
software;  (ii)  Connectmed, which offers Internet connectivity  services;  and
(iii) Salutia, which offers a connectivity system with software to be installed
and integrated to  the  management systems, similar to our MedLink Solution Web
and MedLink Solution Server and related technologies.

We  believe, however, that  our  Health  Management  information  Products  and
related  services  and  solutions  for  the  healthcare  providers  and  health
insurance  companies  represent  an unique approach and has certain competitive
advantages as follows: (i) the MedLink  Solution  significantly reduces medical
administrative procedures and costs through connecting  in real time individual
healthcare provider locations to health insurance companies;  (ii) irrespective
of the choice of connectivity or the method of transmission, MedLink provides a
secure and reliable service where healthcare providers can automatically verify
patient  eligibility,  receive  authorization for the performance  of  approved
medical  procedures and process a  paperless  claim  electronically  with  each
insurance  provider  it  interacts  with,  provided  they are subscribed to the
network;  (iii)  once  connected  to  the  network, MedLink  Solution  provides
numerous benefits to doctors and private health  insurance  companies including
the automation of their paper-based clerical duties; and (iv)  by using MedLink
Solution,  many  of  these cumbersome tasks can be processed electronically  in
seconds, virtually eliminating  processing costs, paperwork, and the high risks
associated with fraud.

<PAGE> 13

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 affect 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.

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.

   We  have  hired appropriate counsel  in  the  United  States  to  apply  for
   copyright protection of our products in the United State. We intend to apply
   for a process patent in the near future.

EMPLOYEES

Our subsidiary, TDS, employs approximately 40 staff and contract personnel.

As of the date  of  this  Annual Report, we do not employ management on a full-
time  or  on  a  part-time basis.  Our  President/Chief  Executive  Officer  is
primarily  responsible  for  all  day-to-day  operations.  Other  services  are
provided by outsourcing and verbal management contracts. As the need arises and
funds become  available, however, management may seek employees as necessary in
our best interests.

RISK FACTORS

Our shares are highly speculative and involve an extremely high degree of risk.
Our shareholders should consider the following risk factors.

<PAGE> 14

      RAPID DEVELOPMENT CHANGES

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 its 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.

      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 PRODUCTS.

It  is anticipated that some of our products and services will be 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 the Company. As of the  date  of  this  Annual  Report, we do not carry
insurance  coverage  to  cover such claims nor, if we do 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,  we  were found liable, we may have to significantly alter one  or
more of its products,  possibly  resulting in additional unanticipated research
and development expenses.

      NATURE OF 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  on  when  new  versions  are released.
Although  we  conduct extensive testing of its 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.

<PAGE> 15

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

As of the date of this Annual Report, none of our Health Information Management
Products are subject to regulation by  the  United  States  federal government.
Computer products used or intended for use in the diagnosis,  cure, mitigation,
treatment  or  prevention  of  disease or other conditions or that  affect  the
structure  or  function  of the body  are  subject  to  regulation  by  the  US
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
U.S.  Department of Health regulations such as HIPPA 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  CONFIDENTIALITY OF PATIENT HEALTH INFORMATION
      COULD RESULT IN REQUIRED PRODUCT MODIFICATIONS.

There  is  substantial  U.S.  federal  and  state  and  foreign  regulation  of
confidentiality of patient health information and the circumstances under which
such information may be used by, disclosed  to or processed by the Company as a
consequence of any contracts with various health  care  providers  or insurance
companies. Although compliance with these laws and regulations is presently the
principal  responsibility  of  the  hospital,  physician  or  other  healthcare
provider, regulations governing patient confidentiality rights are dynamic  and
rapidly evolving. Changes may be made which would require the Company to change
its   products   and  systems  and  methods  which  could  require  significant
expenditures of capital  and  decrease  future  business  prospects. Additional
federal  and  state  legislation  governing  the dissemination of  individually
identifiable information have been proposed in  the  United  States  and may be
adopted, which may also significantly affect the Company's business.

      GOVERNMENT  REGULATION  OF  HEALTHCARE  INFORMATION DELIVERY SYSTEMS  MAY
      AFFECT HEALTHCARE PROVIDERS' DECISIONS.

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.
Certain proposals to reform the U.S. heathcare systems have been and  are being
considered by Congress. These proposals, if enacted, could change the operating
environment for any of our customers within the United States that could have a
negative impact on our business, financial condition and results of operations.
However,  the  U.S.  federal government recently mandated the use of electronic
transmissions for large  Medicare  providers,  which  may positively affect the
marketability of our products in the United States. We  are  unable  to predict
what, if any, changes will occur.

<PAGE> 16

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. A portion of our revenues are expected to be derived from sales of our
Health  Information  Management Products to hospitals  in  the  United  States.
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.

      THERE ARE POLITICAL AND ECONOMIC RISKS IN FOREIGN MARKETPLACES.

As  of  the date of this  Annual  Report,  the  Health  Information  Management
Products  are  sold  by us principally in Brazil. We intend to enter the global
marketplace which includes,  but is not limited to, the marketplaces within the
United States, Australia, South  America  and  Europe. During fiscal year ended
December 31, 2004, international sales accounted for 100% of our total revenue.
As  a  result,  we  face  certain  risks associated with  international  sales.
International sales may be subject to  political,  economic,  legal  and  other
uncertainties  occurring  within  these  countries.  Changes in policies by the
respective  governments  may  result  in changes in laws,  regulations  or  the
interpretation  thereof, confiscatory taxation,  restrictions  on  imports  and
sources of supply,  import  duties,  corruption, economic reforms, and currency
revaluation,  all  of  which  may  materially  and  adversely  affect  us.  The
continuation or increase of any such disparities could affect the political and
social stability of the country, and  thus  our operations. Moreover, there can
be no assurance that future controversies will  not  arise which would threaten
trade relations between the United States and the respective country. In any of
such eventualities, our business could be adversely affected.

      WE MAY FACE SCRUTINY FROM GOVERNMENTAL AGENCIES.

As a result of the rising healthcare costs, U.S. federal  and state governments
and  foreign  governments  have placed an increased emphasis on  detecting  and
eliminating  fraud  and  abuse   in  healthcare  programs.  Numerous  laws  and
regulations now exist within the United  States  and other foreign countries to
prevent fraudulent or abusive billing, to protect patients' privacy rights, and
to ensure patients' access to healthcare. Violation  of the laws or regulations
governing our operations could result in the imposition  of  civil  or criminal
penalties,  including  temporary  or permanent exclusion from participation  in
government healthcare programs, such  as Medicare and Medicaid in the U.S., the
cancellation of any contracts with us to provide managed care services, and the
suspension or revocation of any of our  governmental  licenses.  We  intend  to
conduct  routine  internal  audits  in  an effort to ensure compliance with all
applicable laws and regulations. If errors, discrepancies or violations of laws
are discovered in the course of these internal  audits  or otherwise, we may be
required by law to disclose the relevant facts, once known,  to the appropriate
authorities.

<PAGE> 17

      WE  MAY  EXPERIENCE PRICE REDUCTION, 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: Polimed,  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.  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 unable 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.

      THE INABILITY TO PROTECT 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  its
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 asset 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 our 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.

      WE  ARE  DEPENDENT  UPON  THE  LICENSE AGREEMENT TO FURTHER  DEVELOP  AND
      COMMERCIALIZE OUR PRODUCTS EFFECTIVELY OR AT ALL.

To  further  develop  and  successfully commercialize  the  Health  Information
Management Products and related services, we entered into the License Agreement
with TDS to carry out development and commercialization of the MedLink Solution
within Brazil. Under the terms  of  the  License  Agreement,  we  will  receive
certain royalties once our subsidiary in Brazil has entered cash flow status.

The  risks  associated  with the License Agreement include, but are not limited
to, the following: (i) TDS  may  not  apply  the expected resources or required
expertise in developing the MedLink Solution resources  and  systems  or  other
systems  necessary to successfully commercialize the MedLink Solution products;
and (ii) disputes may arise between us and TDS that delay the commercialization
of the MedLink  Solution  or  adversely  affect its sales or profitability. Our
success will depend on the successful introduction and marketing of the MedLink
Solution  and other products which, in turn,  is  dependent  on  the  continued
existence of  favorable contractual relations with TDS. Our business operations
may be materially  affected  in  the  event  TDS  fails  to honor the terms and
provisions of License Agreement.

<PAGE> 18

      WE  MAY  REQUIRE  ADDITIONAL  FUNDING, AND FUTURE ACCESS  TO  CAPITAL  IS
UNCERTAIN.

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 believe that cash
on  hand will be  sufficient  to  meet  our  projected  operating  and  capital
requirements  for  at  least  the  next  twelve  months.  However,  we may need
additional  financing within this time frame depending on a number of  factors.
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.

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

We depend, to a significant extent, on the efforts  of Mr. Stephen Walters, our
President/Chief Executive Officer and a director, and  on  the  efforts  of our
executive  officers and 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,  our  President/Chief Executive Officer and
other executive officers are involved in a  broad range of critical activities,
including  providing strategic and operational  guidance.  The  loss  of  these
individuals,  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.

      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)  our  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.

<PAGE> 19

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.

TRANSFER AGENT

As of the date of this Annual Report, our transfer  agent  is  Transfer Online,
Inc.,  227  S.W.  Pine  Street,  Suite  300,  Portland, Oregon 97204; telephone
503.227.2950 and facsimile 503.227.6874.


ITEM 2. DESCRIPTION OF PROPERTIES

Except  as  described  above,  we do not own any other  real  estate  or  other
properties. We lease office space in several locations as follows:
   (i)United States: 8th Floor,  5201  Blue  Lagoon Drive, Maimi, Florida,33126
      USA
   (ii)Brazil: Praia de Botafogo # 440, 4 andar,  Botafogo  22250 - 040, Rio de
      Janeiro, RJ Brazil;
   (iii)Asia-Pacific: Level 30, Six Battery Road, Singapore, 049909; and
   (iv)Australia:  Level  66  & 67, MLC Centre Martin Place, Sydney  NSW  2000,
      Australia


ITEM 3. LEGAL PROCEEDINGS

On March 14, 2005, X-Clearing Corp,  a Colorado corporation ("X-Clearing"), our
former transfer agent, initiated legal  proceedings  against  us  by  filing  a
complaint  and verified motion for replevin and for temporary order to preserve
property in  the  District  Court  of  the  City and County of Denver, State of
Colorado, civil action no. 05 CV 1980 (the "Complaint"). During September 2001,
we had entered into an agreement with X-Clearing  Corp. regarding engagement as
our  transfer  agent, registrar and disbursing agent  in  connection  with  our
shares  of  Common  Stock  (the  "Transfer  Agent  Agreement").  The  Complaint
generally alleges  that:  (i)  we  have  breached  and  wrongfully attempted to
terminate  the  Transfer  Agent  Agreement;  (ii) X-Clearing has  a  valid  and
perfected security interest in our books and records  in  accordance  with  the
terms  of  the Transfer Agent Agreement; and (iii) X-Clearing is entitled to an
order from the  District  Court  replevining  and  preventing us from altering,
destroying  or  otherwise  interfering  with the valid and  perfected  security
interest and liquidated damages.

On  April  5,  2005, we filed an answer to Complaint,  counterclaims  and  jury
demand (the "Answer").   The  Answer generally denies that: (i) we breached and
attempted to wrongfully terminate the Transfer Agent Agreement; (ii) X-Clearing
Corp. has a valid and perfected  security  interest  in  our books and records;
(iii)  X-Clearing  is entitled to an order of replevin and liquidated  damages.
Our Answer further states  that:  (i)  X-Clearing  Corp.  has  failed  to  take
reasonable  steps  to  minimize  or  mitigate  its claimed damages; and (ii) X-
Clearing  Corp.'s  claims  are barred by the statute  of  frauds,  doctrine  of
laches, doctrine of accord and  satisfaction.  Our Answer further counterclaims
that: (i) despite X-Clearing Corp. being paid all  administrative  fees,  share
transfer  fees  and  fees  for  new  issuances, X-Clearing Corp. has refused to
produce and provide us with our stock  transfer  records,  which  has caused us
irreparable  harm;  (ii)  X-Clearing  Corp.  has  continued  undertaking  stock
transfers  on  our  behalf and illegally issuing fraudulent stock certificates;
and (iii) X-Clearing Corp. has improperly and illegally used our records, which
included stock certificates  that X-Clearing Corp. has fraudulently created and
issued to make stock transfers without notification to us.

<PAGE> 20

On April 7, 2005, we filed a stipulated  motion  for testimony by telephone and
for expedited ruling by court.  A hearing was been  set  for April 12, 2005. X-
Clearing Corp.'s replevin action was dismissed by the District Court. As of the
date  of this Annual Report, we intend to aggressively pursue  all  such  legal
actions and review further legal remedies against X-Clearing Corp.

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 properties. None of our directors, officers  or  affiliates
are: (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

No matters were submitted  to  our shareholders for approval during fiscal year
ended December 31, 2004.


PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCHOLDER MATTERS

MARKET INFORMATION

Our Common Stock is traded on the  OTC  Bulletin Board under the symbol "TNSX".
The  market  for  our  Common  Stock is limited,  volatile  and  sporadic.  The
following table sets forth the high and low sales prices relating to our Common
Stock  for the last two fiscal years.  These  quotations  reflect  inter-dealer
prices without  retail  mark-up, mark-down, or commissions, and may not reflect
actual transactions.

                                   Fiscal Year Ended
                        December 31, 2004      December 31, 2003
___________________________________________________________________________
                        High        Low        High        Low

First Quarter           $0.38       $0.16      $5.20       $2.00
Second Quarter		$0.62       $0.07      $5.00       $1.25
Third Quarter           $0.16       $0.03      $3.90       $1.25
Fourth Quarter		$0.25       $0.07      $2.80       $0.23

HOLDERS

As of March 31, 2005, we had approximately 270 shareholders of record.

DIVIDENDS

<PAGE> 21

No dividends have ever been  declared  by  our Board of Directors on our Common
Stock. Our previous losses do not currently  indicate  the  ability  to pay any
cash  dividends,  and we do not indicate the intention of paying cash dividends
on our Common Stock in the foreseeable future.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

We have one equity  compensation  plan, the Transax International Limited 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, 2004:

                        Equity Compensation Plan Information
-------------------------------------------------------------------------------
			 Number of Securities		Weighted-Average Exercise	Number of Securities
			 To be Issued Upon		Price of Outstanding		Remaining Available for
Plan Category		 Exercise of Outstanding	Options, Warrants		Future Issuance Under
			 Options, Warrants		and Rights             		Equity Compensation Plans
			 and Rights			                                (excluding column (a))
	                          (a)		                    (b)		                   (c)
-------------------------------------------------------------------------------
Equity Compensation
Plans Approved by
Security Holders

Stock Option Plan              2,425,000	                  $0.41			  2,425,000
Merger Agreement -
   Warrants		       4,100,000		          $1.00			        -0-

Equity Compensation
Plans Not Approved by
Security Holders -

Warrants		         225,000                          $1.00				-0-
Warrants	                 373,570                          $0.50				-0-
Warrants                       2,402,500                          $0.20				-0-
Warrants                       2,000,000                          $0.30				-0-

Total		              11,526,070		                                  2,425,000
-------------------------------------------------------------------------------

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, a
further 7,000,000 shares.

<PAGE> 22

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  cheque,  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 exercised(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 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").  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 of 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.

<PAGE> 23

   FORM S-8 - REGISTRATION STATEMENT

On  November 16, 2004, we filed with the Securities and Exchange  Commission  a
registration statement on "Form S-8 - For Registration Under the Securities Act
of 1933  of  Securities to Be Offered to Employees Pursuant to Employee Benefit
Plans" registering  the  Stock  Options  and  Incentive Stock Options under the
Stock Option Plan in the amount of up to 2,500,000  at  an  exercise  price  of
$0.25.

STOCK OPTIONS GRANTED AND EXERCISED

As  of December 31, 2004, we have granted 8,349,040 Stock Options and cancelled
3,117,310 Stock  Options. As of December 31, 2004, 2,806,730 Stock Options were
exercised. As at December 31, 2004, 2,425,000 Stock Options were outstanding.

Common Stock Purchase Warrants

Merger Agreement

Pursuant to the terms  of  the  Merger  Agreement,  we  issued  an aggregate of
4,100,000  share  purchase warrants (the "Warrant(s)"), pursuant to  which  the
holder thereof has  the right to convert such Warrant into shares of our Common
Stock on a one-to-one  basis  at the rate of $1.00 per share expiring on August
8,  2008 (on the basis of each two  Transax  Limited  share  purchase  warrants
exchanged  into  one  Warrant).  As of December 31, 2004, no Warrants have been
exercised.

Convertible Loan Warrants

At December 31, 2004, loans for $200,000  and  $100,000  due to a related party
were  in  default.  Each  principal amount loan is evidenced by  a  convertible
promissory note. The lender has the option during the term of the loan, and any
extension thereto, to convert  the  principal  and  interest  into units in our
capital  at  a  conversion price of $0.25 per unit (the "Unit"). Each  Unit  is
comprised of one share of our restricted Common Stock and one warrant, and each
warrant entitles  the  holder  thereof  to purchase one share of our restricted
Common Stock at $0.20 per share for a period of twelve months. On September 29,
2004, our Board of Directors reduced the  conversion  price from $0.25 per unit
to $0.08 per unit in order to reflect the current depressed market price of our
stock.  On March 25, 2005 our board reset the conversion price  from  $0.08  to
$0.125.

On September 29, 2004, $55,000 of the aggregate amount then due and owing was
settled  pursuant  to the issuance of 687,500 shares of our restricted Common
Stock and 687,500 warrants. Each warrant entitles the holder  to  purchase an
additional share of our Common Stock at a price of $ 0.20 until September 29,
2009.

Debt Settlements

On  September  29,  2004, our Board of Directors authorized  and  approved  the
execution of various  settlement  agreements  and  the grant of an aggregate of
2,402,500  warrants entitling the holder thereof to purchase  a  share  of  our
restricted Common Stock at $0.20 per share expiring September 29, 2009.

On December 30, 2004, our Board of Directors authorized the conversion of debt
and granted 2,000,000 warrants to purchase 2,000,000 shares of our restricted
Common Stock at $0.30 per share expiring on December 31, 2006.

As of the date of this Annual Report, there are an aggregate of 9,101,070 share
purchase warrants  issued  and  outstanding  as follows: (i) 4,100,000 Warrants
convertible into 4,100,000 shares of Common Stock  at  the  price  of $1.00 per
share  expiring  on  August  14,  2008; (ii) 225,000 Warrants convertible  into
225,000 shares of Common Stock at the  price  of  $1.00  per  share expiring on
November  20, 2005; (iii) 373,570 Warrants convertible into 373,570  shares  of
Common Stock  at  the  price  of $0.50 per share expiring on December 31, 2005;
(iv) 2,402,500 Warrants convertible  into  2,402,500  shares of Common Stock at
the price of $0.20 per share expiring on September 29,  2009; and (v) 2,000,000
Warrants convertible into 2,000,000 shares of Common Stock  at  $0.30 per share
expiring on December 30, 2006.

RECENT SALES OF  UNREGISTERED SECURITIES AND CHANGES IN CONTROL

As of the date of this Annual Report and during fiscal year ended  December 31,
2004, to provide capital, we sold stock in private placement offerings,  issued
stock  in  exchange  for our debts or pursuant to contractual agreements as set
forth below.


DEBT SETTLEMENTS

<PAGE> 24

(i)  We entered into a  settlement  agreement  with  a  creditor  regarding  an
outstanding  account  balance  pertaining to professional fees. Pursuant to the
terms and provisions of the settlement  agreement,  we issued 300,000 shares of
our restricted Common Stock to the creditor at approximately  $0.25  per  share
for settlement of debt in the aggregate amount of $75,000. The shares of Common
Stock  were  issued  under  the exemption from registration pursuant to Section
4(2) of the 1933 Securities Act.  On August 17, 2004, we returned the shares to
treasury for non-performance.

(ii)  We entered into a settlement  of  outstanding  account  with  a  creditor
regarding  settlement  of  debt.  Pursuant  to  the terms and provisions of the
settlement  agreement,  on  April 18, 2004, we issued  450,000  shares  of  our
restricted Common Stock to the  creditor  at  approximately $0.50 per share for
settlement of debt in the aggregate amount of $225,000.  The  shares  of Common
Stock  were  issued  under  the exemption from registration pursuant to Section
4(2) of the 1933 Securities Act.

(iii) On June 2, 2004, we issued  45,000  shares of our restricted Common Stock
to an unrelated third party to settle share subscriptions issued as payment for
compensation regarding finders' fees incurred  during  the  year ended December
31, 2003. We issued 45,000 shares at approximately $0.62 per  share  as payment
for  an  aggregate  amount  of  $27,900. The shares of Common Stock were issued
under the exemption from registration  pursuant  to  Section  4(2)  of the 1933
Securities Act.

(iv)  On  August  12,  2004,  we issued 600,000 shares of our restricted Common
Stock to an unrelated third party  to  settle  share  subscriptions  issued  as
payment  for  compensation  regarding  professional fees incurred during fiscal
year ended December 31, 2004. We issued  600,000  shares  at $0.06 per share as
payment  for  an aggregate amount of $36,000. The shares of Common  Stock  were
issued under the  exemption  from  registration pursuant to Section 4(2) of the
1933 Securities Act.

<PAGE> 25

(v)  On  September 19, 2004, our Board  of  Directors,  pursuant  to  unanimous
written consent,  authorized  and  approved the execution of various settlement
agreements  and  the  issuance  of an aggregate  of  6,698,307  shares  of  its
restricted common stock and 2,402,500 warrants as follows:

(a)  We  entered  into  a  settlement   agreement  with  Stephen  Walters,  our
President/Chief Executive Officer and director ("Walters"), dated September 29,
2004  (the "Walters Settlement Agreement"),  regarding  the  settlement  of  an
aggregate  amount  of  $135,000.00  due  and owing to Walters by us relating to
managerial and consulting services provided  by  Walters  pursuant  to  certain
contractual  relations  between  us  and  Walters (the "Debt"). Pursuant to the
terms and provisions of the Walters Settlement  Agreement:  (i)  we  agreed  to
settle the Debt by issuing to Walters and/or his designates 1,687,500 shares of
our  restricted  Common  Stock  at the rate of $0.08 per share (which amount is
based upon the average of the open  and  close  price of $0.08 of our shares of
Common Stock traded on the OTC Bulletin Board between  September  19,  2004 and
September 29, 2004); and (ii) Walters agreed to convert the Debt and accept the
issuance  of  the  1,687,500 shares of our restricted Common Stock as full  and
complete satisfaction of the Debt. We issued the 1,687,500 shares of restricted
Common Stock to Walters  pursuant  to the transactional exemption under Section
4(2) and Regulation S of the 1933 Securities Act of 1933.

Simultaneously,  Walters and Carlingford  Investments  Limited  ("Carlingford")
entered  into  an  agreement   for   acquisition  of  securities  and  investor
representation  letter  dated  September  29,  2004  (the  "Carlingford/Walters
Agreement"). Pursuant to the terms  and  provisions  of the Carlingford/Walters
Agreement: (i) Walters agreed to transfer to Carlingford  1,250,000  shares  of
our  restricted  Common  Stock  in  consideration  for  a debt due and owing by
Walters to Carlingford; and (ii) Carlingford agreed to accept  the  transfer of
the 1,250,000 shares of restricted Common Stock as settlement of the debt.

Simultaneously,  Walters  and  Silsastri  Yani (the "Walters Creditor") entered
into  an agreement for acquisition of securities  and  investor  representation
letter dated September 29, 2004 (the "Creditor/Walters Agreement"). Pursuant to
the terms  and provisions of the Creditor/Walters Agreement: (i) Walters agreed
to transfer  to  the  Walters  Creditor 437,500 shares of our restricted Common
Stock in consideration for a debt  due  and  owing  by  Walters  to the Walters
Creditor;  and (ii) the Walters Creditor agreed to accept the transfer  of  the
437,500 shares of restricted Common Stock as settlement of the debt.

In accordance  with  a  letter  of  instruction  from Walters and the terms and
provisions of the Walters Settlement Agreement, we  issued  1,250,000 shares of
our restricted Common Stock to Carlingford and 437,500 shares of our restricted
Common  Stock to the Walters Creditor, pursuant to the transactional  exemption
under Section 4(2) and Regulation S of the Securities Act.

(b) We entered  into  a  settlement  agreement  dated  September  29, 2004 with
Carlingford  (the  "Carlingford  Settlement  Agreement")  regarding:  (i)   the
settlement of an aggregate amount of $28,113.70 due and owing to Carlingford by
us  relating  to  cash  advances in the principal amount of $260,000.00 made by
Carlingford and accrued interest  thereon  in  the  amount  of  $28,113.70 (the
"Debt");   (ii)  the  settlement of an aggregate amount of $26,000.00  due  and
owing  to  Carlingford  by  us  relating  to  financial  services  provided  by
Carlingford to us (the "Finders'  Fee Debt"); and (iii) a partial settlement in
the amount of $55,000.00 pertaining  to  an aggregate amount of $424,713.97 due
and owing to Carlingford by us relating to  convertible  loan agreements in the
principal amount of $355,000 and accrued interest thereon  in  the  amount of $
69,713.97  (the  "Convertible Loan Debt"). Pursuant to the terms and provisions
of the Carlingford  Settlement Agreement: (i) we agreed to settle the Debt, the
Finders' Fee Debt and  a  portion  of  the  Convertible Loan Debt by issuing to
Carlingford  and/or its designates an aggregate  of  2,280,440  shares  of  our
restricted Common  Stock at the rate of $0.075 per share (which amount is based
upon the average of  the  open and close price of $0.08 of our shares of Common
Stock traded on the OTC Bulletin Board between September 19, 2004 and September
29, 2004) and 687,500 warrants  entitling  Carlingford and/or its designates to
purchase a share of our restricted Common Stock  at  $0.20  per  share expiring
September  29,  2009;  and  (ii)   Carlingford agreed to convert the Debt,  the
Finders' Fee Debt and a portion of the  Convertible  Loan  Debt  and accept the
issuance of an aggregate of 2,280,440 shares of our restricted Common Stock and
687,500 warrants as full and complete satisfaction of the Debt and the Finders'
Fee Debt and as partial satisfaction of the Convertible Loan Debt in the amount
of $55,000.00.

<PAGE> 26

Simultaneously,  Carlingford  and  Richard AH. Siagian, Antonius LM.  Pakpahan,
Stephen Walters and Stephen Taylor, (collectively, the "Carlingford Creditors")
entered  into  an  agreement  for  acquisition   of   securities  and  investor
representation   letter   dated   September   29,   2004,   respectively   (the
"Carlingford/Creditor Agreement"). Pursuant to the terms and provisions of each
of the Carlingford/Creditor Agreements: (i) Carlingford agreed  to  transfer to
the  Carlingford  Creditors  an aggregate of 2,280,440 shares of our restricted
Common Stock and an aggregate  of  687,500  warrants in consideration for debts
due  and  owing  by  Carlingford to the Carlingford  Creditors;  and  (ii)  the
Carlingford Creditors  agreed  to accept the transfer of a proportionate amount
of the 2,280,440 shares of restricted  Common  Stock  and  687,500  warrants as
settlement of their respective debt.

In  accordance with a letter of instruction from Carlingford and the terms  and
provisions  of  the Carlingford Settlement Agreement, we issued an aggregate of
2,280,440 shares  of  our  restricted  Common  Stock  and  687,500  warrants as
follows: (i) 269,835 shares of restricted Common Stock to Carlingford; and (ii)
2,010,605  shares  of  restricted  Common  Stock  and  687,500  warrants to the
Carlingford  Creditors in proportion to their respective debt pursuant  to  the
transactional  exemption  under  Section  4(2)  and  Regulation  S  of the 1933
Securities Act.

(c)  We  entered  into  a  settlement  agreement  with Asia Pacific Inc. ("Asia
Pacific") dated September 29, 2004 (the "Asia Pacific  Settlement  Agreement"),
regarding  the  settlement of: (i) an aggregate amount of $150,090.00  due  and
owing to Asia Pacific  by  us relating to cash advances in the principal amount
of $128,625.00 and accrued interest  thereon  in  the amount of $21,465.00 (the
"Debt");  and (ii) an aggregate amount of $12,500.00  due  and  owing  to  Asia
Pacific by  us  relating  to  financial services provided by Asia Pacific to us
(the "Finders' Fee Debt"). Pursuant  to  the  terms  and provisions of the Asia
Pacific Settlement Agreement: (i)we agreed to settle the  Debt and the Finders'
Fee  Debt  by  issuing  to Asia Pacific and/or its designates an  aggregate  of
2,167,867 shares of our restricted Common Stock at the rate of $0.075 per share
(which amount is based upon the average of the open and close price of $0.08 of
our shares of common stock  traded  on the OTC Bulletin Board between September
19 and September 29, 2004) and 1,715,000 warrants entitling Asia Pacific and/or
its designates to purchase a share of  our restricted Common Stock at $0.20 per
share expiring September 29, 2009; and (ii)  Asia Pacific agreed to convert the
Debt  and the Finders' Fee Debt and accept the  issuance  of  an  aggregate  of
2,167,867  shares  of our restricted Common Stock and the 1,715,000 warrants as
full and complete satisfaction of the Debt and the Finders' Fee Debt.

<PAGE> 27

Simultaneously, Asia  Pacific  and  Richard AH. Siagian, Antonius LM. Pakpahan,
Silsastri Yani, Adhe Silviani Carlingford  Investments  Limited  and  Thomas A.
Harmusial   (collectively,  the  "Asia  Pacific  Creditors")  entered  into  an
agreement  for  acquisition  of  securities  and investor representation letter
dated   September   29,   2004,   respectively   (the  "Asia   Pacific/Creditor
Agreement"). Pursuant to the terms  and provisions of the Asia Pacific/Creditor
Agreement: (i) Asia Pacific agreed to transfer to the Asia Pacific Creditors an
aggregate of 2,167,687 shares of our  restricted  Common Stock and an aggregate
of 1,715,000 warrants in consideration for debts due  and owing by Asia Pacific
to the Asia Pacific Creditors; and (ii) the Asia Pacific  Creditors  agreed  to
accept  the  transfer  of a proportionate amount of the 2,167,867 shares of our
restricted Common Stock and 1,715,000 warrants as settlement of their debt.

In accordance with a letter  of instruction from Asia Pacific and the terms and
provisions of the Asia Pacific  Settlement Agreement, we issued an aggregate of
2,167,687 shares of our restricted  Common  Stock and 1,715,000 warrants to the
Asia Pacific Creditors in proportion to their respective debts, pursuant to the
transactional exemption under Section 4(2) and  Regulation  S of the Securities
Act.

(d)  We  entered into a settlement agreement with Asia Consulting  Inc.  ("Asia
Consulting")   dated  September  29,  2004  (the  "Asia  Consulting  Settlement
Agreement"), regarding  the settlement of an aggregate amount of $45,000.00 due
and owing to Asia Consulting  by  us  relating  to  managerial  and  consulting
services provided by Asia Consulting to us (the "Debt"). Pursuant to the  terms
and  provisions  of  the Asia Consulting Settlement Agreement: (i) we agreed to
settle the Debt by issuing  to  Asia  Consulting  and/or its designates 562,500
shares of our restricted Common Stock at the rate of  $0.08  per  share  (which
amount  is  based  upon the average of the open and close price of $0.08 of our
shares of Common Stock  traded  on the OTC Bulletin Board between September 19,
2004 and September 29, 2004); and  (ii)  Asia  Consulting agreed to convert the
Debt and accept the issuance of the 562,500 shares  of  our  restricted  Common
Stock as full and complete satisfaction of the Debt.

Simultaneously,  Asia  Consulting and Antonius LM. Pakpahan and Silsastri Yani,
(collectively, the "Asia  Consulting  Creditors") entered into an agreement for
acquisition of securities and investor  representation  letter  dated September
29, 2004, respectively (the "Asia Consulting/Creditor Agreement").  Pursuant to
the  terms  and provisions of the Asia Consulting/Creditor Agreement: (i)  Asia
Consulting agreed  to transfer to the Asia Consulting Creditors an aggregate of
562,500 shares of our  restricted  Common  Stock in consideration for debts due
and owing by Asia Consulting to the Asia Consulting  Creditors;  and  (ii)  the
Asia  Consulting  Creditors  agreed  to  accept  a  proportionate amount of the
aggregate  562,500  shares of restricted common stock as  settlement  of  their
debt.

In accordance with a  letter  of instruction from Asia Consulting and the terms
and  provisions  of the Asia Consulting  Settlement  Agreement,  we  issued  an
aggregate of 562,500  shares  of  our  restricted  Common  Stock  to  the  Asia
Consulting Creditors in proportion to their debt, pursuant to the transactional
exemption under Section 4(2) and Regulation S of the Securities Act.

(vi)  On  October  25,  2004, our Board of Director approved the execution of a
standby  equity distribution  agreement  with  Cornell  Capital  Partners  (the
"Distribution  Agreement"),  and issued a convertible compensation debenture to
Cornell Capital Partners in the principal amount of $200,000 (the "Compensation
Debenture"). Subsequently, on  December  15, 2004, we entered into an amendment
to the Distribution Agreement with Cornell  Capital  Partners pursuant to which
we issued to Cornell Capital Partners an aggregate of  1,202,779  shares of our
restricted  Common  Stock  as  a  commitment  fee  in  lieu of the Compensation
Debenture. As a result the Compensation Debenture has been  terminated. Cornell
Capital  Partners  is allowed to sell up to $50,000 in value of  the  1,202,779
shares of Common Stock in any thirty-day period.

<PAGE> 28

(vii) On January 24,  2005,  our  Board  of  Directors,  pursuant  to unanimous
written  consent,  authorized  and approved the execution of various settlement
agreements  and  the  issuance of an  aggregate  of  3,662,908  shares  of  our
restricted Common Stock, to be effective as of December 31, 2004, as follows:

(a) We entered into a settlement  agreement with Asia Pacific dated January 24,
2005, to be effective as of December  31, 2004 (the "December 2004 Asia Pacific
Settlement Agreement"), regarding the settlement  of  an  aggregate  amount  of
$30,405.00 due and owing to Asia Pacific by us relating to cash advances in the
principal  amount  of  $28,500.00 and accrued interest thereon in the amount of
$1,905.00 (the "Debt").  Pursuant  to  the terms and provisions of the December
2004 Asia Pacific Settlement Agreement:  (i)  we  agreed  to settle the Debt by
issuing to Asia Pacific and/or its designates an aggregate of 202,700 shares of
our  restricted Common Stock at the rate of $0.15 per share  (which  amount  is
based  upon  the  average of the open and close price of $0.15 of our shares of
Common Stock traded  on  the  OTC  Bulletin Board between December 21, 2004 and
December 31, 2004); and (ii) Asia Pacific  agreed  to  convert  the  Debt   and
accept  the issuance of an aggregate of 202,700 shares of our restricted Common
Stock as full and complete satisfaction of the Debt.

Simultaneously,  Asia Pacific and its creditor, Thomas Harmusial ("Harmusial"),
entered into an agreement  for  the  acquisition  of securities and an investor
representation letter dated January 24, 2005, to be  effective  as  of December
31,  2004  (the "Asia Pacific/Harmusial Agreement"). Pursuant to the terms  and
provisions of  the Asia Pacific/Harmusial Agreement: (i) Asia Pacific agreed to
transfer to Harmusial  an  aggregate of 202,700 shares of our restricted Common
Stock in consideration for debts  due  and  owing by Asia Pacific to Harmusial;
and  (ii) Harmusial agreed to accept the transfer  of  the  202,700  shares  of
restricted Common Stock as settlement of the debt.

In accordance  with a letter of instruction from Asia Pacific and the terms and
provisions of the  Asia Pacific Settlement Agreement, we issued an aggregate of
202,700 shares of our  restricted  Common  Stock  to  Harmusial pursuant to the
transactional  exemption  under  Section  4(2) and Regulation  S  of  the  1933
Securities Act of 1933.

(b) We entered into a settlement agreement  with  Carlingford dated January 24,
2005, to be effective as of December 31, 2004 (the  "December  2004 Carlingford
Settlement  Agreement")  regarding  the  settlement of an aggregate  amount  of
$253,036.20 due and owing to Carlingford by us relating to cash advances in the
principal  amount  of  $245,000.00  made by Carlingford  and  accrued  interest
thereon in the amount of $8,036.20 (the  "Debt").  Pursuant  to  the  terms and
provisions of the December 2004 Carlingford Settlement Agreement: (i) we agreed
to settle the Debt by issuing to Carlingford and/or its designates an aggregate
of  1,686,908  shares  of our restricted Common Stock at the rate of $0.15  per
share (which amount is based  upon  the  average of the open and close price of
$0.15 of our shares of Common Stock traded  on  the  OTC Bulletin Board between
December  21,  2004  and  December 31, 2004); and (ii)  Carlingford  agreed  to
convert the Debt and accept the issuance of an aggregate of 1,686,908 shares of
our restricted Common Stock of the Company as full and complete satisfaction of
the Debt.

<PAGE> 29

Simultaneously, Carlingford  and  Richard  AH.  Siagian, Antonius LM. Pakpahan,
Thomas  Harmusial,  Silsastri  Yani  and  Adhe D. Silviani  (collectively,  the
"Carlingford  Creditors")  entered into an agreement  for  the  acquisition  of
securities and an investor representation  letter dated January 24, 2005, to be
effective  as  of  December 31, 2004 (collectively,  the  "Carlingford/Creditor
Agreements").  Pursuant   to   the   terms   and  provisions  of  each  of  the
Carlingford/Creditor  Agreements:  (i) Carlingford  agreed  to  proportionately
transfer to the Carlingford Creditors  an  aggregate of 1,686,908 shares of our
restricted Common Stock in consideration for debts due and owing by Carlingford
to  the  Carlingford Creditors; and (ii) the Carlingford  Creditors  agreed  to
accept the transfer of a proportionate amount of the aggregate 1,686,908 shares
of restricted Common Stock as settlement of their respective debt.

In accordance  with  a letter of instruction from Carlingford and the terms and
provisions of the Carlingford  Settlement  Agreement, we issued an aggregate of
1,686,908 shares of our restricted Common Stock to the Carlingford Creditors in
proportion to their respective debt pursuant  to  the  transactional  exemption
under Section 4(2) and Regulation S of the 1933 Securities Act.

(c)  We  entered  into  a settlement agreement with Stephen Taylor ("Taoylor"),
dated January 24, 2005, to  be  effective  as of December 31, 2004 (the "Taylor
Settlement Agreement"), regarding the settlement  of  an  aggregate  amount  of
$28,995.00  due  and  owing  to  Taylor  by us relating to cash advances in the
principal amount of $26,500.00 and accrued  interest  thereon  in the amount of
$2,495.00  (the  "Debt").  Pursuant to the terms and provisions of  the  Taylor
Settlement Agreement: (i) we  agreed  to  settle  the Debt by issuing to Taylor
and/or his designates 193,300 shares of our restricted Common Stock at the rate
of $0.15 per share (which amount is based upon the  average  of  the  open  and
close  price  of $0.15 of our shares of Common Stock traded on the OTC Bulletin
Board between December  21, 2004 and December 31, 2004); and (ii) Taylor agreed
to convert the Debt and accept  the  issuance  of  the  193,300  shares  of our
restricted Common Stock as full and complete satisfaction of the Debt.

Simultaneously,  Taylor  and a creditor, Adhe D. Silviani ("Siliviani") entered
into  an  agreement  for  the   acquisition   of  securities  and  an  investor
representation letter dated January 24, 2005, to  be  effective  as of December
31,  2004  (the  "Taylor/Siliviani  Agreement").  Pursuant  to  the  terms  and
provisions of the Taylor/Siliviani Agreement: (i) Taylor agreed to transfer  to
Siliviani  an  aggregate  of  193,300  shares of our restricted Common Stock in
consideration  for  debts  due  and owing by  Taylor  to  Siliviani;  and  (ii)
Siliviani agreed to accept the aggregate  193,300  shares  of restricted Common
Stock as settlement of the debt.

In  accordance  with  a  letter  of instruction from Taylor and the  terms  and
provisions  of the Taylor Settlement  Agreement,  we  issued  an  aggregate  of
193,300 shares  of  our  restricted  Common  Stock to Siliviani pursuant to the
transactional  exemption  under  Section 4(2) and  Regulation  S  of  the  1933
Securities Act.

(d) We entered into a settlement agreement with Walters dated January 24, 2005,
to be effective as of December 31,  2004 (the "December 2004 Walters Settlement
Agreement"), regarding the settlement  of an aggregate amount of $75,000.00 due
and  owing  to  Walters by us relating to managerial  and  consulting  services
provided by Walters  pursuant  to  certain contractual relations between us and
Walters (the "Debt"). Pursuant to the terms and provisions of the December 2004
Walters Settlement Agreement: (i) we  agreed  to  settle the Debt by issuing to
Walters an aggregate 500,000 shares of our restricted  Common Stock at the rate
of  $0.15 per share (which amount is based upon the average  of  the  open  and
close  price  of $0.15 of our shares of Common Stock traded on the OTC Bulletin
Board between December 21, 2004 and December 31, 2004); and (ii) Walters agreed
to convert the  Debt  and  accept  the  issuance  of  the 500,000 shares of our
restricted  Common  Stock as full and complete satisfaction  of  the  Debt.  We
issued the 500,000 shares of our restricted Common Stock to Walters pursuant to
the transactional exemption  under  Section  4(2)  and Regulation S of the 1933
Securities Act.

<PAGE> 30

(e) We entered into a settlement agreement with David  M.  Bouzaid,  one of our
directors  ("Bouzaid"),  dated January 24, 2005, to be effective as of December
31, 2004 (the "Bouzaid Settlement  Agreement"),  regarding the settlement of an
aggregate  amount  of $12,000.00 due and owing to Bouzaid  by  us  relating  to
managerial and consulting  services  provided  by  Bouzaid  pursuant to certain
contractual  relations  between  us and Bouzaid (the "Debt"). Pursuant  to  the
terms and provisions of the Bouzaid  Settlement  Agreement:  (i)  we  agreed to
settle  the  Debt  by  issuing  to  Bouzaid  an  aggregate 80,000 shares of our
restricted Common Stock at the rate of $0.15 per share  (which  amount is based
upon the average of the open and close price of $0.15 of our shares  of  Common
Stock  traded  on the OTC Bulletin Board between December 21, 2004 and December
31, 2004); and (ii)  Bouzaid agreed to convert the Debt and accept the issuance
of the 80,000 shares of  our  restricted  Common  Stock  as  full  and complete
satisfaction  of  the  Debt.  We issued the 80,000 shares of restricted  Common
Stock to Bouzaid pursuant to the transactional exemption under Section 4(2) and
Regulation S of the 1933 Securities Act.

(f) We entered into a settlement  agreement  with  Laurie  Bewes,  one  of  our
directors ("Bewes"), dated January 24, 2005, to be effective as of December 31,
2004  (the  "Bewes  Settlement  Agreement"),  regarding  the  settlement  of an
aggregate  amount  of  $35,000.00  due  and  owing  to  Bewes by us relating to
managerial  and  consulting  services  provided  by Bewes pursuant  to  certain
contractual relations between us and Bewes (the "Debt").  Pursuant to the terms
and provisions of the Bewes Settlement Agreement: (i) we agreed  to  settle the
Debt  by issuing to Bewes an aggregate 233,333 shares of our restricted  Common
Stock at the rate of $0.15 per share (which amount is based upon the average of
the open  and  close price of $0.15 of our shares of Common Stock traded on the
OTC Bulletin Board  between  December 21, 2004 and December 31, 2004); and (ii)
Bewes agreed to convert the Debt  and accept the issuance of the 233,333 shares
of our restricted Common Stock as full  and  complete satisfaction of the Debt.
We issued the 233,333 shares of restricted Common  Stock  to  Bewes pursuant to
the  transactional exemption under Section 4(2) and Regulation S  of  the  1933
Securities Act.

(g) We entered into a settlement agreement with Nathalie Pilon, our prior Chief
Financial  Officer/Secretary ("Pilon"), dated January 24, 2005, to be effective
as of December  31,  2004  (the  "Pilon  Settlement  Agreement"), regarding the
settlement of an aggregate amount of $25,000.00 due and  owing  to  Pilon by us
relating  to  managerial and consulting services provided by Pilon pursuant  to
certain contractual  relations  between  us and Pilon (the "Debt"). Pursuant to
the terms and provisions of the Pilon Settlement  Agreement:  (i)  we agreed to
settle  the  Debt  by  issuing  to  Pilon  an  aggregate  166,667 shares of our
restricted Common Stock at the rate of $0.15 per share (which  amount  is based
upon  the  average of the open and close price of $0.15 of our shares of Common
Stock traded  on  the OTC Bulletin Board between December 21, 2004 and December
31, 2004); and (ii) Pilon agreed to convert the Debt and accept the issuance of
the 166,667 shares  of  our  restricted  Common  Stock  as  full  and  complete
satisfaction of the Debt. We issued the 166,667 shares of our restricted Common
Stock  to Pilon pursuant to the transactional exemption under Section 4(2)  and
Regulation S of the 1933 Securities Act.

<PAGE> 31

(h) We entered  into  a settlement agreement with Devlin Jensen, Barristers and
Solicitors ("Devlin Jensen")  dated  January  24,  2005,  to be effective as of
December  31,  2004 (the "Devlin Jensen Settlement Agreement"),  regarding  the
settlement of an  aggregate amount of $90,000.00 due and owing to Devlin Jensen
by us relating to legal  services rendered by Devlin Jensen to us (the "Debt").
Pursuant to the terms and provisions of the Devlin Jensen Settlement Agreement:
(i) we agreed to settle the  Debt  by  issuing  to  Devlin  Jensen an aggregate
600,000 shares of our restricted Common Stock at the rate of  $0.15  per  share
(which amount is based upon the average of the open and close price of $0.15 of
our  shares  of  Common Stock traded on the OTC Bulletin Board between December
21, 2004 and December  31,  2004); and (ii) Devlin Jensen agreed to convert the
Debt and accept the issuance  of  the  600,000  shares of our restricted Common
Stock as full and complete satisfaction of the Debt.   We  issued  the  600,000
shares   of   restricted   Common  Stock  to  Devlin  Jensen  pursuant  to  the
transactional exemption under  Section  4(2)  and  Regulation  S  of  the  1933
Securities Act.

(viii)  During  fiscal  year ended December 31, 2004, we issued an aggregate of
1,050,000 shares of our Common  Stock  pursuant  to  the  exercise of 1,050,000
Stock Options.

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

The following discussions of our results of operations and  financial  position
should  be  read  in  conjunction  with  the  financial  statements  and  notes
pertaining to them that appear elsewhere in this Form 10-KSB.

RESULTS OF OPERATIONS

FOR  FISCAL YEAR ENDED DECEMBER 31, 2004 COMPARED TO FISCAL YEAR ENDED DECEMBER
31, 2003

We incurred  net  losses  of  approximately  ($1,792,300) for fiscal year ended
December  31,  2004 compared to a net loss of approximately  ($3,230,300)   for
fiscal year ended  December  31,  2003 (an approximate decrease of $1,438,000).
Comparative results for fiscal year ended December 31, 2003 include the results
of Transax and TDS only from  August  14,  2003.  The  results  for the current
period include our operations. Analysis of the operating losses for fiscal year
ended December 31, 2004 compared to fiscal year ended December 31,  2003  is as
follows.

During  fiscal  year  ended  December  31,  2004,  we  generated  approximately
$1,199,900  in net revenues compared to approximately $309,589 in net  revenues
during fiscal  year  ended  December  31,  2003  (an  approximate  increase  of
$890,311).  The  significant  increase in revenues is due to the rollout of new
software contracts in Brazil.

During  fiscal  year  ended  December   31,  2004,  we  incurred  approximately
$2,793,500  in  operating  expenses compared  to  approximately  $3,352,000  in
operating expenses during fiscal  year  ended December 31, 2003 (an approximate
decrease of $558,500). The decrease in operating  expenses  during  fiscal year
ended  December  31,  2004  is  primarily  due  to  a  decrease  in stock based
compensation  from  $1,210,100  during fiscal year ended December 31,  2003  to
$502,369 (although cost of product support services increased and such decrease
in  operating  expenses may not be  deemed  proportional  to  the  increase  in
revenues during the same period due to the decrease in stock-based compensation
expenses during such period and as more particularly described below.)

<PAGE> 32

During fiscal year  ended  December  31,  2004,  payroll  and  related benefits
increased    to    approximately   $364,500  (2003:  $302,549)  mostly  due  to
research  and  development   expenditures.  The   cost  of  product
support services increased from approximately $397,900 to $603,586  for  fiscal
year ended December 31, 2004 due to the rollout of our newest contracts.

During  fiscal year ended December 31, 2004, we incurred approximately $127,374
in professional  fees  compared  to  approximately  $385,563 during fiscal year
ended December 31, 2003. This decrease in professional fees is primarily due to
a reduction in accounting and legal expenses relating to the merger of Transax.
During fiscal year ended December 31, 2004, professional  fees consisted mainly
of approximately: (i) $41,635 in audit and  accounting  fees  (2003:  $89,860);
(ii)  $17,746 in legal fees (2003: $239,872); (iii) $0 in financing fees (2003:
$16,729); and (iv) $67,993 in other professional fees fees (2003: $39,102).

During fiscal year ended December 31, 2004, we incurred approximately  $338,900
(2003: $398,181) in related party management and consulting fees. During fiscal
year  ended  December 31, 2004, we incurred general and administrative expenses
of approximately  $584,800  compared  to general and administrative expenses of
approximately $364,187 during fiscal year  ended  December 31, 2003. The higher
costs are primarily due to an increase in support services required to maintain
operations.

During fiscal year ended December 31, 2004,we incurred  approximately  $109,000
(2003:  $162,891)  in investor relations costs.  These costs consist mainly  of
the  production  of promotional  materials  directed  to  shareholders  and  of
communication  program   and   efforts   directed   to  current  and  potential
shareholders.

During  fiscal  year  ended December 31, 2004, we incurred  other  expenses  as
follows: (i) $90,956 (2003:  $65,032) in  interest expense - related party; and
(ii) $64,715 (2003: $-0-) in capital  offering  costs. The increase in interest
expense to related party during fiscal year ended  December 31, 2004 is related
to an increase in receipt of cash advances from a related  party  and  entering
into loan agreements with related parties.

Mr.  Walters,  our President, Chief  Executive  Officer  and  director, derives
remuneration from   us  as  compensation for management and consulting services
rendered.  On January 1, 2004,  $38,000  was  due  to  Mr.  Waters for fees and
expenses incurred during the year ended December 31, 2003.  During  fiscal year
ended  December  31,  2004,  $99,000  was  incurred  by  us  to Mr. Walters for
management  and  consulting  services  rendered. Furthermore, Mr.  Walters  has
advanced funds to us and incurred expenses  on behalf of us. During fiscal year
ended December 31, 2004, Mr. Walters was paid  $-0-  by us for consulting fees.
During  fiscal  year  ended  December  31, 2004, an aggregate  of  $135,000  in
consulting fees and expenses was settled  by  us  by the issuances of 1,687,500
shares of our restricted Common Stock.  At December  31,  2004, Mr. Walters was
owed  approximately  $109,238  for  consulting/management  fees   and  incurred
expenses.

<PAGE> 33

Ms.  Pilon,  our  prior Chief Financial Officer/Secretary, derived remuneration
from us as compensation  for  management  and consulting services rendered.  On
January 1, 2004, $27,400 was due to Ms. Pilon  for  fees  and expenses incurred
during the year ended December 31, 2003.  During fiscal year ended December 31,
2004,  $64,500  was incurred by us to Ms. Pilon for management  and  consulting
services rendered.  Furthermore,  Ms.  Pilon has incurred expenses on behalf of
us. During fiscal year ended December 31,  2004,  Ms. Pilon was paid $14,000 by
us.  At  December  31,  2004,  Ms.  Pilon  was owed approximately  $55,791  for
management / consulting fees and incurred expenses.

As discussed above, the decrease in net loss  during fiscal year ended December
31,  2004  compared  to fiscal year ended December  31,  2003  is  attributable
primarily to the increase  in  gross  revenues  and the decrease in stock-based
compensation expenses. Our net loss during fiscal  year ended December 31, 2004
was approximately ($1,792,190) or ($0.10) per share  compared  to a net loss of
approximately  ($3,230,276)  or  ($0.25) during fiscal year ended December  31,
2003. The weighted average number  of  shares  outstanding  was  17,879,799 for
fiscal  year  ended  December  31, 2004 compared to 12,953,494 for fiscal  year
ended December 31, 2003.

LIQUIDITY AND CAPITAL RESOURCES

FOR FISCAL YEAR ENDED DECEMBER 31, 2004

As  of  fiscal  year  ended  December   31,   2004,  our  current  assets  were
approximately   $225,835  and  our  current  liabilities   were   approximately
$2,121,600, which  resulted  in  an  approximate  working  capital  deficit  of
$1,895,700.  As  of  fiscal year ended December 31, 2004, our total assets were
approximately $789,137  consisting  of:  (i)  $4,090  in  cash; (ii) $51,547 in
prepaid expenses; (iii) $170,198 in accounts receivable; (iv)  $243,044  in net
software  development costs; and (v) $320,258 in net valuation of property  and
equipment.

As  of fiscal  year  ended  December  31,  2004,  our  total  liabilities  were
approximately $2,531,224 consisting of: (i) $1,483,800 in long-term and current
portion  of accounts payable and accrued expenses; (ii) $254,709 due to related
parties; (iii)  $311,455 in convertible loans from related party; (iv) $168,331
in loan payable from  related  party;  (v)  $35,000  in  advances payable; (vi)
$92,013  in  long-term and current portion of capital lease  obligation;  (vii)
$125,000 in convertible  debenture  payable;  and (ix) $60,911 in long-term and
current portion of loan payable.

As at December 31, 2004, our current liabilities  were approximately $2,121,600
compared to approximately $1,857,300 at December 31,  2003.   The  increase  in
current  liabilities  is  due  primarily to an increase in accounts payable and
accrued expenses and additional loans and cash advances received from a related
party to fund operations.

For fiscal year ended December 31,  2004,  net  cash  flow  used  in  operating
activities  was  approximately  ($96,700)  compared  to ($1,097,738) for fiscal
year  ended  December  31, 2003. The change in cash  flows  used  in  operating
activities is mainly due  to  the  decrease  in  operating loss for fiscal year
ended December 31, 2004.

Net  cash  flow  provided  by  financing activities during  fiscal  year  ended
December 31, 2004 was approximately  $554,625  resulting  primarily from a loan
and  cash  advances  from  a  related  party  and  proceeds from a  convertible
debenture  compared  to  approximately  $1,319,629  during  fiscal  year  ended
December 31, 2003. The borrowings were used to fund operating activities.

Net  cash  flows  used  in  investing  activities  amounted   to  approximately
($490,300)  during fiscal year ended December 31, 2004 compared  to  ($178,413)
for fiscal year  ended December 31, 2003. During fiscal year ended December 31,
2004, we capitalized  software  research  and development costs while in fiscal
year 2003 some of these costs were expenses  as  part  of  the costs of product
support services.

In summary, based upon the cash flow activities as previously discussed, during
fiscal  year  ended December 31, 2004, our overall cash position  decreased  by
approximately $6,382.

<PAGE> 34

PLAN OF OPERATION

Since inception,  we  have  incurred  a  cumulative  deficit  of  approximately
($8,480,000), and have a stockholders' deficit of approximately ($1,742,100) as
at  fiscal  year  ended  December  31,  2004.  We  expect  to continue to incur
substantial losses to develop our products and distribution  networks,  and  do
not  expect to attain profitability in the near future. Since our inception, we
have funded  operations through short-term borrowings and equity investments in
order to meet  our  strategic  objectives.  Our future operations are dependent
upon external funding and our ability to increase revenues and reduce expenses.
Management believes that sufficient funding will  be  available from additional
related party borrowings 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.

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 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  must  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 on acceptable terms, we  may  not
be   able   to  conduct  our  business  operations  successfully,  which  could
significantly and materially restrict our overall business operations.

Based upon a  twelve-month  work plan proposed by management, it is anticipated
that such a work plan would require  approximately  $2,000,000 to $5,000,000 of
financing designed to fund various commitments and business  operations.  As of
the  date  of  this  Annual Report, we have entered into an financing agreement
with Scott and Heather  Grimes,  Joint  Tenants with Right of Survivorship (the
"Investor"). Under the terms of the financing arrangement with the Investor, we
issued convertible debentures to the Investor  in the original principal amount
of $250,000. The debentures are convertible at the  Investor's  option any time
up  to  maturity at a conversion price equal to the lower of: (i) 120%  of  the
closing bid  price  of  our Common Stock on the date of the debentures, or (ii)
80% of the lowest closing  bid  price  of our Common Stock for the five trading
days immediately preceding the conversion  date. The debentures have a two-year
term  and  accrue interest at 5% per year. At  maturity,  the  debentures  will
automatically  convert  into  shares  of our Common Stock at a conversion price
equal to the lower of: (i) 120% of the closing bid price of our Common Stock on
the date of the debentures, or (ii) 80%  of the lowest closing bid price on our
Common Stock for five trading days immediately preceding the conversion date.

<PAGE> 35

We believe that we can satisfy our cash requirements for the next twelve months
based  on  our  ability  to  enter  into additional  financing  arrangement  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.

MATERIAL LIABILITIES

CONVERTIBLE LOANS

A significant and estimated material liability  for  us for fiscal year 2005 is
the aggregate amount of $311,455 in principal and interest  due  and owing to a
related party. At December 31, 2004, the loans for $200,000 and $100,000 due to
a related party were in default. Each principal amount loan is evidenced  by  a
convertible promissory note and is repayable on or before a six-month term. The
interest  rate  is  12%  per annum compounded monthly. The related party as the
lender has the option during  the  term of the loan, and any extension thereto,
to convert the principal and interest into units in our capital at a conversion
price of $0.25 per unit (the "Unit").  Each  Unit  is comprised of one share of
our  restricted  Common Stock and one warrant, and each  warrant  entitles  the
holder thereof to  purchase  one  share of our restricted Common Stock at $0.20
per share for a period of twelve months.  On  September  29, 2004, our Board of
Directors reduced the conversion price from $0.25 per unit to $0.08 per unit in
order to reflect the current depressed market price of our stock.  On March 23,
2005  our  board  of  directors  reset  the conversion price of the convertible
debentures to $0.125 per share

On September 29, 2004, $55,000 of the aggregate amount then  due  and owing was
settled  pursuant  to  the issuance of 687,500 shares of our restricted  Common
Stock and 687,500 warrants.  Each  warrant  entitles  the holder to purchase an
additional share of our Common Stock at a price of $ 0.20  until  September 29,
2009.  We also issued 871,425 shares of our restricted Common Stock  to  settle
$69,714 in interest due on these loans.

LOAN

A  significant and estimated material liability for us for fiscal year 2005  is
the  aggregate  amount of $168,331 in principal and interest due and owing to a
related party. On  March  5,  2004,  we  borrowed  *115,000  (approximately USD
$156,860) from such related party. The loan is evidenced by a  promissory  note
and  is  repayable  on or before a twelve-month term. The interest rate is 0.8%
per month, compounded.  At December 31, 2004, approximately $11,471 in interest
was accrued on this loan.

<PAGE> 36

DEBENTURE

A significant and estimated  material  liability for us for fiscal year 2005 is
the aggregate amount of $250,000. On April 1, 2005, we entered into a financing
agreement  with  Scott  and  Heather  Grimes,   Joint  Tenants  with  Right  of
Survivorship  (the "Investor"). Under the terms of  the  financing  arrangement
with the Investor,  we  issued  convertible  debentures  to the Investor in the
original principal amount of $250,000. The debentures are  convertible  at  the
Investor's  option  any  time up to maturity at a conversion price equal to the
lower of: (i) 120% of the  closing bid price of our Common Stock on the date of
the debentures, or (ii) 80% of the lowest closing bid price of our Common Stock
for  the  five trading days immediately  preceding  the  conversion  date.  The
debentures  have  a  two-year  term  and  accrue  interest  at  5% per year. At
maturity, the debentures will automatically convert into shares of  our  Common
Stock at a conversion price equal to the lower of: (i) 120% of the closing  bid
price  of  our  Common  Stock on the date of the debentures, or (ii) 80% of the
lowest closing bid price  on our Common Stock for five trading days immediately
preceding the conversion date.

ACCRUED PAYROLL AND RELATED EXPENSES

A significant and estimated  material  liability for us for fiscal year 2005 is
the aggregate amount of $426,800 due and  owing for Brazilian payroll taxes and
Social Security taxes.

Effective April 1, 2004, we entered into a  payment  program with the Brazilian
authorities  whereas  the  Social Security ("INSS") taxes  due  and  applicable
penalties and interests will be repaid over a period of 60 months.  At December
31, 2004, our INSS tax liabilities  were approximately$ 139,600 plus $13,800 in
interest,  penalties and fines.  The payment  program  requires  us  to  pay  a
monthly fixed  amount  of  approximately  $2,560.   Discussions  are  currently
ongoing  for  us to enter into a similar payment plan for the remainder of  the
payroll tax liabilities.   We  made  the first payment as per the plan in April
2004.

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

The  discussion  and  analysis  of  our  financial  condition  and  results  of
operations is based upon our consolidated financial statements, which have been
prepared in accordance with generally accepted accounting principles or GAAP in
the  United  States.  The preparation of those financial statements requires us
to make estimates and judgements that affect the reported amount of assets  and
liabilites at the date of our financial statements.  Actual results may  differ
from these estimates under different assumptions or conditions.

Critical  accounting  policies are those that reflect significant judgements or
uncertainties,  and  potentially  result  in materially different results under
different  assumptions  and  conditions.  The  Company  believes  that our most
critical  accounting policies include:  recognition  of  transactions  revenues
and accounting for stock options and warrants.


ITEM 7. FINANCIAL STATEMENTS

The information required under Item 310(a) of  Regulation  S-B  is included in
this report as set forth in the "Index to Financial Statement".

<PAGE> 37

INDEX TO FINANCIAL STATEMENTS


Report of Independent Registered Public Accounting Firm..................43

Consolidated Balance Sheet at
December 31, 2004........................................................44

Consolidated  Statements  of  Operations for the years
ended  December 31, 2004 and 2003........................................45

Consolidated  Statements  of Stockholders' Equity
[Deficit]  For the years ended December 31, 2004 and 2003................46

Consolidated  Statements  of  Cash Flows for the
years ended December 31, 2004 and 2003...................................49

Notes to the Consolidated Financial Statements...........................51


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 Sheet...........................................F-3

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

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

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

  Notes to Consolidated Financial Statements...................F-7 to F-29

F-1

            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,  2004,
and  the  related  consolidated   statements   of   operations,  stockholders'
deficit,  and   cash  flows  for  each  of  the  two years in the period ended
December   31,   2004.  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, 2004 and the  results
of  their  operations  and  their  cash  flows for each of the two years in the
period  ended  December  31,  2004  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
3  to the consolidated   financial   statements,   the  Company has accumulated
losses  from  operations  of  approximately  $8.5 million,  a  working  capital
deficiency  of  approximately $1.9 million and a  net  capital   deficiency  of
approximately  $1.8   million  at  December  31,  2004.  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 3. The
consolidated financial statements  do  not  include  any adjustments that might
result from the outcome of this uncertainty.

Moore Stephens, P.C.
Certified Public Accountants
New York, New York
April 15, 2005

F-2


FORM 10-KSB
December 31, 200 4
TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 2004


Current Assets:
  Cash								   4,090
  Accounts receivable (Net of
  allowance for doubtful accounts of $0)			  170,198
  Prepaid expenses and other current assets			  51,547
								---------
     Total Current Assets  					  225,835

Software Development Costs, net					  243,044

Property and Equipment, net					  320,258
								---------
     Total Assets						  789,137
								=========
LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
  Current portion of capital lease obligation 			   75,405
  Convertible debenture payable					  125,000
  Current portion of loan payable				   60,911
  Accounts payable and accrued expenses				1,090,740
  Due to related parties 					  254,709
  Advances payable						   35,000
  Loan payable - related party					  168,331
  Convertible loans from related party				  311,455
								---------
     Total Current Liabilities					2,121,551

Accounts payable and accrued expenses, net of current portion	  393,065
Capital Lease Obligation, net of current portion		   16,608
								---------
     Total Liabilities						2,531,224

COMMITMENTS and CONTINGENCIES (Notes 11 and 12)

Stockholders' Deficit:
  Preferred stock $.0001 par value; 20,000,000 shares authorized;
  No shares issued and outstanding 					 0
  Common stock $.00001 par value; 100,000,000 shares authorized;
  28,537,211 shares issued and outstanding 			       285
  Paid-in capital 						 6,894,411
  Accumulated deficit 						(8,479,936)
  Deferred compensation						   (94,195)
  Other comprehensive loss -
    Cumulative foreign currency adjustment			   (62,652)
								----------
     Total Stockholders' Deficit				(1,742,087)
								----------
     Total Liabilities and Stockholders' Deficit		  789,137
								==========

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

F-4

FORM 10-KSB
December 31, 200 4
TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
<S>                                                     <C>         <C> <C>

REVENUES                                                 1,199,900    309,589

OPERATING EXPENSES:
  Cost of product support services                         603,586    397,942
  Payroll and related benefits                             364,465    302,549
  Research & development costs                             106,807     24,449
  Professional fees                                        127,374    385,563
  Management & consulting fees - related party             338,893    398,181
  Stock based compensation                                 502,369  1,210,100
  Investor relations                                       108,985    162,891
  Depreciation and amortization                             56,211    106,177
  General & administrative                                 584,843    364,187
							----------  ---------
     TOTAL OPERATING EXPENSES                            2,793,532  3,352,039

LOSS FROM OPERATIONS                                   (1,593,632)(3,042,450)

OTHER INCOME (EXPENSES):
  Loss on disposal of fixed assets                               -    (2,588)
  Other income (expense)                                    51,095   (27,616)
  Foreign exchange losses                                 (20,570)    (6,531)
  Interest expense                                       (138,192)   (86,059)
  Interest expense - related party                        (90,956)   (65,032)
							----------  ---------
     TOTAL OTHER EXPENSES                                (198,623)  (187,826)

NET LOSS                                               (1,792,255)(3,230,276)

NET LOSS PER COMMON SHARE:
BASIC AND DILUTED                                              (0)        (0)

WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED 17,879,799 12,953,494
</TABLE>

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

F-5

Form 10-KSB
December 31, 200 4
TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
For the Years Ended December 31, 2004 and 2003

<TABLE>
<CAPTION>
                                                                                                   ACCUMULATED
<S>                               <C>         <C>    <C>           <C>         <C>          <C>          <C>           <C>
                                                                                                      OTHER        TOTAL
                                     COMMON STOCK       SHARE      PAID-IN  ACCUMULATED   DEFERRED  COMPREHENSIVESTOCKHOLDERS'
                                   SHARES   AMOUNT   SUBSCRIPTIONS CAPITAL    DEFICIT   COMPENSATIONINCOME (LOSS)   EQUITY
                                                                                                                 [DEFICIT]
				  ----------   ----   ---------  ---------    --------   ---------    ---------  -----------
Issuance of stock for options      1,206,730    12            -    652,058           -           -            -      652,070
exercised for settlement of debt,
August 28, 2003
Issuance of stock for settlement     100,000     1            -     99,999           -           -            -      100,000
of debt,
August 28, 2003
Issuance of stock for options         87,500     1            -     43,749           -           -            -       43,750
exercised for settlement of debt,
October 22, 2003
Unissued shares (450,000) - for            -     -      225,000          -           -           -            -      225,000
settlement of debt,
November 21, 2003
Unissued shares (45,000) - for             -     -       27,900          -           -           -            -       27,900
finders' fees on cash advances,
November 21, 2003
Issuance of stock for options        162,500     2            -     40,623           -           -            -       40,625
exercised for settlement of debt,
December 3, 2003
Unisssued shares [300,000] for             -     -       75,000          -           -           -            -       75,000
options exercised,
December 31, 2003
Unisssued shares [373,570] for             -     -       93,393          -           -           -            -       93,393
loan conversion - Related Party,
December 31, 2003
Stock options and warrants issued          -     -            -    959,811           -           -            -      959,811
Comprehensive Income (Loss):                                                                                               -
   Net loss for year                       -     -            -          - (3,230,276)           -            -
   Foreign currency translation            -     -            -          -           -           -     (78,793)
adjustments
   Total comprehensive income                                                                                    (3,309,069)
(loss)
				  ----------   ----   ---------  ---------    --------   ---------    ---------  -----------
BALANCE, DECEMBER 31, 2003        14,029,647   141      421,293  4,590,094 (6,687,681)           -       54,676  (1,621,477)
				  ----------   ----   ---------  ---------    --------   ---------    ---------  -----------
Issuance of stock for settlement   1,168,570    12    (421,293)    421,281           -                        -            -
of share subscriptions

Common stock isued for debt       10,147,881   101            -  1,107,253           -           -            -    1,107,354

Common stock issued for services   2,163,334    21            -    222,979           -           -            -      223,000

Cancellation of previously issued  (300,000)   (3)            -   (74,997)           -           -            -     (75,000)
shares

Common stock issued for future     1,327,779    13            -     94,182           -    (94,195)            -            -
services

Stock options and warrants                 -     -            -    502,369           -           -            -      502,369
granted

Beneficial conversion                      -     -            -     31,250           -           -            -       31,250

Comprehensive Income (Loss):
   Net loss for period                     -     -            -          - (1,792,255)           -            -
   Foreign currency translation            -     -            -          -           -           -    (117,328)
adjustments
   Total comprehensive income                                                                                    (1,909,583)
(loss)
				  ----------   ----   ---------  ---------    --------   ---------    ---------  -----------
BALANCE, DECEMBER 31, 2004        28,537,211  $285           $- $6,894,411 $(8,479,936)  $(94,195)    $(62,652) $(1,742,087)
				  ==========  =====   ========= ========== ============  =========    ========= ============

</TABLE>

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

F-6

FORM 10-KSB
December 31, 200 4
TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                         <C>         <C> <C>
Net loss                                                                   (1,792,255)(3,230,276)
Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation and amortization                                              56,211    106,177
     Amortization of development costs                                          83,829     24,449
     Beneficial interest                                                        31,250          -
     Stock based compensation                                                  650,369  1,210,100
     Gain from foreign currency exchange                                             -          -
Changes in assets and liabilities:
     Accounts receivable                                                     (170,198)          -
     Prepaid expenses and other current assets                                (25,916)   (20,477)
     Accounts payable and accrued expenses                                     249,393    435,451
     Accrued interest payable, related party                                    92,573     14,686
     Accrued interest payable                                                        -     10,474
     Due to related parties                                                    478,333    196,104
     Accrued payroll and related expenses                                            -    153,548
     Accounts payable and accrued expenses  - long-term                        393,065      2,026
									    ---------- ----------
NET CASH USED IN OPERATING ACTIVITIES                                           46,655(1,097,738)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capitalized software development costs                                     (216,537)  (102,861)
  Acquisition of property and equipment                                      (273,797)   (75,552)
									    ---------- ----------
NET CASH USED IN INVESTING ACTIVITIES                                        (490,334)  (178,413)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Advances from related party                                                   82,500    484,045
  Advances from non-related company                                            114,000    526,500
  Repayments under capital lease obligations                                    32,714   (45,916)
  Proceeds from convertible debenture                                          125,000          -
  Proceeds from loan payable                                                    60,911          -
  Proceeds from loan - related party                                           139,500          -
  Proceeds from convertible loans - related party                                    -    355,000
									    ---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                      554,625  1,319,629

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                      (117,328)   (64,113)
									    ---------- ----------
NET DECREASE IN CASH                                                           (6,382)   (20,635)

CASH, BEGINNING OF YEAR                                                         10,472     31,107

CASH, END OF YEAR                                                                4,090     10,472


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid for interest                                                        96,000     22,683
  Cash paid for income taxes                                                         -          -

NON-CASH INVESTING AND FINANCING ACTIVITIES:
  204,000 shares issued for finders' fees [pre merger]                               -     51,000
  5,000,000 shares issued for cash advances [pre merger]                             -    250,000
  Common stock issued for debt and accrued interest                          1,107,354          -
  Common stock issued for services                                             148,000          -
</TABLE>


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

F-7

              TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
          POLICIES

The Company

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

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

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

      Pursuant  to  the  terms  of  the Merger Agreement  and  a  corresponding
contribution agreement, Transax has contributed  to the Company 4,500,000 stock
options and 4,100,000 share purchase warrants.  Pursuant  to  further  terms of
the  Agreement,  the Company; (i) exchanged with the Transax option holders  an
aggregate  of 4,500,000  stock  options to acquire up to  4,500,000  shares  of
TNSX's  common stock  to  replace   all   stock options outstanding in Transax;
and  (ii) exchanged with the Transax warrant  holders an aggregate of 4,100,000
share purchase warrants  to  acquire  up  to 4,100,000  shares of TNSX's common
stock  to  replace  all  share  purchase  warrants  that  were outstanding   in
Transax.

      On September 22, 2003, the Board of Directors of the  Company  approved a
change in fiscal year end of the Company from March 31st to a calendar year-end
of  December  31st. The Board of Directors' decision to change the fiscal  year
end was based upon consummation of the Merger and the resulting continuation of
the corporate entity TNSX under the Merger, which has a calendar year end.

      The  Company,   primarily   through   its   wholly-owned  subsidiary  TDS
Telecommunication Data Systems  Ltda.  ("TDS"),  is  an international  provider
of    information    network  solutions   specifically   designed    for    the
healthcare  providers   and   health  insurance companies. The MedLink Solution
{trademark} enables the real time automation  of  routine  patient eligibility,
verification,  authorizations,  claims  processing and payment  functions.  The
Company also has offices located in Miami, Florida, Australia and Brazil.


                                      F-7
                TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004

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

The Company (continued)

In prior years the Company was in the development stage.

Basis of presentation

The  accompanying  consolidated financial  statements  of  the  Company present
the  accounts  of  Transax for the years ended  December  31,  2004  and  2003,
including TNSX from the effective  date  of  the  merger  (August  14, 2003) to
December  31,  2003  and all of 2004 (See  Note  2).  All material intercompany
accounts and transactions  between  the  Company and its subsidiaries have been
eliminated. In prior years the Company was in the development stage.

Use of Estimates

      The  preparation  of  financial  statements  in conformity with generally
accepted  accounting  principles  requires  management to  make  estimates  and
assumptions that affect the reported amounts  of  assets  and  liabilities  and
disclosure  of  contingent assets and liabilities at the dates of the financial
statements and the  reported  amounts  of  revenues  and  expenses  during  the
reporting periods. Actual results could differ  from those estimates. Estimates
used in the preparation of the accompanying financial  statements  include  the
allowance  for  doubtful  accounts  receivable,  the  useful lives of property,
equipment and software development costs and variables  used to determine stock
based compensation.

Fair Value of Financial Instruments

      The  fair  value  of our cash and cash equivalents, accounts  receivable,
accounts payable and accrued  expenses approximate carrying values due to their
short maturities. The values of our debt instruments approximate their carrying
values based on rates currently available to us.

Concentrations of Credit Risk

      Financial  instruments  that   potentially   subject  us  to  significant
concentrations  of  credit  risk  consist  principally  of  cash  and  accounts
receivable.

      The Company performs certain credit evaluation procedures  and  does  not
require  collateral  for  financial  instruments  subject  to credit risk.  The
Company  believes  that  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.





                                      F-8

                TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004


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

Concentrations of Credit Risk (continued)

      The Company recognizes an  allowance  for  doubtful  accounts  to  ensure
accounts  receivable  are  not  overstated  due  to  uncollectibility  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,  2004,  the allowance
for doubtful accounts was $NIL.

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

      The Company had net sales to  2  major customers during each of the years
ended December 31, 2004 and 2003.  These  sales accounted for approximately 91%
or $1,100,000 and 95% or $294,100 of the total  sales  for  the  years 2004 and
2003, respectively.

      The  Company  maintains  its  cash  in  accounts  with  a major financial
institution in the United States and Brazil in the form of demand  deposits and
money  market  accounts.  Deposits  in  this  bank  may  exceed the amounts  of
insurance  provided  on  such  deposits.  As of December 31, 2004,  we  had  no
deposits subjected to such risk. We have not  experienced  any  losses  on  our
deposits of cash and cash equivalents.

Cash and Cash Equivalents

      The  Company  considers  all  highly  liquid  investments  with  original
maturities  of three months or less when purchased to be cash equivalents.  The
Company had no cash equivalents at December 31, 2004.

Property and Equipment, net

      Property  and  equipment  is stated at cost less accumulated depreciation
and amortization. Depreciation and  amortization is recorded on a straight-line
basis over the estimated useful lives  (approximately  2  -  10  years)  of the
assets.  Expenditures for maintenance and repairs that do not improve or extend
the life of the expected assets are expensed to operations, while major repairs
are capitalized.




                                      F-9

                TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004


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

Impairment of Long-Lived Assets

        The  Company reviews its long-lived assets and identifiable intangibles
for impairment  whenever  events  or changes in circumstances indicate that the
carrying amount of an asset may not  be  recoverable.  When  such  factors  and
circumstances  exist,  we  compare the projected undiscounted future cash flows
associated with the future use  and  disposal  of the related asset or group of
assets to their respective carrying amounts. Impairment, if any, is measured as
the excess of the carrying amount over the fair  value,  based  on market value
when  available,  or  discounted  expected cash flows, of those assets  and  is
recorded in the period in which the  determination is made.  As of December 31,
2004, management expects those assets  related  to its continuing operations to
be fully recoverable.

Income Taxes

      The Company files federal and state income  tax  returns  in  the  United
States for its domestic operations, and files separate foreign tax returns  for
the  Company's  foreign  subsidiaries  in  the  jurisdictions  in  which  those
subsidiaries operate. The Company accounts for income taxes under Statement  of
Financial  Accounting  Standards ("SFAS") No. 109, Accounting for Income Taxes.
Under SFAS No.109, deferred  tax  assets and liabilities are recognized for the
future tax consequences attributable  to  differences  between  their financial
statement carrying amounts and their respective tax bases.  Deferred tax assets
and liabilities are measured  using  enacted  tax  rates expected  to  apply to
taxable   income   in   the   years   in  which those temporary differences are
expected  to  be recovered or settled.  Under  SFAS  No.  109,  the  effect  on
deferred tax assets  and  liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.

Foreign Currency Translation

      The assets and liabilities  of  the  Company's  foreign  subsidiaries are
translated  into  U.S.  dollars  at  the  year-end  exchange  rates, equity  is
converted  historically and all revenue and expenses are translated  into  U.S.
dollars at the  average  exchange  rates prevailing during the periods in which
these items arise.  Translation gains  and  losses are deferred and accumulated
as a component of other comprehensive income  or loss in stockholders' deficit.
Transaction  gains  and losses that arise from exchange  rate  fluctuations  on
transactions denominated  in a currency other than the functional currency (TDS
- Brazilian Real, Transax Australia,  -  Australian  dollar and Transax and the
Company - USD) are included in the Statement of Operations as incurred.







                                     F-10

                TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004

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

Revenue Recognition

      Revenue  from the sale of software products, 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.

Loss per Share

      Basic loss per share is computed by dividing net loss by weighted average
number of shares of  common stock outstanding during each period.  Diluted loss
per share is computed  by  dividing  net loss by the weighted average number of
shares  of  common  stock, common stock equivalents  and  potentially  dilutive
securities outstanding  during  each period.   Diluted loss per common share is
not presented because it is anti-dilutive.   The  weighted  average  number  of
common  shares  outstanding has been retroactively restated for all the periods
presented to reflect  the  effects  of the merger.  At December 31, 2004, there
were options and warrants to purchase  11,526,070 shares of common stock, which
could potentially dilute future earnings per share.

Stock Based Compensation

      The Company accounts for stock options  issued to employees in accordance
with  the provisions of Accounting Principles Board  ("APB")  Opinion  No.  25,
"Accounting  for  Stock  Issued to Employees," and related interpretations.  As
such, compensation cost is  measured  on the date of grant as the excess of the
current market price of the underlying  stock  over  the  exercise price.  Such
compensation amounts are amortized over the respective vesting  periods  of the
option  grant.   The Company adopted the disclosure provisions of SFAS No. 123,
"Accounting for Stock-Based  Compensation" and SFAS 148, "Accounting for Stock-
Based Compensation -Transition  and  Disclosure",  which  permits  entities  to
provide  pro  forma  net  income (loss) and pro forma earnings (loss) per share
disclosures for employee stock option grants as if the fair-valued based method
defined in SFAS No. 123 had  been  applied.   The  Company  accounts  for stock
options  and  stock issued to non-employees for goods or services in accordance
with the fair value method of SFAS 123.











                                     F-11

                TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004


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

Stock Based Compensation (continued)

      Had compensation  cost for the stock option plan been determined based on
the fair value of the options  at the grant dates consistent with the method of
SFAS 123, "Accounting for Stock Based Compensation", the Company's net loss and
loss per share would have been changed to the pro forma amounts indicated below
for the years ended December 31, 2004 and 2003:

                                           Year ended December 31,
                                               2004        2003
       Net loss as reported            $(1,792,255) $(3,230,276)
    Add: total stock-based employee
    compensation expense determined under
    fair value based method, net of related tax
    effect                              (109,568)   (1,258,700)

    Pro forma net loss                 $(1,901,823) $(4,488,976)

       Basic loss per share:
           As reported                 $    (.10)   $    (.25)
             Pro forma                 $    (.11)   $   (.35)

The above pro forma disclosures  may  not  be  representative of the effects on
reported net earnings for future years as options  vest  over several years and
the Company may continue to grant options to employees.

Comprehensive Loss

      The  Company  has  adopted SFAS No. 130, Reporting Comprehensive  Income.
Other  comprehensive loss,  which  currently  includes  only  foreign  currency
translation  adjustments,  is  shown  net of tax in the Statement of Changes in
Stockholders' Deficit.

Advertising

      Advertising  costs  are expensed when  incurred.   For  the  years  ended
December 31, 2004 and 2003, advertising expense was not material.






                                     F-12

                TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004

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

Recent accounting pronouncements

      In  December 2004, the  Financial  Accounting  Standards  Board  ("FASB")
issued SFAS  No. 123R, "Share-Based Payment, an Amendment of SFAS No. 123" SFAS
No. 123R requires  companies  to  recognize  in the statement of operations the
grant-  date  fair value of stock options and other  equity-based  compensation
issued to employees.  SFAS  No.  123R  is  effective beginning in the Company's
first  quarter of fiscal 2006. The Company is  in  process  of  evaluating  the
impact of this pronouncement on its financial position.

      In  December  2004,  the  FASB  issued  SFAS  No. 153, "Exchanges of Non-
monetary Assets."  The Statement is an amendment of APB  Opinion  No.  29. SFAS
No.  153  eliminates  the  exception  for  non-monetary  exchanges  of  similar
productive  assets  and  replaces it with a general exception for exchanges  of
non-monetary assets that do not have commercial substance. The Company believes
that  the adoption of this  standard  will  have  no  material  impact  on  its
financial statements.

NOTE 2 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at December 31, 2004:

<TABLE>
<CAPTION>

<S>                                         <C> <C>
Computer Equipment                          $       516,023
Software                                             75,515
Office Furniture and Equipment                       13,288
Vehicle                                              20,833
Other                                                13,410
                                                    639,069
Accumulated Depreciation and   Amortization       (318,811)
                                                    320,258
                                            $
</TABLE>

In 2003,  the  Company  changed the estimated useful lives of certain assets in
order to reflect better current  circumstances.   For  the years ended December
31, 2004 and 2003, depreciation expense amounted to approximately  $56,000  and
$106,000, respectively.






                                     F-13

                TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004


NOTE 3 - GOING CONCERN

Since  inception, the Company has incurred cumulative net losses of $8,479,936,
has a stockholders'  deficit  of  $1,742,087  at  December  31,  2004 and has a
working  capital  deficit of $1,895,716.  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.  Additionally,  under the current roll out schedules
with its clients, the Company expects to increase  its  revenues  significantly
during  2005 with the expectation of the Company becoming a profitable  entity.
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, 2004, these
deficiencies (including interest and fines) amounted to approximately $700,000.
This payroll liability is  included as part of the accounts payable and accrued
expenses (short-term and long-term) within the consolidated balance sheet.

As  a  result  of  the  foregoing,  there  exists substantial doubt  about  the
Company's ability to continue as a going concern.  These consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

NOTE 4 - SOFTWARE DEVELOPMENT COSTS

The Company established the  technological feasibility of its MedLink Solutions
in the year ended December 31, 2002.  Therefore, from Inception to December 31,
2002, all costs incurred in establishing   the technological feasibility of the
MedLink Solutions were charged to expense when   incurred,  as required by SFAS
No. 2, Accounting for Research and Development Costs.

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

For  the  years  ended  December 31, 2004 and  2003,  amortization  expense  of
development costs amounted to $83,829 and $24,449, respectively.

                                     F-14

                TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004



NOTE 5 - RELATED PARTY TRANSACTIONS

Convertible Loans Payable

At December 31, 2004, the  loans  for  $200,000  and $100,000, due to a related
party  whose  officer  is  an  officer of the Company,  were  in  default.   In
September 2004, the related party  converted  principal of $55,000 into 687,500
units  of  the  Company, each  unit consisting   of   one   share   of   common
stock   of   the   Company   and  one  warrant  exercisable   at   $0.20  until
September   29,  2009.   Additionally, in September 2004, the Company re-priced
the conversion to reflect  the  Company's  current share price.  Therefore, the
lender  carries  the option during the term of  the  loan,  and  any  extension
thereto, to convert the principal and interest into common stock of the Company
at a conversion price  of  $0.08 per unit. Each unit is comprised of one common
share  and  one warrant. Each  warrant  entitles  the  holder  to  purchase  an
additional share  of  the  Company's common stock at $0.20 for a period of five
years.  The interest rate of  the loan is 12% per annum compounded monthly.  On
September 29, 2004, the holder  of  the notes exercised the conversion feature.
Accordingly, the Company issued 687,500 shares and 687,500 warrants to purchase
common stock of the Company at $.20 per  share  for the conversion of principal
balance of $55,000.  The Company also issued 871,425  shares of common stock to
settle $69,714 in interest due on these loans.  At December  31, 2004, interest
due  on  these two loans amounted to $11,455 and the principal amount  due  was
$300,000.   During  the  years  ended  December  31, 2004 and 2003, the Company
incurred $48,351 and $41,337, respectively, in interest  related  to  these two
loans.   The  Company  did not incur beneficial conversion charges because  the
conversion price was equivalent  to  the average offering price for equity when
these loans became convertible.

Due to Related Parties

As  of  January  1, 2004 the Company had  approximately  $188,400  of  advances
payable and accrued interest due to a related party whose officer is an officer
of the Company.  During  the  year  ended December 31, 2004, this related party
advanced  the  Company an additional $82,500,  for  working  capital  purposes.
These advances accrue  interest  at 1% per month (12% per annum).  For the year
ended December 31, 2004, the Company  accrued  $40,744  of  interest related to
these  advances.  On September 29, 2004, the Company issued 374,848  shares  of
common stock  to  settle  $28,114  in  interest  due  to this related party. On
December 30, 2004, the Company agreed to issue 1,633,333 shares of common stock
and 1,633,333 warrants to purchase 1,633,333 shares of common stock at $.30 per
share  to  settle debt of $245,000 and 53,575 shares of common  stock  for  the
settlement of  related interest of $8,036. These shares were issued on March 8,
2005 and are included  in  outstanding shares at December 31, 2004. At December
31, 2004, advances due amounting  to  $20,905  are  included  in due to related
parties on the accompanying balance sheet.






                                     F-15

                TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004


NOTE 5 - RELATED PARTY TRANSACTIONS (CONTINUED)

Due to Related Parties (continued)

For  each  of the years ended December 31, 2004 and 2003, the Company  incurred
$165,000 and  $132,000  in   management  fees  to  an  officer/director  of the
Company, respectively,  including an accrual of a bonus in 2004 of $33,000 that
was  approved  by  the board of directors on January 14, 2005.  On December 30,
2004, the Company agreed  to  issue  500,000 shares of common stock at $.15 per
share to this  officer/director for settlement  of $75,000 of this debt.  These
shares were issued on March 8, 2005 and are included  in  outstanding shares at
December  31,  2004.   At December 31, 2004, $142,238 in management  fees  were
outstanding to this officer/director and are included in due to related parties
on the accompanying balance sheet.  The amounts due are unsecured, non-interest
bearing and are payable on demand.

For  the  years  ended  December  31,  2004  and  2003,  the  Company  incurred
approximately $25,600 and  $58,700  in  consulting  fees,  respectively,  to  a
company  whose  director  is a director of the Company.   On December 30, 2004,
the Company agreed to issue 233,333 shares of common stock at $.15 per share to
this officer/director for settlement  of  $35,000  of  this debt.  These shares
were issued on March 8, 2005 and are included in outstanding shares at December
31, 2004.  At December 31, 2004, $17,049 in management fees  was outstanding to
this  officer/director  and  are  included  in  due to related parties  on  the
accompanying  balance  sheet.    The  amounts due are  unsecured,  non-interest
bearing and are payable on demand.

For the years ended December 31, 2004 and  2003,  the  Company incurred $62,535
and $96,000 in management fees to a company whose officer  is an officer of the
operating  subsidiary  of  the  Company.   At  December  31, 2004,  $13,535  in
management  fees  was outstanding to this officer and are included  in  due  to
related parties on the accompanying balance sheet.

The Company incurred  approximately $0 and $30,800 in consulting and management
fees in 2004 and 2003,  respectively  to  a  former director of the Company who
resigned in November 2004. At December 31, 2004,  $5,191 in consulting fees and
expenses were outstanding to this former director and  are  included  in due to
related parties on the accompanying balance sheet.

For  the  years  ended  December  31,  2004  and  2003,  the  Company  incurred
approximately $73,800 and $69,700 in management fees to a company whose officer
is  a  former officer of the Company.  On December 30, 2004, the Company agreed
to  issue   166,667   shares  of  common  stock  at  $.15  per  share  to  this
officer/director for settlement  of  $25,000  of  this debt.  These shares were
issued on March 8, 2005 and are included in outstanding  shares at December 31,
2004.   At  December  31,  2004, $55,791 in management fees and  expenses  were
outstanding to this former officer  and  are included in due to related parties
on the accompanying balance sheet..  The Company  paid  $6,000  in January 2005
and in March 2005 entered into a settlement agreement, whereby the Company will
pay $38,300 over 9 months.



                                     F-16
                TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004

NOTE 5 - RELATED PARTY TRANSACTIONS (CONTINUED)

Loans Payable

        On  March  5,  2004,  the  Company borrowed Euro 115,000 ($156,860   at
December 31, 2004) from an officer of the Company for working capital purposes.
The loan accrues 0.8% compounded interest  per  month,  has  a  term  of twelve
months,  and  the  debt is repayable quarterly in arrears.  As at December  31,
2004, $11,471 in interest  was  accrued on this loan. As of March 31, 2005, the
loan had not been repaid.

NOTE 6 - DEBENTURE PAYABLE

 Pursuant to a Securities Purchase  Agreement entered into on October 25, 2004,
 Cornell Capital Partners is obligated  to  purchase  $250,000  of  convertible
 debentures.  The  $250,000  will  be  disbursed  as follows: (i) $125,000  was
 disbursed  on  October 30, 2004 and (ii) $125,000, within  five  days  of  the
 filing of a Registration  Statement  that  occurred  on  January  5, 2005. The
 debentures are convertible at the holder's option any time up to maturity at a
 conversion  price equal to the lower of (i) 120% of the closing bid  price  of
 the common stock  on  the  date  of  the  debentures or (ii) 80% of the lowest
 closing bid price of the common stock for the  five  trading  days immediately
 preceding the conversion date.  The debentures are secured by stock pledged by
 certain shareholders of the Company.  The debentures have a two-year  term and
 accrue   interest   at   5%  per  year.   At  maturity,  the  debentures  will
 automatically convert into  shares of common stock at a conversion price equal
 to the lower of (i) 120% of the  closing  bid price of the common stock on the
 date of the debentures or (ii) 80% of the lowest  closing  bid  price  of  the
 common    stock    for   five   trading   days   immediately   preceding   the
 conversion  date. In  October  2004, the Company issued $125,000 of debentures
 under this agreement for net proceeds  of  $100,000.  As of December 31, 2004,
 the Company accrued interest payable of $1,302 related to this debenture which
 is  included  in  accounts  payable and accrued expenses on  the  accompanying
 balance sheet. For the year ended  December  31, 2004, the Company recorded an
 imbedded beneficial conversion amount of $31,250 as interest expense since the
 debentures were immediately convertible.

On October 25, 2004, in connection with a Standby Equity Distribution Agreement
(see  Note  8),  the  Company issued a convertible  Compensation  Debenture  to
Cornell Capital Partners  in  the principal amount of $200,000. On December 15,
2004, the Company and Cornell Capital  Partners  entered into an amendment (the
"Amendment")  to the Standby Equity Distribution Agreement  dated  October  25,
2004 by and between  the Company and Cornell Capital Partners.  Pursuant to the
Amendment, the Company  issued  to Cornell Capital Partners 1,202,779 shares of
the Company's common stock as a commitment  fee,  in  lieu  of the compensation
debenture. As a result, the compensation debenture has been terminated. Cornell
Capital Partners will be permitted to sell up to $50,000 of the  commitment fee
shares  in  any 30 day period. In connection with issuance of these shares, the
Company valued  these  common  shares  at the fair market value on the dates of
grant of $.07 per shares or $84,195 based  on  the  quoted  trading  price  and
recorded  deferred compensation in this amount which will be amortized over the
equity funding  commitment  period of 24 months or less if funded earlier.  The
commitment period begins once  the  registration  statement  for the underlying
conversion shares is declared effective or at an earlier date if agreed upon by
the parties.


                                     F-17

                TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004

NOTE 7 - ADVANCES PAYABLE

As  of  January  1,  2004  the  Company had approximately $152,600 of  advances
payable  and  accrued  interest  outstanding   to  a  non-related  company  and
individual.    During the year ended December 31,  2004,  the  Company received
$114,000 in cash advances from this non-related party, accrued interest payable
of  $15,391,  and  recorded  capitalized  development  costs  of $37,500.   The
advances accrue interest at 1% per month (12% per annum). In February 2004, the
Company issued 300,000 shares of its common stock for the settlement of $37,500
of  advances  payable  and  $37,500  of  accrued  expenses  to this non-related
company.  On September 29, 2004, the Company issued 1,715,000 units and 286,200
shares of common stock to settle $128,625 in advances and $21,465  in interest,
respectively,  due  to this non-related party.  Each unit is comprised  of  one
common share and one  warrant.  Each warrant entitles the holder to purchase an
additional share of the Company's  common  stock  at  $0.20 until September 29,
2009.

On  December  30, 2004, the Company agreed to issue 176,667  units  and  16,633
shares of common stock to settle $26,500 in advances and $2,495 in interest due
to this non-related  company  and  individual.  Each  unit  is comprised of one
common share and one warrant.  Each warrant entitles the holder  to purchase an
additional  share  of  the  Company's common stock at $0.30 until December  30,
2006.  These share were issued on March 8, 2005 and are included in outstanding
shares  at December 31, 2004.   As  at  December  31,  2004,  advances  payable
amounted to $35,000.

NOTE 8 - INCOME TAXES

As of December  31,  2004,  the  Company  had  approximately $3,600,000 of U.S.
federal and state net operating loss carryforwards  available  to offset future
taxable income which begin expiring in 2011, if not utilized.  In addition, the
Company   has   approximately   $3,625,000   of   foreign  net  operating  loss
carryforwards   related  to  the  Company's  Brazilian  subsidiary.     Current
Brazilian  tax  legislation  imposes  no time period for the utilization of the
losses, although it does limit the annual usage of the losses to 30% of taxable
profits.  Transax files its income tax  return  on a consolidated company basis
with TNSX, its legal parent, as U.S. tax rules prohibit  the  consolidation  of
its foreign subsidiaries.

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







                                     F-18

                TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004




NOTE 8 - INCOME TAXES (CONTINUED)

Deferred income taxes reflect the net tax  effects  of  operating  loss and tax
credit  carryforwards  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,
2004 and 2003.

The Company's tax expense differs from the "expected" tax expense for the years
ended December 31, 2004 and 2003 as follows:
<TABLE>
<CAPTION>
                                         2004                       2003
<S>                             <C>                       <C> <C>

Computed "expected" tax benefit     $          (636,000)                $(1,098,000)
State income taxes benefit                      (44,000)                   (129,000)
Other                                           (75,000)                   (147,000)
Change in valuation allowance                    755,000                   1,374,000

                               $                       -$                          -
</TABLE>

The tax effects of temporary differences that give rise to significant portions
of deferred tax assets and liabilities at December 31, 2004 are as follows:
<TABLE>
<CAPTION>

<S>                              <C>
Deferred tax assets:
Net operating loss carry forward      $               2,600,500

Total gross deferred tax assets                       2,600,500

Less valuation allowance                            (2,600,500)

Net deferred tax assets         $                             -
</TABLE>

The valuation allowance at December 31, 2004 was $2,600,500. The increase
during 2004 was approximately $755,000.





                                     F-19

                TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004

NOTE 9- FOREIGN OPERATIONS

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


----------------------------
                                                     Year ended December 31,
                                                         2004         2003
                                                ----------------------------
Net sales to Unaffiliated Customers

        Brazil                                  $     1,199,899 $    309,589
        USA                                             -             -
        Singapore                                       -             -
        Australia                                       -             -
        Mauritius                                       -             -
                                                --------------- ------------
                                                      1,199,900      309,589
                                                --------------- ------------
Loss from operations

        Brazil                                      (1,420,343)  (1,446,721)
        USA                                         (1,299,072)  (1,753,628)
        Singapore                                            -      (33,256)
        Australia                                      (32,429)    (108,934)
        Mauritius                                      (41,688)      (9,500)
                                                --------------- ------------
                                                    (2,793,532)  (3,352,039)
                                                --------------- ------------
                                                    (1,593,632)  (3,042,450)
                                                --------------- ------------
Other income (expenses)

        Brazil                                         (90,249)    (105,687)
        USA                                           (105,133)     (90,758)
        Australia                                      (3,241)        8,620
                                                --------------- ------------
                                                     (198,623)     (187,826)
                                                --------------- ------------
Net loss as reported in the
accompanying statements                         $   (1,792,255) $(3,230,276)
                                                --------------- ------------










                                     F-20

                TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004


NOTE 10 - STOCKHOLDERS' DEFICIT

Common Stock

On August 14, 2003, pursuant  to  the  terms  of the Merger, the Company issued
11,066,207 shares of restricted common stock in exchange of all the outstanding
shares of Transax limited, including 300,000 shares  issued  for finder's fees.
Nine  (9)  additional  shares  were issued pursuant to the Merger,  to  satisfy
rounding of the 2:1 reverse split.

On August 28, 2003, the Company  issued  1,206,730  shares  of common stock for
options exercised for net proceeds of $652,071.  The proceeds were utilized for
the settlement of existing debt.

On August 28, 2003, the Company issued 100,000 units, at $ 1.00  per  unit,  in
settlement  of $100,000 of debt. Each unit is comprised of one common share and
one-half warrant.  Each  warrant  entitles the holder to purchase an additional
share of THE Company's common stock at $1.50, for a period of 12 months.

On October 22, 2003, the Company issued  87,500  shares  of  common  stock  for
options exercised, for net proceeds of $43,750.  The proceeds were utilized for
the settlement of advances payable.

On  November  21,  2003,  the  Company  agreed  to  issue 450,000 units for the
conversion  of $225,000 of advances payable.  Each unit  is  comprised  of  one
common share and one-half warrant. Each warrant entitles the holder to purchase
an additional  share of the Company's common stock at $1.00, for a period of 24
months. At December  31,  2003,  these  units  had not yet been issued and were
issued on April 18, 2004.

On November 21, 2003, the Company agreed to issue 45,000 shares of common stock
for finders' fees for advances. $27,900 is included as stock based compensation
in the statement of operations. At December 31,  2003, these shares had not yet
been issued and were issued on June 2, 2004.

On  December 3, 2003, the Company issued 162,500 shares  of  common  stock  for
options  exercised, for net proceeds of $40,625. The proceeds were utilized for
the settlement of advances payable.

On December  31,  2003,  the  Company  agreed to issue 300,000 shares of common
stock for options exercised, for net proceeds  of  $75,000.  The  proceeds were
utilized  for the settlement of advances payable. These shares were  issued  on
January 7, 2004.

On  December  31,  2003, the Company agreed to  issue  373,570  units  for  the
conversion  of  a $66,195  loan  and accrued interest of $27,198 from a related
party whose officer  is  an  officer  of Company. Each unit is comprised of one
common share and one warrant. Each warrant  entitles  the holder to purchase an
additional share of the Company's common stock at $0.50  for  a  period  of  12
months. These units were issued on January 7, 2004.



F-21

                TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004


NOTE 10 - STOCKHOLDERS' DEFICIT (CONTINUED)

On  January  26,  2004,  the Company issued 300,000 shares of restricted common
stock  for services rendered,  for  net  value  of  $75,000,  included  in  the
statement  of  operations  for  the three-month period  ended March 31, 2004 as
professional fees.  On May 5, 2004,  the  Company  returned to treasury 300,000
restricted shares that had been issued for services  rendered  on  January  26,
2004.   The  shares  were  returned  for  non-performance  and  the expense was
reversed during the three month period ended June 30, 2004.

On  February  12, 2004, the Company issued 300,000 shares of common  stock  for
options exercised,  for net proceeds of $75,000. The proceeds were utilized for
the settlement of advances payable.

On  June  11, 2004, the  Company  issued  150,000  shares  of  common  stock  a
consultant  for  services  rendered.  The Company valued these common shares at
the fair market value on the  dates  of  grant  or  $0.25  based  on the quoted
trading price and recorded consulting expense of $37,500.

On  July 26, 2004, May 2002, in connection with the exercise of stock  options,
the Company  issued 600,000 shares to consultants for services rendered.  Since
the Company did  not  receive  any  cash for the exercise of these options, the
Company recorded consulting expense of  $36,000  based on the exercise price of
the stock options granted ($0.06 per share).

On  August  12,  2004,  the Company issued 600,000 shares  of  common  stock  a
consultant for services rendered.   The  Company  valued these common shares at
the  fair  market  value on the dates of grant or $0.06  based  on  the  quoted
trading price and recorded investor relation expense of $36,000.

On September 29, 2004,  the  Company  issued  374,848 shares of common stock to
settle approximately  $28,100 in interest due to a related party in relation to
cash advances.

On September 29, 2004, 2004, the Company issued  346,667 shares of common stock
a company related an officer of the Company for services rendered.  The Company
valued these common shares at the fair market value  on  the  dates of grant or
$0.075  based  on the quoted trading price and recorded consulting  expense  of
$26,000.

On September 29,  2004,  the Company issued 1,687,500 shares of common stock to
settle $135,000 of debt owed to a related party.

On September 29, 2004, the  Company  granted 1,715,000 units to settle $128,625
in cash advances.  Each unit is comprised  of one common share and one warrant.
Each  warrant  entitles  the holder to purchase  an  additional  share  of  the
Company's common stock at $0.20 until September 29, 2009.





                                     F-22

                TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004


NOTE 10 - STOCKHOLDERS' DEFICIT (CONTINUED)

On September 29, 2004, 2004,  the Company issued 166,667 shares of common stock
a consultant for services rendered.   The Company valued these common shares at
the fair market value on the dates of grant  or  $0.075  based  on  the  quoted
trading price and recorded consulting expense of $12,500.

On  September  29,  2004,  the Company issued 286,200 shares of common stock to
settle $21,465 in interest due in relation to cash advances.

On September 29, 2004, the Company  issued  562,500  shares  of common stock to
settle $45,000 of debt.

On  September  29,  2004,  the Company granted 687,500 units for conversion  of
$55,000 of a convertible loan to a related party. Each unit is comprised of one
common share and one warrant.   Each warrant entitles the holder to purchase an
additional share of the Company's common stock at $0.20 until
September 29, 2009.

On September 29, 2004, the Company  issued  871,425  shares  of common stock to
settle $69,714 in interest due to a related party in relation  to a convertible
loan.

On  October  25,  2004,  the Company entered into a Standby Equity Distribution
Agreement with Cornell Capital  Partners, L.P.   Pursuant to the Standby Equity
Distribution  Agreement,  the  Company   may,   at  the  Company's  discretion,
periodically sell to Cornell Capital Partners shares  of  common  stock  for  a
total  purchase  price  of up to $5.0 million.  For each share of common  stock
purchased under the  Standby   Equity  Distribution  Agreement, Cornell Capital
Partners will pay Transax 97% of,  or  a  3% discount  to,  the  lowest closing
bid  price  of  our  common  stock  on the  Over-the-Counter  Bulletin Board or
other  principal market on which  our  common stock is traded for the five days
immediately following the notice  date.  Further, Cornell Capital Partners will
retain 5% of each advance under the Standby Equity Distribution  Agreement.  In
December 2004, the Company issued to Cornell Capital Partners 1,202,779  shares
of  the Company's common stock as a commitment fee, in lieu of the compensation
debenture. As a result, the compensation debenture has been terminated. Cornell
Capital  Partners will be permitted to sell up to $50,000 of the commitment fee
shares in  any  30-  period.   In connection with the issuance of these shares,
the Company valued these common shares at the fair market value on the dates of
grant of $.07 per share,  or  $84,195,  based  on  the quoted trading price and
recorded deferred compensation in this amount which  will be amortized over the
equity funding commitment period of 24 months or less  if  funded  earlier. The
unamortized portion is included in Stockholders' Deficit at December  31, 2004.
The commitment period begins once the registration statement for the underlying
conversion shares is declared effective or at an earlier date if agreed upon by
the parties.







                                     F-23

                TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004


NOTE 10 - STOCKHOLDERS' DEFICIT (CONTINUED)

In  October  2004, the Company issued 125,000 shares of common stock to Monitor
Capital, Inc. (Monitor), an unaffiliated registered broker-dealer that has been
retained by the  Company  in  connection  with  the Standby Equity Distribution
Agreement.  In connection with the issuance of these shares, the Company valued
these common shares at the fair market value on the  date  of grant of $.08 per
share,  or  $10,000,  based  on the quoted trading price and recorded  deferred
compensation in this amount which  will  be  amortized  over the equity funding
commitment  period  of  24  months or less if funded earlier.  The  unamortized
portion  is  included  in Stockholders'  Deficit  at  December  31,  2004.  The
commitment period begins  once  the  registration  statement for the underlying
conversion shares is declared effective or at an earlier date if agreed upon by
the parties.

On  December  30,  2004,  the  Company  agreed  to  grant 2,000,000  units  for
conversion  of $300,000 of loans payable to unrelated  parties.  Each  unit  is
comprised of  one  common  share  and  one  warrant.  Each warrant entitles the
holder to purchase an additional share of the  Company's  common stock at $0.30
until  December  30,  2006. Additionally, in connection with these  loans,  the
Company issued 82,908 common  shares  as settlement of accrued interest payable
amounting to $12,436

On December 30, 2004, the Company agreed  to  issue  1,580,000 shares of common
stock to settle $237,000 in amounts due to related parties.

All  shares  that  the Company agreed to issue on December  30,  2004  for  the
conversion of debt to  equity  were issued on March 8, 2005 and are included in
outstanding shares at December 31, 2004.

Stock Options

On January 14, 2005, the board of  directors  elected  to extend the expiration
date of 373,570 warrants from December 31, 2004 to December 31, 2005.

On November 28, 2004, the Company adopted a 2004 Incentive  Stock  Option  Plan
(the  "Plan").   The  Plan  provides  options  to be granted, exercisable for a
maximum of 2,500,000 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 is
determined by a committee.

On July 26, 2004, the Company  granted  options  to  purchase 600,000 shares of
common  stock  to  a consultant for serviced rendered. The  options  expire  on
August 14, 2008 and  are  exercisable  at  $0.06  per share, which was the fair
market value of the common stock at the grant date.  These  options were valued
using  the Black-Scholes pricing method at a fair value of $0.058  per  option.
Accordingly, the Company recorded stock-based compensation expense of $34,900.





                                     F-24

                TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004


NOTE 10 - STOCKHOLDERS' DEFICIT (CONTINUED)

On December 31, 2004, the Company granted options to purchase 750,000 shares of
common stock  to  certain  employees  of  the Company with an exercise price of
$0.20.  The exercise price on the date of grant  exceeded the fair market value
of  the  common  stock  at  the  grant  date. Accordingly,  under  APB  25,  no
compensation expense was recognized.  These  stock  options  expire on December
30, 2009.

A  summary  of  the  status  of the Company's outstanding stock options  as  of
December 31, 2004 and 2003 and  changes  during  the  years  then  ended  is as
follows:

							Weighted

							Average
							Exercise
                                                  Shares         Price
                                              --------------      ---

Outstanding at December 30, 2002                   4,500,000    $0.36
Granted                                            2,774,040     0.37
Exercised                                         (2,200,000)   (0.37)
Cancelled                                         (2,799,040)   (2.30)
                                               --------------      ---

Outstanding at December 31, 2003                   2,275,000     0.43
        Granted                                    1,800,000     0.14
        Exercised                                 (1,050,000)   (0.14)
        Forfeited                                   (600,000)   (0.50)

Outstanding at December 31, 2004        	   2,425,000   $ 0.41
                                               ==============    ====

Options exercisable at end of year                 2,425,000     $0.41
						==============   =====

          Weighted-average fair value of options
               granted during the year           2004             2003
                                           --------------    -------------
                                                  $0.14        $0.57

The following information applies to options outstanding at December 31, 2004:

                                    Options Outstanding    Options Exercisable
                                  ----------------------   --------------------
                                                         Weighted
                                                          Average
Weighted                     Weighted
                                                        Remaining
Average                      Average
                                                       Contractual
Exercise                     Exercise
Range of Exercise Prices     Shares      Life (Years)  Price   Shares     Price
------------------------    -----------  ------------  -----    ----    --------
     $0.50                  1,675,000          3.62    $0.50  1,675,000   $ 0.50
     $0.20                    750,000          5.00    $0.20    750,000   $ 0.20

The exercise price of all options granted by the Company equals or exceeded the
market price at the date of grant. Accordingly, no compensation expense has
been recognized on options granted to employees and directors.






                                      F-25

                TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004


NOTE 10 - STOCKHOLDERS' DEFICIT (CONTINUED)

On  September  29,  2004,  in connection with a conversion of debt, the Company
granted 2,402,500 warrants to  purchase  2,402,500  shares  of  common stock at
$0.20 per share.  The warrants expire on September 29, 2009.  The fair value of
this  warrant  grant was estimated at $0.096 per warrant on the date  of  grant
using the Black-Scholes  option-pricing  model  with  the  following  weighted-
average assumptions dividend yield of -0- percent; expected volatility  of  191
percent;  risk-free  interest  rate  of  3.15  percent  and an expected holding
periods of 5.00 years.  In connection with these warrants, the Company recorded
stock-based compensation expense of $230,111 for the year  ended  December  31,
2004.

On  December  31,  2004,  in  connection with a conversion of debt, the Company
granted 2,000,000 warrants to purchase  2,000,000  shares  of  common  stock at
$0.30 per share.  The warrants expire on December 30, 2006.  The fair value  of
this  warrant  grant  was  estimated at $0.118 per warrant on the date of grant
using  the Black-Scholes option-pricing  model  with  the  following  weighted-
average  assumptions  dividend yield of -0- percent; expected volatility of 201
percent; risk-free interest  rate  of  3.50  percent  and  an  expected holding
periods of 2.00 years.  In connection with these warrants, the Company recorded
stock-based  compensation expense of $237,358 for the year ended  December  31,
2004.

A summary of the  status  of  the  Company's  outstanding  stock warrants as of
December 31, 2004 and 2003 and changes during the years is as follows:

                                  Weighted Average  Exercise
                                      Shares         Price
                                 ----------------- -----------
Outstanding at December 31, 2002                -     $   -
Granted                                 4,748,570      0.95
Exercised                                       -         -
Forfeited                                       -         -

Outstanding at December 31, 2003        4,748,570      0.95
Granted                                 4,402,500      0.25
Exercised                                 (50,000)    (1.50)
Forfeited

Outstanding at December 31, 2004        9,101,070   $  1.00
                                   ==============   ========

Warrants exercisable at end of year     9,101,070   $   0.61
				   ==============   ========

        	                         2004             2003
	                            -------------- --------------
Weighted-average fair value of warrants
 granted during the year                 $0.25             $0.95






                                     F-26

                TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004

NOTE 10 - STOCKHOLDERS' DEFICIT (CONTINUED)

The following information applies to all warrants outstanding  at  December 31,
2004:

                           Warrants          Outstanding Warrants Exercisable
                 ------------------------          -------------------------
                                              Weighted
                                              Average
Weighted         Weighted                    Remaining
Average          Average                     Contractual
Exercise         Exercise		   Range of Exercise Prices
		 Shares	       Life (Years) 	 Price          Shares    Price
------------   ------------    ------------     -----------    ---------- -----
     $1.00      4,325,000         3.61           $1.00         4,325,000  1.00
      $0.50       373,570         1.00           $0.50           373,570  0.50
     $0.30      2,000,000         2.00           $0.30         2,000,000  0.30
     $020       2,402,500	  4.75           0.20 	       2,402,500  0.20

In 2003, for financial statement purposes, the fair market value of  each stock
option  and  stock  warrant  grant is estimated on the date of grant using  the
Black-Scholes option-pricing  model,  in  accordance  with  SFAS No. 123  using
the  following weighted-average  assumptions:  expected  dividend   yield   0%,
risk-free interest rate of 2.44%, volatility of 136.11% and expected term of  5
years.   In  the  year  ended December 31, 2003, under SFAS No 123, the Company
incurred a stock based compensation  cost  of  $919,500  for  the  issuance  of
options, and $211,700 for the issuance of warrants.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

Rent

The  Company  has  an  operating  lease  for  rental of office space in Brazil,
renewable on an annual basis.  Rent expense amounted  to  approximately $62,300
and $46,000 and is classified as part of general and administrative expenses in
the statement of operations for each of the years ended December  31  2004  and
2003, respectively.

Leases

The  Company  acquired  Point-of-Sale  terminals  and  computer equipment under
capital leases that have been capitalized for approximately  $270,800,  and are
included  in property and equipment. During 2004, the Company leased additional
computer equipment  amounting  to  approximately  $130,000  under  capital ease
arrangements.  Depreciation expense included in the statement of operations  is
approximately $45,000 and $29,600 for each of the years ended December 31, 2004
and 2003, respectively.. Interest expense related to these leases for the years
ended  December  31,  2004  and  2003  was  approximately  $16,800 and $22,700,
respectively.

The minimum lease payments under these capital leases are as follows:

      For the year ending December 31,

              2005     $75,405 (included in current liabilities)
              2006    $16,608

                                     F-27

                TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004

NOTE 12 - LITIGATION

  An action has been brought against the Company by its former  stock  transfer
agent  which alleges, among other items, that the Company breached its contract
with the  transfer  agent.  The Company has filed an answer to the action and a
portion of the action  has been dismissed by the court.  The Company intends to
vigorously defend itself  against  the  remainder  of  the action.  Counsel has
advised  the Company that there is a better than fifty percent  chance  that  a
potential  loss  will  be incurred. Accordingly, an accrual of $50,000 has been
recorded at December 31, 2004.

NOTE 13 - SUBSEQUENT EVENTS

On January 14, 2005, the  Company  entered into a six-month consulting contract
for business development services.   In  connection  with  the  agreement,  the
Company issued 400,000 shares of common stock.  The Company valued these common
shares  at  the  fair  market value on the dates of grant or $0.16 based on the
quoted trading price and  recorded deferred consulting expense of $64,000 to be
amortized over the service period.

On  January  14, 2005, the Company  entered  into  a  consulting  contract  for
business development  services.   In connection with the agreement, the Company
issued 100,000 shares of common stock.   The Company valued these common shares
at the fair market value on the dates of grant  or  $0.16  based  on the quoted
trading  price  and  recorded  deferred  consulting  expense  of $16,000 to  be
amortized over the service period.
On January 14, 2005, the board of directors voted to increase the  compensation
paid  to a Company owned by the Company's Chief Executive Officer from  $11,000
per month  to  $13,750  per month.  Additionally, the board approved a bonus to
the CEO of 25% of 2004 payments made ($33,000).


On March 23, 2005, the Company  entered into a consulting contract for business
development services.  In connection  with  the  agreement,  the Company issued
150,000 shares of common stock.  The Company valued these common  shares at the
fair  market  value on the dates of grant or $0.14 based on the quoted  trading
price and recorded  deferred consulting expense of $21,000 to be amortized over
the service period.

On March 23, 2005, the Company modified the terms of its convertible loans to a
related party.  Under  the  modified terms, $200,000 of principal due under the
convertible  loans  is due on March  31,  2007  and  is  convertible  into  the
Company's common stock at $.125 per share.  The remaining principal of $100,000
is due on April 30, 2007  and is convertible into the Company's common stock at
$.125  per share.  For each  common  share  received  upon  conversion  of  the
principal  balance,  the  related  party  is entitled to receive one warrant to
purchase the Company's common stock at $.25 per share for a period of two years
from the conversion date.

On March 28, 2005, the Company issued 400,000  shares of common stock to settle
approximately  $50,500 in debt due to a related party.



                                     F-28

                TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                Notes to the Consolidated Financial Statements
                               December 31, 2004





NOTE 13 - SUBSEQUENT EVENTS  (CONTINUED)

 On  April  1, 2005, the Company entered into a Securities  Purchase  Agreement
 with Scott and  Heather  Grimes,  Joint  Tenants - with Rights of Survivorship
 (the "Investor").  Pursuant to the Securities  Purchase Agreement, the Company
 issued convertible debentures to the Investor in the original principal amount
 of $250,000. The debentures are convertible at the holder's option any time up
 to  maturity  at a conversion price equal to the lower  of  (i)  120%  of  the
 closing bid price  of  the  common stock on the date of the debentures or (ii)
 80% of the lowest closing bid  price  of the common stock for the five trading
 days immediately preceding the conversion date. The debentures have a two-year
 term and accrue interest at 5% per year.   At  maturity,  the  debentures will
 automatically convert into shares of common stock at a conversion  price equal
 to the lower of (i) 120% of the closing bid price of the common stock  on  the
 date  of  the  debentures  or  (ii) 80% of the lowest closing bid price of the
 common stock for five trading days  immediately preceding the conversion date.
 In April 2005, Company recorded an imbedded  beneficial  conversion  amount of
 $62,500 as interest expense since the debentures were immediately convertible.



                                      F-29

<PAGE> 39

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

Our  principal  independent  accountants from September 22, 2003 to the current
date is Moore Stephens, P.C., 708 Third Avenue,  New York, New York 10017-4109.


ITEM 8A. CONTROLS AND PROCEDURES

FINANCIAL DISCLOSURE CONTROLS AND PROCEDURES

An evaluation was conducted under the supervision and with the participation of
our management, including Stephen Walters, our Chief Executive Officer ("CEO"),
of the effectiveness of the design and operation of our disclosure controls and
procedures  as  of  December 31, 2004.  Based on that evaluation,  Mr.  Walters
concluded that our disclosure controls and procedures were effective as of such
date to ensure that information required to be disclosed in the reports that we
file or submit under  the  Exchange Act, is recorded, processed, summarized and
reported within the time periods specified in SEC rules and forms. Such officer
also confirmed that there was  no change in our internal control over financial
reporting during the year ended December 31, 2004 that has materially affected,
or  is  reasonably  likely to materially  affect,  our  internal  control  over
financial reporting.

ITEM 8B. OTHER INFORMATION

Not applicable.


PART III

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

IDENTIFICATION OF DIRECTORS AND EXCUTIVE OFFICERS

As of the date of this  Annual Report, our directors and executive officers are
as follows:

Name                        Age                      Position

Stephen  Walters            46		President / Chief Executive Officer/
                                      Chief   Financial   Officer  and Director

Laurie Bewes, BBA           52			     Director

David M. Bouzaid            49			     Director

<PAGE> 40

BIOGRAPHIES OF OFFICERS AND DIRECTORS

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

LAURIE BEWES is one of our directors. Mr.  Bewes  currently  is  a  director of
Transax.  Mr. Bewes has a Bachelor of Business Administration (RMIT) and  is  a
member of the  Australian Institute of Company Directors (MAICD).  His business
background  over   the   past   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.

DAVID BOUZAID is one of our directors. Mr. Bouzaid currently is  a  director of
Transax.  Mr.  Bouzaid  has  accumulated  28  years'  experience  in the health
insurance  industry  within  Asia  and  the  Australasia  region.  Mr.  Bouzaid
specializes  in  New  Business Development within the health insurance industry
and over the past four  years  he  has  gained a wealth of experience in Global
Healthcare Insurance. Mr. Bouzaid is currently regional director (Asia-Pacific)
for Interglobal Insurance Services Ltd. based in Bangkok, Thailand.

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 Securities
and Exchange  Commission  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 of Directors.

<PAGE> 41

Our Board of Directors 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 of Directors  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 Securities Exchange Act of 1934, as amended, 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 Securities  and  Exchange  Commission.  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, 2004.

ITEM 10. EXECUTIVE COMPENSATION

COMPENSATION OF OFFICERS AND DIRECTORS

As  of  the date of this Annual Report, certain of our executive  officers  are
compensated  for  their roles as executive officers. Officers and directors are
reimbursed for any  out-of-pocket  expenses  incurred  by them on behalf of us.
None of our directors or executive officers are party to  written employment or
consulting agreements with us. We have, however, informal month-to-month verbal
agreements  with  certain executive officers.  As of the date  of  this  Annual
Report, Mr. Walters derives remuneration from us as compensation for consulting
services rendered.  See  "Summary Compensation Table". We presently do not have
any pension, health, annuity,  insurance,  profit  sharing  or  similar benefit
plans.

WALTERS CONSULTING AGREEMENT

We  entered  into  a  verbal month-to-month consulting services agreement  with
Stephen Walters, our President/Chief Executive Officer (the "Walters Consulting
Agreement"). 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 $11,000.00 US Dollars for a potential
annual salary of $132,000.00, and reimbursement of expenses.

During fiscal year ended  December  31,  2004,  an  aggregate  of  $132,000  in
consulting  fees  was  incurred  to  Mr.  Walters  for services rendered by Mr.
Walters to us under the Walters Consulting Agreement.  During fiscal year ended
December  31,  2004, we paid $-0- to Mr. Walters as compensation  for  services
rendered to us under the Walters Consulting Agreement. On December 31, 2004, we
issued 500,000 shares  of restricted Common Stock to Mr. Walters for settlement
of $75,000 of the amount due and owing to Mr. Walters. As of December 31, 2004,
an aggregate amount of $109,238  remains due and owing to Mr. Walters by us. As
of the date of this Annual Report,  a  further  $50,500  of  the amount due and
owing  has been settled by us by issuance of 400,000 shares of  our  restricted
Common Stock  at  $0.12625  per share. In January 2005, we amended the terms of
the Walters Consulting Agreement  to  a  monthly fee of $13,750 per month for a
potential annual salary of $165,000, and awarded  Mr.  Walters  a 2004 bonus of
$33,000.

SMITH CONSULTING AGREEMENT

We  entered  into  a  verbal month-to-month consulting services agreement  with
Graeme Smith, our prior  Vice President  and  director  (the  "Smith Consulting
Agreement").   Pursuant  to  the  terms and provisions of the Smith  Consulting
Agreement: (i) Mr. Smith agreed to provide technical and managerial services to
us; and (ii) Mr. Smith shall be paid  a per diem fee of $450.00 US Dollars, and
reimbursement of expenses.

<PAGE> 42

During  fiscal  year  ended  December 31, 2003,  an  aggregate  of  $30,755  in
consulting fees was incurred to Mr. Smith for services rendered by Mr. Smith to
us under the Smith Consulting Agreement.  During fiscal year ended December 31,
2003, we paid $24,355 to Mr. Smith  as compensation for services rendered to us
under the Smith Consulting Agreement.  As  of  December  31, 2004, an aggregate
amount of $5,191 in consulting fees and expenses remain due  and  owing  to Mr.
Smith  by  us.  Mr. Smith tendered his resignation as our Vice President and  a
director effective November 10 2004.

PILON CONSULTING AGREEMENT

We entered into a  verbal  month-to-month  consulting  services  agreement with
Nathalie  Pilon,  our  prior  Chief  Financial  Officer  (the "Pilon Consulting
Agreement").  Pursuant  to  the  terms  and provisions of the Pilon  Consulting
Agreement:  (i)  Ms.  Pilon  agreed to provide  financial,  administrative  and
managerial services to us; and  (ii)  Ms.  Pilon shall be paid a monthly fee of
$7,500.00  US  Dollars  for  a  potential  annual   salary   of   $82,500,  and
reimbursement of expenses.

During fiscal year ended December 31, 2004, an aggregate of $73,800 in fees was
incurred to Ms. Pilon for services rendered by Ms. Pilon to us under  the Pilon
Consulting Agreement.  During fiscal year ended December 31, 2004, we paid $-0-
to  Ms.  Pilon  as  compensation  for  services  rendered to us under the Pilon
Consulting  Agreement.  On  December  31,  2004, we issued  166,667  shares  of
restricted Common Stock to Ms. Pilon for settlement  of  $25,000  of the amount
due  and  owing  to Ms. Pilon. As of December 31, 2004, an aggregate amount  of
$55,791 for consulting fees remains due and owing to Ms. Pilon by us. Ms. Pilon
tendered her resignation  as  our  Chief Financial Officer effective January 28
2005. In March 2005, we entered into  a  settlement  agreement  with  Ms. Pilon
regarding payment of $38,300 in settlement of all amounts due.

BEWES CONSULTING AGREEMENT

We  entered  into  a  verbal  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  us;  and (ii) Mr.
Bewes shall be paid a monthly fee of AUD $10,000 (USD approximately $6,600) for
a  potential  annual  salary  of  AUD $120,000 (USD approximately $79,200)  and
reimbursement of expenses.

<PAGE> 43

During fiscal year ended December 31, 2003, an aggregate of USD $58,724 in fees
was incurred to Mr. Bewes for services  rendered  by  Mr. Bewes to us under the
Bewes Consulting Agreement. During fiscal year ended December 31, 2004, we paid
$ 43,064 to Mr. Bewes as compensation for services rendered  to  us  under  the
Bewes  Consulting  Agreement. As of December 31, 2004, an aggregate amount of $
28,785 remains due and owing to Mr. Bewes by us.

DE CASTRO CONSULTING AGREEMENT

We entered into a consulting  services  agreement  with  Americo  De Castro, an
executive  officer  of  our  subsidiary (the "De Castro Consulting Agreement").
Pursuant to the terms and provisions of the De Castro Consulting Agreement: (i)
Mr. De Castro agreed to provide  technical, research and developmental services
to our subsidiary; and (ii) Mr. De  Castro  shall  be  paid  a  monthly  fee of
$8,000.00  US  Dollars  for  an  aggregate  annual  salary  of  $96,000.00, and
reimbursement of expenses.

During fiscal year ended December 31, 2004, an aggregate of $96,000 in fees was
incurred  to  Mr.  De  Castro  for  services rendered by Mr. De Castro  to  our
subsidiary under the De Castro Consulting  Agreement.  During fiscal year ended
December  31,  2004,  we  paid  $88,465  to  Mr. De Castro as compensation  for
services rendered to our subsidiary under the  De  Castro Consulting Agreement.
As of December 31, 2004, an aggregate amount of $7,535 remains due and owing to
Mr. De Castro by us.

SUMMARY COMPENSATION TABLE

The  Summary  Compensation  Table  below  reflects  those amounts  received  as
compensation by our executive officers and directors  during fiscal years ended
December 31, 2002, 2003 and 2004 from us.


<TABLE>
<CAPTION>
                         ANNUAL COMPENSATION		        LONG TERM  COMPEN.
<S>                                                      <C>  <C>    <C>           <C>
Name and                Year	Salary	Other		   Securities Underlying Options
Principal Position
                                           (1)
Stephen Walters   	2004	0	$132,000		     250,000
President and  Chief    2003    0       $132,000		     750,000
Executive Officer       2002	0       $120,000			   0

                                           (1)
Nathalie Pilon   	2004	0	$73,800			     150,000
Prior Chief
Financial Officer       2003	0	$69,700			     100,000
</TABLE>

<PAGE> 44

(1) Pursuant to contractual arrangements between us and the respective officer.

STOCK OPTION/SAR GRANTS IN LAST FISCAL YEAR


<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<S>              <C>                                     <C>                              <C>            <C>        <C>
Name            Number of Securities Underlying OptionsPercent of Total Options GrantedExercise PriceDate of Expiration
 Stephen Walters                                250,000                        5.00%         $0.20          12/30/09
Laurie Bewes                                    125,000                        1.50%         $0.20          12/30/09

David Bouziad                                   125,000                        0.01%         $0.20          12/30/09
Nathalie Pilon                                  150,000                        0.01%         $0.20	    12/30/09

</TABLE>

ITEM 11. SECURITY  OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT

As  of the date of this Annual Report, there are 28,537,211  shares  of  Common
Stock issued and outstanding.  The following table sets forth information as of
the date  of  this Annual Report concerning: (i) each person who is known by us
to own beneficially  more than 5% of our outstanding Common Stock; (ii) each of
our executive officers,  directors  and  key employees; and (iii) all executive
officers and directors as a group. Common  Stock  not  outstanding  but  deemed
beneficially  owned  by  virtue of the right of an individual to acquire shares
within sixty (60) days is  treated  as  outstanding  only  when determining the
amount  and  percentage  of  Common Stock owned by such individual.  Except  as
noted, each person or entity has  sole  voting  and  sole investment power with
respect to the shares of Common Stock shown.

<TABLE>
<CAPTION>

<S>     <C> <C>                  <C>  <C>         <C> <C>

Title of Class     Name and Address of                   Amount and     Percent of
                   Beneficial Owner                      Nature of	Class
	                                                 beneficial
                                                         Ownership


Common Stock       Stephen Walters                (1)(2) 2,134,819	    6.70%
	           Bali View Block A4/7
                   Jl. Cirendeu Raya 40
	           Jakarta Selatan 13419
		   Indonesia

Common Stock	   Carlingford Investments Ltd.   (1)(3) 8,718,788	   31.56%
	           80 Raffles Place
	           #16-20 UOB Plaza II
		   Singapore 048624

Common Stock	   Laurie Bewes                   (1)(4)   733,333	    2.92%
		   429 Willarong Road
		   Caringbah, Australia
		   NSW 2229

<PAGE> 45

Common Stock	   David Bouzaid                  (1)(5)   337,500	    1.35%
	           Jl. Bangka 7 Dalam No.3A
		   Kemang Jakarta Selatan 12730
	           Indonesia

Common Stock	   All officers and directors
		   as a group (3 persons)	     (6)
</TABLE>

 (1)
   These are restricted shares of Common Stock.
(2)
   Mr. Walters is our President/Chief Executive Officer  and  a  director. This
figure  includes:  (i) 1,134,819 shares of Common Stock held of record  by  Mr.
Walters; (ii) an assumption  of  the exercise by Mr. Walters of an aggregate of
750,000 Stock Options granted to Mr.  Walters  to  acquire  750,000  shares  of
Common  Stock  at $0.50 per share expiring on August 14, 2008 and 250,000 stock
options to acquire  250,000  shares of Common Stock at $0.20 per share expiring
on December 30, 2009. As of the  date  of  this Annual Report, no Stock Options
have been exercised.
(3)
  This figure includes: (i) 5,970,455 shares  of Common Stock held of record by
Carlingford   Investments  Limited  ;  (ii)     an     assumption     of    the
exercise by Carlingford  Investments  Limited  of  an  aggregate  of  2,700,000
warrants  held  of  record  by Carlingford Investments Limited, over which  Mr.
Walters has sole voting and disposition rights, into 2,700,000 shares of Common
Stock at a price of $1.00 per  share expiring on August 14, 2008; and (iiii) 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 Current Report, no Warrants have been exercised.
 (4)
  This figure includes: (i) 458,333  shares of Common Stock held of record; and
(ii) an assumption of the exercise by  Mr.  Bewes  of  an  aggregate of 200,000
Stock Options granted to Mr. Bewes to acquire 200,000 shares of Common Stock at
$0.50  per  share  expiring  on  August 14, 2008 and 125,000 stock  options  to
acquire 125,000 shares of Common Stock  at $0.20 per share expiring on December
30, 2009.
(5)
      This figure includes: (i) 130,000 shares  of Common Stock held of record;
and  (ii)  an  assumption of the exercise by Mr. Bouzaid  of  an  aggregate  of
200,000 Stock Options  granted  to  Mr.  Bouzaid  to  acquire 200,000 shares of
Common Stock at $0.50 per share expiring on August 14,  2008  and 125,000 stock
options to acquire 125,000 shares of Common Stock at $0.20 per  share  expiring
on December 30, 2009.
(6)
    This  figure includes: (i) 7,510,274 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 1,682,500 Stock Options to acquire 1,682,500 shares
of Common Stock.

<PAGE> 46


There are  no arrangements or understandings among the entities and individuals
referenced  above   or  their  respective  associates  concerning  election  of
directors or other any other matters which may require shareholder approval.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

With the exception of  the current month-to-month contractual relations between
us and certain of our executive  officers 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. Our Board of  Directors  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.

INDEMNIFICATION PROVISIONS

Under  Section  7-109-102  of  the  Colorado  Business  Corporations  Act  (the
"Colorado  Act")  a  corporation  may indemnify a person  made  a  party  to  a
proceeding because the person is or  was a director, against liability incurred
in the proceeding.  Indemnification permitted  under this section in connection
with  a  proceeding  by  or  in  the  right of the corporation  is  limited  to
reasonable expenses incurred in connection with the proceeding.

Indemnification is only possible under this section 7-109-102, however, if: (a)
the person conducted him/herself in good  faith;  and (b) the person reasonably
believed:  (i)  in  the  case  of  conduct  in an official  capacity  with  the
corporation, that his or her conduct was in the  corporation's  best interests;
and (ii) in all other cases, that his or her conduct was at least  not  opposed
to  the  corporation's  best  interests;  and  (c)  in the case of any criminal
proceeding, the person had no reasonable cause to believe  his  or  her conduct
was  unlawful. It should be noted, however, that under Section 7-109-102(4),  a
corporation  may  not indemnify a director: (i) in connection with a proceeding
by or in the right  of the corporation in which the director is adjudged liable
to the corporation; or  (ii) in connection with any other proceeding in which a
director is adjudged liable  on  the  basis  that  he  or  she derived improper
personal benefit.

Under  Section  7-109-103 a director is entitled to mandatory  indemnification,
when he/she is wholly  successful in the defense of any proceeding to which the
person was a party because  the person is or was a director, against reasonable
expenses incurred in connection to the proceeding.

<PAGE> 47

Under Section 7-109-105, unless  restricted  by  a  corporation's  Articles  of
Incorporation,  a  director who is or was a party to a proceeding may apply for
indemnification to a  court of competent jurisdiction.  The court, upon receipt
of the application, may order indemnification after giving any notice the court
considers necessary.  The court, however, is limited to awarding the reasonable
expenses incurred in connection  with  the  proceeding  and reasonable expenses
incurred to obtain court-ordered indemnification.

Under  Section  7-109-107, unless restricted by the corporation's  Articles  of
Incorporation, an  officer  of  a  corporation  is  also  entitled to mandatory
indemnification  and  to apply for court-ordered indemnification  to  the  same
extent as a director. A  corporation  may  also indemnify an officer, employee,
fiduciary or agent of the corporation to the same extent as a director.

Under Section 7-109-108 a corporation may purchase  and  maintain  insurance on
behalf  of  a person who is or was a director, officer, employee, fiduciary  or
agent of the  corporation against liability asserted against or incurred by the
person in that capacity, whether or not the corporation would have the power to
indemnify such  person  against  the same liability under other sections of the
Colorado Act.

Our officers and directors are accountable  to our shareholders as fiduciaries,
which means such officers and directors are required to exercise good faith and
integrity in handling our affairs. A shareholder may be able to institute legal
action on behalf of himself and all other similarly  situated  shareholders  to
recover   damages  where  we  have  failed  or  refused  to  observe  the  law.
Shareholders  may,  subject  to applicable rules of civil procedure, be able to
bring a class action or derivative  suit  to  enforce  their  rights, including
rights  under  certain  federal  and  state  securities  laws  and regulations.
Shareholders who have suffered losses in connection with the purchase  or  sale
of  their  equity  interest  due  to a breach of a fiduciary duty by one of our
officers or directors in connection  with  such sale or purchase including, but
not  limited to, the misapplication by any such  officer  or  director  of  the
proceeds  from  the  sale of any securities, may be able to recover such losses
from us. We may not be  liable  to  its  shareholders for errors in judgment or
other acts or omissions not amounting to intentional acts.

Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the Commission such indemnification is against  public  policy  as expressed in
the Securities Act and is, therefore, unenforceable.  In the event that a claim
for indemnification against such liabilities (other than the payment  by  us of
expenses  incurred  or  paid  by  one of our directors, officers or controlling
persons  in  the successful defense or  any  action,  suit  or  proceeding)  is
asserted by such director, officer or controlling person in connection with the
securities being  registered, we will, unless in the opinion of its counsel the
matter  has been settled  by  controlling  precedent,  submit  to  a  court  of
appropriate  jurisdiction  the  question  whether such indemnification by it is
against public policy as expressed in the Securities  Act  and will be governed
by the final adjudication of such issue.

We  have  has  no  agreements  with any of our directors or executive  officers
providing for indemnification of  any  such  persons  with respect to liability
arising out of their capacity or status as officers and directors.

<PAGE> 48

At present, there is no pending litigation or proceeding  involving  any of our
directors or executive officers as to which indemnification is being sought.


ITEM 13. EXHIBITS.

(a)   The   following   exhibits   are   filed   as part of this Annual Report:

                   10.1 2004 Stock Option Plan effective January 1, 2004.

                   33.1 Certification  of Chief Executive Officer  Pursuant  to
                        Rule 13a-14(a) or 15d-14(a).

                   33.1 Certification  of  Chief  Financial Officer Pursuant to
                        Rule 13a-14(a) or 15d-14(a).

                   33.1 Certifications Under Section  1350  as Adopted Pursuant
                        to Section 906 of the Sarbanes -Oxley Act.


ITEM 14. PROFESSIONAL ACCOUNTANT FEES AND SERVICES

AUDIT FEES

 During fiscal year ended December 31, 2004, we incurred approximately  $46,000
in  fees  to  our  principal  independent  accountant for professional services
rendered in connection with preparation and  audit  of our financial statements
for  fiscal year ended December 31, 2004 and for the review  of  our  financial
statements  for  the  fiscal  quarters  ended March 31, 2004, June 30, 2004 and
September 30, 2004.

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES

During fiscal year ended December 31, 2004,  we  did  not  incur  any  fees for
professional  services  rendered  by  our  principal independent accountant for
certain information technology services which  may  include, but is not limited
to, operating or supervising or managing our information  or local area network
or  designing  or  implementing  a hardware or software system  that  aggregate
source data underlying the financial statements.

ALL OTHER FEES

During fiscal year ended December 31, 2004, we did not incur any other fees for
professional services rendered by our principal independent accountant for all
other non-audit services which may include, but is not limited to, tax-related
services, actuarial services or valuation services.

SIGNATURES

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

<PAGE> 49
                                                 TRANSAX INTERNATIONal LIMITED

Dated: April 14, 2005
						 By:  /s/ Stephen Walters
                                                 -----------------------------
                                		 Stephen Walters, President /
						 Chief Executive Officer

Dated: April 14, 2005
						 By: /s/ Stephen Walters
						 ----------------------------------
						 Stephen Walters, Chief Financial Officer







<PAGE> 50
FORM 10-KSB
December 31, 200 4
Exhibit 11.1
Transax International Limited









<PAGE> 51
FORM 10-KSB
December 31, 200 4
Exhibit 99.1
						 Transax International Limited






EXHIBIT 99.1

                   CERTIFICATION OF CHIEF EXECUTIVE OFFICER
                 PURSUANT TO SECURITIES EXCHANGE ACT OF 1934
                         RULE 13a-14(a) OR 15d-14(a)

I, Stephen Walters, certify that:
   1. I   have   reviewed   this  annual  report  on  Form  10-KSB  of  Transax
      International Limited ;
   2. Based on my knowledge,  this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements  made,  in  light   of  the  circumstances  under  which  such
      statements were made, not misleading  with  respect to the period covered
      by this report;
   3. Based  on  my knowledge, the financial statements,  and  other  financial
      information  included  in  this  report,  fairly  present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;
   4. The  registrant's  other  certifying  officer and I are  responsible  for
      establishing  and  maintaining disclosure  controls  and  procedures  (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
      and have:
         a. designed such  disclosure  controls  and procedures, or caused such
            disclosure  controls  and  procedures  to  be  designed  under  our
            supervision, to ensure that material information  relating  to  the
            registrant,  including its consolidated subsidiaries, is made known
            to us by others  within  those  entities,  particularly  during the
            period in which this report is being prepared;
         b. evaluated the effectiveness of the registrant's disclosure controls
            and  procedures and presented in this report our conclusions  about
            the effectiveness  of the disclosure controls and procedures, as of
            the  end  of the period  covered  by  this  report  based  on  such
            evaluation; and
         c. disclosed in  this  report  any change in the registrant's internal
            control  over  financial  reporting   that   occurred   during  the
            registrant's  most  recent fiscal quarter (the registrant's  fourth
            fiscal quarter in the case of an annual report) that has materially
            affected,  or  is  reasonably  likely  to  materially  affect,  the
            registrant's internal control over financial reporting; and
   5. The registrant's other certifying  officer and I have disclosed, based on
      our most recent evaluation of internal  control over financial reporting,
      to the registrant's auditors and the audit  committee of the registrant's
      board of directors (or persons performing the equivalent functions):
         a. all significant deficiencies and material  weaknesses in the design
            or operation of internal control over financial reporting which are
            reasonably likely to adversely affect the registrant's  ability  to
            record, process, summarize and report financial information; and
         b. any  fraud,  whether  or  not material, that involves management or
            other employees who have a  significant  role  in  the registrant's
            internal control over financial reporting.

Dated: April 14, 2004         By:  /s/ Stephen Walters
                              ----------------------------------
                              Stephen Walters, President and CEO






<PAGE> 52
FORM 10-KSB
December 31, 200 4
Exhibit 99.2 					 Transax International Limited







EXHIBIT 99.2

                   CERTIFICATION OF CHIEF FINANCIAL OFFICER
                  PURSUANT TO SECURITIES EXCHANGE ACT OF 1934
                          RULE 13a-14(a) OR 15d-14(a)

I, Stephen Walters, certify that:
   1. I   have   reviewed   this  annual  report  on  Form  10-KSB  of  Transax
      International Ltd.;
   2. Based on my knowledge,  this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements  made,  in  light   of  the  circumstances  under  which  such
      statements were made, not misleading  with  respect to the period covered
      by this report;
   3. Based  on  my knowledge, the financial statements,  and  other  financial
      information  included  in  this  report,  fairly  present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;
   4. The  registrant's  other  certifying  officer and I are  responsible  for
      establishing  and  maintaining disclosure  controls  and  procedures  (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
      and have:
         a. designed such  disclosure  controls  and procedures, or caused such
            disclosure  controls  and  procedures  to  be  designed  under  our
            supervision, to ensure that material information  relating  to  the
            registrant,  including its consolidated subsidiaries, is made known
            to us by others  within  those  entities,  particularly  during the
            period in which this report is being prepared;
         b. evaluated the effectiveness of the registrant's disclosure controls
            and  procedures and presented in this report our conclusions  about
            the effectiveness  of the disclosure controls and procedures, as of
            the  end  of the period  covered  by  this  report  based  on  such
            evaluation; and
         c. disclosed in  this  report  any change in the registrant's internal
            control  over  financial  reporting   that   occurred   during  the
            registrant's  most  recent fiscal quarter (the registrant's  fourth
            fiscal quarter in the case of an annual report) that has materially
            affected,  or  is  reasonably  likely  to  materially  affect,  the
            registrant's internal control over financial reporting; and
   5. The registrant's other certifying  officer and I have disclosed, based on
      our most recent evaluation of internal  control over financial reporting,
      to the registrant's auditors and the audit  committee of the registrant's
      board of directors (or persons performing the equivalent functions):
         a. all significant deficiencies and material  weaknesses in the design
            or operation of internal control over financial reporting which are
            reasonably likely to adversely affect the registrant's  ability  to
            record, process, summarize and report financial information; and
         b. any  fraud,  whether  or  not material, that involves management or
            other employees who have a  significant  role  in  the registrant's
            internal control over financial reporting.

Dated: April 14, 2004          By:  /s/ Stephen Walters
                               -----------------------------------------------
                               Stephen Walters, Acting Chief Financial Officer






<PAGE> 53
FORM 10-KSB
December 31, 200 4

Exhibit 99.3                                  Transax International Limited






EXHIBIT 99.3

          CERTIFICATIONS PURSUANT TO SECURITIES EXCHANGE ACT OF 1934
                        RULE 13a-14(b) OR 15d-14(b) AND
                            18 U.S.C. SECTION 1350,
                            AS ADOPTED PURSUANT TO
                 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In  connection  with  the  Annual  Report  of  Transax International Ltd.  (the
"Company") on Form 10-KSB for the period ended December 31, 2003, as filed with
the  Securities  and  Exchange Commission on the date  hereof  (the  "Report"),
Stephen Walters, President  and  Chief  Executive  Officer  of the Company, and
Nathalie Pilon, Chief Financial Officer of the Company, each  certifies for the
purpose  of  complying with Rule 13a-14(b) or Rule 15d-14(b) of the  Securities
Exchange Act of  1934  (the  "Exchange  Act") and Section 1350 of Chapter 63 of
Title 18 of the United  States Code, that:

   1. the Report fully complies with the requirements of Section 13(a) or 15(d)
      of the Exchange Act; and
   2. the information contained in the Report  fairly presents, in all material
      respects,  the  financial  condition and results  of  operations  of  the
      Company.




Dated: April 14, 2004         By:  /s/ Stephen Walters
                              ----------------------------------
                              Stephen Walters, President and CEO

Dated: April 14, 2004         By:  /s/ Stephen Walters
                              -----------------------------------------------
                              Stephen Walters, Acting Chief Financial Officer




<PAGE> 54