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

                                   FORM 10-QSB

           [X] Quarterly Report Pursuant To Section 13 or 15(d) of The
                         Securities Exchange Act of 1934
                  For the quarter period ended October 31, 1998

             [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                         Securities Exchange Act of 1934
         For the transition period from _____________ to _______________

                          Commission file number 0-8422
                                                 ------

                           TRANSACT INTERNATIONAL INC.
        -----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


           CONNECTICUT                                   06-0732124
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation  or  organization)

                  22 THORNDAL CIRCLE, DARIEN, CONNECTICUT 06820
                  ---------------------------------------------
                    (Address of principal executive offices)

                                 (203) 656-0777
                           ---------------------------
                           (Issuer's telephone number)


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


     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 issuer was required to file such  reports),  and (2) has
been subject to such filing requirements for the past 90 days.

YES [X]   NO [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS 
     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of November 13, 1998 was 6,123,235.

     Transitional Small Business Disclosure Format    YES [ ]   NO [X]

<PAGE>

                           TRANSACT INTERNATIONAL INC.

                 FORM 10 - QSB - QUARTER ENDED OCTOBER 31, 1998

                                      INDEX


                                                                            Page
                                                                            ----

PART I    FINANCIAL INFORMATION

Item 1    Financial Statements

          Balance Sheets
          October 31, 1998 (Unaudited) and April 30, 1998                     3

          Statements of Operations (Unaudited)
          Three and Six Months Ended October 31, 1998
          and October 31, 1997                                                4

          Statements of Cash Flows (Unaudited)
          Six Months Ended October 31, 1998 and October 31, 1997              5

          Notes to the Financial Statements (Unaudited)                       6

Item 2    Management's Discussion and Analysis of Financial 
          Condition and Results of Operations                                 8

PART II   OTHER INFORMATION

Item 4    Submission of Matters to a Vote of Security Holders                 9

Item 6    Exhibits and Reports on Form 8-K                                    9

SIGNATURE                                                                    10

                                       2
<PAGE>

                         PART I : FINANCIAL INFORMATION
                         ------------------------------

                           TRANSACT INTERNATIONAL INC.

                                 BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                    OCTOBER 31,      APRIL 30,
                                                                       1998            1998
                                                                    -----------     -----------
ASSETS                                                              (UNAUDITED)
CURRENT ASSETS
<S>                                                                 <C>             <C>        
     Cash                                                           $     3,444     $    53,307
     Accounts receivable, net of allowance for doubtful accounts
         of $31,000 and $58,000, respectively                           524,465         643,109
     Inventories                                                        143,364         209,121
     Costs and estimated earnings in excess of billings on
         incomplete contracts                                           137,366         114,602
     Prepaid expenses and other current assets                            4,110          20,382
                                                                    -----------     -----------
     TOTAL CURRENT ASSETS                                               812,749       1,040,521
                                                                    -----------     -----------

PROPERTY, PLANT AND EQUIPMENT, AT COST                                  304,436         301,628
     Less accumulated depreciation                                     (285,313)       (278,677)
                                                                    -----------     -----------
                                                                         19,123          22,951

OTHER ASSETS                                                              2,300           2,300
                                                                    -----------     -----------
     TOTAL ASSETS                                                   $   834,172     $ 1,065,772
                                                                    ===========     ===========

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
     Bank borrowings                                                $    18,750     $    56,250
     Note payable to stockholder                                         65,000          85,000
     Trade accounts and notes payable                                 1,499,197       1,328,721
     Accrued expenses                                                   390,374         354,065
     Current portion of long-term debt                                   23,657          23,657
     Billings in excess of costs and estimated earnings on
         incomplete contracts                                           219,087         417,807
                                                                    -----------     -----------
     TOTAL CURRENT LIABILITIES                                        2,216,065       2,265,500
                                                                    -----------     -----------

STOCKHOLDERS' DEFICIENCY
     Preferred stock, no par value, authorized
         2,000,000 shares, none issued                                       --              --
     Common stock, no par value, authorized
         12,000,000 shares, 6,201,735 issued                            852,541         852,541
     Additional paid-in capital                                       5,224,726       5,224,726
     Treasury stock, at cost : 78,500 shares                            (29,606)        (29,606)
     Deficit                                                         (7,429,554)     (7,247,389)
                                                                    -----------     -----------
     TOTAL STOCKHOLDERS' DEFICIENCY                                  (1,381,893)     (1,199,728)
                                                                    -----------     -----------

     TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                 $   834,172     $ 1,065,772
                                                                    ===========     ===========
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

                                       3
<PAGE>

                           TRANSACT INTERNATIONAL INC.

                            STATEMENTS OF OPERATIONS

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                            THREE MONTHS ENDED               SIX MONTHS ENDED
                                        ---------------------------     ---------------------------

                                          10/31/98        10/31/97        10/31/98        10/31/97
REVENUE:
<S>                                     <C>             <C>             <C>             <C>        
     Net sales                          $   713,657     $ 1,275,221     $ 1,094,484     $ 2,234,682
     Licensing fees                              --              --         400,000              --
                                        -----------     -----------     -----------     -----------
               Total revenue            $   713,657     $ 1,275,221     $ 1,494,484     $ 2,234,682

COSTS AND EXPENSES :
     Cost of sales                          642,230       1,090,322       1,114,314       1,979,622
     Selling and administrative             305,736         295,722         546,132         610,539
                                        -----------     -----------     -----------     -----------
                                            947,966       1,386,044       1,660,446       2,590,161
                                        -----------     -----------     -----------     -----------

(LOSS) INCOME FROM OPERATIONS              (234,309)       (110,823)       (165,962)       (355,479)
                                        -----------     -----------     -----------     -----------

OTHER INCOME (EXPENSE) :
     Interest expense                        (7,776)         (8,225)        (15,977)        (11,229)
     Other income                              (226)          2,504            (226)          2,504
                                        -----------     -----------     -----------     -----------
                                             (8,002)         (5,721)        (16,203)         (8,725)
                                        -----------     -----------     -----------     -----------

NET (LOSS) INCOME                       $  (242,311)    $  (116,544)    $  (182,165)    $  (364,204)
                                        ===========     ===========     ===========     ===========
NET INCOME (LOSS) PER SHARE OF
 COMMON STOCK - BASIC AND DILUTED              (.04)           (.02)           (.03)           (.06)
                                        ===========     ===========     ===========     ===========
WEIGHTED AVERAGE SHARES
   OUTSTANDING                            6,123,235       6,123,235       6,123,235       6,123,235
                                        ===========     ===========     ===========     ===========
</TABLE>


SEE NOTES TO FINANCIAL STATEMENTS.

                                       4
<PAGE>

                           TRANSACT INTERNATIONAL INC.
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                         SIX MONTHS ENDED
                                                                      -----------------------
                                                                       10/31/98      10/31/97
                                                                      ---------     ---------
OPERATING ACTIVITIES :
<S>                                                                   <C>           <C>       
Net (loss)                                                            $(182,165)    $(364,204)
Adjustments to reconcile net income (loss) to cash
 (used in) provided by :
         Depreciation of property, plant and equipment                    6,636        12,756
         Changes in assets and liabilities :
           Decrease (increase) in accounts receivable                   118,644      (426,184)
           Decrease in inventories                                       65,757       125,148
           Decrease in other current assets                              16,272        14,626
           (Increase) decrease in costs and estimated earnings
               in excess of billings on incomplete contracts - net     (221,484)      221,222
           Increase  in accounts payable and accrued expenses           206,785       296,862
                                                                      ---------     ---------

NET CASH PROVIDED BY (USED IN) OPERATIONS                                10,445      (119,774)
                                                                      ---------     ---------

INVESTING ACTIVITIES :
Capital expenditures                                                     (2,808)       (6,748)
                                                                      ---------     ---------

FINANCING ACTIVITIES :
Proceeds from stockholder loan                                               --       100,000
Repayment of debt                                                       (57,500)      (55,664)
                                                                      ---------     ---------

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES                     (57,500)       44,336
                                                                      ---------     ---------

NET DECREASE IN CASH                                                    (49,863)      (82,186)
CASH, BEGINNING OF PERIOD                                                53,307        85,370
                                                                      ---------     ---------

CASH, END OF PERIOD                                                   $   3,444     $   3,184
                                                                      =========     =========

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest                                                              $   1,665     $   7,129
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

                                       5
<PAGE>

                           TRANSACT INTERNATIONAL INC.

                  NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)

1.   The  accompanying  financial  statements  have been prepared  assuming that
     Transact  International  Inc.  (the  "Company")  will  continue  as a going
     concern.  The Company's ability to continue as a going concern is uncertain
     based on the matters discussed in the next four sentences.  The Company has
     a stockholders' deficiency and working capital deficiency of $1,381,893 and
     $1,403,316,  respectively,  at October 31, 1998. A number of suppliers  are
     requiring the Company to pay on or before  delivery of parts and equipment.
     The  Company's  sales  backlog is $3.1  million at October 31, 1998 and the
     Company is seeking additional orders and exploring the sale or licensing of
     certain  product lines that would enable the Company to continue as a going
     concern. However, there is no assurance that the Company will be successful
     in  attaining  additional  profitable  orders or in  selling  or  licensing
     certain product lines.

     The balance sheet as of October 31, 1998,  the statements of operations for
     the three and six months ended October 31, 1998 and 1997 and the statements
     of cash flows for the six months ended  October 31, 1998 and 1997 have been
     prepared by the Company,  without audit. In the opinion of management,  all
     adjustments (which include only normal recurring  adjustments) necessary to
     present fairly the financial  position,  the results of operations and cash
     flows at October 31, 1998 and all periods presented have been made.

     Certain information and footnote disclosures normally included in financial
     statements  prepared  in  accordance  with  generally  accepted  accounting
     principles  have been  condensed  or omitted.  It is  suggested  that these
     financial  statements be read in conjunction with the financial  statements
     and notes thereto included in the Company's April 30, 1998 annual report to
     stockholders.   Seasonality   is  not  a  major  factor  in  the  Company's
     operations.  The results of operations  for the three and six month periods
     ended October 31, 1998 are not  necessarily  indicative of those for a full
     fiscal year.

2.   Inventories consist of raw materials and manufacturing supplies.

3.   On June 4, 1997 a stockholder  of the Company  loaned the Company  $100,000
     payable  October  31, 1997 with  interest at 8% per annum.  The Company has
     repaid $35,000 of the loan with the balance,  including  interest,  payable
     with the proceeds of a project in India.

     Due to the  loss for the year  ended  April  30,  1998 the  Company  was in
     default of its term loan with its bank and  therefore  the balance  owed at
     April 30,  1998 of $56,250 was  classified  as a current  liability  in the
     April 30, 1998 balance  sheet.  The Company is continuing to repay the bank
     $6,250 per month plus interest.

4.   The Company's licensing agreement with CIMC-TianDa,  a Chinese manufacturer
     was amended.  The revision  provided for total  compensation of $680,000 of
     which  $200,000 was recorded in April 1998,  $400,000 in the quarter  ended
     July 31, 1998 and $80,000 will be recorded when received in December  1998.
     The  $400,000  recorded  in the quarter  ended July 31,  1998 was  received
     $100,000 in June and  $300,000 in August  1998.  The Company has no further
     obligations to CIMC-TianDa pursuant to this licensing agreement.

                                       6
<PAGE>

                           TRANSACT INTERNATIONAL INC.
                  NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
                                   (CONTINUED)

5.   Amounts per share have been computed  using the weighted  average number of
     common shares  outstanding  during each period. No effect has been given to
     shares  issuable  pursuant to outstanding  options as their effect would be
     antidilutive.

6.   There was no benefit  for income  taxes in the three and six month  periods
     ended  October 31,  1998 as the loss  generated  cannot be carried  back to
     offset income in prior years.

     There was no provision  for income taxes in the three and six month periods
     ended October 31, 1998, because the Company has a substantial net operating
     loss carryforward.

     The  Company  has  operating  loss  carryovers  and  investment  tax credit
     carryforwards  for tax return  purposes  of  approximately  $7,000,001  and
     $2,000 respectively, expiring in 1998 through 2010.

     The tax  effects of  temporary  differences  giving  rise to the  Company's
     deferred tax assets at October 31, 1997 are as follows :

          Net operating loss carryforward                 $  2,600,000
          Investment tax credit carryforward                     2,000
          Other reserves and liabilities                        83,000
                                                          ------------

          Valuation allowance                                2,685,000
                                                          ------------
                                                          $         --
                                                          ============

     Due to the Company's  cumulative losses,  management does not consider that
     enough  support to overcome the "more likely than not" criteria  existed at
     October 31, 1998 to record a deferred tax asset. As a result, for financial
     reporting  purposes,  deferred tax assets are fully  reduced by a valuation
     allowance.

                                       7
<PAGE>

                           TRANSACT INTERNATIONAL INC.

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

                       CONDITION AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS:

The Company  incurred net losses for the three and six months ended  October 31,
1998 of $242,311 and $182,165,  respectively.  The losses result  primarily from
the  decrease  in sales for the three and six months  ended  October 31, 1998 of
$561,564 (44%) and $740,198 (33%),  respectively from the comparable  periods in
1997. Gross profit for the three and six months ended October 31, 1998 decreased
to 10% from 15% in 1997 due to lower sales volume, including the stoppage of the
New Delhi,  India project which resumed in November  1988.  However,  in the six
months ended October 31, 1998 the Company  received  $400,000 in licensing  fees
and expects its final payment of $80,000 in December 1998.

For the three and six months  ended  October 31, 1998 the Company `s selling and
administrative   expenses  were  $10,014  higher  and  $64,407  lower  than  the
comparable periods in 1997.

The  Company's  sales  backlog  as of October  31,  1998 is  approximately  $3.1
million. This compares to a $2.4 million backlog at October 31, 1997.

LIQUIDITY AND CAPITAL RESOURCES:

During the six months ended October 31, 1998, the Company provided approximately
$10,000 of cash from operations,  primarily resulting from the net loss net of a
decrease in accounts  receivable and inventory.  At October 31, 1998 the Company
has a working capital deficiency of $1,403,316.

The Company's  ability to continue in business is dependent  upon its ability to
become  profitable  and/or sell or license certain product lines.  The Company's
sales  backlog is $3.1  million at October  31,  1998 and the Company is seeking
additional  orders and  exploring  the sale or license of certain  product lines
that would enable the Company to continue as a going concern.  However, there is
no  assurance  that the  Company  will be  successful  in  attaining  additional
profitable orders or in selling or licensing certain product lines.

                                       8
<PAGE>

                           PART II: OTHER INFORMATION
                           --------------------------

                           TRANSACT INTERNATIONAL INC.



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

          (a)  The 1998 Annual Meeting of  Shareholders  was held on October 14,
               1998.
          (b)  The Board of Directors  currently  consists of the four  nominees
               listed below.
          (c)  The  following  matter  was  voted  upon at the  meeting  and the
               numbers of votes cast for, against, abstained or withheld, are as
               follows:

               Election of the following individuals to the Board of Directors:

               Name                              For                   Withheld
               ----                              ---                   --------
               Frank B. Carder                   5,357,449              65,004
               Bruno S. Frassetto                5,356,549              70,750
               John E. McConnaughy, Jr.          5,361,149              65,904
               Randall Sweeney                   5,361,234              61,219
                                          
          (d)  Not applicable.

Item 6.   Exhibits and Reports of Form 8-K.
          ---------------------------------

          (a)  Exhibits - 27 - Financial Data Schedule

          (b)  Reports on Form 8-K - None

                                       9
<PAGE>

                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                    TRANSACT INTERNATIONAL INC.
                                    ---------------------------
                                             Registrant



Date: December 11, 1998             /s/ Bruno S. Frassetto
-----------------------             ---------------------------------------
                                    BRUNO S. FRASSETTO
                                    President and Acting Chief Financial Officer

                                       10