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 ended January 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 
incorporation  or  organization)                         Identification No.)



                  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 February 16, 1998 was 6,123,235.

         Transitional Small Business Disclosure Format      YES  [ ]   NO  [X]
<PAGE>
                           TRANSACT INTERNATIONAL INC.

                  FORM 10-QSB - Quarter Ended January 31, 1998

                                      Index



PART I         FINANCIAL INFORMATION


  Item 1       Financial Statements

               Balance Sheets
               January 31, 1998 (Unaudited) and April 30, 1997          


              Statements of Operations (Unaudited)
              Three and Nine Months Ended January 31, 1998 and January 31, 1997


              Statements of Cash Flows (Unaudited)
              Nine Months Ended January 31, 1998 and January 31, 1997  


              Notes to the Financial Statements (Unaudited)  


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


PART II    OTHER INFORMATION


  Item 6   Exhibits and Reports on Form 8-K    


SIGNATURE 
<PAGE>
                         PART I : FINANCIAL INFORMATION
<TABLE>
<CAPTION>
                           TRANSACT INTERNATIONAL INC.
                                 BALANCE SHEETS
                                                                    January 31,       April 30,
                                                                        1998            1997
                                                                    ------------     ----------- 
ASSETS                                                                       (Unaudited)
<S>                                                                 <C>              <C>
CURRENT ASSETS
     Cash .....................................................     $     1,974      $    85,370
     Accounts receivable, net of allowance for doubtful
         accounts of $58,000 and $43,000 respectively .........         619,442          459,265
     Inventories ..............................................         236,932          311,969
     Costs and estimated earnings in excess of billings on
         incomplete contracts .................................         163,376          483,180
Prepaid expenses and other current assets .....................           1,298           17,952
                                                                    -----------      -----------

                   TOTAL CURRENT ASSETS .......................       1,023,022        1,357,736
                                                                    -----------      -----------
PROPERTY, PLANT AND EQUIPMENT, at cost ........................         299,906          292,575
     Less accumulated depreciation ............................        (271,720)        (252,293)
                                                                    -----------      -----------
                                                                         28,186           40,282
OTHER ASSETS ..................................................           2,300            2,300
                                                                    -----------      -----------

                   TOTAL ASSETS ...............................     $ 1,053,508      $ 1,400,318
                                                                    ===========      ===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
     Short-term borrowings ....................................     $      --        $   131,250
     Note payable to stockholder ..............................          85,000
     Accounts payable .........................................       1,415,179        1,160,394
     Accrued expenses .........................................         384,312          361,583
     Current portion of long-term debt ........................          99,155           47,319
     Billings in excess of costs and estimated earnings on
         incomplete contracts .................................         141,573           96,300
                                                                    -----------      -----------

                   TOTAL CURRENT LIABILITIES ..................       2,125,219        1,796,846

STOCKHOLDERS' DEFICIENCY
     Preferred stock, no par value, authorized
         2,000,000 shares, none issued ........................            --               --
     Common stock, no par value, authorized
         12,000,000 shares, issued 6,201,735 ..................         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 ..................................................      (7,119,372)      (6,444,189)
                                                                    -----------      -----------
                   TOTAL STOCKHOLDERS' DEFICIENCY .............      (1,071,711)        (396,528)
                                                                    ===========      ===========
                   TOTAL LIABILITIES & STOCKHOLDERS' DEFICIENCY     $ 1,053,508      $ 1,400,318
                                                                    ===========      ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
                                           TRANSACT INTERNATIONAL INC.
                                             STATEMENTS OF OPERATIONS

                                                   (Unaudited)



                                                        Three Months Ended                Nine Months Ended
                                                  ----------------------------      ----------------------------      
                                                     1/31/98          1/31/97          1/31/98          1/31/97
                                                  -----------      -----------      -----------      -----------
<S>                                               <C>              <C>              <C>              <C>
NET SALES ...................................     $   613,566      $ 1,432,626      $ 2,848,248      $ 6,216,185
                                                  -----------      -----------      -----------      -----------
COSTS AND EXPENSES:
     Cost of sales ..........................         654,533        1,240,901        2,634,155        5,272,537
     Selling and administrative .............         266,165          237,416          876,704          927,607
                                                  -----------      -----------      -----------      -----------
                                                      920,698        1,478,317        3,510,859        6,200,144
                                                  -----------      -----------      -----------      -----------

INCOME (LOSS) FROM OPERATIONS ...............        (307,132)         (45,691)        (662,611)          16,041
                                                  -----------      -----------      -----------      -----------
OTHER INCOME (EXPENSE):
     Interest expense .......................          (4,202)          (5,165)         (15,431)         (17,081)
     Other income ...........................             355            1,042            2,859            1,800
                                                  -----------      -----------      -----------      -----------
                                                       (3,847)          (4,123)         (12,572)         (15,281)
                                                  -----------      -----------      -----------      -----------

NET INCOME (LOSS) ...........................     $  (310,979)     $   (49,814)     $  (675,183)    $        760
                                                  ===========      ===========      ===========      ===========

BASIC AND DILUTED NET INCOME (LOSS) PER SHARE     $     (0.05)     $     (0.01)     $     (0.11)     $      0.00
                                                  ===========      ===========      ===========      ===========

WEIGHTED AVERAGE SHARES  OUTSTANDING ........       6,123,235        6,123,235        6,123,235        6,123,235
                                                  ===========      ===========      ===========      ===========

</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
                                      TRANSACT INTERNATIONAL INC.
                                       STATEMENTS OF CASH FLOWS

                                              (Unaudited)

                                                                                Nine Months Ended
                                                                           --------------------------
                                                                            1/31/98          1/31/97
                                                                           ---------        ---------
<S>                                                                        <C>              <C> 
OPERATING ACTIVITIES:
Net income (loss) ..................................................       $(675,183)       $     760
Adjustments to reconcile net income (loss) to cash (used in)
provided by operations:
         Depreciation of property, plant and equipment .............          19,427           27,061
         Changes in assets and liabilities :
              (Increase) in accounts receivable ....................        (160,177)        (162,023)
              Decrease in inventories ..............................          75,037          107,434
              Decrease in other current assets .....................          16,654           56,547
              Decrease (increase) in costs and estimated earnings in
                 excess of billings on incomplete contracts - net ..         365,077          (88,082)
              Increase (decrease) in accounts payable and accrued
                 expenses ..........................................         277,514          (59,575)
                                                                           ---------        ---------
NET CASH USED IN OPERATIONS ........................................         (81,651)        (117,878)
                                                                           ---------        ---------
INVESTING ACTIVITIES:
Capital expenditures ...............................................          (7,331)          (8,212)
                                                                           ---------        ---------
FINANCING ACTIVITIES:
Proceeds from stockholder loan .....................................         100,000             --
Repayment of debt ..................................................         (94,414)         (35,033)
                                                                           ---------        ---------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES ................           5,586          (35,033)
                                                                           ---------        ---------

NET DECREASE IN CASH ...............................................         (83,396)        (161,123)
CASH, BEGINNING OF PERIOD ..........................................          85,370          287,986
                                                                           ---------        ---------

CASH, END OF PERIOD ................................................       $   1,974        $ 126,863
                                                                           =========        =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest ...........................................................       $  15,431        $  17,081

</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<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 very
     hampered by the matters  discussed in the remainder of this paragraph.  The
     Company has a stockholders'  deficiency and working  capital  deficiency of
     $1,071,711 and $1,102,197,  respectively,  at January 31, 1998. The Company
     has lost approximately  $950,000 over the 15 months ended January 31, 1998.
     The Company's  financial  condition is very weak. The Company  continues to
     explore the sale or  licensing of certain  product  lines that might enable
     the Company to continue as a going concern.  The Company's sales backlog is
     approximately $2.8 million of which $1.7 million is a project in India. The
     project  is  presently  on "hold"  pending a  resolution  of the  Company's
     request to the  client for  authority  to assign  the  contract  to a Joint
     Venture  of the  Company  and its  major  subcontractor  for  the  project.
     Although the client has had some initial  reservations to assignment of the
     contract to the proposed  joint  venture the Company  believes  that recent
     duscussions  with the  client  have  cleared  the way for  approval  of the
     Companys  request.  Once the joint  venture is in place,  proceeds from the
     clients L/C to the Company will be  apportioned  between the  subcontractor
     and  the  Company  in  such  a way  as to  assure  direct  payment  to  the
     subcontractor.  The Company is proceeding on the basis that, with the Joint
     Venture  and  Allocation  of  Funds in  place  to the  satisfaction  of the
     Company's Joint Venture partner, the project can then proceed as originally
     planned.  The Company continues to seek additional  profitable  orders. The
     Company's  ability to continue in business is dependent upon its ability to
     become  profitable  and/or  sell or license  certain  product  lines in the
     immediate future.  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 January 31, 1998,  the statements of operations for
     the  three  and  nine  months  ended  January  31,  1998  and  1997 and the
     statements  of cash flows for the nine  months  ended  January 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 January  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, 1997 annual report to
     stockholders.   Seasonality   is  not  a  major  factor  in  the  Company's
     operations.  The results of operations for the three and nine month periods
     ended January 31, 1998 are not  necessarily  indicative of those for a full
     fiscal year.

2.   Inventories consist of raw materials and manufacturing  supplies at January
     31, 1998 and April 30, 1997.

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 was
     unable to repay the loan on October  31, 1997 and  subsequently  reached an
     agreement with the stockholder to pay $5,000 per month until receipt of the
<PAGE>
                           TRANSACT INTERNATIONAL INC.
                  NOTES TO THE FINANCIAL STATEMENTS (Unaudited)

                                   (Continued)

     proceeds of an Indian  project is received.  Upon receipt of these proceeds
     from  India,  expected  in  1998,  the  balance  due on the  loan  from the
     stockholder will be repaid.  The receipt of proceeds from India is expected
     in  1998   subject  to   obtaining  a   satisfactory   resolution   of  the
     subcontractors  concern for payment (see 1. above).  The entire outstanding
     balance due to a stockholder of $85,000 is shown as a current  liability on
     the January 31, 1998 balance sheet.

     Due to the  loss for the year  ended  April  30,  1997 the  Company  was in
     default of its term loan with its bank and  therefore  the balance  owed at
     April 30, 1997 of $131,250  was  classified  as a current  liability in the
     April 30, 1997  balance  sheet.  In August 1997 the bank waived the default
     and therefore the loan, which is payable $6,250 per month plus interest, is
     classified in the January 31, 1998 balance sheet as current portion of long
     term debt.

4.   In February 1997, the Financial Accounting Standards Board issued Statement
     of Financial Accounting Standards No. 128 (SFAS 128), "Earnings per Share,"
     which is effective for the Company's  quarter ended January 31, 1998. Under
     SFAS 128, a Company may present two earnings per share (EPS) amounts. Basic
     EPS is calculated based on income available to common  shareholders and the
     weighted-average  number of shares  outstanding during the reported period.
     Diluted EPS would  include  additional  dilution,  if any,  from  potential
     common  stock,  such as stock  issuable  pursuant to the  exercise of stock
     options  outstanding.  If the  provisions  of SFAS 128 had been  applied in
     fiscal 1997, basic and diluted EPS would not have been effected.

     Amounts per share have been computed  using the weighted  average number of
     common  shares   outstanding   during  each  period.  The  Company  has  no
     outstanding stock options.

5.   There was no benefit for income  taxes in the three and nine month  periods
     ended  January 31, 1998 and 1997, as the loss  generated  cannot be carried
     back to offset income in prior years.

     The  Company  has  operating  loss  carryovers  and  investment  tax credit
     carryforwards  for tax return  purposes  of  approximately  $6,300,000  and
     $28,000 respectively, expiring in 1998 through 2011.

     The tax  effects of  temporary  differences  giving  rise to the  Company's
     deferred tax assets at January 31, 1998 are approximately as follows :
<TABLE>
<CAPTION>
<S>                                                   <C>

               Net operating loss carryforward ..     $2,570,000
               Investment tax credit carryforward        104,000
               Other reserves and liabilities ...        128,000
                                                      ----------
                                                       2,802,000
               Valuation allowance ..............      2,802,000
                                                      ----------
                                                      $     ----
                                                      ==========
</TABLE>
<PAGE>
                           TRANSACT INTERNATIONAL INC.
                  NOTES TO THE FINANCIAL STATEMENTS (Unaudited)

                                   (Continued)

     Due to the Company's  cumulative losses,  management does not consider that
     enough  support to overcome the "more likely than not" criteria  existed at
     January 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.
<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 nine months ended January 31,
1998 of $310,979 and $675,183,  respectively.  The losses result  primarily from
the  decrease in sales for the three and nine months  ended  January 31, 1998 of
$819,060  (57.2%)  and  $3,367,937  (54.2%),  respectively  from the  comparable
periods the prior year. Sales of transfer balls  decreased,  in fiscal 1998 from
fiscal 1997,  approximately  $212,000 and $975,000 for the three and nine months
ended January 31, 1998,  respectively.  Sales from terminal equipment decreased,
in fiscal 1998 from fiscal 1997,  approximately  $629,000 and $2,400,000 for the
three and nine months  ended  January  31,  1998,  respectively.  The decline in
terminal  equipment sales  primarily  reflects the reduction of projects for the
U.S. Air Force in fiscal 1998. Gross (loss) profit percentages for the three and
nine months ended January 31, 1998 and 1997 were (6.7%),  7.5%, 13.4% and 15.2%,
respectively. The decline in gross profits percentages in 1998 was primarily due
to (i) a decrease  in  transfer  ball sales  which  have a higher  gross  profit
percentage than terminal equipment,  and (ii) fixed overhead expenses comparable
to fiscal  1997 with less sales in fiscal  1998 and small cost  overruns  on two
projects in 1998.

For  the  three  and  nine   months   ended   January   31,   1998  the  Company
reduced/(increased)  its  selling  and  administrative  expenses  from  1997  by
$(28,749)  and  $50,903,  respectively.  The  third  quarter  increase  was  due
primarily to  increases in bad debt  expenses and legal fees net of lower travel
expenses.  The  reduction for the nine months ended January 31, 1998 compared to
January 31, 1997 was primarily in  compensation,  travel and rent expense offset
by  increased  legal fees  incurred  applicable  to Seaport  Container  Handling
Systems, Inc.

The Company's sales backlog as of January 31, 1998 is approximately $2.8 million
of which $1.7 million is a project in India.  The project is presently on "hold"
pending a resolution of the Company's request to the client for authorization to
assign  the  contract  to  a  Joint   Venture  of  the  Company  and  its  major
subcontractor for the project.  The Company believes that such  authorization is
forthcomming  and is  proceeding  on the basis that,  with the Joint Venture and
related  Allocation of Funds in place to the satisfaction of the Company's Joint
Venture partner, the project can then proceed as originally planned. The backlog
at January 31, 1997 was $2.8 million.

LIQUIDITY AND CAPITAL RESOURCES:

During the nine months ended  January 31, 1998,  the Company used  approximately
$80,000 of cash in its operations,  primarily resulting from the net loss and an
increase  in  accounts  receivable,  net of a decrease  in  inventory  costs and
estimated earnings in excess of billings on incomplete contracts and an increase
in accounts  payable.  At January  31,  1998 the  Company has a working  capital
deficiency of $1,102,197.

The Company's  ability to continue in business is dependent  upon its ability to
become  profitable and/or sell or license certain product lines in the immediate
future. At January 31, 1998 the Company's  financial  condition is very weak and
its resources limited. There is no assurance that the Company will be successful
in attaining  additional  profitable  orders or in selling or licensing  certain
product lines.
<PAGE>


                           PART II: OTHER INFORMATION

                           TRANSACT INTERNATIONAL INC.




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

                           (a)      Exhibits - 27 - Financial Data Schedule

                           (b)      Reports on Form 8-K  - None





<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: March 10, 1998                        /s/  Bruno S. Frassetto 
--------------------                        ----------------------- 
                                            Bruno S. Frassetto
                                            President and Acting Chief Financial
                                            and Accounting Officer