U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

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

     For the quarterly period ended September 30, 2004

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

     For the transition period from ________________________


                         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.)


                            7545 Irvine Center Drive
                                    Suite 200
                            Irvine, California 92618
                     --------------------------------------
                    (Address of Principal Executive Offices)

                                 (949) 623-8316
                            -------------------------
                           (Issuer's telephone number)


                                       n/a
               ---------------------------------------------------
      (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 registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

     Yes [X]    No [ ]
     ---        --

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

Class                                       Outstanding as of November 14, 2004
-----                                       -----------------------------------

Common Stock, $.00001 par value                         23,546,524

Transitional Small Business Disclosure Format (check one)

     Yes [ ]    No [X]
     ---        --

<PAGE>


FORM 10-QSB
September 30, 2004                                 Transax international Limited

TABLE OF CONTENTS

<TABLE>
<S>                                                                                                  <C>
   PART 1. FINANCIAL INFORMATION...................................................................    1
   ITEM 1. FINANCIAL STATEMENTS....................................................................    1
   TRANSAX INTERNATIONAL LIMITED and SUBSIDIARIES..................................................    2
    Consolidated Balance Sheet [Unaudited].........................................................    2
    Consolidated Statements of Operations [Unaudited]..............................................    3
    Consolidated Statement of Stockholders' Deficit [Unaudited]....................................    4
    Consolidated Statements of Cash Flows [Unaudited]..............................................    5
    Notes to the Unaudited Consolidated Financial Statements.......................................    7
   ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION...............................   20
        General....................................................................................   20
            TDS Telecommunication Data Systems LTDA................................................   20
            Transax Australia Pty Ltd..............................................................   20
            Medlink Technologies, Inc..............................................................   20
        Current Business Operations................................................................   20
            MedLink Solution.......................................................................   21
            Strategic Alliances....................................................................   21
            Material Agreements....................................................................   23
        Results of Operations......................................................................   24
             For the Nine-Month Period Ended September 30, 2004 Compared to the Nine-Month
             Period Ended September 30, 2003.......................................................   24
             For the Three-Month Period Ended September 30, 2004 Compared to the Three-Month
             Period Ended September 30, 2003.......................................................   26
        Liquidity and Capital Resources............................................................   27
            For the Nine-Month Period Ended September 30, 2004.....................................   27
        Plan of Operation..........................................................................   27
        Material Agreements........................................................................   29
            Walters Consulting Agreement...........................................................   29
            Pilon Consulting Agreement.............................................................   29
            De Castro Consulting Agreement.........................................................   29
        Material Operating Liabilities.............................................................   29
            Convertible Loans......................................................................   29
            Loan...................................................................................   30
            Cash Advances from a Related Party.....................................................   30
            Cash Advances Payable..................................................................   30
            Accrued Payroll and Related Expenses...................................................   31
        Off Balance Sheet Arrangements.............................................................   31
   ITEM 3. Controls and Procedures.................................................................   31
   PART II. OTHER INFORMATION......................................................................   32
   ITEM 1. Legal proceedings.......................................................................   32
   ITEM 2. Changes in Securities and Use of Proceeds...............................................   32
        Debt Settlement............................................................................   32
        Stock Options Exercised....................................................................   36
        Securities Ownership of Certain Beneficial Owners and Management...........................   37
   ITEM 3. Defaults upon Senior Securities.........................................................   39
   ITEM 4. Submission of Matters to Vote of Securities Holders.....................................   39
   ITEM 5. Other Information.......................................................................   39
   ITEM 6. Exhibits and Other Information on Form 8-K..............................................   39
            Reports on Form 8-K....................................................................   40
            Signatures.............................................................................   40
   EXHIBIT 11.1....................................................................................   41
   EXHIBIT 31.1....................................................................................   43
   EXHIBIT 31.2....................................................................................   44
   EXHIBIT 32.1....................................................................................   45
</TABLE>

<PAGE>


September 30, 2004
Unaudited Consolidated Financial Statements        Transax International Limited

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS [Unaudited]
SEPTEMBER 30, 2004

Statements  made in this  Form  10-QSB  (the  "Quarterly  Report")  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,  as
amended (the "Act"), and Section 21E of the Securities  Exchange Act of 1934, as
amended (the "Exchange  Act").  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.  Transax
International   Limited  (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.  These
factors  include  adverse  economic  conditions,   entry  of  new  and  stronger
competitors,  inadequate capital and unexpected costs. 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.

                                                                          Page 1

<PAGE>


September 30, 2004
Unaudited Consolidated Financial Statements        Transax International Limited

TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET [UNAUDITED]
SEPTEMBER 30, 2004
================================================================================

<TABLE>
<S>                                                                        <C>
ASSETS

CURRENT
  Cash                                                                     $       5,662
  Accounts receivable (Net of allowance for doubtful accounts of $0)             142,125
  Prepaid expenses and other current assets                                       48,640
                                                                           -------------

TOTAL CURRENT ASSETS                                                             196,427

SOFTWARE DEVELOPMENT COSTS, net                                                  204,642
                                                                           -------------

PROPERTY AND EQUIPMENT, net                                                       52,877
                                                                           -------------

TOTAL ASSETS                                                               $     453,946
                                                                           =============

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
  Current portion of capital lease obligation                              $      19,134
  Accounts payable and accrued expenses                                          530,175
  Accrued payroll and related expenses                                           576,685
  Advances payable                                                                91,700
  Due to related parties                                                         574,225
  Loan from related party                                                        149,513
  Convertible loans from related party                                           300,000
                                                                           -------------

TOTAL CURRENT LIABILITIES                                                      2,241,432

ACCRUED PAYROLL AND RELATED EXPENSES, net of currrent portion                    137,072
CAPITAL LEASE OBLIGATION, net of current portion                                   2,682
                                                                           -------------

TOTAL LIABILITIES                                                              2,381,186
                                                                           -------------

COMMITMENTS AND CONTINGENCIES (NOTES 9 AND 10)

STOCKHOLDERS' DEFICIT

Common stock 0.00001 par value;
  100,000,000 shares authorized;
  16,848,217 shares issued and outstanding                                           168
Paid-in capital                                                                5,309,460
Subscriptions received                                                           521,418
Accumulated deficit                                                           (7,789,219)
Other comprehensive income :
  Cumulative foreign currency translation adjustment                              30,934
                                                                           -------------

TOTAL STOCKHOLDERS' DEFICIT                                                   (1,927,239)
                                                                           -------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                $     453,946
                                                                           =============
</TABLE>

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

                                                                          Page 2

<PAGE>


September 30, 2004
Unaudited Consolidated Financial Statements        Transax International Limited

TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS [UNAUDITED]
================================================================================

<TABLE>
<CAPTION>
                                                   FOR THE THREE MONTHS            FOR THE NINE MONTHS
                                                   ENDED SEPTEMBER 30,             ENDED SEPTEMBER 30,
                                                   2004            2003            2004            2003
                                               ------------    ------------    ------------    ------------
<S>                                            <C>             <C>             <C>             <C>
REVENUES:
Services                                            375,948          97,393         898,993         221,652
Sales taxes                                         (53,571)         (9,397)       (126,417)        (21,455)
                                               ------------    ------------    ------------    ------------

REVENUES                                       $    322,377    $     87,996    $    772,576    $    200,197
                                               ------------    ------------    ------------    ------------

Cost of product support services                    145,412          87,756         392,261         302,113
Payroll and related benefits                        104,638          89,574         269,851         276,215
Research & development costs                         29,846           6,833          77,827           8,671
Professional fees                                   108,647         145,502         142,228         240,920
Management & consulting fees - related party         99,058         114,259         256,858         296,153
Stock based compensation                            113,600              --         113,600         222,390
Investor relations                                   90,660              --         110,297              --
Depreciation and amortization                         8,280          15,510          43,031          90,262
General & administrative                            113,259         113,505         298,025         260,877
                                               ------------    ------------    ------------    ------------

TOTAL OPERATING EXPENSES                            813,400         572,940       1,703,978       1,697,601
                                               ------------    ------------    ------------    ------------

OPERATING LOSS                                     (491,023)       (484,944)       (931,402)     (1,497,405)
                                               ------------    ------------    ------------    ------------

OTHER EXPENSES:
Other expense                                       (10,424)             --         (29,627)         (1,550)
Capital offering costs                                   --        (150,973)             --        (150,973)
Foreign exchange losses                                 197         (46,397)          1,078         (37,701)
Interest expense                                    (31,176)         (4,653)        (73,827)        (18,753)
Interest expense - related party                    (24,727)         (8,424)        (67,759)        (27,436)
                                               ------------    ------------    ------------    ------------

TOTAL OTHER EXPENSES                                (66,130)       (210,448)       (170,135)       (236,413)
                                               ------------    ------------    ------------    ------------

NET LOSS                                       $   (557,153)   $   (695,391)   $ (1,101,537)   $ (1,733,818)
                                               ============    ============    ============    ============

NET LOSS PER SHARE:
  BASIC AND DILUTED                            $      (0.03)   $      (0.05)   $      (0.07)   $      (0.14)
                                               ============    ============    ============    ============

WEIGHTED AVERAGE SHARES OUTSTANDING              16,665,608      12,955,927      15,807,994      12,635,785
                                               ============    ============    ============    ============
</TABLE>

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

                                                                          Page 3

<PAGE>


September 30, 2004
Unaudited Consolidated Financial Statements        Transax International Limited

TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT [UNAUDITED]
FOR THE PERIOD ENDED SEPTEMBER 30, 2004
================================================================================

<TABLE>
<CAPTION>
                                                                    COMMON STOCK    PAR VALUE         SHARE          PAID-IN
                                                                       SHARES         AMOUNT      SUBSCRIPTIONS      CAPITAL
                                                                    ------------   ------------   -------------   --------------
<S>                                                                   <C>          <C>            <C>             <C>
BALANCE, JANUARY 1, 2004                                              14,029,647   $        141   $     421,293   $    4,590,093
Issuance of stock for settlement of share subscriptions,
January 7, 2004                                                          300,000              3         (75,000)          74,997
Issuance of stock for settlement of share subscriptions
Related Party, January 7, 2004                                           373,570              3         (93,393)          93,390
Issuance of restricted stock for services, January 26,
2004                                                                     300,000              3                           74,997
Issuance of stock for options exercised for settlement
of debt, February 12, 2004                                               300,000              3                           74,997
Issuance of stock for settlement of share subscriptions,
April 18, 2004                                                           450,000              4        (225,000)         224,996
Stock returned to treasury, May 5, 2004
Issuance of stock for settlement of finders' fees,
June 2, 2004                                                              45,000              1         (27,900)          27,899
Issuance of stock for options exercised for settlement
of debt, June 11, 2004                                                   150,000              1                           37,499
Issuance of stock for options exercised for settlement
of debt, July 26, 2004                                                   600,000              6                           35,994
Issuance of restricted stock for services, August 12, 2004               600,000              6                           35,994
Unisssued shares [374,848] for interest due on cash advances -
Related Party, September 29, 2004                                                                        28,114
Unisssued shares [346,667] for finder's fee - Related Party,
September 29, 2004                                                                                       26,000
Unisssued shares [1,687,500] for settlement of debt -
Related Party, September 29, 2004                                                                       135,000
Unisssued shares [562,500] for settlement of debt,
September 29, 2004                                                                                       45,000
Unisssued shares [166,667] for finder's fee, September 29, 2004                                          12,500
Unisssued shares [1,166,667] for settlement of cash advances,
September 29, 2004                                                                                       87,500
Unisssued shares  [548,333] for settlement of cash advances,
September 29, 2004                                                                                       41,125
Unisssued shares [270,200] for interest due on cash advances,
September 29, 2004                                                                                       20,265
Unisssued shares [16,000] for interest due on cash advances,
September 29, 2004                                                                                        1,200
Unisssued shares [687,500] for loan conversion - Related Party,
September 29, 2004                                                                                       55,000
Unisssued shares [687,500] for loan conversion - Related Party,
September 29, 2004                                                                                       69,714
Stock options and warrants issued                                                                                        113,600
Treasury stock cancelled, September 23, 2004                            (300,000)            (3)                         (74,997)
Comprehensive Income (Loss):
  Net loss for period
  Foreign currency translation adjustments
  Total comprehensive income (loss)
                                                                    ------------   ------------   -------------   --------------
BALANCE, SEPTEMBER 30, 2004                                           16,848,217   $        168   $     521,418   $    5,309,459
                                                                    ============   ============   =============   ==============
</TABLE>

<TABLE>
<CAPTION>
                                                                                                   ACCUMULATED
                                                                                                      OTHER           TOTAL
                                                                      TREASURY     ACCUMULATED    COMPREHENSIVE   STOCKHOLDERS'
                                                                       STOCK         DEFICIT      INCOME (LOSS)      DEFICIT
                                                                    ------------   ------------   -------------   --------------
<S>                                                                 <C>            <C>             <C>            <C>
BALANCE, JANUARY 1, 2004                                            $              $ (6,687,682)  $      54,676   $   (1,621,479)
Issuance of stock for settlement of share subscriptions,
January 7, 2004                                                                                                               --
Issuance of stock for settlement of share subscriptions
Related Party, January 7, 2004                                                                                                --
Issuance of restricted stock for services, January 26,
2004                                                                                                                      75,000
Issuance of stock for options exercised for settlement
of debt, February 12, 2004                                                                                                75,000
Issuance of stock for settlement of share subscriptions,
April 18, 2004                                                                                                                --
Stock returned to treasury, May 5, 2004                                  (75,000)                                        (75,000)
Issuance of stock for settlement of finders' fees,
June 2, 2004                                                                                                                  --
Issuance of stock for options exercised for settlement
of debt, June 11, 2004                                                                                                    37,500
Issuance of stock for options exercised for settlement
of debt, July 26, 2004                                                                                                    36,000
Issuance of restricted stock for services, August 12, 2004                                                                36,000
Unisssued shares [374,848] for interest due on cash advances -
Related Party, September 29, 2004                                                                                         28,114
Unisssued shares [346,667] for finder's fee - Related Party,
September 29, 2004                                                                                                        26,000
Unisssued shares [1,687,500] for settlement of debt -
Related Party, September 29, 2004                                                                                        135,000
Unisssued shares [562,500] for settlement of debt,
September 29, 2004                                                                                                        45,000
Unisssued shares [166,667] for finder's fee, September 29, 2004                                                           12,500
Unisssued shares [1,166,667] for settlement of cash advances,
September 29, 2004                                                                                                        87,500
Unisssued shares  [548,333] for settlement of cash advances,
September 29, 2004                                                                                                        41,125
Unisssued shares [270,200] for interest due on cash advances,
September 29, 2004                                                                                                        20,265
Unisssued shares [16,000] for interest due on cash advances,
September 29, 2004                                                                                                         1,200
Unisssued shares [687,500] for loan conversion - Related Party,
September 29, 2004                                                                                                        55,000

Unisssued shares [687,500] for loan conversion - Related Party,
September 29, 2004                                                                                                        69,714
Stock options and warrants issued                                                                                        113,600
Treasury stock cancelled, September 23, 2004                              75,000                                              --
Comprehensive Income (Loss):
  Net loss for period                                                                (1,101,537)
  Foreign currency translation adjustments                                                              (23,742)
  Total comprehensive income (loss)                                                                                   (1,125,279)
                                                                    ------------   ------------   -------------   --------------
BALANCE, SEPTEMBER 30, 2004                                         $         --   $ (7,789,219)  $      30,934   $   (1,927,240)
                                                                    ============   ============   =============   ==============
</TABLE>

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

                                                                          Page 4

<PAGE>


September 30, 2004
Unaudited Consolidated Financial Statements        Transax International Limited

TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS [UNAUDITED]
================================================================================

<TABLE>
<CAPTION>
                                                                                        FOR THE NINE MONTHS ENDED
                                                                                              SEPTEMBER 30,
                                                                                           2004           2003
                                                                                        -----------    -----------
<S>                                                                                     <C>            <C>
CASH FLOWS (USED IN)
OPERATING ACTIVITIES
Net (loss) for the period                                                               $(1,101,537)   $(1,733,818)
Adjustments to reconcile net loss to net cash used in operating activities:
  - depreciation and amortization                                                           106,641         90,262
  - gain on sale of fixed assets                                                               (251)            --
  - stock based compensation                                                                113,600        222,390
Changes in assets and liabilities:
  - prepaid expenses and other current assets                                               (23,009)        (3,718)
  - accounts receivable, net                                                               (142,125)            --
  - accounts payable                                                                        136,523        355,819
  - accrued interest payable, related party                                                  67,759         27,436
  - accrued interest payable                                                                 73,827         45,625
  - due to related party                                                                    324,699        202,723
  - accrued payroll and related expenses                                                    304,563          4,682
  - Debt settlement by issuances of shares and  exercise of options                         154,418             --
                                                                                        -----------    -----------

CASH FLOWS - OPERATING ACTIVITIES                                                            15,108       (788,599)
                                                                                        -----------    -----------

CASH FLOWS (USED IN)
INVESTING ACTIVITIES
Capitalized software development costs                                                     (236,353)       (88,759)
Proceeds from disposal of property and equipment                                              3,113             --
Acquisition of property and equipment                                                        (3,852)       (32,130)
                                                                                        -----------    -----------

CASH FLOWS - INVESTING ACTIVITIES                                                          (237,092)      (120,889)
                                                                                        -----------    -----------

CASH FLOWS (USED IN)
FINANCING ACTIVITIES
Advances from related party                                                                  10,000        599,855
Advances from non-related company                                                           114,000             --
Repayments under capital lease obligations                                                  (37,483)       (25,515)
Proceeds from loan - related party                                                          141,806             --
Proceeds from convertible loans - related party                                                  --        355,000
                                                                                        -----------    -----------

CASH FLOWS - FINANCING ACTIVITIES                                                           228,323        929,340
                                                                                        -----------    -----------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                                     (11,149)       (42,056)
                                                                                        -----------    -----------

NET INCREASE (DECREASE) IN CASH                                                              (4,810)       (22,204)

CASH, BEGINNING OF PERIOD                                                                    10,472         31,107
                                                                                        -----------    -----------

CASH, END OF PERIOD                                                                     $     5,662    $     8,903
                                                                                        ===========    ===========
</TABLE>

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

                                                                          Page 5

<PAGE>


September 30, 2004
Unaudited Consolidated Financial Statements        Transax International Limited

TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS [UNAUDITED] (CONTINUED)
================================================================================

<TABLE>
<CAPTION>
                                                                                        FOR THE NINE MONTHS ENDED
                                                                                              SEPTEMBER 30,
                                                                                           2004           2003
                                                                                        -----------    -----------
<S>                                                                                     <C>            <C>
SUPPLEMENTAL CASH DISCLOSURES
Cash paid for interest                                                                  $    73,827    $    19,000
                                                                                        ===========    ===========
Cash paid for interest - Related Party                                                  $    67,759    $        --
                                                                                        ===========    ===========
Cash paid for income taxes                                                              $        --    $        --
                                                                                        ===========    ===========

SUPPLEMENTAL NON-CASH DISCLOSURES

204,000 shares issued for finders' fees [pre merger]                                    $        --    $    51,000
                                                                                        ===========    ===========
5,000,000 shares issued for cash advances [pre merger]                                           --        250,000
                                                                                        ===========    ===========
776,797 shares issued for debt due to a related party [pre merger]                                         194,200
                                                                                        ===========    ===========
1,306,730 shares issued for debt [pre merger]                                                              752,100
                                                                                        ===========    ===========
300,000 shares issued for options exercised for settlement of debt, February 12, 2004   $    75,000    $        --
                                                                                        ===========    ===========
150,000 shares issued for options exercised for settlement of debt, June 11, 2004       $    37,500    $        --
                                                                                        ===========    ===========
600,000 shares issued for options exercised for settlement of debt, July 26, 2004       $    36,000    $        --
                                                                                        ===========    ===========
UNissued shares for debt settlement (see note 8)					$   521,418    $	--
                                                                                        ===========    ===========

</TABLE>

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

                                                                          Page 6

<PAGE>


September 30, 2004
Unaudited Consolidated Financial Statements        Transax International Limited

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. THE COMPANY

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

The Company,  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 SolutionTM enables the real time automation of
routine patient eligibility, verification, authorizations, claims processing and
payment functions.

As of January 1, 2004,  the Company is no longer a development  stage company as
defined in  Financial  Accounting  Standards  Board  ("FASB")  Statement  No. 7,
ACCOUNTING AND REPORTING FOR DEVELOPMENT STAGE COMPANIES.

The accompanying unaudited consolidated financial statements of the Company have
been prepared in accordance  with  Regulation S-B  promulgated by the Securities
and Exchange  Commission and does not include all the  information and footnotes
required by generally  accepted  accounting  principals  in the United States of
America for complete financial statements.  In the opinion of management,  these
interim  unaudited  consolidated  financial  statements  include all adjustments
necessary in order to make the financial statements not misleading.  The results
of operations for such interim periods are not necessarily indicative of results
for a full year. The unaudited  consolidated interim financial statements should
be read in conjunction with the audited  consolidated  financial  statements and
notes  thereto of the  Company  and  results of its  operations  included in the
audited financial  statements for the year ended December 31, 2003. All material
intercompany  accounts and transactions between the Company and its subsidiaries
have been eliminated.

2. GOING CONCERN

Since inception, the Company has incurred cumulative net losses of approximately
$7,789,200  and has a  stockholders'  deficit  of  approximately  $1,927,200  at
September 30, 2004. The Company expects to continue to incur substantial  losses
to develop its products and distribution networks, and does not expect to attain
profitability  in the near future.  Since its inception,  the Company has funded
operations through short-term borrowings and equity investments in order to meet
its strategic  objectives.  The Company's  future  operations are dependent upon
external  funding  and its  ability to increase  revenues  and reduce  expenses.
Management  believes that  sufficient  funding will be available from additional
related party borrowings and private placements to meet its business  objectives
including anticipated cash needs for working capital, for a reasonable period of
time. However, there can be no assurance that the Company will be able to obtain
sufficient  funds to continue  the  development  of its  software  products  and
distribution networks.

                                                                          Page 7

<PAGE>


September 30, 2004
Unaudited Consolidated Financial Statements        Transax International Limited

2. GOING CONCERN (CONTINUED)

Further,  since  fiscal 2000,  the Company has been  deficient in the payment of
Brazilian  payroll taxes and Social Security taxes. At September 30, 2004, these
deficiencies  amounted to  approximately  $426,800.  This  payroll  liability is
included  as part  of the  accrued  payroll  and  related  expenses  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.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         A. 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. As of September 30, 2004, the Company does not
      have any multiple elements arrangement with any of its customers.

         B. 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.

         C. 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 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 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.

                                                                          Page 8

<PAGE>


September 30, 2004
Unaudited Consolidated Financial Statements        Transax International Limited

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         D. LOSS PER SHARE

      Basic loss per share is computed  by  dividing  the loss for the period by
      the weighted  average number of common shares  outstanding for the period.
      Diluted loss per share  reflects the  potential  dilution of securities by
      including  other  potential  common  stock,  including  stock  options and
      warrants,  in the weighted average number of common shares outstanding for
      a period, if dilutive.

      At  September  30, 2004,  there were  7,151,070  outstanding  warrants and
      1,693,270  outstanding  options  that  were  granted  under  the year 2003
      incentive stock option plan (See Note 8). These  securities may dilute the
      earnings per share calculation in the future.

         E. COMPREHENSIVE INCOME

      The Company has adopted  SFAS No.  130,  REPORTING  COMPREHENSIVE  INCOME.
      Other comprehensive income, which currently includes only foreign currency
      translation  adjustments,  is shown net of tax in the Statement of Changes
      in Stockholders' Deficit.

         F. STOCK BASED COMPENSATION

      The Company accounts for stock-based employee compensation arrangements in
      accordance  with the  provisions  of Accounting  Principles  Board ("APB")
      Opinion No. 25,  ACCOUNTING  FOR STOCK ISSUED TO  EMPLOYEES,  and complies
      with the disclosure provisions of SFAS No. 123, Accounting for Stock-Based
      Compensation.  Under APB No. 25, compensation  expense is recognized based
      on the  difference,  if any, on the date of grant  between  the  estimated
      market value of the Company's stock and the amount an employee must pay to
      acquire the stock. Compensation expense is recognized immediately for past
      services and rateably for future services over the option-vesting period.

      The Company  accounts  for equity  instruments  issued in exchange for the
      receipt of goods or services from other than employees in accordance  with
      SFAS No. 123 and the conclusions reached by the Emerging Issues Task Force
      ("EITF") in Issue No. 96-18,  ACCOUNTING FOR EQUITY  INSTRUMENTS  THAT ARE
      ISSUED TO OTHER THAN  EMPLOYEES  FOR  ACQUIRING,  OR IN  CONJUNCTION  WITH
      SELLING,  GOODS OR  SERVICES.  Costs are  measured at the  estimated  fair
      market value of the consideration  received or the estimated fair value of
      the equity instruments issued, whichever is more reliably measurable.  The
      value of equity instruments  issued for consideration  other than employee
      services is  determined  on the  earlier of a  performance  commitment  or
      completion of  performance by the provider of goods or services as defined
      by EITF No. 96-18.

                                                                          Page 9

<PAGE>


September 30, 2004
Unaudited Consolidated Financial Statements        Transax International Limited

4. FINANCIAL INSTRUMENTS / CREDIT RISK

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.

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 3 major  customers  during  the  quarter  ended
September 30, 2004, and to 2 major customers  during the quarter ended September
30, 2003.  Currently,  TDS has three clients:  Camed - Caixa de Assistencia  dos
Funcionarios do Banco Nordeste,  Golden Cross and Bradesco Seguros,  with Golden
Cross being currently  responsible for  approximately 69% of revenues during the
quarter ended September 30, 2004.

The Company  maintains cash deposits with financial  institutions,  which,  from
time  to  time,  may  exceed  federally  insured  limits.  The  Company  has not
experienced any losses and believes it is not exposed to any significant  credit
risk from cash.  At September 30, 2004 the Company did not have cash balances on
deposit that exceeded the federally insured limits.

5. 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
Statement of Financial Accounting Standards ("SFAS") Statement No. 2, ACCOUNTING
FOR RESEARCH AND DEVELOPMENT COSTS.

In accordance with SFAS No. 86, ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE TO
BE SOLD, LEASED OR OTHERWISE  MARKETED,  the Company has capitalized  certain of
its  software  development  costs  incurred.  The Company  began to amortize the
capitalized  costs in the third  quarter of the year ended  December  31,  2003,
based on the current and future revenue for each product.  Amortization of these
costs for the  three-month  and nine-month  periods ended  September 30, 2004 of
approximately   $22,700   (2003  :  $6,000),   and  $63,600   (2003  :  $6,000),
respectively,  are included in the  statement of  operations as part of research
and development expenses.

                                                                         Page 10

<PAGE>


September 30, 2004
Unaudited Consolidated Financial Statements        Transax International Limited

6. PROPERTY AND EQUIPMENT

Property and equipment are comprised of the following:

                                                       September 30,
                                                                2004

Computer equipment                                     $     221,702
Furniture and fixtures                                        12,339
Other                                                         44,112
                                                       -------------
Total at cost                                                278,153
Less: accumulated depreciation and amortization              225,276
                                                       -------------
Net property and equipment                             $      52,877
                                                       -------------

Depreciation  and  amortization  charged to operations is  approximately  $8,300
(2003 : $15,500)  and $ 43,000  (2003 : $ 90,300) for the three  months and nine
month periods ended September 30, 2004, respectively.

7. 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.

                                                                         Page 11

<PAGE>


September 30, 2004
Unaudited Consolidated Financial Statements        Transax International Limited

7. FOREIGN OPERATIONS (CONTINUED)

<TABLE>
<CAPTION>
                                                      ------------------------    --------------------------
                                                         THREE MONTHS ENDED           NINE MONTHS ENDED
                                                           SEPTEMBER 30,                SEPTEMBER 30,
                                                        2004          2003           2004           2003
                                                      ---------    -----------    -----------    -----------
<S>                                                   <C>          <C>            <C>            <C>
Net sales to Unaffiliated Customers

         Brazil                                       $ 322,377    $    87,996    $   772,576    $   200,197
         USA                                                 --             --             --             --
         Singapore                                           --             --             --             --
         Australia                                           --             --             --             --
         Mauritius                                           --             --             --             --
                                                      ---------    -----------    -----------    -----------
                                                        322,377         87,996        772,576        200,197
                                                      ---------    -----------    -----------    -----------

Loss from operations

         Brazil                                        (386,774)      (422,977)    (1,049,166)    (1,080,748)
         USA                                           (381,155)      (112,128)      (588,024)      (533,264)
         Singapore                                           --            514             --        (12,072)
         Australia                                      (32,344)       (38,349)       (32,429)       (71,517)
         Mauritius                                      (13,127)            --        (34,359)            --
                                                      ---------    -----------    -----------    -----------
                                                       (813,400)      (572,940)    (1,703,978)    (1,697,601)
                                                      ---------    -----------    -----------    -----------

                                                       (491,023)      (484,944)      (931,402)    (1,497,405)
                                                      ---------    -----------    -----------    -----------

Other income (expenses)

         Brazil                                         (36,041)       (29,487)       (90,763)       (43,050)
         USA                                            (33,099)      (182,141)       (82,808)      (196,042)
         Singapore                                           --             --             --             --
         Australia                                        3,010          1,180          3,436          2,679
         Mauritius                                           --             --             --             --
                                                      ---------    -----------    -----------    -----------
                                                        (66,130)      (210,447)      (170,135)      (236,413)
                                                      ---------    -----------    -----------    -----------

Net loss as reported in the accompanying statements   $(557,153)   $  (695,391)   $(1,101,537)   $(1,733,818)
                                                      =========    ===========    ===========    ===========
</TABLE>

8. SHARE CAPITAL

COMMON STOCK

On January 7, 2004,  the Company issued 300,000 shares of common stock for share
subscriptions received in 2003 of $75,000.

On January 7, 2004,  the Company  issued  373,570 units for share  subscriptions
received in 2003 of approximately  $93,400 owed to a related party whose officer
is an officer of the  Company.  The units were issued to  assignees  of the debt
holder. Each unit is comprised of one common share and one warrant. Each warrant
entitles the holder to purchase an  additional  share of TNSX's  common stock at
$0.50, for a period of 12 months.

                                                                         Page 12

<PAGE>


September 30, 2004
Unaudited Consolidated Financial Statements        Transax International Limited

8. SHARE CAPITAL (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 (See note 11).

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 April 18, 2004, the Company issued 450,000 units for options exercised during
the year ended December 31, 2003. Each unit is comprised of one common share and
one half  warrant.  Each warrant  entitles the holder to purchase an  additional
share of TNSX's  common stock at $1.00 until  November 20, 2005.  The  proceeds,
totaling $225,000, were utilized to reduce existing debt.

On June 2, 2004,  the Company  issued  45,000  shares of common  stock to settle
share  subscriptions for finders' fees, for net value of $27,900 included in the
statement  of  operations  for the year ended  December  31, 2003 as stock based
compensation.

On June 11, 2004,  the Company issued 150,000 shares of common stock for options
exercised,  for net  proceeds of $37,500.  The  proceeds  were  utilized for the
settlement  of  accounts  payable  related to  financing  fees  included  in the
statement  of  operations  for the three and six -month  periods  ended June 30,
2004.

On July 26, 2004,  the Company issued 600,000 shares of common stock for options
exercised,  for net  proceeds of $36,000.  The  proceeds  were  utilized for the
settlement of accounts payable related to professional  services included in the
statement of operations for the three-month period ended September 30, 2004.

On August 12, 2004, the Company issued 600,000 shares of restricted common stock
to settle share subscriptions for services, for net value of $36,000 included in
the statement of operations for the three-month  period ended September 30, 2004
as professional services.

On September 29, 2004, the Company received  subscriptions for 374,848 shares of
common stock to settle approximately  $28,100 in interest due to a related party
in relation to cash advances.  Subsequent to September 30, 2004, the shares were
issued to assignees of the debt holder. (See note 11).

On September 29, 2004, the Company received  subscriptions for 346,667 shares of
common stock to settle  approximately  $26,000 in finder's fees due to a related
party in relation to cash advances. Subsequent to September 30, 2004, the shares
were issued to assignees of the debt holder. (See note 11).

On September 29, 2004, the Company received  subscriptions  for 1,687,500 shares
of  common  stock to  settle  approximately  $135,000  of debt owed to a related
party.  Subsequent to September 30, 2004, the shares were issued to assignees of
the debt holder. (See note 11).

                                                                         Page 13

<PAGE>


September 30, 2004
Unaudited Consolidated Financial Statements        Transax International Limited

8. SHARE CAPITAL (CONTINUED)

On September 29, 2004, the Company received subscriptions for 1,715,000 units to
settle  approximately  $128,600 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 TNSX's  common  stock at $0.20 until  September  29,  2009.
Subsequent to September 30, 2004, the units were issued to assignees of the debt
holder. (See note 11).

On September 29, 2004, the Company received  subscriptions for 166,667 shares of
common  stock to settle  approximately  $12,500 in finder's  fees in relation to
cash  advances.  Subsequent  to September  30,  2004,  the shares were issued to
assignees of the debt holder. (See note 11).

On September 29, 2004, the Company received  subscriptions for 286,200 shares of
common stock to settle approximately $21,500 in interest due in relation to cash
advances.  Subsequent to September 30, 2004, the shares were issued to assignees
of the debt holder. (See note 11).

On September 29, 2004, the Company received  subscriptions for 562,500 shares of
common stock to settle  approximately  $45,000 of debt.  Subsequent to September
30, 2004, the shares were issued to assignees of the debt holder. (See note 11).

On September 29, 2004, the Company received  subscriptions for 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 TNSX's common stock at $0.20 until
September 29, 2009.  Subsequent to September  30, 2004, the units were issued to
assignees of the debt holder. (See note 11).

On September 29, 2004, the Company received  subscriptions for 871,425 shares of
common stock to settle approximately  $69,700 in interest due to a related party
in relation to a convertible loan.  Subsequent to September 30, 2004, the shares
were issued to assignees of the debt holder. (See note 11).

As at September 30, 2004, 16,848,217 shares were issued and outstanding, and the
Company was obligated to issue an additional 6,698,306 shares of common stock in
relation to the share subscriptions received on September 29, 2004.

STOCK OPTIONS

The Board of  Directors of Transax  approved the adoption of an incentive  Stock
Option Plan, effective January 1, 2003.

As at September  30,  2004,  the Company  granted  7,599,040  stock  options and
cancelled  3,099,040  stock  options  under the Plan.  As at September 30, 2004,
2,806,730  stock options were  exercised,  including  600,000 during the quarter
ended  September 30, 2004. At September 30, 2004,  1,693,270  stock options were
outstanding.  There were 600,000 stock options  granted  during the  nine-months
period  ended  September  30, 2004 (2003 : 0). These  securities  may dilute the
earnings per share calculation in the future.

The table  below  lists the  exercise  prices  and  expiry  date of  outstanding
options.

                                                                         Page 14

<PAGE>


September 30, 2004
Unaudited Consolidated Financial Statements        Transax International Limited

8. SHARE CAPITAL (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                       Weighted
                                                                                         Weighted       Average
                                                                                          Average      Remaining
                                           Number of     Exercise                        Exercise     Contractual
                                            Options       Price      Expiration Date       Price         Life
                                          -----------    --------    ----------------    ---------    -----------
<S>                                        <C>           <C>         <C>                 <C>           <C>
  Granted, August 14, 2003                  4,500,000    $   0.50     August 14, 2008    $    0.49           3.83
                 exercised during 2003     (1,206,730)
                 cancelled during 2003     (1,618,270)
                                          -----------
 number exercisable, December 31, 2003      1,675,000

                 exercised during 2004             --
                 cancelled during 2004             --
                                          -----------
number exercisable, September 30, 2004      1,675,000

  Granted, October 1, 2003                  1,293,270    $   0.50    October 22, 2008           --             --
                 exercised during 2003        (87,500)
                 cancelled during 2003     (1,205,770)
                                          -----------
 number exercisable, December 31, 2003             --

  Granted, December 1, 2003                 1,205,770    $   0.25    December 1, 2008    $    0.00           0.05
                 exercised during 2003       (462,500)
                 cancelled during 2003             --
                                          -----------
 number exercisable, December 31, 2003        743,270

                 exercised during 2004       (450,000)
                 cancelled during 2004       (275,000)
                                          -----------
number exercisable, September 30, 2004         18,270

  Granted, July 26, 2004                      600,000    $   0.06     August 14, 2008           --             --
                 exercised during 2004        600,000
                                          -----------
number exercisable, September 30, 2004             --

Balance, September 30, 2004                 1,693,270                                    $    0.50     3.88 years
                                          -----------                                    ---------    -----------
</TABLE>

The Company  accounts for  stock-based  employee  compensation  arrangements  in
accordance  with the provisions of Accounting  Principles  Board Opinion No. 25,
Accounting for Stock Issued to Employees,  ("APB No. 25") and complies with SFAS
No. 123 Accounting for Stock-Based Compensation, for the disclosure requirements
regarding  stock  based  employee  compensation,  as  well as the accounting for
stock-based  compensation   given  to  non-employees.  For  financial  statement
disclosure  purposes,  the fair  market  value of each  stock  option  and stock
warrant grant during the quarter  ended  September 30, 2004 was estimated on the
date of grant using the Black-Scholes  option-pricing  model, in accordance with
Statement No. 123 using the  following  weighted-average  assumptions:  expected
dividend yield 0%, risk-free  interest rate of 3.15%,  volatility of 191.29% and
expected  term  of 5 years.  The table  below illustrates the pro-forma costs of
options and warrants issued to employees.


                                                                         Page 15

<PAGE>


September 30, 2004
Unaudited Consolidated Financial Statements        Transax International Limited

8. SHARE CAPITAL (CONTINUED)
================================================================================

<TABLE>
<CAPTION>
                                                                     FOR THE THREE MONTHS             FOR THE NINE MONTHS
                                                                     ENDED SEPTEMBER 30,              ENDED SEPTEMBER 30,
                                                                     2004           2003            2004             2003
                                                                  -----------    -----------    -------------    -------------
<S>                                                               <C>            <C>            <C>              <C>
Net loss as reported                                              $  (557,153)   $  (695,391)   $  (1,101,537)   $  (1,733,818)

Deduct: Amount by which stock -based employee compensation as
determined under fair value based method for all awards exceeds
the compensation as determined under the intrinsic value
method.                                                           $    (4,600)       (85,410)   $      (4,600)         (85,410)
                                                                  -----------    -----------    -------------    -------------

Pro forma net loss under SFAS No. 123                             $  (561,753)   $  (780,801)   $  (1,106,137)   $  (1,819,228)
                                                                  ===========    ===========    =============    =============

Basic and diluted net loss per common share as reported           $     (0.03)   $     (0.05)   $       (0.07)   $       (0.14)

Pro forma net loss per common share under SFAS No. 123            $     (0.03)   $     (0.06)   $       (0.07)   $       (0.14)
</TABLE>

WARRANTS

During the  quarter  ended  September  30,  2004,  under SFAS 123,  the  Company
incurred a stock based compensation cost of $34,900 for the issuance of options,
and $78,700 for the  issuance of warrants to  non-employees.  These  charges are
included in the  statement of  operations  as stock based  compensation  for the
three-month period ended September 30, 2004.

As at September 30, 2004,  7,151,070 warrants were outstanding.  The Company has
issued  2,402,500  additional  warrants  during the quarter ended  September 30,
2004.  These  securities  may dilute the earnings per share  calculation  in the
future.

The table  below  lists the  exercise  prices  and  expiry  date of  outstanding
warrants.

<TABLE>
<CAPTION>
                                                                                                     Weighted
                                                                                        Weighted      Average
                                                                                         Average     Remaining
                                    Number of     Date of      Exercise   Expiration    Exercise    Contractual
                                    Warrants       Issue        Price        Date         Price        Life
                                    ---------    ---------     --------   ----------    --------    -----------
<S>                                 <C>          <C>               <C>     <C>
Granted, August 14, 2003            4,100,000    14-Aug-03         1.00    14-Aug-08

Granted, August 26, 2003               50,000    26-Aug-03         1.50    26-Aug-04

Granted, November 21, 2003            225,000    21-Nov-03         1.00    20-Nov-05

Granted, December 31, 2003            373,570    31-Dec-03         0.50    31-Dec-04

Granted, September 29, 2004         2,402,500    29-Sep-04          0.2    29-Sep-09
                                    ---------

Balance, September 30, 2004         7,151,070                                           $   0.69     4.04 years
                                    ---------                                           --------    -----------
</TABLE>

                                                                         Page 16

<PAGE>


September 30, 2004
Unaudited Consolidated Financial Statements        Transax International Limited

9. CASH ADVANCES

As of January 1, 2004 the Company had approximately $152,600 of advances payable
and accrued interest  outstanding to a non-related  company.  During the quarter
ended March 31, 2004,  the Company issued 300,000 shares of its common stock for
the  settlement  of  approximately  $37,500 of  advances  payable and $37,500 of
accrued expenses to this non-related company.  These advances accrue interest at
approximately  1% per month (12% per annum).  The Company accrued  approximately
$3,100 and $9,800 for interest  during the three and  nine-month  periods  ended
September 30, 2004,  respectively.  On September 29, 2004, the Company  received
subscriptions  for 548,333  units and 270,200  shares of common  stock to settle
approximately   $41,100  in  advances  and  $20,300  in  interest  due  to  this
non-related company. Each unit is comprised of one common share and one warrant.
Each  warrant  entitles  the holder to  purchase an  additional  share of TNSX's
common  stock at $0.20 until  September  29,  2009.  As at  September  30, 2004,
advances and accrued interest amounted to $63,500 (See note 8 and 11).

During the three and nine month  periods ended  September 30, 2004,  the Company
received  $24,000 and $90,000  respectively  in cash advances from a non-related
party.  These advances  accrue interest at  approximately  1% per month (12% per
annum). The Company accrued  approximately $2,400 and $2,900 for interest during
the three and  nine-month  periods  ended  September  30, 2004. On September 29,
2004, the Company received  subscriptions  for 1,166,667 units and 16,000 shares
of common stock to settle $87,500 in advances and $1,200 in interest 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 TNSX's
common  stock at $0.20 until  September  29,  2009.  As at  September  30, 2004,
advances and accrued interest amounted to $28,200 (See note 8 and 11).

10. RELATED PARTY

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 quarter ended March 31, 2004,  this related party  advanced
the Company $72,500, for working capital purposes. During the quarter ended June
30, 2004,  this related  party  advanced an  additional  $10,000 to the Company.
These advances  accrue interest at  approximately  1% per month (12% per annum).
The Company  accrued  approximately  $8,000 and $23,200 for interest  during the
three and  nine-month  periods ended  September 30, 2004. On September 29, 2004,
the Company received  subscriptions for 374,848 shares of common stock to settle
approximately $28,100 in interest due to this related party. As at September 30,
2004, advances and accrued interest amounted to approximately $266,000 (See note
8 and 11).  This  balance is included  in due to related  parties on the balance
sheet.

Within the  statement of  operations,  the  following  related  party costs were
expensed during the three and nine-month periods ended September 30, 2004:

   -   The Company  incurred  $33,000 and $99,000 in consulting  and  management
       fees to a director of the Company during the three and nine-month periods
       ended September 30, 2004,  respectively (2003:  $99,000 and $33,000).  At
       September  30,  2004,   approximately  $96,000  in  consulting  fees  and
       approximately $43,600 in expenses were outstanding to this director;

                                                                         Page 17

<PAGE>


September 30, 2004
Unaudited Consolidated Financial Statements        Transax International Limited

10. RELATED PARTY (CONTINUED)

   -   The Company  incurred  $24,000 and $72,000 in consulting  and  management
       fees to a company whose officer is an officer of the operating subsidiary
       of the Company  during the three and nine-month  periods ended  September
       30, 2004,  respectively  (2003:  $24,000 and  $72,000).  At September 30,
       2004, $31,000 in consulting fees was outstanding to this officer;

   -   The Company  incurred  approximately $0 in consulting and management fees
       to a director  of the  Company  during the three and  nine-month  periods
       ended September 30, 2004,  respectively (2003: $10,000 and $10,000). . At
       September  30,  2004,   approximately   $6,400  in  consulting  fees  and
       approximately $3,100 in expenses were outstanding to this director;

   -   The Company incurred approximately $17,700 and $64,500 in consulting fees
       to a company whose officer is an officer of the Company  during the three
       and  nine-month  periods ended  September 30, 2004,  respectively  (2003:
       $17,100 and  $46,200).  At September 30, 2004,  approximately  $78,000 in
       consulting fees were outstanding to this officer;

   -   The Company incurred approximately $25,800 and $25,800 in consulting fees
       to a company whose director is a director of the Company during the three
       and  nine-month  periods ended  September 30, 2004,  respectively  (2003:
       $19,800 and  $38,200).  At September 30, 2004,  approximately  $50,200 in
       consulting fees was outstanding to this director;

   -   The Company incurred  approximately  $24,700 and $67,800 in interest to a
       company whose  director is a director of the Company during the three and
       nine-month periods ended September 30, 2004,  respectively  (2003: $8,400
       and $27,400).

LOAN

On March 5, 2004,  the Company  borrowed Euro 115,000  (approximately  $141,800)
from an officer of the Company for working  capital  purposes.  The loan accrues
0.8% interest per month,  compounded,  has a term of twelve months, and the debt
is repayable  quarterly  in arrears.  As at  September  30, 2004,  approximately
$7,700 in interest was accrued on this loan.

CONVERTIBLE LOANS

At September  30, 2004,  the loans for $255,000 and  $100,000,  due to a related
party whose officer is an officer of the Company, were in default less an amount
of $55,000 that was converted  for  687,500  units  of  the  Company, each  unit
consisting  of  one  share  of  common  stock  of  the  Company  and one warrant
excersiable  at  $0.20  until  September  29, 2009.  During  the  quarter  ended
September, 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  TNSX  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.

                                                                         Page 18

<PAGE>


September 30, 2004
Unaudited Consolidated Financial Statements        Transax International Limited

10. RELATED PARTIES (CONTINUED)

During the three and  nine-month  periods ended  September 30, 2004, the Company
incurred approximately $ 12,800 and $36,900,  respectively,  in interest related
to these two loans.  On September  29, 2004,  the holder of the notes  exercised
this conversion  feature,  and the Company  received  subscriptions  for 687,500
units  for  conversion  of  $55,000  of the  loan.  The  Company  also  received
subscriptions for 871,425 shares of common stock to settle approximately $69,700
in interest due on these loans.

As at  September  30,  2004,  no  interest  was due on these two loans,  and the
principal amount due was $300,000.

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.

11. SUBSEQUENT EVENTS

   -   On October 19, 2004, the Company issued an aggregate of 6,698,306  shares
       of its  restricted  Common  Stock to the  assignees  of the debt  holders
       pursuant to various debt settlement  agreements entered into on September
       29, 2004;

   -   On October  25,  2004,  the Company  entered  into  $5,000,000  financial
       arrangement  with Cornell  Capital  Partners,  LP. Under the terms of the
       funding  arrangement  with Cornell Capital  Partners,  TNSX has secured a
       $250,000   bridge  loan  and  Standby  Equity   facility  for  a  further
       $5,000,000.  The Standby Equity  Distribution  Agreement  commits Cornell
       Capital,  LP. to provide up to  $5,000,000,  of funding to Transax over a
       24-month period;

   -   On November  10, 2004,  Mr.  Graeme Smith  tendered  his  resignation  as
       officer and Director of the Company.

                                                                         Page 19

<PAGE>


FORM 10-QSB
September 30, 2004                                 Transax international Limited

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

GENERAL

Transax International Limited, a Colorado corporation (the "Company"), currently
trades on the OTC Bulletin Board under the symbol "TNSX"".

The  Company  was  incorporated  under the laws of the State of Colorado in 1999
under the name "Vega-Atlantic Corporation".  Previously, the Company was engaged
in the  business  of  minerals  and  oil and gas  exploration,  acquisition  and
development  within the United States and  worldwide.  During  August 2003,  the
Company  completed  the  acquisition  of Transax  Limited,  a  Colorado  private
corporation  ("Transax  Limited"),  pursuant to a reverse merger and changed its
name to "Transax  International  Limited" by filing an amendment to its articles
of incorporation.

As of the date of this Quarterly Report,  the Company,  through its wholly-owned
subsidiary TDS Telecommunication  Data Systems LTDA. ("TDS") is an international
provider of information  network solutions,  products and services  specifically
designed  for  the   healthcare   providers  and  health   insurance   companies
(collectively, the "Health Information Management Products").

TDS TELECOMMUNICATION DATA SYSTEMS LTDA

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

TRANSAX AUSTRALIA PTY LTD.

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

MEDLINK TECHNOLOGIES, INC.

Medlink  Technologies,  Inc.  ("Medlink")  was  incorporated  under  the laws of
Mauritius on January 17, 2003, and is a wholly-owned  subsidiary of the Company.
As of the date of this Quarterly Report, Medlink holds the intellectual property
developed  by the  Company  and  is  responsible  for  initiating  research  and
development.

CURRENT BUSINESS OPERATIONS

As of the  date of this  Quarterly  Report,  the  Company,  through  TDS,  is an
international  provider of health information  management products, as described
below,  specifically  designed for the healthcare providers and health insurance
companies.  The  Company  is  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.

                                                                         Page 20

<PAGE>


FORM 10-QSB
September 30, 2004                                 Transax international Limited

The strategic focus of the Company 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.  Management  of the Company  believes  that the Company's
unique  combination  of  complimentary  solutions  is designed to  significantly
improve the business of healthcare.  The Company's health information management
products  and   software   solutions   are  designed  to  generate   operational
efficiencies, improve cash flow and measure the cost and quality of care.

MEDLINK SOLUTION

The Company has  developed a  proprietary  software  trademarked  (Brazil  only)
"MedLink",  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 the Company is able to provide an insurer with
the  ability  to cost  effectively  process  all of the  transactions  generated
regardless  of  location  or method of  generation.  Management  of the  Company
believes  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.

As of the date of this Quarterly Report the Company has installed  approximately
3,300 solutions into healthcare  provider locations  throughout Brazil and plans
to install up to a further 600 solutions during fiscal 2004.

STRATEGIC ALLIANCES

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

BEARINGPOINT  INC. On February  12,  2004,  the Company and  BearingPoint,  Inc.
("BearingPoint"),  entered into a teaming agreement (the  "BearingPoint  Teaming
Agreement") for tendering to Petrobras.  Pursuant to the terms and provisions of
the BearingPoint Teaming Agreement, (i) BearingPoint will be responsible for the
supply  of the  SmartCards;  (ii)  BearingPoint  will  be  responsible  for  the
development  and  maintenance of the various  applications  for the  SmartCards;
(iii)  BearingPoint  will be responsible for the management and operation of the
Card  Management  Systems  ("CMS");  (iv)  BearingPoint  will be responsible for
consulting  services for the integration of the  specifications  of the project;
(iv)  BearingPoint  will be providing Help Desk services for stage one; (vi) TDS
will  be  responsible  for the  development,  customization,  installation,  and
maintenance of the MedLink Solutions  capture methods and transaction  services;
(vii) TDS will be responsible for development,

                                                                         Page 21

<PAGE>


FORM 10-QSB
September 30, 2004                                 Transax international Limited

customization,  and  maintenance  of the system  authorizer;  (viii) TDS will be
providing  Help  Desk  services  for  stages  two and  three;  (ix)  TDS will be
responsible  for the operation and  maintenance of the capture methods and their
components;  (x)  TDS  will  be  responsible  for  consulting  services  for the
integration and specification of the project.

GENS  INFORMATION  -  PMS/ASP.  On  February  19,  2001,  the  Company  and GENS
Information  ("GENS"),  entered into an operating agreement (the "GENS Operating
Agreement").  Pursuant  to  the  terms  and  provisions  of the  GENS  Operating
Agreement: (i) GENS will provide to the Company a basic product called "Personal
Med",  which  is  a  Windows  client-server  application,  running  with  Delphi
front-end and Paradox and Oracle DB (which has  approximately  thirty variations
designed  around  specific  exam data to be acquired  and stored in each medical
specialization);  and (ii) the Company  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.

As of the date of this Quarterly  Report,  GENS is 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  implementing  access to doctor's agenda and
some direct news to be directed to Internet enabled doctors.

VIDALINK - DRUG MANAGEMENT. On August 29, 2001, the Company and Vidalink entered
into an operational agreement (the "Vidalink Operational  Agreement"),  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  also  offers  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.

MOSAIC  SOFTWARE,  INC. - NETWORK  PROCESSOR  SYSTEM.  On November 25, 2002, the
Company  and Mosaic  entered  into  supplier  agreement  (the  "Mosaic  Supplier
Agreement")  to develop the Network  Processor  software  package,  known as the
"Postillion  ",  for use in the  MedLink  Solution.  Management  of the  Company
believes 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 Postillion software is the best cost effective
solution for this kind of system, and has just been selected by Calypso, the new
ATM being deployed in United States, as the chosen platform.

HYPERCOM  CORPORATION.  On December 1 2003,  the Company and  Hypercom  Inc.,  a
publicly traded  multinational  company  ("Hypercom"),  entered into a servicing
agreement  (the  "Hypercom  Service  Agreement").  Pursuant  to  the  terms  and
provisions of the Hypercom  Service  Agreement,  Hypercom would provide  leasing
arrangements  for  POS  (Point  of  Sale)  terminals  in  Brazil.   The  Company
subsequently entered into capital leases for 255 POS units.

On April 30th 2002,  the  Company  and  Netset,  a wholly  owned  subsidiary  of
Hypercom based in Brazil,  entered into a service  agreement whereby Netset will
(i) provide to the Company installation,  servicing,  training, customer service
and technical support (Call Center) for its

                                                                         Page 22

<PAGE>


FORM 10-QSB
September 30, 2004                                 Transax international Limited

terminal  network  in  Brazil;  and (ii)  allow the  Company  to use the  entire
Hypercom structure to serve its clients.

SCHLUMBERGERSEMA.  On  February  21,  2003,  the  Company  and  SchlumbergerSema
("Schlumberger")  entered  into an  agreement  (the  "Schlumberger  Agreement"),
pursuant to which the Company and  Schlumberger  would co-operate on a number of
business opportunities in the Asia-Pacific and Australasian region.

The  Company's   strategic  alliance  with  Schlumberger  covers  the  following
components:  (i) capture  devices,  which  consist of a  combination  of capture
application   hardware  and  software   capable  of  identifying   and  handling
pre-defined services entries, to be rerouted by means of electronic transactions
to an authorizer system; (ii) rerouting,  which is the development of a hardware
and  software  structure  for  performing  services  of  collecting   electronic
transactions at one service point (a service provider), where there is a capture
device, with the rerouting of the transaction to a service authorization system,
and the following  return of the  authorization's  result to the capture device;
and (iii) authorization  system,  which is comprised of a hardware structure and
application  software,  for creating  parameters  for the business  regulations,
tables and insured registries,  providers and histories,  and is responsible for
handling the transactions  received from the collection network, in reference to
services, their analyses, release or negative, and for sending the corresponding
response to the registered provider, in the form of a message.

MATERIAL AGREEMENTS

During the nine-month  period ended  September 30, 2004,  the Company  processed
approximately 1,893,348 "real-time"  transactions for its 3 customers,  compared
to approximately 1,075,000 during all of fiscal 2003.

GOLDEN CROSS - On August 9, 2002, the Company's  wholly-owned  subsidiary,  TDS,
and Golden Cross, one of Brazil's largest health  insurance  companies  ("Golden
Cross")  entered into an agreement (the "Golden Cross  Agreement").  Pursuant to
the  terms and  conditions  of the  Golden  Cross  Agreement,  the  Company  has
committed to supply to Golden Cross a total of 1,500 installations consisting of
more than 500 MedLink  Solution POS terminals  with the balance being MedLink PC
and  MedLink  Solution  servers.  Additional  installations,   principally  IVR,
commenced in July 2004.  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. As of the date of this Quarterly Report,
the Company has approximately 2,820 Medlink Solutions in Golden Cross Provider's
locations.

CAMED - On October 17, 2002,  the Company's  wholly-owned  subsidiary,  TDS, and
Camed, a self-insured  company based in northern Brazil ("Camed"),  entered into
an agreement  (the "Camed  Agreement")  pursuant to which the Company  installed
MedLink  Solution POS terminals for pilot  testing,  which was completed  during
first quarter 2003. As of the date of this Quarterly Report, approximately 4,750
installations  are scheduled to complete the roll out  consisting of 250 MedLink
Solution POS terminals and 4,500 IVR Phone.  The Camed  agreement  also provides
for MedLink  Solution WEB and MedLink  Solution phone  solutions,  which will be
used  as  appropriate  by the  healthcare  providers.  As of the  date  of  this
Quarterly Report the Company has  approximately  370 Medlink  Solutions in Camed
providers' locations.

BRADESCO HEALTH - 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  Bradesco and
the  Company  entered  into a  contract  pursuant  to

                                                                         Page 23

<PAGE>


FORM 10-QSB
September 30, 2004                                 Transax international Limited

which the Company  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 in March 2004.  Management  of the Company  anticipates  that
current plans will require the Company to install up to 750  solutions  into the
Bradesco  provider's  network during 2004 in order to achieve Bradesco's initial
target of  400,000  transactions  per  month.  As of the date of this  Quarterly
Report the Company has  approximately 112 Medlink Solutions in Bradesco provider
locations.

RESULTS OF OPERATIONS

The  accompanying  unaudited  consolidated  financial  statements of the Company
present the accounts of the Company at September 30, 2004 and of Transax for the
nine-month period ended September 30, 2003.

FOR THE  NINE-MONTH  PERIOD ENDED  SEPTEMBER 30, 2004 COMPARED TO THE NINE-MONTH
PERIOD ENDED SEPTEMBER 30, 2003.

The Company incurred net losses of  approximately  $1,101,500 for the nine-month
period  ended  September  30,  2004  compared  to a net  loss  of  approximately
$1,733,800 for the nine-month  period ended  September 30, 2003 (an  approximate
decrease of  $632,300).  Comparative  results for the  nine-month  period  ended
September 30, 2003 include  only the results of Transax and TDS until August 14,
2003 and for the  Company from that date through September 30, 2003. The results
for  the current  period include the operations of the Company.  Analysis of the
operating losses for the nine-month  period ended September 30, 2004 compared to
the nine-month period ended September 30, 2003 is as follows.

During the nine-month  period ended  September 30, 2004,  the Company  generated
approximately  $899,000 in gross revenues compared to approximately  $221,700 in
gross  revenues  during the  nine-month  period  ended  September  30,  2003 (an
approximate  increase of $677,300).  The significant increase in revenues is due
to the rollout of new software contracts in Brazil.

During the  nine-month  period ended  September 30, 2004,  the Company  incurred
approximately   $1,703,400  in  operating  expenses  compared  to  approximately
$1,697,600 in operating  expenses  during the nine-month  period ended September
30, 2003 (an approximate  increase of $5,800).  The slight increase in operating
expenses during the nine-month  period ended September 30, 2004 is primarily due
to an  increase  in cost of product  support  services  and  investor  relations
expenses,  and is not  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.

During the  nine-month  period ended  September  30,  2004,  payroll and related
benefits  decreased to  approximately  $269,900 (2003:  $276,200) mostly due the
capitalization  of research and  development  expenditures.  The cost of product
support services has increased from  approximately  $302,100 to $392,300 for the
nine-month  period ended  September 30, 2004 due to the rollout of the Company's
newest contract.

During the  nine-month  period ended  September 30, 2004,  the Company  incurred
approximately  $142,200 in professional fees compared to approximately  $240,900
during the  nine-month  period  ended  September  30,  2003.  This  decrease  in
professional  fees is  primarily  due to a  reduction  in  accounting  and legal
expenses  relating  to the  merger  of  Transax  with the  Company.  During  the
nine-month  period ended September 30, 2004,  professional fees consisted mainly
of  approximately:  (i) $31,400 in audit and  accounting  fees (2003:

                                                                         Page 24

<PAGE>


FORM 10-QSB
September 30, 2004                                 Transax international Limited

$ 62,000);  (ii)  $22,000  in legal  fees  (2003:  $139,500);  (iii)  $77,200 in
financing  fees (2003:  $0);  (iv) $9,600 in  regulatory  and filing fees (2003:
$9,000); (v) $0 in monitor fees (2003:  $14,800); and (vi) $0 in management fees
(2003: $15,200).

During the  nine-month  period ended  September 30, 2004,  the Company  incurred
approximately   $256,900  (2003:  $296,200)  in  related  party  management  and
consulting  fees.  During the  nine-month  period ended  September 30, 2004, the
Company incurred general and administrative  expenses of approximately  $298,000
compared to general and administrative expenses of approximately $260,900 during
the nine-month  period ended  September 30, 2003. The higher costs are primarily
due to an increase in support services required to maintain operations.

During the  nine-month  period ended  September 30, 2004,  the Company  incurred
approximately  $110,300  (2003:  $0) 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 the  nine-month  period ended  September 30, 2004,  the Company  incurred
other  expenses as follows:  (i) $1,100 (2003:  ($37,700))  in foreign  exchange
gains; (ii) $473,900 (2003:  $18,800) in interest expense;  (iii) $67,800 (2003:
$27,400) in interest expense- related party; and (iv) $29,600 (2003:  $1,600) in
other expenses.  The increase in interest  expense during the nine-month  period
ended September 30, 2004 is related to an increase in cash advances  payable and
capital  leases in Brazil.  The  increase in  interest  expense due to a related
party  results from the Company  receiving  cash advances and entering into loan
agreements with related parties.

Mr.  Walters,  the  President,  Chief  Executive  Officer  and a director of the
Company,  derives  remuneration  from the Company 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 the nine-month  period ended September 30, 2004,  $99,000 was incurred by
the Company to Mr.  Walters for management  and  consulting  services  rendered.
Furthermore, Mr. Walters has advanced funds to the Company and incurred expenses
on behalf of the Company. During the nine-month period ended September 30, 2004,
Mr.  Walters  was paid $-0- by the  Company  for  consulting  fees.  During  the
nine-month  period  ended  September  30,  2004,  an  aggregate  of  $135,000 in
consulting  fees and  expenses  was settled by the Company by the  issuances  of
1,687,500  shares of common stock of the Company.  At  September  30, 2004,  Mr.
Walters was owed  approximately  $139,600 for  consulting / management  fees and
incurred expenses. See " - Plan of Operation - Material Agreements"and "Part II.
Other Information. Item 2. Changes in Securities and Use of Proceeds."

Ms. Pilon, the Chief Financial Officer of the Company, derives remuneration from
the Company 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  nine-month  period  ended
September  30,  2004,  $64,500  was  incurred  by the  Company to Ms.  Pilon for
management and consulting services rendered. Furthermore, Ms. Pilon has incurred
expenses on behalf of the Company.  During the nine-month period ended September
30, 2004, Ms. Pilon was paid $14,000 by the Company.  At September 30, 2004, Ms.
Pilon was owed  approximately  $78,000  for  management  /  consulting  fees and
incurred expenses. See " - Plan of Operation - Material Agreements".

As discussed above, the decrease in net loss during the nine-month  period ended
September 30, 2004 compared to the nine-month period ended September 30, 2003 is
attributable primarily to the increase in gross revenues and is not proportional
to the  increase in revenues

                                                                         Page 25

<PAGE>


FORM 10-QSB
September 30, 2004                                 Transax international Limited

due to the decrease in stock-based compensation expenses. The Company's net loss
during  the  nine-month  period  ended  September  30,  2004  was  approximately
($1,101,500)  or  ($0.07)  per  share  compared  to a net loss of  approximately
($1,733,800)  or ($0.14) during the nine-month  period ended September 30, 2003.
The  weighted  average  number  of shares  outstanding  was  15,807,994  for the
nine-month  period  ended  September  30, 2004  compared to  12,635,651  for the
nine-month period ended September 30, 2003.

FOR THE THREE-MONTH  PERIOD ENDED SEPTEMBER 30, 2004 COMPARED TO THE THREE-MONTH
PERIOD ENDED SEPTEMBER 30, 2003.

The Company  incurred net losses of  approximately  $557,200 for the three-month
period ended September 30, 2004 compared to a net loss of approximately $695,400
for the three-month period ended September 30, 2003 (an approximate  decrease of
$138,200).  Comparative  results for the three-month  period ended September 30,
2003 include only the results of Transax and TDS  until August 14, 2003  and for
the  Company  from  that  date  through September 30, 2003.  The results for the
current three-month  period  include  the  operations  of the Company.

During the three-month  period ended  September 30, 2004, the Company  generated
approximately  $375,900 in gross revenues  compared to approximately  $97,400 in
gross  revenues  during the  three-month  period  ended  September  30, 2003 (an
approximate increase of $278,500) due to the roll out of its contracts

During the  three-month  period ended  September 30, 2004, the Company  incurred
approximately  $813,400 in operating expenses compared to approximately $572,900
in operating expenses during the three-month period ended September 30, 2003 (an
approximate  increase of $240,500).  The operating  expenses incurred during the
three-month period ended September 30, 2004 consisted primarily of: (i) $145,400
(2003:  $87,800)  in cost of product  support  services;  (ii)  $104,600  (2003:
$89,600)  in payroll and  related  benefits;  (iii)  $29,800  (2003:  $6,800) in
research and development  costs; (iv) $108,600 (2003:  $145,500) in professional
fees;  (v) $99,100 (2003:  $114,300) in management and consulting  fees- related
party;  (vi) $90,700  (2003:  $-0-) in investor  relations;  (vii) $8,300 (2003:
$15,500) in depreciation and amortization;  and (viii) $113,300 (2003: $113,500)
in general and  administrative.  The increase in operating  expenses is directly
related to the increase in transactions processed during the quarter.

During the  three-month  period ended  September 30, 2004, the Company  incurred
other  expenses  as follows:  (i) ($200)  (2003:  $46,400)  in foreign  exchange
losses;  (ii) $31,200 (2003:  $4,700) in interest expense;  (iii) $24,800 (2003:
$8,400) in interest  expense-  related party;  and (iv) $10,400 (2003:  $-0-) in
other  expenses.  The  increase in interest  expenses is related to the advances
received during the year to finance operations.

The decrease in net loss during the three-month  period ended September 30, 2004
compared to the  three-month  period ended  September  30, 2003 is  attributable
primarily to the increase in gross  revenues.  The Company's net loss during the
three-month  period ended  September  30, 2004 was  approximately  ($557,200) or
($0.03) per share compared to a net loss of approximately  ($695,400) or ($0.05)
during the  three-month  period ended  September 30, 2003. The weighted  average
number of shares  outstanding  was 16,665,608 for the  three-month  period ended
September  30, 2004  compared to  12,955,830  for the  three-month  period ended
September 30, 2003.

                                                                         Page 26

<PAGE>


FORM 10-QSB
September 30, 2004                                 Transax international Limited

LIQUIDITY AND CAPITAL RESOURCES

FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2004

As of the  nine-month  period ended  September 30, 2004,  the Company's  current
assets  were   approximately   $196,400   and  its  current   liabilities   were
approximately  $2,241,400,  which  resulted in an  approximate  working  capital
deficit of $2,045,000. As of the nine-month period ended September 30, 2004, the
Company's total assets were approximately $453,900, consisting of: (i) $5,600 in
cash; (ii) $48,600 in prepaid expenses;  (iii) $142,100 in accounts  receivable;
(iv)  $204,600  in net  software  development  costs;  and  (v)  $52,900  in net
valuation of property and equipment.

As of the  nine-month  period ended  September  30, 2004,  the  Company's  total
liabilities  were  approximately  $2,381,200,  consisting  of: (i)  $713,800  in
accrued  payroll and related  expenses;  (ii)  $530,200 in accounts  payable and
accrued  expenses;  (iii)  $574,200  due to related  parties;  (iv)  $300,000 in
convertible  loans from related party;  (v) $149,500 in loan from related party'
(vi) $91,700 in advances  payable;  and (vii)  $21,800 in long-term  and current
portion of capital lease obligation.

As at September 30, 2004, the Company's current  liabilities were  approximately
$2,241,400  compared to  approximately  $1,857,300  at December  31,  2003.  The
increase in current  liabilities  is due primarily to additional  loans and cash
advances received from a related party to fund operations.

For  nine-month  period ended  September 30, 2004, net cash flows from operating
activities  were  approximately  $15,100  compared to $588,600 used in operating
activities  for the  nini-month  period ended June 30, 2003.  The change in cash
flows used in  operating  activities  is mainly due to the decrease in operating
loss for the nine-month period ended September 30, 2004.

Net  cash  flows  from  financing  activities  during  nine-month  period  ended
September 30, 2004, were approximately  $228,300 resulting primarily from a loan
and cash  advances  from a related  party,  compared to  approximately  $929,300
during the nine-month  period ended September 30, 2003. The borrowings were used
to fund operating activities.

Net cash flows used in investing  activities amounted to approximately  $237,100
during  nine-month  period ended  September  30, 2004,  compared to $120,900 for
nine-month  period ended  September  30, 2003.  During  nine-month  period ended
September 30, 2004, the Company  capitalized  software  research and development
costs,  while in 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
nine-month  period ended September 30, 2004, the Company's overall cash position
decreased by approximately $4,800.

PLAN OF OPERATION

Since inception, the Company has incurred cumulative net losses of approximately
$7,789,200 and has a  stockholders'  deficit of  approximately  $1,927,200 as at
September 30, 2004. The Company expects to continue to incur substantial  losses
to develop its products and distribution networks, and does not expect to attain
profitability  in the near future.  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

                                                                         Page 27

<PAGE>


FORM 10-QSB
September 30, 2004                                 Transax international Limited

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  following its merger
to meet its business  objectives  including  anticipated  cash needs for working
capital,  for a reasonable  period of time.  However,  there can be no assurance
that  the  Company  will be able to  obtain  sufficient  funds to  continue  the
development of its software products and distribution networks.

As of the date of this Quarterly  Report,  there is substantial  doubt regarding
the  Company's  ability to  continue  as a going  concern as the Company has not
generated  sufficient  cash flow to fund its  business  operations  and material
commitments.  The  Company's  future  success  and  viability,   therefore,  are
dependent  upon the  Company's  ability  to  develop,  provide  and  market  its
anticipated  information  network  solutions  to  healthcare  providers,  health
insurance companies and other end-users,  and the continuing ability to generate
capital financing.  Management is optimistic that the Company will be successful
in its business operations and capital raising efforts; however, there can be no
assurance  that the Company 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 the Company and
its shareholders.

Management of the Company anticipates an increase in operating expenses over the
next three years to pay costs  associated  with such  business  operations.  The
Company must raise additional funds. The Company may finance these expenses with
further issuances of Common Stock of the Company.  The Company believes that any
anticipated  private  placements  of  equity  capital  and  debt  financing,  if
successful,  may be  adequate  to fund the  Company's  operations  over the next
twelve months.  Thereafter, the Company expects it will need to raise additional
capital  to  meet  long-term  operating  requirements.  If  the  Company  raises
additional  funds through the issuance of equity or convertible  debt securities
other than to current  shareholders,  the  percentage  ownership  of its current
shareholders   would  be  reduced,   and  such  securities  might  have  rights,
preferences  or privileges  senior to its 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, the
Company may not be able to conduct its business operations  successfully,  which
could  significantly  and  materially  restrict the Company's  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  Quarterly  Report,  the  Company  entered  into an  financing
agreement  with  Cornell  Capital  Partners.  Under  the  terms  of the  funding
arrangement with Cornell Capital, Transax has secured a $250,000 bridge loan and
Standby  Equity   facility  for  a  further  $5  million.   The  Standby  Equity
Distribution  Agreement  commits  Cornell Capital to provide up to $5 million of
funding to Transax over a 24-month period.  Therefore,  management believes that
the Company can satisfy its cash  requirements  for the next twelve months based
on its  ability to draw on this  Standby  Equity  facility,  as  necessary.  The
Company's  future  success  and  viability  are  primarily  dependent  upon  the
Company's current  management to generate revenues from business  operations and
raise additional capital through further private offerings of its stock or loans
from private  investors.  There can be no assurance,  however,  that the Company
will be able to raise additional capital.  The Company's failure to successfully
raise  additional  capital  will have a material  and  adverse  affect  upon the
Company and its shareholders.

                                                                         Page 28

<PAGE>


FORM 10-QSB
September 30, 2004                                 Transax international Limited

MATERIAL AGREEMENTS

In connection with the management of the Company and/or its subsidiary  incurred
liability  or  borrowed  funds  pursuant  to  various  contractual  arrangements
representing the following material commitments.

WALTERS CONSULTING AGREEMENT

A significant  and estimated  service  agreement for the Company for fiscal year
2004 is the aggregate  amount of $132,000 to be paid to Mr. Walters  pursuant to
the Walters  Consulting  Agreement.  Pursuant to the terms and provisions of the
Walters  Consulting  Agreement:  (i) Mr.  Walters  agreed to provide  technical,
research  and  technology  development  services  to the  Company;  and (ii) Mr.
Walters shall be paid a monthly fee of $11,000 US Dollars for a potential annual
salary of $132,000, and reimbursement of expenses.

PILON CONSULTING AGREEMENT

A significant  and estimated  service  agreement for the Company for fiscal year
2004 is the aggregate  amount of $87,600 to be paid to Ms. Pilon pursuant to 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 the  Company;  and (ii) Ms.  Pilon shall be paid a
monthly fee of $7,300 US Dollars for a potential  annual salary of $87,600,  and
reimbursement of expenses.

DE CASTRO CONSULTING AGREEMENT

A significant and estimated  material  agreement for the Company for fiscal year
2004 is the aggregate  amount of $96,000 to be paid to Mr. De Castro pursuant to
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 the Company's subsidiary; and (ii) Mr. De
Castro shall be paid a monthly fee of $8,000 US Dollars for an aggregate  annual
salary of $96,000, and reimbursement of expenses.

MATERIAL OPERATING LIABILITIES

CONVERTIBLE LOANS

A significant and estimated  material  liability for the Company for fiscal year
2004 is the aggregate amount of $411,900 in principal and interest due and owing
to a related party. On December 31, 2002,  Transax Limited borrowed $66,195 from
such related party. On March 31, 2003,  Transax Limited  borrowed  $255,000 from
this related  party,  and a further  $100,000 on April 30, 2003.  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 the
capital of the  Company at a  conversion  price of $0.25 per unit (the  "Unit").
Each Unit is  comprised of one share of  restricted  Common Stock of the Company
and one warrant,  and each warrant  entitles the holder  thereof to purchase one
share of restricted  Common Stock of the Company at $0.50 per share for a period
of twelve months.

On December 31, 2003,  the loan and accrued  interest of $93,000 were  converted
for 373,570  common  shares and warrants.  On September  29, 2004,  the Board of
Directors  of the

                                                                         Page 29

<PAGE>


FORM 10-QSB
September 30, 2004                                 Transax international Limited

Company  reduced the  conversion  price from $0.25 per unit to $0.08 per unit in
order to reflect the current  market price of the stock.  On September 29, 2004,
$55,000 of an aggregate  $424,713.97  then due and owing was settled pursuant to
the issuance of 687,500 shares of restricted  common stock and 687,500 warrants.
Each warrant entitles the holder to purchase an additional share of common stock
of the Company at a price of $ 0.20 for five years.  At September 30, 2004,  the
loans for  $200,000  and  $100,000  were in default,  and no interest was due on
these two loans. See "Part II. Other Information.  Item 2. Changes in Securities
and Use of Proceeds."

LOAN

A significant and estimated  material  liability for the Company for fiscal year
2004 is the aggregate amount of $149,500 in principal and interest due and owing
to a  related  party.  On March 5,  2004,  the  Company  borrowed  Euro  115,000
(approximately USD $141,800) 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 September 30 2004, approximately $7,700
in interest was accrued on this loan.

CASH ADVANCES FROM A RELATED PARTY

A significant and estimated  material  liability for the Company for fiscal year
2004 is the  aggregate  amount of $266,000 in cash advances and interest due and
owing to a related  party,  and is  included  in due to  related  parties in the
balance sheet.  During the nine-month  period ended June 30, 2004,  such related
party advanced  approximately $82,500 for working capital purposes. The advances
due and owing at June 30, 2004 were non-interest  bearing until August 31, 2003,
and are accruing 1% interest per month since September 1, 2003.

The Company  accrued  approximately  $8,000 and $23,200 for interest  during the
three and  nine-month  periods ended  September 30, 2004. On September 29, 2004,
the  Company  issued  374,848  shares  of  restricted  common  stock  to  settle
approximately $28,100 in interest due to this related party. See "Part II. Other
Information. Item 2. Changes in Securities and Use of Proceeds."

CASH ADVANCES PAYABLE

As of January 1, 2004 the Company had approximately $152,600 of advances payable
and accrued interest to a non-related  company  outstanding.  During the quarter
ended March 31, 2004, the Company issued 300,000 shares of its restricted common
stock for the  settlement  of  approximately  $37,500 of  advances  payable  and
$37,500 of accrued expenses to this non-related  company.  These advances accrue
interest  at  approximately  1% per month (12% per annum).  The Company  accrued
approximately  $3,100 and $9,800 for  interest  during the three and  nine-month
periods ended  September  30, 2004,  respectively.  On September  29, 2004,  the
Company issued  548,333 units and 270,200  shares  restricted of common stock to
settle  approximately  $41,100 in advances  and $20,300 in interest  due to this
non-related 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 $0.20 until  September  29, 2009. As at September 30,
2004,  advances and accrued  interest  amounted to $63,500.  See "Part II. Other
Information. Item 2. Changes in Securities and use of Proceeds."

                                                                         Page 30

<PAGE>


FORM 10-QSB
September 30, 2004                                 Transax international Limited

During the three and  nine-month  periods ended  September 30, 2004, the Company
received  $24,000 and $90,000  respectively  in cash advances from a non-related
party.  These advances  accrue interest at  approximately  1% per month (12% per
annum). The Company accrued  approximately $2,400 and $2,900 for interest during
the three and  nine-month  periods  ended  September  30, 2004. On September 29,
2004, the Company issued 1,166,667 units and 16,000 shares of restricted  common
stock  to  settle  $87,500  in  advances  and  $1,200  in  interest  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. As at September 30,
2004, advances and accrued interest amounted to $28,200.

ACCRUED PAYROLL AND RELATED EXPENSES

A significant and estimated  material  liability for the Company for fiscal year
2004 is the  aggregate  amount of $426,800 due and owing for  Brazilian  payroll
taxes and Social Security taxes.

Effective April 1, 2004, the Company has 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
March 31, 2004, the Company's INSS tax liabilities were  approximately$  139,600
plus $13,800 in interest,  penalties and fines. The payment program requires the
Company to pay a monthly fixed amount of approximately  $2,560.  Discussions are
currently  ongoing for the Company to enter into a similar  payment plan for the
remainder of the payroll tax liabilities.  The Company made the first payment as
per the plan in April 2004.

OFF BALANCE SHEET ARRANGEMENTS

As of the  date  of this  Quarterly  Report,  the  Company  does  not  have  any
off-balance  sheet  arrangements  that have or are  reasonably  likely to have a
current  or future  effect on the  Company's  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 the
Company is a party, under which the Company has (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.

ITEM 3. CONTROLS AND PROCEDURES

An evaluation was conducted under the supervision and with the  participation of
the Company's management, including Stephen Walters, the Company's President and
Chief  Executive  Officer,  and Nathalie  Pilon,  the Company's  Chief Financial
Officer,  of the  effectiveness  of the design and  operation  of the  Company's
disclosure  controls  and  procedures  as at September  30, 2004.  Based on that
evaluation,  Mr. Walters and Ms. Pilon  concluded that the Company's  disclosure
controls  and  procedures  were  effective  as  of  such  date  to  ensure  that
information  required to be disclosed  in the reports that the Company  files or
submits  under the  Securities  Exchange Act of 1934,  as amended,  is recorded,
processed,  summarized  and  reported  within  the  time  periods  specified  in
Commission rules and forms.

                                                                         Page 31

<PAGE>


FORM 10-QSB
September 30, 2004                                 Transax international Limited

Such officers  also confirm that there was no change in the  Company's  internal
control over financial  reporting  during the nine-month  period ended September
30, 2004 that has  materially  affected,  or is reasonably  likely to materially
affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On May 21, 2004, X-Clearing Corporation (`X-Clearing") forwarded, via courier, a
complaint dated May 17, 2001 [sic]. As of the date of this Quarterly Report, the
complaint  has not been filed with the district  court of the State of Colorado.
X-Clearing seeks relief for damages incurred  following the alleged breach of an
agreement  entered  with  X-Clearing  in 2001.  The  Company  has had no further
correspondence from X-Clearing.

In the event a summons and the  complaint  are filed with the district  court of
the State of Colorado,  management of the Company intends to aggressively pursue
all such legal actions and review further legal remedies against X-Clearing.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

DEBT SETTLEMENT

(a) During the  nine-month  period ended  September 30, 2004,  the Company and a
creditor entered into a settlement of outstanding account dated January 26, 2004
regarding  professional  fees.  Pursuant  to the  terms  and  provisions  of the
settlement agreement, the Company issued 300,000 shares of its 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,  the  Company  returned  the shares to  treasury  for
non-performance.

(b) During the year ended December 31, 2003, the Company and a creditor  entered
into a settlement  of  outstanding  account  dated  November 21, 2003  regarding
settlement  of debt.  Pursuant  to the terms and  provisions  of the  settlement
agreement,  the  Company  issued,  on April  18,  2004,  450,000  shares  of its
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.

(c) On June 2, 2004, the Company  issued 45,000 shares of its 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. The Company 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.

(d) On August 12, 2004,  the Company  issued  600,000  shares of its  restricted
Common Stock to an unrelated third party to settle share subscriptions issued as
payment  for  compensation  regarding  professional  fees  incurred  during  the
nine-month period ended September 30, 2004. The Company issued 600,000 shares at
$0.06 per share as payment for an aggregate

                                                                         Page 32

<PAGE>


FORM 10-QSB
September 30, 2004                                 Transax international Limited

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.

On  September  19, 2004,  the board of  directors  of the  Company,  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:

(e) The Company and Stephen Walters, the President/Chief Executive Officer and a
director of the Company  ("Walters"),  entered into a settlement agreement 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 the
Company  relating to  managerial  and  consulting  services  provided by Walters
pursuant to certain  contractual  relations between the Company and Walters (the
"Debt").  Pursuant  to  the  terms  and  provisions  of the  Walters  Settlement
Agreement:  (i) the  Company  agreed to settle  the Debt by  issuing  to Walters
and/or his designates  1,687,500  shares of its  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 the  Company's  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  restricted  Common  Stock  of  the  Company  as  full  and  complete
satisfaction of the Debt. The Company 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 Securities Act of 1933, as amended (the "Securities
Act").  Walters executed the Walters Settlement  Agreement and acknowledged that
the securities to be issued have not been  registered  under the Securities Act,
that he understood  the economic risk of an  investment in the  securities,  and
that he had the  opportunity  to ask  questions of and receive  answers from the
Company's  management  concerning any and all matters  related to acquisition of
the securities.

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 the
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 the 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,  the Company issued  1,250,000
shares of its restricted  common stock to Carlingford  and 437,500 shares of its
restricted Common Stock to the Walters  Creditor,  pursuant to the transactional
exemption  under Section 4(2) and  Regulation S of the Securities  Act.  Walters
executed the Walters  Settlement  Agreement and acknowledged that the securities
to be  issued  have  not been  registered  under  the  Securities  Act,  that he
understood the economic risk of an investment in the securities, and that he had
the  opportunity  to ask  questions of and receive  answers  from the  Company's
management  concerning  any  and  all  matters  related  to  acquisition  of the
securities. Carlingford and the

                                                                         Page 33

<PAGE>


FORM 10-QSB
September 30, 2004                                 Transax international Limited

Walters   Creditor   executed   the   Carlingford/Walters   Agreement   and  the
Creditor/Walters Agreement,  respectively,  and acknowledged that the securities
to be issued  have not been  registered  under  the  Securities  Act,  that they
understood the economic risk of an investment in the  securities,  and that they
had the  opportunity to ask questions of and receive  answers from the Company's
management  concerning  any  and  all  matters  related  to  acquisition  of the
securities

(f) The  Company and  Carlingford  entered  into a  settlement  agreement  dated
September 29, 2004 (the "Carlingford  Settlement Agreement") regarding:  (i) the
settlement of an aggregate  amount of $28,113.70 due and owing to Carlingford by
the Company  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 the Company relating to financial  services  provided by
Carlingford  to the  Company  (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 the Company  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) the Company
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 its  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 the  Company's  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 the
Company's  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  restricted  common  stock and 687,500  warrants of the
Company 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.

Simultaneously,  Carlingford  and Richard AH. Siagian,  Antonius L.M.  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 the  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,  the  Company  issued an
aggregate of 2,280,440 shares of 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 Securities
Act. Carlingford executed the Carlingford  Settlement Agreement and acknowledged
that the securities to be issued have not been  registered  under the Securities
Act,  that it understood  the economic risk of an investment in the  securities,
and that it had the opportunity to ask questions of and receive answers from the
Company's  management  concerning any and all matters  related to acquisition of
the securities. The Carlingford Creditors each executed the Carlingford/Creditor
Agreement and acknowledged that the securities to be issued have not

                                                                         Page 34

<PAGE>


FORM 10-QSB
September 30, 2004                                 Transax international Limited

been registered under the Securities Act, that they understood the economic risk
of an investment in the  securities,  and that they had the  opportunity  to ask
questions of and receive  answers from the Company's  management  concerning any
and all matters related to acquisition of the securities

(g) The Company and Asia Pacific Inc. ("Asia Pacific") entered into a settlement
agreement  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 the Company  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 the Company relating to financial  services  provided by Asia Pacific
to the Company (the  "Finders' Fee Debt").  Pursuant to the terms and provisions
of the Asia Pacific Settlement  Agreement:  (i) the Company 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 its 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 the  Company's  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 the
Company's  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 restricted common
stock  and  the  1,715,000   warrants  of  the  Company  as  full  and  complete
satisfaction of the Debt and the Finders' Fee Debt.

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 the 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 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,  the Company  issued an
aggregate  of 2,167,687  shares of its  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. Asia Pacific executed the Asia Pacific Settlement  Agreement
and acknowledged that the securities to be issued have not been registered under
the Securities Act, that it understood the economic risk of an investment in the
securities,  and that it had the  opportunity  to ask  questions  of and receive
answers from the Company's management  concerning any and all matters related to
acquisition of the securities. The Asia Pacific Creditors each executed the Asia
Pacific/Creditor  Agreement and  acknowledged  that the  securities to be issued
have not been  registered  under the  Securities  Act, that they  understood the
economic  risk  of an  investment  in the  securities,  and  that  they  had the
opportunity  to  ask  questions  of  and  receive  answers  from  the  Company's
management  concerning  any  and  all  matters  related  to  acquisition  of the
securities

(h) The Company and Asia  Consulting Inc.  ("Asia  Consulting"),  entered into a
settlement  agreement 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 the  Company  relating  to  managerial  and
consulting services provided by Asia

                                                                         Page 35

<PAGE>


FORM 10-QSB
September 30, 2004                                 Transax international Limited

Consulting to the Company (the "Debt").  Pursuant to the terms and provisions of
the Asia Consulting Settlement  Agreement:  (i) the Company agreed to settle the
Debt by issuing to Asia Consulting  and/or its designates  562,500 shares of its
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 the Company's 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  restricted  common  stock of the
Company as full and complete satisfaction of the Debt.

Simultaneously,  Asia Consulting and Antonius L.M.  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 the 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,  the Company issued
an aggregate of 562,500 shares of 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.  Asia  Consulting
executed the Asia  Consulting  Settlement  Agreement and  acknowledged  that the
securities to be issued have not been registered  under the Securities Act, that
it understood the economic risk of an investment in the securities,  and that it
had the  opportunity to ask questions of and receive  answers from the Company's
management  concerning  any  and  all  matters  related  to  acquisition  of the
securities.   The   Asia   Consulting   Creditors   each   executed   the   Asia
Consulting/Creditor  Agreement and acknowledged that the securities to be issued
have not been  registered  under the  Securities  Act, that they  understood the
economic  risk  of an  investment  in the  securities,  and  that  they  had the
opportunity  to  ask  questions  of  and  receive  answers  from  the  Company's
management  concerning  any  and  all  matters  related  to  acquisition  of the
securities.

On October 19,  2004,  the Company  issued  6,698,306  shares of common stock in
relation  to the  share  subscriptions  received  on  September  29,  2004,  and
2,402,500  warrants at $0.20 expiring September 29, 2009. As of the date of this
Quarterly report, 23,546,524 shares were issued and outstanding.

STOCK OPTIONS EXERCISED

As at September  30, 2004,  an  aggregate of 4,500,000  Stock  Options have been
granted  under the Stock Option Plan,  an aggregate of 2,806,730  Stock  Options
have been  exercised  for net proceeds of $836,240,  and an aggregate  1,692,270
Stock Options were outstanding.

(a) On February 12, 2004, an aggregate of 300,000  Stock Options were  exercised
at $0.25 per share for $75,000 by  employees  or  consultants  of the Company in
accordance with the terms of the respective notice and agreements of exercise of
option for  $75,000 in  settlement  of debt due and owing by the  Company to the
optionees.

(b) On June 11, 2004, an aggregate of 150,000  Stock  Options were  exercised at
$0.25 per share for  $37,500  by  employees  or  consultants  of the  Company in
accordance with the terms of the respective notice and agreements of exercise of
option for  $37,500 in  settlement  of debt due and owing by the  Company to the
optionees.

                                                                         Page 36

<PAGE>


FORM 10-QSB
September 30, 2004                                 Transax international Limited

(c) On July 26, 2004, the Company  cancelled 325,000 Stock Options at $0.50 that
had been  previously  granted on August 14, 2003, and cancelled  another 275,000
Stock Options at $0.25 that had been previously  granted on December 1, 2003. On
July 26, 2004, the Company  granted 600,000 Stock Options at $0.06 expiring July
26, 2009 under the Stock Option Plan.  On July 26, 2004, an aggregate of 600,000
Stock Options were  exercised at $0.06 per share for $36,000 by  consultants  of
the Company in accordance with the terms of the respective notice and agreements
of  exercise of option for  $36,000 in  settlement  of debt due and owing by the
Company to the optionees.

As of the date of this Quarterly Report, an aggregate of 4,500,000 Stock Options
have been granted under the Stock Option Plan,  an aggregate of 2,806,730  Stock
Options  have been  exercised  for net  proceeds of  $836,240,  and an aggregate
1,693,270 Stock Options were outstanding.

SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As a result  of the  issuances  of  restricted  common  stock  and  warrants  as
described above, there was a change in beneficial  ownership of the Company.  As
of the date of this Current Report,  there are 23,546,523 shares of common stock
issued and  outstanding,  and the Company is obligated  to issued an  additional
7,151,070 shares of common stock pursuant to exercise of warrants. The following
table sets forth  information as of the date of this Current Report  concerning:
(i) each person who is known by the Company to own beneficially  more than 5% of
the Company's  outstanding  common stock;  (ii) each of the Company's  executive
officers,  directors and key employees and beneficial ownership of the Company's
shares  of  outstanding  common  stock;  and (iii) all  executive  officers  and
directors  as a group  and  beneficial  ownership  of the  Company's  shares  of
outstanding common stock.  Common stock not outstanding but deemed  beneficially
owned by virtue of an exercise  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.

                                                                         Page 37

<PAGE>


FORM 10-QSB
September 30, 2004                                 Transax international Limited

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
                                                             Amount and Nature
                               Name and Address of             of Beneficial           Percent of
Title of Class                  Beneficial Owner                 Ownership              of Class
-------------------------------------------------------------------------------------------------
<S>                            <C>                              <C>                       <C>
Common Stock                   Stephen Walters                  984,819 (1)(2)            3.62%
                               Flat 3 Elstree Crt
                               Blackpool, Lancs
                               FY20SX, UK

Common Stock                   Carlingford Investments
                               Limited                        8,718,788 (1)(3)           26.45%
                               80 raffles Place
                               #16-20 UOB Plaza II
                               Singapore 048624

Common Stock                   Nathalie Pilon                   150,000 (1)(4)            0.46%
                               2919 Ontario Street
                               Vancouver, British Columbia
                               Canada V5T 2Y5

Common Stock                   David Bouzaid                    250,000 (1)(5)            0.76%
                               Jl. Bangka Jakarta Selatan
                               12730
                               Indonesia

Common Stock                   Laurie Bewes                     425,000 (1)(6)            1.29%
                               429 Willawrong Road
                               Caringbah, Australia
                               NSW 2229

Common Stock                   Graeme Smith                     150,000 (1)(7)            0.46%
                               25 South Harper's Road
                               Woodend, Victoria, Australia
                               3442

Common Stock                   All officers and directors    10,678,607 (1)(8)            38.56%
                                as a group (5 persons)
-------------------------------------------------------------------------------------------------
</TABLE>

(1) These are restricted shares of Common Stock.

(2) Mr. Walters is the  President/Chief  Executive Officer and a director of the
Company. This figure includes: (i) 234,819 shares of Common Stock held of record
by Mr.  Walters and;  (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.

(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 (iii) an assumption of the
exercise by Carlingford  Investments  Limited of an aggregate of

                                                                         Page 38

<PAGE>


FORM 10-QSB
September 30, 2004                                 Transax international Limited

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. Mr. Walters
has sole control and  disposition  rights over these shares and warrants.  As of
the date of this  Current  Report,  no  Warrants  nor  Stock  Options  have been
exercised.

(4) This figure includes:  (i) 50,000 shares of Common Stock held of record; and
(ii) an assumption of the exercise by Ms. Pilon of an aggregate of 100,000 Stock
Options  granted to Ms. Pilon to acquire 100,000 shares of Common Stock at $0.50
per share expiring on August 14, 2008.

(5) This figure includes:  (i) 50,000 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 200,00 shares of Common Stock at
$0.50 per share expiring on August 14, 2008.

(6) This figure includes: (i) 225,000 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.

(7) This  figure  includes an  assumption  of the  exercise  by Mr.  Smith of an
aggregate  of 150,000  Stock  Options  granted to Mr.  Smith to acquire  150,000
shares of Common Stock at $0.50 per share expiring on August 14, 2008. As of the
date of this Annual  Report,  Mr. Smith has tendered his  resignation  effective
November 10, 2004.

(8) This figure  includes:  (i) 6,530,275 shares of Common Stock held of record;
(ii) an assumption of the exercise of an aggregate of 1,400,000 Stock Options to
acquire  1,400,000  shares  of Common  Stock;  and  (iii) an  assumption  of the
exercise of an aggregate of 2,748,333  Warrants to acquire  2,748,333  shares of
Common Stock.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

No report required.

ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITIES HOLDERS

No report required.

ITEM 5. OTHER INFORMATION

No report required.

ITEM 6. EXHIBITS AND OTHER INFORMATION ON FORM 8-K

     11.1  Statement of computation of per share earnings [Unaudited]

     10.1  Resignation of Mr. Graeme Smith

     31.1  Certification of Chief Executive Officer pursuant to Securities
           Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a)

                                                                         Page 39

<PAGE>


FORM 10-QSB
September 30, 2004                                 Transax international Limited

     31.2  Certification of Chief Financial Officer pursuant to Securities
           Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a)

     32.1  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

REPORTS ON FORM 8-K

November 3, 2004: current report, items 1,2 3 and 9;
November 1, 2004: current report, item 3;
October 18, 2004: current report, items 2 and 9;
October 12, 2004: current report, item 9;
July 21, 2004: current report, item 9;
March 11, 2004: current report, item 9;
February 24, 2004: current report, item 9;

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.

                                        Transax International Limited


Dated: November 15, 2004                By:  /s/ Stephen Walters
                                        -------------------------------
                                        Stephen Walters, President and
                                        Chief Executive Officer

Dated: November 15, 2004                By:  /s/ Nathalie Pilon
                                        -------------------------------
                                        Nathalie Pilon,
                                        Chief Financial Officer

                                                                         Page 40