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

                                    FORM 10-Q

(Mark One)

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

         For the period ended September 30, 2008

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

        For the transition period from ______ to _______

                           COMMISSION FILE NO. 0-27845

                          TRANSAX INTERNATIONAL LIMITED
                          -----------------------------
                (Name of registrant as specified in its charter)

                Colorado                               90-0287423
                --------                               ----------
    (State or other jurisdiction of                 (I.R.S. Employer
     incorporation or organization)                Identification No.)

             5201 Blue Lagoon Drive, 8th Floor, Miami, Florida 33126
             -------------------------------------------------------
                    (Address of principal executive offices)

                                 (305) 629-3090
                                 --------------
              (Registrant's telephone number, including area code)

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

         Indicate by check mark whether the registrant is a large accelerated
filed, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated filer"
and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

   Large accelerated filer [ ]                  Accelerated filer         [ ]
   Non-accelerated filer   [ ]                  Smaller reporting company [X]

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

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the most practicable date: 52,398,756 shares of
common stock are issued and outstanding as of November 14, 2008.

<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                                    FORM 10-Q
                               SEPTEMBER 30, 2008

                                TABLE OF CONTENTS

                                                                            Page
                                                                             No.
                                                                            ----

                         PART I. - FINANCIAL INFORMATION

Item 1.  Financial Statements. .............................................   3

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations. ............................................  28

Item 3.  Quantitative and Qualitative Disclosures About Market Risk. .......  37

Item 4   Controls and Procedures. ..........................................  38

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings. ................................................  41

Item 1A. Risk Factors. .....................................................  41

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds. ......  41

Item 3.  Defaults Upon Senior Securities. ..................................  41

Item 4.  Submission of Matters to a Vote of Security Holders. ..............  41

Item 5.  Other Information. ................................................  41

Item 6.  Exhibits. .........................................................  41

                           FORWARD LOOKING STATEMENTS


This report on Form 10-Q contains forward-looking statements that are subject to
risks and uncertainties that could cause actual results to differ materially
from those discussed in the forward-looking statements and from historical
results of operations. Among the risks and uncertainties which could cause such
a difference are those relating to our dependence upon certain key personnel,
our ability to manage our growth, our success in implementing the business
strategy, our success in arranging financing where required, and the risk of
economic and market factors affecting us or our customers. Many of such risk
factors are beyond the control of the Company and its management.

                                        2
<PAGE>
<TABLE>
                           TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                                     CONSOLIDATED BALANCE SHEETS
<CAPTION>
                                                                       September 30,   December 31,
                                                                           2008            2007
                                                                       ------------    ------------
                                                                        (Unaudited)      (Audited)
<S>                                                                    <C>             <C>
                               ASSETS

CURRENT ASSETS:
  Cash .............................................................   $    160,790    $    175,938
  Accounts receivable (net of allowance for doubtful accounts of $0)        660,154         487,397
  Prepaid expenses and other current assets ........................        355,956         277,992
                                                                       ------------    ------------

     TOTAL CURRENT ASSETS ..........................................      1,176,900         941,327

SOFTWARE DEVELOPMENT COSTS, net ....................................        188,866         347,063
PROPERTY AND EQUIPMENT, net ........................................        910,180         757,673
OTHER ASSETS .......................................................          2,610           4,800
                                                                       ------------    ------------

     TOTAL ASSETS ..................................................   $  2,278,556    $  2,050,863
                                                                       ============    ============

               LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
  Current portion of loans payable .................................   $    678,327    $    600,440
  Convertible debenture payable, net ...............................              -         225,000
  Accounts payable and accrued expenses ............................      1,943,471       2,184,678
  Deposit on sale of minority interest .............................              -         187,747
  Deferred gain on sale of minority interest in subsidiary .........        937,700               -
  Due to related parties ...........................................        305,116         406,052
  Warrant liability ................................................          6,121         153,134
  Convertible feature liability ....................................        817,254       1,280,100
  Loans payable - related party ....................................        304,896         292,475
  Convertible loan - related party .................................        254,386         238,621
                                                                       ------------    ------------

     TOTAL CURRENT LIABILITIES .....................................      5,247,271       5,568,247

LOANS PAYABLE, NET OF CURRENT PORTION ..............................              -          52,364
ACCOUNTS PAYABLE AND ACCRUED EXPENSES, NET OF CURRENT PORTION ......        195,759         287,307
                                                                       ------------    ------------

     TOTAL LIABILITIES .............................................      5,443,030       5,907,918
                                                                       ------------    ------------

STOCKHOLDERS' DEFICIT:
  Series A convertible preferred stock, no par value; 16,000 shares
   authorized; 14,517 and 15,330 shares issued and outstanding at
   September 30, 2008 and December 31, 2007, respectively;
   liquidation preference $1,451,700 at September 30, 2008 .........      1,335,739       1,417,039
  Common stock $.00001 par value; 100,000,000 shares authorized;
  47,717,963 and 34,632,778 shares issued and outstanding at
   September 30, 2008 and December 31, 2007, respectively ..........            477             346
  Paid-in capital ..................................................      8,395,494       8,013,632
  Accumulated deficit ..............................................    (13,440,277)    (13,313,435)
  Accumulated other comprehensive income ...........................        544,093          25,363
                                                                       ------------    ------------

     TOTAL STOCKHOLDERS' DEFICIT ...................................     (3,164,474)     (3,857,055)
                                                                       ------------    ------------

     TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT ...................   $  2,278,556    $  2,050,863
                                                                       ============    ============

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

                                                  3
</TABLE>
<PAGE>
<TABLE>
                                       TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                                            CONSOLIDATED STATEMENTS OF OPERATIONS
                                                         (Unaudited)
<CAPTION>
                                                             For the Three Months Ended        For the Nine Months Ended
                                                                    September 30,                     September 30,
                                                           ------------------------------    ------------------------------
                                                                2008             2007             2008             2007
                                                           -------------    -------------    -------------    -------------
<S>                                                        <C>              <C>              <C>              <C>
REVENUES ...............................................   $   1,774,551    $   1,328,636    $   4,986,507    $   3,852,538
                                                           -------------    -------------    -------------    -------------

OPERATING EXPENSES:
  Cost of product support services .....................         738,657          580,372        1,838,302        1,540,255
  Compensation and related benefits ....................         442,008          219,465        1,252,684          652,733
  Professional fees ....................................          16,687           17,496           94,186           96,294
  Management and consulting fees - related parties .....          74,985           71,365          229,426          284,032
  Investor relations ...................................           1,000            9,700            1,000           27,978
  Depreciation and amortization ........................          87,593          105,592          261,012          272,503
  General and administrative ...........................         504,664          438,258        1,377,122        1,025,094
                                                           -------------    -------------    -------------    -------------

     TOTAL OPERATING EXPENSES ..........................       1,865,594        1,442,248        5,053,732        3,898,889
                                                           -------------    -------------    -------------    -------------

INCOME (LOSS) FROM OPERATIONS ..........................         (91,043)        (113,612)         (67,225)         (46,351)
                                                           -------------    -------------    -------------    -------------

OTHER INCOME (EXPENSES):
  Other income (expenses) ..............................               -          (52,871)               -           14,749
  Foreign currency exchange loss .......................          15,536           (9,166)           3,219          (22,093)
  Gain from derivative liabilities .....................          97,524          331,500          309,166          738,898
  Interest expense,net .................................          24,956          (49,756)        (238,612)        (342,049)
  Interest expense - related party .....................          (8,379)         (20,093)         (31,404)         (44,850)
                                                           -------------    -------------    -------------    -------------

     TOTAL OTHER INCOME (EXPENSES) .....................         129,637          199,614           42,369          344,655
                                                           -------------    -------------    -------------    -------------

INCOME (LOSS) BEFORE INCOME TAXES ......................          38,594           86,002          (24,856)         298,304

PROVISION FOR INCOME TAXES .............................          (3,852)        (145,462)        (101,986)        (145,462)
                                                           -------------    -------------    -------------    -------------

NET INCOME (LOSS) ......................................          34,742          (59,460)        (126,842)         152,842

DEEMED AND CUMULATIVE PREFERRED STOCK DIVIDENDS ........         (25,556)         (27,790)         (77,476)         (83,790)
                                                           -------------    -------------    -------------    -------------

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS ..   $       9,186    $     (87,250)   $    (204,318)   $      69,052
                                                           =============    =============    =============    =============

COMPREHENSIVE INCOME (LOSS):
  NET INCOME (LOSS) ....................................   $      34,742    $     (59,460)   $    (126,842)   $     152,842

  OTHER COMPREHENSIVE INCOME (LOSS)
     Unrealized foreign currency translation gain (loss)         274,278          147,064          518,730             (317)
                                                           -------------    -------------    -------------    -------------

  COMPREHENSIVE INCOME (LOSS) ..........................   $     309,020    $      87,604    $     391,888    $     152,525
                                                           =============    =============    =============    =============

NET INCOME (LOSS) PER COMMON SHARE:
  BASIC ................................................   $           -    $           -    $           -    $           -
                                                           =============    =============    =============    =============
  DILUTED ..............................................   $           -    $           -    $           -    $           -
                                                           =============    =============    =============    =============

WEIGHTED AVERAGE SHARES OUTSTANDING:
  BASIC ................................................      46,534,216       32,299,923       41,690,594       32,121,302
                                                           =============    =============    =============    =============
  DILUTED ..............................................     100,000,000       32,299,923       41,690,594       72,988,284
                                                           =============    =============    =============    =============

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

                                                              4
</TABLE>
<PAGE>
<TABLE>
                         TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF CASH FLOWS
                                           (Unaudited)
<CAPTION>
                                                                           For the Nine Months
                                                                           Ended September 30,
                                                                         ----------------------
                                                                            2008         2007
                                                                         ---------    ---------
<S>                                                                      <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income ....................................................   $(126,842)   $ 152,842
Adjustments to reconcile net (loss) income to net cash
  provided by operating activities:
     Depreciation and amortization ...................................     261,012      272,503
     Amortization of software maintenance costs ......................     158,197      176,264
     Deposit on sale of minority interest applied to professional fees     (20,000)           -
     Amortization of deferred debt issuance costs ....................           -        4,783
     Amortization of debt discount ...................................           -       31,250
     Gain from derivative liabilities ................................    (309,166)    (738,898)

Changes in assets and liabilities:
     Accounts receivable .............................................    (237,078)    (102,922)
     Prepaid expenses and other current assets .......................    (111,853)     (24,834)
     Other assets ....................................................       2,190            -
     Accounts payable and accrued expenses ...........................     (58,861)     453,665
     Accrued interest payable, related party .........................      28,186       57,144
     Due to related parties ..........................................    (100,936)     138,727
     Accounts payable and accrued expenses - long-term ...............     (79,437)    (113,165)
                                                                         ---------    ---------

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES ..................    (594,588)     307,359
                                                                         ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sale of minority interest ............................     937,700            -
  Capitalized software development costs .............................           -     (254,409)
  Acquisition of property and equipment ..............................    (497,924)     (36,713)
                                                                         ---------    ---------

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES ..................     439,776     (291,122)
                                                                         ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from (repayment of) of loans ..............................      84,200     (125,205)
  Repayment of convertible debt ......................................    (225,000)           -
  Proceeds from loan - related party .................................           -       80,000
                                                                         ---------    ---------

NET CASH USED IN FINANCING ACTIVITIES ................................    (140,800)     (45,205)
                                                                         ---------    ---------

EFFECT OF EXCHANGE RATE CHANGES ON CASH ..............................     280,464        4,584
                                                                         ---------    ---------

NET DECREASE IN CASH .................................................     (15,148)     (24,384)

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

CASH, END OF PERIOD ..................................................   $ 160,790    $  47,117
                                                                         =========    =========


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid for interest .............................................   $ 234,448    $ 297,602
                                                                         =========    =========
  Cash paid for income taxes .........................................   $       -    $       -
                                                                         =========    =========

NON-CASH INVESTING AND FINANCING ACTIVITIES:
  Series A preferred stock converted to common stock .................   $  81,300    $  11,092
                                                                         =========    =========
  Derivative liability reclassified to equity upon conversion ........   $ 300,693    $       -
                                                                         =========    =========

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

                                                5
</TABLE>
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                               September 30, 2008

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

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

The Company, primarily through its 55% owned d subsidiary, Medlink Conectividade
em Saude Ltda ("Medlink Conectividade") is an international provider of
information network solutions specifically designed for healthcare providers and
health insurance companies. The Company's MedLink Solution enables the real time
automation of routine patient eligibility, verification, authorizations, claims
processing and payment functions. The Company has offices located in Miami,
Florida and Rio de Janeiro, Brazil.

On March 26, 2008, the Company executed a stock purchase and option agreement
(the "Agreement") with Engetech, Inc., a Turks & Caicos corporation controlled
and owned 20% by Americo de Castro, director and President of Medlink
Conectividade, and 80% by Flavio Gonzalez Duarte (the "Buyer"). In accordance
with the terms and provisions of the Agreement, the Company sold to the Buyer
45% of the total issued and outstanding stock of its wholly-owned subsidiary,
Transax Limited, which owns one hundred percent of the total issued and
outstanding shares of: (i) Medlink Conectividade, and (ii) Medlink Technologies,
Inc., ("MTI") a Mauritius corporation (See Note 8).

Principles of Consolidation

The consolidated financial statements are prepared in accordance with generally
accepted accounting principles in the United States of America. The consolidated
financial statements include the Company and its 55% owned subsidiary, Transax
Limited, and Transax Limited's wholly-owned subsidiaries Medlink Conectividade,
and MTI. All significant intercompany balances and transactions have been
eliminated in the consolidated financial statements.

Management acknowledges its responsibility for the preparation of the
accompanying interim consolidated financial statements, which reflect all
adjustments, consisting of normal recurring adjustments, considered necessary,
in its opinion, for a fair statement of its consolidated financial position and
the results of its operations for the interim period presented. These
consolidated financial statements should be read in conjunction with the summary
of significant accounting policies and notes to consolidated financial
statements included in the Company's Form 10-KSB annual report for the year
ended December 31, 2007.

The accompanying unaudited condensed consolidated financial statements for
Transax International, Inc. and its subsidiaries have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form 10-Q
and Article 8-03 of Regulation S-X. Operating results for interim periods are
not necessarily indicative of results that may be expected for the fiscal year
as a whole.

                                        6
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                               September 30, 2008

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

Use of Estimates

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

Fair Value of Financial Instruments

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

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

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

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

The adoption of SFAS No. 157 did not have a material impact on the Company's
fair value measurements. The carrying amounts reported in the balance sheet for
cash, accounts receivable, loans payable, accounts payable and accrued expenses,
and amounts due from related parties approximate their fair market value based
on the short-term maturity of these instruments. The Company uses level 2 inputs
to value its derivative liabilities (See Notes 6 and 7).

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

                                        7
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                               September 30, 2008

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

Concentrations of Credit Risk

Financial instruments that potentially subject us to significant concentrations
of credit risk consist principally of cash and accounts receivable. The Company
performs certain credit evaluation procedures and does not require collateral
for financial instruments subject to credit risk. The Company believes that its
credit risk is limited because the Company routinely assesses the financial
strength of its customers, and, based upon factors surrounding the credit risk
of its customers, establishes an allowance for uncollectible accounts and, as a
consequence, believes that its accounts receivable credit risk exposure beyond
such allowances is limited.

The Company recognizes an allowance for doubtful accounts to ensure accounts
receivable are not overstated due to uncollectability and are maintained for all
customers based on a variety of factors, including the length of time the
receivables are past due, significant one-time events and historical experience.
An additional reserve for individual accounts is recorded when the Company
becomes aware of a customer's inability to meet its financial obligation, such
as in the case of bankruptcy filings or deterioration in the customer's
operating results or financial position. If circumstances related to customers
change, estimates of the recoverability of receivables would be further
adjusted. As of September 30, 2008 and December 31, 2007, the allowance for
doubtful accounts was $0.

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

The Company had revenues from two major customers during each of the nine months
ended September 30, 2008 and 2007 that accounted for approximately 79.9%, or
$3,981,700 and 89.1%, or $3,433,449 of the revenues, respectively. For the nine
months ended September 30, 2008, these two major customers accounted for 40.7%
and 39.1% of net revenues, respectively. For the nine months ended September 30,
2007, these two major customers accounted for 49.5% and 39.6% of revenues,
respectively. At September 30, 2008, the same major customers accounted for
33.2% and 38.3% of the total accounts receivable balance outstanding,
respectively. At December 31, 2007, the same major customers accounted for 47%
and 35%, of the total accounts receivable balance outstanding, respectively.

The Company maintains its cash in accounts with major financial institutions in
the United States and Brazil. Deposits in these banks may exceed the amounts of
insurance provided on such deposits. As of September 30, 2008, bank deposits in
the United States did not exceed federally insured limits of $250,000. At
September 30, 2008, the Company had deposits of $28,128 in banks in Brazil which
may not be insured. Historically, we have not experienced any losses on our
deposits of cash.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents. The Company had no
cash equivalents at September 30, 2008 and December 31, 2007.

                                        8
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                               September 30, 2008

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

Property and Equipment, net

Property and equipment, net, is stated at cost less accumulated depreciation and
amortization. Depreciation and amortization is computed generally by the
straight-line method at rates adequate to allocate the cost of applicable assets
over their estimated useful lives, which range from 2 to 10 years. Expenditures
for maintenance and repairs that do not improve or extend the lives of the
related assets are expensed as incurred, while major repairs are capitalized.

Long-Lived Assets

Long-lived assets are reviewed annually for possible impairment, or whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. When such factors and circumstances exist, we compare
the projected undiscounted future cash flows associated with the future use and
disposal of the related asset or group of assets to their respective carrying
amounts. Impairment, if any, is measured as the excess of the carrying amount
over the fair value, based on market value when available, or discounted
expected cash flows, of those assets and is recorded in the period in which the
determination is made. Management recorded no impairment charges of long-lived
assets during each of the nine months ended September 30, 2008 and 2007.

Income Taxes

The Company files federal and state income tax returns in the United States for
its domestic operations, and files separate foreign tax returns for the
Company's foreign subsidiaries in the jurisdictions in which those subsidiaries
operate. The Company accounts for income taxes under SFAS 109, "Accounting for
Income Taxes." Under SFAS 109, deferred tax assets and liabilities are
determined based on differences between the financial statement and tax basis of
assets and liabilities and net operating loss and credit carryforwards using
enacted tax rates in effect for the year in which the differences are expected
to affect taxable income. A valuation allowance is established, when necessary,
to reduce deferred tax assets to the amount that is more likely than not to be
realized. If it becomes more likely than not that a deferred tax asset will be
used, the related valuation allowance on such assets would be reversed.
Management makes judgments as to the interpretation of the tax laws that might
be challenged upon an audit and cause changes to previous estimates of tax
liability. In management's opinion, adequate provisions for income taxes have
been made for all years. If actual taxable income by tax jurisdiction varies
from estimates, additional allowances or reversal of reserves may be necessary.
Under SFAS 109, the effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment
date. Due to net operating loss carry forwards available, no provision for
income taxes has been recorded for the U.S. entities for the nine months ended
September 30, 2008 and 2007. The Company has not recorded any deferred taxes at
September 30, 2008 and December 31, 2007.

                                        9
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                               September 30, 2008

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

On January 1, 2007, the Company adopted the provisions of the FASB's
Interpretation Number 48, "Accounting for Uncertainty in Income Taxes - an
interpretation of SFAS Statement No. 109", ("FIN 48"), which provides a
financial statement recognition threshold and measurement attribute for a tax
position taken or expected to be taken in a tax return. Under FIN 48, we may
recognize the tax benefit from an uncertain tax position only if it is more
likely than not that the tax position will be sustained on examination by the
taxing authorities, based on the technical merits of the position. The tax
benefits recognized in the financial statements from such a position should be
measured based on the largest benefit that has a greater than 50% likelihood of
being realized upon ultimate settlement. FIN 48 also provides guidance on
de-recognition of income tax assets and liabilities, classification of current
and deferred income tax assets and liabilities, accounting for interest and
penalties associated with tax positions, and income tax disclosures. The
adoption of FIN 48 did not have a material impact on our consolidated financial
statements.

Foreign Currency Translation

The reporting currency of the Company is the U.S. dollar. The functional
currency of the Company's operating subsidiary, Medlink Conectividade, is its
local currency, the Brazilian Real ("R$"). Results of operations and cash flows
are translated at average exchange rates during the period, assets and
liabilities are translated at the unified exchange rate at the end of the
period, and equity is translated at historical exchange rates. Translation
adjustments resulting from the process of translating the local currency
financial statements into U.S. dollars are included in determining comprehensive
income. The cumulative translation adjustment and effect of exchange rate
changes on cash for the nine months ended September 30, 2008 and 2007 was
$160,464 and $4,584, respectively. Transaction gains and losses that arise from
exchange rate fluctuations on transactions denominated in a currency other than
the functional currency are included in the results of operations as incurred.

Asset and liability accounts at September 30, 2008 and December 31, 2007 were
translated at 1.9143 R$ to $1.00 and at 1.7713 R$ to $1.00, respectively. Equity
accounts are translated at their historical rate. In accordance with SFAS 95,
"Statement of Cash Flows," cash flows from the Company's operations are
calculated based upon the local currencies using the average translation rate.
As a result, amounts related to assets and liabilities reported on the statement
of cash flows will not necessarily agree with changes in the corresponding
balances on the balance sheet.

Transactions and balances originally denominated in U.S. dollars are presented
at their original amounts. Transactions and balances in other currencies are
converted into U.S. dollars in accordance with SFAS 52, "Foreign Currency
Translation," and are included in determining net income or loss.

Although the economic situation in Brazil has remained relatively stable in
recent years, a return to higher levels of inflation, and currency exchange rate
volatility could adversely affect the Company's operations. Changes in the
valuation of the Brazilian Real in relation to the U.S. dollar may have
significant effects on the Company's consolidated financial statements.

Revenue Recognition

The Company's revenues, which do not require any significant production,
modification or customization for the Company's targeted customers and do not
have multiple elements, are recognized when (1) persuasive evidence of an
arrangement exists; (2) delivery has occurred; (3) the Company's fee is fixed
and determinable; and (4) collectability is probable.

                                       10
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                               September 30, 2008

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

Substantially all of the Company's revenues are derived from the processing of
applications by healthcare providers for approval of patients for healthcare
services from insurance carriers. The Company's software or hardware devices
containing the Company's software are installed at the healthcare provider's
location. The Company offers transaction services to authorize and adjudicate
the identity of the patient and obtains "real time" approval for any necessary
medical procedure from the insurance carrier. The Company's transaction-based
solutions provide remote access for healthcare providers to connect with
contracted insurance carriers. Transaction services are provided through
contracts with insurance carriers and others, which specify the services to be
utilized and the markets to be served. The Company's clients are charged for
these services on a per transaction basis. Pricing varies depending on the type
of transactions being processed under the terms of the contract for which
services are provided. Transaction revenues are recognized in the period in
which the transactions are performed.

Accounting for Conversion Features and Warrants issued with Preferred Stock

The Company issued 16,000 shares of convertible Series A preferred stock, (see
Note 6 and Note 7), which contained an Embedded Conversion Feature, ("ECF"), and
warrants to purchase common stock. In accordance with the guidance in paragraph
12 of SFAS 133, "Accounting for Derivative Instruments and Hedging Activities,"
it was necessary to evaluate the conversion option separately from the debt host
and account for it separately as a derivative if the conversion option met
certain criteria. The conversion option met all three criteria of paragraph 12:
(1) the conversion feature is not clearly and closely related to the host
component, (2) the convertible instrument is not accounted for at fair value,
and (3) the embedded conversion option meets the definition of a derivative in
paragraph 6 of SFAS 133.

To assess whether or not the ECF would be classified as stockholders' equity if
it were freestanding, management considered the guidance in Emerging Issues Task
Force ("EITF") issue No. 00-19, "Accounting for Derivative Financial Instruments
Indexed to, and Potentially Settled in, a Company's Own Stock." In assessing
whether or not the conversion option would be classified as equity or a
liability if it were freestanding, management determined whether or not the
Series A convertible preferred stock is considered "conventional". EITF 00-19
and EITF issue No. 05-2, "The Meaning of Conventional Convertible Debt
Instruments in issue No. 00-19," defines conventional convertible debt as debt
whereby the holder will, at the issuer's option, receive a fixed amount of
shares or the equivalent amount of cash as proceeds when the conversion option
is exercised. . Management considered all aspects of EITF 00-19, paragraphs
12-33 and determined that Series A convertible preferred stock was not
conventional as defined.

This caused the ECF of the Series A convertible preferred stock to be classified
as a derivative financial instrument under SFAS 133. In addition, all warrants
to purchase common stock issued with the preferred stock were then deemed to be
derivative instruments under SFAS 133. The accounting treatment of derivative
financial instruments requires that the Company record the ECF and warrants at
their fair values as of each reporting date. Any change in fair value is
recorded as a gain or loss from derivative liabilities within the consolidated
statements of operations for all periods presented. The derivatives were valued
using the Black-Scholes-Merton option pricing model and are classified in the
consolidated balance sheets as current liabilities at September 30, 2008 and
December 31, 2007.

                                       11
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                               September 30, 2008

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

Basic and Diluted Income (Loss) per Share

Basic income (loss) per share is computed by dividing the net income (loss) by
the weighted average number of shares of common stock outstanding during the
period. Diluted income (loss) per share reflects the basic income (loss) per
share, while giving effect to all potentially dilutive shares of common stock
that were outstanding during the period, such as common stock issuances that
could result from the exercise or conversion of securities (options or
warrants). The computation of diluted loss per share does not assume conversion,
exercise, or contingent issuance of securities that would have an anti-dilutive
effect on loss per share (i.e. reducing loss per share). The dilutive effect of
outstanding options and warrants and their equivalents are reflected in dilutive
earnings per share by the application of the treasury stock method which
recognizes the use of proceeds that could be obtained upon the exercise of
options and warrants in computing diluted earnings per share. It assumes that
any proceeds would be used to purchase common stock at the average market price
of the common stock during the period. The following table presents a
reconciliation of basic and diluted earnings per share:
<TABLE>
<CAPTION>
                                                  For the Three Months        For the Nine Months
                                                   Ended September 30,        Ended September 30,
                                                   2008          2007         2008          2007
                                               ------------   ----------   ----------   ------------
<S>                                            <C>            <C>          <C>          <C>
Net income (loss) attributable to common
shareholders for basic and diluted earnings
per share ..................................   $      9,186   $  (87,250)  $ (204,318)  $     69,052
                                               ============   ==========   ==========   ============

Weighted average shares outstanding - basic      46,534,216   32,299,923   41,690,594     32,121,302
Effect of dilutive securities
   Unexercised options and warrants ........              -            -            -              -
   Convertible debentures ..................              -            -            -      5,357,143
   Convertible loan payable - related party               -            -            -              -
   Convertible preferred stock .............     53,465,784            -            -     35,509,839
                                               ------------   ----------   ----------   ------------
Weighted average shares outstanding- diluted    100,000,000   32,299,923   41,690,594     72,988,284
                                               ============   ==========   ==========   ============
Earnings per share  - basic ................   $          -   $        -   $        -   $          -
                                               ============   ==========   ==========   ============
Earnings per share  - diluted ..............   $          -   $        -   $        -   $          -
                                               ============   ==========   ==========   ============
</TABLE>

         The following were excluded from the computation of diluted shares
outstanding as they would have had an anti-dilutive impact. In periods where the
Company has a net loss, all dilutive securities are excluded. In periods where
the Company has net income, the dilutive securities are excluded when, for
example, their exercise prices are greater than the average fair values of the
Company's common stock as follows:
<TABLE>
<CAPTION>
                                    Three months ended           Nine months ended
                                       September 30,                September 30,
                                 -------------------------   -------------------------
                                    2008           2007          2008          2007
                                 -----------   -----------   -----------   -----------
<S>                              <C>           <C>           <C>           <C>
Stock options ................     2,375,000     2,825,000     2,375,000     2,825,000
Stock warrants ...............     7,402,500    11,902,500     7,402,500    11,902,500
Convertible debt .............             -     5,357,143             -             -
Convertible debt-related party     1,400,000     1,400,000     1,400,000     1,400,000
Convertible preferred stock ..   853,856,716    35,509,839   907,312,500             -
                                 -----------   -----------   -----------   -----------
     Total ...................   865,034,216    56,994,482   918,490,000    16,127,500
                                 ===========   ===========   ===========   ===========
</TABLE>
                                       12
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                               September 30, 2008

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

Stock Based Compensation

The Company adopted SFAS 123R (revised 2004), "Share Based Payment" on a
prospective basis. SFAS 123R establishes the financial accounting and reporting
standards for stock-based compensation plans at fair values. As required by SFAS
123R, the Company recognizes the cost resulting from all stock-based payment
transactions including shares issued under its stock option plans in the
financial statements.

Advertising

Advertising costs are expensed when incurred. For the nine months ended
September 30, 2008 and 2007, advertising expense was deemed to be not material.

Comprehensive Income (Loss)

The Company follows SFAS 130, "Reporting Comprehensive Income" to recognize the
elements of comprehensive income (loss). Comprehensive income (loss) is
comprised of net earnings and all changes to the statements of stockholders'
deficit, except those due to investments by stockholders, changes in paid-in
capital and distributions to stockholders. For the Company, comprehensive income
for the nine months ended September 30, 2008 and 2007 included net earnings and
unrealized foreign currency translation adjustments only.

Research and Development

Research and development costs are expensed as incurred. For the nine months
ended September 30, 2008 and 2007, research and development costs were deemed to
be not material.

Recent Authoritative Pronouncements

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

                                       13
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                               September 30, 2008

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

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

In March 2008, the FASB issued SFAS 161, "Disclosures about Derivative
Instruments and Hedging Activities". The new standard is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand the
effects of those instruments and activities on an entity's financial position,
financial performance, and cash flows. It is effective for financial statements
issued for fiscal years and interim periods beginning after November 5, 2008,
with early application encouraged. The Company is currently evaluating the
impact of adopting SFAS 161 on its consolidated financial statements.

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

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

                                       14
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                               September 30, 2008

NOTE 2 - GOING CONCERN

Since inception, the Company has incurred cumulative net losses of $13,440,277,
and has a stockholders' deficit of $3,164,474 and a working capital deficit of
$4,070,371 at September 30, 2008. Since its inception, the Company has funded
operations through short-term borrowings and equity investments in order to meet
its strategic objectives. The Company's future operations are dependent upon
external funding and its ability to increase revenues and reduce expenses.
Management believes that sufficient funding will be available from additional
related party borrowings and private placements to meet its business objectives,
including anticipated cash needs for working capital, for a reasonable period of
time. However, there can be no assurance that the Company will be able to obtain
sufficient funds to continue the development of its software products and
distribution networks. Further, since fiscal 2000, the Company has been
deficient in the payment of Brazilian payroll taxes and Social Security taxes.
At September 30, 2008 and December 31, 2007, these deficiencies (including
interest and penalties) amounted to approximately $1,214,000 and $1,080,000,
respectively. This payroll liability is included as part of the accounts payable
and accrued expenses (short-term and long-term) within the consolidated balance
sheet. Additionally, the Company sold 45% of its operating subsidiary and the
Buyer has an option to acquire the remaining 55%. Upon the sale of its operating
subsidiary, the Company will have no continuing operations. As a result of the
foregoing, there exists substantial doubt about the Company's ability to
continue as a going concern. These consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at September 30, 2008 and
December 31, 2007:

                                               2008            2007
                                           -----------     -----------
         Computer Equipment ...........    $ 1,512,676     $ 1,501,682
         Software .....................        822,313         607,919
         Office Furniture and Equipment         27,621          22,685
         Vehicle ......................         72,089          46,011
         Other ........................         20,999          19,232
                                           -----------     -----------
                                             2,455,698       2,197,529
         Accumulated Depreciation .....     (1,545,518)     (1,439,856)
                                           -----------     -----------
                                           $   910,180     $   757,673
                                           ===========     ===========

For the nine months ended September 30, 2008 and 2007, depreciation expense
amounted to $261,012 and $272,503, respectively.

                                       15
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                               September 30, 2008

NOTE 4 - SOFTWARE DEVELOPMENT COSTS

Under the criteria set forth in SFAS 86, "Accounting for the Costs of Computer
Software to be Sold, Leased or Otherwise Marketed," capitalization of software
development costs begins upon the establishment of technological feasibility of
the software. The establishment of technological feasibility and the ongoing
assessment of the recoverability of these costs require considerable judgment by
management with respect to certain external factors, including, but not limited
to, anticipated future gross product revenues, estimated economic life, and
changes in software and hardware technology. Capitalized software development
costs are amortized utilizing the straight-line method over the estimated
economic life of the software not to exceed three years. The Company regularly
reviews the carrying value of software development assets and a loss is
recognized when the unamortized costs are deemed unrecoverable based on the
estimated cash flows to be generated from the applicable software. Capitalized
software development costs consisted of the following at September 30, 2008 and
December 31, 2007:

                                                 2008           2007
                                              ---------      ---------
         Software development costs .....     $ 707,823      $ 707,823
         Accumulated amortization .......      (518,957)      (360,760)
                                              ---------      ---------
                                              $ 188,866      $ 347,063
                                              =========      =========

For the nine months ended September 30, 2008 and 2007, amortization of
development costs amounted to $158,197 and $176,264, respectively, and has been
included in cost of product support services on the accompanying consolidated
statements of operations.


NOTE 5 - RELATED PARTY TRANSACTIONS

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

At September 30, 2008 and December 31, 2007, the Company had aggregate loans
payable for $175,000 to a related party company whose officer is an officer of
the Company. In 2005, the Company modified the terms of its convertible loans to
this related party and under the modified terms, payment in full was due by
April 30, 2007. These loans are convertible into the Company's common stock at
$0.125 per share. For each share of common stock received upon conversion of the
principal balance, the related party is entitled to receive one warrant to
purchase the Company's common stock at $0.25 per share for a period of two years
from the conversion date. The interest rate of the loan is 12% per annum
computed at simple interest. At September 30, 2008 and December 31, 2007,
interest due on these loans amounted to $79,386 and $63,621 and the aggregate
principal amount due is $175,000. During the nine months ended September 30,
2008 and 2007, the Company incurred $15,764 and $15,707, respectively, in
interest expense related to these two loans. These two loans are in default and
are currently under re-negotiation with the lender.

                                       16
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                               September 30, 2008

NOTE 5 - RELATED PARTY TRANSACTIONS (CONTINUED)

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

For the nine months ended September 30, 2008 and 2007, the Company incurred
$162,411 and $144,405, respectively, in management fees to an officer/director
of the Company, which has been included in management and consulting fees -
related party on the accompanying consolidated statements of operations.
Effective July 1, 2007, pursuant to a Management Consulting Services Agreement,
the Company's board of directors agreed to increase the compensation of this
officer/director from $15,000 per month to $17,500 per month. At September 30,
2008 and December 31, 2007, $274,481 and $371,932 in management fees and other
expenses are payable to this officer/director and are included in due to related
parties on the accompanying consolidated balance sheet. The amount due is
unsecured, non-interest bearing and payable on demand.

For the nine months ended September 30, 2008 and 2007, the Company incurred
$36,015 and $35,627, respectively, in accounting fees to a company whose officer
is an officer of the Company. The fees are included in management and consulting
fees - related party on the accompanying consolidated statements of operations.
At September 30, 2008 and December 31, 2007, $28,135 and $34,120 in these fees
is payable to this officer and are included in due to related parties on the
accompanying consolidated balance sheets.

For the nine months ended September 30, 2008 and 2007, the Company incurred
$25,000 and $32,000, respectively, in consulting fees to an officer of the
Company. At September 30, 2008 and December 31, 2007, $2,500 and $0 in these
fees is payable to this officer and are included in due to related parties on
the accompanying consolidated balance sheet.

For the nine months ended September 30, 2008 and 2007, the Company incurred
$6,000 and $72,000, respectively, in director and consulting fees to a director
of the Company which has been included in management and consulting fees -
related party on the accompanying consolidated statement of operations.

Loans Payable - Related Party
-----------------------------

On March 5, 2004, the Company borrowed 115,000 Euros (translated to $166,164 and
$169,384 at September 30, 2008 and December 31, 2007, respectively) from an
officer of the Company for working capital purposes. The loan accrues 0.8%
non-compounding interest per month, (9.6% per annum), had an initial term of
twelve months, and was repayable quarterly in arrears. On September 25, 2007,
the officer agreed to extend this loan for an additional twelve months until
March 4, 2008. This loan has not been repaid and is currently payable on demand.
Additionally, during fiscal 2007, the Company borrowed $80,000 from this
officer. This loan accrues 1.0% non-compounding interest per month, (12% per
annum), and is due on demand. In connection with the two loans, for the nine
months ended September 30, 2007, the Company incurred a loan fee of $12,756
which has been included in interest expense - related party on the accompanying
statement of operations. For the nine months ended September 30, 2008 and 2007,
the Company incurred $15,640 and $29,143, respectively, in interest related to
these loans. At September 30, 2008 and December 31, 2007, $58,732 and $43,091 in
interest and loan fees was accrued on these loans and the aggregate principal
and interest amount due is $304,896 and $292,475, respectively, and is included
in loan payable - related party on the accompanying consolidated balance sheets.

                                       17
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                               September 30, 2008

NOTE 6 - FINANCING ARRANGEMENTS

Loans Payable
-------------

The Company's subsidiary, Medlink Conectividade, has several loans and credit
lines with financial institutions. The loans require monthly installment
payments, bear interest at rates ranging from 30% to 50% per annum, are secured
by certain receivables of Medlink Conectividade, and are due through July 2009.
At September 30, 2008 and December 31, 2007, loans payable to these financial
institutions aggregated $678,327 and $652,804, respectively.

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

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

Prior to May 15, 2008, the Company determined that the conversion feature of the
convertible debentures represents an embedded derivative since the debentures
are convertible into a variable number of shares. Accordingly, the convertible
debentures are not considered to be conventional debt under EITF 00-19 and the
embedded conversion feature must be bifurcated from the debt host and accounted
for as a derivative liability. The Company believes that the aforementioned
embedded derivative meets the criteria of SFAS 133 and EITF 00-19, and should be
accounted for as a separate derivative with a corresponding value recorded as a
liability. Accordingly, the fair value of this derivative instrument has been
recorded as a liability on the consolidated balance sheets. The gains and losses
recorded from changes in the fair value of the liability for derivative
contracts has been recorded as a component of other income /(expense) in the
consolidated statements of operations.

At the end of each reporting period and through May 15, 2008, the Company
revalued the convertible feature of these derivative liabilities and the
unexpired warrant. For the nine months ended September 30, 2008 and 2007, the
Company recorded a gain (loss) on valuation of these derivative liability and
warrants of $(41,939) and $113,412, respectively. Amortization of debt discount
for the nine months ended September 30, 2008 and 2007 was $0 and $31,250,
respectively, and is included in interest expense. Amortization of debt offering
costs for the nine months ended September 30, 2008 and 2007 was $0 and $4,783,
respectively, and is included in interest expense. At May 15, 2008, pursuant to
an agreement, the convertible debt is payable in cash. Accordingly, the
remaining derivative liability at May 15 , 2008 of $257,058 was reclassified to
paid in capital. At September 30, 2008, the estimated fair values of the
convertible feature derivative liabilities and warrants are $0 and $0,
respectively. At December 31, 2007, the estimated fair values of the convertible
feature derivative liabilities and warrants were $215,119 and $239. These
liabilities were reflected as a conversion feature liability and warrant
liability, respectively, on the accompanying consolidated balance sheets.

On May 15, 2008, the Company entered into an agreement with Grimes to repay the
outstanding convertible debenture payable including interest and fees as
follows: i) $106,902 on May 16, 2008; ii) $100,000 on June 16, 2008; and iii)
$100,000 on July 16, 2008. As of September 30, 2008, all remaining debt was paid
in full.

                                       18
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                               September 30, 2008

NOTE 6 - FINANCING ARRANGEMENTS (CONTINUED)

Convertible Debentures Payable (continued)
------------------------------------------

At the valuation date of May 15, 2008 and December 31, 2007, the following
assumptions were applied to the convertible debt and warrants:

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

The convertible debenture liability is as follows at September 30, 2008 and
December 31, 2007:

                                                       2008        2007
                                                     --------    --------
         Convertible debentures payable .........    $      -    $225,000
         Less: unamortized discount on debentures           -           -
                                                     --------    --------
                                                     $      -    $225,000
                                                     ========    ========

For the nine months ended September 30, 2008 and 2007, the related gain or
(loss) from derivative liabilities is as follows:

                                     Convertible    Preferred stock
                                        debt          (See Note 7)       Total
                                     -----------    ---------------    ---------
         2008
         ----
Change in fair value of
 derivative liabilities .......       $ (41,939)       $ 351,105       $ 309,166
                                      ---------        ---------       ---------

Total gain (loss) from
 derivative liabilities .......       $ (41,939)       $ 351,105       $ 309,166
                                      =========        =========       =========

         2007
         ----
Change in fair value of
 derivative liabilities .......       $ 113,412        $ 625,486       $ 738,898
                                      ---------        ---------       ---------

Total gain from derivative
 liabilities ..................       $ 113,412        $ 625,486       $ 738,898
                                      =========        =========       =========

                                       19
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                               September 30, 2008

NOTE 7 - STOCKHOLDERS' DEFICIT

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

On January 13, 2006, the Company's Board of Directors approved the creation of
16,000 shares of Series A Convertible Preferred Stock having the following
rights, preferences and limitations:

   (a)   each share has a stated value of $100 per share and no par value;

   (b)   With respect to the payment of dividends and other distributions on the
         capital stock of the Company, including distribution of the assets of
         the Company upon liquidation, the Series A Preferred Shares shall be
         senior to the common stock of the Company, par value $.00001 per share
         and senior to all other series of Preferred Shares (the "Junior
         Stock").

   (c)   The holders of Series A Preferred Shares shall be entitled to receive
         dividends or distributions on a pro rata basis according to their
         holdings of shares of Series A Preferred Shares in the amount of seven
         percent (7%) per year (computed on the basis of a 365-day year and the
         actual days elapsed). Dividends shall be paid in cash. Dividends shall
         be cumulative. No cash dividends or distributions shall be declared or
         paid or set apart for payment on the common stock in any calendar year
         unless cash dividends or distributions on the Series A Preferred Shares
         for such calendar year are likewise declared and paid or set apart for
         payment. No declared and unpaid dividends shall bear or accrue
         interest.

   (d)   Each share of Series A Preferred Shares shall be convertible, at the
         option of the holder thereof, at any time after the date of issuance of
         such shares, into such number of fully paid and non-assessable shares
         of common stock equal to the sum of (i) the Liquidation Amount of the
         Series A Preferred Shares ($100 per share) plus (ii) all accrued but
         unpaid dividends thereon, divided by the "Conversion Price", which is
         equal to the lower of (i) $0.192 ( the "Fixed Conversion Price"), or
         (ii) eighty percent (80%) of the lowest daily volume weighted average
         price ("VWAP") of the common stock during the ten (10) Trading Days
         immediately preceding the date of conversion (the "Market Conversion
         Price"). The VWAP shall be determined using price quotations from
         Bloomberg, LP and a "Trading Day" is any day during which the FINRA OTC
         Bulletin Board is open for trading. Additionally, each share of Series
         A Preferred Shares shall automatically convert into shares of common
         stock at the Conversion Price then in effect immediately upon the
         consummation of the occurrence of a stock acquisition, merger,
         consolidation or reorganization of the Company into or with another
         entity through one or a series of related transactions, or the sale,
         transfer or lease of all or substantially all of the assets of the
         Company. Each share of Series A Preferred Shares shall automatically
         convert into shares of common stock at the Conversion Price then in
         effect immediately upon the third anniversary of the date of Investment
         Agreement.

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

                                       20
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                               September 30, 2008

NOTE 7 - STOCKHOLDERS' DEFICIT (CONTINUED)

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

   (f)   The Company has the right to redeem (unless otherwise prevented by
         law), with three (3) business days advance written notice (the
         "Redemption Notice"), any shares of Series A Preferred Shares provided
         that the closing bid price of the of the Company's common stock, as
         reported by Bloomberg, LP, is less than the Fixed Conversion Price at
         the time of the Redemption Notice. The Company shall pay an amount
         equal to One Hundred Fifteen percent (115%) of the Liquidation Amount,
         plus accrued but unpaid dividends thereon (the "Redemption Amount").
         The Company shall deliver to the holder the Redemption Amount on the
         third (3rd) business day after the Redemption Notice. After receipt of
         a Redemption Notice, the holder shall be entitled to continue to
         convert outstanding shares of Series A Preferred Shares until the
         Redemption Price is received, subject to the conversion limitations as
         defined. The Company may not redeem these shares under any other
         circumstances.

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

Of the 16,000 Series A Preferred Shares to be sold 8,000 were sold to YA Global
on January 13, 2006 and had a purchase price of $800,000, which consisted of
$255,237 from the surrender of a pre-existing promissory note and $544,763 of
new funding, from which the Company received net proceeds of $495,734 after the
payment of placement fees of $49,029. Additionally, the Company paid
approximately $25,000 in legal fees with the proceeds of this financing. On May
8, 2006, the Company sold the remaining 8,000 shares to YA Global, at the
purchase price of $800,000 and received proceeds of $728,000 (net of placement
fees of $72,000).

On January 13, 2006, the Company also issued to YA Global warrants to purchase
up to 5,000,000 shares of Common stock. The first warrant issued to YA Global is
for 2,500,000 shares of common stock at an exercise price of $0.30 per share and
shall terminate after the five (5) year anniversary of the date of issuance. The
second warrant issued to YA Global is for 2,500,000 shares of common stock at an
exercise price of $0.20 per share and shall terminate after the five (5) year
anniversary of the date of issuance.

Subject to the terms and conditions of an Investor Registration Rights
Agreement, the Company was required to prepare and file in 2006 and cause the
Registration Statement to remain effective until all of the Registerable
Securities have been sold. The Company filed its initial registration statement
on Form SB-2 on May 9, 2006 and an amended SB-2/A registration statement on
October 18, 2006. The registration statement was not declared effective. On
November 13, 2008 the Company filed a Form RW withdrawing the registration
statement.

In the event the Registration Statement is not declared effective by the SEC on
or before the Scheduled Effective Deadline, or if after the Registration
Statement has been declared effective by the SEC, sales cannot be made pursuant
to the Registration Statement, the Company will pay as liquidated damages (the
"Liquidated Damages") to the holder, at the holder's option, either a cash
amount or shares of the Company's common stock equal to two percent (2%) of the
Liquidation Amount (as defined in the Certificate of Designation of Series A
Convertible Preferred Shares) outstanding as Liquidated Damages for each thirty
(30) day period or any part thereof after the Scheduled Filing Deadline or the
Scheduled Effective Deadline as the case may be.

                                       21
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                               September 30, 2008

NOTE 7 - STOCKHOLDERS' DEFICIT (CONTINUED)

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

In 2006, pursuant to FASB Staff Position, or FSP, EITF 00-19-2, "Accounting for
Registration Payment Arrangements", the Company recorded a registration rights
penalty expense of $160,000 that is included in accrued expenses on the
accompanying consolidated balance sheet. Based on management's analysis, the
Company does not believe that any additional penalty is due under the Investor
Registration Rights Agreement.

In accordance with SFAS No. 133, the Company is required to record the fair
value of the ECF and warrants as a liability. At September 30, 2008 and 2007,
the Company revalued the ECF and warrants resulting in gains on derivative
liability of $351,105 and $625,486 for the nine months ended September 30, 2008
and 2007, respectively (See Note 6).

At September 30, 2008, the estimated fair value of the ECF and warrants were
liabilities of $817,254 and $6,121, respectively. At December 31, 2007, the
estimated fair value of the ECF and warrants were liabilities of $1,064,981 and
$152,895, respectively. These derivative liabilities are reflected as a
conversion feature liability and a warrant liability, respectively, on the
accompanying consolidated balance sheets.

At the valuation date of September 30, 2008 and December 31, 2007, the fair
value of the ECF and warrants were estimated using the Black-Scholes-Merton
option pricing model with the following assumptions:

                                          2008                2007
                                   -----------------   ------------------
         Dividend rate                     0%                  0%
         Term (in years)           .30 to 2.28 years   1.05 to 3.05 years
         Volatility                       181%                114%
         Risk-free interest rate     1.03% - 2.28%        3.05% - 4.03%

On January 17, 2008, the Company issued 245,098 shares of its common stock upon
conversion of 100 shares of Series A preferred stock.

On January 24, 2008, the Company issued 1,388,889 shares of its common stock
upon conversion of 250 shares of Series A preferred stock.

On March 4, 2008, the Company issued 1,712,121 shares of its common stock upon
conversion of 113 shares of Series A preferred stock.

On April 7, 2008, the Company issued 1,795,455 shares of its common stock upon
conversion of 79 shares of Series A preferred stock.

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

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

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

                                       22
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                               September 30, 2008

NOTE 7 - STOCKHOLDERS' DEFICIT (CONTINUED)

Stock Options
-------------

On November 28, 2004, the Company adopted a 2004 Incentive Stock Option Plan
(the "Plan"). The Plan, as amended, provides options to be granted, exercisable
for a maximum of 7,000,000 shares of common stock. Both incentive and
nonqualified stock options may be granted under the Plan. The exercise price of
options granted, the expiration date, and the vesting period, pursuant to this
plan, are determined by a committee of the Board of Directors.

A summary of the status of the Company's outstanding stock options as of
September 30, 2008 and changes during the period ending on that date is as
follows:

                                                   Nine months ended
                                                   September 30, 2008
                                             -------------------------------
                                              Number of     Weighted Average
                                               Options       Exercise Price
                                             -----------    ----------------
   Stock options
   Balance at beginning of year ..........     3,425,000         $0.25
   Granted ...............................             -             -
   Exercised .............................             -             -
   Forfeited .............................    (1,050,000)         0.50
                                             -----------         -----
   Balance at September 30, 2008 .........     2,375,000         $0.14
                                             ===========         =====

   Options exercisable at end of period ..     2,375,000         $0.14
                                             ===========         =====

   Weighted average fair value of
   options granted during the year .......                       $   -
                                                                 =====

The following table summarizes information about employee and consultants stock
options outstanding at September 30, 2008:

                Options Outstanding                       Options Exercisable
----------------------------------------------------   -------------------------
                             Weighted
               Number         Average       Weighted        Number      Weighted
Range of   Outstanding at    Remaining      Average    Exercisable at    Average
Exercise    September 30,   Contractual     Exercise    September 30,   Exercise
  Price         2008        Life (Years)      Price         2008         Price
--------   --------------   ------------   ---------   --------------   --------
$   0.20          425,000       1.25            0.20          425,000       0.20
$   0.15        1,350,000       2.00            0.15        1,350,000       0.15
$   0.06          600,000       4.16            0.06          600,000       0.06
           --------------                  ---------   --------------   --------
                2,375,000                  $    0.14        2,375,000   $   0.14
           ==============                  =========   ==============   ========

As of September 30, 2008 and December 31, 2007, there are no unrecognized
compensation costs since all options granted under the stock option plans are
vested.

                                       23
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                               September 30, 2008

NOTE 7 - STOCKHOLDERS' DEFICIT (CONTINUED)

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

A summary of the status of the Company's outstanding stock warrants as of
September 30, 2008 and activities during the period then ended is as follows:

                                                    Nine months ended
                                                    September 30, 2008
                                              ------------------------------
                                               Number of    Weighted Average
                                               Warrants      Exercise Price
                                              ----------    ----------------
         Warrants ........................
         Balance at beginning of year ....    11,902,500         $0.50
         Granted .........................             -             -
         Exercised .......................             -             -
         Forfeited .......................    (4,500,000)         0.93
                                              ----------         -----
         Balance at September 30, 2008         7,402,500         $0.23
                                              ==========         =====

The following information applies to all warrants outstanding at September 30,
2008:

               Warrants Outstanding                      Warrants Exercisable
----------------------------------------------------   -------------------------
                             Weighted
                              Average       Weighted                    Weighted
Range of                     Remaining      Average                      Average
Exercise                     Contractual    Exercise                    Exercise
  Price        Shares       Life (Years)      Price       Shares         Price
--------   --------------   ------------   ---------   -------------   ---------
$   0.30        2,500,000       2.29            0.30       2,500,000        0.30
$   0.20        4,902,500       1.66            0.20       4,902,500        0.20
           --------------                  ---------   -------------   ---------
                7,402,500                  $    0.23       7,402,500   $    0.23
           ==============                  =========   =============   =========

NOTE 8 - SALE OF MINORITY INTEREST IN SUBSIDIARY

On March 26, 2008, the board of directors of the Company, pursuant to unanimous
written consent resolutions, approved the execution of a stock purchase and
option agreement (the "Agreement") with Engetech, Inc., (the "Buyer"). In
accordance with the terms and provisions of the Agreement, the Company sold to
the Buyer 45% of the total issued and outstanding stock of its wholly-owned
subsidiary, Transax Limited ("Transax Sub"). Transax Sub owns one hundred
percent of the total issued and outstanding shares of: (i) Medlink Conectividade
and (ii) MTI.

The purchase price for the 45%, or 45 shares, ("Initial Shares") is $3,200,000,
$220,000 of which was to have been paid by December 31, 2007 as a deposit. Of
this amount, approximately $188,000 was received by the Company by December 31,
2007 and at December 31, 2007 was reflected as a liability on the accompanying
consolidated balance sheet as a deposit on sale of minority interest. In March
2008, the Company collected an additional $120,000 of the purchase price. The
remaining balance was to be paid as follows i) $32,000 of the initial deposit is
due immediately; ii) $480,000 was due on March 31, 2008 and was paid in May
2008, and iii) the balance of $2,400,000 was due in twelve equal monthly
payments of $200,000 commencing April 2008.

                                       24
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                               September 30, 2008

NOTE 8 - SALE OF MINORITY INTEREST IN SUBSIDIARY (CONTINUED)

In May 2008, the Agreement was amended. Accordingly, the remaining balance is
due as follows:

         May 2008 ....................................       $  120,000
         June 2008 ...................................       $  150,000
         July 2008 ...................................       $  200,000
         August 2008 .................................       $  200,000
         September 2008 ..............................       $  250,000
         October 2008 ................................       $  280,000
         Aggregate monthly payments from
         November 2008 to April 2009 .................       $1,200,000

Through September 30, 2008, the Company received additional proceeds of
$175,000. The balance due and owing by the Buyer is evidenced by an installment
note secured by a pledge of all of Initial Shares. As of the date of this
report, the Buyer has not paid the remaining initial deposit and is default on
its payments of principal and interest. At September 30, 2008, pursuant to the
terms of the Agreement, as amended, the Company has a remaining note receivable
of $2,262,300 due from the Buyer. Since collection of the remaining purchase
price is not reasonably assured, the Company recorded the full amount of the
purchase price of $3,200,000 as deferred revenue and is reflecting the deferred
revenue net of the remaining note receivable on the accompanying consolidated
balance sheets. Accordingly, at September 30, 2008, the Company's consolidated
balance sheets reflect a deferred gain on the sale of minority interest of
$937,700, which will be recognized as other income when collection is reasonably
assured and not until all of the risks and other incidents of ownership have
been passed to the buyer. At September 30, 2008, deferred gain on sale of
minority interest consists of the following:

Sale price of 45% interest in Transax Limited .................     $ 3,200,000
Less: note receivable balance at September 30, 2008 ...........      (2,262,300)
                                                                    -----------
Deferred gain on sale of minority interest in subsidiary ......     $   937,700
                                                                    ===========

The Buyer has an option to purchase the remaining 55% of Transax Sub. The Option
is exercisable by the Buyer during March and April 2009, subject to shareholder
approval, to acquire the balance of the Company's Medlink Conectividade
operations (and its corresponding debt) by way of acquisition of the remaining
55 shares of the Transax Sub and certain licensing rights for Latin America,
Spain and Portugal in exchange for further payments to the Company of
approximately $2,400,000 in the form of twelve equal monthly payments of
$200,000

Pursuant to the amended agreement, interest shall accrue at an annual rate of
18% on past due amounts and the Buyer will be in default if payments are more
that 15 days late from the payment due date. Additionally, the Buyer may use
positive cash flows from the Medlink operations to pay down the note receivable
balance, subject to certain restriction as defined in the amended agreement as
contingent upon the Buyer's exercise of its option to acquire the remaining 55%
of Transax Sub. If the Buyer does not exercise its option to acquire the balance
of 55% of the Transax Sun shares, then the Company would reduce the Buyer's 45%
ownership proportionally by the portion of shares paid by Medlink net income or
the Buyer has a 60-day option to repay the amount due back to Medlink to
maintain a 45% equity interest in Transax Sub.

In accordance with the further terms and provisions of the Agreement, a
performance bonus shall also be payable by the Buyer to the Company (the
"Bonus") equal to 50% of the revenues received by Medlink Conectividade
(converted monthly to US Dollars at the monthly average exchange rate as
provided by the Central Bank of Brazil) with respect to transactions in excess
of an aggregate of 678,076 executed during 2008 for Medlink Conectividade's
largest customer.

                                       25
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                               September 30, 2008

NOTE 8 - SALE OF MINORITY INTEREST IN SUBSIDIARY (CONTINUED)

The Buyer shall pay the Bonus due as follows: 25% due on May 31, 2009, 25% on
July 31, 2009, 25% on August 31, 2009, and 25% on October 31, 2009. The Bonus
shall be payable regardless of whether or not the Buyer elects to exercise the
Option. At September 30, 2008, the Company estimates that approximately $890,000
of bonus payments are due to the Company. The Company has not recorded the bonus
receivable since the collection of this receivable is not reasonably assured.
Additionally, in accordance with the terms and provisions of the Agreement, MTI
shall grant to the Company a perpetual, exclusive and sub-license to use all of
the software and other intellectual property owned by MTI in all territories
other than (i) Latin America (defined as all mainland countries in the Western
Hemisphere south of the USA/Mexico border; and (ii) Spain and Portugal.

As of the date of this report, the Buyer is in default by approximately
$1,057,000 including $32,000 from the initial payment due and $1,025,000 in
periodic payments.

The Company has issued default notices to the buyer in respect of non-payment
under the Agreement. On November 6, 2008 the buyer forwarded a letter to the
Company indicating a desire to restructure the payment term provided the Company
forfeit the bonus due under the contract. The Company estimates the bonus due as
of September 30, 2008 to be $890,000. The Company is currently in discussion
with the buyer and plans to conclude any renegotiation of contract terms by
November 30, 2008.

NOTE 9 - FOREIGN OPERATIONS

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

                                                      Nine Months ended
                                                        September 30,
                                                 --------------------------
                                                     2008           2007
                                                 -----------    -----------
     Revenues to unaffiliated customers:
             Brazil ..........................   $ 4,986,507    $ 3,852,538
                                                 -----------    -----------
     Operating Expenses:
             Brazil ..........................     4,626,386      3,335,991
             USA .............................       426,063        533,953
             Australia .......................             -              -
             Mauritius .......................         1,283         28,945
                                                 -----------    -----------
          Total Operating Expenses ...........     5,053,732      3,898,889
                                                 -----------    -----------
     Loss from operations ....................       (67,225)       (46,351)
                                                 -----------    -----------
     Other income (expenses) and income taxes:
             Brazil ..........................      (336,434)      (483,279)
             USA .............................       276,817        692,271
             Australia .......................             -         (9,799)
                                                 -----------    -----------
                                                     (59,617)       199,193
                                                 -----------    -----------

        Net (loss) income as reported ........   $  (126,842)   $   152,842
                                                 -----------    -----------

                                       26
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                               September 30, 2008

NOTE 10 - COMMITMENTS AND CONTINGENCIES

Legal Proceedings

The Company's subsidiary, Medlink Conectividade, is involved litigation
pertaining to a previous provider of consultancy services regarding "breach of
contract" and two labor law suits involving employees for "unfair dismissal'
claims. At September 30, 2008 and December 31, 2007, the Company has accrued
approximately $184,402 and $199,000, respectively, related to these lawsuits.
The outcome of these clams is uncertain at this time.

Accrued Taxes and Social Contribution

Since 2000, the Company has been deficient in the payment of Brazilian payroll
taxes and Social Security taxes. At September 30, 2008 and December 31, 2007,
these deficiencies, plus interest and penalties, amounted to approximately
$1,214,000 and $1,080,000, respectively. This liability is included as part of
the accounts payable and accrued expenses (short-term and long-term) within the
consolidated balance sheet. During years 2006 and 2005, the Company entered into
a number of payment programs with the Brazilian authorities whereby the Social
Security ("INSS") taxes due, plus applicable penalties and interests are to be
repaid over a period of up to 60 months. However, there is no certainty that the
Brazilian authorities will enter into similar plans in the future for the
remaining non-negotiated balances due or any future taxes due. The current
portion due, which is included in current liabilities, also includes amounts
whose payment terms have not been negotiated with the Brazilian authorities.

NOTE 11 - SUBSEQUENT EVENTS

On November 3, 2008, the Company issued 2,222,222 shares of its common stock
upon conversion of 40 shares of Series A preferred stock.

On November 14, 2008, the Company issued 2,428,571 shares of its common stock
upon conversion of 17 shares of Series A preferred stock.

                                       27
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

The following analysis of the results of operations and financial condition
should be read in conjunction with our unaudited consolidated financial
statements for the nine months ended September 30, 2008 and notes thereto
contained elsewhere in this report.

GENERAL

Transax International Limited is a Colorado corporation and currently trades on
the OTC Bulletin Board under the symbol "TNSX.OB" and the Frankfurt and Berlin
Stock Exchanges under the symbol "TX6". Please note that throughout this report,
and unless otherwise noted, the words "we," "our," "us," or the "Company" refer
to Transax International Limited. We are an international provider of
information network solutions, products and services specifically designed for
the healthcare providers and health insurance companies (collectively, the
"Health Information Management Products").

CURRENT BUSINESS OPERATIONS

At the end of the third quarter, 2008, we had eight contracts to develop our
solutions for new customers. Three of these contracts were signed during the
first quarter of 2008 and are currently under development with our customers and
awaiting implementation. Transaction data is being collected in a test
environment and will be subject to full roll out at a later date.

We undertook 6.8 million transactions during the nine month period ended
September 30, 2008 compared to 6.4 million transactions compared with the same
period in 2008. Significant growth was achieved in the introduction of the
company's web-based solution which increased to over 150,000 transactions per
month in September 2008 from 22,000 transactions in January 2008.

At the end of the nine month period ended September 30, 2008, we had 7,664
solutions operational in Brazil compared with 7,250 solutions during the same
period in 2007. During 2008 a total of 1,000 Interactive Voice Response
Solutions (IVR) clients were converted onto the Company's web-based solution
which allowed for greater operational flexibility and increased functionality
for the client.

During the nine month period ended September 30, 2008, the Company increased its
staffing levels in response to the development of the Company's HOSP solution, a
solution which would allow real time, on-line healthcare transactions to be
undertaken in an in-patient hospital environment. Current transactions are
generally limited to real time, on-line transactions in the out-patient
environment.

STOCK PURCHASE AND OPTION AGREEMENT

On March 26, 2008, our board of directors, pursuant to unanimous written consent
resolutions approved the execution of a stock purchase and option agreement (the
"Agreement") with Engetech, Inc., a Turks & Caicos corporation controlled and
20% owned by Americo de Castro, director and President of our subsidiary,
Medlink Conectividade, and 80% owned by Flavio Gonzalez Duarte (the "Buyer"). In
accordance with the terms and provisions of the Agreement, we sold to the Buyer
45% of the total issued and outstanding stock of our wholly-owned subsidiary,
Transax Limited. Transax Limited owns 100% of the total issued and outstanding
shares of: (i) Medlink Conectividade; and (ii) Medlink.

                                       28
<PAGE>

In accordance with further terms and provisions of the Agreement: (i) we sold 45
of the 100 shares of Transax Limited's issued and outstanding (the "Initial
Shares") with an option to purchase the remaining 55 shares of Transax Limited
(the "Option"); and (ii) the Buyer agreed to pay us an aggregate purchase price
of $3,200,000 for the Initial Shares. A total of $937,700 was received through
September 30, 2008. The Company also has received monies as reimbursement for
legal fees which are excluded from these amounts as they were used to offset the
associated expenses. For the nine months ended September 30, 2008, we received
$0 of such reimbursement, and a total of $20,000 of reimbursement was received
during the year ended December 31, 2007.

The remaining balance was to be paid as follows i) $32,000 of the initial
deposit is due immediately; ii) $480,000 was due on March 31, 2008 and was paid
in May 2008, and iii) the balance of $2,400,000 was due in twelve equal monthly
payments of $200,000 commencing April 2008. Due to a default in payments by the
Buyer, in May 2008, the Agreement was amended and, accordingly, the remaining
balance is due as follows:

         May 2008 ...................................        $  120,000
         June 2008 ..................................        $  150,000
         July 2008 ..................................        $  200,000
         August 2008 ................................        $  200,000
         September 2008 .............................        $  250,000
         October 2008 ...............................        $  280,000
         Monthly payments from
         November 2008 to April 2009 ................        $1,200,000

Through September 30, 2008, the Company received additional proceeds of
$175,000. The balance due and owing by the Buyer is evidenced by an installment
note secured by a pledge of all of Initial Shares. As of the date of this
report, the Buyer has not paid the remaining initial deposit and is default on
its payments of principal and interest. At September 30, 2008, pursuant to the
terms of the Agreement, as amended, the Company has a remaining note receivable
of $2,262,300 due from the Buyer. Since collection of the remaining purchase
price is not reasonably assured, the Company recorded the full amount of the
purchase price of $3,200,000 as deferred revenue and is reflecting the deferred
revenue net of the remaining note receivable on the accompanying consolidated
balance sheets. Accordingly, at September 30, 2008, the Company's consolidated
balance sheets reflect a deferred gain on the sale of minority interest of
$937,700, which will be recognized as other income when collection is reasonably
assured and not until all of the risks and other incidents of ownership have
been passed to the buyer. At September 30, 2008, the deferred gain on sale of
minority interest consists of the following:

Sale price of 45% interest in Transax Limited .................     $ 3,200,000
Less: note receivable balance at September 30, 2008 ...........      (2,262,300)
                                                                    -----------

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

Pursuant to the amended agreement, interest shall accrue at an annual rate of
18% on past due amounts and the Buyer will be in default if payments are more
that 15 days late from the payment due date. Additionally, the Buyer may use
positive cash flows from the Medlink operation to pay down the note receivable
balance, subject to certain restriction as defined in the amended agreement as
contingent upon the Buyer's exercise of its option to acquire the remaining 55%
of Transax Sub. If the Buyer does not exercise its option to acquire the balance
of 55% of the Transax Sub shares, then the Company would reduce the Buyer's 45%
ownership proportionally by the portion of shares paid by Medlink net income or
the Buyer has a 60-day option to repay the amount due back to Medlink to
maintain a 45% equity interest in Transax Sub.

                                       29
<PAGE>

The Buyer has an option to purchase the remaining 55% of Transax Sub. The Option
is exercisable by the Buyer during March and April 2009, subject to shareholder
approval, to acquire the balance of the Company's Medlink Conectividade
operations (and its corresponding debt) by way of acquisition of the remaining
55 shares of the Transax Sub and certain licensing rights for Latin America,
Spain and Portugal in exchange for further payments to the Company of
approximately $2,400,000 in the form of twelve equal monthly payments of
$200,000

In accordance with the further terms and provisions of the Agreement, a
performance bonus shall also be payable by the Buyer to the Company (the
"Bonus") equal to 50% of the revenues received by Medlink Conectividade
(converted monthly to US Dollars at the monthly average exchange rate as
provided by the Central Bank of Brazil) with respect to transactions in excess
of an aggregate of 678,076 executed during 2008 for Medlink Conectividade's
largest customer. The Buyer shall pay the Bonus due as follows: 25% due on May
31, 2009, 25% on July 31, 2009, 25% on August 31, 2009, and 25% on October 31,
2009. The Bonus shall be payable regardless of whether or not the Buyer elects
to exercise the Option. At September 30, 2008, the Company estimates that
approximately $890,000 of bonus payment are due to the Company. The Company has
not recorded the amount of bonus receivable since the collection of this
receivable is not reasonably assured.Additionally, in accordance with the terms
and provisions of the Agreement, MTI shall grant to the Company a perpetual,
exclusive and sub-license to use all of the software and other intellectual
property owned by MTI in all territories other than (i) Latin America (defined
as all mainland countries in the Western Hemisphere south of the USA/Mexico
border; and (ii) Spain and Portugal.

As of the date of this quarterly report, the Buyer is in default by
approximately $1,057,000 including $32,000 from the initial payment due and
$1,025,000 in periodic payments.

We issued default notices to the buyer in respect of non-payments under the
Agreement. On November 6, 2008 the buyer forwarded a letter to us indicating a
desire to restructure the payment term provided we forfeit the bonus due under
the contract. We estimate the bonus due as of September 30, 2008 to be $890,000.
We are currently in discussions with the buyer and plan to conclude any
renegotiation of contract terms on or about November 30, 2008.

CRITICAL ACCOUNTING POLICIES

Our financial statements and accompanying notes are prepared in accordance with
generally accepted accounting principles in the United States. Preparing
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenue and expenses. These
estimates and assumptions are affected by management's application of accounting
policies. Our critical accounting policies include the following:

Impairment - We review the carrying value of property and equipment for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable, or, at least annually.
Recoverability of long-lived assets is measured by the comparison of the
carrying amount to the undiscounted cash flows that the asset or asset group is
expected to generate, which is used to estimate the fair value. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the property, if any, exceeds its
fair market value.

Accounting for Stock Based Compensation - We have adopted SFAS 123(R), "Share
Based Payment". SFAS 123(R) establishes the financial accounting and reporting
standards for stock-based compensation plans. As required by SFAS 123(R), we
recognize the cost resulting from all stock-based payment transactions
including, shares issued under our stock option plans, in the financial
statements over the term of the services being rendered to the Company.

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<PAGE>

Revenue Recognition - Our revenues, from agreements which do not require any
significant production, modification or customization for the Company's targeted
customers and that do not have multiple elements, are recognized when (1)
persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the
Company's fee is fixed and determinable, and; (4) collectability is probable.

Substantially all of our revenues are derived from the processing of
applications by healthcare providers for approval of healthcare services for
patients from insurance carriers. Our software, or hardware devices containing
our software, are installed at the healthcare provider's location. We offer
transaction services to authorize and adjudicate identity of the patient and
obtain "real time" approval for any necessary medical procedure from the
insurance carrier. Our transaction-based solutions provide remote access for
healthcare providers to connect with contracted insurance carriers. Transaction
services are provided through contracts with insurance carriers and others,
which specify the services to be utilized and the markets to be served. Our
clients are charged for these services on a per transaction basis. Pricing
varies depending on the type of transactions being processed under the terms of
the contract for which services are provided. Transaction revenues are
recognized in the period in which the transactions are performed.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2007, the FASB issued SFAS 141(R), "Business Combinations" and SFAS
160, "Accounting and Reporting of Non-controlling Interests in Consolidated
Financial Statements, an amendment of ARB No. 51".." These two standards must be
adopted in conjunction with each other on a prospective basis. The most
significant changes to business combination accounting pursuant to SFAS 141R and
SFAS 160 are the following: (a) recognize, with certain exceptions, 100 percent
of the fair values of assets acquired, liabilities assumed and non-controlling
interests in acquisitions of less than a 100 percent controlling interest when
the acquisition constitutes a change in control of the acquired entity, (b)
acquirers' shares issued in consideration for a business combination will be
measured at fair value on the closing date, not the announcement date, (c)
recognize contingent consideration arrangements at their acquisition date fair
values, with subsequent changes in fair value generally reflected in earnings,
(d) the expensing of all transaction costs as incurred and most restructuring
costs, (e) recognition of pre-acquisition loss and gain contingencies at their
acquisition date fair values, with certain exceptions, (f) capitalization of
acquired in-process research and development rather than expense recognition,
(g) earn-out arrangements may be required to be re-measured at fair value and
(h) recognize changes that result from a business combination transaction in an
acquirer's existing income tax valuation allowances and tax uncertainty accruals
as adjustments to income tax expense. The Company anticipates these new
standards will significantly affect our accounting for future business
combinations following adoption on January 1, 2009.

In March 2008, the FASB issued SFAS 161, "Disclosures about Derivative
Instruments and Hedging Activities". The new standard is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand the
effects of those instruments and activities on an entity's financial position,
financial performance, and cash flows. It is effective for financial statements
issued for fiscal years and interim periods beginning after November 5, 2008,
with early application encouraged. We are currently evaluating the impact of
adopting SFAS 161 on our consolidated financial statements.

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<PAGE>

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

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

RESULTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 2008 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
2007

Our net loss for the nine-months ended September 30, 2008 was $126,842 compared
to net income of $152,842 for the nine-month period ended September 30, 2007 (a
decrease of $279,684 or 183.0%).

During the nine-month period ended September 30, 2008, we generated $4,986,507
in revenues compared to $3,852,538 in revenues generated during the nine-month
period ended September 30, 2007 (an increase of $1,133,969 or 29.4%). The
increase in revenues is due to the continued installation of our software and/or
hardware devices containing our software at five new healthcare providers'
locations in Brazil. Upon installation, we will begin the processing of
applications submitted by healthcare providers for approval of patients for
healthcare services from the insurance carrier. We charge for these services on
a per transaction basis.

During the nine-month period ended September 30, 2008, we incurred operating
expenses in the aggregate amount of $5,053,732 compared to $3,898,889 incurred
during the nine-month period ended September 30, 2007 (an increase of $1,154,843
or 29.6%). The increase in operating expenses incurred during the nine-month
period ended September 30, 2008 compared to the nine-month period ended
September 30, 2007 resulted from: (i) an increase of $298,047 or 19.4% in cost
of product support services resulting from the increase in revenues; (ii) an
increase of $599,951 or 91.9 % in compensation and related benefits associated
with the increased operations of our MedLink operations; (iii) a decrease of
$2,108 or 2.2% based on a decrease in the amount of professional fees incurred;
(iv) a decrease of $54,606 or 19.20% in management and consulting fees-related
parties due to a decrease in use of certain management and a director/consultant
needed to handle our operations; (v) a decrease in investor relations of $26,978
or 96.4% in investor relations; (vi) a decrease of $11,491 or 4.2% in
depreciation and amortization; and (vii) an increase of $352,028 or 34.3% in
general and administrative expenses primarily resulting from an increase in
operating costs associated with our increased business revenues in 2008.

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<PAGE>

We reported a loss from operations of $67,225 during the nine-month period ended
September 30, 2008 as compared to a loss from operations of $46,351 during the
nine-month period ended September 30, 2007 due to the factors previously
discussed.

During the nine-month period ended September 30, 2008, we incurred other income
of $42,369, compared to other income of $344,655 during the nine-month period
ended September 30, 2007 (a decrease of $302,286 or 87.7%). The variance for
nine-month period ended September 30, 2008, compared to the nine-month period
ended September 30, 2007 resulted primarily from the change in the fair value of
the Company's derivative liabilities which was a gain of $309,166 in 2008, as
compared to a gain in 2007 of $738,898. This change is related to the
classification of the embedded conversion feature and related warrants issued in
connection with our Series A Preferred Stock and debenture payable as derivative
instruments.

For the nine-month period ended September 30, 2008, our loss before income taxes
was $24,856 compared to income before taxes of $298,304 for the nine-month
period ended September 30, 2007. During the nine-month period ended September
30, 2008, we recorded a tax provision of $101,986 for Brazilian income taxes
(2007: $145,462), resulting in a net loss of $(126,842) compared to net income
of $152,842.

During the nine-month period ended September 30, 2008, we recorded a deemed and
cumulative preferred stock dividend of $77,476 compared to $83,790 during the
nine-month period ended September 30, 2007, which is related to our cumulative
dividends on the Series A Preferred Stock.

We reported net loss attributable to common shareholders of ($204,318) during
the nine-month period ended September 30, 2008 as compared to net income
attributable to common shareholders of $69,052 during the nine-month period
ended September 30, 2007. This translates to an earnings per common share
available to shareholders of $0.00 for the nine-month periods ended September
30, 2008 and 2007.

During the nine-month period ended September 30, 2008 and 2007, we recorded an
unrealized foreign currency translation gain of $518,730 compared to a loss of
$317, respectively. This resulted in comprehensive income during the nine-month
period ended September 30, 2008 and 2007 of $391,888 compared to $152,525,
respectively.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2008, our current assets were $1,176,900 and our current
liabilities were $5,247,271, which resulted in a working capital deficit of
$4,070,371. As of September 30, 2008, our total assets were $2,278,556
consisting of: (i) $160,790 in cash; (ii) $355,956 in prepaid expenses and other
current assets; (iii) $660,154 in accounts receivable; (iv) $188,866 in net
software development costs; (v) $910,180 in net property and equipment; and
(vii) $2,610 in other assets. As at September 30, 2008, our total assets were
$2,278,556 compared to $2,050,863 at December 31, 2007.

As of September 30, 2008, our total liabilities were $5,443,030 consisting of:
(i) $2,139,230 in long-term and current portion of accounts payable and accrued
expenses; (ii) $305,116 due to related parties; (iii) $254,386 in convertible
loan to related party; (iv) $304,896 in loan payable to related party; (v)
$678,327 in current portion of loans payable; (vi) $6,121 in warrant liability;
(vii) $817,254 in convertible feature liability and (viii) $937,700 in deferred
gain on sale of minority interest in subsidiary. As at September 30, 2008, our
total liabilities were $5,443,030 compared to $5,907,918 at December 31, 2007.

Stockholders' deficit decreased from $3,857,055 at December 31, 2007 to
$3,164,474 at September 30, 2008.

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<PAGE>

For the nine-month period ended September 30, 2008, net cash flow used in
operating activities was ($594,588) compared to net cash provided by operating
activities of $307,359 for the nine-month period ended September 30, 2007. The
change in cash flows provided by operating activities is principally due to
funding our net loss of $126,842 adjusted for the non-cash gain from derivative
liabilities..

Net cash flows provided by investing activities amounted to $439,776 for the
nine-month period ended September 30, 2008 compared to net cash used in
investing activities of ($291,122) for the nine-month period ended September 30,
2007. During the nine-month period ended September 30, 2008, we received
proceeds of $937,700 from the sale of a minority interest ownership in Transax
Limited offset by the acquisition of property and equipment of $497,924. During
the nine-month period ended September 30, 2007, we capitalized software
development costs of $254,409 and acquired property and equipment of $36,713.

Net cash flows used in financing activities for the nine-month period ended
September 30, 2008 were ($140,800) compared to ($45,205) for the nine-month
period ended September 30, 2007. For the nine months ended September 30, 2008,
cash used in financing activities was attributable to the higher repayment of
debt in 2008 of $100,000.

PLAN OF OPERATION

Since our inception, we have funded operations through higher borrowings and
equity investments in order to meet our strategic objectives. Our future
operations are dependent upon external funding and our ability to increase
revenues and reduce expenses. Management believes that sufficient funding will
be available from additional related party borrowings and private placements to
meet our business objectives including anticipated cash needs for working
capital, for a reasonable period of time. However, there can be no assurance
that we will be able to obtain sufficient funds to continue the development of
our software products and distribution networks.

YA GLOBAL INVESTMENTS ("YA GLOBAL")

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

In connection with the Investment Agreement, the Parties entered into an
Investor Registration Rights Agreement (the "IRRA"), dated January 13, 2006,
pursuant to which the Parties agreed that, in the event the Registration
Statement is not filed within thirty (30) days from the date we file our Annual
Report on Form 10-KSB for the year ended December 31, 2005 (the "Filing
Deadline") or is not declared effective by the Securities and Exchange
Commission within ninety (90) days of the date of the IRRA (the "Effective
Deadline"), or if after the Registration Statement had been declared effective
by the Securities and Exchange Commission, sales cannot be made pursuant to the
Registration Statement, then as relief for the damages to any holder of
Registrable Securities (as defined in the IRRA) by reason of any such delay in
or reduction of its ability to sell the underlying shares of common stock (which
remedy shall not be exclusive of any other remedies at law or in equity), we
would pay as liquidated damages to the holder, at the holder's option, either a
cash amount or shares of our common stock equal to two percent (2%) of the
Liquidation Amount (as defined in the Certificate of Designation of Series A
Convertible Preferred Shares) outstanding as liquidated damages for each thirty
(30) day period or any part thereof after the Filing Deadline or the Effective
Deadline as the case may be. Any liquidated damages payable hereunder shall not

                                       34
<PAGE>

limit, prohibit or preclude the holder from seeking any other remedy available
to it under contract, at law or in equity. We shall pay any liquidated damages
hereunder within three (3) business days of the holder making written demand. It
shall also become an event of default under the IRRA if the Registration
Statement is not declared effective by the Securities and Exchange Commission
within one-hundred twenty (120) days from the date of the IRRA. We initially
filed our Registration Statement with the Securities and Exchange Commission on
May 9, 2006. As of the date of this Quarterly Report, the Registration Statement
has not been declared effective by the Securities and Exchange Commission. We do
not have any intent to re-file our Registration Statement and on November 13,
2008, we formally withdrew the Registration Statement by filing form RW with the
Securities and Exchange Commission. In 2006, pursuant to FASB Staff Position, or
FSP, EITF 00-19-2, "Accounting for Registration Payment Arrangements", the
Company recorded a registration rights penalty expense of $160,000 that is
included in accrued expenses on the accompanying consolidated balance sheet.
Based on management's analysis, the Company does not believe that any additional
penalty is due under the Investor Registration Rights Agreement.

Certain negative covenants in the Investment Agreement could substantially
impact our ability to raise funds from alternative sources in the future. For
example, so long as any Series A Preferred Shares are outstanding, we shall not,
without the prior written consent of YA Global (a) directly or indirectly
consummate any merger, reorganization, restructuring, reverse stock split
consolidation, sale of all or substantially all of our assets or any similar
transaction or related transactions; (b) incur any indebtedness for borrowed
money or become a guarantor or otherwise contingently liable for any such
indebtedness except for trade payables or purchase money obligations incurred in
the ordinary course of business; (c) file any other registration statements on
any form (including but not limited to forms S-1, SB-2, S-3 and S-8); (d) issue
or sell shares of common stock or preferred stock without consideration or for a
consideration per share less than the bid price of the common stock determined
immediately prior to its issuance or issue any preferred stock, warrant, option,
right, contract, call, or other security or instrument granting the holder
thereof the right to acquire common stock without consideration or for a
consideration per share less than the bid price of the common stock determined
immediately prior to the issuance of such convertible security or (e) enter into
any security instrument granting the holder a security interest in any and all
of our assets.

During the nine-month period ended September 30, 2008, we issued 13,085,185
shares of our common stock to YA Global in connection with the conversion of 813
shares of Series A Preferred Stock. Subsequent to the nine-month period ended
September 30, 2008, we issued a further 4,650,793 shares of our common stock to
YA Global. See "Part II. Item 1. Unregistered Sales of Securities and Use of
Proceeds.

As of the date of this Quarterly Report, there is substantial doubt regarding
our ability to continue as a going concern as we have not generated sufficient
cash flow to fund our business operations and material commitments. Our future
success and viability, therefore, are dependent upon our ability to consummate
the sale of our subsidiary, Medlink Connectividade and to subsequently further
develop, provide and market our information network solutions to healthcare
providers, health insurance companies and other end-users, and the continuing
ability to generate capital financing. We are optimistic that we will be
successful in our business operations and capital raising efforts; however,
there can be no assurance that we will be successful in generating revenue or
raising additional capital. The failure to generate sufficient revenues or raise
additional capital may have a material and adverse effect upon us and our
shareholders.

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<PAGE>

We anticipate an increase in operating expenses over the next three years to pay
costs associated with such business operations. We may need to raise additional
funds. We may finance these expenses with further issuances of our common stock.
We believe that any anticipated private placements of equity capital and debt
financing, if successful, may be adequate to fund our operations over the next
twelve months. Thereafter, we expect we will need to raise additional capital to
meet long-term operating requirements. If we raise additional funds through the
issuance of equity or convertible debt securities other than to current
shareholders, the percentage ownership of our current shareholders would be
reduced, and such securities might have rights, preferences or privileges senior
to our existing common stock. In addition, additional financing may not be
available upon acceptable terms, or at all. If adequate funds are not available,
or are not available with acceptable terms, we may not be able to conduct our
business operations successfully. This eventuality could significantly and
materially restrict our overall business operations.

Based upon a twelve (12) month work plan proposed by management, it is
anticipated that such a work plan would require approximately $1,000,000 to
$3,000,000 of financing designed to fund various commitments and business
operations.

We believe that we can satisfy our cash requirements for the next twelve (12)
months based on our ability to consummate the sale of our subsidiary, Medlink
Connectividade, and to enter into additional financing arrangements as
necessary. Our future success and viability are primarily dependent upon our
current management to generate revenues from business operations and raise
additional capital through further private offerings of our stock or loans from
private investors. There can be no assurance, however, that we will be able to
raise additional capital. Our failure to successfully raise additional capital
will have a material and adverse affect upon us and our shareholders.

MATERIAL COMMITMENTS

CONVERTIBLE LOANS - RELATED PARTY

A material liability for us at September 30, 2008 is the aggregate principal
amount of $175,000 and $79,386 in accrued interest due and owing to a related
party in accordance with two convertible promissory notes (collectively, the
"Convertible Promissory Note(s)"). The Convertible Promissory Notes were due on
April 30, 2007 and convertible into shares of our common stock at $0.125 per
shares together with a warrant per share to purchase our common stock at $0.25
per share for a period of two years. As at September 30, 2008, an aggregate
principal amount of $175,000 and interest in the amount of $79,386 remains due
and owing under the Convertible Promissory Notes. As of the date of this
Quarterly Report, the Convertible Promissory Notes are deemed in default and are
under re-negotiation with the lender.

LOAN - RELATED PARTY

A material liability for us at September 30, 2008 is the aggregate amount of
$304,896 in principal and interest due and owing to Stephen Walters, our Chief
Executive Officer (collectively, the "Loans"). The Loans are evidenced by a
promissory note with an interest rate of 0.8% per month, had an initial term of
twelve months and was repayable quarterly in arrears. On September 25, 2007, Mr.
Walters agreed to extend the Loans for an additional twelve months until March
4, 2008. During the 2007 period, we incurred a loan fee of $5,000 and an
additional fee of approximately $7,756, which has been included in interest
expense. For the nine-month periods ended September 30, 2008 and 2007, we
incurred $15,640 and $29,143, respectively, in interest related to these loans.
At September 30, 2008 and December 31, 2007, $58,732 and $43,091 in interest and
loan fees was accrued on these loans and the aggregate principal and interest
amount due is $304,896 and $292,475, respectively.

                                       36
<PAGE>

CONSULTING AGREEMENT

A material liability for us at September 30, 2008 is the amounts due and owing
as management fees to Stephen Walters, our Chief Executive Officer. For the
nine-month periods ended September 30, 2008 and 2007, we incurred $162,411 and
$144,405, respectively, in management fees. At September 30, 2008 and December
31, 2007, $274,481 and $371,932 in management fees and other expenses are
payable to Mr. Walters. In accordance with the terms of an agreement effective
July 2007, we pay monthly to Mr. Walters an aggregate amount of $17,500 as
compensation for managerial and consulting services he provides.

ACCRUED TAXES AND RELATED EXPENSES

A material estimated liability for us for fiscal year 2008 is the amount due and
owing for Brazilian payroll taxes and Social Security taxes. At September 30,
2008 and December 31, 2007, these deficiencies, plus interest and penalties,
amounted to approximately $1,214,000 and $1,080,000, respectively.

Effective April 1, 2004, we entered into a payment program with the Brazilian
authorities whereby the Social Security ("INSS") taxes due and applicable
penalties and interests will be repaid over a period of up to sixty months. At
September 30, 2008, approximately $1,204,464 of our INSS and other taxes are to
be repaid within a 12 month period. At September 30, 2008, the future payments
due to the Brazilian authorities are as follows: (i) 2009 - $1,204,464; (ii)
2010 - $8,056.

MEDLINK CONNECTIVIDADE LOAN PAYABLE AND OTHER LOANS PAYABLE

At September 30, 2008, significant liabilities for us are the several loans and
credit lines with financial institutions in Brazil and a $100,000 loan
outstanding related to our previous outstanding convertible debt. The Brazil
loans require monthly installment payments, bear interest at rates ranging from
30% to 50% per annum, are secured by certain receivables of Medlink
Connectividade, and are due through July 2009. As at September 30, 2008 and
December 31, 2007, the loans payable to these financial institutions and others
aggregated $678,327 and $652,804, respectively.

PURCHASE OF SIGNIFICANT EQUIPMENT

We do not intend to purchase any significant equipment during the next twelve
months.

OFF-BALANCE SHEET ARRANGEMENTS

As of the date of this Quarterly Report, we do not have any off-balance sheet
arrangements that have or are reasonably like to have a current or future effect
on our financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources that are material to investors. The term "off-balance sheet
arrangement" generally means any transaction, agreement or other contractual
arrangement to which an entity unconsolidated with us is a party, under which we
have: (i) any obligation arising under a guarantee contract, derivative
instrument or variable interest; or (ii) a retained or contingent interest in
assets transferred to such entity or similar arrangement that serves as credit,
liquidity or market risk support for such assets.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our financial position,
results of operations or cash flows due to adverse change in foreign currency
and interest rates.

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<PAGE>

EXCHANGE RATE

Our reporting currency is United States Dollars ("USD"). The Brazilian Real is
the functional currency of our subsidiary. The fluctuation of exchange rates of
the Real may have positive or negative impacts on our results of operations.
However, since all revenue and expenses of our subsidiary company is denominated
in Real, the net income effect of appreciation and devaluation of the currency
against the US Dollar will be limited to the net operating results of the
subsidiary company attributable to us.

INTEREST RATE AND INFLATION

Interest rates in Brazil were unstable and Brazil has suffered from very high
inflation rates during the 1980s, which led the country to change currency
several times. Since 1994, inflation has been maintained at normalized levels
(2003: consumer prices rose by about 8%; in 2008, the inflation target is around
9%), and the Brazilian citizen has had the opportunity for the first time in a
long period to get accustomed to a stable currency. Any loans in Brazil would
relate mainly to trade payables and would be short-term. However, were interest
rates to rise, any debt incurred in Brazil could have a significant impact on
our operating and financing activities.

We have not entered into derivative contracts either to hedge existing risks or
for speculative purposes.

ITEM 4.  CONTROLS AND PROCEDURES

FINANCIAL DISCLOSURE CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

We maintain "disclosure controls and procedures" as such term is defined in Rule
13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating
our disclosure controls and procedures, our management recognized that
disclosure controls and procedures, no matter how well conceived and operated,
can provide only reasonable, not absolute, assurance that the objectives of
disclosure controls and procedures are met. Additionally, in designing
disclosure controls and procedures, our management was necessarily required to
apply its judgment in evaluating the cost-benefit relationship of possible
disclosure controls and procedures. The design of any disclosure controls and
procedures is also based in part upon certain assumptions about the likelihood
of future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions.

Our management, including our Chief Executive Officer and our Chief Financial
Officer, have evaluated the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this Quarterly Report. Based
on such evaluation, and as described in greater detail below, our CEO and CFO
have concluded that, as of the end of the period covered by this Quarterly
Report on Form 10-Q, our disclosure controls and procedures were not effective:

      o  to give reasonable assurance that the information required to be
         disclosed by us in reports that we file under the Securities Exchange
         Act of 1934 is recorded, processed, summarized and reported within the
         time periods specified in the Securities and Exchange Commission's
         rules and forms, and

      o  to ensure that information required to be disclosed in the reports that
         we file or submit under the Securities Exchange Act of 1934 is
         accumulated and communicated to our management, including our Chief
         Executive Officer and our Chief Financial Officer, to allow timely
         decisions regarding required disclosure.

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<PAGE>

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
under the Securities Exchange Act. Our management is also required to assess and
report on the effectiveness of our internal control over financial reporting in
accordance with Section 404 of the Sarbanes-Oxley Act of 2002 ("Section 404").
Management assessed the effectiveness of our internal control over financial
reporting as of September 30, 2008. In making this assessment, we used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control - Integrated Framework. During our
assessment of the effectiveness of internal control over financial reporting as
of September 30, 2008, management identified significant deficiencies related to
(i) the U.S. GAAP expertise of our internal accounting staff, (ii) our internal
audit functions; (iii) the absence of an Audit Committee as of September 30,
2008, and (iv) a lack of segregation of duties within accounting functions.

We began preparing to be in compliance with the internal control obligations,
including Section 404, for our fiscal year ending December 31, 2007. Our
internal accounting staff was primarily engaged in ensuring compliance with
Brazil's accounting and reporting requirements for our operating subsidiary and
their U.S. GAAP knowledge was limited. As a result, the majority of our internal
accounting staff, on a consolidated basis, is relatively inexperienced with U.S.
GAAP and the related internal control procedures required of U.S. public
companies. Although our accounting staff is professional and experienced in
accounting requirements and procedures generally accepted in Brazil, management
has determined that they require additional training and assistance in U.S. GAAP
matters. Management has determined that our internal audit function is also
significantly deficient due to insufficient qualified resources to perform
internal audit functions. Finally, management determined that the lack of an
Audit Committee of our Board of Directors also contributed to insufficient
oversight of our accounting and audit functions.

In order to correct the foregoing weaknesses, we have taken the following
remediation measures:

      o  We have committed to the establishment of effective internal audit
         functions, however, due to the scarcity of qualified candidates with
         extensive experience in U.S. GAAP reporting and accounting in Brazil,
         we were not able to hire sufficient internal audit resources before
         September 30, 2008. However, we will increase our search for qualified
         candidates with assistance from recruiters and through referrals.

      o  We will consider searching for independent directors, with one
         qualified to serve on an audit committee to be established by our Board
         of Directors and we anticipate that our Board of Directors will also
         establish a compensation committee to be headed by one of the
         independent directors.

Due to our size and nature, segregation of all conflicting duties may not always
be possible and may not be economically feasible. However, to the extent
possible, we will implement procedures to assure that the initiation of
transactions, the custody of assets and the recording of transactions will be
performed by separate individuals.

We believe that the foregoing steps will remediate the significant deficiencies
identified above, and we will continue to monitor the effectiveness of these
steps and make any changes that our management deems appropriate. Due to the
nature of these significant deficiencies in our internal control over financial
reporting, there is a remote likelihood that misstatements which could be
material to our annual or interim financial statements could occur that would
not be prevented or detected.

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<PAGE>

A material weakness (within the meaning of PCAOB Auditing Standard No. 5) is a
deficiency, or a combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be prevented
or detected on a timely basis. A significant deficiency is a deficiency, or a
combination of deficiencies, in internal control over financial reporting that
is less severe than a material weakness, yet important enough to merit attention
by those responsible for oversight of the company's financial reporting.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies and procedures may deteriorate.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in our internal control over financial reporting
during first nine months of our fiscal year that has materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.

AUDIT COMMITTEE

As of the date of this Quarterly Report, we have not appointed members to an
audit committee and, therefore, the respective role of an audit committee has
been conducted by our Board of Directors. When established, the audit
committee's primary function will be to provide advice with respect to our
financial matters and to assist our Board of Directors in fulfilling its
oversight responsibilities regarding finance, accounting, tax and legal
compliance. The audit committee's primary duties and responsibilities will be
to: (i) serve as an independent and objective party to monitor our financial
reporting process and internal control system; (ii) review and appraise the
audit efforts of our independent accountants; (iii) evaluate our quarterly
financial performance as well as its compliance with laws and regulations; (iv)
oversee management's establishment and enforcement of financial policies and
business practices; and (v) provide an open avenue of communication among the
independent accountants, management and our Board.

Our Board has considered whether the regulatory provision of non-audit services
is compatible with maintaining the principal independent accountant's
independence.

AUDIT COMMITTEE FINANCIAL EXPERT

As of the date of this Quarterly Report, our Board has determined that we do not
have an audit committee financial expert nor do we have an audit committee.

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<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

Our subsidiary, Medlink Connectividade, is involved in litigation pertaining to
a previous provider of consultant services regarding "breach of contract" and
two labor law suits involving employees for "unfair dismissal" claims. At
September 30, 2008 and December 31, 2007, we have accrued approximately $184,000
and $199,000, respectively, related to these lawsuits. The outcome of these
claims is uncertain at this time.

Management is not aware of any other legal proceedings contemplated by any
governmental authority or any other party involving us or our properties. As of
the date of this Quarterly Report, no director, officer or affiliate is (i) a
party adverse to us in any legal proceeding, or (ii) has an adverse interest to
us in any legal proceedings. Management is not aware of any other legal
proceedings pending or that have been threatened against us or our properties.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

During the nine-month period ended September 30, 2008 and subsequent up to the
date of this Quarterly Report, we have issued to YA Global Investments an
aggregate of 17,735,978 shares of our common stock upon conversion of the Series
A preferred stock.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.

ITEM 5.  OTHER INFORMATION

         None.

ITEM 6.  EXHIBITS

31.1     Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer
31.2     Rule 13a-14(a)/15d-14(a) certificate of Chief Financial Officer
32.1     Section 1350 certification of Chief Executive Officer
32.2     Section 1350 certification of Chief Financial Officer


                                   SIGNATURES

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


                                     TRANSAX INTERNATIONAL LIMITED

Dated: November 19, 2008             By: /s/ STEPHEN WALTERS
                                         -------------------
                                         Stephen Walters, President/Chief
                                         Executive Officer and Director

Dated: November 19, 2008             By: /s/ ADAM WASSERMAN
                                         ------------------
                                         Adam Wasserman, Chief Financial Officer

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