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 March 31, 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: 41,649,341 shares of
common stock are issued and outstanding as of May 15, 2008.

<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
                                    FORM 10-Q
                                 MARCH 31, 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. ...      39

Item 4   Controls and Procedures. ......................................      40

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings. ............................................      43

Item 1A. Risk Factors. .................................................      43

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds. ..      43

Item 3.  Defaults Upon Senior Securities. ..............................      43

Item 4.  Submission of Matters to a Vote of Security Holders. ..........      43

Item 5.  Other Information. ............................................      43

Item 6.  Exhibits. .....................................................      43


                           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>
                                                                                    MARCH 31,     DECEMBER 31,
                                                                                      2008            2007
                                                                                  ------------    ------------
                                                                                   (UNAUDITED)      (AUDITED)
<S>                                                                               <C>             <C>
                                     ASSETS
CURRENT ASSETS:
  Cash ........................................................................   $    180,010    $    175,938
  Accounts receivable (net of allowance for doubtful accounts of $0) ..........        641,342         487,397
  Prepaid expenses and other current assets ...................................        307,819         277,992
                                                                                  ------------    ------------

     TOTAL CURRENT ASSETS .....................................................      1,129,171         941,327

SOFTWARE DEVELOPMENT COSTS, net ...............................................        289,909         347,063
PROPERTY AND EQUIPMENT, net ...................................................        738,425         757,673
OTHER ASSETS ..................................................................          2,610           4,800
                                                                                  ------------    ------------

     TOTAL ASSETS .............................................................   $  2,160,115    $  2,050,863
                                                                                  ============    ============

                     LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
  Current portion of loans payable ............................................   $    614,013    $    600,440
  Convertible debenture payable, net ..........................................        225,000         225,000
  Accounts payable and accrued expenses .......................................      2,238,266       2,184,678
  Deposit on sale of minority interest ........................................              -         187,747
  Deferred gain on sale of minority interest in subsidiary ....................        288,607               -
  Due to related parties ......................................................        418,718         406,052
  Warrant liability ...........................................................          6,209         153,134
  Convertible feature liability ...............................................        658,275       1,280,100
  Loan payable - related party ................................................        313,604         292,475
  Convertible loan - related party ............................................        243,857         238,621
                                                                                  ------------    ------------

     TOTAL CURRENT LIABILITIES ................................................      5,006,549       5,568,247

LOANS PAYABLE, NET OF CURRENT PORTION .........................................          7,961          52,364
ACCOUNTS PAYABLE AND ACCRUED EXPENSES, NET OF CURRENT PORTION .................        293,767         287,307
                                                                                  ------------    ------------

     TOTAL LIABILITIES ........................................................      5,308,277       5,907,918
                                                                                  ------------    ------------

STOCKHOLDERS' DEFICIT:
  Series A convertible preferred stock, no par value; 16,000 shares authorized;
    14,867 and 15,330 shares issued and outstanding at March 31, 2008 and
    December 31, 2007, respectively; liquidation preference $1,486,700 at
    March 31, 2008 ............................................................      1,370,739       1,417,039
  Common stock $.00001 par value; 100,000,000 shares authorized;
    37,978,886 and 34,632,778 shares issued and outstanding at March 31, 2008
    and December 31, 2007, respectively .......................................            380             346
  Paid-in capital .............................................................      8,089,463       8,013,632
  Accumulated deficit .........................................................    (12,573,572)    (13,313,435)
  Accumulated other comprehensive income ......................................        (35,172)         25,363
                                                                                  ------------    ------------

     TOTAL STOCKHOLDERS' DEFICIT ..............................................     (3,148,162)     (3,857,055)
                                                                                  ------------    ------------

     TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT ..............................   $  2,160,115    $  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
                                                                      MARCH 31,
                                                           ------------------------------
                                                                2008             2007
                                                           -------------    -------------
<S>                                                        <C>              <C>
REVENUES ...............................................   $   1,480,964    $   1,186,226
                                                           -------------    -------------

OPERATING EXPENSES:
  Cost of product support services .....................         450,496          384,434
  Compensation and related benefits ....................         393,587          211,905
  Professional fees ....................................          51,494           36,007
  Management and consulting fees - related parties .....          74,981          105,355
  Investor relations ...................................               -            9,051
  Depreciation and amortization ........................          91,803           83,627
  General and administrative ...........................         293,224          241,947
                                                           -------------    -------------

     TOTAL OPERATING EXPENSES ..........................       1,355,585        1,072,326
                                                           -------------    -------------

INCOME FROM OPERATIONS .................................         125,379          113,900
                                                           -------------    -------------

OTHER INCOME (EXPENSES):
  Other income (expenses) ..............................               -          (14,020)
  Foreign exchange loss ................................         (12,317)         (11,317)
  Debt settlement and offering costs ...................               -                -
  Gain from derivative liabilities .....................         739,185          458,493
  Gain on sale of minority interest in subsidiary ......               -                -
  Interest expense .....................................         (98,336)        (130,812)
  Interest expense - related party .....................         (14,048)         (14,239)
                                                           -------------    -------------

     TOTAL OTHER INCOME (EXPENSES) .....................         614,484          288,105
                                                           -------------    -------------

INCOME BEFORE INCOME TAXES .............................         739,863          402,005

PROVISION FOR INCOME TAXES .............................               -                -
                                                           -------------    -------------

NET INCOME .............................................         739,863          402,005

DEEMED AND CUMULATIVE PREFERRED STOCK DIVIDENDS ........         (26,422)         (28,000)
                                                           -------------    -------------

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS ............   $     713,441    $     374,005
                                                           =============    =============

COMPREHENSIVE INCOME:
  NET INCOME ...........................................   $     739,863    $     402,005

  OTHER COMPREHENSIVE INCOME (LOSS):
     Unrealized foreign currency translation (loss) gain         (60,535)         (98,393)
                                                           -------------    -------------

  COMPREHENSIVE INCOME .................................   $     679,328    $     303,612
                                                           =============    =============

NET INCOME PER COMMON SHARE:
  BASIC ................................................   $        0.02    $        0.01
                                                           =============    =============
  DILUTED ..............................................   $           -    $           -
                                                           =============    =============

WEIGHTED AVERAGE SHARES OUTSTANDING:
  BASIC ................................................      36,362,669       32,030,511
                                                           =============    =============
  DILUTED ..............................................     278,450,169       62,715,035
                                                           =============    =============

  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 THREE MONTHS
                                                                             ENDED MARCH 31,
                                                                         ----------------------
                                                                            2008         2007
                                                                         ---------    ---------
<S>                                                                      <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income ...........................................................   $ 739,863    $ 402,005
Adjustments to reconcile net income to net cash
  provided by operating activities:
     Depreciation and amortization ...................................      91,803       83,627
     Amortization of software maintenance costs ......................      57,154       70,714
     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 ................................    (739,185)    (458,493)

Changes in assets and liabilities:
     Accounts receivable .............................................    (148,171)    (138,032)
     Prepaid expenses and other current assets .......................     (26,387)      13,138
     Other assets ....................................................       2,190            -
     Accounts payable and accrued expenses ...........................      76,008      141,043
     Accrued interest payable, related party .........................      26,365       10,758
     Due to related parties ..........................................      12,666       45,126
     Accounts payable and accrued expenses - long-term ...............     (41,487)     (55,662)
                                                                         ---------    ---------

NET CASH PROVIDED BY OPERATING ACTIVITIES ............................      30,819      150,257
                                                                         ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sale of minority interest ............................     120,000            -
  Capitalized software development costs .............................           -      (79,392)
  Acquisition of property and equipment ..............................     (64,116)           -
                                                                         ---------    ---------

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES ..................      55,884      (79,392)
                                                                         ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from (repayment of) of loans ..............................     (82,882)    (132,892)
  Proceeds from loan - related party .................................           -       50,000
                                                                         ---------    ---------

NET CASH USED IN FINANCING ACTIVITIES ................................     (82,882)     (82,892)
                                                                         ---------    ---------

EFFECT OF EXCHANGE RATE CHANGES ON CASH ..............................         251        1,710
                                                                         ---------    ---------

NET INCREASE (DECREASE) IN CASH ......................................       4,072      (10,317)

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

CASH, END OF PERIOD ..................................................   $ 180,010    $  61,184
                                                                         =========    =========


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid for interest .............................................   $  95,531    $  92,005
                                                                         =========    =========
  Cash paid for income taxes .........................................   $       -    $       -
                                                                         =========    =========

NON-CASH INVESTING AND FINANCING ACTIVITIES:
  Series A preferred stock converted to common stock .................   $  46,300    $       -
                                                                         =========    =========
  Derivative liability reclassified to equity upon conversion ........   $  29,565    $       -
                                                                         =========    =========

     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
                                 March 31, 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 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 share 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 material 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
                                 March 31, 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. In 2008 and 2007, 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,
customer advances, 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 Note 6 and 7).

In February 2008, the FASB issued FASB Staff Position (FSP) 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
                                 March 31, 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 March 31, 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 stable, it is always possible that
unanticipated events in foreign countries could disrupt the Company's
operations.

The Company had net revenues from two major customers during each of the three
months ended March 31, 2008 and 2007 that accounted for approximately 87%, or
$1,297,000 and 91% or $1,074,000 of the net revenues, respectively. For the
three months ended March 31, 2008, these two major customers accounted for 46%
and 41% of net revenues, respectively. For the three months ended March 31,
2007, these two major customers accounted for 50% and 41% of net revenues,
respectively. At March 31, 2008, the same major customers accounted for 42% and
38%, respectively, of the total accounts receivable balance outstanding. At
December 31, 2007, the same major customers accounted for 47% and 35%,
respectively, of the total accounts receivable balance outstanding.

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 March 31, 2008 and December 31, 2007,
the Company had no deposits subjected to such risk. 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 March 31, 2008 and December 31, 2007.

                                       8
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                                 March 31, 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 - 10 years. Expenditures
for maintenance and repairs that do not improve or extend the lives of the
related assets are expensed to operations, 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 three months ended March 31, 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 three months ended
March 31, 2008 and 2007. The Company has not recorded any deferred taxes at
March 31 ,2008 and December 31, 2007.

                                       9
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                                 March 31, 2008

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

On January 1, 2007, we adopted the provisions of the Financial Accounting
Standards Board's ("FASB"): 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 is the 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 three months ended March 31,
2008 and 2007 was $251 and $1,710, 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 March 31, 2008 and December 31, 2007 were
translated at 1.7491 R$ to $1.00 and at 1.7713 R$ to $1.00, respectively. Equity
accounts were stated 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 fluctuations
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.

                                       10
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                                 March 31, 2008

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

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.

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 $1,600,000 of convertible Series A preferred stock, 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 he exercises the
conversion option. Management determined that Series A convertible preferred
stock was not "conventional," and the Company considered all aspects of EITF
00-19, paragraphs 12-33.

                                       11
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                                 March 31, 2008

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

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 March 31, 2008 and
December 31, 2007.

Basic and Diluted Earnings per Share

Basic earnings per share is computed by dividing the net earnings by the
weighted average number of shares of common stock outstanding during the period.
Diluted earnings per share reflects the basic earnings 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 earnings per share does not assume conversion, exercise, or contingent
issuance of securities that would have an anti-dilutive effect on earnings 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:

                                                        For the Three Months
                                                           Ended March 31,
                                                        2008            2007
                                                    ------------    ------------
Net income available to common shareholders
 for basic and diluted earnings per share ......    $    713,441    $    374,005
                                                    ============    ============

Weighted average shares outstanding - basic ....      36,362,669      32,030,511
Effect of dilutive securities
   Unexercised options and warrants ............               -               -
   Convertible debentures ......................      56,250,000       4,017,857
   Convertible loan payable - related party ....               -               -
   Convertible preferred stock .................     185,837,500      26,666,667
                                                    ------------    ------------
Weighted average shares outstanding- diluted ...     278,450,169      62,715,035
                                                    ============    ============
Earnings per share  - basic ....................    $       0.02    $       0.01
                                                    ============    ============
Earnings per share  - diluted ..................    $       0.00    $       0.00
                                                    ============    ============

                                       12
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                                 March 31, 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 three months ended March
31, 2008 and 2007, advertising expense was deemed not material.

Comprehensive Loss

The Company follows SFAS 130, "Reporting Comprehensive Income" to recognize the
elements of comprehensive income. Comprehensive income is comprised of net
income and all changes to the statements of stockholders' equity, except those
due to investments by stockholders, changes in paid-in capital and distributions
to stockholders. For the Company, comprehensive income for the three months
ended March 31, 2008 and 2007 included net income and foreign currency
translation adjustments.

Research and Development

Research and development costs are expensed as incurred. For the three months
ended March 31, 2008 and 2007, research and development costs were deemed not
material.

New Authoritative Pronouncements

In February 2007, the FASB issued SFAS 159, "The Fair Value Option for Financial
Assets and Financial Liabilities". SFAS 159 is effective for fiscal years
beginning after November 15, 2007. The adoption of SFAS 159 did not have a
material impact on the Company's results of operations, financial position or
liquidity.

In September 2006, the EITF reached a consensus on EITF Issue No. 06-1,
Accounting for Consideration Given by a Service Provider to Manufacturers or
Resellers of Equipment Necessary for an End-Customer to Receive Service from the
Service Provider (EITF 06-1). EITF 06-1 provides that consideration provided to
the manufacturers or resellers of specialized equipment should be accounted for
as a reduction of revenue if the consideration provided is in the form of cash
and the service provider directs that such cash be provided directly to the
customer. Otherwise, the consideration should be recorded as an expense. The
provisions of EITF 06-1 are effective on January 1, 2008. The adoption of EITF
06-1 had no effect on the Company's financial position or results of operations.

                                       13
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                                 March 31, 2008

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

In June 2007, the EITF reached a consensus on issue No. 07-3, "Accounting for
Nonrefundable Advance Payments for Goods or Services to be Used in Future
Research and Development Activities," ("EITF 07-3") which is effective for
fiscal years beginning after December 15, 2007. EITF 07-3 requires that
nonrefundable advance payments for future research and development activities be
deferred and capitalized. Such amounts will be recognized as an expense as the
goods are delivered or the related services are performed. It is expected that
adoption of EITF 07-3 will not have a material impact on the Company's results
of operations, financial position or liquidity.

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.

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 income 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
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.

                                       14
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                                 March 31, 2008

NOTE 2 - GOING CONCERN

Since inception, the Company has incurred cumulative net losses of $12,573,572,
and has a stockholders' deficit of $3,148,162 and a working capital deficit of
$3,877,378 at March 31, 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 March 31, 2008 and December 31, 2007, these deficiencies (including interest
and penalties) amounted to approximately $1,173,000 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. 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 March 31, 2008 (unaudited)
and December 31, 2007:

                                                  2008            2007
                                              -----------     -----------
      Computer Equipment .................    $ 1,580,187     $ 1,501,682
      Software ...........................        617,130         607,919
      Office Furniture and Equipment .....         22,919          22,685
      Vehicle ............................         46,595          46,011
      Other ..............................         19,476          19,232
                                              -----------     -----------
                                                2,286,307       2,197,529
      Accumulated Depreciation ...........     (1,547,882)     (1,439,856)
                                              -----------     -----------
                                              $   738,425     $   757,673
                                              ===========     ===========

For the three months ended March 31, 2008 and 2007, depreciation expense
amounted to $91,803 and $83,627, respectively.

                                       15
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                                 March 31, 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. Software
development costs consisted of the following at March 31, 2008 (unaudited) and
December 31, 2007:

                                                   2008            2007
                                                ---------       ---------
      Software development costs .........      $ 707,823       $ 707,823
      Accumulated amortization ...........       (417,914)       (360,760)
                                                ---------       ---------
                                                $ 289,909       $ 347,063
                                                =========       =========

For the three months ended March 31, 2008 and 2007, amortization of development
costs amounted to approximately $57,154 and $70,714, 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 March 31, 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. Under the modified terms, $75,000 of principal due under the
convertible loans was due on March 31, 2007 and the remaining principal of
$100,000 was due on 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 approximately 12% per annum. At March 31, 2008 and December 31, 2007,
interest due on these two loans amounted to $68,857 and $63,621 and the
aggregate principal amount due is $175,000. During the three months ended March
31, 2008 and 2007, the Company incurred $5,236 and $5,178, 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
                                 March 31, 2008

NOTE 5 - RELATED PARTY TRANSACTIONS (CONTINUED)

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

For the three months ended March 31, 2008 and 2007, the Company incurred $55,866
and $46,905, 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 March 31, 2008 and December 31,
2007, $381,983 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 three months ended March 31, 2008 and 2007, the Company incurred $9,115
and $8,450, 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
March 31, 2008 and December 31, 2007, $34,235 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 three months ended March 31, 2008 and 2007, the Company incurred $14,000
and $10,000, respectively, in consulting fees to an officer of the Company. At
March 31, 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 three months ended March 31, 2007, the Company incurred $36,000 in
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.

Loan Payable - Related Party
----------------------------

On March 5, 2004, the Company borrowed 115,000 Euros (translated to $181,700 and
$169,384 at March 31, 2008 and December 31, 2007, respectively) from an officer
of the Company for working capital purposes. The loan accrues 0.8% interest,
(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% interest,
(12% per annum), and are due on demand. Additionally, in connection with the two
loans, fo9r the three months ended March 31, 2007, the Company incurred a loan
fee of $5,000 which has been included in interest expense - related party on the
accompanying statement of operations. For the three months ended March 31, 2008
and 2007, the Company incurred $8,812 and $4,061, respectively, in interest
related to these loans. At March 31, 2008 and December 31, 2007, $51,903 and
$43,091 in interest and loan fees was accrued on these loans and the aggregate
principal and interest amount due is $313,604 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
                                 March 31, 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 March 31, 2008 and December 31, 2007, loans payable to these financial
institutions aggregated $621,974 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 are convertible at the holder's option any time up to maturity at
a conversion price equal to the lower of (i) 120% of the closing bid price of
the common stock on the date of the debentures or (ii) 80% of the lowest closing
bid price of the common stock for the five trading days immediately preceding
the conversion date. The debentures had a two-year term and accrue interest at
5% per year. On May 15, 2008, the Company entered into an agreement with Grimes
to repay the loan (see Note 11).

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, the Company revalues the warrant and
convertible feature of these derivative liabilities. For the three months ended
March 31, 2008 and 2007, the Company recorded a gain on valuation of these
derivative liability and warrants of $45,436 and $83,468, respectively.
Amortization of debt discount for the three months ended March 31, 2008 and 2007
was $0 and $31,250, respectively, and is included in interest expense.
Amortization of debt offering costs for the three months ended March 31, 2008
and 2007 was $0 and $4,783, respectively, and is included in interest expense.
At March 31, 2008, the estimated fair values of the convertible feature
derivative liabilities and warrants are $169,683 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
are reflected as part of the conversion feature liability and warrant liability,
respectively, on the accompanying consolidated balance sheets.

                                       18
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                                 March 31, 2008

NOTE 6 - FINANCING ARRANGEMENTS (CONTINUED)

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

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

                                           2008               2007
                                        ----------      -----------------
      Market price ................       $0.006             $0.065
      Exercise price of debt ......       $0.004         $0.036 to $0.20
      Term ........................     0.50 years      0.25 - 0.50 years
      Volatility ..................        138%               114%
      Risk-free interest rate .....        1.55%          3.36% - 3.49%

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

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

For the three months ended March 31, 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 ........................      $ 45,436      $693,749      $739,185
                                            --------      --------      --------

Total gain from derivative liabilities      $ 45,436      $693,749      $739,185
                                            ========      ========      ========
                2007
                ----
Change in fair value of derivative
  liabilities ........................      $ 83,468      $375,025      $458,493
                                            --------      --------      --------

Total gain from derivative liabilities      $ 83,468      $375,025      $458,493
                                            ========      ========      ========

                                       19
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                                 March 31, 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
                                 March 31, 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 for a total price 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, as of the date of this report, has not been
declared effective.

                                       21
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                                 March 31, 2008

NOTE 7 - STOCKHOLDERS' DEFICIT (CONTINUED)

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

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.

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 March 31, 2008 and 2007, the
Company revalued the ECF and warrants resulting in a gain on derivative
liability of $693,749 and $375,025 for the three months ended March 31, 2008 and
2007, respectively (See Note 6).

At March 31, 2008, the estimated fair value of the ECF and warrants was $488,592
and $6,209, respectively. At December 31, 2007, the estimated fair value of the
ECF and warrants was $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 March 31, 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) ..........   1 to 1.80 years     1.05 to 3.05 years
      Volatility ...............         137%                 114%
      Risk-free interest rate ..    1.55% - 1.79%         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.

                                       22
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                                 March 31, 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 March
31, 2008 and changes during the period ending on that date is as follows:

                                                   Three Months Ended
                                                     March 31, 2008
                                              ----------------------------
                                              Number of   Weighted Average
                                               Options     Exercise Price
                                              ---------   ----------------
    Stock options
    -------------
    Balance at beginning of year ..........   3,425,000        $ 0.25
    Granted ...............................           -             -
    Exercised .............................           -             -
    Forfeited .............................           -             -
                                              ---------        ------
    Balance at March 31, 2008 .............   3,425,000        $ 0.25
                                              =========        ======

    Options exercisable at end of period ..   3,425,000        $ 0.25
                                              =========        ======
    Weighted average fair value of
     options granted during the year ......                    $    -
                                                               ======

The following table summarizes information about employee and consultants stock
options outstanding at March 31, 2008:

                Options Outstanding                       Options Exercisable
---------------------------------------------------    -------------------------
                              Weighted
                               Average     Weighted                     Weighted
Range of       Number         Remaining     Average        Number        Average
Exercise   Outstanding at    Contractual   Exercise    Exercisable at   Exercise
 Price     March 31, 2007   Life (Years)    Price      March 31, 2007   Price
--------   --------------   ------------   --------    --------------   --------
$   0.50     1,050,000          0.37       $   0.50      1,050,000      $   0.50
$   0.20       425,000          1.75           0.20        425,000          0.20
$   0.15     1,350,000          2.50           0.15      1,350,000          0.15
$   0.06       600,000          4.65           0.06        600,000          0.06
           --------------                  --------    --------------   --------
             3,425,000                     $   0.25      3,425,000      $   0.25
           ==============                  ========    ==============   ========

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

                                       23
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                                 March 31, 2008

NOTE 7 - STOCKHOLDERS' DEFICIT (CONTINUED)

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

A summary of the status of the Company's outstanding stock warrants as of March
31, 2008 and activities during the period then ended is as follows:

                                                   Three Months Ended
                                                     March 31, 2008
                                              -----------------------------
                                              Number of    Weighted Average
                                               Warrants     Exercise Price
                                              ----------   ----------------
    Warrants
    --------
    Balance at beginning of year ..........   11,902,500        $ 0.50
    Granted ...............................            -             -
    Exercised .............................            -             -
    Forfeited .............................     (400,000)         0.20
                                              ----------        ------
    Balance at March 31, 2008 .............   11,502,500        $ 0.51
                                              ==========        ======

The following information applies to all warrants outstanding at March 31, 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
--------   --------------   ------------   --------    --------------   --------
$   1.00      4,100,000         0.37       $   1.00       4,100,000     $   1.00
$   0.30      2,500,000         2.79           0.30       2,500,000         0.30
$   0.20      4,902,500         1.98           0.20       4,902,500         0.20
           --------------                  --------    --------------   --------
             11,502,500                    $   0.51      11,502,500     $   0.51
           ==============                  ========    ==============   ========

                                       24
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                                 March 31, 2008

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., 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 ("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. The remaining balance was to
be paid as follows i) $32,000 of the initial deposit was 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. 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
      Monthly payments of $200,000 from November 2008
          to April 2009 ....................................    $1,200,000

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. At March 31, 2008, pursuant to
the terms of the Agreement, as amended, the Company has a note receivable of
$2,911,393 due from the Buyer and recorded a deferred gain on the sale of
$288,607, which will be recognized as other income when collection is reasonably
assured. At March 31, 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 March 31, 2008 ........    (2,911,393)
                                                                 -----------
      Deferred gain on sale of minority interest in subsidiary   $   288,607
                                                                 ===========

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.

                                       25
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                                 March 31, 2008

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

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.

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 $32,000 from the
initial payment due.

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.

                                                    Three Months ended
                                                         March 31,
                                                -------------------------
                                                    2008         2007
                                                -----------   -----------
     Net revenues to unaffiliated customers:
             Brazil ..........................  $ 1,480,964   $ 1,186,226
                                                -----------   -----------
     Operating Expenses:
             Brazil ..........................    1,148,282       879,066
             USA .............................      203,092       188,925
             Australia .......................            -             -
             Mauritius .......................        4,211         4,335
                                                -----------   -----------
                                                  1,355,585     1,072,326
                                                -----------   -----------
     Income from operations  .................      125,379       113,900
                                                -----------   -----------
     Other income (expenses) and income taxes:
             Brazil ..........................      (95,531)     (106,025)
             USA .............................      710,015       403,929
             Australia .......................            -        (9,799)
                                                -----------   -----------
                                                    614,484       288,105
                                                -----------   -----------
     Net income as reported ..................  $   739,863   $   402,005
                                                -----------   -----------

                                       26
<PAGE>

                 TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
            Notes to the Unaudited Consolidated Financial Statements
                                 March 31, 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 March 31, 2008 and December 31, 2007, the Company has accrued
approximately $202,000 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 March 31, 2008 and December 31, 2007, these
deficiencies, plus interest and penalties, amounted to approximately $1,173,000
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 a similar plan in the future. 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 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 15, 2008, the Company entered into an agreement with Grimes to repay the
outstanding convertible debenture payable and any unpaid interest and fees (See
Note 6) as follows: i) $106,902 on May 16, 2008; ii) $100,000 on June 16, 2008;
and iii) $100,000 on July 16, 2008.

                                       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 consolidated financial statements for the
three months ended March 31, 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

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
share of: (i) Medlink Conectividade; and (ii) Medlink.

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 sell the remaining 55 shares of the Transax Limited
(the "Option"); and (ii) the Buyer agreed to us an aggregate purchase price of
$3,200,000 for the Initial Shares. A total of $288,607 and $187,747 was received
through March 31, 2008 and December 31, 2007, respectively. 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 three
months ended March 31, 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. 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
      Monthly payments of $200,000 from November 2008
           to April 2009 ...................................    $1,200,000

                                       28
<PAGE>

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. At March 31, 2008, pursuant to
the terms of the Agreement, as amended, the Company has a note receivable of
$2,911,393 due from the Buyer and recorded a deferred gain on the sale of
$288,607, which will be recognized into other income when collection is
reasonably assured. At March 31, 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 March 31, 2008 ........    (2,911,393)
                                                                 -----------
      Deferred gain on sale of minority interest in subsidiary   $   288,607
                                                                 ===========

The Option is exercisable by the Buyer during March and April 2009, subject to
shareholder approval, to acquire the balance of our Medlink Connectividade
operations (and its corresponding debt) by way of acquisition of the remaining
55 shares of the Transax Limited and certain licensing rights for Latin America,
Spain and Portugal in exchange for further payments to us of approximately
$2,400,000 in the form of twelve 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 us (the "Bonus") equal
to 50% of the revenues received by Medlink Connectividade (converted monthly to
US Dollar 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 Connectividade's customer Brandesco Saude.
Buyer shall pay the Bonus to the extent due as follows: 40% of January 31, 2009,
20% on April 30, 2009, 20% on July 31, 2009, and 20% on October 31, 2009. The
Bonus shall be payable regardless of whether or not we elect to exercise the
Option.

Granted to us is a perpetual, exclusive and sublicensable license to use all of
the software and other intellectual property owned by Medlink (the "Intellectual
Property") 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 has not paid $32,000 of
initial deposit.

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. Critical accounting policies for Transax International Limited include
the following:

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 its 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.

                                       29
<PAGE>

Software Development Costs - Under the criteria set forth in Statement of
Financial Accounting Standards ("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. We regularly
review 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.

Accounting for Stock Based Compensation - Effective January 1, 2006, we 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 its stock option plans in the
financial statements. The adoption of this pronouncement may have a material
effect on our results of operations.

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

Substantially all of our revenues are derived from the processing of
applications by healthcare providers for approval of patients for healthcare
services 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 February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities, Including an Amendment of FASB
Statement No. 115", under which entities will now be permitted to measure many
financial instruments and certain other assets and liabilities at fair value on
an instrument-by-instrument basis. This Statement is effective as of the
beginning of an entity's first fiscal year that begins after November 15, 2007.
Early adoption is permitted as of the beginning of a fiscal year that begins on
or before November 15, 2007, provided the entity also elects to apply the
provisions of SFAS 157. The adoption of SFAS 159 did not have a material effect
on the Company's financial position or results of operations.

                                       30
<PAGE>

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 the Company's accounting for future business
combinations following adoption on January 1, 2009.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2008 COMPARED TO THREE MONTHS ENDED MARCH 31, 2008

Our net income during the three-month period ended March 31, 2008 was $739,863
compared to $402,005 during the three-month period ended March 31, 2007 (an
increase of $337,858 or 84%).

During the three-month period ended March 31, 2008, we generated $1,480,964 in
revenues compared to $1,186,226 in revenues generated during the three-month
period ended March 31, 2007 (an increase of $294,738 or 24.8%). The increase in
revenues is due to the continued installation of our software and/or hardware
devices containing our software at healthcare providers' locations in Brazil.
Upon installation, we 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 three-month period ended March 31, 2008, we incurred operating
expenses in the aggregate amount of $1,355,585 compared to $1,072,326 incurred
during the three-month period ended March 31, 2007 (an increase of $283,259 or
26.4%). The increase in operating expenses incurred during the three-month
period ended March 31, 2008 compared to the three-month period ended March 31,
2007 resulted from: (i) an increase of $66,062 or 17.2% in cost of product
support services resulting from the increase in revenues; (ii) an increase of
$181,682 or 85.7% in compensation and related benefits associated with the
increased operations of our MedLink operations; (iii) an increase of $15,487 or
43.0% based upon an increase in the amount of legal fees incurred; (iv) a
decrease of $30,374 or 28.8% in management and consulting fees-related parties
due to a decrease in use of management and a director/consultant needed to
handle our operations; (v) a decrease in investor relations of $9,051 or 100.0%
in investor relations; (vi) an increase of $8,176 or 9.8% in depreciation and
amortization; and (vii) an increase of $51,277 or 21.2% in general and
administrative expenses resulting from an increase in operating costs associated
with our increased business revenues in 2008.

                                       31
<PAGE>

We reported income from operations of $125,379 during the three-month period
ended March 31, 2008 as compared to $113,900 during the three-month period ended
March 31, 2007 (an increase of $11,479 or 10.1%). During the three-month period
ended March 31, 2008, we received other income of $614,484 compared to $288,105
during the three-month period ended March 31, 2007 (an increase of $326,379 or
113.3%). The increase in other income during the three-month period ended March
31, 2008 compared to the three-month period ended March 31, 2007 resulted
primarily from the increased market value change ( approximately $281,000) in
2008 as compared to 2007 of the Company's derivative liabilities, which relates
to the classification of the embedded conversion feature and related warrants
issued in connection with our Series A Preferred Stock and debenture payable as
a derivative instrument;

For the three-month period ended March 31, 2008, our net income was $739,863
compared to net income of $402,005 for the three-month period ended March 31,
2007.

During the three-month period ended March 31, 2008, we recorded a deemed and
cumulative preferred stock dividend of $26,422 compared to $28,000 during the
three-month period ended March 31, 2007, which relates to our Series A Preferred
Stock.

We reported net income attributable to common shareholders of $713,441 during
the three-month period ended March 31, 2008 as compared to $374,005 during the
three-month period ended March 31, 2007. This translates to an overall basic
earnings per-share available to shareholders of $0.02 and $0.01 for the
three-month periods ended March 31, 2008 and 2007, respectively.

During the three-month period ended March 31, 2008, we recorded an unrealized
foreign currency translation loss of ($68,690) compared to ($98,393) during the
three-month period ended March 31, 2007. This resulted in comprehensive income
during the three-month period ended March 31, 2008 of $671,173 compared to
$303,612 during the three-month period ended March 31, 2007.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2008, our current assets were $1,129,171 and our current
liabilities were $5,006,549, which resulted in a working capital deficit of
$3,877,378. As of March 31, 2008, our total assets were $2,160,115 consisting
of: (i) $180,010 in cash; (ii) $307,819 in prepaid expenses and other current
assets; (iii) $641,342 in accounts receivable; (iv) $289,909 in net software
development costs; (v) $738,425 in net property and equipment; and (vii) $2,610
in other assets. As at March 31, 2008, our total assets were $2,160,115 compared
to $2,050,863 at December 31, 2007.

As of March 31, 2008, our total liabilities were $5,308,277 consisting of: (i)
$2,532,033 in long-term and current portion of accounts payable and accrued
expenses; (ii) $418,718 due to related parties; (iii) $243,857 in convertible
loan to related party; (iv) $313,604 in loan payable to related party; (v)
$225,000 in net convertible debenture payable; (vi) $621,974 in long-term and
current portion of loans payable; (vii) $6,209 in warrant liability; (viii)
$658,275 in convertible feature liability and (ix) $288,607 in deferred gain on
sale of minority interest in subsidiary. As at March 31, 2008, our total
liabilities were $5,308,277 compared to $5,907,918 at December 31, 2007. The
decrease in total liabilities is due primarily to the decrease in our derivative
liabilities.

Stockholders' deficiency decreased from ($3,857,055) at December 31, 2007 to
($3,148,162) at March 31, 2008.

For the three-month period ended March 31, 2008, net cash flow provided by
operating activities was $30,819 compared to $150,257 for the three-month period
ended March 31, 2007. The change in cash flows provided by operating activities
is principally due an increase in accounts receivable of $148,171.

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Net cash flows provided by investing activities amounted to $55,884 for the
three-month period ended March 31, 2008 compared to net cash used in investing
activities of $79,392 for the three-month period ended March 31, 2007. During
the three-month period ended March 31, 2007, we capitalized software development
costs of $79,392. During the three-month period ended March 31, 2008, we
received proceeds of $120,000 from the sale of a minority interest ownership in
Transax Limited offset by the acquisition of property and equipment of $64,116.

Net cash flows used in financing activities for the three-month period ended
March 31, 2008 were $82,882 compared to $82,892 for the three-month period ended
March 31, 2007, resulting primarily from repayment of loans.

PLAN OF OPERATION

YA GLOBAL INVESTMENTS ("YA GLOBAL")

On January 13, 2006, we entered into the Investment Agreement with YA Global. In
accordance with the terms and provisions of the Investment Agreement: (i) we
sold to YA Global 16,000 shares of our Series A Preferred for a total price of
up to $1,600,000; (ii) the Series A Preferred Shares are senior to all common
stock and all series of preferred stock; (iii) the holders of Series A Preferred
Shares are entitled to receive dividends or distribution on a pro rata basis in
the amount of seven percent (7%) per year which shall be paid in cash and shall
be cumulative; and (iv) each Series A Preferred Share can be converted into
shares of our common stock equal to the sum of the Liquidation Amount, which is
defined as an amount equal to $100 per shares of Series A Preferred, plus
accrued but unpaid dividends thereon, divided by the conversion price (which
conversion price is defined to be equal to the lower of (a) $0.192 or (b) eighty
percent (80%) of the lowest daily volume weighted average price of our common
stock as determined by price quotations from Bloomberg, LP during the ten (10)
trading days immediately preceding the date of conversion.

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 a registration statement
on Form SB-2 is not filed within thirty (30) days from the date we filed 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 has 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
will 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 above) 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 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 a registration statement with the SEC on May 9, 2006 and filed
amended registration statements on July 28, 2006 and October 11, 2006. As of the
date of this Annual Report, the registration statement has not been declared
effective. At December 31, 2006 we recorded a $160,000 penalty that is included
in Accrued Expenses in the accompanying financial statements.

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<PAGE>

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.

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

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 per share, (the
"Series A Preferred Shares") which shall be convertible, at YA Global's
discretion, into shares of our common stock or a total price of up to
$1,600,000.

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

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 has 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
will 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

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<PAGE>

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
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 Annual Report, the Registration Statement
has not been declared effective by the Securities and Exchange Commission.

In connection with the sale of the Series A Preferred Shares, on January 13,
2006, the Parties agreed that YA Global will surrender the promissory note
issued by us to YA Global on May 17, 2005, in the principal amount of $255,237,
in exchange for $255,237 of Series A Preferred Shares. As of January 13, 2006,
the full amount outstanding under the Promissory Note was $255,237, plus accrued
and unpaid interest of $0. As a result of the Parties' agreement, the Promissory
Note was retired and canceled. The Parties also agreed to terminate the
Securities Purchase Agreement and the Investor Registration Rights Agreement,
each dated as of October 25, 2004, as well as the Pledge and Escrow Agreements,
each dated as of October 21, 2004, that were entered into by the Parties in
connection with the issuance of the promissory note.

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.

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

During the three-month period ended March 31, 2008, we issued 3,346,108 shares
of our common stock to YA Global in connection with the conversion of shares of
Series A Preferred Stock. Subsequent to the three-month period ended March 31,
2008, we issued a further 1,795,455 shares of our common stock to YA Global. See
"Part II. Item 1. Unregistered Sales of Securities and Use of Proceeds.

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<PAGE>

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.

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

In April 2005, we entered into a financing agreement with Scott and Heather
Grimes, Joint Tenants with Right of Survivorship (the "Investor"). Under the
terms of the financing arrangement with the Investor, we issued convertible
debentures to the Investor in the original principal amount of $250,000. The
debentures are convertible at the Investor's option any time up to maturity at a
conversion price equal to the lower of: (i) 120% of the closing bid price of our
common stock on the date of the debentures, or (ii) 80% of the lowest closing
bid price of our common stock for the five trading days immediately preceding
the conversion date. The debentures have a two-year term and accrue interest at
5% per year. At maturity, the debentures will automatically convert into shares
of our common stock at a conversion price equal to the lower of: (i) 120% of the
closing bid price of our common stock on the date of the debentures, or (ii) 80%
of the lowest closing bid price on our common stock for five trading days
immediately preceding the conversion date. On July 13, 2006, the Investor
converted $15,000 of the Debenture into 104,167 shares of our common stock and
on October 31, 2006, the Investor converted $10,000 of the debenture into
151,515 shares of our common stock. On May 15, 2008, we entered into an
agreement with Scott and Heather Grimes to repay the outstanding convertible
debenture payable and any unpaid 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.

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<PAGE>

Certain negative covenants in the Securities Purchase Agreement could
substantially impact our ability to raise funds from alternative sources in the
future. For example, for as long as the convertible debenture remains
outstanding and without the written consent of the debenture holder, we (a)
shall not 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) shall
not 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 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; (c) shall not
enter into any security instrument granting the holder a security interest in
any or all of our assets; (d) shall not file any registration statement on Form
S-8 except we may file one registration statement on Form S-8 for up to
2,500,000 shares of common stock and provided however, anyone receiving shares
pursuant to such permitted Form S-8 registration shall be restricted from
selling such shares for a period of ninety (90) days after the registration
statement becomes effective and (e) shall not, and shall cause each of its
subsidiaries not to, enter into, amend, modify or supplement, or permit any
subsidiary to enter into, amend, modify or supplement any agreement,
transaction, commitment, or arrangement with any of its subsidiary's officers,
directors, person who were officers or directors at any time during the previous
two years, stockholders who beneficially own five percent (5%) or more of our
common stock, or Affiliates (as defined in the Securities Purchase Agreement) or
with any individual related by blood, marriage, or adoption to any such
individual or with any entity in which any such entity or individual owns a five
percent (5%) or more beneficial interest, except for (i) customary employment
arrangements and benefit programs on reasonable terms, (ii) any investment in
one of our Affiliates, (iii) any agreement, transaction, commitment, or
arrangement on an arms-length basis on terms no less favorable than terms which
would have been obtainable from a person other than such related party and (iv)
any agreement transaction, commitment, or arrangement which is approved by a
majority of our disinterested directors.

On February 1, 2006, we and the debenture holder mutually agreed to extend the
term of the debentures until December 1, 2007. In addition, we granted a warrant
to purchase 400,000 shares of our common stock to the debenture holder. The
warrant has a term of 2 years and is exercisable at $0.20 per share. We agreed
to register 3,571,429 shares of our common stock underlying the conversion of
the Debentures and the exercise of the warrant on a best efforts basis not later
than 30 days after we filed our Annual Report on Form 10-KSB/A for the fiscal
year ended December 31, 2005. We initially filed a registration statement with
the SEC on May 9, 2006 and filed amended registration statements on July 28,
2006 and October 11, 2006. As of the date of this Quarterly Report, the
registration statement been not been declared effective.

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.

                                       37
<PAGE>

MATERIAL COMMITMENTS

CONVERTIBLE LOANS - RELATED PARTY

A significant material liability for us for fiscal year 2008 is the aggregate
principal amount of $175,000 and $63,621 and $42,621 in accrued interest due and
owing to a related party in accordance with two convertible promissory notes
(collectively, the "Convertible Promissory Note(s)"). Previously, the aggregate
principal amounts of the Convertible Promissory Notes were $200,000 and
$100,000, respectively. During March 2005, we modified the terms of the
Convertible Promissory Notes: (i) $200,000 is due on March 31, 2007 and
convertible into shares of our common stock at $0.125 per share together with a
warrant per share to purchase our common stock at $0.25 per share for a period
of two years; and (ii) $100,000 is 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.
On June 28, 2005 and September 30, 2005, the holders of the Convertible
Promissory Notes partially exercised the respective conversion rights. As at
March 31, 2008, an aggregate principal amount of $175,000 and interest in the
amount of $68,857 and $63,621 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 under re-negotiation with the lender.

LOAN - RELATED PARTY

A significant material liability for us for fiscal year 2008 is the aggregate
amount of $151,834 and $169,384 in principal 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 compounded, 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. Additionally, during fiscal year 2007, we
borrowed $80,000 from Mr. Walters. 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 three-month periods ended March 31, 2008 and 2007, we incurred
$8,812 and $9,061, respectively, in interest related to these loans. At March
31, 2008 and December 31, 2007, $51,903 and $43,091 in interest and loan fees
was accrued on these loans and the aggregate principal and interest amount due
is $313,604 and $292,475, respectively.

CONSULTING AGREEMENT

A significant and estimated material liability for us for fiscal year 2008 is
the amounts due and owing as management fees to Stephen Walters, our Chief
Executive Officer. For the three-month periods ended March 31, 2008 and 2007, we
incurred $55,866 and $46,905, respectively, in management fees. At March 31,
2008 and December 31, 2007, $381,983 and $371,932 in management fees and other
expenses are payable to Mr. Walters. In accordance with the terms of an
agreement effective April 2006, we pay monthly to Mr. Walters an aggregate
amount of $15,000 as compensation for managerial and consulting services he
provides.

CONVERTIBLE DEBENTURE

A significant material liability for us for fiscal year 2008 is the convertible
debenture payable in the amount of $225,000. On April 1, 2005, we entered into a
financing agreement with Investor. Under the terms of the financing arrangement
with the Investor, we issued convertible debentures to the Investor in the
original principal amount of $250,000, of which $25,000 was converted into
255,682 shares of our common stock during fiscal year 2006. The debentures are
convertible at the Investor's option any time up to maturity at a conversion
price equal to the lower of: (i) 120% of the closing bid price of our common
stock on the date of the debentures, or (ii) 80% of the lowest closing bid price

                                       38
<PAGE>

of our common stock for the five trading days immediately preceding the
conversion date. The debentures have a two-year term and accrue interest at 5%
per year. At maturity, the debentures will automatically convert into shares of
our common stock at a conversion price equal to the lower of: (i) 120% of the
closing bid price of our common stock on the date of the debentures, or (ii) 80%
of the lowest closing bid price on our common stock for five trading days
immediately preceding the conversion date. On February 1, 2006 we agreed to
extend the term of the debentures to December 1, 2007 and issued 400,000
warrants at 0.20 per share valid for two (2) years.

ACCRUED TAXES AND RELATED EXPENSES

A significant and estimated material liability for us for fiscal year 2008 is
the amount due and owing for Brazilian payroll taxes and Social Security taxes.
At Marcfh 31, 2008 and December 31, 2007, these deficiencies, plus interest and
penalties, amounted to approximately $1,173,000 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
December 31, 2007, approximately $758,900 of our INSS and other taxes are to be
repaid over periods from eight to fifty months. The payment program requires us
to pay a monthly fixed amount of approximately $9,000. During 2006 we entered
into a payment program for $246,000 of other taxes to be repaid over a period of
sixty months. At March 31, 2008, the future payments due to the Brazilian
authorities are as follows: (i) 2009 - $1,138,683; (ii) 2010 - $26,351; and
(iii) 2011 - $8,150.

MEDLINK CONNECTIVIDADE LOAN PAYABLE

Significant liabilities for us are the several loans and credit lines with
financial institutions. The loan 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
March 31, 2008 and December 31, 2007, the loans payable to these financial
institution aggregated $621,974 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 Reais is
the functional currency of our subsidiary. The fluctuation of exchange rates of
the Reais may have positive or negative impacts on our results of operations.
However, since all sales revenue and expenses of our subsidiary company is
denominated in Reais, 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

Interest rates in Brazil have been unstable and Brazil has suffered from very
high inflation rates during the 1980s, which lead the country to change currency
several times. Brazilians were used to dealing with Cruzeiros until 1986. That
year, an economic plan cur three zeros from the bills and changed the current to
Cruzado. A few years later, another three zeros were dropped and the Brazilians
were introduced to the Cruzados Novos. In the 1990s, the Cruzados Novos were
retired and were turned into Cruzeiros Reais. In 1994, after the deployment of a
new monetary plan, the new currency, called Real or Reais, came into existence.
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 necessarily was 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

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<PAGE>

   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.

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 March 31, 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 March 31, 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 March 31, 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 accounting and reporting requirements for our operating subsidiary and
their U.S. GAAP knowledge was limited. As a result, 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 the PRC, 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 the region,
      we were not able to hire sufficient internal audit resources before the
      end of 2007. 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.

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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.

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 our first fiscal quarter that has materially affected, or is 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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                           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 March
31, 2008 and December 31, 2007, we have accrued approximately $202,000 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 three-month period ended March 31, 2008 and subsequent up to the date
of this Quarterly Report, we have issued to YA Global Investments an aggregate
of 5,141,563 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: May 20, 2008                  By: /s/ STEPHEN WALTERS
                                         -------------------
                                         Stephen Walters, President/Chief
                                         Executive Officer and Director

Dated: May 20, 2008                  By: /s/ ADAM WASSERMAN
                                         ------------------
                                         Adam Wasserman, Chief Financial Officer

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