FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


(Mark One)

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

                 For the quarterly period ended March 31, 1997

                                       OR

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

        For the transition period from _________ to ___________

                         Commission file number 0-10966

                       NATIONAL TRANSACTION NETWORK, INC.
                       ----------------------------------
             (Exact name of registrant as specified in its charter)

              Delaware                             No. 75-1535237
              --------                             --------------
   (State or other jurisdiction                   (I.R.S. Employer
 of incorporation or organization)              Identification Number)


              117 Flanders Road
         Westborough, Massachusetts                     01581
         --------------------------                     -----
   (Address of principal executive offices)           (Zip Code)

                                 (508) 870-3200
                                 --------------
              (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  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest  practicable  date: Common Stock, $.15
par value per share, outstanding as of May 13, 1997: 3,248,606 shares.



                       NATIONAL TRANSACTION NETWORK, INC.



                                                                            PAGE
                                                                            ----
PART I   FINANCIAL INFORMATION

   Item 1   Financial Statements

                 Balance Sheets
                          March 31, 1997 and December 31, 1996                3

                 Statements of Operations
                          Three months ended March 31, 1997 and 1996          5

                 Statements of Cash Flows
                          Three months ended March 31, 1997 and 1996          6

                 Notes to Financial Statements                                7

   Item 2   Management's Discussion and Analysis of Financial
            Condition and Results of Operations                               9


PART II  OTHER INFORMATION                                                   11


Signatures                                                                   12


                                       2


                         PART I - FINANCIAL STATEMENTS


ITEM I. FINANCIAL STATEMENTS
----------------------------

                       NATIONAL TRANSACTION NETWORK, INC.
                                 BALANCE SHEETS


                                     ASSETS
                                     ------


<TABLE>
<CAPTION>
                                                                         (Unaudited)
                                                                           March 31,                December 31,
                                                                             1997                       1996
                                                                             ----                       ----
<S>                                                                        <C>                        <C>       
CURRENT ASSETS:
   Cash and equivalents                                                    $  152,000                 $  266,045
   Accounts receivable
   (Net of allowance for doubtful accounts
    of $100,000 at March 31, 1997
    and December 31, 1996)                                                  1,228,610                  1,406,113
   Accounts receivable-stockholder                                            156,050
   Inventory                                                                  272,579                    233,590
   Prepaid expenses                                                            42,746                     36,394
                                                                           ----------                 ----------
     TOTAL CURRENT ASSETS                                                   1,851,985                  1,942,142
                                                                           ----------                 ----------

PROPERTY AND EQUIPMENT                                                        807,829                    785,051
   Less accumulated depreciation
    and amortization                                                         (607,971)                  (578,032)
                                                                           ----------                 ----------
     PROPERTY AND
     EQUIPMENT - NET                                                          199,858                    207,019
                                                                           ----------                 ----------
OTHER ASSETS                                                                   15,601                     11,931
                                                                           ----------                 ----------
                    TOTAL                                                  $2,067,444                 $2,161,092
                                                                           ==========                 ==========
</TABLE>



                       See Notes to Financial Statements.


                                       3



                       NATIONAL TRANSACTION NETWORK, INC.
                                 BALANCE SHEETS


                      LIABILITIES AND STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                                          (Unaudited)
                                                                            March 31,                December 31,
                                                                              1997                       1996
                                                                              ----                       ----
<S>                                                                        <C>                        <C>       
CURRENT LIABILITIES:
   Accounts payable                                                        $  456,896                 $  497,569
   Accounts payable-stockholder                                               151,286                     95,287
   Accrued liabilities                                                        404,027                    348,786
   Deferred revenue                                                           537,186                    561,982
   Short term portion of capital lease                                         11,799                      9,224
                                                                           ----------                 ----------
     TOTAL CURRENT LIABILITIES                                              1,561,194                  1,512,848
                                                                           ----------                 ----------

LONG TERM LIABILITIES:
   Long term portion of capital lease                                           9,478                     12,053
   Deferred revenue                                                             1,125                      1,941
                                                                           ----------                 ----------
     TOTAL LONG TERM LIABILITIES                                               10,603                     13,994
                                                                           ----------                 ----------

STOCKHOLDERS' EQUITY:
   Preferred stock, $.10 par value;
    authorized, 5,000,000 shares;
    none outstanding
   Common stock, $.15 par value;
    authorized, 6,666,667 shares;
    issued and outstanding, 3,248,606
    shares at March 31, 1997 and
    December 31, 1996                                                         487,291                    487,291
   Additional paid-in capital                                              12,589,255                 12,589,255
   Accumulated Deficit                                                    (12,580,899)               (12,442,296)
                                                                           ----------                 ----------
     TOTAL STOCKHOLDERS'
        EQUITY                                                                495,647                    634,250
                                                                           ----------                 ----------
                  TOTAL                                                    $2,067,444                 $2,161,092
                                                                           ==========                 ==========

</TABLE>

                       See Notes to Financial Statements.



                                       4


                       NATIONAL TRANSACTION NETWORK, INC.
                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                            Three Months Ended
                                                                                                  March 31,
                                                                                                  ---------
                                                                                       1997                        1996
                                                                                       ----                        ----
<S>                                                                                 <C>                         <C>       
REVENUE:
   Systems and equipment                                                            $  576,265                  $  854,307
   Software and services                                                               645,888                     513,814
                                                                                    ----------                  ----------
     Total                                                                           1,222,153                   1,368,121
                                                                                    ----------                  ----------
COST AND EXPENSES:
   Cost of revenue                                                                     611,581                     720,194
   Sales and marketing                                                                 261,998                     276,483
   Research and development                                                            247,983                     244,621
   General and administrative                                                          240,940                     206,019
                                                                                    ----------                  ----------
     Total                                                                           1,362,502                   1,447,317
                                                                                    ----------                  ----------
LOSS FROM OPERATIONS                                                                  (140,349)                    (79,196)
                                                                                    ----------                  ----------
OTHER INCOME :
   Interest income                                                                       1,746                       3,110
                                                                                    ----------                  ----------
     Total                                                                               1,746                       3,110
                                                                                    ----------                  ----------
       NET LOSS                                                                      ($138,603)                   ($76,086)
                                                                                    ==========                  ==========

NET LOSS  PER COMMON SHARE                                                              ($0.04)                     ($0.02)
                                                                                    ==========                  ==========


WEIGHTED AVERAGE NUMBER OF
 COMMON SHARES OUTSTANDING                                                           3,248,606                   3,248,606
                                                                                    ==========                  ==========

</TABLE>

                       See Notes to Financial Statements.



                                       5


                       NATIONAL TRANSACTION NETWORK, INC.
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                   Three Months Ended
                                                                                                        March 31,
                                                                                                        ---------
                                                                                           1997                          1996
                                                                                           ----                          ----

<S>                                                                                     <C>                           <C>       
Cash Flows From Operating Activities:
Net loss                                                                                ($138,603)                    ($ 76,086)
                                                                                         --------                      --------
Adjustments to reconcile net income (loss) to
   net cash provided by (used for) operating activities:
Depreciation and amortization                                                              29,939                        25,759
Increase (decrease) in cash from:
   Accounts receivable                                                                    177,503                       166,333
   Accounts receivable-stockholder                                                       (156,050)
   Inventory                                                                              (38,989)                       43,965
   Prepaid expenses                                                                        (6,352)                       (9,400)
   Other Assets                                                                            (3,670)                       (1,280)
   Accounts payable-stockholder                                                            55,999
   Accounts payable and accrued
     liabilities                                                                           14,568                       (85,731)
   Deferred revenue                                                                       (25,612)                      337,366
                                                                                         --------                      --------
Total adjustments                                                                          47,336                       477,012
                                                                                         --------                      --------
Net cash provided by (used for) operating activities                                      (91,267)                      400,926
                                                                                         --------                      --------
Cash Flows From Investing Activities:
   Purchases of property and equipment                                                    (22,778)                      (49,076)
                                                                                         --------                      --------
Net cash used for investing activities                                                    (22,778)                      (49,076)
                                                                                         --------                      --------
Net increase (decrease) in cash and
   equivalents                                                                           (114,045)                      351,850

Cash and Equivalents, Beginning of Period                                                 266,045                       407,257
                                                                                         --------                      --------
Cash and Equivalents, End of Period                                                      $152,000                      $759,107
                                                                                         ========                      ========

</TABLE>

                       See Notes to Financial Statements.


                                       6




                           TRANSACTION NETWORK, INC.
                          NOTES TO FINANCIAL STATEMENTS


1.   The accompanying  financial  statements and notes do not include all of the
     disclosures made in the Company's Form 10-K for the year ended December 31,
     1996 which  should be read in  conjunction  with these  statements.  In the
     opinion of the Company,  the statements  include all adjustments  necessary
     for a fair presentation of the quarterly results.

2.   The results of  operations  for the three month period ended March 31, 1997
     are not  necessarily  indicative of the results to be expected for the full
     year.

3.   On  September  13,  1996,  International  Verifact  Inc.  ("IVI")  acquired
     beneficial  ownership of approximately 84% of the outstanding common stock,
     $.15 par value, of the Company in a private transaction.  IVI acquired such
     shares in exchange for IVI common shares having an aggregated  market value
     of approximately $1,254,000.

4.   Net loss per common share is computed based on the weighted  average number
     of common  shares  outstanding  during each quarter.  Shares  issuable upon
     exercise  of  outstanding   stock  options  have  been  excluded  from  the
     computations since their effect would be antidilutive.

     In  February  1997,  the  Financial  Accounting  Standards  Board  released
     Statement of Financial  Accounting  Standards (SFAS) No. 128, "Earnings per
     Share,"  which the Company  will adopt in the fourth  quarter of 1997.  Had
     SFAS No. 128 been effective for the quarters ended March 31, 1997 and March
     31,  1996,  basic and  diluted  net loss per share under SFAS No. 128 would
     have been the same as the reported net loss per common share.

5.   In March 1997, the Company  renewed its working capital line of credit with
     its bank through January 4, 1998.  Maximum  available  borrowings under the
     line are the lesser of  $750,000  or certain  levels of  eligible  accounts
     receivable and are subject to monthly and quarterly  financial  performance
     covenants. Borrowings bear interest at a rate per annum equal to the bank's
     prime  rate  plus  1.5%,  are  secured  by the  Company's  assets,  and are
     guaranteed by IVI. At March 31, 1997, there were no borrowings  outstanding
     under the credit  line.  Borrowing  availability  under the credit line was
     $661,515 at March 31, 1997.


                                       7




6.   The Company accounts for Research and Development  costs in accordance with
     Statement of Financial  Accounting Standards (SFAS) No. 86, "Accounting for
     the Costs of Computer Software to be Sold, Leased, or Otherwise  Marketed."
     It is the Company's  policy to capitalize costs relating to the development
     of its products once technological feasibility has been achieved until such
     time when products are available for general release to customers, provided
     that  the  recoverability  of such  costs  is  reasonably  assured  through
     expected sales revenue less related selling expenses. For the quarter ended
     March 31, 1997, there were no costs incurred that required  capitalization.
     Upon availability of products for general release to customers, any related
     capitalized development costs are amortized over a suitable period based on
     the products' estimated economic life.

                                        8

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

RESULTS OF OPERATIONS
---------------------

         Revenue for the quarter  ended  March 31,  1997  decreased  by 10.7% to
$1,222,153  compared to  $1,368,121  for the quarter  ended March 31, 1996.  The
decrease in revenue for the quarter was primarily due to the  installation  of a
large number of the Company's  systems by a significant  customer in the quarter
ended March 31, 1996  relating to the  automation  of consumer  payment  options
involving  electronic  food  stamps.   Furthermore,  as  a  result  of  resource
constraints,  the Company has been delayed in its ability to deliver new payment
system  products to meet the new  technology  demands of several  customers  and
prospects.   Management  believes,  however,  that  the  recent  acquisition  of
approximately  84%  of the  Company's  outstanding  common  stock  by IVI  makes
available  the  additional  resources of IVI needed by the Company to expand the
development and marketing of its products and services.

         Gross  margins as a percent of revenue were 50.0% for the quarter ended
March 31,  1997  compared to 47.4% for the quarter  ended  March 31,  1996.  The
increase  in gross  margin  percentages  between the two  quarterly  periods was
primarily due to a shift in mix between  hardware,  software,  and  professional
services revenues.  For the quarter ended March 31, 1997, higher margin software
and  professional  services  revenue  accounted for  approximately  53% of total
revenue  compared to  approximately  38% of total  revenue for the quarter ended
March 31, 1996.

         Total operating expenses for the quarter ended March 31, 1997 increased
by 3.3%  compared  to the  quarter  ended March 31,  1996.  Sales and  marketing
expenses in the first quarter of 1997 decreased by 5.2% to $261,998  compared to
$276,483  in the first  quarter of 1996.  The  decrease  in sales and  marketing
expenses  related to decreases in compensation  and fringe benefit  expenses and
occupancy  expense  allocations,  primarily  resulting  from the  assignment  of
certain  personnel  and  related  expenses  previously  assigned  to  sales  and
marketing expenses in the quarter ended March 31, 1996 to costs of goods sold in
the quarter ended March 31, 1997.

         Research and development expenses increased by 1.4% to $247,983 for the
quarter  ended March 31, 1997  compared to $244,621 for the quarter  ended March
31,  1996.  Increases  in  research  and  development  expenses  between the two
quarterly  periods  were  incurred  for outside  consulting  expenses due to the
utilization of contract  programmers,  recruiting expenses related to the hiring
of additional research and development staff, and software support contracts for
new  software  development  tools.  These  increases  were  partially  offset by
decreases in compensation and fringe benefits expenses, travel and entertainment
expenses, and occupancy expense allocations resulting from attrition of research
and development personnel during 1996.



                                       9



         General and administrative  expenses increased by 17.0% to $240,940 for
the  quarter  ended March 31, 1997  compared to $206,019  for the quarter  ended
March 31,  1996.  Increases  in  compensation,  fringe  benefit,  and travel and
entertainment  expenses  related to certain  management  personnel  changes made
immediately  following the acquisition in September 1996 of approximately 84% of
the Company's common stock by IVI. In addition,  an increase in outside services
expense  resulted  primarily  from  the  utilization  of an  outside  consultant
assisting   the  Company  with  business   expansion  and  company   acquisition
initiatives.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

         Cash balances at March 31, 1997 were  $152,000  compared to $266,045 at
December 31, 1996.  Net cash used for operating  activities  was $91,267 for the
quarter ended March 31, 1997.  The net loss for the quarter ended March 31, 1997
primarily accounted for the cash used by operations during the quarter. Net cash
used in  investing  activities  for the quarter  ended  March 31,  1997  totaled
$22,778 and represented  primarily capital equipment  expenditures,  principally
for computer and office equipment.

         In March 1997, the Company  renewed its working  capital line of credit
with its bank through January 4, 1998.  Maximum  available  borrowings under the
line  are the  lesser  of  $750,000  or  certain  levels  of  eligible  accounts
receivable  and are  subject  to monthly  and  quarterly  financial  performance
covenants.  Borrowings  bear  interest  at a rate per annum  equal to the bank's
prime rate plus 1.5%, are secured by the Company's assets, and are guaranteed by
IVI. At March 31, 1997,  there were no borrowings  outstanding  under the credit
line.  Borrowing  availability  under the credit line was  $661,515 at March 31,
1997.

         Management  believes  that sources of liquidity for future needs can be
generated  from  existing  cash  balances,   cash  generated  from   operations,
borrowings available to the Company under its bank-financed working capital line
of credit,  and financial  resources made available to the Company from IVI, the
terms of which are pending negotiation.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT
----------------------------------------

         In February 1997,  the Financial  Accounting  Standards  Board released
Statement  of  Financial  Accounting  Standards  (SFAS) No. 128,  "Earnings  per
Share," which the Company will adopt in the fourth quarter of 1997. Had SFAS No.
128 been  effective  for the  quarters  ended March 31, 1997 and March 31, 1996,
basic and diluted net loss per share under SFAS No. 128 would have been the same
as the reported net loss per common share.


                                       10








PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

         The Company has no material legal proceedings at this time.

Item 2.  Changes in Securities.

         Not applicable.

Item 3.  Defaults upon Senior Securities.

         Not applicable.

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

         There were no matters  submitted to a vote of the  security  holders in
         the quarter ended March 31, 1997.

Item 5.  Other Information.

         Not applicable.

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

         (a) Exhibits.

                  None.

         (b) Reports on Form 8-K.

                  None.






                                       11




                                   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.



                                    NATIONAL TRANSACTION NETWORK, INC.





DATE:  May 13, 1997                  By:  /s/  L. Barry Thomson
                                        -------------------------------
                                        L. Barry Thomson, Chief Executive
                                        Officer, President and Chairman of the
                                        Board (Principal Executive Officer)






DATE:  May 13, 1997                 By:  /s/  Milton A. Alpern
                                       --------------------------------
                                       Milton A. Alpern, Vice President of
                                       Finance and Administration (Principal
                                       Financial and Accounting Officer)






                                       12