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 quarterly period ended September 30, 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 November 7, 1997: 3,268,439 shares.





                       NATIONAL TRANSACTION NETWORK, INC.



                                                                         PAGE
                                                                         ----
PART I  FINANCIAL INFORMATION

        Item 1  Financial Statements

                Balance Sheets
                        September 30, 1997 and December 31, 1996           3

                Statements of Operations
                        Three months ended September 30, 1997 and 1996     5
                        Nine months ended September 30, 1997 and 1996      6

                Statements of Cash Flows
                        Nine months ended September 30, 1997 and 1996      7

                Notes to Financial Statements                              8

        Item 2  Management's Discussion and Analysis of Financial
                        Condition and Results of Operations                10


PART II OTHER INFORMATION                                                  14


SIGNATURES                                                                 16


                                        2





                          PART I - FINANCIAL STATEMENTS


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

                       NATIONAL TRANSACTION NETWORK, INC.
                                 BALANCE SHEETS


                                     ASSETS
                             ----------------------

                                                     (Unaudited)
                                                    September 30,  December 31,
                                                        1997           1996
                                                    -----------    -----------

CURRENT ASSETS:
   Cash and equivalents                             $   143,919    $   266,045
   Accounts receivable
   (Net of allowance for doubtful accounts
    of $100,000 at September 30, 1997
    and December 31, 1996)                            1,092,059      1,406,113
   Inventory                                          1,099,163        233,590
   Prepaid expenses                                      39,028         36,394
                                                    -----------    -----------
     TOTAL CURRENT ASSETS                             2,374,169      1,942,142
                                                    -----------    -----------

PROPERTY AND EQUIPMENT                                  935,846        785,051
   Less accumulated depreciation
    and amortization                                   (673,577)      (578,032)
                                                    -----------    -----------
     PROPERTY AND
     EQUIPMENT - NET                                    262,269        207,019
                                                    -----------    -----------
OTHER ASSETS:
   Deposits                                              14,663         11,931
   Capitalized software costs                           127,478              0
                                                    -----------    -----------
     TOTAL OTHER ASSETS                                 142,141         11,931
                                                    -----------    -----------

                    TOTAL                           $ 2,778,579    $ 2,161,092
                                                    ===========    ===========



See Notes to Financial Statements.



                                       3







                       NATIONAL TRANSACTION NETWORK, INC.
                                 BALANCE SHEETS


                      LIABILITIES AND STOCKHOLDERS' EQUITY
          ------------------------------------------------------------

                                                      (Unaudited)
                                                     September 30,  December 31,
                                                         1997          1996
                                                     ------------- -------------
  
CURRENT LIABILITIES:
   Accounts payable                                    $344,452        $497,569
   Accounts payable to stockholder                    1,079,934          95,287
   Accrued liabilities                                  460,124         348,786
   Deferred revenue                                     231,651         561,982
   Short term portion of capital lease                   42,519           9,224
                                                     ----------      ---------- 
     TOTAL CURRENT LIABILITIES                        2,158,680       1,512,848
                                                     ----------      ----------
                                                                   

LONG TERM LIABILITIES:
   Long term portion of capital lease                    28,505          12,053
   Deferred revenue                                       4,728           1,941
   Convertible subordinated debt                        400,000               0
   Interest payable - subordinated debt                   1,283               0
                                                     ----------      ----------
     TOTAL LONG TERM LIABILITIES                        434,516          13,994
                                                     ----------      ----------
                                                                   

STOCKHOLDERS' EQUITY:
   Preferred stock, $.10 par value;
    authorized, 5,000,000 shares;
    none outstanding
   Common stock, $.15 par value;  authorized, 
    20,000,000  shares; issued and outstanding, 
    3,256,939 shares at September 30, 1997 and
    3,248,606 at December 31, 1996                      488,541         487,291
   Additional paid-in capital                        12,592,355      12,589,255
   Deficit                                          (12,895,513)    (12,442,296)
                                                     ----------      ----------
      TOTAL STOCKHOLDERS'  EQUITY                       185,383         634,250
                                                     ----------      ----------
                  TOTAL                              $2,778,579      $2,161,092
                                                     ==========      ==========
                                                                   
                                                                   
See Notes to Financial Statements.

                                       4







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




                                                        Three Months Ended     
                                                             September 30,
                                                         ------------------
                                                         1997           1996
                                                         ----           ----
                                                                    
REVENUE:                                          
     Systems and equipment                             $795,117       $685,078
     Software and services                              603,030        445,518
                                                      ---------      ---------
                                                      1,398,147      1,130,596
                                                      ---------      ---------
                                                                    
COST AND EXPENSES:                                
   Cost of revenue                                      855,142        601,603
   Sales and marketing                                  227,190        297,681
   Research and development                             201,452        207,315
   General and administrative                           185,597        370,418
                                                      ---------      ---------
     Total                                            1,469,381      1,477,017
                                                      ---------      ---------
                                                                    
LOSS FROM OPERATIONS                                    (71,234)      (346,421)
                                                      ---------      ---------
                                                                    
OTHER INCOME (EXPENSE):                           
   Interest income                                           22          7,206
   Interest expense                                      (7,441)             0
                                                       ---------      ---------
                                                                   
     Total                                               (7,419)         7,206
                                                       ---------      ---------
                                                                    
       NET LOSS                                        ($78,653)     ($339,215)
                                                       =========      =========
                                                  
NET LOSS PER COMMON SHARE                                ($0.02)        ($0.10)
                                                       =========      =========
 WEIGHTED AVERAGE NUMBER OF                       
 COMMON SHARES OUTSTANDING                             3,250,671      3,248,606
                                                       =========      =========
                                                                   
                                                                    
                                           

See Notes to Financial Statements.


                                       5

  







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




                                                        Nine Months Ended
                                                           September 30,
                                                    ----------------------------
                                                         1997           1996
                                                      -----------    ---------
REVENUE:
     Systems and equipment                           $1,759,457     $2,062,798
     Software and services                            1,801,256      1,595,129
                                                     ----------     ---------- 
                                                      3,560,713      3,657,927
                                                     ----------     ----------
                                                               
COST AND EXPENSES:                              
   Cost of revenue                                    1,941,621      1,809,739
   Sales and marketing                                  726,135        866,623
   Research and development                             722,336        687,956
   General and administrative                           613,605        776,603
                                                     ----------     ----------
     Total                                            4,003,697      4,140,921
                                                     ----------     ----------
                                                                 
LOSS FROM OPERATIONS                                   (442,984)      (482,994)
                                                     ----------     ----------
                                                                 
OTHER INCOME (EXPENSE):                         
   Interest income                                        1,801         16,368
   Interest expense                                     (12,034)             0
                                                     ----------     ---------- 
      Total                                             (10,233)        16,368
                                                     ----------     ----------
                                                                
       NET LOSS                                       ($453,217)     ($466,626)
                                                     ==========     ========== 
                                                                 
 NET LOSS  PER COMMON SHARE                              ($0.14)        ($0.14)
                                                     ==========     ========== 
                                                                
 WEIGHTED AVERAGE NUMBER OF                      
 COMMON SHARES OUTSTANDING                            3,249,302      3,248,606
                                                     ==========     ========== 
                                                                 
                                                                   
                                                  
                                                  
See Notes to Financial Statements.             

                                       6





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

                                                         Nine Months Ended
                                                            September 30,
                                                    ----------------------------
                                                          1997         1996
                                                          ----         ----
                                                                      
 Cash Flows From Operating Activities:
 Net income (loss)                                      ($453,217)    ($466,626)
 -----------------                                      ----------    ----------
                                                                      
 Adjustments to reconcile  net income  (loss)
  to net cash  provided by (used for) operating 
  activities:
 Depreciation and amortization                             95,545        77,834
 Increase (decrease) in cash from:
    Accounts receivable                                   314,054       680,497
    Inventory                                            (865,573)       25,330
    Prepaid expenses                                       (2,634)      (13,154)
    Deposits                                               (2,732)       (1,280)
    Accounts payable to stockholder                       984,647        38,119
    Accounts payable and accrued
      liabilities                                         (40,496)     (162,953)
    Deferred revenue                                     (327,544)      156,348
                                                         --------    ----------
 Total adjustments                                        155,267       800,741
                                                         --------    ----------
 Net cash provided by (used for) operating
  activities                                             (297,950)      334,115
                                                         --------    ----------
 Cash Flows From Investing Activities:
    Purchases of property and equipment                   (87,406)      (73,397)
    Capitalization of software development costs         (127,478)            0
                                                         --------    ----------
 Net cash used for investing activities                  (214,884)      (73,397)
                                                         --------    ----------
 Cash Flows From Financing Activities:
     Repayment of capital lease                           (13,642)            0
     Proceeds from issuance of convertible 
       subordinated debt                                  400,000             0
     Proceeds from exercise of stock options                4,350             0
     Proceeds from bank line of credit                    400,000             0
     Repayment of bank line of credit                    (400,000)            0
                                                         --------    ----------
 Net cash provided by financing activities                390,708             0
                                                         --------    ----------
  Net increase (decrease) in cash and
    equivalents                                          (122,126)      260,718
                                                         --------    ----------

 Cash and Equivalents, Beginning of Period                266,045       407,257
                                                          --------    ---------
                                                                     
 Cash and Equivalents, End of Period                     $143,919      $667,975
                                                         ========      ========
 Supplemental Information:
     Cash paid for interest                               $10,751            $0
                                                         ========      ========
                                                                      
  Non-cash transactions:
     Capital lease additions                              $63,389            $0
                                                         ========      ========
                                                                    

 See Notes to Financial Statements.


                                       7



                       NATIONAL 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 nine month period ended  September 30,
       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 period.  Shares issuable
       upon the exercise of  outstanding  stock  options and the  conversion  of
       convertible  subordinated  debt 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  quarter  and  nine  months  ended
       September 30, 1997 and September 30, 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. For the quarter and nine months ended  September  30,  1997,  the Company
       made inventory purchases from IVI totaling  approximately  $1,300,000 and
       $1,475,000, respectively.

    6. 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  September  30,  1997,  there  were no
       borrowings  outstanding  under the credit  line.  Borrowing  availability
       under the credit line was approximately $422,000 at September 30, 1997.




                                       8






    7. At the Company's  annual meeting of  stockholders  held on June 10, 1997,
       the  stockholders  approved an increase in the number of shares of common
       stock,  $.15 par value,  authorized for issuance from 6,666,667 shares to
       20,000,000 shares.

    8. On August 18, 1997, the Company  entered into a Convertible  Subordinated
       Note  Purchase  Agreement  (the "Note  Agreement")  with IVI  whereby the
       Company  may from time to time  issue and sell to IVI,  and IVI agrees to
       purchase, the Company's Convertible  Subordinated Notes (the "Notes"), up
       to an aggregate principal amount of $1,000,000.  On October 31, 1997, the
       aggregate  principal  amount of Notes  which can be issued by the Company
       under the Note  Agreement  was  increased to $2,000,000 in order to cover
       additional  anticipated  working capital needs of the Company.  The Notes
       have a five year term,  bear  interest  at a rate per annum  equal to the
       prime  rate  plus  2%,  are  secured  by the  Company's  assets,  and are
       subordinate  to the  Company's  bank-financed  working  capital  line  of
       credit.  The Notes are convertible into the Company's common stock,  $.15
       par  value,  at any  time  in  accordance  with  the  terms  of the  Note
       Agreement,  however the  conversion  price per share shall be equal to no
       less than the fair  market  value as  determined  in the Note  Agreement.
       Additionally, the Notes are subject to certain registration rights in the
       event that the Company determines to register additional shares of common
       stock, $.15 par value, under the Securities Act. Interest payments on the
       Notes are deferred until maturity.

       On September 19, 1997,  the Company issued a Note to IVI in the amount of
       $400,000.  Interest  payable on the Note totaled  $1,283 at September 30,
       1997.

    9. 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.  Upon  availability  of products  for general
       release to  customers,  all  related  capitalized  development  costs are
       amortized  over  a  suitable  period  based  on the  products'  estimated
       economic  life.  For the quarter ended  September  30, 1997,  capitalized
       software development costs amounted to approximately $112,000.

                                        9









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

RESULTS OF OPERATIONS

        Revenue for the quarter ended  September 30, 1997  increased by 23.7% to
$1,398,147  compared to $1,130,596 for the quarter ended September 30, 1996. The
increase in revenue  between the two  quarterly  periods was  primarily due to a
significant  customer's  decision to begin the conversion and upgrade of a large
number of systems in several  divisions  in the third  quarter of 1997.  For the
nine months ended  September 30, 1997,  revenue  decreased by 2.7% to $3,560,713
compared to $3,657,927 for the nine months ended  September 30, 1996.  Decreases
in  revenue,  primarily  due to delays in the  Company's  ability to develop and
deliver  payment  system  products  to meet the new  technology  demands  of its
customers  and  prospects,  offset the revenue  increase of the third quarter of
1997  and  resulted  in the net  revenue  decrease  for the  nine  months  ended
September  30, 1997 compared to the nine months ended  September  30, 1996.  The
delays experienced by the Company in developing and delivering products were the
result of resource  constraints.  IVI's  acquisition of approximately 84% of the
Company's  outstanding  common stock in September  1996 has made  available  the
additional  resources of IVI needed by the Company to begin  development of such
products.

        Gross   margins  as  a  percent   of  revenue   were  38.8%  and  45.5%,
respectively,  for the quarter and nine months ended September 30, 1997 compared
to  46.8%  and  50.5%,  respectively,  for the  quarter  and nine  months  ended
September 30, 1996. The decreases in gross margin percentages were primarily due
to increases in certain  expense  categories  resulting  from the  assignment of
certain  expenses,  previously  assigned to sales and marketing  expenses in the
quarter and nine months ended  September 30, 1996, to costs of goods sold in the
quarter and nine months ended  September 30, 1997.  The  resulting  decreases in
gross  margin  percentages  were  partially  offset  by a shift  in mix  between
hardware,  software,  and professional services revenue.  Higher margin software
and  professional  services  revenue  accounted for  approximately  43% and 51%,
respectively,  of total revenue for the quarter and nine months ended  September
30, 1997 compared to approximately  39% and 44%,  respectively,  for the quarter
and nine months ended September 30, 1996.

        Sales and marketing  expenses for the quarter  ended  September 30, 1997
decreased  by 23.7% to  $227,190  compared to  $297,681  for the  quarter  ended
September  30, 1996.  For the nine months ended  September  30, 1997,  sales and
marketing  expenses  decreased by 16.2% to $726,135 compared to $866,623 for the
nine months ended September 30, 1996. As noted above, a change in the assignment
of certain expenses,  previously assigned to sales and marketing expenses in the
quarter and nine months ended  September  30, 1996 to costs of goods sold in the
quarter and nine months ended  September 30, 1997,  contributed to the decreases
in sales and marketing expenses. Additionally,  decreases in trade show expenses
due to reduced trade show  participation and non-



                                       10






recurring consulting expenses incurred in 1996 related to transaction processing
services  for  certain  specialized  proprietary  transactions  provided  to one
customer,  also contributed to the decreases in sales and marketing expenses for
the quarter and nine months ended September 30, 1997 compared to the quarter and
nine months ended September 30, 1996.  These decreases were partially  offset by
increases in travel and entertainment  expenses of field sales personnel for the
quarter and nine months  ended  September  30, 1997  compared to the quarter and
nine months ended September 30, 1996.

        Research and development  expenses decreased by 2.8% to $201,452 for the
quarter  ended  September  30, 1997  compared to $207,315 for the quarter  ended
September 30, 1996. For the nine months ended  September 30, 1997,  research and
development  expenses increased by 5.0% to $722,336 compared to $687,956 for the
nine months ended  September  30, 1996.  Increases  in  compensation  and fringe
benefit expenses,  recruiting expenses,  travel and entertainment  expenses, and
other expense allocations  associated with an increase in the number of research
and development personnel were generally offset by the capitalization of certain
software  development costs in accordance with Statement of Financial Accounting
Standards  No. 86,  "Accounting  for the Costs of Computer  Software to be Sold,
Leased or Otherwise  Marketed",  resulting in the small  changes in research and
development  expenses for the quarter and nine months ended  September  30, 1997
compared to the  quarter  and nine months  ended  September  30,  1996.  For the
quarter  and  nine  months  ended  September  30,  1997,   capitalized  software
development costs totaled $112,230 and $127,478,  respectively.  For the quarter
and nine month ended  September  30,  1996,  there were no software  development
costs incurred that required capitalization.

        General and  administrative  expenses decreased by 49.9% to $185,597 for
the quarter ended  September 30, 1997 compared to $370,418 for the quarter ended
September 30, 1996.  For the nine months ended  September 30, 1997,  general and
administrative  expenses decreased by 21.0% to $613,605 compared to $776,603 for
the nine months ended September 30, 1996.  These decreases were primarily due to
the  accrual,  in September  1996,  of severance  expenses  associated  with the
termination of the Company's former president and recruiting expenses related to
the hiring of the Company's current general manager.  The personnel actions were
the result of the acquisition of approximately 84% of the Company's  outstanding
common stock by IVI in September 1996.

        Decreases  in interest  income for the  quarter  and nine  months  ended
September 30, 1997  compared to the quarter and nine months ended  September 30,
1996 were due to  decreases  in the amount of funds  available  for  investment.
Interest  expense for the quarter and nine months ended  September  30, 1997 was
incurred on capitalized lease  obligations,  borrowings made under the Company's
bank-financed  working  capital line of credit,  and the amount owed to IVI on a
convertible subordinated note.



                                       11





LIQUIDITY AND CAPITAL RESOURCES

        Cash balances at September  30, 1997 were $143,919  compared to $266,045
at December 31, 1996.  Net cash used for operating  activities  was $297,950 for
the nine months ended September 30, 1997. The net loss for the nine months ended
September 30, 1997,  coupled with an increase in inventory  and a  corresponding
increase in accounts payable to a stockholder,  primarily accounted for the cash
used by  operations  during the period.  The increases in inventory and accounts
payable to a  stockholder  related to inventory  purchases  made from IVI in the
third  quarter of 1997 for a  significant  customer who has  recently  begun the
upgrade  and  conversion  of a large  number of systems  in  several  divisions.
Shipments  to  this  customer  began  in the  third  quarter  of  1997  and  are
anticipated to continue  throughout the first quarter of 1998. Net cash used for
investing  activities  for the nine months  ended  September  30,  1997  totaled
$214,884  and  represented  capital  equipment  expenditures,   principally  for
computer  and office  equipment,  and the  capitalization  of  certain  software
development  expenses.  Net cash provided by financing  activities  for the nine
months ended September 30, 1997 totaled  $390,708 and primarily  represented the
proceeds from the issuance of a convertible subordinated note to IVI.

        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  September  30, 1997,  there were no  borrowings  outstanding  under the
credit  line.  Borrowing  availability  under the credit  line was  $421,786  at
September 30, 1997.

        On August 18, 1997, the Company entered into a Convertible  Subordinated
Note Purchase  Agreement (the "Note Agreement") with IVI whereby the Company may
from  time to time  issue  and sell to IVI,  and IVI  agrees  to  purchase,  the
Company's  Convertible  Subordinated  Notes (the  "Notes"),  up to an  aggregate
principal  amount of $1,000,000.  On October 31, 1997,  the aggregate  principal
amount of Notes which can be issued by the Company under the Note  Agreement was
increased to $2,000,000 in order to cover additional anticipated working capital
needs of the Company.  The Notes have a five year term,  bear interest at a rate
per annum equal to the prime rate plus 2%, are secured by the Company's  assets,
and are  subordinate  to the  Company's  bank-financed  working  capital line of
credit.  The Notes are  convertible  into the Company's  common stock,  $.15 par
value, at any time in accordance  with the terms of the Note Agreement,  however
the  conversion  price per share  shall be equal to no less than the fair market
value as determined in the Note Agreement.  Additionally,  the Notes are subject
to certain  registration  rights in the event  that the  Company  determines  to
register additional shares of common stock, $.15 par value, under the Securities
Act. Interest payments on the Notes are deferred until maturity.




                                       12








        On September 19, 1997, the Company issued a Note to IVI in the principal
amount of $400,000. Interest payable on the Note totaled $1,283 at September 30,
1997.

        Management  believes  that sources of liquidity  for future needs can be
generated from existing cash  balances,  cash  generated  from  operations,  and
borrowings available to the Company under its bank-financed working capital line
of credit and the Note Agreement with IVI.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

        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 quarter and nine months ended  September 30, 1997 and
September  30,  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.

        In June 1997, the Financial Accounting Standards Board released SFAS No.
130,  "Reporting  Comprehensive  Income",  and SFAS No. 131,  "Disclosures about
Segments  of an  Enterprise  and  Related  Information",  both of which  will be
effective for the Company in fiscal 1998. The implementation of SFAS No. 130 and
SFAS  No.  131 is not  expected  to  have a  material  effect  on the  Company's
financial statements






                                       13











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 September 30, 1997.

Item 5. Other Information.

        Not applicable.

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

        (a) Exhibits.

        Exhibit Number                          Exhibit
        --------------                          -------

        3(a)    Certificate   of   Amendment   to   Restated    Certificate   of
                Incorporation filed June 30, 1997

        4(a)    Convertible  Subordinated  Note Purchase  Agreement  between the
                Company and International Verifact Inc. dated August 18, 1997

        4(b)    Amendment to Convertible  Subordinated  Note Purchase  Agreement
                between  the  Company  and  International  Verifact  Inc.  dated
                October 31, 1997



                                       14




        4(c)    Convertible Subordinated Note of the Company dated September 19,
                1997

        4(d)    Security   Agreement   between  the  Company  and  International
                Verifact Inc. dated September 19, 1997

        4(e)    Amendment  to  Security   Agreement   between  the  Company  and
                International Verifact Inc. dated October 31, 1997

        27      Financial Data Schedule

        (b) Reports on Form 8-K.

                None.
        




                                       15



                                   SIGNATURES



In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.



        NATIONAL TRANSACTION NETWORK, INC.





DATE:  November 7, 1997        By:    /s/  L. Barry Thomson
                                  ----------------------------------------------
                                   L. Barry Thomson, Chief Executive
                                   Officer, President and Chairman of the
                                   Board (Principal Executive Officer)






DATE:  November 7, 1997       By:    /s/  Milton A. Alpern
                                 -----------------------------------------------
                                   Milton A. Alpern, Vice President of Finance
                                   and Administration (Principal Financial and
                                   Accounting Officer)





                                       16