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

GENERAL

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

CURRENT BUSINESS OPERATIONS

STOCK PURCHASE AND OPTION AGREEMENT

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

In accordance with further terms and provisions of the Agreement: (i) we sold 45 of the 100 shares of Transax Limited's issued and outstanding (the "Initial Shares") with an option to purchase the remaining 55 shares of Transax Limited (the "Option"); and (ii) the Buyer agreed to pay us an aggregate purchase price of $3,200,000 for the Initial Shares. A total of $865,381 and $187,747 was received through June 30, 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 six months ended June 30, 2008, we received $0 of such reimbursement, and a total of $20,000 of reimbursement was received during the year ended December 31, 2007.

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

         May 2008 ........................................   $  120,000
         June 2008 .......................................      150,000
         July 2008 .......................................      200,000
         August 2008 .....................................      200,000
         September 2008 ..................................      250,000
         October 2008 ....................................      280,000
         Monthly payments from November 2008 to April 2009    1,200,000
                                                             ----------
                                                             $2,400,000
                                                             ==========

Through June 30, 2008, the Company received additional proceeds of $90,000. The balance due and owing by the Buyer is evidenced by an installment note secured by a pledge of all of Initial Shares. As of the date of this report, the Buyer has not paid the remaining initial deposit and is default on its payments of principal and interest. At June 30, 2008, pursuant to the terms of the Agreement, as amended, the Company has a remaining note receivable of $2,334,619 due from the Buyer. Since collection of the remaining purchase price is not reasonably assured, the Company recorded the full amount of the purchase price of $3,200,000 as deferred revenue and is reflecting the deferred revenue net of the remaining note receivable on the accompanying balance sheets. Accordingly, at June 30, 2008, the Company's balance sheets reflect a deferred gain on the sale of $858,607, which will be recognized as other income when collection is reasonably assured and not until all of the risks and other incidents of ownership have been passed to the buyer. At June 30, 2008, deferred gain on sale of minority interest consists of the following:

     Sale price of 45% interest in Transax Limited ..........   $ 3,200,000
     Less: note receivable balance at June 30, 2008 .........    (2,341,393)
                                                                -----------
     Deferred gain on sale of minority interest in subsidiary   $   858,607
                                                                ===========

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

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

In accordance with the further terms and provisions of the Agreement, a performance bonus shall also be payable by the Buyer to the Company (the "Bonus") equal to 50% of the revenues received by Medlink Conectividade (converted monthly to US Dollars at the monthly average exchange rate as provided by the Central Bank of Brazil) with respect to transactions in excess of an aggregate of 678,076 executed during 2008 for Medlink Conectividade's largest customer. The Buyer shall pay the Bonus due as follows: 25% due on May 31, 2009, 25% on July 31, 2009, 25% on August 31, 2009, and 25% on October 31, 2009. The Bonus shall be payable regardless of whether or not the Buyer elects to exercise the Option.

Additionally, in accordance with the terms and provisions of the Agreement, MTI shall grant to the Company a perpetual, exclusive and sub-license to use all of the software and other intellectual property owned by MTI in all territories other than (i) Latin America (defined as all mainland countries in the Western Hemisphere south of the USA/Mexico border; and (ii) Spain and Portugal.

As of the date of this Quarterly Report, the Buyer 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:

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

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

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

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

RECENT ACCOUNTING PRONOUNCEMENTS

In 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.

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

RESULTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 2008 COMPARED TO SIX MONTHS ENDED JUNE 30, 2007

Our net loss for the six-months ended June 30, 2008 was $161,584 compared to net income of $212,302 for the six-month period ended June 30, 2007 (a decrease of $373,886 or 176.1%).

During the six-month period ended June 30, 2008, we generated $3,211,956 in revenues compared to $2,523,902 in revenues generated during the six-month period ended June 30, 2007 (an increase of $608,054 or 27.26%). The increase in revenues is due to the continued installation of our software and/or hardware devices containing our software at the 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 six-month period ended June 30, 2008, we incurred operating expenses in the aggregate amount of $3,188,138 compared to $2,456,641 incurred during the six-month period ended June 30, 2007 (an increase of $731,497 or 29.78%). The increase in operating expenses incurred during the six-month period ended June 30, 2008 compared to the six-month period ended June 30, 2007 resulted from: (i) an increase of $139,762 or 14.56% in cost of product support services resulting from the increase in revenues; (ii) an increase of $377,408 or 87.11 % in

compensation and related benefits associated with the increased operations of our MedLink operations; (iii) a decrease of $1,299 or 1.67% based on a decrease in the amount of professional fees incurred; (iv) a decrease of $58,226 or 27.4% in management and consulting fees-related parties due to a decrease in use of certain management and a director/consultant needed to handle our operations;
(v) a decrease in investor relations of $18,278 or 100.0% in investor relations;
(vi) an increase of $6,508 or 3.90% in depreciation and amortization; and (vii) an increase of $285,622 or 48.7% in general and administrative expenses primarily resulting from an increase in operating costs associated with our increased business revenues in 2008.

We reported income from operations of $23,818 during the six-month period ended June 30, 2008 as compared to $67,261 during the six-month period ended June 30, 2007 due to the factors previously discussed.

During the six-month period ended June 30, 2008, we incurred other expense of ($87,268), compared to other income of $145,041 during the six-month period ended June 30, 2007 (an decrease of $232,309 or 160.2%). The variance change during for six-month period ended June 30, 2008, compared to the six-month period ended June 30, 2007 resulted primarily from the six-month period change in the fair value of the Company's derivative liabilities positions of $211,642 gain in 2008, as compared to 2007 ($407,398 gain). This change is related to the classification of the embedded conversion feature and related warrants issued in connection with our Series A Preferred Stock and debenture payable as derivative instruments.

For the six-month period ended June 30, 2008, our loss before income taxes was $63,450 compared to income before taxes of $212,302 for the six-month period ended June 30, 2007. During the six-month period ended June 30, 2008, we recorded a tax provision of $98,134 for Brazilian income taxes (2007: $-0-), resulting in a net loss of $161,584 compared to net income of $212,302.

During the six-month period ended June 30, 2008, we recorded a deemed and cumulative preferred stock dividend of $51,920 compared to $56,000 during the six-month period ended June 30, 2007, which related to our cumulative dividends on the Series A Preferred Stock.

We reported net loss attributable to common shareholders of ($213,504) during the six-month period ended June 30, 2008 as compared to net income attributable to common shareholders of $156,302 during the six-month period ended June 30, 2007. This translates to an overall loss per-share available to shareholders of $0.01 and $0.00 for each of the six-month periods ended June 30, 2008 and 2007, respectively.

During the six-month period ended June 30, 2008 and 2007, we recorded an unrealized foreign currency translation gain of $244,452 compared to an a loss of $147,381, respectively. This resulted in comprehensive income during the six-month period ended June 30, 2008 of $82,868 compared to $64,921 at June 30, 2007.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2008, our current assets were $1,560,077 and our current liabilities were $5,907,321, which resulted in a working capital deficit of $4,347,244. As of June 30, 2008, our total assets were $2,691,076 consisting of:
(i) $423,864 in cash; (ii) $446,600 in prepaid expenses and other current assets; (iii) $689,613 in accounts receivable; (iv) $250,624 in net software development costs; (v) $877,765 in net property and equipment; and (vii) $2,610 in other assets. As at June 30, 2008, our total assets were $2,691,076 compared to $2,050,863 at December 31, 2007.

As of June 30, 2008, our total liabilities were $6,170,604 consisting of: (i) $2,557,647 in long-term and current portion of accounts payable and accrued expenses; (ii) $311,449 due to related parties; (iii) $249,093 in convertible loan to related party; (iv) $317,346 in loan payable to related party; (v) $949,529 in long-term and current portion of loans and convertible debentures payable; (vi) $17,402 in warrant liability; (vii) $909,531 in convertible feature liability and (viii) $858,607 in deferred gain on sale of minority interest in subsidiary. As at June 30, 2008, our total liabilities were $6,170,604 compared to $5,907,918 at December 31, 2007. The increase in total liabilities is due primarily to an increase in deferred gain on the sale of our subsidiary offset by the decrease in our derivative liabilities.

Stockholders' deficit decreased from $3,857,055 at December 31, 2007 to $3,479,528 at June 30, 2008.

For the six-month period ended June 30, 2008, net cash flow used in operating activities was ($549,879) compared to net cash provided by operating activities of $269,257 for the six-month period ended June 30, 2007. The change in cash flows provided by operating activities is principally due an increase in accounts receivable of $70,788 and of $118,870 in prepaid expenses and other current assets as well as an increase in cash used to reduce accounts payable and accrued expenses, to fund out net loss, and to reduce due to related parties.

Net cash flows provided by investing activities amounted to $772,568 for the six-month period ended June 30, 2008 compared to net cash used in investing activities of ($155,744) for the six-month period ended June 30, 2007. During the six-month period ended June 30, 2008, we received proceeds of $978,607 from the sale of a minority interest ownership in Transax Limited offset by the acquisition of property and equipment of $206,039. During the six-month period ended June 30, 2007, we capitalized software development costs of $155,744.

Net cash flows used in financing activities for the six-month period ended June 30, 2008 were ($9,791) compared to ($163,273) for the six-month period ended June 30, 2007, resulting primarily from repayment of convertible debt.

PLAN OF OPERATION

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.

YA GLOBAL INVESTMENTS ("YA GLOBAL")

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

Of the 16,000 Series A Preferred Shares to be 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 had been declared effective by the Securities and Exchange Commission, sales cannot be made pursuant to the Registration Statement, then as relief for the damages to any holder of Registrable Securities (as defined in the IRRA) by reason of any such delay in or reduction of its ability to sell the underlying shares of common stock (which remedy shall not be exclusive of any other remedies at law or in equity), we would pay as liquidated damages to the holder, at the holder's option, either a cash amount or shares of our common stock equal to two percent (2%) of the Liquidation Amount (as defined in the Certificate of Designation of Series A Convertible Preferred Shares) outstanding as liquidated damages for each thirty
(30) day period or any part thereof after the Filing Deadline or the Effective Deadline as the case may be. Any liquidated damages payable hereunder shall not limit, prohibit or preclude the holder from seeking any other remedy available to it under contract, at law or in equity. We shall pay any liquidated damages hereunder within three (3) business days of the holder making written demand. It shall also become an event of default under the IRRA if the Registration Statement is not declared effective by the Securities and Exchange Commission within one-hundred twenty (120) days from the date of the IRRA. We initially filed our Registration Statement with the Securities and Exchange Commission on May 9, 2006. As of the date of this Quarterly Report, the Registration Statement has not been declared effective by the Securities and Exchange Commission. We do not have any intent to re-file our registration statement. 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 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 . . .