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

GENERAL

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

CURRENT BUSINESS OPERATIONS

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

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

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

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

STOCK PURCHASE AND OPTION AGREEMENT

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

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

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

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

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

Sale price of 45% interest in Transax Limited .................     $ 3,200,000
Less: note receivable balance at September 30, 2008 ...........      (2,262,300)
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Deferred gain on sale of minority interest in subsidiary ......     $   937,700
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Pursuant to the amended agreement, interest shall accrue at an annual rate of 18% on past due amounts and the Buyer will be in default if payments are more that 15 days late from the payment due date. Additionally, the Buyer may use positive cash flows from the Medlink operation to pay down the note receivable balance, subject to certain restriction as defined in the amended agreement as contingent upon the Buyer's exercise of its option to acquire the remaining 55% of Transax Sub. If the Buyer does not exercise its option to acquire the balance of 55% of the Transax Sub shares, then the Company would reduce the Buyer's 45% ownership proportionally by the portion of shares paid by Medlink net income or the Buyer has a 60-day option to repay the amount due back to Medlink to maintain a 45% equity interest in Transax Sub.

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

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

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

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

CRITICAL ACCOUNTING POLICIES

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

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

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

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

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

RECENT ACCOUNTING PRONOUNCEMENTS

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

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

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

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

RESULTS OF OPERATIONS

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

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

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

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

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

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

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

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

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

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

LIQUIDITY AND CAPITAL RESOURCES

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

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

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

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

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

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

PLAN OF OPERATION

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

YA GLOBAL INVESTMENTS ("YA GLOBAL")

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

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

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

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