UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                            -------------------------

                                   FORM 10-KSB
(MARK ONE)

|X|   ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
      ACT OF 1934 For the fiscal year ended December 31, 2005
                                       OR
|_|   TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15(d)  OF THE  SECURITIES
      EXCHANGE  ACT OF 1934  For  the  transition  period  from  ___________  to
      ___________

                                     0-17874
                            (Commission file number)

                            -------------------------
                               GLOBAL AXCESS CORP
                 (Name of Small Business Issuer in Its Charter)

                        NEVADA                             88-0199674
          (State or other jurisdiction of               (I.R.S. Employer
           incorporation or organization)               Identification No.)

               224 PONTE VEDRA PARK DRIVE
              PONTE VEDRA BEACH, FLORIDA                     32082
        (Address of principal executive offices)           (Zip Code)

                                 (904)-280-3950
                (Issuer's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:  None
Securities registered pursuant to Section 12(g) of the Act: Common Stock

                            -------------------------

      Check whether the Issuer:  (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 Issuer was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days.
      Yes |X|      No |_|

      Check if there is no disclosure of delinquent  filers pursuant to Item 405
of Regulation  S-B is not contained  herein,  and will not be contained,  to the
best of the Issuer's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-KSB. [X]

      Indicate  by check mark  whether  the  registrant  is a shell  company (as
defined by Rule 12-b2 of the Exchange Act).
       Yes |_|     No |X|

Issuer's Revenues for the fiscal year 2005 were: $19,595,343.

The  aggregate  market value of the Common Stock held by  non-affiliates  of the
Issuer as of April 27, 2006 was $17,229,665.

As of April 27, 2006, the Issuer had 21,011,786 shares outstanding of the Common
Stock  ($0.001  par  value) and no shares  outstanding  of the  Preferred  Stock
($0.001 par value).

                                     Page 1
<PAGE>

                                 TABLE OF CONTENTS                      Page No.

PART  I

  Item  1.    Description of Business                                          4
  Item  2.    Description of Properties                                       18
  Item  3.    Legal Proceedings                                               18
  Item  4.    Submission of Matters to a Vote of Security Holders             18

PART  II

  Item  5.    Market for Common Equity and Related Stockholder Matters        19
  Item  6.    Management's Discussion and Analysis or Plan of Operation       21
  Item  7.    Financial Statements                                            38
  Item  8.    Changes in and Disagreements With Accountants on Accounting
              and Financial Disclosure                                        38

PART  III

  Item  9.    Directors and Executive Officers, Promoters and Control
              Persons; Compliance With Section 16(a) of the Exchange Act      39
  Item 10.   Executive Compensation                                           41
  Item 11    Security Ownership of Certain Beneficial Owners and Management
                   and Related Stockholder Matters                            47
  Item 12.   Certain Relationships and Related Transactions                   49
  Item 13.   Exhibits and Reports on Form 8-K                                 51
  Item 14.   Principal Accountants Fees and Services                          52

SIGNATURES                                                                    54

FINANCIAL STATEMENTS                                                           F

FINANCIAL STATEMENT SCHEDULE

EXHIBITS

                                     Page 2
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Forward-Looking Statements

In  addition  to  historical  information,  this  Annual  Report on Form  10-KSB
contains  forward-looking  statements that involve risks and uncertainties  that
could cause  actual  results to differ  materially.  Factors that might cause or
contribute to such differences  include, but are not limited to, those discussed
in the  section  entitled  "Management's  Discussion  and  Analysis  or  Plan of
Operation." You should  carefully  review the risks described in other documents
we file from time to time with the Securities and Exchange Commission, including
the  Quarterly  Reports  on Form  10-QSB to be filed in 2006.  When used in this
report,  the words "expects,"  "anticipates,"  "intends,"  "plans,"  "believes,"
"seeks," "targets,"  "estimates," and similar expressions are generally intended
to identify forward-looking  statements.  You should not place undue reliance on
the forward-looking  statements,  which speak only as of the date of this Annual
Report on Form  10-KSB.  We  undertake  no  obligation  to publicly  release any
revisions to the  forward-looking  statements or reflect events or circumstances
after the date of this  document.  Estimates  of future  financial  results  are
inherently unreliable.

From time to time,  representatives  of Global Axcess Corp (the  "Company")  may
make public  predictions or forecasts  regarding the Company's  future  results,
including  estimates  regarding  future  revenues,  expense levels,  earnings or
earnings  from   operations.   Any  forecast   regarding  the  Company's  future
performance  reflects  various  assumptions.  These  assumptions  are subject to
significant  uncertainties,  and, as a matter of course, many of them will prove
to be incorrect.  Further,  the achievement of any forecast  depends on numerous
factors (including those described in this discussion), many of which are beyond
the Company's control. As a result, there can be no assurance that the Company's
performance  will be consistent with any of  management's  forecasts or that the
variation from such  forecasts  will not be material and adverse.  Investors are
cautioned  not to base their  entire  analysis  of the  Company's  business  and
prospects upon isolated  predictions,  but instead are encouraged to utilize the
entire  available  mix  of  historical  and  forward-looking   information  made
available by the Company,  and other  information  affecting the Company and its
products, when evaluating the Company's prospective results of operations.

In addition, representatives of the Company may occasionally comment publicly on
the  perceived  reasonableness  of  published  reports by  independent  analysts
regarding the Company's projected future  performance.  Such comments should not
be  interpreted  as an endorsement or adoption of any given estimate or range of
estimates or the  assumptions  and  methodologies  upon which such estimates are
based.  Undue  reliance  should  not be placed  on any  comments  regarding  the
conformity, or lack thereof, of any independent estimates with the Company's own
present   expectations   regarding  its  future  results  of   operations.   The
methodologies   employed  by  the  Company  in  arriving  at  its  own  internal
projections  and the approaches  taken by  independent  analysts in making their
estimates  are likely  different  in many  significant  respects.  Although  the
Company may presently perceive a given estimate to be reasonable, changes in the
Company's  business,  market conditions or the general economic climate may have
varying effects on the results  obtained  through the use of differing  analyses
and assumptions.  The Company expressly disclaims any continuing  responsibility
to advise  analysts  or the public  markets of its view  regarding  the  current
accuracy of the published estimates of outside analysts. Persons relying on such
estimates  should  pursue their own  independent  investigation  and analysis of
their  accuracy  and the  reasonableness  of the  assumptions  on which they are
based.

                                     Page 3
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                                     PART I

ITEM 1.          DESCRIPTION OF BUSINESS

History

Headquartered  in Ponte Vedra Beach,  Florida,  Global Axcess Corp  (referred to
herein as the "Company",  "we", "our" or "us") is a Nevada Corporation organized
in 1984.  Unless the context otherwise  requires,  all references to the Company
include the Company's subsidiary corporations.

Global Axcess Corp was  reorganized  in 2001 by principals  with  backgrounds in
network-based  electronic commerce and financial transaction processing,  with a
mission  to  emerge  as one of the  nation's  leading  network-based  electronic
commerce and financial transaction  processing  companies.  The Company provides
services  through its automated teller machine ("ATM") network and also provides
financial transaction  processing.  The Company's objective is to expand through
the  strategic  acquisition  of  profitable  ATM  portfolios  and other  related
businesses,  internal growth and deployment of enhanced non-banking ATM consumer
products worldwide.  The Company presently does not have definitive  acquisition
plans.

Recent Developments

Effective April 28, 2005, the Company completed a one-for-five  reverse split of
its common shares outstanding as of that date.

Effective  September 30, 2005, the Company  discontinued and sold its Electronic
Payment & Transfer Corp. subsidiary.

In October 2005, the Company completed its fourth ATM contract acquisition under
which it purchased over 1,500  distributor and merchant location  contracts.  In
addition,  to obtain funding for this acquisition,  the Company entered into two
new financing arrangements.  These arrangements,  which are more fully described
under Item 6, "Recent  Developments,"  include:  1) an amendment  with  Wachovia
Bank,  the Company's  senior  lender,  pursuant to which Wachovia Bank agreed to
provide a  $3,000,000  term loan to the Company,  and 2) a  securities  purchase
agreement  with CAMOFI  Master LDC for the sale of (i)  $3,500,000  in 9% Senior
Subordinated  Secured  Convertible  Notes and (ii) stock  purchase  warrants  to
purchase 910,000 shares of our common stock.

Effective  November 8, 2005, to obtain  additional  funding for acquisitions and
working capital,  the Company entered into Subscription  Agreements with various
accredited  investors for the aggregate  sale of (i) 1,600,000  shares of common
stock and (ii) common stock purchase  warrants to purchase 640,000 shares of our
common stock. The Company closed this financing transaction, which is more fully
described under Item 6, "Recent Developments," on November 8, 2005.

Effective  December 31, 2005, we  discontinued  two operations  that did not fit
within our strategic plans, thereby ceasing operations of the Company's software
development   subsidiary,   Axcess  Technology  Corp.,  and  its  South  African
subsidiary, Axcess Technology Corp, SA (Pty) Ltd.

Business Description

As of December  31,  2005,  the Company  currently  owns,  manages and  operates
approximately  5,000 ATMs in its  national  network,  which  currently  spans 43
states. We provide  proprietary ATM branding and processing services for over 75
financial  institutions that have approximately 740 branded sites under contract
with the Company  nationwide.  Our processing  subsidiary  performs over 980,000
financial transactions per month.

                                     Page 4
<PAGE>

Nationwide Money Services, Inc.

Nationwide Money Services,  Inc., a wholly owned  subsidiary of the Company,  is
engaged in the business of operating a network of ATMs.  The ATMs provide  debit
and  credit  cardholders  with  access to cash,  account  information  and other
services at locations and times  convenient to the cardholder.  Debit and credit
cards are principally issued by banks and credit card companies.

To promote usage of ATMs in our network, we have relationships with national and
regional  card  organizations  (also  referred to as networks)  which enable the
holder of a card issued by one network to use another network's ATM to process a
transaction. These relationships are provided through the Company's wholly owned
subsidiary EFT  Integration,  Inc.  (EFTI) and outsourced  processing  providers
Genpass  Technologies,  LLC, First Data Retail ATM Services  (formerly Core Data
Resources),  and  Columbus  Data  Services,  which have  relationships  with the
following card organizations or networks:

      o     EFTI has a direct  relationship with STAR, a major regional network;
      o     EFTI also processes through CU24 a national credit union network;
      o     through third parties, EFTI has relationships with Cirrus and Pulse,
            the two principal national card organizations; and
      o     other card  organizations,  all of whose  members  are banks and ATM
            network operators and/or sponsored by member banks.

We also  have  relationships  with  major  credit  card  issuers  such as  Visa,
MasterCard  and  Discover,  which  enable the holder of a credit card to use our
network of ATMs for processing a transaction.

ATMs. We deploy and operate ATMs primarily under the following two programs:

      o     Full placement program. Under a full placement  arrangement,  we own
            the  ATM and  are  responsible  for  controlling  substantially  all
            aspects of its operation including maintenance,  cash management and
            loading, supplies,  signage and telecommunications  services. We are
            generally  responsible for almost all of the expenses related to the
            operation  of the ATM with the  exception of power and, on occasion,
            telecommunications. We typically use this program for major national
            and regional merchants.

      o     Merchant-owned  program.  Under a  merchant-owned  arrangement,  the
            merchant  (or,  for a  merchant  using  lease  financing,  its lease
            finance provider) typically buys the ATM through us and the merchant
            is  responsible   for  most  of  the  operating   expenses  such  as
            maintenance, cash management and loading, and supplies. We typically
            provide all transaction  processing services,  and the merchants use
            our  maintenance  services from time to time.  Our rental program is
            similar to our  merchant-owned  program,  except  that the  merchant
            rents the ATM from us rather than  purchasing it, and we provide the
            maintenance and supplies for the machine.

We attempt to place the ATMs in our full placement  program in high  visibility,
high traffic  merchant  locations.  Our  experience  has  demonstrated  that the
following locations, among others, often meet these criteria:

      o     convenience stores;

      o     combination convenience stores and gas stations;

      o     Supermarkets; and

      o     entertainment facilities

We have found that the primary factors affecting  transaction  volume at a given
ATM are its  location  within  the site and  merchandising,  such as indoor  and
outdoor signage,  directing  consumers to the location.  As a result, we seek to
maximize the visibility and  accessibility of our ATMs,  because we believe that
once a customer  establishes  a pattern of using a particular  ATM, the customer
will generally continue to use that ATM.

                                     Page 5
<PAGE>

Most of our new ATMs feature advanced functionality, diagnostics and ease of use
including color displays,  personal  computer-based  operating systems,  thermal
printing,   dial-up  and  remote  monitoring   capabilities,   and  upgrade  and
capacity-expansion  capability.  All machines can perform basic cash  dispensing
and balance inquiry transactions, transmit on-screen marketing, dispense coupons
and conduct marketing surveys. Most of our equipment is modular in design, which
allows  us to be  flexible  and  accommodating  to the needs of our  clients  as
technology advances.

ATM  Relationships.  We purchase  our ATMs from  Triton  Systems and to a lesser
extent, from Tranax  Corporation.  We believe that the large quantity of ATMs we
purchase from these  manufacturers  enables us to receive favorable pricing.  In
addition,  we maintain close working  relationships with these  manufacturers in
the course of our  business,  allowing  us to stay  informed  regarding  product
updates and to minimize technical problems with purchased equipment. Although we
currently  purchase a majority of our ATMs from Triton Systems,  we believe that
our relationships  with Tranax Corporation are good and that we would be able to
purchase  the ATMs we require  from them if we were no longer  able to  purchase
ATMs from Triton Systems.

Merchant  Customers.  We have contracts with national and regional merchants and
with  numerous  independent  store  operators.  For  2005,  no  single  merchant
accounted  for  24% or more of our ATM net  sales.  The  terms  of our  merchant
contracts vary as a result of negotiations at the time of execution. In the case
of our full placement  programs,  the contract terms for contracts  currently in
place typically include:

      o     an initial term of at least five-seven years;

      o     ATM  exclusivity  at locations  where we install an ATM and, in many
            cases, a right of first refusal for all other locations;

      o     a requirement  that the merchant  provide a highly visible space for
            the ATM and signage;

      o     protection for us against underperforming locations by permitting us
            to increase the withdrawal fee or remove ATMs; and

      o     provisions  making the  merchant's  fee  variable  depending  on the
            number of ATM transactions and milestones.

New contracts under our merchant-owned or rental arrangements  typically include
seven year terms with other terms similar to our Full  Placement  contracts,  as
well as the following additional terms:

      o     provisions  imposing an obligation on the merchant to ensure the ATM
            is operational at all times its store is open to the public; and

      o     provisions  that  require a merchant to use its best efforts to have
            any purchaser of the merchant's store assume our contract.

EFT Integration, Inc.

EFT  Integration,  Inc.  (EFTI)  operates a central  processing  center from our
headquarters in Ponte Vedra Beach,  Florida.  The processing center is connected
to each of EFTI's  networked  ATMs  through  dedicated,  dial-up  communications
circuits.  The operation of our processing  center is critical to the successful
operation of our ATM network.

                                     Page 6
<PAGE>

EFTI maintains a "switch" which links,  in a compatible  manner to our networked
ATMs, the processing center and similar processing or transaction  authorization
centers  operated by card  issuers  and card  organizations.  The switch,  which
consists of a Dell computer system,  telecommunications equipment, and Postilion
software  (purchased from Mosaic  Software),  and our own proprietary  software,
enable the electronic exchange of information  necessary to conduct transactions
at our networked  ATMs.  Our system has undergone  rigorous  testing by VISA and
MasterCard,  has  successfully  passed a VISA CISP audit,  and is currently VISA
CISP, VISA Canada AIS,  MasterCard SDP,  American Express DSOP and Discover DISC
compliant for secured transaction  processing.  EFTI has also passed an audit of
Phase I of the SAS 70 Controls and Procedures.

Management  believes  the  Company's  current  computer  system  has  sufficient
capacity to meet our  anticipated  transaction  volume over the next three years
and,  additionally,  to  provide  for  the  development  of new  services  being
considered by us.

Although the switch translates and makes routing decisions between computers, it
does not execute the transactions.  Transactions that originate at our networked
ATMs  are  routed  by our  switch  through  our  processing  center  to the card
organization  and  card  issuer  that  processes  the  account  records  for the
particular cardholder's financial institution.  In turn, the switch relays reply
information and messages from the computer center to the originating terminal.

To  protect  against  power  fluctuations  or  short-term   interruptions,   the
processing  center has  uninterruptible  power  supply  systems with battery and
generator back-up. We believe the processing center's data back-up systems would
prevent loss of transaction  records due to power failure and permit the orderly
shutdown  of the  switch  in the event of an  emergency.  To  provide  continued
operation  in the event of a  catastrophic  failure,  all  incoming ATM messages
would be re-routed to a third party  processor.  EFTI has an extensive  disaster
recovery plan for immediate  handling of our ATM  transactions in the event of a
disaster scenario.  The plan, which has been successfully tested by the Company,
entails processing,  by secured third parties, and use of data facilities in two
offsite locations.

Outsource of processing.  In late 2005 the Company outsourced payment processing
to Genpass Technologies, LLC ("Genpass").  Genpass is a subsidiary of U.S. Bank,
N.A. Pursuant to the Agreement,  Nationwide Money Services,  Inc. ("Nationwide")
agreed to engage  Genpass to be the  exclusive  provider  of certain  electronic
funds transfer services,  which includes a seven year term for the processing of
ATM transactions for Nationwide, a wholly owned subsidiary of the Company.

The Genpass  Agreement  offers the Company a substantial  monetary  incentive to
transfer  ATMs to Genpass.  This  incentive  is an off set of  conversion  costs
incurred by the Company as well as a reimbursement  of expenses  associated with
unwinding contracts associated with the Company's ATM processing switch.

The Genpass  Agreement  provides the Company with a tiered "pick a tier" pricing
structure.  When fully  implemented,  we believe that the Genpass Agreement will
lower the Company's ATM processing and sponsorship costs by 38% to 46%.

Additionally, the Genpass Agreement gives the Company access to additional value
added services as well as reducing its regulatory  burden and costs. The Company
also anticipates an increase in interchange revenue as a result of Genpass' more
optimal transaction routing tables.

Cash Axcess Corporation (Proprietary) Limited

This wholly owned  subsidiary  provides the same services as those of Nationwide
Money Services,  Inc. and operates in South Africa. It began operations in early
2005. We are required to utilize a sponsor bank in order to acquire transactions
generated  from ATMs. We currently have one sponsor bank,  Mercantile  Bank, and
are in negotiations  with two additional  banks. Cash Axcess currently sells the
Tidel ATM to  merchants  and brands the ATM with the name of the  sponsor  bank.
Surcharging is not permitted in South Africa. However, a fee is generated from a
cash withdrawal that is paid by the customer  through his financial  institution
and  collected  through  the South  African  Switch  "SAS" and  remitted  to the
sponsoring  bank.  That fee is split between the bank,  the owner of the ATM and
Cash Axcess. We currently have an exclusive marketing arrangement with Tidel (an
ATM  manufacturer  that is now a wholly owned  subsidiary of NCR Corporation) to
sell their ATMs in South Africa. This exclusivity is tied to the volume of Tidel
ATMs that are purchased annually.

                                     Page 7
<PAGE>

Axcess Technology Corporation

This wholly owned subsidiary was responsible for the development of software for
the Company and its subsidiaries. This included the development of core software
such as a processing  platform for  infrastructure  software that is utilized to
manage our vault cash as well as our  database  for the daily  operation  of our
ATMs. This company was also  responsible for the maintenance and updating of all
our software that we developed. We closed this company as of the end of 2005 and
all remaining employees have been transferred to other subsidiaries.

Electronic Payment and Transfer Corp.

This was a wholly owned  subsidiary that developed and sold debit card solutions
to the unbanked  population of the U.S. It packaged its product as the EasyGreen
Card and sold it as a paycard solution so that unbanked  employees could receive
their payroll in an electronic  form. This company was sold to its management at
the end of the third quarter of 2005.

Revenue Sources

Transaction  Fees. Our revenues are principally  derived from two types of fees,
which we charge for processing  transactions  on our ATM network.  We receive an
interchange  fee from the issuer of the credit or debit  card for  processing  a
transaction when a cardholder uses an ATM in our network.  In addition,  in many
cases, we receive a surcharge fee from the cardholder when the cardholder  makes
a cash  withdrawal  from  an  ATM in our  network.  See  Item  6,  "MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - Overview."

ATM  Network  Management   Services.   In  addition  to  revenues  derived  from
interchange  and  surcharge  fees, we also derive  revenues  from  providing ATM
network  management  services  to banks  and  other  third-party  owners of ATMs
included  in  our  ATM  network.  These  services  include  24-hour  transaction
processing,  monitoring  and  notification  of ATM  status  and cash  condition,
notification  of ATM  service  interruptions,  in some cases  dispatch  of field
service personnel for necessary service calls, and cash settlement and reporting
services.  Banks may choose whether to limit transactions on their ATMs to cards
issued by the bank or to permit acceptance of all cards accepted on our network.
See  Item 6,  "MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR PLAN OF  OPERATION  -
Overview."

Surcharge  Fees.  In April 1996,  national  debit and credit card  organizations
changed  the rules  applicable  to their  members,  including  us, to permit the
imposition  of surcharge  fees on cash  withdrawals  from ATMs.  Our business is
substantially  dependent upon our ability to impose  surcharge fees. Any changes
in laws or card  association  rules  materially  limiting  our ability to impose
surcharge  fees would have a material  adverse  effect on us. See  "--Regulatory
Matters - Surcharge  Regulation."  Since April 1996, we have expanded the number
of ATMs in our network and have expanded our practice of imposing surcharge fees
on cash withdrawals on ATMs.

Seasonality. In our ATM operations, we experience higher transaction volumes per
machine in the second and third quarters than in the first and fourth  quarters.
The increased  volumes in the summer months  coincide  with  increased  vacation
travel in the United States.

                                     Page 8
<PAGE>

Recent Developments in Our Business

The  Company  has  increased  its  "Branded  Cash"  program  through   financial
institution partners,  primarily banks and credit unions, which numbered over 75
as of December 31, 2005. In connection with this program, our financial partners
are allowed to brand our ATMs with their name at specific merchant locations. In
addition,  even though we continue to receive an interchange fee with respect to
each cash withdrawal,  our financial  partners' customers receive surcharge free
transactions at these branded locations.  Further, our financial partners supply
the cash, the cash replenishment,  and first-line maintenance at these ATMs at a
lower cost to us than we would typically pay for such third-party services.

In 2005,  we  experienced  continued  growth in sales to financial  institutions
(FIs) through expansion of the ATM Branding  programs.  Net growth of 21% in new
financial institutions plus expansion of services in 30% of our 2005 client base
added 91 new ATM  locations  and further  reduced  costs for an  additional  142
existing,  previously  unbranded ATMs by transitioning the cost of cash and cash
management to the Branding FI's.

16 of 17 Branded Cash clients whose  contracts were  originally set to expire in
2005  renewed  their  agreements  for  three to five  additional  years  with no
increase in cost to the Company.  The lone client who allowed their agreement to
expire,  after eight  years in the  program,  did so only  because of changes in
their specific market,  and still serve as a reference  account for the Company.
The popularity and FI confidence in the program  substantiates  its value to the
Company and FIs and we believe  should serve to continue  its positive  momentum
for the coming year.

The  Company's  ATM  Outsourcing  program  for FIs  grew by 80%  largely  due to
existing  FI  clients  contracting  merchant  or  Select  Employee  Group  (SEG)
locations  for placement and  management  services.  This program is expected to
more than double again in 2006 as the Company's new or existing partners set out
to expand their reach through adding ATMs.

Additionally,  the Company's ATM Branding programs have allowed it to acquire an
additional  $3,000,000  in vault cash from an  existing  FI  partner  for use in
unbranded  ATMs at  interest  rates tied to the  federal  funds rate rather than
prime interest  rates.  This amounts to a 50% savings in the cost of those funds
and in addition to the direct savings it contributes,  it also helps the Company
negotiate lower rates with traditional  prime based lenders in an environment of
rising interest rates.

We have continued to upgrade our ATMs to be Triple DES compliant with the newest
technology,   which  we  believe  will  increase  revenues  through  the  latest
deployment technology for onscreen advertising.

The  Company is also in  discussions  with  various  financial  institutions  in
regards to  providing  turnkey ATM  solutions  for their  customers.  Under this
scenario,  the Company  would  provide  various  services,  which would  include
installation,   processing  and  management  of  vault  cash,   maintenance  and
accounting functions.

On December 15, 2005,  the Company,  entered into a Distributor  ATM  Processing
Agreement with Genpass Technologies, LLC ("Genpass"). Genpass is a subsidiary of
U.S. Bank, N.A. Pursuant to the agreement,  the Company agreed to engage Genpass
to be the exclusive  provider of certain  electronic  funds  transfer  services,
which includes a seven-year term for the processing of ATM  transactions for the
Company.  This  Agreement  will enable the Company to  materially  decrease  its
processing cost structure going forward.

Breach of contracts

Although our merchant-owned ATM customers have multi-year  contracts with us for
transaction processing services, due to competition, some of these customers may
leave us for our competitors prior to the expiration of their contracts,  or may
not renew their contracts upon their  expiration.  Additionally,  some merchants
may sell or close  their  stores.  When  these  events  occur,  we pursue  these
customers  to  continue  to  utilize  our   processing   services   with  us  or
alternatively,  in the event they terminate their  relationship with us prior to
the expiration of their  contacts,  we seek payment of damages under a breach of
contract clause in our contracts. The Company lost 176 ATM locations during 2005
as a result of these  events.  These  ATM  locations  accounted  for 3.7% of the
Company's total locations and have been replaced with other contracts during the
year.

                                     Page 9
<PAGE>

Our ATM Network

General.  Our network  ATMs are  located  primarily  on the East  coast,  with a
concentration in the 10 states listed below:

   STATE                   NUMBER OF ATMs
   -----                   --------------
     GA                         853
     TX                         697
     NY                         613
     VA                         584
     FL                         481
     NC                         348
     SC                         224
     NM                         208
     MD                         149
     AL                         122

The  operation of the network  involves the  performance  of many  complementary
tasks and services, including principally:

      o     acquiring ATMs to be utilized by us and our customers,

      o     selecting ATM locations and entering into leases for access to those
            locations,

      o     in the case of third  party  merchants,  establishing  relationships
            with these merchants for processing transactions on their ATMs,

      o     the sale of our Branded Cash services to local and regional banks or
            credit unions(see "Branded Cash" above),

      o     establishing   relationships   with   national  and  regional   card
            organizations  and  credit  card  issuers  to  promote  usage of our
            network ATMs,

      o     operating and maintaining  the computer system and related  software
            necessary to process ATM transactions,

      o     processing ATM transactions,

      o     supplying ATMs with cash and  monitoring  cash levels for re-supply,
            and

      o     managing the collection of fees generated by our network operations.

ATM Locations.  We believe that the  profitable  operation of any ATM is largely
dependent  upon the  ATM's  location.  Thus,  we  devote  significant  effort to
selecting  locations that we believe will generate high cardholder  utilization.
Additionally,  we believe the  availability  of attractive  sites is a principal
factor affecting our ability to achieve further market  penetration.  We attempt
to identify locations where pedestrian traffic is high, people need quick access
to cash,  and use of the ATM is convenient and secure.  In addition,  we believe
such  locations also provide a convenience to the retailer who may wish to avoid
the financial exposure and added overhead of offering  check-cashing services to
their customers. Key target locations for our ATMs include the following:

                                    Page 10
<PAGE>

      o     grocery stores,
      o     convenience  stores  and  combination  convenience  stores  and  gas
            stations,
      o     major regional and national retailers,
      o     hotels,
      o     shopping malls,
      o     airports,
      o     colleges,
      o     amusement parks,
      o     sports arenas,
      o     theaters, and
      o     bowling alleys.


Our goal is to secure key locations in advance of our  competitors as we believe
cardholders  generally  establish a pattern of  continued  usage of a particular
ATM.  Further,  we believe such patterned  usage will continue  unless there are
frequent problems with the location, such as a machine being out of service.

We enter into leases for our ATM locations,  which generally provide for payment
to the lessor of either a portion of the fees  generated  by use of the ATM or a
fixed monthly rent. Most of our leases have an initial, five to seven year terms
and include  various  renewable  time periods  (typically  the site owner renews
under the lease).  We  generally  have the right to terminate a lease if the ATM
does not meet certain performance standards.  The lessor generally has the right
to  terminate  a lease  before  the end of the lease term if we breach the lease
agreement or become the debtor in a bankruptcy proceeding.

Typical ATM Transaction.  In a typical ATM transaction  processed by us, a debit
or credit  cardholder  inserts a credit  or debit  card into an ATM to  withdraw
funds or obtain a balance inquiry. The transaction is routed from the ATM to our
processing  center at EFT  Integration  or to  another  third  party  processing
company  by  dedicated,  dial-up  communication  links.  The  processing  center
computers identify the card issuer by the bank  identification  number contained
within the card's magnetic strip.  The transaction is then switched to the local
issuing  bank  or  card   organization   (or  its   designated   processor)  for
authorization.  Once the authorization is received, the authorization message is
routed back to the ATM and the transaction is completed.

Authorization of ATM  transactions.  Transactions  processed on our network ATMs
are the  responsibility of the card issuer. We are not liable in the event of an
error in  dispensing  cash if we receive a proper  authorization  message from a
card issuer.

Transaction  Volumes.  We monitor  the number of  transactions  that are made by
cardholders on ATMs in our network.  The  transaction  volumes  processed on any
given ATM are  affected by a number of factors,  including  location of the ATM,
the  amount of time the ATM has been  installed  at that  location,  and  market
demographics. Our experience is that transaction volume on a newly installed ATM
is  initially  very low and  increases  for a period  of three to six  months as
consumers  become  familiar with the machine  location.  We processed a total of
15,616,794 transactions in fiscal 2005 and 7,309,045 transactions on our network
in fiscal  2004.  As of  December  31,  2005,  our  annual  volume  run rate was
approximately 18,500,000 transactions.

Declining ATM transactions and revenue. During 2005 compared to 2004 the Company
experienced a decline in the average  number of  withdrawals  per unit.  Average
withdrawals  per ATM per month  decreased by 3.1% for 2005 compared to 2004. The
decrease in average  monthly  withdrawals  per ATM was consistent with a similar
decline  industry-wide.  The Company is  projecting a similar 4.5%  reduction in
2006.

Visa/Plus,  which  accounted  for  approximately  14% of our  United  States ATM
transactions  during the year ended December 31, 2005, has divided ATM providers
into  two  tiers,  and  reduced  the  interchange  fees it pays to  second  tier
providers  for  withdrawals  and  balance  inquiries  by $.10  per  transaction,
effective  October 1,  2005.  Our ATMs do not meet all of the  requirements  for
first tier status.  As a means of mitigating the impact of the lower interchange
rates  paid by  Visa/Plus  we have had our  processing  agents  adjust  priority
routing tables to move transactions through networks whose interchange rates are
higher than those paid by Visa/Plus,  whenever applicable agreements permit. The
Cirrus  and  MasterCard   networks   implemented  a  $.05  per  transaction  ATM
Convenience  Fee in April 2005.  This fee is netted out of  interchange  dollars
paid to us. For the year ended December 31, 2005, approximately 6% of our United
States transactions were routed through the Cirrus and MasterCard networks.

                                    Page 11
<PAGE>

Interest  Rate  Risk.  We obtain  vault  cash under  agreements  with  financial
institutions.  Vault cash obtained under these programs  remains the property of
the  financial  institution,  and is not  included on our  consolidated  balance
sheet,  unless there is a timing difference such that the Company is not able to
distribute funds back to financial institutions in time at month-end.  When this
timing difference exists, the Company includes the vault cash and the vault cash
payable on our consolidated  balance sheet. During 2004 amounts we accessed each
month ranged from $5.5 million to $19.4  million and we paid cash fees  totaling
$568K for use of the cash. During 2005 the amounts we accessed each month ranged
from $17.5  million to $21.4  million and paid a total of $1.34  million in cash
fees for use of the cash.  Fees that we pay for use of the cash are  related  to
the bank's interest  rates.  Based on the $19.6 million balance being used as of
December 31, 2005,  and the cost of the cash  increased by 1%, our cost of sales
would increase by $196,000 per year.

Increases in interest  rates will  increase our cost of cash  expenses.  We have
vault cash facilities that are related to variable interest rates. Consequently,
a rise in interest  rates would  increase our  operating  costs and cost of cash
expenses.

Interest  Rate Impact.  Our average  related  interest rate paid in cash fees on
vault cash for 2004 was 5.09%.  During 2005, our monthly  average  interest rate
paid in cash fees increased from 5.38% to 6.97%. Our average cash fees rate paid
on vault cash for 2005 was 6.19%.  The  financial  impact of this  increase  was
approximately $237K in additional cost of cash expense.

Axcess Technology Corporation

Effective  December 31, 2005, we  discontinued  two operations  that did not fit
within our strategic plans, thereby ceasing operations of the Company's software
development   subsidiary,   Axcess  Technology  Corp.,  and  its  South  African
subsidiary, Axcess Technology Corp, SA (Pty) Ltd as of December 31, 2005.

Electronic Payment & Transfer, Corp.

Effective  September 30, 2005, the Company  discontinued and sold its Electronic
Payment & Transfer Corp. subsidiary.

Acquisition Strategy

The Company  believes there may be opportunities to purchase or merge with other
ATM deployers.  Acquisition targets may include one or more small-to-medium size
ATM deployers  located in the United States. We believe that, by integrating the
operations  of  multiple  ATM  deployers  with ours,  the Company  will  achieve
economies  of  scale,  which may  result in  increased  profit  margins  for the
Company. During the period from February 2004 through December 2005, the Company
completed four acquisitions  which added more than 3,200 ATM contract  locations
to our network.

                                    Page 12
<PAGE>

Business Continuity

Global  Axcess'  business  continuity  plan  includes  the  following  two  main
components:

      o     a plan to ensure the  continuous  operation  of Global  Axcess' core
            transaction processing systems; and

      o     a plan to  minimize  disruption  of the  remainder  of its  business
            functions.

Transaction Processing Systems

The Company maintains  Universal Power Systems and diesel generators for back-up
power in the event of temporary  power  outages.  In the event of a  longer-term
business interruption, our Business Continuity Plan directs the process in which
all incoming ATM messages are re-routed to the Company's back-up site at SunGard
Availability Services (SunGuard), an international leader in business continuity
services. The Company's back-up site is located in Carlstadt, New Jersey.

Other Business Functions

The Company has a Business  Continuity  Plan for the  remainder  of its business
functions  consisting  of  4  elements:   Prevention,  Event  Management,  Event
Mitigation, and Event Recovery. The plan addresses events such as vendor service
interruption,  natural disasters,  and issues with our internal systems.  In the
event of a catastrophic  event,  the Company also maintains  alternate sites for
office  operations  through an arrangement with SunGard.  These alternate sites,
which are located in Lake Mary, Florida and Atlanta,  Georgia, provide immediate
access  to the  technical  and  office  facilities  required  for  failover.  In
addition,  we maintain copies of our software and critical business  information
off-site.

Competition

The market for the  transaction  processing  and payment  services  industry and
specifically  ATM  services is highly  competitive.  Competitive  factors in our
business include network  availability and response time, price to both the card
issuer and to our customers and ATM  locations.  Our principal  competitors  are
national ATM companies that have a dominant share of the market. These companies
have greater sales, financial, production,  distribution and marketing resources
than ours.

We have identified the following categories of ATM network operators:

      o     Financial  Institutions.  Banks have been  traditional  deployers of
            ATMs,   which  have   customarily  been  located  at  their  banking
            facilities.  In  addition,  the  present  trend for many banks is to
            place ATMs in retail environments in situations when the bank has an
            existing  relationship with the retailer,  a practice that may limit
            the ATM locations available to us.

      o     Credit Card  Processors.  Several of the credit card processors have
            diversified   their   business  by  taking   advantage  of  existing
            relationships  with  merchants  to place  ATMs at sites  with  those
            merchants.

      o     Third  Party  Operators.  This  category  includes  data  processing
            companies that have historically  provided ATM services to financial
            institutions.

      o     Companies  that have the  capability  to  provide  both  back-office
            services and ATM management services.

      o     Consolidator networks, such as TRM/E-Funds and  Cardtronics/E-Trade,
            whose  operations  consist of  approximately  22,000 ATMs and 25,000
            ATMs, respectively.

Management  believes  that many of the above  providers,  with the  exception of
Cardtronics, deploy ATMs to diversify their operations and that the operation of
the ATM network provides a secondary income source to a primary business.

                                    Page 13
<PAGE>

In April 1996,  national debit and credit card  organizations  changed the rules
applicable to their members to permit the  imposition of surcharge  fees.  Since
that time, we have  experienced  increased  competition,  both from existing ATM
network operators and from new companies entering the industry.  There can be no
assurance  that we will compete  successfully  with  national ATM  companies.  A
continued  increase in competition  could  adversely  affect our margins and may
have a  material  adverse  effect on our  financial  condition  and  results  of
operations.

ATM Network Technology

Most of the ATMs in our  network  are  manufactured  by Triton  and  Tranax.  In
addition,  we own several other ATM machine  brands such as Fujitsu,  Greenlink,
Tidel,  and  others.  EFT  Integration  is  capable of  processing  transactions
generated  by each of these brands of ATMs as well as most other ATM brands such
as those manufactured by IBM/Diebold, NCR, Seimens/Nixdorf,  and WRG. Due to the
wide range of advanced technology available, we are able to supply our customers
with state-of-the-art ATMs providing electronic features and reliability through
sophisticated  diagnostics and self-testing  routines. The various machine types
perform  functions  ranging from the basic  routines,  which include  dispensing
cash,  displaying account  information,  and providing a receipt to the user, to
more  sophisticated  routines such as dispensing stamps or coupons and providing
advertising  revenue  through the use of monochrome  or color monitor  graphics.
Many of our ATMs are  modular  and  upgradeable  so we may adapt them to provide
additional  services in response to changing technology and consumer demand. Our
field services staff tests each ATM prior to placing it in service.

Vault Cash

Currently,  we rent cash ("vault cash") for 1,025 of our ATMs through agreements
with various banks,  which are located  throughout the United States.  The vault
cash is replenished  periodically based upon cash withdrawals.  In addition, our
branded cash  partners  provide cash for 577 ATMs covered under our Branded Cash
program.  For the remaining  3,190 ATMs in our network,  such as  merchant-owned
ATMs,  ATMs owned by other third party  owners and ATMs that are only  processed
through EFTI, we do not supply the vault cash. "See  MANAGEMENT'S  DISCUSSION OR
PLAN OF OPERATION - Liquidity and Capital Resources."

Competition

Individuals  seeking  ATM-related  services have a variety of choices at banking
locations and within retail  establishments.  The convenience  cash delivery and
balance inquiry market is, and we expect it to remain, highly competitive due to
the fact that there are few barriers to entry into the  business.  Our principal
competition arises from other independent sales organizations,  or ISOs, similar
to us including NetBank, Innovus, TRM Corp, IMS and Cardtronics. We also compete
with numerous  national and regional  banks that operate ATMs at their  branches
and at other non-branch  locations.  In addition,  we believe that there will be
continued  consolidation in the ATM industry in the United States.  Accordingly,
new competitors may emerge and quickly acquire significant market share.

Significant Relationships

We  have   agreements  with  Food  Lion  and  Kash  n'  Karry  Stores  for  whom
approximately  696 and 81  ATMs,  respectively,  have  been  installed  at their
locations as of December 31, 2005. Each of these agreements was originally for a
five-year  period and set to automatically  renew on November 28, 2007.  However
both contracts were extended in September,  2003 to run through April,  2011 and
set to automatically  renew,  unless terminated 60 days prior. In addition,  the
site owner has the right to terminate the lease before the end of the lease term
under certain circumstances. Currently, there is no such breach or circumstance.
The  aggregate  revenues  from Food Lion and Kash n' Karry Stores  accounted for
approximately  25.6% and 4.1% of our  revenues  from  continuing  operations  in
fiscal year 2005, respectively.

                                    Page 14
<PAGE>

Regulatory Matters

Surcharge  Regulation.  The imposition of surcharges is not currently subject to
federal  regulation.  However,  several  states  in which we  currently  have no
operations have banned companies from imposing such fees,  generally as a result
of activities of consumer advocacy groups that believe that transaction fees are
unfair to users.  There have been,  however,  various state and local efforts in
the  United  States to ban or limit  transaction  fees.  We are not aware of any
existing  bans or  limits on  transaction  fees  applicable  to us in any of the
jurisdictions  in  which  we  currently  do  business.   However,  some  states,
particularly  Tennessee,  Nebraska,  Connecticut,  Delaware,  New  Mexico,  West
Virginia,  Wyoming,  and Iowa,  require us to obtain a bank  sponsor in order to
charge  withdrawal fees. As a result,  in these states we must make arrangements
with a local  bank to act as a  sponsor  of our ATMs  which  typically  involves
additional  documentation costs and payment of a fee to the bank.  Additionally,
states  such  as  Illinois  and  New  Jersey  limit  or ban  withdrawal  fees on
electronic  benefit  card usage,  which has had  virtually  no impact on our net
sales.  Nevertheless,  we cannot  guarantee  that  transaction  fees will not be
banned or limited in the jurisdictions in the United States in which we operate.
Such a ban or limit  could  materially  limit or reduce our ATM net sales in the
United States

Our ATM business is subject to  government  and industry  regulations,  which we
describe  below.  This  regulatory  environment is subject to change and various
proposals have been made which,  if finalized,  could affect our ATM operations.
Our failure to comply with existing or future laws and regulations pertaining to
our ATM  business  could  result in  restrictions  on our ability to provide our
products and services, as well as the imposition of civil fines.

Electronic Funds Transfer Act. The United States  Electronic Funds Transfer Act,
while directed principally at banks and other financial  institutions,  also has
provisions  that apply to us. In particular,  the act requires ATM operators who
impose  withdrawal  fees to notify a customer of the  withdrawal  fee before the
customer  completes a withdrawal and incurs the fee.  Notification  must be made
through  signs  placed  at or on the ATM and by  notification  either on the ATM
screen or through a print-out from the ATM. All of our ATMs in the United States
provide both types of notification.

Americans  with  Disabilities  Act. The American with  Disabilities  Act ("ADA")
currently  includes  provisions  regulating  the  amount  of clear  floor  space
required in front of each ATM, prescribing the maximum height and reach depth of
each ATM and mandating that  instructions and all information for use of the ATM
be  made  accessible  to  and  independently   usable  by  persons  with  vision
impairments.  The United States Department of Justice is currently  drafting new
accessibility  guidelines under the ADA that will cover virtually all aspects of
commercial  activity  relating  to  disabled  persons.  We expect that these new
guidelines  will  include  provisions  that will  require our ATMs in the United
States to be more  accessible  to the  disabled.  Under the  current  proposals,
height and reach requirements  would be shortened,  keypads would be required to
be laid out in the manner of telephone keypads with selected Braille symbols and
ATMs would be  required to process  speech  capabilities.  These new  guidelines
would affect the manufacture of ATM equipment going forward and could require us
to retire or upgrade many of the ATMs we own potentially at significant  cost to
us. This also applies to those  merchant-owned ATMs where we are not responsible
for upgrade costs.  The comment period on the proposed  guidelines ended May 31,
2005. No guidelines have yet been  promulgated.  Should the guidelines  proposed
become final,  we anticipate  an 18-month  phase-in  before new equipment in new
locations must comply with new accessibility requirements.

Regulation of Transaction  Fees. The imposition of fees on ATM  transactions  in
the United States is not  currently  subject to federal  regulation.  There have
been,  however,  various  state and local efforts in the United States to ban or
limit transaction fees, generally as a result of activities of consumer advocacy
groups that believe that  transaction fees are unfair to users. We are not aware
of any existing bans or limits on  transaction  fees  applicable to us in any of
the  jurisdictions  in which we  currently do  business.  However,  some states,
particularly  Tennessee,  Nebraska,  Connecticut,  Delaware,  New  Mexico,  West
Virginia,  Wyoming,  and Iowa,  require us to obtain a bank  sponsor in order to
charge  withdrawal fees. As a result,  in these states we must make arrangements
with a local  bank to act as a  sponsor  of our ATMs  which  typically  involves
additional  documentation costs and payment of a fee to the bank.  Additionally,
states  such  as  Illinois  and  New  Jersey  limit  or ban  withdrawal  fees on
electronic  benefit  card usage,  which has had  virtually  no impact on our net
sales.  Nevertheless,  we cannot  guarantee  that  transaction  fees will not be
banned or limited in the jurisdictions in the United States in which we operate.
Such a ban or limit  could  materially  limit or reduce our ATM net sales in the
United States.

                                    Page 15
<PAGE>

Anti-fraud Initiatives. Because of reported instances of fraudulent use of ATMs,
legislation  is  pending  that would  require  state or  federal  licensing  and
background  checks  of ATM  operators.  There  are  proposals  pending  in  some
jurisdictions,  including New York and New Jersey, which would require merchants
that are not financial  institutions  to be licensed in order to maintain an ATM
on their premises;  other  jurisdictions  currently require such licensing.  New
licensing  requirements  could  increase  our  cost of doing  business  in those
markets.

Electronic  Financial  Transactions  Network  Regulations.  Electronic Financial
Transactions  Networks  ("EFTN")  has  adopted  extensive  regulations  that are
applicable to various  aspects of our operations and the operations of other ATM
operators.  These regulations  include the encryption  standards  described more
fully below and  limitations on the maximum amount of cash that can be withdrawn
from each machine.  As described in "Triple DES" below,  we will need to convert
our ATMs to the new encryption standards by their compliance dates. With respect
to all other EFTN  regulations,  we believe  that we are in material  compliance
with the regulations that are currently in effect and, if any deficiencies  were
discovered,  we would be able to correct them before they had a material adverse
impact on our business.

Triple DES. The Digital Encryption Standard,  or DES, is the encryption standard
that ATMs use to encrypt the personal  identification number that is transmitted
to the  processing  agent during an ATM  transaction.  Due to concerns  over the
increased  processing  power of computers and their  potential to decode the DES
encryption,  MasterCard  International  and VISA have advised all ATM  operators
that any ATM using its network  must be  compliant  with the more  rigorous  and
secure Triple Data Encryptions Standard Compliance "Triple DES" standard.

Triple  DES  uses  an  enhanced   encryption   key  pad  residing  in  ATMs  and
point-of-sale  terminals  that makes it far more  difficult for even the fastest
computers  to  determine  all  the  possible  algorithmic  combinations  used to
scramble the consumer's personal  identification number (PIN). The use of Single
DES keys,  while  effective for decades  without any known security  breaches by
computer  hackers,  is now thought to be vulnerable to today's  faster  computer
processors.

The nation's largest PIN-based debit network, Star, which is owned by First Data
Corp.,  a company based in Omaha,  Nebraska,  mandated that after June 30, 2003,
all new and replacement ATMs be capable of supporting  Triple DES  transactions,
and that  processors such as the Company be Triple DES ready by July 1, 2004. As
of December 31, 2003 the Company's processing subsidiary,  EFT Integration,  has
been  made  ready to  process  transactions  based on Triple  DES  requirements.
MasterCard requires that every new or replaced ATM to be Triple DES compliant by
April 1, 2002 and all ATMs that are installed or to be installed  must be Triple
DES compliant by March 31, 2005.  VISA has given the networks until December 31,
2005 to be Triple DES  compliant.  There has been an  industry-wide  movement to
seek  approval  from all  networks  and  MasterCard  to allow  the  industry  an
extension  to December  31,  2005;  however,  that has not fully  occurred as of
today. The Company,  however, has been granted an extension by MasterCard,  VISA
and STAR for 75% Triple DES compliance by December 31, 2006 and 100%  compliance
by December 31, 2007. As of February 28, 2006,  approximately 50% of the ATMs we
own in our United States  networks were not equipped with triple DES encryption.
We have adopted a policy that any new ATMs that we acquire  from a  manufacturer
must be triple DES  compliant.  We  believe  that  completion  of the triple DES
conversion of the ATMs we own in the United States will cost  approximately $1.1
million.  Because  we  expect  to use our  field  service  network  to make  the
necessary  conversions,  we believe our ATMs can be compliant with triple DES by
the deadline.

                                    Page 16
<PAGE>

All new ATMs that we purchase  are Triple DES  compliant.  A number of solutions
have been developed to upgrade legacy ATMs,  such as those in our network,  from
DES to Triple DES.  The Company has upgraded  2,301 ATMs to date.  Additionally,
the Company has plans to upgrade the approximately 860 legacy company-owned ATMs
in our network and to work with its merchant customers to upgrade  approximately
1,370  merchant-owned  legacy  ATMs.  Our fiscal 2006  capital  budget  includes
approximately $1,100,000 for such upgrades.

Although the Company believes there are solutions  available which will allow us
to  complete  the  upgrade of our legacy  ATMs,  we cannot  guarantee  that such
upgrades  will be  successful.  In addition,  we cannot state with any degree of
certainty  that such  solutions  will be affordable or that  financing for these
upgrades will be available on terms and conditions  acceptable to us at the time
needed.  In the event we are not  successful in upgrading our legacy ATMs,  such
non-compliant  ATMs would be taken out of  service,  which would have a material
adverse impact on our results of operations.

Network  Regulations.  National and  regional  networks are subject to extensive
regulations  that are  applicable to various  aspects of our  operations and the
operations  of other ATM network  operators.  We believe that we are in material
compliance with all such regulations.

Employees

At December  31,  2005,  the Company had 66 full time  employees  working in the
following subsidiaries:

Global Axcess Corp                 4
Nationwide Money Services         56
Cash Axcess Corp                   6
                                  --
                                  66

Our  business  is highly  automated  and we  outsource  specialized,  repetitive
functions  such  as  cash  delivery  and  security.   As  a  result,  our  labor
requirements for operation of the network are relatively modest and are centered
on monitoring  activities to ensure service quality and cash  reconciliation and
control.  None of our employees are represented by a labor union or covered by a
collective  bargaining  agreement.  We have not  experienced  work stoppages and
consider our employee relations to be good.

                                    Page 17
<PAGE>

ITEM 2.          DESCRIPTION OF PROPERTIES

We do not  own any  real  property.  The  following  table  sets  forth  certain
information about our leased properties as of December 31, 2005.

<TABLE>
<CAPTION>
        Location                   Approximate Square Footage                             Use

<S>                                        <C>                   <C>
                                           10,000 sq. ft.        General office use; operations, accounting, software
Ponte Vedra, Florida                                             development, and related administration.

                                            3,600 sq. ft.        General warehouse use, equipment storage, and
West Columbia, South Carolina                                    maintenance operations.

Cape Town, South Africa                     1,800 sq. ft.        General office use, software development.

                                            5,000 sq. ft.        General office and warehouse use, equipment storage, and
Jacksonville, Texas                                              maintenance operations.

Duluth, Georgia                              250 sq. ft.         General office use and administration
</TABLE>


In general,  all  facilities are leased under  operating  leases and are in good
condition.

ITEM 3.     LEGAL PROCEEDINGS

In March 2004,  the Company  received a claim filed by James  Collins,  a former
employee  of Global  Axcess  Corp.  The claim  was  filed in  Superior  Court of
California,  County  of San  Diego on March  2,  2004.  The  claim  alleges  the
following are owed in connection  with the employment  agreement:  compensation,
bonuses and other benefits of  approximately  $316,915;  and 450,000  restricted
shares and 1,798,500 stock options  exercisable at $0.75 per share.  The Company
believes that this claim is unfounded.  The Company's  management believes that,
while the outcome of this claim cannot be predicted with  certainty,  this claim
will not have a material adverse effect on the Company's consolidated results of
operations, cash flows or financial position.

From time to time, the Company and its subsidiaries may be parties to, and their
property  is  subject  to,  ordinary,  routine  litigation  incidental  to their
business.  Claims may exceed  insurance policy limits and the Company or any one
of its  subsidiaries  may have  exposure to a  liability  that is not covered by
insurance.  Except as noted above,  management is not aware of any such lawsuits
that could have a material adverse impact on the Company's  consolidated results
of operations, cash flows or financial position.

ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

                                    Page 18
<PAGE>


                                     PART II

ITEM 5.          MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

On April 28, 2005,  the Company  completed a  one-for-five  reverse split of its
common  shares  outstanding  as of that date at which  time our  trading  symbol
changed  from  "GLXS" to "GAXC".  Our common  stock is  currently  traded on the
Over-the-Counter  Bulletin Board ("OTCBB") under the symbol "GAXC".  As of April
12, 2006, there were 21,011,786 shares of the Company's Common Stock ($0.001 par
value) issued and outstanding.

We are  currently  authorized  to issue a total of  45,000,000  shares of Common
Stock ($0.001 par value),  and 5,000,000  shares of Preferred  Stock ($0.001 par
value).  The Company does not currently  have any shares of its Preferred  Stock
outstanding.


On April 12,  2006,  there were 268  registered  holders of record of our common
stock. Because many of such shares are held by brokers and other institutions on
behalf  of  stockholders,  we  are  unable  to  estimate  the  total  number  of
stockholders represented by these record holders. The following table sets forth
the high and low sales price per share of our common  stock (as adjusted for the
one-for-five reverse split that occurred on April 28, 2005).

                                                       Price Range
                                                      ------------
                                                        High  Low
                                                      ------  ----
                  Fiscal 2006:
                    First Quarter                     $  1.19   0.76

                  Fiscal 2005:
                    First Quarter                     $  1.85   1.45
                    Second Quarter                       1.60   1.05
                    Third Quarter                        1.67   1.33
                    Fourth Quarter                       1.50   1.05
                    Fiscal Year                          1.85   1.05

                  Fiscal 2004:
                    First Quarter                     $  6.05   2.25
                    Second Quarter                       3.40   2.55
                    Third Quarter                        2.75   1.40
                    Fourth Quarter                       1.85   1.30
                    Fiscal Year                          6.05   1.30


We have not historically  declared or paid any dividends on our common stock and
we currently plan to retain future  earnings to fund the  development and growth
of our  business.  The  declaration  of  future  dividends,  whether  in cash or
in-kind, is within the discretion of the Board of Directors and will depend upon
business conditions,  our results of operations,  our financial  condition,  and
other factors.

                                    Page 19
<PAGE>

Securities authorized for issuance under equity compensation plans:

As of December 31, 2005, we had the following securities authorized for issuance
under the equity  compensation  plans (as adjusted for the one-for-five  reverse
split that occurred on April 28, 2005):

<TABLE>
<CAPTION>
                                                                Number of Securities     Weighted-average     Number of
                                                                to be issued upon        exercise price of    securities
                                                                exercise of              outstanding          remaining available
                                                                outstanding options,     options, warrants    for future issuance
                                                                warrants and rights      and rights           under equity
Plan Category                                                                                                 compensation plans
                                                                                                              (excluding
                                                                                                               securities
                                                                                                               reflected in column
                                                                                                               (a)

Equity compensation plans approved by security holders
<S>                                                                      <C>                   <C>              <C>
     Stock Options                                                       1,933,351             $ 1.43           1,070,277
     Warrants                                                           11,877,060             $ 2.67                  --
Equity compensation plans not approved by security holders                      --                 --                  --
Total                                                                   13,810,411             $ 2.50           1,070,277
</TABLE>


Recent Sales of Unregistered Securities

On October 28, 2005, the Company acquired  approximately  1,590 automated teller
machine  ("ATM")  processing  merchant  contracts and ATM  placement  agreements
(collectively,  the  "Merchant  Contracts")  and ATMs and ATM related  equipment
("Equipment")  from  Amer-E-Com  Digital  Corporation,   a  Florida  corporation
("AECD")  pursuant to an Asset Purchase  Agreement  dated as of October 28, 2005
between  the  Company  and AECD.  The  purchase  price for the  acquisition  was
$5,527,256 in cash of which $4,775,191 was paid on closing and $752,065 was held
in escrow  (the  "Holdback").  The  transaction  was  funded by  utilizing  cash
generated  from the  financing  provided by Wachovia Bank and CAMOFI Master Fund
LDC (see Note 14 to the consolidated financial  statements).  The Holdback shall
be utilized to provide  funding in connection with the purchase of 73 additional
Merchant  Contracts,  to cover  the  value  of any  missing  and  lost  Merchant
Contracts,  and to cover any indemnification  required to be paid by AECD to the
Company  with  respect to losses  incurred by the  Company  prior to the date of
acquisition of the assets  purchased.  On October 27, 2005, to obtain additional
funding for the  acquisition of the Merchant  Contracts and the  Equipment,  the
Company entered into a Securities Purchase Agreement (the "Purchase  Agreement")
with CAMOFI  Master LDC (the  "Investor")  for the sale of (i)  $3,500,000 in 9%
Senior  Subordinated  Secured  Convertible  Note  (the  "Note")  and (ii)  stock
purchase warrants (the "Warrant")to purchase 910,000 shares of our common stock.
The obligations under the Note are subordinated to Wachovia.  The Company closed
the financing  pursuant to the Purchase  Agreement on October 27, 2005. The Note
bears interest at 9%,  matures on October 27, 2010 and is  convertible  into the
Company's  common stock,  at the  Investor's  option,  at a conversion  price of
$1.45.  The Company is permitted to require the Investor to convert a portion of
the Note subject to the attainment of certain volume and price targets  specific
to the  Company's  common  stock.  The Company is required to make cash interest
payments on a monthly basis and on each  conversion  date,  with all accrued and
outstanding  interest due in full as of the maturity date.  All overdue  accrued
and  payments  of  interest  incur a late fee at the rate of 20% per annum.  The
Company  may  prepay  all or part of the  Note in cash at 110% of the  principal
amount plus accrued interest.  The full principal amount of the Note is due upon
default  under the terms of the Note.  In  addition,  the  Company  granted  the
Investor a security interest in substantially all of its assets and intellectual
property as well as registration  rights.  The Warrant is exercisable until five
years from the date of  issuance  at an  exercise  price of $1.75 per share.  In
addition, the exercise price of the Warrant is adjusted in the event the Company
issues  common  stock at a price below the  exercise  price.  The  Investor  has
contractually  agreed to restrict  its ability to convert the Note and  exercise
the Warrant  and  receive  shares of the  Company's  common  stock such that the
number of shares of the Company  common stock held by them and their  affiliates
after such  conversion or exercise  does not exceed 4.99% of the Company's  then
issued  and  outstanding  shares  of  common  stock.  The  sale of the  Note was
completed on October 27, 2005 with respect to $3,500,000  of the Note.  The Note
is a debt obligation arising other than in the ordinary course of business which
constitutes a direct financial  obligation of the Company.  The Note and Warrant
were offered and sold to the Investor in a private placement transaction made in
reliance upon  exemptions from  registration  pursuant to Section 4(2) under the
Securities Act of 1933 and Rule 506 promulgated  thereunder.  The Investor is an
accredited investor as defined in Rule 501 of Regulation D promulgated under the
Securities Act of 1933.

                                    Page 20
<PAGE>

On November 8, 2005, to obtain additional funding of $1,850,000 for acquisitions
and working  capital,  the Company  entered into  Subscription  Agreements  (the
"Purchase  Agreements")  with Renaissance U.S. Growth Investment Trust, PLC, BFS
US Special Opportunities Trust PLC, Heller Capital Investments, LLC, and Richard
Molinsky (the  "Investors")  on November 8, 2005 for the  aggregate  sale of (i)
1,600,000  shares of common stock (the  "Shares") and (ii) common stock purchase
warrants (the  "Warrants") to purchase  640,000 shares of our common stock.  The
Company closed the financing pursuant to the Purchase  Agreements on November 8,
2005. The Warrants are  exercisable  until three years from the date of issuance
at an exercise price of $1.75 per share. In the event that the Company's closing
bid price is equal to or  greater  than  $2.25 for a period of five  consecutive
days,  then,  at the  Company's  election,  the  Warrant  holder is  required to
exercise  its Warrants  within ten days from  receipt of an  automatic  exercise
notice from the Company. If the holder fails to exercise its Warrants within ten
days from receipt of an  automatic  exercise  notice from the Company,  then the
Warrants  will  expire.  The Company  has agreed to register  the Shares and the
shares of common  stock  issuable  upon  exercise  of the  Warrants  on the next
registration  statement  that the Company files with the Securities and Exchange
Commission.  The Shares and Warrants were offered and sold to the Investors in a
private placement transaction made in reliance upon exemptions from registration
pursuant  to  Section  4(2)  under  the  Securities  Act of 1933  and  Rule  506
promulgated  thereunder.  The Investors are each accredited investors as defined
in Rule 501 of Regulation D promulgated under the Securities Act of 1933.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following  discussion  should be read in conjunction  with the  consolidated
financial statements and notes thereto.

In  addition  to  historical  information,  this  Annual  Report on Form  10-KSB
contains  forward-looking  statements that involve risks and uncertainties  that
could cause  actual  results to differ  materially.  Factors that might cause or
contribute to such differences  include, but are not limited to, those discussed
below.  You should  carefully  review the risks  described in other documents we
file from time to time with the  Securities and Exchange  Commission,  including
the  Quarterly  Reports  on Form  10-QSB to be filed in 2006.  When used in this
report,  the words "expects,"  "anticipates,"  "intends,"  "plans,"  "believes,"
"seeks,"   "targets,"   "estimates,"   "looks  for,"  "looks  to,"  and  similar
expressions are generally intended to identify forward-looking  statements.  You
should not place undue reliance on these forward-looking statements, which speak
only as of the date of this  Annual  Report  on Form  10-KSB.  We  undertake  no
obligation to publicly release any revisions to the  forward-looking  statements
or reflect events or circumstances after the date of this document.

                                    Page 21
<PAGE>

Overview

Global Axcess Corp (the "Company"), through its wholly owned subsidiaries,  owns
and operates  Automatic Teller Machines ("ATM") with locations  primarily in the
eastern and southwestern United States of America.  Our revenues are principally
derived from two types of fees,  which we charge for processing  transactions on
our ATM network.  We receive an interchange fee from the issuer of the credit or
debit card for  processing a  transaction  when a cardholder  uses an ATM in our
network.  In  addition,  in most  cases  we  receive  a  surcharge  fee from the
cardholder  when  the  cardholder  makes  a cash  withdrawal  from an ATM in our
network.

Interchange  fees are processing  fees that are paid by the issuer of the credit
or debit card used in a transaction. Interchange fees vary for cash withdrawals,
balance inquiries, account transfers or uncompleted transactions,  which are the
primary  types of  transactions  that  are  currently  processed  on ATMs in our
network.  The  maximum  amount of the  interchange  fees is  established  by the
national and regional  card  organizations  and credit card issuers with whom we
have a relationship.  We receive  interchange fees for transactions on ATMs that
we own,  but  sometimes  we rebate a portion  of the fee to the owner of the ATM
location  under  the  applicable  lease for the ATM site.  We also  receive  the
interchange fee for  transactions on ATMs owned by third party vendors  included
within  our  network,  but we rebate  all or a portion  of each fee to the third
party vendor based upon  negotiations  between us. The interchange fees received
by us vary from network to network and to some extent from issuer to issuer, but
generally range from $0.15 to $0.55 per cash  withdrawal.  Interchange  fees for
balance  inquiries,  account  transfers  and denied  transactions  are generally
substantially less than fees for cash withdrawals. The interchange fees received
by us from the card issuer are  independent  of the service  fees charged by the
card issuer to the cardholder in connection with ATM transactions.  Service fees
charged by card issuers to cardholders in connection with  transactions  through
our  network  range  from  zero to as much as $2.50 per  transaction.  We do not
receive any portion of these service fees.

In most markets we impose a surcharge fee for cash  withdrawals.  Surcharge fees
are a  substantial  additional  source of revenue  for us and other ATM  network
operators.  The surcharge fee for ATMs in our network  ranges  between $1.50 and
$2.50 per  withdrawal.  The surcharge  fee for other ATMs in our network  ranges
between $0.50 and $7.50 per  withdrawal.  We receive the full  surcharge fee for
cash withdrawal  transactions on ATMs that we own, but often we rebate a portion
of the fee to the owner of the ATM location under the  applicable  lease for the
ATM  site.  We  also  receive  the  full  surcharge  fee  for  cash   withdrawal
transactions  on ATMs owned by third party vendors  included within our network,
but we rebate all or a portion of each fee to the third party  vendor based upon
a variety of factors, including transaction volume and the party responsible for
supplying  vault cash to the ATM and only record  earned  revenue based upon the
Company contracts with the third party vendors.

In addition to revenues  derived from  interchange  and surcharge  fees, we also
derive  revenues from  providing  network  management  services to third parties
owning  ATMs  included  in our  ATM  network.  These  services  include  24 hour
transaction  processing,  monitoring  and  notification  of ATM  status and cash
condition,  notification of ATM service interruptions, in some cases dispatch of
field  service  personnel for necessary  service calls and cash  settlement  and
reporting  services.  The fees for these  services are paid by the owners of the
ATMs.

Interchange  fees are  credited to us by networks  and credit card  issuers on a
monthly basis and are paid to us in the following month between the 5th and 15th
business day. Surcharge fees are charged to the cardholder and credited to us by
networks and credit card issuers on a daily basis.  We  periodically  rebate the
portion of these fees owed to ATM owners and owners of ATM  locations.  Fees for
network management services are generally paid to us on a monthly basis.

The  Company's  mission is to become a leading  global ATM network and  services
provider  through  network  acquisition.  The Company is  attempting to position
itself to leverage its technology,  economies of scale and industry knowledge to
capture a larger  portion of the non-bank ATM market.  Importantly,  having both
project management and transaction processing allows the Company to successfully
compete in its industry.  Most competitors do not have this vertical capability.
When coupled  with  third-party  products,  the Company will be in a position to
increase the financial  services  offered by the ATM. These future financial and
digital-based  products will be targeted  towards the  traditional  ATM customer
(domestically,15%  of  the  working  population  do  not  use  traditional  bank
services/checking  accounts),  as well as  potential  new ATM  customers.  These
products  are  intended to give the Company a  competitive  edge in both product
offerings  and  higher  margin  revenues,  and  to  draw  ATM  companies  to its
acquisition  strategy.   Although  the  Company  has  historically  focused  its
operations  mainly in the Eastern  region of the United  States of America,  the
Company has commenced  expansion of its operations  throughout the United States
of America.

                                    Page 22
<PAGE>

Recent Developments

      (a)  On  October  28,  2005,  the  Company  acquired  approximately  1,590
automated teller machine ("ATM") processing merchant contracts and ATM placement
agreements  (collectively,  the "Merchant  Contracts")  and ATMs and ATM related
equipment   ("Equipment")  from  Amer-E-Com  Digital   Corporation,   a  Florida
corporation ("AECD") pursuant to an Asset Purchase Agreement dated as of October
28, 2005 between the Company and AECD.  The purchase  price for the  acquisition
was $5,527,256 in cash of which  $4,775,191 was paid on closing and $752,065 was
held in escrow (the  "Holdback").  The  transaction was funded by utilizing cash
generated  from the  financing  provided by Wachovia Bank and CAMOFI Master Fund
LDC  (see  Note  14 to the  audited,  consolidated  financial  statements).  The
Holdback shall be utilized to provide funding in connection with the purchase of
73  additional  Merchant  Contracts,  to cover the value of any missing and lost
Merchant Contracts, and to cover any indemnification required to be paid by AECD
to the Company with respect to losses  incurred by the Company prior to the date
of acquisition of the assets purchased.

      (b) On October 27,  2005,  to obtain  funding for the  acquisition  of the
Merchant Contracts and the Equipment (see (a) above), the Company entered into a
Third Amended and Restated Loan Agreement with Wachovia Bank  ("Wachovia"),  the
Company's  senior lender,  pursuant to which  Wachovia  agreed to provide a term
loan to the Company in the amount of $3,000,000. Such term loan was evidenced by
a Promissory  Note (the  "Wachovia  Note")  issued at the closing on October 27,
2005.  Under the terms of the  Wachovia  Note,  the  Company is required to make
monthly payments of $50,000 plus accrued  interest  commencing in November 2005.
All  outstanding  principal and interest is payable in full in October 2010. The
interest  rate in  connection  with the Wachovia Note is prime + 1%. The Company
has entered into an interest rate swap related to the note.  The swap  exchanges
the variable rate at prime + 1% for a fixed rate of 9%. In addition, the Company
granted  Wachovia a security  interest  in  substantially  all of its assets and
intellectual  property.  At the closing of the Wachovia Note, the Company became
obligated on  $3,000,000  in notes issued to  Wachovia.  The Wachovia  Note is a
long-term debt obligation  arising other than in the ordinary course of business
which constitutes a direct financial obligation of the Company.

      (c) On October 27, 2005, to obtain additional  funding for the acquisition
of the Merchant Contracts and the Equipment (see (a) and (b) above), the Company
entered into a Securities  Purchase  Agreement (the "Purchase  Agreement")  with
CAMOFI Master LDC (the  "Investor")  for the sale of (i) $3,500,000 in 9% Senior
Subordinated  Secured  Convertible  Note (the  "Note")  and (ii) stock  purchase
warrants (the  "Warrant") to purchase  910,000  shares of our common stock.  The
obligations under the Note are subordinated to Wachovia.  The Company closed the
financing pursuant to the Purchase Agreement on October 27, 2005. The Note bears
interest  at 9%,  matures  on  October  27,  2010  and is  convertible  into the
Company's  common stock,  at the  Investor's  option,  at a conversion  price of
$1.45.  The Company is permitted to require the Investor to convert a portion of
the Note subject to the attainment of certain volume and price targets  specific
to the  Company's  common  stock.  The Company is required to make cash interest
payments on a monthly basis and on each  conversion  date,  with all accrued and
outstanding  interest due in full as of the maturity date.  All overdue  accrued
and  payments  of  interest  incur a late fee at the rate of 20% per annum.  The
Company  may  prepay  all or part of the  Note in cash at 110% of the  principal
amount plus accrued interest.  The full principal amount of the Note is due upon
default under the terms of Note. In addition, the Company granted the Investor a
junior security interest,  subordinate to Wachovia,  in substantially all of its
assets and intellectual  property as well as registration rights. The Warrant is
exercisable  until five years from the date of issuance at an exercise  price of
$1.75 per share.  In addition,  the exercise price of the Warrant is adjusted in
the event the Company  issues common stock at a price below the exercise  price.
The  Investor  has  contractually  agreed to restrict its ability to convert the
Note and exercise the Warrant and receive  shares of the Company's  common stock
such that the  number of shares of the  Company  common  stock  held by them and
their  affiliates after such conversion or exercise does not exceed 4.99% of the
Company's then issued and  outstanding  shares of common stock.  The sale of the
Note was  completed on October 27, 2005 with respect to  $3,500,000 of the Note.
The Note is a debt  obligation  arising  other  than in the  ordinary  course of
business which  constitutes a direct  financial  obligation of the Company.  The
Note and Warrant were  offered and sold to the  Investor in a private  placement
transaction  made in reliance  upon  exemptions  from  registration  pursuant to
Section  4(2)  under  the  Securities  Act of  1933  and  Rule  506  promulgated
thereunder.  The  Investor is an  accredited  investor as defined in Rule 501 of
Regulation D promulgated under the Securities Act of 1933.

                                    Page 23
<PAGE>

      (d) During October 2005, a lawsuit previously filed by the Company to have
750,000 shares of our common stock and 500,000  common stock  purchase  warrants
returned and cancelled was finalized in favor of the Company.

      (e) The  Company  completed  a private  placement  on  November  8,  2005,
primarily  with  institutional  investors.  The offering was priced at $6.25 per
Unit.  Each Unit is  comprised  of 5 shares of common stock and 40% common stock
purchase warrants. The terms of the private offering, which netted cash proceeds
of $1,850,000,  required the Company to issue  1,600,000  shares of common stock
and  640,000  common  stock  purchase  warrants  (Warrants).  The  Warrants  are
exercisable at a price of $1.75.

      (f) Effective  December 31, 2005, we discontinued  two operations that did
not fit within our strategic plans,  thereby ceasing operations of the Company's
software development subsidiary,  Axcess Technology  Corporation,  and its South
African subsidiary,  Axcess Technology Corporation, SA (Pty) Ltd, as of December
31, 2005.

Comparison of Results of Operations for the Fiscal Years Ended December 31, 2005
and 2004

Revenues.  Our revenues from continuing  operations increased 41% to $19,595,343
for the fiscal year ended December 31, 2005 ("fiscal 2005") from $13,900,000 for
the fiscal year ended December 31, 2004 ("fiscal 2004"). This increase is due to
a number of factors, but is mainly due to two main factors:

      o     added revenue  generated from the three  acquisitions  during fiscal
            2004 and one acquisition during fiscal 2005;
      o     and from internal growth with increased locations.

Cost  of  Revenues.  Our  total  cost of  revenues  from  continuing  operations
increased by approximately  41% to $11,550,747 in fiscal 2005 from $8,196,684 in
fiscal 2004. Total cost of revenue from continuing  operations was approximately
59% in fiscal 2005 and 59% in fiscal 2004.  The principal  components of cost of
revenues are cost of cash, cash replenishment,  maintenance, producing salaries,
telecommunication  services and transaction processing charges,  interchange and
surcharge rebates and ATM site rentals. The overall increase in cost of revenues
from continuing  operations is directly attributable to the increase in revenues
from continuing operations.

Gross  Margin.  Gross  profit from  continuing  operations  as a  percentage  of
revenues was  approximately 41% in each of the two years ended December 31, 2005
and 2004.

Operating Expenses. Our total operating expenses from continuing operations
increased to $7,125,580, or approximately 36% of revenue, in fiscal 2005 from
$4,516,375, or almost 33% of revenue, in fiscal 2004. The principal components
of operating expenses are general and administrative expenses such as
professional fees, administrative salaries and benefits, consulting fees,
occupancy costs, sales and marketing expenses and administrative expenses.
Operating expenses also include depreciation and amortization.

                                    Page 24
<PAGE>

Selling,  General and  Administrative  (SG&A) Expenses.  Our total SG&A expenses
from  continuing   operations  increased  to  $5,668,584  in  fiscal  2005  from
$3,407,463  in fiscal 2004.  The majority of the increase in SG&A  expenses from
continuing  operations is directly attributable to the increase in our operating
revenues resulting from the acquisitions we completed in the 4th quarter of 2004
and, also, in 2005. Additionally, we incurred in excess of $270,000 of audit and
audit related fees, increased  compensation  expenses and higher travel expenses
as compared to 2004.

Depreciation and  Amortization.  Depreciation  and amortization  from continuing
operations  increased in fiscal 2005 to  $1,456,996  from  $1,108,912  in fiscal
2004.  This increase in  depreciation  and  amortization  expense was due to the
following factors:

      o     An increase in ATM equipment and developed software in 2005, whereby
            fixed assets net, have increased from $4,745,975 in fiscal year 2004
            to $7,280,199 in fiscal year 2005; and
      o     An increase in  amortization  specific to the merchant  contracts we
            purchased   during   fiscal  year  2004  for  which  a  full  year's
            amortization expense was recorded during 2005.

The Company  amortized  $454,177 and  $146,879 of  developed  software in fiscal
years 2005 and 2004, respectively.

See  Financial  Statement  Footnotes  #2  Significant  Account  Policies  and #8
Intangible Assets, regarding the amortization of intangible merchant contracts.

Interest  Expense.  Interest  expense from  continuing  operations  increased to
$524,574,  or 2.7% of  revenue,  for the fiscal  year ended  December  31,  2005
compared to $188,212, or 1.4% of revenue, in fiscal 2004. This was primarily due
to the  significant  increase in our senior  lender's  loans and notes needed to
complete our various  acquisitions  during 2004 and 2005 as well as the increase
in capital lease  purchases.  Such notes payable were $7,177,111 at December 31,
2005 compared to $1,593,750 at December 31, 2004. In addition, our capital lease
obligations,  increased  from  $1,168,436  at December 31, 2004 to $2,880,307 at
December 31, 2005.

Other  Income/Expense.  In fiscal year 2004, we completed a one-time  settlement
resulting in our receipt of approximately  $304,000 of Global Axcess Corp stock,
which was  returned and  cancelled by the Company.  This was offset by increased
contingent  reserves of $55,000 in fiscal year 2004.  In 2005,  $43,000 of other
income/expense relates to a $43,000 reserve on Note Receivable (see Footnote 9)

Income from  Continuing  Operations  before Taxes. We had income from continuing
operations before income taxes of $353,717 during the fiscal year ended December
31, 2005 compared to $1,247,730 for the fiscal year ended December 31, 2004 as a
result of the factors discussed above.

Discontinued Operations.  Discontinued  operations,  resulting from the disposal
and ceased operations of two subsidiaries during fiscal years 2005 and 2004 were
losses from operations of $867,144 and 646,136, respectively.

Income Tax  Expense.  The  Company  has only been able to utilize  approximately
$546,000 of its Net Operating Loss Carryforward  (NOL) against taxable income in
fiscal year 2005 and none in fiscal year 2004, of the approximately $9.8 million
available.  The NOL is due to expire during fiscal years  2008-2021.  The income
tax  (expense)/benefit  decreased  to an expense of  $209,418  from a benefit of
$538,295   for   continuing   operations,   for  fiscal  years  2005  and  2004,
respectively.

                                    Page 25
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Working  Capital.  During fiscal 2005, we funded our  operations  and investment
activities  through  operating  and financing  activities.  Net cash provided by
continuing  operations  amounted to $2,363,226 and net cash used by discontinued
operations  was  $832,508.  In  addition,  net  cash of  $7,679,084  was used in
investing activities,  primarily to acquire merchant contracts and fixed assets.
Net cash provided by financing activities amounted to $8,009,662. As of December
31, 2005, the Company had current  assets of $5,080,531 and current  liabilities
of  $6,049,071,  which  results in negative  working  capital of $968,540.  This
compares to a working capital deficit of $1,099,234 that existed at December 31,
2004.  Despite  the  negative  working  capital,  we believe we have  sufficient
working  capital to meet our current  obligations  during 2006.  However,  we do
anticipate  the need to raise  additional  equity or debt  financing to meet our
capital needs,  which include the $2,000,000 needed to upgrade our existing ATMs
to the new Triple DES standard, and to expand our business during 2006.

Additional Funding Sources

During  fiscal  2005,  we  entered  into  new  financing  arrangements  to  fund
acquisitions and, additionally,  we raised cash through the sale of common stock
to various private investors  thereby  obtaining  additional funds for expansion
and to meet our working capital needs (see "Recent Developments" above).

In order to fulfill our business  plan,  which  includes  expanding our business
primarily through strategic  acquisitions,  the Company will require  additional
funding.  Thus,  we are  continuing  to pursue  sources of financing to meet our
capital needs during 2006.  Historically,  the Company has relied primarily upon
institutional investors for this purpose. Of the approximately $10,000,000 total
raised in equity  financing  during the years ended  December 31, 2005 and 2004,
the  majority  was funded by  institutions.  We cannot  state with any degree of
certainty  that  additional  institutional  funding  will  be  available  to the
Company.

In addition to those  amounts  realized  during 2005 and 2004 from four  private
placements,  additional funds may become available from the callable sections of
warrants attached to the common stock sold in these offerings should the Company
meet certain  criteria.  We cannot guarantee that this will happen. In the first
quarter of fiscal year 2004, we exercised one call,  which netted  approximately
$2,000,000 in proceeds to the Company,  on warrants that were attached to one of
the private placement transactions completed in 2004.

Our ability to attract investors depends upon a number of factors, some of which
are beyond the Company's control. The key factors in this regard include general
economic  conditions,   the  condition  of  ATM  markets,  the  availability  of
alternative   investment   opportunities,   and  the  Company's  past  financial
performance.

We are continuing our efforts to raise additional  capital through equity and/or
debt financings.  We estimate the Company will require approximately  $2,000,000
in  additional  working  capital to meet its needs during 2006 for such items as
new installations and updated ATMs. These needs are currently being met by lease
credit facilities with several leasing companies.

In addition,  the Company will require significant  additional  financing in the
future in order to satisfy its  acquisition  plan. The Company  intends to raise
additional  capital  through debt and equity  financings  to fund its  continued
growth. The need for additional capital to finance operations and growth will be
greater  should,  among other things,  revenue or expense  estimates prove to be
incorrect,  particularly  if  additional  sources of  capital  are not raised in
sufficient amounts or on acceptable terms when needed. Consequently, the Company
may be  required  to  reduce  the  scope of its  business  activities  until new
financing can be obtained.

                                    Page 26
<PAGE>

The Company  does not use its own funds for vault cash,  but rather  relies upon
third party  sources.  In general,  the Company rents vault cash from  financial
institutions  and pays a negotiated  interest rate for the use of the money. The
vault cash is never in the possession of, controlled or directed by, the Company
but rather  cycles from the bank to the armored car carrier and to the ATM. Each
day's  withdrawals  are settled  back to the owner of the vault cash on the next
business day. Both  Nationwide  Money and its customers (the  merchants)  sign a
document  stating that the vault cash belongs to the financial  institution  and
that neither party has any legal rights to the funds. The required vault cash is
obtained under the following arrangements.

      o     Palm Desert Bank.  Beginning in January 2003, our  arrangement  with
            Palm Desert allows us to obtain up to $10,000,000 in vault cash. The
            Palm  Desert  Bank  arrangement  has a term of two  years and may be
            terminated  by Palm  Desert  Bank  upon  breach  by us and  upon the
            occurrence of certain other events.  Under this arrangement,  we are
            required  to pay a monthly  service  fee on the  outstanding  amount
            equal to the prime rate of  interest,  plus a specified  percentage,
            and must pay  monthly  "bank"  fees.  Additionally  the  Company  is
            required  to make a  deposit  with  Palm  Desert  Bank in an  amount
            determined  by the  outstanding  balance.  We are also  required  to
            maintain  insurance on the vault cash. As of December 31, 2005,  the
            Company  had 87  ATMs  funded  by  Palm  Desert  with a  vault  cash
            outstanding balance of about $1,800,000.

      o     WSFS.  Beginning in September,  2004 the Company has an  arrangement
            with Wilmington  Savings Fund Society ("WSFS") allowing us to obtain
            up to $20,000,000 in vault cash. The WSFS contract may be terminated
            by WSFS at any time  upon  breach by us and upon the  occurrence  of
            certain other events. Under this arrangement, we are required to pay
            a monthly service fee on the  outstanding  amount equal to the prime
            rate of interest, plus a specified percentage,  and must pay monthly
            "bank"  and  insurance  fees.  We  are  also  required  to  maintain
            insurance on the vault cash.  As of December  31, 2005,  the Company
            had 622 ATMs with a vault cash outstanding  balance of approximately
            $12,500,000 in connection with this arrangement.

      o     Various Branded Cash Partners.  Nationwide  Money has partnered with
            numerous banks and credit unions to market specific  Nationwide ATMs
            to  the  cardholders  of  these  institutions.  We add  signage  and
            marketing  material to the ATM so that the ATM is easily  identified
            as  being  associated  with  the  bank  or  credit  union,  and  the
            cardholders   of   these   institutions   receive   surcharge   free
            transactions  at the  designated  ATMs.  This  provides  the bank or
            credit union additional  marketing power and another point of access
            to funds for their cardholders. In return for this benefit, the bank
            or credit union,  provide and manage the vault cash in the specified
            ATM(s), as well as provide and pay for cash  replenishment and first
            line  maintenance.  The advantage to  Nationwide  Money is that this
            reduces the costs associated with vault cash, cash replenishment and
            first line by approximately  50%.  Another  advantage is that with a
            branded ATM, transactions volumes  traditionally  increase more than
            at non-branded  ATMs. As of December 31, 2005,  Nationwide Money had
            44 branded  financial  partners,  which funded 577 ATMs,  with about
            $11.0 million in outstanding vault cash.

Contractual Obligations.  Our ability to fund our capital needs is also impacted
by our overall capacity to acquire favorable  financing terms in our acquisition
of ATMs. Our contractual obligations,  including commitments for future payments
under   non-cancelable   lease   arrangements   and  short  and  long-term  debt
arrangements,  are summarized below and are fully disclosed in Notes 12, 13, 14,
15 and 17 to our consolidated  financial  statements.  We do not participate in,
nor secure  financings  for,  any  unconsolidated,  limited  or special  purpose
entities.

We  anticipate  that  our  capital  expenditures  for  fiscal  2006  will  total
approximately  $2,000,000,  primarily for the acquisition and/or upgrade of ATMs
and  related  ATM  installation  costs.  We lease our ATMs under  capital  lease
agreements  that  expire by the end of 2010 and  provide  for lease  payments at
interest rates  averaging  approximately  11.0% per annum.  In 2005, we acquired
approximately  $1,169,020 of new lease  financing  for ATMs.  See Note 15 to the
Consolidated  Financial  Statements.  We have the following payment  obligations
under current financing and leasing arrangements:

                                    Page 27
<PAGE>

<TABLE>
<CAPTION>
                                                   Total        Less than 1 year     1-2 Years       2-9 Years
<S>                            <C>             <C>                  <C>             <C>             <C>
Notes payable- related parties (*)             $ 1,970,201          $ 137,110       $ 137,110       $1,695,981
Notes payable (*)                                  156,700            118,325          38,375                -
Senior lender notes (*)                         10,204,939          2,329,013       1,222,625        6,653,301
Capital lease obligations (*)                    3,329,026          1,197,058       1,059,359        1,072,609
Operating leases                                   797,892            276,603         233,674          287,615

                                         ----------------------------------------------------------------------
Total contractual cash obligations            $ 16,458,758        $ 4,058,109     $ 2,691,143       $9,709,506
                                         ======================================================================
</TABLE>

(*) Includes interest in future periods

Inflation

Impact of Inflation and Changing Prices.  During 2005, our results of operations
were impacted by increasing interest rates as noted below:

Increases in interest  rates will  increase our cost of cash  expenses.  We have
vault cash agreements with various  financial  institutions  that supply cash to
our ATMs for fees based on variable  interest  rates.  Vault cash obtained under
these programs  remains the property of the financial  institution and, as such,
is not reflected on our  consolidated  balance  sheet,  unless there is a timing
difference  such  that the  Company  is not  able to  distribute  funds  back to
financial institutions in time at month-end. When this timing difference exists,
the  Company  includes  the  vault  cash  and  the  vault  cash  payable  on our
consolidated  balance sheet.  During 2004, amounts we accessed each month ranged
from $5.5 million to $19.4 million and we paid cash fees totaling  approximately
$0.6  million for use of the cash.  During  2005,  the amounts we accessed  each
month  ranged  from  $17.5  million  to  $21.4  million  and we paid a total  of
approximately  $1.3  million  in cash  fees for use of the  cash.  Such fees are
related to the bank's  interest  rates.  If such rates were to  increase  by 100
basis points, our net revenues would decline by $0.2 million on a pre-tax basis.
Decreased interest rates will have an opposite effect to net revenues.

Interest  Rate Impact.  We paid an average  interest rate of 5.09% for our vault
cash  fees in 2004  compared  to an  average  interest  rate of  6.19%  in 2005.
Specific to this increase in interest rates,  our net revenues  declined in 2005
by approximately $0.2 million on a pre-tax basis.

Critical Accounting Policies

The  fundamental   objective  of  financial   reporting  is  to  provide  useful
information that allows a reader to comprehend our business  activities.  To aid
in that  understanding,  management  has  identified  our  "critical  accounting
policies".  When  more  than one  accounting  principle,  or the  method  of its
application,  is generally accepted,  management selects the principle or method
that  is  appropriate  in  the  specific  circumstances.  Application  of  these
accounting principles requires our management to make estimates about the future
resolution of existing  uncertainties.  As a result, actual results could differ
from these estimates.  Accordingly,  these policies have the potential to have a
significant  impact  on  our  financial   statements,   either  because  of  the
significance  of the financial  statement item to which they relate,  or because
they  require  judgment  and  estimation  due to  the  uncertainty  involved  in
measuring,  at a specific point in time,  events which are continuous in nature.
In preparing these financial statements,  management has made its best estimates
and  judgments  of  the  amounts  and  disclosures  included  in  the  financial
statements, giving due regard to materiality. Except as separately discussed, we
do not believe there is a great  likelihood  that materially  different  amounts
would be reported under different  conditions or by using different  assumptions
pertaining to the accounting policies described below.

                                    Page 28
<PAGE>

Revenue Recognition Policies. We recognize revenues as ATM card holders use ATMs
or as services are rendered to customers.  In connection with recording revenue,
estimates and assumptions are required in determining the expected conversion of
the revenue streams to cash collected.  The reserve  estimation process requires
that  management  make   assumptions   based  on  historical   results,   future
expectations,  the industry's economic and competitive  environment,  changes in
the creditworthiness of our customers, and other relevant factors.  Revenues are
also adjusted with positive and negative  processing  accruals  occurring in the
operation of the Company's ATM network in the ordinary course of business. It is
the policy of the Company to book as revenue all  surcharge and  interchange  it
receives and has earned based on their contracts,  whether for its owned ATMs or
for those it manages.  In the case of managed ATMs,  the Company then books as a
commission all monies paid to the owners of the ATMs. Where the Company provided
only processing  services through its wholly owned subsidiary,  EFT Integration,
the Company only records the fees it charges to its customers as revenue. During
consolidation  of the financial  statements  the Company  eliminates the revenue
earned by EFT  Integration  for the processing of Company owned or managed ATMs.
Surcharge  fees are fees  assessed  directly to the consumer  utilizing  the ATM
terminals owned by the Company.  The surcharge fees assessed range from $1.50 to
$2.50 based upon a cash withdrawal transaction from the ATM terminals.

Interchange fees are fees assessed  directly to the card issuer of the consumer.
The  interchange  fees are comprised of two fees: (1) an interchange fee ranging
from approximately  $0.40 to $0.55 based upon each cash withdrawal  transaction;
and (2) an interchange fee ranging from approximately  $0.15 to $0.25 based upon
an account inquiry by the consumer.

Processing fees are earned by EFT Integration,  a wholly owned subsidiary of the
Company,  for the switching of transactions between the ATMs and the cardholders
bank(s).  The processing  fees earned by EFTI for the switching of  transactions
for  Nationwide  Money  Services,  Inc.'s  ATMs  are  eliminated  at the time of
consolidation.  However,  EFTI switches  transactions  for companies  other than
Nationwide Money Services.

Management  fees are  charged and  recognized  monthly to various  companies  or
individuals  that use the services of Nationwide Money Services to operate their
ATMs.  These fees are for services such as cash management,  project  management
and account management.

The Company recognizes revenue on breached contracts when cash is received

Allowance of Uncollectible  Accounts  Receivable.  Accounts receivable have been
reduced by an allowance for amounts that may become uncollectible in the future.
This estimated  allowance is based primarily on  management's  evaluation of the
financial condition of the customer and historical experience.

Equipment.  ATM and computer  equipment  comprises a significant  portion of our
total  assets.  Changes in  technology  or changes in our  intended use of these
assets  may cause the  estimated  period of use or the value of these  assets to
change.  We perform annual internal  studies to confirm the  appropriateness  of
estimated  economic  useful  lives  for  each  category  of  current  equipment.
Estimates  and  assumptions  used in  setting  depreciable  lives  require  both
judgment and estimates.

Stock-based  compensation.  The  Company  applies  Accounting  Principles  Board
("APB")  Opinion No. 25,  Accounting for Stock Issued to Employees,  and Related
Interpretations,  in accounting for stock options issued to employees. Under APB
No. 25,  employee  compensation  cost is recognized when estimated fair value of
the underlying  stock on the date of the grant exceeds the exercise price of the
stock  option.  For stock  options and  warrants  issued to  non-employees,  the
Company  applies SFAS No. 123,  Accounting for Stock-Based  Compensation,  which
requires the recognition of compensation cost based upon the fair value of stock
options at the grant date using the Black-Scholes option pricing model.

                                    Page 29
<PAGE>

In December 2004, the FASB issued SFAS No. 123 (R), "Share-Based Payment".  SFAS
No. 123 (R) revises SFAS No. 123, "Accounting for Stock-Based  Compensation" and
supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees".  SFAS
No. 123 (R) focuses  primarily on the  accounting for  transactions  in which an
entity obtains employee services in share-based payment  transactions.  SFAS No.
123 (R) requires  companies to recognize in the statement of operations the cost
of employee services received in exchange for awards of equity instruments based
on the grant-date fair value of those awards (with limited exceptions). SFAS No.
123 (R) is effective  as of the first  interim or annual  reporting  period that
begins after October 1, 2005 for non-small  business  issuers and after December
15, 2005 for small business  issuers.  Accordingly,  the Company will adopt SFAS
No. 123 (R) in its quarter  ending  March 31,  2006.  The  Company is  currently
evaluating  the  provisions of SFAS No. 123 (R) and has not yet  determined  the
impact,  if any,  that  SFAS No.  123 (R) will have on its  financial  statement
presentation or disclosures.

Impairment of  Long-Lived  Assets.  The Company  reviews  long-lived  assets for
impairment  under SFAS No. 144,  "Accounting  for the  Impairment or Disposal of
Long-Lived  Assets."  Long-lived  assets  to be held and used are  reviewed  for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying  amount of an asset may not be  recoverable.  The carrying  amount of a
long-lived  asset is not  recoverable if it exceeds the sum of the  undiscounted
cash flows  expected  to result  from the use and  eventual  disposition  of the
asset.  Long-lived  assets to be disposed of are reported at the lower  carrying
amount or fair value less cost to sell.

Recent Accounting Pronouncements

In December  2004,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement of Financial  Accounting  Standards  (SFAS) No.  123(R),  "Share-Based
Payment",  which is a revision  of SFAS No.  123,  "Accounting  for  Stock-Based
Compensation".  SFAS 123(R) is effective for public companies that file as small
business  issuers as of the beginning of the first  interim or annual  reporting
period that begins after December 15, 2005.  SFAS 123(R)  supersedes APB Opinion
No.  25,  "Accounting  for  Stock  Issued to  Employees",  and  amends  SFAS 95,
"Statement  of Cash Flows".  SFAS 123(R)  requires all  share-based  payments to
employees,  including grants of employee stock options,  to be recognized in the
income statement based on their fair values.  Pro-forma  disclosure is no longer
an alternative.  The new standard will be effective for us beginning  January 1,
2006. SFAS 123(R) permits public companies to adopt its  requirements  using one
of two methods: 1. A "modified prospective" method in which compensation cost is
recognized  beginning with the effective date (a) based on the  requirements  of
SFAS 123(R) for all  share-based  payments  granted after the effective date and
(b) based on SFAS 123 for all awards granted to employees prior to the effective
date  of SFAS  123(R)  that  remain  unvested  on the  effective  date;  or 2. A
"modified  retrospective" method which includes the requirements of the modified
prospective  method  described  above,  but also permits entities to restate the
amounts  previously  recognized  under  SFAS  123  for  purposes  of  pro  forma
disclosures  either for (a) all prior  periods  presented  or (b) prior  interim
periods in the year of adoption. We plan to adopt SFAS 123(R) as permitted under
the modified prospective method.

In December  2004, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards  ("SFAS") No. 153,  "Exchanges  of
Non-Monetary  Assets,  an Amendment of APB No. 29".  This  Statement  amends APB
Opinion No. 29, "Accounting for Non-monetary Transactions". Earlier guidance had
been based on the  principle  that  exchanges of  non-monetary  assets should be
based on the fair value of the assets  exchanged and APB No. 29 included certain
exceptions  to  this  principle.  However,  FASB  153  eliminated  the  specific
exceptions for non-monetary exchanges with a general exception for all exchanges
of  non-monetary  assets that do not have commercial and economic  substance.  A
non-monetary  exchange has commercial substance only if the future cash flows of
the entity are  expected to change  significantly  as a result of the  exchange.
This  Statement  is effective  for  non-monetary  exchanges  occurring in fiscal
periods  beginning after June 15, 2005. The  implementation of this SFAS No. 153
is not expected to have a material impact on the Company's  financial  statement
presentation or its disclosures.

                                    Page 30
<PAGE>

In May  2005,  the FASB  issued  SFAS No.  154,  "Accounting  Changes  and Error
Corrections",  which  replaces APB Opinion No. 20 and FASB Statement No. 3. SFAS
No. 154 applies to all voluntary changes in accounting principle and changes the
requirements  for  accounting  for  and  reporting  of a  change  in  accounting
principle.  SFAS No. 154 requires  retrospective  application  to prior periods'
financial  statements of a voluntary change in accounting principle unless it is
impracticable.  SFAS No. 154 is effective for accounting changes and corrections
of errors made in fiscal  years  beginning  after  December  15,  2005.  Earlier
application  is permitted  for changes and  corrections  of errors  occurring in
fiscal years  beginning  after June 1, 2005.  The statement  does not change the
transition  provisions of any existing accounting  statement.  We do not believe
the  adoption  of SFAS No. 154 will have a material  effect on our  consolidated
financial statements.

Risk Factors

There  are a number  of  factors  that  could  cause  actual  results  to differ
materially from those  discussed in the  forward-looking  statements,  including
those factors  described below.  Other factors not identified  herein could also
have such an effect. Among the factors that could cause actual results to differ
materially  from  those  discussed  in the  forward-looking  statements  are the
following:

      o     Default Under our Credit Agreements

            The Company has met all  covenants  under its senior debt  covenants
            during the first  three  interim  periods of fiscal  year 2005.  The
            Company has received a waiver of certain  covenants  from its senior
            lender during the 4th quarter of 2005. There were no other covenants
            under debt agreements with lenders that were not met.

      o     Our sales  depend on  transaction  fees from our networks of ATMs. A
            decline  in either  transaction  volume or the level of  transaction
            fees could reduce our sales and harm our operating results.

      o     Transaction fees for our network of ATMs produce  substantially  all
            of our sales. Consequently, our future operating results will depend
            on both transaction volume and the amount of the transaction fees we
            receive.  Our  transaction  volume and fees will depend  principally
            upon:

            o     our ability to find replacement sites in the event of merchant
                  turnover;

            o     competition, which can result in over-served markets, pressure
                  both to reduce  existing fee  structures  and  increase  sales
                  discounts to  merchants  and reduced  opportunities  to secure
                  merchant or other placements of our machines;

            o     our  ability  to  service,  maintain  and  repair  ATMs in our
                  network promptly and efficiently;

            o     continued market acceptance of our services; and

            o     government regulation and network adjustment of our fees.

      o     Changes in laws or card  association  rules affecting our ability to
            impose  surcharge  fees and continued  customer  willingness  to pay
            surcharge fees;

      o     Our  ability  to  form  new  strategic  relationships  and  maintain
            existing relationships with issuers of credit cards and national and
            regional card organizations;

      o     Our  ability  to  expand  our ATM  base and  transaction  processing
            business;

                                    Page 31
<PAGE>

      o     The availability of financing at reasonable rates for vault cash and
            for other corporate purposes, including funding our expansion plans;

      o     Our ability to maintain  our existing  relationships  with Food Lion
            and Kash n' Karry;

      o     Our  ability  to keep our ATMs at other  existing  locations  and to
            place  additional ATMs in preferred  locations at reasonable  rental
            rates;

      o     The extent and nature of competition  from  financial  institutions,
            credit card processors and third party operators,  many of whom have
            substantially greater resources;

      o     Our ability to maintain our ATMs and information  systems technology
            without significant system failures or breakdowns;

      o     Our ability to develop new products and enhance existing products to
            be offered  through  ATMs,  and our ability to  successfully  market
            these products;

      o     Our ability to identify suitable acquisition candidates,  to finance
            and complete  acquisitions  and to successfully  integrate  acquired
            assets and businesses into existing operations;

      o     Our ability to retain senior management and other key personnel;

      o     Our ability to comply with mandated Triple DES configuration; and

      o     Changes in general economic conditions.

Changes in  technology  could  reduce use of ATMs and,  as a result,  reduce our
sales.

New technology in the ATM industries may result in the existing  machines in our
networks becoming  obsolete,  requiring us, or the merchants in our networks who
own  their  machines,  to either  replace  or  upgrade  existing  machines.  Any
replacement  or upgrade  program to machines that we own or that we must upgrade
or replace  under  contracts  with  merchant  owners would  involve  substantial
expense,  as was,  and will be, the case with respect to the upgrade of our ATMs
to  meet   Europay,   MasterCard,   Visa  Smart  Card  ("EMV")  and  triple  DES
requirements.  A failure to either  replace or upgrade  obsolete  machines could
result  in  customers  using  other  ATMs that have  newer  technology,  thereby
reducing our sales and reducing or eliminating our operating margins.

The ATM markets are highly  competitive,  which could limit our growth or reduce
our sales.

Persons seeking ATMs have numerous  choices.  These choices include ATMs offered
by banks or other financial  institutions and ATMs offered by ISOs such as ours.
Some of our competitors offer services directly comparable to ours. In addition,
we believe that there will be continued consolidation in the ATM industry in the
United  States.  Accordingly,  new  competitors  may emerge and quickly  acquire
significant  market share.  In addition,  the majority of these  competitors are
larger,  more established and have greater financial,  technical,  and marketing
resources,  greater name recognition,  and a larger installed customer base than
we do. This competition could prevent us from obtaining or maintaining desirable
locations for our machines,  reduce the use of our machines, and limit or reduce
the  transaction  fees we can charge or require us to  increase  our  merchants'
share of those fees which could cause our profits to decline.  The occurrence of
any of these factors could limit our growth or reduce our sales.

                                    Page 32
<PAGE>

Our failure to achieve and maintain adequate internal  controls,  in an industry
that  is  relatively  new  and  complex,  could  result  in a loss  of  investor
confidence  regarding  our financial  reports and have an adverse  effect on our
business, financial condition, results of operations and stock price.

During the course of the evaluation of our internal  controls for the second and
third  interim  periods  during fiscal year 2005,  we have  identified  material
weaknesses in our internal control over financial reporting. For a discussion of
these  weaknesses and the steps we have taken and expect to take to remedy these
weaknesses,  see Item 9A -  "Controls  and  Procedures."  Failure to achieve and
maintain an effective  internal  control  environment  could result in a loss of
investor  confidence  regarding the accuracy and  completeness  of our financial
reports.  Moreover,  effective  internal  control is necessary for us to produce
reliable financial  reports.  If we cannot produce reliable financial reports or
otherwise  maintain  appropriate  internal  control,  our  business,   financial
condition  and  results  of  operations  could be harmed,  investors  could lose
confidence in our reported financial information, the market price for our stock
could  decline  significantly,  and we may be unable to implement  our intent to
refinance  our  Wachovia  credit  facility or  otherwise  obtain  equity or debt
financing.

The ATM business is and can be expected to remain highly competitive.  While our
principal  competition  comes from  national  and  regional  banks,  we are also
experiencing increased competition from independent ATM companies.  All of these
competitors  offer  services  similar  to or  substantially  the  same as  those
services  offered us. We expect that  competition will intensify as the movement
towards  increasing   consolidation   within  the  financial  services  industry
continues.  In addition,  the  majority of these  competitors  are larger,  more
established  and have greater  financial,  technical,  and marketing  resources,
greater name recognition,  and a larger installed customer base than we do. Such
competition could prevent us from obtaining or maintaining  desirable  locations
for our  machines or could cause us to reduce user fees  generated  by our ATMs,
which could cause our profits to decline.

In the market for electronic  transaction  processing,  the principal factors on
which we compete are price and service levels. Our future revenue growth in this
market is dependent upon securing an increasing  volume of  transactions.  If we
cannot  control our  transaction  processing  expenses,  we may not remain price
competitive and our revenues will be adversely affected.

In addition to our current competitors,  we expect substantial  competition from
established  and new  companies.  We cannot  assure  you that we will be able to
compete   effectively   against  current  and  future   competitors.   Increased
competition could result in price  reductions,  reduced gross margins or loss of
market share.

We may be  unable  to  successfully  integrate  our ATM  acquisitions  with  our
operations and to realize all of the anticipated benefits of those acquisitions.

An acquisition of any  significant  ATM network  involves the integration of two
operations that previously have operated independently,  which can be a complex,
costly and time-consuming  process. The difficulties of combining the operations
include, among other things:

      o     operating a larger combined company;

      o     the necessity of coordinating disparate  organizations,  systems and
            facilities;

      o     retaining merchant participants in the acquired network; and

      o     consolidating    corporate   and   administrative    functions   and
            implementing cost savings.

                                    Page 33
<PAGE>

As a result of four acquisitions from February 2004 through the end of 2005, our
ATM networks have grown from an average of 1,100  transacting ATMs in January of
2004 to an average of 5,000  transacting ATMs in 2005 materially  increasing our
integration  risk.  Moreover,  since the ATM  contracts  we  purchased  from the
various  previous  owners have terms  expiring  within the next five years,  the
potential for merchant  participants  in those networks to leave is greater than
with our pre-acquisition ATM networks.

The  process  of  combining  an  acquired  network  with  ours  could  cause  an
interruption  in our business  and,  possibly,  the loss of key  personnel.  The
diversion of management's  attention and any delays or difficulties  encountered
in connection with the  acquisition  and the integration of an acquired  network
with ours could harm our combined  business,  results of  operations,  financial
condition or prospects after the acquisition.

If merchant-owned ATM customers  terminate their  relationships with us prior to
the  termination of their  contracts or do not renew their  contracts upon their
expiration, it could reduce our ATM sales.

Although our merchant-owned ATM customers have multi-year  contracts with us for
transaction processing services, due to competition, some of these customers may
leave us for our competitors prior to the expiration of their contracts,  or may
not renew their  contracts upon their  expiration.  When this occurs,  we pursue
these customers to remain processing with us or alternatively, in the event they
terminate their  relationship with us prior to the expiration of their contacts,
we seek payment of damages under a breach of contract  clause in our  contracts.
If a substantial number of merchant-owned ATM customers end their  relationships
with us, it could cause a reduction in our ATM sales.

Increases in interest rates will increase our expenses.

We have credit and vault cash  facilities  that carry variable  interest  rates.
Consequently,  a rise in interest rates would  increase our operating  costs and
expenses.

Our  ATM  business   operates  in  a  changing  and   unpredictable   regulatory
environment.

ATM withdrawal  transactions  involve the  electronic  transfer of funds through
Electronic Financial Transactions Networks (EFTNs). The United States Electronic
Funds  Transfer  Act  provides  the basic  framework  establishing  the  rights,
liabilities and  responsibilities  of participants in EFTNs. In addition,  there
have been various  state and local efforts to ban,  limit or otherwise  regulate
ATM  transaction  fees,  which make up a large portion of our sales for our full
placement  ATMs and the  principal  source of ATM  revenue  for  merchants  with
merchant-owned  ATMs  in our  network.  For  example,  in  Tennessee,  Nebraska,
Connecticut,  Delaware,  New  Mexico,  West  Virginia,  Wyoming,  and Iowa  only
bank-sponsored  ATMs can impose withdrawal fees. As a result, in these states we
must make  arrangements  with a local  bank to act as a  sponsor  of ATMs in our
networks, which typically involves additional documentation costs and payment of
a fee to the  bank.  In South  Africa,  ATM  owners  receive  a fee  similar  to
interchange fees. In addition, if existing regulations are made more restrictive
or new regulations are enacted,  we may incur significant expense to comply with
them.

Because of reported instances of fraudulent use of ATMs,  legislation is pending
that would  require  state or federal  licensing  and  background  checks of ATM
operators. There are proposals pending in some jurisdictions, including New York
and  New  Jersey,   which  would  require   merchants  that  are  not  financial
institutions to be licensed in order to maintain an ATM on their premises; other
jurisdictions currently require such licensing. New licensing requirements could
increase our cost of doing business in those markets.

New government and industry  standards will increase our costs and, if we cannot
meet compliance  deadlines,  could require us to remove  non-compliant  machines
from service.

                                    Page 34
<PAGE>

The Digital Encryption  Standard,  or DES, is the encryption  standard that ATMs
use to  encrypt  the  personal  identification  number  that  is  sent to an ATM
processing  agent  during an ATM  transaction.  As we  discuss in  "Business  --
Government  and  Industry  Regulation,"  due to  security  concerns,  MasterCard
International,  one of the largest  EFTNs in the United States has required that
ATMs using their  networks be compliant  with a new DES,  known as "triple DES."
Compliance is required by December 31, 2006 for MasterCard International.  As of
December 31, 2005  approximately  50% of the ATMs we own in our networks for the
U.S. were not equipped with triple DES encryption. We believe that the remaining
cost of upgrading the ATMs we own, as well as merchant-owned  ATMs where we have
or will assume  upgrade costs,  to comply with triple DES will be  approximately
$1.1 million in the United States.

The Americans  with  Disabilities  Act, or ADA,  currently  includes  provisions
regulating  the  amount  of clear  floor  space  required  in front of each ATM,
prescribing  the maximum  height and reach depth of each ATM, and mandating that
instructions  and all  information  for use of the ATM be made accessible to and
independently  usable by persons  with  vision  impairments.  The United  States
Department of Justice is currently  drafting new accessibility  guidelines under
the ADA that will cover virtually all aspects of commercial activity relating to
disabled  persons.  We expect that these new guidelines will include  provisions
addressing ATMs and how to make them more accessible to the disabled.  Under the
current proposals,  height and reach  requirements  would be shortened,  keypads
would be  required  to be laid  out in the  manner  of  telephone  keypads  with
selected   Braille  symbols  and  ATMs  would  be  required  to  possess  speech
capabilities. These new guidelines would affect the manufacture of ATM equipment
going forward and could require us to retire or upgrade many of the ATMs we own,
as well as  merchant-owned  ATMs where we are  responsible  for  upgrade  costs,
potentially  at  significant  expense to us. The comment  period on the proposed
guidelines ended May 31, 2005. No guidelines have yet been  promulgated.  Should
the guidelines  proposed become final, we anticipate an 18-month phase-in before
new equipment in new locations must comply with new accessibility requirements.

If ATMs in our network are not compliant with triple DES, EMV and any applicable
ADA  guidelines by the  respective  deadlines  and we cannot  obtain  compliance
waivers,  we may have to remove the  non-compliant  ATMs from  service and, as a
result,  our ATM net sales could be materially reduced during the period of time
necessary to become compliant.

If we, our  transaction  processors,  our EFTNs or our other  service  providers
experience  system  failures,  the ATM products and services we provide could be
delayed or interrupted, which would harm our business.

Our ability to provide  reliable  service  largely  depends on the efficient and
uninterrupted operations of our transaction processors,  EFTNs and other service
providers.  Any significant  interruptions  could severely harm our business and
reputation  and  result in a loss of sales.  Additionally,  if we cause any such
interruption,  we could lose the affected  merchants or damage our relationships
with them. Our systems and operations,  and those of our transaction processors,
EFTNs and other service  providers,  could be exposed to damage or  interruption
from fire,  natural  disaster,  unlawful acts,  terrorist  attacks,  power loss,
telecommunications  failure,  unauthorized entry and computer viruses. We cannot
be certain that any measures we and our service  providers have taken to prevent
system  failures  will be  successful  or that we will  not  experience  service
interruptions. Further, our property and business interruption insurance may not
be adequate to compensate us for all losses or failures that may occur.

We rely on EFTNs and transaction  processors;  if we cannot renew our agreements
with them, if they are unable to perform their  services  effectively or if they
decrease  the  level of the  transaction  fees we  receive,  it  could  harm our
business.

We  rely  on  several   EFTNs  and   transaction   processors  to  provide  card
authorization,  data  capture and  settlement  services  to us and our  merchant
customers.  Any  inability  on our part to renew our  agreements  with  these or
similar service providers or their failure to provide their services efficiently
and effectively may damage our  relationships  with our merchants and may permit
those merchants to terminate their agreements with us.

Our ATM net sales depend to a significant  extent upon the  transaction  fees we
receive  through  EFTNs.  If one or more of the  EFTNs in  which we  participate
reduces the transaction fees it pays us, and we are unable to route transactions
to other EFTNs to replace them, our ATM net sales would be reduced. For example,
Visa/Plus,  which  accounted  for  approximately  14% of our  United  States ATM
transactions  during the year ended December 31, 2005, has divided ATM providers
into  two  tiers,  and  reduced  the  interchange  fees it pays to  second  tier
providers  for  withdrawals  and  balance  inquiries  by $.10  per  transaction,
effective  October 1,  2005.  Our ATMs do not meet all of the  requirements  for
first tier status.  As a means of mitigating the impact of the lower interchange
rates  paid by  Visa/Plus  we have had our  processing  agents  adjust  priority
routing tables to,  whenever  possible,  move  transactions  through EFTNs whose
interchange rates are higher than those paid by the Visa/Plus EFTN.

                                    Page 35
<PAGE>

The  Cirrus and  MasterCard  networks  implemented  a $.05 per  transaction  ATM
Convenience  Fee in April 2005.  This fee is netted out of  interchange  dollars
paid to us. For the year ended December 31, 2005, approximately 6% of our United
States transactions routed through the Cirrus and MasterCard networks.

We  experienced  insignificant  amounts of theft losses in our ATM operations in
2005. If these losses were to increase significantly,  our results of operations
would be harmed.

During 2005, our ATM operations had little impact in un-reimbursed theft losses.
The Company  insures all ATMs and cash within the ATMs with  certain  deductible
levels for each.

Risks Relating to Our Common Stock We do not plan to pay dividends on our common
stock.

We do not plan to  declare  dividends  on our common  stock for the  foreseeable
future and, in any event,  under the terms of our credit  facility with Wachovia
Bank, are prohibited from doing so.

If any of these risk  factors  occur  adversely  to the Company  they may have a
negative impact to our future results.

Any  forward-looking  statement  contained herein is made as of the date of this
document.  We do not  undertake  to  publicly  update  or  correct  any of these
forward-looking statements in the future.

Factors Affecting The Company's Operating Results

The Company's  business is subject to numerous  factors  affecting its operating
results.  In  addition  to the  risk  factors  discussed  above,  the  Company's
operating results may be affected by:

We have a limited  operating history which may not be an indicator of our future
results.

As a result of our limited operating history, our plan for rapid growth, and the
increasingly  competitive  nature  of the  markets  in  which  we  operate,  the
historical  financial data may not be a good indicator of our future revenue and
operating  expenses.  Our  planned  expense  levels  will  be  based  in part on
expectations   concerning  future  revenue,   which  is  difficult  to  forecast
accurately  based on current plans of expansion and growth.  We may be unable to
adjust spending in a timely manner to compensate for any unexpected shortfall in
revenue. Further, general and administrative expenses may increase significantly
as we expand operations.  To the extent that these expenses precede,  or are not
rapidly  followed  by,  a  corresponding  increase  in  revenue,  our  business,
operating results, and financial condition will suffer.

The termination of our contract with our major customer could negatively  impact
our results of operations and may result in a significant impact to revenues.

                                    Page 36
<PAGE>

In November 2001, we entered into new contracts with Food Lion and an affiliated
company,  Kash n' Karry.  Such contracts  replaced a prior agreement we had with
Food Lion that had  expired in  September  2001.  The new  contracts  were for a
five-year  term and  included  approximately  550 sites then  operating  plus an
additional 400 sites that we began  servicing in September  2001.  During fiscal
year 2003, we renegotiated  these contracts to extend the term to April 2011 and
have in service  approximately  779 ATM sites. The sites maintained by Food Lion
and Kash n' Karry constitute approximately 18% of our total sites and 25% of our
total ongoing revenues. Historically, these sites have generated average revenue
per site in excess  of other  sites.  The loss of or any  further  reduction  in
business from this major  customer  could have a material  adverse impact on our
working capital and future results of operations.

The continued  growth and  acceptance of debit cards as a means of payment could
negatively impact our results of operations.

The use of debit cards by consumers has been growing.  Consumers use debit cards
to make purchases from merchants,  with the amount of the purchase automatically
deducted  from  the  consumers'  checking  accounts.  An  increasing  number  of
merchants  are  accepting  debit  cards  as a  method  of  payment  and are also
permitting  consumers to use the debit cards to obtain cash.  The increasing use
of debit cards to obtain cash may reduce the number of cash withdrawals from our
ATMs and may  adversely  affect our revenues  from  surcharge  fees. A continued
increase in the use and acceptance of debit cards could have a material  adverse
effect on our business, results of operations and financial condition.

Other Factors

Any  regulation or  elimination  of surcharge or  interchange  fees could have a
material adverse impact on our results of operations.

There have been various efforts by both consumer groups and various  legislators
to eliminate  surcharge fees,  which  comprised $10.2 million,  or 51.8%, of our
revenue from continuing operations in 2005. In the event that surcharge fees are
eliminated,  the revenue  generated from cash withdrawal  transactions  would be
significantly reduced, which would have a material adverse impact on our working
capital  and future  results  of  operations.  There  have also been  efforts by
various  legislators to eliminate  interchange fees. Although this would have an
immediate,  negative impact, we believe,  although we cannot guarantee, that the
industry  will  respond  by  increasing  surcharge  fees to make up the  loss in
interchange  fees. In the event that the loss of  interchange  fees could not be
passed through via an increase in surcharge fees, the elimination of interchange
fees would have a material  adverse  impact on our  working  capital  and future
results of operations.

Mergers,  acquisitions  and  personnel  changes at  financial  institutions  and
electronic  funds transfer  networks and  independent  sales  organizations  may
adversely affect our business, financial condition and results of operations.

Currently,  the  banking  industry  is  consolidating,  causing  the  number  of
financial  institutions and ATM networks to decline.  This  consolidation  could
cause us to lose:

      o     current and potential customers;

      o     market  share  if the  combined  entity  determines  that it is more
            efficient to develop in-house  products and services similar to ours
            or use our competitors' products and services; and

      o     revenue if the combined  institution  is able to negotiate a greater
            volume  discount  for, or  discontinue  the use of, our products and
            services.

                                    Page 37
<PAGE>

If  our  computer  network  and  data  centers  were  to  suffer  a  significant
interruption,  our business and customer  reputation could be adversely impacted
and result in a loss of customers.

Our ability to provide  reliable  service  largely  depends on the efficient and
uninterrupted  operations of our computer network systems and data centers.  Any
significant  interruptions  could  severely harm our business and reputation and
result in a loss of customers.  Our systems and  operations  could be exposed to
damage   or   interruption   from   fire,   natural   disaster,    power   loss,
telecommunications failure, unauthorized entry and computer viruses. Although we
have taken  steps to  prevent a system  failure,  we cannot be certain  that our
measures will be successful  and that we will not  experience  system  failures.
Further, our property and business interruption insurance may not be adequate to
compensate us for all losses or failures that may occur.

We may be unable to protect our intellectual property rights, which could have a
negative impact on our results of operations

Despite our efforts to protect our intellectual  property rights,  third parties
may infringe or  misappropriate  our intellectual  property rights, or otherwise
independently develop substantially  equivalent products and services.  The loss
of  intellectual  property  protection  or the  inability  to secure or  enforce
intellectual property protection could harm our business and ability to compete.
We  rely  on a  combination  of  trademark  and  copyright  laws,  trade  secret
protection,   and   confidentiality   and  license  agreements  to  protect  our
trademarks, software and know-how. We have also applied for patent protection on
some  features  of our  newer  products.  We may  find  it  necessary  to  spend
significant  resources  to protect our trade  secrets and monitor and police our
intellectual property rights.

Third  parties  may assert  infringement  claims  against us in the  future.  In
particular, there has been a substantial increase in the issuance of patents for
Internet-related  business processes,  which may have broad implications for all
participants in Internet commerce.  Claims for infringement of these patents are
becoming  an  increasing  source  of  litigation.  If we  become  subject  to an
infringement  claim,  we may be required to modify our  products,  services  and
technologies or obtain a license to permit our continued use of those rights. We
may not be able  to do  either  of  these  things  in a  timely  manner  or upon
reasonable  terms and  conditions.  Failure  to do so could  seriously  harm our
business and  operating  results.  In addition,  future  litigation  relating to
infringement  claims could result in substantial  costs to us and a diversion of
management  resources.  Adverse  determinations  in any litigation or proceeding
could also subject us to  significant  liabilities  and could prevent our use of
certain of our products, services or technologies.

ITEM 7. FINANCIAL STATEMENTS

Our  financial  statements  required  by this  item are  incorporated  herein by
reference  to  the  financial  statements  beginning  on  Page  F-1  immediately
following the signature page.

ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURE

On June  20,  2005,  Global  Axcess  Corp  notified  Weinberg  &  Company,  P.A.
("Weinberg"),  its Independent  Registered  Public  Accounting Firm, that it was
dismissing its services,  effective as of that date.  Further, on June 23, 2005,
the  Company  engaged  Kirkland,  Russ,  Murphy  & Tapp,  P.A.  ("KRMT")  as its
Independent  Registered Public Accounting Firm. This decision to engage KRMT was
taken upon the unanimous approval of the Board of Directors of the Company.

During the last two fiscal  years ended  December 31, 2004 and December 31, 2003
and through June 20, 2005, (i) there were no  disagreements  between the Company
and Weinberg on any matter of  accounting  principles  or  practices,  financial
statement  disclosure or auditing scope or procedure  which,  if not resolved to
the satisfaction of Weinberg would have caused Weinberg to make reference to the
matter in its reports on the Company's financial statements, and (ii) Weinberg's
report  on the  Company's  financial  statements  did not  contain  any  adverse
opinion,  disclaimer of opinion,  or modification or  qualification  of opinion.
During  the last two most  recent  fiscal  years  ended  December  31,  2004 and
December 31, 2003 and through June 20, 2005, there were no reportable  events as
the term described in Item 304(a)(1)(iv) of Regulation S-B.

                                    Page 38
<PAGE>

During the two most recent fiscal years, the Company has not consulted with KRMT
regarding either:

      1.    the   application   of   accounting   principles  to  any  specified
            transaction,  either  completed  or  proposed,  or the type of audit
            opinion   that  might  be  rendered  on  the   Company's   financial
            statements, and neither a written report was provided to the Company
            nor oral advice was provided  that KRMT  concluded  was an important
            factor  considered  by the  Company in reaching a decision as to the
            accounting, auditing or financial reporting issue; or

      2.    any matter  that was either  subject of  disagreement  or event,  as
            defined in Item  304(a)(1)(iv)(A)  of Regulation S-B and the related
            instruction to Item 304 of Regulation S-B, or a reportable event, as
            that term is explained in Item 304(a)(1)(iv)(A) of Regulation S-B.

The Company  requested that Weinberg  furnish it with a letter  addressed to the
Securities  and  Exchange  Commission  stating  whether it agreed with the above
statements.  A copy of this  letter was filed as Exhibit  16.1 to the  Company's
Form 8-K/A1, which was filed with the Securities and Exchange Commission on June
29, 2005.

                                    PART III

Item 9A.    CONTROLS AND PROCEDURES.

Management  of the  Company is  responsible  for  establishing  and  maintaining
adequate internal control over financial reporting and for the assessment of the
effectiveness  of internal  controls  over  financial  reporting.  The Company's
internal control system over financial reporting is a process designed under the
supervision of the Company's chief executive officer and chief financial officer
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of the consolidated  financial statements in accordance with
U.S. generally accepted accounting principles.

All  internal  control  systems,  no matter  how well  designed,  have  inherent
limitations.  Therefore,  even those  systems  determined  to be  effective  can
provide  only   reasonable   assurance  with  respect  to  financial   statement
preparation   and   presentation.   Also,   projections  of  any  evaluation  of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions.

As of the end of the period covered by this report, we carried out an evaluation
of the effectiveness of the design and operation of our disclosure  controls and
procedures  pursuant to Exchange Act Rule 13a-15. This evaluation was done under
the supervision and with the  participation of our principal  executive  officer
and principal  financial  officer.  Based on their  evaluation of our disclosure
controls  and  procedures  (as defined in the Exchange  Act Rule  13a-15e),  our
principal  executive officer and principal financial officer have concluded that
during  the  period  covered  by  this  report,  such  disclosure  controls  and
procedures were not effective to detect the inappropriate application of US GAAP
rules as more fully described below.  This was due to deficiencies  that existed
in the design or operation of our internal control over financial reporting that
adversely  affected our  disclosure  controls and that may be  considered  to be
"material weaknesses." The Public Company Accounting Oversight Board has defined
a material  weakness as a "significant  deficiency or combination of significant
deficiencies  that  results  in more than a remote  likelihood  that a  material
misstatement of the annual or interim financial statements will not be prevented
or detected."

                                    Page 39
<PAGE>

We identified  deficiencies  in our internal  controls and  disclosure  controls
related to the accounting  for revenue,  depreciation  and software  development
costs.  Specifically,  the  identified  deficiencies  involved  the  ineffective
controls over (i) revenue  recognition,  (ii)  accounting for  depreciation  and
(iii) accounting for internally developed software.

As a result of the  identification  of the  misapplication of US GAAP rules, our
management  has concluded  that, as of December 31, 2005,  our internal  control
over financial reporting was not effective.

Remediation of Material Weaknesses

We have formulated a program to remedy the material weaknesses identified above.
In the first phase of the program,  already  completed as of March 31, 2006,  we
have hired a  Controller  and a Senior  Accountant  to augment  our  accounting,
financial reporting and financial control function in our finance department.

In the second phase of the program,  we expect to increase our auditor's  review
work  quarterly,  as well as, increase the areas reviewed and discussed with the
audit committee and auditors beforehand, on any changes in accounting principles
or  revenue or  expense  recognition.  Specifically,  we plan to  implement  the
following remediation measures relating to the identified material weaknesses:

1.  Ineffective  controls over revenue  recognition.  Our  remediation  measures
relating to revenue recognition includes a review by management of revenue items
other than  normal fees earned such as  surcharge  and  interchange  including a
regular review of the accounts receivable aging.

2. Ineffective controls over depreciation.

Subsequent to the errors that resulted in audit adjustments, the Company has set
up a tracking  system to follow the final  production  periods when  software is
completed and will include a review by management of depreciable items. Also the
Company has ceased its software development subsidiaries as of December 31, 2005
and does not plan to change any software depreciation.

3. Ineffective controls over internally developed software.

The Company  has set up a tracking  system to follow the  development,  testing,
implementation  and final production  periods when the software is completed and
will include a review by management of internally developed items.

We plan to complete our remediation program during the second and third quarters
of fiscal 2006. The material weaknesses will not be considered  remediated until
the applicable  remedial  controls  operate for a sufficient  period of time and
management has  concluded,  through  testing,  that these controls are operating
effectively.

Changes in Internal Control Over Financial Reporting

Except as set forth above,  there have been no changes in our  internal  control
over financial  reporting  that occurred  during the three months ended December
31, 2005 that have materially  affected,  or are reasonably likely to materially
affect, our internal control over financial reporting.

                                    Page 40
<PAGE>

Item 9B. OTHER INFORMATION.

None.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE ISSUER

The Company's executive officers, directors and key employees and their ages and
positions as of December 31, 2005 are as follows:

Name                   Age                 Positions
-------------          ---  -------------------------------------------
Michael Dodak           59        C.E.O. and Chairman
-------------          ---  -------------------------------------------
David Fann              51        President and Director
-------------          ---  -------------------------------------------
David  J. Surette       46        CFO and CAO
-------------          ---  -------------------------------------------
Robert Colabrese        50        Executive Vice-President of Sales
------------           ---  -------------------------------------------
George McQuain          50        CEO and COO of Nationwide Money Services, Inc.
------------           ---  -------------------------------------------
Lock Ireland            62        Director
------------           ---  -------------------------------------------
Robert Landis           46        Director
------------           ---  -------------------------------------------
Joseph M. Loughry, III  60        Director
------------           ---  -------------------------------------------
Robert Pearson          70        Director
------------           ---  -------------------------------------------
Alan Rossiter           60        Director
------------           ---  -------------------------------------------

The following is a brief description of each officer and director listed above:

Michael J. Dodak, Chairman of the Board and Chief Executive Officer

Mr.  Dodak has served as CEO and  Chairman  of the Board of Global  Axcess  Corp
since October 2001. Prior to joining the Company,  Mr. Dodak was Chief Executive
Officer of Nationwide Money Services,  Inc., an independent ATM network operator
and services  provider that was sold by First Data Corporation in June 2001. Mr.
Dodak joined  Nationwide Money Services,  Inc. as a controller in early 1996. He
assumed the various duties of a controller including the production of financial
statements,  budgets, and the development of the Money Services,  Inc. database.
In June 1997 he was  promoted to CEO.  Prior to joining  Nationwide,  Mr.  Dodak
founded and served as Chief Financial Officer to several companies  including an
alternative  energy company,  a medical supply company and a for profit chain of
schools.  Earlier,  he was a Senior Financial  Analyst for Litton Industries and
served  as  regional  controller  for Damon  Corporation,  a large  provider  of
clinical  lab  services.  He has  Bachelor  of Arts  and MBA  degrees  from  the
University  of  California  Los  Angeles.  Mr.  Dodak  is  responsible  for  the
day-to-day operations of the Company.

David A. Fann, President and Director

Mr. Fann has served as President  and Director of the Company  since  January of
2002.  Mr. Fann was the Chief  Executive  Officer  and  Chairman of the Board of
TeraGlobal,  Inc.,  a publicly  traded  company,  from  September  1998  through
September  2000.  He was  president  of  TechnoVision  Communications,  Inc.,  a
subsidiary of TeraGlobal,  from November of 1995 to September 2000. Mr. Fann has
also served as Vice  President of Sales and  Marketing for  Quadraplex,  Inc., a
video network company. He co-founded Totally Automated Systems Communications, a
Unix-based  communications  company, and acted as Vice President of that company
from January 1993 through January 1995. From January 1987 through  December 1992
he served as Operations Officer for Networks, Inc.

David J. Surette, Chief Financial Officer and Chief Accounting Officer

Prior to joining the Company,  Mr.  Surette was the Chief  Financial  Officer of
National  Service  Direct,  Inc.  (NSDI),  a  majority  owned  subsidiary  of SR
Teleperformance,  a French  publicly  traded  corporation  in the  telemarketing
industry.  He was the CFO for NSDI  from  September  1999  until he  joined  the
Company in March  2003.  Mr.  Surette  also  served as an interim  CFO for North
American  Telephone  Network,  LLC, a related company to NSDI,  during this same
period.  NSDI has filed for bankruptcy in mid 2004.  Prior to working with NSDI,
he was a Controller for ILD  Telecommunications,  Inc., in the pre-paid  calling
card division,  from June 1998 to August 1999. From 1996 to 1998 Mr. Surette was
the CFO and Director of  Publishing  for High Mountain  Press,  Inc., a book and
magazine  publisher  in the CAD and high tech  markets.  He was CFO and  General
Manager,   from  1991  to  1996,  for  a  magazine   publisher   called  CommTek
Communications Corp., a company in the satellite dish industry.  Mr. Surette was
a Supervising Senior Accountant with KPMG Peat Marwick from 1987 to 1991. He has
a Bachelor of Science degree in Accounting from the University of Massachusetts,
and an MBA degree from Babson  College.  Mr.  Surette  also has his CPA from the
State of Virginia. Mr. Surette is married and has two children.

                                    Page 41
<PAGE>

Mr. Surette is responsible for:  financing the operations of the Company and its
subsidiaries;  financing the  acquisitions  and internal  growth of the Company;
strategic,  legal and risk  analysis  for the  Company;  and SEC  filings of the
Company.

Robert Colabrese, Executive Vice President of Sales

Mr.  Colabrese,  with more than 20 years of industry  experience,  joined NMS in
1996 as Vice President of Operations and was  instrumental  in building the cost
effective  ATM  installation,  management,  and  customer  service  process  NMS
operates  under  today.  In  1999 he  founded  and was  named  President  of EFT
Integration, Inc. where he created an innovative, forward thinking, state of the
art processing  platform from the ground up. Prior to joining NMS, Mr. Colabrese
served in various  management  positions  supporting and developing ATM software
and technical services for Mellon Bank NA. Mr. Colabrese received his Associates
degree in Specialized  Electronics  Technology from Penn Technical  Institute in
Pittsburgh, Pennsylvania. Mr. Colabrese is married and has three children.

George  McQuain,  CEO  and  COO of  Nationwide  Money  Services,  Inc.  and  EFT
Integration, Inc.

George A. McQuain is Chief Executive Officer for Nationwide Money Services,  Inc
("NMS") and EFT  Integration,  Inc. At NMS and EFTI,  George is responsible  for
strategic planning, business plan execution and day-to-day operations.  Prior to
his association with NMS, George served as President and Chief Executive Officer
of Ntercept  Communications,  where he decisively improved sales,  marketing and
product  implementation.  Prior to  Ntercept,  George led First  Union  National
Bank's  national  lockbox  operations.  Prior to First  Union,  George was Chief
Operating   Officer  of  QuestPoint,   a  subsidiary  of  CoreStates   Financial
Corporation.  CoreStates  was  acquired by First Union in May 1998.  George also
played a key leadership role at Nationwide  Remittance Centers ("NRC").  NRC was
an  entrepreneurial  start-up  which grew to  revenues  of $20  million  and was
purchased  by  CoreStates.  During his career at NRC,  George was head of sales,
head of client service and quality, and head of operations. While at NRC, George
is credited  with  successfully  turning  around  operational  productivity  and
quality. George's career also includes time at Marriott Corporation,  the United
States  Treasury  Department,  and the  Office of the  President  of the  United
States.  George  received  his MBA in Finance and  Management  from George Mason
University in Fairfax, Virginia.

                                    Page 42
<PAGE>

Lock Ireland, Director

Presently,  Mr.  Ireland  serves  as a  Consultant  and  Director  for  Resource
Corporate  Management,  Inc.  (RCMI), a company he led as President and CEO from
1994 through  2002.  RCMI is engaged in marketing  cost-efficient  correspondent
banking services to community banks via Banker's Banks across the United States.
From 1987 through 1999, Mr. Ireland was President of Resource Bancshares,  while
simultaneously  serving  terms as Vice  Chairman  of Republic  National  Bank in
Columbia, South Carolina (1987-1995) and as President and CEO of 1st Performance
Bank in Jacksonville,  Florida (1990-1994). In 1999, Mr. Ireland led an employee
buy-out of Resource  Bancshares  Corporation.  Beginning his career in 1969 as a
bank examiner for Federal Reserve Bank in Dallas,  Texas,  Mr. Ireland spent the
next 16 years  serving  in  various  positions  and  served  as  Executive  Vice
President and COO of Bankers  Trust of South  Carolina for the last three years.
Mr.  Ireland  holds a Bachelor of Arts degree in Economics  from North  Carolina
State University.

Robert Landis, Director

Robert Landis is currently the Chairman,  Chief Financial  Officer and Treasurer
of Comprehensive  Care Corporation,  a publicly traded company located in Tampa,
Florida. He has been with Comprehensive Care for over 5 years,  working directly
with all operations,  financial and SEC filings for the company.  Prior to this,
Mr.  Landis  was  with  Maxicare  Health  Plans,  Inc.,  as its  Treasurer  from
1983-1998.  Mr. Landis was with two accounting  firms from 1981-1983,  the first
was Price Waterhouse and the second was Irwin Shapiro  Accountancy  Corp. Robert
brings strong financial,  operational and SEC experience to the Company,  and is
part of the Audit Review Committee for the Company.

Joseph M. Loughry, III, Director

Joseph M. Loughry,  III, age 60, from 2000 through 2003,  Mr.  Loughry served as
the  President,  CEO and a director of HTE,  Inc.,  a software  company that was
listed on NASDAQ.  Prior to 2000, Mr. Loughry served as the President and CEO of
QuestPoint Holdings,  Inc. since 1992. Mr. Loughry graduated from the University
of Maryland - College Park in 1967 with a BS in Business Administration.

Robert Pearson, Director

Mr.  Pearson  joined  RENN  Group in April 1997 and is Senior  Vice-President  -
Investments.  Mr.  Pearson  brings more than thirty years of  experience to RENN
Group's  corporate  finance  function.  From 1994 to 1997,  Mr.  Pearson  was an
independent  financial  management  consultant.  From 1990 to 1994, he served as
Chief Financial Officer and Executive  Vice-President  of Thomas Group,  Inc., a
management  consulting  firm,  where  he was  instrumental  in  moving  a  small
privately  held company  from a start-up to a public  company with more than $40
million  in  revenues.  Prior to  1990,  Mr.  Pearson  was  responsible  for all
administrative  activities for the Superconducting Super Collider Laboratory. In
addition,  from 1960 to 1986,  Mr.  Pearson  served in a variety of positions at
Texas Instruments in financial planning and analysis,  holding such positions as
Vice-President - Controller and Vice-President - Finance. Mr. Pearson holds a BS
in Business from the University of Maryland and was a W.A. Paton Scholar with an
MBA from the  University  of  Michigan.  He is a director  of  eOriginal,  Inc.,
CaminoSoft   Corp.,   Laserscope,   Simtek   Corporation,   and  Advanced  Power
Technologies, Inc.

Alan W. Rossiter, Director

Alan W.  Rossiter,  age 60,  since 1996 has served as the  President  and CEO of
Enterprise  North  Florida  Corporation,   which  provides  emerging  technology
companies  with  extensive  business,  technical  and  financial  services.  Mr.
Rossiter  served for 20 years with the United States Navy in various  capacities
including Aviation  Maintenance  Officer for the United States Pacific Fleet and
Director of Naval Aviation Logistics Management at the Naval Air Systems Command
in Washington,  D.C. during  Operation  Desert Storm.  Mr.  Rossiter  received a
Bachelors degree in History from Denison University in 1967,  graduated from the
Naval Aviation Candidate School at Pensacola, Florida in 1969 and graduated from
National  University of San Diego with a Masters of Business  Administration  in
Financial Management and Information Systems in 1983.

                                    Page 43
<PAGE>

The Board of Directors  has  established a  Compensation  Committee and an Audit
Committee.

Compensation Committee
The Compensation  Committee consists of Lock Ireland,  who serves as Chairman of
this committee, Robert Landis, and Alan Rossiter. The Compensation Committee met
twice during  fiscal  2005.  The  function of the  Compensation  Committee is to
approve stock plans and option grants and review and make recommendations to the
Board of Directors regarding executive compensation and benefits.

Audit Committee
The Audit  Committee  consists of Lock  Ireland,  Robert  Landis,  and Joseph M.
Loughry III. The Board of Directors has determined  that Mr. Landis,  who serves
as Chairman of the Audit Committee,  qualifies as an "audit committee  financial
expert," as defined in the rules of the Securities and Exchange Commission.  The
Audit  Committee  met four times in fiscal  year 2005.  Responsibilities  of the
Committee  include (1) reviewing  financial  statements and consulting  with the
independent auditors concerning the Company's financial  statements,  accounting
and financial  policies,  and internal controls,  (2) reviewing the scope of the
independent auditors' activities and the fees of the independent  auditors,  and
(3) reviewing the  independence  of the auditors.  The Board has determined that
each of Messrs.  Ireland,  Landis,  and Loughry meet the independence  standards
established by the National Association of Securities Dealers.

Nominating & Corporate Governance Committee

The primary  function of the Nominating & Corporate  Governance  Committee is to
(a) identify  individuals  qualified to become members of the Board, (b) approve
and recommend to the Board director  candidates,  (c) develop,  recommend to the
Board and update as necessary  corporate  governance  principles  and  policies,
applicable to the Company,  and (d) monitor  compliance with such principles and
policies.

In 2005,  the Board met seven  times.  The  Board  adopted  various  resolutions
pursuant  to  thirteen  (13)  unanimous  written  consents  in lieu of a meeting
adopted during the year ended December 31, 2005. Each of the incumbent directors
attended  100% of the aggregate of (i) the meetings of the Board during the year
and (ii) the total  number of meetings of all  committees  of the Board on which
the incumbent directors served.

During 2005, there were five non-employee and two employee directors.  The Board
held  seven  meetings  in  person or by  telephone.  In  addition,  the Board of
Directors took action by written consent on thirteen (13) occasions. No Director
received cash  compensation for his service as director during fiscal 2005. Each
non-employee  director is compensated  with stock options in accordance with the
terms of the  Company's  Stock  Option Plan.  Such plan  provides for an initial
grant of 10,000 stock  options upon  acceptance  to the Board and an  additional
10,000 stock options after 6 months of service as director. Additionally, annual
grants of 10,000 stock options are awarded for each year of service  thereafter.
All  non-employee  directors are reimbursed  for expenses  incurred in attending
meetings of the Board of Directors and any committee(s) thereof.

During 2005, a total of 140,000 stock options were granted to non-employee
directors as follows:

Director                                     Number of Options
--------                                     -----------------
Ireland, Lock                                      60,000 (1)
Landis, Robert                                     10,000
Loughry, Joseph                                    20,000
Pearson, Robert                                    20,000
Rossiter, Alan                                     20,000
Hochwimmer, Georg                                  10,000
-----------
(1)   This Director received 50,000 additional options for business  development
      assistance.

                                    Page 44
<PAGE>

Corporate Governance

The role of the Board of  Directors  (the  "Board")of  Global  Axcess Corp is to
oversee  the  business  and  affairs  of the  Company  for  the  benefit  of its
stockholders.  In  addition,  the Board  considers  the  interests  of its other
interested parties, including its employees, customers, suppliers, creditors and
the  communities  in which the  Company  does  business.  The Board has  adopted
corporate  governance  guidelines,  as well as committee charters,  to provide a
framework for the functioning of the Board and Board Committees.

Code of Ethics

The Company has adopted a Code of Ethics and  Business  Conduct  that applies to
all officers, directors and employees of the Company.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company's  executive officers and
directors  and  persons  who own  more  than  10% of a  registered  class of the
Company's  equity  securities  to file  reports of their  ownership  thereof and
changes in that ownership with the  Securities and Exchange  Commission  ("SEC")
and the National  Association of Securities  Dealers,  Inc. Executive  officers,
directors and greater than 10%  stockholders  are required by SEC regulations to
furnish the Company with copies of all such reports they file.

Based  solely  upon a  review  of  Forms  3, 4 and 5,  and  amendments  thereto,
furnished to the Company  during  fiscal year 2005,  the Company is not aware of
any  director,  officer  or  beneficial  owner of more than ten  percent  of the
Company's Common Stock that, during fiscal year 2005, failed to file on a timely
basis reports required by Section 16(a) of the Securities Exchange Act of 1934.

ITEM 11. EXECUTIVE COMPENSATION

The following table summarizes all  compensation  paid by us with respect to the
fiscal  year ended  December  31, 2005 for the Chief  Executive  Officer and all
other executive  officers whose total cash compensation  exceeds $100,000 in the
fiscal year ended December 31, 2005.

                                    Page 45
<PAGE>

<TABLE>
<CAPTION>
                                            Annual Compensation        Long Term Awards
Name and Principal Position       Year     Salary ($)      Bonus ($)   Securities Underlying Options

<S>                               <C>        <C>           <C>          <C>
Michael Dodak                     2005       $275,000      $12,185       --
CEO and Chairman                  2004       $275,000      $15,000       --      (1)
                                  2003       $220,000      $50,000       150,000 (2)


David Fann                        2005       $200,000      $6,360        --
President and Secretary           2004       $200,000      $6,700        --      (1)
                                  2003       $200,000        --          150,000 (2)

David Surette                     2005       $137,945      $7,335        --
CFO                               2004       $125,000      $13,500        13,950 (1)
                                  2003       $120,000        --           85,500 (3) (4)


Robert Colabrese                  2005       $217,554 (5)  $3,025        --
Executive Vice President Sales    2004       $200,000 (6)  $7,000        --      (1)
                                  2003       $135,000        --           54,000 (2)


George McQuain                    2005       $146,670      $6,430        --
CEO & COO of NMS                  2004       $140,000      $14,500        28,200 (1)
                                  2003       $130,000        --           54,000 (2)
</TABLE>

      (1) In 2004, the executive management was granted options based on certain
goals  that  would  have to be met for  fiscal  year 2005  before  they could be
vested. The number of options shown here are the total options that vested based
on those goals in 2005.
      (2) In 2003, the executive management was granted options based on certain
goals  that  would  have to be met for  fiscal  year 2004  before  they could be
vested. The number of options shown here are the options that vested in 2004.
      (3)  Includes  55,500  options  vested  in  2004  and  granted  in 2003 by
executive management based on certain goals that would have to be met for fiscal
year 2004 before they could be vested.
      (4)  Includes  30,000  options  granted  at date of hire which vest over 3
years.
      (5) Combines commission payments of $82,554 during the year with salary of
$135,000.
      (6) Combines commission payments of $65,000 during the year with salary of
$135,000.

Options/SARs Grants During Last Fiscal Year

At total of 277,200  options were granted  during the fiscal year ended December
31, 2005.  No options were granted to our named  executive  officers  during the
fiscal year ended December 31, 2005.

Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End Option Values

The  following  table  sets  forth,  for each of the named  executive  officers,
information  concerning  the number of shares  received  during fiscal 2005 upon
exercise of options and the aggregate dollar amount received from such exercise,
as well as the number and value of  securities  underlying  unexercised  options
held on December 31, 2005.

                                    Page 46
<PAGE>

<TABLE>
<CAPTION>
                           Shares                            Number of Securities Underlying                 Value of
                          Acquired            Value              Options at Year End (#)             Options at Year End ($) (1)(2)
                       on Exercise (#)       Realized        Exercisable       Unexercisable       Exercisable       Unexercisable
Name
<S>                               <C>              <C>           <C>                <C>               <C>                <C>
Mike Dodak                        --               --            60,000             150,000           $17,400            ($76,500)
David Fann                        --               --            60,000             150,000           $17,400            ($76,500)
David Surette                     --               --            30,000              69,450           $25,200            ($29,840)
Robert Colabrese                  --               --            45,000              54,000           $14,175            ($27,540)
George McQuain                    --               --            40,000              82,200           $11,600            ($32,457)
</TABLE>


(1)   Based on the difference  between the option exercise price and the closing
      sale price of $1.19 of our common  stock as reported  on the OTC  Bulletin
      Board on December 31, 2005, the last trading day of our 2005 fiscal year.
(2)   Out of the Money options are shown as negative.

Employment Agreements

We have the following employment contracts with the named executive officers:

Michael Dodak has a five year employment contract from June 30, 2004 to June 30,
2009,  under Board and Mr. Dodak's  approval.  The agreement  provides Mr. Dodak
with the following  compensation:  an annual salary of $250,000;  which has been
increased to $275,000 once certain  milestones were achieved,  and can be raised
to $350,000 when other milestones are achieved; an annual bonus to be determined
and awarded by the Compensation Committee; and an 18 month severance agreement.

David Fann had a two year  employment  contract from April 29, 2002 to April 29,
2004,  which has been  extended  for two  additional  years and six months until
December 31, 2007 under Board and the President's approval. For performance as a
director  and  officer,  the Company  will  compensate  the  President  with the
following:  a monthly  salary of $7,500,  which has been  increased to an annual
amount of $200,000 once certain milestones were achieved and an annual bonus and
stock options to be determined and awarded by the Compensation Committee;  and a
12 month severance agreement.  The compensation under this agreement in 2005 and
2004 was, $200,000 and $200,000, respectively.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

      The following table sets forth certain  information  regarding  beneficial
ownership of our common stock as of April 11, 2006:

      o     by each person who is known by us to  beneficially  own more than 5%
            of our common stock;
      o     by each of our officers and directors; and
      o     by all of our officers and directors as a group.

                                    Page 47
<PAGE>

<TABLE>
<CAPTION>
Name                                                                 Number         Percent (1)
----                                                                 ------         -----------
<S>                                                                  <C>                  <C>    <C>
Mike Dodak                                                           1,108,387            5.29%  (2)
David Fann                                                           1,037,336            4.95%  (3)
Lock Ireland                                                           282,507            1.35%  (4)
Robert Colabrese                                                       271,654            1.30%  (5)
David Surette                                                          154,198            0.74%  (6)
George McQuain                                                         138,700            0.66%  (7)
Robert Landis                                                           67,500            0.32%  (8)
Robert Pearson                                                          15,000            0.07%  (9)
Joseph M. Loughry, III                                                   5,000            0.02%  (10)
Alan W. Rossiter                                                         5,000            0.02%  (11)
                                                            ------------------------------------
All executive officers and directors as a group (10 persons)         3,085,282           14.72%
                                                            ------------------------------------


Other 5% owners:
BFS U.S. Special Opportunities Trust PLC                             3,340,000           15.93%  (12)
Rennaissance U.S. Growth Investment Trust PLC                        3,280,000           15.64%  (13)
Rennaissance Capital Growth & Income Fund III, Inc.                  2,440,000           11.63%  (14)
Cardservice International, Inc.                                      1,110,529            5.29%  (15)
                                                            ------------------------------------
                                                                    10,170,529           48.49%
                                                            ------------------------------------
</TABLE>

The  securities  "beneficially  owned" by a person are  determined in accordance
with the  definition  of  "beneficial  ownership"  set  forth in the  rules  and
regulations  promulgated under the Securities Exchange Act of 1934. Beneficially
owned  securities may include  securities  owned by and for,  among others,  the
spouse and/or minor children of an individual and any other relative who has the
same home as such  individual.  Beneficially  owned  securities may also include
other  securities as to which the  individual has or shares voting or investment
power or which such person has the right to acquire  within 60 days of April 27,
2006 pursuant to the conversion of convertible  equity,  exercise of options, or
otherwise.  Beneficial  ownership  may  be  disclaimed  as  to  certain  of  the
securities.

(1) Based on 21,011,786 shares of common stock outstanding as of April 27, 2006.

(2)  included  are  832,387  common  shares,   60,000  stock  purchase   options
exercisable at $0.90 per share, and 150,000 exercisable at $1.70 per share.

(3)  included  are  761,336  common  shares,   60,000  stock  purchase   options
exercisable at $0.90 per share, and 150,000 exercisable at $1.70 per share.

(4)  included  are  184,007  common  shares,   15,000  stock  purchase   options
exercisable  at $1.10 per share,  7,500 stock  purchase  options  exercisable at
$2.50 per share,  50,000 stock purchase options  exercisable at $1.40 per share,
5,000  stock  purchase  options  exercisable  at $1.45 per  share,  6,000  stock
purchase warrants  exercisable at $1.75 per share, 6,000 stock purchase warrants
exercisable  at $2.50 per share,  6,000 stock purchase  warrants  exercisable at
$5.00 per share,  and 3,000 stock  purchase  warrants  exercisable  at $1.25 per
share.

(5) included are 156,154 common shares, 5,000 stock purchase options exercisable
at $0.675 per share, 40,000 stock options exercisable at $0.90, and 54,000 stock
options exercisable at $1.70 per share.

                                    Page 48
<PAGE>

(6) included are 38,248 common shares, 30,000 stock purchase options exercisable
at $0.35 per share,  55,500  stock  purchase  options  exercisable  at $1.70 per
Share, and 13,950 stock purchase options exercisable at $1.30 per share.

(7) included are 40,000 stock  options  exercisable  at $0.90 per share,  54,000
stock purchase  options  exercisable at $1.70, and 28,200 stock purchase options
exercisable at $1.30 per share.

(8) included are 40,000 common shares, 15,000 stock purchase options exercisable
at $1.10 per share, 7,500 stock purchase options exercisable at $2.50 per share,
and 5,000 stock purchase options exercisable at $1.45 per share.

(9) included are 15,000 stock purchase options exercisable at $1.20 per share.

(10) included are 5,000 stock purchase options exercisable at $1.10 per share.

(11) included are 5,000 stock purchase options exercisable at $1.10 per share.

(12) included are 1,553,332 common shares and 1,786,668 stock purchase  warrants
exercisable at prices ranging from $1.25 to $5.00.

(13) included are 1,553,332 common shares and 1,726,668 stock purchase  warrants
exercisable at prices ranging from $1.75 to $5.00.

(14) included are 953,332 common shares and 1,486,668  stock  purchase  warrants
exercisable at prices ranging from $1.75 to $5.00.

(15) included are 1,110,529 common shares.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

In February  2004, we issued  182,486 shares of common stock to Michael Dodak, a
stockholder,  officer, and director of our company,  through exercise of 200,000
Private  Placement  Offering  Warrants  at $0.50  per  share  and  exercised  as
cashless.

In February  2004,  we issued  182,486  shares of common  stock to David Fann, a
stockholder,  officer, and director of our company,  through exercise of 200,000
Private  Placement  Offering  Warrants  (offsetting  an  equal  amount  of  debt
currently owed by our company) at $0.50 per share and exercised as cashless.

In February 2004, we issued 72,994 shares of common stock to Robert Colabrese, a
stockholder,  and officer of our  company,  through  exercise of 80,000  Private
Placement Offering Warrants at $0.50 per share and exercised as cashless.

In February  2004, we issued 18,248 shares of common stock to David  Surette,  a
stockholder,  and officer of our  company,  through  exercise of 20,000  Private
Placement Offering Warrants at $0.50 per share and exercised as cashless.

In February  2004, we issued  73,007  shares of common stock to Lock Ireland,  a
stockholder  and director of our  company,  through  exercise of 80,000  Private
Placement Offering Warrants at $0.50 per share and exercised as cashless.

In March  2004,  we  issued  2,000  shares of common  stock to Lock  Ireland,  a
stockholder  and  director of our  company,  through  exercise of 2,000  Private
Placement Offering Warrants at $1.75 per share.

In March  2004,  we issued  140,000  shares of  common  stock to BFS US  Special
Opportunities  Trust PLC, a  stockholder  and  beneficial  owner of our company,
through exercise of Private Placement Offering Warrants at $1.75 per share.

                                    Page 49
<PAGE>

In March 2004, we issued 140,000  shares of common stock to Renaissance  Capital
Growth & Income Fund III, a  stockholder  and  beneficial  owner of our company,
through exercise of Private Placement Offering Warrants at $1.75 per share.

In March 2004, we issued 140,000 shares of common stock to Renaissance US Growth
Investment Trust PLC, a stockholder and beneficial owner of our company, through
exercise of Private Placement Offering Warrants at $1.75 per share.

In February  2004,  we issued  533,332  shares of common stock to BFS US Special
Opportunities  Trust PLC, a  stockholder  and  beneficial  owner of our company,
through  a Private  Placement  Offering  for  $666,666  and we issued  1,066,668
Warrants exercisable from $1.75 to $5.00.

In  February  2004,  we issued  533,332  shares of common  stock to  Renaissance
Capital  Growth & Income Fund III, a  stockholder  and  beneficial  owner of our
company,  through  a  Private  Placement  Offering  for  $666,666  and we issued
1,066,668 Warrants exercisable from $1.75 to $5.00.

In February  2004, we issued  533,332  shares of common stock to  Renaissance US
Growth  Investment Trust PLC, a stockholder and beneficial owner of our company,
through  a Private  Placement  Offering  for  $666,666  and we issued  1,066,668
Warrants exercisable from $1.75 to $5.00.

In February 2004, we issued  1,200,000 shares of common stock to Baron Partners,
LP, a  stockholder  and  beneficial  owner of our  company,  through  a  Private
Placement Offering for $1,500,000 and we issued 2,400,000  Warrants  exercisable
from $1.75 to $5.00.

In September  2004, we issued 3,000 warrants to Lock Ireland,  a stockholder and
director of our company,  as part of a debenture with an exercise price of $1.75
per share.

In September  2004,  we issued 66,000  warrants to BFS US Special  Opportunities
Trust PLC, a  stockholder  and  beneficial  owner of our  company,  as part of a
debenture with an exercise price of $1.75 per share.

As of December 31, 2004,  we had an unsecured  promissory  note in the amount of
$192,966  outstanding  payable to Robert Mehlman,  a stockholder of our company.
The note bears interest in the amount of 11% and is due in June 2013.

In October 2005, we reduced the exercise  price from $1.75 to $1.25 and extended
the  expiration  date by five  years on 66,000  warrants  held by BFS US Special
Opportunities  Trust PLC, a stockholder and beneficial owner of our company,  in
return for a five year extension on $1,000,000 in debt financing.  The change in
fair value of the warrants was recorded as additional paid in capital.

In October 2005, we reduced the exercise  price from $1.75 to $1.25 and extended
the  expiration  date by five years on 3,000  warrants held by Lock  Ireland,  a
stockholder and director of our company,  in return for a five year extension on
$50,000 in debt financing. The change in fair value of the warrants was recorded
as additional paid in capital.

In October 2005, the Company  converted  $993,772 in debentures,  net of related
discounts,  issued in September 2004 to equity at a conversion price of $1.25 or
820,000 shares,  and reduced the exercise price of the warrants  attached to the
debentures  from $1.75 to $1.25 and extended the  expiration of the warrant term
from  September  9,  2007  to  October  21,  2010.  The  fair  value  of  equity
approximates  the fair  value of the debt  converted  and the fair  value of the
warrant repricing.

As of November  2005, we issued 600,000 shares of common stock to BFS US Special
Opportunities  Trust PLC, a  stockholder  and  beneficial  owner of our company,
through a Private Placement Offering for $750,000 and we issued 240,000 Warrants
exercisable from $1.75.

As of November  2005, we issued 600,000 shares of common stock to Renaissance US
Growth  Investment Trust PLC, a stockholder and beneficial owner of our company,
through a Private Placement Offering for $750,000 and we issued 240,000 Warrants
exercisable from $1.75.

                                    Page 50
<PAGE>

ITEM 13. EXHIBITS

(a) INDEX TO EXHIBITS

Exhibit
Number      Exhibit Description             Herewith
------      -----------------------------

3.1         Articles   of   Incorporation   -  Restated   and  Amended  May  30,
            2001(Incorporated  by  reference to form 10KSB filed with the SEC on
            March 31, 2003)

3.2         ByLaws of Global Axcess Corp. - As Amended(Incorporated by reference
            to form 10KSB filed with the SEC on March 31, 2003)

3.3         Amendment  to  the  Articles  of   Incorporation   (Incorporated  by
            reference to Form 8-K filed with the SEC on May 3, 2005)

4.1         Securities  Purchase Agreement dated March 11, 2005 of Global Axcess
            Corp  (Incorporated  by  reference to Form 8-K filed with the SEC on
            April 4, 2005)

4.2         Form of Common Stock Purchase Warrant  (Incorporated by reference to
            Form 8-K filed with the SEC on April 4, 2005)

4.3         Securities  Purchase Agreement dated October 27, 2005 entered by and
            between the Company and the Investor (1)

4.4         9% Senior  Subordinated  Secured  Convertible Note dated October 27,
            2005 issued by the Company to the Investor (1)

4.5         Common Stock  Purchase  Warrant dated October 27, 2005 issued by the
            Company to the Investor (1)

4.6         Registration  Rights Agreement dated October 27, 2005 entered by and
            between the Company and the Investor (1)

4.7         Subsidiary Guarantee dated October 27, 2005 (1)

4.8         Subordination  Agreement  dated  October  27,  2005  entered  by and
            between the Company, the Investor and Wachovia (1)

4.9         Security Agreement dated October 27, 2005 entered by and between the
            Company and the Investor (1)

4.10        Third  Amended and Restated  Loan  Agreement  dated October 27, 2005
            entered by and between the Company and Wachovia (1)

4.11        Promissory  Note dated  October  27,  2005  issued by the Company to
            Wachovia (1)

4.12        Form of Subscription Agreement dated November 8, 2005 (2)

4.13        Form of Common Stock Purchase Warrant dated November 8, 2005 (2)

10.1        Agreement  entered  into with Food Lion,  LLC and  Nationwide  Money
            Services,  Inc dated October 5, 2001  (Incorporated  by reference to
            form 10KSB filed with the SEC on April 16, 2002)

10.2        Asset Purchase  Agreement  dated October 28, 2005 by and between the
            Company and Amer-E-Com Digital Corporation (1)

                                    Page 51
<PAGE>

10.3        Distributor  ATM  Processing   Agreement  between  Nationwide  Money
            Services and Genpass Technologies LLC dated December 15, 2005 (3)

14.1        Code of Ethics and  Business  Conduct  of  Officers,  Directors  and
            Employees of Global Axcess Corp.  (Incorporated by reference to form
            10KSB filed with the SEC on March 31, 2003)

16.1        Letter from L.L. Bradford & Company,  LLC (incorporated by reference
            form 8-K current report filed with the SEC on July 1, 2003)

16.2        Letter from Weinberg & Company, P.A. (incorporated by reference form
            8-K current report filed with the SEC on October 17, 2005)

21.1        List of Subsidiaries:

                  Nationwide  Money  Services  Inc.,  a Nevada  corporation  EFT
                  Integration   Corporation,   a  Florida   corporation   Axcess
                  Technology Corporation, a Nevada corporation Axcess Technology
                  Corporation,  Pty Ltd a South African  corporation Cash Axcess
                  Corporation, Pty Ltd a South African corporation

31.1        Certification of the Chief Executive  Officer of Global Axcess Corp.
            pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2        Certification of the Chief Financial  Officer of Global Axcess Corp.
            pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1        Certification of the Chief Executive Officer of Global Axcess,  Inc.
            Pursuant to 18 U.S.C.  Section 1350, As Adopted  Pursuant to Section
            906 of the Sarbanes-Oxley Act of 2002.

32.2        Certification of the Chief Financial Officer of Global Axcess, Inc.,
            Pursuant to 18 U.S.C.  Section 1350, As Adopted  Pursuant to Section
            906 of the Sarbanes-Oxley Act of 2002.

99.3        Code of Ethics and  Business  Conduct  of  Officers,  Directors  and
            Employees of Global Axcess Corp.  (Incorporated by reference to form
            10KSB filed with the SEC on March 31, 2003)

ITEM 14.    PRINCIPAL ACCOUNTANT'S FEES AND SERVICES

Audit Fees. The aggregate  fees billed by Kirkland,  Russ,  Murphy & Tapp,  P.A.
("KRMT")  for  professional  services  rendered  for the audit of the  Company's
annual  financial  statements  for the year ended  December 31, 2005 and for the
reviews of the financial  statements included in the Company's Quarterly Reports
on Form 10-QSB during the fiscal year 2005 were $10,392.  Total unbilled fees by
Kirkland,  Russ, Murphy & Tapp, P.A. ("KRMT") for professional services rendered
for the audit of the Company's  annual  financial  statements for the year ended
December  31,  2005 were  $250,000.  The  aggregate  fees  billed by  Weinberg &
Company,  P.A.  ("Weinberg") for professional services rendered for the audit of
the Company's annual  financial  statements for the year ended December 31, 2004
and for the  reviews  of the  financial  statements  included  in the  Company's
Quarterly  Reports on Form 10-QSB during the fiscal year ended December 31, 2005
were $120,603.

                                    Page 52
<PAGE>

Audit Related Fees. The Company engaged KRMT to provide professional services to
the Company  regarding  audit related fees during the fiscal year ended December
31, 2005.  The  aggregate  fees billed by Weinberg & Company,  P.A. and KRMT for
professional  services  rendered to the Company  regarding  audit  related  fees
during the fiscal year ended December 31, 2005 were $13,000.

Tax Related  Fees.  During the fiscal  years ended  December  31, 2005 and 2004,
there were no fees billed by KRMT or Weinberg for tax related services.

All Other Fees.  There were no fees billed by KRMT or by Weinberg  for  services
rendered to the Company during the fiscal years ended December 31, 2005 and 2004
other than the services  described  under "Audit Fees" and "Audit  Related Fees"
above.

The Board of  Directors  has  considered  whether  the  provision  of  non-audit
services is compatible with maintaining the principal accountant's independence.

                                    Page 53
<PAGE>

                                   SIGNATURES

      Pursuant to the  requirements of the Securities  Exchange Act of 1934, the
Issuer  has  duly  caused  this  report  to be  signed  on  its  behalf  by  the
undersigned, thereunto duly authorized.

                              GLOBAL AXCESS CORP.

                              By: /s/ MICHAEL DODAK
                                 ----------------------------------------------
                                 Michael Dodak
                                 Chief Executive Officer

      Pursuant to the requirements of the Securities  Exchange Act of 1934, this
report has been signed  below by the  following  persons on behalf of the Issuer
and in the capacities indicated on the 30th day of April, 2006.

Signature                  Title
------------------------   ---------------------------
/s/Michael Dodak
Michael Dodak                         CEO, Chairman

/s/David Fann
David Fann                            President, Secretary and Director

/S/ David J. Surette
David J. Surette                      Chief Financial Officer and
                                      Chief Accounting Officer

/S/ Lock Ireland
Lock Ireland                          Director

/S/ Robert Landis
Robert Landis                         Director

/S/ Joseph M. Loughry, III
Joseph M. Loughry, III                Director

/S/ Robert Pearson
Robert Pearson                        Director

/S/ Alan Rossiter
Alan Rossiter                         Director

                                    Page 54

<PAGE>

                       GLOBAL AXCESS CORP AND SUBSIDIARIES
                        CONSOLIDATED FINANCIAL STATEMENTS

                                TABLE OF CONTENTS

                                                                        PAGE NO.
                                                                        --------

Report of Kirkland, Russ, Murphy & Tapp, P.A.                               1

Report of Weinberg & Company, P.A.                                          2

Consolidated financial statements

     Consolidated balance sheet as of December 31, 2005                     3

     Consolidated statements of income for the years ended
              December 31, 2005 and 2004                                    4

     Consolidated statements of stockholders' equity
              for the years ended December 31, 2005 and 2004                5

     Consolidated statements of cash flows for the years ended
              December 31, 2005 and 2004                                    6

     Notes to consolidated financial statements
                as of December 31, 2005                                     8


<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and stockholders of
Global Axcess Corp:

We have audited the  accompanying  consolidated  balance  sheet of Global Axcess
Corp and  Subsidiaries  as of December  31,  2005 and the  related  consolidated
statements  of  income,  stockholders'  equity  and cash flows for the year then
ended.  These  consolidated  financial  statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the
consolidated financial statements are free of material misstatement. The Company
is not  required  to  have,  nor were we  engaged  to  perform,  an audit of its
internal control over financial reporting.  Our audit included  consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the  effectiveness  of the Company's  internal  control
over  financial  reporting.  Accordingly,  we express no such opinion.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the  consolidated  financial  statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated financial position of Global
Axcess  Corp and  Subsidiaries  as of  December  31, 2005 and the results of its
operations  and its cash  flows  for the year  then  ended  in  conformity  with
accounting principles generally accepted in the United States of America.

/s/ KIRKLAND, RUSS, MURPHY & TAPP, P.A.

Clearwater, Florida
April 7, 2006




                                      F-1
<PAGE>




             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
Global Axcess Corp and Subsidiaries
Ponte Vedra Beach, Florida

We  have   audited  the   accompanying   consolidated   statements   of  income,
stockholders' equity, and cash flows of Global Axcess Corp and Subsidiaries (the
"Company") for the year ended December 31, 2004.  These  consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the
consolidated  financial statements are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the  consolidated  financial  statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall consolidated  financial statement
presentation.  We believe  that our audit  provides a  reasonable  basis for our
opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the consolidated  results of operations and
cash flows of Global Axcess Corp and  Subsidiaries  for the year ended  December
31, 2004 in conformity  with  accounting  principles  generally  accepted in the
United States of America.

/s/Weinberg & Company, P.A.
March 10, 2005



                                      F-2
<PAGE>


                       GLOBAL AXCESS CORP AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2005
<TABLE>
<CAPTION>
Current assets
<S>                                                                                     <C>
        Cash and cash equivalents                                                       $ 2,358,119
        Automated teller machine vault cash                                                 463,064
        Accounts receivable, net of allowance for doubtful accounts of $158,316           1,436,804
        Note receivable - current                                                            50,000
        Inventory                                                                           159,514
        Prepaid expense and other current assets                                            283,833
        Deferred tax asset - current                                                        329,197
                                                                                   -----------------
                Total current assets                                                      5,080,531
                                                                                   -----------------

Assets held for sale, net                                                                   485,315
Fixed assets, net                                                                         7,280,199

Other assets
        Merchant contracts, net                                                          13,346,034
        Intangible assets, net                                                            4,284,167
        Notes receivable - non-current, net of allowance of
          approximately $804,000                                                            785,316
        Deferred tax asset - non-current                                                    322,279
        Other assets                                                                         54,208
                                                                                   -----------------

Total assets                                                                           $ 31,638,049
                                                                                   =================


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
        Accounts payable and accrued liabilities                                        $ 2,649,640
        Automated teller machine vault cash payable                                         463,064
        Deferred revenue - current                                                           89,500
        Notes payable-related parties  - current portion                                     16,487
        Notes payable - current portion                                                     112,382
        Senior lenders' notes - current portion, net                                      1,770,833
        Capital lease obligations - current portion                                         947,165
                                                                                   -----------------
                Total current liabilities                                                 6,049,071

Long-term liabilities
        Notes payable-related parties - long-term portion, net of discounts               1,331,608
        Notes payable - long-term portion                                                    36,374
        Senior lenders' notes - long term portion, net of discounts                       5,406,278
        Capital lease obligations - long-term portion                                     1,933,142
        Deferred tax liability- long term portion                                           311,676
                                                                                   -----------------
Total liabilities                                                                        15,068,149
                                                                                   -----------------

Stockholders' equity
        Preferred stock; $0.001 par value; 5,000,000 shares
           authorized, no shares issued and outstanding                                           -
        Common stock; $0.001 par value; 45,000,000 shares
           authorized, 20,970,886 shares issued and outstanding                              20,971
        Additional paid-in capital                                                       22,345,398
        Accumulated deficit                                                              (5,796,469)
                                                                                   -----------------
                Total stockholders' equity                                               16,569,900
                                                                                   -----------------
Total liabilities and stockholders' equity                                             $ 31,638,049
                                                                                   =================
</TABLE>


See Accompanying  Independent  Registered  Public  Accounting Firms' Reports and
Notes to Consolidated Financial Statements

                                      F-3
<PAGE>

                       GLOBAL AXCESS CORP AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                      For the year ended     For the year ended
                                                      December 31, 2005       December 31, 2004

<S>                                                     <C>                    <C>
Revenues                                                $ 19,595,343            $ 13,900,000

Cost of revenues                                          11,550,747               8,196,684
                                                        ------------            ------------
          Gross profit                                     8,044,596               5,703,316
                                                        ------------            ------------

Operating expenses
          Depreciation and amortization                    1,456,996               1,108,911
          Selling, general and administrative              5,668,584               3,407,463
                                                        ------------            ------------
                   Total operating expenses                7,125,580               4,516,374
                                                        ------------            ------------
          Operating income from continuing operations
             before items shown below                        919,016               1,186,942
                                                        ------------            ------------

Other income (expense)
          Settlement income                                       --                 304,000
          Interest expense, net                             (524,574)               (188,212)
          Other expense                                      (40,724)                (55,000)
                                                        ------------            ------------
                   Total other income (expense)             (565,298)                 60,788
                                                        ------------            ------------

Income from continuing operations before
    provision for income taxes                               353,718               1,247,730
Federal income tax (expense) benefit                        (209,418)                538,295
                                                        ------------            ------------
Income from continuing operations                            144,300               1,786,025
Loss from discontinued operations, net of tax               (867,144)               (646,136)
                                                        ------------            ------------
Net income (loss)                                       $   (722,844)           $  1,139,889
                                                        ============            ============

Income (loss) per common share - basic:
Income from continuing operations                       $       0.01            $       0.11
Loss from discontinued operations                       $      (0.05)           $      (0.04)
                                                        ------------            ------------
Net income/(loss)                                       $      (0.04)           $       0.07
                                                        ============            ============

Income (loss) per common share - diluted:
Income from continuing operations                       $       0.01            $       0.11
Loss from discontinued operations                       $      (0.05)           $      (0.04)
                                                        ------------            ------------
Net income/(loss)                                       $      (0.04)           $       0.07
                                                        ============            ============

Weighted average common shares outstanding:

Basic                                                     18,858,947              15,623,259

Diluted                                                   19,416,107              16,489,183

</TABLE>

See Accompanying  Independent  Registered  Public  Accounting Firms' Reports and
Notes to Consolidated Financial Statements

                                      F-4
<PAGE>

                       GLOBAL AXCESS CORP AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004

<TABLE>
<CAPTION>
                                                                             Additional     Common                        Total
                                                       Common Stock           Paid-in       Stock        Accumulated   Stockholders'
                                                   Shares       Amount        Capital      Payable        Deficit        Equity

<S>                                               <C>           <C>         <C>            <C>          <C>              <C>
Balance, December 31, 2003                        9,256,529     9,257       11,294,188     32,500       (6,213,514)      5,122,431

Shares issued in connection with private
  transactions                                    3,228,000     3,228        4,019,272    (32,500)               -       3,990,000

Issuance of common stock in January 2004
  related to Reg S Offering at $0.25 per share      881,625       881        1,038,619          -                -       1,039,500

Stock warrants exercised                          4,242,291     4,242        2,134,325          -                -       2,138,567

Shares returned and cancelled from settlement       (76,000)      (76)        (303,924)                                   (304,000)

Warrants issued with debt                                 -         -           68,549          -                -          68,549

Exercise of stock options                            42,900        43           21,102          -                -          21,145

Stock and stock warrants issued to consultants
   in lieu of cash compensation                       4,000         4            2,390          -                -           2,394

Net income                                                -         -                -          -        1,139,889       1,139,889

                                                 ----------------------------------------------------------------------------------
Balances, December 31, 2004                      17,579,345  $ 17,579     $ 18,274,521        $ -     $ (5,073,625)   $ 13,218,475

Shares issued in connection with private
  transactions, net                               2,052,858     2,053        2,377,760          -                -       2,379,813

Stock warrants exercised                            468,100       468          234,015          -                -         234,483

Exercise of stock options                            46,500        46           51,216          -                -          51,262

Stock and stock warrants issued to consultants
   and employees in lieu of cash compensation         4,248         5           24,760          -                -          24,765

Reacquired and issued treasury shares in
  connection with 1 for 5 reverse split                (165)        -             (279)         -                -            (279)

Conversion of related party notes                   820,000       820          992,952          -                -         993,772

Cancellation of Docutel contract                          -         -         (425,334)         -                -        (425,334)

Stock warrants issued with debt                           -         -          772,816          -                -         772,816

Modification of debt and warrant repricing                -         -           42,971          -                -          42,971

Net loss                                                  -         -                -          -         (722,844)       (722,844)

                                                 ----------------------------------------------------------------------------------
Balances, December 31, 2005                      20,970,886  $ 20,971     $ 22,345,398        $ -     $ (5,796,469)    $16,569,900
                                                 ==================================================================================
</TABLE>

See Accompanying  Independent  Registered  Public  Accounting Firms' Reports and
Notes to Consolidated Financial Statements


                                      F-5
<PAGE>

                       GLOBAL AXCESS CORP AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                         For the Year ended December 31

                                                                                          2005                    2004

Cash flows from operating activities:

<S>                                                                                      <C>                 <C>
     Income from continuing operations                                                   $ 144,300           $ 1,786,025

     Adjustments to reconcile net income from continuing operations

        to net cash provided by operating activities:

       Valuation of notes receivable                                                        42,939                     -

       Stock based compensation                                                             24,765                     -

       Depreciation and amortization                                                     1,456,996             1,108,911

       Deferred tax asset                                                                  198,496              (538,296)

       Amortization of discount on notes payable                                            50,896                     -

     Changes in operating assets and liabilities:

       Change in automated teller machine vault cash                                        (7,329)             (157,031)

       Change in accounts receivable                                                      (199,944)             (786,184)

       Change in inventory                                                                (133,535)              (25,979)

       Change in prepaid expenses and other current assets                                 (75,907)              (92,512)

       Change in other assets                                                              106,659              (138,886)

       Change in accounts payable and accrued liabilities                                  747,561             1,130,355

       Change in automated teller machine vault cash payable                                 7,329               157,031
                                                                                      ------------           -----------
     Net cash provided by continuing operating activities                                2,363,226             2,443,434

Discontinued operations

     Net loss                                                                             (867,144)             (646,136)

     Adjustments to reconcile loss to net cash used in

       discontinued operations:

       Depreciation                                                                         46,868                50,650

       Change in accounts receivable                                                         7,950                (7,950)

       Change in accounts payable and accrued liabilities                                   25,805               (42,500)

       Change in prepaid expenses and other current assets                                 (45,987)               (1,647)

     Net cash used in discontinued operating activities                                   (832,508)             (647,583)
                                                                                      ------------           -----------
     Net cash provided in continuing and discontinued operating activities               1,530,718             1,795,851
                                                                                      ------------           -----------
Cash flows from investing activities:

     Investment in notes                                                                         -               (99,895)

     Purchase of merchant contracts                                                     (5,609,972)          (10,719,398)

     Purchase of property and equipment                                                 (1,619,483)           (2,718,780)
                                                                                      ------------           -----------
       Net cash used in investing activities for continuing operations                  (7,229,455)          (13,538,073)

       Purchase of property and equipment used in discontinued operating activities       (449,629)             (126,387)
                                                                                      ------------           -----------
          Net cash used in investing activities                                         (7,679,084)          (13,664,460)
                                                                                      ------------           -----------
Cash flows from financing activities:

     Proceeds from issuance of common stock                                              2,665,558             6,956,156

     Purchase of treasury shares                                                              (279)                    -

     Proceeds from the issuance of senior lenders' notes payable                          6,725,533             1,750,000

     Proceeds from borrowing on notes payable - related parties                                  -             2,250,000

     Proceeds from notes payable                                                            93,407               177,807

     Principal repayments on senior lenders' notes payable                                (656,250)             (156,250)

     Principal payments on notes payable                                                   (97,830)              (24,628)

     Principal payments on notes payable - related parties                                 (14,715)             (238,673)

     Principal payments on capital lease obligations                                      (705,762)             (181,059)
                                                                                      ------------           -----------
          Net cash provided by financing activities                                      8,009,662            10,533,353
                                                                                      ------------           -----------
(Decrease)/increase in cash                                                              1,861,296            (1,335,256)

Cash, beginning of year                                                                    496,823             1,832,079
                                                                                      ------------           -----------
Cash, end of year                                                                      $ 2,358,119             $ 496,823
                                                                                      ============           ===========
Cash paid for income taxes                                                                       -                     -

Cash paid for interest                                                                   $ 588,500             $ 188,411
</TABLE>

See Accompanying  Independent  Registered  Public  Accounting Firms' Reports and
Notes to Consolidated Financial Statements

                                      F-6
<PAGE>

                       GLOBAL AXCESS CORP AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                            For the year ended      For the year ended
SUPPLEMENTAL CASH FLOW INFORMATION                                          December 31, 2005       December 31, 2004

The significant non-cash investing and financing activities of the Company were
as follows:

Investing activities:
<S>                                                                                 <C>                     <C>
  Purchases of assets under capital lease obligations                               $ 2,417,633             $ 1,042,796
  Assets removed from service, classified as held for sale                              285,702                 199,613
  Sale of subsidiary, see schedule below:                                               778,359                       -
                                                                           ---------------------   ---------------------
    Total non-cash investing activities                                             $ 3,481,694             $ 1,242,409
                                                                           =====================   =====================

Financing activities:
  Warrants exercised on cashless feature                                                    $ -                $ 30,102
  Discount of notes payable                                                             772,816                  68,549
  Cancellation of contract, paid in stock and options                                   425,334                       -
  Conversion of debt to equity by related party                                         993,772                       -
  Modification of debt and warrant repricing                                             42,971                       -
  Stock issued for compensation                                                          24,765                       -
                                                                           ---------------------   ---------------------
    Total non-cash financing activities                                             $ 2,259,658                $ 98,651
                                                                           =====================   =====================


Sale of subsidiary:
     Note received, net of valuation                                                  $ 778,359                     $ -

     Prepaids and other current assets sold                                              49,313                       -
     Fixed assets sold                                                                  632,202                       -
     Intangible assets sold                                                               2,250                       -
     Accounts payable sold                                                              (45,406)                      -
                                                                           ---------------------   ---------------------
                                                                                        638,359                       -
     Liabilities assumed                                                                140,000                       -
                                                                           ---------------------   ---------------------
                                                                                      $ 778,359                     $ -
                                                                           =====================   =====================
</TABLE>

See Accompanying  Independent  Registered  Public  Accounting Firms' Reports and
Notes to Consolidated Financial Statements

                                      F-7
<PAGE>

                       GLOBAL AXCESS CORP AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2005

1.    DESCRIPTION OF THE COMPANY'S BUSINESS AND BASIS OF PRESENTATION

      Global Axcess Corp. (the "Company"),  is a Nevada corporation organized in
      1984.  The  Company,  primarily  through  its wholly  owned  subsidiaries,
      Nationwide  Money  Services,  Inc., EFT Integration and Cash Axcess Corp.,
      provides  electronic  commerce and  transaction  processing  and automated
      teller  machine  ("ATM")  network  and  processing.  The  Company was also
      involved in software  development  through  its wholly  owned  subsidiary,
      Axcess  Technology  Corporation  and debit cards  through its wholly owned
      subsidiary  Electronic  Payment and Transfer Corp.  These two subsidiaries
      were either closed or sold during fiscal year 2005.  The Company's  fiscal
      year ended December 31, 2005.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Cash  Equivalents - The Company  considers all  highly-liquid  investments
      with a  maturity  of  three  months  or  less  when  purchased  to be cash
      equivalents.

      Concentration  of Credit Risk -  Financial  instruments  that  potentially
      subject the Company to concentration  of credit risk consist  primarily of
      temporary  cash  investments  and  accounts  receivable.  The  Company has
      several  bank  accounts  maintained  with one  financial  institution  and
      amounts on deposit may, at times, exceed federally insurable amounts.

      Principles  of  consolidation  -  The  consolidated  financial  statements
      include the  accounts  of Global  Axcess  Corp and its  subsidiaries.  The
      Company has the following subsidiaries:  Nationwide Money Services,  Inc.,
      EFT  Integration,  Inc., Cash Axcess  Corporation  (Proprietary)  Limited,
      Axcess Technology  Corporation,  and Electronic Payment and Transfer Corp.
      See  Footnote  5  referring  to  subsidiaries   included  as  discontinued
      operations.  All significant  inter-company balances and transactions have
      been eliminated in consolidation.

      Reclassifications   -Certain  reclassifications  were  made  to  the  2004
      consolidated statement of cash flows, consolidated statement of income and
      consolidated   statement  of  stockholders'  equity  to  conform  to  2005
      presentation.  These  reclassifications had no impact on net income (loss)
      or stockholders' equity.

      Merchant contract  concentration - The Company contracts the locations for
      its ATMs with various merchants.  As of December 31, 2005, the Company has
      approximately  4,792 active ATMs, of which  approximately 696 machines are
      contracted  through a single  merchant.  Revenues  from this merchant were
      approximately  25.6% and 33% of total fees from continuing  operations for
      the fiscal year ended December 31, 2005 and 2004, respectively.

      Use  of  estimates  -  The  preparation  of  the  consolidated   financial
      statements in conformity with accounting  principles generally accepted in
      the United States of America  requires  management  to make  estimates and
      assumptions that affect the amounts reported in the consolidated financial
      statements and accompanying  notes. Actual results could differ from these
      estimates.

      Revenue   recognition  -  Transaction  service  and  processing  fees  are
      recognized  in the period  that the  service  is  performed.  The  Company
      receives  service fees paid by consumers  utilizing  certain ATMs owned or
      managed  by  the  Company  and  interchange  fees  paid  by  their  banks.
      Processing  fees  are  generally  charged  on  a  per  transaction  basis,
      depending on the contractual arrangement with the customer. Software sales
      and services  revenue is recognized  when complete,  shipped and invoiced.
      ATM sales  revenue is  recognized  when the ATM is shipped and  installed.
      Revenue from managing ATMs for others which is recognized  each month when
      the services are performed.

      Inventory - ATM machines  available  for sale are  classified as inventory
      until such time as the machine is sold, installed and in service. Once the
      ATM machine is sold it is relieved to cost of  revenues.  At December  31,
      2005, the Company's ATM machine inventory  totaled  $159,514.  Inventories
      are valued at the lower of cost (first-in, first-out method) or market.

      Accounts  Receivable - The Company  reviews the accounts  receivable  on a
      regular basis to determine the collectibility of each account. The Company
      records an allowance  for  doubtful  accounts for any account aged past 90
      days when the account is no longer  active.  As of December 31, 2005,  the
      Company  reserved  $158,316 as an allowance for doubtful  accounts against
      the trade receivables of $1,595,120. When the Company deems the receivable
      to be  uncollectible,  the  Company  charges  the  receivable  against the
      allowance for doubtful accounts.

                                      F-8
<PAGE>

      Fixed  assets  -  Fixed  assets  are  stated  at  cost  less   accumulated
      depreciation and amortization.  Depreciation is calculated  principally on
      the  straight-line  method over the estimated  useful lives of the assets,
      which  generally  range  from 3 to 10 years.  Leasehold  improvements  are
      amortized on a  straight-line  basis over the shorter of the lease term or
      the life of the asset.  The cost of repairs and  maintenance is charged to
      expense as incurred.  Expenditures for property  improvements and renewals
      are  capitalized.  Upon  the sale or other  disposition  of a  depreciable
      asset, cost and accumulated depreciation are removed from the accounts and
      any gain or loss is reflected in other income (expense).

      The Company  periodically  evaluates whether events and circumstances have
      occurred that may warrant  revision of the estimated  useful life of fixed
      assets  or  whether  the  remaining  balance  of fixed  assets  should  be
      evaluated  for  possible  impairment.  The Company uses an estimate of the
      related  undiscounted  cash  flows  over the  remaining  life of the fixed
      assets in measuring their  recoverability,  as well as,  historical age to
      estimate useful economic lives and values.

      Assets Held for Sale - ATM machines and related software  components which
      are not currently in service are classified as assets held for sale, until
      such time that  either the  machine is  installed  or  reinstalled  and in
      service or sold.  The Company  plans on having the assets held for sale at
      December  31, 2005 either  sold or  reinstalled  by the end of fiscal year
      2006.  Once in service,  each ATM machine is reclassified as a fixed asset
      and depreciated using the remaining  estimated useful life of the machine.
      Any ATM machine and related software components classified as fixed assets
      held for sale and then sold would be  considered  a  disposal  group and a
      gain or loss on the sale would be recorded. The Company reviews the Assets
      Held for Sale for  impairment  and if it  finds  impairment,  the  Company
      accounts for the  impairment  in  accordance  with SFAS No. 144  "Impaired
      Long-Lived Assets and Long-Lived Assets to be Disposed of".

      Lease  Committments  - The  Company is party to various  operating  leases
      relating to office  facilities  and certain other  equipment  with various
      expiration  dates. All leasing  arrangements  contain normal leasing terms
      without unusual  purchase  options or escalation  clauses.  Rental expense
      under  operating  leases  aggregated  $297,981  and $159,125 for the years
      ended December 31, 2005 and 2004, respectively.  The Company is also party
      to various capital leases relating to ATM machines and related components.
      The assets  associated  with these  capital  leases are  recorded as Fixed
      assets and  depreciated  accordingly.  The  capital  lease  obligation  is
      recorded and amortized over the life the of the lease.

      Intangibles  Assets  -Goodwill and Merchant  Contracts - In June 2001, the
      Financial Accounting Standards Board (FASB) issued SFAS No. 142, "Goodwill
      and Other  Intangible  Assets," which was adopted by the Company in fiscal
      2002.  SFAS No. 142  established  accounting  and reporting  standards for
      goodwill and intangible assets resulting from business combinations.  SFAS
      No. 142 included  provisions  discontinuing the periodic  amortization of,
      and requiring the assessment of the potential impairments of goodwill (and
      intangible  assets  deemed  to have  indefinite  lives).  As SFAS No.  142
      replaced the measurement guidelines for goodwill impairment,  goodwill not
      considered impaired under previous accounting literature may be considered
      impaired  under SFAS No. 142.  SFAS No. 142 also required that the Company
      complete a two-step goodwill  impairment test. The first step compares the
      fair  value  of each  reporting  unit to its  carrying  amount,  including
      goodwill.  If the fair value of a reporting  unit  exceeded  its  carrying
      amount,  goodwill is not  considered to be impaired and the second step is
      not required.  SFAS 142 required  completion of this first step within the
      first six months of  initial  adoption  and  annually  thereafter.  If the
      carrying  amount of a reporting  unit exceeded its fair value,  the second
      step is performed  to measure the amount of  impairment  loss.  The second
      step compared the implied fair value of goodwill to the carrying  value of
      a  reporting  unit's  goodwill.  The  implied  fair value of  goodwill  is
      determined in a manner  similar to accounting  for a business  combination
      with the  allocation  of the assessed  fair value  determined in the first
      step to the assets and  liabilities  of the reporting  unit. The excess of
      the fair value of the  reporting  unit over the  amounts  assigned  to the
      assets  and  liabilities  is the  implied  fair  value of  goodwill.  This
      allocation  process is only performed for purposes of evaluating  goodwill
      impairment  and does not  result  in an entry to  adjust  the value of any
      assets or liabilities.  An impairment loss is recognized for any excess in
      the carrying value of goodwill over the implied fair value of goodwill.

      Intangible assets with finite lives are stated at cost, net of accumulated
      amortization,   and  are  subject  to  impairment  testing  under  certain
      circumstances  in  accordance  with  SFAS  No.  144 and  other  applicable
      pronouncements.  These assets are  amortized on the  straight-line  method
      over  their  estimated  useful  lives  or  period  of  expected   benefit.
      Intangible assets with indefinite lives are subject to periodic impairment
      testing in accordance with SFAS No. 142.

      The Company's  intangible  assets are made up of merchant  contracts  with
      automatic  renewable lives. The Company has determined after review of its
      contracts  that  the  economic  life  of the  contracts  is  extended  and
      estimated  over 21 years  (or 3 times  renewal)  based on  historical  and
      expected  useful lives of similar  assets.  The Company will  amortize the
      merchant  contracts  over their  estimated  useful lives of 21 years.  The
      Company  has adopted  SFAS 142 to reflect  the fair value of the  merchant
      contracts, and uses a two step valuation process to determine if there has
      been any  impairment  on the value of the merchant  contract  assets.  The
      first step is to determine at each contract's  renewable  period,  whether
      they  will  actually  renew  and if not to  amortize  the  cost  over  the
      remaining  life of the  contract.  The second  step is to compare the fair
      value  of each  reporting  unit to the  carrying  amount  of the  merchant
      contracts,  thus testing the impairment of the value of the contracts.  An
      impairment  loss is  recognized  for any excess in the  carrying  value of
      merchant contracts over the assessed fair value of merchant contracts.

                                      F-9
<PAGE>

      Impairment of Long-Lived  Assets - The Company reviews  long-lived  assets
      for  impairment  under SFAS No. 144,  "Accounting  for the  Impairment  or
      Disposal of Long-Lived  Assets." Long-lived assets to be held and used are
      reviewed  for  impairment  whenever  events or  changes  in  circumstances
      indicate that the carrying amount of an asset may not be recoverable.  The
      carrying amount of a long-lived asset is not recoverable if it exceeds the
      sum of the  undiscounted  cash flows  expected  to result from the use and
      eventual disposition of the asset. Long-lived assets to be disposed of are
      reported at the lower of carrying  amount or fair value less cost to sell.
      During the fiscal  years ended  December  31,  2005 and 2004,  the Company
      determined that there were no long-lived assets that were impaired.

      The Financial Accounting Standards Board has issued Statement of Financial
      Accounting  Standard No. 133,  Accounting for Derivative  Instruments  and
      Hedging Activities (SFAS 133), as amended by SFAS No. 137,  Accounting for
      Derivative  Instruments  and Certain Hedging  Activities,  an amendment to
      FASB  Statements  No. 133.  SFAS 133, as amended,  requires that an entity
      recognize all derivatives as either assets or liabilities measured at fair
      value.  The  accounting  for  changes in the fair value of the  derivative
      depends on the use of the derivative.  Changes in fair value of derivative
      instruments not designated as hedging instruments and ineffective portions
      of hedges are recognized in earnings in the current period.

      Fair  value  of  financial  instruments  - The  carrying  amounts  of  the
      Company's long-term  liabilities  approximate the estimated fair values at
      December 31, 2005,  based upon the  Company's  ability to acquire  similar
      debt at similar  rates and  maturities.  The carrying  values of all other
      financial  instruments  approximate  their  fair  value,  because  of  the
      short-term maturities of these instruments.

      Earnings per share - In  calculating  basic (loss)  income per share,  net
      (loss) income is divided by the weighted  average  number of common shares
      outstanding  for the period.  Diluted (loss) income per share reflects the
      assumed exercise or conversion of all dilutive securities, such as options
      and  warrants.  No such exercise or conversion is assumed where the effect
      is  anti-dilutive,  such as  when  there  is a net  loss  from  continuing
      operations. All earnings per share calculations for fiscal 2004 and fiscal
      2005  reflect the reverse  stock  split which was  effective  on April 28,
      2005. The reverse stock split was applied  retroactively to all previously
      disclosed share and per share amounts.

      Reverse Stock Split - Effective April 28, 2005, the Company  implemented a
      one-for-five   reverse  split  of  its  outstanding   common  stock.   All
      information  regarding  share and per  share  amounts  have been  adjusted
      within the financial statements to reflect the reverse stock split.

      Income taxes - The Company  accounts  for its income  taxes in  accordance
      with  SFAS  No.  109  "Accounting   for  Income  Taxes",   which  requires
      recognition  of  deferred  tax  assets  and  liabilities  for  future  tax
      consequences  attributable to differences  between the financial statement
      carrying  amounts of existing assets and liabilities and their  respective
      tax  basis  and  tax  credit  carry-forwards.   Deferred  tax  assets  and
      liabilities  are  measured  using  enacted tax rates  expected to apply to
      taxable  income  in the years in which  those  temporary  differences  are
      expected to be recovered or settled. The effect on deferred tax assets and
      liabilities of a change in tax rates is recognized in income in the period
      that includes the enactment date.

      Segment  information  -  The  Company  discloses  segment  information  in
      accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise
      and Related Information." The Company operates under one segment.

      Research  and  development  costs -  Research  and  development  costs are
      charged to expense when  incurred.  Costs  incurred to internally  develop
      software,  incurred during the research and planning phase of development,
      are  charged  to  expense  as  incurred.   Direct  costs  incurred  during
      development, testing and implementation are capitalized and amortized over
      the useful life of the  software,  using an average  life of three  years.
      Other  development  costs include  development of card-based  business and
      development  of foreign ATM  operations.  During the past two fiscal years
      ending  December 31, 2005 and 2004, the amount of research and development
      costs,  which were borne  entirely by the Company,  amounted to $1,273,237
      and $716,941, respectively.

      Repairs and maintenance costs - Repairs and maintenance costs are expensed
      as incurred. Repairs and maintenance pertaining to the Company's ATMs, the
      revenue driving equipment,  are recorded in cost of revenues.  The Company
      records  repairs and  maintenance  costs  relating  to general  office and
      backend related equipment to general and administrative costs.

      Developed  Software - Costs  incurred to purchase  external  software  and
      internally developed software once technological feasibility has achieved,
      including interest,  are capitalized and amortized over the useful life of
      the software using an average life of three years.  During the fiscal year
      ended December 31, 2005, the Company capitalized  $1,022,907 of internally
      developed software,  of which $184,487 pertained to capitalized  interest.
      During the fiscal year ended  December 31, 2004,  the Company  capitalized
      $923,865 of internally  developed software,  of which $89,302 pertained to
      capitalized interest.

                                      F-10
<PAGE>

      Stock-based compensation - The Company applies Accounting Principles Board
      ("APB")  Opinion No.  25,"Accounting  for Stock Issued to  Employees,  and
      Related  Interpretations",  in  accounting  for  stock  options  issued to
      employees. Under APB No. 25, employee compensation cost is recognized when
      the estimated fair value of the underlying  stock on the date of the grant
      exceeds the  exercise  price of the stock  option.  For stock  options and
      warrants  issued to  non-employees,  the  Company  applies  SFAS No.  123,
      "Accounting for Stock-Based Compensation",  which requires the recognition
      of  compensation  cost based  upon the fair value of stock  options at the
      grant date using the Black-Scholes option pricing model.

      The  following  table  represents  the  effect  on net  income/(loss)  and
      earnings  per share if the Company had applied the fair value based method
      and recognition  provisions of (SFAS) No. 123, "Accounting for Stock-Based
      Compensation", to stock-based employee compensation:

                                                       2005            2004
                                                   ------------    ------------
Net income/(loss), as reported                     $   (722,844)    $ 1,139,889
Add: Stock-based employee compensation
  expense included in reported income (loss),
  net of related tax effects                                 --              --
Deduct: Total stock-based employee
  compensation expense determined under
  fair value based methods for all awards,
  net of related tax effects                            (88,858)       (587,372)
                                                   ------------    ------------
Pro forma net income (loss)                        $   (811,702)$       552,517
                                                   ============    ============

Net income/(loss) per common share:

Basic - as reported                                $      (0.04)   $       0.07
                                                   ============    ============
Basic - pro forma                                  $      (0.04)   $       0.04
                                                   ============    ============

Diluted - as reported                              $      (0.04)   $       0.07
                                                   ============    ============
Diluted - pro forma                                $      (0.04)   $       0.03
                                                   ============    ============

      In December 2002, the Financial  Accounting  Standards Board (FASB) issued
      SFAS No. 148,  "Accounting  for  Stock-Based  Compensation-Transition  and
      Disclosure".  SFAS No. 148 amends the transition and disclosure provisions
      of SFAS No. 123. In December  2004, the FASB issued a revision to SFAS No.
      123 called SFAS No. 123R, which revises the adoption period and transition
      periods  for all  entities  using the fair  value  method  and  applying a
      modified prospective method for accounting for employee stock options. The
      Company will adopt SFAS 123R effective January 1, 2006.

      Recent accounting pronouncements -

      In December 2004, the FASB issued SFAS No. 123 (R), "Share-Based Payment".
      SFAS  No.  123 (R)  revises  SFAS No.  123,  "Accounting  for  Stock-Based
      Compensation"  which supersedes APB Opinion No. 25,  "Accounting for Stock
      Issued to Employees". SFAS No. 123 (R) focuses primarily on the accounting
      for  transactions  in  which  an  entity  obtains  employee   services  in
      share-based payment  transactions.  SFAS No. 123 (R) requires companies to
      recognize  in the  statement  of  income  the  cost of  employee  services
      received  in  exchange  for  awards  of  equity  instruments  based on the
      grant-date fair value of those awards (with limited exceptions).  SFAS No.
      123 (R) is effective as of the first  interim or annual  reporting  period
      that begins after October 1, 2005 for non-small business issuers and after
      December 15, 2005 for small  business  issuers.  Accordingly,  the Company
      will adopt SFAS No. 123 (R) in its quarter ending March 31, 2006.

      In December 2004, the Financial Accounting Standards Board ("FASB") issued
      Statement of Financial  Accounting Standards ("SFAS") No. 153, " Exchanges
      of Non-Monetary Assets, an Amendment of APB No. 29". This Statement amends
      APB Opinion No. 29,  "Accounting  for Nonmonetary  Transactions".  Earlier
      guidance had been based on the  principle  that  exchanges of  nonmonetary
      assets  should be based on the fair value of the assets  exchanged and APB
      No. 29 included certain  exceptions to this principle.  However,  SFAS No.
      153 eliminated the specific  exceptions for  nonmonetary  exchanges with a
      general exception for all exchanges of nonmonetary assets that do not have
      commercial and economic substance.  A nonmonetary  exchange has commercial
      substance  only if the future  cash flows of the  entity are  expected  to
      change  significantly  as a result  of the  exchange.  This  Statement  is
      effective for nonmonetary  exchanges occurring in fiscal periods beginning
      after June 15, 2005. The implementation of SFAS No. 153 is not expected to
      have a material impact on the Company's financial  statement  presentation
      or its disclosures.

                                      F-11
<PAGE>

      In June 2005, the FASB issued SFAS No. 154,  "Accounting Changes and Error
      Corrections",  which replaces APB Opinion No. 20 and FASB Statement No. 3.
      SFAS No. 154 applies to all voluntary changes in accounting  principle and
      changes the  requirements  for accounting for and reporting of a change in
      accounting principle.  SFAS No. 154 requires retrospective  application to
      prior periods'  financial  statements of a voluntary  change in accounting
      principle  unless  it is  impracticable.  SFAS No.  154 is  effective  for
      accounting  changes  and  corrections  of  errors  made  in  fiscal  years
      beginning  after December 15, 2005.  Earlier  application is permitted for
      changes and  corrections  of errors  occurring in fiscal  years  beginning
      after  June  1,  2005.  The  statement  does  not  change  the  transition
      provisions  of any existing  accounting  statement.  We do not believe the
      adoption of SFAS No. 154 will have a material  effect on our  consolidated
      financial statements.

3.    ACQUISITIONS OF ASSETS

      When the  Company  acquires  the  assets of  another  company,  accounting
      principles  generally accepted in the United States of America require the
      Company to estimate the fair value of the other company's  tangible assets
      and  identifiable  intangible  assets.  Based  upon these  estimates,  the
      purchase price is allocated to the assets of the acquired  company for the
      purpose of recording these items in the Company's  financial records.  Any
      unallocated  purchase  price is  recorded  as  goodwill.  The  distinction
      between  the amount of the  purchase  price  allocated  either to tangible
      assets and liabilities or identifiable  intangible  assets and goodwill is
      significant because goodwill is not amortized to the Company's  statements
      of  operations  but is  instead  subject  to the  annual  impairment  test
      discussed in Note 2.  Estimates  inherent in the process of this  purchase
      price allocation include  assumptions  regarding the timing and amounts of
      future cash inflows and outflows, the salability of inventories, selection
      of discount rates, contract renewal rates and general market conditions.

      On October 28, 2005, the Company  acquired  approximately  1,590 automated
      teller  machines  ("ATM")  processing  merchant  contracts,  ATM placement
      agreements,  ATMs  and  ATM  related  equipment  from  Amer-E-Com  Digital
      Corporation, a Florida corporation ("AECD") pursuant to the Asset Purchase
      Agreement  dated as of October 28, 2005 between the Company and AECD.  The
      purchase  price  for the  acquisition  was  $5,527,256  in  cash of  which
      $4,775,191  was paid on  closing  and  $752,065  was held in  escrow  (the
      "Holdback").  The  transaction  was funded from the financing  provided by
      Wachovia  Bank and CAMOFI  Master Fund LDC (see Note 14 - Senior  Lenders'
      Notes  Payable).  As of December 31, 2005, all of the Holdback  remains in
      escrow. The Holdback  represents amounts due to seller if certain contract
      contingencies  are met during fiscal year ending December 31, 2006. If the
      contingencies  are not met by the  seller,  the full amount or the portion
      thereof of The Holdback can come back to the Company in the fiscal  period
      ending  December 31, 2006.  The escrow will be reviewed and released based
      on meeting certain  criteria in 2006. Two months of activity are reflected
      in the Company's Consolidated Statement of Income.

      As of December 31, 2005, the Company  concluded that $28,000 was allocated
      to  equipment  and the  remaining  purchase  price  should be allocated to
      merchant contracts,  based on the Company's assessment of fair values. The
      Company  has  concluded  there is no  impairment  on the fair value of the
      purchased assets as of December 31, 2005.

4.    AMENDMENT TO PREVIOUSLY REPORTED QUARTERLY FINANCIAL STATEMENTS

      On March 30, 2006, Global Axcess Corp (the "Company") announced in a press
      release that on March 30, 2006, the Company determined that the statements
      of  operations  and cash flows for the  quarters  ended June 30,  2005 and
      September 30, 2005 contained errors,  which when corrected would result in
      a material  impact on results of  operations  for the quarters then ended.
      The Company has therefore  determined that the consolidated  statements of
      income and cash flows for the quarters  ended June 30, 2005 and  September
      30, 2005 require amendment.  The errors relate to the Company's accounting
      for revenue under certain of our processing  contracts;  capitalization of
      purchased  software costs; and assets  depreciated faster than they should
      have been.

      The  revenue  correction  totaled  approximately   $667,108.  The  Company
      determined  that  the  revenue  under  those  certain   contracts  may  be
      recognized in future quarters as cash is collected.

      The next error relates to the Company's  accounting  for costs  associated
      with  purchased  software  and related  development  costs not being fully
      capitalized.  The software correction totaled  approximately  $52,059. The
      Company  determined  that the costs  should have been  capitalized  in the
      current interim quarters and expensed in future periods.

                                      F-12
<PAGE>

      The last error relates to the Company's accounting for depreciation during
      the  interim  quarters  related to assets that were  depreciated  prior to
      being placed in service. The depreciation correction totaled approximately
      $104,087.  The Company  determined  that the  depreciation  expense  taken
      during those interim quarters should be recognized in future periods.


      The net  effects  of these  adjustments  total a  reduction  in net income
      during the two quarters by  approximately  $510,962.  The correction  will
      cause a reported net loss for the quarter  ended June 30, 2005 of $42,084,
      and a  reported  net loss for the  quarter  ended  September  30,  2005 of
      $88,603.

      See the effects of the restatements in the following schedules:

                                      F-13
<PAGE>

<TABLE>
<CAPTION>
                                                               Three Months ended                         Six Months ended
                                                                  June 30, 2005                              June 30, 2005

                                                       As previously          Restated           As previously           Restated
                                                          reported                                 reported

<S>                                                      <C>                <C>                    <C>                 <C>
Revenues                                                 $ 5,437,811        $ 5,012,142            $ 10,155,647        $ 9,729,978

Cost of revenues                                           3,024,084          3,024,084               5,728,523          5,728,523
                                                   -------------------------------------      -------------------------------------
      Gross profit                                         2,413,727          1,988,058               4,427,124          4,001,455
                                                   -------------------------------------      -------------------------------------

Operating expenses
      Depreciation and amortization                          381,841            328,033                 701,308            647,500
      Selling, general and administrative                  1,584,671          1,550,805               2,978,142          2,944,276
                                                   -------------------------------------      -------------------------------------
            Total operating expenses                       1,966,512          1,878,838               3,679,450          3,591,776
                                                   -------------------------------------      -------------------------------------
      Operating income from continuing operations
         before items shown below                            447,215            109,220                 747,674            409,679
                                                   -------------------------------------      -------------------------------------

Other income (expense)
      Interest expense, net                                 (153,502)          (153,502)               (275,044)          (275,044)
      Other income                                             2,198              2,198                   2,198              2,198
                                                   -------------------------------------      -------------------------------------
            Total other expenses, net                       (151,304)          (151,304)               (272,846)          (272,846)
                                                   -------------------------------------      -------------------------------------

Income (loss) from continuing operations before
    provision for income taxes                               295,911            (42,084)                474,828            136,833
                                                   -------------------------------------      -------------------------------------
Income (loss)  from continuing operations                    295,911            (42,084)                474,828            136,833
Loss from discontinued operations, net of tax                    $ -                $ -                     $ -                $ -
                                                   -------------------------------------      -------------------------------------
Net income (loss)                                          $ 295,911          $ (42,084)              $ 474,828          $ 136,833
                                                   =====================================      =====================================

Income (loss) per common share - basic:
Income from continuing operations                             $ 0.02            $ (0.00)                 $ 0.03             $ 0.01
Loss from discontinued operations                                $ -                $ -                     $ -                $ -
                                                   -------------------------------------      -------------------------------------
Net income (loss)                                             $ 0.02            $ (0.00)                 $ 0.03             $ 0.01
                                                   =====================================      =====================================

Income (loss) per common share - diluted:
Income from continuing operations                             $ 0.02            $ (0.00)                 $ 0.03             $ 0.01
Loss from discontinued operations                                $ -                $ -                     $ -                $ -
                                                   -------------------------------------      -------------------------------------
Net income (loss)                                             $ 0.02            $ (0.00)                 $ 0.03             $ 0.01
                                                   =====================================      =====================================

Weighted average common shares outstanding:

Basic                                                     18,211,986         18,211,986              18,211,986         18,211,986

Diluted                                                   18,706,275         18,706,275              18,706,275         18,706,275

</TABLE>

                                      F-14
<PAGE>

<TABLE>
<CAPTION>
                                                          Three Months ended                                  Nine Months ended
                                                          September 30, 2005                                 September 30, 2005

                                                   As previously          Restated                      As previously     Restated
                                                     reported                                              reported

<S>                                                   <C>               <C>                             <C>           <C>
Revenues                                              $5,069,320        $ 4,827,881                     $ 15,224,267  $ 14,557,159

Cost of revenues                                       2,866,998          2,866,998                        8,594,511     8,594,511
                                                   ---------------------------------                  -----------------------------
      Gross profit                                     2,202,322          1,960,883                        6,629,756     5,962,648
                                                   ---------------------------------                  -----------------------------

Operating expenses
      Depreciation and amortization                      431,430            381,151                        1,105,074     1,000,987
      Selling, general and administrative              1,457,107          1,438,914                        4,228,494     4,176,435
                                                   ---------------------------------                  -----------------------------
                        Total operating expenses       1,888,537          1,820,065                        5,333,568     5,177,422
                                                   ---------------------------------                  -----------------------------
      Operating income from continuing operations
         before items shown below                        313,785            140,818                        1,296,188       785,226
                                                   ---------------------------------                  -----------------------------

Other income (expense)
      Interest expense, net                             (154,474)          (154,474)                        (429,518)     (429,518)
      Other income                                             -                  -                            1,762         1,762
                                                   ---------------------------------                  -----------------------------
                        Total other expenses, net       (154,474)          (154,474)                        (427,756)     (427,756)
                                                   ---------------------------------                  -----------------------------

Income (loss) from continuing operations before
    provision for income taxes                           159,311            (13,656)                         868,432       357,470
                                                   ---------------------------------                  -----------------------------
Income (loss)  from continuing operations                159,311            (13,656)                         868,432       357,470
Loss from discontinued operations, net of tax          $ (74,947)         $ (74,947)                      $ (309,256)   $ (309,256)
                                                   ---------------------------------                  -----------------------------
Net income (loss)                                       $ 84,364          $ (88,603)                       $ 559,176      $ 48,214
                                                   =================================                  =============================

Income (loss) per common share - basic:
Income from continuing operations                         $ 0.01            $ (0.00)                          $ 0.05        $ 0.02
Loss from discontinued operations                        $ (0.00)           $ (0.00)                         $ (0.02)      $ (0.02)
                                                   ---------------------------------                  -----------------------------
Net income (loss)                                         $ 0.01            $ (0.00)                          $ 0.03        $ 0.00
                                                   =================================                  =============================

Income (loss) per common share - diluted:
Income from continuing operations                         $ 0.00            $ (0.00)                          $ 0.05        $ 0.02
Loss from discontinued operations                        $ (0.00)           $ (0.00)                         $ (0.02)      $ (0.02)
                                                   ---------------------------------                  -----------------------------
Net income (loss)                                         $ 0.00            $ (0.00)                          $ 0.03        $ 0.00
                                                   =================================                  =============================

Weighted average common shares outstanding:

Basic                                                 18,501,286         18,501,286                       18,141,753    18,141,753

Diluted                                               19,137,586         19,137,586                       18,614,811    18,614,811
</TABLE>

5.    DISCONTINUED OPERATIONS

During the quarter  ended  September  30, 2005,  the Company  approved  plans to
dispose  of  its  wholly-owned   subsidiary,   Electronic   Payment  &  Transfer
Corporation  ("EPT"),  and to discontinue  offering  prepaid debit cards and the
related products and services that were marketed by EPT. Subsequently, effective
September 30, 2005, the Company completed the sale of EPT to one former employee
of the Company for a note receivable of approximately $1.5 million (see Note 9 -
"Notes  Receivable  -  Non-current").  The Company has  estimated  an  allowance
against the note  receivable of $0.8 million.  In accordance with FASB Statement
No. 144,  "Accounting for the Impairment or Disposal of Long-Lived  Assets," the
Company  has  classified  EPT  as a  discontinued  operation  and  reported  its
operating   results   within   discontinued   operations  in  the   accompanying
consolidated  statements of income. The Company recorded no gain or loss on this
transaction.

                                      F-15
<PAGE>

During the quarter  ended  December  31,  2005,  the Company  approved  plans to
discontinue two operations that did not fit within management's strategic plans,
thereby ceasing  operations of the Company's  software  development  subsidiary,
Axcess  Technology  Corp.  ("ATC"),  and ATC's South African  subsidiary  Axcess
Technology  Corp,  SA  ("ATCSA"),  as of  December  31,  2005.  The  Company has
dismissed  all but one employee as of December 31,  2005,  transferring  them to
Nationwide Money Services, Inc. All assets and liabilities have been transferred
to  either  Nationwide  Money  Services,  Inc.  or Cash  Axcess  Corp.,  SA.  In
accordance  with FASB  Statement  No. 144,  "Accounting  for the  Impairment  or
Disposal of  Long-Lived  Assets,"  the Company has  classified  ATC and ATCSA as
discontinued operations and reported their operating results within discontinued
operations in the accompanying  consolidated  statements of income.  The Company
has not allocated  interest to  discontinued  operations.  Operating  results of
these discontinued operations were as follows:

                                       For the year ended     For the year ended
                                        December 31, 2005      December 31, 2004
                                        -----------------      -----------------

Revenues                                       $   1,423              $   7,950

Cost of revenues                                   8,010                  8,206
                                        -----------------      ----------------

     Gross profit                                 (6,587)                  (256)
                                        -----------------      ----------------

Operating expenses

     Depreciation and amortization                46,868                 50,650

     Selling, general and administrative         813,689                595,031
                                        -----------------      ----------------
        Total operating expenses
                                                 860,557                645,681
                                        -----------------      ----------------

     Loss from operations                       (867,144)              (645,937)
                                        -----------------      ----------------

Other income (expense)

     Interest expense                                 --                   (199)
                                        -----------------      ----------------
        Total other income
                                                      --                   (199)
                                        -----------------      ----------------

Loss from discontinued operations               (867,144)              (646,136)


Provision for income tax benefit                      --                     --
                                        -----------------      ----------------

Loss from discontinued operations              $(867,144)             $(646,136)
                                        =================      ================

6.    ASSETS HELD FOR SALE

      Fixed assets which are out of service and are held for sale as of December
      31, 2005 are as follows:

Automated teller machines                                            $ 1,095,890

Less: accumulated depreciation and amortization                          610,575
                                                                     -----------
Assets Held for Sale, net                                            $   485,315
                                                                     ===========

                                      F-16
<PAGE>

7.    FIXED ASSETS

     Fixed assets from continuing operations consist of the following as of
December 31, 2005:


Automated teller machines (A)                                        $ 6,701,950
Furniture and fixtures                                                   459,130
Computers, equipment and software (A)                                  3,444,283
Automobiles                                                              201,367
Leasehold equipment                                                       64,508
                                                                     -----------
                                                                      10,871,238
Less: accumulated depreciation and amortization (B)                    3,591,039
                                                                     -----------
Fixed assets, net                                                    $ 7,280,199
                                                                     ===========

(A)   See Note 15 for ATMs and computers held under capital leases.

(B)   Depreciation  expense  from  continuing  operations  for the  years  ended
      December 31, 2005 and 2004 was; $987,748 and $783,971, respectively.

8.   INTANGIBLE ASSETS AND MERCHANT CONTRACTS

     The following table summarizes Intangible assets and merchant contracts
     during the fiscal year ended December 31, 2005:

<TABLE>
<CAPTION>
                                                Gross Carrying     Accumulated        Net
                                                  Value            Amortization

<S>                                              <C>               <C>               <C>
Goodwill                                         $ 4,189,645       $   168,286       $ 4,021,359
Other Intangible Assets                          $   316,642       $    53,834       $   262,808
Merchant contracts                               $14,527,348       $ 1,181,314       $13,346,034
                                                 -----------       -----------       -----------
Total Intangible assets and merchant contracts   $19,033,635       $ 1,403,434       $17,630,201
                                                 ==========        ===========       ===========
</TABLE>


      The Company recorded  amortization  expense of $469,248 and $375,590,  for
      the  years  ended  December  31,  2005 and 2004,  respectively.  Aggregate
      amortization over the next five years,  assuming a useful life of 21 years
      for merchant contracts, is expected to be as follows:

         For the years ending
         December 31,

         2006                                                       $701,133
         2007                                                       $701,133
         2008                                                       $701,133
         2009                                                       $701,133
         2010                                                       $701,133

      The Company has no intangible  assets,  other than goodwill,  that are not
subject to amortization.

9.    NOTES RECEIVABLE - Non-current

During the  quarter  ended  September  30,  2005,  the  Company  disposed of its
wholly-owned subsidiary,  Electronic Payment & Transfer Corporation ("EPT"), and
discontinued  offering prepaid debit cards and the related products and services
that were  marketed by EPT.  Subsequently,  effective  September  30, 2005,  the
Company  completed  the sale of EPT to one former  employee of the Company for a
note of approximately $1.5 million.

<TABLE>
<CAPTION>
Notes receivable - non-current consist of the following at December 31, 2005:

<S>                                                                               <C>
(a) 9%  promissory  note  receivable  requiring  monthly  interest  payments      $   778,360
starting  October  1,  2006 and    quarterly principal payments
starting August 1, 2006, maturing November 1, 2010 requiring a
balloon payment, net of reserve of $761,640
(b) 10% promissory note due February 2007, net of reserve of $42,939                    56,956
Less current maturities                                                                (50,000)
                                                                                   -----------
                                                                                   $   785,316
                                                                                   ===========
</TABLE>

      a)    Effective  September  30, 2005,  the Company  sold its  wholly-owned
            subsidiary,   Electronic   Payment  &  Transfer   Corporation,   for
            $1,540,000 in a secured  promissory note covering the full amount of
            the sale price (see Note 5 - "Discontinued Operations").

      b)    In February 2004, the Company issued a note receivable in the amount
            of  $190,000  due within 1 year and  requiring  monthly  payments of
            principal  and  interest,  with an annual  interest rate of 10%. The
            note has been  amended  to extend  the term to  February  2007.  The
            amount remaining on the note as of December 31, 2005 is $99,895. The
            promissory  note is  collateralized  by the Company's  stock and may
            need to be further  reserved  should the stock  price of the Company
            decline.

10.   ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

      Accounts  payable and  accrued  liabilities  at  December  31, 2005 are as
follows:

         Accounts payable                                       $      1,229,313
         Accrued commissions                                             237,951
         Accrued payroll                                                 260,711
         Accrued audit fees                                              250,000
         Other                                                           671,665
                                                                ----------------

         Accounts payable and accrued liabilities               $      2,649,640
                                                                ================

11.   AUTOMATED TELLER MACHINE VAULT CASH PAYABLE

      Automated  teller machine vault cash payable  consists of funds  collected
      through providing network and switching  services for ATMs.  Additionally,
      these funds have been  reported as  automated  teller  machine  vault cash
      payable on the consolidated balance sheet with offsetting automated teller
      machine  vault  cash at  December  31,  2005.  As of  December  31,  2005,
      automated  teller machine vault cash payable of $463,064  consists of cash
      collected  through  network  and  switching  services  payable  to various
      third-parties.  The  cash is  secured  with a  proportionate  share of the
      automated  teller  machine vault cash, due on demand and the Company rents
      the vault cash from financial  institutions and pays a negotiated interest
      rate for the use of the funds.  The Company does not use its own funds for
      vault cash,  but rather relies upon third party sources.  In general,  the
      Company rents vault cash from financial institutions and pays a negotiated
      interest  rate for the use of the  money.  The vault  cash is never in the
      possession  of,  controlled  or directed by, the Company but rather cycles
      from the bank to the  armored  car  carrier  and to the  ATM.  Each  day's
      withdrawals  are  settled  back to the owner of the vault cash on the next
      business day. Both Nationwide Money and its customers (the merchants) sign
      a  document   stating  that  the  vault  cash  belongs  to  the  financial
      institution and that neither party has any legal rights to the funds.

12.   NOTES PAYABLE - RELATED PARTIES

      As of December 31, 2005,  notes payable - related  parties  consist of the
following:

<TABLE>
<CAPTION>
<S>                                                                                  <C>
      Promissory note in the amount of $218,981 to a stockholder,
      unsecured, payable in monthly principal and interest installments of $3,000,
      bearing an annual interest rate of 11%, and due June 2013                      $          178,251

      Subordinated unsecured debentures of $1,225,000 provided by certain
      stockholders with interest only payments made quarterly at a rate of
      9%, with balloon payments due October 28, 2010, net of discounts and
      fees 1,169,844

                                                                                              1,348,095
      Less: current portion                                                                      16,487
                                                                                     ------------------

      Long-term portion of notes payable - related parties                           $        1,331,608
                                                                                     ==================

      As of December 31,  2005,  principal  payments due on the notes  payable -
related parties are as follows:

      2006                                                                           $           16,487
      2007                                                                                       18,471
      2008                                                                                       20,695
      2009                                                                                       23,186
      2010                                                                                    1,250,978
      Thereafter                                                                                 73,434
                                                                                     ------------------
                                                                                     $        1,403,251

      Less discount                                                                            (55,156)
                                                                                     ------------------
      Total                                                                          $        1,348,095
                                                                                     ==================
</TABLE>

                                      F-17
<PAGE>

13.   NOTES PAYABLE

     As of December 31, 2005, notes payable consist of the following:

<TABLE>
<CAPTION>
<S>                                                                                     <C>
         The Company entered into promissory notes with two non-related parties.
         One note matures on January 5, 2007 and the second matures on September
         30, 2007. Interest rates on the two notes range between 4% and 6%.
         Notes are secured with certain intangible assets and equipment.                $          128,306

         Cananwill  loan for D&O insurance original note was for $47,709
         due within one year at a rate of  8.37 %.                                                  20,450
                                                                                        ------------------
                                                                                                   148,756
         Less: current portion                                                                     112,382
                                                                                        ------------------

         Long-term portion of notes payable                                             $           36,374
                                                                                        ==================

     As of December 31, 2005, principal payments due on the notes payable are as
follows:

         2006                                                                           $          112,382
         2007                                                                                       36,374
                                                                                        ------------------
         Total                                                                          $          148,756
                                                                                        ==================
</TABLE>

14. SENIOR LENDERS' NOTES PAYABLE

     Senior lenders' notes payable consist of the following at December 31,
2005:

<TABLE>
<CAPTION>

<S>                                                                                          <C>
(a) Wachovia Bank                                                                            $  1,479,167
(b) Wachovia Bank - Third Amended and Restated Loan Agreement                                   2,950,000
(c) CAMOFI Master LDC, net of  warrant valuation discounts of $752,055                          2,747,944
                                                                                             ------------
                                                                                             $  7,177,111
                                                                                             ------------
Less:  current portion                                                                       $  1,770,833
                                                                                             ------------
Senior lenders' notes - long term portion, net                                               $  5,406,278
                                                                                             ============
</TABLE>

                                      F-18
<PAGE>

(a)   In September  2004,  the Company  entered into a senior  secured term loan
      with a bank in the amount of  $1,250,000,  and a working  capital  line of
      credit in the amount of $500,000. In June 2005 the term loan was increased
      by $500,000 and the line of credit was  renewed.  The loan and credit line
      are secured by all the assets of the  Company.  Principal  and interest is
      due monthly on the loan,  and the loan matures at the end of 2 years.  The
      line of credit is due to be paid off  within one year.  Interest,  on both
      the loan and line of credit,  is at an annual  rate of Bank Prime plus .25
      basis points, which at December 31, 2005 was 7.50%.

(b)   On October 27, 2005, to obtain funding for the acquisition of the Merchant
      Contracts and the Equipment (see Note 3 above), the Company entered into a
      Third Amended and Restated Loan Agreement with Wachovia Bank ("Wachovia"),
      the Company's senior lender,  pursuant to which Wachovia agreed to provide
      a term loan to the Company in the amount of $3,000,000. Such term loan was
      evidenced by a Promissory Note (the "Wachovia Note") issued at the closing
      on October 27, 2005.  Under the terms of the Wachovia Note, the Company is
      required to make monthly payments of $50,000 plus accrued interest,  which
      commenced in November  2005.  All  outstanding  principal  and interest is
      payable in full in October 2010.  The Company has entered into an interest
      rate swap related to this senior lender notes payable.  The swap exchanges
      the variable rate of Prime plus 1%, for a fixed rate of interest at 9%.

      The  Company's  interest  rate swap has not been  designated  as a hedging
      instrument.  The Company's policy is to record the change in fair value as
      an  increase  or  decrease  to  interest   expense  in  the   accompanying
      consolidated  statements  of income.  The fair value of the interest  rate
      swap at 12/31/05 was immaterial to the consolidated financial statements.

      In  addition,   the  Company  granted  Wachovia  a  security  interest  in
      substantially  all of its assets and intellectual  property.  The Wachovia
      Note is a long-term  debt  obligation  arising  other than in the ordinary
      course of business which constitutes a direct financial  obligation of the
      Company.   The  loan  agreement  requires  the  Company  to  meet  certain
      covenants.  The  three  (3)  covenant  terms  are as  follows:  1)  Senior
      Liabilities to Effective Tangible Net Worth ratio of not more than 2.5; 2)
      Senior  Funded  Debt to EBITDA  ratio of not more  than  2.00 to 1.00;  3)
      EBITDA to Debt Service of not less than 1.25 to 1.00. All of the covenants
      are  measured  quarterly.  As of December  31, 2005 the Company was not in
      compliance with the covenants  described in 2 and 3 above. The Company has
      obtained a waiver of these covenants  through March 31, 2006 and September
      30, 2006, respectively.


(c)   On October 27, 2005, to obtain  additional  funding for the acquisition of
      the Merchant  Contracts  and the  Equipment  (see (b) above),  the Company
      entered into a Securities  Purchase  Agreement (the "Purchase  Agreement")
      with CAMOFI Master LDC (the  "Investor")  for the sale of (i) a $3,500,000
      9% Senior  Subordinated  Secured  Convertible  Note (the  "Note") and (ii)
      stock purchase  warrants (the "Warrant") to purchase 910,000 shares of our
      common stock. The obligations under the Note are subordinated to Wachovia.
      The Company  closed the  financing  pursuant to the Purchase  Agreement on
      October 27, 2005.  The Note matures on October 27, 2010 and is convertible
      into the Company's common stock, at the Investor's option, at a conversion
      price of $1.45.  The  Company is  permitted  to require  the  Investor  to
      convert a portion of the Note subject to the  attainment of certain volume
      and price targets  specific to the Company's  common stock. The Company is
      required to make cash  interest  payments  on a monthly  basis and on each
      conversion date, with all accrued and outstanding  interest due in full as
      of the maturity date. All overdue accrued and payments of interest incur a
      late fee at the rate of 20% per annum.  The Company may prepay all or part
      of the Note in cash at 110% of the principal amount plus accrued interest.
      The full principal  amount of the Note is due upon default under the terms
      of Note. In addition,  the Company  granted the Investor a junior security
      interest, subordinated to Wachovia, in substantially all of its assets and
      intellectual  property  as well as  registration  rights.  The  Warrant is
      exercisable  until  five years from the date of  issuance  at an  exercise
      price of $1.75 per share.  In addition,  the exercise price of the Warrant
      is adjusted in the event the Company  issues common stock at a price below
      the exercise price. The Investor has contractually  agreed to restrict its
      ability to convert the Note and exercise the Warrant and receive shares of
      the Company's common stock such that the number of shares of the Company's
      common stock held by them and their  affiliates  after such  conversion or
      exercise  does  not  exceed  4.99%  of  the  Company's   then  issued  and
      outstanding shares of common stock. The allocation of the proceeds between
      the Note and the  Warrant was based upon the  relative  fair value of each
      security.  The Black-Scholes Model was used to determine the fair value of
      the Warrant.  The Warrant was assigned a fair value of $772,816  which has
      been recorded as a discount to the Note. Due to the terms and value of the
      exercise  and  conversion  prices  there  is  no  significant   beneficial
      conversion  feature. As of December 31, 2005 the Company was in compliance
      or had obtained waivers for all covenants.

                                      F-19
<PAGE>

     As of December 31, 2005, principal payments due on the senior lenders'
notes payable are as follows:

      2006                                                    $        1,770,833
      2007                                                               700,000
      2008                                                               700,000
      2009                                                               700,000
      2010                                                             4,058,333
                                                              ------------------
                                                              $        7,929,166

      Less discount                                                    (752,055)
                                                              ------------------
      Total                                                   $        7,177,111
                                                              ==================

15.   CAPITAL LEASE OBLIGATIONS

      The Company is obligated under various capital leases for automated teller
      machines and computer equipment. For financial reporting purposes, minimum
      lease payments relating to this equipment have been  capitalized.  Capital
      lease obligations, excluding interest, totaling $2,880,307 require minimum
      monthly  lease  payments  ranging from $30 to $8,539 with  interest  rates
      ranging  between  3.73% and  23.00%.  The future  minimum  lease  payments
      required  under capital lease  obligations as of December 31, 2005, are as
      follows:

      2006                                                    $        1,197,058
      2007                                                             1,059,359
      2008                                                               628,195
      2009                                                               366,631
      2010                                                                87,783
                                                              ------------------
                                                                       3,339,026
      Less: amount representing interest                                 458,719
                                                              ------------------
      Present value of minimum lease payments                      2,880,307
      Less: current portion of capital lease obligations             947,165
                                                              ------------------

      Total                                                   $        1,933,142
                                                              ==================

      Equipment  leased under  capital  leases as of December  31, 2005,  totals
      $2,156,355, which is net of accumulated depreciation of $262,438.

16.   OTHER INCOME

      During  fiscal year 2004,  the  Company  settled a claim  whereby  380,000
      shares of common  stock with a market value of $304,000  were  returned to
      the Company. The shares were subsequently cancelled.

17.   COMMITMENTS AND CONTINGENCIES

      Leased  facilities - The Company  entered into a new office lease in Texas
      which  commenced  February  1,  2005,  and  has a term of two  years.  The
      agreement   provides  for  minimum   monthly   base  rental   payments  of
      approximately  $4,406.  The Company  also  leases a warehouse  facility in
      South  Carolina  which is a month  to month  lease  through  2006.  During
      September  2004, the Company  renewed the operating  lease for its Florida
      office under a non-cancelable operating lease. This agreement calls for an
      annual base rent of  approximately  $180,326 with an annual cost of living
      increase of 3%. Rent expense during the years ending December 31, 2005 and
      2004 was $297,981 and $159,125, respectively.

                                      F-20
<PAGE>

      The  following is a schedule by years of future  minimum  rental  payments
      required   under   operating   leases  that  have   initial  or  remaining
      non-cancelable lease terms in excess of one year as of December 31, 2005:

      2006                                                     $        276,603
      2007                                                              233,674
      2008                                                              229,521
      2009                                                               55,185
      2010                                                                2,909
                                                               ----------------
                                                               $        797,892
                                                               ================

18.   LEGAL PROCEEDINGS

      During the fourth quarter of 2002, the Business  Software Alliance ("BSA")
      conducted  an  audit  of  software  in use by  Global  Axcess'  subsidiary
      Nationwide Money Services, Inc. ("NMS"). BSA alleges that NMS infringed on
      software  copyrights for Microsoft and Symantec.  On December 5, 2002, BSA
      sent NMS a letter  requesting  payment of $237,842  plus attorney fees for
      purportedly  misappropriated software that was installed on NMS computers.
      While  acknowledging that some software was  inappropriately  installed on
      NMS computers,  NMS disagrees with the facts  presented in the BSA letter.
      The Company settled this claim during the year ended December 31, 2005.

      In March 2004,  the Company  received a claim  filed by James  Collins,  a
      previous  employee of Global Axcess Corp.  The claim was filed in Superior
      court of  California,  County  of San  Diego on March 2,  2004.  The claim
      alleges  the  following  are  owed  in  connection   with  the  employment
      agreement:  compensation,  bonuses  and other  benefits  of  approximately
      $316,915;   and  90,000   restricted  shares  and  359,700  stock  options
      exercisable  at $3.75 per share.  The Company  believes that this claim is
      unfounded.  The Company's  management  believes that, while the outcome of
      this claim cannot be predicted with certainty,  this claim will not have a
      material  adverse  effect  on  the  Company's   consolidated   results  of
      operations, cash flows or financial position.

      From time to time, the Company and its subsidiaries may be parties to, and
      their property is subject to, ordinary,  routine litigation  incidental to
      their business.  Claims may exceed insurance policy limits and the Company
      or any one of its  subsidiaries  may have exposure to a liability  that is
      not covered by  insurance.  Management  is not aware of any such  lawsuits
      that could have a material  adverse  impact on the Company's  consolidated
      results of operations, cash flows or financial position.

19.   CONSULTING AND EMPLOYMENT AGREEMENTS

      The  Company  has the  following  significant  employment  contracts  with
      executive officers of the Company:

      The Chairman  and CEO has a five year  employment  contract  from June 30,
      2004 to June 30,  2009,  under  Board  and the  Chairman's  approval.  The
      agreement  provides the Chairman and CEO with the following  compensation:
      an annual  salary of $250,000;  which has been  increased to $275,000 once
      certain milestones were achieved, and can be raised to $350,000 when other
      milestones  are achieved;  an annual bonus to be determined and awarded by
      the  Compensation  Committee;  and an 18 month  severance  agreement.  The
      compensation  under this  agreement for the fiscal year ended December 31,
      2005 was  $275,000  and  $137,500  for the fiscal year ended  December 31,
      2004.

      The  President has a two year  employment  contract from April 29, 2002 to
      April 29, 2004,  which has been extended for two additional  years and six
      months until December 31, 2007 under Board and the  President's  approval.
      For performance as a director and officer, the Company will compensate the
      President with the following:  a monthly salary of $7,500,  which has been
      increased to an annual  amount of $200,000  once certain  milestones  were
      achieved  and an annual  bonus  and stock  options  to be  determined  and
      awarded by the Compensation Committee; and a 12 month severance agreement.
      The compensation  under this agreement in 2005 and 2004 was,  $200,000 and
      $200,000, respectively.

20.   CONVERSION OF NETWORK PROCESSING

      In December 2005, the Company,  entered into a Distributor  ATM Processing
      Agreement (the  "Agreement")  with Genpass  Technologies  LLC ("Genpass").
      Pursuant to the Agreement,  the Company agreed to engage Genpass to be the
      exclusive  provider (with certain  exceptions) of certain electronic funds
      transfer  services  including the processing of ATM  transactions  for the
      Company.  The term of the  Agreement is seven years and is  automatically
      renewed for periods of two years  unless  notice to  terminate is provided
      180 days prior to the end of the applicable period.

                                      F-21
<PAGE>

21.   COMMON STOCK

      All share and per share amounts,  in this Note  give retroactive  effect
      to the 1-for-5  reverse  stock split of the  Company's  common  stock that
      occurred on April 28, 2005.

      On January 15, 2004, the Company closed its Regulation S private  offering
      whereby it raised  $1,039,500 during the three months ended March 31, 2004
      in connection with the sale of 2,204,063  (881,625 shares) units for $2.50
      per unit to  accredited  investors  and issued  four types of  warrants (F
      Warrants,  G Warrants,  H Warrants and I Warrants),  which are exercisable
      for a period of five years or for 18 months after the effective  date of a
      registration  statement covering the shares of common stock underlying the
      warrants, whichever is longer. The four warrants terms are as below:

      On January 19, 2004, the Company closed its 2nd private  offering  whereby
      it  raised  $490,000  during  the three  months  ended  March 31,  2004 in
      connection with the sale of 1,070,000 (428,000 shares) units for $2.50 per
      unit to accredited and institutional investors.  Each unit consists of two
      shares of common stock of the Company and issued four types of warrants (F
      Warrants,  G Warrants,  H Warrants and I Warrants),  which are exercisable
      for a period of five years or for 18 months after the effective  date of a
      registration  statement covering the shares of common stock underlying the
      warrants, whichever is longer. The four warrants terms are as below:

      On January 29, 2004, the Company raised  $3,500,000 in connection with the
      sale of  2,800,000  shares  of  common  stock  for  $1.25 per share to two
      institutional  investors.  The  investors,  upon the purchase of every two
      shares of common stock, also received four common stock purchase warrants,
      which  resulted  in  the  issuance  of  5,600,000  common  stock  purchase
      warrants.  The  Company  issued  four types of  warrants  (F  Warrants,  G
      Warrants,  H Warrants and I Warrants),  which are exercisable for a period
      of five years or for 18 months after the effective  date of a registration
      statement  covering the shares of common stock  underlying  the  warrants,
      whichever is longer. The four warrants terms are as follows:

      o The F Warrants are  exercisable  at $1.75 per share and are not callable
      by the Company.

      o The G Warrants  are  exercisable  at $1.75 per share and are callable by
      the Company if the market price of the Company's  common stock is equal to
      or in excess of $3.50 for a period of twenty consecutive days and there is
      an effective  Registration  Statement  covering the shares of common stock
      underlying the G Warrant.

      o The H Warrants  are  exercisable  at $2.50 per share and are callable by
      the Company if the market price of the Company's  common stock is equal to
      or in excess of $5.00 for a period of twenty consecutive days and there is
      an effective  Registration  Statement  covering the shares of common stock
      underlying the H Warrant.

      o The I Warrants  are  exercisable  at $5.00 per share and are callable by
      the Company if the market price of the Company's  common stock is equal to
      or in excess of $6.25 for a period of twenty consecutive days and there is
      an effective  Registration  Statement  covering the shares of common stock
      underlying the I Warrant.

      All common shares  associated  with this private  placement are restricted
      securities in accordance  with Rule 144 as  promulgated  under the Laws of
      the  Securities  Act of 1933.  However,  the Company is required to file a
      registration  statement covering the shares of common stock and the shares
      underlying the common stock  purchase  warrants no later then May 30, 2004
      and it is  required  to go  effective  by July 29,  2004.  The Company has
      registered  the above  shares of common  stock and  underlying  shares for
      stock purchase warrants.

      During January 2004,  shareholders  exercised stock purchase  warrants for
      46,993  shares  of  common  stock.  These  stock  purchase  warrants  were
      exercised at several prices per share for an aggregate amount of $15,155.

      During the three months ending March 31, 2004 shareholders exercised stock
      purchase  warrants for an aggregate of 2,570,697  shares of common  stock.
      These stock purchase warrants were exercised on a cashless provision.

                                      F-22
<PAGE>

      During February 2004,  shareholders  exercised stock purchase warrants for
      85,910  shares  of  common  stock.  These  stock  purchase  warrants  were
      exercised at $0.50 per share for an amount of $42,955.

      Also during February 2004, shareholders exercised stock options for 33,333
      shares of common stock.  These stock  options were  exercised at $2.50 per
      share for an amount of $83,333.

      In March 2004, shareholders exercised stock purchase warrants at $1.75 per
      share  and  received  net  proceeds  of  $1,997,124.  The  Company  issued
      1,505,358 shares on April 1, 2004.

      During April 2004, in connection with one settlement, 76,000 common shares
      were returned to the Company.  These shares were originally issued in 2001
      for consulting fees and charged against income. At the time the settlement
      occurred, these shares had a market value of $4.00 per share. As a result,
      a $304,000 gain was recognized in other income for these  Treasury  shares
      that were returned to the Company.

      During  September  2004,  the  Company  issued  Debt with  stock  purchase
      warrants  attached  at an  exercise  price of $1.75 per share.  A total of
      135,000 shares  underlying the stock purchase warrants for a fair value of
      $68,549 were issued.

      In October 2004,  2,500 options were exercised by an employee at $0.35 per
      share for $875.

      During  the fourth  quarter  of the year,  4,000  shares  were  issued for
      consulting services at a fair value of $2,394.

      During  October  2004,  there was an  exercise  of 40,000  stock  purchase
      warrants at an exercise price of $.50 per share.

      In December  2004, an employee  exercised 400 options at an exercise price
      of $0.675 per share.

      During  December  2004  the  Company  issued  240,000  stock  options  for
      consulting  services  at an exercise  price of $1.50,  for a fair value of
      $9,094.

      During December 2004, the Company  prepaid $12,500 of consulting  costs in
      connection with its financing activities.

      During  2005,  the  Company  issued  4,248  shares of its common  stock to
      employees and consultants in lieu of cash compensation.

      During  2005,  the Company  issued an  aggregate  of 46,500  shares of its
      common stock upon the exercise of stock options  previously granted by the
      Company to various  employees and consultants with exercise prices ranging
      from $0.35 to $1.30.

      During March 2005,  the Company  issued  452,855 shares of common stock in
      connection with one private placement transaction. Units offered consisted
      of four  shares of common  stock and two common  stock  purchase  warrants
      exercisable  at $1.75 per share  for three  years.  The price per unit was
      $5.60.

      During April 2005, in connection with the 5 for 1 reverse stock split, the
      Company reacquired and issued 165 net shares of its common stock.

      During  2005,  shareholders  exercised  stock  purchase  warrants  for  an
      aggregate of 460,000 shares of common stock. These stock purchase warrants
      were exercised at $0.50 per share  resulting in proceeds to the Company of
      $230,433.

      In October 2005, the Company reduced the warrant exercise price from $1.75
      to $1.25 and extended the expiration of the warrant term from September 9,
      2007 to October 21, 2010 for 73,500 stock  purchase  warrants  attached to
      debt issued in September  2004 in return for extending the debenture  term
      to at least October 31, 2010. The change in fair value of the warrants was
      recorded as additional paid in capital.

      In October 2005,  the Company  converted  $993,772 in  debentures,  net of
      related  discounts,  issued in  September  2004 to equity at a  conversion
      price of $1.25 or 820,000  shares,  and reduced the exercise  price of the
      warrants  attached to the debentures  from $1.75 to $1.25 and extended the
      expiration of the warrant term from September 9, 2007 to October 21, 2010.
      The fair value of equity approximates the fair value of the debt converted
      and the fair value of the warrant repricing.

      In October 2005, the Company reduced the warrant exercise price from $1.75
      to $1.25 for 452,855 shares of common stock issued in connection  with one
      private  placement  transaction  in March 2005 in return  for  subscribers
      extending the warrant registration filing deadline from September 30, 2005
      to  December  31,  2005.  The  change in fair  value of the  warrants  was
      recorded as additional paid in capital.

                                      F-23
<PAGE>

      During   November   2005,  in  connection   with  one  private   placement
      transaction,  the Company issued 1,600,000 shares of common stock at $1.25
      per share.

22.   INCOME TAXES

            The components of the provision for income taxes are as follows:

                                                             2005       2004
Current:
  Federal                                                 $      --   $      --
  State                                                          --          --

Deferred:
  Federal                                                   182,487    (453,212)
  State                                                      26,931     (85,084)

                                                          ---------   ---------
  Income tax expense (benefit):                           $ 209,418   $(538,296)
                                                          =========   =========


      Deferred  income taxes arise from the temporary  differences  in reporting
      assets and  liabilities for income tax and financial  reporting  purposes.
      These temporary  differences  primarily resulted from net operating losses
      and different amortization and depreciation methods used for financial and
      tax purposes.

                                      F-24
<PAGE>
<TABLE>
<CAPTION>
                                                                                    2005                   2004
Deferred tax assets:
<S>                                                                               <C>                   <C>
   Arising from operating loss and credit carryforwards                           $ 3,793,443           $ 2,854,197
   Valuation allowance                                                             (2,412,000)           (1,582,908)

                                                                           -------------------      ----------------
Deferred tax assets                                                                 1,381,443             1,271,289
                                                                           -------------------      ----------------

Deferred tax liability:
Arising from accumulated depreciation and amortization                              1,041,643               732,993

Deferred tax liability                                                              1,041,643               732,993
                                                                           -------------------      ----------------
Net deferred tax asset                                                                339,800               538,296

Current portion                                                                             -               216,017
Non-current portion                                                                   339,800               322,279
                                                                           -------------------      ----------------
Net deferred tax asset                                                              $ 339,800             $ 538,296
                                                                           ===================      ================


The provision (benefit) for income taxes shown above varies from statutory federal
income tax rates for those periods as follows:

Federal Income Tax Rate                                                               -34.00%               -34.00%
State Income Tax Rate, net of
federal tax effect                                                                      0.17%                -3.84%
Non-taxable losses from foreign jurisdictions                                          34.36%                 0.00%
Permanent items                                                                         1.25%                -1.97%
Change in valuation allowance                                                          39.00%               -89.46%

Effective tax rate                                                                     40.78%              -129.27%
</TABLE>


      In assessing  the  realizability  of the  deferred tax assets,  management
      considers  whether it is more likely than not, that some portion or all of
      the deferred tax assets will not be realized.  The valuation  allowance at
      December  31,  2005 is related to  deferred  tax assets  arising  from net
      operating  loss  carryforwards.  Management  believes  that based upon its
      projection of future taxable income for the foreseeable future, it is more
      likely  than not that the  Company  will not be able to  realize  the full
      benefit of the net operating loss carryforwards  before they expire due to
      the amortization and  depreciation  losses from the projected  acquisition
      assets.

      At December 31, 2005, the Company has federal and state net operating loss
      carryforwards  remaining of  approximately  $9,800,000  that may be offset
      against future taxable  income through 2024. As part of  management's  tax
      strategies  they  will be  reviewing  the use of the  net  operating  loss
      carryforwards.  The Company is reviewing it tax  depreciation  methods for
      future utilization of the NOL.

23.   NET INCOME PER COMMON SHARE

      Basic net  income  per share is  computed  based on the  weighted  average
      number of common shares outstanding during the period.  Diluted net income
      per common  share is  computed  based on the  weighted  average  number of
      common  shares  outstanding  during the period  increased by the effect of
      dilutive  stock  options and stock  purchase  warrants  using the treasury
      stock method.  The following table sets forth the computation of basic and
      diluted net income per common share:

                                      F-25
<PAGE>

     [OBJECT OMITTED]][GRAPHIC OMITTED]

24. STOCK OPTIONS AND WARRANTS

     Stock options - During the years ended December 31, 2005 and 2004, the
     Company granted stock options totaling 277,200 and 1,239,600 shares of its
     common stock, with a weighted average strike price of $1.42 and $1.45 per
     share, respectively. Certain stock options were exercisable upon grant and
     have a life ranging from 4 months to 5 years. The following table
     summarizes the Company's stock options activity under compensation plans:

                                                      Number          Weighted
                                                        Of            Average
                                                      Options     Exercise Price
Balance, December 31, 2003                           1,975,300      $   2.60
     Options granted                                 1,239,600          1.45
     Options canceled                                 (100,000)         1.75
     Options expired                                  (537,667)         4.00
       Options exercised                               (35,833)         0.35
                                                    ----------      --------
Balance, December 31, 2004                           2,541,400      $   1.90
     Options granted                                   277,200          1.42
     Options cancelled                                (610,700)         1.40
     Options expired                                  (228,050)         1.51
     Options exercised                                 (46,500)         0.90
                                                    ----------      --------

Balance, December 31, 2005                           1,933,350      $   1.43
                                                    ==========      ========

                                      F-26
<PAGE>

Pro forma  disclosure  - Pro forma  information  regarding  net  income  and net
earnings  per  share,  as  disclosed  in Note 2, has been  determined  as if the
Company had accounted for its employee stock-based  compensation plans and other
stock  options  under the fair value  method of SFAS 123. The fair value of each
option grant is estimated  on the date of grant using the  Black-Scholes  option
pricing model with the following  weighted-average  assumptions  used for grants
under the fixed option plans:

                                                          2005              2004
                                                         -----             -----
Weighted-average risk free interest rate                 4.75%             3.75%
Expected life of option (years)                          1.0               2.0
Expected stock volatility                              115%               70.5%
Expected dividend yield                                  0.00%             0.00%
                                                         -----             -----

The following table summarizes information about options outstanding and
exercisable at December 31, 2005:

<TABLE>
<CAPTION>
                   Shares       `                                               Shares
                   Underlying         Weighted Average      Weighted            Underlying     Weighted
                   Options            Remaining             Average             Options        Average
Exercise Price     Outstanding        Contractual Life      Exercise Price      Exercisable    Exercise Price
<S>                    <C>           <C>                   <C>                   <C>          <C>
$0.25-$1.25               492,150     2 years               $       0.81          427,900      $       0.79
$1.26-$20.00            1,441,200     3 years               $       1.64        1,221,000      $       1.65
                   ---------------                          ------------------------------------------------
                        1,933,350                           $       1.43        1,648,900      $       1.43
                   ===============                          ================================================
</TABLE>


<TABLE>
<CAPTION>
                                Exercise Price
                               Equals, Exceeds or
        Number of              is Less Than Mkt.             Weighted                                    Weighted
     Remaining Options          Price of Stock               Average                 Range of             Average
          Granted                on Grant Date            Exercise Price          Exercise Price          Fair Value
     ---------------              ----------------        ---------------         ---------------        ---------------
<S>       <C>                       <C>                    <C>                     <C>                   <C>
                  --                 Equals               $            --         $            --        $            --
           1,441,200                 Exceeds                         1.64                    5.70              2,363,568
             492,150                Less Than                        0.81                    0.25                398,642
     ---------------                                      ---------------         ---------------        ---------------
           1,933,350                                      $          1.43         $            --        $     2,762,210
     ===============                                      ===============         ===============        ===============
</TABLE>

     Stock warrants. The following table summarizes the Company's stock warrant
activity:

                                                   Number           Weighted
                                                     Of              Average
                                                  Warrants        Exercise Price
                                               ---------------- ----------------
         Balance, December 31, 2003                  7,133,999  $           3.60
                                               ---------------- ----------------
              Warrants granted                       8,638,600              3.70
              Warrants canceled                             --                --
              Warrants expired                       (342,663)             36.00
              Warrants exercised                   (4,491,732)              0.90
                                               ---------------  ----------------

         Balance, December 31, 2004                 10,938,204  $           2.70
                                               ===============  ================
              Warrants granted                       1,877,856              1.68
              Warrants canceled                             --                --
              Warrants expired                       (470,000)              1.48
              Warrants exercised                     (468,100)              0.51
                                               ---------------  ----------------

         Balance, December 31, 2005                 11,877,960  $           2.67
                                               ===============  ================

      Pro forma disclosure - SFAS No. 123 requires companies that follow APB No.
      25 to provide a pro forma  disclosure  of the impact of applying  the fair
      value  method of SFAS No. 123.  Accordingly,  no pro forma  disclosure  is
      required as stock warrants were issued for cash not as part of stock based
      consideration.

                                      F-27
<PAGE>

     The following table summarizes information about warrants outstanding and
exercisable at December 31, 2005:


<TABLE>
<CAPTION>
                                    Weighted
                   Shares           Average             Weighted       Shares             Weighted
                   Underlying       Remaining           Average        Underlying         Average
                   Warrants         Contractual         Exercise       Warrants           Exercise
Exercise Price     Outstanding      Life                Price          Exercisable        Price
<S>                    <C>          <C>                 <C>                <C>            <C>
$       0.50           60,900       .26 years           $   0.50           60,900         $ 0.50
$       1.25          382,856       3.28 years          $   1.25          382,856         $ 1.25
$       1.65           80,000       1.1 years           $   1.65           80,000         $ 1.65
$       1.75        5,751,402       1.1 years           $   1.75        5,751,402         $ 1.75
$       2.50        2,801,401       .89 years           $   2.50        2,801,401         $ 2.50
$       5.00        2,801,401       .89 years           $   5.00        2,801,401         $ 5.00
----------------------------------------------------------------------------------------------------
                   11,877,960                           $   2.67       11,877,960         $ 2.67
====================================================================================================
</TABLE>

25.   RELATED PARTY TRANSACTIONS

In February  2004, we issued  182,486 shares of common stock to Michael Dodak, a
stockholder,  officer, and director of our company,  through exercise of 200,000
Private  Placement  Offering  Warrants  at $0.50  per  share  and  exercised  as
cashless.

In February  2004,  we issued  182,486  shares of common  stock to David Fann, a
stockholder,  officer, and director of our company,  through exercise of 200,000
Private  Placement  Offering  Warrants  (offsetting  an  equal  amount  of  debt
currently owed by our company) at $0.50 per share and exercised as cashless.

In February 2004, we issued 72,994 shares of common stock to Robert Colabrese, a
stockholder,  and officer of our  company,  through  exercise of 80,000  Private
Placement Offering Warrants at $0.50 per share and exercised as cashless.

In February  2004, we issued 18,248 shares of common stock to David  Surette,  a
stockholder,  and officer of our  company,  through  exercise of 20,000  Private
Placement Offering Warrants at $0.50 per share and exercised as cashless.

In February  2004, we issued  73,007  shares of common stock to Lock Ireland,  a
stockholder  and director of our  company,  through  exercise of 80,000  Private
Placement Offering Warrants at $0.50 per share and exercised as cashless.

In March  2004,  we  issued  2,000  shares of common  stock to Lock  Ireland,  a
stockholder  and  director of our  company,  through  exercise of 2,000  Private
Placement Offering Warrants at $1.75 per share.

In March  2004,  we issued  140,000  shares of  common  stock to BFS US  Special
Opportunities  Trust PLC, a  stockholder  and  beneficial  owner of our company,
through exercise of Private Placement Offering Warrants at $1.75 per share.

In March 2004, we issued 140,000  shares of common stock to Renaissance  Capital
Growth & Income Fund III, a  stockholder  and  beneficial  owner of our company,
through exercise of Private Placement Offering Warrants at $1.75 per share.

In March 2004, we issued 140,000 shares of common stock to Renaissance US Growth
Investment Trust PLC, a stockholder and beneficial owner of our company, through
exercise of Private Placement Offering Warrants at $1.75 per share.

In February  2004,  we issued  533,332  shares of common stock to BFS US Special
Opportunities  Trust PLC, a  stockholder  and  beneficial  owner of our company,
through  a Private  Placement  Offering  for  $666,666  and we issued  1,066,668
Warrants exercisable from $1.75 to $5.00.

In  February  2004,  we issued  533,332  shares of common  stock to  Renaissance
Capital  Growth & Income Fund III, a  stockholder  and  beneficial  owner of our
company,  through  a  Private  Placement  Offering  for  $666,666  and we issued
1,066,668 Warrants exercisable from $1.75 to $5.00.

                                      F-28
<PAGE>

In February  2004, we issued  533,332  shares of common stock to  Renaissance US
Growth  Investment Trust PLC, a stockholder and beneficial owner of our company,
through  a Private  Placement  Offering  for  $666,666  and we issued  1,066,668
Warrants exercisable from $1.75 to $5.00.

In February 2004, we issued  1,200,000 shares of common stock to Baron Partners,
LP, a  stockholder  and  beneficial  owner of our  company,  through  a  Private
Placement Offering for $1,500,000 and we issued 2,400,000  Warrants  exercisable
from $1.75 to $5.00.

In September  2004, we issued 3,000 warrants to Lock Ireland,  a stockholder and
director of our company,  as part of a debenture with an exercise price of $1.75
per share.

In September  2004,  we issued 66,000  warrants to BFS US Special  Opportunities
Trust PLC, a  stockholder  and  beneficial  owner of our  company,  as part of a
debenture with an exercise price of $1.75 per share.

As of December 31, 2004,  we had an unsecured  promissory  note in the amount of
$192,966  outstanding  payable to Robert Mehlman,  a stockholder of our company.
The note bears interest in the amount of 11% and is due in June 2013.

In October 2005, we reduced the exercise  price from $1.75 to $1.25 and extended
the  expiration  date by five  years on 66,000  warrants  held by BFS US Special
Opportunities  Trust PLC, a stockholder and beneficial owner of our company,  in
return for a five year extension on $1,000,000 in debt financing.  The change in
fair value of the warrants was recorded as additional paid in capital.

In October 2005, the Company  converted  $993,772 in debentures,  net of related
discounts, issued in September 2004 to a stockholder, for equity at a conversion
price of $1.25 and reduced the exercise  price of the  warrants  attached to the
debentures  from $1.75 to $1.25 and extended the  expiration of the warrant term
from  September  9,  2007  to  October  21,  2010.  The  fair  value  of  equity
approximates  the fair  value of the debt  converted  and the fair  value of the
warrant re-pricing.

In October 2005, we reduced the exercise  price from $1.75 to $1.25 and extended
the  expiration  date by five years on 3,000  warrants held by Lock  Ireland,  a
stockholder and director of our company,  in return for a five year extension on
$50,000 in debt financing. The change in fair value of the warrants was recorded
as additional paid in capital.

As of November  2005, we issued 600,000 shares of common stock to BFS US Special
Opportunities  Trust PLC, a  stockholder  and  beneficial  owner of our company,
through a Private Placement Offering for $750,000 and we issued 240,000 Warrants
exercisable for $1.75.

As of November  2005, we issued 600,000 shares of common stock to Renaissance US
Growth  Investment Trust PLC, a stockholder and beneficial owner of our company,
through a Private Placement Offering for $750,000 and we issued 240,000 Warrants
exercisable for $1.75.

26.   SUBSEQUENT EVENTS

On April 3,  2006 the  Company  received  a  significant  payment  from  Genpass
Technologies  LLC, in relation to the Distributor  ATM Processing  Agreement for
the conversion of network processing.

On April 11, 2006 the Company  entered  into a letter of intent and is currently
negotiating a Subscription  and  Shareholder  Agreement to sell 50% of its South
African subsidiary Cash Axcess Corporation (Proprietary) Limited.

                                      F-29