SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-KSB/A
                                 Amendment No.1

(Mark One)

|X|   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934

      For the fiscal year ended May 31, 2006

                                       OR

|_|   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934

      For the transition period from _______________ to _______________

                        Commission File Number 001-15783


                             CASH TECHNOLOGIES, INC.
                 (Name of small business issuer in its charter)


                 Delaware                                   95-4558331
       (State or other jurisdiction                      (I.R.S. Employer
     of incorporation or organization)                  Identification No.)


                    1434 W. 11th Street Los Angeles, CA 90015
               (Address of principal executive offices) (Zip code)


                                 (213) 745-2000
                (Issuer's telephone number, including area code)


         Securities registered under Section 12(b) of the Exchange Act:

                                                      Name of Each Exchange
      Title of Each Class                             on Which Registered
      -------------------                             -------------------

           None                                              None


         Securities registered under Section 12(g) of the Exchange Act:

                                                      Name of Each Exchange
      Title of Each Class                             on Which Registered
      -------------------                             -------------------

 Common Stock, $ .01 Par Value                       American Stock Exchange


|X|   Check whether the issuer (1) filed all reports required to be filed by
      Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
      such  shorter  period  that  the  registrant  was  required  to file  such
      Reports), and (2) has been subject to such filing requirements for the
      Past 90 days. Yes |X| No |_|

                                        1
<PAGE>

|_|   Check if there is no disclosure  of delinquent  filers in response to Item
      405 of  Regulation  S-B is not  contained in this form,  and no disclosure
      will be contained,  to the best of registrant's  knowledge,  in definitive
      proxy or information  statements  incorporated by reference in Part III of
      this Form 10-K or any amendment to this Form 10-K.

      Indicate  by check mark  whether  the  registrant  is a shell  company (as
defined in Rule 12b-2 of the Exchange Act). Yes |_| No |_|

      Our revenues, for our fiscal year ended May 31, 2006, were $8,208,226.

      On May 31, 2006,  there were 22,035,964 shares of common stock, $ .01 par
value per share,  issued and  outstanding.  The  aggregate  market  value of the
Common Stock of Registrant  held by  non-affiliates  of  Registrant  computed by
reference  to the  closing  bid price  $0.71 at which the stock was sold on such
date was, approximately $15,645,534.

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

      On September 10, 2006, there were 22,268,464 shares of Common Stock, $ .01
par value, issued and outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

None

                                        2
<PAGE>

                                     PART I

Item 1. Description of Business

Introduction

      Cash Technologies, Inc., is a Delaware corporation, incorporated in August
1995. Unless the context otherwise requires, references herein to "we," "our" or
"Cash  Tech"  refers  to  Cash  Technologies,  Inc.,  and its  wholly-owned  and
majority-owned   subsidiaries   National  Cash  Processors,   Inc.,  a  Delaware
corporation;  CoinBank Automated Systems, Inc., a Delaware corporation; CoinBank
Automation Handels GmbH,  organized  operating in Salzburg,  Austria,  Cash Tech
Card Systems,  Inc. (formerly Cintelia Systems Inc.), a Delaware  corporation,CT
Holdings,  LLC.,  a Delaware  corporation  of which we own 86.65%,  Claim-Remedi
Service,  Inc. (formerly Heuristic  Technologies,  Inc.), a Delaware company and
TAP Holdings, LLC (dba Tomco Auto Products), of which we own 89%. Our address is
1434 West 11th Street,  Los Angeles,  California  90015. Our telephone number is
(213) 745-2000.

Business Highlights

      Following are certain financial and operational accomplishments during and
subsequent to FY 2006, explained in further detail throughout this document:

      o     Increased  stockholder's equity to $7.8 million,  exceeding the AMEX
            listing requirement of $6 million*

      o     Agreed to sell our Tomco line of  business,  which we  purchased  in
            November  2004 for $2.5  million in cash,  for up to $11  million in
            cash and a note o  Expanded  our  Claim-Remedi  Services  healthcare
            division to deliver three industry-leading products

      o     Invested $2 million in  preferred  stock to acquire 10% of a leading
            online financial transaction processor

      o     Completed  agreement to enable our prepaid  debit cards to be loaded
            at tens of  thousands of Green Dot(R)  Financial  Network  locations
            throughout the U.S, including Rite Aid, CVS,  Walgreens,  RadioShack
            and many other retailers nationwide.

      o     Began  processing  electronic  pharmacy claims for the U.S. Dept. of
            Defense,  the first electronic  claims  processing  performed by the
            DOD.

      o     Raised approx. $3M in equity for operations

(*continuous  compliance to all of the AMEX listing  standards is required - see
Risk Factors)

      We are currently engaged in two principal lines of business,  namely, data
processing   (including   healthcare   data   processing   and  financial   data
processing)and  the manufacturing of auto products,  however in August,  2006 we
agreed to sell our auto products  business,  a transaction  expected to close in
October, 2006.

In 1995, we began development of self-service coin counting  machinesand  later,
an enhanced  version of an  automated  teller  machine that was  designated  the
ATM-X(TM).

                                       4
<PAGE>

      As a result of our view of the need for an advanced transaction processing
system, we began to develop data processing  products and in December of 1997 we
filed a patent application  describing our transaction processing and networking
technologies  which  resulted in the issuance of patent number  6,308,887 by the
U.S. Patent and Trademark Office on October 30, 2001. The technology,  which was
later named EMMA (E-commerce  Message Management  Architecture),  allows for the
seamless  integration of conventional  financial networks with non-bank networks
and the Internet.

      Patented   capabilities   of  EMMA  include  its  ability  to  manage  and
communicate the various  transaction  messages in parallel,  or  asynchronously,
expediting  transaction  processing and the ability to manage disparate networks
efficiently.

CLAIM-REMEDI SERVICES, INC., CASHTECHCARD SYSTEMS, INC.

      In August 2004, we expanded our data processing  initiatives by hiring two
senior  executives  with extensive  experience in healthcare data processing and
debit/credit  cards  to  operate  our  Claim-Remedi  Services,   Inc.  (formerly
Heuristic  Technologies,  Inc.)  and Cash  Tech Card  Services,  Inc.  (formerly
Cintelia Systems,  Inc.)  subsidiaries.  After marketing  research and technical
development,  Claim-Remedi  has  launched  a line of  products  to  improve  the
processing of healthcare  insurance  claims and  CashTechCard  began marketing a
debit card product that targets the employee  benefits,  payroll and underserved
market segments.

Claim-Remedi's products include more specifically:

      o     ProIdentify,  which allows  determination  of a patient's  insurance
            eligibility status in real time,  allowing  healthcare  providers to
            avoid eligibility  losses that affect  approximately 6% of insurance
            claims.

      o     Pro837,  a claim editor that can be  implemented by both health care
            providers  and  insurers,  permitting  healthcare  organizations  to
            identify and correct insurance claims that contain errors or invalid
            information. For providers, Pro837 dramatically improves the rate of
            payment of medical  insurance  claims by identifying  defects in the
            claims that would prevent payment.  The result is decreased accounts
            receivables,   receivables  days  outstanding  and  overhead.   When
            employed by insurers,  Pro837 automatically filters defective claims
            that would otherwise be handled  manually at  significantly  greater
            expense,  reducing  overhead while improving service to the provider
            community.  We believe  that Pro837  represents  a  breakthrough  in
            medical data processing  technology that can, over time,  achieve an
            improvement  in the healthcare  industry in the United States.  When
            Pro837 is combined with our ProIdentify and ProClaimSubmit products,
            the   result  is  a  robust   claims   processing   suite  that  can
            substantially reduce the cost of healthcare  administration.  Pro837
            includes  software   developed  by  ClaimRemedi,   Inc.,  from  whom
            Claim-Remedi  obtained an eight year exclusive  license in February,
            2005  and in  which  we  own a  19.9%  equity  stake.  The  platform
            currently  processes more than one million medical  insurance claims
            per month (from which  Claim-Remedi  presently  does not receive any
            revenue).

      o     ProClaimSubmit,  an "all-payer"  claims  clearinghouse  that permits
            health  care  providers  to submit  their  claims to  virtually  any
            insurer  in  the  U.S.   through  a  single   internet   connection.
            ProClaimSubmit  utilizes the services of various network  providers,
            including those of Affiliated Computer Services,  Inc., a major U.S.
            healthcare  data  processor,  with whom  Claim-Remedi  established a
            strategic marketing relationship in June, 2005.

                                       5
<PAGE>

      CashTechCard's  products  include a  stored-value  MasterCard  debit  card
suited for the unbanked,  sub-prime or underage markets as well as for corporate
payments, loyalty programs, membership clubs and other applications. In addition
to allowing typical  credit-card  type purchases and ATM  withdrawals,  the Card
acts as a virtual bank account,  permitting  direct deposits and electronic bill
payments.  Unlike credit cards, stored-value cards are prepaid; i.e. they can be
used only for purchases or withdrawals up to the amount  previously  loaded onto
the card.  Since no credit  underwriting  is  required;  persons  without a bank
account or with poor credit can obtain one.  Companies can use the Card as a way
to  distribute  payroll  to  temporary  or  unbanked  workers  or to  distribute
tax-exempt medical and transportation  benefits without issuing checks,  parents
can provide the Cards to teenagers to  efficiently  and safely manage a spending
allowance,  check cashers can distribute the Card to customers and load the Card
with check cashing proceeds, etc. The medical benefits capabilities of the cards
provides an interrelationship  with our Claim-Remedi  healthcare  products.  The
card is presently  marketed under the name  CashTech.Card and Papa Cash Card. We
earn fees on every card transaction.

Our EMMA software,  when integrated with Claim-Remedi's  products in the future,
will  enhance  those  products.  For  healthcare  products,  EMMA can  integrate
financial  functions  with  health  insurance   processing  to  further  improve
efficiency in the healthcare  industry.  For  stored-value  cards,  EMMA can add
proprietary functionality to differentiate the cards from competitive offerings.

TOMCO AUTO PRODUCTS

      Tomco  remanufactures and sells replacement fuel systems  (carburetors and
diesel  pumps)  for  domestic  and  foreign   automobiles,   trucks  and  marine
applications.  The Company distributes its products through a nationwide network
of retailers.  Three retailers,  NAPA, O'Reilly Automotive and Carquest accounts
for 77% of Tomco's sales.

Industry (Market) Overview

      Health Care Products

      The  healthcare   industry  is  plagued  with  data   communications   and
compatibility problems that financial services and other industries solved years
ago using  modern data  processing  tools.  Our  experience  in  financial  data
processing  technologies  provided the  background for us to acquire and develop
products that bridge weaknesses in healthcare administration.  "Cost control" in
the  healthcare  industry has  traditionally  referred  only to capping  medical
expenditures. Since further reducing payments to providers is difficult and will
likely  result in only  small  gains,  the  emphasis  has  shifted  to  reducing
administrative  costs.  Comparatively  few  efforts  had  been  made to  control
administrative  costs,  which  account for a large  portion of the total cost of
healthcare.  In the United  States,  where $1.5  trillion is spent on healthcare
annually,   inefficient  healthcare   administration  is  costly.  Our  software
solutions   target  several   particularly   inefficient   areas  of  healthcare
administration: claim submission, determination of patient insurance eligibility
for healthcare providers, and claim editing for providers and payers.

                                       6
<PAGE>

      Products for Healthcare Providers

      To healthcare  providers,  Claim-Remedi  offers  Pro837,  ProIdentify  and
ProClaimSubmit.  These  products,  sold as a  monthly  subscription  or on a per
transaction  basis,  greatly  reduce the cost of healthcare  administration  for
providers.  None of these  products  require any  significant  investment in new
software or  hardware  by  customers  - the  products  are  designed to be fully
compatible with all existing systems used by healthcare organizations.

      Currently,  some 30% - 35% of all health  insurance  claims submitted by a
provider are rejected by the payer  organization  and returned  30-60 days later
for correction and  resubmission or are considered  invalid.  Pro837 acts like a
claims  proofreader:  Before the claims are submitted to the payer organization,
Pro837  subjects the claim to the exact  standards used by the respective  payer
organization in adjudicating  the claim - nearly two million  business rules are
contained in Pro837's rules engine.  It then reports problem claims with precise
instructions  for repairing the errors and forwards payable claims to the payer-
all in a matter of seconds.  Pro837 can reduce a provider's claim rejection rate
to less than 2%, a dramatic  improvement.  Implementation of Pro837 results in a
significant reduction in receivables,  receivables days outstanding and overhead
costs of  managing  claims.  To  maintain  the  highest  performance  standards,
Pro837's rules engine is updated every week with the newest published rules from
payer organizations as well as unpublished and often unannounced rules resulting
from the continuous analysis of actual payment rejection files.

      Providers incur significant financial losses by giving service to patients
who lack insurance or whose  insurance  information  is invalid.  In order for a
healthcare  provider to determine  the  insurance  coverage of a patient,  it is
often  necessary  to phone each  patient's  insurance  company and have an agent
locate the information,  or consult the company's website.  ProIdentify replaces
this function  electronically  by interfacing with the patient databases of most
insurance companies in the U.S. to provide the same information immediately over
an  internet  connection  using  any web  browser.  The use of  ProIdentify  can
completely eliminate the provider's eligibility losses.

      ProClaimSubmit  is  an  "all-payer   clearinghouse"   solution.  Far  more
efficient  than  manual  (paper)  claim  submission,  ProClaimSubmit  allows the
provider to  electronically  submit  claims to  virtually  any payer in the U.S.
through an online connection with Claim-Remedi, saving time and costs.

      Packaging these products together provides customers with a complete claim
proofreading and submission solution.  The package greatly accelerates cash flow
and  reduces  costs.  The suite can also give  healthcare  facilities  unmatched
accuracy in predicting cash flow and determining the value of receivables.

      Products for Healthcare Payers

      For  healthcare  payers,  Claim-Remedi  markets a version of Pro837 called
Payor837 on a per transaction basis.

      Pro837 acts like a filter for payers,  allowing  only claims that are able
to be paid to reach the billing staff,  immediately  rejecting  defective claims
(those  that are  incomplete,  erroneous  or fail the payer's  business  rules),
sending those claims back to the respective providers with detailed explanations
of required corrections.  This process results in a dramatic reduction in claims
handling and associated  costs and improved  information  for the providers.  We
have joined forces with strategic partner  Affiliated  Computer  Services,  Inc.
("ACS"), one of the nation's largest medical data processors, to bundle Payor837
with ACS's claims submission gateway.  This will allow payers to receive "clean"
claims  submitted  by any  provider  through  a  single  connection  instead  of
receiving  error-laden  claims from  thousands of  submitters  over  hundreds of
separate  connections.  We will  believe that this will prove to be a compelling
product for payers in the U.S.

      Pro837/Payor837 Software

      Claim-Remedi  acquired an 8-year exclusive license for the major component
of Pro837/Payor837 from the third-party  developer of the software,  however the
developer is permitted to market its products  independently  until Claim-Remedi
reaches  certain  volume  targets.  A  portion  of all  per-transaction  revenue
received from  customers is paid to the  third-party  developer.  Further,  Cash
Technologies owns a 19.9% equity stake in the developer, Claim Remedi, Inc.

                                       7
<PAGE>

Stored Value Card

      CashTechCard Systems offers a stored-value debit MasterCard card which has
a  variety  of  applications,  including  (i)  corporate  expense  and  benefits
reimbursements,  (ii) corporate  payroll,  (iii) credit card  functionality  for
those with bad or no credit or no bank account,  (iv) as a loyalty or membership
card with  financial  functions,  (v) virtual bank  account,  (vi) as a means of
providing  funds  to  dependents,  etc.  The  Card  can be used at  millions  of
merchants  and ATMs  around  the world and  features  MasterCard  fraud and loss
protection.  The  Card  can be  reloaded  and  managed  at the  CashTechCard.com
website,  via toll  free  phone  support  or at tens of  thousands  of Green Dot
Financial Network locations, including Rite Aid, CVS, Walgreens,  RadioShack and
many  other  retailers  nationwide.  Competition  in the  U.S.  for  debit  card
distribution is fierce and made it attractive for us to create a card program in
Europe,  where  prepaid  debit  cards  are in  their  infancy  and  where we can
distribute cards through  relationships  created  previously in the marketing of
our European coin machines.

CoinBank Machines

      In December 1995, we commenced developing and marketing CoinBank machines,
automated  self-service coin counting and processing machines designed to accept
and count loose coins for a fee. The CoinBank machine is a freestanding  machine
that incorporates  hardware and electronic  components and certain software.  We
have developed three different CoinBank machine models,  with variations in coin
storage capacity, customer interfaces and external appearance.

      As our corporate  focus has moved to our data  processing  businesses,  no
marketing  resources are devoted to CoinBank  machine sales,  and activities are
limited to the word-of-mouth sale of remaining machine inventory.

                                       8
<PAGE>

Tomco Auto Products

      TAP Holdings,  LLC operates  under the brand name Tomco which has a thirty
year history as a leading provider of remanufactured fuel system components. The
Los Angeles-based  company  distributes its products through major auto products
retailers  throughout the U.S. such as NAPA, with 6,000 stores,  CARQUEST,  with
3,600  stores,  O'Reilly  Automotive,  with more than 1,399  stores and numerous
others.  These  customers  accounted  for 77% of Tomco's 2005 sales.  In August,
2006,  we agreed to sell Tomco to Champion  Parts,  Inc.  for up to $11 million;
$1.5 million in cash and up to $9.5 million in a note payable as a percentage of
Champion's sales over a maximum of 11 years.

      The  remanufacturing  business is based on the  availability  of discarded
carburetors,  called "cores".  Adequate core inventories are key to the business
and Tomco's core  inventory as of May 31, 2005 totaled  $6,288,459  with 529,884
units on  hand.  Tomco  receives  most of its  cores  from  its  customer  base.
Consumers turn in their used  carburetors to the retailer and receive a discount
on a  remanufactured  replacement  unit. The retailers  forward the old cores to
Tomco and receive credits toward product invoices. For the fiscal year ended May
31, 2005 Tomco shipped 73,536 units.

Sales and Marketing

      E-Commerce Message Management  Architecture (EMMA) Transaction  Processing
System

      In June 2002 we formed a subsidiary  named CT  Holdings,  LLC, of which we
own 86.65%, to develop, market and implement EMMA-based banking applications. CT
Holdings, LLC will bring BONUS(TM),  a suite of self-service  electronic banking
services,  including  automated  check cashing,  to the  marketplace.  The BONUS
software  allows  automated  check cashing at bank  branches or retailers  using
advanced  ATMs.  Powered by our EMMA  software,  BONUS uses  third  party  owned
proprietary optical character recognition (OCR), biometric  identification and a
sophisticated  risk analysis engine to establish a user's identity and authorize
checks.

      Following the  successful  completion of a pilot with Popular Cash Express
("PCE"), a unit of Popular,  Inc., in June, 2003 the Company signed an agreement
with PCE to install the EMMA(TM) MFS(TM) (Mobile  Financial  Services) system on
PCE's mobile check-cashing trucks. Under the agreement,  PCE was responsible for
installation and hardware costs and a per-transaction  fee to Cash Tech for each
check  processed.  The agreement  provided for the installation of the system on
PCE's fleet of approximately  60 check cashing trucks in two phases,  however in
October  2003,  before the  rollout  had been  completed,  PCE sold the fleet to
another  check  cashing  operator  with whom we have not arranged to install the
product.

      Our  check-cashing  products  for are able to rapidly  capture and analyze
transaction data from checks, reducing losses due to fraud and automating manual
processes.  The  products  have  been  piloted  in  various  financial  services
locations,  however no major  deployment  has  occurred to date.  Our system can
recognize  and  analyze  check  data,  identify a customer  and  provide a check
approval in a few seconds,  reducing losses and improving  efficiency and record
keeping.  The EMMA risk  analysis  process  quickly  analyzes and  credit-scores
electronic  check images to determine  the  probability  of loss.  The speed and
accuracy of the EMMA  system can permit  cashiers  to  identify  fraudulent  and
counterfeit checks while the customer is still present.  This is significant for
the industry since the majority of banks and financial  services  providers have
little or no ability to detect check fraud at the point of  presentation,  which
costs the  industry  billions  of dollars per year.  The  Company  has  recently
developed  a version of the system  designed  for check  cashing  stores and has
reached an agreement  with a check casher to begin live testing of the system in
November,  2005.  The  Company is also in  discussions  to install the system in
retail stores where check cashing activities  generate continuous losses for the
retailer.

      Healthcare Products and Stored Value Card

      In  September,   2005  Heuristic   contracted   non-exclusively  with  two
independent  sales  organizations  ("ISOs")  to sell and market  its  healthcare
products, for which the ISOs receive a portion of the installation and recurring
revenue  generated  by the  products.  Heuristic  also  markets  these  products
directly to large clients and through its network  partner  Affiliated  Computer
Services, Inc. Pro837's unique capabilities make it useful to both providers and
payers.

                                       9
<PAGE>

      Heuristic's  debit  card  products  are  sold  through  several  channels.
Following a testing  period with a check  cashing  company  during which a small
number cards were  distributed,  we have  recently  agreed to roll out the cards
throughout  the  chain of  several  dozen  check  cashing  stores.  We have also
recently   completed  an  agreement  with  a  gift  card  marketer  to  use  the
CashTech.Card  platform  for their  cards.  With our ISOs,  we are  developing a
program to utilize their sales forces to distribute  the card which we expect to
begin during 2005. The new website  created for the card,  www.cashtechcard.com,
will  soon be used to  market  the card  using  internet  marketing  techniques.
Finally,  Heuristic  is  pursuing  a  number  of  private-label   opportunities,
including membership clubs and loyalty programs.

      CoinBank Machines

      Since inception,  we have conducted only limited marketing  activities and
currently have limited marketing and technical experience and limited financial,
personnel and other resources to  independently  undertake  extensive  marketing
activities. We conduct substantially all of our own marketing activities and may
hire additional marketing personnel,  including possibly independent contractors
to  assist  us in  marketing  CoinBank  machines.  To  date,  we have  conducted
marketing  of our cash  processing  services  by means  of  press  releases  and
articles in trade journals targeted at cash-intensive  industries. Our marketing
of CoinBank machines has consisted of entering into market testing  arrangements
with a limited  number of financial  institutions  and  retailers  and attending
certain  industry  shows. We intend to focus our future  coin-machine  marketing
efforts on the sale of CoinBank  machines rather than the  free-placement/shared
revenue model.

      On June 30,  2003,  CoinBank  Automations  Handels  Ges.m.b.H.  ("CoinBank
Europe"),   an  Austrian   corporation  and  wholly  owned  subsidiary  of  Cash
Technologies,    Inc.,    signed    an    agreement    with    Cash    Solutions
Geldverarbeitungssysteme  GmbH i.G. ("Cash Solutions"), an Austrian corporation,
for Cash Solutions to  exclusively  distribute  our CoinBank  self-service  coin
counting  machines in Europe.  Cash Solutions has supplied the machines in small
test quantities to NCR Corporation and others.  The agreement requires that Cash
Solutions meet certain minimum quantities to maintain its exclusivity,  which it
has thus far failed to meet,  however the European coin machine market continues
to represent a significant opportunity for the sale of CoinBank machines.

      The CoinBank machine provides superior  performance due to its proprietary
technology.  The machine  determines  a coin's  denomination  by  electronically
measuring  its metal  content  rather than by weight and size.  The  proprietary
technology,  key  aspects  of which  were  issued a U.S.  patent in 2001  (other
worldwide patents are pending),  outperforms  competitive machines by separating
out and  returning  all  foreign  debris and coins,  improving  reliability  and
accuracy.  Through a  sophisticated  communications  device,  the machines  also
permit remote management,  maintenance and software upgrades via telephone,  the
Internet or local area network (LAN). This allows a large network of machines to
be  efficiently  managed by  financial  institutions  or  retailers.  The latest
version of the CoinBank machine does an exceptional job processing euros,  which
are particularly  difficult to count accurately due to slight  variations in the
metal alloys introduced by the many countries minting the new coins.

      Remanufactured Fuel Systems

      Tomco's products are marketed primarily  throughout the continental United
States.  Tomco sells  carburetors and diesel pumps to aftermarket  retail chains
that  distribute  products  through  their  stores.  The  company  also sells to
automotive and marine  warehouse  distributors,  who then sell to jobber stores.
Three  major auto  retailers,  NAPA,  with 6,000  stores,  CARQUEST,  with 3,600
stores,  O'Reilly  Automotive,  with more than 1,399 stores accounted for 77% of
Tomco's 2005 sales.

                                       10
<PAGE>

      The Company obtains and utilizes used units,  commonly known as "cores". A
majority of the units  remanufactured  by Tomco are acquired  from  customers as
trade-ins ("core returns"). The remainder of the core requirements are filled by
purchasing  cores  in  the  open  market  or  re-configuring  cores  to  replace
difficult-to-obtain  carburetors.  With over 500,000  carburetor cores in stock,
Tomco has been able to fill more 98% of its  orders.  Tomco  generally  fills an
order within three days.

      Tomco  utilizes  outside  salesmen  and sales  representatives  around the
country to promote its product lines. In addition,  Tomco attends periodic trade
shows,  displaying its products and meeting with new and prospective  customers.
Tomco  also  publishes  a catalog  of its  products.  Tomco's  sales  people and
representatives  call on existing and prospective  customers to familiarize them
with the  Company's new and existing  products and to review vendor  agreements.
Tomco offers a ninety day limited warranty on all of its products.

      Customers  can place  orders  by phone,  fax and  direct  Electronic  Data
Interchange ("EDI").  Tomco is currently implementing an internet parts ordering
system which will be available to certain customers in fiscal 2006.

Competition

      EMMA - Electronic Message Management  Architecture  Transaction Processing
System

      There is intense growth in the development and distribution of off-premise
(non-bank)  financial  services,   particularly  on  ATMs,  Point-Of-Sale  (POS)
terminals,  specialty  kiosks and other devices,  including  cellular phones and
wireless  PDAs.  Most of this equipment has a limited user  interface,  although
recent  equipment  models have  high-powered,  graphical user  interfaces.  Many
support  peripherals  for dispensing new financial  products.  While there are a
number of companies  who have  developed  transaction  processing  solutions for
specific  applications,  such as  check  cashing,  event or  airline  ticketing,
prepaid phone cards,  etc, we are not aware of any competitor  that has our plan
to provide  "advanced  function"  transaction  processing  services  as its core
business. One company, 7-Eleven, Inc., has deployed check-cashing terminals into
its convenience stores. These terminals are also capable of issuing money orders
and transferring  money. While apparently similar in functionality to our ATM-X,
the 7-Eleven  system is not designed for banks,  the focus of our BONUS product,
nor is it useful  in mobile  applications,  as is our MFS  product,  nor does it
provide the  versatility  of the EMMA  platform.  In addition,  to our knowledge
7-Eleven is not offering transaction processing services or terminals to outside
companies or  institutions,  though there is no assurance that it will not do so
in the future. This is, nonetheless, an important factor competing for a similar
end-user base.

      Coin Machines

      While we are aware of perhaps a half dozen coin machine  manufacturers  in
the world,  we know of only two companies,  Coinstar,  Inc. and Scancoin,  Inc.,
that have  distributed  an  appreciable  number of  self-service  coin  counting
machines to the U.S. retail industry. To our knowledge,  unlike our approach, in
which  CoinBank  machines  are  sold,  Coinstar  focuses  marketing  efforts  on
installing  "free  placement"  machines.  This  competitor has installed a large
number of  machines  throughout  the  United  States,  and in some  cases,  such
installations  are near  where we have  installed  or may seek to sell  CoinBank
machines.  There can be no  assurance  that  potential  purchasers  of  CoinBank
machines will not prefer to employ this competitor's "free placement"  machines.
Moreover,  there can be no assurance that other  companies are not developing or
will not seek to develop  functionally  equivalent  products or services for the
disposal  of  large  amounts  of  coins  in  the  future.   Other  coin  machine
manufacturers may have substantially greater financial, personnel, marketing and
other  resources  than us. In  addition,  there are many  companies  in the coin
processing  industry that have the  expertise  and resources  that may encourage
them to develop and market  products  or services  that  compete  with  CoinBank
machines or that would render  CoinBank  machines  obsolete or less  marketable.
Moreover,  potential  customers may elect to establish  their own facilities for
counting and processing coins or utilize other methods, which they believe to be
less costly or possess other advantages over CoinBank machines.  There can be no
assurance that we will be able to compete successfully.

                                       11
<PAGE>

      Heuristic Products

      Heuristic's  healthcare products compete in a large and highly competitive
industry filled with products that have similar  functionality  to the Heuristic
products. Large healthcare data processors,  such as WebMD, McKesson, EDS, Perot
Systems and others offer eligibility and claims clearinghouse  capabilities that
are as capable as those offered by  Heuristic.  Several  companies  offer claims
scrubbers which have similar functionality to Heuristic's Pro837 product.  While
we believe  that  Pro837  offers  compelling  advantages  over  these  competing
products,  the competitors have significantly  greater financial,  marketing and
other  resources than  Heuristic and the successful  marketing of their products
may lessen or minimize the demand for Heuristic's products. Heuristic intends to
compete  successfully by combining  Pro837 into bundled  offerings that are well
received by  customers  and thereby  capturing  a small  percentage  of the $1.5
trillion  U.S.  healthcare  market,  however  there  can  be no  assurance  that
Heuristic will succeed in this endeavor.

      Similarly,  the debit card and  stored-value  card  products  compete in a
large  debit and  credit  card  industry  filled  with  similar  and  substitute
products.  Customers  may opt to  utilize  other  forms of  payment,  other card
products or similar products marketed by other companies,  rendering Heuristic's
cards obsolete.  Other stored-value cards have nearly identical functionality to
the Heuristic  products and may be more  effectively  marketed by companies with
greater  resources.  Heuristic  intends to compete  successfully by offering the
state-of-the-art in card functionality,  web-based and phone support, aggressive
pricing and the utilization of existing sales channels,  however there can be no
assurance  that Heuristic  will succeed in  distributing a meaningful  number of
cards.

      Remanufactured Fuel Systems

      There are numerous  small,  family-owned  remanufacturers  servicing their
local  markets,  however,  there are only two national  remanufacturers  of fuel
systems who compete  with Tomco;  Holley (a division of Coltec  Industries)  and
Champion  Parts,  Inc.  Indirect  competitors  are  the  companies  that  supply
carburetor rebuilding kits which allow the consumer to rebuild a carburetor. The
larger  carburetor kit suppliers are: Walker  Products,  Tomco Inc. (St. Louis),
Standard Motor Products, and Ace Electric. Tomco offers a 90-day warranty on all
of its  products.  The Company does not have  patents,  trademarks,  licenses or
franchises.

Intellectual Property

      Although  we have  received  U.S.  Patents  with  respect to our  CoinBank
machine and EMMA  technology,  there can be no assurance that these patents will
afford us with any meaningful  protection.  Any or all claims of a patent can be
invalidated even after its issuance through litigation and other  administrative
procedures.  If we fail to adequately  defend such  attacks,  one or more of our
claims or our entire  patent(s)  could be invalidated and of no further value to
us. We rely on a combination of trade  secrets,  technical  measures,  copyright
protection  and  nondisclosure  agreements  with its  employees to establish and
protect the ideas,  concepts and documentation of certain software  developed by
us and used primarily in its cash processing operations ("Developed  Software").
Such methods may not afford complete  protection,  and there can be no assurance
that third  parties will not  independently  develop such  technology  or obtain
access  to the  Developed  Software.  Although  we  believe  that the  Developed
Software and other  software used in its  operations  does not infringe upon the
rights of others,  there can be no assurance that the Developed Software or such
other  software does not and will not infringe upon the patents or  intellectual
property rights of others. See "Risk Factors"-Litigation.

                                       12
<PAGE>

      In the event of infringement,  we could, under certain  circumstances,  be
required to obtain a license or modify aspects of the Developed Software or such
other  software or refrain from using such  software.  There can be no assurance
that we will have the necessary  financial  resources to defend any infringement
claim made against us or to successfully  terminate any infringement in a timely
manner, upon acceptable terms and conditions or at all. Failure to do any of the
foregoing could have a material adverse effect on us. Moreover, if the Developed
Software or other  software  used in our business is deemed to infringe upon the
rights of others,  we could,  under  certain  circumstances,  become  liable for
damages, which could have a material adverse effect on us.

      We believe that product recognition is an important competitive factor and
promotes the CoinBank  name in  connection  with our  marketing  activities.  We
received  United  States  trademark  registration  for  the  "CoinBank"  name in
September 1997. Although we are not aware of any claims of infringement or other
challenges to our rights to use this  trademark,  there can be no assurance that
our marks do not or will not infringe upon the  proprietary  rights of others or
that our marks  would be  upheld  if  challenged.  We have not  applied  for the
trademark with respect to the EMMA trade name or any other trade name.

Employees

      As of May 31, 2006, we employed 169 employees and three  contractors  on a
full-time  basis,  of which 153 are employed at Tomco and the  remainder at Cash
Technologies  headquarters.  Of the Cash  Tech  staff,  three  were  engaged  in
facilities and security,  one in customer  service,  six in  administration  and
business  development,  and six in system support and development.  Of the Tomco
staff, 134 are engaged in production,  5 in shipping, 2 in outside sales and 12
in administrative  departments.  None of our employees are subject to collective
bargaining  agreements.  We believe that our  relations  with our  employees are
good. In addition, we utilize the services of two offshore technical development
groups for some of our software development activities.

                                  RISK FACTORS
      The following factors, in addition to those discussed elsewhere, should be
considered  carefully in  evaluating  our business and us. An  investment in our
shares  involves a high degree of risk and is suitable only for those  investors
who can bear the risk of loss of their entire investment.

Risks Related to Our Financial Condition

We have limited revenues and a history of incurring  losses,  which has resulted
in our independent  accountants  issuing  opinions  containing  doubts about our
ability to continue as a going concern.

We have generated limited revenues since our inception,  and, while we expect to
generate significant revenues within the next fiscal year, there is no assurance
that we will be successful. For the fiscal years ended May 31, 2006 and 2005, we
had net sales of $8,028,226 and $5,718,886,  respectively.  Virtually all of our
revenues  for the fiscal year ended May 31, 2005 and onwards  have been  derived
from our TAP subsidiary;  however TAP operations do not constitute the principal
operations  that we intend to conduct in the  future.  We intend to focus on the
healthcare  and financial  data  processing  products  which are marketed by our
Heuristics  Technologies  Inc.  subsidiary,  which  business has recently  begun
marketing its products.

      Prior to the fiscal year ended May 31, 2005 we have incurred  losses since
our  inception.  For the last two fiscal years ended May 31, 2006 and 2005,  net
income (losses) of ($5,038,393) and $3,655,760 respectively.  Net income for the
fiscal year ended May 31, 2005, was derived principally from our purchase of the
Tomco assets.  Despite the profit generated during the last fiscal year, we have
continued to generate  operating  losses and while  management  believes that it
will generated  operating  profits in the future,  no assurance can be given. In
its reports  accompanying our audited financial  statements for the fiscal years
ended May 31, 2005 and 2004, our  independent  auditors  included an explanatory
paragraph wherein they expressed substantial doubt about our ability to continue
as a going  concern.  For  the  period  ended  May  31,  2006  we have  incurred
additional (losses) of $(5,038,393).

We are unable to pay our  current  liabilities,  and must rely on the  continued
forbearance of specific creditors to avoid bankruptcy.

                                       13
<PAGE>

      As of May 31,2006 we had outstanding  current  liabilities of $10,831,888,
of which approximately $514,176 is not being paid as agreed. Our creditors have,
to date,  agreed not to accelerate on these  obligations and not to foreclose on
our assets.  However,  should the creditors demand immediate repayment, we would
have to  raise  the  needed  funds  to  satisfy  the  obligations,  possibly  on
unsatisfactory  terms or  failing  that,  we would have to  consider  filing for
bankruptcy protection.

We have an  immediate  need for  capital  and if we are  unable  to  obtain  the
financing we need, our business may fail.

      As of May 31,2006, Cash Tech had working capital of $396,689 and available
cash of $142,991.  Our capital  requirements  have been and will  continue to be
significant,  and our cash  requirements have exceeded cash flow from operations
since inception.  We are in immediate need of capital to continue to operate. We
have been dependent on the proceeds of private placements of our debt and equity
securities  to satisfy our working  capital  requirements.  We will be dependent
upon the  proceeds  of  future  private  placement  offerings  or  other  public
offerings to fund our short-term working capital  requirements,  to fund certain
marketing activities and to continue  implementing our business strategy.  There
can be no assurance we will be able to raise  necessary  capital.  To the extent
that we incur  indebtedness or issue debt securities,  we will be subject to all
of the risks  associated with incurring  indebtedness,  including the risks that
interest rates may fluctuate and cash flow may be  insufficient to pay principal
and  interest  on any such  indebtedness.  Any  inability  to obtain  additional
financing  when needed could require us to  significantly  curtail,  or possibly
cease  altogether,  our  operations.  There can be no assurance that our lenders
will not  declare an event of default  and demand  immediate  payment or seek to
attach our assets. As of May 31,2006, we also owe $3,654,096 to General Electric
Capital Corporation. In 2000, we entered into the first of several loan renewals
with G.E.,  the most recent of which expired in November 2005. We have continued
to pay G.E.  in  accordance  with the terms of the  expired  note and we believe
based on  discussions  with G.E.  that  another  renewal  will soon be executed;
however  we  have no  current  arrangement  or  capability  to  repay  G.E.  its
principal.

Our assets serve as collateral  for various loan  obligations  and therefore may
not be available for distribution to stockholders in the event of liquidation.

      We have  previously  granted  security  interests  in all of our assets to
several  lenders,  including  the  holders  of the  notes in the  principal  and
interest amount of $514,176 issued in a placement which was completed in January
2000,  equipment liens in favor of General Electric Capital Corporation pursuant
to a Master Security Agreement  originally entered into in May 1997 and liens in
favor of BFI  Finance  on all  assets  of TAP  Holdings  pursuant  to a Loan and
Security Agreement entered into in November, 2004.

      The G.E.  loan is secured by certain of our CoinBank  machines.  As of May
31,2006,  we were  indebted  to G.E. in the amount of  approximately  $3,654,096
including  interest.  As a  result  of the  aforementioned  security  interests,
creditors would be entitled to collect upon the assets prior to any distribution
being available to holders of our Common Stock or Preferred Stock.

      The BFI loan is a revolving accounts receivable credit facility secured by
all of the business  assets of TAP Holdings,  LLC as well as a limited  personal
guaranty from TAP's chairman (who is not an employee of Cash  Technologies).  As
of May 31,2006 we owed BFI approximately  $2,097,292  including  interest.  From
time to time, due to  fluctuations in Tomco's cash flow, TAP has requested funds
from the BFI credit  facility at advance rates higher than BFI's  contract rate.
To date BFI has funded all such requests but is under no obligation to do so. In
the event that BFI refuses to fund such  requests  in the  future,  TAP could be
adversely  affected and might not be able to pay its obligations  timely causing
temporary or permanent disruption in the company's operations.

Any  additional  financing  that we may  obtain  may  substantially  dilute  the
interests of our stockholders.

      To the extent that we obtain additional  financing through the issuance of
additional  equity   securities  in  the  future,   such  issuance  may  involve
substantial dilution to our then-existing stockholders.

Risks Related to our TAP Auto Products Business

TAP receives most of its sales from three customers.

                                       14
<PAGE>

      TAP is  substantially  dependent on three customers:  NAPA,  O'Reilly Auto
Parts and CARQUEST.  These customers  combined account for  approximately 77% of
TAP's revenue.  The loss of any of these customers would have a material adverse
affect on TAP's revenue.

The market for TAP's products is shrinking.

      Approximately 98% of TAP's revenue for the twelve month period end May 31,
2006,  was from the  sale of  rebuilt  carburetors.  Sales of  carburetors  have
fluctuated and may continue to fluctuate or decline for two reasons.  First, the
availability  of acceptable  carburetor  cores continues to shrink due to age or
damage.  TAP can  manufacture  new cores but has thus far not made the necessary
investment.  Secondly,  the number of vehicles  using  carburetors  continues to
decline, as the last domestic carbureted  production vehicle was manufactured in
1988.  TAP may be able to compensate  for this decline by increasing  its market
share but there is no  assurance  that it can  succeed in this  effort.  In 1998
Tomco  began  rebuilding  diesel  pumps  which  have a larger  user base than do
carburetors.  The company  also has plans to unveil new  products in fiscal 2006
and  has  explored  certain  offshore  markets  for  its  products  that  may be
lucrative.  However, there is no assurance that any of these measures can offset
the continual erosion in the size of TAP's primary market.

TAP may not fully recover the carrying value of its inventory.

      As of May  31,2006  TAP had had a  carrying  value of  $8,436,161  for its
inventory.  In  November  2004,  at the time TAP's  assets  were  purchased,  an
obsolescence  reserve of $1,180,000 was established to cover potential inventory
impairment due to low core inventory  turnover.  In future  periods,  additional
impairment may be taken based on future  carburetor sales. If TAP concludes that
such  impairment  exists,  this could  give rise to a  substantial  expense  and
negatively impact TAP's financial results.

Risks  Related to Our  Healthcare  Revenue  Management  and  Prepaid  Debit Card
Products

Competition in healthcare  revenue management and prepaid debit card products is
intense.

      Heuristic's healthcare products compete with products offered by companies
that are larger, better known and better capitalized than Heuristic.  Similarly,
competition in the prepaid debit card market is intense and some competitors are
larger  and  more  established  than  Heuristic.  Heuristic  may  not be able to
successfully compete with these companies in which event Heuristic might have to
withdraw one or more of its products which would have a material  adverse effect
on Heuristic and Cash Technologies.

Heuristic is liable for the loss or misuse of personal information.

      Heuristic and its  affiliates  have custody of, or come into contact with,
various types of personal information about consumers, their medical records and
financial   transactions.   The  company  has  taken  steps  to  safeguard  such
information and requires that its suppliers safeguard such information, however,
in the event  such  safeguards  fail to prevent  the loss or misuse of  personal
information, Heuristic might be liable for any damages caused thereby.

Heuristic is  substantially  dependent on third parties for data  processing and
customer support.

      Most data  processing  and customer  support for  Heuristic's  products is
performed by third parties under various exclusive and non-exclusive  contracts.
This reduces  infrastructure  development  costs and increases  speed to market,
however  the  failure of a third  party to perform its duties or renew a service
agreement could be materially detrimental to Heuristic's operations.

Data processing margins generally decline as products become more mature.

      Data processing  products  usually become  "commoditized"  as they mature,
with a corresponding  reduction in profit margins. This is caused by a number of
factors,  including:  Increased  competition  forcing  lower  prices;  increased
volumes  creating  economies of scale which permit lower prices by  competitors,
software  development  costs which are eventually  fully  amortized also permits
lower prices,  et al. There is no assurance that  Heuristic can generate  enough
growth in its sales to outpace these market forces.

Heuristic has liability for debit card losses.

      Under  Heuristic's  agreement  with its card issuing  bank,  Heuristic has
liability for losses caused by card fraud and misuse. These losses are predicted
based on historical  statistics and compensating  reserves are maintained by the
issuing  bank,  however in the event that these  losses were to increase  due to
unexpected behavior of a particular card program or cardholder group,  Heuristic
would be adversely affected.

                                       15
<PAGE>

Risks Related to Our CoinBank Business

We are dependent on third-party marketers in our CoinBank business.

      The demand for our coin processing equipment has significantly  diminished
and is also  subject to a high level of  uncertainty.  We do not intend to focus
significant  marketing  efforts on the sale of our CoinBank machines but instead
rely on third-party marketing organizations to sell the machines. The failure of
our  marketers to sell our machines  would result in  impairment  costs for slow
moving machine inventory.

Impairment Charge

We currently are holding for sale  approximately  241 CoinBank  machines,  which
have a carrying value of  approximately  $609,890 at May 31, 2006. We have taken
an  impairment  charge in the fiscal  year ended May 31,  2004 for the  carrying
value of our CoinBank  machines.  Impairment on coin machines was $154,140.  The
impairment  was taken due to low inventory  turnover for the coin  machines.  In
future periods, additional impairment may be taken based on future sales of coin
machines.  If we conclude that such impairment exists, this could give rise to a
substantial  expense,  which would increase our reported losses.  For the fiscal
year ended May 31, 2006,  we sold eight (4)  machines  for $31,620.  We continue
attempting to identify  parties  interested  in acquiring  the remaining  units,
although  we cannot  guarantee  we will  continue  to have sales or will  obtain
similar sales results.

We may not fully  recover the carrying  value of our CoinBank  machines held for
sale.

If our products do not achieve market acceptance, our business will be harmed.

      The demand for and market  acceptance of our coin and currency  processing
equipment are also subject to a high level of uncertainty.  If we do not realize
market  acceptance of these  products,  our business  will be seriously  harmed.
Commercial  establishments  and  individuals  may elect to utilize other methods
which they believe to be less costly or possess other  advantages  over our cash
processing  services,   including  establishing  their  own  cash  counting  and
processing equipment.

                                       16
<PAGE>

We are dependent on third-party manufacturers.

      We  are  substantially   dependent  on  the  ability  of  the  independent
contractors we hire to build our CoinBank  machines.  We do not  manufacture our
CoinBank  machines.  As a result,  we are  dependent  upon third parties for the
manufacture  of  our  machines,  we  cannot  control  the  price  or  timing  of
availability  of machines for resale and this  reliance  upon third  parties may
affect  our  ability  to market  and sell the  machines  to our  customers  at a
competitive price or to satisfy delivery requirements demanded by our customers.

Risks Related to EMMA-Based Technology

Our EMMA-Based Technology may not perform reliably.

      To date our deployment of EMMA-based products, such as the ATM-X and POS-X
machines,  has been extremely limited and we have derived no significant revenue
from our EMMA-based  applications.  Thus we have  insufficient  information upon
which we can base predictions about the reliability of the technology.  Although
such  systems and machines  have  performed  reliably to date at their  previous
installations and in our laboratory, upon widespread commercial use they may not
satisfactorily perform all of their intended functions or may not prove reliable
in extensive utilization.  Software and other technologies that are incorporated
into our  products  are complex and may contain  errors,  which will only become
apparent  subsequent to widespread  commercial use.  Remedying such errors could
require the  expenditure of a substantial  amount of money and could also result
in significant delays in installing or selling our products,  which could have a
material  adverse  effect on us. We anticipate  that we will continue to seek to
upgrade and enhance both the hardware and software  components  of our products.
Such upgrading and  enhancement  efforts remain subject to the risks inherent in
new product development,  including  unanticipated  technical or other problems,
which  could  result  in  material  delays  in  product   commercialization   or
significantly increased costs.

Effective  marketing of our EMMA technology requires a capital investment beyond
the Company's current resources.

      In marketing our  EMMA-based  products and services,  we have attempted to
change  the  traditional  methods  by  which  people  obtain  certain  financial
services.  Accordingly,  the  cost to  effectively  market  such  technology  is
significant and beyond the Company's current resources, limiting the exposure of
EMMA-based applications to the marketplace. Achieving market acceptance for EMMA
will require  substantial  marketing  efforts and the expenditure of significant
funds.  If and when the  Company  can expend the needed  resources  to  properly
market the EMMA technology, the potential marketplace for such products may have
diminished or been satisfied  with competing  products that obviate the need for
EMMA.

If our EMMA  Technology  does not achieve market  acceptance,  its value will be
severely diminished.

      The  demand  for  EMMA-based  services  and our  ability  to  deliver  the
technology  is  subject  to a high level of  uncertainty.  If we do not  realize
market acceptance of these products,  the technology will not be valuable to the
Company and our investment in EMMA will be impaired.

      As of May 31, 2006, we had test-marketed only four EMMA-driven ATM-X/POS-X
machines and have derived no significant  revenue from our EMMA-based  business.
To date, we have not  installed a base of  EMMA-driven  ATM-X/POS-X  machines or
PrISM systems upon which we can base reliable  predictions about the reliability
or functionality of those technologies.  Although such systems and machines have
performed  reliably  to  date  at  their  previous   installations  and  in  our
laboratory,  upon widespread commercial use they may not satisfactorily  perform
all of  their  intended  functions  or  may  not  prove  reliable  in  extensive
utilization.  Software and other  technologies  that are  incorporated  into our
products  are complex and may contain  errors,  which will only become  apparent
subsequent to widespread commercial use. Remedying such errors could require the
expenditure  of  a  substantial  amount  of  money  and  could  also  result  in
significant  delays in installing  or selling our  products,  which could have a
material  adverse  effect on us. We anticipate  that we will continue to seek to
upgrade and enhance both the hardware and software  components  of our products.
Such upgrading and  enhancement  efforts remain subject to the risks inherent in
new product development,  including  unanticipated  technical or other problems,
which  could  result  in  material  delays  in  product   commercialization   or
significantly  increased costs. Further, our EMMA systems may not satisfactorily
perform  all of its  intended  functions  or will  prove not to be  reliable  in
extensive utilization.

                                       17
<PAGE>

Competing products and services could render our technologies obsolete.

      Our EMMA  platform  will  compete  with  existing  POS  systems,  ATMs and
services offered by financial  institutions and other companies that may provide
services similar to those offered by EMMA.  Competitive  technologies may render
our products and services obsolete or less marketable.

If our EMMA Technology does not achieve market acceptance,  our business will be
harmed.

      In marketing our EMMA based  products and services,  we are  attempting to
change the  traditional  methods by which people obtain  financial  services and
access the Internet.  Accordingly, the demand for these services is subject to a
high level of  uncertainty.  If we do not  realize  market  acceptance  of these
products,  our business will be seriously harmed. The results of the use of EMMA
when  deployed  may not be well  received  and prior  results  of use may not be
indicative of future market  acceptance of our products or services.  Commercial
establishments  and individuals  may elect to utilize other methods,  which they
believe  to be less  costly or possess  other  advantages  over EMMA.  Achieving
market  acceptance for EMMA will require  substantial  marketing efforts and the
expenditure of a significant amount of funds to inform various targeted customer
groups of the perceived  benefits and cost  advantages of EMMA. To date, we have
not generated any revenue from our EMMA based technology.

                                       18
<PAGE>

Our limited marketing capabilities may hinder our growth.

      Since inception,  we have conducted only limited marketing  activities and
currently have limited marketing and technical experience and limited financial,
personnel and other resources to  independently  undertake  extensive  marketing
activities.  Accordingly,  our marketing  efforts may not result in  significant
initial or continued  market  acceptance,  may not develop a market for our EMMA
system  and  may not  succeed  in  positioning  EMMA as a  preferred  method  of
processing  "advanced  function"  transactions.  Further,  our current marketing
plans are  subject  to change  as a result  of a number  of  factors,  including
changes  in market  conditions  and the  nature of the  marketing  requested  or
provided by prospective users of EMMA.

The expansion of our EMMA-based business is uncertain.

      Our  PrISM  product  (Predictive   Identification  and  Security  Manager)
incorporates biometric and risk assessment  technologies originally developed to
secure  financial  transactions  on the EMMA  platform  to address  the need for
sophisticated personal identification at borders,  airports and other locations.
The Company has been focused on its other products and no significant  marketing
of PrISM has  occurred to date.  There can be no  assurance  that we will pursue
this emerging market, or that we will be successful if marketing efforts are the
perceived  level  of  demand  for  these  types of  products  will be as high as
anticipated.

We may not successfully compete with our competitors.

      The   financial   transaction   processing   industry   is  crowded   with
well-established  companies,  large and small.  While  financial data processing
companies such as Deluxe,  First Data,  Total Systems and others have focused on
conventional ATM and POS and related transactions, if these firms were to make a
concerted effort to develop an advanced  function system comparable to EMMA they
might prevent or reduce our ability to effectively  market EMMA. We believe that
our  development  advantage  and  proprietary  technologies  will permit EMMA to
penetrate  the market  effectively,  but there is no  assurance  that  larger or
better  established  transaction  processing  firms  will  not  offer  competing
products in the future that preempt our efforts.

      The  credit/debit  card industry and healthcare  industries are also fully
developed  markets  served by large  companies  who are better  able to finance,
develop  and  market  products  than  is  the  Company.  We  have  attempted  to
differentiate  our  products  from  those  of our  competitors  but  competitive
products  aimed at our target markets could obviate the need for our products or
severely limit our market penetration.

Changing industry trends may adversely effect our operations.

      Alternatives to the use of cash and checks,  such as credit cards and wire
transfer,  debit cards and other forms of  electronic  currency are  increasing.
Increasing use of these  alternative  forms of payment could reduce the need for
some the Company's products while increasing the need for others.

                                       19
<PAGE>

We are dependent on third-party  manufacturers  and on independent  contractors,
whose nonperformance could harm our business.

      We  are  substantially   dependent  on  the  ability  of  the  independent
contractors  we  hire  to  provide  software  engineering  and  support  for our
products.  Any contractor that we utilize or may utilize may not have sufficient
capacity to satisfy our needs during any period of sustained demand. The loss of
services of  independent  contractors  could disrupt our business.  Furthermore,
certain of our products  access  networks  which are owned and operated by third
parties.  The failure or  unavailability of these networks could have a material
adverse effect on us.

We are subject to risks relating to our international installations and sales.

      We are seeking to deploy certain products, such as debit cards, EMMA-based
systems and CoinBank  machines outside of the United States.  To the extent that
we are able to expand our operations and sales outside of the United States,  we
will be subject to the risks associated with international operations and sales,
including  economic and political  instability,  currency  fluctuations,  credit
risks,  shipping  delays,  customs  duties,  export quotas,  foreign  government
regulations and other trade restrictions,  any of which could have a significant
impact on our ability to operate  effectively outside of the United States or to
deliver such products overseas to customers on a competitive and timely basis.

Risks Related to Government Regulation and Patent and Licensing matters

Uncertainty of patent and trademark protection.

      Although  we have  been  issued  U.S.  Patents  with  respect  to our EMMA
technology,  there can be no  assurance  that these  patents  will afford us any
meaningful  protection.  We intend to rely  primarily on a combination  of trade
secrets,  technical measures,  copyright protection and nondisclosure agreements
with  our   employees  to  establish   and  protect  the  ideas,   concepts  and
documentation of software  developed by us. Such methods may not afford complete
protection,  and  there  can  be  no  assurance  that  third  parties  will  not
independently  develop such  technology or obtain access to the software we have
developed.  Although we believe that our use of the  software we  developed  and
other  software  used in our  operations  does not  infringe  upon the rights of
others, our use of the software we developed or such other software may infringe
upon the  patents or  intellectual  property  rights of others.  In the event of
infringement,  we could,  under certain  circumstances,  be required to obtain a
license or modify aspects of the software we developed or such other software or
refrain  from  using  such  software.  We may not have the  necessary  financial
resources  to  defend  any  infringement  claim  made  against  us or be able to
successfully  terminate any  infringement  in a timely manner,  upon  acceptable
terms and conditions or at all.  Failure to do any of the foregoing could have a
material  adverse  effect on us.  Moreover,  if the software we developed or any
other  software or hardware  used in our business is deemed to infringe upon the
rights of others,  we could,  under  certain  circumstances,  become  liable for
damages,  which could have a material  adverse effect on us. We received  United
States  trademark  registration  for  the  "CoinBank"  name in  September  1997.
Although we are not aware of any claims of infringement  or other  challenges to
our rights to use this  trademark,  there can be no assurance  that our marks do
not or will not infringe upon the proprietary rights of others or that our marks
would be upheld if challenged.

                                       20
<PAGE>

Risks Related to Our Management

The  success  of our  business  also  requires  that we retain  other  qualified
management personnel.

      Our  success  is also  dependent  upon  our  ability  to hire  and  retain
additional  qualified  management,  marketing,  technical,  financial  and other
personnel.  Competition for qualified personnel is intense,  and there can be no
assurance that we will be able to hire or retain additional qualified personnel.
Any inability to attract and retain  qualified  management  and other  personnel
would have a material adverse effect on us.

Our directors and officers have limited personal liability.

      Our Certificate of Incorporation includes provisions to limit, to the full
extent  permitted by Delaware  law, the personal  liability of our directors for
monetary  damages arising from a breach of their fiduciary  duties as directors.
In addition, our By-Laws require us to indemnify any of our directors, officers,
employees or agents to the full extent permitted by Delaware law. As a result of
such   provisions  in  our  Certificate  of   Incorporation   and  the  By-Laws,
securityholders  may be unable to recover  damages  against  our  directors  and
officers for actions taken by them which constitute negligence, gross negligence
or a violation of their  fiduciary  duties.  This may reduce the  likelihood  of
securityholders instituting derivative litigation against directors and officers
and may discourage or deter securityholders from suing our directors,  officers,
employees  and agents for  breaches  of their duty of care,  even though such an
action, if successful, might otherwise benefit us and our securityholders.

If our common stock is delisted from the American  Stock  Exchange,  we also are
likely to be subject to the risks relating to penny stocks.

      Our common  stock has not been traded  above $5.00 in over five years.  If
our common stock were to be delisted from trading on the American Stock Exchange
and the  trading  price of the  common  stock  remained  below  $5.00 per share,
trading in our common  stock  would be  subject to the  requirements  of certain
rules  promulgated  under the Exchange Act related to so-called penny stocks.  A
penny stock is defined generally as any non-exchange listed equity security that
has a market price of less than $5.00 per share,  subject to certain exceptions.
These rules require  additional  disclosure by broker-dealers in connection with
any trades  involving a stock defined as a penny stock and impose  various sales
practice  requirements on broker-dealers  who sell penny stocks to persons other
than established customers and accredited investors, generally institutions. The
additional  burdens  imposed  upon   broker-dealers  by  such  requirements  may
discourage broker-dealers from effecting transactions in our common stock, which
could  severely limit the market price and liquidity of our common stock and the
ability of purchasers to sell our common stock in the secondary market.

                                       21
<PAGE>


The price of our common stock has been, and may continue to be, volatile.

      The market price of our common stock has fluctuated over a wide range, and
it is likely that the price of our common  stock will  fluctuate  in the future.
Since June 1, 2005,  the sale price for our common stock,  as reported by the
American Stock  Exchange has  fluctuated  from a low of $0.55 to a high of $1.20
per share.  The market  price of our common stock could be impacted by a variety
of factors, including:

      o     announcements  of   technological   innovations  or  new  commercial
            products by us or our competitors.

      o     changes  in  government   regulation   and  policies  which  may  be
            undertaken  with respect to security  issues  related to  terrorism,
            privacy and other matters.

      o     developments  in the patents or other  proprietary  rights  owned or
            licensed by us or our competitors.

      o     matters related to our financial condition, including our ability to
            obtain necessary capital.

      o     litigation affecting us or our products.

      o     general market conditions in our industry.

      In addition,  the stock market  continues to  experience  price and volume
fluctuations.  These  fluctuations have especially  affected the market price of
many technology  companies.  Such  fluctuations have often been unrelated to the
operating  performance  of these  companies.  Nonetheless,  these  broad  market
fluctuations may negatively affect the market price of our common stock.

We have the discretion to issue additional shares of preferred stock with rights
and preferences superior to those granted to holders of our common stock.

      Our  Certificate  of  Incorporation  authorizes  our board of directors to
issue up to 1,500,000  shares of preferred  stock,  from time to time, in one or
more series.  Our board of directors is authorized,  without further approval of
the  securityholders,  to fix the dividend rights and terms,  conversion rights,
voting rights,  redemption rights and terms,  liquidation  preferences,  and any
other rights,  preferences,  privileges and restrictions  applicable to each new
series of preferred stock. The issuance of such stock could adversely affect the
voting power of the holders of common stock and,  under  certain  circumstances,
make it more difficult for a third party to gain control of us,  discourage bids
for our common  stock at a premium,  or  otherwise  adversely  affect the market
price of our common stock.

ITEM 2. DESCRIPTION OF PROPERTY

      We currently lease our Los Angeles facility from Prime Financial Partners,
Ltd, a Nevada  limited  partnership.  Our  monthly  lease  payment is $9,315 for
13,000 square feet. The lease expires in April 2010.  Bruce Korman,  our CEO, is
one of the partners of Prime Financial Partners, Ltd. Our Tomco operation leases
a 47,000  square  foot  facility  in Los  Angeles  from the owners of Tomco Auto
Products, Inc. Our monthly lease payment is $25,450. The lease expired in April,
2006.  We are currently on a month to month lease agreement.

                                       22
<PAGE>

ITEM 3. LEGAL PROCEEDINGS

      As previously reported,  we terminated a consulting agreement with Abraham
Mirman of Samson  Consulting  Corp. in 2003. In July 2004,  Mirman  initiated an
arbitration  in New York  State  claiming  that  the  agreement  was  wrongfully
terminated  and that  Samson was owed  $600,000 in damages  plus costs.  In June
2005,  an  arbitrator  awarded  Sampson  $100,000  in unpaid  fees,  $21,650  in
statutory  interest  through  July 20,  2005 and no attorney  fees or costs.  In
December 2004, we initiated a lawsuit  against  Mirman in  California,  alleging
that he failed to provide financing promised in February,  2003, causing damages
in excess of  $400,000.  In February  2006,  both  parties  agreed to settle all
outstanding  claims  without any funds  exchanged;  i.e. we have  dismissed  our
California lawsuit and Samson has vacated its New York judgment.

      In 2001 we delivered stock certificates  representing 700,000 shares to an
escrow agent as collateral  for a loan. The loan was never  consummated,  and in
May 2001 we notified the  transfer  agent to cancel the shares.  Thereafter  the
escrow  agent,  an  attorney,  died  and we  were  never  able  to  recover  the
certificates.  In  August,  2004  it  came to our  attention  that a  party  was
attempting to transfer 450,000 of the 700,000 shares. We immediately initiated a
lawsuit in New York to prevent the transfer of the shares and have them retired.
In December, 2004, we reached a settlement in which the shares would be returned
to us without any exchange of money. We intend to similarly  pursue the recovery
of the remaining  250,000 shares,  however in the event that we cannot achieve a
satisfactory outcome in such effort, or in the event that the pending settlement
is not consummated for any reason, some or all of these shares may be treated as
outstanding and our Stockholders'  Equity line item would have to be adjusted to
reflect such additional shares.

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

                                     PART II

ITEM 5. MARKET OF COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      Our  common  stock is  listed on the  American  Stock  Exchange  under the
symbol, "TQ".

The  following  is the range of closing bid prices for the common  stock for the
periods indicated below:


Year ended May 31, 2005                 High   Low

Q1   June 1 - August 31                 1.51   1.00

Q2   September 1 - November 30          1.50   1.11

Q3   December 1 - February 28           1.45   1.10

Q4   March 1 - May 31                   1.25   0.85

                                       23
<PAGE>

Year ended May 31, 2006                 High   Low

Q1   June 1 - August 31                 1.09   0.75

Q2   September 1 - November 30          1.19   0.65

Q3   December 1 - February 28           0.93   0.55

Q4   March 1 - May 31                   1.20   0.59

On Jan 30, 2006 we had a high and low price of $0.84 and $0.55, respectively.

Dividend Policy

      During the fiscal year ended May 31, 2006, we paid dividends in the amount
of $446,116 via shares of our common stock and common stock purchase warrants.
The  declaration in the future of any cash dividends on our common stock will be
at the  discretion  of our board of directors  and will depend upon a variety of
factors,  including our earnings,  if any,  capital  requirements  and financial
position,  as well as the general  economic  conditions at the time in question.
Moreover,  the payment of cash dividends on the Common stock in the future could
be limited or prohibited by the terms of financing  agreements that we may enter
into, such as a bank line of credit or an agreement  relating to the issuance of
other of our debt securities, or by the terms of any preferred stock that are or
may be issued and then outstanding.

      During  the fiscal  year  ended May 31,  2006,  we  accrued  dividends  of
$50,416 for all  Preferred  Stock  outstanding  as compared to $259,985 for the
fiscal year ended May 31, 2005.

                                       24
<PAGE>

Recent Sales of Unregistered Securities

      During the fiscal  quarter  ended May 31, 2006,  in a private  transaction
under  Section  4(2) of the  Securities  Act of 1933,  as amended,  we sold 35.5
shares of  preferred  stock for gross  proceeds of  $355,000  to three  existing
shareholders.  The  Preferred  Stock  shall,  for a period  of seven  years,  be
convertible  into Units,  each  consisting  of 4 five-year  Warrants to purchase
common stock at the rate of one unit for each dollar  invested.  In each Unit, 2
Warrants shall be exercisable at $1.00 per share, 1 Warrant shall be exercisable
at $1.50 per share and 1 Warrant shall be  exercisable  at $2.00 per share.  The
Preferred Stock shall earn dividends at 8% per annum,  payable quarterly in cash
or common stock at the  Company's  option.  If paid in common  stock,  the stock
price shall be the lower of the Market Price or $1.37 per share. Market Price is
defined as the  average  of the  closing  prices of the common  stock for the 10
consecutive trading days immediately preceding the dividend due date.

      During  the  fiscal   quarter  ended  February  28,  2006,  in  a  private
transaction  under Section 4(2) of the  Securities  Act of 1933, as amended,  we
sold  100,000  shares of  common  stock for gross  proceeds  of  $100,000  to an
existing  shareholder.  As part of that  transaction  we also  issued  five-year
warrants  to purchase  50,000  shares of common  stock at an  exercise  price of
$2.50.

      During  to the  fiscal  quarter  ended  February  28,  2006,  in a private
transaction  under Section 4(2) of the  Securities  Act of 1933, as amended,  we
sold  175,000  shares of common  stock for gross  proceeds  of $175,000 to three
existing  shareholders  and  one  new  accredited  investor.  As  part  of  that
transaction  we also issued  five-year  warrants to purchase  175,000  shares of
common stock at an exercise price of $2.00.

      During  the  fiscal   quarter  ended  February  28,  2006,  in  a  private
transaction  under Section 4(2) of the  Securities  Act of 1933, as amended,  we
sold 52.5  shares of  preferred  stock for gross  proceeds  of $525,000 to three
existing  shareholders.  The Preferred Stock shall, for a period of seven years,
be convertible into Units,  each consisting of 4 five-year  Warrants to purchase
common stock at the rate of one unit for each dollar  invested.  In each Unit, 2
Warrants shall be exercisable at $1.00 per share, 1 Warrant shall be exercisable
at $1.50 per share and 1 Warrant shall be  exercisable  at $2.00 per share.  The
Preferred Stock shall earn dividends at 8% per annum,  payable quarterly in cash
or common stock at the  Company's  option.  If paid in common  stock,  the stock
price shall be the lower of the Market Price or $1.37 per share. Market Price is
defined as the  average  of the  closing  prices of the common  stock for the 10
consecutive trading days immediately preceding the dividend due date.

      On February 28, 2006, we completed an investment in ClaimRemedi, Inc., the
licensor of certain  healthcare  software  products  marketed  by our  Heuristic
subsidiary.  Under the terms of the investment, we have issued 350 shares of our
Series K Convertible Preferred Stock to ClaimRemedi in exchange for 19.5% of the
outstanding  shares of  ClaimRemedi.  The Preferred  Stock is  convertible  into
shares of our common  stock at any time at a conversion  price of between  $1.00
and $2.00 per share,  determined at the time of  conversion  based on the market
value of our  common  stock,  which  shall  result in the  issuance  of  between
1,750,000 and 3,500,000 shares of common stock. However, any conversion prior to
February  28,  2008  shall be at a  conversion  price of $2.00  per  share.  The
Preferred Stock accrues dividends at a rate of 4% per annum, which dividends are
payable  in cash  or  stock  at our  option.  If  certain  performance  criteria
applicable to the license agreement  between  ClaimRemedi and our subsidiary are
not met,  ClaimRemedi  has the  right  to buy back up to 50% of the  ClaimRemedi
Shares  beginning 24 months  after  closing,  and up to 100% of the  ClaimRemedi
Shares  beginning 30 months after closing if the conditions  have still not been
met. Any such  repurchase of ClaimRemedi  Shares by  ClaimRemedi  may be made in
cash or by the sale of the Preferred Stock back to us at the issue price.

      On June 30,  2005,  in a private  transaction  under  Section  4(2) of the
Securities  Act of 1933, as amended,  we sold 952,381 shares of common stock for
gross  proceeds of $1,000,000 to one  individual.  We also issued 428,571 of our
common stock purchase warrants with an exercise price of $2.50. All common stock
purchase warrants have an exercise life of 5 years.

      During  the  fiscal   quarter  ended  November  30,  2005,  in  a  private
transaction  under Section 4(2) of the  Securities  Act of 1933, as amended,  we
sold 600,000  shares of common  stock and 600,000 of our common  stock  purchase
warrants  for gross  proceeds  of $600,000 to four  previous  shareholders.  The
common stock  purchase  warrants have an exercise price of $2.50 and an exercise
life of 5 years.

                                       25
<PAGE>

      During  the  fiscal   quarter  ended  November  30,  2005,  in  a  private
transaction  under Section 4(2) of the  Securities  Act of 1933, as amended,  we
sold 66,667 shares of common stock for gross proceeds of $60,000 to one previous
shareholder.  We also issued to that same  investor  30,000 of our common  stock
purchase  warrants with an exercise  price of $1.75.  All common stock  purchase
warrants have an exercise life of 5 years.

      During  the  fiscal   quarter  ended  November  30,  2005,  in  a  private
transaction  under Section 4(2) of the  Securities  Act of 1933, as amended,  we
sold 47,619 shares of common stock for gross proceeds of $50,000 to one previous
European shareholder.  We also issued to that same investor 23,809 of our common
stock  purchase  warrants  with an  exercise  price of $2.50.  All common  stock
purchase warrants have an exercise life of 5 years.

      During the fiscal quarter ended November 30, 2005, we issued 10,000 of our
common stock  purchase  warrants with an exercise price of $0.90 in lieu of cash
for consulting  services.  Based on the  Black-Scholes  option-pricing  model we
recognized an expense of $3,308.

      During the fiscal quarter ended November 30, 2005, we issued 34,000 shares
of our common stock to two investors who exercised stock  warrants.  Proceeds of
$340 dollars were received upon exercise of the warrants.

                                       26
<PAGE>

ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Overview

      Cash Technologies, Inc., is a Delaware corporation, incorporated in August
1995. Unless the context otherwise requires, references herein to "we," "our" or
"Cash  Tech"  refers  to  Cash  Technologies,  Inc.,  and its  wholly-owned  and
majority-owned   subsidiaries   National  Cash  Processors,   Inc.,  a  Delaware
corporation;  CoinBank Automated Systems, Inc., a Delaware corporation; CoinBank
Automation  Handels GmbH,  organized  operating in Salzburg,  Austria,  Cintelia
Systems Inc., a Delaware corporation,CT  Holdings,  LLC., a Delaware corporation
of which we own 86.65%,Heuristic Technologies,  Inc., a Delaware company, formed
in May,  2004, to engage in healthcare  data  processing and debit card issuance
and TAP Holdings, LLC (dba Tomco Auto Products),  of which we own 89%, formed in
November, 2004 to acquire certain assets and assume certain liabilities of Tomco
Auto Products, Inc.

      Our  independent  certified  public  accountant  included  an  explanatory
paragraph  in its report  for the year ended May 31,  2006,  which  indicated  a
substantial  doubt as to the ability of us to continue as a going concern.  This
concern is primarily due to substantial  debt service  requirements  and working
capital needs. See independent certified public accountant's letter.

      Systems development expenses,  marketing expenses,  executive salaries and
general and other  administrative  costs are expected to increase as we continue
to develop our EMMA Platform.  Inasmuch as we will continue to have a high level
of  operating  expenses,  we will  continue  to develop  and improve our various
products.  We anticipate that losses will continue for the  foreseeable  future.
Our expenses have exceeded net revenues  since  inception.  For the fiscal years
ended May 31, 2006 and 2005, we received net income  (losses) of $(5.0)  million
and $(3.7) million, respectively.

      The research and development of new software  products and enhancements to
existing  software  products  were  expensed  as incurred  (and  recorded in the
consolidated  statement of operation) until  technological  feasibility has been
established.  Technological  feasibility  is  established  upon  completion of a
detailed  program  design or  working  model.  As of May 31,  2004,  capitalized
software costs amounted to $1,446,068. Technological feasibility was achieved in
September of 1999 and  commencing  October 1, 1999 all expenses  related to EMMA
software  development  had been  capitalized.  As of December 31,  2001,  we had
capitalized  $2,771,536 in development  and related costs.  The EMMA product was
available for release to the public in January 2002 thus all  development  costs
since have been  expensed  including  $155,679 for the fiscal year ended May 31,
2005 and $150,000 for the fiscal year ended May 31, 2006.

                                       27
<PAGE>


      Amortization  of the  capitalized  software  commenced on January 1, 2002.
Amortization  had been  calculated  over a seven (7) year period for the quarter
ended  February  28,  2002  resulting  in an  amortization  expense of  $65,989.
Management changed the amortization period for capitalized software, to five (5)
years starting March 1, 2002, primarily to approximate the estimated period over
which the business brought about by the technology will expand into its expected
capacity. As of March 1, 2002, net unamortized  capitalized software amounted to
$2,705,547. The unamortized cost as of March 1, 2002 is being amortized over the
remaining revised estimated life. The change resulted in an amortization expense
of  $205,931,  an  increase  of  $40,959  ($0.01 per  share)  from the  original
estimated  amortization  period,  for the year  ended May 31,  2002.  During the
fiscal  year  ended  May 31,  2006,  we  amortized  an  additional  $559,569  of
capitalized software.

      The current EMMA asset is currently valued at $886,300, which reflects the
costs  incurred by us in  developing  the asset,  as well as the net  realizable
value  estimated in  management's  determination.  Management  believes that its
estimates reflect its ability, based upon management's internal projections,  to
obtain a recovery on the asset.  These  estimates  assume  that  recovery of the
value  of the  asset  will be  obtained  commencing  in the  early  half of 2006
calendar  year, and will be obtained fully by the end of the calendar year 2007.
These   projections  and  estimates  are  subject  to  numerous   contingencies,
including,  without limitation,  the condition of the economy and the ability of
corporate entities to purchase software such as the EMMA software.

      In its projections, management has calculated a transaction fee based upon
the use of the  technology  through  placement on mobile  trucks  operated by an
independent  third party.  The  transaction  charge for use through ATM machines
would be higher, because the services available through an ATM located in a bank
office  would be greater and the expense to us is also  greater.  The  projected
transaction fee is based upon management's discussions with potential customers,
including  bank  and  non-bank  ATM  service   providers.   Management  has  had
significant   negotiations  with  representatives  of  various  large  financial
institutions regarding the installation of EMMA based products. However, to date
we  have  not  entertained  any  definitive  agreements  with  any  institution.
According to a study  entitled  "the Use of Checks and other  Non-Cash  Payments
Instruments in the United States"  prepared by the Federal  Reserve,  there were
42.5 billion  checks  processed by financial  institutions  in the United States
during  the year 2000  about a third of which are of the type that our  products
are intended to help process.

                                       28
<PAGE>


      Much of our SG&A  costs  are  fixed in  nature,  therefore,  as  volume of
transactions and revenues increase, the SG&A does not increase proportionately.

      There can be no assurance that management's estimates will prove accurate,
and investors  should be aware that in the event these estimates are inaccurate,
a write down of all or a portion of this asset may be required.

      We record as revenue  licensing and software fees as well as coin counting
machine sales in accordance with generally accepted accounting principles.

      Previously our market  analysis for  self-service  coin counting  machines
indicated that retailers were demanding higher profit margins from the operation
of these  devices  than  that was being  offered  through  the  "free-placement"
business  model.  We  concluded  that  our  free-placement   program  should  be
supplanted by direct sales of these  machines to retail store chains and removed
substantially  all  of  our  free-placement  machines  from  operation.  We  are
marketing  the  machines  to  other  equipment   manufacturer   "OEM"  customers
(manufacturers of cash handling  equipment),  companies with existing  equipment
distribution  and service  channels  and  directly to  retailers  and  financial
institutions.  Although we will continue our direct sales  approach with respect
to our CoinBank  machines,  we intend to focus  substantially all of our efforts
and  operations on the  continued  development  and  deployment of the Heuristic
products and EMMA technology.

      Revenues  generated from CoinBank machines accounted for approximately 46%
of net  revenues  for the fiscal year ended May 31, 2004  compared to 1% for the
fiscal  year  ended  May 31,  2005,  with the  balance  involving  software  and
licensing fees from our EMMA related  services and Tomco.  Although there can be
no assurance,  we anticipate  that the revenue  associated  with processing fees
derived from Heuristic and EMMA  transaction  processing will become the primary
source of our future revenues.

                                       29
<PAGE>

Results of Operations

Fiscal Year Ended May 31, 2006, Compared to Fiscal Year Ended May 31, 2005

      Gross  Revenues  for the fiscal  year ended May 31,  2006 were  $8,208,226
compared  to  $5,718,886  for  fiscal  year  2005.  The  increase  in revenue is
attributable to the acquisition of the Tomco operations in mid 2005 which showed
only a partial  year of  revenues in 2005  versus a full year of  ownership  and
operations  in  fiscal  2006.  For  GAAP   purposes,   TAP  revenues  have  been
reclassified  into Loss on  Business  Held for Sale along with all other TAP P&L
items.

      Net  Revenues  for the year ended May 31,  2006,  was $55,007  compared to
$61,662 in fiscal year 2005.  Cost of revenues  for the year ended May 31, 2006,
was $32,064 compared to $45,185 in fiscal year 2005.

      Gross profit for the year ended May 31,  2006,  was $22,943 as compared to
$16,477 for the year ended May 31, 2005.

      Selling,  general and  administrative  expenses for the year ended May 31,
2006,  were  $3,149,956  compared to expenses of $2,695,792  for the fiscal year
2005.  These  expenses  consisted  primarily of wages (and wage related  costs),
outside contractor expenses,  travel/promotional expenses, professional services
and  facilities/office  related  expenses.  The  increase was  primarily  due to
Increases in license, consulting, and legal fees.

      Research and development  expenses for the fiscal year ended May 31, 2006,
was $150,000  compared to $155,679  for the fiscal year ended May 31, 2005.  The
decrease was the result of a reduction in programmer costs incurred.

      Depreciation  and  amortization  expenses in fiscal year 2006 was $564,263
compared to $563,336 in fiscal 2005.

      Other  Income for the fiscal  year ended May 31,  2006 was $0  compared to
$1,859,693  for the 2005  period.  Income from  forgiveness  of debt in 2005 was
compromised of  forgiveness  of certain debt and  settlement of certain  pending
lawsuits of the Company and its subsidiaries.

      Interest  expense  for the  fiscal  years 2006 and 2005 was  $390,562  and
$153,345,  respectively.  The decrease  was due to the  reversal of  overaccrued
interest in 2005 after an analysis of the GE Capital debt/interest.

      Income Taxes for the fiscal year ended May 31, 2006 was $7,000 compared to
$4,800  for the fiscal  year ended May 31,  2005.  The  increase  was due to the
formation new subsidiaries.

                                       30
<PAGE>

      Minority Interest for the fiscal year ended May 31, 2006 and May 31, 2005,
was $(24,521) and ($26,795),  respectively.  The change in minority interest was
directly  related to the  minority  interest  of  $686,615  associated  with the
extraordinary  gain allocated to the minority  interest  holder of Tap Holdings,
LLC in 2005.

      Extraordinary  gain for the fiscal year ended May 31, 2005 was  $6,249,951
resulting from the purchase of assets from Tomco.

      As a result of the foregoing,  net income (losses) for the years ended May
31, 2006 and 2005 were $5,038,393 and $3,655,760, respectively.

Fiscal Year Ended May 31, 2005, Compared to Fiscal Year Ended May 31, 2004

      Revenues for the fiscal year ended May 31, 2005 were  $5,718,886  compared
to $80,616 for fiscal year 2004. The increase in revenue is  attributable to the
purchase of assets from Tomco.

      Cost of revenues for the year ended May 31, 2005, was $4,354,915  compared
to $47,608 in fiscal year 2004.  The increase in direct costs was  primarily the
result of the purchase of assets from Tomco.

      Gross profit for the year ended May 31, 2005, was $1,363,971,  as compared
to $33,008 for the year ended May 31,  2004.  The  increase in gross  profit was
primarily attributable to the purchase of assets from Tomco.

      Selling,  general and  administrative  expenses for the year ended May 31,
2005,  increased to $4,431,404 compared to expenses of $3,106,495 for the fiscal
year 2004. These expenses consisted primarily of wages (and wage related costs),
outside contractor expenses,  travel/promotional expenses, professional services
and  facilities/office  related expenses.  The increase was primarily due to the
purchase of assets from Tomco.

      Research and development  expenses for the fiscal year ended May 31, 2005,
was $155,679  compared to $120,000  for the fiscal year ended May 31, 2004.  The
increase was the result of additional programmer costs incurred.

      Depreciation and amortization expenses remained  approximately the same at
$563,336 during fiscal 2005 from $563,982 in fiscal 2004.

      Other  Income  for the  fiscal  year  ended  May 31,  2005 was  $2,235,059
compared  to  $40,000  for the 2004  period.  Income  from  forgiveness  of debt
compromised of  forgiveness  of certain debt and  settlement of certain  pending
lawsuits of the Company and its subsidiaries.

      Interest  expense  for the  fiscal  years 2005 and 2004 was  $380,134  and
$553,767,   respectively.   The  decrease  was  primarily  attributable  to  the
conversion of a majority of the convertible debt in the 2005 period.

      Income Taxes for the fiscal year ended May 31, 2005 was $4,800 compared to
$2,400  for the fiscal  year ended May 31,  2004.  The  increase  was due to the
formation new subsidiaries.

                                       31
<PAGE>

      Minority Interest for the fiscal year ended May 31, 2005 and May 31, 2004,
was  $657,867  and  $(45,244),  respectively.  The drastic  increase in minority
interest was directly  related to the minority  interest of $686,615  associated
with the  extraordinary  gain allocated to the minority  interest  holder of Tap
Holdings, LLC.

      Extraordinary  gain for the fiscal year ended May 31, 2005 was  $6,249,951
resulting from the purchase of assets from Tomco.

      As a result of the foregoing,  net income (losses) for the years ended May
31, 2005 and 2004 were $3,655,760 and $(4,382,532), respectively.

Liquidity And Capital Resources

      Our capital  requirements  have been and will continue to be  significant,
and our cash  requirements  have exceeded cash flow from operations.  At May 31,
2006,  we had a working  capital of $396,689  compared to  $1,867,989 at May 31,
2005. At May 31, 2006, we had a cash balance of $142,991 compared to $163,627 at
May 31,  2005.  We are in  immediate  need of  substantial  working  capital  to
continue  our  business  and  operations.  To date,  we have  been  funding  our
operations through the issuance of equity in private placement transactions with
existing  stockholders  or persons  with whom we have  relationships,  including
affiliates of  stockholders.  There can be no assurance  that we will be able to
continue to raise required working capital in this or any other manner.

      Since  inception,  we have  satisfied  our  working  capital  requirements
through limited revenues  generated from operations,  the issuance of equity and
debt  securities,  borrowing  under a line of credit and loans from our security
holders.  Our independent  certified public  accountant  included an explanatory
paragraph  in its report  for the year ended May 31,  2006,  which  indicated  a
substantial doubt as to our ability to continue as a going concern. This concern
is primarily due to substantial  debt service  requirements  and working capital
needs.

      Net cash used in operating  activities  was $2,996,946 for the fiscal year
ended May 31,  2006  compared  to  $4,088,596  for the fiscal year ended May 31,
2005.  The  decrease of Net cash used by operating  activities,  during the 2006
period was primarily  due to the effects of the increase in accrued  interest of
$202,175 and accrued liabilities of $1,571,974.

      Net cash used in  investing  activities  for the fiscal year ended May 31,
2006,  was $3,440 as  compared to  $2,353,217  for the fiscal year ended May 31,
2005.  The  decrease  in used in  investing  activities  for 2006 was  primarily
attributable  to increases in  acquisition  of subsidiary  of $2,328,597  during
2005.

      Net cash  provided by financing  activities  for the fiscal year ended May
31, 2006, was $2,979,749 as compared to $6,584,589 for the fiscal year ended May
31, 2005. The increase in Net cash provided by financing activities for 2006 was
primarily  attributable  to  increases  in proceeds  from the issuance of common
stock of  $2,224,794  and  $880,000 in proceeds  from the  issuance of preferred
stock.

                                       32
<PAGE>

                  INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Cash Technologies, Inc.
Los Angeles, California

We  have  audited  the   accompanying   consolidated   balance  sheets  of  Cash
Technologies, Inc. and Subsidiaries (the "Company") as of May 31, 2005 and 2004,
and the related  consolidated  statements of  operations,  stockholders'  equity
(deficiency)  and cash  flows  for the  years  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 audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board. 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 financial statement  presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial position of Cash Technologies,
Inc.  and  Subsidiaries  as of May 31,  2005 and 2004 and the  results  of their
operations  and  cash  flows  for the  years  then  ended,  in  conformity  with
accounting principles generally accepted in the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern.  As discussed in Note 1(a) to
the  consolidated  financial  statements,  the Company has suffered  significant
recurring losses that raise substantial doubt about its ability to continue as a
going concern.  Management's plans in regard to these matters are also described
in  Note  1(a).  The  consolidated  financial  statements  do  not  include  any
adjustments that might result from the outcome of the uncertainty.


                                             /s/ VASQUEZ & Company LLP

Los Angeles, California
August 17, 2005.

                                       33
<PAGE>

                    CASH TECHNOLOGIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                  MAY 31,        MAY 31,
                                                                                   2006           2005
                                                                              ------------    ------------
<S>                                                                           <C>             <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                                                     $     81,355    $    102,611

Accounts receivable                                                                 14,226              --
Other receivable (net of allowance $50,000)                                        104,684          28,035
Prepaid expenses and other current assets                                          185,986         488,044
Assets of business held for sale
  Cash                                                                              61,636          61,016
  Accounts receivable                                                            2,095,107       1,734,616
  Prepaid expenses and other current assets                                        231,422         261,910
  Inventory (net of allowance $1,180,000) (Note 2)                               8,436,161       8,508,323
  Property and equipment, net                                                       15,261          17,450
  Other assets                                                                     144,038         238,673
                                                                              ------------    ------------
      Total assets of business held for sale                                    10,983,625      10,821,988

                                                                              ------------    ------------
Total Current Assets                                                            11,369,876      11,440,678

CoinBank machines held for sale  (Note 1(n))                                       609,890         638,283

PROPERTY AND EQUIPMENT (net)  (Note 3 )                                             30,260          33,634

CAPITALIZED SOFTWARE COSTS  (Note 1(n))                                            326,531         886,300

CDHC PREFERRED STOCK (Note 10)                                                     900,901         900,901


CLAIMREMEDI PREFERRED STOCK                                                      3,500,000              --


BIPS PREFERRED STOCK                                                             2,000,000              --

OTHER ASSETS                                                                       535,295         211,072
                                                                              ------------    ------------

TOTAL ASSETS                                                                  $ 19,272,753    $ 14,110,868
                                                                              ============    ============


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

CURRENT LIABILITIES:
Current maturities of Notes Payable  (Note 4)                                 $  3,482,287    $  3,288,465
Due to Officers and Directors                                                        8,915           8,915
Convertible debt (Note 5)                                                          514,176         472,975
Due to Stockholders (Note 5)                                                       120,750         270,750
Accounts payable                                                                   607,945         762,920
Accrued liabilities                                                                927,228         782,948
Dividend payable                                                                    50,416         128,589
Liabilities of business held for sale
   Accounts payable                                                              1,126,690       1,343,406
   Notes payable                                                                 2,321,207       1,984,860
   Accrued expenses and other current liabilities                                1,658,943         286,545
                                                                              ------------    ------------
      Total liabilities of business held for sale                                5,106,840       3,614,811

Total Current Liabilities                                                       10,818,557       9,330,373


Long-Term Notes Payable  (Note 6)                                                       --              --
                                                                              ------------    ------------

TOTAL LIABILITIES                                                               10,818,557       9,330,373
                                                                              ------------    ------------


COMMITMENTS & CONTINGENCIES (Notes 7 and 16)                                            --              --

MINORITY INTEREST (Note 14)                                                        (74,517)        (49,996)
MINORITY INTEREST OF ASSETS HELD FOR SALE (Note 14)                                684,662         684,662
                                                                              ------------    ------------
     TOTAL MINORITY INTEREST                                                       610,145         634,666

STOCKHOLDERS' EQUITY (DEFICIENCY):  (Note 9)

Stockholder's equity of business held for sale
   Additional paid in capital                                                      910,000         910,000
   Accumulated equity                                                            4,966,785       5,612,515
                                                                              ------------    ------------
      Total stockholder's equity of business held for sale                       5,876,785       6,522,515


Cumulative Redeemable Preferred Stock, 1,500,000 shares authorized,             10,625,812       4,195,812
647,515 and 647,093  shares issued and outstanding at May 31, 2006 and 2005

Common Stock, $0.01 par value, 35,000,000 shares authorized,                       346,445         183,300
23,035,964 and 20,635,964 issued and outstanding at May 31, 2006 and 2005

Additional Paid-In-Capital                                                      37,816,308      35,742,496
Accumulated Deficit                                                            (46,821,299)    (42,498,294)
                                                                              ------------    ------------

Total stockholders' equity                                                       7,844,050       4,145,828
                                                                              ------------    ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)                       $ 19,272,753    $ 14,110,868
                                                                              ============    ============
                                                                                        --              --
</TABLE>

                 See notes to consolidated financial statements

                                       34
<PAGE>



                    CASH TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                                                  FISCAL YEAR ENDED
                                                                                                    ENDED MAY 31,
                                                                                           2006                      2005
                                                                                        -----------               -----------
<S>                                                                                     <C>                       <C>

NET REVENUES BEFORE RECLASSIFICATION TO DISCONTINUED OPERATIONS) (Note 17)              $ 8,208,226*              $ 5,718,886*
                                                                                        ===========               ===========

NET REVENUES                                                                            $    55,007               $    61,662

COST OF REVENUES                                                                             32,064                    45,185
                                                                                        -----------               -----------

GROSS PROFIT (LOSS)                                                                          22,943                    16,477
                                                                                        -----------               -----------

SELLING, GENERAL, & ADMINISTRATIVE EXPENSE                                                3,149,956                 2,695,791
RESEARCH AND DEVELOPMENT                                                                    150,000                   155,679
IMPAIRMENT ON COIN MACHINES                                                                                                --
DEPRECIATION & AMORTIZATION EXPENSE                                                         564,263                   563,336
                                                                                        -----------               -----------

OPERATING LOSS                                                                          (3.841.276)                (3,398,330)
                                                                                        -----------               -----------

OTHER INCOME (Note 14)                                                                           --                (1,859,693)

INTEREST EXPENSE                                                                            390,562                   153,345
                                                                                        -----------               -----------

LOSS BEFORE INCOME TAXES                                                                (4.231.838)                (1,691,982)
                                                                                        -----------               -----------

INCOME TAXES                                                                                  7,000                     4,000

MINORITY INTEREST (Note 13)                                                                 (24,521)                   26,795

INCOME (LOSS) FROM CONTINUING OPERATIONS                                                 (4,263,359)                1,669,188

DISCONTINUED OPERATIONS (Note 17)
   NET REVENUES                                                                           8,153,219                 5,657,224
   COST OF REVENUES                                                                      (6,313,030)               (4,309,730)
   SELLING, GENERAL, & ADMINISTRATIVE EXPENSE                                            (2,309,953)               (1,735,612)
   OTHER INCOME                                                                                  --                   375,366
   INTEREST EXPENSE                                                                        (454,311)                 (226,789)
   MINORITY INTEREST                                                                             --                  (684,662)
   INCOME TAXES                                                                                  --                      (800)
   EXTRAORDINARY GAIN                                                                            --                 6,249,951
                                                                                        -----------               -----------
                                                                                           (824,075)                5,324,948

      EXTRAORDINARY GAIN ON BUSINESS HELD FOR SALE(Note 15)                                      --                        --
                                                                                        $(5,038,393)              $ 3,655,760
NET INCOME (LOSS)                                                                       -----------               -----------


Dividends & deemed dividends                                                                     --               $ 1,135,700

Net income (loss) allocable to common
shareholders                                                                             (5,038,393)              $ 2,520,060

Basic and diluted net income (loss) per share before extraordinary income               $     (0.26)              $     (0.24)

Basic and diluted net income (loss) per share extraordinary income                      $         0               $ 0.40/0.26

Basic and diluted net income (loss) per share                                           $     (0.26)              $ 0.16/0.10

Basic and diluted weighted average
shares of common stock outstanding                                                 20,583,595/31,002,503      15,647,493/24,368,938
                                                                                        ===========               ===========

</TABLE>

                 See notes to consolidated financial statements

                                       35
<PAGE>



                    CASH TECHNOLOGIES, INC. AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
                 Fiscal Year ended May 31, 2005 and May 31, 2006

<TABLE>
<CAPTION>

                                                                                                             Total
                                Common Stock           Preferred Stock         Additional                  Stockholders'
                           ---------------------   ------------------------     Paid-in     Accumulated      Equity
                             Shares      Amount     Shares        Amount        Capital       Deficit      (Deficiency)
                           ---------------------------------------------------------------------------------------------
<S>                        <C>          <C>        <C>         <C>             <C>          <C>            <C>

Balance May 31, 2004       14,358,446   $143,669    646,091    $  1,883,688  $ 30,292,720 $ (39,405,838) $ (7,085,761)
                           =============================================================================================

Common stock payments
to consultants                353,334      3,534         --              --       379,800            --       383,334

Common stock warrant
payments to consultants            --         --         --              --        71,636            --        71,636

Unit purchase -
common stock                2,943,077     29,430         --              --     2,922,148            --     2,951,578

Beneficial conversion
of warrants                        --         --         --              --       875,716      (875,716)           --

Unit purchase -
preferred stock                    --         --      1,007       2,324,624            --            --     2,324,624

Conversion of warrants
to common stock               279,682      2,798         --              --       185,817            --       188,615

Conversion of preferred
stock to common stock           7,812         78         (5)        (12,500)       12,422            --            --

Conversion of notes
payable to common stock       165,461      1,654         --              --       248,373            --       250,027

Investment in subsidiary           --         --         --              --       323,433            --       323,433

Miscellaneous                   1,890         --      1,890

Dividends paid with
common stock                  213,678      2,137         --              --     1,338,541            --     1,340,678

Dividends accrued on
preferred stock                    --         --         --              --            --      (259,985)     (259,985)

Net income (loss)                  --         --         --              --            --     3,655,760     3,655,760

------------------------------------------------------------------------------------------------------------------------
Balance for May 31, 2005   18,321,490   $183,300    647,093    $  4,195,812  $ 36,652,496 $ (36,885,779)  $ 4,145,828
========================================================================================================================

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

Common stock payments
to consultants              1,400,000    140,000         --              --            --            --       140,000

Common stock warrant
payments to consultants            --         --         --              --            --            --            --

Unit purchase -
common stock                1,975,667     19,757         --              --     2,077,200            --     2,096,957

Beneficial conversion
of warrants                        --         --         --              --            --            --            --

Unit purchase -
preferred stock                    --         --        422       6,430,000            --            --     6,430,000

Dividends accrued on
preferred stock                    --         --         --              --            --        (8,515)       (8,515)

Conversion of notes
payable to common stock            --         --         --              --            --            --            --

Investment in subsidiary           --         --         --              --            --            --            --
Miscellaneous                      --         --         --              --            --            --            --

Dividends paid with
common stock                  338,807      3,388         --              --       442,728            --       446,116

Dividends accrued on
preferred stock                    --         --         --              --            --      (367,943)     (367,943)

Net income (loss)                  --         --         --              --            --    (5,038,393)   (5,038,393)

------------------------------------------------------------------------------------------------------------------------
Balance for May 31, 2006   22,035,964   $346,445    647,515    $ 10,625,812  $ 39,172,424  $(42,344,379)  $ 7,844,050
========================================================================================================================
</TABLE>

                                       36
<PAGE>

                    CASH TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                           FISCAL YEAR ENDED MAY 31
                                                              2006           2005
                                                           ------------    ------------
<S>                                                        <C>
OPERATING ACTIVITIES:
Net loss                                                   $ (5,038,393)          #REF!
Adjustments to reconcile net loss to net cash used by
operating activities:
Minority interest                                               (24,521)        (26,796)
Amortization of capitalized software                            559,769         559,768
Gain on forgiveness of debt                                          --      (2,235,059)

Noncash compensation expense                                      3,308              --
Noncash operating expense                                       140,000

Depreciation expense                                              4,494           3,568

Impairment of CoinBank machines held for sale                        --              --

Changes in operating assets and liabilities:


Accounts receivable                                             (14,226)          2,383
Prepaid expenses and other current assets                       302,058         (11,071)

Other receivable                                                (76,649)             --
CoinBank machines held for sale                                  28,393          23,942
Other assets                                                   (324,223)         14,120
Accrued interest                                                285,023          93,553
Accounts payable                                               (154,974)        292,438
Change in net assets of business held for sale                1,330,392      (6,297,177)
Accrued expenses and other current liabilities                  144,280        (853,830)
                                                           ------------    ------------

Net cash used in operating activities                        (2,835,270)          #REF!
                                                           ------------    ------------

INVESTING ACTIVITIES:


Purchase of property and equipment                               (1,120)         (7,098)
                                                           ------------    ------------


Net cash provided by (used in) investing activities              (1,120)         (7,098)
                                                           ------------    ------------

FINANCING ACTIVITIES:

Proceeds from conversion of warrants                                340         188,615
Net proceeds from issuance of preferred stock                   830,000         832,000
Proceeds from short-term debt                                        --         133,608
Proceeds from (repayments to) equity holder                          --         200,758
Repayments on short-term debt                                  (100,000)        (39,696)
Proceeds from sale of common stock                            2,084,794       3,551,875
                                                           ------------    ------------

Net cash provided by financing activities                     2,815,134       4,867,160
                                                           ------------    ------------

CHANGE IN CASH AND CASH EQUIVALENTS                             (21,256)          #REF!

Cash and Cash Equivalents, Beginning of Year                    102,611          20,951
                                                           ------------    ------------

Cash and Cash Equivalents, End of Year                     $     81,355           #REF!
                                                           ============    ============


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

      Income taxes                                         $      7,000    $      4,800


SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS

     Conversion from convertible debt to common stock      $     50,000    $    250,024
     Conversion of preferred stock into common stock       $         --    $     12,500
     Conversion of notes payable to common stock           $     50,000

     Impairment of CoinBank machines                       $         --    $         --
     Issuance of common stock for services performed       $    143,308    $    390,000
     Dividends declared on preferred stock                 $    367,943    $    259,985
     Dividends paid on preferred stock with common stock   $         --    $  1,340,677

     Dividends paid via common stock                       $    446,116    $         --
     Deemed dividend on warrants issued                    $      8,515    $    875,715
     Conversion of shareholder warrants                    $         --    $    620,535

     Issuance of preferred stock                           $  5,500,000    $         --


     Total assets purchased                                $ 10,798,988
     Total liabilities assumed                             $  2,299,037
                                                                           ------------
     Net assets purchased                                  $  8,499,951
     Bank debt assumed                                     $ (1,600,000)
     Cash paid as investment in subsidiary                 $   (650,000)
                                                                           ------------
     Extraordinary gain                                    $  6,249,951
                                                                           ============
</TABLE>

                 See notes to consolidated financial statements

                                       37
<PAGE>



                    CASH TECHNOLOGIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    SUMMARY OF  SIGNIFICANT  ACCOUNTING  POLICIES,  ORGANIZATION  AND BASIS OF
      PRESENTATION

      (a)   "Going Concern"--The  accompanying consolidated financial statements
            have  been  prepared  assuming  that  we  will  continue  as a going
            concern.  We have  significant  losses from operations and have used
            significant  amounts  of cash for  operations  during  the last five
            years.  Although as of May 31, 2006, we have both  positive  working
            capital and net equity  operating  losses have continued  throughout
            2006.

            In view of the financial  deficiencies,  there is substantial  doubt
            about our ability to continue as a going concern. The recoverability
            of recorded assets and  satisfaction of the liabilities is dependent
            on our continued  operations,  which is in turn  dependent  upon our
            ability to meet our financing  requirements on a continuing basis as
            well  as  to  succeed  in  our  future  operations.   The  financial
            statements   do  not  include  any   adjustments   relating  to  the
            recoverability and classification of recorded assets or liabilities.

            Due to the unfavorable  results of operations and cash flows, we are
            in  the  process  of   negotiating   payment   terms  with   vendors
            representing a significant  portion of our accounts  payable and are
            managing  the  payments  of  the  remaining  accounts  payable  on a
            case-by-case  basis.  Management  is also  taking  certain  steps to
            obtain  additional equity financing to improve our operating results
            and financial position.

            We plan to  increase  revenues  and  reduce  our  costs  in order to
            generate  sufficient  positive cash flow beginning in second quarter
            of fiscal year 2007. While we believe that our financing and revenue
            generation plans will be successful, no assurances can be given that
            we will be successful and that we will continue as a going concern.

      (b)   Basis  of  Consolidation--The  accompanying  consolidated  financial
            statements  include the accounts of Cash  Technologies,  Inc. ( "CTI
            "),  a  Delaware  corporation,  and our  wholly-owned  subsidiaries,
            National  Cash  Processors,  Inc.  (  "NCP  "),  Cintelia,  Inc,  CT
            Holdings, LLC, Heuristic Technologies,  Inc., TAP Holdings, LLC. and
            CoinBank  Automated  Systems  (  "CAS  ")  together  the  "Company."
            CoinBank  Automation  Handels  GmbH,  Salzburg,  Austria  ("CoinBank
            Europe" or "CBE") was treated as a division  of  CoinBank  Automated
            Systems  during  this  period  and was  consolidated  into  CoinBank
            Automated Systems.  All significant  inter-company  transactions and
            accounts have been eliminated in consolidation. CTI was incorporated
            in August 1995. In January 1996, a few of our  affiliates  exchanged
            their stock in NCP as part of a combination of entities under common
            control.  CAS was incorporated in November 1995 Cintelia in December
            2001, CT Holdings,  LLC in June 2002, Heuristic  Technologies in May
            2004 and Tap  Holdings in November  2004.  As of May 31, 2006 we own
            86.35% of CT Holdings, LLC and 89% of TAP Holdings, LLC.

      (c)   Business--The  principal  business  activity  of each  entity  is as
            follows:  CTI is  currently  undergoing  a  development  process  of
            Electronic Message Management  Architecture  Transaction  Processing
            System  (EMMA);  NCP  is  a  full-service   cash-processing   entity
            providing sorting, counting and wrapping functions to cash-intensive
            businesses;  CAS offers  self-service  coin-counting  machines.  CBE
            functions as a European  sales office for us and Cintelia was formed
            to develop and market  software  applications in relation to airport
            and other security through the utilization of biometrics.

            On November 5, 2004 TAP  Holdings,  LLC (dba Tomco Auto  Products or
            the "Company") acquired  substantially all of the assets and assumed
            certain  liabilities  of Tomco Auto  Products,  Inc.  The Company is
            engaged  primarily  in the  remanufacture  and sale of  carburetors,
            throttle body  injection  systems and diesel  injection  pumps,  for
            domestic and foreign  automobiles  and light  trucks,  to automotive
            warehouse distributors and retailers throughout the United States.

                                       38
<PAGE>

            The Company sells units for automobiles and trucks manufactured from
            1932  through  1995.  In order to maintain its high order fill rate,
            which  exceeds  industry  averages,  the  Company  maintains a large
            carburetor  core  inventory.  Although  certain cores remain on hand
            longer than a normal  operating  cycle,  the Company  considers  the
            entire core inventory  necessary to maintain a high level of service
            to its  customers  along  with  keeping  a broad  range  of  product
            offerings available.

      (d)   Fiscal  Year--CTI's fiscal year ended May 31, 2006 but TAP Holdings,
            LLC's  fiscal  year ends on the last Sunday in May,  which  normally
            results in a 52 or 53 week year

      (e)   Revenue  Recognition--The Company recognizes sales when products are
            shipped.  Net sales reflect reductions for cores returned for credit
            and other returns and allowances.

      (f)   Use  of  Estimates--The   preparation  of  financial  statements  in
            conformity with generally accepted  accounting  principles  requires
            management  to  make  estimates  and  assumptions  that  affect  the
            reported  amounts  of assets  and  liabilities  and  disclosures  of
            contingent  assets  and  liabilities  at the  date of the  financial
            statements  and reported  amounts of revenue and expense  during the
            reporting period. Actual results could differ from those estimates.

      (g)   Advertising  Costs--The Company expenses  advertising costs when the
            advertising takes place.

      (h)   Warranty Policy--The Company offers a limited ninety-day warranty on
            products  sold.  Warranty  costs  relating to this limited  warranty
            policy are  estimated  and recorded as warranty  obligations  at the
            time of sale based on historical return rates.

      (i)   Shipping  and  Handling  Fees  and  Costs--In  September  2000,  the
            Emerging  Issues  Task  Force  issued  EITF  00-10,  Accounting  for
            Shipping and  Handling  Fees and Costs  ("EITF  00-10").  EITF 00-10
            requires  shipping  and  handling  fees  billed to  customers  to be
            classified  as revenue and shipping and handling  costs to be either
            classified  as  cost of  sales  or  disclosed  in the  notes  to the
            financial  statements.  The Company  includes  shipping and handling
            fees billed to customers in net sales.  Shipping and handling  costs
            associated  with outbound  freight are included in selling  expenses
            and totaled $386,041 for the year ended May 31, 2006.

      (j)   Cash  Equivalents--We  consider all  investments  purchased  with an
            original maturity of three months or less to be cash equivalents.

      (k)   Cash--The  Company  maintains  its cash in bank accounts  which,  at
            times,  may exceed  federally  insured  limits.  The Company has not
            experienced  any  losses in such  accounts  and  believes  it is not
            exposed to any significant risk on cash.

      (l)   Trade & Other  Receivables--Receivables  are recorded when billed or
            accrued and  represent  claims  against  third  parties that will be
            settled  in cash.  The  carrying  value of  receivables,  net of the
            allowance  for doubtful  accounts,  represents  their  estimated net
            realizable  value. The allowance for doubtful  accounts is estimated
            based on historical collection trends, type of customer,  the age of
            outstanding receivables and existing economic conditions.  If events
            or  changes  in  circumstances  indicate  that  specific  receivable
            balances  may be  impaired,  further  consideration  is given to the
            collectibility  of those  balances  and the  allowance  is  adjusted
            accordingly.  Past due  receivable  balances  are  written-off  when
            collection  efforts have been  unsuccessful in collecting the amount
            due. As of May 31, 2006 the Company had an  Allowance  for Bad Debts
            of $50,000.

                                       39
<PAGE>

      (m)   Inventories--The   Company's   inventory  consists  of  used  cores,
            replacement  component  parts,  and  carburetors and diesel pumps in
            process or completed.  The inventory  values are based on historical
            standards less obsolescence and acquisition reserves.  Standards are
            reviewed  and  adjusted,  if  necessary,  at fiscal  year  end.  The
            standards are valued on a lower of cost or market  basis.  As of May
            31, 2006 an obsolescence reserve of $1,180,000 has been established.
            The reserve against the standard cost, which had been established by
            the seller.

      (n)   CoinBank  Machines  Held  for  Sale--CTI  has  designated   CoinBank
            machines and parts as being held for sale.  CoinBank  machines  held
            for sale are recorded at the lower of cost or estimated  fair value,
            which  includes an estimate of the costs to sell these  assets.  The
            estimated fair value is based on information  including recent sales
            of CoinBank machines and estimated present value techniques.  During
            the fourth  quarter of fiscal year 2006,  management  evaluated  the
            estimated  fair  market  value of these  machines  and  subsequently
            recorded an  impairment  loss of $5,170.  As of May 31, 2006,  the
            carrying value of the CoinBank machines is $609,890.

      (o)   Property and  Equipment--Property  and  equipment are stated at cost
            less  accumulated  depreciation.  The provision for  depreciation is
            computed using the  straight-line  method over the estimated  useful
            lives of the  related  asset,  ranging  from  three to seven  years.
            Amortization  of  leasehold   improvements  is  computed  using  the
            straight-line  method over the shorter of the estimated  life of the
            asset or the remaining term of the lease.

      (p)   Impairment of Long-Lived Assets--We have evaluated long-lived assets
            for impairment whenever events or changes in circumstances  indicate
            that the carrying value of an asset may not be  recoverable.  If the
            estimated  future cash flows  (un-discounted  and  without  interest
            charges) from the use of an asset is less than the carrying value, a
            write-down  would be  recorded  to reduce the  related  asset to its
            estimated fair value.

      (q)   Other  Assets--Other  Assets are  carried at cost and are  amortized
            using a  straight-line  method.  The  organization  costs  are being
            amortized  over  five  years  and the  deferred  loan fees are being
            amortized over the life of the loan.

      (r)   Income Taxes--We have filed a consolidated federal income tax return
            and a combined  California  franchise  tax return.  Deferred  income
            taxes have been  recognized  for temporary  differences  between the
            financial  reporting and income tax bases of assets and liabilities,
            which are based on the  enacted  tax rates  expected to be in effect
            when  such  amounts  are  expected  to be  realized  or  settled.  A
            valuation allowance is established when necessary to reduce deferred
            income tax assets to the amount expected to be realized.  Income tax
            expense is the tax payable or refundable  for the year plus or minus
            the change during the year in deferred income taxes.

      (s)   Employee  Stock  Option--We  have  adopted  statement  of  financial
            accounting   standard   No.   123,   "Accounting   for   Stock-Based
            Compensation"(SFAS No. 123), as of June 1, 1998, which establishes a
            fair value method of accounting for stock-based  compensation plans.
            In  accordance  with SFAS No.  123,  We have  chosen to  continue to
            account for stock-based  compensation  utilizing the intrinsic value
            method  prescribed  in APB 25.  Accordingly,  compensation  cost for
            stock  option is measured as the excess,  if any, of the fair market
            price of our stock at the date of grant over the amount an  employee
            must pay to acquire the stock.

            Also,  in accordance  with SFAS No. 123, we have  provided  footnote
            disclosure with respect to stock-based  employee  compensation.  The
            cost of stock-based  employee  compensation is measured at the grant
            date on the value of the award and is  recognized  over the  service
            period.  The value of the  stock-based  award is determined  using a
            pricing model whereby  compensation cost in excess of the fair value
            of the stock as  determined  by the model at the grant date or other
            measurement date over the amount an employee must pay to acquire the
            stock.

                                       40
<PAGE>

      (t)   Basic and  Diluted  Net Income  (Loss) per Common  Share--Basic  and
            diluted net income  (loss) per common share is based on the weighted
            average  number of common shares  outstanding  during the respective
            periods.  Statement  of  Financial  Accounting  Standards  No.  128,
            "Earnings  per Share"  issued by the FASB is effective for financial
            statements  with  fiscal  years and  interim  periods  ending  after
            December 15, 1997.  SFAS 128 provides for the  calculation  of Basic
            and Diluted earnings per share. Basic earnings per share includes no
            dilution  and is  computed by dividing  income  available  to common
            stockholders  by  the  weighted  average  number  of  common  shares
            outstanding during the periods presented. Diluted earnings per share
            reflect the potential dilution of securities that could share in the
            earnings, such as stock options, warrants or convertible debentures.
            Stock options and warrants  outstanding during the periods presented
            were not  included in diluted  earnings per share since their effect
            would be anti-dilutive.

      (u)   Fair Value of Financial  Instruments--Financial  instruments consist
            of  accounts  receivable  and  payable,  which  have  a  fair  value
            approximating the book value due to their short-term  nature;  notes
            payable for which fair value approximates book value due to interest
            rates on long-term debt  approximate  current  interest  rates,  and
            amounts  due to  stockholders  have  a fair  value  that  cannot  be
            determined due to the related-party nature of the transactions.

      (v)   Concentration   of   Suppliers--We   are  dependent  on  third-party
            manufacturers for the production of the components incorporated into
            CoinBank  machines and currently  purchase  substantially all of our
            requirements  of  specially  designed  or modified  components  from
            single source  suppliers.  We purchased  certain of these components
            pursuant  to open  purchase  orders  placed from time to time in the
            ordinary  course of  business.  Although we  currently  believe that
            alternative  sources for these  components  are  readily  available,
            failure or delay by any  manufacturer in providing  components to us
            on  commercially  reasonable  terms,  or at all,  in the  absence of
            readily available alternative sources, could result in interruptions
            in our ability to continue the assembly and installation of CoinBank
            machines and have a material adverse effect on our operations.

      (w)   Capitalized Software -- The research and development of new software
            products  and  enhancements  to  existing   software  products  were
            expensed as incurred (and recorded in the consolidated  statement of
            operation)  until  technological  feasibility has been  established.
            Technological  feasibility  is  established  upon  completion  of  a
            detailed program design or working model.  Technological feasibility
            was achieved in September of 1999 and commencing October 1, 1999 all
            expenses related to EMMA software  development had been capitalized.
            As  of  December  31,  2001,  we  had   capitalized   $2,771,536  in
            development  and related  costs.  The EMMA product was available for
            release  to the public in January  2002 thus all  development  costs
            since have been  expensed  including  $150,000  for the fiscal  year
            ended May 31, 2006.

            Amortization  of the  capitalized  software  commenced on January 1,
            2002.  Amortization had been calculated over a seven (7) year period
            for the quarter ended February 28, 2002 resulting in an amortization
            expense of $65,989.  Management changed the amortization  period for
            capitalized  software,  to five (5) years  starting  March 1,  2002,
            primarily  to  approximate  the  estimated  period  over  which  the
            business  brought  about  by the  technology  will  expand  into its
            expected capacity. As of March 1, 2002, net unamortized  capitalized
            software amounted to $2,705,547. The unamortized cost as of March 1,
            2002 is being amortized over the remaining  revised  estimated life.
            The change  resulted  in an  amortization  expense of  $205,931,  an
            increase of $40,959  ($0.01 per share) from the  original  estimated
            amortization  period,  for the year ended May 31,  2002.  During the
            fiscal year ended May 31, 2006 we amortized an  additional  $559,769
            of capitalized software.

                                       41
<PAGE>

            As of May 31,  2006,  the current  EMMA asset is valued at $326,531,
            which reflects the costs incurred by us in developing the asset,  as
            well  as  the  net  realizable   value   estimated  in  management's
            determination.  Management  believes that our estimates  reflect our
            ability,  based upon management's internal projections,  to obtain a
            recovery on the asset.  These estimates  assume that recovery of the
            value of the asset will be obtained  commencing  in the earlier half
            of 2006 calendar  year, and will be obtained fully by the end of the
            calendar year 2007.  These  projections and estimates are subject to
            numerous contingencies, including, without limitation, the condition
            of the  economy and the  ability of  corporate  entities to purchase
            software such as the EMMA software.

            In our  projections,  management  has  calculated a transaction  fee
            based upon the use of the  technology  through  placement  on mobile
            trucks  operated by an  independent  third  party.  The  transaction
            charge for use through  ATM  machines  would be higher,  because the
            services  available through an ATM located in a bank office would be
            greater  and  the  expense  to us is  also  greater.  The  projected
            transaction  fee  is  based  upon   management's   discussions  with
            potential  customers,   including  bank  and  non-bank  ATM  service
            providers.   Management  has  had  significant   negotiations   with
            representatives  of various large financial  institutions  regarding
            the  installation of EMMA based products.  However,  to date we have
            not  entertained  any definitive  agreements  with any  institution.
            According to a study  entitled "the Use of Checks and other Non-Cash
            Payments  Instruments in the United States"  prepared by the Federal
            Reserve,  there were 42.5  billion  checks  processed  by  financial
            institutions in the United States during the year 2000 about a third
            of which  are of the type that our  products  are  intended  to help
            process.

            Much of our SG&A costs are fixed in nature,  therefore, as volume of
            transactions  and  revenues  increase,  the SG&A  does not  increase
            proportionately.

            There can be no assurance  that  management's  estimates  will prove
            accurate,  and  investors  should be aware  that in the event  these
            estimates are  inaccurate,  a write down of all or a portion of this
            asset may be required.

      (x)   Concentration of Credit Risk--Financial instruments that potentially
            subject us to a concentration  of credit risk consists  primarily of
            accounts receivable.  The receivables are unsecured,  and we perform
            ongoing credit evaluations of our customers.


NOTE 2 - INVENTORIES

                  As of May 31, 2006 inventories consist of the following:

                  Finished Goods                                $  1,510,569
                  Work in Process                                    668,548
                  Cores                                            6,172,709
                  Component Parts                                  1,264,335
                                                                ------------

                        Inventories at Standard Cost               9,616,161

                  Provision for Obsolescence                      (1,180,000)
                                                                ------------

                        Net Carrying Value of Inventories       $  8,436,161

                                       42
<PAGE>



NOTE 3 - PROPERTY AND EQUIPMENT

      Property and equipment consist of the following:

<TABLE>
<CAPTION>

                                                       2006              2005
                                                    ----------       ----------
<S>                                                 <C>              <C>
Transportation Equipment.......................     $   15,561       $   15,561
Computer equipment.............................        145,483          145,483
Office Equipment...............................          2,061            2,061
Other equipment ...............................         32,134           32,134
                                                    ----------       ----------
      Total Property and Equipment.............     $  195,239       $  195,239
      Less Accumulated Depreciation............        149,718          144,155
                                                    ----------       ----------
                                                    $   45,521       $   51,084
                                                    ==========       ==========
</TABLE>

NOTE 4 - NOTES PAYABLE

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

<TABLE>
<CAPTION>

                                                 Additions          Adjustments
          Loan              Balance 6/1/05   6/1/05 to 5/31/06   6/1/05 to 5/31/06    Balance 5/31/06
-------------------------   --------------   -----------------   -----------------    ---------------
<S>                         <C>              <C>                 <C>                  <C>

GE Capital Principal        $    3,288,465   $              --   $              --    $    3,288,465

GE Capital Interest                394,580             347,388            (347,388)          394,580

BFI Business Finance             1,936,318             160,974                             2,097,292

Notes Payable - TAP (Note 6)        34,735                                 (16,247)            18,48
                            --------------   -----------------   -----------------    ---------------
Totals                      $    5,654,098   $         508,362   $        (363,635)   $    5,798,825
-----------------------------------------------------------------------------------------------------
</TABLE>

                                       43
<PAGE>


                                                            2006         2005
                                                         ----------   ----------

In 1997, we entered into a credit  agreement with G.E.
Capital  Corporation,  or G.E.  Capital,  pursuant  to
which  we  borrowed  $5,500,000  for the  purchase  of
CoinBank  component  equipment,  working  capital  and
general  corporate  purposes.  Due to our inability to
repay G.E. Capital on the original terms, on September
29,  2000 we entered  into the first of  several  loan
modifications  with G.E. The most recent  modification
requires  interest-only payments at a rate of 9.5% and
the  entire  unpaid  balance  is  due at  maturity  in
November,  2005. We do not have sufficient  capital to
repay  this  debt.  We have continued to pay G.E. in
accordance with the terms of the expired note and
believe based on discussions with G.E. that another
renewal will soon be executed.  We have no current plan
or capability to repay G.E. its principal.
As of May 31, 2006, we owed G.E. Capital  $3,683,045,
Which includes  the  principal,  financing  fees and
unpaid interest........................................  $3,683,045   $3,683,045

The maximum amount  available under the line of credit
is  $3,000,000,  limited to 60% of  eligible  accounts
receivable  up to $2,000,000 plus 60%  of  eligible
inventory  up  to $1,000,000, less any availability
reserves, as defined in the loan agreement.  Interest
is payable monthly at 4.0% per annum above the prime
interest  rate (12% at May 31,  2006).
As of May 31, 2006, there was a $160,000
over advance on this line of credit.

The line of credit  is  collateralized  by a  security
interest  in  the   Company's   accounts   receivable,
inventories, property and equipment, and certain other
assets.  The  Company  must also  adhere  to  covenant
limitations,  conditions and restrictions as set forth
in the loan and security agreement.

From time to time, due to  fluctuations in Tomco's cash
flow,  TAP has  requested  funds  from  the BFI  credit
facility at advance  rates  higher than BFI's  contract
rate.  To date BFI has funded all such  requests but is
under no  obligation  to do so. In the  event  that BFI
refuses to fund such requests in the future,  TAP/Tomco
could be  adversely  affected  and might not be able to
pay  its  obligations   timely  causing   temporary  or
permanent disruption in the company's operations.......   2,097,292    1,936,318

At May 31, 2006 TAP  Holdings,  LLC. had a loan payable
outstanding to a broker  relating to the acquisition of
certain assets & liabilities of Tomco Auto Products....      23,157       48,542

                                                          ----------  ----------
                                                          5,803,494    5,667,905

      Less current portion.............................   5,798,825    5,654,098
                                                          ----------  ----------

Long term maturity.....................................  $    4,669   $   13,807
                                                         ==========   ==========

                                       44
<PAGE>

NOTE 5 - CONVERTIBLE DEBT

<TABLE>
<CAPTION>

                                                    Additions     Adjustments
                                                    6-1-05 to      6-1-05 to
         Description             Bal. @ 6/01/05      5/31/06        5/31/06      Bal. @ 5/31/06
         ------------            --------------    ----------     -----------    --------------
<S>                              <C>               <C>            <C>            <C>

Convertible Debt--Principal LT   $      335,012                   $              $      335,012
Convertible Debt--Interest              137,963        41,201                           179,164
Convertible Debt--Stockholders          270,750                      (150,000)          120,750
                                 --------------    ----------     -----------    --------------

         Totals                   $     743,975    $   41,201      $ (150,000)   $      634,926

</TABLE>

In January 2000, we completed a private placement  offering of convertible notes
and warrants  under  Section 4(2) of the  Securities  Act of 1933.  The offering
consisted of units, each unit comprised of a secured convertible promissory note
in the  principal  amount of  $50,000,  bearing  interest at the rate of 10% per
annum and Series B Redeemable Warrants to purchase 5,000 shares of common stock.
GunnAllen  Financial,  Inc., one of our investment bankers and an underwriter in
our initial public  offering,  was engaged as placement agent for this offering.
We received  gross  proceeds from this  offering of $3,362,000  from the sale of
67.2  Units.  As a result of this  offering,  we issued  notes in the  aggregate
principal  amount of  $3,362,000  and  336,200  Series B common  stock  Purchase
Warrants  The notes were  originally  convertible  into our common  stock at the
conversion  rate of $9.50 per  share.  The  Series B  Warrants  were  originally
exercisable  at a price of $13.00 per share.  The notes were  originally due and
payable on July 31, 2001. The notes were secured by a first priority lien on all
of our assets.

Since July 31, 2001, some of the notes have been in default,  and some have been
restructured. Under the restructuring, the notes were extended for two (2) years
to July 2003,  the  noteholders  agreed to surrender all old warrants  priced at
$13.50  per  share to  receive 2  replacement  warrants  for  every old  warrant
surrendered. The new warrants were vested immediately,  have a life of fie years
and were  exercisable at $1.35 through  December 31, 2001, $2.20 through January
15,  2002 and $4.50  thereafter.  As of February  28,  2003 we had  restructured
$2,587,000 of the notes,  representing  thirty-five (35) of the forty-eight (48)
noteholders,   or  approximately  77%  of  the  total  dollar  amount  of  notes
outstanding.  As part of the restructuring  process we reclassified  $339,722 of
interest accrued as part of the reissued notes. During the fiscal year ended May
31,  2004,  noteholders  representing  $3,774,049  of  principal  and  interest,
approximately  83% of the total value of notes,  have converted their notes into
1,510,814  shares of our common stock at $2.50 per share.  We are in discussions
with the  remaining  noteholders.

In  May  2003  we  completed  a  private  placement  offering  with  one  of our
stockholders  consisting of convertible notes and warrants under Section 4(2) of
the Securities Act of 1933. The offering  consisted of an unsecured  convertible
promissory note in the principal amount of $50,000, bearing interest at the rate
of 5% per annum and  redeemable  warrants to purchase  100,000  shares of common
stock.  The note is convertible  into our common stock at the conversion rate of
$0.50 per share.  The Warrants are exercisable at a price of $1.00 per share. We
also  reduced  the  exercise  price of  8,000  Series  C  warrants  owned by the
stockholder from $2.50 to $0.25 per share. The note is due and payable on May 2,
2008. A deemed  dividend  expense of $25,331 was recognized in conjunction  with
the warrants offered in this placement.

                                       45
<PAGE>

In  May  2003  we  completed  a  private  placement  offering  with  one  of our
stockholders  consisting of convertible notes and warrants under Section 4(2) of
the Securities Act of 1933. The offering  consisted of an unsecured  convertible
promissory note in the principal amount of $20,750, bearing interest at the rate
of 5% per annum and  redeemable  warrants  to purchase  30,000  shares of common
stock.  The note is convertible  into our common stock at the conversion rate of
$0.50 per share.  The Warrants are exercisable at a price of $0.65 per share. We
also  reduced  the  exercise  price of  45,000  Series B  warrants  owned by the
stockholder  from $4.50 to $0.65 per share which were converted  immediately for
gross  proceeds to us of $29,250.  The note is due and payable on May 8, 2008. A
deemed  dividend  expense of $25,901  was  recognized  in  conjunction  with the
warrants offered in this placement.

As of May 31,  2006,  we still owed  $514,176 in  principal  and interest to the
remaining noteholders.  There can be no assurance that the remaining noteholders
will not  declare an event of default  and demand  immediate  payment or seek to
attach our assets, including our EMMA technology. (See Risk Factors).

NOTE 6 - LONG-TERM DEBT

      As of May 31, 2006 long term debt consists of the following:

      Note Payable - Truck (a)                                $   9,422
      Note Payable - Unsecured (b)                               13,735
                                                              ---------
                                                                 23,157
     Less: Current Maturities                                   (18,488)
                                                              ---------

     Total                                                    $   4,669

      (a) The note, which is  collateralized  by a security interest in a truck,
      is payable in monthly  installments of $450,  including  interest at 7.49%
      per annum.

      (b) The note, which is unsecured, matured in February, 2006. The remaining
      balance was paid in July 2006 subsequent  to year end. The note, which was
      payable to a broker for services in  connection with the Company's line of
      credit, accrued  interest  at 3% per  annum above  the prime interest rate
      (prime rate at 8% on May 31, 2006) and was subordinated  to  the Company's
      Secured Lender.

                                       46
<PAGE>

NOTE 7 - MAJOR CUSTOMERS AND SUPPLIERS

During the fiscal year ended May 31, 2006 TAP had sales to three  customers that
accounted  for 90.4% of net sales.  As of May 31, 2006 the amount due from these
three customers accounted for 83% of the outstanding accounts receivable.

TAP purchased 79% of its component parts inventory from two suppliers during the
fiscal  year  ended  May 31,  2006.  These  suppliers  accounted  for 11% of the
accounts payable balance as of May 31, 2006.

On February 28, 2006,  we completed an  investment  in  ClaimRemedi,  Inc.,  the
licensor of certain  healthcare  software  products.  As such ClaimRemedi,  Inc.
became a major supplier.

NOTE 8 - INCOME TAXES

As  of  May  31,  2006,   we  have   available   federal  net   operating   loss
("NOL")carry-forwards  that approximate $32.7 million and may be applied against
future  taxable  income  through  tax year  2025.  State  NOL  carry-forward  is
approximately  $19.6 million and expire  through tax year 2011. A 100% valuation
reserve has been set up to entirely  offset any  deferred  tax asset since it is
more likely than not that the deferred tax asset will not be realized.

As of May  31,  2005,  we had  available  federal  net  operating  loss  ("NOL")
carry-forwards  that approximate $30.5 million and may be applied against future
taxable income through tax year 2024.  State NOL  carry-forward is approximately
$17.4  million and expire  through tax year 2010. A 100%  valuation  reserve has
been set up to entirely  offset any  deferred  tax asset since it is more likely
than not that the deferred tax asset will not be realized.

NOTE 9 - STOCKHOLDERS' EQUITY

On June 30, 2005, in a private  transaction under Section 4(2) of the Securities
Act of 1933,  as  amended,  we sold  952,381  shares of  common  stock for gross
proceeds of $1,000,000 to one  individual.  We also issued 428,571 of our common
stock  purchase  warrants  with an  exercise  price of $2.50.  All common  stock
purchase warrants have an exercise life of 5 years.

During the fiscal  quarter  ended  November 30, 2005,  in a private  transaction
under Section 4(2) of the  Securities  Act of 1933, as amended,  we sold 600,000
shares of common  stock and 600,000 of our common  stock  purchase  warrants for
gross  proceeds of  $600,000 to four  previous  shareholders.  The common  stock
purchase  warrants  have an exercise  price of $2.50 and an  exercise  life of 5
years.

During the fiscal  quarter  ended  November 30, 2005,  in a private  transaction
under Section 4(2) of the  Securities  Act of 1933,  as amended,  we sold 66,667
shares  of  common  stock  for  gross   proceeds  of  $60,000  to  one  previous
shareholder.  We also issued to that same  investor  30,000 of our common  stock
purchase  warrants with an exercise  price of $1.75.  All common stock  purchase
warrants have an exercise life of 5 years.

During the fiscal  quarter  ended  November 30, 2005,  in a private  transaction
under Section 4(2) of the  Securities  Act of 1933,  as amended,  we sold 47,619
shares of common stock for gross  proceeds of $50,000 to one  previous  European
shareholder.  We also issued to that same  investor  23,809 of our common  stock
purchase  warrants with an exercise  price of $2.50.  All common stock  purchase
warrants have an exercise life of 5 years.

During the fiscal  quarter  ended  November  30, 2005,  we issued  10,000 of our
common stock  purchase  warrants with an exercise price of $0.90 in lieu of cash
for consulting  services.  Based on the  Black-Scholes  option-pricing  model we
recognized an expense of $3,308.

During the fiscal  quarter  ended  November 30, 2005, we issued 34,000 shares of
our common stock to two investors who exercised stock warrants. Proceeds of $340
dollars were received upon exercise of the warrants.

During the fiscal  quarter  ended  February 28, 2006,  in a private  transaction
under Section 4(2) of the  Securities  Act of 1933, as amended,  we sold 100,000
shares  of  common  stock  for  gross   proceeds  of  $100,000  to  an  existing
shareholder.  As part of that transaction we also issued  five-year  warrants to
purchase 50,000 shares of common stock at an exercise price of $2.00.

                                       47
<PAGE>

During to the fiscal quarter ended  February 28, 2006, in a private  transaction
under Section 4(2) of the  Securities  Act of 1933, as amended,  we sold 175,000
shares  of common  stock  for  gross  proceeds  of  $175,000  to three  existing
shareholders  and one new accredited  investor.  As part of that  transaction we
also issued five-year  warrants to purchase 175,000 shares of common stock at an
exercise price of $2.00.

During the fiscal  quarter  ended  February 28, 2006,  in a private  transaction
under  Section  4(2) of the  Securities  Act of 1933,  as amended,  we sold 52.5
shares of  preferred  stock for gross  proceeds of  $525,000  to three  existing
shareholders.  The  Preferred  Stock  shall,  for a period  of seven  years,  be
convertible  into Units,  each  consisting  of 4 five-year  Warrants to purchase
common stock at the rate of one unit for each dollar  invested.  In each Unit, 2
Warrants shall be exercisable at $1.00 per share, 1 Warrant shall be exercisable
at $1.50 per share and 1 Warrant shall be  exercisable  at $2.00 per share.  The
Preferred Stock shall earn dividends at 8% per annum,  payable quarterly in cash
or common stock at the  Company's  option.  If paid in common  stock,  the stock
price shall be the lower of the Market Price or $1.37 per share. Market Price is
defined as the  average  of the  closing  prices of the common  stock for the 10
consecutive trading days immediately preceding the dividend due date.

On February 28, 2006,  we completed an  investment  in  ClaimRemedi,  Inc.,  the
licensor of certain  healthcare  software  products  marketed  by our  Heuristic
subsidiary.  Under the terms of the investment, we have issued 350 shares of our
Series K Convertible Preferred Stock to ClaimRemedi in exchange for 19.5% of the
outstanding  shares of  ClaimRemedi.  The Preferred  Stock is  convertible  into
shares of our common  stock at any time at a conversion  price of between  $1.00
and $2.00 per share,  determined at the time of  conversion  based on the market
value of our  common  stock,  which  shall  result in the  issuance  of  between
1,750,000 and 3,500,000 shares of common stock. However, any conversion prior to
February  28,  2008  shall be at a  conversion  price of $2.00  per  share.  The
Preferred Stock accrues dividends at a rate of 4% per annum, which dividends are
payable  in cash  or  stock  at our  option.  If  certain  performance  criteria
applicable to the license agreement  between  ClaimRemedi and our subsidiary are
not met,  ClaimRemedi  has the  right  to buy back up to 50% of the  ClaimRemedi
Shares  beginning 24 months  after  closing,  and up to 100% of the  ClaimRemedi
Shares  beginning 30 months after closing if the conditions  have still not been
met. Any such  repurchase of ClaimRemedi  Shares by  ClaimRemedi  may be made in
cash or by the sale of the Preferred Stock back to us at the issue price.

During the fiscal  quarter  ended May 31, 2006, in a private  transaction  under
Section 4(2) of the Securities  Act of 1933, as amended,  we sold 35.5 shares of
preferred  stock for gross proceeds of $355,000 to three existing  shareholders.
The Preferred  Stock shall,  for a period of seven years,  be  convertible  into
Units,  each consisting of 4 five-year  Warrants to purchase common stock at the
rate of one unit for each dollar  invested.  In each Unit,  2 Warrants  shall be
exercisable  at $1.00 per share,  1 Warrant  shall be  exercisable  at $1.50 per
share and 1 Warrant shall be exercisable at $2.00 per share. The Preferred Stock
shall earn dividends at 8% per annum,  payable quarterly in cash or common stock
at the Company's  option.  If paid in common stock, the stock price shall be the
lower of the  Market  Price or $1.37 per share.  Market  Price is defined as the
average of the closing prices of the common stock for the 10 consecutive trading
days immediately preceding the dividend due date.

In fiscal quarter ended August 31, 2004, in a private  transaction under Section
4(2) of the Securities Act of 1933, as amended,  we sold 782 shares of preferred
stock for gross proceeds of $782,000. We also issued 204,930 of our common stock
purchase warrants with an exercise price of $3.00 and an additional 286,870 with
an exercise price of $5.00. All common stock purchase  warrants have an exercise
life  of five  years  and  there  was no  beneficial  conversion  recognized  in
conjunction with this transaction.

In fiscal  quarter  ended  November 30,  2004,  in a private  transaction  under
Section 4(2) of the  Securities  Act of 1933,  as amended,  we sold 50 shares of
preferred  stock for gross  proceeds  of $50,000.  We also issued  10,000 of our
common stock purchase warrants with an exercise price of $2.50 and an additional
15,000 with an exercise price of $3.50. All common stock purchase  warrants have
an exercise life of five years and there was no beneficial conversion recognized
in conjunction with this transaction.

In the fiscal  quarter ended  November 30, 2004, in private  transactions  under
Section 4(2) of the Securities Act of 1933, as amended, the Company sold 456,206
shares of the Company's Common Stock for gross proceeds of $490,000. In addition
the  Company  issued  235,263  five year Common  Stock  purchase  warrants  with
exercise prices ranging from $2.00 to $3.00.

                                       48
<PAGE>

In the fiscal  quarter ended  February 28, 2005, in private  transactions  under
Section  4(2) of the  Securities  Act of 1933,  as  amended,  the  Company  sold
1,398,216 shares of the Company's Common Stock for gross proceeds of $1,506,100.
In addition the Company issued 816,675 five year Common Stock purchase  warrants
with exercise prices ranging from $2.00 to $5.00.

In the fiscal quarter ended May 31, 2005, in private  transactions under Section
4(2) of the  Securities  Act of 1933,  as amended,  the Company  sold  1,042,392
shares of the  Company's  Common  Stock for gross  proceeds  of  $1,095,950.  In
addition the Company  issued  621,000 five year Common Stock  purchase  warrants
with exercise prices ranging from $2.00 to $5.00.

On April 18, 2005,  the Company  agreed to pay 50 shares with a $500,000  stated
value of  Series  J  Preferred  Stock  to  ClaimRemedi,  Inc.,  a vendor  of the
Company's Heuristic  Technologies,  Inc. subsidiary,  in exchange for a discount
not to exceed  $1,000,000 on future  transaction fees to be paid by Heuristic to
ClaimRemedi under the existing license agreement between the two companies.  The
Series J Preferred Stock shall be convertible to common stock at any time at the
then current market price of the Company's  common stock,  with a floor of $1.00
per share and a ceiling of $3.00 per share,  but has agreed not to sell any such
common  stock  until  after  the  earlier  of  Heuristic   achieving   5,000,000
transactions  per  quarter  for  4  consecutive  quarters  or  an  aggregate  of
25,000,000 transactions under the license agreement. In the event that Heuristic
never  achieves  the  transaction  benchmarks  prior to the  termination  of the
license  agreement,  ClaimRemedi  shall return the  securities to the Company or
repay the value  thereof.  The Company  recorded this  transaction  as a prepaid
asset.

On April 19, 2005, the Company  completed an investment  transaction in which it
issued 100 shares with a $1,000,000  stated value of Series H Preferred Stock in
exchange for 15% of the common stock of CDHC Group,  Inc., a startup  company in
the healthcare industry.  CDHC Group, led by industry veterans,  is a healthcare
marketing  company   targeting   consumers  and  providers  who  participate  in
consumer-driven  and high deductible  health plans. The Series H Preferred Stock
shall be  convertible  to common stock at any time after the second  anniversary
following the close of the transaction,  at the then current market price of the
Company's  common  stock  with a floor of $1.00 per share and a ceiling of $3.00
per share. The Company recorded this transaction as a long term asset.

On May 2, 2005,  the Company  issued 25 shares with a $250,000  stated  value of
Series  I  Preferred  Stock to the  Chief  Executive  Officer,  Ray  Pedden,  of
Heuristic  Technologies.  The Series I Preferred  Stock shall be  convertible to
common stock at any time after the second anniversary following the close of the
transaction, at the then current market price of the Company's common stock with
a floor of $2.00  per  share  and a ceiling  of $3.00  per  share.  The  Company
recorded this transaction as a prepaid asset.

NOTE 10 - STOCK OPTION PLAN AND WARRANTS

We adopted a 1996 stock option plan (the "Option  Plan").  As of May 31, 2006, a
total of 3,500,887  shares of our common  stock have been  reserved for issuance
under the Option  Plan.  As of May 31,  2005,  we had  1,543,600 of such options
outstanding.  The Board of Directors administers the Option Plan, or a committee
appointed by the Board of Directors,  which determine the recipients and term of
the awards granted (Item 10. "Stock Options").

In addition to the above mentioned  stock options,  in July 1998, in conjunction
with  our  initial   public   offering   certain   debt   holders  were  granted
options/warrants in exchange for note repayments.

As for May 31, 2006 a total of  3,500,887  shares of our common  stock have been
reserved for issuance under the Option Plan of which  1,543,600 are  outstanding
and 1,957,287 were remaining (Item 10. "Stock Options").

We have granted the following  options/warrants  to purchase  common stock as of
May 31, 2006.

                                       49
<PAGE>

<TABLE>
<CAPTION>

                                                 Number of       Weighted Average
                                              Options/Warrants    Price $/Share
                                              ----------------   ----------------
<S>                                           <C>                <C>

Options/Warrants outstanding - May 31, 2004          7,409,969   $           2.41
                                              -----------------------------------

Employee Stock Options
----------------------
Granted                                                     --                 --
Expired                                                135,600               5.25
Exercised                                                   --                 --

Stockholder Warrants
----------------------
Granted                                              2,780,738               2.26
Expired                                              1,053,800               6.04
Exercised                                              279,862               0.67
                                              -----------------------------------
Options/Warrants outstanding - May 31, 2005          8,721,445   $           1.93
                                              -----------------------------------
Employee Stock Options
----------------------
Granted                                              1,020,500   $           1.01
Expired                                                     --                 --
Exercised                                                   --                 --

Stockholder Warrants
----------------------
Granted                                                676,964               2.26
Expired                                                375,000               7.84
Exercised                                                   --                 --
                                              -----------------------------------
Options
Options/Warrants outstanding - May 31, 2006         10,418,909   $           2.01
                                              -----------------------------------

</TABLE>

Stock Based Compensation

All stock options  issued to employees  have an exercise price not less than the
fair market value of the  Company's  common  stock on the date of grant,  and in
accounting  for such options  utilizing the  intrinsic  value method there is no
related compensation expense recorded in the Company's financial statements.  If
the compensation had been determined based on the fair market value of the stock
option on their dates of grant in  accordance  with SFAS 123, the  Company's net
loss and loss per share for the years  ended May 31,  2005 and 2004,  would have
been increased to the pro forma amounts presented below:

<TABLE>
<CAPTION>

                                                                      2006          2005
                                                                 ------------   ------------
<S>                                                              <C>            <C>

      Net Income (Loss)
      -----------------
            As Reported......................................    $(5,082,143)     $ 2,520,060
            Pro Forma........................................    $(4,809,693)     $ 1,839,863

      Basic and Diluted Income (Loss) Per Common Share
      ------------------------------------------------
            As Reported......................................    $      (.26)     $0.16/$0.10
            Pro Forma........................................    $     (0.25)     $0.12/$0.08

</TABLE>

For the fiscal  year  ended May 31,  2006,  the fair  value of option  grants is
estimated on the date of grant utilizing the Black-Scholes  option-pricing model
with the weighted  average  assumption  for options  granted  during  2001-2006,
expected  life of the option is 5 years.

For the fiscal  year  ended May 31,  2005,  the fair  value of option  grants is
estimated on the date of grant utilizing the Black-Scholes  option-pricing model
with the weighted  average  assumption  for options  granted  during  2000-2005,
expected  life of the option is 5 years,  expected  volatility of 38%, risk free
interest rate of 3.76% and a 0% dividend yield.  The weighted average fair value
at the grant date for such option is $0.73 per option.

                                       50
<PAGE>

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------
       Outstanding Weighted Average                      Exercisable Weighted Average
---------------------------------------------------   ---------------------------------
 Total Shares                          Exercise        Total Shares        Exercise
   05/31/06            Life              Price           05/31/06            Price
---------------   ---------------   ---------------   ---------------   ---------------
<C>               <C>               <C>               <C>               <C>
        300,000              4.50             $1.20           300,000             $1.20

        480,000              4.50             $0.81           480,000             $0.81

         30,000              4.25             $1.75            30,000             $1.75

        205,000              4.50             $2.00           205,000             $2.00

        253,809              4.50             $2.50           253,809             $2.50

        428,574              4.00             $2.50           428,574             $2.50

        117,118              2.75             $0.01           117,118             $0.01

        331,000              4.00             $0.01           331,000             $0.01

      1,350,000              3.75             $0.65         1,350,000             $0.65

         74,250              1.75             $0.65            74,250             $0.65

        175,000              1.75             $0.65           175,000             $0.65

          5,250              1.75             $0.65             5,250             $0.65

         22,500              1.75             $0.65            22,500             $0.65

          4,000              1.75             $0.65             4,000             $0.65

      1,054,560              1.75             $0.65         1,054,560             $0.65

         30,000              1.75             $0.65            30,000             $0.65

         50,000              1.75             $0.80            50,000             $0.80

         97,369              1.75             $0.95            97,369             $0.95

        487,931              1.75             $1.00           487,931             $1.00

        357,856              2.50             $1.00           357,856             $1.00

        100,000              1.75             $1.00           100,000             $1.00

         25,000              3.25             $1.00            25,000             $1.00

         25,000              3.50             $1.00            25,000             $1.00

        350,000              1.75             $1.01           350,000             $1.01

        200,180              1.75             $1.01           200,180             $1.01

         10,000              1.75             $1.20            10,000             $1.20
-----------------------------------------------------------------------------------------
</TABLE>

                                       51
<PAGE>

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------
       Outstanding Weighted Average                      Exercisable Weighted Average
---------------------------------------------------   ---------------------------------
 Total Shares                          Exercise        Total Shares        Exercise
   05/31/06            Life              Price           05/31/06            Price
---------------   ---------------   ---------------   ---------------   ---------------
<C>               <C>               <C>               <C>               <C>

          5,000              1.75             $1.20             5,000             $1.20

          7,813              2.50             $1.30             7,813             $1.30

         50,000              1.75             $1.36            50,000             $1.36

        100,000              1.75             $1.25           100,000             $1.46

         90,000              1.75             $1.50            90,000             $1.50

        150,000              1.75             $1.00           150,000             $1.50

         36,000              1.75             $1.50            36,000             $1.50

          7,500              1.75             $1.70             7,500             $1.70

        240,000              1.75             $1.75           240,000             $1.75

        180,000              1.75             $1.75           180,000             $1.75

         50,000              1.75             $1.88            50,000             $1.88

         34,500              1.50             $2.00            34,500             $2.00

         50,000              1.50             $2.00            50,000             $2.00

         10,000              1.50             $2.00            10,000             $2.00

         50,400              1.50             $2.00            50,400             $2.00

         20,000              3.25             $2.00            20,000             $2.00

        215,000              3.50             $2.00           215,000             $2.00

        787,675              3.75             $2.00           787,675             $2.00

        185,000              4.00             $2.00           185,000             $2.00

         10,417              1.75             $2.50            10,417             $2.50

         64,000              1.50             $2.50            64,000             $2.50

         45,000              1.50             $2.50            45,000             $2.50

          5,000              1.50             $2.50             5,000             $2.50

         22,763              3.00             $2.50            22,763             $2.50

         10,000              3.25             $2.50            10,000             $2.50

        191,830              3.00             $3.00           191,830             $3.00

         13,100              3.25             $3.00            13,100             $3.00

         30,000              3.50             $3.00            30,000             $3.00
-----------------------------------------------------------------------------------------
</TABLE>

                                       52
<PAGE>

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------
       Outstanding Weighted Average                      Exercisable Weighted Average
---------------------------------------------------   ---------------------------------
 Total Shares                          Exercise        Total Shares        Exercise
   05/31/06            Life              Price           05/31/06            Price
---------------   ---------------   ---------------   ---------------   ---------------
<C>               <C>               <C>               <C>               <C>


         64,500              3.75             $3.00            64,500             $3.00

         15,000              3.25             $3.50            15,000             $3.50

         66,500              3.75             $4.00            66,500             $4.00

        268,570              3.00             $5.00           268,570             $5.00

         18,300              3.25             $5.00            18,300             $5.00

         71,500              3.75             $5.00            71,500             $5.00

         40,000              1.50             $5.88            40,000             $5.88

         74,250              0.75            $11.55            74,250            $11.55

         53,813              0.50            $12.00            53,813            $12.00

         25,000              0.75            $12.94            25,000            $12.94

         55,000              0.75            $13.00            55,000            $13.00

     10,418,909                               $1.96        10,418,909             $1.96
===============                                       ===============
-----------------------------------------------------------------------------------------
</TABLE>

NOTE 11 - SEGMENT REPORTING

We operate through four business  segments:  Heuristic  Technologies,  Inc., TAP
Holdings,   LLC  (aka   "Tomco"),   CoinBank   machine-related   activities  and
EMMA-related  activities.  We sell CoinBank  self-service coin counting machines
through  existing  equipment   distribution   channels.   Our  EMMA  transaction
processing system has not yet been deployed and all current software development
costs are being expensed.

Information on our business segments for the fiscal years ended May 31,

                                    2006         2005
                                 ----------   ----------
Net Revenues and Sales:
  CoinBank machines              $   35,635       61,662
  EMMA                                   --           --
  Heuristic                           5,257           --
  TAP- Tomco Auto Products        8,153,219   $5,657,224
  Unallocated                        14,114           --
                                 ----------   ----------

                                 $8,208,226   $5,718,886
                                 ==========   ==========

                                       53
<PAGE>

                                                    2006           2005
                                                -----------    -----------

Interest expense
  CoinBank machines                                      --             --
  EMMA                                                   --             --
  Heuristic                                              --             --
  TAP- Tomco Auto Products                          454,311        226,789
  Unallocated                                       390,562        153,345
                                                -----------    -----------
                                                    844,873        380,134
                                                ===========    ===========
Depreciation & Amortization
  CoinBank machines                                      --             --
  EMMA                                              559,767        559,768
  Heuristic                                              --             --
  TAP- Tomco Auto Products                          129,142      1,735,615
  Unallocated                                         4,496          3,568
                                                -----------    -----------
                                                    623,405      2,298,951
                                                ===========    ===========

Segment profit (loss)
  CoinBank machines                                (255,757)        96,626
  EMMA                                                   --             --
  Heuristic                                      (1,257,791)      (605,854)
  TAP- Tomco Auto Products                         (824,075)     5,324,948
  Unallocated                                    (2,700,770)    (1,047,287)
                                                -----------    -----------
                                                 (5,038,393)     3,768,433
                                                ===========    ===========

Net identifiable assets:
  CoinBank machines                                 615,260        753,744
  EMMA                                              326,531        886,300
  Heuristic                                              --             --
  TAP- Tomco Auto Products                       10,983,625     10,821,988
  Unallocated                                     7,347,537      1,648,835
                                                -----------    -----------
                                                 19,272,753     14,110,867
                                                ===========    ===========

NOTE 12 - RELATED PARTY TRANSACTIONS

We obtained  loans of $68,000 in the fiscal year ended May 31, 2002 and $342,700
during the fiscal  year  ended May 31,  2003 from Bruce  Korman who is our Chief
Executive  Officer  and  Chairman  of our  Board of  Directors.  The  loans  are
short-term  non-interest bearing loans and are payable upon demand and as of May
31, 2006 $8,915 is outstanding to Mr. Korman.

Furthermore,  as of May 31, 2006,  we were in arrears of $290,874 for the salary
to Mr. Korman,  and owed $69,090 in accrued rent for our offices to a company in
which Mr. Korman has a beneficial interest.

NOTE 13 - MINORITY INTEREST

From November 2002 through March 2003, we received $443,000 in net proceeds from
members  for an  equity  share  in  our  subsidiary  of CT  Holdings,  LLC.  The
stockholders  own 13.65% while we own 86.35%.  The net  proceeds  from this have
been used to further develop the BONUS product for CT Holdings,  LLC, as well as
for working  capital for CT Holdings,  LLC and Cash  Technologies,  Inc. For the
fiscal  year ended May 31,  2005,  we have  allocated  $155,119  of losses in CT
Holdings, LLC to minority interest.

On  November  5, 2004 TAP  Holdings,  LLC (dba  Tomco  Auto  Products)  acquired
substantially  all of the assets and assumed  certain  liabilities of Tomco Auto
Products,  Inc. One  shareholder  owns 11% while we own 89%. For the fiscal year
ended May 31, 2006, we have allocated  $684,662 of losses and extraordinary gain
in TAP Holdings, LLC to minority interest.

                                       54
<PAGE>

NOTE 14 - OTHER INCOME

During  the  fiscal  year  ended May 31,  2005,  the  Company  had  income  from
forgiveness of debt of $2,235,059.  Income from  forgiveness of debt consists of
settlement  of various  lawsuits  and other  liabilities  by the Company and its
subsidiaries.  During the fiscal  year ended May 31,  2006,  the  Company had no
income from forgiveness of debt.

NOTE 15 - EXTRAORDINARY INCOME

On November 5, 2004 the Company's majority owned subsidiary,  TAP Holdings,  LLC
acquired  certain assets and liabilities of Tomco Auto Products,  Inc. for the a
purchase  price  of  $2,500,000,  less  certain  adjustments,  paid as  follows:
$650,000  in cash  and the  remainder  from an asset  based  bank  credit  line,
seller-carried financing and assumption of certain liabilities. The total assets
purchased had an  approximate  book value of $11,001,478 a majority of which was
inventory,  valued at $9,650,225.  The difference  between the net inventory and
the  purchase  price  resulted  in an  extraordinary  gain  to  the  Company  of
$6,249,951 as outlined below:

                                           Assets purchased &
                                           liabilities assumed
                                               Nov. 5, 2004
                                             ---------------
Assets

     Cash                                    $       116,565
     Accounts receivable                     $     1,968,276
     Accounts receivable other               $        55,815

     Inventory                               $     9,650,225
     Less: inventory reserve                 $    (1,180,000)

     Prepaid expenses                        $       372,367
     Other assets                            $        18,230
                                             ---------------

Total Assets                                 $    11,001,478
                                             ===============

Liabilities

     Accounts payable                        $     1,568,358
     Warranty reserve                        $       202,490
     Accrued expenses                        $       480,679

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

Total Liabilities                            $     2,251,527
                                             ---------------

Net Assets                                   $     8,749,951

Purchase price                               $     2,500,000

Extraordinary gain                           $     6,249,951


                                       55
<PAGE>

NOTE 16 - COMMITMENTS AND CONTINGENCIES

In June, 2002 we were notified that a vendor,  Kiosk Information  Systems,  Inc.
("KIS"),  had  obtained a judgment  against us for $129,567  allegedly  owed for
services  rendered in 1999,  plus interest and attorneys  fees. Upon learning of
the  judgment,  we  notified  KIS that we have never been  served with a lawsuit
related to this matter and were unaware of the  existence of the case. As of May
31, 2004, we had an accrued liability of $138,000 for this lawsuit. We had filed
a  petition  to  vacate  the  judgment,  but in  December,  2004,  KIS and  Cash
Technologies,  Inc.  agreed to a settlement  in which we paid KIS  $50,000.  The
balance of the accrued  liability of approximately  $92,752 has been written off
in the quarter ended February 28, 2005.

In February 2003 Abraham  Mirman of Samson  Consulting  Corp.  was hired,  inter
alia, to provide  consulting  services and arrange financing for us. The term of
the agreement was 12 months at a monthly cost of $50,000 or an equivalent  value
in shares of our stock;  either party had the right to terminate after one month
for any reason.  Shortly  thereafter,  we terminated  the agreement for Samson's
failure to perform.  In July 2004,  Mirman  initiated an arbitration in New York
State claiming that the agreement was wrongfully  terminated and that Samson was
owed $600,000 in damages plus costs. In June 2005, an arbitrator awarded Sampson
$100,000 in unpaid fees, $21,650 in statutory interest through July 20, 2005 and
no attorney fees or costs.  Subsequently,  we initiated a lawsuit against Mirman
in  California,  alleging  that he  failed  to  provide  financing  promised  in
February,  2003,  causing damages in excess of $400,000.  In February 2006, both
parties agreed to settle all  outstanding  claims  without any funds  exchanged;
i.e. we have  dismissed  our  California  lawsuit and Samson has vacated its New
York judgment.  We had reserved  $121,650_for the Samson judgment which has been
returned to Shareholders Equity.

In 2001 we delivered stock certificates representing 700,000 shares to an escrow
agent as collateral for a loan. The loan was never consummated,  and in May 2001
we  notified  the  transfer  agent to cancel the shares.  Thereafter  the escrow
agent,  an  attorney,  passed  away  and we  were  never  able  to  recover  the
certificates.  In  August,  2004  it  came to our  attention  that a  party  was
attempting to transfer 450,000 of the 700,000 shares. We immediately initiated a
lawsuit in New York to prevent the transfer of the shares and have them retired.
In December,  2004, we reached a tentative  settlement in which the shares would
be returned to us without any  exchange  of money,  pending  execution  of final
settlement  documentation.  We intend to  similarly  pursue the  recovery of the
remaining  250,000  shares,  however  in the  event  that we  cannot  achieve  a
satisfactory outcome in such effort, or in the event that the pending settlement
is not consummated for any reason, some or all of these shares may be treated as
outstanding and our Stockholders'  Equity line item would have to be adjusted to
reflect such additional shares.

                                       56
<PAGE>



NOTE 17 - SUBSEQUENT EVENTS

Subsequent to the fiscal year ended May 31, 2006, in private  transactions under
Section 4(2) of the Securities  Act of 1933, as amended,  we sold 232,500 shares
of common stock for gross proceeds of $233,400 to five existing shareholders. As
part of that transaction we also issued  five-year  warrants to purchase 232,500
shares of common stock at an exercise prices ranging from $1.5 to $2.50.

During the fiscal  quarter  ended May 31, 2006, in a private  transaction  under
Section 4(2) of the  Securities  Act of 1933,  as amended,  we sold 25 shares of
preferred  stock for gross proceeds of $250,000 to three existing  shareholders.
The Preferred  Stock shall,  for a period of seven years,  be  convertible  into
Units,  each consisting of 4 five-year  Warrants to purchase common stock at the
rate of one unit for each dollar  invested.  In each Unit,  2 Warrants  shall be
exercisable  at $1.00 per share,  1 Warrant  shall be  exercisable  at $1.50 per
share and 1 Warrant shall be exercisable at $2.00 per share. The Preferred Stock
shall earn dividends at 8% per annum,  payable quarterly in cash or common stock
at the Company's  option.  If paid in common stock, the stock price shall be the
lower of the  Market  Price or $1.37 per share.  Market  Price is defined as the
average of the closing prices of the common stock for the 10 consecutive trading
days immediately preceding the dividend due date.

During the month of July 2006, Edmund King, the Chief Financial Officer,  loaned
the  company  $50,000  and  Bruce  Korman,  Chief  Executive  Officer,  $25,000,
respectively.

On  August  31,  2006  the  company  signed  an  agreement  to sell  most of its
remanufactured carburetor assets to Champion Parts Inc. for up to $11 million in
cash and debt.  About $1.5  million is in cash and up to $9.5 million will be in
contingent  payments to sell the remanufactured  carburetor assets of Tomco. The
subsidiary  TAP Holdings  will shut the Los Angeles  factory and  terminate  any
remaining employees.

During the 1st quarter  ended August 31, 2006,  the company  raised  $457,926 in
capital investments. Losses during the 1st quarter are expected to be similar to
the 4th quarter ended May 31, 2006 of  $1,100,000,  for a net decrease in equity
of $640,000.

On June  22,  2006,  the  company  announced  that  it  completed  a  $2,000,000
investment in Business Intelligent Processing Systems, Limited (BIPS). Under the
terms of the investment, Cash Technologies has issued 200 shares of its Series M
Convertible  Preferred  Stock  to BIPS in  exchange  for 10% of the  outstanding
shares of BIPS. The Preferred  Stock is  convertible  into shares of Cash Tech's
Common Stock after June 1, 2007 at a conversion price of between $1.00 and $2.00
per share, determined at the time of conversion based on the market value of the
Common Stock, resulting in the issuance of between 1,000,000 and 2,000,000 share
of Common Stock to BIPS.  In addition,  if BIPS does not reach  certain  revenue
targets  within two years,  Cash Tech can  repurchase up to 75% of the Preferred
Stock  for $.01 pr  share.  Preferred  Stock  which is  subject  to Cash  Tech's
repurchasing  rights cannot be converted.  Cash Technologies will have the right
to appoint a director to the Board of Directors of BIPS.

During the 2nd quarter ending November 30, 2006, the Company will have finalized
the Tomco sale which will generate $1,000,000 of income.

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

There have been no changes in our independent  accountants or disagreements with
our independent accountants in the last two fiscal years.

ITEM 8A CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures:

"Evaluation of Disclosure  Controls and Procedures.  The Chief Executive Officer
and Chief Financial officer, after evaluating the effectiveness of the Company's
disclosure  controls and procedures (as defined in Exchange Act Rule  13a-15(e))
as of the end of the period covered by this Form 10-KSB, have concluded that its
disclosure  controls and  procedures  are  effective to  reasonably  ensure that
material information required to be disclosed by the Company in the reports that
are filed or submitted under the Exchange Act is recorded, processed, summarized
and  reported  within the time  periods  specific  by  Securities  and  Exchange
Commissions'  rules  and  forms and that such  information  is  accumulated  and
communicated to our management,  including our Chief Executive Officer and Chief
Financial Officer, as appropriate,  to allow timely decisions regarding required
disclosure.


                                       57
<PAGE>

Changes in Internal Control over Financial Reporting. There were no changes made
during our most recently  completed  fiscal quarter in our internal control over
financial reporting that have materially  affected,  or are reasonably likely to
materially affect, our internal control over financial reporting."

ITEM 8B OTHER INFORMATION

None

                                       58
<PAGE>

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT

      The  following  table sets forth  information  regarding our directors and
executive officers:

<TABLE>
<CAPTION>

Name                     Age        Position
<S>                      <C>        <C>
Bruce R. Korman           47        President, Chief Executive Officer and
                                    Chairman of the Board

Edmund King               42        Chief Financial Officer and Secretary

Richard  Miller           54        Director(1)(2)

Robert B. Fagenson        57        Director(1)

Kevin Walls               44        Director(2)

</TABLE>

--------------
(1)   Compensation Committee member.
(2)   Audit Committee member.

      Bruce Korman has been our President,  Chief Executive Officer and Chairman
of the  Board of  Directors  since  our  inception,  and has  served in the same
capacities at National  Cash  Processors,  Inc., or NCP, and CoinBank  Automated
Systems,  Inc., or CAS, our  wholly-owned  subsidiaries,  since their inception.
Since 1984,  Mr. Korman has been a principal and general  partner in a series of
real estate limited  partnerships  engaged in the development,  construction and
management of multi-family housing projects in Southern California.

      Edmund King has served as Chief Financial  Officer and Secretary of us and
our  subsidiaries  since  December  11, 2000.  Mr. King served as financial  and
operations consultant for numerous  manufacturing,  entertainment and e-commerce
companies from 1998-2000.  He also served as Vice-President  and Chief Financial
Officer of UStel,  Inc. between  1997-1998,  controller for ITT Fluid Technology
Corporation  between  1989-1992,  as well as a  financial  analyst  for  Trouver
Capital Partners from 1994-1997.

      Richard Miller has been a director  since our  inception.  Since 1985, Mr.
Miller has served as President and Chief Executive Officer of Union Fidelity,  a
mortgage banking firm which he founded. Mr. Miller is also the President of M.R.
International  Enterprises,  Ltd.,  which is the  general  partner  of  Lakeview
Enterprises Limited Partnership, a private real estate limited partnership.

      Robert B. Fagenson has been a director since August 4, 1998. Mr.  Fagenson
has,  for more  than the last five  years,  been a  director  and  President  of
Fagenson & Co.,  Inc., a New York Stock  Exchange  specialist  firm,  and a Vice
President and director of Starr Securities,  Inc. a registered broker-dealer and
member of the New York Stock  Exchange.  Mr. Fagenson has been director and Vice
Chairman of the New York Stock Exchange; a director of Rent-Way, Inc., a company
listed on the New York Stock Exchange;  a director of Intrenet,  Inc., a company
listed  on  the  Nasdaq  SmallCap  Market;   and  a  director  of  Hudson  Hotel
Corporation, a company listed on the Nasdaq National Market. Mr. Fagenson serves
as the  representative  of Starr  Securities,  Inc., the  co-underwriter  in the
Company's initial public offering.

      Kevin Walls has been a director since July 2001. Mr. Kevin Walls also acts
as a consultant to many companies the aviation industry. Prior to July 2001, Mr.
Walls worked for five years as Director of Sales with  Guinness Peat Aviation in
Ireland,  at that time the world's largest aircraft finance and leasing company.
From 1994 to 1997, Mr. Kevin Walls worked as Vice President - Corporate Planning
for a major  airline in  Jakarta,  Indonesia,  and headed up the  corporate  and
strategic planning department.

                                       59
<PAGE>

Compensation of Directors, Committees of the Board and Board Meetings.

      Directors  do not receive  cash  compensation  for serving on our board of
directors.  We reimburse non-employee directors for the costs of attending board
meetings.  Employee-directors are not entitled to any additional compensation as
directors.  All  non-employee  directors  are  eligible  to  participate  in the
Non-Executive  Director  Stock Option  Plan,  which was approved by our board of
directors  in August  1998 and by our  stockholders  in June  1999.  There  were
150,000 shares reserved under the Non-Executive Director Plan, each non-employee
director  received  options to purchase  30,000  shares of our common stock upon
joining our board of directors,  which  options  vested as to 10,000 shares upon
joining the board and vested as to an  additional  10,000  shares on each of the
first and second  anniversaries of joining the board. There are no annual grants
of  options  to  directors   under  the   Non-Executive   Director   Plan.   See
"Non-Executive Director Stock Option Plan".

      On March 28,  2003,  our board of  directors  approved an amendment to the
Director  Plan.  Under the  amendment  the shares  reserved  under the plan were
increased to 700,000 and each director  surrendered  all of his previously  held
options and was issued a one-time grant of 140,000  options at an exercise price
of $0.65. On January 5, 2004, the stockholders approved this increase.

      On June 20,  2005,  the  stockholders  approved  another  amendment to the
Director Plan. Under the amendment the number of shares was once again increased
to 1,000,000  and each  director  received an  additional  50,000  options at an
exercise price of $1.20....

      The board of directors has established two committees. The Audit Committee
currently is comprised of Kevin Walls and Richard  Miller,  who are  independent
directors  within the meaning of the American  Stock Exchange  rules.  The Audit
Committee's duties include:

      o     reviewing with our  independent  auditors,  the scope and results of
            any audits; and

      o     reviewing  with  the  independent   auditors  and  management,   our
            accounting, financial and operating controls and staff.

      In  addition,  our  board of  directors  has  established  a  Compensation
Committee, currently comprised of Robert Fagenson and Richard Miller. All of the
members  of  the   Compensation   Committee  are  independent   directors.   The
Compensation Committee administers our Employee Stock Option Plan and negotiates
and approves employment agreements with our executive officers.

Certain Key Employees

      Willi  Muhr,  41,  has  been  our  Vice   President   since  August  1996,
establishing and managing our European Operations. From June 1993 to March 1996,
Mr. Muhr served as Chief Executive Officer of Adcon Telemetry,  an international
wireless data  communications  company.  From August 1986 to February  1993, Mr.
Muhr was a principal in a series of real estate limited  partnerships engaged in
the development, construction and management of multi-family housing projects in
Southern California.

      Darryl J. Bergman, 38, has been our Chief Technology Officer since January
1997.  From January 1991 to December  1996, Mr. Bergman served first as Software
Developer and later as Software  Project Leader at Harte-Hanks,  a leading media
and marketing firm, where he had senior responsibility for database applications
software  development for major accounts including Sony Corporation,  Prudential
Insurance, Cigna Health Care and others.

                                       60
<PAGE>

Summary of Cash and Certain Other Compensation

      The following table sets forth certain  compensation paid by us during the
fiscal years ended May 31, 2006, May 31, 2005 and May 31, 2004 to our President
and Chief  Executive  Officer  and our other most highly  compensated  executive
officer (collectively, the "Named Executive Officers"):

                           Summary Compensation Table

<TABLE>
<CAPTION>

Name and                                                                                                All Other
Principal Position                  Annual Compensation               Long Term Compensation          Compensation(1)
------------------                  -------------------               ----------------------          ---------------
                                                                    Securities
                             Year        Salary         Bonus       Underlying      Options (#)
                             ----       ---------       -----       ----------      -----------
<S>                          <C>        <C>             <C>         <C>             <C>               <C>
Bruce Korman...............  2006       $ 250,000*                                     1,000,00       $      18,000(1)
     President and Chief     2005       $ 250,000*                                                    $      18,000(1)
     Executive Officer       2004       $ 180,000*                                    1,350,000       $      18,000(1)

Edmund King................  2006       $ 180,000                                                     $       9,000(1)
     Chief Financial         2005       $ 150,000                                                     $       9,000(1)
     Officer                 2004       $ 138,000                                                     $       9,000(1)

</TABLE>

-------------------------
(1)   Represents paid additional benefits.

      * As of May 31,  2006 the  Company  owes Bruce  Korman  $290,874 in unpaid
        wages.

The following table discloses in

      The following table discloses information concerning stock options granted
in the year ended May 31, 2006 to our Named Executive Officers.

Option Grants in Fiscal Year Ended May 31, 2006

                      Individual Grants in Last Fiscal Year


<TABLE>
<CAPTION>

                                                      Percent of Total
                           Number of Securities      Options/Warrants to
                                Underlying           Employees in Fiscal       Exercise Price
Name                         Options/Warrants              Year (%)                ($/Sh)         Expiration Date
----------------------     ---------------------     -------------------       --------------     ---------------
<S>                        <C>                       <C>                       <C>                <C>
Bruce Korman..........                         0                      --                   --                  --

Edmund King...........                         0                      --                   --                  --

</TABLE>

Aggregated Option Exercises And Fiscal Year-End Option Values

      The  following  table  sets  forth  information  concerning  the number of
options owned by the Named Executive  Officers and the value of any in-the-money
unexercised  stock options as of May 31, 2006. No options were  exercised by any
of the Named Executive Officers during the fiscal year ended May 31, 2006:

                                       61
<PAGE>

<TABLE>
<CAPTION>

                          Number of Securities Underlying Unexercised                Value of Unexercised In-the-Money
                                    Options at May 31, 2006                             Options at May 31, 2006(1)
                        ----------------------------------------------      ---------------------------------------------------

Name                         Exercisable           Un-exercisable           Exercisable             Un-exercisable
----------------------- ----------------------- ---------------------- ---------------------- ----------------------------
<S>                     <C>                     <C>                    <C>                    <C>
Bruce Korman...........        2,350,000                  0                  $ 2,350,000                  $ 0

Edmund King............          750,000                  0                  $   750,000                  $ 0

</TABLE>

------------------------------
(1)   Year-end  values  for  unexercised   in-the-money  options  represent  the
      positive  spread between the exercise price of such options and the fiscal
      year-end market value of the common stock. An option is  "in-the-money" if
      the fiscal  year end fair  market  value of the common  stock  exceeds the
      option exercise price.

Employment Agreements

      We  previously  entered into a three-year  employment  agreement  with Mr.
Korman,  which has been  automatically  renewed annually  according to its terms
since July 2001. Mr. Korman also participates in other business endeavors, which
require a portion of his business time.  Although Mr. Korman has advised us that
his  participation  in outside  business  matters  should not interfere with his
performance of his duties as our President and Chief  Executive  Officer,  there
can be no assurance  that a conflict of interest  will not arise with respect to
the  allocation of Mr.  Korman's time or that such conflict would be resolved in
our favor.

Employee Stock Option Plans

      In 1996, we adopted our 1996  Employee  Stock Option Plan, or the Employee
Plan.  The  purpose  of the  Employee  Plan is to attract  and retain  qualified
personnel,  to provide  additional  incentives  to our  employees,  officers and
consultants of the Company and to promote the success of our business. A reserve
of 775,887  shares of common stock had been  established  for issuance under the
Employee Plan. The  Compensation  Committee of our board of directors  currently
administers  the Employee Plan.  Subject to the Employee Plan, the board (or its
designated  committee)  has  complete  discretion  to determine  which  eligible
individuals  are to receive option grants,  the number of shares subject to each
such grant,  the exercise price of the option,  the status of any granted option
as either an  incentive  stock  option or a  non-qualified  option,  the vesting
schedule to be in effect for the option grant and the maximum term for which any
granted option is to remain outstanding.

      Each option  granted  under the Employee  Plan will have a maximum term of
five years, subject to earlier termination following the optionee's cessation of
service  with us. All  options  granted to date have a term of five  years.  The
exercise  price of  incentive  stock  options and  non-qualified  stock  options
granted  under the Employee  Plan must be at least 100% of the fair market value
of the stock subject to the option on the date of grant,  respectively  (or 110%
with  respect to  incentive  options  granted to holders of more than 10% of our
voting  power).  Such payment may be made in cash,  or at the  discretion of our
board  of  directors,  in  outstanding  shares  of  common  stock  held  by  the
participant,  through a full recourse  promissory  note payable in  installments
over a  period  of years  or any  combination  of the  foregoing.  Our  Board is
submitting for stockholder  approval a proposal to increase the number of shares
reserved under the 1996 Plan by 200,000 shares.

      At our  Annual  Meeting  of  Stockholders  held  on  June  21,  1999,  our
stockholders  approved an  amendment to the 1996  Employee  Stock Option Plan to
increase the number of shares  available  for  issuance  from 557,887 to 775,887
shares and then again on January  5, 2004 the plan was  increased  by  2,725,000
shares to 3,500,887.

      At our  Annual  Meeting  of  Stockholders  held  on  June  20,  2005,  our
stockholders  approved an  amendment to the 1996  Employee  Stock Option Plan to
increase the number of shares available for issuance from 3,500,887 to 5,500,000
shares.  The stockholders  also approved the grant of 2,000,000 options to Bruce
Korman, the Company's  President and Chief Executive Officer and 650,000 options
to Edmund King, the Company's Chief Financial Officer.  As of May 31, 2005 there
are 1,408,000 options outstanding under the 1996 Employee Stock Option Plan.

                                       62
<PAGE>

Non-Executive Director Stock Option Plan

      In August 1998,  our board of directors  approved a Director  Stock Option
Plan,  or Director  Plan,  for  Non-Employee  Directors  who are not eligible to
participate  in the  Employee  Plan.  The  Director  Plan  was  approved  by our
stockholders at our Annual Meeting held in June 1999.

      The  Director  Plan  provides  that each  non-executive  director  will be
granted  options to purchase  30,000 shares of our common stock upon joining our
board of directors. The options vest as follows: 10,000 options upon joining the
board;  10,000 options on the first anniversary of such date; and 10,000 options
on the second anniversary of such date. There are no annual grants of options to
directors under the Director Plan. Only  non-employee  directors are eligible to
participate in the Director Plan.

      The Director  Plan is intended to attract and retain key  personnel  whose
performance is expected to have a positive effect on our business by encouraging
and  assisting  those persons to acquire our common stock equity in the Company.
Our board  believes  that by  compensating  directors  with  stock  options  the
directors will have similar  interests to our stockholders to promote growth and
enhanced stockholder value. Options may be granted under the Director Plan until
the year 2008 to non-executive  directors as defined and members of any advisory
board established by us who are not full-time employees of our Company or of any
of our subsidiaries.

      The exercise price for options  granted under the Director Plan is 100% of
the fair market value of the common stock on the date of grant.  Until otherwise
provided in the relevant stock option agreements,  the exercise price of options
granted under the Director Plan must be paid at the time of exercise,  either in
cash,  by delivery of shares of common stock or by a  combination  of each.  The
term of each option  commences on the date it is granted and, unless  terminated
sooner as provided in the  Director  Plan,  expires  five years from the date of
grant.  Options  granted  under the Director  Plan do not qualify for  incentive
stock option treatment.

      On March 28,  2003,  our board of  directors  approved an amendment to the
Director  Plan.  Under  the  amendment,  each  director  surrendered  all of his
previously held options and was issued a one-time grant of 140,000 options at an
exercise price of $.65, subject to shareholder approval. On January 5, 2004, the
stockholders approved this increase.

      On June 20,  2005,  the  stockholders  approved  another  amendment to the
Director Plan. Under the amendment the number of shares was once again increased
to 1,000,000  and each  director  received an  additional  50,000  options at an
exercise price of $1.20.

      As of May 31, 2005, there are 420,000 options to purchase 30,000 shares of
our common stock outstanding.

Limitations of Liability and Indemnification

      Our Restated  Certificate  of  Incorporation  and by-laws  provide that we
shall,  to the maximum  extent  permitted  from time to time under the  Delaware
General  Corporation Law (the "DGCL"),  indemnify and advance expenses to any of
our officers, directors,  employees or agents in connection with any threatened,
pending or completed  action,  suit or proceeding.  The Restated  Certificate of
Incorporation  also  permits us to secure  insurance on behalf of any person who
was or is a director,  officer,  employee or agent for us against any  liability
incurred by such person in such capacity,  regardless of whether indemnification
would be permitted  under the applicable  provisions of the DGCL or the Restated
Certificate of Incorporation.

      Section  102(b)(7) of the DGCL permits a provision in the  certificate  of
incorporation of each corporation organized thereunder  eliminating or limiting,
with certain exceptions, the personal liability of a director to the corporation
or its  stockholders for monetary damages for certain breaches of fiduciary duty
as a director.

                                       63
<PAGE>



      Section 145 of the DGCL ("Section  145"), in summary,  empowers a Delaware
corporation,  within certain limitations, to indemnify its officers,  directors,
employees and agents against expenses  (including  attorneys' fees),  judgments,
fines and amounts paid in settlement,  actually and reasonably  incurred by them
in connection with any nonderivative  suit or proceeding,  if they acted in good
faith and in a manner  they  reasonably  believed to be in or not opposed to the
best  interests of the  corporation,  and, with respect to a criminal  action or
proceeding, had no reasonable cause to believe their conduct was unlawful.

      With respect to derivative  actions,  Section 145 permits a corporation to
indemnify  its  officers,  directors,  employees  and  agents  against  expenses
(including  attorneys' fees) actually and reasonably incurred in connection with
the defense or settlement of such action or suit, provided such person meets the
standard  of  conduct  described  in the  preceding  paragraph,  except  that no
indemnification  is permitted in respect of any claim where such person has been
found  liable to the  corporation,  unless the Court of Chancery or the court in
which  such  action  or suit  was  brought  approves  such  indemnification  and
determines that such person is fairly and reasonably entitled to be indemnified.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

PRINCIPAL  STOCKHOLDERS  SECURITY  OWNERSHIP  OF CERTAIN  BENEFICIAL  OWNERS AND
MANAGEMENT

      The following table sets forth certain information as of May 31, 2005 with
respect to each executive officer and director,  all directors and officers as a
group and the  persons  (including  any  "group" as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended),  known by us to be
the  beneficial  owner of more than five  percent  of our common  stock.  Unless
otherwise  indicated,  we believe that all persons  named in the table have sole
voting  and  investment  power  with  respect  to all  shares  of  common  stock
beneficially  owned by them.  A person is deemed to be the  beneficial  owner of
shares that can be acquired  by such  person  within 60 days from May 31,  2005,
upon the exercise of options,  warrants or  convertible  securities.  At May 31,
2005, there were 18,374,346 shares of common stock outstanding.

<TABLE>
<CAPTION>

      Name and Address of                     Amount and Nature               Percentage of Shares
    Beneficial Owners(1)(2)              of Beneficial Ownership (2a)          Beneficially Owned
    -----------------------              ----------------------------          ------------------
<S>                                      <C>                                   <C>

Bruce Korman (3)                                 1,866,267                           9.49%

Richard Miller (4)                                 856,657                           4.85%

Robert B. Fagenson (5)(6)                          271,126                           1.72%

Kevin Walls (7)                                    336,927                           2.07%

Eric Butlein (8)                                 3,056,445                          15.55%

Edmund King (9)                                     50,000                              *

Darryl Bergman (10)                                 75,000                              *

Willi Muhr (11)                                     50,000                              *

Peter & Irene Gauld (12)                         1,755,860                           9.43%

All directors and executive officers
as a group (persons)(1)(2)(3)(4)(5)(6)
(7)(8)(9)(10)(11)(12)                            8,468,282                          37.57%

</TABLE>

*  Denotes less than 1%.

                                       64
<PAGE>

(1)   Unless otherwise indicated, the address for each named individual or group
      is in care of Cash Technologies, Inc., 1434 West 11th Street, Los Angeles,
      California 90015.

(2)   Unless otherwise indicated, we believe that all persons named in the table
      have sole voting and investment power with respect to all shares of common
      stock  beneficially owned by them. A person is deemed to be the beneficial
      owner of  securities  that can be acquired  by such person  within 60 days
      from May 31, 2004,  upon the exercise of options,  warrants or convertible
      securities.  Each beneficial owner's percentage ownership is determined by
      assuming that options, warrants or convertible securities that are held by
      such  person  (but not  those  held by any  other  person)  and  which are
      exercisable within 60 days of the date of May 31, 2004.

(3)   Includes  516,267  shares  owned by First  Bancorp  L.P.  Mr.  Korman is a
      limited  partner of First  Bancorp L.P.  and the  President of the general
      partner of First Bancorp L.P. Also includes  1,350,000  shares  subject to
      outstanding exercisable employee options.

(4)   Includes 516,477 shares owned by Lakeview Enterprises,  Ltd. Mr. Miller is
      a limited partner of Lakeview  Enterprises,  Ltd. and the President of the
      general partner of Lakeview Enterprises, Ltd. Also includes 200,180 shares
      subject to  outstanding  exercisable  warrants and an  additional  340,800
      executive options.

(5)   Includes  2,625  shares  issuable  upon the  conversion  of 2,625 Series A
      Preferred  Stock,  and 141,313 shares subject to outstanding  warrants and
      options.

(6)   On March 28,  2003,  the  Board of  Directors  approved  that  in-lieu  of
      repayment of the $75,000 loan from Mr.  Fagenson to the Company.  Includes
      117,188  shares  issuable upon the  conversion of warrants  exercisable at
      $0.01  per  share  with a term of 7  years.  Any of such  warrants  can be
      redeemed  at any time for a cash  payment  from the  Company  of $0.65 per
      warrant share.

(7)   Includes  12,000 shares  issuable upon the  conversion of 12,000  options,
      120,000  shares  issuable  upon  conversion  of Series B preferred  stock,
      64,927  shares  issuable  upon the  conversion  of  dividends  on Series B
      preferred stock and an additional 140,000 upon the conversion of executive
      options.

(8)   Includes  260,000  shares  issued upon  conversion of  convertible  notes,
      80,000 shares issued upon conversion of Series B preferred stock,  480,769
      shares issued upon conversion of Series C preferred stock,  833,723 shares
      of common  stock,  and an aggregate of 352,231  shares  issuable  upon the
      conversion  of  352,231  Series  D and  other  warrants.  Includes  shares
      beneficially  owned  through Ejada  Limited  Partnership,  his spouse Jada
      Butlein, ADA Partners, Tikkum Olam Foundation, ADA Greater Trust and Ejada
      Butlein Trust.

(9)   Includes 50,000 shares subject to options.

(10)  Includes 75,000 shares subject to options.

(11)  Includes 50,000 shares subject to options.

(12)  Includes 325,860 shares issued upon conversion of Series D preferred stock
      and 500,000  shares issued upon  conversion  of Series F preferred  stock,
      576,923  shares of common  stock,  53,077  shares of common  stock  issued
      in-lieu of interest  and an  aggregate  of 300,000  shares  issuable  upon
      exercise of 300,000 Series E, G and H warrants.

                                       65
<PAGE>

EQUITY COMPENSATION PLAN INFORMATION

      The  following  table sets forth certain  information  as of September 10,
2005,  with respect to each  employee,  officer and  director,  each nominee for
director,  all  directors and officers as a group and the persons known by us to
hold options under our Employee  Stock Option and  Non-Executive  Director Stock
Option  Plan.  As of  September  10, 2005 a reserve of  5,500,000  shares of our
common  stock had been  established  for issuance  under the  Employee  Plan and
1,000,000 under the  Non-Executive  Director Plan.  There are 4,054,000  options
outstanding under the Employee Plan and 570,000 under the Non-Executive Director
Plan.

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------------
Number of securities to be issued upon exercise    Weighted average of     Weighted average              Number of
        of options, warrants and rights            exercise price of       exercise price of       remaining  available for
                                                   outstanding options,    outstanding options,    future issuance under
                                                   warrants and rights     warrants and rights     equity compensation
                                                                                                     plans (excluding)
                                                                                                   securities reflected in
                                                                                                         column (a))
----------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                       <C>                   <C>
     Equity Compensation plans approved by                  4,624,000                 $1.00                 1,876,000
         Security holders..........................

     Equity Compensation plans not approved by
         Security holders..........................                --                    --                        --

              Total................................         4,624,000                 $1.00                 1,876,000
----------------------------------------------------------------------------------------------------------------------------

</TABLE>

Certain Reports

      Other than the individuals  disclosed below,  during the fiscal year ended
May 31, 2005,  based upon the information and reports received by us, other than
one of our shareholders as described  below, no Director,  officer of beneficial
owner of more than ten percent of the  Corporation's  Common Stock (which is the
only class of securities of the Corporation  registered  under Section 12 of the
Securities  Exchange Act of 1934 (the "Act"),  (a "Reporting  Person") failed to
file on a timely  basis,  reports  required  by Section 16 of the Act during the
most  recent  fiscal  year.  Two of our  directors,  Vincent  Carrino  and Robin
Richards,  failed to file Form 4 reports for the months of August 1999 and March
1999,  respectively.  In addition Mr. Butlein one of our shareholders has failed
to timely file reports on forms 3, 4, 5 commencing in January 2001.  Furthermore
Mr. Fagenson, one of our directors, failed to timely file a report on form 4 for
the month of April 4, 2001.  The  Corporation  was not subject to the  reporting
requirements under the Act prior to its initial public offering in July 1998.

                                       66
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Certain Transactions

      In April 2001,  we obtained a short-term  loan of $75,000 from Mr.  Robert
Fagenson who serves on our board of directors. In January, 2004, we extinguished
this debt and  accrued  interest of $20,265 by issuing  117,188  warrants to Mr.
Fagenson.  The  warrants  have an  exercise  price  of $.01  per  share  and are
exercisable for a term of seven years.

      As of May 31, 2006, we had  outstanding  short-term  loans of an aggregate
principal amount of $8,915 from Bruce Korman (and related  parties),  who is our
Chief  Executive  Officer and Chairman of the Board of Directors.  The loans are
short-term non-interest bearing loans and are payable upon demand.  Furthermore,
as of May 31, 2006,  we were in arrears of $290,874 for the salary to Mr. Korman
and owed $69,050 in accrued rent for our offices to Prime Financial Partners,  a
company in which Mr. Korman has a beneficial interest.

Delaware Anti-takeover Law

      We are subject to certain  anti-takeover  provisions  under Section 203 of
the Delaware General Corporation Law. In general,  under Section 203, a Delaware
corporation  may not engage in any  business  combination  with any  "interested
stockholder"  (a person that owns,  directly or  indirectly,  15% or more of the
outstanding  voting stock of a  corporation  or is an affiliate of a corporation
and was the owner of 15% or more of the  outstanding  voting stock) for a period
of three  years  following  the  date  such  stockholder  became  an  interested
stockholder,  unless  (i)  prior to such  date the  board  of  directors  of the
corporation  approved either the business  combination or the transaction  which
resulted in the  stockholder  becoming an interested  stockholder,  or (II) upon
consummation  of the transaction  which resulted in the stockholder  becoming an
interested  stockholder,  the interested  stockholder  owned at least 85% of the
voting  stock  of the  corporation  outstanding  at  the  time  the  transaction
commenced,  or (III) on or subsequent to such date, the business  combination is
approved  by the board of  directors  and  unauthorized  at an annual or special
meeting of  stockholders  by at least 66 2/3% of the  outstanding  voting  stock
which is not owned by the interested  stockholder.  The restrictions  imposed by
Section  203  will not  apply  to a  corporation  if the  corporation's  initial
certificate of incorporation  contains a provision  expressly electing not to be
governed  by this  section  or the  corporation  by action  of its  stockholders
holding  a  majority  of  the  outstanding  stock  adopts  an  amendment  to its
certificate of incorporation or by-laws expressly electing not to be governed by
Section 203.

      We have not  elected  out of Section  203,  and upon  consummation  of our
initial  public  offering  and the  listing  of  common  stock  on  Nasdaq,  the
restrictions  imposed by Section 203 apply to us. Such provision  could have the
effect of  discouraging,  delaying or  preventing  a takeover of us, which could
otherwise  be in the best  interest  of our  stockholders,  and have an  adverse
effect on the market price for our common stock.

                                       67
<PAGE>
ITEM 13. EXHIBITS, LISTS AND REPORTS ON FORM 8-K

(a)   Exhibits

      The following Exhibits  designated by an asterisk (*) have been previously
filed with the  Securities  and  Exchange  Commission  and,  pursuant to Rule 17
C.F.R.  230.411,  are  incorporated  by reference to the document  referenced in
brackets following the descriptions of such exhibits.

*3.1     Our  Restated   Certificate  of  Incorporation   {Exhibit  3.1  to  our
         Registration Statement on Form SB-2 (File No. 333-6436)}
*3.2     Our Bylaws  {Exhibit  3.2 to our  Registration  Statement  on Form SB-2
         (File No. 333-6436)}
*3.3     Certificate  of  Designation  of  Series  A 8%  Cumulative  Convertible
         Preferred  Stock  {filed as Exhibit  3.1 (a) to our Form 10 QSB for the
         quarter ended August 31, 1999.
*3.4     Certificate of Designation of Series E Cumulative Convertible Preferred
         Stock {Exhibit 3.4 to our Registration Statement on Form SB-2 (File No.
         333-6436)}
*3.5     Certificate of Designation of Series F Cumulative Convertible Preferred
         Stock {Exhibit 3.5 to our Registration Statement on Form SB-2 (File No.
         333-6436)}
3.6      Certificate of Designation of Series H Cumulative Convertible Preferred
         Stock
3.7      Certificate of Designation of Series I Cumulative Convertible Preferred
         Stock
3.8      Certificate of Designation of Series J Cumulative Convertible Preferred
         Stock
*4.1     Our Common Stock  Certificate  form  {Exhibit  4.1 to our  Registration
         Statement on Form SB-2 (File No. 333-6436)}
*4.2     Form of the Underwriter's Warrant Agreement,  including Form of Warrant
         Certificate dated as of July 9, 1998 between us, Starr Securities, Inc.
         and GunnAllen  Financial Inc. (the  "Underwriters"){Exhibit  4.1 to our
         Registration Statement on Form SB-2 (File No. 333-6436)}
*10.1    Lease for our  Facilities at 1422 -34 West 11th Street,  Los Angeles Ca
         {Exhibit  10.1 to our  Registration  Statement  on Form SB-2  (File No.
         333-6436)}
*10.2    Agreement dated November 22, 1996 between National Cash Processors Inc.
         and First  Bancorp LP {Exhibit  10.2 to our  Registration  Statement on
         Form SB-2 (File No. 333-6436)}
*10.3    Manufacturing  and License  Agreement dated January 17, 1997 between us
         and  Geld   Bearbeitungs   Systeme   GES.M.B.H.{Exhibit   10.3  to  our
         Registration Statement on Form SB-2 (File No. 333-6436)}
*10.4    Form of Employment  Agreement between us and Bruce Korman {Exhibit 10.4
         to our Registration Statement on Form SB-2 (File No. 333-6436)}
*10.5    Employee Stock Option Plan {Exhibit 10.5 to our Registration  Statement
         on Form SB-2 (File No. 333-6436)}
*10.6    Form of Consulting  Agreement between us and the Underwriters  dated as
         of July 9, 1998  {Exhibit  10.6 to our  Registration  Statement on Form
         SB-2 (File No. 333-6436)}
*10.7    Our Stock Purchase  Agreement and Plan of Reorganization  {Exhibit 10.7
         to our Registration Statement on Form SB-2 (File No. 333-6436)}
*10.9    Promissory  Note issued to G.E.  Capital Corp,  Security  Agreement and
         related Guarantees {Exhibit 10.9 to our Registration  Statement on Form
         SB-2 (File No. 333-6436)}
*10.10   Form  of  Bridge  Notes  and  Bridge  Warrant  {Exhibit  10.10  to  our
         Registration Statement on Form SB-2 (File No. 333-6436)}
*10.11   Non-Executive  Director  Stock  Option  Plan {filed as Exhibit A to our
         Proxy Statement for its Annual Meeting held on June 21, 1999}.
23.      Consent of Vasquez & Company LLP, independent auditors
31.1     Certification
31.2     Certification
32.1     Certification pursuant to 18 U.S.C. Section 1350

                                       68
<PAGE>

(b)   Reports on 8-K

      None

ITEM 14. PRINCIPAL ACCOUNTING FEES & SERVICES

Independent Accountant Fees

      The following table sets forth the aggregate fees for  professional  audit
services  rendered  by  Vasquez & Co LLP for the audit of our  annual  financial
statements  for the  fiscal  years  2005 and  2004,  and fees  billed  for other
services  provided by Vasquez & Co LLP for fiscal  years 2005 and 2004.  Certain
amounts  from  fiscal  year  2004  have  been  reclassified  to  conform  to new
presentation requirements.

<TABLE>
<CAPTION>

                                               Fiscal Year Ended May 31,
                                             ----------------------------
                                                 2006            2005
                                             ------------    ------------
<S>                                          <C>             <C>
Audit Fees                                   $     55,000     $    92,000

Audit-Related Fees                                 27,000          18,000

Tax Fees                                            7,000           7,000

All other fees                                      3,000              --
                                             ------------    ------------

Total Fees Paid                              $     92,000    $    117,000
                                             ============    ============
</TABLE>

                                       69
<PAGE>

                                   SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its  behalf  by the  undersigned,  thereunto  duly  authorized  the  14th day of
September, 2005.

                                       CASH TECHNOLOGIES, INC.


                                       By: /s/ BRUCE KORMAN
                                           -------------------------------------
                                           Bruce Korman
                                           President and Chief Executive Officer

      Pursuant to the  requirements of the Securities  Exchange Act of 1934, the
following  persons on behalf of the  Registrant and in the capacities and on the
dates indicated have signed this report below.



Signature                   Title                             Date
---------                   -----                             ----

/s/ BRUCE KORMAN            President,                        September 13, 2006
-----------------------     Chief Executive Officer
Bruce Korman                And Director
                            (Principal Executive Officer)


/s/ EDMUND KING             Chief Financial Officer
-----------------------     (Principal Financial Officer)     September 13, 2006
Edmund King


/s/ RICHARD MILLER          Director                          September 13, 2006
-----------------------
Richard Miller


/s/ ROBERT FAGENSON         Director                          September 13, 2006
-----------------------
Robert Fagenson


/s/ KEVIN WALLS             Director                          September 13, 2006
-----------------------
Kevin Walls

                                       70