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, 2008




OR




o
            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 of incorporation or organization)
            
            (I.R.S.
      Employer 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:




Title of Each
      Class
            
            Name
      of Each Exchangeon Which
      RegisteredNone
            
            None




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




Title of Each
      Class
            
            Name
      of Each Exchangeon Which
      RegisteredCommon
      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
      xNo o







1




o
            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 oNo þ





Our
revenues, for our fiscal year ended May 31, 2008, were $336,615.





On May
31, 2008, there were 24,753,726 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 $0.30 at which the stock was sold on such date was,
approximately $7,426,118.





APPLICABLE
ONLY TO CORPORATE REGISTRANTS





On
September 9, 2008, there were 24,753,726  shares of Common Stock, $
..01 par value, issued and outstanding.





DOCUMENTS
INCORPORATED BY REFERENCE





None




2





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., a
Delaware corporation, CT Holdings, LLC., a Delaware limited liability company of
which we own 86.65%, Claim-Remedi Services, Inc., a Delaware company and TAP
Holdings, LLC (formerly dba Tomco Auto Products) and CPI Holdings, LLC (dba
Champion Parts). 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 2007, explained in further detail throughout this document:




3




·
            Acquired certain
      assets of nationally-known auto parts company Champion Parts, Inc. on May
      5, 2008, through newly formed subsidiary CPI Holdings, LLC, generating
      nearly $10 million in extraordinary gain (see financials) and meeting an
      essential step in our plan to regain compliance with the listing standards
      of the American Stock Exchange (see Risks –
      Amex)





·
            Raised
      approx. $3.4M in debt and convertible debt to acquire the Champion
      assets






·
            Recovered
      three of the largest six automotive retail customers in the U.S.,
      representing sufficient business, once implemented, to make CPI Holdings
      profitable.







·
            Restored $7,761,655in
      stockholders equity (see financial
  statements)






Following
the sale of our auto products assets in November 2006, we were engaged
exclusively in data processing (including healthcare data processing and
financial data processing).   The acquisition of the Champion
assets (described below) has shifted the company’s focus back to auto parts
manufacturing activities.  As reported previously, all debit card data
processing and issuance has been discontinued.




Furthermore,
it is our strategy, in addition to the continued aggressive marketing of our
products, to actively seek acquisitions and investments in the automotive and
fuel efficiency industries that are synergistic to our existing manufacturing
operations.







CPI
HOLDINGS, LLC dba CHAMPION PARTS





Background
- Sale of Tomco to Champion Parts, Inc.




In
November 2004, Cash Tech’s TAP Holdings, LLC subsidiary (“TAP”) acquired the
assets of Los Angeles-based Tomco Auto Products, Inc. (“Tomco”) for $2.5 million
in cash.  At that time Tomco and Champion Parts, Inc. (“Champion”)
were the two largest fuel system remanufacturers in the U.S.  TAP
improved Tomco’s operations and sold the company in November 2006 to Champion
for $10.8 million.  The terms were $1.3 million in cash and a $9.5
million secured promissory note payable as a percentage of Champion sales,
estimated to be approx. $1.2 million per year, secured by Champion’s
inventory.




Champion
made initial payments to TAP on the note, however without warning on October 10,
2007 Champion filed for Chapter 11 as a result of a dispute with its primary
lender, PNC Business Credit, Inc.




TAP was
required to writeoff the remaining balance of the Champion note, immediately
reducing Cash Tech’s stockholders’ equity well below the minimum $6 million
level required to remain listed on the American Stock Exchange.  The
risk to Cash Tech’s stock also prevented a pending capital raise planned for
October 2007 and stalled the investments and acquisitions in the data processing
field that were strategically planned for 2008.




Acquisition of Champion
Assets




Forced to
restructure its strategic plan, Cash Tech created a new subsidiary, CPI
Holdings, LLC, in February 2008 to acquire Champion’s assets from its lender,
PNC Bank, following a court-ordered foreclosure.  To fund the
acquisition and working capital, Cash Tech raised approximately $3.4 million in
debt and convertible debt. After lengthy negotiations and bankruptcy court
proceedings, CPI succeeded in acquiring approximately $14.4 million in assets
for $2.97 million from PNC Bank on May 5, 2008.




4




The
acquired assets consist of finished goods, raw materials, component parts, all
manufacturing and office equipment, furniture, computers, intangible assets such
as the company name, IP, software, records, etc.  To avoid adversarial
collection activities with valuable customers, CPI chose not to acquire
Champion’s receivables from PNC.  This allowed CPI to restore
customer-friendly policies and pricing and distance itself from Champion’s
problems.





Operations





CPI
rehired the former pre-bankruptcy CEO of Champion, who had run the company
profitably for 9 years, as well as his management team, allowing operations to
be restored immediately following the May 2008 acquisition.  CPI
resumed operations in its leased 200,000 square foot factory in Hope,
Arkansas.   Since then CPI has recovered 3 of the largest 6 U.S.
auto parts retailers as customers, whose combined commitments are expected to
make CPI profitable in its next fiscal quarter.





Expansion





To
leverage CPI’s retail distribution channel consisting of thousands of retail
stores, CPI intends to acquire other products, particularly in the
fuel-efficiency and “green tech” markets, which can be manufactured by CPI
and/or sole through CPI’s customer channels.  The first such product
is a turbocharger being acquired from Turbomotive, Inc. (see below) which will
be manufactured by Champion under the brand name Champion
PerformanceTM.








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




In
late 2004, we expanded our data processing initiatives into the healthcare and
debit card industries by establishing our Claim-Remedi Services, Inc. and
CashTechCard Systems, Inc. subsidiaries and hiring executive staff experienced
in those industries . After marketing research and technical development,
Claim-Remedi launched a line of products to improve the processing of healthcare
insurance claims. Claim-Remedi’s products utilize a combination of software
developed internally and software licensed non-exclusively from a third party.
CashTechCard began marketing a debit card product that targets the employee
benefits, payroll and underbanked market segments, however as a result of the
decision by CashTechCard’s issuing bank to exit the debit card market and the
events of 2007 that required Cash Tech to focus on restoring the Champion
business, CashTechCard’s card issuance activities were terminated in December
2007.




Claim-Remedi's
products include:




·
            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.





·
            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.





·
            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.




Prior to
the formationof Claim-Remedi and CashTechCard Services the
Company developed and patented sophisticated transaction processing technology
called EMMA. Our EMMA software has potential applications within the data
processing industry though no efforts are presently underway to market
EMMA.





5




Industry
(Market) Overview




Remanufactured
Fuel Systems




Starting
in the 1980’s and ending in the 1990’s car and truck manufacturers moved to fuel
injected engines and away from carburetors, however there are an estimated40 million vehiclesin the U.S.
that are still using carburetors.  Car collectors, owners who repair
rather than replace their vehicles and operators of special purpose vehicles
(farming, construction equipment, marine, etc.) are among the customer
base.




The
carburetor replacement market dropped significantly in the 5-7 years after
vehicle manufacturers introduced fuel injection.  Overall demand has
since flattened and continues to drop several percent each year.  This
is offset by smaller suppliers periodically exiting the market, consolidating
business for CPI, and modest yearly product price increases, providing CPI with
projected revenue increases for the foreseeable future.  In addition,
CPI acquired the Champion assets at a steep discount, has increased efficiency
since resuming operations and its total debt is about a tenth of Champion’s
former debt, allowing CPI to be profitable on approx. 15% of Champion’s 2006
revenue.




Champion
(and Tomco) dominated the U.S. market due to their enormous catalog of
replacement units and their competitive pricing, allowing customers to service
virtually every vehicle on the road and giving CPI a very high “fill rate” with
retailers, a key metric.




There are
numerous small, family-owned remanufacturers servicing their local markets,
however, there is only one major national remanufacturer of fuel systems that
competes with CPI - Holley Performance Products, Inc.   Indirect
competitors are companies that supply carburetor rebuilding kits, including
Walker Products, Tomco Inc. (St. Louis), Standard Motor Products.  CPI
does not have patents, licenses or franchises.




National
Retail Distribution




In
management’s opinion, CPI’s most valuable asset is its retail distribution
network.  Virtually every national automotive retailer was a customer
of Champion and/or Tomco:  NAPA, O’Reilly, Autozone, Carquest, PEP
Boys, Advance and others.  These companies represent in excess of
20,000 retail locations.  CPI has resumed sales with 3 of the major 6
retailers and believes it will be able to restore business with the others in
the future.  The shipping, regional warehousing, invoicing, warranty
return, cataloging and other procedures needed in order to be an approved vendor
for these retailers have been developed over decades and constitute an
intangible asset of great value.




6





The Future: Fuel-Efficiency
and Emission-Reduction
Products




The
market for products that increase fuel efficiency and reduce toxic emissions is
large and growing.  Tougher regulatory standards, higher fuel prices
and increasing demand for lower-carbon-footprint vehicles are driving this
sector and these trends are likely to continue.




CPI has
agreed to acquire the assets of Turbomotive, Inc. for $1.75 million, of which a
portion under $500,000 shall be cash and the balance paid in preferred stock of
Cash Technologies (terms being finalized based on performance
criteria).  The preferred stock will permit conversion at the market
price of Cash Tech’s common stock with a floor of $0.75 per share and a ceiling
of $1.50 per share.   The turbo assets being acquired consist of
proprietary turbo technology, including issued and pending patents,
manufacturing processes, fabrication drawings, purchase orders, trade names,
other intangibles and tooling.




Turbo
manufacturing will consist of two primary operations: (i) metal casting
performed by contract shops; (ii) machining, assembly and testing to be
performed at Champion.   Champion has extensive experience in the
exact type of manufacturing required.




The
Turbomotive acquisition brings CPI Holdings into the thriving market of
fuel-efficiency products.  Turbochargers increase fuel efficiency by
25% (50% for diesel engines), reduce emissions by 25%, increase engine power by
50% and keep the engine cleaner which reduces maintenance costs.  Most
manufacturers are now designing new cars to include turbos, allowing engines to
be smaller, lighter and meet tougher environmental standards.  Demand
for turbochargers is international and a turbo unit manufactured for a foreign
car or truck can be used anywhere in the world where that vehicle or engine is
sold.  Therefore turbo models produced for use in the U.S. can be
readily marketed in Europe and Asia.  The turbo market exceeded $5
billion last year, with more than 17 million units produced and is expected to
increase to $10 billion within 5 years.  The emerging use of
alternative fuels will also increase the use and demand for
turbochargers.  We believe that Turbomotive’s patented technology
makes it the best product available.




The
leading turbo makers today are Honeywell Turbo Technologies (est. 40% market
share) and BorgWarner (est. 25% market share).  They are supplying the
vehicle manufacturers but have had a minor role in the
aftermarket.  Therefore there is an opportunity for an
industrial-quality aftermarket product to penetrate the retail market for both
replacement and add-on purposes.  Discussions with CPI’s customers
have confirmed that the market is ripe for retail distribution of
turbos.




Turbomotive’s
patented and patent-pending ball bearing technology can also significantly
improve the performance of the existing OEM products.




In the
future, CPI will target other fuel-efficiency and emission-reduction products
and technologies that can be distributed through its retail channel and other
possible strategic business acquisitions.




Brand
Recognition




CPI
enjoys the national recognition of the Champion brand name resulting from 60
years of marketing.  CPI plans to market the fuel efficiency products
under the brand name Champion PerformanceTM which it intends to
build into a widely recognized standard for quality and performance in fuel
efficiency products throughout the industry.




7


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. In the United States, where $2
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.




Products
for Healthcare Providers





To
healthcare providers, Claim-Remedi offers Pro837, ProIdentify and
ProClaimSubmit. These products, offered as a monthly subscription or on a per
transaction basis, can 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% of all health insurance claims submitted by a provider are
rejected by the payer organization and returned weeks   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 5%, 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 reverse engineering 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.




Healthcare
Products





The
market for Claim-Remedi products can be divided into three segments: large
providers (hospitals, institutions) small providers (physician practices) and
payers (insurance companies, health plans, etc.). In each case our strategy is
to partner with sales channels and leverage their existing relationships with
clients to minimize our need to create and support a large direct sales force.
Based on completed and pending events, we believe that strategy will prove to be
a successful one for the distribution of Claim-Remedi products. As our products
are software and web-based, expanded distribution is achievable without a
corresponding increase in overhead.





8





Claim-Remedi
has contracted non-exclusively with Physician Sales and Service, Inc. (PSS), the
largest supplier of medical products to the physician practice market in the
U.S., to distribute its healthcare software products. PSS has about 700 sales
reps in the U.S. and approximately 250,000 doctor clients. Claim-Remedi is also
direct-marketing to the small practice market and pursuing partnerships with
other software vendors for integration of our products with their complimentary
products.





In the
hospital market, Claim-Remedi has begun direct marketing to hospitals and
pursuing relationships with hospital software vendors. One such relationship,
with Accuro Healthcare Solutions is designed to integrate Claim-Remedi’s
eligibility product with Accuro’s products. Accuro provides software to more
than a thousand hospitals in the U.S.




Claim-Remedi's
healthcare products compete in a large and highly competitive industry filled
with products that have similar functionality to Claim-Remedi's products. Large
healthcare data processors, such as WebMD, McKesson, EDS, Perot Systems and
others offer eligibility and claims clearinghouse capabilities that have similar
capabilities as those offered by Claim-Remedi. Several companies offer claims
scrubbers which have similar functionality to Claim-Remedi'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 we do and the successful marketing of their products may
lessen or minimize the demand for Claim-Remedi's products. Claim-Remedi 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
Claim-Remedi will succeed in this endeavor.




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.




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, 2008, we employed 32 employees and one contractor on a full-time basis, of
which 25 were employed by CPI Holdings.  Of the Cash Tech and Claim-Remedi
staff, one was engaged in facilities and security, one in customer service, four
in administration and business development, and two in system support and
development.




9





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, 2008 and 2007, we had net
sales of $336,615 and $313,946, respectively. Losses will continue until and
unless our products are more widely sold.




We
have incurred losses since our inception. For the last two fiscal years ended
May 31, 2007 and 2008, net income (losses) of ($800,052) and $(3,065,247)
respectively. In its reports accompanying our audited financial statements for
the fiscal years ended May 31, 2007 and 2008, our independent auditors included
an explanatory paragraph wherein they expressed substantial doubt about our
ability to continue as a going concern. For the fiscal year ended May 31, 2008
we have incurred additional (losses) which include a one time bad debt expense
of $7,518,118 and a one time write off of our investment in
BIPS.





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





As of
May 31, 2008 we had outstanding current liabilities of $8,142,075, consisting of
obligations and accruals for loans, dividends and notes payable, trade payables,
taxes, unpaid salaries and other items of which approximately $1,400,000 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 ceasing operations and/or 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, 2008, Cash Tech had working capital of $5,241,369 and available cash of
$410,305. 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, 2008, we also owe $3,938,924 to General
Electric Capital Corporation. In 2000, we entered into the first of several loan
renewals with G.E., the most recent of which requires certain fees and interest
to be paid following which the note shall be extended for 12 months at which
time all sums owing to GE shall be due and payable.  A default of this
obligation or failure to negotiate a renewal could result in the delisting
and/or bankruptcy of the Company.





10





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 General Electric Capital Corporation pursuant to a Master Security
Agreement originally entered into in May 1997, liens in favor of BFI Finance on
all assets of TAP Holdings pursuant to a Loan and Security Agreement entered
into in November, 2004, a lien on the assets of CPI Holdings, LLC in favor of
Greenfield Commercial Credit in the amount of $1,360,000 entered into May 5,
2008 and a lien on the assets of CPI Holdings in favor of private placement
investors in the aggregate amount of $1,590,000 entered in to on May 5,
2008.





As of
February 29, 2008, we were indebted to G.E. in the amount of approximately
$3,938,924 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 former chairman (who is not an employee of Cash Technologies). As of May
31,
2008 we owed BFI approximately $205,703 including interest. The outstanding
balance owed to BFI is expected to be paid from the sale of certain assets of
TAP and refunded insurance deposits.




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 CPI Holdings, LLC




CPI is
expected to be substantially  dependent on its major customers;
initially Autozone, Pep Boys,  and CARQUEST, Mercury Marine and
ATG.  These customers have accounted thus far for approximately 77% of
CPI's revenue.  The loss of any of these customers would have a
material adverse affect on CPI's revenue.





The
market for fuel system products is shrinking.





Until and
unless CPI begins sales of turbocharger and/or other products under
consideration, all or virtually all of CPI’s revenue will be from the sale of
rebuilt carburetors and air conditioning compressors.  Sales of
carburetors have fluctuated and may continue to fluctuate or decline as the
number of vehicles using carburetors continues to decline.  CPI
expects to compensate for this decline by increasing its market share and from
routine price increases but there is no assurance that it can succeed in this
effort.





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





As of May
31, 2008, CPI had a carrying value of $11,967,341for its inventory.  In May 2008, at the time CPI's assets were
purchased, an obsolescence reserve of $1,113,200 was established to cover
potential inventory impairment.  In future periods, additional
reserves may be taken based on CPI’s inventory, which could result in a
substantial expense and negatively impact CPI’s financial results.





11





The turbocharger market is
competitive and sales are uncertain





Following
the acquisition of the Turbomotive assets (see above), CPI intends to
manufacture and distribute turbochargers though its retail and other
channels.  While CPI’s retailers have indicated their interest in
carrying the company’s turbo products, there can be no assurance that the retail
channel will be timely activated or produce sufficient revenues to meet CPI’s
objectives.  In addition, other larger manufacturers of turbos, such
as Honeywell and Borg-Warner, are better capitalized and better known than CPI
and could negatively impact CPI’s sales if they targeted the same
markets.





Turbocharger manufacturing
may be delayed





Following the acquisition of the
Turbomotive assets, CPI will begin to establish manufacturing operations to
produce turbochargers at its factory in Hope, Arkansas.  While CPI’s
management has manufactured turbos in the past and believes that it possesses
the necessary expertise to do so in the future, various manufacturing start-up
problems, including engineering, supply chain, quality control or other issues,
or insufficient capital to purchase needed tooling or equipment, can delay or
impede the start or continuation of turbo production and materially impact
turbocharger sales.




Risks
Related to Our Healthcare Products





Competition
in healthcare software is intense.





Claim-Remedi’s
healthcare products compete with products offered by companies that are larger,
better known and better capitalized than Claim-Remedi. Claim-Remedi has taken
steps and developed features designed to differentiate its products, however
these steps may prove inadequate in which event Claim-Remedi might have to
withdraw one or more of its products which would have a material adverse effect
on Cash Technologies.




Claim-Remedi
is liable for the loss or misuse of personal information.





Claim-Remedi
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, the
companies might be liable for any damages caused thereby.





Claim-Remedi
is substantially dependent on third parties for data processing and customer
support.





Most data
processing and customer support for Claim-Remedi’s products are performed
by third parties under 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 the company's operations.





Essential
services related to CashTechCard have ceased.




In
December, 2007 the Company’s CashTechCard Systems, Inc. subsidiary received
notice that its card issuer, First Premier Bank, would be exiting the prepaid
debit card industry and its card transaction processing would cease by April 10,
2008. CashTechCard began efforts to secure a replacement issuer on acceptable
terms. However, as a result of the significant costs and requirements of
replacement issuers and the limited resources available from the Company as it
plans to acquire the Champion assets, on April 18, 2008 the board of
CashTechCard decided not to continue card issuance and processing
activities.




12


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 Claim-Remedi can generate enough
growth in its sales to outpace these market forces.








Risks
Related to Our CoinBank Machines





Impairment
Charge





We are currently
holding for sale approximately 236 CoinBank machines which were manufactured
when the Company was actively engaged in the sale of such equipment. The
machines have a carrying value of approximately $509,890 at May 31, 2008. We
have taken impairment charges in the past due to low inventory turnover for the
coin machines. In future periods, while we intend to liquidate the remaining
machines, additional impairment may be taken. If we conclude that such
impairment exists, this could give rise to a substantial expense, which would
increase our reported losses. We have identified parties interested in acquiring
the remaining units, although there is no assurance that such sales will be
consummated and we may not fully recover the carrying value of our CoinBank
machines held for sale.


We
may not successfully compete with our competitors.





The
healthcare industry is a 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.




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.






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 CoinBank and EMMA
technologies, 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.





13





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, security
holders 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 security
holders instituting derivative litigation against directors and officers and may
discourage or deter security holders 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 security
holders.






Risks
Related to our Common Stock





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 eight 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.





14





If
our common stock is delisted from the American Stock Exchange, we may not be
able to raise essential investment capital.




If our
common stock is delisted from the American Stock Exchange, particularly as
a result of Amex’s refusal to approve our plan to regain compliance with
the Amex listing standards (see below) we may find it difficult or impossible to
raise additional investment capital, without which we cannot
survive.





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. The one
year sale price for our common stock, as reported by the American Stock Exchange
has fluctuated from a low of $0.10 to a high of $1.05 per share. The market
price of our common stock could be impacted by a variety of factors,
including:




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





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





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





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





·
            litigation
      affecting us or our products.





·
            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 security
holders, 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.




15




Risks
Related to our listing on the American Stock Exchange


We
have been notified by the American Stock Exchange that our stock is subject to
delisting





Following
the bankruptcy of Champion Parts, Inc. and the subsequent write-off of the note
receivable from Champion in the approximate amount of $7,518,118, we were
notified by the American Stock Exchange (Amex) that we were not in compliance
with the continued listing standards of the Amex.  In particular, Amex
cited violations of Section 1003(a) of the Company Guide with respect to
impaired financial condition and falling below the minimum $6,000,000 of
required stockholders equity and Section 301 due to the issuance of securities
prior to receiving Amex approval.  The Section 301 violation was
promptly resolved and in January 2008 Amex accepted our plan to regain
compliance with Section 1003 by March 1, 2008.  Specifically, our plan
to acquire the Champion assets through our CPI Holding subsidiary (see above)
was projected to restore our minimum required stockholders equity.  On
April 30, 2008 Amex extended the compliance date to September 15, 2008 in
consideration of the imminent acquisition of the Champion assets by CPI (which
closed on May 5, 2008) and to allow for the filing of this 10-KSB.  A
compliance report will be provided to Amex indicating that we have met the
requirements specified in the April 30, 2008 notice.  Nevertheless,
Amex retains discretion in its approval of such compliance reports and there can
be no assurance that Amex will accept the report in full satisfaction of our
listing requirements.








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, has a
beneficial interest in Prime. Our CPI Holdings operation leases a 277,000 square
foot facility in Hope, Arkansas from the bankruptcy trustee of Champion Parts,
Inc. CPI’s monthly lease payment is $15,000.  The lease expires in
April, 2009.






ITEM 3. LEGAL PROCEEDINGS





On August
22, 2008, TAP Holdings, LLC, a wholly owned subsidiary of Cash Technologies,
Inc. filed a lawsuit against PNC Bank National Association, PNC Business Credit,
John Stanescki, Lee Labine, Tom Stoltz and Does 1-10 (“Defendants”), in
California Superior Court (TAP Holdings, LLC vs. PNC Bank, National Association
et al, Case No. BC396800) alleging that Defendants and each of
them:




(i)
Fraudulently induced TAP to enter into a Subordination and Standstill Agreement
as part of TAP’s sale of most of its assets to Champion Parts, Inc. (“Champion”)
in 2006;




(ii)
Conspired to defraud TAP of payments to which it was entitled from Champion
through the use of the mail and wire in violation of the Racketeering Influenced
and Corrupt Organizations Act (RICO), 18 U.S.C. §1962;




(iii)
Exercised dominion and control over Champion and its management, ultimately
resulting in the bankruptcy of Champion and the evisceration of the Promissory
Note owed by Champion to TAP with a remaining balance of approximately $8.5
million;




(iv)
Breached the covenant of good faith and fair dealing in the agreements they
signed in the sale of the TAP assets to Champion;




(v)
Breached their fiduciary duty to TAP in their handling of the loan(s) to
Champion; and




(vi)
Negligently misrepresented and/or omitted material facts to TAP involving
Champion, the agreement and sale of the TAP assets to Champion, and the ability
of Champion to repay the Promissory Note owed to TAP.




16





TAP is
seeking to recover damages in the amount of at least $25 million subject to
proof at trial. The company will incur significant costs to pursue this
litigation and there can be no assurance that it will prevail.





On April
14, 2008, Del Rey Ventures, Inc. filed a lawsuit in California against TAP
Holdings, LLC, for breach of contract and common counts in the amount of
$77,663, plus interest, costs and attorney’s fees.  The lawsuit also named
Cash Technologies, Inc. and TAP Holdings boardmembers Edmund King and Bruce
Korman as alter egos of TAP Holdings.  TAP Holdings and the other
defendants filed cross-complaints against Del Rey Ventures and Richard
Schoenfeld seeking no less than $3 million in compensatory damages, as well as
punitive damages, rescission, interest and costs for the wrongful conduct of the
cross-defendants, including:





1.
            Multiple
      acts of fraud, including material misrepresentations and/or omissions in
      connection with TAP’s sale of assets to Champion in October 1996 and the
      fraudulent inducement of an assignment of an employment contract from Mr.
      Schoenfeld to Del Rey Ventures;


2.
            Breach
      of fiduciary duty, including the defendants’ concealment of unanticipated
      returns before the 1996 TAP sale of assets to Champion resulting in a
      shortfall at closing;


3.
            Corporate
      waste, including Mr. Schoenfeld’s misreporting of TAP’s inventory between
      June 2006 and October 2006;


4.
            Conversion
      and the taking of corporate opportunity in the secret and unauthorized
      sale of approximately 11,000 finished goods from TAP’s inventory for Mr.
      Schoenfeld’s personal gain to the detriment of TAP and its shareholders;
      and


5.
            Breach
      of contract for the defendants’ failure to provide the services required
      under the assigned employment
contract.





TAP
Holdings and Cash Tech will incur significant costs to pursue this litigation
and there can be no assurance that they will prevail.








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





None










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, 2008
            
            High
            
            LowQ1
            June
      1 - August 31
            
            .97
            
            .72Q2
            September
      1 - November 30
            
            .75
            
            .23Q3
            December
      1 - February 28
            
            .23
            
            .12Q4
            March
      1 - May 31
            
            .50
            
            0.11





17





Year ended May 31, 2007
            
            High
            
            LowQ1
            June
      1 - August 31
            
            1.29
            
            0.67Q2
            September
      1 - November 30
            
            1.25
            
            0.80Q3
            December
      1 - February 28
            
            1.17
            
            0.80Q4
            March
      1 - May 31
            
            1.12
            
            0.85




On
September 12, 2008 we had a high and low price of $0.30.





Dividend
Policy





During
the fiscal year ended May 31, 2008, we paid no dividends. 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, 2008, we accrued dividends of $210,830 for all
Preferred Stock outstanding as compared to $50,416 for the fiscal year ended May
31, 2006.







Recent
Sales of Unregistered Securities











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, CashTechCard Systems, Inc.
(formerly Cintelia Systems Inc.), a Delaware corporation, CT Holdings, LLC., a
Delaware corporation of which we own 86.65%, Claim-Remedi Services, Inc.
(formerly Heuristic Technologies, Inc.), a Delaware company, formed in May,
2004, to engage in healthcare data processing and debit card issuance, TAP
Holdings, LLC (dba Tomco Auto Products) and CPI Holdings, LLC (dba Champion
Parts).


Our
independent certified public accountant included an explanatory paragraph in its
report for the year ended May 31, 2008, 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, 2008
and 2007, we received net income (losses) of $(800,000) and $(3.1) million,
respectively.




18





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, 2008, capitalized software costs had been
fully amortized . 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 $75,000 for the fiscal year ended May 31, 2008 and $93,750 for the
fiscal year ended May 31, 2007 .




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.




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




Although
we will continue our word-of-mouth sales approach with respect to our remaining
CoinBank machines, we intend to focus substantially all of our efforts and
operations on the continued development and deployment of the CPI Holdings and
Claim-Remedi products.





Revenues
generated from CoinBank machines accounted for approximately 0 % of net revenues
for the fiscal years ended May 31, 2008 and 2007, with the balance involving
software and licensing fees from CPI Holding and Claim-Remedi. Although there
can be no assurance, we anticipate that the activities associated with CPI
Holdings will become the largest source of our future revenues.








Results
of Operations




Fiscal Year Ended May 31, 2008,
Compared to Fiscal Year Ended May 31, 2007
 
 Net
Revenues for the year ended May 31, 2008, was $336,615 compared to $313,946 in
fiscal year 2007. Cost of revenues for the year ended May 31, 2008, was $249,738
compared to $424,281 in fiscal year 2007.
 
 Gross
profit for the year ended May 31, 2008, was $86,877 compared to $(110,335) for
the year ended May 31, 2007.   The increase was a result of the
addition of CPI sales to the company’s consolidated income
statement.
  These
expenses consisted primarily of wages (and wage related costs), outside
contractor expenses, travel/promotional expenses, professional services and
facilities/office related expenses. The decrease was primarily due to a decrease
in overall operating costs.
 
 Research
and development expenses for the fiscal year ended May 31, 2008, was $25,000
compared to $93,750 for the fiscal year ended May 31, 2007. The decrease was the
result of a reduction in programmer costs incurred.
 
 Depreciation
and amortization expenses in fiscal year 2008 were $2,178 compared to $329,968
in fiscal 2007.   The decrease was a result of the conclusion of
amortization for certain R&D in fiscal 2007.
 
 Other
Income for the fiscal year ended May 31, 2008 was $777,714 compared to $271,250
for the 2007 period.  Other Income was from forgiveness and abandonment of
debt and reversal of certain accruals offset partially by write offs of certain
assets.


19


Interest
expense for the fiscal years 2008 and 2007 was $766,516 and $407,567,
respectively.
 
 Income
Taxes for the fiscal year ended May 31, 2008 was $2,400, unchanged from
2007.
 
 Minority
Interest for the fiscal year ended May 31, 2008 and May 31, 2007, was $(24,629)
and $(24,122) respectively.
 
 Gain
(Loss) From Disposition of Subsidiary’s Assets of $(7,518,118) was a result of
the writeoff of the note receivable from Champion Parts, Inc. in October
2007.
 
 As a
result of the foregoing, net income (losses) for the year ended May 31, 2008 was
$(800,052 compared to (3,065,247) for May 31, 2007.




Fiscal Year Ended May 31, 2007,
Compared to Fiscal Year Ended May 31, 2006





Net
Revenues for the year ended May 31, 2007, was $313,946 compared to $55,007 in
fiscal year 2006. Cost of revenues for the year ended May 31, 2007, was $424,281
compared to $32,064 in fiscal year 2006.





Gross
profit for the year ended May 31, 2007, was $(110,335) as compared to $22,943
for the year ended May 31, 2006.





Selling,
general and administrative expenses for the year ended May 31, 2007, were
$3,011,275 compared to expenses of $3,271,606 for the fiscal year 2006. 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, 2007, was $93,750
compared to $150,000 for the fiscal year ended May 31, 2006. The decrease was
the result of a reduction in programmer costs incurred.





Depreciation
and amortization expenses in fiscal year 2007 were $329,968 compared to $390,562
in fiscal 2006.





Other
Income for the fiscal year ended May 31, 2007 was $271,250 compared to $121,650
for the 2006 period. Other Income was from forgiveness of certain debt in 2006
and was from a write-off of certain convertible debt in 2007 which debt had been
deemed abandoned.





20





Interest
expense for the fiscal years 2007 and 2006 was $407,567 and $390,562,
respectively.





Income
Taxes for the fiscal year ended May 31, 2007 was $2,400 compared to $7,000 for
the fiscal year ended May 31, 2006.





Minority
Interest for the fiscal year ended May 31, 2007 and May 31, 2006, was $(24,122)
and ($24,521), respectively. Gain From Disposition of Subsidiary’s Assets of $1,481,468 was a result
of the sale of a majority of the assets of the Company’s TAP subsidiary. As a
result of the foregoing, net income (losses) for the years ended May 31, 2007
and 2006 were (3,065,247) and $(5,038,392), 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, 2008, we had working capital of
$5,148,929 compared to $(6,662,506) at May 31, 2007.  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, 2008, 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 sources (used) in
operating activities was $(3,353,577) for the fiscal year ended May 31, 2008
compared to $(2,775,679)for the fiscal year ended May 31, 2007.
  Net cash used in investing
activities for the fiscal year ended May 31, 2008, was  $(846,618)as compared to $0for the fiscal year ended May 31, 2007.
  Net cash provided by
financing activities for the fiscal year ended May 31, 2008, was $1,809,615as compared to $ 3,801,971for the fiscal year ended May 31, 2007.


21




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, 2008 and 2007, 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, 2008 and 2007 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


September
15, 2008





22





CASH TECHNOLOGIES, INC. AND
SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS




MAY
      31,
              
              
              MAY
      31,2008
              
              
              2007ASSETSCURRENT
      ASSETS:Cash
      and cash equivalents
              
              $
              410,305
              
              
              $
              1,107,649Accounts
      receivable
              
              
              128,622
              
              
              
              29,853Prepaid
      expenses and other current assets
              
              
              529,896
              
              
              
              194,627Other
      receivable (net of allowance $50,000)
              
              
              118,456
              
              
              
              163,551Inventory
              
              
              11,967,341
              
              
              
              -Assets
      of discontinued operationsCash
              
              
              41
              
              
              
              41Accounts
      receivable
              
              
              -
              
              
              
              192,360Prepaid
      expenses and other current assets
              
              
              117,000
              
              
              
              263,076Inventory
      (net of allowance $121,000)
              
              
              93,553
              
              
              
              121,690Property
      and equipment, netNote
      receivable
              
              
              -
              
              
              
              1,387,500Other
      assets
              
              
              18,230
              
              
              
              18,230Total
      assets of discontinued operations
              
              
              228,824
              
              
              
              1,982,897Total
      Current Assets
              
              
              13,383,444
              
              
              
              3,478,577CoinBank
      machines held for sale  (Note 1(n))
              
              
              609,890
              
              
              
              609,890PROPERTY
      AND EQUIPMENT (net)
              
              
              3,027
              
              
              
              26,823NOTES
      RECEIVABLE
              
              
              
              
              
              
              6,879,045CAPITALIZED
      SOFTWARE COSTS  (Note 1(n))
              
              
              -CDHC
      PREFERRED STOCK
              
              
              218,401
              
              
              
              900,901CLAIMREMEDI
      PREFERRED STOCK
              
              
              3,500,000
              
              
              
              3,500,000BIPS
      PREFERRED STOCK
              
              
              -
              
              
              
              2,000,000OTHER
      ASSETS
              
              
              -
              
              
              
              535,295TOTAL
      ASSETS
              
              $
              17,714,762
              
              
              $
              17,930,531LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIENCY)CURRENT
      LIABILITIES:Current
      maturities of Notes Payable  (Note 5)
              
              $
              3,938,524
              
              
              $
              3,482,286Due
      to Officers and Directors
              
              
              8,915
              
              
              
              8,915Convertible
      debt (Note 5)
              
              
              147,337
              
              
              
              170,519Due
      to Shareholders (Note 4)
              
              
              398,805
              
              
              
              602,610Accounts
      payable
              
              
              894,202
              
              
              
              1,131,497Accrued
      liabilities
              
              
              1,956,702
              
              
              
              2,094,333Dividend
      payable
              
              
              461,246
              
              
              
              261,246Liabilities
      of discontinued operationsAccounts
      payable
              
              
              -
              
              
              
              725,443Notes
      payable
              
              
              336,344
              
              
              
              1,172,207Accrued
      expenses and other current liabilities
              
              
              -
              
              
              
              492,026Total
      liabilities of discontinued operations
              
              
              336,344
              
              
              
              2,389,676Total
      Current Liabilities
              
              
              8,142,075
              
              
              
              10,141,082Long-Term
      Notes Payable  (Note 6)
              
              
              1,933,673
              
              
              
              1,134,560TOTAL
      LIABILITIES
              
              
              10,075,748
              
              
              
              11,275,642COMMITMENTS
      & CONTINGENCIES (Note 7)
              
              
              -
              
              
              
              -MINORITY
      INTEREST
              
              
              (122,640
              )
              
              
              (98,639
              )MINORITY
      INTEREST OF DISCONTINUED OPERATIONS
              
              
              
              
              
              
              -TOTAL
      MINORITY INTEREST
              
              
              (122,640
              )
              
              
              (98,639
              )STOCKHOLDERS'
      EQUITY (DEFICIENCY):  (Note 6)Stockholder's
      equity of discontinued operationsAdditional
      paid in capital
              
              
              979,367
              
              
              
              910,000Accumulated
      equity
              
              
              (1,086,887
              )
              
              
              5,249,766Total
      stockholder's equity of discontinued operations
              
              
              (107,520
              )
              
              
              6,159,766Cumulative
      Redeemable Preferred Stock, 5,500,000 shares authorized, and
      647,893  shares issued and outstanding at May 31, 2008
      and  May 31, 2007
              
              
              10,906,811
              
              
              
              10,875,812Common
      Stock, $0.01 par value, 65,000,000 shares authorized, and
      24,753,726  shares issued and outstanding at May 31, 2008
      and  May 31, 2007
              
              
              368,132
              
              
              
              366,876Additional
      Paid-In-Capital
              
              
              42,265,826
              
              
              
              40,177,545Accumulated
      Deficit
              
              
              (45,671,595
              )
              
              
              (50,826,471
              )Total
      stockholders' Equity
              
              
              7,761,654
              
              
              
              6,753,528TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
              
              $
              17,714,762
              
              
              $
              17,930,531




See notes
to consolidated financial statements





23





CASH
TECHNOLOGIES, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS





FISCAL
      YEAR ENDEDMAY
      31,2008
              
              
              2007NET
      REVENUES
              
              $
              336,615
              
              
              $
              313,946COST
      OF REVENUES
              
              
              249,738
              
              
              
              424,281GROSS
      PROFIT (LOSS)
              
              
              86,877
              
              
              
              (110,335
              )SELLING,
      GENERAL, & ADMINISTRATIVE EXPENSE
              
              
              2,374,618
              
              
              
              3,012,078RESEARCH
      AND DEVELOPMENT
              
              
              25,000
              
              
              
              93,750DEPRECIATION
      & AMORTIZATION EXPENSE
              
              
              2,178
              
              
              
              329,968IMPAIRMENT
      OF INVESTMENT IN BIPS
              
              
              2,000,000
              
              
              
              -OPERATING
      LOSS
              
              
              (4,314,919
              )
              
              
              (3,546,131
              )OTHER
      INCOME (Note 14)
              
              
              (777,714
              )
              
              
              (271,250
              )INTEREST
      EXPENSE
              
              
              766,516
              
              
              
              407,567PROFIT/(LOSS)
      BEFORE INCOME TAXES
              
              
              (4,303,721
              )
              
              
              (3,682,448
              )INCOME
      TAXES
              
              
              2,400
              
              
              
              2,400MINORITY
      INTEREST (Note 13)
              
              
              (24,629
              )
              
              
              (24,122
              )NET
      INCOME (LOSS) FROM CONTINUING OPERATIONS
              
              $
              (4,281,492
              )
              
              $
              (3,660,726
              )DISCONTINUED
      OPERATIONSNET
      REVENUES
              
              
              
              
              
              $
              2,780,586FORGIVENESS
      OF DEBT
              
              
              
              
              
              
              -COST
      OF REVENUES
              
              
              
              
              
              
              (2,250,226
              )SELLING,
      GENERAL & ADMINISTRATIVE EXPENSE
              
              
              1,237,586
              
              
              
              (1,087,318
              )INTEREST
      EXPENSE
              
              
              (56,211
              )
              
              
              (329,031
              )GAIN
      (LOSS) FROM DISPOSITION OF SUBSIDIARY'S ASSETS
              
              
              (7,518,118
              )
              
              
              1,481,468INCOME
      (LOSS) FROM DISCONTINUED OPERATIONS
              
              
              (6,336,743
              )
              
              
              595,479Extraordinary
      Gain on purchase of CPI assets
              
              
              9,818,183NET
      INCOME (LOSS)
              
              $
              (800,052
              )
              
              $
              (3,065,247
              )Dividends
      & deemed dividends
              
              $
              245,000
              
              
              $
              210,830Net
      income (loss) allocable to common shareholders
              
              $
              (1,045,052
              )
              
              $
              (3,276,077
              )Earnings
      per share - Basic and Diluted:Income
      from continuing operations
              
              $
              (0.19
              )
              
              $
              (0.17
              )Discontinued
      operations
              
              $
              (0.27
              )
              
              $
              0.03Extraordinary
      items
              
              $
              0.42
              
              
              $
              -Net
      income (loss)
              
              $
              (0.04
              )
              
              $
              (0.14
              )Basic
      and diluted weighted average shares of common stock
      outstanding
              
              
              23,497,000
              
              
              
              23,189,489





See notes
to consolidated financial statements





24





Cash
Technologies, Inc.
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
 Quarter
ended May 31, 2007
  CTI
      w/o TAPCTI
      w/o TAP
                  
                  
                  
                  
                  
                  Total
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  TotalAdditional
                  
                  
                  CTI
      w/o TAP
                  
                  
                  Stockholders'
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  Stockholders'Common
      Stock
                  
                  
                  Preferred
      Stock
                  
                  
                  Paid-in
                  
                  
                  Accumulated
                  
                  
                  Equity
                  
                  
                  APIC
                  
                  
                  DEFICIT
                  
                  
                  Total
                  
                  
                  EquityShares
                  
                  
                  Amount
                  
                  
                  Shares
                  
                  
                  Amount
                  
                  
                  Capital
                  
                  
                  Deficit
                  
                  
                  (Deficiency)
                  
                  
                  TAP
                  
                  
                  TAP
                  
                  
                  TAP
                  
                  
                  (Deficiency)Balance
      for May 31, 2006
                  
                  
                  22,035,964
                  
                  
                  $
                  346,445
                  
                  
                  
                  647,443
                  
                  
                  $
                  10,625,812
                  
                  
                  $
                  39,172,424
                  
                  
                  $
                  (42,300,630
                  )
                  
                  $
                  7,844,050
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  
                  7,844,050Minority
      Interest
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Common
      stock payments to consultants
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Miscellaneous
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (17,124
                  )
                  
                  
                  427,603
                  
                  
                  
                  410,479
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  410,479Unit
      purchase - common stock
                  
                  
                  204,310
                  
                  
                  
                  20,431
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,932,246
                  
                  
                  
                  -
                  
                  
                  
                  1,952,677
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,952,677Unit
      purchase - preferred stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  250
                  
                  
                  
                  250,000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  250,000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  250,000Dividends
      accrued on preferred stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (210,832
                  )
                  
                  
                  (210,832
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (210,832
                  )Net
      income (loss)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (3,377,746
                  )
                  
                  
                  (3,377,746
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (3,377,746
                  )reclass
      for TAP's portion
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (910,000
                  )
                  
                  
                  (5,249,766
                  )
                  
                  
                  (6,159,766
                  )
                  
                  
                  910,000
                  
                  
                  
                  5,249,766
                  
                  
                  
                  6,159,766
                  
                  
                  
                  -adjustment
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (115,100
                  )
                  
                  
                  (115,100
                  )
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  
                  (115,100
                  )Balance
      for May 31, 2007
                  
                  
                  22,240,274
                  
                  
                  $
                  366,876
                  
                  
                  
                  647,693
                  
                  
                  $
                  10,875,812
                  
                  
                  $
                  40,177,546
                  
                  
                  $
                  (50,826,471
                  )
                  
                  $
                  593,762
                  
                  
                  $
                  910,000
                  
                  
                  $
                  5,249,766
                  
                  
                  $
                  6,159,766
                  
                  
                  $
                  6,753,528Minority
      Interest
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (24,001
                  )
                  
                  
                  (24,001
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (24,001
                  )Unit
      purchase - common stock
                  
                  
                  2,513,452
                  
                  
                  
                  1,256
                  
                  
                  
                  200
                  
                  
                  
                  31,000
                  
                  
                  
                  164,364
                  
                  
                  
                  -
                  
                  
                  
                  196,620
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  196,620Unit
      purchase - preferred stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  
                  (65,440
                  )
                  
                  
                  -
                  
                  
                  
                  (65,440
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (65,440
                  )Conversion
      of warrants to common stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,582,068
                  
                  
                  
                  -
                  
                  
                  
                  1,582,068
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,582,068Write
      down of assets
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  660,780
                  
                  
                  
                  
                  
                  
                  
                  660,780
                  
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  
                  660,780Misc
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (253,492
                  )
                  
                  
                  (112,813
                  )
                  
                  
                  (366,305
                  )
                  
                  
                  69,367
                  
                  
                  
                  90
                  
                  
                  
                  69,457
                  
                  
                  
                  (296,848
                  )Net
      income (loss)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  5,291,691
                  
                  
                  
                  5,291,691
                  
                  
                  
                  -
                  
                  
                  
                  (6,336,743
                  )
                  
                  
                  (6,336,743
                  )
                  
                  
                  (1,045,052
                  )Balance
      for May 31, 2008
                  
                  
                  24,753,726
                  
                  
                  $
                  368,132
                  
                  
                  
                  647,893
                  
                  
                  $
                  10,906,812
                  
                  
                  $
                  42,265,826
                  
                  
                  $
                  (45,671,594
                  )
                  
                  $
                  7,869,175
                  
                  
                  $
                  979,367
                  
                  
                  $
                  (1,086,887
                  )
                  
                  $
                  (107,520
                  )
                  
                  $
                  7,761,655


See notes
to consolidated financial statements


25





CASH TECHNOLOGIES, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS




FISCAL
      YEAR ENDED MAY 312008
              
              
              2007OPERATING
      ACTIVITIES:Net
      loss
              
              $
              (800,052
              )
              
              $
              (3,065,247
              )Adjustments
      to reconcile net loss to net cash used byoperating
      activities:Bad
      Debt Expense-discontinued operations
              
              
              7,518,118Impairment
      of investment in BIPS
              
              
              2,000,000Extraordinary
      Gain
              
              
              (9,818,183
              )Minority
      interest
              
              
              (24,001
              )
              
              
              (24,122
              )Gain
      on sale of asset
              
              
              -Amortization
      deemed interest expense
              
              
              604,446Amortization
      of capitalized software
              
              
              
              
              
              
              326,531Income
      on forgiveness of debt
              
              
              
              
              
              
              (271,250
              )Noncash
      compensation expenseNon-Cash
      payment for services
              
              
              
              
              
              
              (72,407
              )Depreciation
      expense
              
              
              2,178
              
              
              
              3,437Other
      Assets
              
              
              535,295Gain
      on sale of asset
              
              
              (79,580
              )Impairment
      of CoinBank machines held for saleChanges
      in operating assets and liabilities:Accounts
      receivable
              
              
              (98,768
              )
              
              
              (15,627
              )Inventory
              
              
              (2,149,158
              )Prepaid
      expenses and other current assets
              
              
              (335,269
              )
              
              
              (8,641
              )Other
      receivable
              
              
              45,095
              
              
              
              (58,867
              )Accrued
      interest
              
              
              472,124Accounts
      payable
              
              
              (237,295
              )
              
              
              523,552Change
      in net assets of business held for sale
              
              
              (850,896
              )
              
              
              (967,643
              )Accrued
      expenses and other current liabilities
              
              
              (137,631
              )
              
              
              854,605Net
      cash used in operating activities
              
              
              (3,353,577
              )
              
              
              (2,775,679
              )INVESTING
      ACTIVITIES:Proceeds
      from sale of investment
              
              
              825,000Disposal
      of equipment
              
              
              21,618Net
      cash provided by (used in) investing activities
              
              
              846,618
              
              
              
              -FINANCING
      ACTIVITIES:Proceeds
      from conversion of warrants
              
              
              -Proceeds
      from the issuance of warrants
              
              
              -Net
      proceeds from issuance of preferred stock
              
              
              31,000
              
              
              
              250,000Proceeds
      from Long-term debt
              
              
              1,775,000
              
              
              
              1,134,560Proceeds
      from short term debt from equity holder
              
              
              121,195
              
              
              
              481,860Repayments
      on short-term debt
              
              
              (283,200
              )
              
              
              -Repayments
      on long-term debtProceeds
      from sale of common stock
              
              
              165,620
              
              
              
              1,935,553Net
      cash provided by financing activities
              
              
              1,809,615
              
              
              
              3,801,973CHANGE
      IN CASH AND CASH EQUIVALENTS
              
              
              (697,344
              )
              
              
              1,026,294Cash
      and Cash Equivalents, Beginning of Period
              
              
              1,107,649
              
              
              
              81,355Cash
      and Cash Equivalents, End of Period
              
              $
              410,305
              
              
              $
              1,107,649SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONIncome
      taxes
              
              
              2,400
              
              
              
              2,400SUPPLEMENTAL
      DISCLOSURE OF NONCASH TRANSACTIONSConversion
      from convertible debt to common stock
              
              
              
              
              
              $
              120,876Conversion
      of notes payable to common stockIssuance
      of common stock for services performed
              
              
              
              
              
              $
              210,000Gain
      (Loss) on operations of discontinued operationsDividends
      declared on preferred stock
              
              
              
              
              
              $
              210,830Dividends
      payd via common stockDeemed
      dividend on warrants issuedIssuance
      of preferred stockRepayment
      of debt to equity holders
              
              
              325,000


See
notes to consolidated financial statements


26





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. As of May 31, 2008, we do not have positive working
      capital and net equity operating losses have continued throughout 2007. 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.





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.





27





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 "), CashTechCard Systems, Inc., CT Holdings, LLC, Claim-Remedi
      Services, Inc., TAP Holdings, LLC., CoinBank Automated Systems ( "CAS ")
      and CPI Holdings, LLC, 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, Claim-Remedi in
      May 2004, Tap Holdings in November 2004 and CPI Holdings in February 2008.
      As of May 31, 2008 we own 86.35% of CT Holdings,
  LLC.





(c)
            Business
      — The principal business activity of each entity is as follows: CTI is
      currently managing its subsidiary operations and providing EMMA and other
      software development resources to subsidiaries; Claim-Remedi Services,
      Inc. provides healthcare software and data processing;. CBE functions as a
      European sales office for us and CPI Holdings operates our auto parts
      manufacturing operation.  Other entities are
      inoperative.




On May
5, 2008 ,CPI Holdings, LLC (dba Champion Parts or the "Company") acquired
certain assets of Champion Parts, 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.




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—CPI's fiscal year ended May 31,
2008





(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.





28





(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.





(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,
      2008 the Company had an Allowance for Bad Debts of
  $50,000.





(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, 2008 an obsolescence reserve of $121,000 has been
      established.





(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, 2008,
      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.





29





(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 Options – Effective June 1, 2006 the Company adopted SFAS 123(R)
      “Share Based Payment” using the modified prospective approach and
      accordingly prior periods have not been restated to reflect the impact of
      SFAS 123(R). Under SFAS 123(R), stock-based awards granted prior to June
      1, 2006 will be charged to expense over the remaining portion of their
      vesting period. These awards will be charged to expense under the
      straight-line method using the same fair value measurements which were
      used in calculating pro forma stock-based compensation expense under SFAS
      123. For stock-based awards granted on or after June 1, 2006, the Company
      has determined stock-based compensation based on the fair value method
      specified in SFAS 123(R), and amortizes stock-based compensation expense
      on the straight-line basis over the requisite service period. For periods
      prior to June 1, 2006, SFAS 123(R) requires forfeitures to be estimated at
      the time of grant and revised, if necessary, in subsequent periods if
      actual forfeitures differ from initial estimates. Previously under APB 25
      to the extent awards were forfeited prior to vesting, the corresponding
      previously recognized expense was reversed in the period of
      forfeiture.





SFAS
123(R) permits public companies to adopt its requirements using one of two
methods:





A. "Modified
prospective" method in which compensation cost is recognized beginning with the
effective date (a) based on the requirements of SFAS 123(R) for all share-based
payments granted after the effective date and (b) based on the requirements of
SFAS 123 for all awards granted to employees prior to the effective date of SFAS
123(R) that remain unvested on the effective date.





B. "Modified
retrospective" method which includes the requirements of the modified
prospective method described above, but also permits entities to restate, based
on the amounts previously recognized under SFAS 123(R) for purposes of pro forma
disclosures, either (a) all prior periods presented or (b) prior interim periods
during the year of adoption.





The
Company has adopted SFAS 123(R) on July 1, 2006 using the modified prospective
method and have provided footnote disclosure with respect to stock-based
employee compensation..





(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.





30





(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
      $93,750 for the fiscal year ended May 31,
  2008.




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, 2008 amortization was completed.




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.




31





NOTE 2 - INVENTORIES




As of May
31, 2008 inventories consist of the following:





Finished
      Goods
            
            $
            2,881,783Work
      in Process
            
            
            3,000Cores
            
            
            5,881,938Component
      Parts
            
            
            4,316,822Inventories
      at Standard Cost
            
            
            11,967,341Provision
      for Obsolescence
            
            
            1,113,202
            )Net
      Carrying Value of Inventories
            
            $
            11,967,341





NOTE 3 - PROPERTY AND EQUIPMENT




Property
and equipment consist of the following:




2008
              
              
              2007Computer
      equipment
              
              $
              145,483
              
              
              $
              145,483Office
      Equipment
              
              
              2,061
              
              
              
              2,061Other
      equipment
              
              
              35,620
              
              
              
              32,134Total
      Property and Equipment
              
              $
              183,164
              
              
              $
              179,678Less
      Accumulated Depreciation
              
              
              180,137
              
              
              
              152,855$
              3,027
              
              
              $
              26,823




NOTE 4 - NOTES PAYABLE




Loan
            
            Balance
      6/1/07
            
            
            Additions
              6/1/07
      to 5/31/08
            
            
            Adjustments
              6/1/07
      to 5/31/08
            
            
            Balance
      5/31/08GE
      Capital Principal
            
            $
            3,482,287
            
            
            $
            —
            
            
            $
            
            
            
            $
            3,482,287GE
      Capital Interest
            
            
            200,758
            
            
            
            347,388
            
            
            
            (354,324
            )
            
            
            193,822BFI
      Business Finance
            
            
            1,172,207
            
            
            
            290,953
            
            
            
            (1,248,207
            )
            
            
            214,953Totals
            
            $
            5,803,494
            
            
            $
            999,017
            
            
            $
            (1,947,259
            )
            
            $
            4,855,252




2007
            
            
            2006In
      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 a payment of
      certain fees and interest following which GE has agreed to extend the loan
      on interest-only terms at a rate of 9.5% for 12 additional months at which
      time the entire unpaid balance shall be due and payable. We have no
      current plan or   capability to repay G.E. its principal. As of May
      31, 2008, we owed G.E. Capital $3,683,045, which includes the principal,
      financing fees and unpaid interest.
            
            $
            3,683,045
            
            
            $
            3,683,045For
      a period of approximately two years, the Company’s subsidiary, TAP
      Holdings, LLC, operated Tomco Auto   Products, until the sale of most
      of the Tomco assets on October 31, 2006. During such period, TAP  
      maintained an asset-based line of credit for the   benefit or Tomco
      on which a partial repayment of   $1,300,000 was made as part of the
      Tomco sale   transaction. As of May 31, 2008, the line of  
      credit had an outstanding balance of approximately   $1,172,207
      including interest. The line of credit is   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). The outstanding balance of the line of credit is  
      expected to be fully paid by approximately August,   2007 from
      remaining Tomco receivables (which were not sold by TAP in the Tomco sale
      transaction) and monthly note payments from the acquirer of the Tomco
      assets.
            
            
            1,172,207
            
            
            
            2,097,292At
      May 31, 2006 TAP Holdings, LLC. had a loan payable outstanding from the
      purchase of a delivery truck. The loan has since been
      satisfied.
            
            
            -0-
            
            
            
            23,1574,855,252
            
            
            
            5,803,494




32





NOTE 5 - CONVERTIBLE DEBT





Description
            
            Bal.
      @ 6/01/07
            
            
            Additions
      6-1-07 to 5/31/2008
            
            
            Adjustments
      6-1-07 to 5/31/2008
            
            
            Bal.
      @ 5/31/08Convertible
      Debt — Principal LT
            
            $
            1,244,572
            
            
            $
            689,101
            
            
            $
            
            
            
            $
            1,933,673Convertible
      Debt—Interest
            
            
            60,507
            
            
            
            83,330
            
            
            
            
            
            
            
            143,837Convertible
      Debt—Stockholders
            
            
            602,610
            
            
            
            
            
            
            
            (415,563
            )
            
            
            187,047Totals
            
            $
            1,907,689
            
            
            $
            772,431
            
            
            $
            -415,563
            
            
            $
            2,264,557








In May
2003 we completed a private placement offering with a stockholder consisting 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 common stock at the
conversion rate of $0.50 per share. The Warrants are exercisable at $1.00 per
share. At that time 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. This note was converted on September 11, 2006 and
was reclassified into equity.




On May
22, 2007 we completed a private placement consisting of a convertible note,
common stock and common stock warrants. The total placement was for $1,500,000
and consisted of:





·
            a 6% interest 3 year
      convertible note for $1,200,000 with a conversion price of $1.05 per
      share,





33





·
            $300,000 of common stock at
      $0.80 per share, or 375,000 shares of common
    stock,





·
            common stock purchase warrants
      to purchase 759,000 shares of common stock at $1.75 per
      share





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.





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, 2008, we still owed $120,750 in principal and interest to the remaining
noteholders. There can be no assurance that we will be able to pay the remaining
noteholders when the notes are due and that the 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).





In May
2008 we completed a private placement offering with 5 investors consisting of
(i) convertible debentures totaling $1,590,000, convertible into common stock at
$.25/share, with interest at 12% per annum payable quarterly, secured by the
assets of CPI Holdings; and (ii) 5-year warrants to purchase 3.18 million shares
of common stock, exercisable at $.50/share; and (iii) warrants expiring on
November 7, 2008 to purchase 1.59 million shares of common stock exercisable at
$.35/share.




In accordance with EITF
98-05, “Accounting for Convertible Securities with Beneficial Conversion
Features or Contingently Adjustment Conversion Ratios Abstract”, the Company
allocated the proceeds according to the value of the convertible note and the
warrants based on their relative fair values.  Fair value of the
warrants was determined using the Black-Scholes valuation model.  For the
6-month warrants,  risk-free interest rate used ranged from 1.64% to 1.74%,
volatility rate ranged from 172% to  208%, and exercise price is
$0.35.  For the 5-year warrants, risk-free interest rate used ranged from
2.99% to 4.86%, volatility rate ranged from 406% to 593%, and exercise price is
$0.75 and $0.50.
  In accordance with EITF
00-27, “Application of Issue No. 98-5 to Certain Convertible Instruments”, the
issue costs, value of the beneficial conversion feature and value of the
warrants amounting to $140,440, $856,744 and $650,323, respectively, have been
recorded as a discount to convertible notes and are being amortized over the
term of the notes using the straight-line method.  For the year ended
May 31, 2008, amortization of the discount was $28,826, $33,848 and $23,643,
respectively.  Unamortized debt discount as of May 31, 2008 are
$111,614, $822,896 and $626,680, respectively





NOTE 6 -
MAJOR CUSTOMERS AND SUPPLIERS








NOTE 7
- INCOME TAXES




As of May
31, 2008, we had available federal net operating loss ("NOL") carry-forwards
that approximate $37.2 million and may be applied against future taxable income
through tax year 2025. State NOL carry-forward is approximately $23.1 million
and expire through tax year 2012. 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.





34





NOTE 8
- STOCKHOLDERS'
EQUITY








NOTE 9
- STOCK OPTION PLAN AND WARRANTS





We
adopted a 1996 stock option plan (the "Option Plan"). As of May 31, 2008, a
total of 3,500,887 shares of our common stock have been reserved for
issuance under the Option Plan. As of May 31, 2008, we  had 3,500,887
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, 2008 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, 2008.




Number
      of Options/Warrants
              
              
              Weighted
      Average Price $/ShareOptions/Warrants
      outstanding - May 31, 2006
              
              
              10,418,909
              
              
              $
              2.01Employee
      Stock OptionsGranted
              
              
              100,000
              
              
              $
              0.95Expired
              
              
              —
              
              
              
              —Exercised
              
              
              —
              
              
              
              —Stockholder
      WarrantsGranted
              
              
              1,809,864
              
              
              
              1.23Expired
              
              
              2,044,886
              
              
              
              2.15Exercised
              
              
              —
              
              
              
              —OptionsOptions/Warrants
      outstanding - May 31, 2007
              
              
              10,283,887
              
              
              $
              1.54Employee
      Stock OptionsGranted
              
              
              —
              
              
              $Expired
              
              
              —
              
              
              
              —Exercised
              
              
              —
              
              
              
              —Stockholder
      WarrantsGranted
              
              
              4,770,000
              
              
              
              0.45Expired
              
              
              4,897,349
              
              
              
              1.31Exercised
              
              
              —
              
              
              
              —OptionsOptions/Warrants
      outstanding - May 31, 2008
              
              
              10,156,538
              
              
              $
              1.14




35




Outstanding
      Weighted Average
              
              Exercisable
      Weighted AverageTotal
      Shares
                05/31/08
              
              Life
              
              Exercise
                Price
              
              Total
      Shares
                05/31/08
              
              Exercise
                Price300,000
              
              2.50
              
              $
              1.20
              
              300,000
              
              $
              1.20480,000
              
              2.50
              
              $
              0.81
              
              480,000
              
              $
              0.8130,000
              
              2.25
              
              $
              1.75
              
              30,000
              
              $
              1.75205,000
              
              2.50
              
              $
              2.00
              
              205,000
              
              $
              2.00253,809
              
              2.50
              
              $
              2.50
              
              253,809
              
              $
              2.50428,574
              
              2.00
              
              $
              2.50
              
              428,574
              
              $
              2.50117,118
              
              .75
              
              $
              0.01
              
              117,118
              
              $
              0.01331,000
              
              2.00
              
              $
              0.01
              
              331,000
              
              $
              0.011,350,000
              
              1.75
              
              $
              0.65
              
              1,350,000
              
              $
              0.65357,856
              
              .50
              
              $
              1.00
              
              357,856
              
              $
              1.0025,000
              
              1.25
              
              $
              1.00
              
              25,000
              
              $
              1.0025,000
              
              1.50
              
              $
              1.00
              
              25,000
              
              $
              1.007,813
              
              .50
              
              $
              1.30
              
              7,813
              
              $
              1.3020,000
              
              1.25
              
              $
              2.00
              
              20,000
              
              $
              2.00215,000
              
              1.50
              
              $
              2.00
              
              215,000
              
              $
              2.00787,675
              
              1.75
              
              $
              2.00
              
              787,675
              
              $
              2.00185,000
              
              2.00
              
              $
              2.00
              
              185,000
              
              $
              2.0022,763
              
              1.00
              
              $
              2.50
              
              22,763
              
              $
              2.5010,000
              
              1.25
              
              $
              2.50
              
              10,000
              
              $
              2.50191,830
              
              1.00
              
              $
              3.00
              
              191,830
              
              $
              3.0013,100
              
              1.25
              
              $
              3.00
              
              13,100
              
              $
              3.0030,000
              
              1.50
              
              $
              3.00
              
              30,000
              
              $
              3.003,180,000
              
              5.00
              
              
              0.50
              
              3,180,000
              
              
              5.001,590,000
              
              .50
              
              
              0.35
              
              1,590,000
              
              
              0.35




36




NOTE 10 -
SEGMENT REPORTING




We
operate through two business segments: Claim-Remedi Services, Inc. and CPI
Holdings, LLC (dba Champion Parts)




Twelve
      Months EndedMay
      31,Net
      revenues:
                  
                  2008
                  
                  
                  2007ClaimRemedi/CashTechCard
                  
                  $
                  158,628
                  
                  
                  $
                  313,946CPI
                  
                  
                  98,281
                  
                  
                  
                  -Unallocated
                  
                  
                  79,706336,615
                  
                  
                  
                  313,946Interest
      expense:ClaimRemedi/CashTechCard
                  
                  
                  -
                  
                  
                  
                  -CPI
                  
                  
                  42,353
                  
                  
                  
                  -Unallocated
                  
                  
                  724,163
                  
                  
                  
                  407,567766,516
                  
                  
                  
                  407,567Depreciation
      & Amortization:ClaimRemedi/CashTechCardCPI
                  
                  
                  
                  
                  
                  
                  -Unallocated
                  
                  
                  2,178
                  
                  
                  
                  329,9682,178
                  
                  
                  
                  329,968Segment
      Income (loss):ClaimRemedi/CashTechCard
                  
                  
                  (2,986,209
                  )
                  
                  
                  (1,405,705
                  )CPI
                  
                  
                  (105,562
                  )
                  
                  
                  -Unallocated
                  
                  
                  (1,189,721
                  )
                  
                  
                  (2,255,021
                  )$
                  (4,281,492
                  )
                  
                  $
                  (3,660,726
                  )


NOTE 11 -
RELATED PARTY TRANSACTIONS




Furthermore,
as of May 31, 2008, we were in arrears of $290,874 for the salary to Mr. Korman,
and owed $224,878 in accrued rent for our offices to a company in which Mr.
Korman has a beneficial interest.




NOTE 12 -
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%.




NOTE 13 - OTHER INCOME




During
the fiscal year ended May 31, 2008, the Company had income from forgiveness of
debt and reversal of certain accruals offset partially by write offs of certain
assets.. Income from forgiveness of debt consists of settlement of a convertible
debenture that has been deemed abandoned by the Company and certain unsecured
debt also deemed abandoned..




NOTE 14 -
COMMITMENTS AND CONTINGENCIES





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.




NOTE 15 - SUBSEQUENT EVENTS





--NONE--





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:





37





"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.






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






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:




Name
            
            Age
            
            PositionBruce
      R. Korman
            
            49
            
            President,
      Chief Executive Officer and Chairman of the BoardEdmund
      King
            
            44
            
            Chief
      Financial Officer and SecretaryRichard
      Miller
            
            56
            
            Director(1)(2)Robert
      B. Fagenson
            
            59
            
            Director(1)Kevin
      Walls
            
            46
            
            Director(2)




(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 our
wholly-owned subsidiaries, since their inception. Previously, Mr. Korman was 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 for Cash Technologies
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.





38





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.





Robin
Richards resigned from the Board of Directors effective September 12,
2008.






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:




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





39





·
            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




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.




Brian
D. Walters, Esq., 35, has been Vice President and General Counsel since June
2007.  Mr. Walters was an attorney at the law firm of Gibson, Dunn &
Crutcher, LLP, widely recognized as one of the top corporate and litigation
firms in the country, where he was member of the Litigation, Healthcare,
Emerging Technologies, Telecommunications and Appellate Groups during his
tenure.  At GD&C Mr. Walters represented Fortune 500 companies and
other businesses and individuals in complex litigation, regulatory and corporate
compliance matters.  Previously Mr. Walters was member of the legal
department of Computer Sciences Corporation.  Mr. Walters received his
Juris Doctor from The UCLA School of Law.  He graduated magna cum laudewith a
Bachelor of Arts degree while earning his Masters in Public Administration from
George Washington University.




Summary
of Cash and Certain Other Compensation




The
following table sets forth certain compensation paid by us during the fiscal
years ended May 31, 2007, May 31, 2006 and May 31, 2005 to our President and
Chief Executive Officer and our other most highly compensated executive officer
(collectively, the "Named Executive Officers"):




Summary Compensation Table





Name
      andAll
      OtherPrincipal
      PositionCompensation(1)
            Annual
      Compensation
            
            Long
      Term CompensationYear
            
            Salary
            
            Bonus
            
            Underlying
            
            Options
      (#)Bruce
      Korman
            2008
            
            $
            250,000
            *
            
            
            
            
            $
            18,000
            (1)President
      and Chief
            2007
            
            $
            250,000
            *
            
            
            1,000,000
            
            $
            18,000
            (1)Executive
      Officer
            2006
            
            $
            250,000
            *
            
            
            
            
            $
            18,000
            (1)Edmund
      King
            2008
            
            $
            180,000
            
            
            
            
            
            $
            9,000
            (1)Chief
      Financial
            2007
            
            $
            180,000
            
            
            
            
            
            $
            9,000
            (1)Officer
            2006
            
            $
            150,000
            
            
            
            
            
            $
            9,000




(1)
Represents paid additional benefits.




* As
of May 31, 2008 the Company owes Bruce Korman $290,874 in unpaid
wages.




40





The
following table discloses information concerning stock options granted in the
year ended May 31, 2007 to our Named Executive Officers.




Option Grants in Fiscal Year Ended May 31,
2008




Individual
Grants in Last Fiscal Year





Name
            
            Number
      of Securities Underlying Options/Warrants
            
            Percent
      of Total Options/ Warrants to Employees in Fiscal Year (%)
            
            Exercise
      Price ($/Sh)
            
            Expiration
      DateBruce
      Korman
            
            
            0
            
            —
            
            
            —
            
            —Edmund
      King
            
            
            0
            
            —
            
            
            —
            
            —




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, 2008. No options were exercised by any of the Named
Executive Officers during the fiscal year ended May 31, 2008:





Number
      of Securities Underlying Unexercised Options at May 31,
    2007
            
            Value
      of Unexercised In-the-Money  Options at May 31,2007
    (1)Name
            
            Exercisable
            
            Un-exercisable
            
            Exercisable
            
            Un-exercisableBruce
      Korman
            
            $
            3,350,000
            
            
            0
            
            $
            3,350,000
            
            $
            0Edmund
      King
            
            
            750,000
            
            
            0
            
            $
            750,000
            
            $
            0






(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.





41





Employee
Stock Option Plans




In May
2007, we adopted our 2007 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 7,000,000
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.




At our
Annual Meeting of Stockholders held in May, 2007, our stockholders approved the
2007 Employee Stock Option Plan and increased the number of shares available for
issuance from 3,500,887 to 7,000,000 shares.




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.





42





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 $0.65, 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 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, 2008, 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.





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, 2008 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, 2007, upon the exercise of
options, warrants or convertible securities. At May 31, 2007, there were
22,790,663 shares of common stock outstanding.




43





Name and Address of
              Beneficial
      Owners(1)(2)
            
            Amount
      and Nature of Beneficial Ownership (2a)
            
            Percentage
      of Shares Beneficially OwnedBruce
      Korman (3)
            
            
            3,866,267
            
            12.47
            %Richard
      Miller (4)
            
            
            856,657
            
            2.76
            %Robert
      B. Fagenson (5)(6)
            
            
            271,126
            
            .87
            %Kevin
      Walls (7)
            
            
            336,927
            
            1.09
            %Eric
      Butlein (8)
            
            
            3,533,130
            
            11.40
            %Edmund
      King (9)
            
            
            750,000
            
            2.42
            %Darryl
      Bergman (10)
            
            
            500,000
            
            1.61
            %Willi
      Muhr (11)
            
            
            200,000
            
            .65
            %Peter
      & Irene Gauld (12)
            
            
            1,755,860
            
            5.66
            %All
      directors and executive officers as a group (persons)(1)(2)(3)(4)(5)(6)
      (7)(8)(9)(10)(11)(12)
            
            
            12,249,967
            
            39.1
            %






*
            Denotes
      less than 1%.





(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.





44





(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 3,350,000 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)
            Includes
      117,188 shares issuable upon the conversion of warrants exercisable at
      $0.01 per share with a term of 7 years, approved by the Board of Directors
      in lieu of repayment of a $75,000 loan from Mr. Fagenson to the Company.
      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
      750,000 shares subject to options.





(10)
            Includes
      500,000 shares subject to options.





(11)
            Includes
      200,000 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.






EQUITY
COMPENSATION PLAN INFORMATION




The
following table sets forth certain information as of September 10, 2008, 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.





45





Number of securities to be issued upon
      exercise of options, warrants and rights
            
            Weighted
      average of exercise price of outstanding options, warrants and
      rights
            
            Weighted
      average exercise price of outstanding options, warrants and
      rights
            
            Number
      of remaining available for future issuance under equity compensation plans
      (excluding) securities reflected in column (a))Equity
      Compensation plans approved by
            
            
            4,624,000
            
            $
            1.00
            
            
            1,876,000Security
      holdersEquity
      Compensation plans not approved bySecurity
      holders
            
            
            —
            
            
            —
            
            
            —Total
            
            
            4,624,000
            
            $
            1.00
            
            
            1,876,000




Certain
Reports




Other
than the individuals disclosed below, during the fiscal year ended May 31, 2007,
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. .




ITEM 12. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS




Certain
Transactions




As of May
31, 2008, 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, 2008, we were in arrears of $290,874 for salary to Mr. Korman and owed
$224,878 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.





46





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.





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)}




47





*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 auditors31.1
            Certification31.2
            Certification32.1
            Certification
      pursuant to 18 U.S.C. Section 1350







(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 2008 and 2007, and fees billed for other
services provided by Vasquez & Co LLP for fiscal years 2008 and
2007.




Fiscal
      Year Ended May 31,2008
              
              
              2007Audit
      Fees
              
              $
              132,000
              
              
              $
              104,000Audit-Related
      Fees
              
              
              
              
              
              
              18,000Tax
      Fees
              
              
              7,000
              
              
              
              7,000All
      other fees
              
              
              5,000
              
              
              
              3,240Total
      Fees Paid
              
              $
              144,000
              
              
              $
              132,240




48





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 15th day of September,
2008.




CASH
      TECHNOLOGIES, INC.By:
            /s/
      BRUCE KORMANBruce
      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,
      Chief Executive Officer
            
            September
      15, 2008Bruce
      Korman
            
            And
      Director (Principal Executive Officer)/s/ EDMUND KING
            
            Chief
      Financial Officer
            
            September
      15, 2008Edmund
      King
            
            (Principal
      Financial Officer)/s/
      RICHARD MILLER
            
            Director
            
            September
      15, 2008Richard
      Miller/s/
      ROBERT FAGENSON
            
            Director
            
            September
      15, 2008Robert
      Fagenson/s/
      KEVIN WALLS
            
            Director
            
            September
      15, 2008Kevin
      Walls