UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION





Washington,
D.C. 20549





FORM
10-Q





x  QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
EXCHANGE ACT OF 1934





For the
quarterly period ended June 30, 2010





 ̈  TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
EXCHANGE ACT OF 1934





For the
transition period
from               to





Commission
file
number            0-19657





ACCESS TO MONEY, INC.(Exact
      name of registrant as specified in its
charter)





Delaware
                
                93-0809419(State
      or other jurisdiction of incorporation or organization)
                
                (I.R.S.
      EmployerIdentification
      No.)





1101
      Kings Highway N, Suite G100Cherry Hill, New Jersey(Address
      of principal executive offices) (Zip Code)(856) 414-9100(Registrant’s
      telephone number, including area
code)





Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days).   YES x  NO  ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).     YES  ̈  NO  ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of "large accelerated filer,"
"accelerated filer" and "smaller reporting company" in Rule 12b-2 of the
Exchange Act.





Large
      accelerated filer    o
                        Accelerated
      filer                      oNon-accelerated
      filer o
                        Smaller reporting
      company    x(Do
      not check if a smaller reporting
company)





Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).


YES   ̈   NO  x





Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date:  22,279,011 shares of common
stock outstanding at August 11, 2010.








TABLE OF CONTENTS
                                
                                Page No.PART
      I
                                
                                FINANCIAL
      INFORMATIONITEM
      1.
                                
                                Financial
      Statements
                                
                                2ITEM
      2.
                                
                                Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
                                
                                12ITEM
      4T.
                                
                                Controls
      and Procedures
                                
                                20PART
      II
                                
                                OTHER
      INFORMATIONITEM
      6.
                                
                                Exhibits
                                
                                21


i


PART
I - FINANCIAL INFORMATION





ITEM
      1.
            FINANCIAL
      STATEMENTS.





ACCESS
TO MONEY, INC.


CONDENSED
CONSOLIDATED BALANCE SHEETS


(In
thousands)


(Unaudited)





June30,2010
                    
                    
                    December31,2009ASSETSCurrent
      assets:Cash
                    
                    $
                    5,372
                    
                    
                    $
                    5,770Restricted
      cash
                    
                    
                    800
                    
                    
                    
                    800Accounts
      receivable, net
                    
                    
                    2,429
                    
                    
                    
                    2,494Leases
      receivable, net
                    
                    
                    74
                    
                    
                    
                    109Inventories
                    
                    
                    1,284
                    
                    
                    
                    767Prepaid
      expenses and other
                    
                    
                    481
                    
                    
                    
                    289Deferred
      financing costs
                    
                    
                    207
                    
                    
                    
                    259Total
      current assets
                    
                    
                    10,647
                    
                    
                    
                    10,488Property
      and equipment, net
                    
                    
                    3,209
                    
                    
                    
                    3,220Intangible
      assets, net
                    
                    
                    1,695
                    
                    
                    
                    1,711Goodwill
                    
                    
                    10,559
                    
                    
                    
                    10,559Deferred
      financing costs, long term
                    
                    
                    -
                    
                    
                    
                    78Other
      assets
                    
                    
                    323
                    
                    
                    
                    319Total
      assets
                    
                    $
                    26,433
                    
                    
                    $
                    26,375LIABILITIES
      AND SHAREHOLDERS’ DEFICITCurrent
      liabilities:Accounts
      payable
                    
                    $
                    6,332
                    
                    
                    $
                    5,639Accrued
      expenses
                    
                    
                    5,967
                    
                    
                    
                    5,691Term
      loans
                    
                    
                    9,730
                    
                    
                    
                    1,092Total
      current liabilities
                    
                    
                    22,029
                    
                    
                    
                    12,422Long-term
      liabilitiesTerm
      loans and other debt
                    
                    
                    9,809
                    
                    
                    
                    18,406Warrants
                    
                    
                    4,405
                    
                    
                    
                    6,747Total
      liabilities
                    
                    
                    36,243
                    
                    
                    
                    37,575Shareholders’
      deficit:Common
      stock, $0.001 par value -
                      70,000
      shares authorized; 22,310 and 22,086 shares issued as
                      of
      June 30, 2010 and December 31, 2009, respectively, and
                      22,279
      and 22,073 shares outstanding at June 30, 2010 and
                      December
      31, 2009, respectively
                    
                    
                    135,949
                    
                    
                    
                    135,891Preferred
      stock - 5,000 shares authorized; none issued and
      outstanding
                    
                    
                    -
                    
                    
                    
                    -Additional
      paid-in capital
                    
                    
                    63
                    
                    
                    
                    63Accumulated
      deficit
                    
                    
                    (145,822
                    )
                    
                    
                    (147,154
                    )Total
      shareholders’ deficit
                    
                    
                    (9,810
                    )
                    
                    
                    (11,200
                    )Total
      liabilities and shareholders’ deficit
                    
                    $
                    26,433
                    
                    
                    $
                    26,375





See
accompanying notes to condensed consolidated financial
statements.


2


ACCESS
TO MONEY, INC.


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS


(In
thousands, except per share data)


(Unaudited)





Three months ended June 30,
                
                
                Six months ended June 30,2010
                
                
                2009
                
                
                2010
                
                
                2009Sales
                
                $
                21,987
                
                
                $
                23,130
                
                
                $
                44,190
                
                
                $
                45,375Commissions
                
                
                14,899
                
                
                
                15,837
                
                
                
                29,471
                
                
                
                30,818Net
      sales
                
                
                7,088
                
                
                
                7,293
                
                
                
                14,719
                
                
                
                14,557Cost
      of sales
                
                
                3,395
                
                
                
                3,714
                
                
                
                7,714
                
                
                
                7,321Gross
      profit
                
                
                3,693
                
                
                
                3,579
                
                
                
                7,005
                
                
                
                7,236Selling,
      general and administrative
                
                
                2,816
                
                
                
                2,707
                
                
                
                5,401
                
                
                
                5,517Operating
      income
                
                
                877
                
                
                
                872
                
                
                
                1,604
                
                
                
                1,719Interest
      expense
                
                
                759
                
                
                
                735
                
                
                
                1,516
                
                
                
                1,469Amortization
      of debt issuance costs
                
                
                560
                
                
                
                559
                
                
                
                1,119
                
                
                
                1,114Other
      expense (income)
                
                
                (10
                )
                
                
                (86
                )
                
                
                (30
                )
                
                
                (106
                )Loss
      on asset disposal
                
                
                2
                
                
                
                23
                
                
                
                9
                
                
                
                64Change
      in fair value of warrants (income) expense
                
                
                (2,482
                )
                
                
                2,873
                
                
                
                (2,342
                )
                
                
                2,995Net
      income (loss) before income taxes
                
                
                2,048
                
                
                
                (3,232
                )
                
                
                1,332
                
                
                
                (3,817
                )Provision
      (benefit) for income taxes
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                12Net
      income (loss)
                
                $
                2,048
                
                
                $
                (3,232
                )
                
                $
                1,332
                
                
                $
                (3,829
                )Net
      income (loss) per common share - basic
                
                $
                .09
                
                
                $
                (.15
                )
                
                $
                .06
                
                
                $
                (.18
                )Net
      income (loss) per common share – diluted
                
                $
                .07
                
                
                $
                (.15
                )
                
                $
                .05
                
                
                $
                (.18
                )Weighted
      average common shares outstanding:Basic
                
                
                22,252
                
                
                
                21,726
                
                
                
                22,163
                
                
                
                21,607Diluted
                
                
                29,620
                
                
                
                21,726
                
                
                
                28,706
                
                
                
                21,607





See
accompanying notes to condensed consolidated financial
statements.


3


ACCESS
TO MONEY, INC.


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(In
thousands)


(Unaudited)





Sixmonthsended
                  June30,2010
                
                
                Sixmonthsended
                  June30,2009Cash
      flows from operating activities:Net
      income (loss)
                
                $
                1,332
                
                
                $
                (3,829
                )Adjustments
      to reconcile net income (loss) to net cash provided by operating
      activities:Depreciation
      and amortization
                
                
                2,103
                
                
                
                2,007Non-cash
      share-based compensation
                
                
                58
                
                
                
                66Loss
      on disposal or retirement of equipment
                
                
                9
                
                
                
                64Provision
      for doubtful accounts
                
                
                132
                
                
                
                86Change
      in warrant value
                
                
                (2,342
                )
                
                
                2,995Changes
      in assets and liabilities, net of acquisitions:Restricted
      cash
                
                
                -
                
                
                
                1,200Accounts
      receivable
                
                
                (68
                )
                
                
                235Lease
      receivable
                
                
                36
                
                
                
                962Inventories
                
                
                (517
                )
                
                
                (231
                )Prepaid
      expenses and other
                
                
                (192
                )
                
                
                104Accounts
      payable
                
                
                694
                
                
                
                (379
                )Accrued
      expenses
                
                
                276
                
                
                
                (246
                )Cash
      provided by operating activities
                
                
                1,521
                
                
                
                3,034Cash
      flows from investing activities:Capital
      expenditures
                
                
                (630
                )
                
                
                (1,130
                )Proceeds
      from sale of equipment
                
                
                -
                
                
                
                31Acquisition
      of intangible and other assets
                
                
                (339
                )
                
                
                (6
                )Cash
      (used in) investing activities
                
                
                (969
                )
                
                
                (1,105
                )Cash
      flows from financing activities:Payment
      of term loans
                
                
                (950
                )
                
                
                (533
                )Borrowings
      on notes payable
                
                
                -
                
                
                
                57Cash
      (used in) financing activities
                
                
                (950
                )
                
                
                (476
                )Net
      (decrease) increase in cash and cash equivalents
                
                
                (398
                )
                
                
                1,453Beginning
      cash and cash equivalents
                
                
                5,770
                
                
                
                4,535Ending
      cash and cash equivalents
                
                $
                5,372
                
                
                $
                5,988Supplemental
      cash flow information:Cash
      paid for interest
                
                $
                797
                
                
                $
                808





See
accompanying notes to condensed consolidated financial
statements.


4


ACCESS
TO MONEY, INC.


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





1.
            BASIS OF
      PRESENTATION





The
accompanying unaudited condensed consolidated financial statements of Access to
Money, Inc. and its subsidiaries have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission (the "SEC") for interim
financial statements, and reflect all adjustments, consisting only of normal
recurring adjustments, which, in the opinion of management, are necessary for a
fair statement of the results of the interim periods.  These condensed
consolidated financial statements should be read in conjunction with our annual
report on Form 10-K for the year ended December 31,
2009.  Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles in the United States of America have been condensed or
omitted pursuant to such rules and regulations. The results of operations for
the periods presented are not necessarily indicative of the results to be
expected for any subsequent interim period or for the year ending
December 31, 2010.





2.
            DESCRIPTION OF BUSINESS AND
      SUMMARY OF SIGNIFICANT ACCOUNTING
  POLICIES





Description
of Business





We are an
independent sales organization, or ISO, servicing businesses in the operation of
automated teller machines, or ATMs.  We entered the ATM business in
1999 and expanded operations through both internal growth and
acquisitions.  In June 2009, we merged TRM Corporation into Access to
Money, Inc., a Delaware corporation, for purposes of changing our state of
incorporation and our name to Access to Money, Inc.  At June 30, 2010,
we had approximately 12,000 ATMs under contract.





Principles
of Consolidation





The
condensed consolidated financial statements include the accounts of Access to
Money, Inc. and its subsidiaries.  Our subsidiaries at June 30,
2010 consisted of TRM Copy Centers (USA) Corporation, TRM (Canada) Corporation,
TRM ATM Corporation, TRM ATM Acquisition Corporation, Access Cash International
LLC, Access to Money-SL, Inc., LJR Consulting Corp., and FPC France
Ltd.





Use
of Estimates





The
preparation of our financial statements requires us to make estimates and
judgments that affect the reported amounts of our assets, liabilities, sales,
costs and expenses, and the disclosure of contingent assets and
liabilities.  On an on-going basis, we evaluate our estimates and
judgments, including those related to impairments, depreciation, intangible
assets, accounts receivable, inventories, and income taxes.  We base
our estimates and judgments on historical experience and on various assumptions
that we believe are reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources.  Actual
results may differ from these estimates under different assumptions or
conditions.





Fair
Value Measurements





We
measure and disclose the estimated fair value of financial assets and
liabilities using the fair value hierarchy prescribed by U.S.
GAAP.  The fair value hierarchy has three levels which are based on
reliable available inputs of observable data.  The hierarchy requires
the use of observable market data when available.  The levels are
defined as follows:





·
            Level 1- quoted prices
      for identicalinstruments in active
markets;




·
            Level2 - quoted prices
      for similarinstruments in active markets; quoted prices for identical or
      similar instruments in markets that are not active; and model-derived
      valuations in which significant inputs and significant value drivers are
      observable in active markets;
and


5




·
            Level3 - fair value
      measurements derived from valuation techniques in which one or more
      significant inputs or significant value drivers are unobservable.




If quoted
market prices or inputs are not available, fair value measurements are based
upon valuation models that utilize current market or independently sourced
market inputs, such as interest rates, option volatilities, credit spreads,
market capitalization rates, etc.  The primary valuation model we use
is the Black-Scholes model.





Financial
instruments, including cash equivalents, accounts receivable and accounts
payable approximate fair market value because of the short maturity of these
instruments.  Fair value approximates the carrying value of our
borrowings under our variable-rate long-term debt, based upon interest rates
available for the same or similar instruments.  In 2010, the majority
of our debt had fixed interest rates and the fair value is estimated at
$21.1 million.





Restricted
Cash





At June
30, 2010 and December 31, 2009 we had $800,000 of cash held by a bank as
collateral for a letter of credit that is classified as restricted cash on our
balance sheet.  The restricted cash pertains to a term under an
agreement with our vault cash supplier.





Revenue
Recognition and Presentation





We record
and report revenue pertaining to the use and operation of ATMs including,
transaction based sales, service sales, equipment/hardware sales and branch
build-out sales.  A portion or all of the surcharges assessed on ATM
transactions is paid to the owner/merchant of the ATM based upon negotiated
contract terms.  We receive daily electronic reports from ATM
processing companies for ATM transactions that occur on machines we own and
operate in addition to machines owned and operated by merchants contracted with
us.  On a monthly basis, we use the accumulation of daily transaction
data to calculate a merchant's commission.  The amount of commission
is generally dependent upon transaction volumes, and we remit commission
payments directly to the merchant's bank account through electronic funds
transfer or make payment via a paper check.  We recognize ATM
transaction sales based upon actual transactions reported monthly by ATM
processing companies.  We have recently entered into a sales
arrangement with a customer that contains multiple elements or deliverables as
defined in revenue recognition guidance.  Under a multiple deliverable
arrangement we evaluate and separate each deliverable to determine whether it
represents a separate unit of accounting. In these situations, we allocate
the total arrangement consideration to each unit of accounting based on the
deliverable’s relative fair value.





Accounts
Receivable and Allowance for Doubtful Accounts





The
Company reviews the accounts receivable on a regular basis to determine the
collectability of each account.  The Company maintains allowances for
doubtful accounts for estimated losses resulting from the failure of its clients
to make required payments.  At each reporting period, the Company
evaluates the adequacy of the allowance for doubtful accounts and calculates the
appropriate allowance based on historical experience, credit evaluations,
specific client collection issues and the length of time a receivable is past
due.  When the Company deems the receivable to be uncollectible, the
Company charges the receivable against the allowance for doubtful
accounts.  Accounts receivable are shown net of allowance for doubtful
accounts of $231,000 and $272,000 at June 30, 2010 and December 31,
2009, respectively.





Inventory





Inventory
is stated at the lower of cost (first-in, first-out method) or
market.  Inventory consists primarily of ATMs and related parts and
equipment.  ATMs and parts available for sale are classified as
inventory until such time as the machine or part is sold or installed and in
service.  Once the ATM or part is sold, it is relieved to cost of
sales.


6


The following table summarizes
inventories (in thousands):





June30,2010
                  
                  
                  December31,2009ATMs
      held for resale
                  
                  $
                  929
                  
                  
                  $
                  439Parts
                  
                  
                  355
                  
                  
                  
                  328$
                  1,284
                  
                  
                  $
                  767





Fixed
Assets





Fixed
assets are recorded at cost plus amounts required to place equipment in
service.  Depreciation and amortization begins when the asset is
placed in service.  ATMs, furniture and fixtures and computer
equipment are generally depreciated using the straight-line method over the
estimated remaining useful lives of the related assets.  Estimated
useful lives are as follows:





ATMs
              
              3-10
      yearsComputer
      equipment
              
              2-5
      yearsFurniture
      and fixtures
              
              5-7
      years





Upon the
sale or other disposition of an asset, cost and accumulated depreciation are
removed from the accounts and any gain or loss is reflected in gain (loss) on
sale of assets.





Goodwill
and Intangible Assets





As of
June 30, 2010 and December 31, 2009, our assets included goodwill of
$10.6 million and intangible assets with net carrying amounts of
$1.7 million and $1.6 million, respectively.  Goodwill is
tested for impairment annually or whenever a triggering event is identified that
may indicate an impairment has occurred.  Potential impairment
indicators include a significant decline in revenues or a decline in our
capitalization below carrying value.  Goodwill is tested by comparing
the estimated fair value of a reporting unit containing goodwill to its carrying
value.  Since December 31, 2009, there have been no indicators of
impairment.





The
following table summarizes Intangible Assets as of June 30, 2010 (in
thousands):





June30,2010Gross
                    carrying
                    amount
                  
                  
                  Accumulated
                    amortization
                  
                  
                  Net
                    carrying
                    amountSubject
      to amortizationNon-compete
      agreement
                  
                  $
                  175
                  
                  
                  $
                  (128
                  )
                  
                  $
                  47Customer
      contracts
                  
                  
                  1,382
                  
                  
                  
                  (629
                  )
                  
                  
                  753Distributor
      agreements
                  
                  
                  225
                  
                  
                  
                  (83
                  )
                  
                  
                  142Non-contractual
      customer base
                  
                  
                  250
                  
                  
                  
                  (92
                  )
                  
                  
                  158$
                  2,032
                  
                  
                  $
                  (932
                  )
                  
                  $
                  1,100Not
      subject to amortization
                  
                  
                  595
                  
                  
                  
                  -
                  
                  
                  
                  595$
                  2,627
                  
                  
                  $
                  (932
                  )
                  
                  $
                  1,695





Amortization
of intangible and other assets, which is included in selling, general and
administrative expense was approximately $180,000 and $177,000 for the three
months ended June 30, 2010 and 2009, respectively, and $352,000 and
$339,000 for the six months ended June 30, 2010 and 2009,
respectively.





Income
Taxes





We
account for income taxes in accordance with GAAP which requires recognition of
deferred tax assets and liabilities for future tax consequences attributable to
differences between the financial statement reporting balances of assets and
liabilities and their respective tax basis.  Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those differences are expected to be recovered or
reversed.


7


Share-Based
Compensation





Share-based
compensation is measured as the fair value of the award at its grant date based
on the estimated number of awards that are expected to vest, and recorded over
the applicable service period.  In the absence of an observable market
price for a share-based award, the fair value is based upon a valuation
methodology that takes into consideration various factors, including the
exercise price of the award, the expected term of the award, the current price
of the underlying shares, the expected volatility of the underlying share price,
the expected dividends on the underlying shares, and the risk-free interest
rate.  Compensation expense has been recognized based on the estimated
grant date fair value method using the Black-Scholes valuation
model.





Warrants





Effective
January 1, 2009, we adopted new accounting guidance that can affect the
accounting for warrants and many convertible instruments with provisions that
protect holders from a change in our stock price.  Protection
provisions reduce the exercise price of a warrant or convertible instrument if
an issuer either issues equity shares for a price that is lower than the
exercise price of those instruments or issues new warrants or convertible
instruments that have a lower exercise price.  We evaluated and
determined that outstanding warrants to acquire stock of the Company contain
provisions that protect holders from declines in the stock price and as a
result, we have recognized these warrants as a liability at their respective
fair values on each reporting date.





Net
Income (Loss) Per Share





The
Company reports its earnings per share under both the basic and diluted
methods.  When calculating basic income / (loss) per share, net income
/ (loss) is divided by the weighted average number of common shares outstanding
for the period.  Diluted income per share reflects the assumed
exercise or conversion of all dilutive securities, such as options, restricted
shares and warrants.  No such exercise or conversion is assumed where
the effect is anti-dilutive, such as when there is a net loss from operations or
when the exercise price of the potentially dilutive securities is greater than
the market price of the Company’s stock.  For the three and six month
periods ended June 30, 2009, the Company incurred net losses and the exercise
price for outstanding warrants and options was greater than the average market
price. Accordingly, all were excluded from the calculation of diluted earning
per share as their impact on the net loss available to common stockholders was
anti-dilutive.  Dilutive securities consisting of 6.8 million
warrants, 411,980 shares of restricted stock, and 128,333 stock options were
included in the calculation of diluted income per share for the three months
ended June 30, 2010 since the Company reported net income for this
period.  Dilutive securities consisting of 6.0 million warrants,
397,479 shares of restricted stock, and 121,429 stock options were included in
the calculation of diluted income per share for the six months ended
June 30, 2010.





3.
            ACCRUED
      AND OTHER EXPENSES





The following table summarizes accounts
payable and accrued liabilities (in thousands):





June 30,2010
                  
                  
                  December 31,2009Accrued
      payroll expenses
                  
                  $
                  250
                  
                  
                  $
                  339Accrued
      interest expense
                  
                  
                  3,394
                  
                  
                  
                  2,675Accrued
      ATM maintenance and other expenses
                  
                  
                  182
                  
                  
                  
                  438Other
      accrued expenses
                  
                  
                  2,141
                  
                  
                  
                  2,239$
                  5,967
                  
                  
                  $
                  5,691


8





4.
            TERM
      LOANS AND OTHER DEBT:





The following table summarizes term
loans and other debt (in thousands):





June 30,2010
                  
                  
                  December 31,2009Lampe
      Loan Facility
                  
                  $
                  9,900
                  
                  
                  $
                  9,900Cadence
      Special Holdings II, LLC
                  
                  
                  1,100
                  
                  
                  
                  1,100Note
      payable to former owner of LJR Consulting
                  
                  
                  9,755
                  
                  
                  
                  9,755Notemachine
                  
                  
                  -
                  
                  
                  
                  324Other
      debt
                  
                  
                  367
                  
                  
                  
                  991Debt
      discount
                  
                  
                  (1,583
                  )
                  
                  
                  (2,572
                  )$
                  19,539
                  
                  
                  $
                  19,498





On April
18, 2008, we borrowed $11.0 million pursuant to a Securities Purchase Agreement
with LC Capital Master Fund, Ltd. ("LC Capital") as lender and Lampe,
Conway & Co., LLC ("Lampe") as administrative and collateral agent ("Lampe
Loan Facility").  The $11.0 million note accrues interest at 13% per
annum, payable semiannually, is due in April 2011, and is collateralized by
substantially all of our assets and the assets of our
subsidiaries.  The Lampe Loan Facility includes covenants that require
us to maintain a certain balance of cash and investments, meet a minimum
trailing twelve-month consolidated EBITDA target of $6.0 million, and
maintain at least 10,250 transacting ATMs.





On May
30, 2008, LC Capital assigned 10% of the promissory note to Cadence Special
Holdings II, LLC ("Cadence").





On April
18, 2008, as part of the purchase price for the capital stock of LJR Consulting,
we issued a note payable in the amount of $9.8 million, to Douglas Falcone, the
former owner of LJR Consulting and current Chief Operating Officer of the
Company.  The note accrues interest at 13% per annum payable quarterly
and the principal balance is due April 18, 2015.  Payments under the
promissory note are subordinated to the payment in full of the Lampe Loan
Facility.  Payments on the note have been deferred by Douglas Falcone
and interest due is reported as interest payable under accrued
expenses.





We had
$367,000 and $991,000 of other debt as of June 30, 2010 and
December 31, 2009, respectively.  The debt at December 31,
2009, included notes payable balances due to Douglas Falcone for vault cash in
connection with his ownership of LJR Consulting, and to a bank for a lease
related to a customer project.  The balance due Douglas Falcone was
repaid as we replaced the cash in our ATMs previously funded by Douglas Falcone
with cash provided by our primary vault cash provider.  The balance as
of June 30, 2010 consists of the bank note related to the customer project
which is paid monthly with an interest rate of 7.5% through August 2011, and an
auto loan.





5.
            WARRANTS





Common Stock Warrants





We have four warrants outstanding which
provide the holders to purchase up to an aggregate of 18.1 million shares
of common stock upon exercise.





The following tables list the warrant
holders and their grants (in thousands):





Holder
                  
                  Amount
                  
                  
                  ExercisePrice
                  
                  ExpirationDateLC
      Capital Master Fund, Ltd.
                  
                  
                  11,250
                  
                  
                  $
                  0.28
                  
                  April
      2015LC
      Capital Master Fund, Ltd.
                  
                  
                  2,500
                  
                  
                  $
                  0.28
                  
                  February
      2015Cadence
      Special Holdings II, LLC
                  
                  
                  1,250
                  
                  
                  $
                  0.28
                  
                  April
      2015GSO
                  
                  
                  3,072
                  
                  
                  $
                  0.28
                  
                  November
      201318,072


9





All warrants are exercisable at any
time and we have agreed to register the shares issuable upon the exercise of the
warrants.  We use a Black-Scholes valuation model to estimate the fair
value of the issued warrants.





6.
            VAULT
      CASH





In
general, we rent vault cash under a bailment arrangement from financial
institutions and pay negotiated fees for the use of that money when it is placed
in ATMs we are responsible for supplying cash to.  The vault cash is
controlled by employees of the financial institutions and armored car carriers
who we contract with to deliver the cash to our ATMs.  As cash
withdrawals are made at the ATMs, processing companies settle the transactions
and send funds back to the financial institutions for transactions made the
previous day.  We have a contract with the bank and armored car
carriers stating that the vault cash belongs to the bank and that neither we nor
the armored car carrier has any legal rights to the funds.





During
the three and six months ending June 30, 2010, our rental fee for the use
of funds was calculated using an interest rate of 2.75%.  During the
three and six months ending June 30, 2010, the average monthly amount of
cash used to vault our ATMs was $42.3 million and $44.0 million,
respectively.  The cost associated with our vault cash for the three
and six months ending June 30, 2010 was $517,000 and $1.0 million,
respectively.





7.
            SHARE-BASED
      COMPENSATION





The
Company calculates the fair value of stock-based instruments awarded to
employees on the date of grant and recognizes the calculated fair value, net of
estimated forfeitures, as compensation expense over the requisite service
periods of the related awards.  The following table reflects the total
share-based compensation expense included in selling, general and administrative
expense of the Company’s Condensed Consolidated Statements of Operations for the
three month period ended June 30, 2010 and 2009 (in
thousands):





Three months ended
                
                
                Six months ended2010
                
                
                2009
                
                
                2010
                
                
                2009Options
                
                $
                -
                
                
                $
                5
                
                
                $
                14
                
                
                $
                13Restricted
      shares
                
                
                20
                
                
                
                33
                
                
                
                55
                
                
                
                53Total
      share-based compensation expense
                
                $
                20
                
                
                $
                38
                
                
                $
                69
                
                
                $
                66





Options.The following table
summarizes stock option activity during the three months ended June 30,
2010, as follows:





Number of Shares
                    
                    
                    Weighted Average Exercise PriceOptions
      Outstanding January 1, 2010
                    
                    
                    322,500
                    
                    
                    $
                    1.13Granted
                    
                    
                    -
                    
                    
                    
                    -Exercised
                    
                    
                    -
                    
                    
                    
                    -Cancelled
                    
                    
                    -
                    
                    
                    
                    -Options
      Outstanding June 30, 2010
                    
                    
                    322,500
                    
                    
                    $
                    1.13





As of June 30, 2010, options to
purchase 322,500 shares of common stock at a weighted average exercise price of
$1.13 per share were vested and exercisable.





Restricted
Stock.  The following
table summarizes restricted stock activity during the six months ended June 30,
2010, as follows:





SharesRestricted
      shares January 1, 2010
                  
                  
                  834,995Granted
                  
                  
                  25,000Vested
                  
                  
                  225,000Forfeited
                  
                  
                  19,999Restricted
      shares June 30, 2010
                  
                  
                  614,996


10





8.
            PROVISION
      FOR INCOME TAXES





We have
not recorded an income tax benefit for the three month periods ending
June 30, 2009 or 2010 because we are uncertain that we will be able to
realize the benefit of our net operating loss carryforwards and future
deductible amounts.  As of June 30, 2010, we have net operating
losses of approximately $61.8 million available to offset future taxable
income for United States federal income tax purposes which expire in the years
2020 through 2028.  We have established a valuation allowance by which
all net deferred tax assets have been offset.  Our Canadian subsidiary
has net operating loss carryforwards of approximately $15.0 million available to
offset future taxable income in Canada which expire in the years 2010 through
2017.  However, we have sold the assets of our Canadian subsidiary,
and it no longer has any operations.





9.           CHANGES
IN SHAREHOLDERS DEFICIT





The following table provides the
transactions for the three month period ended June 30, 2010 concerning
shareholders deficit (in thousands):





Common
                  
                  
                  Additional
                    Paid-in
                  
                  
                  Accumulated
                  
                  
                  Total
                    ShareholdersShares
                  
                  
                  Amounts
                  
                  
                  Capital
                  
                  
                  Deficit
                  
                  
                  DeficitBalances,
      March 31, 2010
                  
                  
                  22,086
                  
                  
                  $
                  135,941
                  
                  
                  $
                  63
                  
                  
                  $
                  (147,870
                  )
                  
                  $
                  (11,866
                  )Net
      income
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,048
                  
                  
                  
                  2,048Share-based
      compensation
                  
                  
                  -
                  
                  
                  
                  20
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  20Treasury
      shares
                  
                  
                  -
                  
                  
                  
                  (12
                  )
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  (12
                  )Restricted
      shares vested
                  
                  
                  225
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Balances,
      June 30, 2010*
                  
                  
                  22,311
                  
                  
                  $
                  135,949
                  
                  
                  $
                  63
                  
                  
                  $
                  (145,822
                  )
                  
                  $
                  (9,810
                  )





*Common
shares include 31,613 of Treasury shares which are not reported as
outstanding.





10.
            FAIR
      VALUE OF FINANCIAL INSTRUMENTS





Financial
instruments, including cash and cash equivalents, accounts receivable and
accounts payable approximate fair market value because of the short maturity of
these instruments.  The carry amounts of our long-term liabilities
approximate the estimated fair values at June 30, 2010 based on our ability
to acquire similar debt at similar maturities.





Warrants





The table
below provides a reconciliation of the beginning and ending balances for our
warrant liability and increase in fair value using a Black-Scholes model as of
June 30, 2010.





Balance
      as of January 1, 2010
                  
                  $
                  6,747Decrease
      in fair value of warrants
                  
                  
                  (2,342
                  )Balance
      as of June 30, 2010
                  
                  $
                  4,405





We
determined the fair value of our warrants using a Black-Scholes
model.  The significant assumptions considered by the model were the
amounts of outstanding warrants, the remaining term of each warrant, the per
share stock price of $0.28, a risk free rate of 1.66%, and a historical
volatility of 141.1%.


11


ITEM
      2.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS.





Cautionary
Statements Regarding Forward-Looking Statements





This
report contains "forward-looking statements" within the meaning of Section 27A
of the Securities Act of 1933, as amended (the "Securities Act"), and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act").  All statements other than statements of historical facts
included or incorporated by reference in this quarterly report on Form 10-Q,
including without limitation, statements regarding our future financial
position, business strategy, budgets, projected revenues, projected costs and
plans and objective of management for future operations, are forward-looking
statements.  In addition, forward-looking statements generally can be
identified by the use of forward-looking terminology such as "may," "will,"
"expects," "intends," "plans," "projects," "estimates," "anticipates," or
"believes" or the negative thereof or any variation there on or similar
terminology or expressions.





These
forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ materially from results proposed in such
statements.  Although we believe that the expectations reflected in
such forward-looking statements are reasonable, we can give no assurance that
such expectations will prove to have been correct.  Important factors
that could cause actual results to differ materially from our expectations
include, but are not limited to: a decline in ATM transaction volume or fees,
changes in technology standards, a failure by third parties to service our ATMs,
regulatory changes, increases in interest rates, the inability to obtain cash
for our ATMs, reduction in the number of transacting ATMs, market acceptance of
our student loan processing services, demand for student loans, availability of
credit, changes in regulations regarding student loans and financial
institutions, and statements of assumption underlying any of the foregoing, as
well as other factors set forth under the caption "Risk Factors" in our Annual
Report on Form 10-K for the year ended December 31, 2009 filed with the
Securities and Exchange Commission.





All
subsequent written and oral forward-looking statements attributable to us, or
persons acting on our behalf, are expressly qualified in their entirety by the
foregoing.  Except as required by law, we assume no duty to update or
revise our forward-looking statements based on changes in internal estimates,
expectations, or otherwise.





Overview





We are an
independent sales organization which acts as the source for businesses to
purchase and operate automated teller machines, or ATMs.  From 1999 to
the present we have expanded our ATM sales, service and operations through
internal growth and acquisitions.





We
currently manage, own and operate approximately 12,000 ATMs across the United
States (typically under multi-year contracts) for independent store owners,
larger retail chains, hotels, stadiums, universities, banks, credit unions, and
other financial institutions.  We also offer our financial institution
clients a one-stop solution for new branch construction and fit
outs.  In addition to providing our merchant customers with
supplemental revenues from transaction fees, we believe that the presence of
ATMs in a merchant’s store helps to promote higher foot traffic, increased
impulse purchases, and longer shopping times since they often make the retail
site a destination for cash.  We attempt to maximize the usefulness of
our ATMs to our customers by participating in as many Electronic Funds Transfer
Networks ("EFTNs") as practical, including NYCE, Visa, MasterCard, Cirrus, Plus,
American Express, Discover/Novus, STAR, Allpoint and Moneypass.





Operational
Metrics





We derive most of our revenue from
transaction-based sales.  We also generate revenue from the sale of
ATM equipment and service calls.  A description of these revenue
sources is provided below.





Transaction-based
sales — sales we derive from withdrawal fees and interchange
fees.





·
            Withdrawal fees — fees
      we receive from a processor derived from a customer making an ATM
      withdrawal.  Withdrawal fees are sometimes referred to as
      surcharge or convenience fees in the
industry.




·
            Interchange fees — fees
      that an EFTN charges the customer’s financial institution for routing a
      withdrawal transaction or an account balance inquiry.  The
      interchange fee is shared between the EFTN and us, as the ATM service
      provider, based on an agreement between us and the
      EFTN.  Interchange fees apply to all transactions on ATMs that
      we own and ATMs owned by merchants and managed or serviced by
      us.


12


Service and other
sales — fees we charge for providing repair, maintenance, other services,
parts and supplies to merchants who purchase or rent ATMs from us.





Sales of ATM
equipment — sales of ATM equipment to an independent operator or
merchant.





The
principal cost related to the operation of an ATM is the commission we pay to a
merchant or the ATM owner.  The amount of the commission is dependent
on a number of factors the most important of which is whether we provide cash
for the machine.  Under our merchant-owned model, the merchant retains
the majority or all of the surcharge which is the primary component of
commission.  ATMs we deploy under a full placement model for which we
pay the costs to operate the unit have a lower commission rate than those owned
and operated by a merchant.  Full placement machines incur lower sales
commissions and typically generate more income.





Branding





During
the past two years, we have strengthened the Company by focusing specifically on
the sales, service and management of ATMs within the United
States.  We have completed a restructuring effort by selling
underperforming operations and assets, renegotiating vendor relationships and
contracts, and identifying complementary business partners.





One of
the key changes we have made to help expand the recognition of our identity and
service offerings to the public was to change our corporate name to "Access to
Money, Inc."  We believe this name and brand uniquely identify the
products and services we offer and provides a simple, yet powerful, vision and
connection to our clients, industry and consumers.





Strategic
Outlook





While
changes in consumer practices have impacted the number of ATM transactions, we
have continued to leverage our partnership with Select-A-Branch to deploy
Select-A-Branch enabled ATMs which provide surcharge free transactions to
customers of participating financial institutions.  We have
experienced significant increases in transaction volume at surcharge free
machines installed at specific locations of our largest
customers.





We have
also been successful in placing ATMs under our "Bank at Work" program which is a
unique arrangement for placing units in professional office and business
environments and locations.  Under this program we supply an ATM and
provide a fully outsourced solution to the customer.  The business
model provides customers with the benefits of an accessible ATM in their work
environment, no capital outlay, and a revenue sharing stream based on
transaction volume.





We
continue to pursue agreements with national and regional retailers, franchisors,
and associations to deploy our ATMs.





We
continue to move our student loan services business forward under our new
partnership with People Capital.  By combining our services along with
People Capital's turnkey solution for the selection, origination and servicing
of private student loans, we look to bring People Capital's loan lending
technology to credit unions and community banks across the
country.  This partnership provides us with the ability to offer both
origination and servicing support to our customers.  Total revenues
from this business have been immaterial to date.


13


Results of
Operations





The following table sets forth our
Consolidated Statements of Operations information as a percentage of
sales.  The percentages for commission are percentages of total
transaction-based sales while all other percentages are percentages of net
sales.  Percentages may not add due to rounding.





ThreeMonthsEnded
                  June30,
                
                
                SixMonthsEnded
                  June30,2010
                
                
                2009
                
                
                2010
                
                
                2009Sales
                
                
                100.0
                %
                
                
                100.0
                %
                
                
                100.0
                %
                
                
                100.0
                %Commission
                
                
                70.8
                
                
                
                72.5
                
                
                
                71.5
                
                
                
                72.3Net
      sales
                
                
                33.6
                
                
                
                27.5
                
                
                
                35.7
                
                
                
                27.7Cost
      of sales
                
                
                47.9
                
                
                
                50.9
                
                
                
                52.4
                
                
                
                50.3Gross
      profit
                
                
                52.1
                
                
                
                49.1
                
                
                
                47.6
                
                
                
                49.7Sales,
      general and administrative expenses
                
                
                39.7
                
                
                
                37.1
                
                
                
                36.7
                
                
                
                37.9Operating
      income
                
                
                12.4
                
                
                
                12.0
                
                
                
                10.9
                
                
                
                11.8Interest
      expenseInterest
      expense
                
                
                10.7
                
                
                
                10.1
                
                
                
                10.3
                
                
                
                10.1Amortization
      - debt issuance
                
                
                7.9
                
                
                
                7.7
                
                
                
                7.6
                
                
                
                7.7Total
      Interest Expense
                
                
                18.6
                
                
                
                17.8
                
                
                
                17.9
                
                
                
                17.8Loss/(gain)
      on warrant value
                
                
                (35.0
                )
                
                
                39.4
                
                
                
                (15.9
                )
                
                
                20.6Interest
      (income)
                
                
                (0.1
                )
                
                
                (0.8
                )
                
                
                (0.1
                )
                
                
                (0.7
                )Net
      income (loss)
                
                
                28.9
                %
                
                
                (44.3
                )%
                
                
                9.1
                %
                
                
                (26.2
                )%





Key
Operating Metrics





We rely on certain key measures to
monitor our operating performance, including total transactions, total
withdrawal transactions, number of transacting ATMs, withdrawals per ATM per
month, gross sales per withdrawal transaction, commission per withdrawal, and
net transaction based sales per withdrawal per month.





The following table sets forth
information regarding these key measures for the three and six month periods
ended June 30, 2010 and 2009:





Three
      Months Ended June 30,
                
                
                Six
      Months Ended June 30,2010
                
                
                2009
                
                
                2010
                
                
                2009Total
      transactions
                
                
                10,633,907
                
                
                
                11,222,139
                
                
                
                20,820,811
                
                
                
                22,148,138Withdrawal
      transactions
                
                
                8,551,655
                
                
                
                9,002,165
                
                
                
                16,746,364
                
                
                
                17,693,345Average
      number of transacting ATMs
                
                
                11,014
                
                
                
                11,330
                
                
                
                10,999
                
                
                
                11,378Average
      withdrawals per ATM per month
                
                
                259
                
                
                
                265
                
                
                
                254
                
                
                
                259Average
      gross transaction-based sales per withdrawal transaction
                
                $
                2.46
                
                
                $
                2.43
                
                
                $
                2.46
                
                
                $
                2.41Average
      commission per withdrawal transaction
                
                $
                1.74
                
                
                $
                1.76
                
                
                $
                1.76
                
                
                $
                1.74Average
      net transaction-based sales per withdrawal transaction
                
                $
                .72
                
                
                $
                .67
                
                
                $
                .70
                
                
                $
                .67


14




The
average number of transacting ATMs in our network during the second quarter of
2010 decreased by 317 from 11,330 in the second quarter of 2009 to 11,013 in
2010 primarily as the result of normal attrition and the removal of
approximately 100 ATMs from Cumberland Farms due to the expiration of our
contract with them not being renewed.  The decrease in the number of
transacting machines contributed to a 451,000, or 5.0%, decrease in the number
of withdrawal transactions during the three months ended June 30, 2010 as
compared to the three months ended June 30, 2009.





The
number of transacting ATMs in our network at June 30, 2010 was 11,000
compared to 11,322 at June 30, 2009.  The average number of
transacting machines decreased by 379 to 10,999 for the first six months of 2010
compared to 11,378 in 2009.  The decrease was due to regular
attrition, closure of locations by merchants, and more recently the impact of
Cumberland Farms machines coming out of service.  We have experienced
increases in the average net transaction-based sales per withdrawal of $0.05 and
$0.03, respectively, between the second quarters of 2010 and 2009, due primarily
to fewer ATM contracts with larger commission payouts.





Comparison
of Results of Operations for the Three and Six Month Periods Ended June 30,
2010 to the Three and Six Month Periods Ended June 30, 2009.





Sales





The following table sets forth selected
information from our Condensed Consolidated Statements of
Operations.  The results are in thousands, except for
percentages.





ThreeMonthsEndedJune 30,
                
                
                SixMonthsEndedJune30,2010
                
                
                2009
                
                
                % Change
                
                
                2010
                
                
                2009
                
                
                % ChangeGross
      transaction-based sales
                
                $
                21,056
                
                
                $
                21,828
                
                
                
                (3.5
                )
                
                $
                41,241
                
                
                $
                42,609
                
                
                
                (3.2
                )Commissions
                
                
                14,899
                
                
                
                15,837
                
                
                
                (5.9
                )
                
                
                29,471
                
                
                
                30,818
                
                
                
                (4.4
                )Net
      transaction-based sales
                
                
                6,157
                
                
                
                5,991
                
                
                
                2.8
                
                
                
                11,770
                
                
                
                11,791
                
                
                
                (0.2
                )Service
      and other sales
                
                
                627
                
                
                
                763
                
                
                
                (17.8
                )
                
                
                1,232
                
                
                
                1,797
                
                
                
                (31.4
                )ATM
      equipment sales
                
                
                248
                
                
                
                545
                
                
                
                (54.5
                )
                
                
                1,577
                
                
                
                909
                
                
                
                73.5Branch
      build out
                
                
                56
                
                
                
                (6
                )
                
                
                -
                
                
                
                140
                
                
                
                60
                
                
                
                131.9Net
      sales
                
                $
                7,088
                
                
                $
                7,293
                
                
                
                (2.8
                )
                
                $
                14,719
                
                
                $
                14,557
                
                
                
                1.1





Transaction-based
sales were $21.1 million during the three months ended June 30, 2010
compared to $21.8 million for the corresponding period of 2009.  This
$700,000, or 3.5%, decrease was primarily attributable to fewer transacting
units between the periods.  Service and other sales decreased $136,000
to $627,000 between the same periods.  The decrease was primarily due
to fewer billable service calls as a result of the replacement of older ATMs
with newer equipment.





Transaction-based
sales were approximately $41.2 million during the first six months of 2010
compared to approximately $42.6 million for the corresponding period of
2009.  This $1.4 million, or 3.2%, decrease was primarily
attributable to fewer transacting ATMs.  Service and other sales
decreased $565,000, or 31.4%, to $1.2 million during this same
period.  The decrease was primarily due to fewer billable service
calls as a result of the replacement of older ATMs with newer
equipment.  The sale of ATM machines increased by $668,000, or 73.5%,
from $909,000 in the first six months of 2009 to $1.6 million in the first
six months of 2010.  This increase was the result of hardware sales to
several large customers in 2010 compared to 2009 while many customers waited for
the economy to improve before spending capital on new equipment.





Commissions
decreased from $15.8 million in the first three months of 2009 to
$14.9 million in the first three months of 2010.  This decrease
of approximately $938,000, or 5.9%, resulted primarily from fewer
transactions.  As a percentage of transaction-based sales, commissions
decreased to 70.8% in the second quarter of 2010 from 72.5% in the second
quarter of 2009.  The average commission per withdrawal transaction
decreased to $1.74 for the second quarter of 2010 as compared to $1.76 for the
second quarter of 2009.  The lower commission per withdrawal is the
result of new commission structures on recently sold ATM contracts compared to
those for machines with higher commission structures that were taken out of
service during 2009.


15





Commissions
decreased from approximately $30.8 million in the first six months of 2009 to
approximately $29.5 million in the first six months of
2010.  This decrease of $1.3 million, or 4.4%, was the result of
fewer units and transactions.  As a percentage of gross
transaction-based sales, commissions decreased to 71.5% in the first six months
of 2010 from 72.3% in the first six months of 2009.  The average
commission per withdrawal transaction increased to $1.76 for the first six
months of 2010 as compared to $1.74 for the first six months of
2009.





Cost
of Sales





The
following table sets forth selected costs of sales data from our Condensed
Consolidated Statements of Operations.  The results are in thousands,
except for percentages.





ThreeMonthsEndedJune 30,
                
                
                SixMonthsEndedJune30,2010
                
                
                2009
                
                
                % Change
                
                
                2010
                
                
                2009
                
                
                % ChangeProcessing
      costs
                
                $
                647
                
                
                $
                627
                
                
                
                3.2
                
                
                $
                1,096
                
                
                $
                1,338
                
                
                
                (18.1
                )Armored
      car service
                
                
                728
                
                
                
                671
                
                
                
                8.5
                
                
                
                1,203
                
                
                
                1,358
                
                
                
                (11.4
                )Cost
      of cash
                
                
                517
                
                
                
                507
                
                
                
                2.0
                
                
                
                1,030
                
                
                
                972
                
                
                
                6.0Service
      costs
                
                
                805
                
                
                
                827
                
                
                
                (2.7
                )
                
                
                1,663
                
                
                
                1,708
                
                
                
                (2.6
                )Cost
      of machine sales
                
                
                127
                
                
                
                498
                
                
                
                (74.5
                )
                
                
                1,522
                
                
                
                783
                
                
                
                94.4Machine
      depreciation
                
                
                219
                
                
                
                203
                
                
                
                7.9
                
                
                
                450
                
                
                
                391
                
                
                
                15.1Communication
      costs
                
                
                168
                
                
                
                241
                
                
                
                (30.3
                )
                
                
                396
                
                
                
                489
                
                
                
                (19.0
                )Other
      costs
                
                
                184
                
                
                
                140
                
                
                
                31.4
                
                
                
                354
                
                
                
                282
                
                
                
                25.5Total
      cost of sales
                
                $
                3,395
                
                
                $
                3,714
                
                
                
                (8.6
                )
                
                $
                7,714
                
                
                $
                7,321
                
                
                
                5.4





Cost of
sales from operations consist primarily of cost of vault cash, service costs,
processing costs, and armored car service costs.  Costs of sales
decreased approximately $319,000, or 8.6%, to $3.4 million during the three
months ended June 30, 2010 compared to $3.7 million in the same period
in 2009.  Costs of sales increased approximately $393,000, or 5.4%, to
$7.7 million during the first six months of 2010 as compared to
$7.3 million in the first six months of 2009.  The reasons for
the changes between the three and six month periods ended June 30, 2010 and
June 30, 2009 are described below.





Our cost
of vault cash increased by $10,000, or 2.0%, to $517,000 during the three months
ended June 30, 2010 from $507,000 in the same period of
2009.  This increase was the result of the following
factors.  First, the number of ATMs which we provide cash for
increased by 1.5% from 2,186 in June 2009 to 2,218 in
June 2010.  Second, the average amount of vault cash used in the
second quarter of 2010 increased by 2.9%, to $42.3 million from
$41.1 million during the second quarter of 2009.  The interest
rate on ourvault
cash facility remained constant at 2.75% between June 30, 2009 and
June 30, 2010.





Our cost
of vault cash increased by $58,000, or 6.0%, to approximately $1.0 million
during the first six months of 2010 from $972,000 in the first six months of
2009.  The average amount of vault cash we utilized for ATMs we supply
cash to increased $2.9 million, or 7.2%, to $43.9 million for the
first six months of 2010 from $41.0 million for the first six months of
2009.





Maintenance
and third party service costs decreased $22,000, or 2.7%, to $805,000 in the
three months ended June 30, 2010 compared to $827,000 in the same period
of  2009.





Maintenance
and third party service costs decreased $45,000, or 2.6%, to approximately
$1.6 million in the first six months of 2010 compared to $1.7 million
in the first six months of 2009.  This reduction is the result of
improvements in coordination with our third party service vendors combined with
improved communication directly with our clients by our customer and technical
services teams. We restructured our process to determine the cause of mechanical
and/or operating issues while on the phone with our customers which reduces
repeated service visits to machines.





Processing
fees increased $20,000, or 3.2%, to $647,000, in the three months ended
June 30, 2010 compared to $627,000 in the same period of
2009.  The increase is due to a change in fees being assessed by
MasterCard.  Processing fees decreased by $242,000, or 18.1%, in the
six month period ending June 30, 2010 compared to the same period in
2009.  This decrease is the result of a credit from a processor for
overcharges and lower fees due to lower transaction volume.


16


Armored
car costs increased $57,000, or 8.5%, to $728,000 in the three months ended
June 30, 2010 from $671,000 in the same period of 2009.  This
increase is attributable to an increase in the number of ATMs for which we
supply the cash and additional costs associated with our vendor Mount Vernon
Money Center Corp. discontinuing its operations.





The cost
of machine sales decreased $371,000, or 74.5%, to $127,000 in the three months
ended June 30, 2010 compared to $498,000 in the same period of
2009.  This decrease is due to fewer sales between the second quarter
of 2009 and the second quarter of 2010.  Machine sale cost increased
$739,000, or 94.4%, to $1.5 million in the first six months of 2010 from
$783,000 in the first six months of 2009 due to hardware sales to several large
customers in 2010 compared to 2009 during which customers were hesitant to make
large capital outlays.





Gross Profit(in thousands, except for
percentages)





ThreeMonthsEndedJune 30,
                
                
                SixMonthsEndedJune30,2010
                
                
                2009
                
                
                % Change
                
                
                2010
                
                
                2009
                
                
                % ChangeGross
      profit
                
                $
                3,693
                
                
                $
                3,579
                
                
                
                3.7
                
                
                $
                7,005
                
                
                $
                7,236
                
                
                
                (3.2
                )





During
the three months ended June 30, 2010, gross profit was $3.6 million
compared to $3.6 million in the same period of 2009.  During the
first six months of 2010, we generated $7.0 million of gross profit
compared to $7.2 million in the first six months of 2009.  The
reasons for the decreases have been discussed above in sales and
costs.





Selling, General, and Administrative
Expenses(in thousands,
except for percentages)





ThreeMonthsEndedJune 30,
                
                
                SixMonthsEndedJune30,2010
                
                
                2009
                
                
                % Change
                
                
                2010
                
                
                2009
                
                
                % ChangeSelling,
      general and administrative
                
                $
                2,816
                
                
                $
                2,707
                
                
                
                4.0
                
                
                $
                5,401
                
                
                $
                5,517
                
                
                
                (2.1
                )





Selling,
general and administrative expense increased by $109,000, or 4.0%, to
$2.8 million in the three months ended June 30, 2010 from $2.7 million
in the corresponding period of 2009.  Selling, general and
administrative expense as a percent of net sales increased to 38.9% in the
second quarter of 2010 from 37.1% in the second quarter of 2009.





Selling,
general and administrative expense decreased by $116,000, or 2.1%, to
approximately $5.4 million in the first six months of 2010 from
approximately $5.5 million in the first six months of
2009.  Selling, general and administrative expense as a percent of net
sales decreased to 36.3% in the first six months of 2010 from 37.9% in the first
six months of 2009.





Payroll
related costs decreased by $47,000, or 3.1%, to $1.5 million for the three
months ended June 30, 2010 compared to $1.6 million in the same period
in 2009.  Payroll related costs decreased by $226,000, or 7.2%, to
$2.9 million in the first six months of 2010 from $3.1 million in the first
six months of 2009.  This decrease is primarily attributable to
reductions in bonus, commission and temporary labor costs.





While we
have seen increases in marketing, travel and entertainment, and bad debt
reserves of approximately $99,000 combined between the three months ended
June 30, 2010 and the corresponding period of 2009, these increases have
been offset by decreases in telephone, insurance, bank fees, legal, accounting,
and professional services of approximately $121,000.





We also
experienced decreases in repairs and maintenance, telephone, insurance, bank
fees and professional services totaling approximately $230,000 in the first six
months of 2010 compared to the corresponding period of 2009.  These
reductions have been offset by a combined increase of approximately $264,000 of
costs related to rent, licenses and fees, travel and entertainment, marketing
and bad debt reserves in the first six months of 2010 compared to the
corresponding period of 2009.


17


Operating Income(in thousands, except for
percentages)





ThreeMonthsEndedJune 30,
                
                
                SixMonthsEndedJune30,2010
                
                
                2009
                
                
                % Change
                
                
                2010
                
                
                2009
                
                
                % ChangeOperating
      income
                
                $
                877
                
                
                $
                872
                
                
                
                0.6
                
                
                $
                1,604
                
                
                $
                1,719
                
                
                
                (6.7
                )





During
the three months ended June 30, 2010, operating income was $877,000,
compared to $872,000 earned in the corresponding period of
2009.  During the first six months of 2010, we generated
$1.6 million of operating income compared to $1.7 million in the first
six months of 2009.





Depreciation and Amortization(in thousands, except for
percentages)





ThreeMonthsEndedJune 30,
                
                
                SixMonthsEndedJune30,2010
                
                
                2009
                
                
                % Change
                
                
                2010
                
                
                2009
                
                
                % ChangeDepreciation
      expense
                
                $
                311
                
                
                $
                233
                
                
                
                33.5
                
                
                $
                633
                
                
                $
                494
                
                
                
                28.1Amortization
      expense
                
                
                180
                
                
                
                177
                
                
                
                1.7
                
                
                
                352
                
                
                
                339
                
                
                
                3.8Total
      depreciation and amortization
                
                $
                491
                
                
                $
                410
                
                
                
                19.8
                
                
                $
                985
                
                
                $
                833
                
                
                
                18.3





Depreciation
is accounted for in both cost of sales and selling, general and administrative
expense.  Machine depreciation for ATMs that we own is included in
cost of sales while all other depreciation related to furniture fixtures and
equipment, computer related assets and automobiles is included in selling,
general and administrative expense.  Amortization listed above is for
intangible assets.  We also have amortization related to debt issuance
costs, which is accounted for below operating income and included in interest
expense.





The
increases in the depreciation between the three and six month periods of 2009
and 2010 are primarily due to the addition of full placement ATMs the Company
acquired and placed into service.





Interest Expense(in thousands except for
percentages)





ThreeMonthsEndedJune 30,
                
                
                SixMonthsEndedJune30,2010
                
                
                2009
                
                
                % Change
                
                
                2010
                
                
                2009
                
                
                % ChangeInterest
      expense
                
                $
                759
                
                
                $
                735
                
                
                
                3.3
                
                
                $
                1,516
                
                
                $
                1,469
                
                
                
                3.2Amortization
      – debt issuance
                
                
                560
                
                
                
                559
                
                
                
                0.2
                
                
                
                1,119
                
                
                
                1,114
                
                
                
                0.5Total
      interest expense
                
                $
                1,319
                
                
                $
                1,294
                
                
                
                1.9
                
                
                $
                2,635
                
                
                $
                2,583
                
                
                
                2.0





Interest
expense for the three months ended June 30, 2010 increased by $24,000, or
3.3%, to $759,000 from $735,000 reported in the corresponding period of
2009. Interest expense for the first six months of 2010 increased by
$47,000, or 3.2%, compared to the corresponding period in 2009.  These
increases were due to additional accruals related to the terms of our loan
agreements.





Amortization
of debt issuance costs remained constant for the three and six month periods of
2010 compared to the same periods in 2009.





In the
event that we refinance all or a portion of our existing debt, we would expect
to accelerate all or a portion of the debt issuance cost which is currently
being amortized on a monthly basis over the term of the existing
facility.  As of June 30, 2010, the unamortized balance was
approximately $1.6 million.  This balance would be accelerated in
whole, or in part, and accounted for as a non-cash expense in the quarterly
reporting period in which any such refinancing occurs.


18


Gain/Loss
on Warrant Value





Effective
January 1, 2009, we adopted new accounting guidance that can affect the
accounting for warrants and many convertible instruments with provisions that
protect holders from a decline in the stock price.  Protection
provisions reduce the exercise price of a warrant or convertible instrument if
the issuer either issues equity shares for a price that is lower than the
exercise price of those instruments or issues new warrants or convertible
instruments that have a lower exercise price.  We evaluated and
determined that outstanding warrants to acquire our stock contain provisions
that protect holders from declines in the stock price and as a result,
recognized these warrants as liabilities at their respective fair values on each
reporting date.  For a complete description of the loss on warrant
value, see our consolidated financial statements contained elsewhere in this
report.





The table
below provides a reconciliation of the beginning and ending balances for our
warrant liability and increase in fair value using significant unobservable
inputs (Level 3) as of June 30, 2010 (in thousands).





Balance
      as of December 31, 2009
                  
                  $
                  6,747Increase
      in fair value of warrants
                  
                  
                  (2,342
                  )Balance
      as of June 30, 2010
                  
                  $
                  4,405





Net
Income (loss)(in thousands, except for
percentages)





ThreeMonthsEndedJune 30,
                
                
                SixMonthsEndedJune30,2010
                
                
                2009
                
                
                % Change
                
                
                2010
                
                
                2009
                
                
                % ChangeNet
      income (loss)
                
                $
                2,048
                
                
                $
                (3,232
                )
                
                
                163.4
                
                
                $
                1,332
                
                
                $
                (3,829
                )
                
                
                134.8





We
recognized net income of approximately $2.0 million for the three months
ended June 30, 2010 compared to a net loss of $3.2 million for the
same period of 2009.  This $5.2 million, or 163.4%, change was created
by a $5.4 million change in the gain/loss in warrant value between the
periods.





We
recognized net income of approximately $1.3 million for the first six
months of 2010 compared to a net loss of $3.8 million for the first six
months of 2009.  This $5.1 million, or 134.8%, improvement
occurred as a result of a $5.3 million change in the gain/loss in warrant
value between the first six months of 2010 compared to the same period in
2009.





Provision
for Income Taxes





We have
recorded no benefit from our losses for the second quarter of 2010 and 2009
because we are uncertain that we will be able to realize the benefit of our net
operating loss carryforwards and future deductible amounts.





Liquidity
and Capital Resources





Our
principal ongoing funding requirements are for working capital to finance
operations, make debt payments, and fund capital expenditures.  We
believe that our liquidity and capital resources are adequate for our currently
anticipated needs over the next twelve months.  As explained below, we
will need to extend or refinance our existing secured lending facility prior to
April 2011.





Net cash
provided by operating activities during the six months ended June 30, 2010
was $1.5 million compared to $3.0 million during the six months ended
June 30, 2009.  The principal difference between the periods was
the impact of $1.2 million of restricted cash being released to operating
cash in 2009 without a comparable event in 2010.





Net cash
used in investing activities during the six months ended June 30, 2010 was
$969,000 compared to $1.1 million in the six months ended June 30,
2009.  Both related to capital expenditures for ATMs and
equipment.


19





Net cash
used for financing activities was $950,000 during the six months ended
June 30, 2010 and consisted of the repayment of term loans.  Net
cash used during the six months ended June 30, 2009 was $476,000 and was
also for the repayment of term loans.





We had
cash and cash equivalents of approximately $5.4 million at June 30,
2010 compared to $5.8 million at December 31, 2009.





At
June 30, 2010 and 2009, we had net working capital deficits of $11.4 and
$1.9 million, respectively.





On April
18, 2008, we borrowed $11.0 million pursuant to the Lampe Loan
Facility.  Under the lending facility, interest accrues at 13% per
annum, payable semiannually, comes due in April 2011, and is collateralized
by substantially all of our assets and the assets of our
subsidiaries.  We have had continued discussions with our current
lenders and potential replacement lenders regarding the refinancing of all or a
portion of the Lampe Loan Facility and our other outstanding term loans for more
favorable economic terms.  There can be no assurance that any such
refinancings will be completed.  For a more complete description of
indebtedness, please see Note 4 of our notes to condensed consolidated financial
statements included in Part I, Item 1 of this report.





Off-Balance
Sheet Arrangements





As of
June 30, 2010, we did not have any relationships with unconsolidated
entities or financial partners, such as entities often referred to as structured
finance or special purpose entities, established for the purpose of facilitating
off-balance sheet arrangements or other contractually narrow or limited
purposes.  As such, we are not materially exposed to any financing,
liquidity, market or credit risk that could arise if we had engaged in such
relationships.





Critical
Accounting Policies and Estimates





Our
critical accounting policies and estimates as of June 30, 2010 are
consistent with those discussed in our Annual Report on Form 10-K for the year
ended December 31, 2009.





New
Accounting Standards





See Note
2 of Notes to Condensed Consolidated Financial Statements in Part I,
Item 1 for a discussion of recent accounting pronouncements.





ITEM
      4T.
            CONTROLS
      AND PROCEDURES





As of
June 30, 2010, we carried out the evaluation of the effectiveness of our
disclosure controls and procedures required by Rule 13a-15(e) under the Exchange
Act under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial
Officer.  Based upon that evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that, as of June 30, 2010, our disclosure
controls and procedures were effective to provide reasonable assurance that
information we are required to disclose in reports that we file or submit under
the Exchange Act is: (i) recorded, processed, summarized and reported within the
time periods specified in the SEC’s rules and forms, and (ii) accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.





There has
been no change in our internal control over financial reporting identified in
connection with this evaluation that occurred during our fiscal quarter ended
June 30, 2010 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial
reporting.


20





PART
II – OTHER INFORMATION





ITEM
      6.
            EXHIBITS





31.1
            Certification
      of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the
      Securities Exchange Act of 1934, as amended, as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of
2002.





31.2
            Certification
      of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the
      Securities Exchange Act of 1934, as amended, as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of
2002.





32.1
            Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.





32.2
            Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.


21





SIGNATURE





Pursuant
to the requirements 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.





ACCESS
      TO MONEY, INC.Date:      August
      12, 2010
                By:
                /s/ Michael J. DolanMichael
      J. DolanChief
      Financial Officer




22