UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON,
DC 20549
 
 FORM
10-KSB
  (Mark
One)
  ý
              ANNUAL REPORT
      UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 For the Fiscal Year ended
December 31, 2007
    ̈
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 For the Fiscal Year ended
December 31, 2007
  Commission File
No. 000-49723
  Money Centers of America,
Inc.
 (Name of
small business issuer in its charter)
 
 DELAWARE
              
              23-2929364(State
      orother
      jurisdiction of incorporation or organization)
              
              (IRS
      Employer Identification No.)
 700
South Henderson Road
 Suite
325
 King
of Prussia, PA 19406
 (Address
      of principal executive offices, Zip
Code)
 
 (610) 354-8888
 (Issuer's
telephone number)
 
 Section registered under Section
12(b) of the Exchange Act:None.
 
 Securities
      registered under
                Section 12(g)
      of the Exchange Act:
              
              Name
      of Each Exchange on Which Registered:Common
      Stock, par value $.01 per share
              
              None
 
 Check
whether the issuer is not required to file reports pursuant to Section 13 or
15(d) of the Exchange Act.  ̈
  Check
whether the issuer (1) has filed all reports required to be filed by Section 13
or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filings requirements for the past 90
days. Yes  ý No   ̈
  Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.   ý
  Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).  Yes ̈ No ý
  The
registrant's revenues for the most recent fiscal year were $8,694,549.
  The
aggregate market value of the voting common stock held by non-affiliates of the
issuer as of March 31, 2008 was approximately $3,504,535 (based on the average
closing bid and asked prices of the registrant's common stock in the
over-the-counter market as of March 31, 2007.
  As of
March 31, 2008, 31,751,832 shares of the issuer's common stock, par value $.01
per share, were issued and outstanding.
  Documents
Incorporated by Reference:  None.
  
 
 TABLE
OF CONTENTS
  PART
      IITEM
      1
              -
              DESCRIPTION
      OF BUSINESS
              1ITEM
      2
              -
              DESCRIPTION
      OF PROPERTY
              12ITEM
      3
              -
              LEGAL
      PROCEEDINGS
              12ITEM
      4
              -
              SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
              12PART
      IIITEM
      5
              -
              MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
              13ITEM
      6
              -
              MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
              14ITEM
      7
              -
              FINANCIAL
      STATEMENTS
              20ITEM
      8
              -
              CHANGES
      IN AND DISCUSSIONS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
              20ITEM
      8A
              -
              CONTROLS
      AND PROCEDURES
              21ITEM
      8B
              -
              OTHER
      INFORMATIONPART
      IIIITEM
      9
              -
              DIRECTORS
      AND EXECUTIVE OFFICERS OF THE REGISTRANT
              22ITEM
      10
              -
              EXECUTIVE
      COMPENSATION
              24ITEM
      11
              -
              SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
              26ITEM
      12
              -
              CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS
              27ITEM
      13
              -
              EXHIBITS
              27ITEM
      14
              -
              PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
              28FINANCIAL
      STATEMENTS
              F-1
  
 (i)
 CAUTIONARY
STATEMENT FOR FORWARD-LOOKING STATEMENTS
  This
Annual Report on Form 10-KSB includes forward-looking statements.  We
have based these forward-looking statements on our current expectations and
projections about future events.  These forward-looking statements are
subject to known and unknown risks, uncertainties and assumptions about us that
may cause our actual results, levels of activity, performance or achievements to
be materially different from any future results, levels of activity, performance
or achievements expressed or implied by such forward-looking
statements.  In some cases, you can identify forward-looking
statements by terminology such as “may,” “will,” “should,” “could,” “would,”
“expect,” “plan,” anticipate,” “believe,” “estimate,” “continue,” or the
negative of such terms or other similar expressions.  We caution that
any forward-looking statement made by us in this Form 10-KSB or in other
announcements made by us are further qualified by important factors that could
cause actual results to differ materially from those projected in the
forward-looking statements, including without limitation the risk factors set
forth in this Form 10-KSB.
 
 PART
I
  ITEM
      1.
              DESCRIPTION
      OF BUSINESS
  General
  Money
Centers of America, Inc. (“Money Centers”) is a corporation existing under the
laws of the State of Delaware.  Our original Certificate of
Incorporation was filed on October 10, 1997 and a Restated Certificate of
Incorporation was filed on August 20, 2004.
  We
provide cash access services, transaction management systems, and financial
networks to the gaming industry.  Our value proposition to our
customers is aimed at leveraging technology, generating value, and creating
measurable results in profitability, customer satisfaction and loyalty to gaming
companies.  Our core competencies are the facilitation, processing,
and execution of ATM, Credit Card Advance, POS Debit, Check Cashing, stored
value, marker, and merchant card services in the gaming industry.  As
the suppliers to the gaming industry have consolidated service offerings, we
will meet the growing trend towards single source providers of products and
services to casinos and other gaming facilities worldwide. This trend supports
our business plan to offer a full range of cash access services as well as
innovative alternative technology solutions for the gaming company.
  We intend
to become a leading innovator in cash access and transaction management systems
for the gaming industry.  Our business model is specifically focused
on providing our full suite of cash access services through two distinct
deployment channels:  1) the traditional outsourced solution whereby
we enter into exclusive service agreements with the casino operator for all cash
access services whereby we provide a complete package of hardware, software and
processing services, and 2) the licensing of our OnSwitchTM
Transaction Management System technology through licensing agreements pursuant
to which we sell an enterprise payment solution that empowers gaming companies
to own, and therefore control, every form of payment processing within their
organization.
  We have
identified the gaming industry as a niche segment within the funds transfer
industry that has significant growth opportunities.  We are confident
that continuing our proven outsource model and our position as the only company
currently offering a transaction management system for an end to end payment
processing solution positions us to meet the needs of any gaming company while
having a differentiating competitive advantage over other companies in our
industry.
  We
currently have contracts to provide some or all of the cash access services in
18 locations across the United States.  Our locations are in the
states of California (11 locations), Nevada (1 location), New York (2
locations), New Mexico (1 location), Wisconsin (1 location), Louisiana (1
location) and Washington (1 location).  In 2007, our cash access
technology facilitated 1,954,375 transactions totaling
$316,479,750.
  Products
  Our two
deployment strategies are designed to provide a complete end to end payment
solution for cash access transactions, merchant card transactions, and other
required point of sale transactions within a gaming facility. Credit/debit card
cash advance, credit services, Automatic Teller Machines (“ATMs”) and check
cashing solutions are the primary means by which casinos make cash available to
gaming customers.  We provide these services directly to casino
patrons on a outsourced services model, as do our competitors.  Our
OnSwitchTM
enterprise payment solution empowers a gaming operator to integrate the internal
management of merchant card processing and other point of sale transaction
requirements seamlessly into their current business operations. We believe that
we have a distinct competitive advantage over all of our competitors because we
are the only company with both an outsourced service offering and an enterprise
payment solution.
  
  OnSwitchTMTransaction Management
System
  We have
formed an exclusive gaming industry partnership with S1 Corporation to create
OnSwitchTM, an
enterprise payment processing solution that we have built on S1’s Postilion
Processing Platform.  OnSwitchTM
empowers a gaming operator to garnish the profits from internalizing the
processing of traditional cash access services, our proprietary services, and
non-cash access transactions:
 
 Merchant
card processing
 Private
label credit/debit cards
 Stored
Value for players’ club and payroll requirements
 Ticket
redemption
 
 Though
the economics for large gaming companies would suggest otherwise, historically
casino operators have engaged third party vendors, of which we are one, to
handle cash access operations, with the goal of driving more cash to the gaming
floor.  These third party providers would install the equipment,
evaluate credit transactions, and provide the cash to casino patrons who were
seeking to tap available sources of cash. This model is based on a revenue
sharing from completed transactions between the host casino and the third party
vendor.
 
 The
OnSwitchTM model provides a
gaming company with an extremely cost-effective enterprise payment solution that
leverages existing casino infrastructure to eliminate the outsourced provider,
capture the profits from cash access operations, reduce merchant card processing
costs, and gain control of the customer experience.  We believe that
this model will prove attractive to casino operators.
 
 OnSwitchTM
utilizes S1’s Postilion Processing Platform, which is used by more than 250
customers in over 50 countries, including GE, FedEx Kinko’s, Shell, 7-Eleven,
Canadian Tire, EDS, and numerous financial institutions, retailers, and
processing companies. In fact one of every six ATMs in the Unites States is
running on OnSwitchTM’s
processing platform. We have the exclusive rights to S1’s Postilion technology
in the gaming industry in the United States, positioning us as the only company
to offer this differentiating value proposition that could create a complete
paradigm shift in this multi-billion dollar segment of the gaming
industry.
 
 OnSwitchTM  generates
revenues from licensing fees and ongoing support fees paid by the casino rather
than through revenue sharing with the casino as is the case in the outsource
model.  On a comparative basis, we  realize lower revenues
from the OnSwitchTM model
than from the outsource model for any particular gaming
operation.  However our net margin is significantly higher as we will
no longer incur the costs associated with on-site personnel, equipment, interest
expense, or the substantial working capital required to support the traditional
outsource model.  The revenue differential actually has the potential
to protect our exclusive market position in the form of a substantial barrier to
entry.  If any of our larger competitors with substantial market share
were to develop a competing solution, they would risk cannibalizing their
existing revenue by as much as 80%.  We believe that this will be a
significant disincentive as these are publicly traded companies that have based
their value proposition to the investment community on the merits and
perpetuation of the outsourced model.
  We sold
our first OnSwitchTM in
December 2007 to the Rolling Hills Casino in Corning, CA.  We intend
to have the OnSwitchTM fully
deployed at the Rolling Hills Casino in the second quarter of 2008.  ,
Our sales pipeline continues to grow, current prospects are confidently moving
through our sales cycle, and we currently are finalizing business terms and
designing project timelines with prospects in the later stages of our sales
cycle.
  Omni
Network
  Also in
January 2006, we introduced the Omni Network (ON), a free shared credit data and
responsible gaming network for the gaming industry.  We built the Omni
Network with the idea that credit and responsible gaming data belongs to the
gaming operators and is necessary for the protection of consumers and the
integrity of gaming operations.
 
 2
 Omni
Network is comprised of real-time credit and responsible gaming data garnered
from a transaction database that spans the entire United States and soon the
Caribbean and South America.  Free access to this comprehensive
database empowers casino operators to make their own informed decisions about
extending credit to casino patrons.
 
 Membership
in the Omni Networks is free to casino operators in the United
States.  We will initially populate the database from its casino cash
access operations.  Additional subscribers will contribute their own
data to further build out the credit and transaction history of casino
patrons.
  Traditional
Outsource Services
  Historically
casino operators have engaged third party vendors such as us, to handle cash
access operations on an outsourcing basis.  In these relationships, we
provide four basic services:  credit/debit card cash advances, ATMs,
check cashing and credit services.
  Credit/Debit Card Cash
Advance
  Our
Credit/Debit Card Cash Advance (“CCCA”) products allow casino patrons to obtain
cash from their credit card, or checking account in the case of debit
transactions, through the use of our software and equipment.  Our CCCA
product accounted for 58,933 transactions and $1,561,671 in revenues (18.2% of
total revenues) for the year ended December 31, 2007.
  In order
to initiate a transaction, gaming patrons visit one of our ATMs or kiosks
located on the casino floor.  Each kiosk houses a point-of-sale
terminal (“POS”) equipped with our software.  The ATM or kiosk
terminal will prompt the customer to swipe his/her credit or debit card and
enter the dollar amount requested.  The terminal will then dial our
centralized processing center that electronically contacts the appropriate bank
for an authorization or disapproval.  If authorized, the terminal will
direct the customer to a casino cage.  Once at the cage, the customer
will present his/her credit/debit card and driver’s license.  A cage
cashier will swipe the credit/debit card in one of our terminals, which
communicates with our central servers.  After finding the
kiosk-approved transaction, a printer attached to the cage terminal will
generate a company check.   The cashier will give the customer
cash in the amount requested after he/she endorses the system-generated
check.  The check is then deposited by the casino into its account for
payment from one of our bank accounts and we debit the customer’s credit/debit
card.  This transaction can be accomplished without the gaming
customer using a personal identification number.  For credit/debit
card advances, customers pay a service charge typically between 6% and 9% of the
amount advanced.
  The CCCA
product is distinguished from standard ATM transactions, described below, in
that either a credit or debit card can be used to initiate the transaction, no
PIN number is required, and the maximum withdrawal limits typically imposed on
ATM transactions are not applicable as the CCCA transaction is initiated at our
booth and is processed as a typical POS transaction instead of as an ATM
transaction.
  We
believe that we have several competitive advantages over competing providers of
CCCA services.  First, our casino clients are able to access player
tracking and other valuable information from our website on a daily
basis.  This information is collected when a customer uses our CCCA
product.  Competing systems offer limited reporting, which typically
is only available via hard copy weeks after the month has ended.  Our
reporting is Internet-based and allows customers to custom design a system to
meet their reporting requirements.  In addition, customers have access
to their information twenty-four hours a day, seven days a
week.  Unique features of our PC-based systems are color, touch-screen
monitors, and integration of all products in one interface, signature capture
technology and transaction prompting.
  3
 ATMs
  Automated
Teller Machines or “ATMs” are a growth market spurred on by the development of
less expensive “dial-up” automatic teller machines and the opportunity to charge
users transaction surcharges of up to $5.00 per disbursement.  We have
access to all major bank networks and equipment suppliers.  Due to the
highly fragmented nature of the ATM business, this service is highly
competitive, which has eroded margins and revenue growth
potential.  We are currently providing gateway services to a wide
range of national, regional and international debit and credit
networks.  Additional links are being established, including direct
connections to national merchants as well as third party
authorization.  In addition to providing ATMs in casinos in
conjunction with our other services, we have contracts to provide free-standing
ATMs to 4 customers and we currently operate 16 ATMs at those locations (of
which 11 ATMs are not in casinos).  Our casino-based ATMs do not
effectively compete with ATMs offered by banks and other financial institutions
as we are the only ATM providers in our casinos.  ATM activities
accounted for 1,644,281 transactions and $3,627,225 in revenues (42.4% of total
revenues) for the year ended December 31, 2007.
  Transactions
at our ATM machines currently are processed by GenPass Technologies, a
full-service ATM processing company that provides services to over 24,000 ATMs
nationwide.  All ATM transactions are processed using GenPass’ network
and GenPass provides all reporting, recordkeeping and related
services.  In addition, GenPass provides all cash management and vault
cash needed for our non-casino ATMs.  GenPass receives a
per-transaction fee and charges us a fee for vault cash equal to GenPass’ cost
of funds, currently the prime rate less 5/8%, on vault cash used at non-casino
ATMs.  GenPass is one of several national ATM processors, and although
we currently are dependent on GenPass for this service we believe that alternate
providers are available on substantially similar economic terms.  In
addition, we  have the capability to process our own ATM transactions
using OnSwitchTM.
  Check
Cashing
  Check
cashing services are provided at all of our casino operations.  When a
casino patron requests check cashing at one of our service desks, we initiate a
check verification process using identification procedures and software
systems.  Each transaction also provides additional data for our
customer database, which can be used in assessing the creditworthiness of the
particular customer.  The system and software permit information to be
gathered and reported in an efficient and timely manner.  We have
designed and implemented a credit rating system that utilizes this customer
database to determine whether a casino customer’s check should be
cashed.  Check cashing involves the risk that some cashed checks will
be uncollectible because of insufficient funds, stop payment orders, closed
accounts or fraud.   We assume 100% of the credit risk from check
cashing operations.  This risk of collection is greater in new
locations where the amount of data in our database is smaller.  Unlike
all other companies providing check services, we do not use a credit scoring
system, as a credit scoring system will decline many checks that we believe are
acceptable risks.  Currently, we only guarantee checks that are cashed
in one of our full service money centers, where our employees are facilitating
the transaction.
  A second
option for check cashing services is a check guarantee and check verification
process in which the casino uses POS terminals to scan the customer’s check and
request remote authorization.  We have formed an alliance with a third
party provider to offer this service option to our customers.  We
intend to either acquire a company operating in this segment of the industry or
to build a proprietary system to offer this service to our
customers.  Under this option, which is not yet in operation in any of
the casinos we serve, the third party provider retains 100% of the credit
risk.
  Check
cashing activities accounted for 251,161 transactions and $2,466,514 in revenues
(28.8% of total revenues) for the year ended December 31, 2007.  For
that period, we incurred aggregate net losses from bad checks of $210,725,
representing .003% of the aggregate $66,687,191 in check-cashing transactions
processed.
  CreditPlus Credit
Services
  Casinos
in traditional gaming markets, like Las Vegas and Atlantic City, rely on credit
issuance for up to 40% of their revenues.  These casinos issue credit
internally and rely on specialized credit reporting in their risk management
decisions.  Prior to the launch of our CreditPlus product there was
only one company providing the specialized credit reporting that the gaming
industry relies on for its credit decisions.
  4
 Until
recently, casinos in the $15 billion dollar a year Native American Gaming market
had little or no ability to utilize credit issuance in their
operations.  Under the state law compacts governing their operations,
the majority of Native American casinos are prohibited from offering credit to
customers.  Further, the capital requirements necessary to develop the
internal ability to offer credit on a prudent basis prevented smaller properties
from developing the capability.  The absence of a third party credit
issuer capable of facilitating these transactions compounded the
problem.  As non-Native American casinos extend credit directly, there
was no market need for a third-party credit provider, and therefore no providers
of this service.  The other provider of specialized credit reporting
did not itself provide credit services.
  Our
CreditPlus platform allows players in Native American casinos to receive credit
for the first time and, based on an average transaction fee of 10%, CreditPlus
positions us to be at the forefront of what we estimate to be a $2 billion
market.  Currently we have a strong market position in providing
credit guarantee and credit management services to this highly profitable
market.
  The
CreditPlus product has three distinct elements:  Credit Reporting,
Credit Management and Credit Guarantee.
  Credit
Reporting.  We have developed a proprietary database of credit
reporting information, based on prior transaction history with casino
patrons.
  Credit
Management.  Like our check cashing management software,
CreditPlus can be used to streamline the credit process from approval through
collection of bad debt.  Casinos will have access to the CreditPlus
system that will provide check and credit histories for casino and retail
patrons.  Since many casinos wish to manage this process internally,
we believe there is significant revenue opportunity with this
product.
  Credit
Guarantee.  Casino and retail customers can also access cash
through CreditPlus credit guarantee.  The customer will fill out a
CreditPlus application.  We then go through a check verification and
credit underwriting process similar to that used in check cashing to determine
whether to extend credit.  Upon approval, the CreditPlus system will
generate a marker for an amount up to the credit line that we
approved.  Each marker is effectively a check drawn on the customer’s
checking account that we agree to hold for up to 30 days.  Most
markers are repaid prior to the end of the holding period.  Fees are
based on state regulations and the amount of time that we hold the
marker.  In many cases, the customer will return to our location prior
to our deposit of the marker and request that a new holding period be
established in exchange for an additional fee.  These transactions are
approved and facilitated at our full service money centers and shortly will be
available through the casino cage via an approval code transmitted through the
CreditPlus system.  We assume 100% of the credit risk from the
issuance of the marker.
  Although
none of our customers used CreditPlus in 2007, we continue to offer it as one of
our services.
  In
addition to our four core services, we have developed our “Cash Services Host
Program.”  Under the program, we have specially trained and equipped
employees, known to the casino and identifiable as our Cash Services Hosts,
deployed on the casino floor.  The Cash Services Hosts are available
to casino customers to provide cash access services at the gaming table or slot
machine, thus eliminating the need for the customer to leave the gaming table or
slot machine to obtain funds.  This is viewed as an amenity by the
customer and increases the gaming activity thereby enhancing the casino’s
revenues.  By making our services more accessible to the customer, it
increases our transaction activity and revenues.  The Cash Services
Host Program was operating at 3 casinos for all of 2007 and 2006.  The
Cash Services Host Program accounted for approximately $223,817 in revenues
(2.6% of total revenues) for the year ended December 31, 2007.
 
 Business
Objectives
  Our
business strategy is to focus on continuing to aggressively market our services
in the casino industry, while seeking to develop additional proprietary
technology to manage and execute the funds transfer transactions that are a part
of our core business while providing us with a competitive advantage in the
markets that we serve.  This will enable us to maximize market
penetration, realize significant profit margins and compete effectively with
larger competitors.
 
 5
  The
Casino Gaming Market
  Casino
gaming in the United States has expanded significantly in recent
years.  Once found only in Nevada and New Jersey, casino gaming has
been legalized in numerous states, including land-based casinos on Native
American lands and elsewhere, on riverboats and dockside casinos, and at horse
racing venues.  The growth in gaming has resulted from legalization of
gaming in additional jurisdictions and the opening of new casinos in existing
markets, as well as from an overall increase in gaming activity.
  Though
the geographic expansion of casino gaming has slowed, we anticipate continued
growth as states struggle to fill large revenue gaps in their state
budgets.  We also anticipate continued growth in the Native American
Gaming market as tribes are more successful at negotiating more stable and
long-term compacts with their respective state governments. The expansion of
casino gaming has generated a corresponding demand for ancillary services,
including cash access services in casinos.  Third parties provide cash
access services to most casinos pursuant to contracts with the casino
operator.  We believe that the principal objective of casino operators
in providing or arranging for such services is to promote gaming activity by
making funds available to casino customers on a convenient basis.  In
some cases, however, the casino operator may view such services as a potential
profit center separate from the gaming operations.
  Our
business currently is concentrated in the casino industry and it contemplates
that its operations will continue to be focused on operations in casinos and
other gaming locations.  Accordingly, a decline in the popularity of
gaming, a reduction in the rate of expansion of casino gaming, changes in laws
or regulations affecting casinos and related operations, or other adverse
changes in the gaming industry would have a material adverse effect on our
operations.  We will continue our business plan to identify market
segments outside of gaming to diversify our revenue base while maintaining our
operating margins.  Until this objective is achieved, there will
always be a risk that our current revenue is highly dependent on the success of
the gaming industry.
  Increased
competition has prompted casino operators to seek innovative ways to attract
patrons and increase the frequency of return visits.  We believe that
efficient and confidential access to cash for casino patrons contributes to
increased gaming volume.  Credit/debit card cash advances, markers,
check cashing and ATMs are the three primary methods used by casinos to provide
their patrons with quick and efficient access to cash. Virtually all casinos in
the United States currently offer at least one of these services on their
premises.  While some casino operators provide such services
themselves, most casinos' cash access services are provided by third parties
pursuant to contracts with the casino operators.  We are unique in
that we provide multiple options for the delivery of these
services.  We offer systems that are run from the casino's cage,
systems that we operate with our employees out of leased space in the casino,
and we offer host programs where our employees facilitate transactions remotely
from the slot machine or gaming table.
  Customer
Profile
  Every
gaming facility provides ATM, credit card cash advance, debit, and/or check
cashing services to their customers.  Services are typically
outsourced pursuant to an exclusive agreement with a supplier for an average of
two to five years.  Each year approximately 400 accounts totaling over
$500 million in revenue are up for bid.
  Our
current customer base consists of a both non-Native American casinos where we
currently provide stand-alone ATM services, and Native American casinos where we
have both stand alone ATM and full service contracts.  Of our 18
locations five (5) are full service deployments at Native American casinos and
the balance are ATM-only locations or credit card only (12 non-Native American
casinos/locations).  Our customers represent a blend of the type and
size of gaming operations in the U.S., including traditional markets like Las
Vegas, Native American reservations, and smaller markets like New
York.   We have one casino in Louisiana in which we offer credit
card and POS Debit services only.
  Our full
service locations all reside within the Native American Gaming segment of the
industry.  Two are in California, with one each in New Mexico,
Washington and Wisconsin.  We provide more limited services at one
casino location in Louisiana.  Our stand-alone ATM customers are located in
Nevada, New York, and California.  Two of our full service customers
represented approximately 63% of our revenue for the year ended December 31,
2007.  Two other customers represented approximately 20% of our total
revenues for the year ended December 31, 2007.
  6
  There are
no boundaries when identifying potential casino customers.  In the
near future, we will focus our marketing efforts on the Native American market,
Las Vegas, Atlantic City, the Caribbean and South America and
riverboats.
  We
operate our cash access services pursuant to agreements with the operators of
the host casinos or approved resellers.  Such agreements typically
have initial terms of one to five years, with renewal clauses.  In
most of the agreements, either party may cancel the agreement with cause if the
breach is not cured within thirty days.  We rely principally on our
relationship with the casino operators rather than on the terms of our contracts
for the continued operation of our cash access services.  While there
can be no assurance that the agreements will be renewed after their initial
terms, we believe that our relationships with the casinos in which we operate
are good.
  Government
Regulation
  Many
states and Tribal entities require companies engaged in the business of
providing cash access services or transmitting funds to obtain licenses from the
appropriate regulating bodies.  Certain states require companies to
post bonds or other collateral to secure their obligations to their customers in
those states.  State and Tribal agencies have extensive discretion to
deny or revoke licenses.  We have obtained the necessary licenses and
bonds to do business with the casinos where we currently operate, and will be
subject to similar licensing requirements as we expand our operations into other
jurisdictions.
  As part
of our application for licenses and permits, members of our board of directors
(“Board of Directors”), our officers, key employees and stockholders holding
five percent or more of our stock must submit to a personal background
check.  This process can be time consuming and
intrusive.  If an individual is unwilling to provide this background
information or is unsatisfactory to a licensing authority, we must have a
mechanism for making the necessary changes in management or stock ownership
before beginning the application process.  While there can be no
assurance that we will be able to do so, we anticipate that we will be able to
obtain and maintain the licenses necessary for the conduct of our
business.
  Many
suppliers to Native American casinos are subject to the rules and regulations of
the local tribal gaming commission.  These gaming commissions have
authority to regulate all aspects of casino operations, including vendor
selection.  Some gaming commissions require vendors to obtain licenses
and may exercise extensive discretion to deny or revoke licenses.  We
have obtained the necessary licenses or approvals from the appropriate tribal
gaming commissions where we operate.  While there can be no assurance
that we will be able to do so, we anticipate that we will be able to obtain and
maintain the licenses and approvals necessary for the conduct of our
business.
  Our
business may also be affected by state and federal regulations governing the
gaming industry in general.  Changes in the approach to regulation of
casino gaming could affect the number of new gaming establishments in which it
may provide cash access services.
  Competition
  We have
focused to a large extent on providing cash access services to the gaming
industry.  We have fewer competitors than in the past due to
consolidation.  In the cash access services market, we compete only
with 3 primary competitors,Global Cash Access, Inc., Global Payments Inc.’s
Cash & Win Service, and Cash Systems, Inc.  Certegy, Inc’s Game
Financial Corporation was recently sold to Global Cash
Access.  Competition for business for outsourced cash access services
is based largely on price (i.e., fees paid to
the casino from cash access service revenues), as well as on breadth of services
provided, quality of service to casino customers and value-added features such
as customer information provided to the casino.  We believe that our
implementation of OnSwitchTMwill
materially change our competitive situation, as no other service provider offers
a competitive enterprise payment solution.  Although alternatives
exist to the Postilion platform on which one or more of our competitors could
build a competing system, we believe that Postilion is most appropriate for our
industry and that we have a substantial development head start that will allow
us to capture market share.  It is possible that new competitors may
engage in cash access services, some of which may have greater financial
resources, or that one or more competitors will offer additional
products.  If we face significant competition, we may have a material
adverse effect on our business, financial condition and results of
operations.  We cannot predict whether we will be able to compete
successfully against current and future competitors.
  7
 Our
competitors are primarily specialized gaming cash access
companies.  Global Cash Access and Cash Systems, Inc. are stand alone
businesses like us.  Although Global Cash Access has the largest
market share, much larger companies such as  Global Payments, and US
Bank have entered the market through acquisitions and subsidiary
operations.  These companies have significant access to capital and
development resources that are superior to ours.  However, we believe
that their large size also will make it more difficult for these companies to
adapt quickly to swift changes in market conditions and customized customer
demands.
  Global
Cash Access historically has been the dominant market presence, with an
estimated 66% market share before the acquisition of Game Financial from
Certegy. As of now we estimate they have 81% of the market share
  In
addition to Global Cash Access we face competition from Cash Systems, which is
focused on gaming on Native American Reservations, with an estimated 8% market
share.  We estimate our own market share at 1%.  We do not
view financial institutions that offer ATM services at or near casinos as
effective competitors because they do not have the scope of products necessary
for a full service cash access money center.  Local and national banks
can provide ATM services, but they lack credit card, marker, and check cashing
products.
  Employees
  We
currently have 47 full time employees, of which 35 employees are engaged in
operations, two in sales and marketing, two in information technology and eight
in finance, administration and management functions.
  None of
our employees are covered by a collective bargaining agreement, and we believe
that we have a good relationship with our employees.
  RISK
FACTORS
  In
addition to other information included in this report, the following factors
should be considered in evaluating our business and future
prospects.
  We have approximately
$11,220,000 in indebtedness and approximately $2,120,000 in accounts payable,
commissions payable and accrued interest and expenses.  If we are
unable to satisfy these obligations, then our business will be adversely
effected.
  As of
December 31, 2007, we had indebtedness in the aggregate principal amount of
approximately $11,220,000 and accounts payable and accrued expenses of
approximately $2,120,000.  Though our operating profits are sufficient
to meet our current obligations under our credit facilities, if we become unable
to satisfy these obligations, then our business will be adversely
affected.  Certain of these obligations are secured by security
interests in substantially all of our assets granted to the
lender.  Accordingly, if we are unable to satisfy these obligations,
then our lender may sell our assets to satisfy the amounts due under these
loans.  Any such action would have an adverse effect on our
business.
  Our independent auditors
have raised substantial doubt about our ability to continue as a going
concern.
  Due to
our accumulated deficit of $24,400,337 as of December 31, 2007, and our net
losses and cash used in operations of $3,580,675 and $1,211,022, respectively,
for the year ended December 31, 2007, our independent auditors have raised
substantial doubt about our ability to continue as a going
concern.  While we believe that our present plan of operations will be
profitable and will generate positive cash flow, we may not generate net income
or positive cash flow in 2008 or at any time in the future.
  We have had a history of
losses and may experience continued losses in the foreseeable
future.
  For the
year ended December 31, 2007 we incurred a net loss of $3,580,675 and for the
year ended December 31, 2006, we incurred a net loss of
$4,342,466.  We expect to incur losses for the year ending December
31, 2008.  If we are unable to increase revenues from existing and new
contracts while controlling costs, our losses may be greater than we anticipate
and we may have insufficient capital to meet our obligations.
  Our business is concentrated
in the gaming industry.
  Our
business currently is concentrated in the casino gaming industry, and our plan
of operation contemplates that we will continue to focus on operations in
casinos and other gaming locations.  Accordingly, a decline in the
popularity of gaming or the rate of expansion of the gaming industry, changes in
laws or regulations affecting casinos and related operations or the occurrence
of other adverse changes in the gaming industry, would have a material adverse
effect on operations.
  8
 Most of our agreements with
casinos are of a short duration and may not be renewed.
  Our
agreements with casino operators typically have initial terms of one to five
years, with renewal clauses.  It is likely that one or more of our
casino customers will elect not to renew their contracts.  We rely
principally on our relationships with the casino operators, rather than on the
terms of our contracts, for the continued operation of our funds transfer
services.  However, if our contracts expire and customers do not elect
to renew them, and we have not entered into sufficient contracts with new
customers to replace the lost revenues, then our revenues will be adversely
affected.
  Our contracts with Native
American tribes are subject to claims of sovereign immunity.
  We have
entered into agreements with Native American tribes.  Native American
tribes in the United States generally enjoy sovereign immunity from lawsuits,
similar to that of the United States government.  The law regarding
sovereign immunity is unsettled.  Though some of our contracts provide
for a limited waiver of immunity for the enforcement of our contractual rights,
if any Native American tribe defaults on our agreements and successfully asserts
its right of sovereign immunity, our ability to recover our investment, or to
originate and sell future Native American Gaming transactions, could be
materially adversely affected.
  We derive a significant
portion of our revenues from a few customers and the loss of one or more of
these contracts could have a significant adverse effect on our financial
results.
  We are
dependent on a limited number of customers for a significant portion of our
revenue and gross profit.  For the year ended December 31, 2007,
approximately 63% of total revenues were derived from operations at two full
service casinos.  Two other customers represented approximately 20% of
our total revenues for the year ended December 31, 2007.
 
 The loss
of any of the other four major customers would result in an immediate material
reduction in our revenues and gross profit.
  We face collection risks in
cashing checks presented by casino patrons.
  Like all
companies engaged in the funds transfer business, we face certain collection
risks, especially with respect to check cashing services.  We attempt
to minimize collection risks by utilizing disciplined procedures in processing
transactions.  Nevertheless, our operations would be adversely
affected by any material increase in aggregate collection
losses.  Though we have been effective in managing our credit risk in
the past, it is possible that we might incur significant losses with respect to
our check cashing services in the future and such losses could have a material,
adverse effect on our financial condition.
  We are subject to licensing
requirements and other regulations.
  We are
subject to licensing requirements and other regulations in many states and by
Native American tribal entities.  Regulators have significant
discretion to deny or revoke licenses.  If we are unable to obtain a
license required to do business in a certain state or with a certain Native
American tribe, or if such a license is revoked, there would be significant
negative consequences, including possible similar action by other regulatory
entities.  In addition, government laws and regulations may include
limitations on fees charged to consumers for cash access services (although no
such limitations currently exist).  Changes in laws and regulations
could have a material, adverse effect on our operations.
  The exercise of stock
options and warrants at prices below the market price of our common stock could
cause a decrease or create a ceiling on the market price of our common
stock.
  We have
issued and outstanding stock options and warrants exercisable for 9,730,380
shares of our common stock at prices below our current market price, with an
average exercise price of $ 0.03 per share.  The existence of these
options may have a depressing effect on the market price of our common stock,
and the exercise of these options, if accompanied by a sale of the shares of
common stock issued on exercise, may result in a decrease in the market price of
our common stock.
  9
 Our success depends on
market acceptance of our products and services.
  We
believe that our ability to increase revenues, cash flow and profitability will
depend, in part, upon continued market acceptance of our products and services,
particularly our credit card cash advance products, POS Debit, CreditPlus, ATM
and check cashing products.  We cannot predict whether market
acceptance of our existing products and services will continue or that our new
products and services will receive any acceptance from the
marketplace.  Changes in market conditions in the gaming industry and
in the financial condition of casino operators, such as consolidation within the
industry or other factors, could limit or decrease market acceptance of our
products and services.  Most of our business is based on one to five
year agreements with casino operators.  We have been successful in
renewing these agreements and in attracting new customers.  However,
insufficient market acceptance of our products and services could have a
material, adverse effect on our business, financial condition and results of
operations.
  Our success will be largely
dependent upon our key executive officers and other key
personnel.
  Our
success will be largely dependent upon the continued employment of our key
executive officers and, particularly, our continued employment of Christopher M.
Wolfington.  The loss of Mr. Wolfington's services would have a
material adverse effect on our operation.  Although Mr. Wolfington has
entered into an employment agreement with us, and owns approximately 53.7% of
our issued and outstanding common stock, it is possible that Mr. Wolfington
would not continue his employment with us.  In addition, we do not
presently maintain insurance on Mr. Wolfington's life.  Although we
believe that we would be able to locate a suitable replacement for Mr.
Wolfington if his services were lost, we may not be able to do so.  In
addition, our future operating results will substantially depend upon our
ability to attract and retain highly qualified management, financial, technical
and administrative personnel.  Competition for highly talented
personnel is intense and can lead to increased compensation
expenses.  We may not be able to attract and retain the personnel
necessary for the development of our business.
  We will be in competition
with companies that are larger, more established and better capitalized than we
are.
  The cash
access services industry is highly competitive, rapidly evolving and subject to
constant change.  Our principal competitors in the credit/debit card
cash advance area are Global Cash Access, Inc., Global Payment, Inc.’s Cash
& Win Service, Certegy, Inc.’s Game Financial Corporation subsidiary and
Cash Systems, Inc.  Some of our competitors have:
  ·
              greater
      financial, technical, personnel, promotional and marketing
      resources;
  ·
              longer
      operating histories;
  ·
              greater
      name recognition; and
  ·
              larger
      consumer bases than us.
  We
believe that existing competitors are likely to continue to expand their
products and service offerings.  Moreover, because there are few,
substantial barriers to entry, we expect that new competitors are likely to
enter the cash access services market and attempt to market financial products
and services similar to our products and services, which would result in greater
competition.  We may not be able to compete successfully with these
new or existing competitors.
  Shares of our common stock
lack a significant trading market.
  Shares of
our common stock are not eligible for trading on any national or regional
exchange.  Our common stock is eligible for trading in the
over-the-counter market on the Over-The-Counter Bulletin Board.  This
market tends to be highly illiquid.  There are currently no plans,
proposals, arrangements or understandings with any person with regard to the
development of a trading market in our common stock.  An active
trading market in our common stock may not develop, or if such a market
develops, may not be sustained.  In addition, there is a greater
chance for market volatility for securities that trade on the Over-The-Counter
Bulletin Board as opposed to securities that trade on a national exchange or
quotation system.  This volatility may be caused by a variety of
factors, including the lack of readily available quotations, the absence of
consistent administrative supervision of  "bid" and "ask" quotations
and generally lower trading volume.
  10
 Ownership of our stock by
one person means that our other shareholders have no effective ability to elect
directors or otherwise influence management.
  One
person controls a majority of our capital stock.  Christopher M.
Wolfington owns approximately 53.7% of our issued and outstanding capital
stock.  As a result, Mr. Wolfington has the ability to control
substantially all matters submitted to our shareholders for approval (including
the election and removal of directors and any merger, consolidation or sale of
all or substantially all of our assets), to elect himself as Chairman, Chief
Executive Officer and Treasurer and to control our management and
affairs.  This concentration of ownership may have the effect of
delaying, deferring or preventing a change in control, or impeding a merger,
consolidation, takeover or other business.
  Our shares of common stock
are subject to penny stock regulation.
  Holders
of shares of our common stock may have difficulty selling those shares because
our common stock will probably be subject to the penny stock
rules.  Shares of our common stock are subject to rules adopted by the
Securities and Exchange Commission that regulate broker-dealer practices in
connection with transactions in "penny stocks."  Penny stocks are
generally equity securities with a price of less than $5.00 which are not
registered on certain national securities exchanges or quoted on the NASDAQ
system, provided that current price and volume information with respect to
transactions in those securities is provided by the exchange or
system.  The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from those rules, to deliver a
standardized risk disclosure document prepared by the Securities and Exchange
Commission, which contains the following:
  ·
              a
      description of the nature and level of risk in the market for penny stocks
      in both public offerings and secondary
trading;
  ·
              a
      description of the broker's or dealer's duties to the customer and of the
      rights and remedies available to the customer with respect to violation to
      such duties or other requirements of securities
  laws;
  ·
              a
      brief, clear, narrative description of a dealer market, including "bid"
      and "ask" prices for penny stocks and the significance of the spread
      between the "bid" and "ask" price;
  ·
              a
      toll-free telephone number for inquiries on disciplinary
      actions;
  ·
              definitions
      of significant terms in the disclosure document or in the conduct of
      trading in penny stocks; and
  ·
              such
      other information and is in such form (including language, type, size and
      format), as the Securities and Exchange Commission shall require by rule
      or regulation.
  Prior to
effecting any transaction in penny stock, the broker-dealer also must provide
the customer with the following:
  ·
              the
      bid and offer quotations for the penny
stock;
  ·
              the
      compensation of the broker-dealer and its salesperson in the
      transaction;
  ·
              the
      number of shares to which such bid and ask prices apply, or other
      comparable information relating to the depth and liquidity of the market
      for such stock; and
  ·
              monthly
      account statements showing the market value of each penny stock held in
      the customer's account.
  In
addition, the penny stock rules require that, prior to a transaction in a penny
stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability
statement.  These disclosure requirements may have the effect of
reducing the trading activity in the secondary market for a stock that becomes
subject to the penny stock rules.
  11
 A provision in our Amended
and Restated Certificate of Incorporation requires 5% holders of our common
stock to consent to background checks by state and Native American regulators
and statutory provisions to which we are subject may have the effect of
deterring potential acquisition proposals.
  Many of
the regulatory authorities that approve our licensing and many of the Native
American tribes with which we may do business perform background checks on our
directors, officers and principal shareholders.  As a consequence, our
Amended and Restated Certificate of Incorporation provides that a person may not
hold 5% or more of our securities without first agreeing to:
  ·
              consent
      to a background investigation;
  ·
              provide
      a financial statement; and
  ·
              respond
      to questions from gaming regulators and/or Native American
      tribes.
  Stockholders
holding less than 5% of our outstanding securities could also be subject to the
same requirements.  Such requirements could discourage acquisition of
large blocks of our securities, could depress the trading price of our common
stock and could possibly deter any potential purchaser of us.
  Our
directors may be subject to investigation and review by gaming regulators in
jurisdictions where we are licensed or have applied for a
license.  Such investigation and review of our directors may have an
anti-takeover effect.
  We do not intend to pay cash
dividends on our shares of common stock.
  The
future payment of dividends will be at the discretion of our Board of Directors
and will depend on our future earnings, financial requirements and other
similarly unpredictable factors.  For the foreseeable future, we
anticipate that any earnings that may be generated from our operations will be
retained by us to finance and develop our business and that dividends will not
be paid to stockholders.  Accordingly, the only income that our
stockholders may receive will be derived from the growth of our stock price, if
any.
  ITEM
      2.
              DESCRIPTION
      OF PROPERTY
  Our
corporate headquarters is located at 700 South Henderson Road, Suite 325, King
of Prussia, Pennsylvania 19406 and occupies approximately 1,800 square feet of
office space.  These offices are located in a building owned by
affiliates of our chief executive officer. This is on a month to month lease of
approximately $2,800 per month. We also have an equipment staging and technology
office located in Golden Valley, Minnesota.  The current lease
obligation for the Minnesota office is approximately $770 per
month.  We believe that our current facilities are adequate to conduct
our business operations for the foreseeable future.  If these premises
were no longer available to us, we believe that we could find other suitable
premises without any material adverse impact on our operations.
  ITEM
      3.
              LEGAL
      PROCEEDINGS
  On or
about August 28, 2007 , The Campo Band of Kumeyaay Indians d/b/a The Golden
Acorn Casino (the "Casino"), commenced an Arbitration proceeding before the JAMS
Arbitration service in San Diego.  In its Demand for Arbitration, the
Casino alleges that Money Centers of America, Inc. ("MCA") breached its
Financial Services Agreement with the Casino.  The Casino seeks
damages in excess of $950,000.  MCA believes the Casino's claims lack
merit and intends to vigorously defend them.  MCA believes the Casino
wrongfully terminated the Financial Services Agreement almost three years prior
to the conclusion of its contractually agreed upon renewal term.  MCA
has therefore filed a counterclaim against the Casino and seeks to
recover by way of offset or otherwise approximately $800,000 in damages
which resulted from the Casino's wrongful early termination of the Financial
Service Agreement.
 
 In
addition, we are, from time to time during the normal course of our business
operations, subject to various litigation claims and legal
disputes.  We do not believe that the ultimate disposition of any of
these matters will have a material adverse effect on our consolidated financial
position, results of operations or liquidity.
  ITEM
      4.
              SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY
HOLDERS
  None.
  12
 PART  II
  ITEM
      5.
              MARKET
      FOR COMMON EQUITY AND RELATED SHAREHOLDER
  MATTERS
  Our
common stock is currently quoted on the Over-The-Counter Bulletin Board under
the symbol “MCAM.OB.”
  Market
Information
  Our
shares of common stock were first quoted on the Over-The-Counter Bulletin Board
on October 14, 2002. The following table presents the high and low bid prices
per share of our common stock as quoted for the years ended December 31, 2007
and December 31, 2006, which information was provided by NASDAQ Trading and
Market Services.
  Year
      ending December 31, 2007Quarter
      ended:
              High
      Bid
              Low
      BidDecember
      31, 2007
              0.35
              0.12September
      30, 2007
              0.37
              0.17June 30, 2007
              0.60
              0.26March 31, 2007
              0.55
              0.33
   Year
      ended December 31, 2006Quarter
      ended:
              High
      Bid
              Low
      BidMarch 31, 2006
              0.70
              0.14June 30, 2006
              0.38
              0.28September 30,
2006
              0.43
              0.25December 31, 2006
              0.37
              0.32
  The
above quotations reflect inter-dealer prices, without retail mark-up, markdown
or commission and may not reflect actual transactions.  On March 31,
2008, the closing bid price for our common stock was $0.24 per
share.
  Holders
  As of
December 31, 2007, we had 60 stockholders of record of our common
stock.  Such number of record holders was derived from the records
maintained by our transfer agent, Florida Atlantic Stock Transfer.
  Dividends
  To date,
we have not declared or paid any cash dividends and do not intend to do so for
the foreseeable future.  Prior to our acquisition by iGames in January
2004, we paid dividends to our shareholders.  In January 2004, prior
to the acquisition, these dividends were approximately $270,010.  In
the future we intend to retain all earnings, if any, to finance the continued
development of our business.  Any future payment of dividends will be
determined solely in the discretion of our Board of Directors.
  Securities Authorized for
Issuance Under Equity Compensation Plans
  Number
      of securities to be issued upon exercise of outstanding options, warrants
      and rights
              
              
              Weighted
      average exercise price of outstanding options, warrants and
      rights
              
              
              Number
      of securities remaining available for future issuance under equity
      compensation plansEquity
      compensation plans approved by security holders
              
              
              $8,918,280
              
              
              
              $0.12
              
              
              
              0Equity
      compensation plans not approved by security holders
              
              
              $0
              
              
              
              $0
              
              
              
              0Total
              
              
              $8,918,280
              
              
              
              $0.12
              
              
              
              0
  There
were no other securities authorized for issuance under equity compensation plans
at December 31, 2007.
  13
  ITEM
      6.
              MANAGEMENT'S
      DISCUSSION AND ANALYSIS
  The
following discussion and analysis of the results of operations, financial
condition and liquidity should be read in conjunction with our consolidated
financial statements and notes thereto appearing elsewhere in this
prospectus.  These statements have been prepared in accordance with
accounting principles generally accepted in the United States.  These
principles require us to make certain estimates, judgments and assumptions that
affect the reported amount of assets, liabilities, revenues and expenses, and
related disclosure of contingent assets and related liabilities.  On a
going forward basis, we evaluate our estimates based on historical experience
and various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
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.
  History
  We are a
single source provider of cash access services to the gaming
industry.  We combine advanced technology with personalized customer
services to deliver ATM, credit card advance, POS debit card advance, Check
Cashing Services and CreditPlus marker services on an outsourcing basis to
casinos, license our OnSwitchTM
transaction management system to casinos and merchant card
processing.
  We were
formed as a Delaware corporation in 1997.  Prior to March 2001, we
were a development company focusing on the completion of a Point of Sale ("POS")
transaction management system for the gaming industry.  In March 2001,
we commenced operations with the launch of the POS system at the Paragon Casino
in Marksville, LA.
  Current
Overview
  Our core
business of providing single source full service cash access services in the
gaming industry continues to be the major source of our revenue and profits in
2007.  We have also launched several new services in the last 27
months, such as OnSwitchTM and
Omni Network that have helped to differentiate our product offering in the
marketplace.  Our core business generates revenues from transaction
fees associated with each unique service we provide, including ATMs, credit card
advances, POS Debit, check cashing, markers and various other financial
instruments.  We receive our fees from either the casino operator or
the consumer who is requesting access to their funds.  The pricing of
each transaction type is determined by evaluating risk and costs associated with
the transaction in question.  Accordingly, our transaction fees have a
profit component built into them.  Furthermore, reimbursement for
electronic transactions are guaranteed by the credit or debit networks and
associations that process the transactions as long as procedures are followed,
thereby reducing the period of time that trade accounts receivable are
outstanding to several days.
  14
 We
deployed our OnSwitchTM
Transaction Management System (OnSwitchTM) in
January 2006.  There were several barriers to the first
sale.  First, no company has ever offered a product to the casino
market like OnSwitchTM.  With
OnSwitchTM, the
casinocan actually control their own cash access.  MCA
surpassed the first barrier when we sold our first OnSwitchTM in December 2007
to the Rolling Hills Casino.  The second barrier to entry is
prospective casino customers would like to see OnSwitchTM "live" and
in operation in a casino.  MCA expects to cross this next barrier shortly
when we have fully deployed OnSwitchTM in the
second quarter of 2008 at the Rolling Hills Casino.  MCA has several
casinos far along in the OnSwitchTM sales process and
management feels once we have OnSwitchTMfully
deployed at the Rolling Hills Casino, we will have additional signings shortly
thereafter.
  Companies
providing cash access services to the gaming industry face some unique
challenges and opportunities in the next ten years.  Many companies in
the industry have merged, been acquired or have recapitalized in order to
capitalize on the trends identified in the gaming industry.
  Historically,
providers of cash access services to the gaming industry had cash flow margins
that were generally higher than those experienced in the funds transfer and
processing industries.  Growing competition and the maturing of the
market has resulted in a decline in these margins as companies have begun
marketing their services based on price rather than innovation or value added
services.  This trend is highlighted by the number of companies that
promote revenue growth and an increased account base but experience little
increase in net income.  This trend is magnified by the fact that the
largest participant in the industry has close to 81% market share and has begun
to forgo margin in order to retain business.  Companies that can adapt
to the changing market and can create innovative products and services stand at
the forefront of a new wave in revenue and profit growth.
  Substantially
all gaming facilities provide ATM services, credit card cash advances, debit,
and/or check cashing services to their customers.  Services are
typically outsourced and provided on an exclusive basis for an average of two to
five years.  Each year, approximately 400 accounts totaling $300
million in revenue are put out to bid.  Currently there are five major
companies, including us, that have proprietary systems to compete for this
business.  Although this market has matured from a pricing
perspective, the demand for the services from the end user is still
strong.
  Like most
maturing markets, the companies that succeed are those that are capable of
reinventing themselves and the markets they serve.  We believe that
smaller gaming properties will always look to have cash access services provided
in the traditional manner.  However, there are several major trends
occurring in the gaming industry that will have a major impact on our industry
and will determine which companies emerge as industry leaders:
  1.
              Consolidation
      of major casino companies that will put pressure on other major casino
      companies to follow suit and will put pressure on smaller casino companies
      to focus on service and value added amenities in order to
      compete.
  The trend
towards consolidation of the major gaming companies has continued and will make
it difficult to continue to offer our services in the traditional
manner.  The economics are too compelling for the gaming operators not
to consider internalizing these operations in order to generate additional
revenue and profits to service the debt associated with the
consolidation.  Our preparation has continued to position us to
capitalize on this trend.  We have prepared for this change and have
already begun to offer our systems and services through licensing OnSwitchTM , our
transaction management system.  In addition to outsourcing the cash
services operations, we now offer turn-key processing capabilities for internal
use by the casino.  This means casinos will license our technology so
they can operate and maintain their own cash access services, including the
addition of their merchant card processing.  Our size makes us
uniquely capable of adapting to this change.  Though the license
agreements do not have the same revenue potential as a traditional cash services
contract, the net income derived from these agreements is higher, the user
agreements are for a longer period of time and we do not have the same capital
expenditures or vault cash requirements that we experience in performing
traditional cash access services.  Furthermore, our larger competitors
have spent years trying to conceal the economic benefits of this type of
offering because their large infrastructure is designed to only support an
outsourced solution.
  2.
              Ticket
      In-Ticket Out technology growth exceeding
  expectations.
  The first
major casino company to remove coins from the casino floor was Caesars Palace in
Atlantic City, NJ.  Since then, slot machine manufacturers have
developed a technology that prints and accepts bar-coded tickets at the slot
machine instead of accepting or dispensing coins.  It was originally
anticipated that it would take 10-15 years for the industry to fully adopt this
technology.  It appears it may only take half this amount of
time.  This presents a problem to casino operators.  They
now have tens of thousands of bar-coded tickets a day that need to be redeemed
for cash.  This has paved the way for self-service ticket redemption
technology so customers do not have to go to the casino cage in order to redeem
their tickets.  The initial ticket redemption machines placed in
service have proven to be too big and too expensive.  Most casino
operators have to wait until budget season to appropriate the necessary funds in
order to even consider the acquisition of the required equipment.  We
believe this functionality will ultimately reside on the ATM machine thus
eliminating the requirement to purchase new equipment and eliminating the need
to remove a slot machine to make room for a stand-alone ticket redemption
device.  We are developing technology that will allow
ticket-redemption functionality on our cash access devices.  There is
still the problem of security with the bar-coded ticket, which is as good as
cash.  Many casino operators will refuse to allow vendors to handle
the tickets for security and fraud concerns.  This is an additional
economic benefit of our plan to have the casino operator internalize their cash
access services because only the casino's personnel will handle the tickets in
the situations where they are licensing our services.
  15
 3.
              Execution
      of long-term and stable compacts for Native American casinos in numerous
      state jurisdictions has made traditional capital more readily available
      paving the way for a new wave of expansion and the resulting need for new
      sources of revenue and customer
amenities.
  Recent
shortfalls in state budgets have brought the tribal and state governments
together to execute long-term compacts that meet the financial needs of both
parties.  In recent years, California, Arizona, New Mexico and
Wisconsin are just a few examples of this development.  The added
financial stability for Native American casinos has made traditional capital
more readily available to tribes, leading many tribes to undertake expansion of
casino facilities and operations.
  In order
to support this expansion, Native American casino operators will seek new
sources of revenues and new amenities to attract and retain more quality
customers.  One of the most critical customer amenities in casino
operations is the availability of credit.  Traditional gaming markets,
such as Las Vegas and Atlantic City, rely on credit issuance for up to 40% of
their revenues.  These markets issue credit internally and rely on
specialized credit reporting in their risk management
decisions.  Significant capital investment in technology is required
for these transactions to be executed efficiently.  However, within
the $15 billion dollar Native American Gaming market there are virtually no
credit services currently available.  Approximately 26 of 29 states
that have approved Native American Gaming do not allow Native American tribes or
their respective casinos to issue credit.  The lack of credit play is
also due to the lack of a third party credit issuer that is capable of
facilitating the transactions.  Our CreditPlus platform allows Native
American casinos to issue credit to players, providing Native American casinos
with a guest amenity that is already widely accepted in traditional
jurisdictions.  Our ability to convert this market opportunity into
revenue is largely dependent on the success of our sales efforts in educating
casinos in the Native American Gaming market regarding the advantages of
CreditPlus and its compliance with the regulatory requirements.
  Our Cash
Services Host Program is uniquely aimed at capitalizing on the need for new
profitable guest amenities.  Where most guest amenities require
additional expenses, this service helps the casino operator generate more
revenues.  This service allows customers to facilitate cash access
transactions from the slot machine or gaming table.  Our hosts are
available to bring the transaction to the guest, which is viewed as a valuable
customer amenity, while driving more money to the gaming floor for the casino
operator.
  Organic
growth through sales by internal salespeople is usually the most efficient and
profitable growth strategy in the cash services business.  Much of our
historical growth has occurred in this manner.  We realize that
recognizing industry trends is no assurance of success.  We have also
complimented our internal sales strategy by creating relationships with
independent sales organizations that have established relationships with gaming
operators nationwide.  Although our sales commissions will be higher
at gaming establishments entered through this sales channel, we will not be
burdened with the up-front salary, travel and entertainment costs associated
with the traditional internal sales approach.
  This
parallel strategy of sales and product development is capital intensive and
presents substantial risk.  There is no guarantee that we will be able
to manage all three strategies effectively.
  We
believe that it is necessary to increase our working capital position so that we
can capitalize on the profitable trends in the industry while maintaining and
servicing our current customer base and integrating acquired operations such as
Available Money, Inc. (“Available Money”), which we acquired in April of
2004.  Without sufficient working capital, we would be forced to
utilize working capital to support revenue growth at the expense of executing on
our integration and conversion plans.  This would result in
substantially higher operating costs without the assurance of additional
revenues to support such costs.
  16
 Critical
Accounting Policies
  In
presenting our financial statements in conformity with accounting principles
generally accepted in the United States, we are required to make estimates and
assumptions that affect the amounts reported therein.  Several of the
estimates and assumptions we are required to make relate to matters that are
inherently uncertain as they pertain to future events.  However,
events that are outside of our control cannot be predicted and, as such, they
cannot be contemplated in evaluating such estimates and
assumptions.  If there is a significant unfavorable change to current
conditions, it will likely result in a material adverse impact to our
consolidated results of operations, financial position and in
liquidity.  We believe that the estimates and assumptions we used when
preparing our financial statements were the most appropriate at that
time.  Presented below are those accounting policies that we believe
require subjective and complex judgments that could potentially affect reported
results.
  Revenue
Recognition.  In general, we record revenue when persuasive
evidence of an arrangement exists, services have been rendered or product
delivery has occurred, the sales price to the customer is fixed or determinable,
and collectability is reasonably assured.  The following
policies reflect specific criteria for our various revenue
streams:
  ATM’s and Credit
Cards.  Fees earned from ATM and credit card advances are
recorded on the date of transaction.
  Check
Cashing:  Revenue is recorded from the fees on check cashing
services on the date the check is cashed.  If a customer’s check is
returned by the bank on which it is drawn, the full amount of the check is
charged as bad debt loss.  The check is subsequently resubmitted to
the bank for payment.  If the bank honors it, the amount of the check
is recognized as negative bad debt expense.
  Check Cashing Bad
Debt.  The principal source of bad debts that we experience are
due to checks presented by casino patrons that are ultimately returned by the
drawer's bank for insufficient funds.  We account for these check
cashing bad debts on a cash basis.  Fees charged for check cashing are
recorded as income on the date the check is cashed.  If a check is
returned by the bank on which it is drawn, we charge the full amount of the
check as a bad debt loss.  If the bank subsequently honors the check,
we recognize the amount of the check as a negative bad debt.  Based on
the quick turnaround of the check being returned by the bank on which it is
drawn and our resubmission to the bank for payment, we feel this method
approximates the allowance method, which is a Generally Accepted Accounting
Principle.
  Goodwill and Long-Lived
Intangible Assets.  The carrying value of goodwill as well as
other long-lived intangible assets such as contracts with casinos is reviewed if
the facts and circumstances suggest that they may be impaired.  With
respect to contract rights in particular, which have defined terms, this will
result in an annual adjustment based on the remaining term of the
contract.  If this review indicates that the assets will not be
recoverable, as determined based on our discounted estimated cash flows over the
remaining amortization period, then the carrying values of the assets are
reduced to their estimated fair values.  Effective January 1, 2002, we
adopted Statement of Financial Accounting Standards No. 142, "Goodwill And Other
Intangible Assets" which eliminates amortization of goodwill and certain other
intangible assets and requires annual testing for impairment.  The
calculation of fair value includes a number of estimates and assumptions,
including projections of future income and cash flows, determining remaining
contract periods and the choice of an appropriate discount rate.  In
our experience, forecasts of cash flows based on historical results are
relatively dependable.  We use the remaining contract term for
estimating contract periods, which may vary from actual experience due to early
terminations that cannot be forecast.  We use our current cost of
funds, which is a variable rate, as the discount rate.  Use of a
higher discount rate would have the effect of reducing the calculated fair
value, while use of a lower rate would increase the calculated fair
value.  In connection with the acquisition of Available Money (our
only acquired reporting unit), goodwill was allocated based on the excess of the
final purchase price over the value of the acquired contract rights, determined
as described above.
  Stock Based
Compensation.  Effective January 1, 2006, the Company adopted
the provisions of SFAS No. 123(R), "Share-Based Payment," under the modified
prospective method.  SFAS No. 123(R) eliminates accounting for
share-based compensation transactions using the intrinsic value method
prescribed under APB Opinion No. 25 "Accounting for Stock Issued to Employees,"
and requires instead that such transactions be accounted for using a
fair-value-based method.  Under the modified prospective method, the
Company is required to recognize compensation cost for share-based payment to
employees based on their grant date fair value from the beginning of the fiscal
period in which the recognition provisions are first applied.  For
periods prior to adoption, the financial statements are unchanged, and the pro
forma disclosures previously required by SFAS No. 123, as amended by SFAS No.
148, will continue to be required under SFAS No. 123(R) to the extent those
amounts differ from those in the Statement of Operations.
  17
  Results
of Operations
  Year
Ended December 31, 2007 vs. Year Ended December 31, 2006
 
 Year
      Ended
                  December
      31, 2007
                  ($)
              
              
              Year
      Ended
                  December
      31, 2006
                  ($)
              
              
              Change
      ($)Net
      loss
              
              
              (3,580,675
              )
              
              
              (4,342,466
              )
              
              
              761,791Revenues
              
              
              8,694,549
              
              
              
              11,721,752
              
              
              
              (3,027,203
              )Cost
      of services
              
              
              7,016,784
              
              
              
              9,471,763
              
              
              
              (2,454,979
              )Commissions
      & Rents Paid
              
              
              3,720,508
              
              
              
              5,409,907
              
              
              
              (1,689,399
              )Wages
      & Benefits
              
              
              1,644,920
              
              
              
              2,135,686
              
              
              
              (490,766
              )Processing
      Fee & Service Charges
              
              
              1,041,720
              
              
              
              1,250,505
              
              
              
              (208,785
              )Bad
      Debts
              
              
              141,389
              
              
              
              92,953
              
              
              
              48,436ATM
      Lease Fees & Maintenance
              
              
              180,358
              
              
              
              197,166
              
              
              
              (16,808
              )Cash
      Replenishment Services
              
              
              92,703
              
              
              
              119,604
              
              
              
              (26,901
              )Other
              
              
              195,186
              
              
              
              265,942
              
              
              
              (70,756
              )Gross
      Profit
              
              
              1,677,765
              
              
              
              2,249,989
              
              
              
              (572,224
              )Selling,
      General and Administrative Expenses
              
              
              1,857,361
              
              
              
              1,968,572
              
              
              
              (111,211
              )Management
      Compensation
              
              
              693,309
              
              
              
              691,175
              
              
              
              2,134Professional
      Fees
              
              
              357,722
              
              
              
              237,101
              
              
              
              120,621Travel
              
              
              189,535
              
              
              
              254,133
              
              
              
              (64,598
              )Other
              
              
              616,795
              
              
              
              786,163
              
              
              
              (169,368
              )Noncash
      compensation
              
              
              1,124,100
              
              
              
              2,111,402
              
              
              
              (987,302Depreciation
      and amortization
              
              
              894,353
              
              
              
              355,309
              
              
              
              539,044Loss
      on impairment of goodwill
              
              
              -
              
              
              
              203,124
              
              
              
              (203,124
              )Settlement
      expenses
              
              
              5,000
              
              
              
              210,000
              
              
              
              (205,000
              )Interest
      expense, net
              
              
              (1,521,179
              )
              
              
              (1,849,740
              )
              
              
              (328,561
              )Other
      income (expenses)
              
              
              143,553
              
              
              
              105,692
              
              
              
              37,861
  Our net
loss decreased by approximately $760,000 for the year ended December 31,
2007  primarily due to a decrease  in revenue from the loss
of the Sycuan and Campo contracts in 2006 offset by a decrease in non cash
compensation of approximately $1 million.
  Our
revenues as a whole decreased by approximately 25.8% during the year ended
December 31, 2007 as compared to the year ended December 31, 2006. The Money
Centers portfolio (consisting primarily of full-service casino contracts)
decreased 22% or $2,094,000.  Approximately $2,000,000 of this
reflected the loss of the Sycuan contract which de-installed on May 9, 2006 and
approximately $630,000 reflected the loss of the Campo contract in the 4th quarter
of 2006.  We had the addition of $212,000 in revenues from new
contracts, while the remaining Money Centers casinos had increased same store
sales of 4% from same period last year. The Available Money portfolio
(consisting of ATM contracts) decreased 44% or $929,849.
  Our
selling, general and administrative expenses decreased by approximately $111,000
during the year ended December 31, 2007 due to decreases in every category
except legal. Our depreciation and amortization expenses increased
substantially during the year ended December 31, 2007 primarily due to the
amortization of our financing costs related to the recapitalization in December
of 2006.
  Our
interest expense decreased $328,561 during the year ended December 31, 2007
mostly due to a decrease in the interest rate we are paying on our long-term
debt as a result of the refinance that took place in December
2006.  In addition, we did not incur any non-cash interest expense in
2007 as opposed to $147,902 of noncash interest expense in
2006.
  Other
income (expenses) in 2007 were approximately $38,000 more because
we  did not have expenses in 2007 equivalent to the one time expenses
incurred in 2006 related to the closing down of our operations at the Sycuan
Casino in 2006.
  18
  Off-Balance
Sheet Arrangements
  There
were no off-balance sheet arrangements during the year ended December 31, 2007
that have or are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that
is material to our investors.
  Changes
in Financial Position, Liquidity and Capital Resources
  Year
      ended
                  December
      31, 2007
                  ($)
              
              
              Year
      ended
                  December
      31, 2006
                  ($)
              
              
              Change
      ($)Net
      Cash (Used in) Provided by Operating Activities
              
              
              (1,211,022
              )
              
              
              (1,393,259
              )
              
              
              182,237Net
      Cash Used in Investing Activities
              
              
              (211,241
              )
              
              
              (524,560
              )
              
              
              313,319Net
      Cash Provided by Financing Activities
              
              
              (669,490
              )
              
              
              272,354
              
              
              
              (941,844
              )
  Net cash
used in operations decreased by approximately $182,000 , primarily due to
an decrease in our net loss combined with an increase in depreciation,
amortization and deferred revenue offset by a decrease in issuance of stock and
options for services . Net cash used in investing activities decreased due to
the fact that we did not have financing costs and our expenses related to
development of OnSwitchTM decreased
significantly in 2007.
  Net cash
provided by financing activities decreased during the year ended December 31,
2007 primarily due to the fact that we did not have any major borrowings in 2007
and we completed a major refinance in 2006.
  A
significant portion of our existing indebtedness prior to December 28, 2006 was
associated with our vault cash line of credit of $7,000,000 with Mercantile
Capital, L.P., which we used to provide vault cash for our casino operations at
most locations. Vault cash is the money necessary to fund the float, or money in
transit, that exists when customers utilize our services but we have yet to be
reimbursed from the Debit, Credit Card Cash Advance, or ATM networks for
executing the transactions. Although these funds are generally reimbursed within
24-48 hours, a significant amount of cash is required to fund our operations due
to the magnitude of our transaction volume. Our vault cash loan accrued interest
at the base commercial lending rate of Wilmington Trust Company of Pennsylvania
plus 10.75% per annum on the outstanding principal balance, with a minimum rate
of 15% per annum, and had a maturity date of May 31, 2006.  Vault cash
for our ATM operations at locations where we do not provide full cash access
services (primarily Available Money customers) is provided by our ATM processing
provider under the terms of the ATM processing agreement, at a cost equal to the
ATM processor's cost of funds, which currently is the Prime Rate.
  On
December 28, 2006, the Mercantile line of credit was converted to a $2,525,000
term loan maturing December 31, 2008 and bearing interest at 12.75%, payable
monthly.  The principal balance due to Mercantile above $2,525,000 was
repaid with a portion of the proceeds from a $4,750,000 term loan from Baena
Advisors, LLC.  This loan bears interest at 30-day LIBOR plus 13%,
payable monthly, and is due February 28, 2009.
  In
September and October 2005 we borrowed $800,000 from individuals, including the
uncle and brother of our Chief Executive Officer, pursuant to convertible notes
that bore interest at 10% per annum and matured in September and October of
2006.  $550,000 of this amount has been repaid.  We have
reached an agreement in principle to refinance the remaining $250,000, together
with accrued interest, by a $300,000 increase in the Baena Advisors
facility.
  In
addition, two of our casino customers provide vault cash lines of credit for our
activities at their casinos.  These facilities are unsecured and bear
interest rates ranging from zero to approximately 3.25%. Our debt is used
primarily to provide vault cash for our casino operations.  Vault cash
for our ATM operations at locations where we do not provide full cash access
services (primarily Available Money customers) is provided by our ATM processing
provider under the terms of the ATM processing agreement, at a cost equal to the
ATM processor’s cost of funds, which currently is Prime minus 5/8%.
  On
September 10, 2004, we borrowed $210,000 from the father of our chief executive
officer to pay an advance on commissions to a new casino
customer.  This loan bears interest at 10% per annum, payable
monthly.  We currently are making $5,000 principal payments per
month.  The current principal balance outstanding is
$6,000.  In addition, we issued the lender warrants to purchase 50,000
shares of our common stock at an exercise price of $.33 per share.
  19
 Though we
anticipate our operating profits will be sufficient to meet our current
obligations under our credit facilities, if we become unable to satisfy these
obligations, then our business may be adversely affected as Mercantile Capital
will have the right to sell our assets to satisfy any outstanding indebtedness
under our line of credit loan or our term loan that we are unable to
repay.
  We also
have a substantial amount of accounts payable and accrued
expenses.  To the extent that we are unable to satisfy these
obligations as they come due, we risk the loss of services from our vendors and
possible lawsuits seeking collection of amounts due.
  Our goal
is to change the way our customers view cash access services by transforming the
way casinos find, serve and retain their customers.  We will strive to
assist our customers by continuing to grow and improve everything we
do.  We require significant capital to meet these
objectives.  Our capital requirements are as follows:
  ·
              Equipment:  Each
      new account requires hardware at the location level and some additions to
      network infrastructure at our central server
  farm.
  ·
              Vault
      Cash:  All contracts in which we provide full service money
      centers and ATM accounts for which we are responsible for cash
      replenishment require vault cash.  Vault cash is the money
      necessary to fund the float that exists when we pay money to patrons but
      have yet to be reimbursed from the Debit, Credit Card Cash Advance, or ATM
      networks for executing the
transactions.
  ·
              Acquisition
      Financing:  We presently have no cash for use in completing
      additional acquisitions.  To the extent that we cannot complete
      acquisitions through the use of our equity securities, we will need to
      obtain additional indebtedness or seller financing in order to complete
      such acquisitions.
  ·
              Working
      Capital:  We will require substantial working capital to pay the
      costs associated with our expanding employee base and to service our
      growing base of customers.
  ·
              Technology
      Development:  We will continue to incur development costs
      related to the design and development of our new products and related
      technology.  We presently do not have an internal staff of
      engineers or software development experts and have outsourced this
      function to IntuiCode, LLC, a company operated by Jeremy Stein, a member
      of our Board of Directors.
  We are
actively seeking various sources of growth capital and strategic partnerships
that will assist us in achieving our business objectives.  We are also
exploring various potential financing options and other sources of working
capital.  There is no assurance that we will succeed in finding
additional sources of capital on favorable terms or at all.  To the
extent that we cannot find additional sources of capital, we may be delayed in
fully implementing our business plan.
  We do not
pay and do not intend to pay dividends on our common stock.  We
believe it to be in the best interest of our stockholders to invest all
available cash in the expansion of our business.
  Due to
our accumulated deficit of $24,400,337 as of December 31, 2007 and our net
losses and cash used in operations of $3,580,675 and $1,211,022, respectively,
for the year ended December 31, 2007, our independent auditors have raised
substantial doubt about our ability to continue as a going
concern.  While we believe that our present plan of operations will be
profitable and will generate positive cash flow, there is no assurance that we
will generate net income or positive cash flow for 2008 or at any time in the
future.
  ITEM
      7.
              FINANCIAL
      STATEMENTS
  Our
consolidated financial statements for Fiscal Years 2007 and 2006 and footnotes
related thereto may be found at pages F-1 through F-30.
  ITEM
      8.
              CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
  None.
  20
 ITEM
8A.     CONTROLS AND PROCEDURES
  Evaluation of Disclosure
Controls and Procedures
  As of
December 31, 2007, we carried out an evaluation of the effectiveness of the
design and operation of our “disclosure controls and procedures” (as defined in
the Exchange Act Rules 13a-15(e) and 15d-15(e)) under the supervision and with
the participation of our management, including Christopher M. Wolfington, our
Chief Executive Officer and Jason P. Walsh, our Chief Financial
Officer.  Based upon that evaluation, Mr. Wolfington and Mr. Walsh
concluded that our disclosure controls and procedures are
effective.
  Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms.  Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed in our reports filed under the Exchange Act
is accumulated and communicated to management to allow timely decisions
regarding required disclosure.
  Changes in Internal
Controls
  There
were no significant changes in our internal controls or, to our knowledge, in
other factors that could significantly affect our disclosure controls and
procedures subsequent to the date we carried out this evaluation.
  ITEM
8B.    OTHER INFORMATION
  None.
  21
 PART  III
  ITEM
      9.
              DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND
      CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF
      THE EXCHANGE ACT
    The
following table sets forth the names, ages and positions of our directors and
executive officers and executive officers of our subsidiary as of March 31,
2008.
  Name
              
              Age
              
              Current
      Position(s) with CompanyChristopher
      M. Wolfington
              
              43
              
              Chairman
      of the Board of Directors, Chief Executive Officer and
      PresidentJason
      P. Walsh
              
              30
              
              Chief
      Financial Officer, Chief Operating Officer, Secretary and
      TreasurerJeremy
      Stein
              
              40
              
              DirectorTerry
      Contreras
              
              45
              
              DirectorDennis
      Gomes
              
              64
              
              DirectorJohn
      Ziegler, Jr.
              
              42
              
              Director
  All
directors serve until their successors are duly elected and
qualified.  Vacancies in the Board of Directors are filled by majority
vote of the remaining directors.  The executive officers are elected
by, and serve at the discretion of, the Board of Directors.
  A brief
description of the business experience during the past five years of our
directors, our executive officers and our key employees is as
follows:
  Christopher M.
Wolfington–Chairman, Chief Executive Officer and President.  Mr.
Wolfington has been in the financial services industry for approximately 16
years.  He has our Chairman since our inception.  From 1991
to 1994 he was a partner in The Stanley Laman Group, a firm providing
investment, insurance, mergers, acquisition, and planning services to companies
nationwide.  From 1995 to 1998 he was President of Casino Money
Centers, a subsidiary of CRW Financial, Inc.  Mr. Wolfington received
a Bachelor of Arts degree in Communications and Business from the University of
Scranton.
  Jason P.
Walsh –Chief
Financial Officer, Chief Operating Officer, Secretary and
Treasurer.  Mr. Walsh became our Chief Financial Officer, Secretary
and Treasurer in June 2005.   From 1997 until June 2005 he was a
certified public accountant with Robert J. Kratz & Company.  Mr.
Walsh received a Bachelors of Science degree in Accounting from Drexel
University, and is a Pennsylvania Certified Public Accountant.
  Jeremy Stein –Mr. Stein served as President and Chief Executive Officer and a director
of iGames from June 2002 until January 2004, and as Secretary and a director of
iGames since January 2004.  Mr. Stein has also served as the Chief
Executive Officer of IntuiCode, LLC, a software development company, since 2000
and as a senior software engineer with Mikohn Gaming Corporation, where he
worked until 2001.  Prior thereto, he was a senior software engineer
and director of Progressive Games, Inc. from 1995 to 1998 and the Chief
Technical Officer of Emerald System, Inc. from 1993 to 1995.  Mr.
Stein studied computer science at Virginia Tech.  See "Related Party
Transactions."
  Dennis
Gomes – Mr. Gomes’ background is in law enforcement as an investigator of
casino operations in Nevada and New Jersey.   Having earned an
undisputed reputation for character and integrity through his numerous
senior-level operational positions throughout his career, Gomes served as
President of the Tropicana Casino & Resort and Trump Taj Mahal Hotel &
Casino in Atlantic City and as President of The Golden Nugget Hotel & Casino
in Las Vegas.
  22
 John Ziegler,
Jr. -  Since June of 2002, Mr. Ziegler has been the Principal
and Executive Vice President of the M.F. Irvine Companies. From 1995 to 2002,
Mr. Ziegler was the Chief Financial Officer of Wilcox & Gibbs. Mr. Ziegler
received a B.S. in business and economics from Lafayette College in
1990.
  Terry
Contreras -  Since February 2002, Mr. Contreras has been the
Chief Financial Officer at Rolling Hills Casino.  From April 2000 to
February 2002 Mr. Contreras was the Vice President of Polaris Gaming Group,
LLC.  Mr. Contreras received a B. S. in Finance from Oregon State
University in 1985.
  Mr.
Ziegler is Mr. Wolfington’s brother-in-law.  There are no other family
relationships among any of our directors or executive officers.
  Audit
Committee
  The Audit
Committee oversees our processes of accounting and financial reporting and
provides oversight with respect to our audits and financial
statements.  In this role, the Audit Committee reviews the
professional services provided by our independent accountants and the
independence of the accounting firm from our management.  The Audit
Committee also reviews the scope of the audit performed by our independent
accountants, our annual financial statements, our systems of internal accounting
controls and other matters with respect to the accounting, internal auditing and
financial reporting practices and procedures as it finds appropriate or as may
be brought to its attention.  The Audit Committee is comprised of
Messrs. Contreras and Ziegler, each of whom is independent as defined by the
rules and regulations of the Securities and Exchange Commission.  Mr.
Contreras serves as Chairman of the Audit Committee and as our “audit committee
financial expert” as required under the SEC’s rules.
  Section
16(a) Beneficial Ownership Reporting Compliance
  Section
16(a) of the Securities Exchange Act requires our directors, executive officers
and persons who are the beneficial owners of more than ten percent of our common
stock (collectively, the “Reporting Persons”) to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and to furnish
us with copies of these reports.
  Based on
our review of Forms 3 and 4 filed with the Securities and Exchange Commission,
we do not believe that any of the Reporting Persons had delinquent filings
pursuant to Section 16(a) of the Securities Exchange Act.
  Code
of Ethics
  We have
adopted a code of ethics that applies to our executive officers, all other
employees and each member of our Board of Directors.  Our Board of
Directors adopted the code of ethics in June 2004.  We will provide a
copy of the code of ethics to any person without charge, upon
request.  The request should be made in writing and addressed to
Christopher M. Wolfington, Money Centers of America, Inc., 700 South Henderson
Road, Suite 325, King of Prussia, Pennsylvania 19406.  The code of
ethics is also posted on our website at www.moneycenters.com.  We
intend to disclose any amendments or waivers to our code of ethics on our
website.  Additionally, our code of ethics is included as an exhibit
to this Annual Report on Form 10-KSB.
  23
 ITEM
10.  EXECUTIVE COMPENSATION
  The
following table presents compensation information for the year ended December
31, 2007 for our principal executive officer and our two most highly compensated
executive officers (other than the principal executive officer) whose total
annual salary and bonus exceeded $100,000 during such fiscal year (collectively,
the “Named Executive Officers”).
  SUMMARY
COMPENSATION TABLE
 
 Name
      and Principal Position
              
              Year
              
              Salary
              
              
              Bonus
              
              
              Option
      Awards
              
              
              All
      Other Compensation
              
              
              TotalChristopher
      M. Wolfington, Chairman, Chief Executive Officer
              
              2007
              
              
              $350,000
              
              
              
              $180,708
              (1)
              
              
              $  
      -
              
              
              
              $35,147
              (2)
              
              
              $565,8552006
              
              
              $350,000
              
              
              
              $204,994
              (3)
              
              
              $1,888,122
              
              
              
              $39,359
              (4)
              
              
              $2,482,475Jason
      P. Walsh, Chief Financial Officer, Chief Operating Officer, Secretary
      & Treasurer
              
              2007
              
              
              $170,000
              
              
              
              $0
              
              
              
              $284,393
              
              
              
              
              
              
              
              $454,3932006
              
              
              $145,000
              
              
              
              $25,000
              
              
              
              $181,320
              
              
              
              
              
              
              
              $351,320
 (1)  Includes $5,708 in sales
commissions on contracts in place prior to 2004.
 (2)  Includes $31,549 in
automobile expense and $3,598 in life insurance premiums.
 (3)  Includes $29,994 in
sales commissions on contracts in place prior to 2004.
 (4)  Includes $35,761 in
automobile expense and $3,598 in life insurance premiums
 
 In
January 2004, we entered into a five-year employment agreement with Christopher
M. Wolfington, our Chairman, President and Chief Executive
Officer.  In addition to an annual salary of $350,000 per year
(subject to annual increases at the discretion of the Board of Directors) (the
"Base Salary"), Mr. Wolfington's employment agreement provides for a guaranteed
bonus equal to 50% of his Base Salary in any calendar year (the "Guaranteed
Bonus") and a discretionary incentive bonus of up to 50% of his Base Salary in
any calendar year pursuant to a bonus program to be adopted by the Board of
Directors (the "Incentive Bonus").  Pursuant to his employment
agreement, Mr. Wolfington is entitled to fringe benefits including participation
in retirement plans, life insurance, hospitalization, major medical, paid
vacation, a leased automobile and expense reimbursement.  In addition,
under the terms of his employment agreement Mr. Wolfington was entitled to
receive options to purchase 3,780,780 shares of our common stock at an exercise
price of $0.01, upon the accomplishment of performance goals established by the
Board of Directors in 2004, which the Board concluded had been satisfied by the
equity private placement and debt refinancings in 2006.  In the event
there is a change of control after which Mr. Wolfington is asked to relocate his
principal business location more than 35 miles, his duties are significantly
reduced from the duties he had immediately prior to the change of control or
there is a material reduction in his Base Salary in effect immediately prior to
the change of control and, as a result of any of the foregoing, Mr. Wolfington
resigns his employment hereunder within one year after the date of the change of
control, then Mr. Wolfington shall be entitled to receive as severance payments,
his Guaranteed Bonus, his Base Salary and his insurance benefits for a period
equal to the greater of  the initial term of the agreement or 24
months from the date of the termination or cessation of Mr. Wolfington's
employment.  For purposes of Mr. Wolfington's employment agreement, a
change of control occurs if we sell all or substantially all of our assets or if
shares of our capital stock representing more than 50% of the votes which all
stockholders are entitled to cast are acquired, by purchase, merger,
reorganization or otherwise) by any person or group of affiliated persons not an
affiliate of iGames at the time of such acquisition.
  Jason P.
Walsh’s 2007 compensation as our Chief Operating Officer, Chief Financial
Officer, Secretary and Treasurer is governed by a May 2005 employment agreement,
as amended in October 2005.  Mr. Walsh's minimum annual salary is
$145,000 and he receives annual bonus compensation of up to $25,000 per
year.  In addition, Mr. Walsh was granted options to purchase 200,000
shares of our common stock with an exercise price of $.42 per share, of which
50,000 vested immediately, 50,000 vested after one year and the remainder vested
after two years.  Effective December 31, 2006 (the original expiration
date), Mr. Walsh’s employment agreement was amended and restated to provide for
an annual salary of $170,000 and no bonus compensation.  Mr. Walsh
also received options to purchase 500,000 shares of our common stock at an
exercise price of $0.38 per share, based on the market price at the time of
grant.  50% of these options vest July 1, 2007 with the remainder
vested December 31, 2007.  In the event Mr. Walsh's employment is
terminated prior to the then-current expiration date by us without good cause,
as defined in the employment agreement, or Mr. Walsh elects early termination
with good reason, as defined in the employment agreement, and such termination
is within six months following a change in control, as defined in the employment
agreement, Mr. Walsh will receive 100% of his annual salary in effect as of the
date of such termination for a period of one year.  In addition, Mr.
Walsh would be entitled to payment of accrued but unused vacation time through
the termination date and all unvested stock options held by Mr. Walsh would
automatically vest.
 
 24
 Repricing of
Options
  We have
not adjusted or amended the exercise price of any stock
options.
  Outstanding
Equity Awards at Fiscal Year-End
  Option
      AwardsName
              Number
      of Securities
                Underlying
      Unexercised Options
                (#)
      Exercisable
              Number
      of Securities Underlying Unexercised Options
                (#)
      Unexercisable
              Option
      Exercise Price
                ($)
              Option
      Expiration DateChristopher
      Wolfington
              2,620,000
              
              .01
              1/2/2014Christopher
      Wolfington
              3,380,780
              
              .01
              12/28/2016Jason
      P. Walsh
              200,000
              
              .42
              6/14/2014Jason
      P. Walsh
              100,000
              
              .01
              11/15/2016Jason
      P. Walsh
              200,000
              
              .26
              11/15/2016Jason
      P. Walsh
              500,000
              
              .38
              02/28/2017
  Under the
terms of his employment agreement Mr. Wolfington was entitled to receive options
to purchase 3,780,780 shares of our common stock at an exercise price of $0.01,
upon the accomplishment of performancegoals
established by the Board of Directors, which the Board concluded had been
satisfied by the equity private placement and debt refinancings in
2006.  These grants represent approximately 75%of the
options granted to our employees in the fiscal year ended
December 31, 2006.  In October 2006, the Compensation Committee
determined to grant to Mr. Walsh options to purchase 100,000 shares of our
common stock at an exercise price of $0.01 per share, and options to purchase
200,000 shares of our common stockat
an exercise price of $0.26 per
share, which equaled the market price as of the date of grant, based on an
evaluation of his overall contribution to our business.  In March 2007, the
Compensation Committee determined to grant Mr. Walsh options to purchase 500,000
shares of our Common Stock at an exercise price of $0.38 per share, which
equaled the market price as of the date of
grant.
  Long Term Incentive
Plans
  We
currently do not have any long-term incentive plans.
  Director
Compensation
  Name
              Fees
      Earned or
                Paid
      in Cash
              Option
      Awards
              Total($)
              ($)
              ($)Jeremy
      Stein
              $7,500
              $61,700(1)
              $69,200John
      Zeigler
              $7,500
              $61,700(2)
              $69,200Dennis
      Gomes
              $5,000
              $61,700(3)
              $66,700Terry
      Contreras
              $2,500
              $22,980(4)
              $25,480
 
 (1)
              As
      of December 31, 2007, Mr. Stein held options to purchase 450,000 shares of
      common stock.
 (2)
                As
      of December 31, 2007, Mr. Ziegler held options to purchase 115,000 shares
      of common stock.  .
 (3)
              As
      of December 31, 2007, Mr. Gomes held options to purchase 100,000 shares of
      common stock.
 (4)
              As
      of December 31, 2007, Mr. Contreras held options to purchase 100,000
      shares of common stock.
 
 Our
directors who are also employees do not receive any additional consideration for
serving on our Board of Directors.  Our outside directors, who are not
employees, receive $2,500 for each meeting of the Board of Directors or any
committee thereof that they attend.  In addition, our outside
directors receive an annual grant of options to purchase 100,000 shares of our
common stock at an exercise price equal to the closing sales price of our common
stock on the date of grant.
  25
  ITEM
      11.
              SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS [LARRY USUALLY
DOES]
  Securities Authorized for
Issuance Under Equity Compensation Plans
  See
“Securities Authorized for Issuance Under Equity Compensation Plans” in Item 5
on page 13.
  Information as to ownership
of Common Stock by Officers, Directors and owners of 5% or more of our Common
Stock
  The
following table sets forth certain information with respect to beneficial
ownership of our common stock as of April 10, 2007 by:
  ·
              each
      person known to us to be the beneficial owner of more than 5% of our
      common stock;
  ·
              each
      of our directors;
  ·
              each
      of our executive officers; and
  ·
              all
      of our executive officers and directors as a
  group.
  Unless
otherwise specified, we believe that all persons listed in the table possess
sole voting and investment power with respect to all shares of our common stock
beneficially owned by them.  As of March 31, 2008, 31,751,832 shares
of our common stock were issued and outstanding.
  Name and
      Address
                  of Beneficial Owner(1)
              
              Position
              
              Amount and Nature of Beneficial
      Ownership(1)
              
              Percentage
      of ClassChristopher
      M. Wolfington
                700
      South Henderson Road,
                Ste.  325
                King
      of Prussia, PA 19406
              
              President,
      Chief Executive Officer, Chairman of the Board
              
              23,070,383(2)
              
              61.09Jason
      P. Walsh
                700
      South Henderson Road
                Ste.
      325
                King
      of Prussia, PA 19406
              
              Chief
      Operating Officer, Chief Financial Officer, Secretary &
      Treasurer
              
              1,032,500(3)
              
              3.15Jeremy
      Stein
                301
      Yamato Road, Suite 2199
                Boca
      Raton, FL 33431
              
              Director
              
              510,000(4)
              
              1.58Dennis
      Gomes
                615
      E. Lost Pine Way
                Galloway,
      NJ 08205
              
              Director
              
              500,000(5)
              
              1.55Terry
      Contreras
                1464
      Lucy Way
                Chico,
      CA  95973
              
              Director
              
              262,200(6)
              
              *John
      Ziegler, Jr.
                136
      Magnolia Drive
                Phoenixville,
      PA  19460
              
              Director
              
              252,000(7)
              
              *All
      Executive Officers and Directors as a group (6 persons)
              
              
              
              25,627,083
              
              63.83*  Less
      than 1%
  (1)
                Beneficial
      ownership has been determined in accordance with Rule 13d-3 under the
      Securities Exchange Act of 1934.  All shares are beneficially
      owned and sole voting and investment power is held by the persons named,
      except as otherwise noted.
  26
 (2)
                Includes
      options to purchase 6,015,780 shares of Common Stock, and 3,108,772 shares
      of Common Stock owned by the Christopher M. Wolfington Grantor Retained
      Annuity Trust.  Does not include 521,759 shares of Common Stock
      held by the Christopher M. Wolfington Irrevocable Trust as Mr. Wolfington
      is not the beneficial owner of these shares of Common
    Stock.
  (3)
                Includes
      options to purchase 1,000,000 shares of Common
  stock.
  (4)
                Includes
      options to purchase 450,000 shares of Common
  Stock.
  (5)
                Includes
      options to purchase 200,000 shares of Common Stock and warrants to
      purchase 300,000 shares of Common Stock held by Gomes Gaming Management,
      LLC.
  (6)
                Includes
      options to purchase 200,000 shares of Common
  Stock.
  (7)
                Includes
      options to purchase 130,000 shares of Common
  Stock.
   ITEM
      12.
              CERTAIN
      RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS
  IntuiCode,
LLC provides us with product development, deployment and maintenance services on
a monthly basis for cash compensation determined on a project-by-project
basis.  We paid IntuiCode approximately $146,250 during the year ended
December 31, 2007.  Jeremy Stein, a member of our Board of Directors,
holds approximately 0.19% of our stock (including shares subject to options) is
also the Chief Executive Officer and the holder of approximately 31% of the
outstanding membership interests of IntuiCode.  The value of Mr.
Stein’s interest in payments made to IntuiCode in 2007 was
$45,338.  We believe the terms of IntuiCode's engagement are at least
as fair as those that we could have obtained from unrelated third parties in
arms-length negotiations.
  Although
we believe that IntuiCode is highly qualified to provide these services, we
believe that other software developers are available to provide similar services
should IntuiCode no longer be able or willing to do so.
  On
December 28, 2006, we entered into a Credit and Security Agreement (the “Credit
Agreement”) with Baena Advisors, LLC (“Baena”) pursuant to which Baena advanced
$4,750,000 to us.  The proceeds of this loan were used to repay
outstanding indebtedness, as described in “Management’s Discussion and Analysis
– Changes in Financial Position, Liquidity and Capital
Resources.”  Baena is owned by Sean Wolfington, the brother of our
Chief Executive Officer and Chairman.
  The loan
bears interest at a rate equal to 30-day LIBOR plus 13%, payable
monthly.  The principal amount of the loan, together with accrued but
unpaid interest, is due and payable February 28, 2009; provided that Baena may
extend the term of the Loan to February 28, 2011.  In addition, we pay
Baena a monthly loan fee of $3,000.  Our obligations under the Credit
Agreement are secured by the grant of a security interest in all of our assets
and are guaranteed by our Chief Executive Officer and his wife.  The
guaranty is secured by a pledge of all the shares of our common stock held by
our Chief Executive Officer.
  In
connection with the making of the loan, we issued to Baena warrants to purchase
an aggregate of 2,000,000 shares of our common stock at an exercise price of
$0.01 per share.  The warrants expire February 28, 2011.
 
  ITEM
      13.
              EXHIBITS
  Exhibit
                Number
              Description3.1
              Money
      Centers of America, Inc. Amended and Restated Certificate of Incorporation
      (incorporated by reference to Exhibit 3.1 of the Current Report on Form
      8-K filed on October 19, 2004).3.2
              Money
      Centers of America, Inc. Amended and Restated Bylaws (incorporated by
      reference to Exhibit 3.2 of the Current Report on Form 8-K filed on
      October 19, 2004).4.1
              Form
      of Specimen Stock Certificate.
  27
 Exhibit
                Number
              Description4.2
              Form
      of Baena Warrant (incorporated by reference to Exhibit 4.1 to the Current
      Report on Form 8-K filed January 8, 2007).10.1
              Amended
      and Restated 2003 Stock Incentive Plan (incorporated by reference to
      Exhibit 10.2 of Form 10-KSB filed on July 13, 2004)10.2
              Employment
      Agreement dated as of January 2, 2004 by and between iGames Entertainment,
      Inc. and Christopher M. Wolfington (incorporated by reference to Exhibit
      10.1 of Form 10-KSB filed on July 13, 2004).10.3
              Amendment
      to Employment Agreement dated as of March 20, 2006 by and between Money
      Centers of America, Inc. and Christopher M. Wolfington (incorporated by
      reference to Exhibit 10.3 to the Quarterly Report on Form 10-QSB for the
      fiscal quarter ended March 31, 2006 filed on May 22,
  2006).10.3
              Amended
      and Restated Employment Agreement dated as of March 1, 2007, but effective
      December 31, 2006 by and between Money Centers of America, Inc. and Jason
      P. Walsh.10.4
              Credit
      and Security Agreement dated December 28, 2006 between Money Centers of
      America, Inc. and Baena Advisors, LLC (incorporated by reference to
      Exhibit 10.1 to the Current Report on Form 8-K filed January 8,
      2007).10.5
              $4,750,000
      Promissory Note dated December 28, 2006 from Money Centers of America,
      Inc. to Baena Advisors, LLC (incorporated by reference to Exhibit 10.2 to
      the Current Report on Form 8-K filed January 8, 2007).10.8
              Amendment
      to Credit and Security Agreement dated December 28, 2006 between Money
      Centers of America, Inc. and Mercantile Capital, L.P. (incorporated by
      reference to Exhibit 10.3 to the Current Report on Form 8-K filed January
      8, 2007).10.9
              $2,525,000
      Amended and Restated Promissory Note dated December 28, 2006 from Money
      Centers of America, Inc. to Mercantile Capital, L.P. (incorporated by
      reference to Exhibit 10.4 to the Current Report on Form 8-K filed January
      8, 2007).10.10
              Software
      Development Agreement effective September 1, 2004 by and between Money
      Centers of America, Inc. and IntuiCode LLC.  (incorporated by
      reference to Exhibit 10.8 to the Registration Statement on Form SB-2 filed
      on February 14, 2004 (File No.  333-122819)14
              Code
      of Ethics (incorporated by reference to Exhibit 14 of Form 10-KSB filed on
      July 13, 2004)21
              Subsidiaries
      of Money Centers of America, Inc.31.1
              Certification
      dated April 15, 2008 pursuant to Exchange Act Rule 13a-14(a) or
      15d-14(a) of the Principal Executive Officer and the Principal Financial
      Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
      of 2002 by Christopher M. Wolfington, Chief Executive
    Officer.31.2
              Certification
      dated April 15, 2008 pursuant to Exchange Act Rule 13a-14(a) or
      15d-14(a) of the Principal Accounting Officer as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002 by Jason P. Walsh,
      Chief Financial Officer.32
              Certification
      dated April 15, 2008 pursuant to 18 U.S.C.  Section 1350 as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 made by
      Christopher M. Wolfington, Chief Executive Officer and Jason P. Walsh,
      Chief Financial Officer.
   ITEM
      14.
              PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
  Audit
Fees
  The
aggregate fees billed for professional services rendered by our principal
accountant for the audit of our annual financial statements and review of our
quarterly financial statements in 2006 was $60,000 and in 2007 was
$63,000.
  28
 Audit-Related
Fees
  During
2006 and 2007, our principal accountant did not render assurance and related
services reasonably related to the performance of the audit or review of
financial statements.
  Tax Fees
  The
aggregate fees billed for professional services rendered by our principal
accountant for tax compliance, tax advice and tax planning  in 2006
were $10,000 and in 2007 were $10,500 . These services consisted of preparation
of corporate tax returns and state and federal tax planning.
  All Other
Fees
  During
2006 and 2007, there were no fees billed for products and services provided by
the principal accountant other than those set forth above.
  Audit Committee
Approval
  The Audit
Committee pre-approves all audit and non-audit services provided by our
independent auditors prior to the engagement of the independent auditors with
respect to such services.  The Audit Committee shall pre-approve any
additional audit services and permissible non-audit services.  All
“Audit Fees” and “Tax Fees” set forth above were pre-approved by the Audit
Committee in accordance with its pre-approval policy.
  29
 SIGNATURES
  Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this Annual Report on Form 10-KSB to be signed
on its behalf by the undersigned thereunto duly authorized, in the City of
Philadelphia, Commonwealth of Pennsylvania.
  Money
      Centers of America, Inc.Date:  April
      15, 2008
                By:
                /s/ Christopher
      M. WolfingtonChristopher
      M. WolfingtonChief
      Executive Officer
  In
accordance with the Exchange Act, this report had been signed below by the
following persons on behalf of the registrant in the capacities and on the dates
indicated.
 
 /s/
      Christopher M. WolfingtonChristopher
      M. WolfingtonChief
      Executive Officer and DirectorDate:  April 15,2008
 
 /s/
      Jason P. WalshJason
      P. WalshChief
      Financial Officer (principal financial officer and
                Principal
      accounting officer)Date:  April 15,2008
 
 /s/
      Jeremy SteinJeremy
      SteinDirectorDateApril 15,2008
 
 /s/ Dennis GomesDennis
      GomesDirectorDate
      April 15,2008
 
 /s/
      John Ziegler, Jr.John
      Ziegler, Jr.DirectorDate:
      April 15,2008
 
 /s/
      Terry ContrerasTerry
      ContrerasDirectorDate:
      April 15,2008
 
 
 30
  CONSOLIDATED
FINANCIAL STATEMENTS
 
 Index
to Consolidated Financial Statements
 
 Report
      of Independent Registered Public Accounting Firm
                F-1Consolidated
      Balance Sheet
                F-2Consolidated
      Statements of Operations
                F-3Consolidated
      Statements of Changes in Stockholders’ Deficit
                F-4Consolidated
      Statements of Cash Flows
                F-5Notes
      to Consolidated Financial Statements
                F-6
      – F-30
 
 
 
 
  REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the
Audit Committee
 Money
Centers of America, Inc.
 
 
 We have
audited the accompanying consolidated balance sheet of Money Centers of America,
Inc. and Subsidiaries as of December 31, 2007 and the related consolidated
statements of operations, changes in stockholders’ deficit and cash flows for
the years ended December 31, 2007 and 2006. These consolidated financial
statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material
misstatement.  The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial
reporting.  Accordingly we express no such opinion.  An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
 
 In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Money Centers of America,
Inc. and Subsidiaries as of December 31, 2007 and the results of their
operations and their cash flows for the years ended December 31, 2007 and 2006,
in conformity with accounting principles generally accepted in the United States
of America.
 
 The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from operations,
has net cash used in operations, a net working capital deficit, a stockholders’
deficit and an accumulated deficit that raises substantial doubt about its
ability to continue as agoing concern. Management’s plan in regard
to these matters is also described in Note 2. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
 
 /s/  Sherb
& Co, LLP
 Certified
Public Accountants
  New York,
NY
 April 10,
2008
 
 F-1
  MONEY
      CENTERS OF AMERICA, INC. AND SUBSIDIARIESCONSOLIDATED
      BALANCE SHEETDECEMBER
      31, 2007
  ASSETSCurrent
      assets:Restricted
      cash
                  
                  $
                  2,527,631Accounts
      receivable
                  
                  
                  15,140Prepaid
      expenses and other current assets
                  
                  
                  373,913Total
      current assets
                  
                  
                  2,916,684Property
      and equipment, net
                  
                  
                  812,832Other
      assets:Intangible
      assets, net
                  
                  
                  1,320,175Deferred
      financing costs, net
                  
                  
                  568,772Deposits
                  
                  
                  55,397Total
      other assets
                  
                  
                  1,944,344Total
      assets
                  
                  $
                  5,673,860LIABILITIES AND STOCKHOLDERS'
      DEFICITCurrent
      liabilities:Accounts
      payable
                  
                  $
                  486,964Deferred
      revenue
                  
                  
                  360,000Accrued
      interest
                  
                  
                  112,377Accrued
      expenses
                  
                  
                  791,976Current
      portion of capital lease
                  
                  
                  125,720Notes
      payable
                  
                  
                  2,504,190Lines
      of credit
                  
                  
                  2,474,219Due
      to officer
                  
                  
                  195,125Commissions
      payable
                  
                  
                  638,825Total
      current liabilities
                  
                  
                  7,689,397Long-term
      liabilities:Capital
      lease, net of current portion
                  
                  
                  522,581Note
      payable, related party
                  
                  
                  5,040,864Total
      long-term liabilities
                  
                  
                  5,563,445Total
      Liabilities
                  
                  
                  13,252,841Stockholders'
      Deficit:Preferred
      stock; $.001 par value, 20,000,000 shares authorizednone
      issued and outstanding
                  
                  
                  -Common
      stock; $.01 par value, 150,000,000 shares authorized31,751,832
      shares issued and outstanding
                  
                  
                  317,518Additional
      paid-in capital
                  
                  
                  16,503,838Accumulated
      deficit
                  
                  
                  (24,400,337)Total
      stockholders' deficit
                  
                  
                  (7,578,981)Total
      liabilities and stockholders' deficit
                  
                  $
                  5,673,860
  See
      accompanying notes to consolidated financial
  statements.
  F-2
 MONEY
      CENTERS OF AMERICA, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF OPERATIONS
  YEARS
      ENDEDDECEMBER
      31,2007
                  
                  
                  2006Revenues
                  
                  $
                  8,694,549
                  
                  
                  $
                  11,721,752Cost
      of revenues
                  
                  
                  7,016,784
                  
                  
                  
                  9,471,763Gross
      profit
                  
                  
                  1,677,765
                  
                  
                  
                  2,249,989Operating
      expenses:Selling,
      general and administrative expenses (includesequity
      compensation of $1,124,100 and $2,111,402for
      the years ended December 31, 2007 and 2006respectively)
                  
                  
                  2,981,461
                  
                  
                  
                  4,079,974Depreciation
      and amortization
                  
                  
                  894,353
                  
                  
                  
                  355,309Loss
      on impairment of goodwill
                  
                  
                  -
                  
                  
                  
                  203,124Settlement
      expenses
                  
                  
                  5,000
                  
                  
                  
                  210,000Total
      operating loss
                  
                  
                  (2,203,050
                  )
                  
                  
                  (2,598,419
                  )Other
      income (expenses):Interest
      income
                  
                  
                  19,969
                  
                  
                  
                  16,471Interest
      expense
                  
                  
                  (1,541,148
                  )
                  
                  
                  (1,866,211
                  )Total
      interest expense, net
                  
                  
                  (1,521,179
                  )
                  
                  
                  (1,849,740
                  )Other
      income
                  
                  
                  143,553
                  
                  
                  
                  234,068Other
      expenses
                  
                  
                  -
                  
                  
                  
                  (128,376
                  )Total
      other income
                  
                  
                  143,553
                  
                  
                  
                  105,692Net
      loss
                  
                  $
                  (3,580,675
                  )
                  
                  $
                  (4,342,467
                  )Net
      loss per common share - basic and diluted
                  
                  $
                  (0.12
                  )
                  
                  $
                  (0.14
                  )Weighted
      Average Common Shares Outstanding-Basic
      and diluted
                  
                  
                  30,896,829
                  
                  
                  
                  30,524,853
  See
      accompanying notes to consolidated financial
  statements.
  F-3
  MONEY CENTERS OF AMERICA, INC. AND
      SUBSIDIARIESCONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'
      DEFICIT
  Common
      Stock
                  
                  
                  Additional
                  
                  
                  
                  
                  
                  Total($.01
      par value)
                  
                  
                  Paid-In
                  
                  
                  Accumulated
                  
                  
                  Stockholders'Shares
                  
                  
                  Amount
                  
                  
                  Capital
                  
                  
                  Defict
                  
                  
                  DeficitBalance,
      December 31, 2005
                  
                  
                  25,206,978
                  
                  
                  $
                  252,069
                  
                  
                  $
                  11,189,541
                  
                  
                  $
                  (16,477,197
                  )
                  
                  $
                  (5,035,587
                  )Issuance
      of common stock for services
                  
                  
                  15,375
                  
                  
                  
                  154
                  
                  
                  
                  5,587
                  
                  
                  
                  -
                  
                  
                  
                  5,741Sale
      of common stock, net of offering costs
                  
                  
                  5,100,000
                  
                  
                  
                  51,000
                  
                  
                  
                  1,062,390
                  
                  
                  
                  -
                  
                  
                  
                  1,113,390Exercise
      of stock options
                  
                  
                  202,500
                  
                  
                  
                  2,025
                  
                  
                  
                  4,000
                  
                  
                  
                  -
                  
                  
                  
                  6,025Note
      discount 37,500 warrants issued
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  10,305
                  
                  
                  
                  -
                  
                  
                  
                  10,305Issuance
      of warrants to consultants/lender
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,014,582
                  
                  
                  
                  -
                  
                  
                  
                  1,014,582Vesting
      of employee stock options
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  27,487
                  
                  
                  
                  -
                  
                  
                  
                  27,487Issuance
      of options for services
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,069,442
                  
                  
                  
                  -
                  
                  
                  
                  2,069,442Net
      Loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (4,342,466
                  )
                  
                  
                  (4,342,466
                  )Balance,
      December 31, 2006
                  
                  
                  30,524,853
                  
                  
                  
                  305,248
                  
                  
                  
                  15,383,334
                  
                  
                  
                  (20,819,663
                  )
                  
                  
                  (5,131,081
                  )Issuance
      of common stock for services
                  
                  
                  1,979
                  
                  
                  
                  20
                  
                  
                  
                  990
                  
                  
                  
                  -
                  
                  
                  
                  1,010Exercise
      of stock options
                  
                  
                  1,225,000
                  
                  
                  
                  12,250
                  
                  
                  
                  124,204
                  
                  
                  
                  -
                  
                  
                  
                  136,454Vesting
      of employee stock options
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  35,000
                  
                  
                  
                  -
                  
                  
                  
                  35,000Issuance
      of options for services
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  960,310
                  
                  
                  
                  -
                  
                  
                  
                  960,310Net
      Loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (3,580,675
                  )
                  
                  
                  (3,580,675
                  )Balance,
      December 31, 2007
                  
                  
                  31,751,832
                  
                  
                  $
                  317,518
                  
                  
                  $
                  16,503,838
                  
                  
                  $
                  (24,400,338
                  )
                  
                  $
                  (7,578,982
                  )
  See
      accompanying notes to consolidated financial
  statements.
  F-4
 
 MONEY
      CENTERS OF AMERICA, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF CASH FLOWS
  Years
      EndedDecember
      31,2007
                      
                      
                      2006Cash
      flows from operating activities:Net
      loss
                      
                      $
                      (3,580,675
                      )
                      
                      $
                      (4,342,466
                      )Adjustments
      used to reconcile net loss to net cashused
      in operating activities:Depreciation
      and amortization
                      
                      
                      894,353
                      
                      
                      
                      355,309Amortization
      of debt discount
                      
                      
                      -
                      
                      
                      
                      138,156Issuance
      of warrants for services
                      
                      
                      -
                      
                      
                      
                      15,782Issuance
      of common stock for services
                      
                      
                      990
                      
                      
                      
                      5,741Issuance
      of stock options for services and stock options vested
                      
                      
                      1,123,110
                      
                      
                      
                      2,096,929Write
      off of goodwill
                      
                      
                      -
                      
                      
                      
                      203,123Settlement
      with vendor other income
                      
                      
                      -
                      
                      
                      
                      (181,576
                      )Changes
      in operating assets and liabilities:Increase
      (decrease) in:Accounts
      payable
                      
                      
                      (12,699
                      )
                      
                      
                      (519,530
                      )Accrued
      interest
                      
                      
                      44,213
                      
                      
                      
                      (7,933
                      )Accrued
      expenses
                      
                      
                      73,508
                      
                      
                      
                      516,601Deferred
      revenue
                      
                      
                      360,000
                      
                      
                      
                      -Commissions
      payable
                      
                      
                      (25,550
                      )
                      
                      
                      (82,119
                      )(Increase)
      decrease in:Prepaid
      expenses and other current assets
                      
                      
                      (103,315
                      )
                      
                      
                      (29,334
                      )Accounts
      receivable
                      
                      
                      15,044
                      
                      
                      
                      312,558Proceeds
      from refundable deposit
                      
                      
                      -
                      
                      
                      
                      126,000Deposits
                      
                      
                      -
                      
                      
                      
                      (500
                      )Net
      cash used in operating activities
                      
                      
                      (1,211,022
                      )
                      
                      
                      (1,393,259
                      )Cash
      flows from investing activities:Purchases
      of property and equipment
                      
                      
                      (57,482
                      )
                      
                      
                      (105,990
                      )Cash
      paid for acquisition and intangible assets
                      
                      
                      (153,759
                      )
                      
                      
                      (294,470
                      )Cash
      paid for loan cost on convertible debt
                      
                      
                      -
                      
                      
                      
                      (124,100
                      )Net
      cash used in investing activities
                      
                      
                      (211,241
                      )
                      
                      
                      (524,560
                      )Cash
      flows from financing activities:Net
      change in lines of credit
                      
                      
                      (571,097
                      )
                      
                      
                      (4,450,643
                      )Payments
      on capital lease obligations
                      
                      
                      (44,581
                      )
                      
                      
                      (152,960
                      )Advances
      to officer
                      
                      
                      (99,005
                      )
                      
                      
                      (251,200
                      )Proceeds
      from notes payable
                      
                      
                      81,329
                      
                      
                      
                      7,350,000Payments
      on notes payable
                      
                      
                      (44,810
                      )
                      
                      
                      (3,342,259
                      )Sale
      of common stock, net of $161,620 of offering costs
                      
                      
                      -
                      
                      
                      
                      1,113,391Exercise
      of stock options and warrants
                      
                      
                      8,674
                      
                      
                      
                      6,025Net
      cash (used in) provided by financing activities
                      
                      
                      (669,490
                      )
                      
                      
                      272,354NET
      DECREASE IN CASH
                      
                      
                      (2,091,752
                      )
                      
                      
                      (1,645,465
                      )CASH,
      beginning of year
                      
                      
                      4,619,383
                      
                      
                      
                      6,264,848CASH,
      end of year
                      
                      $
                      2,527,631
                      
                      
                      $
                      4,619,383Supplemental
      disclosure of cash flow information:Cash
      paid during the period for interest
                      
                      $
                      1,541,148
                      
                      
                      $
                      1,718,309Cash
      paid during the period for taxes
                      
                      $
                      151,837
                      
                      
                      $
                      171,056Supplemental
      disclosure on non-cash investing and financing
      activities:Acquisition
      of equipment under capital lease
                      
                      $
                      -
                      
                      
                      $
                      563,288Reduction
      of loan payable officer in exchange for related accrual
                      
                      $
                      175,000
                      
                      
                      $
                      43,750Record
      beneficial conversion feature for convertible debtDetachable
      warrants
                      
                      $
                      -
                      
                      
                      $
                      10,305Issuance
      of warrants to lender
                      
                      $
                      -
                      
                      
                      $
                      998,800
  See
      accompanying notes to consolidated financial
  statements.
  F-5
  Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December 31, 2007
 Note 1 –
Organization
  Money Centers
of America Inc. (the "Company" or "MCA"), a Delaware corporation, was
incorporated in October 1997.  The Company is a single source provider
of cash access services, ONSwitchTM Transaction Management System,
and the Omni Network to the gaming industry.  The Company has combined
advanced technology with personalized customer services to deliver ATM, Credit
Card Advance, POS Debit, Check Cashing Services, CreditPlus (outsourced marker
services), cash access host program, customer data sharing and merchant card
processing.
  Note 2 -  Going
Concern
  The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  The Company has a working capital
deficit of $4,772,712, a stockholders’ deficit of $7,578,981 and an accumulated
deficit of $24,400,337 at December 31, 2007.  The Company also
reflected a net loss of $3,580,675 and net cash used in operations of
$1,211,022, for the year ended December 31, 2007.  These
conditions raise substantial doubt about the Company’s ability to continue as a
going concern.
  Management
is in the process of implementing its business plan. Additionally, management is
actively seeking additional sources of capital, but no assurance can be made
that capital will be available on reasonable terms.  Management
believes the actions it is taking allow the Company to continue as a going
concern. The financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going
concern.
  Note3–Basis of Presentation and
Significant Accounting Policies
  (A)           Basis
of Presentation
  The
consolidated financial statements are prepared in accordance with generally
accepted accounting principles in the United States of America ("US
GAAP").  The consolidated financial statements include the accounts of
the Company and its subsidiaries.  All material intercompany balances
and transactions have been eliminated.  The Company and its
subsidiaries have fiscal years ending on December 31.
  (B)           Principles
of Consolidation
  The
Company consolidates its wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
  (C)           Use
of Estimates
  In
preparing financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and revenues and expenses during the periods
presented.  Actual results may differ from these
estimates.
  F-6
 
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December
31, 2007
 Significant
estimates during 2007 and 2006 include depreciable lives on equipment, the
valuation of stock options granted for services, the value of warrants issued in
connection with debt related financing, valuation of intangible assets not
having finite lives and the valuation allowance for deferred tax assets since
the Company had continuing operating losses.
  (D)    Reclassification
 
 Certain
prior periods balances have been reclassified to conform to the current period’s
financial statement presentation.  These reclassifications had no
impact on previously reported results of operations or stockholders’
deficit.
  (E)    Cash
and Cash Equivalents and Compensating Balances
  For
purposes of the statements of cash flows, the Company considers all highly
liquid investments with an original maturity date of three months or less to be
cash equivalents.
  The
Company minimizes its credit risk associated with cash by periodically
evaluating the credit quality of its primary financial institution. The balance
at times may exceed federally insured limits. At December 31, 2007, the balance
exceeded the federally insured limit by $3,466,785.  In addition, the
Company maintains a significant amount of cash at each of the
casinos.  Management believes that the Company has controls in place
to safeguard these on-hand amounts, and that no significant credit risk exists
with respect to cash.
  Additionally,
the Company had $30,000 maintained under a compensating balance
agreement.  The $30,000 is retained due to potential dishonorment of
bad checks that are unforeseen.  There is an informal agreement
between our bank and our lender that requires this compensating balance
agreement.
  (F)    Restricted
Cash
  Restricted
cash is the balance of cash that is in the Company’s bank accounts and network
that is used as collateral for our asset based lender (See Note
5).  The Company does not have access to this cash unless there is an
amount over and above the required amount of collateral.  In order to
pay operating expenses, the Company requests that the asset based lender
transfer funds into the Company’s unrestricted cash accounts.  The
restricted cash balance at December 31, 2007 was $2,527,631.
  (G)    Accounts
Receivable
  Accounts
receivable arise primarily from ATM, credit card advances and check cashing
services provided at casino locations. Concentration of credit risk related to
ATM and credit card advances are limited to the processors who remit the cash
advanced back to the Company along with the Company’s allocable share of fees
earned.  The Company believes these processors are financially stable
and no significant credit risk exists with respect to accounts receivable
arising from credit card advances.  No allowance was considered
necessary at December 31, 2007 and 2006.
  F-7
 
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December 31, 2007
 (H)    Equipment
  Equipment
is stated at cost, less accumulated depreciation.  Expenditures for
maintenance and repairs are charged to expense as incurred.  Equipment
consists primarily of cash access devices and computer
equipment.  Depreciation is computed using the straight-line method
over the estimated useful lives of the assets, which ranges from five to seven
years.
  (I)    Long
Lived Assets
  The
Company accounts for long-lived assets in accordance with the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets."  SFAS No. 144
requires that long-lived assets be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable.  Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to future
undiscounted net cash flows expected to be generated by the asset.  If
such assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets exceeds the
fair value of the assets.  Assets to be disposed of are reported at
the lower of the carrying amount or fair value less costs to sell the
asset.   There were no impairment charges taken during the year
ended December 31, 2007.
  (J)   Goodwill,
Intangibles and Related Impairment
  Goodwill
is assumed to have an indefinite life pursuant to statement of Financial
Accounting Standards No. SFAS 142, "Goodwill and Other Intangible Assets" and
accordingly is not amortized but subject to periodic impairment tests. Acquired
contract rights are considered to have a finite life, pursuant to SFAS 142, to
be amortized over the period the asset is expected to contribute to future cash
flows.  The Company expects the period to be 1 to 4 years. The
contract rights will also be subject to periodic impairment tests.  In
accordance with SFAS No. 142, the Company is required to evaluate the
carrying value of its intangible assets (goodwill) subsequent to their
acquisition.
  (K)   Internal
Use Software and Website Development Costs
  The
Company has adopted the provisions of AICPA Statement of Position ("SOP") 98-1,
"Accounting for the Costs of Software Developed or Obtained for Internal Use,"
and Emerging Issues Task Force ("EITF") Consensus 00-2.  "Accounting
for Web Site Development Costs."  The type of costs incurred by the
Company in developing its internal use software and Web site include, but are
not limited to payroll-related costs (e.g. fringe benefits) for employees who
devote time to the internal use computer software or Web site project,
consulting fees, the price of computer software purchased from third parties and
travel expenses incurred by employees or consultants in their duties directly
associated with developing the software.  These costs are either
expensed or capitalized depending on the type of cost and the stage of
development of the software and Web site.
  The
Company makes ongoing evaluations of the recoverability of its capitalized
internal use software and Web site by comparing the amount capitalized for each
module or component of software to their estimated net realizable
values.  If such evaluations indicate that the unamortized costs
exceed the net realizable values, the Company writes off the amount by which the
unamortized costs exceed the net realizable values.  At December 31,
2007 and 2006, no such write-offs were required.
  F-8
 
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December 31, 2007
 At
December 31, 2007, the net book value of capitalized software was $1,320,175.
Amortization expense for the years ended December 31, 2007 and 2006 was $5,562
and $7,897, respectively.
  (L)    Deferred
Financing Costs
  Deferred
financing costs are capitalized and amortized over the term of the related debt.
At December 31, 2007, the gross amount of deferred financing costs was
$1,299,183 and related accumulated amortization was $730,411.  At
December 31, 2007 the Company reflects in the accompanying consolidated balance
sheet net deferred financing costs of $568,772.  Amortization of
deferred financing costs was $580,775 and $38,701 for the years ended
December 31, 2007 and 2006, respectively.
  (M)  Revenue
Recognition
  The
Company follows the guidance of the Securities and Exchange Commission’s Staff
Accounting Bulletin No. 104 for revenue recognition.  In general, the
Company records revenue when persuasive evidence of an arrangement exists,
services have been rendered or product delivery has occurred, the sales price to
the customer is fixed or determinable, and collectability is reasonably
assured.  The following policies reflect specific criteria for the
various revenue streams of the Company:
  (1)    ATM’s
and Credit Cards
  Fees
earned from ATM and credit card advances are recorded on the date of
transaction.
  (2)    Check
Cashing
  Revenue
is recorded from fees on check cashing services on the date the check is
cashed.  If a customer’s check is returned by the bank on which it is
drawn, the full amount of the check is charged as bad debt
expense.  The check is subsequently resubmitted to the bank for
payment.  If the bank honors it, the amount of the check is recognized
as a negative bad debt expense.  Based on the quick turnaround of the
check being returned by the bank on which it is drawn and the resubmission to
the bank for payment, the Company feels this method approximates the allowance
method, which is a U.S. Generally Accepted Accounting
Principle.  Based upon past history no allowance was considered
necessary at December 31, 2007 and 2006, respectively.
  (3)   
Deferred Revenue
  In
December 2007, The Company licensed its internally developed transaction
management system, OnSwitchTM, to a customer.  The Company received a
deposit of $360,000 which it recorded as deferred revenue until the software is
fully installed and operational.  The Company expects to recognize
this revenue in the second quarter of 2008.
  F-9
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December
31, 2007
  (N)    Cost
of Revenues
  The cost
of revenues primarily includes commissions paid, non management wages, employee
benefits, bad debts, rents paid to contract lessors, transaction processing
costs, cash replenishment fees, non-capitalizable operating lease fees for ATM’s
and repairs and maintenance of ATM’s.
  (O)    Advertising
  In
accordance with Accounting Standards Executive Committee Statement of Position
93-7, ("SOP 93-7") costs incurred for producing and communicating advertising of
the Company, are charged to operations as incurred.  Advertising
expense for the years ended December 31, 2007 and 2006 were $26,409 and $45,755,
respectively.
  (P)    Income
Taxes
  The
Company accounts for income taxes under the Financial Accounting Standards No.
109 "Accounting for Income Taxes" ("Statement 109").  Under Statement
109, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases.  Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.  Under
Statement 109, the effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period, which includes the enactment
date.
  (Q)    Fair
Value of Financial Instruments
  Statement
of Financial Accounting Standards No. 107, "Disclosures about Fair Value of
Financial Instruments," requires disclosures of information about the fair value
of certain financial instruments for which it is practicable to estimate the
value.  For purpose of this disclosure, the fair value of a financial
instrument is the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced sale or
liquidation.
  The
carrying amounts of the Company’s short-term financial instruments, including
accounts receivable, accounts payable and accrued expenses, commissions payable,
notes payable, convertible notes payable, net of debt discount, line of credit
and due to related party approximate fair value due to the relatively short
period to maturity for these instruments.
  (R)    Earnings
per Share
  In
accordance with Statement of Financial Accounting Standards No. 128, "Earnings
per Share," basic earnings per share is computed by dividing the net loss less
preferred dividends for the period by the weighted average number of shares
outstanding.  Diluted earnings per share is computed by dividing net
loss by the weighted average number of shares outstanding including the effect
of share equivalents.  Common share equivalents consist of shares
issuable upon the exercise of certain common stock purchase warrants, stock
options, and convertible preferred stock. The Company has excluded these common
share equivalents from its computation of earnings per share due to their
antidilutive effect as the Company has reflected a net loss at December 31, 2007
and 2006, respectively.  Accordingly, the basic and diluted EPS are
the same.
  F-10
 
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December 31, 2007
 At
December 31, 2007 and 2006 there were 12,738,280 and 12,081,336 shares of
issuable common stock underlying the options, warrants and convertible debt
securities, respectively.
  The
following table summarizes all common stock equivalents outstanding at December
31, 2007 and 2006, respectively.
  2007
                
                
                2006Common
      stock options
                
                
                8,918,280
                
                
                
                3,565,000Common
      stock warrants
                
                
                3,820,000
                
                
                
                7,960,780Convertible
      notes payable
                
                
                -
                
                
                
                555,556Total
      Common Stock Equivalents
                
                
                12,738,280
                
                
                
                12,081,336
 
 (S)    Stock
Based Compensation
  The
Company applies the provisions of SFAS No. 123(R), "Share-Based Payment," under
the modified prospective method.  SFAS No. 123(R) eliminates
accounting for share-based compensation transactions using the intrinsic value
method prescribed under APB Opinion No. 25 "Accounting for Stock Issued to
Employees," and requires instead that such transactions be accounted for using a
fair-value-based method.  Under the modified prospective method, the
Company is required to recognize compensation cost for share-based payment to
employees based on their grant date fair value from the beginning of the fiscal
period in which the recognition provisions are first
applied.
  During
2007 and 2006, the Company granted 2,272,500 and 4,280,780 options, respectively
to employees that were accounted for pursuant to SFAS No. 123(R).
  During
2007 and 2006, the Company granted 900,000 and 2,182,500 warrants,
respectively to non-employees that were accounted for pursuant to SFAS No.
123(R) and 123.
  See
detailed discussion of stock based compensation in Note 10.
  (T)    Recent
Accounting Pronouncements
  In
December 2007, the FASB issued FASB Statement No. 141 (revised 2007), Business
Combinations. This Statement replaces FASB Statement No. 141, Business
Combinations. This Statement retains the fundamental requirements in
Statement 141 that the acquisition method of accounting (which Statement
141 called the purchase method) be used for all business combinations and for an
acquirer to be identified for each business combination. This Statement defines
the acquirer as the entity that obtains control of one or more businesses in the
business combination and establishes the acquisition date as the date
that the acquirer achieves control. This Statement’s scope is broader than
that of Statement 141, which applied only to business combinations in which
control was obtained by transferring consideration. By applying the same method
of accounting—the acquisition method—to all transactions and other events
in which one entity obtains control over one or more other businesses, this
Statement improves the comparability of the information about business
combinations provided in financial reports.
  F-11
 
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December 31, 2007
 This
Statement requires an acquirer to recognize the assets acquired, the liabilities
assumed, and any noncontrolling interest in the acquiree at the acquisition
date, measured at their fair values as of that date, with limited exceptions
specified in the Statement. That replaces Statement 141’s cost-allocation
process, which required the cost of an acquisition to be allocated to the
individual assets acquired and liabilities assumed based on their estimated fair
values.
  This
Statement applies to all transactions or other events in which an entity (the
acquirer) obtains control of one or more businesses (the acquirer), including
those sometimes referred to as “true mergers” or “mergers of equals” and
combinations achieved without the transfer of consideration, for example, by
contract alone or through the lapse of minority veto rights. This Statement
applies to all business entities, including mutual entities that previously used
the pooling-of-interests method of accounting for some business combinations. It
does not apply to: (a) The formation of a joint venture, (b) The acquisition of
an asset or a group of assets that does not constitute a business, (c) A
combination between entities or businesses under common control, (d) A
combination between not-for-profit organizations or the acquisition of a
for-profit business by a not-for-profit organization.
  This
Statement applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. An entity may not apply it
before that date. Management believes this Statement will have no impact on the
financial statements of the Company once adopted.
  In
December 2007, the FASB issued FASB Statement No. 160 - Noncontrolling Interests
in Consolidated Financial Statements – an amendment of ARB No. 51. This
Statement applies to all entities that prepare consolidated financial
statements, except not-for-profit organizations, but will affect only those
entities that have an outstanding noncontrolling interest in one or more
subsidiaries or that deconsolidate a subsidiary. Not-for-profit organizations
should continue to apply the guidance in Accounting Research Bulletin No. 51,
Consolidated Financial Statements, before the amendments made by this Statement,
and any other applicable standards, until the Board issues interpretative
guidance.
  This
Statement amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. Before this Statement was issued,
limited guidance existed for reporting noncontrolling interests. As a result,
considerable diversity in practice existed. So-called minority interests were
reported in the consolidated statement of financial position as liabilities or
in the mezzanine section between liabilities and equity. This Statement improves
comparability by eliminating that diversity.
  F-12
 
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December
31, 2007
 A
noncontrolling interest, sometimes called a minority interest, is the portion of
equity in a subsidiary not attributable, directly or indirectly, to a parent.
The objective of this Statement is to improve the relevance, comparability, and
transparency of the financial information that a reporting entity provides in
its consolidated financial statements by establishing accounting and reporting
standards that require: (a) The ownership interests in subsidiaries held by
parties other than the parent be clearly identified, labeled, and presented in
the consolidated statement of financial position within equity, but separate
from the parent’s equity, (b)  The amount of consolidated net income
attributable to the parent and to the noncontrolling interest be clearly
identified and presented on the face of the consolidated statement of income,
(c)  Changes in a parent’s ownership interest while the parent retains
its controlling financial interest in its subsidiary be accounted for
consistently. A parent’s ownership interest in a subsidiary changes if the
parent purchases additional ownership interests in its subsidiary or if the
parent sells some of its ownership interests in its subsidiary. It also
changes if the subsidiary reacquires some of its ownership interests or the
subsidiary issues additional ownership interests. All of those transactions are
economically similar, and this Statement requires that they be accounted for
similarly, as equity transactions, (d)  When a subsidiary is
deconsolidated, any retained noncontrolling equity investment in the former
subsidiary be initially measured at fair value. The gain or loss on the
deconsolidation of the subsidiary is measured using the fair value of any
noncontrolling equity investment rather than the carrying amount of that
retained investment, (e) Entities provide sufficient disclosures that clearly
identify and distinguish between the interests of the parent and the interests
of the noncontrolling owners.
  This
Statement is effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2008 (that is, January 1, 2009, for
entities with calendar year-ends). Earlier adoption is prohibited. This
Statement shall be applied prospectively as of the beginning of the fiscal year
in which this Statement is initially applied, except for the presentation and
disclosure requirements. The presentation and disclosure requirements shall be
applied retrospectively for all periods presented. Management believes this
Statement will have no impact on the financial statements of the Company once
adopted.
  Note4-  Equipment
  The major
classes of property and equipment at December 31, 2007 are as
follows:
  Classification
                
                Estimated
      LifeEquipment
                
                5
      years
                
                $
                1,957,760Furniture
                
                5-7
      years
                
                
                104,353Vehicles
                
                5
      years
                
                
                9,0002,071,113Less:
      accumulated depreciation
                
                
                
                
                (1,258,281
                )Equipment,
      net
                
                
                
                $
                812,832
  Depreciation
expense for property and equipment for the years ended December 31, 2007 and
2006 was $307,774 and $249,349 respectively.
  Of the
totals presented above, capitalized equipment under capital leases had a gross
carrying value of $1,064,050 and accumulated depreciation of $500,610 at
December 31, 2007.
  F-13
 
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December
31, 2007
 Note5-  Acquisition,
Intangible Assets and Goodwill
  On
January 6, 2004, iGames acquired the capital stock of Available Money, Inc.
("Available Money") a provider of ATM cash access services.  This
expanded our casino ATM business but it also propelled the Company into
non-casino related ATM businesses, such as strip malls.  The
acquisition was accounted for under the purchase method of accounting and the
results of operations of Available Money are included in the operations of the
Company from January 6, 2004.  The purchase price was
$6,000,000.  The initial goodwill recorded on this purchase was
approximately $3,800,000 (see Note 1(I)).  The remaining $2,100,000
was assigned to contract rights based on the discounted projected cash flow from
the contracts through their expiration dates, using a 15% discount
rate.  At December 31, 2007, the net book value of contract rights was
$0.
  During
2004, certain of the Available Money contracts were not renewed and the Company
has canceled 1,470,589 shares of stock issued to the former Available Money
shareholders, representing a $2,000,002 reduction in the purchase price, the
Company has accordingly lowered the goodwill recorded on the purchase by
$2,000,002, to approximately $1,831,000. As part of the settlement with the
former owners of Available Money the purchase price was reduced by $150,000 and
the Company reduced goodwill by $150,000 in March of 2005.   As a
result of the July 2005 settlements of litigation with Equitex, Inc. and Chex
Services, Inc. goodwill was reduced by $1,500,000 to approximately $200,000. The
$1,500,000 reduction was offset against a corresponding reduction in loans
payable.  During 2006 the remaining balance of approximately $200,000
was written off.
  Intangible
assets at December 31, 2007 are as follows:
  (a)
                Intangible
      assets
  Estimated
      LifeSoftware
                15
      Years
                
                $
                9,928Software
      development costs
                5-7
      years
                
                
                1,348,269Website
      development costs
                3
      years
                
                
                24,000Contract
      rights
                1 –
      3 years
                
                
                2,100,306Other
                3
      years
                
                
                5,1083,487,611Less:
      accumulated amortization
                
                
                
                (2,167,436
                )Intangibles,
      net
                
                
                $
                1,320,175
 
  F-14
 
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December 31, 2007
 Amortization
expense, for intangible assets, for the years ended December 31, 2007 and 2006
was $5,804 and $67,259, respectively.
  The
following table represents the balance of intangible assets over the next 5
years and thereafter:
 
 Intangible
      assets subject to amortization
                
                Total
                
                
                2008
                
                
                2009
                
                
                2010
                
                
                2011
                
                
                2012
                
                
                ThereafterGross
      capitalized amount
                
                $
                3,487,611
                
                
                $
                3,487,611
                
                
                $
                3,487,611
                
                
                $
                3,487,611
                
                
                $
                3,487,611
                
                
                $
                3,487,611
                
                
                $
                3,487,611Accumulated
      amortization
                
                
                (2,167,436
                )
                
                
                (2,246,241
                )
                
                
                (2,378,139
                )
                
                
                (2,510,010
                )
                
                
                (2,641,881
                )
                
                
                (2,773,753
                )
                
                
                (3,487,611
                )Intangibles,
      net of accumulated amortization
                
                $
                1,320,175
                
                
                $
                1,241,370
                
                
                $
                1,109,472
                
                
                $
                977,601
                
                
                $
                845,729
                
                
                $
                713,858
                
                
                $
                0Amortization
      expense
                
                $
                5,804
                
                
                $
                78,805
                
                
                $
                31,898
                
                
                $
                131,871
                
                
                $
                131,871
                
                
                $
                131,871
                
                
                $
                713,858
   Note6- Notes
Payable
  Notes
payable at December 31, 2007 consisted of the following:
  In
      December 2006 the Company borrowed an aggregate $4,750,000 from a related
      party, Baena Advisors, LLC (“Baena”), evidenced by a promissory
      note.  Baena is owned by Sean Wolfington, the brother of our
      Chief Executive Officer and Chairman.  Interest on the note is
      payable monthly and bears interest at 30-day LIBOR plus 13% per
      annum.  In April 2007, the Lender paid off a bridge loan in the
      amount of $290,864 which included principal and all accrued interest, and
      added it to the principal amount of this note.  Monthly payments
      consist of interest only with the full amount of the note due on February
      28, 2009.
                
                $
                5,040,864In
      December 2006 the Company borrowed an aggregate $2,525,000 from Mercantile
      Capital, LLP, as evidenced by a promissory note.  Interest on
      the note is payable monthly and bears interest at a rate of 12.75% per
      annum.  Monthly payments consist of interest only with the full
      amount of the note due at the end of the two year term.
                
                
                2,498,190In
      June 2007 the Company borrowed $9,000 from a family member of our chief
      executive officer.  The note bears interest at 8% per annum and
      is payable monthly, beginning June 1, 2007.
                
                
                6,000Notes
      Payable
                
                $
                7,545,054
 
 F-15
 
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December 31, 2007
 At
December 31, 2007, the Company had the following outstanding accrued interest
payable for all debt instruments:
 
 Interest
      accrued on Notes Payable and Lines of Credit
                
                $
                103,063Interest
      accrued on non convertible related note
                
                
                1,783Total
      accrued interest payable, Convertible notes
                
                $
                104,846
  Estimated
interest expense on Notes Payable over the next threeyears is as
follows:
  2008
                
                $
                1,239,3952009
                
                
                147,7462010
                
                
                -Total
                
                $
                1,387,141
  Note7- Capital
Leases
  During
the third quarter of 2007, the Company refinanced its outstanding capital leases
with its ATM machine lender.  Obligations under capital lease of
$648,301 are now payable in sixty monthly installments of $15,000 beginning July
2007.  The imputed interest rate on this lease refinance is
10.81%
  Capital
lease obligations at December 31, 2007 consisted of the following:
  F-16
 
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December 31, 2007
 Obligation
      under capital lease, imputed interest rate at 10.81%; due June 2012;
      collateralized by equipment
                
                $
                648,301Less:
      current maturities
                
                
                (125,720
                )Long
      term obligation, net of current portion
                
                $
                522,581
  Future
minimum lease payments for equipment acquired under capital leases at December
31, 2007 are as follows:
  2008
                
                
                216,9782009
                
                
                200,2882010
                
                
                200,2882011
                
                
                200,2882012
                
                
                100,143Total
      minimum lease payments
                
                
                917,985Less
      amount representing interest
                
                
                (269,684
                )Present
      value of net minimum lease
                
                
                648,301Less
      current portion
                
                
                (125,720
                )$
                522,581
  Note8-  Lines of
Credit
  Lines of
credit at December 31, 2007 consisted of the following:
  Line
      of credit, interest is payable monthly at 9% per annum, the line is
      unsecured and due on demand.  This line has been established
      with one of the Company’s casino customers. This line is currently being
      disputed and is in litigation. See note 11 (4).
                
                $
                922,827Line
      of credit, non-interest bearing, the line is unsecured and due on
      demand.  This line has been established with one of the
      Company’s casino customers.
                
                
                761,175Line
      of credit, the line is unsecured and due on demand.  The Company
      pays a fixed stated amount of interest totaling $1,000 per
      month.  The payments are recorded and charged to interest
      expense.  This line has been established with one of the
      Company’s casino customers.  At December 31, 2007, the Company
      had recorded related accrued interest payable of $1,000 in connection with
      this line of credit.
                
                
                790,217Total
      Lines of Credit
                
                $
                2,474,219
  
 F-17
 
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December 31,
2007
  Note9- Related Party
Transactions
  During
2007, the Company issued a $175,000 note to its CEO in payment of the CEO’s
2006 guaranteed bonus.  This loan in aggregate with previous notes to
the Company’s CEO bear interest at 10%, are unsecured and due on
demand.  The outstanding principal and related accrued interest
balance on these notes at December 31, 2007 was $196,908.  Of the
total, $1,783 represented accrued interest payable.  Interest is
payable monthly and the total interest of $1,783 accrued at December 31, 2007
represents one months interest.
  During
2007, the Company was party to a lease for a rental unit in West Palm Beach,
Florida.  The lease for this property is with the brother of our CEO. 
Rent of $1,699 is payable monthly.
  Note10- Stockholders’Deficit
  Year
Ended December 31, 2007
  (A)          Common
Stock Issuances
  (1)  Cash
  None
  (2)  Services
  In
February 2007, the Company issued 1,979 shares of common stock to employees for
services rendered.  The Company valued the shares at the fair market
value on the date of issuance which was $0.50 per share based on the quoted
closing trading price and recorded as non-cash compensation expense of
$990.
  (3)  Exercise of
Options/Warrants
  In
February 2007, two directors exercised 200,000 options at $0.01 per
share.  The Company received proceeds of $2,000 from the transaction
and issued 200,000 shares of common stock.
 
 In
February 2007, our CFO/COO exercised 12,500 warrants at $0.01 per
share.  The Company received proceeds of $125 from the transaction and
issued 12,500 shares of common stock.
 
 In March
2007, a former employee exercised 12,500 options at $0.33 per
share.  The Company received proceeds of $4,125 from the transaction
and issued 12,500 shares of common stock.
 
 F-18
 
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December 31, 2007
 In March
2007, a director exercised 20,000 options at $0.01 per share.  The
Company received proceeds of $200 from the transaction and issued 20,000 shares
of common stock.
 
 In
November 2007, a former director exercised 200,000 options at $0.01 per
share.  The Company received proceeds of $2,000 from the transaction
and issued 200,000 shares of common stock.
 
 In
November 2007, a former director exercised 780,000 options at $0.01 per
share.  The Company received proceeds of $7,800 from the transaction
and issued 780,000 shares of common stock.
  B)           Accrued
Penalty Shares
  At
December 31, 2007, pursuant to the terms of a prior common stock offering with
registration rights, the Company has accrued penalties in the amount of 142,500
shares with respect to a delay in registering shares sold in a prior common
stock offering.  The Company has valued these shares at $81,048 based
on the quoted closing trading price every two weeks when the penalty
accrued.  The fair value of the penalty has been recorded as a
component of accrued expenses.
  (C)          Stock
Options
  The
Company follows SFAS No. 123R for all share based payment awards.  The
fair value of each option or warrant granted is estimated on the date of grant
using the Black-Scholes option pricing model. The following is a summary of all
stock option and warrant activity with employees and non-employees during
2007:
  (1) Option
Grants - Employees
  In
February 2007, 500,000 options at an exercise price of $0.38 per share were
issued to the Company’s CFO/COO pursuant to his employment
agreement.  250,000 options vested July 1, 2007 and 250,000 options
vest December 31, 2007.  The Company valued these shares using the
Black-Scholes valuation model at $249,393 and accordingly booked a non-cash
compensation expense in the same amount.
 
 In
February 2007, 100,000 options at an exercise price of $0.38 per share were
issued to an employee and vested immediately.  The Company valued
these shares using the Black-Scholes valuation model at $52,200 and accordingly
booked a non-cash compensation expense in the same amount.
 
 In March
2007, 400,000 options at an exercise price of $0.01 per share were issued to our
non-employee directors according to their compensation
arrangements.  The Company valued these shares using the Black-Scholes
valuation model at $246,800 and accordingly booked a non-cash compensation
expense in the same amount.
 
 F-19
 
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December 31, 2007
 In March
2007, 265,000 options at an exercise price of $0.38 per share were issued to 5
employees according to management and the board of directors for additional
compensation.  The Company valued these shares using the Black-Scholes
valuation model at $158,205 and accordingly booked a non-cash compensation
expense in the same amount.
 
 In
September 2007, 380,000 options at an exercise price of $0.01 per share were
issued to a former director according to his compensation arrangements prior to
his retirement from the board of directors.  The Company valued these
shares using the Black-Scholes valuation model at $109,934 and accordingly
booked a non-cash compensation expense in the same amount.
 
 In
December 2007, 527,500 options at an exercise price of $0.23 per share were
issued to 8 employees according to management and the board of directors for
additional compensation.  The Company valued these shares using the
Black-Scholes valuation model at $120,798 and accordingly booked a non-cash
compensation expense in the same amount.
 
 In
December 2007, 100,000 options at an exercise price of $0.01 per share were
issued to one of our non-employee directors according to their compensation
arrangements.  The Company valued these shares using the Black-Scholes
valuation model at $22,980 and accordingly booked a non-cash compensation
expense in the same amount.
  (2) Options
Vested – Employees
  In June
2007, options to purchase 100,000 shares of the Company’s common stock at
an exercise price of $0.42 per share previously issued to the Company’s Chief
Financial Officer vested according to the executives employment
agreement.  The Company valued these shares at $35,000, the fair
market value based on the Black-Scholes model, and accordingly recorded a
noncash compensation expense in the same amount.
  (3) Option
Forfeitures – Employees
  In
December 2007, 102,500 options held by 7 employees with an exercise price of
$0.33 per share expired.
  (4) Weighted
Average Assumptions for 2007 Option Grants – Employees
  Exercise
      prices on grant dates
                $0.01
      - $0. 38Expected
      dividend yields
                0%Expected
      Volatility
                132 – 178Risk
      free interest rates
                5%Expected
      lives of options
                10
      years
 
 F-20
 
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December 31, 2007
 Employee
stock option activity for the years ended December 31, 2007 and 2006 are
summarized as follows:
  Number
      of Shares
                
                
                Weighted
      Average Exercise PriceOutstanding
      at December 31, 2005
                
                
                3,602,500
                
                
                $
                0.19Granted
                
                
                4,480,780
                
                
                
                0.02Exercised
                
                
                (122,500
                )
                
                
                0.01Cancelled/Expired
                
                
                -
                
                
                
                -Outstanding
      at December 31, 2006
                
                
                7,960,780
                
                
                $
                0.10Granted
                
                
                2,272,500
                
                
                
                0. 25Exercised
                
                
                (1,212,500
                )
                
                
                0.01Cancelled/Expired
                
                
                (102,500
                )
                
                
                -Outstanding
      at December 31, 2007
                
                
                8,918,280
                
                
                $
                0.12Exercisable,
      December 31, 2007
                
                
                8,918,280
                
                
                $
                0.12
 
 The
following table summarizes the Company’s employee stock options outstanding at
December 31, 2007:
  Options
      OutstandingRange
      of Exercise Price
                
                Number
                
                Weighted
      Average
                  Remaining
      Life
                
                Weighted
      Average
                  Exercise
      Price0.01
                
                6,725,780
                
                6.01-9.00
                
                0.010.23-0.33
                
                727,500
                
                8.88-9.00
                
                0.240.38-0.42
                
                1,065,000
                
                6.46-9.17
                
                0.390.70-0.77
                
                212,500
                
                6.34-7.05
                
                0.752.00-2.28
                
                187,500
                
                5.42-5.84
                
                2.118,918,280
 
  (D) Warrants
  (1) Warrant
Grants – Consultants
 
 In
January 2007, the Company issued 900,000 warrants to purchase the Company’s
stock at an exercise price of $0.35, $0.37 and $0.70 respectively per share to a
consultant for services rendered.  According to the issuance 300,000
warrants at $0.35 vested January 31, 2007, 300,000 warrants at $0.37 vest
January 31, 2008 and the remaining 300,000 warrants at $0.70 will vest January
31, 2009.  The Company valued the 300,000 vested shares at $127,800
and accordingly booked a non-cash compensation expense in the same
amount.
 
 F-21
 
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December 31, 2007
  Warrant
activity for the year ended December 31, 2007 is summarized as
follows:
  Number
      of Shares
                
                
                Weighted
      Average Exercise PriceOutstanding
      at December 31, 2005
                
                
                1,457,500
                
                
                $
                2.72Granted
                
                
                2,182,500
                
                
                
                0.03Exercised
                
                
                (75,000
                )
                
                
                0.01Cancelled
                
                
                -
                
                
                
                -Outstanding
      at December 31, 2006
                
                
                3,565,000
                
                
                $
                1.13Granted
                
                
                900,000
                
                
                
                0.53Exercised
                
                
                (12,500
                )
                
                
                0.01Cancelled
                
                
                (632,500
                )
                
                
                4.75Outstanding
      at December 31, 2007
                
                
                3,820,000
                
                
                $
                0.37
   F-22
 
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December 31, 2007
 Warrants
      OutstandingRange
      of Exercise Price
                
                Number
                
                Weighted
      Average
                  Remaining
      Life
                
                Weighted
      Average
                  Exercise
      Price0.01
                
                2,277,500
                
                5.04-9.25
                
                0.010.30-0.37
                
                870,000
                
                1.95-9.35
                
                0.230.40-0.44
                
                30,000
                
                8.01
                
                0.420.47-0.51
                
                30,000
                
                7.93-8.01
                
                0.490.70
                
                300,000
                
                9.35
                
                -1.00
                
                75,000
                
                0.75
                
                1.002.40
                
                112,500
                
                1.08-5.50
                
                2.404.00-6.00
                
                125,000
                
                0.75
                
                4.003,820,000
  All
outstanding warrants are exercisable at December 31, 2007, with the exception of
600,000 warrants issued to a consultant of the Company.
  Year Ended December 31,
2006
  (A)
                Common
      Stock Issuances
 
 (1)  Cash
 
 In August
2006, the Company issued 4,800,000 shares of common stock to investors at $.25
per share. The Company received proceeds of $1,038,390 from the
transaction  net of offering costs.
  In
November 2006, the Company issued 300,000 shares of common stock to investors at
$.25 per share. The Company received proceeds of $75,000 from the
transaction.
  (2)  Services
 
 In
February 2006, the Company issued 9,158 shares of common stock to employees for
services rendered in lieu of cash bonuses.  The Company valued the
shares at the fair value on the date of issuance which was $.43 per share based
on the quoted closing trading price and recorded non-cash compensation expense
of $3,938.
  In
September 2006, the Company issued 6,217 shares of common stock to employees for
services rendered in lieu of cash bonuses.  The Company valued the
shares at the fair value on the date of issuance which was $.29 per share based
on the quoted closing trading price and recorded non-cash compensation expense
of $1,803.
  F-23
 
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December 31, 2007
 (3)  Exercise
of Options/Warrants
  In
February 2006, an employee and a consultant exercised options and warrants to
purchase 75,000 shares of the Company’s common stock at $.01 per
share.  The Company received proceeds of $750 from the transaction and
issued 75,000 shares.
  In April
2006, an employee exercised options to purchase 15,000 shares of the Company’s
common stock at $.01 per share, The Company received proceeds of $150 from the
transaction and issued 15,000 shares of common stock.
  In April
2006, an employee exercised options to purchase 25,000 shares of the Company’s
common stock at $.01 per share, The Company received proceeds of $250 from the
transaction and issued 25,000 shares of common stock.
  In July
2006, a lender exercised warrants to purchase 25,000 shares of the Company’s
common stock at $.01 per share The Company received proceeds of $250 from the
transaction and issued 25,000 shares.
  In
October 2006, a lender exercised warrants to purchase 50,000 shares of the
Company’s common stock at $.01 per share The Company received proceeds of $500
from the transaction and issued 50,000 shares.
  In
December 2006, an employee exercised warrants to purchase 12,500 shares of the
Company’s common stock at $.33 per share The Company received proceeds of $4,125
from the transaction and issued 12,500 shares.
  (B)
                Accrued
      Penalty Shares
  At
December 31, 2006, pursuant to the terms of a prior common stock offering with
registration rights, the Company has accrued penalties in the amount of 135,000
shares.  The Company has valued these shares at $81,048 based on the
quoted closing trading price every two weeks when the penalty accrues. The fair
value of the penalty has been recorded as a component of accrued expenses. In
February 2006, the Company’s Form SB-2 was declared
effective.  Pursuant to the terms of the original agreement once a
registration statement had been declared effective, accrual of penalty shares is
no longer required.  As of February 2006, the penalty shares have
ceased accruing.
  (C)
                Stock
      Options
  The
Company follows SFAS No. 123R for all share based payment awards.  The
fair value of each option or warrant granted is estimated on the date of grant
using the Black-Scholes option pricing model. The following is a summary of all
stock option and warrant activity with employees and non-employees during
2006:
  (1) Option
Grants - Employees
  In
November 2006, 100,000 options at an exercise price of $0.01 per share were
issued to the Company’s Chief Financial Officer according to a board
resolution.  The Company valued these shares at $25,960, the fair
market value based on the Black-Scholes model, and accordingly recorded a
noncash compensation expense in the same amount.
  F-24
 
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December 31, 2007
 In
November 2006, 200,000 options at an exercise price of $0.26 per share were
issued to the Company’s Chief Financial Officer according to a board
resolution.  The Company valued these shares at $51,520, the fair
market value based on the Black-Scholes model, and accordingly recorded a
noncash compensation expense in the same amount.
  In
November 2006, 400,000 options at an exercise price of $0.01 per share were
issued to the Company’s Board of Directors according to a board
resolution.  The Company valued these shares at $103,840, the fair
market value based on the Black-Scholes model, and accordingly recorded a
noncash compensation expense in the same amount.
  In
December 2006, 3,780,780 options at an exercise price of $0.01 per share issued
to the Company’s Chief Executive Officer vested according to the executives
employment agreement.  The Company valued these shares at $1,888,122,
the fair market value based on the Black-Scholes model, and accordingly recorded
a noncash compensation expense in the same amount.
  (2) Options/
Warrants Exercised – Employees/Consultants
  In
February 2006, a consultant exercised warrants to purchase 5,000 shares of the
Company’s common stock at $.01 per share. The Company received proceeds of $50
from the transaction and issued 5,000 shares of common stock.
  In
February 2006, an employee exercised options to purchase 70,000 shares of the
Company’s common stock at $.01 per share.  The Company received
proceeds of $700 from the transaction and issued 70,000 shares of common
stock.
  In April
2006, an employee exercised options to purchase 15,000 shares of the Company’s
common stock at $.01 per share, The Company received proceeds of $150 from the
transaction and issued 15,000 shares of common stock.
  In April
2006, an employee exercised options to purchase 25,000 shares of the Company’s
common stock at $.01 per share, The Company received proceeds of $250 from the
transaction and issued 25,000 shares of common stock.
  In
December 2006, an employee exercised options to purchase 12,500 shares of the
Company’s common stockat $.33 per
share.  The Company received proceeds of $4,125 from the transaction
and issued 12,500 shares
  (3) Options
Vested – Employees
  In May,
2006, options to purchase 12,500 shares of the Company’s common stock at an
exercise price of $0.33 per share previously issued to an employee vested
according to their stock option agreement.  The Company valued these
shares at $4,266, the fair market value based on the Black-Scholes model, and
accordingly recorded a noncash compensation expense in the same
amount.
  F-25
 
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December 31, 2007
 In June
2006, options to purchase 50,000 shares of the Company’s common stock at an
exercise price of $0.42 per share previously issued to the Company’s Chief
Financial Officer vested according to the executives employment
agreement.  The Company valued these shares at $18,955, the fair
market value based on the Black-Scholes model, and accordingly recorded a
noncash compensation expense in the same amount.
  In
December, 2006, options to purchase 12,500 shares of the Company’s common stock
at an exercise price of $0.33 per share previously issued to an employee vested
according to their stock option agreement.  The Company valued these
shares at $4,266, the fair market value based on the Black-Scholes model, and
accordingly recorded a noncash compensation expense in the same
amount.
  (4) Option
Forfeitures – Employees
  None
  (5) Weighted
Average Assumptions for 2006 Option Grants – Employees
  Exercise
      prices on grant dates
                $0.01
      - $0.26Expected
      dividend yields
                0%Expected
      Volatility
                157
      – 199Risk
      free interest rates
                4%Expected
      lives of options
                10
      years
 
 Note 11-Commitments and
Contingencies
  (1)  Operating
Leases
  In
connection with converting all of the Available Money ATM’s, the Company now
pays rent to various mall properties where it has ATM machines.  These
monthly rents average $25,000 per month in the aggregate.
  The
Company is party to a 39-month lease agreement pursuant to which it rents office
space in Pennsylvania at a monthly rent of $2,635.  This lease expired
February 2008 and the company is now on a month to month lease.
  The
Company’s total rent expense under operating leases was $360,828 and $474,106
for the years ended December 31, 2007 and 2006, respectively.
  Estimated
rent expense under non-cancelable operating leases over the next five years is
as follows:
  F-26
 
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December 31, 2007
 
 2008
                282,2192009
                267,9842010
                111,6602011
                -20112
                -Total
                661,863
 
 (2)  Casino
Contracts
  The
Company operates at a number of Native American owned gaming establishments
under contracts requiring the Company to pay commissions to operate at the
respective gaming locations.
  Typically,
the fees are earned by the gaming establishment over the life of the contract
based on one of the following scenarios:
  (A)
                A
      dollar amount, as defined by the contract, per transaction volume
      processed by the Company.
  (B)
                A
      percentage of the Company’s profits at the respective
      location.
  As of
December 31, 2007 the Company has recorded $433,752 of accrued commissions on
casino contracts. Pursuant to the contracts, the Native American owned casinos
have not waived their sovereign immunity.
  (3)  Employment
Agreements
  (A)  CEO
  (1)  Employment
Agreement
  In
January 2004, the Company entered into a five-year employment agreement with its
Chairman, President and Chief Executive Officer.  In addition to an
annual salary of $350,000 per year (subject to annual increases at the
discretion of the Board of Directors )  (the "Base Salary"), the
employment agreement provides for a $200,000 signing bonus, a guaranteed bonus
equal to 50% of his Base Salary in any calendar  year
(the  "Guaranteed  Bonus" )   and a
discretionary incentive bonus of up to 50% of his Base Salary in any calendar
year pursuant to a bonus program to be adopted by the Board of Directors
(the "Incentive Bonus").  Pursuant to his employment agreement, the
officer is entitled to fringe benefits including participation in retirement
plans, life insurance, hospitalization, major medical, paid vacation, a leased
automobile and expense reimbursement.  At December 31, 2007, the
Company had accrued $175,000 for bonus. During 2007, the Company’s CEO
agreed to defer $70,000 of his base salary, which the Company has
accrued.
  F-27
 
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December 31, 2007
 (2) Commissions
Payable
  The
Company pays sales commission to sales persons closing various
contracts.  The CEO was paid $5,708 in sales commission for
2007.
  (B)  CFO/COO
  In March
2007, the Company entered into an amended and restated employment agreement,
dated March 1, 2007 which amended and restated the employment agreement, dated
June 14, 2005, by and between the Company and its Chief Financial
Officer.  Mr. Walsh shall serve as the Company’s Chief Financial
Officer and Chief Operating Officer.
  The term
of the Employment Agreement was retroactive to December 31, 2006 and continues
until the earlier of CFO’s death or termination by either the Company
or  the CFO.  The CFO/COO annual salary shall be no less
than $170,000.  Upon termination of the Employment Agreement within
six (6) months following a change in control of the Company either by the
Company without cause or by the CFO/COO, the CFO/COO will receive severance pay
equal to one year’s salary.
  In
addition, the CFO was granted options to purchase 500,000 shares of the
Company’s common stock with an exercise price of $.38 per share. The Options
have a term of ten years and are exercisable as follows:  (i) options
to purchase 250,000 shares of the Company’s common stock are exercisable on July
1, 2007; and (ii) options to purchase 250,000 shares of the Company’s common
stock are exercisable on December 31, 2007, in each case as long as the CFO is
employed by the Company.  The Options are immediately exercisable
following a change in control of the Company.  If CFO’s employment by
the Company is terminated by the Company without good cause or CFO elects early
termination with good reason, all unvested Options automatically
vest.
  (4)  Litigation
  On or
about August 28, 2007 , The Campo Band of Kumeyaay Indians d/b/a The Golden
Acorn Casino (the "Casino"), commenced an Arbitration proceeding before the JAMS
Arbitration service in San Diego.  In its Demand for Arbitration, the
Casino alleges that Money Centers of America, Inc. ("MCA") breached its
Financial Services Agreement with the Casino.  The Casino seeks
damages in excess of $950,000.  MCA believes the Casino's claims lack
merit and intends to vigorously defend them.  MCA believes the Casino
wrongfully terminated the Financial Services Agreement almost three years prior
to the conclusion of its contractually agreed upon renewal term.  MCA
has therefore filed a counterclaim against the Casino and seeks to
recover by way of offset or otherwise approximately $800,000 in damages
which resulted from the Casino's wrongful early termination of the Financial
Service Agreement.
 
 F-28
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December 31,
2007
  Note 12-  Customer
Concentrations
  For the
year ended December 31, 2007, approximately 63% of total revenues were derived
from operations at two full service casinos.  Two other customers
represented approximately 20% of our total revenues for the year ended December
31, 2007.
 
 For the
year ended December 31, 2006, approximately 62% of total revenues were derived
from operations at three full service casinos. No other customers represented
more than ten percent of the Company’s total revenues for the year ended
December 31, 2006.  One of these casinos did not renew its contract in
May of 2006, but still represented 16.7 percent of our revenues in
2006.
  Note 13-  Cash Rental
Program and RelatedInterest
Expense
  Included
in interest expense are monies owed to an unrelated vendor for interest
charges.  The interest is based on the amount of cash in the Company’s
Available Money ATM machines and network and is calculated on a daily
basis.  The balance of this cash funded by the vendor in the Company’s
ATM machines at December 31, 2007 was approximately $977,000.  The
interest rate on the $977,000 is prime plus zero. Effectively the company rents
this cash.  The Company does not reflect this cash as an asset or the
loan as a liability on its balance sheet at year end. Interest expense from this
cash was $136,930 for 2007.
  Note 14-  Income
Taxes
  Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. Significant components of the
Company’s deferred tax assets (liabilities) are as follows:
  December
      31,Deferred
      tax assets:
                
                2007
                
                
                2006Net
      operating loss carryforwards
                
                $
                3,658,000
                
                
                $
                2,779,000Accrued
      expenses
                
                
                325,000
                
                
                
                325,000Depreciation
      and amortization
                
                
                (45,000
                )
                
                
                60,000Compensatory
      element of stock options
                
                
                1,132,000
                
                
                
                739,000Less
      valuation allowance
                
                
                (5,070,000
                )
                
                
                (3,903,000
                )Net
      deferred tax assets
                
                $
                -
                
                
                $
                -
  The
reconciliation of the income tax computed at the U.S. federal statutory rate to
income tax expense for the periods ended December 31, 2007 and
2006:
  December
      31,2007
                
                
                2006Tax
      (benefit) at federal statutory rate (34%)
                
                $
                (1,253,000
                )
                
                $
                (1,520,000
                )Stock
      issued for interest
                
                
                -
                
                
                
                52,000Goodwill
      impairment
                
                
                -
                
                
                
                71,000Ammortization
                
                
                86,000
                
                
                
                -Change
      in valuation allowance
                
                
                1,167,000
                
                
                
                1,397,000Net
      income tax benefit
                
                $
                -
                
                
                $
                -
  F-29
 
 Money
Centers of America, Inc. and Subsidiaries
 Notes
to Financial Statements
 December 31, 2007
 FASB No.
109 requires a valuation allowance to reduce the deferred tax assets reported
if, based on weight of the evidence, it is more likely than not that some
portion or all of the deferred tax assets will not be realized. After
consideration of all the evidence, both positive and negative, management has
determined that a full valuation allowance at December 31, 2007 is necessary to
reduce the deferred tax assets to the amount that will more likely than not be
realized. At December 31, 2007, the Company has available net operating loss
carryforwards of approximately $10,453,000, which expire in the year
2021-2027.  $2,425,000 of the net operating losses are subject to the
limitations under Section 382 of the Internal Revenue Code relating to changes
in ownership in the amount of $231,000 annually as calculated under code Section
382 of the Internal Revenue Code.
  Note 13-  Subsequent
Events(Unaudited)
 
 In April
2008, the Company granted options to purchase and aggregate 400,000 options of
the Company’s common stock to its Board of Directors.  The options
have an exercise price of $0.01.
  
  F-30