U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
Mark One

[ X ]          ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the Fiscal Year ended September 30, 1999

                                       OR

[   ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the transition period from _____ to _____

                         Commission File Number 0-25148

                        GLOBAL PAYMENT TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)

             Delaware                                           11-2974651
   (State or other jurisdiction                              (I.R.S. Employer
 of incorporation or organization)                           Identification No.)

 20 East Sunrise Highway, Suite 201, Valley Stream, New York       11581
             (Address of principal executive office)             (Zip Code)

Registrant's telephone number, including area code  516-256-1000

Securities registered pursuant to Section 12(b) of the Act:

                                      None

Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock, par value $.01 per share
                                (Title of class)

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

<PAGE>




     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best  of  the  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [X]

     The aggregate  market value of the Common Stock of the  registrant  held by
non-affiliates  of the registrant,  based on the average bid and asked prices on
December 21, 1999, was approximately $40,732,800.

     As of December 21, 1999,  the  registrant  had a total of 5,624,675  Common
Shares outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the definitive  Proxy  Statement of the registrant for the year
ended  September 30, 1999 are  incorporated  by reference  into Part III of this
report.






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                                     PART I

Item 1. Business

General

Global Payment Technologies, Inc. (the "Company") was originally incorporated in
New York in 1988 under the name Coin Bill  Validator,  Inc. In March  1997,  the
Company's  shareholders  approved  a change of the  Company's  name and state of
incorporation  from New York to  Delaware,  effected  through  the merger of the
Company into the Company's wholly-owned subsidiary, Global Payment Technologies,
Inc., a Delaware corporation.

The Company designs and manufactures currency validation systems including paper
currency validators and related paper currency stackers,  and sells its products
in the United States and numerous international markets.  Validators receive and
authenticate  paper  currencies  in a variety of automated  machines,  including
gaming and gaming related  equipment,  beverage and vending  machines and retail
equipment that dispense products,  services, coinage and other currencies.  Note
stackers are sold with most validators and are designed to store validated paper
currency and, in some cases,  record and store information on contents,  usually
in secure  removable  cassettes.  Although the Company knows of no  commercially
available validator that is counterfeit-currency-proof, the Company's validators
and stackers offer  significant  protection  against  tampering and  counterfeit
currencies  and  provide  tamper-evident  storage  of  validated  currency.  The
Company's  validators  are  adaptable  to a wide  variety of original  equipment
manufacturer  ("OEM")  applications  and have been engineered into the design of
most major gaming and numerous beverage and vending machines sold worldwide. The
Company's  products  offer a highly  competitive  level of  performance  and are
designed to provide ease of maintenance and repair.

In August 1996, the Company acquired a 50%  non-controlling  interest in a South
African   affiliate,   Global  Payment   Technologies  South  Africa  Pty.  Ltd.
("GPT-SA"), which on July 3, 1998, changed its name to Global Payment Technology
Holdings  (Proprietary) Limited ("GPTHL").  On May 29, 1998, Hosken Consolidated
Investments  ("HCI"), a South African investment company,  purchased a one-third
interest in GPT-SA.  Terms of the transaction called for HCI to purchase certain
shares from the Company and the Bevin Trust (GPT-SA's founding shareholders), as
well as  additional  shares  directly  from GPT-SA,  which reduced the Company's
ownership  of  GPT-SA  from  50% to 33%.  On  November  1,  1999,  GPTHL  formed
International  Payment Systems Pty. Ltd.  ("IPS") and assigned its rights to all
of the non-gaming activities,  primarily the distribution of Ingenico, De La Rue
and Scan Coin products.  The Company  currently has a 30% interest in IPS. GPTHL
holds the exclusive  distribution  rights to the Company's products in the South
African  region.   Also  on  November  1,  1999,  On-Line  Gaming  Systems  Inc.
("On-Line"),  a  Florida-based  Nasdaq listed company  specializing  in Internet
wagering and other casino based  products,  acquired a 23.5% equity  interest in
GPTHL through the purchase of shares from the three partners and management. The
ability to distribute  On-Lines' products allows GPTHL to broaden its market and
product line. With the closing of this transaction,  the Company now has a 23.5%
interest in GPTHL.



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<PAGE>

In January  1997,  the  Company  acquired a 50%  non-controlling  interest  in a
China-based affiliate, Hangzhou CBV Plastics Corp. Ltd. This entity manufactures
plastic  and  metal  components,  some of which are used by the  Company  in its
production.

In August  1997,  the  Company  acquired a 50%  non-controlling  interest  in an
Australian affiliate,  Global Payment Technologies  Australia Pty. Ltd ("GPTA").
This entity is  responsible  for sales and service of the Company's  products in
Australia and New Zealand on an exclusive basis.

In June 1998, the Company formed Global Payment  Technologies  (Europe)  Limited
("GPT-Europe"),  which is based in the United  Kingdom  and is  responsible  for
sales and service of the Company's products in Europe.  GPT-Europe purchased the
assets and assumed the  liabilities of Global Payment  Technologies  (U.K.) Ltd.
("GPT-UK"), the Company's prior independent European distributor, as of February
28, 1998.  The Company owns 70% of  GPT-Europe,  with the remaining 30% owned by
GPT-Europe's operations manager, a former principal of GPT-UK.

On April 7, 1999, the Company acquired a 25% equity interest in Abacus Financial
Management Systems,  Ltd.  ("Abacus"),  a UK-based software company.  Abacus has
developed a cash management system, of which the Company's  validators are a key
component,  primarily  intended to serve the retail  market.  In  addition,  the
Company and the  principal of Abacus have formed  Abacus  Financial  Management,
Inc.  USA,  which is 80% owned by the  Company  and has the  exclusive  right to
distribute Abacus' product in North America.

Background and History

In the 1980s,  a general  trend  developed  with  respect to an  increase in the
incorporation of paper currency  validators in a large number of beverage,  food
and novelty vending machines that offered primarily low-priced items. During the
1990s,  subsequent  technological  improvements  in the sensory  capabilities of
validators  created the ability to process high  volumes of larger  denomination
notes,  which led to the extensive  use of  validators in many new  applications
including casino gaming machines, lottery ticket dispensing devices and postage,
transportation,  parking and high-value vending machines. This trend accelerated
during  the  1990s as a  result  of the  realization  that  currency  validators
positively  impacted  sales  revenues  and the overall  growth in the  worldwide
gaming and beverage and vending industries.

Since  incorporation,  the  Company's  net sales have  grown from  approximately
$35,000 in fiscal  1989 to $16.7  million in fiscal  1996,  to $23.9  million in
fiscal 1997,  to $39.4  million in fiscal 1998,  and to $43.9  million in fiscal
1999.  Prior to January  1993,  the  Company's  marketing  efforts were directed
primarily  toward  domestic  distribution  and  end-users  that  focused  on the
replacement  and  retrofit  markets  for  validators  in  amusement  and  gaming
machines.  Commencing in January 1993,  the Company began to focus its marketing
efforts on OEMs of gaming machines and automated  vending machines that dispense
beverages,  telephone cards and postage stamps. In addition, since January 1993,
the  Company  has   progressively   increased  its  marketing   efforts  to  the
international market for currency validation systems, particularly targeting the
international  gaming industry.  The Company's  international  sales amounted to
80%,  84% and 73% of net sales in  fiscal  1999,  1998 and  1997,  respectively.
Management


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<PAGE>

believes the international  market for currency validation systems may grow at a
faster  rate  than in the  United  States  and,  therefore,  may  represent  the
Company's best long-term growth opportunity.  However, the Company has been able
to increase its presence in the domestic  gaming market as a result of increased
domestic  activity  by  certain of the  Company's  international  customers  and
through  increased  sales and support  provided by the  Company's  branch office
located in Las Vegas, Nevada.

Marketing Strategy

The Company has  continued to focus its marketing  efforts on those  segments of
the  marketplace  which  require  a  relatively  high  degree  of  security  and
substantial  custom  design  work  that  is  not  adequately  served  by  larger
competitors  which focus  primarily on the broader,  higher-volume  market using
standardized  product  configurations.  This  focus  has been  effective  in the
worldwide  gaming market and is the "niche" strategy that allowed the Company to
develop a strong  international  customer  base  that  originally  started  with
manufacturers too small to attract the Company's competition.  The focus of this
strategy has, and continues to be, the creation of an increasing presence in the
international  gaming  industry which  continues to gain momentum as markets and
customers  grow.  In 1997,  this strategy led to the  Company's  products  being
designed into most of the major OEMs' gaming  machines.  In 1998,  this strategy
led to new  customers  that  opted to use the  Company's  products  based on its
growing strength internationally and its reputation for working closely to adapt
to customers'  needs. In 1999, the Company  continued to strengthen and grow its
relationships  with the OEMs through  increased  joint marketing and advertising
efforts and by creating  databases to allow the OEMs an  opportunity to seek new
potential markets worldwide.  As a result, the Company is now in the position to
gain  additional  business  based on its  acceptance as the currency  validation
standard  for a number of growing  markets  worldwide.  The  establishment  of a
strong  international  presence continues to provide for growth opportunities in
the domestic gaming sector,  as this market is viewed as an important target for
expansion by several of the  Company's  international  customers.  In 1999,  the
Company also began a seminar  program that  provided  certain key  customers and
their personnel with an in-depth orientation of the Company and its operations.

In 1998,  the Company  expanded its  marketing  efforts to include the end-users
(i.e., casino operators) who purchase machines from the OEMs to help ensure that
the Company's  validator  products will be specified as the product of choice in
new orders. The Company also focused on creating business in the retrofit market
for  certain  important  gaming  venues  such as Nevada,  where  gaining  market
presence  would provide  improved  visibility  and  credibility  in the domestic
market.  The expected results of improved  recognition were achieved in 1998. In
1999,  this  strategy of working with the end-users was expanded to include more
direct  operator  technical  training  and  participation  in seminars  with the
Company's OEM customers.  By marketing  directly to the end-users in conjunction
with the OEMs,  the Company  expects its products  will gain  acceptance  as its
customers'  gaming machines gain entry into major casinos or regions  previously
dominated by currency validators of the Company's competition.  During 1999, the
Company began to develop  programs and plans to allow for improved  education of
its customers.  Such programs and plans will include the development of formally
documented  maintenance  schedules  and  similar  programs  to  be  proposed  to
customers  during 2000.  These  maintenance  programs  will likely be offered in
coordination with the Company's OEM customers, and are


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<PAGE>

intended to broaden  awareness of the Company and its products within the gaming
industry. Additionally, the Company will be focusing increased marketing efforts
on explaining the technical  features and customer  support  programs of current
and  future  products  in  order  to  further   differentiate  itself  from  the
competition.  As  a  specific  example,  the  Company  will  have  an  excellent
opportunity in the domestic market to interface and train its end-users when the
new $5 and $10 notes are  released,  which is expected in May 2000.  The Company
and its OEM customers will work together at the casino  technical and management
levels during this upgrade process, which should generate increased goodwill and
understanding  of the  Company  and its  commitment  to  service.  This  overall
strategy  allows the  Company's  products to continue  to  demonstrate  the high
performance and quality achieved in a number of worldwide markets.

The Company's  strategy in the large worldwide beverage and vending industry has
been, and will continue to be, the same "niche" effort that has been  successful
in the gaming marketplace.  In 1998 and 1999, the Company continued to focus its
efforts on creating  relationships with the major OEMs and end-user customers in
certain  emerging  international  markets.  By  working  with  both the OEMs and
end-users to adapt its products to meet their needs, the Company is beginning to
create a growing  presence in the beverage  and vending  market with its current
product lines.  This  flexibility to adapt its products to meet customers' needs
led to a  successful  product  launch in Russia  during 1998 and has allowed the
Company to establish new sales in Europe with major vending operators.  In 2000,
this strategy will continue to be used to develop  particular  areas such as the
emerging markets in Eastern Europe and the Pacific Rim. Management believes this
strategy  will assist in providing  the Company with  increased  visibility  and
credibility  in the  overall  beverage  and  vending  industry.  The Company has
recognized  the need to develop a product that can more  effectively  compete in
terms of price  and  features  with  other  manufacturers'  validators  in these
industries  and has placed a high priority on this product  development  effort.
The Company expects to begin field trials during the fourth calendar  quarter of
2000.  Also in 2000,  in an effort to gain  momentum  in the  worldwide  vending
market for the planned new product release, the Company is modifying its current
Generation  II product  planned to be more price  competitive,  primarily in the
international  vending  marketplace.  This  effort is  expected  to provide  the
Company  with   additional   market   penetration  and  sales  revenues  in  the
international vending market during fiscal 2000.

The  Company's  revenue  growth is due primarily to its focus on the customer as
well as on the  development of products that utilize  features that add value to
its customers in the gaming and beverage and vending  industries.  This strategy
will be further  expanded with the  anticipated  release and trials of three new
products  beginning with the second  calendar  quarter of 2000. The Company will
strive to raise the level of currency  acceptance and  counterfeit  rejection of
its validators to new  standards,  in addition to expanding the functions of the
validator to handle the processing of payments or transactions through a variety
of media,  both paper and  electronically  based.  During 2000, the Company will
also  strive to expand its product  base  through its  worldwide  joint  venture
partners and strategic  alliances with other  companies that offer  technologies
that are synergistic to its currency validation products.  Management expects to
build upon the  strengths and skills  developed by the  Company's  joint venture
partners  in areas such as  electronic  funds  transfer  point-of-sale  (EFTPOS)
hardware and software  development.


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<PAGE>

Through the creation of  integrated  payment  solutions for its  customers,  the
Company will continue to provide value-added products and services.

The Company's overall sales and marketing  strategy in both the worldwide gaming
and beverage and vending markets is to deliver a high quality product  supported
by a local  sales  and  service  organization  in order  to make  the  Company's
products the market standard for currency validation  products.  The Company has
successfully  pursued  this  strategy in  Australia  and South  Africa where the
Company's  products are accepted as the industry  standard in the gaming market.
Also  toward  this  end,  during  fiscal  1996  and  fiscal  1997,  the  Company
established  joint  ventures  that  provide  local  sales  and  service  in both
Australia and South Africa and  strengthened  its  distributor  relationship  in
Italy. In addition,  during fiscal 1998 the Company formed GPT-Europe to provide
local sales and service in Europe.  During 1999, the Company  expanded its local
sales  and  service  network  in  Southeast  Asia,  as it  signed  a  three-year
distribution  agreement with RGB Ltd., a Malaysian company ("RGB"). RGB has been
a customer of the Company for several years and,  through its  organization  and
many  contacts in the region,  this  alliance  should  strengthen  the Company's
reputation  in this  region and  provide  new sales  opportunities.  The Company
expects to continue to expand its international  sales and service  capabilities
throughout 2000.

To date,  the  Company's  success  has been  dependent  upon the use of paper or
simulated  paper currency in automated  payment  systems for gaming and beverage
and vending applications.  A substantial diminution of the use of paper currency
as a  means  of  payment  through  a  return  to  extensive  use of  high-value,
metal-based  coinage or the  widespread  adoption of electronic  funds  transfer
systems based on credit,  debit or "smart-cards"  could materially and adversely
affect the Company's  future growth until and unless the Company  develops other
products  that are not solely  dependent on the use of paper or simulated  paper
currency.  The Company believes that aspects of its technology and manufacturing
expertise - for example, the technology  applicable to electro-optical  scanning
and certain of its patented  technologies  and  proprietary  algorithms,  may be
applicable to products and systems for  conducting  transactions  using forms of
currency  other than paper.  The Company is  currently  investigating,  and will
continue to investigate,  such opportunities and endeavor to develop new product
applications  where markets for such products may exist.  However,  no assurance
can be given that the Company  will be able to  successfully  develop and market
such new products and systems.

Products

Since  inception,   the  Company  has  endeavored,   through  its  research  and
development  and  manufacturing  efforts,  to  provide  products  that  meet the
specific  performance  requirements  of its customers.  These  requirements  are
continually evolving as the markets for currency validators continue to grow and
as  technological  advances are  incorporated  into the  products'  design.  The
Company spent approximately $300,000,  $350,000 and $245,000 during fiscal 1999,
1998 and fiscal 1997, respectively,  on research and development.  The Company's
research  and  development  consists  primarily of efforts to expand its product
lines into new applications and markets.  The Company's new product  development
efforts are focused on the design of its next generation of validator  products,
the first of which  will be the  Generation  III IDS.  The  Company  anticipates
beginning  field trials in the second  calendar  quarter of 2000


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with  commercial  availability  in the third calendar  quarter of 2000.  Late in
calendar  2000,   the  Company  plans  to  introduce  a  new  product   designed
specifically   to  address  the   requirements   of  the  beverage  and  vending
marketplace. This product is expected to be commercially available in early 2001
and is intended to enable the Company to increase its overall market penetration
and  share  of  validator  sales  to  the  international  beverage  and  vending
marketplace.  Building from its engineering  libraries,  the Company anticipates
the  introduction  of a third new  product in early 2001 that will  provide  the
Company  additional  flexibility  in meeting  its  customers'  needs in both the
domestic and international gaming markets.

The Company's principal products include three basic validator models and a wide
range of comprehensive  currency databases and note stacker  configurations.  In
fiscal 1997, the Company  planned for a shift in demand toward its Generation II
product line and such sales  amounted to 58% of unit sales.  During  fiscal 1998
and 1999,  this shift  continued and Generation II product line sales  accounted
for 72% and 79%,  respectively of unit sales. The Generation III IDS product has
been designed to be a drop-in  replacement  for Generation II IDS and is focused
toward  bringing  new  technological  features  to  the  marketplace.  Once  the
Generation III product line is commercially available, the Company expects sales
to shift from its  Generation  II product  line.  The  Company  believes  it has
adequately reserved for inventory  obsolescence for the shift in demand from its
Generation I products to its Generation II products and will continually  assess
the adequacy of inventory  reserves for the anticipated  shift in demand towards
its Generation III products.

The  Model  125  ("M-125")  is the  Company's  first  generation  multi-country,
multi-denominational  validator model specifically designed for the beverage and
vending  industries where its  space-saving  upstack design makes it popular for
use in machines where space is at a premium. The M-125's note stackers are fully
detachable  and  available  with  capacities  of 150, 300 and 600 notes.  During
fiscal 1998 and 1999,  M-125 sales were  primarily  in vending  applications  in
Italy,  helping to grow the Company's presence and credibility in that important
European  market.  It is expected that this product will begin to be replaced in
fiscal 2001 by a new beverage and vending product currently under development.

The  Model  150  ("M-150")  is the  Company's  first  generation  multi-country,
multi-denominational validator designed to fit machines where space is available
either to the rear or downward.  The M-150 is available  with locking  removable
cassette bill  stackers in 500,  1,000 and 2,000 bill  capacities  and is United
States  Postal  Service,  Department  of Gaming  Enforcement  ("DGE") and Gaming
Laboratories,  Inc.  ("GLI")  approved.  Due to the growth and acceptance of the
Generation II product line, the M-150 product has been substantially  reduced in
1999 and is expected to be completely phased out by early 2001.

The Company's Generation II product line features several technological advances
designed  specifically to meet the exacting requirements of the gaming industry.
The  Generation II line includes the Company's  "IDS," "IDUS," "IBS," and "IBSi"
validators.  The IBSi has been  positioned  as a  replacement  for the Company's
first generation  M-150 validator.  Generation II products have been approved by
DGE and GLI, as well as by a number of U.S. and international test labs.



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Generation II validators  are offered in a wide variety of  configurations  that
can provide  solutions for most worldwide  gaming  markets,  as well as for many
beverage and vending  markets.  Generation II validators  can be configured  for
down-stack  applications  which  allow the note  stacker,  a security  removable
cassette, to be reached through a separate front entrance in the gaming machine.
Rear  stacker  configurations  are also  available.  The  front  section  of all
Generation  II validator  units can be opened  easily to allow for  maintenance,
repair or clearance of the currency  pathway without  violating the integrity of
the  associated  security  stacker.  Generation  II  validators  offer  currency
acceptance  of  notes up to 3.34  inches  (85 mm) in  width  and  have  enhanced
features for gaming and high security  applications.  These  features  include a
multi-level  high security  validation  process with  side-looking  sensors,  an
animated  bill  runway  with  "smart   visuals"  for  customer   attraction  and
diagnostics,  a user-selectable currency denomination acceptance and an optional
bar-code  reader for tickets and coupons.  The  Generation II line also offers a
"soft drop analyzer"  ("SDA") option.  This patented SDA feature allows the note
stacker cassette to maintain and track specific  information such as currency or
coupons in the cassette by quantity and  denomination;  the specific  machine or
game that the cassette was removed from; the  acceptance  rate of the validator;
and  time-in/time-out of the cassette from the gaming machine.  This information
can be easily  downloaded,  via a docking station provided by the Company,  to a
personal computer allowing instant feedback/tracking for the machine operator.

Product Performance and Warranties

The  Company's  validator and note stacker  products are generally  covered by a
one-year warranty against defects in materials or workmanship, which the Company
believes is standard for the  industry.  The Company or its  authorized  service
agents  will repair or replace any units which  require  warranty  service.  The
Company  does not  warrant  that its  validators  will  reject  all  counterfeit
currencies and believes that there is no commercially  available  validator that
is  counterfeit-currency-proof  or warranteed as such. To support its increasing
international  market  presence,  the  Company has  expanded  its  warranty  and
non-warranty support coverage to provide in-country  capability in key worldwide
markets (e.g.  Australia,  South Africa,  Europe and Southeast  Asia).  In these
markets,  the local sales and service joint venture  partners  provide  warranty
labor while the  Company's  primary  product  support in these markets is in the
form of warranty parts. The Company expects to expand its international  service
capabilities during 2000. Over the last three years, the Company has experienced
an increase in its cost of warranting its products.  Warranty  expense for 1999,
1998  and  1997  was  $490,000,  $175,000  and  $130,000,   respectively,  which
represents actual costs incurred and an estimate of future costs to be incurred.
The  increase in 1999 was the result of  increased  unit sales of the  Company's
products,   changes  in  design  to  comply  with  regulatory  requirements  and
additional costs to maintain its various components.

Marketing and Sales

An "in-house"  sales force  consisting of sales  representatives,  sales/product
technicians  and customer  service  support  personnel  conducts  the  Company's
primary  sales and  marketing  efforts in both the  domestic  and  international
markets.  During the latter  part of fiscal  1996 and during  fiscal  1997,  the
Company  established joint ventures providing local sales and service in


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the key markets of South  Africa and  Australia  and a  Company-owned  sales and
service  office was opened in the important  Las Vegas,  Nevada  market.  During
fiscal 1998, the Company formed GPT-Europe, a 70%-owned entity, to provide local
sales and  service in Europe and  acquired  the  assets and  liabilities  of its
former independent European  distributor.  During 1999, the Company expanded its
local sales and service capabilities in Southeast Asia as it signed a three-year
distribution agreement with RGB Ltd., a Malaysian company. The overall sales and
service  network  provides  effective  international  coverage for the Company's
products and  customers  and is an  indication  of the  Company's  commitment to
providing superior service worldwide.

During fiscal 1998 and 1999, the Company  expanded its "Technical  Services" and
"Customer Service" groups,  which were formed in 1997 and allowed the Company to
become more  customer  focused.  During  fiscal  2000,  the Company  anticipates
further  expansion of the sales and  marketing  structure to support  additional
sales opportunities worldwide.  This expansion will include adding key personnel
to its corporate and Las Vegas offices to focus on new sales  opportunities  and
to provide superior technical support and customer service to OEMs and end-users
worldwide.   This  will  allow  senior   management   to  focus  on   developing
opportunities   embracing  new  technologies  that  will  provide  products  and
partnerships for the future.

Customer Concentration

During  fiscal  1999,  the  Company's  largest  customer,  GPTA,  accounted  for
approximately  59% of net sales.  In addition,  a significant  portion of GPTA's
sales is to  Aristocrat  Leisure  Industries  Pty Ltd.  Net sales to the  gaming
industry  accounted for  approximately 87% of the Company's  revenues,  with the
remaining 13% primarily  from product  applications  in the beverage and vending
industry.  The Company  anticipates a further reduction of its dependence on its
largest  customer and the gaming  industry by expanding its customer base and by
the introduction of its next generation of validation  products for the beverage
and vending marketplace.

Manufacturing

Since 1995, the Company's  operations have been conducted from a leased facility
of 40,000  square  feet,  which  houses  the  manufacturing  and  administrative
functions  in  Hauppauge,  New York.  During  fiscal  1997,  due to the need for
increased  production space to meet ongoing and anticipated future sales growth,
the Company leased an additional  5,000 square feet of space located adjacent to
the existing Hauppauge facility.

The Company's  manufacturing  operations  consist  primarily of  mechanical  and
electro-optical   assembly  and  the  provision  of  wiring  harnesses   between
components  and between the  validator and the OEM machine in which the finished
product  is to be used.  The  Company  routinely  tests all  components  and has
extensive "burn-in"  procedures for the final assembled product.  Direct control
over fabrication and testing permits the Company to shorten its production cycle
and protect patented and proprietary technology.  During fiscal 1998 the Company
significantly improved its overall manufacturing productivity,  as measured by a
production  capacity  increase of approximately  48% without adding a production
shift. This was achieved by a combination


                                       10
<PAGE>

of increased  staff as well as improved  manufacturing  efficiencies.  In fiscal
1999 the Company achieved additional  manufacturing  productivity  improvements,
which  enabled  the  Company  to  achieve  a 26%  unit  sales  increase  to  its
approximately  98,000 validators.  During fiscal 1999, the Company began to plan
its  transition  to  demand  flow  technology   ("DFT")  in  a  portion  of  its
manufacturing.  It is  anticipated  that DFT, when fully  implemented  in fiscal
2000,  will enable the Company to reduce its  inventory,  reduce  total  product
cycle time,  and most  importantly,  increase its  flexibility  in responding to
customer orders.

The Company  depends on a limited  number of  suppliers  for various  stamped or
formed housings, gears, cogs and wheels and electronic assemblies or components,
including certain  microprocessor chips. The Company believes that concentrating
its purchases from its existing  suppliers  provides,  in certain cases,  better
prices, better quality and consistency and more reliable deliveries. The Company
maintains on-going communications with its suppliers to prevent interruptions in
supply and, to date,  generally has been able to obtain  adequate  supplies in a
timely manner.  The Company has entered into volume blanket purchase  agreements
with selected suppliers to guard against shortages of unique components, thereby
limiting the Company's exposure to business interruptions.  Furthermore, many of
the electronic  components used by the Company,  including its  microprocessors,
are widely used in many applications and are available from a number of sources.
However,  the short  wavelength  light source that forms a critical  part of the
Company's optical scanning device is now commercially available from only a very
limited  number of suppliers.  The Company  believes that if such supply were to
become unavailable, its units could be redesigned to use other light sources and
still remain  competitive in the marketplace.  However,  any interruption in the
supply  of  key  components  which  cannot  be  quickly  remedied  could  have a
materially adverse effect on the Company's results of operations.

Competition

The market for the  Company's  products  is very  competitive  and the number of
competitors  and their  product  offerings  have  increased  due to the  growing
worldwide  marketplace.  A number  of  competitors  have  significantly  greater
financial,   technical,   sales  and  marketing   resources  than  the  Company.
Additionally,   certain  of  these  companies  have  acquired  competitors  with
synergistic product lines in an effort to offer a more complete product line. In
1998, Coin Controls Limited ("Coin Controls") acquired Ardac, Inc. ("Ardac"),  a
domestic currency validator manufacturer. Coin Controls had primarily focused on
the validation of coins worldwide for the gaming and amusement industries.  With
the acquisition of Ardac,  Coin Controls  changed its name to Money Controls PLC
("MCP")  and the two  companies  together  had the  ability to package  its coin
mechanism with a currency validator for both the gaming and beverage and vending
industries.  In November 1999 MCP announced its agreement to be acquired by Coin
Acceptors,  Inc.  ("Coinco"),  a St. Louis based  supplier of primarily  vending
products.  This now provides  the Company  with a  competitor  that has a strong
integrated  gaming and  beverage  and vending  product  line,  as well as strong
relationships  in both  industries.  A similar  competitive  concept has been in
place with Mars Electronics  International  ("MEI"), an entity that has products
able to serve both the gaming and the beverage and vending marketplace.



                                       11
<PAGE>

In the domestic  market,  certain  competitors  are  divisions or  affiliates of
manufacturers  of vending  machines.  For  example,  Royal  Vendors,  Inc. is an
affiliate  of  Coinco.   Accordingly,   such  validator  manufacturers  enjoy  a
competitive advantage in providing for the significant validator requirements of
their affiliates.  For validators sold for use in the beverage,  food, snack and
lower-priced goods or amusement  markets,  Coinco dominates the domestic market.
MEI, Ardac,  Japan Cash Machines Co., Ltd. ("JCM"),  Sanyo,  Conlux,  Coegis and
Cashcode Company,  Inc. are recognized  competitors in the growing international
beverage and vending market.

The  largest  supplier of  validators  used in the  domestic  gaming and lottery
markets  is JCM.  Internationally,  the  Company  competes  for  gaming  machine
business with JCM, MEI and Ardac.  In the secondary  low-value  gaming  markets,
Innovative  Technology,  Ltd.  maintains a  significant  market share due to its
low-cost approach to this market.  The Company has focused its marketing efforts
on the higher-priced  domestic and international  gaming validator  business and
competes on the basis of quality, durability and performance while maintaining a
high level of protection against tampering and counterfeit  currencies,  as well
as a competitive price point.

The Company  historically  has been more willing to address smaller markets than
its larger  competitors  and expects to encounter  increased  competition as the
markets  addressed by its products  continue to grow. Also, the Company has been
willing to adapt its  products to a variety of OEMs,  which has allowed it to be
flexible to expand when new markets open up to sales.  The Company believes that
performance,  quality and protection against tampering and counterfeit  currency
are  relatively  more  important,   and  price  relatively  less  important,  as
competitive factors in the worldwide gaming marketplace.

Intellectual Property

The Company relies on certain proprietary  know-how and trade secrets to protect
its technology.  Important  components of this  proprietary  information are the
Company's library of distinguishing characteristics of the currencies, which its
validators scan and validate,  and its proprietary  algorithms.  The Company has
entered into  non-disclosure  and secrecy  agreements  with all of its employees
having access to this technology.

The Company holds nine U.S. patents as follows:  design for "Escrow Box for Coin
Operated  Machines,"  U.S.  Patent No.  0283518  issued April 22,  1986;  "Paper
Currency Acceptor and Method of Handling Paper Currency for Vending Machines and
the Like," U.S. Patent No. 4884671 issued December 5, 1989; "Anti-fraud Currency
Acceptor," U.S. Patent No. 5259490 issued November 9, 1993;  "Bill  Accumulating
and Stacking  Device," U.S. Patent No. 5322275 issued June 21, 1994;  "Mechanism
for Insuring  Alignment  of Currency in Currency  Validators,"  U.S.  Patent No.
5527031  issued June 18, 1996  (expiring  in April 2000);  "Soft Count  Tracking
System," U.S. Patent No. 5630755 issued May 20, 1997; "Paper Currency  Validator
(Side-Looking  Sensors),"  U.S.  Patent No. 5806649  issued  September 15, 1998;
"Electrical Switch  Connectors," U.S. Patent No. 5842879 issued December 1, 1998
and "Stacker  Mechanism for Stacking Bank Notes" U.S.  Patent No. 5899452 issued
May 4, 1999.  Certain  patents cover  technology used in the Company's first and
second  generation  validator  product  lines and the  remaining  patents  cover
technology used in certain special models.  The


                                       12
<PAGE>

Company has also applied for two additional U.S. patents,  the most important of
which  covers the use of short  wave-length  light in a validator to discern the
color  and  other  characteristics  of bills  being  scanned.  In  addition,  on
September 30, 1999 the Company filed a reissue  application with the U.S. Patent
and Trademark Office to amend and broaden the claims of U.S. Patent No. 5630755.

In addition to its U.S. patents and pending  applications,  the Company has also
applied for patent  protection in a large number of  international  markets.  If
corresponding  foreign  patents are  obtained,  the Company  believes that these
patents could provide important protection for certain technological  advantages
its validators possess in international  markets.  However, the Company does not
believe that it will be materially  and adversely  affected if these patents are
not issued. No assurances can be given that any patent  applications will result
in the issuance of additional  patents.  In December 1999, the Company  received
its first international patent issued by the Eurasian Patent Convention covering
the use of short wave-length light in a validator to discern the color and other
characteristics of bills being scanned.

The Company  licensed certain patented  proprietary  technology  covered by U.S.
Patent  No.  5630755  to Ardac,  Inc.  in 1999.  Such  license  settled a patent
infringement  suit  initiated  by the  Company and  provides  for the payment of
license fees based on unit sales of certain of Ardac's products.

Although the Company has not received any claims  asserting  infringement of the
proprietary  rights of third  parties,  there can be no  assurances  that  third
parties  will not assert such  claims  against the Company in the future or that
any  such   assertion  may  not  require  the  Company  to  enter  into  royalty
arrangements or result in protracted or costly litigation.

Government Regulation

As a  supplier  of paper  currency  validators  to  customers  subject to gaming
regulations and postal  regulations,  the Company is indirectly  subject to such
regulations  that  are  reflected  in  customer   purchase  orders  or  customer
specifications.  The Company  believes that it is in full  compliance  with such
regulations. Any failure to comply with such regulations,  however, could have a
materially adverse effect on the results of operations of the Company.

Employees

On December 20, 1999, the Company had 222 employees,  including 7 executives; 22
sales, technical support and customer service representatives;  41 engineers and
software  developers;  35  materials,  quality  control  and  quality  assurance
personnel;    25    administrative    and    clerical    personnel;    and    92
assembly/manufacturing personnel. The Company believes its relationship with its
employees is good.


                                       13
<PAGE>

Special Note Regarding Forward-Looking Statements

A number of statements  contained in this report are forward-looking  statements
within the meaning of the Private Securities  Litigation Reform Act of 1995 that
involve  risks and  uncertainties  that  could  cause  actual  results to differ
materially from those expressed or implied in the applicable  statements.  These
risks  and  uncertainties  include,  but  are  not  limited  to:  the  Company's
dependence   on  the  paper   currency   validator   market  and  its  potential
vulnerability  to  technological  obsolescence;  the risks that its  current and
future products may contain errors or defects that would be difficult and costly
to detect and correct; potential manufacturing  difficulties;  possible risks of
product  inventory  obsolescence;  potential  shortages  of key parts and/or raw
materials;   potential  difficulties  in  managing  growth;  dependence  on  key
personnel;  the  Company's  dependence  on a  limited  base of  customers  for a
significant  portion of sales;  the  Company's and its  customers'  and vendors'
readiness for year 2000 compliance;  the possible impact of competitive products
and pricing;  uncertainties  with respect to the  Company's  business  strategy;
general economic  conditions in the domestic and  international  market in which
the Company operates;  and other risks described in the Company's Securities and
Exchange Commission filings.

Item 2. Properties

The  Company   leases   approximately   45,000  square  feet  which  houses  the
manufacturing and  administrative  functions in Hauppauge,  New York, for a term
expiring March 31, 2000, at an annual base rental of  approximately  $299,000 in
fiscal 1999, increasing to approximately $306,000 in the final year of the term.
The Company believes this facility is adequate for its  manufacturing  needs for
the  foreseeable  future and is  currently in  negotiations  to extend the lease
term. The Company leases  approximately  6,600 square feet in Valley Stream, New
York,  for a term  expiring  February  28,  2002,  at an annual  base  rental of
approximately  $154,000 in fiscal  1999,  increasing  annually to  approximately
$170,000  in the final year of the term.  This  facility  houses the  executive,
accounting and certain sales  functions of the Company.  The Company also leases
approximately  3,600  square  feet in Las  Vegas,  Nevada,  for a term  expiring
January 31, 2004, at an annual base rental of approximately  $45,000  increasing
annually to  approximately  $50,000 in the final year of the term. This facility
houses certain sales and service functions of the Company.

Item 3. Legal Proceedings

There are no material legal proceedings pending against the Company.

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.


                                       14
<PAGE>

                                     PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

a)   Market Information

The Company's  Common Stock is listed and trades on the NASDAQ  National  Market
System under the symbol GPTX.  The  following  table sets forth,  on a per share
basis,  the high and low sale  prices for the  Company's  Common  Stock for each
quarter of fiscal 1998 and 1999.

                                                        Common Stock
                                                  ------------------------
         Quarter Ended                             High              Low
         -------------                            ------            ------
         December 31, 1997                        11 7/8            8
         March 31, 1998                           15 1/2            8 1/4
         June 30, 1998                            14 7/8            7 1/4
         September 30, 1998                       11 5/8            4 1/2
         December 31, 1998                         8 7/8            5  5/8
         March 31, 1999                           12 11/16          7 3/8
         June 30, 1999                            15 3/4            7 1/4
         September 30, 1999                        9 3/8            7 5/8


b)   Holders

The  approximate  number of  beneficial  holders  and  holders  of record of the
Company's Common Stock as of December 21, 1999, were 1,548 and 53, respectively.

c)   Dividends

The holders of Common  Stock are  entitled to receive  such  dividends as may be
declared by the Company's  Board of  Directors.  The Company has not declared or
paid any cash dividends and does not expect to declare or pay any cash dividends
in the foreseeable future.



                                       15
<PAGE>

Item 6. Selected Financial Data

FINANCIAL HIGHLIGHTS
(In thousands, except earnings per share)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Year Ended September 30           1995(2)      1996      1997      1998         1999
--------------------------------------------------------------------------------------
<S>                              <C>          <C>       <C>       <C>          <C>
Net Sales                        $14,125      $16,693   $23,868   $39,388      $43,896
Net income                         1,166          272     1,475     3,356(3)     3,962
Diluted earnings per share (1)       .23          .05       .25       .56          .68
Total assets                      10,562       10,903    14,154    22,583       26,204
Long term debt obligations          --           --        --        --          4,994
Stockholders' equity               8,647        8,919    10,417    13,087       17,038
</TABLE>

(1)  Diluted earnings per share have been adjusted to give a retroactive  effect
     to a two-for-one stock split, in the form of a stock dividend,  distributed
     on September 4, 1997.

(2)  Gives pro forma effect in 1995 to full-year "C"  corporation  income taxes.
     Prior to the public offering in 1995, the Company was taxed as a subchapter
     "S" corporation.

(3)  Includes  an  after-tax  gain of  $225,000  from  the  sale of a  one-third
     interest in the Company's unconsolidated South African affiliate.

QUARTERLY INFORMATION
(In thousands, except earnings per share)

                                              Quarter Ended
--------------------------------------------------------------------------------
                              Dec. 31   Mar. 31   June 30     Sept. 30      Year
--------------------------------------------------------------------------------
Fiscal 1998

Net sales                     $ 7,686   $10,167   $10,528      $11,007   $39,388
Gross profit                    3,301     4,277     4,442        4,355    16,375
Net income                        583       794     1,069(1)       910     3,356
Diluted earnings per share       0.10      0.13      0.18         0.15      0.56

--------------------------------------------------------------------------------
Fiscal 1999

Net sales                     $12,302   $13,189   $13,251      $ 5,154   $43,896
Gross profit                    4,852     5,269     5,273        1,842    17,236
Net income                      1,136     1,290     1,249          287     3,962
Diluted earnings per share       0.20      0.22      0.21         0.05      0.68

(1)  Includes  an  after-tax  gain of  $225,000  from  the  sale of a  one-third
     interest in the Company's unconsolidated South African affiliate.


                                       16
<PAGE>


Item 7.   Management's  Discussion and Analysis of Financial
          Condition and Results of Operations

Results of Operations

Fiscal year ended September 30, 1999 compared with September 30, 1998

Sales

Net sales for fiscal 1999 increased by 11.4% to $43.896 million as compared with
$39.388  million in fiscal 1998. The sales growth in fiscal 1999 is attributable
to increased demand for the Company's bill validator  products  primarily in the
international gaming industry, and specifically in Australia. Increased sales in
Australia and to the domestic gaming  industry  amounted to  approximately  $7.1
million and $1.2 million, respectively. These increases were partially offset by
a decrease of  approximately  $1.7 million in sales to the Russian  beverage and
vending  market  resulting  from a decline in the  economic  conditions  of that
country, as well as a decrease of approximately $1.6 million in sales to Europe.
Accordingly,  gaming  sales  increased  20% to $39.585  million and beverage and
vending  sales  decreased  33% to $4.311  million.  Net  sales to  international
customers  accounted  for 80.4% and 83.9% of net sales in fiscal  1999 and 1998,
respectively.

Gross Profit

Gross profit increased to $17.236 million, or 39.3% of net sales, in fiscal 1999
as compared  with  $16.375  million,  or 41.6% of net sales,  in the  prior-year
period.  The decrease in gross profit as a percentage of sales was primarily the
result of a change in the  Company's  distribution  method that began during the
fourth  quarter of fiscal 1998.  At that time the Company began to sell directly
to its  Australian  and South African  affiliates  which  subsequently  sell the
Company's  products into those respective  markets.  As a result of this change,
1999 results reflect lower sales and gross profit, and a commensurate  reduction
in sales commissions within its operating expenses.

Operating Expenses

Operating expenses in fiscal 1999 decreased to $10.306 million,  or 23.5% of net
sales, as compared with $10.983 million,  or 27.9% of net sales, in fiscal 1998.
Primarily  as a  result  of  the  shift  in  distribution  method  noted  above,
commission  expense  decreased  from $2.738 million in 1998 to $556,000 in 1999.
Excluding the effect of these commissions, operating expenses as a percentage of
net sales were 22.2% in 1999 as compared with 20.9% in 1998. This increase, as a
percentage of net sales, in 1999 is principally the result of increased staffing
and  related  payroll  costs,  primarily  added  during  1998,  to  support  the
anticipated sales growth in 1999 and beyond, as well as higher warranty costs to
support the  Company's  product.  Such  increase in warranty  costs is primarily
attributable  to  increased  unit sales of the  Company's  products,  changes in
design to comply with regulatory  requirements  and additional costs to maintain
its various  components.  Additionally,  the Company's decline in fourth quarter
sales caused operating  expenses,  as a percentage of net sales, to increase for
both the fourth quarter and full year.



                                       17
<PAGE>

Net Income

For fiscal  1999,  the  Company's  net income was $3.962  million,  or $0.68 per
share,  as compared with $3.356  million,  or $0.56 per share,  for fiscal 1998.
During fiscal 1998,  the Company  recognized an after-tax  gain of $225,000,  or
$.04 per share,  which was the result of the sale of a portion of the  Company's
equity interest in its South African  affiliate  ("GPT-SA").  The Company owns a
one-third  interest in GPT-SA (as of September  30, 1999),  50%  non-controlling
interests  in a  local  sales  and  service  organization  in  Australia  and  a
manufacturing  firm in China,  as well as a 25%  non-controlling  interest  in a
UK-based  software  company,  all of which are  accounted  for using the  equity
method.  Included in the results of operations  for fiscal 1999 and 1998 are the
Company's  share of losses (net of profits) of these  affiliates of $678,000 and
$215,000,  respectively.  Equity in income of unconsolidated affiliates has been
reduced  by  approximately  $1,125,000  and  $400,000  in fiscal  1999 and 1998,
respectively,  which  represents the gross profit on the Company's  sales to its
affiliates,  where such sales had not then been recognized by the affiliates. In
addition,  the Company owns 70% of GPT-Europe Limited, a local sales and service
organization  in  Europe,  whose  results  are  consolidated  in  the  Company's
financial statements.  With the establishment of a Foreign Sales Corporation and
the continuation of the Company's  international sales strength, the Company has
reduced its effective tax rate to 32.0% in fiscal 1999 as compared with 39.0% in
fiscal 1998.

Fiscal year ended September 30, 1998 compared with September 30, 1997

Sales

Net sales for fiscal 1998 increased by 65.0% to $39.388 million as compared with
$23.868  million in fiscal 1997. The sales growth in fiscal 1998 is attributable
to increased demand for the Company's bill validator  products  primarily in the
international gaming industry.  Although sales to the international beverage and
vending market represent a relatively small percentage of the Company's  overall
sales,  such sales increased 82.6% to $6.413 million in 1998. The revenue growth
is the result of the Company  broadening  its customer  base,  and  accordingly,
sales to the Company's largest customer, as a percentage of net sales, decreased
to 45.7% of net  sales in 1998  from  54.0% of net  sales in 1997.  Net sales to
international  customers  accounted  for  83.9% and 72.8% of net sales in fiscal
1998 and 1997, respectively.

Gross Profit

Gross profit increased to $16.375 million, or 41.6% of net sales, in fiscal 1998
as  compared  with  $8.986  million,  or 37.6% of net  sales,  in the prior year
period.  The increase in gross profit as a percentage of net sales was primarily
attributable to increased  operating  efficiencies due to longer production runs
and reduced product costs resulting from volume  purchase  arrangements.  During
the fourth quarter of fiscal 1998, the Company initiated selling directly to its
Australian  affiliate which  subsequently  sells the Company's products into the
Australian and New Zealand markets. This distribution method will be utilized by
the Company's South African affiliate commencing in fiscal 1999. Under the prior
method,  the Company  sold  directly  to the  customer,  recognizing  additional
revenues and the related  commission  expense.  As a result of this change,  the
Company  expects  future  operating  results to reflect  lower gross profit from
these  sales  and a  commensurate  reduction  in sales  commissions  within  its
operating expenses.



                                       18
<PAGE>

Operating Expenses

Operating  expenses in fiscal 1998  increased  by 72.2% to $10.983  million,  or
27.9% of net sales, as compared with $6.378  million,  or 26.7% of net sales, in
fiscal 1997. The primary  reason for the increase in operating  expenses was due
to  increased  sales  commissions  expense in fiscal  1998 of $2.738  million as
compared  with  $300,000  in  fiscal  1997.  These   commissions  were  paid  to
distributors of the Company's products,  including certain affiliates  providing
in-country  sales and service in  Australia,  South Africa and Europe.  As noted
above,  the Company  expects a  significant  reduction in sales  commissions  in
fiscal 1999 on sales to  Australia  and South Africa as a result of the shift in
distribution  method.  Excluding  the  effect  of these  commissions,  operating
expenses as a percentage  of net sales were 20.9% in 1998 as compared with 25.5%
in 1997. In addition to the increased sales  commissions,  the Company  incurred
increased  staffing  and related  payroll  costs  necessary to support the sales
growth in fiscal 1998 as well as to support  the  Company's  growth  strategy in
fiscal 1999 and beyond.

Net Income

For fiscal  1998,  the  Company's  net income was $3.356  million,  or $0.56 per
share, as compared with $1.475 million, or $0.25 per share for fiscal 1997. (Net
income  per  share  figures  give  retroactive  effect  in  both  periods  to  a
two-for-one  stock  split,  in the  form of a  stock  dividend,  distributed  on
September 4, 1997.) During fiscal 1998, the Company recognized an after-tax gain
of $225,000,  or $0.04 per share,  which was the result of the sale of a portion
of the Company's equity interest in its South African affiliate ("GPT-SA").  The
Company  now  owns a  one-third  interest  in  GPT-SA  and  50%  non-controlling
interests  in a  local  sales  and  service  organization  in  Australia  and  a
manufacturing  firm in China,  all of which are  accounted  for using the equity
method.  Included in the results of operations  for fiscal 1998 and 1997 are the
Company's  share of losses (net of profits) of these  affiliates of $215,000 and
$71,000,  respectively.  In fiscal  1998,  equity  in  income of  unconsolidated
affiliates  has been reduced by  approximately  $400,000,  which  represents the
gross profit on the Company's sales to its affiliates,  where such sales had not
then been  recognized by the  affiliates.  In addition,  the Company owns 70% of
GPT-Europe  Limited,  a local sales and service  organization  in Europe,  whose
results are consolidated in the Company's financial statements.

Liquidity and Capital Resources

The  Company's  capital  requirements  consist  primarily of those  necessary to
continue  to  expand  and  improve   product   development   and   manufacturing
capabilities, sales and marketing operations,  investments in affiliates and, to
a lesser degree,  interest payments on the Company's  indebtedness.  The Company
believes that its available resources,  including its credit facilities,  should
be sufficient to meet its obligations as they become due and permit continuation
of its planned  product  development  and expansion  throughout  fiscal 2000 and
beyond.

At September 30, 1998, the Company maintained two borrowing  facilities with The
Chase Manhattan Bank. These facilities  consisted of a $5,000,000 unsecured line
of credit  to be used for  short-term  working  capital  needs and a  $3,500,000
unsecured  line of credit to be used to repurchase  up to 500,000  shares of the
Company's common stock. Both of these lines bore interest at a rate equal to the
bank's  prime  rate or LIBOR  plus  175  basis  points  per  annum.


                                       19
<PAGE>

Outstanding  borrowings and interest  rates under these  facilities at September
30, 1998 were  $3,050,000 and 8.25%,  and  $1,047,000  and 7.25%,  respectively.
These  notes had an  original  maturity  date of March 31,  1999,  however,  the
maturity  was  extended  until  July  1999  when the  Company  entered  into the
long-term credit agreement discussed below.

On July 15,  1999,  the  Company  entered  into a $10 million  long-term  credit
agreement  with The Chase  Manhattan  Bank which is  comprised  of a  $4,000,000
five-year term loan, payable in equal monthly installments with a fixed interest
rate of 7.66% per  annum and a  $6,000,000  unsecured  revolving  line of credit
("RLC").  The term of the RLC is three  years and  outstanding  borrowings  bear
interest at the bank's prime rate, or at the Company's  option,  for  borrowings
greater  than  $500,000,  LIBOR  plus a range of 125 to 200  basis  points.  The
precise  borrowing  rate is determined by the  Company's  financial  performance
under certain  covenants  with which it was in compliance at September 30, 1999.
Simultaneous  with the signing of the new credit  agreement,  the Company repaid
all of its  then  outstanding  bank  debt and  terminated  its  existing  credit
facilities.  As of September 30, 1999,  outstanding  borrowings  under five-year
term loan and the RLC were $3,800,000 and $1,994,000, respectively.

Net cash used in operating activities amounted to $1.037 million in fiscal 1999.
Net income,  adjusted for noncash items, was $5.561 million in fiscal 1999. This
amount was reduced by an increase in accounts  receivable of $4.472  million,  a
decrease in accrued expenses and other current  liabilities of $1.134 million, a
decrease in accounts payable of $517,000,  a decrease in income taxes payable of
$376,000,  and an increase in prepaid expenses and other assets of $111,000. Net
cash used in operating activities amounted to $3.857 million in fiscal 1998. Net
income,  adjusted for noncash  items,  was $3.977  million in fiscal 1998.  This
amount was  augmented  by an  increase  in accrued  expenses  and other  current
liabilities  of $1.695  million  and an  increase  in income  taxes  payable  of
$321,000 and was offset by an increase in accounts receivable of $6.034 million,
an increase in inventory of $3.344 million,  an increase in prepaid expenses and
other  assets of $214,000 and a decrease in accounts  payable of  $258,000.  Net
cash provided by operating  activities  amounted to $380,000 in fiscal 1997. Net
income,  adjusted for noncash  items,  was $2.105  million in fiscal 1997.  This
amount was augmented by an increase in accounts payable of $1.495 million and an
increase in accrued expenses and other current liabilities of $679,000,  and was
offset by an increase in accounts  receivable of $2.012 million,  an increase in
inventory of $1.365  million and a decrease in income taxes payable of $488,000.
Over the last three  years,  the  Company  has seen  increases  in its  accounts
receivable  primarily  due to the  offering  of  extended  payment  terms to its
Australian  and South  African  affiliates  in  conjunction  with the  change in
distribution  which commenced in the fourth quarter of 1998. In addition,  sales
increases of 11%, 65% and 43% in 1999, 1998 and 1997,  respectively  have caused
accounts receivable to increase.  Additionally,  the Company has seen a trend in
its international  business to extend longer payment terms, and will continue to
do so to build long term customer relationships,  while at the same time closely
examining credit risk.

Net cash used in  investing  activities  amounted  to $128,000 in fiscal 1999 as
compared  with  $633,000 in fiscal 1998 and $1.217  million in fiscal 1997.  The
Company  provided net fundings to its joint  ventures of $166,000 in fiscal 1999
as compared  with $42,000 in fiscal 1998 and $426,000  during  fiscal 1997,  the
latter of which was  predominantly  in the form of loans.  In  addition,  during
fiscal 1998 the Company recognized a pre-tax gain of $385,000 from the sale


                                       20
<PAGE>

of a portion of the equity in its South  African  affiliate,  which  reduced its
ownership from 50% to 33%. Further, the Company received $472,000 and $39,000 in
dividend  distributions  from  its  Australian  and  South  African  affiliates,
respectively, during fiscal 1999. The remaining investing activities of $473,000
in fiscal 1999, $976,000 in fiscal 1998 and $791,000 in fiscal 1997 were for the
purchase of property and equipment.

Net cash provided by financing  activities  amounted to $1.686 million in fiscal
1999, as compared with $3.411 million in fiscal 1998 and $23,000 in fiscal 1997.
In fiscal 1999 the  Company  received  proceeds  from its credit  facilities  of
$1.697  million as compared with $4.097 million in fiscal 1998. The Company used
a portion of these proceeds to repurchase its common stock amounting to $247,000
(44,200  shares)  and  $1.047  million   (165,000  shares)  in  1999  and  1998,
respectively. The remaining cash provided by financing activities of $236,000 in
fiscal 1999, $361,000 in fiscal 1998 and all financing activities in fiscal 1997
were from the issuance of common  stock upon the  exercise of stock  options and
warrants.

Year 2000

The Company has developed and implemented a  comprehensive  plan to address Year
2000 issues. The plan addresses two main areas: (a) information  systems and (b)
supply  chain  readiness.  To oversee the  process,  the Company  established  a
Steering  Committee  comprised  of senior  executives.  The  Company  identified
minimal potential  deficiencies  related to Year 2000 in its information systems
and believes it has addressed them through  upgrades and other  remediation.  To
mitigate the risk of Year 2000 non-compliance by third parties,  the Company has
identified,  contacted  and  met  with  critical  inventory  suppliers  and  has
communicated  with its larger  customers  about their Year 2000  readiness.  The
Company believes it is difficult to specifically  identify the cause of the most
reasonable worst case Year 2000 scenario;  however, based upon its work to date,
the  Company  believes  it would  likely be the  result of the  failure of third
parties to be Year 2000  compliant.  Incremental  out-of-pocket  costs  incurred
through  September  30,  1999  have not been  significant  and,  based  upon the
Company's current estimates,  the costs of its Year 2000 program are expected to
be  immaterial.  Such costs do not  include  internal  employee  costs and costs
related to the  deferral of other  information  technology  projects.  While the
Company does not have a system to track  internal  employee  costs  specifically
related to the Year 2000,  those  costs are not  expected  to be material to the
Company's results of operations or financial condition.

Item 7a. Quantitative and Qualitative Disclosures About Market Risk

Fiscal 1999 saw  continued  moderation  in the level of  inflation.  In order to
offset the resultant rise in the costs of  operations,  the Company has and will
continue  to  assess  ways  to  reduce  product   manufacturing  costs,  thereby
increasing  profit margins and improve its operations to gain  efficiencies  and
reduce operating costs.

While the Company operates in many international markets, it does so principally
through the sale of its products with invoices  denominated in the United States
currency.  Additionally,  the Company  operates without the use of derivative or
hedging instruments.



                                       21
<PAGE>

The Company has a $6.0 million revolving credit facility with borrowings subject
to interest  at the bank's  prime rate or LIBOR plus a range of 125 to 200 basis
points.  As such,  the interest  rate is variable  and the  interest  expense on
potential  borrowings is based upon the types of loans and  applicable  interest
rates  at the  time of  borrowing.  In the  event  the  Company  had its  entire
revolving credit facility,  $6.0 million,  outstanding for the entire year, each
100 basis point increase would result in an annual increase in interest  expense
of approximately $60,000.

Item 8. Financial Statements and Supplementary Data

The  financial  statements  of the  Company  required by this item are set forth
beginning on page F-1.

Item 9. Changes in and Disagreements With Accountants on Accounting and
        Financial Disclosure

None



                                       22
<PAGE>

                                    PART III

Items 10 through 13  inclusive  are omitted per General  Instruction  G(3).  The
information  required by Part III shall be  incorporated  by reference  from the
Registrant's  definitive  proxy  statement  pursuant to  Regulation  14A for the
fiscal year ended September 30, 1999.

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)  The following documents are filed as part of this report:

     1.   All Financial Statements:

          Report of Independent Public Accountants (page F-1)

          Consolidated  Balance  Sheets as of September  30, 1999 and 1998 (page
          F-2)

          Consolidated  Statements  of Income for the years ended  September 30,
          1999, 1998 and 1997 (page F-3)

          Consolidated  Statements of  Shareholders'  Equity for the years ended
          September 30, 1999, 1998 and 1997 (page F-4)

          Consolidated  Statements  of Cash Flows for the years ended  September
          30, 1999, 1998 and 1997 (page F-5)

          Notes to Consolidated Financial Statements (page F-6)

     2.   Financial  statement  schedules required to be filed by Item 8 of this
          Form:

          Report of  Independent  Accountants  on Financial  Statement  Schedule
          (page S-1)

          Schedule II of Valuation and Qualifying Accounts (pageS-2)

     3.   Exhibits:

Exhibit No.
-----------

3.1          Certificate of Incorporation (3)

3.2          Certificate of Merger (3)

3.3          By-Laws (3)

4.1          Credit  Agreement  dated July 15, 1999  between the Company and The
             Chase Manhattan Bank ("Chase")(6)

4.1(a)       Revolving  Credit  Note dated July 15, 1999 issue by the Company to
             Chase(6)

4.1(b)       Term Note dated July 15, 1999 issue by the Company to Chase(6)

4.1(c)       Limited  Corporate  Guaranty  dated July 15,  1999 issued by Abacus
             Financial Management Systems Ltd. USA to Chase(6)

4.1(d)       Pledge  Agreement  dated July 15,  1999  between  the  Company  and
             Chase(6)

10.1         Lease dated  September  21, 1994 between the Company and  Heartland
             Associates (1)



                                       23
<PAGE>

10.2         Amendment  dated July 31,  1997 to lease dated  September  21, 1994
             between the Company and Heartland Associates (3)

10.3         1994 Stock Option Plan (2)

10.4         1996 Stock Option Plan (2)

10.5         Employment  Agreement dated January 1, 1998 between the Company and
             Robert W. Nader (5)

10.6         Employment  Agreement dated October 1, 1998 between the Company and
             Edward Seidenberg (5)

10.7         Employment  Agreement  dated September 30, 1997 between the Company
             and Stephen Katz (3)

10.8         Employment  Agreement  dated May 1, 1999  between  the  Company and
             Thomas McNeill (6)

10.9         Supplier  agreement  dated  May 14,  1998  between  Global  Payment
             Technologies, Inc. and Aristrocrat Leisure Industries Pty Ltd. (4)

21           List of Subsidiaries (7)

23           Consent of Independent Public Accountants (7)

27           Financial Data Schedule (7)

----------
(1)  Incorporated  by  reference  to  the  Company's   initial  filings  of  the
     Registration Statement on Form SB-2 (File #33-86352-NY).

(2)  Incorporated by reference to the Company's  Registration  Statement on Form
     S-8 (File #333-30829).

(3)  Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the fiscal year ended September 30, 1997.

(4)  Incorporated by reference to the Company's  Quarterly Report on Form 10-QSB
     for the quarter ended June 30, 1998.

(5)  In Incorporated by reference to the Company's  Annual Report on Form 10-KSB
     for the fiscal year ended September 30, 1998.

(6)  Incorporated  by reference to the Company's  Quarterly  Report on Form 10-Q
     for the quarter ended June 30, 1999.

(7)  Filed herewith.

(b)  Reports on Form 8-K

No  Reports on Form 8-K have been  filed  during the last  quarter of the period
covered by this Report.


                                       24
<PAGE>

                                   SIGNATURES

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

                                            Global Payment Technologies, Inc.

                                            By:  s/Stephen Katz
                                                 ------------------------------
                                                 Stephen Katz
                                                 Chairman of the Board and
                                                 Chief Executive Officer
Date:  December 28, 1999

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

<TABLE>
<CAPTION>
         Signature                          Title                           Date
         ---------                          -----                           ----
<S>                                 <C>                                <C>
s/Stephen Katz                      Chairman of the Board              December 28, 1999
---------------------------         and Chief Executive Officer
Stephen Katz

s/Edward Seidenberg                 Director, President and            December 28, 1999
---------------------------         Chief Operating Officer
Edward Seidenberg

s/Henry B. Ellis                    Director                           December 28, 1999
---------------------------
Henry B. Ellis

s/Richard Gerzof                    Director                           December 28, 1999
---------------------------
Richard Gerzof

s/Martin H. Kern                    Director                           December 28, 1999
---------------------------
Martin H. Kern

s/Thomas McNeill                    Vice President, Chief Financial    December 28, 1999
---------------------------         Officer and Principal Accounting
Thomas McNeill                      Officer
</TABLE>


                                       25
<PAGE>



                        GLOBAL PAYMENT TECHNOLOGIES, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                            Page
                                                                            ----

Report of Independent Public Accountants                                     F-1

Consolidated Balance Sheets as of September 30, 1999 and 1998                F-2

Consolidated Statements of Income for the years ended September
     30, 1999, 1998 and 1997                                                 F-3

Consolidated Statements of Shareholders' Equity for the years ended
     September 30, 1999, 1998 and 1997                                       F-4


Consolidated Statements of Cash Flows for the years ended
     September 30, 1999, 1998 and 1997                                       F-5

Notes to Consolidated Financial Statements                                   F-6






<PAGE>



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To Global Payment Technologies, Inc.:

We have audited the accompanying  consolidated  balance sheets of Global Payment
Technologies,  Inc. (a Delaware corporation) and subsidiaries (the "Company") as
of  September  30, 1999 and 1998,  and the related  consolidated  statements  of
income,  shareholders'  equity and cash flows for each of the three years in the
period  ended   September  30,  1999.   These   financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  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 financial  statements  referred to above present fairly, in
all material respects,  the financial  position of Global Payment  Technologies,
Inc.  and  subsidiaries  as of September  30, 1999 and 1998,  and the results of
their  operations and their cash flows for each of the three years in the period
ended  September  30, 1999 in  conformity  with  generally  accepted  accounting
principles.




                                                             ARTHUR ANDERSEN LLP

Melville, New York
November 22, 1999



                                      F-1
<PAGE>


                        GLOBAL PAYMENT TECHNOLOGIES, INC.

                           CONSOLIDATED BALANCE SHEETS

                        AS OF SEPTEMBER 30, 1999 AND 1998

                (Dollar amounts in thousands, except share data)

<TABLE>
<CAPTION>
                                          ASSETS                                 1999        1998
                                                                               --------    --------
<S>                                                                            <C>         <C>
Current assets:
   Cash and cash equivalents                                                   $  1,355    $    834
   Accounts receivable, less allowance for doubtful accounts of
     $288 and $248, respectively                                                  2,715       5,854
   Accounts receivable from affiliates                                           10,919       4,497
   Inventory, less allowance for obsolescence of $850 and $942, respectively      7,504       8,090
   Prepaid expenses and other current assets                                        330         254
   Deferred income tax benefit                                                      981         584
                                                                               --------    --------
                  Total current assets                                           23,804      20,113

Property and equipment, net                                                       1,551       1,758

Investments in unconsolidated affiliates                                            684         582

Other assets                                                                        165         130
                                                                               --------    --------
                  Total assets                                                 $ 26,204    $ 22,583
                                                                               ========    ========

                           LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Current portion of long-term debt                                           $    800    $   --
   Note payable to bank                                                            --         4,097
   Accounts payable                                                               1,527       2,044
   Accrued expenses and other current liabilities                                 1,791       2,925
   Income taxes payable                                                              54         430
                                                                               --------    --------
                  Total current liabilities                                       4,172       9,496

Long-term debt                                                                    4,994        --
                                                                               --------    --------
                  Total liabilities                                               9,166       9,496
                                                                               --------    --------

Commitments and contingencies (Note 12)

Shareholders' equity:
   Common stock, 20,000,000 shares authorized; $.01 par value,
     5,619,125 shares and 5,570,300 shares issued in 1999 and
      1998, respectively                                                             56          56
   Additional paid-in capital                                                     8,570       8,334
   Retained earnings                                                              9,706       5,744
                                                                               --------    --------
                                                                                 18,332      14,134

Less:  Treasury stock, at cost, 209,200 shares and 165,000 shares in
          1999 and 1998, respectively                                            (1,294)     (1,047)
                                                                               --------    --------
                  Total shareholders' equity                                     17,038      13,087
                                                                               --------    --------
                  Total liabilities and shareholders' equity                   $ 26,204    $ 22,583
                                                                               ========    ========
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                      F-2
<PAGE>

                        GLOBAL PAYMENT TECHNOLOGIES, INC.

                        CONSOLIDATED STATEMENTS OF INCOME

              FOR THE YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997

         (Dollar amounts in thousands, except share and per share data)


<TABLE>
<CAPTION>
                                                                   1999           1998           1997
                                                                -----------    -----------    -----------
<S>                                                             <C>            <C>            <C>
Net sales:
   Non-affiliates                                               $    15,890    $    34,572    $    23,649
   Affiliates                                                        28,006          4,816            219
                                                                -----------    -----------    -----------
                                                                     43,896         39,388         23,868

Cost of sales                                                        26,660         23,013         14,882
                                                                -----------    -----------    -----------

Gross profit                                                         17,236         16,375          8,986

Operating expenses                                                   10,306         10,983          6,378
                                                                -----------    -----------    -----------

Income from operations                                                6,930          5,392          2,608
                                                                -----------    -----------    -----------

Other income (expense):
   Equity in loss of unconsolidated affiliates                         (678)          (215)           (71)
   Gain on sale of investment in unconsolidated
   affiliate                                                           --              385           --

   Interest income                                                       39           --               51
   Interest expense                                                    (465)           (62)          --
                                                                -----------    -----------    -----------
         Other income (expense), net                                 (1,104)           108            (20)
                                                                -----------    -----------    -----------

Income before provision for income taxes                              5,826          5,500          2,588

Provision for income taxes                                            1,864          2,144          1,113
                                                                -----------    -----------    -----------

Net income                                                      $     3,962    $     3,356    $     1,475
                                                                ===========    ===========    ===========

Net income per share:
   Basic                                                        $       .74    $       .61    $       .27
                                                                ===========    ===========    ===========
   Diluted                                                      $       .68    $       .56    $       .25
                                                                ===========    ===========    ===========

Common shares used in computing net income per share amounts:
   Basic                                                          5,381,170      5,513,414      5,500,530
                                                                ===========    ===========    ===========
   Diluted                                                        5,822,787      5,995,067      5,794,215
                                                                ===========    ===========    ===========
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                      F-3
<PAGE>

                        GLOBAL PAYMENT TECHNOLOGIES, INC.

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

              FOR THE YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997

                (Dollar amounts in thousands, except share data)


<TABLE>
<CAPTION>
                                                    Common Stock        Additional                  Treasury Stock
                                                ---------------------    Paid-in    Retained    ----------------------
                                                 Shares       Amount     Capital    Earnings      Shares      Amount        Total
                                                ---------   ---------   ---------   ---------   ---------    ---------    ---------
<S>                                             <C>         <C>         <C>         <C>                      <C>          <C>
Balance at September 30, 1996                   5,500,000   $      55   $   7,951   $     913        --      $    --      $   8,919
   Exercise of common stock options                 6,200        --            23        --          --           --             23
   Net income                                        --          --          --         1,475        --           --          1,475
                                                ---------   ---------   ---------   ---------   ---------    ---------    ---------
Balance at September 30, 1997                   5,506,200          55       7,974       2,388        --           --         10,417
   Exercise of common stock options and
     warrants                                      64,100           1         360        --          --           --            361
   Purchase of treasury stock                        --          --          --          --      (165,000)      (1,047)      (1,047)
   Net income                                        --          --          --         3,356        --           --          3,356
                                                ---------   ---------   ---------   ---------   ---------    ---------    ---------
Balance at September 30, 1998                   5,570,300          56       8,334       5,744    (165,000)      (1,047)      13,087
   Exercise of common stock options                48,825        --           236        --          --           --            236
   Purchase of treasury stock                        --          --          --          --       (44,200)        (247)        (247)
   Net income                                        --          --          --         3,962        --           --          3,962
                                                ---------   ---------   ---------   ---------   ---------    ---------    ---------
Balance at September 30, 1999                   5,619,125   $      56   $   8,570   $   9,706    (209,200)   $  (1,294)   $  17,038
                                                =========   =========   =========   =========   =========    =========    =========
</TABLE>



   The accompanying notes are an integral part of these financial statements.



                                      F-4
<PAGE>

                        GLOBAL PAYMENT TECHNOLOGIES, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

              FOR THE YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997

                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                                1999       1998       1997
                                                                               -------    -------    -------
<S>                                                                            <C>        <C>        <C>
OPERATING ACTIVITIES:
   Net income                                                                  $ 3,962    $ 3,356    $ 1,475
   Adjustments to reconcile net income to net cash (used in) provided by
     operating activities:
     Equity in loss of unconsolidated affiliates                                   678        215         71
     Gain on sale of investment in unconsolidated affiliate                       --         (385)      --
     Depreciation and amortization                                                 680        553        343
     Provision for (recovery of) losses on accounts receivable                      64        123        (39)
     Provision for inventory obsolescence                                          574        374         39
     Deferred income taxes                                                        (397)      (259)       216
     Changes in operating assets and liabilities:
       Increase in accounts receivable, including affiliates                    (4,472)    (6,034)    (2,012)
       Decrease (increase) in inventory                                             12     (3,344)    (1,365)
       Increase in prepaid expenses and other assets                              (111)      (214)       (34)
       (Decrease) increase in accounts payable                                    (517)      (258)     1,495
       (Decrease) increase in accrued expenses and other current liabilities    (1,134)     1,695        679
       (Decrease) increase in income taxes payable                                (376)       321       (488)
                                                                               -------    -------    -------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES                             (1,037)    (3,857)       380
                                                                               -------    -------    -------

INVESTING ACTIVITIES:
   Purchases of property and equipment, net of proceeds from disposals            (473)      (976)      (791)
   Proceeds from sale of investment in unconsolidated affiliate                   --          385       --
   Investments in unconsolidated affiliates                                       (166)       (42)      (426)
   Distributions from unconsolidated affiliates                                    511       --         --
                                                                               -------    -------    -------
NET CASH USED IN INVESTING ACTIVITIES                                             (128)      (633)    (1,217)
                                                                               -------    -------    -------

FINANCING ACTIVITIES:
   Proceeds from notes payable to bank                                           1,697      4,097       --
   Purchase of treasury stock                                                     (247)    (1,047)      --
   Issuance of stock upon exercise of stock options and warrants                   236        361         23
                                                                               -------    -------    -------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                        1,686      3,411         23
                                                                               -------    -------    -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                               521     (1,079)      (814)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                     834      1,913      2,727
                                                                               -------    -------    -------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                       $ 1,355    $   834    $ 1,913
                                                                               =======    =======    =======

CASH PAID DURING THE YEAR FOR:
   Interest                                                                    $   446    $    97    $  --
                                                                               =======    =======    =======
   Income taxes                                                                $ 2,621    $ 1,879    $ 1,400
                                                                               =======    =======    =======
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                      F-5
<PAGE>

                        GLOBAL PAYMENT TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        SEPTEMBER 30, 1999, 1998 AND 1997



1.   ORGANIZATION AND NATURE OF BUSINESS:

Global Payment  Technologies,  Inc. (the "Company") was established in 1988. The
Company designs,  manufactures and markets paper currency  validating  equipment
used in gaming and vending machines in the United States and other countries.

Substantially  all of the Company's  revenues are derived from the sale of paper
currency  validators and related bill stackers,  specifically the Company's IDS,
IBS,  IDUS,  M-125 and M-150  validator  models.  Fluctuations  in the Company's
results of operations may be caused by various factors, including the timing and
market acceptance of new products introduced by the Company and its competitors,
the size and  timing of  product  orders  and  shipments,  the  relative  mix of
products  sold  by the  Company,  specific  economic  conditions  in the  gaming
industry,  from which the Company derives a substantial portion of its revenues,
and general economic conditions.  Additionally,  the Company depends on a single
or limited  number of  suppliers  for certain  housings,  parts and  components,
including certain  microprocessor chips and short wave-length light sources. The
Company has entered into volume blanket  purchase  agreements  with suppliers to
guard against unique  component  shortages,  limiting the Company's  exposure to
business interruptions.

Significant Customers

The Company's  largest customers for 1999, 1998 and 1997 represent the following
percentages of net sales and accounts receivable:

                    Net Sales                 1999          1998           1997
                    ---------                 ----          ----           ----

        GPT Australia                          59%           46%            54%
        Customer B                             N/A           10%            N/A

               Accounts Receivable
               -------------------

        GPT Australia                          72%            45%           62%
        Customer B                             N/A            8%            N/A

There were no other  customers that  represented 10% or more of net sales in the
fiscal years presented.


                                      F-6
<PAGE>

Geographic Areas

The  Company's  products are sold both  domestically  and  internationally.  The
following summarizes the geographic dispersion of the Company's sales:

<TABLE>
<CAPTION>
                                                 Year Ended September 30,
                                              -----------------------------
                                               1999        1998       1997
                                              -------    -------    -------
                                                    (Amounts in 000s)
<S>                                           <C>        <C>        <C>
     Domestic sales (United States)           $ 8,614    $ 7,394    $ 6,519
                                              -------    -------    -------

     International sales:
     Australia                                 26,110     18,947     11,190
     All others                                 9,172     13,047      6,159
                                              -------    -------    -------
                                               35,282     31,994    $17,349
                                              =======    =======    =======
                   Total sales                $43,896    $39,388    $23,868
                                              =======    =======    =======
</TABLE>

Primarily  all of the  Company's  long-lived  assets are domiciled in the United
States.

2.   SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation

The  consolidated  financial  statements  include the accounts of Global Payment
Technologies,   Inc.  and  its  majority-owned  subsidiaries.   All  significant
intercompany accounts and transactions have been eliminated in consolidation.

Revenue Recognition

The Company  recognizes  revenue  upon  shipment  of products to its  customers,
including  shipments to its unconsolidated  affiliates,  or at the time services
are completed with respect to repairs not covered by warranty agreements.

Investments in Unconsolidated Affiliates

The Company  applies  the equity  method of  accounting  to its  investments  in
entities  where the Company has  non-controlling  ownership  interests of 20% to
50%. The Company's share of these affiliates'  earnings or losses is included in
the consolidated statements of income. The Company eliminates its pro rata share
of  gross  profit  on  sales  to its  affiliates  for  inventory  on hand at the
affiliates  at  the  end of the  year.  See  Note  11 for a  description  of the
Company's  unconsolidated  affiliates and the related  transactions  between the
Company and these affiliates.

Cash and Cash Equivalents

Cash equivalents are stated at cost,  which  approximates  market value.  Highly
liquid  investments with maturities of three months or less at the purchase date
are considered cash equivalents for purposes of the consolidated  balance sheets
and consolidated statements of cash flows.

Inventory

Inventory  is stated at the lower of cost  (first-in,  first-out  method) or net
realizable value. The Company analyzes the net realizable value of its inventory
on an ongoing  basis.  In determining  whether the net  realizable  value of its
inventory is impaired,  the Company  considers  historical sales performance and
expected  future  product  sales,   market   conditions  in  which  the  Company
distributes its products,  changes in product strategy and the potential for the
introduction of new technology or products by the Company and its competitors.


                                      F-7
<PAGE>

Property, Equipment and Depreciation

Property and equipment are stated at cost.  Depreciation is calculated using the
straight-line  method over the estimated useful lives of the assets (Note 5) or,
in the case of leasehold improvements,  the life of the related lease, whichever
is shorter.  Maintenance  and repair  costs are charged to expense as  incurred.
Expenditures that significantly  increase value or extend useful asset lives are
capitalized.

Long-Lived Assets

The Company  accounts for long-lived  assets  pursuant to Statement of Financial
Accounting  Standards  ("SFAS")  No.  121,  "Accounting  for the  Impairment  of
Long-Lived  Assets and for Long-Lived  Assets to Be Disposed of," which requires
that long-lived assets, certain identifiable intangibles and goodwill related to
those assets to be held, and used, be reviewed for impairment whenever events or
changes in  circumstances  indicate that the carrying amount of those assets may
not be  recoverable.  The Company did not record any  impairment  adjustments in
fiscal 1999, 1998 and 1997.

Research and Development

Research and development costs incurred by the Company are included in operating
expenses in the year  incurred.  Such costs  amounted to $300,000,  $350,000 and
$245,000 in fiscal 1999, 1998 and 1997, respectively.

Warranty Policy

The Company  warrants  that its  products  are free from defects in material and
workmanship  for a period of one year  from the date of  initial  purchase.  The
warranty  does not cover any losses or damage that occur as a result of improper
installation,  misuse or neglect and repair or modification by anyone other than
the Company and its appointed service centers.  Repair costs on  out-of-warranty
units are charged to the Company's customers.

Income Taxes

The Company accounts for income taxes under SFAS No. 109, "Accounting for Income
Taxes"  (Note 10).  SFAS No. 109  requires an asset and  liability  approach for
financial  reporting for income taxes.  Under SFAS No. 109,  deferred  taxes are
provided for  temporary  differences  between the carrying  values of assets and
liabilities  for  financial  reporting  and tax purposes at the enacted rates at
which these differences are expected to reverse.

Net Income Per Share

Net income per common share amounts  ("basic EPS") were computed by dividing net
earnings by the weighted average number of common shares outstanding,  excluding
any potential  dilution.  Net income per common share amounts assuming  dilution
("diluted EPS") were computed by reflecting potential dilution from the exercise
of stock options and warrants.


                                      F-8
<PAGE>

A  reconciliation  between  the  numerators  and  denominators  of the basic and
diluted EPS computations is as follows:


<TABLE>
<CAPTION>
                                                                        Year Ended September 30,
                                                                  ------------------------------------
                                                                     1999         1998         1997
                                                                  ----------   ----------   ----------
                                                               (In 000s, except share and per share data)
<S>                                                               <C>          <C>          <C>
     Numerator
     Net income attributable to common stockholders               $    3,962   $    3,356   $    1,475
                                                                  ==========   ==========   ==========

     Denominator
     Weighted average common shares outstanding - basic            5,381,170    5,513,414    5,500,530
     Effect of dilutive securities:  stock options and warrants      441,617      481,653      293,685
                                                                  ----------   ----------   ----------
     Weighted average common shares outstanding - diluted          5,822,787    5,995,067    5,794,215
                                                                  ==========   ==========   ==========

     Basic EPS                                                    $      .74   $      .61   $      .27
                                                                  ==========   ==========   ==========
     Diluted EPS                                                  $      .68   $      .56   $      .25
                                                                  ==========   ==========   ==========
</TABLE>

Stock-Based Compensation

The Company  applies the  provisions  of  Accounting  Principles  Board  ("APB")
Opinion No. 25,  "Accounting  for Stock Issued to Employees" in connection  with
stock-based  compensation granted to employees and directors of the Company. The
Company provides the required pro forma  disclosures as if the fair value method
under SFAS No. 123,  "Accounting for Stock-Based  Compensation" was adopted. Any
stock-based  compensation  awards to  non-employees  are accounted for using the
provisions of SFAS No. 123; no such awards were made to non-employees during the
three years ended September 30, 1999.

Comprehensive Income

In the first  quarter of 1998,  the Company  adopted  SFAS No.  130,  "Reporting
Comprehensive  Income," which requires companies to report all changes in equity
during  a  period,  except  those  resulting  from  investments  by  owners  and
distributions  to  owners,   for  the  period  in  which  they  are  recognized.
Comprehensive  income is the total of net income and all other non-owner changes
in equity (or other  comprehensive  income) such as unrealized  gains/losses  on
securities  classified  as  available-for-sale,   foreign  currency  translation
adjustments and minimum pension liability  adjustments.  Comprehensive and other
comprehensive income must be reported on the face of annual financial statements
or in the case of interim reporting,  the footnote approach may be utilized. For
fiscal years 1999, 1998 and 1997, the Company's  operations did not give rise to
material  items  includable  in  comprehensive  income  which  were not  already
included in net income.  Accordingly,  the Company's comprehensive income is the
same as its net income for all periods presented.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

Reclassifications

Certain prior-year financial statement amounts have been reclassified to conform
to the current year's presentation.


                                      F-9
<PAGE>


Recently Issued Accounting Standard

In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
"Accounting for Derivative  Instruments and Hedging  Activities." This statement
establishes  accounting  and  reporting  standards for  derivative  instruments,
including certain derivative  instruments  embedded in other contracts,  and for
hedging activities.  SFAS No. 133 is effective for all fiscal quarters beginning
after  June  15,  2000 (as  amended  by SFAS  No.  137)  and  will  not  require
retroactive  restatement  of  prior-period  financial  statements.  The  Company
currently  does not use derivative  instruments or engage in hedging  activities
and, accordingly, does not expect that this statement will have an impact on its
consolidated financial statements when adopted.

3.   ACQUISITIONS:

In June 1998, the Company formed Global Payment  Technologies  (Europe)  Limited
("GPT-Europe"),  which is based in the United  Kingdom  and is  responsible  for
sales and  service  of the  Company's  products  throughout  Europe.  GPT-Europe
purchased the assets and assumed the liabilities of Global Payment  Technologies
(U.K.) Ltd. ("GPT-UK"), the Company's prior independent European distributor, as
of February 28,  1998.  The excess of the cost over the fair market value of the
net  assets  acquired  was  not  material.   The  Company,   through  a  capital
contribution of $76,000, owns 70% of GPT-Europe, with the remaining 30% owned by
GPT-Europe's  operations  manager,  a former  principal of GPT-UK.  GPT-Europe's
assets and  liabilities  are included in the  consolidated  balance sheets as of
September 30, 1999 and 1998 and the results of its operations from March 1, 1998
to  September  30,  1998 and for the year  ended  September  30,  1999 have been
included in the consolidated  statements of income,  net of the related minority
interest in subsidiary earnings, which was not material.

In April 1999, the Company  acquired a 25% equity  interest in Abacus  Financial
Management  Systems,  Ltd.  ("Abacus"),  a UK-based software  company,  for a de
minimis  amount (Note 11).  This  investment  is being  accounted  for under the
equity  method.  Abacus has  developed a cash  management  system,  of which the
Company's  validators  are a key  component,  that  offers the  retail  market a
mechanism  for  counting,  storing,  and  transporting  its  cash  receipts.  In
addition,  the Company and the principal of Abacus have formed Abacus  Financial
Management  Systems Limited,  USA, which is 80% owned by the Company and has the
exclusive  right  to  distribute  Abacus'  product  in  North  America.  Through
September 30, 1999, there has been no significant activity in this entity.

4.   INVENTORY:

The following is a summary of the composition of inventory:

                                                         September 30,
                                                    -----------------------
                                                     1999             1998
                                                    ------           ------
                                                           (in 000s)

     Raw materials                                  $2,501           $2,775
     Work-in-process                                 3,715            3,706
     Finished goods                                  1,288            1,609
                                                    ------           ------
                                                    $7,504           $8,090
                                                    ======           ======


                                      F-10
<PAGE>

5.   PROPERTY AND EQUIPMENT, NET:

Major classifications of property and equipment are as follows:

<TABLE>
<CAPTION>
                                                                                    September 30,
                                                                            ------------------------------
                                                     Useful Lives               1999              1998
                                                     ------------           -----------        -----------
                                                                                        (in 000s)
<S>                                                  <C>                    <C>                <C>
       Leasehold improvements                        5 years                $       258        $       243
       Furniture and fixtures                        3 - 7 years                    452                401
       Machinery and equipment                       3 - 10 years                 1,335              1,140
       Computer software                             5 years                        691                578
       Computer hardware                             3 years                        759                718
                                                                            -----------        -----------
                                                                                  3,495              3,080
       Less: Accumulated
       depreciation and amortization                                             (1,944)            (1,322)
                                                                            -----------        -----------
                                                                            $     1,551        $     1,758
                                                                            ===========        ===========
</TABLE>

6.   ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

Accrued expenses and other current liabilities consist of the following:

                                                           September 30,
                                                        -------------------
                                                         1999         1998
                                                        ------       ------
                                                             (in 000s)

     Compensation and employee benefits                 $  742       $  967
     International commissions                              69          949
     Warranty costs                                        244          112
     Administrative and other                              736          897
                                                        ------       ------
                                                        $1,791       $2,925
                                                        ======       ======

7.   NOTES PAYABLE TO BANK:

At September 30, 1998, the Company maintained two borrowing  facilities with The
Chase Manhattan Bank. These facilities  consisted of a $5,000,000 unsecured line
of credit  to be used for  short-term  working  capital  needs and a  $3,500,000
unsecured  line of credit to be used to repurchase  up to 500,000  shares of the
Company's common stock. Both of these lines bore interest at a rate equal to the
bank's  prime  rate or LIBOR  plus  175  basis  points  per  annum.  Outstanding
borrowings and interest rates under these  facilities at September 30, 1998 were
$3,050,000 and 8.25%, and $1,047,000 and 7.25%, respectively. These notes had an
original  maturity  date of March 31, 1999;  however,  the maturity was extended
until July 1999 when the Company  entered into the  long-term  credit  agreement
discussed  in  Note  8.  Simultaneously  with  the  signing  of the  new  credit
agreement,  the  Company  repaid  all of its  then  outstanding  bank  debt  and
terminated its existing credit facilities.



                                      F-11
<PAGE>

8.   LONG-TERM DEBT:

Long-term debt consists of the following at September 30, 1999:

     Revolving credit note                                       $1,994,000
     Term note                                                    3,800,000
                                                                 ----------
                                                                  5,794,000
     Less: current portion of term note                             800,000
                                                                 ----------
                                                                 $4,994,000
                                                                 ==========

On July  15,1999,  the  Company  entered  into a $10  million  long-term  credit
agreement  with The Chase  Manhattan  Bank which is  comprised  of a  $4,000,000
five-year term loan, payable in equal monthly installments with a fixed interest
rate of 7.66% per  annum and a  $6,000,000  unsecured  revolving  line of credit
("RLC").  The term of the RLC is three  years and  outstanding  borrowings  bear
interest at the bank's prime rate or at the  Company's  option,  for  borrowings
greater  than  $500,000,  LIBOR  plus a range of 125 to 200  basis  points.  The
precise  borrowing  rate is determined by the  Company's  financial  performance
under  certain  covenants.  Simultaneous  with  the  signing  of the new  credit
agreement,  the  Company  repaid  all of its  then  outstanding  bank  debt  and
terminated  its existing  credit  facilities.  In connection  with the long-term
credit  agreement,  the  Company  is  required  to  maintain  certain  financial
covenants with which it was in compliance at September 30, 1999. As of September
30, 1999, annual principal  maturities for the amount outstanding under the term
note were as follows:

        Fiscal Year Ended September 30,                               Amount
        -------------------------------                             ----------
                    2000                                            $  800,000
                    2001                                               800,000
                    2002                                               800,000
                    2003                                               800,000
                    2004                                               600,000
                                                                    ----------
                                                                    $3,800,000
                                                                    ==========

9.   SHAREHOLDERS' EQUITY:

Stock Split

In July 1997,  the Company's  Board of Directors  approved a  two-for-one  stock
split, in the form of a stock dividend,  to the Company's common shareholders of
record at August 18, 1997.  The new shares were issued to such  shareholders  of
record  on  September  4,  1997.  Par  value  remained  at $.01 per  share.  All
information  contained  in the  consolidated  financial  statements  and related
footnotes has been retroactively restated to give effect to this stock split.

Stock Repurchase

In June 1998, the Board of Directors  approved a common stock  repurchase  plan,
providing for the purchase of up to 500,000 shares of the Company's common stock
over a one-year period, using a separately  established line of credit (Note 7).
In September 1998, the Company purchased 165,000 shares of its common stock at a
cost of $1,047,000. In October 1998 and January 1999, respectively,  the Company
purchased  41,000  shares of its common  stock at a cost of  $223,000  and 3,200
shares of its common stock at a cost of $24,000.


                                      F-12
<PAGE>

Stock Option Plans

In October  1994,  the  Company  adopted  the 1994 Stock  Option Plan (the "1994
Plan")  covering up to 300,000 of the Company's  common shares pursuant to which
officers,  directors,  key  employees of the  Company,  and  consultants  to the
Company are eligible to receive incentive and/or non-qualified stock options. In
March 1996, the Board of Directors adopted the 1996 Stock Option Plan (the "1996
Plan").  The purpose and provisions of the 1996 Plan are essentially the same as
the 1994 Plan. The 1996 Plan originally  covered 400,000 of the Company's common
shares.  The total shares available for grant under the 1996 Plan were increased
to 900,000 by the Board of  Directors in September  1996.  The 1996 Plan,  as so
amended, was approved by the shareholders of the Company.

Both the 1994 Plan,  which expires on October 17, 2004, and the 1996 Plan, which
expires on March 18, 2006, are administered by the Compensation and Stock Option
Committee of the Board of  Directors.  The selection of  participants,  grant of
options, determination of price and other conditions relating to the exercise of
options are  determined by the  Compensation  and Stock Option  Committee of the
Board of Directors.

Incentive  stock  options  granted  under  both  the 1994  and  1996  Plans  are
exercisable for a period of up to 10 years from the date of grant at an exercise
price which is not less than the fair market  value of the common  shares on the
date of the grant,  except that the term of an incentive  stock  option  granted
under each of the plans to a shareholder owning more than 10% of the outstanding
common shares may not exceed five years,  and its exercise price may not be less
than  110% of the fair  market  value of the  common  shares  on the date of the
grant.

During fiscal 1997, a total of 60,000 incentive stock options were granted under
the 1996 Plan. These options will become  exercisable over a four-year period in
equal  amounts  commencing  with the first  anniversary  from the date of grant,
except for 24,000  options,  which will vest on the same basis over a  five-year
period.

During  fiscal  1998,  a total of  147,750  incentive  stock  options  and 7,500
non-qualified  options were granted under the 1996 Plan. All options  granted in
1998 will become exercisable over a four-year period in equal amounts commencing
with the first anniversary of the date of grant.

During  fiscal  1999,  a total of 148,850  incentive  stock  options  and 23,500
non-qualified  options were granted under the 1996 Plan. All options  granted in
1999 will become exercisable over a four-year period in equal amounts commencing
with the first anniversary of the date of grant.

The Company  accounts for option awards granted to employees and directors under
APB  Opinion No. 25,  under  which  compensation  cost is  recognized  for stock
options  granted at an exercise  price less than the market value of the options
on the  grant  date.  No  compensation  cost has been  recorded  by the  Company
pursuant  to APB  Opinion  No. 25. Had  compensation  cost for all stock  option
grants in fiscal years 1999, 1998 and 1997 been determined  consistent with SFAS
No. 123, the Company's net income and earnings per share would have been:

<TABLE>
<CAPTION>
                                                                             1999              1998             1997
                                                                          ----------        ----------        ----------
                                                                                (in 000s, except per share data)

<S>                                                                       <C>               <C>               <C>
     Net income:                                       As reported        $    3,962        $    3,356        $    1,475
                                                       Pro forma               3,721             3,227               958

     Net income per common share - basic:
                                                       As reported        $      .74        $      .61        $      .27
                                                       Pro forma                 .69               .59               .17

     Net income per common share - diluted:
                                                       As reported        $      .68        $      .56        $      .25
                                                       Pro forma                 .64               .54               .17
</TABLE>


                                      F-13
<PAGE>

The  effects  of  applying  SFAS No.  123 in this pro forma  disclosure  are not
indicative  of future  amounts.  SFAS No.  123 does not  apply to option  awards
granted prior to fiscal-year  1997,  and  additional  awards in future years are
anticipated.

A summary of the Company's stock option plans as of September 30, 1999, 1998 and
1997, and changes during the years then ended, is presented below.

<TABLE>
<CAPTION>

                                                           1999                       1998                         1997
                                                  -------------------------- --------------------------  -------------------------
                                                                 Weighted                   Weighted                   Weighted
                                                                 Average                     Average                    Average
                                                                 Exercise                   Exercise                   Exercise
                                                    Shares        Price        Shares         Price        Shares        Price
     --------------------------------------------------------  ------------- ------------  ------------  -----------  ------------
<S>                                                 <C>            <C>         <C>             <C>         <C>            <C>
     Outstanding at the beginning of the year       813,150        $4.94       726,400         $4.08       693,500        $3.64
       Granted at fair value                        172,350        $8.98       155,250         $8.97        60,000        $8.93
       Forfeited                                    (26,250)       $6.40       (20,900)        $4.15       (20,900)       $3.78
       Exercised                                    (48,825)       $4.89       (47,600)        $5.24        (6,200)       $3.78
                                                    -------                    -------                     -------

     Outstanding at end of the year                 910,425        $5.66       813,150         $4.94       726,400        $4.08
                                                    =======                    =======                     =======

     Options exercisable at year end                556,300        $3.96       526,510         $3.57       501,400        $3.45
                                                    =======                    =======                     =======

     Weighted-average fair value of options
       granted during the year (a)                    $5.39        N/A           $5.04         N/A           $5.08        N/A
</TABLE>

(a)  The fair  value of each  option  grant was  estimated  on the date of grant
     using  the   Black-Scholes   option-pricing   model   with  the   following
     weighted-average assumptions:

<TABLE>
<CAPTION>
                                                        Year Ended September 30,
                                         --------------------------------------------------------
                                               1999               1998               1997
                                         -----------------  ------------------ ------------------
<S>                                          <C>                 <C>                <C>
        Risk-free interest rates              5.87%               5.22%              6.19%
        Expected lives                       5 years             5 years            5 years
        Expected volatility                    65%                 60%                58%
        Expected dividend yields               --                  --                 --
</TABLE>

Summarized  information  about  the  Company's  stock  options  outstanding  and
exercisable at September 30, 1999 is as follows:

<TABLE>
<CAPTION>
                                                         Outstanding                               Exercisable
                                       ------------------------------------------------  -------------------------------
                                                           Average         Average                          Average
             Exercise Price Range          Options          Life            Price           Options          Price
             --------------------      ------------------------------------------------  -------------------------------
<S>                                         <C>          <C>              <C>                  <C>          <C>
            $3.00 to $4.50                  534,100      6.54 years       $  3.34              487,300      $ 3.29
            $5.00 to $5.50                   25,675      6.36 years       $  5.21               16,675      $ 5.32
            $6.50 to $7.00                   99,050      5.96 years       $  6.56               24,575      $ 6.56
            $7.50 to $8.50                   25,450      6.64 years       $  7.75               --            --
            $9.00 to $11.00                 137,400      6.97 years       $  9.09               --            --
            $11.00 to $12.00                 44,750      7.30 years       $ 11.59               16,750      $11.59
            $13.50 to $14.50                 44,000      5.56 years       $ 14.17               11,000      $14.17
                                       ------------                                      -------------
            $3.00 to $14.50                 910,425      6.53 years       $  5.66              556,300      $ 3.96
                                       ============                                      =============
</TABLE>



                                      F-14
<PAGE>

Underwriters' Warrants

In connection  with the  Company's  initial  public  offering of common stock in
February 1995, the Company granted warrants to purchase 150,000 shares of common
stock at $6.60  per  share to the  underwriters  of that  public  offering.  The
exercise  price of $6.60 per share  represented in excess of 110% of the initial
public  offering  price.  During  fiscal  1998,  16,500 of these  warrants  were
exercised and no warrants were exercised during fiscal 1999. As of September 30,
1999,  all of the  remaining  133,500  warrants were  exercisable  and expire on
February 6, 2000.

10.  INCOME TAXES:

The provision for income taxes is comprised of the following:

<TABLE>
<CAPTION>
                                      For the Fiscal Years Ended September 30,
                                      ----------------------------------------
                                         1999          1998           1997
                                        -------       -------       -------
                                                     (in 000s)
<S>                                     <C>           <C>           <C>
     Current:
        Federal                         $ 1,945       $ 1,965       $   670
        State and local                     316           438           223
                                        -------       -------       -------
                                          2,261         2,403           893
                                        -------       -------       -------
     Deferred:
        Federal                            (343)         (179)          153
        State and local                     (54)          (80)           67
                                        -------       -------       -------
                                           (397)         (259)          220
                                        -------       -------       -------
                   Total                $ 1,864       $ 2,144       $ 1,113
                                        =======       =======       =======
</TABLE>

Significant components of deferred tax assets and liabilities are as follows:

                                                            As of September 30,
                                                          ---------------------
                                                           1999    1998    1997
                                                          -----   -----   -----
                                                                (in 000s)

  Current deferred tax assets:
     Accounts receivable                                  $  91   $  80   $ 101
     Inventory                                              270     306     320
     Accrued expenses and other, net                        136      68    --
     Elimination of gross profit on sales to affiliates     484     130    --
                                                          -----   -----   -----
                Total                                       981     584     421

  Non-current deferred tax liability:
     Depreciation                                          --      --       (96)
                                                          -----   -----   -----
                Net deferred tax asset                    $ 981   $ 584   $ 325
                                                          =====   =====   =====

The Company  believes  that,  based upon its  consistent  history of  profitable
operations,  it is probable  that the net  deferred tax assets will be realized,
primarily from the generation of future taxable income.

Reconciliation  of the  statutory  Federal  income  tax  rate  to the  Company's
effective tax rate is as follows:

                                                      For the Fiscal Years
                                                       Ended September 30,
                                                  ---------------------------
                                                   1999       1998      1997
                                                  ------     ------    ------

     U.S. Federal statutory rate                    34.0%      34.0%     34.0%
     State income taxes, net of Federal benefit      3.0        4.3       7.5
     Foreign sales corporation                      (3.5)      --        --
     All other, net                                 (1.5)       0.7       1.5
                                                  ------     ------    ------
     Effective income tax rate                      32.0%      39.0%     43.0%
                                                  ======     ======    ======


                                      F-15
<PAGE>


11.  TRANSACTIONS WITH UNCONSOLIDATED AFFILIATES:

In August 1996, the Company acquired a 50%  non-controlling  interest in a South
African affiliate ("GPT-SA"),  which on July 3, 1998, changed its name to Global
Payment Technology Holdings  (Proprietary) Limited ("GPTHL"),  for which funding
commenced in June 1997.  This entity is responsible for sales and service of the
Company's  products in the South African  region on an exclusive  basis.  During
fiscal 1998 and 1997, the Company loaned $104,000 and $178,000, respectively, to
this affiliate.  Partial  repayments  totaling  $166,000 were received in fiscal
1998. In addition, the Company received a dividend distribution in the amount of
$39,000 in fiscal  1999.  These  amounts are  included as part of the  Company's
investment in unconsolidated affiliates in the accompanying consolidated balance
sheets as of September 30, 1999 and 1998. On May 29, 1998,  Hosken  Consolidated
Investments  ("HCI"), a South African investment company,  purchased a one-third
interest in GPT-SA.  Terms of the transaction called for HCI to purchase certain
shares from the Company and the Bevin Trust (GPT-SA's founding  shareholders) as
well as additional shares directly from GPT-SA. The Company recognized a pre-tax
gain of $385,000 on the transaction and its ownership of GPT-SA was reduced from
50% to 33%.  The  Company's  consolidated  results  of  operations  include  the
Company's  equity in the results of operations of this  affiliate in the amounts
of $1,000, $1,400 and ($78,000) in fiscal 1999, 1998 and 1997, respectively. For
fiscal  1999,  the  Company  reduced  its  equity in  income  of  unconsolidated
affiliates  by  $122,000,  which  represents  the gross  profit on sales to this
affiliate which have not yet been recognized by the affiliate.

In January  1997,  the  Company  acquired a 50%  non-controlling  interest  in a
China-based  affiliate.  This entity manufactures  plastic and metal components,
some of which  are used by the  Company  in its  production.  In  addition,  the
Company is  obligated  to loan up to an  aggregate  of $299,000 to this  entity,
which will bear  interest  at the rate of 1.5%  above the prime rate  prevailing
from time to time at the Company's bank, per annum. During fiscal 1998 and 1997,
the Company loaned $25,000 and $219,000,  respectively, to this affiliate. These
amounts  are  included as part of the  Company's  investment  in  unconsolidated
affiliates in the accompanying  consolidated  balance sheets as of September 30,
1999 and 1998.  The Company's  consolidated  results of  operations  include the
Company's  equity in the results of operations of this  affiliate in the amounts
of  $38,000,   ($169,000)   and  ($42,000)  in  fiscal  1999,   1998  and  1997,
respectively.

In August  1997,  the  Company  acquired a 50%  non-controlling  interest  in an
Australian  affiliate.  This entity is responsible  for sales and service of the
Company's  products in  Australia  and New Zealand on an  exclusive  basis.  The
Company's consolidated results of operations include the Company's equity in the
results of operations of this affiliate in the amounts of ($638,000),  ($47,000)
and $49,000 in fiscal  1999,  1998 and 1997,  respectively.  For fiscal 1999 and
1998, the Company reduced its equity in income of  unconsolidated  affiliates by
$1,003,000  and $400,000,  respectively,  which  represents  the gross profit on
sales to this affiliate that have not then been recognized by the affiliate.  In
1999, the Company received a dividend distribution in the amount of $472,000.

In  April  1999,  the  Company  acquired  a 25%  interest  in  Abacus  Financial
Management Systems,  Ltd. ("Abacus") for $162,000.  Abacus is a software company
based in the United  Kingdom that has  developed a cash  management  system,  of
which the  Company's  validators  are a key  component,  that  offers the retail
market a mechanism for counting,  storing,  and  transporting its cash receipts.
The Company's  consolidated  results of operations for the year ended  September
30, 1999 include the Company's equity in the loss of this affiliate of $79,000.


                                      F-16
<PAGE>


12.  COMMITMENTS AND CONTINGENCIES:

Minimum Lease Commitments

The operations of the Company are conducted in leased premises,  one of which is
leased from an affiliate owned partially by the Company's Chairman.  The Company
also leases various  office  equipment.  At September 30, 1999, the  approximate
minimum  annual  rentals under these leases,  which expire  through  fiscal year
2002, were as follows:


                                   Total (including
       For the Fiscal Year           Related Party          Related Party
      Ending September 30,           Commitments)            Commitments
      --------------------           ------------            -----------
                                       (in 000s)              (in 000s)

              2000                       $354                   $157
              2001                        208                    161
              2002                        116                     68
              2003                         50                     --
              2004                         17                     --

Total rent expense for all operating leases was $494,000,  $430,000 and $388,000
in fiscal 1999, 1998 and 1997,  respectively,  including $133,000,  $121,000 and
$65,000, respectively,  paid to the affiliate. The Company's management believes
this lease with the affiliate is on terms that approximate fair market value.

Employment Agreements

The Company has entered into various  employment  agreements  with four officers
and one other employee of the Company  expiring  through the end of fiscal 2000,
with minimum compensation requirements as follows:

           For the Fiscal Year
           Ending September 30,                          (in 000s)
           --------------------                          ---------
                  2000                                   $688,000
                  2001                                    264,000

Litigation

There are no material legal proceedings pending against the Company.

13.  SUBSEQUENT EVENT:

On November 1, 1999,  GPTHL  formed  International  Payment  Systems  Pty.  Ltd.
("IPS") and assigned its rights to all of the non-gaming  activities,  primarily
the  distribution  of Ingenico,  De La Rue and Scan Coin  products.  The Company
currently  has a 30%  interest in IPS.  GPTHL holds the  exclusive  distribution
rights to the Company's  products in the South African region.  Also on November
1, 1999, On-Line Gaming Systems Inc. ("On-Line"),  a Florida-based Nasdaq listed
company  specializing  in Internet  wagering and other  casino  based  products,
acquired a 23.5%  equity  interest in GPTHL  through the purchase of shares from
the three partners and management.  The ability to distribute On-Lines' products
allows  GPTHL to broaden its market and product  line.  With the closing of this
transaction, the Company now has a 23.5% interest in GPTHL.


                                      F-17
<PAGE>


              REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE


To Global Payment Technologies, Inc.:

We have audited, in accordance with generally accepted auditing  standards,  the
consolidated  financial  statements  of Global  Payment  Technologies,  Inc. and
subsidiaries  (the  "Company")  included  in this Form 10-K and have  issued our
report  thereon dated November 22, 1999. Our audits were made for the purpose of
forming an  opinion  on the basic  financial  statements  taken as a whole.  The
accompanying  schedule is the responsibility of the Company's  management and is
presented  for  purposes  of  complying   with  the   Securities   and  Exchange
Commission's  rules and is not a part of the basic  financial  statements.  This
schedule has been subjected to the auditing  procedures  applied in the audit of
the  basic  financial  statements  and,  in our  opinion,  fairly  states in all
material  respects  the  financial  data  required  to be set forth  therein  in
relation to the basic financial statements taken as a whole.


                                                         ARTHUR ANDERSEN LLP



Melville, New York
November 22, 1999











                                       S-1



<PAGE>




                                                                     SCHEDULE II


                        GLOBAL PAYMENT TECHNOLOGIES, INC.

                  SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS


<TABLE>
<CAPTION>
                  COLUMN A                          COLUMN B              COLUMN C              COLUMN D             COLUMN E
                  --------                          --------              --------              --------             --------
                                                                         Charged to
                                                   Balance at            costs and            Deductions -            Balance
                                                    Beginning         expenses, net of         write off              at end
                 Description                        of period            recoveries           of accounts            of period
                 -----------                        ---------            ----------           ------------           ---------
<S>                                                   <C>                  <C>                   <C>                   <C>
Allowance for doubtful accounts:
   September 30, 1997                                 $  268               $   (39)              $     4               $   225
                                                      ======               =========             =======               =======

   September 30, 1998                                 $  225               $   123               $   100               $   248
                                                      ======               =======               =======               =======

   September 30, 1999                                 $  248               $    64               $    24               $   288
                                                      ======               =======               =======               =======
</TABLE>







                                       S-2