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, 2004


                                       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.)



                425B OSER AVENUE, HAUPPAUGE, NEW YORK         11788
                ------------------------------------------------------
                (Address of principal executive office)     (Zip Code)


Registrant's telephone number, including area code         631-231-1177
                                                           ------------

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 ]

         Indicate by check mark whether the registrant is an  accelerated  filer
(as defined in the Securities and Exchange act rule 12b-2). Yes___ or NO_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 November 26, 2004, was approximately $27,600,000.

         As of November 26, 2004, the registrant had a total of 5,627,240 Common
Shares outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the  definitive  Proxy  Statement of the registrant for the
annual meeting of stockholders to be held in 2005 are  incorporated by reference
into Part III of this report.




                                       2

<PAGE>


                                     PART I

ITEM 1.           BUSINESS

GENERAL

Global  Payment  Technologies,  Inc. (the  "Company") is a Delaware  corporation
established in 1988. 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.

On November 1, 1999, Global Payment Technology  Holdings  (Proprietary)  Limited
("GPTHL"),  the Company's South African affiliate,  formed International Payment
Systems  Pty Ltd.  ("IPS")  and  assigned  to IPS its  rights to all of  GPTHL's
non-gaming  activities,  primarily the  distribution of Ingenico,  De La Rue and
Scan Coin  products.  The  Company had a 30%  interest  in IPS.  GPTHL holds the
exclusive  distribution  rights to the  Company's  products in the South African
region.  On January 18, 2001,  GPTHL merged its  operations  with Vukani  Gaming
Corporation  ("Vukani")  (formerly South African Video Gaming  Corporation (Pty)
Ltd.),  a wholly  owned  subsidiary  of  Hosken  Consolidated  Investments  Ltd.
("HCI").  By virtue  of the  agreement,  the  Company's  ownership  of GPTHL was
reduced from 23.5% to approximately 5%. In March 2002, the Company exercised its
right to acquire shares from an existing shareholder,  HCI, for $979,000,  which
increased the Company's  ownership to 24.2%.  In April 2003,  the Company sold a
significant  portion of its  investments  in its South African  affiliates.  The
Company received  approximately  $1.9 million in cash for the sale of its entire
interest in IPS and a major  portion of its  interest  in GPTHL.  As a result of
this  transaction,  which  did not  result  in a gain  or  loss,  the  Company's
ownership  interest in GPTHL has been reduced from 24.2% to 5%.  GPTHL's  Vukani
division is one of the two licensed  operators in the South African route market
province of  Mpumalanga.  The cash received was a return of all of the Company's
advances and investments  resulting in the Company recovering the carrying value
of such  advances and  investments.  On January 15,  2004,  the Company sold its
remaining 5% ownership interest in GPTHL for a gain of $78,000.


                                       3
<PAGE>

The  Company has 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 2002,  the Company and two other  shareholders  formed eCash  Management
Pty.  Ltd.,  an  Australian  based  company.  This  entity was formed to market,
distribute,  service and support  Automated Teller Machines across Australia and
New Zealand. The Company owns a 35% interest in this entity.

Since  1998,  the  Company  owned 70% of Global  Payment  Technologies  (Europe)
Limited  ("GPT-Europe").  This  entity  is based in the  United  Kingdom  and is
responsible for sales and service of the Company's products in Europe. Effective
October  1,  2001,  the  Company  acquired  the  remaining  30% of the  stock of
GPT-Europe,  for a de  minimis  amount,  from the then  operations  manager  and
promoted him to European sales manager.

In April 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.   To  date,  Abacus  Financial
Management, Inc. USA has not had material operations.

In fiscal 2004,  the Company  established  a wholly owned  subsidiary in Moscow,
Russia (GPT-Russia) to provide local service of the Company's products.

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 its high of $43.9  million in fiscal  1999.  In fiscal
2000, sales declined to $22.5 million as a result of a slowdown in the worldwide
gaming market and delays in key projects,  which resulted in increased inventory
at the  Company's  affiliates.  During  fiscal  2000 the  Company  significantly
reduced  inventory at its affiliates,  matching  demand in those regions,  which
resulted in the resumption of production and shipments in August 2000. In fiscal
2001,  sales  increased 43% to $32.2 million  primarily as a result of increased
demand for our products in both Australia and Russia, as well as the addition of
several new customers  during the year. In fiscal 2002,  sales  decreased 14% to
$27.7  million as a result of  customers  lowering  their  inventory  and taking
advantage of the Company's  shorter  lead-times  on its Argus gaming  validator,
certain  product  issues  which  have  since  been  resolved,  as well as softer
worldwide  economic  conditions.  In fiscal 2003,  sales decreased 5.9% to $26.1
million as a result of reduced  sales in Eastern  Europe which were  hindered by
initial product issues, which have since been resolved,  offset in part by sales
of the Company's new vending  product which  commenced in January 2003. With the
launching  of its new  beverage  and vending  product in fiscal 2003 the Company
achieved an  increase in its  beverage  and vending  sales with $5.7  million as
compared to $2.2 million in fiscal 2002. As a percentage of sales,  beverage and
vending products  represented 21.7% in fiscal 2003 as compared with 8% in fiscal
2002. In fiscal 2004,  sales  decreased  6.5% to $24.4 million  primarily due to
$4.3 million in lower sales of the Company's  gaming  products to its Australian
affiliate  offset, in part, by a $1.7 million increase in sales of the Company's
Aurora product to both the vending and gaming markets and a $637,000 increase in
sales to the South  African  gaming  market.  Gaming  sales for fiscal 2004 were
$19.304 million, or 79.2% of sales, as compare with $20.417 million, or 78.3% of
sales,  in fiscal 2003.  Beverage and vending  sales for fiscal 2004 were $5.077
million,  or 20.8% of sales, as compared with $5.659 million,  or 21.7% of sales
in fiscal 2003.

                                       4
<PAGE>

The Company's  international  sales amounted to 86%, 90% and 92% of net sales in
fiscal 2004 2003 and 2002,  respectively.  Management believes the international
markets for currency  validation systems in both gaming and beverage and vending
may  grow at a  faster  rate  than in the  United  States  and,  therefore,  may
represent the Company's best long-term growth opportunity.

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 have tended to focus primarily on the broader,  higher-volume
market using standardized product configurations.  Our approach in the worldwide
gaming  market was  initially  a "niche"  strategy  that  allowed the Company to
develop a strong  international  customer  base  that  originally  started  with
manufacturers  too small to attract  the larger  competitors.  With  development
completed and the  commencement of sales of our Argus(TM) and Aurora products in
January  2001  and  January  2003,  respectively,  and  the  launch  of our  new
"Advantage" and "SA-4" products in fiscal 2005, this strategy will continue, and
be  broadened  paying  particular  attention  to markets  which have the largest
opportunity  for growth.  The Company has both gained new customers and retained
existing customers based on its strength  internationally and its reputation for
working  closely to adapt to  customers'  needs.  The Company  will  continue to
market  directly to the OEMs and  Operators  in Eastern  Europe to continue  its
pursuit to regain lost market share due to initial  product  issues on its Argus
product, which have since been resolved.  During the second half of fiscal 2004,
the Company has  achieved  significant  increases in gaming sales with Aurora in
this part of the world. The Company has in the past and will continue to attempt
to strengthen and grow its  relationships  with the OEMs through joint marketing
and advertising efforts and by creating  country-specific currency databases and
customization,  which  will  allow  OEMs an  opportunity  to seek new  potential
markets  worldwide.  Today the  Company  has in  excess  of 70  country-specific
databases and 17 multi-country  databases,  which is one of the largest database
libraries  in the  industry.  Further,  it  plans to  continue  to build a large
library of databases for its newest products,  as well as adding to its existing
Argus and Aurora databases.

                                       5
<PAGE>

As a result of the Company's launch of its Aurora product in fiscal 2003, it has
increased  its Aurora  revenue from $5.3 million in fiscal 2003, to $7.0 million
in fiscal 2004. In fiscal 2003 the Company  signed a four year supply  contract,
valued in excess of $10,000,000,  with tobaccoland Automaten GmbH & Co, a German
based cigarette-vending operator with over 200,000 machines or approximately 25%
of the German  market  share,  however,  in the last  quarter of fiscal 2004 the
overall German tobacco vending industry has faced significant  volume shortfalls
due  to  significant  government  increases  in  cigarette  taxes.  During  this
timeframe,  however,  the Company more than offset the loss in revenue from this
industry segment by successfully and  substantially  penetrating  sales into the
Russian  gaming  market with its Aurora,  originally  dubbed the  "beverage  and
vending"  product.  As a result of this  progress GPT has  increased  its Aurora
sales year over year by penetrating  into both the beverage and vending industry
as well as the gaming  industry,  thus  increasing  its customer base as well as
venues and markets  Aurora  serves.  The Company will continue to search for new
growth opportunities both domestically and internationally for all its products.
The Company  believes it is in position  to gain  additional  business  with its
Aurora product based on its  acceptance as a currency  validator for a number of
growing   markets   worldwide.   By  leveraging   the  Company's   international
relationships, the Company will seek growth opportunities in the domestic gaming
sector,  as the United States is viewed as an important  target for expansion by
several of our major OEM  customers.  Further,  the Company has launched its new
Advantage product in early fiscal 2005 and believes it will allow the Company to
penetrate the domestic gaming market as well as other international markets.

In the gaming venue, the Company markets its products principally to the OEMs as
well as the end-users (i.e.,  casino  operators) who purchase slot 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 has also  provided  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. In 1999, the Company developed
programs  and plans  designed  to elevate  the level of our  customers'  product
knowledge.  Such  programs  and  plans  included  the  development  of  formally
documented  maintenance  schedules and similar  programs,  which are proposed to
customers. These maintenance programs are being offered in coordination with the
Company's OEM  customers,  and are intended to broaden  awareness of the Company
and its  products  within the gaming  industry and as a result  increase  sales.
Additionally,  the Company will be focusing its 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.  This
overall  strategy  allows the Company's  products to continue to demonstrate the
high level of performance  and quality  achieved in many markets  throughout the
world.

                                       6
<PAGE>

The Company's marketing strategy for the significantly larger worldwide beverage
and  vending  industry  will be very  similar  to that of the  Company's  gaming
strategy.  During  fiscal 2002,  the Company  completed  its field trials of the
Aurora product and initiated its sales campaign.  During fiscal 2003, with sales
of its new Aurora  product  commencing in January 2003,  the Company  achieved a
significant $3.5 million increase in beverage and vending sales to $5.7 million.
Throughout fiscal 2004 and into fiscal 2005, the Company will continue to market
and sell its Aurora product through its already existing distribution  channels,
as well as through the creation of additional  alliances  and sales  channels to
further penetrate this market. The beverage and vending  industry's  requirement
for currency validation  equipment is more than $375 million per annum, or three
times that of the gaming  market.  In  addition,  further  penetration  into the
beverage  and  vending  market,  as well as the  gaming  market,  will allow the
Company  to  achieve a major  portion  of its  diversification  strategy  and if
successful  could  reduce the  reliance  on any one market as well as expand its
customer base.

The Company's  overall sales and marketing  strategy in the worldwide gaming and
beverage and vending  industries is to deliver a high quality product  supported
by local sales and service in order to make the  Company's  products  the market
standard for currency validation products.  The Company has successfully pursued
this  strategy in Australia,  South  Africa,  Latin America and Russia where the
Company's  products are accepted as the industry  standard in the gaming market.
Also  toward this end,  the  Company  has sales and  service  offices in London,
England and Moscow,  Russia as well as a joint venture that provides local sales
and service in Australia.  It also has distributors in Russia, Italy,  Southeast
Asia, Latin America, the Middle East and South Africa.

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 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 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  continues to grow
and as technological  advances are incorporated into the products'  design.  The
Company spent approximately $75,000,  $150,000, and $225,000 during fiscal 2004,
2003 and 2002, respectively, on research and development. The Company's research
and development  consists  primarily of efforts to expand its product lines into
new applications, as well as to achieve improvements in technology.

                                       7
<PAGE>

The Company's product development efforts have been focused on the design of its
latest  generation  of  validator  products,  the first of which was  Argus(TM).
Argus(TM), the Company's gaming validator,  began selling in January 2001. Sales
of this product  represented  19%, 63%, 54% and 51% of unit  validator  sales in
fiscal  2001,  2002,  2003 and 2004,  respectively.  In the summer of 2002,  the
Company  completed the development of its new product  designed  specifically to
address the  requirements of the vending  industry.  Following  successful field
trials during the summer and fall of 2002,  the Company  commenced its sales and
marketing  campaign  which led to sales  commencing  in January  2003 on its new
product called "Aurora".  Sales of this product  represented 29% and 43% of unit
validator  sales  in  fiscal  2003 and  2004,  respectively.  Building  from its
engineering libraries, the Company has launched several new products,  including
"Advantage"  and "SA-4",  during the  beginning  of fiscal 2005 that the Company
anticipates  will  provide the  Company  additional  flexibility  in meeting its
customers'  needs in both the domestic and  international  gaming  markets.  For
Argus(TM) and Aurora  products,  the Company has, since achieving  technological
feasibility through a detailed program design,  capitalized the cost of software
coding and development,  and reflects the amortization of these costs in cost of
sales.

The Company's  principal  products in fiscal 2004 include three basic  validator
models (GII,  Argus(TM) and Aurora) 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 2000,  2001 and 2002,  this shift
continued and Generation II and Argus(TM)  product line sales accounted for 76%,
89% and 92%,  respectively of unit sales. The Argus product has been designed to
be a drop-in  replacement  for  Generation  II  products  and is focused  toward
bringing new technological  features to the marketplace.  During fiscal 2002 and
fiscal 2003,  sales  substantially  shifted  from the  Company's  Generation  II
product line to its Argus(TM)  product line,  which  represented  63% and 80% of
gaming  validator sales.  This shift increased  further in the fourth quarter of
fiscal 2003 and  represented 96% of gaming sales.  This shift,  coupled with the
Company's  increased  marketing efforts on Argus,  rather than its Generation II
product line resulted in an increased inventory reserve in the fourth quarter of
2003. The Company believes it has adequately reserved for inventory obsolescence
for the shift in demand from its  Generation  I products and its  Generation  II
products.

The Company's Generation II product line features several technological advances
designed  specifically  to meet the  requirements  of the gaming  industry.  The
Generation  II line  includes the  Company's  "IDS,"  "IDUS,"  "IBS," and "IBSi"
validators.

                                       8
<PAGE>

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.  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.  During  fiscal  2004,  the
Company  has  commenced a phase out program on this  product,  however;  we will
maintain field service and support for warranty repairs for several more years.

Argus(TM) is a worldwide gaming note validator,  which can process multi-country
databases,  with a substantially greater number of notes (between 2.44 inches to
3.35 inches in width),  in all 4 directions.  Argus is designed to be a one size
fits all validator  that uses  essentially  the same hardware for every currency
throughout the world.  Argus is equipped with a standard bar code reader,  which
has the added  capability  of reading  coupons and currency at the same time. In
the  future,  GPT plans to explore  the  option of  integrating  smart-card  and
mag-card  technologies with its existing  products.  The Argus sensor system has
the Company's patented Red, Green, Blue and Infrared (RGBI) optical array, which
generates 56 channels of high-resolution data. It is arranged in a unique layout
that allows for the  analysis of a note's  signature  (fingerprint)  without any
gaps  between  optical  sensors.  The optical  information  provided by Argus is
reflective (off the note),  transmissive  (through the note) and a combined RGBI
pattern  of  reflective  data to  create a color  signature  of the  note  being
evaluated.  The Argus validator also has a high-sensitivity  magnetic sensor and
high-resolution Side-Looking Sensors(TM). Both the Generation II and III product
lines offer 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.


Aurora is the Company's first validator  specifically designed for the worldwide
beverage and vending industries.  Aurora is an  injection-molded  modular design
that can be used in the up-stack or down-stack orientation and uses state of the
art optics in its  internal  sensor  system  with the  Company's  patented  RGBI
optical  array.  With  field  trials  completed  in the fall of 2002  and  sales
commencing in January 2003, this product has quickly  replaced most sales of the
Company's M-125 and M-150. This product originally targeted for the beverage and
vending industry has also been aggressively  marketed in the un-regulated gaming
market in 2004 with substantial penetration. The Company will continue marketing
efforts in both venues during fiscal 2005. As with Argus,  Aurora is designed to
be a one size fits all  validator  that  essentially  uses the same hardware for
every currency in the world.

                                       9
<PAGE>

The Company's  newest  products  launched in early fiscal 2005 are Advantage and
SA-4.  Advantage is a worldwide  note validator that can handle bills up to 3.35
inches in width.  Advantage  uses the latest DSP chip set for a 20X  increase in
speed, which decreases the time it takes to validate to less than half a second.
The DSP chip enables the use of advanced algorithms, which significantly improve
security and performance. The Advantage sensor system has the Company's patented
Red,  Green,  Blue and Infrared  (RGBI)  optical array and an industry  standard
bar-code reader that is compatible with the various Ticket-In  Ticket-Out (TITO)
systems  currently  found on many casino floors  worldwide.  The newly  designed
precision mechanism and side-looking optical system increases the sensitivity of
the  Advantage  currency  validator  to detect  fraud  attempts.  The  number of
different  notes retained in a single  database  memory is expandable from 40 to
128 in all  four  directions,  which  enables  Advantage  to  securely  validate
multiple currencies without the need to re-program.

SA-4 is a worldwide  note  validator  that can handle bills up to 3.35 inches in
width  while  holding  a  database  of up to 128  different  bank  notes in four
directions,  which enables SA-4 to securely validate multiple currencies without
the need to  re-program.  The DSP chip  enables the use of advanced  algorithms,
which significantly improve security and performance.  The SA-4 Advantage sensor
system has the Company's  patented Red, Green,  Blue and Infrared (RGBI) optical
array and an  industry  standard  bar-code  reader that is  compatible  with the
various  Ticket-In  Ticket-Out  (TITO)  systems  currently  found on many Casino
floors  worldwide.  Many  countries use magnetic ink to increase the security of
their  currency.  The SA-4 currency  validator  contains a new  high-sensitivity
magnetic  circuit  that  doubles the  sensitivity  to detect  these  inks.  SA-4
contains front and rear sensors,  which guarantee the detection of critical bill
position information. SA-4 supports the various industry-standard  communication
protocols commonly used for vending, gaming, and video lottery machines.

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. This warranty has
essentially doubled with its generation III validators (Argus, Aurora, Advantage
and SA-4).  The Company or its authorized  service agents will repair or replace
any units that 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 warranted
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,  Russia, Latin
America,  South Africa,  Europe and Southeast Asia). In these markets, the local
sales and service joint venture partners and distributors 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 2005 as opportunities  arise. Over the last three years, the
Company's  cost of  warranting  its  products  has varied  primarily as a direct
result  of the  increase  or  decrease  in the unit  sales,  as well as  product
performance. Warranty expense for 2004, 2003 and 2002 was 198,000, $327,000, and
$280,000,  respectively,  which represents actual costs incurred and an estimate
of future costs to be incurred.

                                       10
<PAGE>

MARKETING AND SALES

An "in-house"  sales force  consisting of sales  representatives,  sales/product
technicians and customer service support  personnel,  as well as strategic joint
ventures and  distributors,  conducts the Company's  primary sales and marketing
efforts in both the domestic and international  markets. The Company has a joint
venture  providing  local sales and service in the key market of  Australia  and
Company-owned sales and service offices in London,  England and Moscow,  Russia.
In addition,  the Company has  distributors  in  Southeast  Asia,  Italy,  Latin
America  and South  Africa.  The  overall  sales and  service  network  provides
effective  international  coverage for the Company's  products and customers and
reflects the Company's commitment to providing superior service worldwide.

CUSTOMER CONCENTRATION

During  fiscal  2004,  the  Company's  largest  customer,  GPTA,  accounted  for
approximately  34% of net sales.  A  significant  portion of GPTA's  sales is to
Aristocrat  Technologies  Australia  Pty Ltd.  Net sales to the gaming  industry
accounted for approximately 79.2% of the Company's revenues,  with the remaining
20.8% primarily from product  applications in the beverage and vending industry.
While the Company has  diversified  its sales mix with sales to the beverage and
vending industry,  increased sales to Russia,  and added new accounts during the
year,  it  continues to sell to a small group of OEMs in the gaming and beverage
and vending industries.  The Company must achieve  significantly less dependence
on several  important  customers by expanding into new countries,  expanding its
customer  base and  developing  new  products to increase the market size it can
market to, such as domestic  gaming and the mass  market  vending  applications.
Until such  initiatives  are achieved,  the Company is at risk that lower demand
for  any  one  product  or  market,  or a loss of a  significant  customer,  can
substantially impact its revenues and net income.


MANUFACTURING

Since 1995, the Company's operations have been conducted from a leased facility,
currently 44,000 square feet, which houses the manufacturing and  administrative
functions in Hauppauge, New York.

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,  via its key  suppliers,  and testing  permits the Company to
shorten its production  cycle and protect  patented and proprietary  technology.
During fiscal 2000, the Company  transitioned a portion of its  manufacturing to
demand flow technology. In addition, the Company has evaluated and will continue
to  evaluate   its   suppliers  in  an  effort  to  reduce  its  total  cost  of
manufacturing,  a process  that may include  vendor  consolidation  and selected
outsourcing.  Despite these efforts,  the Company's  manufacturing  efficiencies
significantly  declined  in  fiscal  2000 as a direct  result  of the 49%  sales
decline  resulting  in higher  manufacturing  costs  per  unit,  as well as less
efficient  operations as a result of lower and more frequent production runs. In
fiscal 2001,  the Company  incurred  higher  startup  costs on its new products;
however,  this was  offset by  increased  production  volumes  and  commensurate
efficiencies resulting from a 43% increase in sales and production.

                                       11
<PAGE>

As the Company began its transition to the Argus product line in fiscal 2001, it
incurred  increased  costs related to lower volumes on the two product lines. As
this  transition  was  substantially  completed  during  fiscal 2002,  Argus was
expected to be produced in a more  efficient  manner at a lower cost, and at the
same time allowing the Company increased  flexibility to meet customers' demand.
In the fourth  quarter of 2002 these  improvements  were more than offset by the
significant reduction in sales and production. During fiscal 2003, the Company's
introduction  of its new Aurora product with higher  initial  purchase costs and
increased initial  manufacturing  costs, coupled with overall lower sales volume
than fiscal 2002  resulted in lower net margins for the year.  The Company  did,
however,  take action to significantly  reduce its purchased  component costs on
Aurora and Argus by the end of fiscal 2003 by manufacturing  and selling off, on
a first-in  first-out basis, its higher priced purchased  components.  In fiscal
2004,  the Company  continued its efforts to further reduce costs and to improve
the margin on its Aurora product, and while improvements in purchasing costs and
manufacturing  efficiencies  have been achieved by the end of fiscal 2004, until
such  time as these  benefits  are  substantially  realized  over the  first two
quarters of fiscal 2005,  the margins in the future will continue to be affected
by the mix of products as well as sales volumes.

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 that 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,  and  subsequently  completed,  its
agreement to be acquired by Coin Acceptors,  Inc. ("Coinco"),  a St. Louis-based
supplier  of  primarily  vending  products.  This  resulted  in  Coinco  being a
competitor that has an integrated  gaming and beverage and vending product line,
as well as  relationships  in both  industries.  A  similar  competitor  is Mars
Electronics  International  ("MEI"),  an entity that has products  able to serve
both the gaming and the beverage and vending marketplace.

                                       12
<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. 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"), International Currency Technologies,  Sanyo, Conlux,
Coegis and Cashcode Company,  Inc.  ("Cashcode") compete with the Company in the
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, Ardac and Cashcode.  In the secondary  low-value  gaming
markets, Innovative Technology, Ltd. maintains a significant market share due to
this market's price  sensitivity and 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 service,
quality, durability and performance while maintaining a high level of protection
against tampering and counterfeit currencies.

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.


                                       13
<PAGE>

The Company holds ten 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; "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; "STACKER MECHANISM FOR STACKING BANK NOTES" U.S. Patent No. 5899452 issued
May 4, 1999; "APPARATUS AND METHOD FOR DETECTING A SECURITY FEATURE IN A
CURRENCY NOTE," U.S. Patent No. 6,104,036 issued August 15, 2000; and "BANK NOTE
VALIDATOR (RGBI)" U.S. Patent No. 6,223,876 issued May 1, 2001. Certain patents
cover technology used in the Company's first, second and third generation
validator product lines and the remaining patents cover technology used in
certain special models. 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  application,  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  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.  The  Company  has  obtained  patents in
Australia,  New Zealand and South Africa under the  Eurasian  Patent  Convention
corresponding to U.S. Patent No. 6,223,876 covering the use of short wave-length
light in a  validator  to discern the color and other  characteristics  of bills
being  scanned.  In addition  the  Company has  obtained a patent in New Zealand
corresponding to U.S. Patent No. 5,630,755  covering a system for monitoring and
tracking money collected from a gaming machine and the like.

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.

In March 2004,  the Company  entered  into a  Cross-License  Agreement  with JCM
whereby the Company grants JCM a  non-exclusive,  royalty-free  license for U.S.
Patent No.  5,630,755 and JCM grants the Company a  non-exclusive,  royalty-free
license to use and install the ID-003 software in bill  validators  manufactured
by or on behalf of the Company and sold by the Company.

                                       14
<PAGE>

Although  the  Company  has  not   received  any  bona  fide  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 November 16, 2004, the Company had 114 employees, consisting of 2 executives;
10 sales  and  customer  service  representatives;  23  engineers  and  software
developers, and technical support representatives; 18 materials, quality control
and quality assurance personnel; 9 administrative and clerical personnel; and 52
assembly/manufacturing personnel. The Company believes its relationship with its
employees is good.

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  Company's  dependence on a
limited  base of  customers  for a  significant  portion of sales;  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;  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 relative strength of the United States currency; and other risks
described in the Company's Securities and Exchange Commission filings.

ITEM 2. PROPERTIES

The  Company   leases   approximately   44,000  square  feet  which  houses  the
manufacturing and  administrative  functions in Hauppauge,  New York, for a term
expiring  June 30, 2006, at an annual base rental of  approximately  $349,000 in
fiscal 2004, increasing to approximately $372,000 in the final year of the term.
The Company believes this facility is adequate for its  manufacturing  needs for
the foreseeable future.

                                       15
<PAGE>

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.

                                     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 2003 and 2004.


                                         COMMON STOCK
                                         ------------
 QUARTER ENDED                       HIGH             LOW
-------------------                 -----            -----
December 31, 2002                    6.79             5.30
March 31, 2003                       6.09             4.10
June 30, 2003                        5.00             3.50
September 30, 2003                   4.288            2.95
December 31, 2003                    3.65             3.05
March 31, 2004                       4.25             3.16
June 30, 2004                        4.06             3.15
September 30, 2004                   4.08             3.25

b) HOLDERS

The  approximate  number of  beneficial  holders  and  holders  of record of the
Company's Common Stock as of November 26, 2004 were 1,350 and 35, 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.



                                       16
<PAGE>



ITEM 6. SELECTED FINANCIAL DATA

FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)


<TABLE>
<CAPTION>

Year Ended September 30                   2000           2001          2002              2003           2004
---------------------------------     ------------    ---------      --------          --------      -----------
<S>                                   <C>               <C>          <C>               <C>           <C>
Net sales                             $ 22,507          $32,161      $ 27,713          $ 26,076      $ 24,381
Net income (loss)                       (1,229)(2)          806          (633)(1)        (5,677)(5)    (1,690)(6)
Diluted earnings (loss) per share        (0.22)(3)         0.14         (0.11)(3)         (1.02)(3)     (0.30)(3)
Total assets (4)                        24,460           26,466        24,030            17,775        16,267
Long-term debt obligations               3,617            2,800             0                 0         1,354
Stockholders' equity                    16,795           17,550        17,026            11,677        11,107
</TABLE>


(1)  Includes an after-tax gain of $82,000 from the sale of the Company's
     unconsolidated China affiliate.

(2)  Includes an after-tax gain of $221,000 from the sale of a portion of the
     Company's unconsolidated South African affiliate.

(3)  The weighted average shares outstanding used in the calculation of net loss
     per common share did not include potential shares outstanding because they
     were anti-dilutive.

(4)  As described in Note 2 to the consolidated financial statements, the
     Company, in connection with its fiscal 2002 annual audit, reclassified
     certain costs previously included in inventory, in the amount of $2,756,000
     and $1,528,000 as capitalized software costs, and molds and tooling,
     respectively, as of September 30, 2001. This reclassification did not
     affect reported earnings, total assets, or stockholders' equity for any
     period.

(5)  Based on the Company's continued losses, and related uncertainty as to the
     Company's ability to generate sufficient taxable income to realize the full
     value of its deferred income tax asset, the Company recorded a full
     valuation allowance and related income tax expense in the fourth quarter of
     fiscal 2003.

(6)  Includes a gain of $78,000 from the sale of the remaining portion of the
     Company's unconsolidated South African affiliate.



                                       17
<PAGE>


QUARTERLY INFORMATION
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)


<TABLE>
<CAPTION>
Quarter Ended
                                      Dec. 31         Mar. 31       June 30       Sept. 30         Year
                                      -------         -------       -------       --------       --------
Fiscal 2003
-------
<S>                                    <C>            <C>            <C>            <C>            <C>
Net sales                              5,960          7,072          7,348          5,696          26,076
Gross profit                           1,390          1,123          1,189            425           4,127
Net loss                                (340)          (858)          (627)        (3,852)         (5,677)
Basic loss  per share                  (0.06)         (0.15)         (0.11)         (0.70)          (1.02)
Diluted loss per share (1)             (0.06)         (0.15)         (0.11)         (0.70)          (1.02)

Fiscal 2004
-------
Net sales                              4,333          5,712          7,076          7,260          24,381
Gross profit                             815          1,025          1,670          1,832           5,342
Net income (loss)                       (988)          (711)          (108)           117          (1,690)
Basic income (loss) per share          (0.18)         (0.13)         (0.02)          0.02           (0.30)
Diluted income (loss) per share (1)    (0.18)         (0.13)         (0.02)          0.02           (0.30)
</TABLE>

(1)  The weighted average shares outstanding used in the calculation of net loss
     per common share did not include potential shares outstanding because they
     were anti-dilutive.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
       OF OPERATIONS

RESULTS OF OPERATIONS

FISCAL YEAR ENDED SEPTEMBER 30, 2004 COMPARED WITH SEPTEMBER 30, 2003

SALES
Net sales for fiscal 2004 decreased by 6.5% to $24.381  million as compared with
$26.076  million in fiscal 2003. This decrease was primarily due to $4.3 million
in lower sales of the Company's  gaming  products to its  Australian  affiliate,
offset in part,  by a $1.7  million  increase in sales of the  Company's  Aurora
product to both the vending and gaming markets and a $637,000  increase in sales
to the South African  gaming  market.  Gaming sales for fiscal 2004 were $19.304
million, or 79.2% of sales, as compared with $20.417 million, or 78.3% of sales,
in fiscal 2003.  Beverage and vending sales for fiscal 2004 were $5.077 million,
or 20.8% of sales, as compared with $5.659 million,  or 21.7% of sales in fiscal
2003. Net sales to international  customers accounted for 86.3% and 90.0% of net
sales in fiscal 2004 and 2003, respectively.

                                       18
<PAGE>

GROSS PROFIT
Gross profit increased to $5.342 million,  or 21.9% of net sales, in fiscal 2004
as  compared  with  $4.127  million,  or 15.8% of net sales,  in the  prior-year
period. In fiscal 2004, the inventory provision charged to operations  decreased
by $610,000  to $237,000 in fiscal 2004 as compared to $847,000 in fiscal  2003.
This decreased  provision is the result of the Company's  provision  required in
fiscal 2003 for the discontinuance of its generation I and II products.  Further
in fiscal 2004,  indirect  costs were reduced by  approximately  $485,000 due to
cost reduction initiatives completed in December 2003. In addition, the increase
in  gross  profit,  as  a  percentage  of  sales,  was  positively  impacted  by
improvements in margins on the Company's  Aurora  product,  which in fiscal 2003
had significant  startup costs,  including higher purchase costs as well as less
efficient manufacturing. The Company is continuing its efforts to further reduce
costs and to improve the margin on its Aurora product, and while improvements in
purchasing costs and manufacturing efficiencies have been achieved by the end of
fiscal 2004, until such time as these benefits are  substantially  realized over
the first two quarters of fiscal 2005,  the margins in the future will  continue
to be affected by the mix of products as well as sales  volumes.  During  fiscal
2004 the Company's  gross profit as a percentage of sales for the quarters ended
December 2003, March 2004, June 2004 and September 2004 were 18.8%, 17.9%, 23.6%
and 25.2%, respectively.

OPERATING EXPENSES
Operating  expenses in fiscal 2004 decreased to $6.857 million,  or 28.1% of net
sales, as compared with $9.758  million,  or 37.4% of net sales, in fiscal 2003.
This  decrease  of $2.901  million is  primarily  the  results of the  Company's
completion of its cost reduction  initiatives in December 2003,  which consisted
primarily  of employee  and  employee  related  expenses,  as well as  operating
expenses in fiscal 2003 including $405,000,  as compared to none in fiscal 2004,
for the amortization and write-down of the Company's smart card intangible asset
resulting from the Company's  decision to focus on its core  operations and that
it will not seek or be able to  realize  the  benefits  of this  asset in future
periods.


INCOME TAXES
With respect to the provision for income taxes, the effective rate was a benefit
of 0.4% in fiscal 2004 as compared to a provision of 9.1% in fiscal  2003.  This
change  in the  effective  tax rate is  primarily  the  result  of  fiscal  2004
operating  losses for which no benefit  has been  recognized.  The  Company  has
provided a full  valuation  allowance  against  its  deferred  tax assets in the
fourth  quarter  of fiscal  2003,  and  continues  to  provide a full  valuation
allowance at September 30, 2004,  due to the Company's  continued  annual losses
and the uncertainty as to the Company's ability to generate  sufficient  taxable
income to realize the full value of those assets.  This  valuation  allowance is
subject to adjustment based upon the Company's ongoing  assessment of its future
taxable income and may be wholly or partially reversed.


                                       19
<PAGE>

NET LOSS
The net loss for fiscal 2004 was ($1,690,000),  or ($.30) per share, as compared
with  ($5,677,000),  or ($1.02) per share,  for fiscal 2003.  In addition to its
operations, the Company owns interests in unconsolidated affiliates in Australia
and the United  Kingdom  which are accounted  for using the equity  method.  Its
South African  affiliate,  however,  was accounted for on a cost basis effective
April  2003 until the final sale of that  entity in January  2004,  in which the
Company recognized a gain on the sale in the amount of $78,000.  Included in the
results of operations  for fiscal 2004 and 2003 are the  Company's  share of net
profits of these  affiliates of $108,000 and $676,000,  respectively.  In fiscal
2004 and  2003,  equity  in  income  of  unconsolidated  affiliates  includes  a
(decrease) increase of ($165,000) and $225,000,  respectively,  which represents
the  (deferral)  recognition  of the  Company's  share of the gross  profits  on
intercompany  sales to its  affiliates  that (have not) have been  recognized by
these  affiliates.  Excluding  the  intercompany  gross profit  adjustment,  the
Company's  share of net income of these  unconsolidated  affiliates was $273,000
and $451,000 for fiscal 2004 and 2003,  respectively.  This decrease of $178,000
is primarily the result of lower sales and profits at the  Company's  Australian
affiliates, a result of the softer gaming market in Australia due principally to
tighter  gaming  regulations  and a  slowing  market.  Until  such  time  as the
Australian  market  improves,  or other  export  markets  develop,  the  Company
anticipates a continued  reduction in the  profitability  at this affiliate.  In
addition,  the Company owns 100% of Global Payment Technologies (Europe) Limited
and GPT-Russia,  and owns 80% of Abacus Financial Management Systems, Ltd., USA,
the results of which are consolidated in the Company's financial statements.


FISCAL YEAR ENDED SEPTEMBER 30, 2003 COMPARED WITH SEPTEMBER 30, 2002

SALES
Net sales for fiscal 2003 decreased by 5.9% to $26.076  million as compared with
$27.713  million in fiscal 2002. This decrease was primarily due to lower demand
for the Company's Argus gaming product in Eastern Europe,  and to product issues
which  have  since  been  resolved,  offset  in part by  increased  sales of the
Company's  beverage and vending  products.  Sales of the Company's  beverage and
vending  products for the year were $5.659  million,  or 21.7% of net sales,  as
compared  with  $2.218  million,  or 8.0% of net sales in the prior  year.  This
increase  was the  result of the  Company's  new  Aurora  beverage  and  vending
product,  for which sales  commenced  in January  2003.  Sales of the  Company's
gaming  products for the year were $20.417  million,  or 78.3% of net sales,  as
compared  with  $25.495  million,  or 92.0% of net sales in the prior year.  Net
sales to international  customers  accounted for 90.0% and 91.7% of net sales in
fiscal 2003 and 2002,  respectively.  This year the  Company  has  substantially
transitioned  its  sales  to  its  Argus  gaming  validator,  which  represented
approximately  80% of its gaming validator sales in fiscal 2003 as compared with
63% in the prior year period. Further, Argus represented 96% of gaming validator
sales in the fourth quarter of 2003.




                                       20
<PAGE>

GROSS PROFIT
Gross profit decreased to $4.127 million,  or 15.8% of net sales, in fiscal 2003
as  compared  with  $6.828  million,  or 24.6% of net sales,  in the  prior-year
period.  This  decrease  in gross  profit,  as a  percentage  of net sales,  was
primarily  the result of  substantial  startup  costs  relating to new products,
principally  higher initial  purchasing  costs and less efficient  manufacturing
operations  on the  Company's  new beverage and vending  product for which sales
commenced  in January  2003.  During  fiscal 2003  Aurora  sales  accounted  for
substantially  all of beverage  and vending  sales as compared  with none in the
prior  year.   While   improvements  in  purchasing   costs  and   manufacturing
efficiencies  have been achieved by the end of fiscal 2003, the Company will not
realize these benefits until it utilizes its higher priced component material on
a first-in  first-out  basis,  which was  substantially  completed in the fourth
quarter  of 2003.  With the  ability to realize  the  benefit of lower  purchase
prices and more  efficient  operations  expected in fiscal 2004,  direct cost of
sales are expected to decrease per unit. Gross profit, however, will be affected
by the mix of products as well as sales volumes in future periods.  Finally, the
inventory provision increased by $659,000 to $847,000 in fiscal 2003 as compared
to $188,000 in the prior year.  This  increased  provision  is the result of the
current sales plan, including the Company's decision to terminate its Generation
I products,  a plan to phase out its  Generation  II product line in fiscal 2004
and the inability to use certain Generation III components, as well as marketing
efforts being focused on Argus and Aurora products instead of earlier generation
products.

OPERATING EXPENSES
Operating  expenses in fiscal 2003 increased to $9.758 million,  or 37.4% of net
sales, as compared with $8.783  million,  or 31.7% of net sales, in fiscal 2002.
This increase of $975,000  includes $405,000 for the amortization and write-down
of the  Company's  smart card  intangible  asset  resulting  from the  Company's
decision to focus on its core operations and that it will not seek or be able to
realize the  benefits of this asset in future  periods.  In addition the Company
incurred increased  executive costs of $210,000 as a result of the transition to
a new  CEO  and the  contractual  obligations  of the  previous  CEO,  increased
recruiting and relocation  expenses for three executives of $172,000,  increased
bank related fees of $150,000  and  increased  legal and audit fees of $140,000,
offset in part by lower staffing costs. In September 2003, the Company initiated
a cost reduction effort,  which reduced total staffing by approximately 15%. The
benefits from this initiative  will be fully  recognized in the first quarter of
fiscal year 2004 and will reduce total costs at an approximate  annualized  rate
of $1.2 million.  In December  2003,  the Company  completed its cost  reduction
initiatives, primarily a reduction of staffing and benefits, which will be fully
recognized  in the second  quarter of fiscal 2004 and will reduce total costs at
an approximate annualized rate of $2 million.

INCOME TAXES
With respect to the provision for income taxes, the effective rate was (9.1%) as
compared with 59.4% in the prior-year  period.  This change in the effective tax
rate is the  result  of the  Company's  change in mix of  earnings  from its own
operations and earnings derived from its foreign affiliates and, furthermore, as
a result of the  provision  in the  fourth  quarter  of fiscal  2003,  of a full
valuation  allowance against the Company's  deferred income tax asset due to the
Company's  continued  losses and the uncertainty as to the Company's  ability to
generate  sufficient  taxable  income to realize the full value of those assets.
This  valuation  allowance  is subject to  adjustment  based upon the  Company's
ongoing  assessment of its future  taxable income and may be wholly or partially
reversed.

                                       21
<PAGE>

NET INCOME (LOSS)
The net loss for fiscal 2003 was ($5,677,000), or ($1.02) per share, as compared
with  ($633,000),  or ($.11) per share,  for fiscal  2002.  In  addition  to its
operations,  the Company owns interests in various unconsolidated  affiliates in
key  regions  of the  world,  all of which are  accounted  for using the  equity
method,  except for South Africa, which effective April 2003 is accounted for on
a cost basis. Included in the results of operations for fiscal 2003 and 2002 are
the Company's share of net profits of these affiliates of $676,000 and $565,000,
respectively.  In  fiscal  2003 and 2002,  equity  in  income of  unconsolidated
affiliates  includes an increase of $225,000 and $250,000,  respectively,  which
represents  the  recognition  of the  Company's  share of the gross  profits  on
intercompany  sales  to its  affiliates  that  have  been  recognized  by  these
affiliates.  Excluding the intercompany gross profit  adjustment,  the Company's
share of net income of these unconsolidated affiliates was $451,000 and $315,000
for fiscal 2003 and 2002,  respectively.  This increase of $136,000 includes the
affect of lower  sales and profits at the  Company's  Australian  affiliates,  a
result of the softer  gaming  market in  Australia  due  principally  to tighter
gaming  regulations  and lower profits at its eCash  affiliate.  Income from the
Company's  Australian  affiliate  was  $678,000 in fiscal 2002 as compared  with
$470,000 in fiscal 2003. Until such time as the Australian market improves,  the
Company  anticipates a continued  reduction in  profitability at this affiliate.
Positively  affecting  the Company in fiscal 2003 were lower losses at its South
African  operations,  totaling $60,000,  which were  substantially sold in April
2003,  and a write down of the  Company's  net  investment  in Abacus  Financial
Management   Systems,   Ltd.  totaling  $215,000  in  fiscal  2002  due  to  the
deterioration in the financial  condition of that entity, as compared to none in
fiscal 2003. In addition, the Company has a majority ownership in Global Payment
Technologies  (Europe) Limited and Abacus Financial  Management  Systems,  Ltd.,
USA,  whose  results are  consolidated  in the Company's  financial  statements.
During fiscal 2002, the Company recognized an after-tax gain of $82,000, or $.01
per share, which resulted from the sale of the Company's China investment.

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 and service principal and interest
payments on the Company's  indebtedness.  At September  30, 2004,  the Company's
cash and cash  equivalents  were  $3,453,000  as  compared  with  $1,220,000  at
September 30, 2003. A significant  portion of the Company's  cash balance in the
amount  of  $770,000  and   $774,000,   as  of  September  30,  2004  and  2003,
respectively,  consists of currency  used to test the  Company's  products  and,
although it could be available, it is not anticipated to be utilized for working
capital  purposes in the normal  course of business.  The Company has  initiated
outsourcing  some of its  manufactured  product  in an effort to  improve  gross
margin  percentages  as well as its cash  flow.  In  addition  the  Company  has
realized  significant savings from its cost reduction  initiatives  completed in
December  2003. As a result of these savings and the funds  available  under the
credit  facility  with Laurus  discussed  below,  the Company  believes that its
available  resources should be sufficient to meet its obligations as they become
due and permit  continuation of its planned  product  development and operations
for the next 12 months.


                                       22
<PAGE>

On March 16, 2004, the Company  received  aggregate  proceeds of $1,500,000 from
the sale to Laurus Master Fund Ltd. ("Laurus") of a $1,500,000  principal amount
secured  convertible  term note due in March  2007 (the  "CTN"),  pursuant  to a
Securities Purchase  Agreement.  The CTN is convertible into common stock of the
Company  at any time at the rate of $4.26 of  principal  for one share of common
stock and is collateralized by substantially all assets of the Company. The note
provides for monthly principal payments of $25,000 from July 2004 to March 2005,
$45,000 from April 2005 to September 2005 and $55,833 from October 2005 to March
2007.  Interest is payable  monthly at the prime rate plus 1.5%,  with a minimum
rate of 6%.  In  addition,  Laurus  received  7 year  warrants  to  purchase  an
aggregate of 200,000  shares of the  Company's  common stock at prices of $4.87,
$5.28 and $5.68 for  100,000,  60,000 and  40,000  warrants,  respectively.  The
Company  utilized  approximately  $1,200,000  of the  proceeds to repay  amounts
outstanding under a previous credit agreement.

The value allocated to the warrants resulted in a debt discount of $506,000 that
is being recognized as interest expense over the term of the note. Additionally,
by allocating  value to the warrants,  Laurus  received a beneficial  conversion
feature in the amount of $304,000 that resulted in additional debt discount that
is being  recognized  as interest  expense  over the term of the note.  Interest
expense is computed utilizing the interest method, which results in an effective
yield  over  the  term of the  note.  For the  year  ended  September  30,  2004
amortization  expense was $242,000.  As of September 30, 2004,  the  unamortized
debt discount amounted to approximately $568,000.  Amortization of debt discount
will approximate  $370,000 and $198,000 for fiscal 2005 and 2006,  respectively,
which will be charged to  operations.  In the event that the CTN, or any portion
of the CTN, is converted prior to maturity,  the unamortized discount related to
the amount  converted  will be  immediately  recognized as interest  expense and
charged to operations.

On March 16,  2004,  the Company also  entered  into a Security  Agreement  with
Laurus  which  provides  for a credit  facility of  $2,500,000  consisting  of a
secured  revolving  note of  $1,750,000  (the  "RN") and a  secured  convertible
minimum  borrowing  note of $750,000  (the "MBN"),  both due in March 2007 (both
notes collectively  referred to as the "LOC"). At closing,  the Company borrowed
$750,000  under  the MBN.  Funds  available  under the LOC are  determined  by a
borrowing  base equal to 85% and 70% of eligible  domestic and foreign  accounts
receivable,  respectively,  and 50% of eligible  inventory.  Outstanding amounts
under the RN and MBN are  convertible  into  common  stock of the Company at any
time at the rate of $4.26 of  principal  for one share of  common  stock and are
collateralized by substantially  all assets of the Company.  Interest is payable
monthly at the prime rate plus 1.5%, with a minimum rate of 6%. At September 30,
2004, the Company has $1,750,000 available under the RN.

                                       23
<PAGE>

The agreements provide that Laurus will not convert debt or exercise warrants to
the extent that such  conversion  or exercise  would result in Laurus,  together
with its  affiliates,  beneficially  owning  more  than  4.99% of the  number of
outstanding  shares,  including  warrants,  of the Company's common stock at the
time of conversion or exercise.

Net cash provided by operating  activities was  $1,741,000 in fiscal 2004.  This
amount is due to decreased  inventory of $746,000 as a result of outsourcing and
the autonomous  nature of the Generation III components,  decreased income taxes
receivable of $96,000 due to collections in 2004,  decreased accounts receivable
of  $1,907,000,  and net loss for the year,  adjusted  for  non-cash  items,  of
$126,000,  offset,  in part,  by increased  prepaid  expenses and other  current
assets  of  $383,000,  decreased  accrued  expenses  and  other  liabilities  of
$600,000,  and  decreased  accounts  payable of  151,000.  Net cash  provided by
operating  activities amounted to $106,000 in fiscal 2003. This amount is due to
decreased  inventory of $955,000 as a result of  outsourcing  and the autonomous
nature of the Generation III  components,  decrease  income taxes  receivable of
$652,000  due to  collections  in 2003,  increased  accrued  expenses  and other
liabilities  of $450,000,  increased  accounts  payable of  $363,000,  decreased
accounts  receivable of $179,000,  decreased  prepaid expenses and other current
assets of $113,000, and decreased other assets and capitalized software costs of
$86,000,  offset,  in part,  by a net loss for the year,  adjusted  for non-cash
items of  ($2,692,000).  Net cash provided by operating  activities  amounted to
$2,261,000 in fiscal 2002. This amount is due to decrease accounts receivable of
$5,242,000,  decreased  prepaid  expenses and other current  assets of $291,000,
decreased  inventory  of  $10,000  and a net loss  for the  year,  adjusted  for
non-cash items, of $2,000,  offset,  in part, by increased  accounts  payable of
$2,127,000 and decreased income taxes receivable of $674,000,  offset,  in part,
by decreased  accounts  payable of $1,411,000,  decreased  accrued  expenses and
other  liabilities  of  $336,000  and  increased  other  assets and  capitalized
software  costs of  $269,000.  The  Company  sells  its  products  primarily  to
international  markets on terms  generally  greater  than 30 days.  Further  the
Company has agreements with its affiliates,  which could extend payment terms in
excess of 90 days. Based upon history,  and the Company's  current review of its
accounts  receivable,  it believes it is  adequately  reserved  for  potentially
uncollectible  accounts.   However,  given  the  Company's  sales  and  accounts
receivable  are  concentrated  to a small  group  of  customers  and in  certain
markets,  any changes in  conditions  could  cause a material  impact to its net
income (loss) and cash flow.

Net cash (used in)  provided by  investing  activities  amounted to ($38,000) in
fiscal 2004 as compared  with  $1,169,000  in fiscal  2003 and  ($1,608,000)  in
fiscal 2002. In fiscal 2004 the Company  received  $154,000 from the sale of the
remaining portion of its South African affiliate investment,  in fiscal 2003 the
Company received  $1,877,000 from the sale of a significant portion of its South
African affiliate  investment and in fiscal 2002 received $118,000 from the sale
of  its  investment  in  its  China  affiliate  (See  Note  3 in  the  financial
statements).  The Company  provided net fundings  and  investments  in its joint
ventures of $51,000 in fiscal 2004,  $323,000 in fiscal 2003 and  $1,380,000  in
fiscal 2002.  Further,  the Company received  $206,000,  $21,000 and $550,000 in
dividend distributions,  primarily from its Australian affiliate,  during fiscal
2004, 2003 and fiscal 2002, respectively.  The remaining investing activities of
$347,000 in fiscal  2004,  $406,000  in fiscal 2003 and  $896,000 in fiscal 2002
were for the purchase of property and equipment  primarily for its manufacturing
operations.

Net cash  provided by (used in) financing  activities  consisted of net proceeds
from  issuance  of  convertible  debt  of  $2,250,000  in  fiscal  2004  and net
repayments  of bank  borrowings  of  $1,868,000 in fiscal 2004, as compared with
$1,719,000  in fiscal  2003 and  $155,000 in fiscal  2002.  The  remaining  cash
provided by financing  activities of $148,000 in fiscal 2004,  $60,000 in fiscal
2003 and  $37,000  in  fiscal  2002  were from the  issuance  of stock  upon the
exercise of common stock options and warrants.



                                       24
<PAGE>


COMMITMENTS:
At September 30, 2004, future minimum payments under  non-cancelable  leases and
payments to be made for long-term  debt maturing over the next five years are as
follows in ($000):

                                      OPERATING LEASE          DEBT REPAYMENTS
                                      ----------------         ---------------
Fiscal year ending September 30:
2005                                         $ 415                   $   420
2006                                           319                       670
Thereafter                                     --                      1,085
                                            ------                   -------
Total                                        $ 734                   $ 2,175
                                            ------                   -------

In addition to the chart above,  and in the normal course of business,  purchase
orders  are  generated   which   obligate  the  Company  for  future   inventory
requirements.  As of September 30, 2004, purchase order commitments approximated
$8.1 million and will be used for production requirements during fiscal 2005 and
beyond.

CRITICAL ACCOUNTING POLICIES

This management  discussion and analysis is based on our consolidated  financial
statements  which are prepared using certain critical  accounting  policies that
require  management to make  judgments and estimates that are subject to varying
degrees of uncertainty.  While we believe that these  accounting  policies,  and
management's judgments and estimates,  are reasonable,  actual future events can
and  often  do  result  in  outcomes  that  can  be  materially  different  from
management's  current  judgments and  estimates.  We believe that the accounting
policies and related  matters  described in the paragraphs  below are those that
depend most heavily on management's judgments and estimates.

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.
These items, as well as the  introduction  of new technology on products,  could
result in future inventory obsolescence.



                                       25
<PAGE>

CAPITALIZED SOFTWARE COSTS:
Based upon achieving technological feasibility through a detailed program design
for  Argus(TM)  and Aurora  products,  the Company has  capitalized  the cost of
software coding and development of these products, and reflects the amortization
of these costs in cost of sales. The annual amortization is calculated using the
greater of (a) the ratio that current  gross  revenues for a product bear to the
total of current and  anticipated  future gross revenues for that product or (b)
the  straight-line  method over the  remaining  estimated  economic  life of the
product  including the period being  reported on. The  estimation of both future
sales of products as well as the life of the product are critical estimates that
are  affected  by both  internal  and  external  factors  that might  affect the
Company's  estimates.  If the useful life is reduced,  or sales projections fall
short of the estimation, amortization expense will increase.

REVENUE RECOGNITION:
The Company  recognizes  revenue upon  shipment of products to its customers and
the passage of title, including shipments to its unconsolidated  affiliates,  or
at the time  services  are  completed  with  respect to repairs  not  covered by
warranty agreements. With respect to sales to its unconsolidated affiliates, the
Company defers its pro rata share of gross profit on those sales until such time
as its  affiliates  sell to a third  party  customer.  The  timing  of  sales to
affiliates can have an effect on the Company's recognized profitability.

WARRANTY POLICY:
The Company  provides  for the  estimated  cost of product  warranty at the time
related sales revenue is recognized.  Furthermore, the Company warrants that its
products are free from defects in material and  workmanship  for a period of one
year, or almost two years  relating to its Argus and Aurora  products,  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 beyond the warranty period are charged to the Company's customers.

RESERVE FOR UNCOLLECTIBLE ACCOUNTS RECEIVABLE:
At September 30, 2004,  our accounts  receivable  balance was $4.2 million.  Our
accounting  policy  is to  reserve  for  the  accounts  receivable  of  specific
customers based on our assessment of certain customers' financial condition.  We
make these  assessments using our knowledge of the industry coupled with current
circumstances or known events and our past experiences.  This policy is based on
our past collection experience. To the extent that our experience changes or our
customers experience financial difficulty our reserve may need to increase.

INVESTMENTS IN UNCONSOLIDATED AFFILIATES:
The  Company  applies  the  equity  method  of  accounting  to  its  investments
(including advances) in entities where the Company has non-controlling ownership
interests of 50% or less and exercises a  significant  influence on that entity.
The Company's share of these  affiliates'  earnings or losses is included in the
consolidated statements of operations. 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.  For  investments  in which no public market
exists, the Company reviews the operating  performance,  financing and forecasts
for such entities in assessing the net realizable  values of these  investments.
Accordingly,  the Company  recognized an impairment loss in fiscal 2002 totaling
$215,000 for its net  investment in the United  Kingdom-based  Abacus  Financial
Management  Systems  Limited  affiliate  based  upon the  deterioration  in that
entity's  financial  condition.  Since  April  2003,  when  the  Company  sold a
significant  portion of its  investment  in its South African  affiliates  which
reduced its  ownership in GPTHL from 24.2% to 5%, the Company  accounted for its
remaining  investment on a cost basis.  Effective  January 15, 2004, the Company
sold its remaining interest in this affiliate.

                                       26
<PAGE>

LONG-LIVED ASSETS:

The Company accounts for long-lived  assets in accordance with the provisions of
SFAS No. 144,  Accounting for the  Impairment or Disposal of Long-Lived  Assets.
This  Statement  requires  that  long-lived  assets be reviewed  for  impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison  of the carrying  amount of an asset to future net cash
flows expected to be generated by the asset.  If the carrying amount of an asset
exceeds its estimated  future cash flows, an impairment  charge is recognized by
the amount by which the carrying  amount of the asset  exceeds the fair value of
the asset.  Assets to be disposed of are  reported at the lower of the  carrying
amount or fair  value  less costs to sell,  and are no longer  depreciated.  The
Company  adopted  SFAS No. 144 on October 1, 2002.  The adoption of SFAS 144 did
not affect the Company's financial statements. Prior to the adoption of SFAS No.
144, the Company  accounted for long-lived  assets in accordance  with SFAS 121,
Accounting for Impairment of Long-Lived  Assets and for Long-Lived  Assets to be
Disposed Of.
As a result of its review,  the Company  does not  believe  that any  impairment
exists in the recoverability of its long-lived assets as of September 30, 2004.

INCOME TAXES:
The Company accounts for income taxes under SFAS No. 109, "Accounting for Income
Taxes".  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.  The effective tax rate for the Company is
affected by the income mix derived from the core  business and from its share of
income from foreign affiliates that may have different tax rates. Realization of
deferred  tax  assets  is  primarily   dependent   upon  the  Company's   future
profitability,  and the Company  has,  consequently,  provided a full  valuation
allowance against its deferred income tax assets due to the impact of the fiscal
2004 and 2003  losses  and  uncertainty  as to the  ability to  generate  future
taxable income to sufficiently realize those assets. To the extent the Company's
profitability  improves,  the  valuation  allowance  may be wholly or  partially
reversed. At such time that the Company believes that it will realize sufficient
taxable income the valuation allowance will be reassessed.



                                       27
<PAGE>



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Fiscal 2004 saw  continued  moderation  in the level of  inflation.  In order to
offset the resultant rise in the costs of operations,  the Company has assessed,
and will continue to assess,  ways to gain efficiencies and reduce operating and
manufacturing  costs,  thereby  increasing  profit  margins  and  improving  its
operations.

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.  The  Company  is  subject  to the  effects  caused by the
strengthening  or  weakening  of the  United  States  currency,  and as such may
consider the use of currency instruments in the future.

The Company has a $1.425 million  convertible term note as of September 30, 2004
with  borrowings  subject to  interest  at the bank's  prime rate plus 150 basis
points.  The Company also has a $2.5 million  credit  facility  consisting  of a
secured  revolving  note of $1.75  million  and a  secured  convertible  minimum
borrowing  note of $750,000  with  borrowings  subject to interest at the bank's
prime rate plus 150 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,  $3.925  million at September 30, 2004,
outstanding  for the entire year,  each 100 basis point increase would result in
an annual increase in interest expense of approximately $40,000.

The Company has investments in privately held  unconsolidated  foreign companies
for the purposes of conducting its business overseas and attaining its strategic
objectives. These investments have a net carrying value of $1.8 million and $1.7
million at September  30, 2004 and 2003,  respectively.  These  investments  are
included in Investments in Unconsolidated Affiliates and are accounted for using
the equity method.  For investments in which no public market exists, our policy
is to regularly review the operating performance,  recent financing transactions
and forecasts for such companies in assessing the net  realizable  values of the
investments in these  companies.  Impairment  losses on equity  investments  are
recorded  when events and  circumstances  indicate that such assets are impaired
and the  decline  in value is other than  temporary.  Accordingly,  we  recorded
$215,000 in impairment losses during the fourth quarter of fiscal 2002.


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.



                                       28
<PAGE>



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

On March 10, 2004 the Board of Directors of Global  Payment  Technologies,  Inc.
(the "Company") dismissed KPMG, LLP ("KPMG") as its independent certified public
accountants and appointed Eisner,  LLP ("Eisner") to serve in their place. These
actions were taken at the recommendation of the Company's Audit Committee.

KPMG had served as the Company's  independent  public accountants since July 26,
2002. KPMG's report on the Company's  consolidated  financial statements for the
fiscal  years  ended  September  30,  2003 and 2002 did not  contain  an adverse
opinion or disclaimer of opinion,  nor was such report  qualified or modified as
to uncertainty, audit scope or accounting principles.

During the two fiscal years ended  September  30, 2004,  through March 10, 2004,
there  were no  disagreements  between  the  Company  and KPMG on any  matter of
accounting principles or practices,  financial statement disclosure, or auditing
scope or procedure  which,  if not resolved to KPMG's  satisfaction,  would have
caused it to make reference to the subject matter in connection  with its report
on the Company's consolidated financial statements for such year; and there were
no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.

During the two fiscal years ended  September  30, 2004,  through March 10, 2004,
the Company did not consult Eisner with respect to either (i) the application of
accounting principles to a specified transaction,  either completed or proposed,
or  the  type  of  audit  opinion  that  might  be  rendered  on  the  Company's
consolidated  financial  statements,  or (ii) any  matter  that was  either  the
subject  of  a  disagreement,  within  the  meaning  of  Item  304(a)(1)(iv)  of
Regulation  S-K,  or any  "reportable  event,"  as that term is  defined in Item
304(a)(1)(v) of Regulation S-K.


ITEM 9A. CONTROLS AND PROCEDURES

The Company  maintains a system of disclosure  controls and  procedures  that is
designed to provide reasonable assurance that information,  which is required to
be disclosed  by the Company in the reports  that it files or submits  under the
Securities  Exchange Act of 1934, as amended, is accumulated and communicated to
management in a timely manner.  The Company's Chief Executive  Officer and Chief
Financial  Officer  have  evaluated  this  system  of  disclosure  controls  and
procedures as of the end of the period covered by this annual report and believe
that the system is operating effectively to ensure appropriate disclosure. There
have been no changes in the Company's internal control over financial  reporting
during  the most  recent  fiscal  year that  have  materially  affected,  or are
reasonably  likely to materially  affect,  the Company's  internal  control over
financial reporting.



                                       29
<PAGE>

                                    PART III

Items 10 through 14  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
annual meeting of stockholders to be held in calendar 2005.

                                     PART IV


ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(A) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT:

     1. GLOBAL PAYMENT TECHNOLOGIES, INC. CONSOLIDATED FINANCIAL STATEMENTS:

          Reports of Independent Registered Public Accounting Firms (pages F-1 -
          F-2)

          Consolidated Balance Sheets as of September 30, 2004 and 2003 (page
          F-3)

          Consolidated Statements of Income for the years ended September 30,
          2004, 2003 and 2002 (page F-4)

          Consolidated Statements of Shareholders' Equity and Comprehensive Loss
          for the years ended September 30, 2004, 2003 and 2002 (page F-5)

          Consolidated Statements of Cash Flows for the years ended September
          30, 2004, 2003 and 2002 (page F-6)

          Notes to Consolidated Financial Statements (pages F-7 - F23)

     2. GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LIMITED FINANCIAL STATEMENTS:

          Reports of Independent Registered Public Accounting Firms (pages F-24
          to F-25)

          Balance Sheets as of June 30, 2004 and 2003 (page F-26)

          Statements of Income for each of the years in the three-year period
          ended June 30, 2004 (page F-27)

          Statements of Stockholders' Equity for each of the years in the
          three-year period ended June 30, 2004 (page F-28)

          Statements of Cash Flows for each of the years in the three-year
          period ended June 30, 2004 (page F-29)

          Notes to Financial Statements (pages F-30 to F34)



                                       30
<PAGE>



     3.   FINANCIAL STATEMENT SCHEDULES REQUIRED TO BE FILED BY ITEM 8 OF THIS
          FORM:

          Schedule II - Valuation and Qualifying Accounts (page S-1)

     4.   EXHIBITS:

EXHIBIT NO.

3.1   Certificate of Incorporation (2)

3.2   Certificate of Merger (2)

3.3   By-Laws (2)

4.1   Securities Purchase Agreement dated March 16, 2004 by and between the
      registrant and Laurus (5)

4.2   Secured Convertible Term Note dated March 16, 2004 issued to Laurus (5)

4.3   Common Stock Purchase Warrant dated March 16, 2004 issued to Laurus (5)

4.4   Registration Rights Agreement dated March 16, 2004 by and between the
      registrant and Laurus (5)

4.5   Security Agreement dated March 16, 2004 by and between the registrant and
      Laurus (5)

4.6   Security Agreement dated March 16, 2004 by and between the registrant and
      Laurus (5)

4.7   Secured Convertible Minimum Borrowing Note dated March 16, 2004 issued to
      Laurus (5)

4.8   Secured Revolving Note dated March 16, 2004 issued to Laurus (5)

4.9   Registration Rights Agreement dated March 16, 2004 by and between the
      registrant and Laurus (5)

4.10  Amendment No. 1, dated April 29, 2004, to Securities Purchase Agreement
      (6)

4.11  Amendment No. 1, dated April 29, 2004, to Common Stock Purchase Warrant
      (6)

4.12  Amendment No. 1, dated April 29, 2004, to Secured Convertible Minimum
      Borrowing Note (6)

4.13  Amendment No. 1, dated April 29, 2004, to Secured Revolving Note (6)

4.14  Amendment No. 1, dated April 29, 2004, to Secured Convertible Term Note
      (6)

4.15  Amendment No.2, dated August 9, 2004 to Secured Convertible Term Note (7)

4.16  Amendment No.2, dated August 9, 2004 to Secured Convertible Minimum
      Borrowing Note (7)

4.17  Amendment No.2, dated August 9, 2004 to Secured Revolving Note (7)

10.1  Lease dated October 1, 2000 between the Company and Heartland Associates
      (4)

10.2  1994 Stock Option Plan (1)*

10.3  1996 Stock Option Plan (1)*

10.4  2000 Stock Option Plan (3)*

10.5  Employment  Agreement  dated May 1, 2004  between  the  Company  and
      Thomas McNeill (6)*

10.6  Employment  Agreement  dated  April 5, 2004  between the Company and
      Thomas Oliveri (6)*

14    Code of Ethics (8)

21    List of Subsidiaries (8)

                                       31
<PAGE>

23.1  Consent of Eisner LLP, Independent Registered Public Accounting Firm(8)

23.2  Consent of Pitcher Partners, Independent Registered Public Accounting Firm
      (8)

23.2  Consent of KPMG LLP, Independent Registered Public Accounting Firm (8)

23.3  Consent of KPMG, Independent Registered Public Accounting Firm (8)

31.1  Rule13a-14a Certification (Chief Executive Officer) (8)

31.2  Rule13a-14a Certification (Chief Financial Officer) (8)

32    Section 1350 Certification (8)


(1)   Filed as an exhibit to the Company's Registration Statement on Form S-8
      (File #333-30829).

(2)   Filed as an exhibit to the Company's Annual Report on Form 10-KSB for the
      fiscal year ended September 30, 1997.

(3)   Incorporated by reference to the Company's Proxy Statement for the fiscal
      year ended September 30, 1999.

(4)   Filed as an exhibit to the Company's Annual Report on Form 10-K for the
      fiscal year ended September 30, 2000

(5)   Filed as an exhibit to the Company's Current Report on Form 8-K dated
      March 16, 2004, filed with the SEC on March 18, 2004

(6)   Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
      fiscal quarter ended March 31, 2004

(7)   Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
      fiscal quarter ended June 30, 2004

(8)   Filed herewith.

*     Management contract or compensatory plan or arrangement


                                       32

<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/THOMAS OLIVERI
                                            ------------------------------
                                                Thomas Oliveri
                                                Chief Executive Officer
                                                and Director
Date:  December 2, 2004

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/ Thomas Oliveri                            President, Chief Executive Officer  December 2, 2004
------------------------------------          and Director
Thomas Oliveri

/s/ Richard Gerzof                            Director, Chairman of the Board     December 2, 2004
------------------------------------
Richard Gerzof

/s/ Stuart S. Levy                            Director                            December 2, 2004
------------------------------------
Stuart S. Levy

/s/ Edward Seidenberg                         Director                            December 2, 2004
------------------------------------
Edward Seidenberg

/s/ William H. Wood                           Director                             December 2, 2004
------------------------------------
William H. Wood

/s/ Thomas McNeill                            Vice President, Chief Financial      December 2, 2004
------------------------------------          Officer and Principal Accounting
Thomas McNeill                                Officer
</TABLE>



                                       33


<PAGE>


                        GLOBAL PAYMENT TECHNOLOGIES, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>


                                                                                                PAGE

<S>                                                                                               <C>
Consolidated Financial Statements of Global Payment Technologies, Inc.:

Reports of Independent Registered Public Accounting Firms                                       F-1 to F-2

Consolidated Balance Sheets as of September 30, 2004 and 2003                                   F-3

Consolidated Statements of Operations for each of the years in the
three-year period ended September 30, 2004                                                      F-4

Consolidated Statements of Shareholders' Equity and Comprehensive Loss for each
of the years in the three-year period ended September 30, 2004                                  F-5

Consolidated Statements of Cash Flows for each of the years in the three-year
period ended September 30, 2004                                                                 F-6

Notes to Consolidated Financial Statements                                                      F-7 to F-23

Financial Statements of Global Payment Technologies Australia Pty Limited:(1)

Reports of Independent Registered Public Accounting Firms                                       F-24 to F-25

Balance Sheets as of June 30, 2004 and 2003                                                     F-26

Statements of Income for each of the years in the three-year period ended
June 30, 2004                                                                                   F-27

Statements of Stockholders' Equity for each of the years in the three-year period
ended June 30, 2004                                                                             F-28

Statements of Cash Flows for each of the years in the three-year period ended
June 30, 2004                                                                                   F-29

Notes to Financial Statements                                                                   F-30 to F34

Additional Financial Information Pursuant to the Requirements of Form 10-K:

Schedule II - Valuation and Qualifying Accounts and Reserves                                    S-1

Schedules  not listed above have been  omitted  because they are either
not applicable or the required  information  has been provided  elsewhere in the
consolidated financial statements or notes thereto

(1) Included pursuant to Reg. S-X, Rule 3-09
</TABLE>



<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
Global Payment Technologies,  Inc.:


We have audited the accompanying consolidated balance sheet of Global Payment
Technologies, Inc. and subsidiaries as of September 30, 2004, and the related
consolidated statements of operations, shareholders' equity and comprehensive
loss and cash flows for the year then ended. Our audit also included financial
statement Schedule II, listed in the accompanying index as it relates to such
year. These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audit. We did
not audit the financial statements of Global Payment Technologies Australia Pty
Limited (GPTA) and eCash Management Pty Limited (eCash), 50% and 35%,
respectively, owned investee companies. The Company's investment in GPTA and
eCash was $1,746,000 and $65,000, respectively at September 30, 2004, and its
equity in earnings (loss) of GPTA and eCash was $172,000 and ($64,000),
respectively, for the year then ended. The financial statements of GPTA and
eCash were audited by other auditors whose reports have been furnished to us,
and our opinion, insofar as it relates to the amounts included for GPTA and
eCash, is based solely on the reports of the other auditors.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the 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 audit and the reports of
the other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audit and the reports of the other auditors, the
financial statements referred to above present fairly, in all material respects,
the consolidated financial position of Global Payment Technologies, Inc. and
subsidiaries as of September 30, 2004, and the consolidated results of their
operations and their cash flows for the year then ended, in conformity with U.S.
generally accepted accounting principles. Also, in our opinion, the financial
statement Schedule II as it relates to the year ended September 30, 2004, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.

Eisner LLP

New York, New York

November 18, 2004


                                      F-1




<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors and Shareholders
Global Payment Technologies, Inc.:

We have audited the 2003 and 2002  consolidated  financial  statements of Global
Payment  Technologies,  Inc.,  and  subsidiaries  as listed in the  accompanying
index. In connection with our audits of the 2003 and 2002 consolidated financial
statements,  we also have audited the fiscal 2003 and 2002  financial  statement
Schedule II as listed in the accompanying  index. These  consolidated  financial
statements and financial  statement  Schedule II are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated  financial  statements and financial statement Schedule II based on
our audits.

We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the 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 fiscal 2003 and 2002 consolidated 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, 2003, and the results of their operations and their cash flows for each of
the years in the two year period ended September 30, 2003, in conformity with
accounting principles generally accepted in the United States of America. Also,
in our opinion, the related fiscal 2003 and 2002 financial statement Schedule
II, when considered in relation to the basic consolidated financial statements
taken as a whole, presents fairly, in all material respects, the information set
forth therein.

                                          KPMG LLP

Melville, New York
December 29, 2003 (except as to Note 8, which is as of January 13, 2004)


                                      F-2

<PAGE>

                        GLOBAL PAYMENT TECHNOLOGIES, INC.
                           Consolidated Balance Sheets
                           September 30, 2004 and 2003
                (Dollar amounts in thousands, except share data)

<TABLE>
<CAPTION>


                                    Assets                                             2004                2003
                                                                                     --------           ---------
Current assets:
<S>                                                                                  <C>                <C>
    Cash and cash equivalents                                                        $  3,453           $  1,220
    Accounts receivable, less allowance for doubtful accounts
       of $250 and $234, respectively                                                     385              2,175
    Accounts receivable from affiliates                                                 3,780              4,108
    Inventory, net                                                                      2,573              3,499
    Prepaid expenses and other current assets                                             404                 64
    Income taxes receivable                                                               115                211
                                                                                     --------           --------
                Total current assets                                                   10,710             11,277
Investments in unconsolidated affiliates                                                1,811              1,722
Property and equipment, net                                                             2,134              2,617
Capitalized software costs, net                                                         1,612              2,159
                                                                                     --------           --------
                Total assets                                                         $ 16,267           $ 17,775
                                                                                     ========           ========
                     Liabilities and Shareholders' Equity
Current liabilities:
    Current portion of long-term debt, net of discount of $167 in 2004               $    253           $    793
    Revolving line of credit                                                             --                1,000
    Accounts payable                                                                    2,273              2,424
    Accrued expenses and other current liabilities                                      1,280              1,881
                                                                                     --------           --------
                Total current liabilities                                               3,806              6,098

Long-term debt, net of discount of $401 in 2004                                         1,354               --
                                                                                     --------           --------
                Total Liabilities                                                       5,160              6,098
                                                                                     --------           --------
Commitments and contingencies (note 11)

Shareholders' equity:
    Common stock, par value $0.01. Authorized 20,000,000 shares;
       issued 5,880,750 and 5,829,500 shares, respectively                                 59                 58
    Additional paid-in capital                                                         10,800              9,843
    Retained earnings                                                                   1,283              2,973
    Accumulated other comprehensive income                                                464                302
                                                                                     --------           --------
                                                                                       12,606             13,176
Less treasury stock, at cost,  278,984 shares                                          (1,499)            (1,499)
                                                                                     --------           --------
                Total shareholders' equity                                             11,107             11,677
                                                                                     --------           --------
                Total liabilities and shareholders' equity                           $ 16,267           $ 17,775
                                                                                     ========           ========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-3

<PAGE>

                        GLOBAL PAYMENT TECHNOLOGIES, INC.
                      Consolidated Statements of Operations
                 Years ended September 30, 2004, 2003, and 2002
         (Dollar amounts in thousands, except share and per share data)


<TABLE>
<CAPTION>
                                                                     2004                  2003                  2002
                                                                  -----------          ------------          ------------
Net sales:
<S>                                                               <C>                   <C>                   <C>
     Non-affiliates                                               $    15,880           $    12,989           $    15,163
     Affiliates                                                         8,501                13,087                12,550
                                                                  -----------           -----------           -----------
                                                                       24,381                26,076                27,713
Cost of sales                                                          19,039                21,949                20,885
                                                                  -----------           -----------           -----------
                 Gross profit                                           5,342                 4,127                 6,828
Operating expenses                                                      6,857                 9,758                 8,783
                                                                  -----------           -----------           -----------
                 Loss from operations                                  (1,515)               (5,631)               (1,955)
                                                                  -----------           -----------           -----------
Other (expense) income:
     Equity in income of unconsolidated
        affiliates, net                                                   108                   676                   565
     Gain on sale of investment in
        unconsolidated affiliate                                           78                  --                     108
     Interest expense, net                                               (368)                 (248)                 (277)
                                                                  -----------           -----------           -----------
                 Other (expense) income                                  (182)                  428                   396
                                                                  -----------           -----------           -----------
                 Loss before (benefit)
                    provision for income taxes                         (1,697)               (5,203)               (1,559)
(Benefit) provision for income taxes                                       (7)                  474                  (926)
                                                                  -----------           -----------           -----------
                 Net loss                                         $    (1,690)          $    (5,677)          $      (633)
                                                                  ===========           ===========           ===========
Net loss per share:
     Basic                                                        $     (0.30)          $     (1.02)          $     (0.11)
     Diluted                                                            (0.30)                (1.02)                (0.11)
Common shares used in computing net
     loss per share amounts:
        Basic                                                       5,577,825             5,545,015             5,529,302
        Diluted                                                     5,577,825             5,545,015             5,529,302
</TABLE>


See accompanying notes to consolidated financial statements.



                                      F-4


<PAGE>



                        GLOBAL PAYMENT TECHNOLOGIES, INC.
     Consolidated Statements of Shareholders' Equity and Comprehensive Loss
                 Years ended September 30, 2004, 2003, and 2002
                (Dollar amounts in thousands, except share data)

<TABLE>
<CAPTION>
                                                          Common stock         Additional
                                    Comprehensive  -----------------------      paid-in      Retained
                                    income (loss)    Shares       Amount        capital      earnings
                                    -------------- ---------   -----------   ------------  ------------
<S>                                 <C>           <C>         <C>            <C>           <C>
Balance at September 30, 2001                      5,806,250   $        58    $     9,708   $   9,283
    Net loss                        $      (633)           --           --             --        (633)
    Cumulative translation
      adjustment
      of foreign investments                 56            --           --             --          --
                                    -----------
    Comprehensive loss              $      (577)           --           --             --          --
                                    ===========
    Exercise of common stock options,
      including income tax
      benefits of $16                     8,850            --           53             --          --
                                                   ----------  -----------    -----------  ----------
Balance at September 30, 2002                       5,815,100           58          9,761       8,650
    Net loss                        $    (5,677)           --           --             --      (5,677)
    Cumulative translation adjustment
      of foreign investments                246            --           --             --          --
                                    -----------
    Comprehensive loss              $    (5,431)           --           --             --          --
                                    ===========
    Exercise of common stock options,
      including income tax
      benefits of $22                    14,400            --           82             --          --
                                                   ---------   -----------    -----------  ----------
Balance at September 30, 2003                       5,829,500           58          9,843       2,973
    Net loss                        $    (1,690)           --           --             --      (1,690)
    Cumulative translation
      adjustment
      of foreign investments                162            --           --             --          --
                                    -----------
    Comprehensive loss              $    (1,528)           --           --             --          --
                                    ===========
    Exercise of common stock options,
      including income tax
      benefits of $0                                   51,250            1            147          --
    Common stock warrants issued
      with convertible note                                                           506
    Beneficial conversion feature
      related
      to convertible note                                                             304          --
                                                   ----------  -----------    -----------  ----------
Balance at September 30, 2004                       5,880,750  $        59    $    10,800  $    1,283
                                                   ==========  ===========    ===========  ==========
</TABLE>



<TABLE>
<CAPTION>
                                                         Other            Treasury stock
                                                      Comprehensive --------------------------
                                                         Income         Shares        Amount         Total
                                                      ------------  -------------  -----------    ----------
<S>                                                  <C>              <C>         <C>            <C>
Balance at September 30, 2001                         $       --       (278,984)   $   (1,499)    $   17,550
    Net loss                                                  --             --            --           (633)
    Cumulative translation
      adjustment
      of foreign investments                                   56            --            --             56

    Comprehensive loss                                         --            --            --             --

    Exercise of common stock options,
      including income tax
      benefits of $16                                          --            --            53
                                                      -----------   ------------  ------------    ----------
Balance at September 30, 2002                                  56      (278,984)        (1,499)       17,026
    Net loss                                                   --                           --        (5,677)
    Cumulative translation adjustment
      of foreign investments                                  246            --             --           246

    Comprehensive loss                                         --            --             --            --

    Exercise of common stock options,
      including income tax
      benefits of $22                                         --             --             82
                                                      -----------   -----------   ------------   -----------
Balance at September 30, 2003                                 302      (278,984)        (1,499)       11,677
    Net loss                                                  --             --             --        (1,690)
    Cumulative translation
      adjustment
      of foreign investments                                  162            --             --           162

    Comprehensive loss                                         --            --             --            --

    Exercise of common stock options,
      including income tax
      benefits of $0                                           --            --             --           148
    Common stock warrants issued
      with convertible note                                                                              506
    Beneficial conversion feature
      related
      to convertible note                                      --             --            --           304
                                                      -----------    -----------  ------------   -----------
Balance at September 30, 2004                         $       464      (278,984)  $     (1,499)  $    11,107
                                                      ===========   ============  ============   ===========
</TABLE>


See accompanying notes to consolidated financial statements.


                                      F-5


<PAGE>

                        GLOBAL PAYMENT TECHNOLOGIES, INC.
                      Consolidated Statements of Cash Flows
                 Years ended September 30, 2004, 2003, and 2002
                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                                2004            2003            2002
                                                                             ---------        --------       ---------
Operating activities:
<S>                                                                           <C>             <C>             <C>
    Net loss                                                                  $(1,690)        $(5,677)        $  (633)
    Adjustments to reconcile net loss to net cash
       provided by operating activities:
         Equity in income of unconsolidated affiliates                           (108)           (676)           (565)
         Gain on sale of investment in unconsolidated affiliate                   (78)           --              (108)
         Depreciation and amortization                                          1,421           1,450           1,037
         Provision for losses on accounts receivable                              102             127             108
         Provision for inventory obsolescence                                     237             847             188
         Loss on disposition of assets                                           --               379            --
         Deferred income taxes                                                   --               858             (25)
         Amortization of debt discount                                            242            --              --
         Changes in operating assets and liabilities:
            Decrease (increase) in accounts receivable                          1,744            (920)          2,082
            Decrease in accounts receivable from
              affiliates                                                          163           1,099           3,160
            Decrease in inventory                                                 746             955              10
            (Increase) decrease in prepaid expenses and
              other current assets                                               (383)            113             291
            Decrease (increase) in income tax receivable                           96             652            (863)
            (Increase) in intangible assets                                      --              --              (405)
            Decrease (increase) in other assets                                  --                86            (269)
            (Decrease) increase in accounts payable                              (151)            363          (1,411)
            (Decrease) increase in accrued expenses
              and other liabilities                                              (600)            450            (336)
                                                                              -------         -------         -------
                 Net cash provided by operating activities                      1,741             106           2,261
                                                                              -------         -------         -------
Investing activities:
    Purchases of property and equipment                                          (347)           (406)           (896)
    Proceeds from sale of investments in unconsolidated affiliates                154           1,877             118
    Investments in unconsolidated affiliates                                      (51)           (323)         (1,380)
    Distributions from unconsolidated affiliate                                   206              21             550
                                                                              -------         -------         -------
                 Net cash (used in) provided by investing activities              (38)          1,169          (1,608)
                                                                              -------         -------         -------
Financing activities:
    Repayments of notes payable to bank                                        (1,868)         (1,719)           (155)
    Proceeds from issuance of convertible debt and warrants                     2,250            --              --
    Issuance of stock upon exercise of stock options                              148              60              37
                                                                              -------         -------         -------
                 Net cash provided by (used in) financing activities              530          (1,659)           (118)
                                                                              -------         -------         -------
                 Net  increase (decrease) in cash and
                    cash equivalents                                            2,233            (384)            535
Cash and cash equivalents at beginning of year                                  1,220           1,604           1,069
                                                                              -------         -------         -------
Cash and cash equivalents at end of year                                      $ 3,453         $ 1,220         $ 1,604
                                                                              =======         =======         =======
Cash paid during the year for:
    Interest                                                                  $   125         $   248         $   261
    Income taxes                                                                   11            --                55

Non cash financing activities:
    Discount on convertible note and increase in additional
    paid-in capital resulting from beneficial conversion feature              $   304

</TABLE>


See accompanying notes to consolidated financial statements


                                      F-6




<PAGE>

(1)  ORGANIZATION AND NATURE OF BUSINESS

     (a)  DESCRIPTION  OF  BUSINESS

          Global Payment Technologies, Inc. (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  Argus,  Aurora  and IDS  validator  models.  A few key
          customers  account  for a large  portion  of the  Company's  revenues.
          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.

     (b)  ORGANIZATION AND DEVELOPMENT OF BUSINESS

          The Company has a wholly owned subsidiary, 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.

          Additionally,  the Company has an 80%  controlling  interest in Abacus
          Financial Management,  Inc. USA (Abacus-USA),  which has the exclusive
          right to  distribute  the  products  of  Abacus  Financial  Management
          Systems Ltd. (Abacus-UK) in North America. Abacus-UK manufactures cash
          management systems for use in retail applications.  Abacus USA has not
          had material operations to date.

          In fiscal 2004,  the Company  established  a wholly owned  subsidiary,
          Global  Payment  Technologies,  Inc  (GPT-Russia)  which  is  based in
          Moscow,  Russia and is responsible  for providing local service of the
          Company's  products.

          See  note  2(d)  and  note  3  for  a  description  of  the  Company's
          investments in unconsolidated affiliates.

     (c)  SIGNIFICANT  CUSTOMERS

          The Company's largest customers for 2004, 2003, and 2002 represent the
          following   percentages   of  net  sales  and   accounts   receivable,
          respectively:


                                            2004       2003       2002
                                          --------   --------   --------
          Net sales:
            Customer A                       34%        48%        44%
            Customer B                       N/A        N/A        16%
            Customer C                       11%        15%        N/A

          Accounts receivable:
            Customer A                       87%        62%        71%
            Customer B                       N/A        N/A        11%
            Customer C                       N/A        N/A        N/A


          There  were no other  customers  that  represented  10% or more of net
          sales or accounts receivable, respectively, in any of the fiscal years
          presented.  Customer A is the  Company's  unconsolidated  affiliate in
          Australia (see Note 3).



                                       F-7
<PAGE>

     (d)  GEOGRAPHIC  AREAS

          The Company generated revenues both domestically and  internationally.
          The following  summarizes the  geographic  dispersion of the Company's
          revenues by destination:
                                                  Year ended September 30
                                             -----------------------------------
                                               2004         2003         2002
                                             ---------    ---------    ---------
                                                       (In thousands)

          Domestic revenues (United States)  $  3,257     $  2,775     $  2,615
                                             ---------    ---------    ---------
          International revenues:
              Australia                         7,647       10,182        9,544
              Europe                            9,516        9,591       11,291
              All others                        3,961        3,528        4,263
                                             ---------    ---------    ---------
                                               21,124       23,301       25,098
                                             ---------    ---------    ---------
                  Total revenues             $ 24,381     $ 26,076     $ 27,713
                                             =========    =========    =========

          All of the Company's long-lived assets are domiciled in the United
          States, except for an immaterial amount at its subsidiary in the
          United Kingdom.

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

     (a)  PRINCIPLES  OF  CONSOLIDATION

          The consolidated  financial  statements include the accounts of Global
          Payment Technologies, Inc., GPT-Europe, Abacus-USA and GPT-Russia. The
          accounts of  Abacus-USA  are  presented  net of the  related  minority
          interests,  which were not  material in any period.  All  intercompany
          balances and transactions have been eliminated in consolidation.

     (b)  REVENUE  RECOGNITION

          NON-AFFILIATES

          The Company  recognizes  revenue upon shipment of products and passage
          of title to its non-affiliated  customers, or at the time services are
          completed with respect to repairs not covered by warranty agreements.

          AFFILIATES

          The Company  recognizes revenue upon shipment and passage of title, to
          its affiliated  customers,  but defers its proportionate  share of the
          related  gross  profit on product  sales  until  sales are made by the
          affiliated  customers to their third-party end users  (customers),  in
          accordance  with APB Opinion No. 18, THE EQUITY  METHOD OF  ACCOUNTING
          FOR INVESTMENTS IN COMMON STOCK (see (d)).

     (c)  SHIPPING AND HANDLING  COSTS

          The Company records shipping and handling costs billed to customers in
          net sales and classifies  the shipping and handling  costs  associated
          with outbound freight in cost of sales.




                                      F-8
<PAGE>



     (d)  INVESTMENTS IN UNCONSOLIDATED AFFILIATES

          The Company applies the equity method of accounting to its investments
          in entities where the Company has  non-controlling,  but  influential,
          ownership interests. The Company's share of these affiliates' earnings
          or losses is included in the  consolidated  statements of  operations.
          The Company  eliminates its pro rata share of gross profit on sales to
          its affiliates for inventory on hand at the affiliates as of September
          30. Entities in which the Company's  respective  ownership interest is
          less than 20%, and in which there is a resulting inability to exercise
          significant  influence,  are  accounted  for using the cost  method of
          accounting. A description of the Company's  unconsolidated  affiliates
          and the related  transactions between the Company and these affiliates
          is discussed in note 3.

     (e)  FOREIGN  CURRENCY  TRANSLATION

          The financial  position and results of  operations  of GPT-Europe  and
          unconsolidated  affiliates  are measured  using local  currency as the
          functional  currency.  Assets and  liabilities  of such  entities  are
          translated  into US dollars at exchange  rates in effect at  year-end,
          while revenues and expenses are  translated at average  exchange rates
          prevailing during the year. The resulting translation gains and losses
          are  recorded  directly  to  accumulated  other  comprehensive  income
          (loss),  a separate  component of  shareholders'  equity,  and are not
          included in net income until  realized  through sale or liquidation of
          the investment. Exchange gains and losses incurred on foreign currency
          transactions,  which were not material  during fiscal 2002,  2003, and
          2004, are included in net loss.

     (f)  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.
          A significant  portion of the Company's  cash balance in the amount of
          $770,000 and $774,000, as of September 30, 2004 and 2003, respectively
          consists of currency used to test the Company's products, and although
          it  could be  available,  it is not  anticipated  to be  utilized  for
          working capital purposes in the normal course of business. Translation
          gains or losses on foreign currency amounts used for test purposes are
          included in operating loss.

     (g)  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. These items
          could result in future inventory obsolescence.

     (h)  PROPERTY AND EQUIPMENT

          Property  and  equipment  are  recorded  at  cost.   Depreciation   is
          calculated  using the  straight-line  method over the estimated useful
          lives  of  the  assets   (note  6)  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,  which  significantly  increase  value or extend  useful
          asset lives are capitalized and depreciated.


                                      F-9
<PAGE>


     (i)  CAPITALIZED SOFTWARE COSTS

          In accordance  with SFAS No. 86,  ACCOUNTING FOR THE COSTS OF COMPUTER
          SOFTWARE    TO   BE    SOLD,    LEASED    OR    OTHERWISE    MARKETED,
          internally-generated  software  development  costs associated with new
          products and significant  software  enhancements to existing  products
          are  expensed as incurred  until  technological  feasibility  has been
          established.  Pursuant to SFAS No. 86, the Company deems technological
          feasibility  to be have been met upon  completion of a detail  program
          design.  Internally-  generated software  development costs of $0, $0,
          and $320,000  were  capitalized  during fiscal years 2004,  2003,  and
          2002,  respectively.  The Company recorded  amortization in accordance
          with SFAS No. 86 of  $547,000,  $519,000,  and $396,000 for the fiscal
          years ended September 30, 2004, 2003 and 2002, respectively,  which is
          included in cost of sales in the accompanying  Consolidated Statements
          of Operations.  Unamortized  internally-generated software development
          costs included in the accompanying  consolidated  balance sheets as of
          September  30,  2004  and  2003  were   $1,612,000   and   $2,159,000,
          respectively.

     (j)  LONG-LIVED ASSETS

          The Company  accounts for  long-lived  assets in  accordance  with the
          provisions of SFAS No. 144,  ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL
          OF LONG-LIVED  ASSETS.  This Statement requires that long-lived assets
          be reviewed for impairment whenever events or changes in circumstances
          indicate that the carrying  amount of an asset may not be recoverable.
          Recoverability  of  assets  to be  held  and  used  is  measured  by a
          comparison of the carrying  amount of an asset to future  undiscounted
          net cash flows expected to be generated by the asset.  If the carrying
          amount  of an asset  exceeds  its  estimated  future  cash  flows,  an
          impairment  charge is  recognized  by the amount by which the carrying
          amount of the asset exceeds the fair value of the asset.  Assets to be
          disposed of are reported at the lower of the  carrying  amount or fair
          value less costs to sell, and are no longer  depreciated.  The Company
          adopted SFAS No. 144 effective  October 1, 2002.  The adoption of SFAS
          144 did not affect the Company's  financial  statements.  Prior to the
          adoption of SFAS No. 144, the Company  accounted for long-lived assets
          in accordance  with SFAS 121,  ACCOUNTING FOR IMPAIRMENT OF LONG-LIVED
          ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF.

     (k)  INTANGIBLE ASSETS

          In June  2001,  the FASB  issued  SFAS No.  142,  GOODWILL  AND  OTHER
          INTANGIBLE ASSETS.  Under SFAS No. 142, goodwill and intangible assets
          with  indefinite  lives  are no  longer  amortized  but  are  reviewed
          annually (or more  frequently,  if  impairment  indicators  arise) for
          impairment.  Separable  intangible  assets that are not deemed to have
          indefinite lives will continue to be amortized over their useful lives
          (but with no maximum  life).  The Company has  adopted  this  standard
          effective   October  1,  2001.   The  effect  of   adoption   was  not
          material.

          Intangible   assets,   recorded  at  unamortized   cost  of  $345,000,
          representing  intellectual  property  owned by the Company  associated
          with the  Company's  joint  venture with an  unrelated  third party to
          develop  and  distribute  a product  with the  ability to read  "smart
          cards"  were  written  off in the  fourth  quarter  of 2003,  when the
          Company   made  a  strategic   decision  to  no  longer   pursue  this
          relationship.


                                      F-10
<PAGE>


     (l)  RESEARCH AND DEVELOPMENT

          Research and development costs incurred by the Company are included in
          operating  expenses  in the year  incurred.  Such  costs  amounted  to
          $75,000,  $150,000,  and  $225,000  in  fiscal  2004,  2003 and  2002,
          respectively.

     (m)  WARRANTY POLICY

          The  Company  warrants  that its  products  are free from  defects  in
          material and workmanship  for a period of one or two years,  depending
          on the  particular  product,  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 beyond the warranty  period are charged to the  Company's
          customers (see (b)).

          In November 2002, the FASB issued  Interpretation No. 45, "Guarantor's
          Accounting  and  Disclosure  Requirements  for  Guarantees,  Including
          Indirect  Guarantees of  Indebtedness  of Others"  ("FIN 45").  FIN 45
          requires  that the  guarantor  recognize,  at the inception of certain
          guarantees,   a  liability  for  the  fair  value  of  the  obligation
          undertaken in issuing such guarantee.  FIN 45 also requires additional
          disclosure   requirements  about  the  guarantor's  obligations  under
          certain  guarantees that it has issued. The adoption of FIN 45 did not
          affect the Company's financial results.

          The Company recognizes, and historically has recognized, the estimated
          cost associated with its standard  warranty on products at the time of
          sale.  The estimate is based on  historical  failure rates and current
          claim  cost  experience.  A summary of the  changes  in the  Company's
          accrued warranty obligation (which is included in accrued expenses) is
          included  in  the  Company's  Schedule  of  Valuation  and  Qualifying
          Accounts.

     (n)  INCOME TAXES

          The Company  accounts for income taxes under SFAS No. 109,  ACCOUNTING
          FOR  INCOME  TAXES.  SFAS No.  109  requires  an asset  and  liability
          approach for financial reporting for income taxes. Under SFAS No. 109,
          deferred taxes are provided for net operating loss  carryforwards  and
          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. See note 10.

     (o)  EARNINGS PER SHARE

          Net income (loss) per common share amounts (basic EPS) are computed by
          dividing net earnings (loss) by the weighted  average number of common
          shares  outstanding,  excluding  any  potential  dilution.  Net income
          (loss) per common share amounts  assuming  dilution  (diluted EPS) are
          computed by reflecting  potential  dilution from the exercise of stock
          options,  and  warrants,  and the  conversion  into  common  stock  of
          convertible  loans.  Diluted EPS for fiscal years 2004,  2003 and 2002
          are the same as basic  EPS,  as the  inclusion  of the  impact  of any
          common stock equivalents  outstanding  during those periods,  would be
          anti-dilutive.  Common  stock  equivalents  not included in EPS are as
          follows:


                                      F-11
<PAGE>

                                    Year ended September 30
                             -----------------------------------
                                2004        2003        2002
                             -----------  ---------  -----------
          Stock options         887,800    766,600    1,058,600
          Stock warrants        200,000         --           --
          Convertible Debt      510,563         --           --
                             -----------  ---------  -----------
          Total               1,598,363    766,600    1,058,600
                             ===========  =========  ===========

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

<TABLE>
<CAPTION>
                                                      Year ended September 30
                                            -------------------------------------------
                                                2004            2003           2002
                                            ------------    ------------   ------------
                                          (In thousands, except share and per share data)
          Numerator:
<S>                                         <C>             <C>                   <C>
            Net loss attributable to
             common stockholders             $   (1,690)    $    (5,677)   $      (633)
                                            ------------    ------------   ------------
          Denominator:
            Weighted average common shares
             outstanding - basic              5,577,825       5,545,015      5,529,302
            Effect of dilutive securities:
              Stock options and warrants             --              --             --
              Convertible loan                       --              --             --
                                            ------------    ------------   ------------
            Weighted average common shares
             outstanding - diluted            5,577,825       5,545,015      5,529,302
                                            ============    ============   ============
          Basic EPS                         $     (0.30)    $     (1.02)   $     (0.11)
          Diluted EPS                             (0.30)          (1.02)         (0.11)

</TABLE>


     (p)  STOCK-BASED COMPENSATION

          The Company  observes the provisions of SFAS No. 123,  "Accounting for
          Stock-Based Compensation," ("SFAS No. 123") by continuing to apply the
          provisions of  Accounting  Principles  Board  ("APB")  Opinion No. 25,
          "Accounting for Stock Issued to Employees  ("APB No. 25").

          The Company  applies the intrinsic value method as outlined in APB No.
          25 and related  interpretations  in  accounting  for stock options and
          share units  granted under its stock option plans which are more fully
          disclosed in note 9. Under the intrinsic value method, no compensation
          expense is recognized if the exercise price of the Company's  employee
          stock options equals the market price of the  underlying  stock on the
          date  of  the  grant.  Accordingly,  no  compensation  cost  has  been
          recognized on options granted to employees. SFAS No. 123 requires that
          the Company provide pro forma  information  regarding net earnings and
          net  earnings  per  common  share  as if  compensation  cost  for  the
          Company's  stock option plans had been  determined in accordance  with
          the fair value  method  prescribed  therein.  The Company  adopted the
          disclosure  portion  of SFAS  No.  148,  "Accounting  for  Stock-Based
          Compensation - Transition and Disclosure" requiring quarterly SFAS No.
          123 pro forma  disclosure.  The Financial  Accounting  Standards Board
          recently  indicated  that  they  will  require  stock-based   employee
          compensation  to be  recorded  as a charge to  earnings  pursuant to a
          standard they are currently deliberating.  We will continue to monitor
          their progress on the issuance of this standard.


                                      F-12
<PAGE>

          The following  table  illustrates  the effect on net loss and loss per
          common share as if the fair value  method  ("FMV") had been applied to
          all outstanding awards in each period presented.


                                              2004        2003         2002
                                            ---------   ---------    ---------
                                           (In thousands, except per share data)
          Net loss:
            As reported                     $ (1,690)   $ (5,677)    $   (633)
            Deduct: Compensation expense
                    determined under FMV        (475)       (394)        (386)
                                            ---------   ---------    ---------
            Pro forma                         (2,165)     (6,071)      (1,019)
          Net loss per common
           share - basic and diluted:
            As reported                     $  (0.30)   $  (1.02)    $ (0.11)
            Pro forma                          (0.39)      (1.09)      (0.18)


          The effects of applying SFAS No. 123 in this pro forma  disclosure are
          not indicative of future amounts.

     (q)  COMPREHENSIVE INCOME (LOSS)

          SFAS No. 130,  REPORTING  COMPREHENSIVE  INCOME 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 (loss) is the total
          of net  income  (loss)  and all other  nonowner  changes in equity (or
          other comprehensive income (loss)) such as unrealized  gains/losses on
          securities   classified  as   available-for-sale,   foreign   currency
          translation adjustments and minimum pension liability adjustments.  As
          of  September  30, 2004 and 2003,  due to currency  fluctuations,  the
          cumulative  currency  translation  adjustment related to the Company's
          investments   in  foreign   affiliates   was  $464,000  and  $302,000,
          respectively,  which  is  reflected  in  shareholders'  equity  in the
          accompanying consolidated balance sheets.

     (r)  DERIVATIVE INSTRUMENTS

          SFAS No.  133,  ACCOUNTING  FOR  DERIVATIVE  INSTRUMENTS  AND  HEDGING
          ACTIVITIES   establishes   accounting  and  reporting   standards  for
          derivative  instruments,   including  certain  derivative  instruments
          embedded in other contracts,  and for hedging activities.  The Company
          currently  does not use  derivative  instruments  or engage in hedging
          activities.

     (s)  FAIR VALUE OF FINANCIAL INSTRUMENTS

          The carrying value of all monetary assets and liabilities reflected in
          the accompanying  consolidated  balance sheets approximated fair value
          as a result of the short-term nature of such assets and liabilities or
          with respect to long-term debt as a result of variable interest rates,
          subject to a minimum rate based on the Company's credit rating.



                                      F-13
<PAGE>




     (t)  SEGMENT REPORTING

          The Company follows the provisions of SFAS No. 131,  DISCLOSURES ABOUT
          SEGMENTS OF AN ENTERPRISE  AND RELATED  INFORMATION.  Pursuant to this
          pronouncement,  the reportable operating segments are determined based
          on the Company's  management  approach.  The management  approach,  as
          defined by SFAS No. 131, is based on the way that the chief  operating
          decision-maker  organizes the segments within an enterprise for making
          operating decisions and assessing  performance.  The Company's results
          of operations are reviewed by the chief operating  decision-maker on a
          consolidated  basis  and the  Company  operates  in only one  segment.
          Geographical sales segment data is presented in note 1(d).

     (u) USE OF ESTIMATES

          The preparation of financial  statements in conformity with accounting
          principles generally accepted in the United States of America 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.
          Among the more  significant  estimates  included  in the  consolidated
          financial   statements  are  the  allowance  for  doubtful   accounts,
          recoverability  of  inventory,   deferred  income  taxes,  capitalized
          software and  provisions for  warranties.  Actual results could differ
          from those estimates.

     (v) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

          In August  2003,  the  Emerging  Issues  Task Force  (EITF)  reached a
          consensus  on Issue No.  03-05  APPLICABILITY  OF AICPA  STATEMENT  OF
          POSITION  (SOP) 97-2 TO  NON-SOFTWARE  DELIVERABLES  IN AN ARRANGEMENT
          CONTAINING  MORE-THAN-INCIDENTAL SOFTWARE, that in an arrangement that
          includes  software  that is more than  incidental  to the  products or
          services  as a  whole,  software  and  software-related  elements  are
          included  within  the  scope of SOP  97-2.  Software-related  elements
          include  software  products and  services as well as any  non-software
          deliverable(s)  (including hardware) for which software deliverable is
          essential to its functionality.  The Company adopted the provisions of
          this statement  effective October 1, 2003, and the effects of adoption
          were not material to the consolidated  financial  statements.

          Financial   Accounting   Standards   Board   Interpretation   No.  46,
          CONSOLIDATION  OF  VARIABLE   INTEREST   ENTITIES  (FIN  No.  46)  was
          originally  issued in  January  2003 and was  subsequently  revised in
          December  2003.  FIN No. 46  attempts to clarify  the  application  of
          Accounting   Research   Bulletin   No.  51,   CONSOLIDATED   FINANCIAL
          STATEMENTS,  to certain entities in which equity investors do not have
          the characteristics of a controlling financial interest or do not have
          sufficient  equity at risk for the  entity to finance  its  activities
          without additional  subordinated  financial support.  The Company does
          not  believe  that  it has  any  involvement  with  variable  interest
          entities that are required to be consolidated under FIN No. 46.

          In May  2003,  the  FASB  issued  SFAS  150,  ACCOUNTING  FOR  CERTAIN
          FINANCIAL  INSTRUMENTS  WITH  CHARACTERISTICS  OF BOTH LIABILITIES AND
          EQUITY.  SFAS 150 establishes  standards for how an issuer  classifies
          and measures certain  financial  instruments with  characteristics  of
          both  liabilities  and equity.  It requires that an issuer  classify a
          financial  instrument  that is within its scope as a liability  (or an
          asset  in  some   circumstances).   Many  of  those  instruments  were
          previously  classified  as  equity.  The  provisions  of SFAS  150 are
          effective for (1)  instruments  entered into or modified after May 31,
          2003,  and  (2)  pre-existing  instruments  as of July  1,  2003.  The
          adoption  of  SFAS  150  did  not  have  an  effect  on the  Company's
          consolidated financial statements.


                                      F-14
<PAGE>



(3)  UNCONSOLIDATED AFFILIATES

     Net sales to unconsolidated  affiliates for fiscal year 2004, 2003 and 2002
     and accounts receivable from unconsolidated  affiliates as of September 30,
     2004 and 2003 are as follows (in thousands):


<TABLE>
<CAPTION>
<S>                       <C>       <C>          <C>        <C>              <C>
                                                                  Accounts receivable
                                                                    from affiliates
                               Net sales  - affiliates      ------------------------------
                          --------------------------------  September 30,    September 30,
                            2004       2003        2002          2004             2003
                          --------   ---------   ---------  -------------    -------------
     Australia            $ 8,183    $ 12,482    $ 12,179    $    3,632       $    3,872
     Abacus-UK                 --          --         137           148              148
     South Africa             318         605         234            --               88
                          --------   ---------   ---------  -------------    -------------
                 Total    $ 8,501    $ 13,087    $ 12,550    $    3,780       $    4,108
                          ========   =========   =========  =============    =============
</TABLE>

     (a)  AUSTRALIA

          In fiscal 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 2002,  the Company and two other  shareholders  formed
          eCash  Management  Pty.  Ltd  (eCash),  an  Australian  based  company
          responsible  to market,  distribute,  service  and  support  automated
          teller machines across  Australia and New Zealand.  The Company owns a
          35% interest in this entity. The accompanying  consolidated results of
          operations  include the Company's  equity in the results of operations
          of these affiliates in the amounts of $273,000, $470,000, and $678,000
          in fiscal 2004, 2003, and 2002,  respectively.  For fiscal 2004, 2003,
          and 2002,  the  Company  increased  (reduced)  its equity in income of
          unconsolidated  affiliates  by  $(165,000),  $225,000,  and  $250,000,
          respectively,  which  amounts  represent  the effect of the  Company's
          share of the gross profit on sales of the Company's  products to these
          affiliates,  which were unsold by the  affiliate  as of the  Company's
          fiscal year-end. Deferred gross profit of $538,000 as of September 30,
          2004 is shown as a reduction of accounts receivable from affiliates in
          the  accompanying  balance  sheets.  The Company  also  received  cash
          dividends of  $206,000,  $0, and $550,000  from these  affiliates  for
          fiscal 2004, 2003, and 2002, respectively.

     (b)  ABACUS - UK

          In fiscal 1999, the Company acquired a non-controlling 25% interest in
          Abacus Financial Management Systems Ltd.  (Abacus-UK).  Abacus-UK 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,  which offers the retail  market a mechanism  for counting,
          storing and  transporting  its cash  receipts.  The  Company  invested
          $162,000 in this entity to acquire the 25%  non-controlling  ownership
          interest.  In  fiscal  2004 and  2003,  the  Company  did not make any
          additional  investment,  however, in fiscal 2002, the Company invested
          an  additional  $207,000  in  Abacus-UK.  The  Company's  consolidated
          results of operations  for the years ended  September 30, 2004,  2003,
          and 2002 include the Company's equity in the loss of this affiliate of
          $0, $0, and $131,000, respectively.

                                      F-15
<PAGE>


          During  the fourth  quarter of fiscal  2002,  the  Company  recorded a
          non-cash charge to operations of $215,000 related to the impairment of
          its  equity-method  investment  in  Abacus-UK,  pursuant to Accounting
          Principles  Board Opinion No. 18, THE EQUITY METHOD OF ACCOUNTING  FOR
          INVESTMENTS  IN  COMMON  STOCK.   This  impairment   loss,  which  was
          considered other than temporary,  was due to the  deterioration of the
          financial condition of this entity and is included in equity in income
          of unconsolidated  affiliates,  net, in the accompanying  consolidated
          statement of operations for the fiscal year ended September 30, 2002.

     (c) SOUTH AFRICA

          In  April  2003,  the  Company  sold  a  significant  portion  of  its
          investments  in its South  African  affiliates.  The Company  received
          approximately $1.9 million in cash for the sale of its entire interest
          in the cash handling  division of  International  Payment  Systems Pty
          Ltd.  and  a  major   portion  of  its  interest  in  Global   Payment
          Technologies  Holdings (Pty) Ltd. ("GPTHL"),  its South African gaming
          affiliate. As a result of this transaction,  which did not result in a
          gain or loss,  the Company's  ownership  interest in GPTHL was reduced
          from 24.2% to 5%. GPTHL's  Vukani  division is one of the two licensed
          operators in the South  African route market  province of  Mpumalanga.
          The cash  received was a return of all of the  Company's  advances and
          investments  resulting in the Company's  recovering the carrying value
          of such  advances  and  investments.  The  Company  accounted  for its
          remaining  investment on the cost basis.

          In October 2003,  the Company  invested an additional  $51,000 in this
          entity.  Effective January 15, 2004, the Company's  remaining interest
          was sold.  A gain of $78,000 was realized  upon sale of the  remaining
          interest.  The  Company's  results of  operations  for the years ended
          September 30, 2003, and 2002 include the Company's  equity in the loss
          of this affiliate of ($14,000), and ($75,000), respectively.

     (d) CHINA

          During the third  quarter of fiscal  2002,  the  Company  sold its 50%
          non-controlling  interest in its China-based  affiliate.  As a result,
          the Company recorded a gain of $108,000 in the accompanying  statement
          of operations.

(4)  SUMMARY FINANCIAL INFORMATION

     Financial  information with respect to the Company's Australian  affiliates
     is  included  in  the  accompanying   financial  statements  based  on  the
     affiliates'  fiscal  year ended June 30. The  following  summary  financial
     information  reflects the combined assets and liabilities of GPTA and eCash
     as of June 30, 2004 and 2003 and their combined operating results for their
     fiscal  years  ended  June 30,  2004,  2003,  and 2002.  Additionally,  the
     combined 2002 operating  results  include those of Abacus-UK.  Such summary
     financial  information  has been provided  herein based upon the respective
     individual   significance  of  these   unconsolidated   affiliates  to  the
     consolidated  financial  information  of the  Company  for each  respective
     period.

                                 (in thousands)

                              June 30,    June 30,
                                2004        2003
                              --------------------
     Current assets           $ 8,255    $ 10,966
     Non-current assets           695       1,007
     Current liabilities        5,264       7,710
     Non-current liabilities       84          --
     Net assets                 3,602       4,263

                                      F-16

<PAGE>
                                 (in thousands)

                             Year ended       Year ended       Year ended
                           June 30, 2004    June 30, 2003    June 30, 2002
                           -----------------------------------------------
     Net sales                $ 13,892         $ 18,016         $ 19,699
     Operating income              621              538              202
     Net income                    483              604              527


(5)  INVENTORY

     The following is a summary of the composition of inventory:

                                                            September 30
                                                        -------------------
                                                          2004       2003
                                                        --------   --------
                                                           (In thousands)
     Raw materials                                      $ 1,339    $ 1,725
     Work-in-progress                                       458        787
     Finished goods                                         776        987
                                                        --------   --------
                                                        $ 2,573    $ 3,499
                                                        ========   ========


(6)  PROPERTY AND EQUIPMENT, NET

     Major  classifications  of property and  equipment  are as  follows:

                                                               September 30
                                                           -------------------
                                        Useful lives         2004       2003
                                       ------------------  --------   --------
                                                              (In thousands)
     Leasehold improvements            Shorter of the
                                       life of the lease
                                       or useful life of
                                       asset               $   266    $   266
     Furniture and fixtures            3 - 7 years             391        391
     Machinery and equipment           3 - 10 years          2,882      2,511
     Tooling and Molds                 7 years               1,839      1,839
     Computer software                 5 years                 995        995
     Computer hardware                 3 years               1,016      1,002
                                                           --------   --------
                                                             7,389      7,004
     Less accumulated depreciation and
      amortization                                          (5,255)    (4,387)
                                                           --------   --------
                                                           $ 2,134    $ 2,617
                                                           ========   ========


     Depreciation and amortization expense was $830,000,  $849,000, and $640,000
     for the fiscal years ended September 30, 2004, 2003 and 2002, respectively.


                                      F-17
<PAGE>



(7)  ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

     Accrued   expenses   and  other   current   liabilities   consist   of  the
     following:

                                                           September 30
                                                        -------------------
                                                          2004       2003
                                                        --------   --------
                                                           (In thousands)

     Accrued legal and accounting                       $   229    $   228
     Warranty costs                                         298        346
     Accrued commissions                                    154        499
     Administrative and other                               599        808
                                                        --------   --------
                                                        $ 1,280    $ 1,881
                                                        ========   ========

(8)  DEBT

     On March 16, 2004, the Company  received  aggregate  proceeds of $1,500,000
     from the  sale to  Laurus  Master  Fund  Ltd.  ("Laurus")  of a  $1,500,000
     principal  amount  secured  convertible  term  note due in March  2007 (the
     "CTN"), pursuant to a Securities Purchase Agreement. The CTN is convertible
     into  common  stock  of the  Company  at any  time at the  rate of $4.26 of
     principal  for  one  share  of  common  stock  and  is   collateralized  by
     substantially  all assets of the  Company.  The CTN  provides  for  monthly
     principal  payments of $25,000  from July 2004 to March 2005,  $45,000 from
     April 2005 to  September  2005 and $55,833 from October 2005 to March 2007.
     Interest  is payable  monthly  at the prime rate plus 1.5%,  with a minimum
     rate of 6%. In  addition,  Laurus  received 7 year  warrants to purchase an
     aggregate  of 200,000  shares of the  Company's  common  stock at prices of
     $4.87,   $5.28  and  $5.68  for  100,000,   60,000  and  40,000   warrants,
     respectively.  Under the agreement,  the Company is restricted  from paying
     dividends or purchasing treasury stock. The Company utilized  approximately
     $1,200,000  of the proceeds to repay amounts  outstanding  under a previous
     credit  agreement.  At  September  30,  2003,  amounts  outstanding  on the
     Company's  revolving  line of credit with Chase Bank was  $1,000,000 and on
     the Company's  term notes,  which were to mature  during fiscal 2004,  were
     $793,000.

     The value allocated to the warrants resulted in a debt discount of $506,000
     that is being  recognized  as interest  expense  over the term of the note.
     Additionally,  by  allocating  value to the  warrants,  Laurus  received  a
     beneficial  conversion  feature in the amount of $304,000  that resulted in
     additional debt discount that is being  recognized as interest expense over
     the term of the note.  Interest expense is computed  utilizing the interest
     method,  which results in a constant  effective  yield over the term of the
     note.  For the year ended  September  30,  2004,  amortization  expense was
     $242,000.  As of September 30, 2004, the unamortized debt discount amounted
     to approximately  $568,000.  Amortization of debt discount will approximate
     $370,000 and $198,000 for fiscal 2005 and 2006, respectively, which will be
     charged to  operations.  In the event that the CTN,  or any  portion of the
     CTN, is converted prior to maturity,  the unamortized  discount  related to
     the amount converted will be immediately recognized as interest expense and
     charged to  operations.

     On March 16, 2004, the Company also entered into a Security  Agreement with
     Laurus which provides for a credit  facility of $2,500,000  consisting of a
     secured  revolving note of $1,750,000 (the "RN") and a secured  convertible
     minimum  borrowing  note of $750,000  (the  "MBN"),  both due in March 2007
     (both notes collectively referred to as the "LOC"). At closing, the Company
     borrowed  $750,000  under  the  MBN.  Funds  available  under  the  LOC are
     determined  by a borrowing  base equal to 85% and 70% of eligible  domestic
     and  foreign  accounts  receivable,   respectively,  and  50%  of  eligible
     inventory.  Outstanding  amounts under the RN and MBN are convertible  into
     common  stock of the Company at any time at the rate of $4.26 of  principal
     for one share of common stock and are  collateralized  by substantially all
     assets of the Company.  Interest is payable  monthly at the prime rate plus
     1.5%,  with a minimum  rate of 6%. At September  30, 2004,  no amounts were
     outstanding under the RN.

                                      F-18
<PAGE>

     The  agreements  provide  that  Laurus  will not  convert  debt or exercise
     warrants to the extent that such  conversion  or exercise  would  result in
     Laurus,  together with its affiliates,  beneficially owning more than 4.99%
     of the number of outstanding shares,  including warrants,  of the Company's
     common  stock at the time of  conversion  or  exercise.


     Outstanding debt to Laurus as of September 30, 2004 is as follows:

     (In thousands)

     Total debt                             $ 2,175

     Less unamortized debt discount            (568)
                                            --------
     Net                                      1,607

     Less current portion                      (253)
                                            --------
     Long term debt                         $ 1,354
                                            --------


     As of  September  30,  2004,  annual  principal  maturities  for the amount
     outstanding under the notes were as follows:


                                           Amount
                                       --------------
     Fiscal year ended September 30:   (in thousands)
         2005                             $   420
         2006                                 670
         2007                               1,085
                                       --------------
                                          $ 2,175
                                       ==============


                                      F-19
<PAGE>


(9)  STOCK OPTION PLANS

     The  Company  has  several  stock  option  plans in effect  covering in the
     aggregate  1,500,000  of the  Company's  common  shares  pursuant  to which
     officers, directors and key employees of the Company and consultants to the
     Company  are  eligible  to  receive  incentive  and/or  nonqualified  stock
     options. The stock option plans, which expire at varying dates beginning on
     October 17, 2004 through  January 25,  2010,  are all  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  and
     administered  in accordance  with the stock option plans as approved by the
     shareholders.

     Incentive  stock options  granted under these various 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 2002, a total of 255,200  incentive  stock options and 66,000
     nonqualified  options were granted. All options granted in 2002 will become
     exercisable over varying terms up to four years.

     During  fiscal 2003, a total of 95,000  incentive  stock options and 31,000
     nonqualified  options were granted. All options granted in 2003 will become
     exercisable over varying terms up to four years.

     During fiscal 2004, a total of 265,650  incentive stock options and 100,500
     nonqualified  options were granted. All options granted in 2004 will become
     exercisable  over varying terms up to four years.

     A summary of the  Company's  stock option  plans as of September  30, 2004,
     2003,  and 2002,  and  changes  during the years then ended,  is  presented
     below.

<TABLE>
<CAPTION>
                                         2004                     2003                   2002
                                ----------------------- ----------------------- -----------------------
                                             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 year            766,600   $    5.02    1,058,600  $    4.53     880,850   $    5.16
       Granted at fair value       366,150        3.98      126,000       4.05     321,200        3.73
       Forfeited                  (193,700)       5.96     (403,600)      3.55    (134,600)       6.68
       Exercised                   (51,250)       2.88      (14,400)      4.48      (8,850)       4.07
                                -----------             ------------            -----------
     Outstanding at end of
      the year                     887,800        4.48      766,600       5.02   1,058,600        4.53
                                ===========             ============            ===========
     Options exercisable at
      year end                     371,059        5.18      348,120       6.18     555,040        4.51
     Weighted average fair value
      of options granted during
      the year (a)                                2.26                    2.63                    2.51
</TABLE>

                                      F-20

<PAGE>

     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:

                                       Year ended September 30
                                -----------------------------------
                                   2004         2003        2002
                                -----------   ---------   ---------
     Risk-free interest rates         4.02%       3.07%       4.83%
     Expected lives              5.5 years     7 years     7 years
     Expected volatility                66%         65%         66%
     Expected dividend yields           --          --          --


     Summarized  information  about the Company's stock options  outstanding and
     exercisable at September 30, 2004 is as follows:

<TABLE>
<CAPTION>
<S> <C>                       <C>        <C>        <C>              <C>         <C>
                                         Outstanding                       Exercisable
                              -------------------------------------- ---------------------------
                                          Weighted      Weighted                    Weighted
                                           average       average                     average
      Exercise price range     Options      life      exercise price  Options     exercise price
     -----------------------  ---------- ----------  --------------- ----------  ---------------
     $2.40 to $4.00             590,100       5.34   $        3.75     144,485   $        3.41
     $4.01 to $6.00             216,400       4.60            4.92     145,274            5.06
     $6.01 to $8.00              28,800       1.14            6.81      28,800            6.81
     $8.01 to $10.00             42,000       1.94            8.99      42,000            8.99
     $10.01 to $12.00            10,500       1.25           11.43      10,500           11.43
     $12.01 to $14.25                --         --              --          --              --
                              ----------                             ----------
                                887,800       4.81            4.48     371,059            5.18
                              ==========                             ==========
</TABLE>


(10) INCOME TAXES

     The provision for (benefit from) income taxes consists of the following:

                           Fiscal years ended September 30
                           -------------------------------
                              2004      2003      2002
                             -------   -------   -------
                                   (In thousands)
     Current:
       Federal               $  (15)   $ (211)   $ (885)
       State and local            8        --        --
                             -------   -------   -------
                                 (7)     (211)     (885)
                             -------   -------   -------
     Deferred:
       Federal                   --       685       147
       State and local           --        --      (188)
                             -------   -------   -------
                                 --       685       (41)
                             -------   -------   -------
                 Total       $   (7)   $  474    $ (926)
                             =======   =======   =======



                                      F-21
<PAGE>

     Significant  components  of  deferred  tax  assets and  liabilities  are as
     follows:
                                                            September 30
                                                      ---------------------
                                                        2004        2003
                                                      ---------   ---------
                                                          (In thousands)
     Deferred tax assets:
       Accounts receivable                            $     91    $     89
       Inventory                                           472         507
       Accrued expenses and other, net                     132         186
       Elimination of gross profit on sales to
        affiliates                                         196         141
       Tax NOL carryforward                              2,154       1,646
                                                      ---------   --------
             Deferred tax asset                          3,045       2,569
     Less: Valuation allowance (a)                      (2,429)     (1,952)
                                                      ---------   --------
                                                           616         617
     Deferred tax liability:
       Undistributed earnings of
        foreign affiliates                                (616)       (617)
                                                      ---------   ---------
             Net deferred taxes                       $     --    $     --
                                                      =========   =========


     (a) The  Company's  ability to recover  the  reported  amounts of  deferred
     income tax benefit is  dependent  upon its  ability to generate  sufficient
     taxable income during the periods over which net temporary tax  differences
     become deductible. The Company has incurred significant operating losses in
     the fiscal years 2004,  2003, and 2002. Due to recurring losses and because
     of the  uncertainty  as to the  Company's  ability to  generate  sufficient
     taxable  income to realize the value of its deferred tax asset,  during the
     fourth  quarter  of  fiscal  2003 the  Company  provided  a full  valuation
     allowance.  This valuation allowance will be periodically  assessed and may
     be partially or wholly reversed in the future.

     As of September 30, 2004, the Company has a net operating loss carryforward
     of $5,859,000, which expires in 2023 and 2024.

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

                                                 Fiscal years ended September 30
                                                 -------------------------------
                                                  2004      2003       2002
                                                 --------  --------   -------
     U.S. Federal statutory rate                  (34.0)%   (34.0)%   (34.0)%
     State income taxes, net of federal benefit    (2.5)     (3.8)     (5.9)
     Impact of foreign operations                   0.0       6.9     (22.1)
     All other, net                                 4.5       0.5       2.6
     Change in valuation allowance                 31.6      39.5        --
                                                 --------  --------   -------
           Effective income tax rate               (0.4)%     9.1%    (59.4)%
                                                 --------  --------   -------


                                      F-22
<PAGE>




(11) COMMITMENTS AND CONTINGENCIES

     (a) MINIMUM LEASE COMMITMENTS

         The  operations  of the Company are conducted in leased  premises.  The
         Company also leases  various office  equipment.  At September 30, 2004,
         the approximate minimum annual rentals under these leases, which expire
         through fiscal year 2006, were as follows:

                                                               (In thousands)
         Fiscal year ending September 30:
           2005                                                 $       415
           2006                                                         319
           Thereafter                                                    --

         Total rent expense for all operating leases was $406,000, $474,000, and
         $472,000 in fiscal 2004,  2003, and 2002,  respectively,  including $0,
         $27,000, and $40,000  respectively,  paid to a related party affiliate.
         The  operating  lease with the related  party  affiliate  was cancelled
         during fiscal 2003. The Company's  management  believes this lease with
         the affiliate was on terms, which approximated fair market value.

     (b) EMPLOYMENT AGREEMENTS

         The  Company  has  entered  into  employment  agreements  with  its two
         officers,  which  expire in April 2005 and 2006.  Minimum  compensation
         requirements  are  $309,000  and  $113,000  for the fiscal years ending
         September 30, 2005 and 2006, respectively.

                                      F-23


<PAGE>


                  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



The Board of Directors
Global Payment Technologies, Inc



We have audited the accompanying balance sheet of Global Payments Technology Pty
Limited  as  of  June  30,  2004  and  the  related   statement  of  operations,
stockholders'  equity,  and cash flows for the year ended June 30,  2004.  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 audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the 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  audit  provides  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 the Company as of June 30,2004,
and the  results  of its  operations  and its cash flows for the year ended June
30,2004, in conformity with US generally accepted accounting principles.






Pitcher Partners,
Sydney, Australia



1 October 2004






                                       F-24
<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




The Board of Directors and Stockholders
Global Payment Technologies Pty Limited





We have audited the  accompanying  balance sheet of Global Payment  Technologies
Pty  Limited  as of  June  30,  2003  and  the  related  statements  of  income,
stockholders'  equity,  and cash  flows  for each of the  years in the  two-year
period ended June 30, 2003. 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 the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the 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 Pty
Limited as of June 30,  2003,  and the  results of its  operations  and its cash
flows for each of the  years in the two year  period  ended  June 30,  2003,  in
conformity with accounting principles generally accepted in the United States of
America.








KPMG








Sydney, Australia


19 December 2003



                                      F-25
<PAGE>



                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD
                                 Balance Sheets
                             June 30, 2004 and 2003
<TABLE>
<CAPTION>
                               Assets                                                2004             2003
                                                                               ----------------- ---------------
Current assets:
<S>                                                                   <C>      <C>                  <C>
   Cash and equivalents                                              A$              2,761,638       2,267,402
   Trade accounts receivable, less allowances for doubtful
    accounts of A$10,000 and A$10,000 in 2003                                         2,152,016       2,477,200
    Inventories                                                                       4,509,809       7,350,859
    Deferred income taxes                                                               231,943         523,157
    Income taxes receivable                                                             192,545               -
    Receivable from affiliate                                                         1,036,688       1,462,246
    Other current assets                                                                141,340          50,415
                                                                               ----------------- ---------------
                        Total current assets                                         11,025,979      14,131,279
                                                                               ----------------- ---------------
Property, plant and equipment
    Machinery and equipment                                                             360,222         352,870
    Less accumulated depreciation and amortization                                     (172,556)       (130,992)
                                                                               ----------------- ---------------
                        Net property, plant and equipment                               187,666         221,878
                                                                               ----------------- ---------------
                                   Total assets                       A$             11,213,645      14,353,157
                                                                               ================= ===============
                Liabilities and Stockholders' Equity
Current Liabilities:
    Trade accounts payable                                            A$              5,251,550       8,727,631
    Income taxes (receivable)/payable                                                         -         (8,225)
    Accrued liabilities                                                               1,045,963       1,063,045
                                                                               ----------------- ---------------
                          Total current liabilities                                   6,297,513       9,782,451
                                                                               ----------------- ---------------
                          Total liabilities                                           6,297,513       9,782,451
                                                                               ----------------- ---------------
Commitments and contingencies (Note 1) Stockholders' equity:
    Common stock
     Issued and outstanding 20,000 shares in 2004 and 20,000 shares                      20,000          20,000
     in 2003
    Retained earnings                                                                 4,896,132       4,550,706
                                                                               ----------------- ---------------
                 Total stockholders' equity                                           4,916,132       4,570,706
                                                                               ----------------- ---------------
                 Total liabilities and stockholders' equity           A$             11,213,645      14,353,157
                                                                               ================= ===============
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-26


<PAGE>



                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                              Statements of Income

                    Years ended June 30, 2004, 2003 and 2002

<TABLE>
<CAPTION>

                                                                   2004            2003             2002
                                                              --------------- --------------- -----------------
<S>                                                   <C>       <C>              <C>               <C>
   Net sales                                         A$          17,409,545      27,537,178        37,229,261
   Cost of goods sold                                            14,690,273      24,364,738        31,522,890
                                                              --------------- --------------- -----------------
                       Gross profit                               2,719,272       3,172,440         5,706,371

   Selling, general and administrative expenses                  (1,777,565)     (1,937,681)       (1,918,794)
   Related party royalty                                                                  --       (1,307,783)
                                                              --------------- --------------- -----------------
                      Operating income                              941,707       1,234,759         2,479,794

   Other income (expense):
       Interest income                                              140,252         221,318           103,216
       Other sundry income                                           63,240         151,065                --
       Interest expense                                                   -         (4,412)           (39,771)
       Servicing income                                             207,416         105,420            90,135
       Foreign exchange gains                                             -         202,924            45,108
                                                              --------------- --------------- -----------------

                      Income before income taxes                  1,352,615       1,911,074         2,678,482
   Income taxes                                                    (407,189)       (578,232)         (817,779)
                                                              --------------- --------------- -----------------
                      Net income                                    945,426       1,332,842         1,860,703
                                                              =============== =============== =================
</TABLE>

         See accompanying notes to consolidated financial statements

                                      F-27

<PAGE>



                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                       Statements of Stockholders' Equity

                    Years ended June 30, 2004, 2003 and 2002


<TABLE>
<CAPTION>



                                                                                                    Total
                                                                    Common         Retained     Stockholders'
                                                                    Stock          Earnings         Equity
                                                                --------------- --------------- ---------------
<S>                                                       <C>                        <C>             <C>
     Balances at June 30, 2001 (unaudited)               A$             20,000       3,357,161      3,377,161
         Net income (unaudited)                                             --       1,860,703      1,860,703
          Dividends declared                                                --              --             --
                                                                --------------- --------------- ---------------
     Balances at June 30, 2002                           A$             20,000       5,217,864       5,237,864
        Net income (unaudited)                                              --       1,332,842      1,332, 842
        Dividends declared                                                  --      (2,000,000)     (2,000,000)
                                                                --------------- --------------- ---------------
     Balances at June 30, 2003                           A$             20,000       4,550,706      4,570,706
         Net income                                                          -         945,426        945,426
         Dividends declared                                                  -        (600,000)      (600,000)
                                                                --------------- --------------- ---------------
     Balances at June 30, 2004                           A$             20,000       4,896,132      4,916,132
                                                                =============== =============== ===============
</TABLE>

         See accompanying notes to consolidated financial statements


                                      F-28
<PAGE>



                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                            Statements of Cash Flows

                    Years ended June 30, 2004, 2003 and 2002
<TABLE>
<CAPTION>
                                                                            2004            2003            2002
                                                                       --------------- --------------- ---------------
<S>                                                              <C>       <C>                 <C>             <C>
Net income                                                      A$            945,426       1,332,842       1,860,703
  Adjusted to reconcile net income to net cash
     provided by operating activities:
   Depreciation and amortisation of property, plant and equipment              42,209          42,139          34,930
   Decrease /  (increase) in trade accounts receivable                        325,184       2,632,803     (1,389,057)
   Decrease /  (increase) in inventories                                    2,841,050       3,316,850         175,233
   Decrease /  (increase) in other assets                                     (90,925)        146,134           2,363
   Decrease /  (increase) in intercompany receivables                         425,557     (1,462,246)              --
   Decrease in trade accounts payable                                      (3,476,080)     (3,419,624)     (1,103,844)
   Decrease in accrued liabilities                                            (17,082)       (379,767)       (329,759)
   Increase in prepaid expenses                                                     -              --        (10,744)
   Decrease /  (increase) in deferred income taxes                            106,894        (196,742)        (64,596)
                                                                       --------------- --------------- ---------------
              Net cash provided by/ (used in) operating activities          1,102,233       2,012,389       (824,771)
                                                                       --------------- --------------- ---------------
Cash flows from investing activities:
   Capital expenditures, including interest capitalized                       (7,997)       (101,137)        (93,471)
                                                                       --------------- --------------- ---------------
              Net cash used in investing activities                           (7,997)       (101,137)        (93,471)
                                                                       --------------- --------------- ---------------
Cash flows from financing activities:
   Dividends paid                                                           (600,000)     (2,000,000)              --
                                                                       --------------- --------------- ---------------
              Net cash used in financing activities                         (600,000)     (2,000,000)              --
                                                                       --------------- --------------- ---------------
              Net decrease in cash and cash equivalents                       494,236        (88,748)       (918,242)
Cash and cash equivalents at beginning of year                              2,267,402       2,356,150       3,274,392
                                                                       --------------- --------------- ---------------
Cash and cash equivalents at end of year                        A$          2,761,638       2,267,402       2,356,150
                                                                       =============== =============== ===============
</TABLE>

See accompanying notes to consolidated financial statements

                                      F-29
<PAGE>


                 GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                          Notes to Financial Statements

                          June 30, 2004, 2003 and 2002

1. Summary of Significant Accounting Policies and Practices

a)   Description of Business

     Global Payment Technologies Australia Pty Limited (the "Company")
     distributes and services paper currency validating equipment used in gaming
     and vending machines in Australia and other countries. There were no
     significant changes in the nature of the Company's principal activity
     during the fiscal year.

b)   Trade Accounts Receivable

     Trade accounts receivable are recorded at the invoiced amount and do not
     bear interest. The allowance for doubtful accounts is the Company's best
     estimate of the amount of probable credit losses in the Company's existing
     accounts receivable. The Company determines the allowance based on
     historical write-off experience by industry and national economic data.
     Account balances are charged off against the allowance after all means of
     collection have been exhausted and the potential for recovery is considered
     remote. The Company does not have any off-balance-sheet credit exposure
     related to its customers.

     Concentration of credit risk

     The Company's largest customer represented 47% (2003: 48%) of trade
     accounts receivable as of June 30, 2004 and 59% (2003: 70%) of sales for
     the fiscal year ended June 30, 2004. One other customer represented 10% or
     more of net sales and trade accounts receivable as of and for the year
     ended June 30, 2004.

c)   Inventories

     Inventories are stated at the lower cost or market value. Cost is
     determined using the first-in, first-out method for all inventories.

d)   Property, Plant and Equipment

     Property, plant and equipment are stated at cost.

     Depreciation on plant and equipment is calculated on the straight-line
     method over the estimated useful lives of the assets. The depreciation
     rates range from 7.5% to 27% (2003: 7.5% to 27%).

e)   Other Current Assets and Other Assets

     Other assets are comprised of security deposits, prepaid expenses, goods
     and services tax due from the Australian Tax Office and other non-trade
     receivables.

f)   Income Taxes

     Income taxes are accounted for under the asset and liability method.
     Deferred tax assets and liabilities are recognized for the future tax
     consequences attributable to differences between the financial statement
     carrying amounts of existing assets and liabilities and their respective
     tax bases and operating loss and tax credit carry forwards. Deferred tax


                                      F-30
<PAGE>

     assets and liabilities are measured using enacted tax rates expected to
     apply to taxable income in the years in which those temporary differences
     are expected to be recovered or settled. The effect on deferred tax assets
     and liabilities of a change in tax rates is recognized in income in the
     period that includes the enactment date.

g)   Use of Estimates

     Management of the Company has made a number of estimates and assumptions
     relating to the reporting of assets and liabilities and the disclosure of
     contingent assets and liabilities to prepare these financial statements in
     conformity with generally accepted accounting principles. Actual results
     could differ from those estimates.

h)   Impairment of Long-Lived Assets

     Long-Lived assets are reviewed for impairment whenever events or changes in
     circumstances indicate that the carrying amount of an asset may not be
     recoverable. Recoverability of assets to be held and used is measured by a
     comparison of the carrying amount of an asset to estimated undiscounted
     future cash flows expected to be generated by the asset. If the carrying
     amount of an asset exceeds its estimated future cash flows, an impairment
     charge is recognized by the amount by which the carrying amount of the
     asset exceeds the fair value of the asset. Assets to be disposed of are
     reported at the lower of the carrying amount or fair value less costs to
     sell, and depreciation ceases.

     The Company did not recognize any impairment adjustments in fiscal 2004
     (2003: nil; 2002: nil).

i)   Revenue Recognition

     The Company recognises revenue upon shipment of products and passage of
     title to its customers, or at the time services are completed with respect
     to repairs not covered by warranty agreements.

j)   Commitments and Contingencies

     Liabilities for loss contingencies arising from claims, assessments,
     litigation, fines and penalties and other sources are recorded when it is
     probable that a liability has been incurred and the amount of the
     assessment and/or remediation can be reasonably estimated. No such amounts
     were recorded in fiscal 2004, 2003 or 2002.

k)   Advertising expenses

     Advertising expenses are recognized in the statement of income as incurred.

l)   Cash and cash equivalents

     Cash and cash equivalents comprise cash on hand, and cash and term deposits
     with banking institutions. The Term deposits are for a period of 7 days.
     These have been rolled over since year-end. Cash at bank includes cash
     denominated in Australian and US dollars. US dollar denominated bank
     accounts are restated at year-end to spot rates at year-end with the gain
     recognized in the Statement of income.


                                      F-31



<PAGE>



2)   Income Taxes

     All pre tax income is derived from domestic operations.

     Total income taxes for the years ended June 30, 2004, 2003 and 2002
     consists of:

<TABLE>
<CAPTION>
                                                           Current      Deferred      Total
                                                         ------------------------------------
<S>                                             <C>     <C>            <C>             <C>
     Year ended June 30, 2004:                  A$         115,975      291,214      407,189
                                                         ====================================

     Year ended June 30, 2003:                  A$         757,375     (179,143)     578,232
                                                         ====================================

     Year ended June 30, 2002                   A$         882,376      (64,597)     817,779
                                                         ====================================
</TABLE>

     Income tax expense was $407,189, $578,232 and $817,779 for the years ended
     June 30, 2004, June 30, 2003 and June 30, 2002, respectively, and differed
     from the amounts computed by applying the Australian federal income tax
     rate of 30% (2003: 30%; 2002: 30%) to pre tax income as a result of the
     following:

<TABLE>
<CAPTION>
<S>                                                           <C>    <C>          <C>
                                                                         2004         2003
                                                                      -----------------------
     Computed "expected" tax expense                           A$       405,785      573,322
     Increase (reduction) in income taxes resulting from:
        Adjustment to deferred tax assets and
        liabilities for enacted changes in tax laws and
        rates                                                                --           --
        Under/over provision for prior years                                 --           --
        Other, net                                                        1,404        4,910
                                                                      -----------------------
                                                               A$       407,189      578,232
                                                                      =======================
</TABLE>

     The tax effects of temporary differences that give rise to significant
     portions of the deferred tax assets and deferred tax liabilities at 30 June
     2004 and 2003 are presented below.

<TABLE>
<CAPTION>
                                                                         2004               2003

                                                                    At 30% tax rate   At 30% tax rate
                                                                    ----------------------------------
<S>                                                                 <C>               <C>
     Deferred tax assets:
          Accounts receivable principally due to
              allowance for doubtful accounts                  A$         3,000                 3,000
         Inventory                                                       41,183               233,094
         Employee leave entitlements                                     40,226                22,966
         Bonus provision                                                139,620               168,720
         Unrealised foreign exchange movements                          (18,577)              60,877
          Other                                                          26,491                34,500
                                                                    ----------------------------------
                         Total gross deferred tax assets                231,943               523,157
                                                                    ----------------------------------
                         Net deferred tax assets                        231,943               523,157
                                                                    ==================================
</TABLE>


                                      F-32
<PAGE>

     In assessing the realizability of deferred tax assets, management considers
     whether it is more likely than not that some portion or all of the deferred
     tax assets will not be realized. The ultimate realization of deferred tax
     assets is dependent upon the generation of future taxable income during the
     periods in which those temporary differences become deductible. Management
     considers the scheduled reversal of deferred tax liabilities, projected
     future taxable income, and tax planning strategies in making this
     assessment. Based upon the level of historical taxable income and
     projections for future taxable income over the periods, which the deferred
     tax assets are deductible, management believes it is more likely than not
     the Company will realize the benefits of these deductible differences at
     June 30, 2004.


3)   Pension and Other Postretirement Benefits

     The Company contributed to a defined contribution superannuation fund on
     behalf of its employees. Contributions are based upon Australian statutory
     minimum percentage of salary plus any additional contributions included in
     employee's employment agreement. The company contributed A$81,692, A$76,127
     and A$79,740 during fiscal years 2004, 2003 and 2002 respectively to the
     fund. There were no contributions outstanding at year-end.

     The Company does not sponsor any other post employment benefits for its
     employees.

4)   Accrued Liabilities

<TABLE>
<CAPTION>
                                                                     2004          2003

<S>                                                         <C>   <C>          <C>
     Goods and services tax payable                         A$       160,538      206,336
     Accrued expenses                                                676,340      705,411
     Provision for employee leave                                    134,085       76,554
     Warranty provision                                               75,000       75,000
                                                                  ------------------------

                                                            A$     1,045,963    1,063,301
                                                                  ========================
</TABLE>

5)   Commitments
<TABLE>
<CAPTION>

     Non cancellable operating lease commitments

     Future operating lease commitments not provided for             2004         2003
     in the financial statements and payable:
<S>                                                         <C>   <C>          <C>
     Within one year                                        A$       210,000      210,000
     One to two years                                                210,000      210,000
     Two to three years                                                    -      210,000
                                                                  ------------------------
                                                            A$       420,000      630,000
                                                                  ------------------------
</TABLE>

     The Company leases property under a non-cancellable four year operating
     lease expiring in 2006. There is an option to renew the lease for a further
     four years at the completion of the lease. The Company has not entered into
     any capital leases.

                                      F-33
<PAGE>




6)   Related parties

     The company is 50% owned by Global Payment Technologies, Inc, a company
     incorporated in the United States of America. The other 50% is owned by a
     private trust of which the Managing Director of the company is a
     beneficiary. During the year, the Company purchased inventories from Global
     Payment Technologies, Inc., which totalled $14,106,885 (2003: $24,880,000).
     An amount ofA$5,123,728 is included in Trade accounts payable at balance
     date.

               As of June 30, 2004 the Company had receivables from eCash
               Holdings Pty Limited of $1,036,688, (2003: $1,462,246) which were
               primarily attributable to payments made by the Company on behalf
               of eCash Holdings Pty Limited to employees and vendors of eCash
               Holdings Pty Limited. Interest is charged on the balance at the
               rate of 7% p.a.
               During the year, the Company had purchases from to eCash Holdings
               Pty Limited totalling $nil (2003: $667,600).
               During the year, the Company had sales to eCash Holdings Pty
               Limited totalling $334,460 and the group $415,784 (2003: nil). An
               amount ofA$208,872 is included in Trade accounts receivable at
               balance date.
               For the year ended June 30, 2004, the Company charged eCash
               Holdings Pty Limited a management fee for administrative tasks
               conducted by the Company on behalf of eCash
               Holdings Pty Limited, which is included in other sundry income in
               the accompanying statement of income.
               eCash Holdings Pty Limited is owned 35% by Global Payment
               Technologies, Inc., 35% by the private trust of the Managing
               Director of the Company, and 30% by an unrelated third party.

               There were no other transactions with related parties.


                                      F-34




<PAGE>

<TABLE>
<CAPTION>


                                                                                                                Schedule II
                                             GLOBAL PAYMENT TECHNOLOGIES, INC.
                                       Schedule of Valuation and Qualifying Accounts

             Column A                       Column B              Column C              Column D              Column E
------------------------------------    ------------------    ------------------    ------------------    ------------------
                                           Balance at            Charged to           Deductions -             Balance
                                            beginning             costs and             write off              at end
            Description                     of period             expenses             of accounts            of period
------------------------------------    ------------------    ------------------    ------------------    ------------------
Allowance for doubtful
     accounts:
<S>                                    <C>                   <C>                   <C>                   <C>
        September 30, 2002           $            169      $            108      $            100      $            177
        September 30, 2003                        177                   127                    70                   234
        September 30, 2004                        234                   102                    86                   250

Warranty Reserve
        September 30, 2002                        382                   281                   323                   340
        September 30, 2003                        340                   327                   321                   346
        September 30, 2004                        346                   198                   246                   298
See accompanying independent auditors' report.


</TABLE>
























                                      S-1