UNITED STATES
                       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, 2007

                                       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.)

                    170 Wilbur Place, Bohemia, New York 11716
                   ------------------------------------------
               (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code    631-563-2500
                                                      ------------

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)


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<PAGE>


     Indicate by check mark if the registrant is a well-known  seasoned  issuer,
as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

     Indicate by check mark if the  registrant  is not  required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]

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

     Indicate by check mark 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 a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large  accelerated  filer" in Rule 12b-2 of the Exchange  Act.  (Check
One): Large Accelerated Filer [ ] Accelerated Filer [ ] Non-Accelerated  Filer
[X]

     Indicate by check mark whether the  registrant is shell company (as defined
in rule 12b-2 of the Act). Yes [ ] 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
March 31, 2007, was approximately $6,450,225.

     As of December 31, 2007, the registrant had a total of 6,497,185  shares of
Common Stock outstanding.

     DOCUMENTS INCORPORATED BY REFERENCE

Portion of the Company's Proxy Statement for its 2008 Annual Meeting are
incorporated by reference into Part III of this Report



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<PAGE>


                                     PART I

Item 1.    Business
-------    --------

General

Global  Payment  Technologies,  Inc. (the  "Company") is a Delaware  corporation
established  in 1988. We design and  manufacture  currency  validation  systems,
including  paper currency  validators and related paper currency  stackers,  and
sell our  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 we know
of no commercially available validator that is  counterfeit-currency-proof,  our
validators  and stackers  offer  significant  protection  against  tampering and
counterfeit currencies and provide tamper-evident storage of validated currency.
Our  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. Our
products offer a highly  competitive  level of  performance  and are designed to
provide ease of maintenance and repair.

Fiscal 2007 has been a turbulent  year for us as we continued  to struggle  with
operating losses and cash flow deficiencies.  Our senior loan with Laurus Master
Funds, which originally came due in March 2007 was extended until June 2007, and
extended  again until  November  2007. In exchange for the  extensions,  we paid
$25,000  in cash and  issued  275,000  shares  of fully  paid and  nonassessable
restricted common stock along with warrants immediately  exercisable to purchase
75,000 shares of common stock at $0.01 per share. The extensions did not provide
us with  any  additional  liquidity.  On  June 1,  Stephen  Nevitt  resigned  as
President and CEO and William McMahon was named interim  President and CEO along
with his  duties as Chief  Financial  Officer.  In July 2007 we  relocated  to a
smaller  manufacturing  facility  which is more  appropriate  to the size of our
business.  While we continued  the  development  of our new  products,  our cash
constraints  slowed  the  process  and we were not able to launch as  originally
planned. In addition,  we had delays in receiving raw materials from our vendors
which  delayed our ability to ship product on a timely  basis.  Throughout  this
time period, we continued to negotiate for additional funding.

On January 15,  2008,  the Company  entered into a series of  transactions  with
entities  affiliated  with  Andre  Soussa,  Chief  Executive  of Global  Payment
Technologies  Australia  ("GPTA"),  the  Company's  largest  customer.  GPTA has
advanced $440,000 pursuant to a Secured Term Note ("Secured Note") which matures
on January 15, 2009.  Interest only is payable monthly at prime plus 3%, subject
to a minimum of 9% per  annum.  The loan is  secured  by  substantially  all the
assets of the  Company.  Under the terms of the  Secured  Note,  the  Company is
required to notify GPTA in writing of any  outstanding  expense or payment to be
paid by the  Company in excess of $1,000  and the  Company  is  prohibited  from
making any such payment or payments in the aggregate of more than $5,000 without
GPTA's prior written approval.



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<PAGE>


In addition,  an affiliate  controlled  by Andre Soussa will make an  additional
$400,000 investment after the filing by the Company of its Annual Report on Form
10-K. At the close of the  transactions,  Mr. Soussa and his affiliates  will be
the largest  shareholders of the Company. Mr. Soussa will become Chairman of the
Board and Chief  Executive  Officer as part of an overall  restructuring  of the
Company.  In  addition,  four of the  five  members  of the  existing  Board  of
Directors  will be replaced.  Mr.  Richard  Gerzof will remain as a director but
will relinquish his role as Chairman.  Mr. William McMahon,  previously  interim
President  and CEO, and CFO will remain with the Company as President  and Chief
Financial  Officer.  For additional  information about these  transactions,  see
"Business Item 1. Recent Developments".

Until the fourth quarter of fiscal 2006 we had a 50% non-controlling interest in
GPTA. This entity is responsible for sales and service of the Company's products
in Australia  and New Zealand on an exclusive  basis.  On September 2, 2006,  we
sold our  entire  interest  for a total of  approximately  $1,791,000,  of which
$1,511,000  was  received in cash at closing and  $280,000  was placed in escrow
which was released on the one year anniversary of the transaction. The purchaser
was ACN 121 187 068 Pty Limited ("ACN"), a corporation  organized under the laws
of New South  Wales,  Australia  and is  related  to  Exfair  Pty  Limited,  the
registered  holder of the remaining 50% of the issued and outstanding  shares of
GPTA. In addition we entered into a 5 year exclusive  distributor agreement with
GPTA. The distributor agreement provides GPTA the exclusive  distribution rights
in Australia, Asia, New Zealand, and the Pacific Rim as well as exclusive rights
to  distribute  Aristocrat  worldwide.  GPTA will be  responsible  for providing
sales, technical support, installation,  service and repair functions as well as
maintaining sufficient inventory stock to provide for the territories.

In June 2002, the Company and two other shareholders  formed eCash Holdings Pty.
Ltd. ("eCash"),  an Australian based company.  This entity was formed to market,
distribute,  service and support  Automated Teller Machines across Australia and
New  Zealand.  We owned 1,050 shares  which  represented  a 35% interest in this
entity.  On August 25, 2006,  we sold four hundred and fifty (450) shares to ACN
for a total  purchase  price of $123,138 and six hundred (600) shares to ACN 121
187 157 Pty Limited, a corporation  organized under the laws of New South Wales,
Australia,  for a total purchase price of $162,723.  The purchase price for each
sale was based on our equity in the  respective  business  units as of April 30,
2006.

We own 100% 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 and the Middle East.

In April 1999, we acquired a 25% equity interest in Abacus Financial  Management
Systems,  Ltd.  ("Abacus-UK"),   a  UK-based  software  company.  Abacus-UK  has
developed a cash management system, of which our validators are a key component,
primarily  intended to serve the retail  market.  In February 2005, we exchanged
our 25% equity interest for a 12.5% ownership interest in Evolve Corporation PLC
("Evolve-UK").  The  exchange  of  ownership  did  not  require  us to  make  an
additional  investment.  Evolve-UK  owns 100% of Abacus-UK and Evolve 100, which
provides  integrated  and  stand-alone  cash  management  systems  to the retail
industry for coin currency handling. In addition, the Company and a principal of
Evolve-UK had formed Abacus Financial Management, Inc. USA ("Abacus-USA"), which
is 80%  owned  by us and has  non-exclusive  rights  to  distribute  Evolve-UK's
product in the USA. To date, Abacus-USA has not had material operations.



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<PAGE>


In fiscal 2004,  we  registered  a branch in Moscow,  Russia  ("GPT-Russia")  to
provide local service for our 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.

Our net sales grew from approximately  $35,000 in fiscal 1989 (our first year of
operations)  to our 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 our
affiliates.  During  fiscal  2000  we  significantly  reduced  inventory  at our
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 our shorter  lead-times on our
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 our new  vending  product
which  commenced  in January  2003.  With the  launching of our new beverage and
vending  product in fiscal  2003,  we achieved an increase in our  beverage  and
vending  sales to $5.7  million as  compared  to $2.2  million  in fiscal  2002.
Beverage and vending products  represented  21.7% of our sales in fiscal 2003 as
compared with 8% in fiscal 2002.



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<PAGE>


In fiscal 2004,  sales  decreased  6.5% to $24.4  million  primarily due to $4.3
million  in lower  sales of our  gaming  products  to our  Australian  affiliate
offset,  in part, by a $1.7 million  increase in sales of our 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 for fiscal 2005  increased by 6.2% to $25.886  million.  This increase
was due to increased sales of $3.821 million to the gaming market, primarily the
result of increased demand from our Australian  affiliate and in Russia,  offset
by decreased  sales of $2.316 million to the beverage and vending  market,  as a
result of significant cigarette tax increases in Germany.

Gaming  sales  for  fiscal  2005 were  $23.150  million,  or 89.4% of sales,  as
compared with $19.304 million,  or 79.2% of sales, in fiscal 2004.  Beverage and
vending  sales  for  fiscal  2005 were  $2.736  million,  or 10.6% of sales,  as
compared with $5.077 million, or 20.8% of sales, in fiscal 2004.

Net sales for fiscal 2006 decreased 45% to $14.3 million.  The decrease in sales
was  mainly due to the  restrictions  put on gaming in Russia and a slow down in
the market in Australia.  Gaming sales were $11.3 million in fiscal 2006, or 79%
of sales, as compared to $23.150  million or 89.4% in fiscal 2005.  Beverage and
vending sales were $3.0 million,  or 21% of sales, in fiscal 2006 as compared to
$2.736 million or 10.6% of total sales in fiscal 2005.

Net sales for fiscal 2007 decreased 18% to $11.6 million.  The largest  decrease
in sales was in the Russian market which  continues to be adversely  affected by
the  restrictions  put on gaming by the Russian  government.  Gaming  sales were
$10.0 million in fiscal 2007 or, 86% of sales, as compared to $11.3 million,  or
79% of sales, in fiscal 2006.  Beverage and vending sales were $1.6 million,  or
14% of sales,  in fiscal 2007 as compared to $3.0 million,  or 21% of sales,  in
fiscal 2006.

Our  international  sales  amounted to 91%,  90% and 93%, of net sales in fiscal
2007, 2006 and 2005, respectively.

Marketing Strategy

We have  continued  to focus our  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.  GPT's  approach in the worldwide  gaming
market was  initially  a "niche"  strategy  that  allowed us 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 "SA-4" product in fiscal
2005,  this strategy has continued  with  particular  attention  paid to markets
which have the largest opportunity for growth. We have both gained new customers
and retained existing  customers based on our strength  internationally  and our
reputation for working closely to adapt to customers' needs. We will continue to
attempt to  strengthen  and grow our  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 we have 96 country-specific databases and 15
multi-country  databases,  which  we  believe  is one of  the  largest  database
libraries in the industry. Further, we plan to continue to build a large library
of databases for our newest  products,  as well as adding to existing  Argus and
Aurora databases.


                                       6

<PAGE>


After the  launch of our  Aurora  product  in fiscal  2003,  we  experienced  an
increase in Aurora  revenue from $5.3 million in fiscal 2003, to $7.0 million in
fiscal 2004,  to $8.1  million in fiscal  2005.  In fiscal 2003 we 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,  since the
last  quarter of fiscal 2004 the overall  German  tobacco  vending  industry has
faced  significant  volume  shortfalls due to government  increases in cigarette
taxes. In fiscal 2005, we successfully  penetrated sales into the Russian gaming
market with our Aurora  product,  originally  dubbed the  "beverage and vending"
product.  However,  in fiscal 2006,  as a result of  restrictions  placed on new
casinos in the  Russian  market,  sales of the Aurora  product  declined to $3.4
million.  In fiscal 2007 Aurora sales  continued to decline to $1.8 million.  In
2007 we introduced a faster version of the Aurora called the Falcon,  which uses
a Digital  Signal  Processor  (DSP)  chip.  This  product is targeted to low end
casinos, kiosks, payment systems and amusement games. We will continue to search
for new growth  opportunities both domestically and  internationally for all our
products.  Further,  we launched SA-4 in fiscal 2005 and believe it will provide
an opportunity  for  penetration in the domestic  gaming market as well as other
international  markets.  The SA-4 model is targeted to the global  casino market
and incorporates  the features of Argus with a faster Digital Signal  Processing
(DSP) chip which  allows for  currency  validating  in less than one second.  In
fiscal 2006, we had sales of $4.3 million for our SA-4 validator.

In the gaming venue,  we market our 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 our  validator  products will be specified as the product of
choice in new orders. We have also provided direct operator  technical  training
and participation in seminars with our OEM customers.  By marketing  directly to
the  end-users in  conjunction  with the OEMs,  we expect our products will gain
acceptance as our  customers'  gaming  machines gain entry into major casinos or
regions previously  dominated by currency  validators of our competition.  Since
1999,  we have offered  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 our OEM customers,  and are intended to broaden  awareness of
the Company and our products within the gaming industry and as a result increase
sales.  Additionally,  we are focusing our marketing  efforts on explaining  the
technical  features and customer support programs of current and future products
in order to further differentiate  ourselves from the competition.  This overall
strategy  allows our  products  to  continue  to  demonstrate  the high level of
performance and quality achieved in many markets throughout the world.



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<PAGE>


Our  marketing  strategy for the  significantly  larger  worldwide  beverage and
vending industry is very similar to that of our gaming  strategy.  During fiscal
2002, we initiated sales of the Aurora  product.  During fiscal 2003, with sales
of our new Aurora product  commencing in January 2003, we achieved a significant
$3.5 million increase in beverage and vending sales to $5.7 million.  Throughout
fiscal 2004,  2005,  2006 and 2007, we marketed our Aurora  product  through our
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 us to achieve  further  diversification  and, if
successful,  could  reduce our  reliance on any one market as well as expand our
customer base.

Our 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 our products the market standard for currency
validation products.  We successfully pursued this strategy in Australia,  South
Africa,  Latin  America and Russia where our products are accepted in the gaming
market.  In order to provide  service  and  support,  we have sales and  service
offices in London  and  Moscow as well as  distributors  in  Australia,  Russia,
Italy, Southeast Asia, Latin America, the Middle East and South Africa.

To date,  our  continuing  sales  have 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 our future growth
until and unless we develop other products that are not solely  dependent on the
use of paper or simulated paper currency.  We are 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 we will be able to  successfully  develop and market
such new products and systems.


Products

Since  inception,  we have  endeavored,  through  research and  development  and
manufacturing  efforts,  to provide products that meet the specific  performance
requirements of our customers.  These  requirements are continually  evolving as
the  markets  for  currency  validators  continue  to grow and as  technological
advances are  incorporated  into the products'  design.  We spent  approximately
$713,000,  $333,000 and $55,000 during fiscal 2007, 2006 and 2005, respectively,
on research and development.  Our research and development consists primarily of
efforts to develop new currency  validators,  expand our product  lines into new
applications, as well as to achieve improvements in technology.



                                       8
<PAGE>


Our product  development  efforts  have been focused on the design of our latest
generation of validator products,  the first of which was Argus(TM),  our gaming
validator.  We began selling  Argus(TM) in January  2001.  Sales of this product
represented  19%, 63%, 54%, 51% and 50% of unit validator  sales in fiscal 2001,
2002,  2003,  2004 and 2005,  respectively.  We launched the SA-4 in late fiscal
2005.  The SA-4,  an improved  Argus  validator  with a faster  processor  chip,
achieved unit sales  representing  36% and 56% of unit validator sales in fiscal
2006 and 2007, 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,  we
commenced  a sales  and  marketing  campaign  which led to sales  commencing  in
January  2003  on our  new  product  called  "Aurora".  Sales  of  this  product
represented  43%, 48%, 47% and 33% of unit validator  sales in fiscal 2004, 2005
2006 and 2007,  respectively.  For Argus(TM) and Aurora products, we have, since
achieving   technological   feasibility   through  a  detailed  program  design,
capitalized  the cost of  software  coding  and  development,  and  reflect  the
amortization of these costs in cost of sales.

Our principal  products in fiscal 2007  included the SA-4,  Argus(TM) and Aurora
and  a  wide  range  of  comprehensive   currency  databases  and  note  stacker
configurations.  In fiscal  1997,  we planned  for a shift in demand  toward our
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% of unit sales,  respectively.
The Argus product had been designed to be a drop-in  replacement  for Generation
II products and this focused toward bringing new  technological  features to the
marketplace.  During fiscal 2002 and fiscal 2003,  sales  substantially  shifted
from our  Generation  II  product  line to our  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 which
coupled  with  our  increased  marketing  efforts  on  Argus,  rather  than  our
Generation II product line,  resulted in an increased  inventory  reserve in the
fourth quarter of 2003.  During fiscal 2004, we commenced a phase out program on
this product,  however;  we will maintain field service and support for warranty
repairs  for several  more years.  We believe we have  adequately  reserved  for
inventory  obsolescence  for the shift in demand from our  Generation I products
and Generation II products to our Generation III products.

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. The
Argus  sensor  system has our 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). The Generation III
product line offers a "soft drop  analyzer"  ("SDA")  option.  This patented SDA
feature  allows  the note  stacker  cassette  to  maintain  and  track  specific
information  such as  currency  or  coupons  in the  cassette  by  quantity  and
denomination;  the specific  machine or game that the cassette was removed from;
the acceptance rate of the validator;  and time-in/time-out of the cassette from
the gaming machine.  This  information can be easily  downloaded,  via a docking
station   provided   by   us,   to  a   personal   computer   allowing   instant
feedback/tracking for the machine operator.



                                       9
<PAGE>


Aurora is our 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 our patented RGBI optical array.  With field
trials  completed in the fall of 2002 and sales commencing in January 2003, this
product  quickly  replaced  most  sales of our M-125 and  M-150  products.  This
product originally  targeted for the beverage and vending industry has also been
aggressively  marketed in the  un-regulated  gaming market in 2004 and 2005 with
substantial  penetration.  We continued  marketing efforts in both venues during
fiscal  2006.  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.

In fiscal 2005 we launched the SA-4. 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 sensor system has our 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.

In fiscal 2007,  we launched our Falcon  currency  validator  which uses Digital
Signal  Processor  (DSP)  technology to achieve fast reliable note  recognition.
With our proven patented RGBI Optical  Technology,  Falcon can validate currency
for most  countries.  Falcon  was  designed  as a faster  version  of the Aurora
validator  and is targeted  for low end  casinos,  kiosks,  payment  systems and
amusement games.

Product Performance and Warranties



                                       10
<PAGE>


Our  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 our Generation III validators (Argus, Aurora, Advantage
and SA-4).  The Company or our authorized  service agents will repair or replace
any units that require warranty  service.  We do not warrant that our validators
will reject all counterfeit currencies and believe that there is no commercially
available validator that is  counterfeit-currency-proof or warranted as such. To
support our  increasing  international  market  presence,  we have  expanded our
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 our primary
product support in these markets is in the form of warranty parts. Over the last
three years,  our cost of  warranting  our  products  has varied  primarily as a
direct result of the increase or decrease in the unit sales,  as well as product
performance.  Warranty  liability as of September 30, 2007 and 2006 was $108,000
and  $309,000,  respectively,  which  represents  actual  costs  incurred and an
estimate of future costs to be incurred.

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 our primary sales and marketing efforts in
both the domestic and international  markets.  We have  company-owned  sales and
service offices in London, Moscow and Lima, Peru and exclusive  distributors for
the key markets of Australia,  New Zealand and the Pacific Rim. In addition,  we
have distributors in Russia,  Italy,  Southeast Asia, Latin America,  the Middle
East and South Africa.  The overall sales and service network provides effective
international   coverage  for  our  products  and  customers  and  reflects  our
commitment to providing superior service worldwide.

Customer Concentration

During fiscal 2007, our largest customer,  GPTA, accounted for approximately 41%
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 86% of our revenues, with the remaining 14% primarily from product
applications in the beverage and vending  industry.  We 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  our  customer  base and  developing  new products to
increase the market size we can market to, such as domestic  gaming and the mass
market vending applications. Until such initiatives are achieved, we are at risk
that lower  demand for any one  product  or market,  or a loss of a  significant
customer, can substantially impact our revenues and net income.



                                       11
<PAGE>


Manufacturing

From 1995 through June 30, 2007, our operations had been conducted from a 44,000
square foot leased facility,  which housed the manufacturing and  administrative
functions in Hauppauge,  New York. As of July 2, 2007 our  operations  have been
conducted from a leased facility, currently 25,550 square feet, which housed the
manufacturing and administrative  functions in Bohemia, New York. Annual savings
as a result of the move is estimated to be $250,000.

Our 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.
We routinely test all components and have extensive "burn-in" procedures for the
final assembled product. Direct control over fabrication, via our key suppliers,
and testing permits us to shorten our production  cycle and protect patented and
proprietary  technology.  During fiscal 2000, we  transitioned  a portion of our
manufacturing to demand flow technology. In addition, we have evaluated and will
continue  to  evaluate  our  suppliers  in an effort to reduce our total cost of
manufacturing, a process that may include vendor consolidation and outsourcing.

As we began our transition to the Argus product line in fiscal 2001, we 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 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, our  introduction  of our 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. We did,  however,  take action to  significantly
reduce our  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, our higher
priced purchased components. In fiscal 2004, we continued our efforts to further
reduce  costs  and to  improve  the  margin  on our  Aurora  product,  and while
improvements  in  purchasing  costs  and  manufacturing  efficiencies  had  been
achieved by the end of fiscal 2004,  the benefits  were  substantially  realized
during  fiscal 2005.  During  fiscal 2006 and 2007,  we continued our efforts to
reduce product costs, including potential outsourcing,  but the most significant
factor affecting our gross profit  percentage was the unit sales levels achieved
and their relationship to manufacturing  costs, as well as any impact from sales
and  marketing  efforts to achieve  additional  market share  and/or  reduce our
current inventory levels.

We  depend 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.  We believe  that  concentrating  our
purchases from our existing suppliers provides, in certain cases, better prices,
better  quality  and  consistency  and more  reliable  deliveries.  We  maintain
on-going  communications  with our suppliers to prevent  interruptions in supply
and, to date,  generally have been able to obtain adequate  supplies in a timely
manner. Many of the electronic components we use, including our microprocessors,
are widely used in many applications and are available from a number of sources.
However,  the short wave length light  source that forms a critical  part of our
optical scanning device is now  commercially  available from only a very limited
number of suppliers.  We believe that if such supply were to become unavailable,
our 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 our results of operations.



                                       12
<PAGE>


Competition

The market for our products is very  competitive  and the number of  competitors
and  their  product  offerings  has  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.  Similar  competitors are Japan Cash Machines Co., Ltd.  ("JCM") and
Mars  Electronics  International  ("MEI"),  entities  that have products able to
serve both the gaming and the beverage and vending marketplaces.

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,  JCM,  Ardac,
International Currency Technologies, Sanyo, Conlux, Coegis and Cashcode Company,
Inc.  ("Cashcode")  compete  with us in the  international  beverage and vending
market.

The largest supplier of validators used in the domestic gaming and lottery
markets is JCM. Internationally, we compete 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. We have
focused our marketing efforts on the higher-priced domestic and international
gaming validator business and compete on the basis of service, quality,
durability and performance while maintaining a high level of protection against
tampering and counterfeit currencies.



                                       13
<PAGE>


Historically  we have been more  willing to  address  smaller  markets  than our
larger competitors and expect to encounter increased  competition as the markets
addressed by our products  continue to grow. Also, we have been willing to adapt
our products to a variety of OEMs, which has allowed us to be flexible to expand
when new markets  open up to sales.  We believe  that  performance,  quality and
protection against tampering and counterfeit  currency are as important as price
as competitive factors in the worldwide gaming marketplace.

Intellectual Property

We rely on  certain  proprietary  know-how  and trade  secrets  to  protect  our
technology. Important components of this proprietary information are our library
of distinguishing  characteristics of the currencies,  which our validators scan
and   validate,   and  our   proprietary   algorithms.   We  have  entered  into
non-disclosure and secrecy agreements with all of our employees having access to
this technology.

We hold ten U.S.  patents as follows:  design for "Escrow Box for Coin  Operated
Machines,"  U.S.  Patent No.  D283,518  issued April 22, 1986;  "Paper  Currency
Acceptor  and Method of Handling  Paper  Currency  for Vending  Machines and the
Like," U.S. Patent No. 4,884,671 issued December 5, 1989;  "Anti-fraud  Currency
Acceptor," U.S. Patent No. 5,259,490 issued November 9, 1993; "Bill Accumulating
and Stacking  Device," U.S.  Patent No.  5,322,275  issued June 21, 1994;  "Soft
Count Tracking  System," U.S. Patent No. 5,630,755  issued May 20, 1997;  "Paper
Currency  Validator  (Side-Looking  Sensors)," U.S. Patent No.  5,806,649 issued
September 15, 1998;  "Electrical  Switch  Connectors," U.S. Patent No. 5,842,879
issued December 1, 1998; "Stacker Mechanism for Stacking Bank Notes" U.S. Patent
No. 5,899,452 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 our 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 we filed a reissue
application  with the U.S. Patent and Trademark  Office to amend and broaden the
claims of U.S. Patent No. 5,630,755.

In addition to our U.S.  patents and pending  application,  we have also applied
for  patent  protection  in  a  large  number  of  international   markets.   If
corresponding  foreign patents are obtained, we believe that these patents could
provide important protection for certain technological advantages our validators
possess in  international  markets.  However,  we do not believe that we 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.  We have 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 we have 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.



                                       14
<PAGE>


In September  2006, we announced that we had filed for patents on  revolutionary
new optical  technology  expected to be unveiled in a new product  launch during
fiscal 2008.

We have licensed certain patented proprietary technology covered by U.S. Patent
No. 5,630,755 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,  we entered into a  Cross-License  Agreement  with JCM whereby we
granted JCM a non-exclusive,  royalty-free license for U.S. Patent No. 5,630,755
and JCM granted us 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 us.

Although we have 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 us in the future or that any such
assertion  may not require us 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,   we  are  indirectly  subject  to  such
regulations  that  are  reflected  in  customer   purchase  orders  or  customer
specifications. We believe that we are in full compliance with such regulations.
Any failure to comply with such  regulations,  however,  could have a materially
adverse effect on our results of operations.

Employees

On  December  31,  2007  in our  Bohemia,  NY  location,  we  had 71  employees,
consisting of 2 executives;  4 sales and customer  service  representatives;  19
engineers and software  developers,  and technical  support  representatives;  6
materials, quality control and quality assurance personnel; 6 administrative and
clerical personnel; and 34 assembly/manufacturing personnel. In addition we have
6 employees in the UK and 2 technicians in Moscow.  We believe our  relationship
with our employees is good.


Recent Developments

On January 15, 2008, Global Payment  Technologies,  Inc. (the "Company") entered
into a Securities Purchase Agreement (the "Purchase  Agreement") with Exfair Pty
Ltd, an Australian  company  ("Exfair") and GPTA. The transactions  contemplated
thereunder are expected to be consummated at two closings (as discussed below).

First Closing



                                       15
<PAGE>


At the first  closing on January  15, 2008 (the  "First  Closing"),  the Company
issued to GPTA a one-year  secured term note in the principal amount of $440,000
(the "Secured  Note") that bears interest at a rate equal to the prime rate plus
3.0%  (provided,  that the  interest  rate  shall not be less than  9.0%) and is
secured by all the assets of the Company  pursuant to a Security  Agreement (the
"Security Agreement"). Additionally, the Company entered into a Voting Agreement
with Exfair and  certain  director-stockholders  of the  Company,  wherein  such
stockholders  agreed to vote in favor of (i) the election of certain  persons to
the  Board of  Directors  of the  Company  and (ii) an  amendment  to  Company's
Certificate  of  Incorporation  establishing  a class  of  Preferred  Stock  (as
discussed below).  Additionally,  the Company entered into a Technology  License
Agreement with GPTA, pursuant to which the Company has agreed to grant a license
to GP Australia to utilize certain  databases and proprietary  operating systems
if the  Company is unable or willing to  continue  to provide  support  for such
databases and operating systems of the Company,  and the parties thereto further
agreed that if the Company commences  bankruptcy  proceedings,  then the Company
would permit GPTA to duplicate any of the Company's  intellectual property as of
the  commencement  of such  bankruptcy  proceedings.  GPTA and the Company  also
agreed to make certain technical amendments to the Distribution  Agreement dated
September 1, 2006.

 Second Closing

At the second closing,  which will only occur upon the Company filing its Annual
Report on Form 10-K with the Securities and Exchange  Commission  (the "SEC") by
the date set forth in the Purchase Agreement (the "Second Closing"), the Company
will issue (i) a  Convertible  Note (the  "Convertible  Note") in the  principal
amount of  $400,000  to Exfair,  which note may be  converted  into two  million
shares of Series A Convertible  Preferred Stock, par value US$0.01 per share, of
the Company (the "Preferred  Stock") and (ii) a four-year  Common Stock Purchase
Warrant  (the  "Warrant")  to purchase  5,784,849  shares of Common Stock of the
Company at an exercise price of $0.28 per share. The Convertible Note matures in
June 2009.

The Company's failure to file its Annual Report on Form 10-K with the SEC by the
date set forth in the Secured Note  constitutes  an event of default  thereunder
which  would  allow  GPTA  to  accelerate  the  Secured  Note  and  declare  all
indebtedness, including principal, accrued interest and all other payments under
the Secured Note to be immediately due and payable.

Effective as of the  consummation  of the Second  Closing,  all current  Company
directors  except  Richard  Gerzof will resign and new directors  appointed.  In
addition,  the Company will enter into an Employment  Agreement with Mr. Soussa,
pursuant to which he will be employed as the Company's Chief  Executive  Officer
for a two-year term  commencing  on the date of the Second  Closing at an annual
base salary of  $300,000.  Mr.  Soussa will also be awarded  options to purchase
500,000  shares of the Company's  Common Stock in accordance  with the Company's
stock option plan.  In  connection  with the  transactions  contemplated  by the
Purchase  Agreement,  effective as of the Second  Closing,  William McMahon will
resign as a director of the Company and as its Chief Executive Officer.  William
McMahon will remain at the Company as its President and Chief Financial  Officer
and enter into a new  Employment  Agreement with the Company for a two-year term
with an annual base salary of $200,000. Mr. McMahon will also be awarded options
to purchase  250,000 shares of the Company's Common Stock in accordance with the
Company's stock option plan.



                                       16
<PAGE>


The Company has agreed to seek the approval of the  stockholders  of the Company
to amend the  Certificate  of  Incorporation  to  authorize a class of Preferred
Stock.  Upon the  approval of such  amendment  and the filing  thereof  with the
Secretary  of  State  of the  State  of  Delaware,  the  Convertible  Note  will
automatically  be  converted  into  2,000,000  shares  of  Series A  Convertible
Preferred Stock, par value US$0.01 per share,  with such rights and preferences,
including, but not limited to:

(a) Voting  Rights.  During  the first 18 months  after the  designation  of the
Series A Preferred Stock,  each holder of shares of the Series A Preferred Stock
shall be  entitled  to five (5) times the number of votes equal to the number of
shares of Common  Stock into which such  Holder's  shares of Series A  Preferred
Stock could be converted  and after such first 18 month  period,  each holder of
shares of the Series A Preferred  Stock shall be entitled to the number of votes
equal to the number of shares of Common Stock into which such Holder's shares of
Series A Preferred  Stock could be  converted.  During the first 18 months after
the designation of the Series A Preferred Stock, so long as any shares of Series
A Preferred Stock are outstanding, the holders of Series A Preferred Stock shall
be entitled to designate three (3) members of the Board of Directors. During the
first 18 months after the Series A Preferred Stock has been  designated,  if the
number of members of the Board of  Directors is increased to more than five (5),
the number of directors  designated  by the holders of Series A Preferred  Stock
shall increase such that the Series A Preferred Stock shall designate a majority
of the number of authorized Board of Director members.

(b)  Dividends.  The Series A Preferred  Stock will,  with respect to payment of
dividends and rights upon liquidation,  dissolution or winding-up of the affairs
of the Company,  rank senior and prior to the Common  Stock of the Company,  and
any  additional  series of preferred  stock which may in the future be issued by
the  Company  and  are  designated  in  the  amendment  to  the  Certificate  of
Incorporation  or the  certificate of designation  establishing  such additional
preferred stock as ranking junior to the Series A Preferred  Stock.  The holders
of the Series A Preferred  Stock will be entitled to receive  dividends if, when
and as  declared  by the Board of  Directors  from time to time,  and in amounts
determined by the Board of Directors;  provided,  however, no dividends shall be
paid on any share of Common  Stock unless a dividend is paid with respect to all
outstanding  shares of Series A Preferred Stock in an amount for each such share
of Series A Preferred  Stock equal to or greater  than the  aggregate  amount of
such  dividends  for all  shares of Common  Stock  into which each such share of
Series A Preferred Stock could then be converted.

(c) Liquidation  Value.  The  liquidation  value per share of Series A Preferred
Stock,  in case of the  voluntary or  involuntary  liquidation,  dissolution  or
winding-up  of the  affairs of the  Company,  will be an amount  equal to $0.20,
subject to adjustment in the event of a stock split,  stock  dividend or similar
event applicable to the Series A Preferred Stock.



                                       17
<PAGE>


(d)  Additional  Issuances of  Securities.  Except for certain  issuances by the
Company, If, at any time while the Series A Preferred Stock is outstanding,  the
Company  sells or grants any option to  purchase or sells or grants any right to
reprice its  securities,  or otherwise  disposes of or issues (or  announces any
sale, grant or any option to purchase or other  disposition) any Common Stock or
Common Stock equivalents  entitling any person to acquire shares of Common Stock
at an  effective  price  per  share  that is  lower  than  the  then  applicable
conversion  price,  then the  conversion  price  shall be  reduced to such lower
price.


(e)  Modification of Series A Preferred Stock. So long as any shares of Series A
Preferred Stock remain outstanding,  the Company, shall not, without the vote or
written  consent  by the  holders  of more than  fifty  percent  (50.0%)  of the
outstanding  Series A Preferred  Stock,  voting together as a single class,  and
unless  approved by the Board of  Directors:  (i) redeem,  purchase or otherwise
acquire  for value (or pay into or set  aside for a sinking  or other  analogous
fund for such  purpose)  any share or shares of its  Capital  Stock,  except for
conversion  into or exchange for stock  junior to the Series A Preferred  Stock;
(ii)  alter,  modify or amend the terms of the Series A  Preferred  Stock in any
way; or (iii)  create or issue any Capital  Stock of the  Company  ranking  pari
passu with or senior to the Series A Preferred Stock either as to the payment of
dividends or rights in liquidation,  dissolution or winding-up of the affairs of
the Company;  increase the authorized number of shares of the Series A Preferred
Stock;  re-issue  any Series A  Preferred  Stock  which have been  converted  or
otherwise acquired by the Company in accordance with the terms hereof.



The Board of  Directors  awarded  Richard  Gerzof,  Chairman of the Board of the
Company,  immediately  exercisable  options to purchase 250,000 shares of Common
Stock of the  Company at an exercise  price of $0.20 per share,  the fair market
value as of the date of  grant.  The Board of  Directors  also  awarded  Elliott
Goldberg, Matthew Dollinger and William Wood, directors, immediately exercisable
options  to  purchase  100,000,   18,500  and  3,500  shares  of  Common  Stock,
respectively, at the exercise price of $0.20 per share, the fair market value as
of the date of grant.

The Board of  Directors  also  amended the  Company's  2006 Stock Option Plan to
eliminate the  requirement  that options must be  exercised,  to the extent they
were exercisable,  within a three month period following the date of termination
of employment or directorship, even if by disability or death.


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 a limited base of customers  for a  significant  portion of sales;
the  Company's  dependence  on the  paper  currency  validator  market  and  its
potential  vulnerability to technological  obsolescence;  the possible impact of
competitive products and pricing; 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;  uncertainties  with respect to the Company's  business
strategy;  general economic conditions in the domestic and international  market
in which the  Company  operates;  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.



                                       18
<PAGE>


Item 1A.    Risk Factors
--------    ------------

We have not been profitable for the past few years.
---------------------------------------------------

We have had a large  decline in sales this year and we have not been  profitable
for the past few years.  Our new product  initiatives may not be enough to allow
us to regain profitability.

We are dependent on the paper currency validator and gaming market.
-------------------------------------------------------------------

In fiscal  2007,  86% of our sales were to the gaming  market.  Any  significant
technological  advances to increased  use of smart cards could cause a reduction
in our revenues.  Any changes in government  regulations,  as we  experienced in
Russia, could have an adverse effect on our revenue.

We are dependent on a small number of customers.
------------------------------------------------

In fiscal 2007,  one customer  accounted for 41% of our sales.  The loss of this
customer could have a significant adverse effect on our revenue.

Some product components have a long lead time.
----------------------------------------------

Some of our  product  components  may take in excess of 12 weeks to obtain and a
shortage of those parts may have a negative effect on our revenue.

Some components are single sourced.
-----------------------------------

Some of our products can only be produced by one vendor. The loss of this vendor
could have a negative effect on our revenue.

Some of our inventory may become obsolete.
------------------------------------------

We hold inventory for warranty and repairs and replacements.  We also anticipate
sales volumes from our customers due to lead times required to build  inventory.
There is a risk that orders may be less than  anticipated  for  certain  product
models  and  that we may  have  excess  inventory  or  inventory  which  becomes
obsolete.



                                       19
<PAGE>


We may have  difficulty  competing  with  larger  companies  that offer  similar
--------------------------------------------------------------------------------
products which may result in decreased revenue
----------------------------------------------

We  believe  that  we  have a very  competitive  product;  however,  many of our
competitors  have greater  resources than we have and can invest more in product
development  and  marketing or develop  pricing  strategies  which may adversely
affect our revenues.

We are  dependent on  management  and our  engineers and a loss of key employees
--------------------------------------------------------------------------------
could disrupt our business and our financial performance could suffer.
----------------------------------------------------------------------

Our business is largely  dependent upon our senior  executive  officer,  William
McMahon,  our interim  President,  chief  executive  officer and chief financial
officer.  Our business may be adversely affected if any key management personnel
or other key employees left our employ.

Item 1B.    Unresolved Staff Comments
--------    -------------------------

Not applicable.

Item 2.     Properties
-------     ----------


On July 2, 2007, the Company moved to a new leased facility  located in Bohemia,
New York. The facility has 25,550 square feet and houses the  manufacturing  and
administrative  functions.  Future minimum rentals,  which aggregate $1,754,499,
are as follows:  During the first lease year,  the annual rent will be $214,620,
second  lease year  $221,059,  third  lease  year  $227,690,  fourth  lease year
$234,521,  fifth lease year $241,557,  sixth lease year $248,803,  seventh lease
year $256,268, eighth lease year (five months) $109,981.


Item 3.     Legal Proceedings
-------     -----------------

The company is a defendant in matters which arose in the ordinary course of
business. In the opinion of management, the ultimate resolution of this matter
would not have a material adverse effect on the Company's consolidated financial
position, results of operations or liquidity.

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

Not applicable.

                                     PART II



                                       20
<PAGE>


Item 5.     Market for Registrant's Common Equity, Related Stockholder Matters
-------     ------------------------------------------------------------------
and Issuer Purchases of Equity Securities
-----------------------------------------

a)    Market Information

The Company's Common Stock is listed and trades on the Over the Counter Bulletin
Board under the symbol GPTX.OB. 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 2006 and 2007. During such period the Common Stock was traded
on the NASDAQ National Market System.



                                       21
<PAGE>


Quarter Ended              High           Low
----------------------------------- ---------------
December 31, 2005          3.58          2.09
March 31, 2006             2.80          2.03
June 30, 2006              2.49          1.10
September 30, 2006         1.99          1.25
December 31, 2006          2.20           .94
March 31, 2007             1.72           .83
June 30, 2007              1.32           .34
September 30, 2007         .71            .21

b)    Holders

The approximate number of beneficial holders and holders of record of the
Company's Common Stock as of March 31, 2007 were 1,246 and 34, 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.

d)    Securities Authorized for Issuance Under Equity Compensation Plans

The table below sets forth certain information as of the Company's fiscal year
ended September 30, 2007 regarding the shares of the Company's common stock
available for grant or granted under stock option plans that (i) were adopted by
the Company's stockholders and (ii) were not adopted by the Company's
stockholders.

                                                           Number of securities
                                                           remaining available
                                          Weighted-average for future issuance
                    Number of securities  exercise price       under equity
                     to be issued upon    of outstanding    compensation plans
                        exercise of          options,     (excluding securities
                    outstanding options,   warrants and    in the first column
                    warrants and rights       rights          of this table)
                    -------------------       ------          --------------
Equity                      711,360                $3.18        1,448,485
compensation
plans approved by
security holders
Equity               Not Applicable       Not Applicable   Not Applicable
compensation
plans not
approved by
security holders



                                       22
<PAGE>


Item 6.     Selected Financial Data
-------     -----------------------
FINANCIAL HIGHLIGHTS
--------------------
(In thousands, except earnings per share)
-----------------------------------------
<TABLE>
<CAPTION>
Year Ended September 30           2003            2004             2005          2006           2007
--------------------------   ------------    -------------    ------------- ------------    -----------

<S>                           <C>             <C>              <C>           <C>             <C>
Net Sales                     $    26,076     $     24,381     $     25,886  $    14,303     $   11,602
Net loss                          (5,677) (1)      (1,690) (2)        (573)      (4,143) (4)    (5,591)
Diluted loss per share (3)         (1.02)           (0.30)           (0.10)       (0.67)         (0.89)
Total assets                       17,775           16,267           16,714       11,765          6,802
Long-term debt obligations              0            1,354               79           40              0
Stockholders' equity               11,677           11,107           13,371        8,837          3,470
</TABLE>


(1)  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.
(2)  Includes a gain of $78,000  from the sale of the  remaining  portion of the
     Company's unconsolidated South African affiliate.
(3)  The weighted average shares  outstanding used in the calculation of diluted
     loss per share did not include  potential shares  outstanding  because they
     were anti-dilutive.
(4)  Includes  gain on sale  of  investments  in  unconsolidated  affiliates  of
     $307,000.



                                       23
<PAGE>


QUARTERLY INFORMATION
---------------------
(In thousands, except earnings per share)
-----------------------------------------

<TABLE>
<CAPTION>
Quarter Ended                       Dec. 31     Mar. 31      June 30      Sept. 30       Year
                                  ----------- ------------ ------------ ------------ -------------
                                              (restated)
Fiscal 2007
----------------------------------
<S>                                <C>         <C>           <C>         <C>          <C>
Net sales                          $    3,964  $     2,802   $    3,103  $     1,733  $     11,602
Gross profit (loss)                       712          627          285        (234)         1,390
Net loss                              (1,249)      (1,330)      (1,606)      (1,406)       (5,591)
Basic loss per share                   (0.20)       (0.21)       (0.26)       (0.21)        (0.88)
Diluted loss per share (1)             (0.20)       (0.21)       (0.26)       (0.21)        (0.88)

Fiscal 2006
----------------------------------
Net sales                          $    3,905  $     4,027   $    3,165  $     3,206  $     14,303
Gross profit (loss)                       685          628         (18)          480         1,775
Net loss                                (790)        (543)      (1,889)        (921)       (4,143)
Basic loss per share                   (0.13)       (0.09)       (0.30)       (0.15)        (0.67)
Diluted loss per share (1)             (0.13)       (0.09)       (0.30)       (0.15)        (0.67)
</TABLE>

(1)  The weighted average shares  outstanding used in the calculation of diluted
     loss per share,  for periods in which the  Company had a net loss,  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, 2007 compared with September 30, 2006

Sales Net  sales for  fiscal  2007  decreased  by 18.9% to  $11,602  million  as
compared with $14,303 million in fiscal 2006. The largest  decrease in sales was
in  the  Russian  market  which  continues  to  be  adversely  affected  by  the
restrictions put on gaming by the Russian government. Last year's sales included
special  incentives  to  customers  in order to reduce  inventory  levels in the
Company's Aurora product.  Gaming sales were $10.0 million in fiscal 2007 or 86%
of  sales,  as  compared  to $11.3  million,  or 79% of sales,  in fiscal  2006.
Beverage and vending sales were $1.6 million, or 14% of sales, in fiscal 2007 as
compared  to $3.0  million,  or 21% of  sales,  in  fiscal  2006.  Net  sales to
international  customers  accounted for 91 % and 90% of net sales in fiscal 2007
and 2006, respectively.



                                       24
<PAGE>


Gross Profit

Gross profit  decreased to $1,390  million,  or 11% of sales,  as compared  with
$1,775 million, or 12% of sales, in the prior-year period. The decrease in gross
profit  was   affected  by  a  18.9%  sales   decline  from  fiscal  2006  while
manufacturing  expenses were virtually  unchanged.  This resulted in significant
under  absorption  of  overhead.  The  most  significant  factor  affecting  the
Company's  gross profit  percentage  will be the unit sales levels  achieved and
their relationship to manufacturing  costs, as well as any impact from sales and
marketing  efforts to achieve  additional  market share and/or reduce  inventory
levels.

Operating Expenses

Operating expenses decreased to $6,975 million,  or 60% of sales, in fiscal 2007
from $7,429 million,  or 51% of sales, in fiscal 2006. This decrease of $454,000
is  primarily  the  result  of lower  payroll  and  travel-partially  offset  by
increased  expenses  resulting from the development and testing of the Company's
new products-Falcon and Eagle-and an increase due to moving costs.

Other (Expense) Income

During fiscal 2006, the Company sold its interests in its affiliated  customers.
Prior to such  dispositions,  the Company  recognized  revenue upon shipment and
passage of title to its  affiliated  customers,  but deferred its  proportionate
share of the related  gross profit on product sales until sales were made by the
affiliated  customers  to  third-party  end users  (customers).  Included in the
results of  operations  for fiscal 2006 were the  Company's net share of profits
through August 31, 2006, the effective date of sale, of $648,000.

Interest Expense

Interest  expense  increased to $61,000 for fiscal 2007 as compared to $8,000 in
fiscal 2006.  The  increase was as a result of the costs of borrowing  under the
Line of Credit.


Income Taxes

With respect to the provision for income taxes, the effective rate was a benefit
of .6% in fiscal 2007 as compared to a tax benefit of 0.0% in fiscal 2006.  This
change  in the  effective  tax rate is  primarily  the  result  of  fiscal  2007
operating losses for which no benefit has been recognized.  The Company provided
a full valuation  allowance against its deferred income tax assets in the fourth
quarter of fiscal 2003 and  continues to provide a full  valuation  allowance at
September 30, 2007. The 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 in the future.

Net Loss



                                       25
<PAGE>


The net loss for fiscal 2007 was ($5,591,000), or ($0.89) per share, as compared
with ($4,143,000), or ($0.67) per share, in fiscal 2006.



Fiscal year ended September 30, 2006 compared with September 30, 2005

Sales

Net sales for fiscal 2006 decreased by 44.7% to $14.303 million as compared with
$25.886  million in fiscal  2005.  This  decrease  was due to lower sales to the
gaming market,  in which sales declined 51% from $23.1 million in fiscal 2005 to
$11.3 million in fiscal 2006. Gaming sales to the Australian market declined 50%
as the Company's  distributor  reduced its short term inventory  requirements to
better manage current market conditions in its territory. Sales into the Russian
market  declined  by  over  30% as a  result  of  government  regulations  which
temporarily  prohibit the placement of new gaming  devices.  These declines were
partially  offset by increased  sales into the Asian and South African  markets,
which  reflected  some  growth  in the  Macau  gaming  area of  China as well as
increased sales efforts by the Company's  distributor in South Africa.  Beverage
and  vending  sales  for  fiscal  2006 were $3.0  million,  or 21% of sales,  as
compared to $2.7 million or 10.6% of sales, an increase of 10%, primarily in the
beverage sector.  Net sales to international  customers  accounted for 90.6% and
92.7% of net sales in fiscal 2006 and 2005, respectively.

Gross Profit

Gross profit  decreased to $1.775  million,  or 12.4% of net sales,  as compared
with $6.867 million or 26.5% of net sales in the prior-year period. The decrease
in gross profit was  primarily  the result of sales  incentives to reduce Aurora
inventory  levels as well as attempting  to increase the Company's  market share
with the Aurora product,  and the effect of a 45% sales decline from fiscal 2005
while  manufacturing  expenses  were  virtually  unchanged.   This  resulted  in
significant under absorption of overhead. In addition, the Company increased the
inventory  reserve by $432,000 in fiscal 2006 to provide for obsolescence in its
Advantage product line.



                                       26
<PAGE>


Operating Expenses

Operating  expenses  increased to $7.429 million or 51.9% of net sales in fiscal
2006 from $7.051  million or 27.2% of net sales in fiscal  2005,  an increase of
$378 thousand or 5.4%.  This  increase was due, in part, to a severance  payment
made to a former officer of $150,000,  research and  development  cost increases
related to the new  products  planned  to be  introduced  in fiscal  2008 and an
increase in rent  expense  related to a short term  extension of the lease until
June 2007.

Equity in income of unconsolidated affiliates and Gain on sale of investments in
unconsolidated affiliates

During fiscal 2006, the Company sold its interests in its affiliated  customers.
Prior to such dispositions,  the Company accounted for its results of operations
using the equity method. Included in the Company's results of operations are the
Company's net share of profits  through  August 31, 2006,  the effective date of
sale, of $648,000.  For fiscal 2006, the Company  increased its equity in income
of unconsolidated  subsidiaries by $535,000 as compared to a reduction in fiscal
2005 of $33,000,  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 affiliates as of the Company's fiscal year end.

The accompanying consolidated results of operations include a gain of
approximately $307,000 relating to the sale of the Company's interests in its
unconsolidated affiliates in fiscal 2006.


Interest Expense

Included  in interest  expense  for fiscal 2005 was  $568,000 as a result of the
amortization of debt discount. During fiscal 2005 the term loan was fully repaid
and the debt discount was fully amortized.

Income Taxes

With respect to the provision for income taxes,  the effective  rate was 0.0% in
fiscal 2006 as compared to a tax benefit of 3.5% in fiscal 2005.  This change in
the effective tax rate is primarily the result of fiscal 2006  operating  losses
for which no benefit has been recognized.  The Company provided a full valuation
allowance against its deferred income tax assets in the fourth quarter of fiscal
2003 and continues to provide a full valuation  allowance at September 30, 2006.
The  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 in the future.

Net Loss

The net loss for fiscal 2006 was ($4,143,000), or ($0.67) per share, as compared
with  ($573,000),  or ($0.10) per share,  in fiscal 2005.  Liquidity and Capital
Resources



                                       27
<PAGE>


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,   fund  inventory   purchase
commitments,  and service  principal  and  interest  payments  on the  Company's
indebtedness.  At September 30, 2007,  the Company's  cash and cash  equivalents
were $879,000 as compared  with  $2,352,000 at September 30, 2006. A significant
portion of the Company's cash balance in the amount of $498,000 and $741,000, as
of September 30, 2007 and 2006, respectively,  consists of currency used to test
the  Company's  products.  The Company had  $280,000 of cash held in escrow as a
result of its sale on September 2, 2006 of the  Company's  50% interest in GPTA.
The escrow was released on the one year anniversary of the transaction.

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 was 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 was  collateralized  by  substantially  all  assets  of the  Company.
Interest was 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.  At September 30, 2004,  $1,425,000 was outstanding
under the CTN.  During the year ended  September  30, 2005,  the Company  repaid
$50,000 and Laurus  converted the  remaining  $1,375,000 of the CTN into 323,000
shares of common stock, resulting in the full repayment of the CTN.

The value  allocated  to the  warrants  resulted in a debt  discount of $506,000
which  was  being  recognized  as  interest  expense  over  the term of the CTN.
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 was being recognized as interest expense over the term of the CTN.
Interest expense was computed  utilizing the interest method,  which resulted in
an  effective  yield over the term of the CTN.  Amortization  for the year ended
September 30, 2005 was $568,000.  During fiscal 2005,  the entire amount of debt
discount had been 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 (the RN
and the MBN  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%. During the year
ended  September  30, 2005,  Laurus  converted  $750,000 of the MBN into 176,000
shares of common stock. At September 30, 2007,  $353,000 was  outstanding  under
the MBN or the RN.



                                       28
<PAGE>


The agreements  provided that Laurus would 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  outstanding
shares,  including  warrants,  of the  Company's  common  stock  at the  time of
conversion or exercise.

The Company's  credit facility with Laurus was paid in full on the maturity date
of November  15,  2007.  The  Company is in  discussion  to provide  alternative
financing. The Company believes, but has no assurance,  that it will replace the
line.

Net cash used in operating activities was $1,853,000 in fiscal 2007. This amount
was  due  to a net  loss  for  the  period,  adjusted  for  non-cash  items,  of
$1,363,,000,  decreased  accounts  receivable of $1,026,000,  decreased  prepaid
expenses and other current assets of $103,000,  decreased  accrued  expenses and
other liabilities of $310,000,  decreased inventory of $1,172,000, and increased
accounts payable of $420,000.

Net cash used in operating activities was $2,330,000 in fiscal 2006. This amount
was  due  to a net  loss  for  the  period,  adjusted  for  non-cash  items,  of
$1,054,000,  decreased accounts receivable of $1,676,000, decreased income taxes
receivable  of $25,000,  increased  accrued  expenses and other  liabilities  of
$115,000  reduced by increased  inventory of $530,000,  and  decreased  accounts
payable of $513,000.

Net cash used in operating  activities was $434,000 in fiscal 2005.  This amount
was  due  to a net  loss  for  the  period,  adjusted  for  non-cash  items,  of
$1,767,000,  decreased  prepaid expenses and other assets of $42,000,  decreased
accounts  receivable  of $824,000,  and  decreased  income taxes  receivable  of
$90,000,  reduced by increased inventory of $2,830,000,  primarily the result of
an increase in the Company's  Aurora product due to lower Russian orders and the
slowdown in the German cigarette vending market,  due to significant  German tax
increases,  coupled with the Company's  commitment to receive inventory from its
vendors,  decreased  accounts payable of $181,000 and decreased  accrued expense
and other current liabilities of $146,000.

The Company  sells its  products  primarily  to  international  markets on terms
generally  greater than 30 days. The Company granted 90 day payment terms to its
Australian distributor.  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. Additionally,  the timing and size of the Company's
future Aurora sales orders,  coupled with the continued  commitments  to receive
certain  component  parts, as well as the potential impact of current and future
sales programs, could have an impact on cash from operations and on gross profit
percentages.



                                       29
<PAGE>


Net cash provided by investing activities amounted to $112,000 in fiscal 2007 as
compared with net cash provided by investing  activities of $1,622,000 in fiscal
2006 and net cash used in investing  activities  of $340,000 in fiscal 2005.  In
fiscal 2006 the Company  received  $1,798,000  from the sale of its interests in
Global Payment  Technologies  Australia Pty Ltd and eCash Pty Ltd. Further,  the
Company  received  $574,000  in  dividend  distributions,   primarily  from  its
Australian affiliate,  during fiscal 2006. There were no dividend  distributions
in fiscal 2005 or 2007. The remaining investing activities of $168,000 in fiscal
2007, $176,000 in fiscal 2006, and $340,000 in fiscal 2005 were for the purchase
of property and equipment primarily for the Company's manufacturing operations.

Net cash  used in  financing  activities  consisted  of net  repayments  of bank
borrowings of $60,000 in fiscal 2007 as compared  with  $(48,000) in fiscal 2006
and $63,000 in fiscal 2005. The Company had net borrowings on its Line of Credit
of $353,000 in fiscal 2007. The remaining cash provided by financing  activities
of $492,000 in fiscal 2005 was from the  issuance of stock upon the  exercise of
common stock options and warrants.

The  consolidated  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern,  which contemplates the realization of
assets and  satisfaction  of liabilities  in the normal course of business.  The
Company  has  suffered  recurring  losses  and  deficiencies  in cash flows from
operations.  Accordingly,  the Company  will be required to identify  additional
revenue  resources,  raise additional  capital and/or  significantly  reduce its
expenses in order to pay its  obligations  as they become due. As  discussed  in
Note 12 to the Company's consolidated financial statements,  the Company entered
into a debt financing agreement and is undertaking a corporate  restructuring to
attempt to improve  operating results and develop new products,  however,  there
can be no  assurance  that such plans will be  successful.  These  uncertainties
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern. The accompanying  consolidated  financial statements do not include any
adjustments  relating to the  recoverability of the carrying amount of assets or
the  amount  of  liabilities  that  might  result  from  the  outcome  of  these
uncertainties.


Commitments:

At September 30, 2007, future minimum payments under  non-cancelable  leases and
principal  payments to be made for  long-term  debt  maturing over the next five
years and thereafter are as follows in ($000):



                                       30
<PAGE>



                            Operating Lease   Debt Repayments
                          -------------------------------------

Fiscal year ended September 30,
            2008            $         321       $           393
            2009                      242
            2010                      249
            2011                      255
            2012                      263
         Thereafter                   591
                          ---------------    ------------------
           Total            $       1,921       $           393
                          ---------------    ------------------

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, 2007, purchase order commitments approximated
$4.0 million and will be used for production requirements during fiscal 2008 and
beyond.


                                       31
<PAGE>


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 carrying amount 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.

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.  Prior to the sale of the Company's interest in Australian
unconsolidated  affiliates,  the  Company  deferred  its pro rata share of gross
profit on sales  for the  inventory  of the  affiliates  until  such time as its
affiliates sold to a third party customer.

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 in the case of its Argus,  Aurora, SA-4, and Advantage
products,  from the date of initial  purchase.  The warranty  does not cover any
losses or damages  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.



                                       32
<PAGE>


Reserve for Uncollectible Accounts Receivable:

At September  30,  2007,  our accounts  receivable  balance was $1 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:

During fiscal 2006,  the Company sold its interest in its  affiliated  entities.
Prior to such  disposition,  the Company applied the equity method of accounting
to its  investments  (including  advances)  in  entities  where the  Company had
non-controlling  ownership  interests of 50% or less and exercised a significant
influence on that entity.  The Company's share of these affiliates'  earnings or
losses is included in the consolidated statements of operations through the date
of sale.  Prior to the sale of its  affiliates,  the Company  eliminated its pro
rata share of gross profit on sales to such  affiliates for inventory on hand at
the affiliates.  Effective  February,  2005, when the Company  exchanged its 25%
interest in Abacus-UK for a 12.5%  interest in Evolve-UK,  it accounted for this
investment on a cost basis.  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.

Long-Lived Assets:

The Company accounts for long-lived  assets in accordance with the provisions of
Statement  of  Accounting   Standards  ("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. 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, 2007.

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
2007,  2006 and 2005 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.



                                       33
<PAGE>


Debt Discounts:

Pursuant to the Securities  Purchase  Agreement with Laurus the Company received
proceeds of $1,500,000  from the issuance of the CTN in the principal  amount of
$1,500,000  and 7 year  warrants to  purchase  200,000  shares of the  Company's
common stock. The value allocated to the warrants resulted in a debt discount of
$506,000 that was being recognized as interest expense over the term of the CTN.
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 was being recognized as interest expense over the term of the CTN.
Interest expense was computed utilizing the interest method, which results in an
effective  yield over the term of the CTN.  During the year ended  September 30,
2005, the Company repaid $50,000 and Laurus converted $1,375,000 of the CTN into
323,000 shares of common stock, resulting in the full repayment of the CTN. As a
result of the  conversion  of the balance of the CTN, the entire  amount of debt
discount has been recognized as interest expense and charged to operations.

Share-Based Compensation:

Effective  October 1, 2005,  the Company  adopted SFAS No. 123  (Revised  2004),
Share Based Payment ("SFAS No. 123R"), which requires a public entity to measure
the cost of employee,  officer and director services received in exchange for an
award of equity  instruments  based on the grant  date fair  value of the award.
SFAS No. 123R supersedes the Company's  previous  accounting under SFAS No. 123,
Accounting for Stock-Based  Compensation  ("SFAS No. 123"),  which permitted the
Company to account  for such  compensation  under  Accounting  Principles  Board
Opinion  No.  25,  Accounting  for Stock  Issued to  Employees  ("APB No.  25").
Pursuant to APB No. 25, and related  interpretations,  no compensation  cost had
been recognized in connection with the issuance of stock options, as all options
granted under the Company's stock option plans had an exercise price equal to or
greater than the market value of the underlying  common stock on the date of the
grant.

In advance of implementing  the  requirements of SFAS No. 123R, the Company,  in
September 2005, accelerated the vesting of all unvested stock options previously
awarded to employees,  officers and directors in order to avoid the  recognition
of compensation  expense under SFAS No.123R,  with respect to these options. Any
option grants since then have resulted in compensation expense.

The Company  adopted  SFAS No. 123R using the  modified  prospective  transition
method,  which  requires  that  compensation  cost be recorded as earned for all
unvested stock options  outstanding at the beginning of the first fiscal year of
adoption  of SFAS No.  123R based upon the grant  date fair value  estimated  in
accordance with the original  provisions of SFAS No. 123 and for all share-based
payments granted subsequent to the adoption,  based on the grant date fair value
estimated in accordance with the provisions of SFAS No. 123R. In accordance with
the modified prospective transition method, the Company's consolidated financial
statements  for prior  periods  have not been  restated to  reflect,  and do not
include, the impact of SFAS No. 123R.



                                       34
<PAGE>


Item 7A.    Quantitative and Qualitative Disclosures About Market Risk
--------    ----------------------------------------------------------

Fiscal 2007 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.

During  fiscal  2006,  the Company  sold its  interests  in its  privately  held
unconsolidated  foreign  companies  which it used for the purposes of conducting
its business overseas and attaining its strategic objectives. 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.


Item 8.     Financial Statements and Supplementary Data
-------     -------------------------------------------

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


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

None.



                                       35
<PAGE>


Item 9A.    Controls and Procedures
--------    -----------------------

Disclosure Controls

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.

Changes in Internal Control Over Financial Reporting

The  Chief  Executive  Officer  and the Chief  Financial  Officer  conducted  an
evaluation  of our internal  control  over  financial  reporting  (as defined in
Securities  Exchange  Act Rule 13a-15 (f))  ("Internal  Control")  to  determine
whether any changes in Internal  Control  occurred  during the fiscal year ended
September 30, 2007, that have materially affected or which are reasonably likely
to  materially  affect  Internal  Control.  Based  on that  evaluation,  no such
occurred during such period.

The Company is not an  "accelerated  filer" (i.e. the Company's  public float is
less than $75 million) for the fiscal year 2007;  hence,  the internal  controls
certification and attestation  requirements of Section 404 of the Sarbanes-Oxley
act will not be applicable to the Company until the fiscal year ending September
30, 2008.  Notwithstanding the fact that these internal control requirements are
not  applicable to the Company at this time,  the Company has been reviewing its
internal control procedures.

Based upon the evaluation  conducted by management in connection  with the audit
of the Company's financial statements for the year ended September 30, 2007, the
Company  identified  material  weaknesses in our internal control over financial
reporting. A material weakness is "a significant deficiency, or a combination of
significant  deficiencies,  that results in more than a remote likelihood that a
material  misstatement of the annual or interim financial statements will not be
prevented  or  detected  by the  Company  in a  timely  manner."  Management  is
currently taking steps to correct these material  weaknesses  through changes in
procedures and evaluation of personnel.

Item 9B.    Other Information
--------    -----------------

None.



                                       36
<PAGE>


Rider 34

                                    PART III

The  information  called  for by Part III  (Items 10, 11, 12, 13 and 14) of Form
10-K will be included in the Company's  Proxy  Statement for the Company's  2008
Annual Meeting of  Shareholders,  which is hereby  incorporated  by reference to
such Proxy  Statement,  except that the  information as to the Company's  equity
compensation  plans contained in the last paragraph of Item 5 in this Report are
incorporated by reference into Items 10 and 12, respectively, of this Report.



                                       37
<PAGE>


                                     PART IV


Item 15.    Exhibits and Financial Statement Schedules
--------    ------------------------------------------

The following documents are filed as part of this report:

       1. Global Payment Technologies, Inc. Consolidated Financial Statements:

            Report of Independent Registered Public Accounting Firm (page 45)

            Consolidated Balance Sheets as of September 30, 2007 and 2006
            (page F-2)
            Consolidated Statements of Operations for each of the years in the
            three-year period ended September 30, 2007 (page F-3)

            Consolidated Statements of Shareholders' Equity and Comprehensive
            Loss for each of the years in the three-year period ended September
            30, 2007 (page F-4)

            Consolidated Statements of Cash Flows for each of the years in the
            three-year period ended September 30, 2007 (page F-5)

            Notes to Consolidated Financial Statements (pages 46 - 68)

       2.  Global   Payment   Technologies   Australia  Pty  Limited   Financial
Statements:

            Report of Independent Registered Public Accounting Firms (page 69)

            Balance Sheets as of August 31, 2006 and June 30, 2006 (page 70)

            Statement of Operations for the period ended August 31, 2006 and
            year ended June 30, 2006 (page 71)

            Statements of Stockholders' Equity for period ended August 31, 2006
            and year ended June 30, 2006 (page 72)

            Statements of Cash Flows for period ended August 31, 2006 and year
            ended June 30, 2006 (page 73)

            Notes to Financial Statements (pages 74-82)

            Report of Independent Registered Public Accounting Firms (page 83)



                                       38
<PAGE>


            Balance Sheets as of June 30, 2006 and 2005 (page 84)

            Statements of Operations for each of the years in the three-year
            period ended June 30, 2006 (page 85)

            Statements of Stockholders' Equity for each of the years in the
            three-year period ended June 30, 2006 (page 86)

            Statements of Cash Flows for each of the years in the three-year
            period ended June 30, 2006 (page 87)

            Notes to Financial Statements (pages 88-96)

       3. Global  Payment  Technologies  eCash  Holdings  Pty Limited  Financial
Statements:

            Report of Independent Registered Public Accounting Firms (page 97)

            Consolidated Balance Sheets as of June 30, 2006 and 2005 (page 98)

            Consolidated Statements of Operations for each of the years in the
            three-year period ended June 30, 2006 (page 99)

            Consolidated Statements of Stockholder's Equity for each of the
            years in the three-year period ended June 30, 2006 (page 100)

            Consolidated Statements of Cash Flows for each of the years in the
            three-year period ended June 30, 2006 (page 101)

            Notes to Consolidated Financial Statements (pages 102-109)

            Report of Independent Registered Public Accounting Firms (page 110)

            Consolidated Balance Sheets as of August 31, 2006 and June 30, 2006
(page 111)
            Consolidated Statements of Operations for the period ended August
            31, 2006 and June 30, 2006 (page 112)

            Consolidated Statements of Stockholder's Equity for the period ended
            August 31, 2006 and June 30, 2006 (page 113)

            Consolidated Statements of Cash Flows for the period ended August
            31, 2006 and June 30, 2006 (page 114)

            Notes to Consolidated Financial Statements (pages 115-122)



                                       39
<PAGE>


       4. Financial  statement  schedules required to be filed by Item 8 of this
Form: Schedule II - Valuation and Qualifying Accounts (page 125)

       5. Exhibits:

<TABLE>
<CAPTION>
Exhibit No.

<S>                                      <C>
3.1         Certificate of Incorporation (2)
3.2         Certificate of Merger (2)
3.3         By-Laws
4.1         Securities   Purchase  Agreement  dated  March  16,  2004  by  and  between  the
            registrant and Laurus (4)
4.2         Common Stock Purchase Warrant dated March 16, 2004 issued to Laurus (4)
4.3         Registration   Rights  Agreement  dated  March  16,  2004  by  and  between  the
            registrant and Laurus (4)
4.4         Registration   Rights  Agreement  dated  March  16,  2004  by  and  between  the
            registrant and Laurus (4)
4.5         Amendment No. 1, dated April 29, 2004, to Securities Purchase Agreement (5)
4.6         Amendment No. 1, dated April 29, 2004, to Common Stock Purchase Warrant (5)
10.1        1994 Stock Option Plan (1)*
10.2        1996 Stock Option Plan (1)*
10.3        2000 Stock Option Plan (3)*
10.4        Employment Agreement dated April 17, 2006 between the Company and William
            McMahon (7)*
</TABLE>



                                       40
<PAGE>

<TABLE>
<CAPTION>
<S>                          <C>
10.5        Lease dated June 1, 2007 between Global Payment Technologies, Inc and Rechler
            Equity LLC (8)
10.6        Securities Purchase Agreement, dated January 15, 2008, by and among Global
            Payment Technologies, Inc., Exfair Pty Ltd, and Global Payment Technologies
            Australia Pty. Ltd. (9)
10.7        Secured Term Note, dated January 15, 2008, issued by Global Payment
            Technologies, Inc. in favor of Global Payment Technologies Australia Pty. Ltd.
            (9)
10.8        Security Agreement, dated January 15, 2008, by and between Global Payment
            Technologies, Inc. and Global Payment Technologies Australia Pty. Ltd. (9)
10.9        Voting Agreement, dated January 15, 2008, by and among Global Payment
            Technologies, Inc., Exfair Pty Ltd, and certain stockholders listed therein (9)
10.10       Technology License Agreement, dated January 15, 2008, by and between Global
            Payment Technologies, Inc. and Global Payment Technologies Australia Pty. Ltd.
            (9)
10.11       Amendment No. 1 to Distribution Agreement, dated January 15, 2008, by and
            between Global Payment Technologies, Inc. and Global Payment Technologies
            Australia Pty. Ltd. (9)
10.12       Form of Convertible Note to be issued by Global Payment Technologies, Inc. in
            favor of Exfair Pty Ltd. (9)
10.13       Form of Warrant to be issued by Global Payment Technologies, Inc. (9)
10.14       Form of Certificate of Designation establishing Series A Convertible Preferred
            Stock (9)
10.15       Form of Registration Rights Agreement by and between Global Payment
            Technologies, Inc. and Exfair Pty Ltd. (9)
10.16       Form of Employment Agreement by and between Global Payment Technologies, Inc.
            and Andre Soussa. (9)
10.17       Form of Employment Agreement by and between Global Payment Technologies, Inc.
            and William McMahon (9)
14          Code of Ethics (6)
21          List of Subsidiaries (8)
23.1        Consent of Eisner LLP, Independent Registered Public Accounting Firm(8)
23.2        Consent of Pitcher Partners, Independent Registered Public Accounting Firm (8)
31.1        Rule13a-14a Certification (Chief Executive Officer) (8)
32          Section 1350 Certification (8)
99.1        Press Release of Global Payment Technologies, Inc., dated January 17, 2008,
            reporting the transactions contemplated by the Purchaser Agreement, dated
            January 15, 2008, by and among Global Payment Technologies, Inc., Exfair Pty
            Ltd, and Global Payment Technologies Australia Pty. Ltd.
</TABLE>


            --------------------------------------------------------------------
(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)         Filed as an exhibit to the Company's Proxy Statement for the fiscal
            year ended September 30, 1999.
(4)         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.
(5)         Filed as an exhibit to the Company's Quarterly Report on Form 10-Q
            for the fiscal quarter ended March 31, 2004.
(6)         Filed as an exhibit to the Company's Annual Report on Form 10-K for
            the fiscal year ended September 30, 2004.
(7)         Filed as an exhibit to the Company's Quarterly Report on Form 10-Q
            for the fiscal quarter ended March 31, 2006.
(8)         Filed herewith.
(9)         Filed as an exhibit to the Company's Current Report on Form 8-K
            dated January 22, 2008, filed with the SEC on January 22, 2008.
*           Management contract or compensatory plan or arrangement



                                       41
<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/William McMahon
                 -----------------
              William McMahon
              President, Chief Executive Officer and Chief Financial Officer

Date:  January 22, 2008

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.

     Signature                         Title                         Date
-------------------- ----------------------------------------- -----------------



s/William McMahon    President, Chief Executive Officer        January 22, 2008
--------------------
William McMahon      Chief Financial Officer and
                     Principal Accounting Officer and Director

s/Richard Gerzof     Director, Chairman of the Board           January 22, 2008
Richard Gerzof

s/William H. Wood    Director                                  January 22, 2008
William H. Wood

s/Elliot Goldberg    Director                                  January 22, 2008
Elliot Goldberg

s/Matthew Dollinger  Director                                  January 22, 2008
Matthew Dollinger



                                       42
<PAGE>


                        GLOBAL PAYMENT TECHNOLOGIES, INC.

                   Index to Consolidated Financial Statements

<TABLE>
<CAPTION>
                                                                                                          Page
Consolidated Financial Statements of Global Payment Technologies, Inc.:
<S>                                                                                                        <C>
Report of Independent Registered Public Accounting Firm                                                    45
      Consolidated Balance Sheets as of September 30, 2007 and 2006                                       F-2
      Consolidated Statements of Operations for each of the years in the three-year period ended
          September 30, 2007                                                                              F-3
      Consolidated Statements of Shareholders' Equity and Comprehensive Loss for each of the
         years in the three-year period ended September 30, 2007                                          F-4
      Consolidated Statements of Cash Flows for each of the years in the three-year period ended
         September 30, 2007                                                                               F-5
      Notes to Consolidated Financial Statements                                                         46-68
Financial Statements of Global Payment Technologies Australia Pty Limited:1
      Report of Independent Registered Public Accounting Firms                                             69

      Balance Sheets as of August 31, 2006 and June 30, 2006                                               70

      Statement of Operations for the period ended August 31, 2006 and year ended
      June 30, 2006                                                                                        71

      Statements of Stockholders' Equity for period ended August 31, 2006 and year
      ended June 30, 2006                                                                                  72

      Statements of Cash Flows for period ended August 31, 2006 and year ended
      June 30, 2006                                                                                        73

      Notes to Financial Statements                                                                      74-82

      Report of Independent Registered Public Accounting Firms                                             83

      Balance Sheets as of June 30, 2006 and 2005                                                          84
      Statements of Operations for each of the years in the three-year period ended
          June 30, 2006                                                                                    85
      Statements of Stockholders' Equity for each of the years in the three-year period
          ended June 30, 2006                                                                              86
      Statements of Cash Flows for each of the years in the three-year period ended
          June 30, 2006                                                                                    87



                                       43
<PAGE>


      Notes to Financial Statements                                                                      88-96
 Financial Statements of Global Payment Technologies eCash Holdings Pty Limited::1
      Report of Independent Registered Public Accounting Firms                                             97

      Consolidated Balance Sheets as of June 30, 2006 and 2005                                             98

      Consolidated Statements of Operations for each of the years in the three-year period ended June
       30, 2006                                                                                            99

      Consolidated Statements of Stockholder's Equity for each of the years in the three-year period
       ended June 30, 2006                                                                                100

      Consolidated Statements of Cash Flows for each of the years in the three-year period ended June
       30, 2006                                                                                           101

      Notes to Consolidated Financial Statements                                                        102-109

      Report of Independent Registered Public Accounting Firms 1                                          110

      Consolidated Balance Sheets as of August 31, 2006 and June 30, 2006                                 111

      Consolidated Statements of Operations for the period ended August 31, 2006
      and June 30, 2006                                                                                   112

      Consolidated Statements of Stockholder's Equity for the period ended
      August 31, 2006 and June 30, 2006                                                                   113

      Consolidated Statements of Cash Flows for the period ended
      August 31, 2006 and June 30, 2006                                                                      114

      Notes to Consolidated Financial Statements                                                         115-122
       Additional Financial Information Pursuant to the Requirements of Form 10-K:
       Schedule II - Valuation and Qualifying Accounts and Reserves                                          125
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>



                                       44
<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 sheets of Global Payment
Technologies,  Inc. and  subsidiaries as of September 30, 2007 and 2006, and the
related  consolidated   statements  of  operations,   shareholders'  equity  and
comprehensive  loss and cash  flows  for each of the three  years in the  period
ended September 30, 2007. Our audits also included financial  statement Schedule
II, listed in the index at Item 15(a). 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  audits.  We did not audit the  financial  statements  of
Global Payment Technologies  Australia Pty Limited (GPTA) and eCash Holdings Pty
Limited (eCash), 50% and 35%,  respectively,  owned investee companies which the
Company sold effective  August 31, 2006. The Company's equity in earnings (loss)
of GPTA and eCash was $593,000 and  $590,000,  respectively,  for the year ended
September 30, 2006 and $253,000 and ($50,000),  respectively, for the year ended
September 30, 2005.  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 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 and the reports of
the other auditors provide a reasonable basis for our opinion.

In our opinion,  based on our audits 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, 2007 and 2006, and the consolidated  results of
their  operations and their cash flows for each of the three years in the period
ended September 30, 2007, in conformity with U.S. generally accepted  accounting
principles. Also, in our opinion, the related financial statement Schedule, 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.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has suffered recurring losses and
deficiencies  in cash flows from  operations.  These factors  raise  substantial
doubt about its ability to continue as a going  concern.  Management's  plans in
regard to these matters are also described in Note 1. The consolidated financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.

As discussed in Note 2(o) to the consolidated  financial  statements,  effective
October 1, 2005, the Company  changed its method of accounting  for  share-based
compensation.


/s/ Eisner LLP
New York, New York
January 22, 2008



                                       45
<PAGE>
                        GLOBAL PAYMENT TECHNOLOGIES, INC.
                           Consolidated Balance Sheets
                           September 30, 2007 and 2006
              (Dollar amounts in thousands, except per share data)
<TABLE>
<CAPTION>
<S>                                                          <C>          <C>

                       Assets                              2007          2006
                                                        ------------  -----------
Current assets:
   Cash and cash equivalents                          $         879 $      2,352
   Cash held in escrow                                            -          280
   Accounts receivable, less allowance for doubtful accounts
     of $86 and $159, respectively                            1,030        2,065
   Inventory, net                                             3,768        5,040
   Prepaid expenses and other current assets                    178          218
                                                        ------------  -----------
           Total current assets                               5,855        9,955
Property and equipment, net                                     822        1,249
Capitalized software costs, net                                  89          561
Other assets                                                     36            -
                                                        ------------  -----------
           Total assets                               $       6,802 $     11,765
                                                        ============  ===========
        Liabilities and Shareholders' Equity
Current liabilities:
   Borrowing under debt facility                      $         353 $          -
   Current portion of long-term debt                             40           60
   Accounts payable                                           2,003        1,579
   Accrued expenses and other current liabilities               936        1,249
                                                        ------------  -----------
           Total current liabilities                          3,332        2,888

Long-term debt                                                    -           40
                                                        ------------  -----------

           Total Liabilities                                  3,332        2,928
                                                        ------------  -----------

Commitments and Contingency (note 11)

Shareholders' equity:
   Common stock, par value $0.01; Authorized 20,000,000 shares;
     issued 6,772,185 and 6,497,185 shares, respectively         68           65
   Additional paid-in capital                                13,912       13,609
   Accumulated deficit                                       (9,024)      (3,433)
   Accumulated other comprehensive income                        13           95
                                                        ------------  -----------
                                                              4,969       10,336
Less treasury stock, at cost,  278,984 shares                (1,499)      (1,499)
                                                        ------------  -----------
           Total shareholders' equity                         3,470        8,837
                                                        ------------  -----------
           Total liabilities and shareholders' equity $       6,802 $     11,765
                                                        ============  ===========
See accompanying notes to consolidated financial statements.
</TABLE>

                                      F-2

<PAGE>

      GLOBAL PAYMENT TECHNOLOGIES, INC.
    Consolidated Statements of Operations
  Years ended September 30, 2007, 2006, and 2005
(Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
<S>                                               <C>           <C>           <C>

                                                 2007          2006          2005
                                              ------------  ------------  ------------
Net sales:
         Non-affiliates                     $      11,602 $      10,751  $     15,547
         Affiliates                                     -         3,552        10,339
                                              ------------  ------------  ------------
                                                   11,602        14,303        25,886
Cost of sales                                      10,212        12,528        19,019
                                              ------------  ------------  ------------
                  Gross profit                      1,390         1,775         6,867
Operating expenses                                  6,975         7,429         7,051
                                              ------------  ------------  ------------
                  Loss from operations             (5,585)       (5,654)         (184)
                                              ------------  ------------  ------------
Other income (expense):
         Equity in income of unconsolidated
            affiliates, net                                       1,183           203
         Gain on sale of investments in
            unconsolidated affiliates                               307             -
         Interest income (expense), net               (38)           23          (613)
                                              ------------  ------------  ------------
                  Other (expense) income              (38)        1,513          (410)
                                              ------------  ------------  ------------
                  Loss before provision
                    (benefit) for income taxes     (5,623)       (4,141)         (594)
Provision (benefit) for income taxes                  (32)            2           (21)
                                              ------------  ------------  ------------
                  Net loss                  $      (5,591)$      (4,143) $       (573)
                                              ============  ============  ============
Net loss per share:
         Basic                              $       (0.89)$       (0.67) $       (0.10)
         Diluted                                    (0.89)        (0.67)         (0.10)
Common shares used in computing
    net loss per share amounts:
            Basic                               6,296,557     6,218,201     5,976,467
            Diluted                             6,296,557     6,218,201     5,976,467

</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-3
<PAGE>

                        GLOBAL PAYMENT TECHNOLOGIES, INC.
         Consolidated Statements of Shareholders' Equity and Comprehensive Loss
                 Years ended September 30, 2007, 2006, and 2005
                (Dollar amounts in thousands, except share data)
<TABLE>
<CAPTION>
<S>                                   <C>         <C>        <C>      <C>       <C>        <C>             <C>        <C>      <C>


                                                   -------------------                      Accumulated    -----------------
                                      Comprehensive    Common stock   Additional            Other           Treasury stock
                                                   ------------------- paid-in  Accumulated Comprehensive  -----------------
                                           loss      Shares    Amount  capital   deficit    Income         Shares    Amount   Total
                                         --------- --------- --------- --------- --------- ---------       -------- --------  ------
Balance at September 30, 2004                      5,880,750       59    10,800     1,283       464  (278,984)   (1,499)   11,107
   Net loss                                  (573)        -         -         -      (573)        -         -         -      (573)
   Cumulative translation adjustment
    of foreign investments-gain               185         -         -         -         -       185         -         -       185
                                        ---------
   Comprehensive loss                        (388)        -         -         -         -         -         -         -         -
                                        =========
   Fair value of stock options issued           -         -        36         -         -         -         -        36
   Conversion of convertible notes                  498,826         5     2,120         -         -         -         -     2,125
   Exercise of common stock options,
    including income tax benefits of $0             117,609         1       490         -         -         -         -       491
                                                   --------        --      ----        --        --        --        --      ---
Balance at September 30, 2005                     6,497,185        65    13,446       710       649  (278,984)   (1,499)   13,371
   Net loss                                (4,143)        -         -         -    (4,143)        -         -         -    (4,143)
   Reclassification to operations in
    connection with sales of
    foreign affiliates                       (506)                                             (506)                         (506)
   Cumulative translation adjustment
    of foreign investments-loss               (48)        -         -         -         -       (48)        -         -       (48)
                                        ---------
   Comprehensive loss                      (4,697)        -         -         -         -         -         -         -         -
                                        =========
   Fair value of stock options issued                     -         -       163         -         -         -         -       163
                                                   -------- --------- --------- --------- --------- --------- --------- ------------
Balance at September 30, 2006                     6,497,185        65    13,609    (3,433)       95  (278,984)   (1,499)    8,837
   Net loss                             $  (5,591)                                 (5,591)                                 (5,591)
   Cumulative translation adjustment
    of foreign investments-loss               (82)                                              (82)                          (82)
                                        ---------
   Comprehensive loss                   $  (5,673)
                                        =========
   Common stock issued in connection                                                                                            -
       with the extension of debt facility            275,000       3       159                                               162
   Fair value of warrants issued with                                                                                           -
       the extension of debt facility                                        44                                                44
   Fair value of stock options issued                                       100                                               100
                                                  --------- --------- --------- --------- --------- --------- --------- ---------
Balance at September 30, 2007                      6,772,185    68     13,912      (9,024)    13     (278,984)   (1,499)    3,470
                                                  ========= ========= ========= ========= ========= ========= ========= =========
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>
                              GLOBAL PAYMENT TECHNOLOGIES, INC.
                            Consolidated Statements of Cash Flows
                        Years ended September 30, 2007, 2006, and 2005
                                (Dollar amounts in thousands)
<TABLE>
<CAPTION>
<S>                                                                                            <C>      <C>        <C>

                                                                                               2007     2006     2005
                                                                                              -------- -------- --------
Operating activities:
  Net loss                                                                                    $(5,591) $(4,143) $  (573)
  Adjustments to reconcile net loss to net cash (used in) operating activities:

    Equity in income of unconsolidated affiliates                                                       (1,183)    (203)
    Gain on sale of investments in unconsolidated affiliates                                              (307)       -
    Dividend distributions from unconsolidated affiliates                                                  574        -
    Depreciation and amortization                                                               1,067    1,118    1,592
    Debt costs amortization                                                                       168
    Provision for losses on accounts receivable                                                   (32)      61       47
    Provision for inventory obsolescence                                                           60      567      300
    Share based compensation expense                                                              100      163       36
    Amortization of debt discount                                                                   -       61      568
    Changes in operating assets and liabilities:
      Decrease(increase) in accounts receivable                                                 1,026     (740)  (1,042)
      Decrease in accounts receivable from affiliates                                               -    2,416    1,866
      Decrease (increase) in inventory                                                          1,172     (530)  (2,830)
      Decrease (increase) in prepaid expenses and other current assets
                                                                                                  103      (14)      42
      Increase in other assets                                                                    (36)       -        -
      Decrease in income tax receivable                                                             -       25       90
      Increase (decrease) increase in accounts payable                                            420     (513)    (181)
      (Decrease) increase in accrued expenses and other liabilities
                                                                                                 (310)     115     (146)
                                                                                               -------  -------  -------
        Net cash (used in) by operating activities                                             (1,853)  (2,330)    (434)
                                                                                               -------  -------  -------
Investing activities:
  Purchases of property and equipment                                                            (168)    (176)    (340)
  Proceeds from sale of investments in unconsolidated affiliates                                    -    1,798        -
  Proceeds from escrow account                                                                    280        -        -
                                                                                               -------  -------  -------
        Net cash provided by (used in) investing activities                                       112    1,622     (340)
                                                                                               -------  -------  -------
Financing activities:
  Repayments of notes payable to bank                                                             (60)     (48)     (63)
  Net borrowing from debt facility                                                                353        -        -
  Debt costs                                                                                      (25)       -      492
                                                                                               -------  -------  -------
        Net cash provided by (used in) by financing activities                                    268      (48)     429
                                                                                               -------  -------  -------
        Net decrease in cash and cash equivalents
                                                                                               (1,473)    (756)    (345)
Cash and cash equivalents at beginning of year                                                  2,352    3,108    3,453
                                                                                               -------  -------  -------
Cash and cash equivalents at end of year                                                      $   879  $ 2,352  $ 3,108
                                                                                               =======  =======  =======
Cash paid during the year for:
  Interest                                                                                    $    61  $     8  $    59
  Income taxes                                                                                               -        7

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

  Reduction of convertible notes and increase in common stock and additional paid-in capital
   due to conversion of notes                                                                 $     -  $     -  $ 2,125

  Increase in debt costs and additional paid in capital from issuance of 275,000 shares of
   common stock and 75,000 warrants to lender in connection with extension of debt facility
                                                                                              $   206        -        -
Non cash investing activities:
  Machinery acquired through capital lease                                                    $     -  $    31  $   130
  Proceeds from sale of investments in unconsolidated affiliates held in escrow               $     -  $   280  $     -
</TABLE>


See accompanying notes to consolidated financial statements.

                                      F-5
<PAGE>


(1)  Organization, Nature of Business and Basis of Presentation

(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  SA-4,  Argus,  Aurora and  Falcon  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,  some of which are  foreign,  for  certain  housings,  parts and
     components,  including certain  microprocessor  chips and short wave length
     light  sources.  In addition,  certain of such  suppliers hold inventory on
     behalf of the Company.

(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.

     See note 2(d) and note 3 for a description of the Company's  investments in
     unconsolidated affiliates, which it sold in fiscal 2006.

(c)  Significant Customers

     The Company's  largest  customers for 2007,  2006,  and 2005  represent the
     following  percentages of net sales and accounts receivable,  respectively:

                          2007       2006       2005
                         --------- ---------- -----------
Net sales:
  Customer A                41%       28%         40%
  Customer B                N/A       N/A         16%
Accounts receivable:
  Customer A                71%       80%         58%

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 was the  Company's  unconsolidated  affiliate  in  Australia,  which
interest was sold in the fourth quarter of fiscal 2006 (see note 3).



                                       46
<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:

<TABLE>
<CAPTION>
                                                 Year ended September 30
                                   ---------------------------------------------------
                                         2007             2006             2005
                                   ---------------- ---------------- -----------------
                                                     (In thousands)
<S>                               <C>                  <C>             <C>
Domestic revenues (United States) $           1,061    $       1,340   $         1,881
                                   ---------------- ---------------- -----------------
International revenues:
  Australia                                   4,770            3,292             9,509
  Europe                                      3,297            5,225            11,207
  All others                                  2,474            4,446             3,289
                                   ---------------- ---------------- -----------------
                                             10,541           12,963            24,005
                                   ---------------- ---------------- -----------------
            Total revenues        $          11,602   $       14,303   $        25,886
                                   ================ ================ =================
</TABLE>

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.

(e)   Basis of Presentation

     The  accompanying  consolidated  financial  statements  have been  prepared
     assuming  that  the  Company  will  continue  as  a  going  concern,  which
     contemplates  the realization of assets and  satisfaction of liabilities in
     the normal course of business.  The Company has suffered  recurring  losses
     and  deficiencies in cash flows from operations.  Accordingly,  the Company
     will be required to identify additional revenue resources, raise additional
     capital  and/or  significantly  reduce  its  expenses  in  order to pay its
     obligations  as they  become  due.  As  discussed  in Note 12, the  Company
     entered into a debt  financing  agreement  and is  undertaking  a corporate
     restructuring  to attempt to improve  operating  results  and  develop  new
     products,  however,  there  can be no  assurance  that such  plans  will be
     successful. These uncertainties raise substantial doubt about the Company's
     ability to  continue  as a going  concern.  The  accompanying  consolidated
     financial  statements  do  not  include  any  adjustments  relating  to the
     recoverability   of  the  carrying  amount  of  assets  or  the  amount  of
     liabilities that might result from the outcome of these uncertainties.


(2)  Summary of Significant Accounting and Reporting Policies

(a)  Principles of Consolidation

     The  consolidated  financial  statements  include  the  accounts  of Global
     Payment Technologies, Inc., and its wholly owned subsidiary GPT-Europe. All
     intercompany   balances   and   transactions   have  been   eliminated   in
     consolidation.

(b)  Revenue Recognition

     Non-affiliates



                                       47
<PAGE>


     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

     During  fiscal  2006,  the Company  sold its  interests  in its  affiliated
     customers. Prior to such dispositions,  the Company recognized revenue upon
     shipment and passage of title,  to its affiliated  customers,  but deferred
     its proportionate  share of the related gross profit on product sales until
     sales were made by the affiliated  customers to their third-party end users
     (customers), in accordance with Accounting Principles Board ("APB") Opinion
     No. 18, The Equity Method of  Accounting  for  Investments  in Common Stock
     ("APB No. 18") (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.

(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  (loss)  until
     realized through sale or liquidation of the investment.  Exchange gains and
     losses incurred on foreign currency transactions including foreign currency
     used for test purposes  referred to in (f), which were not material  during
     fiscal 2007, 2006, and 2005, are included in net loss.

(f)  Cash and Cash Equivalent

     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 $498,000
     and $741,000,  as of September 30, 2007 and 2006,  respectively consists of
     currency used to test the Company's products.



                                       48
<PAGE>


(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 carrying amount
     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.

(i)  Capitalized Software Costs

     In accordance with Statement of Financial Accounting Standards ("SFAS") No.
     86,  Accounting  for the Costs of Computer  Software to be Sold,  Leased or
     Otherwise   Marketed   ("SFAS  No.  86"),   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  as  having  been  met upon
     completion of a detail program design.  No internally-  generated  software
     development  costs were  capitalized  during fiscal years 2007,  2006,  and
     2005. The Company  recorded  amortization in accordance with SFAS No. 86 of
     $472,000,  $472,000,  and $579,000 for the fiscal years ended September 30,
     2007,  2006 and 2005,  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, 2007 and 2006
     were $89,000 and $561,000, 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 ("SFAS No. 144"). 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.

(k)  Research and Development

     Research  and  development  costs  incurred by the Company are  included in
     operating  expenses in the year incurred.  Such costs amounted to $713,000,
     $333,000, and $55,000 in fiscal 2007, 2006 and 2005, respectively.



                                       49
<PAGE>


(l)  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  damages  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)).

     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.

(m)  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  purposes and their tax bases at the enacted  rates at
     which these differences are expected to reverse. See note 10.

(n)  Per Share Data

     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 2007, 2006 and 2005 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:[GRAPHIC

                                Year ended September 30
                   --------------------------------------------------
                        2007             2006             2005
                   --------------- ---------------- -----------------

Stock options              711,360        1,290,550           859,999
Stock warrants             275,000          200,000           200,000
Convertible Debt                 0                0           197,740
                   --------------- ---------------- -----------------
Total                      986,360        1,490,550         1,257,739
                   =============== ================ =================



                                       50
<PAGE>


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

<TABLE>
<CAPTION>
                                                 Year ended September 30
                                   ---------------------------------------------------
                                               2007             2006              2005
                                   ---------------- ---------------- -----------------
                                     (In thousands, except share and per share data)
Numerator:
  Net loss attributable to
<S>                               <C>                <C>              <C>
    common stockholders           $         (5,591)  $       (4,143)  $          (573)
                                   ---------------- ---------------- -----------------
Denominator:
  Weighted average common shares
    outstanding - basic                   6,296,557        6,218,201         5,976,467
  Effect of dilutive securities:
    Stock options and warrants                   --               --                --
    Convertible loan                             --               --                --
                                   ---------------- ---------------- -----------------
  Weighted average common shares
    outstanding - diluted                 6,296,557        6,218,201         5,976,467
                                   ================ ================ =================
Basic EPS                         $          (0.89)  $        (0.67)  $         (0.10)
Diluted EPS                                  (0.89)           (0.67)            (0.10)
</TABLE>


(o)  Stock-Based Compensation

     Effective  October 1, 2005,  the Company  adopted  Statement  of  Financial
     Accounting Standards No. 123 (Revised 2004), Share Based Payment ("SFAS No.
     123R"),  which  requires a public  entity to measure the cost of  employee,
     officer and director  services  received in exchange for an award of equity
     instruments  based on the grant date fair value of the award. SFAS No. 123R
     supersedes the Company's previous accounting under SFAS No. 123, Accounting
     for Stock-Based  Compensation ("SFAS No. 123"), which permitted the Company
     to account for such compensation under Accounting  Principles Board Opinion
     No. 25,  Accounting for Stock Issued to Employees ("APB No. 25").  Pursuant
     to APB No. 25, and related  interpretations,  no compensation cost had been
     recognized in connection with the issuance of stock options, as all options
     granted under the Company's  stock option plans had an exercise price equal
     to or greater than the market value of the  underlying  common stock on the
     date of the grant.

     In advance of implementing  the requirements of SFAS No. 123R, the Company,
     in September  2005,  accelerated  the vesting of all unvested stock options
     previously  awarded to employees,  officers and directors in order to avoid
     the recognition of compensation expense under SFAS No.123R, with respect to
     these options as the market price of the Company's common stock on the date
     the  vesting  was  accelerated  was  less  than the  exercise  price of the
     modified stock option,  no  compensation  expense was recognized  under APB
     No.25 as a result of the modification of the vesting terms of the options.

     The Company adopted SFAS No. 123R using the modified prospective transition
     method, which requires that compensation cost be recorded as earned for all
     unvested  stock  options  outstanding  at the beginning of the first fiscal
     year of  adoption  of SFAS No.  123R  based  upon the grant date fair value
     estimated in  accordance  with the original  provisions of SFAS No. 123 and
     for all share-based  payments granted subsequent to the adoption,  based on
     the grant date fair value.  In  accordance  with the  modified  prospective
     transition  method,  the Company's  consolidated  financial  statements for
     prior  periods have not been restated to reflect,  and do not include,  the
     impact of SFAS No. 123R.  In the fiscal years ended  September 30, 2007 and
     2006,  respectively  as a result of adoption of SFAS  No.123R,  the Company
     recorded  share-based  compensation for options  attributable to employees,
     officers and directors of $100,000 and $163,000, respectively.



                                       51
<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 2005.

                                                 2005
                                    -----------------
                                    (In thousands, except per share data)
Net loss:
  As reported                      $            (573)
  Deduct: Compensation expense
         determined under FMV                 (1,156)        (a)
                                    -----------------
  Pro forma                                   (1,729)
Net loss per common
  share - basic and diluted:
    As reported                    $           (0.10)
    Pro forma                                  (0.29)

     (a)  Includes $652,000 from acceleration of vesting of outstanding options.

(p)  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, 2007 and 2006, due to
     currency  fluctuations,  the  cumulative  currency  translation  adjustment
     related to the Company's  investments in foreign affiliates was $13,000 and
     $95,000,  respectively,  which is reflected in shareholders'  equity in the
     accompanying  consolidated balance sheets. In 2006, cumulative  translation
     gains of $506,000 were  transferred from  accumulated  other  comprehensive
     income to operations in connection with the sale of the foreign affiliates.

(q)  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.

(r)  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).



                                       52
<PAGE>


(s)  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.

(t)  Recently Issued Accounting Pronouncements

     In July 2006, the FASB issued Interpretation No. 48 ("FIN 48"), "Accounting
     for  Uncertainty  in Income  Taxes,"  which  clarifies the  accounting  for
     uncertainty  in income taxes  recognized  in the  financial  statements  in
     accordance  with FASB Statement SFAS No. 109,  Accounting for Income Taxes.
     FIN  48  provides  guidance  on the  financial  statement  recognition  and
     measurement  of a tax  position  taken  or  expected  to be  taken in a tax
     return.  FIN 48 also provides  guidance on  derecognition,  classification,
     interest and  penalties,  accounting in interim  periods,  disclosures  and
     transition.  FIN 48 is effective for fiscal years  beginning after December
     15, 2006.  The Company is currently  evaluating the impact of this standard
     on the Consolidated Financial Statements.

     In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements."
     SFAS No. 157 defines fair value, establishes a framework for measuring fair
     value  in  U.S.  generally  accepted  accounting   principles  and  expands
     disclosures  about fair value  measurements.  SFAS No. 157 is effective for
     fiscal years  beginning  after November 15, 2007 and interim periods within
     those fiscal years. The Company is currently evaluating the effect that the
     adoption of SFAS No. 157 will have on its consolidated  financial  position
     and results of operations.

     In  February  2007,  the FASB  issued  FAS No.  159,  "The  Fair  Value for
     Financial  Assets and Financial  Liabilities"  ("FAS No. 159"). FAS No. 159
     permits  entities to choose to measure  financial  assets and  liabilities,
     with certain  exceptions,  at fair value at specified  election dates.  The
     objective is to improve financial  reporting by providing entities with the
     opportunity to mitigate volatility in reported earnings caused by measuring
     related assets and liabilities  differently without having to apply complex
     hedge  accounting  provisions.  A business  entity shall report  unrealized
     gains and losses on items for which the fair value  option has been elected
     in earnings at each subsequent reporting date. FAS No. 159 is effective for
     the  Company in fiscal  years  beginning  October 1, 2008.  The  Company is
     currently  evaluating  the  impact  of FAS  No.  159  on  its  consolidated
     financial position and results of operations.

     In December 2007, the FASB issued FAS No. 160, "Noncontrolling Interests in
     Consolidated  Financial  Statements-an  amendment  of ARB No. 51" ("FAS No.
     160"). FAS No. 160 establishes  accounting and reporting  standards for the
     noncontrolling  interest in a subsidiary and for the  deconsolidation  of a
     subsidiary.  It clarifies that a noncontrolling interest in a subsidiary is
     an ownership interest in the consolidated entity that should be reported as
     equity in the consolidated  financial statements.  FAS No. 160 is effective
     for the Company in fiscal years  beginning  October 1, 2009. The Company is
     currently  evaluating  the  impact  of FAS  No.  160  on  its  consolidated
     financial position and results of operations.



                                       53
<PAGE>


     In December  2007,  the FASB  issued FAS No. 141 R "Business  Combinations"
     ("FAS No. 141R"). FAS No. 141R establishes  principles and requirements for
     how the acquirer of a business  recognizes  and  measures in its  financial
     statements the identifiable assets acquired,  the liabilities  assumed, and
     any  noncontrolling  interest in the  acquiree.  FAS No. 141R also provides
     guidance  for  recognizing  and  measuring  the  goodwill  acquired  in the
     business  combination and determines what information to disclose to enable
     users of the  financial  statements  to evaluate  the nature and  financial
     effects of the  business  combination.  FAS No. 141R is  effective  for the
     Company in fiscal year beginning October 1, 2009. While the Company has not
     yet evaluated this statement for the impact, if any, that FAS No. 141R will
     have on its consolidated financial position and results of operations,  the
     Company will be required to expense costs related to any acquisitions after
     September 30, 2009.

(u)  Reclassification

     Certain   reclassifications  have  been  made  to  prior  period  financial
     information to conform to current period presentation.



(3)  Unconsolidated Affiliates

     Net sales to unconsolidated  Australia  affiliates for fiscal year 2006 and
     2005 amounted to $3,552,000 and $10,339,000, respectively.

(a)  Australia

     In fiscal 1997, the Company acquired a 50%  non-controlling  interest in an
     Australian affiliate, Global Payment Technologies Australia Pty Ltd (GPTA).
     On September 2, 2006, the Company sold its 50% non controlling interest for
     a total of  approximately  $1,791,000 of which  $1,511,000  was received in
     cash at closing and  $280,000  was placed in escrow and was released on the
     one year  anniversary of the  transaction.  The purchaser is related to the
     registered holder of the remaining 50% of the issued and outstanding shares
     of GPTA.  The Company  also  entered  into a 5 year  exclusive  distributor
     agreement  with GPTA  which is  responsible  for sales and  service  of the
     Company's products in Australia, New Zealand and the Pacific Rim.

     In June 2002, the Company and two other shareholders  formed eCash Holdings
     Pty.  Ltd  (eCash),  an  Australian  based  company to market,  distribute,
     service and support  automated  teller  machines  across  Australia and New
     Zealand.  The Company  owned a 35% interest in this  entity.  On August 25,
     2006,  the Company  sold its total  interest  for a cash  consideration  of
     $286,908.

     The  accompanying  consolidated  results  of  operations  include a gain of
     approximately  $307,000  in 2006  relating  to the  sale  of the  Company's
     interests in GPTA and eCash.

     The accompanying  consolidated  results of operations include the Company's
     equity in the results of operations  of these  affiliates in the amounts of
     $648,000  and  $236,000  in fiscal  2006 and 2005,  respectively.  The 2006
     amount  includes  $625,000,  representing  the  Company's  share  of a gain
     recognized  by eCash on the sale of its  automatic  teller  machine  rental
     business.  For fiscal 2006 and 2005 the  Company  increased  (reduced)  its
     equity in income of  unconsolidated  affiliates by $535,000 and  $(33,000),
     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. The
     Company  also  received  cash  dividends  of  $574,000  and $0  from  these
     affiliates for fiscal 2006 and 2005,  respectively.  Subsequent to the sale
     of its  interests  in GPTA and eCash,  the Company no longer  defers  gross
     profit on sales to such affiliates.



                                       54
<PAGE>


(b)  Evolve - UK

     In fiscal  1999,  the Company  acquired a  non-controlling  25% interest in
     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.  In fiscal 2007 and
     2006, the Company did not make any additional investment.

     In fiscal  2002,  the  Company  recorded  a non-cash  charge to  operations
     related to the  impairment  of its  equity-method  investment in Abacus-UK,
     pursuant to APB No. 18, The Equity Method of Accounting for  Investments in
     Common Stock.  The impairment  charge reduced the investment to zero.  This
     impairment loss, which was considered other than temporary,  was due to the
     deterioration  of the  financial  condition of this entity.  The  Company's
     consolidated  results of operations for the years ended  September 30, 2007
     and 2006 do not include the Company's  equity in the loss of this affiliate
     as the equity investment was previously reduced to zero.

     In February  2005,  the Company  exchanged  its 25%  ownership  interest in
     Abacus-UK  for a 12.5%  ownership  interest in  Evolve-UK.  The exchange of
     ownership  did not require the  Company to make an  additional  investment.
     Evolve-UK owns 100% of Abacus-UK and Evolve 100, which provides  integrated
     and  stand-alone  cash  management  systems to the retail industry for coin
     currency handling.

     At the time of the exchange,  Evolve-UK had incurred  recurring losses, had
     an  accumulated  deficit  and  required  additional  funding to further its
     research  and  development.   Therefore,  the  Company  believes  that  its
     investment  in  Evolve-UK  has  nominal  value.  Accordingly,  no gain  was
     recorded by the Company on the  exchange  and, as the Company does not have
     the ability to exercise  significant  influence over Evolve-UK's  operating
     and financial policies,  its investment in Evolve-UK has been accounted for
     at cost with a carrying value of zero.



                                       55
<PAGE>


(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, except for fiscal 2006.  Due to the
     sale of the Company's  interests in GPTA and eCash,  operating  results are
     included  through  August 31, 2006,  the effective  date of the sale of the
     entities. The following summary financial information reflects the combined
     operating  results for their fiscal years ended June 30, 2006 and 2005, and
     for the two months ended August 31, 2006.

                                 (in thousands)
<TABLE>
<CAPTION>
                             Two Months ended        Year ended        Year ended
                               Aug 31, 2006        June 30, 2006      June 30, 2005
                         -----------------------  ------------------  ---------------
<S>                       <C>                    <C>               <C>
Net sales                 $                1,963 $          11,635 $           14,245
Operating Income(Loss)                        39             (747)              (340)
Net income                                    61             1,746                429
</TABLE>

(5)  Inventory

     The following is a summary of the composition of inventory:

                                    September 30
                        -------------------------------------
                              2007                2006
                        ----------------   ------------------
                                   (In thousands)
Raw materials          $           2,457  $             4,104
Work-in-progress                     544                  358
Finished goods                       767                  578
                        ----------------   ------------------
                       $           3,768  $             5,040
                        ================   ==================



                                       56
<PAGE>


(6)  Property and Equipment, Net

     Major classifications of property and equipment are as follows:

<TABLE>
<CAPTION>
<S>                                     <C>                      <C>           <C>
                                      Useful lives          2007          2006
                                   -------------------  -------------  ------------

    Leasehold improvements           Shorter of the
                                    life of the lease
                                    or useful life of
                                   asset               $          94  $        266
    Furniture and fixtures              3-7 years                410           410
    Machinery and equipment             3-10 years             3,468         3,409
    Tooling and molds                    7 years               1,839         1,839
    Computer software                    5 years               1,037         1,016
    Computer hardware                    3 years               1,077         1,071
                                                        -------------  ------------
                                                               7,925         8,011
                                                                       ------------
    Less accumulated
     depreciation/amoritization                               (7,103)       (6,762)
                                                        -------------  ------------
    Property and Equipment, net                        $         822         1,249
                                                        =============  ============
</TABLE>


Depreciation and amortization expense was $595,000,  $646,000,  and $916,000 for
the fiscal years ended September 30, 2007, 2006 and 2005, respectively.

(7)  Accrued Expenses and Other Current Liabilities

     Accrued expenses and other current liabilities consist of the following:


                                   2007          2006
                                ----------- --------------
Accrued legal and accounting     $      177  $         132
Warranty costs                          108            309
Accrued commissions                       -              4
Customer Deposits                       184            110
Administrative and other                467  $         694
                                ----------- --------------
             Total               $      936  $       1,249
                                =========== ==============



                                       57
<PAGE>


(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 was 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 was  collateralized  by  substantially  all  assets  of the  Company.
Interest was 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 per share prices of $4.87, $5.28
and $5.68 for  100,000,  60,000 and  40,000  warrants,  respectively.  Under the
agreement,  the  Company was  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,
2004,  $1,425,000 was outstanding under the CTN. During the year ended September
30,  2005,  the  Company  repaid  $50,000  and Laurus  converted  the  remaining
$1,375,000 of the CTN into 323,000 shares of common stock, resulting in the full
repayment  of the CTN.  As a result of the CTN being  fully  repaid,  $29,000 of
unamortized  closing  costs related to the CTN were charged to operations in the
year ended September 30, 2005.

The value allocated to the warrants resulted in a debt discount of $506,000 that
was being recognized as interest expense over the term of the CTN. 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
was being  recognized  as interest  expense  over the term of the CTN.  Interest
expense  was  computed  utilizing  the  interest  method,  which  results  in an
effective  yield  over  the  term of the  CTN.  As the CTN  was  converted,  the
unamortized discount related to the amount converted was immediately  recognized
as interest  expense and charged to operations.  Amortization for the year ended
September 30, 2005 was $568,000.

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 of which were  originally
due in March 2007 and which were extended  through November 15, 2007 (the RN and
the MBN 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%. During the year
ended  September  30, 2005,  Laurus  converted  $750,000 of the MBN into 176,000
shares of common  stock.  At  September  30, 2007 and 2006,  $353,000 and 0 were
outstanding under the LOC.

The  agreements,  as amended on June 18,  2007,  provide  that Laurus  would 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 9.99% of the  number of  outstanding  shares,  including  warrants,  of the
Company's common stock at the time of conversion or exercise.

The June 18, 2007  amendment  provides  Laurus with 275,000 shares of fully paid
and  nonassessable  restricted  shares of the common  stock of the Company and a
Common Stock  Purchase  Warrant  immediately  exercisable  for 75,000  shares of
Common Stock of the Company at $0.01 per share which does not have an expiration
date.  The Company  valued the shares and warrant at $206,000  ($.59 per share),
the market value of the  Company's  common  stock at the date of the  amendment.
Such amount has been recorded as deferred debt costs with a corresponding credit
to additional  paid-in capital and is being amortized through November 15, 2007,
the maturity date.  Amortization for 2007 amounted to $143,000. The Company also
paid Laurus $25,000 in connection  with a prior  amendment that had extended the
due date to May 16, 2007, which was charged to operations in 2007.



                                       58
<PAGE>


The Company's  credit facility with Laurus was paid in full on the maturity date
of November 15, 2007. The facility was terminated.

Registration  rights  agreements were entered into with Laurus which require the
Company to file  registration  statements  for the  resale of the  common  stock
issuable upon  conversion of the notes and upon the exercise of the warrants and
to use  commercially  reasonable  efforts  to have the  registration  statements
declared  effective by the end of a specified  grace  period.  In addition,  the
Company is  required to use  commercially  reasonable  efforts to  maintain  the
effectiveness  of the  registration  statements  until all such common stock has
been sold or may be sold without volume restrictions  pursuant to Rule 144(k) of
the  Securities  Act. If the Company fails to have the  registration  statements
declared   effective  within  the  grace  period  or  if  effectiveness  is  not
maintained,  the agreements  require cash payments of liquidated  damages by the
Company to Laurus at 1.0% per month,  with  respect to the CTN or the  warrants,
and  2.0%  per  month,  with  respect  to the MBN,  of the  respective  original
principal  amounts until the failure is cured.  The  registration  statement was
filed and declared effective within the specified grace period.

The  Company  accounts  for  the  registration  rights  agreements  as  separate
free-standing  financial  instruments  and accounts for the  liquidated  damages
provisions  therein as a derivative  liability subject to the provisions of SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS No.
133").  Accordingly,  the liability is recorded at estimated fair value based on
an estimate of the  probability  and costs of potential  cash  penalties  and is
revalued  at each  balance  sheet date with  changes in value  recorded in other
income. As of September 30, 2007 no liability was recorded as the Company deemed
the  fair  value  of any  potential  cash  settlement  relating  to  maintaining
effectiveness of the registration statements to be nominal.

In May, 2005, the Company  entered into a capital lease  agreement for machinery
in the amount of $130,000.  The note is to be repaid in monthly  installments of
$4,040 over a three year  period.  Interest is being  charged at a rate of 7.44%
per annum.  The balance at September  30, 2007 and 2006 was $31,000 and $76,000,
respectively.

In March, 2006, the Company entered into a capital lease agreement for machinery
in the amount of $31,000.  The note is to be repaid in monthly  installments  of
$1,381 over a two year period.  Interest is being charged at a rate of 7.25% per
annum.  The  balance at  September  30,  2007 and 2006 was $9,  000 and  $24,000
respectively.

Outstanding  debt with respect to the capital lease as of September 30, 2007 and
2006 is as follows:

                                    (In thousands)

                                       2007         2006
                                   ------------- ------------
Total debt                          $        41   $      106
Less amount representing interest            (1)          (6)
                                   ------------- ------------
Net                                          40          100
Less current portion                        (40)         (60)
                                   ------------- ------------
Long term debt                      $         -   $       40
                                   ============= ============



                                       59
<PAGE>


(9)   Share-Based Payments

       Options

The Company has several  stock option plans in effect  covering in the aggregate
2,300,000 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 1994 and 1996 stock
option plans expired on October 17, 2004 and March 18, 2006,  respectively,  and
the 2000 and 2006 stock  option  plans  expire on January  25, 2010 and March 7,
2016,  respectively,  after which no more option grants may be issued under such
plans. The stock option plans are all administered by the Compensation 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  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.  Options
granted under these various  plans  generally  vest over three or four years and
expire  seven or ten years from the date of grant,  while  certain  options vest
over one and one-half  years and expire seven years from the date of grant.  The
Company  expects  to issue new  shares  upon  stock  option  exercises,  but has
treasury shares that could be used for this purpose.

During  fiscal  2005,  a total of 32,500  incentive  stock  options  and 127,000
nonqualified  options were granted.  All options  granted in 2005 were to become
exercisable over varying terms up to four years.

On  September  8,  2005,  prior  to the  adoption  of  SFAS  123R,  the  Company
accelerated  the  vesting  of  unvested  stock  options  previously  awarded  to
employees, officers and directors of the Company (see note 2(o).

During fiscal 2006, a total of 830,000  nonqualified  options were granted.  All
options granted in 2006 were to become exercisable over varying terms up to four
years.

There were no options granted in fiscal 2007.



                                       60
<PAGE>


A summary of the Company's stock option plans activity as of September 30, 2007,
and changes during the twelve months then ended is as follows:

<TABLE>
<CAPTION>
<S>                                              <C>         <C>          <C>          <C>
                                                                            Weighted
                                                               Weighted     average        Aggregate
                                                                average    remaining       intrinsic
                                                               exercise   contractual        value
                                                    Shares       price    term (years)  (in thousands)
                                                 ------------ ----------- ------------ -----------------

Outstanding, October 1, 2006                       1,290,550  $      3.12
    Granted                                                -            -
    Exercised                                              -            -
    Forfeited                                       (550,540)        2.77
    Expired                                          (28,650)        8.45
                                                 ------------ -----------
Outstanding, September 30, 2007                      711,360  $      3.18          3.9 $               -
                                                 ============ =========== ============ =================
Vested or expected to vest, September 30, 2007       711,360  $      3.18          3.9 $               -
                                                 ============ =========== ============ =================
Exercisable, September 30, 2007                      501,360  $      3.72          3.1 $               -
                                                 ============ =========== ============ =================
</TABLE>

In connection  with the adoption of SFAS No. 123R,  the Company  reassessed  its
valuation  technique  and related  assumptions.  The Company  estimates the fair
value  of  stock  options  using a  Black-Scholes  valuation  model.  Key  input
assumptions  used to  estimate  the  fair  value of stock  options  include  the
expected term until exercise of the option, expected volatility of the Company's
stock, the risk free interest rate, option  forfeiture rates, and dividends,  if
any. The expected  term of the options is  calculated  using the midpoint of the
vesting date and the expected life of the grant  consistent  with the provisions
of Securities and Exchange  Commission  Staff  Accounting  Bulletin No. 107. The
expected  volatility is derived from the historical  volatility of the Company's
stock for a period that matches the expected  life of the option.  The risk-free
interest  rate is the yield from a treasury  bond or note that is  comparable in
term to the expected life of the option.

Option forfeiture rates are based on the Company's historical  forfeiture rates.
Expected  dividends  are based on the  Company's  history and the  likelihood of
future dividends.

Compensation  costs for stock options with graded vesting are recognized ratably
over the vesting period.  As of September 30, 2007 and 2006,  there was $109,000
and $504,000,  respectively of total unrecognized  compensation costs related to
stock options. These costs are expected to be recognized over a weighted average
period of 1.7 years and 2.2 years, respectively.

The  weighted-average  grant-date  fair value of options  granted for the twelve
months ended September 30, 2006 and 2005 was $0.81 and $3.16, respectively.  The
total intrinsic value of stock options  exercised during the twelve months ended
September 30, 2005 was $238,000.



                                       61
<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:

                                  2006              2005
                            ----------------- -----------------
Expected volatility                 39% - 50%         43% - 62%
Weighted-average volatility             40.3%             49.0%
Expected dividends                       0.0%              0.0%
Expected term (in years)                  3.6               4.1
Risk-free interest rates                4.82%             4.18%

Warrants

As of September 30, 2007, there are 275,000 fully vested warrants outstanding to
purchase  the  Company's  common  stock as follows:  100,000,  60,000 and 40,000
warrants with exercise  prices of $4.87,  $5.28 and $5.68,  respectively,  which
expire in March 2011 and 75,000 warrants  exercisable at $.01 with no expiration
date (See Note 8).

(10) Income Taxes

     For  financial  reporting  purposes,   (loss)/income  before  income  taxes
includes the following components:

                                   Fiscal years ended September 30
                          --------------------------------------------------
                               2007             2006              2005
                          ---------------  ---------------  ----------------
                                            (In thousands)
Pretax (loss)/income:

  United
   States                $        (5,100) $        (4,344) $           (541)
  Foreign                           (523)              203              (53)
                          ---------------  ---------------  ----------------
                         $        (5,623) $        (4,141) $           (594)
                          ===============  ===============  ================



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



                                       62
<PAGE>


                                Fiscal years ended September 30
                       --------------------------------------------------
                            2007             2006              2005
                       ---------------  ---------------  ----------------
                                         (In thousands)
Current:
  Federal             $           (32) $             -- $              --
  State and local                                     2              (21)
                       ---------------  ---------------  ----------------
                                  (32)                2              (21)
                       ---------------  ---------------  ----------------
Deferred:
  Federal                           --               --                --
  State and local                   --               --                --
                       ---------------  ---------------  ----------------
                                    --               --                --
                       ---------------  ---------------  ----------------
    Total             $           (32) $              2 $            (21)
                       ===============  ===============  ================



                                       63
<PAGE>


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

                                                   September 30
                                         --------------------------------
                                                    2007             2006
                                         ---------------  ---------------
                                                  (In thousands)
Deferred tax assets:
  Accounts receivable                   $             20 $             41
  Inventory                                          436              609
  Accrued expenses and other, net                     44              127
  GPT-Europe losses and cumulative
  translations adjustments                           512              271
  Stock option expenses                               93               --
  Tax NOL carryforwards                            5,212            3,425
                                         ---------------  ---------------
           Deferred tax asset                      6,317            4,473
Less: Valuation allowance (a)                    (6,225)          (4,202)
                                         ---------------  ---------------
                                                      92              271
Deferred tax liability:
  Property, plant and equipment                     (92)            (271)

                                         ---------------  ---------------
           Net deferred taxes           $             -- $             --
                                         ===============  ===============


(a)  The Company has incurred  significant  operating losses in the fiscal years
     2007,  2006,  and 2005.  Due to the  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 the Company  provided
     a full valuation allowance to offset its deferred tax asset. This valuation
     allowance  will be  periodically  assessed  and may be  partially or wholly
     reversed in the future.

     As of September 30, 2007, the Company has a net operating loss carryforward
     of $14,278,557 which expires between 2023 through 2027.

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

<TABLE>
<CAPTION>
                                                     Fiscal years ended September 30
                                        ---------------------------------------------------------
                                               2007               2006               2005
                                        ------------------ ------------------ -------------------
<S>                                                <C>                <C>                 <C>
U.S. Federal statutory rate                        (34.0)%            (34.0)%             (34.0)%
State income taxes, net of federal
 effect                                             (2.5)%             (2.5)%              (2.5)%
All other,
 net                                                                                        5.1
Change in valuation allowance                       36.5               36.5                27.9
                                        ------------------ ------------------ -------------------
            Effective income tax rate                0.0%               0.0%               (3.5)%
                                        ================== ================== ===================
</TABLE>



                                       64
<PAGE>


(11) Commitments and Contingency

(a)  Minimum Lease Commitments

The operations of the Company are conducted in leased premises. At September 30,
2007, the  approximate  minimum annual rentals under these leases,  which expire
through fiscal year 2014, were as follows:


Fiscal Year
----------------
2008                                 $         321
2009                                           242
2010                                           249
2011                                           255
2012                                           263
Thereafter                                     591
                                   ---------------
      Total                          $       1,921
                                   ---------------



     Total rent expense for all  operating  leases was $473,000,  $516,000,  and
     $460,000 in fiscal 2007, 2006, and 2005, respectively.

(b)  Purchase Commitment

     At  September  30,  2007  the  Company  had  entered  into  purchase  order
     commitments of approximately $4.0 million which will be used for production
     requirements during fiscal 2008 and beyond.

(c)  Litigation

     The Company is a defendant in matters which arose in the ordinary course of
     business.  In the opinion of  management,  the ultimate  resolution of this
     matter  would  not  have  a  material   adverse  effect  on  the  Company's
     consolidated  financial position,  results of operations or liquidity.  The
     Company  believes  that  an  adequate   provision  has  been  made  in  the
     consolidated financial statements.

(12) Subsequent Events


     On January 15, 2008,  Global  Payment  Technologies,  Inc. (the  "Company")
     entered into a Securities  Purchase  Agreement (the  "Purchase  Agreement")
     with  Exfair  Pty Ltd,  an  Australian  company  ("Exfair")  and GPTA.  The
     transactions  contemplated thereunder are expected to be consummated at two
     closings (as discussed below).

     First Closing



                                       65
<PAGE>


At the first  closing on January  15, 2008 (the  "First  Closing"),  the Company
issued to GPTA a one-year  secured term note in the principal amount of $440,000
(the "Secured  Note") that bears interest at a rate equal to the prime rate plus
3.0%  (provided,  that the  interest  rate  shall not be less than  9.0%) and is
secured by all the assets of the Company  pursuant to a Security  Agreement (the
"Security Agreement"). Additionally, the Company entered into a Voting Agreement
with Exfair and  certain  director-stockholders  of the  Company,  wherein  such
stockholders  agreed to vote in favor of (i) the election of certain  persons to
the  Board of  Directors  of the  Company  and (ii) an  amendment  to  Company's
Certificate  of  Incorporation  establishing  a class  of  Preferred  Stock  (as
discussed below).  Additionally,  the Company entered into a Technology  License
Agreement with GP Australia, pursuant to which the Company has agreed to grant a
license to GP Australia to utilize certain  databases and proprietary  operating
systems if the Company is unable or willing to  continue to provide  support for
such  databases and operating  systems of the Company,  and the parties  thereto
further agreed that if the Company commences  bankruptcy  proceedings,  then the
Company  would  permit  GPTA  to  duplicate  any of the  Company's  intellectual
property as of the  commencement  of such bankruptcy  proceedings.  GPTA and the
Company also agreed to make certain  technical  amendments  to the  Distribution
Agreement dated September 1, 2006.

Second Closing

At the second closing,  which will only occur upon the Company filing its Annual
Report on Form 10-K with the Securities and Exchange  Commission  (the "SEC") by
the date set forth in the Purchase Agreement (the "Second Closing"), the Company
will issue (i) a  Convertible  Note (the  "Convertible  Note") in the  principal
amount of  $400,000  to Exfair,  which note may be  converted  into two  million
shares of Series A Convertible  Preferred Stock, par value US$0.01 per share, of
the Company (the "Preferred  Stock") and (ii) a four-year  Common Stock Purchase
Warrant  (the  "Warrant")  to purchase  5,784,849  shares of Common Stock of the
Company at an exercise price of $0.28 per share. The Convertible Note matures in
June 2009.

The Company's failure to file its Annual Report on Form 10-K with the SEC by the
date set forth in the Secured Note  constitutes  an event of default  thereunder
which  would  allow  GPTA  to  accelerate  the  Secured  Note  and  declare  all
indebtedness, including principal, accrued interest and all other payments under
the Secured Note to be immediately due and payable.

Effective as of the  consummation  of the Second  Closing,  all current  Company
directors  except  Richard  Gerzof will resign and new directors  appointed.  In
addition,  the Company will enter into an Employment  Agreement with Mr. Soussa,
pursuant to which he will be employed as the Company's Chief  Executive  Officer
for a two-year term  commencing  on the date of the Second  Closing at an annual
base salary of  $300,000.  Mr.  Soussa will also be awarded  options to purchase
500,000  shares of the Company's  Common Stock in accordance  with the Company's
stock option plan.  In  connection  with the  transactions  contemplated  by the
Purchase  Agreement,  effective as of the Second  Closing,  William McMahon will
resign as a director of the Company and as its Chief Executive Officer.  William
McMahon will remain at the Company as its President and Chief Financial  Officer
and enter into a new  Employment  Agreement with the Company for a two-year term
with an annual base salary of $200,000. Mr. McMahon will also be awarded options
to purchase  250,000 shares of the Company's Common Stock in accordance with the
Company's stock option plan.



                                       66
<PAGE>


The Company has agreed to seek the approval of the  stockholders  of the Company
to amend the  Certificate  of  Incorporation  to  authorize a class of Preferred
Stock.  Upon the  approval of such  amendment  and the filing  thereof  with the
Secretary  of  State  of the  State  of  Delaware,  the  Convertible  Note  will
automatically  be  converted  into  2,000,000  shares  of  Series A  Convertible
Preferred Stock, par value US$0.01 per share,  with such rights and preferences,
including, but not limited to:

(a) Voting  Rights.  During  the first 18 months  after the  designation  of the
Series A Preferred Stock,  each holder of shares of the Series A Preferred Stock
shall be  entitled  to five (5) times the number of votes equal to the number of
shares of Common  Stock into which such  Holder's  shares of Series A  Preferred
Stock could be converted  and after such first 18 month  period,  each holder of
shares of the Series A Preferred  Stock shall be entitled to the number of votes
equal to the number of shares of Common Stock into which such Holder's shares of
Series A Preferred  Stock could be  converted.  During the first 18 months after
the designation of the Series A Preferred Stock, so long as any shares of Series
A Preferred Stock are outstanding, the holders of Series A Preferred Stock shall
be entitled to designate three (3) members of the Board of Directors. During the
first 18 months after the Series A Preferred Stock has been  designated,  if the
number of members of the Board of  Directors is increased to more than five (5),
the number of directors  designated  by the holders of Series A Preferred  Stock
shall increase such that the Series A Preferred Stock shall designate a majority
of the number of authorized Board of Director members.

(b)  Dividends.  The Series A Preferred  Stock will,  with respect to payment of
dividends and rights upon liquidation,  dissolution or winding-up of the affairs
of the Company,  rank senior and prior to the Common  Stock of the Company,  and
any  additional  series of preferred  stock which may in the future be issued by
the  Company  and  are  designated  in  the  amendment  to  the  Certificate  of
Incorporation  or the  certificate of designation  establishing  such additional
preferred stock as ranking junior to the Series A Preferred  Stock.  The holders
of the Series A Preferred  Stock will be entitled to receive  dividends if, when
and as  declared  by the Board of  Directors  from time to time,  and in amounts
determined by the Board of Directors;  provided,  however, no dividends shall be
paid on any share of Common  Stock unless a dividend is paid with respect to all
outstanding  shares of Series A Preferred Stock in an amount for each such share
of Series A Preferred  Stock equal to or greater  than the  aggregate  amount of
such  dividends  for all  shares of Common  Stock  into which each such share of
Series A Preferred Stock could then be converted.

(c) Liquidation  Value.  The  liquidation  value per share of Series A Preferred
Stock,  in case of the  voluntary or  involuntary  liquidation,  dissolution  or
winding-up  of the  affairs of the  Company,  will be an amount  equal to $0.20,
subject to adjustment in the event of a stock split,  stock  dividend or similar
event applicable to the Series A Preferred Stock.

(d)  Additional  Issuances of  Securities.  Except for certain  issuances by the
Company, If, at any time while the Series A Preferred Stock is outstanding,  the
Company  sells or grants any option to  purchase or sells or grants any right to
reprice its  securities,  or otherwise  disposes of or issues (or  announces any
sale, grant or any option to purchase or other  disposition) any Common Stock or
Common Stock equivalents  entitling any person to acquire shares of Common Stock
at an  effective  price  per  share  that is  lower  than  the  then  applicable
conversion  price,  then the  conversion  price  shall be  reduced to such lower
price.



                                       67
<PAGE>


(e)  Modification of Series A Preferred Stock. So long as any shares of Series A
Preferred Stock remain outstanding,  the Company, shall not, without the vote or
written  consent  by the  holders  of more than  fifty  percent  (50.0%)  of the
outstanding  Series A Preferred  Stock,  voting together as a single class,  and
unless  approved by the Board of  Directors:  (i) redeem,  purchase or otherwise
acquire  for value (or pay into or set  aside for a sinking  or other  analogous
fund for such  purpose)  any share or shares of its  Capital  Stock,  except for
conversion  into or exchange for stock  junior to the Series A Preferred  Stock;
(ii)  alter,  modify or amend the terms of the Series A  Preferred  Stock in any
way; or (iii)  create or issue any Capital  Stock of the  Company  ranking  pari
passu with or senior to the Series A Preferred Stock either as to the payment of
dividends or rights in liquidation,  dissolution or winding-up of the affairs of
the Company;  increase the authorized number of shares of the Series A Preferred
Stock;  re-issue  any Series A  Preferred  Stock  which have been  converted  or
otherwise acquired by the Company in accordance with the terms hereof.

The Board of  Directors  awarded  Richard  Gerzof,  Chairman of the Board of the
Company,  immediately  exercisable  options to purchase 250,000 shares of Common
Stock of the  Company at an exercise  price of $0.20 per share,  the fair market
value as of the date of  grant.  The Board of  Directors  also  awarded  Elliott
Goldberg, Matthew Dollinger and William Wood, directors, immediately exercisable
options  to  purchase  100,000,   18,500  and  3,500  shares  of  Common  Stock,
respectively, at the exercise price of $0.20 per share, the fair market value as
of the date of grant.

The Board of  Directors  also  amended the  Company's  2006 Stock Option Plan to
eliminate the  requirement  that options must be  exercised,  to the extent they
were exercisable,  within a three month period following the date of termination
of employment or directorship, even if by disability or death.



                                       68
<PAGE>


Report of Independent Registered Public Accounting Firm

The Board of Directors
Global Payment Technologies, Inc



We have audited the accompanying  balance sheets of Global Payment  Technologies
Australia  Pty Ltd as of  August  31,  2006 and June  30,  2006 and the  related
statement of  operations,  stockholders'  equity,  and cash flows for the period
ended August 31, 2006 and year ended June 30, 2006.  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 the Global Payment Technologies
Australia  Pty Ltd as of August 31, 2006 and June 30,  2006,  and the results of
its  operations and its cash flows for the period ended August 31, 2006 and year
ended  June  30,  2006 in  conformity  with  US  generally  accepted  accounting
principles.



/s/ Pitcher Partners,
Sydney, Australia


11th January 2007



                                       69
<PAGE>


                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD
                                 Balance Sheets
                        August 31, 2006 and June 30, 2006
<TABLE>
<CAPTION>
                       Assets                             August 2006      June 2006
                                                        ----------------- --------------
Current assets:
<S>                                                    <C>                     <C>
    Cash and equivalents                              A$        3,024,562      2,405,739
 Trade accounts receivable, less allowances for
  doubtful accounts of A$10,000 in August 2006 and
  A$10,000 in June 2006                                         1,347,105      1,006,953
    Inventories                                                 2,707,513      3,513,694
 Income taxes receivable                                           20,263              -
    Receivable from affiliate                                      82,908         67,139
    Other current assets                                           74,212         74,466
                                                        ----------------- --------------
                    Total current assets                        7,256,563      7,067,991
                                                        ----------------- --------------
Non current assets:
    Deferred income taxes                                         213,541        213,541
    Property, plant and equipment
          Machinery and equipment                                 392,312        381,802
          Less accumulated depreciation and
           amortization                                         (256,184)      (249,184)
                                                        ----------------- --------------
             Net property, plant and equipment                    136,128        132,618
                                                        ----------------- --------------
                    Total non current assets                      349,669        346,159
                                                        ================= ==============
                    Total assets                      A$        7,606,232      7,414,150
                                                        ================= ==============

         Liabilities and Stockholders' Equity
Current Liabilities:
    Trade accounts payable                            A$        1,786,612      1,643,659
    Income taxes payable                                                -          4,357
    Accrued liabilities                                           788,147        768,472
                                                        ----------------- --------------
                    Total current liabilities                   2,574,759      2,416,488
                                                        ----------------- --------------
                    Total liabilities                           2,574,759      2,416,488
                                                        ----------------- --------------

Commitments and contingencies (Note 1)

Stockholders' equity: Common stock
     Issued and outstanding 20,000 shares in 2006 and
      20,000 shares in 2005                                        20,000         20,000
Retained earnings                                               5,011,473      4,977,662
                                                        ----------------- --------------
                 Total stockholders' equity                     5,031,473      4,997,662
                                                        ----------------- --------------
                 Total liabilities and stockholders'  A$
                  equity                                        7,606,232      7,414,150
                                                        ================= ==============
</TABLE>

See accompanying notes to financial statements.



                                       70
<PAGE>


                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                            Statements of Operations

            Period ended August 31, 2006 and year ended June 30, 2006


T
                                          August 2006        June 2006
                                        ---------------- -----------------

Servicing income                                  18,728           191,184
Net sales                             A$       1,821,998        10,963,570
                                        ---------------- -----------------
Total sales                                    1,840,726        11,154,754
Cost of goods sold
- GPT Inc                                    (1,543,403)       (9,070,800)
- Other                                         (11,652)         (193,266)
                                        ---------------- -----------------
                    Gross profit                 285,671         1,890,688

Selling, general and administrative
 expenses                                      (263,056)       (1,834,094)

                                        ---------------- -----------------
                   Operating income               22,615            56,594

Other income (expense):
    Interest income                               19,868           114,593
    Other sundry income                            5,817            12,000

                                        ---------------- -----------------
                   Income before
                    income taxes                  48,300           183,187
Income taxes                                    (14,489)          (61,603)
                                        ---------------- -----------------
                   Net income                     33,811           121,584
                                        ================ =================

      See accompanying notes to financial statements



                                       71
<PAGE>


                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                       Statements of Stockholders' Equity

            Period ended August 31, 2006 and year ended June 30, 2006


                                       Common       Retained         Total
                                       Stock        Earnings     Stockholders'
                                                                     Equity
                                   ---------------- ----------- ----------------

Balances at June 30, 2006        A$        20,000     4,977,662        4,997,662
   Net income                                   -        33,811           33,811
                                   ---------------- ----------- ----------------

Balances at August 31, 2006                20,000     5,011,473        5,031,473
                                   ================ =========== ================

      See accompanying notes to financial statements



                                       72
<PAGE>


                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                            Statements of Cash Flows

            Period ended August 31, 2006 and year ended June 30, 2006


                                                      August 2006    June 2006
                                                   --------------- ------------

Net income                                       A$         33,811      121,584
  Adjusted to reconcile net income to net cash
provided by operating activities:
   Depreciation and amortisation of property,
    plant and equipment                                      7,000       35,226
   Write off of obsolete stock                                   -       17,024
   (Increase) / decrease in trade accounts
    receivable                                           (340,152)    1,998,068
   (Increase) / decrease in inventories                    806,181    2,966,636
   (Increase) / decrease in other assets                       254     (18,685)
   (Increase) / decrease in intercompany
    receivables                                           (15,769)      942,037
   Increase / (decrease) in trade accounts
    payable                                                142,954  (4,190,257)
   Increase / (decrease) in accrued liabilities             19,674        7,276
   (Increase) / decrease in deferred income taxes                -     (18,732)
 Increase / (decrease) in income tax provision            (24,620)      (2,955)
   (Increase) / decrease in income tax receivable                -            -
                                                   --------------- ------------
              Net cash provided by/ (used in)
               operating activities                        629,333    1,857,222
                                                   --------------- ------------

Cash flows from investing activities:
   Capital expenditures, including interest
    capitalized                                           (10,510)      (9,910)
                                                   --------------- ------------
              Net cash used in investing
               activities                                 (10,510)      (9,910)
                                                   --------------- ------------

Cash flows from financing activities:
   Dividends paid                                                -    (800,000)
                                                   --------------- ------------
              Net cash used in financing
               activities                                        -    (800,000)
                                                   --------------- ------------
              Net decrease in cash and cash
               equivalents                                 618,823    1,047,312
Cash and cash equivalents at beginning of year           2,405,739    1,358,427
                                                   --------------- ------------
Cash and cash equivalents at end of year         A$      3,024,562    2,405,739
                                                   =============== ============
See accompanying notes to financial statements



                                       73
<PAGE>


                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                          Notes to Financial Statements

                        August 31, 2006 and June 30, 2006

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
     period.

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  35.1% (June 2006: 29.1%) of trade
     accounts  receivable as of August 31, 2006 and 63.2% (June 2006:  66.8%) of
     sales for the fiscal  period  ended August 31,  2006.  Two other  customers
     represented  27% or more of net sales and trade  accounts  receivable as of
     and for the period ended August 31, 2006.

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 33.33% (June 2006: 7.5% to 33.33%).

e)   Other Current Assets and Other Assets Other assets are comprised of prepaid
     expenses and other non-trade receivables.


f)   Income Taxes



                                       74
<PAGE>


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 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.



                                       75
<PAGE>


                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                          Notes to Financial Statements

                        August 31, 2006 and June 30, 2006

1)   Summary of significant Accounting Policies and Practices (cont)

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 August 2006 (June
     2006: nil).

i)   Revenue Recognition

                  The Company recognizes 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 August 2006 and June
            2006.

k) Advertising expenses

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

                l)Cash and cash equivalents




                                       76
<PAGE>


    Cash and cash equivalents comprise cash on hand, cash at bank
            and term deposits with banking institutions. The Term Deposits are
            for a period of 30 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
            Operations.



                                       77
<PAGE>


                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                          Notes to Financial Statements

                        August 31, 2006 and June 30, 2006


2)   Income Taxes

     All pre tax income is derived from domestic operations.

     Total income taxes for the period ended August 31, 2006 and year ended June
     30, 2006 consist of:

                                             Current    Deferred     Total
                                            ---------- ------------- ---------

       Period ended August 31, 2006:   A$      14,489            -     14,489
                                            ========== ============= =========

       Year ended June 30, 2006:       A$      80,335     (18,732)     61,603
                                            ========== ============= =========

       Income tax expense was $14,489 and $61,603 for the period ended August
       31, 2006 and year ended June 30, 2006 respectively, and differed from the
       amounts computed by applying the Australian federal income tax rate of
       30% (June 2006: 30%) to pre tax income as a result of the following:

                                           August  2006     June 2006
                                           -------------- -----------

       Computed "expected" tax        A$       14,489       54,956
       expense
       Other, net                                   -        6,647
                                           -------------- ---------

                                      A$       14,489       61,603
                                           ============== =========



                                       78
<PAGE>


                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                          Notes to Financial Statements

                        August 31, 2006 and June 30, 2006

2)   Income Taxes (continued)

     The tax  effects of  temporary  differences  that give rise to  significant
     portions of the deferred tax assets and deferred tax  liabilities at August
     31, 2006 and June 30, 2006 are presented below.

                                                   August 2006       June 2006

                                               At 30 % tax rate  At 30% tax rate
                                               ----------------- ---------------

Deferred tax assets:
     Accounts receivable principally due to  A$
allowance for doubtful accounts                            3,000           3,000
    Inventory                                             10,731          10,731
    Employee leave entitlements                           50,185          50,185
    Bonus provision                                      116,145         116,145
    Unrealised foreign exchange movements                  8,223           8,223
     Other                                                25,257          25,257
                                               ----------------- ---------------
                    Total gross deferred tax
                     assets                              213,541         213,541
                                               ----------------- ---------------
                    Net deferred tax assets              213,541         213,541
                                               ================= ===============


     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 realised.  The ultimate  realisation 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
     August 31, 2006.



                                       79
<PAGE>


                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                          Notes to Financial Statements

                        August 31, 2006 and June 30, 2006

3)   Pension and Other Post Retirement 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$23,986  and
     A$93,188 during August 2006 and June 2006  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

                                                    August 2006    June 2006

          Goods and services tax payable       A$         78,018        58,207
          Accrued expenses                               467,845       467,982
          Provision for employee leave                   167,283       167,283
          Warranty provision                              75,000        75,000
                                                   --------------- ------------
                                               A$        788,146       768,472
                                                   =============== ============

5)   Commitments

     Non cancellable operating lease commitments

          Future operating lease commitments        August 2006    June 2006
          not provided for in the financial
          statements and payable:
          Within one year                      A$        166,000       181,000
          One to two years                               188,000       188,000
          Two to three years                              15,000        15,000
                                                   ---------------- -----------
                                               A$        369,000       384,000
                                                   ---------------- -----------

     The Company leases property under a  non-cancellable 4 year operating lease
     expiring in July 2006.

     The company  exercised  the option in July 2004 to extend the lease for two
     years.

     The Company has not entered into any capital leases.

6)   Cost of Goods Sold



                                       80
<PAGE>


                                           August 2006      June 2006
Opening Inventory (excluding stock inA$
 transit)                                      2,968,716      5,300,666
Add
Purchases - GPT Inc                              751,346      6,521,841
Purchases - Other                                  3,300        248,594
Freight and other charges                         11,652        161,681
                                       ----------------- --------------
                                               3,735,014     12,232,782
Less
Ending Inventory (excluding stock in
 transit)                                    (2,179,959)    (2,968,716)
                                       ----------------- --------------
Cost of Goods Sold                   A$        1,555,055      9,264,066
                                       ================= ==============



                                       81
<PAGE>


                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                          Notes to Financial Statements

                        August 31, 2006 and June 30, 2006

7)   Related parties

     The company was 50% owned by Global  Payment  Technologies,  Inc, a company
     incorporated in the United States of America.  Global Payment Technologies,
     Inc  disposed of its  interest  on 4 September  2006 to ACN 121 187 068 Pty
     Limited,  a company  domiciled  in  Australia.  The other 50% is owned by a
     private  trust  of  which  the  Managing  Director  of  the  company  is  a
     beneficiary.

     During the period,  the Company  purchased  inventories from Global Payment
     Technologies,  Inc., which totalled  $739,870 (June 2006:  $6,521,841).  An
     amount of  A$1,702,173  payable  to  Global  Payment  Technologies,  Inc is
     included in Trade accounts payable at balance date (June 2006: $1,612,556).

     As of August 31, 2006 the Company had  receivables  from eCash Holdings Pty
     Limited of $82,908,  (June 2006: $67,139) 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.  This  amount  has been  repaid  since
     balance date.

     During the  period,  the Company  had sales to eCash  Holdings  Pty Limited
     totalling $Nil (June 2006:  $1,836). An amount of $Nil is included in Trade
     accounts receivable at balance date (June 2006: $Nil).

     For the period ended  August 31, 2006 and the year ended 30 June 2006,  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 operations.

     eCash  Holdings Pty Limited was 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. Global Payment Technologies,  Inc disposed
     of its interest on 25 August 2006 to ACN 121 187 068 Pty Limited, a company
     domiciled in Australia.

     There were no other transactions with related parties.



                                       82
<PAGE>


Report of Independent Registered Public Accounting Firm



The Board of Directors
Global Payment Technologies, Inc


We have audited the accompanying  balance sheets of Global Payment  Technologies
Australia  Pty Ltd as of June 30, 2006 and 2005,  and the related  statement  of
operations,  stockholders'  equity,  and cash flows for the years ended June 30,
2006  and  2005.  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 the Global Payment Technologies
Australia  Pty Ltd as of  June  30,  2006  and  2005,  and  the  results  of its
operations  and its cash flows for the years ended June 30, 2006,  2005 and 2004
in conformity with US generally accepted accounting principles.




/s/ Pitcher Partners,
Sydney, Australia


11th January 2007



                                       83
<PAGE>


                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD
                                 Balance Sheets
                             June 30, 2006 and 2005
<TABLE>
<CAPTION>
                          Assets                                       2006         2005
                                                             -------------- ------------
Current assets:
<S>                                                        <C>                 <C>
    Cash and equivalents                                  A$      2,405,739    1,358,427
 Trade accounts receivable, less allowances for doubtful
  accounts of A$10,000 in 2006 and A$10,000 in 2005               1,006,953    3,005,021
    Inventories                                                   3,513,694    6,497,354
    Receivable from affiliate                                        67,139    1,009,172
    Other current assets                                             74,466       55,781
                                                             -------------- ------------
                    Total current assets                          7,067,991   11,925,755
                                                             -------------- ------------
Non current assets:
    Deferred income taxes                                           213,541      194,809
    Property, plant and equipment
          Machinery and equipment                                   381,802      371,892
          Less accumulated depreciation and amortization          (249,184)    (213,958)
                                                             -------------- ------------
             Net property, plant and equipment                      132,618      157,934
                                                             -------------- ------------
                    Total non current assets                        346,159      352,743
                                                             -------------- ------------
                    Total assets                          A$      7,414,150   12,278,498
                                                             ============== ============

           Liabilities and Stockholders' Equity
Current Liabilities:
    Trade accounts payable                                A$      1,643,659    5,833,912
    Income taxes payable                                              4,357        7,312
    Accrued liabilities                                             768,472      761,196
                                                             -------------- ------------
                    Total current liabilities                     2,416,488    6,602,420
                                                             -------------- ------------
                    Total liabilities                             2,416,488    6,602,420
                                                             -------------- ------------

Commitments and contingencies (Note 1)

Stockholders' equity: Common stock
     Issued and outstanding 20,000 shares in 2006 and
      20,000 shares in 2005                                          20,000       20,000
Retained earnings                                                 4,977,662    5,656,078
                                                             -------------- ------------
                 Total stockholders' equity                       4,997,662    5,676,078
                                                             -------------- ------------
                 Total liabilities and stockholders'      A$
                  equity                                          7,414,150   12,278,498
                                                             ============== ============
</TABLE>

See accompanying notes to financial statements.



                                       84
<PAGE>


                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                            Statements of Operations

                    Years ended June 30, 2006, 2005 and 2004

<TABLE>
<CAPTION>
                                                      2006           2005         2004
                                          --------------- -------------- ------------

<S>                                               <C>            <C>          <C>
Servicing income                                  191,184        250,306      207,416
Net sales                               A$     10,963,570     17,104,350  17,409, 545
                                          --------------- -------------- ------------
Total sales                                    11,154,754     17,354,656   17,616,961
Cost of goods sold
- GPT Inc                                     (9,070,800)   (14,307,241) (14,363,467)
- Other                                         (193,266)      (185,508)    (326,806)
                                          --------------- -------------- ------------
                    Gross profit
                                                1,890,688      2,861,907    2,926,688

Selling, general and administrative
 expenses                                     (1,834,094)    (1,947,755)  (1,777,565)

                                          --------------- -------------- ------------
                   Operating income                56,594        914,152    1,149,123

Other income (expense):
    Interest income                               114,593        162,179      140,252
    Other sundry income                            12,000         12,000       63,240

                                          --------------- -------------- ------------
                   Income before income
                    taxes                         183,187      1,088,331    1,352,615
Income taxes                                     (61,603)      (328,385)    (407,189)
                                          --------------- -------------- ------------
                   Net income                     121,584        759,946      945,426
                                          =============== ============== ============
</TABLE>

      See accompanying notes to financial statements



                                       85
<PAGE>


                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                       Statements of Stockholders' Equity

                    Years ended June 30, 2006, 2005 and 2004


                                      Common        Retained         Total
                                      Stock         Earnings     Stockholders'
                                                                     Equity
                                  -------------- -------------- ----------------

Balances at June 30, 2003      A$         20,000      4,550,706        4,570,706
   Net income (unaudited)                      -        945,426          945,426
   Dividends declared                          -      (600,000)        (600,000)
                                  -------------- -------------- ----------------

Balances at June 30, 2004      A$         20,000      4,896,132        4,916,132
    Net income                                 -        759,946          759,946
    Dividends declared                         -              -                -
                                  -------------- -------------- ----------------

Balances at June 30, 2005      A$         20,000      5,656,078        5,676,078
    Net income                                 -        121,584          121,584
    Dividends declared                         -      (800,000)        (800,000)
                                  -------------- -------------- ----------------

Balances at June 30, 2006                 20,000      4,977,662        4,997,662
                                  ============== ============== ================

      See accompanying notes to financial statements



                                       86
<PAGE>


                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                                     Statements of Cash Flows

                    Years ended June 30, 2006, 2005 and 2004

<TABLE>
<CAPTION>
                                                          2006         2005         2004
                                                      ------------ ------------ ------------

<S>                                                  <C>                <C>          <C>
Net income                                          A$     121,584      759,946      945,426
  Adjusted to reconcile net income to net cash
provided by operating activities:
   Depreciation and amortisation of property, plant
    and equipment                                           35,226       40,757       42,209
   Write off of obsolete stock                              17,024            -            -
   (Increase) / decrease in trade accounts
    receivable                                           1,998,068    (853,005)      325,074
   (Increase) / decrease in inventories                  2,966,636  (1,987,545)    2,841,050
   (Increase) / decrease in prepayments                   (18,685)       85,559     (90,925)
   (Increase) / decrease in intercompany receivables       942,033       27,516      425,667
   Increase / (decrease) in trade accounts payable     (4,190,253)      582,360  (3,476,080)
   Increase / (decrease) in accrued liabilities              7,276    (284,767)     (17,082)
   (Increase) / decrease in deferred income taxes         (18,732)       37,134      291,214
 Increase / (decrease) in income tax provision             (2,955)        7,312            -
   (Increase) / decrease in income tax receivable                -      192,545    (184,320)
                                                      ------------ ------------ ------------
              Net cash provided by/ (used in)
               operating activities                      1,857,222  (1,392,188)    1,102,233
                                                      ------------ ------------ ------------

Cash flows from investing activities:
   Capital expenditures, including interest
    capitalized                                            (9,910)     (11,023)      (7,997)
                                                      ------------ ------------ ------------
              Net cash used in investing activities        (9,910)     (11,023)      (7,997)
                                                      ------------ ------------ ------------

Cash flows from financing activities:
   Dividends paid                                        (800,000)            -    (600,000)
                                                      ------------ ------------ ------------
              Net cash used in financing activities      (800,000)            -    (600,000)
                                                      ------------ ------------ ------------
              Net decrease in cash and cash
               equivalents                               1,047,312  (1,403,211)      494,236
Cash and cash equivalents at beginning of year           1,358,427    2,761,638    2,267,402
                                                      ------------ ------------ ------------
Cash and cash equivalents at end of year            A$
                                                         2,405,739    1,358,427    2,761,638
                                                      ============ ============ ============
</TABLE>

See accompanying notes to financial statements



                                       87
<PAGE>


                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                          Notes to Financial Statements

                          June 30, 2006, 2005 and 2004

2. 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 29% (2005:  33% and 2004: 47%) of
     trade accounts  receivable as of June 30, 2006 and 67% (2005: 54% and 2004:
     59%) of sales for the fiscal year ended June 30, 2006. Two other  customers
     represented  29.5%  (2005:  12%) or more of net sales  and  trade  accounts
     receivable as of and for the year ended June 30, 2006.

     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 33.33%  (2005:  7.5% to 27%;  2004:  7.5% to
          27%).

     e)   Other Current Assets and Other Assets

          Other  assets are  comprised of prepaid  expenses and other  non-trade
          receivables.



                                       88
<PAGE>


     g)   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 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.



                                       89
<PAGE>


                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                          Notes to Financial Statements

                          June 30, 2006, 2005 and 2004

1) Summary of significant Accounting Policies and Practices (cont)

        l) 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.

        m) 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
          2006 (2005: nil; 2004: nil).

        n)    Revenue Recognition

                  The Company recognizes 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.

        o)    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 2006, 2005 or
            2004.

        p) Advertising expenses

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


                                       90
<PAGE>

                l)Cash and cash equivalents

                  Cash and cash equivalents comprise cash on hand, cash at bank
            and term deposits with banking institutions. The Term Deposits are
            for a period of 30 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
            Operations.


                                       91
<PAGE>

                GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                          Notes to Financial Statements

                          June 30, 2006, 2005 and 2004


    2) Income Taxes

       All pre tax income is derived from domestic operations.

       Total income taxes for the years ended June 30, 2006, 2005 and 2004
consist of:

                                             Current    Deferred     Total
                                            ----------------------------------

       Year ended June 30, 2006:       A$      80,335     (18,732)     61,603
                                            ==================================

       Year ended June 30, 2005:       A$     291,251       37,134    328,385
                                            ==================================

       Year ended June 30, 2004:       A$     115,975      291,214    407,189
                                            ==================================

       Income tax expense was $61,603, $328,385 and $407,189 for the years ended
       June 30, 2006, June 30, 2005 and June 30, 2004, respectively, and
       differed from the amounts computed by applying the Australian federal
       income tax rate of 30% (2005: 30%; 2004: 30%) to pre tax income as a
       result of the following:

                                             2006        2005        2004
                                           -----------------------------------

       Computed "expected" tax        A$      54,956      326,499     405,785
       expense
       Other, net                              6,647        1,886       1,404
                                           -----------------------------------

                                      A$      61,603      328,385     407,189
                                           ===================================


                                       92
<PAGE>

                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                          Notes to Financial Statements

                          June 30, 2006, 2005 and 2004

6)       Income Taxes (continued)

         The tax effects of temporary differences that give rise to significant
         portions of the deferred tax assets and deferred tax liabilities at
         June 30, 2006 and 2005 are presented below.

                                                      2006          2005

                                                   At 30 % tax   At 30% tax
                                                      rate          rate
                                                  ----------------------------
       Deferred tax assets:
           Accounts receivable principally
              due to allowance for doubtful   A$          3,000         3,000
              accounts
           Inventory                                     10,731         5,624
           Employee leave entitlements                   50,185        44,644
           Bonus provision                              116,145        94,897
           Unrealised foreign exchange                    8,223        21,357
              movements
           Other                                         25,257        25,287
                                                  ----------------------------
              Total gross deferred tax assets           213,541       194,809
                                                  ----------------------------
              Net deferred tax assets                   213,541       194,809
                                                  ============================

       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 realised. The ultimate realisation 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, 2006.

                                       93
<PAGE>

                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                          Notes to Financial Statements

                          June 30, 2006, 2005 and 2004

7)    Pension and Other Post Retirement 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$93,188,  A$83,304 and A$81,692 during fiscal years 2006,
      2005 and 2004  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.

8)    Accrued Liabilities

                                                       2006          2005

          Goods and services tax payable       A$         58,207       141,837
          Accrued expenses                               467,982       395,545
          Provision for employee leave                   167,283       148,814
          Warranty provision                              75,000        75,000
                                                   ----------------------------
                                               A$        768,472       761,196
                                                   ============================

9)    Commitments

         Non cancellable operating lease commitments

          Future operating lease commitments
          not provided for in the financial
          statements and payable:                      2006          2005
          Within one year                      A$        181,000       210,000
          One to two years                               188,000        70,000
          Two to three years                              15,000             -
                                                   ----------------------------
                                               A$        384,000       280,000
                                                   ============================

          The Company leases property under a non-cancellable 4 year operating
          lease expiring in July 2006.

          The company exercised the option in July 2004 to extend the lease for
          two years.

          The Company has not entered into any capital leases.

                                       94

<PAGE>

       6) Cost of Goods Sold
                                       2006       2005        2004
Opening Inventory (excluding  A$
stock in transit)                     5,300,666 2,580,220   3,228,659
Add
Purchases - GPT Inc                   6,521,841 16,736,086 13,484,683
Purchases - Other                       248,594    219,651    266,904
Freight and other charges               161,681    257,458    290,247
                                   ----------------------------------
                                   ----------------------------------
                                     12,232,782 19,793,415 17,270,493
Less
Ending Inventory (excluding
stock in transit)                   (2,968,716) (5,300,666)(2,580,220)
                                   ----------------------------------
Cost of Goods Sold            A$      9,264,066 14,492,749 14,690,273
                                   ==================================

                                       95

<PAGE>

                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                          Notes to Financial Statements

                          June 30, 2006, 2005 and 2004

8)    Related parties

      The company was 50% owned by Global Payment Technologies, Inc, a
      company incorporated in the United States of America. Global Payment
      Technologies, Inc disposed of its interest on 4 September 2006 to ACN
      121 187 068 Pty Limited, a company domiciled in Australia. 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 $6,521,841 (2005: $16,736,086). An
      amount of A$1,612,556 payable to Global Payment Technologies, Inc is
      included in Trade accounts payable at balance date (2005: $5,652,566).

      As of June 30, 2006 the Company had receivables from eCash Holdings
      Pty Limited of $67,139, (2005: $1,009,172) 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.
      This amount has been repaid since balance date.

      During the year, the Company had sales to eCash Holdings Pty Limited
      totalling $1,836 (2005: $469,391). An amount of A$Nil is included in
      Trade accounts receivable at balance date (2005: $200,178).

      For the year ended June 30, 2006, 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 operations.

      eCash Holdings Pty Limited was 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. Global Payment
      Technologies, Inc disposed of its interest on 25 August 2006 to ACN
      121 187 068 Pty Limited, a company domiciled in Australia.

      There were no other transactions with related parties.

                                       96
<PAGE>

      Report of Independent Registered Public Accounting Firm




The Board of Directors
eCash Holdings Pty Limited



We have audited the accompanying consolidated balance sheets of eCash Holdings
Pty Limited and subsidiaries as of June 30, 2006 and 2005 and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years ended June 30, 2006, 2005 and 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 audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of eCash
Holdings Pty Limited and subsidiaries as of June 30, 2006 and 2005, and the
consolidated results of their operations and cash flows for the years ended June
30, 2006, 2005 and 2004, in conformity with US generally accepted accounting
principles.






/s/ Pitcher Partners,
Sydney, Australia



11th January 2007

                                       97
<PAGE>

                   eCash Holdings Pty Limited and subsidiaries

                           Consolidated Balance Sheets

                                  June 30, 2006
<TABLE>
<CAPTION>
<S>                                                            <C>           <C>
             Assets
                                                               2006          2005
                                                           ---------------------------
Current assets:
    Cash and cash                                      A$      1,102,169      274,282
    equivalents
    Trade accounts receivable, less allowance for
    doubtful accounts of A$NIL (2005-A$NIL)                      362,617      166,296
    Inventories                                                  774,940      886,462
    Deferred Income taxes                                         58,854      415,028
    Other current assets                                         137,975        8,962
                                                           ---------------------------
              Total current assets                              2,436,555    1,751,030
                                                           ---------------------------
Property, plant and equipment
    Machinery and equipment                                       16,378       20,905
    Less accumulated depreciation and amortization                 (741)      (3,907)
                                                           ---------------------------
             Net property, plant and equipment                    15,637       16,998
                                                           ---------------------------

   Assets of discontinued operations                                   -      652,831
                                                           ---------------------------

             Total assets                              A$      2,452,192    2,420,859
                                                           ===========================

             Liabilities and Stockholders' Equity
Current liabilities:
                                                       A$
    Trade accounts payable                                       339,582      830,405
    Income taxes payable                                         507,712     (59,951)
    Payable to affiliate                                          67,139    1,009,172
    Accrued liabilities                                          350,219      366,096

    Liabilities of discontinued operations                             -      198,979
                                                           ---------------------------
             Total current liabilities                         1,264,652    2,344,701
                                                           ---------------------------
             Total liabilities                                 1,264,652    2,344,701
                                                           ---------------------------

Stockholders' equity:
    Common Stock
        Issued and outstanding 3,000 shares in 2006
        and 3,000 shares in 2005                                   3,000        3,000
    Retained earnings                                          1,184,540       73,158
                                                           ---------------------------
             Total stockholders' equity                        1,187,540       76,158
                                                           ---------------------------

             Total liabilities and stockholders'       A$      2,452,192    2,420,859
             equity                                        ===========================

</TABLE>

Commitments and contingencies (Note 1)

See accompanying notes to the consolidated financial statements.

                                       98
<PAGE>

                   eCash Holdings Pty Limited and subsidiaries

                      Consolidated Statements of Operations

                            Year ended June 30, 2006


<TABLE>
<CAPTION>
<S>                                             <C>          <C>            <C>
                                                  2006         2005          2004

Continuing operations

Sales                                      A$    4,635,873     1,525,034    1,427,159
Cost of goods sold (including
rebate and other direct costs)                 (3,283,678)   (1,489,513)    (710,341)
                                              ----------------------------------------
                Gross profit                     1,352,195        35,521      716,818

Selling, general and administrative            (1,103,886)     (658,897)    (530,495)
expenses
                                              ----------------------------------------

                Operating income/(loss)            248,309     (623,376)      186,323

Other income / (expense):
      Interest revenue                              58,152         9,383        1,426
      Rental income                                    795          (75)        2,865
      Other income                                  75,144        95,295        3,332
      Interest expense                            (15,216)      (73,423)     (84,524)
      Servicing income                              12,792        14,214       30,758
      Maintenance costs                                  -             -     (25,140)
      Rebate income                                 17,118        29,375       46,919
                                              ----------------------------------------
Income/(loss) from continuing                      397,094     (548,607)      161,959
operations before income taxes
Income taxes credit / (expense)                  (119,072)       330,563    (204,804)
                                              ----------------------------------------
Income/(loss) from continuing
operations                                         278,022     (218,044)     (42,845)
                                              ----------------------------------------

Discontinued operations (Note 8)
Profit / (loss) from
discontinued operations                          2,761,943      (56,988)    (224,562)
Income taxes credit / (expense)                   (828,583)        84,465            -
                                              ----------------------------------------
Income/(loss) from
discontinued operations                          1,933,360        27,477    (224,562)
                                              ----------------------------------------
             Net income                          2,211,382     (190,567)    (267,407)
                                              ========================================

See accompanying notes to the consolidated financial statements.
</TABLE>

                                       99
<PAGE>

                   eCash Holdings Pty Limited and subsidiaries

                 Consolidated Statements of Stockholders' Equity

                            Year ended June 30, 2006




<TABLE>
<CAPTION>
<S>                                                 <C>        <C>           <C>

                                                 Common      Retained       Total
                                                  Stock      Earnings    Stockholders'
                                                                            Equity
                                               ---------------------------------------


Balances at June 30, 2003 (Unaudited)      A$        2,984       531,132      534,116
      Net income/(loss)                                  -     (267,407)     (267,407)
      Share adjustment                                  16             -           16
                                               ---------------------------------------

Balances at June 30, 2004                  A$        3,000       263,725      266,725
      Net income/(loss)                                  -     (190,567)    (190,567)
                                               ---------------------------------------

Balances at June 30, 2005                  A$        3,000        73,158       76,158
      Net income/(loss)                                  -     2,211,382    2,211,382
      Dividends declared                                 -   (1,100,000)  (1,100,000)
                                               ---------------------------------------

Balances at June 30, 2006                  A$        3,000     1,184,540    1,187,540
                                               =======================================


See accompanying notes to the consolidated financial statements.
</TABLE>
                                      100
<PAGE>

                   eCash Holdings Pty Limited and subsidiaries

                      Consolidated Statements of Cash Flows

                            Year ended June 30, 2006

<TABLE>
<CAPTION>
<S>                                              <C>           <C>             <C>

                                                   2006          2005         2004
                                               -----------------------------------------
Net income/(loss)                          A$     2,211,382    (190,567)       (267,407)
     Adjustments to reconcile net income
     to net cash providing by operating
     activities:
     Net profit on disposal of business          (3,335,839)            -             -
     Depreciation and amortisation of
     property, plant and equipment                    79,339      110,457        60,496
     Increase/(decrease) in doubtful debts                 -     (27,000)             -
     (Increase)/decrease in trade                   (52,644)    (136,192)      (42,351)
     accounts receivable
     (Increase)/decrease in prepayments              (3,821)            -             -
     (Increase)/decrease in inventories              111,522     (15,535)       974,204
     (Increase)/decrease in other                  (124,254)      120,320     (116,420)
     assets
     Increase/(decrease) in related party          (942,033)     (21,240)     (431,834)
     balances
     Increase/(decrease) in trade                  (625,081)      713,731       125,374
     accounts payable
     Increase/(decrease) in provisions
     and other accruals                             (80,598)      209,014      (67,830)
     (Increase)/decrease in income tax               567,663       38,330             -
     balance
     (Increase)/decrease in deferred tax             356,174    (415,028)       208,850
     balance
                                               -----------------------------------------
          Net cash provided by/(used in)
          operating activities                   (1,838,190)      386,290       443,082
                                               -----------------------------------------
Cash flows from investing activities:
      Net cash inflow upon disposal of             3,872,791            -             -
      business
      Capital expenditure, including
      interest capitalised                         (122,490)    (227,205)     (447,269)
                                               -----------------------------------------
          Net cash provided by/(used in)
          investing activities                     3,750,301    (227,205)     (447,269)
                                               -----------------------------------------
Cash flow from financing activities:
     Issue of shares                                       -            -            16
     Dividends paid                              (1,100,000)            -             -
                                               -----------------------------------------
          Net cash provided by/(used in)
          financing activities                   (1,100,000)            -            16
                                               -----------------------------------------
          Net increase/(decrease) in cash
          and cash equivalents                       812,111      159,085       (4,171)
Cash and cash equivalents at beginning of            290,058      130,973       135,144
year
                                               -----------------------------------------
Cash and cash equivalents at end of year   A$      1,102,169      290,058       130,973
                                               =========================================

See accompanying notes to consolidated financial statements.
</TABLE>

                                      101
<PAGE>

                     eCash Holdings Pty Ltd and subsidiaries

                  Notes to the Consolidated Financial Statements

(1) Summary of Significant Accounting Policies and Practices

      (a) Description of Business

      eCash Holdings Pty Ltd (the "Company") was incorporated on 13 October 1999
      and remained dormant until the 2002 financial year. The company operates
      in the distribution and servicing of automatic teller machines. In 2002,
      the Company did not trade, rather it allowed a related party to trade on
      its behalf under an agreed contractual arrangement and in return an agency
      fee was received. In 2003, the Company commenced trading in its own right.
      On 17 July 2003 the company changed its name from eCash Pty Limited to
      eCash Holdings Pty Limited.

      (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 Group's largest ATM sales  customer,  represented  57.9% (2005:
      43.6%) and (2004: 0%) of trade accounts  receivable as of June 30, 2006
      and 76.5% (2005: 31%) and (2004: 0%) of sales for the fiscal year ended
      June 30, 2006.  The Group's  largest ATM rebate customer,  represented 0%
      (2005:  44.6%) of trade  accounts  receivable as of June 30, 2006 and 100%
      (2005:  100% and 2004:  100%) of rebate income for the fiscal year ended
      June 30, 2006.

      (c) Inventories

      Inventories are stated at the lower of 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 21% (2005: 7.5% to 21%) and (2004: 7.5% to 21%).

      (e) Other Current Assets and Other Assets

      Other assets are comprised of rental bonds, prepaid expenditure, and
      other non-trade receivables.

                                      102

<PAGE>

                     eCash Holdings Pty Ltd and subsidiaries

                 Notes to the Consolidated Financial Statements

(1)   Summary of Significant Accounting Policies and Practices (cont)

      (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
      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.

      Capital gains tax, if applicable, is provided for in establishing period
      income tax expense when an asset is sold.


      (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, such as property, plant and equipment, and purchased
      intangibles subject to amortization, 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.

      An impairment loss is recognised to the extent that the carrying amount
      exceeds the asset's fair value. The Company did not recognise any
      impairment adjustments in fiscal 2006, 2005 and 2004.

      (i) Revenue Recognition

      The Company recognises revenue when products are shipped and the customer
      takes ownership and assumes risk of loss. Interest income is recognised as
      it accrues. Service revenue is recognised as the services are provided.
      Rebate income is brought to account at the time the rebate is earned.

                                      103
<PAGE>

      (j) Commitments and Contingencies

      Liabilities for loss contingencies, including environmental remediation
      costs, 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.

      (k) Advertising expenses

      Advertising expenses are recognised in the statement of operations as
      incurred.

                                      104
<PAGE>

                     eCash Holdings Pty Ltd and subsidiaries

                 Notes to the Consolidated Financial Statements


(1) Summary of Significant Accounting Policies and Practices (cont)

      (l) Cash and cash equivalents

      Cash and cash equivalents comprise cash on hand, cash at bank and term
      deposits with banking institutions. 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/loss recognised in the Statement of Operations.

      (m) Consolidation

      The consolidated financial statements of the consolidated entity include
      the financial statements of the Company, being the chief entity, and its
      controlled entities ("the consolidated entity").

      Where an entity either began or ceased to be controlled during the year,
      the results are included only from the date control commenced or up to the
      date control ceased.

      The balances and effects of transactions, between controlled entities
      included in the consolidated financial statements have been eliminated.

      (n) Investments in controlled entities

      Capital ATM Pty Limited was incorporated on 17 March 2003 with the eCash
      Holdings Pty Limited investing A$1 share capital at the date of
      incorporation acquiring a 100% interest.

      Custom Cash Pty Limited was incorporated on 18 March 2003 with the eCash
      Holdings Pty Limited investing A$1 share capital at the date of
      incorporation acquiring a 100% interest.

      eCash Pty Limited was incorporated on 24 July 2003 with eCash Holdings Pty
      Ltd investing $1 share capital at the date of incorporation acquiring 100%
      interest.

      eCash Management Pty Limited was incorporated on 12 September 2002 with
      eCash Holdings Pty Limited investing A$1 share capital at the date of
      incorporation acquiring 100% interest.


(2) Income Taxes

       Total income tax (expense) credit for the years ended June 30, 2006, 2005
and 2004 consist of:
<TABLE>
<CAPTION>
<S>                                           <C>           <C>          <C>

                                           Current        Deferred       Total

       Year ended June 30, 2006:       A$     (591,480)     (356,175)    (947,655)
                                           ========================================

       Year ended June 30, 2005:       A$             -       415,028      415,028
                                           ========================================

       Year ended June 30, 2004:       A$         4,046     (208,850)     (204,804)
                                           ========================================
</TABLE>

                                      105

<PAGE>

                     eCash Holdings Pty Ltd and subsidiaries

                 Notes to the Consolidated Financial Statements

(2) Income Taxes (cont)

      Income tax expense was A$947,655 for the year ended June 30, 2006 and a
      credit of A$415,028 for the year ended June 30, 2005 and an expense of
      $204,804 for the year ended June 30, 2004 and differed from the amounts
      computed by applying the Australian federal income tax rate of 30% (2005:
      30%) and (2004: 30%) to pre tax income as a result of the following:

<TABLE>
<CAPTION>
<S>                                              <C>         <C>            <C>

                                                 2006         2005          2004
                                             ----------------------------------------
       Computed "expected" tax          A$
       expense/(credit)                           947,741     (181,679)     (18,781)
       Computed "expected" tax
       expense/(credit) of not deductible           2,155         2,017            -
                                             ----------------------------------------
       Computed "expected" tax
       expense/(credit) of
       consolidated tax group                     949,896     (179,662)     (18,781)
       Timing differences reversal                (2,241)             -      163,757
       Tax losses and timing
       differences (previously not
       recognised / brought to account)                 -     (235,366)       59,828
       Increase (reduction) in income
       taxes resulting from other net                   -             -            -
       misc items
                                             ----------------------------------------
                                        A$        947,655     (415,028)      204,804
                                             ========================================
</TABLE>

      The tax effect of temporary differences that give rise to significant
      portions of the deferred tax assets and deferred tax liabilities at 30
      June 2006 are presented below.

<TABLE>
<CAPTION>
<S>                                                             <C>         <C>

                                                              2006          2005
                                                           At 30% Tax    At 30% Tax
                                                              Rate          Rate
       Deferred tax assets:
            Employee leave entitlements             A$           28,816       21,283
            Bonus provision                                      33,000       37,506
            Unrealised Foreign exchange (gains) /               (2,962)
            losses                                                            13,117
            Tax losses previously not brought to                      -      343,122
            account
                                                          ---------------------------
               Deferred tax assets- gross                        58,854      415,028
                                                          ---------------------------
               Less valuation allowance                               -            -
                                                          ---------------------------
               Net deferred tax asset                            58,854      415,028
                                                          ===========================
</TABLE>

      In assessing the realisability 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 realised. The ultimate realisation 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.

                                      106
<PAGE>


                     eCash Holdings Pty Ltd and subsidiaries

                   Notes to Consolidated Financial Statements

(3) Pension and Other Post retirement Benefits

      The Company contributed to a defined contribution superannuation fund on
behalf of its employees. Contributions are based upon Australian statutory
minimum percentages of salary plus any additional contributions included in
employee's employment agreement. The consolidated entity contributed A$35,680
during fiscal year 2006 (2005: A$32,022) and (2004: A$30,973). 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>
<S>                                                            <C>          <C>

                                                              2006          2005
       Goods and services tax payable               A$                -       34,061
       Accrued expenses                                         123,167      174,421
       Deferred income                                          131,000       92,727
       Provision for employee leave                              96,052       64,887
                                                          ---------------------------
                                                    A$          350,219      366,096
                                                          ===========================
</TABLE>


(5) Cost of Goods Sold
<TABLE>
<CAPTION>
<S>                                            <C>           <C>          <C>

                                                 2006         2005          2004
       Opening Inventory                A$        886,462       870,927    1,824,131
       Add
       Purchases                                3,474,894     1,755,954      125,511
       Freight and other charges                  454,638       978,702      488,565
                                              ---------------------------------------
                                                4,815,994     3,605,583    2,438,207
       Less
       Ending Inventory                         (774,940)     (886,462)    (870,927)
                                              ---------------------------------------
       Cost of Goods Sold               A$      4,041,054     2,719,121    1,567,280
                                              =======================================

       Continuing                               3,283,678     1,489,513      710,341
       Discontinued                               757,376     1,229,608      856,939
                                              ---------------------------------------
       Cost of Goods Sold               A$      4,041,054     2,719,121    1,567,280
                                              =======================================
</TABLE>

(6) Commitments

                   Non cancellable operating lease commitments
                   -------------------------------------------

      The consolidated entity has no operating lease commitments.

(7) Related parties

      The company was 35% owned by Global Payments Technology, Inc., is 35%
      owned by the private trust of the Managing Director of the Global Payment
      Technology Australia Pty Limited, and is 30% owned by the Marketing
      Director of Global Payment Technology Australia Pty Limited. Global
      Payments Technology, Inc. disposed of its interest on 25 August 2006 to
      ACN 121 187 068 Pty Limited, a company domiciled in Australia.

                                      107
<PAGE>

      During the year the Group had purchases from Global Payment Technologies
      Australia Pty Limited totalling A$1,836 (2005: A$469,391) and (2004:
      A$415,787). An amount of A$0 (2005: A$200,178) and (2004: A$208,872) is
      included in Trade accounts payable at balance date. In addition the Group
      owed Global Payment Technologies Australia Pty Ltd A$67,139. (2005:
      A$1,009,172).

      Global Payment Technologies Australia Pty Limited, a related party, paid
      salary, rental and other administrative costs on behalf of the
      consolidated entity. These costs were recharged through the affiliate
      loan accounts. The company paid salary, rental and other administrative
      costs on behalf of its controlled entities. These amounts were recharged
      through the affiliate accounts.

      There were no other transactions with related parties.

                                      108

<PAGE>

                     eCash Holdings Pty Ltd and subsidiaries

                   Notes to Consolidated Financial Statements

(8)  Discontinued Operations

During the 30 June 2006 financial year the group disposed of its ATM rental
business.

The business had the following income and expenditure during the years ended 30
June 2006, 2005 and 2004:

<TABLE>
<CAPTION>
<S>                                             <C>         <C>             <C>

                                                  2006         2005          2004

Sales (including rebate                  A$        657,665     1,429,556      822,477
income)
Cost of goods sold (including rebates
and other direct costs)                          (757,376)   (1,229,608)    (856,939)
                                              ----------------------------------------
                Gross profit / (loss)             (99,711)       199,948     (34,462)

Selling, general and administrative              (486,405)     (259,371)    (192,610)
expenses
                                              ----------------------------------------
                Operating income/(loss)          (586,116)      (59,423)    (227,072)

Other income / (expense):
      Profit on sale of business                 3,335,839             -            -
      Other income                                       -             -        1,636
      Interest revenue                              12,220         2,435          874
                                              ----------------------------------------
             Income/(loss) before                2,761,943      (56,988)    (224,562)
             income taxes
                                              ========================================

</TABLE>

The business had the following assets and liabilities at 30 June 2006 and 2005.

<TABLE>
<CAPTION>
<S>                                                                <C>       <C>

             Assets                                            2006          2005
                                                           ---------------------------

    Cash and cash                                                      -       15,776
    equivalents
    Trade accounts receivable                                          -      143,875
    Other current assets                                               -          740
    Property, plant and equipment                                      -      492,440
                                                           ---------------------------

       Total assets                                                    -      652,831
                                                           ===========================

             Liabilities
    Trade accounts payable                                             -      134,258
    Accrued liabilities                                                -       64,721
                                                           ---------------------------

       Total liabilities                                               -      198,979
                                                           ===========================

</TABLE>

(9)  Cash and Cash Equivalents

Cash and cash equivalents are reconciled to the consolidated statement of cash
flows as follows:
<TABLE>
<CAPTION>
<S>                                                           <C>            <C>

                                                               2006          2005

Continuing operations                                   A$     1,102,169      274,282
Discontinued operations (Note 8)                                       -       15,776
                                                           ---------------------------
                                                               1,102,169      290,058
                                                           ===========================
</TABLE>
                                      109
<PAGE>

Report of Independent Registered Public Accounting Firm




The Board of Directors
eCash Holdings Pty Limited



We have audited the accompanying consolidated balance sheets of eCash Holdings
Pty Limited and subsidiaries as of August 31, 2006 and June 30, 2006 and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the period ended August 31, 2006 and year ended June 30, 2006. 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
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of eCash
Holdings Pty Limited and subsidiaries as of August 31, 2006 and June 30, 2006,
and the consolidated results of their operations and cash flows for the period
ended August 31, 2006 and year ended June 30, 2006 in conformity with US
generally accepted accounting principles.





/s/ Pitcher Partners,
Sydney, Australia



11th January 2007

                                      110
<PAGE>

                   eCash Holdings Pty Limited and subsidiaries

                           Consolidated Balance Sheets

                        August 31, 2006 and June 30, 2006

<TABLE>
<CAPTION>
<S>                                                          <C>           <C>

             Assets
                                                            August 2006   June 2006
                                                           ---------------------------
Current assets:
    Cash and cash                                      A$      1,249,575    1,102,169
    equivalents
    Trade accounts receivable, less allowance for
    doubtful accounts of A$NIL (2005-A$NIL)                      472,700      362,617
    Inventories                                                  858,138      774,940
    Deferred Income taxes                                         58,854       58,854
    Other current assets                                         142,666      137,975
                                                           ---------------------------
             Total current assets                              2,781,933    2,436,555
                                                           ---------------------------
Property, plant and equipment
    Machinery and equipment                                       16,378       16,378
    Less accumulated depreciation and amortization                 (841)        (741)
                                                           ---------------------------
             Net property, plant and equipment                    15,537       15,637
                                                           ---------------------------

             Total assets                              A$      2,797,470    2,452,192
                                                           ===========================

             Liabilities and Stockholders' Equity
Current liabilities:
                                                       A$
    Trade accounts payable                                       583,383      339,582
    Income taxes payable                                         611,281      507,712
    Intercompany payable                                          82,908       67,139
    Accrued liabilities                                          286,265      350,219
                                                           ---------------------------
             Total current liabilities                         1,563,837    1,264,652
                                                           ---------------------------
             Total liabilities                                 1,563,837    1,264,652
                                                           ---------------------------

Commitments and contingencies (Note 1)

Stockholders' equity:
    Common Stock
        Issued and outstanding 3,000 shares in 2006
        and 3,000 shares in 2005                                   3,000        3,000
    Retained earnings/(accumulated losses)                     1,230,633    1,184,540
                                                           ---------------------------
             Total stockholders' equity                        1,233,633    1,187,540
                                                           ---------------------------

             Total liabilities and stockholders'       A$      2,797,470    2,452,192
             equity
                                                           ===========================
</TABLE>

See accompanying notes to the consolidated financial statements.

                                      111

<PAGE>

                   eCash Holdings Pty Limited and subsidiaries

                      Consolidated Statements of Operations

                 Period ended August 31, 2006 and June 30, 2006


<TABLE>
<CAPTION>
<S>                                                           <C>        <C>

                                                             August 2006   June 2006

Sales                                                  A$        751,618    4,635,873
Cost of goods sold                                             (534,777)  (3,283,678)
                                                             -------------------------
                              Gross profit                        216,841   1,352,195

Selling, general and administrative expenses                    (187,736) (1,103,886)
                                                             -------------------------

                              Operating income/(loss)              29,105     248,309

Other income (expense):
            Interest revenue                                       10,359      58,152
            Rental income                                               -         795
            Other income                                           20,919      75,144
            Interest expense                                            -    (15,216)
            Servicing income                                        5,510      12,792
            Rebate income                                               -      17,118
                                                             -------------------------
              Income/(loss) from continuing
              operations before income taxes                       65,893     397,094
Income taxes credit (expense)                                    (19,800)   (119,072)
                                                             -------------------------
              Income/(loss) from discontinued
              operations                                           46,093     278,022
                                                             -------------------------

Discontinued operations (Note 8)
Profit / (loss) from discontinued operations                       -        2,761,943
Income taxes credit / (expense)                                    -        (828,583)
                                                             --------------------------
Income/(loss) from discontinued operations                         -        1,933,360
                                                             --------------------------
                    Net income                                  46,093      2,211,382
                                                             ==========================

</TABLE>

See accompanying notes to the consolidated financial statements.

                                      112

<PAGE>

                   eCash Holdings Pty Limited and subsidiaries

                 Consolidated Statements of Stockholders' Equity

                 Period ended August 31, 2006 and June 30, 2006




<TABLE>
<CAPTION>
<S>                                                <C>        <C>          <C>

                                                 Common      Retained       Total
                                                  Stock      Earnings    Stockholders'
                                                                            Equity
                                               ---------------------------------------

Balances at June 30, 2006                  A$        3,000     1,184,540    1,187,540
         Net income/(loss)                               -        46,093       46,093
                                               ---------------------------------------

Balances at August 31, 2006                A$        3,000     1,230,633    1,233,633
                                               =======================================

</TABLE>

See accompanying notes to the consolidated financial statements.

                                      113

<PAGE>

                   eCash Holdings Pty Limited and subsidiaries

                      Consolidated Statements of Cash Flows

                 Period ended August 31, 2006 and June 30, 2006


                                                August 2006   June 2006
                                               ---------------------------
Net income/(loss)                          A$         46,093   2,211,382
     Adjustments to reconcile net income
     to net cash providing by operating
     activities:
     Net profit on disposal of business                    -  (3,335,839)
     Depreciation and amortisation of
     property, plant and equipment                       100       79,339
     Increase/(decrease) in doubtful debts                              -
     (Increase)/decrease in trade                  (110,083)     (52,644)
     accounts receivable
     (Increase)/decrease in prepayments             (15,202)      (3,821)
     (Increase)/decrease in inventories             (83,198)      111,522
     (Increase)/decrease in other                     10,511    (124,254)
     assets
     Increase/(decrease) in related party             15,769    (942,033)
     balances
     Increase/(decrease) in trade                    243,801    (625,081)
     accounts payable
     Increase/(decrease) in provisions
     and other accruals                             (63,954)     (80,598)
     (Increase)/decrease in income tax               103,569      567,663
     balance
     (Increase)/decrease in deferred tax                          356,174
     balance
                                               ---------------------------
          Net cash provided by/(used in)
          operating activities                       147,406  (1,838,190)

                                               ---------------------------
Cash flows from investing activities:
      Net cash inflow upon disposal of                     -    3,872,791
      business
      Capital expenditure, including
      interest capitalised                                 -    (122,490)
                                               ---------------------------
          Net cash provided by/(used in)
          investing activities                             -    3,750,301
                                               ---------------------------
Cash flow from financing activities:
     Issue of shares                                       -            -
     Dividends paid                                        -  (1,100,000)
                                               ---------------------------
          Net cash provided by/(used in)
          financing activities                             -  (1,100,000)
                                               ---------------------------
          Net increase/(decrease) in cash
          and cash equivalents                       147,406      812,111
Cash and cash equivalents at beginning of          1,102,169      290,058
year
                                               ---------------------------
Cash and cash equivalents at end of year   A$      1,249,575    1,102,169
                                               ===========================

See accompanying notes to consolidated financial statements.

                                      114
<PAGE>

                     Cash Holdings Pty Ltd and subsidiaries

                 Notes to the Consolidated Financial Statements

(1) Summary of Significant Accounting Policies and Practices

      (a) Description of Business

      eCash Holdings Pty Ltd (the "Company") was incorporated on 13 October 1999
      and remained dormant until the 2002 financial year. The company operates
      in the distribution and servicing of automatic teller machines. In 2002,
      the Company did not trade, rather it allowed a related party to trade on
      its behalf under an agreed contractual arrangement and in return an agency
      fee was received. In 2003, the Company commenced trading in its own right.
      On 17 July 2003 the company changed its name from eCash Pty Limited to
      eCash Holdings Pty Limited.

      (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 Group's largest ATM sales customer, represented 62.4% (June 2006:
      57.9%) of trade accounts receivable as of August 31, 2006 and 75.6% (June
      2006: 76.5%) of sales for the fiscal period ended August 31, 2006. The
      Group's largest ATM rebate customer, represented 0% (June 2006: 0%) of
      trade accounts receivable as of August 31, 2006 and 0% (June 2006: 100%)
      of rebate income for the fiscal period ended August 31, 2006.

      (c) Inventories

      Inventories are stated at the lower of 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 21% (June 2006: 7.5% to 21%).

      (e) Other Current Assets and Other Assets

       Other assets are comprised of rental bonds, prepaid expenditure, and
       other non-trade receivables.

                                      115
<PAGE>

                     Cash Holdings Pty Ltd and subsidiaries

                 Notes to the Consolidated Financial Statements

(2)   Summary of Significant Accounting Policies and Practices (cont)

      (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
      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.

      Capital gains tax, if applicable, is provided for in establishing period
      income tax expense when an asset is sold.

      (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, such as property, plant and equipment, and purchased
      intangibles subject to amortization, 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.

      An impairment loss is recognised to the extent that the carrying amount
      exceeds the asset's fair value. The Company did not recognise any
      impairment adjustments in August 2006 (June 2006: nil).

      (i) Revenue Recognition

      The Company recognises revenue when products are shipped and the customer
      takes ownership and assumes risk of loss. Interest income is recognised as
      it accrues. Service revenue is recognised as the services are provided.
      Rebate income is brought to account at the time the rebate is earned.

      (j) Commitments and Contingencies

      Liabilities for loss contingencies, including environmental remediation
      costs, arising from claims, assessments, litigation, fines and penalties

                                      116
<PAGE>

      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.

      (k) Advertising expenses

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

                                      117

<PAGE>

                     eCash Holdings Pty Ltd and subsidiaries

                 Notes to the Consolidated Financial Statements


(1) Summary of Significant Accounting Policies and Practices (cont)

      (l) Cash and cash equivalents

      Cash and cash equivalents comprise cash on hand, cash at bank and term
      deposits with banking institutions. 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/loss recognised in the Statement of Operations.

      (m) Consolidation

      The consolidated financial statements of the consolidated entity include
      the financial statements of the Company, being the chief entity, and its
      controlled entities ("the consolidated entity").

      Where an entity either began or ceased to be controlled during the year,
      the results are included only from the date control commenced or up to the
      date control ceased.

      The balances and effects of transactions, between controlled entities
      included in the consolidated financial statements have been eliminated.

      (n) Investments in controlled entities

      Capital ATM Pty Limited was incorporated on 17 March 2003 with the eCash
      Holdings Pty Limited investing A$1 share capital at the date of
      incorporation acquiring a 100% interest.

      Custom Cash Pty Limited was incorporated on 18 March 2003 with the eCash
      Holdings Pty Limited investing A$1 share capital at the date of
      incorporation acquiring a 100% interest.

      eCash Pty Limited was incorporated on 24 July 2003 with eCash Holdings Pty
      Ltd investing $1 share capital at the date of incorporation acquiring 100%
      interest.

      eCash Management Pty Limited was incorporated on 12 September 2002 with
      eCash Holdings Pty Limited investing A$1 share capital at the date of
      incorporation acquiring 100% interest.


(2) Income Taxes

       Total income tax (expense) credit for the years ended August 31, 2006 and
June 30, 2006 consist of:

<TABLE>
<CAPTION>
<S>                                           <C>           <C>          <C>

                                           Current        Deferred       Total

       Year ended August 31, 2006:     A$      (19,800)             -     (19,800)
                                           ========================================

       Year ended June 30, 2006:       A$     (591,480)     (356,175)    (947,655)
                                           ========================================
</TABLE>

                                      118
<PAGE>

                     eCash Holdings Pty Ltd and subsidiaries

                 Notes to the Consolidated Financial Statements

(2) Income Taxes (cont)

      Income tax expense was A$19,800 for the period ended August 31, 2006 and
      A$947,655 for the year ended June 30, 2006 and differed from the amounts
      computed by applying the Australian federal income tax rate of 30% (June
      2006: 30%) to pre tax income as a result of the following:


                                             August 2006    June 2006
                                             ---------------------------
       Computed "expected" tax          A$
       expense/(credit)                            19,800       947,741
       Computed "expected" tax
       expense/(credit) of not                          -         2,155
       deductible
                                              ---------------------------
       Computed "expected" tax
       expense/(credit) of
       consolidated tax group                           -       949,896
       Timing differences reversal                      -       (2,241)
       Tax losses and timing
       differences (previously not
       recognized / brought to account)                 -             -
       Increase (reduction) in income
       taxes resulting from other net                   -             -
       misc items
                                              ---------------------------
                                        A$         19,800       947,655
                                             ===========================

      The tax effect of temporary differences that give rise to significant
      portions of the deferred tax assets and deferred tax liabilities at August
      31, 2006 and 30 June 2006 are presented below.

<TABLE>
<CAPTION>
<S>                                                            <C>           <C>

                                                           August 2006   June 2006
                                                           At 30% Tax    At 30% Tax
                                                              Rate          Rate
       Deferred tax assets:
            Accounts receivable principally due to
            allowance for doubtful accounts         A$                -            -
            Employee leave entitlements                          28,816       28,816
            Bonus provision                                      33,000       33,000
            Unrealized Foreign exchange (gains) /               (2,962)      (2,962)
            losses
            Tax losses previously not brought to                      -            -
            account
                                                          ---------------------------
               Deferred tax assets- gross                        58,854       58,854
                                                          ---------------------------
               Less valuation allowance                               -            -
                                                          ---------------------------
               Net deferred tax asset                            58,854       58,854
                                                          ===========================
</TABLE>

      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.

                                      119
<PAGE>

                     eCash Holdings Pty Ltd and subsidiaries

                   Notes to Consolidated Financial Statements

(3) Pension and Other Post retirement Benefits

      The Company contributed to a defined contribution superannuation fund on
behalf of its employees. Contributions are based upon Australian statutory
minimum percentages of salary plus any additional contributions included in
employee's employment agreement. The consolidated entity contributed A$5,845
during period ended August 31, 2006 (June 2006: A$35,680). 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>
<S>                                                            <C>          <C>

                                                           August 2006   June 2006
       Accrued expenses                             A$          165,713      123,167
       Deferred income                                           24,500      131,000
       Provision for employee leave                              96,052       96,052
                                                          ---------------------------
                                                          ---------------------------
                                                    A$          286,265      350,219
                                                          ===========================

(5) Cost of Goods Sold

                                                           August 2006   June 2006
       Opening Inventory                            A$          774,940      886,462
       Add
       Purchases                                                606,370    3,474,894
       Freight and other charges                                 11,605      454,638
                                                          ---------------------------
                                                          ---------------------------
                                                              1,392,915    4,815,994
       Less
       Ending Inventory                                       (858,138)    (774,940)
                                                          ---------------------------
                                                          ---------------------------
       Cost of Goods Sold                           A$          534,777    4,041,054
                                                          ===========================

       Continuing                                               534,777    3,283,678
       Discontinued                                                   -      757,376
                                                          ---------------------------
       Cost of Goods Sold                           A$          534,777    4,041,054
                                                          ===========================
</TABLE>

(6) Commitments

                   Non cancellable operating lease commitments
                   -------------------------------------------
      The company and consolidated entity have no operating lease commitments.

(7) Related parties

      The company was 35% owned by Global Payments Technology, Inc., is 35%
      owned by the private trust of the Managing Director of the Global Payment
      Technology Australia Pty Limited, and is 30% owned by the Marketing
      Director of Global Payment Technology Australia Pty Limited. Global
      Payments Technology, Inc. disposed of its interest on 25 August 2006.

      During the period the Group had purchases from Global Payment Technologies
      Australia Pty Limited totalling A$0 (June 2006: A$1,836). An amount of A$0

                                      120
<PAGE>

      (June 2006: A$0) is included in Trade accounts payable at balance date. In
      addition the Group owed Global Payment Technologies Australia Pty Ltd
      A$82,908 (June 2006: A$67,139).

      Global Payment Technologies Australia Pty Limited, a related party, paid
      salary, rental and other administrative costs on behalf of the
      consolidated entity. These costs were recharged through the intercompany
      loan accounts.

      The company paid salary, rental and other administrative costs on behalf
      of its controlled entities. These amounts were recharged through the
      intercompany accounts.

      There were no other transactions with related parties.

                                      121

<PAGE>

                     eCash Holdings Pty Ltd and subsidiaries

                   Notes to Consolidated Financial Statements

(8)  Discontinued Operations

During the 30 June 2006 financial year the group disposed of its ATM rental
business.

The company had the following income and expenditure during the year ended 30
June 2006:

<TABLE>
<CAPTION>
<S>                                                                         <C>
                                                                          June 2006

Sales (including rebate                                             A$        657,665
income)
Cost of goods sold (including rebates and other direct costs)
                                                                            (757,376)
                                                                         -------------
                Gross profit / (loss)                                        (99,711)

Selling, general and administrative expenses                                (486,405)
                                                                         -------------
                Operating income/(loss)                                     (586,116)

Other income / (expense):
      Profit on sale of business                                            3,335,839
      Other income                                                                  -
      Interest revenue                                                         12,220
                                                                         -------------
             Income/(loss) before income taxes                              2,761,943
                                                                         =============
</TABLE>

The discontinued business did not have any assets and liabilities at 30 June
2006.

                                      122

<PAGE>

<TABLE>
<CAPTION>
<S>                           <C>              <C>             <C>              <C>

                                                                          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 (credited) Deductions -      Balance
                          beginning      to costs and                          at end
     Description          of period        expenses                          of period
-----------------------   -----------    --------------     -----------      -----------
Allowance for doubtful
   accounts:
     September 30, 2005         250               47            145  (a)         152
     September 30, 2006         152               61             54  (a)         159
     September 30, 2007         159              (32)            41  (a)          86

Warranty Reserve
     September 30, 2005         298              176            206  (b)         268
     September 30, 2006         268              161            120  (b)         309
     September 30, 2007         309             (174)            27  (b)         108

</TABLE>



(a) Write-off of accounts.
(b) Expenses incurred under warranty obligation.

                                      S-1