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

                                    FORM 10-K
Mark One

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

                  For the Fiscal Year ended September 30, 2003

                                       OR

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

                  For the transition period from _____ to _____

                         Commission File Number 0-25148

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

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

                   425B Oser Avenue, Hauppauge, New York 11788
                -- --------------------------------------------
               (Address of principal executive office) (Zip Code)

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

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

                                      None
                                     -----

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

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

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

<PAGE>





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

         Indicate by check mark whether the registrant is an accelerated filer
(as defined in the Securities and Exchange act rule 12b-2). Yes___ or NO_X_

                  The aggregate market value of the Common Stock of the
registrant held by non-affiliates of the registrant, based on the average bid
and asked prices on December 17, 2003, was approximately $17,200,000.

         As of December 17, 2003, the registrant had a total of 5,550,516 Common
Shares outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the definitive Proxy Statement of the registrant for the
annual meeting of stockholders to be held in 2004 are incorporated by reference
into Part III of this report.





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                                     PART I

Item 1.           Business
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General

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

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

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

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of the Company's advances and investments resulting in the Company recovering
the carrying value of such advances and investments. The Company accounts for
this remaining investment, approximately $25,000 as of September 30, 2003,
prospectively on a cost basis.


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

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

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

In April 1999, the Company acquired a 25% equity interest in Abacus Financial
Management Systems, Ltd. ("Abacus"), a UK-based software company. Abacus has
developed a cash management system, of which the Company's validators are a key
component, primarily intended to serve the retail market. In addition, the
Company and the principal of Abacus have formed Abacus Financial Management,
Inc. USA, which is 80% owned by the Company and has the exclusive right to
distribute Abacus' product in North America. To date, Abacus Financial
Management, Inc. USA has not had material operations.

Background and History

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

Since incorporation, the Company's net sales have grown from approximately
$35,000 in fiscal 1989 to its high of $43.9 million in fiscal 1999. In fiscal
2000, sales declined to $22.5 million as a result of a slowdown in the worldwide
gaming market and delays in key projects, which resulted in increased inventory
at the Company's affiliates. During fiscal 2000 the Company significantly
reduced inventory at its affiliates, matching demand in those regions, which

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resulted in the resumption of production and shipments in August 2000. In fiscal
2001, sales increased 43% to $32.2 million primarily as a result of increased
demand for our products in both Australia and Russia, as well as the addition of
several new customers during the year. In fiscal 2002, sales decreased 14% to
$27.7 million as a result of customers lowering their inventory and taking
advantage of the Company's shorter lead-times on its Argus gaming validator,
certain product issues which have since been resolved, as well as softer
worldwide economic conditions. In fiscal 2003, sales decreased 5.9% to 26.1
million as a result of reduced sales in Eastern Europe which have continued to
be hindered by initial product issues, which have since been resolved, offset in
part by sales of the Company's new vending product which commenced in January
2003. With the launching of its new beverage and vending product in fiscal 2003
the Company achieved an increase in its beverage and vending sales to $5.7
million as compared to $2.2 million in fiscal 2002. As a percentage of sales,
beverage and vending products represented 21.7% in fiscal 2003 as compared to 8%
in fiscal 2002.

The Company's international sales amounted to 90%, 92% and 90% of net sales in
fiscal 2003, 2002 and 2001, respectively. Management believes the international
markets for currency validation systems in both gaming and beverage and vending
may grow at a faster rate than in the United States and, therefore, may
represent the Company's best long-term growth opportunity.

Marketing Strategy

The Company has continued to focus its marketing efforts on those segments of
the marketplace which require a relatively high degree of security and
substantial custom design work that is not adequately served by larger
competitors which have tended to focus primarily on the broader, higher-volume
market using standardized product configurations. Our approach has been
effective in the worldwide gaming market and was initially a "niche" strategy
that allowed the Company to develop a strong international customer base that
originally started with manufacturers too small to attract the larger
competitors. With development completed and the commencement of sales of our
Argus(TM) and Aurora products in January 2001 and January 2003, respectively,
and the imminent launch of our new "Advantage" product in fiscal 2004, this
strategy will continue, and be broadened paying particular attention to markets
which have the largest opportunity for growth. The Company has both gained new
customers and retained existing customers based on its strength internationally
and its reputation for working closely to adapt to customers' needs. The Company
will continue to market directly to the OEMs and Operators in Eastern Europe to
continue its pursuit to regain lost market share due to initial product issues
on its Argus product, which have since been resolved. While the Company has seen
some progress in this respect, it has not yet seen an appreciable increase in
its gaming sales in this part of the world. The Company has and will attempt to
continue to strengthen and grow its relationships with the OEMs through joint
marketing and advertising efforts and by creating country-specific currency
databases and customization, which will allow OEMs an opportunity to seek new
potential markets worldwide. Today the Company has in excess of 55
country-specific databases, which is one of the largest database libraries in
the industry. Further, it plans to continue to build a large library of
databases for its new Aurora beverage and vending validator product line. As a
result of the Company's launch of its Aurora

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beverage and vending product in fiscal 2003, and the signing of 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, the Company believes it is in
position to gain additional business with its Aurora product based on its
acceptance as a currency validator for a number of growing markets worldwide. In
addition, the Company has begun to sell this product into certain gaming
applications as well. By leveraging the Company's international relationships,
the Company will seek growth opportunities in the domestic gaming sector, as the
United States is viewed as an important target for expansion by several of our
major OEM customers. Further, the Company is launching its new Advantage product
that it believes will allow it to penetrate the domestic gaming market as early
as fiscal 2004.

In the gaming venue, the Company markets its products principally to the OEMs as
well as the end-users (i.e., casino operators) who purchase slot machines from
the OEMs to help ensure that the Company's validator products will be specified
as the product of choice in new orders. The Company has also provided direct
operator technical training and participation in seminars with the Company's OEM
customers. By marketing directly to the end-users in conjunction with the OEMs,
the Company expects its products will gain acceptance as its customers' gaming
machines gain entry into major casinos or regions previously dominated by
currency validators of the Company's competition. In 1999, the Company began to
develop programs and plans designed to elevate the level of our customers'
product knowledge. Such programs and plans include the development of formally
documented maintenance schedules and similar programs to be proposed to
customers. These maintenance programs are being offered in coordination with the
Company's OEM customers, and are intended to broaden awareness of the Company
and its products within the gaming industry and as a result increase sales.
Additionally, the Company will be focusing its marketing efforts on explaining
the technical features and customer support programs of current and future
products in order to further differentiate itself from the competition. This
overall strategy allows the Company's products to continue to demonstrate the
high level of performance and quality achieved in many markets throughout the
world.

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

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

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

Products

Since inception, the Company has endeavored, through its research and
development and manufacturing efforts, to provide products that meet the
specific performance requirements of its customers. These requirements are
continually evolving as the markets for currency validators continues to grow
and as technological advances are incorporated into the products' design. The
Company spent approximately $150,000, $225,000 and $150,000 during fiscal 2003,
2002 and 2001, respectively, on research and development. The Company's research
and development consists primarily of efforts to expand its product lines into
new applications, as well as to achieve improvements in technology.

The Company's new product development efforts have been focused on the design of
its latest generation of validator products, the first of which was Argus(TM).
Argus(TM), the Company's gaming validator, began selling in January 2001. Sales
of this new product represented 19%, 63% and 80% of validator sales in fiscal
2001, 2002 and 2003, respectively. In the summer of 2002, the Company completed
the development of its new product designed specifically to address the
requirements of the vending industry. Following successful field trials during
the summer and fall of 2002, the Company commenced its sales and marketing
campaign which led to sales commencing in January 2003 on its new product called
"Aurora". Building from its engineering libraries, the Company anticipates
launching another new product, "Advantage", during fiscal 2004 that will provide
the Company additional flexibility in meeting its customers' needs in both the
domestic and international gaming markets. For Argus(TM) and

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Aurora products, the Company has, since achieving technological feasibility
through a detailed program design, capitalized the cost of software coding and
development, and reflects the amortization of these costs in cost of sales.

The Company's principal products include three basic validator models (GII,
Argus(TM) and Aurora) and a wide range of comprehensive currency databases and
note stacker configurations. In fiscal 1997, the Company planned for a shift in
demand toward its Generation II product line and such sales amounted to 58% of
unit sales. During fiscal 2000, 2001 and 2002, this shift continued and
Generation II and Argus(TM) product line sales accounted for 76%, 89% and 92%,
respectively of unit sales. The Argus product has been designed to be a drop-in
replacement for Generation II products and is focused toward bringing new
technological features to the marketplace. During fiscal 2002 and fiscal 2003,
sales substantially shifted from the Company's Generation II product line to its
Argus(TM) product line which represented 63% and 80% of gaming validator sales.
This shift increased further in the fourth quarter of fiscal 2003 and
represented 96% of gaming sales. This shift, coupled with the Company's
increased marketing efforts on Argus, rather than its Generation II product line
resulted in an increased inventory reserve in the fourth quarter of 2003. The
Company believes it has adequately reserved for inventory obsolescence for the
shift in demand from its Generation I products and its Generation II products.

The Model 125 ("M-125") is the Company's first generation validator specifically
designed for the beverage and vending industries. The M-125's note stackers are
fully detachable and available with capacities of 150, 300 and 600 notes. During
fiscal 2001, 2002 and 2003, M-125 sales were primarily in vending applications
in Italy. This product has been replaced during fiscal 2003 by the Company's
Aurora product, which has been sold in many countries including Germany, Russia,
South Africa and the Latin American region. With the last of any substantial
M-125 sales realized in fiscal 2003, remaining components not expected to be
used for warranty repairs are fully reserved.

The Model 150 ("M-150") is the Company's first generation multi-country,
multi-denominational validator designed to fit machines where space is available
either to the rear or downward. The M-150 is available with locking removable
cassette bill stackers in 500, 1,000 and 2,000 bill capacities. Due to the
growth and acceptance of the Company's newest products, Argus and Aurora, the
M-150 product has been substantially phased out and it is anticipated that
minimal units will be sold in fiscal 2004. Any remaining components not expected
to be used for warranty repairs or small unit sales are fully reserved.

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

Generation II validators are offered in a wide variety of configurations that
can provide solutions for most worldwide gaming markets, as well as for many
beverage and vending markets. Generation II validators can be configured for
down-stack applications which allow the note stacker, a security removable
cassette, to be reached through a separate front entrance

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in the gaming machine. Rear stacker configurations are also available.
Generation II validators offer currency acceptance of notes up to 3.34 inches
(85 mm) in width and have enhanced features for gaming and high security
applications. These features include a multi-level high security validation
process with side-looking sensors, an animated bill runway with "smart visuals"
for customer attraction and diagnostics, a user-selectable currency denomination
acceptance and an optional bar-code reader for tickets and coupons. During
fiscal 2004, the Company intends to implement a phase out program on this
product, however; we will maintain field service and support for warranty
repairs for several more years.

Argus(TM) is a worldwide gaming note validator, which can process multi-country
databases, with a substantially greater number of notes (between 2.44 inches to
3.35 inches in width), in all 4 directions. Argus is designed to be a one size
fits all validator that uses essentially the same hardware for every currency
throughout the world. Argus is equipped with a standard bar code reader, which
has the added capability of reading coupons and currency at the same time. In
the future, GPT plans to explore the option of incorporating smart-card and
mag-card technologies with its existing products. The Argus sensor system has
the Company's patented Red, Green, Blue and Infrared (RGBI) optical array, which
generates 56 channels of high-resolution data. It is arranged in a unique layout
that allows for the analysis of a note's signature (fingerprint) without any
gaps between optical sensors. The optical information provided by Argus is
reflective (off the note), transmissive (through the note) and a combined RGBI
pattern of reflective data to create a color signature of the note being
evaluated. The Argus validator also has a high-sensitivity magnetic sensor and
high-resolution Side-Looking Sensors(TM). Both the Generation II product line
and Argus offer a "soft drop analyzer" ("SDA") option. This patented SDA feature
allows the note stacker cassette to maintain and track specific information such
as currency or coupons in the cassette by quantity and denomination; the
specific machine or game that the cassette was removed from; the acceptance rate
of the validator; and time-in/time-out of the cassette from the gaming machine.
This information can be easily downloaded, via a docking station provided by the
Company, to a personal computer allowing instant feedback/tracking for the
machine operator.


Aurora is the Company's first validator specifically designed for the worldwide
beverage and vending industries. Aurora is an injection-molded modular design
that can be used in the up-stack or down-stack orientation and uses state of the
art optics in its internal sensor system with the Company's patented RGBI
optical array. With field trials completed in the fall of 2002 and sales
commencing in January 2003, this product has quickly replaced most sales of the
Company's M-125 and M-150. This product has been marketed substantially in the
beverage and vending industries, and most recently has been marketed in certain
gaming markets resulting in the receipt of small orders. The Company will
continue to market this product in both gaming and vending applications during
fiscal 2004. 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.

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Product Performance and Warranties

The Company's validator and note stacker products are generally covered by a
one-year warranty against defects in materials or workmanship. This warranty has
essentially doubled with the new Argus and Aurora validators. The Company or its
authorized service agents will repair or replace any units that require warranty
service. The Company does not warrant that its validators will reject all
counterfeit currencies and believes that there is no commercially available
validator that is counterfeit-currency-proof or warranted as such. To support
its increasing international market presence, the Company has expanded its
warranty and non-warranty support coverage to provide in-country capability in
key worldwide markets (e.g. Australia, Russia, Latin America, South Africa,
Europe and Southeast Asia). In these markets, the local sales and service joint
venture partners and distributors provide warranty labor while the Company's
primary product support in these markets is in the form of warranty parts. The
Company expects to expand its international service capabilities during 2004 as
opportunities arise. Over the last three years, the Company's cost of warranting
its products has varied primarily as a direct result of the increase or decrease
in the unit sales, as well as product performance. Warranty expense for 2003,
2002 and 2001 was $327,000, $280,000 and $145,000, 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 the Company's primary sales and marketing
efforts in both the domestic and international markets. The Company has joint
ventures providing local sales and service in the key markets of South Africa
and Australia and Company-owned sales and service offices in Las Vegas, Nevada,
London, England and Moscow, Russia. In addition, the Company has distributors in
Southeast Asia, Italy and Latin America. The overall sales and service network
provides effective international coverage for the Company's products and
customers and reflects the Company's commitment to providing superior service
worldwide.

Customer Concentration

During fiscal 2003, the Company's largest customer, GPTA, accounted for
approximately 48% 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 78% of the Company's revenues, with the remaining
22% primarily from product applications in the beverage and vending industry.
While the Company has substantially diversified with increased sales to the
beverage and vending industry, as well as adding new accounts during the year,
it still sells to a small group of OEMs in the gaming and beverage and vending
industries. The Company must achieve significantly less dependence on several
important customers by expanding into new countries, expanding its customer base
and developing new products to increase the market size it can market to, such
as domestic gaming and the mass market vending applications. Until

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such initiatives are achieved, the Company is at risk that lower demand for any
one product or market, or a loss of a significant customer, can substantially
impact its revenues and net income.

Manufacturing

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

The Company's manufacturing operations consist primarily of mechanical and
electro-optical assembly and the provision of wiring harnesses between
components and between the validator and the OEM machine in which the finished
product is to be used. The Company routinely tests all components and has
extensive "burn-in" procedures for the final assembled product. Direct control
over fabrication, via its key suppliers, and testing permits the Company to
shorten its production cycle and protect patented and proprietary technology.
During fiscal 2000, the Company transitioned a portion of its manufacturing to
demand flow technology. In addition, the Company has evaluated and will continue
to evaluate its suppliers in an effort to reduce its total cost of
manufacturing, a process that may include vendor consolidation and selected
outsourcing. Despite these efforts, the Company's manufacturing efficiencies
significantly declined in fiscal 2000 as a direct result of the 49% sales
decline resulting in higher manufacturing costs per unit, as well as less
efficient operations as a result of lower and more frequent production runs. In
fiscal 2001, the Company incurred higher startup costs on its new products;
however, this was offset by increased production volumes and commensurate
efficiencies resulting from a 43% increase in sales and production.

As the Company began its transition to the Argus product line in fiscal 2001, it
incurred increased costs related to lower volumes on the two product lines. As
this transition was substantially completed during fiscal 2002, Argus was
expected to be produced in a more efficient manner at a lower cost, and at the
same time allowing the Company increased flexibility to meet customers' demand.
In the fourth quarter of 2002 these improvements were more than offset by the
significant reduction in sales and production. During fiscal 2003, the Company's
introduction of its new Aurora product with higher initial purchase costs and
increased initial manufacturing costs, coupled with overall lower sales volume
than fiscal 2002 resulted in lower net margins for the year. The Company did,
however, take action to significantly reduce its purchased component costs on
Aurora and Argus by the end of fiscal 2003 by manufacturing and selling off, on
a first-in first-out basis, its higher priced purchased components. As a result
of these actions, the Company is in a position, depending on future sales
volumes and customer and product mix, to achieve improved net margins in future
quarters resulting from improvements in production and purchasing efficiencies,
as well as selective outsourcing.

The Company depends on a limited number of suppliers for various stamped or
formed housings, gears, cogs and wheels and electronic assemblies or components,
including certain microprocessor chips. The Company believes that concentrating
its purchases from its existing

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

Competition

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

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

The largest supplier of validators used in the domestic gaming and lottery
markets is JCM. Internationally, the Company competes for gaming machine
business with JCM, MEI, Ardac

                                       12
<PAGE>

and Cashcode. In the secondary low-value gaming markets, Innovative Technology,
Ltd. maintains a significant market share due to this market's price sensitivity
and its low-cost approach to this market. The Company has focused its marketing
efforts on the higher-priced domestic and international gaming validator
business and competes on the basis of service, quality, durability and
performance while maintaining a high level of protection against tampering and
counterfeit currencies.

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

Intellectual Property

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

The Company holds ten U.S. patents as follows: design for "Escrow Box for Coin
Operated Machines," U.S. Patent No. 0283518 issued April 22, 1986; "Paper
Currency Acceptor and Method of Handling Paper Currency for Vending Machines and
the Like," U.S. Patent No. 4884671 issued December 5, 1989; "Anti-fraud Currency
Acceptor," U.S. Patent No. 5259490 issued November 9, 1993; "Bill Accumulating
and Stacking Device," U.S. Patent No. 5322275 issued June 21, 1994; "Soft Count
Tracking System," U.S. Patent No. 5630755 issued May 20, 1997; "Paper Currency
Validator (Side-Looking Sensors)," U.S. Patent No. 5806649 issued September 15,
1998; "Electrical Switch Connectors," U.S. Patent No. 5842879 issued December 1,
1998; "Stacker Mechanism for Stacking Bank Notes" U.S. Patent No. 5899452 issued
May 4, 1999; "Apparatus and method for detecting a security feature in a
currency note," U.S. Patent No. 6,104,036 issued August 15, 2000; and "Bank Note
Validator (RGBI)" U.S. Patent No. 6,223,876 issued May 1, 2001. Certain patents
cover technology used in the Company's first, second and third generation
validator product lines and the remaining patents cover technology used in
certain special models. In addition, on September 30, 1999 the Company filed a
reissue application with the U.S. Patent and Trademark Office to amend and
broaden the claims of U.S. Patent No. 5630755.

In addition to its U.S. patents and pending application, the Company has also
applied for patent protection in a large number of international markets. If
corresponding foreign patents are obtained, the Company believes that these
patents could provide important protection for certain technological advantages
its validators possess in international markets. However, the Company does not
believe that it will be materially adversely affected if these patents are not


                                       13
<PAGE>

issued. No assurances can be given that any patent applications will result in
the issuance of additional patents. The Company has obtained patents in
Australia, New Zealand and South Africa under the Eurasian Patent Convention
corresponding to U.S. Patent No. 6,223,876 covering the use of short wave-length
light in a validator to discern the color and other characteristics of bills
being scanned. In addition the Company has obtained a patent in New Zealand
corresponding to U.S. Patent No. 5,630,755 covering a system for monitoring and
tracking money collected from a gaming machine and the like.

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

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

Government Regulation

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

Employees

On December 22, 2003, the Company had 106 employees, consisting of 3 executives;
9 sales and customer service representatives; 25 engineers and software
developers, and technical support representatives; 20 materials, quality control
and quality assurance personnel; 9 administrative and clerical personnel; and 40
assembly/manufacturing personnel. The Company believes its relationship with its
employees is good.

Special Note Regarding Forward-Looking Statements

A number of statements contained in this report are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 that
involve risks and uncertainties that could cause actual results to differ
materially from those expressed or implied in the applicable statements. These
risks and uncertainties include, but are not limited to: the Company's
dependence on the paper currency validator market and its potential
vulnerability to technological obsolescence; the Company's dependence on a
limited base of customers for a significant portion of sales; the possible
impact of competitive products and pricing; uncertainties with respect to the
Company's business strategy; general economic conditions in the domestic and
international market in which the Company operates; the risks that its current

                                       14
<PAGE>

and future products may contain errors or defects that would be difficult and
costly to detect and correct; potential manufacturing difficulties; possible
risks of product inventory obsolescence; potential shortages of key parts and/or
raw materials; potential difficulties in managing growth; dependence on key
personnel; the relative strength of the United States currency; the pending
commencement of operations for the South African route market; and other risks
described in the Company's Securities and Exchange Commission filings.

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

The Company leases approximately 44,000 square feet which houses the
manufacturing and administrative functions in Hauppauge, New York, for a term
expiring June 30, 2006, at an annual base rental of approximately $336,000 in
fiscal 2003, increasing to approximately $372,000 in the final year of the term.
The Company believes this facility is adequate for its manufacturing needs for
the foreseeable future. The Company leased space in Valley Stream, New York
through August 31, 2003. The annual base net rental was approximately $14,000.
This facility housed certain executive functions of the Company. The Company
also leases approximately 3,600 square feet in Las Vegas, Nevada, for a term
expiring January 31, 2004, at an annual base rental of approximately $50,000.
This facility houses certain sales and service functions of the Company.

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

There are no material legal proceedings pending against the Company.

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

Not applicable.


                                       15
<PAGE>


                                     PART II

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

a)       Market Information

The Company's Common Stock is listed and trades on the NASDAQ National Market
System under the symbol GPTX. The following table sets forth, on a per share
basis, the high and low sale prices for the Company's Common Stock for each
quarter of fiscal 2002 and 2003.

                                                      Common Stock
                                                      ------------

         Quarter Ended                           High             Low
         -------------                          ------            ----

         December 31, 2001                       3.90              2.95
         March 31, 2002                          6.00              3.50
         June 30, 2002                           6.44              5.35
         September 30, 2002                      7.397             5.46
         December 31, 2002                       6.79              5.30
         March 31, 2003                          6.09              4.10
         June 30, 2003                           5.00              3.50
         September 30, 2003                      4.288             2.95

b)       Holders

The approximate number of beneficial holders and holders of record of the
Company's Common Stock as of December 17, 2003 were 1,400 and 40, respectively.

c)       Dividends

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


                                       16
<PAGE>


Item 6.           Selected Financial Data
------            -----------------------

FINANCIAL HIGHLIGHTS
--------------------
(In thousands, except earnings per share)
-----------------------------------------
<TABLE>
<CAPTION>

Year Ended September 30                1999       2000      2001      2002       2003
----------------------------------------------------------------------------------------
<S>                                   <C>       <C>        <C>       <C>        <C>
Net sales                             $43,896   $22,507    $32,161   $27,713     $26,076
Net income (loss)                       3,962   (1,229)(2)     806     (633)(1)  (5,677)(5)
Diluted earnings (loss) per share         .68     (.22)(3)     .14     (.11)(3)   (1.02)(3)
Total assets (4)                       26,122    24,460     26,466    24,030      17,775
Long- term debt obligations             4,994     3,617      2,800         -           -
Stockholders' equity                   17,038    16,795     17,550    17,026      11,677
</TABLE>

(1)  Includes an after-tax gain of $82,000 from the sale of the Company's
     unconsolidated China affiliate.
(2)  Includes an after-tax gain of $221,000 from the sale of a portion of the
     Company's unconsolidated South African affiliate.
(3)  The weighted average shares outstanding used in the calculation of net loss
     per common share did not include potential shares outstanding because they
     were anti-dilutive.
(4)  As described in Note 2 to the consolidated financial statements, the
     Company, in connection with its fiscal 2002 annual audit, reclassified
     certain costs previously included in inventory, in the amount of $2,756,000
     and $1,528,000 as capitalized software costs, and molds and tooling,
     respectively, as of September 30, 2001. This reclassification did not
     affect reported earnings, total assets, or stockholders' equity for any
     period.
(5)  Based on the Company's continued losses, and related uncertainty as to the
     Company's ability to generate sufficient taxable income to realize the full
     value of its deferred income tax asset, the Company recorded a full
     valuation allowance and related income tax expense of $2,569,000 in the
     fourth quarter of fiscal 2003.

QUARTERLY INFORMATION
---------------------
(In thousands, except earnings per share)
-----------------------------------------
<TABLE>
<CAPTION>

                                                                                Quarter Ended
----------------------------------------------------------------------------------------------------------------------------
                                          Dec. 31          Mar. 31          June 30          Sept. 30           Year
----------------------------------------------------------------------------------------------------------------------------
Fiscal 2002
-----------
<S>                                    <C>               <C>              <C>              <C>                <C>
Net sales                              $   8,290         $   8,408        $   6,503        $   4,512          $27,713
Gross profit                               2,123             2,371            1,895              439            6,828
Net income (loss)                            118               126              159          (1,036)             (633)
Basic earnings (loss) per share              .02               .02              .03            (.19)(1)       (.11)(1)
Diluted earnings (loss) per share            .02               .02              .03            (.19)(1)       (.11)(1)

---------------------------------------------------------------------------------------------------------------------------
Fiscal 2003
-----------
Net sales                               $   5,960         $   7,072         $   7,348        $   5,696         $26,076
Gross profit                                1,390             1,123             1,189              425           4,127
Net loss                                     (340)             (858)             (627)          (3,852)         (5,677)
Basic loss per share (1)                     (.06)             (.15)             (.11)            (.70)          (1.02)
Diluted loss per share (1)                   (.06)             (.15)             (.11)            (.70)          (1.02)
</TABLE>

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


                                       17
<PAGE>


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

Results of Operations
---------------------

Fiscal year ended September 30, 2003 compared with September 30, 2002
---------------------------------------------------------------------

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

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

                                       18
<PAGE>

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


Income Taxes
With respect to the provision for income taxes, the effective rate was (9.1%) as
compared to 59.4% in the prior-year period. This change in the effective tax
rate is the result of the Company's change in mix of earnings from its own
operations and earnings derived from its foreign affiliates and, furthermore, as
a result of the provision in the fourth quarter of fiscal 2003, of a full
valuation allowance of $2,569,000 against the Company's deferred income tax
asset due to the Company's continued losses and the uncertainty as to the
Company's ability to generate sufficient taxable income to realize the full
value of those assets. This valuation allowance is subject to adjustment based
on the Company's ongoing assessment of its future taxable income and may be
wholly or partially reversed.

Net Income (Loss)
The net loss for fiscal 2003 was ($5,677,000), or ($1.02) per share, as compared
with ($633,000), or ($.11) per share, for fiscal 2002. In addition to its
operations, the Company owns interests in various unconsolidated affiliates in
key regions of the world, all of which are accounted for using the equity
method, except for South Africa which effective April 2003 is accounted for on a
cost basis. Included in the results of operations for fiscal 2003 and 2002 are
the Company's share of net profits of these affiliates of $676,000 and $565,000,
respectively. In fiscal 2003 and 2002, equity in income of unconsolidated
affiliates includes an increase of $225,000 and $250,000, respectively, which
represents the recognition of the Company's share of the gross profits on
intercompany sales to its affiliates that have been recognized by these
affiliates. Excluding the intercompany gross profit adjustment, the Company's
share of net income of these unconsolidated affiliates was $451,000 and $315,000
for fiscal 2003 and 2002, respectively. This increase of $136,000 includes the
affect of lower sales and profits at the Company's Australian affiliates, a
result of the softer gaming market in Australia due principally to tighter
gaming regulations and lower profits at its eCash affiliate. Income from the
Company's Australian affiliate was $678,000 in fiscal 2002 as compared to
$470,000 in fiscal 2003. Until such time as the Australian market improves, the
Company anticipates a continued reduction in profitability at this affiliate.
Positively affecting the Company in fiscal 2003 were lower losses at its South
African operations, totaling $60,000, which were substantially sold in April
2003, and a writedown of the Company's net investment in Abacus

                                       19
<PAGE>

Financial Management Systems, Ltd. totaling $215,000 in fiscal 2002 due to the
deterioration in the financial condition of that entity, as compared to none in
fiscal 2003. In addition, the Company has a majority ownership in Global Payment
Technologies (Europe) Limited and Abacus Financial Management Systems, Ltd.,
USA, whose results are consolidated in the Company's financial statements.
During fiscal 2002, the Company recognized an after-tax gain of $82,000, or $.01
per share, which resulted from the sale of the Company's China investment.


Fiscal year ended September 30, 2002 compared with September 30, 2001
---------------------------------------------------------------------

Sales
Net sales for fiscal 2002 decreased by 13.8% to $27.713 million as compared with
$32.161 million in fiscal 2001. The sales decrease in fiscal 2002 is primarily
due to the results of customers lowering their inventory and taking advantage of
the Company's shorter lead-times on its Argus gaming validator, certain Argus
product issues, which have since been resolved, as well as softer worldwide
economic conditions. Gaming sales decreased 14% to $25.5 million and beverage
and vending sales decreased 14% to $2.2 million. Net sales to international
customers accounted for 91.7% and 89.6% of net sales in fiscal 2002 and 2001,
respectively. This year the Company has substantially transitioned its sales to
its new gaming validator, Argus(TM), which represented approximately 63% of its
validator sales in fiscal 2002 as compared to 19% in the prior year period.

Gross Profit
Gross profit decreased to $6.828 million, or 24.6% of net sales, in fiscal 2002
as compared with $9.754 million, or 30.3% of net sales, in the prior-year
period. This decrease is primarily due to the $4.5 million reduction in sales as
well as higher initial purchasing costs and less efficient manufacturing
operations relating to new products. Argus accounted for 63% of all validator
sales in fiscal year 2002 as compared to 19% in fiscal year 2001. While
improvement from lower purchasing costs and manufacturing efficiencies is
expected in future periods, margins will be affected by the mix of products as
well as sales volumes.

Operating Expenses
Operating expenses in fiscal 2002 increased to $8.783 million, or 31.7% of net
sales, as compared with $8.687 million, or 27.0% of net sales, in fiscal 2001.
The increase in operating expenses as a percentage of sales is primarily due to
the lower sales levels in fiscal 2002. In absolute terms operating expenses
increased by $96,000 or 1.1%. This increase of $96,000 was primarily the result
of higher warranty, travel, insurance, legal and audit costs, offset, in part,
by lower employee related expenses due to reductions in headcount. In August
2002, the Company initiated a cost reduction effort which reduced staffing by
14%.


Income Taxes
With respect to the provision for income taxes, the effective rate was 59.4% as
compared with 21.5% in the prior-year period. This increase in the effective tax
rate is the result of the

                                       20
<PAGE>

Company's change in mix of earnings from its own operations and earnings derived
from its foreign affiliates.

Net Income (Loss)
The net loss for fiscal 2002 was ($633,000), or ($0.11) per share, as compared
with net income of $806,000, or $0.14 per share, for fiscal 2001. In addition to
its operations, the Company owns interests in various unconsolidated affiliates
in key regions of the world, all of which are accounted for using the equity
method. Included in the results of operations for fiscal 2002 and 2001 are the
Company's share of net profits of these affiliates of $565,000 and $169,000,
respectively. In fiscal 2002 and 2001, equity in income of unconsolidated
affiliates includes an increase (decrease) of approximately $250,000 and
($11,000), respectively, which represents the recognition (deferral) of the
Company's share of the gross profits on intercompany sales to its affiliates
that have (have not then) been recognized by these affiliates. Excluding the
intercompany gross profit adjustment, the Company's share of net income of these
unconsolidated affiliates was $315,000 and $180,000 for fiscal 2002 and 2001,
respectively. This increase is primarily the result of higher sales and profits
at the Company's Australian affiliates, including its new eCash joint venture,
offset in part by, startup costs incurred by the Company's South African Vukani
operations and losses at Abacus Financial Management Systems, Ltd., including
the writedown of the Company's net investment totaling $215,000 related to its
purchase of the stock, and loans provided to that entity, due to the
deterioration in the financial condition of that entity. In addition, the
Company has a majority ownership in Global Payment Technologies (Europe) Limited
and Abacus Financial Management Systems, Ltd., USA, whose results are
consolidated in the Company's financial statements. During fiscal 2002, the
Company recognized an after-tax gain of $82,000, or $.01 per share, which
resulted from the sale of the Company's China investment. Excluding the effect
of this one-time gain, the net loss was ($715,000), or ($.11) per share.



Liquidity and Capital Resources

The Company's capital requirements consist primarily of those necessary to
continue to expand and improve product development and manufacturing
capabilities, sales and marketing operations, investments in affiliates and
interest payments on the Company's indebtedness. As a result of the Company's
agreement, in December 2003, amending its credit facility, and the completion of
its September 2003 and December 2003 cost reduction initiatives which will
reduce total cost at an annualized rate of $3 million, the Company believes that
its available resources, including its credit facilities, should be sufficient
to meet its obligations as they become due and permit continuation of its
planned product development and operations throughout fiscal 2004.

                                       21
<PAGE>

In May 2003, the Company reached an agreement with its bank to amend its credit
facility which included new financial covenants. Further, the Company used the
proceeds from the sale of its South African affiliate investment to pay down its
newest term loan and the revolving line of credit by $1,400,000 and $500,000,
respectively. The monthly payments on both term loans will remain the same. In
addition, based upon the Company's analysis of its cash flow it reduced its RLC
facility from $3.5 million to $2.0 million and has provided the bank additional
security in its inventory and cash. At September 30, 2003, the term loans are
classified as a short term liability as the loan is scheduled to be paid in full
by June 30, 2004. The RLC has been classified as a short term liability until
such time as the Company can be certain it will meet future loan covenants. As
of September 30, 2003, the Company was not in compliance with certain financial
covenants; however, has received a waiver for such non-compliance. The Company
has reached an agreement with its bank to further amend its credit facility. The
amendments, dated December 2003 and January 2004, include new financial
covenants, which the Company anticipates it will meet due to its cost reduction
initiatives and based on the Company's expectation of results for fiscal 2004.
The amendment also includes a reduction of the RLC from $2 million to $1.2
million, an RLC termination date of December 31, 2004 (previously September 10,
2005), as well as increases in its RLC interest rates between 200 - 400 basis
points effective March 1, 2004. The Company is actively seeking a replacement
financial institution more suitable to its current size and operations.
Outstanding borrowings under the term loans and the RLC were $793,000 and
$1,000,000, respectively as of September 30, 2003. The consolidated financial
statements have been prepared on a going concern basis based upon management's
plans, which are more fully described in Note 1c to the consolidated financial
statements.

Net cash provided by operating activities was $106,000 in fiscal 2003. This
amount is due to decreased inventory of $955,000 as a result of outsourcing and
the autonomous nature of the Generation III components, decreased income taxes
receivable of $652,000 due to collections in 2003, increased accrued expenses
and other liabilities of $450,000, increased accounts payable of $363,000,
decreased accounts receivable of $179,000, decreased prepaid expenses and other
current assets of $113,000 and decreased other assets and capitalized software
costs of $86,000, offset in part by a net loss for the year, adjusted for
non-cash items, of ($2,692,000). Net cash provided by operating activities
amounted to $2,261,000 in fiscal 2002. This amount is due to decreased

                                       22
<PAGE>

accounts receivable of $5,242,000, decreased prepaid expenses and other current
assets of $291,000, decreased inventory of $10,000 and a net loss for the year,
adjusted for non-cash items, of $2,000, offset, in part, by decreased accounts
payable of $1,411,000, increased income taxes receivable of $863,000, increased
intangible assets of $405,000, decreased accrued expenses and other current
liabilities of $336,000 and increased other assets and capitalized software
costs of $269,000. Net cash provided by operating activities amounted to
$2,533,000 in fiscal 2001. This amount is due to net income for the year,
adjusted for non-cash items, of $1,686,000, increased accounts payable of
$2,127,000 and decreased income taxes receivable of $674,000, offset, in part,
by increased accounts receivable of $1,550,000, decreased prepaid expenses and
other current assets of $177,000, increased other assets and capitalized
software costs of $162,000, increased inventory of $47,000 and decreased accrued
expenses and other liabilities of $18,000. The Company sells its products
primarily to international markets on terms generally greater than 30 days.
Further the Company has agreements with its affiliates, which could extend
payment terms in excess of 90 days. Based upon history, and the Company's
current review of its accounts receivable, it believes it is adequately reserved
for potentially uncollectable accounts. However, given the Company's sales and
accounts receivable are concentrated to a small group of customers and in
certain markets, any changes in conditions could cause a material impact to its
net income (loss) and cash flow.

Net cash provided by (used in) investing activities amounted to $1,169,000 in
fiscal 2003 as compared with ($1,608,000) in fiscal 2002 and ($1,734,000) in
fiscal 2001. In fiscal 2003 the Company received $1,877,000 from the sale of a
significant portion of its South African affiliate investment and in fiscal 2002
received $118,000 from the sale of its investment in its China affiliate (See
Note 3 in the financial statements). The Company provided net fundings and
investments in its joint ventures of $323,000 in fiscal 2003, $1,380,000 in
fiscal 2002 as compared with $298,000 in fiscal 2001. Further, the Company
received $21,000 and $550,000 in dividend distributions, primarily from its
Australian affiliate, during fiscal 2003 and fiscal 2002. The remaining
investing activities of $406,000 in fiscal 2003, $896,000 in fiscal 2002 and
$1,436,000 in fiscal 2001 were for the purchase of property and equipment
primarily for its manufacturing operations.

Net cash used in financing activities consisted of net repayments of bank
borrowings of $1,719,000 in fiscal 2003, as compared with $155,000 in fiscal
2002 and $858,000 in fiscal 2001. In addition, during fiscal 2001 the Company
used a portion of its loan to repurchase its common stock amounting to $205,000
(69,784 shares). The remaining cash provided by financing activities of $60,000
in fiscal 2003, $37,000 in fiscal 2002 and $154,000 in fiscal 2000 were from the
issuance of stock upon the exercise of common stock options and warrants.



Commitments:
The operations of the Company are conducted in leased premises. The Company also
leases various office equipment. At September 30, 2003, the approximate minimum
annual rentals under these leases, which expire through fiscal year 2006, were
as follows:

                                       23
<PAGE>

                                                              Total
                                                              commitments
Fiscal year ending September 30:
2004                                                          $424
2005                                                           415
2006                                                           285
Thereafter                                                      -

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, 2003, purchase order commitments approximated
$5,268,000 and will be used for production requirements up to, and in excess of,
six months.

Critical Accounting Policies
----------------------------

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

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

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.

                                       24
<PAGE>

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

Warranty Policy:
The Company provides for the estimated cost of product warranty at the time
related sales revenue is recognized. Furthermore, the Company warrants that its
products are free from defects in material and workmanship for a period of one
year, or almost two years relating to its Argus and Aurora products, from the
date of initial purchase. The warranty does not cover any losses or damage that
occur as a result of improper installation, misuse or neglect and repair or
modification by anyone other than the Company and its appointed service centers.
Repair costs beyond the warranty period are charged to the Company's customers.

Reserve for Uncollectible Accounts Receivable:
At September 30, 2003, our accounts receivable balance was $6.3 million. Our
accounting policy is to reserve for the accounts receivable of specific
customers based on our assessment of certain customers' financial condition. We
make these assessments using our knowledge of the industry coupled with current
circumstances or known events and our past experiences. This policy is based on
our past collection experience. To the extent that our experience changes or our
customers experience financial difficulty our reserve may need to increase.

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

Long-Lived Assets:

The Company accounts for long-lived assets in accordance with the provisions of
SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.
This Statement requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets

                                       25
<PAGE>

to be held and used is measured by a comparison of the carrying amount of an
asset to future net cash flows expected to be generated by the asset. If the
carrying amount of an asset exceeds its estimated future cash flows, an
impairment charge is recognized by the amount by which the carrying amount of
the asset exceeds the fair value of the asset. Assets to be disposed of are
reported at the lower of the carrying amount or fair value less costs to sell,
and are no longer depreciated. The Company adopted SFAS No. 144 on October 1,
2002. The adoption of SFAS 144 did not affect the Company's financial
statements. Prior to the adoption of SFAS No. 144, the Company accounted for
long-lived assets in accordance with SFAS 121, Accounting for Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of. As a result of
its review, the Company does not believe that any impairment exists in the
recoverability of its long-lived assets as of September 30, 2003.

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 full
fiscal 2003 loss 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.


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

Fiscal 2003 saw continued moderation in the level of inflation. In order to
offset the resultant rise in the costs of operations, the Company has assessed,
and will continue to assess, ways to gain efficiencies and reduce operating and
manufacturing costs, thereby increasing profit margins and improving its
operations.

While the Company operates in many international markets, it does so principally
through the sale of its products with invoices denominated in the United States
currency. Additionally, the Company operates without the use of derivative or
hedging instruments. The Company is subject to the effects caused by the
strengthening or weakening of the United States currency, and as such may
consider the use of currency instruments in the future.

The Company has a $1.2 million revolving credit facility with borrowings subject
to interest at the bank's prime rate or LIBOR plus a range of 0 to 350 basis
points. As such, the interest rate is variable and the interest expense on
potential borrowings is based upon the types of loans and applicable interest
rates at the time of borrowing. In the event the Company had its entire
revolving credit facility, $1.2 million, outstanding for the entire year, each
100 basis point increase would result in an annual increase in interest expense
of approximately $12,000.

                                       26
<PAGE>

The Company has investments in privately held unconsolidated foreign companies
for the purposes of conducting its business overseas and attaining its strategic
objectives. These investments have a net carrying value of $1.4 million and $2.4
million at September 30, 2003 and 2002, respectively. These investments are
included in Investments in Unconsolidated Affiliates and are accounted for using
the equity method, or in the case of the GPTHL investment, on a cost basis. For
investments in which no public market exists, our policy is to regularly review
the operating performance, recent financing transactions and forecasts for such
companies in assessing the net realizable values of the investments in these
companies. Impairment losses on equity investments are recorded when events and
circumstances indicate that such assets are impaired and the decline in value is
other than temporary. Accordingly, we recorded $215,000 in impairment losses
during the fourth quarter of fiscal 2002.


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

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

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

On July 26, 2002 the Board of Directors of Global Payment Technologies, Inc.
(the "Company") dismissed Arthur Andersen LLP ("Andersen") as its independent
certified public accountants and appointed KPMG, LLP ("KPMG") to serve in their
place. These actions were taken at the recommendation of the Company's Audit
Committee.

Andersen had served as the Company's independent public accountants since 1993.
Andersen's report on the Company's consolidated financial statements for the
fiscal year ended September 30, 2001 did not contain an adverse opinion or
disclaimer of opinion, nor was such report qualified or modified as to
uncertainty, audit scope or accounting principles.

During the fiscal year ended September 30, 2001 and through July 26, 2002, there
were no disagreements between the Company and Andersen on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure which, if not resolved to Andersen's satisfaction, would have
caused it to make reference to the subject matter in connection with its report
on the Company's consolidated financial statements for such year; and there were
no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.

During the fiscal year ended September 30, 2001 and through July 26, 2002, the
Company did not consult KPMG with respect to either (i) the application of
accounting principles to a specified transaction, either completed or proposed,
or the type of audit opinion that might be rendered on the Company's
consolidated financial statements, or (ii) any matter that was either the
subject of a disagreement, within the meaning of Item 304(a)(1)(iv) of
Regulation S-K, or any "reportable event," as that term is defined in Item
304(a)(1)(v) of Regulation S-K.


                                       27
<PAGE>


                                    PART III

Items 10 through 13 inclusive are omitted per General Instruction G (3). The
information required by Part III shall be incorporated by reference from the
Registrant's definitive proxy statement pursuant to Regulation 14A for the
annual meeting of stockholders to be held in calendar 2004.

                                     PART IV

Item 9a. Controls and Procedures
-------  -----------------------

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

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
-------- ----------------------------------------------------------------

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

1.       All Financial Statements:

          Report of Independent Public Accountants (page F-2)

          Consolidated Balance Sheets as of September 30, 2003 and 2002 (page
          F-5)

          Consolidated Statements of Income for the years ended September 30,
          2003, 2002 and 2001 (page F-6)

          Consolidated Statements of Shareholders' Equity and Comprehensive
          income for the years ended September 30, 2003, 2002 and 2001 (page
          F-7)

          Consolidated Statements of Cash Flows for the years ended September
          30, 2003, 2002 and 2001 (page F-8)

          Notes to Consolidated Financial Statements (page F-9)

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

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

          Schedule III - Financial Statements of Global Payment Technologies
          Australia PTY LTD (page S-2)

                                       28
<PAGE>
<TABLE>
<CAPTION>

3.     Exhibits:

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

<S>       <C>
3.1      Certificate of Incorporation (2)
3.2      Certificate of Merger (2)
3.3      By-Laws (2)
4.1      Amended and Restated Credit Agreement dated September 10, 2002 between the Company and The Chase Manhattan Bank
         ("Chase")(7)
4.1(a)   Amended and Restated Revolving Credit Note dated September 10, 2002 issued by the Company to Chase (7)
4.1(b)   Amended and Restated Term Note A dated September 10, 2002 issued by the Company to Chase (7)
4.1(c)   Term Note B dated September 10, 2002 issue by the Company to Chase (7)
4.1(d)   Unlimited Corporate Guaranty dated September 10, 2002 by the Company to Chase(7)
4.1(e)   Amended and Restated Limited Corporate Guaranty dated September 10, 2002 by Abacus Financial Management Systems Ltd. USA
         to Chase (7)
4.1(f)   Security Agreement dated September 10, 2002 by the Company and Chase (7)
4.1(g)   Amended and Restated Pledge Agreement dated September 10, 2002 between the Company and Chase (7)
4.1(h)   First Amendment and Waiver dated January 13, 2003 to the Credit Agreement dated September 10, 2002 between the Company
         and Chase (7)
4.1(i)   Amendment and Waiver dated May 14, 2003 to the Credit Agreement dated September 10, 2002 between the Company and Chase
         (8)
4.1(j)   Third Amendment and Waiver dated August 1, 2003 to the Credit Agreement dated September 10, 2002 between the Company and
         Chase (9)
4.1(k)   Second Amendment and Waiver dated December 23, 2003 to the Credit Agreement dated May 14, 2003 between the Company and
         Chase (10)
4.1(l)   Third Amendment and Waiver dated January 13, 2004 to the Credit Agreement dated May 14, 2003 between the Company and
         Chase (10)
10.1     Lease dated October 1, 2000 between the Company and Heartland Associates (5)
10.2     1994 Stock Option Plan (1)*
10.3     1996 Stock Option Plan (1)*
10.4     2000 Stock Option Plan (3)*
10.5     Employment Agreement dated May 1, 2000 between the Company and Thomas McNeill (4)*
10.5     Employment Agreement dated July 1, 2001 between the Company and Thomas Oliveri (6)*
14       Code of Ethics (10)
21       List of Subsidiaries (10)
23       Consent of Independent Public Accountants (10)
31.1     Rule13a-14a Certification (Interim Chief Executive Officer) (10)
31.2     Rule13a-14a Certification (Chief Financial Officer) (10)
32       Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (10)



         -----------------------------------------------------------------------------
(1)      Incorporated by reference to the Company's Registration Statement on Form S-8
</TABLE>

                                       29
<PAGE>
<TABLE>
<CAPTION>
<S>       <C>
         (File #333-30829).
(2)      Incorporated by reference to the Company's Annual Report on Form 10-KSB
         for the fiscal year ended September 30, 1997.
(3)      Incorporated by reference to the Company's Proxy Statement for the fiscal year ended September 30, 1999.
(4)      Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000.
(5)      Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2000
(6)      Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2001
(7)      Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2002
(8)      Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2003
(9)      Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2003
(10)     Filed herewith.
*        Management contract or compensatory plan or arrangement
</TABLE>


(b)      Reports on Form 8-K

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


                                       30
<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/Martin H. Kern
                                    -----------------------------
                                    Martin H. Kern
                                    Interim Chief Executive Officer and Director
Date:  January 13, 2004

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


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


<S>                                  <C>                                         <C>
s/Martin H. Kern                    Interim Chief Executive Officer      January 13, 2004
---------------------------                  and Director
Martin H. Kern

s/Thomas Oliveri                    President, Chief Operating Officer   January 13, 2004
---------------------------                  and Director
Thomas Oliveri

s/Richard Gerzof                    Director                             January 13, 2004
---------------------------
Richard Gerzof

s/Edward Seidenberg                 Director                             January 13, 2004
---------------------------
Edward Seidenberg

s/Thomas McNeill                    Vice President, Chief Financial      January 13, 2004
---------------------------         Officer and Principal Accounting
Thomas McNeill                      Officer

</TABLE>




                                       31
<PAGE>

                        GLOBAL PAYMENT TECHNOLOGIES, INC.



                   Index to Consolidated Financial Statements
<TABLE>
<CAPTION>



                                                                                                                   Page

<S>                                                                                                                   <C>
Independent Auditors' Report                                                                                        F-1

Consolidated Financial Statements:
     Consolidated Balance Sheets as of September 30, 2003 and 2002                                                  F-5
     Consolidated Statements of Operations for each of the years in the three-year period ended
      September 30, 2003                                                                                            F-6
     Consolidated Statements of Shareholders' Equity and Comprehensive Income (Loss) for
      each of the years in the three-year period ended September 30, 2003                                           F-7
     Consolidated Statements of Cash Flows for each of the years in the three-year period ended
      September 30, 2003                                                                                            F-8

     Notes to Consolidated Financial Statements                                                             F-9 to F-25

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

Schedule II - Valuation and Qualifying Accounts and Reserves                                                        S-1
Schedule III - Financial Statements of Global Payment Technologies Australia Pty Ltd.1                              S-2


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

1 Included pursuant to Reg. S-X, Rule 3-09

</TABLE>


<PAGE>



                          Independent Auditors' Report



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


We have audited the 2003 and 2002 consolidated financial statements of Global
Payment Technologies, Inc., and subsidiaries as listed in the accompanying
index. In connection with our audits of the 2003 and 2002 consolidated financial
statements, we also have audited the fiscal 2003 and 2002 financial statement
Schedule II as listed in the accompanying index. These consolidated financial
statements and financial statement Schedule II are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement Schedule II based on
our audits. The 2001 consolidated financial statements and financial statement
Schedule II of Global Payment Technologies, Inc., as listed in the accompanying
index, were audited by other auditors who have ceased operations. Those auditors
expressed an unqualified opinion on those financial statements and financial
statement Schedule II before the restatement described in note 2 (v) to the
consolidated financial statements, in their report dated November 16, 2001.

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

In our opinion, the fiscal 2003 and 2002 consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of Global Payment Technologies, Inc., and subsidiaries as of September
30, 2003 and 2002, and the results of their operations and their cash flows for
the years then ended in conformity with accounting principles generally accepted
in the United States of America. Also, in our opinion, the related fiscal 2003
and 2002 financial statement Schedule II, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly, in
all material respects, the information set forth therein.

<PAGE>

As discussed above, the 2001 financial statements of Global Payment
Technologies, Inc., as listed in the accompanying index, were audited by other
auditors who have ceased operations. As described in Note 2 (v), the fiscal 2001
statement of cash flows has been restated for reclassification of certain
balance sheet items. We have audited the adjustments that were applied to
restate the balance sheet classifications. In our opinion, such adjustments are
appropriate and have been properly applied. However, we were not engaged to
audit, review or apply any procedures to the 2001 financial statements of Global
Payment Technologies, Inc. other than with respect to such adjustments, and,
accordingly, we do not express an opinion or any other form of assurance on the
2001 financial statements taken as a whole.

                                                               KPMG LLP


Melville, New York
December 29, 2003 (except as to Notes 1c and 9, which are as of January 13,
2004)


                                      F-2
<PAGE>




                          Independent Auditors' Report



To Global Payment Technologies, Inc.:


We have audited the accompanying consolidated balance sheet of Global Payment
Technologies, Inc. (a Delaware corporation) and subsidiaries (the Company) as of
September 30, 2001 and 2000, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended September 30, 2001. 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 audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Global Payment Technologies,
Inc. and subsidiaries as of September 30, 2001 and 2000, and the results of its
operations and its cash flows for each of the three years in the period ended
September 30, 2001 in conformity with accounting principles generally accepted
in the United States of America.



Arthur Andersen LLP
Melville, New York
November 16, 2001

This is a copy of the audit report previously issued by Arthur Andersen LLP in
connection with the Company's filing on Form 10-K for the fiscal year ended
September 30, 2001. This audit report has not been reissued by Arthur Andersen
LLP. As described in Note 2 (v), certain prior year balance sheet items have
been reclassified and restated.

                                      F-3
<PAGE>


                   Independent Auditors' Report on Schedule II



To Global Payment Technologies, Inc.:


We have audited, in accordance with auditing standards generally accepted in the
United States of America, the consolidated financial statements of Global
Payment Technologies, Inc. and Subsidiaries included in this Form 10-K and have
issued our report thereon dated November 16, 2001. Our audits were made for the
purpose of forming an opinion on the basic financial statements taken as a
whole. This schedule (Schedule II - Schedule of Valuation and Qualifying
Accounts) is presented for the purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in our
audits of the basic financial statements and, in our opinion, fairly states in
all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.







Arthur Andersen LLP
Melville, New York
November 16, 2001


This is a copy of the audit report previously issued by Arthur Andersen LLP in
connection with the Company's filing on Form 10-K for the fiscal year ended
September 30, 2001. This audit report has not been reissued by Arthur Andersen
LLP. As described in Note 2 (v), certain prior year balance sheet items have
been reclassified and restated.

                                      F-4
<PAGE>

                        GLOBAL PAYMENT TECHNOLOGIES, INC.
                           Consolidated Balance Sheets
                           September 30, 2003 and 2002
                (Dollar amounts in thousands, except share data)
<TABLE>
<CAPTION>


                                     Assets                                                2003                 2002
                                                                                     ------------------   ------------------
<S>                                                                               <C>                              <C>
Current assets:
    Cash and cash equivalents                                                     $           1,220                1,604
    Accounts receivable, less allowance for doubtful accounts
       of $234 and $177, respectively                                                         2,175                1,557
    Accounts receivable from affiliates                                                       4,108                4,982
    Inventory, net                                                                            3,499                5,301
    Prepaid expenses and other current assets                                                    64                  177
    Deferred income taxes, net                                                                   --                  836
    Income taxes receivable                                                                     211                  863
                                                                                     ------------------   ------------------
                Total current assets                                                         11,277               15,320
Investments in unconsolidated affiliates                                                      1,722                2,426
Property and equipment, net                                                                   2,617                3,115
Capitalized software costs                                                                    2,159                2,678
Intangible assets                                                                               --                   405
Other assets                                                                                    --                    86
                                                                                     ------------------   ------------------
                Total assets                                                      $          17,775               24,030
                                                                                     ==================   ==================
                      Liabilities and Shareholders' Equity
Current liabilities:
    Current portion of long-term debt                                             $             793                3,512
    Revolving line of credit                                                                  1,000                  --
    Accounts payable                                                                          2,424                2,061
    Accrued expenses and other current liabilities                                            1,881                1,431
                                                                                     ------------------   ------------------
                Total current liabilities                                                     6,098                7,004
                                                                                     ------------------   ------------------
                Total liabilities                                                             6,098                7,004
                                                                                     ------------------   ------------------
Commitments and contingencies (note 12) Shareholders' equity:
    Common stock, par value $0.01. Authorized 20,000,000 shares;
       issued and outstanding 5,829,500 and 5,815,100 shares, respectively                       58                   58
    Additional paid-in capital                                                                9,843                9,761
    Retained earnings                                                                         2,973                8,650
    Accumulated other comprehensive income                                                      302                   56
                                                                                     ------------------   ------------------
                                                                                             13,176               18,525
Less treasury stock, at cost,  278,984 shares                                                (1,499)              (1,499)
                                                                                     ------------------   ------------------
                Total shareholders' equity                                                   11,677               17,026
                                                                                     ------------------   ------------------
                Total liabilities and shareholders' equity                        $          17,775               24,030
                                                                                     ==================   ==================
See accompanying notes to consolidated financial statements.

</TABLE>
                                      F-5
<PAGE>
                        GLOBAL PAYMENT TECHNOLOGIES, INC.
                      Consolidated Statements of Operations
                 Years ended September 30, 2003, 2002, and 2001
         (Dollar amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>


                                                                    2003                  2002                  2001
                                                              ------------------    ------------------    ------------------
<S>                                                        <C>                              <C>                   <C>
Net sales:
     Non-affiliates                                        $          12,989                15,163                14,936
     Affiliates                                                       13,087                12,550                17,225
                                                              ------------------    ------------------    ------------------
                                                                      26,076                27,713                32,161
Cost of sales                                                         21,949                20,885                22,407
                                                              ------------------    ------------------    ------------------
                 Gross profit                                          4,127                 6,828                 9,754
Operating expenses                                                     9,758                 8,783                 8,687
                                                              ------------------    ------------------    ------------------
                 Income (loss) from operations                        (5,631)               (1,955)                1,067
                                                              ------------------    ------------------    ------------------
Other income (expense):
     Equity in income of unconsolidated
        affiliates, net                                                  676                   565                   169
     Gain on sale of investment in
        unconsolidated affiliate                                         --                    108                   --
     Interest expense                                                   (248)                 (290)                 (308)
     Other income                                                        --                     13                    99
                                                              ------------------    ------------------    ------------------
                 Other income (expense)                                  428                   396                   (40)
                                                              ------------------    ------------------    ------------------
                 Income (loss) before provision
                    (benefit) for income taxes                           (5,203)               (1,559)             1,027
Provision (benefit) for income taxes                                        474                  (926)               221
                                                              ------------------    ------------------    ------------------
                 Net income (loss)                         $             (5,677)                 (633)               806
                                                              ==================    ==================    ==================
Net income (loss) per share:
     Basic                                                 $              (1.02)                (0.11)              0.15
     Diluted                                                              (1.02)                (0.11)              0.14
Common shares used in computing net income (loss) per share amounts:
        Basic                                                         5,545,015             5,529,302           5,547,195
        Diluted                                                       5,545,015             5,529,302           5,635,961

See accompanying notes to consolidated financial statements.

</TABLE>
                                      F-6

<PAGE>

                       GLOBAL PAYMENT TECHNOLOGIES, INC.
Consolidated Statements of Shareholders' Equity and Comperhensive Income (Loss)
                 Years ended September 30, 2003, 2002, and 2001
                (Dollar amounts in thousands, except share data)
<TABLE>
<CAPTION>



                                                     ---------------------------
                                    Comprehensive           Common stock            Additional                      Other
                                                     ---------------------------    paid-in       Retained      Comprehensive
                                    income (loss)      Shares         Amount        capital       earnings         Income
                                    --------------  -------------  -------------  -------------  ------------   -------------
<S>                                     <C>              <C>            <C>              <C>         <C>           <C>
Balance at September 30, 2000           $                5,766,250            58          9,554         8,477            --
    Exercise of common stock options
      and warrants                                         40,000            --             154           --             --
    Purchase of treasury stock                                --             --             --            --             --
    Net income and comprehensive income        806            --             --             --            806            --
                                          ============   ------------  -------------  -------------  ------------  -------------
Balance at September 30, 2001                            5,806,250     $      58          9,708         9,283            --
    Net loss                                     (633)        --             --             --           (633)           --
    Cumulative translation adjustment
      of foreign investments                    56            --             --             --            --              56
                                          ------------
    Comprehensive loss                           (577)        --             --             --            --             --
                                          ============
    Exercise of common stock options,
      including income tax benefits of $16                  8,850            --              53           --             --
                                                         ------------  -------------  -------------  ------------  -------------
Balance at September 30, 2002                            5,815,100            58          9,761         8,650             56
    Net loss                                   (5,677)        --             --             --         (5,677)           --
    Cumulative translation adjustment
      of foreign investments                   246            --             --             --            --             246
                                          ------------
    Comprehensive loss                  $      (5,431)        --             --             --            --             --
                                          ============
    Exercise of common stock options,
      including income tax benefits of $22                 14,400            --              82           --             --
                                                         ------------  -------------  -------------  ------------  -------------
Balance at September 30, 2003                            5,829,500     $      58          9,843         2,973            302
                                                         ============  =============  =============  ============  =============

</TABLE>
<TABLE>
<CAPTION>



                                                     ---------------------------
                                                             Treasury stock
                                                     ---------------------------
                                                          Shares        Amount          Total
                                                     -------------  ------------   ------------

<S>                                                        <C>         <C>             <C>
Balance at September 30, 2000                              (209,200)   $   (1,294)     16,795
    Exercise of common stock options
      and warrants                                           --            --             154
    Purchase of treasury stock                              (69,784)         (205)       (205)
    Net income and comprehensive income                      --            --             806
                                                       -------------  ------------   ------------
Balance at September 30, 2001                              (278,984)       (1,499)     17,550
    Net loss                                                 --            --            (633)
    Cumulative translation adjustment
      of foreign investments                                 --            --              56

    Comprehensive loss                                       --            --             --

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

    Comprehensive loss                                       --            --             --

    Exercise of common stock options,
      including income tax benefits of $22                   --            --              82
                                                       -------------  ------------   ------------
Balance at September 30, 2003                              (278,984)   $   (1,499)     11,677
                                                       =============  ============   ============

See accompanying notes to consolidated financial statements.
</TABLE>
                                      F-7
<PAGE>
                        GLOBAL PAYMENT TECHNOLOGIES, INC.
                      Consolidated Statements of Cash Flows
                 Years ended September 30, 2003, 2002, and 2001
                          (Dollar amounts in thousands)
<TABLE>
<CAPTION>

                                                                                                                         2001 (as
                                                                                          2003          2002            restated)
                                                                                    ------------     ------------    -------------
<S>                                                                                    <C>               <C>             <C>
Operating activities:
    Net income (loss)                                                                  $(5,677)          (633)           806
    Adjustments to reconcile net income (loss) to net cash
       provided by operating activities:
         Equity in income of unconsolidated affiliates                                    (676)          (565)          (169)
         Gain on sale of investment in unconsolidated affiliate                             --           (108)            --
         Depreciation and amortization                                                   1,450          1,037            761
         Provision for losses on accounts receivable                                       127            108             66
         Provision for inventory obsolescence                                              847            188            180
         Loss on disposition of assets                                                     379             --             --
         Deferred income taxes                                                             858            (25)            42
         Changes in operating assets and liabilities:
            Decrease (increase) in accounts receivable                                    (920)         2,082         (1,239)
            Decrease (increase) in accounts receivable from
               affiliates                                                                1,099          3,160           (311)
            Decrease (increase) in inventory                                               955             10            (47)
            Decrease (increase) in prepaid expenses and
               other current assets                                                        113            291           (177)
            (Increase) decrease in income tax receivable                                   652           (863)           674
            Increase in intangible assets                                                   --           (405)            --
            Decrease (increase) in other assets and capitalized software costs              86           (269)          (162)
            (Decrease) increase in accounts payable                                        363         (1,411)         2,127
            (Decrease) increase in accrued expenses
               and other liabilities                                                       450           (336)           (18)
                                                                                       -------        -------        -------
                 Net cash provided by operating activities                                 106          2,261          2,533
                                                                                       -------        -------        -------
Investing activities:
    Purchases of property and equipment                                                   (406)          (896)        (1,436)
    Proceeds from sale of investments in unconsolidated affiliates                       1,877            118             --
    Investments in unconsolidated affiliates                                              (323)        (1,380)          (298)
    Distributions from unconsolidated affiliate                                             21            550             --
                                                                                       -------        -------        -------
                 Net cash provided by (used in) investing activities                     1,169         (1,608)        (1,734)
                                                                                       -------        -------        -------
Financing activities:
    Repayments of notes payable to bank                                                 (1,719)          (155)          (858)
    Purchase of treasury stock                                                              --             --           (205)
    Issuance of stock upon exercise of stock options and warrants                           60             37            154
                                                                                       -------        -------        -------
                 Net cash used in financing activities                                  (1,659)          (118)          (909)
                                                                                       -------        -------        -------
                 Net (decrease) increase in cash and
                    cash equivalents                                                      (384)           535           (110)
Cash and cash equivalents at beginning of year                                           1,604          1,069          1,179
                                                                                       -------        -------        -------
Cash and cash equivalents at end of year                                               $ 1,220          1,604          1,069
                                                                                       =======        =======        =======
Cash paid during the year for:
    Interest                                                                           $   248            261            308
    Income taxes                                                                            --             55            250


See accompanying notes to consolidated financial statements.
</TABLE>
                                      F-8
<PAGE>



(1)    Organization and Nature of Business

       (a)    Description of Business

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

              Substantially all of the Company's revenues are derived from the
              sale of paper currency validators and related bill stackers,
              specifically the Company's Argus, Aurora and IDS validator models.
              Fluctuations in the Company's results of operations may be caused
              by various factors, including the timing and market acceptance of
              new products introduced by the Company and its competitors, the
              size and timing of product orders and shipments, changes in volume
              of a few key customers which account for a large portion of the
              Company's revenues, the relative mix of products sold by the
              Company, specific economic conditions in the gaming industry, from
              which the Company derives a substantial portion of its revenues,
              and general economic conditions. Additionally, the Company depends
              on a single or limited number of suppliers for certain housings,
              parts and components, including certain microprocessor chips and
              short wave-length light sources.

       (b)    Organization and Development of Business

              The Company had a 70% controlling interest in Global Payment
              Technologies (Europe) Limited (GPT-Europe), which, through the
              purchase of the remaining 30%, from the minority shareholder, on
              October 1, 2001, became a wholly owned subsidiary. Neither the
              acquisition price nor the pro forma effect of the acquisition of
              their remaining interest were material. GPT-Europe is based in the
              United Kingdom and is responsible for sales and service of the
              Company's products in Europe.

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

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

         (c)   Financing and Liquidity

               The Company has suffered recurring operating losses, and as of
               September 30, 2003, the Company was not in compliance with
               certain financial covenants; however, has received a waiver for
               such non-compliance (see Note 9). The Company has reached an
               agreement with its bank to further amend its credit facility. The
               Company's capital requirements consist primarily of those
               necessary to continue to expand and improve product development
               and manufacturing capabilities, sales and marketing operations,
               investments in affiliates and interest payments on the Company's
               indebtedness. The Company has initiated outsourcing some of its
               manufactured product in an effort to improve gross margin
               percentages as well as its cash flow. An inventory reduction plan
               has also been put in place to further improve future cash flows.
               Although the Company has amended its current credit facility, the
               Company is in discussions with other lenders to put in place an
               asset-based lending agreement which could potentially provide
               additional financing availability. As a result of the Company's
               agreements, in December 2003 and January 2004, amending its
               credit facility, and the completion of its September 2003 and
               December 2003 cost reduction initiatives which will reduce total
               costs at an annualized rate of $3 million, the Company believes
               that its available resources, including its credit facilities,
               should be sufficient to meet its obligations as they become due
               and permit continuation of its planned product development and
               operations throughout fiscal 2004. The accompanying consolidated
               financial statements have been presented on a going-concern basis
               based on management's plans described above.

                                      F-9
<PAGE>


       (d)    Significant Customers

              The Company's largest customers for 2003, 2002, and 2001 represent
              the following percentages of net sales and accounts receivable,
              respectively:
<TABLE>
<CAPTION>

                                                     2003                  2002                  2001
                                                ------------------    ------------------   -------------------
<S>                                                    <C>                   <C>                  <C>
Net sales:
     Customer A                                        48%                   44%                  52%
     Customer B                                        N/A                   16%                  15%
     Customer C                                        15%                   N/A                  N/A

Accounts receivable:
     Customer A                                        62%                   71%                  68%
     Customer B                                        N/A                   11%                   9%
     Customer C                                        N/A                   N/A                  N/A


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


       (e)    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
                                                --------------------------------------------------------------
                                                      2003                  2002                  2001
                                                ------------------    ------------------   -------------------
                                                                       (In thousands)
<S>                                          <C>                               <C>                   <C>
Domestic revenues (United States)            $           2,775                 2,615                 3,375
                                                ------------------    ------------------   -------------------
International revenues:
     Australia                                          10,182                 9,544                16,781
     Europe                                              9,591                11,291                 8,127
     All others                                          3,528                 4,263                 3,878
                                                ------------------    ------------------   -------------------
                                                        23,301                25,098                28,786
                                                ------------------    ------------------   -------------------
                 Total revenues              $          26,076                27,713                32,161
                                                ==================    ==================   ===================


              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.
</TABLE>


(2)    Summary of Significant Accounting and Reporting Policies

       (a)    Principles of Consolidation

              The consolidated financial statements include the accounts of
              Global Payment Technologies, Inc., GPT-Europe and Abacus-USA. The
              accounts of GPT-Europe and Abacus-USA are presented net of the
              related minority interests (as applicable for each year
              presented), which were not material in any period. All
              intercompany balances and transactions have been eliminated in
              consolidation.
                                      F-10
<PAGE>

       (b)    Revenue Recognition

              Non-affiliates

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

              Affiliates

              The Company recognizes revenue upon shipment and passage of title,
              to its affiliated customers, but defers its proportionate share of
              the related gross profit on product sales until sales are made by
              the affiliated customers to their third-party end users
              (customers), in accordance with APB Opinion No. 18, The Equity
              Method of Accounting for Investments in Common Stock (see (d)).

       (c)    Shipping and Handling Costs

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

       (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 at the end of the reporting period.
              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)    Cash and Cash Equivalents

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

       (f)    Inventory

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

       (g)    Property and Equipment

              Property and equipment are recorded at cost. Depreciation is
              calculated using the straight-line method over the estimated
              useful lives of the assets (note 6) or, in the case of leasehold
              improvements, the life of the related lease, whichever is shorter.
              Maintenance and repair costs are charged to expense as incurred.
              Expenditures, which significantly increase value or extend useful
              asset lives are capitalized and depreciated.

                                      F-11
<PAGE>

       (h)    Capitalized Software Costs

              In accordance with SFAS No. 86, Accounting for the Costs of
              Computer Software to be Sold, Leased or Otherwise Marketed,
              internally-generated software development costs associated with
              new products and significant software enhancements to existing
              products are expensed as incurred until technological feasibility
              has been established. Pursuant to SFAS No. 86, the Company deems
              technological feasibility to be have been met upon completion of a
              detail program design. Internally- generated software development
              costs of $0, $320,000, and $372,000 were capitalized during fiscal
              years 2003, 2002, and 2001, respectively. The Company recorded
              amortization in accordance with SFAS No. 86 of $519,000, $396,000,
              and $119,000 for the fiscal years ended September 30, 2003, 2002
              and 2001, 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, 2003
              and 2002 were $2,159,000 and $2,678,000, respectively.

(i)      Long-Lived Assets

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

        (j)   Intangible Assets

              Intangible assets, recorded at cost, represented intellectual
              property owned by the Company associated with the Company's joint
              venture with an unrelated third party to develop and distribute a
              product with the ability to read "smart cards". In the fourth
              quarter of 2003, the Company made a strategic decision to no
              longer pursue this relationship, and the remaining value of this
              asset was written-off.

       (k)    Goodwill

              In June 2001, the FASB issued SFAS No. 141, Business Combinations
              and No. 142, Goodwill and Other Intangible Assets. SFAS No. 141
              requires all business combinations initiated after June 30, 2001
              to be accounted for using the purchase method of accounting. Under
              SFAS No. 142, goodwill and intangible assets with indefinite lives
              are no longer amortized but are reviewed annually (or more
              frequently, if impairment indicators arise) for impairment.
              Separable intangible assets that are not deemed to have indefinite
              lives will continue to be amortized over their useful lives (but
              with no maximum life). The Company has adopted this standard
              effective October 1, 2001. The effect of adoption was not
              material.

                                      F-12
<PAGE>

       (l)    Research and Development

              Research and development costs incurred by the Company are
              included in operating expenses in the year incurred. Such costs
              amounted to $150,000, $225,000, and $150,000 in fiscal 2003, 2002
              and 2001, respectively.

       (m)    Warranty Policy

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

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

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

       (n)    Income Taxes

              The Company accounts for income taxes under SFAS No. 109,
              Accounting for Income Taxes. SFAS No. 109 requires an asset and
              liability approach for financial reporting for income taxes. Under
              SFAS No. 109, deferred taxes are provided for 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.

       (o)    Earnings Per Share

              Net income (loss) per common share amounts (basic EPS) are
              computed by dividing net earnings (loss) by the weighted average
              number of common shares outstanding, excluding any potential
              dilution. Net income (loss) per common share amounts assuming
              dilution (diluted EPS) are computed by reflecting potential
              dilution from the exercise of stock options and warrants. Diluted
              EPS for fiscal years 2003 and 2002 are the same as basic EPS, as
              the inclusion of the impact of any common stock equivalents
              outstanding during those periods, respectively, would be
              anti-dilutive. Options to purchase 670,550, 785,947, and 802,084
              shares of common stock, were not included in the computation of
              diluted earnings per share for fiscal 2003 and 2002, respectively,
              because the exercise price exceeded the average market price of
              common shares for the period. These options were still outstanding
              at the end of the period.

                                      F-13
<PAGE>

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


                                                      2003                  2002                  2001
                                                ------------------    ------------------   -------------------
                                                       (In thousands, except share and per share data)
<S>                                          <C>                                <C>                    <C>
Numerator:
     Net income (loss) attributable to
        common stockholders                  $          (5,677)                 (633)                  806
                                                ------------------    ------------------   -------------------
Denominator:
     Weighted average common shares
        outstanding - basic                          5,545,015             5,529,302             5,547,195
     Effect of dilutive securities:
        Stock options and warrants                         --                    --                 88,766
                                                ------------------    ------------------   -------------------
     Weighted average common shares
        outstanding - diluted                        5,545,015             5,529,302             5,635,961
                                                ==================    ==================   ===================
Basic EPS                                    $           (1.02)                (0.11)                 0.15
Diluted EPS                                              (1.02)                (0.11)                 0.14

</TABLE>


(p)      Stock-Based Compensation

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

              The Company applies the intrinsic value method as outlined in APB
              No. 25 and related interpretations in accounting for stock options
              and share units granted under its stock option plans which are
              more fully disclosed in note 10(b). Under the intrinsic value
              method, no compensation expense is recognized if the exercise
              price of the Company's employee stock options equals the market
              price of the underlying stock on the date of the grant.
              Accordingly, no compensation cost has been recognized on options
              granted to employees. SFAS No. 123 requires that the Company
              provide pro forma information regarding net earnings and net
              earnings per common share as if compensation cost for the
              Company's stock option plans had been determined in accordance
              with the fair value method prescribed therein. The Company adopted
              the disclosure portion of SFAS No. 148, "Accounting for
              Stock-Based Compensation - Transition and Disclosure" requiring
              quarterly SFAS No. 123 pro forma disclosure. The Financial
              Accounting Board recently indicated that they will require
              stock-based employee compensation to be recorded as a charge to
              earnings pursuant to a standard they are currently deliberating,
              which they believe will become effective on January 1, 2005. We
              will continue to monitor their progress on the issuance of this
              standard.

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

                                      F-14
<PAGE>
<TABLE>
<CAPTION>

                                                      2003                  2002                  2001
                                                ------------------    ------------------   -------------------
                                                            (In thousands, except per share data)
Net income (loss):
<S>                                              <C>                               <C>                    <C>
     As reported                                 $         (5,677)                 (633)                  806
     Deduct: Compensation expense
              determined under FMV                           (394)                 (386)                 (905)
                                                             -------               -------               -----
     Pro forma                                             (6,071)               (1,019)                  (99)
Net  income (loss) per common share - basic:
        As reported                                         (1.02)                (0.11)                 0.15
        Pro forma                                           (1.09)                (0.18)                (0.02)
Net  income (loss) per common share - diluted:
        As reported                                         (1.02)                (0.11)                 0.14
        Pro forma                                           (1.09)                (0.18)                (0.02)


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


        (q)   Comprehensive Income (Loss)

              SFAS No. 130, Reporting Comprehensive Income requires companies to
              report all changes in equity during a period, except those
              resulting from investments by owners and distributions to owners,
              for the period in which they are recognized. Comprehensive income
              (loss) is the total of net income (loss) and all other nonowner
              changes in equity (or other comprehensive income (loss)) such as
              unrealized gains/losses on securities classified as
              available-for-sale, foreign currency translation adjustments and
              minimum pension liability adjustments. For fiscal year 2001, the
              Company's operations did not give rise to material items
              includable in comprehensive income (loss), which were not already
              included in net income (loss). Accordingly, the Company's
              comprehensive income (loss) is the same as its net income (loss)
              for that year. In fiscal 2003 and 2002, due to currency
              fluctuations, the cumulative currency translation adjustment
              related to the Company's investments in unconsolidated affiliates
              was $302,000 and $56,000, respectively, which is reflected in the
              accompanying balance sheets and statement of shareholders' equity
              and comprehensive income (loss).

       (r)    Derivative Instruments

              SFAS No. 133, Accounting for Derivative Instruments and Hedging
              Activities establishes accounting and reporting standards for
              derivative instruments, including certain derivative instruments
              embedded in other contracts, and for hedging activities. The
              Company currently does not use derivative instruments or engage in
              hedging activities.

       (s)    Fair Value of Financial Instruments

              The Company complies with the provisions of SFAS No. 107,
              Disclosure about Fair Value of Financial Instruments, which
              requires disclosures about the fair value of financial
              instruments. The carrying value of all monetary assets and
              liabilities (including debt for which the accompanying interest
              rates are tied to existing market conditions) reflected in the
              accompanying consolidated balance sheets approximated fair value
              as a result of the short-term nature of such assets and
              liabilities at September 30, 2003 and 2002, respectively.

                                      F-15
<PAGE>

       (t)    Segment Reporting

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

       (u)    Use of Estimates

              The preparation of financial statements in conformity with
              accounting principles generally accepted in the United States of
              America requires management to make estimates and assumptions that
              affect the reported amounts of assets and liabilities, and
              disclosure of contingent assets and liabilities, at the date of
              the financial statements and the reported amounts of revenues and
              expenses during the reporting period. Among the more significant
              estimates included in the consolidated financial statements are
              the allowance for doubtful accounts, recoverability of inventory,
              deferred income taxes, capitalized software and provisions for
              warranties. Actual results could differ from those estimates.

       (v)    Reclassifications and Restatement

              Certain prior-year financial statement amounts have been
              reclassified to conform to the current year's presentation. In
              addition, in fiscal 2002, the Company reclassified certain costs,
              previously included in inventory, related to the development of
              software used in its products and the acquisition of molds and
              tooling for production. The capitalized software costs of
              $2,678,000 and $2,756,000, respectively are separately reflected
              as long-term assets and molds and tooling costs of $1,840,000 and
              $1,528,000, respectively are included in property and equipment as
              of September 30, 2002 and 2001, respectively. The amortization of
              such costs is charged to cost of sales. This reclassification has
              not changed the Company's net income, total assets or equity for
              any period.

              The amounts reclassified at September 30, 2001 are as follows (in
thousands):
<TABLE>
<CAPTION>


                                                             As reported               As restated
                                                             -----------               ------------
<S>                                                                   <C>                      <C>
            Inventory                                                 $9,783                   $5,499
            Property and equipment                                     1,331                    2,859
            Capitalized software costs                                    --                    2,756
</TABLE>


(w)      Recently Issued Accounting Pronouncements

              In August 2003, the Emerging Issues Task Force (EITF) reached a
              consensus on Issue No. 03-05 Applicability of AICPA Statement of
              Position (SOP) 97-2 to Non-Software Deliverables in an Arrangement
              Containing More-Than-Incidental Software, that in an arrangement
              that includes software that is more than incidental to the
              products or services as a whole, software and software-related
              elements are included within the scope of SOP 97-2.
              Software-related elements include software products and services
              as well as any non-software deliverable(s) (including hardware)
              for which software deliverable is essential to its functionality.
              The Company adopted the provisions of this statement effective
              October 1, 2003, and the effects of adoption were not material to
              the consolidated financial statements.


                                      F-16
<PAGE>


              In July 2003, the Financial Accounting Standards Board (FASB)
              issued FASB Interpretation No. 46, Consolidation of Variable
              Interest Entities, which requires certain disclosures in all
              financial statements initially issued after January 31, 2003, if
              it is reasonably possible that an enterprise will consolidate or
              disclose information about a variable interest entity (VIE) when
              Interpretation 46 becomes effective. The recognition and
              measurement provisions that address consolidation of VIEs apply to
              all VIEs that are created after January 31, 2003; VIEs that exist
              as of January 31, 2003 are subject to the recognition and
              measurement provisions in annual or interim periods beginning
              after June 15, 2003. The Company plans to adopt the provisions of
              Interpretation No. 46, Consolidation of Variable Interest
              Entities, in the fourth quarter of fiscal 2004. The Company has
              not determined the impact, if any, on its consolidated financial
              statements.

 (3)   Unconsolidated Affiliates

       Net sales to unconsolidated affiliates for fiscal year 2003, 2002 and
       2001 and accounts receivable from unconsolidated affiliates as of
       September 30, 2003 and 2002 are as follows (in thousands):
<TABLE>
<CAPTION>



                                                                                          Accounts receivable
                                                                                            from affiliates
                                                Net sales - affiliate               ---------------------------------
                                   ------------------------------------------------  September 30,    September 30,
                                        2003            2002             2001             2003            2002
                                   ---------------  --------------  ---------------  ---------------  --------------
<S>                              <C>                     <C>              <C>               <C>             <C>
Australia                        $       12,482          12,179           16,724            3,872           4,686
Abacus-UK                                    --             137               13              148             131
South Africa                                605             234              488               88             165
                                   ---------------  --------------  ---------------  ---------------  --------------
               Total             $       13,087          12,550           17,225            4,108           4,982
                                   ===============  ==============  ===============  ===============  ==============
</TABLE>



       (a)    Australia

              In fiscal 1997, the Company acquired a 50% non-controlling
              interest in an Australian affiliate. This entity is responsible
              for sales and service of the Company's products in Australia and
              New Zealand, on an exclusive basis. In June 2002, the Company and
              two other shareholders formed eCash Management Pty. Ltd., an
              Australian based company responsible to market, distribute,
              service and support Automated Teller Machines across Australia and
              New Zealand. The Company owns a 35% interest in this entity. The
              accompanying consolidated results of operations include the
              Company's equity in the results of operations of these affiliates
              in the amounts of $470,000, $678,000, and $224,000 in fiscal 2003,
              2002, and 2001, respectively. For fiscal 2003, 2002, and 2001, the
              Company increased (reduced) its equity in income of unconsolidated
              affiliates by $225,000, $250,000, and $(11,000), 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 fiscal
              year-end. The Company also received a cash dividend of $550,000
              from these affiliates during the fourth quarter of fiscal 2002.

       (b)    Abacus - UK

              In fiscal 1999, the Company acquired a non-controlling 25%
              interest in Abacus Financial Management Systems Ltd. (Abacus-UK).
              Abacus-UK is a software company based in the United Kingdom that
              has developed a cash management system, of which the Company's
              validators are a key component, which offers the retail market a
              mechanism for counting, storing and transporting its cash
              receipts. The Company invested $162,000 in this entity to acquire
              the 25% non-controlling ownership interest. In fiscal 2003, the
              Company did not make any additional investment, however, in fiscal
              2002 and 2001, the Company invested an additional $207,000 and
              $228,000, respectively, in Abacus-UK. The Company's consolidated
              results of operations for the years ended September 30, 2003,
              2002, and 2001 include the Company's equity in the loss of this
              affiliate of $0, $131,000, and $141,000, respectively.

                                      F-17
<PAGE>

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

(c)      South Africa

              In April 2003, the Company sold a significant portion of its
              investments in its South African affiliates. The Company received
              approximately $1.9 million in cash for the sale of its entire
              interest in the cash handling division of International Payment
              Systems Pty Ltd. and a major portion of its interest in Global
              Payment Technologies Holdings (Pty) Ltd. ("GPTHL"), its South
              African gaming affiliate. As a result of this transaction, which
              did not result in a gain or loss, the Company's ownership interest
              in GPTHL has been reduced from 24.2% to 5%. GPTHL's Vukani
              division is one of the two licensed operators in the South African
              route market province of Mpumalanga. The cash received was a
              return of all of the Company's advances and investments resulting
              in the Company's recovering the carrying value of such advances
              and investments. The Company will account for this remaining
              investment prospectively on the cost basis. The Company's results
              of operations for the years ended September 30, 2003, 2002, and
              2001 include the Company's equity in the (loss) income of this
              affiliate of ($14,000), ($75,000) and $84,000, respectively.

        (d)   China

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

                                      F-18
<PAGE>

(4)    Summary Financial Information

       The following summary financial information reflects the combined
       interests of GPT Australia Pty Ltd. and eCash Pty Ltd as of and for the
       year ended September 30, 2003 and the combined interests of GPT Australia
       Pty Ltd, eCash Pty Ltd, and Abacus-UK as of and for the year ended
       September 30, 2002. Such summary financial information has been provided
       herein based upon the respective individual significance of these
       unconsolidated affiliates to the consolidated financial information of
       the Company for each respective period.

                                          (in thousands)

                                   June 30,          June 30,
                                     2003              2002
                              ------------------------------------
Current assets             $           10,966          10,603
Non-current assets                      1,007             180
Current liabilities                     7,710           7,876
Non-current liabilities                   --            1,149
Net assets                              4,263           1,758



                                             (in thousands)

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



       The Company's combined share of income from GPT Australia Pty Ltd and
       eCash Pty Ltd for the fiscal year ended September 30, 2003 was $470,000
       and for GPT Australia Pty Ltd, eCash Pty Ltd, and Abacus-UK for the year
       ended 2002 (excluding the write-off of Abacus - UK) was $547,000.

(5)    Inventory

       The following is a summary of the composition of inventory:

                                                    September 30
                                      -----------------------------------------
                                             2003                  2002
                                      -------------------   -------------------
                                                   (In thousands)

Raw materials                      $            1,725                 3,211
Work-in-progress                                  787                 1,216
Finished goods                                    987                   874
                                      -------------------   -------------------
                                   $            3,499                 5,301
                                      ===================   ===================

                                      F-19
<PAGE>



(6)    Property and Equipment, Net

       Major classifications of property and equipment are as follows:
<TABLE>
<CAPTION>


                                                                                           September 30
                                                                            -----------------------------------------
                                                         Useful lives              2003                  2002
                                                      -------------------   -------------------   -------------------
                                                                                         (In thousands)

<S>                                                   <C>                         <C>                     <C>
Leasehold improvements                                Shorter of the
                                                      life of the lease
                                                      or useful life of
                                                      asset              $              266                   271
Furniture and fixtures                                3 - 7 years                       391                   617
Machinery and equipment                               3 - 10 years                    2,511                 2,192
Tooling and Molds                                     7 years                         1,839                 1,942
Computer software                                     5 years                           995                   953
Computer hardware                                     3 years                         1,002                   968
                                                                            -------------------   -------------------
                                                                                      7,004                 6,943
Less accumulated depreciation and
     amortization                                                                    (4,387)               (3,828)
                                                                            -------------------   -------------------
                                                                         $            2,617                 3,115
                                                                            ===================   ===================


       Depreciation and amortization expense was $849,000, $640,000, and
       $636,000 for the fiscal years ended September 30, 2003, 2002 and 2001,
       respectively.
</TABLE>


(7)    Accrued Expenses and Other Current Liabilities

       Accrued expenses and other current liabilities consist of the following:
<TABLE>
<CAPTION>


                                                                      September 30
                                                      -----------------------------------------
                                                             2003                  2002
                                                      -------------------   -------------------
                                                                   (In thousands)

<S>                                                <C>                                  <C>
Compensation and employee benefits                 $              228                   240
Warranty costs                                                    346                   340
Accrued income taxes and other taxes                              200                   259
Accrued commissions                                               499                    61
Administrative and other                                          608                   531
                                                      -------------------   -------------------
                                                   $            1,881                 1,431
                                                      ===================   ===================
</TABLE>


(8)    Notes Payable to Bank

       At September 30, 2002, the Company had a $79,000 note payable to a bank
       related to GPT-Europe. The note had an interest rate of approximately 8%
       and matured December 31, 2002.

                                      F-20
<PAGE>


(9)    Current Portion of Long-Term Debt

       Current portion of long-term debt consists of the following at September
       30, 2003 (in thousands):

Term note A                                        $          600
Term note B                                                   193
                                                      ---------------
                                                   $          793
                                                      ===============




       On September 10, 2002, the Company entered into an Amended and Restated
       Credit Agreement (the Agreement) with a certain financial institution.
       The Agreement provides for the existence of two separate term loans and a
       revolving line of credit ("RLC") with varying interest rates and maturity
       dates.

       In May 2003, the Company reached an agreement with its bank to amend
       its credit facility, which included new financial covenants. Further,
       the Company used the proceeds from the sale of its South African
       affiliate investment to pay down its term loan and the RLC by $1.4
       million and $.5 million, respectively. The monthly payments on both
       term loans remained the same. In addition, the Company's RLC facility
       was reduced from $3.5 million to $2.0 million and the Company provided
       the bank additional security in its inventory and cash.

       At September 30, 2003, the Company was not in compliance with certain
       financial covenants. The Company has since received a waiver for such
       non-compliance. Further, the Company has reached an agreement with its
       bank to amend its credit facility, as amended in May 2003. The
       amendments, dated December 2003 and January 2004, include new
       financial covenants, a reduction of the RLC facility from $2 million
       to $1.2 million, an RLC termination date of December 31, 2004
       (previously September 10, 2005), as well as increases in its RLC
       interest rate margins between 200 - 400 basis points effective March
       1, 2004. The Company is in the process of seeking a replacement
       financial institution more suitable to its current size and
       operations.

       The interest rates and maturities on the two separate term loans and
       revolving line of credit are as follows:

       Term Note A - This note ($600,000 as of 9/30/03) is payable in nine
       remaining equal monthly installments of $67,000, matures on June 30,
       2004, and bears interest at a fixed rate of 9.41%.

       Term Note B - This note ($193,000 as of 9/30/03) is payable over the next
       six months in monthly installments of $34,000 until the balance is paid
       in full, in March 2004, and bears interest at LIBOR plus 350 basis
       points.

       Revolving credit loans - This RLC, which now matures on December 31,
       2004, provides for $1.2 million in revolving credit notes. The revolving
       credit notes bear interest at the bank's prime rate plus 150 basis
       points. Effective March 1, 2004 and May 1, 2004 this interest rate
       increases to the banks prime rate plus 350 basis points and 550 basis
       points, respectively. The revolving line of credit outstanding at
       September 30, 2003 is $1,000,000.

       All of the above borrowing instruments are secured by all of the
       Company's accounts receivable, inventory and cash and are guaranteed by
       Abacus -USA, the Company's 80%-owned consolidated affiliate.

       As of September 30, 2003, based on the terms of the Agreement, annual
       principal maturities for the amount outstanding under the term notes were
       as follows:

                                      F-21
<PAGE>

                                                      Amount (in thousands)
                                                      -------------------
Fiscal year ended September 30:
     2004                                          $          793
                                                      ===================


(10)   Shareholders' Equity

       (a)    Stock Repurchase

              In June 1998, the board of directors approved a common stock
              repurchase plan, providing for the purchase of up to 500,000
              shares of the Company's common stock. In fiscal 2001, the Company
              purchased, in a series of transactions, 69,784 shares, of its
              common stock at an aggregate cost of $205,000.

              Under the Company's existing credit agreement (discussed in note
              9), the Company is restricted from repurchasing common stock in
              the future.

       (b)    Stock Option Plans

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

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

              During fiscal 2001, a total of 132,950 incentive stock options and
              270,000 nonqualified options were granted. All options granted in
              2001 will become exercisable over varying terms up to five years.
              As part of the aforementioned stock option grants, one executive
              was granted 30,000 incentive stock options and 270,000
              nonqualified options, which both vested upon the grant date of
              those options.

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

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

                                      F-22
<PAGE>

              A summary of the Company's stock option plans as of September 30,
              2003, 2002, and 2001, and changes during the years then ended, is
              presented below.
<TABLE>
<CAPTION>


                                       2003                        2002                         2001
                          ---------------------------  --------------------------- ---------------------------
                                          Weighted                     Weighted                    Weighted
                                           average                     average                      average
                                          exercise                     exercise                    exercise
                             Shares         price        Shares         price         Shares         price
                          -------------  ------------  ------------  ------------- -------------  ------------
Outstanding at the
<S>                          <C>       <C>                 <C>     <C>                <C>       <C>
  beginning of year          1,058,600 $        4.53       880,850 $         5.16     1,031,400 $        5.54
      Granted at fair
      value                    126,000          4.05       321,200           3.73       402,950          3.02
      Forfeited              (403,600)          3.55     (134,600)           6.68     (513,500)          4.34
      Exercised               (14,400)          4.48       (8,850)           4.07      (40,000)          3.88
                          -------------                ------------                -------------
Outstanding at end of
the year                       766,600          5.02     1,058,600           4.53       880,850          5.16
                          =============                ============                =============
 Options exercisable at
 year end                      348,120          6.18       555,040           4.51       520,670          4.61

 Weighted average fair
 value of options granted
 during the year (a)                            2.63                         2.51                        1.81
</TABLE>


              The fair value of each option grant was estimated on the date of
              grant using the Black-Scholes option-pricing model with the
              following weighted average assumptions:
<TABLE>
<CAPTION>


                                                                   Year ended September 30
                                                --------------------------------------------------------------
                                                      2003                  2002                  2001
                                                ------------------    ------------------   -------------------
<S>                                                      <C>                   <C>                   <C>
Risk-free interest rates                                 3.07%                 4.83%                 3.12%
Expected lives                                            7 years              7 years              5 years
Expected volatility                                      65%                   66%                   70%
Expected dividend yields                                 --                    --                    --
</TABLE>




              Summarized information about the Company's stock options
outstanding and exercisable at September 30, 2003 is as follows:
<TABLE>
<CAPTION>


                                                Outstanding                             Exercisable
                                ----------------------------------------------  ------------------------------
                                                                  Weighted                        Weighted
                                                  Weighted         average                         average
                                                   average        exercise                        exercise
    Exercise price range           Options          life            price          Options          price
------------------------------  --------------  --------------  --------------  --------------  --------------
<S>                                 <C>                <C>    <C>                   <C>       <C>
$2.40 to $4.00                      340,400            4.80   $        3.36         105,900   $        3.31
$4.01 to $6.00                      278,550            5.20            4.90         113,040            5.59
$6.01 to $8.00                       45,300            2.17            6.85          42,900            6.81
$8.01 to $10.00                      68,350            3.00            9.12          54,680            9.12
$10.01 to $12.00                     29,000            2.68           11.50          26,600           11.52
$12.01 to $14.25                      5,000            1.58           14.25           5,000           14.25
                                --------------                                  --------------
                                    766,600            4.53            5.02         348,120            6.18
                                ==============                                  ==============

</TABLE>

                                      F-23
<PAGE>

(11)   Income Taxes

       The provision for (benefit from) income taxes consists of the following:
<TABLE>
<CAPTION>


                                                     Fiscal years ended September 30
                                      ---------------------------------------------------------------
                                             2003                  2002                  2001
                                      -------------------   -------------------   -------------------
                                                              (In thousands)
<S>                                <C>                                 <C>                    <C>
Current:
     Federal                       $             (211)                 (885)                  220
     State and local                              --                    --                     43
                                      -------------------   -------------------   -------------------
                                                 (211)                 (885)                  263
                                      -------------------   -------------------   -------------------
Deferred:
     Federal                                      685                   147                   (34)
     State and local                              --                   (188)                   (8)
                                      -------------------   -------------------   -------------------
                                                  685                   (41)                  (42)
                                      -------------------   -------------------   -------------------
                 Total             $              474                  (926)                  221
                                      ===================   ===================   ===================
</TABLE>



       Significant components of deferred tax assets are as follows:
<TABLE>
<CAPTION>


                                                                               September 30
                                                      ---------------------------------------------------------------
                                                             2003                  2002                  2001
                                                      -------------------   -------------------   -------------------
                                                                              (In thousands)
Deferred tax assets:
<S>                                                <C>                                   <C>                   <C>
     Accounts receivable                           $               89                    65                    48
     Inventory                                                    507                   296                   286
     Accrued expenses and other, net                              186                   257                   215
     Elimination of gross profit on sales to
        affiliates                                                141                   218                   246
     Tax NOL carryforward                                       1,646                    --                    --
                                                      -------------------   -------------------   -------------------
                 Deferred tax asset                             2,569                   836                   795
     Less:  Valuation allowance(a)                             (2,569)                   --                    --
                                                      -------------------   -------------------   -------------------
                 Net deferred tax asset            $               --                   836                  795
                                                      ===================   ===================   ===================
</TABLE>


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

                                      F-24
<PAGE>

       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
                                                      ---------------------------------------------------------------
                                                             2003                  2002                  2001
                                                      -------------------   -------------------   -------------------
<S>                                                          <C>                   <C>                    <C>
U.S. Federal statutory rate                                   34.0%                 34.0%                 34.0%
State income taxes, net of federal benefit                     3.8%                  5.9%                  2.1
Impact of foreign operations                                   3.0%                 22.1%                (16.5)
All other, net                                                (0.5)                 (2.6)                  1.9
Change in valuation allowance                                (49.4)                  --                    --
                                                      -------------------   -------------------   -------------------
                 Effective income tax rate                   (9.1)%                 59.4%                21.5%
                                                      ===================   ===================   ===================
</TABLE>



(12)   Commitments and Contingencies

       (a)    Minimum Lease Commitments

              The operations of the Company are conducted in leased premises.
              The Company also leases various office equipment. At September 30,
              2003, the approximate minimum annual rentals under these leases,
              which expire through fiscal year 2006, were as follows:

                                                       (In thousands)
Fiscal year ending September 30:
     2004                                        $               424
     2005                                                        415
     2006                                                        285
     Thereafter                                                    -



              Total rent expense for all operating leases was $474,000,
              $472,000, and $511,000 in fiscal 2003, 2002, and 2001,
              respectively, including $27,000, $40,000, and $101,000,
              respectively, paid to the related party affiliate. The operating
              lease with the related party affiliate was cancelled during fiscal
              2003. The Company's management believes this lease with the
              affiliate was on terms which approximated fair market value.

       (b)    Employment Agreements

              The Company has entered into employment agreements with two
              officers of the Company, which expire through the end of fiscal
              2004, with minimum compensation requirements of $246,000 for the
              fiscal year ending September 30, 2004.



       c)     Litigation

              There are no material legal proceedings pending against the
              Company.

                                      F-25
<PAGE>

                                                                    Schedule II
<TABLE>
<CAPTION>


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

             Column A                       Column B              Column C              Column D              Column E
------------------------------------    ------------------    ------------------    ------------------    ------------------
                                           Balance at            Charged to           Deductions -             Balance
                                            beginning             costs and             write off              at end
            Description                     of period             expenses             of accounts            of period
------------------------------------    ------------------    ------------------    ------------------    ------------------
Allowance for doubtful
     accounts:
<S>                                  <C>                                 <C>                  <C>                   <C>
        September 30, 2001           $            206                    66                   103                   169
        September 30, 2002                        169                   108                   100                   177
        September 30, 2003                        177                   127                    70                   234

Warranty Reserve
        September 30, 2002                        382                   281                   323                   340
        September 30, 2003                        340                   327                   321                   346

See accompanying independent auditors' report.

</TABLE>
                                      S-1
<PAGE>

                                  SCHEDULE III
                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD


                              Financial Statements


                          June 30, 2003, 2002 and 2001





                                Table of Contents



                                                           Page

Independent Auditors' Report                                  1

Balance Sheets                                                2

Statements of Income                                          3

Statements of Stockholders' equity                            4

Statements of Cash Flows                                      5

Notes to Financial Statements                              6-11







                                      S-2
<PAGE>



                          Independent Auditors' Report


The Board of Directors
Global Payment Technologies, Inc


We have audited the accompanying balance sheets of Global Payment Technologies
Pty Limited as of June 30, 2003 and 2002, and the related statements of income,
stockholders' equity, and cash flows for the years then ended. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.


In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Global Payment Technologies Pty
Limited as of June 30, 2003 and 2002, and the results of its operations and its
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.






KPMG - Sydney, Australia




19 December 2003


<PAGE>
                 GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD
                                 Balance Sheets

                             June 30, 2003 and 2002

<TABLE>
<CAPTION>


                      Assets                                               2003            2002
                                                                        -------------   -------------
<S>                                                                   <C>                <C>
Current assets:
    Cash and cash equivalents                                        A$  2,267,402       2,356,150
    Trade accounts receivable, less allowance for doubtful
      accounts of  A$10,000, A$40,000 in 2002 and A$37,555 in 2001       2,477,200       5,110,003
    Inventories                                                          7,350,859      10,667,709

    Deferred income taxes                                                  523,157         344,014
    Receivable from affiliate                                            1,462,246            --
    Other current assets                                                    50,415         196,549
                                                                        -------------   -------------
                Total current assets                                    14,131,279      18,674,425
                                                                        -------------   -------------
Property, plant and equipment
    Machinery and equipment                                                352,870         247,412
    Less accumulated depreciation and amortization                        (130,992)        (88,853)
                                                                        -------------   -------------
                Net property, plant and equipment                          221,878         158,559
                                                                        -------------   -------------
                  Total assets                                       A$ 14,353,157      18,832,984
                                                                        =============   =============

                 Liabilities and Stockholders' Equity

Current liabilities:
    Trade accounts payable                                           A$  8,727,631      12,147,255
    Income taxes (receivable)/payable                                       (8,225)        319,883
    Accrued liabilities                                                  1,063,045       1,127,982
                                                                        -------------   -------------
                  Total current liabilities                              9,782,451      13,595,120
                                                                        -------------   -------------
                  Total liabilities                                      9,782,451      13,595,120
                                                                        -------------   -------------

Commitments and contingencies (Note 1) Stockholders' equity:
    Common stock
      issued and outstanding 20,000 shares in 2003
      and 20,000 shares in 2002                                             20,000          20,000
    Retained earnings                                                    4,550,706       5,217,864
                                                                        -------------   -------------
                  Total stockholders' equity                             4,570,706       5,237,864
                                                                        -------------   -------------
                  Total liabilities and stockholders' equity         A$ 14,353,157      18,832,984
                                                                        =============   =============


See accompanying notes to consolidated financial statements.

</TABLE>
                                       2
<PAGE>

                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                              Statements of Income

                    Years ended June 30, 2003, 2002 and 2001

<TABLE>
<CAPTION>
                                                                                                                2001
                                                                         2003               2002              Unaudited
                                                                    ----------------   ----------------   ------------------
<S>                                                              <C>                      <C>                  <C>
Net sales                                                       A$     27,537,178         37,229,261           30,777,423
Cost of goods sold                                                     24,364,738         31,522,890           26,836,256
                                                                    ----------------   ----------------   ------------------
                 Gross profit                                           3,172,440          5,706,371            3,941,167

Selling, general and administrative expenses                           (1,937,681)        (1,918,794)          (1,754,276)
Related party royalty                                                          --         (1,307,783)                  --
                                                                    ----------------   ----------------   ------------------

                 Operating income                                       1,234,759          2,479,794            2,186,891

Other income (expense):
    Interest income                                                       221,318            103,216              234,349
    Other sundry income                                                   151,065               --                   --
    Interest expense                                                       (4,412)           (39,771)             (32,311)
    Servicing income                                                      105,420             90,135               97,909
    Foreign exchange gain                                                 202,924             45,108              153,802
                                                                    ----------------   ----------------   ------------------

                 Income before income taxes                             1,911,074          2,678,482            2,640,640
Income taxes                                                             (578,232)          (817,779)            (903,329)
                                                                    ----------------   ----------------   ------------------

                 Net income                                             1,332,842          1,860,703            1,737,311
                                                                    ================   ================   ==================
</TABLE>


See accompanying notes to consolidated financial statements.

                                       3
<PAGE>

    GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                             Statements of Stockholders' Equity

                    Years ended June 30, 2003, 2002 and 2001

<TABLE>
<CAPTION>



                                                                                  Total
                                                  Common        Retained      stockholders'
                                                  stock         earnings         equity
                                               ------------- --------------- ----------------

<S>                                        <C>                  <C>              <C>
Balances at June 30, 2000 (unaudited)     A$       20,000       1,619,850        1,639,850
    Net income (unaudited)                             --       1,737,311        1,737,311
Dividends declared                                     --              --               --
                                               ------------- --------------- ----------------

Balances at June 30, 2001 (unaudited)     A$       20,000       3,357,161        3,377,161
    Net income (unaudited)                               --     1,860,703        1,860,703
Dividends declared                                       --            --               --
                                               ------------- --------------- ----------------
Balances at June 30, 2002                 A$       20,000       5,217,864        5,237,864
    Net income                                         --       1,332,842        1,332,842
Dividends declared                                     --      (2,000,000)      (2,000,000)
                                               ------------- --------------- ----------------

Balances at June 30, 2003                 A$       20,000       4,550,706        4,570,706
                                               ============= =============== ================


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


                                       4

<PAGE>

                 GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                            Statements of Cash Flows

                    Years ended June 30, 2003, 2002 and 2001

<TABLE>
<CAPTION>

                                                                                                                2001
                                                                            2003              2002            unaudited
                                                                        --------------    --------------   ----------------

<S>                                                                  <C>                      <C>                <C>
Net income                                                          A$      1,332,842         1,860,703          1,737,311
    Adjustments to reconcile net income to net cash
     provided by operating activities:
    Depreciation and amortisation of property, plant and equipment             42,139            34,930             21,965
    Decrease/(increase) in trade accounts receivable                        2,632,803        (1,389,057)        (1,852,775)
    Decrease/(increase) in inventories                                      3,316,850           175,233         (3,713,537)
    Decrease in other assets                                                  146,134             2,363             --
    (Increase) in intercompany receivables                                 (1,462,246)           --                 --
    Decrease in trade accounts payable                                     (3,419,624)       (1,103,844)          (374,452)
    Decrease in accrued liabilities                                          (379,767)         (329,759)           799,556
    Increase in prepaid expenses                                               --               (10,744)            32,739
    Increase in deferred income taxes                                        (196,742)          (64,596)          (250,590)
                                                                        --------------    --------------   ----------------

               Net cash provided by/ (used in) operating activities         2,012,389          (824,771)        (3,599,783)
                                                                        --------------    --------------   ----------------

Cash flows from investing activities:
    Capital expenditures, including interest capitalized                     (109,718)          (93,471)           (77,942)
                                                                        --------------    --------------   ----------------

               Net cash used in investing activities                         (109,718)          (93,471)           (77,942)
                                                                        --------------    --------------   ----------------

Cash flows from financing activities:
    Dividends paid                                                         (2,000,000)           --                 --
                                                                        --------------    --------------   ----------------

               Net cash used in financing activities                       (2,000,000)           --                 --
                                                                        --------------    --------------   ----------------

               Net decrease in cash and cash equivalents                    (97,329)         (918,242)        (3,677,725)

Cash and cash equivalents at beginning of year                            2,356,150         3,274,392          6,952,117
                                                                        --------------    --------------   ----------------

Cash and cash equivalents at end of year                            A$    2,258,821         2,356,150          3,274,392
                                                                        ==============    ==============   ================


See accompanying notes to consolidated financial statements.
</TABLE>
                                       5
<PAGE>




<PAGE>

                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD


                          Notes to Financial Statements

                    June 30, 2003, 2002 and 2001 (unaudited)



(1)    Summary of Significant Accounting Policies and Practices

       (a)    Description of Business

              Global Payment Technologies Australia Pty Ltd (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 activities 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 48% (2002: 42%) of
              trade accounts receivable as of June 30, 2003 and 70% (2002: 70%)
              of sales for the fiscal year ended June 30, 2003. There were no
              other customers that represented 10% or more of net sales or trade
              accounts receivable as of and for the year ended June 30, 2003.

       (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 27% (2002: 7.5%
              to 27%).

       (e)    Other Current Assets and Other Assets

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


                                       6
<PAGE>
                GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD


                          Notes to Financial Statements

                    June 30, 2003, 2002 and 2001 (unaudited)



(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 carryforwards. 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.

       (g)    Use of Estimates

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

       (h)    Impairment of Long-Lived Assets

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

              The Company did not recognize any impairment adjustments in
              fiscal 2003 (2002: nil; 2001: 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.In   the  prior  year  the  Company  sold  independent
               automated  teller  machines  (ATM's) under an arrangement  with a
               related  entity,  eCash Pty Limited.  The Company assumed all the
               credit  risk  associated  with those  sales.  The  machines  were
               purchased  from third  parties with the Company  assuming all the
               risks and rewards of ownership of the inventory. An agreed fee of
               $1,307,738  was paid to eCash Pty Limited  under the  arrangement
               for the use of customer lists, vendor lists and the "eCash" trade
               name.  Revenues and expenses from the sales under the arrangement
               were included in the net sales and cost of sales on a gross basis
               in accordance  with  Emerging  Issues Task Force (EITF) Issue No.
               99-19  Reporting  Revenue Gross as an Principal  Versus Net as an
               Agent.Total sales and cost of sales under the arrangement in 2002
               were $6,252,852 and $4,340,796 respectively. On July 1, 2002, the
               Company  ended  its sales  arrangement  with  eCash Pty  Limited.
               Inventories  on hand at year  totaling  $1,619,766  were  sold at
               carrying  value to eCash Pty  Limited.  This  arrangement,  which
               commenced on July 1, 2001, did not exist prior to the fiscal year
               ended June 30, 2002 and no such  arrangement  existed  during the
               2003 fiscal year.

                                       7
<PAGE>
                GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD


                          Notes to Financial Statements

                    June 30, 2003, 2002 and 2001 (unaudited)


       (j)    Commitments and Contingencies

              Liabilities   for  loss   contingencies   arising   from  claims,
              assessments,  litigation,  fines and  penalties and other sources
              are  recorded  when it is  probable  that a  liability  has  been
              incurred and the amount of the assessment and/or  remediation can
              be reasonably estimated.  No such amounts were recorded in fiscal
              2003, 2002 or 2001.

       (k)    Advertising expenses

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

       (l)    Cash and cash equivalents

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

(2)    Income Taxes

       All pretax income is derived from domestic operations.

       Total income taxes for the years ended June 30, 2003 consists of:
<TABLE>
<CAPTION>


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

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

Year ended June 30, 2002:                     A$            882,376              (64,597)               817,779
                                                   ==================   ======================  ==================

Year ended June 30, 2001 (unaudited):         A$          1,153,919             (250,590)                903,329
                                                   ==================   ======================  ==================
</TABLE>




                                       8
<PAGE>

                GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD


                          Notes to Financial Statements

                    June 30, 2003, 2002 and 2001 (unaudited)


(2)    Income Taxes (continued)

       Income tax expense was $578,232, $817,779, and $903,329 (unaudited) for
       the years ended June 30, 2003, June 30, 2002 and June 30, 2001,
       respectively, and differed from the amounts computed by applying the
       Australian federal income tax rate of 30% (2002: 30%; 2001: 34%) to
       pretax income as a result of the following:
<TABLE>
<CAPTION>


                                                                  2003                   2002
                                                           --------------------   -------------------

<S>                                                     <C>                                <C>
Computed "expected" tax expense                        A$           573,322                803,544
Increase (reduction) in income taxes resulting from:
    Adjustment to deferred tax assets and
    liabilities for enacted changes in tax  laws and
    rates                                                                --                 35,931
    Under/over provision for prior years                                 --                 (1,474)
    Other, net                                                        4,910                 20,222
                                                           --------------------   -------------------

                                                       A$           578,232                817,779
                                                           ====================   ===================
</TABLE>


       The tax effects of temporary differences that give rise to significant
       portions of the deferred tax assets and deferred tax liabilities at 30
       June 2003 and 2002 are presented below.

<TABLE>
<CAPTION>

                                                                  2003                  2002

                                                               at 30% tax         at 30% tax rate
                                                                  rate
                                                           --------------------  -------------------
<S>                                                     <C>                                <C>
Deferred tax assets:
    Accounts receivable principally due to
      allowance for doubtful accounts                  A$             3,000                12,000
    Inventory                                                       233,094               109,955
    Employee leave entitlements                                      22,966                25,691
    Bonus provision                                                 168,720               132,300
    Unrealised foreign exchange movements                            60,877                     0
    Other                                                            34,500                64,068
                                                           --------------------  -------------------
              Total gross deferred tax assets                       523,157               344,014
Less valuation allowance                                                  -                     -
                                                           --------------------  -------------------

              Net deferred tax assets                               523,157               344,014
                                                           --------------------  -------------------
</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. 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, 2003.

                                       9
<PAGE>


(3) Pension and Other Postretirement Benefits

       The Company contributed to a defined contribution superannuation fund on
       behalf of its employees. Contributions are based upon Australian
       statutory minimum percentages of salary plus any additional contributions
       included in employee's employment agreement. The company contributed
       A$76,127, $79,740 and A$46,964 during fiscal years 2003, 2002 and 2001
       respectively to the fund. There were no contributions outstanding at year
       end.

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

(4)      Accrued Liabilities
<TABLE>
<CAPTION>


                                                                     2003               2002

<S>                                                          <C>                          <C>
      Goods and services tax payable                        A$        206,336             312,173
      Accrued expenses                                                705,411             590,172
      Provision for employee leave                                     76,554              85,637
      Other provisions                                                      0              65,000
      Warranty provision                                               75,000              75,000
                                                                ----------------   ----------------
                                                                ----------------   ----------------
                                                           A$       1,063,301           1,127,982
                                                                ================   ================
</TABLE>


(5)    Commitments

       Non cancelable operating lease commitments

      Future operating lease commitments not                     2003
      provided for in the financial statements and
      payable:
      Within one year                                  A$        210,000
      One to two years                                           210,000
      Two to three years                                         210,000
                                                             -------------
                                                       A$        630,000
                                                             -------------

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


                                       10
<PAGE>

(6)    Related parties

       The company is 50% owned by Global Payment Technologies, Inc, a company
       incorporated in the United States of America. The other 50% is owned by a
       private trust of which the Managing Director of the company is a
       beneficiary. During the year, the Company purchased inventories from
       Global Payment Technologies, Inc. Purchases during year totaled
       $24,880,000 (2002: $31,522,890; 2001: $26,836,256).

          During the previous year the Company  entered into an  arrangement  to
          sell   independent   automated   teller  machines   (ATM's)  under  an
          arrangement  with a  related  entity,  eCash  Pty  Limited.  eCash Pty
          Limited is owned 35% by Global Payment Technologies,  Inc., 35% by the
          private trust of the Managing  Director of the Company,  and 30% by an
          unrelated  third party.  An agreed fee of $1,307,738 was paid to eCash
          Pty  Limited  under the  arrangement  for the use of  customer  lists,
          vendor  lists  and the  "eCash"  trade  name.  Total  sales  under the
          arrangement  in 2002 were  $6,252,852.  On July 1, 2002,  the  Company
          ended its sales  arrangement  with eCash Pty Limited.  Inventories  on
          hand at year totaling  $1,619,766 were sold at carrying value to eCash
          Pty Limited.  This  arrangement,  which commenced on July 1, 2001, did
          not exist  prior to the fiscal  year  ended June 30,  2002 and no such
          arrangement existed during the 2003 fiscal year.

       As of June 30, 2002 the Company had receivables from eCash Pty Limited of
       $1,462,246, which were primarily attributable to payments made by the
       Company on behalf of eCash Pty Limited to employees and vendors of eCash
       Pty Limited.

          For the year  ended  June 30,  2003,  the  Company  charged  eCash Pty
          Limited a  management  fee or  administrative  tasks  conducted by the
          Company on behalf of eCash Pty  Limited,  which is  included  in other
          sundry income in the accompanying statement of income.

       There were no other transactions with related parties.


                                       11