UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
Mark One

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

                  For the Fiscal Year ended September 30, 2005
                  --------------------------------------------

                                       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)


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

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

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

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

     Indicate by check mark whether the registrant is an accelerated filer (as
defined in rule 12b-2 of the Act). Yes [ ] No [X]

     Indicate by check mark whether the registrant is shell company (as defined
in rule 12b-2 of the Act). Yes [ ] No [X]

     The aggregate market value of the Common Stock of the registrant held by
non-affiliates of the registrant, based on the average bid and asked prices on
March 31, 2005, was approximately $34,400,000.

     As of December 9, 2005, the registrant had a total of 6,218,201 shares of
Common Stock outstanding.




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                                     PART I

Item 1.           Business
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General

Global Payment Technologies, Inc. (the "Company") is a Delaware corporation
established in 1988. The Company designs and manufactures currency validation
systems, including paper currency validators and related paper currency
stackers, and sells its products in the United States and numerous international
markets. Validators receive and authenticate paper currencies in a variety of
automated machines, including gaming and gaming related equipment, beverage and
vending machines and retail equipment that dispense products, services, coinage
and other currencies. Note stackers are sold with most validators and are
designed to store validated paper currency and, in some cases, record and store
information on contents, usually in secure removable cassettes. Although the
Company knows of no commercially available validator that is
counterfeit-currency-proof, the Company's validators and stackers offer
significant protection against tampering and counterfeit currencies and provide
tamper-evident storage of validated currency. The Company's validators are
adaptable to a wide variety of original equipment manufacturer ("OEM")
applications and have been engineered into the design of most major gaming and
numerous beverage and vending machines sold worldwide. The Company's products
offer a highly competitive level of performance and are designed to provide ease
of maintenance and repair.

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

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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 Holdings Pty.
Ltd.("eCash"), an Australian based company. This entity was formed to market,
distribute, service and support Automated Teller Machines across Australia and
New Zealand. The Company owns a 35% interest in this entity.

The Company owns 100% of Global Payment Technologies (Europe) Limited
("GPT-Europe"). This entity is based in the United Kingdom and is responsible
for sales and service of the Company's products in Europe.

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

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

Background and History

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

The Company's net sales grew from approximately $35,000 in fiscal 1989 (its
first year of operations) 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 were hindered by
initial product issues, which have since been resolved, offset in part by sales
of the Company's new vending product which commenced in January 2003. With the
launching of its new beverage and vending product in fiscal 2003 the Company
achieved an increase in its beverage and vending sales to $5.7 million as
compared to $2.2 million in fiscal 2002. Beverage and vending products
represented 21.7% of the Company's sales in fiscal 2003 as compared with 8% in
fiscal 2002. In fiscal 2004, sales decreased 6.5% to $24.4 million primarily due
to $4.3 million in lower sales of the Company's gaming products to its
Australian affiliate offset, in part, by a $1.7 million increase in sales of the
Company's Aurora product to both the vending and gaming markets and a $637,000
increase in sales to the South African gaming market. Gaming sales for fiscal
2004 were $19.304 million, or 79.2% of sales, as compared with $20.417 million,
or 78.3% of sales, in fiscal 2003. Beverage and vending sales for fiscal 2004
were $5.077 million, or 20.8% of sales, as compared with $5.659 million, or
21.7% of sales in fiscal 2003. Net sales for fiscal 2005 increased by 6.2% to
$25.886 million as compared with $24.381 million in fiscal 2004. This increase
was due to increased sales of $3.821 million to the gaming market, primarily the
result of increased demand from the Company's Australian affiliate and in
Russia, offset by decreased sales of $2.316 million to the beverage and vending
market, as a result of significant cigarette tax increases in Germany. Gaming
sales for fiscal 2005 were $23.150 million, or 89.4% of sales, as compared with
$19.304 million, or 79.2% of sales, in fiscal 2004. Beverage and vending sales
for fiscal 2005 were $2.736 million, or 10.6% of sales, as compared with $5.077
million, or 20.8% of sales in fiscal 2004.

The Company's international sales amounted to 93%, 86%, and 90% of net sales in
fiscal 2005 2004 and 2003, respectively. Management believes the international
markets for currency validation systems in both gaming and beverage and vending
may grow at a faster rate than in the United States and, therefore, may
represent the Company's best long-term growth opportunity.

Marketing Strategy

The Company has continued to focus its marketing efforts on those segments of
the marketplace which require a relatively high degree of security and
substantial custom design work that is not adequately served by larger
competitors which have tended to focus primarily on the broader, higher-volume
market using standardized product configurations. Our approach in the worldwide
gaming market was initially a "niche" strategy that allowed the Company to
develop a strong international customer base that originally started with
manufacturers too small to attract the larger competitors. With development
completed and the commencement of sales of our Argus(TM) and Aurora products in
January 2001 and January 2003, respectively, and the launch of our new


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"Advantage" and "SA-4" products in fiscal 2005, this strategy will continue, and
be broadened paying particular attention to markets which have the largest
opportunity for growth. The Company has both gained new customers and retained
existing customers based on its strength internationally and its reputation for
working closely to adapt to customers' needs. The Company is continuing to
market directly to the OEMs and operators in Eastern Europe in an effort to
regain lost market share due to initial product issues on its Argus product,
which have since been resolved. During the second half of fiscal 2004 and during
fiscal 2005, the Company has achieved significant increases in gaming sales with
Aurora in this part of the world. The Company will continue to attempt to
strengthen and grow its relationships with the OEMs through joint marketing and
advertising efforts and by creating country-specific currency databases and
customization, which will allow OEMs an opportunity to seek new potential
markets worldwide. Today the Company has in excess of 75 country-specific
databases and 17 multi-country databases, which it believes is one of the
largest database libraries in the industry. Further, it plans to continue to
build a large library of databases for its newest products, as well as adding to
its existing Argus and Aurora databases.

As a result of the Company's launch of its Aurora product in fiscal 2003, it has
increased its Aurora revenue from $5.3 million in fiscal 2003, to $7.0 million
in fiscal 2004, to $8.1 million in fiscal 2005. In fiscal 2003 the Company
signed a four year supply contract, valued in excess of $10,000,000, with
tobaccoland Automaten GmbH & Co, a German based cigarette-vending operator with
over 200,000 machines or approximately 25% of the German market share. However,
since the last quarter of fiscal 2004 the overall German tobacco vending
industry has faced significant volume shortfalls due to government increases in
cigarette taxes. During this timeframe, however, the Company more than offset
the loss in revenue from this industry segment by successfully and substantially
penetrating sales into the Russian gaming market with its Aurora product,
originally dubbed the "beverage and vending" product. As a result of this
progress GPT has increased its Aurora sales year over year by penetrating into
both the beverage and vending industry as well as the gaming industry, thus
increasing its customer base as well as the venues and markets Aurora serves.
The Company will continue to search for new growth opportunities both
domestically and internationally for all its products. The Company believes it
is in position to gain additional business with its Aurora product based on its
acceptance as a currency validator for a number of growing markets worldwide. By
leveraging the Company's international relationships, the Company will seek
growth opportunities in the domestic gaming sector, as the United States is
viewed as an important target for expansion by several of our major OEM
customers. Further, the Company has launched its Advantage and SA-4 products in
fiscal 2005 and believes they will provide an opportunity for the Company to
penetrate the domestic gaming market as well as other international markets.

In the gaming venue, the Company markets its products principally to the OEMs as
well as the end-users (i.e., casino operators) who purchase slot machines from
the OEMs to help ensure that the Company's validator products will be specified
as the product of choice in new orders. The Company has also provided direct
operator technical training and participation in seminars with the Company's OEM
customers. By marketing directly to the end-users in conjunction with the OEMs,
the Company expects its products will gain acceptance as its customers' gaming
machines gain entry into major casinos or regions previously dominated by
currency validators of the Company's competition. Since 1999, the Company has


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offered programs and plans designed to elevate the level of our customers'
product knowledge. Such programs and plans included the development of formally
documented maintenance schedules and similar programs, which are proposed to
customers. These maintenance programs are being offered in coordination with 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 is 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 is very similar to that of the Company's gaming strategy.
During fiscal 2002, the Company completed its field trials of the Aurora product
and initiated its sales campaign. During fiscal 2003, with sales of its new
Aurora product commencing in January 2003, the Company achieved a significant
$3.5 million increase in beverage and vending sales to $5.7 million. Throughout
fiscal 2004, 2005, and into fiscal 2006, the Company has and will continue to
market and sell its Aurora product through its already existing distribution
channels, as well as through the creation of additional alliances and sales
channels to further penetrate this market. The beverage and vending industry's
requirement for currency validation equipment is more than $375 million per
annum, or three times that of the gaming market. In addition, further
penetration into the beverage and vending market, as well as the gaming market,
will allow the Company to achieve further diversification and, if successful,
could reduce its reliance on any one market as well as expand its customer base.

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

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


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<PAGE>

Products

Since inception, the Company has endeavored, through its research and
development and manufacturing efforts, to provide products that meet the
specific performance requirements of its customers. These requirements are
continually evolving as the markets for currency validators continue to grow and
as technological advances are incorporated into the products' design. The
Company spent approximately $55,000, $75,000 and $150,000 during fiscal 2005,
2004 and 2003, 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 product development efforts have been focused on the design of its
latest generation of validator products, the first of which was Argus(TM), its
gaming validator. The Company began selling Argus(TM) in January 2001. Sales of
this product represented 19%, 63%, 54%, 51% and 50% of unit validator sales in
fiscal 2001, 2002, 2003, 2004 and 2005, respectively. In the summer of 2002, the
Company completed the development of its new product designed specifically to
address the requirements of the vending industry. Following successful field
trials during the summer and fall of 2002, the Company commenced its sales and
marketing campaign which led to sales commencing in January 2003 on its new
product called "Aurora". Sales of this product represented 29%, 43% and 48% of
unit validator sales in fiscal 2003, 2004 and 2005, respectively. Building from
its engineering libraries, the Company has launched several new products,
including "Advantage" and "SA-4", during fiscal 2005 that the Company
anticipates will provide the Company additional flexibility in meeting its
customers' needs in both the domestic and international gaming markets. For
Argus(TM) and Aurora products, the Company has, since achieving technological
feasibility through a detailed program design, capitalized the cost of software
coding and development, and reflects the amortization of these costs in cost of
sales.

The Company's principal products in fiscal 2005 include 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. During fiscal 2004, the Company


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commenced a phase out program on this product, however; we will maintain field
service and support for warranty repairs for several more years. The Company
believes it has adequately reserved for inventory obsolescence for the shift in
demand from its Generation I products and Generation II products to its
Generation III products.

Argus(TM) is a worldwide gaming note validator, which can process multi-country
databases, with a substantially greater number of notes (between 2.44 inches to
3.35 inches in width), in all 4 directions. Argus is designed to be a one size
fits all validator that uses essentially the same hardware for every currency
throughout the world. Argus is equipped with a standard bar code reader, which
has the added capability of reading coupons and currency at the same time. In
the future, the Company plans to explore the option of integrating smart-card
and mag-card technologies with its existing products. The Argus sensor system
has the Company's patented Red, Green, Blue and Infrared (RGBI) optical array,
which generates 56 channels of high-resolution data. It is arranged in a unique
layout that allows for the analysis of a note's signature (fingerprint) without
any gaps between optical sensors. The optical information provided by Argus is
reflective (off the note), transmissive (through the note) and a combined RGBI
pattern of reflective data to create a color signature of the note being
evaluated. The Argus validator also has a high-sensitivity magnetic sensor and
high-resolution Side-Looking Sensors(TM). The Generation III product line offers
a "soft drop analyzer" ("SDA") option. This patented SDA feature allows the note
stacker cassette to maintain and track specific information such as currency or
coupons in the cassette by quantity and denomination; the specific machine or
game that the cassette was removed from; the acceptance rate of the validator;
and time-in/time-out of the cassette from the gaming machine. This information
can be easily downloaded, via a docking station provided by 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 products. This product originally targeted for the
beverage and vending industry has also been aggressively marketed in the
un-regulated gaming market in 2004 and 2005 with substantial penetration. The
Company will continue marketing efforts in both venues during fiscal 2006. As
with Argus, Aurora is designed to be a one size fits all validator that
essentially uses the same hardware for every currency in the world.

The Company's newest products launched in fiscal 2005 are Advantage and SA-4.
Advantage is a worldwide note validator, which meets the U.S. industry
footprint, and can handle bills up to 3.35 inches in width. Advantage uses the
latest DSP chip set for a 20X increase in speed, which decreases the time it
takes to validate to less than half a second. The DSP chip enables the use of
advanced algorithms, which significantly improve security and performance. The
Advantage sensor system has the Company's patented Red, Green, Blue and Infrared
(RGBI) optical array and an industry standard bar-code reader that is compatible
with the various Ticket-In Ticket-Out (TITO) systems currently found on many
casino floors worldwide. The newly designed precision mechanism and side-looking


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optical system increases the sensitivity of the Advantage currency validator to
detect fraud attempts. The number of different notes retained in a single
database memory is expandable from 40 to 128 in all four directions, which
enables Advantage to securely validate multiple currencies without the need to
re-program.

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

Product Performance and Warranties

The Company's validator and note stacker products are generally covered by a
one-year warranty against defects in materials or workmanship. This warranty has
essentially doubled with the Company's Generation III validators (Argus, Aurora,
Advantage and SA-4). The Company or its authorized service agents will repair or
replace any units that require warranty service. The Company does not warrant
that its validators will reject all counterfeit currencies and believes that
there is no commercially available validator that is counterfeit-currency-proof
or warranted as such. To support its increasing international market presence,
the Company has expanded its warranty and non-warranty support coverage to
provide in-country capability in key worldwide markets (e.g. Australia, Russia,
Latin America, South Africa, Europe and Southeast Asia). In these markets, the
local sales and service joint venture partners and distributors provide warranty
labor while the Company's primary product support in these markets is in the
form of warranty parts. The Company expects to expand its international service
capabilities during 2006 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 2005, 2004 and 2003 was $176,000, $198,000,
and $327,000, 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 a joint
venture providing local sales and service in the key market of Australia and
Company-owned sales and service offices in London and Moscow. In addition, the


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Company has distributors in Russia, Italy, Southeast Asia, Latin America, the
Middle East and South Africa. The overall sales and service network provides
effective international coverage for the Company's products and customers and
reflects the Company's commitment to providing superior service worldwide.

Customer Concentration

During fiscal 2005, the Company's largest customer, GPTA, accounted for
approximately 40% 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 89.4% of the Company's revenues, with the remaining
10.6% primarily from product applications in the beverage and vending industry.
While the Company has diversified its sales mix with sales to the beverage and
vending industry, increased sales to Russia, and added new accounts during the
year, it continues to sell to a small group of OEMs in the gaming and beverage
and vending industries. The Company must achieve significantly less dependence
on several important customers by expanding into new countries, expanding its
customer base and developing new products to increase the market size it can
market to, such as domestic gaming and the mass market vending applications.
Until such initiatives are achieved, the Company is at risk that lower demand
for any one product or market, or a loss of a significant customer, can
substantially impact its revenues and net income.

Manufacturing

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

The Company's manufacturing operations consist primarily of mechanical and
electro-optical assembly and the provision of wiring harnesses between
components and between the validator and the OEM machine in which the finished
product is to be used. The Company routinely tests all components and has
extensive "burn-in" procedures for the final assembled product. Direct control
over fabrication, via its key suppliers, and testing permits the Company to
shorten its production cycle and protect patented and proprietary technology.
During fiscal 2000, the Company transitioned a portion of its manufacturing to
demand flow technology. In addition, the Company has evaluated and will continue
to evaluate its suppliers in an effort to reduce its total cost of
manufacturing, a process that may include vendor consolidation and outsourcing.

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


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introduction of its new Aurora product with higher initial purchase costs and
increased initial manufacturing costs, coupled with overall lower sales volume
than fiscal 2002 resulted in lower net margins for the year. The Company did,
however, take action to significantly reduce its purchased component costs on
Aurora and Argus by the end of fiscal 2003 by manufacturing and selling off, on
a first-in first-out basis, its higher priced purchased components. In fiscal
2004, the Company continued its efforts to further reduce costs and to improve
the margin on its Aurora product, and while improvements in purchasing costs and
manufacturing efficiencies had been achieved by the end of fiscal 2004, the
benefits were substantially realized during fiscal 2005. During fiscal 2006,
while the Company continues its efforts to reduce product costs, including
potential outsourcing, the most significant factor affecting the Company's gross
profit percentage will be the unit sales levels achieved and their relationship
to manufacturing costs, as well as any impact from sales and marketing efforts
to achieve additional market share and/or reduce its current inventory levels.

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

Competition

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


                                       12
<PAGE>

supplier of primarily vending products. This resulted in Coinco being a
competitor that has an integrated gaming and beverage and vending product line,
as well as relationships in both industries. Similar competitors are Japan Cash
Machines Co., Ltd. ("JCM") and Mars Electronics International ("MEI"), entities
that have products able to serve both the gaming and the beverage and vending
marketplaces.

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

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

The Company historically has been more willing to address smaller markets than
its larger competitors and expects to encounter increased competition as the
markets addressed by its products continue to grow. Also, the Company has been
willing to adapt its products to a variety of OEMs, which has allowed it to be
flexible to expand when new markets open up to sales. The Company believes that
performance, quality and protection against tampering and counterfeit currency
are as important as price 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. D283,518 issued April 22, 1986; "Paper
Currency Acceptor and Method of Handling Paper Currency for Vending Machines and
the Like," U.S. Patent No. 4,884,671 issued December 5, 1989; "Anti-fraud
Currency Acceptor," U.S. Patent No. 5,259,490 issued November 9, 1993; "Bill
Accumulating and Stacking Device," U.S. Patent No. 5,322,275 issued June 21,


                                       13
<PAGE>

1994; "Soft Count Tracking System," U.S. Patent No. 5,630,755 issued May 20,
1997; "Paper Currency Validator (Side-Looking Sensors)," U.S. Patent No.
5,806,649 issued September 15, 1998; "Electrical Switch Connectors," U.S. Patent
No. 5,842,879 issued December 1, 1998; "Stacker Mechanism for Stacking Bank
Notes" U.S. Patent No. 5,899,452 issued May 4, 1999; "Apparatus and Method for
Detecting a Security Feature in a Currency Note," U.S. Patent No. 6,104,036
issued August 15, 2000; and "Bank Note Validator (RGBI)" U.S. Patent No.
6,223,876 issued May 1, 2001. Certain patents cover technology used in 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.
5,630,755.

In addition to its U.S. patents and pending application, the Company has also
applied for patent protection in a large number of international markets. If
corresponding foreign patents are obtained, the Company believes that these
patents could provide important protection for certain technological advantages
its validators possess in international markets. However, the Company does not
believe that it will be materially adversely affected if these patents are not
issued. No assurances can be given that any patent applications will result in
the issuance of additional patents. The Company has obtained patents in
Australia, New Zealand and South Africa under the Eurasian Patent Convention
corresponding to U.S. Patent No. 6,223,876 covering the use of short wave-length
light in a validator to discern the color and other characteristics of bills
being scanned. In addition the Company has obtained a patent in New Zealand
corresponding to U.S. Patent No. 5,630,755 covering a system for monitoring and
tracking money collected from a gaming machine and the like.

The Company licensed certain patented proprietary technology covered by U.S.
Patent No. 5,630,755 to Ardac, Inc. in 1999. Such license settled a patent
infringement suit initiated by the Company and provides for the payment of
license fees based on unit sales of certain of Ardac's products.

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

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


                                       14
<PAGE>

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 2, 2005, the Company had 102 employees, consisting of 3 executives;
9 sales and customer service representatives; 23 engineers and software
developers, and technical support representatives; 14 materials, quality control
and quality assurance personnel; 12 administrative and clerical personnel; and
41 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 a limited base of customers for a significant portion of sales;
the Company's dependence on the paper currency validator market and its
potential vulnerability to technological obsolescence; the possible impact of
competitive products and pricing; the risks that its current and future products
may contain errors or defects that would be difficult and costly to detect and
correct; potential manufacturing difficulties; possible risks of product
inventory obsolescence; uncertainties with respect to the Company's business
strategy; general economic conditions in the domestic and international market
in which the Company operates; potential shortages of key parts and/or raw
materials; potential difficulties in managing growth; dependence on key
personnel; the relative strength of the United States currency; and other risks
described in the Company's Securities and Exchange Commission filings.

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

Not yet required to be described.

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

Not applicable.

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 $360,000 in
fiscal 2005 and $278,000 in fiscal 2006. The Company believes this facility has
excess capacity for its office and manufacturing needs and is currently
reviewing its options to downsize the current facility or relocate its
operations.

                                       15
<PAGE>

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

There are no material legal proceedings pending against the Company.

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

Not applicable.

                                     PART II

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

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 2004 and 2005.

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

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

         December 31, 2003               3.65               3.05
         March 31, 2004                  4.25               3.16
         June 30, 2004                   4.06               3.15
         September 30, 2004              4.08               3.25
         December 31, 2004               6.00               3.60
         March 31, 2005                  7.63               5.40
         June 30, 2005                   7.00               3.81
         September 30, 2005              4.25               2.85

b)       Holders

The approximate number of beneficial holders and holders of record of the
Company's Common Stock as of December 2, 2005 were 1,365 and 34, respectively.

c)       Dividends

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



                                       16
<PAGE>

Item 6.          Selected Financial Data
-------          -----------------------
FINANCIAL HIGHLIGHTS
--------------------
(In thousands, except earnings per share)
-----------------------------------------

<TABLE>
<CAPTION>

Year Ended September 30                 2001     2002       2003       2004       2005
----------------------------------------------  --------   --------   --------   --------

<S>                                   <C>       <C>        <C>        <C>        <C>
Net sales                             $32,161   $27,713    $26,076    $24,381    $25,886
Net income (loss)                         806      (633)(1) (5,677)(2) (1,690)(3)   (573)
Diluted earnings (loss) per share        0.14     (0.11)(4)  (1.02)(4)  (0.30)(4)  (0.10)(4)
Total assets (5)                       26,466    24,030     17,775     16,267     16,714
Long-term debt obligations              2,800         0          0      1,354         79
Stockholders' equity                   17,550    17,026     11,677     11,107     13,371
</TABLE>

(1)  Includes an after-tax gain of $82,000 from the sale of the Company's
     unconsolidated China affiliate.
(2)  Based on the Company's continued losses, and related uncertainty as to the
     Company's ability to generate sufficient taxable income to realize the full
     value of its deferred income tax asset, the Company recorded a full
     valuation allowance and related income tax expense in the fourth quarter of
     fiscal 2003.
(3)  Includes a gain of $78,000 from the sale of the remaining portion of the
     Company's unconsolidated South African affiliate.
(4)  The weighted average shares outstanding used in the calculation of diluted
     loss per share did not include potential shares outstanding because they
     were anti-dilutive.
(5)  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.


                                       17
<PAGE>

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


Quarter Ended
                                    Dec. 31  Mar. 31  June 30  Sept. 30   Year
                                    -------  -------  -------  --------   ----
Fiscal 2004
-----------
Net sales                            $4,333   $5,712   $7,076   $7,260  $24,381
Gross profit                            815    1,025    1,670    1,832    5,342
Net income (loss)                      (988)    (711)    (108)     117   (1,690)
Basic income (loss) per share         (0.18)   (0.13)   (0.02)    0.02    (0.30)
Diluted income (loss) per share (1)   (0.18)   (0.13)   (0.02)    0.02    (0.30)

Fiscal 2005
-----------
Net sales                            $7,752   $7,945   $5,173   $5,016  $25,886
Gross profit                          2,024    2,336    1,261    1,246    6,867
Net income (loss)                       180     (122)    (340)    (291)    (573)
Basic income (loss) per share          0.03    (0.02)   (0.05)   (0.05)   (0.10)
Diluted income (loss) per share (1)    0.03    (0.02)   (0.05)   (0.05)   (0.10)

(1)  The weighted average shares outstanding used in the calculation of diluted
     loss per share, for periods in which the Company had a net loss, did not
     include potential shares outstanding because they were anti-dilutive.

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

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

Fiscal year ended September 30, 2005 compared with September 30, 2004
---------------------------------------------------------------------

Sales
Net sales for fiscal 2005 increased by 6.2% to $25.886 million as compared with
$24.381 million in fiscal 2004. This increase was due to increased sales of
$3.821 million to the gaming market, primarily the result of increased demand
from the Company's Australian affiliate and in Russia, offset by decreased sales
of $2.316 million to the beverage and vending market, as a result of significant
cigarette tax increases in Germany. Gaming sales for fiscal 2005 were $23.150
million, or 89.4% of sales, as compared with $19.304 million, or 79.2% of sales,
in fiscal 2004. Beverage and vending sales for fiscal 2005 were $2.736 million,
or 10.6% of sales, as compared with $5.077 million, or 20.8% of sales in fiscal
2004. Net sales to international customers accounted for 92.7% and 86.3% of net
sales in fiscal 2005 and 2004, respectively.


                                       18
<PAGE>

Gross Profit
Gross profit increased to $6.867 million, or 26.5% of net sales, in fiscal 2005
as compared with $5.342 million, or 21.9% of net sales, in the prior-year
period. The increase in gross profit, as a percentage of sales, was primarily
the result of achieving a 6.2% sales increase while at the same time leveraging
off of existing fixed manufacturing costs and by improvements in purchasing
costs and manufacturing efficiencies on the Company's Aurora product that were
achieved by the end of fiscal 2004 and realized early in fiscal 2005. The most
significant factor affecting the Company's gross profit percentage will be the
unit sales levels achieved and their relationship to manufacturing costs, as
well as any impact from sales and marketing efforts to achieve additional market
share and/or reduce its current inventory levels. During fiscal 2005 the
Company's gross profit as a percentage of sales for the quarters ended December
2004, March 2005, June 2005 and September 2005 were 26.1%, 29.4%, 24.4% and
24.8%, respectively.

Operating Expenses
Operating expenses in fiscal 2005 increased to $7.051 million, or 27.2% of net
sales, as compared with $6.857 million, or 28.1% of net sales, in fiscal 2004.
This increase of $194,000 is primarily the result of increased travel and
stockholder relations expenses of $140,000 and $110,000, respectively, offset in
part by reduced legal and professional fees of $72,000.

Income Taxes
With respect to the provision for income taxes, the effective rate was a benefit
of 3.5% as compared with a benefit of 0.4% in the prior-year period. The Company
provided a full valuation allowance against its deferred income tax assets in
the fourth quarter of fiscal 2003 and continues to provide a full valuation
allowance at September 30, 2005. The valuation allowance is subject to
adjustment based upon the Company's ongoing assessment of its future taxable
income and may be wholly or partially reversed in the future.

Net Loss
The net loss for fiscal 2005 was ($573,000), or ($.10) per share, as compared
with ($1,690,000), or ($.30) per share, for fiscal 2004. In addition to its
operations, the Company owns interests in unconsolidated affiliates in Australia
which are accounted for using the equity method. The Company accounted for its
United Kingdom affiliate using the equity method until February, 2005, when the
Company exchanged its 25% interest in Abacus-UK for a 12.5% interest in
Evolve-UK, which is now accounted for on a cost basis. The Company's affiliate
in South Africa was accounted for on a cost basis until January 15, 2004, when
the Company sold its remaining 5% ownership interest and recognized a gain on
the sale of $78,000. Included in the results of operations for fiscal 2005 and
2004 are the Company's share of net profits of these affiliates of $203,000 and
$108,000, respectively. In fiscal 2005 and 2004, equity in income of
unconsolidated affiliates includes a decrease of $33,000 and $165,000,
respectively, which represents the deferral of the Company's share of the gross
profits on intercompany sales to its affiliates that have not been recognized by
these affiliates. Excluding the intercompany gross profit adjustment, the
Company's share of net income of these unconsolidated affiliates was $236,000
and $273,000 for fiscal 2005 and 2004, respectively. This decrease of $37,000
was primarily the result of lower sales and profits at the Company's Australian
affiliates, partially offset, by the reversal of the valuation allowance of the


                                       19
<PAGE>

deferred tax assets at the Company's eCash affiliate. In addition, the Company
owns 100% of GPT-Europe and GPT-Russia, and owns 80% of Abacus-USA, the results
of which are consolidated in the Company's financial statements. Included in
interest expense for fiscal 2005 and 2004 was $568,000 and $242,000,
respectively, as a result of the amortization of debt discount. As of March 31,
2005 the term loan was fully repaid and the debt discount was fully amortized.

Fiscal year ended September 30, 2004 compared with September 30, 2003
---------------------------------------------------------------------

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

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

Operating Expenses
Operating expenses in fiscal 2004 decreased to $6.857 million, or 28.1% of net
sales, as compared with $9.758 million, or 37.4% of net sales, in fiscal 2003.
This decrease of $2.901 million is primarily the result of the Company's
completion of its cost reduction initiatives in December 2003, which related
primarily to employee and employee related expenses, as well as operating


                                       20
<PAGE>

expenses in fiscal 2003 including $405,000, as compared with none in fiscal
2004, for the amortization and write-down of the Company's smart card intangible
asset resulting from the Company's decision to focus on its core operations and
that it will not seek or be able to realize the benefits of this asset in future
periods.


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

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

                                       21
<PAGE>

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, fund inventory purchase
commitments, and service principal and interest payments on the Company's
indebtedness. At September 30, 2005, the Company's cash and cash equivalents
were $3,108,000 as compared with $3,453,000 at September 30, 2004. A significant
portion of the Company's cash balance in the amount of $744,000 and $770,000, as
of September 30, 2005 and 2004, respectively, consists of currency used to test
the Company's products and, although it could be available, it is not
anticipated to be utilized for working capital purposes in the normal course of
business. As a result of the Company's cash balances and the funds available
under the credit facility with Laurus discussed below, the Company believes that
its available resources should be sufficient to meet its obligations as they
become due and permit continuation of its planned product development and
operations for the next 12 months.

On March 16, 2004, the Company received aggregate proceeds of $1,500,000 from
the sale to Laurus Master Fund Ltd. ("Laurus") of a $1,500,000 principal amount
secured convertible term note due in March 2007 (the "CTN"), pursuant to a
Securities Purchase Agreement. The CTN was convertible into common stock of the
Company at any time at the rate of $4.26 of principal for one share of common
stock and was collateralized by substantially all assets of the Company.
Interest was payable monthly at the prime rate plus 1.5%, with a minimum rate of
6%. In addition, Laurus received 7 year warrants to purchase an aggregate of
200,000 shares of the Company's common stock at prices of $4.87, $5.28 and $5.68
for 100,000, 60,000 and 40,000 warrants, respectively. The Company utilized
approximately $1,200,000 of the proceeds to repay amounts outstanding under a
previous credit agreement. At September 30, 2004, $1,425,000 was outstanding
under the CTN. During the year ended September 30, 2005, the Company repaid
$50,000 and Laurus converted the remaining $1,375,000 of the CTN into 323,000
shares of common stock, resulting in the full repayment of the CTN.

The value allocated to the warrants resulted in a debt discount of $506,000 that
was being recognized as interest expense over the term of the CTN. Additionally,
by allocating value to the warrants, Laurus received a beneficial conversion
feature in the amount of $304,000 that resulted in additional debt discount that
was being recognized as interest expense over the term of the CTN. Interest
expense was computed utilizing the interest method, which results in an
effective yield over the term of the CTN. Amortization for the years ended
September 30, 2005 and 2004 was $568,000 and $242,000, respectively. As of March
31, 2005, the entire amount of debt discount had been recognized as interest
expense and charged to operations.

On March 16, 2004, the Company also entered into a Security Agreement with
Laurus which provides for a credit facility of $2,500,000 consisting of a
secured revolving note of $1,750,000 (the "RN") and a secured convertible
minimum borrowing note of $750,000 (the "MBN"), both due in March 2007 (the RN
and the MBN collectively referred to as the "LOC"). At closing, the Company
borrowed $750,000 under the MBN. Funds available under the LOC are determined by


                                       22
<PAGE>

a borrowing base equal to 85% and 70% of eligible domestic and foreign accounts
receivable, respectively, and 50% of eligible inventory. Outstanding amounts
under the RN and MBN are convertible into common stock of the Company at any
time at the rate of $4.26 of principal for one share of common stock and are
collateralized by substantially all assets of the Company. Interest is payable
monthly at the prime rate plus 1.5%, with a minimum rate of 6%. During the year
ended September 30, 2005, Laurus converted $750,000 of the MBN into 176,000
shares of common stock. At September 30, 2005, no amounts were outstanding under
the MBN or the RN.

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

Net cash used in operating activities was ($434,000) in fiscal 2005. This amount
was due to a net loss for the period, adjusted for non-cash items, of
$1,767,000, decreased prepaid expenses and other assets of $42,000, decreased
accounts receivable of $824,000, and decreased income taxes receivable of
$90,000, reduced by increased inventory of $2,830,000, primarily the result of
an increase in the Company's Aurora product due to lower Russian orders and the
slowdown in the German cigarette vending market, due to significant German tax
increases, coupled with the Company's commitment to receive inventory from its
vendors, decreased accounts payable of $181,000 and decreased accrued expenses
and other current liabilities of $146,000. Net cash provided by operating
activities was $1,741,000 in fiscal 2004. This amount was due to decreased
inventory of $746,000 as a result of outsourcing and the commonality of the
Generation III components, decreased income taxes receivable of $96,000 due to
collections in 2004, decreased accounts receivable of $1,907,000, and net loss
for the year, adjusted for non-cash items, of $126,000, offset, in part, by
increased prepaid expenses and other current assets of $383,000, decreased
accrued expenses and other liabilities of $600,000, and decreased accounts
payable of 151,000. Net cash provided by operating activities amounted to
$106,000 in fiscal 2003. This amount is due to decreased inventory of $955,000
as a result of outsourcing and the commonality 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). The Company sells its
products primarily to international markets on terms generally greater than 30
days. Further the Company has agreements with its affiliates, which could extend
payment terms in excess of 90 days. Based upon history, and the Company's
current review of its accounts receivable, it believes it is adequately reserved
for potentially uncollectible accounts. However, given the Company's sales and
accounts receivable are concentrated to a small group of customers and in
certain markets, any changes in conditions could cause a material impact to its
net income (loss) and cash flow. Additionally, the timing and size of the
Company's future Aurora sales orders, coupled with the continued commitments to
receive certain component parts, as well as the potential impact of current and


                                       23
<PAGE>

future sales programs, could have an impact on cash from operations and on gross
profit percentages.

Net cash (used in) provided by investing activities amounted to ($340,000) in
fiscal 2005 as compared with ($38,000) in fiscal 2004 and $1,169,000 in fiscal
2003. In fiscal 2004 the Company received $154,000 from the sale of the
remaining portion of its South African affiliate investment and in fiscal 2003
the Company received $1,877,000 from the sale of a significant portion of its
South African affiliate investment. The Company provided net fundings and
investments in its joint ventures of $51,000 in fiscal 2004 and $323,000 in
fiscal 2003. Further, the Company received $206,000 and $21,000 in dividend
distributions, primarily from its Australian affiliate, during fiscal 2004 and
2003, respectively. The remaining investing activities of $340,000 in fiscal
2005, $347,000 in fiscal 2004 and $406,000 in fiscal 2003 were for the purchase
of property and equipment primarily for its manufacturing operations.

Net cash provided by (used in) financing activities consisted of net proceeds
from issuance of convertible debt of $2,250,000 in fiscal 2004 and net
repayments of bank borrowings of $63,000 in fiscal 2005 as compared with
$1,868,000 in fiscal 2004 and $1,719,000 in fiscal 2003. The remaining cash
provided by financing activities of $492,000 in fiscal 2005, $148,000 in fiscal
2004 and $60,000 in fiscal 2003 were from the issuance of stock upon the
exercise of common stock options and warrants.

Commitments:
At September 30, 2005, future minimum payments under non-cancelable leases and
principal payments to be made for long-term debt maturing over the next five
years are as follows in ($000):

                                     Operating Lease       Debt Repayments
                                    ------------------   -------------------
Fiscal year ended September 30:
   2006                             $             384    $               41
   2007                                            61                    45
   2008                                            41                    31
                                    ------------------   -------------------
                                    $             486    $              117
                                    ==================   ===================

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, 2005, purchase order commitments approximated
$6.0 million and will be used for production requirements during fiscal 2006 and
beyond.

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

This management discussion and analysis is based on our consolidated financial
statements which are prepared using certain critical accounting policies that
require management to make judgments and estimates that are subject to varying
degrees of uncertainty. While we believe that these accounting policies, and


                                       24
<PAGE>

management's judgments and estimates, are reasonable, actual future events can
and often do result in outcomes that can be materially different from
management's current judgments and estimates. We believe that the accounting
policies and related matters described in the paragraphs below are those that
depend most heavily on management's judgments and estimates.

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

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

Revenue Recognition:
The Company recognizes revenue upon shipment of products to its customers and
the passage of title, including shipments to its unconsolidated affiliates, or
at the time services are completed with respect to repairs not covered by
warranty agreements. 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 in the case of its Argus, Aurora, SA-4, and Advantage
products, from the date of initial purchase. The warranty does not cover any
losses or damages that occur as a result of improper installation, misuse or
neglect and repair or modification by anyone other than the Company and its
appointed service centers. Repair costs beyond the warranty period are charged
to the Company's customers.

                                       25
<PAGE>

Reserve for Uncollectible Accounts Receivable:
At September 30, 2005, our accounts receivable balance was $3.3 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. Effective February, 2005, when the Company
exchanged its 25% interest in Abacus-UK for a 12.5% interest in Evolve-UK, it
accounted for this investment on a cost basis. For investments in which no
public market exists, the Company reviews the operating performance, financing
and forecasts for such entities in assessing the net realizable values of these
investments. Since April 2003, when the Company sold a significant portion of
its investment in its South African affiliates which reduced its ownership in
GPTHL from 24.2% to 5%, the Company accounted for its remaining investment on a
cost basis. Effective January 15, 2004, the Company sold its remaining interest
in this affiliate.

Long-Lived Assets:
The Company accounts for long-lived assets in accordance with the provisions of
SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.
This Statement requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to future net cash
flows expected to be generated by the asset. If the carrying amount of an asset
exceeds its estimated future cash flows, an impairment charge is recognized by
the amount by which the carrying amount of the asset exceeds the fair value of
the asset. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell, and are no longer depreciated. The
Company adopted SFAS No. 144 on October 1, 2002. The adoption of SFAS No. 144
did not affect the Company's financial statements. 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, 2005.

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


                                       26
<PAGE>

profitability, and the Company has, consequently, provided a full valuation
allowance against its deferred income tax assets due to the impact of the fiscal
2005, 2004 and 2003 losses and uncertainty as to the ability to generate future
taxable income to sufficiently realize those assets. To the extent the Company's
profitability improves, the valuation allowance may be wholly or partially
reversed. At such time that the Company believes that it will realize sufficient
taxable income, the valuation allowance will be reassessed.

Debt Discounts:
Pursuant to the Securities Purchase Agreement with Laurus the Company received
proceeds of $1,500,000 from the issuance of the CTN in the principal amount of
$1,500,000 and 7 year warrants to purchase 200,000 shares of the Company's
common stock. The value allocated to the warrants resulted in a debt discount of
$506,000 that was being recognized as interest expense over the term of the CTN.
Additionally, by allocating value to the warrants, Laurus received a beneficial
conversion feature in the amount of $304,000 that resulted in additional debt
discount that was being recognized as interest expense over the term of the CTN.
Interest expense was computed utilizing the interest method, which results in an
effective yield over the term of the CTN. As the CTN was converted, the
unamortized discount related to the amount converted was immediately recognized
as interest expense and charged to operations. At September 30, 2004, $1,425,000
was outstanding under the CTN. During the year ended September 30, 2005, the
Company repaid $50,000 and Laurus converted the remaining $1,375,000 of the CTN
into 323,000 shares of common stock, resulting in the full repayment of the CTN.
As a result of the conversion of the balance of the CTN, the entire amount of
debt discount has been recognized as interest expense and charged to operations.

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 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. Under the intrinsic value method, no compensation
expense is recognized if the exercise price of the Company's employee stock
options equals the market price of the underlying stock on the date of the
grant. Accordingly, no compensation cost has been recognized on options granted
to employees. SFAS No. 123 requires that the Company provide pro forma
information regarding net earnings and net earnings per common share as if
compensation cost for the Company's stock option plans had been determined in
accordance with the fair value method prescribed therein. The Company adopted
the disclosure portion of SFAS No. 148, Accounting for Stock-Based Compensation
- Transition and Disclosure, requiring quarterly SFAS No. 123 pro forma
disclosure. The Financial Accounting Standards Board recently issued SFAS No.
123 (revised 2004), Share-Based Payment ("SFAS No. 123R"), which requires a
public entity to measure the cost of employee services received in exchange for
an award of equity instruments based on the grant-date fair value of the award.
The Company will adopt SFAS No. 123R in the first quarter of fiscal 2006.

                                       27
<PAGE>

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

Fiscal 2005 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 $2.5 million credit facility consisting of a secured revolving
note of $1.75 million and a secured convertible minimum borrowing note of
$750,000 with borrowings subject to interest at the bank's prime rate plus 150
basis points. As such, the interest rate is variable and the interest expense on
potential borrowings is based upon the types of loans and applicable interest
rates at the time of borrowing. In the event the Company had its entire
revolving credit facility, $2.5 million at September 30, 2005, outstanding for
the entire year, each 100 basis point increase would result in an annual
increase in interest expense of approximately $25,000.

The Company has investments in privately held unconsolidated foreign companies
for the purposes of conducting its business overseas and attaining its strategic
objectives. These investments had a net carrying value of $2.2 million and $1.8
million at September 30, 2005 and 2004, respectively. These investments are
included in Investments in Unconsolidated Affiliates and are accounted for using
the equity method. For investments in which no public market exists, our policy
is to regularly review the operating performance, recent financing transactions
and forecasts for such companies in assessing the net realizable values of the
investments in these companies. Impairment losses on equity investments are
recorded when events and circumstances indicate that such assets are impaired
and the decline in value is other than temporary.


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

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


                                       28
<PAGE>

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

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

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

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

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

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

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

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

None.


                                       29
<PAGE>

                                    PART III

Item 10.         Directors and Executive Officers of the Registrant
--------         --------------------------------------------------

a)       Directors and Executive Officers

The following table sets forth certain information with respect to our directors
and executive officers.

Name                Age      Positions with the Company
----                ---      --------------------------

Richard E. Gerzof   60       Director, Chairman of the Board (1) (2) (3)
Edward Seidenberg   48       Director, Chairman of the Audit and
                             Compensation Committees (1) (2)
William H. Wood     63       Director, Chairman of the Nominating Committee (3)
Stephen Nevitt      57       President/Chief Executive Officer, Director (2) (3)
Thomas Oliveri      46       Executive Vice President and Chief Operating
                             Officer, Director
Thomas McNeill      43       Vice President, Chief Financial Officer and
                             Secretary

(1)      Member of the Audit Committee
(2)      Member of the Compensation Committee
(3)      Member of the Nominating Committee

         Richard E. Gerzof has been Chairman of the Board of Directors since
March 2004, Vice Chairman of the Board of Directors from May 2003 to March 2004,
and a director of the Company since its inception in 1988. Mr. Gerzof has been a
partner of Sun Harbor Manor, a nursing home, since 1974. He has also been a
licensed real estate broker since 1982 and was a partner or principal in Sonom
Realty Co., a property management and construction firm, from 1974 through 1992.
He has also been a partner in the Frank's Steaks Restaurant chain since 1993.

         Edward Seidenberg has been a director of the Company since April 2003,
Chairman of the Audit Committee from April 2003 to January 2004 and since
January 2005, and Chairman of the Compensation Committee since January 2004.
Since November 2000, Mr. Seidenberg has been Chief Operating Officer of
InfoHighway Communications Corporation. He was previously President of the
Company from March 1998 to November 2000, was Chief Operating Officer of the
Company from March 1997 to November 2000, and a director of the Company from
August 1996 to November 2000. From August 1996 to March 1998 he served as Vice
President of the Company. From October 1995 to July 1996 he was Vice President
and Chief Financial Officer of MCI Wireless, the country's largest
non-facilities provider of cellular telephone service, and from March 1990 to
September 1995 he was Vice President and Chief Financial Officer of Nationwide
Cellular Service, Inc. Mr. Seidenberg received his BS in Accounting from State
University of New York at Buffalo and his MBA in Finance from Emory University.

                                       30
<PAGE>

         William H. Wood has been a director of the Company since August 2004
and Chairman of the Nominating Committee since January 2005. He was President of
the Company from January 1993 to March 1998 and served as Chief Executive
Officer of the Company from April 1993 to May 1996. He was a director of the
Company from May 1993 to March 1999. From April 1999 to July 2004 he was self
employed in various consulting and sales assignments in the beverage and vending
industries, and was engaged in community activities and private investments.
From January 1990 until January 1993 he held various executive positions at
Maytag Corp./Dixie Narco Division, including Director of Product Development
(January 1990 to June 1990), Vice President, Engineering and Technical Resources
(July 1990 to April 1992), and Vice President, Gaming and OEM Business (May 1992
to January 1993). From July 1990 to January 1993 he was also a corporate officer
of Maytag Corp., with responsibilities in its Dixie Narco Division.

         Stephen Nevitt has been President and Chief Executive Officer of the
Company since November 2005 and a director of the Company since January 2005.
Since September 2003, he has been a partner in Solar Crossings LLC, an
international marketing and sales agency that is consulting on the commercial
launch of new sunglass technologies. From August 2000 through August 2003, Mr.
Nevitt was a consultant to Bushnell Performance Optics, a leading global
distributor of sunglasses, binoculars and range finders. From November 1976 to
August 1995 Mr. Nevitt worked in a family sunglass business. In 1995 his company
successfully completed an initial public offering trading under the name
Solar-Mates, Inc. In 1997 the company acquired the Serengeti Eyewear division
from Corning Inc. The company, now known as Serengeti Eyewear, Inc., was
purchased by strategic buyers in August 2000. Mr. Nevitt served as President/CEO
of the company from October 1992 to August 2000.

         Thomas Oliveri has been Executive Vice President and Chief Operating
Officer of the Company since November 2005, he was President and Chief Executive
Officer of the Company from January 2004 to November 2005 and a director since
December 2003. From May 2003 to January 2004 he was President and Chief
Operating Officer. He was Vice President, Chief Operating Officer of the Company
from November 2000 to May 2003 and was Vice President, Operations from March
1999 to October 2000. He was Director of Operations of the Company from January
1999 to February 1999. From May 1998 to November 1998 he served as Director of
Operations for Bennett X-Ray. From December 1995 to May 1998, he served as plant
manager and then as general manager of the Cybex division of Lumex, Inc., a
manufacturer of fitness and rehabilitation equipment. From May 1993 to November
1995 he served as manager of technical services and then as general manager
within the Lumex division of Lumex, Inc., a manufacturer and provider of health
care products. From 1988 to May 1993 he served as general manager for Ragen Data
Systems, a manufacturer of fuel gauging systems.

         Thomas McNeill has been Secretary of the Company since March 1997 and
Vice President and Chief Financial Officer of the Company since September 1997.
From October 1996 to September 1997 he served as Controller of the Company. From
March 1995 through October 1996 Mr. McNeill was Director of Finance for Bellco
Drug Corp., a pharmaceutical distribution company. From January 1991 through
August 1992 he was Controller and from August 1992 to May 1994 he was Vice


                                       31
<PAGE>

President of Operations for the Marx & Newman Co. division of the United States
Shoe Corporation, a manufacturer and distributor of women's footwear. Mr.
McNeill is a Certified Public Accountant.

b)       Audit Committee

The Audit Committee has been established in accordance with Section 3(a)(58)(A)
of the Securities Exchange Act of 1934, as amended. The Committee provides
assistance to the Company's directors in fulfilling the Board's oversight
responsibility as to the Company's accounting, auditing, and financial reporting
practices and as to the quality and integrity of the financial reports of the
Company. The specific functions and responsibilities of the Audit Committee are
set forth in the written charter of the Audit Committee adopted by the Board of
Directors. The Audit Committee is made up of Mr. Seidenberg, its financial
expert and Mr. Gerzof. Effective November 8, 2005, the Company no longer
complies with NASDAQ's audit committee requirements as it has only two
independent members presently remaining on such Committee. NASDAQ Marketplace
Rule 4350(d)(4) permits the Company to become compliant by the earlier of the
Company's next annual shareholders' meeting or November 8, 2006. The Company
intends to add an additional independent director who would also be added to the
Audit Committee.

c)       Code of Ethics

The Company has adopted a code of ethics that applies to its directors, officers
and employees. The Company filed a copy of its code of ethics as Exhibit 14 to
its annual report on Form 10-K for the fiscal year ended September 30, 2004. The
Company intends to report amendments to or waivers from the Company's code of
ethics that are required to be reported pursuant to the rules of the Securities
and Exchange Commission on Form 8-K.

d)       Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's Common Stock, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
Common Stock of the Company. To the Company's knowledge, based solely on a
review of such reports furnished to the Company with respect to its most recent
fiscal year, the Company believes that during or with respect to the fiscal year
ended September 30, 2005 all reports under Section 16 (a) have been timely
filed.


                                       32
<PAGE>

Item 11.         Executive Compensation
--------         ----------------------

a)       Summary Compensation Table

The following table summarizes the compensation earned for the last three fiscal
years by the Company's Chief Executive Officer and all other executive officers
whose salary and bonus exceeded $100,000 for the 2005 fiscal year (the "Named
Executive Officers"), for services in all capacities to the Company during its
2005, 2004 and 2003 fiscal years.
<TABLE>
<CAPTION>
                                                                                                        Long-Term
                                                                 Annual Compensation                  Compensation
                                                                 -------------------                  ------------
                                                                                                        Securities
           Name and Principal                                                                           Underlying
               Position                       Year              Salary              Bonus                 Options
               --------                       ----              ------              -----                 -------
<S>            <C>                            <C>                <C>                 <C>                   <C>
Thomas Oliveri (1)..................          2005               $231,000            $15,000               15,000
         President and Chief Executive        2004                200,000                ---              100,000
         Officer                              2003                184,000                ---                  ---

Thomas McNeill......................          2005                171,000              4,000                  ---
         Vice President, Chief                2004                161,000             10,000               25,000
         Financial Officer                    2003                158,000                ---                  ---
</TABLE>

(1)  Effective November 2005, Mr. Nevitt replaced Mr. Oliveri as President and
     Chief Executive Officer and Mr. Oliveri assumed the positions of Executive
     Vice President and Chief Operating Officer.

b)       Option Grants in Last Fiscal Year (Individual Grants)

<TABLE>
<CAPTION>

                                                                                                Potential Realizable Value at
                                                                                                Assumed Annual Rates of Stock
                                                % of Total Options                               Price Appreciation for
                           Number of Securities     Granted to         Exercise                            Option
                            Underlying Options     Employees in          Price       Expiration             Term
            Name                  Granted           Fiscal Year        ($/Share)        Date       At 5%    ----      At 10%
            ----                  -------           -----------        ---------        ----       -----              ------
<S>                              <C>                  <C>                <C>          <C> <C>      <C>               <C>
   Thomas Oliveri........        15,000(1)            31.6%              $6.86        3/9/2012     $42,000           $98,000
   Thomas McNeill........           ---                ---                 ---             ---         ---               ---
</TABLE>

(1)  These options were awarded at the fair market value of the Company's Common
     Stock at March 10, 2005, the date of the award, and become exercisable in
     cumulative annual installments of 25% per year on each of the first four
     anniversaries of the grant date. The options were awarded for services as
     an executive officer.

No SARS were granted in the last fiscal year.

                                       33
<PAGE>


c)       Aggregated Option Exercises and Fiscal Year End Option Values

<TABLE>
<CAPTION>

                                                                 Number of Securities
                                                               Underlying Unexercised         Value of Unexercised
                                    Shares                          Options at                In-the-Money Options
                                   Acquired on                  September 30, 2005            September 30, 2005(1)
                                    Exercise      Value         ------------------            ------------------------
             Name                    (#)       Realized($)   Exercisable/Unexercisable       Exercisable/Unexercisable
             ----                    ---       -----------   -------------------------       -------------------------
<S>                                                              <C>                           <C>
Thomas Oliveri...................    ---              ---        206,500           --          $16,500             ---
Thomas McNeill...................    ---              ---        112,500          ---          $13,200             ---
</TABLE>

(1)  The closing price of the Company's Common Stock as reported on the Nasdaq
     National Market on September 30, 2005 was $3.60 per share. Value is
     calculated by multiplying (a) the difference between the closing price and
     the option exercise price by (b) the number of shares of Common Stock
     underlying the option.

No SARS were exercised during the last fiscal year or were outstanding at fiscal
year end.

d)       Compensation of Directors

The following chart summarizes the stock options granted and cash compensation
paid to directors for services rendered as directors during the 2005 fiscal
year:

                           Options          Cash
                           Granted          Compensation
                           -------          ------------
Richard E. Gerzof          23,500                    $0
William H. Wood             3,500                18,700
Stephen Nevitt             21,500                     0
Stuart Levy                     0                 5,600
Edward Seidenberg           3,500                23,500
                            -----                ------
         Total             52,000               $47,800
                           ======               =======


Effective January 1, 2004, compensation for non-employee directors is as
follows:

Annual Board retainer                         $12,000
Annual Audit Committee Chairman fee             4,000
Annual Compensation Committee Chairman fee      1,000
Board meeting fee                               1,000
Committee meeting fee                             500

Each non-employee director may elect to receive stock options in lieu of cash
compensation.
Employee directors do not receive director fees.

                                       34
<PAGE>


e)       Employment Agreements

Effective November 7, 2005 the Company entered into an agreement with Stephen
Nevitt providing for his employment as President and Chief Executive Officer for
a one-year term with automatic extensions for additional one-year terms unless
and until either the Company or Mr. Nevitt provides 90 days advance written
notice of a desire to terminate the agreement. The agreement provides for a
salary at a rate of $225,000 per year and bonuses and stock options as
determined by the Board of Directors. The agreement grants Mr. Nevitt options to
purchase 250,000 shares of the common stock of the Company at $2.85 per share,
the fair market value as of the date of the agreement, which options vest at the
rate of 83,333 options on the first anniversary of the date of the agreement and
a like amount on each of the second and third anniversaries and options to
purchase an additional 250,000 shares, subject to approval by the shareholders
of the Company at its next meeting of stockholders. If such additional options
are approved, the exercise price would be the fair market value at the date of
the approval and would otherwise be identical to the options previously granted.
The agreement also provides for participation in employee benefit plans and
other fringe benefits. If terminated under a change of control event in the
first six months, he would be entitled to $25,000 or if terminated under a
change of control event in the second six month period, he would be entitled to
$50,000.

Effective April 5, 2004 the Company entered into an agreement with Thomas
Oliveri providing for his employment as President and Chief Executive Officer.
On November 7, 2005, Mr. Oliveri's position changed to Executive Vice President
and Chief Operating Officer and on December 14, 2005 an amendment to his
agreement was executed providing for a salary of $200,000 and bonuses and stock
options as determined by the Board of Directors. The agreement also provides for
participation in employee benefit plans and other fringe benefits. The term of
the contract expires on November 7, 2006. If terminated under a change of
control event, he would be entitled to earn up to 1.5 times the salary rate of
$255,000. There were no other changes to his employment agreement.

Effective May 1, 2004 the Company entered into an agreement with Thomas McNeill
providing for his employment as Vice President and Chief Financial Officer for a
one-year term, with automatic extensions for additional one-year terms unless
and until either the Company or Mr. McNeill provides 180 days advance written
notice of a desire to terminate the agreement. The current agreement provides
for a salary at a rate of $176,000 per year and bonuses and stock options as
determined by the Board of Directors. The agreement also provides for
participation in employee benefit plans and other fringe benefits. If terminated
under a change of control event, he would be entitled to earn up to 1.00 times
his salary.


                                       35
<PAGE>

Item 12.         Security Ownership of Certain Beneficial Owners and Management
--------         --------------------------------------------------------------
                 and Related Stockholder Matters
                 -------------------------------


a)       Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of November 30, 2005, certain information as
to the Common Stock ownership of each of the Company's directors, each of the
officers included in the Summary Compensation Table above, all executive
officers and directors as a group and all persons known by the Company to be the
beneficial owners of more than five percent of the Company's Common Stock.
Unless otherwise noted, the Company believes that each person named in the table
below has sole voting and investment power with respect to all shares of Common
Stock beneficially owned by such person.
<TABLE>
<CAPTION>

                                                               Amount and Nature
                                                                 Of Beneficial                  Percentage of
                  Name and Address                                Ownership                Outstanding Shares Owned
                  ----------------                                ---------                ------------------------

<S>                                                                <C>                               <C>
Richard E. Gerzof.................................                 484,100(1)                        7.7%
   873 Remsens Lane
   Upper Brookville, NY  11771

William H. Wood...................................                 300,152(2)                        4.8%
   122 Burchwood Bay Cove
   Hot Springs, AK 71913

Thomas Oliveri....................................                 206,500(3)                        3.2%
   c/o Global Payment Technologies, Inc.
   425B Oser Avenue
   Hauppauge, NY 11788

Thomas McNeill....................................                 115,500(4)                        1.8%
   c/o Global Payment Technologies, Inc.
   425B Oser Avenue
   Hauppauge, NY 11788

Edward Seidenberg.................................                  28,500(5)                         *
   c/o Global Payment Technologies, Inc.
   425B Oser Avenue
   Hauppauge, NY 11788
</TABLE>

                                       36
<PAGE>

<TABLE>
<CAPTION>

                                                               Amount and Nature
                                                                 Of Beneficial                  Percentage of
                  Name and Address                                Ownership                Outstanding Shares Owned
                  ----------------                                ---------                ------------------------

<S>                                                                <C>                               <C>

Stephen Nevitt....................................                  21,500(6)                         *
   c/o Global Payment Technologies, Inc.
   425B Oser Avenue
   Hauppauge, NY 11788

All directors and executive officers as a group
(6 persons).......................................               1,156,252(7)                       17.3%
</TABLE>

--------------
*  Less than 1%

(1)  Includes 108,500 shares issuable upon exercise of currently exercisable
     options.
(2)  Includes 6,500 shares issuable upon exercise of currently exercisable
     options.
(3)  Consists of 206,500 shares issuable upon exercise of currently exercisable
     options.
(4)  Includes 115,500 shares issuable upon exercise of currently exercisable
     options.
(5)  Includes 13,500 shares issuable upon exercise of currently exercisable
     options.
(6)  Consists of 21,500 shares issuable upon exercise of currently exercisable
     options.
(7)  Includes 469,000 shares issuable upon exercise of currently exercisable
     options.

b)       Equity Compensation Plan Information

         The table below sets forth certain information as of the Company's
fiscal year ended September 30, 2005 regarding the shares of the Company's
common stock available for grant or granted under stock option plans that (i)
were adopted by the Company's stockholders and (ii) were not adopted by the
Company's stockholders.
<TABLE>
<CAPTION>

                                                                                      Number of securities remaining
                                Number of securities to be      Weighted-average      available for future issuance
                                 issued upon exercise of        exercise price of        under equity compensation
                              outstanding options, warrants    outstanding options,   plans (excluding securities in
                                       and rights              warrants and rights    the first column of this table)
                                       ----------              -------------------    -------------------------------
<S>                                       <C>                           <C>                      <C>
Equity Compensation plans                 859,999                       $4.65                    274,942
approved by security
holders

Equity Compensation plans              Not Applicable           Not Applicable                Not Applicable
not approved by security
holders
</TABLE>

                                       37
<PAGE>

Item 13.         Certain Relationships and Related Transactions
--------         ----------------------------------------------

None.

Item 14.         Principal Accountant Fees and Services
--------         --------------------------------------

a)       Independent Auditors

Eisner LLP has audited and reported upon the financial statements of the Company
for the fiscal years ended September 30, 2005 and 2004. For the fiscal years
ended September 30, 2005 and 2004, the Company paid (or will pay) the following
fees for services rendered during the audit in respect of those years:

b)       Audit Fees

For the fiscal years ended September 30, 2005 and 2004 Eisner LLP billed the
Company $113,000 and $96,000, respectively for services rendered for the audit
of the Company's annual financial statements included in its report on Form 10-K
and the reviews of the financial statements included in its reports on Form 10-Q
filed with the SEC.

c) Audit Related Fees

None.

d) Tax Fees

For the fiscal years ended September 30, 2005 and 2004 the Company was billed
$15,000 and $25,000, respectively, by Eisner LLP in connection with the
preparation of tax returns and the provision of tax advice.

e)       All Other Fees

For the fiscal years ended September 30, 2005 and 2004 Eisner LLP billed the
Company $13,000 and $13,000, respectively, in connection with the audit of its
employee benefit plans.

f)       Pre-Approval Policies and Procedures

The Audit Committee pre-approves all work performed by the Company's auditors.
The Audit Committee of the Board of Directors has considered whether the
provision of non-audit services by both Eisner LLP and KPMG LLP is compatible
with maintaining auditor independence.

g)       Prior Accountants

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

KPMG had served as the Company's independent public accountants since July 26,
2002. KPMG's report on the Company's consolidated financial statements for the


                                       38
<PAGE>

fiscal years ended September 30, 2003 and 2002 did not contain an adverse
opinion or disclaimer of opinion, nor was such report qualified or modified as
to uncertainty, audit scope or accounting principles.

During the fiscal year ended September 30, 2003, and the interim period ended
March 10, 2004, there were no disagreements between the Company and KPMG on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure which, if not resolved to KPMG's satisfaction, would
have caused it to make reference to the subject matter in connection with its
report on the Company's consolidated financial statements for such year; and
there were no reportable events as defined in Item 304(a)(1)(v) of Regulation
S-K.

During the fiscal year ended September 30, 2003, and the interim period ended
March 10, 2004, the Company did not consult Eisner with respect to either (i)
the application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Company's consolidated financial statements, or (ii) any matter that was
either the subject of a disagreement, within the meaning of Item 304(a)(1)(iv)
of Regulation S-K, or any "reportable event," as that term is defined in Item
304(a)(1)(v) of Regulation S-K.


                                     PART IV


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

The following documents are filed as part of this report:

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

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

          Consolidated Balance Sheets as of September 30, 2005 and 2004
          (page F-3)

          Consolidated Statements of Operations for each of the years in
          the three-year period ended September 30, 2005 (page F-4)

          Consolidated Statements of Shareholders' Equity and
          Comprehensive Loss for each of the years in the three-year
          period ended September 30, 2005 (page F-5)

          Consolidated Statements of Cash Flows for each of the years in
          the three-year period ended September 30, 2005 (page F-6)

          Notes to Consolidated Financial Statements (pages F-7 - F-24)

     2.   Global Payment Technologies Australia Pty Limited Financial
          Statements:

          Reports of Independent Registered Public Accounting Firms
          (pages F-25 to F-26)

          Balance Sheets as of June 30, 2005 and 2004 (page F-27)

                                       39
<PAGE>

          Statements of Income for each of the years in the three-year
          period ended June 30, 2005 (page F-28)

          Statements of Stockholders' Equity for each of the years in the
          three-year period ended June 30, 2005 (page F-29)

          Statements of Cash Flows for each of the years in the three-year
          period ended June 30, 2005 (page F-30)

          Notes to Financial Statements (pages F-31 to F-36)


     3.   Financial statement schedules required to be filed by Item 8
          of this Form: Schedule II - Valuation and Qualifying Accounts
          (page S-1)

     4.    Exhibits:

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

3.1       Certificate of Incorporation (2)
3.2       Certificate of Merger (2)
3.3       By-Laws (2)
4.1       Securities Purchase Agreement dated March 16, 2004 by and between the
          registrant and Laurus (5)
4.2       Common Stock Purchase Warrant dated March 16, 2004 issued to
          Laurus (5)
4.3       Registration Rights Agreement dated March 16, 2004 by and between the
          registrant and Laurus (5)
4.4       Security Agreement dated March 16, 2004 by and between the registrant
          and Laurus (5)
4.5       Security Agreement dated March 16, 2004 by and between the registrant
          and Laurus (5)
4.6       Secured Convertible Minimum Borrowing Note dated March 16, 2004 issued
          to Laurus (5)
4.7       Secured Revolving Note dated March 16, 2004 issued to Laurus (5)
4.8       Registration Rights Agreement dated March 16, 2004 by and between the
          registrant and Laurus (5)
4.9       Amendment No. 1, dated April 29, 2004, to Securities Purchase
          Agreement (6)
4.10      Amendment No. 1, dated April 29, 2004, to Common Stock Purchase
          Warrant (6)
4.11      Amendment No. 1, dated April 29, 2004, to Secured Convertible Minimum
          Borrowing Note (6)
4.12      Amendment No. 1, dated April 29, 2004, to Secured Revolving Note (6)
4.13      Amendment No.2, dated August 9, 2004 to Secured Convertible Minimum
          Borrowing Note (7)
4.14      Amendment No.2, dated August 9, 2004 to Secured Revolving Note (7)
10.1      Lease dated October 1, 2000 between the Company and Heartland
          Associates (4)
10.2      1994 Stock Option Plan (1)*
10.3      1996 Stock Option Plan (1)*
10.4      2000 Stock Option Plan (3)*

                                       40
<PAGE>

10.5      Employment Agreement dated May 1, 2004 between the Company and Thomas
          McNeill (6)*
10.6      Employment Agreement dated April 5, 2004 between the Company and
          Thomas Oliveri (6)*
10.7      Employment Agreement dated November 7, 2005 between the Company and
          Stephen Nevitt (9)*
10.8      Amendment dated December 14, 2005 to Employment Agreement between the
          Company and Thomas Oliveri (9)*
14        Code of Ethics (8)
21        List of Subsidiaries (9)
23.1      Consent of Eisner LLP, Independent Registered Public Accounting
          Firm (9)
23.2      Consent of Pitcher Partners, Independent Registered Public Accounting
          Firm (9)
23.3      Consent of KPMG LLP, Independent Registered Public Accounting Firm (9)
23.4      Consent of KPMG, Independent Registered Public Accounting Firm (9)
31.1      Rule13a-14a Certification (Chief Executive Officer) (9)
31.2      Rule13a-14a Certification (Chief Financial Officer) (9)
32        Section 1350 Certification (9)

          ----------------------------------------------------------------------
(1)       Filed as an exhibit to the Company's Registration Statement on
          Form S-8 (File #333-30829).
(2)       Filed as an exhibit to the Company's Annual Report on Form
          10-KSB for the fiscal year ended September 30, 1997.
(3)       Filed as an exhibit to the Company's Proxy Statement for the fiscal
          year ended September 30, 1999.
(4)       Filed as an exhibit to the Company's Annual Report on Form 10-K for
          the fiscal year ended September 30, 2000.
(5)       Filed as an exhibit to the Company's Current Report on Form 8-K dated
          March 16, 2004, filed with the SEC on March 18, 2004.
(6)       Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for
          the fiscal quarter ended March 31, 2004.
(7)       Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for
          the fiscal quarter ended June 30, 2004.
(8)       Filed as an exhibit to the Company's Annual Report on Form 10-K for
          the fiscal year ended September 30, 2004.
(9)       Filed herewith.
*         Management contract or compensatory plan or arrangement


                                       41
<PAGE>

                                   SIGNATURES

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

                                   Global Payment Technologies, Inc.

                                   By: s/Stephen Nevitt
                                       -----------------------------------------
                                       Stephen Nevitt
                                       President and Chief Executive Officer
Date:  December 16, 2005

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

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



<S>                                         <C>                                  <C>
s/Stephen Nevitt                            President, Chief Executive Officer   December 16, 2005
------------------------------------        and Director
Stephen Nevitt

s/Thomas Oliveri                            Executive Vice President, Chief      December 16, 2005
------------------------------------        Operating Officer, and Director
Thomas Oliveri

s/Richard Gerzof                            Director, Chairman of the Board      December 16, 2005
------------------------------------
Richard Gerzof

s/Edward Seidenberg                         Director                             December 16, 2005
------------------------------------
Edward Seidenberg

s/William H. Wood                           Director                             December 16, 2005
------------------------------------
William H. Wood

s/Thomas McNeill                            Vice President, Chief Financial      December 16, 2005
------------------------------------        Officer and Principal Accounting
Thomas McNeill                              Officer

</TABLE>

                                       42
<PAGE>

                        GLOBAL PAYMENT TECHNOLOGIES, INC.

                   Index to Consolidated Financial Statements
<TABLE>
<CAPTION>

                                                                                                                Page
Consolidated Financial Statements of Global Payment Technologies, Inc.:

<S>                                                                                                           <C>    <C>
Reports of Independent Registered Public Accounting Firms                                                   F-1 to F-2

   Consolidated Balance Sheets as of September 30, 2005 and 2004                                                   F-3

   Consolidated Statements of Operations for each of the years in the three-year period ended
     September 30, 2005                                                                                            F-4

   Consolidated Statements of Shareholders' Equity and Comprehensive Loss for each of the
     years in the three-year period ended September 30, 2005                                                       F-5

   Consolidated Statements of Cash Flows for each of the years in the three-year period ended
     September 30, 2005                                                                                            F-6

   Notes to Consolidated Financial Statements                                                              F-7 to F-24

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

Reports of Independent Registered Public Accounting Firms                                                 F-25 to F-26

   Balance Sheets as of June 30, 2005 and 2004                                                                    F-27

   Statements of Operations for each of the years in the three-year period ended
     June 30, 2005                                                                                                F-28

   Statements of Stockholders' Equity for each of the years in the three-year period
     ended June 30, 2005                                                                                          F-29

   Statements of Cash Flows for each of the years in the three-year period ended
     June 30, 2005                                                                                                F-30

   Notes to Financial Statements                                                                          F-31 to F-36


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

   Schedule II - Valuation and Qualifying Accounts and Reserves                                                    S-1
</TABLE>

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



<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



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

We have audited the accompanying consolidated balance sheets of Global Payment
Technologies, Inc. and subsidiaries as of September 30, 2005 and 2004, and the
related consolidated statements of operations, shareholders' equity and
comprehensive loss and cash flows for the years then ended. Our audits also
included financial statement Schedule II, listed in the accompanying index as it
relates to such years. These financial statements and financial statement
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits. We did not audit the financial statements of Global Payment Technologies
Australia Pty Limited (GPTA) and eCash Holdings Pty Limited (eCash), 50% and
35%, respectively, owned investee companies. The Company's investment in GPTA
and eCash was $2,198,000 and $21,000, respectively, at September 30, 2005 and
$1,746,000 and $65,000, respectively, at September 30, 2004, and its equity in
earnings (loss) of GPTA and eCash was $253,000 and ($50,000), respectively, for
the year ended September 30, 2005 and $172,000 and ($64,000), respectively, for
the year ended September 30, 2004. The financial statements of GPTA and eCash
were audited by other auditors whose reports have been furnished to us, and our
opinion, insofar as it relates to the amounts included for GPTA and eCash, is
based solely on the reports of the other auditors.

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

In our opinion, based on our audits and the reports of the other auditors, the
financial statements referred to above present fairly, in all material respects,
the consolidated financial position of Global Payment Technologies, Inc. and
subsidiaries as of September 30, 2005 and 2004, and the consolidated results of
their operations and their cash flows for the years then ended, in conformity
with U.S. generally accepted accounting principles. Also, in our opinion, the
financial statement Schedule II as it relates to the years ended September 30,
2005 and 2004, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.

Eisner LLP



New York, New York

November 4, 2005

                                      F-1
<PAGE>



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



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

We have audited the accompanying consolidated statements of operations,
shareholders' equity and comprehensive loss and cash flows of Global Payment
Technologies, Inc., and subsidiaries (the Company) for the year ended September
30, 2003. In connection with our audit, we also audited the 2003 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 audit.

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

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

                                               KPMG LLP

Melville, New York
December 29, 2003

                                      F-2
<PAGE>

                        GLOBAL PAYMENT TECHNOLOGIES, INC.

                           Consolidated Balance Sheets

                           September 30, 2005 and 2004

                (Dollar amounts in thousands, except share data)
<TABLE>
<CAPTION>

                             Assets                                      2005      2004
                                                                        -------   -------
Current assets:
<S>                                                                    <C>       <C>
  Cash and cash equivalents                                            $ 3,108   $ 3,453
  Accounts receivable, less allowance for doubtful accounts
   of $152 and $250, respectively                                        1,386       385
  Accounts receivable from affiliates                                    1,881     3,780
  Inventory, net                                                         5,109     2,573
  Prepaid expenses and other current assets                                265       404
  Income taxes receivable                                                   25       115
                                                                       -------   -------
      Total current assets                                              11,774    10,710
Investments in unconsolidated affiliates                                 2,219     1,811
Property and equipment, net                                              1,688     2,134
Capitalized software costs, net                                          1,033     1,612
                                                                       -------   -------
      Total assets                                                     $16,714   $16,267
                                                                       =======   =======
                          Liabilities and Shareholders' Equity

Current liabilities:
  Current portion of long-term debt, net of discount of $167 in 2004   $    38   $   253
  Accounts payable                                                       2,092     2,273
  Accrued expenses and other current liabilities                         1,134     1,280
                                                                       -------   -------
      Total current liabilities                                          3,264     3,806

Long-term debt, net of discount of $401 in 2004                             79     1,354
                                                                       -------   -------

      Total Liabilities                                                  3,343     5,160
                                                                       -------   -------

Commitments (note 11)

Shareholders' equity:
  Common stock, par value $0.01. Authorized 20,000,000 shares;
   issued 6,497,185 and 5,880,750 shares, respectively                      65        59
  Additional paid-in capital                                            13,446    10,800
  Retained earnings                                                        710     1,283
  Accumulated other comprehensive income                                   649       464
                                                                       -------   -------
                                                                        14,870    12,606
Less treasury stock, at cost,  278,984 shares                           (1,499)   (1,499)
                                                                       -------   -------
      Total shareholders' equity                                        13,371    11,107
                                                                       -------   -------
      Total liabilities and shareholders' equity                       $16,714   $16,267
                                                                       =======   =======
See accompanying notes to consolidated financial statements.
</TABLE>

                                      F-3
<PAGE>

                        GLOBAL PAYMENT TECHNOLOGIES, INC.

                      Consolidated Statements of Operations

                 Years ended September 30, 2005, 2004, and 2003

         (Dollar amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>

                                                    2005             2004              2003
                                               ----------------  ---------------  ----------------
Net sales:
<S>                                           <C>               <C>              <C>
  Non-affiliates                              $         15,547  $        15,880  $         12,989
  Affiliates                                            10,339            8,501            13,087
                                               ----------------  ---------------  ----------------
                                                        25,886           24,381            26,076

Cost of sales                                           19,019           19,039            21,949
                                               ----------------  ---------------  ----------------
            Gross profit                                 6,867            5,342             4,127
Operating expenses                                       7,051            6,857             9,758
                                               ----------------  ---------------  ----------------
            Loss from operations                          (184)          (1,515)           (5,631)
                                               ----------------  ---------------  ----------------
Other (expense) income:
  Equity in income of unconsolidated
    affiliates, net                                        203              108               676
  Gain on sale of investment in
    unconsolidated affiliate                                --               78                --
  Interest expense, net                                   (613)            (368)             (248)
                                               ----------------  ---------------  ----------------
            Other (expense) income                        (410)            (182)              428
                                               ----------------  ---------------  ----------------
            Loss before (benefit)
              provision for income taxes                  (594)          (1,697)           (5,203)
(Benefit) provision for income taxes                       (21)              (7)              474
                                               ----------------  ---------------  ----------------
            Net loss                          $           (573) $        (1,690) $         (5,677)
                                               ================  ===============  ================
Net loss per share:
  Basic                                       $          (0.10) $         (0.30) $          (1.02)
  Diluted                                                (0.10)           (0.30)            (1.02)
Common shares used in computing net
  loss per share amounts:
    Basic                                            5,976,467        5,577,825         5,545,015
    Diluted                                          5,976,467        5,577,825         5,545,015

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

                                      F-4
<PAGE>


                        GLOBAL PAYMENT TECHNOLOGIES, INC.

     Consolidated Statements of Shareholders' Equity and Comprehensive Loss

                 Years ended September 30, 2005, 2004, and 2003

                (Dollar amounts in thousands, except share data)
<TABLE>
<CAPTION>


                                       ---------------------                      Accumulated
                                           Common stock       Additional             Other     -------------------
                         Comprehensive ---------------------  paid-in   Retained  Comprehensive  Treasury stock
                             loss        Shares     Amount    capital   earnings    Income        Shares   Amount      Total
                          -----------  ---------- ---------- ---------- --------   ---------    --------- ---------  --------

<S>                  <C> <C>           <C>       <C>        <C>        <C>      <C>           <C>      <C>         <C>
Balance at September
 30, 2002                              5,815,100 $       58 $    9,761 $  8,650 $      56     (278,984)$  (1,499)  $   17,026

 Net loss                $    (5,677)         --         --         --   (5,677)       --           --        --       (5,677)

Cumulative translation
  adjustment of foreign
  investments                    246          --         --         --       --       246           --        --          246
                          -----------

 Comprehensive loss      $    (5,431)         --         --         --       --        --           --        --           --
                          ===========

 Exercise of common stock
  options,including income
  tax benefits of $22                     14,400         --         82       --        --           --        --           82
                                       ---------- ---------- ---------- -------- ---------    --------- --------- ------------
Balance at September
 30, 2003                              5,829,500         58      9,843    2,973       302     (278,984)   (1,499)      11,677

Net loss                $     (1,690)         --         --         --   (1,690)       --           --        --       (1,690)

 Cumulative translation
  adjustment of foreign
  investments                    162          --         --         --       --       162           --        --          162
                          -----------

 Comprehensive loss      $    (1,528)         --         --         --       --        --           --        --           --
                          ===========
 Exercise of common stock
  options, including income
  tax benefits of $0                      51,250          1        147                                                    148

 Common stock warrants issued
  with convertible note                       --         --        506       --        --           --        --          506

 Beneficial conversion feature
  related to convertible note                 --         --        304       --        --           --        --          304
                                       ---------- ---------- ---------- -------- ---------    --------- --------- ------------

Balance at September
 30, 2004                              5,880,750         59     10,800    1,283       464     (278,984)   (1,499)      11,107

 Net loss                $      (573)         --         --         --     (573)       --           --        --         (573)

 Cumulative translation
  adjustment of foreign
  investments                    185          --         --         --       --       185           --        --          185
                          -----------

 Comprehensive loss      $      (388)         --         --         --       --        --           --        --           --
                          ===========

 Fair value of stock
  options issued                              --         --         36       --        --           --        --           36

 Conversion of convertible
  notes                                  498,826          5      2,120       --        --           --        --        2,125

 Exercise of common stock
  options, including income
   tax benefits of $0                    117,609          1        490       --        --           --        --          491
                                       ---------- ---------- ---------- -------- ---------    --------- --------- ------------
Balance at September
 30, 2005                               6,497,185 $       65 $   13,446 $    710 $     649     (278,984)$  (1,499)  $   13,371
                                       ========== ========== ========== ======== =========    ========= ========= ============

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

                                      F-5
<PAGE>

                        GLOBAL PAYMENT TECHNOLOGIES, INC.

                      Consolidated Statements of Cash Flows

                 Years ended September 30, 2005, 2004, and 2003

                          (Dollar amounts in thousands)
<TABLE>
<CAPTION>
                                                                     2005      2004      2003
                                                                   -------   -------   -------
Operating activities:
<S>                                                               <C>       <C>       <C>
 Net loss                                                         $  (573)  $(1,690)  $(5,677)
 Adjustments to reconcile net loss to net cash
   (used in) provided by operating activities:
     Equity in income of unconsolidated affiliates                   (203)     (108)     (676)
     Gain on sale of investment in unconsolidated affiliate            --       (78)       --
     Depreciation and amortization                                  1,592     1,421     1,450
     Provision for losses on accounts receivable                       47       102       127
     Provision for inventory obsolescence                             300       237       847
     Issuance of stock options to a consultant                         36        --        --
     Loss on disposition of assets                                     --        --       379
     Deferred income taxes                                             --        --       858
     Amortization of debt discount                                    568       242        --
     Changes in operating assets and liabilities:
       (Increase) decrease in accounts receivable                  (1,042)    1,744      (920)
       Decrease in accounts receivable from affiliates              1,866       163     1,099
       (Increase) decrease in inventory                            (2,830)      746       955
       Decrease (increase) in prepaid expenses and
         other current assets                                          42      (383)      113
       Decrease in income tax receivable                               90        96       652
       Decrease in other assets                                        --        --        86
       (Decrease) increase in accounts payable                       (181)     (151)      363
       (Decrease) increase in accrued expenses
         and other liabilities                                       (146)     (600)      450
                                                                   -------   -------   -------
           Net cash (used in) provided by operating activities       (434)    1,741       106
                                                                   -------   -------   -------
Investing activities:
 Purchases of property and equipment                                 (340)     (347)     (406)
 Proceeds from sale of investments in unconsolidated affiliates        --       154     1,877
 Investments in unconsolidated affiliates                              --       (51)     (323)
 Distributions from unconsolidated affiliate                           --       206        21
                                                                   -------   -------   -------
           Net cash (used in) provided by investing activities       (340)      (38)    1,169
                                                                   -------   -------   -------
Financing activities:
 Repayments of notes payable to bank                                  (63)   (1,868)   (1,719)
 Proceeds from issuance of convertible debt and warrants               --     2,250        --
 Proceeds from the exercise of stock options                          492       148        60
                                                                   -------   -------   -------
           Net cash provided by (used in) financing activities        429       530    (1,659)
                                                                   -------   -------   -------
           Net (decrease) increase in cash and
              cash equivalents                                       (345)    2,233      (384)
Cash and cash equivalents at beginning of year                      3,453     1,220     1,604
                                                                   -------   -------   -------
Cash and cash equivalents at end of year                          $ 3,108   $ 3,453   $ 1,220
                                                                   =======   =======   =======
Cash paid during the year for:
 Interest                                                         $    59   $   125   $   248
 Income taxes                                                           7        11        --

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

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

Non cash investing activities:
 Machinery acquired through capital lease                         $   130   $    --   $    --

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

                                      F-6
<PAGE>

(1)  Organization and Nature of Business

     (a)  Description of Business

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

          Substantially all of the Company's revenues are derived from the sale
          of paper currency validators and related bill stackers, specifically
          the Company's Argus and Aurora validator models. A few key customers
          account for a large portion of the Company's revenues. Additionally,
          the Company depends on a single or limited number of suppliers for
          certain housings, parts and components, including certain
          microprocessor chips and short wave-length light sources.

     (b)  Organization and Development of Business

          The Company has a wholly owned subsidiary, Global Payment Technologies
          (Europe) Limited (GPT-Europe), which is based in the United Kingdom
          and is responsible for sales and service of the Company's products in
          Europe.

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

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

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

     (c)  Significant Customers

          The Company's largest customers for 2005, 2004, and 2003 represent the
          following percentages of net sales and accounts receivable,
          respectively:

                                    2005             2004             2003
                                 ------------    ------------     ------------
          Net sales:
            Customer A               40%              34%             48%
            Customer B               16%              N/A             N/A
            Customer C               N/A              11%             15%
          Accounts receivable:
            Customer A               58%              87%             62%
            Customer B               N/A              N/A             N/A
            Customer C               N/A              N/A             N/A


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

                                      F-7
<PAGE>


     (d)  Geographic Areas

          The Company generated revenues both domestically and internationally.
          The following summarizes the geographic dispersion of the Company's
          revenues by destination:
<TABLE>
<CAPTION>


                                                       Year ended September 30
                                              -------------------------------------------------
                                                    2005             2004             2003
                                              ---------------  ---------------  ---------------
                                                                (In thousands)
<S>                                           <C>              <C>              <C>
          Domestic revenues (United States)   $         1,881  $         3,257  $         2,775
                                              ---------------  ---------------  ---------------
          International revenues:
            Australia                                   9,509            7,647           10,182
            Europe                                     11,207            9,516            9,591
            All others                                  3,289            3,961            3,528
                                              ---------------  ---------------  ---------------
                                                       24,005           21,124           23,301
                                              ---------------  ---------------  ---------------
                     Total revenues          $        25,886   $        24,381  $        26,076
                                              ===============  ===============  ===============
</TABLE>

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

(2)  Summary of Significant Accounting and Reporting Policies

     (a)  Principles of Consolidation

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

     (b)  Revenue Recognition

          Non-affiliates

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

          Affiliates

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

     (c)  Shipping and Handling Costs

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

                                      F-8
<PAGE>

     (d)  Investments in Unconsolidated Affiliates

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

     (e)  Foreign Currency Translation

          The financial position and results of operations of GPT-Europe and
          unconsolidated affiliates are measured using local currency as the
          functional currency. Assets and liabilities of such entities are
          translated into US dollars at exchange rates in effect at year-end,
          while revenues and expenses are translated at average exchange rates
          prevailing during the year. The resulting translation gains and losses
          are recorded directly to accumulated other comprehensive income
          (loss), a separate component of shareholders' equity, and are not
          included in net income (loss) until realized through sale or
          liquidation of the investment. Exchange gains and losses incurred on
          foreign currency transactions, which were not material during fiscal
          2005, 2004, and 2003, are included in net loss.

     (f)  Cash and Cash Equivalents

          Cash equivalents are stated at cost, which approximates market value.
          Highly liquid investments with maturities of three months or less at
          the purchase date are considered cash equivalents for purposes of the
          consolidated balance sheets and consolidated statements of cash flows.
          A significant portion of the Company's cash balance in the amount of
          $744,000 and $770,000, as of September 30, 2005 and 2004, respectively
          consists of currency used to test the Company's products, and although
          it could be available, it is not anticipated to be utilized for
          working capital purposes in the normal course of business. Translation
          gains or losses on foreign currency amounts used for test purposes are
          included in operating loss.

     (g)  Inventory

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

     (h)  Property and Equipment

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

                                      F-9
<PAGE>

     (i)  Capitalized Software Costs

          In accordance with the Statement of Financial Accounting Standards
          ("SFAS") No. 86, Accounting for the Costs of Computer Software to be
          Sold, Leased or Otherwise Marketed ("SFAS No. 86"),
          internally-generated software development costs associated with new
          products and significant software enhancements to existing products
          are expensed as incurred until technological feasibility has been
          established. Pursuant to SFAS No. 86, the Company deems technological
          feasibility as having been met upon completion of a detail program
          design. No internally- generated software development costs were
          capitalized during fiscal years 2005, 2004, and 2003. The Company
          recorded amortization in accordance with SFAS No. 86 of $579,000,
          $547,000, and $519,000 for the fiscal years ended September 30, 2005,
          2004 and 2003, 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, 2005 and
          2004 were $1,033,000 and $1,612,000, respectively.

     (j)  Long-Lived Assets

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

     (k)  Intangible Assets

          The Company accounts for long-lived intangible assets in accordance
          with the provisions of SFAS No. 142, Goodwill and Other Intangible
          Assets ("SFAS No. 142"). 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).

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

     (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
          $55,000, $75,000, and $150,000 in fiscal 2005, 2004 and 2003,
          respectively.

                                      F-10
<PAGE>


     (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 damages that occur as a result
          of improper installation, misuse or neglect and repair or modification
          by anyone other than the Company and its appointed service centers.
          Repair costs beyond the warranty period are charged to the Company's
          customers (see (b)).

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

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

     (n)  Income Taxes

          The Company accounts for income taxes under SFAS No. 109, Accounting
          for Income Taxes. SFAS No. 109 requires an asset and liability
          approach for financial reporting for income taxes. Under SFAS No. 109,
          deferred taxes are provided for net operating loss carryforwards and
          for temporary differences between the carrying values of assets and
          liabilities for financial reporting purposes and their tax bases at
          the enacted rates at which these differences are expected to reverse.
          See note 10.

     (o)  Earnings Per Share

          Net income (loss) per common share amounts (basic EPS) are computed by
          dividing net earnings (loss) by the weighted average number of common
          shares outstanding, excluding any potential dilution. Net income
          (loss) per common share amounts assuming dilution (diluted EPS) are
          computed by reflecting potential dilution from the exercise of stock
          options and warrants, and the conversion into common stock of
          convertible loans. Diluted EPS for fiscal years 2005, 2004 and 2003
          are the same as basic EPS, as the inclusion of the impact of any
          common stock equivalents outstanding during those periods, would be
          anti-dilutive. Common stock equivalents not included in EPS are as
          follows:

                                      F-11
<PAGE>


                                        Year ended September 30
                            --------------------------------------------------
                                   2005             2004              2003
                            ---------------  ---------------  ----------------

          Stock options             859,999          887,800           766,600
          Stock warrants            200,000          200,000                --
          Convertible Debt          197,740          510,563                --
                            ---------------  ---------------  ----------------
          Total                   1,257,739        1,598,363           766,600
                            ===============  ===============  ================

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

<TABLE>
<CAPTION>


                                                        Year ended September 30
                                             -------------------------------------------------
                                                    2005             2004             2003
                                             ---------------  ---------------  ---------------
                                              (In thousands, except share and per share data)
<S>                                          <C>              <C>              <C>
          Numerator:
            Net loss attributable to
              common stockholders            $          (573) $        (1,690) $        (5,677)
                                              ---------------  ---------------  ---------------
          Denominator:
            Weighted average common shares
              outstanding - basic                  5,976,467        5,577,825        5,545,015
          Effect of dilutive securities:
           Stock options and warrants                    --               --               --
           Convertible loan                              --               --               --
                                              ---------------  ---------------  ---------------
          Weighted average common shares
            outstanding - diluted                  5,976,467        5,577,825        5,545,015
                                              ===============  ===============  ===============
          Basic EPS                          $         (0.10) $         (0.30) $         (1.02)
          Diluted EPS                                  (0.10)           (0.30)           (1.02)
</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 APB Opinion No. 25, Accounting for Stock Issued to
          Employees ("APB No. 25"). The Company applies the intrinsic value
          method as outlined in APB No. 25 and related interpretations in
          accounting for stock options and share units granted under its stock
          option plans which are more fully disclosed in note 9. Under the
          intrinsic value method, no compensation expense is recognized if the
          exercise price of the Company's employee stock options equals the
          market price of the underlying stock on the date of the grant.
          Accordingly, no compensation cost has been recognized on options
          granted to employees. SFAS No. 123 requires that the Company provide
          pro forma information regarding net earnings and net earnings per
          common share as if compensation cost for the Company's stock option
          plans had been determined in accordance with the fair value method
          prescribed therein. The Company adopted the disclosure portion of SFAS
          No. 148, Accounting for Stock-Based Compensation - Transition and
          Disclosure, requiring quarterly SFAS No. 123 pro forma disclosure.

                                      F-12
<PAGE>

          The Financial Accounting Standards Board recently issued SFAS No. 123
          (revised 2004), Share-Based Payment ("SFAS No. 123R"), which requires
          a public entity to measure the cost of employee services received in
          exchange for an award of equity instruments based on the grant-date
          fair value of the award. The Company will adopt SFAS No. 123R in the
          first quarter of fiscal 2006 (see (v)).

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

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

<TABLE>
<CAPTION>

                                                    2005             2004             2003
                                             ---------------   --------------  ---------------
                                                      (In thousands, except per share data)
<S>                                          <C>               <C>             <C>
          Net loss:
            As reported                      $          (573)  $       (1,690) $        (5,677)
            Deduct: Compensation expense
                    determined under FMV              (1,156)(a)         (475)            (394)
                                              ---------------   --------------  ---------------
            Pro forma                                 (1,729)          (2,165)          (6,071)
          Net loss per common
           share - basic and diluted:
             As reported                     $         (0.10)  $        (0.30) $         (1.02)
             Pro forma                                 (0.29)(a)        (0.39)           (1.09)
</TABLE>

               (a)  Includes $652,000 ($.11 per share) from acceleration of
                    vesting of outstanding options.

          The effects of applying SFAS No. 123 in this pro forma disclosure are
          not indicative of future amounts to be expensed under SFAS No. 123R.

     (q)  Comprehensive Income (Loss)

          SFAS No. 130, Reporting Comprehensive Income requires companies to
          report all changes in equity during a period, except those resulting
          from investments by owners and distributions to owners, for the period
          in which they are recognized. Comprehensive income (loss) is the total
          of net income (loss) and all other nonowner changes in equity (or
          other comprehensive income (loss)) such as unrealized gains/losses on
          securities classified as available-for-sale, foreign currency
          translation adjustments and minimum pension liability adjustments. As
          of September 30, 2005 and 2004, due to currency fluctuations, the
          cumulative currency translation adjustment related to the Company's
          investments in foreign affiliates was $649,000 and $464,000,
          respectively, which is reflected in shareholders' equity in the
          accompanying consolidated balance sheets.

     (r)  Derivative Instruments

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

                                      F-13
<PAGE>

     (s)  Fair Value of Financial Instruments

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

     (t)  Segment Reporting

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

     (u)  Use of Estimates

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

     (v)  Recently Issued Accounting Pronouncements

          SFAS No. 123R, issued in December 2004, is a revision of FASB No. 123
          and supersedes APB Opinion No. 25 and its related implementation
          guidance. The statement focuses primarily on accounting for
          transactions in which an entity obtains employee services in
          share-based payment transactions. SFAS No.123R requires a public
          entity to measure the cost of employee services received in exchange
          for an award of equity instruments based on the grant-date fair value
          of the award (with limited exceptions). That cost will be recognized
          over the period during which an employee is required to provide
          service in exchange for the award which would normally be the vesting
          period of the options. This statement (as further amended in April
          2005) is effective as of the beginning of the first annual reporting
          period that begins after June 15, 2005 and the Company will adopt the
          statement in the first quarter of fiscal 2006. SFAS No. 123R requires
          that compensation expense be recognized for the unvested portions of
          existing options granted prior to its effective date and the cost of
          stock options granted to employees after the effective date.
          Accordingly, upon adoption of SFAS No. 123R, there will be no
          compensation expense from options issued to employees, officers and
          directors before September 30, 2005 as they are fully vested. Any
          compensation expense in future periods will be due to new grants
          issued, the effect of which is dependent on the fair value of the
          options issued.

          In November 2004, the FASB issued SFAS No. 151, Inventory Costs - an
          amendment of ARB No. 43, Chapter 4 ("SFAS No. 151"). SFAS No. 151
          clarifies the accounting for abnormal amounts of idle facility
          expense, freight, handling costs, and wasted material (spoilage). The
          statement requires that those items be recognized as current-period
          charges. This statement is effective as of the beginning of the first

                                      F-14
<PAGE>

          annual reporting period that begins after June 15, 2005 and the
          Company will adopt the statement in the first quarter of fiscal 2006.
          The Company has not determined the impact, if any, that this statement
          will have on its consolidated financial statements.

          In September 2005, the Emerging Issues Task Force ("EITF") reached a
          consensus on EITF issue No. 05-8 "Income Tax Consequences of Issuing
          Convertible Debt with a Beneficial Conversion Feature" ("EITF No.
          05-8"). EITF No. 05-8 provides that the issue should be applied by
          retrospective application and is effective as of the beginning of the
          first interim or annual reporting period beginning after December 15,
          2005, with early application permitted. The Company has elected early
          application in the accompanying financial statements and the effect
          was immaterial (see note 10).

(3)  Unconsolidated Affiliates

     Net sales to unconsolidated affiliates for fiscal year 2005, 2004 and 2003
     and accounts receivable from unconsolidated affiliates as of September 30,
     2005 and 2004 are as follows (in thousands):

<TABLE>
<CAPTION>


                                                                     Accounts receivable
                                                                       from affiliates
                                      Net sales - affiliates      ----------------------------
                                  ------------------------------  September 30,  September 30,
                                     2005        2004     2003         2005          2004
                                  ----------  --------  --------  -------------  -------------
<S>                               <C>         <C>       <C>          <C>           <C>
          Australia               $  10,338   $ 8,183   $12,482    $     1,881    $     3,632
          Abacus-UK                       1        --        --             --            148
          South Africa                   --       318       605             --             --
                                  ----------  --------  --------  -------------  -------------
                    Total         $  10,339   $ 8,501   $13,087    $     1,881    $     3,780
                                  ==========  ========  ========  =============  =============
</TABLE>

     (a)  Australia

          In fiscal 1997, the Company acquired a 50% non-controlling interest
          in an Australian affiliate, Global Payment Technologies Australia
          Pty Ltd (GPTA). This entity is responsible for sales and service
          of the Company's products in Australia and New Zealand, on an
          exclusive basis. In June 2002, the Company and two other
          shareholders formed eCash Holdings Pty. Ltd (eCash), an
          Australian based company responsible to market, distribute,
          service and support automated teller machines across Australia
          and New Zealand. The Company owns a 35% interest in this entity.
          The accompanying consolidated results of operations include the
          Company's equity in the results of operations of these affiliates
          in the amounts of $236,000, $273,000, and $470,000 in fiscal
          2005, 2004, and 2003, respectively. For fiscal 2005, 2004, and
          2003, the Company (reduced) increased its equity in income of
          unconsolidated affiliates by $(33,000), $(165,000), and $225,000,
          respectively, which amounts represent the effect of the Company's
          share of the gross profit on sales of the Company's products to
          these affiliates, which were unsold by the affiliate as of the
          Company's fiscal year-end. Deferred gross profit of $535,000 and
          $502,000 as of September 30, 2005 and 2004, respectively, is
          shown as a reduction of accounts receivable from affiliates in
          the accompanying balance sheets. The Company also received cash
          dividends of $0, $206,000, and $0 from these affiliates for
          fiscal 2005, 2004, and 2003, respectively.

          In October 2005, a subsidiary of eCash sold its automatic teller
          machine rental business for approximately $3,000,000, resulting
          in a gain of approximately $1,785,000, net of Australian income
          taxes, of which the Company's share is approximately $625,000.

                                      F-15
<PAGE>

     (b)  Evolve - UK

          In fiscal 1999, the Company acquired a non-controlling 25% interest in
          Abacus-UK. Abacus-UK is a software company based in the United Kingdom
          that has developed a cash management system, of which the Company's
          validators are a key component, which offers the retail market a
          mechanism for counting, storing and transporting its cash receipts. In
          fiscal 2005, 2004 and 2003, the Company did not make any additional
          investment.

          In fiscal 2002, the Company recorded a non-cash charge to operations
          related to the impairment of its equity-method investment in
          Abacus-UK, pursuant to APB No. 18, The Equity Method of Accounting for
          Investments in Common Stock. The impairment charge reduced the
          investment to zero. This impairment loss, which was considered other
          than temporary, was due to the deterioration of the financial
          condition of this entity. The Company's consolidated results of
          operations for the years ended September 30, 2005, 2004, and 2003 do
          not include the Company's equity in the loss of this affiliate as the
          equity investment was previously reduced to zero.

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

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

     (c)  South Africa

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

          In October 2003, the Company invested an additional $51,000 in this
          entity. Effective January 15, 2004, the Company's remaining interest
          was sold. A gain of $78,000 was realized upon sale of the remaining
          interest. The Company's results of operations for the years ended
          September 30, 2004, and 2003 include the Company's equity in the loss
          of this affiliate of $0 and ($14,000), respectively.

                                      F-16
<PAGE>


(4)  Summary Financial Information

     Financial information with respect to the Company's Australian affiliates
     is included in the accompanying financial statements based on the
     affiliates' fiscal year ended June 30. The following summary financial
     information reflects the combined assets and liabilities of GPTA and eCash
     as of June 30, 2005 and 2004 and their combined operating results for their
     fiscal years ended June 30, 2005, 2004, and 2003.

                                            (in thousands)

                                       June 30,          June 30,
                                         2005              2004
                                  ----------------------------------
     Current assets             $          10,686 $            8,255
     Non-current assets                       509                695
     Current liabilities                    6,814              5,264
     Non-current liabilities                    -                 84
     Net assets                             4,381              3,602


                             (in thousands)
<TABLE>
<CAPTION>

                                   Year ended          Year ended          Year ended
                                  June 30, 2005       June 30, 2004       June 30, 2003
                                 -------------------------------------------------------
<S>                             <C>                 <C>                 <C>
     Net sales                     $     14,245        $     13,892        $     18,016
     Operating (loss) income               (340)                621                 538
     Net income                             429                 483                 604
</TABLE>

(5)  Inventory

     The following is a summary of the composition of inventory:


                                                   September 30
                                         --------------------------------
                                              2005             2004
                                         ---------------  ---------------
                                                  (In thousands)
     Raw materials                       $         3,870  $         1,339
     Work-in-progress                                470              458
     Finished goods                                  769              776
                                         ---------------  ---------------
                                         $         5,109  $         2,573
                                         ===============  ===============

                                      F-17
<PAGE>



(6)  Property and Equipment, Net

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

                                                                        September 30
                                                              --------------------------------
                                              Useful lives          2005             2004
                                             ---------------  ---------------  ---------------
                                                                       (In thousands)
<S>                                           <C> <C>                     <C>              <C>
     Leasehold improvements                   Shorter of the
                                              life of the
                                              lease
                                              or useful life
                                              of
                                              asset           $           266  $           266
     Furniture and fixtures                   3 - 7 years                 410              391
     Machinery and equipment                  3 - 10 years              3,228            2,882
     Tooling and Molds                        7 years                   1,839            1,839
     Computer software                        5 years                   1,004              995
     Computer hardware                        3 years                   1,052            1,016
                                                              ---------------  ---------------
                                                                        7,799            7,389
     Less accumulated depreciation and
       amortization                                                    (6,111)          (5,255)
                                                              ---------------  ---------------
                                                              $         1,688  $         2,134
                                                              ===============  ===============
</TABLE>

     Depreciation and amortization expense was $916,000, $830,000, and $849,000
     for the fiscal years ended September 30, 2005, 2004 and 2003, respectively.

(7)  Accrued Expenses and Other Current Liabilities

     Accrued expenses and other current liabilities consist of the following:


                                                         September 30
                                               --------------------------------
                                                      2005             2004
                                               ---------------  ---------------
                                                          (In thousands)
     Accrued legal and accounting              $           112  $           229
     Warranty costs                                        268              298
     Accrued commissions                                    22              154
     Administrative and other                              732              599
                                               ---------------  ---------------
                                               $         1,134  $         1,280
                                               ===============  ===============

                                      F-18
<PAGE>

(8)  Debt

     On March 16, 2004, the Company received aggregate proceeds of $1,500,000
     from the sale to Laurus Master Fund Ltd. ("Laurus") of a $1,500,000
     principal amount secured convertible term note due in March 2007 (the
     "CTN"), pursuant to a Securities Purchase Agreement. The CTN was
     convertible into common stock of the Company at any time at the rate of
     $4.26 of principal for one share of common stock and was collateralized by
     substantially all assets of the Company. Interest was payable monthly at
     the prime rate plus 1.5%, with a minimum rate of 6%. In addition, Laurus
     received 7 year warrants to purchase an aggregate of 200,000 shares of the
     Company's common stock at prices of $4.87, $5.28 and $5.68 for 100,000,
     60,000 and 40,000 warrants, respectively. Under the agreement, the Company
     is restricted from paying dividends or purchasing treasury stock. The
     Company utilized approximately $1,200,000 of the proceeds to repay amounts
     outstanding under a previous credit agreement. At September 30, 2004,
     $1,425,000 was outstanding under the CTN. During the year ended September
     30, 2005, the Company repaid $50,000 and Laurus converted the remaining
     $1,375,000 of the CTN into 323,000 shares of common stock, resulting in the
     full repayment of the CTN. As a result of the CTN being fully repaid,
     $29,000 of unamortized closing costs related to the CTN were charged to
     operations in the year ended September 30, 2005.

     The value allocated to the warrants resulted in a debt discount of $506,000
     that was being recognized as interest expense over the term of the CTN.
     Additionally, by allocating value to the warrants, Laurus received a
     beneficial conversion feature in the amount of $304,000 that resulted in
     additional debt discount that was being recognized as interest expense over
     the term of the CTN. Interest expense was computed utilizing the interest
     method, which results in an effective yield over the term of the CTN. As
     the CTN was converted, the unamortized discount related to the amount
     converted was immediately recognized as interest expense and charged to
     operations. Amortization for the years ended September 30, 2005 and 2004
     was $568,000 and $242,000, respectively. As of March 31, 2005, the entire
     amount of debt discount had been recognized as interest expense and charged
     to operations.

     On March 16, 2004, the Company also entered into a Security Agreement with
     Laurus which provides for a credit facility of $2,500,000 consisting of a
     secured revolving note of $1,750,000 (the "RN") and a secured convertible
     minimum borrowing note of $750,000 (the "MBN"), both due in March 2007 (the
     RN and the MBN notes collectively referred to as the "LOC"). At closing,
     the Company borrowed $750,000 under the MBN. Funds available under the LOC
     are determined by a borrowing base equal to 85% and 70% of eligible
     domestic and foreign accounts receivable, respectively, and 50% of eligible
     inventory. Outstanding amounts under the RN and MBN are convertible into
     common stock of the Company at any time at the rate of $4.26 of principal
     for one share of common stock and are collateralized by substantially all
     assets of the Company. Interest is payable monthly at the prime rate plus
     1.5%, with a minimum rate of 6%. At September 30, 2004, $750,000 was
     outstanding under the CTN. During the year ended September 30, 2005, Laurus
     converted $750,000 of the MBN into 176,000 shares of common stock. At
     September 30, 2005 and 2004, no amounts were outstanding under the RN.

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

     In May, 2005, the Company entered into a capital lease agreement for
     machinery in the amount of $130,000. The note is to be repaid in monthly
     installments of $4,040 over a three year period. Interest is being charged
     at a rate of 7.44% per annum. The balance at September 30, 2005 was
     $117,000.

                                      F-19
<PAGE>

     Outstanding debt with respect to the capital lease as of September 30, 2005
     is as follows (in thousands):


     Total debt                         $     129
     Less amount representing interest        (12)
                                        ---------
     Net                                      117
     Less current portion                     (41)
                                        ---------
     Long term debt                     $      76
                                        =========

     Annual principal maturities for outstanding debt as of September 30,
     2005 is as follows:

                                                  Amount
                                             ---------------
     Fiscal year ended September 30:          (in thousands)
       2006                                  $            41
       2007                                               45
       2008                                               31
                                             ---------------
                                             $           117
                                             ===============


(9)  Stock Option Plans

     The Company has several stock option plans in effect covering in the
     aggregate 1,500,000 of the Company's common shares pursuant to which
     officers, directors and key employees of the Company and consultants to the
     Company are eligible to receive incentive and/or nonqualified stock
     options. The 1994 stock option plan expired on October 17, 2004 and the
     1996, and 2000 stock option plans expire on March 18, 2006, and January 25,
     2010, respectively, after which, no more option grants may be issued under
     such plans. The stock option plans are all administered by the Compensation
     Committee of the Board of Directors. The selection of participants, grant
     of options, determination of price and other conditions relating to the
     exercise of options are determined by the Compensation Committee of the
     Board of Directors and administered in accordance with the stock option
     plans as approved by the shareholders.

     Incentive stock options granted under these various plans are exercisable
     for a period of up to 10 years from the date of grant at an exercise price
     which is not less than the fair market value of the common shares on the
     date of the grant, except that the term of an incentive stock option
     granted under each of the plans to a shareholder owning more than 10% of
     the outstanding common shares may not exceed five years and its exercise
     price may not be less than 110% of the fair market value of the common
     shares on the date of the grant. During fiscal 2003, a total of 95,000
     incentive stock options and 31,000 nonqualified options were granted. All
     options granted in 2003 were to become exercisable over varying terms up to
     four years.


                                      F-20
<PAGE>

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

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

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

     A summary of the Company's stock option plans as of September 30, 2005,
     2004, and 2003, and changes during the years then ended, is presented
     below.
<TABLE>
<CAPTION>

                                                 2005               2004                2003
                                         ------------------ ------------------ -------------------
                                                   Weighted           Weighted            Weighted
                                                   average            average             average
                                                   exercise           exercise            exercise
                                           Shares    price    Shares    price     Shares    price
                                         --------- -------- --------- -------- ---------- --------
<S>                                       <C>     <C>        <C>     <C>       <C>       <C>
     Outstanding at the beginning
      of year                             887,800 $   4.48   766,600 $   5.02  1,058,600 $   4.53
         Granted at fair value            159,500     5.48   366,150     3.98    126,000     4.05
         Forfeited                        (69,692)    5.05  (193,700)    5.96   (403,600)    3.55
         Exercised                       (117,609)    4.19   (51,250)    2.88    (14,400)    4.48
                                         ---------          ---------          ----------
     Outstanding at end of the year       859,999     4.65   887,800     4.48    766,600     5.02
                                         =========          =========          ==========
     Options exercisable at year end      814,999     4.68   371,059     5.18    348,120     6.18

     Weighted average fair value
       of options granted during
       the year                                       2.43               2.26                2.63
</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
                                   -------------------------------------------------
                                           2005             2004             2003
                                   ---------------  ---------------  ---------------
<S>                                          <C>              <C>              <C>
     Risk-free interest rates                4.18%            4.02%            3.07%
     Expected lives                      4.1 years        5.5 years          7 years
     Expected volatility                       49%              66%              65%
     Expected dividend yields                  --               --               --
</TABLE>

                                      F-21
<PAGE>


     Summarized information about the Company's stock options outstanding and
     exercisable at September 30, 2005 is as follows:

                                      Outstanding               Exercisable
                                   ---------------------     -----------------
                                                      Weighted          Weighted
                                            Weighted  average           average
                                            average   exercise          exercise
         Exercise price range      Options    life    price   Options     price
         --------------------      -------    ----    -----   -------     -----
     $2.40 to $4.00                490,999     4.47 $   3.75  490,999 $   3.75
     $4.01 to $6.00                246,750     3.39     4.84  201,750     4.98
     $6.01 to $8.00                 73,400     5.95     6.93   73,400     6.93
     $8.01 to $10.00                39,850     0.93     8.98   39,850     8.98
     $10.01 to $12.00                9,000     0.39    11.37    9,000    11.37
                                  --------                   --------
                                   859,999     4.08     4.65  814,999     4.68
                                  ========                   ========

(10) Income Taxes

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

                                         Fiscal years ended September 30
                              -------------------------------------------------
                                     2005             2004             2003
                              ---------------  ---------------  ---------------
                                              (In thousands)
     Pretax (loss)/income:

            United States     $          (541) $        (1,695) $        (5,421)
            Foreign                       (53)              (2)             218
                               ---------------  ---------------  ---------------
                              $          (594) $        (1,697) $        (5,203)
                               ===============  ===============  ===============

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


                                    Fiscal years ended September 30
                             -------------------------------------------------
                                   2005             2004             2003
                             ---------------  ---------------  ---------------
                                              (In thousands)
     Current:
       Federal               $            --  $           (15) $          (211)
       State and local                   (21)               8               --
                             ---------------  ---------------  ---------------
                                         (21)              (7)            (211)
                             ---------------  ---------------  ---------------
     Deferred:
       Federal                            --               --              685
       State and local                    --               --               --
                             ---------------  ---------------  ---------------
                                          --               --              685
                             ---------------  ---------------  ---------------
               Total        $           (21) $            (7)  $           474
                             ===============  ===============  ===============

                                      F-22
<PAGE>

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

                                                       September 30
                                             ----------------------------------
                                                   2005               2004
                                             ---------------  -----------------
                                                        (In thousands)
     Deferred tax assets:
       Accounts receivable                   $            38  $              91
       Inventory                                         499                472
       Accrued expenses and other, net                   114                132
       Elimination of gross profit on sales to
          affiliates                                     218                196
       Tax NOL carryforward                            2,369              2,154
                                             ---------------  -----------------
                Deferred tax asset                     3,238              3,045
     Less:  Valuation allowance (a) (b)               (2,593)            (2,351)
                                             ---------------  -----------------
                                                         645                694
     Deferred tax liability:
       Unamortized beneficial
       conversion feature (b)                             --                (78)
     Undistributed earnings of
       foreign affiliates                               (645)              (616)
                                             ---------------  -----------------
       Net deferred taxes                    $            --  $              --
                                             ===============  =================

     (a)  The Company's ability to recover the reported amounts of deferred
          income tax benefit is dependent upon its ability to generate
          sufficient taxable income during the periods over which net temporary
          tax differences become deductible. The Company has incurred
          significant operating losses in the fiscal years 2005, 2004, and 2003.
          Due to recurring losses and because of the uncertainty as to the
          Company's ability to generate sufficient taxable income to realize the
          value of its deferred tax asset, during the fourth quarter of fiscal
          2003 the Company provided a full valuation allowance. This valuation
          allowance will be periodically assessed and may be partially or wholly
          reversed in the future.

     (b)  In September 2005, the Emerging Issues Task Force ("EITF") reached a
          consensus on EITF issue No. 05-8 "Income Tax Consequences of Issuing
          Convertible Debt with a Beneficial Conversion Feature" ("EITF No.
          05-8"). EITF No. 05-8 provides that the basis difference between
          financial reporting purposes and income tax purposes that results from
          the issuance of convertible debt with a beneficial conversion feature
          is a temporary difference for purposes of applying SFAS No. 109. EITF
          No. 05-8 also provides that the recognition of deferred taxes for the
          temporary difference should be recorded as an adjustment to additional
          paid-in capital. EITF No. 05-8 further provides that the issue should
          be applied by retrospective application. Accordingly, the Company has
          retrospectively adjusted the components of deferred tax assets and
          liabilities at September 30, 2004 and recorded a deferred tax
          liability with a corresponding reduction in the valuation allowance
          amounting to $78,000 related to the unamortized discount for the
          convertible term note attributable to the beneficial conversion
          feature at such date (see Note 8). There was no effect on additional
          paid-in capital as the charge for deferred taxes of $103,000 was
          offset by the recognition of a deferred tax asset and resultant credit
          to additional paid-in capital for the same amount.

                                      F-23
<PAGE>

     As of September 30, 2005, the Company has a net operating loss carryforward
     of $6,490,000, which expires in between 2023 and 2025.

     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
                                               -------------------------------------------------
                                                      2005            2004           2003
                                               ----------------- --------------- ---------------
<S>                                                       <C>             <C>            <C>
     U.S. Federal statutory rate                          (34.0)%         (34.0)%        (34.0)%
     State income taxes, net of federal effect             (2.5)           (2.5)          (3.8)
     Impact of foreign operations                           0.0             0.0            6.9
     All other, net                                         5.1             4.5            0.5
     Change in valuation allowance                         27.9            31.6           39.5
                                               ----------------- --------------- ---------------
                Effective income tax rate                 (3.5)%          (0.4)%           9.1%
                                               ================= =============== ===============
</TABLE>


(11) Commitments

     (a)  Minimum Lease Commitments

          The operations of the Company are conducted in leased premises. The
          Company also leases various office equipment. At September 30, 2005,
          the approximate minimum annual rentals under these leases, which
          expire through fiscal year 2008, were as follows:


                                                         (In thousands)
          Fiscal year ending September 30:
             2006                                       $            384
             2007                                                     61
             2008                                                     41
                                                        ----------------
                                                        $            486
                                                        ================

          Total rent expense for all operating leases was $460,000, $463,000,
          and $544,000 in fiscal 2005, 2004, and 2003, respectively, including
          $27,000 paid to a related party affiliate in fiscal 2003. The
          operating lease with the related party affiliate was cancelled during
          fiscal 2003.

     (b)  Employment Agreements

          The Company has entered into employment agreements with its three
          officers, which expire in May 2006, November 2006, and April 2007.
          Minimum compensation requirements are $590,000 and $150,000 for the
          fiscal years ending September 30, 2006 and 2007, respectively.


                                      F-24
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



The Board of Directors
Global Payment Technologies, Inc



We have audited the accompanying balance sheets of Global Payment Technologies
Australia Pty Ltd as of June 30, 2005 and 2004, and the related statement of
operations, stockholders' equity, and cash flows for the years ended June 30,
2005 and 2004. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Global Payment Technologies
Australia Pty Ltd as of June 30, 2005 and 2004, and the results of its
operations and its cash flows for the years ended June 30, 2005 and 2004 in
conformity with US generally accepted accounting principles.






Pitcher Partners,


Sydney, Australia
11 November 2005

                                      F-25
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



The Board of Directors and Stockholders
Global Payment Technologies Pty Limited:

We have audited the accompanying statements of income, stockholders' equity, and
cash flows of Global Payment Technologies Pty Limited (the Company) for the year
ended June 30, 2003. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

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


KPMG

Sydney, Australia
19 December 2003

                                      F-26
<PAGE>



                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD
                                 Balance Sheets
                             June 30, 2005 and 2004
<TABLE>
<CAPTION>

                            Assets                                       2005          2004
                                                                      -------------------------
Current assets:
<S>                                                                <C>               <C>
    Cash and equivalents                                          A$   1,358,427     2,761,638
    Trade accounts receivable, less allowances for doubtful
      accounts of A$10,000 in 2005 and A$10,000 in 2004                3,005,021     2,152,016
    Inventories                                                        6,497,354     4,509,809
    Deferred income taxes                                                194,809       231,943
    Income taxes receivable                                                    -       192,545
    Receivable from affiliate                                          1,009,172     1,036,688
    Other current assets                                                  55,781       141,340
                                                                      -------------------------
             Total current assets                                     12,120,564    11,025,979
                                                                      -------------------------
Property, plant and equipment
    Machinery and equipment                                              371,892       360,222
    Less accumulated depreciation and amortization                      (213,958)     (172,556)
                                                                      -------------------------
             Net property, plant and equipment                           157,934       187,666
                                                                      -------------------------
                    Total assets                                  A$  12,278,498    11,213,645
                                                                      =========================

                    Liabilities and Stockholders' Equity

Current Liabilities:
    Trade accounts payable                                        A$   5,833,912     5,251,550
    Income taxes payable                                                   7,312             -
    Accrued liabilities                                                  761,196     1,045,963
                                                                      -------------------------
                   Total current liabilities                           6,602,420     6,297,513
                                                                      -------------------------
                   Total liabilities                                   6,602,420     6,297,513
                                                                      -------------------------

Commitments and contingencies (Note 1)

Stockholders' equity: Common stock
    Issued and outstanding 20,000 shares in 2005 and 20,000
     shares in 2004                                                       20,000        20,000
Retained earnings                                                      5,656,078     4,896,132
                                                                      -------------------------

                 Total stockholders' equity                            5,676,078     4,916,132
                                                                      -------------------------

                 Total liabilities and stockholders' equity       A$  12,278,498    11,213,645
                                                                      =========================

See accompanying notes to financial statements.
</TABLE>

                                      F-27
<PAGE>

                 GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                            Statements of Operations

                    Years ended June 30, 2005, 2004 and 2003
<TABLE>
<CAPTION>

                                                          2005          2004          2003
                                                      ----------------------------------------

<S>                                                 <C>              <C>           <C>
Net sales                                          A$  17,104,350    17,409,545    27,537,178
Cost of goods sold
- GPT Inc                                              14,307,241    14,396,467    24,230,731
- Other                                                   185,508       293,806       134,006
                                                      ----------------------------------------

           Gross profit                                 2,611,601     2,719,272     3,172,440

Selling, general and administrative expenses           (1,947,755)   (1,777,565)   (1,937,681)
                                                                                           --
                                                      ----------------------------------------

            Operating income                              663,846       941,707     1,234,759

Other income (expense):
  Interest income                                         162,179       140,252       221,318
  Other sundry income                                      12,000        63,240       151,065
  Interest expense                                              -             -        (4,412)
  Servicing income                                        250,306       207,416       105,420
  Foreign exchange gains                                        -             -       202,924
                                                      ----------------------------------------
            Income before income taxes                  1,088,331     1,352,615     1,911,074
Income taxes                                             (328,385)     (407,189)     (578,232)
                                                      ----------------------------------------

            Net income                                    759,946       945,426     1,332,842
                                                      ========================================

See accompanying notes to financial statements
</TABLE>

                                      F-28
<PAGE>

                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                       Statements of Stockholders' Equity

                    Years ended June 30, 2005, 2004 and 2003


<TABLE>
<CAPTION>


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

<S>               <C> <C>                   <C>                        <C>             <C>
 Balances at June 30, 2002                 A$             20,000       5,217,864       5,237,864
  Net income (unaudited)                                      --       1,332,842       1,332,842
  Dividends declared                                          --      (2,000,000)     (2,000,000)
                                                    -----------------------------------------------

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

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

 Balances at June 30, 2005                                20,000       5,656,078       5,676,078
                                                    ===============================================

     See accompanying notes to financial statements
</TABLE>

                                      F-29
<PAGE>

                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD

                            Statements of Cash Flows

                    Years ended June 30, 2005, 2004 and 2003

<TABLE>
<CAPTION>

                                                                            2005            2004            2003
                                                                       -----------------------------------------------

<S>                                                              <C>                          <C>           <C>
Net income                                                      A$            759,946         945,426       1,332,842
  Adjusted to reconcile net income to net cash
   provided by operating activities:
  Depreciation and amortisation of property, plant and                         40,757          42,209          42,139
  equipment
  Decrease / (increase) in trade accounts receivable                         (853,005)        325,184       2,632,803
  Decrease / (increase) in inventories                                     (1,987,545)      2,841,050       3,316,850
  Decrease / (increase) in other assets                                        85,559         (90,925)        146,134
  Decrease / (increase) in intercompany receivables                            27,516         425,557      (1,462,246)
 (Decrease) / Increase in trade accounts payable                              582,360      (3,476,080)     (3,419,624)
  Decrease in accrued liabilities                                            (284,767)        (17,082)       (379,767)
  Decrease / (increase) in deferred income taxes                               37,134         291,214        (196,742)
  Increase in income tax provision                                              7,312               -               -
  Decrease / (increase) in income tax receivable                              192,545        (184,320)              -
                                                                       -----------------------------------------------

       Net cash provided by/ (used in) operating activities                (1,392,188)      1,102,233       2,012,389
                                                                       -----------------------------------------------

Cash flows from investing activities:
 Capital expenditures, including interest capitalized                         (11,023)         (7,997)       (101,137)
                                                                       -----------------------------------------------

       Net cash used in investing activities                                  (11,023)         (7,997)       (101,137)
                                                                       -----------------------------------------------

Cash flows from financing activities:
 Dividends paid                                                                     -        (600,000)     (2,000,000)
                                                                       -----------------------------------------------

       Net cash used in financing activities                                        -        (600,000)     (2,000,000)
                                                                       -----------------------------------------------

       Net decrease in cash and cash equivalents                           (1,403,211)        494,236        (88,748)

Cash and cash equivalents at beginning of year                              2,761,638       2,267,402       2,356,150
                                                                       -----------------------------------------------

Cash and cash equivalents at end of year                        A$          1,358,427       2,761,638       2,267,402
                                                                       ===============================================

See accompanying notes to financial statements
</TABLE>

                                      F-30
<PAGE>

                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD
                          Notes to Financial Statements
                          June 30, 2005, 2004 and 2003

1.       Summary of Significant Accounting Policies and Practices

         a)       Description of Business

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

         b)       Trade Accounts Receivable

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

                  Concentration of credit risk

                  The Company's largest customer represented 33.3% (2004: 47%)
                  of trade accounts receivable as of June 30, 2005 and 54.2%
                  (2004: 59%) of sales for the fiscal year ended June 30, 2005.
                  Two other customers represented 12% or more of net sales and
                  trade accounts receivable as of and for the year ended June
                  30, 2005.

         c)       Inventories

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

         d)       Property, Plant and Equipment

                  Property, plant and equipment are stated at cost.

                  Depreciation on plant and equipment is calculated on the
                  straight-line method over the estimated useful lives of the
                  assets. The depreciation rates range from 7.5% to 27% (2004:
                  7.5% to 27%; 2003: 7.5% to 27%).

         e)       Other Current Assets and Other Assets

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

         f)       Income Taxes

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

                                      F-31
<PAGE>

                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD
                          Notes to Financial Statements
                          June 30, 2005, 2004 and 2003

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

         g)       Use of Estimates

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

         h)       Impairment of Long-Lived Assets

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

                  The Company did not recognise any impairment adjustments in
                  fiscal 2005 (2004: nil; 2003: nil).

         i)       Revenue Recognition

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

         j)       Commitments and Contingencies

                  Liabilities for loss contingencies arising from claims,
                  assessments, litigation, fines and penalties and other sources
                  are recorded when it is probable that a liability has been
                  incurred and the amount of the assessment and/or remediation
                  can be reasonably estimated. No such amounts were recorded in
                  fiscal 2005, 2004 or 2003.

         k)       Advertising expenses

                  Advertising expenses are recognized in the statement of
                  operations 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 operations


                                      F-32
<PAGE>

                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD
                          Notes to Financial Statements
                          June 30, 2005, 2004 and 2003


2)       Income Taxes

         All pre tax income is derived from domestic operations.

         Total income taxes for the years ended June 30, 2005, 2004 and 2003
         consists of:
<TABLE>
<CAPTION>

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

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

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

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

         Income tax expense was $328,385, $407,189 and $578,232 for the years
         ended June 30, 2005, June 30, 2004 and June 30, 2003, respectively,
         and differed from the amounts computed by applying the Australian
         federal income tax rate of 30% (2004: 30%; 2003: 30%) to pre tax
         income as a result of the following:
<TABLE>
<CAPTION>

                                                                    2005            2004              2003
                                                               --------------------------------------------------

<S>                                                     <C>                           <C>               <C>
         Computed "expected" tax expense               A$            326,499          405,785           573,322
         Increase (reduction) in income taxes
         resulting from:
         Adjustment to deferred tax assets and
         liabilities for enacted changes in tax laws
         and rates                                                        --               --                --
             Under/over provision for prior years
                                                                          --               --                --
             Other, net                                                1,886            1,404             4,910
                                                               --------------------------------------------------

                                                        A$            328,385          407,189           578,232
                                                               ==================================================
</TABLE>

                                      F-33
<PAGE>

                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD
                          Notes to Financial Statements
                          June 30, 2005, 2004 and 2003

2)       Income Taxes (continued)

         The tax effects of temporary differences that give rise to
         significant portions of the deferred tax assets and deferred tax
         liabilities at 30 June 2005 and 2004 are presented below.
<TABLE>
<CAPTION>

                                                                                2005                 2004

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

<S>                                                             <C>                                     <C>
         Deferred tax assets:
           Accounts receivable principally due to
            allowance for doubtful accounts                    A$                   3,000               3,000
           Inventory                                                                5,624              41,183
           Employee leave entitlements                                             44,644              40,226
           Bonus provision                                                         94,897             139,620
           Unrealised foreign exchange movements                                   21,357             (18,577)
           Other                                                                   25,287              26,491
                                                                        ----------------------------------------
                   Total gross deferred tax assets                                194,809             231,943
                                                                        ----------------------------------------

                    Net deferred tax assets                                       194,809             231,943
                                                                        ========================================
</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 realised. The ultimate
         realisation of deferred tax assets is dependent upon the generation of
         future taxable income during the periods in which those temporary
         differences become deductible. Management considers the scheduled
         reversal of deferred tax liabilities, projected future taxable income,
         and tax planning strategies in making this assessment. Based upon the
         level of historical taxable income and projections for future taxable
         income over the periods, which the deferred tax assets are deductible,
         management believes it is more likely than not the Company will
         realize the benefits of these deductible differences at June 30, 2005.

                                      F-34
<PAGE>

                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD
                          Notes to Financial Statements
                          June 30, 2005, 2004 and 2003

3)       Pension and Other Post Retirement Benefits

         The Company contributed to a defined contribution superannuation
         fund on behalf of its employees. Contributions are based upon
         Australian statutory minimum percentage of salary plus any
         additional contributions included in employee's employment
         agreement. The company contributed A$83,304, A$81,692 and A$76,127
         during fiscal years 2005, 2004 and 2003 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>

                                                                                   2005                 2004

<S>                                                               <C>                                   <C>
          Goods and services tax payable                         A$                141,837              160,538
          Accrued expenses                                                         395,545              676,340
          Provision for employee leave                                             148,814              134,085
          Warranty provision                                                        75,000               75,000
                                                                      -----------------------------------------
                                                                A$                761,196            1,045,963
                                                                      =========================================
</TABLE>

5)       Commitments

         Non cancellable operating lease commitments
<TABLE>
<CAPTION>
                                                                                   2005                 2004
<S>                                                                <C>                                   <C>
          Future operating lease commitments not provided for
          in the financial statements and payable:
          Within one year                                         A$                210,000              210,000
          One to two years                                                           70,000              210,000
          Two to three years                                                              -                    -
                                                                        -----------------------------------------
                                                                  A$                280,000              420,000
                                                                        -----------------------------------------
</TABLE>

         The Company leases property under a non-cancellable four year
         operating lease expiring in October 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.


6)       Cost of Goods Sold
<TABLE>
<CAPTION>
                                                                     2005             2004            2003
<S>                                                                 <C>             <C>             <C>
         Opening Inventory (excluding stock in        A$
         transit)                                                   2,580,220       3,228,659       6,708,544
         Add
         Purchases - GPT Inc                                       16,736,086      13,484,683      20,534,873
         Purchases - Other                                            219,651         266,904         113,557
         Freight and other charges                                    257,458         290,247         236,422
                                                            -------------------------------------------------
                                                                   19,793,415      17,270,493      27,593,396
         Less
         Ending Inventory (excluding stock in
         transit)                                                   5,300,666       2,580,220       3,228,659
                                                            -------------------------------------------------
         Cost of Goods Sold                           A$           14,492,749      14,690,273      24,364,737
                                                            =================================================
</TABLE>

                                      F-35
<PAGE>

                  GLOBAL PAYMENT TECHNOLOGIES AUSTRALIA PTY LTD
                          Notes to Financial Statements
                          June 30, 2005, 2004 and 2003

7)       Related parties

         The company is 50% owned by Global Payment Technologies, Inc, a
         company incorporated in the United States of America. The other
         50% is owned by a private trust of which the Managing Director of
         the company is a beneficiary.

         During the year, the Company purchased inventories from Global
         Payment Technologies, Inc., which totalled $16,736,086 (2004:
         $13,484,683). An amount of A$5,652,566 is included in Trade
         accounts payable at balance date (2004: $4,978,968).

         As of June 30, 2005 the Company had receivables from eCash
         Holdings Pty Limited of $1,009,172, (2004: $1,036,688) which were
         primarily attributable to payments made by the Company on behalf
         of eCash Holdings Pty Limited to employees and vendors of eCash
         Holdings Pty Limited. Interest is charged on the balance at the
         rate of 7% p.a. This amount has been repaid since balance date.
         During the year, the Company had sales to eCash Holdings Pty
         Limited totalling $469,391 (2004: $415,784). An amount of
         A$200,178 is included in Trade accounts receivable at balance date
         (2004: $NIL). For the year ended June 30, 2005, the Company
         charged eCash Holdings Pty Limited a management fee for
         administrative tasks conducted by the Company on behalf of eCash
         Holdings Pty Limited, which is included in other sundry income in
         the accompanying statement of operations.
         eCash Holdings Pty Limited is owned 35% by Global Payment
         Technologies, Inc., 35% by the private trust of the Managing
         Director of the Company, and 30% by an unrelated third party.

         There were no other transactions with related parties.

                                      F-36
<PAGE>
<TABLE>
<CAPTION>

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

          Column A               Column B         Column C         Column D          Column E
----------------------------  ---------------  ---------------  ---------------  -----------------
                                Balance at       Charged to      Deductions -         Balance
                                 beginning        costs and        write off          at end
        Description              of period        expenses        of accounts        of period
----------------------------  ---------------  ---------------  ---------------  -----------------
Allowance for doubtful
  accounts:
<S>           <C> <C>        <C>              <C>              <C>              <C>
    September 30, 2003       $           177  $           127  $            70  $             234
    September 30, 2004                   234              102               86                250
    September 30, 2005                   250               47              145                152

Warranty Reserve
    September 30, 2003                   340              327              321                346
    September 30, 2004                   346              198              246                298
    September 30, 2005                   298              176              206                268

</TABLE>


                                      S-1