UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549








FORM
      10-QSB





(MARK
      ONE)





x
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE
                ACT OF 1934 for the quarterly period ended September 30,
                2007





OR





o
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE
                ACT OF 1934 for the transition period from ___________ to___________





000-17874


(Commission
      file number)







GLOBAL
      AXCESS CORP


(Name
      of
      Small Business Issuer in Its Charter)




NEVADA
                
                88-0199674(State
                    or other jurisdiction of
                
                (I.R.S.
                    Employerincorporation
                    or organization)
                
                Identification
                    No.)
  7800
                    BELFORT PARKWAY, Suite 165JACKSONVILLE,
                    FLORIDA
                
                32256(Address
                    of principal executive offices)
                
                (Zip
                    Code)





(904)
      280-3950


(Issuer's
      Telephone Number, Including Area Code)





Securities
      registered pursuant to Section 12(b) of the Act: None




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








Check
      whether the Issuer: (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
      9 months (or for such shorter period that the Issuer was required to file
      such
      reports), and (2) has been subject to such filing requirements for the past
      90
      days. Yes  x No o




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of Exchange Act).


Yes
oNo
x




As
      of
      November 05, 2007, the Issuer had 20,973,924 shares outstanding of the Common
      Stock ($0.001 par value) and no shares outstanding of the Preferred Stock
      ($0.001 par value).





Transitional
      Small Business Disclosure Format (Check One): Yes oNo x










TABLE
      OF
      CONTENTS




PART
                  I
              
              FINANCIAL
                INFORMATIONItem
              
              1.
              
              Financial
                  Statements (unaudited)
              
              4Item
              
              2.
              
              Management's
                  Discussion and Analysis or Plan of Operation
              
              25Item
              
              3.
              
              Controls
                  and Procedures
              
              39Item
              
              3A(T).
              
              Controls
                  and Procedures
              
              40PART II
              
              OTHER
                INFORMATIONItem
              
              1.
              
              Legal
                  Proceedings
              
              40Item
              
              1A.
              
              Risk
                  Factors
              
              41Item
              
              2.
              
              Unregistered
                  Sale of Equity Securities and Use of Proceeds
              
              41Item
              
              3.
              
              Defaults
                  Upon Senior Securities
              
              41Item
              
              4.
              
              Submission
                  of Matters to a Vote of Security Holders
              
              41Item
              
              5.
              
              Other
                  Information
              
              41Item
              
              6.
              
              Exhibits
              
              41SIGNATURES
              
              
              
              44





2




Forward-Looking
      Statements





In
      addition to historical information, this Quarterly Report on Form 10-QSB contains
      forward-looking statements that involve risks and uncertainties that could
      cause actual results to differ materially. Factors that might cause or contribute
      to such differences include, but are not limited to, those discussed in
      the
      section entitled "Management's Discussion and Analysis or Plan of Operation."
      You should carefully review the risks described in other documents we
      file
      from time to time with the Securities and Exchange Commission, including the
      Quarterly Reports on Form 10-QSB that have been or are to be filed in 2007. When
      used
      in this report, the words "expects," "anticipates," "intends," "plans,"
      "believes," "seeks," "targets," "estimates," and similar expressions are
      generally intended to identify forward-looking statements. You should not place
      undue reliance on the forward-looking statements, which speak only as of the
      date
      of this Quarterly Report on Form 10-QSB. We undertake no obligation to publicly
      release any revisions to the forward-looking statements or reflect events
      or
      circumstances after the date of this document.





Estimates
      of future financial results are inherently unreliable.





From
      time
      to time, representatives of Global Axcess Corp (the Company) may make public
      predictions or forecasts regarding the Company's future results, including
      estimates regarding future revenues, expense levels, earnings or earnings
      from operations. Any forecast regarding the Company's future performance
      reflects various assumptions. These assumptions are subject to significant
      uncertainties, and, as a matter of course, many of them will prove to
      be
      incorrect. Further, the achievement of any forecast depends on numerous factors
      (including those described in this discussion), many of which are beyond the
      Company's control. As a result, there can be no assurance that the Company's performance
      will be consistent with any management forecasts or that the variation
      from such forecasts will not be material and adverse. Investors are cautioned
      not to base their entire analysis of the Company's business and prospects
      upon isolated predictions, but instead are encouraged to utilize the entire
      available mix of historical and forward-looking information made available
      by the Company, and other information affecting the Company and its products,
      when evaluating the Company's prospective results of operations.




In
      addition, representatives of the Company may occasionally comment publicly
      on the
      perceived reasonableness of published reports by independent analysts regarding
      the Company's projected future performance. Such comments should not be
      interpreted as an endorsement or adoption of any given estimate or range of estimates
      or the assumptions and methodologies upon which such estimates are based.
      Undue reliance should not be placed on any comments regarding the conformity,
      or lack thereof, of any independent estimates with the Company's own present
      expectations regarding its future results of operations. The methodologies
      employed by the Company in arriving at its own internal projections
      and the approaches taken by independent analysts in making their estimates
      are likely different in many significant respects. Although the Company
      may presently perceive a given estimate to be reasonable, changes in the Company's
      business, market conditions or the general economic climate may
      have


varying
      effects on the results obtained through the use of differing analyses and
      assumptions. The Company expressly disclaims any continuing responsibility to
      advise
      analysts or the public markets of its view regarding the current accuracy
      of the published estimates of outside analysts. Persons relying on such estimates
      should pursue their own independent investigation and analysis of their
      accuracy and the reasonableness of the assumptions on which they are based.




3


**PART
      I - FINANCIAL INFORMATION**





**Item
      1. Financial Statements (unaudited)**





GLOBAL
      AXCESS CORP AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED BALANCE SHEET


September
      30, 2007


(Unaudited)




ASSETSCurrent
                  assetsCash
                  and cash equivalents
              
              $
              530,014Automated
                  teller machine vault cash
              
              
              1,960Accounts
                  receivable, net of allowance for doubtful accounts of
                  $33,376
              
              
              1,161,456Inventory
              
              
              380,762Prepaid
                  expenses and other current assets
              
              
              151,855Total
                  current assets
              
              
              2,226,047Fixed
                  assets, net
              
              
              5,695,037Other
                  assetsMerchant
                  contracts, net
              
              
              12,214,306Intangible
                  assets, net
              
              
              4,176,839Deferred
                  tax asset - non-current
              
              
              339,800Other
                  assets
              
              
              17,001Total
                  assets
              
              $
              24,669,030LIABILITIES
                  AND STOCKHOLDERS' EQUITYCurrent
                  liabilitiesAccounts
                  payable and accrued liabilities
              
              $
              3,796,260Notes
                  payable - related parties - current portion, net
              
              
              19,028Note
                  payable
              
              
              50,000Senior
                  lenders' notes payable - current portion, net
              
              
              600,000Capital
                  lease obligations - current portion
              
              
              1,053,798Total
                  current liabilities
              
              
              5,519,086Long-term
                  liabilitiesNotes
                  payable - related parties - long-term portion, net
              
              
              1,320,809Senior
                  lenders' notes payable - long-term portion, net
              
              
              4,768,737Capital
                  lease obligations - long-term portion
              
              
              1,026,314Total
                  liabilities
              
              
              12,634,946Stockholders'
                  equityPreferred
                  stock; $0.001 par value; 5,000,000 sharesauthorized,
                  no shares issued and outstanding
              
              
              -Common
                  stock; $0.001 par value; 45,000,000 sharesauthorized,
                  21,021,786 shares issued, 20,973,924 outstanding
              
              
              21,022Additional
                  paid-in capital
              
              
              22,415,584Accumulated
                  deficit
              
              
              (10,390,556
              )Treasury
                  stock; 47,862 shares of common stock at cost
              
              
              (11,966
              )Total
                  stockholders' equity
              
              
              12,034,084Total
                  liabilities and stockholders' equity
              
              $
              24,669,030




See
      Accompanying Notes to Condensed Consolidated Financial
      Statements


4





GLOBAL
      AXCESS CORP AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)




For
                    the Three Months EndedSeptember
                    30, 2007
                
                September
                    30, 2006Revenues
                
                $
                5,532,807
                
                $
                5,556,874Cost
                    of revenues
                
                
                3,248,596
                
                
                3,188,105Gross
                    profit
                
                
                2,284,211
                
                
                2,368,769Operating
                    expensesDepreciation
                    and amortization
                
                
                576,815
                
                
                610,981Impairment
                    of long-lived assets
                
                
                -
                
                
                1,329,396Selling,
                    general and administrative
                
                
                1,253,056
                
                
                2,384,450Restructuring
                    charges
                
                
                -
                
                
                757,811Impairment
                    of notes receivable
                
                
                -
                
                
                522,864Stock
                    compensation expense
                
                
                43,851
                
                
                -Total
                    operating expenses
                
                
                1,873,722
                
                
                5,605,502Operating
                    income (loss) from continuing operationsbefore
                    items shown below
                
                
                410,489
                
                
                (3,236,733
                )Interest
                    expense, net
                
                
                (314,787
                )
                
                (399,422
                )Gain
                    on sale of assets
                
                
                500
                
                
                -Loss
                    attributed to minority interest
                
                
                -
                
                
                62,752Income
                    (loss) from continuing operations
                
                $
                96,202
                
                $
                (3,573,403
                )Loss
                    from discontinued operations, net of tax
                
                $
                -
                
                $
                (53,997
                )Net
                    Income (loss)
                
                $
                96,202
                
                $
                (3,627,400
                )Income
                    (loss) per common share - basic:Income
                    (loss) from continuing operations
                
                $
                0.01
                
                $
                (0.17
                )Loss
                    from discontinued operations
                
                $
                -
                
                $
                (0.00
                )Net
                    Income (loss) per common share
                
                $
                0.01
                
                $
                (0.17
                )Income
                    (loss) per common share - diluted:Income
                    (loss) from continuing operations
                
                $
                0.01
                
                $
                (0.17
                )Loss
                    from discontinued operations
                
                $
                -
                
                $
                (0.00
                )Net
                    Income (loss) per common share
                
                $
                0.01
                
                $
                (0.17
                )Weighted
                    average common shares outstanding:Basic
                
                
                20,973,924
                
                
                21,021,243Diluted
                
                
                20,973,924
                
                
                21,021,243




See
      Accompanying Notes to Condensed Consolidated Financial
      Statements


5





GLOBAL
      AXCESS CORP AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)




For
                  the Nine Months EndedSeptember
                  30, 2007
              
              September
                  30, 2006Revenues
              
              $
              16,400,007
              
              $
              16,232,522Cost
                  of revenues
              
              
              9,610,767
              
              
              9,234,923Gross
                  profit
              
              
              6,789,240
              
              
              6,997,599Operating
                  expensesDepreciation
                  and amortization
              
              
              1,683,729
              
              
              1,824,868Impairment
                  of long-lived assets
              
              
              -
              
              
              1,329,396Selling,
                  general and administrative
              
              
              4,011,515
              
              
              5,520,263Restructuring
                  charges
              
              
              -
              
              
              757,811Impairment
                  of notes receivable
              
              
              5,743
              
              
              812,756Recovery
                  of bad debts
              
              
              (100,000
              )
              
              -Stock
                  compensation expense
              
              
              49,181
              
              
              (11,698
              )Other
                  expense
              
              
              -
              
              
              450,000Total
                  operating expenses
              
              
              5,650,168
              
              
              10,683,396Operating
                  income (loss) from continuing operationsbefore
                  items shown below
              
              
              1,139,072
              
              
              (3,685,797
              )Interest
                  expense, net
              
              
              (923,227
              )
              
              (1,039,685
              )Gain
                  (loss) on sale or disposal of assets
              
              
              (22,517
              )
              
              13,655Loss
                  attributed to minority interest
              
              
              -
              
              
              109,351Income
                  (loss) from continuing operations
              
              $
              193,328
              
              $
              (4,602,476
              )Income
                  (loss) from discontinued operations, net of tax
              
              $
              175,000
              
              $
              (275,937
              )Net
                  Income (loss)
              
              $
              368,328
              
              $
              (4,878,413
              )Income
                  (loss) per common share - basic:Income
                  (loss) from continuing operations
              
              $
              0.01
              
              $
              (0.22
              )Income
                  (loss) from discontinued operations
              
              $
              0.01
              
              $
              (0.01
              )Net
                  Income (loss) per common share
              
              $
              0.02
              
              $
              (0.23
              )Income
                  (loss) per common share - diluted:Income
                  (loss) from continuing operations
              
              $
              0.01
              
              $
              (0.22
              )Income
                  (loss) from discontinued operations
              
              $
              0.01
              
              $
              (0.01
              )Net
                  Income (loss) per common share
              
              $
              0.02
              
              $
              (0.23
              )Weighted
                  average common shares outstanding:Basic
              
              
              20,993,209
              
              
              20,987,328Diluted
              
              
              20,994,711
              
              
              20,987,328




See
      Accompanying Notes to Condensed Consolidated Financial Statements




6


GLOBAL
      AXCESS CORP AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)




For
                  the Nine Months EndedSeptember
                  30, 2007
              
              September
                  30, 2006Cash
                  flows from operating activities:Income
                  (loss) from continuing operations
              
              $
              193,328
              
              $
              (4,602,476
              )Adjustments
                  to reconcile net income (loss) from continuing operationsto
                  net cash provided by continuing operating activities:Stock
                  based compensation
              
              
              49,181
              
              
              (11,698
              )Depreciation
                  and amortization
              
              
              1,683,729
              
              
              1,824,868Impairment
                  of long-lived assets
              
              
              -
              
              
              1,329,396Allowance
                  for doubtful accounts
              
              
              (25,729
              )
              
              171,402Accretion
                  of discount on notes payable
              
              
              124,489
              
              
              115,779Impairment
                  of notes receivable
              
              
              5,743
              
              
              812,756Loss
                  attributed to minority interest
              
              
              -
              
              
              (109,351
              )Loss
                  on sale or disposal of assets
              
              
              22,517
              
              
              -Changes
                  in operating assets and liabilities:Change
                  in automated teller machine vault cash
              
              
              24,260
              
              
              277,903Change
                  in accounts receivable
              
              
              53,153
              
              
              (55,307
              )Change
                  in other receivable
              
              
              15
              
              
              -Change
                  in inventory
              
              
              19,716
              
              
              (92,348
              )Change
                  in prepaid expenses and other current assets
              
              
              83,462
              
              
              47,533Change
                  in other assets and deferred revenue
              
              
              15,529
              
              
              (58,944
              )Change
                  in intangible assets, net
              
              
              6,774
              
              
              -Change
                  in accounts payable and accrued liabilities
              
              
              (394,825
              )
              
              1,472,317Change
                  in automated teller machine vault cash payable
              
              
              (26,220
              )
              
              (277,903
              )Net
                  cash provided by continuing operating activitities
              
              
              1,835,122
              
              
              843,926Discontinued
                  operationsNet
                  income (loss)
              
              
              175,000
              
              
              (275,937
              )Adjustments
                  to reconcile net income (loss) to net cash used indiscontinued
                  operations:Change
                  in deferred gain on sale of subsidiary
              
              
              (175,000
              )
              
              -Depreciation
              
              
              -
              
              
              62,162Change
                  in accounts receivable
              
              
              -
              
              
              (22,179
              )Change
                  in accounts payable and accrued liabilities
              
              
              -
              
              
              59,867Change
                  in prepaid expenses and other current assets
              
              
              -
              
              
              (20,358
              )Net
                  cash used in discontinued operating activities
              
              
              -
              
              
              (196,445
              )Net
                  cash provided by continuing and discontinued operating
                  activities
              
              
              1,835,122
              
              
              647,481Cash
                  flows from investing activities:Proceeds
                  from other receivable related to sale of subsidiary
              
              
              175,000
              
              
              -Insurance
                  proceeds on disposal of fixed assets
              
              
              35,390
              
              
              -Costs
                  of acquiring merchant contracts
              
              
              (224,228
              )
              
              -Purchase
                  of property and equipment
              
              
              (600,214
              )
              
              (665,208
              )Proceeds
                  from merchant contract escrow reimbursement
              
              
              -
              
              
              265,160Net
                  cash used in investing activities
              
              
              (614,052
              )
              
              (400,048
              )Cash
                  flows from financing activities:Proceeds
                  from issuance of common stock
              
              
              -
              
              
              23,950Proceeds
                  from bank notes
              
              
              -
              
              
              400,000Proceeds
                  from lease buybacks
              
              
              -
              
              
              204,306Principal
                  payments on senior lenders' notes payable
              
              
              (508,332
              )
              
              (1,618,749
              )Principal
                  payments on notes payable
              
              
              -
              
              
              (91,855
              )Principal
                  payments on notes payable - related parties
              
              
              (13,653
              )
              
              (1,730
              )Principal
                  payments on capital lease obligations
              
              
              (922,915
              )
              
              (819,869
              )Net
                  cash used in financing activities
              
              
              (1,444,900
              )
              
              (1,903,947
              )Effect
                  of exchange rate fluctuation on cash in discontinued
                  operations
              
              
              -
              
              
              (98,078
              )Decrease
                  in cash
              
              
              (223,830
              )
              
              (1,754,592
              )Cash,
                  beginning of period
              
              
              753,844
              
              
              2,358,119Cash,
                  end of the period
              
              $
              530,014
              
              $
              603,527Cash
                  paid for interest
              
              $
              716,004
              
              $
              923,907




See
      Accompanying Notes to Condensed Consolidated Financial Statements




7




Supplemental
      schedule of non-cash investing and financing activities:




For
                  the Nine Months EndedSeptember
                  30, 2007
              
              September
                  30, 2006Investing
                  activities:Purchase
                  of assets under capital lease obligations
              
              $
              89,394
              
              $
              1,146,284Note
                  on sale of subsidiary
              
              
              -
              
              
              700,000Total
                  non-cash investing activities
              
              $
              89,394
              
              $
              1,846,284Financing
                  activitiesStock
                  issued for compensation
              
              $
              49,181
              
              $
              22,218Discount
                  of notes payable
              
              
              124,489
              
              
              115,779Total
                  non-cash financing activities
              
              $
              173,670
              
              $
              137,997Settlement
                  of note receivable through issuance of treasury stock:Note
                  receivable
              
              $
              (17,709
              )
              $
              -Impairment
                  of notes receivable
              
              
              5,743
              
              
              -Repurchase
                  of treasury stock, 47,862 shares of common stock at cost
              
              $
              (11,966
              )
              $
              -




See
      Accompanying Notes to Condensed Consolidated Financial
      Statements


8


GLOBAL
      AXCESS CORP AND SUBSIDIARIES


NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


AS
      OF
      September 30, 2007


(Unaudited)




**1.**
            **BASIS
                OF PRESENTATION**





The
      accompanying unaudited condensed consolidated financial statements have
      been
      prepared in accordance with Securities and Exchange Commission requirements
      for interim financial statements. Therefore, they do not include
      all of the information and footnotes required by accounting principles
      generally accepted in the United States of America for complete financial
      statements. These condensed consolidated financial statements should
      be
      read in conjunction with the Form 10-KSB for the year ended December
      31, 2006 of Global Axcess Corp and subsidiaries ("the Company").





The
      condensed consolidated financial statements present the condensed
      consolidated balance sheet, statements of operations, and cash flows
      of
      Global Axcess Corp and its subsidiaries. The condensed consolidated
      financial statements have been prepared in accordance with accounting
      principles generac ly accepted in the United States of America.





The
      condensed consolidated statements of operations and cash flows also include
      discontinued operations from Global Axcess Corp’s former subsidiaries.





The
      condensed consolidated financial information is unaudited. In the
      opinion of management, all adjustments necessary to present fairly the financial
      position as of September 30, 2007 and the results of operations and cash flows
      presented herein have been included in the condensed consolidated
      financial statements. Interim results are not necessarily indicative
      of results of operations for the full year.





***Executive
      Stock Option Grants***





Effective
      April 2, 2007, the Board of Directors of Global Axcess Corp granted 1,000,000
      incentive stock options to executive management of the Company. 25% of the
      stock
      options under this grant are performance based vesting upon achievement of
      aggressive financial goals (unrelated to targeted net income). Even though
      these
      performance based goals are aggressive in nature, management currently believes
      vesting is probable, and accordingly in accordance with Statement of Financial
      Accounting Standards No. 123 (Revised 2004), "Share-Based Payment," (SFAS 123
      (R)), compensation costs have been accrued for these options as of September
      30,
      2007.





In
      addition, 25% of the stock options under the above grant are based on a market
      condition, exercisable upon achievement of an aggressive Company stock price.
      In
      accordance with SFAS 123(R), the effect of the market condition has been
      reflected in the market value, and the related compensation cost, of these
      options.





***Performance
      Based Incentive Bonus Plan***





Effective
      fiscal 2007, the Company implemented a performance based incentive program
      for
      several employees and management of the Company. A quarterly cash bonus pool
      is
      funded by the Company’s achievement of operating profits from continuing
      operations. During the nine-month period ended September 30, 2007 the Company
      recorded $21,398 of expenses relating to this plan.




9




***Performance
      Based 401k Contribution Plan***





Effective
      fiscal 2007, the Company implemented a performance based incentive program
      matching 401k contributions. For each quarter the Company achieves its Net
      Income budget, the Company will match up to 50% of the first 6% of an employee’s
      401k contributions during that respective quarter. During the nine-month period
      ended September 30, 2007 the Company recorded $7,917 of expenses relating to
      this plan.





***Senior
      Lender Debt Agreement***





On
      September 28, 2007, the Company entered into a Fourth Amended and Restated
      Loan
      Agreement with Wachovia Bank. Concurrent with the execution of the Fourth
      Restated Loan Agreement, the Company issued a Consolidated Renewal Promissory
      Note on September 28, 2007. The Renewal Promissory Note consolidated the
      promissory note dated October 27, 2005 in the original principal amount of
      $3,000,000 and with a September 28, 2007 balance of $1,850,000 and the revolving
      line of credit dated June 22, 2005 with a September 28, 2007 principal amount
      of
      $500,000.





Pursuant
      to the terms of the Fourth Restated Loan Agreement certain required financial
      covenants have been modified from the Third Amended and Restated Loan Agreement.
      The Company is now required to maintain a debt service coverage ratio of 1.00
      to
      1.00 on or before December 31, 2007, and of not less than 1.25 to 1.00 at all
      times thereafter. Further, the Company is now required to maintain a senior
      funded debt to EBITDA ratio of not more than 1.50 to 1.00 on or before December
      31, 2007, and of not more than 1.25 to 1.00 at all times thereafter. In
      addition, the Company is now required to maintain a senior liabilities to
      effective net worth ratio of not more than 2.75 to 1.00 on or before September
      30, 2007, of not more than 2.50 to 1.00 after September 30, 2007, and on or
      before December 31, 2007, of not more than 2.25 to 1.00 after December 31,
      2007,
      and on or before June 30, 2008, and of not more than 2.00 to 1.00 at all times
      thereafter.





As
      of
      September 30, 2007 the Company was in compliance with all three required
      covenants.




All
      fiscal year 2007 adjustments are of normal recurring nature with the exception
      of:





·
            $100,000 recovery of bad debts (see Note #4 “Notes
              Receivable”)  ·
            $175,000
                gain on sale of assets (see Note #3 “Discontinued
                Operations”)


·
            Settlement
                of a note receivable on April 20, 2007 whereby the 47,862 shares
                of
                Company stock being held as collateral were returned as settlement
                of the
                note (see Note #4 “Notes Receivable”). The Company recorded the $11,966
                market value of the returned shares as Treasury
                stock.




**2.**
            **DESCRIPTION
                OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
                POLICIES**





***Description
      of Business***




Global
      Axcess Corp, through its wholly owned subsidiaries, is an independent provider
      of Automated Teller Machine ("ATM") services.




10




***Significant
      Accounting Policies***





The
      preparation of financial statements and related disclosures in conformity with
      accounting principles generally accepted in the United States of America
      requires management to make judgments, assumptions and estimates that affect
      the
      amounts reported in the Company’s condensed consolidated financial statements
      and accompanying notes. The Company bases its estimates and judgments on
      historical experience and on various other assumptions that it believes are
      reasonable under the circumstances. However, future events are subject to
      change, and the best estimates and judgments routinely require adjustment.
      The
      amounts of assets and liabilities reported in its condensed consolidated balance
      sheet, and the amounts of revenues and expenses reported for each of its fiscal
      periods, are affected by estimates and assumptions which are used for, but
      not
      limited to, the accounting for allowance for doubtful accounts, goodwill and
      intangible asset impairments, restructurings, inventory and income taxes. Actual
      results could differ from these estimates. The following accounting policies
      are
      significantly affected by judgments, assumptions and estimates used in the
      preparation of the Company’s consolidated financial statements.





***Cash
      Equivalents***





The
      Company considers all highly-liquid investments with a maturity of three months
      or less when purchased to be cash equivalents.




***Principles
      of Consolidation***





The
      condensed consolidated financial statements include the accounts of Global
      Axcess Corp and its subsidiaries. The Company has the following subsidiaries:
      Nationwide Money Services, Inc., EFT Integration, Inc. (EFTI) and Cash Axcess
      Corporation (Proprietary) Limited (see Note #3 referring to subsidiaries
      included as discontinued operations). All significant intercompany transactions
      and accounts have been eliminated in consolidation.





***Reclassifications***





Certain
      reclassifications were made to the 2006 condensed consolidated statements of
      operations to conform to 2007 presentation. These reclassifications had no
      impact on net income (loss) or stockholders’ equity for the periods
      presented.





***Use
      of Estimates***





The
      preparation of the condensed consolidated 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 amounts
      reported in the condensed consolidated financial statements and accompanying
      notes. Actual results could differ from these estimates.




***Revenue
      Recognition***





Transaction
      service and processing fees are recognized in the period that the service is
      performed. The Company receives two types of fees: surcharge/convenience fees
      paid by consumers utilizing certain ATMs owned or managed by the Company; and
      interchange fees paid by their banks. Processing fees are generally charged
      on a
      per transaction basis, depending on the contractual arrangement with the
      customer. ATM sales revenue is recognized when the ATM is shipped and installed.
      Revenue from managing ATMs for others is recognized each month when the services
      are performed.




11




***Inventory***





Inventory
          is stated at the lower of cost (first-in, first-out method) or market.
          Inventory
          consists primarily of ATMs and related parts and equipment, including parts
          relating to upgrading ATMs to become Triple DES compliant. Parts relating
          to
          upgrading ATMs to become Triple DES compliant are recorded to fixed assets
          when
          the part is placed into service, if the ATM is Company owned. Parts relating
          to
          upgrading ATMs to become Triple DES compliant are recorded to Merchant
          Contracts
          when the part is placed into service, if the ATM is merchant owned and
          the
          merchant signs a term extension to an existing contract. The cost of the
          part
          will subsequently be amortized over the life of the contract extension.
          Parts
          relating to upgrading ATMs to become Triple DES compliant are expensed
          when the
          part is placed into service, if the Company upgrades the merchant owned
          ATMs at
          no charge to the merchant. ATMs and parts available for sale are classified
          as
          inventory until such time as the machine or part is sold or installed and
          in
          service. Once the ATM or part is sold, it is relieved to cost of revenues.
          At
          September 30, 2007, the Company's inventory totaled $380,762, of which
          $276,282
          were parts related to upgrading ATMs to become Triple DES
          compliant.


***Accounts
      Receivable and Allowance for Doubtful Accounts***





The
      Company reviews the accounts receivable on a regular basis to determine the
      collectibility of each account. The Company maintains allowances for doubtful
      accounts for estimated losses resulting from the failure of its customers to
      make required payments. At each reporting period, the Company evaluates the
      adequacy of the allowance for doubtful accounts and calculates the appropriate
      allowance based on historical experience, credit evaluations, specific customer
      collection issues and the length of time a receivable is past due. The Company
      records an allowance for doubtful accounts for any billed invoice aged past
      60
      days. When the Company deems the receivable to be uncollectible, the Company
      charges the receivable against the allowance for doubtful accounts. As of
      September 30, 2007, the Company had bad debt reserves totaling $33,376 against
      gross accounts receivable totaling $1,194,832.




***Fixed
      Assets***





Fixed
      assets are stated at cost, less accumulated depreciation and amortization.
      Depreciation is calculated principally on the straight-line method over the
      estimated useful lives of the assets, which generally range from 3 to 10 years.
      Leasehold improvements are amortized on a straight-line basis over the shorter
      of the lease term or the life of the asset. The cost of repairs and maintenance
      is charged to expense as incurred. Expenditures for property improvements and
      renewals are capitalized, if they extend the useful life of the related asset.
      Upon the sale or other disposition of a depreciable asset, cost and accumulated
      depreciation are removed from the accounts and any gain or loss is reflected
      in
      gain (loss) on sale of assets.




12




The
      Company periodically evaluates whether events and circumstances have occurred
      that may warrant revision of the estimated useful life of fixed assets or
      whether the remaining balance of fixed assets should be evaluated for possible
      impairment. The Company uses an estimate of the related undiscounted cash flows
      over the remaining life of the fixed assets in measuring their recoverability,
      as well as historical age, to estimate useful economic lives and values. The
      Company reviews fixed assets for impairment and if it finds impairment, the
      Company accounts for the impairment in accordance with SFAS No. 144 “Accounting
      for the Impairment or Disposal of Long-Lived Assets” (see Note #5 referring to
      impairment of long-lived assets).





***Assets
      Held for Sale***





ATMs
      and
      related software components which are not currently in service are classified
      as
      assets held for sale, until such time either the machine is installed or
      reinstalled and in service, sold, or deemed to be impaired. Once in service,
      each ATM is reclassified as a fixed asset and depreciated using the remaining
      estimated useful life of the machine. Any ATM and related software components
      classified as fixed assets held for sale and then sold would be considered
      a
      disposal group and a gain or loss on the sale would be recorded. During fiscal
      year 2006, the Company reviewed the Assets Held for Sale for impairment and
      found the assets held for sale to be impaired. The Company accounted for the
      impairment in accordance with SFAS No. 144 ”Accounting for the Impairment or
      Disposal of Long-lived Assets”. During the fiscal year ended December 31, 2006,
      the Company recorded approximately $1.3 million of impairment of long-lived
      assets, and of that amount, $485,315 related to impairment of assets held for
      sale (see Note #5 referring to impairment of long-lived assets).





***Intangible
      Assets - Goodwill and Merchant Contracts***





In
      June
      2001, the FASB issued SFAS No. 142, “Goodwill and Other Intangible Assets,”
which was adopted by the Company in fiscal 2002. SFAS No. 142 established
      accounting and reporting standards for goodwill and intangible assets resulting
      from business combinations. SFAS No. 142 included provisions discontinuing
      the
      periodic amortization of, and requiring the assessment of the potential
      impairments of goodwill (and intangible assets deemed to have indefinite lives).
      As SFAS No. 142 replaced the measurement guidelines for goodwill impairment,
      goodwill not considered impaired under previous accounting literature may be
      considered impaired under SFAS No. 142. SFAS No. 142 also required that the
      Company complete a two-step goodwill impairment test. The first step compares
      the fair value of each reporting unit to its carrying amount, including
      goodwill. If the fair value of a reporting unit exceeded its carrying amount,
      goodwill is not considered to be impaired and the second step is not required.
      SFAS No. 142 required completion of this first step within the first six months
      of initial adoption and annually thereafter. If the carrying amount of a
      reporting unit exceeded its fair value, the second step is performed to measure
      the amount of impairment loss. The second step compared the implied fair value
      of goodwill to the carrying value of a reporting unit's goodwill. The implied
      fair value of goodwill is determined in a manner similar to accounting for
      a
      business combination with the allocation of the assessed fair value determined
      in the first step to the assets and liabilities of the reporting unit. The
      excess of the fair value of the reporting unit over the amounts assigned to
      the
      assets and liabilities is the implied fair value of goodwill. This allocation
      process is only performed for purposes of evaluating goodwill impairment and
      does not result in an entry to adjust the value of any assets or liabilities.
      An
      impairment loss is recognized for any excess in the carrying value of goodwill
      over the implied fair value of goodwill.




13




Intangible
      assets with finite lives and merchant contracts are stated at cost, net of
      accumulated amortization, and are subject to impairment testing under certain
      circumstances in accordance with SFAS No. 144 and other applicable
      pronouncements. These assets are amortized on the straight-line method over
      their estimated useful lives or period of expected benefit. These assets are
      subject to periodic impairment testing in accordance with SFAS No.
      142.





The
      Company’s merchant contracts are made up of contracts with automatic renewable
      lives. The Company has determined after review of its contracts that the
      economic life of the contracts is extended and estimated over 21 years (or
      3
      times renewal) based on historical and expected useful lives of similar assets.
      The Company amortizes the merchant contracts over their estimated useful lives
      of 21 years. The Company has adopted SFAS No. 142 to reflect the fair value
      of
      the merchant contracts, and uses a two step valuation process to determine
      if
      there has been any impairment on the value of the merchant contract assets.
      The
      first step is to periodically assess the remaining contract lives, including
      expected renewals. If the periodic assessment results in a determination that
      the economic lives of the merchant contracts are less than 21 years, the Company
      adjusts the remaining amortization lives of the merchant contracts. The second
      step is to compare the estimated future undiscounted cash flows of each
      reporting unit to the carrying amount of the merchant contracts, thus testing
      the impairment of the value of the contracts. An impairment loss is recognized
      for any excess in the carrying value of merchant contracts over the assessed
      fair value of merchant contracts. To date, the Company’s testing has indicated
      that there is no impairment of its goodwill and merchant contracts.





As
      of
      September 30, 2007 the Company has accumulated amortization totaling $2,413,567
      against merchant contracts totaling $14,627,873.





As
      of
      September 30, 2007 the Company has accumulated amortization totaling $350,899
      against intangible assets totaling $4,527,738.





***Fair
      Value of Financial Instruments***




The
      carrying amounts of the Company’s long-term liabilities approximate the
      estimated fair values at September 30, 2007, based upon the Company’s ability to
      acquire similar debt at similar maturities. The carrying values of all other
      financial instruments approximate their fair value, because of the short-term
      maturities of these instruments.





***Earnings
      per Share***




In
      calculating basic income (loss) per share, net income (loss) is divided by
      the
      weighted average number of common shares outstanding for the period. Diluted
      income (loss) per share reflects the assumed exercise or conversion of all
      dilutive securities, such as options and warrants. No such exercise or
      conversion is assumed where the effect is anti-dilutive, such as when there
      is a
      net loss from continuing operations. Stock options to purchase 1,628,425 shares
      of common stock that were outstanding at September 30, 2007 were not included
      in
      the computation of diluted earnings per share because the exercise prices of
      these stock options were greater than the average share price of the Company’s
      common stock and, therefore, the effect would have been antidilutive. No
      warrants outstanding at September 30, 2007 were included in the computation
      of
      diluted earnings per share. The diluted earnings per share amount equals basic
      earnings per share for the three and nine months ended September 30, 2006
      because the Company had a net loss from continuing operations and the impact
      of
      the assumed exercise of the stock options and warrants is
      anti-dilutive.




14




For
                  the Three Months EndedSeptember
                  30, 2007
              
              September
                  30, 2006NumeratorIncome
                  (loss) from continuing operations
              
              $
              96,202
              
              $
              (3,573,403
              )Loss
                  from discontinued operations
              
              $
              -
              
              $
              (53,997
              )Numerator
                  for diluted income (loss) per shareavailable
                  to common stockholders
              
              $
              96,202
              
              $
              (3,627,400
              )DenominatorWeighted
                  average shares
              
              
              20,973,924
              
              
              21,021,243Effect
                  of dilutive securities:Treasury
                  method, effect of employee stock options&
                  warrants
              
              
              -
              
              
              -Denominator
                  for diluted income (loss) per share adjustedweighted
                  shares after assumed exercises
              
              
              20,973,924
              
              
              21,021,243**Income
                  (loss) per common share - basic:**Income
                  (loss) from continuing operations
              
              $
              0.01
              
              $
              (0.17
              )Loss
                  from discontinued operations
              
              $
              -
              
              $
              (0.00
              )Net
                  Income (loss) per common share
              
              $
              0.01
              
              $
              (0.17
              )**Income
                  (loss) per common share - diluted:**Income
                  (loss) from continuing operations
              
              $
              0.01
              
              $
              (0.17
              )Loss
                  from discontinued operations
              
              $
              -
              
              $
              (0.00
              )Net
                  Income (loss) per common share
              
              $
              0.01
              
              $
              (0.17
              )




15




For
                    the Nine Months EndedSeptember
                    30, 2007
                
                September
                    30, 2006NumeratorIncome
                    (loss) from continuing operations
                
                $
                193,328
                
                $
                (4,602,476
                )Income
                    (loss) from discontinued operations
                
                $
                175,000
                
                $
                (275,937
                )Numerator
                    for diluted income (loss) per shareavailable
                    to common stockholders
                
                $
                368,328
                
                $
                (4,878,413
                )DenominatorWeighted
                    average shares
                
                
                20,993,209
                
                
                20,987,328Effect
                    of dilutive securities:Treasury
                    method, effect of employee stock options&
                    warrants
                
                
                1,502
                
                
                -Denominator
                    for diluted income (loss) per share adjustedweighted
                    shares after assumed exercises
                
                
                20,994,711
                
                
                20,987,328**Income
                    (loss) per common share - basic:**Income
                    (loss) from continuing operations
                
                $
                0.01
                
                $
                (0.22
                )Income
                    (loss) from discontinued operations
                
                $
                0.01
                
                $
                (0.01
                )Net
                    Income (loss) per common share
                
                $
                0.02
                
                $
                (0.23
                )**Income
                    (loss) per common share - diluted:**Income
                    (loss) from continuing operations
                
                $
                0.01
                
                $
                (0.22
                )Income
                    (loss) from discontinued operations
                
                $
                0.01
                
                $
                (0.01
                )Net
                    Income (loss) per common share
                
                $
                0.02
                
                $
                (0.23
                )




***Income
      Taxes***





The
      Company accounts for its income taxes in accordance with SFAS No. 109
“Accounting for Income Taxes”, which requires recognition of deferred tax assets
      and liabilities for future tax consequences attributable to differences between
      the financial statement carrying amounts of existing assets and liabilities
      and
      their respective tax basis and tax credit carry-forwards. Deferred tax assets
      and liabilities are measured using enacted tax rates expected to apply to
      taxable income in the years in which those temporary differences are expected
      to
      be recovered or settled. The effect on deferred tax assets and liabilities
      of a
      change in tax rates is recognized in income in the period that includes the
      enactment date.





***Research
      and Development Costs***





Research
      and development costs are charged to expense when incurred. Costs incurred
      to
      internally develop software, incurred during the research and planning phase
      of
      development, are charged to expense as incurred, and direct costs incurred
      during development, testing and implementation are capitalized as incurred
      over
      the useful life of the software and amortized for an average life of three
      years. During the three-month periods ended September 30, 2007 and 2006, the
      amount of research and development costs, which were borne entirely by the
      Company, amounted to $0 and $125,504, respectively.




16




***Repairs
      and Maintenance Costs***





Repairs
      and maintenance costs are expensed as incurred. Repairs and maintenance
      pertaining to the Company’s ATMs are recorded in cost of revenues. The Company
      records repairs and maintenance costs relating to general office and backend
      related equipment to general and administrative costs.





***Stock-based
      Compensation***





Effective
      January 1, 2006, the Company adopted the fair value recognition provisions
      of
      Statement of Financial Accounting Standards ("SFAS") No. 123 (Revised 2004),
      "Share-Based Payment," using the modified-prospective-transition method which
      requires us to recognize compensation expense on a prospective basis. SFAS
      No.
      123(R) requires that all stock based compensation be recognized as an expense
      in
      the financial statements and that such cost be measured at the fair value of
      the
      award. Under this method, in addition to reflecting compensation for new
      share-based awards, expense is also recognized to reflect the remaining service
      period of awards that had been included in pro-forma disclosure in prior
      periods. Prior period financial statements have not been restated. The stock
      based compensation expense is included in operating expenses in the consolidated
      statements of operations.




***Recent
      Accounting Pronouncements***





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. SFAS
      No. 157 provides guidance on the definition of fair value, methods to measure
      fair value, and expanded disclosures of fair value. SFAS No. 157 is effective
      as
      of the first interim or annual reporting period that begins after November
      15,
      2007. Accordingly, the Company will adopt SFAS No. 157 in its quarter ending
      March 31, 2008. The Company is currently evaluating the provisions of SFAS
      No.
      157 and has not yet determined the impact, if any, that SFAS No. 157 will have
      on its financial statement presentation or disclosures.




**3.**
            **DISCONTINUED
                OPERATIONS**




On
      May 2,
      2006, the Company entered into a Shareholder Agreement to sell 50% of Cash
      Axcess Corporation (Proprietary) Limited (CAC), in a stock arrangement with
      Industrial Electronic Investments Limited.  Under
      the
      requirements of FASB Interpretation No. 46(R), this transaction constituted
      a
      variable interest for the Company, with the Company being determined as the
      primary beneficiary. During the quarter ended September 30, 2006, the Company
      approved plans to discontinue its South African operation which did not fit
      within management’s strategic plans. On September 30, 2006, the Company
      finalized the sale of the remaining 50% of CAC, its Variable Interest Entity.
      In
      accordance with FASB Statement No. 144, "Accounting for the Impairment or
      Disposal of Long-Lived Assets," the Company has classified CAC as discontinued
      operations and reported their operating results within discontinued operations
      in the accompanying condensed consolidated statements of income and statements
      of cash flow.




17




The
      Company has not allocated interest to discontinued operations. Operating results
      of these discontinued operations were as follows for the three-month and
      nine-month periods ended September 30, 2006:




For
                    the Three Months Ended
                
                For
                    the Nine Months EndedSeptember
                    30, 2006
                
                September
                    30, 2006Revenues
                
                $
                36,593
                
                $
                138,138Cost
                    of revenues
                
                
                21,228
                
                
                66,442Gross
                    Profit
                
                
                15,365
                
                
                71,696Operating
                    ExpensesDepreciation
                    and amortization
                
                
                22,808
                
                
                62,162Selling,
                    general and administrative
                
                
                118,061
                
                
                356,978Total
                    operating expenses
                
                
                140,869
                
                
                419,140Loss
                    from operations
                
                
                (125,504
                )
                
                (347,444
                )Gain
                    on sale of assets
                
                
                71,507
                
                
                71,507Net
                    loss
                
                $
                (53,997
                )
                $
                (275,937
                )




As
      part
      of the aforementioned sale of 50% of CAC on September 30, 2006, $175,000 of
      the
      sales price was held in an escrow account as security to cover any claims made
      in connection with a breach of any of the Company's warranties in the sale
      agreement. The warranty period ended and the Company received the full escrowed
      amount of $175,000 on March 28, 2007. The Company recognized the $175,000
      deferred gain on sale as income from discontinued operations during the
      three-month period ended March 31, 2007.




**4.**
            **NOTES
                RECEIVABLE**





During
      the quarter ended September 30, 2005, the Company disposed of its wholly-owned
      subsidiary, Electronic Payment & Transfer Corporation (“EPT”), and
      discontinued offering prepaid debit cards and the related products and services
      that were marketed by EPT. Subsequently, effective September 30, 2005, the
      Company completed the sale of EPT to one former employee of the Company for
      $1,540,000 in a secured promissory note covering the full amount of the sale
      price. On August 1, 2006, Electronic Payment Systems, LLC (“EPS”), the acquirer,
      failed to make its required payment and was in default of the Stock Purchase
      Agreement made and entered into as of September 30, 2005. The Company sent
      a
      default notification letter on August 2, 2006 and EPS had thirty days to cure
      the default. EPS has failed to make any payment to date; therefore the Company
      determined that it is unlikely that the purchaser will repay the note. The
      Company and EPS were in negotiations to amend the note to $500,000, however
      no
      agreement had been reached. Additionally, management determined that is was
      unlikely that the Company would receive financial information from EPS to assist
      in supporting collectibility and increased the reserve by $778,360 during the
      year ended December 31, 2006, which together with the previous reserve, reduced
      the carrying value to zero. On June 29, 2007, the Company settled all claims
      against EPS in exchange for a payment of $100,000. Additionally, in the event
      EPT is sold or merged into another entity within 3 years from the date of the
      settlement, the Company is entitled to receive an additional $200,000 payment.
      During the nine-month period ended September 30, 2007, the Company recorded
      the
      $100,000 settlement as a recovery of bad debts. The $100,000 payment was
      received on July 6, 2007.




18




**5.**
              **IMPAIRMENT
                  OF LONG-LIVED ASSETS AND BUSINESS REORGANIZATION
                  CHARGES**
  ***Impairment
        of Long-lived assets***
 
 As
        discussed in Note #2 “Description of Business and Summary of Significant
        Accounting Policies”, the Company accounts for the impairment of long-lived
        assets in accordance with SFAS No. 144 ”Impaired Long-Lived Assets and
        Long-Lived Assets to be Disposed of”.
 
 In
        July
        2006, the Company disconnected its processing switch which processed the
        transactions for its subsidiary EFT Integration, Inc. and replaced its switching
        software with a third party vendor. Accordingly, the switching software was
        evaluated for impairment and deemed to be impaired.
 
 Assets
        held for sale, consisting of ATMs and related software, were reevaluated
        for
        impairment. Of the $485,315 total assets held for sale, $125,586 worth of
        ATMs
        were determined to be useful and able to be placed back in service. In
        accordance with SFAS No. 144 ” Accounting for the Impairment or Disposal of
        Long-lived Assets”, these useful assets were to be placed back into service at
        zero book value which is their depreciated value had they not been held for
        sale. Therefore, the full balance of assets held for sale was determined
        to be
        fully impaired.
 
 Additionally,
        the Company reviewed other ATMs and software for impairment and determined
        that
        some of the Company’s other ATMs and software were impaired. The following
        summarizes the amounts charged to impairment of long-lived assets for fiscal
        year ended December 31, 2006:
 Long-lived
                    asset description
                
                Net
                    Book Value
                
                Estimated
                    proceeds from disposition
                
                Impairment
                    ChargeSwitching
                    software
                
                $
                610,024
                
                
                -
                
                $
                610,024Assets
                    held for sale
                
                $
                485,315
                
                
                -
                
                $
                485,315ATMs
                    and other software
                
                $
                234,057
                
                
                -
                
                $
                234,057$
                1,329,396
 ***Business
        Restructuring Costs***
 
 During
        the quarter ended September 30, 2006, the Company evaluated its business
        plan
        and developed a plan for business reorganization. Included in this
        business-reorganization plan was the decision to sell its South African Variable
        Interest Entity (Under the requirements of FASB Interpretation No. 46(R),
        the
        Company has a variable interest in this entity, with the Company being
        determined as the primary beneficiary), CAC (see Note #3 “Discontinued
        Operations”); the decision to shut down the aforementioned switching platform
        and migrate to third party vendor for processing (see above); the decision
        to
        reevaluate the plan to reinstall assets held for sale back into service (see
        above); and the decision to reevaluate other ATMs and software for impairment
        (see above). Additionally, the Company decided to restructure management
        and to
        outsource certain employee functions to third party vendors. As part of this
        decision to eliminate the positions held by the two senior officers and other
        employees, the Company incurred restructuring charges during the third quarter
        of 2006 in the amount of $757,811. As of December 31, 2006 the amount of
        restructuring charges accrued was $484,345. As of September 30, 2007, the
        amount
        of remaining accrued restructuring charges was $184,276.
 
 19
  **6.**
              **COMMITMENTS
                  AND CONTINGENCIES**
  We
        lease
        ATMs under capital lease agreements that expire between 2007 and 2011 and
        provide for lease payments at interest rates from 3.73% up to 18.71% per
        annum.
        The majority of the capital lease agreements, which total approximately 76%
        of
        our September 30, 2007 balances, are at interest rates at or below 12.11%.
        See
        Financial Footnote #15 to the Consolidated Financial Statements in the Form
        10-KSB Annual Report. Capital leases entered into during the nine-month period
        ended September 30, 2007 mature in 36 months with rates varying between 9.7%
        and
        11.2%, totaled $89,394. We did not enter into any capital leases during the
        three-month period ended September 30, 2007.
  **7.**
              **LITIGATION
                  AND CLAIMS**
  In
        March
        2004, the Company received a claim filed by James Collins, a previous employee
        of Global Axcess Corp. The claim was filed in Superior Court of California,
        County of San Diego on March 2, 2004. The claim alleged the following were
        owed
        in connection with the employment agreement: compensation, bonuses and other
        benefits of approximately $316,915; and 90,000 restricted shares and 359,700
        stock options exercisable at $3.75 per share. As of March 31, 2006, the Company
        had accrued a total of $450,000 for the potential legal claim. The claim
        filed
        by James Collins was settled for $450,000 on May 2, 2006 whereby the Company
        made a lump-sum payment of $300,000 on May 22, 2006 and agreed to pay the
        remaining $150,000 in 12 monthly installments of $12,500 commencing July
        1, 2006
        and ending June 30, 2007. As of June 30, 2007, the Company has fulfilled
        its
        obligations and has paid this settlement in full.
 
 On
        or
        about September 23, 2005, Nationwide Money Services, Inc. (“Nationwide”) filed
        suit against ZMA Enterprise, Inc., d/b/a Citgo Food Mart (“ZMA”), a merchant
        with whom Nationwide and its successor-in-interest, Progressive Ventures
        d/b/a
        Progressive ATM, had executed an ATM Processing Agreement (the “Agreement”).
        Nationwide alleged in its complaint that ZMA had breached the Agreement by,
        among other things, failing to maintain an exclusive contractual relationship
        with Nationwide for provision of ATM processing services. ZMA answered
        Nationwide’s complaint, denied all liability, and asserted various defenses,
        including a contention that the Agreement was vague and unenforceable. Following
        discovery, this case was tried before the State Court of Dekalb County, Georgia.
        On April 6, 2007, the court entered an order holding that the Agreement was
        fully enforceable against ZMA and entering judgment in favor of Nationwide
        and
        against ZMA for the full amount of Nationwide’s contractual damages plus
        attorneys’ fees and expenses of litigation. ZMA filed a notice of appeal
        regarding the court’s judgment on or about May 7, 2007. ZMA’s appeal has now
        been dismissed based on its failure to pay the costs of preparing the appellate
        record. We express no opinion as to the likelihood of success or potential
        amount of recovery in this matter.
 
 20
  Beginning
        in or around October, 2005, Nationwide Money Services, Inc. (“Nationwide”) has
        filed suit against various merchants located in several states, alleging
        that
        these merchants breached the terms of their ATM processing agreements with
        Nationwide or its successor-in-interest, Progressive Ventures, Inc. Many
        of
        these actions remain pending, while Nationwide has obtained settlement default
        judgments from certain merchants and has received settlement payments from
        one
        merchant but has yet to receive any other settlements. The Company recognizes
        revenue on breached contracts when cash is received and the Company has not
        recognized any revenue on these breached contracts during the quarters ended
        September 30, 2007 and 2006. The Company expresses no opinion as to the
        likelihood of success or potential amount of recovery in these
        matters.
 
 On
        or
        about July 26, 2006, Nationwide Money Services, Inc. (“Nationwide”) filed suit
        against ATMs R Us, Inc. (“ATMs R Us”), a party with which Nationwide and its
        successor-in-interest, Progressive Ventures, Inc. contracted for the provision
        of certain maintenance and installation services regarding their ATM network
        and
        affiliated merchants. Nationwide alleges in its complaint claims for breach
        of
        contract, tortious interference with contractual relations, tortious
        interference with business relations, violations of the Georgia Trade Secrets
        Act, punitive damages, and attorneys’ fees and expenses of litigation. ATMs R Us
        failed to answer or otherwise respond to Nationwide’s complaint. Nationwide is
        currently taking steps to perfect a default judgment against ATMs R Us in
        accordance with Georgia law. The Company expresses no opinion as to the
        likelihood of success or potential amount of recovery, and has not recorded
        income during the quarters ended September 30, 2007 and 2006 relating to
        this
        matter.
 
 On
        August
        1, 2006, Electronic Payment Systems, LLC (“EPS”), the purchaser of the Company’s
        disposed wholly-owned subsidiary Electronic Payment & Transfer Corporation
        (“EPT”), failed to make its required payment and is in default of the Stock
        Purchase Agreement made and entered into as of September 30, 2005 (See Note
        #4
“Notes Receivable”). The Company subsequently brought suit against EPS and its
        principal. On June 29, 2007, the Company settled all claims against EPS and
        Mr.
        Graham in exchange for the payment of $100,000 from the defendants. In the
        event
        EPT is sold or merged into another entity within 3 years from the date of
        the
        settlement, the Company is entitled to receive an additional $200,000 payment
        from the defendants. During the quarter ended June 30, 2007, the Company
        recorded the $100,000 settlement as a recovery of bad debts. The $100,000
        payment was received on July 6, 2007.
  21
 On
        August
        4, 2006, the Company was served with a demand for arbitration/mediation from
        EFMARK Service Company (“EFMARK”), a provider of maintenance services and a
        provider of cash replenishment services for automated teller machines. EFMARK
        alleged that the Company has failed to compensate EFMARK for services amounting
        to $103,000 and was seeking said amount as well as interest of $32,000. The
        Company believed the demand contained factual inaccuracies and was wholly
        without merit. However, in the spirit of its business relationship with EFMARK,
        the Company settled this claim for $40,000 on October 4, 2006. The Company
        reflected this $40,000 expense and liability in its consolidated financial
        statements ended December 31, 2006.
  On
        September 29, 2006, the Company was served with process by Renaissance US
        Growth
        Investment Trust PLC ("Renn") and BFS US Special Opportunities Trust PLC
        ("BFS"
        and collectively with Renn, the "Plaintiffs"), two investors and shareholders
        of
        the Company. In the Complaint, filed in the Circuit Court of the Seventh
        Judicial Circuit in and for St. John's County, Florida, Plaintiffs allege
        breach
        of contract, fraud, and negligent misrepresentation. The Plaintiffs sought
        monetary damages, attorney fees and rescission of their investment in the
        amount
        of $1,500,000 based on the Company's restatement of its earnings for the
        2nd and
        3rd quarters of 2005. The Company denied any and all allegations of wrongdoing
        and vigorously defended such action. During fiscal year 2006, the Company
        recorded a $200,000 expense accrual for what it deemed to be probable legal
        expenses defending this claim. The Company believed that all legal expenses
        exceeding $200,000 would be covered under the Company’s Directors and Officers
        insurance policy. As of June 30, 2007 the remaining balance of that accrual
        was
        approximately $31,750. On June 7, 2007, the Company filed a Counterclaim
        against
        Renn and BFS in the Circuit Court of the Seventh Judicial Circuit in and
        for St.
        John's County, Florida. At all material times related to this litigation,
        the
        Renn and BFS funds were advised and managed by an investment company called
        RENN
        Capital Group, Inc. (“RENN Cap”). In the Counterclaim the Company alleged Renn
        and BFS, separately and together with RENN Cap, conspired with a former board
        member, in breach of his fiduciary duties as a director of the Company, to
        obtain confidential information regarding the Company and subsequently used
        and
        exploited such confidential information in litigation against the Company.
        By
        substantially assisting and encouraging the former board member to obtain
        and
        use such information in breach of his fiduciary duties, Renn and BFS aided
        and
        abetted the former board member in the breach of his fiduciary duty. On August
        2, 2007 the Company reached a settlement with Renn, the terms of which are
        confidential. The settlement resulted in no additional costs to the Company
        nor
        any recovery amounts. The total legal fees paid in connection with this claim
        amounted to $174,612 and during the quarter ended September 30, 2007 the
        Company
        booked the remaining accrual balance of $25,388 into income.
 
 On
        October 31, 2006, EFT Integration Inc., a wholly-owned subsidiary of Global
        Axcess Corp, filed a lawsuit styled as EFT Integration, Inc., vs DELTACOM,
        Inc.,
        f/k/a ITC^DELTACOM Communications, Inc., in the Circuit Court, Fourth Judicial
        Circuit, Duval County, Florida, Case No. 16-2006-CA-007992. EFT Integration,
        Inc. has alleged that between January of 2002 and October of 2006, Deltacom,
        Inc., charged amounts in excess of the rates agreed to for long distance
        telephone service and other services, and refused to provide billing records
        for
        verification, despite demand. In the lawsuit, EFT Integration, Inc., has
        claims
        pending for an accounting and breach of contract seeking to recover amounts
        overpaid by the Company and seeking other damages. On July 3, 2007, Deltacom,
        Inc. filed a counterclaim in this lawsuit against EFT Integration, Inc.,
        asserting claims for breach of contract and for open account seeking payment
        of
        amounts they claim remain unpaid for communications services provided and
        to
        recover credits previously given to EFT Integration, Inc. The Company expresses
        no opinion as to the likelihood of success or potential amount of recovery,
        and
        has not recorded income during the quarter ended September 30, 2007 relating
        to
        this matter.
 
 22
  On
        December 26, 2006, the Company was served with process by Robert Colabrese
        (the
“Plaintiff), a former employee of the Company. In the Complaint, filed in
        the
        Circuit Court of the Seventh Judicial Circuit in and for St. John’s County,
        Florida, the Plaintiff alleges that the Company breached the employment
        agreement entered between the Company and the Plaintiff in July 2003. The
        Plaintiff is seeking monetary damages for unpaid wages and commissions, attorney
        fees and an accounting of all sales generated through the Plaintiff. The
        Company
        denies any and all allegations of wrongdoing and intends to vigorously defend
        such action. On August 30, 2007, the Company filed a Counterclaim against
        the
        Plaintiff in which it asserted claims for breach of contract, breach of
        fiduciary duty, and tortious interference. The Company has a $50,000 accrual
        recorded at September 30, 2007 in connection with this complaint.
 
 On
        or
        about January 29, 2007, Nationwide Money Services, Inc. (“Nationwide”) filed
        suit against the Atlanta Retailers Association, LLC (“ARA”) for breach of
        contract, tortious interference with contractual relations, tortious
        interference with business relations, punitive damages, and attorneys’ fees and
        expenses of litigation based upon the ARA’s alleged breach of a preferred vendor
        agreement with Progressive Ventures, Inc., Nationwide’s successor-in-interest.
        The ARA answered Nationwide’s complaint, denied all liability, and asserted
        various counterclaims. In light of pending settlement negotiations, the parties
        agreed to dismiss the litigation without prejudice and the dismissal was
        filed
        with the Court on April 18, 2007. Should settlement negotiations fail, either
        party has the right to re-institute the litigation. The Company expresses
        no
        opinion as to the likelihood of success or potential amount of recovery,
        and has
        not recorded income during the quarter ended September 30, 2007 relating
        to this
        matter.
 
 On
        August
        23, 2007, Nationwide Money Services, Inc. filed suit against Resource Express,
        Inc., in the Circuit Court, Seventh Judicial Circuit, St. Johns County, Florida,
        Case No. CA 071120 for breach of contract. Nationwide Money Services, Inc.
        alleges that the Defendant corporation breached the terms of its Distributor
        Agreement with Nationwide which was entered into to resolve previous litigation
        between the parties. Nationwide seeks $40,000 in liquidated damages. The
        Company
        expresses no opinion as to the likelihood of success or potential amount
        of
        recovery relating to this matter.
 
 On
        October 19, 2007, the Company was served with process by Camofi Master LDC
        ("Camofi"), a debt holder of the Company. In the Complaint, filed in the
        United
        Stated District Court in and for the Southern District of New York, Camofi
        alleges material and negligent misrepresentation of Global Axcess’ financial
        results relating to the restatement of 2005 earnings that occurred in 2006
        and
        seeks not less than $2,000,000 in damages (actual amount to be calculated
        at
        trial) plus all costs and expenses. The Company denies any and all allegations
        of wrongdoing and intends to vigorously defend such action and does not
        anticipate a material financial impact due to this matter.
 
 23
  Additionally,
        one significant investor has communicated to us a desire to unwind a financial
        transaction that took place prior to the 2005 restatement of earnings which
        would convert company stock back into debt.
 
 From
        time
        to time, the Company and its subsidiaries may be parties to, and their property
        is subject to, ordinary, routine litigation incidental to their business.
        Claims
        may exceed insurance policy limits and the Company or any one of its
        subsidiaries may have exposure to a liability that is not covered by insurance.
        Management is not aware of any lawsuits, other than previously discussed
        that
        could have a material adverse impact on the Company’s consolidated results of
        operations, cash flows or financial position.
 
 **8.**
              **INCOME
                  TAXES**
 
 In
        assessing the realizability of the deferred tax assets, management considers
        whether it is more likely than not, that some portion or all of the deferred
        tax
        assets will not be realized. The valuation allowance at September 30, 2007
        is
        related to deferred tax assets arising from net operating loss carryforwards.
        Management believes that based upon its projection of future taxable income
        for
        the foreseeable future, it is more likely than not that the Company will
        not be
        able to realize the full benefit of the net operating loss carryforwards
        before
        they expire due to the amortization and depreciation losses from the projected
        acquisition assets.
 
 The
        Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No.
        48, “Accounting for Uncertainty in Income Taxes - an Interpretation of SFAS No.
        109”, (“FIN48”), as of the beginning of its 2007 fiscal year. This
        Interpretation clarifies the accounting for uncertainty in income taxes.
        FIN 48
        prescribes a recognition threshold and measurement attribute for the financial
        statement recognition and measurement of a tax position taken or expected
        to be
        taken on a tax return. Under FIN 48, the Company first assesses whether it
        is
        more likely than not that an individual tax position is to be sustained,
        under
        the presumption the taxing authority has all relevant information. The
        recognized tax position is measured as the largest benefit that is greater
        than
        50 percent likely of being realized upon ultimate settlement. Previously
        recognized tax positions that no longer meet the more likely than not
        recognition threshold are derecognized in the period in which that threshold
        is
        no longer met. Accordingly the unit of account under this standard is the
        individual tax position and not a higher level such as the aggregate of the
        various positions that are encompassed by the total tax return filing. As
        a
        result of the implementation of FIN 48, the Company did not recognize a change
        in its tax liabilities or assets.
 
 At
        December 31, 2006, the Company has net operating loss carryforwards remaining
        of
        approximately $21,564,900 that may be offset against future taxable income
        through 2026. As part of management’s tax strategies we will be reviewing the
        use of the net operating loss carryforwards. The Company is reviewing its
        tax
        depreciation methods for future utilization of the NOL.
  24
  **9.**
              **CHANGES
                  IN STOCKHOLDERS' EQUITY**
 
 See
        the
        table below for all the equity transactions for the three-month period ended
        September 30, 2007:
 Common
                    Stock
                
                Additional
Paid-in
                
                Accumulated
                
                Treasury
                
                Total
                    Stockholders'Shares
                
                Amount
                
                Capital
                
                Deficit
                
                Stock
                
                EquityBalances,
                    June 30, 2007
                
                
                20,973,924
                
                
                21,022
                
                
                22,371,733
                
                
                (10,486,758
                )
                
                (11,966
                )
                
                11,894,031Stock
                    compensation expense
                
                
                -
                
                
                -
                
                
                43,851
                
                
                -
                
                
                -
                
                
                43,851Net
                    income
                
                
                -
                
                
                -
                
                
                -
                
                
                96,202
                
                
                -
                
                
                96,202Balances,
                    September 30, 2007
                
                
                20,973,924
                
                
                21,022
                
                
                22,415,584
                
                
                (10,390,556
                )
                
                (11,966
                )
                
                12,034,084
 
 **10.**
              **STOCK
                  OPTIONS AND WARRANTS**
  Effective
        January 1, 2006, the Company adopted the fair value recognition provisions
        of
        Statement of Financial Accounting Standards ("SFAS") No. 123 (Revised 2004),
        "Share-Based Payment," using the modified-prospective-transition method which
        requires us to recognize compensation expense on a prospective basis. SFAS
        No.
        123(R) requires that all stock based compensation be recognized as an expense
        in
        the financial statements and that such cost be measured at the fair value
        of the
        award. Under this method, in addition to reflecting compensation for new
        share-based awards, expense is also recognized to reflect the remaining service
        period of awards that had been included in pro-forma disclosure in prior
        periods. Prior period financial statements have not been restated. The stock
        based compensation expense is included in operating expenses in the condensed
        consolidated statements of operations.
 
 Total
        stock compensation expenses charged against income during the three-month
        and
        nine-month periods ended September 30, 2007 were $43,851 and $49,181,
        respectively.
 
 **11.**
              **SUBSEQUENT
                  EVENTS**
  On
        October 19, 2007, the Company was served with process by Camofi Master LDC
        ("Camofi"), a debt holder of the Company. In the Complaint, filed in the
        United
        Stated District Court in and for the Southern District of New York, Camofi
        alleges material and negligent misrepresentation of Global Axcess’ financial
        results relating to the restatement of 2005 earnings that occurred in 2006
        and
        seeks not less than $2,000,000 in damages (actual amount to be calculated
        at
        trial) plus all costs and expenses. The Company denies any and all allegations
        of wrongdoing and intends to vigorously defend such action and does not
        anticipate a material financial impact due to this matter.
  **Item
        2. Management's Discussion and Analysis or Plan of
        Operation**
  The
        following discussion should be read in conjunction with the condensed consolidated
        financial statements and notes thereto.
 
 In
        addition to historical information, this Quarterly Report on Form 10-QSB contains
        forward-looking statements that involve risks and uncertainties that could
        cause actual results to differ materially. Factors that might cause or contribute
        to such differences include, but are not limited to, those discussed in
        the
        section entitled " Management's Discussion and Analysis or Plan of Operation”.
        You should carefully review the risks described in other documents we
        file
        from time to time with the Securities and Exchange Commission, including the
        Quarterly Reports on Form 10-QSB that have been or are to be filed in
        2007. When
        used
        in this report, the words "expects," "anticipates," "intends," "plans,"
        "believes," "seeks," "targets," "estimates," "looks for," "looks to," and
        similar expressions are generally intended to identify forward-looking statements.
        You should not place undue reliance on these forward-looking statements,
        which speak only as of the date of this Quarterly Report on Form 10-QSB.
        We undertake no obligation to publicly release any revisions to the
 forward-looking
        statements or reflect events or circumstances after the date of this
        document.
 
 25
  ***Summary***
 
 The
        Company, through its wholly owned subsidiaries, owns and operates Automated
        Teller Machines ("ATM"s) with locations primarily in the eastern and
        southwestern United States of America. Our revenues are principally derived
        from
        two types of fees, which we charge for processing transactions on our ATM
        network. We receive an interchange fee from the issuer of the credit or debit
        card for processing a transaction when a cardholder uses an ATM in our network.
        In addition, in most cases we receive a surcharge/convenience fee from the
        cardholder when the cardholder makes a cash withdrawal from an ATM in our
        network.
 
 Interchange
        fees are processing fees that are paid by the issuer of the credit or debit
        card
        used in a transaction. Interchange fees vary for cash withdrawals, balance
        inquiries, account transfers or uncompleted transactions, which are the primary
        types of transactions that are currently processed on ATMs in our network.
        The
        maximum amount of the interchange fees is established by the national and
        regional card organizations and credit card issuers with whom we have a
        relationship. We receive interchange fees for transactions on ATMs that we
        own,
        but sometimes we rebate a portion of the fee to the owner of the ATM location
        under the applicable lease for the ATM site. We also receive the interchange
        fee
        for transactions on ATMs owned by third party vendors included within our
        network, but we rebate all or a portion of each fee to the third party vendor
        based upon negotiations between us. The interchange fees received by us vary
        from network to network and to some extent from issuer to issuer, but generally
        range from $0.15 to $0.55 per cash withdrawal. Interchange fees for balance
        inquiries, account transfers and denied transactions are generally substantially
        less than fees for cash withdrawals. The interchange fees received by us
        from
        the card issuer are independent of the service fees charged by the card issuer
        to the cardholder in connection with ATM transactions. Service fees charged
        by
        card issuers to cardholders in connection with transactions through our network
        range from zero to $2.50 per transaction. We do not receive any portion of
        these
        service fees.
 
 In
        most
        markets we impose a surcharge/convenience fee for cash withdrawals.
        Surcharge/convenience fees are a substantial additional source of revenue
        for us
        and other ATM network operators. The surcharge/convenience fee for ATMs in
        our
        network ranges between $1.50 and $2.75 per withdrawal. The surcharge/convenience
        fee for other ATMs in our network ranges between $0.50 and $7.50 per withdrawal.
        We receive the full surcharge/convenience fee for cash withdrawal transactions
        on ATMs that we own, but often we rebate a portion of the fee to the owner
        of
        the ATM location under the applicable lease for the ATM site. We also receive
        the full surcharge/convenience fee for cash withdrawal transactions on ATMs
        owned by third party vendors included within our network, but we rebate all
        or a
        portion of each fee to the third party vendor based upon a variety of factors,
        including transaction volume and the party responsible for supplying vault
        cash
        to the ATM and only record earned revenues based upon the Company’s contracts
        with the third party vendors.
 
 26
  In
        addition to revenues derived from interchange and surcharge/convenience fees,
        we
        also derive revenues from providing network management services to third
        parties
        owning ATMs included in our ATM network. These services include 24 hour
        transaction processing, monitoring and notification of ATM status and cash
        condition, notification of ATM service interruptions, in some cases dispatch
        of
        field service personnel for necessary service calls and cash settlement and
        reporting services. The fees for these services are paid by the owners of
        the
        ATMs.
 
 Interchange
        fees are credited to us by networks and credit card issuers on a monthly
        basis
        and are paid to us in the following month between the 5th and 15th business
        day.
        Surcharge/convenience fees are charged to the cardholder and credited to
        us by
        networks and credit card issuers on a daily basis. We rebate the portion
        of
        these fees to ATM owners and owners of ATM locations as commission payments
        as
        per their contractual terms. Fees for network management services are generally
        paid to us on a monthly basis.
 
 27
  ***Results
        of Continuing Operations***
 
 The
        following tables set forth certain consolidated statement of continuing
        operations data as a percentage of revenues for the periods
        indicated:
 For
                    the Three Months EndedSeptember
                    30, 2007
                
                September
                    30, 2006Revenues
                
                
                100.0
                %
                
                100.0
                %Cost
                    of revenues
                
                
                58.7
                %
                
                57.4
                %Gross
                    profit
                
                
                41.3
                %
                
                42.6
                %Depreciation
                    and amortization
                
                
                10.4
                %
                
                11.0
                %Impairment
                    of long-lived assets
                
                
                0.0
                %
                
                23.9
                %Selling,
                    general and administrative
                
                
                22.6
                %
                
                42.9
                %Restructuring
                    charges
                
                
                0.0
                %
                
                13.6
                %Impairment
                    of notes receivable
                
                
                0.0
                %
                
                9.4
                %Stock
                    compensation expense
                
                
                0.8
                %
                
                0.0
                %Total
                    operating expenses
                
                
                33.8
                %
                
                100.8
                %Operating
                    income from continuing operations before items shown below
                
                
                7.5
                %
                
                -58.2
                %Interest
                    expense, net
                
                
                -5.7
                %
                
                -7.2
                %Loss
                    on disposal of assets
                
                
                0.0
                %
                
                0.0
                %Loss
                    attributed to minority interest
                
                
                0.0
                %
                
                1.1
                %Income
                    (loss) from continuing operations before provision for income
                    taxes
                
                
                1.8
                %
                
                -64.3
                %Income
                    (loss) from continuing operations
                
                
                1.8
                %
                
                -64.3
                %EBITDA
                    (1)
                
                
                17.9
                %
                
                -46.1
                %
 For
                      the Nine Months EndedSeptember
                      30, 2007
                  
                  September
                      30, 2006Revenues
                  
                  
                  100.0
                  %
                  
                  100.0
                  %Cost
                      of revenues
                  
                  
                  58.6
                  %
                  
                  56.9
                  %Gross
                      profit
                  
                  
                  41.4
                  %
                  
                  43.1
                  %Depreciation
                      and amortization
                  
                  
                  10.3
                  %
                  
                  11.2
                  %Impairment
                      of long-lived assets
                  
                  
                  0.0
                  %
                  
                  8.2
                  %Selling,
                      general and administrative
                  
                  
                  24.5
                  %
                  
                  34.0
                  %Restructuring
                      charges
                  
                  
                  0.0
                  %
                  
                  4.7
                  %Impairment
                      of notes receivable
                  
                  
                  0.0
                  %
                  
                  5.0
                  %Recovery
                      of bad debts
                  
                  
                  -0.6
                  %
                  
                  0.0
                  %Stock
                      compensation expense
                  
                  
                  0.3
                  %
                  
                  -0.1
                  %Other
                      expense
                  
                  
                  0.0
                  %
                  
                  2.8
                  %Total
                      operating expenses
                  
                  
                  34.5
                  %
                  
                  65.8
                  %Operating
                      income (loss) from continuing operations before items shown
                      below
                  
                  
                  6.9
                  %
                  
                  -22.7
                  %Interest
                      expense, net
                  
                  
                  -5.6
                  %
                  
                  -6.4
                  %Gain
                      (loss) on sale or disposal of assets
                  
                  
                  -0.1
                  %
                  
                  0.1
                  %Loss
                      attributed to minority interest
                  
                  
                  0.0
                  %
                  
                  0.7
                  %Income
                      (loss) from continuing operations before provision for income
                      taxes
                  
                  
                  1.2
                  %
                  
                  -28.3
                  %Income
                      (loss) from continuing operations
                  
                  
                  1.2
                  %
                  
                  -28.3
                  %EBITDA
                      (1)
                  
                  
                  17.1
                  %
                  
                  -10.7
                  %
 
 (1)
        See
“—EBITDA”
  28
  ***Comparison
        of Results of Continuing Operations for the Three Months Ended September
        30,
        2007 and 2006:***
 
 ***Revenues***
 
 The
        Company reported total operating revenue from continuing operations of
        $5,532,807 for the three-month period ended September 30, 2007 as compared
        to
        $5,556,874 for the three-month period ended September 30, 2006. There was
        a
        slight decrease in the three-month revenues mainly due to lower ATM transactions
        for the three-month period ended September 30, 2007 versus the same period
        in
        fiscal 2006. The decrease in ATM transaction revenue was offset due to an
        increase in non-transaction based revenue recorded in the third quarter of
        2007
        relating to billings to customers for cash (ongoing) and project (annual)
        management.
  ***Cost
        of Revenues***
 
 Our
        total
        cost of revenues from continuing operations increased from $3,188,105 to
        $3,248,596 in the three-month periods ended September 30, 2006 and 2007,
        respectively. The increase in cost of revenues period over period was due
        to
        several factors. First, in a move to increase ATM uptime rates we have increased
        our first line and second line dispatch rates. These increased dispatch rates
        combined with higher fuel charges resulted in higher first line and second
        line
        maintenance costs during the quarter. Second, our residual/commission payments
        to customers increased from the same quarter in fiscal 2006. Third, our
        insurance premiums in 2007 have increased and even though we have moved to
        lower
        cost cash providers in 2007 and have saved on cash costs, we have incurred
        higher insurance premiums with these vendors.
  ***Gross
        Profit***
 
 Gross
        profit from continuing operations as a percentage of revenue for the three-month
        period ended September 30, 2007 and 2006 were approximately 41.3%, or $2,284,211
        and approximately 42.6%, or $2,368,769 respectively. The decreased gross
        profit
        for the third quarter of 2007 versus the same period in 2006 was partly
        attributable to the revenues and cost of revenues factors discussed above.
        Additionally, the proportion of ownership vs. merchant ATMs increased. Ownership
        ATMs contribute a higher gross profit but a lower gross profit
        percentage.
  ***Operating
        Expenses***
 
 Our
        total
        operating expenses from continuing operations for the three months ended
        September 30, 2007 and 2006 were $1,873,722 and $5,605,502, respectively.
        The
        principal components of operating expenses are general and administrative
        expenses such as professional and legal fees, administrative salaries and
        benefits, consulting and audit fees, occupancy costs, sales and marketing
        expenses and administrative expenses. Operating expenses also include
        depreciation and amortization, impairment and restructuring charges, and
        stock
        compensation expenses. See explanation of operating expenses below:
 
 ***Selling,
        General and Administrative (SG&A) Expenses***
 
 Our
        total
        SG&A expenses from continuing operations decreased to $1,253,056 for the
        three-month period ended September 30, 2007 from $2,384,450 for the three-month
        period ended September 30, 2006. The decrease in SG&A expenses from
        continuing operations is directly attributable to the decrease in salaries
        and
        benefits, audit and legal fees and rent expenses resulting from the reduced
        headcount and cost reduction measures we have undertaken in late 2006 and
        in the
        first two quarters of 2007. During the quarter ended September 30, 2006,
        we
        recorded a $200,000 legal reserve for a lawsuit. Additionally, during the
        three
        month period ended September 30, 2006, we recorded an increased reserve for
        bad
        debts.
  29
  ***Depreciation
        and Amortization***
 
 Depreciation
        and amortization from continuing operations decreased for the three-month
        period
        ended September 30, 2007 to $576,815 from $610,981 for the same period in
        2006.
        This decrease in depreciation and amortization expense was mainly due to
        the
        following factor:
 
 ·
              A
                  decrease in depreciable assets relating to impaired assets written
                  off in
                  the third quarter of 2006.
  See
        Note
        #2 “Description of Business and Summary of Significant Accounting Policies”
regarding the amortization of intangible merchant contracts.
 
 ***Impairment
        and Restructuring Charges***
 
 During
        the three-month period ended September 30, 2006, we incurred impairment of
        long-lived assets charges, restructuring charges and impairment of notes
        receivable charges of $1,329,396, $757,811, and $522,864, respectively. See
        Note
        #4 “Note Receivable” and Note #5 “Impairment of Long-Lived Assets and Business
        Reorganization Charges” regarding the details of these charges.
 
 ***Stock
        Compensation Expense***
 
 During
        the three-month period ended September 30, 2007, we recorded stock compensation
        expenses of $43,851 mainly relating to executive stock option grants (see
        Note
        #1 “Basis of Presentation” and Note #2 “Description of Business and Summary of
        Significant Accounting Policies”).
 
 ***Operating
        Income from Continuing Operations***
 
 We
        had
        operating income from continuing operations for the three-month period ended
        September 30, 2007 in the amount of $410,489 as compared to operating loss
        from
        continuing operations of $3,236,733 in the three-month period ended September
        30, 2006.
 
 ***Interest
        Expense, Net***
 
 Interest
        expense, net, decreased for the three-month period ended September 30, 2007
        to
        $314,787 from $399,422 for the three-month period ended September 30, 2006.
        The
        decrease was mainly due to decreased debt balances at the three-month period
        ended September 30, 2007 as compared to the debt balances at the three-month
        period ended September 30, 2006. During the three-month period ended September
        30, 2007 we recorded interest expense of $24,527 relating to the interest
        swap
        agreement we entered into with our senior lender. The decrease in interest
        rates
        during September 2007 caused us to have an unfavorable market value of the
        swap
        and our policy is to record the change in fair value as an increase or decrease
        to interest expense in our consolidated statements of income.
 
 ***Gain
        on Sale of Assets***
 
 During
        the three-month period ended September 30, 2007, we recorded a gain on disposal
        of assets of $500.
 
 ***Loss
        Attributed to Minority Interest***
 
 During
        the three-month period ended September 30, 2006, we allocated $62,752 of
        loss to
        minority interest relating to the consolidation of our Variable Interest
        Entity,
        Cash Axcess Corp, prior to its sale.
  30
  ***Income
        (loss) from Continuing Operations Before Provision for
        Tax***
 
 We
        had
        net income from continuing operations before taxes of $96,202  for
        the
        three months ended September 30, 2007 as compared to net loss from continuing
        operations before taxes of $3,573,403 for the three-month period ended September
        30, 2006.
 
 ***Income
        Taxes***
 
 We
        incurred no tax expense in either of the respective periods ending
 September
        30, 2007 and September 30, 2006. At December 31, 2006, the Company has an
        NOL
        carryforward of approximately $21.6 million available. The NOL is due to
        expire
        during fiscal years 2008-2026.
 
 ***Loss
        from Discontinued Operations***
 
 We
        had a
        net loss from discontinued operations of $53,997 for the three months ended
        September 30, 2006.
 
 ***Net
        Income (loss)***
 
 We
        had
        net income of $96,202 for the three months ended September 30, 2007 as compared
        to a net loss of $3,627,400 for the three-month period ended September 30,
        2006.
 
 ***Comparison
        of Results of Continuing Operations for the Nine Months Ended September 30,
        2007
        and 2006:***
 
 ***Revenues***
 
 The
        Company reported total operating revenue from continuing operations of
        $16,400,007 for the nine-month period ended September 30, 2007 as compared
        to
        $16,232,522 for the nine-month period ended September 30, 2006. There was
        an
        increase in the nine-month revenues despite lower ATM transactions for the
        nine-month period ended September 30, 2007 versus the same period in fiscal
        2006. The increase in ATM transaction revenue was mainly due to an increase
        in
        non-transaction based revenue recorded in the second and third quarters of
        2007
        relating to billings to customers for cash (ongoing) and project (annual)
        management.
  ***Cost
        of Revenues***
 
 Our
        total
        cost of revenues from continuing operations increased from $9,234,923 to
        $9,610,767 in the nine-month periods ended September 30, 2006 and 2007,
        respectively. The increase in cost of revenues period over period was due
        to
        several factors. First, in a move to increase ATM uptime rates we have increased
        our first line and second line dispatch rates. These increased dispatch rates
        combined with higher fuel charges resulted in higher first line and second
        line
        maintenance costs during the nine-month period in fiscal 2007. Second, our
        residual/commission payments to customers increased from the same period
        in
        fiscal 2006. Third, our insurance premiums in 2007 have increased and even
        though we have moved to lower cost cash providers in 2007 and have saved
        on cash
        costs, we have incurred higher insurance premiums with these vendors.
        Additionally, in order to improve our cost structure, during the fourth quarter
        of 2006 we negotiated and began implementation of contracts with lower cost
        ATM
        vault cash providers and negotiated and began implementation of a contract
        to
        outsource ATM cash management and monitoring. While these cost improvements
        will
        show cost reductions in fiscal 2007, during the first quarter of 2007 we
        incurred some duplicate expenses relating to these implementations.
 
 31
  ***Gross
        Profit***
 
 Gross
        profit from continuing operations as a percentage of revenue for the nine-month
        period ended September 30, 2007 and 2006 were approximately 41.4%, or $6,789,240
        and approximately 43.1%, or $6,997,599 respectively. The decreased gross
        profit
        for the nine-month period of 2007 versus the same period in 2006 was
        attributable to the revenues and cost of revenues factors discussed above.
        Additionally, the proportion of ownership vs. merchant ATMs increased. Ownership
        ATMs contribute a higher gross profit but a lower gross profit percentage.
 
 ***Operating
        Expenses***
 
 Our
        total
        operating expenses from continuing operations for the nine months ended
        September 30, 2007 and 2006 were $5,650,168 and $10,683,396, respectively.
        The
        principal components of operating expenses are general and administrative
        expenses such as professional and legal fees, administrative salaries and
        benefits, consulting and audit fees, occupancy costs, sales and marketing
        expenses and administrative expenses. Operating expenses also include
        depreciation and amortization, impairment and restructuring charges, recovery
        of
        bad debts, stock compensation expenses and other operating expenses. See
        explanation of operating expenses below:
 
 ***Selling,
        General and Administrative (SG&A) Expenses***
 
 Our
        total
        SG&A expenses from continuing operations decreased to $4,011,515 for the
        nine-month period ended September 30, 2007 from $5,520,263 for the nine-month
        period ended September 30, 2006. The decrease in SG&A expenses from
        continuing operations is directly attributable to the decrease in salaries
        and
        benefits, audit and legal fees and rent expenses resulting from the reduced
        headcount and cost reduction measures we have undertaken in late 2006 and
        in the
        first two quarters of 2007. Included in the SG&A expenses for the nine-month
        period ending September 30, 2007 were $29,315 of expenses relating to
        performance based employee incentives.
  ***Depreciation
        and Amortization***
 
 Depreciation
        and amortization from continuing operations decreased for the nine-month
        period
        ended September 30, 2007 to $1,683,729 from $1,824,868 for the same period
        in
        2006. This decrease in depreciation and amortization expense was mainly due
        to
        the following factor:
 
 ·
              A
                  decrease in depreciable assets relating to impaired assets written
                  off in
                  the third quarter of 2006.
  See
        Note
        #2 “Description of Business and Summary of Significant Accounting Policies”
regarding the amortization of intangible merchant contracts.
 
 ***Impairment
        and Restructuring Charges***
 
 During
        the nine-month period ended September 30, 2007, we incurred impairment of
        notes
        receivable charges of $5,743 which related to the settlement of a February
        2004
        note (see Note #4 “Notes Receivable”). During the nine-month period ended
        September 30, 2006, we incurred impairment of long-lived assets charges,
        restructuring charges and impairment of notes receivable charges of $1,329,396,
        $757,811, and $812,756, respectively. See Note #4 “Note Receivable” and Note #5
“Impairment of Long-Lived Assets and Business Reorganization Charges” regarding
        the details of these charges.
 
 32
  ***Recovery
        of Bad Debts***
 
 During
        the nine-month period ended September 30, 2007, we recorded a recovery of
        bad
        debts of $100,000 which related to the settlement of a previously fully reserved
        note (see Note #4 “Notes Receivable”).
 
 ***Stock
        Compensation Expense***
 
 During
        the nine-month period ended September 30, 2007, we recorded stock compensation
        expenses of $49,181 mainly relating to executive stock option grants (see
        Note
        #1 “Basis of Presentation” and Note #2 “Description Of Business and Summary of
        Significant Accounting Policies”). During the nine-month period ended September
        30, 2006 we recorded a stock compensation expense credit of
        $11,698.
 
 ***Other
        Expense***
 
 During
        the nine-month period ended September 30, 2006, we incurred other operating
        expenses of $450,000 which related to legal fee expenses and reserves in
        connection with the James Collins legal claim (see Note #7 “Litigation and
        Claims”).
 
 ***Operating
        Income (Loss) from Continuing Operations***
 
 We
        had
        operating income from continuing operations for the nine-month period ended
        September 30, 2007 in the amount of $1,139,072 as compared to an operating
        loss
        from continuing operations of $3,685,797 in the nine-month period ended
        September 30, 2006.
 
 ***Interest
        Expense, Net***
 
 Interest
        expense, net, decreased for the nine-month period ended September 30, 2007
        to
        $923,227 from $1,039,685 for the nine-month period ended September 30, 2006.
        The
        decrease was mainly due to decreased debt balances at the nine-month period
        ended September 30, 2007 as compared to the debt balances at the nine-month
        period ended September 30, 2006. During the three-month period ended September
        30, 2007 we recorded interest expense of $24,527 relating to the interest
        swap
        agreement we entered into with our senior lender. The decrease in interest
        rates
        during September 2007 caused us to have an unfavorable market value of the
        swap
        and our policy is to record the change in fair value as an increase or decrease
        to interest expense in our consolidated statements of income.
 
 ***Gain
        (loss) on Sale or Disposal of Assets***
 
 During
        the nine-month period ended September 30, 2007, we recorded a loss on sale
        or
        disposal of certain ATM assets and leasehold improvements of $22,517 as compared
        to a net gain on sale of certain ATM assets and automobiles of $13,655 during
        the nine months ended September 30, 2006.
 
 ***Loss
        Attributed to Minority Interest***
 
 During
        the nine-month period ended September 30, 2006, we allocated $109,351 of
        loss to
        minority interest relating to the consolidation of our Variable Interest
        Entity,
        Cash Axcess Corp, prior to its sale.
  ***Income
        (loss) from Continuing Operations Before Provision for
        Tax***
 
 We
        had
        net income from continuing operations before taxes of $193,328 for
        the
        nine months ended September 30, 2007 as compared to net loss from continuing
        operations before taxes of $4,602,476 for the nine-month period ended September
        30, 2006.
 
 33
  ***Income
        Taxes***
 
 We
        incurred no tax expense in either of the respective periods ending September
        30, 2007 and September 30, 2006. At December 31, 2006, the Company has an
        NOL
        carryforward of approximately $21.6 million available. The NOL is due to
        expire
        during fiscal years 2008-2026.
 
 ***Income
        (loss) from Discontinued Operations***
 
 We
        had
        net income from discontinued operations of $175,000 for the nine months ended
        September 30, 2007 resulting from the received amounts pertaining to the
        escrowed portion of the Company’s Cash Axcess Corp sale. For the nine-month
        period ended September 30, 2006, the Company had a net loss from discontinued
        operations of $275,937.
 
 ***Net
        Income (loss)***
 
 We
        had
        net income of $368,328 for the nine months ended September 30, 2007 as compared
        to a net loss of $4,878,413 for the nine-month period ended September 30,
        2006.
 
 ***EBITDA***
 
 EBITDA
        (a
        non-GAAP measure) is defined as earnings before net interest, taxes,
        depreciation and amortization. EBITDA has some inherent limitations in measuring
        operating performance due to the exclusion of certain financial elements
        such as
        depreciation and is not necessarily comparable to other similarly titled
        captions of other companies due to potential inconsistencies in the method
        of
        calculation. Furthermore, EBITDA is not intended to be a substitute for cash
        flows from operating activities, as a measure of liquidity, or an alternative
        to
        net income in determining our operating performance in accordance with
        accounting principles generally accepted in the United States of America.
        Our
        use of EBITDA should be considered within the following context:
 
 ·
              We
                  acknowledge that our depreciable assets are necessary to earn revenue
                  based on our current business.
 
 ·
              Our
                  use of EBITDA as a measure of operating performance is not based
                  on our
                  belief about the reasonableness of excluding depreciation when
                  measuring
                  financial performance.
 
 ·
              Our
                  use of EBITDA is supported by the importance of EBITDA to the following
                  key stakeholders:
 
 ·
              Analysts—
                  who estimate our projected EBITDA and other EBITDA-based metrics
                  in their
                  independently developed financial models for
                  investors;
 
 ·
              Creditors—
                  who evaluate our operating performance based on compliance with
                  certain
                  EBITDA-based debt covenants;
 
 ·
              Investment
                  Bankers—
                  who use EBITDA and other EBITDA-based metrics in their written
                  evaluations
                  and comparisons of companies within our industry;
                  and
  34
  ·
              Board
                  of Directors and Executive Management—
                  who use EBITDA as an essential metric for evaluating management
                  performance relative to our operating budget and bank covenant
                  compliance,
                  as well as our ability to service debt and raise capital for growth
                  opportunities which are a critical component to our strategy.
 
 The
        following tables set forth a reconciliation of net income to EBITDA from
        continuing operations for each period included herein:
 For
                      the Three Months EndedSeptember
                      30, 2007
                  
                  September
                      30, 2006Net
                      income (loss) from continuing operations
                  
                  $
                  96,202
                  
                  $
                  (3,573,403
                  )Provision
                      for income taxes
                  
                  
                  -
                  
                  
                  -Interest
                      expense, net
                  
                  
                  314,787
                  
                  
                  399,422Depreciation
                      and amortization
                  
                  
                  576,815
                  
                  
                  610,981EBITDA
                  
                  $
                  987,804
                  
                  $
                  (2,563,000
                  )
 
 For
                      the Nine Months EndedSeptember
                      30, 2007
                  
                  September
                      30, 2006Net
                      income (loss) from continuing operations
                  
                  $
                  193,328
                  
                  $
                  (4,602,476
                  )Provision
                      for income taxes
                  
                  
                  -
                  
                  
                  -Interest
                      expense, net
                  
                  
                  923,227
                  
                  
                  1,039,685Depreciation
                      and amortization
                  
                  
                  1,683,729
                  
                  
                  1,824,868EBITDA
                  
                  $
                  2,800,284
                  
                  $
                  (1,737,923
                  )
 Our
          EBITDA increased to $987,804 for the third quarter of fiscal 2007 from
          ($2,563,000) for the third quarter of fiscal 2006. EBITDA as a percentage
          of
          revenues increased to 17.9% for the third quarter of fiscal 2007 from (46.1%)
          for the third quarter of fiscal 2006.
 
 Our
          EBITDA increased to $2,800,284 for the nine months ended September 30,
          2007 from
          ($1,737,923) for nine months ended September 30, 2006. EBITDA as a percentage
          of
          revenues increased to 17.1% for the nine months ended September 30, 2007
          from
          (10.7%) for nine months ended September 30, 2006.
 35
 The
          following tables set forth a reconciliation of net income to EBITDA before
          stock
          compensation expense from continuing operations for each period included
          herein:
 For
                      the Three Months EndedSeptember
                      30, 2007
                  
                  September
                      30, 2006Net
                      income (loss) from continuing operations
                  
                  $
                  96,202
                  
                  $
                  (3,573,403
                  )Provision
                      for income taxes
                  
                  
                  -
                  
                  
                  -Interest
                      expense, net
                  
                  
                  314,787
                  
                  
                  399,422Depreciation
                      and amortization
                  
                  
                  576,815
                  
                  
                  610,981Stock
                      compensation expense
                  
                  
                  43,851
                  
                  
                  -EBITDA
                      before stock compensation expense
                  
                  $
                  1,031,655
                  
                  $
                  (2,563,000
                  )
 
 For
                      the Nine Months EndedSeptember
                      30, 2007
                  
                  September
                      30, 2006Net
                      income (loss) from continuing operations
                  
                  $
                  193,328
                  
                  $
                  (4,602,476
                  )Provision
                      for income taxes
                  
                  
                  -
                  
                  
                  -Interest
                      expense, net
                  
                  
                  923,227
                  
                  
                  1,039,685Depreciation
                      and amortization
                  
                  
                  1,683,729
                  
                  
                  1,824,868Stock
                      compensation expense
                  
                  
                  49,181
                  
                  
                  (11,698
                  )EBITDA
                      before stock compensation expense
                  
                  $
                  2,849,465
                  
                  $
                  (1,749,621
                  )
  ***Seasonality***
 
 In
        our
        ATM operations, we traditionally experience higher transaction volumes per
        machine in the second and third quarters than in the first and fourth quarters.
        The increased volumes in the summer months coincide with increased vacation
        travel in the United States.
 
 ***Liquidity
        and Capital Resources***
 
 Our
        primary liquidity and capital resource needs are to finance the costs of
        our
        operations, to make capital expenditures and to service our debt.
 
 We
        have
        funded our operations and investment activities from cash flow generated by
        operations. Net
        cash
        provided by continuing operating activities
        during the nine-month period ended September 30, 2007 was $1,835,122, compared
        to the net cash provided by continuing operating activities during the
        nine-month period ended September 30, 2006 of $843,926. Net cash used in
        discontinued operating activities during the nine-month period ended September
        30, 2006 was $196,445.
 
 The
        Company used $1,444,900 for financing activities, mainly paying back senior
        lender notes and capital leases, during the nine-month period ended September
        30, 2007, compared to funds used in financing activities of $1,903,947 for
        the
        nine-month period ended September 30, 2006.
 
 Net
        cash
        used in investing activities in continuing operations was $614,052 during
        the
        nine-month period ended September 30, 2007, mainly representing net purchases
        of
        property and equipment and parts relating to upgrading ATMs to become Triple
        DES
        compliant offset by the proceeds received from sale of a subsidiary. This
        compares to net cash used in investing activities in continuing operations
        of
        $400,048 for the nine-month period ended September 30, 2006, used mainly
        for the
        purchases of property and equipment.
  36
 
 The
        Company does not use its own funds for vault cash, but rather relies upon third
        party sources. The Company in general rents the vault cash from financial institutions
        and pays a negotiated interest rate for the use of the money. The vault
        cash is never in the possession of, controlled or directed by the Company but
        rather cycles from the bank, to the armored car carrier, and to the ATM. Each
        day’s withdrawals are settled back to the owner of the vault cash on the next
        business day. Both Nationwide Money and its customers (the merchants) sign a
        document stating that the vault cash belongs to the financial institution
        and that
        neither party has any legal rights to the funds. The required vault cash
        is obtained
        under the following arrangements:
 
 ·
              *Palm
                  Desert Bank*.
                  Beginning in January 2003, our arrangement with Palm Desert allows
                  us to
                  obtain up to $10,000,000 in vault cash. The Palm Desert Bank arrangement
                  has a term of two years and may be terminated by Palm Desert Bank
                  upon
                  breach by us and upon the occurrence of certain other events. Under
                  this
                  arrangement, we are required to pay a monthly service fee on the
                  outstanding amount equal to the prime rate of interest, plus a
                  specified
                  percentage, and must pay monthly "bank" fees. Additionally the
                  Company is
                  required to make a deposit with Palm Desert Bank in an amount determined
                  by the outstanding balance. We are also required to maintain insurance
                  on
                  the vault cash. The contract with Palm Desert was terminated effective
                  April 2007 and the Company converted terminals from Palm Desert
                  cash to
                  alternate funding sources. As of September 30, 2007, the Company
                  had 0
                  ATMs funded by Palm Desert with a vault cash outstanding balance
                  of
                  $0.
 
 ·
              *Wilmington
                  Savings Fund Society (WSFS)*.
                  Beginning in September, 2004 the Company has an arrangement with
                  Wilmington Savings Fund Society (“WSFS”) allowing us to obtain up to
                  $20,000,000 in vault cash. The WSFS contract may be terminated
                  by WSFS at
                  any time upon breach by us and upon the occurrence of certain other
                  events. Under this arrangement, we are required to pay a monthly
                  service
                  fee on the outstanding amount equal to the prime rate of interest,
                  plus a
                  specified percentage, and must pay monthly "bank" and insurance
                  fees. We
                  are also required to maintain insurance on the vault cash. The
                  contract
                  currently in place with WSFS expires on October 31, 2007 with a
                  one year
                  auto renewal period unless one party gives 60 days notice of their
                  intention not to renew. As of September 30, 2007, the Company had
                  119 ATMs
                  funded by WSFS with a vault cash outstanding balance of approximately
                  $2,800,000 in connection with this arrangement.
 
 ·
              *First
                  Charter*.
                  On September 1, 2004, we entered into an arrangement with First
                  Charter
                  National Bank allowing us to obtain up to $3,000,000 in vault cash.
                  We
                  have since increased the line as of December 31, 2006 to $6,000,000.
                  The
                  First Charter contract may be terminated by First Charter at any
                  time upon
                  breach by us and upon the occurrence of certain other events. Under
                  this
                  arrangement, we are required to pay a monthly service fee on the
                  outstanding amount equal to the federal funds rate of interest,
                  plus a
                  specific percentage, and must pay monthly bank fees. We are also
                  required
                  to maintain insurance on the vault cash. The contract currently
                  in place
                  with First Charter expires on January 31, 2009 with a two year
                  auto
                  renewal period unless one party gives 180 days notice of their
                  intention
                  not to renew. As of September 30, 2007, the Company had 186 ATMs
                  funded by
                  First Charter with a vault cash outstanding balance of about approximately
                  $4,300,000.
 
 ·
              *Food
                  Lion Credit Association (FLCA)*.
                  On February 1, 2002, we entered into an arrangement with Food Lion
                  Credit
                  Association allowing us to obtain up to $2,000,000 in vault cash.
                  We have
                  since increased the line as of December 31, 2006 to $6,000,000.
                  The Food
                  Lion Credit Association contract may be terminated by Food Lion
                  Credit
                  Association at any time upon breach by us and upon the occurrence
                  of
                  certain other events. Under this arrangement, we are required to
                  pay a
                  monthly service fee on the entire line equal to the prime rate
                  of
                  interest, minus a specific percentage, and must pay monthly bank
                  fees. We
                  were also required to maintain insurance on the vault cash. The
                  contract
                  was terminated effective February 2007 and the Company converted terminals
                  from FLCA cash to alternate funding sources. As of September 30,
                  2007, the
                  Company had 0 ATMs funded by FLCA with a vault cash outstanding
                  balance of
                  $0.
  37
  ·
              *Elan
                  (formerly GenPass Technologies)*.
                  On November 24, 2006 we signed a Cash Provisioning Agreement with
                  Genpass
                  Technologies allowing us to obtain up to $22,000,000 in vault cash.
                  The
                  Genpass contract may be terminated by Genpass Technologies at any
                  time
                  upon breach by us and upon the occurrence of certain other events.
                  Under
                  this arrangement, we are required to pay a monthly service fee
                  on the
                  average terminal balance plus a load factor. In addition, we are
                  required
                  to maintain insurance on the vault cash. The contract currently
                  in place
                  with Elan expires on August 11, 2008 with a one year auto renewal
                  period
                  unless one party gives 180 days notice of their intention not to
                  renew. As
                  of September 30, 2007, the Company had 641 ATMs funded by Elan
                  with a
                  vault cash outstanding balance of about approximately
                  $14,400,000.
 
 ·
              *Various
                  Branded Cash Partners*.
                  Nationwide Money Services, Inc., a subsidiary of the Company, has
                  partnered with numerous banks and credit unions to market specific
                  Nationwide ATMs to the cardholders of these institutions. We add
                  signage
                  and marketing material to the ATM so that the ATM is easily identified
                  as
                  being associated with the bank or credit union, and the cardholders
                  of
                  these institutions receive surcharge free transactions at the designated
                  ATMs. This provides the bank or credit union additional marketing
                  power
                  and another point of access to funds for their cardholders. In
                  return for
                  this benefit, the bank or credit union, provide and manage the
                  vault cash
                  in the specified ATM(s), as well as provide and pay for cash replenishment
                  and first line maintenance. The advantage to Nationwide Money is
                  that this
                  reduces the costs associated with vault cash, cash replenishment
                  and first
                  line maintenance by approximately 50%. Another advantage is that
                  with a
                  branded ATM, transactions volumes traditionally increase more than
                  at
                  non-branded ATMs. As of September 30, 2007, Nationwide Money had
                  52
                  branded financial partners, which funded 662 ATMs.
  ***Working
        Capital***
 
 As
        of
        September 30, 2007, the Company had current assets of $2,226,047 and current
        liabilities of $5,519,086, which results in a negative working capital of
        $3,293,039 as compared to current assets of $3,501,479 and current liabilities
        of $6,460,024 resulting in a negative working capital of $2,958,545 as of
        September 30, 2006. The ratio of current assets to current liabilities decreased
        to 0.40 at September 30, 2007 from 0.54 at September 30, 2006. Despite the
        negative working capital, we believe that if we achieve our business plan,
        we
        will have sufficient working capital to meet our remaining and current
        obligations during 2007. We are continuing our efforts to raise additional
        capital through lease financing. We currently have lease lines available
        for
        approximately $1,500,000 for new purchases, which is sufficient to cover
        our
        estimated financing needs.
 
 38
 
 ***Impact
        of Inflation and Changing Prices***
 
 We
        were
        not impacted by inflation during the past two fiscal years in any material
        respect. Interest rate hikes have increased the rental cost of our vault
        cash.
        As the interest rates decrease and vault cash costs decrease, this will have
        a
        more favorable impact on the Company’s income.
  **Item
        3. Controls and Procedures**
 
 Management
        of the Company is responsible for establishing and maintaining adequate
        internal control over financial reporting and for the assessment of the effectiveness
        of internal controls over financial reporting. The Company's internal
        control system over financial reporting is a process designed under the supervision
        of the Company's Chief Executive Officer and Chief Financial Officer to
        provide reasonable assurance regarding the reliability of financial reporting and
        the
        preparation of the condensed consolidated financial statements in accordance
        with U.S. generally accepted accounting principles.
 
 All
        internal control systems, no matter how well designed, have inherent limitations.
        Therefore, even those systems determined to be effective can provide
        only reasonable assurance with respect to financial statement preparation
        and presentation. Also, projections of any evaluation of effectiveness
        to future periods are subject to the risk that controls may become inadequate
        because of changes in conditions.
 
 The
        Company maintains disclosure controls and procedures that are designed to
        ensure
        that information required to be disclosed in the Company’s reports under the
        Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
        and reported within the time periods specified in the SEC’s rules and forms, and
        that such information is accumulated and communicated to the Company’s
        management, including its Chief Executive Officer and Chief Financial Officer,
        as appropriate, to allow timely decisions regarding required disclosure.
        In
        designing and evaluating the disclosure controls and procedures, management
        recognized that any controls and procedures, no matter how well designed
        and
        operated, can provide only reasonable assurance of achieving the desired
        control
        objectives, and management necessarily was required to apply its judgment
        in
        evaluating the cost-benefit relationship of possible controls and
        procedures.
  ***Evaluation***
  The
        Company carried out an evaluation, under the supervision, and with the
        participation, of the Company’s management, including the Company’s Chief
        Executive Officer and the Company’s Chief Financial Officer, of the
        effectiveness of the Company’s disclosure controls and procedures as of
        September 30, 2007. Based on the foregoing, the Company’s Chief Executive
        Officer and the Company’s Chief Financial Officer concluded that the Company’s
        disclosure controls and procedures were effective as of September 30,
        2007.
  ***Remediation
        of Previously Stated Material Weaknesses***
 
 We
        formulated a program to remedy the material weaknesses identified in the
        Form
        10QSB quarterly report for the period ended March 31, 2006.
 
 In
        the
        first phase of the program, completed as of March 31, 2006, we hired a
        Controller and a Senior Accountant to augment our accounting, financial
        reporting and financial control function in our finance department. Due to
        the
        subsequent departure of our previous Chief Financial Officer and subsequent
        appointment of our previous Controller into that position, we have adjusted
        the
        plan by engaging an outside consulting firm to assist in the financial reporting
        of the Company and to review the Company’s application of accounting
        principles.
 
 39
  In
        the
        second phase of the program, we increased our auditor's review work quarterly,
        as well as, increased the areas reviewed and discussed with the audit committee
        and auditors beforehand, on any changes in accounting principles or revenue
        or
        expense recognition. Specifically, we implemented the following remediation
        measures relating to the previously stated material weaknesses:
 
 1. *Ineffective
        controls over revenue recognition* .
        Our
        remediation measures relating to revenue recognition includes a review by
        management of revenue items other than normal fees earned such as
        surcharge/convenience and interchange including a regular review of the accounts
        receivable aging. We have also instituted an objective method of determining
        the
        collectibility of the accounts receivable as well as a strict method for
        setting
        reserves against those receivables.
 
 2. *Ineffective
        controls over depreciation* .
        Subsequent to the errors that resulted in previous audit adjustments, the
        Company has set up a tracking system to follow the final production periods
        when
        software is being developed and will include a review by management of
        depreciable items. Also, the Company has ceased its software development
        subsidiaries as of December 31, 2005 and does not plan to change the method
        of
        software depreciation on previously capitalized assets. Additionally, during
        the
        previous fiscal year the Company installed a new fixed asset management module
        onto its accounting platform which now automates the calculation of the
        appropriate depreciation over the selected life span of the equipment.
 
 3. *Ineffective
        controls over internally developed software* .
        The
        Company has set up a tracking system to follow the development, testing,
        implementation and final production periods when the software is being
        developed. During the year ended December 31, 2005, the Company ceased
        operations of software development subsidiaries.
 
 We
        completed our remediation program during fiscal 2006. The material weaknesses
        are considered remediated as the applicable remedial controls operated for
        a
        sufficient period of time and management has thus concluded, through testing,
        that these controls are operating effectively.
 
 ***Changes
        in Internal Control Over Financial Reporting***
 
 There
        were no changes during the quarter ended September 30, 2007 in our internal
        control over financial reporting or in other factors that materially affected,
        or are reasonably likely to materially affect, our internal controls over
        financial reporting.
 
 **Item
        3A(T). Controls and Procedures**
 
 Not
        applicable
 
 **PART
        II - OTHER INFORMATION**
 
 **Item
        1. Legal Proceedings**
 
 Information
        regarding legal proceedings is contained in Note #7 to the Condensed
        Consolidated Financial Statements contained in this Report and is incorporated
        herein by reference.
 
 40
  **Item
        1A. Risk Factors**
 
 There
        were no material changes from the risk factors previously disclosed in Risk
        Factors within “Item 1. Description of Business” included in our Annual Report
        on Form 10-KSB for the year ended December 31, 2006.
 
 **Item
        2. Unregistered Sale of Equity Securities and Use of
        Proceeds**
 
 None
 
 **Item
        3. Defaults upon Senior Securities**
  None
 
 **Item
        4. Submission of Matters to a Vote of Security Holders**
 
 None
 
 **Item
        5. Other Information**
 
 None
 
 **Item
        6. Exhibits**
 
 Exhibit
        Description
 
 3.1
              
              Articles
                  of Incorporation - Restated and Amended May 30, 2001(Incorporated
                  by
                  reference to form 10KSB filed with the SEC on March 31,
                  2003)3.2
              
              By-Laws
                  of Global Axcess Corp - As Amended(Incorporated by reference to
                  form 10KSB
                  filed with the SEC on March 31, 2003)3.3
              
              Amendment
                  to the Articles of Incorporation (Incorporated by reference to
                  Form 8-K
                  filed with the SEC on May 3, 2005)4.1
              
              Securities
                  Purchase Agreement dated March 11, 2005 of Global Axcess Corp
                  (Incorporated by reference to Form 8-K filed with the SEC on April
                  4,
                  2005)4.2
              
              Form
                  of Common Stock Purchase Warrant (Incorporated by reference to
                  Form 8-K
                  filed with the SEC on April 4, 2005)4.3
              
              Securities
                  Purchase Agreement dated October 27, 2005 entered by and between
                  the
                  Company and the Investor (1)4.4
              
              9%
                  Senior Subordinated Secured Convertible Note dated October 27,
                  2005 issued
                  by the Company to the Investor (1)
  41
  4.5
              
              Common
                  Stock Purchase Warrant dated October 27, 2005 issued by the Company
                  to the
                  Investor (1)4.6
              
              Registration
                  Rights Agreement dated October 27, 2005 entered by and between
                  the Company
                  and the Investor (1)4.7
              
              Subsidiary
                  Guarantee dated October 27, 2005 (1)4.8
              
              Subordination
                  Agreement dated October 27, 2005 entered by and between the Company,
                  the
                  Investor and Wachovia (1)4.9
              
              Security
                  Agreement dated October 27, 2005 entered by and between the Company
                  and
                  the Investor (1)4.10
              
              Third
                  Amended and Restated Loan Agreement dated October 27, 2005 entered
                  by and
                  between the Company and Wachovia (1)4.11
              
              Promissory
                  Note dated October 27, 2005 issued by the Company to Wachovia
                  (1)4.12
              
              Form
                  of Subscription Agreement dated November 8, 2005 (2)4.13
              
              Form
                  of Common Stock Purchase Warrant dated November 8, 2005
                  (2)4.14
              
              Consolidated
                  Renewal Promissory Note dated August 28, 2007 issued by Company
                  to
                  Wachovia (Incorporated to form 8-K filed with the SEC on October
                  1,
                  2007)4.15
              
              Fourth
                  Amended and Restated Loan Agreement entered by and between the
                  Company and
                  Wachovia (Incorporated to form 8-K filed with the SEC on October
                  1,
                  2007)10.1
              
              Agreement
                  entered into with Food Lion, LLC and Nationwide Money Services,
                  Inc dated
                  October 5, 2001 (Incorporated by reference to form 10KSB filed
                  with the
                  SEC on April 16, 2002)10.2
              
              Asset
                  Purchase Agreement dated October 28, 2005 by and between the Company
                  and
                  Amer-E-Com Digital Corporation (1)10.3
              
              Distributor
                  ATM Processing Agreement between Nationwide Money Services and
                  Genpass
                  Technologies LLC dated December 15, 2005 (3)10.4
              
              Net
                  Enterprise Value Special Transaction Plan (incorporated by reference
                  to
                  form 8-K current report filed with the SEC on June 14,
                  2007)14.1
              
              Code
                  of Ethics and Business Conduct of Officers, Directors and Employees
                  of
                  Global Axcess Corp. (Incorporated by reference to form 10KSB filed
                  with
                  the SEC on March 31, 2003)
 
 16.1
              
              Letter
                  from L.L. Bradford & Company, LLC (incorporated by reference form 8-K
                  current report filed with the SEC on July 1, 2003)21.1
              
              List
                  of Subsidiaries:Nationwide
                  Money Services Inc., a Nevada corporationEFT
                  Integration Corporation, a Florida corporationAxcess
                  Technology Corporation, a Nevada corporationAxcess
                  Technology Corporation, Pty Ltd a South African
                  corporation
  42
  Cash
                  Axcess Corporation, Pty Ltd a South African
                  corporation
  31.1
              Certification
                  of the Chief Executive Officer of Global Axcess Corppursuant
                  to Section 302 of the Sarbanes-Oxley Act of
                  2002.
 
 31.2
              Certification
                  of the Chief Financial Officer of Global Axcess Corppursuant
                  to Section 302 of the Sarbanes-Oxley Act of
                  2002.
 
 32.1
              Certification
                  of the Chief Executive Officer of Global Axcess Corppursuant
                  to Section 906 of the Sarbanes-Oxley Act of
                  2002.
 
 32.2
              Certification
                  of the Chief Financial Officer of Global Axcess Corppursuant
                  to Section 906 of the Sarbanes-Oxley Act of
                  2002.
  43
 
 SIGNATURES
 
 Pursuant
        to the requirements of the Securities Exchange Act of 1934, as of November
        6, 2007 the Issuer has duly caused this report to be signed on its behalf
        by the
        undersigned, thereunto duly authorized.
 GLOBAL
                  AXCESS CORPBy:
              /s/
                George A. McQuainGeorge
                  A. McQuain
                President
                  and Chief Executive Officer
  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 Issuer and
        in
        the capacities indicated on the 6 th day of
        November, 2007.
 Signature
                
                Title/S/
                    Walter A. HowellWalter
                    A. Howell
                
                Director/S/
                    Lock IrelandLock
                    Ireland
                
                Vice
                    Chairman, Director/S/
                    Robert LandisRobert
                    Landis
                
                Director/S/
                    Michael J. LoiaconoMichael
                    J. Loiacono
                
                Chief
                    Financial Officer, Chief Accounting Officer/S/
                    Joseph LoughryJoseph
                    Loughry
                
                Chairman,
                    Director/s/
                    George A. McQuainGeorge
                    A. McQuain
                
                President,
                    CEO and Director/S/
                    Alan RossiterAlan
                    Rossiter
                
                Director
  44