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 SECURITIES EXCHANGE
                ACT OF
                1934 For the quarterly period ended March 31,
                2006





OR





|_|
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                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.)224
                PONTE VEDRA PARK DRIVEPONTE
                VEDRA BEACH, FLORIDA
            32082(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 o No
      x





Check
      if
      there is no disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-B is not contained herein, and will not be contained, to the best
      of
      the Issuer's knowledge, in definitive proxy or information statements incorporated
      by reference in Part II of this Form 10-QSB. x





As
      of May
      12, 2006, the Issuer had 21,011,786 shares outstanding of the Common Stock
      ($0.001 par value) and no shares outstanding of the Preferred Stock ($0.001
      par value).











TABLE
                OF CONTENTS
            Page
                No.PART
                I
            FINANCIAL
                INFORMATIONItem
                1.
            Financial
                Statements (unaudited)
            5Item
                2.
            Management's
                Discussion and Analysis or Plan of Operation
            19Item
                3.
            Controls
                and Procedures
            28PART
                II
            OTHER
                INFORMATIONItem
                1.
            Legal
                Proceedings
            29Item
                2.
            Changes
                in Securities.
            30Item
                3.
            Defaults
                Upon Senior Securities.
            30Item
                4.
            Submission
                of Matters to a Vote of Security Holders.
            30Item
                5.
            Other
                Information.
            30Item
                6.
            Exhibits.
            30SIGNATURES
            31





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 2006.
      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.




2


PART
      I -
      FINANCIAL INFORMATION





Item
      1.
      Financial Statements





GLOBAL
      AXCESS CORP AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED BALANCE SHEET


March
      31,
      2006


(Unaudited)


ASSETSCurrent
                  assetsCash
                  and cash equivalents
              
              $
              1,406,639Automated
                  teller machine vault cash
              
              
              318,590Accounts
                  receivable, net of allowance for doubtful accounts of
                  $176,854
              
              
              1,466,864Note
                  receivable - current
              
              
              50,000Inventory
              
              
              195,465Deferred
                  tax asset - current
              
              
              329,197Prepaid
                  expense and other current assets
              
              
              473,114Total
                  current assets
              
              
              4,239,869Assets
                  held for sale, net
              
              
              485,316Fixed
                  assets, net
              
              
              7,662,967Other
                  assetsMerchant
                  contracts, net
              
              
              13,189,652Intangible
                  assets, net
              
              
              4,264,470Notes
                  receivable - non-current, net of allowance of $804,579
              
              
              747,090Deferred
                  tax asset - non-current
              
              
              322,279Other
                  assets
              
              
              54,223Total
                  assets
              
              $
              30,965,866LIABILITIES
                  AND STOCKHOLDERS' EQUITYCurrent
                  liabilitiesAccounts
                  payable and accrued liabilities
              
              $
              3,489,370Automated
                  teller machine vault cash payable
              
              
              318,590Deferred
                  revenue - current
              
              
              89,500Notes
                  payable-related parties - current portion
              
              
              17,157Notes
                  payable - current portion
              
              
              104,056Senior
                  lenders' notes - current portion, net
              
              
              1,004,167Capital
                  lease obligations - current portion
              
              
              1,059,901Total
                  current liabilities
              
              
              6,082,741Long-term
                  liabilitiesNotes
                  payable-related parties - long-term portion
              
              
              1,326,990Notes
                  payable - long-term portion
              
              
              16,997Senior
                  lenders' notes - long term portion, net
              
              
              5,318,878Capital
                  lease obligations - long-term portion
              
              
              2,182,425Deferred
                  tax liability- long term portion
              
              
              311,676Total
                  liabilities
              
              
              15,239,707Stockholders'
                  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,
                  20,971,786 shares issued and outstanding
              
              
              20,972Common
                  Stock Payable
              
              
              20,000Additional
                  paid-in capital
              
              
              22,359,571Accumulated
                  deficit
              
              
              (6,674,384
              )Total
                  stockholders' equity
              
              
              15,726,159Total
                  liabilities and stockholders' equity
              
              $
              30,965,866




See
      Accompanying Notes to Condensed Consolidated Financial
      Statements


3





GLOBAL
      AXCESS CORP AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)


For
                  the Three Months EndedMarch
                  31, 2006
              
              March
                  31, 2005Revenues
              
              $
              5,245,570
              
              $
              4,717,236Cost
                  of revenues
              
              
              2,968,362
              
              
              2,704,439Gross
                  profit
              
              
              2,277,208
              
              
              2,012,797Operating
                  expensesDepreciation
                  and amortization
              
              
              624,396
              
              
              311,108Selling,
                  general and administrative
              
              
              1,554,097
              
              
              1,171,570Total
                  operating expenses
              
              
              2,178,493
              
              
              1,482,678Operating
                  income from continuing operationsbefore
                  items shown below
              
              
              98,715
              
              
              530,119Other
                  income (expense)Interest
                  expense, net
              
              
              (331,063
              )
              
              (121,541
              )Gain
                  on sale of assets
              
              
              14,433
              
              
              -Other
                  income (expense)
              
              
              (660,000
              )
              
              -Total
                  other (expense)
              
              
              (976,630
              )
              
              (121,541
              )Income
                  (loss) from continuing operations beforeprovision
                  for income taxes
              
              
              (877,915
              )
              
              408,578Federal
                  income tax (expense) benefit
              
              
              -
              
              
              -Income
                  (loss) from continuing operations
              
              
              (877,915
              )
              
              408,578Loss
                  from discontinued operations, net of tax
              
              $
              -
              
              $
              (229,660
              )Net
                  income (loss)
              
              $
              (877,915
              )
              $
              178,918Income
                  (loss)per common share - basic:Income
                  (loss) from continuing operations
              
              $
              (0.04
              )
              $
              0.02Loss
                  from discontinued operations
              
              $
              -
              
              $
              (0.01
              )Net
                  income/(loss)
              
              $
              (0.04
              )
              $
              0.01Income
                  (loss) per common share - diluted:Income
                  (loss) from continuing operations
              
              $
              (0.04
              )
              $
              0.02Loss
                  from discontinued operations
              
              $
              -
              
              $
              (0.01
              )Net
                  income/(loss)
              
              $
              (0.04
              )
              $
              0.01Weighted
                  average common shares outstanding:Basic
              
              
              20,971,336
              
              
              17,751,630Diluted
              
              
              20,971,336
              
              
              18,618,178





See
      Accompanying Notes to Condensed Consolidated Financial
      Statements


4





GLOBAL
      AXCESS CORP AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS





(Unaudited)




For
                  the Three Months endedMarch
                  31,2006
              
              March
                  31, 2005Cash
                  flows from operating activities:(Loss)
                  income from continuing operations
              
              $
              (877,915
              )
              $
              408,578Adjustments
                  to reconcile net income from continuing operationsto
                  net cash provided by operating activities:Stock
                  based compensation
              
              
              13,724
              
              
              4,542Depreciation
                  and amortization
              
              
              624,396
              
              
              311,108Accretion
                  of discount on notes payable
              
              
              37,600
              
              
              7,902Write-off
                  of uncollectible note receivable
              
              
              38,226
              
              
              -Changes
                  in operating assets and liabilities:Change
                  in automated teller machine vault cash
              
              
              144,474
              
              
              58,823Change
                  in accounts receivable
              
              
              (30,060
              )
              
              (165,877
              )Change
                  in inventory
              
              
              (35,951
              )
              
              (19,827
              )Change
                  in prepaid expenses and other current assets
              
              
              (189,281
              )
              
              22,807Change
                  in other assets
              
              
              (15
              )
              
              (10,231
              )Change
                  in accounts payable and accrued liabilities
              
              
              839,730
              
              
              198,930Change
                  in automated teller machine vault cash payable
              
              
              (144,474
              )
              
              (58,823
              )Net
                  cash provided by continuing operating activitities
              
              
              420,454
              
              
              757,932Discontinued
                  operationsNet
                  loss
              
              
              -
              
              
              (229,660
              )Adjustments
                  to reconcile loss to net cash used indiscontinued
                  operations:Depreciation
              
              
              -
              
              
              8,359Change
                  in accounts receivable
              
              
              -
              
              
              2,518Change
                  in accounts payable and accrued liabilities
              
              
              -
              
              
              (30,012
              )Change
                  in prepaid expenses and other current assets
              
              
              -
              
              
              (3,101
              )Net
                  cash used in discontinued operating activities
              
              
              -
              
              
              (251,896
              )Net
                  cash provided by continuing and discontinued operating
                  activities
              
              
              420,454
              
              
              506,036Cash
                  flows from investing activities:Purchase
                  of merchant contracts
              
              
              -
              
              
              (20,825
              )Purchase
                  of property and equipment
              
              
              (218,425
              )
              
              (726,689
              )Net
                  cash used in investing activities for continuing
                  operations
              
              
              (218,425
              )
              
              (747,514
              )Purchase
                  of property and equipment used in discontinued operating
                  activities
              
              
              -
              
              
              (110,103
              )Net
                  cash used in investing activities
              
              
              (218,425
              )
              
              (857,617
              )Cash
                  flows from financing activities:Proceeds
                  from issuance of common stock
              
              
              20,450
              
              
              644,618Deferred
                  offering costs
              
              
              -
              
              
              (12,500
              )Proceeds
                  from notes payable
              
              
              -
              
              
              48,406Principal
                  payments on senior lenders' notes
              
              
              (891,666
              )
              
              (156,250
              )Principal
                  payments on notes payable
              
              
              (27,703
              )
              
              -Principal
                  payments on notes payable - related parties
              
              
              (3,948
              )
              
              -Principal
                  payments on capital lease obligations
              
              
              (250,642
              )
              
              -Net
                  cash provided by (used in) financing activities
              
              
              (1,153,509
              )
              
              524,274(Decrease)
                  increase in cash
              
              
              (951,480
              )
              
              172,694Cash,
                  beginning of period
              
              
              2,358,119
              
              
              496,823Cash,
                  end of the period
              
              $
              1,406,639
              
              $
              669,517Cash
                  paid for income taxes
              
              
              -
              
              
              -Cash
                  paid for interest
              
              $
              (293,463
              )
              $
              (113,640
              )


See
      Accompanying Notes to Condensed Consolidated Financial
      Statements


5





Supplemental
      schedule of non-cash investing and financing activities:





For
                  the Three Months endedMarch
                  31, 2006
              
              March
                  31, 2005Investing
                  activities:Purchase
                  of assets under capital lease obligations
              
              $
              612,661
              
              
              527,192Financing
                  activitiesStock
                  issued for compensation
              
              
              13,724
              
              
              4,542Discount
                  of notes payable
              
              
              37,600
              
              
              7,902Total
                  non-cash financing activities
              
              $
              51,324
              
              $
              12,444




See
      Accompanying Notes to Condensed Consolidated Financial
      Statements


6


GLOBAL
      AXCESS CORP AND SUBSIDIARIES


NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


AS
      OF
      MARCH 31, 2006


(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, 2005 of Global Axcess Corp
      and
      subsidiaries ("the Company").




The
      interim 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 generally
      accepted in the United States of America.




The
      interim condensed consolidated financial information is unaudited. In the
      opinion of management, all adjustments necessary to present fairly the financial
      position as of March 31, 2006 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.




All
      adjustments are of normal recurring nature, with the exception of :




·  $410,000
      increase in accrual for potential settlement of legal claim(see note 5)


·  $250,000
      increase in legal and other accrued expenses





2.
            DESCRIPTION
                OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
                POLICIES





Description
      of Business





Global
      Axcess Corp, through its wholly owned subsidiaries, is a


network-based
      electronic commerce and transaction processing company; and an automated teller
      machine ("ATM") network and processing consolidator.





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., and Cash Axcess
      Corporation (Proprietary) Limited, (see Footnote 3 referring to subsidiaries
      included as discontinued operations). All significant inter-company balances
      and
      transactions have been eliminated in consolidation.




7


Reclassifications





Certain
      reclassifications were made to the 2005 condensed consolidated statement of
      cash
      flows and condensed consolidated statement of operations to conform to 2006
      presentation. These reclassifications had no impact on net income (loss) or
      stockholders’ equity.




Use
      of
      Estimates





The
      preparation of 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 reported
      amounts of assets and liabilities and disclosure of contingent assets and
      liabilities at the date of the condensed consolidated financial statements
      and
      the reported amounts of revenues and expenses during the reporting period.
      Actual results could differ from those estimates.





Revenue
      recognition





Transaction
      service and processing fees are recognized in the period that the service is
      performed. The Company receives service 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. Software sales and services
      revenue is recognized when complete, shipped and invoiced. 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.





Inventory





ATM
                machines available for sale are classified as inventory until such
                time as
                the machine is sold, installed and in service. Once the ATM machine
                is
                sold it is relieved to cost of sales. At March 31, 2006, the Company’s ATM
                machine inventory totaled $195,465. Inventories are valued at the
                lower of
                cost (first-in, first-out method) or
                market.





Accounts
      Receivable





The
      Company reviews the accounts receivable on a regular basis to determine the
      collectibility of each account. The Company records an allowance for doubtful
      accounts for any account aged past 90 days when the account is no longer active.
      When the Company deems the receivable to be uncollectible, the Company charges
      the receivable against the allowance for doubtful accounts.





Amortization
      of Assets





As
      of
      March 31, 2006 the Company has accumulated amortization totaling $241,818
      against intangible assets totaling $4,506,288.





As
      of
      March 31, 2006 the Company has accumulated amortization totaling $1,356,510
      against merchant contracts totaling $14,546,162.





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. 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 other income (expense).


8





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.





Assets
      Held for Sale





ATM
      machines 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 or sold. The Company plans on having
      the
      assets held for sale at March 31, 2006 either sold or reinstalled by the end
      of
      fiscal year 2006. Once in service, each ATM machine is reclassified as a fixed
      asset and depreciated using the remaining estimated useful life of the machine.
      Any ATM machine 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. The Company reviews the Assets Held for Sale
      for
      impairment and if it finds impairment, the Company accounts for the impairment
      in accordance with SFAS No.144 ”Impaired Long-Lived Assets and Long-Lived Assets
      to be Disposed of”.





Intangible
      Assets - Goodwill and Merchant Contracts





In
      June
      2001, the Financial Accounting Standards Board (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 exceeds its carrying amount, goodwill is not considered to be impaired
      and
      the second step is not required. SFAS 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 exceeds its fair value, the second step
      is
      performed to measure the amount of impairment loss. The second step compares
      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.


9





Intangible
      assets with finite lives 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. Intangible assets with indefinite lives are subject
      to periodic impairment testing in accordance with SFAS
      No. 142.





The
      Company’s intangible assets are made up of merchant 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 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 determine at each contract’s renewable period, whether they will
      actually renew and if not to amortize the cost over the remaining life of the
      contract. The second step is to compare the fair value 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.





Fair
      value of financial instruments




The
      carrying amounts of the Company’s long-term liabilities approximate the
      estimated fair values at March 31, 2006 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. The reverse stock split
      was
      applied retroactively to all previously disclosed share and per share amounts.
      The diluted earnings per share amount equals basic earnings per share for the
      three months ended March 31, 2006 because the Company had a net loss and the
      impact of the assumed exercise of the stock options and warrants is
      anti-dilutive.




10


For
                  the Three Months EndedMarch
                  31, 2006
              
              March
                  31, 2005NumeratorIncome
                  (loss) from continuing operations
              
              
              (877,915
              )
              
              408,578Loss
                  from discontinued operations
              
              
              -
              
              
              (229,660
              )Numerator
                  for diluted income (loss) per shareavailable
                  to common stockholders
              
              
              (877,915
              )
              
              178,918DenominatorWeighted
                  average shares
              
              
              20,971,336
              
              
              17,751,630Effect
                  of dilutive securities:Employee
                  stock options & warrants
              
              
              -
              
              
              866,548Denominator
                  for diluted income (loss) per share adjustedweighted
                  shares after assumed exercises
              
              
              20,971,336
              
              
              18,618,178**Income
                  (loss) per common share - basic:**Income
                  (loss) from continuing operations
              
              
              (0.04
              )
              
              0.02Loss
                  from discontinued operations
              
              
              -
              
              
              (0.01
              )Net
                  Income (loss) per share
              
              
              (0.04
              )
              
              0.01**Income
                  (loss) per common share - diluted:**Income
                  (loss) from continuing operations
              
              
              (0.04
              )
              
              0.02Loss
                  from discontinued operations
              
              
              -
              
              
              (0.01
              )Net
                  Income (loss) per share
              
              
              (0.04
              )
              
              0.01




Reverse
      Stock Split





Effective
      April 28, 2005, the Company implemented a one-for-five reverse split of its
      outstanding common stock. All information regarding share and per share amounts
      have been adjusted within the financial statements to reflect the reverse stock
      split.





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.





11


Segment
      information




The
      Company discloses segment information in accordance with SFAS No. 131,
“Disclosures about Segments of an Enterprise and Related Information.” The
      Company operates under one segment.




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. Other development costs include development of card-based business and
      development of foreign ATM operations. During the past three month periods
      ending March 31, 2006 and 2005, the amount of research and development costs,
      which were borne entirely by the Company, amounted to $102,601 and $333,623,
      respectively.





Repairs
      and maintenance costs





Repairs
      and maintenance costs are expensed as incurred. Repairs and maintenance
      pertaining to the Company’s ATMs, the revenue driving equipment, 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.





Internally
      Developed Software





Costs
      incurred related to internally developed software, including interest, are
      capitalized and amortized over the useful life of the software for an average
      life of three years. During the quarter ended March 31, 2006 and 2005, the
      Company capitalized $ 0 , and approximately $341,000 of internally developed
      software, respectively.




Recent
      accounting pronouncements





In
      December 2004, the FASB issued SFAS No. 123 (R), “Share-Based Payment”. SFAS No.
      123 (R) revises SFAS No. 123, “Accounting for Stock-Based Compensation” which
      supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees”. SFAS
      No. 123 (R) focuses primarily on the accounting for transactions in which an
      entity obtains employee services in share-based payment transactions. SFAS
      No.
      123 (R) requires companies to recognize in the statement of income the cost
      of
      employee services received in exchange for awards of equity instruments based
      on
      the grant-date fair value of those awards (with limited exceptions). SFAS No.
      123 (R) is effective as of the first interim or annual reporting period that
      begins after October 1, 2005 for non-small business issuers and after December
      15, 2005 for small business issuers. Accordingly, the Company has adopted SFAS
      No. 123 (R) in its quarter ending March 31, 2006. During the quarter ended
      March
      31, 2006, the Company recorded $13,724 of stock based compensation expense
      in
      the accompanying condensed consolidated statement of operations.




Risk
      Factors





There
      are
      a number of factors that could cause actual results to differ materially from
      those discussed in the forward-looking statements, including those factors
      described below. Other factors not identified herein could also have such an
      effect. Among the factors that could cause actual results to differ materially
      from those discussed in the forward-looking statements are the
      following:


12





·  Default
      Under our Credit Agreements





The
      Company has received a waiver of certain covenants from its senior lender during
      the 1 st quarter
      of 2006. There were no other covenants under debt agreements with lenders that
      were not met.





·  Our
      sales
      depend on transaction fees from our networks of ATMs. A decline in either
      transaction volume or the level of transaction fees could reduce our sales
      and
      harm our operating results **.**





·  Transaction
      fees for our network of ATMs produce substantially all of our sales.
      Consequently, our future operating results will depend on both transaction
      volume and the amount of the transaction fees we receive. Our transaction volume
      and fees will depend principally upon:





·
            
            our
                ability to find replacement sites in the event of merchant
                turnover;·
            
            competition,
                which can result in over-served markets, pressure both to reduce
                existing
                fee structures and increase sales discounts to merchants and reduced
                opportunities to secure merchant or other placements of our
                machines;·
            
            our
                ability to service, maintain and repair ATMs in our network promptly
                and
                efficiently;·
            
            continued
                market acceptance of our services; and·
            
            government
                regulation and network adjustment of our
                fees.





·  Changes
      in laws or card association rules affecting our ability to impose surcharge
      fees
      and continued customer willingness to pay surcharge fees;





·  Our
      ability to form new strategic relationships and maintain existing relationships
      with issuers of credit cards and national and regional card
      organizations;





·  Our
      ability to expand our ATM base and transaction processing business;





·  The
      availability of financing at reasonable rates for vault cash and for other
      corporate purposes, including funding our expansion plans;





·  Our
      ability to maintain our existing relationships with Food Lion and Kash n’
Karry;





·  Our
      ability to keep our ATMs at other existing locations and to place additional
      ATMs in preferred locations at reasonable rental rates;





·  The
      extent and nature of competition from financial institutions, credit card
      processors and third party operators, many of whom have substantially greater
      resources;





·  Our
      ability to maintain our ATMs and information systems technology without
      significant system failures or breakdowns;





13


·  Our
      ability to develop new products and enhance existing products to be offered
      through ATMs, and our ability to successfully market these
      products;





·  Our
      ability to identify suitable acquisition candidates, to finance and complete
      acquisitions and to successfully integrate acquired assets and businesses into
      existing operations;





·  Our
      ability to retain senior management and other key personnel;




·  Our
      ability to comply with mandated Triple DES configuration; and





·  Changes
      in general economic conditions.





3.
            DISCOUNTINUED
                OPERATIONS




During
      the quarter ended September 30, 2005, the Company approved plans to dispose
      of
      its wholly-owned subsidiary, Electronic Payment & Transfer Corporation
      ("EPT"), and to discontinue 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 a $1.5 million note receivable (see Note 4 - "Notes
      Receivable - Non-current"). The Company has estimated an allowance against
      the
      note receivable of $0.8 million. In accordance with FASB Statement No. 144,
      "Accounting for the Impairment or Disposal of Long-Lived Assets," the Company
      has classified EPT as a discontinued operation and reported its operating
      results within discontinued operations in the accompanying consolidated
      statements of income. The Company recorded no gain or loss on this
      transaction.





During
      the quarter ended December 31, 2005, the Company approved plans to discontinue
      two operations that did not fit within management’s strategic plans, thereby
      ceasing operations of the Company’s software development subsidiary, Axcess
      Technology Corp. (“ATC”), and ATC’s South African subsidiary Axcess Technology
      Corp, SA (“ATCSA”), as of December 31, 2005. The Company has dismissed all but
      one employee as of December 31, 2005, transferring them to Nationwide Money
      Services, Inc. All assets and liabilities have been transferred to either
      Nationwide Money Services, Inc. or Cash Axcess Corp., SA. In accordance with
      FASB Statement No. 144, "Accounting for the Impairment or Disposal of Long-Lived
      Assets," the Company has classified ATC and ATCSA as discontinued operations
      and
      reported their operating results within discontinued operations in the
      accompanying consolidated statements of income and statements of cash flow.
      The
      Company has not allocated interest to discontinued operations. Operating
      results, of these discontinued operations were as follows for the period ending
      March 31, 2005:


14




2005Revenues
              
              $
              600Cost
                  of revenues
              
              
              -Gross
                  Profit
              
              
              600Operating
                  ExpensesDepreciation
                  and amortization
              
              
              8,359Selling,
                  general and administrative
              
              
              221,901Total
                  operating expenses
              
              
              230,260Loss
                  from operations
              
              
              (229,660
              )Loss
                  before provision for taxes
              
              
              (229,660
              )Net
                  loss
              
              $
              (229,660
              )




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
      a
      $1.5 million note receivable.





Notes
      receivable - non-current consist of the following at March 31,
      2006:





(a)
                9% promissory note receivable requiring monthly interest payments
                starting
                October 1, 2006 and quarterly principal payments starting August
                1, 2006,
                maturing November 1, 2010 requiring a balloon payment, net of reserve
                of
                $761,640
            
            $
            740,134(b)
                10% promissory note due February 2007, net of reserve of
                $42,939
            
            
            56,956Less
                current portion
            
            
            (50,000
            )$
            747,090





(c)
      Effective September 30, 2005, the Company sold its wholly-owned subsidiary,
      Electronic Payment & Transfer Corporation, for $1,540,000 in a secured
      promissory note covering the full amount of the sale price (see Note 3 -
      "Discontinued Operations").





(d)
      In
      February 2004, the Company issued a note receivable in the amount of $190,000
      due within 1 year and requiring monthly payments of principal and interest,
      with
      an annual interest rate of 10%. The note has been amended to extend the term
      to
      February 2007. The amount remaining on the note as of March 31, 2006 is $99,895.
      The promissory note is collateralized by the Company’s stock and may need to be
      further reserved should the stock price of the Company decline.





5.
            COMMITMENTS
                AND CONTINGENCIES





Capital
      leases entered into during the three-month period ending March 31, 2006 mature
      in 60 months with various rates from 12.07% to 12.11%, totaled
      $612,661.








15


Legal
      proceedings





As
      of
      March 31, 2006, the Company has accrued legal costs of $450,000 related to
      various legal proceedings.








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 alleges the following are 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. The Company has accrued $450,000
      for potential legal claims as of March 31, 2006.





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 such lawsuits that could have a material adverse
      impact on the Company’s consolidated results of operations, cash flows or
      financial position.





6.
              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 March 31, 2006 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.





At
      March
      31, 2006, the Company has net operating loss carryforwards remaining of
      approximately $9,800,000 that may be offset against future taxable income
      through 2025. As part of management’s tax strategies they 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.





7.
            CHANGES
                IN STOCKHOLDERS' EQUITY





See
      the
      table below for all the equity transactions for the three-month period ending
      March 31, 2006:


16


Additional
              
              Common
              
              
              
              TotalCommon
                  Stock
              
              Paid-in
              
              Stock
              
              Accumulated
              
              Stockholders'Shares
              
              Amount
              
              Capital
              
              Payable
              
              Deficit
              
              EquityBalances,
                  December 31, 2005
              
              
              20,970,886
              
              
              20,971
              
              
              22,345,398
              
              
              -
              
              
              (5,796,469
              )
              
              16,569,900Stock
                  warrants exercised and issued
              
              
              900
              
              
              1
              
              
              449
              
              
              -
              
              
              -
              
              
              450Stock
                  warrants exercised and not issued
              
              
              -
              
              
              -
              
              
              -
              
              
              20,000
              
              
              -
              
              
              20,000Stock
                  Compensation Expense
              
              
              -
              
              
              -
              
              
              13,724
              
              
              -
              
              
              -
              
              
              13,724Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (877,915
              )
              
              (877,915
              )Balances,
                  March 31, 2006
              
              
              20,971,786
              
              $
              20,972
              
              $
              22,359,571
              
              $
              20,000
              
              $
              (6,674,384
              )
              $
              15,726,159





8.
            STOCK
                OPTIONS AND WARRANTS




Pro
      forma disclosure - Pro
      forma information regarding net income and net earnings per share, has been
      determined as if the Company had accounted for its employee stock-based
      compensation plans and other stock options under the fair value method of SFAS
      123. The fair value of each option grant is estimated on the date of grant
      using
      the Black-Scholes option pricing model with the following weighted-average
      assumptions used for grants under the fixed option plans:




March
                31, 2005Weighted-average
                risk free interest rate
            
            
            5.25
            %Expected
                life of option (years)
            
            
            2.0Expected
                stock volatility
            
            
            71
            %Expected
                dividend yield
            
            
            0.00
            %




Effective
      January 1, 2006, the Company adopted provisions of Financial Accounting
      Standards Board (FASB) Statement No. 123R "Share-Based Payment," (FAS 123R)
      for
      its share-based compensation plans. The Company previously accounted for these
      plans under the recognition and measurement principles of Accounting Principles
      Board (APB) No. 25, "Accounting for Stock Issued to Employees," (APB 25) and
      related interpretations and disclosure requirements established by FAS 123,
      "Accounting for Stock-Based Compensation." Under APB 25, because the exercise
      price of the Company's employee stock options equaled the market price of the
      underlying stock on the date of the grant, no compensation expense was recorded
      in 2005, but pro forma effects on income were disclosed in the comparative
      quarter in 2005.




Under
      FAS
      123R, all share-based compensation cost is measured at the grant date, based
      on
      the fair value of the award, and is recognized as an expense in the income
      statement over the vesting period. The cost for all share-based awards granted
      subsequent to January 1, 2006, represented the grant-date fair value that was
      estimated in accordance with the provisions of FAS 123R. Prior periods have
      not
      been restated.





The
      following table illustrates the effect on net income per share if the Company
      had applied the fair value recognition provisions of FASB Statement No. 123,
      "Accounting for stock-Based Compensation," to stock-based employee
      compensation.





17





2005Net
                    income, as reported
                
                $
                178,918Add:
                    Stock-based employee compensation expense included in reported
                    income
                    (loss), net of related tax effectsDeduct:
                    Total stock-based employee compensation expense determined under
                    fair
                    value based methods for all awards,net of related tax
                    effects
                
                $
                (68,227
                )Pro
                    forma net income (loss)
                
                $
                110,690Net
                    income/(loss) per common shareBasic
                    income, as reported
                
                $
                0.01Basic
                    income/ (loss), pro forma
                
                $
                0.00





Compensation
      expense charged against income during the first quarter of 2006 for stock
      options was $13,724.




9.
            SUBSEQUENT
                EVENTS





On
      April
      3, 2006 the Company received a significant payment from Genpass Technologies
      LLC, in relation to the Distributor ATM Processing Agreement for the conversion
      of network processing.





On
      May 2,
      2006 the Company entered into a  Shareholder Agreement to sell 50% of its
      South African subsidiary Cash Axcess Corporation (Proprietary) Limited, its
      wholly owned subsidiary, in a stock arrangement with the buyer. The Company
      will
      convert a loan into additional shares of stock at the same time. The Company
      will also either receive or give additional shares of stock and cash if certain
      milestones are achieved or not achieved, respectively in the twelve month period
      following the contract date.





On
      May 4,
      2006, the Company entered into a letter agreement with Raymond James &
Associates, Inc. (“RJ”) pursuant to which the Company retained RJ to act as its
      sole, external investment banking advisor in helping the Company evaluate
      strategic alternatives including the sale of all or a portion of its assets
      or
      securities. In consideration for such services, the Company has paid RJ an
      initial retainer of $50,000 and has agreed to reimburse RJ for all reasonable
      out of pocket expenses, pay a transaction fee of $500,000 plus 2.5% of any
      consideration over $16 million received by the Company in connection with any
      transaction and pay $150,000 in connection with any fairness opinion delivered
      by RJ to the Company.


18





On
      May 9,
      2006, Robert Pearson resigned from his position on the Board of Directors.





On
      May
      10, 2006, David J. Surette notified the Company of his resignation as Chief
      Financial Officer and Chief Accounting Officer effective May 31,
      2006.








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 2006.
      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.




Summary




Global
      Axcess Corp (the "Company"), through its wholly owned subsidiaries, owns and
      operates Automatic Teller Machines ("ATM") 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 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, 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 as much as $2.50 per transaction. We do not receive any portion
      of
      these service fees.




19


In
      most
      markets we impose a surcharge fee for cash withdrawals. Surcharge fees are
      a
      substantial additional source of revenue for us and other ATM network operators.
      The surcharge fee for ATMs in our network ranges between $1.50 and $2.50 per
      withdrawal. The surcharge fee for other ATMs in our network ranges between
      $0.50
      and $7.50 per withdrawal. We receive the full surcharge 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 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 revenue based upon the Company contracts
      with
      the third party vendors.




In
      addition to revenues derived from interchange and surcharge 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 fees are charged to the cardholder and credited to us by networks
      and
      credit card issuers on a daily basis. We periodically rebate the portion of
      these fees owed to ATM owners and owners of ATM locations. Fees for network
      management services are generally paid to us on a monthly basis.




The
      Company's mission is to become a leading global ATM network and services
      provider through network acquisition. The Company is positioning itself to
      leverage its advanced technology, economies of scale and industry knowledge
      to
      capture a larger portion of the non-bank ATM market. Importantly, having both
      project management and transaction processing allows the Company to successfully
      compete in its industry. Most competitors do not have this vertical capability.
      When coupled with third-party products, the Company will be in a position to
      increase the financial services offered by the ATM. These future financial
      and
      digital-based products will be targeted towards the traditional ATM customer
      (domestically,15% of the working population do not use traditional bank
      services/checking accounts), as well as potential new ATM customers. These
      products are intended to give the Company a competitive edge in both product
      offerings and higher margin revenues, and to draw ATM companies to its
      acquisition strategy. Although the Company has historically focused its
      operations mainly in the Eastern region of the United States of America, the
      Company has commenced expansion of its operations throughout the United States
      of America.




Critical
      Accounting Policies




The
      fundamental objective of financial reporting is to provide useful information
      that allows a reader to comprehend our business activities. To aid in that
      understanding, management has identified our "critical accounting policies".
      When more than one accounting principle, or the method of its application,
      is
      generally accepted, management selects the principle or method that is
      appropriate in the specific circumstances. Application of these accounting
      principles requires our management to make estimates about the future resolution
      of existing uncertainties. As a result, actual results could differ from these
      estimates. Accordingly, these policies have the potential to have a significant
      impact on our consolidated financial statements, either because of the
      significance of the consolidated financial statement item to which they relate,
      or because they require judgment and estimation due to the uncertainty involved
      in measuring, at a specific point in time, events which are continuous in
      nature.




20


In
      preparing these consolidated financial statements, management has made its
      best
      estimates and judgments of the amounts and disclosures included in the
      consolidated financial statements. Except as separately discussed, we do not
      believe there is a great likelihood that materially different amounts would
      be
      reported under different conditions or by using different assumptions pertaining
      to the accounting policies described below.




Revenue
      Recognition Policies




We
      recognize revenues as ATM cardholders use ATMs or as services are rendered
      to
      customers. When the customer accepts the convenience fee, also known as
      surcharge fees, and performs a transaction on the ATM, revenue can then be
      recognized since that transaction is then captured by the Company's database.
      In
      connection with recording revenue, estimates and assumptions are required in
      determining the expected conversion of the revenue streams to cash collected.
      The reserve estimation process requires that management make assumptions based
      on historical results, future expectations, the industry's economic and
      competitive environment, changes in the creditworthiness of our customers,
      and
      other relevant factors. Revenues are also adjusted with positive and negative
      processing accruals occurring in the operation of the Company's ATM network
      in
      the ordinary course of business. It is the policy of the Company to book as
      revenue all surcharge and interchange it receives and has earned based upon
      their contracts, whether for its owned ATMs or for those it manages. In the
      case
      of managed ATMs, the Company then books as a contracted expense a lease fee
      for
      the use of the ATM or space rent and pays this to the owners of the ATMs and/or
      the third party vendors. Where the Company provided only processing services
      through its wholly owned subsidiary, EFT Integration, the Company only records
      the fees it charges to its customers as revenue. During consolidation of the
      financial statements the Company eliminates the revenue earned by EFT
      Integration for the processing of Company owned or managed ATMs. Surcharge
      fees
      are fees assessed directly to the consumer utilizing the ATM terminals owned
      by
      the Company. The surcharge fees assessed range from $1.50 to $2.50 based upon
      a
      cash withdrawal transaction from the ATM terminals. The Company records only
      the
      surcharge and interchange monies due to the Company because it owns the ATMs
      or
      it manages the ATM’s and records the management or processing income due under
      contracts the Company owns. The Company does not record surcharge or interchange
      monies that pass through the Company’s processor to the ATM owner.




Interchange
      fees are fees assessed directly to the card issuer of the consumer. The
      interchange fees are comprised of two fees: (1) an interchange fee ranging
      from
      approximately $0.40 to $0.55 based upon each cash withdrawal transaction; and
      (2) an interchange fee ranging from approximately $0.15 to $0.25 based upon
      an
      account inquiry by the consumer.




Processing
      fees are earned by EFT Integration (EFTI), a wholly owned subsidiary of the
      Company, for the switching of transactions between the ATMs and the cardholders
      bank(s). The processing fees earned by EFTI for the switching of transactions
      for Nationwide Money Services, Inc.'s ATMs are eliminated at time of
      consolidation. However, EFTI switches transactions for companies other than
      Nationwide Money Services.




21


Management
      fees are charged to various companies or individuals that use the services
      of
      Nationwide Money Services to operate their ATMs. These fees are for services
      such as cash management, project management and account management.




Software
      sales and services are recorded when complete, shipped and
      invoiced.




Allowance
      of Uncollectible Accounts Receivable




Merchants
      and investors have been historically billed for reimbursable expenses of the
      Company as part of negotiated contracts. The accounts receivable, for these
      reimbursed expense invoices, have been historically reduced by an allowance
      for
      amounts that may become uncollectible in the future. The Company reviews the
      accounts receivable on a regular basis to determine the collectability of the
      accounts. The Company reserves for accounts that have aged over 90 days and
      are
      no longer an active account.




Inventory




ATM
      machines and equipment available for sale are classified as inventory until
      such
      time as the machine is sold, installed and in service. Once the ATM machine
      is
      sold it is relieved to cost of sales. At March 31, 2006, the Company’s ATM
      machine inventory totaled $ 195,465 .
      Equipment




ATM
      equipment comprises a significant portion of our total assets. Changes in
      technology or changes in our intended use of these assets may cause the
      estimated period of use or the value of these assets to change. We perform
      annual internal studies to confirm the appropriateness of estimated economic
      useful lives for each category of current equipment. Estimates and assumptions
      used in setting depreciable lives require both judgment and estimates. ATM
      machines and related software components not currently in service are classified
      as held for sale, until such time either the machine is installed and in service
      or sold. Once in service, each ATM machine is reclassified as a fixed asset
      and
      depreciated using the remaining estimate useful life of the machine. Any ATM
      machines classified as held for sale and then sold would be considered a
      disposal group and a gain or loss on the sale would be recorded.




Goodwill




In
      July
      2001, the FASB issued SFAS No. 142, 'Goodwill and Other Intangible Assets,'
      which was required to be adopted for 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 compared 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
      was not required. SFAS 142 required completion of this first step within the
      first three 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 was only performed for purposes of evaluating goodwill
      impairment and did 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.




22


Asset
      Impairment




The
      Company reviews long-lived assets for impairment under SFAS No. 144, "Accounting
      for the Impairment or Disposal of Long-Lived Assets." Long-lived assets to
      be
      held and used are reviewed for impairment whenever events or changes in
      circumstances indicate that the carrying amount of an asset may not be
      recoverable. The carrying amount of a long-lived asset is not recoverable if
      it
      exceeds the sum of the undiscounted cash flows expected to result from the
      use
      and eventual disposition of the asset. Long-lived assets to be disposed of
      are
      reported at the lower carrying amount or fair value less cost to sell. During
      the three month period ended March 31, 2006, the Company determined that there
      were no long-lived assets that were impaired.




Intangible
      assets with finite lives 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 and accelerated methods, as appropriate, over
      their estimated useful lives or period of expected benefit. Intangible assets
      with indefinite lives are subject to periodic impairment testing in accordance
      with SFAS No. 142.




(a)  See
      Note
”Subsequent Events” under Recent Developments above.




Comparison
      of Results of Continuing Operations for the Three Months Ended March 31, 2006
      and 2005:




Revenues




The
      Company reported total operating revenue from continuing operations of $
      5,245,570 for
      the
      three month period ended March 31, 2006 as compared to $
      4,717,236 for
      the
      three month period ended March 31, 2005. This increase in the three month
      revenues is mainly due to higher surcharge and interchange revenue from acquired
      ATM merchant locations and increased organic sales of ATMs.




Cost
      of
      Revenues




Our
      total
      cost of revenues from continuing operations increased from $ 2,704,439 to
      $ 2,968,362 in
      the
      three-month periods ended March 31, 2005 and 2006, respectively. The continued
      growth in our transactions, interest costs increases, network cost increases
      and
      the acquisition during fiscal year 2005 had a significant impact on the cost
      of
      revenues from continuing operations for the three-months ending March 31, 2006.




Gross
      Margin




Gross
      profit from continuing operations as a percentage of revenue for the three-month
      period ended March 31, 2006 and 2005 were approximately 43.4%, or 2,277,208 and
      approximately 42.7%, or $ 2,012,797 respectively.
      There was a significant increase in the number of ATMs in service, with
      approximately 5,000 in service during the three-month period ended March 31,
      2006 , compared to 3,500 ATMs in service during the same three-month period
      ending March 31, 2005.




23


Operating
      Expenses





Our
      total
      operating expenses from continuing operations for the three months ended March
      31, 2006 and 2005, were $ 2,178,493 and
      $ 1,482,678 respectively.
      The principal components of operating expenses are general and administrative
      expenses such as professional fees, administrative salaries and benefits,
      consulting fees, occupancy costs, sales and marketing expenses and
      administrative expenses. Operating expenses also include depreciation and
      amortization.





Selling,
      General and Administrative (SG&A) Expenses





Our
      total
      SG&A expenses from continuing operations increased to $ 1,554,097 for
      the
      three-month period ended March 31, 2006 from $ 1,171,570 for
      the
      three-month period ended March 31, 2005. The majority of the increase in
      SG&A expenses from continuing operations is directly attributable to the
      increase in salaries and benefits, professional fees and other expenses related
      to the increase in operating revenues resulting from the acquisitions we
      completed in 2004 and 2005.







Depreciation
      and Amortization





Depreciation
      and amortization from continuing operations increased for the three-month period
      ended March 31, 2006 to $ 624,396 from
      $ 311,108 for
      the
      same period in 2005. This increase in depreciation and amortization expense
      was
      due to the following factor:





·  An
      increase in ATM equipment and developed software in 2005, whereby fixed assets
      ,
      net, have increased from $6,100,531 in March 2005 to




·  $ 7,662,967 in
      March
      2006; and




·  An
      increase in amortization specific to the merchant contracts we purchased during
      fiscal year 2005 for which a full quarter’s amortization expense was recorded
      during the three-month period ended March 31, 2006.







See
      Financial Statement Footnotes #2 Significant Account Policies regarding the
      amortization of intangible merchant contracts.




Income
      (Loss) from Continuing Operations





We
      had
      income from continuing operations for the three-month period ending March 31,
      2006 in the amount of $ 98,715 as
      compared to income from continuing operations of $ 530,119 in the three-month
      period ending March 31, 2005.





Other
      Income and expense





During
      the three months ended March 31, 2006 there were non-operating accruals in
      the
      amount of $660,000.





Interest
      Expense, Net





Interest
      expense, net, increased for the three-month period ended March 31, 2006 to
      $331,063 from $121,541 for the three-month period ended March 31, 2005. The
      increase was mainly due to increased debt and higher interest rates during
      the
      three month period ended March 31, 2006.




24


Income
      (loss) from continuing operations before provision for tax





We
      had
      net loss from continuing operations before taxes of $877,915 for the three
      months ended March 31, 2006 as compared to net income from continuing operations
      before taxes of $408,578 for the three-month period ending March 31, 2005.





Income
      Taxes





We
      incurred no tax expense in either of the respective periods
      ending March
      31,
      2006 and 2005. The Company has net operating loss carry-forwards
      from 2002 of approximately $9,800,000 which expire in various periods through
      2025.





Liquidity
      and Capital Resources





Working
      Capital





As
      of
      March 31, 2006, the Company had current assets of $4,239,869 and current
      liabilities of $ 6,082,741 ,
      which
      results in a negative working capital of $
      1,842,872 as
      compared to current assets of $5,080,530 and current liabilities of $6,049,071
      resulting in a negative working capital of $968,541 as of March 31, 2005. The
      ratio of current assets to current liabilities decreased to 0.70 at March
      31, 2006 from 0.84 at December 31, 2005. The decrease is mainly from the
      additional reserve for legal claims. It is expected that cash provided from
      operations will be sufficient for the next 12 months.





Additional
      Funding Sources





We
      have
      funded our operations and investment activities from cash flow generated by
      operations and financing activities. Net cash provided by continuing operating
      activities during the three-month periods ending March 31, 2006 and 2005 was
      $ 420,454 and
      $
      757,932, respectively. Decreases in operating assets over liabilities amounted
      to $
      622,648 .
      The
      decreases in the operating assets were mainly due to higher levels of accrued
      liabilities.





The
      Company used $1,153,509 for financing activities, mainly paying back senior
      lender notes and capital leases, during the period ending March 31, 2006,
      compared to funds provided by financing activities of $524,274 for the period
      ending March 31, 2005.





The
      Company believes its sources of cash are adequate for the next 12 month's of
      operations.





In
      order
      to fulfill its business plan and expand its business, the Company must have
      access to funding sources that are prepared to make equity or debt


investments
      in the Company's securities.





In
      order
      to address this potential for growth, the Company has taken steps to raise
      additional funds to finance its operations, including the potential for making
      strategic acquisitions, which could better position the Company for growth.
      Historically, the Company has relied primarily upon institutional investors
      for
      this purpose. There can be no guarantee that institutional funding will be
      available to the Company in the near future. The Company has conducted several
      private placement offerings with accredited investors.




25




The
      Company's ability to attract investors depends upon a number of factors, some
      of
      which are beyond the Company's control. The key factors in this regard include
      general economic conditions, the condition of ATM markets, the availability
      of
      alternative investment opportunities and the Company's past financial
      performance affecting the Company's current reputation in the financial
      community.


The
      Company is continuing its efforts to raise additional capital through equity
      or
      debt financings. To continue its current business plan and acquisition strategy
      the Company estimates, it will require approximately $1,800,000 in additional
      capital to meet its needs for the next 12 months for acquisitions and such
      items
      as new ATM leases.




The
      Company will require significant additional financing in the future in order
      to
      satisfy its acquisition plan. To fund its continued growth the Company intends
      to raise additional capital through debt and equity financings, however, the
      Company cannot guarantee that it will be able to raise funding through these
      types of financings. The need for additional capital to finance operations
      and
      growth will be greater should, among other things, revenue or expense estimates
      prove to be incorrect, particularly if additional sources of capital are not
      raised in sufficient amounts or on acceptable terms when needed. Consequently,
      the Company may be required to reduce the scope of its business activities
      until
      other financing can be obtained.




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 days 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.




o
            Palm
                Desert Bank. Nationwide Money Services has been using Palm Desert
                National
                Bank as a vault cash provider since April of 2001. This relationship
                was
                limited to the funding of a specific portfolio of ATMs and as a result
                limited the growth potential of the relationship. During the third
                quarter
                of 2002, Nationwide Money and Palm Desert initiated discussions to
                expand
                the relationship and for Palm Desert to provide vault cash for additional
                ATMs. As of March 31, 2006, Nationwide Money had 53 ATMs funded by
                Palm
                Desert with a vault cash outstanding balance of about
                $1,000,000**.**In
                January 2003, we entered into an arrangement with Palm Desert allowing
                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.




o
            WSFS.
                On May 15, 2000, we entered into an arrangement with Wilmington Savings
                Fund Society ("WSFS") allowing us to obtain up to $2,000,000 in vault
                cash. In May 2002, we renewed the agreement with WSFS and increased
                the
                vault cash limit to $5,000,000 and the new contract has a month-to-month
                term. Due to added locations from our acquisitions we have increased
                the
                WSFS line as of March 31, 2006, to approximately $20,000,000. The
                Company
                is currently using approximately $11,500,000 of the WSFS line. 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.




26


o
            Various
                Branded Cash Partners. Nationwide Money 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 by approximately
                50%.
                Another advantage is that with a branded ATM, transactions volumes
                traditionally increase more than at a non-branded ATM. As of March
                31,
                2006 , Nationwide Money had 54 branded partners, which funded over
                632
                ATMs in 11 states.




As
      any
      newly-placed ATMs mature, such ATMs generally experience increased activity
      and
      generate increased revenues. We believe that future cash flow from operations
      will be sufficient to fund operations and to allow us to continue to explore
      and
      pursue expansion opportunities.




If
      cash
      flow from operations is not sufficient to fund our operations, we may be
      required to seek additional sources of financing. If any of our existing
      financing arrangements are terminated, or if we seek additional funding to
      expand our ATM network, additional financing may not be available when needed
      or
      may not be available on acceptable terms. In that event, our ability to maintain
      and expand our ATM network may be adversely affected. The loss of one or more
      sources of vault cash funding or the loss of additional customers could have
      a
      material adverse effect on our business, results of operations and financial
      condition. As always, we continue to look for new and alternative vault cash
      sources.




Contractual
      Obligations




Our
      ability to fund our capital needs is also impacted by our overall capacity
      to
      acquire favorable financing terms in our acquisition of ATMs. Our contractual
      obligations, including commitments for future payments under non-cancelable
      lease arrangements and short and long-term debt arrangements, are summarized
      below. We do not participate in, nor secure financings for, any unconsolidated,
      limited or special purpose entities. We anticipate that our capital expenditures
      (outside of acquisitions) for fiscal 2006 will total approximately $1,800,000,
      primarily for the acquisition of ATMs and related ATM installation costs. We
      lease ATMs under capital lease agreements that expire between in 2006 and 2008
      and provide for lease payments at interest rates up to 14% per annum. See Note
      8
      to the Consolidated Financial Statements in the Form 10KSB Annual
      Report.




27


Inflation




Impact
      of
      Inflation and Changing Prices. While subject to inflation, we were not impacted
      by inflation during the past two fiscal years in any material respect. During
      the current year inflation, mainly through interest rate hikes have increased
      the rental cost of our vault cash. As the interest rates increase and vault
      cash
      becomes increasingly more due to acquisitions this factor will have a less
      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 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.




As
      of the
      end of the period covered by this report, we carried out an evaluation of the
      effectiveness of the design and operation of our disclosure controls and
      procedures pursuant to Exchange Act Rule 13a-15. This evaluation was done under
      the supervision and with the participation of our principal executive officer
      and principal financial officer. Based on their evaluation of our disclosure
      controls and procedures (as defined in the Exchange Act Rule 13a-15e), our
      principal executive officer and principal financial officer have concluded
      that
      during the period covered by this report, such disclosure controls and
      procedures were not effective to detect the inappropriate application of US
      GAAP
      rules as more fully described below. This was due to deficiencies that existed
      in the design or operation of our internal control over financial reporting
      that
      adversely affected our disclosure controls and that may be considered to be
      "material weaknesses." The Public Company Accounting Oversight Board has defined
      a material weakness as a "significant deficiency or combination of significant
      deficiencies that results in more than a remote likelihood that a material
      misstatement of the annual or interim financial statements will not be prevented
      or detected."




We
      identified deficiencies in our internal controls and disclosure controls related
      to the accounting for revenue, depreciation and software development costs.
      Specifically, the identified deficiencies involved the ineffective controls
      over
      (i) revenue recognition, (ii) accounting for depreciation and (iii) accounting
      for internally developed software.




As
      a
      result of the identification of the misapplication of US GAAP rules, our
      management has concluded that, as of March 31, 2006, our internal control over
      financial reporting was not effective.




Remediation
      of Material Weaknesses




We
      have
      formulated a program to remedy the material weaknesses identified above. In
      the
      first phase of the program, already completed as of March 31, 2006, we have
      hired a Controller and a Senior Accountant to augment our accounting, financial
      reporting and financial control function in our finance department.




28


In
      the
      second phase of the program, we expect to increase our auditor's review work
      quarterly, as well as, increase 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 plan to implement the following
      remediation measures relating to the identified 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 and interchange including a regular
      review of the accounts receivable aging.




2.
      Ineffective controls over depreciation.




Subsequent
      to the errors that resulted in audit adjustments, the Company has set up a
      tracking system to follow the final production periods when software is
      completed 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 any software depreciation.




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 completed
      and
      will include a review by management of internally developed items.




We
      plan
      to complete our remediation program during the second and third quarters of
      fiscal 2006. The material weaknesses will not be considered remediated until
      the
      applicable remedial controls operate for a sufficient period of time and
      management has concluded, through testing, that these controls are operating
      effectively.




Changes
      in Internal Control Over Financial Reporting




Except
      as
      set forth above, there have been no changes in our internal control over
      financial reporting that occurred during the three months ended December 31,
      2005 that have materially affected, or are reasonably likely to materially
      affect, our internal control over financial reporting.




PART
      II -
      OTHER INFORMATION




Item
      1.
      Legal Proceedings




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 alleges the following are 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. The Company has increased its
      reserve on the legal claim by $410,000 as of the period ended March 31, 2006.




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 such lawsuits that could have a material adverse
      impact on the Company’s consolidated results of operations, cash flows or
      financial position.




29




Item
      2.
      Unregistered Sale of Equity Securities and Use of Proceeds




Not
      applicable




Item
      3.
      Defaults upon Senior Securities




The
      Wachovia loan agreement requires the Company to meet certain covenants. The
      three (3) covenant terms are as follows: 1) Senior Liabilities to Effective
      Tangible Net Worth ratio of not more than 2.25; 2) Senior Funded Debt to EBITDA
      ratio of not more than 2.00 to 1.00; 3) EBITDA to Debt Service of not less
      than
      1.25 to 1.00. All of the covenants are measured quarterly. As of March 31,
      2006
      the Company was not in compliance with the covenants described in 2 and 3 above.
      The Company has obtained waivers of these covenants for March 31, 2006 and
      through September 30, 2006, respectively.




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




None




Item
      5.
      Other Information




None




Item
      6.
      Exhibits




Exhibit
            Description




31.1
            Certification
                of the Chief Executive Officer of Global Axcess Corp pursuant to
                Section
                302 of the Sarbanes-Oxley Act of
                2002.




31.2
            Certification
                of the Chief Financial Officer of Global Axcess Corp pursuant to
                Section
                302 of the Sarbanes-Oxley Act of
                2002.




32.1
            Certification
                of the Chief Executive Officer of Global Axcess Corp pursuant to
                Section
                906 of the Sarbanes-Oxley Act of
                2002.




32.2
            Certification
                of the Chief Financial Officer of Global Axcess Corp pursuant to
                Section
                906 of the Sarbanes-Oxley Act of
                2002.




30


SIGNATURES




Pursuant
      to the requirements of the Securities Exchange Act of 1934, as of May 12, 2006
      the Issuer has duly caused this report to be signed on its behalf by the
      undersigned, thereunto duly authorized.




GLOBAL
              AXCESS
              CORP.By:
            /s/
              MICHAEL DODAKMichael Dodak
              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 12th day of May, 2006.




Signature
            Title/s/Michael
                DodakMichael
                Dodak
            CEO,
                Chairman/s/David
                FannDavid
                Fann
            President,
                Secretary and DirectorLock
                Ireland
            Director/S/
                Robert LandisRobert
                Landis
            Director/S/
                Joseph LoughryJoseph
                Loughry
            Director/S/
                Allen RossiterAllen
                Rossiter
            Director/S/
                David J. SuretteDavid
                J. Surette
            Chief
                Financial Officer, Chief Accounting
                Officer


31