**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
  
  **FORM
        10-Q**
 
 (MARK
        ONE)
 
 x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT
        OF 1934 for the quarterly period ended September 30, 2008
  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**
 (Exact
        name of registrant as specified in its charter)
 
 **NEVADA**
              **88-0199674**(State
                  or other jurisdiction of incorporation or organization)
              (I.R.S.
                  Employer Identification No.)**7800
                  BELFORT PARKWAY, Suite 165****JACKSONVILLE,
                  FLORIDA**
              **32256**(Address
                  of principal executive offices)
              (Zip
                  Code)
 
 **(904)
        280-3950**
 (Registrant's
        telephone number, including area code)
  
 Indicate
        by check mark whether the registrant (1) has filed all reports required to
        be
        filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
        the
        preceding 12 months (or for such shorter period that the registrant was required
        to file such reports), and (2) has been subject to such filing requirements
        for
        the past 90 days. Yes x No
o
 
 Indicate
        by check mark whether the registrant is a large accelerated filer, an
        accelerated filer, a non-accelerated filer or a smaller reporting company.
        See
        definitions of “large accelerated filer,” “accelerated filer,” and “smaller
        reporting company” in Rule 12b-2 of the Exchange Act.
 Large
                    accelerated Filer ̈
                Accelerated
                    Filer ̈Non-accelerated
                    Filer ̈
                Smaller
                    reporting companyx
 
 Indicate
          by check mark whether the registrant is a shell company (as defined in
          Rule
          12b-2 of Exchange Act). Yes ࿠
No x
 
 As
        of
        November 03, 2008, the registrant had 20,973,924 shares outstanding of the
        common stock ($0.001 par value).
  
 
 **TABLE
                  OF CONTENTS**
              **Page
                  No.****PART
                  I**
              **FINANCIAL
                  INFORMATION**Item
                  1.
              Financial
                  Statements (unaudited)
              4Item
                  2.
              Management's
                  Discussion and Analysis of Financial Condition and Results of Operations
              23Item
                  3.
              Quantitative
                  and Qualitative Disclosure About Market Risk
              33Item
                  4.
              Controls
                  and Procedures
              33Item
                  4T.
              Controls
                  and Procedures
              33**PART
                  II**
              **OTHER
                  INFORMATION**Item
                  1.
              Legal
                  Proceedings
              33Item
                  1A.
              Risk
                  Factors
              33Item
                  2.
              Unregistered
                  Sale of Equity Securities and Use of Proceeds
              33Item
                  3.
              Defaults
                  Upon Senior Securities
              34Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              34Item
                  5.
              Other
                  Information
              34Item
                  6.
              Exhibits
              34**SIGNATURES**
              
              36
  2
  ***Forward-Looking
        Statements***
 
 *Unless
        the context indicates otherwise, all references in this document to “we”, “us”
and “our” refer to Global Axcess Corp and its subsidiaries.*
 
 *In
        addition to historical information, this Quarterly Report on Form 10-Q 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 of Financial Condition and
        Results of Operations." 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-Q that have been or are to be
        filed
        in 2008.*
 
 *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-Q. We undertake no obligation to
        publicly release any revisions to the forward-looking statements or reflect
        events or circumstances after the date of this document.*
 
 *Estimates
        of future financial results are inherently unreliable.*
 
 *From
        time to time, representatives of Global Axcess Corp (the “Company”) may make
        public predictions or forecasts regarding the Company's future results,
        including estimates regarding future revenues, expense levels, earnings or
        earnings from operations. Any forecast regarding the Company's future
        performance reflects various assumptions. These assumptions are subject to
        significant uncertainties and, as a matter of course, many of them will prove
        to
        be incorrect. Further, the achievement of any forecast depends on numerous
        factors (including those described in this discussion), many of which are
        beyond
        the Company's control. As a result, there can be no assurance that the Company's
        performance will be consistent with any management forecasts or that the
        variation from such forecasts will not be material and adverse. Investors
        are
        cautioned not to base their entire analysis of the Company's business and
        prospects upon isolated predictions, but instead are encouraged to utilize
        the
        entire available mix of historical and forward-looking information made
        available by the Company, and other information affecting the Company and
        its
        products, when evaluating the Company's prospective results of
        operations.*
 
 *In
        addition, representatives of the Company may occasionally comment publicly
        on
        the perceived reasonableness of published reports by independent analysts
        regarding the Company's projected future performance. Such comments should
        not
        be interpreted as an endorsement or adoption of any given estimate or range
        of
        estimates or the assumptions and methodologies upon which such estimates
        are
        based. Undue reliance should not be placed on any comments regarding the
        conformity, or lack thereof, of any independent estimates with the Company's
        own
        present expectations regarding its future results of operations. The
        methodologies employed by the Company in arriving at its own internal
        projections and the approaches taken by independent analysts in making their
        estimates are likely different in many significant respects. Although the
        Company may presently perceive a given estimate to be reasonable, changes
        in the
        Company's business, market conditions or the general economic climate may
        have
        varying effects on the results obtained through the use of differing analyses
        and assumptions. The Company expressly disclaims any continuing responsibility
        to advise analysts or the public markets of its view regarding the current
        accuracy of the published estimates of outside analysts. Persons relying
        on such
        estimates should pursue their own independent investigation and analysis
        of
        their accuracy and the reasonableness of the assumptions on which they are
        based.*
  3
  **PART
        I - FINANCIAL INFORMATION**
 
 **ITEM
        1. Financial Statements (unaudited)**
 
 **GLOBAL
        AXCESS CORP AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED BALANCE SHEETS**
 
 (Unaudited)
              
              (Audited)September 30, 2008
              
              December 31, 2007ASSETSCurrent
                  assetsCash
                  and cash equivalents
              
              $
              1,127,738
              
              $
              540,161Accounts
                  receivable, net of allowance of $13,349 in 2008 and $23,797 in
                  2007
              
              
              985,046
              
              
              924,629Inventory
              
              
              336,228
              
              
              235,597Prepaid
                  expenses and other current assets
              
              
              152,083
              
              
              141,348Total
                  current assets
              
              
              2,601,095
              
              
              1,841,735Fixed
                  assets, net
              
              
              4,933,965
              
              
              5,580,882Other
                  assetsMerchant
                  contracts, net
              
              
              11,519,619
              
              
              12,057,638Intangible
                  assets, net
              
              
              4,130,034
              
              
              4,165,491Deferred
                  tax asset - non-current
              
              
              339,800
              
              
              339,800Other
                  assets
              
              
              9,232
              
              
              15,139Total
                  assets
              
              $
              23,533,745
              
              $
              24,000,685LIABILITIES
                  AND STOCKHOLDERS' EQUITYCurrent
                  liabilitiesAccounts
                  payable and accrued liabilities
              
              $
              2,704,888
              
              $
              3,361,635Notes
                  payable - related parties - current portion, net
              
              
              19,821
              
              
              20,695Note
                  payable
              
              
              -
              
              
              25,000Senior
                  lenders' notes payable - current portion, net
              
              
              606,416
              
              
              600,000Capital
                  lease obligations - current portion
              
              
              769,184
              
              
              961,046Total
                  current liabilities
              
              
              4,100,309
              
              
              4,968,376Long-term
                  liabilitiesNotes
                  payable - related parties - long-term portion, net
              
              
              1,311,324
              
              
              1,317,180Senior
                  lenders' notes payable - long-term portion, net
              
              
              4,353,253
              
              
              4,757,377Capital
                  lease obligations - long-term portion
              
              
              642,762
              
              
              823,489Total
                  liabilities
              
              
              10,407,648
              
              
              11,866,422Stockholders'
                  equityPreferred
                  stock; $0.001 par value; 5,000,000 shares authorized, no shares
                  issued and
                  outstanding
              
              
              -
              
              
              -Common
                  stock; $0.001 par value; 45,000,000 shares authorized, 21,021,786
                  shares
                  issued and 20,973,924 shares outstanding
              
              
              21,022
              
              
              21,022Additional
                  paid-in capital
              
              
              22,606,148
              
              
              22,453,584Accumulated
                  deficit
              
              
              (9,489,107
              )
              
              (10,328,377
              )Treasury
                  stock; 47,862 shares of common stock at cost
              
              
              (11,966
              )
              
              (11,966
              )Total
                  stockholders' equity
              
              
              13,126,097
              
              
              12,134,263Total
                  liabilities and stockholders' equity
              
              $
              23,533,745
              
              $
              24,000,685
 
 *See
        Accompanying Notes to Condensed Consolidated Financial
        Statements*
  4
  **GLOBAL
        AXCESS CORP AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS**
 (Unaudited)
 
 For the Three Months EndedSeptember 30, 2008
              
              September 30, 2007Revenues
              
              $
              5,652,977
              
              $
              5,532,807Cost
                  of revenues
              
              
              3,199,906
              
              
              3,248,596Gross
                  profit
              
              
              2,453,071
              
              
              2,284,211Operating
                  expensesDepreciation
                  expense
              
              
              329,061
              
              
              390,446Amortization
                  of intangible merchant contracts
              
              
              193,173
              
              
              186,369Selling,
                  general and administrative
              
              
              1,367,572
              
              
              1,253,056Stock
                  compensation expense
              
              
              30,540
              
              
              43,851Total
                  operating expenses
              
              
              1,920,346
              
              
              1,873,722Operating
                  income from continuing operations before items shown below
              
              
              532,725
              
              
              410,489Interest
                  expense, net
              
              
              (255,900
              )
              
              (314,787
              )Gain
                  on sale or disposal of assets
              
              
              -
              
              
              500Income
                  from continuing operations
              
              $
              276,825
              
              $
              96,202Net
                  Income
              
              $
              276,825
              
              $
              96,202Income
                  per common share - basic:Income
                  from continuing operations
              
              $
              0.01
              
              $
              0.01Net
                  Income per common share
              
              $
              0.01
              
              $
              0.01Income
                  per common share - diluted:Income
                  from continuing operations
              
              $
              0.01
              
              $
              0.01Net
                  Income per common share
              
              $
              0.01
              
              $
              0.01Weighted
                  average common shares outstanding:Basic
              
              
              20,973,924
              
              
              20,973,924Diluted
              
              
              21,043,567
              
              
              20,973,924
 
 *See
        Accompanying Notes to Condensed Consolidated Financial
        Statements*
  5
  **GLOBAL
        AXCESS CORP AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS**
 (Unaudited)
 
 For the Nine Months EndedSeptember 30, 2008
              
              September 30, 2007Revenues
              
              $
              17,026,465
              
              $
              16,400,007Cost
                  of revenues
              
              
              9,578,552
              
              
              9,610,767Gross
                  profit
              
              
              7,447,913
              
              
              6,789,240Operating
                  expensesDepreciation
                  expense
              
              
              1,108,318
              
              
              1,143,420Amortization
                  of intangible merchant contracts
              
              
              577,502
              
              
              540,309Selling,
                  general and administrative
              
              
              3,987,978
              
              
              4,011,515Impairment
                  of notes receivable
              
              
              -
              
              
              5,743Recovery
                  of bad debts
              
              
              -
              
              
              (100,000
              )Stock
                  compensation expense
              
              
              152,564
              
              
              49,181Total
                  operating expenses
              
              
              5,826,362
              
              
              5,650,168Operating
                  income from continuing operations before items shown below
              
              
              1,621,551
              
              
              1,139,072Interest
                  expense, net
              
              
              (782,281
              )
              
              (923,227
              )Loss
                  on sale or disposal of assets
              
              
              -
              
              
              (22,517
              )Income
                  from continuing operations
              
              $
              839,270
              
              $
              193,328Income
                  from discontinued operations, net of tax
              
              $
              -
              
              $
              175,000Net
                  Income
              
              $
              839,270
              
              $
              368,328Income
                  per common share - basic:Income
                  from continuing operations
              
              $
              0.04
              
              $
              0.01Income
                  from discontinued operations
              
              $
              -
              
              $
              0.01Net
                  Income per common share
              
              $
              0.04
              
              $
              0.02Income
                  per common share - diluted:Income
                  from continuing operations
              
              $
              0.04
              
              $
              0.01Income
                  from discontinued operations
              
              $
              -
              
              $
              0.01Net
                  Income per common share
              
              $
              0.04
              
              $
              0.02Weighted
                  average common shares outstanding:Basic
              
              
              20,973,924
              
              
              20,993,209Diluted
              
              
              20,998,495
              
              
              20,994,711
 
 *See
        Accompanying Notes to Condensed Consolidated Financial
        Statements*
  6
  **GLOBAL
        AXCESS CORP AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS**
 (Unaudited)
 
 For the Nine Months EndedSeptember 30, 2008
              
              September 30, 2007Cash
                  flows from operating activities:Income
                  from continuing operations
              
              $
              839,270
              
              $
              193,328Adjustments
                  to reconcile net income from continuing operations to net cash
                  provided by
                  continuing operating activities:Stock
                  based compensation
              
              
              152,564
              
              
              49,181Depreciation
                  expense
              
              
              1,108,318
              
              
              1,143,420Amortization
                  of intangible merchant contracts
              
              
              577,502
              
              
              540,309Amortization
                  of capitalized loan fees
              
              
              34,824
              
              
              -Allowance
                  for doubtful accounts
              
              
              (13,220
              )
              
              (25,729
              )Non-cash
                  interest expense on swap agreement with senior lender
              
              
              14,300
              
              
              -Accretion
                  of discount on notes payable
              
              
              124,491
              
              
              124,489Impairment
                  of notes receivable
              
              
              -
              
              
              5,743Loss
                  on sale or disposal of assets
              
              
              -
              
              
              22,517Changes
                  in operating assets and liabilities:Change
                  in automated teller machine vault cash
              
              
              -
              
              
              24,260Change
                  in accounts receivable
              
              
              (47,197
              )
              
              53,153Change
                  in other receivable
              
              
              -
              
              
              15Change
                  in inventory
              
              
              24,097
              
              
              19,716Change
                  in prepaid expenses and other current assets
              
              
              (10,735
              )
              
              83,462Change
                  in other assets
              
              
              5,907
              
              
              15,529Change
                  in intangible assets, net
              
              
              633
              
              
              6,774Change
                  in accounts payable and accrued liabilities
              
              
              (671,047
              )
              
              (394,825
              )Change
                  in automated teller machine vault cash payable
              
              
              -
              
              
              (26,220
              )Net
                  cash provided by continuing operating activitities
              
              
              2,139,707
              
              
              1,835,122Discontinued
                  operationsNet
                  income
              
              
              -
              
              
              175,000Adjustments
                  to reconcile net income to net cash used in discontinued
                  operations:Change
                  in deferred gain on sale of subsidiary
              
              
              -
              
              
              (175,000
              )Net
                  cash provided by continuing and discontinued operating
                  activities
              
              
              2,139,707
              
              
              1,835,122Cash
                  flows from investing activities:Proceeds
                  from sale of subsidiary
              
              
              -
              
              
              175,000Insurance
                  proceeds on disposal of fixed assets
              
              
              -
              
              
              35,390Costs
                  of acquiring merchant contracts
              
              
              (39,483
              )
              
              (224,228
              )Purchase
                  of property and equipment
              
              
              (178,725
              )
              
              (600,214
              )Net
                  cash used in investing activities
              
              
              (218,208
              )
              
              (614,052
              )Cash
                  flows from financing activities:Proceeds
                  from senior lenders' notes payable
              
              
              39,028
              
              
              -Principal
                  payments on senior lenders' notes payable
              
              
              (552,658
              )
              
              (508,332
              )Principal
                  payments on notes payable
              
              
              (25,000
              )
              
              -Principal
                  payments on notes payable - related parties
              
              
              (15,299
              )
              
              (13,653
              )Principal
                  payments on capital lease obligations
              
              
              (779,993
              )
              
              (922,915
              )Net
                  cash used in financing activities
              
              
              (1,333,922
              )
              
              (1,444,900
              )Increase
                  (decrease) in cash
              
              
              587,577
              
              
              (223,830
              )Cash,
                  beginning of period
              
              
              540,161
              
              
              753,844Cash,
                  end of the period
              
              $
              1,127,738
              
              $
              530,014Cash
                  paid for interest
              
              $
              603,579
              
              $
              716,004
 
 *See
        Accompanying Notes to Condensed Consolidated Financial
        Statements*
  7
  Supplemental
        schedule of non-cash investing and financing activities:
 
 For the Nine Months Ended*SUPPLEMENTAL CASH FLOW INFORMATION*
              
              September 30, 2008
              
              September 30, 2007The
                  significant non-cash investing and financing activities of the
                  Company
                  were as follows:Operating
                  activities:Transfer
                  of de-installed net fixed assets to inventory
              
              $
              124,728
              
              $
              -Total
                  non-cash operating activities
              
              $
              124,728
              
              $
              -Investing
                  activities:Purchase
                  of assets under capital lease obligations
              
              $
              407,404
              
              $
              89,394Transfer
                  of de-installed net fixed assets to inventory
              
              
              (124,728
              )
              
              -Total
                  non-cash investing activities
              
              $
              282,676
              
              $
              89,394Settlement
                  of note receivable through issuance of treasury stock:Note
                  receivable
              
              $
              -
              
              $
              (17,709
              )Impairment
                  of notes receivable
              
              
              -
              
              
              5,743Repurchase
                  of treasury stock, 47,862 shares of common stock at cost
              
              $
              -
              
              $
              (11,966
              )
 
 *See
        Accompanying Notes to Condensed Consolidated Financial
        Statements*
  8
  **GLOBAL
        AXCESS CORP AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF SEPTEMBER 30, 2008**
 (Unaudited)
 
 **1.
        BASIS OF PRESENTATION**
 
 The
        accompanying unaudited condensed consolidated financial statements have been
        prepared in accordance with Securities and Exchange Commission (“the “SEC”)
        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 and Form 10-KSB/A for the year ended December 31, 2007
        of
        Global Axcess Corp and its subsidiaries (the “Company").
 
 The
        condensed consolidated financial statements present the condensed consolidated
        balance sheet, statements of operations, and cash flows of the Company. The
        condensed consolidated financial statements have been prepared in accordance
        with accounting principles generally accepted in the United States of
        America.
 
 The
        condensed consolidated statements of operations and cash flows also include
        discontinued operations from Global Axcess Corp’s former subsidiaries.
 
 The
        condensed consolidated financial information is unaudited. In the opinion
        of
        management, all adjustments (consisting of only normal recurring adjustments)
        necessary to present fairly the financial position as of September 30, 2008
        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.
 
 **2.
        DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
        POLICIES**
 
 ***Description
        of Business***
 
 Global
        Axcess Corp, through its wholly-owned subsidiaries, is an independent provider
        of Automated Teller Machine ("ATM") services in the United States. Through
        its
        wholly-owned subsidiary, Nationwide Money Services, Inc., the Company provides
        turnkey ATM management solutions that include cash, project and account
        management services. The Company currently owns, manages or operates
        approximately 4,300 ATMs in its national network spanning 44
        states.
 
 ***Significant
        Accounting Policies***
 
 The
        preparation of financial statements and related disclosures in conformity
        with
        accounting principles generally accepted in the United States of America
        requires management to make judgments, assumptions and estimates that affect
        the
        amounts reported in the Company’s condensed consolidated financial statements
        and accompanying notes. The Company bases its estimates and judgments on
        historical experience and on various other assumptions that it believes are
        reasonable under the circumstances. However, future events are subject to
        change, and the best estimates and judgments routinely require adjustment.
        The
        amounts of assets and liabilities reported in its condensed consolidated
        balance
        sheets, and the amounts of revenues and expenses reported for each of its
        fiscal
        periods, are affected by estimates and assumptions which are used for, but
        not
        limited to, the accounting for allowance for doubtful accounts, goodwill
        and
        intangible asset impairments, restructurings, inventory and income taxes.
        Actual
        results could differ from these estimates. The following accounting policies
        are
        significantly affected by judgments, assumptions and estimates used in the
        preparation of the Company’s consolidated financial
        statements.
  9
  ***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. Global Axcess Corp has the following
        subsidiaries: Nationwide Money Services, Inc. and EFT Integration, Inc.
        (“EFTI”). All significant intercompany transactions and accounts have been
        eliminated in consolidation.
 
 ***Reclassifications***
 
 Certain
        reclassifications were made to the 2007 condensed consolidated statements
        of
        operations to conform to the 2008 presentation. These reclassifications had
        no
        impact on net income or stockholders’ equity for the periods
        presented.
 
 ***Use
        of Estimates***
 
 The
                  preparation of the condensed consolidated financial statements
                  in
                  conformity with accounting principles generally accepted in the
                  United
                  States of America requires management to make estimates and assumptions
                  that affect the amounts reported in the condensed consolidated
                  financial
                  statements and accompanying notes. Actual results could differ
                  from these
                  estimates.
  ***Revenue
        Recognition***
 
 Transaction
        service and processing fees are recognized in the period that the service
        is
        performed. The Company receives two types of fees: surcharge/convenience
        fees
        paid by consumers utilizing certain ATMs owned or managed by the Company;
        and
        interchange fees paid by their banks. Processing fees are generally charged
        on a
        per transaction basis, depending on the contractual arrangement with the
        customer. ATM sales revenue is recognized when the ATM is shipped and installed.
        Revenue from managing ATMs for others is recognized each month when the services
        are performed.
 
 Branding
        fees are generated by the Company’s bank branding arrangements, under which
        financial institutions pay a fixed monthly fee per ATM to the Company to
        have
        their brand name on selected ATMs within the Company’s ATM portfolio. In return
        for such fees, the bank’s customers can use those branded ATMs without paying a
        surcharge fee. Branding fees are recognized in the period that the service
        is
        performed. None of the branding fees are subject to escalation clauses. Should
        the Company include escalation clauses in its future branding contracts,
        pursuant to the SEC’s SAB, Topic 13, Revenue Recognition, the monthly per ATM
        branding fees, which would be subject to escalation clauses within the
        agreements, would be recognized as revenues on a straight-line basis over
        the
        term of the agreement. In most of its branding agreements, the Company does
        not
        receive any one-time set-up fees in addition to the monthly branding fees.
        The
        Company has received immaterial one-time set-up fees per ATM. This set-up
        fee is
        separate from the recurring, monthly branding fees and is meant to compensate
        the Company for the burden incurred related to the initial set-up of a branded
        ATM versus the on-going monthly services provided for the actual branding.
        Since
        any and all one-time set up fees have been immaterial to date, the Company
        has
        recorded the fee upon contract signing. Should any future branding agreements
        contain material set-up fees, pursuant to the guidance in Emerging Issues
        Task
        Force (“EITF”) Issue No. 00-21, Revenue Arrangements with Multiple Deliverables,
        and SAB No. 104, Revenue Recognition, the Company would defer these set-up
        fees
        (as well as the corresponding costs associated with the initial set-up) and
        recognize such amounts as revenue (and expense) over the terms of the underlying
        bank branding agreements.
 
 Additionally,
        the Company recognizes revenue on breached contracts when cash is received.
        During the nine-month period ended September 30, 2008, the Company received
        and
        booked $13,944 of revenue on these breached contracts.
 
 In
        connection with the Company’s merchant-owned ATM operating/processing
        arrangements, the Company typically pays the surcharge fees that it earns
        to the
        merchant as fees for providing, placing, and maintaining the ATM unit. Pursuant
        to the guidance of EITF Issue No. 01-9, Accounting for Consideration Given
        by a
        Vendor to a Customer (Including a Reseller of the Vendor’s Products), the
        Company has recorded such payments as a direct reduction of
        revenue.
  10





The
      Company follows the guidance in EITF Issue 99-19, Reporting Revenue Gross as
      a
      Principal versus Net as an Agent, for its merchant contracts. In accordance
      with
      EITF Issue 99-19, the SEC staff concluded that if the company performs as an
      agent or broker without assuming the risks and rewards of ownership of the
      goods, sales should be and are reported on a net basis.





The
      Company is not exposed to similar financial obligations and risks as it is
      on
      its company-owned ATM contracts. For example, under a merchant-owned
      arrangement, the merchant is responsible for most of the operating expenses
      of
      the ATM such as maintenance, cash management and loading, supplies, signage
      and
      telecommunication services. As such, the Company reports the
      surcharge/convenience fees relating to merchant-owned ATM arrangements on a
      net
      basis.




***Total
      Revenue and Total Cost of Revenues Presentation***





The
      Company presents “Revenues” and “Cost of revenues” as a single line item in the
      consolidated statements of operations. The following tables set forth the
      revenue and cost of revenues sources included in the single line items presented
      for the three-month and nine-month periods ended September 30, 2008 and
      2007:





**Revenues:**





For the Three Months EndedSeptember 30, 2008
            
            September 30, 2007Surcharge
                / Convenience Fee revenue
            
            $
            3,031,740
            
            $
            2,763,868Interchange
                revenue
            
            
            1,978,252
            
            
            2,111,597Processing
                revenue
            
            
            72,257
            
            
            80,621ATM
                Sales revenue
            
            
            119,254
            
            
            92,114Other
                revenue
            
            
            451,474
            
            
            484,607Total
                revenue
            
            $
            5,652,977
            
            
            5,532,807





For the Three Months EndedSeptember 30, 2008
            
            September 30, 2007ATM
                Operating revenue
            
            $
            5,533,723
            
            $
            5,440,693ATM
                Sales revenue
            
            
            119,254
            
            
            92,114Total
                revenue
            
            $
            5,652,977
            
            $
            5,532,807





For the Nine Months EndedSeptember 30, 2008
            
            September 30, 2007Surcharge
                / Convenience Fee revenue
            
            $
            9,005,422
            
            $
            8,193,650Interchange
                revenue
            
            
            6,019,038
            
            
            6,235,401Processing
                revenue
            
            
            227,623
            
            
            257,568ATM
                Sales revenue
            
            
            431,594
            
            
            346,564Other
                revenue
            
            
            1,342,788
            
            
            1,366,824Total
                revenue
            
            
            17,026,465
            
            $
            16,400,007





For the Nine Months EndedSeptember 30, 2008
            
            September 30, 2007ATM
                Operating revenue
            
            $
            16,594,871
            
            $
            16,053,443ATM
                Sales revenue
            
            
            431,594
            
            
            346,564Total
                revenue
            
            $
            17,026,465
            
            $
            16,400,007


11





**Cost
      of Revenues:**





For the Three Months EndedSeptember 30, 2008
            
            September 30, 2007Merchant
                residual / commission costs
            
            $
            1,886,794
            
            $
            1,796,873Cost
                of cash
            
            
            467,170
            
            
            662,212Processing
                costs
            
            
            222,735
            
            
            255,103Communication
                costs
            
            
            146,405
            
            
            139,438ATM
                Sales costs
            
            
            118,516
            
            
            73,785Other
                cost of revenues
            
            
            358,286
            
            
            321,185Total
                cost of revenues
            
            $
            3,199,906
            
            
            3,248,596





For the Three Months EndedSeptember 30, 2008
            
            September 30, 2007Cost
                of ATM operating revenue
            
            $
            3,081,390
            
            $
            3,174,811ATM
                Sales costs
            
            
            118,516
            
            
            73,785Total
                cost of revenues
            
            $
            3,199,906
            
            $
            3,248,596





For the Nine Months EndedSeptember 30, 2008
            
            September 30, 2007Merchant
                residual / commission costs
            
            $
            5,521,077
            
            $
            5,035,175Cost
                of cash
            
            
            1,519,930
            
            
            2,032,403Processing
                costs
            
            
            650,358
            
            
            748,522Communication
                costs
            
            
            432,323
            
            
            422,045ATM
                Sales costs
            
            
            400,644
            
            
            331,528Other
                cost of revenues
            
            
            1,054,220
            
            
            1,041,094Total
                cost of revenues
            
            
            9,578,552
            
            $
            9,610,767





For the Nine Months EndedSeptember 30, 2008
            
            September 30, 2007Cost
                of ATM operating revenue
            
            $
            9,177,908
            
            $
            9,279,239ATM
                Sales costs
            
            
            400,644
            
            
            331,528Total
                cost of revenues
            
            $
            9,578,552
            
            $
            9,610,767





***Inventory***





Inventory
                is stated at the lower of cost (first-in, first-out method) or market.
                Inventory consists primarily of ATMs and related parts and equipment,
                including parts relating to upgrading ATMs to become Triple DES compliant.
                Parts relating to upgrading ATMs to become Triple DES compliant are
                recorded to fixed assets when the part is placed into service if
                the ATM
                is Company owned. Parts relating to upgrading ATMs to become Triple
                DES
                compliant are recorded to Merchant Contracts when the part is placed
                into
                service if the ATM is merchant owned and the merchant signs a term
                extension to an existing contract. The cost of the part will subsequently
                be amortized over the life of the contract extension. Parts relating
                to
                upgrading ATMs to become Triple DES compliant are expensed when the
                part
                is placed into service if the Company upgrades the merchant owned
                ATMs at
                no charge to the merchant. ATMs and parts available for sale are
                classified as inventory until such time as the machine or part is
                sold or
                installed and in service. Once the ATM or part is sold, it is relieved
                to
                cost of revenues. During the nine-month period ended September 30,
                2008
                the Company reclassified $124,728 of ATMs not in service into inventory.
                Once the inventoried ATM is placed back into service, pursuant to
                SFAS No.
                144 “Accounting for the Impairment or Disposal of Long-Lived Assets” the
                ATM is reclassified into fixed assets at the lower of fair market
                value or
                net book value adjusted by any unrecognized depreciation. At September
                30,
                2008, the Company's inventory totaled
                $336,228.


12





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





The
      Company reviews the accounts receivable on a regular basis to determine the
      collectability of each account. The Company maintains allowances for doubtful
      accounts for estimated losses resulting from the failure of its customers to
      make required payments. At each reporting period, the Company evaluates the
      adequacy of the allowance for doubtful accounts and calculates the appropriate
      allowance based on historical experience, credit evaluations, specific customer
      collection issues and the length of time a receivable is past due. The Company
      records an allowance for doubtful accounts for any billed invoice aged past
      60
      days. When the Company deems the receivable to be uncollectible, the Company
      charges the receivable against the allowance for doubtful accounts. As of
      September 30, 2008, the Company had bad debt reserves totaling $13,349 against
      gross accounts receivable totaling $998,395.




***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 three to 10
      years. Leasehold improvements are amortized on a straight-line basis over the
      shorter of the lease term or the life of the asset. The cost of repairs and
      maintenance is charged to expense as incurred. Expenditures for property
      improvements and renewals are capitalized if they extend the useful life of
      the
      related asset. Upon the sale or other disposition of a depreciable asset, cost
      and accumulated depreciation are removed from the accounts and any gain or
      loss
      is reflected in gain (loss) on sale of assets.





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




***Intangible
      Assets – Goodwill and Merchant Contracts***





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


13





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





The
      Company’s merchant contracts are made up of contracts with automatic renewable
      lives. The Company has determined after review of its contracts that the
      economic life of the contracts is extended and estimated over 21 years (or
      three
      times renewal) based on historical and expected useful lives of similar assets.
      The Company amortizes the merchant contracts over their estimated useful lives
      of 21 years. The Company has adopted SFAS No. 142 to reflect the fair value
      of
      the merchant contracts, and uses a two step valuation process to determine
      if
      there has been any impairment on the value of the merchant contract assets.
      Additionally, when the Company gives away an ATM part such as a Triple-DES
      kit
      (see Item 1 “Description of Business” in the Annual Report on Form 10-KSB for a
      description of Triple-DES) to induce a contract extension from the merchant,
      the
      Company records the value of the ATM part to Merchant Contracts and amortizes
      the value of the part over the life of the contract extension.





The
      first
      step is to periodically assess the remaining contract lives, including expected
      renewals. If the periodic assessment results in a determination that the
      economic lives of the merchant contracts are less than 21 years, the Company
      adjusts the remaining amortization lives of the merchant contracts. The
      Company’s merchant contracts have an average initial term of approximately seven
      years. While the Company has historically experienced a higher turnover rate
      among its merchant-owned customers than with its company-owned portfolio, the
      Company is currently experiencing an average of 2.2 renewals on its current
      merchant-owned contracts acquired through the end of fiscal 2005. Pursuant
      to
      FASB Staff Position No. FAS 142-3 dated April 25, 2008, “an entity shall
      consider its own historical experience” about “renewal or extension used to
      determine the useful life of a recognized intangible asset.” Until such time
      when the Company’s historical experience does not support the useful and
      economic life of the merchant contracts, the Company concludes that the current
      economic life of 21 years is appropriate.





The
      second step is to compare the estimated future undiscounted cash flows of each
      reporting unit to the carrying amount of the merchant contracts, thus testing
      the impairment of the value of the contracts. An impairment loss is recognized
      for any excess in the carrying value of merchant contracts over the assessed
      fair value of merchant contracts. To date, the Company’s testing has indicated
      that there is no impairment of its goodwill and merchant contracts.





The
      following table summarizes Intangible Assets and Merchant Contracts at September
      30, 2008:





Gross Carrying Value
            
            Accumulated
              Amortization
            
            NetGoodwill
            
            $
            4,189,645
            
            $
            168,286
            
            $
            4,021,359Other
                Intangible Assets
            
            
            338,092
            
            
            229,418
            
            
            108,674Merchant
                contracts
            
            
            14,696,314
            
            
            3,176,694
            
            
            11,519,620Total
                Intangible assets and merchant contracts
            
            $
            19,224,051
            
            $
            3,574,398
            
            $
            15,649,653





***Fair
      Value of Financial Instruments***




The
      carrying amounts of the Company’s long-term liabilities approximate the
      estimated fair values at September 30, 2008, 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.


14





***Earnings
      per Share***




In
      calculating basic income per share, net income is divided by the weighted
      average number of common shares outstanding for the period. Diluted income
      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 or when the exercise price of the potentially dilutive securities
      is
      less than the market value of the Company’s stock. Stock options to purchase
      1,662,000 shares of common stock that were outstanding at September 30, 2008
      were not included in the computation of diluted earnings per share for the
      three
      and nine months ended September 30, 2008 because the exercise prices of these
      stock options were greater than the average share price of the Company’s common
      stock and; therefore, the effect would have been anti-dilutive. No warrants
      outstanding at September 30, 2008 were included in the computation of diluted
      earnings per share because they were anti-dilutive. Stock options to purchase
      1,628,425 shares of common stock that were outstanding at September 30, 2007
      were not included in the computation of diluted earnings per share for the
      three
      and nine months ended September 30, 2007, respectively, because the exercise
      prices of these stock options were greater than the average share price of
      the
      Company’s common stock and; therefore, the effect would have been anti-dilutive.
      No warrants outstanding at September 30, 2007 were included in the computation
      of diluted earnings per share because they were anti-dilutive.




For the Three Months EndedSeptember 30, 2008
            
            September 30, 2007NumeratorIncome
                from continuing operations
            
            $
            276,825
            
            $
            96,202Numerator
                for diluted income per share available to common
                stockholders
            
            $
            276,825
            
            $
            96,202DenominatorWeighted
                average shares
            
            
            20,973,924
            
            
            20,973,924Effect
                of dilutive securities:Treasury
                method, effect of employee stock options & warrants
            
            
            69,643
            
            
            -Denominator
                for diluted income per share adjusted weighted shares after assumed
                exercises
            
            
            21,043,567
            
            
            20,973,924**Income
                per common share - basic:**Income
                from continuing operations
            
            $
            0.01
            
            $
            0.01Net
                Income per common share
            
            $
            0.01
            
            $
            0.01**Income
                per common share - diluted:**Income
                from continuing operations
            
            $
            0.01
            
            $
            0.01Net
                Income per common share
            
            $
            0.01
            
            $
            0.01


15




For the Nine Months EndedSeptember 30, 2008
            
            September 30, 2007NumeratorIncome
                from continuing operations
            
            $
            839,270
            
            $
            193,328Income
                from discontinued operations
            
            
            -
            
            
            175,000Numerator
                for diluted income per share available to common
                stockholders
            
            $
            839,270
            
            $
            368,328DenominatorWeighted
                average shares
            
            
            20,973,924
            
            
            20,993,209Effect
                of dilutive securities:Treasury
                method, effect of employee stock options & warrants
            
            
            24,571
            
            
            1,502Denominator
                for diluted income per share adjusted weighted shares after assumed
                exercises
            
            
            20,998,495
            
            
            20,994,711**Income
                per common share - basic:**Income
                from continuing operations
            
            $
            0.04
            
            $
            0.01Income
                from discontinued operations
            
            $
            -
            
            $
            0.01Net
                Income per common share
            
            $
            0.04
            
            $
            0.02**Income
                per common share - diluted:**Income
                from continuing operations
            
            $
            0.04
            
            $
            0.01Income
                from discontinued operations
            
            $
            -
            
            $
            0.01Net
                Income per common share
            
            $
            0.04
            
            $
            0.02




***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.





***Repairs
      and Maintenance Costs***





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





***Stock-based
      Compensation***





Effective
      January 1, 2006, the Company adopted the fair value recognition provisions
      of
      Statement of Financial Accounting Standards ("SFAS") No. 123 (Revised 2004),
      "Share-Based Payment," using the modified-prospective-transition method which
      requires us to recognize compensation expense on a prospective basis. SFAS
      No.
      123(R) requires that all stock based compensation be recognized as an expense
      in
      the financial statements and that such cost be measured at the fair value of
      the
      award. Under this method, in addition to reflecting compensation for new
      share-based awards, expense is also recognized to reflect the remaining service
      period of awards that had been included in pro-forma disclosure in prior
      periods. The stock based compensation expense is included in operating expenses
      in the consolidated statements of income. During the three-month and nine-month
      periods ended September 30, 2008, the Company recorded $30,540 and $152,564,
      respectively, of stock compensation expenses.


16





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





Effective
      fiscal 2007, the Company implemented a performance based incentive program
      matching 401k contributions. For each quarter the Company achieves its net
      income budget, the Company will match up to 50% of the first 6% of an employee’s
      401k contributions during that respective quarter. During the three-month and
      nine-month periods ended September 30, 2008, the Company recorded $11,050 and
      $31,907, respectively, of expenses relating to this plan.





***Performance
      Based Incentive Bonus Plan***





Effective
      fiscal 2008, the Company implemented a performance based incentive program
      for
      employees and management of the Company. A quarterly cash bonus pool is funded
      by the Company’s achievement of net profits. During the three-month period ended
      September 30, 2008 the Company recorded $31,528 of bonus expenses and $4,200
      of
      estimated payroll taxes relating to this plan. Of the $31,528 recorded during
      the three-month period ended September 30, 2008, $16,903 is held back and will
      be paid upon achievement of fiscal 2008 net profits. During the nine-month
      period ended September 30, 2008, the Company recorded $98,784 of expenses
      relating to this plan. Of the $94,584 recorded during the nine-month period
      ended September 30, 2008, $50,709 is held back and will be paid upon achievement
      of fiscal 2008 net profits.




***Recent
      Accounting Pronouncements***





In
      March
      2008, the FASB issued SFAS No. 161, “Disclosures about Derivatives and Hedging
      Activities” (“SFAS 161”) – an amendment of SFAS No. 133, which changes the
      disclosure requirements for derivative instruments and hedging activities.
      This
      standard requires a company to provide enhanced disclosures about (a) how and
      why the company uses derivative instruments, (b) how derivative instruments
      and
      related hedged items are accounted for under Statement 133, and (c) how
      derivative instruments and related hedged items affect the company’s financial
      position, financial performance, and cash flows. We will adopt the provisions
      of
      SFAS 161 on January 1, 2009 and apply the disclosure requirements to disclosures
      made subsequent to its adoption. The Company does not expect the adoption of
      SFAS 161 to have a material impact on our financial statements.





In
      April
      2008, the FASB issued FSP FAS 142-3, “Determination of the Useful Life of
      Intangible Assets” (“FAS 142-3”), which amends the factors that should be
      considered in developing renewal or extension assumptions used to determine
      the
      useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and
      Other Intangible Assets” (“SFAS 142”). The intent of FAS 142-3 is to improve the
      consistency between the useful life of a recognized intangible asset under
      SFAS
      142 and the period of expected cash flows used to measure the fair value of
      the
      asset under applicable accounting literature. The Company will adopt the
      provision of FAS 142-3 on January 1, 2009 and is currently assessing the impact
      the adoption will have on its financial position and results of
      operations.





In
      May
      2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
      Accounting Principles” (“SFAS 162”). SFAS 162 identifies the sources of
      accounting principles to be used in the preparation of financial statements
      of
      nongovernmental entities that are presented in conformity with generally
      accepted accounting principles (“GAAP”) in the United States (the GAAP
      hierarchy). This statement is effective 60 days following the SEC’s approval of
      the Public Company Accounting Oversight Board amendments to AU Section 411,
“The
      Meaning of Present Fairly in Conformity with Generally Accepted Accounting
      Principles.” The Company currently adheres to the hierarchy of GAAP as presented
      in SFAS No. 162 and does not expect its adoption will have a material impact
      on
      its consolidated results of operations and financial condition.


17





**3.
      DISCONTINUED OPERATIONS**




On
      May 2,
      2006, the Company entered into a Shareholder Agreement to sell 50% of Cash
      Axcess Corporation (Proprietary) Limited (“CAC”) in a stock arrangement with
      Industrial Electronic Investments Limited. On September 30, 2006, the Company
      finalized the sale of the remaining 50% of CAC. As part of the sale of 50%
      of
      CAC on September 30, 2006, $175,000 of the sale price was held in an escrow
      account as security to cover any claims made in connection with a breach of
      any
      of the Company's warranties in the sale agreement. The warranty period ended
      and
      the Company received the full escrowed amount of $175,000 on March 28, 2007.
      The
      Company recognized the $175,000 deferred gain on sale as income from
      discontinued operations during the nine-month period ended September 30,
      2007.





**4.
      NOTES RECEIVABLE**





In
      February 2004, the Company issued a note receivable in the amount of $190,000
      due within one year and requiring monthly payments of principal and interest,
      with an annual interest rate of 10%. The note was amended to extend the term
      to
      February 2007. The amount remaining on the note as of March 31, 2007 was
      $99,895. The promissory note is collateralized by the Company’s stock and during
      the fiscal year ended December 31, 2006, the Company increased the reserve
      due
      to the declining stock price of the Company. The 47,862 shares of Company stock
      held as collateral on this note were returned to the Company on April 20, 2007
      as settlement of this note. The Company recorded the $11,966 market value of
      the
      returned 47,862 shares of stock as treasury stock. The settlement of this note
      resulted in an impairment of notes receivable charge of $5,743 recorded during
      the nine-month period ended September 30, 2007.





During
      the quarter ended September 30, 2005, the Company disposed of its wholly-owned
      subsidiary, Electronic Payment & Transfer Corporation (“EPT”), and
      discontinued offering prepaid debit cards and the related products and services
      that were marketed by EPT. Subsequently, effective September 30, 2005, the
      Company completed the sale of EPT to one former employee of the Company for
      $1,540,000 in a secured promissory note covering the full amount of the sale
      price. On August 1, 2006, Electronic Payment Systems, LLC (“EPS”), the acquirer,
      failed to make its required payment and was in default of the Stock Purchase
      Agreement made and entered into as of September 30, 2005. During 2006, the
      Company reduced the carrying value of the note to zero. On June 29, 2007, the
      Company settled all claims against EPS in exchange for a payment of $100,000.
      Additionally, in the event EPT is sold or merged into another entity within
      three years from the date of the settlement, the Company is entitled to receive
      an additional $200,000 payment. During the nine-month period ended September
      30,
      2007, the Company recorded the $100,000 settlement as a recovery of bad debts.
      The $100,000 payment was received on July 6, 2007.





**5.
      BUSINESS REORGANIZATION CHARGES**





During
      the quarter ended September 30, 2006, the Company decided to restructure
      management and to outsource certain employee functions to third party vendors.
      As part of this decision to eliminate the positions held by the two senior
      officers and other employees, the Company incurred restructuring charges during
      the third quarter of 2006 in the amount of $757,811. As of December 31, 2007,
      the amount of restructuring charges accrued was $141,313. As of September 30,
      2008, the Company had fulfilled all payment obligations regarding the management
      restructuring taken place during fiscal year 2006.





**6.** **ACCOUNTS
      PAYABLE AND ACCRUED LIABILITIES**





Accounts
      payable and accrued liabilities consisted of the following as of September
      30,
      2008 and December 31, 2007:


18





September 30, 2008
            
            December 31, 2007Accounts
                payable
            
            $
            427,050
            
            $
            901,894Accrued
                commissions/residual payments
            
            
            1,266,522
            
            
            1,157,608Accrued
                cost of cash and cash replenishment expenses
            
            
            326,015
            
            
            431,302Accrued
                payroll
            
            
            309,298
            
            
            303,545Accrued
                severance
            
            
            -
            
            
            141,313Accrued
                audit fees
            
            
            75,351
            
            
            89,269Accrued
                interest
            
            
            71,151
            
            
            56,852Accrued
                legal fees
            
            
            -
            
            
            15,000Other
            
            
            229,501
            
            
            264,852Accounts
                payable and accrued liabilities
            
            $
            2,704,888
            
            $
            3,361,635





**7.
      COMMITMENTS AND CONTINGENCIES**





We
      lease
      ATMs and back office computer equipment under capital lease agreements that
      expire between 2008 and 2011 and provide for lease payments at interest rates
      from 5.99% up to 14.37% per annum. The majority of the capital lease agreements,
      which total approximately 96% of our September 30, 2008 balances, are at
      interest rates at or below 12.11%. See Financial Footnote #14 to the
      Consolidated Financial Statements in the Annual Report on Form
      10-KSB.





During
      the nine-month period ended September 30, 2008, we entered into $407,404 of
      new
      capital lease obligations, $360,504 of which are new $1 buy-out capital leases
      resulting from refinancing five previous fair market value leases which were
      at
      interest rates up to 18.71% per annum. The new refinanced capital lease
      obligations are 30-month leases at an interest rate of 7.8% per annum. As of
      September 30, 2008, approximately $1.4 million of capital lease obligations
      were
      included within the Company’s consolidated balance sheet.





**8.
      LITIGATION AND CLAIMS**





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.
      Management is not aware of any lawsuits, other than discussed below that could
      have a material impact on the Company’s consolidated results of operations, cash
      flows or financial position.





*Resource
      Express, Inc.*





On
      August
      23, 2007, Nationwide filed suit against Resource Express, Inc. (the “Defendant”)
      in the Circuit Court, Seventh Judicial Circuit, St. Johns County, Florida,
      case
      No. CA 071120 for breach of contract. Nationwide alleged that the Defendant
      breached the terms of its Distributor Agreement with Nationwide which was
      entered into to resolve previous litigation between the parties. On June 30,
      2008, the Court entered a Final Default Judgment in favor of Nationwide and
      against the Defendant in the amount of $51,063. On August 20, 2008, the
      Defendant filed an Assignment for the Benefit of Creditors listing $46,407
      in
      assets and debts in the approximate amount of $88,000. Nationwide has filed
      its
      proof of claim in the amount of the judgment plus interest. The Company
      expresses no opinion as to the likelihood of success or potential amount of
      recovery or collection relating to this matter, and has not recorded income
      during the nine-month period ended September 30, 2008 relating to this
      matter.





*CAMOFI
      Master LDC*





On
      October 19, 2007, the Company was served with process by CAMOFI Master LDC
      ("CAMOFI "), a debt holder of the Company. In the complaint, filed in the United
      States District Court in and for the Southern District of New York, CAMOFI
      alleges material and negligent misrepresentation of the Company’s financial
      results relating to the restatement of 2005 earnings that occurred in 2006
      and
      seeks not less than $2,000,000 in damages (actual amount to be calculated at
      trial) plus all costs and expenses. The Company denied any and all allegations
      of wrongdoing, intends to vigorously defend such action and does not anticipate
      a material financial impact due to this matter. On December 13, 2007, in the
      face of a motion to dismiss that the Company filed, CAMOFI withdrew their
      negligent misrepresentation claim, sent the default notification described
      more
      fully below, and filed an amended complaint for breach of contract, alleging
      that the Company breached certain representations and warranties set forth
      in
      the convertible debt placement agreements and instruments executed by and
      between CAMOFI and the Company in 2006.


19





Specifically,
      the declaration of default and acceleration from CAMOFI (the "Notice") relates
      to the Company's 9% Senior Subordinated Secured Convertible Note due October
      27,
      2010 in the principal amount of $3,500,000 (the "Note"). The description of
      the
      Note and related transaction contained in the Company's Current Report on Form
      8-K filed with the SEC on November 1, 2005 is hereby incorporated by
      reference.




The
      Notice claims that an event of default has occurred under Section 8(a)(iv)
      of
      the Note. An event of default under Section 8(a)(iv) of the Note occurs if
      any
      representation or warranty made in (i) the Note, (ii) any transaction document
      related to the Note, (iii) any written statement pursuant to the Note, or (iv)
      any other report, financial statement or certificate made or delivered to the
      Investor was untrue or incorrect in any material respect as of the date of
      the
      Note.





The
      Notice demands immediate payment of an amount equal to the sum of (i) 110%
      of
      the principal amount of the Note, plus all accrued and unpaid interest, and
      (ii)
      all other amounts, costs, expenses and liquidated damages due in respect to
      the
      Note. Pursuant to the terms of the Note, any overdue and unpaid interest must
      be
      paid at the rate of 20% per annum from the date such interest was due through
      the date of payment. The Company denies any claim that an event of default
      has
      occurred under Section 8(a)(iv) of the Note and is vigorously defending its
      position. The complaint seeks damages of "not less than $4,679,500"; however,
      even if a court were to determine that there was an event of default under
      the
      Note, the Company estimates that, as of the date hereof, a payment of
      approximately $3,876,250 would be due and payable. A February 1, 2009 non-jury
      trial date has been set in The United States District Court, Southern District
      of New York. Even though the court date is scheduled for February 2009, the
      Company is actively seeking to refinance the CAMOFI debt. Since the court date
      is scheduled for 2009, the Company believes it is unlikely that any resolution
      of this suit will occur before the end of the third quarter of fiscal 2009,
      and
      as such believes that the debt, net of warrant valuation discounts, should
      continue to be categorized as long-term debt as of September 30, 2008. The
      Company believes that all legal expenses relating to this litigation will be
      covered under the Company’s directors and officers insurance
      policy.





On
      August
      12, 2008, the Company entered into a settlement agreement, effective as of
      August 12, 2008 (the “Agreement”), with CAMOFI. The Agreement provides that the
      Company will make a $3,700,000 lump sum payment (the “Payment”) to CAMOFI to
      cancel the Company’s 9% Senior Subordinated Secured Convertible Note due October
      27, 2010 in the principal amount of $3,500,000 (the “Note”) issued in October of
      2005. Of the $3,700,000 total lump sum payment, $3,500,000 will repay the
      principal balance of the note and $200,000 will reimburse CAMOFI for legal
      fees
      and other expenses. Global Axcess's directors and officer's insurance policy
      will cover the $200,000. The Payment is the entire payment that the Company will
      make under the Note or any of the other transaction documents entered into
      by
      the Company and CAMOFI in October of 2005, with the exception of any obligations
      that the Company may have to CAMOFI relating to the warrants issued in
      connection with the Note and the related registration rights agreement. In
      addition, pursuant to the terms of the Agreement, the Company will reduce the
      exercise price of the warrants from $1.75 to $0.01 and remove the full ratchet
      anti-dilution protection provisions contained in the warrants. The Agreement
      also provides that CAMOFI acknowledges that the Company will need to obtain
      financing in order to make the Payment and, as a result, the Agreement is
      contingent upon the Company successfully obtaining financing such that the
      closing of the Agreement can occur within 90 days after August 12, 2008. Upon
      closing, the Company expects to record a non-cash expense of approximately
      $300,000 for the early extinguishment of debt which would have otherwise been
      expensed at $38,600 per quarter through the maturity date of the note in October
      2010. The Company also expects to record a non-cash expense of approximately
      $175,000 for the warrant repricing. This will result in the Company recording
      a
      one-time charge of approximately $475,000 to earnings upon closing. If the
      Company is unable to obtain the necessary financing, the Agreement will become
      null and void.


20







As
      of
      November 4, 2008, the Company believes that it is unlikely that it will obtain
      the necessary financing in the required time frame and has verbally requested
      a
      60-day extension from CAMOFI to obtain financing. Without the approval of the
      extension, the inability to obtain the financing will make the agreement null
      and void.





*Sydney
      Michael Cole*





On
      April
      3, 2008, the Company was served with process by Sidney Michael Cole ("COLE"),
      an
      investor and shareholder of the Company. In the complaint, filed in the District
      Court of Dallas County, Texas, COLE alleges securities fraud and common law
      fraud relating to the restatement of the Company’s 2005 earnings that occurred
      in 2006. COLE seeks unspecified damages in the complaint. The Company denies
      all
      allegations in the complaint and intends to vigorously defend such action.
      The
      Company has moved the case to the United States District Court for the Northern
      District of Texas, and pursuant to a Joint Report filed with the court, the
      parties have proposed that the case be set for trial in August of 2009. The
      parties are working to conclude initial discovery and schedule an expedited
      mediation conference sometime during the fourth quarter of 2008. The Company
      believes that all costs including legal expenses relating to this litigation
      will be covered under the Company’s directors and officers insurance policy and
      does not anticipate a material financial impact due to this matter.





**9.
      INCOME TAXES**





In
      assessing the realizability of the deferred tax assets, management considers
      whether it is more likely than not, that some portion or all of the deferred
      tax
      assets will not be realized. The valuation allowance at September 30, 2008
      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
      December 31, 2007, the Company had net operating loss carryforwards remaining
      of
      approximately $22,969,986 that may be offset against future taxable income
      through 2027. As part of management’s tax strategies we will be reviewing the
      use of the net operating loss carryforwards. The Company is reviewing its tax
      depreciation methods for future utilization of the net operating
      loss.





**10.
      CHANGES IN STOCKHOLDERS' EQUITY**





See
      the
      table below for all the equity transactions for the three-month period ended
      September 30, 2008:


Common Stock
              
              Additional
                Paid-in
              
              Accumulated
              
              Treasury
              
              Total
                Stockholders'Shares
              
              Amount
              
              Capital
              
              Deficit
              
              Stock
              
              EquityBalances,
                  June 30, 2008
              
              
              20,973,924
              
              $
              21,022
              
              $
              22,575,608
              
              $
              (9,765,932
              )
              $
              (11,966
              )
              $
              12,818,732Stock
                  compensation expense
              
              
              -
              
              
              -
              
              
              30,540
              
              
              -
              
              
              -
              
              
              30,540Net
                  income
              
              
              -
              
              
              -
              
              
              -
              
              
              276,825
              
              
              -
              
              
              276,825Balances,
                  September 30, 2008
              
              
              20,973,924
              
              $
              21,022
              
              $
              22,606,148
              
              $
              (9,489,107
              )
              $
              (11,966
              )
              $
              13,126,097





**11.**  **FAIR VALUE MEASUREMENT**





On
      January 1, 2008, we adopted SFAS No. 157, “Fair Value Measurements,” which
      defines fair value, establishes a framework for using fair value to measure
      assets and liabilities, and expands disclosures about fair value measurements.
      The statement applies whenever other statements require or permit assets or
      liabilities to be measured at fair value. SFAS 157 is effective for fiscal
      years
      beginning after November 15, 2007, except for nonfinancial assets and
      liabilities that are recognized or disclosed at fair value in the financial
      statements on a nonrecurring basis for which application has been deferred
      for
      one year.




21





SFAS
      157
      established the following fair value hierarchy that prioritizes the inputs
      used
      to measure fair value:





Level
      1:
      Quoted prices are available in active markets for identical assets or
      liabilities as of the reporting date. Active markets are those in which
      transactions for the asset or liability occur in sufficient frequency and volume
      to provide pricing information on an ongoing basis. Level 1 primarily consists
      of financial instruments such as exchange-traded derivatives, listed equities
      and U.S. government treasury securities.





Level
      2:
      Pricing inputs are other than quoted prices in active markets included in Level
      1, which are either directly or indirectly observable as of the reporting date.
      Level 2 includes those financial instruments that are valued using models or
      other valuation methodologies. These models are primarily industry-standard
      models that consider various assumptions, including quoted forward prices for
      commodities, time value, volatility factors, and current market and contractual
      prices for the underlying instruments, as well as other relevant economic
      measures. Substantially all of these assumptions are observable in the
      marketplace throughout the full term of the instrument, can be derived from
      observable data or are supported by observable levels at which transactions
      are
      executed in the marketplace. Instruments in this category include
      non-exchange-traded derivatives such as over the counter forwards, options
      and
      repurchase agreements.





Level
      3:
      Pricing inputs include significant inputs that are generally less observable
      from objective sources. These inputs may be used with internally developed
      methodologies that result in management’s best estimate of fair value. At each
      balance sheet date, we perform an analysis of all instruments subject to SFAS
      No. 157 and include in Level 3 all of those whose fair value is based on
      significant unobservable inputs.





The
      following table presents our financial assets and liabilities that were
      accounted for at fair value on a recurring basis as of September 30, 2008 by
      level within the fair value hierarchy:


Fair Value Measurements UsingTotal
              
              Level 1
              
              Level 2
              
              Level 3Assets
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -Liabilities:Derivative
                  financial instruments
              
              $
              66,566
              
              $
              -
              
              $
              66,566
              
              $
              -




Our
      derivative financial instruments are interest rate swap agreements, which are
      observable at commonly quoted intervals for the full term of the derivatives
      and
      therefore considered a level 2 input. During the three-month period ended
      September 30, 2008, we recorded $8,621 of expense relating to the interest
      rate
      swap which is included in the interest expense, net in our condensed
      consolidated statements of operations. During the nine-month period ended
      September 30, 2008, we recorded $14,300 of expense relating to the interest
      rate
      swap which is included in the interest expense, net in our condensed
      consolidated statements of operations.





In
      the
      accompanying condensed consolidated balance sheets, we have recorded debt
      discounted based upon the fair value of detachable warrants as well as an asset
      retirement obligation. As discussed above, the application of SFAS 157 for
      these
      non-recurring items has been deferred.





22




**12.
      SUBSEQUENT EVENTS**





None.





**ITEM
      2. Management's Discussion and Analysis of Financial Condition and Results
      of
      Operations**




The
      following discussion should be read in conjunction with the condensed
      consolidated financial statements and notes thereto.





***Summary***





The
      Company, through its wholly-owned subsidiaries, owns, manages or operates
      Automated Teller Machines ("ATMs”) with locations primarily in the eastern and
      southwestern United States of America. Our revenues are principally derived
      from
      two types of fees, which we charge for processing transactions on our ATM
      network. We receive an interchange fee from the issuer of the credit or debit
      card for processing a transaction when a cardholder uses an ATM in our network.
      In addition, in most cases we receive a surcharge/convenience fee from the
      cardholder when the cardholder makes a cash withdrawal from an ATM in our
      network.





Interchange
      fees are processing fees that are paid by the issuer of the credit or debit
      card
      used in a transaction. Interchange fees vary for cash withdrawals, balance
      inquiries, account transfers or uncompleted transactions, which are the primary
      types of transactions that are currently processed on ATMs in our network.
      The
      maximum amount of the interchange fees is established by the national and
      regional card organizations and credit card issuers with whom we have a
      relationship. We receive interchange fees for transactions on ATMs that we
      own,
      but sometimes we rebate a portion of the fee to the owner of the ATM location
      under the applicable lease for the ATM site. We also receive the interchange
      fee
      for transactions on ATMs owned by third party vendors included within our
      network, but we rebate all or a portion of each fee to the third party vendor
      based upon negotiations between us. The interchange fees received by us vary
      from network to network and to some extent from issuer to issuer, but generally
      range from $0.15 to $0.55 per cash withdrawal. Interchange fees for balance
      inquiries, account transfers and denied transactions are generally substantially
      less than fees for cash withdrawals. The interchange fees received by us from
      the card issuer are independent of the service fees charged by the card issuer
      to the cardholder in connection with ATM transactions. Service fees charged
      by
      card issuers to cardholders in connection with transactions through our network
      range from zero to $2.50 per transaction. We do not receive any portion of
      these
      service fees.





In
      most
      markets we impose a surcharge/convenience fee for cash withdrawals.
      Surcharge/convenience fees are a substantial additional source of revenue for
      us
      and other ATM network operators. The surcharge/convenience fee for most of
      the
      ATMs in our network ranges between $1.50 and $2.75 per withdrawal. The
      surcharge/convenience fee for other ATMs in our network ranges between $0.50
      and
      $7.50 per withdrawal. We receive the full surcharge/convenience fee for cash
      withdrawal transactions on ATMs that we own, but often we rebate a portion
      of
      the fee to the owner of the ATM location under the applicable lease for the
      ATM
      site. We also receive the full surcharge/convenience fee for cash withdrawal
      transactions on ATMs owned by third party vendors included within our network,
      but we rebate all or a portion of each fee to the third party vendor based
      upon
      a variety of factors, including transaction volume and the party responsible
      for
      supplying vault cash to the ATM, and only record earned revenues based upon
      the
      Company’s contracts with the third party vendors.





In
      addition to revenues derived from interchange and surcharge/convenience fees,
      we
      also derive revenues from providing network management services to third parties
      owning ATMs included in our ATM network. These services include 24 hour
      transaction processing, monitoring and notification of ATM status and cash
      condition, notification of ATM service interruptions, in some cases dispatch
      of
      field service personnel for necessary service calls and cash settlement and
      reporting services. The fees for these services are paid by the owners of the
      ATMs.





Interchange
      fees are credited to us by networks and credit card issuers on a monthly basis
      and are paid to us in the following month between the 5th and 15th business
      day.
      Surcharge/convenience fees are charged to the cardholder and credited to us
      by
      networks and credit card issuers on a daily basis. We rebate the portion of
      these fees to ATM owners and owners of ATM locations as commission payments
      as
      per their contractual terms. Fees for network management services are generally
      paid to us on a monthly basis.




23





***Results
      of Continuing Operations***





The
      following tables set forth certain consolidated statement of continuing
      operations data as a percentage of revenues for the periods indicated.
      Percentages may not add due to rounding.


For the Three Months EndedSeptember 30,2008
              
              September 30,2007Revenues
              
              
              100.0
              %
              
              100.0
              %Cost
                  of revenues
              
              
              56.6
              %
              
              58.7
              %Gross
                  profit
              
              
              43.4
              %
              
              41.3
              %Depreciation
                  expense
              
              
              5.8
              %
              
              7.1
              %Amortization
                  of intangible merchant contracts
              
              
              3.4
              %
              
              3.4
              %Selling,
                  general and administrative
              
              
              24.2
              %
              
              22.6
              %Impairment
                  of notes receivable
              
              
              0.0
              %
              
              0.0
              %Recovery
                  of bad debts
              
              
              0.0
              %
              
              0.0
              %Stock
                  compensation expense
              
              
              0.5
              %
              
              0.8
              %Total
                  operating expenses
              
              
              33.9
              %
              
              33.9
              %Operating
                  income from continuing operationsbefore
                  items shown below
              
              
              9.5
              %
              
              7.4
              %Interest
                  expense, net
              
              
              -4.5
              %
              
              -5.7
              %Gain
                  on disposal of assets
              
              
              0.0
              %
              
              0.0
              %Income
                  from continuing operations before provision for income
                  taxes
              
              
              5.0
              %
              
              1.7
              %Income
                  from continuing operations
              
              
              5.0
              %
              
              1.7
              %EBITDA
                  (1)
              
              
              18.7
              %
              
              17.9
              %


For the Nine Months EndedSeptember 30, 2008
              
              September 30, 2007Revenues
              
              
              100.0
              %
              
              100.0
              %Cost
                  of revenues
              
              
              56.3
              %
              
              58.6
              %Gross
                  profit
              
              
              43.7
              %
              
              41.4
              %Depreciation
                  expense
              
              
              6.5
              %
              
              7.0
              %Amortization
                  of intangible merchant contracts
              
              
              3.4
              %
              
              3.3
              %Selling,
                  general and administrative
              
              
              23.4
              %
              
              24.5
              %Impairment
                  of notes receivable
              
              
              0.0
              %
              
              0.0
              %Recovery
                  of bad debts
              
              
              0.0
              %
              
              -0.6
              %Stock
                  compensation expense
              
              
              0.9
              %
              
              0.3
              %Total
                  operating expenses
              
              
              34.2
              %
              
              34.5
              %Operating
                  income from continuing operationsbefore
                  items shown below
              
              
              9.5
              %
              
              6.9
              %Interest
                  expense, net
              
              
              -4.6
              %
              
              -5.6
              %Gain
                  on disposal of assets
              
              
              0.0
              %
              
              -0.1
              %Income
                  from continuing operations before provision for income
                  taxes
              
              
              4.9
              %
              
              1.2
              %Income
                  from continuing operations
              
              
              4.9
              %
              
              1.2
              %EBITDA
                  (1)
              
              
              19.4
              %
              
              17.1
              %





(1)
      See
“—EBITDA”




24





***Comparison
      of Results of Operations for the Three Months Ended September 30, 2008 and
      2007:***





***Revenues***





The
      Company reported total operating revenue from continuing operations of
      $5,652,977 for the three-month period ended September 30, 2008 as compared
      to
      $5,532,807 for the three-month period ended September 30, 2007. We achieved
      increased revenues from 2007 despite slightly lower transaction volumes. This
      increase was mainly due to increased revenues relating to increased
      surcharge/convenience fees on selected ATMs beginning in the first quarter
      of
      2008.




***Cost
      of Revenues***





Our
      total
      cost of revenues from continuing operations decreased from $3,248,596 to
      $3,199,906 for the three-month period ended September 30, 2007 to the
      three-month period ended September 30, 2008. The slight decrease in cost of
      revenues period over period was achieved despite higher fuel charges resulting
      in higher first line and second line maintenance costs and increased
      residual/commission payments to customers from fiscal 2007. Lower interest
      rates
      resulted in lower cash costs for the three-month period in 2008 and offset
      the
      higher maintenance costs and increased residual/commission payments from fiscal
      2007.




***Gross
      Profit***





Gross
      profit from continuing operations as a percentage of revenue for the three-month
      periods ended September 30, 2008 and 2007 were approximately 43.4%, or
      $2,453,071, and approximately 41.3%, or $2,284,211, respectively. The increased
      gross profit and gross profit percentage for the third quarter of 2008 versus
      the same period in 2007 was mainly attributable to the increased
      surcharge/convenience fees on selected ATMs and lower cash costs due to lower
      interest rates.




***Operating
      Expenses***





Our
      total
      operating expenses from continuing operations for the three months ended
      September 30, 2008 and 2007 were $1,920,346 and $1,873,722, respectively. The
      principal components of operating expenses are general and administrative
      expenses such as professional and legal fees, administrative salaries and
      benefits, consulting and audit fees, occupancy costs, sales and marketing
      expenses and administrative expenses. Operating expenses also include
      depreciation, amortization of intangible merchant contracts and stock
      compensation expenses. See explanation of operating expenses below:





***Selling,
      General and Administrative (“SG&A”) Expenses***





Our
      total
      SG&A expenses from continuing operations increased to $1,367,572 for the
      three-month period ended September 30, 2008 from $1,253,056 for the three-month
      period ended September 30, 2007. The increase in SG&A expenses from
      continuing operations was directly attributable to the incentive based
      performance plans implemented in 2008 and achieved during the third quarter
      of
      2008. Additionally, the Company incurred approximately $30,000 in marketing
      expenses relating to a gas give-away program in the Georgia and Texas markets.




***Depreciation
      Expense***





Depreciation
      expense from continuing operations decreased for the three-month period ended
      September 30, 2008 to $329,061 from $390,446 for the same period in 2007. This
      decrease in depreciation expense was mainly due to depreciation savings
      resulting from refinancing several fair market value capital leases to bargain
      price capital leases. This refinancing enables the Company to depreciate the
      assets covered under the respective leases over a longer period of time thus
      recording savings during the three-month period.




25





***Amortization
      of Intangible Merchant Contracts***





Amortization
      of intangible merchant contracts from continuing operations increased for the
      three-month period ended September 30, 2008 to $193,173 from $186,369 for the
      same period in 2007. The increase in amortization expense was mainly due to
      the
      additional amortization from the capitalized merchant contracts relating to
      the
      Triple-DES upgrades purchased during the last nine months of 2007. See Note
      #2
“Description of Business and Summary of Significant Accounting Policies”
regarding the amortization of intangible merchant contracts.





***Stock
      Compensation Expense***





During
      the three-month periods ended September 30, 2008 and 2007, we recorded stock
      compensation expenses of $30,540 and $43,851, respectively, mainly relating
      to
      executive stock option grants (see Note #2 “Description of Business and Summary
      of Significant Accounting Policies”).





***Operating
      Income from Continuing Operations***





We
      had
      operating income from continuing operations for the three-month period ended
      September 30, 2008 in the amount of $532,725 as compared to operating income
      from continuing operations of $410,489 in the three-month period ended September
      30, 2007.





***Interest
      Expense, Net***





Interest
      expense, net, decreased for the three-month period ended September 30, 2008
      to
      $255,900 from $314,787 for the three-month period ended September 30, 2007.
      The
      decrease was mainly due to decreased debt balances at the three-month period
      ended September 30, 2008 as compared to the debt balances at the three-month
      period ended September 30, 2007. During the three-month period ended September
      30, 2008 we recorded interest expense of $8,621 relating to the interest swap
      agreement we entered into with our senior lender.


For the Three Months EndedSeptember 30, 2008
              
              September 30, 2007Interest
                  expense, net
              
              $
              214,403
              
              $
              273,291Accretion
                  of discount on notes payable
              
              
              41,497
              
              
              41,496Total
                  Interest expense, net
              
              $
              255,900
              
              $
              314,787





***Gain
      on Sale or Disposal of Assets***





During
      the three-month period ended September 30, 2007, we recorded a gain on disposal
      of certain ATM assets of $500.





***Income
      from Continuing Operations Before Provision for
      Tax***





We
      had
      net income from continuing operations before taxes of $276,825 for the three
      months ended September 30, 2008 as compared to net income from continuing
      operations before taxes of $96,202 for the three-month period ended September
      30, 2007.





***Income
      Taxes***





We
      incurred no tax expense in either of the respective periods ending September
      30,
      2008 and September 30, 2007. At December 31, 2007, the Company has a net
      operating loss carryforward of approximately $23.0 million available. The net
      operating loss carryforward is due to expire during fiscal years 2008-2027.





***Net
      Income***





We
      had
      net income of $276,825 for the three months ended September 30, 2008 as compared
      to net income of $96,202 for the three-month period ended September 30,
      2007.





26





***Comparison
      of Results of Operations for the Nine months Ended September 30, 2008 and
      2007:***





***Revenues***





The
      Company reported total operating revenue from continuing operations of
      $17,026,465 for the nine-month period ended September 30, 2008 as compared
      to
      $16,400,007 for the nine-month period ended September 30, 2007. We achieved
      increased revenues from 2007 despite lower transaction volumes. This increase
      was mainly due to increased revenues relating to increased surcharge/convenience
      fees on selected ATMs beginning in the first quarter of 2008.




***Cost
      of Revenues***





Our
      total
      cost of revenues from continuing operations decreased slightly from $9,610,767
      to $9,578,552 for the nine-month period ended September 30, 2007 to the
      nine-month period ended September 30, 2008. The slight decrease in cost of
      revenues period over period was achieved despite higher fuel charges resulting
      in higher first line and second line maintenance costs and increased
      residual/commission payments to customers from fiscal 2007. Lower interest
      rates
      resulted in lower cash costs for the nine-month period in 2008 and offset the
      higher maintenance costs and increased residual/commission payments from fiscal
      2007.




***Gross
      Profit***





Gross
      profit from continuing operations as a percentage of revenue for the nine-month
      periods ended September 30, 2008 and 2007 were approximately 43.7%, or
      $7,447,913, and approximately 41.4%, or $6,789,240, respectively. The increased
      gross profit and gross profit percentage for the first nine months of 2008
      versus the same period in 2007 was mainly attributable to the increased
      surcharge/convenience fees on selected ATMs and lower cash costs due to lower
      interest rates.




***Operating
      Expenses***





Our
      total
      operating expenses from continuing operations for the nine months ended
      September 30, 2008 and 2007 were $5,826,362 and $5,650,168, respectively. The
      principal components of operating expenses are general and administrative
      expenses such as professional and legal fees, administrative salaries and
      benefits, consulting and audit fees, occupancy costs, sales and marketing
      expenses and administrative expenses. Operating expenses also include
      depreciation, amortization of intangible merchant contracts, impairment of
      notes
      receivable, recovery of bad debts and stock compensation expenses. See
      explanation of operating expenses below:





***Selling,
      General and Administrative (“SG&A”) Expenses***





Our
      total
      SG&A expenses from continuing operations decreased to $3,987,978 for the
      nine-month period ended September 30, 2008 from $4,011,515 for the nine-month
      period ended September 30, 2007. The decrease in SG&A expenses from
      continuing operations was directly attributable to the decrease in legal and
      professional fees resulting from cost reduction measures we had undertaken
      in
      the first two quarters of 2008. Additionally, during the nine-month period
      in
      2007 we incurred approximately $20,000 of costs associated with our shareholder
      meeting.




***Depreciation
      Expense***





Depreciation
      expense from continuing operations decreased for the nine-month period ended
      September 30, 2008 to $1,108,318 from $1,143,420 for the same period in 2007.
      This decrease in depreciation expense was mainly due to depreciation savings
      resulting from refinancing several fair market value capital leases to bargain
      price capital leases. This refinancing enables the Company to depreciate the
      assets covered under the respective leases over a longer period of time thus
      recording savings during the three-month period.




27




***Amortization
      of Intangible Merchant Contracts***





Amortization
      of intangible merchant contracts from continuing operations increased for the
      nine-month period ended September 30, 2008 to $577,502 from $540,309 for the
      same period in 2007. The increase in amortization expense was mainly due to the
      additional amortization from the capitalized merchant contracts relating to
      the
      Triple-DES upgrades purchased during the last nine months of 2007. See Note
      #2
“Description of Business and Summary of Significant Accounting Policies”
regarding the amortization of intangible merchant contracts.





***Impairment
      of Notes Receivable***





During
      the nine-month period ended September 30, 2007 we incurred impairment of notes
      receivable charges of $5,743 which related to the settlement of a February
      2004
      note (see Note #4 “Notes Receivable”).





***Recovery
      of Bad Debts***





During
      the nine-month period ended September 30, 2007, we recorded a recovery of bad
      debts of $100,000 which related to the settlement of a previously fully reserved
      note (see Note #4 “Notes Receivable”).





***Stock
      Compensation Expense***





During
      the nine-month period ended September 30, 2008 and 2007, we recorded stock
      compensation expenses of $152,564 and $49,181 respectively, mainly relating
      to
      executive stock option grants (see Note #2 “Description of Business and Summary
      of Significant Accounting Policies”).





***Operating
      Income from Continuing Operations***





We
      had
      operating income from continuing operations for the nine-month period ended
      September 30, 2008 in the amount of $1,621,551 as compared to operating income
      from continuing operations of $1,139,072 in the nine-month period ended
      September 30, 2007.





***Interest
      Expense, Net***





Interest
      expense, net, decreased for the nine-month period ended September 30, 2008
      to
      $782,281 from $923,227 for the nine-month period ended September 30, 2007.
      The
      decrease was mainly due to decreased debt balances at the nine-month period
      ended September 30, 2008 as compared to the debt balances at the nine-month
      period ended September 30, 2007. During the nine-month period ended September
      30, 2008 we recorded interest expense of $14,300 relating to the interest swap
      agreement we entered into with our senior lender.


For the Nine Months EndedSeptember 30, 2008
              
              September
                  30, 2007Interest
                  expense, net
              
              $
              657,790
              
              $
              798,738Accretion
                  of discount on notes payable
              
              
              124,491
              
              
              124,489Total
                  Interest expense, net
              
              $
              782,281
              
              $
              923,227




***Loss
      on Sale or Disposal of Assets***





During
      the nine-month period ended September 30, 2007, we recorded a loss on disposal
      of certain ATM assets of $22,517.





***Income
      from Continuing Operations Before Provision for
      Tax***





We
      had
      net income from continuing operations before taxes of $839,270 for the nine
      months ended September 30, 2008 as compared to net income from continuing
      operations before taxes of $193,328 for the nine-month period ended September
      30, 2007.




28





***Income
      Taxes***





We
      incurred no tax expense in either of the respective periods ending September
      30,
      2008 and September 30, 2007. At December 31, 2007, the Company has a net
      operating loss carryforward of approximately $23.0 million available. The net
      operating loss carryforward is due to expire during fiscal years 2008-2027.





***Income
      from Discontinued Operations***





We
      had
      income from discontinued operations of $175,000 for the nine months ended
      September 30, 2007 resulting from the received amounts pertaining to the
      escrowed portion of the Company’s Cash Axcess Corp sale.





***Net
      Income***





We
      had
      net income of $839,270 for the nine months ended September 30, 2008 as compared
      to net income of $368,328 for the nine-month period ended September 30,
      2007.





***EBITDA***





EBITDA
      (a
      non-GAAP measure) is defined as earnings before net interest, taxes,
      depreciation and amortization. EBITDA has some inherent limitations in measuring
      operating performance due to the exclusion of certain financial elements such
      as
      depreciation and is not necessarily comparable to other similarly titled
      captions of other companies due to potential inconsistencies in the method
      of
      calculation. Furthermore, EBITDA is not intended to be a substitute for cash
      flows from operating activities, as a measure of liquidity, or an alternative
      to
      net income in determining our operating performance in accordance with
      accounting principles generally accepted in the United States of America. Our
      use of EBITDA should be considered within the following context:





•
We
      acknowledge that our depreciable assets are necessary to earn revenue based
      on
      our current business.





•
Our
      use
      of EBITDA as a measure of operating performance is not based on our belief
      about
      the reasonableness of excluding depreciation when measuring financial
      performance.





•
Our
      use
      of EBITDA is supported by the importance of EBITDA to the following key
      stakeholders:





• Analysts —
who
      estimate our projected EBITDA and other EBITDA-based metrics in their
      independently developed financial models for investors;





• Creditors —
who
      evaluate our operating performance based on compliance with certain EBITDA-based
      debt covenants;





• Investment
      Bankers —
who
      use
      EBITDA and other EBITDA-based metrics in their written evaluations and
      comparisons of companies within our industry; and





• Board
      of Directors and Executive Management —
who
      use
      EBITDA as an essential metric for evaluating management performance relative
      to
      our operating budget and bank covenant compliance, as well as our ability to
      service debt and raise capital for growth opportunities which are a critical
      component to our strategy.




29


***The
      following table sets forth a reconciliation of net income from continuing
      operations to EBITDA from continuing operations for the three months ended
      September 30, 2008 and 2007:***


For the Three Months EndedSeptember 30, 2008
              
              September
                  30, 2007Net
                  income from continuing operations
              
              $
              276,825
              
              $
              96,202Interest
                  expense, net
              
              
              255,900
              
              
              314,787Depreciation
                  expense
              
              
              329,061
              
              
              390,446Amortization
                  of intangible merchant contracts
              
              
              193,173
              
              
              186,369EBITDA
                  from continuing operations
              
              $
              1,054,959
              
              $
              987,804


Our
      EBITDA from continuing operations increased to $1,054,959 for the third quarter
      of fiscal 2008 from $987,804 for the third quarter of fiscal 2007. EBITDA from
      continuing operations as a percentage of revenues increased to 18.7% for the
      third quarter of fiscal 2008 from 17.9% for the third quarter of fiscal 2007.
      EBITDA from continuing operations increased 6.8% for the third quarter of 2008
      from the third quarter of 2007.





***The
      following table sets forth a reconciliation of net income from continuing
      operations to EBITDA from continuing operations for the nine months ended
      September 30, 2008 and 2007:***


For the Nine Months EndedSeptember 30, 2008
              
              September
                  30, 2007Net
                  income from continuing operations
              
              $
              839,270
              
              $
              193,328Interest
                  expense, net
              
              
              782,281
              
              
              923,227Depreciation
                  expense
              
              
              1,108,318
              
              
              1,143,420Amortization
                  of intangible merchant contracts
              
              
              577,502
              
              
              540,309EBITDA
                  from continuing operations
              
              $
              3,307,371
              
              $
              2,800,284





Our
      EBITDA from continuing operations increased to $3,307,371 for the nine months
      of
      fiscal 2008 from $2,800,284 for the nine months of fiscal 2007. EBITDA from
      continuing operations as a percentage of revenues increased to 19.4% for the
      nine months of fiscal 2008 from 17.1% for the nine months of fiscal 2007. EBITDA
      from continuing operations increased 18.1% for the nine months of 2008 from
      the
      nine months of 2007.





***The
      following table sets forth a reconciliation of net income from continuing
      operations to EBITDA from continuing operations before stock compensation
      expense for the three months ended September 30, 2008 and
      2007:***


For the Three Months EndedSeptember 30, 2008
              
              September
                  30, 2007Net
                  income from continuing operations
              
              $
              276,825
              
              $
              96,202Interest
                  expense, net
              
              
              255,900
              
              
              314,787Depreciation
                  expense
              
              
              329,061
              
              
              390,446Amortization
                  of intangible merchant contracts
              
              
              193,173
              
              
              186,369Stock
                  compensation expense
              
              
              30,540
              
              
              43,851EBITDA
                  from continuing operations before stock compensation
                  expense
              
              $
              1,085,499
              
              $
              1,031,655





Our
      EBITDA from continuing operations before stock compensation expense increased
      to
      $1,085,499 for the third quarter of fiscal 2008 from $1,031,655 for the third
      quarter of fiscal 2007. EBITDA from continuing operations before stock
      compensation expense as a percentage of revenues increased to 19.2% for the
      third quarter of fiscal 2008 from 18.6% for the third quarter of fiscal 2007.
      EBITDA from continuing operations before stock compensation expense increased
      5.2% for the third quarter of 2008 from the third quarter of 2007.




30






***The
      following table sets forth a reconciliation of net income from continuing
      operations to EBITDA from continuing operations before stock compensation
      expense for the nine months ended September 30, 2008 and
      2007:***





For the Nine Months EndedSeptember 30, 2008
            
            September 30, 2007Net
                income from continuing operations
            
            $
            839,270
            
            $
            193,328Interest
                expense, net
            
            
            782,281
            
            
            923,227Depreciation
                expense
            
            
            1,108,318
            
            
            1,143,420Amortization
                of intangible merchant contracts
            
            
            577,502
            
            
            540,309Stock
                compensation expense
            
            
            152,564
            
            
            49,181EBITDA
                from continuing operations before stock compensation
                expense
            
            $
            3,459,935
            
            $
            2,849,465




Our
      EBITDA from continuing operations before stock compensation expense increased
      to
      $3,459,935 for the nine months of fiscal 2008 from $2,849,465 for the nine
      months of fiscal 2007. EBITDA from continuing operations before stock
      compensation expense as a percentage of revenues increased to 20.3% for the
      nine
      months of fiscal 2008 from 17.4% for the nine months of fiscal 2007. EBITDA
      from
      continuing operations before stock compensation expense increased 21.4% for
      the
      nine months of 2008 from the nine months of 2007.





***Seasonality***





In
      our
      ATM operations, we traditionally experience higher transaction volumes per
      machine in the second and third quarters than in the first and fourth quarters.
      The increased volumes in the summer months coincide with increased vacation
      travel in the United States.





***Liquidity
      and Capital Resources***





Our
      primary liquidity and capital resource needs are to finance the costs of our
      operations, to make capital expenditures and to service our debt.





We
      have
      funded our operations and investment activities from cash flow generated by
      operations. Net
      cash
      provided by continuing operating activities
      during the nine-month period ended September 30, 2008 was $2,139,707, compared
      to the net cash provided by continuing operating activities during the
      nine-month period ended September 30, 2007 of $1,835,122. This represented
      a
      16.6% increase year over year.





The
      Company used $1,333,922 for financing activities, mainly paying back senior
      lender notes and capital leases during the nine-month period ended September
      30,
      2008, compared to funds used in financing activities of $1,444,900 for the
      nine-month period ended September 30, 2007.





Net
      cash
      used in investing activities was $218,208 during the nine-month period ended
      September 30, 2008, mainly representing net purchases of property and equipment.
      This compares to net cash used in investing activities of $614,052 for the
      nine-month period ended September 30, 2007, representing net purchases of
      property and equipment offset by escrow proceeds received from sale of
      subsidiary.





Recently,
      the capital and credit markets have become increasingly volatile as a result
      of
      adverse conditions that have caused the failure and near failure of a number
      of
      large financial service companies. If the capital and credit markets continue
      to
      experience volatility and the availability of funds remains limited, it is
      possible that our ability to access the capital and credit markets may be
      limited by these factors at a time when we would like to refinance maturing
      debt. Likewise, if the financial institutions listed below experience similar
      failures, we would need to find other third party sources to fund our vault
      cash
      discussed below.


31





The
      Company does not use its own funds for vault cash, but rather relies upon third
      party sources. The Company in general rents the vault cash from financial
      institutions and pays a negotiated interest rate for the use of the money.
      The
      vault cash is never in the possession of, controlled or directed by the Company
      but rather cycles from the bank to the armored car carrier and to the ATM.
      Each
      day’s withdrawals are settled back to the owner of the vault cash on the next
      business day. Both Nationwide 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:





·
            *Wilmington
                Savings Fund Society (WSFS)*.
                Beginning in September 2004, the Company has an arrangement with
                Wilmington Savings Fund Society (“WSFS”) allowing us to obtain up to
                $20,000,000 in vault cash. The WSFS contract may be terminated by
                WSFS at
                any time upon breach by us and upon the occurrence of certain other
                events. Under this arrangement, we are required to pay a monthly
                service
                fee on the outstanding amount equal to the prime rate of interest,
                plus a
                specified percentage, and must pay monthly "bank" and insurance fees.
                We
                are also required to maintain insurance on the vault cash. The contract
                currently in place with WSFS expires on October 31, 2009 with a one
                year
                auto renewal period unless one party gives 60 days notice of their
                intention not to renew. As of September 30, 2008, the Company had
                48 ATMs
                funded by WSFS with a vault cash outstanding balance of approximately
                $722,500 in connection with this arrangement.





·
            *First
                Charter*.
                On September 1, 2004, we entered into an arrangement with First Charter
                National Bank (“First Charter”) allowing us to obtain up to $3,000,000 in
                vault cash. We had since increased the line as of December 31, 2006
                to
                $6,000,000. In September 2008, First Charter was acquired by Fifth
                Third
                Bancorp (“Fifth Third”). Fifth Third’s strategy relating to providing ATM
                vault cash is different than First Charter’s. As a result, Fifth Third
                elected to terminate the contract early. As of September 30, 2008,
                the
                Company had no ATMs funded by Fifth
                Third.




·
            *Elan
                (formerly GenPass Technologies)*.
                On November 24, 2006, we signed a Cash Provisioning Agreement with
                Elan
                allowing us to obtain up to $30,000,000 in vault cash. The Elan contract
                may be terminated by Elan at any time upon breach by us and upon
                the
                occurrence of certain other events. Under this arrangement, we are
                required to pay a monthly service fee on the average terminal balance
                plus
                a load factor. In addition, we are required to maintain insurance
                on the
                vault cash. The contract currently in place with Elan expires on
                August
                11, 2009 with a one year auto renewal period unless one party gives
                180
                days notice of their intention not to renew. As of September 30,
                2008, the
                Company had 946 ATMs funded by Elan with a vault cash outstanding
                balance
                of about approximately $18,933,900.





·
            *Various
                Branded Cash Partners*.
                Nationwide 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 is that this reduces the costs associated with vault cash,
                cash
                replenishment and first line maintenance by approximately 50%. Another
                advantage is that with a branded ATM, transactions volumes traditionally
                increase more than at non-branded ATMs. As of September 30, 2008,
                Nationwide had 53 branded financial partners, which funded 534 ATMs.





***Working
      Capital***





As
      of
      September 30, 2008, we had current assets of $2,601,095 and current liabilities
      of $4,100,309, which results in a negative working capital of $1,499,214 as
      compared to current assets of $2,226,047 and current liabilities of $5,519,086
      resulting in a negative working capital of $3,293,039 as of September 30, 2007.
      The ratio of current assets to current liabilities increased to 0.63 at
      September 30, 2008 from 0.40 at September 30, 2007. Despite the negative working
      capital, we believe that if we achieve our business plan, we will have
      sufficient working capital to meet our remaining and current obligations during
      2008. As of September 30, 2008, we were in compliance with all applicable
      covenants and ratios under our Fourth Amended and Restated Loan Agreement with
      Wachovia Bank.


32





***Impact
      of Inflation and Changing Prices***





We
      were
      not impacted by inflation during the past two fiscal years in any material
      respect. Interest rate decreases have decreased the rental cost of our vault
      cash. As the interest rates decrease and vault cash costs decrease, this will
      have a more favorable impact on the Company’s income.





**ITEM
      3. Quantitative and Qualitative Disclosure About Market Risk**





Not
      applicable.





**ITEM
      4. Controls and Procedures**





Not
      applicable.





**ITEM
      4T. Controls and Procedures**





***Evaluation
      of Disclosure Controls and Procedures***




The
      Company has established disclosure controls and procedures to ensure that
      material information relating to the Company, including its consolidated
      subsidiaries, is made known on a timely basis to the officers who certify its
      financial reports and to other members of senior management and the Company’s
      board of directors. Based on their evaluation as of September 30, 2008, the
      principal executive officer and principal financial officer of the Company
      have
      concluded that the Company’s disclosure controls and procedures (as defined in
      Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are
      effective to ensure that the information required to be disclosed by the Company
      in the reports that it files or submits under the Securities Exchange Act of
      1934 is recorded, processed, summarized and reported within the time periods
      specified in SEC rules and forms.





***Changes
      in Internal Control Over Financial Reporting***





There
      were no changes to internal controls over financial reporting that occurred
      during the three months ended September 30, 2008, that have materially affected,
      or are reasonably likely to materially impact our internal controls over
      financial reporting.





**PART
      II - OTHER INFORMATION**





**ITEM
      1. Legal Proceedings**





Information
      regarding legal proceedings is contained in Note #8 (“Litigation and Claims”) to
      the Condensed Consolidated Financial Statements contained in this report and
      is
      incorporated herein by reference.





**ITEM
      1A. Risk Factors**





There
      were no material changes from the risk factors previously disclosed in Risk
      Factors within “Item 1. Description of Business” included in our Annual Report
      on Form 10-KSB for the year ended December 31, 2007.





**ITEM
      2. Unregistered Sale of Equity Securities and Use of
      Proceeds**





None.


33





**ITEM
      3. Defaults upon Senior Securities**





None.





**ITEM
      4. Submission of Matters to a Vote of Security Holders**





None.





**ITEM
      5. Other Information**





None.





**ITEM
      6. Exhibits**





***Exhibit
      Description***





3.1
            
            Articles
                of Incorporation - Restated and Amended May 30, 2001(Incorporated
                by
                reference to form 10KSB filed with the SEC on March 31,
                2003)3.2
            
            By-Laws
                of Global Axcess Corp - As Amended (Incorporated by reference to
                form
                10KSB filed with the SEC on March 31, 2003)3.3
            
            Amendment
                to the Articles of Incorporation (Incorporated by reference to Form
                8-K
                filed with the SEC on May 3, 2005)4.1
            
            Securities
                Purchase Agreement dated March 11, 2005 of Global Axcess Corp
                (Incorporated by reference to Form 8-K filed with the SEC on April
                4,
                2005)4.2
            
            Form
                of Common Stock Purchase Warrant (Incorporated by reference to Form
                8-K
                filed with the SEC on April 4, 2005)4.3
            
            Securities
                Purchase Agreement dated October 27, 2005 entered by and between
                the
                Company and the Investor (Incorporated by reference to Form 8-K filed
                with
                the SEC on November 1, 2005)4.4
            
            9%
                Senior Subordinated Secured Convertible Note dated October 27, 2005
                issued
                by the Company to the Investor (Incorporated by reference to Form
                8-K
                filed with the SEC on November 1, 2005)4.5
            
            Common
                Stock Purchase Warrant dated October 27, 2005 issued by the Company
                to the
                Investor (Incorporated by reference to Form 8-K filed with the SEC
                on
                November 1, 2005)4.6
            
            Registration
                Rights Agreement dated October 27, 2005 entered by and between the
                Company
                and the Investor (Incorporated by reference to Form 8-K filed with
                the SEC
                on November 1, 2005)4.7
            
            Subsidiary
                Guarantee dated October 27, 2005 (Incorporated by reference to Form
                8-K
                filed with the SEC on November 1, 2005)4.8
            
            Subordination
                Agreement dated October 27, 2005 entered by and between the Company,
                the
                Investor and Wachovia (Incorporated by reference to Form 8-K filed
                with
                the SEC on November 1, 2005)




34





4.9
            
            Security
                Agreement dated October 27, 2005 entered by and between the Company
                and
                the Investor (Incorporated by reference to Form 8-K filed with the
                SEC on
                November 1, 2005)4.10
            
            Third
                Amended and Restated Loan Agreement dated October 27, 2005 entered
                by and
                between the Company and Wachovia (Incorporated by reference to Form
                8-K
                filed with the SEC on November 1, 2005)4.11
            
            Promissory
                Note dated October 27, 2005 issued by the Company to Wachovia
                (Incorporated by reference to Form 8-K filed with the SEC on November
                1,
                2005)4.12
            
            Form
                of Subscription Agreement dated November 8, 2005 (Incorporated by
                reference to Form 8-K filed with the SEC on November 15,
                2005)4.13
            
            Form
                of Common Stock Purchase Warrant dated November 8, 2005 (Incorporated
                by
                reference to Form 8-K filed with the SEC on November 15,
                2005)4.14
            
            Consolidated
                Renewal Promissory Note dated August 28, 2007 issued by Company to
                Wachovia (Incorporated to form 8-K filed with the SEC on October
                1,
                2007)4.15
            
            Fourth
                Amended and Restated Loan Agreement entered by and between the Company
                and
                Wachovia (incorporated by reference to Form 8-K filed October 1,
                2007).10.1
            
            Employment
                Agreement dated July 1, 2008 by and between the Company and George
                McQuain
                (incorporated by reference to Form 8-K filed July 2,
                2008).10.2
            
            Settlement
                Agreement, effective as of August 12, 2008, between the Company and
                CAMOFI
                Master LDC (incorporated by reference to Form 8-K filed August 18,
                2008).31.1
            
            Certification
                of the Chief Executive Officer of Global Axcess Corp Certification
                of the
                Chief Financial Officer of Global Axcess Corp31.2
            
            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 Corppursuant
                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.


35





**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, as of November
      4,
      2008 the Registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized.





GLOBAL
                AXCESS CORPBy:
            /s/
                George A. McQuainGeorge
                A. McQuainPresident
                and Chief Executive Officer





Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the Registrant and in the
      capacities indicated on the 4 th day of
      November, 2008.





Signature
            
            Title*/S/
                Walter A. Howell*Walter
                A. Howell
            
            Director*/S/
                Lock Ireland*Lock
                Ireland
            
            Vice
                Chairman and Director*/S/
                Robert Landis*Robert
                Landis
            
            Director*/S/
                Michael J. Loiacono*Michael
                J. Loiacono
            
            Chief
                Financial Officer and Chief Accounting Officer*/S/
                Joseph Loughry*Joseph
                Loughry
            
            Chairman
                and Director*/s/George
                A. McQuain*George
                A. McQuain
            
            President,
                CEO and Director*/S/
                Alan Rossiter*Alan
                Rossiter
            
            Director




36