UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549











FORM
      10-QSB





(MARK
      ONE)





x
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
              EXCHANGE ACT OF 1934 for the quarterly
                period
                ended March 31, 2007




OR





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




000-17874


(Commission
      file number)











GLOBAL
      AXCESS CORP


(Name
      of
      Small Business Issuer in Its Charter)





NEVADA
            88-0199674(State
                or other jurisdiction of
            (I.R.S.
                Employerincorporation
                or organization)
            Identification
                No.)





7800
                BELFORT PARKWAY, Suite 165
              JACKSONVILLE,
                FLORIDA
            
            32256(Address
                of principal executive offices)
            
            (Zip
                Code)





(904)
      280-3950


(Issuer's
      Telephone Number, Including Area Code)





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




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









Check
      whether the Issuer: (1) has filed all reports required to be filed by Section
      13
      or 15(d) of the Securities Exchange Act of 1934 during the preceding 9 months
      (or for such shorter period that the Issuer was required to file such reports),
      and (2) has been subject to such filing requirements for the past 90 days.
      Yes
x No o





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


Yes
o
      No x





As
      of May
      9, 2007, the Issuer had 20,973,924 shares outstanding of the Common Stock
      ($0.001 par value) and no shares outstanding of the Preferred Stock ($0.001
      par value).





Transitional
      Small Business Disclosure Format (Check One): Yes o No x










TABLE
        OF
        CONTENTS
 
 Page
                  No.PART
                  I
              
              FINANCIAL
                  INFORMATIONItem
                  1.
              
              Financial
                  Statements (unaudited)
              
              4Item
                  2.
              
              Management's
                  Discussion and Analysis or Plan of Operation
              
              21Item
                  3.
              
              Controls
                  and Procedures
              
              27Item
                  3A(T).
              
              Controls
                  and Procedures
              
              29PART
                  II
              OTHER
                  INFORMATIONItem
                  1.
              
              Legal
                  Proceedings
              
              29Item
                  1A.
              
              Risk
                  Factors
              
              32Item
                  2.
              
              Unregistered
                  Sale of Equity Securities and Use of Proceeds
              
              32Item
                  3.
              
              Defaults
                  Upon Senior Securities
              
              32Item
                  4.
              
              Submission
                  of Matters to a Vote of Security Holders
              
              32Item
                  5.
              
              Other
                  Information
              
              32Item
                  6.
              
              Exhibits
              
              32SIGNATURES
              
              
              35




Forward-Looking
        Statements
 
 In
        addition to historical information, this Quarterly Report on Form 10-QSB
        contains forward-looking statements that involve risks and uncertainties
        that
        could cause actual results to differ materially. Factors that might cause
        or
        contribute to such differences include, but are not limited to, those discussed
        in the section entitled "Management's Discussion and Analysis
        or Plan of Operation." You should carefully review the risks described in
        other
        documents we file from time to time with the Securities and Exchange Commission,
        including the Quarterly Reports on Form 10-QSB that have been or are to be
        filed
        in 2007. When used in this report, the words "expects," "anticipates,"
        "intends," "plans," "believes," "seeks," "targets," "estimates," and similar
        expressions are generally intended to identify forward-looking statements.
        You
        should not place undue reliance on the forward-looking statements, which
        speak
        only as of the date of this Quarterly Report on Form 10-QSB. We undertake
        no
        obligation to publicly release any revisions to the forward-looking statements
        or reflect events or circumstances after the date of this document.
 
 Estimates
        of future financial results are inherently unreliable.
 
 From
        time
        to time, representatives of Global Axcess Corp (the Company) may make public
        predictions or forecasts regarding the Company's future results, including
        estimates regarding future revenues, expense levels, earnings or earnings
        from
        operations. Any forecast regarding the Company's future performance reflects
        various assumptions. These assumptions are subject to significant uncertainties,
        and, as a matter of course, many of them will prove to be incorrect. Further,
        the achievement of any forecast depends on numerous factors (including those
        described in this discussion), many of which are beyond the Company's control.
        As a result, there can be no assurance that the Company's performance will
        be
        consistent with any management forecasts or that the variation from such
        forecasts will not be material and adverse. Investors are cautioned not to
        base
        their entire analysis of the Company's business and prospects upon isolated
        predictions, but instead are encouraged to utilize the entire available mix
        of
        historical and forward-looking information made available by the Company,
        and
        other information affecting the Company and its products, when evaluating
        the
        Company's prospective results of operations.


2




In
        addition, representatives of the Company may occasionally comment publicly
        on
        the perceived reasonableness of published reports by independent analysts
        regarding the Company's projected future performance. Such comments should
        not
        be interpreted as an endorsement or adoption of any given estimate or range
        of
        estimates or the assumptions and methodologies upon which such estimates
        are
        based. Undue reliance should not be placed on any comments regarding the
        conformity, or lack thereof, of any independent estimates with the Company's
        own
        present expectations regarding its future results of operations. The
        methodologies employed by the Company in arriving at its own internal
        projections and the approaches taken by independent analysts in making their
        estimates are likely different in many significant respects. Although the
        Company may presently perceive a given estimate to be reasonable, changes
        in the
        Company's business, market conditions or the general economic climate may
        have
        varying effects on the results obtained through the use of differing analyses
        and assumptions. The Company expressly disclaims any continuing responsibility
        to advise analysts or the public markets of its view regarding the current
        accuracy of the published estimates of outside analysts. Persons relying
        on such
        estimates should pursue their own independent investigation and analysis
        of
        their accuracy and the reasonableness of the assumptions on which they are
        based.
   3




**PART
        I - FINANCIAL INFORMATION**
 
 **Item
        1. Financial Statements (unaudited)**
 
 GLOBAL
        AXCESS CORP AND SUBSIDIARIES
 CONDENSED
        CONSOLIDATED BALANCE SHEET
 March
        31,
        2007
 (Unaudited)
 ASSETSCurrent
                    assetsCash
                    and cash equivalents
                
                $
                633,157Automated
                    teller machine vault cash
                
                
                26,960Accounts
                    receivable, net of allowance for doubtful accounts of
                    $104,535
                
                
                1,261,144Note
                    receivable - current
                
                
                17,709Inventory
                
                
                438,120Prepaid
                    expenses and other current assets
                
                
                185,532Total
                    current assets
                
                
                2,562,622Fixed
                    assets, net
                
                
                6,006,817Other
                    assetsMerchant
                    contracts, net
                
                
                12,358,098Intangible
                    assets, net
                
                
                4,201,387Deferred
                    tax asset - non-current
                
                
                339,800Other
                    assets
                
                
                19,951Total
                    assets
                
                $
                25,488,675LIABILITIES
                    AND STOCKHOLDERS' EQUITYCurrent
                    liabilitiesAccounts
                    payable and accrued liabilities
                
                $
                4,079,896Notes
                    payable - related parties - current portion, net
                
                
                10,459Note
                    payable
                
                
                50,000Senior
                    lenders' notes payable - current portion, net
                
                
                600,000Capital
                    lease obligations - current portion
                
                
                1,172,749Total
                    current liabilities
                
                
                5,913,104Long-term
                    liabilitiesNotes
                    payable - related parties - long-term portion, net
                
                
                1,332,897Senior
                    lenders' notes payable - long-term portion, net
                
                
                4,991,455Capital
                    lease obligations - long-term portion
                
                
                1,521,459Total
                    liabilities
                
                
                13,758,915Stockholders'
                    equityPreferred
                    stock; $0.001 par value; 5,000,000 sharesauthorized,
                    no shares issued and outstanding
                
                
                -Common
                    stock; $0.001 par value; 45,000,000 sharesauthorized,
                    21,021,786 shares issued and outstanding
                
                
                21,022Additional
                    paid-in capital
                
                
                22,366,403Accumulated
                    deficit
                
                
                (10,657,665
                )Total
                    stockholders' equity
                
                
                11,729,760Total
                    liabilities and stockholders' equity
                
                $
                25,488,675
  See
        Accompanying Notes to Condensed Consolidated Financial
        Statements
   4




GLOBAL
        AXCESS CORP AND SUBSIDIARIES
 CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 For
                      the Three Months EndedMarch
                      31, 2007
                  
                  March
                      31, 2006Revenues
                  
                  $
                  5,270,990
                  
                  $
                  5,196,737Cost
                      of revenues
                  
                  
                  3,094,674
                  
                  
                  2,949,129Gross
                      profit
                  
                  
                  2,176,316
                  
                  
                  2,247,608Operating
                      expensesDepreciation
                      and amortization
                  
                  
                  548,141
                  
                  
                  604,582Selling,
                      general and administrative
                  
                  
                  1,385,285
                  
                  
                  1,405,050Impairment
                      of notes receivable
                  
                  
                  -
                  
                  
                  288,226Other
                      expense
                  
                  
                  -
                  
                  
                  410,000Total
                      operating expenses
                  
                  
                  1,933,426
                  
                  
                  2,707,858Operating
                      income (loss) from continuing operationsbefore
                      items shown below
                  
                  
                  242,890
                  
                  
                  (460,250
                  )Interest
                      expense, net
                  
                  
                  (317,531
                  )
                  
                  (331,063
                  )Gain
                      on sale of assets
                  
                  
                  860
                  
                  
                  15,999Loss
                        from continuing operations before provision forincome
                        taxes
                  
                  
                  (73,781
                  )
                  
                  (775,314
                  )Loss
                      from continuing operations
                  
                  $
                  (73,781
                  )
                  $
                  (775,314
                  )Income
                      (loss) from discontinued operations, net of tax
                  
                  $
                  175,000
                  
                  $
                  (102,601
                  )Net
                      Income (loss)
                  
                  $
                  101,219
                  
                  $
                  (877,915
                  )Income
                      (loss) per common share - basic:Income
                      (loss) from continuing operations
                  
                  $
                  (0.00
                  )
                  $
                  (0.04
                  )Income
                      (loss) from discontinued operations
                  
                  $
                  0.01
                  
                  $
                  (0.00
                  )Net
                      Income (loss) per share
                  
                  $
                  0.01
                  
                  $
                  (0.04
                  )Income
                      (loss) per common share - diluted:Income
                      (loss) from continuing operations
                  
                  $
                  (0.00
                  )
                  $
                  (0.04
                  )Income
                      (loss) from discontinued operations
                  
                  $
                  0.01
                  
                  $
                  (0.00
                  )Net
                      Income (loss) per share
                  
                  $
                  0.01
                  
                  $
                  (0.04
                  )Weighted
                      average common shares outstanding:Basic
                  
                  
                  21,021,786
                  
                  
                  20,971,336Diluted
                  
                  
                  21,021,786
                  
                  
                  20,971,336




See
      Accompanying Notes to Condensed Consolidated Financial Statements




5




GLOBAL
        AXCESS CORP AND SUBSIDIARIES
 CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 For
                    the Three Months EndedMarch
                    31, 2007
                
                March
                    31, 2006Cash
                    flows from operating activities:Loss
                    from continuing operations
                
                $
                (73,781
                )
                $
                (775,314
                )Adjustments
                    to reconcile net loss from continuing operationsto
                    net cash provided by continuing operating activities:Stock
                    based compensation
                
                
                -
                
                
                13,724Depreciation
                    and amortization
                
                
                548,141
                
                
                604,582Allowance
                    for doubtful accounts
                
                
                (9,289
                )
                
                -Accretion
                    of discount on notes payable
                
                
                41,497
                
                
                37,600Impairment
                    of notes receivable
                
                
                -
                
                
                288,226Gain
                    on sale of assets
                
                
                (860
                )
                
                -Changes
                    in operating assets and liabilities:Change
                    in automated teller machine vault cash
                
                
                (740
                )
                
                144,474Change
                    in accounts receivable
                
                
                (62,975
                )
                
                (28,590
                )Change
                    in other receivable
                
                
                15
                
                
                -Change
                    in inventory
                
                
                (37,642
                )
                
                (49,549
                )Change
                    in prepaid expenses and other current assets
                
                
                49,785
                
                
                (189,658
                )Change
                    in other assets
                
                
                (5,195
                )
                
                (15
                )Change
                    in accounts payable and accrued liabilities
                
                
                (111,190
                )
                
                600,442Change
                    in automated teller machine vault cash payable
                
                
                (26,220
                )
                
                (144,474
                )Net
                    cash provided by continuing operating activitities
                
                
                311,546
                
                
                501,448Discontinued
                    operationsNet
                    income (loss)
                
                
                175,000
                
                
                (102,601
                )Adjustments
                    to reconcile loss to net cash used indiscontinued
                    operations:Change
                    in deferred gain on sale of subsidiary
                
                
                (175,000
                )
                
                -Depreciation
                
                
                -
                
                
                19,814Change
                    in accounts receivable
                
                
                -
                
                
                (1,470
                )Change
                    in accounts payable and accrued liabilities
                
                
                -
                
                
                (10,712
                )Change
                    in inventory, prepaid expenses and other current assets
                
                
                -
                
                
                13,975Net
                    cash used in discontinued operating activities
                
                
                -
                
                
                (80,994
                )Net
                    cash provided by continuing and discontinued operating
                    activities
                
                
                311,546
                
                
                420,454Cash
                    flows from investing activities:Proceeds
                    from other receivable related to sale of subsidiary
                
                
                175,000
                
                
                -Costs
                    of acquiring merchant contracts
                
                
                (5,325
                )
                
                -Purchase
                    of property and equipment
                
                
                (80,333
                )
                
                (174,255
                )Net
                    cash provided by (used in) investing activities for continuing
                    operations
                
                
                89,342
                
                
                (174,255
                )Net
                    cash used in investing activities for discontinued
                    operations
                
                
                -
                
                
                (44,170
                )Net
                    cash provided by (used in) investing activities
                
                
                89,342
                
                
                (218,425
                )Cash
                    flows from financing activities:Proceeds
                    from issuance of common stock
                
                
                -
                
                
                20,450Principal
                    payments on senior lenders' notes payable
                
                
                (208,334
                )
                
                (891,666
                )Principal
                    payments on notes payable
                
                
                -
                
                
                (27,703
                )Principal
                    payments on notes payable - related parties
                
                
                (4,422
                )
                
                (3,948
                )Principal
                    payments on capital lease obligations
                
                
                (308,819
                )
                
                (250,642
                )Net
                    cash used in financing activities
                
                
                (521,575
                )
                
                (1,153,509
                )Decrease
                    in cash
                
                
                (120,687
                )
                
                (951,480
                )Cash,
                    beginning of period
                
                
                753,844
                
                
                2,358,119Cash,
                    end of the period
                
                $
                633,157
                
                $
                1,406,639Cash
                    paid for interest
                
                $
                247,100
                
                $
                293,463




See
        Accompanying Notes to Condensed Consolidated Financial Statements
  6




Supplemental
        schedule of non-cash investing and financing activities:
  For
                    the Three Months EndedMarch
                    31, 2007
                
                March
                    31, 2006Investing
                    activities:Purchase
                    of assets under capital lease obligations
                
                $
                89,394
                
                $
                612,661Total
                    non-cash investing activities
                
                $
                89,394
                
                $
                612,661Financing
                    activitiesStock
                    issued for compensation
                
                
                -
                
                
                13,724Discount
                    of notes payable
                
                
                41,497
                
                
                37,600Total
                    non-cash financing activities
                
                $
                41,497
                
                $
                51,324




See
        Accompanying Notes to Condensed Consolidated Financial Statements
  7


GLOBAL
        AXCESS CORP AND SUBSIDIARIES
 NOTES
        TO
        CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 AS
        OF
        March 31, 2007
 (Unaudited)
 
 **1.          
          BASIS OF PRESENTATION**
 
 The
        accompanying unaudited condensed consolidated financial statements have been
        prepared in accordance with Securities and Exchange Commission requirements
        for
        interim financial statements. Therefore, they do not include all of the
        information and footnotes required by accounting principles generally accepted
        in the United States of America for complete financial statements. These
        condensed consolidated financial statements should be read in conjunction
        with
        the Form 10-KSB for the year ended December 31, 2006 of Global Axcess Corp
        and
        subsidiaries ("the Company").
 
 The
        condensed consolidated financial statements present the condensed consolidated
        balance sheet, statements of operations, and cash flows of Global Axcess
        Corp
        and its subsidiaries. The condensed consolidated financial statements have
        been
        prepared in accordance with accounting principles 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 necessary to present fairly the financial position
        as of March 31, 2007 and the results of operations and cash flows presented
        herein have been included in the condensed consolidated financial statements.
        Interim results are not necessarily indicative of results of operations for
        the
        full year.
 
 All
        adjustments are of normal recurring nature with the exception of:
 
 ·
              $175,000
                  gain on sale of assets (see Note 3)
  **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.
 
 ***Significant
        Accounting Policies***
 
 The
        preparation of financial statements and related disclosures in conformity
        with
        accounting principles generally accepted in the United States of America
        requires management to make judgments, assumptions and estimates that affect
        the
        amounts reported in the Company’s condensed consolidated financial statements
        and accompanying notes. The Company bases its estimates and judgments on
        historical experience and on various other assumptions that it believes are
        reasonable under the circumstances. However, future events are subject to
        change, and the best estimates and judgments routinely require adjustment.
        The
        amounts of assets and liabilities reported in its condensed consolidated
        balance
        sheet, and the amounts of revenues and expenses reported for each of its
        fiscal
        periods, are affected by estimates and assumptions which are used for, but
        not
        limited to, the accounting for allowance for doubtful accounts, goodwill
        and
        intangible asset impairments, restructurings, inventory and income taxes.
        Actual
        results could differ from these estimates. The following accounting policies
        are
        significantly affected by judgments, assumptions and estimates used in the
        preparation of the Company’s consolidated financial statements.
 
 8
  ***Cash
        Equivalents***
 
 The
        Company considers all highly-liquid investments with a maturity of three
        months
        or less when purchased to be cash equivalents.
  ***Principles
        of Consolidation***
 
 The
        condensed consolidated financial statements include the accounts of Global
        Axcess Corp and its subsidiaries. The Company has the following subsidiaries:
        Nationwide Money Services, Inc., EFT Integration, Inc. (EFTI) and Cash Axcess
        Corporation (Proprietary) Limited (see Note 3 referring to subsidiaries included
        as discontinued operations). All significant intercompany transactions and
        accounts have been eliminated in consolidation.
  ***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.
 
 ***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 upgrade ATMs to become Triple DES compliant.
                  Parts relating to upgrading ATMs to become Triple DES compliant
                  are
                  recorded to fixed assets when the part is placed into service,
                  if the ATM
                  is Company owned. Parts relating to upgrading ATMs to become Triple
                  DES
                  compliant are recorded to Merchant Contracts when the part is placed
                  into
                  service, if the ATM is merchant owned and the merchant signs a
                  term
                  extension to an existing contract. The cost of the part will subsequently
                  be amortized over the life of the contract extension. Parts relating
                  to
                  upgrading ATMs to become Triple DES compliant are expensed when
                  the part
                  is placed into service, if the Company upgrades the merchant owned
                  ATMs at
                  no charge to the merchant. ATMs and parts available for sale are
                  classified as inventory until such time as the machine or part
                  is sold or
                  installed and in service. Once the ATM or part is sold, it is relieved
                  to
                  cost of revenues. At March 31, 2007, the Company's inventory totaled
                  $438,120, of which $325,630 were parts related to upgrade ATMs
                  to become
                  Triple DES compliant.
  9
  ***Accounts
        Receivable and Allowance for Doubtful Accounts***
 
 The
        Company reviews the accounts receivable on a regular basis to determine the
        collectibility of each account. The Company maintains allowances for doubtful
        accounts for estimated losses resulting from the failure of its customers
        to
        make required payments. At each reporting period, the Company evaluates the
        adequacy of the allowance for doubtful accounts and calculates the appropriate
        allowance based on historical experience, credit evaluations, specific customer
        collection issues and the length of time a receivable is past due. The Company
        records an allowance for doubtful accounts for any billed invoice aged past
        60
        days. When the Company deems the receivable to be uncollectible, the Company
        charges the receivable against the allowance for doubtful accounts. As of
        March
        31, 2007, the Company had bad debt reserves totaling $104,535 against gross
        accounts receivable totaling $1,365,679.
  ***Fixed
        Assets***
 
 Fixed
        assets are stated at cost, less accumulated depreciation and amortization.
        Depreciation is calculated principally on the straight-line method over the
        estimated useful lives of the assets, which generally range from 3 to 10
        years.
        Leasehold improvements are amortized on a straight-line basis over the shorter
        of the lease term or the life of the asset. The cost of repairs and maintenance
        is charged to expense as incurred. Expenditures for property improvements
        and
        renewals are capitalized, if they extend the useful life of the related asset.
        Upon the sale or other disposition of a depreciable asset, cost and accumulated
        depreciation are removed from the accounts and any gain or loss is reflected
        in
        gain (loss) on sale of assets.
 
 The
        Company periodically evaluates whether events and circumstances have occurred
        that may warrant revision of the estimated useful life of fixed assets or
        whether the remaining balance of fixed assets should be evaluated for possible
        impairment. The Company uses an estimate of the related undiscounted cash
        flows
        over the remaining life of the fixed assets in measuring their recoverability,
        as well as historical age, to estimate useful economic lives and values.
        The
        Company reviews fixed assets for impairment and if it finds impairment, the
        Company accounts for the impairment in accordance with SFAS No. 144 “Accounting
        for the Impairment or Disposal of Long-Lived Assets.” (see Note 5 referring to
        impairment of long-lived assets).
 
 ***Assets
        Held for Sale***
 
 ATMs
        and
        related software components which are not currently in service are classified
        as
        assets held for sale, until such time either the machine is installed or
        reinstalled and in service, sold, or deemed to be impaired. Once in service,
        each ATM is reclassified as a fixed asset and depreciated using the remaining
        estimated useful life of the machine. Any ATM and related software components
        classified as fixed assets held for sale and then sold would be considered
        a
        disposal group and a gain or loss on the sale would be recorded. During fiscal
        year 2006, the Company reviewed the Assets Held for Sale for impairment and
        found the assets held for sale to be impaired. The Company accounted for
        the
        impairment in accordance with SFAS No. 144 ”Accounting for the Impairment or
        Disposal of Long-lived Assets”. During the fiscal year ended December 31, 2006,
        the Company recorded approximately $1.3 million of impairment of long-lived
        assets, and of that amount, $485,315 related to impairment of assets held
        for
        sale (see Note 5 referring to impairment of long-lived assets).
 
 10
  ***Intangible
        Assets - Goodwill and Merchant Contracts***
 
 In
        June
        2001, the FASB issued SFAS No. 142, “Goodwill and Other Intangible Assets,”
which was adopted by the Company in fiscal 2002. SFAS No. 142 established
        accounting and reporting standards for goodwill and intangible assets resulting
        from business combinations. SFAS No. 142 included provisions discontinuing
        the
        periodic amortization of, and requiring the assessment of the potential
        impairments of goodwill (and intangible assets deemed to have indefinite
        lives).
        As SFAS No. 142 replaced the measurement guidelines for goodwill impairment,
        goodwill not considered impaired under previous accounting literature may
        be
        considered impaired under SFAS No. 142. SFAS No. 142 also required that the
        Company complete a two-step goodwill impairment test. The first step compares
        the fair value of each reporting unit to its carrying amount, including
        goodwill. If the fair value of a reporting unit exceeded its carrying amount,
        goodwill is not considered to be impaired and the second step is not required.
        SFAS No. 142 required completion of this first step within the first six
        months
        of initial adoption and annually thereafter. If the carrying amount of a
        reporting unit exceeded its fair value, the second step is performed to measure
        the amount of impairment loss. The second step compared the implied fair
        value
        of goodwill to the carrying value of a reporting unit's goodwill. The implied
        fair value of goodwill is determined in a manner similar to accounting for
        a
        business combination with the allocation of the assessed fair value determined
        in the first step to the assets and liabilities of the reporting unit. The
        excess of the fair value of the reporting unit over the amounts assigned
        to the
        assets and liabilities is the implied fair value of goodwill. This allocation
        process is only performed for purposes of evaluating goodwill impairment
        and
        does not result in an entry to adjust the value of any assets or liabilities.
        An
        impairment loss is recognized for any excess in the carrying value of goodwill
        over the implied fair value of goodwill.
 
 Intangible
        assets with finite lives and merchant contracts are stated at cost, net of
        accumulated amortization, and are subject to impairment testing under certain
        circumstances in accordance with SFAS No. 144 and other applicable
        pronouncements. These assets are amortized on the straight-line method over
        their estimated useful lives or period of expected benefit. These assets
        are
        subject to periodic impairment testing in accordance with SFAS No.
        142.
 
 The
        Company’s merchant contracts are made up of contracts with automatic renewable
        lives. The Company has determined after review of its contracts that the
        economic life of the contracts is extended and estimated over 21 years (or
        3
        times renewal) based on historical and expected useful lives of similar assets.
        The Company amortizes the merchant contracts over their estimated useful
        lives
        of 21 years. The Company has adopted SFAS No. 142 to reflect the fair value
        of
        the merchant contracts, and uses a two step valuation process to determine
        if
        there has been any impairment on the value of the merchant contract assets.
        The
        first step is to periodically assess the remaining contract lives, including
        expected renewals. If the periodic assessment results in a determination
        that
        the economic lives of the merchant contracts are less than 21 years, the
        Company
        adjusts the remaining amortization lives of the merchant contracts. The second
        step is to compare the estimated future undiscounted cash flows of each
        reporting unit to the carrying amount of the merchant contracts, thus testing
        the impairment of the value of the contracts. An impairment loss is recognized
        for any excess in the carrying value of merchant contracts over the assessed
        fair value of merchant contracts. To date, the Company’s testing has indicated
        that there is no impairment of its goodwill and merchant contracts.
 
 11
  As
        of
        March 31, 2007 the Company has accumulated amortization totaling $316,350
        against intangible assets totaling $4,517,737.
 
 As
        of
        March 31, 2007 the Company has accumulated amortization totaling $2,054,848
        against merchant contracts totaling $14,412,946.
 
 ***Fair
        Value of Financial Instruments***
  The
        carrying amounts of the Company’s long-term liabilities approximate the
        estimated fair values at March 31, 2007, based upon the Company’s ability to
        acquire similar debt at similar maturities. The carrying values of all other
        financial instruments approximate their fair value, because of the short-term
        maturities of these instruments.
 
 ***Earnings
        per Share***
  In
        calculating basic income (loss) per share, net income (loss) is divided by
        the
        weighted average number of common shares outstanding for the period. Diluted
        income (loss) per share reflects the assumed exercise or conversion of all
        dilutive securities, such as options and warrants. No such exercise or
        conversion is assumed where the effect is anti-dilutive, such as when there
        is a
        net loss from continuing operations. The diluted earnings per share amount
        equals basic earnings per share for the three months ended March 31, 2007
        and
        2006 because the Company had a net loss from continuing operations and the
        impact of the assumed exercise of the stock options and warrants is
        anti-dilutive.
  12
 For
                    the Three Months EndedMarch
                    31, 2007
                
                March
                    31, 2006NumeratorLoss
                    from continuing operations
                
                $
                (73,781
                )
                $
                (775,314
                )Income
                    (loss) from discontinued operations
                
                $
                175,000
                
                $
                (102,601
                )Numerator
                    for diluted income (loss) per shareavailable
                    to common stockholders
                
                $
                101,219
                
                $
                (877,915
                )DenominatorWeighted
                    average shares
                
                
                21,021,786
                
                
                20,971,336Effect
                    of dilutive securities:Employee
                    stock options & warrants
                
                
                -
                
                
                -Denominator
                    for diluted income (loss) per share adjustedweighted
                    shares after assumed exercises
                
                
                21,021,786
                
                
                20,971,336**Income
                    (loss) per common share - basic:**Income
                    (loss) from continuing operations
                
                $
                (0.00
                )
                $
                (0.04
                )Income
                    (loss) from discontinued operations
                
                $
                0.01
                
                $
                (0.00
                )Net
                    Income (loss) per share
                
                $
                0.01
                
                $
                (0.04
                )**Income
                    (loss) per common share - diluted:**Income
                    (loss) from continuing operations
                
                
                (0.00
                )
                
                (0.04
                )Income
                    (loss) from discontinued operations
                
                $
                0.01
                
                $
                (0.00
                )Net
                    Income (loss) per share
                
                $
                0.01
                
                $
                (0.04
                )
  ***Income
        Taxes***
 
 The
        Company accounts for its income taxes in accordance with SFAS No. 109
“Accounting for Income Taxes”, which requires recognition of deferred tax assets
        and liabilities for future tax consequences attributable to differences between
        the financial statement carrying amounts of existing assets and liabilities
        and
        their respective tax basis and tax credit carry-forwards. Deferred tax assets
        and liabilities are measured using enacted tax rates expected to apply to
        taxable income in the years in which those temporary differences are expected
        to
        be recovered or settled. The effect on deferred tax assets and liabilities
        of a
        change in tax rates is recognized in income in the period that includes the
        enactment date.
 
 ***Research
        and Development Costs***
 
 Research
        and development costs are charged to expense when incurred. Costs incurred
        to
        internally develop software, incurred during the research and planning phase
        of
        development, are charged to expense as incurred, and direct costs incurred
        during development, testing and implementation are capitalized as incurred
        over
        the useful life of the software and amortized for an average life of three
        years. During the three-month periods ended March 31, 2007 and 2006, the
        amount
        of research and development costs, which were borne entirely by the Company,
        amounted to $0 and $102,601, respectively.
 
 13
  ***Repairs
        and Maintenance Costs***
 
 Repairs
        and maintenance costs are expensed as incurred. Repairs and maintenance
        pertaining to the Company’s ATMs are recorded in cost of revenues. The Company
        records repairs and maintenance costs relating to general office and backend
        related equipment to general and administrative costs.
 
 ***Stock-based
        Compensation***
 
 Effective
        January 1, 2006, the Company adopted the fair value recognition provisions
        of
        Statement of Financial Accounting Standards ("SFAS") No. 123 (Revised 2004),
        "Share-Based Payment," using the modified-prospective-transition method which
        requires us to recognize compensation expense on a prospective basis. SFAS
        No.
        123(R) requires that all stock based compensation be recognized as an expense
        in
        the financial statements and that such cost be measured at the fair value
        of the
        award. Under this method, in addition to reflecting compensation for new
        share-based awards, expense is also recognized to reflect the remaining service
        period of awards that had been included in pro-forma disclosure in prior
        periods. Prior period financial statements have not been restated. The stock
        based compensation expense is included in SG&A expenses in the consolidated
        statements of operations.
  ***Recent
        Accounting Pronouncements***
 
 In
        September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. SFAS
        No. 157 provides guidance on the definition of fair value, methods to measure
        fair value, and expanded disclosures of fair value. SFAS No. 157 is effective
        as
        of the first interim or annual reporting period that begins after November
        15,
        2007. Accordingly, the Company will adopt SFAS No. 157 in its quarter ending
        March 31, 2008. The Company is currently evaluating the provisions of SFAS
        No.
        157 and has not yet determined the impact, if any, that SFAS No. 157 will
        have
        on its financial statement presentation or disclosures.
  **3.            
        DISCONTINUED OPERATIONS**
  On
        May 2,
        2006, the Company entered into a Shareholder Agreement to sell 50% of Cash
        Axcess Corporation (Proprietary) Limited, in a stock arrangement with Industrial
        Electronic Investments Limited.  Under
        the
        requirements of FASB Interpretation No. 46(R), this transaction constituted
        a
        variable interest for the Company, with the Company being determined as the
        primary beneficiary. During the quarter ended September 30, 2006, the Company
        approved plans to discontinue its South African operation which did not fit
        within management’s strategic plans. On September 30, 2006, the Company
        finalized the sale of the remaining 50% of Cash Axcess Corporation (Proprietary)
        Limited (“CAC”), its Variable Interest Entity. In accordance with FASB Statement
        No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
        the
        Company has classified CAC as discontinued operations and reported their
        operating results within discontinued operations in the accompanying condensed
        consolidated statements of income and statements of cash flow.
 
 14
  The
        Company has not allocated interest to discontinued operations. Operating
        results
        of these discontinued operations were as follows for the three-month period
        ended March 31, 2006:
 Three
                    Months EndedMarch
                    31, 2006Revenues
                
                $
                48,833Cost
                    of revenues
                
                
                19,233Gross
                    Profit
                
                
                29,600Operating
                    ExpensesDepreciation
                    and amortization
                
                
                19,814Selling,
                    general and administrative
                
                
                112,387Total
                    operating expenses
                
                
                132,201Loss
                    from operations
                
                
                (102,601
                )Net
                    loss
                
                $
                (102,601
                )
  As
        part
        of the aforementioned sale of 50% of CAC on September 30, 2006, $175,000
        of the
        sales price was held in an escrow account as security to cover any claims
        made
        in connection with a breach of any of the Company's warranties in the sale
        agreement. The warranty period ended and the Company received the full escrowed
        amount of $175,000 on March 28, 2007. The Company recognized the $175,000
        deferred gain on sale as income from discontinued operations during the
        three-month period ended March 31, 2007.
  **4.            
        NOTES RECEIVABLE**
 
 Notes
        receivable - current consist of the following at March 31,
        2007:
 
 (a)
                  9% promissory note receivable requiring monthly interest payments
                  starting
                  October 1, 2006 and quarterly principal payments starting August
                  1, 2006,
                  maturing November 1, 2010 requiring a balloon payment, fully reserved
                  due
                  to non-payment
              
              $
              0(b)
                  10% promissory note due February 2007, net of reserve of $82,186.
              
              
              17,709$
              17,709
 
 (a)
        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 (see Note #3 "Discontinued Operations”). On August 1, 2006, Electronic
        Payment Systems, LLC (“EPS”), the acquirer, failed to make its required payment
        and was in default of the Stock Purchase Agreement made and entered into
        as of
        September 30, 2005. The Company sent a default notification letter on August
        2,
        2006 and EPS had thirty days to cure the default. EPS has failed to make
        any
        payment to date; therefore the Company determined that it is unlikely that
        the
        purchaser will repay the note. The Company and EPS were in negotiations to
        amend
        the note to $500,000, however no agreement had been reached. Additionally,
        it is
        unlikely that the Company will receive financial information from EPS to
        assist
        in supporting collectibility. In the absence of financial information to
        determine collectibility and only having the value of the stock of EPS as
        security on the repayment of the note, management has determined that it
        is
        likely that the note is fully impaired and increased the reserve by $778,360
        during the year ended December 31, 2006, which together with the previous
        reserve, reduced the carrying value to zero.
 
 15
  (b)
        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 has been amended to extend
        the
        term to February 2007. The amount remaining on the note as of March 31, 2007
        is
        $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
        by
        $39,247 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 has received no payments of interest on this loan and no interest
        income
        has been recognized in the periods presented.
  **5.            
        IMPAIRMENT OF LONG-LIVED ASSETS AND BUSINESS REORGANIZATION
        CHARGES**
  ***Impairment
        of Long-lived assets***
 
 As
        discussed in Note 2 “Description of Business and Summary of Significant
        Accounting Policies”, the Company accounts for the impairment of long-lived
        assets in accordance with SFAS No. 144 ”Impaired Long-Lived Assets and
        Long-Lived Assets to be Disposed of”.
 
 In
        July
        2006, the Company disconnected its processing switch which processed the
        transactions for its subsidiary EFT Integration, Inc. and replaced its switching
        software with a third party vendor. Accordingly, the switching software was
        evaluated for impairment and deemed to be impaired.
 
 Assets
        held for sale, consisting of ATMs and related software, were reevaluated
        for
        impairment. Of the $485,315 total assets held for sale, $125,586 worth of
        ATMs
        were determined to be useful and able to be placed back in service. In
        accordance with SFAS No. 144 ” Accounting for the Impairment or Disposal of
        Long-lived Assets”, these useful assets were to be placed back into service at
        zero book value which is their depreciated value had they not been held for
        sale. Therefore, the full balance of assets held for sale was determined
        to be
        fully impaired.
   16
   Additionally,
        the Company reviewed other ATMs and software for impairment and determined
        that
        some of the Company’s other ATMs and software were impaired. The following
        summarizes the amounts charged to impairment of long-lived assets for fiscal
        year ended December 31, 2006:
 Net
                    Book
                
                Estimated
                    proceeds
                
                ImpairmentLong-lived
                    asset description
                
                Value
                
                from
                    disposition
                
                ChargeSwitching
                    software
                
                $
                610,024
                
                
                -
                
                $
                610,024Assets
                    held for sale
                
                $
                485,315
                
                
                -
                
                $
                485,315ATMs
                    and other software
                
                $
                234,057
                
                
                -
                
                $
                234,057$
                1,329,396
 
 ***Business
        Restructuring Costs***
 
 During
        the quarter ended September 30, 2006, the Company evaluated its business
        plan
        and developed a plan for business reorganization. Included in this
        business-reorganization plan was the decision to sell its South African Variable
        Interest Entity (Under the requirements of FASB Interpretation No. 46(R),
        the
        Company has a variable interest in this entity, with the Company being
        determined as the primary beneficiary), Cash Axcess Corporation (Proprietary)
        Limited (“CAC”) (see Note #3 “Discontinued Operations”); the decision to shut
        down the aforementioned switching platform and migrate to third party vendor
        for
        processing (see above); the decision to reevaluate the plan to reinstall
        assets
        held for sale back into service (see above); and the decision to reevaluate
        other ATMs and software for impairment (see above). Additionally, the Company
        decided to restructure management and to outsource certain employee functions
        to
        third party vendors. As part of this decision to eliminate the positions
        held by
        the two senior officers and other employees, the Company incurred restructuring
        charges during the third quarter of 2006 in the amount of $757,811. As of
        March
        31, 2007, the amount of restructuring charges accrued was $367,503.
 
 **6.            
        COMMITMENTS AND CONTINGENCIES**
 
 We
        lease
        ATMs under capital lease agreements that expire between 2007 and 2011 and
        provide for lease payments at interest rates up to 19.3% per annum. See
        Financial Footnote # 15 to the Consolidated Financial Statements in the Form
        10-KSB Annual Report. Capital leases entered into during the three-month
        period
        ended March 31, 2007 mature in 36 months with rates varying between 9.7%
        and
        11.2%, totaled $89,394.
 
 ***Legal
        proceedings***
 
 In
        March
        2004, the Company received a claim filed by James Collins, a previous employee
        of Global Axcess Corp. The claim was filed in Superior Court of California,
        County of San Diego on March 2, 2004. The claim alleged the following were
        owed
        in connection with the employment agreement: compensation, bonuses and other
        benefits of approximately $316,915; and 90,000 restricted shares and 359,700
        stock options exercisable at $3.75 per share. As of March 31, 2006, the Company
        had accrued a total of $450,000 for the potential legal claim. The claim
        filed
        by James Collins was settled for $450,000 on May 2, 2006 whereby the Company
        made a lump-sum payment of $300,000 on May 22, 2006 and has agreed to pay
        the
        remaining $150,000 in 12 monthly installments of $12,500 commencing July
        1, 2006
        and ending June 30, 2007.
 
 17
  Beginning
        in or around October, 2005, Nationwide Money Services, Inc. (“Nationwide”) has
        filed suit against various merchants located in several states, alleging
        that
        these merchants breached the terms of their ATM processing agreements with
        Nationwide or its successor-in-interest, Progressive Ventures, Inc. Many
        of
        these actions remain pending, while Nationwide has obtained settlement default
        judgments from certain merchants but has yet to receive any settlements.
        The
        Company recognizes revenue on breached contracts when cash is received and
        the
        Company has not recognized any revenue on these breached contracts during
        the
        quarters ended March 31, 2007 and 2006. The Company expresses no opinion
        as to
        the likelihood of success or potential amount of recovery in these
        matters.
 
 On
        or
        about July 26, 2006, Nationwide Money Services, Inc. (“Nationwide”) filed suit
        against ATMs R Us, Inc. (“ATMs R Us”), a party with which Nationwide and its
        successor-in-interest, Progressive Ventures, Inc. contracted for the provision
        of certain maintenance and installation services regarding their ATM network
        and
        affiliated merchants. Nationwide alleges in its complaint claims for breach
        of
        contract, tortious interference with contractual relations, tortious
        interference with business relations, violations of the Georgia Trade Secrets
        Act, punitive damages, and attorneys’ fees and expenses of litigation. ATMs R Us
        failed to answer or otherwise respond to Nationwide’s complaint. Nationwide is
        currently taking steps to perfect a default judgment against ATMs R Us in
        accordance with Georgia law. The Company expresses no opinion as to the
        likelihood of success or potential amount of recovery, and has not recorded
        income during the quarter ended March 31, 2007 relating to this
        matter.
 
 On
        August
        1, 2006, Electronic Payment Systems, LLC (“EPS”), the purchaser of the Company’s
        disposed wholly-owned subsidiary Electronic Payment & Transfer Corporation
        (“EPT”), failed to make its required payment and is in default of the Stock
        Purchase Agreement made and entered into as of September 30, 2005 (See Note
        # 4
“Notes Receivable”). The Company sent a default notification letter on August 2,
        2006 and EPS had thirty days as of the date of the default notification to
        cure
        the default, which it failed to do. The Company has filed suit against EPS
        and
        is seeking repayment of the $1,540,000 original note in full. The carrying
        value
        of this note at March 31, 2007 was zero. The Company expresses no opinion
        as to
        the likelihood of success or potential amount of recovery, and has not recorded
        income during the quarter ended March 31, 2007 relating to this matter.
 
 On
        August
        4, 2006, the Company was served with a demand for arbitration/mediation from
        EFMARK Service Company (“EFMARK”), a provider of maintenance services and a
        provider of cash replenishment services for automated teller machines. EFMARK
        alleged that the Company has failed to compensate EFMARK for services amounting
        to $103,000 and was seeking said amount as well as interest of $32,000. The
        Company believed the demand contained factual inaccuracies and was wholly
        without merit. However, in the spirit of its business relationship with EFMARK,
        the Company settled this claim for $40,000 on October 4, 2006. The Company
        reflected this $40,000 expense and liability in its consolidated financial
        statements ended December 31, 2006.
 
 18
  On
        September 29, 2006, the Company was served with process by Renaissance US
        Growth
        Investment Trust PLC ("Renn") and BFS US Special Opportunities Trust PLC
        ("BFS"
        and collectively with Renn, the "Plaintiffs"), two investors and shareholders
        of
        the Company. In the Complaint, filed in the Circuit Court of the Seventh
        Judicial Circuit in and for St. John's County, Florida, Plaintiffs allege
        breach
        of contract, fraud, and negligent misrepresentation. The Plaintiffs are seeking
        monetary damages, attorney fees and rescission of their investment in the
        amount
        of $1,500,000 based on the Company's restatement of its earnings for the
        2nd and
        3rd quarters of 2005. The Company denies any and all allegations of wrongdoing
        and intends to vigorously defend such action. During fiscal year 2006, the
        Company recorded a $200,000 expense accrual for what it deemed to be probable
        legal expenses defending this claim. As of March 31, 2007 the remaining balance
        of that accrual is approximately $123,000.
 
 On
        October 31, 2006, EFT Integration Inc., a wholly-owned subsidiary of Global
        Axcess Corp, filed a lawsuit styled as EFT Integration, Inc., vs DELTACOM,
        Inc.,
        f/k/a ITC^DELTACOM Communications, Inc., in the Circuit Court, Fourth Judicial
        Circuit, Duval County, Florida, Case No. 16-2006-CA-007992. EFT Integration,
        Inc., has alleged that between January of 2002 and October of 2006, Deltacom,
        Inc., charged amounts in excess of the rates agreed to for long distance
        telephone service and other services, and refused to provide billing records
        for
        verification, despite demand. In the lawsuit, EFT Integration, Inc., has
        asserted claims for an accounting, breach of contract, civil theft and fraud,
        seeking to recover amounts overpaid by the Company and seeking other damages.
        The Company expresses no opinion as to the likelihood of success or potential
        amount of recovery, and has not recorded income during the quarter ended
        March
        31, 2007 relating to this matter.
 
 On
        December 26, 2006, the Company was served with process by Robert Colabrese
        (the
“Plaintiff), a former employee of the Company. In the Complaint, filed in
        the
        Circuit Court of the Seventh Judicial Circuit in and for St. John’s County,
        Florida, the Plaintiff alleges that the Company has breached the employment
        agreement entered between the Company and the Plaintiff in July 2003. The
        Plaintiff is seeking monetary damages for unpaid wages and commissions, attorney
        fees and an accounting of all sales generated through the Plaintiff. The
        Company
        denies any and all allegations of wrongdoing and intends to vigorously defend
        such action. The Company has a $50,000 accrual recorded at March 31, 2007
        in
        connection with this complaint.
 
 On
        or
        about January 29, 2007, Nationwide Money Services, Inc. (“Nationwide”) filed
        suit against the Atlanta Retailers Association, LLC (“ARA”) for breach of
        contract, tortious interference with contractual relations, tortious
        interference with business relations, punitive damages, and attorneys’ fees and
        expenses of litigation based upon the ARA’s alleged breach of a preferred vendor
        agreement with Progressive Ventures, Inc., Nationwide’s successor-in-interest.
        The ARA answered Nationwide’s complaint, denied all liability, and asserted
        various counterclaims. In light of pending settlement negotiations, the parties
        agreed to dismiss the litigation without prejudice and the dismissal was
        filed
        with the Court on April 18, 2007. Should settlement negotiations fail, either
        party has the right to re-institute the litigation. The parties anticipate
        conducting discovery in the coming months. The Company expresses no opinion
        as
        to the likelihood of success or potential amount of recovery, and has not
        recorded income during the quarter ended March 31, 2007 relating to this
        matter.
 
 19
  From
        time
        to time, the Company and its subsidiaries may be parties to, and their property
        is subject to, ordinary, routine litigation incidental to their business.
        Claims
        may exceed insurance policy limits and the Company or any one of its
        subsidiaries may have exposure to a liability that is not covered by insurance.
        Management is not aware of any lawsuits, other than previously discussed
        that
        could have a material adverse impact on the Company’s consolidated results of
        operations, cash flows or financial position.
 
 **7.             INCOME
        TAXES**
 
 In
        assessing the realizability of the deferred tax assets, management considers
        whether it is more likely than not, that some portion or all of the deferred
        tax
        assets will not be realized. The valuation allowance at March 31, 2007 is
        related to deferred tax assets arising from net operating loss carryforwards.
        Management believes that based upon its projection of future taxable income
        for
        the foreseeable future, it is more likely than not that the Company will
        not be
        able to realize the full benefit of the net operating loss carryforwards
        before
        they expire due to the amortization and depreciation losses from the projected
        acquisition assets.
 
 The
        Company adopted Financial Accounting Standards Board (‘FASB”) Interpretation No.
        48, “Accounting for Uncertainty in Income Taxes - an Interpretation of SFAS No.
        109”, (“FIN48”), as of the beginning of its 2007 fiscal year. This
        Interpretation clarifies the accounting for uncertainty in income taxes.
        FIN 48
        prescribes a recognition threshold and measurement attribute for the financial
        statement recognition and measurement of a tax position taken or expected
        to be
        taken on a tax return. Under FIN 48, the Company first assesses whether it
        is
        more likely than not that an individual tax position is more likely than
        not to
        be sustained, under the presumption the taxing authority has all relevant
        information, it is recognized. The recognized tax position is measured as
        the
        largest benefit that is greater than 50 percent likely of being realized
        upon
        ultimate settlement. Previously recognized tax positions that no longer meet
        the
        more likely than not recognition threshold are derecognized in the period
        in
        which that threshold is no longer met. Accordingly the unit of account under
        this standard is the individual tax position and not a higher level such
        as the
        aggregate of the various positions that are encompassed by the total tax
        return
        filing. As a result of the implementation of FIN 48, the Company did not
        recognize a change in its tax liabilities or assets.
 
 At
        December 31, 2006, the Company has net operating loss carryforwards remaining
        of
        approximately $21,564,900 that may be offset against future taxable income
        through 2026. As part of management’s tax strategies they will be reviewing the
        use of the net operating loss carryforwards. The Company is reviewing its
        tax
        depreciation methods for future utilization of the NOL.
 
 20
  **8.            
        CHANGES IN STOCKHOLDERS' EQUITY**
 
 See
        the
        table below for all the equity transactions for the three-month period ended
        March 31, 2007:
 Additional
                
                
                
                TotalCommon
                    Stock
                
                Paid-in
                
                Accumulated
                
                Stockholders'Shares
                
                Amount
                
                Capital
                
                Deficit
                
                EquityBalances,
                    December 31, 2006
                
                
                21,021,786
                
                $
                21,022
                
                $
                22,366,403
                
                $
                (10,758,884
                )
                $
                11,628,541Net
                    income
                
                
                -
                
                
                -
                
                
                -
                
                
                101,219
                
                
                101,219Balances,
                    March 31, 2007
                
                
                21,021,786
                
                $
                21,022
                
                $
                22,366,403
                
                $
                (10,657,665
                )
                $
                11,729,760
  **9.** **STOCK
        OPTIONS AND WARRANTS**
  Effective
        January 1, 2006, the Company adopted the fair value recognition provisions
        of
        Statement of Financial Accounting Standards ("SFAS") No. 123 (Revised 2004),
        "Share-Based Payment," using the modified-prospective-transition method which
        requires us to recognize compensation expense on a prospective basis. SFAS
        No.
        123(R) requires that all stock based compensation be recognized as an expense
        in
        the financial statements and that such cost be measured at the fair value
        of the
        award. Under this method, in addition to reflecting compensation for new
        share-based awards, expense is also recognized to reflect the remaining service
        period of awards that had been included in pro-forma disclosure in prior
        periods. Prior period financial statements have not been restated. The stock
        based compensation expense is included in SG&A expenses in the condensed
        consolidated statements of operations.
 
 Total
        compensation cost related to non-vested awards not yet recognized as of March
        31, 2007 is not significant to the condensed consolidated financial
        statements.
 
 **10.           SUBSEQUENT
        EVENTS**
 
 None
 
 **Item
        2.  Management's Discussion and Analysis or Plan of
        Operation**
 The
          following discussion should be read in conjunction with the condensed
          consolidated financial statements and notes thereto.
 
 In
          addition to historical information, this Quarterly Report on Form 10-QSB
          contains forward-looking statements that involve risks and uncertainties
          that
          could cause actual results to differ materially. Factors that might cause
          or
          contribute to such differences include, but are not limited to, those discussed
          in the section entitled " Management's Discussion and Analysis or Plan
          of
          Operation”. You should carefully review the risks described in other documents
          we file from time to time with the Securities and Exchange Commission,
          including
          the Quarterly Reports on Form 10-QSB that have been or are to be filed
          in 2007.
          When used in this report, the words "expects," "anticipates," "intends,"
          "plans," "believes," "seeks," "targets," "estimates," "looks for," "looks
          to,"
          and similar expressions are generally intended to identify forward-looking
          statements. You should not place undue reliance on these forward-looking
          statements, which speak only as of the date of this Quarterly Report on
          Form
          10-QSB. We undertake no obligation to publicly release any revisions to
          the
          forward-looking statements or reflect events or circumstances after the
          date of
          this document.
 
 21


***Summary***





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





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





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





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.




22





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.




***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.




***Comparison
      of Results of Continuing Operations for the Three Months Ended March 31, 2007
      and 2006:***





***Revenues***





The
      Company reported total operating revenue from continuing operations of
      $5,270,990 for the three-month period ended March 31, 2007 as compared to
      $5,196,737 for
      the
      three-month period ended March 31, 2006. The increase in the three month
      revenues is mainly due to higher ATM transactions for the three-month period
      ended March 31, 2007 versus the same period in fiscal 2006.




***Cost
      of Revenues***





Our
      total
      cost of revenues from continuing operations increased from $2,949,129 to
      $3,094,674 in the three-month periods ended March 31, 2006 and 2007,
      respectively. The increase in the three month revenues is partly due to higher
      ATM transactions for the three-month period ended March 31, 2007 versus the
      same
      period in fiscal 2006. Additionally, in order to improve its cost structure,
      during the fourth quarter of 2006 the Company negotiated and began
      implementation of contracts with lower cost ATM vault cash providers and
      negotiated and began implementation of a contract to outsource ATM cash
      management and monitoring. While these cost improvements will show cost
      reductions in fiscal 2007, during the first quarter of 2007 the Company incurred
      some duplicate expenses relating to these implementations.





***Gross
      Profit***





Gross
      profit from continuing operations as a percentage of revenue for the three-month
      period ended March 31, 2007 and 2006 were approximately 41.3%, or $2,176,316
      and
      approximately 43.3%, or $2,247,608 respectively.
      The decreased gross profit percentage for the first quarter of 2007 versus
      the
      same period in 2006 was primarily attributable to the increased cost of revenues
      as discussed above.




***Operating
      Expenses***





Our
      total
      operating expenses from continuing operations for the three months ended March
      31, 2007 and 2006 were $1,933,426 and $2,707,858, respectively. The principal
      components of operating expenses are general and administrative expenses such
      as
      professional and legal fees, administrative salaries and benefits, consulting
      and audit fees, occupancy costs, sales and marketing expenses and administrative
      expenses. Operating expenses also include depreciation and amortization,
      impairment charges and other operating expenses. See explanation of operating
      expenses below:




23





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





Our
      total
      SG&A expenses from continuing operations decreased to $1,385,285 for the
      three-month period ended March 31, 2007 from $1,405,050 for the three-month
      period ended March 31, 2006. The decrease in SG&A expenses from continuing
      operations is directly attributable to the decrease in salaries and benefits,
      audit fees and rent expenses resulting from the reduced headcount and cost
      reduction measures we have undertaken in late 2006 and in the first quarter
      of
      2007 offset by increased legal expenses relating to litigation.




***Depreciation
      and Amortization***





Depreciation
      and amortization from continuing operations decreased for the three-month period
      ended March 31, 2007 to $548,141 from $604,582 for the same period in 2006.
      This
      decrease in depreciation and amortization expense was mainly due to the
      following factor:





·
            A
                decrease in depreciable assets relating to impaired assets written
                off in
                the third quarter of 2006.




See
      Note
      2 “Description of Business and Summary of Significant Accounting Policies”
regarding the amortization of intangible merchant contracts.





***Other
      Expense***





In
      the
      first quarter of 2006, we incurred other operating expenses of $410,000 which
      related to legal fee expenses and reserves in connection with the James Collins
      legal claim (see Note # 6 “Commitment and Contingencies”).





***Operating
      Income (Loss) from Continuing Operations***





We
      had
      operating income from continuing operations for the three-month period ended
      March 31, 2007 in the amount of $242,890 as compared to an operating loss from
      continuing operations of $460,250 in the three-month period ended March 31,
      2006.





***Interest
      Expense, Net***





Interest
      expense, net, decreased for the three-month period ended March 31, 2007 to
      $317,531 from $331,063 for the three-month period ended March 31, 2006. The
      decrease was mainly due to decreased debt balances at the three-month period
      ended March 31, 2007 as compared to the debt balances at the three-month period
      ended March 31, 2006.




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





We
      had
      net loss from continuing operations before taxes of $73,781


for
      the
      three months ended March 31, 2007 as compared to net loss from continuing
      operations before taxes of $775,314 for the three-month period ended March
      31,
      2006.





***Income
      Taxes***





We
      incurred no tax expense in either of the respective periods ending March
      31,
      2007 and March 31, 2006. At December 31, 2006, the Company has an NOL
      carryforward of approximately $21.6 million available. The NOL is due to expire
      during fiscal years 2008-2026.




24





***Income
      (loss) from Discontinued Operations***





We
      had
      net income from discontinued operations of $175,000 for the three months ended
      March 31, 2007 resulting from the received amounts pertaining to the escrowed
      portion of the Company’s Cash Axcess Corp sale. For the three-month period ended
      March 31, 2006, the Company had a net loss from discontinued operations of
      $102,601.





***Net
      Income (loss)***





We
      had
      net income of $101,219 for the three months ended March 31, 2007 as compared
      to
      a net loss of $877,915 for the three-month period ended March 31,
      2006.





***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 and financing activities. Net
      cash
      provided by continuing operating activities
      during the three-month period ended March 31, 2007 was $311,546 compared to
      the
      net cash provided by continuing operating activities during the three-month
      period ended March 31, 2006 of $501,448. Net cash used in discontinued operating
      activities during the three-month period ended March 31, 2006 was $80,994.





The
      Company used $521,575 for financing activities, mainly paying back senior lender
      notes and capital leases, during the three-month period ended March 31, 2007,
      compared to funds used in financing activities of $1,153,509 for the three-month
      period ended March 31, 2006.





Net
      cash
      provided by investing activities in continuing operations was $89,342 during
      three-month period ended March 31, 2007, mainly representing the proceeds
      received from sale of subsidiary offset by net purchases of property and
      equipment. This compares to net cash used in investing activities in continuing
      operations of $174,255 for the three-month period ended March 31, 2006, used
      mainly for the purchases of property and equipment. During the three-month
      period ended March 31, 2006, the Company used $44,170 in investing activities
      for discontinued operations.





The
      Company does not use its own funds for vault cash, but rather relies upon third
      party sources. The Company in general rents the vault cash from financial institutions
      and pays a negotiated interest rate for the use of the money. The vault
      cash is never in the possession of, controlled or directed by the Company but
      rather cycles from the bank, to the armored car carrier, and to the ATM. Each
      day’s withdrawals are settled back to the owner of the vault cash on the next
      business day. Both Nationwide Money and its customers (the merchants) sign a
      document stating that the vault cash belongs to the financial institution and that
      neither party has any legal rights to the funds. The required vault cash is obtained
      under the following arrangements:





·
            *Palm
                Desert Bank*.
                Beginning in January 2003, our arrangement with Palm Desert allows
                us to
                obtain up to $10,000,000 in vault cash. The Palm Desert Bank arrangement
                has a term of two years and may be terminated by Palm Desert Bank
                upon
                breach by us and upon the occurrence of certain other events. Under
                this
                arrangement, we are required to pay a monthly service fee on the
                outstanding amount equal to the prime rate of interest, plus a specified
                percentage, and must pay monthly "bank" fees. Additionally the Company
                is
                required to make a deposit with Palm Desert Bank in an amount determined
                by the outstanding balance. We are also required to maintain insurance
                on
                the vault cash. The contract currently in place with Palm Desert
                will be
                terminated effective April 2007. As a result, the Company began converting
                terminals in December 2006 from Palm Desert cash to alternate funding
                sources. As of March 31, 2007, the Company had 0 ATMs funded by Palm
                Desert with a vault cash outstanding balance of
                $0.




25


·
            *WSFS*.
                Beginning in September, 2004 the Company has an arrangement with
                Wilmington Savings Fund Society (“WSFS”) allowing us to obtain up to
                $20,000,000 in vault cash. The WSFS contract may be terminated by
                WSFS at
                any time upon breach by us and upon the occurrence of certain other
                events. Under this arrangement, we are required to pay a monthly
                service
                fee on the outstanding amount equal to the prime rate of interest,
                plus a
                specified percentage, and must pay monthly "bank" and insurance fees.
                We
                are also required to maintain insurance on the vault cash. The contract
                currently in place with WSFS expires on October 31, 2007 with a one
                year
                auto renewal period unless one party gives 60 days notice of their
                intention not to renew. As of March 31, 2007, the Company had 124
                ATMs
                with a vault cash outstanding balance of approximately $2,300,000
                in
                connection with this arrangement.





·
            *First
                Charter*.
                On September 1, 2004, we entered into an arrangement with First Charter
                National Bank allowing us to obtain up to $3,000,000 in vault cash.
                We
                have since increased the line as of December 31, 2006 to $6,000,000.
                The
                First Charter contract may be terminated by First Charter at any
                time upon
                breach by us and upon the occurrence of certain other events. Under
                this
                arrangement, we are required to pay a monthly service fee on the
                outstanding amount equal to the federal funds rate of interest, plus
                a
                specific percentage, and must pay monthly bank fees. We are also
                required
                to maintain insurance on the vault cash. The contract currently in
                place
                with First Charter expires on January 31, 2009 with a two year auto
                renewal period unless one party gives 180 days notice of their intention
                not to renew. As of March 31, 2007, the Company had 182 ATMs funded
                by
                First Charter with a vault cash outstanding balance of about approximately
                $4,700,000.





·
            *Food
                Lion Credit Association (FLCA)*.
                On February 1, 2002, we entered into an arrangement with Food Lion
                Credit
                Association allowing us to obtain up to $2,000,000 in vault cash.
                We have
                since increased the line as of December 31, 2006 to $6,000,000. The
                Food
                Lion Credit Association contract may be terminated by Food Lion Credit
                Association at any time upon breach by us and upon the occurrence
                of
                certain other events. Under this arrangement, we are required to
                pay a
                monthly service fee on the entire line equal to the prime rate of
                interest, minus a specific percentage, and must pay monthly bank
                fees. We
                are also required to maintain insurance on the vault cash. The contract
                was terminated effective February 2007. As a result, the Company
                began
                converting terminals in December 2006 from FLCA cash to alternate
                funding
                sources. As of March 31, 2007, the Company had 0 ATMs funded by FLCA
                with
                a vault cash outstanding balance of about approximately
                $30,000.





·
            *Elan
                (formerly GenPass Technologies)*.
                On November 24, 2006 we signed a Cash Provisioning Agreement with
                Genpass
                Technologies allowing us to obtain up to $22,000,000 in vault cash.
                The
                Genpass contract may be terminated by Genpass Technologies at any
                time
                upon breach by us and upon the occurrence of certain other events.
                Under
                this arrangement, we are required to pay a monthly service fee on
                the
                average terminal balance plus a load factor. In addition, we are
                required
                to maintain insurance on the vault cash. The contract currently in
                place
                with Elan expires on August 11, 2008 with a one year auto renewal
                period
                unless one party gives 180 days notice of their intention not to
                renew. As
                of March 31, 2007, the Company had 565 ATMs funded by Elan with a
                vault
                cash outstanding balance of about approximately
                $12,600,000.




26




·
            *Various
                Branded Cash Partners*.
                Nationwide Money Services, Inc., a subsidiary of the Company, has
                partnered with numerous banks and credit unions to market specific
                Nationwide ATMs to the cardholders of these institutions. We add
                signage
                and marketing material to the ATM so that the ATM is easily identified
                as
                being associated with the bank or credit union, and the cardholders
                of
                these institutions receive surcharge free transactions at the designated
                ATMs. This provides the bank or credit union additional marketing
                power
                and another point of access to funds for their cardholders. In return
                for
                this benefit, the bank or credit union, provide and manage the vault
                cash
                in the specified ATM(s), as well as provide and pay for cash replenishment
                and first line maintenance. The advantage to Nationwide Money is
                that this
                reduces the costs associated with vault cash, cash replenishment
                and first
                line maintenance by approximately 50%. Another advantage is that
                with a
                branded ATM, transactions volumes traditionally increase more than
                at
                non-branded ATMs. As of March 31, 2007, Nationwide Money had 58 branded
                financial partners, which funded 648 ATMs.




***Working
      Capital***





As
      of
      March 31, 2007, the Company had current assets of $2,562,623 and current
      liabilities of $5,913,104, which results in a negative working capital of
      $3,350,481 as
      compared to current assets of $4,239,869 and current liabilities of $6,082,741
      resulting in a negative working capital of $1,842,872 as of March 31, 2006.
      The
      ratio of current assets to current liabilities decreased to 0.43 at March 31,
      2007 from 0.70 at March 31, 2006. Despite the negative working capital, we
      believe that if we achieve our 2007 business plan, we will have sufficient
      working capital to meet our remaining and current obligations during 2007.
      We
      are continuing our efforts to raise additional capital lease financing. We
      estimate the Company will require approximately $2,300,000 of new lease
      financing to fund new purchases of ATMs and back office equipment. We currently
      have lease lines available for approximately $1,500,000 for these new
      purchases.




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





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




**Item
      3. Controls and Procedures**





Management
      of the Company is responsible for establishing and maintaining adequate
      internal control over financial reporting and for the assessment of the effectiveness
      of internal controls over financial reporting. The Company's internal
      control system over financial reporting is a process designed under the supervision
      of the Company's Chief Executive Officer and Chief Financial Officer to
      provide reasonable assurance regarding the reliability of financial reporting and
      the
      preparation of the condensed consolidated financial statements in accordance
      with U.S. generally accepted accounting principles.




27





All
      internal control systems, no matter how well designed, have inherent limitations.
      Therefore, even those systems determined to be effective can provide
      only reasonable assurance with respect to financial statement preparation
      and presentation. Also, projections of any evaluation of effectiveness
      to future periods are subject to the risk that controls may become inadequate
      because of changes in conditions.





The
      Company maintains disclosure controls and procedures that are designed to ensure
      that information required to be disclosed in the Company’s reports under the
      Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
      and reported within the time periods specified in the SEC’s rules and forms, and
      that such information is accumulated and communicated to the Company’s
      management, including its Chief Executive Officer and Chief Financial Officer,
      as appropriate, to allow timely decisions regarding required disclosure. In
      designing and evaluating the disclosure controls and procedures, management
      recognized that any controls and procedures, no matter how well designed and
      operated, can provide only reasonable assurance of achieving the desired control
      objectives, and management necessarily was required to apply its judgment in
      evaluating the cost-benefit relationship of possible controls and
      procedures.




***Evaluation***




The
      Company carried out an evaluation, under the supervision, and with the
      participation, of the Company’s management, including the Company’s Chief
      Executive Officer and the Company’s Chief Financial Officer, of the
      effectiveness of the Company’s disclosure controls and procedures as of March
      31, 2007. Based on the foregoing, the Company’s Chief Executive Officer and the
      Company’s Chief Financial Officer concluded that the Company’s disclosure
      controls and procedures were effective as of March 31, 2007.




***Remediation
      of Previously Stated Material Weaknesses***





We
      formulated a program to remedy the material weaknesses identified in the Form
      10QSB quarterly report for the period ended March 31, 2006.





In
      the
      first phase of the program, completed as of March 31, 2006, we hired a
      Controller and a Senior Accountant to augment our accounting, financial
      reporting and financial control function in our finance department. Due to
      the
      subsequent departure of our previous Chief Financial Officer and subsequent
      appointment of our previous Controller into that position, we have adjusted
      the
      plan by engaging an outside consulting firm to assist in the financial reporting
      of the Company and to review the Company’s application of accounting
      principles.





In
      the
      second phase of the program, we increased our auditor's review work quarterly,
      as well as, increased the areas reviewed and discussed with the audit committee
      and auditors beforehand, on any changes in accounting principles or revenue
      or
      expense recognition. Specifically, we implemented the following remediation
      measures relating to the previously stated material weaknesses:





1. *Ineffective
      controls over revenue recognition* .
      Our
      remediation measures relating to revenue recognition includes a review by
      management of revenue items other than normal fees earned such as
      surcharge/convenience and interchange including a regular review of the accounts
      receivable aging. We have also instituted an objective method of determining
      the
      collectibility of the accounts receivable as well as a strict method for setting
      reserves against those receivables.




28





2. *Ineffective
      controls over depreciation* .
      Subsequent to the errors that resulted in previous audit adjustments, the
      Company has set up a tracking system to follow the final production periods
      when
      software is being developed and will include a review by management of
      depreciable items. Also, the Company has ceased its software development
      subsidiaries as of December 31, 2005 and does not plan to change the method
      of
      software depreciation on previously capitalized assets. Additionally, during
      the
      fiscal year the Company installed a new fixed asset management module onto
      its
      accounting platform which now automates the calculation of the appropriate
      depreciation over the selected life span of the equipment.





3. *Ineffective
      controls over internally developed software* .
      The
      Company has set up a tracking system to follow the development, testing,
      implementation and final production periods when the software is being
      developed. During the year ended December 31, 2005, the Company ceased
      operations of software development subsidiaries.





We
      completed our remediation program during fiscal 2006. The material weaknesses
      are considered remediated as the applicable remedial controls operated for
      a
      sufficient period of time and management has thus concluded, through testing,
      that these controls are operating effectively.




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





There
      were no changes during the quarter ended March 31, 2007 in our internal control
      over financial reporting or in other factors that materially affected, or are
      reasonably likely to materially affect, our internal controls over financial
      reporting.




**Item
      3A(T). Controls and Procedures**





Not
      applicable





**PART
      II - OTHER INFORMATION**





**Item
      1. Legal Proceedings**





In
      March
      2004, the Company received a claim filed by James Collins, a previous employee
      of Global Axcess Corp. The claim was filed in Superior Court of California,
      County of San Diego on March 2, 2004. The claim alleged the following were
      owed
      in connection with the employment agreement: compensation, bonuses and other
      benefits of approximately $316,915; and 90,000 restricted shares and 359,700
      stock options exercisable at $3.75 per share. As of March 31, 2006, the Company
      had accrued a total of $450,000 for the potential legal claim. The claim filed
      by James Collins was settled for $450,000 on May 2, 2006 whereby the Company
      made a lump-sum payment of $300,000 on May 22, 2006 and has agreed to pay the
      remaining $150,000 in 12 monthly installments of $12,500 commencing July 1,
      2006
      and ending June 30, 2007.




29





Beginning
      in or around October, 2005, Nationwide Money Services, Inc. (“Nationwide”) has
      filed suit against various merchants located in several states, alleging that
      these merchants breached the terms of their ATM processing agreements with
      Nationwide or its successor-in-interest, Progressive Ventures, Inc. Many of
      these actions remain pending, while Nationwide has obtained settlement default
      judgments from certain merchants but has yet to receive any settlements. The
      Company recognizes revenue on breached contracts when cash is received and
      the
      Company has not recognized any revenue on these breached contracts during the
      quarters ended March 31, 2007 and 2006. The Company expresses no opinion as
      to
      the likelihood of success or potential amount of recovery in these
      matters.





On
      or
      about July 26, 2006, Nationwide Money Services, Inc. (“Nationwide”) filed suit
      against ATMs R Us, Inc. (“ATMs R Us”), a party with which Nationwide and its
      successor-in-interest, Progressive Ventures, Inc. contracted for the provision
      of certain maintenance and installation services regarding their ATM network
      and
      affiliated merchants. Nationwide alleges in its complaint claims for breach
      of
      contract, tortious interference with contractual relations, tortious
      interference with business relations, violations of the Georgia Trade Secrets
      Act, punitive damages, and attorneys’ fees and expenses of litigation. ATMs R Us
      failed to answer or otherwise respond to Nationwide’s complaint. Nationwide is
      currently taking steps to perfect a default judgment against ATMs R Us in
      accordance with Georgia law. The Company expresses no opinion as to the
      likelihood of success or potential amount of recovery, and has not recorded
      income during the quarter ended March 31, 2007 relating to this
      matter.





On
      August
      1, 2006, Electronic Payment Systems, LLC (“EPS”), the purchaser of the Company’s
      disposed wholly-owned subsidiary Electronic Payment & Transfer Corporation
      (“EPT”), failed to make its required payment and is in default of the Stock
      Purchase Agreement made and entered into as of September 30, 2005 (See Note
      # 4
“Notes Receivable”). The Company sent a default notification letter on August 2,
      2006 and EPS had thirty days as of the date of the default notification to
      cure
      the default, which it failed to do. The Company has filed suit against EPS
      and
      is seeking repayment of the $1,540,000 original note in full. The carrying
      value
      of this note at March 31, 2007 was zero. The Company expresses no opinion as
      to
      the likelihood of success or potential amount of recovery, and has not recorded
      income during the quarter ended March 31, 2007 relating to this matter.





On
      August
      4, 2006, the Company was served with a demand for arbitration/mediation from
      EFMARK Service Company (“EFMARK”), a provider of maintenance services and a
      provider of cash replenishment services for automated teller machines. EFMARK
      alleged that the Company has failed to compensate EFMARK for services amounting
      to $103,000 and was seeking said amount as well as interest of $32,000. The
      Company believed the demand contained factual inaccuracies and was wholly
      without merit. However, in the spirit of its business relationship with EFMARK,
      the Company settled this claim for $40,000 on October 4, 2006. The Company
      reflected this $40,000 expense and liability in its consolidated financial
      statements ended December 31, 2006.





On
      September 29, 2006, the Company was served with process by Renaissance US Growth
      Investment Trust PLC ("Renn") and BFS US Special Opportunities Trust PLC ("BFS"
      and collectively with Renn, the "Plaintiffs"), two investors and shareholders
      of
      the Company. In the Complaint, filed in the Circuit Court of the Seventh
      Judicial Circuit in and for St. John's County, Florida, Plaintiffs allege breach
      of contract, fraud, and negligent misrepresentation. The Plaintiffs are seeking
      monetary damages, attorney fees and rescission of their investment in the amount
      of $1,500,000 based on the Company's restatement of its earnings for the 2nd
      and
      3rd quarters of 2005. The Company denies any and all allegations of wrongdoing
      and intends to vigorously defend such action. During fiscal year 2006, the
      Company recorded a $200,000 expense accrual for what it deemed to be probable
      legal expenses defending this claim. As of March 31, 2007 the remaining balance
      of that accrual is approximately $123,000.




30





On
      October 31, 2006, EFT Integration Inc., a wholly-owned subsidiary of Global
      Axcess Corp, filed a lawsuit styled as EFT Integration, Inc., vs DELTACOM,
      Inc.,
      f/k/a ITC^DELTACOM Communications, Inc., in the Circuit Court, Fourth Judicial
      Circuit, Duval County, Florida, Case No. 16-2006-CA-007992. EFT Integration,
      Inc., has alleged that between January of 2002 and October of 2006, Deltacom,
      Inc., charged amounts in excess of the rates agreed to for long distance
      telephone service and other services, and refused to provide billing records
      for
      verification, despite demand. In the lawsuit, EFT Integration, Inc., has
      asserted claims for an accounting, breach of contract, civil theft and fraud,
      seeking to recover amounts overpaid by the Company and seeking other damages.
      The Company expresses no opinion as to the likelihood of success or potential
      amount of recovery, and has not recorded income during the quarter ended March
      31, 2007 relating to this matter.





On
      December 26, 2006, the Company was served with process by Robert Colabrese
      (the
“Plaintiff), a former employee of the Company. In the Complaint, filed in the
      Circuit Court of the Seventh Judicial Circuit in and for St. John’s County,
      Florida, the Plaintiff alleges that the Company has breached the employment
      agreement entered between the Company and the Plaintiff in July 2003. The
      Plaintiff is seeking monetary damages for unpaid wages and commissions, attorney
      fees and an accounting of all sales generated through the Plaintiff. The Company
      denies any and all allegations of wrongdoing and intends to vigorously defend
      such action. The Company has a $50,000 accrual recorded at March 31, 2007 in
      connection with this complaint.





On
      or
      about January 29, 2007, Nationwide Money Services, Inc. (“Nationwide”) filed
      suit against the Atlanta Retailers Association, LLC (“ARA”) for breach of
      contract, tortious interference with contractual relations, tortious
      interference with business relations, punitive damages, and attorneys’ fees and
      expenses of litigation based upon the ARA’s alleged breach of a preferred vendor
      agreement with Progressive Ventures, Inc., Nationwide’s successor-in-interest.
      The ARA answered Nationwide’s complaint, denied all liability, and asserted
      various counterclaims. In light of pending settlement negotiations, the parties
      agreed to dismiss the litigation without prejudice and the dismissal was filed
      with the Court on April 18, 2007. Should settlement negotiations fail, either
      party has the right to re-institute the litigation. The Company expresses no
      opinion as to the likelihood of success or potential amount of recovery, and
      has
      not recorded income during the quarter ended March 31, 2007 relating to this
      matter.





From
      time
      to time, the Company and its subsidiaries may be parties to, and their property
      is subject to, ordinary, routine litigation incidental to their business. Claims
      may exceed insurance policy limits and the Company or any one of its
      subsidiaries may have exposure to a liability that is not covered by insurance.
      Management is not aware of any lawsuits, other than previously discussed that
      could have a material adverse impact on the Company’s consolidated results of
      operations, cash flows or financial position.





31





**Item
      1A. Risk Factors**





There
      were no material changes from the risk factors previously disclosed in Risk
      Factors within “Item 1. Description of Business” included in our Annual Report
      on Form 10-KSB for the year ended December 31, 2006.





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





None





**Item
      3. Defaults upon Senior Securities**





The
      Wachovia loan agreement requires the Company to meet certain covenants. The
      three covenant terms are as follows: 1) Senior Liabilities to Effective Tangible
      Net Worth ratio of not more than 2.25; 2) Senior Funded Debt to EBITDA ratio
      of
      not more than 2.00 to 1.00; and 3) EBITDA to Debt Service of not less than
      1.25
      to 1.00. All of the covenants are measured quarterly. As of March 31, 2007
      the
      Company was not in compliance with all covenants and has obtained a waiver
      of
      these covenants through March 31, 2007.





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





None





**Item
      5. Other Information**





None





**Item
      6. Exhibits**





Exhibit
            
            Description3.1
            
            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
            
            ByLaws
                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)




32




4.2
            
            Form
                of Common Stock Purchase Warrant (Incorporated by reference to Form
                8-K
                filed with the SEC on April 4, 2005)4.3
            
            Securities
                Purchase Agreement dated October 27, 2005 entered by and between
                the
                Company and the Investor (1)4.4
            
            9%
                Senior Subordinated Secured Convertible Note dated October 27, 2005
                issued
                by the Company to the Investor (1)4.5
            
            Common
                Stock Purchase Warrant dated October 27, 2005 issued by the Company
                to the
                Investor (1)4.6
            
            Registration
                Rights Agreement dated October 27, 2005 entered by and between the
                Company
                and the Investor (1)4.7
            
            Subsidiary
                Guarantee dated October 27, 2005 (1)4.8
            
            Subordination
                Agreement dated October 27, 2005 entered by and between the Company,
                the
                Investor and Wachovia (1)4.9
            
            Security
                Agreement dated October 27, 2005 entered by and between the Company
                and
                the Investor (1)4.10
            
            Third
                Amended and Restated Loan Agreement dated October 27, 2005 entered
                by and
                between the Company and Wachovia (1)4.11
            
            Promissory
                Note dated October 27, 2005 issued by the Company to Wachovia
                (1)4.12
            
            Form
                of Subscription Agreement dated November 8, 2005 (2)4.13
            
            Form
                of Common Stock Purchase Warrant dated November 8, 2005
                (2)10.1
            
            Agreement
                entered into with Food Lion, LLC and Nationwide Money Services, Inc
                dated
                October 5, 2001 (Incorporated by reference to form 10KSB filed with
                the
                SEC on April 16, 2002)10.2
            
            Asset
                Purchase Agreement dated October 28, 2005 by and between the Company
                and
                Amer-E-Com Digital Corporation (1)10.3
            
            Distributor
                ATM Processing Agreement between Nationwide Money Services and Genpass
                Technologies LLC dated December 15, 2005 (3)14.1
            
            Code
                of Ethics and Business Conduct of Officers, Directors and Employees
                of
                Global Axcess Corp. (Incorporated by reference to form 10KSB filed
                with
                the SEC on March 31, 2003)





16.1
            
            Letter
                from L.L. Bradford & Company, LLC (incorporated by reference form 8-K
                current report filed with the SEC on July 1, 2003)21.1
            
            List
                of Subsidiaries:Nationwide
                Money Services Inc., a Nevada corporationEFT
                Integration Corporation, a Florida
                corporation




33




Axcess
                Technology Corporation, a Nevada corporationAxcess
                Technology Corporation, Pty Ltd a South African
                corporationCash
                Axcess Corporation, Pty Ltd a South African
                corporation




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





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





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





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




34





SIGNATURES





Pursuant
      to the requirements of the Securities Exchange Act of 1934, as of May
      10,
      2007 the Issuer has duly caused this report to be signed on its behalf by the
      undersigned, thereunto duly authorized.




GLOBAL
                AXCESS CORPBy:
            /s/
              George A. McQuainGeorge
              A. 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 Issuer and
      in
      the capacities indicated on the 10 th day of
      May, 2007.





Signature
            
            Title/S/
                Lock IrelandLock
                Ireland
            
            Vice
                Chairman, Director/S/
                Robert LandisRobert
                Landis
            
            Director/S/
                Michael J. LoiaconoMichael
                J. Loiacono
            
            Chief
                Financial Officer, Chief Accounting Officer/S/
                Joseph LoughryJoseph
                Loughry
            
            Chairman,
                Director/s/George
                A. McQuainGeorge
                A. McQuain
            
            President,
                CEO and Director/S/
                Alan RossiterAlan
                Rossiter
            
            Director





35