UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549











FORM
      10-QSB/A


Amendment
      No. 1





(MARK
      ONE)





x
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934 For the quarterly period ended September 30,
                2005





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.)224
                PONTE VEDRA PARK DRIVEPONTE
                VEDRA BEACH, FLORIDA
            32082(Address
                of principal executive offices)
            (Zip
                Code)





(904)280-3950


(Issuer's
      Telephone Number, Including Area Code)





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


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











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





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of Exchange Act). Yes o No
x





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




As
      of May
      23, 2006, the Issuer had 21,011,786 shares outstanding of the Common Stock
      ($0.001 par value) and no shares outstanding of the Preferred Stock ($0.001
      par
      value).





EXPLANATORY
      NOTE-Amendment to Previously Reported Quarterly Financial
      Statements





The
      purpose of this amendment on Form 10-QSB is to amend and restate the Company’s
      consolidated financial statements and related disclosures for the three and
      nine
      months ended September 30, 2005 from those previously filed with the Securities
      and Exchange Commission (the “SEC”) on November 12, 2005.





On
      March
      30, 2006, the Company determined that the statements of operations and cash
      flows for the quarter ended September 30, 2005 contained errors, which when
      corrected would result in a material impact on the Company’s results of
      operations for the quarter then ended. The Company’s Audit Committee and senior
      management have therefore determined that the consolidated financial statements
      for the three and nine months ended September 30, 2005 require amendment. The
      errors, which are more fully described in Note 3 to the consolidated financial
      statements contained herein, relate to the Company’s accounting for revenue
      under certain of our processing contracts; capitalization of purchased software
      costs; and depreciation of certain assets that were not in service during the
      three and nine months ended September 30, 2005.





Generally,
      no attempt has been made in this Form 10-QSB to modify or update other
      disclosures presented in the original report on Form 10-QSB except as required
      to reflect the effects of the restatement. Additionally, this Form 10-QSB
      generally does not reflect events occurring after the filing of the Form 10-QSB
      or modify or update those disclosures, including the exhibits to the Form
      10-QSB, affected by subsequent events. Information not affected by the
      restatement is unchanged and reflects the disclosures made at the time of the
      original filing of the Form 10-QSB on November 12, 2005. Accordingly, this
      form
      10-QSB should be read in conjunction with the Company’s filings made with the
      SEC subsequent to the filing of the original Form 10-QSB including any
      amendments to those filings. The following items have been amended as a result
      of the restatement:





Part
      I-Item 1. Financial Statements


Part
      I-Item 2. Management’s Discussion and Analysis of Financial Condition and
      Results of Operations


Part
      I-Item 3. Controls and Procedures


Part
      II-Item 6. Exhibits














TABLE
                OF CONTENTS
            Page
                No.PART
                I
            FINANCIAL
                INFORMATIONItem
                1.
            Financial
                Statements (unaudited)
            3Item
                2.
            Management's
                Discussion and Analysis or Plan of Operation
            15Item
                3.
            Controls
                and Procedures
            24PART
                II
            OTHER
                INFORMATIONItem
                1.
            Legal
                Proceedings
            25Item
                2.
            Changes
                in Securities.
            25Item
                3.
            Defaults
                Upon Senior Securities.
            26Item
                4.
            Submission
                of Matters to a Vote of Security Holders.
            26Item
                5.
            Other
                Information.
            26Item
                6.
            Exhibits.
            27SIGNATURES
            
            28





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 2005.
      When used in this report, the words "expects," "anticipates," "intends,"
      "plans," "believes," "seeks," "targets," "estimates," and similar expressions
      are generally intended to identify forward-looking statements. You should not
      place undue reliance on the forward-looking statements, which speak only as
      of
      the date of this Quarterly Report on Form 10-QSB. We undertake no obligation
      to
      publicly release any revisions to the forward-looking statements or reflect
      events or circumstances after the date of this document.





Estimates
      of future financial results are inherently unreliable.





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








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





2


PART
      I -
      FINANCIAL INFORMATION





Item
      1.
      Financial Statements





GLOBAL
      AXCESS CORP AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED BALANCE SHEET


September
      30, 2005


(Unaudited)


ASSETSCurrent
                    assetsCash
                
                $
                21,082Automated
                    teller machine vault cash
                
                
                435,816Accounts
                    receivable, net
                
                
                1,175,118Note
                    receivable
                
                
                99,895Inventory
                
                
                182,114Deferred
                    tax asset - current
                
                
                375,331Prepaid
                    expense & other current assets
                
                
                549,206Total
                    current assets
                
                
                2,838,562Fixed
                    assets, net
                
                
                7,362,469Other
                    assetsMerchant
                    contracts
                
                
                8,306,010Note
                    receivable
                
                
                1,540,000Intangible
                    assets, net
                
                
                4,100,836Deferred
                    tax asset - long term
                
                
                322,279Total
                    assets
                
                $
                24,470,156LIABILITIES
                    AND STOCKHOLDERS' EQUITYCurrent
                    liabilitiesAccounts
                    payable and accrued liabilities
                
                $
                1,715,871Automated
                    teller machine vault cash payable
                
                
                435,816Deferred
                    revenue - current
                
                
                89,500Note
                    payable-related parties - current portion
                
                
                15,576Notes
                    payable - current portion
                
                
                125,147Bank
                    loan - current portion
                
                
                925,000Capital
                    lease obligations - current portion
                
                
                911,211Total
                    current liabilities
                
                
                4,218,121Long-term
                    liabilitiesDeferred revenue - long-term portion
                
                
                1,174,856Notes
                    payable-related parties - long-term portion
                
                
                1,345,814Notes
                    payable - long-term portion
                
                
                57,674Bank
                    loan - long-term portion
                
                
                675,000Capital
                    lease obligations - long-term portion
                
                
                1,868,866Total
                    liabilities
                
                
                9,340,331Stockholders'
                    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,
                    18,501,286 shares issued and outstanding
                
                
                18,501Common
                    stock payable
                
                
                841Additional
                    paid-in capital
                
                
                20,135,877Accumulated
                    deficit
                
                
                (5,025,394
                )Total
                    stockholders' equity
                
                
                15,129,825Total
                    liabilities and stockholders' equity
                
                $
                24,470,156




See
      Accompanying Notes to Condensed Consolidated Financial
      Statements


3





GLOBAL
      AXCESS CORP AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)


Three
                  Months ended September 30,
              
              Nine
                  Months ended September 30,2005
              
              2004
              
              2005
              
              2004Revenues
              
              $
              4,827,881
              
              $
              3,190,383
              
              $
              14,557,159
              
              $
              9,038,933Cost
                  of revenues
              
              
              2,866,998
              
              
              1,717,850
              
              
              8,594,511
              
              
              4,891,430Gross
                  profit
              
              
              1,960,883
              
              
              1,472,533
              
              
              5,962,648
              
              
              4,147,503Operating
                  expenses:Depreciation
                  and amortization
              
              
              381,151
              
              
              254,505
              
              
              1,000,987
              
              
              874,781General
                  and administrative
              
              
              1,438,914
              
              
              939,490
              
              
              4,176,435
              
              
              2,571,166Total
                  operating expenses
              
              
              1,820,065
              
              
              1,193,995
              
              
              5,177,422
              
              
              3,445,947Operating
                  income from continuing operationsbefore items shown below
              
              
              140,818
              
              
              278,538
              
              
              785,226
              
              
              701,556Other
                  income (expense)Legal
                  settlement
              
              
              -
              
              
              -
              
              
              -
              
              
              304,000Contingent
                  reserve
              
              
              -
              
              
              (20,000
              )
              
              -
              
              
              (75,000
              )Interest
                  expense, net
              
              
              (154,474
              )
              
              (17,395
              )
              
              (429,518
              )
              
              (70,228
              )Other
                  income
              
              
              -
              
              
              -
              
              
              1,762
              
              
              -Total
                  other income (expense)
              
              
              (154,474
              )
              
              (37,395
              )
              
              (427,756
              )
              
              158,772Income
                  from continuing operationsbefore income taxes
              
              
              (13,656
              )
              
              241,143
              
              
              357,470
              
              
              860,328Provision
                for taxes
              
              
              -
              
              
              -
              
              
              -
              
              
              -Income
                  (loss) from continuing operations
              
              
              (13,656
              )
              
              241,143
              
              
              357,470
              
              
              860,328Loss
                  from discontinued operations, net of tax
              
              
              (74,947
              )
              
              (88,784
              )
              
              (309,256
              )
              
              (251,677
              )Net
                  income (loss)
              
              $
              (88,603
              )
              $
              152,359
              
              $
              48,214
              
              $
              608,651**Income
                  per common share - basic:**Income
                  from continuing operations
              
              $
              -
              
              $
              0.01
              
              $
              0.02
              
              $
              0.06Loss
                  from discontinued operations
              
              
              -
              
              
              -
              
              
              (0.02
              )
              
              (0.02
              )Net
                  income (loss)
              
              $
              -
              
              $
              0.01
              
              $
              0.00
              
              $
              0.04**Income
                  per common share - diluted:**Income
                  from continuing operations
              
              $
              -
              
              $
              0.01
              
              $
              0.02
              
              $
              0.04Loss
                  from discontinued operations
              
              
              -
              
              
              -
              
              
              (0.02
              )
              
              (0.01
              )Net
                  income (loss)
              
              $
              -
              
              $
              0.01
              
              $
              0.00
              
              $
              0.03**Weighted
                  average common shares outstanding:**Basic
              
              
              18,501,286
              
              
              16,103,088
              
              
              18,141,753
              
              
              14,310,608Diluted
              
              
              19,137,586
              
              
              25,181,751
              
              
              18,614,811
              
              
              23,389,271





See
      Accompanying Notes to Condensed Consolidated Financial
      Statements


4





GLOBAL
      AXCESS CORP AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)


Nine
                  months ended September 30,2005
              
              2004Cash
                  flows from operating activities:Income
                  from continuing operations
              
              $
              357,470
              
              $
              860,328Adjustments
                  to reconcile net income from continuingoperations to net cash provided by operating activities:Contingent
                  reserves
              
              
              -
              
              
              75,000Legal
                  settlement
              
              
              -
              
              
              (304,000
              )Depreciation
                  and amortization
              
              
              1,000,987
              
              
              874,781Changes
                  in operating assets and liabilities:Change
                  in automated teller machine vault cash
              
              
              19,920
              
              
              (59,075
              )Change
                  in accounts receivable
              
              
              69,692
              
              
              (600,177
              )Change
                  in inventory
              
              
              (156,135
              )
              
              (28,893
              )Change
                  in prepaid expenses and other current assets
              
              
              (337,955
              )
              
              (178,980
              )Change
                  in other assets
              
              
              250,367
              
              
              6,894Change
                  in accounts payable and accrued liabilities
              
              
              (155,312
              )
              
              214,954Change
                  in automated teller machine vault cash payable
              
              
              (19,920
              )
              
              59,075Net
                  cash provided by continuing operations
              
              
              1,029,113
              
              
              919,907Net
                  cash used by discontinued operations
              
              
              (669,905
              )
              
              (223,835
              )Net
                  cash provided in continuing and discontinued operations
              
              
              359,208
              
              
              696,072Cash
                  flows from investing activities:Purchase
                  of fixed assets
              
              
              (1,198,449
              )
              
              (4,458,331
              )Note

                  receivable issued for loan
              
              
              -
              
              
              (99,895
              )Purchase
                  of contracts
              
              
              (66,658
              )
              
              (9,269,641
              )Net
                  cash used in investing activities
              
              
              (1,265,107
              )
              
              (13,827,867
              )Cash
                  flows from financing activities:Proceeds
                  from issuance of common stock, net of offering costs
              
              
              686,300
              
              
              7,200,568Procceds
                  from issuance of bank loans
              
              
              500,000
              
              
              1,726,680Proceeds
                  from notes payable - related parties
              
              
              -
              
              
              1,050,000Proceeds
                  from notes payable
              
              
              47,710
              
              
              1,162,807Proceeds
                  on capital lease obligations
              
              
              -
              
              
              691,351Payment
                  on bank notes
              
              
              (493,750
              )
              
              -Principal
                  payments on notes payable
              
              
              (18,068
              )
              
              (12,138
              )Principal
                  payments on notes payable - related parties
              
              
              -
              
              
              (54,389
              )Change
                  in stock payable
              
              
              -
              
              
              (31,000
              )Principal
                  payments on capital lease obligations
              
              
              (292,034
              )
              
              (112,927
              )Net
                  cash provided by financing activities
              
              
              430,158
              
              
              11,620,952Increase/(decrease)
                  in cash
              
              $
              (475,741
              )
              
              (1,510,843
              )Cash,
                  beginning of period
              
              
              496,823
              
              
              1,832,079Cash,
                  end of period
              
              $
              21,082
              
              $
              321,236




See
      Accompanying Notes to Condensed Consolidated Financial
      Statements


5





Supplemental
      schedule of non-cash investing and financing activities:




Nine
                  months ended September 30,2005
              
              2004Issuance
                  of 86,025 shares of common stock related to finder'sfee
                  for acquisition of common stock.
              
              $
              -
              
              $
              107,532Issuance
                  of 2,570,697 shares of common stock related to exchange ofexercise
                  of cashless warrants at $0.50
              
              $
              -
              
              $
              1,285,349Transfer
                  of used ATM's, originally held for rental, from fixed
                  assetsto
                  inventory, now held for sale
              
              $
              -
              
              $
              194,584Capital
                  leases assumed for ATM purchases
              
              $
              2,103,675
              
              $
              -Deferred
                  gain on sale of subsidiary
              
              $
              1,540,000
              
              $
              -Related
                  party notes converted to common stock
              
              $
              1,025,000
              
              $
              -





See
      Accompanying Notes to Condensed Consolidated Financial
      Statements


6


GLOBAL
      AXCESS CORP AND SUBSIDIARIES


NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


AS
      OF
      SEPTEMBER 30, 2005


(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, 2004 of Global Axcess Corp
      ("the
      Company").





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





The
      interim condensed consolidated financial information is unaudited. In the
      opinion of management, all adjustments necessary to present fairly the financial
      position as of September 30, 2005 and the results of operations and cash flows
      presented herein have been included in the condensed consolidated financial
      statements. Interim results are not necessarily indicative of results of
      operations for the full year.





2.
            DESCRIPTION
                OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
                POLICIES





Description
      of Business





Global
      Axcess Corp, through its wholly owned subsidiaries, is a network-based
      electronic commerce and transaction processing company; and an automated teller
      machine ("ATM") network and processing consolidator.





Use
      of
      Estimates





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those
      estimates.





Inventory





ATM
      machines available for sale are classified as inventory until such time as
      the
      machine is sold, installed and in service. Once the ATM machine is sold it
      is
      relieved to cost of sales. At September 30, 2005, the Company’s ATM machine
      inventory totaled $182,114.





Equipment





ATM
      machines and related software components not currently in service are classified
      as fixed assets not in service, until such time either the machine is installed
      and in service or sold. Once in service, each ATM machine is reclassified as
      a
      fixed asset and depreciated using the remaining estimated useful life of the
      machine. Any ATM machines classified as fixed assets not in service and then
      sold would be considered a disposal group and a gain or loss on the sale would
      be recorded.


7





Allowance
      and Amortization of Assets





On
      the
      balance sheet as of September 30, 2005 the Company reserved $5,983 as an
      allowance for bad debt against the trade receivables of $1,181,101.





As
      of
      September 30, 2005 the Company has accumulated amortization totaling $202,252
      against intangible assets totaling $4,303,088.





As
      of
      September 30, 2005 the Company has accumulated amortization totaling $1,027,809
      against merchant contracts totaling $9,333,819.





Earnings
      Per Share





Basic
      net
      income per share is computed based on the weighted average number of common
      shares outstanding during the period. Diluted net income per common share is
      computed based on the weighted average number of common shares outstanding
      during the period increased by the effect of dilutive stock options and stock
      purchase warrants using the treasury stock method. The following table sets
      forth the computation of basic and diluted income per common share:


Three
                  Months Ended September 30,
              
              Nine
                  Months Ended September 30,2005
              
              2004
              
              2005
              
              2004Numerator:Income
                  (loss)  from continuing operations
              
              $
              (13,656
              )
              $
              241,143
              
              
              357,470
              
              
              860,328Loss
                  from discontinued operations
              
              
              (74,947
              )
              
              (88,784
              )
              
              (309,256
              )
              
              (251,677
              )Numerator
                  for diluted income (loss) per shareavailable to common stockholders
              
              $
              (88,603
              )
              $
              152,359
              
              $
              48,214
              
              $
              608,651Denominator:Weighted
                  average shares
              
              
              18,501,286
              
              
              16,103,088
              
              
              18,141,753
              
              
              14,310,608Effect
                  of dilutive securities:Employee stock options
              
              
              548,200
              
              
              8,578,663
              
              
              406,983
              
              
              8,953,663Warrants
              
              
              88,100
              
              
              500,000
              
              
              66,075
              
              
              125,000Denominator
                  for diluted income per share-adjustedweighted average shares after assumed exercises
              
              
              19,137,586
              
              
              25,181,751
              
              
              18,614,811
              
              
              23,389,271**Income
                  (Loss) per common share - basic:**Income
                  (loss)from continuing operations
              
              
              -
              
              
              0.01
              
              
              0.02
              
              
              0.06Loss
                  from discontinued operations
              
              
              -
              
              
              -
              
              
              (0.02
              )
              
              (0.02
              )Net
                  income (loss)
              
              $
              -
              
              $
              0.01
              
              $
              -
              
              $
              0.04**Income
                  (Loss) per common share - diluted:**Income
                  (loss) from continuing operations
              
              
              -
              
              
              0.01
              
              
              0.02
              
              
              0.04Loss
                  from discontinued operations
              
              
              -
              
              
              -
              
              
              (0.02
              )
              
              (0.01
              )Net
                  income (loss)
              
              $
              -
              
              $
              0.01
              
              $
              -
              
              $
              0.03




Stock-based
      compensation - The Company applies Accounting Principles Board ("APB") Opinion
      No. 25, Accounting for Stock Issued to Employees, and Related Interpretations,
      in accounting for stock options issued to employees. Under APB No. 25, employee
      compensation cost is recognized when estimated fair value of the underlying
      stock on the date of the grant exceeds exercise price of the stock option.
      For
      stock options and warrants issued to non-employees, the Company applies SFAS
      No.
      123, Accounting for Stock-Based Compensation, which requires the recognition
      of
      compensation cost based upon the fair value of stock options at the grant date
      using the Black-Scholes option-pricing model.


8


In
      December 2002, the Financial Accounting Standards Board (FASB) issued SFAS
      No.
      148, "Accounting for Stock-Based Compensation-Transition and Disclosure". SFAS
      No. 148 amends the transition and disclosure provisions of SFAS No. 123. In
      December 2004, the FASB issued a revision to SFAS No. 123 called SFAS No. 123R,
      which revises the adoption period and transition periods for all entities using
      the fair value method and applying a modified prospective method for accounting
      for employee stock options. The Company will be adopting SFAS 123R as
      recommended for Small Business (SB) filers, as of December 15, 2005 for periods
      subsequent to that date. Currently, the Company is applying SFAS 123R and the
      modified prospective method for valuing the disclosures.





The
      following table represents the effect on net income and earnings per share
      if
      the Company had applied the fair value based method and recognition provisions
      of Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting
      for
      Stock-Based Compensation", and the transition disclosure provisions of SFAS
      No.
      148, to stock-based employee compensation:




For
                  the Nine Months Ended September 30,2005
              
              2004**Net
                  income, as reported**
              
              $
              48,214
              
              $
              608,651Add:
                  Stock-based employee compensation expense included in reported
                  income,net
                  of related tax effects
              
              
              -
              
              
              -Deduct:
                  Total stock-based employee compensation expense determinedunder
                  fair value based methods for all awards, net of related tax
                  effects
              
              
              (811,247
              )
              
              (338,395
              )**Pro
                  forma net income (loss)**
              
              $
              (763,033
              )
              $
              270,256**Net
                  income (loss) per common share:**Basic
                  - as reported
              
              $
              -
              
              $
              0.04Basic
                  - pro forma
              
              $
              (0.04
              )
              $
              0.01Diluted
                  - as reported
              
              $
              -
              
              $
              0.03Diluted
                  - pro forma
              
              $
              (0.04
              )
              $
              0.01





3.
            AMENDMENT
                TO PREVIOUSLY REPORTED QUARTERLY FINANCIAL
                STATEMENTS





The
      Company’s previously issued consolidated financial statements for the three and
      nine months ended September 30, 2005 have been restated to correct errors
      related to the Company’s accounting for: revenue under certain of its processing
      contracts; capitalization of purchased software costs; and depreciation of
      certain assets that were not in service during the nine months ended September
      30, 2005.





The
      revenue correction specific to the three and nine months ended September 30,
      2005 totaled $241,439 and $667,108, respectively. The Company determined that
      revenue under certain contracts may be recognized in future quarters as cash
      is
      collected.





As
      a
      result of the error specific to purchased software costs, the Company’s general
      and administrative expenses were overstated during the three and nine months
      ended September 30, 2005 by $18,193 and $52,059, respectively. The Company
      determined that such costs should have been capitalized during the six and
      nine
      months ended September 30, 2005 and expensed in future periods.





The
      Company’s depreciation expense was overstated during the three and nine months
      ended September 30, 2005 by $50,279 and $104,087, respectively, as a result
      of
      the error specific to depreciation expense, which the Company determined should
      be recognized in future periods.


9





As
      a
      result of these adjustments, net income for the three and nine months ended
      September 30, 2005 was reduced by $172,967 and $510,962, respectively. The
      Company has reported a net loss of $88,603 versus the previously reported net
      income of $84,364 for the three months ended September 30, 2005. For the nine
      months ended September 30, 2005, the Company has reported net income of $48,214
      versus the previously reported net income of $559,176.





The
      following table summarizes the effect of the restatement on the consolidated
      statement of operations for the three and nine months ended September 30,
      2005:


Three
                  Months ended
              
              Nine
                  Months endedSeptember
                  30, 2005
              
              September
                  30, 2005As
                  previously
              
              
              
              As
                  previouslyreported
              
              Restated
              
              reported
              
              RestatedRevenues
              
              $
              5,069,320
              
              $
              4,827,881
              
              $
              15,224,267
              
              $
              14,557,159Cost
                  of revenues
              
              
              2,866,998
              
              
              2,866,998
              
              
              8,594,511
              
              
              8,594,511Gross
                  profit
              
              
              2,202,322
              
              
              1,960,883
              
              
              6,629,756
              
              
              5,962,648Operating
                  expenses:Depreciation
                  and amortization
              
              
              431,430
              
              
              381,151
              
              
              1,105,074
              
              
              1,000,987Selling,
                  General and administrative
              
              
              1,457,107
              
              
              1,438,914
              
              
              4,228,494
              
              
              4,176,435Total
                  operating expenses
              
              
              1,888,537
              
              
              1,820,065
              
              
              5,333,568
              
              
              5,177,422Operating
                  income from continuing operationsbefore items shown below
              
              
              313,785
              
              
              140,818
              
              
              1,296,188
              
              
              785,226Other
                  income (expense)Interest
                  expense, net
              
              
              (154,474
              )
              
              (154,474
              )
              
              (429,518
              )
              
              (429,518
              )Other
                  income
              
              
              -
              
              
              -
              
              
              1,762
              
              
              1,762Total
                  other expenses, net
              
              
              (154,474
              )
              
              (154,474
              )
              
              (427,756
              )
              
              (427,756
              )Income
                  (loss) from continuing operationsbefore provision for income taxes
              
              
              159,311
              
              
              (13,656
              )
              
              868,432
              
              
              357,470Income
                  (loss) from continuing operations
              
              
              159,311
              
              
              (13,656
              )
              
              868,432
              
              
              357,470Loss
                  from discontinued operations, net of tax
              
              
              (74,947
              )
              
              (74,947
              )
              
              (309,256
              )
              
              (309,256
              )Net
                  income (loss)
              
              $
              84,364
              
              $
              (88,603
              )
              $
              559,176
              
              $
              48,214Income
                  per common share - basic:Income
                  (loss) from continuing operations
              
              $
              0.01
              
              $
              -
              
              $
              0.05
              
              $
              0.02Loss
                  from discontinued operations
              
              
              (0.01
              )
              
              (0.01
              )
              
              (0.02
              )
              
              (0.02
              )Net
                  income (loss)
              
              $
              -
              
              $
              (0.01
              )
              $
              0.03
              
              $
              0.00Income
                  (loss) per common share - diluted:Income
                  (loss) from continuing operations
              
              $
              0.01
              
              $
              -
              
              $
              0.05
              
              $
              0.02Loss
                  from discontinued operations
              
              
              (0.01
              )
              
              (0.01
              )
              
              (0.02
              )
              
              (0.02
              )Net
                  income (loss)
              
              $
              -
              
              $
              (0.01
              )
              $
              0.03
              
              $
              0.00


10




4.
            DISCONTINUED
                OPERATIONS





During
      the quarter ended September 30, 2005, the Company approved plans to dispose
      of
      its wholly-owned subsidiary, Electronic Payment & Transfer Corporation
      (“EPT”), and to discontinue offering prepaid debit cards and the related
      products and services that were marketed by EPT. Subsequently, effective
      September 30, 2005, the Company completed the sale of EPT to one former employee
      of the Company for a $1.5 million note receivable (see Note 4 - “Note
      Receivable”). The Company has deferred recognition of the $1,174,856 estimated
      gain on EPT’s disposal pending collection of the note receivable. In accordance
      with FASB Statement No. 144, “Accounting for the Impairment or Disposal of
      Long-Lived Assets,” the Company has classified EPT as a discontinued operation
      and reported its operating results within discontinued operations in the
      accompanying unaudited, condensed consolidated statement of operations. The
      estimated gain has been deferred and included in long-term liabilities in the
      accompanying, unaudited condensed consolidated balance sheet. Operating results
      of the discontinued operations were as follows:




Three
                Months ended September 30,
            
            Nine
                Months ended September 30,2005
            
            2004
            
            2005
            
            2004Revenues
            
            $
            723
            
            $
            --
            
            $
            1,423
            
            $
            7,950Cost
                of revenues
            
            
            7,000
            
            
            627
            
            
            8,010
            
            
            7,175Gross
                profit
            
            
            (6,277
            )
            
            (627
            )
            
            (6,587
            )
            
            775Operating
                expenses:Depreciation
                and amortization
            
            
            19,204
            
            
            5,141
            
            
            46,868
            
            
            12,885General
                and administrative
            
            
            208,780
            
            
            83,016
            
            
            415,115
            
            
            239,567Total
                operating expenses
            
            
            227,984
            
            
            88,157
            
            
            461,983
            
            
            252,452Loss
                from discontinued operations before income taxes
            
            
            (234,261
            )
            
            (88,784
            )
            
            (468,570
            )
            
            (251,677
            )Provision
                for income (tax) benefit
            
            
            159,314
            
            
            --
            
            
            159,314
            
            
            --Loss
                from discontinued operations, net of tax
            
            $
            (74,947
            )
            $
            (88,784
            )
            $
            (309,256
            )
            $
            (251,677
            )





5.
            NOTE
                RECEIVABLE - Non-current





Effective
      September 30, 2005, the Company sold its wholly-owned subsidiary, Electronic
      Payment & Transfer Corporation, for $1,540,000 in a secured promissory note
      covering the full amount of the sale price (see Note 3 - “Discontinued
      Operations”). The non-current note receivable consists of the following at
      September 30, 2005:





9%
      promissory note, with monthly interest payments starting October 1, 2006 and
      quarterly principal payments starting August 1, 2006 maturing November 1, 2010   $1,540,000





6.
            COMMITMENTS
                AND CONTINGENCIES





Leased
      facilities - During March 2004, the Company extended the operating lease for
      its
      facilities under a non-cancelable operating lease for an additional 3 years
      expiring in March 2009. The agreement calls for an annual base rent of
      approximately $180,326 with an annual cost of living increase of 3%. Rent
      Expense during the nine-month period ending September 30, 2005 and 2004 was
      $216,322 and $169,347, respectively. Future minimum rental payments required
      under the operating lease for the office facilities as of September 30, 2005
      are
      as follows:





11





remaining
                three months of 2005
            
            $
            58,0462006
            
            
            257,6742007
            
            
            258,6052008
            
            
            209,7132009
            
            
            35,476$
            819,514





In
      January 2005, the Company entered into a new loan agreement with ATM Networks
      Inc. at an interest rate of 6.25% per annum for 2 years. The balance as of
      September 30, 2005 is $35,110 and is included in notes payable
      current.





Capital
      lease obligations - During the three-month period ending September 30, 2005
      the
      Company entered into capital lease obligations as follows:





Capital
      leases entered into during the three-month period ending September 30, 2005
      maturing in 36 to 60 months with various rates from 5.99% to 14% totaling
      $971,907 as of September 30, 2005.





Future
      minimum lease principal payments required under capital lease obligations as
      of
      September 30, 2005 are as follows:





Remaining
                three months of 2005
            
            $
            291,8332006
            
            
            1,104,3942007
            
            
            894,8962008
            
            
            413,9912009
            
            
            74,963Total
                capital lease obligations
            
            $
            2,780,077





Legal
      proceedings - As of September 30, 2005, the Company has accrued legal costs
      of
      $40,000 related to various legal proceedings.





There
      are
      no new significant pending or threatened litigation or legal proceedings since
      December 31, 2004. In March 2004, the Company received a claim filed by James
      Collins, a previous employee of Global Axcess Corp. The claim was filed in
      Superior court of California, County of San Diego on March 2, 2004. The claim
      alleges the following are owed in connection with the employment
      agreement:


compensation,
      bonuses and other benefits of approximately $316,915;


and
      90,000 restricted shares and 359,700 stock options exercisable at $3.75 per
      share.





The
      Company believes that this claim is unfounded. The Company’s management believes
      that this claim will not have a material adverse effect on the Company’s
      consolidated results of operations, cash flows or financial
      position.





The
      Company is evaluating various strategic opportunities with regards to its wholly
      owned subsidiaries (see Note 8 - “Subsequent Events” and Note 3 - “Discontinued
      Operations”).





7.
            INCOME
                TAXES





Deferred
      income taxes arise from the temporary differences in reporting assets and
      liabilities for income tax and financial reporting purposes. These temporary
      differences primarily resulted from net operating losses and different
      amortization and depreciation methods used for financial and tax
      purposes.


12





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 or will not be realized. The valuation allowance at September 30,
      2005 is related to deferred tax assets arising from net operating loss
      carry-forwards. 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 be able to realize the full benefit of the net operating loss
      carry-forwards before they expire.





At
      December 31, 2004, the Company has net operating loss carry-forwards totaling
      approximately $6,500,000 that may be offset against future taxable income
      through 2016.





8.
            CHANGES
                IN STOCKHOLDERS' EQUITY





See
      the
      table below for all the equity transactions for the three-month period ending
      September 30, 2005:




Common
              
              
              
              TotalCommon
                  Stock
              
              Additional
              
              Stock
              
              Accumulated
              
              Stockholders'Shares
              
              Amount
              
              Paid-in
                  Capital
              
              Payable
              
              Deficit
              
              EquityBalance
                  as of June 30, 2005
              
              
              18,211,986
              
              $
              18,212
              
              $
              18,949,634
              
              $
              -
              
              $
              (4,936,791
              )
              $
              14,031,055Stock
                  options excercised in September 2005excercised
                  at $.73 per share average
              
              
              19,300
              
              
              19
              
              
              28,534
              
              
              20
              
              
              -
              
              
              28,573Warrants
                  excercised in September 2005excercised
                  at $0.50 per share
              
              
              270,000
              
              
              270
              
              
              135,179
              
              
              1
              
              
              -
              
              
              135,4509%
                  Related Party Notes converted tocommon
                  Stock at $1.25 per share
              
              
              -
              
              
              -
              
              
              1,024,180
              
              
              820
              
              
              -
              
              
              1,025,000Legal
                  fees for offering
              
              
              -
              
              
              -
              
              
              (1,650
              )
              
              -
              
              
              -
              
              
              (1,650
              )Net
                  Income
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (88,603
              )
              
              (88,603
              )Balance
                  as of September 30, 2005
              
              
              18,501,286
              
              $
              18,501
              
              $
              20,135,877
              
              $
              841
              
              $
              (5,025,394
              )
              $
              15,129,825





9.
            SUBSEQUENT
                EVENTS





(a)
            On
                October 28, 2005, the Company acquired approximately 1,590 automated
                teller machine (“ATM”) processing merchant contracts and ATM placement
                agreements (collectively, the “Merchant Contracts”) and ATMs and ATM
                related equipment (“Equipment”) from Amer-E-Com Digital Corporation, a
                Florida corporation (“AECD”) pursuant to an Asset Purchase Agreement dated
                as of October 28, 2005 between the Company and AECD. The purchase
                price
                for the acquisition was $5,527,256 in cash of which $4,775,191 was
                paid on
                closing and $752,065 was held in escrow (the “Holdback”). The transaction
                was funded by utilizing cash generated from the financing provided
                by
                Wachovia Bank and CAMOFI Master Fund LDC (see Notes 8(b) and 8(c)
                below).
                The Holdback shall be utilized to provide funding in connection with
                the
                purchase of 73 additional Merchant Contracts, to cover the value
                of any
                missing and lost Merchant Contracts, and to cover any indemnification
                required to be paid by AECD to the Company with respect to losses
                incurred
                by the Company prior to the date of acquisition of the assets
                purchased.





13


(b)
            On
                October 27, 2005, to obtain funding for the acquisition of the Merchant
                Contracts and the Equipment (see Note 8(a) above), the Company entered
                into a Third Amended and Restated Loan Agreement with Wachovia Bank
                (“Wachovia”), the Company’s senior lender, pursuant to which Wachovia
                agreed to provide a term loan to the Company in the amount of $3,000,000.
                Such term loan was evidenced by a Promissory Note (the “Wachovia Note”)
                issued at the closing on October 27, 2005. Under the terms of the
                Wachovia
                Note, the Company is required to make monthly payments of $50,000
                plus
                accrued interest commencing in November 2005. All outstanding principal
                and interest is payable in full in October 2010. The interest rate
                in
                connection with the Wachovia Note is 9%. In addition, the Company
                granted
                Wachovia a security interest in substantially all of its assets and
                intellectual property. At the closing of the Wachovia Note, the Company
                became obligated on $3,000,000 in notes issued to Wachovia. The Wachovia
                Note is a long-term debt obligation arising other than in the ordinary
                course of business which constitutes a direct financial obligation
                of the
                Company.





(c)
            On
                October 27, 2005, to obtain additional funding for the acquisition
                of the
                Merchant Contracts and the Equipment (see Note 8(a) and 8(b) above),
                the
                Company entered into a Securities Purchase Agreement (the “Purchase
                Agreement”) with CAMOFI Master LDC (the “Investor”) for the sale of (i)
                $3,500,000 in 9% Senior Subordinated Secured Convertible Note (the
“Note”)
                and (ii) stock purchase warrants (the “Warrant”) to purchase 910,000
                shares of our common stock. The obligations under the Note are
                subordinated to Wachovia. The Company closed the financing pursuant
                to the
                Purchase Agreement on October 27, 2005. The Note bears interest at
                9%,
                matures on October 27, 2010 and is convertible into the Company’s common
                stock, at the Investor’s option, at a conversion price of $1.45. The
                Company is permitted to require the Investor to convert a portion
                of the
                Note subject to the attainment of certain volume and price targets
                specific to the Company’s common stock. The Company is required to make
                cash interest payments on a monthly basis and on each conversion
                date,
                with all accrued and outstanding interest due in full as of the maturity
                date. All overdue accrued and payments of interest incur a late fee
                at the
                rate of 20% per annum. The Company may prepay all or part of the
                Note in
                cash at 110% of the principal amount plus accrued interest. The full
                principal amount of the Note is due upon default under the terms
                of Note.
                In addition, the Company granted the Investor a junior security interest,
                subordinate to Wachovia, in substantially all of its assets and
                intellectual property as well as registration rights. The Warrant
                is
                exercisable until five years from the date of issuance at an exercise
                price of $1.75 per share. In addition, the exercise price of the
                Warrant
                is adjusted in the event the Company issues common stock at a price
                below
                the exercise price. The Investor has contractually agreed to restrict
                its
                ability to convert the Note and exercise the Warrant and receive
                shares of
                the Company’s common stock such that the number of shares of the Company
                common stock held by them and their affiliates after such conversion
                or
                exercise does not exceed 4.99% of the Company’s then issued and
                outstanding shares of common stock. The sale of the Note was completed
                on
                October 27, 2005 with respect to $3,500,000 of the Note. The Note
                is a
                debt obligation arising other than in the ordinary course of business
                which constitutes a direct financial obligation of the Company. The
                Note
                and Warrant were offered and sold to the Investor in a private placement
                transaction made in reliance upon exemptions from registration pursuant
                to
                Section 4(2) under the Securities Act of 1933 and Rule 506 promulgated
                thereunder. The Investors is an accredited investor as defined in
                Rule 501
                of Regulation D promulgated under the Securities Act of
                1933.


14


(d)
            The
                Company completed a private placement offering on November 11, 2005,
                primarily with institutional investors. The offering was priced at
                $6.25
                per Unit. The Units were made of 5 shares of common stock and 40%
                common
                stock purchase warrants. The private offering netted $1,850,000,
                and will
                issue 1,600,000 shares of common stock and 640,000 common stock purchase
                warrants with an exercise price of
                $1.75.





(e)
            During
                October 2005, a lawsuit filed by the Company to have 750,000 shares
                of
                common stock and 500,000 common stock purchase warrants returned
                and
                cancelled has been finalized in favor of the
                Company.





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 2005.
      When used in this report, the words "expects," "anticipates," "intends,"
      "plans," "believes," "seeks," "targets," "estimates," "looks for," "looks to,"
      and similar expressions are generally intended to identify forward-looking
      statements. You should not place undue reliance on these forward-looking
      statements, which speak only as of the date of this Quarterly Report on Form
      10-QSB. We undertake no obligation to publicly release any revisions to the
      forward-looking statements or reflect events or circumstances after the date
      of
      this document.





Summary





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





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





15


In
      most
      markets we impose a surcharge fee for cash withdrawals. Surcharge fees are
      a
      substantial additional source of revenue for us and other ATM network operators.
      The surcharge fee for ATMs in our network ranges between $1.50 and $2.50 per
      withdrawal. The surcharge fee for other ATMs in our network ranges between
      $0.50
      and $7.50 per withdrawal. We receive the full surcharge fee for cash withdrawal
      transactions on ATMs that we own, but often we rebate a portion of the fee
      to
      the owner of the ATM location under the applicable lease for the ATM site.
      We
      also receive the full surcharge fee for cash withdrawal transactions on ATMs
      owned by third party vendors included within our network, but we rebate all
      or a
      portion of each fee to the third party vendor based upon a variety of factors,
      including transaction volume and the party responsible for supplying vault
      cash
      to the ATM and only record earned revenue based upon the Company contracts
      with
      the third party vendors.





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





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





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





16


Critical
      Accounting Policies





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





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





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





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





17


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





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





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





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





Inventory.
      ATM machines available for sale are classified as inventory until such time
      as
      the machine is sold, installed and in service. Once the ATM machine is sold
      it
      is relieved to cost of sales. At September 30, 2005, the Company’s ATM machine
      inventory totaled $182,114.




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





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





18





Asset
      Impairment. The Company reviews long-lived assets for impairment under SFAS
      No.
      144, "Accounting for the Impairment or Disposal of Long-Lived Assets."
      Long-lived assets to be held and used are reviewed for impairment whenever
      events or changes in circumstances indicate that the carrying amount of an
      asset
      may not be recoverable. The carrying amount of a long-lived asset is not
      recoverable if it exceeds the sum of the undiscounted cash flows expected to
      result from the use and eventual disposition of the asset. Long-lived assets
      to
      be disposed of are reported at the lower carrying amount or fair value less
      cost
      to sell. During the year ended December 31, 2004, the Company determined that
      there were no long-lived assets that were impaired.





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




Recent
      Developments





(a)
            During
                the quarter ended September 30, 2005, the Company approved plans
                to
                dispose of its wholly-owned subsidiary, Electronic Payment & Transfer
                Corporation (“EPT”), and to discontinue offering prepaid debit cards and
                the related products and services that were marketed by EPT. Subsequently,
                effective September 30, 2005, the Company completed the sale of EPT
                to one
                former employee of the Company for a $1.5 million note receivable
                (see
                Note 4 - “Note Receivable” - to the unaudited, consolidated condensed
                financial statements). The Company has deferred recognition of the
                $1,174,856 estimated gain on EPT’s disposal pending collection of the note
                receivable. In accordance with FASB Statement No. 144, “Accounting for the
                Impairment or Disposal of Long-Lived Assets,” the Company has classified
                EPT as a discontinued operation and reported its operating results
                within
                discontinued operations in the accompanying unaudited, condensed
                consolidated statement of operations. The estimated gain has been
                deferred
                and included in long-term liabilities in the accompanying, unaudited
                condensed consolidated balance sheet. Operating results of the
                discontinued operations were as
                follows:




Three
                Months ended September 30,
            
            Nine
                Months ended September 30,2005
            
            2004
            
            2005
            
            2004Revenues
            
            $
            723
            
            $
            --
            
            $
            1,423
            
            $
            7,950Cost
                of revenues
            
            
            7,000
            
            
            627
            
            
            8,010
            
            
            7,175Gross
                profit
            
            
            (6,277
            )
            
            (627
            )
            
            (6,587
            )
            
            775Operating
                expenses:Depreciation
                and amortization
            
            
            19,204
            
            
            5,141
            
            
            46,868
            
            
            12,885General
                and administrative
            
            
            208,780
            
            
            83,016
            
            
            415,115
            
            
            239,567Total
                operating expenses
            
            
            227,984
            
            
            88,157
            
            
            461,983
            
            
            252,452Loss
                from discontinued operations before income taxes
            
            
            (234,261
            )
            
            (88,784
            )
            
            (468,570
            )
            
            (251,677
            )Provision
                for income (tax) benefit
            
            
            159,314
            
            
            
            
            
            159,314Loss
                from discontinued operations, net of tax
            
            $
            (74,947
            )
            $
            (88,784
            )
            $
            (309,256
            )
            $
            (251,677
            )





19





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





Comparison
      of Results of Continuing Operations for the Three and Nine Months Ended
      September 30, 2005 and 2004





Revenues.
      The Company reported total operating revenue from continuing operations of
      $4,827,881 for the three month period ended September 30, 2005 as compared
      to
      $3,190,383 for the three month period ended September 30, 2004. During the
      nine-month periods ended September 30, 2005 and 2004, operating revenues from
      continuing operations increased to $14,557,159 from $9,038,933, respectively.
      This increase in the three and nine month revenues are mainly due to higher
      surcharge and interchange revenue from acquired ATM merchant locations and
      increased organic sales of ATMs.




Cost
      of
      Revenues. Our total cost of revenues from continuing operations increased from
      $1,717,850 to $2,866,998 in the three-month periods ended September 30, 2004
      and
      2005, respectively. During the nine-month periods ended September 30, 2005
      and
      2004, the cost of revenues from continuing operations increased to $8,594,511
      from $4,891,430, respectively. Both the continued growth in our Branded Partners
      and the acquisition during fiscal year 2005 had a significant impact on the
      cost
      of revenues from continuing operations for the three- and nine-months ending
      September 30, 2005. Increases in interest rates affects the rental cost of
      the
      vault cash used in the ATM’s. During the nine month period ending September 30,
      2005, the Company has seen increased vault cash costs. The Company can offset
      this cost with increased branded locations.





Gross
      Margin. Gross profit from continuing operations as a percentage of revenue
      for
      the three-month periods ended September 30, 2005 and 2004 were 40.6%, or
      $1,960,883, and 46.2%, or $1,472,533, respectively. During the nine-month
      periods ended September 30, 2005 and 2004, the gross margins from continuing
      operations increased to $5,962,648 from $4,147,503, respectively. There was
      a
      significant increase during 2005 in the number of ATMs in service, with
      approximately 3,500 in service during 2005 compared to 2,400 ATMs in service
      during the same three and nine-month periods ending September 30, 2004.




Operating
      Expenses. Our total operating expenses from continuing operations for the three
      months ended September 30, 2005 and 2004, were $1,820,065 and $1,193,995,
      respectively. During the nine-month periods ended September 30, 2005 and 2004,
      operating expenses from continuing operations increased to $5,177,422 from
      $3,445,947, respectively. The principal components of operating expenses are
      professional fees, administrative salaries and benefits, depreciation and
      amortization, consulting fees, occupancy costs, sales and marketing expenses
      and
      administrative expenses. The increases in both depreciation and general and
      administrative costs were due to the acquisitions of ATM merchant contracts
      during the fourth quarter of 2004.




20


Other
      Income and expense. During the three months ended September 30, 2005 and 2004,
      there was no other income or expense and $20,000 expense, respectively from
      continuing operations. During the nine months ended September 30, 2005, other
      income from continuing operations totaled $1,762 compared to $229,000 for the
      nine months ended September 30, 2004. Other income during the nine months ended
      September 30, 2004 included $304,000 from one legal settlement offset by a
      $75,000 contingent reserve.





Interest
      Expense, Net. Interest expense, net, from continuing operations increased for
      the three-month period ending September 30, 2005 to $154,474 from $17,395 for
      the three-month period ending September 30, 2004. During the nine-month periods
      ended September 30, 2005 and 2004, interest expense, net, from continuing
      operations increased to $429,518 from $70,228, respectively. The increase was
      mainly due to fees charged on loans and leases, for purchases of acquisitions
      and new ATMs, amortized during the three and nine-month periods ended September
      30, 2005.





Income
      from Continuing Operations. We had a loss from continuing operations for the
      three-month period ending September 30, 2005 in the amount of $13,656 as
      compared to income from continuing operations of $241,143 in the three-month
      period ending September 30, 2004. During the nine-month periods ended September
      30, 2005 and 2004, income from continuing operations decreased to $357,470
      from
      $860,328, respectively.


Income
      Taxes. We paid no income taxes in either of the respective periods ending
      September 30, 2005 and 2004. This was a result of a net operating loss
      carry-forward from 2002 of approximately $6,500,000. We have unused operating
      loss carry forwards which will expire in various periods through 2022





LIQUIDITY
      AND CAPITAL RESOURCES





Working
      Capital. As of September 30, 2005, the Company had current assets of $2,838,562
      and current liabilities of $4,218,121, which results in a negative working
      capital of $1,379,559, as compared to current assets of $2,750,511 and current
      liabilities of $3,849,746 resulting in a negative working capital of 1,099,235
      as of December 31, 2004. The ratio of current assets to current liabilities
      decreased to 0.67 at September 30, 2005 from 0.71 at December 31, 2004. It
      is
      expected that cash provided from operations will be sufficient for the next
      12
      months.





Additional
      Funding Sources





We
      have
      funded our operations and investment activities from cash flow generated by
      operations and financing activities. Net cash provided by operating activities
      during the nine-month periods ending September 30, 2005 and 2004 was $1,029,113
      and 696,072, respectively. Net cash provided by continuing operating activities
      in the nine-month period ending September 30, 2005 consisted primarily of net
      income of $357,470, depreciation and amortization of $1,000,987. Decreases
      in
      operating assets over liabilities amounted to $329,343. The decrease in the
      operating assets were mainly due to higher levels of prepaid expense and other
      assets and inventory by $337,955 and 156,135, respectively, and decreases in
      accounts payable by $155,312.





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





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





21


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





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





The
      Company is continuing its efforts to raise additional capital through equity
      or
      debt financings. To continue its current business plan and acquisition strategy
      the Company estimates, it will require approximately $8,500,000 in additional
      capital to meet its needs for the next 12 months for acquisitions and such
      items
      as new ATM leases.





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





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





o
            Palm
                Desert Bank. Nationwide Money Services has been using Palm Desert
                National
                Bank as a vault cash provider since April of 2001. This relationship
                was
                limited to the funding of a specific portfolio of ATMs and as a result
                limited the growth potential of the relationship. During the third
                quarter
                of 2002, Nationwide Money and Palm Desert initiated discussions to
                expand
                the relationship and for Palm Desert to provide vault cash for additional
                ATMs. As of September 30, 2005, Nationwide Money had 105 ATMs funded
                by
                Palm Desert with a vault cash outstanding balance of about $3,000,000.
                In
                January 2003, we entered into an arrangement with Palm Desert allowing
                us
                to obtain up to $10,000,000 in vault cash. The Palm Desert Bank
                arrangement has a term of two years and may be terminated by Palm
                Desert
                Bank upon breach by us and upon the occurrence of certain other events.
                Under this arrangement, we are required to pay a monthly service
                fee on
                the outstanding amount equal to the prime rate of interest, plus
                a
                specified percentage, and must pay monthly "bank" fees. Additionally
                the
                Company is required to make a deposit with Palm Desert Bank in an
                amount
                determined by the outstanding balance. We are also required to maintain
                insurance on the vault cash.


22


o
            WSFS.
                On May 15, 2000, we entered into an arrangement with Wilmington Savings
                Fund Society ("WSFS") allowing us to obtain up to $2,000,000 in vault
                cash. In May 2002, we renewed the agreement with WSFS and increased
                the
                vault cash limit to $5,000,000 and the new contract has a month-to-month
                term. Due to added locations from our acquisitions we have increased
                the
                WSFS line as of September 30, 2005, to approximately $20,000,000.
                The
                Company is currently using approximately $15,000,0000 of the WSFS
                line.
                The WSFS contract may be terminated by WSFS at any time upon breach
                by us
                and upon the occurrence of certain other events. Under this arrangement,
                we are required to pay a monthly service fee on the outstanding amount
                equal to the prime rate of interest, plus a specified percentage,
                and must
                pay monthly "bank" and insurance fees. We are also required to maintain
                insurance on the vault cash.





o
            Various
                Branded Cash Partners. Nationwide Money has partnered with numerous
                banks
                and credit unions to market specific Nationwide ATMs to the cardholders
                of
                these institutions. We add signage and marketing material to the
                ATM so
                that the ATM is easily identified as being associated with the bank
                or
                credit union, and the cardholders of these institutions receive surcharge
                free transactions at the designated ATMs. This provides the bank
                or credit
                union additional marketing power and another point of access to funds
                for
                their cardholders. In return for this benefit, the bank or credit
                union,
                provide and manage the vault cash in the specified ATM(s), as well
                as
                provide and pay for cash replenishment and first line maintenance.
                The
                advantage to Nationwide Money is that this reduces the costs associated
                with vault cash, cash replenishment and first line by approximately
                50%.
                Another advantage is that with a branded ATM, transactions volumes
                traditionally increase more than at a non-branded ATM. As of September
                30,
                2005 , Nationwide Money had 80 branded partners, which funded over
                750
                ATMs in 9 states, with about $9.0 million in outstanding vault
                cash.





As
      a
      result of certain factors, our cash provided by continuing operating activities
      has slightly increased for the nine-month period ending September 30, 2005,
      compared to the nine-month period ending September 30, 2004. The Company is
      realizing more profit and a higher level of depreciation/amortization, thus
      raising the cash from continuing operations to approximately $1,029,000 from
      $920,000, respectively. With this increase in operating cash flows we have
      incurred additional demands on our available capital in connection with the
      start-up expenses associated with our two new subsidiaries Axcess Technologies
      Corp. and Cash Axcess Corp. The cash balance as of September 30, 2005 of
      $21,082, reflects the usage of cash to invest mainly in ATM equipment during
      the
      nine month period, as the cash used for investing was $1,065,107. Net funds
      provided by financing activities made up $230,158, to apply towards the asset
      investments.





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





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


23





Contractual
      Obligations. Our ability to fund our capital needs is also impacted by our
      overall capacity to acquire favorable financing terms in our acquisition of
      ATMs. Our contractual obligations, including commitments for future payments
      under non-cancelable lease arrangements and short and long-term debt
      arrangements, are summarized below. We do not participate in, nor secure
      financings for, any unconsolidated, limited or special purpose entities. We
      anticipate that our capital expenditures (outside of acquisitions) for fiscal
      2005 will total approximately $1,800,000, primarily for the acquisition of
      ATMs
      and related ATM installation costs. We lease ATMs under capital lease agreements
      that expire between in 2006 and 2008 and provide for lease payments at interest
      rates up to 14% per annum. See Note 8 to the Consolidated Financial Statements
      in the Form 10KSB Annual Report.





Inflation





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





Item
      3.
      Controls and Procedures.





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





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





In
      the
      second phase of the program, we expect to (i) increase our auditor’s review work
      quarterly, as well as, increase the areas reviewed and discussed with the audit
      committee and auditors beforehand, on any changes in accounting principles
      or
      revenue or expense recognition. Specifically, we plan to implement the following
      remediation measures relating to the identified material
      weaknesses:


24





1.
      Ineffective controls over revenue recognition.





Our
      remediation measures relating to revenue recognition includes a review by
      management of revenue items other than normal fees earned such as surcharge
      and
      interchange including a regular review of the accounts receivable aging.





2.
      Ineffective controls over depreciation.





Subsequent
      to the errors that resulted in audit adjustments, the Company has set up a
      tracking system to follow the final production periods when software is
      completed and will include a review by management of depreciable items. Also
      the
      Company has ceased its software development subsidiaries as of December 31,
      2005
      and does not plan to change any software depreciation.





3.
      Ineffective controls over internally developed software.





The
      Company has set up a tracking system to follow the development, testing,
      implementation and final production periods when the software is completed
      and
      will include a review by management of internally developed items.





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





Changes
      in Internal Control Over Financial Reporting





Except
      as
      set forth above, there have been no changes in our internal control over
      financial reporting that occurred during the three month period ended September
      30, 2005 that have materially affected, or are reasonably likely to materially
      affect, our internal control over financial reporting.





PART
      II -
      OTHER INFORMATION




Item
      1.
      Legal Proceedings





From
      time
      to time, the Company is a party to litigation or other legal proceedings
      that it considers to be a part of the ordinary course of its business.
      In March 2004, the Company received a claim filed by James Collins, a previous
      employee of Global Axcess Corp. The claim was filed in Superior court of
      California, County of San Diego on March 2, 2004. The claim alleges the
      following are owed in connection with the employment agreement:


compensation,
      bonuses and other benefits of approximately $316,915;


and
      450,000 restricted shares and 1,798,500 stock options exercisable at $0.75
      per
      share.





The
      Company believes that this claim is unfounded. The Company’s management believes
      that this claim will not have a material adverse effect on the Company’s
      consolidated results of operations, cash flows or financial
      position.





The
      Company is not involved currently in legal proceedings that could reasonably
      be
      expected to have a material adverse effect on its business, prospects, financial
      condition or results of operations except as set forth below. We may become
      involved in material legal proceedings in the future.





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





On
      October 27, 2005, to obtain additional funding for the acquisition of the
      Merchant Contracts and the Equipment, the Company entered into a Securities
      Purchase Agreement (the “Purchase Agreement”) with CAMOFI Master LDC (the
“Investor”) on for the sale of (i) $3,500,000 in 9% Senior Subordinated Secured
      Convertible Note (the “Note”) and (ii) stock purchase warrants (the “Warrant”)
      to purchase 910,000 shares of our common stock. The obligations under the Note
      are subordinated to Wachovia. The Company closed the financing pursuant to
      the
      Purchase Agreement on October 27, 2005. The Note bears interest at 9%, matures
      on October 27, 2010 and is convertible into the Company’s common stock, at the
      Investor’s option, at a conversion price of $1.45. The Company is permitted to
      require the Investor to convert a portion of the Note subject to the attainment
      of certain volume and price targets specific to the Company’s common stock. The
      Company is required to make cash interest payments on a monthly basis and on
      each conversion date, with all accrued and outstanding interest due in full
      as
      of the maturity date. All overdue accrued and payments of interest incur a
      late
      fee at the rate of 20% per annum. The Company may prepay all or part of the
      Note
      in cash at 110% of the principal amount plus accrued interest. The full
      principal amount of the Note is due upon default under the terms of Note. In
      addition, the Company granted the Investor a security interest in substantially
      all of its assets and intellectual property as well as registration rights.
      The
      Warrant is exercisable until five years from the date of issuance at an exercise
      price of $1.75 per share. In addition, the exercise price of the Warrant is
      adjusted in the event the Company issues common stock at a price below the
      exercise price. The Investor has contractually agreed to restrict its ability
      to
      convert the Note and exercise the Warrant and receive shares of the Company’s
      common stock such that the number of shares of the Company common stock held
      by
      them and their affiliates after such conversion or exercise does not exceed
      4.99% of the Company’s then issued and outstanding shares of common stock. The
      sale of the Note was completed on October 27, 2005 with respect to $3,500,000
      of
      the Note. The Note is a debt obligation arising other than in the ordinary
      course of business which constitutes a direct financial obligation of the
      Company. The Note and Warrant were offered and sold to the Investor in a private
      placement transaction made in reliance upon exemptions from registration
      pursuant to Section 4(2) under the Securities Act of 1933 and Rule 506
      promulgated thereunder. The Investors is an accredited investor as defined
      in
      Rule 501 of Regulation D promulgated under the Securities Act of
      1933.


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Item
      3.
      Defaults Upon Senior Securities.





None.





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





None.





Item
      5.
      Other Information.





On
      September 21, 2005, Donald Headlund submitted a letter dated September 7, 2005
      to Global Axcess Corp (the "Company") pursuant to which he resigned as a
      Director of the Company.





During
      the quarter ended September 30, 2005, the Company approved plans to dispose
      of
      its wholly-owned subsidiary, Electronic Payment & Transfer Corporation
      (“EPT”), and to discontinue offering prepaid debit cards and the related
      products and services that were marketed by EPT. Subsequently, effective
      September 30, 2005, the Company completed the sale of EPT to an employee of
      the
      Company for a $1.5 million note receivable.


26





Item
      6.
      Exhibits.





Exhibit
            Description31.1
            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.





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SIGNATURES





Pursuant
      to the requirements of the Securities Exchange Act of 1934, as of May
      24,
      2006 the Issuer has duly caused this report to be signed on its behalf by the
      undersigned, thereunto duly authorized.




GLOBAL
              AXCESS
              CORP.By:
            /s/
              MICHAEL DODAKMichael
              DodakChief
              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 24th day of May, 2006.





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




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