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UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549





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FORM 10-QSB





(MARK ONE)





|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ---------------------------------------------------------------------------------------




| |  | FOR THREE MONTH PERIOD ENDED NOVEMBER 30, 2002
| |  | ----------------------------------------------




OR





| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ----------------------------------------------------------------------------------------




COMMISSION FILE NUMBER:    001-15783





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CASH TECHNOLOGIES, INC.


(Exact name of registrant as specified in its charter)





DELAWARE

95-4558331(State or other jurisdiction of incorporation organization)

(IRS Employer Identification No.)1434 W. 11TH STREET, LOS ANGELES, CA

90015(Address of principal executive offices)

(Zip Code)





(213) 745-2000


(Registrants telephone number, including area code)





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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x  No  ̈ .





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Indicate the number of shares outstanding of each of the registrants classes of
common stock, as of the latest practicable date.





On January 15, 2002, there were 6,721,416 shares of common
stock, $ .01 par value, issued and outstanding.





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CASH TECHNOLOGIES, INC.





FORM 10-QSB





INDEX


PAGE NO.PART I.

FINANCIAL INFORMATIONItem 1.

Consolidated Financial Statements:Consolidated Balance Sheets as of November 30, 2002 (unaudited) and May 31, 2002

1Consolidated Statements of Operations for the three and six month periods ended November 30, 2002 and 2001 (unaudited)

2Consolidated Statements of Cash Flows for the six-month period ended November 30, 2002 and 2001 (unaudited)

3Notes to Consolidated Financial Statements for the six-month period ended November 30, 2002 and 2001 (unaudited)

4Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations

12PART II.

OTHER INFORMATIONItem 1.

Legal Proceedings

22Item 2.

Changes in Securities

23Item 3.

Default Upon Senior Securities

24Item 4.

Submission of Matters to a Vote of Security Holders

25Item 5.

Other Information

25Item 6.

Exhibits and Reports on Form 8-K

25SIGNATURES

26













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##### Table of Contents

PART 1


ITEM
1.    FINANCIAL STATEMENTS





CASH TECHNOLOGIES, INC.





CONSOLIDATED BALANCE SHEETS


(Unaudited)





NOVEMBER 30, 2002


MAY 31, 2000ASSETSCURRENT ASSETS:Cash and cash equivalents

$
758


$
419,704Prepaid expenses


25,000



Accounts receivable


46,598



38,276Other receivable (net of allowance $21,000)


85,532



85,532Total current assets


157,888



543,512CoinBank machines held for sale


903,891



1,029,292PROPERTY AND EQUIPMENT (net)


41,109



56,890CAPITALIZED SOFTWARE COSTS


2,285,720



2,565,605DEFERRED FINANCE FEES






83,333OTHER ASSETS


3,000



3,000TOTAL ASSETS

$
3,391,608


$
4,281,632LIABILITIES AND STOCKHOLDERS DEFICIENCYCURRENT LIABILITIES:Current maturities of notes payable


4,081,125



4,137,630Due to officers and directors


173,448



75,000Convertible debt


1,249,276



1,420,574Equity placement liability






530,000Accounts payable


1,096,313



961,045Accrued liabilities


1,245,180



954,745Bank overdraft


200,033



197,800Dividend payable


950,031



776,456Total current liabilities


8,995,406



9,053,250Long-term notes payable


2,926,722



Long-term convertible debt






2,586,674TOTAL LIABILITIES


11,922,128



11,639,924COMMITMENTS & CONTINGENCIESMINORITY INTEREST


43,737



STOCKHOLDERS DEFICIENCY:Common stock


70,452



62,335Preferred stock


1,758,688



1,904,688Additional paid in capital


21,449,857



20,140,847Accumulated deficit


(31,853,254
)


(29,466,162
)Total stockholders deficiency


(8,574,257
)


(7,358,292
)TOTAL LIABILITIES AND STOCKHOLDERS DEFICIENCY

$
3,391,608


$
4,281,632





See notes to consolidated financial statements




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CASH TECHNOLOGIES, INC.


CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)





FOR THREE MONTHS ENDED
NOVEMBER 30,


FOR SIX MONTHS ENDED NOVEMBER
30,2002


2001


2002


2001GROSS REVENUES (Note 1)

$
45,492


$
4,463,088


$
2,183,884


$
5,437,409NET REVENUES

$
45,492


$
160,466


$
232,863


$
189,319COST OF REVENUES


41,392


$
100,437



171,850



139,511GROSS PROFIT (LOSS)


4,100


$
60,029



61,013



49,808SELLING, GENERAL, & ADMINISTRATIVE EXPENSE


619,958



495,847



1,318,859



970,877RESEARCH & DEVELOPMENT EXPENSE


72,346







167,000



DEPRECIATION & AMORTIZATION EXPENSE


147,149



23,716



294,711



67,850OPERATING LOSS


(835,353
)


(459,534
)


(1,719,557
)


(988,919
)INTEREST EXPENSE


187,561



290,462



416,694



555,217LOSS BEFORE INCOME TAXES


(1,022,914
)


(749,996
)


(2,136,251
)


(1,544,136
)INCOME TAXES














MINORITY INTEREST


(11,399
)






(11,399
)


NET LOSS

$
(1,011,515
)


(749,996
)

$
(2,124,852
)

$
(1,544,136
)Dividends & deemed dividends

$
108,633


$
188,599


$
262,240


$
765,280Net loss allocable to common shareholders

$
(1,120,148
)

$
(938,595
)

$
(2,387,092
)

$
(2,309,416
)Basic and diluted net loss per share

$
(0.20
)

$
(0.26
)

$
(0.42
)

$
(0.64
)Basic and diluted weighted average shares of common stock outstanding


5,636,470



3,613,533



5,636,470



3,613,533





See notes to consolidated financial statements




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CASH TECHNOLOGIES, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)





FISCAL SIX MONTHS ENDED NOVEMBER 30,2002


2001OPERATING ACTIVITIES:Net loss

$
(2,124,852
)

$
(1,544,136
)Adjustments to reconcile net loss to net cash used by operating activities:Amortization of discount on convertible debt






17,583Amortization of capitalized software


279,885



Noncash deemed interest expense


83,333



208,334Noncash compensation expense


162,598



Depreciation expense


16,750



59,413Minority Interest


(11,399
)


Changes in operating assets and liabilities:Account receivable


(8,322
)


(34,160
)CoinBank machines held for sale


125,401



60,379Prepaid expenses and other current assets


(25,000
)


7,500Other assets






(36,773
)Accounts payable


135,268



118,823Accrued interest


262,245



319,000Accrued expenses and other current liabilities


290,435



358,150Net cash used in operating activities


(813,658
)


(465,887
)INVESTING ACTIVITIES:Purchase of property and equipment


(969
)


(2,202
)Capitalized software






(351,121
)Net cash used in investing activities


(969
)


(353,323
)FINANCING ACTIVITIES:Book overdraft


2,233



(3,060
)Net proceeds from issuance of preferred stock






750,500Net proceeds from exercise of common stock warrants


100,000



Proceeds from short-term debt


98,448



100,000Proceeds from common stock of subsidiary


45,000



Repayments on short-term debt


(150,000
)


(95,000
)Proceeds from sale of common stock


300,000



217,500Net cash provided by financing activities


395,681



969,940CHANGE IN CASH AND CASH EQUIVALENTS


(418,946
)


150,730Cash and Cash Equivalents, Beginning of Period


419,704



Cash and Cash Equivalents, End of Period

$
758


$
150,730SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONIncome taxes

$



$
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONSConversion of preferred stock into common stock

$
146,000


$
35,587Conversion of warrants into common stock

$
262,000


$
Deemed dividend on preferred stock

$



$
433,060Finance fees added to notes payable

$



$
250,000Common stock offering

$
300,000


$
Issuance of common stock for services performed

$
162,600


$
99,167Dividends declared on preferred stock

$
173,575


$
320,182Deemed dividend on warrants issued

$
88,665


$
12,038





See notes to consolidated financial statements




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CASH TECHNOLOGIES, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)





NOTE 1: GENERAL





GOING CONCERN:





The Company has prepared the financial statements included in this Form 10-QSB assuming that the Company will continue as a going concern.
Although the Company has raised additional capital since its public offering in July 1998, it has never generated sufficient revenue-producing activity to sustain its operations. Accordingly, the Company must realize a satisfactory level of
profitability from its current and future operation in order to remain a viable entity. In addition, the Company must raise significant capital to fund current operations and to repay existing debt. The Companys auditors have included an
explanatory paragraph in their report for the year ended May 31, 2002, indicating there is substantial doubt regarding the Companys ability to continue as a going concern. The accompanying consolidated financial statements do not include any
adjustments that might result from the outcome of any uncertainty.





PRESENTATION OF INTERIM
INFORMATION:





In the opinion of the management of Cash Technologies, Inc. (the Company), the
accompanying unaudited condensed consolidated financial statements include all normal adjustments considered necessary to present fairly the financial position as of November 30, 2002 and the results of operation and cash flows for the six month
period ended November 30, 2002 and 2001. Interim results are not necessarily indicative of results to be expected for any subsequent quarter or for the entire fiscal year.





The condensed consolidated financial statements and notes are presented as permitted by Form 10-QSB. These condensed financial statements have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). Certain information and footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting
principles, have been omitted pursuant to such SEC rules and regulations. These financial statements should be read in conjunction with the Companys audited financial statements and the accompanying notes included in the Companys Form
10-KSB for the year ended May 31, 2002, filed with the SEC. The results of operations for the three and six month period ended November 30, 2002, are not necessarily indicative of the results to be expected for any subsequent quarter or for the
entire fiscal year.





Gross revenuesincludes the value of currency processed and does not represent
revenue under generally accepted accounting principles.





The research and development of new software products and
enhancements to existing software products were expensed as incurred (and recorded in the consolidated statement of operation) until technological feasibility has been established. Technological feasibility is established upon completion of a
detailed program design or working model. As of November 30, 2002, capitalized software costs amounted to $2,285,720. Technological feasibility was achieved in September of 1999 and commencing October 1, 1999 all expenses related to EMMA software
development have been capitalized. As of December 31, 2001, the Company had capitalized $2,771,536 in development and related costs. The EMMA product was available for release to the public in January 2002 thus all development costs since have been
expensed including $167,000 for the six month period ended November 30, 2002.




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Amortization of the capitalized software commenced on January 1, 2002.
Amortization had been calculated over a seven (7) year period for the quarter ended February 28, 2002 resulting in an amortization expense of $65,989. Management changed the amortization period for capitalized software, to five (5) years starting
March 1, 2002, primarily to approximate the estimated period over which the business brought about by the technology will expand into its expected capacity. As of March 1, 2002, net unamortized capitalized software amounted to $2,705,547 net of
accumulated amortization of $65,989. The unamortized cost as of March 1, 2002 is being amortized over the remaining revised estimated life. The change resulted in an amortization expense of $205,931, an increase of $40,959 ($0.01 per share) from the
original estimated amortization period, for the year ended May 31, 2002. During the six month period ended November 30, 2002, the Company amortized an additional $279,884 of capitalized software.





The current EMMA asset is currently valued at $2,285,720, which reflects the costs incurred by the Company in developing the asset, as
well as the net realizable value estimated in managements determination. Management believes that its estimates reflect its ability, based upon managements internal projections, to obtain a recovery on the asset. These estimates assume
that recovery of the value of the asset will be obtained commencing in the later half of 2003 calendar year, and will be obtained fully by the end of the calendar year 2005. These projections and estimates are subject to numerous contingencies,
including, without limitation, the condition of the economy and the ability of corporate entities to purchase software such as the EMMA software.





In its projections, management has calculated a transaction fee based upon the use of the technology through placement on mobile trucks operated by an independent third party. The Company currently has
a pilot program with an unaffiliated third party for such services. The transaction charge for use through ATM machines would be higher, because the services available through an ATM located in a bank office would be greater and the expense to the
Company is also greater. The projected transaction fee is based upon managements discussions with potential customers, including bank and non-bank ATM service providers. Management has had significant negotiations with representatives of
various large financial institutions regarding the installation of EMMA based products. However, to date the Company has not entertained any definitive agreements with any institution. According to a study entitled the Use of Checks and other
Non-Cash Payments Instruments in the United States prepared by the Federal Reserve, there were 42.5 billion checks processed by financial institutions in the United States during the year 2000 about a third of which are of the type that the
Companys products are intended to help process.





Much of our SG&A costs are fixed in nature, therefore,
as volume of transactions and revenues increase, the SG&A does not increase proportionately.





There can be no
assurance that managements estimates will prove accurate, and investors should be aware that in the event these estimates are inaccurate, a write down of all or a portion of this asset may be required.





NOTE 2. COMMITMENTS AND CONTINGENCIES





On August 7, 2000 Shaws Supermarkets filed a lawsuit, captioned Shaws Supermarkets, Inc. v. Cash Technologies, Inc., CoinBank Automated Systems Inc. (Civil action # 00CV11571WGY, United States District
Court, District of Massachusetts), against us claiming breach of contract and damages. We operated CoinBank machines in Shaws locations in New England on a free-placement basis since June 1999 and had been negotiating a settlement and
termination agreement with Shaws to terminate the CoinBank machine placements in light of our decision to exit the free placement business. Shaws was




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claiming damages in excess of $200,000, for contract termination fees and reimbursements. We believed that the amount owed was approximately
$55,000 and had accrued for the liability. In January of 2001, both parties agreed in principal to settle the lawsuit for $74,779 granting that Shaws release all of the CoinBank machines being held at its facilities. The settlement agreement
was never completed due to a disagreement over some of its terms.





On June 7, 2002, Shaws Supermarkets filed
a lawsuit, captioned Shaws Supermarkets, Inc. v. Cash Technologies, Inc., CoinBank Automated Systems Inc. (Civil action # 02-02532, United States District Court, District of Massachusetts), against us again claiming breach of contract
and damages in excess of $200,000. We were unaware of the lawsuit until September 2002 when we were served. We are defending the lawsuit and believe we have meritorious defenses. Furthermore, we have filed a countersuit in excess of $750,000 for the
value for our CoinBank machines, loss of business and all other applicable costs incurred by us.





In December
1997, Vindex USA, Inc. filed a complaint against our CoinBank subsidiary, in the Superior Court of California, Los Angeles County seeking to recover $40,000, an unspecified amount of commissions and interest accrued thereon allegedly due it under
the terms of a consulting agreement it alleges was breached by CoinBank. The court has entered judgment against CoinBank in favor of Vindex in the sum of $97,864, which remains outstanding.





We have commenced a lawsuit in Austria against Geld Bearbeitungs Systeme GES.M.B.H., an Austrian entity which had been manufacturing certain of our CoinBank machines. As
previously described in our SEC Reports, we have a five year licensing and manufacturing services agreement with Geld. We had previously entered into a letter of intent to acquire Geld and certain disputes have arisen regarding the acquisition and
licensing agreements between the parties. We instituted the suit to enforce certain licensing rights under our agreements and to enforce the acquisition letter of intent. Although we believe, based upon advice of our Austrian counsel, that we have a
meritorious and strong claim, we may not be successful in our suit. Recently the Austrian Courts awarded us a 10% ownership interest in Geld resulting from a ruling adverse to one of its principals.





We are involved in a litigation titled Kane Corte, et al v. Cash Technologies, Inc. et al., (Case # 128256, 32/nd/ Judicial
District Parish of Terrebonne, State of Louisiana). In August 2001, we first became aware that an entity to which we had sold 23 CoinBank machines in October 1999 had filed suit against us in Louisiana court and obtained a default judgment against
us. The Louisiana judgment was issued on August 15, 2000 and rewarded the purchaser $230,000 in damages and ordered that the machines be returned to the Company. In March 2001, the purchaser obtained a sister-state judgment against us in California
based on the judgment of the Louisiana court and a writ of execution was issued.





Upon learning of this matter, we
immediately initiated legal actions in Louisiana and California. At a hearing in the Louisiana court, we were granted a Temporary Restraining Order staying enforcement of the judgment. We contend that the Louisiana court had no jurisdiction over it
and that we were never properly served with either the original Louisiana lawsuit, the judgment issued by the Louisiana court or the California sister- state judgment. We also contend that Kane Cortes allegations are without merit and that his
desire to return the machines is a result of his failed business practices. The Company has initiated legal action in both Louisiana and California seeking to set aside both judgments and to cause the matter, including the issue of jurisdiction, to
be heard on its merits by the Louisiana court. The Company believes that it will be successful in these actions to set aside the judgments. The Company further believes that it has meritorious defenses to each of the allegations in the action and
that it will ultimately prevail on merits. The Company will incur the cost of defense, including legal fees, in an undetermined amount in connection with these matters, which may not be recoverable. There can be no assurance that




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the Company will be successful in the defense.





On July 10, 2002, Burns International Security Services (Burns) obtained a default judgment against the Company for $14,157 (the Judgment) for services Burns rendered to one of
the Companys affiliates. On August 15, 2002, the Company, not having received actual notice of the lawsuit before the judgment was entered, filed a motion to set aside or vacate the Judgment. The court, on September 4, 2002, issued a tentative
ruling in the Companys favor granting the motion to set aside or vacate the Judgment. In October 2002, the Company and Burns reached a settlement for the Company to pay a gross amount of $12,257 in installments. As of January 15, 2002, the
Company has made a payment of $2,000.00 with regards to this judgment.





On August 1, 2002, Cash Technologies, Inc.
filed a lawsuit, captioned Cash Technologies, Inc. v. McNeely and Willmon (Case No. BC 278823, Superior Court of the State of California), for breach of contract. In September 2002, Cash Technologies, Inc. entered into promissory notes with
McNeely and Willmon in the amount of $79,999. Pursuant to the promissory notes the funds were due to be returned in December 2002. Despite our repeated attempts both McNeely and Willmon have refused to pay the funds owed to us. We are seeking an
amount in excess of $79,999. On September 25, 2002, McNeely and Willmon filed a cross complaint claiming $500,000 in compensatory damages. The next scheduled court hearing is scheduled for February of 2002. Although, we believe that the cross
complaint has no merit and we are confident that we will prevail in regards to this lawsuit, there can be no assurance.





NOTE 3:
STOCKHOLDERS EQUITY





In June 2002, in a private transaction under Section 4(2) of the Securities Act of 1933,
as amended, sold 1 unit at an aggregate of $50,000 of its securities to 1 foreign investor. Each unit comprised of (i) 33,333 shares of Common Stock and (ii); 5,000 common stock purchase warrants. The warrants have an exercise price of $2.00 per
share and are exercisable for five years. A deemed dividend benefit of $4,855 was recognized in conjunction with this placement.





In June 2002, the Company issued 60,400 shares of the Companys common stock and 50,400 common stock warrants with an exercise price of $2.00 and a five (5) year life to a consultant in lieu of cash payment. The Company recorded
a compensation expense charge of $90,600 as well as a beneficial conversion feature of $50,291.





In June 2002, the
Company issued 55,000 shares of the Companys common stock to one of its developers in lieu of cash payment for services rendered. The shares of common stock were valued at $1.36 per share.





In October 2002, in a private transaction under Section 4(2) of the Securities Act of 1933, as amended, the Company sold 1 unit at an aggregate of $250,000 of its
securities to a shareholder. The unit comprised of (i) 312,500 shares of Common Stock and (ii); 150,000 common stock purchase warrants. The warrants have an exercise price of $0.95 per share and are exercisable for five years. A deemed dividend
expense of $23,055 was recognized in conjunction with this placement.





During the quarter ended November
30, 2002, shareholders converted 20,000 shares of Series B and 10,500 of Series A Redeemable Preferred Stock for 30,500 shares of the Companys Common Stock.





During the quarter ended November 30, 2002, the Company received $100,000 from a Series D warrant holder to exercise 200,000 warrants into 200,000 shares of the
Companys common stock.




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During the quarter ended November 30, 2002, the Company received an additional
$45,000 from 3 of its shareholders for an equity share in the Companys subsidiary of CT Holdings, LLC. As of November 30, 2002 the Company has received $413,000 in net proceeds and the shareholders own 13.35% while the Company owns 86.65% of
CT Holdings, LLC. The proceeds from this have been used to further develop the BONUS product for CT holdings, LLC as well as working capital for CT Holdings, LLC and Cash Technologies, Inc.





NOTE 4: RELATED PARTY TRANSACTIONS





In April
2001, the Company had obtained a short-term loan of $75,000 from Mr. Robert Fagenson who serves on the Companys Board of Directors. The total amount of this loan is still outstanding. The loan bears an interest rate 10% per annum and is
payable upon demand. As of the quarter ended November 30, 2002 the Company has accrued $12,500 in interest with regards to this loan. The Company has issued warrants to purchase 10,000 shares of the Companys common stock at an exercise price
of $2.00 per share and an exercise period of three years. A compensation expense of $7,284 has been recorded in conjunction with the warrants.





As of November 30, 2002, the Company has outstanding short-term loans of an aggregate principal amount of $98,448 from Bruce Korman (and related parties) who is an affiliate, Chief Executive Officer
and Chairman of the Board of Directors of the Company. The loans are short-term non-interest bearing loans and are payable upon demand. Furthermore, as of November 30, 2002, the Company had $90,523 in arrears in salary to Mr. Korman.





NOTE 5: SHORT-TERM DEBT





In 1997, we entered into a credit agreement with G.E. Capital Corporation (G.E.) pursuant to which we borrowed $5,500,000 for the purchase of CoinBank component equipment, working capital and general corporate purposes.
On September 29, 2000 the Company entered into an agreement with GE to defer principal payments on the debt for twelve (12) months and to defer interest payments for six (6) months. As consideration for the extension, the Company and GE have agreed
to increase the principal portion of the loan by $500,000 and the Company recorded deferred financing fees, which were amortized over an eighteen (18) month period. The Company and G.E. Capital had negotiated another waiver agreement as of September
13, 2001 pursuant to which G.E. Capital agreed to a six (6) month deferral of interest payments and a twelve (12) month deferral of principal payments provided (i) we granted G.E. Capital a lien on all of its assets (ii) we paid G.E. Capital 60% of
all proceeds from the sale of its CoinBank machines (iii) we obtained subordination agreements from all of our noteholders prior to December 30, 2001 whereby the noteholders subordinate their lien to that of G.E. Capital (iv) the sum of $250,000 is
added to the outstanding principal amount of the loan, which is being amortized over a twelve (12) month period. On September 27, 2002 the Company entered into an agreement with GE to pay the total debt outstanding in twelve (12) monthly payments
beginning October 15, 2002 of which the first eleven (11) consisting of interest only and the payment twelve (12) consisting of all outstanding principal, interest and fees. The Company agreed to (i) pay 9.5% per annum for the first six (6) payments
(ii) pay 11.5% per annum for the last six (6) payments (iii) a minimum of 18% if the Company was to become in default (iv) 5% late fee if a payment is received ten (10) days after the payment date and (v) 90% of all gross proceeds received from the
sale of presently owned CoinBank machines. As of November 30, 2002 we owed $3,903,723, which includes the principal, financing fees and unpaid interest.




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NOTE 6: CONVERTIBLE DEBT





In January 2000, we completed a private placement offering of convertible notes and warrants under Section 4(2) of the Securities Act of 1933. The offering consisted of
units, each unit comprised of a secured convertible promissory note in the principal amount of $50,000, bearing interest at the rate of 10% per annum and Series B Redeemable Warrants to purchase 5,000 shares of common stock. GunnAllen Financial,
Inc., one of our investment bankers and an underwriter in our initial public offering, was engaged as placement agent for this offering. We received gross proceeds from this offering of $3,362,000 from the sale of 67.2 Units. As a result of this
offering, we issued notes in the aggregate principal amount of $3,362,000 and 336,200 Series B Common Stock Purchase Warrants The notes were originally convertible into our Common Stock at the conversion rate of $9.50 per share. The Series B
Warrants were originally exercisable at a price of $13.00 per share. The notes were originally due and payable on July 31, 2001. The notes were secured by a first priority lien on all of our assets.





Since July 31, 2001, some of the notes have been in default, and some have been restructured. Under the restructuring, the notes were
extended for two (2) years to July 2003, the noteholders agreed to surrender all old warrants priced at $13.50 per share to receive 2 replacement warrants for every old warrant surrendered. The new warrants are vested immediately, have a life of 5
years and were exercisable at $1.35 thru December 31, 2001, $2.20 through January 15, 2002 and $4.50 thereafter. As of November 30, 2002 the Company has restructured $2,587,000 of the notes, representing thirty-five (35) of the forty-eight (48)
noteholders, or approximately 77% of the total dollar amount of notes outstanding. The Company is engaged in discussions with the remaining thirteen (13) noteholders to finalize modifications of their notes. As part of the restructuring process the
Company reclassified $339,722 of interest accrued as part of the reissued notes. There can be no assurance we will be successful in restructuring these remaining notes. As of November 30, 2002 the Company has accrued an additional $474,276 in
interest payable on the notes. The Company has recognized a deemed dividends expense of $273,904 in conjunction with this restructuring.





NOTE 7: SEGMENT REPORTING





The Company operates through 3 business segments: Cash
processing, CoinBank machines, and the development and marketing of its EMMA transaction processing software and related services. The Company had until recently a firm fixed price contract with the Los Angeles County Metropolitan Transportation
Authority to count currency, which purchased in bulk at a discount from face value and processed and deposited at face value in the Companys account. The Companys contract with the Los Angeles County Metropolitan Transit Authority
(LACMTA) to count currency expired on June 30, 2002, which has resulted and will result in a significant reduction in the Companys gross revenue in the future. As of January 1, 2002 the Company does not have any cash processing customers and,
due to our focus on our other businesses, we may choose not to pursue other cash processing customers. The Company also sells self-service coin counting (CoinBank) machines through existing equipment distribution channels.




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Information on the Companys business segments for the:





Three months endedNovember 30,


Six months endedNovember 30,2002


2001


2002


2001Net Revenues and Sales:Cash processing

$



$
67,839


$
27,624


$
82,741Coinbank machines


45,492



82,627



183,992



96,578EMMA






10,000



21,247



10,000Unallocated














45,492



160,466



232,863



189,319Interest expenseCash processing






642







642Coinbank machines


2,336



2,336



4,821



4,672EMMA














Unallocated


185,225



287,484



411,873



549,903187,561



290,462



416,694



555,217DepreciationCash processing






4,698







20,201Coinbank machines


5,849



10,231



11,697



22,407EMMA


139,942







279,884



Unallocated


1,358



8,787



3,130



16,805147,149



23,716



294,711



59,413Segment profit (loss)Cash processing






(25,602
)


(25,921
)


(84,150
)Coinbank machines


(192,571
)


(155,977
)


(385,165
)


(391,197
)EMMA


(139,942
)






(279,884
)


Unallocated


(679,002
)


(568,417
)


(1,433,912
)


(1,068,789
)(1,011,515
)


(749,996
)


(2,124,852
)


(1,544,136
)Net identifiable assets:Cash processing






36,099







36,099Coinbank machines


903,891



1,136,404



903,891



1,136,404EMMA


2,285,720



2,713,870



2,285,720



2,713,870




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Unallocated

201,997

763,603

199,764

763,6033,391,608

4,649,976

3,389,375

4,649,976





NOTE 8: SUBSEQUENT EVENTS





NONE




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS





SAFE
HARBOR STATEMENT





In addition to historical information, the information included in this Form 10-QSB
contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), such
as those pertaining to the Companys capital resources, performance and results of operations. Forward-looking statements involve numerous risks and uncertainties and should not be relied upon as predictions of future events. Certain such
forward-looking statements can be identified by the use of forward-looking terminology such as believes, expects, may, will, should, seeks, approximately,
intends, plans, pro forma, estimates, or anticipates or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy, plans or intentions. Such
forward-looking statements are necessarily dependent on assumptions, data or methods that may be incorrect or imprecise and may be incapable of being realized. The following factors, among others, could cause actual results and future events to
differ materially from those set forth or contemplated in the forward-looking statements: significant and immediate need for capital, market acceptance of the Companys products, technological restrictions upon development, the lack of revenue,
limited marketing experience, uncertainty of product development, including our EMMA technology, dependence upon new technology, need for qualified management personnel and competition. The success of the Company also depends upon economic trends
generally, governmental regulation, legislation, and population changes. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect managements analysis only. The Company assumes no obligation to update
forward-looking statements.





Introduction





Cash Technologies, Inc., is a Delaware corporation, incorporated in August 1995. Unless the context otherwise requires, references herein to we, our
or Cash Tech refers to Cash Technologies, Inc., and its wholly-owned subsidiaries, National Cash Processors, Inc., a Delaware corporation, incorporated in May, 1994, which became a subsidiary in January, 1996; CoinBank Automated Systems,
Inc., a Delaware corporation, incorporated in November, 1995; and CoinBank Automation Handels GmbH, Salzburg, Austria incorporated in February, 1998. In December, 2001, we created a new subsidiary, Cintelia Systems Inc., a Delaware corporation and
in June, 2002 we created another subsidiary CT Holdings, LLC., also a Delaware corporation of which we currently own 86.65%.





Our business model has evolved over the last three years from a business based upon currency processing in our Los Angeles facilities and retail coin processing through our CoinBank machines, to a business based upon our proprietary
transaction processing technology called E-commerce Message Management Architecture, or EMMA. Although we intend to continue operations in our original two lines of business, much of our operations in the last three years have been refocused upon
development of EMMA and marketing of this new transaction processing technology. We anticipate most of our future growth will be based upon EMMA, although there can be no assurance that we will be able to generate revenue from this business line and
we have not generated any EMMA related revenue to date.





EMMA is designed to interface with our various e-commerce
partners and to seamlessly connect with financial networks, particularly the four main channels through which trillions of dollars in commerce are transacted each year:





(1) the ATM network;




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(2) the credit card network;


(3) the Automated Clearing House (ACH) network; and


(4) cash.





The EMMA transaction processing system allows individuals with no ATM card or credit card to access these four channels and obtain the expanded number of services that are
offered through them, and not otherwise easily accessible. For consumers, EMMA will result in access to these services and products through ATM machines and Point of Sale terminals located at retail outlets, including supermarkets, general
merchandisers and convenience stores and others. Utilization of EMMA will allow retail establishments such as grocery supermarkets, banks, brokerage firm offices, check cashing establishments and other commercial outlets to provide consumers with
greater financial services which may result in increased revenues to such establishments. For every transaction processed through EMMA, we intend to receive a transaction fee.





Over the past fiscal year and since, numerous business milestones were achieved by the Company, including the following:





| |  |  | We were issued a U.S. patent for essential elements of our EMMA technology
| | - |  | --------------------------------------------------------------------------

| |  |  | We were issued a U.S. patent for critical components of our CoinBank coin counting machine
| | - |  | ------------------------------------------------------------------------------------------

| |  |  | The EMMA software was deemed ready for market.
| | - |  | ----------------------------------------------

| |  |  | The BONUSbank check cashing application was created
| | - |  | ----------------------------------------------------

| |  |  | Our CT Holdings subsidiary was formed to market BONUS
| | - |  | -----------------------------------------------------

| |  |  | CT Holdings signed its first major marketing agreement with Netkey, Inc. to market BONUS to the banking industry in June, 2002
| | - |  | ------------------------------------------------------------------------------------------------------------------------------

| |  |  | A supply agreement was signed with Diebold, Inc. in July, 2002 to permit Diebold to distribute our CoinBank machines to its customers and the first order of
twenty CoinBank machines under the Diebold agreement was shipped
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | The Companys first transaction revenue generating contract was signed with a Banco Popular division in August, 2002 for our mobile check cashing
application
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | The Company installed the Banco Popular mobile check cashing pilot in December, 2002.
| | - |  | -------------------------------------------------------------------------------------




E-Commerce Message Management Architecture (EMMA)  Transaction Processing System





In 1996, the Company began its development of an
enhanced version of an automated teller machine which was designated the ATM-X  . The ATM-X was
designed to provide a range of services not typically offered by ATM machines, such as electronic bill payment, instant activated phone cards, event ticketing and others. As development efforts proceeded, the Company discovered the need to create a
robust transaction processing system that could link the new ATMs with the worldwide financial networks in order to provide these new services to ATMs, kiosks and wireless devices.





In December of 1997, the Company filed a patent application describing its transaction processing and networking technologies, which resulted in the issuance of patent,
number 6,308,887, by the U.S. Patent and Trademark Office on October 30, 2001. The technology, which was later named EMMA (E-commerce Message Management Architecture), allows for the seamless integration of conventional ATM and credit card networks
with non-bank networks and the Internet. The explosion of Internet e-commerce has created, in managements opinion, a demand for EMMAs unique capabilities to provide advanced financial services on ATMs, POS (point of sale) terminals and
wireless devices.




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Technological feasibility was achieved in September of 1999 and commencing
October 1, 1999 all expenses related to EMMA software development had been capitalized. As of December 31, 2001, the Company had capitalized $2,771,536 in development and related costs. The EMMA product was available for release to the public in
January 2002 thus all development costs since have been expensed including $167,000 for the six month period ended November 30, 2002.





Amortization of the capitalized software commenced on January 1, 2002. Amortization had been calculated over a seven (7) year period for the quarter ended February 28, 2002 resulting in an amortization expense of $65,989.
Management changed the amortization period for capitalized software, to five (5) years starting March 1, 2002, primarily to approximate the estimated period over which the business brought about by the technology will expand into its expected
capacity. As of March 1, 2002, net unamortized capitalized software amounted to $2,705,547. The unamortized cost as of March 1, 2002 is being amortized over the remaining revised estimated life. The change resulted in an amortization expense of
$205,931, an increase of $40,959 ($0.01 per share) from the original estimated amortization period, for the year ended May 31, 2002. During the quarter ended November 30, 2002, the Company amortized an additional $139,942 of capitalized
software.





Commercial Cash Processing





Cash Technologies, Inc. operates a cash processing facility in Los Angeles, California, where it counts currency purchased in bulk at a small discount from face value. We
then sort, wrap and resell the currency to various retail customers at face value plus a small fee or deposit it at face value at the Federal Reserve Bank for credit to our account. The Companys contract with the Los Angeles County
Metropolitan Transit Authority (LACMTA) to count currency expired on June 30, 2002, which will result in a significant reduction in the Companys gross revenue in the future. As of January 1, 2002 the Company does not have any cash processing
customers and, due to our focus on our other businesses, we may choose not to pursue other cash processing customers.





CoinBank
Machines Business





In 1995, the Company began its development of CoinBank ® self-service coin counting machines, distributed through its CoinBank Automated Systems, Inc. subsidiary. The machines accept and count
loose coin, then generate a receipt redeemable for the amount counted less a service fee of typically 7-9%. This receipt can then be exchanged for currency or goods. The machines provide individuals and small businesses with a convenient method for
the disposing of their accumulated loose coin without the need for pre-sorting or wrapping. The Company has performed extensive field tests with these machines in the U.S. and Europe. The machines can be readily configured to count coin
denominations from most countries in the world. An important feature of the machines, for which the Company has received a U.S. patent, number 6,318,536, is their ability to reject extraneous materials such as foreign objects and slugs, minimizing
down time and repairs.





The Company is marketing the machines to other equipment manufacturer OEM
customers (manufacturers of cash handling equipment), companies with existing equipment distribution and service channels and directly to retailers and financial institutions.





During the fiscal year ended May 31, 2001, the Companys market analysis for self-service coin counting machines indicated that retailers were demanding higher profit
margins from the operation of these devices than that was being offered through the free-placement business model. The Company




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concluded that its free-placement program should be supplanted by direct sales of these machines to retail store chains and removed
substantially all of its free-placement machines from operation, including the termination of its agreement with Shaws Supermarkets. See Legal Proceedings. Though the Company intends to complete certain potential direct sales of
its coin machines, it intends to focus substantially all of its efforts and operations on the continued development and deployment of the EMMA technology.




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RESULTS OF OPERATIONS





THREE MONTHS ENDED NOVEMBER 30, 2002, COMPARED TO THREE MONTHS ENDED NOVEMBER 30, 2001.





Net revenues for the three-month period ended November 30, 2002 decreased to $45,492 compared to $160,466 for the 2001 period. The decrease in net revenue was primarily attributable to the
decrease in the amount of cash processed during the period. The Companys contract with the Los Angeles County Metropolitan Transit Authority (LACMTA) to count currency expired on June 30, 2002, which has resulted in a reduction in the
Companys net revenue.





Cost of revenues for the three-month period ended November 30, 2002, was
$41,392 compared to $100,437 for the quarter ended November 30, 2001. The decrease in direct costs was primarily the result of a decrease in the amount of cash processed during the period. Included in cost of revenues is depreciation expense of $961
and $1,560 for the three months ended November 30, 2002 and 2001, respectively.





Gross profitfor the three
months ended November 30, 2002 was $4,100 compared to $60,029 for the three months ended November 30, 2001. Gross profit decreased since the Company had no cash processing operations during the period.





Selling, General and Administrative expenses for the three months ended November 30, 2002, increased to $619,958 compared to
$495,847 for the three months ended November 30, 2001. These expenses consist primarily of wages (and wage related costs), outside contractor expenses, travel/promotional expenses, professional services and facilities/office related expenses. The
increase was primarily attributable to capitalization of software development costs during the 2001 period while amortization of capitalized software was being recognized in the 2002 period. During the quarter ended November 30, 2001, $170,858 in
software development costs was capitalized compared to zero for the same period in 2002.





Research and
developmentexpenses for the three months ended November 30, 2002, $72,346, compared to zero for the three months ended November 30, 2001. The increase was the result of the Company ceasing to capitalize software expenses as of January 1, 2002.





Depreciation and amortization expenses for the three months ended November 30, 2002, and 2001, were
$147,149 and $23,716, respectively. The increase was the result of the amortization of capitalized software costs of 139,942 during the current quarter.





Interest expense for the three months ended November 30, 2002 and 2001, was $187,561 and $290,462, respectively. The decrease is directly related to reduction in interest expense recognized in
relation to GE Capital loan deferments.





Net loss applicable to minority interest for the three month period ended
November 30, 2002, was $811,399 compared to zero for the 2001 period.





As a result of the foregoing, net
losses for the three months ended November 30, 2002 and 2001, were $(1,011,515) and $749,996 respectively.




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SIX MONTHS ENDED NOVEMBER 30, 2002, COMPARED TO SIX MONTHS ENDED NOVEMBER 30, 2001.





Net revenues for the six-month period ended November 30, 2002 increased to $232,863 compared to $189,319 for the 2001
period. The increase in net revenue was primarily attributable to the increase in the amount of CoinBank machines sold offset by the decrease in the amount of cash processed during the period. The Companys contract with the Los Angeles County
Metropolitan Transit Authority (LACMTA) to count currency expired on June 30, 2002, which has resulted in a reduction in the Companys net revenue.





Cost of revenues for the six-month period ended November 30, 2002, was $171,850 compared to $139,511 for the quarter ended November 30, 2001. The increase in direct costs was primarily the
result of an increase in the cost of coin machines sold. Included in cost of revenues is depreciation expense of $1,922 and $2,781 for the six months ended November 30, 2002 and 2001, respectively.





Gross profitfor the six months ended November 30, 2002 was $61,013 compared to $49,808 for the six months ended November 30, 2001.
The increase in gross profit was directly related to the increase in CoinBank machines sold.





Selling, General
and Administrative expenses for the six months ended November 30, 2002, increased to $1,318,859 compared to $970,877 for the six months ended November 30, 2001. These expenses consist primarily of wages (and wage related costs), outside
contractor expenses, travel/promotional expenses, professional services and facilities/office related expenses. The increase was primarily attributable to capitalization of software development costs during the 2001 period while amortization of
capitalized software was being recognized in the 2002 period. During the six-month period ended November 30, 2001, $351,121 in software development costs was capitalized compared to zero for the same period in 2002.





Research and developmentexpenses for the six months ended November 30, 2002, $167,000, compared to zero for the six months ended
November 30, 2001. The increase was primarily attributable to capitalization of software development costs during the 2001 period.





Depreciation and amortization expenses for the six months ended November 30, 2002, and 2001, were $294,711 and $67,850, respectively. The increase was the result of the amortization of capitalized software costs of
$279,884 during the current quarter.





Interest expense for the six months ended November 30, 2002 and 2001,
was $416,694 and $555,217, respectively. The decrease is directly related to reduction in interest expense recognized in relation to GE Capital loan deferments.





Net loss applicable to minority interest for the six month period ended November 30, 2002, was $11,399 compared to zero for the 2001 period.





As a result of the foregoing, net losses for the six months ended November 30, 2002 and 2001, were $2,124,852 and $1,544,136 respectively.




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LIQUIDITY AND CAPITAL RESOURCES





The Companys capital requirements have been and will continue to be significant and its cash requirements have been exceeding its cash flow from operations. At
November 30, 2002, the Company had a working capital deficit of $8,837,518 compared to a working capital deficit of $10,627,413 for 2001. The variance in the working capital is primarily due to reclassification in the current period of convertible
notes payable of $2,926,722 from short term to long term and GE notes payable of $3,288,465 from long term to short term. At January 21, 2002, the Company had a cash balance of approximately $50,000. The Companys current monthly operating
costs without any interest or principal payments on debt, amortization of warrants and depreciation expense; is approximately $150,000 per month.





Since inception, the Company has satisfied its working capital requirements through limited revenues generated from operations, the issuance of equity and debt securities, borrowing under a line of
credit and loans from stockholders of the Company. Furthermore, the Companys contract with the Los Angeles County Metropolitan Transit Authority (LACMTA) to count currency expired on June 30, 2002, which will result in a significant reduction
in the Companys gross revenue in the future. As of January 1, 2002 the Company does not have any cash processing customers.





The Company has entered into an OEM arrangement to supply Diebold, Inc with CoinBank machines for Diebold, Inc. to sell through its sales force. The first 20 machines under this relationship were shipped in August 2002 and an
additional 3 in December 2002. The Company believes that this relationship could result in significant revenues over the next 12-month period. The gross proceeds of these sales were approximately $160,000, although there can be no assurance of
future sales.





In August 2002, we signed an agreement with Popular Cash Express, Inc. (PCE), a unit of
Banco Popular parent Popular, Inc., to install its EMMA  MFS  (Mobile Financial Services) system on PCEs mobile check cashing trucks. Under the agreement, PCE is responsible for installation
and hardware costs and a per-transaction fee to Cash Tech for each check processed. The agreement provides for the parties to share the cost of a 120-day pilot, the successful conclusion of which would be followed by a rollout to PCEs fleet of
sixty (60) check cashing trucks in the Los Angeles area. In December, 2002 the Company installed EMMA MFS on the first PCE truck. There can be no assurance we will obtain revenue from the pilot program.





The Companys independent certified public accountant included an explanatory paragraph in its report for the year ended May 31,
2002, which indicated a substantial doubt as to the ability of the Company to continue as a going concern. This concern is primarily due to substantial debt service requirements and working capital needs. See independent certified public
accountants letter.





Net cash used by operating activities was $813,658 for the six months ended November
30, 2002, compared to $465,887 for the six months ended November 30, 2001. The total increase of $347,771 in net cash used by operating activities, during the 2002 period was primarily due to a decrease in non-cash deemed interest expense of
$125,001, depreciation expense of $42,663, accrued interest $56,755 and accrued expenses and other current liabilities of $67,715, offset by the increase in receivables of $279,885 and non-cash compensation of $162,598.





Net cash used in investing activities was $969 for the six months ended November 30, 2002, as compared to $353,323 for the six months
ended November 30, 2001. The decrease in net cash used in investing activities was primarily attributable to a decrease in capitalized software cost of $351,121.




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Net cash provided by financing activities for the six months ended November 30,
2002, was $395,681 as compared to net cash provided by financing activities of $969,940 for the six months ended November 30, 2001. The decrease in net cash provided by financing activities for the 2002 period was primarily attributable to decreases
in proceeds from the issuance of preferred stock of $750,500 offset by increases in net proceeds from exercise of common stock warrants of $100,000 and proceeds from sale of common stock of $82,500.





In 1997, we entered into a credit agreement with G.E. Capital Corporation (G.E.) pursuant to which we borrowed $5,500,000 for
the purchase of CoinBank component equipment, working capital and general corporate purposes. On September 29, 2000 the Company entered into an agreement with GE to defer principal payments on the debt for twelve (12) months and to defer interest
payments for six (6) months. As consideration for the extension, the Company and GE have agreed to increase the principal portion of the loan by $500,000 and the Company recorded deferred financing fees, which were amortized over an eighteen (18)
month period. The Company and G.E. Capital had negotiated another waiver agreement as of September 13, 2001 pursuant to which G.E. Capital agreed to a six (6) month deferral of interest payments and a twelve (12) month deferral of principal payments
provided (i) we granted G.E. Capital a lien on all of its assets (ii) we paid G.E. Capital 60% of all proceeds from the sale of its CoinBank machines (iii) we obtained subordination agreements from all of our noteholders prior to December 30, 2001
whereby the noteholders subordinate their lien to that of G.E. Capital (iv) the sum of $250,000 is added to the outstanding principal amount of the loan, which is being amortized over a twelve (12) month period. On September 27, 2002 the Company
entered into an agreement with GE to pay the total debt outstanding in twelve (12) monthly payments beginning October 15, 2002 of which the first eleven (11) consisting of interest only and the payment twelve (12) consisting of all outstanding
principal, interest and fees. The Company agreed to (i) pay 9.5% per annum for the first six (6) payments (ii) pay 11.5% per annum for the last six (6) payments (iii) a minimum of 18% if the Company was to become in default (iv) 5% late fee if a
payment is received ten (10) days after the payment date and (v) 90% of all gross proceeds received from the sale of presently owned CoinBank machines. As of November 30, 2002 we owed $3,903,723, which includes the principal, financing fees and
unpaid interest.





In January 2000, we completed a private placement offering of convertible notes and warrants
under Section 4(2) of the Securities Act of 1933. The offering consisted of units, each unit comprised of a secured convertible promissory note in the principal amount of $50,000, bearing interest at the rate of 10% per annum and Series B Redeemable
Warrants to purchase 5,000 shares of common stock. GunnAllen Financial, Inc., one of our investment bankers and an underwriter in our initial public offering, was engaged as placement agent for this offering. We received gross proceeds from this
offering of $3,362,000 from the sale of 67.2 Units. As a result of this offering, we issued notes in the aggregate principal amount of $3,362,000 and 336,200 Series B Common Stock Purchase Warrants The notes were originally convertible into our
Common Stock at the conversion rate of $9.50 per share. The Series B Warrants were originally exercisable at a price of $13.00 per share. The notes were originally due and payable on July 31, 2001. The notes were secured by a first priority lien on
all of our assets.





Since July 31, 2001, some of the notes have been in default, and some have been restructured.
Under the restructuring, the notes were extended for two (2) years to July 2003, the noteholders agreed to surrender all old warrants priced at $13.50 per share to receive 2 replacement warrants for every old warrant surrendered. The new warrants
are vested immediately, have a life of 5 years and were exercisable at $1.35 through December 31, 2001, $2.20 through January 15, 2002 and $4.50 thereafter. As of November 30, 2002 the Company has restructured $2,587,000 of the notes, representing
thirty-five (35) of the forty-eight (48) noteholders, or approximately 77% of the total dollar amount of notes outstanding. The Company is engaged in discussions with the remaining thirteen (13) noteholders to finalize modifications of their notes.
As part of the restructuring process the Company reclassified $339,722 of




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interest accrued as part of the reissued notes. There can be no assurance we will be successful in restructuring these remaining notes. As of
November 30, 2002 the Company has accrued an additional $474,276 in interest payable on the notes. The Company has recognized a deemed dividends expense of $273,904 in conjunction with this restructuring.





In June 2002, in a private transaction under Section 4(2) of the Securities Act of 1933, as amended, sold 1 unit at an aggregate of
$50,000 of its securities to 1 foreign investor. Each unit comprised of (i) 33,333 shares of Common Stock and (ii); 5,000 common stock purchase warrants. The warrants have an exercise price of $2.00 per share and are exercisable for five years. A
deemed dividend benefit of $4,855 was recognized in conjunction with this placement.





In June 2002, the Company
issued 60,400 shares of the Companys common stock and 50,400 common stock warrants with an exercise price of $2.00 and a five (5) year life to a consultant in lieu of cash payment. The Company recorded a compensation expense charge of $90,600
as well as a beneficial conversion feature of $50,291.





In June 2002, the Company issued 55,000 shares of the
Companys common stock to one of its developers in lieu of cash payment for services rendered. The shares of common stock were valued at $1.36 per share.





In October 2002, in a private transaction under Section 4(2) of the Securities Act of 1933, as amended, the Company sold 1 unit at an aggregate of $250,000 of its securities to a shareholder. The unit
comprised of (i) 312,500 shares of Common Stock and (ii); 150,000 common stock purchase warrants. The warrants have an exercise price of $0.95 per share and are exercisable for five years. A deemed dividend expense of $23,055 was recognized in
conjunction with this placement.





During the quarter ended November 30, 2002, shareholders converted
20,000 shares of Series B and 10,500 of Series A Redeemable Preferred Stock for 30,500 shares of the Companys Common Stock.





During the quarter ended November 30, 2002, the Company received $100,000 from a Series D warrant holder to exercise 200,000 warrants into 200,000 shares of the Companys common stock.





During the quarter ended November 30, 2002, the Company received an additional $45,000 from 3 of its shareholders for an equity share in
the Companys subsidiary of CT Holdings, LLC. As of November 30, 2002 the Company has received $413,000 in net proceeds and the shareholders own 13.35% while the Company owns 86.65% of CT Holdings, LLC. The proceeds from this have been used to
further develop the BONUS product for CT holdings, LLC as well as working capital for CT Holdings, LLC and Cash Technologies, Inc.





In April 2001, the Company had obtained a short-term loan of $75,000 from Mr. Robert Fagenson who serves on the Companys Board of Directors. The total amount of this loan is still outstanding. The loan bears an
interest rate 10% per annum and is payable upon demand. As of the quarter ended November 30, 2002 the Company has accrued $12,500 in interest with regards to this loan. The Company has issued warrants to purchase 10,000 shares of the Companys
common stock at an exercise price of $2.00 per share and an exercise period of three years. A compensation expense of $7,284 has been recorded in conjunction with the warrants.





As of November 30, 2002, the Company has outstanding short-term loans of an aggregate principal amount of $98,448 from Bruce Korman (and related parties) who is an
affiliate, Chief Executive Officer and Chairman of the Board of Directors of the Company. The loans are short-term non-interest




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bearing loans and are payable upon demand. Furthermore, as of November 30, 2002, the Company had $90,523 in arrears in salary to Mr. Korman.




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PART II.    OTHER INFORMATION





ITEM 1.    LEGAL PROCEEDINGS





On August 7, 2000 Shaws
Supermarkets filed a lawsuit, captioned Shaws Supermarkets, Inc. v. Cash Technologies, Inc., CoinBank Automated Systems Inc. (Civil action # 00CV11571WGY, United States District Court, District of Massachusetts), against us claiming
breach of contract and damages. We operated CoinBank machines in Shaws locations in New England on a free-placement basis since June 1999 and had been negotiating a settlement and termination agreement with Shaws to terminate the
CoinBank machine placements in light of our decision to exit the free placement business. Shaws was claiming damages in excess of $200,000, for contract termination fees and reimbursements. We believed that the amount owed was approximately
$55,000 and had accrued for the liability. In January of 2001, both parties agreed in principal to settle the lawsuit for $74,779 granting that Shaws release all of the CoinBank machines being held at its facilities. The settlement agreement
was never completed due to a disagreement over some of its terms.





On June 7, 2002, Shaws Supermarkets filed
a lawsuit, captioned Shaws Supermarkets, Inc. v. Cash Technologies, Inc., CoinBank Automated Systems Inc. (Civil action # 02-02532, United States District Court, District of Massachusetts), against us again claiming breach of contract
and damages in excess of $200,000. We were unaware of the lawsuit until September 2002 when we were served. We are defending the lawsuit and believe we have meritorious defenses. Furthermore, we have filed a countersuit in excess of $750,000 for the
value for our CoinBank machines, loss of business and all other applicable costs incurred by us.





In December
1997, Vindex USA, Inc. filed a complaint against our CoinBank subsidiary, in the Superior Court of California, Los Angeles County seeking to recover $40,000, an unspecified amount of commissions and interest accrued thereon allegedly due it under
the terms of a consulting agreement it alleges was breached by CoinBank. The court has entered judgment against CoinBank in favor of Vindex in the sum of $97,864, which remains outstanding.





We have commenced a lawsuit in Austria against Geld Bearbeitungs Systeme GES.M.B.H., an Austrian entity which had been manufacturing certain of our CoinBank machines. As
previously described in our SEC Reports, we have a five year licensing and manufacturing services agreement with Geld. We had previously entered into a letter of intent to acquire Geld and certain disputes have arisen regarding the acquisition and
licensing agreements between the parties. We instituted the suit to enforce certain licensing rights under our agreements and to enforce the acquisition letter of intent. Although we believe, based upon advice of our Austrian counsel, that we have a
meritorious and strong claim, we may not be successful in our suit. Recently the Austrian Courts awarded us a 10% ownership interest in Geld resulting from a ruling adverse to one of its principals.





We are involved in a litigation titled Kane Corte, et al v. Cash Technologies, Inc. et al., (Case # 128256, 32/nd/ Judicial
District Parish of Terrebonne, State of Louisiana). In August 2001, we first became aware that an entity to which we had sold 23 CoinBank machines in October 1999 had filed suit against us in Louisiana court and obtained a default judgment against
us. The Louisiana judgment was issued on August 15, 2000 and rewarded the purchaser $230,000 in damages and ordered that the machines be returned to the Company. In March 2001, the purchaser obtained a sister-state judgment against us in California
based on the judgment of the Louisiana court and a writ of execution was issued.





Upon learning of this matter, we
immediately initiated legal actions in Louisiana and California.




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At a hearing in the Louisiana court, we were granted a Temporary Restraining
Order staying enforcement of the judgment. We contend that the Louisiana court had no jurisdiction over it and that we were never properly served with either the original Louisiana lawsuit, the judgment issued by the Louisiana court or the
California sister- state judgment. We also contend that Kane Cortes allegations are without merit and that his desire to return the machines is a result of his failed business practices. The Company has initiated legal action in both Louisiana
and California seeking to set aside both judgments and to cause the matter, including the issue of jurisdiction, to be heard on its merits by the Louisiana court. The Company believes that it will be successful in these actions to set aside the
judgments. The Company further believes that it has meritorious defenses to each of the allegations in the action and that it will ultimately prevail on merits. The Company will incur the cost of defense, including legal fees, in an undetermined
amount in connection with these matters, which may not be recoverable. There can be no assurance that the Company will be successful in the defense.





On July 10, 2002, Burns International Security Services (Burns) obtained a default judgment against the Company for $14,157 (the Judgment) for services Burns rendered to one of
the Companys affiliates. On August 15, 2002, the Company, not having received actual notice of the lawsuit before the judgment was entered, filed a motion to set aside or vacate the Judgment. The court, on September 4, 2002, issued a tentative
ruling in the Companys favor granting the motion to set aside or vacate the Judgment. In October 2002, the Company and Burns reached a settlement for the Company to pay a gross amount of $12,257 in installments. As of January 15, 2002, the
Company has made a payment of $2,000.00 with regards to this judgment.





On August 1, 2002, Cash Technologies, Inc.
filed a lawsuit, captioned Cash Technologies, Inc. v. McNeely and Willmon (Case No. BC 278823, Superior Court of the State of California), for breach of contract. In September 2002, Cash Technologies, Inc. entered into promissory notes with
McNeely and Willmon in the amount of $79,999. Pursuant to the promissory notes the funds were due to be returned in December 2002. Despite our repeated attempts both McNeely and Willmon have refused to pay the funds owed to us. We are seeking an
amount in excess of $79,999. On September 25, 2002, McNeely and Willmon filed a cross complaint claiming $500,000 in compensatory damages. The next scheduled court hearing is scheduled for February of 2002. Although, we believe that the cross
complaint has no merit and we are confident that we will prevail in regards to this lawsuit, there can be no assurance.





ITEM 2.    CHANGE IN SECURITIES





In June 2002, in a private
transaction under Section 4(2) of the Securities Act of 1933, as amended, sold 1 unit at an aggregate of $50,000 of its securities to 1 foreign investor. Each unit comprised of (i) 33,333 shares of Common Stock and (ii); 5,000 common stock purchase
warrants. The warrants have an exercise price of $2.00 per share and are exercisable for five years. A deemed dividend benefit of $4,855 was recognized in conjunction with this placement.





In June 2002, the Company issued 60,400 shares of the Companys common stock and 50,400 common stock warrants with an exercise price of $2.00 and a five (5) year life
to a consultant in lieu of cash payment. The Company recorded a compensation expense charge of $90,600 as well as a beneficial conversion feature of $50,291.





In June 2002, the Company issued 55,000 shares of the Companys common stock to one of its developers in lieu of cash payment for services rendered. The shares of common stock were valued at $1.36
per share.




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In October 2002, in a private transaction under Section 4(2) of the Securities
Act of 1933, as amended, the Company sold 1 unit at an aggregate of $250,000 of its securities to a shareholder. The unit comprised of (i) 312,500 shares of Common Stock and (ii); 150,000 common stock purchase warrants. The warrants have an exercise
price of $0.95 per share and are exercisable for five years. A deemed dividend expense of $23,055 was recognized in conjunction with this placement.





During the quarter ended November 30, 2002, shareholders converted 20,000 shares of Series B and 10,500 of Series A Redeemable Preferred Stock for 30,500 shares of the Companys Common Stock.





During the quarter ended November 30, 2002, the Company received $100,000 from a Series D warrant holder to
exercise 200,000 warrants into 200,000 shares of the Companys common stock.





During the quarter ended
November 30, 2002, the Company received an additional $45,000 from 3 of its shareholders for an equity share in the Companys subsidiary of CT Holdings, LLC. As of November 30, 2002 the Company has received $413,000 in net proceeds and the
shareholders own 13.35% while the Company owns 86.65% of CT Holdings, LLC. The proceeds from this have been used to further develop the BONUS product for CT holdings, LLC as well as working capital for CT Holdings, LLC and Cash Technologies, Inc.





ITEM 3.    DEFAULT UPON SENIOR SECURITIES





In January 2000, we
completed a private placement offering of convertible notes and warrants under Section 4(2) of the Securities Act of 1933. The offering consisted of units, each unit comprised of a secured convertible promissory note in the principal amount of
$50,000, bearing interest at the rate of 10% per annum and Series B Redeemable Warrants to purchase 5,000 shares of common stock. GunnAllen Financial, Inc., one of our investment bankers and an underwriter in our initial public offering, was engaged
as placement agent for this offering. We received gross proceeds from this offering of $3,362,000 from the sale of 67.2 Units. As a result of this offering, we issued notes in the aggregate principal amount of $3,362,000 and 336,200 Series B Common
Stock Purchase Warrants The notes were originally convertible into our Common Stock at the conversion rate of $9.50 per share. The Series B Warrants were originally exercisable at a price of $13.00 per share. The notes were originally due and
payable on July 31, 2001. The notes were secured by a first priority lien on all of our assets.





Since July 31,
2001, some of the notes have been in default, and some have been restructured. Under the restructuring, the notes were extended for two (2) years to July 2003, the noteholders agreed to surrender all old warrants priced at $13.50 per share to
receive 2 replacement warrants for every old warrant surrendered. The new warrants are vested immediately, have a life of 5 years and were exercisable at $1.35 thru December 31, 2001, $2.20 through January 15, 2002 and $4.50 thereafter. As of
November 30, 2002 the Company has restructured $2,587,000 of the notes, representing thirty-five (35) of the forty-eight (48) noteholders, or approximately 77% of the total dollar amount of notes outstanding. The Company is engaged in discussions
with the remaining thirteen (13) noteholders to finalize modifications of their notes. As part of the restructuring process the Company reclassified $339,722 of interest accrued as part of the reissued notes. There can be no assurance we will be
successful in restructuring these remaining notes. As of November 30, 2002 the Company has accrued an additional $474,276 in interest payable on the notes. The Company has recognized a deemed dividends expense of $273,904 in conjunction with this
restructuring.




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ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





Not
Applicable





ITEM 5.    OTHER INFORMATION





NONE





ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K





(a)  Exhibits





99.1  Certifications Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002





(b)  Reports on Form 8-K





NONE




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SIGNATURE





Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report on Form 10QSB for the fiscal quarter ended November 30, 2002, to be signed on its behalf by the undersigned, thereunto duly authorized the 21st day of January 2002.





CASH TECHNOLOGIES, INC.By:    /s/ Bruce KormanBruce Korman President and Chief Executive Officer





By:    /s/ Edmund KingEdmund King Chief Financial Officer




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Annex A





CERTIFICATIONS*





I, Bruce Korman, Chief Executive Officer, certify that:





|1. |  | I have reviewed this quarterly report on Form 10-QSB for the period ended November 30, 2002, of Cash Technologies, Inc.;
|-- |  | ------------------------------------------------------------------------------------------------------------------------




|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d- 14) for the registrant and have:
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly
report (the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------




|5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the equivalent functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------




|6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




Date: January 21, 2002





/s/ Bruce KormanBruce Korman Chief Executive Officer




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CERTIFICATIONS*





I, Edmund King, Chief Financial Officer, certify that:





|1. |  | I have reviewed this quarterly report on Form 10-QSB for the period ended November 30, 2002, of Cash Technologies, Inc.;
|-- |  | ------------------------------------------------------------------------------------------------------------------------




|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d- 14) for the registrant and have:
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly
report (the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------




|5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the equivalent functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------




|6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




Date: January 21, 2002





/s/ Edmund KingEdmund King Chief Financial Officer




28