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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-QSB



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(MARK ONE)

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



FOR THREE MONTH PERIOD ENDED NOVEMBER 30, 2003



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND 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)



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|DELAWARE                                                    |  | 95-4558331                       
|----------------------------------------------------------- |  | ---------------------------------
|(State or other jurisdiction of incorporation organization) |  | (IRS Employer Identification No.)
|                                                            | 
|1434 W. 11THSTREET, 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 ̈.



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, 2004, there were 12,077,895 shares of common stock, $ .01 par value, issued and outstanding.



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##### Table of Contents

CASH TECHNOLOGIES, INC.

FORM 10-QSB



INDEX



|                                                                                                  |  |                                                                                                                             |  | PAGE NO.
|------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------- |  | --------
|PART I. FINANCIAL INFORMATION                                                                     |  |                                                                                                                            
|                                                                                                  | 
|Item 1.    
Consolidated Financial Statements:                                                    |  |                                                                                                                            
|                                                                                                  |  |                                                                                                                            
|                                                                                                  |  | Consolidated Balance Sheets as of November 30, 2003 (unaudited) and May 31, 2003                                            |  | 3       
|                                                                                                  |  |                                                                                                                            
|                                                                                                  |  | Consolidated Statements of Operations for the three and six month periods ended November 30, 2003 and 2002 (unaudited)      |  | 4       
|                                                                                                  |  |                                                                                                                            
|                                                                                                  |  | Consolidated Statements of Cash Flows for the six-month periods ended November 30, 2003 and 2002 (unaudited)                |  | 5       
|                                                                                                  |  |                                                                                                                            
|                                                                                                  |  | Notes to Consolidated Financial Statements for the three and six month periods ended November 30, 2003 and 2002 (unaudited) |  | 6       
|                                                                                                  | 
|Item 2.    
Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 16                                                                                                                         
|                                                                                                  | 
|Item 3.    
Controls And Procedures                                                               |  | 26                                                                                                                         
|                                                                                                  | 
|PART II. OTHER INFORMATION                                                                        |  |                                                                                                                            
|                                                                                                  | 
|Item 1.    
Legal Proceedings                                                                     |  | 27                                                                                                                         
|                                                                                                  | 
|Item 2.    
Changes in Securities                                                                 |  | 28                                                                                                                         
|                                                                                                  | 
|Item 3.    
Default Upon Senior Securities                                                        |  | 29                                                                                                                         
|                                                                                                  | 
|Item 4.    
Submission of Matters to a Vote of Security Holders                                   |  | 29                                                                                                                         
|                                                                                                  | 
|Item 5.    
Other Information                                                                     |  | 31                                                                                                                         
|                                                                                                  | 
|Item 6.    
Exhibits and Reports on Form 8-K                                                      |  | 31                                                                                                                         
|                                                                                                  | 
|SIGNATURES                                                                                        |  | 32                                                                                                                         



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##### Table of Contents

PART I

ITEM 1. FINANCIAL STATEMENTS



CASH TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)



|                                               |  | NOVEMBER 30,2003 |             |   | MAY 31, 2003 |  
|---------------------------------------------- |  | ---------------- | ----------- | - | ------------ | -
|ASSETS                                         |  |                  |             |   |              |  
|CURRENT ASSETS:                                |  |                  |             |   |              |  
|Cash and cash equivalents                      |  | $                | 29,941      |   |              | $
|Accounts receivable                            |  |                  | 2,383       |   |              |  
|Prepaid expenses and other current assets      |  |                  |            |   |              |  
|Other receivable                               |  |                  | 28,035      |   |              |  
|                                               |  |                  |             |   |              |  
|Total Current Assets                           |  |                  | 60,359      |   |              |  
|                                               |  |                 
|CoinBank machines held for sale (Note 1(j))    |  |                  | 834,223     |   |              |  
|                                               |  |                 
|PROPERTY AND EQUIPMENT (net) (Note 2 )         |  |                  | 26,645      |   |              |  
|                                               |  |                 
|CAPITALIZED SOFTWARE COSTS (Note 1(r))         |  |                  | 1,725,952   |   |              |  
|                                               |  |                 
|OTHER ASSETS                                   |  |                  | 72,427      |   |              |  
|                                               |  |                  |             |   |              |  
|TOTAL ASSETS                                   |  | $                | 2,719,606   |   |              | $
|                                               |  |                  |             |   |              |  
|LIABILITIES AND STOCKHOLDERS DEFICIENCY       |  |                  |             |   |              |  
|                                               |  |                 
|CURRENT LIABILITIES:                           |  |                  |             |   |              |  
|Current maturities of Notes Payable (Note 3)   |  | $                | 4,412,080   |   |              | $
|Due to Officers and Directors (Note 9)         |  |                  | 121,085     |   |              |  
|Convertible debt (Note 4)                      |  |                  | 885,070     |   |              |  
|Due to Shareholders (Note 4)                   |  |                  | 70,750      |   |              |  
|Accounts payable                               |  |                  | 931,665     |   |              |  
|Accrued liabilities                            |  |                  | 1,816,746   |   |              |  
|Bank overdraft                                 |  |                  | 197,800     |   |              |  
|Dividend payable                               |  |                  | 1,160,934   |   |              |  
|                                               |  |                  |             |   |              |  
|Total Current Liabilities                      |  |                  | 9,596,129   |   |              |  
|                                               |  |                 
|Long-Term Notes Payable (Note 3)               |  |                  |            |   |              |  
|Long-Term Convertible Debt (Note 4)            |  |                  |            |   |              |  
|                                               |  |                  |             |   |              |  
|TOTAL LIABILITIES                              |  |                  | 9,596,129   |   |              |  
|                                               |  |                  |             |   |              |  
|COMMITMENTS & CONTINGENCIES (Note 10)          |  |                  |            |   |              |  
|                                               |  |                 
|MINORITY INTEREST                              |  |                  | 945         |   |              |  
|                                               |  |                  |             |   |              |  
|STOCKHOLDERS DEFICIENCY: (Note 6)             |  |                  |             |   |              |  
|                                               |  |                 
|Cumulative Redeemable Preferred Stock          |  |                  | 1,758,688   |   |              |  
|                                               |  |                 
|Common Stock                                   |  |                  | 118,607     |   |              |  
|                                               |  |                 
|Additional Paid-In-Capital                     |  |                  | 27,939,646  |   |              |  
|Accumulated Deficit                            |  |                  | (36,694,409 | ) |              |  
|                                               |  |                  |             |   |              |  
|Total stockholders deficiency                 |  |                  | (6,877,468  | ) |              |  
|                                               |  |                  |             |   |              |  
|TOTAL LIABILITIES AND STOCKHOLDERS DEFICIENCY |  | $                | 2,719,606   |   |              | $
|                                               |  |                  |             |   |              |  



See notes to
consolidated financial statements



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CASH TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



|                                                                      |  | FOR THREE MONTHSENDED NOVEMBER 30, |            |   | FOR SIX MONTHS ENDED NOVEMBER 30, |  
|--------------------------------------------------------------------- |  | ---------------------------------- | ---------- | - | --------------------------------- | -
|                                                                      |  | 2003                               |            |   | 2002                              |  
|NET REVENUES                                                          |  | $                                  | 15,000     |   |                                   | $
|COST OF REVENUES                                                      |  |                                    | 2,358      |   |                                   |  
|                                                                      |  |                                    |            |   |                                   |  
|GROSS PROFIT (LOSS)                                                   |  |                                    | 12,642     |   |                                   |  
|                                                                      |  |                                    |            |  
|SELLING, GENERAL, & ADMINISTRATIVE EXPENSE                            |  |                                    | 667,713    |   |                                   |  
|RESEARCH & DEVELOPMENT EXPENSE                                        |  |                                    | 30,000     |   |                                   |  
|DEPRECIATION & AMORTIZATION EXPENSE                                   |  |                                    | 141,145    |   |                                   |  
|                                                                      |  |                                    |            |   |                                   |  
|OPERATING LOSS                                                        |  |                                    | (826,216   | ) |                                   |  
|                                                                      |  |                                    |            |  
|INTEREST EXPENSE                                                      |  |                                    | 118,584    |   |                                   |  
|                                                                      |  |                                    |            |   |                                   |  
|LOSS BEFORE INCOME TAXES                                              |  |                                    | (944,800   | ) |                                   |  
|INCOME TAXES                                                          |  |                                    |           |   |                                   |  
|                                                                      |  |                                    |            |   |                                   |  
|Minority Interest                                                     |  | $                                  | (10,399    | ) |                                   | $
|                                                                      |  |                                    |            |   |                                   |  
|LOSS - Continuing Operations                                          |  | $                                  | (934,401   | ) |                                   | $
|LOSS - Discontinuined Operations                                      |  | $                                  |           |   |                                   | $
|                                                                      |  |                                    |            |   |                                   |  
|NET LOSS                                                              |  | $                                  | (934,401   | ) |                                   | $
|                                                                      |  |                                    |            |   |                                   |  
|Dividends & deemed dividends                                          |  | $                                  | 111,141    |   |                                   | $
|                                                                      |  |                                    |            |  
|Net loss allocable to common shareholders                             |  | $                                  | (1,045,542 | ) |                                   | $
|                                                                      |  |                                    |            |  
|Basic and diluted net loss per share                                  |  | $                                  | (0.12      | ) |                                   | $
|                                                                      |  |                                    |            |  
|Basic and diluted weighted average shares of common stock outstanding |  |                                    | 8,904,995  |   |                                   |  
|                                                                      |  |                                    |            |   |                                   |  



See notes to
consolidated financial statements.



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CASH TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



|                                                                            |  | FOR THE SIX MONTHSENDED NOVEMBER 30, |           
|--------------------------------------------------------------------------- |  | ------------------------------------ | ----------
|                                                                            |  | 2003                                 |           
|OPERATING ACTIVITIES:                                                       |  |                                      |           
|Net loss                                                                    |  | $                                    | (1,916,740
|Adjustments to reconcile net loss to net cash used by operating activities: |  |                                      |           
|                                                                            |  |                                     
|Minority interest                                                           |  |                                      | (21,099   
|Amortization of capitalized software                                        |  |                                      | 279,884   
|Noncash deemed interest expense                                             |  |                                      |          
|Noncash compensation expense                                                |  |                                      | 258,209   
|Depreciation expense                                                        |  |                                      | 2,406     
|                                                                            |  |                                     
|Changes in operating assets and liabilities:                                |  |                                      |           
|                                                                            |  |                                     
|Account receivable                                                          |  |                                      | 101       
|CoinBank machines held for sale                                             |  |                                      | 27,867    
|Prepaid expenses and other current assets                                   |  |                                      | 4,057     
|Other assets                                                                |  |                                      | (3,240    
|Accounts payable                                                            |  |                                      | (217,590  
|Accrued interest                                                            |  |                                      | 256,671   
|Accrued expenses and other current liabilities                              |  |                                      | 321,926   
|                                                                            |  |                                      |           
|Net cash used in operating activities                                       |  |                                      | (1,007,548
|                                                                            |  |                                      |           
|INVESTING ACTIVITIES:                                                       |  |                                      |           
|                                                                            |  |                                     
|Purchase of property and equipment                                          |  |                                      |          
|                                                                            |  |                                      |           
|Net cash provided by (used in) investing activities                         |  |                                      |          
|                                                                            |  |                                      |           
|FINANCING ACTIVITIES:                                                       |  |                                      |           
|                                                                            |  |                                     
|Bank overdraft                                                              |  |                                      |          
|Proceeds from conversion of warrants                                        |  |                                      | 235,910   
|Proceeds from short-term debt                                               |  |                                      |          
|Proceeds from common stock of subsidiary                                    |  |                                      |          
|Repayments on short-term debt                                               |  |                                      |          
|Proceeds from sale of common stock                                          |  |                                      | 799,705   
|                                                                            |  |                                      |           
|Net cash provided by financing activities                                   |  |                                      | 1,035,615 
|                                                                            |  |                                      |           
|CHANGE IN CASH AND CASH EQUIVALENTS                                         |  |                                      | 28,067    
|                                                                            |  |                                     
|Cash and Cash Equivalents, Beginning of Period                              |  |                                      | 1,874     
|                                                                            |  |                                      |           
|Cash and Cash Equivalents, End of Period                                    |  | $                                    | 29,941    
|                                                                            |  |                                      |           
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                            |  |                                      |           
|                                                                            |  |                                     
|Income taxes                                                                |  | $                                    |          
|                                                                            |  |                                     
|SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS                             |  |                                      |           
|                                                                            |  |                                     
|Conversion of preferred stock into common stock                             |  | $                                    |          
|Conversion of convertible debt into common stock                            |  | $                                    | 3,606,695 
|Issuance of common stock for services performed                             |  | $                                    | 317,474   
|Dividends declared on preferred stock                                       |  | $                                    | 168,057   
|Dividends paid on preferred stock with common stock                         |  | $                                    | 18,000    
|Deemed dividend on warrants issued                                          |  | $                                    | 302,505   
|Conversion of shareholder warrants                                          |  | $                                    | 235,910   



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, 2003, 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, 2003 and the results of operation and cash
flows for the three and six month periods ended November 30, 2003 and 2002. 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, 2003, filed with the SEC. The results of operations for the three and six months period ended November 30,
2003, are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire fiscal year.



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



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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.



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
$30,000 for the three month period ended November 30, 2003.



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, 2003, the Company amortized an additional $139,942 of capitalized software.



In connection with the development of our EMMA software, during the period
ending September 30, 1999 we utilized $278,000 in funds for coding and testing activities necessary to resolve all of the identified high-risk development issues. These costs were reflected as expenses on our financial statements. Commencing October
1, 1999 through December 31, 2002 the Company incurred approximately $2,771,536 over 27 months of coding, subsequent to the detail program design and establishment of feasibility, until the product became available in January 2002 for general
release to customers. These costs were treated as capitalized software costs in our financial statements through December 31, 2002. We discuss below the manner in which we developed our EMMA software, which is intended to assist the reader in
understanding the difference in our costs in the technological feasibility using detail program design and capitalized software costs during production (coding) phases.



With respect to the technological feasibility using the detail program design approach, there were two primary issues, which
can be classified as high risk development issues which needed to be resolved as evidence that technological feasibility had been established under paragraph 4(a)(3) of SFAS 86.



First, there was our multi-transactional messaging architecture.
This involved the testing of our proprietary messaging protocol and parallel processing method for predicted performance and behavior. We estimate that we expended approximately $ 160,000 for this activity. The messaging protocol and processing
method are what we believe differentiates us from other attempts to develop similar software. Once these were developed, successfully tested using simulations with existing applications and deemed workable, the development risk for messaging was
overcome and a patent application for the multi-transactional architecture was filed on July 2, 1999. This patent was granted by the U.S. Patent and Trademark Office in October of 2001.



The second high risk development issue was obtaining independent ATM certification for our new messaging
architecture. In order to process ATM transactions, the software being developed has to be certifiable by one of the major authorized ATM networks (such as Star, MAC, etc.) for interfacing with the global ATM network. We partnered with a third-party
ATM software provider to assist in these



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efforts, instead of developing the software for this step ourselves. This significantly reduced our costs to obtain certification and complete this high risk
development step because we were able to incorporate and modify the third partys software, which had been previously certified, and re-certify it rather than develop our own in-house ATM software from scratch. A per-transaction license fee
will be paid by Cash Technologies to the third party when the system starts generating transactions, thereby further reducing our development costs because we avoided upfront licensing fees. Certification was obtained in August of 1999 and the EMMA
software was then deemed feasible.



COSTS BEFORE VS. AFTER FEASIBILITY



There are two primary reasons that the expensed costs
prior to feasibility were far less than the costs subsequent to feasibility, which were capitalized.



First, our proprietary messaging and processing methods were proven earlier than expected.



Second, as stated above, instead of developing our own ATM software we used a third party software product, which saved time
and money. This was completed on August 19, 1999.



Partnering
with other software providers and licensing third-party software allowed us to reduce costs below original estimates during the high-risk technological feasibility phase using the detail program design approach. In contrast to the
initial high-risk development effort, the subsequent coding required more resources and time than expected. As a result, the costs to establish feasibility (approximately $278,000) were substantially lower than the subsequent cost (approximately
$2,770,000) incurred to make the product available for general release to customers. It is also important to observe that this category of transaction software is rare in the marketplace and doesnt follow the typical pattern of development of
the vast majority of consumer and office software, where most development dollars are expended early in technological feasibility phase using a working model.



Our offered products such as ATM-X and POS-X were originally contemplated in the detailed program design established prior to September 1999. The
Company has given trade names such as ATM-X and POS-X (referring to whether EMMA would be running an ATM or at a retail point of sale) since such time to help market the uses of EMMA.



In addition, management has identified potential uses for EMMA not originally contemplated. These new uses were created
after January 2002 and the costs associated with these new uses, as reflected in our filings, have been treated as general and administrative expenses and not capitalized. Certain of these potential uses have been given trade names such as PrISM
(PrISM uses EMMAs fraud detection to control access to a physical location). Any programming that has been done for such products (primarily for demos, creating use-specific screens and interfacing to third-party products) were included in
General and Administrative expenses and were minimal. In future filings, similar costs will be charged to Research and Development Expense.



Furthermore, as in all of our applications where we expect to use biometrics, the biometrics will be purchased/licensed from a third party.



For the reasons cited, most development costs occurred after the software
program design was completed and feasibility was achieved. These results are not typical, nor comparable to software developers who use either the detail program design approach, which the Company used, or the working model approach, under paragraph
4(b) of SFAS 86, and these factors should be considered when reviewing the Companys financial statements.



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NOTE 2. COMMITMENTS AND CONTINGENCIES



Shaws Supermarkets has filed a lawsuit, captioned Shaws Supermarkets, Inc. v. Cash Technologies, Inc.,
CoinBank Automated Systems Inc. (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 is claiming damages in excess of
$75,000, for contract termination fees and reimbursements. We believe that the amount owed is approximately $55,000 and have accrued for the liability. Furthermore, we have potential claims against Shaws for damages to the machines. Although
we intend to vigorously defend the suit, we may not be successful in our defense.



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 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. In May 2003, the Louisiana Court decided in favor of the Company and vacated its previous judgment against us. The plaintiff, however, immediately refiled its lawsuit. The Company has entered into settlement negotiations and has
reached a tentative settlement agreement involving the resale of the Plaintiffs machines. There can be no assurance that the Company will be successful in completing the settlement arrangement satisfactorily.



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. loaned McNeely and Willmon the amount of $79,999. Pursuant to the
promissory notes the funds were due to be returned in December 2002. Despite repeated collection attempts, both McNeely and Willmon refused to repay the funds. The Companys lawsuit sought an amount in excess of $79,999. On September 25, 2002,
McNeely and Willmon filed a cross complaint claiming $500,000 in compensatory damages. In November 2003, the Company entered into a settlement agreement with McNeely and Willmon requiring McNeely and Willmon to pay a total of $50,000 over a three
month period. These amounts have been paid as of January 12, 2004, and all claims against the Company have been dismissed, satisfying all conditions of the settlement.



In June, 2002 we were notified that a vendor, Kiosk Information Systems, Inc. (KIS), had obtained a judgment
against the Company for $129,567 allegedly owed for services rendered in 1999, plus interest and attorneys fees. Upon learning of the judgment, we notified KIS that we have never been served with a lawsuit related to this matter and was unaware of
the existence of the case. Subsequent



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settlement negotiations resulted in a tentative settlement agreement with KIS on July 7, 2003 which has not been performed as of January 14, 2004. If this
matter is not otherwise settled, it is likely that the Company will initiate legal action to set aside the judgment and take other appropriate measures. In such event the Company will incur substantial legal fees and there is no assurance that we
would succeed in setting aside the judgment or prevailing in any subsequent litigation.



NOTE 3: STOCKHOLDERS EQUITY



On September 2,
2003, in a private transaction under Section 4(2) of the Securities Act of 1933, as amended, the Company sold 5 units at an aggregate of $25,000 of its securities to 2 European shareholders. The unit comprised of (i) 38,462 shares of Common Stock
and (ii); 12,821 common stock purchase warrants. The Company received gross proceeds of $125,000 in conjunction with this placement. The warrants have an exercise price of $1.00 per share and are exercisable for five years. There was a deemed
dividend expense of $99,584 in conjunction with this offering.



In September 2003, 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 $50,000 of its securities. The unit comprised of 62,500 shares of Common Stock.



In October 2003, in a private transaction under Section 4(2) of the
Securities Act of 1933, as amended, the Company sold 69,000 shares of the Companys common stock to four investors for $52,440.



In October 2003, 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 $25,000
of its securities to a European investor. The unit comprised of (i) 31,250 shares of Common Stock and (ii) 10,417 common stock purchase warrants. The warrants have an exercise price of $1.00 per share and are exercisable for five years. There was a
deemed dividend expense of $11,557 in conjunction with this offering.



In October 2003, in a private transaction under Section 4(2) of the Securities Act of 1933, as amended, the Company sold 25,000 shares of the Companys common stock to an individual for $20,000.



In October 2003, in a private transaction under Section 4(2) of the
Securities Act of 1933, as amended, the Company sold 10,000 shares of the Companys common stock to an individual for $8,000.



During the quarter ended November 30, 2003, the Company awarded 125,000 shares of the Companys common stock to a former director of the Company as
part of a consulting agreement. A compensation expense of $130,000 was recorded in conjunction with this award.



During the quarter ended November 30, 2003, noteholders representing $3,606,695 of principal and interest amount converted their notes into 1,442,682
shares of the Companys common stock. The conversion was completed at a rate of $2.50 per share.



On December 1, 2003, 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
$70,000 of its securities. The unit comprised of (i) 87,500 shares of Common Stock and (ii) 20,000 common stock purchase warrants. The warrants have an exercise price of $1.00 per share and are exercisable for five years.



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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 of 10% per annum and is payable upon demand. As of the quarter ended November, 2003 the Company has accrued $20,000 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, 2003, the
Company has outstanding short-term loans of an aggregate principal amount of $46,085 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, 2003, the Company had $224,264 in arrears in salary to Mr. Korman.



As of November 30, 2003, the Company had $66,352 in arrears in salary to Mr. Darryl Bergman. Mr. Bergman serves as the Chief Technology Officer of the
Company.



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. Due to the Companys inability to repay G.E. on the original terms, on September 29,
2000 the Company entered into the first of several loan modifications with G.E. The most recent modification, which shall expire in October, 2004, requires interest-only payments at a rate of 9.5% and the entire unpaid balance is due at maturity. As
of January 10, 2004 the loan is current. As of November 30, 2003, we owed $3,899,294, 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 were 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. In August, 2003, the Company proposed the conversion to equity of the $3.3
million in secured convertible debt to the noteholders, expected to be consummated in January, 2004. The proposed terms include reducing the conversion price of the notes to $2.50 per share and the conversion price of the warrants to $0.65.



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##### Table of Contents

As of November 14, 2003, noteholders representing $3,606,695 of principal and interest, approximately 80%
of the total value of notes, have converted their notes into 1,442,682 shares of the Companys common stock at $2.50 per share. The Company is in discussions with the remaining noteholders. As of November 30, 2003, we still owed $885,070 in
principal and interest.



NOTE 6: LONG-TERM DEBT



NONE



NOTE 7: STOCK BASED COMPENSATION



All stock options issued to employees have an exercise price not less than the fair market value of the Companys Common Stock on the date of grant,
and in accounting for such options utilizing the intrinsic value method there is no related compensation expense recorded in the Companys financial statements. If the compensation had been determined based on the fair market value of the stock
option on their dates of grant in accordance with SFAS 123 and SFAS 148, the Companys net loss and loss per share for the three and six month periods ended November 30, 2003 and November 30, 2002, would have been increased to the pro forma
amounts presented below:



|                                        |  | FOR THREE MONTHSENDED NOVEMBER 30, |   |  | FOR SIX MONTHS ENDED NOVEMBER 30, |  
|--------------------------------------- |  | ---------------------------------- | - |  | --------------------------------- | -
|                                        |  | 2003                               |   |  | 2002                              |  
|Net Loss                                |  |                                    |   |  |                                   |  
|                                        |  |                                    |   | 
|As Reported                             |  | (934,401                           | ) |  | (985,595                          | )
|Pro Forma                               |  | (1,045,542                         | ) |  | (1,180,054                        | )
|                                        |  |                                    |   | 
|Basic and Diluted Loss Per Common Share |  |                                    |   |  |                                   |  
|                                        |  |                                    |   | 
|As Reported                             |  | (0.10                              | ) |  | (0.17                             | )
|Pro Forma                               |  | (0.12                              | ) |  | (0.21                             | )



For the six month
period ended November 30, 2003, the fair value of option grants is estimated on the date of grant utilizing the Black-Scholes option-pricing model with the weighted average assumption for options granted during 1998-2003, expected life of the option
is 5 years, expected volatility of 38%, risk free interest rate of 3.46% and a 0% dividend yield. The weighted average fair value at the grant date for such option is $5.38 per option.



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For the six month period ended November 30, 2002, the fair value of option grants is estimated on the
date of grant utilizing the Black-Scholes option-pricing model with the weighted average assumption for options granted during 1997-2002, expected life of the option is 5 years, expected volatility of 51%, risk free interest rate of 3.31% and a 0%
dividend yield. The weighted average fair value at the grant date for such option is $5.38 per option.



NOTE 8: SEGMENT REPORTING



The Company operates through 2 business segments: CoinBank machines and E-Commerce Message Management Architecture (EMMA). The Company discontinued its cash processing in the fourth quarter of fiscal year ended May 31, 2003. The Company had
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 also sells self-service coin counting machines through existing equipment distribution channels. Furthermore, the Company has developed an E-Commerce Message Management Architecture transaction processing system, which has not yet been
deployed and the software development costs are being capitalized.



Information
on the Companys business segments for the:



|                                                      |  | Three months endedNovember 30, |           |   | Six months ended November 30, |  
|----------------------------------------------------- |  | ------------------------------ | --------- | - | ----------------------------- | -
|                                                      |  | 2003                           |           |   | 2002                          |  
|Net Revenues and Sales:                               |  |                                |           |   |                               |  
|                                                      |  |                                |           |  
|CoinBank machines                                     |  | $                              |          |   |                               | $
|EMMA                                                  |  |                                |          |   |                               |  
|Unallocated                                           |  |                                | 15,000    |   |                               |  
|                                                      |  |                                |           |   |                               |  
|                                                      |  |                                | 15,000    |   |                               |  
|                                                      |  |                                |           |   |                               |  
|Interest expense:                                     |  |                                |           |   |                               |  
|                                                      |  |                                |           |  
|CoinBank machines                                     |  |                                | 2,336     |   |                               |  
|EMMA                                                  |  |                                |          |   |                               |  
|Unallocated                                           |  |                                | 116,284   |   |                               |  
|                                                      |  |                                |           |   |                               |  
|                                                      |  |                                | 118,584   |   |                               |  
|                                                      |  |                                |           |   |                               |  
|Depreciation:                                         |  |                                |           |   |                               |  
|                                                      |  |                                |           |  
|CoinBank machines                                     |  |                                |          |   |                               |  
|EMMA                                                  |  |                                | 139,942   |   |                               |  
|Unallocated                                           |  |                                | 1,203     |   |                               |  
|                                                      |  |                                |           |   |                               |  
|                                                      |  |                                | 141,145   |   |                               |  
|                                                      |  |                                |           |   |                               |  
|Segment profit (loss) before discontinued operations: |  |                                |           |   |                               |  
|                                                      |  |                                |           |  
|CoinBank machines                                     |  |                                | (73,139   | ) |                               |  
|EMMA                                                  |  |                                |          |   |                               |  
|Unallocated                                           |  |                                | (861,262  | ) |                               |  
|                                                      |  |                                |           |   |                               |  
|                                                      |  |                                | (934,401  | ) |                               |  
|                                                      |  |                                |           |   |                               |  
|Net identifiable assets:                              |  |                                |           |   |                               |  
|                                                      |  |                                |           |  
|CoinBank machines                                     |  |                                | 834,223   |   |                               |  
|EMMA                                                  |  |                                | 1,725,952 |   |                               |  
|Unallocated                                           |  |                                | 159,431   |   |                               |  
|                                                      |  |                                |           |   |                               |  
|                                                      |  |                                | 2,719,606 |   |                               |  
|                                                      |  |                                |           |   |                               |  



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NOTE 9: DISCONTINUED OPERATIONS



Cash Technologies, Inc. operated a cash processing facility in Los Angeles, California, where it counted currency purchased
in bulk at a small discount from face value. We then sorted, wrapped and resold the currency to various retail customers at face value plus a small fee or deposited 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 and has resulted in a significant reduction in the Companys gross revenue in the future. As of
August 31, 2003, the Company does not have any cash processing customers and, due to our focus on our other businesses, we chose not to pursue other cash processing customers. Cash processing was considered as discontinued operations in the fourth
quarter of fiscal year ended May 31, 2003.



|                                           |  | QUARTER ENDEDNOVEMBER 30, |  
|------------------------------------------ |  | ------------------------- | -
|                                           |  | 2003                      |  
|NET REVENUES                               |  | $                         | 
|COST OF REVENUES                           |  |                           | 
|                                           |  |                           |  
|GROSS PROFIT (LOSS)                        |  |                           | 
|                                           |  |                           |  
|SELLING, GENERAL, & ADMINISTRATIVE EXPENSE |  |                           | 
|DEPRECIATION & AMORTIZATION EXPENSE        |  |                           | 
|                                           |  |                           |  
|OPERATING LOSS                             |  |                           | 
|INTEREST EXPENSE                           |  |                           | 
|                                           |  |                           |  
|LOSS BEFORE INCOME TAXES                   |  |                           | 
|                                           |  |                           |  
|INCOME TAXES                               |  |                           | 
|                                           |  |                           |  
|LOSS - DISCONTINUED OPERATIONS             |  |                           | 
|                                           |  |                           |  



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##### Table of Contents

NOTE 10: MINORITY INTEREST



As of November 30, 2003, the Company has received $443,000 in net proceeds from shareholders for an equity share in the
Companys subsidiary of CT Holdings, LLC. The shareholders own 13.65% while the Company owns 86.35%. The proceeds from this have been used to further develop the BONUS product for CT Holdings, LLC as well as for working capital for CT Holdings,
LLC and Cash Technologies, Inc. During the quarter ended November 30, 2003, the Company has allocated $10,399 of losses in CT Holdings, LLC to minority interest.



NOTE 11: SUBSEQUENT EVENTS



On December 1, 2003, 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
$70,000 of its securities. The unit comprised of (i) 87,500 shares of Common Stock and (ii) 20,000 common stock purchase warrants. The warrants have an exercise price of $1.00 per share and are exercisable for five years.



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##### Table of Contents

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, lack of revenue, market acceptance of the Companys products, technological restrictions upon development, 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%. Unless the context otherwise requires, references herein to
we or us refers to Cash Technologies, Inc., and its wholly-owned and majority owned subsidiaries, National Cash Processors, Inc., CoinBank Automated Systems, Inc., Cintelia Systems, Inc. and CoinBank Automation Handels GmbH,
Salzburg, Austria. Our address is 1434 West 11thStreet, Los Angeles, California 90015. Our telephone number is
(213) 745-2000.



Since April 3, 2000, our common stock has been
listed on the American Stock Exchange under the symbol TQ. On October 10, 2003 the closing price of the common stock was $1.00. From the date of our initial public offering on July 8, 1998 through March 31, 2000, our common stock was
listed for trading on the Nasdaq SmallCap Market under the symbol CHNG.



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 sale of CoinBank machines line of business, much of our operations in the last three years
have been refocused



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##### Table of Contents

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 material 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;



(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 a variety of financial
services. 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.



To date, we have not generated any material revenue from our EMMA technology. There can be no assurance that we will be successful in generating material
revenue.



Over the past three fiscal years 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
| | - | -----------------------------------------------------



| |  | A supply agreement was signed with Diebold, Inc. to permit Diebold to distribute our CoinBank machines to its customers. Approximately 46 CoinBank machines have been shipped under
the Diebold agreement since August 2002.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Companys first transaction revenue-generating contract was signed with Popular Cash Express, a Banco Popular division, for our MFS mobile check cashing product.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Company began the Popular Cash Express (PCE) pilot in December, 2002. The pilot was successfully concluded and an agreement was signed in June, 2003 to roll out the system to
their mobile locations. The rollout, interrupted by a sale of the mobile business unit, is underway.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Company signed an agreement for the distribution of CoinBank machines in Europe through Cash Solutions Geld., Ges.m.b.H., an NCR Corporation supplier in June 2002. The product
launch, including the creation of sales literature, customer presentations, technician training, etc. is underway and the first orders have been received.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | In August, 2003, the Company proposed the conversion to equity of its $3.3 million principal value of secured convertible debt to the noteholders. As of November 14, 2003,
noteholders representing $3,606,695 of principal and interest, approximately 80% of the total value of notes, have converted their notes into 1,442,682 shares of the Companys common stock at $2.50 per share.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

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.



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
$30,000 for the three month period ended November 30, 2003.



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, 2003, the Company amortized an additional $139,942 of capitalized software.



Commercial Cash Processing



Cash Technologies, Inc. operated a cash processing facility in Los Angeles,
California, where it counted currency purchased in bulk at a small discount from face value. We then sorted, wrapped and resold the currency to various retail customers at face value plus a small fee or deposited 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 and has resulted in a significant reduction in the
Companys gross revenue. As of August 31, 2003, the Company does not have any cash processing customers and, due to our focus on our other businesses, we chose not to pursue other cash processing customers. Cash processing was considered as
discontinued operations in the fourth quarter of fiscal year ended May 31, 2003.



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##### Table of Contents

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 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.



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 33 machines under this relationship have been shipped since August 2002 for an aggregate proceeds of $236,104. The
Company also sold 9 other machines during the same period to other customers for additional gross proceeds of $56,750.



On June 30, 2003, CoinBank Automations Handels Ges.m.b.H. (CoinBank Europe), an Austrian corporation and wholly owned subsidiary of Cash
Technologies, Inc., signed an agreement with Cash Solutions Geld., Ges.m.b.H. (Cash Solutions), an Austrian corporation, for Cash Solutions to exclusively distribute our CoinBank® self-service coin counting machines in Europe. Cash Solutions will supply the machines
to NCR Corporation and others. NCR is one of the worlds largest banking equipment providers and will in turn market the machines to its bank customers in Europe directly and indirectly through its distributors.



The agreement requires that Cash Solutions purchase certain minimum
quantities each year to maintain its exclusivity and allows for the parties to share in manufacturing cost reductions realized as production quantities increase from sales. The machines, engineered in the U.S. and Austria by Cash Tech and CoinBank
Europe, are manufactured under contract to CoinBank Europe by a prestigious European equipment at its ISO 2002 manufacturing facilities in Austria.



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##### Table of Contents

RESULTS OF OPERATIONS



THREE MONTHS ENDED NOVEMBER 30, 2003, COMPARED TO THREE MONTHS ENDED NOVEMBER 30, 2002.



Net revenues for the three-month period ended November 30, 2003 decreased to $15,000 compared to $45,492 for the 2002
period. The decrease in net revenue was primarily attributable to the decrease in amount of CoinBank machines sold during the current period.



Cost of revenues for the three-month period ended November 30, 2003, was $2,358 compared to $41,392 for the quarter ended November 30, 2002. The
decrease in direct costs was primarily attributable to the decrease in amount of CoinBank machines sold during the current period.



Gross profitfor the three months ended November 30, 2003 was $12,642 compared to $4,100 for the three months ended November 30, 2002. The increase
in gross profit was related to the decrease in the amount of CoinBank machines sold and an increase in other income.



Selling, General and Administrative expenses for the three months ended November 30, 2003, increased to $667,713 compared to $619,958 for the three
months ended November 30, 2002. These expenses consist primarily of wages (and wage related costs), outside contractor expenses, travel/promotional expenses, professional services and facilities/office related expenses.



Research and developmentexpenses for the three months ended November
30, 2003, $30,000, compared to $72,346 for the three months ended November 30, 2002. The decrease was the result of the allocation of the Companys limited resources from development to working capital.



Depreciation and amortization expenses for the three months ended
November 30, 2003, and 2001, were $141,145 and $147,149, respectively.



Interest expense for the three months ended November 30, 2003 and 2002, was $118,584 and $187,561, respectively. The decrease related to reduction in interest expense recognized in relation to GE Capital loan
deferments and the conversion of convertible debt.



Minority
Interestallocation of losses for the three months ended November 30, 2003 was $10,399 compared to $11,399 for the period ended November 30, 2003.



As a result of the foregoing, net losses from continuing operations for the three months ended November 30, 2003 and 2002, were $934,401 and $985,595
respectively.



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SIX MONTHS ENDED NOVEMBER 30, 2003, COMPARED TO SIX MONTHS ENDED NOVEMBER 30, 2002.



Net revenues for the six-month period ended November 30, 2003
decreased to $86,525 compared to $232,863 for the 2002 period. The decrease in net revenue was primarily attributable to the decrease in the amount of CoinBank machines sold offset by the increase in other revenue.



Cost of revenues for the six-month period ended November 30, 2003, was
$34,048 compared to $171,850 for the quarter ended November 30, 2002. The decrease in direct costs was primarily the result of a decrease in the cost of coin machines sold.



Gross profitfor the six months ended November 30, 2003 was $52,477 compared to $61,013 for the six months ended
November 30, 2002. The decrease in gross profit was directly related to the decrease in CoinBank machines sold.



Selling, General and Administrative expenses for the six months ended November 30, 2003, increased to $1,352,390 compared to $1,318,859 for the six
months ended November 30, 2002. These expenses consist primarily of wages (and wage related costs), outside contractor expenses, travel/promotional expenses, professional services and facilities/office related expenses.



Research and developmentexpenses for the six months ended November
30, 2003, $60,000, compared to $167,000 for the six months ended November 30, 2002. The decrease was the result of the allocation of the Companys limited resources from development to working capital.



Depreciation and amortization expenses for the six months ended
November 30, 2003, and 2002, were $282,290 and $294,711, respectively.



Interest expense for the six months ended November 30, 2003 and 2002, was $295,636 and $416,694, respectively. The decrease is directly related to reduction in interest expense recognized in relation to GE
Capital loan deferments.



Minority Interestallocation
of losses for the six months ended November 30, 2003 was $21,099 compared to $11,399 for the period ended November 30, 2002.



As a result of the foregoing, net losses from continuing operations for the six months ended November 30, 2003 and 2002, were $1,916,740 and $2,098,932
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, 2003, the Company had a working capital deficit of $9,535,770 compared to a working capital deficit of $8,837,518 for the same quarter in 2002. At January 10, 2004, the Company had a cash
balance of approximately $10,000. The Companys current monthly operating costs without any interest or principal payments on debt, amortization of warrants and depreciation expense; is approximately $175,000 per month. We are in a desperate
need for working capital. To date we have been funding our operations through the issuance of equity in private placement transactions with existing shareholders or persons with whom we have relationships, including affiliates of shareholders. There
can be no assurance that we will be able to continue to raise required working capital in this manner.



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 has resulted in a significant reduction in the Companys gross revenue. As of November 30, 2003 the Company does not have any cash processing customers. The company chose to discontinue operations in the fourth quarter of fiscal year
ended May 31, 2003.



The Companys independent certified
public accountant included an explanatory paragraph in its report for the year ended May 31, 2003, 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.



Net cash used
by operating activities was $1,007,548 for the six months ended November 30, 2003 compared to $813,658 for the six months ended November 30, 2002. The increase of net cash used by operating activities, during the 2003 period was primarily due to the
effects of the decreases in accounts payable of $352,858 and CoinBank machines held for sale of $97,534 offset by the effects of the increases in non-cash compensation expense of $95,611 and accrued expenses of $31,491.



Net cash used in investing activities was $0 for the six months ended
November 30, 2003, compared to $969 for the six months ended November 30, 2002.



Net cash provided by financing activities for the six months ended November 30, 2003, was $1,035,615 as compared to $395,681 for the six months ended November 30, 2002. The increase in net cash provided by financing
activities for the 2003 period was primarily attributable to increases in proceeds from the issuance of common stock of $499,705 and proceeds from conversion of warrants $135,910 offset by decreases in repayments of short-term debt of $150,000.



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. Due to the Companys inability to repay G.E. on the original terms, on
September 29, 2000 the Company entered into the first of several loan modifications with G.E. The most recent modification, which shall expire in October, 2004, requires interest-only payments at a rate of 9.5% and the entire unpaid balance is due
at maturity. As of January 10, 2004 the loan is current. As of November 30, 2003, we owed $3,899,294, which includes the principal, financing fees and unpaid interest.



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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 were 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. In August, 2003, the Company proposed the
conversion to equity of the $3.3 million in secured convertible debt to the noteholders, expected to be consummated in January, 2004. The proposed terms include reducing the conversion price of the notes to $2.50 per share and the conversion price
of the warrants to $0.65.



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 were 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. In August, 2003, the Company
proposed the conversion to equity of the $3.3 million in secured convertible debt to the noteholders, expected to be consummated in January, 2004. The proposed terms include reducing the conversion price of the notes to $2.50 per share and the
conversion price of the warrants to $0.65.



As of November 14,
2003, noteholders representing $3,606,695 of principal and interest, approximately 80% of the total value of notes, have converted their notes into 1,442,682 shares of the Companys common stock at $2.50 per share. The Company is in discussions
with the remaining noteholders. As of November 30, 2003, we still owed $885,070 in principal and interest.



In June 2003, the Company issued dividends on the Series E Redeemable Preferred Stock of $18,000. The preferred shareholders were awarded 31,032 shares of
the Companys Common Stock in lieu of cash.



In June 2003,
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 $50,000 of its securities. The unit comprised of 100,000 shares of Common Stock.



In June 2003, 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 $25,000 of its securities. The unit comprised of (i) 38,462 shares of Common Stock and (ii); 15,000 common stock purchase warrants. The warrants have an exercise price of $1.00 per
share and are exercisable for five years. A deemed dividend expense of $7,339 was recognized in conjunction with this placement.



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In June 2003, 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 $75,000 of its securities to a shareholder. The unit comprised of (i) 150,000 shares of Common Stock and (ii); 37,500 common stock purchase warrants. The warrants have an exercise price of $1.00 per share and
are exercisable for five years. A deemed dividend expense of $46,354 was recognized in conjunction with this placement.



In July 2003, in a private transaction under Section 4(2) of the Securities Act of 1933, as amended, the Company sold 26 units at an aggregate of $10,000
of its securities to 7 shareholders. The unit comprised of (i) 15,385 shares of Common Stock and (ii); 5,000 common stock purchase warrants. The Company received gross proceeds of $260,000 in conjunction with this placement. The warrants have an
exercise price of $1.00 per share and are exercisable for five years. A deemed dividend expense of $137,671 was recognized in conjunction with this placement.



In July 2003, 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 $50,000
of its securities. The unit comprised of 76,924 shares of Common Stock.



In July 2003, the Company issued a total of 224,543 shares of the Companys common stock to its consultants in lieu of cash payments. The 224,543 shares included 82,619 shares paid to developers in lieu of cash payments for services
rendered. The remaining 141,924 were part of various consulting agreements. The total 224,543 shares represented a cash value of $183,474.



In July 2003, the Company received $235,910 from warrant holders to exercise 362,940 warrants into 362,940 shares of the Companys common stock.



On September 2, 2003, in a private transaction under
Section 4(2) of the Securities Act of 1933, as amended, the Company sold 5 units at an aggregate of $25,000 of its securities to 2 European shareholders. The unit comprised of (i) 38,462 shares of Common Stock and (ii); 12,821 common stock purchase
warrants. The Company received gross proceeds of $125,000 in conjunction with this placement. The warrants have an exercise price of $1.00 per share and are exercisable for five years. There was a deemed dividend expense of $99,584 in conjunction
with this offering.



In September 2003, 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 $50,000 of its securities. The unit comprised of 62,500 shares of Common Stock.



In October 2003, in a private transaction under Section 4(2) of the
Securities Act of 1933, as amended, the Company sold 69,000 shares of the Companys common stock to four investors for $52,440.



In October 2003, 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 $25,000
of its securities to a European investor. The unit comprised of (i) 31,250 shares of Common Stock and (ii) 10,417 common stock purchase warrants. The warrants have an exercise price of $1.00 per share and are exercisable for five years. There was a
deemed dividend expense of $11,557 in conjunction with this offering.



In October 2003, in a private transaction under Section 4(2) of the Securities Act of 1933, as amended, the Company sold 25,000 shares of the Companys common stock to an individual for $20,000.



In October 2003, in a private transaction under Section 4(2) of the
Securities Act of 1933, as amended, the Company sold 10,000 shares of the Companys common stock to an individual for $8,000.



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During the quarter ended November 30, 2003, the Company awarded 125,000 shares of the Companys
common stock to a former director of the Company as part of a consulting agreement. A compensation expense of $130,000 was recorded in conjunction with this award.



On December 1, 2003, 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 $70,000 of its securities. The unit comprised of (i) 87,500 shares of Common Stock and (ii) 20,000 common stock purchase warrants. The warrants have an exercise price of $1.00 per share and are exercisable for five years.



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 of 10% per annum and is payable upon demand. As of the quarter ended November,
2003 the Company has accrued $20,000 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, 2003, the Company has outstanding short-term loans of an aggregate principal amount of $46,085 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, 2003, the Company had $224,264 in arrears in salary to Mr. Korman.



As of November 30, 2003, the Company had $66,352 in arrears in salary to Mr.
Darryl Bergman. Mr. Bergman serves as the Chief Technology Officer of the Company.



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##### Table of Contents

ITEM 3 CONTROLS AND PROCEDURES



Evaluation of
Disclosure Controls and Procedures:



Our management, under the
supervision and with the participation of our chief executive officer and chief financial officer, conducted an evaluation of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c))
within 45 days of the filing date of this Quarterly Report on Form 10-QSB. Based on their evaluation, our chief executive officer and chief financial officer have concluded that as of the Evaluation Date, our disclosure controls and procedures are
effective to ensure that all material information required to be filed in this Quarterly Report on Form 10-QSB has been made known to them.



Changes in Internal Controls:



The Board of Directors adopted, effective, August 25, 2003 a Code of Ethics for its Chief Executive Officer and Chief Financial Officer, as well as a Code
of Ethics for its employees. These Codes are intended to ensure compliance with rules and regulations, promote honest and ethical behavior and to prevent wrongdoing.



Additionally, the Board, in response to the passage of the Sarbanes-Oxley Act of 2002, among other actions, formed a
Disclosure Committee comprised of various members of our management team. The Disclosure Committee is charged with, among other things, reviewing and developing policies and procedures to enhance our disclosure controls and procedures as well as
with reviewing our periodic reports and other public disclosures. Other than as described above, there have been no changes, including corrective actions with regard to significant deficiencies or material weaknesses in our internal controls or in
other factors that could significantly affect these controls subsequent to November 30, 2003.



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PART II. OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS



Shaws Supermarkets has filed a lawsuit, captioned Shaws Supermarkets, Inc. v. Cash Technologies, Inc., CoinBank Automated Systems Inc. (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 is claiming damages in excess of $75,000, for contract termination fees and reimbursements. We believe that the amount owed is approximately $55,000 and
have accrued for the liability. Furthermore, we have potential claims against Shaws for damages to the machines. Although we intend to vigorously defend the suit, we may not be successful in our defense.



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 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. In May 2003, the Louisiana Court decided in favor of the Company and vacated
its previous judgment against us. The plaintiff, however, immediately refiled its lawsuit. The Company has entered into settlement negotiations and has reached a tentative settlement agreement involving the resale of the Plaintiffs machines.
There can be no assurance that the Company will be successful in completing the settlement arrangement satisfactorily.



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. loaned McNeely and Willmon the amount of $79,999. Pursuant to the promissory notes the funds were due to be returned in December 2002. Despite
repeated collection attempts, both McNeely and Willmon refused to repay the funds. The Companys lawsuit sought an amount in excess of $79,999. On September 25, 2002, McNeely and Willmon filed a cross complaint claiming $500,000 in compensatory
damages. In November 2003, the Company entered into a settlement agreement with McNeely and Willmon requiring McNeely and Willmon to pay a total of $50,000 over a three month period. These amounts have been paid as of January 12, 2004, and all
claims against the Company have been dismissed, satisfying all conditions of the settlement.



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In June, 2002 we were notified that a vendor, Kiosk Information Systems, Inc. (KIS), had
obtained a judgment against the Company for $129,567 allegedly owed for services rendered in 1999, plus interest and attorneys fees. Upon learning of the judgment, we notified KIS that we have never been served with a lawsuit related to this matter
and was unaware of the existence of the case. Subsequent settlement negotiations resulted in a tentative settlement agreement with KIS on July 7, 2003 which has not been performed as of January 14, 2004. If this matter is not otherwise settled, it
is likely that the Company will initiate legal action to set aside the judgment and take other appropriate measures. In such event the Company will incur substantial legal fees and there is no assurance that we would succeed in setting aside the
judgment or prevailing in any subsequent litigation.



ITEM 2. CHANGE IN SECURITIES



On
September 2, 2003, in a private transaction under Section 4(2) of the Securities Act of 1933, as amended, the Company sold 5 units at an aggregate of $25,000 of its securities to 2 European shareholders. The unit comprised of (i) 38,462 shares of
Common Stock and (ii); 12,821 common stock purchase warrants. The Company received gross proceeds of $125,000 in conjunction with this placement. The warrants have an exercise price of $1.00 per share and are exercisable for five years. There was a
deemed dividend expense of $99,584 in conjunction with this offering.



In September 2003, 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 $50,000 of its securities. The unit comprised of 62,500 shares of Common Stock.



In October 2003, in a private transaction under Section 4(2) of the
Securities Act of 1933, as amended, the Company sold 69,000 shares of the Companys common stock to four investors for $52,440.



In October 2003, 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 $25,000
of its securities to a European investor. The unit comprised of (i) 31,250 shares of Common Stock and (ii) 10,417 common stock purchase warrants. The warrants have an exercise price of $1.00 per share and are exercisable for five years. There was a
deemed dividend expense of $11,557 in conjunction with this offering.



In October 2003, in a private transaction under Section 4(2) of the Securities Act of 1933, as amended, the Company sold 25,000 shares of the Companys common stock to an individual for $20,000.



In October 2003, in a private transaction under Section 4(2) of the
Securities Act of 1933, as amended, the Company sold 10,000 shares of the Companys common stock to an individual for $8,000.



During the quarter ended November 30, 2003, the Company awarded 125,000 shares of the Companys common stock to a former director of the Company as
part of a consulting agreement. A compensation expense of $130,000 was recorded in conjunction with this award.



During the quarter ended November 30, 2003, noteholders representing $3,606,695 of principal and interest amount converted their notes into 1,442,682
shares of the Companys common stock. The conversion was completed at a rate of $2.50 per share.



On December 1, 2003, 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
$70,000 of its securities. The unit comprised of (i) 87,500 shares of Common Stock and (ii) 20,000 common stock purchase warrants. The warrants have an exercise price of $1.00 per share and are exercisable for five years.



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##### Table of Contents

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 were 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. In August, 2003, the Company proposed the conversion to equity of the $3.3 million in secured convertible debt to the noteholders, expected to be
consummated in January, 2004. The proposed terms include reducing the conversion price of the notes to $2.50 per share and the conversion price of the warrants to $0.65.



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 were 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. In August, 2003, the Company proposed the conversion to equity of the $3.3 million in secured convertible debt to the
noteholders, expected to be consummated in January, 2004. The proposed terms include reducing the conversion price of the notes to $2.50 per share and the conversion price of the warrants to $0.65.



As of November 14, 2003, noteholders representing $3,606,695 of principal and
interest, approximately 80% of the total value of notes, have converted their notes into 1,442,682 shares of the Companys common stock at $2.50 per share. The Company is in discussions with the remaining noteholders. As of November 30, 2003,
we still owed $885,070 in principal and interest.



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



The Company did not submit any matters to the shareholders during the quarter ended November 30, 2003. The Company did hold a shareholders meeting on January 5, 2004, the first for the Company in the last three (3)
calendar years.



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Results of the Annual Meeting



The Meeting was held on January 5, 2004 at the Companys offices in Los Angeles, California. The Companys Proxy Statement was
mailed to shareholders on or about December 15, 2003.



Shareholders were
requested to vote and act upon the following several items:



1. the election
of five directors;



2. a proposal to amend the Companys Employee Option
plan, including amendments to increase the number of shares reserved under the Employee Plan and certain grants to the Companys Chief Executive Officer;



3. a proposal to amend the Companys Director Option Plan, including amendments to increase the number of shares reserved under the Director Plan and an increase
in the number of options granted to directors; and



4. a proposal to approve
the conversion terms of the Companys outstanding Series B Preferred stock.



At the meeting, shareholders representing an aggregate of 5,029,990 shares were present either in person or by proxy, representing 51% of the total outstanding. For purpose of the Meeting, at the record date of November 24, 2003, there were
9,895,155 shares issued and outstanding.



All of the proposals and all of the
nominees for directors were approved by shareholders. The voting was as follows:



|1. | Election of Directors
|-- | ---------------------



|Name            |  | Votes For |  | Votes Against |  | Withheld Vote
|--------------- |  | --------- |  | ------------- |  | -------------
|Bruce Korman    |  | 5,025,494 |  | 4,496         |  | 0            
|Robert Fagenson |  | 5,027,640 |  | 2,350         |  | 0            
|Richard Miller  |  | 5,027,640 |  | 2,350         |  | 0            
|Kevin Walls     |  | 5,027,640 |  | 2,350         |  | 0            
|David Grano     |  | 5,027,640 |  | 2,350         |  | 0            



|2. | Proposal to Amend the Employee Option Plan
|-- | ------------------------------------------



|Votes For |  | Votes Against |  | Abstentions/NonVotes
|--------- |  | ------------- |  | --------------------
|4,837,290 |  | 187,700       |  | 5,000               



|3. | Proposal to Amend the Director Option Plan
|-- | ------------------------------------------



|Votes For |  | Votes Against |  | Abstentions/NonVotes
|--------- |  | ------------- |  | --------------------
|4,803,190 |  | 221,800       |  | 5,000               



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|4. | Proposal to Approve Conversion Terms of Series B Preferred Stock
|-- | ----------------------------------------------------------------



|Votes For |  | Votes Against |  | Abstentions/NonVotes
|--------- |  | ------------- |  | --------------------
|4,992,110 |  | 32,880        |  | 5,000               



ITEM 5. OTHER INFORMATION



NONE



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



|(a)  |  | Exhibits                                                       
|---- |  | ---------------------------------------------------------------
|     | 
|31.1 |  | Certification of Chief Executive Officer                       
|     | 
|31.2 |  | Certification of Chief Financial Officer                       
|     | 
|32.1 |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
|     | 
|(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-A for the fiscal quarter ended November 30, 2003, to be signed on its behalf by the undersigned, thereunto duly authorized the 20th
day of January, 2004.



|CASH TECHNOLOGIES, INC.              
|-------------------------------------
|                                     
|By: /S/ Bruce Korman                 
|Bruce Korman                         
|President and Chief Executive Officer
|                                     
|By: /S/ Edmund King                  
|Edmund King                          
|Chief Financial Officer              



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