UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                        --------------------------------
                                   FORM 10-QSB

(MARK ONE)

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

FOR THREE MONTH PERIOD ENDED AUGUST 31, 2005

OR

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

                        COMMISSION FILE NUMBER: 001-15783
                            ------------------------

                             CASH TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)

             DELAWARE                                   95-4558331
  (State or other jurisdiction              (IRS Employer Identification No.)
 of incorporation  organization)

         1434 W. 11TH STREET, LOS ANGELES, CA                       90015
       (Address of principal executive offices)                   (Zip Code)

                                 (213) 745-2000
              (Registrant's telephone number, including area code)

                            ------------------------

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 October 14, 2005,  there were  19,273,871  shares of common stock,  $ .01 par
value per share, issued and outstanding.


<PAGE>

                             CASH TECHNOLOGIES, INC.
                                   FORM 10-QSB

                                      INDEX


                                                                        PAGE NO.

PART I. FINANCIAL INFORMATION

Item 1.    Consolidated Financial Statements:

              Consolidated Balance Sheet as of August 31, 2005 (unaudited)
              and May 31, 2005 ..............................................  3

              Consolidated  Statements  of  Operations  for the three  month
              periods ended August 31, 2005 and August 31, 2004  (unaudited).  4

              Consolidated  Statements  of Cash  Flows  for the  three-month
              periods Ended August 31, 2005 and August 31, 2004  (unaudited).  5

              Notes to Consolidated Financial Statements for the three-month
              periods ended August 31, 2005 and August 31, 2004 (unaudited)..  6


Item 2.    Management's Discussion and Analysis of Financial Condition,
                  Results of Operations, and Risk Factors.................... 15

Item 3.    Controls And Procedures........................................... 24

PART II. OTHER INFORMATION

Item 1.    Legal Proceedings................................................. 25

Item 2.    Change in Securities ............................................. 25

Item 3.    Defaults Upon Senior Securities................................... 25

Item 4.    Submission of Matters to a Vote of Security Holders............... 26

Item 5.    Other Information................................................. 25

Item 6.    Exhibits and Reports on Form 8-K.................................. 26

SIGNATURES................................................................... 27


                                       2
<PAGE>

PART I

ITEM 1. FINANCIAL STATEMENTS

                       CASH TECHNOLOGIES, INC. AND SUBSIDIARIES
                              CONSOLIDATED BALANCE SHEETS
                                      (UNAUDITED)

<TABLE>
<CAPTION>
                                                           AUGUST 31,        MAY 31,
                                                              2005            2005
                                                          ------------    ------------
<S>                                                       <C>             <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                                 $    136,767    $    163,627
Accounts receivable                                          1,223,852       1,734,616
Prepaid expenses and other current assets                      772,163         749,954
Other receivable (net of allowance $21,000)                     28,035          28,035
Inventory (net of allowance $1,180,000)                      8,952,899       8,508,323
                                                          ------------    ------------
Total Current Assets                                        11,113,716      11,184,555

CoinBank machines held for sale                                628,994         638,283

PROPERTY AND EQUIPMENT (net)                                    52,321          51,084

CAPITALIZED SOFTWARE COSTS                                     746,357         886,300

CDHC PREFERRED STOCK                                           900,901         900,901

OTHER ASSETS                                                   304,711         449,745
                                                          ------------    ------------
TOTAL ASSETS                                              $ 13,747,000    $ 14,110,868
                                                          ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Current maturities of Notes Payable  (Note 5)             $  5,557,788    $  5,654,098
Due to Officers and Directors                                    8,915           8,915
Convertible debt (Note 5)                                      478,142         472,975
Due to Shareholders (Note 5)                                   170,750         270,750
Accounts payable                                             1,680,631       1,967,800
Accrued liabilities                                          1,221,633         813,439
Dividend payable                                               179,004         128,589
                                                          ------------    ------------
Total Current Liabilities                                    9,296,863       9,316,566

Long-Term Notes Payable  (Note 6)                               12,940          13,807
                                                          ------------    ------------
TOTAL LIABILITIES                                            9,309,803       9,330,373
                                                          ------------    ------------
COMMITMENTS & CONTINGENCIES (Note 2)                                --              --

MINORITY INTEREST (Note 9)                                     628,404         634,666

STOCKHOLDERS' EQUITY:  (Note 3)

Cumulative  Redeemable Preferred Stock,
1,000,000 shares authorized, 657,093 and 646,091 shares
issued and outstanding at May 31, 2005 and 2004              4,195,812       4,195,812

Common Stock, $0.01 par value, 20,000,000 shares
authorized, 18,374,346 and 14,358,446 issued and
outstanding at May 31, 2005 and 2004                           192,824         183,300

Additional Paid-In-Capital                                  37,642,941      36,652,496
Accumulated Deficit                                        (38,222,783)    (36,885,779)
                                                          ------------    ------------
Total stockholders' equity                                   3,808,793       4,145,828
                                                          ------------    ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $ 13,747,000    $ 14,110,868
                                                          ============    ============
</TABLE>


                    See notes to consolidated financial statements


                                           3
<PAGE>

                    CASH TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                      THREE MONTH PERIOD
                                                       ENDED AUGUST 31,
                                                ----------------------------
                                                    2005            2004
                                                ------------    ------------


NET REVENUES                                    $  1,877,501    $     14,764
COST OF REVENUES                                   1,346,763          13,126
                                                ------------    ------------
GROSS PROFIT (LOSS)                                  530,738           1,638
                                                ------------    ------------
SELLING, GENERAL, & ADMINISTRATIVE EXPENSE         1,443,557         675,264
RESEARCH AND DEVELOPMENT                              37,500          45,000
IMPAIRMENT ON COIN MACHINES                               --              --
DEPRECIATION & AMORTIZATION EXPENSE                  141,066         140,642
                                                ------------    ------------
OPERATING LOSS                                    (1,091,385)       (859,268)
                                                ------------    ------------
INTEREST EXPENSE                                     196,666          97,145
                                                ------------    ------------
LOSS BEFORE INCOME TAXES                          (1,288,051)       (956,413)
                                                ------------    ------------
INCOME TAXES                                           4,800              --

MINORITY INTEREST (Note 9 )                            6,262          13,349

NET INCOME (LOSS)                               $ (1,286,589)   $   (943,064)
                                                ------------    ------------
Dividends & deemed dividends                    $     50,415    $     84,029

Net income (loss) allocable to common
shareholders                                    $ (1,337,004)   $ (1,027,093)

Basic and diluted net income (loss) per share   $      (0.08)   $      (0.08)

Basic and diluted weighted average
shares of common stock outstanding                17,106,973      12,891,574
                                                ============    ============


                See notes to consolidated financial statements.


                                       4
<PAGE>

                     CASH TECHNOLOGIES, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    (UNAUDITED)

<TABLE>
<CAPTION>
                                                             THREE MONTH PERIOD
                                                              ENDED AUGUST 31
                                                        --------------------------
                                                            2005          2004
                                                        -----------    -----------
<S>                                                     <C>            <C>
OPERATING ACTIVITIES:
Net loss                                                $(1,286,589)   $  (943,064)
Adjustments to reconcile net loss to net cash used by
operating activities:
Minority interest                                            (6,262)       (13,349)
Amortization of capitalized software                        139,943        139,942
Depreciation expense                                            952            701

Changes in operating assets and liabilities:

Inventory                                                  (444,576)            --
Account receivable                                          482,729        (12,381)
CoinBank machines held for sale                               9,289          9,289
Prepaid expenses and other current assets                     5,826             --
Other assets                                                145,034             --
Accounts payable                                            (86,411)         7,558
Accrued interest                                            (91,143)         7,079
Accrued expenses and other current liabilities              207,404         86,217
                                                        -----------    -----------

Net cash used in operating activities                      (923,804)      (718,008)
                                                        -----------    -----------

INVESTING ACTIVITIES:

Purchase of property and equipment                           (2,189)        (5,746)
                                                        -----------    -----------

Net cash provided by (used in) investing activities          (2,189)        (5,746)
                                                        -----------    -----------

FINANCING ACTIVITIES:

Net proceeds from issuance of preferred stock                    --        782,000
Repayments on long-term debt                                   (867)            --
Repayments on short-term debt                              (100,000)            --
Proceeds from sale of common stock                        1,000,000             --
                                                        -----------    -----------
Net cash provided by financing activities                   899,133        782,000
                                                        -----------    -----------
CHANGE IN CASH AND CASH EQUIVALENTS                         (26,860)        58,246

Cash and Cash Equivalents, Beginning of Period              163,627         20,950
                                                        -----------    -----------
Cash and Cash Equivalents, End of Period                $   136,767    $    79,196
                                                        ===========    ===========


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
           Income taxes                                 $     4,800    $        --


SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
           Dividends declared on preferred stock        $    50,415    $    84,029

</TABLE>


                  See notes to consolidated financial statements


                                         5
<PAGE>

CASH TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1: GENERAL

GOING CONCERN:

      We have  prepared the  financial  statements  included in this Form 10-QSB
assuming  that we will  continue  as a going  concern.  Although  we have raised
additional capital since our initial public offering in July 1998, we have never
generated  sufficient  revenue-producing  activity  to sustain  our  operations.
Accordingly, we must raise significant capital to fund current operations and to
repay  existing  debt.  Our auditors have included an  explanatory  paragraph in
their report for the year ended May 31, 2005,  indicating  there is  substantial
doubt  regarding our 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. ("Cash Tech"
or the "Company"),  the accompanying  unaudited condensed consolidated financial
statements include all normal adjustments considered necessary to present fairly
the  financial  position as of August 31, 2005 and the results of operation  and
cash flows for the three  month  periods  ended  August 31,  2005 and August 31,
2004.  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,  2005,
filed with the SEC. The results of  operations  for the three month period ended
August 31, 2005,  are not  necessarily  indicative of the results to be expected
for any subsequent quarter or for the entire fiscal year.

      In  December  of  1997,  we  filed a  patent  application  describing  our
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 we refer to as EMMA (E commerce Message
Management  Architecture),  can perform  complex data  processing  that involves
interactivity with disparate  platforms and devices for financial,  security and
other applications.

      Technological feasibility of the Company's EMMA technology 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,  we 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  $37,500 for the three month  period  ended
August 31, 2005.


                                       6
<PAGE>

      Amortization  of the  capitalized  software  commenced on January 1, 2002.
Amortization  had been calculated over a seven 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 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  August  31,  2005,  we  amortized  an  additional   $139,942  of
capitalized software.

      In connection with the development of our EMMA software, during the period
ended  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 we 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"  that  needed  to  be  resolved  as  evidence  that
technological  feasibility had been established  under paragraph 4(a)(3) of SFAS
86.

      The first issue 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  EFT
network transactions,  the software being developed has to be certifiable by one
of the major  authorized EFT networks (such as Star,  MAC, etc.) for interfacing
with the global EFT  network.  We  partnered  with a  third-party  ATM  software
provider to assist in these efforts, instead of developing the software for this
step ourselves.  This significantly reduced our costs to 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 similar software from scratch.  A  per-transaction  license
fee will be paid by us to the third  party  when the  system  starts  generating
transactions,  thereby further reducing  development  costs.  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.


                                       7
<PAGE>

      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,  wherein 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. We have
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) 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 we used, or the working model approach,  under paragraph
4(b) of SFAS 86, and these  factors  should be  considered  when  reviewing  our
financial statements.

NOTE 2. COMMITMENTS AND CONTINGENCIES

      In February  2003 Abraham  Mirman of Samson  Consulting  Corp.  was hired,
inter alia, to provide consulting  services and to arrange financing for us. The
term  of the  agreement  was 12  months  at a  monthly  cost  of  $50,000  or an
equivalent value in shares of our stock; either party had the right to terminate
after one month for any reason. Shortly thereafter,  we terminated the agreement
for Samson's failure to perform.  In July 2004, Mirman initiated  arbitration in
New York State  claiming that the agreement was  wrongfully  terminated and that
Samson was owed damages. In the arbitration Samson claimed that it was owed fees
for the entire 12 month term of the agreement,  plus attorneys' fees. We alleged
that  Samson had failed to perform  its  obligations,  had failed to provide any
promised  financing  and that Mirman had  induced us to enter into the  contract
under false and deceptive pretenses. In June 2005, an arbitrator determined that
Mirman was owed 2 months fees and thus awarded Sampson  $100,000 in unpaid fees,
$21,650 in statutory  interest through July 20, 2005 and no attorney fees. As of
August 31, 2005, we have fully accrued for this liability. We are undertaking an
appeal of the arbitrator's decision in New York.


                                       8
<PAGE>

      In addition,  we have  initiated a lawsuit  against  Mirman in California,
alleging that he failed to provide financing promised in February, 2003, causing
damages  in excess of  $400,000.  There  can be no  assurance  that our New York
appeal or California case will prove  successful.  This litigation will continue
to incur legal costs until its conclusion.

      In 2001 we delivered stock certificates  representing 700,000 shares to an
escrow agent as collateral  for a loan. The loan was never  consummated,  and in
May 2001 we notified the  transfer  agent to cancel the shares.  Thereafter  the
escrow  agent,  an  attorney,  died  and we  were  never  able  to  recover  the
certificates.  In  August,  2004  it  came to our  attention  that a  party  was
improperly  attempting to transfer 450,000 of the 700,000 shares. We immediately
initiated a lawsuit in New York to prevent  the  transfer of the shares and have
them  retired.  In December,  2004,  we reached a settlement in which the shares
would be returned to us without any  exchange of money.  We intend to  similarly
pursue the recovery of the remaining  250,000 shares,  however in the event that
we cannot  achieve a satisfactory  outcome in such effort,  or in the event that
the pending  settlement is not consummated for any reason,  some or all of these
shares may be treated as  outstanding  and our  Stockholders'  Equity  line item
would have to be adjusted to reflect such additional shares.

NOTE 3: STOCKHOLDERS EQUITY

      On June 30,  2005,  in a private  transaction  under  Section  4(2) of the
Securities  Act of 1933, as amended,  we sold 952,381 shares of common stock for
gross  proceeds of $1,000,000 to one  individual.  We also issued 428,571 of our
common stock purchase warrants with an exercise price of $2.50. All common stock
purchase warrants have an exercise life of 5 years.

NOTE 4: RELATED PARTY TRANSACTIONS

      We  obtained  loans of $68,000 in the fiscal  year ended May 31,  2002 and
$342,700  during the  fiscal  year ended May 31,  2003 from  Bruce  Korman  (and
related parties) who is our Chief Executive Officer and Chairman of our Board of
Directors.  The loans were short-term loans and as of August 31, 2005, $8,915 is
outstanding to Mr. Korman. The loans are short-term  non-interest  bearing loans
and are payable upon  demand.  Furthermore,  as of August 31,  2005,  we were in
arrears of $290,874  for salary to Mr.  Korman and owed  $22,473 in accrued rent
for our offices to a company in which Mr. Korman has a beneficial interest.

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.  In
September,  2000, due to our inability to repay G.E. on the original  terms,  we
restructured the loan to an interest-only  note which has been renewed annually.
The  most  recent  note,   which  shall  expire  in  November   2005,   requires
interest-only payments at a rate of 9.5% and the entire unpaid balance is due at
maturity.  As of August 31, 2005, we owed $3,654,096,  which includes  principal
and  financing  fees.  As of September  10, 2005,  the loan was current.  We are
currently in discussions with G.E. about another renewal and, while there can be
no  assurances;  we  believe  that we and  G.E.  will  agree  on  renewal  terms
acceptable to both parties.


                                       9
<PAGE>

      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 secured  convertible  debt to the  noteholders.  The
proposed terms included  reducing the conversion price of the notes to $2.50 per
share and the exercise price of the warrants to $0.65. As of August 31, 2005, we
still  owed  $478,142  in  principal   and  interest  to  the  seven   remaining
noteholders.

      In May 2003 we  completed  a private  placement  offering  with one of our
stockholders   consisting  of  convertible  notes  and  warrants.  The  offering
consisted of an unsecured convertible promissory note in the principal amount of
$50,000, bearing interest at the rate of 5% per annum and redeemable warrants to
purchase 100,000 shares of common stock. The note is convertible into our common
stock at the conversion rate of $0.50 per share. The Warrants are exercisable at
a price of $1.00 per share. We also reduced the exercise price of 8,000 Series C
warrants owned by the stockholder from $2.50 to $0.25 per share. The note is due
and payable on May 2, 2008.

      In May 2003 we  completed  a private  placement  offering  with one of our
stockholders   consisting  of  convertible  notes  and  warrants.  The  offering
consisted of an unsecured convertible promissory note in the principal amount of
$20,750, bearing interest at the rate of 5% per annum and redeemable warrants to
purchase 30,000 shares of common stock.  The note is convertible into our common
stock at the conversion rate of $0.50 per share. The Warrants are exercisable at
$0.65 per share.  We also reduced the exercise price of 45,000 Series B warrants
owned by the  stockholder  from $4.50 to $0.65 per share  which  were  converted
immediately for gross proceeds to us of $29,250.  The note is due and payable on
May 8, 2008.

      We  obtained  loans of $68,000 in the fiscal  year ended May 31,  2002 and
$342,700 during the fiscal year ended May 31, 2003 from Bruce Korman,  our Chief
Executive  Officer  and  Chairman  of our Board of  Directors.  The  loans  were
short-term loans and as of August 31, 2005, $8,915 is outstanding to Mr. Korman.

      The Company's  subsidiary TAP Holdings,  LLC which owns and operates Tomco
auto products has an asset based equity line with a revolving  credit line which
was partially used for the  acquisition of Tomco Auto Products and for operating
cashflow. On August 31, 2005 the balance for the above mentioned equity line was
approximately  $1,868,957.  The  equity  line is secured  by the  inventory  and
receivables of TAP.


                                       10
<PAGE>

               NOTE 6: LONG-TERM DEBT

               Note Payable - Truck (a)                                  $17,675
               Note Payable - Unsecured (b)                               30,000
                                                                         -------
                                                                          48,675
               Less: Current Maturities                                   34,735
                                                                         -------
Total                                                                    $12,940

(a) The note,  which is  collateralized  by a security  interest in a truck,  is
payable in monthly installments of $450, including interest at 7.49% per annum.

(b) The note, which is unsecured,  matures in February, 2006. The note, which is
payable  to a broker for  services  in  connection  with the  Company's  line of
credit, accrues interest at 3% per annum above the prime interest rate (9% as of
May 31, 2005) and is subordinated to the Company's Secured Lender.

NOTE 7: STOCK BASED COMPENSATION

      All stock options issued to employees have an exercise price not less than
the  fair  market  value  of our  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 our  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, our net
loss and loss per share for the three month  periods  ended  August 31, 2005 and
August 31, 2004,  would have been  increased to the pro forma amounts  presented
below:

                                                      FOR THREE MONTHS
                                                       ENDED AUGUST 31,
                                                ----------------------------
                                                    2005             2004
                                                ------------    ------------

                      Net Income (Loss)

                           As Reported            (1,286,589)       (943,064)

                           Pro Forma              (1,851,775)     (1,951,754)

                      Basic and Diluted Income (loss) Per Common Share

                           As Reported                 (0.08)          (0.07)

                           Pro Forma                   (0.11)          (0.15)


      For the three month period ended August 31, 2005, 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 2000-2005, expected life of the option is 5 years, expected volatility of
29.01%,  risk free interest rate of 3.87% and a 0% dividend yield.  The weighted
average fair value at the grant date for such option is $0.73 per option.

      For the three month period ended August 31, 2004, 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 1999-2004, expected life of the option is 5 years, expected volatility of
46.61%,  risk free interest rate of 3.33% and a 0% dividend yield.  The weighted
average fair value at the grant date for such option is $0.73 per option.

NOTE 8: SEGMENT REPORTING

      We operate through four business segments:  Heuristic Technologies,  Inc.,
TAP  Holdings,  LLC  (aka  "Tomco"),  CoinBank  machine-related  activities  and
EMMA-related  activities.  We sell CoinBank  self-service coin counting machines
through  existing  equipment   distribution   channels.   Our  EMMA  transaction
processing system has not yet been deployed and all current software development
costs are being expensed.


                                       11
<PAGE>

      Information on our business segments for the:

                                                      THREE MONTHS ENDED
                                                          AUGUST 31,
                                                ----------------------------
            Net revenues:                           2005            2004
                                                ------------    ------------
              CoinBank machines                       14,078          14,764
              EMMA                                        --              --
              Heuristic                                1,586              --
              Tomco                                1,811,332              --
              Unallocated                             50,505              --
                                                ------------    ------------
                                                   1,877,501          14,764
                                                ============    ============

            Interest expense:

              CoinBank machines                           --           2,336
              EMMA                                        --              --
              Heuristic                                   --              --
              Tomco                                   98,768
              Unallocated                             97,898          94,809
                                                ------------    ------------
                                                     196,666          97,145
                                                ============    ============

            Depreciation & Amortization:

              CoinBank machines                           --              --
              EMMA                                   139,942         139,942
              Heuristic                                   --              --
              Tomco                                       --              --
              Unallocated                              1,124             700
                                                ------------    ------------
                                                     141,066         140,642
                                                ============    ============


                                       12
<PAGE>

            Segment loss:

              CoinBank machines                       62,098          52,563
              EMMA                                        --              --
              Heuristic                              392,445              --
              Tomco                                  198,178              --
              Unallocated                            633,868         889,501
                                                ------------    ------------
                                                   1,286,589         943,064
                                                ============    ============

            Net identifiable assets:

              CoinBank machines                      628,994         666,150
              EMMA                                   746,357       1,306,126
              Heuristic                                   --              --
              Tomco                               10,591,449              --
              Unallocated                          1,780,200         254,966
                                                ------------    ------------
                                                  13,747,000       2,227,242
                                                ============    ============

NOTE 9: MINORITY INTEREST

      From  November  2002  through  March  2003,  we  received  $443,000 in net
proceeds from members for an equity share in our  subsidiary  CT Holdings,  LLC.
The minority members own 13.65% while we own 86.35%.  The net proceeds from this
have been used to  further  develop  the BONUS  product  as well as for  working
capital for CT Holdings and Cash  Technologies,  Inc. For the three months ended
August 31, 2005, we have  allocated  $6,262 of losses in CT Holdings to minority
interest.

      On November 5, 2004 TAP Holdings,  LLC (dba Tomco Auto Products)  acquired
substantially  all of the assets and assumed  certain  liabilities of Tomco Auto
Products,  Inc. One member of TAP owns 11% while we own 89%. For the fiscal year
ended May 31, 2005, we had allocated  $684,662 of losses and extraordinary  gain
in TAP to minority interest.

NOTE 10: SUBSEQUENT EVENTS

      In  October  2004,  in a private  transaction  under  Section  4(2) of the
Securities  Act of 1933, as amended,  we sold 600,000 shares of common stock for
gross  proceeds  of $600,000 to four  investors.  We also issued  600,000 of our
common stock purchase warrants with an exercise price of $2.50. All common stock
purchase warrants have an exercise life of five years.

      On October 14, 2005, Mr. Robin  Richards  rejoined our Board of Directors.
Mr. Richards is currently Chairman and CEO of Notification Technologies, Inc., a
privately  held company that provides  school-to-parent  communication  services
throughout the U.S. Previously,  he was CEO of Vivendi Universal Net USA ("VUNet
USA"),  a subsidiary of Vivendi  Universal.  VUNet USA operated  MP3.com,  Inc.,
Flipside  Network,  Moviso,  a leading  wireless  service provider and VUNet USA
Technologies,  a leading internet distribution infrastructure provider. Prior to
his  position at VUNet USA,  Mr.  Richards  was the  founding  president,  chief


                                       13
<PAGE>

operating  officer and a director of MP3.com,  Inc.,  involved in all aspects of
that company's  historic impact on the internet and the music industry,  its IPO
and ultimate sale to Vivendi  Universal.  Additionally,  Mr.  Richards served as
managing  director  of  Tickets.com,  Inc.  and  was  founder  and  CEO of  Lexi
International,  a tele-services and database  management  company.  Mr. Richards
served on the Board of Cash Technologies previously from 1999 through 2001.


                                       14
<PAGE>

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  and
majority-owned   subsidiaries   National  Cash  Processors,   Inc.,  a  Delaware
corporation;  CoinBank Automated Systems, Inc., a Delaware corporation; CoinBank
Automation Handels GmbH, organized in Salzburg,  Austria, Cintelia Systems Inc.,
a Delaware  corporation,  CT Holdings,  LLC., a Delaware corporation of which we
own 86.65%,  Heuristic  Technologies,  Inc., a Delaware company,  formed in May,
2004 to engage in  healthcare  data  processing  and debit card issuance and TAP
Holdings,  LLC (dba  Tomco  Auto  Products),  of which  we own  89%,  formed  in
November, 2004 to acquire certain assets and assume certain liabilities of Tomco
Auto Products, Inc..

Business Highlights

      Following are certain  financial  and  operational  accomplishments  of FY
2005, explained in further detail throughout this document:

      o     Moved from  negative $7 million in  stockholders  equity to positive
            $4.1million
      o     Achieved profitability for the first time in the Company's history
      o     Met the AMEX listing requirements for the first time since listing*
      o     Acquired  Tomco line of  business,  resulting in  profitability  and
            significant equity improvement
      o     Created the Heuristic  Technologies  line of business,  establishing
            two recurring  revenue  sources in the massive  healthcare and debit
            card industries


                                       15
<PAGE>

      o     Invested  in  a  startup  company  creating  a  national  discounted
            healthcare network
      o     Created a strategic marketing  relationship with Fortune 500 medical
            data processor Affiliated Computer Services (NYSE:ACS)
      o     Launched two debit card  programs - one for the check  cashers,  one
            for general use
      o     Raised approx.  $3M in equity for operations,  the Tomco acquisition
            and other uses
      o     Settled  outstanding  legal  matters

(*The  Company must  continue to increase its  stockholders'  equity to maintain
compliance with AMEX listing standards - see Risk Factors below)

      Our  independent  certified  public  accountant  included  an  explanatory
paragraph  in its report  for the year ended May 31,  2005,  which  indicated  a
substantial  doubt as to the ability of us to continue as a going concern.  This
concern is primarily due to substantial  debt service  requirements  and working
capital needs. See independent certified public accountant's letter.

      Systems development expenses,  marketing expenses,  executive salaries and
general and other  administrative  costs are expected to increase as we continue
to develop  our EMMA  Platform.  Inasmuch  as we will  continue  to develop  and
improve our various products,  we will have a high level of operating  expenses.
We anticipate  that losses will continue for the near future.  Our expenses have
exceeded net revenues since  inception.  For the 3 month period ended August 31,
2005 and 2004,  we  incurred  net  losses of $1.27  million  and $0.94  million,
respectively.

      Gross  profit  for the three  month  period  ended  August 31,  2005,  was
$530,738,  as  compared to $1,638 for the three month  period  ended  August 31,
2004. The increase in gross profit was primarily  attributable to the operations
of our TAP subsidiary.

      The research and development of new software  products and enhancements to
existing  software  products  were  expensed  as incurred  (and  recorded in the
consolidated  statement  of  operation)  until  technological   feasibility  was
established.  Technological  feasibility  is  established  upon  completion of a
detailed program design or working model. 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,  we 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  $37,500 for the three month  period  ended
August 31, 2005.

      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 three
month  period ended August 31,  2005,  we  amortized an  additional  $139,942 of
capitalized software.

      The current EMMA asset is currently valued at $746,357, which reflects the
costs  incurred by us in  developing  the asset,  as well as the net  realizable
value  estimated in  management's  determination.  Management  believes that its
estimates reflect its ability, based upon management's internal projections,  to
obtain a recovery on the asset.  These  estimates  assume  that  recovery of the
value  of the  asset  will be  obtained  commencing  in the  early  half of 2006
calendar  year, and will be obtained fully by the end of the calendar year 2007.
These   projections  and  estimates  are  subject  to  numerous   contingencies,
including,  without limitation,  the condition of the economy and the ability of
corporate entities to purchase software such as the EMMA software.


                                       16
<PAGE>

      In its projections,  management has calculated transaction fees based upon
the  use of the  technology  through  placement  in  various  environments.  The
projected  transaction  fees  are  based  upon  management's   discussions  with
potential customers,  including bank and non-bank service providers.  Management
has had  significant  negotiations  with  representatives  of various  financial
institutions and other commercial  customers  regarding the installation of EMMA
based  products.  However,  to date  we  have  not  consummated  any  definitive
agreements with such customers.

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

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

      We record as revenue  licensing and software fees as well as coin counting
machine sales in accordance with generally accepted accounting principles.

      We are marketing  CoinBank 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. Although we will continue to sell our CoinBank machines,
we  intend to focus  substantially  all of our  efforts  and  operations  on the
continued  development  and  deployment  of  the  Heuristic  products  and  EMMA
technology and the operation of our TAP Holdings, LLC subsidiary.


                                       17
<PAGE>

RESULTS OF OPERATIONS

THREE MONTHS ENDED AUGUST 31, 2005 COMPARED TO THE THREE MONTHS ENDED AUGUST 31,
2004.

      Net revenues for the three-month period ended August 31, 2005 increased to
$1,877,501  compared to $14,764 for the same 2004  period.  The  increase in net
revenue is  attributable  to the purchase of assets and certain  liabilities  of
Tomco Auto Products,  Inc. Net revenues were reduced in this period  compared to
the previous quarter due primarily to (i) normal seasonality of Tomco and (ii) a
one-time  increase  in  warranty  returns  in the month of June  resulting  from
Tomco's  implementation  of a new  stricter  warranty  return  policy  with  its
customers. As a result of the new warranty policy, warranty returns for July and
August were materially lower than June and consistent with management's expected
improvements.

      Cost of  revenues  for the  three-month  period  ended  August 31, 2005 is
$1,346,763  compared to $13,126  for the  quarter  ended  August 31,  2004.  The
increase in direct costs was attributable to the operations of the Company's new
TAP subsidiary.

      Gross  profit  for the three  months  ended  August 31,  2005 is  $530,738
compared to $1,638 for the same period a year ago.  The increase in gross profit
was attributable to the operations of the Company's new TAP subsidiary.

      Selling,  General and  Administrative  expenses for the three months ended
August 31,  2005,  increased  to  $1,443,557  compared to $675,264 for the three
months ended August 31, 2004.  These  expenses  consist  primarily of wages (and
wage related costs), outside contractor expenses,  travel/promotional  expenses,
professional  services and facilities/office  related expenses.  The increase is
primarily attributable to the operations of the Company's new TAP subsidiary.

      Research  and  development  expenses for the three months ended August 31,
2005, is $37,500 compared to $45,000 for the three months ended August 31, 2004.

      Depreciation and  amortization  expenses for the three months ended August
31, 2005, and August 31, 2004, were $141,066 and $140,642, respectively.

      Interest expense for the three months ended August 31, 2005 and August 31,
2004,  is $196,666  and $97,145,  respectively.  The  difference  was due to the
operations of the Company's new TAP subsidiary.

      Minority  Interest  for the three  months ended August 31, 2005 and August
31, 2004, is $6,262 and $13,349, respectively

      As a result of the foregoing,  net losses from  continuing  operations for
the three months ended August 31, 2005 and 2004,  are  $1,286,589  and $943,064,
respectively.  The difference is primarily due to a nearly $200,000 loss for the
quarter from the Company's TAP subsidiary due to change in warranty  policy,  as
explained  above,  and  approximately  $100,000 in expenses  associated with the
Company's  Heuristic  Technologies  subsidiary,  which did not begin to generate
revenues until after August 31, 2005.


                                       18
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

      Our capital  requirements  have been and will continue to be  significant,
and our cash requirements have exceeded cash flow from operations. At August 31,
2005,  we have a working  capital of  $1,816,853  compared to a working  capital
deficit of  $(9,468,650)  at August 31, 2004. At August 31, 2005, we have a cash
balance of approximately  $136,767.  We are in immediate need of working capital
to continue  our  business  and  operations.  To date,  we have been funding our
operations  primarily  through  the  issuance  of  equity in  private  placement
transactions with existing stockholders or affiliates of stockholders. There can
be no  assurance  that we will be able to  continue  to raise  required  working
capital in this or any other manner.

      Since  inception,  we have  satisfied  our  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  our
securityholders.   Our  independent  certified  public  accountant  included  an
explanatory  paragraph  in its  report for the year  ended May 31,  2005,  which
indicated a substantial  doubt as to our ability to continue as a going concern.
This concern is primarily  due to  substantial  debt  service  requirements  and
working capital needs.

      Net cash used in  operating  activities  was $923,804 for the three months
ended August 31, 2005 compared to $718,008 for the three months ended August 31,
2004. The increase of was primarily due to an increase in accounts receivable of
$495,110, other assets of $145,034 and accrued expenses of $121,187.

      Net cash used in  investing  activities  for the three months ended August
31, 2005, was $2,189 as compared to $5,746 for the three months ended August 31,
2004.

      Net cash  provided by  financing  activities  for the three  months  ended
August 31, 2005, was $899,133 as compared to $782,000 for the three months ended
August 31, 2004. The increase was attributable to the net result of various fund
raising activities.

      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.  In
September,  2000, due to our inability to repay G.E. on the original  terms,  we
restructured the loan to an interest-only  note which has been renewed annually.
The  most  recent  note,   which  shall  expire  in  November   2005,   requires
interest-only payments at a rate of 9.5% and the entire unpaid balance is due at
maturity.  As of August 31, 2005, we owed $3,654,096,  which includes  principal
and  financing  fees.  As of September  10, 2005,  the loan was current.  We are
currently in discussions with G.E. about another renewal and, while there can be
no  assurances;  we  believe  that we and  G.E.  will  agree  on  renewal  terms
acceptable to both parties.

      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.


                                       19
<PAGE>

      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 two  replacement  warrants  for every old warrant
surrendered. The new warrants were vested immediately, have a life of five 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 secured  convertible  debt to the  noteholders.  The
proposed terms included  reducing the conversion price of the notes to $2.50 per
share and the exercise price of the warrants to $0.65. As of August 31, 2005, we
still  owed  $478,142  in  principal   and  interest  to  the  seven   remaining
noteholders.

      In November 2005, TAP Holdings,  LLC established a line of credit with BFI
Business  Finance.  The  maximum  amount  available  under the line of credit is
$2,000,000,  limited to 60% of eligible accounts receivable plus 60% of eligible
inventory up to $1,000,000,  less any availability  reserves,  as defined in the
loan  agreement.  Interest is payable  monthly at 4.0% per annum above the prime
interest rate (10% at May 31, 2005).  Any  outstanding  balance under the credit
line is due November 5, 2006. The line of credit is collateralized by a security
interest in the TAP's accounts receivable,  inventories,  property and equipment
and  certain  other  assets.  TAP must  also  adhere  to  covenant  limitations,
conditions and restrictions as set forth in the loan and security agreement.  As
of May 31, 2005,  there was $1,866,957  outstanding and  approximately  $131,000
available under the line of credit.

      From time to time,  due to  fluctuations  in Tomco's  cash  flow,  TAP has
requested  funds from the BFI credit facility at advance rates higher than BFI's
contract  rate.  To date  BFI has  funded  all  such  requests  but is  under no
obligation  to do so. In the event that BFI refuses to fund such requests in the
future,  TAP/Tomco could be adversely  affected and might not be able to pay its
obligations  timely causing  temporary or permanent  disruption in the company's
operations.

      On June 30,  2005,  in a private  transaction  under  Section  4(2) of the
Securities  Act of 1933, as amended,  we sold 952,381 shares of common stock for
gross  proceeds of $1,000,000 to one  individual.  We also issued 428,571 of our
common stock purchase warrants with an exercise price of $2.50. All common stock
purchase warrants have an exercise life of 5 years.

      In  October  2004,  in a private  transaction  under  Section  4(2) of the
Securities  Act of 1933, as amended,  we sold 600,000 shares of common stock for
gross  proceeds  of $600,000 to four  investors.  We also issued  600,000 of our
common stock purchase warrants with an exercise price of $2.50. All common stock
purchase warrants have an exercise life of five years.


                                       20
<PAGE>

RISK FACTORS

      Investors should  carefully  consider the risks described below and in our
Annual Report on Form 10-KSB. The risks and uncertainties described below and in
the Annual Report are not the only ones facing us. If any of the following risks
actually occur, our business, financial condition or results of operations could
be materially adversely affected.

WE HAVE LIMITED REVENUES AND A HISTORY OF INCURRING  LOSSES,  WHICH HAS RESULTED
IN OUR INDEPENDENT  ACCOUNTANTS  ISSUING  OPINIONS  CONTAINING  DOUBTS ABOUT OUR
ABILITY TO CONTINUE AS A GOING CONCERN.

      We have generated  limited  revenues  since our  inception,  and, while we
expect to generate significant revenues within the next fiscal year, there is no
assurance  that we will be  successful.  For the fiscal years ended May 31, 2004
and 2005,  we had net sales of $80,616  and  $5,718,886,  respectively.  For the
fiscal quarter ended August 1, 2005 we had net sales of $1,877,501.

      Prior to the fiscal year ended May 31, 2005 we had  incurred  losses since
our  inception.  For the last two fiscal  years ended May 31, 2004 and 2005,  we
realized net income (losses) of $(4,382,532)  and $3,655,760  respectively.  For
the fiscal  quarter ended August 31, 2005 we incurred net losses of  $1,286,589.
We had a stockholders' equity of $4,145,828 as of May 31, 2005 and $3,808,793 as
of August 31, 2005. In its reports accompanying our audited financial statements
for the fiscal  years  ended May 31,  2005 and 2004,  our  independent  auditors
included an explanatory paragraph wherein they expressed substantial doubt about
our ability to continue as a going concern.  Despite the profit generated during
the current  fiscal year,  we have  continued to generate  operating  losses and
expect to continue to incur losses in the near future.

WE ARE UNABLE TO PAY OUR  CURRENT  LIABILITIES,  AND MUST RELY ON THE  CONTINUED
FORBEARANCE OF SPECIFIC CREDITORS TO AVOID BANKRUPTCY.

      As  of  August  31,  2005  we  had  outstanding   current  liabilities  of
$9,309,803,  of which  approximately  $478,142 is not being paid as agreed.  Our
creditors have, to date,  agreed not to accelerate on these  obligations and not
to foreclose  on our assets.  However,  should the  creditors  demand  immediate
repayment,  we would have to raise the needed funds to satisfy the  obligations,
possibly  on  unsatisfactory  terms or failing  that,  we would have to consider
filing for bankruptcy  protection.  We have an immediate need for capital and if
we are unable to obtain the financing we need, our business may fail.

WE HAVE AN  IMMEDIATE  NEED FOR  CAPITAL  AND IF WE ARE  UNABLE  TO  OBTAIN  THE
FINANCING WE NEED, OUR BUSINESS MAY FAIL.

      As of August 31, 2005,  Cash Tech had working  capital of  $1,816,853  and
available cash of $136,767. Our capital requirements have been and will continue
to be  significant,  and our cash  requirements  have  exceeded  cash  flow from
operations since  inception.  We are in immediate need of capital to continue to
operate.  We have been  dependent on the proceeds of private  placements  of our
debt and equity securities to satisfy our working capital requirements.  We will
be dependent  upon the proceeds of future private  placement  offerings or other
public  offerings to fund  development  of the EMMA  technology,  our short-term
working  capital  requirements,  to fund  certain  marketing  activities  and to
continue  implementing our business strategy.  There can be no assurance we will
be able to raise necessary capital.  To the extent that we incur indebtedness or
issue debt  securities,  we will be subject to all of the risks  associated with
incurring substantial indebtedness,  including the risks that interest rates may
fluctuate and cash flow may be insufficient to pay principal and interest on any
such  indebtedness.  Any inability to obtain  additional  financing  when needed


                                       21
<PAGE>

could require us to significantly  curtail,  or possibly cease  altogether,  our
operations. There can be no assurance that our lenders will not declare an event
of default and demand immediate payment or seek to attach our assets,  including
our EMMA  technology.  As of May 31, 2005, we owe $3,654,096 to General Electric
Capital  Corporation.  In 2000,  we entered into the first of several notes with
G.E. which have been renewed annually.  The current note will expire in November
2005, and while our recent  discussions  with G.E.  suggest that another renewal
will be consummated, there can be no assurance that this will occur.

OUR ASSETS SERVE AS COLLATERAL  FOR VARIOUS LOAN  OBLIGATIONS  AND THEREFORE MAY
NOT BE AVAILABLE FOR DISTRIBUTION TO STOCKHOLDERS IN THE EVENT OF LIQUIDATION.

      We have  previously  granted  security  interests  in all of our assets to
various  lenders,  including  the holders of notes in the principal and interest
amount of $478,142  issued in a placement  which was  completed  in January 2000
equipment liens in favor of General Electric Capital  Corporation  pursuant to a
Master Security Agreement originally entered into in May 1997 and liens in favor
of BFI Finance on all assets of TAP  Holdings  pursuant  to a Loan and  Security
Agreement entered into in November 2004.

      The General Electric loan is secured by certain of our CoinBank  machines.
As of May 31, 2005, we were indebted to General Electric Capital  Corporation in
the amount of approximately  $3,654,096  including interest.  As a result of the
existing  liens and  continuing  losses,  it is  unlikely  that we could  obtain
additional  credit  by  securing  our  assets.  Further,  as  a  result  of  the
aforementioned  security interests,  creditors would be entitled to collect upon
the assets prior to any  distribution  being  available to holders of our Common
Stock or Preferred Stock.

      The BFI loan is a revolving accounts receivable credit facility secured by
all of the assets of TAP Holdings,  LLC as well as a limited  personal  guaranty
from TAP's chairman, who is not an employee of Cash Technologies.  As of May 31,
2005 we were indebted to BFI in the amount of approximately $1,868,957 including
interest.  From time to time, due to  fluctuations in Tomco's cash flow, TAP has
requested  funds from the BFI credit facility at advance rates higher than BFI's
contract  rate.  To date  BFI has  funded  all  such  requests  but is  under no
obligation  to do so. In the event that BFI refuses to fund such requests in the
future,  TAP/Tomco could be adversely  affected and might not be able to pay its
obligations   timely  causing   temporary  or  permanent   disruption  in  TAP's
operations.

ANY  ADDITIONAL  FINANCING  THAT WE MAY  OBTAIN  MAY  SUBSTANTIALLY  DILUTE  THE
INTERESTS OF OUR STOCKHOLDERS.

      To the extent that we obtain additional  financing through the issuance of
additional  equity   securities  in  the  future,   such  issuance  may  involve
substantial dilution to our stockholders.

THE AMERICAN STOCK EXCHANGE MAY DELIST OUR SECURITIES.

         Our common stock is listed on American Stock Exchange  ("AMEX") When we
began trading on the AMEX in 2000, the exchange granted us an exemption from its
listing  requirements  in order for our common stock to be listed for trading as
we were not in compliance with the criteria for continued listing.  In November,
2003, at the request of AMEX, we submitted a plan to come into  compliance  with
the  continued  listing  requirements  by April 20,  2005.  On April 20, 2005 we
submitted  a  report  to  AMEX  stating  that  we  believed  that we had met the
requirements of the exchange and had achieved the plan's  objectives,  including
increasing  shareholder  equity to  greater  than $4  million as well as meeting
various other requirements.  AMEX subsequently confirmed our compliance with the


                                       22
<PAGE>

listing  requirements as of the date of the report,  representing the first time
since  listing on the AMEX that the Company  had  achieved  compliance  with the
continued  listing  standards.  However,  the Company must  continue to meet the
listing  requirements stated in the AMEX rules and AMEX has informed us that due
to continuing  operating  losses,  it expects us to meet the next  shareholder's
equity threshold of $6 million.  We will be providing a plan to reach the higher
equity  requirement  and while we believe  that our plan will be  acceptable  to
AMEX,  there can be no assurance  that AMEX will accept the plan or that we will
accomplish its targets. In the event that the plan is not accepted or we fail to
meet its  objectives or fail to meet future listing  requirements,  it is likely
that AMEX would initiate de-listing  procedures.  In the event that our stock is
de-listed we would be required to liquidate  certain of our Preferred  Stock. No
assurance can be given that we will be able to meet or maintain the AMEX listing
criteria or that our progress will continue to be satisfactory to the AMEX.

IF OUR COMMON STOCK IS DELISTED FROM THE AMERICAN  STOCK  EXCHANGE,  WE ALSO ARE
LIKELY TO BE SUBJECT TO THE RISKS RELATING TO PENNY STOCKS.

      Our common  stock has not been traded  above $5.00 in over four years.  If
our common stock were to be delisted from trading on the American Stock Exchange
and the  trading  price of the  common  stock  remained  below  $5.00 per share,
trading in our common  stock  would be  subject to the  requirements  of certain
rules  promulgated  under the Exchange Act related to so-called penny stocks.  A
penny stock is defined generally as any non-exchange listed equity security that
has a market price of less than $5.00 per share,  subject to certain exceptions.
These rules require  additional  disclosure by broker-dealers in connection with
any trades  involving a stock defined as a penny stock and impose  various sales
practice  requirements on broker-dealers  who sell penny stocks to persons other
than established customers and accredited investors, generally institutions. The
additional  burdens  imposed  upon   broker-dealers  by  such  requirements  may
discourage broker-dealers from effecting transactions in our common stock, which
could  severely limit the market price and liquidity of our common stock and the
ability of purchasers to sell our common stock in the secondary market.


                                       23
<PAGE>

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))  as of the end of the fiscal  quarter ended August
31,  2005.  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,
based on their  evaluation  as of August 31,  2005,  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 August 31, 2005.


                                       24
<PAGE>

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      In February  2003 Abraham  Mirman of Samson  Consulting  Corp.  was hired,
inter alia, to provide consulting  services and to arrange financing for us. The
term  of the  agreement  was 12  months  at a  monthly  cost  of  $50,000  or an
equivalent value in shares of our stock; either party had the right to terminate
after one month for any reason. Shortly thereafter,  we terminated the agreement
for Samson's failure to perform.  In July 2004, Mirman initiated  arbitration in
New York State  claiming that the agreement was  wrongfully  terminated and that
Samson was owed damages. In the arbitration Samson claimed that it was owed fees
for the entire 12 month term of the agreement,  plus attorneys' fees. We alleged
that  Samson had failed to perform  its  obligations,  had failed to provide any
promised  financing  and that Mirman had  induced us to enter into the  contract
under false and deceptive pretenses. In June 2005, an arbitrator determined that
Mirman was owed 2 months fees and thus awarded Sampson  $100,000 in unpaid fees,
$21,650 in statutory  interest through July 20, 2005 and no attorney fees. As of
August 31, 2005, we have fully accrued for this liability. We are undertaking an
appeal of the arbitrator's decision in New York.

      In addition,  we have  initiated a lawsuit  against  Mirman in California,
alleging that he failed to provide financing promised in February, 2003, causing
damages  in excess of  $400,000.  There  can be no  assurance  that our New York
appeal or California case will prove  successful.  This litigation will continue
to incur legal costs until its conclusion.

      In 2001 we delivered stock certificates  representing 700,000 shares to an
escrow agent as collateral  for a loan. The loan was never  consummated,  and in
May 2001 we notified the  transfer  agent to cancel the shares.  Thereafter  the
escrow  agent,  an  attorney,  died  and we  were  never  able  to  recover  the
certificates.  In  August,  2004  it  came to our  attention  that a  party  was
attempting to transfer 450,000 of the 700,000 shares. We immediately initiated a
lawsuit in New York to prevent the transfer of the shares and have them retired.
In December, 2004, we reached a settlement in which the shares would be returned
to us without any exchange of money. We intend to similarly  pursue the recovery
of the remaining  250,000 shares,  however in the event that we cannot achieve a
satisfactory outcome in such effort, or in the event that the pending settlement
is not consummated for any reason, some or all of these shares may be treated as
outstanding and our Stockholders'  Equity line item would have to be adjusted to
reflect such additional shares.

ITEM 2. CHANGE IN SECURITIES

      On June 30,  2005,  in a private  transaction  under  Section  4(2) of the
Securities  Act of 1933, as amended,  we sold 952,381 shares of common stock for
gross  proceeds of $1,000,000 to one  individual.  We also issued 428,571 of our
common stock purchase warrants with an exercise price of $2.50. All common stock
purchase warrants have an exercise life of 5 years.

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. 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
are  secured by a first  priority  lien on all of our  assets.  As of August 31,
2005, we still owed $478,142 in principal and interest to the noteholders.


                                       25
<PAGE>

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

      During this fiscal year,  there have not been any matters  submitted for a
vote from the security holders.

ITEM 5. OTHER INFORMATION

      In  October  2004,  in a private  transaction  under  Section  4(2) of the
Securities  Act of 1933, as amended,  we sold 600,000 shares of common stock for
gross  proceeds  of $600,000 to four  investors.  We also issued  600,000 of our
common stock purchase warrants with an exercise price of $2.50. All common stock
purchase warrants have an exercise life of five years.

      On October 14, 2005, Mr. Robin  Richards  rejoined our Board of Directors.
Mr. Richards is currently Chairman and CEO of Notification Technologies, Inc., a
privately  held company that provides  school-to-parent  communication  services
throughout the U.S. Previously,  he was CEO of Vivendi Universal Net USA ("VUNet
USA"),  a subsidiary of Vivendi  Universal.  VUNet USA operated  MP3.com,  Inc.,
Flipside  Network,  Moviso,  a leading  wireless  service provider and VUNet USA
Technologies,  a leading internet distribution infrastructure provider. Prior to
his  position at VUNet USA,  Mr.  Richards  was the  founding  president,  chief
operating  officer and a director of MP3.com,  Inc.,  involved in all aspects of
that company's  historic impact on the internet and the music industry,  its IPO
and ultimate sale to Vivendi  Universal.  Additionally,  Mr.  Richards served as
managing  director  of  Tickets.com,  Inc.  and  was  founder  and  CEO of  Lexi
International,  a tele-services and database  management  company.  Mr. Richards
served on the Board of Cash Technologies previously from 1999 through 2001.

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  incorporated by reference filed on February 13,
            2004

            NONE


                                       26
<PAGE>

SIGNATURES

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 10-QSB for the
fiscal  quarter  ended  August  31,  2005,  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized the 17th day of October, 2005.


CASH TECHNOLOGIES, INC.


By:  /S/ Bruce Korman
  -------------------------------------
  Bruce Korman
  President and Chief Executive Officer


By:  /S/ Edmund King
  -------------------------------------
  Edmund King
  Chief Financial Officer


                                       27