**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, 2006





OR





o
      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 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)





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





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 o.





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


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





On
      October 18, 2006, there were 20,887,143 shares of common stock, $ .01 par value
      per share, issued and outstanding.





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


1


**CASH
      TECHNOLOGIES, INC.**


**FORM
      10-QSB**





**INDEX**





**PAGE
      NO.**





**PART
      I. FINANCIAL INFORMATION**


Item
                  1. Consolidated Financial Statements:Consolidated
                  Balance Sheets as of August 31, 2006 (unaudited) and
                May
                  31, 2006
              **3**Consolidated
                  Statements of Operations for the three-month periods
                ended
                  August 31, 2006 and August 31, 2005 (unaudited)
              **4**Consolidated
                  Statements of Cash Flows for the three-month periods
                Ended
                  August 31, 2006 and August 31, 2005 (unaudited)
              **5**Notes
                  to Consolidated Financial Statements for the three-month periods
                ended
                  August 31, 2006 and August 31, 2005 (unaudited)
              **6**Item
                  2. Management's Discussion and Analysis of Financial Condition,Results
                  of Operations, and Risk Factors
              **15**Item
                  3. Controls And Procedures
              **27****PART
                  II. OTHER INFORMATION**Item
                  1. Legal Proceedings
              **28**Item
                  2. Unregistered Sales of Equity Securities and Use of
                  Proceeds
              **28**Item
                  3. Defaults Upon Senior Securities
              **29**Item
                  4. Submission of Matters to a Vote of Security Holders
              **29**Item
                  5. Other Information
              **29**Item
                  6. Exhibits and Reports on Form 8-K
              **30**SIGNATURES
              **31**


2


**PART
      I**





**ITEM
      1. FINANCIAL STATEMENTS**





**CASH
      TECHNOLOGIES, INC.**


**CONSOLIDATED** **BALANCE
      SHEETS**


**(UNAUDITED)**




**August
                  31, 2006**
              
              **May
                  31, 2006****ASSETS**CURRENT
                  ASSETS:Cash
                  and cash equivalents
              
              $
              85,419
              
              $
              81,355Accounts
                  receivable
              
              
              15,890
              
              
              14,226Prepaid
                  expenses and other current assets
              
              
              192,135
              
              
              185,986Other
                  receivable (net of allowance $50,000)
              
              
              108,535
              
              
              104,684Inventory
                  (net of allowance $1,180,000) (Note 2)
              
              
              -
              
              
              -Assets
                  of discontinued
                  operationsCash
              
              
              9,631
              
              
              61,636Accounts
                  receivable
              
              
              2,244,371
              
              
              2,095,107Prepaid
                  expenses and other current assets
              
              
              222,830
              
              
              231,422Inventory
                  (net of allowance $1,180,000) (Note 2)
              
              
              8,350,891
              
              
              8,436,161Property
                  and equipment, net
              
              
              14,136
              
              
              15,261Other
                  assets
              
              
              109,756
              
              
              144,038Total
                  assets of discontinued
                  operations
              
              
              **10,951,615**
              
              
              **10,983,625**Total
                  Current Assets
              
              
              **11,353,594**
              
              
              **11,369,876**CoinBank
                  machines held for sale (Note 1(n))
              
              
              609,890
              
              
              609,890PROPERTY
                  AND EQUIPMENT (net) (Note 3 )
              
              
              29,136
              
              
              30,260CAPITALIZED
                  SOFTWARE COSTS (Note 1(n))
              
              
              186,589
              
              
              326,531CDHC
                  PREFERRED STOCK (Note 10)
              
              
              900,901
              
              
              900,901CLAIMREMEDI
                  PREFERRED STOCK
              
              
              3,500,000
              
              
              3,500,000BIPS
                  PREFERRED STOCK
              
              
              2,000,000
              
              
              2,000,000OTHER
                  ASSETS
              
              
              535,295
              
              
              535,295**TOTAL
                  ASSETS**
              
              **$**
              **19,115,406**
              
              **$**
              **19,272,753****LIABILITIES
                  AND STOCKHOLDERS' EQUITY (DEFICIENCY)**CURRENT
                  LIABILITIES:Current
                  maturities of Notes Payable (Note 4)
              
              
              3,482,287
              
              
              3,482,287Due
                  to Officers and Directors
              
              
              8,915
              
              
              8,915Convertible
                  debt (Note 5)
              
              
              511,645
              
              
              514,176Due
                  to Shareholders (Note 5)
              
              
              129,665
              
              
              120,750Accounts
                  payable
              
              
              645,530
              
              
              607,945Accrued
                  liabilities
              
              
              1,456,199
              
              
              927,228Bank
                  overdraft
              
              
              -
              
              
              -Dividend
                  payable
              
              
              105,416
              
              
              50,416Liabilities
                  of discontinued
                  operationsAccounts
                  payable
              
              
              1,153,437
              
              
              1,126,690Notes
                  payable
              
              
              2,270,051
              
              
              2,321,207Accrued
                  expenses and other current liabilities
              
              
              1,803,181
              
              
              1,658,943Total
                  liabilities of discontinued
                  operations
              
              
              5,226,669
              
              
              **5,106,840**Total
                  Current Liabilities
              
              
              **11,566,326**
              
              
              **10,818,557**Long-Term
                  Notes Payable (Note 6)
              
              
              75,000
              
              
              -**TOTAL
                  LIABILITIES**
              
              
              11,641,326
              
              
              10,818,557COMMITMENTS
                  & CONTINGENCIES (Note 7)
              
              
              
              
              
              -MINORITY
                  INTEREST
              
              
              (80,567
              )
              
              (74,517
              )MINORITY
                  INTEREST OF DISCONTINUED OPERATIONS
              
              
              684,662
              
              
              684,662TOTAL
                  MINORITY INTEREST
              
              
              **604,095**
              
              
              **610,145****STOCKHOLDERS'
                  EQUITY (DEFICIENCY): (Note 6)**Stockholder's
                  equity of discontinued
                  operationsAdditional
                  paid in capital
              
              
              910,000
              
              
              910,000Accumulated
                  equity
              
              
              4,113,581
              
              
              4,966,785Total
                  stockholder's equity of discontinued
                  operations
              
              
              **5,023,581**
              
              
              **5,876,785****Cumulative
                  Redeemable Preferred Stock, 1,500,000 shares authorized,**
              
              
              10,825,812
              
              
              10,625,812**647,515
                  and 647,093 shares issued and outstanding at May 31, 2006 and
                  2005**Common
                  Stock, $0.01 par value, 35,000,000 shares authorized,
              
              
              454,029
              
              
              346,44523,035,964
                  and 20,635,964 issued and outstanding at May 31, 2006 and
                  2005-**Additional
                  Paid-In-Capital**
              
              
              38,543,239
              
              
              38,262,424**Accumulated
                  Deficit**
              
              
              (47,976,676
              )
              
              (47,267,415
              )**Total
                  stockholders' Equity**
              
              
              6,869,985
              
              
              7,844,050**TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)**
              
              **$**
              **19,115,406**
              
              **$**
              **19,272,753**










See
      notes
      to consolidated financial statements








3


**CASH
      TECHNOLOGIES, INC.**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**(UNAUDITED)**





August
                  31,
              
              August
                  31,2006
              
              2005NET
                  REVENUES BEFORE RECLASSIFICATION OF DISCONTINUED
                  OPERATIONS
              
              $
              1,866,493
              
              $
              1,877,501NET
                  REVENUES
              
              $
              34,592
              
              $
              15,664COST
                  OF REVENUES
              
              
              19,511
              
              
              10,383GROSS
                  PROFIT (LOSS)
              
              
              15,081
              
              
              5,281SELLING,
                  GENERAL, & ADMINISTRATIVE EXPENSE
              
              
              839,638
              
              
              818,690RESEARCH
                  AND DEVELOPMENT
              
              
              37,500
              
              
              37,500IMPAIRMENT
                  ON COIN MACHINES
              
              
              -
              
              
              -DEPRECIATION
                  & AMORTIZATION EXPENSE
              
              
              141,066
              
              
              141,066OPERATING
                  LOSS
              
              
              (1,003,122
              )
              
              (991,975
              )OTHER
                  INCOME (Note 14)
              
              
              -
              
              
              -INTEREST
                  EXPENSE
              
              
              99,092
              
              
              97,898LOSS
                  BEFORE INCOME TAXES
              
              
              (1,102,214
              )
              
              (1,089,873
              )INCOME
                  TAXES
              
              
              2,400
              
              
              4,800MINORITY
                  INTEREST (Note 13)
              
              
              22,754
              
              
              6,262NET
                  INCOME (LOSS) FROM CONTINUING OPERATIONS
              
              
              (1,081,859
              )
              
              (1,088,411
              )DISCONTINUED OPERATIONSNET
                  REVENUES
              
              
              1,831,901
              
              
              1,861,837COST
                  OF REVENUES
              
              
              (1,249,929
              )
              
              (1,336,380
              )SELLING,
                  GENERAL, & ADMINISTRATIVE EXPENSE
              
              
              (611,940
              )
              
              (624,867
              )INTEREST
                  EXPENSE
              
              
              (121,874
              )
              
              (98,768
              )EXTRAORDINARY
                  LOSS ON DIS OPERATIONS
              
              
              (151,842
              )
              
              (198,178
              )NET
                  INCOME
              
              $
              (1,233,701
              )
              $
              (1,286,589
              )Dividends
                  & deemed dividends
              
              $
              55,000
              
              $
              50,415Net
                  income (loss) allocable to common shareholders
              
              $
              (1,288,701
              )
              $
              (1,337,004
              )Basic
                  and diluted net income (loss) per share
              
              $
              (0.06
              )
              $
              (0.08
              )Basic
                  and diluted weighted average shares of commonstock
                  outstanding
              
              
              20,887,143
                  / 31,519,950
              
              
              17,106,973







See
      notes
      to consolidated financial statements.





4


**CASH
      TECHNOLOGIES, INC.**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(UNAUDITED)**






**August
                  31,**
              
              **August
                  31,****2006**
              
              **2005****OPERATING
                  ACTIVITIES:**Net
                  loss
              
              $
              (1,233,701
              )
              $
              (1,286,589
              )Adjustments
                  to reconcile net loss to net cash used byoperating
                  activities:Minority
                  interest
              
              
              (22,753
              )
              
              (6,262
              )Amortization
                  of capitalized software
              
              
              139,942
              
              
              139,943Depreciation
                  expense
              
              
              1,124
              
              
              952Changes
                  in operating assets and liabilities:Accounts
                  receivable
              
              
              (1,664
              )
              
              (28,035
              )Prepaid
                  expenses and other current assets
              
              
              (6,149
              )
              
              (71,965
              )Other
                  receivable
              
              
              (3,851
              )
              
              -CoinBank
                  machines held for sale
              
              
              -
              
              
              9,289Other
                  assets
              
              
              -
              
              
              119,490Accrued
                  interest
              
              
              6,384
              
              
              (91,143
              )Accounts
                  payable
              
              
              37,585
              
              
              (236,067
              )Change
                  in net assets of discontinued
                  operations
              
              
              -
              
              
              424,727Accrued
                  expenses and other current liabilities
              
              
              528,750
              
              
              101,856Net
                  cash used in operating activities
              
              
              (554,336
              )
              
              (923,804
              )**INVESTING
                  ACTIVITIES:**Net
                  acquisition cost of TomcoPurchase
                  of property and equipment
              
              
              -
              
              
              (2,189
              )Net
                  cash provided by (used in) investing activities
              
              
              -
              
              
              (2,189
              )**FINANCING
                  ACTIVITIES:**Net
                  proceeds from issuance of preferred stock
              
              
              200,000
              
              
              -Proceeds
                  from Long-term debt
              
              
              75,000
              
              
              -Repayments
                  on short-term debt
              
              
              -
              
              
              (100,000
              )Repayments
                  on long-term debt
              
              
              -
              
              
              (867
              )Proceeds
                  from sale of common stock
              
              
              283,400
              
              
              1,000,000Net
                  cash provided by financing activities
              
              
              558,400
              
              
              899,133**CHANGE
                  IN CASH AND CASH EQUIVALENTS**
              
              
              4,064
              
              
              (26,860
              )Cash
                  and Cash Equivalents, Beginning of Year
              
              
              81,355
              
              
              163,627Cash
                  and Cash Equivalents, End of Year
              
              $
              85,419
              
              $
              136,767**SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION**Income
                  taxes
              
              $
              2,400
              
              $
              4,800**SUPPLEMENTAL
                  DISCLOSURE OF NONCASH TRANSACTIONS**Loss
                  on operations of discontinued
                  operations
              
              $
              (151,839
              )
              $
              (198,178
              )Dividends
                  declared on preferred stock
              
              $
              55,000
              
              $
              50,415










See
      notes
      to consolidated financial statements





5


**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 activities 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, 2006 and the results of operation and
      cash flows for the three-month periods ended August 31, 2006 and August 31,
      2005. 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, 2006, filed with the SEC.
      The results of operations for the three-month period ended August 31, 2006,
      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, 2006.





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, 2006, we amortized an additional $139,942 of capitalized
      software.


6




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, 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


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.





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. 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.




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, interalia,
      to
      provide consulting services and 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 an arbitration in New York State
      claiming that the agreement was wrongfully terminated and that Samson was owed
      $600,000 in damages plus costs. In June 2005, an arbitrator awarded Sampson
      $100,000 in unpaid fees, $21,650 in statutory interest through July 20, 2005
      and
      no attorney fees or costs. Subsequently, we 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. In February 2006, both
      parties agreed to settle all outstanding claims without any funds exchanged;
      i.e. we have dismissed our California lawsuit and Samson has vacated its New
      York judgment




8


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, passed away 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 tentative 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**





In
      the fiscal quarter ended August 31, 2006, in private transactions under Section
      4(2) of the Securities Act of 1933, as amended, the Company sold 280,575
      shares of the Company's Common Stock for gross proceeds of $283,400. In addition
      the Company issued 282,500 five year Common Stock purchase warrants with
      exercise prices ranging from $1.50 to $2.50.





During
      the fiscal quarter ended August 31, 2006, in a private transaction under Section
      4(2) of the Securities Act of 1933, as amended, we sold 20 shares of preferred
      stock for gross proceeds of $200,000 to four existing shareholders. The
      Preferred Stock shall, for a period of seven years, be convertible into Units,
      each consisting of 4 five-year Warrants to purchase common stock at the rate
      of
      one unit for each dollar invested. In each Unit, 2 Warrants shall be exercisable
      at $2.00 per share, 1 Warrant shall be exercisable at $1.50 per share and 1
      Warrant shall be exercisable at $2.00 per share. The Preferred Stock shall
      earn
      dividends at 8% per annum, payable quarterly in cash or common stock at the
      Company's option. If paid in common stock, the stock price shall be the lower
      of
      the Market Price or $1.37 per share. Market Price is defined as the average
      of
      the closing prices of the common stock for the 10 consecutive trading days
      immediately preceding the dividend due date.





Subsequent
      to the fiscal quarter ended August 31, 2006, in private transactions under
      Section 4(2) of the Securities Act of 1933, as amended, the Company
      sold 79,000 shares of the Company's Common Stock for gross proceeds of
      $83,200. In addition the Company issued 79,000 five year Common Stock
      purchase warrants with exercise prices ranging from $2.00 to $2.50.








**NOTE
      4: RELATED PARTY TRANSACTIONS**





As
      of
      August 31, 2006, we were in arrears $286,849 for salary to Mr. Korman, $47,935
      in expense reimbursements and owed $96,995 in accrued rent for our offices
      to a
      company in which Mr. Korman has a beneficial interest. In addition, Mr. King
      has
      loaned $53,000 and Mr. Korman has loaned $25,000 to the Company during the
      quarter.








**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. The General Electric
      loan is secured by certain of our CoinBank machines. In 2000, we entered into
      the first of several loan renewals with G.E., the most recent of which expired
      in November 2005. We have continued to pay G.E. in accordance with the terms
      of
      the expired note and believe based on discussions with G.E. that another renewal
      will soon be executed. We have no current plan or capability to repay G.E.
      its
      principal. As of August 31, 2006, we owed $3,654,096 including principal and
      financing fees.


9




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., 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 to 48 investors. 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, 41 out of 48 noteholders have converted their notes to equity
      at
      a conversion price of $2.50 per share. Noteholders who converted to equity
      also
      received two replacement warrants exercisable at $1.35 per share for each
      warrant previously held. The remaining 7 notes are in default of their original
      or restructured terms. As of August 31, 2006, we owed $511,645 in principal
      interest to the 7 remaining noteholders.





In
      May 2003 we
      completed a private placement offering with
      a stockholder consisting 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 common
      stock at the conversion rate of $0.50 per share. The Warrants are exercisable
      at
      $1.00 per share. At that time 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. This note was converted on September 11,
      2006 and will be reclassified into equity.





In
      May 2003 we
      completed a private placement offering with
      a stockholder consisting 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 common
      stock at the conversion rate of $0.50 per share. The Warrants are exercisable
      at
      $0.65 per share. At the time 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
      exercised immediately for gross proceeds to us of $29,250. The note is due
      and
      payable on May 8, 2008.





The
      Company’s subsidiary TAP Holdings, LLC, which owns and operates Tomco Auto
      Products, has an asset based revolving line of credit. On August 31, 2006,
      the
      balance on the line of credit was approximately $2,265,359, including interest.
      The line of credit is secured by all of the business assets of TAP Holdings,
      LLC
      as well as a limited personal guaranty from TAP's chairman (who is not an
      employee of Cash Technologies). From time to time, due to fluctuations in
      Tomco's cash flow, TAP has requested funds from the line of credit at advance
      rates higher than the contract rate. To date the lender has funded all such
      requests but is under no obligation to do so. In the event that the lender
      refuses to fund such requests in the future, TAP could be adversely affected
      and
      might not be able to pay its obligations timely causing temporary or permanent
      disruption in the company's operations.


10


**NOTE
      6: LONG-TERM DEBT**




As
      of
      August 31, 2006 long term debt consists of the following:


Note
                  Payable - Truck (a)
              $8,250---------Less:
                  Current Maturities
              4,692---------Total
              $3,558




(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.





**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 and six-month periods ended August 31, 2006 and August 31, 2005,
      would have been increased to the pro forma amounts presented below:




**FOR
                    THREE MONTHS****ENDED
                    AUGUST 31,****2006**
                
                **2005**Net
                    Income (Loss)As
                    Reported
                
                
                (1,233,701
                )
                
                (1,286,589
                )Pro
                    Forma
                
                
                (1,147,510
                )
                
                (1,851,775
                )Basic
                    and Diluted Income (loss) Per Common Common ShareAs
                    Reported
                
                
                (0.04
                )
                
                (0.08
                )Pro
                    Forma
                
                
                (0.06
                )
                
                (0.11
                )





11




For
      the
      three month period ended August 31, 2006, 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 2001-2006,
      expected life of the option is 5 years, expected volatility of 61.83%, risk
      free
      interest rate of 3.76% and a 0% dividend yield. The weighted average fair value
      at the grant date for such option is $0.95 per option.





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 2000-2006,
      expected life of the option is 5 years, expected volatility of 37.01%, risk
      free
      interest rate of 4.00% 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.





Information
      on our business segments for the:


**Three
                    months ended**
                  **August
                    31,**Net
                    revenues:
                
                **2006**
                
                **2005**CoinBank
                    machines
                
                
                125
                
                
                14,078EMMA
                
                
                -
                
                
                -CTC/CRSI
                
                
                34,467
                
                
                1,586TAP
                
                
                1,831,901
                
                
                1,811,332Unallocated
                
                
                -
                
                
                50,5051,866,493
                
                
                1,877,501Interest
                    expense:CoinBank
                    machines
                
                
                -
                
                
                -EMMA
                
                
                -
                
                
                -CTC/CRSI
                
                
                -TAP
                
                
                121,874
                
                
                98,768Unallocated
                
                
                99,092
                
                
                97,898220,966
                
                
                196,666
   12
  Depreciation
                    & Amortization:CoinBank
                    machines
                
                
                -
                
                
                -EMMA
                
                
                139,942
                
                
                139,942CTC/CRSI
                
                
                -
                
                
                -TAP
                
                
                -
                
                
                -Unallocated
                
                
                1,124
                
                
                1,124141,066
                
                
                141,066Segment
                    Loss:CoinBank
                    machines
                
                
                63,399
                
                
                62,098EMMA
                
                
                -
                
                
                -CTC/CRSI
                
                
                276,936
                
                
                392,445TAP
                
                
                151,842
                
                
                198,178Unallocated
                
                
                741,524
                
                
                633,8681,233,701
                
                
                1,286,589Net
                    identifiable assets:CoinBank
                    machines
                
                
                609,890
                
                
                628,994EMMA
                
                
                186,589
                
                
                746,357CTC/CRSI
                
                
                54,083
                
                
                -TAP
                
                
                10,951,615
                
                
                10,591,449Unallocated
                
                
                7,313,229
                
                
                1,780,20019,115,406
                
                
                13,747,000





**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,
      2006,
      we have allocated $6,051 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 TomcoAuto
      Products, Inc. We own 89% of TAP. TAP Holdings, LLC operates under the brand
      name Tomco which has a thirty year history as a leading provider of
      remanufactured fuel system components. The Los Angeles-based company distributes
      its products through major auto products retailers throughout the U.S. such
      as
      NAPA, with 6,000 stores, CARQUEST, with 3,600 stores, O'Reilly Automotive,
      with
      more than 1,399 stores and numerous others. These customers accounted for 77%
      of
      Tomco's 2005 sales. In August, 2006, we agreed to sell Tomco to Champion Parts,
      Inc. for up to $11 million; $1.5 million in cash and up to $9.5 million in
      a
      note payable as a percentage of Champion’s sales over a maximum of 11 years.




13


The
      remanufacturing business is based on the availability of discarded carburetors,
      called "cores". Adequate core inventories are key to the business and Tomco's
      core inventory as of May 31, 2006 totaled $6,172,709 with 498,340 units on
      hand. Tomco receives most of its cores from its customer base. Consumers turn
      in
      their used carburetors to the retailer and receive a discount on a
      remanufactured replacement unit. The retailers forward the old cores to Tomco
      and receive credits toward product invoices. For the fiscal year ended May
      31,
      2006 Tomco shipped 127,725 units.








**NOTE
      10: SUBSEQUENT EVENTS**





In
      May 2003 we
      completed a private placement offering with
      a stockholder consisting 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 common
      stock at the conversion rate of $0.50 per share. The Warrants are exercisable
      at
      $1.00 per share. At that time 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. This note was converted on September 11,
      2006 and will be reclassified into equity.





Subsequent
      to the fiscal quarter ended August 31, 2006, in private transactions under
      Section 4(2) of the Securities Act of 1933, as amended, the Company sold 79,000
      shares of the Company's Common Stock for gross proceeds of $83,200. In addition
      the Company issued 79,000 five year Common Stock purchase warrants with
      exercise prices ranging from $2.00 to $2.50.


14


**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 operating in Salzburg, Austria, Cash Tech Card Systems, Inc.
      (formerly Cintelia Systems Inc.), a Delaware corporation,CT Holdings, LLC.,
      a
      Delaware corporation of which we own 86.65%, Claim-Remedi Service, Inc.
      (formerly Heuristic Technologies, Inc.), a Delaware company and TAP Holdings,
      LLC (dba Tomco Auto Products), of which we own 89%. Our address is 1434 West
      11th Street, Los Angeles, California 90015. Our telephone number is (213)
      745-2000.




We
      are
      currently engaged in two principal lines of business, namely, data processing
      (including healthcare data processing and financial data processing) and the
      manufacturing of auto products, however in August, 2006 we agreed to sell our
      auto products business, a transaction expected to close in October,
      2006.


Our
      independent certified public accountant included an explanatory paragraph in
      its
      report for the year ended May 31, 2006, 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 three-month periods ended August 31, 2006
      and
      2005, we incurred net income (losses) of approximately $(1,233,701) and
      $(1,286,589) respectively.




15


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, 2006.




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, 2006, we amortized an additional $139,942 of capitalized
      software.




The
      current EMMA asset is currently valued at $186,589, 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 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.




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.




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.




Although
      we will continue to sell Coin Bank Machines from remaining inventory, we are
      focusing substantially all of our efforts and operations on the continued
      development of the healthcare and financial data processing products including
      the EMMA technology.


16


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 healthcare and financial data processing
      products and EMMA technology and the operation of our TAP Holdings, LLC
      subsidiary.





**RESULTS
      OF OPERATIONS**





**THREE
      MONTHS ENDED AUGUST 31, 2006 COMPARED TO THE THREE MONTHS ENDED AUGUST 31,
      2005.**




*Net
        revenues* for the
        three-month period ended August 31, 2006 increased to $34,592 compared to
        $15,664 for the same 2005 period. The increase in net revenue is attributable
        to
        an increase in sale of our health care products.
 
 *Net
        revenues* attributable to discontinued operations for the three-month period ended
        August
        31, 2006 decreased to $1,831,901 compared to $1,861,837 for the same 2005
        period.
 
 *Cost
        of revenues* for the
        three-month period ended August 31 ,
        2006 was
        $19,511 compared to $10,383. The increase in cost of revenues is directly
        related to the increase in sales.
 
 *Cost
        of revenues* attributable to discontinued operations the three-month period ended August
        31 ,
        2006 was
        $1,249,929 compared to $1,336,380 for the quarter ended August 31 ,
        2005 .
 
 *Gross
        profit* for
        the
        three months ended August 31 ,
        2006 was
        $15,081 compared to $5,281 for the same period a year ago.
 
 *Gross
        profit* attributable
        to discontinued operations for the three months ended August 31 ,
        2006 was
        $581,972 compared to $525,457 for the same period a year ago. The increase
        in
        gross profit was attributable a favorable product mix in sales at the Company’s
        TAP subsidiary.
 
 Se *lling,
        General and Administrative* expenses
        for the three months ended August 31 ,
        2006 ,
        increased to $839,638 compared to $818,690 for the three months ended August
        31 ,
        2005 .
        These
        expenses consist primarily of wages (and wage related costs), outside contractor
        expenses, travel/promotional expenses, professional services and
        facilities/office related expenses.
 
 Se *lling,
        General and Administrative* expenses
        attributable to discontinued operations for the three months ended August
        31 ,
        2006 ,
        decreased to $611,940 compared to $624,867 for the three months ended August
        31 ,
        2005 .
        The
        decrease is related to a decrease in revenues and a decrease in the Company’s
        labor force.
 
 *Research
        and development* expenses
        for the three months ended August 31 ,
        2006 ,
        was
        $37,500 compared to $37,500 for the three months ended August 31 ,
        2005 .
 
 *Depreciation
        and amortization* expenses
        for the three months ended August 31 ,
        2006 ,
        and
        August 31 ,
        2005 ,
        were
        $141,066 and $141,066, respectively.
 
 *Interest
        expense* for the
        three months ended August 31 ,
        2006 and
        August 31 ,
        2005 ,
        was
        $99,092 and $97,898, respectively.
 
 *Interest
        expense* for the
        three months ended August 31 ,
        2006 and
        August 31 ,
        2005 ,
        was
        $121,874 and $98,768, respectively. The increase was due to a higher loan
        carrying amount at TAP Holdings.
 
 *Minority
        Interest* for the
        three months ended August 31 ,
        2006 and
        August 31 ,
        2005 ,
        is
        $22,754 and $6,262, respectively
 
 *Income
        Taxes* for the
        three months ended August 31 ,
        2006 and
        August 31 ,
        2005 ,
        is
        2,400 and $4,800, respectively
  As
        a
        result of the foregoing, net income (losses) for the three months ended August
        31, 2006 and
        August 31 ,
        2005,
        are $(1,081,859) and $(1,088,411), respectively.
  As
        a
        result of the foregoing, net income (losses) attributable to discontinued
        operations for the three months ended August 31, 2006 and
        August 31 ,
        2005,
        are $(151,842) and $(198,178), respectively.
 
 17


**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 ,
      2006 ,
      we have
      working capital deficit of $(614,711) compared to working capital of $650,912
      at
      May 31, 2006. At August 31 ,
      2006 ,
      we had
      a cash balance of approximately $95,050. 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, 2006, 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
      $(554,336) for the three months ended August
      31, 2006 compared
      to $(923,804) for the three months ended August 31, ,
      2005 .
      The
      decrease was primarily due to an increase in accrued expenses.





*Net
      cash used in investing activities* for the
      three months ended August 31 ,
      2006 ,
      was
      $0as compared to $(2,189) for the three months ended August 31 ,
      2005 .





*Net
      cash provided by financing activities* for the
      three months ended August 31 ,
      2006 ,
      was
      $558,400 as compared to $899,133 for the three months ended August
      31 ,
      2005 .
      The
      decrease 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. The General Electric
      loan is secured by certain of our CoinBank machines. In 2000, we entered into
      the first of several loan renewals with G.E., the most recent of which expired
      in November 2005. We have continued to pay G.E. in accordance with the terms
      of
      the expired note and believe based on discussions with G.E. that another renewal
      will soon be executed. We have no current plan or capability to repay G.E.
      its
      principal. As of August 31, 2006, we owed $3,654,096 including principal and
      financing fees.





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., 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 to 48 investors. 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, 41 out of 48 noteholders have converted their notes to equity
      at
      a conversion price of $2.50 per share. Noteholders who converted to equity
      also
      received two replacement warrants exercisable at $1.35 per share for each
      warrant previously held. The remaining 7 notes are in default of their original
      or restructured terms. As of August 31, 2006, we owed $511,645 in principal
      and
      interest to the 7 remaining noteholders.




18


In
      November 2004, 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 TAP's
      accounts receivable, inventories, property and equipment and certain other
      assets as well as a limited personal guaranty from TAP's chairman (who is not
      an
      employee of Cash Technologies). TAP must also adhere to covenant limitations,
      conditions and restrictions as set forth in the loan and security agreement.
      As
      of August 31 ,
      2006 ,
      there
      was $2,265,359 outstanding 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 could be
      adversely affected and might not be able to pay its obligations timely causing
      temporary or permanent disruption in the Company's operations.







19


**RISK
      FACTORS**




The
      following factors, in addition to those discussed elsewhere, should be
      considered carefully in evaluating our business and us. An investment in our
      shares involves a high degree of risk and is suitable only for those investors
      who can bear the risk of loss of their entire investment.




Risks
      Related to Our Financial Condition




**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, 2006 and 2005, we had
      net
      sales of $8,028,226 and $5,718,886, respectively. Virtually all of our revenues
      for the fiscal year ended May 31, 2005 and onwards have been derived from our
      TAP subsidiary; however TAP operations do not constitute the principal
      operations that we intend to conduct in the future. We intend to focus on the
      healthcare and financial data processing products which are marketed by our
      Claim-Remedi Services, Inc. subsidiary.




Prior
      to
      the fiscal year ended May 31, 2006 we have incurred losses since our inception.
      For the last two fiscal years ended May 31, 2006 and 2005, net income (losses)
      of ($5,038,393) and $3,655,760 respectively. Net income for the fiscal year
      ended May 31, 2005, was derived principally from our purchase of the Tomco
      assets. Despite the profit generated during the last fiscal year, we have
      continued to generate operating losses and while management believes that it
      will generated operating profits in the future, no assurance can be given.
      In
      its reports accompanying our audited financial statements for the fiscal years
      ended May 31, 2006 and 2005, our independent auditors included an explanatory
      paragraph wherein they expressed substantial doubt about our ability to continue
      as a going concern. For the three month period ended August 31, 2006 we have
      incurred additional (losses) of $(1,233,701).





**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, 2006 we had outstanding current liabilities of $11,741,326, of which
      approximately $511,645 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.**




As
      of
      August 31,2006, Cash Tech had working capital of $551,315 and available cash
      of
      $95,050. 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 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 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 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. As of August 31,2006, we also owe $3,654,096 to General
      Electric Capital Corporation. In 2000, we entered into the first of several
      loan
      renewals with G.E., the most recent of which expired in November 2005. We have
      continued to pay G.E. in accordance with the terms of the expired note and
      we
      believe based on discussions with G.E. that another renewal will be executed;
      however we have no current arrangement or capability to repay G.E. its
      principal.





20


**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 several lenders,
      including the holders of the notes in the principal and interest amount of
      $511,645 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
      G.E.
      loan is secured by certain of our CoinBank machines. As of May 31,2006, we
      were
      indebted to G.E. in the amount of approximately $3,654,096 including interest.
      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
      business 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 August
      31,2006 we owed BFI approximately $2,270,051 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 could be
      adversely affected and might not be able to pay its obligations timely causing
      temporary or permanent disruption in the company's operations. Following the
      sale and winding up of TAP’s Tomco business, the BFI loan will be repaid.





**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 then-existing stockholders.




**Risks
      Related to our TAP Auto Products Business**





**TAP
      receives most of its sales from three customers.**




TAP
      is
      substantially dependent on three customers: NAPA, O'Reilly Auto Parts and
      CARQUEST. These customers combined account for approximately 77% of TAP’s
      revenue. The loss of any of these customers would have a material adverse affect
      on TAP’s revenue.




**The
      market for TAP’s products is shrinking.**




21


Approximately
      98% of TAP's revenue for the twelve month period end May 31, 2006, was from
      the
      sale of rebuilt carburetors. Sales of carburetors have fluctuated and may
      continue to fluctuate or decline for two reasons. First, the availability of
      acceptable carburetor cores continues to shrink due to age or damage. TAP can
      manufacture new cores but has thus far not made the necessary investment.
      Secondly, the number of vehicles using carburetors continues to decline, as
      the
      last domestic carbureted production vehicle was manufactured in 1988. TAP may
      be
      able to compensate for this decline by increasing its market share but there
      is
      no assurance that it can succeed in this effort. In 1998 Tomco began rebuilding
      diesel pumps which have a larger user base than do carburetors.




**TAP
      may not fully recover the carrying value of its inventory.**




As
      of May
      31,2006 TAP had had a carrying value of $8,436,161 for its inventory. In
      November 2004, at the time TAP's assets were purchased, an obsolescence reserve
      of $1,180,000 was established to cover potential inventory impairment due to
      low
      core inventory turnover. In future periods, additional impairment may be taken
      based on future carburetor sales. If TAP concludes that such impairment exists,
      this could give rise to a substantial expense and negatively impact TAP's
      financial results, however the impact of these issues will be diminished upon
      the expected sale of Tomco in October, 2006.




**Risks
      Related to Our Healthcare Revenue Management and Prepaid Debit Card
      Products**





**Competition
      in healthcare revenue management and prepaid debit card products is
      intense.**





Claim-Remedi’s
      healthcare products compete with products offered by companies that are larger,
      better known and better capitalized than Claim-Remedi. Similarly, competition
      in
      the prepaid debit card market is intense and some competitors are larger and
      more established than CashTechCard. Claim-Remedi and CashTechCard may not be
      able to successfully compete with these companies in which event the companies
      might have to withdraw one or more of their products which would have a material
      adverse effect on Cash Technologies.





**Claim-Remedi
      and CashTechCard are liable for the loss or misuse of personal
      information.**





Claim-Remedi,
      CashTechCard and their affiliates have custody of, or come into contact with,
      various types of personal information about consumers, their medical records
      and
      financial transactions. The company has taken steps to safeguard such
      information and requires that its suppliers safeguard such information, however,
      in the event such safeguards fail to prevent the loss or misuse of personal
      information, the companies might be liable for any damages caused thereby.





**Claim-Remedi
      and CashTechCard are substantially dependent on third parties for data
      processing and customer support.**





Most
      data
      processing and customer support for Claim-Remedi’s and CashTechCard’s products
      is performed by third parties under various exclusive and non-exclusive
      contracts. This reduces infrastructure development costs and increases speed
      to
      market, however the failure of a third party to perform its duties or renew
      a
      service agreement could be materially detrimental to the companies’ operations.





**Data
      processing margins generally decline as products become more
      mature.**





Data
      processing products usually become “commoditized” as they mature, with a
      corresponding reduction in profit margins. This is caused by a number of
      factors, including: Increased competition forcing lower prices; increased
      volumes creating economies of scale which permit lower prices by competitors,
      software development costs which are eventually fully amortized also permits
      lower prices, et al. There is no assurance that Claim-Remedi can generate enough
      growth in its sales to outpace these market forces.





22


**CashTechCard
      has liability for debit card losses.** ****





Under
      CashTechCard’s agreement with its card issuing bank, CashTechCard has liability
      for losses caused by card fraud and misuse. These losses are predicted based
      on
      historical statistics and compensating reserves are maintained by the issuing
      bank, however in the event that these losses were to increase due to unexpected
      behavior of a particular card program or cardholder group, CashTechCard would
      be
      adversely affected.





**Risks
      Related to Our CoinBank Business**


**Impairment
      Charge**





We
      currently are holding for sale approximately 241 CoinBank machines, which have
      a
      carrying value of approximately $609,890 at May 31, 2006. We have taken an
      impairment charge in the fiscal year ended May 31, 2004 for the carrying value
      of our CoinBank machines. Impairment on coin machines was $154,140. The
      impairment was taken due to low inventory turnover for the coin machines. In
      future periods, additional impairment may be taken based on future sales of
      coin
      machines. If we conclude that such impairment exists, this could give rise
      to a
      substantial expense, which would increase our reported losses. For the fiscal
      year ended May 31, 2006, we sold eight (4) machines for $31,620. We continue
      attempting to identify parties interested in acquiring the remaining units,
      although we cannot guarantee we will continue to have sales or will obtain
      similar sales results.





We
      may
      not fully recover the carrying value of our CoinBank machines held for sale.




**We
      may not successfully compete with our competitors.**




The
      credit/debit card industry and healthcare industries are also fully developed
      markets served by large companies who are better able to finance, develop and
      market products than is the Company. We have attempted to differentiate our
      products from those of our competitors but competitive products aimed at our
      target markets could obviate the need for our products or severely limit our
      market penetration.




**Changing
      industry trends may adversely effect our operations.**




Alternatives
      to the use of cash and checks, such as credit cards and wire transfer, debit
      cards and other forms of electronic currency are increasing. Increasing use
      of
      these alternative forms of payment could reduce the need for some the Company's
      products while increasing the need for others.


23


We
      are
      dependent on third-party manufacturers and on independent contractors, whose
      nonperformance could harm our business.




We
      are
      substantially dependent on the ability of the independent contractors we hire
      to
      provide software engineering and support for our products. Any contractor that
      we utilize or may utilize may not have sufficient capacity to satisfy our needs
      during any period of sustained demand. The loss of services of independent
      contractors could disrupt our business. Furthermore, certain of our products
      access networks which are owned and operated by third parties. The failure
      or
      unavailability of these networks could have a material adverse effect on us.




**We
      are subject to risks relating to our international installations and
      sales** .




We
      are
      seeking to deploy certain products, such as debit cards, outside of the United
      States. To the extent that we are able to expand our operations and sales
      outside of the United States, we will be subject to the risks associated with
      international operations and sales, including economic and political
      instability, currency fluctuations, credit risks, shipping delays, customs
      duties, export quotas, foreign government regulations and other trade
      restrictions, any of which could have a significant impact on our ability to
      operate effectively outside of the United States or to deliver such products
      overseas to customers on a competitive and timely basis.




**Risks
      Related to Government Regulation and Patent and Licensing matters**




**Uncertainty
      of patent and trademark protection.**




Although
      we have been issued U.S. Patents with respect to our EMMA coin machine
      technology, there can be no assurance that these patents will afford us any
      meaningful protection. We intend to rely primarily on a combination of trade
      secrets, technical measures, copyright protection and nondisclosure agreements
      with our employees to establish and protect the ideas, concepts and
      documentation of software developed by us. Such methods may not afford complete
      protection, and there can be no assurance that third parties will not
      independently develop such technology or obtain access to the software we have
      developed. Although we believe that our use of the software we developed and
      other software used in our operations does not infringe upon the rights of
      others, our use of the software we developed or such other software may infringe
      upon the patents or intellectual property rights of others. In the event of
      infringement, we could, under certain circumstances, be required to obtain
      a
      license or modify aspects of the software we developed or such other software
      or
      refrain from using such software. We may not have the necessary financial
      resources to defend any infringement claim made against us or be able to
      successfully terminate any infringement in a timely manner, upon acceptable
      terms and conditions or at all. Failure to do any of the foregoing could have
      a
      material adverse effect on us. Moreover, if the software we developed or any
      other software or hardware used in our business is deemed to infringe upon
      the
      rights of others, we could, under certain circumstances, become liable for
      damages, which could have a material adverse effect on us. We received United
      States trademark registration for the "CoinBank" name in September 1997.
      Although we are not aware of any claims of infringement or other challenges
      to
      our rights to use this trademark, there can be no assurance that our marks
      do
      not or will not infringe upon the proprietary rights of others or that our
      marks
      would be upheld if challenged.




**Risks
      Related to Our Management**




24


The
      success of our business also requires that we retain other qualified management
      personnel.




Our
      success is also dependent upon our ability to hire and retain additional
      qualified management, marketing, technical, financial and other personnel.
      Competition for qualified personnel is intense, and there can be no assurance
      that we will be able to hire or retain additional qualified personnel. Any
      inability to attract and retain qualified management and other personnel would
      have a material adverse effect on us.




**Our
      directors and officers have limited personal liability.**




Our
      Certificate of Incorporation includes provisions to limit, to the full extent
      permitted by Delaware law, the personal liability of our directors for monetary
      damages arising from a breach of their fiduciary duties as directors. In
      addition, our By-Laws require us to indemnify any of our directors, officers,
      employees or agents to the full extent permitted by Delaware law. As a result
      of
      such provisions in our Certificate of Incorporation and the By-Laws,
      securityholders may be unable to recover damages against our directors and
      officers for actions taken by them which constitute negligence, gross negligence
      or a violation of their fiduciary duties. This may reduce the likelihood of
      securityholders instituting derivative litigation against directors and officers
      and may discourage or deter securityholders from suing our directors, officers,
      employees and agents for breaches of their duty of care, even though such an
      action, if successful, might otherwise benefit us and our securityholders.




**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 five 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.




**The
      price of our common stock has been, and may continue to be, volatile.**




The
      market price of our common stock has fluctuated over a wide range, and it is
      likely that the price of our common stock will fluctuate in the future. Since
      June 1, 2005, the sale price for our common stock, as reported by the American
      Stock Exchange has fluctuated from a low of $0.55 to a high of $1.33 per share.
      The market price of our common stock could be impacted by a variety of factors,
      including:




o
              announcements
                  of technological innovations or new commercial products by us or
                  our
                  competitors.
   25
  o
              changes
                  in government regulation and policies which may be undertaken with
                  respect
                  to security issues related to terrorism, privacy and other matters.
  o
              developments
                  in the patents or other proprietary rights owned or licensed by
                  us or our
                  competitors.
  o
              matters
                  related to our financial condition, including our ability to obtain
                  necessary capital.
  o
              litigation
                  affecting us or our products.
  o
              general
                  market conditions in our industry.




In
      addition, the stock market continues to experience price and volume
      fluctuations. These fluctuations have especially affected the market price
      of
      many technology companies. Such fluctuations have often been unrelated to the
      operating performance of these companies. Nonetheless, these broad market
      fluctuations may negatively affect the market price of our common stock.




**We
      have the discretion to issue additional shares of preferred stock with rights
      and preferences superior to those granted to holders of our common stock.**




Our
        Certificate of Incorporation authorizes our board of directors to issue up
        to
        1,500,000 shares of preferred stock, from time to time, in one or more series.
        Our board of directors is authorized, without further approval of the
        securityholders, to fix the dividend rights and terms, conversion rights,
        voting
        rights, redemption rights and terms, liquidation preferences, and any other
        rights, preferences, privileges and restrictions applicable to each new series
        of preferred stock. The issuance of such stock could adversely affect the
        voting
        power of the holders of common stock and, under certain circumstances, make
        it
        more difficult for a third party to gain control of us, discourage bids for
        our
        common stock at a premium, or otherwise adversely affect the market price
        of our
        common stock.




26


**ITEM
      3. CONTROLS AND PROCEDURES**





The
      Company maintains disclosure controls and procedures (as defined in Exchange
      Act
      Rule 13a-15(e)) that are designed to assure that information required to be
      disclosed in its Securities Exchange Act of 1934 reports is recorded, processed,
      summarized and reported within the time periods specified in the Securities
      and
      Exchange Commission’s rules and forms, and that such information is accumulated
      and communicated to management, including the Chief Executive Officer and Chief
      Financial Officer, as appropriate, to allow timely decisions regarding required
      disclosures.




In
      designing and evaluating the disclosure controls and procedures, management
      recognizes that any controls and procedures, no matter how well designed and
      operated, can provide reasonable assurance only of achieving the desired control
      objectives, and management necessarily is required to apply its judgment in
      weighting the costs and benefits of possible new or different controls and
      procedures. Limitations are inherent in all control systems, so no evaluation
      of
      controls can provide absolute assurance that all control issues and any fraud
      within the Company have been detected.




As
      required by Exchange Act Rule 13a-15(b), as of the end of the period covered
      by
      this report the Company, under the supervision and with the participation of
      our
      Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness
      of the Company’s disclosure controls and procedures. Based on this evaluation,
      our Chief Executive Officer and Chief Financial Officer concluded that the
      Company’s disclosure controls and procedures were effective as of that date.




There
      was
      no change in the Company’s internal control over financial reporting during the
      Company’s most recently completed fiscal quarter that has materially affected,
      or is reasonably likely to materially affect, the Company’s internal control
      over financial reporting.







27


**PART
      II. OTHER INFORMATION**





**ITEM
      1. LEGAL PROCEEDINGS**





In
      February 2003 Abraham Mirman of Samson Consulting Corp. was hired, interalia,
      to
      provide consulting services and 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 an arbitration in New York State
      claiming that the agreement was wrongfully terminated and that Samson was owed
      $600,000 in damages plus costs. In June 2005, an arbitrator awarded Sampson
      $100,000 in unpaid fees, $21,650 in statutory interest through July 20, 2005
      and
      no attorney fees or costs. Subsequently, we 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. In February 2006, both
      parties agreed to settle all outstanding claims without any funds exchanged;
      i.e. we have dismissed our California lawsuit and Samson has vacated its New
      York judgment




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, passed away 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 tentative settlement in which the shares would be returned to us
      without any exchange of money, pending execution of final settlement
      documentation. 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.** **UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**





In
      the fiscal quarter ended August 31, 2006, in private transactions under Section
      4(2) of the Securities Act of 1933, as amended, the Company sold 280,575 shares
      of the Company's Common Stock for gross proceeds of $283,400. In addition the
      Company issued 282,550 five year Common Stock purchase warrants with
      exercise prices ranging from $1.50 to $2.50.





During
      the fiscal quarter ended August 31, 2006, in a private transaction under Section
      4(2) of the Securities Act of 1933, as amended, we sold 20 shares of
      preferred stock for gross proceeds of $200,000 to four existing shareholders.
      The Preferred Stock shall, for a period of seven years, be convertible into
      Units, each consisting of 4 five-year Warrants to purchase common stock at
      the
      rate of one unit for each dollar invested. In each Unit, 2 Warrants shall be
      exercisable at $1.00 per share, 1 Warrant shall be exercisable at $1.50 per
      share and 1 Warrant shall be exercisable at $2.00 per share. The Preferred
      Stock
      shall earn dividends at 8% per annum, payable quarterly in cash or common stock
      at the Company's option. If paid in common stock, the stock price shall be
      the
      lower of the Market Price or $1.37 per share. Market Price is defined as the
      average of the closing prices of the common stock for the 10 consecutive trading
      days immediately preceding the dividend due date.





Subsequent
      to the fiscal quarter ended August 31, 2006, in private transactions under
      Section 4(2) of the Securities Act of 1933, as amended, the Company
      sold 79,000 shares of the Company's Common Stock for gross proceeds of
      $83,200. In addition the Company issued 79,000 five year Common Stock purchase
      warrants with exercise prices ranging from $2.00 to $2.50.





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The
      proceeds from these transactions will be used primarily for the day to day
      operations of the Company.





**ITEM
      3. DEFAULT UPON SENIOR SECURITIES**





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. The General Electric
      loan is secured by certain of our CoinBank machines. In 2000, we entered into
      the first of several loan renewals with G.E., the most recent of which expired
      in November 2005. We have continued to pay G.E. in accordance with the terms
      of
      the expired note and believe based on discussions with G.E. that another renewal
      will be executed. We have no current plan or capability to repay G.E. its
      principal. As of August 31, 2006, we owed $3,654,096 including principal and
      financing fees.





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 to 48 investors in the aggregate principal amount
      of
      $3,362,000 and 336,200 Series B Common Stock Purchase Warrants. The notes,
      secured by a first priority lien on all of our assets, were originally
      convertible into our common stock at the conversion rate of $9.50 per share
      and
      were due and payable on July 31, 2001. The Series B Warrants were originally
      exercisable at a price of $13.00 per share. Since July 31, 2001, 41 out of
      48
      noteholders converted their notes to equity at a conversion price of $2.50
      per
      share. Noteholders who converted to equity also received two replacement
      warrants exercisable at $1.35 per share for each original warrant previously
      held. The remaining 7 notes are in default of their original or restructured
      terms. As of August 31, 2006, we owed $511,645 in principal and interest to
      the
      seven noteholders.








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





During
      this three month period ended August 31, 2006, there have not been any matters
      submitted for a vote from the security holders.








**ITEM
      5. OTHER INFORMATION**





In
      May 2003 we
      completed a private placement offering with
      a stockholder consisting 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 common
      stock at the conversion rate of $0.50 per share. The Warrants are exercisable
      at
      $1.00 per share. At that time 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. This note was converted on September 11, 2006
      and will be reclassified into equity.





Subsequent
      to the fiscal quarter ended August 31, 2006, in private transactions under
      Section 4(2) of the Securities Act of 1933, as amended, the Company sold 69,000
      shares of the Company's Common Stock for gross proceeds of $71,500. In addition
      the Company issued 69,000 five year Common Stock purchase warrants with exercise
      prices ranging from $2.00 to $2.50.








29


**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)
              Report
                  on Form 8-K filed on November 4, 2005 under Item
                  3.01. Report
                  on Form 8-K/A filed on November 9, 2005 under Item
                  3.01.









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**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, 2006, to be signed on its behalf by the undersigned,
      thereunto duly authorized the 20th day of October, 2006.







CASH
      TECHNOLOGIES, INC.








By:
      /S/
      Bruce Korman


________________________________________


Bruce
      Korman


President
      and Chief Executive Officer








By:
      /S/  Edmund
      King


________________________________________


Edmund
      King


Chief
      Financial Officer


31