**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 NOVEMBER 30, 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
      January 18, 2006, there were 21,439,711 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













**CASH
      TECHNOLOGIES, INC.**


**FORM
      10-QSB**





**INDEX**





**PAGE
                NO.****PART
                I. FINANCIAL INFORMATION**Item
                1. Consolidated Financial Statements:Consolidated
                  Balance Sheets as of November 30, 2006 (unaudited) and  May 31,
                  2006
            
            **3**Consolidated
                Statements of Operations for the three-month and six month periods
                ended
                November 30, 2006 and November 30, 2005 (unaudited)
            
            **4**Consolidated
                Statements of Cash Flows for the three-month and six month periods
                Ended
                November 30, 2006 and November 30, 2005 (unaudited)
            
            **5**Notes
                to Consolidated Financial Statements for the three-month and six
                month
                periods ended November 30, 2006 and November 30, 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
            
            **29****PART
                II. OTHER INFORMATION**Item
                1. Legal Proceedings
            
            **30**Item
                2. Unregistered Sales of Equity Securities and Use of Proceeds
            
            **30**Item
                3. Defaults Upon Senior Securities
            
            **30**Item
                4. Submission of Matters to a Vote of Security Holders
            
            **31**Item
                5. Other Information
            
            **31**Item
                6. Exhibits and Reports on Form 8-K
            
            **31**SIGNATURES
            
            **32**




2


**PART
      I**





**ITEM
      1. FINANCIAL STATEMENTS**


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


**NOVEMBER
                  30,**
              
              **MAY
                  31,****2006**
              
              **2006****ASSETS**CURRENT
                  ASSETS:Cash
                  and cash equivalents
              
              $
              17,513
              
              $
              81,355Accounts
                  receivable
              
              
              31,772
              
              
              14,226Prepaid
                  expenses and other current assets
              
              
              194,627
              
              
              185,986Other
                  receivable (net of allowance $50,000)
              
              
              146,818
              
              
              104,684Assets
                  of discontinued operationsCash
              
              
              7,131
              
              
              61,636Accounts
                  receivable
              
              
              731,576
              
              
              2,095,107Prepaid
                  expenses and other current assets
              
              
              290,032
              
              
              231,422Inventory
                  (net of allowance $121,000)
              
              
              121,690
              
              
              8,436,161Property
                  and equipment, net
              
              
              10,895
              
              
              15,261Note
                  receivable
              
              
              1,387,500
              
              
              -Other
                  assets
              
              
              18,230
              
              
              144,038Total
                  assets of discontinued operations
              
              
              **2,567,054**
              
              
              **10,983,625**Total
                  Current Assets
              
              
              **2,957,784**
              
              
              **11,369,876**CoinBank
                  machines held for sale (Note 1(n))
              
              
              609,890
              
              
              609,890PROPERTY
                  AND EQUIPMENT (net)
              
              
              28,747
              
              
              30,260NOTES
                  RECEIVABLE
              
              
              7,279,045
              
              
              -CAPITALIZED
                  SOFTWARE COSTS (Note 1(n))
              
              
              46,647
              
              
              326,531CDHC
                  PREFERRED STOCK
              
              
              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**
              
              **$**
              **17,858,309**
              
              **$**
              **19,272,753****LIABILITIES
                  AND STOCKHOLDERS' EQUITY (DEFICIENCY)**CURRENT
                  LIABILITIES:Current
                  maturities of Notes Payable (Note 5)
              
              $
              3,482,287
              
              
              3,482,287Due
                  to Officers and Directors
              
              
              8,915
              
              
              8,915Convertible
                  debt (Note 5)
              
              
              520,020
              
              
              514,176Due
                  to Shareholders (Note 4)
              
              
              452,749
              
              
              120,750Accounts
                  payable
              
              
              904,226
              
              
              607,945Accrued
                  liabilities
              
              
              1,160,235
              
              
              927,228Dividend
                  payable
              
              
              160,416
              
              
              50,416Liabilities
                  of discontinued operationsAccounts
                  payable
              
              
              715,603
              
              
              1,126,690Notes
                  payable
              
              
              1,928,115
              
              
              2,321,207Accrued
                  expenses and other current liabilities
              
              
              867,870
              
              
              1,658,943Total
                  liabilities of discontinued operations
              
              
              **3,511,588**
              
              
              **5,106,840**Total
                  Current Liabilities
              
              
              **10,200,436**
              
              
              **10,818,557**Long-Term
                  Notes Payable (Note 6)
              
              
              **-**
              
              
              -**TOTAL
                  LIABILITIES**
              
              
              **10,200,436**
              
              
              **10,818,557**COMMITMENTS
                  & CONTINGENCIES (Note 7)
              
              
              -
              
              
              -MINORITY
                  INTEREST
              
              
              (87,052
              )
              
              (74,517
              )MINORITY
                  INTEREST OF DISCONTINUED OPERATIONS
              
              
              -
              
              
              684,662TOTAL
                  MINORITY INTEREST
              
              
              **(87,052**
              **)**
              
              **610,145****STOCKHOLDERS'
                  EQUITY (DEFICIENCY): (Note 6)**Stockholder's
                  equity of discontinued operationsAdditional
                  paid in capital
              
              
              -
              
              
              910,000Accumulated
                  equity
              
              
              -
              
              
              4,966,785Total
                  stockholder's equity of discontinued operations
              
              
              **-**
              
              
              **5,876,785**Cumulative
                  Redeemable Preferred Stock, 1,500,000 shares authorized,647,715
                  and 647,515 shares issued and outstanding at November 30, 2006
                  and May 31,
                  2006
              
              
              10,825,812
              
              
              10,625,812Common
                  Stock, $0.01 par value, 35,000,000 shares authorized,23,631,164
                  and 23,035,964 issued and outstanding at November 30, 2006 and
                  May 31,
                  2006
              
              
              456,906
              
              
              346,445Additional
                  Paid-In-Capital
              
              
              39,751,062
              
              
              38,262,424Accumulated
                  Deficit
              
              
              (43,288,855
              )
              
              (47,267,415
              )**Total
                  stockholders' Equity**
              
              
              **7,744,925**
              
              
              **7,844,051****TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)**
              
              **$**
              **17,858,309**
              
              **$**
              **19,272,753**


See
        notes
        to consolidated financial statements


3




**CASH
      TECHNOLOGIES, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS** **(UNAUDITED)**


**THREE
                  MONTH PERIOD**
              
              **SIX
                  MONTHS****ENDED
                  NOVEMBER 30,**
              
              **ENDED
                  NOVEMBER 30,****2006**
              
              **2005**
              
              **2006**
              
              **2005**NET
                  REVENUES BEFORE DISCONTINUED OPERATIONS
              
              $
              1,036,082
              
              $
              2,024,112
              
              $
              2,902,575
              
              $
              3,811,920NET
                  REVENUES
              
              $
              81,782
              
              $
              23,525
              
              $
              116,374
              
              $
              39,189COST
                  OF REVENUES
              
              
              16,576
              
              
              14,407
              
              
              36,087
              
              
              24,790GROSS
                  PROFIT (LOSS)
              
              
              65,206
              
              
              9,118
              
              
              80,287
              
              
              14,399SELLING,
                  GENERAL, & ADMINISTRATIVE EXPENSE
              
              
              737,756
              
              
              664,360
              
              
              1,577,394
              
              
              1,483,221RESEARCH
                  AND DEVELOPMENT
              
              
              18,750
              
              
              37,500
              
              
              56,250
              
              
              75,000IMPAIRMENT
                  ON COIN MACHINES
              
              
              -
              
              
              -
              
              
              -
              
              
              -DEPRECIATION
                  & AMORTIZATION EXPENSE
              
              
              141,135
              
              
              141,066
              
              
              282,201
              
              
              281,961**OPERATING
                  LOSS**
              
              
              (832,435
              )
              
              (833,808
              )
              
              (1,835,558
              )
              
              (1,825,783
              )INTEREST
                  EXPENSE
              
              
              96,102
              
              
              97,554
              
              
              195,194
              
              
              195,452LOSS
                  BEFORE INCOME TAXES
              
              
              (928,537
              )
              
              (931,362
              )
              
              (2,030,752
              )
              
              (2,021,235
              )INCOME
                  TAXES
              
              
              -
              
              
              2,200
              
              
              2,400
              
              
              7,000MINORITY
                  INTEREST (Note 13)
              
              
              (6,485
              )
              
              (6,082
              )
              
              (12,537
              )
              
              (12,343
              )Income
                  (loss) before Extraordinary Gain
              
              
              (922,052
              )
              
              (927,480
              )
              
              (2,020,615
              )
              
              (2,015,892
              )NET
                  INCOME (LOSS) FROM CONTINUING OPERATIONS
              
              **$**
              **(922,052**
              **)**
              **$**
              **(927,480**
              **)**
              **$**
              **(2,020,615**
              **)**
              **$**
              **(2,015,892**
              **)**DISCONTINUED
                  OPERATIONSNET
                  REVENUES
              
              $
              954,300
              
              $
              2,000,587
              
              $
              2,786,201
              
              $
              3,811,920FORGIVENESS
                  OF DEBT
              
              
              -
              
              
              664
              
              
              -
              
              
              51,169COST
                  OF REVENUES
              
              
              (991,385
              )
              
              (1,461,227
              )
              
              (2,241,314
              )
              
              (2,797,607
              )SELLING,
                  GENERAL & ADMINISTRATIVE EXPENSE
              
              
              (707,057
              )
              
              (644,696
              )
              
              (1,318,997
              )
              
              (1,269,563
              )INTEREST
                  EXPENSE
              
              
              (127,746
              )
              
              (106,279
              )
              
              (249,620
              )
              
              (205,047
              )GAIN
                  FROM DISPOSITION OF SUBSIDIARY'S ASSETS
              
              
              1,481,468
              
              
              -
              
              
              1,481,468
              
              
              -INCOME
                    FROM DISCONTINED OPERATIONS
              
              
              609,580
              
              
              (210,951
              )
              
              457,738
              
              
              (409,128
              )NET
                  INCOME (LOSS)
              
              $
              (312,472
              )
              $
              (1,138,431
              )
              $
              (1,562,877
              )
              $
              (2,425,020
              )Dividends
                  & deemed dividends
              
              $
              55,000
              
              $
              225,212
              
              $
              110,000
              
              $
              275,627Net
                  income (loss) allocable to commonshareholders
              
              $
              (367,472
              )
              $
              (1,363,643
              )
              $
              (1,672,877
              )
              $
              (2,700,647
              )Basic
                  and diluted net income (loss) per sharebefore
                  extraordinary income
              
              $
              (0.03
              )
              $
              (0.05
              )
              $
              (0.06
              )
              $
              (0.11
              )Basic
                  and diluted net income (loss) per sharefor
                  extraordinary income
              
              $
              0.02
              
              $
              (0.01
              )
              $
              0.01
              
              $
              (0.02
              )Basic
                  and diluted weighted averageshares
                  of common stock outstanding
              
              
              31,974,661
              
              
              18,011,905
              
              
              31,974,661
              
              
              18,011,905




See
        notes
        to consolidated financial statements


4


**CASH
      TECHNOLOGIES, INC. AND SUBSIDIARIES** **CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(UNAUDITED)**


**November
                  30,**
              
              **November
                  30,****2006**
              
              **2005****OPERATING
                  ACTIVITIES:**Net
                  loss
              
              $
              (2,020,615
              )
              $
              (2,015,891
              )Adjustments
                  to reconcile net loss to net cash used byoperating
                  activities:Minority
                  interest
              
              
              (12,535
              )
              
              (17,674
              )Amortization
                  of capitalized software
              
              
              279,884
              
              
              279,885Income
                  on forgiveness of debt
              
              
              **-**
              
              
              (51,169
              )Noncash
                  compensation expense
              
              
              **-**
              
              
              3,308Non-Cash
                  payment for services
              
              
              105,000
              
              
              -Depreciation
                  expense
              
              
              1,513
              
              
              2,076Changes
                  in operating assets and liabilities:Accounts
                  receivable
              
              
              (17,546
              )
              
              17,409Prepaid
                  expenses and other current assets
              
              
              (8,641
              )
              
              (150,000
              )Other
                  receivable
              
              
              (42,134
              )
              
              -Inventory
              
              
              -
              
              
              (677,535
              )CoinBank
                  machines held for sale
              
              
              -
              
              
              23,223Other
                  assets
              
              
              -
              
              
              118,250Accrued
                  interest
              
              
              14,759
              
              
              47,599Accounts
                  payable
              
              
              296,281
              
              
              (157,109
              )Accrued
                  expenses and other current liabilities
              
              
              233,008
              
              
              864,969Net
                  cash used in operating activities
              
              
              (1,171,026
              )
              
              (1,712,659
              )**INVESTING
                  ACTIVITIES:**Net
                  acquisition cost of TomcoPurchase
                  of property and equipment
              
              
              -
              
              
              (949
              )Net
                  cash provided by (used in) investing activities
              
              
              -
              
              
              (949
              )**FINANCING
                  ACTIVITIES:**Proceeds
                  from conversion of warrants
              
              
              -
              
              
              340Proceeds
                  from the issuance of warrants
              
              
              -
              
              
              -Net
                  proceeds from issuance of preferred stock
              
              
              200,000
              
              
              -Proceeds
                  from Long-term debt
              
              
              323,084
              
              
              143,856Repayments
                  on short-term debt
              
              
              -
              
              
              (100,000
              )Proceeds
                  from sale of common stock
              
              
              584,100
              
              
              1,710,000Net
                  cash provided by financing activities
              
              
              1,107,184
              
              
              1,754,196**CHANGE
                  IN CASH AND CASH EQUIVALENTS**
              
              
              (63,842
              )
              
              40,588Cash
                  and Cash Equivalents, Beginning of Period
              
              
              81,355
              
              
              102,611Cash
                  and Cash Equivalents, End of Period
              
              $
              17,513
              
              $
              143,199**SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION**Income
                  taxes
              
              
              2,400
              
              $
              7,100**SUPPLEMENTAL
                  DISCLOSURE OF NONCASH TRANSACTIONS**Issuance
                  of common stock for services performed
              
              $
              105,000
              
              $
              3,308Gain
                  (Loss) on operations of discontinued operations
              
              $
              457,738
              
              $
              (409,129
              )Dividends
                  declared on preferred stock
              
              $
              110,000
              
              $
              267,112Deemed
                  dividend on warrants issued
              
              $
              -
              
              $
              8,515





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, 2006, 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 November 30, 2006 and the results of operation
      and
      cash flows for the three and six-month periods ended November 30, 2006 and
      November 30, 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 six-month period ended November 30, 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 $18,750 for the three month period ended November 30, 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 six month
      period ended November 30, 2006, we amortized an additional $279,884 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, MAC, etc.) for interfacing with
      the
      global EFT network. We partnered with a third-party ATM software provider to
      assist in these efforts, instead of developing the software for this step
      ourselves. This significantly reduced our costs to complete this high risk
      development step because we were able to incorporate and modify the third
      party’s software, which had been previously certified, and re-certify it rather
      than develop our own similar software from scratch. 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.





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





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 settlement in which the shares were 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, 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 November 30, 2006, in private transactions under Section
      4(2) of the Securities Act of 1933, as amended, the Company sold 286,700 shares
      of the Company's Common Stock for gross proceeds of $300,700. In addition the
      Company issued 265,814 five year Common Stock purchase warrants with exercise
      prices ranging from $1.70 to $2.25.





Subsequent
      to the fiscal quarter ended November 30, 2006, in private transactions under
      Section 4(2) of the Securities Act of 1933, as amended, the Company sold 265,000
      shares of the Company's Common Stock for gross proceeds of $265,000. In addition
      the Company issued 232,500 five year Common Stock purchase warrants with
      exercise prices ranging from $1.65 to $2.00.




**NOTE
      4: RELATED PARTY TRANSACTIONS**





As
      of
      November 30, 2006, we were in arrears $290,874 for salary to Mr. Korman, $47,935
      in expense reimbursements and owed $114,940 in accrued rent for our offices
      to a
      company in which Mr. Korman has a beneficial interest. In addition, Mr. King
      has
      loaned $50,000 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 was
      executed in December, 2006 and will expire in February 1, 2008. Payments are
      interest only and we have no present plan or capability to repay G.E. its
      principal. As of November 30, 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.




9




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 November 30, 2006, we owed $520,021 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 exercised 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, until September 30, 2006, owned
      and operated Tomco Auto Products, has an asset based revolving line of credit.
      On November 30, 2006, the balance on the line of credit was approximately
      $1,299,735, 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 former chairman (who is not an employee of Cash Technologies). Following
      the sale of most of the assets of TAP (the “Tomco Sale”), a payment of
      $1,300,000 was made toward the loan. The existing balance of $1,299,735 is
      secured by the remaining TAP accounts receivable and installment payments to
      be
      received from the Tomco Sale.





10




**NOTE
      6: STOCK BASED COMPENSATION**





Prior
      to
      June 1, 2006, the Company accounted for employee stock-based compensation using
      the intrinsic value method supplemented by pro forma disclosures in accordance
      with APB 25 and SFAS 123 “Accounting for Stock-Based Compensation” (“SFAS 123”),
      as amended by SFAS No.148 “Accounting for Stock-Based Compensation—Transition
      and Disclosures.” Under the intrinsic value based method, compensation cost is
      the excess, if any, of the quoted market price of the stock at grant date or
      other measurement date over the amount an employee must pay to acquire the
      stock. Under the intrinsic value method, the Company has recognized stock-based
      compensation common stock on the date of grant.





Effective
      June 1, 2006 the Company adopted SFAS 123(R) using the modified prospective
      approach and accordingly prior periods have not been restated to reflect the
      impact of SFAS 123(R). Under SFAS 123(R), stock-based awards granted prior
      to
      its adoption will be expensed over the remaining portion of their vesting
      period. These awards will be expensed under the accelerated amortization method
      using the same fair value measurements which were used in calculating pro forma
      stock-based compensation expense under SFAS 123. For stock-based awards granted
      on or after June 1, 2006, the Company will amortize stock-based compensation
      expense on a straight-line basis over the requisite service period, which is
      five years.





SFAS
      123(R) requires forfeitures to be estimated at the time of grant and revised,
      if
      necessary, in subsequent periods if actual forfeitures differ from initial
      estimates. Stock-based compensation expense has been recorded net of estimated
      forfeitures for the year ended September 30, 2006 such that expense was recorded
      only for those stock-based awards that are expected to vest. Previously under
      APB 25 to the extent awards were forfeited prior to vesting, the corresponding
      previously recognized expense was reversed in the period of
      forfeiture.





SFAS
      123
      requires the Company to provide pro-forma information regarding net loss as
      if
      compensation cost for the stock options granted to the Company’s employees had
      been determined in accordance with the fair value based method prescribed in
      SFAS 123. Options granted to non-employees are recognized in these financial
      statements as compensation expense under SFAS 123 (See Note 11) using the
      Black-Scholes option-pricing model.





If
      the
      fair value based method under FAS 123 had been applied in measuring stock-based
      compensation expense for the six-month period ended November 30, 2005, the
      pro
      forma on net income (loss) and net income (loss) per share would have been
      as
      follows:





**FOR
                THREE MONTHS**
            
            **FOR
                SIX MONTHS****ENDED
                NOVEMBER 30,**
            
            **ENDED
                NOVEMBER 30,****2006**
            
            **2005**
            
            **2006**
            
            **2005**Net
                Income (Loss)As
                Reported
            
            
            312,472
            
            
            (1,138,431
            )
            
            (1,562,877
            )
            
            (2,425,020
            )Pro
                Forma
            
            
            312,472
            
            
            (1,590,119
            )
            
            (1,562,877
            )
            
            (2,876,708
            )Basic
              and Diluted Income (loss) Per Common ShareAs
                Reported
            
            
            (0.03
            )
            
            (0.06
            )
            
            (0.06
            )
            
            (0.13
            )Pro
                Forma
            
            
            (0.03
            )
            
            (0.09
            )
            
            (0.04
            )
            
            (0.16
            )





11





For
      the
      three month period ended November 30, 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 63.13%, 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
      six month period ended November 30, 2005, the fair value of option grants is
      estimated on the date of grant utilizing the Black-Scholes option-pricing model
      with the weighted average assumption for options granted during 2000-2005,
      expected life of the option is 5 years, expected volatility of 18.20%, 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
      7: 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**
              
              **Six
                  months ended****November
                  30,**
              
              **November
                  30,****2006**
              
              **2005**
              
              **2006**
              
              **2005**Net
                  revenues:CoinBank
                  machines
              
              
              
              
              
              21,138
              
              
              126
              
              
              35,216EMMA
              
              
              -
              
              
              -
              
              
              -Heuristic
              
              
              81,782
              
              
              2,387
              
              
              116,248
              
              
              3,973TAP
              
              
              954,300
              
              
              2,000,587
              
              
              2,786,201
              
              
              3,811,920Unallocated
              
              
              -
              
              
              -
              
              
              -
              
              
              -1,036,082
              
              
              2,024,112
              
              
              2,902,575
              
              
              3,851,109Interest
                  expense:CoinBank
                  machines
              
              
              -
              
              
              -
              
              
              -
              
              
              -EMMA
              
              
              -
              
              
              -
              
              
              -
              
              
              -Heuristic
              
              
              -
              
              
              -
              
              
              -
              
              
              -TAP
              
              
              127,746
              
              
              106,279
              
              
              195,194
              
              
              205,047Unallocated
              
              
              96,102
              
              
              97,554
              
              
              249,620
              
              
              195,452223,848
              
              
              203,833
              
              
              444,814
              
              
              400,499Depreciation
                  & Amortization:CoinBank
                  machines
              
              
              -
              
              
              -
              
              
              -
              
              
              -EMMA
              
              
              139,941
              
              
              139,942
              
              
              279,883
              
              
              279,885Heuristic
              
              
              -
              
              
              -
              
              
              -
              
              
              -TAP
              
              
              -
              
              
              -
              
              
              -
              
              
              -Unallocated
              
              
              1,194
              
              
              1,124
              
              
              2,318
              
              
              2,076141,135
              
              
              141,066
              
              
              282,201
              
              
              281,961Segment
                  Income (loss):CoinBank
                  machines
              
              
              (79,421
              )
              
              (57,954
              )
              
              (168,294
              )
              
              (120,052
              )EMMA
              
              
              -
              
              
              -
              
              
              -
              
              
              -Heuristic
              
              
              (242,591
              )
              
              (261,281
              )
              
              (624,527
              )
              
              (653,726
              )TAP
              
              
              609,580
              
              
              (210,951
              )
              
              457,738
              
              
              (409,129
              )Unallocated
              
              
              (600,040
              )
              
              (608,245
              )
              
              (1,227,794
              )
              
              (1,242,113
              )(312,472
              )
              
              (1,138,431
              )
              
              (1,562,877
              )
              
              (2,425,020
              )




12




**NOTE
      8: 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 six months ended November 30,
      2006,
      we have allocated $12,537 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, 2005 totaled $6,288,459 with 529,884 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, 2005 Tomco
      shipped 73,536 units.




On
      September 30, 2006 TAP Holdings, LLC sold most of its assets to Champion Parts,
      Inc. The sale included a transfer of all carburetor related inventory,
      trademarks, patents and sales contracts. TAP received $1.3 million in cash
      and
      up to $9.1 million in future payments, represented by a secured promissory
      note,
      to be paid over a maximum of 11 years based on a percentage of combined
      carburetor sales by Champion. TAP
      has
      closed its Los Angeles factory and terminated any remaining
      employees.




**NOTE
      9: SUBSEQUENT EVENTS**





Subsequent
      to the fiscal quarter ended November 30, 2006, in private transactions under
      Section 4(2) of the Securities Act of 1933, as amended, the Company sold 265,000
      shares of the Company's Common Stock for gross proceeds of $265,000. In addition
      the Company issued 232,500 five year Common Stock purchase warrants with
      exercise prices ranging from $1.65 to $2.00.


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 and 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., a
      Delaware company and TAP Holdings, LLC (dba Tomco Auto Products). Our address
      is
      1434 West 11th Street, Los Angeles, California 90015. Our telephone number
      is
      (213) 745-2000.





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
      and market our data processing software. We anticipate that losses will continue
      for the near future. Our expenses have exceeded net revenues since inception.
      For the six-month periods ended November 30, 2006 and 2005, we incurred net
      income (losses) before extraordinary gain of approximately $(1,299,422) and
      $(2,425,020) respectively.




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 $56,250 for the six-month period ended November 30, 2006.




15




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 six-month
      period ended November 30, 2006, we amortized an additional $279,884of
      capitalized software.




The
      current EMMA asset is currently valued at $46,647, which reflects the costs
      incurred by us in developing the asset, as well as the net realizable value
      estimated in management's determination. Management believes that its estimates
      reflect its ability, based upon management's internal projections, to obtain a
      recovery on the asset. These estimates assume that recovery of the value of
      the
      asset will be obtained commencing in the last half of 2006 calendar year, and
      will be obtained fully by the end of the calendar year 2007. These projections
      and estimates are subject to numerous contingencies, including, without
      limitation, use of EMMA software in other products being developed and marketed
      by us.




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 the current and future use of the technology
      in
      our products.




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.




Our
      principal line of business is data processing in two market sectors, healthcare
      and consumer finance. Until the October 2006 sale of most of the assets of
      our
      TAP subsidiary, we were also involved in the manufacturing of auto products.




16




Although
      we still possess and are in discussions for the sale of our CoinBank technology
      and machines, substantially all of our efforts are directed to the continued
      development and deployment of our healthcare and financial data processing
      products.





**RESULTS
      OF OPERATIONS**





**THREE
      MONTHS ENDED NOVEMBER 30, 2006 COMPARED TO THE THREE MONTHS ENDED NOVEMBER
      30, 2005.**




*Net
      revenues* for the
      three-month period ended November 30, 2006 increased to $81,782 compared to
      $23,525 for the same 2005 period. The increase in net revenue is attributable
      to
      an increase in sales of our health care products.





*Net
      revenues* attributable to business held for sale for the three-month period ended November
      30, 2006 decreased to $954,300 compared to $2,000,587 for the same 2005 period.
      This decrease is directly attributable to the sale of a majority of the business
      during the first part of the November 30, 2006 quarter.





*Cost
      of revenues* for the
      three-month period ended November 30 ,
      2006 was
      $16,576 compared to $14,407. This small increase in cost of revenues is directly
      related to the increase in sales.





*Cost
      of revenues* attributable to business held for sale the three-month period ended November
      30 ,
      2006 was
      $991,385 compared to $1,461,227 for the quarter ended November 30 ,
      2005 .
      This
      decrease is attributable to the Tomco sale part way through the
      quarter.





*Gross
      profit* for
      the
      three months ended November 30 ,
      2006 was
      $65,206 compared to $9,118 for the same period a year ago.





*Gross
      profit* attributable
      to business held for sale for the three months ended November 30 ,
      2006 was
      $(37,085) compared to $539,360 for the same period a year ago. The decrease
      in
      gross profit was attributable to reduced operations due to the Tomco sale during
      the quarter and higher than normal returns immediately prior to the sale.





Se *lling,
      General and Administrative* expenses
      for the three months ended November 30 ,
      2006 ,
      increased to $737,756 compared to $664,360 for the three months ended November
      30 ,
      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 business held for sale for the three months ended November
      30 ,
      2006 ,
      increased to $707,057 compared to $644,696 for the three months ended November
      30 ,
      2005 .
      The
      increase is related to costs incurred in closing down the Tomco business.





*Research
      and development* expenses
      for the three months ended November 30 ,
      2006 ,
      was
      $18,750 compared to $37,500 for the three months ended November 30 ,
      2005 .





*Depreciation
      and amortization* expenses
      for the three months ended November 30 ,
      2006 ,
      and
      November 30 ,
      2005 ,
      were
      $141,135 and $141,066, respectively.




17




*Interest
      expense* for the
      three months ended November 30 ,
      2006 and
      November 30 ,
      2005 ,
      was
      $96,102 and $97,554, respectively.





*Interest
      expense* attributable to the business held for sale for the three months ended November
      30 ,
      2006 and
      November 30 ,
      2005 ,
      was
      $127,746 and $106,279, respectively. The increase was due to a higher loan
      carrying amount at TAP Holdings.





*Minority
      Interest* for the
      three months ended November 30 ,
      2006 and
      November 30 ,
      2005 ,
      is
      $6,485 and $6,082, respectively





*Income
      Taxes* for the
      three months ended November 30 ,
      2006 and
      November 30 ,
      2005 ,
      is 0
      and $2,200, respectively





As
      a
      result of the foregoing, net income (losses) for the three months ended November
      30, 2006 and
      November 30 ,
      2005,
      are $(922,052) and $(927,780), respectively.





As
      a
      result of the foregoing, net income (losses) attributable to business held
      for
      sale for the three months ended November 30, 2006 and
      November 30 ,
      2005,
      are $609,580 and $(210,951), respectively.




As
        a
        result of the foregoing, consolidated net income (losses) for the three months
        ended November 30, 2006 and November 30, 2005, are $(312,472) and $(1,138,431),
        respectively. The net income for 2006 is attributable to an extraordinary
        gain
        on the sale of most of TAP Holdings’ assets of approximately
        $1,800,000.





**SIX
      MONTHS ENDED NOVEMBER 30, 2006 COMPARED TO THE SIX MONTHS ENDED NOVEMBER 30,
      2005.**




*Net
      revenues* for the
      six-month period ended November 30, 2006 increased to $116,374 compared to
      $39,189 for the same 2005 period. The increase in net revenue is attributable
      to
      an increase in sales of our health care products.





*Net
      revenues* attributable to business held for sale for the six-month period ended November
      30, 2006 decreased to $2,786,201 compared to $3,811,920 for the same 2005
      period. This decrease is directly attributable to the Tomco sale during the
      first part of the November 30, 2006 quarter.





*Cost
      of revenues* for the
      six-month period ended November 30 ,
      2006 was
      $36,087 compared to $24,790. The increase in cost of revenues is directly
      related to the increase in sales.





*Cost
      of revenues* attributable to business held for sale the six-month period ended November
      30 ,
      2006 was
      $2,241,314 compared to $2,797,607 for the quarter ended November 30 ,
      2005 .
      The
      decrease in cost of revenues was attributable the reduced operations because
      of
      the sale of the Tomco business at the beginning of the quarter offset partially
      by higher than normal returns immediately prior to the sale.





*Gross
      profit* for
      the
      six months ended November 30 ,
      2006 was
      $80,287 compared to $14,399 for the same period a year ago.





*Gross
      profit* attributable
      to business held for sale for the six months ended November 30 ,
      2006 was
      $544,887 compared to $1,014,313 for the same period a year ago. The
      decrease in gross profit was attributable the reduced operations due to the
      Tomco sale at the beginning of the quarter and higher than normal returns
      immediately prior to the sale.





*S*e *lling,
      General and Administrative* expenses
      for the six months ended November 30 ,
      2006 ,
      increased to $1,577,394 compared to $1,483,221 for the six months ended November
      30 ,
      2005 .
      These
      expenses consist primarily of wages (and wage related costs), outside contractor
      expenses, travel/promotional expenses, professional services and
      facilities/office related expenses.




18




*S*e *lling,
      General and Administrative* expenses
      attributable to business held for sale for the six months ended November
      30 ,
      2006 ,
      decreased to $1,318,997 compared to $1,269,563 for the six months ended November
      30 ,
      2005 .
      The
      increase is related to costs incurred in closing down the Tomco business.





*Research
      and development* expenses
      for the six months ended November 30 ,
      2006 ,
      was
      $56,250 compared to $75,000 for the six months ended November 30 ,
      2005 .





*Depreciation
      and amortization* expenses
      for the six months ended November 30 ,
      2006 ,
      and
      November 30 ,
      2005 ,
      were
      $282,201 and $281,961, respectively.





*Interest
      expense* for the
      six months ended November 30 ,
      2006 and
      November 30 ,
      2005 ,
      was
      $195,194 and $195,452, respectively.





*Interest
      expense* attributable to the business held for sale for the six months ended November
      30 ,
      2006 and
      November 30 ,
      2005 ,
      was
      $249,620 and $205,047, respectively. The increase was due to a higher loan
      carrying amount at TAP Holdings.





*Minority
      Interest* for the
      six months ended November 30 ,
      2006 and
      November 30 ,
      2005 ,
      is
      $12,537 and $12,343, respectively





*Income
      Taxes* for the
      six months ended November 30 ,
      2006 and
      November 30 ,
      2005 ,
      is
      2,400 and $7,000, respectively





As
      a
      result of the foregoing, net income (losses) for the six months ended November
      30, 2006 and
      November 30 ,
      2005,
      are $(2,020,615) and $(2,015,892), respectively.





As
      a
      result of the foregoing, net income (losses) attributable to business held
      for
      sale for the six months ended November 30, 2006 and
      November 30 ,
      2005,
      are $457,738 and $(409,128), respectively.




As
        a
        result of the foregoing, consolidated net income (losses) for the six months
        ended November 30, 2006 and November 30, 2005, are $(1,562,877) and
        $(2,425,020), respectively. The reduction in net loss for 2006 is attributable
        to an extraordinary gain on the sale of most of TAP Holdings’ assets of
        approximately $1,800,000.




**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 November 30 ,
      2006 ,
      we have
      working capital deficit of $(7,242,652) compared to a working capital of
      $551,319 at May 31, 2006. The large change is a direct result of the sale of
      most of the current assets of TAP Holdings, LLC which resulted in a long term
      note. At November 30 ,
      2006 ,
      we had
      a cash balance of approximately $17,513. 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.




19





*Net
      cash used in operating activities* was
      $(1,171,026) for the six months ended November
      30, 2006 compared
      to $(1,712,659) for the six months ended November 30, 2005 .
      The
      decrease was primarily due to an increase in accrued expenses.





*Net
      cash used in investing activities* for the
      six months ended November 30 ,
      2006 ,
      was
      $0as compared to $(949) for the six months ended November 30 ,
      2005 .





*Net
      cash provided by financing activities* for the
      six months ended November 30 ,
      2006 ,
      was
      $1,107,184 as compared to $1,754,196 for the six months ended November
      30 ,
      2005 .
      The
      decrease was attributable to the net result of various fund raising
      activities.


Total
        shareholder’s equity as of November
        30, 2006 is $7,744,925.




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 was executed in December, 2006 and will expire in
      February 1, 2008. Payments are interest only and we have no present plan or
      capability to repay G.E. its principal. As of November 30, 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 November 30, 2006, we owed $520,021 in principal
      and interest to the 7 remaining noteholders.




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 former 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 November 30 ,
      2006 ,
      there
      was $1,299,735 outstanding including interest.




20




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.





21


**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 $8,208,226 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 substantially ceased in October, 2006
        with the sale of most of its assets. We intend to focus on our healthcare
        and
        financial data processing products which are marketed by our Claim- Remedi
        Services, Inc. and CashTechCard Systems, Inc. subsidiaries.
  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 generate 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 six month period ended November 30, 2006 we have
        incurred additional (losses) of $(1,229,422).
 
 **We
        are unable to pay our current liabilities, and must rely on the continued
        forbearance of specific creditors to avoid bankruptcy.**
 
 As
        of
        November 30, 2006 we had outstanding current liabilities of $10,200,436,
        of
        which approximately $250,021 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
        November 30, 2006, Cash Tech had working capital deficit of $7,242,652 and
        available cash of $17,513. 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.
  22
  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 November 30, 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 was executed in
        December, 2006 and will expire on February 1, 2008. We have no current
        arrangement or capability to repay G.E. its principal.
 
 **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
        $520,021 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 former chairman (who is not an employee of Cash Technologies). As of
        November 30, 2006 we owed BFI approximately $1,299,735 including interest.
        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 TAP Holdings, LLC**
 
 **TAP’s
        revenues are entirely dependent on payments from one
        company**
  In
        October, 2006, TAP sold most of its assets to Champion Parts, Inc. The initial
        cash payment from Champion was paid to TAP’s secured lender to allow TAP’s
        assets to be transferred to Champion. The remainder of the purchase price
        is in
        the form of a $9.1 million promissory note with a term of 11 years, monthly
        payments for which are calculated based on a percentage of the total carburetor
        sales by Champion. While Champion’s projected revenues are
  23
  expected
        to result in the note being paid in full during its term, poor performance
        by
        Champion, its customers or the carburetor industry, or a default or bankruptcy
        by Champion could result in a disruption in monthly payments and the note
        amount
        not being fully paid. Further, Champion’s payment obligations under the note
        shall cease at the end of the 11-year term even if the note amount has not
        been
        paid in full if through no act of default by Champion.
  **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.
 
 **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
  24
  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 236 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 (8) 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.
  25
  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 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.
  26
  **Risks
        Related to Our Management**
  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:
   27
  ·
              announcements
                  of technological innovations or new commercialproducts
                  by us or our competitors.
  ·
              changes
                  in government regulation and policies which may beundertaken
                  with respect to security issues related to terrorism,privacy
                  and other matters.
  ·
              developments
                  in the patents or other proprietary rights owned orlicensed
                  by us or our competitors.
  ·
              matters
                  related to our financial condition, including our ability toobtain
                  necessary capital.
  ·
              litigation
                  affecting us or our products.
  ·
              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.
  28
  **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.




29


**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 settlement in which the shares were 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, 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 November 30, 2006, in private transactions under Section
      4(2) of the Securities Act of 1933, as amended, the Company sold 286,700 shares
      of the Company's Common Stock for gross proceeds of $300,700. In addition the
      Company issued 265,814 five year Common Stock purchase warrants with exercise
      prices ranging from $1.70 to $2.25.





Subsequent
      to the fiscal quarter ended November 30, 2006, in private transactions under
      Section 4(2) of the Securities Act of 1933, as amended, the Company sold 265,000
      shares of the Company's Common Stock for gross proceeds of $265,000. In addition
      the Company issued 232,500 five year Common Stock purchase warrants with
      exercise prices ranging from $1.65 to $2.00.





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 was
        executed in December, 2006 and will expire in February 1, 2008. Payments
        are
        interest only and we have no present plan or capability to repay G.E. its
        principal. As of November 30, 2006, we owed $3,654,096 including principal
        and
        financing fees.


30





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 November 30, 2006, we owed $520,021 in principal and interest
      to
      the seven noteholders.





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





During
      this six month period ended November 30, 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 exercised on September 11, 2006
      and will be reclassified into equity.





Subsequent
      to the fiscal quarter ended November 30, 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.




**ITEM
      6. EXHIBITS AND REPORTS ON FORM 8-K**





(a)
              
              Exhibits31.1
              
              Certification
                  of Chief Executive Officer31.2
              
              Certification
                  of Chief Financial Officer32.1
              
              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.


31


**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 November 30, 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 KormanBruce
                Korman
              President
                and Chief Executive Officer


By:  
                /S/Edmund
                KingEdmund
                King
              Chief
                Financial Officer




32