U.S. 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 EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE  TRANSITION  PERIOD  FROM ______________ TO ______________


                         COMMISSION FILE NUMBER: 0-28749


                         FREESTAR TECHNOLOGY CORPORATION
              ----------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

             Nevada                                          88-0446457
 ---------------------------------                      --------------------
 (State or Other Jurisdiction of                          (I.R.S. Employer
  of Incorporation or Organization)                      Identification No.)


              Calle Fantino Falco, J.A. Baez Building, 2nd Floor,
                       Santo Domingo, Dominican Republic
             ------------------------------------------------------
                    (Address of Principal Executive Offices)

                                (809) 368-2001 .
                          ----------------------------
                         (Registrant's Telephone Number)

--------------------------------------------------------------------------------
  (Former Name, Former Address, and Former Fiscal Year, if Changed Since Last
   Report)

     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) been  subject to such
filing requirements for the past 90 days. Yes X No .

     As of September  30, 2004,  the  Registrant  had  68,317,750  (1) shares of
common stock issued and outstanding.

     Transitional Small Business Disclosure Format (check one): Yes  No     X .
                                                                    ----   ----

(1) Adjusted for a one for seven reverse split that was effective on November 8,
2004


<PAGE>


                                TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION                                             PAGE

    ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)

             CONDENSED CONSOLIDATED BALANCE
             SHEET AS OF SEPTEMBER 30, 2004...................................3

             CONDENSED CONSOLIDATED STATEMENTS OF
             OPERATIONS FOR THE THREE MONTHS
             ENDED SEPTEMBER 30, 2004 AND 2003................................4

             CONDENSED CONSOLIDATED STATEMENTS
             OF CASH FLOWS FOR THE THREE MONTHS ENDED
             SEPTEMBER 30, 2004 AND 2003......................................5

             NOTES TO CONDENSED CONSOLIDATED
             FINANCIAL STATEMENTS.............................................6

    ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS...................14

    ITEM 3.  CONTROLS AND PROCEDURES.........................................27

PART II - OTHER INFORMATION

    ITEM 1.  LEGAL PROCEEDINGS...............................................28

    ITEM 2.  UNREGISTERED SALES OF EQUITY
             SECURITIES AND USE OF PROCEEDS..................................30

    ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.................................31

    ITEM 4.  SUBMISSION OF MATTERS TO A VOTE
             OF SECURITY HOLDERS.............................................31

    ITEM 5.  OTHER INFORMATION...............................................31

    ITEM 6.  EXHIBITS........................................................31

SIGNATURES...................................................................32

                                       2

<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                         FREESTAR TECHNOLOGY CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEET
                               SEPTEBMER 30, 2004
                                   (Unaudited)

                                            ASSETS

Current assets:
 Cash and cash equivalents                                       $     266,146
 Accounts receivable, net of allowance for doubtful
  accounts of $32,499                                                  167,907
 Other current assets                                                   44,553
                                                                 -------------

    Total current assets                                               478,606

Property, plant and equipment, net of accumulated
 depreciation and amortization                                          49,028

Software, net of accumulated amortization                              892,532
Customer relationships and contracts,
 net of accumulated amortization                                     1,755,488
Software license, net of accumulated amortization                    1,845,904
                                                                 -------------

    Total assets                                                 $   5,021,558
                                                                 =============

                             LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Accounts payable and accrued expenses                               1,266,885
 Accrued salaries - officers                                           106,053
 Due to related parties for advances                                    73,460
                                                                 -------------

    Total current liabilities                                        1,446,398

Stockholders' Equity:
 Convertible preferred stock, series A, $0.001 par value,
 1,000,000 shares authorized; 1,000,000 shares issued
 and outstanding                                                         1,000
Convertible preferred stock, series B, $0.001 par value,
 4,000,000 shares authorized; 2,500,000 shares issued
 and outstanding                                                         2,500
 Additional paid-in capital - preferred stock                        2,229,558
 Common stock, $0.001 par value, 500,000,000 shares
  authorized; 68,317,750 (1) shares issued and outstanding              68,318
 Additional paid-in capital - common stock                          28,567,852
 Share cancellation receivable                                      (2,584,628)
 Subscription receivable                                              (702,693)
 Deferred compensation                                              (1,021,624)
 Accumulated deficit                                               (22,989,670)
 Accumulated other comprehensive gain  (loss)                            4,547
                                                                 -------------

  Total stockholders' equity                                         3,575,160
                                                                 -------------

                                                                 $   5,021,558
                                                                 =============

(1) Adjusted for a one for seven reverse split of the common stock that was
effective on November 8, 2004

                The accompanying notes form an integral part of
                these condensed consolidated financial statements

                                       3
<PAGE>


                         FREESTAR TECHNOLOGY CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                               Three Months    Three Months
                                                   Ended          Ended
                                               September 30,   September 30,
                                                    2004           2003
                                               ------------    ------------


Revenue                                        $    365,952    $    299,943

Cost of revenue                                     169,915         152,659
                                               ------------    ------------


Gross profit                                        196,037         147,284


Non-cash compensation                               580,666       1,940,856
Selling, general and administrative expenses        592,515         595,805
                                               ------------    ------------

Loss from operations                               (977,144)     (2,389,377)

Interest income (expense)                            (1,052)        (16,551)
                                               ------------    ------------

Loss before income taxes                           (978,196)     (2,405,928)

Income taxes                                           --              --
                                               ------------    ------------

Net Loss                                           (978,196)     (2,405,928)

Other comprehensive income (loss)                    13,962          12,931

                                               ------------    ------------
Comprehensive loss                             $   (964,234)   $ (2,392,997)
                                               ============    ============


Loss per share - basic and diluted             $      (0.01)   $      (0.08)
                                               ============    ============

Weighted average shares outstanding -
    basic and diluted (1)                        68,134,365      29,515,431
                                               ============    ============



(1) Adjusted for a one for seven reverse split of the common stock that was
effective on November 8, 2004


                 The accompanying notes form an integral part of
                these condensed consolidated financial statements

                                       4
<PAGE>

                         FREESTAR TECHNOLOGY CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                              Three Months   Three Months
                                                                 Ended          Ended
                                                              September 30,  September 30,
                                                                   2004           2003
                                                              -----------    -----------
<S>                                                          <C>            <C>

Cash flows from operating activities:
    Net loss                                                  $  (978,196)   $(2,405,928)
    Adjustments to reconcile net loss to
      net cash used in operating activities:

         Depreciation and amortization                            143,729        107,337
         Non-cash compensation                                    580,665      1,940,856
    Changes in assets and liabilities:
      (Increase) decrease in assets
         Accounts receivable                                      (13,716)        14,137
         Prepaid salaries - officers                                 --           30,000
         Deferred revenue                                            --          (18,069)
         Other assets                                             (34,158)       (18,328)
      Increase (decrease) in liabilities
         Accounts payable and accrued expenses                     (3,163)        64,172
            Due to shareholders                                    35,396         16,475
            Accrued interest - advance from related parties       106,053           --
                                                              -----------    -----------
               Total adjustments                                  814,806      2,136,580
                                                              -----------    -----------

               Net cash used in operating activities             (163,390)      (269,348)

Cash flows from investing activities:
    Purchase of fixed assets                                       (3,868)       (24,417)
    Purchase of software and capitalized software cost            (96,627)       (85,932)
    Investment in TransAxis, Inc.                                    --          (75,000)
                                                              -----------    -----------

               Net cash used in investing activities             (100,495)      (185,349)

Cash flows from financing activities:
    Proceeds from sale of common stock                               --           99,985
    Proceeds from exercise of stock options/warrants              375,000        307,500
    Advances (repayments) from related party, net                    --            8,206
                                                              -----------    -----------

               Net cash provided by financing activities          375,000        415,691

Net increase (decrease) in cash and cash equivalents              111,115        (39,006)

Foreign currently translation adjustments                         (51,174)        17,366

Cash and cash equivalents, beginning of period                    206,205        264,423
                                                              -----------    -----------

Cash and cash equivalents, end of period                      $   266,146    $   242,783
                                                              ===========    ===========

Supplemental disclosure of cash flow information:

         Interest paid                                        $    23,795    $      --
                                                              ===========    ===========

         Income tax paid                                      $      --      $      --
                                                              ===========    ===========

Shares and warrants issued for services                       $   206,000    $ 1,940,856
                                                              ===========    ===========

Deferred compensation realized                                $   374,666    $      --
                                                              ===========    ===========

Effect of reverse split of common stock                       $   409,906    $      --
                                                              ===========    ===========
</TABLE>

                 The accompanying notes form an integral part of
                these condensed consolidated financial statements

                                       5
<PAGE>

                         FREESTAR TECHNOLOGY CORPORATON
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1. BASIS OF PRESENTATION AND NATURE OF BUSINESS OPERATIONS

Basis of Presentation.
----------------------

The  accompanying  unaudited  condensed  consolidated  financial  statements  of
FreeStar Technology  Corporation,  a Nevada corporation  ("Company"),  have been
prepared in accordance  with the  instructions to Form 10-QSB and do not include
all of the information and footnotes required by accounting principles generally
accepted in the United  States of America for  complete  consolidated  financial
statements.  These condensed consolidated financial statements and related notes
should be read in conjunction with the Company's Form 10-KSB for the fiscal year
ended June 30, 2004. In the opinion of management,  these condensed consolidated
financial  statements  reflect all adjustments  which are of a normal  recurring
nature and which are necessary to present  fairly the financial  position of the
Company as of September 30, 2004,  and the results of operations  and cash flows
for the  three  months  ended  September  30,  2004 and  2003.  The  results  of
operations  for the three months ended  September  30, 2004 are not  necessarily
indicative of the results that may be expected for the entire fiscal year.

Nature of Business Operations.
------------------------------

The Company (formerly Freestar  Technologies) was formed on November 17, 1999 as
a Nevada  corporation.  The  Company  is a  provider  of  payment  services  and
processing.  Its principal offices are in Santo Domingo, Dominican Republic; the
company  also has offices in Helsinki,  Finland;  Dublin,  Ireland;  and Geneva,
Switzerland.

The  Registrant  intends to increase  revenue from its core  payment  processing
products,  which include:  (1)Authorization:  transaction  fees it receives from
processing online point of sale terminal transactions; (2) Sale of Point of Sale
Solutions:  sales  of  "Point  of Sale"  terminals  as well as  integrated  cash
register  systems;  (3)  transaction  fees  stemming  from its Internet  Payment
Gateway;  (4) Dynamic Currency  Conversion credit card services to merchants and
acquiring  banks (the  company  will provide  transaction  gateway  services and
settlement with participating  banking  institutions);  (5) Private Label Cards:
transaction  management  services provided for a private label card issuer;  and
(6) Consulting Fees: consulting services provided to financial  institutions and
merchants.

Going Concern.
--------------

The  accompanying  consolidated  financial  statements  have  been  prepared  in
conformity with accounting principles generally accepted in the United States of
America,  which  contemplate  continuation  of the  Company as a going  concern.
However,  the Company has  reported a net loss of $978,196  for the three months
ended  September 30, 2004 and  $6,335,273  for the year ended June 30, 2004, and
had an accumulated  deficit of $22,989,670 as of September 30, 2004. The Company


                                       6
<PAGE>

cannot be certain that  anticipated  revenues from operations will be sufficient
to satisfy its ongoing capital requirements. Management's belief is based on the
Company's  operating plan,  which in turn is based on assumptions that may prove
to be incorrect.  If the Company's  financial  resources  are  insufficient  the
Company may require additional  financing in order to execute its operating plan
and  continue  as a going  concern.  The Company  cannot  predict  whether  this
additional  financing  will be in the form of equity or debt,  or be in  another
form. The Company may not be able to obtain the necessary  additional capital on
a timely basis,  on  acceptable  terms,  or at all. In any of these events,  the
Company may be unable to implement  its current plans for  expansion,  repay its
debt obligations as they become due or respond to competitive pressures,  any of
which  circumstances  would  have a  material  adverse  effect on its  business,
prospects, financial condition and results of operations.

Management plans to take the following steps that it believes will be sufficient
to  provide  the  Company  with the  ability  to  continue  as a going  concern.
Management  intends to raise financing through the sale of its stock both on the
public  market and in private  placements to  individual  investors.  Management
believes  that  with  this  financing,  the  Company  will be  able to  generate
additional  revenues that will allow the Company to continue as a going concern.
This will be accomplished by hiring additional  personnel and focusing sales and
marketing efforts on the distribution of product through key marketing  channels
currently being developed by the Company. The Company also intends to pursue the
acquisition of certain strategic industry partners where appropriate.

Revenue Recognition.
-------------------

The Company recognizes revenue when products are shipped or services provided to
its customers.  Provisions for discounts and other  adjustments are provided for
in the same period the related revenue is recorded.

Processing  fee revenue is earned based upon the actual  number of  transactions
processed  through  its  processing  system.  Transaction  processing  fees  are
recognized in the period that the service is  performed.  These fees are charged
on a per transaction  basis,  depending on the  arrangement  with the customers.
Prebilling for the estimated number of transactions  processed in the future was
classified as deferred revenue.

Stock Based Compensation:
------------------------

The Company accounts for stock-based  compensation in accordance with Accounting
Principles  Board  ("APB")  Opinion  No.  25,  "Accounting  for Stock  Issued to
Employees,"  and  complies  with  the  disclosure  provisions  of  Statement  of
Financial  Accounting  Standards  ("SFAS") No. 123,  "Accounting for Stock-Based
Compensation."  Under APB No. 25,  compensation cost recognized over the vesting
period  based on the excess,  if any, on the date grant of the fair value of the
Company's shares over the employee's  exercise price. When the exercise price of
the option is less than the fair  value  price of the  underlying  shares on the
grant date,  deferred stock  compensation is recognized and amortized to expense
in accordance with Financial Accounting Standards Board ("FASB")  Interpretation
No. 44 over the vesting period of the individual  options.  Accordingly,  if the
exercise  price of the Company's  employee  options equals or exceeds the market
price of the underlying shares on the date of grant, no compensation  expense is
recognized.  Options or shares awards issued  non-employees are valued using the
Black-Scholes pricing model and expensed over the period services are provided.

In  December  2002,  the  FASB  issued  No.  148,  "Accounting  for  Stock-Based
Compensation-Transition  and  Disclosure,"  which  amends  SFAS  No.  123.  This
statement  amends SFAS No. to provide  alternative  methods of transition  for a
voluntary  change to the fair value based method of accounting  for  stock-based
employee  compensation.  In  addition,  SFAS  No.  148  expands  the  disclosure
requirements of SFAS No. 123 to require more prominent disclosures in the annual
and interim financial  statements about the method of accounting for stock-based
employee compensation and the effect of the method used on reported results. The
transition provisions of SFAS No. 148 are effective for fiscal years ended after
December 15, 2002. The transition  provisions do not currently have an impact on
the Company's  consolidated  financial position and results of operations as the
Company  has not elected to adopt the fair  value-based  method  accounting  for
stock-based employee  compensation under SFAS No. 123. The disclosure provisions
of SFAS No. 148 a re effective  for  financial  statements  for interim  periods
beginning   after  December  15,  2002.  The  Company   adopted  the  disclosure
requirements in the third quarter of fiscal 2003.


                                       7
<PAGE>

For purposes of pro forma  disclosures,  the estimated fair value of the options
is  amortized  over  the  options'  vesting  period.  The  Company's  pro  forma
information was as follows:

                                2004            2003
                           ------------    ------------
Net loss, as reported      $   (964,234)   $ (2,392,997)
Compensation  recognized
under APB No. 25                     --              --
Compensation recognized
Under SFAS 123                       --              --
                           ------------    ------------
Pro forma net loss         $   (964,234)   $ (2,392,997)
                           ============    ============

Pro forma loss per share   $      (0.01)   $      (0.08)
                           ============    ============


Capitalized Software Development Costs.
---------------------------------------

In accordance with SFAS No. 86,  "Accounting for the Costs of Computer  Software
to be Sold, Leased or Otherwise Marketed," the Company capitalizes certain costs
related to the  development  of new  software  products  or the  enhancement  of
existing software products for use in our transaction processing software. These
costs are capitalized from the point in time that technological  feasibility has
been  established,  as evidenced by a working model or detailed  working program
design to the point in time that the product is available for general release to
customers.  Capitalized development costs are amortized on a straight-line basis
over the estimated economic lives of the products, beginning when the product is
placed  into  service.   Research  and  development   costs  incurred  prior  to
establishing  technological feasibility and costs incurred subsequent to general
product  release to customers  are charged to expense as  incurred.  The Company
periodically  evaluates  whether  events or  circumstances  have  occurred  that
indicate that the remaining useful lives of the capitalized software development
costs should be revised or that the remaining  balance of such assets may not be
recoverable.

As of June 30, 2004, the Company capitalized $506,424 of software development in
accordance  with SFAS No. 86. During the three months ended  September 30, 2004,
the Company placed into service $152,652, and capitalized an additional $96,626.
As of September 30, 2004,  the Company has  capitalized a net amount of $450,392
that is yet to be placed onto service.

Software costs also include the Enhanced Transactions Secured Software ("ETSS"),
which was  originally  contributed  by the founder and president of  ePayLatina,
S.A. This software is essential for the use of the Company's  ePayPad.  Software
costs also include the development costs related to adding  enhancements to this
software  consisting  primarily of labor cost. Software costs are amortized on a
straight-line basis over a period of three years.

2. TRANSAXIS, INC.

On September 24, 2003, the Company entered into a stock purchase  agreement with
certain shareholders of TransAxis,  Inc. ("TransAxis") (formerly Digital Courier
Technologies,  Inc.) for the  acquisition  of common stock of this publicly held
company ("TA Acquisition Agreement"). The terms of the agreement provide for the
Company to purchase the  following:  (a) 373,382  shares of Company common stock
(which  represented  43.5% of the total of 805,000  shares of  TransAxis  common
stock  outstanding);  and (b) a right to convert $349,984 of TransAxis debt into
2,916,533 shares, which if converted,  would have given the Company 87.5% of the
outstanding  common  stock of TransAxis  ("Conversion  Right").  The  Conversion
Right, which was part of a settlement agreement between Don Marshall, the former
CEO of TransAxis, and TransAxis, was assigned by Mr. Marshall to the Company. In
exchange  the  Company  was to issue on a pro rata basis  based on the  sellers'
current percentage beneficial ownership of TransAxis common stock (including the
beneficial ownership of the TransAxis common stock represented by the Conversion
Right) the  aggregate  number of shares of  Company  common  stock  which is the
greater of (i) 7,000,000 (1,000,000 post reverse-split)  shares of common stock,
or (ii) that number of shares of common stock equal to $1,260,000 divided by the
average  closing bid price per share of the common  stock on the five days prior
to the closing date.

                                       8
<PAGE>

On October 8, 2003,  the  parties  amended  the TA  Acquisition  Agreement.  The
following was amended under this document:

         (a) The  Registration  Rights Agreement was amended so that the Company
         is to  use  commercially  reasonable  efforts  to  cause  a  Form  SB-2
         registration  statement  covering  re-sales  of all of  the  shares  of
         Company common stock to be issued to or on behalf of the Sellers at the
         closing to be filed  with the SEC  within  180 days after the  closing.
         Thereafter,  the Company is to use commercially  reasonable  efforts to
         have this  registration  statement  declared  effective  as promptly as
         possible,  and to keep this registration  statement effective until the
         earlier of (i) one year following the  effectiveness  date or (ii) that
         date on which  all of the  common  stock  covered  by the  registration
         statement may be resold without  further  restriction  pursuant to Rule
         144 under the Securities Act of 1933.

         (b) The parties to the  agreement  concur that the  original  amount of
         Company common stock to be issued in connection with the TA Acquisition
         Agreement is 31,500,000  shares, but that due to a certain liability of
         TransAxis, the total amount of common stock to be issued by the Company
         is reduced to 25,312,053  (3,616,008 post reverse-split).  In addition,
         due to a missing stock certificate of that Company, the Company will be
         required to deliver a further  reduced total of  25,183,418  (3,597,631
         post  reverse-split)  shares of common stock at the  closing,  with the
         remaining 128,585 (17,941 post reverse-split) shares only upon delivery
         to the Company the missing stock certificate.

On February 20, 2004, the parties further  amended the TA Acquisition  Agreement
("Amendment  No.  2").  The Company had  identified  certain  accounting-related
deficiencies  in the books of TransAxis which predate the closing date, and that
such deficiencies  have and will continue to preclude  TransAxis from being able
to obtain audited financial  statements without undue effort and expense,  if at
all.  In  order to  avoid  the  cost of  litigation  and  further  disputes  and
negotiation,  the  Company and  TransAxis  agreed to reduce the number of shares
issuable under the TA  Acquisition  Agreement from  25,183,418  (3,597,631  post
reverse-split)  to 3,200,000  (457,143 post reverse split),  which were actually
issued.  In exchange,  the Company actually received 350,900 shares of TransAxis
stock,  or 43.5% of the total  outstanding  shares of  805,000,  with a right to
receive an additional  22,482 lost shares of common stock and a right to convert
certain  debt into  2,916,533  shares of common  stock upon the  exercise of the
Conversion  Right.  The Company never exercised the Conversion  Right, and never
controlled  a  majority  of the  common  stock of  TransAxis.  The  Company  and
TransAxis  rescinded the Conversion  Right,  effective on June 17, 2004, but the
Company retains its claim for $349,984.

                                       9
<PAGE>

After  extensive  discussions and following the unanimous  determination  of The
Company's Board of Directors,  the Company has terminated the TA Agreement as of
June 17,  2004.  This  decision  was based on both  TransAxis'  and the sellers'
failure to disclose  material  liabilities and  contingencies in connection with
that company,  as well as their failure to comply with their  obligations  under
the agreement.  The Company believes that it will recover the 3,200,000 (457,143
post reverse split) shares issued under the TA Acquisition Agreement.

On October 14, 2003, Don Marshall,  the former director of TransAxis,  appointed
Paul Egan and Ciaran  Egan,  as directors of  TransAxis;  he then  resigned as a
director.  On December 8, 2003,  Fionn  Stakelum was  appointed as a director of
TransAxis.  As of August 24, 2004,  Paul Egan,  Ciaran Egan,  and Fionn Stakelum
resigned as directors of TransAxis.

Brown-Simpson Settlement
------------------------

Prior to the execution of the TA Acquisition Agreement, TransAxis had incurred a
liability to Brown Simpson Partners I, Ltd.  ("Brown  Simpson") in the amount of
approximately  $1,400,000.  During the three months ended December 31, 2003, the
Company  entered into a settlement  agreement with Brown Simpson ("Brown Simpson
Settlement  Agreement") whereby the Company would issue to Brown Simpson 740,488
shares  (post  reverse-split)  of  Company  common  stock and pay the  amount of
$10,000  in cash in  return  for Brown  Simpson's  dismissal  of all its  claims
against the Company. These shares were issued on December 30, 2003.

In June 2004, the Company cancelled the Brown Simpson Settlement Agreement.  The
Company  believes it will receive the 740,488 shares (post  reverse-split)  that
were  issued to Brown  Simpson.  These  shares are shown as  outstanding  on the
Company's  consolidated  balance sheet at September 30, 2004,  and the amount of
$679,028 pertaining to these shares is shown as share cancellation receivable.

3. UNIPAY, INC.

On May 17, 2004, the Company  announced the acquisition of Unipay,  Inc.' Smokey
Mountain payment processing  division in Murphy,  North Carolina on May 4, 2004.
This division  currently  processes  payment  transactions (via credit cards and
debit cards) through many of the largest processors, and has the ability to be a
direct  processor with full settlement  capabilities.  Unipay  processes  client
transactions  using its  proprietary  technology,  Cyber-Terminal  and Universal
Payment software. The Company agreed to pay $150,000 in cash and issue 1,428,571
restricted shares (post reverse-split) of common stock (valued at $1,000,000) in
exchange for the assets of the division.

On June 14, 2004, the Company informed Unipay and its sole shareholder, Unicomp,
Inc.  that due to the  failures of these  parties to the  purchase  agreement to
perform as required under this agreement, including blocking access to the North
Carolina  premises,  preventing  transfer  of  assets,  and  failing  to deliver
business  and other  documents,  the purchase  transaction  is  terminated.  The


                                       10
<PAGE>

Company  actually paid $25,000 in connection  with this agreement and issued the
1,428,571 restricted shares (post reverse-split); the Company expects to recover
the  1,428,571  shares (post  reverse-split)  and will cancel them upon receipt.
These shares are shown as  outstanding  on the  Company's  consolidated  balance
sheet at September 30, 2004,  and the amount of  $1,000,000  pertaining to these
shares is shown as share cancellation receivable.

4. COMMON STOCK

Reverse Stock-Split.
--------------------

Effective  November 8, 2004, the Company  implemented a 1-for-7 reverse split of
its common stock. The Company's condensed  consolidated financial statements for
the three  months ended  September  30, 2004 reflect the effects of this reverse
stock-split.

Issuance of Common Stock for Services.
--------------------------------------

During the three months ended  September 30, 2004,  the Company  issued  242,857
shares (post  reverse-split)  of its common stock  registered  under Form S-8 at
$0.56 per share to various consultants and legal counsel for current and  future
services for a value of $136,000.

Also during the three  months  ended  September  30,  2004,  the Company  issued
142,857 shares (post  reverse-split)  of its common stock  registered under Form
S-8 at $0.49 per share to a  consultant  for current and future  services  for a
value of $70,000.

During the twelve months ended June 30, 2003,  the Company issued 657,142 shares
(post  reverse-split)  of common stock in error.  The Company expects to recover
these  shares  and will  cancel  them upon  receipt.  These  shares are shown as
outstanding on the Company's  consolidated  balance sheet at September 30, 2004,
and the  amount  of  $153,600  pertaining  to  these  shares  is  shown as share
cancellation receivable.

Sale of Common Stock.
---------------------

During the three months ended September 30, 2004, the Company received $375,000
in cash relating to stock options exercised during the twelve months ended June
30, 2004. This amount was credited to subscriptions receivable.

5. SEGMENT INFORMATION

The Company currently operates two business segments: (1) the sale of its secure
transaction  processing system ePayPad and related service,  and (2) transaction
processing  fees  generated  through  its  wholly  owned   subsidiary,   Rahaxi.
Intercompany  receivable  and payable are  subtracted  from the total assets and
liabilities  for  the  segments,  which  are  eliminated  in  consolidation  and
therefore, do not themselves impact consolidated results.


                                       11
<PAGE>


                                                Three months ended
                                                   September 30,
                                           --------------------------
                                               2004           2003
                                           --------------------------
Sales to external customers:
PaySafe                                    $      --      $      --
Rahaxi                                         365,952        299,943
                                           -----------    -----------
Total sales to external customers:         $   365,952    $   299,943
                                           ===========    ===========

Depreciation and amortization:
PaySafe                                    $     9,996    $    28,924
Rahaxi                                         133,734         78,644
                                           -----------    -----------
Total depreciation and amortization:       $   143,730    $   107,568
                                           ===========    ===========

General and administrative expense:
PaySafe                                    $   333,794    $   434,728
Rahaxi                                         114,991         53,509
                                           -----------    -----------
Total general and administrative expense   $   448,785    $   488,237
                                           ===========    ===========

Capital expenditures:
PaySafe                                    $     3,868    $    24,417
Rahaxi                                          96,627         85,932
                                           -----------    -----------
Total capital expenditures                 $   100,495    $   110,349
                                           ===========    ===========

Operating income (loss):
PaySafe                                    $  (950,015)   $(2,419,166)
Rahaxi                                         (28,181)         7,529
                                           -----------    -----------
Total operating income (loss)              $  (978,196)   $(2,411,637)
                                           ===========    ===========

Segment assets:
PaySafe                                    $    87,882    $   432,083
Rahaxi                                       4,933,676      4,672,636
                                           -----------    -----------
Total segment assets                       $ 5,021,558    $ 5,104,719
                                           ===========    ===========


6. RELATED PARTY TRANSACTIONS

Accrued Salaries - Officers.
----------------------------

The Company's  president and  shareholder,  Paul Egan, has delayed  payment of a
portion of his salary in order to conserve the Company's  cash. At September 30,
2004,  the Company has recorded  the amount of $48,253 in accrued  salary due to
Mr.  Egan.  This  amount  is  shown  as  Accrued  Salaries  -  Officers  in  the
accompanying Consolidated Condensed Balance Sheet as of September 30, 2004.


                                       12
<PAGE>

The Company's chief financial officer and shareholder,  Ciaran Egan, has delayed
payment of a portion of his salary in order to conserve the  Company's  cash. At
September  30,  2004,  the Company has recorded the amount of $57,799 in accrued
salary due to Mr. Egan.  This amount is shown as Accrued  Salaries - Officers in
the accompanying Consolidated Condensed Balance Sheet as of September 30, 2004.

Advances by Related Parties.
----------------------------

The Company's  President and  shareholder,  Paul Egan, has advanced funds to the
Company  for its  operations.  The Company was  indebted  to the  President  for
$22,658 at June 30, 2004.  During the three months ended September 30, 2004, Mr.
Egan advanced the Company an  additional  $49,818.  At September  30, 2004,  the
Company is indebted  to the  President  in the net amount of  $72,476,  which is
shown in the Due To Related Parties For Advances in the  accompanying  Condensed
Consolidated  Balance  Sheet as of September  30,  2004.  Interest on the unpaid
balances is accrued at the rate of 7% per annum.

The Company's  Chief Financial  Officer,  Ciaran Egan, has advanced funds to the
Company for its  operations.  The Company  was  indebted to the Chief  Financial
Officer for $30,178 at June 30, 2004.  During the three  months ended  September
30, 2004,  the Company  repaid Mr. Egan the net amount of $29,194.  At September
30, 2004,  the Company is indebted to Mr. Egan in the net amount of $984,  which
is shown in Due To Related  Parties For Advances in the  accompanying  Condensed
Consolidated  Balance  Sheet as of September  30,  2004.  Interest on the unpaid
balances is accrued at the rate of 7% per annum.

7. LEGAL PROCEEDINGS

There  are  legal   proceedings   involving  the  Company.   Please  see  "Legal
Proceedings"  under Item 1 of Part II hereafter  for a complete  description  of
these proceedings.

8. SUBSEQUENT EVENTS

The Company's  Board of Directors  approved a one for seven reverse split of the
Company's common stock, which became effective November 8, 2004.


                                       13
<PAGE>

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

       The  following  discussion  and  analysis of the  Registrant's  financial
condition  and  results  of  operations  is based  upon,  and  should be read in
conjunction with, its unaudited condensed  consolidated financial statements and
related notes included  elsewhere in this Form 10-QSB,  which have been prepared
in  accordance  with  accounting  principles  generally  accepted  in the United
States.

Overview.
---------

       The e-payments and e-commerce market is composed of debit and credit card
issuers, switch interchanges,  transaction acquirers and transaction generators,
including  Automated Teller Machine ("ATM") networks,  retail merchant locations
and the Internet. The routing, control and settlement of e-payments is a complex
activity due to the large number of locations  and variety of sources from which
transactions can be generated,  the large number of issuers in the market,  high
transaction  volumes,  geographically  dispersed  networks,  differing  types of
authorization and varied reporting requirements.  These activities are typically
performed online and must be conducted 24 hours a day, seven days a week.

       The  Registrant's   products  and  services  are  primarily   focused  on
facilitating   electronic   payments   ("e-payments")  and  electronic  commerce
("e-commerce").  These  products and services are used  principally by financial
institutions,   retailers,  and  e-payment  processors,  both  in  domestic  and
international markets.

       The Registrant  intends to increase its operations  from its core payment
processing  products,  which  include:  (1)Authorization:  transaction  fees  it
receives from processing online point of sale terminal transactions; (2) Sale of
Point of Sale Solutions:  sales of Point of Sale terminals as well as integrated
cash register  systems;  (3) transaction fees stemming from its Internet Payment
Gateway;  (4) Dynamic Currency  Conversion credit card services to merchants and
acquiring  banks (the  company  will provide  transaction  gateway  services and
settlement with participating  banking  institutions);  (5) Private Label Cards:
transaction  management  services provided for a private label card issuer;  and
(6) Consulting Fees: consulting services provided to financial  institutions and
merchants.  The  Registrant's  revenue for the 12 months ended June 30, 2004 was
primarily generated from the transaction fees through its Finland operations.

       For the Registrant to derive revenue  outside of its Finnish  operations,
the  Registrant  first had to perform a major  hardware and software  upgrade at
Rahaxi,  as Rahaxi is the core operating  system of the  Registrant's  products.
This  upgrade was  completed  in  December  2003,  and evolved the  Registrant's
business critical systems to the latest  Hewlett-Packard  ("HP") NonStop servers
and BASE24 e-payment  processing  software.  HP NonStop servers are estimated to
run  approximately  95% of the world's secure  transactions,  making the NonStop
platform the backbone for the world's most  demanding and critical  environments
and  offering  the  Registrant  a  secure,   continuously  available  processing
platform.  A vastly scalable  platform,  HP NonStop provides the Registrant with
the ability to achieve an adaptive  enterprise by enabling it to respond quickly
and easily to changing  business  needs,  such as managing the expected  growing
number of transactions and the need for increased capacity.


                                       14
<PAGE>

       BASE24  software from ACI Worldwide  provides the Registrant with a fast,
powerful  authorization  system.  BASE24 software offers high data integrity for
mission-critical  environments.  ACI  and HP  have a  strong  and  long-standing
relationship in e-payment implementations worldwide.

       The new system  will  enable the  Registrant  to meet the latest Visa and
MasterCard standards and to pave the way for EMV Europay/MasterCard/Visa ("EMV")
compliance. The Registrant will also be capable of supporting the latest Visa 3D
secure payment technology.  EMV is an agreed-upon  protocol for the introduction
of smart cards. Chip-based bank and payment cards provide a substantial increase
in the security of consumer payment transactions,  and the Registrant expects it
will be the standard  throughout Europe by 2005. EMV is also gaining momentum in
Asia and America, and promises complete global interoperability of bankcards for
consumers.  All  payment  processors  will  have to be able to  accept  payments
mediated  by smart  cards  in  order to  remain  competitive,  and  meeting  EMV
compliance  has major  implications  for all  aspects  of the  payment  handling
processes.  Management  believes  that  with  the  company's  investment  in the
upgraded  NonStop  systems  running  the  newest ACI  software,  it can meet its
projected increasing capacity needs and ensure future volume growth.

       The  Registrant,  under the current  management,  began  generating  more
revenue since its  acquisition  of Rahaxi  Processing  Oy. in January 2003.  Its
business  is rapidly  changing,  and it expects the coming  twelve  months to be
quite  different from the previous  twelve months as the company makes ready and
further  rolls-out  its  products  and  services.  This process will require the
Registrant to react quickly to problems and opportunities as they arise, and may
involve costs that it does not currently anticipate. The Registrant also expects
that further  acquisitions  may help it to quickly move forward in achieving its
goals.

       Management  believes  that the company's  near term growth  opportunities
will be derived form the European market place and a significant  portion of its
resources  both  financial and personnel,  will be directed  towards  developing
those  opportunities.  The  Registrant  also believes that from a  technological
infrastructure  point of view it will  centralize the hosting and development of
its processing system in Europe from its operations in Helsinki, Finland.

       The  Registrant's  principal  offices  are in  Santo  Domingo,  Dominican
Republic; the Registrant also has offices in Helsinki, Finland; Dublin, Ireland;
and Geneva,  Switzerland. In February 2004, the Registrant announced that it was
its intention to move its corporate headquarters to Miami, Florida in the United
States.  The  Registrant has made no progress in securing an agreement with Spin
Networks,  who are based in Miami;  therefore the  Registrant  has not proceeded
further at this  juncture in its efforts to locate a premises in Miami.  However
the Registrant expects to review its intention to move its headquarters to Miami
in the third  quarter  of fiscal  2005 as it is still of the  opinion  that this
city,  from an  administrative  perspective,  offers best  location for a United
States headquarters.


                                       15
<PAGE>

       While the Registrant's  offices in Finland,  Ireland and Switzerland will
primarily focus on the European  market,  the company's  office in the Dominican
Republic  will  continue  to pursue  opportunities  in the  Caribbean  and Latin
America.  Management  believes that these emerging markets could offer favorable
opportunities  in the longer term.  The  Registrant  previously had an agreement
with Bank  Nacional de Credito to distribute  one of its products,  the ePayPad;
however,  the bank was  subsequently  acquired by another entity and the company
has been unable to move forward under this  agreement  with the new owners.  The
Registrant has initiated  discussions  with regard to  establishing a market for
its products in Asia,  specifically  China;  representatives of the company have
visited China, the  introductions  being hosted and arranged by Xinhua Financial
Network.

       Effective  November 8, 2004, the  Registrant  implemented a one for seven
reverse  split  of  its  common  stock.  The  company's  condensed  consolidated
financial  statements for the three months ended  September 30, 2004 reflect the
effects of this reverse stock-split. The new trading symbol for the Registrant's
common stock as of that date is "FSRT".

Results of Operations.
---------------------

(a) Revenue.

       The Registrant  recognized revenue of $365,952 for the three months ended
September 30, 2004 compared to $299,943 for the three months ended September 30,
2003,  an increase of $66,009 or  approximately  22%. The increase was due to an
increase in processing  fees  generated by the  Registrant's  subsidiary  Rahaxi
Processing Oy.

       The Registrant  expects  revenue  levels to increase  throughout the next
twelve  months as the company  continues  to  introduce  its service  offerings;
however,  there can be no guarantee that the company's products will be accepted
in the  marketplace  or that its sales  efforts will be  successful.  Please see
"Factors That May Affect Operating Results."

       The  majority  of the  Registrant's  revenue for the three  months  ended
September  30,  2004 was from  indirect  merchant  services,  where  revenue  is
generated on services  primarily  priced on a specified  amount per transaction.
The  company  believes  that for fiscal 2005 it will also  derive  revenue  from
direct merchant services which revenue is generated on services primarily priced
as a percentage  of the  transaction  value.  The  majority of the  Registrant's
revenue for the three months ended  September 30, 2003 was also  generated  from
indirect merchant services .

       A  significant  percentage  of the  Registrant's  revenue  for the  first
quarter of fiscal 2005 has been derived from a limited  number of the  company's
customers,  primarily Finnish customers for its transaction processing products.
Approximately  55% of the company's  total revenue was  attributable  to its ten
largest  customers.  The future loss of any major customer could have a material
adverse effect on the Registrant's business,  financial condition and results of
operations.  The  Registrant  believes  that this  customer  concentration  will
continue for the  remainder of fiscal 2005.  The  Registrant  believes that this
customer  concentration  will be diluted in the second half of fiscal 2006 as it
pursues operations outside of Finland. The majority of Registrant's revenues for
the first quarter of fiscal 2005 has been generated by its operations outside of
the United States,  and the company's future growth rate is, in part,  dependent
on continued growth in international  markets. The Registrant expects this trend
to continue through the fiscal year 2005.


                                       16
<PAGE>

(b) Cost of Revenue.

       Cost of revenue was $169,915 for the three  months  ended  September  30,
2004  compared to $152,659  for the three months ended  September  30, 2003,  an
increase of $17,256 or approximately 11%. The increase in cost of revenue is due
in part to increased business volume. In addition,  the Rahaxi has upgraded both
the  hardware  and  software  of its  processing  platform,  and these costs are
recognized  in the cost of  revenue  for the  current  period  but not the prior
period.

       Cost of revenue can be expected to increase in the coming  twelve  months
if the company  continues its current trend of increasing  sales. The Registrant
also  intends  to  expand  its  service  offering  and  its  business  mix  will
necessarily  change,  so that gross  margin as a percent of sales may not remain
constant.

(c) Non-Cash Compensation.

       The  Registrant  recorded  non-cash  compensation  of $580,666  for three
months ended  September  30, 2004  compared to  $1,940,856  for the three months
ended September 30, 2003, a decrease of $1,360,190 or approximately  70%. During
the three months ended  September 30, 2003,  the  Registrant  issued  restricted
shares of common stock valued at $1,100,000 to an investment banker and warrants
valued at approximately  $298,000 to various financial  consultants for services
with regard to the  development and  implementation  of a plan for the company's
financial structure. There were no warrants issued during the three months ended
September 30, 2004.

       The  Registrant  expects  non-cash  compensation  to increase  during the
coming twelve  months.  The  Registrant's  expected  continued  expansion in its
various  geographic markets will create a growing need for local consultants and
advisors  that  will be  satisfied  in  large  part via  non-cash  compensation.
Management  intends to continue  to utilize  non-cash  compensation  in order to
conserve cash.

(d) Selling, General and Administrative Expenses.

       Selling, general, and administrative expenses were $592,515 for the three
months ended  September 30, 2004 compared to $595,805 for the three months ended
September  30, 2003, a decrease of $3,290 or  approximately  1%. The  Registrant
continued to add to its product capabilities, with higher values for capitalized
software  and  software  licenses   generating  higher   amortization   expense.
Depreciation expense also increased for similar reasons.


                                       17
<PAGE>

       During the three months ended September 30, 2004, the primary  components
of selling,  general,  and  administrative  expenses were:  payroll and employee
costs of  approximately  $159,000;  depreciation  and  amortization  expense  of
approximately $144,000;  legal and accounting fees of approximately $128,000 due
to ongoing  litigation (see "Legal  Proceedings"),  and as a result of legal and
accounting  work involved with the  Registrant's  annual audit and compliance at
its June 30, 2004 fiscal year end; travel costs of  approximately  $97,000;  and
facility  costs  (rent,   telephone,   utilities,   building   maintenance)   of
approximately $42,000.

       The  rate  of  future  SG&A  will  largely  depend  on  the  pace  of the
Registrant's  growth in the market for payment processing  products and upon the
cost of outside services and professional fees, including legal fees relating to
litigation.  The company  fully  expects these costs to increase as it continues
its expected rollout of product  offerings.  In addition,  selling expenses will
continue to increase due to  increased  focus on obtaining  new  customers.  The
Registrant intends to focus additional resources in the areas of sales personnel
salaries, trade show participation, and other promotional expenses. In addition,
the Registrant may pursue further acquisitions in order to facilitate its growth
and  exploit  market  opportunities,  which  would  further  drive up legal  and
accounting fees, payroll, and travel costs.

(e) Interest Expense.

       The Registrant recognized net interest expense of $1,052 during the three
months ended September 30, 2004 compared to interest  expense of $16,551 for the
three months ended  September  30, 2003, a decrease of $15,499 or  approximately
93%.  Lower  interest  expense  was due to lower  levels of debt during the most
recent quarter.  Pursuant to the vFinance settlement  agreement,  the Registrant
reversed  the  liability  it had  recorded  to its  president  in the  amount of
$679,869,  which had been accruing interest on this amount at the rate of 7% per
annum.

       Currently,  the Registrant is utilizing  equity financing partly in order
to avoid the interest charges associated with debt financing.  Accordingly,  the
Registrant does not expect interest expense to materially increase in the coming
twelve months. There can be no guarantee that this will be the case; however, as
the market for the  Registrant's  stock  could  change,  forcing  the company to
pursue  alternative  methods of financing the company's cash needs; in addition,
the  Registrant  could  receive an offer of attractive  debt  financing or could
undertake  additional  financing with regard to an  acquisition,  in which cases
interest expense would significantly increase.

(f) Net Loss.

       For the  reasons  stated  above,  the  Registrant  recorded a net loss of
$978,196 for the three months ended  September  30, 2004  compared to $2,405,928
for the three months ended  September  30,  2003,  a decrease of  $1,427,732  or
approximately 59%.

       The  Registrant  may  continue to incur  losses on both a  quarterly  and
annual  basis.  In  addition,  the  Registrant  expects  to  continue  to  incur
significant costs of services and substantial operating expenses. Therefore, the
Registrant will need to significantly increase revenues to achieve profitability
and a positive cash flow. The Registrant may not be able to generate  sufficient
revenues to achieve profitability. The Registrant expects losses to continue for
at least the next twelve months.


                                       18
<PAGE>

       The Registrant  will attempt to continue to fund its  operations  through
debt and equity financing until it achieves profitability,  of which there is no
guarantee.  The  Registrant  expects  these  concerns  regarding  its  perceived
viability to continue throughout the fiscal year 2005.

Factors That May Affect Operating Results.
------------------------------------------

       The operating results of the Registrant can vary significantly  depending
upon a number of  factors,  many of which are  outside  the  company's  control.
General factors that may affect the Registrant's operating results include:

o      market acceptance of and changes in demand for products and services;

o      a small  number of  customers  account  for,  and may in  future  periods
       account  for,  substantial  portions  of the  Registrant's  revenue,  and
       revenue could decline because of delays of customer orders or the failure
       to retain customers;

o      gain or loss of clients or strategic relationships;

o      announcement  or  introduction  of  new  services  and  products  by  the
       Registrant or by its competitors;

o      price competition;

o      the  ability  to  upgrade  and  develop  systems  and  infrastructure  to
       accommodate growth;

o      the ability to introduce  and market  products and services in accordance
       with market demand;

o      changes in governmental regulation; and

o      reduction  in or delay of capital  spending by clients due to the effects
       of terrorism, war and political instability.

       The Registrant  believes that its planned growth and  profitability  will
depend in large part on the ability to promote its  services,  gain  clients and
expand its  relationship  with  current  clients.  Accordingly,  the  Registrant
intends to invest in marketing,  strategic partnerships,  and development of its
client base. If the  Registrant is not  successful in promoting its services and
expanding  its  client  base,  this may have a  material  adverse  effect on its
financial condition and the ability to continue to operate the business.

       The Registrant is also subject to the following specific factors that may
affect the company's operating results:

                                       19
<PAGE>

(a)    Competition.

       The market for electronic  payment  systems and electronic POS systems is
intensely  competitive  and we expect  competition to continue to increase.  The
Registrant's  competitors for POS systems include  VeriFone and Ingenico amongst
others, and companies such as Global Payments, First Data and Euroconnex for the
Registrant's  electronic payment software. In addition,  the companies with whom
we have  strategic  relationships  could  develop  products or  services,  which
compete with the Registrant's products or services. In addition some competitors
in the  Registrant's  market  have  longer  operating  histories,  significantly
greater financial,  technical,  marketing and other resources, and greater brand
recognition  than  the  company  does.  The  Registrant  also  expects  to  face
additional  competition as other  established  and emerging  companies enter the
market for  electronic  payment  solutions.  To be  competitive,  the Registrant
believes  that it must,  among other  things,  invest  significant  resources in
developing  new  products,  improve its current  products and maintain  customer
satisfaction. Such investment will increase the Registrant's expenses and affect
its  profitability.  In  addition,  if it fails  to make  this  investment,  the
Registrant may not be able to compete  successfully with its competitors,  which
could have a material adverse effect on its revenue and future profitability

(b)    Technological and Market Changes.

       The markets in which the Registrant  competes are  characterized by rapid
technological  change,  frequent new product  introductions,  evolving  industry
standards and changing  needs of customers.  There can be no assurance  that the
Registrant's  existing  products will continue to be properly  positioned in the
market or that the company  will be able to introduce  new or enhanced  products
into the market on a timely  basis,  or at all.  Currently,  the  Registrant  is
focusing on upgrading and  introducing  new products.  There can be no assurance
that  enhancements  to existing  products or new products will receive  customer
acceptance. As competition in the electronic payments industry increases, it may
become increasingly difficult for the company to be competitive.

       Risks  associated with the  development and  introduction of new products
include delays in development and changes in payment  processing,  and operating
system  technologies  that  could  require  the  Registrant  to modify  existing
products.  There is also the risk to the Registrant  that there may be delays in
initial  shipments  of new  products.  Further  risks  inherent  in new  product
introductions include the uncertainty of price-performance  relative to products
of competitors,  competitors'  responses to the  introductions and the desire by
customers to evaluate new products for longer periods of time.

(c)    New Versions of Registrant's Products May Contain Errors or Defects.

       The Registrant's  electronic  payment software products and point of sale
devices are complex and, accordingly,  may contain undetected errors or failures
when first  introduced or as new versions are  released.  This may result in the
loss of,  or delay in,  market  acceptance  of the  Registrant's  products.  The
Registrant has in the past  discovered  software  errors in its new releases and


                                       20
<PAGE>

new products after their introduction.  The Registrant has experienced delays in
release,  lost revenues and customer  frustration  during the period required to
correct these  errors.  The  Registrant  may in the future  discover  errors and
additional  scalability  limitations  in new releases or new products  after the
commencement of commercial  shipments or be required to compensate customers for
such limitations or errors, as a result of which the Registrant's business, cash
flow,  financial  condition  and  results  of  operations  could  be  materially
adversely affected.

(d)    No Assurance of Successful and Timely Product Development.

       The Registrant's products and proposed enhancements are at various stages
of development and additional  development and testing will be required in order
to determine the technical feasibility and commercial viability of the products.

       There  can be no  assurance  that the  Registrant's  product  development
efforts will be successfully  completed.  The Registrant's  proposed development
schedule  may be  affected  by a variety of  factors,  many of which will not be
within the  control of the  Registrant,  including  technological  difficulties,
access to  proprietary  technology of others,  delays in  regulatory  approvals,
international  operating licenses, and the availability of necessary funding. In
light of the foregoing  factors,  there can be no assurance  that the Registrant
will be  able to  complete  or  successfully  commercialize  its  products.  The
inability of the  Registrant to  successfully  complete the  development  of new
products or to do so in a timely  manner,  could force the  Registrant  to scale
back operations, or cease operations entirely.

(e)    Market Acceptance.

       The  Registrant's  success is dependent on the market  acceptance  of its
products.  Despite the increasing demand for security devices,  the Registrant's
products represents an advanced approach to the industry,  and market acceptance
of the  company's  products  will be  dependent,  among other  things,  upon its
quality, ease of use, speed,  reliability,  and cost effectiveness.  Even if the
advantages of the Registrant's  products are established,  the company is unable
to  predict  how  quickly,  if at all,  the  products  will be  accepted  by the
marketplace.

(f)    Protection of Proprietary Rights.

       The Registrant's success and ability to compete will be dependent in part
on the protection of its potential  patents,  trademarks,  trade names,  service
marks and other  proprietary  rights.  The  Registrant  intends to rely on trade
secret and copyright laws to protect the intellectual  property that it plans to
develop,  but there can be no assurance  that such laws will provide  sufficient
protection  to the  Registrant,  that others will not develop a service that are
similar or superior to the Registrant's,  or that third parties will not copy or
otherwise  obtain  and  use the  Registrant's  proprietary  information  without
authorization. In addition, certain of the Registrant's know-how and proprietary
technology may not be patentable.

         The Registrant may rely on certain intellectual property licensed from
third parties, and may be required to license additional products or services in


                                       21
<PAGE>

the future, for use in the general operations of its business plan. There can be
no assurance  that these third party licenses will be available or will continue
to be available to the  Registrant on acceptable  terms or at all. The inability
to enter into and maintain any of these licenses  could have a material  adverse
effect on the Registrant's business, financial condition or operating results.

       There is a risk that some of the  Registrant's  products may infringe the
proprietary  rights  of  third  parties.   In  addition,   whether  or  not  the
Registrant's   products  infringe  on  proprietary   rights  of  third  parties,
infringement or invalidity  claims may be asserted or prosecuted  against it and
it could incur  significant  expense in defending them. If any claims or actions
are asserted  against the Registrant,  it may be required to modify its products
or seek licenses for these intellectual  property rights. The Registrant may not
be able to modify its  products or obtain  licenses on  commercially  reasonable
terms,  in a timely  manner or at all. The  Registrant's  failure to do so could
have a negative affect on its business and revenues.

(g)    Dependence on Suppliers.

       The  Registrant  depends upon a number of suppliers for components of its
products.  There is an inherent  risk that certain  components  of the company's
products  will  be   unavailable   for  prompt   delivery  or,  in  some  cases,
discontinued.  The  Registrant  only has limited  control  over any  third-party
manufacturer as to quality  controls,  timeliness of production,  deliveries and
various  other  factors.  Should  the  availability  of  certain  components  be
compromised,  it could force the company to develop  alternative  designs  using
other  components,  which  could  add to the cost of goods  sold and  compromise
delivery  commitments.  If the  Registrant  is unable to obtain  components in a
timely manner,  at an acceptable cost, or at all, the company may need to select
new  suppliers,  redesign or  reconstruct  processes  used to build its security
devices.  In such an instance,  the Registrant  would not be able to manufacture
any  security  devices for a period of time,  which could  materially  adversely
affect its business, results from operations, and financial condition.

(h)    Economic Slowdown.

       The world economy in general, and the United States economy in particular
have experienced a prolonged  downturn for electronic payment products which the
Registrant  believes has adversely affected demand for its products and has made
it increasingly  difficult to accurately  forecast future revenues.  While it is
seeing  indications  that the economic outlook is no longer  deteriorating,  the
Registrant  cannot predict the extent,  timing or duration of any improvement in
the economies where it sells its products.  Further, the Registrant expects that
its revenue during fiscal 2005 will be significantly  affected by the timing and
success of the introduction of new products and services during the fiscal year.

(i)    Key Personnel.

       The Registrant's success is largely dependent on the personal efforts and
abilities  of  its  senior  management.  The  loss  of  certain  members  of the


                                       22
<PAGE>

Registrant's senior management, including the company's chief executive officer,
chief  financial  officer  and chief  technical  officer,  could have a material
adverse effect on the company's business and prospects.

       The  Registrant  intends to recruit in fiscal year 2005 employees who are
skilled  in  e-commerce,  payment,  funds  management,  payment  reconciliation,
Internet  and other  technologies.  The failure to recruit  these key  personnel
could have a material adverse effect on the Registrant's  business. As a result,
the  Registrant  may  experience  increased  compensation  costs that may not be
offset through either improved  productivity or higher revenue.  There can be no
assurances  that we will be  successful  in retaining  existing  personnel or in
attracting and recruiting experienced qualified personnel.

(j)    Litigation.

       As stated under Legal Proceedings, the Registrant is subject to a lawsuit
and a regulatory investigation. It is possible that one or more of these matters
could be  resolved  in a manner that  ultimately  would have a material  adverse
impact on the Registrant's  business,  and could negatively impact its revenues,
operating margins, and net income.

Operating Activities.
---------------------

       The net cash used in  operating  activities  was  $163,390  for the three
months ended  September 30, 2004 compared to $269,348 for the three months ended
September 30, 2003, a decrease of $105,958 or  approximately  41%. A significant
portion of cash used was attributed to the payment of non-cash compensation.

Liquidity and Capital Resources.
--------------------------------

       As of September 30, 2004,  the  Registrant  had total  current  assets of
$478,606 and total current  liabilities  of  $1,446,398,  resulting in a working
capital deficit of $967,792.  The Registrant has incurred significant losses and
negative cash flows from operations for the last two years

       The  Registrant  recognizes  the need for the infusion of cash during the
2005 fiscal year.  The Registrant is pursuing  various  financing  options.  The
company relies  heavily upon the market  liquidity of its stock as traded on the
Over the Counter  Bulletin Board for its ability to raise funds, for its ability
to consummate acquisitions, and for the use of non-cash compensation for many of
the company's  consultants.  Should the Registrant experience a weakening in the
market for its common stock,  both its  short-term  liquidity and its ability to
achieve its long-term strategy could be adversely affected.

       Thus,   the   Registrant's   continued   operations,   as   well  as  the
implementation  of its  business  plan,  will  depend  upon its ability to raise
additional  funds  through  bank  borrowings,  equity  or  debt  financing.  The
Registrant  estimates that it will need to raise  approximately  $5,000,000 over
the next twelve months for such  purposes.  However,  adequate  funds may not be
available  when  needed  or may  not be  available  on  favorable  terms  to the
Registrant.  The ability of the  Registrant  to  continue as a going  concern is


                                       23
<PAGE>

dependent  on  additional  sources of capital and the  success of the  company's
business  plan.  The  notes to the  audited  consolidated  financial  statements
contained  in this  Form  10-KSB  for the  year  ended  June 30,  2004,  include
substantial  doubt paragraphs  regarding the company's  ability to continue as a
going concern.

       If funding is insufficient at any time in the future,  the Registrant may
not  be  able  to  take  advantage  of  business  opportunities  or  respond  to
competitive  pressures,  or may be  required  to reduce the scope of its planned
product  development and marketing  efforts,  any of which could have a negative
impact on its business and operating results. In addition,  insufficient funding
may have a material adverse effect on the company's financial  condition,  which
could require the company to:

o      curtail operations significantly;

o      sell significant assets;

o      seek  arrangements  with  strategic  partners or other  parties  that may
       require  the  company  to  relinquish  significant  rights  to  products,
       technologies or markets; or

o      explore other  strategic  alternatives  including a merger or sale of the
       company.

       To the extent that the Registrant raises  additional  capital through the
sale of equity or convertible debt  securities,  the issuance of such securities
will result in dilution to existing stockholders. If additional funds are raised
through the  issuance of debt  securities,  these  securities  may have  rights,
preferences  and  privileges  senior to holders of common stock and the terms of
such debt could impose restrictions on the Registrant's  operations.  Regardless
of whether the  Registrant's  cash  assets  prove to be  inadequate  to meet the
company's  operational needs, the Registrant may seek to compensate providers of
services by issuing stock in lieu of cash, which will also result in dilution to
existing shareholders.

       The  Registrant has been  successful in obtaining cash resources  through
private placements and the exercise of options.  Financing  activities  provided
cash of $375,000  during the three months ended  September  30, 2004 compared to
$415,691 for the three months ended September 30, 2003, a decrease of $40,691 or
approximately  10%.  During the three  months  ended  September  30,  2004,  the
Registrant  received $375,000 in cash relating to stock options exercised during
the twelve months ended June 30, 2004; this amount was credited to subscriptions
receivable.  At September 30, 2004,  there is also a balance due of $500,000 for
common stock sold in a prior period.

Certain Indebtedness.
---------------------

       The Registrant's President and shareholder, Paul Egan, has advanced funds
to the Company for its operations.  The Registrant was indebted to the President
for $22,658 at June 30, 2004.  During the three months ended September 30, 2004,
Mr. Egan advanced the Registrant an additional  $49,818.  At September 30, 2004,
the Registrant is indebted to the President in the net amount of $72,476,  which
is  shown  in the  Due To  Related  Parties  For  Advances  in the  accompanying
Condensed  Consolidated  Balance Sheet as of September 30, 2004. Interest on the
unpaid balances is accrued at the rate of 7% per annum.

                                       24
<PAGE>

       The Registrant's Chief Financial Officer, Ciaran Egan, has advanced funds
to the Registrant for its  operations.  The Registrant was indebted to the Chief
Financial  Officer for $30,178 at June 30,  2004.  During the three months ended
September 30, 2004, the Registrant repaid Mr. Egan the net amount of $29,194. At
September 30, 2004,  the Registrant is indebted to Mr. Egan in the net amount of
$984,  which is shown in Due To Related Parties For Advances in the accompanying
Condensed  Consolidated  Balance Sheet as of September 30, 2004. Interest on the
unpaid balances is accrued at the rate of 7% per annum.

       The Registrant  expects to repay these amounts as soon as sufficient cash
flow from operations is generated.

Exchange Rates
--------------

       The Registrant's  operations are principally in Dominican  Republic under
the name  ePayLatina  S.A.,  which  are  operated  in its  local  currency,  the
Dominican  Republic Peso; and in Helsinki  Finland under the Rahaxi  subsidiary,
operated  in its local  currency,  the Euro.  All  assets  and  liabilities  are
translated at exchange rates in effect at the end of the year.  Income statement
accounts are  translated  at average  rates for the year.  Gains and losses from
translation  of foreign  currency  financial  statements  into U.S.  dollars are
included in the accumulated comprehensive income (loss). The accumulated foreign
currency translation adjustment is $4,547 at September 30, 2004.

       A  significant  portion of the  Registrant's  revenues  and  expenses  is
denominated  in  currencies  other  than U.S.  dollars;  Rahaxi  Processing  Oy.
generates its revenue in EUROS.  Any  significant  change in exchange  rates may
have a favorable or negative effect on both the revenues and  operational  costs
of the  Registrant  In  particular,  the  value of the U.S.  dollar  to the Euro
impacts the Registrant's  operating results.  The Registrant's  expenses are not
necessarily  incurred in the currency in which revenue is  generated,  and, as a
result,  we are  required  from time to time to convert  currencies  to meet the
Registrant's obligations. In addition, a significant portion of the Registrant's
financial  statements  are prepared in Euro and  translated to U.S.  dollars for
consolidation.

Inflation.
---------

       The impact of inflation on the costs of the  Registrant,  and the ability
to pass on cost  increases to its customers  over time is dependent  upon market
conditions.  The Registrant is not aware of any inflationary pressures that have
had any significant impact on the Registrant's operations over the past quarter,
and the  company  does not  anticipate  that  inflationary  factors  will have a
significant impact on future operations.

Other.
------

       The  Registrant  does  not  provide  post-retirement  or  post-employment
benefits  requiring charges under Statements of Financial  Accounting  Standards
No. 106 and No. 112.


                                       25
<PAGE>

Critical Accounting Policies.
-----------------------------

       The  Securities  and  Exchange  Commission  ("SEC") has issued  Financial
Reporting Release No. 60, "Cautionary Advice Regarding Disclosure About Critical
Accounting  Policies"  ("FRR  60"),   suggesting  companies  provide  additional
disclosure and commentary on their most critical accounting policies. In FRR 60,
the  Commission  has defined the most critical  accounting  policies as the ones
that are most important to the portrayal of a company's  financial condition and
operating  results,  and  require  management  to make  its most  difficult  and
subjective judgments, often as a result of the need to make estimates of matters
that are inherently uncertain.  Based on this definition,  the Registrant's most
critical accounting policies include: (a) use of estimates in the preparation of
financial statements;  (b) stock-based  compensation  arrangements;  (c) revenue
recognition; and (d) long-lived assets. The methods, estimates and judgments the
Registrant  uses in applying  these most  critical  accounting  policies  have a
significant  impact  on  the  results  the  company  reports  in  its  financial
statements.

(a)    Use of Estimates in the Preparation of Financial Statements.

       The preparation of these financial  statements requires the Registrant to
make  estimates  and  judgments  that  affect  the  reported  amounts of assets,
liabilities,  revenues and expenses, and related disclosure of contingent assets
and liabilities. On an on-going basis, the Registrant evaluates these estimates,
including those related to revenue recognition and concentration of credit risk.
The Registrant bases its estimates on historical experience and on various other
assumptions  that is  believed to be  reasonable  under the  circumstances,  the
results of which form the basis for making  judgments  about the carrying values
of assets and  liabilities  that are not readily  apparent  from other  sources.
Actual results may differ from these estimates  under  different  assumptions or
conditions.

(b)    Stock-based Compensation Arrangements.

       The  Registrant  intends  to issue  shares  of  common  stock to  various
individuals  and  entities  for  management,  legal,  consulting  and  marketing
services. These issuances will be valued at the fair market value of the service
provided  and the  number of shares  issued is  determined,  based upon the open
market  closing  price  of  common  stock  as of the  date  of  each  respective
transaction.  These  transactions  will be  reflected as a component of selling,
general and administrative expenses in the accompanying statement of operations.

(c)    Revenue Recognition.

       The Registrant  recognizes  revenue when products are shipped or services
provided to its customers.  Provisions for discounts and other  adjustments  are
provided for in the same period the related sales are recorded.

       Processing  fee  revenue  is  earned  based  upon the  actual  number  of
transactions  processed through its processing  system.  Transaction  processing
fees are recognized in the period that the service is performed.  These fees are
charged  on a per  transaction  basis,  depending  on the  arrangement  with the
customer.  Prebilling  for  estimated  number of  transactions  processed in the
future periods was classified as deferred revenue.


                                       26
<PAGE>

(d) Long-lived Assets.

       Long-lived  assets  to be held  and  used  are  analyzed  for  impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable.  The Registrant evaluates at each balance sheet
date whether  events and  circumstances  have occurred  that  indicate  possible
impairment.  If there are indications of impairment,  the Registrant uses future
undiscounted  cash  flows  of the  related  asset  or  asset  grouping  over the
remaining  life in measuring  whether the assets are  recoverable.  In the event
such cash flows are not expected to be sufficient to recover the recorded  asset
values,  the assets are written down to their  estimated fair value.  Long-lived
assets to be  disposed of are  reported at the lower of carrying  amount or fair
value of asset less the cost to sell.

Forward Looking Statements.
---------------------------

       The foregoing management's discussion and analysis of financial condition
and results of  operations  contains  "forward  looking  statements"  within the
meaning of Rule 175 of the Securities Act of 1933, as amended,  and Rule 3b-6 of
the  Securities  Act  of  1934,  as  amended.  The  words  "believe,"  "expect,"
"anticipate," "intends," "forecast," "project," and similar expressions identify
forward-looking  statements.  These are statements that relate to future periods
and include, but are not limited to, statements as to the Registrant's estimates
as to the  adequacy  of its  capital  resources,  its need and ability to obtain
additional  financing,  the features and  benefits of its  products,  its growth
strategy,  the need for additional sales and support staff, its operating losses
and negative cash flow, and its critical  accounting  policies.  Forward-looking
statements  are  subject to certain  risks and  uncertainties  that could  cause
actual  results to differ  materially  from  those  projected.  These  risks and
uncertainties include, but are not limited to, those discussed above, as well as
risks  related  to the  Registrant's  ability  to  develop  new  technology  and
introduce  new  products and its ability to protect its  intellectual  property.
These  forward-looking  statements  speak  only  as  of  the  date  hereof.  The
Registrant expressly disclaims any obligation or undertaking to release publicly
any updates or revisions to any forward-looking  statements  contained herein to
reflect  any change in its  expectations  with  regard  thereto or any change in
events, conditions or circumstances on which any such statement is based.

ITEM 3.  CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures.
-------------------------------------------------

       Within the 90 days prior to the end of the period covered by this report,
the Company  carried out an  evaluation of the  effectiveness  of the design and
operation  of its  disclosure  controls and  procedures  pursuant to Rule 13a-15
under the Securities  Exchange Act of 1934, as amended  ("Exchange  Act").  This
evaluation  was done under the  supervision  and with the  participation  of the


                                       27
<PAGE>

Company's president and its chief financial officer. Based upon that evaluation,
they  concluded  that the  Company's  disclosure  controls  and  procedures  are
effective,  at the  reasonable  assurance  level,  in  gathering,  analyzing and
disclosing  information needed to satisfy the Company's  disclosure  obligations
under the Exchange Act.

Changes in Disclosure Controls and Procedures.
----------------------------------------------

       There were no significant changes in the Registrant's disclosure controls
and procedures, or in factors that could significantly affect those controls and
procedures since their most recent evaluation.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

       Other  than as set  forth  below,  the  Registrant  is not a party to any
material pending legal  proceedings  and, to the best of its knowledge,  no such
action by or against the Registrant has been threatened.

FreeStar et al. v. Dennis H. Johnston et al.
-------------------------------------------

       On or about  September 13, 2002,  the  Registrant  and  ePayLatina,  S.A.
brought  an action in the  Superior  Court for the State of  California  against
Dennis  Johnston  for  malpractice,   breach  of  fiduciary  duty;   deceit  and
declaratory relief.

       On or about  February  19,  2003,  Mr.  Johnston  filed an  answer to the
complaint and an unverified  cross-complaint  alleging breach of contract, fraud
among other causes of action.

       In  May  2003,   Mr.   Johnston   filed  an   unverified   first  amended
cross-complaint  alleging  breach of contract and fraud in connection with legal
fees allegedly owed to Mr. Johnston.  The Registrant has filed an answer to that
cross-complaint.

       In August 2004, Mr. Johnston and his then attorney were sanctioned $5,000
for abuses of the discovery process.

       The  Registrant  filed a motion for  terminating  sanctions  against  Mr.
Johnston, based on his alleged abuse of the discovery process. A hearing on this
motion was held on October 26, 2004. At that hearing,  Judge Chirlin granted the
Registrant's motion for terminating  sanctions,  which resulted in the dismissal
of Mr. Johnston's  cross-complaint  with prejudice and granting the Registrant's
motion for a $100,000  judgment against Mr. Johnson.  This ruling could still be
appealed, but the Registrant is unaware of any appeal.

Sportinghet PLC v. FreeStar Technology Corporation.
---------------------------------------------------

       On May 7, 2004, Sportingbet, PLC filed a complaint against the Registrant
in the Clark County Nevada Superior Court.  The complaint  alleges,  among other


                                       28
<PAGE>

things, that the Registrant breached a settlement  agreement and debt guarantee.
Sportingbet  has alleged  damages in excess of  $10,000,  to be proven at trial.
Sportingbet  also sought  immediate  possession of 7,100,592  Registrant  shares
under a payment guarantee and stock pledge agreement.

       On June 14,2004,  the Registrant filed an answer and counterclaim seeking
damages in excess of $1,400,000.

       Management believes the Registrant has meritorious claims and defenses to
Sportingbet's  claims and ultimately will prevail on the merits.  However,  this
matter  remains in the early stages of litigation  and there can be no assurance
as  to  the  outcome  of  the  lawsuit.   Litigation   is  subject  to  inherent
uncertainties,  and unfavorable rulings could occur. Were unfavorable rulings to
occur,  there  exists  the  possibility  of a material  adverse  impact of money
damages on the  Registrant's  financial  condition,  results of  operations,  or
liquidity of the period in which the ruling occurs, or future periods.

Diamond Club of America, Inc. v. FreeStar Technology Corporation.
-----------------------------------------------------------------

       On April 6, 2004, Diamond Club of America, Inc. filed a complaint against
the  Registrant  in the Suffolk  County New York Supreme  Court.  The  complaint
alleges,  among other things,  that the Registrant  owes Diamond Club $35,410.45
pursuant  to  an  agreement  between  Diamond  Club  and  TransAxis,  Inc.  or a
predecessor company of TransAxis,  Inc. The Registrant, in turn, asserts that as
a minority  stockholder in TransAxis it is not responsible for the debts of that
company.

       Management believes the Registrant has meritorious claims and defenses to
Diamond Club's claims and ultimately will prevail on the merits.  However,  this
matter  remains in the early stages of litigation  and there can be no assurance
as  to  the  outcome  of  the  lawsuit.   Litigation   is  subject  to  inherent
uncertainties,  and unfavorable rulings could occur. Were unfavorable rulings to
occur,  there  exists  the  possibility  of a material  adverse  impact of money
damages on the  Registrant's  financial  condition,  results of  operations,  or
liquidity of the period in which the ruling occurs, or future periods.

Shelly Singhal v. FreeStar Technology Corporation.
--------------------------------------------------

       On August 24, 2004,  Shelly Singhal,  a former  investment banker for the
Registrant, filed a lawsuit in the Clark County Nevada Superior Court for breach
of contract,  breach of covenant of fair dealing,  civil conspiracy and specific
performance.  The banker  claims that he is  entitled  to a fee for  services of
10,000,000   (1,428,571   post   reverse-split)   unrestricted   shares  of  the
Registrant's  common stock.  On October 20, 2004,  Mr.  Singhal  sought  summary
judgment on his complaint. That motion was denied in its entirety.

       Management believes the Registrant has meritorious claims and defenses to
Mr.  Singhal's claims and ultimately will prevail on the merits.  However,  this
matter  remains in the early stages of litigation  and there can be no assurance
as  to  the  outcome  of  the  lawsuit.   Litigation   is  subject  to  inherent
uncertainties,  and unfavorable rulings could occur. Were unfavorable rulings to
occur,  there  exists  the  possibility  of a material  adverse  impact of money
damages on the  Registrant's  financial  condition,  results of  operations,  or
liquidity of the period in which the ruling occurs, or future periods.


                                       29
<PAGE>

Securities and Exchange Commission Investigation.
------------------------------------------------

       In January 2003,  the  Registrant  was advised by the staff of the Denver
office of the SEC that it had initiated an informal,  non-public inquiry.  Since
that  time,  the staff has sought  and  received  production  of  documents  and
testimony  relating  to  certain  financing  transactions  entered  into  by the
Registrant,   issuance  of  its  stock  in  compliance  with  the   registration
provisions, facts stated in press releases and reports filed with the Commission
concerning,  among other things, the Registrant's assets, operations,  financial
condition, anticipated revenue and strategic initiatives.

       In July 2003,  the  Registrant  learned  that the SEC had issued a formal
order of investigation.  There is a risk that an enforcement  proceeding will be
recommended  by  the  staff  of  the  Commission  as a  result  of  this  formal
investigation. Enforcement proceedings could include allegations by the SEC that
the  Registrant  violated  the  anti-fraud,  registration  and books and records
provisions of federal  securities laws, and the rules  thereunder.  However,  it
cannot  be  predicted  with  certainty  what  the  nature  of  such  enforcement
proceeding  would be, the type of  sanctions  that might be sought,  or what the
likelihood  would be of  reaching  a  settlement.  The  Registrant  has been and
expects to continue to cooperate with the ongoing SEC investigation.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

       None.


                                       30
<PAGE>

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

         Not applicable.

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

       The Registrant's  Board of Directors  unanimously  approved a proposal to
decrease the issued and outstanding common stock of the company (also known as a
reverse stock split) by the ratio of seven  existing  shares of common stock for
each new one share of common stock without a change in the authorized  shares of
common stock of the company.  The Registrant  received the written  consent of a
majority of the voting power associated with the common stock for this corporate
action.  The  reverse  stock split was  affected on November 8, 2004,  a date at
least  twenty days after the filing and mailing of an  Information  Statement to
all  shareholders  of  record  from  whom the  Registrant  did not seek  written
consent.

ITEM 5.  OTHER INFORMATION.

       (a) On August 3, 2004, the Registrant issued  14,400,000  (2,057,143 post
reverse-split)  shares of  common  stock to Paul  Egan as a  replacement  of the
14,400,000  shares  previously  issued to Mr.  Egan in  November  2001 as a loan
repayment and as compensation.  These shares were subsequently  transferred from
Mr. Egan's  ownership to vFinance  Investments  in  connection  with a financing
agreement between the Registrant and vFinance; these shares were returned to the
Registrant and cancelled under the terms of a settlement agreement in connection
with a legal action between the parties.

       (b) The Registrant's  President and  shareholder,  Paul Egan, has delayed
payment of a portion of his salary in order to conserve the  company's  cash. At
September 30, 2004, the Registrant has recorded the amount of $48,253 in accrued
salary due to Mr. Egan.

       (c) The  Registrant's  Chief Financial  Officer and  shareholder,  Ciaran
Egan,  has delayed  payment of a portion of his salary in order to conserve  the
company's cash. At September 30, 2004, the Registrant has recorded the amount of
$57,799 in accrued salary due to Mr. Egan.

ITEM 6.  EXHIBITS.

       Exhibits  included or incorporated  by reference  herein are set forth in
the attached Exhibit Index.


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<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                    FreeStar Technology Corporation


Dated: November 12, 2004            By: /s/ Paul Egan
                                    --------------------------------------------
                                    Paul Egan, President/Chief Executive Officer


Dated: November 12, 2004            By: /s/ Ciaran Egan
                                    --------------------------------------------
                                    Ciaran Egan, Secretary/Treasurer/
                                    Chief Financial Officer



                                       32
<PAGE>



                                  EXHIBIT INDEX

Number                             Description

1      Agency Agreement between the Registrant and vFinance  Investments,  Inc.,
       dated March 24, 2002 (including the following  exhibits:  Exhibit B: Form
       of Warrant) (the  following  exhibits have been omitted:  Exhibit A: Term
       Sheet)  (incorporated  by reference to Exhibit 1 of the Form 10-KSB filed
       on November 13, 2002).

2.1    Asset Purchase  Agreement between the Registrant and Southern  California
       Logo, Inc., dated April 26, 2000  (incorporated by reference to Exhibit 1
       of the Form 8-K filed on May 15, 2000).

2.2    Asset   Purchase   Agreement   between  the   Registrant   and  Ronbridge
       Investments,  Ltd., dated October 17, 2000  (incorporated by reference to
       Exhibit 10 of the Form 8-K filed on October 23, 2000).

2.3    Binding Letter of Intent between the  Registrant  and  ePayLatina,  S.A.,
       dated July 23, 2001  (incorporated  by  reference  to Exhibit 10.2 of the
       Form 8-K filed on July 25, 2001).

2.4    Asset Purchase  Agreement  between the Registrant and  ePayLatina,  S.A.,
       dated  August 9, 2001  (incorporated  by reference to Exhibit 10.1 of the
       Form 8-K filed on August 14, 2001).

2.5    Acquisition  Agreement  between  the  Registrant  and Heroya  Investments
       Limited,  dated  September 10, 2002 (the  following  schedules  have been
       omitted:  Schedule  1, books and  records of  Rahaxi;  Schedule  2, draft
       employment  agreements with Hans Turitz and Tony Horrell; and Schedule 3,
       list  of  clients  introduced  to  Rahaxi  by  Heroya)  (incorporated  by
       reference to Exhibit 2 of the Form 8-K filed on September 25, 2002).

2.6    Amendment 1 to  Acquisition  Agreement  between the Registrant and Heroya
       Investments  Limited,  dated December 16, 2002 (incorporated by reference
       to Exhibit 2.2 of the Form 8-K/A filed on December 24, 2002).

2.7    Amendment 2 to  Acquisition  Agreement  between the Registrant and Heroya
       Investments  Limited,  dated February 25, 2003 (incorporated by reference
       to Exhibit 2.3 of the Form 8-K/A filed on February 26, 2003).

2.8    Letter  Agreement,  dated  April  24,  2003,  from  FreeStar  Acquisition
       Corporation to the Registrant, and consented to by Paul Egan, Ciaran Egan
       and Fionn Stakelum (including the Performance Guarantee) (incorporated by
       reference  to  Exhibit 2 of the Form 8-K filed on April  24,  2003).  2.9
       Letter of Intent between the Registrant and Digital Courier Technologies,
       Inc.,  dated April 29, 2003 and accepted on April 30, 2003  (incorporated
       by reference to Exhibit 2 of the Form 8-K filed on May 1, 2003).


                                       33
<PAGE>

2.10   Revised  Letter of Intent  between the  Registrant  and  TransAxis,  Inc.
       (formerly  known  as  Digital  Courier  Technologies,  Inc.),  dated  and
       accepted on June 20, 2003 (the  following  exhibits to this document have
       been  omitted:  Exhibit A: form of a Senior  Secured  Convertible  Note ;
       Exhibit  B:  Security   Agreement;   and  Exhibit  C:  Use  of  Proceeds)
       (incorporated by reference to Exhibit 2.2 of the Form 8-K/A filed on June
       26, 2003).

2.11   Amendment 3 to  Acquisition  Agreement  between the Registrant and Heroya
       Investments  Limited,  dated June 27, 2003  (incorporated by reference to
       Exhibit 2.4 of the Form 8-K/A filed on October 15, 2003).

2.12   Stock Purchase  Agreement  between the Registrant and the stockholders of
       TransAxis,  Inc., dated September 24, 2003  (incorporated by reference to
       Exhibit 2.1 of the Form 8-K filed on October 24, 2003).

2.13   Amendment to Stock  Purchase  Agreement  between the  Registrant  and the
       stockholders of TransAxis,  Inc., dated October 8, 2003  (incorporated by
       reference to Exhibit 2.2 of the Form 8-K filed on October 24, 2003).

2.14   Amendment No. 2 to Stock  Purchase  Agreement  between the Registrant and
       the   stockholders   of  TransAxis,   Inc.,   dated   February  20,  2004
       (incorporated  by  reference  to Exhibit  2.3 of the Form 8-K/A  filed on
       March 2, 2004).

2.15   Asset Purchase Agreement between the Registrant, and Unipay, Inc. and its
       stockholder,  Unicomp, Inc., dated May 4, 2004 (incorporated by reference
       to Exhibit 2.1 of the Form 8-K filed on May 20, 2004).

2.16   Registration  Rights Agreement between the Registrant,  and Unipay,  Inc.
       and its stockholder,  Unicomp,  Inc., dated May 4, 2004  (incorporated by
       reference to Exhibit 2.2 of the Form 8-K filed on May 20, 2004).

2.17   Non-Competition  and Non-Disclosure  Agreement between the Registrant and
       Unicomp,  Inc.,  dated May 4, 2004  (incorporated by reference to Exhibit
       2.3 of the Form 8-K filed on May 20, 2004).

3.1    Articles of  Incorporation,  dated  November  17, 1999  (incorporated  by
       reference to Exhibit 3.3 of the Form 10-SB filed on January 3, 2000).

3.2    Certificate of Amendment of Articles of Incorporation, dated September 8,
       2000  (incorporated  by reference to Exhibit 3.4 of the Form S-8 filed on
       August  17,  2001).   3.3   Certificate   of  Amendment  to  Articles  of
       Incorporation,  dated  February  15, 2001  (incorporated  by reference to
       Exhibit 3.1 of the Form 8-K filed on February 20, 2001).


                                       34
<PAGE>

3.4    Certificate of Amendment to Articles of Incorporation, dated December 15,
       2002  (incorporated  by reference to Exhibit 3.4 of the Form 10-QSB filed
       on March 12, 2003).

3.5    Certificate of Amendment to Articles of Incorporation, dated February 24,
       2003  (incorporated  by reference to Exhibit 3.5 of the Form 10-QSB filed
       on March 12, 2003).

3.6    Bylaws, dated November 17, 1999 (incorporated by reference to Exhibit 3.2
       of the Form 10-SB filed on January 3, 2000)

4.1    Consulting   Services   Agreement   between  the  Registrant  and  Public
       Securities Service, dated November 30, 1999 (incorporated by reference to
       Exhibit 10.1 of the Form S-8 filed on September 29, 2000).

4.2    Consulting Agreement between the Registrant and Dennis H. Johnston, dated
       August 1, 2001 (incorporated by reference to Exhibit 10.1 of the Form S-8
       filed on August 17, 2001).

4.3    Certificate of Powers,  Designations,  Preferences and Rights of Series A
       Preferred Stock of the Registrant, dated August 10, 2001 (incorporated by
       reference to Exhibit 4 of the Form 8-K filed on August 14, 2001).

4.4    Non-Employee Directors and Consultants Retainer Stock Plan, dated October
       25, 2001  (incorporated by reference to Exhibit 4.1 of the Form S-8 filed
       on November 9, 2001).

4.5    Employee Stock Incentive Plan,  dated October 25, 2001  (incorporated  by
       reference to Exhibit 4.2 of the Form S-8 filed on November 9, 2001).

4.6    Form of Financing Agreement between the Registrant,  and Papell Holdings,
       Ltd. and Boat Basin  Investors LLC,  dated March 25, 2002  (including the
       following exhibits:  Exhibit A: Form of Convertible Note; Exhibit B: Form
       of Warrant;  Exhibit C: Registration  Rights Agreement;  Exhibit D: Stock
       Pledge Agreement;  Exhibit E: Form of Opinion of Counsel;  and Exhibit F:
       Unconditional  Guarantee  (the  following  exhibits  have  been  omitted:
       Schedule 4(c): Compliance with Laws; Schedule 4(d): Litigation;  Schedule
       4(h): Capitalization; and Schedule 7(j): Consolidations) (incorporated by
       reference to Exhibit 4.6 of the Form 10-KSB filed on November 13, 2002).


                                       35
<PAGE>


4.7    Loan Agreement between the Registrant,  and David Stefansky,  Marc Siegal
       and Richard  Rosenblum,  dated June 12,  2002  (including  the  following
       exhibits:   Exhibit  A:  Form  of   Promissory   Note;   and  Exhibit  C:
       Unconditional  Guarantee)  (the  following  exhibits  have been  omitted:
       Exhibit B: Term Sheet; and Exhibit D: Corporate Resolution) (incorporated
       by  reference  to Exhibit  4.7 of the Form 10-KSB  filed on November  13,
       2002).

4.8    Form of Financing Agreement between the Registrant,  and Papell Holdings,
       Ltd., Boat Basin Investors LLC,  vFinance,  Inc., David  Stefansky,  Marc
       Siegal and  Richard  Rosenblum  dated June 27,  2002  (except  for Papell
       Holdings,  which is dated  September 9, 2002)  (including  the  following
       exhibits:  Exhibit A: Form of Convertible  Note;  Exhibit B: Registration
       Rights Agreement;  Exhibit C: Unconditional Guarantee; Exhibit D: Form of
       Stock Pledge  Agreement;  and Exhibit E: Form of Opinion of Counsel) (the
       following  exhibits have been omitted:  Schedule  4(c):  Compliance  with
       Laws;  Schedule  4(d):  Litigation;  Schedule 4(h):  Capitalization;  and
       Schedule 7(j): Consolidations)  (incorporated by reference to Exhibit 4.8
       of the Form 10-KSB filed on November 13, 2002).

4.9    Supplementary  Agreement between the Registrant and vFinance Investments,
       Inc., Boat Basin Investors LLC. Marc Siegel, David Stefansky, and Richard
       Rosenblum,  dated June 27, 2002 (incorporated by reference to Exhibit 4.9
       of the Form 10-KSB filed on November 13, 2002).

4.10   Amended and Restated  Non-Employee  Directors  and  Consultants  Retainer
       Stock Plan, dated November 15, 2002 (incorporated by reference to Exhibit
       4.1 of the Form S-8 POS filed on December 11, 2002).

4.11   Amended and  Restated  Stock  Incentive  Plan,  dated  November  15, 2002
       (incorporated  by  reference  to Exhibit 4.2 of the Form S-8 POS filed on
       December 11, 2002).

4.12   Option to Purchase  10,000,000  Shares of Common  Stock,  dated April 24,
       2003,   issued  by  the   Registrant  to  Phaeton   Investments   Limited
       (incorporated  by  reference to Exhibit 10 of the Form 8-K filed on April
       24, 2003).

4.13   Amended and Restated  Non-Employee  Directors  and  Consultants  Retainer
       Stock  Plan  (Amendment  No,  2),  dated May 25,  2003  (incorporated  by
       reference to Exhibit 4.1 of the Form S-8 POS filed on June 2, 2003).

4.14   Amended and Restated Stock  Incentive  Plan  (Amendment No, 2), dated May
       25, 2003  (incorporated  by  reference to Exhibit 4.2 of the Form S-8 POS
       filed on June 2, 2003).

4.15   Senior Secured Convertible Note issued by TransAxis, Inc. in favor of the
       Registrant,  dated July 14, 2003  (incorporated  by  reference to Exhibit
       4.15 of the Form 10-QSB filed on December 1, 2003).

4.16   Senior Secured Convertible Note issued by TransAxis, Inc. in favor of the
       Registrant,  dated July 17, 2003  (incorporated  by  reference to Exhibit
       4.16 of the Form 10-QSB filed on December 1, 2003).


                                       36
<PAGE>

4.17   Amended and Restated  Non-Employee  Directors  and  Consultants  Retainer
       Stock  Plan  (Amendment  No. 3),  dated  April 7, 2004  (incorporated  by
       reference to Exhibit 4 of the Form S-8 PSO filed on April 19, 2004).

10.1   Employment Agreement between the Registrant and Ciaran Egan, dated August
       9, 2001  (incorporated by reference to Exhibit 10.2 of the Form 8-K filed
       on August 14, 2001).

10.2   Employment  Agreement  between the Registrant and Paul Egan, dated August
       9, 2001  (incorporated by reference to Exhibit 10.3 of the Form 8-K filed
       on August 14, 2001).

10.3   Consulting  Agreement  between  the  Registrant  and  Margaux  Investment
       Management Group S.A.,  dated August 23, 2003  (incorporated by reference
       to Exhibit 10.3 of the Form 10-KSB/A filed on October 28, 2004).

10.4   Addendum to Employment  Contract  between the  Registrant  and Paul Egan,
       dated  August 9, 2004  (incorporated  by reference to Exhibit 10.4 of the
       Form 10-KSB/A filed on October 28, 2004).

10.5   Addendum to Employment  Contract  between the Registrant and Ciaran Egan,
       dated  August 9, 2004  (incorporated  by reference to Exhibit 10.5 of the
       Form 10-KSB/A filed on October 28, 2004).

10.6   Rescission  Agreement  between the Registrant and TransAxis,  Inc., dated
       August 24, 2004 (effective on June 17, 2004)  (incorporated  by reference
       to Exhibit 10 of the Form 8-K/A filed on August 26, 2004).

16.1   Letter  on  change  in  certifying   accountant,   dated  March  9,  2001
       (incorporated  by  reference  to Exhibit  16.2 of the Form 8-K/A filed on
       March 13, 2001).

16.2   Letter  on  change in  certifying  accountant,  dated  October  17,  2002
       (incorporated  by  reference  to Exhibit  16 of the Form  8-K/A  filed on
       October 22, 2002).

16.3   Letter  on  change  in  certifying   accountant,   dated  June  28,  2004
       (incorporated  by reference to Exhibit 16 of the Form 8-K/A filed on July
       16, 2004).

21     Subsidiaries of the Registrant  (incorporated  by reference to Exhibit 21
       of the Form 10-QSB filed on May 20, 2003).


                                       37
<PAGE>


23     Consent of Independent  Certified  Public  Accountants  (incorporated  by
       reference to Exhibit 23 of the Form 10-KSB/A filed on October 28, 2004).

31.1   Rule 13a-14(a)/15d-14(a) Certification of Paul Egan (filed herewith).

31.2   Rule 13a-14(a)/15d-14(a) Certification of Ciaran Egan (filed herewith).

32     Section 1350 Certification of Paul Egan and Ciaran Egan (filed herewith).

99.1   Certificate of Register  issued to ePayLatina,  S.A.,  dated June 4, 2001
       (in Spanish and translated  into English)  (incorporated  by reference to
       Exhibit 99 of the Form 8-K filed on April 9, 2003).

99.2   Press Release issued by the Registrant on April 24, 2003 (incorporated by
       reference to Exhibit 2 of the Form 8-K filed on April 24, 2003).

99.3   Press  Release  issued by the  Registrant  at 7:37 p.m. on April 24, 2003
       (incorporated  by  reference  to Exhibit  99.3 of the Form 8-K/A filed on
       April 25, 2003).

99.4   Text of conference call held on May 7, 2003 (incorporated by reference to
       Exhibit 99 of the Form 8-K filed on May 9, 2003).

99.5   Text of conference call held on May 21, 2003  (incorporated  by reference
       to Exhibit 99.1 of the Form 8-K filed on May 30, 2003).

99.6   Text of press release,  dated May 29, 2003  (incorporated by reference to
       Exhibit 99.2 of the Form 8-K filed on May 30, 2003).

99.7   Press Release issued by the Registrant on July 29, 2003  (incorporated by
       reference to Exhibit 99.3 of the Form 8-K/A filed on August 6, 2003).

99.8   Text of conference call held on July 29, 2003  (incorporated by reference
       to Exhibit 99.4 of the Form 8-K/A filed on August 6, 2003).

99.9   Text of press release,  dated October 16, 2003 (incorporated by reference
       to Exhibit 99 of the Form 8-K filed on October 24, 2003).


                                       38