U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-QSB/A

(MARK ONE)[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2005

                                       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 Company as Specified in Its Charter)

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


                    60 Lower Baggot Street, Dublin 2 Ireland
                    ----------------------------------------
                    (Address of Principal Executive Offices)

                                353 1 602 4757
                                --------------
                          (Company's Telephone Number)

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

     Indicate  by check  mark  whether  the  Company  (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 Company
was  required  to file  such  reports),  and (2)  been  subject  to such  filing
requirements for the past 90 days: Yes   X    No    .
                                       ---      ---

     Indicate by check mark  whether the Company is a shell  company (as defined
in Rule 12b-2 of the Exchange Act): Yes    No  X  .
                                       ---    ---

     As of February 16, 2006, the Company had 194,269,136 shares of common stock
issued and outstanding.

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

<PAGE>



                        AMENDMENT NO. 1 EXPLANATORY NOTE
                        --------------------------------

     We are filing Amendment No. 1 (this "Amendment") to the Freestar Technology
Corporation  Quarterly Report on Form 10-QSB for the three months and six months
ended  December  31,  2005,  in response to comments  issued by the staff of the
Division of Corporation  Finance of the Securities and Exchange  Commission (the
"Commission").  The  Commission  issued their comments to the Company on July 6,
2006 in connection  with its review of the  Company's  Annual Report on SEC Form
10-KSB and Quarterly Reports on SEC Form 10-QSB.

     Based on these  comments and  discussions  with the  Commission,  and after
consultation with the Company's  independent  registered public accounting firm,
the  Company  is  filing  this  Amendment  to  present  the  cost of  amortizing
capitalized  computer  software  as  a  cost  of  revenue  in  our  consolidated
statements of losses. Such costs were previously classified as selling,  general
and administrative  expenses.  In this regard, the Company has also expanded the
comparison  of the three  months and six months  ended  December 31, 2005 to the
three  months  and six  months  ended  December  31,  2004  in the  Management's
Discussion and Analysis and Plan of Operation.

     This change in presentation has no impact on previously  reported net loss,
loss per  share,  revenue,  cash,  total  assets,  cash  flow or  deficiency  in
stockholders' equity. For the convenience of the reader, this Form 10-QSB/A sets
forth the entire Form 2005 10-QSB. There are no other significant changes to the
original Form 10-QSB other than those  outlined  above.  This Form 10-QSB/A does
not reflect events  occurring  after the filing of the original Form 10-QSB,  or
modify or  update  disclosures  therein  in any way other  than as  required  to
reflect the  Amendment  set forth below.  Among other  things,  forward  looking
statements  made in the original Form 10-KSB (other than the  restatement),  and
such forward looking statements should be read in their historical  context.  In
addition,  currently-dated  certifications  from our Chief Executive Officer and
Chief Financial Officer have been included as exhibits to this Amendment.



<PAGE>



                                TABLE OF CONTENTS



PART I - FINANCIAL INFORMATION                                              PAGE

ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)

         CONDENSED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2005 .........3

         CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE
         THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 2005 AND 2004..........4

         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX
         MONTHS ENDED DECEMBER 31, 2005 AND 2004...............................5

         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS..................7

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS............................................15

ITEM 3.  CONTROLS AND PROCEDURES..............................................25

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS....................................................26

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS..........26

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES......................................27

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................27

ITEM 5.  OTHER INFORMATION....................................................27

ITEM 6.  EXHIBITS.............................................................27

SIGNATURES....................................................................28


                                        2
<PAGE>


PART I - FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS.


                        FREESTAR TECHNOLOGY CORPORATION
         CONDENSED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2005
                                   (Unaudited)

                                     ASSETS



Current assets:
  Cash and cash equivalents                                      $    627,394
  Accounts receivable, net of allowance for doubtful
     accounts of  $32,636                                             353,008
  Employee  advances                                                   35,000
  Other current assets                                                 79,579
  Inventory                                                           119,387
                                                                 -------------

            Total current assets                                    1,214,368
                                                                 -------------

Property, plant and equipment, net of accumulated
  depreciation and amortization of $ 53,889                           102,948

Software license, net of accumulated amortization of $693,526       1,567,629
Customer relationships and contracts, net of accumulated
  amortization of $476,361                                          1,490,843
Software, net of accumulated amortization of $ 615,404              1,388,905
                                                                 -------------

            Total assets                                         $  5,764,693
                                                                 =============

                  LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable and accrued expenses                          $  1,183,341
  Due to related parties for advances                                  93,284
  Accrued salaries - officers                                          33,553
  Note payable - current portion                                      631,749
                                                                 -------------

            Total current liabilities                               1,941,927
                                                                 -------------
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, issued and outstanding               4,000
  Additional paid-in capital - preferred stock                      6,368,058
  Common stock, $0.001 par value, 500,000,000 shares
     authorized; 141,230,279 shares issued and outstanding            141,230
  Additional paid-in capital - common stock                        46,394,032
  Common stock subscriptions receivable                              (400,000)
  Common stock subscribed                                              25,000
  Deferred compensation                                            (1,798,878)
  Accumulated deficit                                             (46,820,149)
  Accumulated other comprehensive gain  (loss)                        (91,527)
                                                                 -------------

            Total stockholders' equity                              3,822,766
                                                                 -------------

            Total liabilities and stockholders' equity           $  5,764,693
                                                                 =============

The  accompany  notes  form an  integral  part of these  unaudited  consolidated
condensed financial statements.


                                        3
<PAGE>

                  FREESTAR TECHNOLOGY CORPORATION
          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                            (Unaudited)

<TABLE>
<CAPTION>


                                                 Three Months     Three Months      Six Months       Six Months
                                                   Ended             Ended            Ended            Ended
                                                 December 31,     December 31,     December 31,     December 31,
                                                     2005             2004             2005             2004
                                                -------------    -------------    -------------    -------------
<S>                                             <C>              <C>              <C>              <C>


Revenue                                         $     577,946    $     424,772    $   1,180,694    $     790,724

Cost of revenue                                       444,816          346,482          943,372          603,175
                                                -------------    -------------    -------------    -------------

Gross profit                                          133,130           78,290          237,322          187,549

Selling, general and administrative expenses        1,884,052        1,427,741        2,908,506        2,514,144
                                                -------------    -------------    -------------    -------------

Loss from operations                               (1,750,922)      (1,349,451)      (2,671,184)      (2,326,595)

Other income (expenses):
  Gain on disposal of assets                              219               --            2,223               --
  Interest income/(expense)                           (18,475)            (852)         (37,246)          (1,904)
                                                -------------    -------------    -------------    -------------

Loss before income taxes                           (1,769,178)      (1,350,303)      (2,706,207)      (2,328,499)

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

Net Loss                                           (1,769,178)      (1,350,303)      (2,706,207)      (2,328,499)

Other - Comprehensive income (loss):
  Gain (Loss) on foreign exchange                     (40,580)          50,981           (7,518)          64,943
                                                -------------    -------------    -------------    -------------
Comprehensive loss                              $  (1,809,758)   $  (1,299,322)   $  (2,713,725)   $  (2,263,556)
                                                =============    =============    =============    =============

Loss per share - basic                          $       (0.01)   $       (0.02)   $       (0.02)   $       (0.03)
                                                =============    =============    =============    =============

Weighted average shares outstanding - basic       133,018,400       69,401,578      126,741,569       68,767,972
                                                =============    =============    =============    =============

Weighted average shares outstanding - diluted     158,650,032       75,401,578      152,460,939       74,767,972
                                                =============    =============    =============    =============



</TABLE>

The  accompany  notes  form  an  integral  part  of  these  unaudited  condensed
consolidated financial statements.


                                        4
<PAGE>


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

<TABLE>
<CAPTION>

                                                                Six Months     Six Months
                                                                   Ended          Ended
                                                                December 31,  December 31,
                                                                    2005          2004
                                                                -----------   ------------
<S>                                                             <C>           <C>
Cash flows used for operating activities:
   Net loss                                                     $(2,706,207)   $(2,328,498)

   Adjustments  to  reconcile  net  loss to net  cash
      provided  by  (used  for)operating activities:
         Amortization of discount on note                            24,727             --
         Gain on disposal of fixed assets                            (2,223)            --
         Depreciation and amortization                              305,153        291,410
         Warrants issued pursuant to joint venture agreement        259,311             --
         Non-cash equity-based compensation                       1,012,068      1,273,192
   Changes in assets and liabilities:
      (Increase) decrease in assets
         Accounts receivable                                       (190,664)       (48,083)
         Inventory                                                 (119,387)            --
         Employee  advances                                         (35,000)            --
         Other assets                                               (44,970)       (62,253)

      Increase (decrease) in liabilities
         Accounts payable and accrued expenses                      (46,680)       102,723
         Payment of accrued salary to officers                     (230,000)            --
         Due to shareholders                                             --        128,553
                                                                -----------    -----------
            Total adjustments                                       932,335      1, 685,542
                                                                ----------    -----------
            Net cash used by operating activities                (1,773,872)      (642,956)
                                                                -----------    -----------

Cash flows provided by (used for) investing activities:
   Purchase of fixed assets, net                                    (34,671)       (42,373)
   Proceeds from sale of fixed assets, net                            2,223             --
   Purchase of software and capitalized software cost, net         (318,410)      (225,600)
                                                                -----------    -----------
            Net cash used by investing activities                  (350,858)      (267,973)
                                                                -----------    -----------
Cash flows provided by (used for) financing activities:
   Proceeds from sale of common stock,net                         1,000,000             --
   Advanced from related parties                                     57,178        184,500
   Payments to related parties for advances                        (144,394)            --
   Proceeds from exercise of stock options/warrants, net          1,212,493        804,000
                                                                -----------    -----------
              Net cash provided by financing activities           2,125,277        988,500
                                                                -----------    -----------

Net increase (decrease) in cash and cash equivalents                    547         77,571

Foreign currently translation adjustments                            (5,831)      (254,982)

Cash and cash equivalents, beginning of period                      632,678        206,205
                                                                -----------    -----------
Cash and cash equivalents, end of period                        $   627,394    $    28,794
                                                                ===========    ===========

The  accompany  notes  form  an  integral  part  of  these  unaudited  condensed
consolidated financial statements.


                                        5
<PAGE>


Supplemental disclosure of cash flow information:

   Interest paid                                                $      --      $      --
                                                                ===========    ===========

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

   Effect of reverse split of common stock                      $      --      $   409,906
                                                                ===========    ===========

   Shares of common stock issued for services                   $   996,800    $   586,558
                                                                ===========    ===========

   Adjust deferred compensation for the period                  $   551,635    $      --
                                                                ===========    ===========

   Shares of common stock issued for subscriptions receivable   $   400,000    $      --
                                                                 ===========    ===========


   Cancellation of shares of common stock                       $   263,349    $   150,000
                                                                ===========    ===========

   Fair value of options issued to consultants and employees    $   828,758    $      --
                                                                ===========    ===========

   Non-cash compensation for exercise price of stock options    $     1,500    $      --
                                                                ===========    ===========

   Imputed interest on note issued for legal settlement         $    24,727    $      --
                                                                ===========    ===========

   Value of term extension of warrants and options
     to consultants                                             $   259,035    $      --
                                                                ===========    ===========
</TABLE>


The  accompany  notes  form  an  integral  part  of  these  unaudited  condensed
consolidated financial statements.


                                        6
<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, 2005. In the opinion of management,  these condensed consolidated
financial  statements  reflect all  adjustments  that are of a normal  recurring
nature and which are necessary to present  fairly the financial  position of the
Company as of December 31, 2005,  and the results of  operations  and cash flows
for the three  months and six  months  ended  December  31,  2005 and 2004.  The
results of  operations  for the three months and six months  ended  December 31,
2005 are not necessarily  indicative of the results that may be expected for the
entire  fiscal year.  Certain  amounts in the prior period on the  Statements of
Cash Flows have been changed to conform to the current period presentation.

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 Dublin,  Ireland; the Company also has
offices in Helsinki, Finland; Stockholm,  Sweden; Geneva, Switzerland; and Santo
Domingo, the Dominican Republic.

The  Company  intends  to  derive  revenues  from  its core  payment  processing
products,  which include:  (1) Authorization:  transaction fees it receives from
processing online point of sale terminal transactions;  (2) Point of Sale: sales
of "Point of Sale" terminals;  (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 Company's  revenue for the three months ended
December 31, 2005 was primarily  generated from the  transaction  processing and
consulting fees through its Finland operations.

Going Concern
-------------

The   accompanying   consolidated   financial   statements  have  been  prepared
inconformity 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 $1,769,178 for the three months
ended  December 31, 2005 and  $22,102,463  for the year ended June 30, 2005, and
had an accumulated deficit of $46,820,149 as of December 31, 2005.

The Company 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 in private
placements to  individual  investors.  Management  may raise funds in the public
markets,  though there currently are no plans to do so. Management believes that
with this financing, the Company will be able to generate additional


                                        7
<PAGE>

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  revenues from  contracts in which the Company  provides
only consulting services as the services are performed. The contractual terms of
the  agreements  dictate the  recognition  of revenue by the  Company.  Payments
received in advance are deferred until the service is provided.

Contract costs include all direct equipment, material, and labor costs and those
indirect costs related to contract performance, such as indirect labor. Selling,
general and administrative costs are charged to expense as incurred.  Provisions
for estimated  losses on  uncompleted  contracts are made in the period in which
such  losses  are  determined.   Changes  in  contract   performance,   contract
conditions,  and estimated  profitability  that may result in revisions to costs
and income are recognized in the period in which the revisions are determined.

For revenue from product  sales,  the Company  recognizes  revenue in accordance
with Staff Accounting  Bulletin ("SAB") No. 104,  "Revenue  Recognition,"  which
superseded  SAB No. 101,  "Revenue  Recognition  in Financial  Statements."  SAB
No.101  requires  that four basic  criteria  must be met before  revenue  can be
recognized:  (1) persuasive  evidence of an arrangement exists; (2) delivery has
occurred; (3) the selling price is fixed and determinable; and (4)collectibility
is  reasonably  assured.  Determination  of  criteria  (3) and (4) are  based on
management's  judgments  regarding the fixed nature of the selling prices of the
products  delivered and the  collectibility  of those  amounts.  Provisions  for
discounts and rebates to customers,  estimated returns and allowances, and other
adjustments  are provided for in the same period the related sales are recorded.
The Company  defers any revenue for which the product has not been  delivered or
is subject to refund until such time that the Company and the  customer  jointly
determine that the product has been delivered or no refund will be required. SAB
No.  104   incorporates   Emerging   Issues  Task  Force   ("EITF")  No.  00-21,
"Multiple-Deliverable Revenue Arrangements." EITF No. 00-21 addresses accounting
for  arrangements  that may involve  the  delivery  or  performance  of multiple
products,  services and/or rights to use assets. The effect of implementing EITF
No.  00-21 on the  Company's  consolidated  financial  position  and  results of
operations was not significant. This issue addresses determination of whether an
arrangement  involving more than one deliverable  contains more than one unit of
accounting  and  how  the  arrangement  consideration  should  be  measured  and
allocated to the separate units of accounting.  EITF No. 00-21 became  effective
for revenue  arrangements entered into in periods beginning after June 15, 2003.
For  revenue  arrangements  occurring  on or after  August 1, 2003,  the Company
revised its revenue recognition policy to comply with the provisions of EITF No.
00-21.

For those contracts which contain multiple  deliverables,  management must first
determine whether each service, or deliverable, meets the separation criteria of
EITF No. 00-21. In general, a deliverable (or a group of deliverables) meets the
separation  criteria if the deliverable has standalone value to the customer and
if there is objective  and reliable  evidence of the fair value of the remaining
deliverables  in the  arrangement.  Each  deliverable  that meets the separation
criteria is considered a "separate unit of accounting." Management allocates the
total arrangement consideration to each separate unit of accounting based on the
relative  fair  value  of  each  separate  unit of  accounting.  The  amount  of
arrangement  consideration  that is allocated to a unit of  accounting  that has
already been delivered is limited to the amount that is not contingent  upon the
delivery  of  another  separate  unit  of  accounting.   After  the  arrangement
consideration has been allocated to each separate unit of accounting, management
applies the  appropriate  revenue  recognition  method for each separate unit of
accounting as described  previously based on the nature of the arrangement.  All
deliverables  that do not meet the  separation  criteria  of EITF No.  00-21 are
combined into one unit of accounting,  and the appropriate  revenue  recognition
method is applied under SAB No. 101. Processing fee revenue is earned based
  upon the actual  number of
transactions  processed  through the Company's  processing  system.  Transaction
processing  fees are  recognized  in the period that the  service is  performed.
These fees are typically  charged on a per transaction  basis,  depending on the
arrangement with the customer.

                                        8
<PAGE>

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 SFAS  No.  123,
"Accounting   for   Stock-Based   Compensation."   Under  APB  Opinion  No.  25,
compensation  cost is recognized over the vesting period based on the excess, if
any,  on the date of 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 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  to
non-employees are valued using the Black-Scholes pricing model and expensed over
the period services are provided.

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation  -  Transition  and   Disclosure,"   which  amends  SFAS  No.  123,
"Accounting for Stock-Based  Compensation,"  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
both 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
of accounting  for  stock-based  employee  compensation  under SFAS No. 123. The
disclosure provisions of SFAS No. 148 are 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.

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:

                                   Three Months Ended
                                       December 31,
                                   2005           2004
                                -----------   -----------
Net loss, as reported           $(1,769,178)  $(1,350,303)

Compensation recognized under
under APB No. 25                     34,500        34,500

Compensation recognized under
SFAS No. 123                        (34,500)      (34,500)
                                -----------   -----------
Pro forma net loss              $(1,769,178)  $(1,350,303)
                                ===========   ===========
Pro forma loss per share        $     (0.01)  $     (0.02)
                                ===========   ===========


                                    Six Months Ended
                                      December 31,
                                   2005          2004
                                -----------   -----------
Net loss, as reported           $(2,706,207)  $(2,328,499)

Compensation recognized under
under APB No. 25                     34,500        34,500

Compensation recognized under
SFAS No. 123                        (34,500)      (34,500)
                                -----------   -----------
Pro forma net loss              $(2,706,207)  $(2,328,499)
                                ===========   ===========
Pro forma loss per share        $     (0.02)  $     (0.03)
                                ===========   ===========


                                        9
<PAGE>

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

In accordance with Statement of Financial  Accounting Standards ("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.

The Company often has under  development  several  discreet  design  features or
enhancements,  each of which may be  completed  and  released  to  customers  at
different  times.  During the three months ended  December 31, 2005, the Company
placed into service and began amortizing approximately $398,536 of software. The
total  net  book  value  of  software  in  service  at  December   31,  2005  is
approximately  $551,185.  During the three months ended  December 31, 2005,  the
Company has  purchased  and  capitalized  from a third party  software  totaling
$318,410  for new  software  under  development.  The  total  net book  value of
software under  development at December 31, 2005 is approximately  $837,720.  At
December  31,  2005,  total  software  capitalized  at  under  SFAS  No.  86  is
$1,388,905, net of accumulated amortization of $615,404.

Software costs also include the Enhanced Transactions Secured Software ("ETSS"),
which was  originally  contributed  by the founder and president of  ePayLatina,
S.A.,  Paul  Egan,  who is also  president  of the  Company.  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 to six  years.  These  costs  have  been  substantially
amortized as of December 31, 2005.

Inventories
-----------

Inventory  is stated at the lower of cost,  using the average  cost  method,  or
market.


Significant Recent Accounting Pronouncements
--------------------------------------------

In March 2005, the FASB issued FASB  Interpretation  ("FIN") No. 47, "Accounting
for  Conditional  Asset  Retirement  Obligations,   an  interpretation  of  FASB
Statement  No. 143," which  requires an entity to recognize a liability  for the
fair value of a conditional  asset  retirement  obligation  when incurred if the
liability's fair value can be reasonably  estimated.  The Company is required to
adopt the provisions of FIN No. 47 no later than the end of its fiscal 2006. The
Company does not expect the adoption of this  Interpretation  to have a material
impact on its  consolidated  financial  position,  results of operations or cash
flows.

In May  2005,  the FASB  issued  SFAS No.  154,  "Accounting  Changes  and Error
Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3." SFAS
No.  154  requires   retrospective   application  to  prior  periods'  financial
statements for changes in accounting  principle,  unless it is  impracticable to
determine  either the  period-specific  effects or the cumulative  effect of the
change. SFAS No. 154 also requires that retrospective application of a change in
accounting  principle is limited to the direct  effects of the change.  Indirect
effects   of  a  change   in   accounting   principle,   such  as  a  change  in
non-discretionary  profit-sharing  payments resulting from an accounting change,
should be recognized in the period of the accounting  change.  SFAS No. 154 also
requires that a change in  depreciation,  amortization,  or depletion method for
long-lived,  non-financial  assets be  accounted  for as a change in  accounting
estimate affected by a change in accounting principle. SFAS No. 154 is effective
for accounting  changes and corrections of errors made in fiscal years beginning
after December 15, 2005. Early adoption is permitted for accounting  changes and
corrections  of errors made in fiscal years  beginning  after May 2005, the date
that SFAS No. 154 was issued.  The Company  does not expect the adoption of this
Statement  to have a material  impact on its  consolidated  financial  position,
results of operations or cash flows.

                                       10
<PAGE>

2.  INVENTORIES

Inventory at December 31, 2005 consists of the Company's Point of Sale Terminals
which  have  been  purchased  from  third  party  manufacturers.  Components  of
inventories as of December 31, 2005 are as follows:


Finished goods       $119,387
                     --------
Total                $119,387
                     ========

3. NOTES PAYABLE

The Company has  outstanding  a one-year  convertible  note  payable in the face
amount of $650,000.  The note is due May 12, 2006.  The terms of the note do not
include a stated  interest  rate,  and the Company  has imputed  interest at the
annual  rate of 8% per annum for a discount of $49,428 at the  inception  of the
note. During the three months ended December 31, 2005, the Company amortized the
to interest  expense the amount of $12,487;  at December 31, 2005, the remaining
amount of the discount is $18,251.


4. COMMON STOCK

Sales Of Securities
-------------------

During  the three  months  ended  December  31,  2005,  the  Company  issued the
following shares of common stock:

The Company issued a total of 600,000  restricted  shares of common stock to two
consultants  and one employee  for  services to the  Company.  These shares were
valued at $153,000  (average of $0.255 per share,  which  approximates  the fair
value of the shares at the time the services were rendered).

The Company  issued a total of 2,050,000  shares of its common stock  registered
under Form S-8 to various  consultants  and legal counsel for current and future
services valued at $574,000 (average of $0.28 per share,  which approximates the
fair value of the shares at the time the services were rendered).

The Company issued a total of 1,833,333  shares of common stock registered under
Form S-8 pursuant to the exercise of stock options for a total of $275,000 cash,
or an average of $0.15 per share.  Additional options to purchase 166,666 shares
of common stock at $0.15 per share for a total of $25,000  were also  exercised,
and the Company  issued  these shares in January  2006.  This amount is shown as
Common Stock Subscribed in the Company's condensed consolidated balance sheet at
December 31, 2005.

The Company  issued  options to purchase  150,000  shares of common  stock to an
employee  at an  exercise  price of $0.01 per share.  The  Company  charged  the
intrinsic  value of these options,  or $34,500,  to operations  during the three
months ended  December 31, 2005.  These  options were  exercised by the employee
during the three months ended  December 31, 2005, and the Company issued 150,000
shares of stock  pursuant to this  exercise.  The  exercise  price of $1,500 was
charged to compensation expense during the three months ended December 31, 2005.

The Company issued options  covering a total of 2,000,000 shares of common stock
registered  under Form S-8 under the Company's Stock Incentive Plan. The Company
determined  the fair value of these  options using the  Black-Scholes  valuation
model, and charged the amount of $309,667 to operations  during the three months
ended December 31, 2005.

The  Company  extended  the  life of  certain  options  and  warrants  held by a
consultant  to the  Company.  These  options  and  warrants,  each  to  purchase
1,428,571  shares of the  Company's  common  stock (an  aggregate  of  2,857,142
shares)  originally  were to expire on November  19, 2005 and November 19, 2007,
respectively.  These  expiration  dates were  extended to November  19, 2010 and
November 19, 2011,  respectively.  These  options and  warrants  were  initially
valued at $555,964,  and this amount was charged to operations in prior periods.
The Company valued these options and warrants with the extended terms  utilizing
the  Black-Scholes  valuation  model,  and determined that the fair value of the
options and warrants  with the new terms to be an  aggregate  of  $778,990.  The
Company charged the additional  value created by the change in terms of $223,026
to operations during the three months ended December 31, 2005.

                                       11
<PAGE>

The Company issued an aggregate of 3,099,997  shares of common stock  registered
under  Form  S-8 for  stock  options  exercised  in a prior  period.  A total of
$365,000 cash was received  during the three months ended December 31, 2005, and
$100,000 was  received in a prior  quarter for a total of $465,000 or an average
of $0.15 per share.

The Company issued  8,333,333  shares of restricted  common stock for $1,000,000
cash which was received in a prior period. The sale price was $0.12 per share.

The Company  issued  2,000,000  shares of  restricted  common  stock for a total
$400,000  which had not yet been  received at December 31, 2005.  This amount is
shown as  Common  Stock  Subscriptions  Receivable  on the  Company's  condensed
consolidated balance sheet at December 31, 2005.

5. PREFERRED STOCK

On October 17, 2005, the Company issued the following unregistered  (restricted)
securities  of the Company to Paul Egan,  Ciaran  Egan,  and Fionn  Stakelum for
services rendered to the company, as follows:

         Paul Egan:                2,000,000 shares of Series B preferred stock.
                                   1,000,000 shares of Series A preferred stock

         Ciaran Egan:              1,500,000 shares of Series B preferred stock.

         Fionn Stakelum:             500,000 shares of Series B preferred stock.


The Company discovered that the Certificates of Designation for the Series A and
Series B preferred stock of the Company had  inadvertently not been filed before
this stock was issued.  Thereafter,  the  Certificates of Designation were filed
with the Nevada  Secretary of State on June 22, 2005 (see Exhibits 4.1 and 4.2).
Since  Nevada law  requires  that such  Certificates  be filed before this stock
issued,  the Company received back and cancelled all of the preferred stock that
had been issued by the Company and new preferred  stock  certificates  were then
issued (as set forth above).

The Series A preferred  stock was  originally  issued with the intention that it
would be convertible into 12 shares of common stock,  provided certain financial
goals were met by the Company  (which have not been met at  December  31,  2005;
however,  these  goals  may be met at  some  future  date.  This  convertibility
provision  has no set term).  The one for seven  reverse  split of the Company's
common stock,  effective on November 8, 2004, this reduced the convertibility of
this stock down to 1.71 to one.

The  Series  B  preferred  stock  that was  issued  prior to  November  8,  2004
(1,000,000  shares for Paul Egan,  1,000,000 shares for Ciaran Egan, and 500,000
shares for Fionn  Stakelum) was  originally  issued with the  intention  that it
would be  convertible  into 12  shares of common  stock,  with no  restrictions.
However,  with the one for seven reverse  split of the  Company's  common stock,
effective  on  November  8,  2004,  this  reduced  the  convertibility  of these
2,500,000  shares down to 1.71 to one.  The other  1,500,000  shares of Series B
preferred  stock  issued on February  21, 2005 were not  affected by the reverse
split.

6. SEGMENT INFORMATION

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

                                       12
<PAGE>

The  following  table  summarizes   segment  asset  and  operating  balances  by
reportable segment:

<TABLE>
<CAPTION>
                                             Three months ended                 Six months ended
                                                December 31                       December 31
                                         --------------------------      --------------------------
                                            2005             2004             2005           2004
                                         ----------      ----------      ----------      ----------
<S>                                    <C>              <C>              <C>              <C>

Sales to external customers:

Corporate                                        --              --              --              --
PaySafe                                          --              --              --              --
Rahaxi                                      577,946         424,772       1,180,694         790,724
                                         ----------      ----------      ----------      ----------
Total sales to external customers:          577,946         424,772       1,180,694         790,724
                                         ==========      ==========      ==========      ==========

Depreciation and amortization:

Corporate                                        --              --              --              --
PaySafe                                       6,405          13,579          19,555          23,575
Rahaxi                                      152,222         134,101         285,598         267,835
                                         ----------      ----------      ----------      ----------
Total depreciation and amortization:        158,627         147,680         305,153         291,410
                                         ==========      ==========      ==========      ==========

General and administrative expense:
(not including depreciation and
amortization)

Corporate                                 1,365,587         692,526       2,122,149       1,273,192
PaySafe                                      63,174         449,532         115,939         783,326
Rahaxi                                      392,537         226,105         545,885         341,096
                                         ----------      ----------      ----------      ----------
Total general and administrative
expense                                   1,821,300       1,368,163       2,783,973       2,397,614
                                         ==========      ==========      ==========      ==========

Capital expenditures:

Corporate                                        --              --              --              --
Paysafe                                          --          21,903              --          25,771
Rahaxi                                      322,301         145,575         353,081         242,202
                                         ----------      ----------      ----------      ----------
Total capital expenditures                  322,301         167,478         353,081         267,973
                                         ==========      ==========      ==========      ==========

Operating income (loss):

Corporate                                (1,607,575)     (1,053,410)     (2,359,797)     (1,776,754)
Paysafe                                     (49,533)       (102,227)       (115,939)       (327,846)
Rahaxi                                      (93,814)       (193,814)       (195,448)       (221,995)
                                         ----------      ----------      ----------      ----------
Total operating income (loss)            (1,750,922)     (1,349,451)     (2,671,184)     (2,326,595)
                                         ==========      ==========      ==========      ==========

Segment assets:

Corporate                                   537,979              --         537,979              --
Paysafe                                      44,774          98,886          44,774          98,886
Rahaxi                                    5,181,940       4,896,066       5,181,940       4,896,066
                                         ---------       ---------       ----------      ----------
Total segment assets                      5,764,693       4,994,952       5,764,693       4,994,952
                                         ==========      ==========      ==========      ==========

</TABLE>


                                       13
<PAGE>


7. RELATED PARTY TRANSACTIONS

Amounts due to related parties at December 31, 2005 consist of the following:

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

The  Company's  president,  Paul Egan,  who is also a  shareholder,  has delayed
payment of a portion of his salary in order to conserve the  Company's  cash. At
December  31,  2005,  the Company had  recorded the amount of $10,753 in accrued
salary due to Mr. Egan. This amount is shown as accrued  salaries - officers the
accompanying Condensed consolidated Balance Sheet as of December 31, 2005.

The Company's chief financial  officer,  Ciaran Egan, who is also a shareholder,
has  delayed  payment  of a  portion  of his  salary  in order to  conserve  the
Company's  cash.  At December 31,  2005,  the Company had recorded the amount of
$22,800  in  accrued  salary due to Mr.  Egan.  This  amount is shown as accrued
salaries - officers in the accompanying unaudited Condensed consolidated Balance
Sheet as of December 31, 2005.

Advances By Related Parties
---------------------------

Paul Egan has advanced  funds to the Company for its  operations.  These amounts
include net advances of $65,551 and accrued  interest of $20,972 at December 31,
2005.

Ciaran Egan has advanced funds to the Company for its operations.  These amounts
include net  advances of $5,576 and accrued  interest of $1,185 at December  31,
2005.

The Company  expects to repay these amounts as soon as sufficient cash flow from
operations is generated.  Interest on the unpaid balances is accrued at the rate
of 7% per annum.

Accrued Liability For Preferred Stock Issuance
----------------------------------------------

As part of his  long-term  incentive  and  compensation  plan,  the  Company has
granted  to Paul Egan  1,000,000  shares of its Series B  Convertible  Preferred
Stock.  At September 30, 2005, the Company has recorded the amount of $2,760,000
as an accrued liability, representing the fair value of these shares. During the
three months ended December 31, 2005, the Company issued these Preferred  Shares
and relieved the accrued liability of $2,760,000 (see Note 5).

As part of his  long-term  incentive  and  compensation  plan,  the  Company has
granted to Ciaran  Egan  500,000  shares of its Series B  Convertible  Preferred
Stock,  convertible  at the rate of 12 to 1 into shares of the Company's  common
stock.  At September 30, 2005, the Company has recorded the amount of $1,380,000
as an accrued liability, representing the fair value of these shares. During the
three months ended December 31, 2005, the Company issued these Preferred  Shares
and relieved the accrued liability of $1,380,000 (see Note 5).

8. SUBSEQUENT EVENTS

Private Placement of Common Stock
---------------------------------

On January 27, 2006, the Company signed subscription  agreements with a group of
offshore investors ("Investors") for the sale of an aggregate of $9.2 million in
Company common stock, plus warrants (the "Financing").

The Company will issue 46 million newly issued shares of restricted common stock
under  Regulation  S at $0.20 per share,  plus  warrants  to purchase 50 million
shares of Company common stock with two-year  exercise periods and strike prices
ranging from $1.50 to $8.50. Pursuant to the terms of the Financing, the Company
will issue all 46 million  shares  immediately,  which will be held in escrow by
Carl Hessel ("Escrow  Agent"),  a director and major  stockholder of the Company
based in Geneva, Switzerland, along with the warrants. The Investors are to make
the first payment of $4.6 million  dollars  within 7 days of the issuance of the
shares  and a  second  payment  of  $4.6  million  dollars  within  four  months
thereafter.  One-half of the shares and warrants  will be released by the Escrow
Agent to the Investors  upon receipt of the first payment and the second half of
the shares and warrants will be released by the Escrow Agent upon receipt of the
second  payment from the  Investors.  If any Investor fails to make the required
payments, such Investor's portion of the shares and warrants will be returned to
the Company by the Escrow Agent for  cancellation.  As of February 20, 2006, the
Company  had  received  approximately  $4,600,000  in the  form of  proceeds  or
confirmed commitments in connection with this offering.

                                       14
<PAGE>

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


     The following  discussion and analysis of the Company's financial condition
and results of operations is based upon, and should be read in conjunction with,
its condensed  consolidated  financial  statements  and related  notes  included
elsewhere in this Form 10-QSB/A.



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 per day, seven days per week.

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

     The Company  intends to derive  revenues  from its core payment  processing
products,  which include:  (1) Authorization:  transaction fees it receives from
processing online point of sale terminal transactions;  (2) Point of Sale: sales
of "Point of Sale" terminals;  (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 Company's  revenue for the three months ended
December 31, 2005 was primarily  generated from the  transaction  and consulting
fees through its Finland operations.

     BASE24  software  from ACI  Worldwide  provides  the  Company  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  Company  to meet  the  latest  Visa and
MasterCard standards and to pave the way for EMV Europay/MasterCard/Visa ("EMV")
compliance.  The Company 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.  EMV is also gaining momentum
in Asia and America,  and may help bring about 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.

     Management believes that the Company's near term growth  opportunities will
be derived  from the  European  market  place and a  significant  portion of its
resources,  both financial and personnel,  will be directed  towards  developing
those  opportunities.  The Company  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 Company's  principal offices are in Dublin,  Ireland.  The Company also
has offices in Helsinki,  Finland; Stockholm,  Sweden; Geneva, Switzerland;  and
Santo Domingo,  the Dominican Republic.  While the Company's offices in Finland,
Sweden,  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,  although no
revenues  are  anticipated  from such  markets  within the next 12  months.  The
Company has initiated  discussions  with regard to establishing a market for its
products in Asia, specifically China.

                                       15
<PAGE>

     Effective November 8, 2004, the Company implemented a one for seven reverse
split of its  common  stock.  The  company's  unaudited  condensed  consolidated
financial  statements for the three months ended December 31, 2004 reflected the
effects of this reverse  stock-split.  The new trading  symbol for the Company's
common stock as of that date was "FSRT."


Results Of Operations
---------------------

THREE MONTHS ENDED DECEMBER 31, 2005 COMPARED TO THREE MONTHS ENDED DECEMBER 31,
2004

(a) REVENUE

     The Company had revenue of $577,946 for the three months ended December 31,
2005  compared to $424,772  for the three months  ended  December  31, 2004,  an
increase of $153,174  or  approximately  36%.  The  substantial  majority of the
increase was due primarily to the generation of consulting and development  fees
by the  Company's  subsidiary,  Rahaxi  Processing  Oy. The other reason for the
increase in revenue was an increase in transaction processing fees by Rahaxi due
to an increased volume of transactions processed.  The Company expects the trend
of increased processing fees to continue throughout the remainder of fiscal 2006
with  the  addition  of new  clients  and a  continued  increase  in  consumers'
preference  to use  credit  and debit  cards as  against  cash,  will  result in
increased transactional volume.

     For the three  months  ended  December  31,  2005,  the  Company  processed
4,827,103  transactions,  an increase of 541,873 or approximately  13%, over the
4,285,230  transactions  that were processed in the  corresponding  period ended
December 31, 2004.

     During the three  months  ended  December  31,  2005,  the Company  derived
revenues  of $130,668  from  development  and  consulting  services  supplied to
clients.  The  Company did not receive  such fees during the  comparable  period
ended December 31, 2004.  The Company  expects to receive  further  revenue from
consulting and development fees throughout the remainder of fiscal 2006.

     The Company expects  revenue levels to increase  throughout the next twelve
months  as it  continues  to  introduce  its  service  offerings,  such  as  EMV
transaction  processing  and its Internet  Payment  Gateway.  In  addition,  the
Company  believes that it will derive further  revenue from the sale of Point Of
Sale terminals through its relationships with Hypercom and Global Refunds. 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."

     A  significant  percentage  of the  Company's  revenue for the three months
ended December 31, 2005 has been derived from a limited number of its customers,
primarily   Finnish   customers  for  its   transaction   processing   products.
Approximately  56% of the Company's total revenues were  attributable to its ten
largest  customers.  The Company derived additional revenue from clients outside
of Finland  during the three  months  ended  December  31,  2005;  this  revenue
accounted for approximately 24% of total revenue for the period. The Company did
not obtain revenue outside of Finland during the three months ended December 31,
2004. The future loss of any major customer could have a material adverse effect
on the Company's business,  financial  condition and results of operations.  The
Company  believes  that  this  customer  concentration  will  continue  for  the
remainder of fiscal 2006,  but will gradually  start to be diluted  beginning in
the second half of fiscal 2006 as it continues to pursue  operations  outside of
Finland.

     The majority of Company's  revenues for the three months ended December 31,
2005 have been generated by its operations outside of the United States, and its
future growth rate is, in part  dependent on continued  growth in  international
markets.  The  Company  expects the  majority of its  revenues to continue to be
generated  outside of the U.S.  through the remainder of fiscal year 2006.  (The
Company's fiscal year 2006 runs from July 1, 2005 through June 30, 2006).

(b) COST OF REVENUE


     Cost of revenue was $444,816 for the three months ended  December 31, 2005,
compared to $346,482 for the three months ended  December 31, 2004,  an increase
of $98,334 or approximately  28%. The increase in cost of revenue is due in part
to continued investment in the Company's technical  infrastructure and hiring of
additional staff.  Approximately $95,875 of the cost of revenue is attributed to
the amortization of capitalized  software;  this cost will not increase directly
with an increase  in sales,  but will only  increase  as the Company  adds to or
improves its operating software.

                                       16
<PAGE>

     Cost of revenue can be expected to increase in the coming  twelve months if
the Company  continues its current trend of increasing  sales.  The Company 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.  The
fixed portion of cost of revenue  attributable  to the  amortization of software
costs  will  become  smaller  as a  percentage  of sales if  sales  continue  to
increase, thus increasing the Company's operating margin.


(c) SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general and administrative expenses were $1,884,052 for the three
months ended December 31, 2005 compared to $1,427,741 for the three months ended
December  31, 2004,  an increase of $456,311 or  approximately  32%.  During the
three  months  ended  December  31,  2005,  the primary  components  of selling,
general, and administrative expenses were: consulting fees of $914,172, of which
$685,231   were  non-cash   costs;   payroll  and  related  costs  of  $366,174;
depreciation and amortization of $62,752; legal and accounting fees of $157,652;
travel  and  entertainment  costs of  $138,666;  facility  costs,  such as rent,
telephone, and utilities, of $99,692; recruiting costs of $36,339;  professional
services of $27,042; and investor relations costs of $26,400.



     The level of future  selling,  general  and  administrative  expenses  will
largely  depend on the pace of the  Company'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 Company intends to focus  additional  resources in
the areas of sales  personnel  salaries,  trade  show  participation,  and other
promotional expenses.  In addition,  the Company 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.

(d) INTEREST EXPENSE

     The Company had net  interest  expense of $18,475  during the three  months
ended  December 31, 2005 compared to net interest  expense of $852 for the three
months ended December 31, 2004, an increase of $17,623 or  approximately  2068%.
Higher  interest  expense was due primarily to  amortization  of the discount on
notes payable in the amount of $12,487.

     Currently,  the Company is utilizing  equity  financing  partly in order to
avoid the interest  charges  associated  with debt financing.  Accordingly,  the
Company 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  price for the  Company's  common stock could  change,  forcing it to
pursue  alternative  methods of financing the Company's cash needs. In addition,
the  Company  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.

(e) NET LOSS

     For the reasons stated above, the Company recorded a net loss of $1,769,178
for the three months  ended  December 31, 2005  compared to  $1,350,303  for the
three months ended  December 31, 2004, an increase of $418,875 or  approximately
31%. The increased loss is primarily due to the increase in sales,  general, and
administrative expenses for the period. The Company may continue to incur losses
on both a quarterly and annual basis,  and anticipates  continued  losses for at
least the next 12 months. In addition,  the Company expects to continue to incur
significant costs of services and substantial operating expenses. Therefore, the
Company will need to significantly  increase  revenues to achieve  profitability
and a positive  cash flow.  The Company  may not be able to generate  sufficient
revenues to achieve profitability. The Company expects losses to continue for at
least the next twelve months.

     The Company  will attempt to continue to fund its  operations  through debt
and equity  financing  until it  achieves  profitability,  of which  there is no
guarantee.  The Company expects these concerns regarding its perceived viability
to continue throughout the fiscal year 2006.

SIX MONTHS  ENDED  DECEMBER 31, 2005  COMPARED TO SIX MONTHS ENDED  DECEMBER 31,
2004

(a) REVENUE

     The Company had revenue of $1,180,694 for the six months ended December 31,
2005  compared  to $790,724  for the six months  ended  December  31,  2004,  an
increase of $389,970  or  approximately  49%.  The  substantial  majority of the
increase was due primarily to the generation of consulting fees by the Company's
subsidiary,  Rahaxi  Processing Oy. The other reason for the increase in revenue
was an increase in transaction  processing  fees by Rahaxi.  The Company expects
this trend to continue throughout the remainder of fiscal 2006 with the addition
of new clients and a continued  increase in consumers'  preference to use credit
and debit cards as against cash, will result in increased transactional volume

                                       17
<PAGE>

     For the six months ended December 31, 2005, the Company processed 9,215,641
transactions,  an increase of 1,169,781 or approximately  15% over the 8,045,860
transactions that were processed in the corresponding  period ended December 31,
2004.

     During the six months ended December 31, 2005 the Company derived  revenues
of $304,300 from development and consulting  services  supplied to clients.  The
Company did not receive such fees during the  comparable  period ended  December
31, 2004. The Company  expects to receive  further  revenue from  consulting and
development fees throughout the remainder of fiscal 2006.

(b) COST OF REVENUE


     Cost of revenue was $943,372  for the six months  ended  December 31, 2005,
compared to $603,175 for the six months ended  December 31, 2004, an increase of
$340,197 or approximately 56%. The increase in cost of revenue is due in part to
continued  investment in the Company's  technical  infrastructure  and hiring of
additional staff. Approximately $180,620 of the cost of revenue is attributed to
the amortization of capitalized  software;  this cost will not increase directly
with an increase  in sales,  but will only  increase  as the Company  adds to or
improves its operating software.

(c) SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general and administrative  expenses were $2,908,506 for the six
months ended  December 31, 2005 compared to $2,514,144  for the six months ended
December 31, 2004, an increase of $394,362 or approximately  16%. During the six
months ended December 31, 2005, the primary components of selling,  general, and
administrative expenses were: consulting fees of $1,563,047, of which $1,271,379
were non-cash  costs;  payroll and related costs of $624,484;  depreciation  and
amortization of $124,533;  travel and entertainment costs of $253,435; legal and
accounting  fees of  $221,034;  facility  fees,  such as  rent,  telephone,  and
utilities,   of  $188,893;  and  fees  for  professional  services  of  $60,821;
recruiting  costs of $36,339;  and  investor  relations  costs of  $26,400.  The
Company  also  credited to selling,  general,  and  administration  expenses the
amount of $263,349  representing the original  issuance cost of shares issued to
consultants  in prior  periods,  which have been  returned  to the  Company  and
cancelled.



(d) INTEREST EXPENSE

     The Company had net interest expense of $37,246 during the six months ended
December 31, 2005 compared to net interest  expense of $1,904 for the six months
ended December 31, 2004, an increase of $35,342 or approximately  1856%.  Higher
interest  expense was due  primarily  to  amortization  of the discount on notes
payable in the amount of $24,727.

(e) NET LOSS

     For the reasons stated above, the Company recorded a net loss of $2,706,207
for the six months ended  December 31, 2005 compared to  $2,328,499  for the six
months ended  December 31, 2004, an increase of $377,708 or  approximately  16%.
The  increased  loss is primarily  due to the increase in sales,  genereal,  and
Administrative expenses.

OPERATING ACTIVITIES

     The net cash used in operating activities was $1,773,872 for the six months
ended  December 31, 2005 compared to $642,956 for the six months ended  December
31,  2004,  an  increase  of  $1,130,916  or  approximately  176%.  Cash used in
operating   activities  during  the  six  months  ended  December  31,  2005  is
attributable  primarily  to the  net  loss of  $2,669,922  partially  offset  by
non-cash  charges of  $1,235,094  (net of  $263,349  for stock  returned  to the
Company and cancelled) and $305,153 of depreciation and amortization.  Cash from
operating  activities  was also  decreased  by  $666,701  due to  changes in the
components of working capital.

INVESTING ACTIVITIES

     Net cash used in investing  activities was $350,858,  which was an increase
of $82,885 or approximately 31% compared to cash used in investing activities of
$267,973 for the six months ended December 31, 2004. This increase was primarily
due to decreased  investing by the Company in software and capitalized  software
costs.

LIQUIDITY AND CAPITAL RESOURCES

     As of December 31, 2005, the Company had total current assets of $1,214,368
and total current  liabilities  of  $1,941,927,  resulting in a working  capital
deficit of $727,559.  The Company had cash and cash  equivalents  of $627,394 at
December 31,  2005.  As of December  31,  2005,  the Company had an  accumulated
deficit  of  $46,820,149.  These  factors  raise  substantial  doubt  as to  the
Company's  ability to  continue as a going  concern.  The  independent  auditors
report on our June 30,  2005  financial  statements  included in the Form 10-KSB
states  that our  difficulty  in  generating  sufficient  cash  flow to meet our
obligations  and  sustain  operations  raise  substantial  doubts  about the our
ability to continue as a going concern.

                                      18
<PAGE>

     The accompanying  financial statements have been prepared assuming that the
Company continues as a going concern that contemplates the realization of assets
and the  satisfaction of liabilities in the normal course of business.  However,
the ability of the Company to continue as a going concern on a longer-term basis
will be  dependent  upon its  ability  to  generate  sufficient  cash  flow from
operations  to meet its  obligations  on a timely  basis,  to obtain  additional
financing, and ultimately, attain profitability.

     Management plans to continue raising  additional  capital through a variety
of fund raising methods during fiscal 2006 and to pursue all available financing
alternatives in this regard. Management may also consider a variety of potential
partnership or strategic alliances to strengthen its financial position. Whereas
the Company has been successful in the past in raising capital, no assurance can
be given that these  sources of  financing  will  continue to be available to us
and/or that demand for our  equity/debt  instruments  will be sufficient to meet
our capital needs, or that financing will be available on terms favorable to the
Company. The financial statements do not include any adjustments relating to the
recoverability  and classification of liabilities that might be necessary should
the Company be unable to continue as a going concern. If funding is insufficient
at any time in the  future,  the Company  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 Company raises  additional  capital through the sale
of equity or convertible  debt  securities,  the issuance of such securities may
result in significant 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  Company's  operations.
Regardless of whether the  Company's  cash assets prove to be inadequate to meet
the Company's operational needs, the Company may seek to compensate providers of
services by issuance of stock in lieu of cash, which may also result in dilution
to existing shareholders.

     The Company has been successful in obtaining cash resources through private
placements and the exercise of options.  Financing  activities  provided cash of
$2,125,277  during the six months ended  December 31, 2005  compared to $988,500
for the six months  ended  December  31,  2004,  an  increase of  $1,136,777  or
approximately  115%.  During the six months ended December 31, 2005, the Company
received  $1,000,000 in cash from the sale of common stock,  and $1,212,493 from
the exercise of stock options.

     On January 27, 2006,  the Company  signed  subscription  agreements  with a
group of offshore  investors  ("Investors") for the sale of an aggregate of $9.2
million in Company common stock, plus warrants (the "Financing").

     The Company will issue 46 million newly issued shares of restricted  common
stock  under  Regulation  S at $0.20 per share,  plus  warrants  to  purchase 50
million shares of Company common stock with two-year exercise periods and strike
prices ranging from $1.50 to $8.50. Pursuant to the terms of the Financing,  the
Company  will issue all 46  million  shares  immediately,  which will be held in
escrow by Carl Hessel ("Escrow Agent"),  a director and major stockholder of the
Company based in Gevena, Switzerland, along with the warrants. The Investors are
to make the first payment of $4.6 million  dollars within 7 days of the issuance
of the shares and a second  payment of $4.6 million  dollars  within four months
thereafter. One-half of the shares and warrants will be released by the Escrow
 Agent to the Investors upon receipt of the first payment and the second half of
the shares and warrants will be released by the Escrow Agent upon receipt of the
second  payment from the  Investors.  If any Investor fails to make the required
payments, such Investor's portion of the shares and warrants will be returned to
the Company by the Escrow Agent for cancellation.

     As of February 20, 2006, the Company had received approximately  $4,600,000
in the form of  proceeds  or  confirmed  commitments  in  connection  with  this
offering.

CERTAIN INDEBTEDNESS

     Paul Egan has  advanced  funds to the  Company  for its  operations.  These
amounts  include net  advances  of $65,551  and  accrued  interest of $20,972 at
December 31, 2005.

     Ciaran Egan has  advanced  funds to the Company for its  operations.  These
amounts  include  net  advances  of $5,576  and  accrued  interest  of $1,185 at
December 31, 2005.

                                      19
<PAGE>

     The Company  expects to repay these amounts as soon as sufficient cash flow
from operations is generated.  Interest on the unpaid balances is accrued at the
rate of 7% per annum.

ACCRUED SALARIES

     The Company's president, Paul Egan, who is also a shareholder,  has delayed
payment of a portion of his salary in order to conserve the  Company's  cash. At
December  31,  2005,  the Company had  recorded the amount of $10,753 in accrued
salary due to Mr.  Egan.  This amount is shown as Due to Related  Parties in the
accompanying Condensed consolidated Balance Sheet as of December 31, 2005.

     The  Company's  chief  financial  officer,  Ciaran  Egan,  who  is  also  a
shareholder, has delayed payment of a portion of his salary in order to conserve
the Company's cash. At December 31, 2005, the Company had recorded the amount of
$22,800  in  accrued  salary  due to Mr.  Egan.  This  amount is shown as Due to
Related Parties in the accompanying  unaudited  Condensed  consolidated  Balance
Sheet as of December 31, 2005.

EXCHANGE RATES

     The Company's  operations are  principally  in Helsinki,  Finland under the
name of Rahaxi Processing Oy., operated in its local currency,  the Euro, and in
Dominican  Republic  under  the name  ePayLatina  S.A.,  operated  in its  local
currency, the Dominican Republic Peso. All assets and liabilities are translated
at exchange  rates in effect at the end of the year.  Accounts for  consolidated
statements of operations are translated at weighted  average rates for the year.
Gains and losses from translation of foreign currency financial  statements into
U.S.  dollars  are  included  in  Other  -  comprehensive   income  (loss).  The
accumulated  foreign currency  translation  adjustment was $(91,561) at December
31, 2005.

     Any  significant  change in exchange rates may have a favorable or negative
effect on both the revenues and operational costs of the Company. In particular,
the  value of the  U.S.  dollar  to the Euro  impacts  the  Company's  operating
results.  The Company's expenses are not necessarily incurred in the currency in
which revenue is generated,  and, as a result,  it is required from time to time
to  convert  currencies  to meet  the  Company's  obligations.  In  addition,  a
significant portion of the Company'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  Company,  and the ability to
pass on cost  increases  to its  customers  over time is  dependent  upon market
conditions. The Company is not aware of any inflationary pressures that have had
any significant  impact on the Company's  operations over the past quarter,  and
the  Company  does  not  anticipate  that  inflationary   factors  will  have  a
significant impact on future operations.

OFF-BALANCE SHEET ARRANGEMENTS

     The Company does not maintain  off-balance  sheet  arrangements nor does it
participate in non-exchange  traded  contracts  requiring fair value  accounting
treatment.

OTHER

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

CRITICAL ACCOUNTING POLICIES

     The 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 Company'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 Company 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 Company 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  Company  evaluates  these  estimates,
including those related to revenue recognition and concentration of credit risk.
The Company 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.

                                      20
<PAGE>

(b) STOCK-BASED COMPENSATION ARRANGEMENTS

     The Company 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  Company  recognizes  revenues  from  contracts  in which  the  Company
provides only consulting services as the services are performed. The contractual
terms of the  agreements  dictate  the  recognition  of revenue by the  Company.
Payments received in advance are deferred until the service is provided.

     Contract costs include all direct equipment,  material, and labor costs and
those indirect costs related to contract  performance,  such as indirect  labor.
Selling,  general and  administrative  costs are charged to expense as incurred.
Provisions for estimated losses on uncompleted  contracts are made in the period
in which such losses are determined.  Changes in contract performance,  contract
conditions,  and estimated  profitability  that may result in revisions to costs
and income are recognized in the period in which the revisions are determined.

     For  revenue  from  product  sales,  the  Company   recognizes  revenue  in
accordance   with  Staff   Accounting   Bulletin   ("SAB")  No.  104,   "Revenue
Recognition,"  which superseded SAB No. 101,  "Revenue  Recognition in Financial
Statements."  SAB No. 101 requires  that four basic  criteria must be met before
revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2)
delivery has occurred; (3) the selling price is fixed and determinable;  and (4)
collectibility is reasonably assured.  Determination of criteria (3) and (4) are
based on management's judgments regarding the fixed nature of the selling prices
of the products  delivered and the  collectibility of those amounts.  Provisions
for discounts and rebates to customers,  estimated  returns and allowances,  and
other  adjustments  are  provided  for in the same period the related  sales are
recorded.  The  Company  defers any  revenue  for which the product has not been
delivered  or is subject  to refund  until  such time that the  Company  and the
customer jointly determine that the product has been delivered or no refund will
be required.  SAB No. 104  incorporates  Emerging Issues Task Force ("EITF") No.
00-21,  "Multiple-Deliverable  Revenue  Arrangements."  EITF No. 00-21 addresses
accounting  for  arrangements  that may involve the delivery or  performance  of
multiple  products,  services  and/or  rights  to  use  assets.  The  effect  of
implementing EITF No. 00-21 on the Company's consolidated financial position and
results of operations was not significant. This issue addresses determination of
whether an arrangement  involving more than one  deliverable  contains more than
one unit of accounting and how the arrangement  consideration should be measured
and  allocated  to the  separate  units of  accounting.  EITF No.  00-21  became
effective for revenue  arrangements entered into in periods beginning after June
15, 2003.  For revenue  arrangements  occurring on or after August 1, 2003,  the
Company revised its revenue  recognition policy to comply with the provisions of
EITF No. 00-21.

     For those contracts which contain  multiple  deliverables,  management must
first  determine  whether each service,  or  deliverable,  meets the  separation
criteria  of  EITF  No.  00-21.  In  general,  a  deliverable  (or  a  group  of
deliverables)  meets the separation  criteria if the  deliverable has standalone
value to the  customer and if there is  objective  and reliable  evidence of the
fair value of the remaining  deliverables in the  arrangement.  Each deliverable
that  meets  the   separation   criteria  is  considered  a  "separate  unit  of
accounting."  Management  allocates the total arrangement  consideration to each
separate  unit of  accounting  based on the relative fair value of each separate

                                      21
<PAGE>

unit of accounting. The amount of arrangement consideration that is allocated to
a unit of  accounting  that has already been  delivered is limited to the amount
that is not contingent upon the delivery of another separate unit of accounting.
After the arrangement  consideration has been allocated to each separate unit of
accounting,  management applies the appropriate  revenue  recognition method for
each separate unit of accounting as described  previously based on the nature of
the arrangement.  All deliverables  that do not meet the separation  criteria of
EITF No. 00-21 are combined  into one unit of  accounting,  and the  appropriate
revenue recognition method is applied.

     Processing   fee  revenue  is  earned  based  upon  the  actual  number  of
transactions  processed  through the Company's  processing  system.  Transaction
processing  fees are  recognized  in the period that the  service is  performed.
These fees are typically  charged on a per transaction  basis,  depending on the
arrangement with the customer.

(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 Company evaluates at each balance sheet date whether
events and  circumstances  have occurred that indicate possible  impairment.  If
there are indications of impairment,  the Company 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.


     This Form 10-QSB/A 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.  When used in this Form 10-QSB/A,  the words
"expects,"  "anticipates,"  "believes,"  "plans," "will" and similar expressions
are intended to identify forward-looking  statements.  These are statements that
relate to  future  periods  and  include,  but are not  limited  to,  statements
regarding  our  adequacy  of  capital  resources,  need and  ability  to  obtain
additional financing,  the features and benefits of our services,  our operating
losses and negative cash flow, and our 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 the  risks  set  forth  under  "Factors  That  May  Affect  Operating
Results." These forward-looking statements speak only as of the date hereof. The
Company  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.

FACTORS THAT MAY AFFECT OPERATING RESULTS

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

                                      22
<PAGE>

     The Company 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 Company  intends to
invest in marketing, strategic partnerships, and development of its client base.
If the Company 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 Company is also  subject to the  following  specific  factors  that may
affect the Company's operating results:

(a) COMPETITION

     The market for  electronic  payment  systems and  electronic POS systems is
intensely  competitive  and we expect  competition to continue to increase.  The
Company's  competitors  for POS systems include  VeriFone and Ingenico,  amongst
others, and companies such as Global Payments, First Data and Euroconnex for the
Company's electronic payment software.  In Finland the company faces competition
from  companies  such as  Point,  which is the  largest  terminal  vendor in the
Finnish  market,  as well as companies such as Screenway and Altdata,  which are
Point of Sale software  vendors.  In addition,  the companies  with whom we have
strategic relationships could develop products or services that compete with the
Company's products or services.  In addition,  some competitors in the Company's
market  have  longer  operating  histories,   significantly  greater  financial,
technical, marketing and other resources, and greater brand recognition than the
Company does. The Company also expects to face  additional  competition as other
established  and  emerging  companies  enter the market for  electronic  payment
solutions.  To be competitive,  the Company  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 Company's expenses and affect its profitability. In addition, if it
fails  to  make  this  investment,  the  Company  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  Company  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
Company'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 Company 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 Company to modify existing products.
There is also the risk to the  Company  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.  Further,  the
Company  expects  that its  revenue  during  fiscal  2006 will be  significantly
affected  by the timing and  success of the  introduction  of new  products  and
services during the fiscal year.

(c) NEW VERSIONS OF COMPANY'S PRODUCTS MAY CONTAIN ERRORS OR DEFECTS

     The  Company'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 Company's  products.  The Company
has in the past discovered  software errors in its new releases and new products
after their  introduction.  The Company has experienced delays in release,  lost
revenues and customer  frustration  during the period  required to correct these
errors. The Company 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 Company's business,  cash flow, financial condition and
results of operations could be materially adversely affected.


                                      23
<PAGE>

(d) NO ASSURANCE OF SUCCESSFUL AND TIMELY PRODUCT DEVELOPMENT

     The Company'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 Company's product development efforts will be
successfully  completed.  The  Company's  proposed  development  schedule may be
affected by a variety of  factors,  many of which will not be within the control
of the Company,  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 Company will be able to complete or
successfully  commercialize  new  products.  The  inability  of the  Company  to
successfully  complete the  development  of new products or to do so in a timely
manner,  could force the Company to scale back  operations,  or cease operations
entirely.

(e) MARKET ACCEPTANCE

     The  Company's  success  is  dependent  on  the  market  acceptance  of its
products.  Market acceptance of the Company's products will be dependent,  among
other  things,  upon  quality,  ease  of  use,  speed,  reliability,   and  cost
effectiveness. Even if the advantages of the Company'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  Company'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 Company 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  Company,  that  others  will not  develop  services  that are similar or
superior to the  Company's,  or that third  parties  will not copy or  otherwise
obtain and use the Company's proprietary  information without authorization.  In
addition,  certain of the Company's know-how and proprietary  technology may not
be patentable.

     The Company may rely on certain  intellectual  property licensed from third
parties,  and may be required to license additional  products or services in the
future.  There can be no  assurance  that these  third  party  licenses  will be
available or will continue to be available to the Companion  acceptable terms or
at all. The  inability to enter into and  maintain any of these  licenses  could
have a material adverse effect on the Company's business, financial condition or
operating results.

     There is a risk  that  some of the  Company's  products  may  infringe  the
proprietary rights of third parties.  In addition,  whether or not the Company'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 Company,  it may be required to modify its products or seek licenses
for these  intellectual  property rights.  The Company may not be able to modify
its products or obtain  licenses on commercially  reasonable  terms, in a timely
manner or at all. The Company's failure to do so could have a negative affect on
its business and revenues.

(g) DEPENDENCE ON SUPPLIERS

     The  Company  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  Company  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 Company is unable to obtain components in a timely
manner,  at an  acceptable  cost,  or at all, the Company may need to select new
suppliers or redesign or reconstruct  processes  used to build its products.  In
such an  instance,  the Company  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.

                                       24
<PAGE>

(i) KEY PERSONNEL

     The  Company's  success is largely  dependent on the  personal  efforts and
abilities of its senior management. The loss of certain members of the Company'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  Company  intends  to  recruit in fiscal  year 2006  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 Company's business. As a result, the
Company  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) LIMITATIONS ON LIABILITY AND INDEMNIFICATION

     The Company's  articles of incorporation  and bylaws include  provisions to
the effect that we may indemnify any director,  officer, or employee, as well as
limit the  liability  of such  persons.  In addition,  provisions  of Nevada law
provide for such  indemnification,  as well as for a limitation  of liability of
our directors and officers for monetary  damages  arising from a breach of their
fiduciary duties. Any limitation on the liability of any director or officer, or
indemnification  of  any  director,   officer,  or  employee,  could  result  in
substantial  expenditures being made by the Company in covering any liability of
such persons or in indemnifying them.

(k) LITIGATION

     As stated under Legal Proceedings,  the Company 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  Company's  business,  and could  negatively  impact its revenues,
operating margins, and net income.

ITEM 3.  CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

     The Company  maintains  disclosure  controls and  procedures (as defined in
Rule 13a-15(e) and Rule 15d-15(e) under the Securities  Exchange Act of 1934, as
amended) that are designed to ensure that  information  required to be disclosed
in our periodic  reports  filed under the  Exchange Act is recorded,  processed,
summarized and reported within the time periods specified in the SEC's rules and
forms,  and  that  such  information  is  accumulated  and  communicated  to our
management,  including our principal  executive officer and principal  financial
officer, to allow timely decisions regarding required disclosure.

     As of the end of the period covered by this report,  our management carried
out an  evaluation,  under the  supervision  and with the  participation  of our
principal  executive officer and principal  financial officer, of our disclosure
controls and  procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the
Exchange Act). Based upon the evaluation,  our principal  executive  officer and
principal   financial  officer  concluded  that  our  disclosure   controls  and
procedures  were  effective  at a  reasonable  assurance  level to  ensure  that
information required to be disclosed by us in the reports that we file or submit
under the Exchange Act is recorded,  processed,  summarized and reported, within
the time  periods  specified  in the SEC's  rules and forms.  In  addition,  our
principal  executive officer and principal  financial officer concluded that the
Company's  disclosure  controls and  procedures  were  effective at a reasonable
assurance  level to ensure  that  information  required to be  disclosed  in the
reports that the Company files or submits under the Exchange Act is  accumulated
and communicated to the Company's management,  including our principal executive
officer and principal  financial  officer,  to allow timely decisions  regarding
required disclosure.



                                       25
<PAGE>



CHANGES IN DISCLOSURE CONTROLS AND PROCEDURES

     There were no changes in the Company'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,  there have been no material  changes to the
legal  proceeding  or  investigations  reported  in  Part  II,  Item 1 -  "Legal
Proceedings" in the Company's Form 10-QSB filed with the SEC on December 6, 2005
(the "Prior  10-Q").  Other than as set forth  below or in the Prior  10-Q,  the
Company is not a party to any material pending legal proceeding and, to the best
of its knowledge, no such action against the Company has been threatened.

CYBERNET VENTURES V. DIGITAL COURIER TECHNOLOGIES, INC. ET AL.

     On April 18, 2002, Cybernet Ventures,  Inc.  ("Cybernet") filed a complaint
in Los Angeles  County  Superior  Court  alleging  that  between  April 1999 and
December 2001, Digital Courier  Technologies,  Inc. ("DCTI") engaged in wrongful
conduct  with  respect to its  performance  of certain  credit  card  processing
agreements  with  DCTI.  Cybernet's  complaint  asserts  legal  causes of action
against    DCTI   for   fraud,    intentional    misrepresentation,    negligent
misrepresentation, conversion, unjust enrichment, and interference with economic
relations.

     Unbeknownst  to the  Company,  on June 11,  2003  Cybernet  filed its First
Amended  Complaint adding the Company as a "Doe"  defendant,  without adding any
specific  claims for relief.  In March 2005,  again  unbeknownst to the Company,
Cybernet secured a $2,200,000 default judgment against the Company.

     On July 25, 2005,  after  consideration of the papers filed by the parties,
and the arguments of counsel,  the Court reversed its early judgment and vacated
the $2,200,000  default  judgment that had been entered against the Company.  On
July 26,  2005,  the  Company  moved the Court to  dismiss  the  entire  amended
complaint against the Company.

     On September 12, 2005,  Cybernet filed a Second Amended  Complaint  against
the Company seeking $2,200,000 in damages, alleging that the Company had engaged
in a  "defacto"  merger  with DCTI and  therefore  should be  subject  to DCTI's
financial  obligations.  On December  29, 2005,  the Company  filed a motion for
summary judgment against Cybernet. The Court has not yet ruled on that motion.


     Management  believes  that the Company  will  prevail on the merits and the
Company intends to defend itself vigorously. However, this matter remains in the
early  stages of  litigation  and there can be no assurance as to the outcome of
the  lawsuit  or  that  the  Company's  motion  for  summary  judgment  will  be
successful.  Litigation is subject to inherent  uncertainties,  and  unfavorable
rulings could occur.  Any such unfavorable  rulings,  such as an award for money
damages to Cybernet,  could result in a material adverse impact on the Company's
financial condition, results of operations, and liquidity.

     From time to time,  we may become  involved in various  lawsuits  and legal
proceedings which arise in the ordinary course of business.  However, litigation
is subject to inherent  uncertainties,  and an adverse  result in these or other
matters  may  arise  from  time to time  that may harm our  business.  Except as
disclosed  below,  we are currently not aware of any such legal  proceedings  or
claims that we believe will have,  individually or in the aggregate,  a material
adverse affect on our business, financial condition or operating results.

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

     The  Company  made  the  following  sales  of   unregistered   (restricted)
securities  during  the  quarter  ended on  December  31,  2005 (not  previously
reported in a Form 8-K):

          (a) On October 13, 2005,  the Company issued  6,650,000  shares of its
common stock to an investor for $798,000  cash, or $0.12 per share.  Payment for
these shares had been received by the Company in a prior period.


                                       26
<PAGE>


          (b) On November 18, 2005, the Company issued  1,683,333  shares of its
common stock to an investor for $202,000  cash, or $0.12 per share.  Payment for
these shares had been received by the Company in a prior period.

          (c) On November 18, 2005,  the Company  issued  300,000  shares of its
common stock  valued at $81,000 or $0.27 per share to a consultant  for services
to be provided over a twelve month period.

          (d) On November 30, 2005,  the Company  issued  150,000  shares of its
common  stock  valued at $30,000 or $0.20 per share to an  employee as a service
bonus.

          (e) On December  2, 2005,  the Company  issued  150,000  shares of its
common stock  valued at $42,000 or $0.28 per share to a consultant  for services
provided.

          (f) On December 21, 2005, the Company issued an aggregate of 2,000,000
shares of its common stock valued at $400,000 or $0.20 per share to 3 investors.
Payment for these shares had not been received at December 31, 2005.

     No commissions were paid in connection with any of these sales. These sales
were undertaken under Rule 506 of Regulation D under the Securities Act of 1933.
Each of the  transactions  did not  involve  a public  offering  and each of the
investors represented that he/she was a "sophisticated" or "accredited" investor
as defined in Rule 502 of Regulation D.

     There have been no  purchases of common stock of the Company by the Company
or its affiliates during the three months ended December 31, 2005.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

         Not applicable.


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

         None.

ITEM 5.  OTHER INFORMATION.

SUBSEQUENT EVENT

Private Placement of Common Stock
---------------------------------

On January 27, 2006, the Company signed subscription  agreements with a group of
offshore investors ("Investors") for the sale of an aggregate of $9.2 million in
Company common stock, plus warrants (the "Financing").

The Company will issue 46 million newly issued shares of restricted common stock
under  Regulation  S at $0.20 per share,  plus  warrants  to purchase 50 million
shares of Company common stock with two-year  exercise periods and strike prices
ranging from $1.50 to $8.50. Pursuant to the terms of the Financing, the Company
will issue all 46 million  shares  immediately,  which will be held in escrow by
Carl Hessel ("Escrow  Agent"),  a director and major  stockholder of the Company
based in Geneva, Switzerland, along with the warrants. The Investors are to make
the first payment of $4.6 million  dollars  within 7 days of the issuance of the
shares  and a  second  payment  of  $4.6  million  dollars  within  four  months
thereafter.  One-half of the shares and warrants  will be released by the Escrow
Agent to the Investors  upon receipt of the first payment and the second half of
the shares and warrants will be released by the Escrow Agent upon receipt of the
second  payment from the  Investors.  If any Investor fails to make the required
payments, such Investor's portion of the shares and warrants will be returned to
the Company by the Escrow Agent for  cancellation.  As of February 20, 2006, the
Company  had  received  approximately  $4,600,000  in the  form of  proceeds  or
confirmed commitments in connection with this offering.

ITEM 6.  EXHIBITS.

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


                                      27
<PAGE>


                                   SIGNATURES

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

                                     FREESTAR TECHNOLOGY CORPORATION

Dated: July 21, 2006                  By: /s/ Paul Egan
                                         ---------------------------------------
                                             Paul Egan
                                             Chief Executive Officer

Dated: July 21, 2006                  By: /s/ Ciaran Egan
                                         ---------------------------------------
                                             Ciaran Egan Secretary/Treasurer/
                                             Chief Financial Officer

                                       28
<PAGE>


                                  EXHIBIT INDEX

Number                                      Description
------            --------------------------------------------------------------

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).

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

4.2               Certificate  of  Designation  (Series  A),  dated June 9, 2005
                  (incorporated  by  reference  to  Exhibit  4.1 of the Form 8-K
                  filed on October 20, 2005).

4.3               Certificate  of  Designation  (Series  B),  dated June 9, 2005
                  (incorporated  by  reference  to  Exhibit  4.2 of the Form 8-K
                  filed on October 20, 2005).

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).


                                       29