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

                                   FORM 10-QSB

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2004

                                       OR

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


                         COMMISSION FILE NUMBER: 0-28749


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

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


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

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

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

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant  was  required to file such  reports),  and (2) been  subject to such
filing requirements for the past 90 days. Yes  X   No    .
                                             -----   ----

         As of December 31, 2004,  the  Registrant  had 70,717,750 (1) shares of
common stock issued and outstanding.

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

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

                                       1

<PAGE>

                                TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION                                              PAGE

            ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)

                     CONDENSED CONSOLIDATED BALANCE
                     SHEET AS OF DECEMBER 31, 2004............................3

                     CONDENSED CONSOLIDATED STATEMENTS OF LOSSES
                     AND COMPREHENSIVE LOSSES FOR THE THREE AND SIX MONTHS
                     ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003............4

                     CONDENSED CONSOLIDATED STATEMENTS
                     OF CASH FLOWS FOR THE SIX MONTHS ENDED
                     DECEMBER 31, 2004 AND DECEMBER 31, 2003..................5

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

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

            ITEM 3.  CONTROLS AND PROCEDURES.................................29

PART II - OTHER INFORMATION

            ITEM 1.  LEGAL PROCEEDINGS.......................................30

            ITEM 2.  UNREGISTERED SALES OF EQUITY
                     SECURITIES AND USE OF PROCEEDS..........................32

            ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.........................32

            ITEM 4.  SUBMISSION OF MATTERS TO A VOTE
                     OF SECURITY HOLDERS.....................................32

            ITEM 5.  OTHER INFORMATION.......................................33

            ITEM 6.  EXHIBITS................................................33

SIGNATURES...................................................................34

                                       2

<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                         FREESTAR TECHNOLOGY CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2004
                                   (Unaudited)

                                     ASSETS
Current assets:
  Cash and cash equivalents                                         $   28,794
  Accounts receivable, net of allowance for doubtful
    accounts of $37,332                                                219,689
  Other current assets                                                  92,295
                                                                    ----------

      Total current assets                                             340,778

Property, plant and equipment, net of accumulated
  depreciation and amortization                                         87,222

Software license, net of accumulated amortization                    1,790,249
Customer relationships and contracts, net of
   accumulated amortization                                          1,702,559
Software, net of accumulated amortization                            1,074,144
                                                                    ----------

      Total assets                                                  $4,994,952
                                                                    ==========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable and accrued expenses                              1,281,251
  Due to related parties for advances                                  187,783
  Accrued salaries - officers                                          128,553
                                                                    ----------

      Total current liabilities                                      1,597,587
                                                                    ----------

Stockholders' equity:
  Convertible  preferred  stock,  series A, $0.001
     par value, 1,000,000 shares authorized; 1,000,000
     shares issued and outstanding                                       1,000
  Convertible  preferred  stock,  series B, $0.001
     par value, 4,000,000 shares authorized; 2,500,000
     shares issued and outstanding                                       2,500
  Additional paid-in capital - preferred stock                       2,229,558
 Common stock, $0.001 par value, 500,000,000 shares
   authorized; 70,717,750 (1)shares issued and outstanding              70,718
 Additional paid-in capital - common stock                          29,171,010
 Share cancellation receivable                                      (2,434,628)
 Subscription receivable                                              (648,693)
 Deferred compensation                                                (709,656)
 Accumulated deficit                                               (24,339,972)
 Accumulated other comprehensive gain  (loss)                           55,528
                                                                  ------------

     Total stockholders' equity                                      3,397,365
                                                                  ------------

                                                                  $  4,994,952
                                                                  ============

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


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

                                       3
<PAGE>

                         FREESTAR TECHNOLOGY CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF LOSSES
                            AND COMPREHENSIVE LOSSES
                                   (Unaudited)

<TABLE>
<CAPTION>
                                               Three Months   Three Months    Six Months    Six Months
                                                  Ended          Ended          Ended         Ended
                                               December 31,   December 31,   December 31,  December 31,
                                                   2004           2003           2004          2003
                                                                                           (Restated) (1)
                                               -----------    -----------    -----------    -----------
<S>                                            <C>            <C>            <C>            <C>
Revenue                                        $   424,772    $   361,431    $   790,724    $   661,374

Cost of revenue                                    258,380        282,776        428,295        435,435
                                               -----------    -----------    -----------    -----------

Gross profit                                       166,392         78,655        362,429        225,939

Non-cash compensation                              692,526        611,552      1,273,192      1,643,408

Selling, general and administrative expenses       823,317        720,151      1,415,832      1,315,956
                                               -----------    -----------    -----------    -----------

Loss from operations                            (1,349,451)    (1,253,048)    (2,326,595)    (2,733,425)

Interest expense                                      (852)       (15,910)        (1,904)       (32,461)
                                               -----------    -----------    -----------    -----------

Net Loss                                        (1,350,302)    (1,268,958)    (2,328,498)    (2,765,886)

Other comprehensive income                          50,981        112,965         64,943        125,896
                                               -----------    -----------    -----------    -----------

Comprehensive loss                             $(1,299,321)   $(1,155,993)   $(2,263,555)   $(2,639,990)
                                               ===========    ===========    ===========    ===========

Loss per share - basic and diluted             $     (0.02)   $     (0.02)   $     (0.03)   $     (0.06)
                                               ===========    ===========    ===========    ===========

Weighted average shares outstanding -
    basic and diluted (2)                       69,401,578     54,644,255     68,767,972     42,079,843
                                                ==========     ==========     ==========     ==========
</TABLE>

(1)  See Note 5.

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

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

                                       4

<PAGE>

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

<TABLE>
<CAPTION>
                                                         Six Months     Six Months
                                                           Ended           Ended
                                                        December 31,   December 31,
                                                            2004           2003
                                                        -----------    -----------
<S>                                                     <C>            <C>
Cash flows from operating activities:
   Net loss                                             $(2,328,498)   $(2,765,886)

Adjustments to reconcile net loss to net cash
  provided by operating activities:
         Depreciation and amortization                      291,410        258,222

         Non-cash compensation                            1,273,192      1,643,408

   Changes in assets and liabilities:
      (Increase) decrease in assets
         Accounts receivable                                (48,083)       (35,629)
         Inventories                                              -         56,553
         Deferred revenue                                         -        (29,917)
         Other assets                                       (62,253)       (96,898)
      Increase (decrease) in liabilities
         Accounts payable and accrued expenses              102,723        393,329
         Due to shareholders                                128,553         16,475
                                                        -----------    -----------

            Total adjustments                             1,685,542      2,205,543
                                                        -----------    -----------

            Net cash used in operating activities          (642,956)      (560,343)
                                                        -----------    -----------

Cash flows from investing activities:
   Purchase of fixed assets                                 (42,373)       (11,911)

   Purchase of software and capitalized software cost      (225,600)      (385,406)

   Investment in TransAxis, Inc.                                 --        (75,000)
                                                        -----------    -----------

            Net cash used in investing activities          (267,973)      (472,317)
                                                        -----------    -----------
Cash flows from financing activities:

   Proceeds from sale of common stock                            --      1,046,152

   Proceeds from exercise of stock options/warrants         804,000        307,500

   Advances (repayments) from related party, net            184,500        (11,585)
                                                        -----------    -----------

            Net cash provided by financing activities       988,500      1,342,067
                                                        -----------    -----------

Net increase in cash and cash equivalents                    77,571        309,407
</TABLE>

                                       5

<PAGE>

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

<TABLE>
<CAPTION>
                                                         Six Months    Six Months
                                                           Ended        Ended
                                                        December 31,   December 31,
                                                            2004          2003
                                                        -----------    -----------
<S>                                                     <C>            <C>
Foreign currently translation adjustments                  (254,982)        16,311

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

Cash and cash equivalents, end of period                $    28,794    $   590,141
                                                        ===========    ===========
Supplemental disclosure of cash flow information:
   Interest paid                                        $        --    $        --
                                                        ===========    ===========

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

   Effect of reverse split of common stock              $   409,906    $        --
                                                        ===========    ===========
   Shares and warrants and options  issued
      for services                                      $   586,558    $ 1,643,408
                                                        ===========    ===========

   Cancellation of shares of common stock               $   150,000    $        --
                                                        ===========    ===========
   Issuance of 4,000,000 shares of common stock
      to replace shares contributed by a
      shareholder for a debt conversion                 $        --    $   270,000
                                                        ===========    ===========
   Issuance of 7 million shares of common stock
      for unpaid accrued salaries to officers
      and salaries                                      $        --    $   343,000
                                                        ===========    ===========
   Debt to related party incurred in relation to
      convertible  notes payable and related
      accrued expenses paid off by shares owned
      by the president of the Company                   $        --    $   679,869
                                                        ===========    ===========

   Issuance of 8,383,418 shares for investment
      in TransAxis, Inc.                                $        --    $ 1,431,028
                                                        ===========    ===========
</TABLE>

                 The accompanying notes form an integral part of
                these 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, 2004. In the opinion of management,  these condensed consolidated
financial  statements  reflect all adjustments  which are of a normal  recurring
nature and which are necessary to present  fairly the financial  position of the
Company as of December 31, 2004, the results of operations  for the  three-month
and six-month  periods ended  December 31, 2004 and 2003, and cash flows for the
six months ended  December 31, 2004 and 2003.  The results of operations for the
six-month  period ended December 31, 2004 are not necessarily  indicative of the
results that may be expected for the entire fiscal year.

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

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

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

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

The  accompanying  consolidated  financial  statements  have  been  prepared  in
conformity with accounting principles generally accepted in the United States of
America,  which  contemplate  continuation  of the  Company as a going  concern.
However,  the Company has reported a net loss of  $2,328,498  for the six months
ended December 31, 2004 and $6,335,273 for the year ended June 30, 2004, and had
an  accumulated  deficit of  $24,339,972  as of December 31,  2004.  The

                                       7

<PAGE>

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

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

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

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

Stock Based Compensation.
-------------------------

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

                                       8

<PAGE>

underlying  shares on the date of grant, no compensation  expense is recognized.
Options or shares awards issued non-employees are valued using the Black-Scholes
pricing model and expensed over the period services are provided.

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

<TABLE>
<CAPTION>
                                     Three Months Ended             Six Months Ended
                                        December 31,                  December 31,
                                --------------------------    --------------------------
                                    2004           2003           2004           2003
                                -----------    -----------    -----------    -----------
<S>                             <C>            <C>            <C>            <C>
Net loss, as reported           $(1,350,302)   $(1,268,958)   $(2,328,498)   $(2,765,886)

Compensation recognized under
APB No. 25                                0              0              0              0

Compensation recognized under
SFAS 123                                  0              0              0              0
                                -----------    -----------    -----------    -----------

Pro forma net loss              $(1,350,302)   $(1,268,958)   $(2,328,498)   $(2,765,886)
                                ===========    ===========    ===========    ===========

Pro forma loss per share        $     (0.02)   $     (0.02)   $     (0.03)   $     (0.08)
                                ===========    ===========    ===========    ===========
</TABLE>

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

In accordance with SFAS No. 86,  "Accounting for the Costs of Computer  Software
to be Sold, Leased or Otherwise Marketed," the Company capitalizes certain costs
related to the  development  of new  software  products  or the  enhancement  of
existing software products for use in our transaction processing software. These
costs are capitalized from the point in time that technological  feasibility has
been  established,  as evidenced by a working model or detailed  working program
design to the point in time that the product is available for general release to
customers.  Capitalized development costs are amortized on a straight-line basis
over the estimated economic lives of the products, beginning when the product is
placed  into  service.   Research  and

                                       9

<PAGE>

development costs incurred prior to establishing  technological  feasibility and
costs incurred subsequent to general product release to customers are charged to
expense as  incurred.  The  Company  periodically  evaluates  whether  events or
circumstances have occurred that indicate that the remaining useful lives of the
capitalized  software  development costs should be revised or that the remaining
balance of such assets may not be recoverable.

As of June 30, 2004, the Company capitalized $506,424 of software development in
accordance  with SFAS No. 86. During the six months ended December 31, 2004, the
Company placed into service $152,652, and capitalized an additional $183,610. As
of December 31, 2004, the Company has  capitalized a net amount of $537,382 that
is yet to be placed onto service.

Software costs also include the Enhanced Transactions Secured Software ("ETSS"),
which was  originally  contributed  by the founder and president of  ePayLatina,
S.A. This software is essential for the use of the Company's  ePayPad.  Software
costs also include the development costs related to adding  enhancements to this
software  consisting  primarily of labor cost. Software costs are amortized on a
straight-line  basis  over a period  of  three  years.  These  costs  have  been
substantially amortized as of December 31, 2004.

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

On  December  16,  2004,  the FASB  issued  Statement  No. 123  (revised  2004),
Share-Based  Payment,  which is a revision of FASB Statement No. 123, Accounting
for Stock-Based  Compensation.  Statement 123(R)  supersedes APB Opinion No. 25,
Accounting  for Stock Issued to  Employees,  and amends FASB  Statement  No. 95,
Statement of Cash Flows. Generally,  the approach in Statement 123(R) is similar
to the approach  described in Statement 123. However,  Statement 123(R) requires
all  share-based  payments to  employees,  including  grants of  employee  stock
options,  to be recognized in the income  statement  based on their fair values.
Pro forma  disclosure  is no longer  an  alternative.  The  Company  will  adopt
Statement  123(R) on July 1, 2005.  Statement 123(R) permits public companies to
adopt its requirements using one of two methods:


1) A "modified  prospective"  method in which  compensation  cost is  recognized
beginning  with the effective  date (a) based on the  requirements  of Statement
123(R) for all  share-based  payments  granted after the effective  date and (b)
based on the  requirements  of Statement 123 for all awards granted to employees
prior to the  effective  date of  Statement  123(R) that remain  unvested on the
effective date.

2) A "modified  retrospective"  method which  includes the  requirements  of the
modified  prospective  method  described  above,  but also  permits  entities to
restate  based on the amounts  previously  recognized  under  Statement  123 for
purposes of pro forma disclosures  either (a) all prior periods presented or (b)
prior interim periods of the year of adoption.

The Company will adopt Statement 123(R) on July 1, 2005, however,  management is
still evaluating which method to adopt.

As permitted by Statement 123, the company  currently  accounts for  share-based
payments to employees  using Opinion 25's  intrinsic  value method and, as such,
generally   recognizes  no   compensation   cost  for  employee  stock  options.
Accordingly,  the adoption of Statement  123(R)'s  fair value method will have a
significant impact on our result of operations,  although it will have no impact
on our overall  financial  position.  The impact of adoption of Statement 123(R)
cannot be predicted at this time because it will depend on levels of share-based
payments  granted in the future.  However,  had we adopted  Statement  123(R) in
prior periods, the impact of that standard would have approximated the impact of
Statement  123 as  described  in the  disclosure  of pro  forma net  income  and
earnings per share in Note 1 to our consolidated financial statements. Statement
123(R) also  requires the  benefits of tax  deductions  in excess of  recognized
compensation  cost to be reported as a  financing  cash flow,  rather than as an
operating cash flow as required under current literature.  This requirement will
reduce net operating cash flows and increase net financing cash flows in periods
after  adoption.  The Company cannot  estimate what those amounts will be in the
future because they depend on, among other things, when employees exercise stock
options.

In November  2004, the FASB issued FAS 151,  "Inventory  Costs * an amendment of
ARB No. 43,  Chapter 4" ("FAS 151").  FAS 151 amends the guidance in  Accounting
Research  Bulletin  (ARB) No.  43,  Chapter  4, to clarify  the  accounting  for
abnormal amounts of idle facility expense,  freight,  handling costs, and wasted
material (spoilage).  FAS 151 requires that these costs be recognized as current
period  charges  regardless of whether they are abnormal.  In addition,  FAS 151
requires  that  allocation  of  fixed  production  overheads  to  the  costs  of
manufacturing be based on the normal capacity of the production facilities.  The
provisions of FAS 151 are effective for inventory  costs incurred  during fiscal
years  beginning  after June 15,  2005.  The  Company  does not expect  this new
standard to have a material  effect on its  consolidated  financial  position or
results of operations


                                       10
<PAGE>


2. COMMON STOCK

Reverse Stock-split.
--------------------

Effective  November 8, 2004, the Company  implemented a 1-for-7 reverse split of
its common stock. All references to the financial  statements and notes thereto,
numbers  of  shares  and share  amounts  outstanding,  have  been  retroactively
restated to reflect the reverse stock-split.

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

During the six months  ended  December 31,  2004,  the Company  entered into the
following transactions

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

The Company  issued  142,857  shares  (post  reverse-split)  of its common stock
registered  under Form S-8 at $0.49 per share to a  consultant  for  current and
future services for a value of $70,000.

The Company  issued  200,000  shares  (post  reverse-split)  of its common stock
registered  under Form S-8 at $0.237 per share to a  consultant  for current and
future services for a value of $47,358.

The Company issued 200,000  shares (post  reverse-split)  of its common stock to
registered  under  Form  S-8 at $0.39  per  share to a  consultant  for  current
services for a value of $78,000.

All  valuations of common stock issued for services were based upon the value of
the services  rendered,  which did not differ  materially from the fair value of
the Company's common stock during the period the services were rendered.

Also during the six months ended  December 31, 2004,  the Company issued options
to purchase 2,142,857 shares of common stock at a price of $0.175 per share. The
fair valuie of these  options was  calculated  using the  Black-Scholes  pricing
model,  and the amount of  $255,200  was  charged to  operations  during the six
months ended December 31, 2004.

Also during the six months ended December 31, 2004, deferred compensation in the
amount of $686,634 was charged to operations.

Recovery of Shares Issued in Error.
-----------------------------------

During the six months ended  December 31, 2004,  the Company  recovered  142,857
(post reverse-split) shares of common stock valued at $150,000 previously issued
in error.

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

During the six months ended December 31, 2004, the Company received  $429,000 in
cash relating to stock options exercised during the twelve months ended June 30,
2004. No cash was received at the time of the exercise. The total exercise price
of these options was $500,000  representing the purchase of 10,000,000 shares of
the  Company's  restricted  common  stock.  At December 31, 2004,  the amount of
$479,000 has been collected for this options  exercise,  and $21,000  remains in
subscriptions receivable.

Also during the six months  ended  December 31,  2004,  the Company  received an
additional  $375,000 in cash relating to stock options  exercised during the six
months ended December 31, 2004.

3. SEGMENT INFORMATION

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

                                       11

<PAGE>

<TABLE>
<CAPTION>
                                               Three Months Ended              Six Months Ended
                                                   December 31,                  December 31,
                                           --------------------------    --------------------------
                                               2004           2003           2004           2003
                                           -----------    -----------    -----------    -----------
<S>                                        <C>            <C>            <C>            <C>
Sales to external customers:
PaySafe                                    $        --    $        --    $        --    $        --
Rahaxi                                         424,772        361,431        790,724        661,374
                                           -----------    -----------    -----------    -----------
Total sales to external customers:         $   424,772    $   361,431    $   790,724    $   661,374
                                           ===========    ===========    ===========    ===========
Depreciation and amortization:
PaySafe                                    $    13,579    $    30,327    $    23,575    $    59,251
Rahaxi                                         134,101        120,327        267,835        198,971
                                           -----------    -----------    -----------    -----------
Total depreciation and amortization:       $   147,680    $   150,654    $   291,410    $   258,222
                                           ===========    ===========    ===========    ===========
Selling, general and administrative
expense without depreciation and
amortizaton:
PaySafe                                    $   449,532    $   484,781    $   783,326    $   919,509
Rahaxi                                         226,105         84,716        341,096        138,225
                                           -----------    -----------    -----------    -----------
Total general and administrative expense   $   675,637    $   569,497    $ 1,124,422    $ 1,057,734
                                           ===========    ===========    ===========    ===========
Capital expenditures:
PaySafe                                    $    21,903    $     4,129    $    25,771    $    28,546
Rahaxi                                         145,575        282,839        242,202        368,771
                                           -----------    -----------    -----------    -----------
Total capital expenditures                 $   167,478    $   286,968    $   267,973    $   397,317
                                           ===========    ===========    ===========    ===========
Net income (loss):
PaySafe                                    $(1,157,411)   $(1,154,313)   $(2,107,426)   $(2,626,309)
Rahaxi                                        (192,891)      (114,645)      (221,072)      (107,116)
                                           -----------    -----------    -----------    -----------
Total operating income (loss)              $(1,350,302)   $(1,268,958)   $(2,328,498)   $(2,733,425)
                                           ===========    ===========    ===========    ===========
Segment assets:
PaySafe                                    $    98,886    $ 2,186,130    $    98,886    $ 2,186,130
Rahaxi                                       4,896,066      4,957,625      4,896,066      4,957,625
                                           -----------    -----------    -----------    -----------
Total segment assets                       $ 4,994,952    $ 7,143,755    $ 4,994,952    $ 7,143,755
                                           ===========    ===========    ===========    ===========
</TABLE>

                                       12

<PAGE>

4. RELATED PARTY TRANSACTIONS

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,  2004,  the Company has  recorded the amount of $75,753 in accrued
salary due to Mr. Egan.  This amount is shown as Accrued  Salaries - Officers in
the accompanying Consolidated Condensed Balance Sheet as of December 31, 2004.

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,  2004,  the Company has recorded the amount of
$52,800  in  accrued  salary due to Mr.  Egan.  This  amount is shown as Accrued
Salaries - Officers in the accompanying  Consolidated Condensed Balance Sheet as
of December 31, 2004.

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

Paul Egan has advanced funds to the Company for its operations.  The Company was
indebted  to the Mr. Egan for  $22,658 at June 30,  2004.  During the six months
ended December 31, 2004,  Mr. Egan advanced the Company an additional  $122,653.
At December 31,  2004,  the Company is indebted to Mr. Egan in the net amount of
$158,236,  including  interest of $12,925.  The entire  amount of principal  and
interest is shown in the Due To Related Parties For Advances in the accompanying
Condensed  Consolidated  Balance Sheet as of December 31, 2004.  Interest on the
unpaid balances is accrued at the rate of 7% per annum.

Ciaran Egan has advanced  funds to the Company for its  operations.  The Company
was  indebted to Mr. Egan for  $30,178 at June 30,  2004.  During the six months
ended  December 31, 2004,  the Company repaid Mr. Egan the net amount of $1,381.
At December 31,  2004,  the Company is indebted to Mr. Egan in the net amount of
$29,547, including interest of $750. The entire amount of principal and interest
is shown in Due To Related  Parties For Advances in the  accompanying  Condensed
Consolidated  Balance  Sheet as of  December  31,  2004.  Interest on the unpaid
balances is accrued at the rate of 7% per annum.

5. CHANGE IN PRIOR PERIOD

During the audit of the  Company's  financial  statements  for the twelve months
ended June 30, 2004,  the Company made an  accounting  adjustment  for a certain
transaction  that occurred during the three months ended September 30, 2003. The
Company  sold  15,700,000  restricted  shares  of common  stock to a  previously
unaffiliated third party at $0.01 per shares. The Company originally charged the
difference between the sales price of the stock and the market price of $909,000
to non-cash  compensation.  This adjustment  reverses the charge to expense,  in
order to maintain  consistency in the manner which similar transactions had been
recorded.  The result of this adjustment was a decrease in non-cash compensation
expense of $909,000 and a  corresponding  decrease in the net less for the three
months ended  September 30, 2003 and six months ended December 31, 2003. The net
effects of the adjustment for the three months ended  September 30, 2003 and the
six months ended December 31, 2003 are as follows:

<TABLE>
<CAPTION>
                                       Three Months                        Six Months
                                    Ended September 30,                Ended December 31,
                                           2003                               2003
                             ----------------------------------  --------------------------------
                              As Originally                        As Originally
                                 Reported        Restated            Reported        Restated
                             ----------------------------------  --------------------------------
<S>                          <C>                <C>                 <C>            <C>
Non-cash compensation            1,940,856       1,031,856            2,552,408     1,643,408
Net loss                        (2,405,928)     (1,268,958)           3,674,886     2,765,886
Loss per share -
    basic and diluted           $    (0.04)     $    (0.02)          $    (0.09)   $    (0.06)
</TABLE>

                                       13
<PAGE>

6. LEGAL PROCEEDINGS

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


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

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

Overview.
--------

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

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

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

         For the Registrant to derive revenue outside of its Finnish operations,
the  Registrant  first had to perform a major  hardware and software  upgrade at
Rahaxi,  as Rahaxi is the core operating  system of the  Registrant's  products.
This  upgrade was  completed  in  December  2003,  and evolved the  Registrant's
business critical systems to the latest  Hewlett-Packard  ("HP") NonStop servers
and BASE24 e-payment  processing  software.  HP NonStop servers are estimated to
run  approximately  95% of the world's secure  transactions,  making the NonStop
platform the backbone for the world's most  demanding and critical  environments
and  offering  the  Registrant  a  secure,   continuously  available  processing


                                       14
<PAGE>

platform.  A vastly scalable  platform,  HP NonStop provides the Registrant with
the ability to achieve an adaptive  enterprise by enabling it to respond quickly
and easily to changing  business  needs,  such as managing the expected  growing
number of transactions and the need for increased capacity.

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

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

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

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

         The  Registrant's  principal  offices are in Santo  Domingo,  Dominican
Republic; the Registrant also has offices in Helsinki, Finland; Dublin, Ireland;
and Geneva, Switzerland.  While the Registrant's offices in Finland, Ireland and
Switzerland will primarily focus on the European market, the company's office in
the Dominican  Republic will continue to pursue  opportunities  in the Caribbean
and Latin America.  Management  believes that these emerging markets could offer
favorable  opportunities  in the  longer  term.  The  Registrant  has  initiated
discussions  with  regard to  establishing  a market for its  products  in Asia,
specifically  China;  representatives  of the company  have visited  China,  the
introductions being hosted and arranged by Xinhua Financial Network.

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

                                       15

<PAGE>

RESULTS OF  OPERATIONS - THREE MONTHS ENDED  DECEMBER 31, 2004 COMPARED TO THREE
MONTHS ENDED DECEMBER 31, 2003

(a) Revenue.
------------

         The  Registrant  recognized  revenue of $424,772  for the three  months
ended December 31, 2004 compared to $361,431 for the three months ended December
31, 2003, a increase of $63,341 or  approximately  18%.  The increase was due to
an increase in processing fees generated by the Registrant's  subsidiary  Rahaxi
Processing  Oy. The  Registrant  expects this trend to continue  throughout  the
remainder of fiscal 2005 as 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 ,2004 the  Registrant  processed
4,285,230 transactions,  an increase of 1,127,946, or 33.58%, over the 3,358,284
transactions  that were  processed in the  corresponding  period ended  December
31,2003.

         The Registrant  expects revenue levels to increase  throughout the next
twelve months as the company  continues to introduce its service  offerings such
as EMV  transaction  processing , the Registrant  believes that it will derive a
higher price per transaction for processing EMV  transactions as compared to non
EMV transactions; however, there can be no guarantee that the company's products
will  be  accepted  in the  marketplace  or  that  its  sales  efforts  will  be
successful. Please see "Factors That May Affect Operating Results."

         The  majority of the  Registrant's  revenue for the three  months ended
December  31,  2004  was from  indirect  merchant  services,  where  revenue  is
generated on services  primarily  priced on a specified  amount per transaction.
The company believes that for the remainder of fiscal 2005 it will also begin to
derive  revenue  from direct  merchant  services  which  revenue is generated on
services primarily priced as a percentage of the transaction value. The majority
of the  Registrant's  revenue for the three months  ended  December 31, 2003 was
also generated from indirect merchant services.

         A  significant  percentage  of the  Registrant's  revenue for the three
months ended  December  31, 2004 has been  derived from a limited  number of the
company's customers,  primarily Finnish customers for its transaction processing
products.  Approximately  55% of the company's total revenue was attributable to
its ten largest  customers.  The future loss of any major  customer could have a
material adverse effect on the Registrant's  business,  financial  condition and
results of operations.  The Registrant believes that this customer concentration
will continue for the  remainder of fiscal 2005.  The  Registrant  believes that
this customer concentration will be diluted in the second half of fiscal 2006 as
it pursues operations outside of Finland. The majority of Registrant's  revenues
for the  three  months  ended  December  31,  2004 have  been  generated  by its
operations  outside of the United States,  and the company's  future growth rate
is, in part,

                                       16
<PAGE>

dependent on continued growth in international  markets.  The Registrant expects
this trend to continue through the remainder of fiscal year 2005.

(b) Cost of Revenue.
--------------------

         Cost of revenue was $258,380  for the three  months ended  December 31,
2004  compared to $282,776  for the three  months  ended  December  31,  2003, a
decrease of $24,396 or approximately  9%. The decrease in cost of revenue is due
in part to increased business volume. In addition,  the Rahaxi has upgraded both
the  hardware  and  software  of its  processing  platform,  and these costs are
recognized  in the cost of  revenue  for the  current  period  but not the prior
period.  The Registrant will continue to invest in its technical  infrastructure
to ensure delivery of cost effective and competitive products to its customers.

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

(c) Non-cash Compensation.
--------------------------

         The Registrant  recorded  non-cash  compensation  of $692,526 for three
months ended  December 31, 2004  compared to $611,552 for the three months ended
December 31, 2003, an increase of $80,974 or approximately 13%. During the three
months ended December 31, 2004, the Registrant  charged to operations the amount
of $437,236,  representing  the cost of common stock issued to  consultants  for
services rendered during the period.  The Registrant also issued warrants valued
at approximately  $255,000 and common stock valued at approximately  $125,000 to
consultants for services.

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

(d) Selling, General and Administrative Expenses.
-------------------------------------------------

         Selling,  general,  and  administrative  expenses were $823,317 for the
three months ended  December 31, 2004  compared to $720,151 for the three months
ended  December  31,  2003,  an increase of $103,166 or  approximately  14%. The
Registrant continued to add to its product capabilities,  with higher values for
capitalized  software  and  software  licenses  generating  higher  amortization
expense. Depreciation expense also increased for similar reasons.

         During  the  three  months  ended   September  30,  2004,  the  primary
components of selling,  general,  and  administrative  expenses were:  legal and
accounting  fees of  approximately  $191,000;  payroll  and  employee  costs  of
approximately  $181,000;  depreciation and amortization expense of approximately
$141,000; facility costs (rent, telephone,  utilities, and building maintenance)
of approximately $89,000; and consulting fees of approximately $49,000.

                                       17

<PAGE>

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

(e) Interest Expense.
--------------------

         The Registrant recognized net interest expense of $852 during the three
months ended  December 31, 2004 compared to interest  expense of $15,910 for the
three  months ended  December  31, 2003, a decrease of $15,058 or  approximately
95%.  Lower  interest  expense  was due to lower  levels of debt during the most
recent quarter.  Pursuant to the vFinance settlement  agreement,  the Registrant
reversed  the  liability  it had  recorded  to its  president  in the  amount of
$679,869,  which had been accruing interest on this amount at the rate of 7% per
annum.

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

(f) Net Loss.
-------------

         For the reasons  stated above,  the  Registrant  recorded a net loss of
$1,350,302  for the three months ended  December 31, 2004 compared to $1,268,958
for the  three  months  ended  December  31 2003,  an  increase  of  $81,344  or
approximately 6%.

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

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

                                       18

<PAGE>

RESULTS OF  OPERATIONS  - SIX MONTHS  ENDED  DECEMBER  31, 2004  COMPARED TO SIX
MONTHS ENDED DECEMBER 31, 2003

(a) Revenue.
------------

         The Registrant  recognized revenue of $790,724 for the six months ended
December 31, 2004  compared to $661,374  for the six months  ended  December 31,
2003, an increase of $129,350 or  approximately  20%. The primary reason for the
increase  in  revenue  is  directly  related  to the  increase  in  transactions
processed by the Registrant during the period. For the six months ended December
31,  2004,  the  Registrant  processed  8,045,860  transactions,  an increase of
1,439,193, or 21.78%, over the 6,606,664 transactions that were processed during
the six months ended December 31, 2003.

(b) Cost of Revenue.
--------------------

         Cost of revenue was $428,295 for the six months ended December 31, 2004
compared to $435,435 for the six months  ended  December 31, 2003, a decrease of
$7,140 or  approximately  2%. The  decrease in cost of revenue is due in part to
the Registrant  deciding to bring some outsourced  fixed cost services,  such as
its Rahaxi  call  center,  under its own  control.  The  Registrant  also gained
favorably  from the decline in the United States Dollar versus the Euro, as some
of its fixed costs related to  development  are priced in United States  dollars
and revenue is derived in the Euro.

(c) Non-cash Compensation.
--------------------------

         The Registrant  recorded  non-cash  compensation  of $1,273,192 for six
months ended  December 31, 2004 compared to $1,643,408  for the six months ended
December 31, 2003, a decrease of $370,216 or  approximately  23%. During the six
months ended December 31, 2004, the Registrant  charged to operations the amount
of $1,017,992  representing the fair value of stock issued for services rendered
during the period.  Also during the six months  ended  December  31,  2004,  the
Registrant  charged to operations the amount of $255,200  representing  the fair
value of options and warrants  issued to consultants  during the period.  During
the six months ended December 31, 2003, the Registrant  issued restricted shares
of common stock valued at  $1,100,000  to an  investment  banker for  consulting
services with regard to with regard to the development and  implementation  of a
plan for the Company's financial structure;  there was no such charge during the
six months ended December 31, 2004.

(d) Selling, General and Administrative Expenses.
-------------------------------------------------

         Selling,  general, and administrative  expenses were $1,415,832 for the
six months ended  December 31, 2004  compared to  $1,315,956  for the six months
ended  December  31,  2003,  an increase  of $99,876 or  approximately  8%.  The
Registrant continued to add to its product capabilities,  with higher values for
capitalized  software  and  software  licenses  generating  higher  amortization
expense. Depreciation expense also increased for similar reasons.

                                       19
<PAGE>

(e) Interest Expense.
---------------------

         The Registrant recognized net interest expense of $1,904 during the six
months ended  December 31, 2004 compared to interest  expense of $32,461 for the
six months ended December 31, 2003, a decrease of $30,557 or approximately  94%.
Lower  interest  expense was due to lower  levels of debt during the most recent
quarter.  Pursuant to the vFinance settlement agreement, the Registrant reversed
the liability it had recorded to its president in the amount of $679,869,  which
had been accruing interest on this amount at the rate of 7% per annum during the
six months ended December 31, 2003.

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


(f) Net Loss.
-------------

         For the reasons  stated above,  the  Registrant  recorded a net loss of
$2,328,498 for the six months ended December 31, 2004 compared to $2,765,886 for
the six months ended  December 31 2003, a decrease of $437,388 or  approximately
16%.

FACTORS THAT MAY AFFECT OPERATING RESULTS.

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

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

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

o        gain or loss of clients or strategic relationships;

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

o        price competition;

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

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

o        changes in governmental regulation; and

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

                                       20

<PAGE>

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

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

(a) Competition.
----------------

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

(b) Technological and Market Changes.
-------------------------------------

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

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

                                       21
<PAGE>

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

         The Registrant's electronic payment software products and point of sale
devices are complex and, accordingly,  may contain undetected errors or failures
when first  introduced or as new versions are  released.  This may result in the
loss of,  or delay in,  market  acceptance  of the  Registrant's  products.  The
Registrant has in the past  discovered  software  errors in its new releases and
new products after their introduction.  The Registrant has experienced delays in
release,  lost revenues and customer  frustration  during the period required to
correct these  errors.  The  Registrant  may in the future  discover  errors and
additional  scalability  limitations  in new releases or new products  after the
commencement of commercial  shipments or be required to compensate customers for
such limitations or errors, as a result of which the Registrant's business, cash
flow,  financial  condition  and  results  of  operations  could  be  materially
adversely affected.

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

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

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

(e) Market Acceptance.
----------------------

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

(f) Protection of Proprietary Rights.
-------------------------------------

         The  Registrant's  success and ability to compete  will be dependent in
part on the  protection  of its  potential  patents,  trademarks,  trade  names,
service marks and other proprietary  rights.  The Registrant  intends to rely on
trade secret and  copyright  laws to protect the  intellectual  property that

                                       22

<PAGE>

it plans to develop,  but there can be no assurance  that such laws will provide
sufficient protection to the Registrant,  that others will not develop a service
that are similar or superior to the Registrant's, or that third parties will not
copy  or  otherwise  obtain  and use the  Registrant's  proprietary  information
without  authorization.  In addition,  certain of the Registrant's  know-how and
proprietary technology may not be patentable.

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

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

(g) Dependence On Suppliers.
----------------------------

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

(h) Economic Slowdown.
----------------------

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

                                       23

<PAGE>

fiscal  2005 will be  significantly  affected  by the timing and  success of the
introduction of new products and services during the fiscal year.

(i) Key Personnel.
------------------

            The  Registrant's  success  is  largely  dependent  on the  personal
efforts and abilities of its senior  management.  The loss of certain members of
the  Registrant's  senior  management,  including the company's  chief executive
officer,  chief  financial  officer and chief  technical  officer,  could have a
material adverse effect on the company's business and prospects.

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

(g) Litigation.
---------------

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

OPERATING ACTIVITIES.

         The net cash used in  operating  activities  was  $642,956  for the six
months  ended  December  31, 2004  compared to $560,343 for the six months ended
December 31, 2003, an increase of $82,613 or approximately  15%. The decrease in
cash  for the  current  period  is  attributable  primarily  to the net  loss of
$2,328,498,  partially  offset by the non-cash charges of $1,273,192 of non-cash
compensation and $291,410 of depreciation and amortization.

                                       24

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES.

         As of December 31, 2004,  the  Registrant  had total current  assets of
$340,778 and total current  liabilities  of  $1,597,787,  resulting in a working
capital deficit of $1,257,009.  The Registrant has incurred  significant  losses
and negative cash flows from operations for the last two years

         The Registrant has been successful in obtaining cash resources  through
private placements and the exercise of options.  Financing  activities  provided
cash of $988,500  during the six months  ended  December  31,  2004  compared to
$1,342,067 for the six months ended December 31, 2003, a decrease of $353,567 or
approximately 27%. During the six months ended December 31, 2004, the Registrant
received  $54,000 in cash relating to stock options  exercised during the twelve
months  ended  June  30,  2004;  this  amount  was  credited  to   subscriptions
receivable.  At December 31,  2004,  there is also a balance due of $500,000 for
common stock sold in a prior period.

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

         Thus,  the   Registrant's   continued   operations,   as  well  as  the
implementation  of its  business  plan,  will  depend  upon its ability to raise
additional  funds  through  bank  borrowings,  equity  or  debt  financing.  The
Registrant  estimates that it will need to raise  approximately  $5,000,000 over
the next twelve months for such  purposes.  However,  adequate  funds may not be
available  when  needed  or may  not be  available  on  favorable  terms  to the
Registrant.  The ability of the  Registrant  to  continue as a going  concern is
dependent  on  additional  sources of capital and the  success of the  company's
business  plan.  The  notes to the  audited  consolidated  financial  statements
contained  in this  Form  10-KSB  for the  year  ended  June 30,  2004,  include
substantial  doubt paragraphs  regarding the company's  ability to continue as a
going concern.

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

o        curtail operations significantly;

o        sell significant assets;

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

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

                                       25
<PAGE>

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

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

Our independent  registered  certified  public  accountants have stated in their
report  included  in our  June  30,  2004  Form  10-KSB,  that we have  incurred
operating  losses  in the  last  two  years,  and  that  we are  dependant  upon
management's  ability to develop  profitable  operations.  These factors,  among
others,  may raise  substantial  doubt  about our ability to continue as a going
concern.

CERTAIN INDEBTEDNESS.

         The Registrant's president,  Paul Egan, who is also a shareholder,  has
advanced funds to the company for its operations. The Registrant was indebted to
Mr. Egan for $22,658 at June 30, 2004.  During the six months ended December 31,
2004, Mr. Egan advanced the Registrant an additional  $122,653.  At December 31,
2004,  the  Registrant  is indebted  to Mr. Egan in the net amount of  $158,236,
including interest of 12,925. This amount is shown in the Due To Related Parties
For Advances in the  accompanying  Condensed  Consolidated  Balance  Sheet as of
December 31, 2004.  Interest on the unpaid balances is accrued at the rate of 7%
per annum.

         The Registrant's  chief financial  officer,  Ciaran Egan, who is also a
shareholder,  has  advanced  funds  to  the  company  for  its  operations.  The
Registrant was indebted to Mr. Egan for $30,178 at June 30, 2004. During the six
months ended December 31, 2004, the Registrant repaid Mr. Egan the net amount of
$1,381.  At December 31, 2004, the Registrant is indebted to Mr. Egan in the net
amount of $29,547,  including  interest of $750.  This amount is shown in Due To
Related Parties For Advances in the accompanying  Condensed Consolidated Balance
Sheet as of December 31, 2004. Interest on the unpaid balances is accrued at the
rate of 7% per annum.

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

                                       26

<PAGE>

EXCHANGE RATES.

         The Registrant's operations are principally in Dominican Republic under
the name  ePayLatina  S.A.,  which  are  operated  in its  local  currency,  the
Dominican  Republic Peso; and in Helsinki  Finland under the Rahaxi  subsidiary,
operated  in its local  currency,  the Euro.  All  assets  and  liabilities  are
translated at exchange rates in effect at the end of the year.  Income statement
accounts are  translated  at average  rates for the year.  Gains and losses from
translation  of foreign  currency  financial  statements  into U.S.  dollars are
included in the accumulated comprehensive income (loss). The accumulated foreign
currency translation adjustment is $55,528 at December 31, 2004.

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

INFLATION.

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

OTHER.

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

CRITICAL ACCOUNTING POLICIES.

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

                                       27

<PAGE>


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

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

(b) Stock-based Compensation Arrangements.
------------------------------------------

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

(c) Revenue Recognition.
------------------------

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

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

(d) Long-lived Assets.
----------------------

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

                                       28

<PAGE>

FORWARD LOOKING STATEMENTS.

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

OFF-BALANCE SHEET ARRANGEMENTS

     We do not have any off-balance sheet arrangements.

ITEM 3.  CONTROLS AND PROCEDURES.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.

         As of the end of the period  covered  by this  report,  the  Registrant
carried out an  evaluation of the  effectiveness  of the design and operation of
its  disclosure  controls  and  procedures  pursuant  to Rule  13a-15  under the
Securities  Exchange Act of 1934, as amended  ("Exchange  Act"). This evaluation
was done under the supervision and with the  participation  of the  Registrant's
president and its chief  financial  officer.  Based upon that  evaluation,  they
concluded that the Registrant's disclosure controls and procedures are effective
in  gathering,  analyzing  and  disclosing  information  needed to  satisfy  the
Registrant's disclosure obligations under the Exchange Act.

CHANGES IN DISCLOSURE CONTROLS AND PROCEDURES.

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

                                       29

<PAGE>

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

         Other than as set forth  below,  the  Registrant  is not a party to any
pending material pending legal  proceedings.

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

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

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

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

         On July 19, 2004, the Court  sanctioned  Mr.  Johnston and his attorney
$5,000 for discovery  abuses and ordered Johnston to respond to the Registrant's
discovery  by no later than  August 9,  2004.  The Court  noted that  Johnston's
discovery abuse was the worse that Court had ever seen.

         On September 28, 2004,  the Registrant  filed a motion for  terminating
sanctions  against  Mr.  Johnston,  based on his  continued  abuse of the  legal
discovery process and failure to obey the Court's July 19. 2004 order. A hearing
on the  Registrant's  sanction  motion was held on  October  26,  2004.  At that
hearing,  Judge Chirlin  granted the company's  motion against Mr.  Johnston and
awarded terminating sanctions.

         The Court's  final order,  entered on November 12, 2004,  dismissed Mr.
Johnston's cross-complaint against the Registrant with prejudice. The Court also
granted a default  judgment  against Mr.  Johnston  and  awarded the  Registrant
$102,800,  plus interest at the rate of 10% per annum. That award is in addition
to the $15,000 award made to the Registrant's  law firm,  Corrigan & Morris LLP,
as part of an earlier  anti-slapp  action brought by this firm against Johnston.
It is also in addition to the $5,000 sanction  awarded to the Registrant in July
2004. There are no remaining contingent liabilities related to that lawsuit.

Sportinghet PLC v. Freestar Technology Corporation.
---------------------------------------------------

         On  May 7,  2004,  Sportingbet,  PLC  filed  a  complaint  against  the
Registrant in the Clark County Nevada  Superior  Court.  The complaint  alleges,
among other things, that the Registrant breached a settlement agreement and debt
guarantee. Sportingbet has alleged damages in excess

                                       30

<PAGE>

of $10,000, to be proven at trial.  Sportingbet also sought immediate possession
of  7,100,592  Registrant  shares  under a payment  guarantee  and stock  pledge
agreement.

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

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

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

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

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

Shelly Singhal v. Freestar Technology Corporation.
-------------------------------------------------

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

         Because the Registrant has already  expensed the shares and because the
company was served with the complaint on September 21, 2004, the materiality, if
any,  of a  potential  loss  is  difficult  to  gage.  Management  believes  the
Registrant  has  meritorious  claims and  defenses to Mr.  Singhal's  claims and
ultimately will prevail on the merits. However, this matter remains in the early
stages of  litigation  and there can be no  assurance  as to the  outcome of the
lawsuit.  Litigation  is  subject to  inherent  uncertainties,  and  unfavorable
rulings  could  occur.  Were  unfavorable  rulings  to occur,  there  exists the
possibility of a material  adverse  impact of money

                                       31

<PAGE>

damages on the  Registrant's  financial  condition,  results of  operations,  or
liquidity of the period in which the ruling occurs, or future periods.

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

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

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

         The  Registrant  has  received a demand  letter  from  certain  parties
claiming that the company is infringing certain intellectual property rights. To
date,  no lawsuit has been filed and the  Registrant's  management  is confident
that it is not infringing  any  intellectual  property  rights  whatsoever.  The
Registrant's  management is confident  that if any  litigation  ensues,  it will
prevail.

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

         The Registrant made the following  sales of  unregistered  (restricted)
securities  during  the  quarter  ended on  December  31,  2004 (not  previously
reported in a Form 8-K):

         (a) On  November  9, 2004,  the  Registrant  issued an option  covering
857,000  shares of common  stock to one  company as  compensation  for  services
rendered to the company. This option is exercisable under the Registrant's Stock
Incentive Plan at $0.175 per share for a period of ten years thereafter.

         (b) On November  19, 2004,  the  Registrant  issued an option  covering
1,285,857  shares of common stock to one individual as compensation for services
rendered to the company. This option is exercisable under the Registrant's Stock
Incentive Plan at $0.175 per share for a period of ten years thereafter.

         (c) On November 30, 2004, the Registrant issued in error 200,000 shares
of common stock to one person; these have since been cancelled.


     The following  table  provides  information  about  purchases by us and our
affiliated  purchasers  during the  quarter  ended  December  31, 2004 of equity
securities  that are  registered by us pursuant to Section 12 of the  Securities
Exchange Act of 1934:

<TABLE>
<S>          <C>                <C>             <C>                             <C>

                    (a)               (b)                  (c)                             (d)
              total number       Average Price    Total Number of Shares         Maximum Number or Approximate
              of Shares (or      Paid per Share   (or Units) Purchased as Part   Dollar Valuie of Shares
              Units) Purchased   (or Unit)        of Publicly Announced          That May Yet Be Purchased
                                                  Plans or Programs (1)          Under the Plans or Programs


10/01/04-
10/31/04                    0              $ 0                       $ 0                           0

11/01/04-
11/30/04                    0              $ 0                       $ 0                           0

12/01/04-
12/31/04                    0              $ 0                       $ 0                           0

</TABLE>


We have not entered into any plans or programs under which we may repurchase our
common stock.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

         Not applicable.

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

                                       32

<PAGE>

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

ITEM 5.  OTHER INFORMATION.

         The Registrant'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, 2004, the Registrant has recorded the amount of $75,753 in
accrued  salary due to Mr.  Egan.  This  amount is shown as  Accrued  Salaries -
Officers in the accompanying Consolidated Condensed Balance Sheet as of December
31, 2004.

         The Registrant'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, 2004, the Company has recorded the amount of
$52,800  in  accrued  salary due to Mr.  Egan.  This  amount is shown as Accrued
Salaries - Officers in the accompanying  Consolidated Condensed Balance Sheet as
of December 31, 2004.

ITEM 6.  EXHIBITS.

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

                                       33

<PAGE>

                                   SIGNATURES

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

                                  FreeStar Technology Corporation


Dated: February 11, 2005          By: /s/ Paul Egan
                                      ------------------------------------------
                                          Paul Egan, President/Chief Executive
                                          Officer


Dated: February 11, 2005          By: /s/ Ciaran Egan
                                      ------------------------------------------
                                          Ciaran Egan, Secretary/Treasurer/Chief
                                          Financial Officer

                                       34

<PAGE>

                                  EXHIBIT INDEX

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

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

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

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

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

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

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

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

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

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

                                       35

<PAGE>

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

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

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

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

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

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

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

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

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

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

                                       36

<PAGE>

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

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

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

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

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

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

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

4.7               Loan Agreement  between the Registrant,  and David  Stefansky,
                  Marc  Siegal  and  Richard  Rosenblum,  dated  June  12,  2002
                  (including  the  following   exhibits:   Exhibit

                                       37

<PAGE>

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

                  A: Form of  Promissory  Note;  and  Exhibit  C:  Unconditional
                  Guarantee) (the following exhibits have been omitted:  Exhibit
                  B:  Term   Sheet;   and  Exhibit  D:   Corporate   Resolution)
                  (incorporated  by  reference to Exhibit 4.7 of the Form 10-KSB
                  filed on November 13, 2002).

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

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

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

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

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

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

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

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

4.16              Senior Secured  Convertible Note issued by TransAxis,  Inc. in
                  favor of the

                                       38

<PAGE>

Number                                Description
------                                ------------
                  Registrant,  dated July 17, 2003 (incorporated by reference to
                  Exhibit 4.16 of the Form 10-QSB filed on December 1, 2003).

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

4.18              Amended and Restated  Non-Employee  Directors and  Consultants
                  Retainer Stock Plan (Amendment No. 4), dated December 20, 2004
                  (incorporated  by reference to Exhibit 4.1 of the Form S-8 POS
                  filed on January 26, 2005).

4.19              Amended and Restated Stock  Incentive Plan  (Amendment No. 3),
                  dated December 20, 2004  (incorporated by reference to Exhibit
                  4.2 of the Form S-8 POS filed on January 26, 2005).

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

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

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

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

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

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

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

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

                                       39

<PAGE>

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

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

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

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

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

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

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

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

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

99.3              Press release issued by the  Registrant,  dated April 24, 2003
                  (incorporated  by  reference to Exhibit 99.3 of the Form 8-K/A
                  filed on April 25, 2003).

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

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

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

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

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

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

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