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 MARCH 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 Incorporation              (I.R.S. Employer
             or Organization)                             Identification No.)

               CALLE FANTINO FALCO, J.A. BAEZ BUILDING, 2ND FLOOR,
                        SANTO DOMINGO, DOMINICAN REPUBLIC
--------------------------------------------------------------------------------
                    (Address of Principal Executive Offices)

                  Registrant's telephone number: (809) 503-5911
                                                 ---------------

         Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001
Par Value

         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 March 31, 2004, the Registrant had  433,174,252  shares of common
stock issued and outstanding.

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


                                       1

<PAGE>

                                TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION                                              PAGE

         ITEM 1.   FINANCIAL STATEMENTS

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

                   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
                   COMPREHENSIVE INCOME (LOSS) FOR THE THREE AND NINE
                   MONTHS ENDED MARCH 31, 2004 AND MARCH 31, 2003..............4

                   CONDENSED CONSOLIDATED STATEMENTS OF
                   CASH FLOWS FOR NINE MONTHS ENDED
                   MARCH 31, 2004 AND MARCH 31, 2003...........................5

                   NOTES TO CONDENSED CONSOLIDATED
                   FINANCIAL STATEMENTS........................................8

         ITEM 2.   MANAGEMENT'S DISCUSSION AND
                   ANALYSIS OF FINANCIAL CONDITION
                   AND RESULTS OF OPERATIONS..................................16

         ITEM 3.   CONTROLS AND PROCEDURES....................................32

PART II - OTHER INFORMATION

         ITEM 1.   LEGAL PROCEEDINGS..........................................32

         ITEM 2.   CHANGES IN SECURITIES......................................37

         ITEM 3.   DEFAULTS UPON SENIOR SECURITIES............................37

         ITEM 4.   SUBMISSION OF MATTERS TO A VOTE
                   OF SECURITY HOLDERS........................................37

         ITEM 5.   OTHER INFORMATION..........................................38

         ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K...........................42

SIGNATURES....................................................................43


                                       2

<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

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

                                     ASSETS
Current assets:
  Cash and cash equivalents                                          $  222,922
  Accounts receivable, net of allowance for
    doubtful accounts of $25,326                                        159,432
  Prepaid expenses                                                       16,447
  Other current assets                                                  146,590
                                                                     ----------

       Total current assets                                             545,391

Property, plant and equipment, net of
  accumulated depreciation and amortization                              42,423
Software, net of accumulated amortization                               757,332
Customer relationships and contracts,
   net of accumulated amortization                                    1,861,346
Software license, net of accumulated amortization                     1,957,213
                                                                     ----------

                                                                     $5,163,705
                                                                     ==========
                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable and accrued expenses                                 954,511
  Due to related party for advances                                       7,855
                                                                     ----------
       Total current liabilities                                        962,366
                                                                     ----------
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; 433,174,252 issued and outstanding                       432,184
 Additional paid-in capital - common stock                           25,226,986
 Share cancellation receivable                                       (1,584,628)
 Subscription receivable                                               (372,693)
 Deferred compensation                                               (1,716,196)
 Accumulated deficit                                                (20,154,061)
 Accumulated other comprehensive income                                 136,689
                                                                   ------------

     Total stockholders' equity                                       4,201,339
                                                                   ------------
                                                                   $  5,163,705
                                                                   ============

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

                                       3

<PAGE>

                         FREESTAR TECHNOLOGY CORPORATION
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                Three Months     Three Months     Nine Months      Nine Months
                                                   Ended            Ended            Ended            Ended
                                                  March 31,        March 31,        March 31,        March 31,
                                                    2004             2003             2004             2003
                                               -------------    -------------    -------------    -------------
<S>                                            <C>              <C>              <C>              <C>
Net revenue                                    $     329,659    $     312,631    $     991,033    $     321,331
Cost of revenue
                                                     334,555          210,649          769,990          211,451
                                               -------------    -------------    -------------    -------------

Gross profit (loss)                                   (4,896)         101,982          221,043          109,880

Non-cash compensation                                814,051        2,778,404        3,366,459        7,396,909
Selling, general and administrative expenses         610,560          331,434        1,926,516        1,051,200
Loss on investment                                   100,000               --          100,000               --
                                               -------------    -------------    -------------    -------------
Loss from operations                              (1,529,507)      (3,007,856)      (5,171,932)      (8,338,229)

Other income (expenses):
Gain on extinguishment of debt                       727,459               --          727,459               --
Miscellaneous                                             --           (3,608)              --           39,048
Interest expense                                        (926)          (2,084)         (33,387)        (379,946)
                                               -------------    -------------    -------------    -------------
Net Loss                                            (802,974)      (3,013,548)      (4,477,860)      (8,679,127)

Other comprehensive income (loss)                     29,445          (19,935)         155,341          106,792
                                               -------------    -------------    -------------    -------------

Comprehensive loss                             $    (773,529)   $  (3,033,483)   $  (4,322,519)   $  (8,572,335)
                                               =============    =============    =============    =============

Loss per share - basic and diluted             $          --    $       (0.02)   $       (0.01)   $       (0.10)
                                               =============    =============    =============    =============
Weighted average shares outstanding -
    basic and diluted                            427,582,659      139,012,411      338,577,672       86,551,600
                                               =============    =============    =============    =============
</TABLE>

                 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>
                                                               Nine Months    Nine Months
                                                                  Ended          Ended
                                                                 March 31,     March 31,
                                                                  2004           2003
                                                               -----------    -----------
<S>                                                            <C>            <C>
Cash flows from operating activities:
    Net loss                                                   $(4,477,860)   $(8,679,127)

    Adjustments to reconcile net loss to net cash
      provided by (used for) operating activities:
         Gain on extinguishment of debt                           (727,459)            --
         Loss on investment                                        100,000             --
         Depreciation and amortization                             416,798        151,967
         Non-cash compensation                                   3,366,459      7,396,909
         Amortization of financing cost on convertible
            notes payable                                               --        224,738
         Amortization of discount for beneficial conversion
            features on convertible notes payable                       --        106,752

    Changes in assets and liabilities:
       (Increase) decrease in assets
         Accounts receivable                                       (13,860)       (14,834)
         Prepaid expenses                                          114,053       (179,600)
         Merchandise credits - current                                  --         44,000
         Other current assets                                     (125,363)       (76,992)
         Other assets                                                3,162          2,143

       Increase (decrease) in liabilities
         Accounts payable and accrued expenses                     270,223        (30,419)
         Due to shareholders                                            --         11,720
         Accrued salaries - related parties                             --         52,400
         Deferred revenue                                          (31,404)            --
                                                               -----------    -----------
            Total adjustments                                    3,372,609      7,688,784
                                                               -----------    -----------
            Net cash used by operating activities               (1,105,251)      (990,343)
                                                               -----------    -----------
Cash flows from investing activities:
    Purchase of fixed assets                                            --         (7,278)
    Investment in Rahaxi Processing Oy                                  --         74,457
    Purchase of software and capitalized software cost            (522,821)            --
    Deposits on acquisition of Unipay, Inc.                        (25,000)            --
    Investment in TransAxis, Inc.                                  (75,000)            --
                                                               -----------    -----------
   Net cash provided by (used for) investing activities           (622,821)        67,179
                                                               -----------    -----------

</TABLE>

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

                                       5

<PAGE>

                         FREESTAR TECHNOLOGY CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                Nine Months    Nine Months
                                                                   Ended          Ended
                                                                 March 31,      March 31,
                                                                   2004           2003
                                                               -----------    -----------
<S>                                                            <C>            <C>
Cash flows from financing activities:
   Repayment of line of credit                                      (5,091)        (1,810)
   Repayment on overdraft                                               --         (8,207)
   Proceeds from issuance of notes payable                              --        350,000
   Proceeds from sale of common stock                            1,554,616        230,000
   Proceeds from exercise of stock options/warrants                307,500        410,000
   Sale of warrants                                                     --         90,000
   Advances (repayments) from related party, net                  (191,642)        16,559
                                                               -----------    -----------

   Net cash provided by financing activities                     1,665,383      1,086,542
                                                               -----------    -----------

Net increase (decrease) in cash and cash equivalents               (62,689)       163,378

Effect of exchange rate changes on cash                             21,188        102,796

Cash and cash equivalents, beginning of period                     264,423          2,441
                                                               -----------    -----------

Cash and cash equivalents, end of period                       $   222,922    $   268,615
                                                               ===========    ===========
Supplemental disclosure of cash flow information:
   Interest paid                                               $    23,795    $    30,685
                                                               ===========    ===========

   Income tax paid                                             $         -    $         -
                                                               ===========    ===========
Supplemental disclosure of cash flow information, continued:
     Shares and warrants issued for services                   $ 3,366,459    $ 7,396,909
                                                               ===========    ===========
     Prepaid financing cost as increase of convertible
        notes payable                                          $         -    $   135,720
                                                               ===========    ===========
</TABLE>

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

                                       6

<PAGE>

                         FREESTAR TECHNOLOGY CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                   Nine Months   Nine Months
                                                                      Ended        Ended
                                                                     March 31,   December 31,
                                                                       2004         2003
                                                                   ------------   --------
<S>                                                                <C>            <C>
Discount for beneficial conversion features on
   convertible notes payable                                       $          -   $106,752
                                                                   ============   ========
Issuance of 4,000,000 shares of common stock to replace
   Shares a shareholder contributed for a debt conversion          $          -   $270,000
                                                                   ============   ========
Issuance of 7,000,000 shares of common stock for unpaid accrued
salaries to officers and salaries for future period                $          -   $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                           $          -   $679,867
                                                                   ============   ========

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

                                       7

<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, 2003. 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 March 31, 2004, and the results of operations for the  three-month
and  nine-month  periods  ended March 31, 2004 and 2003,  and cash flows for the
nine-month  periods ended March 31, 2004 and 2003. The results of operations for
the nine-month period ended March 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 known as Freestar Technologies and Freedom Surf, Inc., was
formed on November 17, 1999 as a Nevada corporation,  with its principal offices
in Santo  Domingo,  Dominican  Republic.  The  Company has  developed  software-
enabling  e-commerce  transactions over the Internet,  using credit,  debit, ATM
(with PIN), or smart cards.

The Company intends to have four main revenue sources:  (1) sales of its PaySafe
devices "ePayPad";  (2) processing fees related to the transactions  through the
use of ePayPad and merchant  services  (the Company  intends to charge a fee for
these  transactions  ranging from 0.3% to 1.3% of the value of the transaction);
(3) revenue  from the  Company's  transaction  fees  stemming  from its Internet
Payment  Gateway;  and (4) revenue  stemming  from Rahaxi  Processing  Oy, which
derives  income from the  transaction  fees it receives from  processing  online
point of sale terminal transactions.

ePayPad is one of several card swipe devices that the Company intends to utilize
to deliver its transaction  processing solution "Pay Safe Now". The ePayPad is a
small  desktop  hardware  device  resembling  a credit card reader found at your
local  supermarket or bank. This  unobtrusive box is equipped with a credit card
reader  and a ten key  numeric  keypad.  The  ePayPad  allows the  consumers  to
securely shop and pay bills on-line.

Through  the  purchase  of Rahaxi  Processing  Oy in  January  2003,  a Northern
European online credit card processing company based in Helsinki,  Finland,  the
Company  intends to expand its market to Europe.  For the three and nine  months
ended March 31, 2004, all revenue of the Company was derived from this division.


                                       8
<PAGE>

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

The accompanying  condensed consolidated financial statements have been prepared
on a going concern basis,  which  contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business.

Through  March 31, 2004,  the Company has not been able to generate  significant
revenue from its operations to cover its costs and operating expenses.  Although
the Company  has been able to issue its common  stock or other  financing  for a
significant portion of its expenses, it is not known whether the Company will be
able to continue this practice, or if its revenue will increase significantly to
be able to meet its cash operating expenses.

This, in turn, raises  substantial doubt about the Company's ability to continue
as a going concern.  Management  believes that the Company will be able to raise
additional funds through an offering of its common stock or alternative  sources
of financing.  However,  no  assurances  can be given as to the success of these
plans. The financial statements do not include any adjustments that might result
from the outcome of these uncertainties.

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.

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

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation-Transition and Disclosure-an amendment of SFAS 123." This statement
amends SFAS No.  123,  "Accounting  for  Stock-Based  Compensation,"  to provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee  compensation.  In addition,  this
statement  amends  the  disclosure  requirements  of  SFAS  No.  123 to  require
prominent  disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported  results.  The Company has chosen to continue to account
for stock-based  compensation using the intrinsic value method prescribed in APB
Opinion No. 25 and related  interpretations.  Accordingly,  compensation expense
for stock options is measured as the excess, if any, of the fair market value of
the  Company's  stock at the date of the grant  over the  exercise  price of the
related option. The Company has adopted the annual disclosure provisions of SFAS
No. 148 in its  financial  reports for the year ended  December 31, 2002 and for
the subsequent periods.

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

In December 2003, the  Securities and Exchange  Commission  ("SEC") issued Staff
Accounting  Bulletin  ("SAB")  No.  104,  "Revenue  Recognition."  SAB  No.  104
supersedes SAB No. 101, "Revenue  Recognition in Financial  Statements." SAB No.
104's primary purpose is to rescind accounting guidance contained in SAB No. 101
related to multiple element revenue arrangements,  superseded as a result of the
issuance of Emerging  Issues Task Force  ("EITF")  No.  00-21,  "Accounting  for
Revenue  Arrangements  with Multiple  Deliverables."  Additionally,  SAB No. 104
rescinds the SEC's Revenue Recognition in Financial Statements  Frequently Asked
Questions and Answers  ("FAQ") issued with SAB No. 101 that had been codified in
SEC Topic No. 13, "Revenue  Recognition." Selected portions of the FAQ have been
incorporated  into SAB No. 104.  While the wording of SAB No. 104 has changed to
reflect the issuance of EITF No. 00-21,  the revenue  recognition  principles of
SAB No. 101 remain  largely  unchanged by the issuance of SAB No. 104, which was
effective  upon  issuance.  The  adoption  of SAB No.  104 did  not  impact  the
consolidated financial statements.

                                       9
<PAGE>

2.       TRANSAXIS, INC.

Acquisition Agreement
---------------------

On September 24, 2003, the Company entered into a stock purchase  agreement with
certain shareholders of TransAxis,  Inc. ("TransAxis") (formerly Digital Courier
Technologies,  Inc.) for the  acquisition  of a majority of the common  stock of
this  publicly  held  company  ("TA  Acquisition  Agreement").  The terms of the
acquisition  provide  for the  Company to purchase a majority of the shares that
consist of the following: (a) the 2,916,533 shares that will be outstanding upon
the conversion of certain debt of TransAxis  ("Conversion  Right");  and (b) the
805,000 shares of Company common stock issued and  outstanding.  In exchange the
Company is to issue on a pro rata basis based on the sellers' current percentage
beneficial  ownership  of  TransAxis  common  stock  (including  the  beneficial
ownership of the TransAxis common stock represented by the Conversion Right) the
aggregate  number of shares of Company  common stock which is the greater of (i)
7,000,000  shares of common stock, or (ii) that number of shares of common stock
equal to  $1,260,000  divided by the average  closing bid price per share of the
common stock on the five days prior to the closing date.

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

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

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

On February 20, 2004, the parties further  amended the TA Acquisition  Agreement
("Amendment  No.  2").  The  Company  claimed  that  it had  identified  certain
accounting-related  deficiencies  in the books of  TransAxis  which  predate the
closing  date,  and that such  deficiencies  have and will  continue to preclude
TransAxis from being able to obtain audited financial  statements  without undue
effort  and  expense.  In order to avoid  the  cost of  litigation  and  further
disputes and negotiation,  the Company and TransAxis agreed to reduce the number
of shares  issuable  under  the TA  Acquisition  Agreement  from  25,183,418  to
3,200,000,  which were  actually  issued.  In  exchange,  the  Company  actually
received  350,900  shares of  TransAxis  stock,  or 43.5%,  although  it remains
entitled to receive the lost shares.  The Company never exercised the Conversion
Right, and never controlled a majority of the shares of TransAxis.

Loan to TransAxis.
------------------

In anticipation of this transaction and while in the negotiation  stage, in July
2003,  the  Company  loaned to  TransAxis  the amount of $75,000  via two senior
secured  convertible  note  agreements  in the  amount of $50,000  and  $25,000,
respectively  ("Bridge Notes") (see Exhibits 4.15 and 4.16 to this Form 10-QSB).
The Bridge Notes carry interest at the rate of (i)12.5 % per year from September
1, 2003,  provided  that the Company does not hold less than 70% interest of the
outstanding  capital  stock of TransAxis  at August 31,  2003,  and (ii) 15% per
annum  commencing  January 1, 2004,  provided that the Company has not completed
the  acquisition  of  TransAxis  by this  date.  The  Bridge  Notes  are  senior
obligation of TransAxis and payment is secured by a security  agreement  between
the two parties.

                                       10

<PAGE>


The Bridge Notes matured on September 29, 2003 without being paid. If the Bridge
Notes are not paid in full before  December 31, 2003, the Company has the option
for a one-year  period to convert the Bridge Notes without  payment of any other
consideration  into common stock of TransAxis  according  to the  following:  at
least the  number of shares  which will prove 5%  ownership  of the  outstanding
shares of TransAxis, and shall be increased by 1% for each additional $15,000 of
loans or accrued interest thereon that the Company maintains with TransAxis.

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

Prior to the execution of the TA Acquisition Agreement, TransAxis had incurred a
liability to Brown Simpson Partners I, Ltd.  ("Brown  Simpson") in the amount of
approximately  $1,400,000.  The Company entered into a settlement agreement with
Brown Simpson (the "Brown  Simpson  Settlement  Agreement")  whereby the Company
would issue to Brown Simpson  5,183,418  shares of Company  common stock and pay
the amount of $10,000 in cash in return for Brown Simpson's dismissal of all its
claims against the Company. These shares were issued on December 30, 2003.

Conclusion
----------

On June 17, 2004,  after  extensive  discussions  and  following  the  unanimous
determination  of the  Registrant's  Board  of  Directors,  the  Registrant  has
terminated  the TA  Acquisition  Agreement  and  the  Brown  Simpson  Settlement
Agreement.  This decision was based on both Transaxis' and the Sellers'  failure
to disclose  material  liabilities  and  contingencies  in connection  with that
company as well as their  failure to comply  with  their  obligations  under the
Agreement. The Company wrote-off the $75,000 Bridge Notes as loss on investments
in the  accompanying  condensed  consolidated  statements of operations  for the
three months ended March 31, 2004.

                                       11
<PAGE>


3.       COMMON STOCK

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

During the three months and nine months ended March 31, 2004, the Company issued
1,095,000 and 13,980,000,  respectively,  shares of its common stock  registered
under Form S-8 to various  consultants  and legal counsel for current and future
services.

During the three months and nine months ended March 31, 2004, the Company issued
900,000 and 24,300,000,  respectively,  restricted shares of its common stock to
various consultants for current and future services.

During the nine months ended March 31, 2004, the Company issued 1,000,000 shares
of its  restricted  shares of common stock to an employee for current and future
services.

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

During the three months ended  September 30, 2003,  the Company sold  15,700,000
restricted  shares of its common  stock to various  investors at $0.01 per share
for an aggregate amount of $157,000.

During the three months ended  December 31, 2003,  the Company sold  163,700,000
restricted  shares of its common  stock to various  investors at $0.01 per share
for an aggregate amount of $1,637,000.

During the three  months  ended  March 31,  2004,  the  Company  sold  1,000,000
restricted  shares of its  common  stock to an  investor  at $0.01 per share for
$10,000.

As of March 31, 2004,  the Company has  outstanding  subscription  receivable of
$372,693  related to unpaid  amounts for sales of common  stock and  exercise of
options and warrants.

Issuance of Shares for Rahaxi Acquisition.
------------------------------------------

During the quarter ended September 30, 2003, the Company issued 8,137,000 shares
of common stock pursuant to the acquisition of Rahaxi Processing Oy. ("Rahaxi").
The  issuance  of these  shares  had been  included  in the  calculation  of the
purchase price of Rahaxi during the fiscal year ended June 30, 2003.

Issuance of Shares for Transaxis Acquisition.
---------------------------------------------

During the three months ended December 31, 2003,  the Company issued  25,183,418
restricted  shares of its common stock pursuant to the acquisition of TransAxis.
On  February  20,  2004,  the Company  renegotiated  this  transaction,  and has
cancelled  these  shares and issued  3,200,000  restricted  shares of its common
stock in satisfaction of the renegotiated  agreement  subsequent to December 31,
2003. As of March 31, 2004, the certificate for 25,183,418  shares was cancelled
and a new certificate for 3,200,000 shares was issued.


                                       12

<PAGE>

During the quarter ended December 31, 2003, the Company issued  5,183,418 shares
of common stock pursuant to the terms of a debt  settlement  agreement.  On June
17, 2004, After extensive discussions and following the unanimous  determination
of the  Registrant's  Board of Directors,  the  Registrant  has  terminated  the
TransAxis Acquisition  Agreement.  The amount of $679,028 representing the issue
price of the 5,183,418  shares issued  pursuant to the debt  settlement  and the
$752,000 representing the issue price of the 3,200,000 shares issued pursuant to
the TransAxis Acquisition Agreement are shown as shares cancellation  receivable
on the accompanying condensed consolidated balance sheet as of March 31, 2004.

Warrants and Stock Options to Consultants.
------------------------------------------

During the nine months  ended March 31,  2004,  the  Company  granted  9,000,000
options to  purchase  its common  stock to various  consultants.  These  options
vested  immediately on the grant date and have a strike price of ranging between
$0.023 to $0.05  per  share.  The  Company  valued  these  options  by using the
Black-Scholes model under the following  assumptions:  (i) no expected dividends
(ii) a risk-free interest rate range of 2.65% (iii) expected  volatility ranging
between  118% to 156% and (iv) an expected  life of 1/2 year.  The fair value of
these  options was  $298,187,  which was expensed in the nine months ended March
31, 2004.

Cancellation of Common Stock
----------------------------

As of March 31, 2004,  the Company has 4,600,000  shares being  cancelled with a
cost of $153,600,  which was classified as Share Cancellation  Receivable in the
accompanying  balance sheet.  The original  issuance was made in error therefore
was subsequently cancelled by the Company.

4.       SEGMENT INFORMATION

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


                                       13

<PAGE>

                                                  Rahaxi
                                   Paysafe       Payment
                                   System       Processing       Total
                                ------------   ------------   ------------
                                 For the Three Months Ended March 31,2004
                                ------------------------------------------
Net revenue                     $        --    $   329,659    $   329,659
                                ============   ===========    ===========

Loss from operations            $(1,335,386)   $  (194,121)   $(1,529,507)
                                ============   ===========    ===========

                                 For the Three Months Ended March 31,2003
                                ------------------------------------------
Net revenue                     $    97,127    $   215,504    $   312,631
                                ============   ===========    ===========

Income (loss) from operations   $(2,918,453)   $   (89,403)   $(3,007,856)
                                ============   ===========    ===========

                                 For the Nine Months Ended March 31,2004
                                ------------------------------------------
Revenue                         $        --    $   991,033    $   991,033
                                ============   ===========    ===========

Loss from operations            $(4,888,828)   $  (283,104)   $(5,171,932)
                                ============   ===========    ===========

                                 For the Nine Months Ended March 31,2003
                                ------------------------------------------
Net revenue                     $   105,827    $   215,504    $   321,331
                                ============   ===========    ===========

Loss from operations            $(8,248,826)   $   (89,403)   $(8,338,229)
                                ============   ===========    ===========

                                          As of March 31, 2004
                                ------------------------------------------
Total assets                    $   785,805    $ 4,402,900    $ 5,163,705
                                ============   ===========    ===========
Total liabilities               $   189,223    $   773,143    $   962,366
                                ============   ===========    ===========

5.       RELATED PARTY TRANSACTIONS

Advances by President and Shareholder.
--------------------------------------

The Company's  president and  shareholder,  Paul Egan, has advanced funds to the
Company for its  operations.  During the three months ended March 31, 2004,  the
Company  repaid the net amount of $191,642 to Mr. Egan.  At March 31, 2004,  the
Company owes Mr. Egan the net amount of $7,855, which is shown as Due To Related
Party For Advances in the accompanying  Consolidated  Condensed Balance Sheet as
of March 31, 2004.  Interest on the unpaid balances is accrued at the rate of 7%
per annum.

Pledged Shares.
---------------

In December 2002, a lender group  exercised  their rights against the 14,400,000
shares  pledged by the  president  of the  Company in full  satisfaction  of the
outstanding notes payable of $637,000,  interest payable of $18,569, and accrued
penalties of $24,300 totaling $679,869.


                                       14

<PAGE>

In March 2004,  this lender group entered into a settlement  agreement  with the
Company. As part of the settlement,  this lender group is required to return the
14,400,000  pledged  shares to the  president  of the Company and the Company is
relieved  from  any  other  indebtedness  to this  lender  group.  Prior to this
settlement,  the Company  considered  the notes  payable of $679,869 and related
interest of $47,590 totaling  $727,459  payable to the president  related to the
his 14,400,000  shares given to this lender group.  The president of the Company
agreed to relieve  the  liabilities  of the Company to repay  $727,459  upon the
execution of this  settlement  agreement.  The Company  recorded a gain on legal
settlement  of $727,459  for the three  months and nine  months  ended March 31,
2004.

In addition,  this lender group agreed to return  999,000  shares to the Company
that was issued to this lender group as collateral  for borrowings in June 2002.
The  Company  has not yet  received  the shares as of March 31,  2004.  Upon the
receipts of the shares,  the Company will record a gain on legal  settlement  at
cost based on the date of the issuance.

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.

7.       SUBSEQUENT EVENTS

Unipay, Inc.
-----------

On May 17, 2004, the  Registrant  announced the  acquisition  of Unipay,  Inc.'s
Smokey Mountain payment processing division in Murphy,  North Carolina on May 4,
2004. This division currently  processes payment  transactions (via credit cards
and debit cards) through many of the largest processors,  and has the ability to
be a direct processor with full settlement capabilities. Unipay processes client
transactions  using its  proprietary  technology,  Cyber-Terminal  and Universal
Payment  software.  The  Registrant  agreed  to pay  $150,000  in cash and issue
10,000,000  restricted shares of common stock (valued at $1,000,000) in exchange
for the assets of the division. The Registrant has agreed to file a registration
statement covering those shares.

On June 14,  2004,  the  Registrant  informed  Unipay and its sole  shareholder,
Unicomp,  that due to the failures of these parties to the purchase agreement to
perform as required under this agreement, including blocking access to the North
Carolina  premises,  preventing  transfer  of  assets,  and  failing  to deliver
business  and other  documents,  the purchase  transaction  is  terminated.  The
Registrant  paid $25,000 in connection  with this agreement and has charged this
amount  to  loss  on  investments  in the  accompanying  condensed  consolidated
statement of  operations  and  comprehensive  income (loss) for the three months
ended March 31, 2004.

TransAxis, Inc.
---------------

After  extensive  discussions and following the unanimous  determination  of the
Registrant's Board of Directors,  the Registrant has terminated the TA Agreement
and the Brown Simpson  Settlement  Agreement as of June 17, 2004.  This decision
was based on both  TransAxis'  and the  sellers'  failure to  disclose  material
liabilities and contingencies in connection with that company,  as well as their
failure to comply with their  obligations  under the  agreement.  The Registrant
believes  that  it  will  recover  the  3,200,000  shares  issued  under  the TA
Acquisition  Agreement,  and has  recorded  the  amount  of  $752,000  as shares
cancellation receivable in the accompanying condensed consolidated balance sheet
as of March 31, 2004. The Registrant  wrote-off the $75,000 Bridge Notes as loss
on  investments  in  the  accompanying  condensed  consolidated   statements  of
operations for the three months ended March 31, 2004.

The  Registrant  believes  that it will  recover  the  5,183,418  shares  issued
pursuant  to the  Brown  Simpson  Settlement  Agreement,  and  has  recorded  an
additional $679,028  representing the Brown Simpson shares as share cancellation
receivable in the accompanying  condensed consolidated balance sheet as of March
31, 2004.


                                       15

<PAGE>

Nordea Bank
-----------

On May 27, 2004, the Registrant's  wholly owned subsidiary Rahaxi Processing Oy.
has entered into an agreement  with Nordea  Bank, a leading  financial  services
group in the Nordic and Baltic Sea region.  Headquartered in Stockholm,  Sweden,
Nordea  operates  through three business areas:  retail  banking,  corporate and
institutional banking, and asset management and life insurance. The terms of the
agreement  provide for Rahaxi and Nordea to enter into a cooperative  agreement,
whereby Rahaxi will provide Nordea transaction-processing  services for mutually
selected local, Scandinavian, pan-European and international merchants.

The  Registrant  believes  this  agreement  is in line with  several  of its key
strategies  designed to maintain Rahaxi's  attractiveness in global markets.  By
collaborating  with  Nordea,  one of Europe's  leading  financial  institutions,
management believes the Registrant is strengthening its position in the European
market place,  which is one of its target regions.  Management also believes the
industry of merchant  acquiring is becoming a global  affair.  Given the massive
explosion of e-commerce  within the relatively  short time frame  involved,  any
merchant  acquirer  that  intends  to become  seriously  involved  in the global
economy  must act to  develop  a true  international  strategy,  which  includes
working in conjunction with partners.

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

The  following  discussion  and analysis of financial  condition  and results of
operations  of  the  FreeStar  Technology  Corporation,   a  Nevada  corporation
("Registrant"),  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 have four main revenue sources:  (1) sales of
its PaySafe devices  "ePayPad";  (2) processing fees related to the transactions
through the use of ePayPad and  merchant  services  (the  Registrant  intends to
charge a fee for these  transactions  ranging  from 0.3% to 1.3% of the value of
the  transaction);  (3) revenue from the Registrant's  transaction fees stemming
from its Internet  Payment  Gateway  (estimated  to be about 0.5% to 3.5% of the
value of the transaction);  and (4) revenue stemming from Rahaxi Processing Oy.,
which  derives  income from the  transaction  fees it receives  from  processing
online point of sale terminal transactions in Finland. For the nine months ended
March 31,  2004,  the  Registrant's  revenue was  primarily  generated  from the
transaction fees through its Finland operations.

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


                                       16
<PAGE>

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

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

         The Registrant is a small company in a very competitive  market. It has
a limited  number  of staff  and is  currently  headquartered  in the  Dominican
Republic;  however  the company  announced  in February  2004 its  intention  to
relocate its corporate offices to Miami,  Florida.  Management believes that the
move to Miami will enhance the company's  ability to coordinate  its  operations
and also provide for greater transparency in its relationship with shareholders.
The company has  identified  the location for its offices in Miami and is in the
latter stages of negotiating  the lease for these  premises.  The Registrant has
its European headquarters in Geneva, Switzerland, as well as offices in Ireland,
Sweden and Finland.

         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.

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

(a)      Revenue.

         The Registrant generated revenue of $329,659 for the three months ended
March 31, 2004, an increase of $17,028, or approximately 5%, compared to revenue
of $312,631 for the three months ended March 31, 2003. The net change was due to
an increase  of  $114,155  in  processing  fees  generated  by the  Registrant's
subsidiary  Rahaxi  Processing Oy., combined with a decrease of $97,157 in sales
in the Dominican  Republic.  This change in sales mix reflects the


                                       17

<PAGE>

change in the company's strategy to focus its resources on the United States and
European markets.

(b)      Cost of Revenue.

         Cost of revenue was $334,555 for the three months ended March 31, 2004,
an increase of  $123,906,  or  approximately  59%,  compared to $210,649 for the
three months ended March 31, 2003. During the three months ended March 31, 2004,
Rahaxi  upgraded both the hardware and software of its  processing  platform and
began to recognize these costs. The change in the Registrant's business mix from
the  comparable  quarter of 2003 also added to the increased cost of revenue for
the quarter ending March 31, 2004.

(c)      Non-cash Compensation.

         During the three months ended March 31, 2004, the  Registrant  recorded
$814,051  in  non-cash  compensation,  which is a  decrease  of  $1,964,353,  or
approximately  71%,  compared to  $2,778,404 in non-cash  compensation  recorded
during the three  months  ended March 31,  2003.  During the three  months ended
March 31, 2003, the Company issued warrants valued at  approximately  $1,500,000
to its  investment  banker and other  financial  consultants  for services  with
regard to development and  implementation of a plan for the Company's  financial
structure. There were no warrants issued during the three months ended March 31,
2004.  Also during the three  months ended March 31,  2003,  the Company  issued
stock  valued  at   approximately   $1,200,000  for  legal  services  and  other
consultants, compared to approximately $400,000 for the three months ended March
31,  2004.  The primary  reason for the  decrease is a reduction in the level of
litigation the Company experienced during the three months ended March 31, 2004.
During the three  months  ended  March 31,  2004,  the  Company  also  amortized
approximately  $418,000  of the cost of stock  issued  to  consultants  in prior
periods.

(d)      Selling, General and Administrative Expenses.

         Selling,  general,  and administrative  expenses ("SG&A") were $610,560
for the  three  months  ended  March 31,  2004,  an  increase  of  $279,126,  or
approximately  84%,  compared to such  expenses of $331,434 for the three months
ended  March  31,  2003.  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 March 31, 2004, the primary components of
SG&A were: depreciation and amortization expense of approximately $155,000; cash
paid for consulting fees of approximately $124,000; legal and accounting fees of
approximately $83,000 due to ongoing litigation (see "Legal  Proceedings"),  and
as a result of legal and  accounting  work  involved  with the  acquisitions  of
Rahaxi  Processing  Oy. and  TransAxis,  Inc.;  payroll  costs of  approximately
$100,000  as the company  continued  to build out its  infrastructure;  facility
costs  (rent,  telephone,  utilities,  building  maintenance)  of  approximately
$44,000;  and  travel  costs of  approximately  $44,000,  which  rose due to the
coordination of the Registrant's product rollout with Rahaxi.


                                       18

<PAGE>

(e)      Loss On Investment

         During the three months ended March 31, 2004, the Company advanced cash
in the amount of $25,000 to Unipay,  Inc., a potential  acquisition  target.  In
June 2004,  the  Company  made the  decision  not to pursue  Unipay,  Inc. as an
acquisition candidate and wrote-off the $25,000 advance to loss on investment in
the  consolidated  statement of operations  for the three months ended March 31,
2004.

         In June 2004,  the  Registrant  terminated  the  TransAxis  Acquisition
agreement and wrote-off the Note Receivable  from TransAxis,  Inc. in the amount
of $75,000 during the three months ended March 31, 2004.

(f)      Interest Expense.

         The Registrant recognized net interest expense of $926 during the three
months  ended  March 31,  2004,  a decrease  of $1,158,  or  approximately  56%,
compared  to  interest  expense of $2,084 for the three  months  ended March 31,
2003.  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 three months ended March 31, 2004, the  Registrant  also made
principal  payments  on the  amount  due to  related  parties  in the  amount of
$246,105.

(g)      Miscellaneous.

         The Registrant  recorded no miscellaneous  income or expense during the
three months ended March 31, 2004  compared to  miscellaneous  expense of $3,608
during the three months ended March 31, 2003.

(h)      Gain On Legal Settlement

         The  Registrant  recognized  a gain on the  settlement  of the vFinance
lawsuit of $727,459  during the three months  ended March 31,  2004,  and had no
such gain during the comparable period of the prior year.

(i)      Net Loss.

         For the reasons  stated above,  the  Registrant  recorded a net loss of
$802,974  for  the  three  months  ended  March  31,  2004,  an  improvement  of
$2,210,574,  or  approximately  74%,  compared  to the net  loss  of  $3,013,548
realized during the three months ended March 31, 2003.

RESULTS OF OPERATIONS - NINE MONTHS ENDED MARCH 31, 2004 COMPARED TO NINE MONTHS
ENDED MARCH 31, 2003.

(a)      Revenue.


                                       19

<PAGE>

         The  Registrant had revenue of $991,033 for the nine months ended March
31, 2004 compared to revenue of $321,331  during the nine months ended March 31,
2003, an increase of $669,702,  or approximately  208%. The increased revenue is
mainly  due to the  revenue  derived  as a result of the  acquisition  of Rahaxi
Processing  Oy. The  Registrant  did not own Rahaxi  Processing  Oy.  during the
entire comparable period in the prior year.

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

(b)      Cost of Revenue.

         Cost of revenue was  $769,990  for the nine months ended March 31, 2004
compared to $211,451 for the nine months  ended March 31,  2003,  an increase of
$558,539, or approximately 264%. Cost of revenue increased in the current period
compared  to the  comparable  period of the prior year  because  the  Registrant
generated  revenue and  incurred  the costs of revenue  during only three of the
nine months ended March 31, 2003  compared to the entire nine month period ended
March 31, 2004. The Registrant's  Rahaxi subsidiary also upgraded its processing
platform  during the nine months  ended  March 31,  2004,  and this  resulted in
increased costs.

         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.

         During the nine months ended March 31, 2004,  the  Registrant  recorded
$3,366,459  in non-cash  compensation,  which was a decrease of  $4,030,450,  or
approximately  54%,  compared to  $7,396,909 in non-cash  compensation  recorded
during the nine months  ended March 31,  2003.  The  primary  components  of the
decrease were fewer shares and options issued as compensation to consultants, as
well as a decrease in the number of shares  issued as  compensation  to officers
and directors.

         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.

         SG&A was  $1,926,516  for the nine  months  ended  March 31,  2004,  an
increase of $875,316,  or approximately 83%, compared to $1,051,200 for the nine
months  ended March 31,

                                       20

<PAGE>

2003.  During the nine months ended March 31, 2004,  the primary  components  of
SG&A were:  depreciation  and  amortization  of  approximately  $417,000  as the
Registrant  upgraded  its  processing  platform  and  continue  to build out its
product line; payroll expenses of approximately  $324,000;  legal and accounting
fees of approximately $310,000,  primarily due to ongoing litigation, as well as
the  TransAxis  and  Rahaxi  acquisitions;  cash  paid  for  consulting  fees of
approximately $238,000;  travel costs of approximately $127,000 due to the focus
on its Finland subsidiary and the Finnish market; investor relations expenses of
approximately  $110,000;  merchant  services  of  approximately  $105,000 as the
Company  continued  to  roll  out  its  services  in the  European  market;  and
facilities expense (rent,  telephone,  utilities,  and building  maintenance) of
approximately $69,000.

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

(e)      Loss On Investment

         During the three months ended March 31, 2004, the Company advanced cash
in the amount of $25,000 to Unipay,  Inc., a potential  acquisition  target.  In
June 2004,  the  Company  made the  decision  not to pursue  Unipay,  Inc. as an
acquisition candidate and wrote-off the $25,000 advance to loss on investment in
the  consolidated  statement of operations  for the three months ended March 31,
2004.

         On June 17, 2004, the Registrant  terminated the TransAxis  acquisition
agreement and wrote-off the Note Receivable  from TransAxis,  Inc. in the amount
of $75,000 as loss on investment in the consolidated statement of operations for
the three months ended March 31, 2004.

(f)      Interest Expense.

         The Registrant  recognized  net interest  expense of $33,387 during the
nine months ended March 31, 2004, a decrease of $346,559,  or approximately 91%,
compared to interest  expense of  $379,946  for the nine months  ended March 31,
2003. The reason for this decrease is lower borrowings  during the quarter ended
March 31,  2004.  The  Registrant  had  outstanding  convertible  debentures  of
approximately $600,000 during the quarter ended March 31, 2003 that were settled
in December  2002 with common  stock  personally  owned by the  president of the
company.  The Registrant  recorded a liability to its president in the amount of
$679,869  and  accrued  interest  on this  amount at the rate of 7% per annum in
2003. This liability was eliminated during the nine months ended March 31, 2004,
pursuant to the  vFinance  settlement  agreement.  Also,  during the nine months
ended March 31, 2003, the company reduced the amount payable to related parties


                                       21

<PAGE>

by  approximately  $191,000.  During the comparable  nine-month  period of 2003,
interest  expense  included   substantially  higher  interest  charges  for  the
convertible debentures,  including amortization of an amount attributable to the
beneficial conversion feature of these notes.

         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.

(g)      Miscellaneous.

         The Registrant recorded no miscellaneous  income and expense during the
nine months  ended March 31, 2004  compared to  miscellaneous  income of $39,048
during the comparable  period of 2003. The Registrant  received a non-refundable
deposit of $50,000  during the nine months ended March 31, 2003, and had no such
transaction during the comparable period of 2004.

         The Registrant does not anticipate  material increases in miscellaneous
income or expense in the coming twelve months.

(h)      Gain On Legal Settlement.

         In December  2002, a lender group  exercised  their rights  against the
14,400,000   shares   pledged  by  the  president  of  the  Registrant  in  full
satisfaction of the outstanding  notes payable of $637,000,  interest payable of
$18,569, and accrued penalties of $24,300 totaling $679,869.

         In March 2004,  this lender group  entered into a settlement  agreement
with the Registrant (see "Legal Proceedings").  As part of the settlement,  this
lender  group is  required  to  return  the  14,400,000  pledged  shares  to the
president of the company and the company is relieved from any other indebtedness
to this lender group.  Prior to this settlement,  the Registrant  considered the
notes  payable of $679,869  and related  interest of $47,590  totaling  $727,459
payable to the  president  related to the his  14,400,000  shares  given to this
lender group.

         In addition,  this lender group agreed to return  999,000 shares to the
Registrant  Company  that was  issued to this  lender  group as  collateral  for
borrowings in June 2002. The Company has not yet received the shares as of March
31,  2004.  Upon the  receipts of the shares,  the Company will record a gain on
legal settlement at cost based on the date of the issuance.

         Thus,  the  Registrant  recognized  a  gain  on the  settlement  of the
vFinance  lawsuit of $727,759  during the three and nine months  ended March 31,
2004, and had no such gain during the comparable periods of the prior year.


                                       22

<PAGE>

(i)      Net Loss.

         For the reasons  stated above,  the  Registrant  recorded a net loss of
$4,477,860  for the  nine  months  ended  March  31,  2004,  an  improvement  of
$4,201,267,  or  approximately  48%,  compared  to the net  loss  of  $8,679,127
realized during the nine months ended March 31, 2003.

         A  significant  percentage  of the  Registrant's  revenue for the third
quarter of fiscal 2004,  and for the first nine months of fiscal 2004,  has been
derived from a limited number of the Registrant's  customers,  primarily Finnish
customers for the Registrant's  transaction  processing products.  Approximately
40% of the  Registrant's  total revenue was attributable to the Registrant's 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 2004.  The  Registrant  believes that this
customer  concentration  will be diluted in the first half of fiscal  2005 as it
pursues operations outside of Finland.

         The majority of  Registrant's  revenues for the third quarter of fiscal
2004 and for the first  nine  months of fiscal  2004 has been  generated  by its
operations  outside of the United  States,  and the  Registrant's  future growth
rates and  success  are in part  dependent  on  continued  growth and success in
international markets. The Registrant expects this trend to continue through the
fiscal year 2004.

         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 2004.

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;

                                       23

<PAGE>

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

o        price competition;

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

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

o        changes in governmental regulation; and

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

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

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

(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, Ingenico and Hypercom
amongst others, and companies such as NetGiro, TradeSafe & ProPay, and SafeDebit
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.

                                       24

<PAGE>

         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 us to be competitive .

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

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

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


                                       25

<PAGE>

(f)      Protection of Proprietary Rights.

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

         The Registrant may rely on certain intellectual  property licensed from
third parties, and may be required to license additional products or services in
the  future,  for  use in the  general  operations  of its  business  plan.  The
Registrant currently has no licenses for the use of any specific products. 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.

                                       26

<PAGE>

(h)      Economic Slowdown.

         The  world  economy  in  general,  and the  United  States  economy  in
particular have experienced a prolonged downturn for electronic payment products
which the Registrant believes has adversely affected demand for its products and
has made it increasingly difficult to accurately forecast future revenues. While
it is seeing  indications that the economic outlook is no longer  deteriorating,
the Registrant cannot predict the extent,  timing or duration of any improvement
in the economies where it sells its products.  Further,  the Registrant  expects
that its revenue during fiscal 2004 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 2004 employees who are
skilled  in  e-commerce,  payment,  funds  management,  payment  reconciliation,
Internet  and other  technologies.  The failure to recruit  these key  personnel
could have a material adverse effect on the Registrant's  business. As a result,
the  Registrant  may  experience  increased  compensation  costs that may not be
offset through either improved  productivity or higher revenue.  There can be no
assurances  that we will be  successful  in retaining  existing  personnel or in
attracting and recruiting experienced qualified personnel.

(j)      Litigation.

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

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

         The  Registrant had a working  capital  deficit of $416,975 as of March
31, 2004, which is a decrease of $991,743,  or approximately 70%, from a working
capital  deficit of $1,408,718 as of March 31, 2003, and a decrease of $823,417,
or  approximately  66%,  compared to a working  capital deficit of $1,240,392 at
June 30, 2003. The Registrant  has needed to continually  raise capital  through
private offerings to fund its operations.

         During the nine months  ended March 31,  2004,  the  Registrant  sold a
total of  180,400,000  shares of common stock for  consideration  of  $1,804,000
($0.01 per share).  The Registrant  received cash proceeds of $1,554,616 (net of
direct  financing  costs and  commissions).  The unpaid  portion is  included in
subscription receivable in the accompanying condensed consolidated balance sheet
as of March 31, 2004.

                                       27

<PAGE>

         The  Registrant  recognizes  the need for the  infusion  of cash during
fiscal 2004. 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 condensed  consolidated  financial  statements
contained in this Form  10-QSB,  as well as the audited  consolidated  financial
statements contained in the Registrant's Form 10-KSB for the year ended June 30,
2003,  include  substantial doubt paragraphs  regarding the company's ability to
continue as a going concern.  The Registrant  believes it currently has adequate
cash to fund anticipated cash needs for at least the next three months.

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

o        curtail operations significantly;

o        sell significant assets;

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

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

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

         The Company's  independent  certified public accountants have stated in
their  report  included in the  Company's  June 30, 2003 Form  10-KSB,  that the
Company has incurred operating losses in the past years, and that the Company is
dependent upon  management's  ability to develop  profitable  operations.  These
factors among others may raise  substantial doubt about the Company's ability to
continue as a going concern.

                                       28

<PAGE>

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

         (a) The Registrant's president and shareholder, Paul Egan, has advanced
funds to the company for its operations. During the three months ended March 31,
2004, the Registrant repaid the net amount of $191,642 to Mr. Egan. At March 31,
2004, the Company owes Mr. Egan the net amount of $7,855,  which is shown as Due
To  Related  Party For  Advances  on the  balance  sheet as of March  31,  2004.
Interest on the unpaid balances is accrued at the rate of 7% per annum.

         (b) In anticipation of the TransAxis Acquisition Agreement and while in
the  negotiation  stage,  in July 2003, the  Registrant  loaned to TransAxis the
amount of $75,000 via two senior  secured  convertible  note  agreements  in the
amount of $50,000 and $25,000,  respectively  ("Bridge Notes"). The Bridge Notes
carry  interest  at the rate of  (i)12.5  % per year  from  September  1,  2003,
provided  that  the  Company  does  not  hold  less  than  70%  interest  of the
outstanding  capital  stock of TransAxis  at August 31,  2003,  and (ii) 15% per
annum  commencing  January 1, 2004,  provided that the Company has not completed
the  acquisition  of  TransAxis  by this  date.  The  Bridge  Notes are a senior
obligation  of  TransAxis,  Inc. and payment is secured by a security  agreement
between the two parties.

         The Bridge  Notes  matured on September  29, 2003  without  being paid.
Since the Bridge Notes were not paid in full by December  31, 2003,  the Company
has the option for a one-year period to convert the Bridge Notes without payment
of any other  consideration  into common  stock of  TransAxis  according  to the
following:  at least the number of shares which will provide 5% ownership of the
outstanding  shares  of  TransAxis,  and  shall  be  increased  by 1%  for  each
additional  $15,000  of loans  or  accrued  interest  thereon  that the  Company
maintains with TransAxis.

         After extensive  discussions and following the unanimous  determination
of the  Registrant's  Board of Directors,  the  Registrant  has  terminated  the
Agreement as of June 17, 2004.  This decision was based on both  TransAxis'  and
the Sellers'  failure to disclose  material  liabilities  and  contingencies  in
connection  with that  company,  as well as their  failure to comply  with their
obligations under the Agreement. The Company charged the $75,000 Bridge Notes to
Loss on investments during the three months ended March 31, 2004.

Exchange Rates.
---------------

         The Registrant's  operations are principally in the 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  period.  Income
statement  accounts are  translated at average  rates for the period.  Gains and
losses from  translation  of foreign  currency  financial  statements  into U.S.
dollars are included in  comprehensive  income (loss).  The accumulated  foreign
currency translation adjustment was $445,689 at March 31, 2004.

                                       29

<PAGE>

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

Inflation.
----------

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

Other.
------

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

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

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

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

         The preparation of these financial  statements  requires the Registrant
to make  estimates  and  judgments  that affect the reported  amounts of assets,
liabilities,  revenues and expenses, and related disclosure of contingent assets
and liabilities. On an on-going basis, the Registrant evaluates these estimates,
including those related to revenue recognition and concentration of credit risk.
The Registrant bases its estimates on historical experience and on various other
assumptions  that is  believed to be  reasonable  under the  circumstances,  the
results of which form the basis for making

                                       30

<PAGE>

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.

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

                                       31

<PAGE>

cash flow,  its critical  accounting  policies,  its  profitability  and factors
contributing to its future growth and profitability.  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,  its ability to protect its intellectual  property, and its ability to
find additional financing. These forward-looking statements speak only as of the
date hereof. The Registrant expressly disclaims any obligation or undertaking to
release  publicly  any updates or revisions  to any  forward-looking  statements
contained herein to reflect any change in its  expectations  with regard thereto
or any change in events, conditions or circumstances on which any such statement
is based.

ITEM 3.  CONTROLS AND PROCEDURES.

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

         Within  the 90 days  prior  to the end of the  period  covered  by this
report,  the 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 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.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

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

Freestar Et Al. V. Dennis H. Johnston Et Al.
-------------------------------------------

         On September 10, 2002,  Dennis  Johnston  dismissed a previous  federal
court action in its entirety against  Registrant,  Paul Egan, Ciaran Egan, First
American Stock Transfer and Phillip Young.  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 Mr. Johnston for  malpractice,  breach of fiduciary
duty; deceit and declaratory relief. Mr. Johnston demurred to the complaint.  On
January

                                       32

<PAGE>

30, 2003, Judge Judith Chirlin rejected Mr. Johnston's  demurrer and ordered him
to answer the complaint as it stands.

         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. The  cross-complaint  was brought against the same
defendants  in the  District  Court action and added new  defendants,  including
Corrigan + Morris LLP and its  partners.  In March  2003,  Registrant  and other
defendants  demurred  to  Mr.  Johnston's   cross-complaint.   In  the  face  of
Registrant's  demurrer,  Johnston chose not to oppose, but instead abandoned his
complaint.

         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.  All causes of action against  Corrigan &
Morris LLP and its partners were dismissed with prejudice and costs were awarded
to  Corrigan  +  Morris  LLP.  The  Registrant  has  filed  an  answer  to  that
cross-complaint.

         In June 2003,  Judge  Judith  Chirlin  ruled  that the  action  against
Corrigan + Morris LLP was dismissed with prejudice.  On January 15, 2004,  Judge
Chirlin  ordered Mr. Johnston to pay Corrigan + Morris LLP $15,500 in attorneys'
fees. On January 15, 2004, Judge Chirlin granted the Anti-SLAPP  motions brought
by the Registrant's other attorneys, the affect of which is to dismiss them from
this  action,  and  instructed  them to submit  their  requests for the award of
attorney  fees. On April 29, 2004, the  Registrant  obtained a protective  order
prohibiting  the parties from  disclosing  any  information  learned  during the
litigation to outside parties or making any of the information public.

         Management believes the Registrant has meritorious claims in its action
and defenses to Mr.  Johnston's  cross-claims and ultimately will prevail on the
merits.  However,  this matter remains in the early stages of litigation because
all  discovery  was stayed  until  January  15, 2004  because of the  anti-slapp
motions filed by the Registrant's attorneys. 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.

vFinance et al. v. Freestar et al. (Bankruptcy Action).
-------------------------------------------------------

         On January 9, 2003,  vFinance  Investments,  Richard  Rosenblum,  David
Stefansky,  Marc Siegel,  Boat Basin  Investors  LLC and Papell  Holdings,  Ltd.
("Petitioners") filed an involuntary bankruptcy petition against the Registrant.
The Petitioners sought liquidation and the appointment of a receiver.

         On March 4, 2003,  United States Bankruptcy Judge Gropper dismissed the
Petitioners' bankruptcy petition against the Registrant.  On March 21, 2003, the
Registrant  filed  its  motion  for an order  and  judgment  awarding  costs and
attorneys' fees in favor of the Registrant  against the Petitioners  pursuant to
11  U.S.C.  ss.  303(i).  On or about  April 21,  2003,  the  parties  reached a

                                       33

<PAGE>

settlement  to resolve the 11 U.S.C.  ss.303(i)  (1) issues in that motion.  The
Petitioners  owed  and  paid  the  Registrant  $40,000  in  satisfaction  of the
settlement.

vFinance et al. v. Freestar et al. (Civil Action).
--------------------------------------------------

         On or about January 22, 2003, vFinance Investments,  Richard Rosenblum,
David  Stefansky,  Marc Siegel,  Boat Basin Investors LLC, and Papell  Holdings,
Ltd.  (collectively,  "Plaintiffs")  filed a complaint  against Paul Egan, First
American  Stock  Transfer  and Phil Young,  president  of First  American  Stock
Transfer,  in the United States District Court for the Southern  District of New
York  alleging,  among other claims,  fraud,  conversion  and  violations of the
Securities  Exchange Act of 1934. In addition to unspecified money damages,  the
Plaintiffs  sought an affirmative  preliminary  injunction  against Mr. Egan and
First American Stock Transfer seeking the removal of restrictive  legends placed
on 14,400,000  unregistered  shares of Registrant stock purportedly owned by the
Plaintiffs. The Registrant was not named in the suit. The Registrant opposed the
affirmative  injunctive  action on the grounds that removal of the legends would
constitute a violation of the registration  provisions of the federal securities
laws and that the Registrant was an indispensable party.

         On January 29, 2003, U.S. District Judge Robert Sweet held a hearing on
the Plaintiffs' request for preliminary injunction and expressed serious concern
that there seemed to be  significant  factual  disputes and refused to order the
injunction.

         On  February  7,  2003,   Judge  Sweet  issued  an  order  denying  the
Plaintiffs' motion for preliminary injunction and staying the action pursuant to
U.S. Bankruptcy Code 11 U.S.C. 362(a), on the ground that the Registrant,  which
was not named in the action,  was an  indispensable  party.  That stay continued
until  after  the  bankruptcy  case  (discussed  above)  was  dismissed  and the
Registrant was added as a defendant.

         On March 24, 2003, the Plaintiffs  filed an amended  complaint  against
the Registrant,  Paul Egan,  Ciaran Egan, and Registrant's  stock transfer agent
alleging,  among other  things,  that  Registrant  and Paul Egan failed to repay
money  borrowed.  Plaintiffs'  13 causes of action  include  breach of contract,
conversion  fraud and violations of the Securities and Exchange Act of 1934. The
amended  complaint  seeks the  issuance  of  14,400,000  shares of free  trading
Registrant stock and damages in an unspecified amount.

         On May 5,  2003,  the  Registrant  filed  a  counterclaim  against  the
Plaintiffs  and vFinance  Investments,  Inc. On that same date,  the  Registrant
answered  Plaintiffs'  complaint,  denying  the  allegations.  The  Registrant's
counterclaim  contends that the Plaintiffs and vFinance breached their fiduciary
duties to the  Registrant  by  recommending  and  assisting  the  Registrant  in
negotiating  and  drafting   convertible   debt  financing   through   floorless
convertible notes with lenders  controlled by vFinance.  The Registrant  further
alleges that the Plaintiffs and vFinance charged the Registrant  exorbitant fees
and  otherwise  ensured  profits of multiples of their  original  investment  by
setting out to destroy  the  Registrant  through  short  selling its stock.  The
Registrant and Paul Egan further allege that vFinance and the Plaintiffs  caused
them to suffer damages as a result of their "death spiral" or toxic  convertible
financing  strategy,  violations  of the  federal  securities  laws,  breach  of

                                       34

<PAGE>

contracts,  including  over-conversion  of certain  pledged  securities,  market
manipulation, breach of fiduciary duty and fraud.

         As  part  of  the  counter-claim,   the  Registrant  alleges  that  the
Plaintiffs  may  have  caused  the  Registrant  unwittingly  to  participate  in
violations  of the  registration  provisions of the federal  securities  laws in
connection with certain previously  disclosed financing  transactions  involving
convertible notes.

         As of March 4, 2004, this case has been settled. Under the terms of the
settlement agreement: (i) Plaintiffs,  David Stefansky,  Richard Rosenblum, Marc
Siegel,  Boat Basin  Investors  LCC, and Papell  Holdings Ltd.  agreed to return
15,399,000 shares (990,000 shares originally issued by the Company as collateral
and 14,400,000 given by Mr. Paul Egan) of the Registrant's stock issued to them;
and  (ii)  Plaintiffs  and  vFinance  agreed  to  refrain  from  trading  in the
Registrant's  securities for a period of two years.  On or about March 19, 2004,
the parties filed a  stipulation  of dismissal of the case with  prejudice.  The
parties also  exchanged  full mutual  releases of all claims,  cross-claims  and
counterclaims  with  prejudice.  There are no remaining  contingent  liabilities
related to that lawsuit.

Sportingbet PLC v. FreeStar Technology Corporation.
---------------------------------------------------

         On or about  May 17,  2004,  Sportingbet  PLC  ("Sportingbet")  filed a
complaint  against the Registrant in Nevada State Court. The complaint  alleges,
among other things, that the Registrant breached a settlement agreement and debt
guarantee. Sportingbet has alleged damages in excess of $10,000, to be proven at
trial, and the complaint seeks an injunction requiring the Registrant to deliver
7,100,592 shares of its common stock under the terms of a stock pledge agreement
and settlement  agreement.  On June 3, 2004,  Sportingbet  obtained an unopposed
writ of possession order from the Nevada Court ordering the Registrant to tender
7,100,592 free trading shares of common stock to Sportingbet.

         On June 14, 2004, the Registrant  filed a counterclaim  seeking damages
in excess of $1,400,000.  The Registrant also filed a  countermotion  asking the
Court to vacate or  reconsider  the writ of  possession,  or in the  alternative
seeking bond in the amount of $1,400,000.

         On June 21, 2004, the court vacated its earlier order and set aside the
writ of possession.  Accordingly, the Registrant was not required to deliver any
stock to Sportingbet.

         Management believes the Registrant has meritorious claims in its action
and defenses to Sportingbet's complaint and that the company will prevail on the
merits.  In particular,  management  believes that the settlement  agreement and
related  documents  referenced in the complaint,  all executed in November 2003,
never became effective under the terms of this agreement.  However,  this matter
remains in the very 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

                                       35
<PAGE>

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

         In January 2003, the  Registrant  learned that the SEC had initiated an
informal,  non-public  inquiry.  Since that  time,  the SEC 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 of the Securities Act of 1933, facts stated in
press  releases and reports filed with the SEC  concerning,  among other things,
the Registrant's assets,  operations,  financial condition,  anticipated revenue
and strategic initiatives.

         The  Registrant  is and expects to continue to cooperate  with that SEC
investigation.  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 SEC staff as a result of this formal  investigation,
but it cannot be predicted what the nature of such enforcement  proceeding would
be, the type of sanctions  sought or what the likelihood  would be of reaching a
settlement.



                                       36

<PAGE>

ITEM 2.  CHANGES IN SECURITIES.

         The  Registrant  sold the  following  securities  without  registration
(restricted) during the three months ended March 31, 2004:

         (a) On January 5, 2004, the Registrant sold 1,000,000  shares of common
stock to one individual for consideration of $10,000 ($0.01 per share).

         (b) On  January  23,  2004,  the  Registrant  issued a total of 600,000
shares of common stock to three individuals for consulting work for the company,
valued at a total of $99,000 ($0.165 per share).

         (c) On March 24, 2004, the  Registrant  issued 300,000 shares of common
stock to one individual for consulting  work for the company,  valued at $63,000
($0.21 per share).

         No  commissions  were paid in connection  with any of these sales.  All
these sales were undertaken  under either Rule 506 of Regulation D or Regulation
S under the Securities Act of 1933, as amended.

         On March 22, 2004, the  Registrant  issued  3,600,000  shares of common
stock in error to one  investor in a  Regulation  S offering.  These shares were
subsequently cancelled in May 2004.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

         Not applicable.

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

         None

                                       37

<PAGE>

ITEM 5.  OTHER INFORMATION.

Disagreement with Former Auditor for ePayLatina, S.A.
-----------------------------------------------------

         On August  10,  2001,  the  Registrant  purchased  all of the assets of
ePayLatina,  S.A. Prior to this acquisition, an audit was conducted on the books
and record of  ePayLatina,  S.A.  by the  Dominican  Republic  office of Ernst &
Young. This audit, dated August 2, 2001, is contained in a Form 8-K/A filed with
the SEC on November 1, 2001.  For  accounting  purposes,  this  acquisition  was
accounted for using the purchase method, with ePayLatina, S.A. as the accounting
acquirer  in a reverse  acquisition.  Therefore,  the  historical  equity of the
Registrant  has been  adjusted to reflect the  conversion  of  ePayLatina,  S.A.
common stock to that of the Registrant.  Additionally, as a reverse acquisition,
the  historical  operating  results  prior  to  the  acquisition  are  those  of
ePayLatina,  S.A. and include only the  transactions of the Registrant after the
acquisition.

         On  October  25,  2002,  the  former   independent   auditors  for  the
Registrant, Stonefield Josephson, Inc. ("Stonefield"), completed an audit of the
books and records of the Registrant for the period from May 25, 2001  (inception
of ePayLatina, S.A.) to June 30, 2002. Stonefield concluded, as a result of this
audit,  that: (a) because  ePayLatina,  S.A. lacked sufficient  documentation to
demonstrate  to  Stonefield  that this company owned free and clear of any liens
certain  assets,  including  equipment  and  software,  previously  recorded  on
ePayLatina,  S.A.'s balance sheet as having a value of  approximately  $900,000,
this company  could no longer  properly  recognize  such items as assets of this
company;  and  (b)  the  revenue  figures  for  the  Registrant,  based  on  the
ePayLatina,  S.A.  audit,  for the period  from May 25,  2001 to March 31,  2002
(including the intervening quarters), were recorded improperly and overstated by
approximately  $150,500.  Both the  balance  sheet and the income  statement  in
question had previously been audited by Ernst & Young.

         Prior to the  issuance  of the audit for the fiscal year ended June 30,
2002,  Stonefield  attempted on numerous  occasions to contact  Ernst & Young to
discuss this inconsistency. In September 2003, Ernst & Young's Domincan Republic
office orally advised Paul Egan that Ernst & Young continues to stand behind its
audit of ePayLatina,  and in particular confirms its opinion that the assets and
revenue  were both  properly  recorded by  ePayLatina,  S.A. as reflected in the
audited  financial  statements  which they prepared.  Neither the Registrant nor
Stonefield has received any written correspondence from Ernst & Young supporting
their  position  or  evidence  of the  Registrant's  ownership  of such  assets.
However,  it is the Registrant's  understanding  that this matter is still under
review by Ernst & Young.

         As a result of the above  disagreement,  the Registrant has not amended
the  Form  8-K  noted  above.  Once  this  matter  has  been  resolved,  then  a
determination  will be made by the  Registrant  as to  whether  the  Form 8-K is
required to be further amended.  However,  the Registrant has filed amended Form
10-QSB's on March 29, 2004 for the affected  periods as a result of Stonefield's
audit.  Effective on June 23, 2004, Stonefield was terminated as the independent
accountant for the Registrant.

                                       38
<PAGE>


TransAxis, Inc.
---------------

(a)      Stock Purchase Agreement.

         On September 24, 2003,  the  Registrant  entered into a stock  purchase
agreement with certain shareholders of TransAxis,  Inc. ("TransAxis")  (formerly
Digital  Courier  Technologies,  Inc.) for the  acquisition of a majority of the
common stock of this publicly  held company ("TA  Acquisition  Agreement")  (see
Exhibit 2.12 to this Form 10-QSB).  The terms of the acquisition provide for the
Registrant  to purchase a majority of the shares that consist of the  following:
(a) the 2,916,533 shares that will be outstanding upon the conversion of certain
debt of TransAxis ("Conversion Right"); and (b) the 805,000 shares of Registrant
common stock issued and outstanding. In exchange the Registrant is to issue on a
pro rata basis based on the sellers' current percentage  beneficial ownership of
TransAxis  common stock  (including  the  beneficial  ownership of the TransAxis
common stock represented by the Conversion Right) the aggregate number of shares
of  Registrant  common  stock  which is the greater of (i)  7,000,000  shares of
common stock,  or (ii) that number of shares of common stock equal to $1,260,000
divided by the average  closing  bid price per share of the common  stock on the
five days prior to the closing date.

         On October 8, 2003, the parties  amended the TA  Acquisition  Agreement
(see Exhibit 2.13 to this Form  10-QSB).  The  following  was amended under this
document:

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

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

         On February 20, 2004,  the parties  further  amended the TA Acquisition
Agreement  ("Amendment  No. 2"). The  Registrant  claimed that it had identified
certain accounting-related  deficiencies in the books of TransAxis which predate
the closing date, and that such  deficiencies have and will continue to preclude
TransAxis from being able to obtain audited financial  statements  without undue
effort  and  expense.  In order to avoid  the  cost of  litigation  and  further
disputes and  negotiation,  the  Registrant  and TransAxis  agreed to reduce the
number of shares issuable under the TA Acquisition  Agreement from 25,183,418 to
3,200,000,  which were actually  issued.  In exchange,  the Registrant  actually
received  350,900  shares of  TransAxis  stock,  or 43.5%,  although  it remains
entitled  to  receive  the lost  shares.  The  Registrant  never  exercised  the
Conversion Right, and never controlled a majority of the shares of TransAxis.

                                       39

<PAGE>



(b)      Loan to TransAxis.

         In anticipation of this transaction and while in the negotiation stage,
in July 2003, the  Registrant  loaned to TransAxis the amount of $75,000 via two
senior secured convertible note agreements in the amount of $50,000 and $25,000,
respectively  ("Bridge Notes") (see Exhibits 4.15 and 4.16 to this Form 10-QSB).
The Bridge Notes carry interest at the rate of (i)12.5 % per year from September
1, 2003,  provided that the  Registrant  does not hold less than 70% interest of
the outstanding  capital stock of TransAxis at August 31, 2003, and (ii) 15% per
annum commencing January 1, 2004, provided that the Registrant has not completed
the  acquisition  of  TransAxis  by this  date.  The  Bridge  Notes  are  senior
obligation of TransAxis and payment is secured by a security  agreement  between
the two parties.

         The Bridge Notes  matured on September  29, 2003 without being paid. If
the Bridge Notes are not paid in full before  December 31, 2003,  the Registrant
has the option for a one-year period to convert the Bridge Notes without payment
of any other  consideration  into common  stock of  TransAxis  according  to the
following:  at least the number of shares  which will prove 5%  ownership of the
outstanding  shares  of  TransAxis,  and  shall  be  increased  by 1%  for  each
additional  $15,000 of loans or accrued  interest  thereon  that the  Registrant
maintains with TransAxis.

(c)      Brown Simpson Settlement.

         Prior to the execution of the TA Acquisition  Agreement,  TransAxis had
incurred a liability to Brown Simpson Partners I, Ltd. ("Brown  Simpson") in the
amount of  approximately  $1,400,000.  The Registrant  entered into a settlement
agreement with Brown Simpson (the "Brown Simpson Settlement  Agreement") whereby
the  Registrant  would issue to Brown  Simpson  5,183,418  shares of  Registrant
common stock and pay the amount of $10,000 in cash in return for Brown Simpson's
dismissal of all its claims against the Registrant.  These shares were issued on
December 30, 2003.

Subsequent Events.
------------------

(a)      Unipay, Inc.

         (a) On May 17,  2004,  the  Registrant  announced  the  acquisition  of
Unipay,  Inc.'s Smokey Mountain  payment  processing  division in Murphy,  North
Carolina on May 4, 2004. This division currently processes payment  transactions
(via credit cards and debit cards) through many of the largest  processors,  and
has the  ability to be a direct  processor  with full  settlement  capabilities.
Unipay  processes  client   transactions   using  its  proprietary   technology,
Cyber-Terminal  and Universal  Payment  software.  The Registrant  agreed to pay
$150,000 in cash and issue 10,000,000  restricted shares of common stock (valued
at  $1,000,000)  in exchange for the assets of the division.  The Registrant has
agreed to file a registration statement covering those shares.

         On  June  14,  2004,  the  Registrant  informed  Unipay  and  its  sole
shareholder,  Unicomp, that due to the failures of these parties to the purchase
agreement to perform as required under this agreement, including blocking access
to the North Carolina  premises,  preventing  transfer of assets, and failing to
deliver  business and other documents,  the purchase  transaction is terminated.
The Registrant actually paid $25,000 in connection with this agreement.

(b)      TransAxis, Inc.

         After extensive  discussions and following the unanimous  determination
of the  Registrant's  Board of Directors,  the  Registrant has terminated the TA
Agreement and the Brown Simpson  Settlement  Agreement as of June 17, 2004. This
decision  was based on both  TransAxis'  and the  sellers'  failure to  disclose
material  liabilities and contingencies in connection with that company, as well
as their  failure to comply  with their  obligations  under the  agreement.  The
Registrant  believes that it will recover the 3,200,000  shares issued under the
TA  Acquisition  Agreement,  and has  recorded  the amount of $752,000 as shares
cancellation receivable in the accompanying condensed consolidated balance sheet
as of March 31, 2004. The Registrant  wrote-off the $75,000 Bridge Notes as loss
on  investments  in  the  accompanying  condensed  consolidated   statements  of
operations for the three months ended March 31, 2004.

         The  Registrant  believes  that it will  recover the  5,183,418  shares
issued pursuant to the Brown Simpson Settlement  Agreement,  and has recorded an
additional $679,028  representing the Brown Simpson shares as share cancellation
receivable in the accompanying  condensed consolidated balance sheet as of March
31, 2004.

                                       40
<PAGE>

(c)      Nordea Bank.

         On May 27,  2004,  the  Registrant's  wholly  owned  subsidiary  Rahaxi
Processing  Oy. has  entered  into an  agreement  with  Nordea  Bank,  a leading
financial  services group in the Nordic and Baltic Sea region.  Headquartered in
Stockholm, Sweden, Nordea operates through three business areas: retail banking,
corporate and  institutional  banking,  and asset management and life insurance.
The terms of the  agreement  provide  for  Rahaxi  and  Nordea  to enter  into a
cooperative agreement, whereby Rahaxi will provide Nordea transaction-processing
services  for  mutually   selected   local,   Scandinavian,   pan-European   and
international merchants.

         The  Registrant  believes this agreement is in line with several of its
key strategies  designed to maintain Rahaxi's  attractiveness in global markets.
By collaborating  with Nordea,  one of Europe's leading financial  institutions,
management believes the Registrant is strengthening its position in the European
market place,  which is one of its target regions.  Management also believes the
industry of merchant  acquiring is becoming a global  affair.  Given the massive
explosion of e-commerce  within the relatively  short time frame  involved,  any
merchant  acquirer  that  intends  to become  seriously  involved  in the global
economy  must act to  develop  a true  international  strategy,  which  includes
working in conjunction with partners.


                                       41

<PAGE>

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

Exhibits.
---------

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

Reports On Form 8-K.
--------------------

         The Registrant  filed the following report on Form 8-K during the third
         quarter of the fiscal year covered by this Form 10-QSB:

         A Form 8-K/A filed on March 2, 2004 to report that in  connection  with
         the  stock  purchase  agreement  between  the  Registrant  and  certain
         shareholders  of TransAxis,  Inc.  ("Sellers") for the acquisition of a
         majority of the common stock of this  publicly held company on February
         20, 2004, the parties  executed a second  amendment to this  agreement.
         Under this amendment, the Sellers agreed to deliver the certificate for
         25,183,418  restricted  shares of common  stock  (previously  issued in
         connection with the Agreement) to the company's transfer agent so as to
         cancel all of the these shares,  except for 3,200,000 restricted shares
         of common stock (the agreed upon payment under this amendment).

                                       42

<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: June 23, 2004               By: /s/ Paul Egan
                                       -------------
                                   Paul Egan, President/Chief
                                   Executive Officer

Dated: June 23, 2004               By: /s/ Ciaran Egan
                                       ---------------
                                   Ciaran Egan, Secretary/Treasurer/Chief
                                   Financial Officer

                                       43

<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).

                                       44

<PAGE>

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).

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).

                                       45

<PAGE>

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

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

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

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

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

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

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

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).

                                       46

<PAGE>

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  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).

                                       47

<PAGE>

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

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

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

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).

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 8-K filed
                  on November 4, 2003).

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

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

32                Section 1350  Certification  of Paul Egan and Ciaran Egan (see
                  below).

                                       48

<PAGE>

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,  April 24, 2003 (7:37
                  p.m.)  (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 by the  Registrant,  dated 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 by the Registrant,  dated 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 by the Registrant, dated 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).

                                       49