<PAGE>




                 UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

    (Mark  One)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

    For the quarterly period ended March 31, 2001

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

    For the transition period from         to
                                  ---------  ---------

                          Commission File No. 000-28749

                              FREESTAR TECHNOLOGIES

                 (Name of Small Business Issuer in Its Charter)

             Nevada                                          88-0446457
  (State or Other Jurisdiction of                           (IRS Employer
  Incorporation or Organization)                        Identification Number)

         207 W. 138th Street
           Los Angeles, CA                                      90006
(Address of Principal Executive Offices)                       (Zip Code)

                                 (310) 352-3300
                           (Issuer's Telephone Number)

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or such shorter
period of time that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X]   No [ ]

State the number of shares outstanding of each of the issuer's classes of common
equity as of March 31, 2000: Common stock 6,861,500 shares, Preferred Stock 0
shares

Transitional Small Business Disclosure Format

(Check one):       Yes  [ ]  No  [x]

                                        1

<PAGE>
                                TABLE OF CONTENTS

PART 1 - FINANCIAL INFORMATION
                                                                   PAGE
                                                                   ----
Item 1. Financial Statements.....................................  3/15

Item 2. Plan of Operation........................................  16

PART 11- OTHER INFORMATION

Item 1. Legal Proceedings........................................  21

Item 2. Changes in Securities....................................  22

Item 3. Defaults Upon Senior Securities..........................  23

Item 4. Submission of Matters to a Vote of Security Holders......  23

Item 5. Other Information........................................  23

Item 6. Exhibits and Reports on Form 8-K.........................  26

SIGNATURES.......................................................  26

                                        2

<PAGE>

                              FREESTAR TECHNOLOGIES
                              FINANCIAL STATEMENTS
                                   (Unaudited)
                                 March 31, 2001

                                TABLE OF CONTENTS

                                                           PAGE

BALANCE SHEET - ASSETS                                      4

BALANCE SHEET - LIABILITIES AND SHAREHOLDER'S EQUITY        5

STATEMENT OF OPERATIONS                                     6

STATEMENT OF CASH FLOWS                                     7

NOTES TO FINANCIAL STATEMENTS                               8

                                        3


<PAGE>

                              FREESTAR TECHNOLOGIES
                                  Balance Sheet
                                 March 31, 2001

                                     ASSETS

CURRENT ASSETS
    Cash                                                            $   189,456
    Accounts receivable                                                 512,612
    Notes Receivable                                                     72,000
    Inventory                                                           366,585
    Employee advance                                                      1,500
    Prepaid Insurance                                                       851
    Prepaid State Income Tax                                                800
    Deposits                                                             10,000
                                                                    ------------
    TOTAL CURRENT ASSETS                                              1,153,804

PROPERTY AND EQUIPMENT
    Manufacturing Machinery                                             325,507
    Machinery Leases                                                      2,296
    Furniture & Fixtures                                                 72,787
    Office Equipment                                                     62,109
                                                                    ------------
                                                                        462,699
    Less: accumulated depreciation                                     (357,346)
                                                                    ------------
    TOTAL PROPERTY & EQUIPMENT                                          105,353

OTHER ASSETS
    Security Deposits                                                     6,000
    Goodwill                                                          2,758,030
                                                                    ------------
    TOTAL OTHER ASSETS                                                2,764,030

                                                                    ------------
TOTAL ASSETS                                                        $ 4,023,187
                                                                    ============

                See accompanying notes to financial statements


                                        4

<PAGE>

                              FREESTAR TECHNOLOGIES
                                  Balance Sheet
                                 March 31, 2001

                       LIABILITIES & STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Accounts payable & accrued expenses                             $   158,262
    Notes Payable                                                       750,000
    Payroll Clearing                                                    (75,581)
    Taxes Payable                                                        12,714
    Deposits                                                            150,000
                                                                    ------------
    TOTAL CURRENT LIABILITIES                                           995,395

LONG-TERM LIABILITIES
    Notes payable-Community Bank                                        225,000
    Notes payable-Corporate Officer                                     394,866
                                                                    ------------
    TOTAL LONG TERM LIABILITIES                                         619,866
                                                                    ------------
    TOTAL LIABILITIES                                                 1,515,261

STOCKHOLDERS' EQUITY

    Common stock, $.001 par value, 80,000,000 shares authorized,
      6,861,500 shares issued and outstanding                             6,861
    Paid in capital                                                   2,458,698
    Retained Earnings-Beginning                                        (263,227)
    Net Profit (Loss)                                                   305,594
                                                                    -----------
    TOTAL STOCKHOLDERS' EQUITY                                        2,507,926
                                                                    -----------
TOTAL LIABILITIES & OWNER'S EQUITY                                  $ 4,023,187
                                                                    ============

                See accompanying notes to financial statements

                                        5


<PAGE>

                              Freestar Technologies
                                Income Statement

                                          Three Months Ended
                                               March 31,
                                       2001             2000
                                   -------------    -------------

SALES                              $    747,427     $    475,508

COST OF SALES                            85,281           20,685
                                   -------------    -------------
GROSS PROFIT                            662,146          454,643

OPERATING EXPENSES
    Selling,
    General and administrative          199,261          105,985
                                   -------------    -------------
TOTAL OPERATING EXPENSES                199,261          105,985
                                   -------------    -------------

OPERATING INCOME                        462,885          348,658

INCOME BEFORE INCOME TAX                462,885          348,658

PROVISION FOR INCOME TAX               (157,381)        (118,543)
                                   -------------    -------------

NET INCOME                         $    305,594     $    230,515
                                   =============    =============

EARNINGS PER SHARE - BASIC         $      0.045     $      0.045
                                   =============    =============

WEIGHTED AVERAGE NUMBER OF
    SHARES OUTSTANDING                6,861,500        5,107,667

                See accompanying notes to financial statements


                                        6


<PAGE>
<TABLE>

                              FREESTAR TECHNOLOGIES
                            Statements of Cash Flows
<CAPTION>

                                                                        Three Months Ended
                                                                            March 31,
                                                                      2001            2000
                                                                  ------------    ------------
<S>                                                               <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income (loss)                                             $   305,594     $   230,515
    (Increase) decrease in accounts receivable                        (62,500)       (377,166)
    (Increase) decrease in inventory                                 (100,001)       (425,338)
    Increase (decrease) in accounts payable and accrued expense       (18,462)         60,176
    Increase (decrease) in payroll clearing                           (10,000)
    Increase (decrease) in Deposits                                  (150,000)
    Increase (decrease) in Taxes Payable                              158,588           7,303
    Increase (decrease) in Sales Tax Payable                          (11,351)
    Increase (decrease) in Notes Payable-corporate officer           (227,651)
    Depreciation                                                      (18,462)
                                                                  ------------    ------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES                     (111,543)       (464,510)

CASH FLOWS FROM INVESTING ACTIVITIES                                        -
    Acquisition of Equipment                                                          172,020
                                                                  ------------    ------------
NET CASH USED BY INVESTING ACTIVITIES                                                 172,020

CASH FLOWS FROM FINANCING ACTIVITIES                                        -
    Increase (decrease) in Loans Payable                                              292,490
                                                                  ------------    ------------
NET CASH USED BY FINANCING ACTIVITIES                                       -         290,703
                                                                  ------------    ------------
NET INCREASE (DECREASE) IN CASH                                      (111,543)          1,787

CASH BALANCE, BEGINNING OF PERIOD                                     300,999               -
                                                                  ------------    ------------
CASH BALANCE, END OF PERIOD                                       $   189,456     $     1,787
                                                                  ============    ============

SUPPLEMENTAL DISCLOSURES
    Cash paid during the period for interest                      $   (18,546)    $   (17,958)
                                                                  ============    ============
    Cash paid during the period for income tax                    $         -     $         -
                                                                  ============    ============
</TABLE>
                            See accompanying notes to financial statements


                                                   7

<PAGE>

                              FREESTAR TECHNOLOGIES

                        NOTES TO THE FINANCIAL STATEMENTS
                        ---------------------------------
                                 March 31, 2001

                                   (Unaudited)

NOTE 1 - ACCOUNTING POLICIES AND PROCEDURES
-------------------------------------------

General Policies & Procedures
-----------------------------

1.       Freestar Technologies ("the Company") uses the accrual method of
         accounting, recording revenues when a transaction occurs where the
         Company has a reasonable expectation of receiving the revenue.

2.       The Company has not yet adopted any policy regarding payment of
         dividends. No dividends have been paid since inception.

3.       The costs of equipment is depreciated over the estimated useful
         life of the asset utilizing the straight-line method of depreciation.

4.       The preparation of these financial statements are in conformity with
         generally accepted accounting principles. Therefore management has made
         estimates and assumptions that affect the reported amounts of assets
         and liabilities as of the date of the financial statements and revenues
         and expenses for the period reported. Actual results may differ from
         these estimates.

         These interim results are not necessarily indicative of results for a
         full year.

5.       The Company had a net operating loss carry forward as of December 31,
         2000. The Company will review its need for a provision for federal
         income tax after each operating quarter and each period for which a
         statement of operations is issued. The Company's marginal tax rate is
         34%. The Company's effective tax rate is 0% due to the tax loss carry
         forward.

6.       The Company's subsidiary, Southern California Logo, Inc. ("SOCAL") has
         changed its year end to December 31 to conform to the Company's fiscal
         year end.

                                        8

<PAGE>
                              FREESTAR TECHNOLOGIES

                        NOTES TO THE FINANCIAL STATEMENTS
                        ---------------------------------
                                 March 31, 2001

                                   (Unaudited)

NOTE 1 - ACCOUNTING POLICIES & PROCEDURES, CONTINUED
----------------------------------------------------

Concentration of Credit Risk
----------------------------

The Company provides a credit in the normal course of business to a select group
of customers and performs ongoing credit evaluation of such customers. The
Company evaluates reserves for potential credit losses based on the Company's
historical experience. The Company determines the reserve based on a percentage
of total accounts receivable.

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

Inventories are stated at cost determined using the first-in, first-out (FIFO)
method, but not in excess of market. Inventories consist of raw materials,
work-in process and finished goods. Costs include materials and direct labor.

Property and Equipment
----------------------

Property and equipment are stated at the Company's allocated acquisition cost
for the assets acquired and at cost for all new additions. When property and
equipment is sold or retired, the cost and related accumulated depreciation are
eliminated from the respective accounts and any gain or loss is credited or
charged to income. Maintenance and repairs are charged to expense when incurred;
expenditures for renewals or betterments are capitalized.

Property and equipment is primarily depreciated using the straight-line method
over the estimated useful lives of the related assets or, for leasehold
improvements, over the term of the lease, if less. The following are the
estimated useful lives:

         Machinery and equipment                3 - 5 years
         Automobiles                                5 years
         Furniture and fixtures                     5 years
         Computer equipment                         5 years
         Leasehold improvements                    10 years

                                        9

<PAGE>

                              FREESTAR TECHNOLOGIES

                        NOTES TO THE FINANCIAL STATEMENTS
                        ---------------------------------
                                 March 31, 2001

                                   (Unaudited)

NOTE 1 - ACCOUNTING POLICIES & PROCEDURES, CONTINUED
----------------------------------------------------

Long-Lived Assets
-----------------

Management of the Company assesses the recoverability of property and equipment
by determining whether the depreciation and amortization of such assets over
their remaining lives can be recovered through projected undiscounted cash
flows. The amount of impairment, if any, is measured based on fair value and is
charged to operations in the period in which such impairment is determined by
management. To date, management has not identified any impairment of long-lived
assets.

Revenue Recognition
-------------------

Revenues are recognized upon shipment of goods to customers.

Income Taxes
------------

The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109 ("SFAS 109"), "ACCOUNTING FOR INCOME TAXES." Under
SFAS 109, the asset and liability method is used in accounting for income taxes.
Under this method, deferred tax assets and liabilities are determined based on
differences between the financial reporting and the tax basis of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse.

NOTE 2 - ACQUISITION

On January 4, 2000, the Company acquired all of the issued and outstanding
common stock of Southern California Logo, Inc. ["SOCAL"] for 900,000 shares of
the Company stock at $2.1667 per share plus $800,000 in a note payable to Rick
Songer at an interest rate of prime plus one due on or before July 15, 2000.
During the year 2000, a total of $500,000 of the note for $800,000 was paid
leaving a balance due of $300,000 which has not been paid. The Company also
assumed the outstanding liabilities of SOCAL.

SOCAL was incorporated in October, 1985 and is a leading supplier of high
quality, custom embroidered, promotional clothing to the film industry. The
company has provided products for over 500 movies including The Rock,
Armageddon, Top Gun, Terminator 1 and 2, and many other major films. In the
early years, the Company became a top supplier of wardrobe and related products
to the motion picture industry. In more recent years, the Company has expanded
the customer base into promotional products for many major corporations and has
done private labeling for numerous major brands. The company's most recent
venture has provided products for the surf and skateboard industry.

                                 10


<PAGE>

                              FREESTAR TECHNOLOGIES

                        NOTES TO THE FINANCIAL STATEMENTS
                        ---------------------------------
                                 March 31, 2001

                                   (Unaudited)

NOTE 2 - ACQUISITION, CONTINUED
-------------------------------

This transaction has been accounted for under the purchase method of accounting
and the results of operations of SOCAL are included in the historical financial
statements from the date of acquisition.

Common stock issued to SOCAL's shareholder                $1,950,030
Note payable                                                 800,000
Liabilities assumed and incurred                             467,152
                                                          -----------
         Total acquisition cost                            3,217,182
Less: Assets acquired                                        387,250
                                                          -----------
Excess of purchase price over net assets acquired         $2,829,932
                                                          ===========
NOTE 3 - INVENTORIES
--------------------

Inventories consisted of the following at March 31, 2001:

         Raw materials                  $ 205,288
         Work-in-process                   25,661
         Finished goods                   135,636
                                        ----------

                                        $ 366,585
                                        ==========

Based on a physical inventory taken on August 31, 2000, the Company's total
inventories had 56% raw materials, 7% work-in-process, and 37% finished goods.
The same allocation percentage was used to allocate the total inventories at
March 31, 2001.

NOTE 4 - PROPERTY AND EQUIPMENT
-------------------------------

At March 31, 2001, property and equipment consists of the following:

         Furniture, fixtures and equipment                   $   105,451
         Embroidery machinery                                    220,570
         Capital lease asset                                      74,693
         Automobile                                               55,732
                                                             ------------
                                                                 456,446
         Less Accumulated Depreciation                          (351,093)
                                                             ------------
        Net Value of Equipment:                                  105,353

                                       11


<PAGE>

                              FREESTAR TECHNOLOGIES

                        NOTES TO THE FINANCIAL STATEMENTS
                        ---------------------------------
                                 March 31, 2001

                                   (Unaudited)

NOTE 5 - BANK LINE-OF-CREDIT
----------------------------

The Company has a $300,000 line of credit available with a financial
institution. The line bears interest at the bank's index rate (national prime as
determined by Bank of America of California) plus 1.5% and expires in 2002. It
is collateralized by inventories, equipment, accounts receivable and general
intangibles. This line is separately guaranteed by the Company's shareholder,
Rick Songer.

The line of credit agreement requires maintenance of working capital and debt to
net worth ratios. In addition, the agreement contains restrictions regarding
adequate insurance, loans and advances. The Company was in compliance with all
restrictions as of March 31, 2001.

As of March 31, 2001, the outstanding balance on this credit line was $225,000.

NOTE 6 - NOTE PAYABLE - SHAREHOLDER
-----------------------------------

Shareholder note payable consists of unsecured note, bearing interest at 10% per
annum, with principal and interest due after 2002. The balance on this note as
of March 31, 2001 was $394,866. The amount due to the shareholder as of December
31, 2001 was $662,217 which represents a reduction of $227,651 during the first
quarter of 2001.

NOTE 7 - CAPITAL LEASE OBLIGATION
---------------------------------

The Company is the lessee of certain equipment (included in property and
equipment) under a capital lease which expires during 2001, with effective
interest rate of 13.32%. Future minimum lease obligation for the asset under
capital lease are as follows:

       Year Ending
         December 31,                                                  2000
       -------------                                             ---------------
         2000                                                    $       28,326
         2001                                                            28,714
                                                                 ---------------
   Total minimum lease obligations                                       57,040
      Less: interest imputed                                             (7,193)
                                                                 ---------------
      Present value of future minimum lease obligations                  49,847
    Less: current portion                                               (23,061)
                                                                 ---------------
      Noncurrent portion                                         $       26,786
                                                                 ===============

                                       12

<PAGE>

                              FREESTAR TECHNOLOGIES

                        NOTES TO THE FINANCIAL STATEMENTS
                        ---------------------------------
                                 March 31, 2001

                                   (Unaudited)



NOTE 8 - COMMITMENTS
--------------------

Lease
-----

The Company leases its manufacturing and operating facility under noncancellable
operating lease agreement, which expires in October, 2003. This lease agreement
has a renewal option for an additional five-year period through 2008. The lease
contains clauses requiring the Company to pay taxes, insurance and other
operating expenses of the property. The monthly lease payment is $10,418.

Future minimum annual payments required under the noncancellable operating
leases, excluding common area maintenance and property taxes, are as follows:

          YEAR ENDING DECEMBER 31

               2001                                     $       125,016
               2002                                             125,016
               2003                                             125,016
               2004                                              20,836
                                                        ----------------

                                                        $       520,900
                                                        ================

Total rent expense was approximately $31,254 for the quarter ended March 31,
2001.

                                       13

<PAGE>

                              FREESTAR TECHNOLOGIES

                        NOTES TO THE FINANCIAL STATEMENTS
                        ---------------------------------
                                 March 31, 2001

                                   (Unaudited)

NOTE 9 - COMMON STOCK TRANSACTIONS
-----------------------------------

On April 5, 1999, the Company completed a public offering that was exempt from
federal registration pursuant to Regulation D, Rule 504 of the Securities Act of
1933 as amended. The Company sold 5,000,000 shares of common stock at a price of
$.001 per share for a total amount of $5,000.

On or about December 10, 1999 the Company purchased equipment (the "Equipment")
to manufacture neoprene wet suits valued at $5,180,000 by issuing 969,000 shares
of the Company's stock and issuing a promissory note in the original principal
amount of $335,000. The Company did not obtain a report from a licensed
independent appraiser as to the valuation of the Equipment. The Company later
defaulted on the purchase of the equipment and all right, title and interest in
and to that equipment returned to the seller and the 969,000 shares which were
issued in connection with the purchase of that equipment were cancelled.

On May 2, 2000, the Company issued 900,000 shares at $2.1667 per share to
acquire SOCAL (see Note 2).

On May 4, 2000, the Company issued 100,000 shares of stock to John Cruickshank
of Defined Holding Corporation for work done in lieu of monetary compensation
which was registered by the filing of an S-8 Registration Statement on October
20, 2000.

On August 4, 2000, the Company issued 349,000 restricted shares of the Company's
Common stock in lieu of cash payments to World Alliance Consulting,
Incorporated.

On August 4, 2000, the Company issued 500,000 restricted shares of the Company's
Common stock in lieu of cash payments to International Capital Group LLC.

On November 6, 2000, the Company issued 12,500 restricted shares of the
Company's Common stock in lieu of cash payments to the Geneva Group.

NOTE 10 - STOCK OPTIONS

On March 15, 2000, the Company granted 4,560,000 stock options at an exercise
price of $0.01 to its key employees and service providers considered essential
to the continuation of the business.

All of those stock options and any exercise of those stock options which
occurred during the year 2000, were cancelled by action of the Board of
Directors on February 5, 2001.

                                   14

<PAGE>

                              FREESTAR TECHNOLOGIES

                        NOTES TO THE FINANCIAL STATEMENTS
                        ---------------------------------
                                 March 31, 2001

                                   (Unaudited)

NOTE 11 - EARNINGS (LOSS) PER SHARE
-----------------------------------

Earnings (loss) per share is computed based on the weighted average number of
shares of common stock outstanding during the period. Basic income per share for
the quarter ended March 31, 2001 is $0.003.

NOTE 12 - SEGMENT REPORTING
---------------------------

SFAS No. 131 "Disclosures about Segments of an Enterprise and Related
Information" requires that a publicly traded company must disclose information
about its operating segments when it presents a complete set of financial
statements. Since the parent did not have substantial operations in 2000, and
all income is derived from SOCAL, the Subsidiary, detailed information of the
reportable segment is not presented.

                                       15


<PAGE>

Item 2 - Management's Discussion & Analysis or Plan of Operation

Freestar Technologies, is a diversified firm consisting of three divisions, all
vertically integrated to serve the growing demand for the machinery, media,
apparel, automotive parts, micro-turbine and telecommunications markets.

The strategic business plan is broadly diversified with a business mix of high
earning hard assets in non-cyclical markets and high margin products and
services in high growth cyclical markets. Positioning itself in these
negatively- correlated markets is designed to smooth out the Company's
performance in all stages of the business cycle.

The Company's first division is its Sports/promotional Apparel Division, known
as Freedom Surf, built around the acquisition of Southern California Logo in
January, 2000. SewCal is a producer of promotional apparel for the film and
sports industry in Southern California. It has trade marked a sports apparel
line, invested heavily in its production capacity, and currently is positioned
and negotiating to take on a major national apparel line under license. Its
current customer list is a Who's-Who in the entertainment (e.g. Disney) and
sports world (e.g. L.A. Lakers). Its growth strategy is to expand the SewCalLogo
customer base on a national level and to grow through related acquisitions.

The Company's second division is not operational as of the end of the first
quarter of 2001.

The third division will be known as Freestar Techonology Systems and results
from the grant of a license from Turbonique, Inc. and focuses on developing
advanced micro- turbine technology to meet the demand for improved efficiency
and performance in the automotive transportation, power and pump markets. This
division also was not operational at the end of the first quarter of 2001.

History of the Company
----------------------

The Company was organized on August 2, 1997 under the laws of the State of
Delaware as Interstate Capital Corporation. The Company at that time had no
operations and was considered a development stage company. On November 17, 1999,
the Company caused a Nevada corporation to be formed under the name of Freedom
Surf, Inc. which then merged with Interstate Capital Corporation for the purpose
of changing the corporate domicile to Nevada.

Previously, on April 5, 1999, Interstate Capital Corporation had completed a
public offering that was exempt from Federal registration under Regulation D,
Rule 504 of the Securities & Exchange Act of 1933, as amended. The Company sold
5,000,000 shares of common stock at a price of $.001 per share raising a total
of $5,000.00.

                                       16


<PAGE>

Effective January 4, 2000, the Company, then known as Freedom Surf, acquired all
of the issued and outstanding shares of stock in Southern California Logo, Inc.
["SewCal"]. The contract was executed on May 12, 2000 but was deemed effective
for purposes of reporting income and expense as of January 4, 2000.

Sewcal was acquired through a structured acquisition under the terms of which
the former owners of Sewcal, Rick & Judy Songer, received a total of 900,000
shares of stock. They, in turn, transferred a total of 13,150 shares to some
long time employees. Judy Songer retained a total of 236,850 shares of common
stock in Freestar and Rick Songer owns a total of 650,000 shares. Additionally,
the Company then known as Freedom Surf was to pay a total of $800,000 in cash to
the Songers. $500,000 of that amount was paid in August, 2000 and the balance is
still owed.

Significant Events During the Year 2000 and Subsequent
Events During First Quarter of 2001
------------------------------------------------------

On December 10, 1999, Freedom Surf reported that it had purchased equipment (the
"Equipment") to manufacture neoprene wet suits which was stored in Costa Rica.
Freedom Surf valued the Equipment at $5,180,000. Freedom Surf did not obtain a
report from a licensed independent appraiser. However, Raece Richardson, then
President of Freedom Surf, arranged for an appraisal of this Equipment by a
local appraiser of boats who valued the Equipment at $5,180,000.00. Freedom Surf
then issued 969,000 shares of its common stock to the seller of the Equipment,
STS de Costa Rica, S.A. ["STS"], and also issued a promissory note in the amount
of $335,000 to the same company.

On October 19, 2000, Freedom Surf reported that it had sold the Equipment to
Ronbridge Investments Limited, a Hong Kong company ("Ronbridge") for $4,750,000,
accepting a down payment of $750,000 in cash which was received on August 31,
2000 and a promissory note for the balance of $4,000,000. At the time of the
sale, the only shareholder and President of Ronbridge was Raece Richardson's
father. At the time, Raece Richardson was a principal shareholder of Freedom
Surf. At the time the transaction was completed on the sale of the Equipment,
Ronbridge did not have sufficient resources to pay the amount due on the balance
of $4,750,000. Also, neither Freedom Surf nor Ronbridge had the capacity to pay
the promissory note to the original owner of the Equipment who was still owed
$335,000.

Based on advice from outside consultants, the equipment transaction was
structured so that Pacific Standard Financial Group, Inc. ["Pacific"] acquired
the Equipment from STS and resold it to the Freedom Surf.

Pacific is believed to have purchased the Equipment from STS for the same
consideration that the Company agreed to pay Pacific except that the promissory
note issued by Pacific to the STS was in the original principal amount of
$300,000. Pacific transferred the 969,000 shares to STS and also executed a
promissory note to STS for $300,000, as noted.

After this transaction, Freedom Surf never took possession of the Equipment and
it remained in storage under the control of STS. As a part of the agreement,
Freedom Surf was required to pay storage fees but never paid them. Also, Freedom
Surf never paid Pacific the $335,000 which was owed and Pacific, in turn, never
paid STS the $300,000 which was owed to them. On November 16, 2000, Freedom Surf
received a notice ("Notice") from STS declaring a default. The Notice stated
that STS was terminating the agreement. STS returned the 969,000 shares of
common stock and has not given any indication that it would bring suit for the
monies owed to it. They have accepted the Equipment in lieu of payment.

                                       17

<PAGE>

Finally, Freedom Surf informed Ronbridge that it was not in a position to refund
Ronbridge the $750,000 which it received as a down payment on the sale of the
Equipment.

On December 8, 2000, Freedom Surf reported on Form 8-K to the Securities &
Exchange Commission that the above described situation had occurred.

On January 23, 2001, a group of shareholders who had formed a committee known as
the Committee for Corporate Governance, Larinda Nilsen, Chairman, filed a
Preliminary Proxy Statement [PRE 14a] with the Securities & Exchange Commission
stating that they intended to call a special meeting of the shareholders for the
purpose of removing the remaining members of the Board and electing new Board
members.

Prior to the filing of this Preliminary Proxy Statement, certain members of the
Board of Directors had already resigned. On December 1, 2000, John W.
Cruickshank resigned as a member of the Board of Directors of the Company.
Shortly thereafter, Holly Richardson, another member of the Board resigned
leaving two members of the Board, Rick Songer and David McKenzie.

The remaining Board members, Rick Songer & David McKenzie met in a special
meeting of the Board of Directors on February 2, 2001 to consider the matters
raised by the Preliminary Proxy Statement which had been filed by Larinda
Nilsen. Both Rick Songer and David McKenzie tendered their resignation as
members of the Board of Directors, those resignations to become effective on
February 5, 2001 at 12:00 P.M. Pacific Standard Time. Prior to their
resignations becoming effective, pursuant to Article II, Section 2 of the By
Laws of the corporation, the resigning Board elected new members to replace the
present Board until the next annual meeting of the shareholders, those persons
to become Board members effective on February 5, 2001 at 12:00 P.M. Pacific
Standard Time.

Article II, Section 2 of the By Laws of the corporation provides as follows:

     "SECTION 2. When any vacancy occurs among the Directors by death,
resignation, disqualification or other cause, the stockholders, at any regular
or special meeting, or at any adjourned meeting thereof, or the remaining
Directors, by the affirmative vote of a majority thereof, shall elect a
successor to hold office for the unexpired portion of the term of the Director
whose place shall have become vacant and until his successor shall have been
elected and shall qualify."

                                       18

<PAGE>

The new members of the Board of Directors who were elected to serve until the
next Annual Meeting of the Shareholders were: Charles Cortland Hooper, Arthur F.
Wigand and James L. Flippen.

On February 14, 2001, the Secretary of State of the State of Nevada accepted an
Amendment to the Articles of Incorporation of the Registrant changing its name
from Freedom Surf, Inc. to Freestar Technologies.

Additionally, the Board of Directors implemented a reverse stock split of one
(1) share of common stock for each four (4) shares owned. This reverse split
returned shareholders to the same number of shares which they had prior to the
October, 2000 forward split discussed above. The reverse split became effective
on February 22, 2001. The reverse split had been authorized by the Board of
Directors at a special meeting held on February 5, 2001 pursuant to Section
78.207 of the Nevada Revised Statutes which provides in pertinent part as
follows:

"1. Unless otherwise provided in the articles of incorporation, a corporation
organized and existing under the laws of this state that desires to change the
number of shares of the same class and series and correspondingly increasing or
decreasing the number of shares issued and outstanding shares of the same class
and series held by each shareholder of record as of the effective date and time
of the change, may, . . ,do so by a resolution adopted by the board of
directors, without obtaining the approval of the shareholders."

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

The results of operations of the Company for the period ended March 31, 2001
compared to the period ended March 31, 2000 are discussed below.

Revenues
--------

Presently, Freestar receives income from the manufacturing operation at Sewcal.
For the three month period ended March 31, 2001 gross income totaled $747,427.
This contrasted with gross income of $475,508 for the same period last year.

Operating Expenses
------------------

Sales, General and Administrative:

Selling, general and administrative costs for the period ended March 31, 2001
totaled $199,261 whereas for the same period ended March 31, 2000, those
expenses totaled $105,985.

                                       19

<PAGE>

Interest Expense:

Interest expense for the period ended March 31, 2001 was a credit of $(18,546)
after credit for interest earned on deposits of $300,000 which Freestar
maintains as additional collateral for its credit line. Interest expense for the
same period ended March 31, 2000 also ended in a credit of $(17,958).

Net Profit
----------

Our net operating income before taxes for the period ended March 31, 2001 was
$462,885 as compared to a net operating income before taxes of $348,658 for the
same period ended March 31, 2000. This translates to a net operating income per
share of $0.045 per share, basic and diluted, for the period ended March 31,
2001 and $0.045, basic and diluted for the period ended March 31, 2000. It
should be noted, however, that the Company had a net loss on operations for the
year ended December 31, 2000 of $(179,947) as a result of other operations not
related to its sewing operations at SoCal Logo. Also, the business of SoCal is
highly seasonal with high gross sales during the early months of the year and
lower gross sales toward the end of the year. For that reason, the quarterly
results are not necessarily reflective of the results which the Company may have
when annualized.

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

To date, we have funded our capital requirements for our current from cash flows
from our operations and from equity lines of credit which the Company has
available. Our cash position as of March 31, 2001 was $339,456 as compared to
$1,787 for the same period ended March 31, 2000. The increase in cash came
mainly from the $300,000 deposit of cash maintained as additional collateral for
the Company's credit line and from increased cash flow during the first quarter
of 2001. Cash flow provided by operating activities increased by $38,457 during
the period from December 31, 2000 to March 31, 2001 increasing the balance of
cash from $300,999 as of December 31, 2000 to $339,456 as of March 31, 2001.
During the quarter, the Company received no funds from either investing or
financing activities.

Our Capital Requirements
------------------------

During the next two years, we plan to finance our long-term operations and
capital requirements with the profits and funds generated from the revenues from
operations and equity lines which we intend to obtain during that period.

                                 20

<PAGE>

Forward Looking Statements:

This Quarterly Report on Form 10-QSB may be deemed to contain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. The Company intends that
such forward-looking statements be subject to the safe harbors created by such
statutes. The forward-looking statements included herein are based on current
expectations that involve a number of risks and uncertainties. Accordingly, to
the extent that this Annual Report contains forward-looking statements regarding
the financial condition, operating results, business prospects or any other
aspect of the Company, please be advised that the Company's actual financial
condition, operating results and business performance may differ materially from
that projected or estimated by the Company in forward-looking statements. The
differences may be caused by a variety of factors, including but not limited to
adverse economic conditions, intense competition, including intensification of
price competition and entry of new competitors and products, adverse federal,
state and local government regulation, inadequate capital, unexpected costs and
operating deficits, increases in general and administrative costs, lower sales
and revenues than forecast, loss of customers, customer returns of products sold
to them by the Company, disadvantageous currency exchange rates, termination of
contracts, loss of suppliers, technological obsolescence of the Company's
products, technical problems with the Company's products, price increases for
supplies and components, inability to raise prices, failure to obtain new
customers, litigation and administrative proceedings involving the Company, the
possible acquisition of new businesses that result in operating losses or that
do not perform as anticipated, resulting in unanticipated losses, the possible
fluctuation and volatility of the Company's operating results, financial
condition and stock price, losses incurred in litigating and settling cases,
dilution in the Company's ownership of its business, adverse publicity and news
coverage, inability to carry out marketing and sales plans, loss or retirement
of key executives, changes in interest rates, inflationary factors, and other
specific risks that may be alluded to in this Annual Report or in other reports
issued by the Company. In addition, the business and operations of the Company
are subject to substantial risks which increase the uncertainty inherent in the
forward-looking statements. In light of the significant uncertainties inherent
in the forward-looking information included herein, the inclusion of such
information should not be regarded as a representation by the Company or any
other person that the objectives or plans of the Company will be achieved.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The Company may from time to time be involved in various claims, lawsuits,
disputes with third parties, actions involving allegations of discrimination, or
breach of contract actions incidental to the operation of its business. The
Company is not currently involved in any such litigation which it believes could
have a materially adverse effect on its financial condition or results of
operations other than a potential dispute with the Seller of the Equipment in
connection with the Seller's declaration of a default and a possible claim by
Ronbridge, each as discussed more fully in Management's Discussion & Analysis
and Plan of Operation.

Presently, neither the Company nor any of its officers or directors are involved
in any legal proceedings.

                                   21

<PAGE>

Item 2 - Changes in Securities

In the last three years, we have made transactions with our common stock for
cash, services, and acquisitions which were not registered under the Securities
Act of 1933.

We have issued stock for services rendered for investor relations and other
consulting services which were performed by Geneva Group, Inc. 12,500 shares of
common stock were issued on November 11, 2000 in lieu of cash payments or in
addition to cash payments in certain circumstances.

Additionally, we have issued stock for services for services rendered for
investor relations and other consulting services which were performed by World
Alliance Consulting, Inc. 349,000 shares of common stock were issued on
September 1, 2000 in lieu of cash payments.

Finally, on August 4, 2000, we issued stock for consulting services rendered by
International Capital Group, LLC which resulted in the issuance of 500,000
shares of common stock in lieu of cash payments.

Additionally, we have issued stock to acquire assets as follows:

On May 12, 2000, the Company completed the purchase of Southern California Logo,
Inc. in exchange for 900,000 shares of common stock which was issued to the
prior shareholders of that company, Rick & Judy Songer who gave a portion of the
shares to their long time employees.

In all of the transactions shown above, the issuance, delivery and sale of our
common stock was made pursuant to the asset exchange exemption within the
meaning of Section 4(2) of the Act; and we have issued stop transfer orders
concerning the transfer of certificates representing all the common stock issued
and outstanding as reported above.

We have issued our common stock for services to our employees and others as
follows:

<TABLE>
<CAPTION>

Name              Date of Issuance       Number of Shares      Value of Shares at Issuance
--------------    ----------------       ----------------      ---------------------------
<S>               <C>                   <C>                    <C>
John Cruickshank  May 4, 2000           100,000                $10,000

International     Aug. 4, 2000          500,000                $50,000
Capital Group

World Alliance    Aug. 4, 2000          349,000                $34,900
Consulting

Geneva Group      Nov. 11, 2000          12,500                $12,500

</TABLE>

The Board of Directors cancelled warrants, options and common stock issued to
former officers and directors as follows:

Raece Richardson received a total of 4,000,000 warrants and David McKenzie
received a total of 500,000 warrants which were convertible into common stock in
the corporation at any time upon the payment of $.01 per share. These warrants
were cancelled by the Board of Directors of Freestar on February 5, 2001. Raece
Richardson had converted 2,000,000 warrants in October, 2000 but never paid the
option price. The Board of Directors cancelled all shares which had been issued
pursuant to the exercise of these warrants for failure to properly exercise the
warrants or to pay the option price. David McKenzie never attempted to exercise
his warrants which have now been cancelled.

                                       22


<PAGE>

The Board of Directors in August, 2000 authorized the issuance of 200,000
warrants to each of the then members of the Board of Directors, Rick Songer,
David McKenzie, Holly Richardson and John Cruickshank. These warrants could be
exercised over a period of two years on certain specified option dates. All of
these warrants were cancelled by the Board of Directors of Freestar on February
5, 2001 prior to any of them ever being exercised.

Additionally, it was discovered by the Board of Directors in February, 2001 that
Raece Richardson had caused stock to be issued without the approval of the Board
of Directors and without authority to various friends and acquaintances. All of
these shares were cancelled by the Board on February 5, 2001. The total number
of 3,152,750 common shares were cancelled as a result of this inquiry including
the reversal of the shares held by Raece Richardson which had resulted from
exercised warrants.

Item 3 - Defaults upon Senior Securities

There have been no defaults upon senior securities

Item 4 - Submission to a Vote of Security Holders

None

Item 5 - Other Information

Name Change:
------------

On February 14, 2001, the Secretary of State of the State of Nevada accepted an
Amendment to the Articles of Incorporation of the Registrant changing its name
from Freedom Surf, Inc. to Freestar Technologies.

Additionally, the Board of Directors implemented a reverse stock split of 1
share of common stock for each 4 shares owned. The reverse split is to become
effective on February 22, 2001. The reverse split was authorized by the Board of
Directors at a special meeting held on February 5, 2001 pursuant to Section
78.207 of the Nevada Revised Statutes which provides in pertinent part as
follows:

"1. Unless otherwise provided in the articles of incorporation, a corporation
organized and existing under the laws of this state that desires to change the
number of shares of the same class and series and correspondingly increasing or
decreasing the number of shares issued and outstanding shares of the same class
and series held by each shareholder of record as of the effective date and time
of the change, may, . . ,do so by a resolution adopted by the board of
directors, without obtaining the approval of the shareholders."

Change of Directors and Officers:
---------------------------------

On January 23, 2001, a group of shareholders who had formed a committee known as
the Committee for Corporate Governance, Larinda Nilsen, Chairman, filed a
Preliminary Proxy Statement [PRE 14a] with the Securities & Exchange Commission
stating that they intended to call a special meeting of the shareholders for the
purpose of removing the remaining members of the Board and electing new Board
members.

                                       23

<PAGE>

Prior to the filing of this Preliminary Proxy Statement, certain members of the
Board of Directors had already resigned. On December 1, 2000, John W.
Cruickshank resigned as a member of the Board of Directors of the Company.
Shortly thereafter, Holly Richardson, another member of the Board resigned
leaving two members of the Board, Rick Songer and David McKenzie.

The remaining Board members, Rick Songer & David McKenzie met in a special
meeting of the Board of Directors on February 2, 2001 to consider the matters
raised by the Preliminary Proxy Statement which had been filed by Larinda
Nilsen. Both Rick Songer and David McKenzie tendered their resignation as
members of the Board of Directors, those resignations to become effective on
February 5, 2001 at 12:00 P.M. Pacific Standard Time. Prior to their
resignations becoming effective, pursuant to Article II, Section 2 of the By
Laws of the corporation, the resigning Board elected new members to replace the
present Board until the next annual meeting of the shareholders, those persons
to become Board members effective on February 5, 2001 at 12:00 P.M. Pacific
Standard Time.

Article II, Section 2 of the By Laws of the corporation provides as follows:

     "SECTION 2. When any vacancy occurs among the Directors by death,
resignation, disqualification or other cause, the stockholders, at any regular
or special meeting, or at any adjourned meeting thereof, or the remaining
Directors, by the affirmative vote of a majority thereof, shall elect a
successor to hold office for the unexpired portion of the term of the Director
whose place shall have become vacant and until his successor shall have been
elected and shall qualify."

The new members of the Board of Directors who were elected to serve until the
next Annual Meeting of the Shareholders were: Charles Cortland Hooper, Arthur F.
Wigand and James L. Flippen.

The positions of each of them, their ages and other information follows:

Name and Age          Current Position       Director Since     Officer Since
------------          ----------------       --------------     -------------
Charles               President, Director    Feb. 5, 2001       Feb. 5, 2001
Cortland Hooper, 52

Arthur F.             Chief Financial Officer,
Wigand, 57            Director               Feb. 5, 2001       Feb.5, 2001

James L.              Vice President,
Flippen, 54           Director               Feb. 5, 2001       Feb. 5, 2001

The following is a biography of each of the current officers and directors:

                                       24

<PAGE>

Charles Cortland Hooper, President, Director

From 1986 until August of 2000, he was the Chief Executive Officer of Mojave
Natural Resources in Temecula, California, a company which produces decorative
rock and construction aggregate and industrial minerals. In August of 2000, he
became President of Rent USA, Inc., a heavy duty construction equipment rental
company. He left that company to become President of Freestar Technologies in
February, 2001. From 1978 until 1990, he was also the owner of Old Town
Financial in La Jolla, California that developed of shopping centers, office
buildings, condominiums, apartments, health clubs, single family homes and ranch
estates. He began his career in 1968 with Litton Industries. He was an officer
in the U.S. Navy during the Viet Nam war. Mr. Hooper is a graduate of the
University of California at Los Angeles with High Honors, has a Master of
Science Degree from the U.S. Naval Post Graduate School and has done doctorate
work in finance and human behavior. He has also taken a number of continuing
education courses in finance, real estate and insurance.

Arthur F. Wigand, Chief Financial Officer, Director

Mr. Wigand briefly acted as a Vice President of Rent USA from August, 2000 until
February of 2001 when he came to Freestar Technologies to become its Chief
Financial Officer. He had been retired since 1998. From 1996 through 1998, he
became President of Cubic Communications, a company that had had as its sole
customer the United States government. Mr. Wigand assisted the transition from
government as the sole customer to commercial applications for the company's
products From 1986 to 1989, Mr. Wigand was Vice President of Operations at
Compudyne Air Traffic Control in San Diego, California. In 1995, Mr. Wigand
became Vice President of Direction Finder Products for product development,
customer service, scheduling and profit and loss for the product group
establishing a joint venture with Hughes STX to develop and manufacture search
and rescue direction finding equipment.

James L. Flippen, Vice President, Director

For a brief time from August, 2000 until February, 2001, Mr. Flippen was a Vice
President of Rent USA. In February, 2001, he became a Vice President and
Director of Freestar Technologies, acting only on an as needed basis and without
a permanent salary. Prior to coming with Rent USA and since 1997, Mr. Flippen,
acted as a consultant specializing in new business development, feasibility
studies of acquisitions for quarry development, asphalt plants and batch plants,
working on such specific developmental projects as the new San Francisco ball
park, the San Francisco BART Airport extension and U.S. Steel hazardous waste
clean up. Prior to 1997 and going back for the last several years to 1986, he
operated Flippen Engineering, Inc. specializing in sand and gravel mining and
recovery and handling the engineering aspects of a number of large development
projects including high end residential, commercial and a Robert Trent Jones
golf course.

                                       25

<PAGE>

Item 6 - Exhibits and Reports on Form 8-K

The following Reports were filed by Freestar formerly known as Freedom Surf on
Form 8-K during the three month period ended March 31, 2001:

       a. An 8-K Report filed on February 6, 2001 reporting that the last
remaining officers and directors, Rick Songer and David McKenzie had resigned
effective February 5, 2001 and that three new directors had been elected to
replace them, Charles Cortland Hooper, Arthur F. Wigand and James L. Flippen.

       b. An 8-K Report filed on February 20, 2001 reporting that the Company
had changed its name from Freedom Surf, Inc. to Freestar Technologies and that
the Board of Directors had authorized a one (1) for four (4) reverse split of
the common stock in the Company to take place on February 22, 2001.

       c. An 8-K/A Report filed on March 13, 2001 reporting a change in the
Company's principal auditor.

   SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933, Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form 10Q-SB and has duly caused this Quarterly Report
to be signed on its behalf by the undersigned, there unto duly authorized, in
the City of Los Angeles, State of California, on this 4th day of May, 2001.

          FREESTAR TECHNOLOGIES

          By:/s/ Charles Cortland Hooper
          -------------------------------
          Chief Executive Officer
          & Director

                                       26