Development. ---------------------

The Company was originally 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.

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

On August 10, 2001, the Company purchased all of the assets of ePayLatina, S. A. in exchange for 1,000,000 shares of Series A preferred stock in the Company. The Series A shares are convertible into 12,000,000 shares of common stock in the Company. Conversion can occur upon the certification after 12 months that the Company has a before tax profit of at least $1,000,000 at which time, 1/3rd of the preferred shares become convertible into common. Then, on each 12-month anniversary date, again on certification of before tax profits of at least $1,000,000, another 1/3rd of the preferred shares will convert to common until all of the preferred stock has been converted. The preferred stock was disbursed to Paul Egan, the owner of ePayLatina, S. A. The preferred stock is voting and each share receives 12 votes on any issue brought before the shareholders. Total assets transferred to the Company by this transaction totaled $696,285 less liabilities of ePayLatina, S. A. that the Company assumed totaling $316,788.

With the filing of a Certificate of Amendment to Articles of Incorporation, dated December 15, 2002, with the Nevada Secretary of State, the number of authorized common shares was increased from 80,000,000 to 500,000,000. With the filing of a Certificate of Amendment to Articles of Incorporation, dated February 24, 2003, with the Nevada Secretary of State, the name of the Company was changed from "Freestar Technologies" to "FreeStar Technology Corporation".

On October 12, 2005, the Company's board of directors determined to change the address of the executive offices of the Company to: 60 Lower Baggot Street, Dublin 2 Ireland. The new telephone number for the Company is: 353 1 602 4757.

On September 10, 2002, the Company entered into an agreement with Heroya Investments Limited ("Heroya", the "Rahaxi Acquisition Agreement") for the acquisition of Rahaxi Processing Oy. The original terms of the Rahaxi Acquisition provided for the Company to make incremental cash payments to Heroya over the course of 13 months, and to collateralize the full value of the acquisition in the form of an equivalent amount of common stock of the Company. In addition, Heroya is entitled to receive 10% of the net profits generated by Rahaxi for the first four quarters immediately following the closing date.

On December 16, 2002, the Company and Heroya executed a first amendment ("Amendment I") to the Rahaxi Acquisition Agreement. Under Amendment I, the purchase price of $4,300,000 is to be paid in restricted common stock of the Company, and cash, as follows: