Press Release

Year 2006 / Tuesday October 3, 5:30 am ET

FreeStar Technology Corp. Reports Revenue Rises 30 Percent in Fiscal Year, Ended June 30, 2006

Number of Transactions Processed Climbs 16 Percent
Established New Relationships, Gained EMV Certification and Enhanced Customer Relations Management in the Past 12 Months

DUBLIN, Ireland, Oct. 3 /PRNewswire-FirstCall/ -- FreeStar Technology Corp. (OTC Bulletin Board: FSRT - News), an international card payments processor and technology company, today announced that revenue rose 30% and the number of transactions processed climbed 16% in the fiscal year, ended June 30, 2006.

Revenue advanced to $2.097 million from $1.602 million in fiscal 2005. The revenue increase was propelled by software development income increase and higher payment processing volume at FreeStar Technology's wholly owned subsidiary Rahaxi Processing Oy. Rahaxi Processing's transaction volume during fiscal 2006 was 18 million, up from 15.5 million in fiscal 2005.

Noting that the company had achieved EMV certification, entered into agreements with several of the largest European Acquiring Banks to launch a new product previously not available in Europe and established critical sales, distribution and development relationships during the year, FreeStar Technology President and CEO Paul Egan said, "We believe that in the coming year we will begin to reward our investors for their confidence as we demonstrate the value our team has created."

The Company's net loss for the period narrowed 36% to $13.99 million from $22.10 million in the prior fiscal year, largely as a result of a reduction in SG&A costs. Chief Financial Officer Ciaran Egan explained that $10.109 million of the net loss was accounted for by non-cash costs.

"We continue to use non-cash compensation whenever possible to conserve the Company's cash. The non-cash costs are in the form of common stock, stock options and warrants. We believe that this helps us maximize shareholder value in the long term," Ciaran Egan said.

He reported that the company raised more than $7.5 million from the sale of stock and the exercise of stock options and warrants. It finished the year with more than $2.9 million in cash and with working capital of approximately $2.45 million and no long-term debt. He also noted that the company has the mechanisms in place to raise an additional $14.6 million in equity capital.

Mr. Egan added, "It is important to note that our costs include fixed and semi-variable items, such as the leases for computer hardware and software and some software development costs. These costs do not change in direct proportion to sales, so that if our sales should increase, our gross margins could widen."

      Among the key accomplishment of fiscal 2006:
    * Agreement with Neocard Oy. to provide electronic payment processing for
      Neocard's credit and loyalty cards.
    * Introduction of card payment technology that detects VAT refund
      eligibility and converts currency in real time in connection with Global
      Refund and Hypercom at the Cartes 2005;
    * Introduced Rahaxi-oti(TM) (open terminal interface), an in-house
      developed and managed middleware solution for point of sale equipment
      vendors
    * Marketing agreement with Finnish vendor Oy Wike Ab Agentur for a sales
      and referral contract, which covers point of sale and electronic cash
      register sales software and hardware to more than 4,500 Finnish and
      Estonian merchants;
    * Sales and referral agreement with Winhair Cash Management systems, a
      leading provider of cash management software solutions for hair salons
      and barbershops in Finland.
    * Marketing agreement with Software Profecon Oy. for sales of its OTI
      software to Software Profecon's merchant clients; and
    * Marketing agreement with Tietotisma Oy. to sell OTI to its retail and
      hospitality clients.

Major technological milestones Rahaxi Processing accomplished in the period included:

    * Finnish EMV certifications of its in-house developed POS middleware
      software solution Rahaxi-OTI(TM) and the Hypercom® T2100 Point-of-Sale
      payment terminal;
    * EMV certification with its long-term partner, leading Finnish Electronic
      Cash Register vendor CPU Oy; and
    * EMV certification from MasterCard for MasterCard Securecode online
      payment processing.

During the past 12 months, Egan added, Rahaxi Processing has also re-structured its corporate marketing, customer relations management and account management operations and has invested in human resources, employing ambitious and customer service oriented staff to provide the best possible service to its merchant clients and its fast growing network of re-sellers and technological partners.

About FreeStar Technology Corporation

FreeStar Technology Corp. is a payment processing company. Its wholly owned subsidiary Rahaxi Processing Oy., based in Helsinki, has a robust Northern European BASE24 credit card processing platform. Rahaxi currently processes in excess of 2 million card payments per month for such companies as Finnair, Ikea and Stockmann. FreeStar is focused on exploiting a first-to-market advantage for its Enhanced Transactional Secure Software, which is a software package that empowers consumers to consummate e-commerce transactions with a high level of security using credit, debit, ATM (with PIN) or smart cards. The company, based in Dublin, Ireland, maintains satellite offices in Santo Domingo, Dominican Republic, Helsinki and Geneva. For more information, please visit http://www.freestartech.com or http://www.rahaxi.com.

About EMV

EMV is a standard for interoperation of IC cards ("Chip cards") and IC capable POS terminals, for authenticating credit and debit card payments. The name EMV is an acronym of "Europay MasterCard Visa", the three companies which originally cooperated to develop the standard. The EMV standard defines the interaction at the physical, electrical, data and application levels between IC cards and IC card processing devices for financial transactions. Portions of the standard are heavily based on the IC Chip card interface defined in ISO 7816.

Source: FreeStar Technology Corporation