U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 2009

OR

r	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

Rahaxi, Inc.

(Formerly Freestar Technology Corporation)

(Name of small business issuer in its charter)

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

Wicklow Enterprise Centre, The Murrough,

Wicklow Town, County Wicklow, Republic of Ireland

(Address of Principal Executive Offices)

Issuer's telephone number: 353-404-66433

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 if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

r Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. r

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) has been subject to such filing requirements for the past 90 days.

x Yes r No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes r No r [Not Applicable to Smaller Reporting Companies]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. r

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer r	Accelerated filer r
Non-accelerated filer r (Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). r Yes x No

The aggregate market value of the voting and non-voting common equity held by non-affiliates, computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of December 31, 2008, was $14,419,616

488,952,663 shares (post reverse-split) of our common stock were issued and outstanding as of November 10, 2009.

Documents incorporated by reference: None.

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TABLE OF CONTENTS

		PAGE
PART I.

ITEM 1.	BUSINESS	3
ITEM 1A.	RISK FACTORS	13
ITEM 2.	PROPERTIES	17
ITEM 3.	LEGAL PROCEEDINGS	17
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	17

PART II.

ITEM 5.	MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	18
ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	19
ITEM 8.	CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	26
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	26
ITEM 9A.	CONTROLS AND PROCEDURES	26
ITEM 9B	OTHER INFORMATION	27

PART III.

ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	28
ITEM 11.	EXECUTIVE COMPENSATION	29
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	32
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE	35
ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	35

PART IV.

ITEM 15.	EXHIBITS	37
	SIGNATURES	38

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PART I.

ITEM 1. BUSINESS

Recent Events: Increase to Authorized Common and Preferred Stock

On August 10, 2009, Rahaxi, Inc. filed a definitive Proxy Statement seeking shareholder approval of proposed amendments to our Articles of Incorporation to (i) increase our authorized Common Stock from 500 Million shares to One Billion shares and (ii) increase our authorized preferred stock from Five Million to Ten Million shares. Shareholders approved both proposals and we filed an amendment to our Articles of Incorporation with the Secretary of State of Delaware to implement such changes effective as of September 21, 2009.

Overview

Rahaxi, Inc., formerly known as Freestar Technology Corporation (the “Company”, “we” or “our”) is a provider of electronic payment processing services, including credit and debit card transaction processing, point-of-sale related software applications and other value-added services. We currently process on average approximately 1,840,000 transactions per month and serve in excess of 2,600 merchant locations. We provide transaction processing support for all major credit cards, including Visa, MasterCard, American Express, Diners Club and JCB, and all bank-issued Finnish debit cards. We enable merchants and financial institutions to accept, and their consumers to utilize, electronic payments using credit and debit cards to purchase goods and services. Our role is to serve as an intermediary in the exchange of information and funds that must occur between parties so that a payment transaction can be completed. We provide merchants with various transaction processing services, including authorizing card transactions at the merchant’s retail location (also known as the point-of-sale), and capturing and transmitting transaction data. Through agreements with Hypercom Corporation, the world's second largest manufacturer of payment terminals, Spectra Technologies, a leading Chinese electronic payment solution provider, we also offer our customers point-of-sale terminals, which are integrated with our software products to provide merchants with a complete solution for credit and debit card transaction processing.

Our role in a transaction is to serve as a link between the merchant and the merchant's bank, known as the acquiring bank, and the bank that issued the consumer’s credit or debit card, known as the issuing bank. The electronic authorization process for a credit card transaction begins when the merchant "swipes" or inserts the card into its point-of-sale terminal and enters the amount of the purchase. After capturing the data, the point-of-sale terminal transmits the authorization request through our switching center, where the data is routed to the issuing bank (typically via the Interchange Network, a telecommunication network operated by international card corporations) for authorization. The issuing bank confirms that the credit card is authentic and whether a transaction will cause the cardholder to exceed defined limits. The approval or disapproval of the transaction is transmitted back to our switching center, where it is routed to the appropriate merchant’s acquiring bank.

We are incorporated under the laws of the State of Nevada

PLC Acquisition

In November 2006, we acquired 50% of the outstanding capital stock of Project Life Cycle Partners, Ltd. (“PLC”), a consulting firm located in Dublin, Ireland. PLC Partners is a niche project consulting firm specializing in the management and implementation of information systems projects. PLC Partners has international experience within the financial services and telecommunications sectors.

Business Description

Our switching and transaction processing platform is operated by our wholly-owned subsidiary, Rahaxi Processing Oy, which is located in Finland. We are one of the leading players in the Finnish transaction processing market, serving approximately 2100 merchants each day and processing on average approximately 1,840,000 transactions per month.

Our primary revenue streams include (i) transaction fees we receive from processing credit and debit card transactions through point-of-sale terminals at a merchant’s retail location, (ii) revenue from sales of point-of-sale terminals, and (iii) consulting fees, which include revenue from our subsidiary, Project Life Cycle Partners Limited (“PLC”), as well as customization of software applications for merchants and other customers. Other anticipated revenue streams include additional processing fees from processing dynamic currency conversion through our agreements with such clients as Global Refund Group although such revenues have been relatively small to date. In fiscal year 2009, the period from July 1, 2008 through June 30, 2009, transaction fees from point-of-sale terminal transactions were primarily from merchants and customers based in Finland. We also derived nominal revenue from transaction fees from clients in Estonia, Spain and Iceland. PLC generated revenues from consulting and development fees from our customers in the United Kingdom and Ireland.

In fiscal 2009, we generated revenue from the sale of point of sale terminals and networking equipment, and began generating income from commissions received from the sale of prepaid PINS in the telecommunication industry.

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Products and Services

Our main product and service offering includes:

(1) Authorization

Transaction fees from processing point-of-sale terminal transactions make up a significant portion of our total revenues. Our card processing payment engine captures, configures and routes credit, debit, charge, and private label card transactions to the applicable banks and card issuers for authorization and settlement.

We provide transaction processing support for Visa, MasterCard, American Express, Diners Club, JCB and all bank-issued Finnish debit cards. Our network currently supports in excess of 10,000 point-of-sale appliances, including integrated cash registers and stand-alone/desk terminals. Our authorization and transaction fees are primarily priced based on a specified amount per transaction, although we offer flat fee pricing packages as well.

Our processing payment engine is also designed to acquire transactions from merchants and route to cross border financial institutions. For example, our system is directly linked to merchants in Spain and Denmark, and acquires transactions from Spanish and Danish terminals. We have also established relationships with financial institutions and multi-national merchants in Sweden to expand on our proven cross-border capabilities. However, as noted above, most of our processing fee revenue continues to be derived from customers in Finland.

We have developed and certified in the Dominican Republic an electronic PIN distribution application for point of sale solutions in association with some of the most important telecommunications companies in the Dominican Republic and Haiti. Our product is distributed to customers directly and indirectly through our affiliated merchant's sales channels.

(2) EMV Compliant Point-of-Sale Solutions

EMVCo, LLC, a consortium formed by Europay, MasterCard and Visa, has designated standards to increase transaction processing security. The EMV standard utilizes integrated circuit card technology, also known as chip cards or chip and PIN based technology, to replace the magnetic stripe on credit cards. The purpose and goal of the EMV standard is to allow secure interoperation between EMV compliant cards and EMV compliant credit card payment point-of-sale terminals. The major benefit to moving to EMV based credit card payment systems is improved security and associated fraud reduction.

EMV financial transactions are more secure against fraud than traditional credit card payments, which use the magnetic stripe data encoded on the back of a credit card. This is due to the use of encryption algorithms to provide authentication of the card, the processing terminal and the transaction processing center.

Although not the only possible method, the majority of implementations of EMV cards and terminals confirm the identity of the cardholder by requiring the entry of a PIN (Personal Identification Number) rather than signing a paper receipt. The increased protection from fraud has allowed banks and credit card issuers to push through a “liability shift” such that merchants in the Nordic region and other countries in Europe are now liable (as of January 2005) for any fraud that results from non-EMV transactions on their systems. In light of this incentive, we believe that the majority of merchants will begin to migrate their systems in Europe to EMV-compliant systems, although such migration has progressed at a slower than originally anticipated pace.

We have developed an EMV compliant processing platform to provide merchants with this enhanced fraud protection for European credit card transactions. We are currently EMV-certified in Finland and are seeking certification in other countries. We intend to offer end-to-end merchant processing solutions. Through our strategic relationships with Spectra Technologies and Hypercom, we offer high performance, integrated/hybrid point-of-sale terminals that are able to process both magnetic stripe cards and chip cards operating under the EMV standard. These terminals are ideal for retailers that desire speed, security, compliance with the most recent specifications, and acceptance of all leading payment cards in one easy to use device.

Our strategic relationships allow us to assist merchants in various categories and sizes with advanced and proven point-of-sale terminals from globally recognized manufacturers, integrated with our robust transaction processing and switching. We are not a “one-size-fits-all” organization, but instead aim to provide suitable solutions for establishments across verticals.

(3) "Partners in Business" Philosophy

We strive to form relationships with important market participants with the aim of providing our customers with the best products and services in the market. This “Partners in Business Philosophy” includes relationships with both manufacturers of payment devices and financial institutions, as well as our customers.

We have agreements to provide such services as payment and technology solutions to the banking industry, and revenue sharing agreements which utilize our proprietary processing platform for the telecommunications industry for the sale of electronic prepaid PINS for cellular phones. Our clients in the Dominican Republic include Banco Progresso, UniBank Haiti, Cardnet, Visanet, Union Telecard Dominicana, UniCart Haiti, Alsaka Water and Lotto Distributors.

We have agreements with Hypercom and Spectra Technologies to deploy fully EMV compliant terminals in the Finnish market. These point-of-sale terminal offerings, core competencies and transaction processing expertise allow us to support all major credit-charge-debit cards, as well as private label cards. We offer our solutions and services to small, medium, and large retailers across retailing segments. The Company began deriving revenue from the sale of point-of-sale terminals in fiscal 2007, and we expect an increasing percentage of our revenues to be derived from point-of-sale terminal sales in fiscal 2010.

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(4) Dynamic Currency Conversion

Dynamic Currency Conversion (“DCC”) or Cardholder Preferred Currency (“CPC”) is a financial service in which holders of credit cards have the cost of a transaction converted to their local currency when making a payment in a foreign currency. Currently, this feature is only possible for Visa and MasterCard networks. American Express cards have the benefit of being unable to have dynamic currency conversion applied.

For example, the following is a typical DCC transaction at point of sale: A cardholder (for example, from the United States) that is traveling in Europe presents a Visa/MasterCard for payment for a product/service priced in euros. The credit card details are captured on the point of sale device (“POS”), which identifies that the card is a USA issued card. The cashier asks the cardholder to pay in US dollars and the POS converts the euro amount into US dollars (based on a margined daily rate). This exchange rate is a managed exchange rate in order increase margins on the transactions by charging for the cost of the service at the point of sale. The cardholder signs a receipt that shows the euro amount, rate of exchange and the US dollar amount. The service guarantees that this exact US dollar amount will be debited to the cardholder account, and the exact euro amount will be credited to the merchant’s account, to the benefit of the merchant

Once the rates are presented to the customer through the point-of-sale terminal and accepted, the authorization request is then routed to us to be switched to the appropriate issuing and acquiring banks. We will provide transaction gateway services and settlement with the participating banking institutions. We have an existing relationship with FCC and Global Refund that has the potential to significantly expand our terminal base and increase transaction volumes when fully implemented. FCC and Global Refund began the initial product roll-out with dynamic currency conversion in Spain, and have recently expanded into Iceland and Denmark, with plans to expand to additional countries in 2008 and 2009. We derived fairly limited processing revenue from our relationship with FCC and Global Refund in fiscal 2008 and 2009, and expect to such revenue to remain limited in fiscal 2010 from this strategic relationship.

(5) Software Development / PLC / Consulting Fees

We also offer consulting and development services to financial institutions and merchants. The development of the software system for FCC and Global Refund described earlier is one example of a consulting assignment carried out by us that involved the development sophisticated, custom software applications.

Through our acquisition of fifty percent of the capital stock of Project Life Cycle Partners Limited (PLC) in fiscal 2007, we have increased our consulting and development revenues. PLC is a project consultant firm that manages and implements information systems projects for banking and financial services institutions, with most of its revenues derived from customers in Ireland.

PLC helps their clients to fast-track critical projects, partnering closely with them to ensure that all stakeholders share a vision for the project and are working towards common goals. By taking a holistic view of each project and by understanding the perspective of all affected by it PLC aim to maximize the human as well as the economic benefits for their clients. PLC consider the full life cycle of every project they manage, taking into account the impact the project will have on the client organization, its customers and its stakeholders both during the project and after it is completed.

By creating positive benefits in terms of employee morale, customer loyalty, team-development and ultimately profitability, the PLC approach strives to add value to every project. Key to its success is the emphasis PLC places on communications, and keeping key players informed, on track and enthused. PLC are experienced team-builders, accomplished negotiators and skilled in coaching and mentoring.

PLC manages projects of any various size and complexity, from a single project to a portfolio of projects. PLC undertakes project work both in Ireland and internationally, and is comfortable working with organizations of all sizes.

(6) Private Label Cards

We believe that the market for private label programs has significantly different needs than bankcard programs in terms of marketing, services and processing requirements. Private label, or closed loop, programs require flexibility and unique processing capabilities. We are capable of supporting the requirements of private label programs with several authorization and verification methods, flexible parameterization, real-time processing, transaction logging, and database updates. Our processing engine easily handles advanced remote data collection, data dissemination on demand, data scheduling, transaction monitoring, and new interface formats.

As example of our success with private label programs is the IKEA Hej Card. In August 2004, we were chosen by IKANO Rahoitus Oy., a member of The IKANO Group, as the transaction management provider for the IKEA Hej Card. After a rigorous proposal process and consideration of other electronic payments providers, we exhibited fast time to market, highly configurable processing logic, low risk, and competitive pricing. By leveraging our existing relationship with IKEA for acquisition and routing, we met or exceeded IKANO's requirements for the processing of the IKEA private label Hej Card. The IKANO Group is a diversified Scandinavian financial services organization. IKANO Rahoitus is a strategic business unit of the Finance Division, focusing on processing large volumes of financial and associated products.

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Market Overview

Market Participants

The market for card payment transactions comprises several market participants. In a typical transaction, a consumer uses a card to pay for goods or services from a merchant. In order for this transaction to work, the merchant needs to be sure that the consumer can pay for his products or services.

Once the consumer has presented his card to the merchant at the point of sale, or point-of-sale, the merchant's bank, also known as the acquiring bank, must make contact with the consumer’s bank, also known as the issuing bank, in order to verify the authenticity of the card and to confirm that the consumer can pay for the merchant’s product or service. The contact between the acquiring bank and the issuing bank, which includes authorization and transaction data, is facilitated by the Interchange Network. The Interchange Network is a worldwide computer and telecommunication network operated by international card corporations, such as Visa, MasterCard and Amex. Once the acquiring bank has received authorization from the issuing bank, the merchant is authorized at the point-of-sale to proceed with the purchase.

Our role in this payment process is to serve as the link between the merchant and its acquiring bank and the issuing bank (typically via the Interchange Network). Our customer is usually the merchant, to whom we provide a total payment processing solution so that the merchant can accept credit cards as a method of payment. Our services include providing the merchant with necessary point-of-sale terminals and software and switching and processing of point-of-sale terminal transactions.

The routing, control and settlement of credit card payment transactions 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.

Market Growth

In recent years, credit card usage has demonstrated significant growth rates. Management believes this trend will continue long-term. However, during 2008, unprecedented events occurred in the financial markets around the world resulting in distress in the credit environment, equity market volatility and government intervention. As a result, we believe that credit card usage may decline in the near term, or that prior growth rates could be significantly reduced.

Assuming that global economic conditions continue to show improvement, we believe that card payments will continue to increase at the expense of cash payments in the years ahead, and that more transactions will move to card-based payments instead of cash.

Europe

Credit card usage in Europe has grown significantly. For example, gross dollar volume in 2007, as reported by MasterCard’s customers, increased by 16.2% over 2006. This can be compared to 5.8% in the USA. Due to card fraud, European nations and card associations have focused on developing and implementing next-generation security measures.

Emerging Markets

Certain regions, such as Eastern Europe, Latin America, and Asia, and certain countries in particular, including Russia, India and China, are experiencing rapid growth in the usage of card-based payments. In China, Visa and MasterCard purchase volume increased 34% from 2002 to 2003, from about $6.8 billion to about $9.1 billion.

Despite this strong growth, the emerging markets have a long way to go until they reach the same level in terms of card usage as in the Western world. For example, one study has found that cards were used in only fifteen percent of all retail sales in China in 2006, compared with a global norm of about 30 percent. The increasing adoption of electronic payments in these regions is driven primarily by strong economic growth, improving infrastructure development, strong support from governments seeking to increase VAT and sales tax collection, and the expanding presence of wireless networks.

Market Drivers

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Evolving Standards and EMV

Evolving standards have implications to all participants in the payment industry. The introduction of the smart card technology for all credit and debit products is the first major change and challenge in payment card operating structure since the magnetic stripe came to market over 30 years ago. The international card companies, through their jointly owned body EMVCo, have promoted and encouraged the industry, member's banks, retailers and processors to convert to the integrated chip-based technology.

The key driver behind the conversion to chip cards is the significant reduction of fraud. Since magnetic stripe cards are relatively easy to replicate, migrating to complex chip cards will make counterfeiting much harder. In addition, card issuers, retailers and merchant acquirers are expected to benefit from improved card/cardholder authentication and validation at the point of sale, better data storage and opportunities for multiple applications on one card.

EMVCo was conceived by Europay, MasterCard and Visa - hence the acronym EMV - to introduce integrated circuit card technology, also called chip card or smart card technology, for all credit and debit products. This chip card standards organization has prescribed specifications for certification of all new and existing electronic payment systems. EMV is expected to be the de facto standard in the area of credit/debit card systems managed by EMVCo. EMVCo's objective is to manage, enhance and maintain EMV chip card specifications. The EMV standard also satisfies card issuer's business requirements for accommodating single to multiple applications on one payment card regardless of system operator. The EMV standard ensures global interoperability across cards, platforms and devices, establishes the magnetic stripe to chip migration path and an open platform for payment cards.

EMV is also gaining momentum in Asia and America, and promises complete global interoperability of bankcards for consumers. We believe that all payment processors will have to be able to accept payments mediated by chip cards in order to remain competitive, and meeting EMV compliance has major implications for all aspects of the payment handling process.

This standard is expected to drive additional growth in sales of next-generation electronic payment systems.

EMV Changed Liability Rules

In the Nordic region and other European countries, from January 1, 2005, liability rules have changed to provide greater protection against fraud to merchants who have deployed EMV compliant point-of-sale terminals. In practical terms, liability shift refers to a transaction authorized at the point of sale by a merchant fulfilling its obligations by honoring a chip payment card with an EMV-enabled and certified device. If the merchant uses an EMV compatible and certified point-of-sale terminal for end-to-end processing, the transaction cannot be charged-back. If the EMV authorized transaction is later determined to be fraudulent or the card was lost or stolen at the time of transaction authorization, the merchant faces no liability for the loss and keeps the funds for the transaction. However, if a merchant's payment processing device is not EMV compatible, then the merchant must absorb the transaction loss due to fraud plus any ancillary charges, such as chargeback penalty fees assessed by its acquiring bank.

EMV – Mandatory Implementation

In addition to the liability shift described above, EMV compliant terminals have now become mandatory for merchants most European countries. We believe that this presents the Company with a major opportunity to expand our market share in Finland if we can successfully fund and implement our business plans. One major barrier to gaining new accounts and expanding market share is convincing merchants to incur the time and expense of changing terminals and software. When the EMV standards will become mandatory, merchants who do not yet have EMV-compliant terminals will be required to upgrade their systems. This creates a unique opportunity for us to target a significant number of merchants for whom upgrading their payment processing services and equipment will be mandatory, lowering one of the most significant barriers for acquiring new accounts. Management believes we currently account for approximately 5% of the transaction processing market in Finland, and will have an opportunity to significantly increase that market share after the EMV standards become mandatory.

SEPA / Regulatory Changes

The Single Euro Payments Area (SEPA) initiative for the European financial infrastructure is designed to improve the efficiency of European cross border payments and implement a uniform set of standards across fragmented national markets for electronic euro payments (credit, ATM and card payments). The SEPA project includes the development of common financial instruments, standards, procedures, and infrastructure to enable economies of scale.

SEPA consists of:

- a single set of euro payment instruments : credit transfers, direct debits and card payments;

- efficient processing infrastructures for euro payments;

- common technical standards and common business practices.

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SEPA has three phases: the design phase, which is substantially completed, and the implementation phase and migration phase. SEPA’s goal is to have a critical mass of migrations to the SEPA standard by the end of 2010.

Though cross-border standardization, SEPA is designed to result in increased competition across each country in the European Union, with a higher number of competitors and fewer niches or special fields or incompatibilities. SEPA’s intended benefits include:

- reduction of costs of electronic money and of payment transactions through competition at the side of payment providers and banks;

- reduction of cash and increase of electronic payments through reduction of costs;

- increasing surveillance of (electronic) money flow particularly regarding money laundering and terrorism funding.

We believe that SEPA will present the Company with an opportunity to expand our service offering into other countries in Europe in a cost efficient manner. Presently, each country has local rules, regulations, standards and/or required certifications for electronic payment processing. Therefore, there are significant costs to develop compliant applications for individual countries, creating substantial barriers to entry.

If SEPA is broadly adopted, we will be able to implement a single set of protocols and standards across multiple countries in Europe. This would allow us to expand are service offerings into additional countries in a more cost effective manner by avoiding the substantial cost and time required to customize applications for every local set of rules and regulations.

Although SEPA standards may also increase the number of competitors we face in Finland, as well as any countries we may expand into, management believes that Finland already has some of the lowest payment processing fees in Europe. Thus, we believe that we should be able to offer cost-effective solutions in additional European countries while defending our current market share. While we believe that SEPA implementation may present log-term growth opportunities for the Company in new markets, due to resource constraints, we expect to continue to focus primarily on Finland, and to a greater extent in the Dominican Republic, during the upcoming fiscal year.

Other regulatory changes on national, regional and global levels could affect participants in the payment industry as well. Governmental concern regarding funding of international terrorism, international fraud as well competition and world trade issues all contribute to new laws and regulations affecting the payment industry.

PCI-DSS Compliance

In June 2005, American Express, Discover Financial Services, JCB, MasterCard Worldwide and Visa International founded the PCI Security Council. These requirements are based on an internationally recognized standard for information security practices. The main tasks of the PCI council are:

-	Creating, owning and managing PCI for credit card data
-	Classifying a common audit requirement to certify compliance

-	Overseeing a certification process for security assessors and network scanning vendors
-	Instituting minimum qualification requirements

-	Retaining and publishing a list of certified assessors and vendors

Under the Payment Card Industry Data Security (PCI DSS) standards, a business or organization should be able to assure their customers that its credit card data/account information and transaction information is safe from hackers or any malicious system intrusion.

Our payment card processing systems and procedures are PCI-DSS compliant, which we believe provides us with a competitive advantage over other processing companies that are not PCI-DSS compliant.

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New Card Features and Functionality

Industry participants are increasingly developing value-added payment applications and features, i.e. pre-paid cards, gift card and loyalty card programs as well as multi-currency conversion applications such as tax free shopping applications. These applications and features expand the range of services and functionality offered by electronic payments systems. Payment processors and electronic payment systems require testing and recertification when new value-added payment applications and features are added. Staying ahead of competition requires close monitoring and swift adoption to trends and changes in the card application and features area.

Risk Management Controls

Risk management controls drive many participants in the international payment industry. Banks and other financial institutions constantly review and implement changes of their systems, which affect all other participants in the payment chain.

Competition

The market for electronic payment systems and point-of-sale systems is intensely competitive and we expect competition to continue to increase. Our competitors for point-of-sale systems include VeriFone and Ingenico amongst others, and companies such as Global Payments, First Data and Euroconnex for our electronic payment software. In Finland, we face competition from companies such as Point, which is the largest terminal vendor in the Finnish market, as well as companies such as Screenway and Altdata, which are point-of-sale software vendors. In addition, the companies with whom we have strategic relationships could develop products or services that compete with our products or services.

In addition some competitors in our market have longer operating histories, significantly greater financial, technical, marketing and other resources, and greater brand recognition than we do. We also expect to face additional competition as other established and emerging companies enter the market for electronic payment solutions. To be competitive, we believe that we must, among other things, invest significant resources in developing new products, improve our current products and maintain customer satisfaction. Such investment will increase our expenses and affect our profitability. In addition, if we fail to make this investment, we may not be able to compete successfully with our competitors, which could have a material adverse effect on our revenue and future profitability.

Strategy

Payment card operations are an ever-changing industry. New, emerging and converging technologies as well as marketplace demands are changing the landscape of this global industry. As a result, every participant in the industry is adjusting to both opportunities and challenges. Some factors impacting the industry include evolving standards, such as the EMV standard; new card features and functionality, such as the dynamic currency conversion application; regulatory changes, such as SEPA; as well as consolidation and risk management controls. All these factors are drivers for change industry-wide.

Our objective is to provide solutions and services that enable secure and real-time movement of financial transactions incorporating hardware and software to enable credit, debit and ATM cards with PIN transactions. The key elements of our strategy are to:

(1) Increase Market Share in Finland and Expand Into Other Scandinavian and European Countries

We continue to focus heavily on our current base market in the Finnish region, as well as looking for opportunities in other European markets. As described above, with the implementation of EMV standards, we believe we will have a significant opportunity to increase our market share in Finland, if we successfully execute of business plans and if we have adequate capital and resources.

In addition, we believe that the SEPA standards will also lower barriers to entry in other countries. As SEPA standards are implemented, we will carefully review other countries in the European market, such as Sweden, where current processing rules and standards have limited competition and increased processing fees paid by banks and merchants.

Expanding into other Scandinavian countries remains a long-term goal, but due to resource constraints and the varying timing of the actual implementation of SEPA, we do not expect any significant new market penetration in the upcoming fiscal year.

(2) Dominican Republic

We continue to roll out our product offering in the Dominican Republic. We currently serve have deployed over 2,000 terminals to merchants in the Dominican Republic and have implemented POS terminal sales. We believe the terminal landscape to be in excess of 40,000 units and are aggressively targeting this market.

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(3) Offer Additional Value-Added Services to Current Customers

Our customer base includes established blue chip customers, predominantly in Finland. In order to maintain and increase our customer base as well as to increase the margin per customer, it is imperative for us to offer additional value-added services to our current customers. By introducing new value added services to merchants, their perception of the point of sale terminal as a cost center is changing to a profit center. Additional value added services include multi-currency accounts, dynamic currency conversion, tax-free shopping applications and loyalty cards.

(4) Capitalize on High Growth Opportunities in Emerging Markets / CUP

We intend to capitalize on high growth opportunities in emerging markets. The credit and debit card market in China, for example, has expanded dramatically in recent years as the country races to adopt and integrate global standards and technologies. Our strategy to exploit the growth in credit card usage growth among Chinese cardholders has been to target the Chinese tourist market in Europe.

In August 2006, we entered into an agreement to become a Third Party Services Provider for China Unionpay Co., LTD., Shanghai, P.C., which we refer to as China Unionpay. Under this agreement, we have an opportunity to provide transaction processing services to China Unionpay credit card holders traveling in Europe. Through our agreement with the French bank Natixis Paiements, we processed our first live transaction for CUP in June, 2008 in Paris, France. This agreement has the potential to drive an increase in the number of merchants, as Natixis Paiements markets the product directly to its clients throughout Europe. We have been pursuing additional banking relationships to allow us to expand our market for CUP transactions in Europe.

(5) Secure Relationships with Additional European Merchant Banks

In order for us to increase our transaction processing volume outside of Finland, our ongoing goal is to secure relationships with an additional two to three European merchant banks, also known as acquiring banks. These banks, which are certified to accept credit card transactions on behalf of merchants, conduct a very substantial volume of traffic and have shown what we believe is an increasing trend to outsource their payment processing, creating a market opportunity for us. We successfully implemented a relationship with the French bank Natixis Paiements with regard to our CUP offering, and continue to pursue additional merchant bank relationships.

Sales

We sell both directly to merchants as well as indirectly through resellers. Our internal sales force is targeting three segments:

· Large merchants such as retail chains

· Point-of-sale providers, meaning any companies providing transaction processing related hardware or services, but requiring switching, authorization or other processing services to complete their offerings.

· Payment terminal vendors

Large Merchants

Larger merchants select their switching and processing services from companies providing the best services. Their existing systems are either run by their own IT departments or by a strategic partner on an outsourced basis. We are positioned to leverage on both the outsourcing trend among large merchants as well as the need for EMV migration. In order to be successful in this segment, it is imperative for us to provide ours customers with a robust payment service and demonstrate cross-border capabilities. We are currently capable of offering payment services to large merchants in Finland, the Baltics, Sweden and Denmark, Poland and Germany.

Point-of-Sale Providers and Vendors

While big merchants carefully select their providers of payment services, small merchants tend to choose the payment provider that is recommended by the point-of-sale provider(s) they use. As a consequence, we are focusing to develop business relations with key point-of-sale providers and vendors that have their own customer base. This is done through a reseller program, which offers monetary compensation to resellers and explores common marketing strategies. We are constantly marketing to this fragmented segment in order to locate cooperation possibilities.

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Marketing

Our marketing strategy has three major objectives: (1) to increase our profile and name recognition in the market; (2) to improve our position in our current customer field; and (3) to introduce us as a value-added partner to our resellers.

The first objective has been implemented by creating our overall image through basic one-to-one sales, new sales presentations and engaging web search companies to introduce us among the first hits when searching for payment providers. The work we are doing in this regard has resulted in new customers, who may contact us without sales personnel having to contact them first. In order to meet the second objective, we are actively working on printed information sheets, which are sent to current and potential customers. The third objective is being addressed by helping our resellers in both the commercial and technical fields; we have introduced a reseller program and are frequently meeting with our resellers.

Our board of directors believes that we are well positioned to take advantage of the various opportunities for growth in the market if we have adequate capital to implement our business plans. We are active in a growth market and we enjoy certain competitive advantages. During fiscal 2009, we generated on average approximately 1,840,000 transactions per month. Management estimates that, due to new business wins and new service offerings, the average monthly transaction volume will increase significantly by the end of fiscal 2010.

Technical Infrastructure

We completed a major hardware and software upgrade in December 2003, and migrated our business critical systems to the latest Hewlett-Packard ("HP") NonStop servers and BASE24 electronic 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 us a secure, continuously available processing platform. A vastly scalable platform, HP NonStop provides us with the ability quickly respond to changing business needs, such as managing the expected growing number of transactions and the resulting need for increased capacity.

BASE24 software from ACI Worldwide provides us 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 electronic payment implementations worldwide.

These systems have enabled us to meet the latest Visa and MasterCard standards and have paved the way for EMV compliance certification. We received EMV-certification for Visa®, MasterCard® and all domestic Finnish cards used with our Rahaxi-OTI(TM) Point Of Sale (point-of-sale) middleware solution from Luottokunta in Finland. We also received the Finnish EMV certification required to sell Hypercom's Optimum range of card payment terminals in Finland.

We are also capable of supporting the latest Visa 3D secure payment technology. Management believes that with our investment in the upgraded NonStop systems running the newest ACI software, we can meet our projected increasing capacity needs. We are currently licensed to process 8,000,000 transactions per month and can increase this capacity with the addition of further licenses. We have developed and certified in the Dominican Republic an electronic PIN distribution application for point of sale solutions in association with some of the most important telecommunications companies in the Dominican Republic and Haiti

Research and Development

Our long-term growth strategy requires continued development of new processing products and adoption of new and changing standards. We believe that the timely development of new applications and enhancements is essential to maintain our competitive position in the market. We work closely with our customers to design systems and processes that meet their planned technical and production requirements. Our product development efforts focus on new products and improved versions of existing products. We do not conduct any pure research, and we purchase much of our software in off-the-shelf form from a third party software vendor. We invested approximately $485,000 for fiscal 2009 and in excess of $973,000 for fiscal 2008, which includes software costs which were expensed as incurred and costs which have been capitalized. Key development activities during fiscal 2009 included:

·	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 OTI, Open terminal interface, a turnkey solution for point-of-sale equipment

·	Introduced Rahaxi-oti(tm) (open terminal interface), an in-house developed and managed middleware solution for point of sale equipment vendors
·	Finnish EMV certifications of its in-house developed point-of-sale middleware software solution Rahaxi-OTI 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.
·	SPECTRA CREON POS application development, EMV certification, TIP approval
·	Software interface for host B24 system to route and process domestic transactions via foreign transaction acquirer CEKAB
·	Implementation of a new functionality in OTI required by Finnish Banking Association (tips, partial refunds)
·	Implementation of a new online transaction reporting software for general customer use (LiveReport)
·	Implementation of a specific version of LiveReport software for customer R-Kioski with an additional functionality
·	Specific functionality for RauttaKirja major customer had been implemented to OTI and B24
·	Implementation of new commission calculation software for resellers
·	Implementation of PA DSS security principles into OTI sotware, PA DSS compliant version of OTI is available to merchants
·	Implementation of support for Plussa loyalty card to B24
·	New communication channels to domestic acquirers (Nordea bank) had been developed to replace legacy X.25 lines
·	Hotcard functionality for T4200 Hypercom POS family had been implemented
·	Development of prepaid platform for the telecommunications industry in the Dominican Republic

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Customers

We have approximately 2,100 customers. Our clients include Ikano, Global Refunds, Finnair and Stockman. A significant percentage of our revenue is still being derived from a limited number of our customers, which are primarily Finnish customers for our transaction processing products. We had one customer that accounted for approximately 11% of sales for the year ended June 30, 2009. Our two largest customers accounted for approximately 21% of our sales for the year ended June 30, 2009.

Suppliers

Our processing system integration activities consist primarily of assembling various commercial and proprietary components into finished processing systems in Helsinki, Finland. We use numerous vendors to supply hardware and software components and modules for the production and support of our payment processing products. Although we make reasonable efforts to assure that components and modules are available from multiple qualified suppliers, this is not always possible; accordingly, some key modules and components may be obtained only from a single supplier or a limited group of suppliers. We have sought, and will continue to seek, to minimize the risk of production and service interruptions by constantly improving our relationships with key suppliers and monitoring the financial stability of those key suppliers. Our key suppliers include:

ACI Worldwide - BASE24 Software License

Altamedius - GSM and eWallet Enhancements

Fujitsu - Multi-Banking Link Software

HP Invent - Hardware Systems

Hypercom - point-of-sale manufacturer

InterMart Corporation - Hybrid Card Based Solutions

Sonera - X.25 and Telecom Lines

Spectra Technologies - point-of-sale manufacturer

TietoEnator - Hardware Housing

Acquiring and Issuing Banks

We are switching and processing electronic payment transactions for all the leading banks in Finland and have a contract with SEB/Euroline in Sweden, China Unionpay in China and Natisis Paiements in France. We intend to link our customers to more banks in Europe during the course of fiscal 2008. We currently have links (electronic communications) in place with the following acquiring banks:

Luottokunta

Handelsbanken

SEB/Euroline

CEKAB

Nordea

Oko

Sampo

Alandsbanken

Samlink

PKK

Natixis Paiements

Employees

As of June 30, 2009, we had fifty-two full-time employees, as well as several consultants in various specialties. Of the total, four are senior management, four in finance and accounting, eleven in software development, two in project management, eight in office administration, nine in sales and marketing, two in legal, four in business development, nine in customer support and one in Investor relations.

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Miscellaneous

There is no need for any government approval of our principal products and services in the markets we serve. There are no existing or, to our knowledge, probable governmental regulations on our business. We are not aware of any compliance issues with any environmental laws in connection with our business.

ITEM 1A. RISK FACTORS

Global economics, political and other conditions may adversely affect trends in consumer spending, which may adversely impact the Company’s revenue and profitability.

The global electronic payments industry depends heavily upon the overall level of consumer, business and government spending. A sustained deterioration in the general economic conditions affects the Company’s financial performance by reducing the number of transactions involving payment cards. A reduction in the amount of consumer spending could adversely impact future revenues and profits of the Company and make it more difficult for the Company to obtain new business.

The loss of even one significant client or any significant reduction in the use of our services could have a material adverse effect on our business, financial condition and results of operations.

We derive a significant portion of our revenues from two clients. For the years ended June 30, 2009 and 2008, revenues from two customers represented approximately 21% and 50% of our total revenues, respectively. The loss of anyone of these customers could have a material adverse effect on our business, financial condition and results of operations.

We Have Never Been Profitable and Require Immediate Additional Capital to Continue our Operations

Based on our cash balance, assets and liabilities as of June 30, 2009, we are in need of immediate additional financing to fund our current working capital requirements, as well as longer-term needs. The recent global economic downturn, along with the decline in our average stock price over the past fiscal year and our continued losses, have made raising such required capital significantly more difficult.

Since our incorporation, we have not achieved profitability. We have incurred substantial costs to build the foundations of our business. From our inception to the date of this report we have retained a deficit. We expect our operating losses and negative cash flows to continue into the future. Even if we do become profitable, we cannot assure you that we can sustain or increase profitability on a quarterly or annual basis in the future. If our revenues grow slower than we anticipate, or if our operating expenses exceed our projected levels and cannot be adjusted appropriately, our business will be materially and adversely affected.

The financial statements included in this report have been prepared on the basis that we will continue as a going concern, which assumes the realization of assets and the satisfaction of liabilities in the normal course of business. We have incurred accumulated losses of approximately $115,553,000 as of June 30, 2009. We do not expect to generate sufficient revenue to meet our cash requirements for the next twelve months. We will need to raise additional capital to continue meeting operational expenses. Our independent auditors have added an explanatory paragraph to their report of our financial statements for the year ended June 30, 2009 stating that our net losses, lack of revenues and dependence on our ability to raise additional capital to continue our existence, raise substantial doubt about our ability to continue as a going concern. If we are not successful in raising sufficient additional capital, we may we may not be able to continue as a going concern, our stockholders may lose their entire investment in us.

Technological and Market Changes

The markets in which we compete are characterized by rapid technological change, frequent new product introductions, evolving industry standards and changing needs of customers. There can be no assurance that our existing products will continue to be properly positioned in the market or that we will be able to introduce new or enhanced products into the market on a timely basis, or at all. Currently, we are focusing on upgrading and introducing new products and entering new geographic markets. 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 us to modify existing products. There is also the risk 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.

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New Versions of Our Products May Contain Errors or Defects

Our 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 our products. We have in the past discovered software errors in our new releases and new products after their introduction. We have experienced delays in release, lost revenues and customer frustration during the period required to correct these errors. We 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 our business, cash flow, financial condition and results of operations could be materially adversely affected.

No Assurance of Successful and Timely Product Development

Our 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 our product development efforts will be successfully completed. Our proposed development schedule may be affected by a variety of factors, many of which will not be within our control, 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 we will be able to complete or successfully commercialize our products. Our inability to successfully complete the development of new products or to do so in a timely manner, could force us to scale back operations, or cease operations entirely.

Market Acceptance

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

Protection of Proprietary Rights

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

We 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 our business plan. There can be no assurance that these third party licenses will be available or will continue to be available to us on acceptable terms or at all. The inability to enter into and maintain any of these licenses could have a material adverse effect on our business, financial condition or operating results.

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

Dependence on Suppliers

We depend upon a number of suppliers for components of our products. There is an inherent risk that certain components of our products will be unavailable for prompt delivery or, in some cases, discontinued. We only have 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 us to develop alternative designs using other components, which could add to the cost of goods sold and compromise delivery commitments. If we are unable to obtain components in a timely manner, at an acceptable cost, or at all, we may need to select new suppliers or redesign or reconstruct processes used to build our security devices. In such an instance, we would not be able to manufacture any security devices for a period of time, which could materially adversely affect our business, results from operations, and financial condition.

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Key Personnel

Our success is largely dependent on the personal efforts and abilities of our senior management. The loss of certain members of our senior management, including our chief executive officer, or chief financial officer, could have a material adverse effect on our business and prospects.

We will likely need to recruit additional 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 our business. As a result, we 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.

We May Experience Problems Related to Our Growth

Our future growth, if any, may cause a significant strain on our management, operational, financial and other resources. Our ability to manage our growth effectively will require us to implement and improve our operational, financial, manufacturing and management information systems and to expand, train, manage and motivate our employees. These demands may require the addition of new management personnel and the development of additional expertise by management. Any increase in resources devoted to research, product development and marketing and sales efforts without a corresponding increase in our operational, financial, and manufacturing and management information systems could have a material adverse effect on our business, financial condition, and results of operations.

Control by Our Officers and Directors May Override Wishes of Other Stockholders

Our officers and directors currently own common stock and options equal to over 25% of the outstanding shares of our common stock. As a result, such persons, acting together, have the ability to exercise significant influence over all matters requiring stockholder approval. In addition, all decisions with respect to our management will be made exclusively by our officers and directors. Investors will only have rights associated with stockholders to make decisions that affect us. Accordingly, it could be difficult for the investors hereunder to effectuate control over our affairs.

Therefore, our success, to a large extent, will depend on the quality of our directors and officers. Accordingly, no person should invest in the Company unless he is willing to entrust all aspects of our management to our officers and directors.

External Factors May Affect Our Viability

Our industry in general is a speculative venture necessarily involving some substantial risk. There is no certainty that the expenditures to be made by us will result in commercially profitable business. The marketability of our services will be affected by numerous factors beyond our control. These factors include market fluctuations, and the general state of the economy (including the rate of inflation, and local economic conditions), which can affect companies' spending. Factors that leave less money in the hands of our potential customers will likely have an adverse effect on the Company. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in the Company not receiving an adequate return on invested capital.

Potential Conflicts of Interest May Affect Ability of Officers and Directors to Make Decisions in the Best Interests of Company

Conflicts of interest may arise in the area of corporate opportunities that cannot be resolved through arm's length negotiations. All of the potential conflicts of interest will be resolved only through exercise by the directors of such judgment as is consistent with their fiduciary duties.

Limitations on Liability, and Indemnification, of Directors and Officers May Result in Expenditures by us

Our articles of incorporation and bylaws include provisions to the effect that the Company may indemnify any director, officer, or employee. In addition, provisions of the Nevada Revised Statutes law provide for such indemnification, as well as for a limitation of liability of our directors for monetary damages arising from a breach of their fiduciary duties as directors. Any limitation on the liability of any director, or indemnification of directors, officer, or employees, could result in substantial expenditures being made by the Company in covering any liability of such persons or in indemnifying them.

Absence of Cash Dividends May Affect Investment Value of Company's Stock

The Board of Directors does not anticipate paying cash dividends on the common stock for the foreseeable future and intends to retain any future earnings to finance the growth of the Company's business. Payment of dividends, if any, will depend, among other factors, on earnings, capital requirements and our general operating and financial conditions as well as legal limitations on the payment of dividends out of paid-in capital.

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No Assurance of Public Trading Market and Risk of Low Priced Securities May Affect Market Value of Company's Stock

The SEC has adopted a number of rules to regulate "penny stocks." Such rules include Rule 3a51-1 and Rules 15g-1 through 15g-9 under the Securities Exchange Act of 1934, as amended. Because our securities may constitute "penny stocks" within the meaning of the rules (as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, largely traded in the Over the Counter Bulletin Board or the Pink Sheets), the rules would apply to us and to our securities.

The SEC has adopted Rule 15g-9 which established sales practice requirements for certain low price securities. Unless the transaction is exempt, it shall be unlawful for a broker or dealer to sell a penny stock to, or to effect the purchase of a penny stock by, any person unless prior to the transaction: (i)the broker or dealer has approved the person's account for transactions in penny stock pursuant to this rule and (ii) the broker or dealer has received from the person a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stock, the broker or dealer must: (a) obtain from the person information concerning the person's financial situation, investment experience, and investment objectives; (b) reasonably determine that transactions in penny stock are suitable for that person, and that the person has sufficient knowledge and experience in financial matters that the person reasonably may be expected to be capable of evaluating the risks of transactions in penny stock; (c) deliver to the person a written statement setting forth the basis on which the broker or dealer made the determination (i) stating in a highlighted format that it is unlawful for the broker or dealer to affect a transaction in penny stock unless the broker or dealer has received, prior to the transaction, a written agreement to the transaction from the person; and (ii) stating in a highlighted format immediately preceding the customer signature line that (iii) the broker or dealer is required to provide the person with the written statement; and (iv) the person should not sign and return the written statement to the broker or dealer if it does not accurately reflect the person's financial situation, investment experience, and investment objectives; and (d) receive from the person a manually signed and dated copy of the written statement. It is also required that disclosure be made as to the risks of investing in penny stock and the commissions payable to the broker-dealer, as well as current price quotations and the remedies and rights available in cases of fraud in penny stock transactions. Statements, on a monthly basis, must be sent to the investor listing recent prices for the Penny Stock and information on the limited market.

The regulations governing penny stocks, as set forth above, sometimes limit the ability of broker-dealers to sell our common stock and thus, ultimately, the ability of the investors to sell their securities in the secondary market.

Potential shareholders of the Company should also be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) "boiler room" practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses.

Failure to Remain Current in Reporting Requirements Could Result in Delisting from the Over the Counter Bulletin Board

Companies trading on the Over the Counter Bulletin Board ("OTCBB"), such as the Company, must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTCBB. If we fail to remain current in our reporting requirements, we could be delisted from the Bulletin Board.

In addition, pursuant to the applicable rules of the National Association of Securities Dealers, Inc. that operates the OTCBB, those OTCBB issuers that are cited for filing delinquency in its Form 10-K's/Form 10-Q's three times in a 24-month period and those OTCBB issuers removed for failure to file such reports two times in a 24-month period ineligible for quotation on the OTCBB for a period of one year. Under this proposed rule, a company filing with the extension time set forth in a Notice of Late Filing (Form 12b-25) would not be considered late. This rule does not apply to a company's Current Reports on Form 8-K.

As a result of these rules, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.

Since this annual report on Form 10-K was filed late, there is an increased risk that we could be delisted due to future late filings, since we have already incurred our first “strike” for having a late filing. In addition, as noted above under “Key Personnel” in this Risk Factors section, our ability to make timely filings remains depending upon such key personnel, including our CEO and CFO.

We may have problems obtaining our independent accounting firm’s report on our compliance with Section 404 of the Sarbanes-Oxley Act.

The SEC, as directed by Section 404 of the Sarbanes-Oxley Act, adopted rules generally requiring each public company to include a report of management on the company’s internal controls over financial reporting in its annual report on Form 10-K that contains an assessment by management of the effectiveness of the company’s internal controls over financial reporting. Commencing with our annual report for the fiscal year ending June 30, 2010, our independent registered accounting firm must attest to and report on management’s assessment of the effectiveness of our internal controls over financial reporting.

Failure to Maintain Market Makers May Affect Value of Our Stock

If we are unable to maintain one or more National Association of Securities Dealers, Inc. member broker/dealers as market makers, the liquidity of the common stock could be impaired, not only in the number of shares of common stock which could be bought and sold, but also through possible delays in the timing of transactions, and lower prices for the common stock than might otherwise prevail. Furthermore, the lack of market makers could result in persons being unable to buy or sell shares of the common stock on any secondary market. There can be no assurance that we will be able to maintain such market makers.

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Shares Eligible For Future Sale

Most of the shares currently held by management have been issued in reliance on the private placement exemption under the Securities Act of 1933. Such shares will not be available for sale in the open market without separate registration except in reliance upon Rule 144 under the Securities Act of 1933. Due to recent changes to Rule 144, additional shares will become available for resale without registration. Under revised Rule 144, the holding period for non-affiliates was shorted from one year to six months and volume restrictions were eliminated, provided that certain current public information is then available. If a substantial number of the shares owned by these shareholders were sold pursuant to Rule 144 or a registered offering, the market price of the common stock at that time could be adversely affected.

ITEM 2. PROPERTIES

Offices

We had leased a 1,664 square foot office for our corporate headquarters in Dublin, Ireland for $9,867 per month. This lease originally expired in January 2011. In April 2009, we cancelled this lease, and accrued a cancellation charge in the amount of $2,300. In April 2009, we and entered into an agreement to rent a total 800 square feet of office space, in Wicklow, at a cost of $702 per month. This rental agreement is on a month-to-month basis, with an eight week cancellation notice requirement.

We lease 5,527 square feet of office space in Helsinki, Finland for $10,254 per month. This lease expires in February 2012. The lease contains provisions to increase the monthly lease amount to $12,221 effective March 1, 2010; and $12,502 on March 1, 2011.

We had leased a 6,081 square foot office in Santo Domingo, Dominican Republic. This lease was for five years and originally expired in September 2011. In May 2009, we cancelled this lease, and accrued a cancellation charge in the amount of $20,000. We also wrote-off prepaid rent in the amount of $72,925. In May 2009, we entered into a new agreement to lease 6,099 square feet of office space, along with furniture and a data center, also in Santo Domingo, Dominican Republic. This lease expires September 30, 2012, and calls for aggregate lease expense in the amount of $13,600 per month.

All these offices are currently adequate for our needs.

Furniture and Equipment, Leasehold Improvements, and Computers

The furniture and equipment, leasehold improvements and computers owned by us are recorded at their acquisition cost, and are depreciated using the straight-line and declining methods. This equipment, which is required for the day-to-day operation of our business in our Finland, Dominican Republic, Ireland and Sweden offices, is currently valued at $84,766 and $165,990, respectively, as of June 30, 2009 and 2008.

We lease a telephone switchboard for our Helsinki offices; the cost is $3,200 per year, and can be terminated at any time.

ITEM 3. LEGAL PROCEEDINGS

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. Other than as set forth below, we are not a party to any material pending legal proceedings and, to the best of our knowledge, no such action has been threatened against us.

ACI v. Rahaxi Processing Oy

On March 31, 2008, Rahaxi Processing Oy, a subsidiary of ours based in Helsinki, Finland, received a summons detailing legal proceedings to be taken against it by ACI Worldwide (EMEA) Limited (“ACI”), which is domiciled in Watford, United Kingdom pursuant to a written complaint filed on the 26th February 2008 in Helsinki District Court. ACI is claiming payment relating to outstanding invoices for services provided to the Company such as license fees, maintenance fees, support and software fees and consultancy service fees pursuant to various agreements between ACI and the Company.

The Company has acknowledged that a certain amount of the fees claimed under summons are due to ACI and in recognition of this fact the Company has paid a significant portion of the monies due with respect to the uncontested invoices. The Company will, however, be contesting a significant portion of the fees claimed by under the summons when the preliminary hearing of the case takes place in Helsinki District Court, expected to occur towards the beginning of 2010.

This matter remains in the early stages of litigation and there can be no assurance as to the outcome of the lawsuit. Litigation is subject to inherent uncertainties, and unfavorable rulings could occur. Were unfavorable rulings to occur, there exists the possibility of a material adverse impact of money damages on the Company’s financial condition.

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

None.

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PART II.

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

From August 4, 2000 through March 2, 2001, our common stock was traded on the OTCBB under the symbol "FRSH". From March 5, 2001 through February 26, 2003, our common stock traded under the symbol "FSTI" (reflecting the name change from "Freedom Surf, Inc." to "Freestar Technologies"). From February 27, 2003, through November 7, 2004, our common stock traded under the symbol "FSRC" (reflecting the name change from "Freestar Technologies" to "FreesStar Technology Corporation"). From November 8, 2004 to November 21, 2008, our common stock has been traded under the symbol "FSRT" (reflecting the one for seven reverse split of common stock that occurred on November 8, 2004). From November 22, 2008 through present, our common stock has been traded under the symbol “RHXI” (reflecting the name change from “Freestar Technology Corporation” to “Rahaxi, Inc.” and the simultaneous one for three reverse stock split). The range of closing prices shown below is reported while trading on the OTC Bulletin Board. The quotations shown reflect inter-dealer prices, without retail mark-up, markdown or commission and may not necessarily represent actual transactions.

Per Share Common Stock Bid Prices by Quarter For the Fiscal Year Ended June 30, 2009
	High		Low

Quarter Ended June 30, 2009	$	0.02	$	0.06
Quarter Ended March 31, 2009	$	0.17	$	0.03
Quarter Ended December 31, 2008	$	0.14	$	0.04
Quarter Ended September 30, 2008	$	0.24	$	0.08

Per Share Common Stock Bid Prices by Quarter For the Fiscal Year Ended June 30, 2008
	High		Low
Quarter Ended June 30, 2008	$	0.42	$	0.15
Quarter Ended March 31, 2008	$	0.45	$	0.12
Quarter Ended December 31, 2007	$	0.60	$	0.33
Quarter Ended September 30, 2007	$	0.72	$	0.42

Holders of Common Equity

As of November 2, 2009, we had approximately 278 shareholders of record of our common stock. The number of registered shareholders excludes any estimate by us of the number of beneficial owners of common shares held in street name.

Dividend Information

We have not declared or paid a cash dividend to stockholders since we were incorporated. The board of directors presently intends to retain any earnings to finance our operations and does not expect to authorize cash dividends in the foreseeable future. Any payment of cash dividends in the future will depend upon our earnings, capital requirements and other factors.

Sales of Unregistered Securities

We made the following issuances of unregistered (restricted) securities during the fourth quarter of the fiscal year ended on June 30, 2009:

In April 2009, we issued a total of 10,000,000 shares of common stock (post reverse-split) with a fair value of $500,000 to three consultants for services.

In April 2009, we issued a total of 7,812,000 shares of common stock (post reverse split) as collateral on a loan; in June 2009, we issued an additional 1,250,000 shares of common stock as collateral on a second loan. These shares were recorded at their par values of $7,812 and $1,250, respectively.

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In April 2009, we sold 102,000,000 shares of common stock (post reverse split) to investors for cash of $1,040,000.

In April 2009, we issued a total of 400,000 shares of common stock (post reverse-split) with a fair value of $18,600 to employees as a bonus.

In May 2009, we issued a total of 70,000,000 shares of common stock (post reverse-split) with a fair value of $2,730,000 to three officers of the Company for services. The issuances were as follows: 35,000,000 shares to our CEO, Paul Egan; 25,000,000 shares to our CFO, Ciaran Egan; and 10,000,000 shares to our Director of European Operations, Fionn Stakelum.

Except as noted above, we did not pay any cash commissions on the above listed issuances. We did not employ any form of general solicitation or advertising in connection with the offer and sale of the securities described below. Except as otherwise noted above, the offer and sale of the securities listed below were made in reliance on the exemption from registration provided by Section 4(2) of the Securities Act Regulation D promulgated by the Securities and Exchange Commission as transactions by an issuer not involving any public offering or Regulation S relating to offshore offerings.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

Overview

The electronic payment transaction industry is composed of debit and credit card issuers, switch interchanges, transaction acquirers and transaction generators, including Automated Teller Machine networks, retail merchant locations and the Internet. The routing, control and settlement of electronic 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 must be conducted 24 hours a day, seven days a week.

Our products and services are primarily focused on facilitating electronic card transactions. These products and services are used principally by financial institutions, retailers, and payment processors, both in domestic and international markets.

We intend to increase revenue from our core payment processing products, which include: (1) Authorization: transaction fees derived from processing point of sale terminal transactions; (2) Dynamic Currency Conversion support services: we will provide support for transaction gateway services and settlement of credit card transactions utilizing dynamic currency conversion to merchants and participating banking institutions; (3) Consulting and Software Development Fees: consulting services and customized software development provided to financial institutions and merchants and fees earned by PLC; (4) Sale of Point of Sale solutions: sales of point of sale terminals; and (5) Private Label Cards: transaction management services provided for a private label card issuer. Our revenue for the year ended June 30, 2009 was primarily generated from transaction fees, sales of point of sale terminals through our Finland operations and consulting fees through PLC, as well as through customized software development fees.

In November 2006, the Company acquired 50% of the outstanding capital stock of Project Life Cycle Partners, Ltd. (“PLC”), a technology consulting firm located in Dublin, Ireland. PLC is a niche project consulting firm specializing in the management and implementation of information systems projects. PLC has international experience within the financial services and telecommunication sectors.

Due to our systems upgrade in December 2003 to the latest Hewlett-Packard NonStop servers and BASE24 e-payment processing software, we do not anticipate the need for any similar significant systems upgrades within the next 12 months. However, we are continuously reviewing our product and service offering to ensure we maintain our competitive position in our target markets.

Our business is continually evolving. Market conditions may require us to react quickly to problems and opportunities as they arise, and we may incur costs that we do not currently anticipate. Our business strategy to maximize growth and shareholder value may include future strategic acquisitions where we believe such acquisitions will help us quickly move forward in achieving our goals.

Management believes that our primary short and medium-term growth opportunities will be derived form the European marketplace and a significant portion of our resources, both financial and personnel, will be directed towards developing those opportunities. We believe that our anticipated growth and ultimate profitability will depend in large part on the ability to promote our services, gain clients and expand our relationship with current clients. Accordingly, we intend to invest in marketing, strategic relationships, and development of our client base.

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Results of Operations

Revenue

Transaction processing and related revenue

Transaction processing and related revenue was $1,915,247 for the year ended June 30, 2009, compared to $2,076,309 during the prior year, a decrease of $161,062 or approximately 7.8%. The Company processed a total of 22,119,999 transactions during the year ended June 30, 2009, an increase of 3,100,944 or approximately 16.3% compared to 19,019,055 transactions processed during the prior year. Transaction processing revenue measured in U.S. dollars decreased from the prior year primarily for two reasons: (1) the average exchange rate for the U.S. dollar vs. the Euro decreased by approximately 6.4% during the twelve months ended June 30, 2009; and (2) the Company has more fixed-fee contracts in place during the year ended June 30, 2009, which result in less revenue per transaction.

Consulting services revenue

Consulting services revenue was $1,912,364 for the year ended June 30, 2009, compared to $2,904,708 during the prior year, a decrease of $992,344 or approximately 34.2%. Consulting services revenue is primarily generated by the Company’s subsidiary PLC. The decrease in consulting services revenue can be attributed to the completion of projects under management during the period without comparable replacement projects being initiated, the decline in value of the Euro compared to the U.S. dollar, and the worsening of economic conditions in Ireland.

Hardware sales and related revenue

Hardware sales and related revenue was $1,397,549 during the year ended June 30, 2009, compared to $1,278,690 during the prior year, an increase of $118,859 or approximately 9.3%. Hardware sales and related revenue increased due to continued demand for our products in the marketplace. We expect this increased demand to continue for the next fiscal year.

For the reasons above, total revenue for the year ended June 30, 2009 was $5,225,160 compared to $6,259,707 for the year ended June 30, 2008, a decrease of $1,034,547 or approximately 16.5%.

All of our revenue for the year ended June 30, 2009 has been derived from a limited number of its customers, primarily Finnish customers for its transaction processing products. Approximately 49% of our total revenue was attributable to our ten largest customers. The future loss of any major customer could have a material adverse effect on our business, financial condition and results of operations. We believe that this customer concentration will continue for much of fiscal 2010. We believe that this customer concentration will be diluted in the latter half of fiscal 2010 as we pursue operations outside of Finland. All of our revenues for the twelve months ended June 30, 2009 have been generated by our operations outside of the United States, and our future growth rate is, in part, dependent on continued growth in international markets. We expect this trend to continue through fiscal year 2010.

Cost of Revenue

Cost of transaction processing and related revenue

Cost of transaction processing and related revenue was $1,290,287 for the year ended June 30, 2009, compared to $2,313,929 for the prior year ended June 30, 2008, a decrease of $1,023,642 or approximately 44.2%. The primary reason for the decrease was the completion of many significant software development projects and customization work. During the year ended June 30, 2008, we wrote-off all of our capitalized software, and no longer charge the amortization of software or software licenses to cost of goods sold. We expense all costs associated with maintaining, and many of the costs of improving, our processing and customer support capabilities. These costs do not always change in direct relation to sales, and in fact often increase in advance of any potential increase in sales which they may support.

Cost of consulting services

Cost of consulting services revenue was $1,151,275 for the year ended June 30, 2009, compared to $2,146,766 for the prior year ended June 30, 2008, a decrease of $995,491 or approximately 46.4%. Cost of consulting services revenue decreased primarily because the related consulting services revenue decreased. Consulting services revenue is primarily generated by our subsidiary company PLC Partners, Ltd. Gross profit as a percentage of consulting service revenues increased to 39.8% for the year ended June 30, 2009 from 26.1% for the year ended June 30, 2008. The increase in gross profit percentage was attributable primarily to a reduction in the number of sub contractors hired due to the completion of a number of projects.

Cost of hardware and related revenue

Cost of hardware and related revenue was $637,978 during the year ended June 30, 2009, compared to $834,950 during the prior year, a decrease of $196,972 or approximately 23.6%. Included in cost of hardware revenue are terminals shipped to customers as test and demonstration units, as well as items replaced or returned. The cost of hardware revenue has decreased as a percentage of hardware sales because we have reduced the number of demo units we have shipped. Gross profit as a percentage of hardware and related revenue increased to 54.4% for the year ended June 30, 2009 from 34.7% for the year ended June 30, 2008. The increase in gross profit percentage was attributable primarily to a decrease in the number of demos products shipped.

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For the reasons above, total cost of revenue was $3,079,540 for the year ended June 30, 2009, compared to $5,295,645 for the year ended June 30, 2008, a decrease of $2,216,105 or approximately 41.8%. Gross profit for the year ended June 30, 2009 was $2,145,620 or 41.1% of sales compared to $964,062 or 15.4% of sales for the prior year.

We expect cost of revenue to increase in the coming year as we continue our current trend of increasing sales and expanding our product offering. As our service offerings and business mix changes, gross margin as a percent of sales may not remain constant.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $18,863,958 for the year ended June 30, 2009 compared to $19,737,217 for the year ended June 30, 2008, a decrease of $873,259 or approximately 4.4%. The primary components of selling, general, and administrative expenses for the year ended June 30, 2009 were: consulting and professional services fees of $8,968,160, including $8,139,586 of non-cash compensation in the form of stock, stock options, and warrants. Other components of selling, general, and administrative expenses for fiscal year 2009 included payroll and related costs of $7,424,594, including $3,806,400 of non-cash compensation to management and employees in the form of stock and stock options; facilities expense (rent, telephone, utilities, and maintenance) of $982,183; travel and entertainment costs of $507,236; depreciation and amortization of $374,884; legal and accounting fees of $307,772; freight and delivery charges of $56,442; licenses and dues of $45,519; advertising and marketing of $44,284; and repair and maintenance of $37,428.

The amount of future selling, general, and administrative expenses will largely depend on the pace of our growth in the market for payment processing products and upon the cost of outside services and professional fees, including legal fees relating to litigation and acquisitions. We fully expect these costs to increase as we continue our expected rollout of product offerings. We also intend to continue to build out our infrastructure, which may include adding support staff and branch offices. Selling expenses may also continue to increase due to increased focus on obtaining new customers. We intend to focus additional resources in the areas of sales personnel salaries, trade show participation, and other promotional expenses. In addition, we may pursue further acquisitions in order to facilitate our growth and exploit market opportunities, which would further drive up legal and accounting fees, payroll, and travel costs.

Impairment of Software

Cost of impairment of software was $4,086,502 for the year ended June 30, 2008 representing the cost of capitalized software and software licenses. There was no such charge during the year ended June 30, 2009.

Additional Cost of Acquisition

During the year ended June 30, 2008, the Company issued an additional 1,111,110 shares of common stock (post reverse-split) with a fair value of $192,555 pursuant to the terms of the acquisition of PLC Partners, Ltd. There was no such charge during the year ended June 30, 2009.

Financing Cost

During the year ended June 30, 2009, the Company wrote-off subscriptions receivable in the amount of $1,131,590. This amount represents shares issued pursuant to a financing transaction entered into in March, 2006. The Company has received a total of $8,134,924 pursuant to this financing transaction through March 31, 2009. There was no such write-off during the corresponding period of the prior year.

Interest Expense

Interest expense, net was $124,372 for the year ended June 30, 2009, compared to $47,374 for the year ended June 30, 2008, an increase of $76,998 or approximately 162.5%. The increase is due primarily to an increase in notes payable balances during the current year.

Currently, we are utilizing equity financing partly in order to avoid the interest charges associated with debt financing. Accordingly, we do not expect interest expense to materially increase in the coming year. There can be no guarantee that this will be the case, however, as the market for our common stock could change, forcing us to pursue alternative methods of financing our cash needs. In addition, we 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.

Minority Interest in Net Income of Subsidiary

The Company recorded the minority interest in the net income of its subsidiary PLC Partners, Ltd. of $7,954 during the year ended June 30, 2009, compared to $39,855 during the year ended June 30, 2008, a decrease of $31,901 or approximately 80%.

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Net Loss

For the reasons stated above, we recorded a net loss of $17,983,146 for the year ended June 30, 2009 compared to $23,150,901 for the year ended June 30, 2008, a decrease of $5,167,755 or approximately 22.3%.

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

Commitments

Our total commitments under non-cancelable operating leases at June 30, 2009 are as follows:

Years ending June 30,
2010	$	298,602
2011	$	310,974
2012	$	142,826
2013	$	-
2014	$	-
Total	$	752,402

Operating Activities

The net cash used in operating activities was $4,567,582 for the year ended June 30, 2009 compared to $3,713,921 for the year ended June 30, 2008, an increase of $853,661 or approximately 23.0%. The primary reason for the increase in cash used in operating activities was a change in the certain components of working capital, which had the effect of increasing cash outflow: an increase in accounts payable provided $1,758,764 of cash in the prior period, compared to $122,597 in the current year; also, an increase in the amounts due to related parties provided $582,225 of cash in the prior period, and a decrease in amounts due to related parties consumed $580,763 of cash in the current period. For the year ended June 30, 2009, the primary components of cash used in operating activities during the current period are the net loss of ($17,983,146), partially offset by the non-cash charges of non-cash compensation of $11,945,986; non-cash financing cost of $1,131,590; and depreciation and amortization of $374,884.

Investing Activities

Net cash used in investing activities was $3,236 during the year ended June 30, 2009 compared to $470,589 for the year ended June 30, 2008, a decrease of $467,353. This decrease was primarily due to a reduction in capitalized software costs related to software enhancement of our transaction processing system.

Financing Activities

Net cash provided by financing activities was $3,874,345 for the year ended June 30, 2009, compared to $4,694,474 for the year ended June 30, 2008, a decrease of $820,129 or approximately 17.5%. The reason for the decrease was due to a decrease of $2,263,205 in cash generated from the exercise of stock options, partially offset by an increase in cash from the issuance of notes payable in the amount of $1,118,419.

Liquidity and Capital Resources

As of June 30, 2009, we had total current assets of $1,657,765 and total current liabilities of $5,232,914, resulting in a working capital deficiency of $(3,575,149). We had cash and cash equivalents of $345,842 at June 30, 2009, and an accumulated deficit of $115,552,958.

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Management expects that global economic conditions will continue to present a challenging operating environment for at least the rest of the year. Working capital management will continue to be a high priority. Given the uncertainty in world economies and the possibility of continued weakness in markets served, management has contingency plans to appropriately respond to conditions as they develop, but there can be no assurance that those contingency plans will be successful.

The independent auditors report on our June 30, 2009 financial statements included in this Form 10-K states that our difficulty in generating sufficient cash flow to meet our obligations and sustain operations raise substantial doubts about the our ability to continue as a going concern.

The accompanying financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. However, our ability to continue as a going concern will be dependent upon our ability to generate sufficient cash flow from operations to meet our obligations on a timely basis, to obtain additional financing, and ultimately attain profitability.

Prior Financing

On January 27, 2006, the Company signed subscription agreements with a group of offshore investors for the sale of an aggregate of $9.2 million in Company common stock, plus warrants (the “January Financing”). Due to the failure of the investment group to timely fund in full the first payment required for the purchase of shares and warrants, the Company terminated the January Financing; all shares and warrants issued thereunder were returned by the escrow holder to the Company for cancellation, and any funds received pursuant to the January Financing were returned by the escrow holder to the investors.

In March 2006, we initiated a financing with a group of European investors (collectively, the “Investors”), lead by Olympia Holding AS, for the sale of $9.2 million in Company common stock, plus warrants (the “2006 Financing”).

Pursuant to the 2006 Financing, the Company agreed to issue 15,333,333 shares (pot reserves split) of restricted common stock under Regulation S at $0.60 per share (post reverse split), plus warrants to purchase 16,666,667 shares (post reverse split) of common stock with two-year exercise periods and strike prices ranging from $4.50 to $25.50 (post reverse split), as set forth below. The shares were held in escrow by Carl Hessel ("Escrow Holder"), a director (now former director) and stockholder of the Company based in Geneva, Switzerland, along with the warrants. Pursuant to the terms of the 2006 Financing, the first payment of $4.6 million was due immediately, with a second payment of $4.6 million due within three months thereafter.

As of June 30, 2009, the Company had received cash in the net amount $8,134,924 pursuant to the March Financing, and had issued 15,283,333 shares (post reverse split) of common stock and warrants to purchase an additional 16,612,319 shares (post reverse split). Warrants to purchase 8,278,986 shares expired on March 31, 2008, and warrants to purchase 8,333,333 shares (post reverse split) remain outstanding at June 30, 2009. The Company determined that, in light of the significant decrease in its stock price since the 2006 Financing was executed, and the potential for protracted litigation, it was in the best interest of the Company to write-off the remaining $1,065,000, rather than institute legal proceedings to collect such remaining amount.

The Company also issued to consultants 1,533,333 shares (post reverse split) of unregistered common stock and warrants to purchase an additional 4,333,333 shares of common stock (post reverse split) at a price of $0.60 per share (post reverse split) as a commission for work performed on the March Financing. These warrants to purchase 4,333,333 shares (post reverse split) expired on March 31, 2008.

All warrants have a two-year exercise period from the date of issuance of the warrants. No registration rights were granted to the Investors in connection with the March Financing and the shares and warrants issued in the March Financing will be restricted securities, subject to the applicable restrictions set forth in Regulation S promulgated under the Securities Act of 1933, as amended.

Additional Financing Required

Management plans to continue raising additional capital through a variety of fund raising methods during fiscal 2010 and to pursue all available financing alternatives in this regard. Management may also consider a variety of potential partnership or strategic alliances to strengthen its financial position. Although we have been successful in the past in raising capital, no assurance can be given that these sources of financing will continue to be available to us and/or that demand for our equity/debt instruments will be sufficient to meet our capital needs, or that financing will be available on terms favorable to us. The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should we be unable to continue as a going concern.

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

·	curtail operations significantly;
·	sell significant assets;

·	seek arrangements with strategic partners or other parties that may require us to relinquish significant rights to products, technologies or markets; or
·	explore other strategic alternatives including a merger or sale;

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

Certain Indebtedness

From time to time, Paul Egan and Ciaran Egan have had delayed payment of a portion of their salaries in order to conserve our cash. At June 30, 2009, $0 of accrued salaries was owed to Paul Egan, and $80,396 of accrued salaries was owed to Ciaran Egan. At June 30, 2008, $317,385 and $147,123 of accrued salaries were owed to Paul Egan and Ciaran Egan, respectively.

Ciaran Egan has also advanced the funds to the Company. These advances accrue interest at the rate of 7% per annum. At June 30, 2009, the Company owned the amount of $48,971 to Ciaran Egan for advances, plus $4,969 of accrued interest.

Pursuant to Paul Egan’s and Ciaran Egan’s employment agreements, the Company provides the officers a car allowance. At June 30, 2009, the Company has accrued the amount of $6,441 to Paul Egan and $52,669 to Ciaran Egan for car allowances.

Exchange Rates

Our operations are principally conducted in Finland through our subsidiary Rahaxi, which operates in its local currency, the Euro. We also have operations in the Dominican Republic under the name ePayLatina S.A., and Freestar Dominicana, Inc. operating in its local currency, the Dominican Republic Peso. All assets and liabilities are translated at exchange rates in effect at the end of the year. Accounts for consolidated statements of operations are translated at weighted average rates for the year. Gains and losses from translation of foreign currency into U.S. dollars are included in other comprehensive income (loss). The accumulated foreign currency translation adjustment was a positive impact of $110,770 for the year ended June 30, 2009.

A significant portion of our 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 our revenues and operational costs. In particular, the value of the U.S. dollar to the Euro impacts our operating results. Our 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 our obligations. In addition, a significant portion of our financial statements are prepared in Euro and translated to U.S. dollars for consolidation.

Inflation

The impact of inflation on our costs, and the ability to pass on cost increases to our customers over time is dependent upon market conditions. We are not aware of any inflationary pressures that have had any significant impact on our operations over the past fiscal year, and we do not anticipate that inflationary factors will have a significant impact on future operations.

Off-Balance Sheet Arrangements

We do not maintain off-balance sheet arrangements nor do we participate in non-exchange traded contracts requiring fair value accounting treatment.

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Critical Accounting Policies

The 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, our 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 we use in applying these most critical accounting policies have a significant impact on the results we report in our financial statements.

Use of Estimates in the Preparation of Financial Statements

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Stock-Based Compensation Arrangements

The Company 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.

Revenue Recognition

The Company recognizes revenues from contracts in which the Company provides only consulting services as the services are performed. The contractual terms of the agreements dictate the recognition of revenue by the Company. Payments received in advance are deferred until the service is provided.

Contract costs include all direct equipment, material, and labor costs and those indirect costs related to contract performance, such as indirect labor. Selling, general and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in contract performance, contract conditions, and estimated profitability that may result in revisions to costs and income are recognized in the period in which the revisions are determined.

For revenue from product sales, the Company recognizes revenue in accordance with Staff Accounting Bulletin ("SAB") No. 104, "Revenue Recognition," which superseded SAB No. 101, "Revenue Recognition in Financial Statements." SAB No. 101 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required. SAB No. 104 incorporates Emerging Issues Task Force ("EITF") No. 00-21, "Multiple-Deliverable Revenue Arrangements." EITF No. 00-21 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. The effect of implementing EITF No. 00-21 on the Company's consolidated financial position and results of operations was not significant. This issue addresses determination of whether an arrangement involving more than one deliverable contains more than one unit of accounting and how the arrangement consideration should be measured and allocated to the separate units of accounting. EITF No. 00-21 became effective for revenue arrangements entered into in periods beginning after June 15, 2003. For revenue arrangements occurring on or after August 1, 2003, the Company revised its revenue recognition policy to comply with the provisions of EITF No. 00-21.

For those contracts which contain multiple deliverables, management must first determine whether each service, or deliverable, meets the separation criteria of EITF No. 00-21. In general, a deliverable (or a group of deliverables) meets the separation criteria if the deliverable has standalone value to the customer and if there is objective and reliable evidence of the fair value of the remaining deliverables in the arrangement. Each deliverable that meets the separation criteria is considered a "separate unit of accounting." Management allocates the total arrangement consideration to each separate unit of accounting based on the relative fair value of each separate unit of accounting. The amount of arrangement consideration that is allocated to a unit of accounting that has already been delivered is limited to the amount that is not contingent upon the delivery of another separate unit of accounting. After the arrangement consideration has been allocated to each separate unit of accounting, management applies the appropriate revenue recognition method for each separate unit of accounting as described previously based on the nature of the arrangement. All deliverables that do not meet the separation criteria of EITF No. 00-21 are combined into one unit of accounting, and the appropriate revenue recognition method is applied.

Processing fee revenue is earned based upon the actual number of transactions processed through the Company's processing system. Transaction processing fees are recognized in the period that the service is performed. These fees are typically charged on a per transaction basis, depending on the arrangement with the customer.

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Long-lived Assets

The Company has adopted Statement of Financial Accounting Standards No. 144 (SFAS 144). The Statement requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undercounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. SFAS No. 144 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less costs to sell.

Forward Looking Statements

This Form 10-K 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. When used in this Form 10-K, the words "expects," "anticipates," "believes," "plans," "will" and similar expressions are intended to identify forward-looking statements. These are statements that relate to future periods and include, but are not limited to, statements regarding the adequacy of our capital resources, need and ability to obtain additional financing, the features and benefits of our services, our operating losses and negative cash flow, and our critical accounting policies.

Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this report, and in particular, the risks discussed in Item 1, Risk Factors.

These forward-looking statements speak only as of the date hereof. We expressly disclaim 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.

Our operating results can vary significantly depending upon a number of factors, many of which are outside our control. In addition to the Risk Factors set forth in Item 1, general factors that may affect our operating results include:

·	our ability to finance working capital requirements;
·	our ability to increase market share and revenue;
·	market acceptance of and changes in demand for products and services;
·	a small number of customers account for, and may in future periods account for, substantial portions of our revenue, and revenue could decline because of delays of customer orders or the failure to retain customers;

·	gain or loss of clients or strategic relationships;
·	announcement or introduction of new services and products by us or by our competitors;

·	price competition;
·	the ability to upgrade and develop systems and infrastructure to accommodate growth;

·	the ability to introduce and market products and services in accordance with market demand;
·	changes in governmental regulation; and

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

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Consolidated financial statements as of and for the fiscal year ended June 30, 2009 and for the fiscal year ended June 30, 2008 are presented in a separate section of this report following Item 14.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

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ITEM 9A. CONTROLS AND PROCEDURES

Internal Control Over Financial Reporting – Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. Under the supervision and with the participation of our management, including Mr. Paul Egan, our Chief Executive Officer, and Mr. Ciaran Egan, our Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our internal control over financial reporting was not effective. Please see the subsection “Significant Deficiencies In Disclosure Controls And Procedures Or Internal Controls” below.

This annual report does not include an audit report of our registered public accounting firm regarding internal control over financial reporting. In addition, Management's report on internal control over financial reporting was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this annual report.

Changes in internal controls

Except as described below, there were no changes in internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially effect, our internal control over financial reporting. As described below, as a result of our evaluation of our internal control over financial reporting as of June 30, 2009, we determined that our controls and procedures are not effective and subsequent to the period of this report, began to implement changes to our internal controls.

Significant Deficiencies In Disclosure Controls And Procedures Or Internal Controls

We have determined there were errors in accounting for the status of certain shares of the Company’s common stock which had been issued pursuant to a financing agreement. The Company previously reported that these shares of stock had been held in escrow, when in fact these shares were improperly in the possession of third parties.

The Company completed its review in order to design enhanced controls and procedures to remedy this deficiency, and determined that such escrows should be avoided in the future where possible, or an outside third-party escrow should be utilized. The Company is not aware of any other deficiencies in its system of disclosure controls and procedures.

We also determined that our disclosure controls and procedures were not effective in light of the Company’s failure to timely file this Annual Report on Form 10-K. The late filing was caused by our inability to timely gather and report required financial information, including from our local staffs and local accounting firms, from our various operations in Finland, Ireland and the Dominican Republic. Based on this, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective based on our material weakness in the form of lack of segregation of duties, which stems in part from limited capital resources to hire additional financial and administrative staff. We have begun to delegate duties to other employees of the Company in order to address such deficiencies.

ITEM 9B. OTHER INFORMATION

None.

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PART III.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

Directors and Executive Officers

The names, ages, and respective positions of our directors, executive officers, and key employees are set forth below. The directors named below will serve until the next annual meeting of our stockholders or until their successors are duly elected. Officers will hold their positions at the will of the board of directors, subject to any employment agreements. There are no arrangements, agreements or understandings between non-management shareholders and management under which non-management shareholders may directly or indirectly participate in or influence the management of our affairs.

Paul Egan, President/Chief Executive Officer/Director

Mr. Egan, age 46, has served as our Chief Executive Officer and President since August 2001. Mr. Egan founded ePayLatina S.A., which developed the PaySafeNow system and was acquired by us in August 2001. Before founding ePayLatina, Mr. Egan was the vice-president of Inter-Leisure, S. A. Mr. Egan also worked with the South African firm ENGEN to oversee the new project division after their acquisition of Mobil Oil South Africa and to implement their construction projects and corporate identity. He studied construction management in Birmingham, England and worked for Trafalger House Construction Division on major projects in London Banking Districts. Mr. Egan attended Teenier College Dublin.

Ciaran Egan, Secretary/Treasurer/Chief Financial Officer/Director

Mr. Egan, age 45, has served as our Chief Financial Officer since August 2001. Mr. Egan joined ePayLatina S.A. in May 2001 where he took the position of vice president. From 1994 to 2001, he was employed by Midiron International Recruitment based in Johannesburg, South Africa, as managing director, with the central focus on establishing new markets in the Middle East, United Kingdom and Ireland. He was successful in obtaining and completing contracts with the Ministry of Defense and Aviation in Saudi Arabia and the United Arab Emirates. He also implemented contracts with the National Health Services in the United Kingdom as well as several private institutions in Ireland. Prior to that, Mr. Egan was the National Sales Director for Sellrange Ltd (Ireland). Mr. Egan graduated from Terenure College Dublin in 1982.

Fionn Stakelum, Director

Mr. Stakelum, age 40, was appointed to our board of directors in October 2002. Since 2003, he has also served as our Director of European Operations. Mr. Stakelum is an Irish national who holds a Bachelor of Commerce Degree (Hons) with a major in Systems Analysis obtained from University College Galway in 1990. His experience includes a position as a technical support engineer for the Corel Corporation, which he held from 1994 to 1996. Mr. Stakelum's experience also includes the position of localization software engineer, also for the Corel Corporation, for the period 1996 to 1997. He moved to Lotus Inc. in 1997 and remained there until 1999, when he joined Microsoft Inc. as a lead software development engineer (a position he held until the latter part of 2001). From that time to the present, Mr. Stakelum has functioned as an independent consultant. He was previously involved in the localization of MSOffice 2000 and XP in over 20 languages.

Killian McGrath, Director

Mr. McGrath, age 34, joined our board of directors in June 2008. Mr. McGrath was educated at the Carmelite College in Castlemarter, Co Cork, and at St. Augustus College in Durgavan County, Waterford, Republic of Ireland. Mr. McGrath set up and founded construction companies in Germany, United States of America and in the Republic of Ireland. He has been Managing Director of these various international and domestic construction for more than 10 years and these companies were involved in the development of major residential and commercial developments in Europe and the United States. Through his involvement in the construction industry over the last 18 years he has also developed extensive contacts within the financial services industry in Europe.

Family Relationships

Mr. Stakelum is the brother-in-law of Paul Egan and Ciaran Egan. Paul Egan and Ciaran Egan are brothers.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Exchange Act requires executive officers and directors, and persons who beneficially own more than 10% of any class of our equity securities to file initial reports of ownership and reports of changes in ownership with the SEC. Executive officers, directors and beneficial owners of more than 10% of any class of our equity securities are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.

To our knowledge, based solely on the review of copies of such reports furnished to us during the year ended June 30, 2009, we are not aware of any reports which were not timely filed except as follows: (i) Pendle Properties Limited purchased 100 million shares of our common stock on April 22, 2009 (as previously reported by us on Form 8-K filed April 24, 2009), but Pendle has failed to file a Form 3 reporting such transaction; (ii) Form 4s filed late by Fionn Stakelum on June 5, 2009, May 12, 2009 and March 20, 2009, reporting the grant of shares by the Company as compensation for services, and two sales of shares, respectively; (iii) Form 4s filed late by Ciaran Egan on June 5, 2009 and October 14, 2008 reporting grants of shares and options, respectively, by the Company as compensation for services; (iv) Form 4s filed late by Ciaran Egan on June 5, 2009 and October 14, 2008 reporting grants of shares and options, respectively, by the Company as compensation for services; and (v) Killian McGrath failed to timely file a Form 3 in connection with his appointment to our Board of Directors. Except as noted above, all of these documents have been prepared and filed with the SEC. Other than these, we are not aware of any other required reports that were not timely filed with regard to the fiscal year ended June 30, 2009.

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Code of Ethics

We have adopted a Code of Ethics that applies to our directors and senior officers, including our principal executive, financial and accounting officers. A copy of the Code of Ethics is attached as an exhibit to this Annual Report on Form 10-K and is also available on our website at www.rahaxi.com. We intend to disclose on our website amendments to, or waivers from, any provision of our Code of Ethics which applies to our Chief Executive Officer, Chief Financial Officer, principal accounting officer and persons performing similar functions and amendments to, or waivers from, any provision which relates to any element of our Code of Ethics described in Item 406(b) of Regulation S-B.

Committees of the Board Of Directors

We presently do not have a compensation committee, nominating committee, an executive committee of our board of directors, stock plan committee or any other committees, except for an audit committee.

Audit Committee

Our audit committee consists of Paul Egan and Ciaran Egan. The audit committee has not adopted a written charter. Our board of directors has determined that we do not have an audit committee financial expert serving on our audit committee; we have been unable to secure the services of such a person.

The primary responsibility of the audit committee is to oversee our financial reporting process on behalf of our board of directors and report the result of their activities to the board. Such responsibilities include, are not limited to, the selection, and if necessary the replacement, of our independent auditors, review and discuss with such independent auditors (i) the overall scope and plans for the audit, (ii) the adequacy and effectiveness of the accounting and financial controls, including our system to monitor and manage business risks, and legal and ethical programs, and (iii) the results of the annual audit, including the financial statements to be included in our annual report on Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth information concerning the compensation for services in all capacities rendered to us for the two fiscal years ended June 30, 2009 and June 30, 2008, of our Chief Executive Officer and our other two executive officers whose annual compensation exceeded $100,000 in the fiscal year ended June 30, 2009. We refer to the Chief Executive Officer and these other officers as the named executive officers.

SUMMARY COMPENSATION TABLE

Name and Principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($)(7)		Options Awards ($)(7)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation on Earnings ($)		All Other Compensation ($)		Total ($)
Paul Egan CEO/President / Director	(1) 2009	$	416,970	$	-	$	1,365,000	$	-	$	-	$	-	$	24,865	$	1,806,835
	(2) 2008	$	440,788	$	-	$	1,000,000	$	134,629	$	-	$	-	$	26,447	$	1,601,864

Ciaran Egan CFO/ Secretary / Treasurer / Director	(3) 2009	$	416,970	$	-	$	975,000	$	-	$	-	$	-	$	24,865	$	1,416,835
	(4) 2008	$	440,788	$	-	$	750,000	$	134,326	$	-	$	-	$	26,447	$	1,351,561

Fionn Stakelum Director / Director of European Operations	(5) 2009	$	99,461	$	-	$	390,000	$	-	$	-	$	-	$	-	$	489,461
	(6) 2008	$	105,789	$	-	$	-	$	-	$	-	$	-	$	-	$	105,789

(1) 2009 amounts for Paul Egan included the following: salary consists of $416,970 from Mr. Egan’s role as Chief Executive Officer of Rahaxi, Inc.; 35,000,000 shares of common stock (post reverse-split) with a fair value of $1,365,000; and a car allowance (accrued and unpaid) in the amount of $24,865.

(2) 2008 amounts for Paul Egan included the following: salary consists of $440,788 from Mr. Egan's role as Chief Executive Officer of Rahaxi, Inc.; 6,666,667 shares of common stock (post reverse split) with a fair value of $1,000,000; options to purchase 2,000,000 shares of common stock (post reverse split) at a price of $0.15 per share (post reverse split), with a fair value of $134,629; and a car allowance (accrued but unpaid) of $26,447. The options expired unexercised.

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(3) 2009 amounts for Ciaran Egan included the following: salary consists of $416,970 from Mr. Egan’s role as Chief Financial Officer of Rahaxi, Inc.; 25,000,000 shares of common stock (post reverse-split) with a fair value of $975,000; and a car allowance (accrued and unpaid) in the mount of $24,865.

(4) 2008 amounts for Ciaran Egan include salary of $440,788 from Mr. Egan's role as Chief Financial Officer of Rahaxi, Inc.; 5,000,000 shares of common stock (post reverse split) with a fair value of $750,000, accrued but unissued at June 30, 2008; options to purchase 2,000,000 shares of common stock (post reverse split) at a price of $0.15 per share (post reverse split), with a fair value of $134,629; and a car allowance (accrued and unpaid) in the amount of $26,447. The options expired unexercised.

(5) 2009 amounts for Fionn Stakelum include the following: salary consists of $99,461 from Mr. Stakelum’s role as Director of European Operations for Rahaxi, Inc.; and 10,000,000 shares of common stock (post reverse split) with a fair value of $390,000.

(6) 2008 amounts include $105,789 from Mr. Stakelum's role as Director of European Operations for Rahaxi, Inc.

(7) With respect to equity compensation, the dollar amounts shown above reflect the value of such awards under SFAS 123R as recognized in the financial statements. With respect to stock awards, the value was calculated as the number of shares multiplied by the closing price on the grant date.

The following table provides information on exercisable and unexercisable options and unvested stock awards held by the named executive officers on June 30, 2009.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

Option Awards

Name

Number of securities underlying unexercised options

(#)

exercisable

Number of securities underlying unexercised options

(#)

unexercisable

Equity incentive plan awards: Number of securities underlying unexercised earned options

(#)

Option exercise price ($)

Option Expiration Date

Paul Egan

Ciaran Egan

Fionn Stakelum

Employment Agreements; Severance Agreements; Change of Control Agreements

We do not have any change of control agreements with our named executive officers. On May 29, 2007, we entered into new employment agreements with each of Paul Egan and Ciaran Egan, which replace their prior employment agreements with the Company. As described below, these agreements provide certain severance benefits if employment is terminated under certain circumstances.

Chief Executive Officer:

In August 2001, we entered into an employment agreement with Paul Egan, our President and Chief Executive Officer. Under the terms of the agreement, Mr. Egan was entitled to a minimum annual salary of $150,000 per year. In addition, Mr. Egan received an automobile allowance not to exceed $1,500 per month. This employment agreement expired in August 2004, at which time an addendum to this employment contract was executed which (i) extended all terms and conditions of this employment contract to April 9, 2007, and (ii) provided that a review of Paul Egan’s remuneration take place on or before December 31, 2004. Effective January 1, 2006, Paul Egan’s salary was increased to $264,000 per year.

On May 29, 2007, we entered into new employment agreement with Paul Egan that replaces his prior employment agreement with the Company. Paul Egan’s employment agreement has a five year term. Under the agreement, Paul Egan will continue to serve in his current role of President and Chief Executive Officer of the Company, reporting to the Board of Directors. The Company will pay Paul Egan €300,000 (approximately US$421,000, (including the salary paid to Paul Egan as Chief Executive Officer of Freestar Dominicana; see below), based on current exchange rates at the time the agreement was executed) per year in base salary, plus an automobile allowance of €1,500 (approximately US$2,100 based on current exchange rates at the time the agreement was executed) per month and other benefits. The Board of Directors will review the annual base salary each year, but may not reduce it below the initial base salary level. Paul Egan will be eligible for bonuses to be paid in stock or stock options, with such bonuses to be determined by the Board of Directors. If Mr. Egan’s employment is terminated by the Company Without Cause (as defined in the employment agreement) or by Mr. Egan for Good Reason (as defined in the employment agreement), then Mr. Egan shall be entitled to a lump sum payment equal to one year’s annual salary, plus any applicable bonuses.

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Effective March 1, 2006, Paul Egan began to draw a salary of $25,000 per year for his position as Chief Executive Officer of our subsidiary, Freestar Dominicana. This amount is included in the €300,000 salary Paul Egan draws as President and Chief Executive Officer of the Company (see above).

On June 17, 2008, the Board of Directors approved the following equity compensation for Paul Egan: (i) issuance of 6,666,667 shares (post reverse-split) of fully vested common stock, subject to resale restrictions under Rule 144; (ii) grant of options to purchase 2,000,000 shares (post reverse-split) of restricted common stock at an exercise price of $0.15 per share, with half of such options having with a net exercise, or cashless exercise provision.

On May 6, 2009, the Board of Directors approved the following equity compensation for Paul Egan: issuance of 35,000,000 shares (post reverse-split) of fully vested common stock, subject to resale restrictions under Rule 144.

At June 30, 2009, the Company owed Paul Egan the amount of $6,441 in accrued car allowance. At June 30, 2008, the Company owed Paul Egan the amount of $317,385 in accrued salary, and an additional $30,786 in accrued car allowance. Also at June 30, 2008, the Company owed Mr. Egan $217,613 for cash advances he had made to the Company, plus an additional $9,179 for interest due o on these advances.

Chief Financial Officer:

In August 2001, we entered into an employment agreement with Ciaran Egan, our President and Chief Executive Officer. Under the terms of the agreement, we Mr. Egan was entitled to receive a minimum annual salary of $120,000 per year. In addition, Mr. Egan received an automobile allowance not to exceed $1,500 per month. This employment agreement expired in August 2004, at which time an addendum to this employment contract was executed which (i) extended all terms and conditions of this employment contract to April 9, 2007, and (ii) provided that a review of Ciaran Egan’s remuneration take place on or before December 31, 2004. Effective January 1, 2006, Ciaran Egan’s salary was increased to $240,000 per year.

On May 29, 2007, we entered into new employment agreement with Ciaran Egan that replaces his prior employment agreement with the Company. Ciaran Egan’s employment agreement has a five year term. Under the agreement, Ciaran Egan will continue to serve in his current role as Chief Executive Officer of the Company, reporting to the President. The Company will pay Ciaran Egan €300,000 (approximately US$421,000, (including the salary paid to Ciaran Egan as Chief Financial Officer of Freestar Dominicana; see below), based on current exchange rates at the time the agreement was executed) per year in base salary, plus an automobile allowance of €1,500 (approximately US$2,100 based on current exchange rates at the time the agreement was executed) per month and other benefits. The Board of Directors will review the annual base salary each year, but may not reduce it below the initial base salary level. Ciaran Egan will be eligible for bonuses to be paid in stock or stock options, with such bonuses to be determined by the Board of Directors. If Mr. Egan’s employment is terminated by the Company Without Cause (as defined in the employment agreement) or by Mr. Egan for Good Reason (as defined in the employment agreement), then Mr. Egan shall be entitled to a lump sum payment equal to one year’s annual salary, plus any applicable bonuses.

Effective March 1, 2006, Ciaran Egan began to draw a salary of $25,000 per year for his position as Chief Financial Officer of our subsidiary, Freestar Dominicana. This amount is included in the €300,000 salary Ciaran Egan draws as Chief Executive Officer of the Company (see above).

On June 17, 2008, the Board of Directors approved the following equity compensation for Ciaran Egan: (i) issuance of 5,000,000 shares (post reverse-split) of fully vested common stock, subject to resale restrictions under Rule 144; (ii) grant of options to purchase 2,000,000 shares (post reverse-split) of restricted common stock at an exercise price of $0.15 per share (post reverse-split), with half of such options having with a net exercise, or cashless exercise provision.

On May 6, 2009, the Board of Directors approved the following equity compensation for Ciaran Egan: issuance of 25,000,000 shares (post reverse-split) of fully vested common stock, subject to resale restrictions under Rule 144.

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At June 30, 2009, the Company owed Ciaran Egan the amount of $80,396 in accrued salary, and an additional $52,669 in accrued car allowance. Also at June 30, 2009, the Company owed Mr. Egan $48,971 for cash advances he had made to the Company, plus an additional $4,969 for interest due on these advances. At June 30, 2008, the Company owed Ciaran Egan the amount of $147,123 in accrued salary, and an additional $30,786 in accrued car allowance. Also at June 30, 2008, the Company owed Mr. Egan $19,268 for cash advances he had made to the Company, plus an additional $2,069 for interest due on these advances.

DIRECTOR COMPENSATION

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Paul Egan	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Ciaran Egan	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Fionn Stakelum	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Killian McGrath	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Carl Hessel (1)	$	-	$	632,700	$	-	$	-	$	-	$	-	$	632,700

(1) In fiscal 2009, we issued a total of 6,660,000 shares (post reverse-split) of common stock with a fair value of $632,700 to Mr. Hessel as director compensation. Mr. Hessel resigned as a Director of the Company effective April 2, 2009. Compensation reported in this table does not include 833,334 shares (post reverse-split) of common stock with a fair value of $125,000 issued to Margaux Investment Management Group, a company controlled by Mr. Hessel, a director. See Item 13 "Certain Relationships and Related Transactions, and Director Independence."

All directors may be reimbursed for their reasonable expenses incurred in connection with attending meetings of the board of directors or management committees. Under our Non-Employee Directors and Consultants Retainer Stock Plan, our directors are eligible for grants of stock of stock options for their service as directors. In fiscal 2007, we adopted a Board compensation policy that provides $50,000 per year in compensation to our independent directors. Only Mr. McGrath qualified as an independent director. Mr. McGrath joined the Board in June 2008 and did not receive any compensation during fiscal year 2008 or 2009.

Other than Mr. McGrath, each of our directors also provides services as an employee or consultant. See “Summary Compensation Table” above in this Item 10, along with “Employment Agreements” below and Item 12 “Certain Relationships and Related Transactions” for a description of compensation granted to our directors in their capacities as employees and/or consultants and in the case of Mr. Hessel, for certain transactions with his spouse.

Compensation Committee Interlocks and Insider Participation

As noted above, we do not have any compensation committee. Our entire Board of Directors, which includes our CEO - Paul Egan, CFO - Ciaran Egan, and Director of European Operations - Fionn Stakelum, all participated in deliberations regarding executive officer compensation. During fiscal year 2009, none of our executive officers served on the compensation committee (or its equivalent) or board of directors of another entity whose executive officer served on our Board of Directors.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, AND RELATED STOCKHOLDER MATTERS.

The following tables set forth information regarding the beneficial ownership of shares of our Common Stock and Series A Preferred Stock by (i) all stockholders known to the us to be beneficial owners of more than 5% of the outstanding stock; and (ii) all directors, executive officers, and our key employees, individually and as a group. As of October 13, 2009 there were 485,452,663 shares (post reverse-split) of Common Stock issued and outstanding, and 1,000,000 shares of Series A preferred stock outstanding, each share of which is convertible into 0.57 shares (post reverse-split) of common stock upon the attainment of certain financial goals by the Company (which have not occurred).

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	Class of
Name	Security	Shares		% of class
Pendle Properties Ltd.	Common		100,000,000		20.6	%
Ragnall House No. 18, Peel Road
Douglas, Isle of Man, IMI 4L2Z

Paul Egan (1)	Common		51,389,364		11.3	%
Wicklow Enterprise Centre
The Murrough, Wicklow Town Co.
Wicklow, Republic of Ireland

Ciaran Egan	Common		37,421,360		8.2	%
Wicklow Enterprise Centre
The Murrough, Wicklow Town Co.
Wicklow, Republic of Ireland

Fionn Stakelum	Common		10,385,714		2.3	%
Wicklow Enterprise Centre
The Murrough, Wicklow Town Co.
Wicklow, Republic of Ireland

Killian McGrath	Common		1,000,067		0.2	%
Wicklow Enterprise Centre
The Murrough, Wicklow Town Co.
Wicklow, Republic of Ireland

All Directors & officers	Common		100,196,505		22.1	%
as a group (4 persons)

(1) 1,000,000 shares of Series A Preferred Stock are not included since they are not convertible until the Company attains certain financial goals, which have not been achieved.

	Class of
Name	Security	Shares		% of class
Paul Egan	Preferred		1,000,000		100.0	%
Wicklow Enterprise Centre	Series A
The Murrough, Wicklow Town Co.
Wicklow, Republic of Ireland

Ciaran Egan	Preferred		-		0.0	%
Wicklow Enterprise Centre	Series A
The Murrough, Wicklow Town Co.
Wicklow, Republic of Ireland

Fionn Stakelum	Preferred		-		0.0	%
Wicklow Enterprise Centre	Series A
The Murrough, Wicklow Town Co.
Wicklow, Republic of Ireland

Killian McGrath	Preferred		-		0.0	%
Wicklow Enterprise Centre	Series A
The Murrough, Wicklow Town Co.
Wicklow, Republic of Ireland

All Directors & officers	Preferred		1,000,000		100.0	%
as a group (4 persons)	Series A

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Securities Authorized for Issuance under Equity Compensation Plans

We have adopted four equity compensation plans (none of which have been approved by our shareholders):

(a) Directors and Consultants Retainer Stock Plans

On October 25, 2001, the Company adopted a Non-Employee Directors and Consultants Retainer Stock Plan (the Company adopted Amendment No. 4 to this plan on December 20, 2004). The purposes of the plan are to enable the Company to promote the interests of the company by attracting and retaining non-employee directors and consultants capable of furthering the business of the Company and by aligning their economic interests more closely with those of the Company’s shareholders, by paying their retainer or fees in the form of shares of common stock. A total of 25,000,000 shares (post reverse-split) of common stock have been registered under this plan as a result of Form S-8’s filed with the SEC. Through June 30, 2009, the Company had issued all 25,000,000 shares (post reverse split) of common stock under this plan.

On February 1, 2007, the Company adopted the 2007 Directors and Consultants Stock Plan, authorizing an additional 11,666,667 shares (post reverse-split) of common stock for the same purposes as the Non-Employee Directors and Consultants Retainer Stock Plan. On April 17, 2008, the Company registered an additional 11,666,667 shares (post reverse-split) of common stock under the 2007 Directors and Consultants Stock Plan. During the year ended June 30, 2009, the Company transferred an additional 100,000,000 shares (post reverse-split) of common stock into this plan from the 2007 Stock Incentive Plan (see below). During the year ended June 30, 2009, the Company issued a total of 85,165,362 shares (post reverse-split) of common stock under this plan and reserved an additional 1,009,757 shares (post reverse-split) for the exercise of options. At June 30, 2009, there was an aggregate of 35,074,212 shares (post reverse-split) of common stock available for issuance under the 2007 Directors and Consultants Stock Plan

(b) Stock Incentive Plans

On October 25, 2001, the Company adopted a Stock Incentive Plan (the company adopted Amendment No. 3 to this plan on December 20, 2004). This plan is intended to allow directors, officers, employees, and certain non-employees of the Company to receive options to purchase company common stock. The purpose of this plan is to provide these persons with equity-based compensation incentives to make significant and extraordinary contributions to the long-term performance and growth of the company, and to attract and retain employees. A total of 23,333,333 shares (post reverse split) of common stock have been registered under this plan under Form S-8’s filed with the SEC. Options granted under this plan are to be exercisable for a period of ten years from the grant date at whatever price is established by the board of directors, in its sole discretion, on the date of the grant. Through June 30, 2009, the Company had issued all 23,333,333 shares (post reverse split) of common stock under this plan.

On February 1, 2007, the Company adopted the 2007 Stock Incentive Plan, authorizing an additional 11,666,667 shares (post reverse-split) of common stock for the same purposes as the Stock Incentive Plan. The Company has since registered the following additional shares of common stock under the 2007 Stock Incentive Plan; on April 17, 2008, the Company registered 11,666,667 shares (post reverse-split); on December 4, 2008, the Company registered an additional 50,000,000 shares (post reverse-split); on April 1, 2009, the Company registered an additional 50,000,000 shares (post reverse-split); and on October 13, 1009, the Company registered an additional 50,000,000 shares (post reverse-split) for a total of 196,666,667 shares (post reverse split) registered under this plan. The Company has transferred 100,000,000 of these shares (post reverse-split) to the 2007 Directors and Consultants Retainer Stock Plan (see above). During the year ended June 30, 2009, the Company issued 31,879,231 shares (post reverse-split) of common stock under this plan and reserved an additional 358,333 shares (post reverse-split) for the exercise of options. At June 30, 2009, there is an aggregate of 38,842,375 shares (post reverse-split) of common stock available for issuance under the 2007 Stock Incentive Plan.

Equity Compensation Plan Information As of June 30, 2009
Plan Category	Number of Securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average Exercise price of outstanding options, warrants and rights ($)	Number of Securities (post reverse-split) remaining available for future issuance under equity compensation plans (excluding securities reflected in first column)
Equity Compensation Plans approved by security holders	None	None	None
Equity Compensation Plans not approved by security holders	(1) None
Equity Compensation Plans not approved by security holders	(2) None
	(3)			35,074,212
	(4)			38,842,375

Total

(2) 2001 Stock Incentive Plan

(3) 2007 Directors and Consultants Stock Plan

(4) 2007 Stock Incentive Plan

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Certain Relationships and Related Transactions

Other than as set forth below, during the fiscal year ended June 30, 2009 there have been no relationships, transactions, or proposed transactions to which we were or are to be a party, in which any of the directors, executive officers, or 5% or greater shareholders (or any immediate family thereof) had or is to have a direct or indirect material interest.

(a) At June 30, 2009 and 2008, the Company owed Paul Egan the amount of $0 and $317,385, respectively, in accrued salary.

(b) At June 30, 2009 and 2008, the Company owed Paul Egan the amount of $0 and $217,613, respectively, for cash advances he had made to the Company, plus an additional $0 and $9,179, respectively, for interest due on these advances.

(c) At June 30, 2009 and 2008, the Company owed Paul Egan the amount of $6,441 and $30,786, respectively, in accrued car allowance.

(d)At June 30, 2009 and 2008, the Company owed Ciaran Egan the amount of $80,396 and $147,123, respectively, in accrued salary.

(e) At June 30, 2009 and 2008, the Company owed to Ciaran Egan the amount of $48,971 and $19,268, respectively, for cash advances made to the Company; as well as $4,969 and $2,069, respectively, for interest on these advances.

(f) At June 30, 2009 and 2008, the Company owed Ciaran Egan the amount of $52,669 and $30,786, respectively, in accrued car allowance.

(g) The Company issued to Margaux Investment Management Group, a company controlled by Carl Hessel, a Director, 833,334 shares (post reverse-split) of common stock with a fair value of $125,000. Mr. Hessel resigned as a Director effective on April 2, 2009.

Policies and Procedures for Related Party Transactions

The Company conducts an appropriate review of all related party transactions that are required to be disclosed pursuant to Regulation S-K, Item 404 for potential conflict of interest situations on an ongoing basis and all such transactions must be disclosed to and approved by the entire Board of Directors of the Company.

Director Independence

Our Board of Directors is currently composed of four directors, of whom Killian McGrath would qualify as an independent director based on the definition of independent director set forth in Rule 4200(a)(15) of the Nasdaq Marketplace rules. Because our common stock is traded on the NASD OTC Electronic Bulletin Board, which is not a securities exchange, we are not subject to corporate governance rules that require that a board of directors be composed of a majority of independent directors.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit Fees

The aggregate fees billed for each of the last two fiscal years for professional services rendered by RBSM LLP for the audit of our annual financial statements, and review of financial statements included in our Form 10-QSB's: 2009: $174,870; and 2008: $163,091.

Audit-Related Fees

The aggregate fees billed in each of the last two fiscal years for assurance and related services by RBSM LLP that are reasonably related to the performance of the audit or review of our financial statements and are not reported under Audit Fees above: 2009: $7,000 and 2008: $6,362.

Tax Fees

The aggregate fees billed in each of the last two fiscal years for professional services rendered by RBSM LLP for tax compliance, tax advice, and tax planning: $0.

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All Other Fees

The aggregate fees billed in each of the last two fiscal years for products and services provided by RBSM LLP, other than the services reported above: $0.

Pre-Approval of Services by Audit Committee

Our policy is to have the audit committee pre-approve all audit and permissible non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent auditors and management are required to periodically report to the audit committee regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date. The audit committee may also pre-approve particular services on a case-by-case basis. All services performed by our independent auditors in fiscal 2009 and fiscal 2008 were approved in accordance with the audit committee’s pre-approval policies.

PART IV

ITEM 15. EXHIBITS

Exhibits included or incorporated by reference in this document are set forth in the Exhibit Index.

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	Rahaxi, Inc.

Date: November 13, 2009	By:	/s/ Paul Egan
		President and Chief Executive Officer

KNOWN BY ALL PERSONS THESE PRESENTS, that each person whose signature appears below constitutes and appoints Paul Egan and Ciaran Egan, or any one of them, their attorneys-in-fact and agents with full power of substitution and re-substitution, for him and his name, place and stead, in any and all capacities, to sign any or all amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the foregoing, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: November 13, 2009

/s/ Paul Egan

Paul Egan, President, Chief Executive Officer (Principal Executive

Officer), and Director

Date: November 13, 2009

/s/ Ciaran Egan

Chief Financial Officer, Secretary and Treasurer (Principal Financial

and Accounting Officer) and Director

Date: November 13, 2009

/s/ Fionn Stakelum

Fionn Stakelum, Director

Date: November 13, 2009

/s/ Killian McGrath

Killian McGrath, Director

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EXHIBIT INDEX

Number	Description
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)

3.7	Bylaws, as amended June 16, 2008 (incorporated by reference to Exhibit 3.1 of Form 8-K filed on June 18, 2008)

3.8	Certificate of Amendment to the Articles of Incorporation dated September 21, 2009 (incorporated by reference to Exhibit 3.1 of Form 8-K filed September 25, 2009).

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

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

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

4.4	Form of Option to Purchase Shares of Common Stock, dated February 21, 2005 (incorporated by reference to Exhibit 4.1 of the Form 8-K filed on May 12, 2005).

4.5	2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of the Form 8-K filed on February 1, 2007)

4.6	2007 Stock Incentive Plan, as amended April 15, 2008 (incorporated by reference to Exhibit 10.1 of the Form 8-K filed on April 17, 2008)

4.7	Form of Stock Option Award Agreement under 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 of the Form 8-K filed on April 17, 2008)

4.8	2007 Directors and Consultants Stock Plan (incorporated by reference to Exhibit 10.3 of the Form 8-K filed on February 1, 2007)

4.9	Form of Stock Agreement Award under 2007 Directors and Consultants Stock Plan (incorporated by reference to Exhibit 10.4 of the Form 8-K filed on February 1, 2007)

4.10	2007 Directors and Consultants Stock Plan, as amended April 15, 2008 (incorporated by reference to Exhibit 10.1 of the Form 8-K filed on April 17, 2008)

4.11	Certificate of Designation (Series A), dated June 9, 2005 (incorporated by reference to Exhibit 4.1 of the Form 8-K filed on October 20, 2005).

4.12	Certificate of Designation (Series B), dated June 9, 2005 (incorporated by reference to Exhibit 4.2 of the Form 8-K filed on October 20, 2005).

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Number		Description
10.1 *	Employment Agreement between the Company and Angel Pacheco, dated April 1, 2005 (incorporated by reference to Exhibit 10 of the Form 8-K filed on May 10, 2005)

10.2	Lease Agreement dated December 13, 2006 for office space in Helsinki, Finland (incorporated by reference to Exhibit 10.7 of the Form 10-KSB filed on September 28, 2007)

10.3 *	Consulting Agreement with Donna Hessel dated July 9, 2007 (incorporated by reference to Exhibit 10.1 of the Form 10-Q filed on November 19, 2007)

10.4 *	Employment Agreement between the Company and Paul Egan, dated May 29, 2007 (incorporated by reference to Exhibit 10.1 of the Form 8-K filed on June 4, 2008).

10.5 *	Employment Agreement between the Company and Ciaran Egan, dated May 29, 2007 (incorporated by reference to Exhibit 10.2 of the Form 8-K filed on June 4, 2008).

10.6 *	Consulting Agreement with Margaux Investment Management Group, S.A. dated August 15, 2008 (filed herewith)

10.7 *	Option Agreement between the Company and Paul Egan, dated June 18, 2008 (filed herewith)

10.8 *	Option Agreement between the Company and Ciaran Egan, dated June 18, 2008 (filed herewith)

21	Subsidiaries of the Company (filed herewith).

23	Consent of Independent Registered Public Accounting Firm (filed herewith).

24.1	Power of attorney (included in signature page).

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

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

32	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2003 (furnished herewith).

* Indicates a management contract or compensatory plan or arrangement

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WASHINGTON, D.C. 20549

FINANCIAL STATEMENTS

JUNE 30, 2009 AND 2008

FORMING A PART OF ANNUAL REPORT

PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934

RAHAXI, INC.

(FORMERLY FREESTAR TECHNOLOGY CORPORATION)

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RAHAXI, INC.

(FORMERLY FREESTAR TECHNOLOGY CORPORATION)

INDEX TO FINANCIAL STATEMENTS

	Page

Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets at June 30, 2009 and 2008	F-2
Consolidated Statements of Operations and Comprehensive Loss for The Years Ended June 30, 2009 and 2008	F-3
Consolidated Statements of Deficiency in Stockholders' Equity for The Two Years Ended June 30, 2009	F-4 to F-6
Consolidated Statements of Cash Flows for The Years Ended June 30, 2009 and 2008	F-7
Notes to Consolidated Financial Statements	F-8 to F-27

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

Rahaxi, Inc.

(Formerly Freestar Technology Corporation)

We have audited the accompanying consolidated balance sheets of Rahaxi, Inc. (the "Company") as of June 30, 2009 and 2008 and the related consolidated statements of operations and comprehensive loss, deficiency in stockholders' equity, and cash flows for each of the two years in the period ended June 30, 2009. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based upon our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2009 and 2008, and the results of its operations and its cash flows for each of the two years in the period ended June 30, 2009 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1, the Company is experiencing difficulty in generating sufficient cash flow to meet it obligations and sustain its operations, which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to this matter are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/RBSM LLP

New York, New York

November 13, 2009

F-1

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RAHAXI, INC.

(FORMERLY FREESTAR TECHNOLOGY CORPORATION)

CONSOLIDATED BALANCE SHEETS

	June 30,			June 30,
ASSETS	2009			2008

Current assets:
Cash and cash equivalents	$	345,842		$	692,802
Accounts receivable, net of allowance for doubtful accounts of $87,113
and $91,483 at June 30, 2009 and 2008, respectively (note 3)		612,463			724,944
Other current assets (note 4)		136,585			143,482
Inventory (note 5)		562,875			579,030

Total current assets		1,657,765			2,140,258

Property, plant, and equipment, net of accumulated depreciation and
amortization of $328,119 and $286,240 at June 30, 2009 and
2008, respectively (note 6)		84,766			165,990
Customer relationships and contracts, net of accumulated amortization of
$1,468,333 and $1,158,413 at June 30, 2009 and 2008, respectively (note 7)		1,480,916			1,790,836

Total assets	$	3,223,447		$	4,097,084

LIABILITIES AND (DEFICIENCY IN) STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued expenses (note 8)	$	4,132,127		$	3,648,224
Notes payable, current portion (note 9)		50,000			-
Convertible notes payable, current portion (note 9)		611,000			-
Due to related parties (note 11)		193,446			774,209
Deferred revenue		246,341			243,063

Total current liabilities		5,232,914			4,665,496

Long-term portion of notes payable		457,419

Total Liabilities		5,690,333			4,665,496

Commitments and contingencies
Minority interest		532,785			476,528
(Deficiency In) Stockholders' Equity: (notes 14, 15, 16, 17)
Convertible preferred stock, series A, $0.001 par value, 1,000,000
shares authorized, issued and outstanding		1,000			1,000
Convertible preferred stock, series B, $0.001 par value, 4,000,000 shares
Shares authorized; no shares issued and outstanding at June 30, 2009 and 2008		-			-

Additional paid-in capital - preferred stock		432,058			432,058
Common stock, $0.001 par value, 500,000,000 shares authorized;
454,312,663 and 125,805,444 shares issued and outstanding
at June 30, 2009 and 2008, respectively		454,312			125,805
Additional paid-in capital - common stock		110,720,243			95,702,395
Common stock subscriptions receivable		(25,620	)		(1,131,590	)
Common stock subscribed		660,777			1,195,457
Accumulated deficit		(115,552,958	)		(97,569,812	)
Accumulated other comprehensive gain		310,517			199,747

Total (deficiency in ) stockholders' equity		(2,999,671	)		(1,044,940	)

Total liabilities and (deficiency in ) stockholders' equity	$	3,223,447		$	4,097,084

The accompany notes form an integral part of these consolidated financial statements.

F-2

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RAHAXI, INC.

(FORMERLY FREESTAR TECHNOLOGY CORPORATION)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE YEARS ENDED JUNE 30, 2009 AND 2008

	For the Year			For the Year
	Ended			Ended
	June 30,			June 30,
	2009			2008

Revenue
Transaction processing	$	1,915,247		$	2,076,309
Consulting services		1,912,364			2,904,708
Hardware and related		1,397,549			1,278,690
Total revenue		5,225,160			6,259,707

Cost of revenue
Transaction processing		1,290,287			2,313,929
Consulting services		1,151,275			2,146,766
Hardware and related		637,978			834,950
Total cost of sales		3,079,540			5,295,645

Gross Profit		2,145,620			964,062
Operation expenses:

Impairment of intangible assets		-			4,086,502
Selling, general and administrative expenses		18,863,958			19,737,217
Total operating expenses		18,863,958			23,823,719

Loss from operations		(16,718,338	)		(22,859,657	)

Other income (expenses):
Financing cost		(1,131,590	)		-
Additional cost of acquisition		-			(192,555	)
Interest income/(expense)		(124,372	)		(47,374	)

Loss before income taxes and minority interest in subsidiaries		(17,974,300	)		(23,099,586	)

Income taxes		892			11,460

Minority interest in net loss of subsidiaries		7,954			39,855

Net Loss		(17,983,146	)		(23,150,901	)

Other - Comprehensive income (loss): Gain (Loss) on foreign exchange		110,770			108,352

Comprehensive loss	$	(17,872,376	)	$	(23,042,549	)

Loss per share - basic and diluted	$	(0.08	)	$	(0.24	)

Weighted average shares outstanding - basic		217,950,637			96,859,088

Weighted average shares outstanding - diluted		217,950,637			99,430,517

The accompany notes form an integral part of these consolidated financial statements.

F-3

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RAHAXI, INC.

(FORMERLY FREESTAR TECHNOLOGY CORPORATION)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE TWO YEARS ENDED JUNE 30, 2009

	Preferred stock													Common Stock
	Series A				Series B
	Shares		Amount		Shares			Amount			Additional paid-in capital			Shares		Amount		Additional paid-in capital		Common stock Subscribed			Subscription receivable			Accumulated deficit			Accumulated Other Comp Inc ( Loss)		Total Shareholders Deficit


Balance at June 30, 2007		1,000,000	$	1,000		2,000,000		$	2,000		$	2,890,058			77,927,817	$	77,928	$	75,024,033	$	2,600,014		$	(600,000	)	$	(74,418,911	)	$	91,395	$	5,667,517

Shares issued to consultants for services		-		-		-			-			-			9,989,833		9,990		4,549,266		-			-			-			-		4,559,256

Fair value of options granted to consultants		-		-		-			-			-			-		-		3,782,955		-			-			-			-		3,782,955

Options exercised by consultants for cash		-		-		-			-			-			15,238,376		15,238		2,793,063		(1,844	)		-			-			-		2,806,457

Options exercised, not yet paid		-		-		-			-			-			3,106,667		3,107		276,493		-			(96,590	)		-			-		183,010

Options exercised, shares not issued		-		-		-			-			-			-		-		-		447,287			-			-			-		447,287

Shares issued to employees for services		-		-		-			-			-			950,000		950		309,600		-			-			-			-		310,550

Shares issued for conversion of preferred stock		-		-		(2,000,000	)		(2,000	)		(2,458,000	)		2,855,714		2,856		2,457,144		-			-			-			-		(0	)

Shares issued pursuant to financing transaction, previously paid		-		-		-			-			-			4,333,333		4,333		2,595,667		(2,600,000	)		-			-			-		0

Shares sold for cash in financing transaction		-		-		-			-			-			833,333		833		499,167		-			-			-			-		500,000

Shares issued pursuant to financing transaction, not yet paid		-		-		-			-			-			2,500,000		2,500		1,497,500		-			(1,500,000	)		-			-		-

F-4


Cash received for shares previously issued in financing transaction	-	-	-	-	-	-	-	-		-	465,000	-		-	465,000

Shares sold for cash	-	-	-	-	-	266,667	267	39,733		-	-	-		-	40,000

Shares issued to Director as compensation	-	-	-	-	-	766,667	767	302,233		-	-	-		-	303,000

Shares issued to officer as compensation	-	-	-	-	-	6,666,667	6,667	993,333		-	-	-		-	1,000,000

Shares to be issued to officer as compensation	-	-	-	-	-	-	-	-		750,000	-	-		-	750,000

Options issued for officer compensation	-	-	-	-	-	-	-	268,538		-	-	-		-	268,538

Amortization of deferred compensation	-	-	-	-	-	-	-	599,770		-	-	-		-	599,770

Amortization of unearned compensation	-	-	-	-	-	-	-	121,701		-	-	-		-	121,701

Shares issued for acquisition of PLC	-	-	-	-	-	370,370	370	192,185		-	-	-		-	192,555

Cancellation of shares issued for subscription receivable	-	-	-	-	-	-	-	(600,000	)	-	600,000	-		-	-

Adjust number of shares issuable to officer for conversion of preferred shares in prior period	-	-	-	-	-	-	-	13		-	-	-		-	13

Loss for the twelve months ended June 30, 2008	-	-	-	-	-	-	-	-		-	-	(23,150,901	)	108,352	(23,042,549	)

F-5


Balance at June 30, 2008	1,000,000	$	1,000	-	$	-	$	432,058	125,805,444		$	125,806		$	95,702,394		$	1,195,457		$	(1,131,590	)	$	(97,569,812	)	$	199,747	$	(1,044,940	)

Common stock returned for cancellation	-		-	-		-		-	(1,333,333	)		(1,333	)		1,333			-			-			-			-		(0	)

Common stock sold for cash	-		-	-		-		-	122,000,000			122,000			1,218,000			(100,000	)		-			-			-		1,240,000

Common stock issued as collateral for notes payable	-		-	-		-		-	9,062,000			9,062			(9,062	)		-			-			-			-		-

Options exercised by consultants for cash	-		-	-		-		-	26,679,231			26,679			1,163,692			(702,000	)		(25,620	)		-			-		462,751

Shares issued to employees for services	-		-	-		-		-	3,350,000			3,350			315,350			-			-			-			-		318,700

Shares issued to consultants for services	-		-	-		-		-	84,455,121			84,456			6,270,941			-			-			-			-		6,355,397

Shares issued to Officers and Directors as compensation	-		-	-		-		-	82,493,333			82,493			4,155,207			(750,000	)		-			-			-		3,487,700

Shares issued for rent payment	-		-	-		-		-	1,800,000			1,800			118,200			-			-			-			-		120,000

Fair value of options granted to consultants	-		-	-		-		-	-			-			1,784,188			-			-			-			-		1,784,188

Options exercised, shares not issued	-		-	-		-		-	-			-			-			713,057			-			-			-		713,057

Common stock subscribed and issued, cash not received	-		-	-		-		-	-			-			-			304,263			-			-			-		304,263

Write off of subscription receivable	-		-	-		-		-	-			-			-			-			1,131,590			-			-		1,131,590

Rounding due to reverse-split	868		-	-		-		-	-			-			-			-			-			-			-		-

Loss for the year ended June 30, 2009	-		-	-		-		-	-			-			-			-			-			(17,983,146	)		110,770		(17,872,376	)

Balance at June 30, 2009	1,000,000	$	1,000	-	$	-	$	432,058	454,312,663		$	454,312		$	110,720,243		$	660,777		$	(25,620	)	$	(115,552,958	)	$	310,517	$	(2,999,671	)

The accompany notes form an integral part of these consolidated financial statements.

F-6

Table of Contents

RAHAXI, INC.

(FORMERLY FREESTAR TECHNOLOGY CORPORATION)

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED JUNE 30, 2009 AND 2008

	For the Year			For the Year
	Ended			Ended
	June 30,			June 30,
	2009			2008
Cash flows used for operating activities:
Net loss	$	(17,983,146	)	$	(23,150,901	)
Minority interest in income loss of subsidiary		7,954			39,855
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Bad debt expense		(30,237	)		51,203
Depreciation and amortization		374,884			807,047
Non-cash financing cost		1,131,590			-
Impairment of intangible assets		-			4,086,502
Non-cash compensation		11,945,986			11,695,785

Changes in assets and liabilities:
(Increase) decrease in assets
Accounts receivable		226,511			62,451
Inventory		80,585			223,040
Other current assets		136,462			(25,058	)
Increase (decrease) in liabilities
Accounts payable and accrued expenses		122,597			1,758,764
Deferred revenue		3,278			155,166
Due to related parties		(580,763	)		582,225

Total adjustments		13,418,847			19,436,980

Net cash used by operating activities		(4,564,299	)		(3,713,921	)

Cash flows provided by (used for) investing activities:
Purchase of fixed assets		(3,236	)		(50,464	)
Purchase of software and capitalized software cost		-			(420,125	)
Net cash used by investing activities		(3,236	)		(470,589	)

Cash flows provided by (used for) financing activities:
Proceeds from sale of common stock		1,544,263			1,002,742
Proceeds from issuance of notes payable		1,118,419			-
Proceeds from exercise of stock options/warrants		1,175,806			3,439,011
Cash contributed by officer of subsidiary		35,857			252,721

Net cash provided by financing activities		3,874,345			4,694,474

Net increase (decrease) in cash and cash equivalents		(693,190	)		509,964

Foreign currency translation adjustments		346,230			(283,570	)

Cash and cash equivalents, beginning of period		692,802			466,408
Cash and cash equivalents, end of period	$	345,842		$	692,802



Supplemental disclosure of cash flow information:

Interest paid	$	-		$	-

Income tax paid	$	892		$	31,655

Common stock issued to consultants for services	$	6,355,398		$	4,559,256

Common stock issued to employees as compensation	$	318,700		$	310,550

Adjustment of unearned common stock for the period

Rahaxi, Inc. 10-K