Replies to post #78 on Freestar Technologies (fka FSTI)

[SKI4FUN2]

Clean shell?????


ITEM 1. LEGAL PROCEEDINGS.

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

By letter dated November 1, 2000, the staff of the Securities and
Exchange Commission has informed the Registrant that it has completed
its investigation, and intends to recommend to the Commission that a
civil action in federal court be taken against the Registrant alleging
violations of Section 17(a) of the Securities Act of 1933, Sections
10(b), 12(g) 13(a), 13(b)(2)(A) and 13(b)((2)(b) of the Securities
Exchange Act of 1934, and Rules 10b-5, 12b-20, 13a-1, 13a-11 and 13a-
13 thereunder. The staff believes that, among other things, the
Registrant made false or misleading statements in filings with the
Commission during calendar year 2000 that the Registrant had purchased
assets in Costa Rica worth $5.18 million and that later sold those
assets. The staff also plans to recommend that the Commission seek
injunctive relief, but not a civil penalty or other collateral
remedies. The Registrant and the staff are in discussions regarding
the foregoing. The Registrant anticipates that it will resolve the
foregoing proposed action by entering into a consent to an order,
without admitting or denying the allegations, that it be permanently
enjoined from violating any of the foregoing sections of the
Securities Act, and the Exchange Act and rules thereunder.

It should be noted that the foregoing allegations pertain to
conduct by former officers and directors of the Registrant. Current
management of the Registrant has retained counsel to vigorously pursue
state and federal legal action against those individuals and others
that it believes have caused damage to the Registrant.