<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                                  ANNUAL REPORT

        Under Section 13 or 15(d) of the Securities Exchange Act of 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                           Commission File No. 0-30124

                       SONUS COMMUNICATION HOLDINGS, INC.
                             A Delaware corporation
                   IRS Employer Identification No. 54-1939577
                1600 Wilson Blvd, Suite 1008, Arlington, VA 22209
                           Telephone - (703) 527- 8860

           Securities registered pursuant to Section 12(b) of the Act:
                                      NONE

           Securities registered pursuant to Section 12(g) of the Act:
                              Title of each class:
                          Common Stock, $.001 par value

Check whether the issuer (1) filed all reports required to be filed by Section
13 of 15(d) of the Exchange Act during the past 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. Yes [X] No [ ]

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in a definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB [ ].

          Issuer's revenues for its most recent fiscal year $1,704,056.

As of March 15, 2000 the aggregate market value of the Company's voting Common
Stock held by non-affiliates of the Company was approximately $26,776,000.

As of March 15, 2000 there were 7,098,071 shares of the Registrant's Common
Stock, $.0001 par value outstanding.


<PAGE>   2




                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
Part I
<S>        <C>                                                                              <C>
            Item  1.  Description of Business.................................................1

            Item  2.  Property................................................................6
            Item  3.  Legal Proceeding........................................................6
            Item  4.  Submission of Matters to a Vote of Security Holders.....................6

Part II

            Item  5.  Market for the Registrant's Common Equity and Related Matters...........6
            Item  6.  Management's Discussion and Analysis of Financial Condition
                      and Results of Operation................................................7
            Item  7.  Financial Statements...................................................12

            Item  8.  Changes and Disagreements with Accountants on Accounting
                      and Financial Disclosure...............................................13

Part III

            Item  9.  Directors and Executive Officers of the Registrant.....................13
            Item 10.  Executive Compensation.................................................16
            Item 11.  Security Ownership of Certain Beneficial Owners and Management.........19
            Item 12.  Certain Relationships and Related Transactions.........................23
            Item 13.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.......25
</TABLE>




<PAGE>   3


                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

       We are a global telecommunications company that provides facilities based
carrier grade voice over IP(Internet protocol) to countries around the world for
wholesale customers. With the acquisition of Empire One Telecommunications
("EOT") announced in November 1999, we plan to extend our services into the
retail market place beginning in the second quarter of 2000. While we expect to
consummate the acquisition of EOT in late March or early April, 2000, the merger
is subject to several conditions. We can provide no assurances that we will
successfully complete the transaction within the time frame expected or at all.

       Our current operations are conducted through Sonus Communications, Inc.
("Sonus"), a Virginia corporation and wholly owned subsidiary of Sonus
Communications Holdings, Inc. (the "Company"). The Company was incorporated in
the State of Delaware in April 1999 and Sonus was incorporated in the
Commonwealth of Virginia in May, 1995. The retail operations will be conducted
through a new subsidiary that will be called Empire One Telecommunications after
the completion of the acquisition.

       Sonus is an FCC licensed telecommunications company that uses the public
internet as well as private internet networks to transport international voice
telephone calls. We are among the first of a growing number of service providers
to offer telephone services that utilize the internet and private internet
networks and are also among the first carriers with internet based telephone
service regarded as equivalent to that of the major international long-distance
carriers such as AT&T. We implement leading edge technology in our ongoing
effort to develop and deploy a global internet communications network providing
telephone, facsimile and data services.

       Our current customers are U.S. and foreign international long-distance
carriers and pre-paid calling card companies that use our network to send their
commercial telephone traffic, including telephone, facsimile, and internet
service through the lowest cost route to international destinations.

       With the addition of EOT, our principal strategy will be to focus our
resources on the development of the retail ethnic communities within the United
States served by EOT, and to expand into new ethnic markets within the U.S. EOT
currently serves residents mostly within the Chinese and Irish communities with
the largest concentration of those customers in the New York City area. With our
support, during the first quarter of 2000, EOT began to market its services to
the retail Russian community within New York. In the future, we plan to expand
its services to other ethnic markets and to expand to other U.S. cities.

       Additionally, EOT is developing New York based facilities that will
enable it to provide the higher margin calls within the local New York area for
which fees can be charged ("Intralata" calls). Once operational, EOT will be
able to bypass the current local exchange carrier and offer these calls at a
lower rate. EOT expects its new Intralata capability to enhance its
competitiveness and its margins because it will no longer have to use a third
party to provide such service.




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       The strategy for the international long distance telecommunications
network will be to expand the current network opportunistically into locations
where there are reasonable margins and volumes. Only on a profitable basis will
we attempt to grow our customer base, expand the number of markets served and
increase capacity in the markets we currently serve. We plan to pursue emerging
geographical markets which have been historically under-served. Management has
identified several potential emerging markets that may prove to fit this mold
but can give no assurances that the international long distance network will be
expanded in the foreseeable future.

       In those international markets we enter, we hope to gain share by
offering services of the same quality as major telecommunications carriers at
lower prices than our competitors. The public internet and private internet
networks that we employ are significantly more cost-efficient than the older
technology networks currently employed by both traditional long-distance
carriers that use circuit switching and the next-generation telecommunication
companies with networks that are based on "point-to-point" leased bandwidth. We
rely on technologies and techniques aimed at driving down the costs of our
international routing, including internet routing, intelligent switching and a
refile strategy. By using the internet, we gain a significant cost advantage
while being able to provide carrier quality services.

COMPETITION

       Competition for wholesale customers is primarily based on price and the
type and quality of service offered. Our ability to market our long-distance
resale services depends upon the existence of spreads between the rates offered
by us and those offered by the international exchange carriers with whom we
compete as well as those from whom we obtain service. International exchange
carriers consist of long-distance providers and other companies that provide
long-distance access. Our ability to compete in the long-distance
telecommunications market also depends, in part, on our ability to obtain
advantageous rates from international exchange carriers, and on the ability of
international exchange carriers to carry the calls that we route through them to
our networks.

       The markets in which we operate are extremely competitive. Several next
generation telecommunication companies offer internet-based long-distance
service at a substantial discount to traditional commercial grade service. Many
of our competitors are significantly larger and have substantially greater
market presence and financial, technical, operational, marketing and other
resources and experience. We compete with:

              -      international exchange carriers that provide long-distance
                     access and other long-distance providers, including large
                     carriers such as AT&T, MCI/WorldCom and Sprint,

              -      foreign government-owned telephone monopolies,

              -      other marketers of international long-distance,

              -      wholesale providers of international long-distance
                     services,

              -      alliances for providing carrier services such as "Global
                     One", "Concert" (an alliance between British Telecom Plc
                     and MCI) and "Uniworld" (an alliance between AT&T and
                     Unisource-Telecom Netherlands, Telia AB, Swiss Telecom PTT
                     and Telefonica de Espana S.A.),



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              -      new entrants to the international and domestic
                     long-distance market, such as regional telephone operating
                     companies in the United States, who have entered or have
                     announced plans to enter the international long-distance
                     market after recent legislation authorizing entry, and new
                     or expected entrants to the international long-distance
                     market such as RWE AG in Germany and

              -      small resellers and facility-based exchange carriers.

SUPPLIERS AND PROVIDERS

       We are dependent on third-party suppliers of telecommunications and
internet network transmission services for many of our services and do not have
long-term contracts with them. We have three principal suppliers of satellite
services and two principal suppliers of terrestrial and internet circuits. We
are dependent upon our current primary providers of leased-line network capacity
and internet access and upon third-parties to provide telecommunications
services to customers. Our ability to provide quality and reliable
telecommunications services and our ability to expand our network by providing
new voice and data lines is dependent upon the services of telecommunication and
internet service providers such as MCI/WorldCom and local access providers such
as Bell Atlantic.

MAJOR CUSTOMERS

       Currently, we have five primary customers, all of which are resellers of
long distance telephone service for long-distance providers or are themselves
long distance providers. We are dependent on these five customers for nearly all
of our revenues.

PATENTS

       We do not possess any patents, and we do not believe that our business is
dependent upon any patents. We are involved in various licensing arrangements.
Although these licenses are important to our business, we do not believe that
our business is dependent upon any single license or any group of licenses.

REGULATORY ENVIRONMENT

       Sonus is a facilities-based carrier licensed by the Federal
Communications Commission under Section 214 of the Communications Act of 1934.
U.S. domestic interstate long-distance telecommunications services are generally
subject to regulation by the FCC. Intrastate long-distance services are
regulated by state commissions, which have varying requirements. International
telephone services are subject to regulation by both U.S. and foreign
regulators.

       The FCC requires us and other international telephone service providers
to provide service without violating the laws of the countries where we operate.
We are subject to regulations relating to internet telephony in each country
where we maintain our network equipment. Some of the countries in which our
network equipment is located have uncertain and changing regulatory
environments. Local laws and regulations differ among the jurisdictions. The
interpretation and enforcement of these laws and regulations varies and is often
based on the informal views of the local government ministries which, in some
cases, are subject to influence



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<PAGE>   6

by local public telephone companies. In certain of our principal existing and
target markets, there may exist certain laws, regulations or policies that
either prohibit or limit, or could be used to prohibit or limit, certain of our
services.

       The 1996 Telecommunications Act substantially altered the regulatory
framework for the telecommunications industry for domestic and U.S.
international telecommunications services. The 1996 Telecommunications Act
directs the FCC to conduct a variety of rulemaking activities to implement the
Act's requirements. We cannot predict the ultimate effects of this legislation
or the outcome of the FCC rulemaking required by this Act. The legislation does
not impose substantial regulatory burdens on us at present. However, rulemaking
required by the 1996 Telecommunications Act could produce additional regulatory
requirements, including a requirement that we contribute some portion of our
revenues to subsidize mechanisms for universal service. In addition, the
legislation could increase competition and affect interconnections and costs.

       Many of the overseas markets in which we currently market long-distance
telephone services are undergoing dramatic changes as a result of privatization
and deregulation. The European Union has mandated competitive markets for the
European telecommunications industry and the various European countries are at
different stages of opening their telecommunications markets. As a result of
privatization and deregulation, a new competitive environment is emerging in
which major European telephone companies, media companies and utilities are
entering the telecommunications market and forming new alliances which are
radically changing the landscape for domestic and international telephone
services. This new environment, although competitive, has allowed small
companies like us to penetrate new markets and rapidly gain market share.

       The FCC and various state regulatory commissions have not made any formal
determinations regarding the regulatory status of voice telephony services
provided through use of the internet. However, America's Carriers
Telecommunications Association, an association of domestic phone carriers, filed
a petition in March, 1996 with the FCC alleging that providers of internet
telephone software are operating as telecommunications carriers and, as such,
should be subject to the FCC regulatory framework applicable to traditional
telecommunications companies. The petition seeks a declaratory ruling
establishing the FCC's authority over interstate and international
communications using the internet and an order directing that persons providing
internet phone service comply with the regulatory requirements of the
Communication Act of 1934. The petition also urges the FCC to initiate a
rulemaking proceeding to consider rules governing the use of the internet for
the provision of telecommunication services. The FCC has not taken final action
with respect to the petition.

EMPLOYEES

       We have ten employees, all of which are full-time employees. Some of our
employees have entered into employment and other agreements with us. The Company
believes its relations with its employees is good.


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<PAGE>   7

HISTORY

       THE MERGER OF SONUS COMMUNICATIONS, INC. WITH SONUS PARK ACQUISITION,
INC.

       In January 1999, Sonus Communications, Inc. entered into merger
discussions with The Park Group, Limited, a dormant public corporation. In
anticipation of the merger, The Park Group, Limited formed Sonus Park
Acquisition, Inc., a Virginia corporation, as a wholly-owned subsidiary of The
Park Group, Limited, which merged with and into Sonus Communications, Inc. on
March 4, 1999, leaving Sonus Communications, Inc. as the surviving corporation
and a wholly owned subsidiary of The Park Group, Limited. The former
shareholders of Sonus Communications, Inc. received approximately 92% of the
capital stock of The Park Group, Limited in the merger.

       THE MERGER OF SONUS COMMUNICATION HOLDINGS, INC. WITH THE PARK GROUP,
LIMITED.

       On April 7, 1999, The Park Group, Limited organized Sonus Communication
Holdings, Inc. as a Delaware corporation and wholly-owned subsidiary of The Park
Group Limited. On April 16, 1999, Sonus Communication Holdings, Inc. merged with
and into The Park Group, Limited, leaving Sonus Communication Holdings, Inc. as
the surviving corporation following the merger. As a consequence of the merger,
Sonus Communications, Inc. became a wholly-owned subsidiary of Sonus
Communication Holdings, Inc. Shares of The Park Group, Limited were exchanged
for shares of Sonus Communication Holdings, Inc. on a one-for-one basis in the
merger. The sole purpose of the merger was to reincorporate in the State of
Delaware.

       HISTORY OF THE COMPANY'S PREDECESSOR.

       The Park Group, Limited was originally incorporated as American Ventures,
Inc. on January 24, 1986 under the laws of the State of Colorado. American
Ventures, Inc. was formed as a "blind pool," in which investors entrusted
management to apply the offering proceeds to acquire or merge with a suitable
operating company. In August 1986, American Ventures, Inc. closed an initial
public offering of it stock. In February 1987, American Ventures, Inc. acquired
The Park Group, Ltd., a mortgage company, as a wholly owned subsidiary. American
Ventures, Inc. then changed The Park Group, Ltd.'s name to "Park Group Mortgage
Company, Ltd.," and changed its own name to "The Park Group, Ltd." The Park
Group, Limited had been dormant for at least three years prior to the merger
with Sonus Communication Holdings, Inc.

       MERGER WITH EMPIRE ONE TELECOMMUNICATIONS

       In November 1999, the Company entered into a merger agreement with Empire
One Telecommunications, Inc. We have received approvals from the Federal
Communication Commission, the New York State Public Service Commission and other
regulatory agencies, and the shareholders of Empire One Telecommunications, Inc.
have voted to approve the merger. In the event we close the merger, we will
issue 1,065,857 shares of common stock to the current stockholders of Empire One
Telecommunications, Inc. We anticipate that the merger will close before the end
of the first quarter of 2000, but can provide no assurances in that regard.



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<PAGE>   8


ITEM 2.  PROPERTY

       We lease and maintain our corporate headquarters in 2,027 square feet of
office space located at 1600 Wilson Blvd., Suite 1008, Arlington, Virginia
22209. At December 31, 1999, we leased or owned telecommunications equipment
located in Holmdel, New Jersey, New York City, New York, Los Angeles,
California, Shanghai, China and Tbilisi, Georgia. The value of the equipment we
currently own is approximately $721,000. Subsequent to December 31, 1999, we
converted approximately $375,000 owed to the manufacturer of the equipment into
a lease secured by the equipment.

ITEM 3.  LEGAL PROCEEDINGS

       The Company is not a party to any legal proceeding required to be
described in this report.

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

       None

                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS

       Our common stock is traded over-the-counter and quoted on the bulletin
board maintained by NASDAQ under the symbol "SNHD" on a limited and sometimes
sporadic basis. Quoting began in August of 1999. The reported high and low
prices for the common stock are shown below for the indicated periods through
December 31, 1999. The prices presented are the low bid and high ask prices that
represent prices between broker-dealers and do not include retail mark-ups and
mark-downs or any commission to the broker-dealer. The prices do not necessarily
reflect actual transactions. As of March 20, 2000, there were approximately 274
stockholders of record of the common stock.

<TABLE>
<CAPTION>
                                          Closing
                                          -------
                                  Low                  High
<S>                              <C>                  <C>
1999
----
Third Quarter                     1/2                  3
Fourth Quarter                    2 1/4                4 1/2
</TABLE>

RECENT SALES OF UNREGISTERED SECURITIES

       As part of a $2.5 million private offering of our common stock, we sold
an aggregate of 1,851,504 shares of common stock in November 1999 and January
2000 for approximately $2,499,500 to 43 sophisticated individual and corporate
accredited investors, reflecting a $1.35 per share offering price. L. Flomenhaft
& Co., Inc. and Hudson Allen & Co. acted as placement agents in connection with
this offering. Securities were sold in the offering at three separate closings
conducted on November 22, 1999, January 5, 2000 and January 26, 2000. We sold
418,140 shares of common stock on November 22, 1999 for approximately $564,500,
1,088,939



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shares of common stock on January 5, 2000 for approximately $1,470,000, and
344,425 shares of common stock on January 26, 2000 for approximately $465,000.
The placement agents received warrants to purchase 62,720 shares of common stock
at $1.35 per share and $56,449 in cash in connection with the closing on
November 22, received warrants to purchase an aggregate of 143,378 shares of
common stock at $1.35 and $147,000 in cash in connection with the closing on
January 5, 2000 and warrants to purchase an aggregate of 51,664 shares of common
stock and approximately $46,500 in cash in connection with the closing on
January 26, 2000.

       We relied on Section 4(2) of the Act, and on Rule 506 of Regulation D
promulgated thereunder, in issuing the shares in the $2.5 million offering
without registering the offering under the Act. We relied upon representations
and warranties of the investors contained in the subscription agreements entered
into with the private placement investors, to the effect that such investors
were accredited investors and on investor questionnaires completed by such
investors.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

       The following discussion of the financial condition and results of
operations of our company should be read in conjunction with the financial
statements and the notes to those statements and the other financial information
included elsewhere in this Form 10-KSB. The Private Securities Litigation Reform
Act provides a "safe harbor" for forward-looking statements. Certain statements
included in this Form 10-KSB are forward-looking and are based on the Company's
current expectations and are subject to a number of risks and uncertainties that
could cause actual results to differ materially from results expressed or
implied in any forward-looking statements made by, or on behalf of, the Company.
The Company assumes no obligation to update any forward-looking statements
contained herein or that may be made from time to time by, or on behalf of, the
Company.

OVERVIEW

       We are currently a provider of telecommunications services that utilize
the public internet as well as private internet networks. Since we began
offering long distance services in late 1998, our strategy has been to establish
routes into underserved geographic markets such as countries that were formerly
part of the Soviet Union (e.g. Republic of Georgia) and developing countries in
Asia, the Pacific Rim and the Caribbean. This strategy involved establishing a
relationship with a local organization in the destination country that would own
all necessary equipment in that country as well as establish any necessary
working relationships with the local phone company or other companies. More
recently, we have adjusted our strategy and are establishing ourselves both as a
significant provider of "pin-drop" quality voice-over-internet telephone service
to several international markets and as a growing competitive local exchange
carrier providing service to ethnic markets in the U.S.

       As a result of this strategy, we entered into an agreement, which is
expected to close in late March or early April 2000, to acquire Empire One
Telecommunications, Inc., a competitive local exchange carrier located in New
York City focusing on the Chinese community. We expect to use EOT to market to
other ethnic communities such as the Russian communities in the U.S.


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This approach will integrate the existing long distance circuits with local
communications services.

       Since we began offering long distance telecommunications services, we
have incurred net operating losses and expect to incur additional losses for the
foreseeable future, primarily as a result of increased sales and marketing
efforts. As of December 31, 1999, the Company had accumulated net losses of
approximately $2,199,525.

REVENUES

       We began our long distance offerings through a circuit we established
into the Republic of Georgia. We have traditionally sold this capacity to other
telecommunications providers that wholesale the service to carriers within the
United States. Most of the revenue was from these customers sending voice, fax
and other telecommunications that terminated in the Republic of Georgia with
some also being "refiled" to other locations in the former Soviet Union such as
Moscow and St. Petersburg. In addition, we established a relationship with an
internet service provider to service its needs for a circuit from the Republic
of Georgia into the United States. For 1999, 61% of our revenue, or $1,035,000
was generated from telecommunications services carried over this circuit. There
was no revenue from this circuit until the fourth quarter of 1998.

       During the second quarter of 1999, we established a small presence in
China. We learned that we could not continue to provide services on a profitable
basis with the relationships we initially developed. As a result, we generated
only a small amount of revenue before the decision was made to stop providing
services over this route until different relationships could be located. We are
pursuing new relationships and hope to offer services into China again on a
profitable basis during the first half of 2000, but can provide no assurances in
that regard. For 1999, only 8% of our revenue, or $136,000 was recognized from
services terminating in China.

       We established a network circuit in Southwest Asia during the third
quarter of 1999. Due to political turmoil in Southwest Asia, we were not able to
terminate traffic into that region from November 1999 through mid-March, 2000.
While we have re-established our Southwest Asia operations on a limited basis,
we can provide no assurances that our Southwest Asia operations can be fully
restored to earlier levels or that we can maintain the operability of that
circuit. This interruption in the operation of our Southwest Asia circuit could
have a material adverse effect on our revenues and financial condition. As a
result of the locations we target, we expect that events will occur from time to
time that may disrupt our ability to use any individual circuit for
indeterminate periods of time.

       With the acquisition of Empire One, we will focus expansion in the future
on increasing revenues by developing services centered around various ethnic
communities in the United States. These services will include local, long
distance, internet and other communications needs of these various communities.
In addition, we will continue to opportunistically look for international
locations where telecommunications services can be provided on a profitable
basis. Because these will be pursued only as opportunities arise, the timing of
additional network circuits, if any, can not be determined. Such opportunities
may exist in locations as diverse as Cuba, Kazakhstan, Central Africa, or other
countries that are currently underserved.



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<PAGE>   11

      DIRECT OPERATING EXPENSES

      Direct operating expenses consist primarily of network costs associated
with the routing and termination of customers' traffic. These include:

              --     amounts paid to carriers and internet service providers to
                     carry our traffic on both the internet and traditional
                     phone networks,

              --     amounts paid to our international vendors to terminate our
                     traffic at their circuits, and

              --     costs associated with leased lines and satellite routes
                     connecting our circuits directly to the internet or to
                     connect to circuits of our international vendors.

       We expect our direct operating expenses to increase in absolute terms
over time to support our customer base. Some of these costs are fixed while
other costs vary on a per minute basis. Therefore, there may be some volatility
in our direct operating costs as a percentage of revenues, particularly as we
expand our network.

    GENERAL AND ADMINISTRATIVE

       General and administrative expenses consist of salaries of our employees
and associated benefits, rent, travel and professional fees including those of
accountants, lawyers and other business consultants. A portion of our general
and administrative expenses include the costs associated with technical support
and customer service, consisting primarily of the salaries of employees. We
expect technical support and customer support expenses to increase over time to
support new and existing customers and additions to the network. We expect
general and administrative costs to increase to support our growth as we
establish a larger organization to implement our business plan.

       RESULTS OF OPERATIONS

       For the year ended December 31, 1999, we had revenues of $1,704,000
compared to $287,000 for the year ended December 31, 1998. During 1998, we began
installing our network with the first revenues generated from telecommunications
services occurring in the fourth quarter of 1998. Revenues prior to the fourth
quarter of 1998 were mostly from consulting services. As we have focused on
telecommunications services and expanding our network, revenues from consulting
have decreased with no consulting service revenues during 1999. The first
circuit installed was to the Republic of Georgia which began generating revenues
in the fourth quarter of 1998. In 1999, the circuit to the Republic of Georgia
generated 61% of the total revenue.

       During the first quarter of 1999, we began installing the network to
China. This circuit began carrying traffic during the second quarter of 1999.
Since beginning service to China, we have experienced significant declines in
prices due to competitive pressures. As a result, the



                                       9
<PAGE>   12

original circuit to China has become uncompetitive. Consequently, we made the
decision to take the circuit out of service until a new relationship can be
established that will result in a profitable circuit and be competitive in the
marketplace. During 1999, the China circuit generated only 8% of total revenues
with most of that coming during the second quarter.

       At the end of the third quarter, we established a circuit in Southwest
Asia. This circuit has carried telecommunications traffic sporadically since
being established, due to political unrest. We expect the circuit to be
operational again before the end of the second quarter of 2000, although the
revenue from it may be limited. We also expect to add additional circuits in
other locations in the last part of 2000 if the opportunity arises in locations
that can be operated profitably. Most of the focus during 2000 will be in
building the ethnic markets of Empire One in the United States.

       We had direct operating expenses of $1,951,000 for year ended December
31, 1999, compared to direct operating expenses of $268,000 for the year ended
December 31, 1998. These expenses relate to the installation and operation of
the network. For 1999 and 1998, the call termination, satellite utilization fees
and other costs of carrying traffic accounted for 83% and 85%, respectively, of
direct operating expenses with such items as depreciation and equipment
maintenance costs accounting for the remainder of the direct costs.

       General and administrative expenses were $1,237,000 for the 12 months of
1999 compared to $94,000 for the 12 months of 1998. This increase is directly
attributable to the increase in wages since the two founders in 1998 took
minimal salaries based on the time they spent on the business in 1998 as
compared to staffing of nine at December 31, 1999 and all associated costs of
establishing and maintaining an office. Because operations during 1998 were
minimal, the founders spent little time on operations. In addition, we had an
agreement with a third party to provide services on an as needed basis for time
spent on operations. We expect that in order to increase capacity of the current
installed locations and to expand into additional locations, as well as to
obtain the administrative support necessary in connection with being a public
company, a significant investment in both equipment and personnel will be
needed. The result will be to increase operating expenses with no assurance of
any return on investment.

       On March 4, 1999, Sonus Communications Inc. merged with and into Sonus
Park Acquisitions, Inc., a newly formed wholly owned subsidiary of The Park
Group, Limited. Sonus Communications, Inc., which was the surviving entity,
became a wholly owned subsidiary of The Park Group, Limited and the only asset
of The Park Group, Limited. On April 7, 1999, The Park Group, Limited organized
Sonus Communication Holdings, Inc. as a Delaware corporation and a wholly owned
subsidiary of The Park Group, Limited. On April 16, 1999, Sonus Communication
Holdings, Inc. merged with and into The Park Group, Limited leaving Sonus
Communication Holdings, Inc. as the surviving corporation. Shares of The Park
Group, Limited were exchanged for shares of Sonus Communication Holdings, Inc.
on a one-for-one basis. The sole purpose of the merger was to re-incorporate in
Delaware.

       The total merger related costs of $262,000 include $238,000 for costs
related to the Park/Sonus merger consisting of legal fees of approximately
$121,000, investment banking fees of $104,000, and accounting fees and other
miscellaneous fees of $13,000. In addition, we



                                       10
<PAGE>   13

incurred $25,000 for investment banking fees during the third quarter of 1999
related to the acquisition of Empire One. We expect to incur additional
investment banking fees during the first quarter of 2000 due to the merger with
Empire One. It is expected that these fees will be capitalized as part of the
acquisition of Empire One. Please see the Footnotes to Consolidated Financial
Statements for additional information on the mergers.

       As a result of the limited revenue, the increased costs associated with
the expansion and the costs of the merger, we had a net loss of $1,751,000 for
1999. This is compared to a net loss of $81,000 for 1998 when operations were
limited.

LIQUIDITY

       At December 31, 1998, we had cash of $1,000, negative working capital of
$312,000 and negative shareholders' equity of $181,000. During 1999, we have
been successful in completing four separate rounds of financing.

       The first round was completed in January 1999 when we sold 750,000 shares
of our common stock in a private offering realizing net proceeds aggregating
$627,000. In May 1999, we completed the second round by selling $575,000 in
convertible debentures. These Debentures were automatically converted under the
terms of the agreement to common stock with the sale of the Equity Unit offering
in August 1999. The third round of financing consisted of the sale of Equity
Units comprised of one share of our common stock and one warrant exercisable for
one share of common stock at an exercise price of $3.00. We closed the minimum
under the Equity Unit offering in August 1999 by selling 250,000 units thereby
netting $435,000 in cash after investment banking fees and other expenses. The
final round in 1999 was completed in November 1999 with the sale of 418,140
shares of common stock at $1.35 per share, and we realized net proceeds of
$502,000. This final round was the first traunch of a $2.5 million offering and
the remainder of the offering closed in January 2000. See the Footnotes to
Consolidated Financial Statements included in this Form 10-KSB for more details
related to these transactions.

       Even though we have been successful in completing the financings noted
above, prior to the financing completed in January 2000, we had negative working
capital of $219,000 at December 31, 1999 with positive shareholders' equity of
$412,000. As a result, we will need to continue our efforts to raise capital or
find other sources of funds to finance our growth and the continued losses. As
part of this effort, on September 29, 1999, we entered into an equipment leasing
arrangement with our network equipment supplier. The agreement provides for a
total available facility of $2.2 million. Under the arrangement, we leased
$200,000 of network equipment in the third quarter accounted for as a capital
lease. In addition, subsequent to December 31, 1999, the vendor equipment
payable of $365,000 was put under this lease facility thereby providing
additional working capital.

       As noted in the footnotes to the Consolidated Financial Statements, we
signed a merger agreement on November 15, 1999 to acquire Empire One
Telecommunications. The acquisition, when completed, will result in the issuance
of approximately 1,066,000 shares of our common stock in exchange for all the
outstanding common stock of Empire One. Regulatory and



                                       11
<PAGE>   14

shareholder approval was obtained during the first quarter of 2000. In
conjunction with the signing of the merger agreement, we received the first
traunch of the $2.5 million offering noted above.

       In May 1999, we filed a Form 10-SB with the Securities and Exchange
Commission to register our common stock under the Securities Exchange Act of
1934, as amended. The Form 10-SB became effective in July 1999 and our stock
began trading publicly on the NASDAQ over the counter bulletin board in August
1999. Besides the monies we expect to raise in conjunction with the Empire One
acquisition, we believe it will be necessary to continue to raise additional
funds in order to have enough cash to pay for our expected expansion and
continue our operations. With the aid of our investment banker, Hudson Allen &
Co., we are anticipating a round of financing by mid-year of 2000 that is
expected to be a minimum of $5 million and could be significantly higher based
on our operations at the time of the financing, although no assurances can be
provided that such funds can be obtained on terms favorable to us or at all.

       We believe that the proceeds from the sale of debt and equity securities
during 2000, combined with operating revenues, will be sufficient to allow us to
conduct our operations during the fiscal year ending December 31, 2000.

       During 1999, we acquired $589,000 of equipment, including $574,000 for
our network. During 1999, we and our vendors installed equipment in Southwest
Asia, China and the United States as part of the effort to increase our network
capabilities. The network equipment was financed by the manufacturer with a
portion under capital lease at December 31, 1999 and the remainder put under
lease during the first quarter of 2000. The additional equipment financing has
been offset by payments made to the manufacturer on equipment acquired and
financed in 1998 resulting in an increase of $8,000 in the amount owed the
manufacturer at December 31, 1999.

       As part of the expenses associated with the mergers as noted above, we
hired L. Flomenhaft & Co., Inc. as a consultant. The relationship extends for
two years. As a fee for these services, L. Flomenhaft & Co. agreed to take
shares of our common stock valued at $90,000 in lieu of cash.

       As noted above, the acquisition of subscribers for Empire One after the
merger and the opportunistic expansion of the current network requires
substantial investment of both equipment and personnel. We expect that we will
have to continue to raise funds in both the private and public markets to have
enough cash to pay for this expected expansion and to continue our operations.
We believe that our ability to raise money in the public sector will enhance
these efforts although there can be no assurance that this will be the case or
that any public offering of our securities will be made.

ITEM 7.  FINANCIAL STATEMENTS

SEE "CONSOLIDATED FINANCIAL STATEMENTS" ON PAGES F-2 THROUGH F-18 OF THIS ANNUAL
REPORT ON FORM 10-KSB



                                       12
<PAGE>   15

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

EXECUTIVE OFFICERS AND DIRECTORS

The names, ages and titles of all of our directors and executive officers are:

<TABLE>
<CAPTION>
          NAME         AGE                           POSITION
          ----         ---                             ----
<S>                    <C>         <C>
Charles W. Albo         62          Chairman and Executive Vice President, Director
W. Todd Coffin          32          President, Chief Executive Officer, Director
Nana Maraneli           53          Vice-Chairman; Executive Vice President; Secretary; Director
Richard D. Rose         45          Chief Financial Officer; Treasurer
Stephen Albo            35          Chief Technology Officer
Raleigh Coffin          66          Director
John Theodoracopulos    34          Director
Ronald Frankum          64          Director
</TABLE>

Each director is elected to hold office until the next annual meeting of
stockholders and until his or her successor is elected and qualified. Each
officer serves at the discretion of the Board of Directors, subject to any
applicable employment agreements.

CHARLES W. ALBO, CHAIRMAN, EXECUTIVE VICE PRESIDENT, is our co-founder and has
been Chairman and a director of Sonus Communication Holdings, Inc. and Sonus
Communications, Inc. since April 7, 1999, served as Chief Executive Officer of
Sonus Communications, Inc. from its incorporation in May, 1995 until April 14,
1999, and has been a director of the Sonus Communications, Inc. since May, 1995.
Mr. Albo oversees our existing operations and is responsible for managing and
developing new domestic customer relationships and new foreign partnership
relationships. Mr. Albo's background is in strategic planning, analysis and
management. In 1994, together with Nana Maraneli, Mr. Albo co-founded Goodwill
Communications, Ltd., a company which installed and is operating international
telecommunications services linking the Nation of Georgia to the United States.
From 1994 through 1999, Mr. Albo served as Goodwill Communications' president.
From 1992 until 1995, Mr. Albo served as President of Management Vision
Partners, Inc., a company which assisted high technology companies in the
development of next generation products, non-defense markets and international
business.



                                       13
<PAGE>   16

W. TODD COFFIN, CHIEF EXECUTIVE OFFICER, PRESIDENT, DIRECTOR, joined Sonus
Communication Holdings, Inc. and Sonus Communications, Inc. as CEO on April 14,
1999, as President on April 19, 1999 and as a Director on April 20, 1999. Mr.
Coffin's background is in finance, telecommunications and enabling technologies.
From March 1997 to April 1999, Mr. Coffin worked in investment banking for
Tanner Unman Securities where he assisted in the financing of telecommunications
companies including IDT Corp. and Amnex and technology companies including
Fonix, Globalink and SuperConductor Technologies. From June 1995 to May 1997,
Mr. Coffin was the Investment Director for ETOM Technologies, a venture-backed
technology company. From April 1993 to May 1995, Mr. Coffin was with Alex Brown
& Sons. From 1991 to 1993, Mr. Coffin was with Smith Barney, Harris, Upham.

NANA MARANELI, VICE-CHAIRPERSON, EXECUTIVE VICE PRESIDENT, SECRETARY, is our
co-founder and has been Vice Chairperson, Executive Vice President, Secretary
and a director of Sonus Communication Holdings, Inc. since April, 1999, was
President of Sonus Communications, Inc. from May 1995 until April 20, 1999, and
has been a director of Sonus Communications, Inc. since May 1995. Ms. Maraneli
oversees our operations in the former Soviet Union and is responsible for the
development of new telecommunication opportunities in Eastern Europe and Asia.
Ms. Maraneli was born in Tbilisi, Georgia and is a permanent resident of the
United States. She has ten years experience generating business partnerships
between entities in the U.S., Tbilisi, Moscow, Paris, Vienna, Amsterdam, and
London. Under George Soros' direction, Ms. Maraneli organized the development of
the Soros Foundation's Georgian branch and served as its first executive
director. In 1994, Ms. Maraneli co-founded Goodwill Communications, a Georgian
telecommunication service provider. From 1993 through 1995, Ms. Maraneli served
as Vice President of Management Vision Partners, Inc. While at Management Vision
Partners, Inc., Ms. Maraneli assisted other companies in identifying joint
venture partners and negotiating joint venture agreements for enterprises in
Eastern Europe and the former Soviet Union, including joint ventures in Karelia
for forest products, in Georgia for bank card clearing and in Bulgaria for
cellular and paging services.

RICHARD D. ROSE, CHIEF FINANCIAL OFFICER, TREASURER, joined Sonus Communication
Holdings, Inc. and Sonus Communications, Inc. on April 20, 1999 as Chief
Financial Officer and Treasurer. From March 1998 until April 1999, Mr. Rose
served as Vice President of Finance and Administration of Visual Mining, Inc., a
venture-backed start-up software company. From October 1997 to March 1998, Mr.
Rose was the Chief Financial Officer for the Netrix Corporation, a
telephone/data switch manufacturer. From January 1997 through September 1997,
Mr. Rose ran his own financial services company consulting for high-technology
start-ups. Prior to January 1997, for more than five years, Mr. Rose was Chief
Financial Officer of Penril Data Communication Networks, Inc., a manufacturer of
data communications equipment.

STEPHEN ALBO, CHIEF TECHNOLOGY OFFICER, has been our Chief Technology Officer
since January 1999. He has over 14 years of project management, systems
analysis, design, development and maintenance experience at all levels. He also
has experience in telecommunications, software development and business
management. Since January 1999 Mr. Albo has been employed as our Chief
Technology Officer, responsible for system development, implementation and
maintenance of all voice/data networks. From September 1996 until



                                       14
<PAGE>   17

January 1999, Mr. Albo was the Director of Information Systems for CommTek
Communications Corp., where he oversaw development and operations of all
corporate information systems functions including production of printed and
electronic magazines, and EDI partnerships. From May 1994 until September 1996
he was Director of Information Systems/Manager of Technical Support for
Intrafed, Inc., where he was in charge of development and operations of all
corporate information systems functions. Mr. Albo is the son of Charles W. Albo,
Chairman and Executive Vice President of Sonus Communication Holdings, Inc. and
Sonus Communications, Inc.

RALEIGH COFFIN, DIRECTOR, has been a director of Sonus Communication Holdings,
Inc. and Sonus Communications, Inc. since April 19, 1999. He has extensive
management experience in several major corporations. Mr. Coffin is currently
Director and Vice Chairman of InMedia Presentations Inc. (listed on the Montreal
Exchange as IMD) and is responsible for the strategic, marketing and funding
needs for InMedia. InMedia sells computer software which provides for the
digitization of film and other images for enhancement, e-mailing or multi-media
presentations. Mr. Coffin served as President and CEO of ETOM Technologies
Corp., a company that performed research and development for next generation DVD
and video on demand technology, from 1992 until 1997. Mr. Coffin served as
President and Founder of The Alternate Network, providing original programming
and interactive phone services. He has served as Brand Manager at Procter &
Gamble, assistant to the President and Chairman and as a division manager at
General Foods and President of International Standard Brands. In addition, Mr.
Coffin had responsibility for all operations outside the U.S. as President of
Playtex International.

JOHN H. THEODORACOPULOS, DIRECTOR, joined Sonus Communication Holdings, Inc. in
April, 1999. Since 1989, Mr. Theodoracopulos has worked for National Shipping &
Trading Corp., a tanker and bulk carrier operator. Based in New York, New York,
he oversees the fleet's worldwide commercial operations. He also advises their
overseas affiliates on investments in real estate, tourism and agriculture.

RONALD FRANKUM, DIRECTOR, was appointed to the Board of Directors on September
27, 1999. Mr. Frankum is the founder, president and chairman of IntelPhone
Holdings, Ltd., a telecommunications company started in 1993 to develop business
opportunities in GSM technologies, manufacturing and high technology products on
a global basis. From July 1996 to December 1998, Mr. Frankum was a member of the
board of directors of Digitel, a telecommunications company which conducted
trials for a nationwide 900 GSM digital cellular telephone system in the
Republic of Slovenia. As a co-founder of PMCL Mobilink, Mr. Frankum helped to
create the Motorola mobile phone system in Southwest Asia. In 1994, Mr. Frankum
was the Vice-Chairman of the GSM Association and in 1995 served as the Chairman
of the North American interest group of the GSM Association. From February 1986
to August 1997, Mr. Frankum served as Chairman of the Board of Saif Telecom
Ltd., a southwest Asian company involved in the development of
telecommunications services and was Managing General Partner of Cellular Fund
One, an asset management company that raised capital and built and operated
rural cellular telephone systems in the United States. Mr. Frankum is a former
Deputy Science Advisor to President Reagan responsible for national
telecommunications planning, emergency preparedness and network modernization.



                                       15
<PAGE>   18


ITEM 10. EXECUTIVE COMPENSATION.

CASH COMPENSATION OF EXECUTIVE OFFICERS

       The following information relates to compensation paid to our Chief
Executive Officer and to the three other most highly-compensated individuals who
were serving the Company as executive officers at the end of 1999. Herbert R.
Donica served as the chief executive officer of The Park Group, Limited, our
predecessor, during the last three fiscal years, until February 26, 1999.
Neither Mr. Donica nor any other executive officer received compensation for
their services as executive officers of The Park Group, Limited during the last
three fiscal years.

<TABLE>
<CAPTION>
                                                                            Annual Compensation
                                                             -----------------------------------------------------

                                                                                                    Securities
                                                                                                    Underlying
Name and Principal Position                  Fiscal Year        Salary              Bonus           Options/SAR
-------------------------------------      ---------------   -------------      --------------   -----------------
<S>                                       <C>                <C>                <C>                 <C>
W. Todd Coffin, Chief
Executive Officer (1)                           1999            $80,000             $37,500              0


Charles W. Albo, Chief
Executive Officer,
Executive Vice
President (2)                                   1999            $86,534               0                  0


Steven Albo, Chief
Operating Officer                               1999           $108,000               0                200,000
</TABLE>

------------

(1)    Mr. Coffin served as Chief Executive Officer of the Company from April,
       1999 through the end of 1999.

(2)    Charles W. Albo served as our Chief Executive Officer from our inception
       until mid-April, 1999, and as our executive vice president from April,
       1999 through the remainder of the 1999 fiscal year.

OPTION GRANTS IN LAST FISCAL YEAR

       The following table presents information relating to option and warrant
grants made during 1999 to our named Executive Officers and the potential
realizable value of each grant assuming appreciation of our common stock at an
annual rate of either 5% or 10% over the stated term of the option.



                                       16
<PAGE>   19

<TABLE>
<CAPTION>
                                                                 Individual Grants
                         -----------------------------------------------------------------------------------------------
                            Number of Shares      Percentage of Options
                           Underlying Options      Granted to Employees        Exercise or Base
           Name                 Granted             in Fiscal Year (1)          Price Per Share       Expiration Date
-----------------------  ----------------------   -----------------------     ------------------   ---------------------
<S>                            <C>                 <C>                        <C>                   <C>
W. Todd Coffin                        0                   0                         --                       --

Charles W. Albo                       0                   0                         --                       --

Steven Albo                     100,000 (2)              18.83                      $1.50                 6/10/09
                                 75,000 (3)              14.12                       1.00                 4/19/04
                                 75,000 (4)              14.12                       1.00                 4/19/04
</TABLE>

(1)    Percentages calculated based on aggregate of 306,000 employee stock
       options granted and 225,000 warrants issued to employees.

(2)    Represents stock options issued pursuant to our employee stock option
       plan, of which 41,667 options are vested and presently exercisable.

(3)    Represent common stock purchase warrants which are all vested and
       presently exercisable.

(4)    Represent common stock purchase warrants, of which 35,000 are currently
       vested or will vest within 60 days.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES

       The following table presents certain information about stock options
exercised by our named Executive Officers during 1999 and the value of
unexercised options held by them at the end of 1999.

<TABLE>
<CAPTION>
                                                                   No. Shares                          Value of Unexercised
                           Shares Acquired                   Underlying Unexercised                    In-the-Money Options
        Name                upon Exercise                 Options at December 31, 1999               At December 31, 1999 (1)
----------------  -------------------------------   ---------------------------------------    -----------------------------------

                     No.         Value Realized       Exercisable          Unexercisable         Exercisable       Unexercisable
----------------  -----------  ------------------   ------------------  -------------------    --------------   ------------------
<S>                <C>                 <C>                  <C>                  <C>               <C>                  <C>
W. Todd Coffin           -0-                 -0-                                                         -0-                  -0-

Charles W. Albo          -0-                 -0-                                                         -0-                  -0-

Steven Albo              -0-                 -0-              151,667               98,333          $273,400             $161,600
</TABLE>

(1)    The closing price of the Company's common stock at the end of fiscal year
       1999 was $2.94 per share.


                                       17
<PAGE>   20

LONG TERM INCENTIVE PLAN DURING FISCAL YEAR

       We did not make any long term incentive plan awards to any executive
officers or directors during the fiscal year ended December 31, 1999.

EMPLOYMENT AGREEMENTS

       We entered into a three-year employment agreement with Charles W. Albo as
of April 15, 1999. The agreement provides that he will serve as Executive Vice
President and Chairman of Sonus Communication Holdings, Inc. He has agreed to
forgo any salary during the first year of the term (through May 1, 2000) but
will become entitled to receive salary thereafter equivalent to that of
similarly situated executives, to be not less than $84,000 per year. The
agreement also provides that Mr. Albo shall be entitled to participate in
benefit programs available to similarly situated senior management employees
from and after April 15, 2000. We may terminate Mr. Albo's employment agreement
for "cause" or upon a finding of disability under the agreement. The employment
agreement also contains provisions pursuant to which Mr. Albo has agreed not to
compete with us.

       We entered into a one-year employment agreement with Steven Albo as of
February 1, 2000. The agreement provides that he will serve as Vice President of
Operations and Chief Technical Officer of Sonus Communication Holdings, Inc. He
agreed to a salary of $84,000 per year plus a bonus of $31,000 at December 31,
1999 provided he was an employee on that date.

DIRECTORS' COMPENSATION

       The directors do not receive any fees for their services in such
capacity. However, each Director is reimbursed for all reasonable and necessary
costs and expenses incurred as a result of being a Director.

       On June 10, 1999, we adopted the 1999 Director Stock Incentive Plan,
which was approved by a majority of the stockholders on July 12, 1999. Under the
terms of the 1999 Director Stock Incentive Plan, which expires on June 10, 2009,
our non-employee directors may be granted non-statutory stock options at an
exercise price equal to 100% of the fair market value on the date of grant. No
option will be exercisable more than ten years from the date of grant. We have
reserved 350,000 shares for issuance under the 1999 Director Stock Incentive
Plan. As of the date of this prospectus, options to purchase 50,000 shares have
been granted to Ronald Frankum under the 1999 Director Stock Incentive Plan
entitling Mr. Frankum to purchase 50,000 shares at an exercise price of $2.00
per share.

EMPLOYEE STOCK INCENTIVE PLAN

       On June 10, 1999, we adopted the 1999 Stock Incentive Plan which was
approved by a majority of the stockholders on July 12, 1999. Under the terms of
the 1999 Stock Incentive Plan, which expires on June 10, 2009, employees may be
granted incentive stock options, non-statutory stock options and restricted
stock awards. The option price of shares of common stock generally will not be
less than 100% of the fair market value on the date of grant or 110% of fair



                                       18
<PAGE>   21


market value in the case of a grant to a 10% or greater shareholder. No option
will be exercisable more than ten years from the date of grant. We have reserved
500,000 shares for issuance under the 1999 Stock Incentive Plan. As of the date
of this prospectus, employees had been granted 306,000 shares. Options typically
vest quarterly over a three year period unless the Board of Directors in its
discretion provides otherwise. Options shall become fully vested upon a "change
of control" as defined in the 1999 Stock Incentive Plan. The Board of Directors
has discretion to set the terms and conditions of options; including the term,
exercise price, and vesting conditions, if any; to determine whether the option
is an incentive stock option or a non-qualified stock option; to select the
persons who receive such grants; and to interpret and administer the 1999 Stock
Incentive Plan.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

       The table below sets forth certain information regarding the beneficial
ownership of the common stock, the only class of capital stock authorized, as of
March 9, 2000, by:

       (i) each person we know to be the beneficial owner of more than 5% of the
outstanding shares of common stock,

       (ii) each of our directors and the Chief Executive Officer, and

       (iii) all directors and executive officers as a group. Unless otherwise
indicated, each of the stockholders listed below has sole voting and investment
power with respect to the shares beneficially owned.



                                       19
<PAGE>   22


                        BENEFICIAL OWNERS OF MORE THAN 5%
                               OF OUR COMMON STOCK

<TABLE>
<CAPTION>
                    NAME AND ADDRESS               AMOUNT AND NATURE
                  OF BENEFICIAL OWNER           OF BENEFICIAL OWNERSHIP      PERCENT OF CLASS
                  -------------------           -----------------------      ----------------
<S>                                          <C>                            <C>
Charles W. Albo                                       1,044,431(1)                17.3%
1600 Wilson Blvd
Suite 1008
Arlington, VA
22209

Nana Maraneli                                         1,000,000(2)                16.6%
1600 Wilson Blvd.
Suite 1008
Arlington, VA
22209

Evansville Ltd.                                         545,370                      9%
Attn: Thomas A Huzer
Quadrant Management, Inc.
720 5th Avenue
New York, NY
10019

L. Flomenhaft & Co., Inc.                             1,051,255(3)                15.1%
225 West 34th Street
Suite 2008
New York, NY
10122
</TABLE>

----------------------

(1)    Includes 1,000,000 shares owned of record by Albo Limited Partners, a
       Virginia limited partnership, of which Mr. Albo is general partner.

(2)    Includes 950,000 shares owned of record by Maraneli Limited Partners, a
       Virginia limited partnership, of which Ms. Maraneli is general partner.

(3)    Includes 120,000 shares of outstanding common stock and fully vested
       common stock purchase warrants (i) issued January 21, 1999 to purchase
       78,750 shares of common stock at an exercise price of $1.00 per share,
       (ii) issued January 21, 1999 to purchase 487,500 shares of common stock
       at an exercise price of $.92 per share, (iii) issued August 3, 1999 to
       purchase 86,250 shares of common stock at an exercise price of $1.00 per
       share, (iv) issued August 3, 1999 to purchase 25,500 shares of common
       stock issuable at an exercise price of $3.00 per share, (v) issued August
       3, 1999 to purchase 32,812 shares of common stock at an exercise price of
       $2.00 per share, and (vi) issued November 22, 1999, January 5, 2000 and
       January 27, 2000 to purchase 220,443 shares of common stock at an
       exercise price of $1.35 per share. See "Description of Securities,
       Description of Warrants".



                                       20
<PAGE>   23


       The following table sets forth the beneficial ownership of common
stock of the Directors and Executive Officers based on 6,032,214 shares of
common stock outstanding as of March 9, 2000.

                        BENEFICIAL OWNERSHIP OF DIRECTORS
                             AND EXECUTIVE OFFICERS

<TABLE>
<CAPTION>
NAME AND ADDRESS                                 AMOUNT AND NATURE
OF BENEFICIAL OWNER                           OF BENEFICIAL OWNERSHIP            PERCENT OF CLASS
-------------------                           -----------------------            ----------------
<S>                                          <C>                                <C>
Charles W. Albo - Chairman and                     1,044,431 (1)                      17.3%
Executive Vice President
1600 Wilson Blvd.
Suite 1008
Arlington, VA 22209

Steven Albo                                          151,667 (2)                       2.5%
Chief Technology Officer
1600 Wilson Blvd.
Suite 1008
Arlington, VA 22209

Raleigh Coffin - Director                           100,000 (3)                      1.6 (4)
c/o Hudson Capital Advisors, LLC
160 Shore Road
Old Greenwich, CT 06870

W. Todd Coffin - Chief                              292,007 (4)                        4.7%
Executive Officer, President and
Director
1600 Wilson Blvd.
Suite 1008
Arlington, VA 22209

Nana Maraneli - Vice                               1,000,000 (5)                      16.6%
Chairperson,
Executive Vice President and
Secretary
1600 Wilson Blvd.,
Suite 1008
Arlington, VA 22209

Richard D. Rose - Treasurer and                      50,000 (6)                       -- (7)
Chief Financial Officer
1600 Wilson Blvd.,
Suite 1008
Arlington, VA 22209
</TABLE>



                                       21
<PAGE>   24

<TABLE>
<S>                                               <C>                             <C>
John Theodoracopulos  Director                       150,623 (8)                       2.5%
545 Madison Avenue
6th Floor
New York, NY 10022

Ronald Frankum                                        12,500 (9)                      -- (7)
Director
774 Mays Blvd., Suite 10-222
Incline Village, NV 89451

Directors and Executive Officers as a Group           2,757,895                       41.9%
</TABLE>

1.     Includes 1,000,000 shares owned of record by Albo Limited Partners, a
       Virginia limited partnership, of which Mr. Albo is general partner.

2.     Represents warrants to purchase 75,000 shares of common stock at $1.00
       per share granted as of January 1, 1999, all of which are vested,
       warrants to purchase 25,000 shares of common stock at $1.00 per share
       granted as of April 20, 1999, all of which are vested, and options to
       purchase 33,334 shares of common stock at $1.50 per share, all of which
       are vested.

3.     Represents 100,000 warrants to purchase shares of common stock at an
       exercise price of $1.00 per share which are fully vested.

4.     Includes warrants to purchase 4,688 shares of common stock at an exercise
       price of $2.00 per share, warrants to purchase 37,319 shares of common
       stock at an exercise price of $1.35 per share, and warrants to purchase
       200,000 shares of common stock at an exercise price of $3.00 per share,
       all of which are vested and owned beneficially and of record by Hudson
       Allen & Co. Mr. Coffin is an equity holder in Hudson Allen & Co.

5.     Includes 950,000 shares owned of record by Maraneli Limited Partners, a
       Virginia limited partnership, of which Ms. Maraneli is general partner.

6.     Represents warrants to purchase 25,000 shares of common stock at an
       exercise price of $1.00 per share which are vested, and options to
       purchase 25,000 shares of common stock at $1.50 which are vested.

7.     Percent of class is less than 1%.

8.     Includes 138,123 shares of issued common stock and warrants to purchase
       12,500 shares of common stock at an exercise price of $3.00 per share
       which are fully vested.

9.     Represents options granted under the Company's 1999 Directors Stock
       Option Plan which are fully vested.

CONDITIONAL RIGHT TO ACQUIRE CERTAIN SECURITIES

       In addition to the shares set forth in the table above, Charles Albo and
Nana Maraneli also each own warrants to purchase 125,000 shares of common stock
at $1.50 per share, which vest when the shares of common stock issued in the
unit placement are registered for resale or otherwise are exempt from
registration under the Securities Act and the stock price per share has closed
at or above $3.00 bid for 20 consecutive trading days within the eighteen month
period


                                       22
<PAGE>   25

following the closing of such private placement. The warrants were issued on
April 20, 1999 and expire on April 20, 2004.

       In addition to options to purchase 41,667 shares of common stock at a
price of $1.50 per share and warrants to purchase 110,000 shares of common stock
at a price of $1.00 per share, all of which are fully vested, Mr. Stephen Albo
owns options to purchase 58,333 shares of common stock at a price of $1.50 per
share and warrants to purchase an additional 40,000 shares of common stock at a
price of $1.00 per share, which vest in equal 10,000 warrant increments on each
six month anniversary of the date of issuance of the warrants. The warrants were
issued to Mr. Stephen Albo as of April 20, 1999.

In addition to the 292,007 shares of common stock shown in the table above, Mr.
W. Todd Coffin, through Coffin & Sons, Inc., his wholly-owned consulting
company, also has the right to receive (i) 50,000 additional shares of common
stock upon the completion of the next private placement to occur after April,
1999 in an amount in excess of $1,000,000 at a price per share of at least $1.50
per share, (ii) 50,000 shares of common stock following the closing of such
private placement, if the shares issued in such private placement are
successfully registered for resale under the Securities Act and the stock trades
at or above $3.00 per share for 20 consecutive trading days within 18 months of
the closing of such private placement, and (iii) in the event we and Coffin &
Sons, Inc. choose not to renew their consulting arrangement, 50,000 shares of
common stock following the installation of a new chief executive officer
identified and recruited by Coffin & Sons, Inc. and acceptable to us.

Also in addition to the 292,007 shares of common stock shown above, Mr. Coffin,
through Hudson Allen & Co., has been granted warrants to purchase an additional
300,000 shares of common stock which are not currently vested, but vest in
100,000 warrant increments for each $2,000,000 worth of financing obtained for
us by Hudson Allen. Mr. Todd Coffin is an equity owner of Hudson Allen & Co.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

       In April, 1999, Mr. Albo, Chairman and Executive Vice President, and Ms.
Maraneli, Vice-Chairperson and Executive Vice President, each transferred
550,000 shares of common stock to us, for cancellation. The cancellation became
effective in May, 1999. In exchange for the cancellation of these shares, we
issued to each of Mr. Albo and Ms. Maraneli warrants dated April 20, 1999 to
purchase 125,000 shares of common stock at an exercise price of $1.50 per share.
Mr. Albo and Ms. Maraneli are our founders.

       In April 1999, Mr. Albo and Ms. Maraneli also each transferred to us
75,000 shares, at a price of $1.50 per share, which shares were redeemed by the
Company effective May 1999. Mr. Albo and Ms. Maraneli have agreed that payment
of the $1.50 per share will be deferred until the closing of a private placement
of common stock in an amount not less than $1,000,000 or another equity
financing in which we receive proceeds of not less than $1,000,000. In exchange
for the deferral of our payment obligations, we have agreed to advance each of
Mr. Albo and Ms. Maraneli up to $7,000 each month as a loan to Mr. Albo and Ms.
Maraneli, not to exceed the $112,500 in the aggregate. All amounts so advanced
will be deducted from $112,500 to be paid


                                       23
<PAGE>   26

to Mr. Albo and Ms. Maraneli upon the closing of the proposed private placement
or other equity financing providing proceeds to us of not less than $1,000,000.
Mr. Albo and Ms. Maraneli are required to repay such advances only from amounts
paid to Mr. Albo and Ms. Maraneli pursuant to the redemption of their shares
described above.

       In April 1999, Mr. Albo agreed to convert our shareholder demand note in
the aggregate principal amount of $99,969 in favor of Mr. Albo into 44,431
shares of common stock, reflecting a conversion rate of $2.25 per share. The
demand note was cancelled in exchange for the issuance of the shares in May,
1999.

       In May 1999, we sold $575,000 of our 10% Convertible Debentures. The
Debentures were automatically converted into common stock upon the first closing
of the Unit offering described below at an effective conversion price of $1.00
per share. Mr. Theodoracopulos, a director, purchased $25,000 aggregate
principal amount of such Debentures.

       In October 1999, we entered into a letter agreement with the investment
banking firm of Hudson Allen & Co. Under the terms of the agreement, Hudson
Allen has agreed to render investment banking services for one year in exchange
for a signing fee of 500,000 common stock purchase warrants, 100,000 vesting
upon signing, with the remainder vesting in 100,000 warrant increments for each
$2,000,000 worth of financing obtained for us by Hudson Allen. Under the
agreement, Hudson Allen will also serve as our non-exclusive placement agent. As
our placement agent Hudson Allen will be entitled to commissions pursuant to
successful financings in the form of a cash fee of 8% of gross proceeds
received, 8% warrant coverage for proceeds up to $5,000,000 and a cash fee of 5%
and 5% warrant coverage for proceeds received in excess of $5,000,000. We expect
the warrants to provide for registration rights for the common stock underlying
the warrants.

       Hudson Allen will be entitled to receive a management fee of $6,000 per
month from and after the date on which it has raised $1,000,000 for us as a
management and consulting fee. In the event of a merger or acquisition
consummated by a source introduced to us by Hudson Allen, a fee in the amount of
3% shall be payable to Hudson Allen. Hudson Allen will receive 1% of the
transaction value if we are acquired by another entity not introduced by Hudson
Allen and Hudson Allen works on such transaction at any time during the
effectiveness or within one year after termination of this agreement.

       Hudson Allen will be entitled to the foregoing fees if:

       1.     a financing, merger or acquisition is consummated within 12 months
              of their termination (or the expiration of Hudson Allen's
              engagement); and

       2.     there was contact by or through Hudson Allen with the other party
              to the financing, regarding financing during the period of the
              engagement; or

       3.     any materials, presentations or analyses prepared by Hudson Allen
              are provided to the other party prior to consummation of the
              financing.

       The agreement requires us to indemnify Hudson Allen under certain
circumstances and reimburse Hudson Allen for its expenses incurred in the course
of representing us. We can



                                       24
<PAGE>   27

provide no assurance that Hudson Allen will be successful in raising funds for
us or in finding suitable acquisitions.

Mr. Coffin has been serving as chief executive officer on an interim
month-to-month basis since his contract expired on October 15, 1999. We are
actively engaged in locating a suitable replacement but have not made a hiring
decision. Mr. Coffin intends to step down as chief executive officer and
director during the fourth quarter of this year assuming that a suitable
replacement is located. We can provide no assurance, however, that we will be
able to locate a suitable replacement prior to Mr. Coffin's departure. In
addition, Mr. Coffin is associated with Hudson Allen & Co., our investment
banking firm. Mr. Coffin may receive a portion of the consideration Hudson Allen
becomes entitled to under our letter agreement with Hudson Allen. See "Security
Ownership of Certain Beneficial Owners and Management: Conditional Right to
Acquire Certain Securities" for additional information, which is incorporated by
reference herein and "Executive Compensation: Employment Agreements" for
additional information, which are incorporated by reference herein.

ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

  (a)  Financial Statements

       Included in Part II of this report:

       Independent Auditors' Report

       Consolidated Balance Sheets as of December 31, 1999 and 1998

       Consolidated Statements of Operations for each of the two years in the
       period ended December 31, 1999

       Consolidated Statement of Changes in Stockholders' Equity for each of the
       two years in the period ended December 31, 1999

       Consolidated Statements of Cash Flows for each of the two years in the
       period ended December 31, 1999

       Notes to Consolidated Financial Statements for the years ended December
       31, 1999 and 1998

  Exhibits

  The exhibits are set forth on the attached Exhibit Index which is incorporated
  by reference.

  Reports on Form 8-K

  No reports on Form 8-K were filed during the last quarter of the period
  covered by this report.



                                       25
<PAGE>   28


                                  EXHIBIT INDEX

Exhibit
No.            DESCRIPTION OF EXHIBIT

2.1            Plan of Merger between Sonus Park Acquisition, Inc. and Sonus
               Communications, Inc. dated February 26, 1999, contained in the
               Agreement of Merger previously filed as Exhibit 3.1(f) to Form
               10-SB filed May 14, 1999 (the "Form 10-SB"), hereby incorporated
               by reference.

2.2            Agreement and Plan of Merger dated April 12, 1999, contained in
               the Articles of Merger previously filed as Exhibit 3.1(g) to Form
               10-SB, hereby incorporated by reference.

2.3            Merger Agreement dated as of November 15, 1999 among the Company,
               Empire One Acquisition Corporation, Empire One
               Telecommunications, Inc., John K. Friedman, Paul A. Butler, and
               Bradley D. Lewis previously filed as Exhibit 2.3 to Form SB-2
               filed December 7, 1999 ("Form SB-2"), hereby incorporated by
               reference.

3.1            Certificate of Incorporation of the Company, previously filed as
               Exhibit 2.1 of Form 10-SB, hereby incorporated by reference.

3.2            By-laws of the Company, previously filed as Exhibit 2.2 of Form
               10-SB, hereby incorporated by reference.

4.1            Stock Subscription Agreement dated January 14, 1999, previously
               filed as Exhibit 3.1(a) of Form 10-SB, hereby incorporated by
               reference.

4.2            Placement Agent Agreement dated January 14, 1999, previously
               filed as Exhibit 3.1(b) of Form 10-SB, hereby incorporated by
               reference.

4.3            Shareholders Agreement dated as of January 21, 1999, previously
               filed as Exhibit 3.1(c) of Form 10-SB, hereby incorporated by
               reference.

4.4            10% Convertible Debentures dated May 5, 1999, previously filed as
               Exhibit 3.1(d) of Form 10-SB, hereby incorporated by reference.

4.5            Debenture Purchase Agreement dated May 5, 1999, previously filed
               as Exhibit 3.1(e) of Form 10-SB, incorporated herein by
               reference.

4.6            Articles of Merger dated February 26, 1999, previously filed as
               Exhibit 3.1(f) of Form 10-SB, hereby incorporated by reference.

4.7            Articles of Merger dated April 12, 1999, previously filed as
               Exhibit 3.1(g) of Form 10-SB, hereby incorporated by reference.



                                       26
<PAGE>   29

4.8            Certificate of Merger dated April 12, 1999, previously filed as
               Exhibit 3.1(h) of Form 10-SB, hereby incorporated by reference.

4.9            78,750 Placement Agent Warrants issued to L. Flomenhaft & Co.,
               Inc. dated January 21, 1999, previously filed as Exhibit 4.9 to
               Form SB-2, incorporated herein by reference.

4.10           11,250 Warrants issued to Lawrence Kaplan dated January 21, 1999,
               previously filed as Exhibit 4.10 to Form SB-2, incorporated
               herein by reference.

4.11           487,500 Consulting Warrants issued to L. Flomenhaft & Co., Inc.
               dated January 21, 1999, previously filed as Exhibit 4.11 to Form
               SB-2, incorporated herein by reference.

4.12           86,250 Debenture Placement Agent Warrants issued to L. Flomenhaft
               & Co., Inc. dated August 3, 1999, previously filed as Exhibit
               4.12 to Form SB-2, incorporated herein by reference.

4.13           Form of Unit Warrant issued to various purchasers dated August 3,
               1999, previously filed as Exhibit 4.13 to Form SB-2, incorporated
               herein by reference.

4.14           32,812 Unit Placement Agent Warrants issued to L. Flomenhaft
               dated August 3, 1999, previously filed as Exhibit 4.14 to Form
               SB-2, incorporated herein by reference.

4.15           4,688 Unit Placement Agent Warrant issued to Tanner Unman
               Securities, Inc. on August 3, 1999, previously filed as Exhibit
               4.15 to Form SB-2, incorporated herein by reference.

4.16           4,444 Placement Agent Warrants issued to Coffin & Sons, Inc.
               dated November 22, 1999, previously filed as Exhibit 4.16 to Form
               SB-2, incorporated herein by reference.

4.17           58,276 Placement Agent Warrants issued to L. Flomenhaft & Co.,
               Inc. dated November 22, 1999, previously filed as Exhibit 4.17 to
               Form SB-2, incorporated herein by reference.

10.1           Employment Agreement dated as of April 15, 1999 between the
               Company and Charles W. Albo, previously filed as Exhibit 10.1 to
               Form SB-2, incorporated herein by reference.

10.2           Employment Agreement dated as of April 15, 1999 between the
               Company and Nana Maraneli, previously filed as Exhibit 10.2 to
               Form SB-2, incorporated herein by reference.



                                       27
<PAGE>   30

10.3           Consulting Agreement between Sonus Communications, Inc. and L.
               Flomenhaft & Co., Inc. dated January 14, 1999, previously filed
               as Exhibit 6.1(a) of Form 10-SB, hereby incorporated by
               reference.

10.4           Placement Agent Agreement between Sonus Communications, Inc. and
               L. Flomenhaft & Co., Inc. dated January 14, 1999, previously
               filed as Exhibit 3.1(b) of Form 10-SB, hereby incorporated by
               reference.

10.5           Employment Agreement with Richard D. Rose dated April 15, 1999,
               previously filed as Exhibit 6.1(c) of Form 10-SB, hereby
               incorporated by reference.

10.6           Consulting Agreement with Raleigh Coffin dated as of April 15,
               1999, previously filed as Exhibit 6.1(d) of Form 10-SB, hereby
               incorporated by reference.

10.7           10% Convertible Debentures dated May 5, 1999, previously filed as
               Exhibit 3.1(d) of Form 10-SB, hereby incorporated by reference.

10.8           Consulting Agreement dated April 15, 1999 between the Company and
               Coffin & Sons, Inc., previously filed as Exhibit 6.1(f) of Form
               10-SB, hereby incorporated by reference.

10.9           Hudson Allen Letter Agreement, previously filed as Exhibit 10.9
               of Form SB-2, hereby incorporated by reference.

22             Subsidiaries of the Company: Sonus Communication, Inc., a
               Virginia corporation, and Empire One Acquisition Corporation, a
               Delaware corporation.

27             Financial Data Schedule



                                       28
<PAGE>   31


                                   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.

Dated:  March 27, 2000                     SONUS COMMUNICATION HOLDINGS, INC.


                                           BY:/s/ W. Todd Coffin
                                           -------------------------------------
                                           W. Todd Coffin
                                           President and Chief Executive Officer

In accordance with the 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.

<TABLE>
<CAPTION>
Signatures                                                              Title                              Date
----------                                                              -----                              ----
<S>                                                         <C>                                          <C>
/s/ W. Todd Coffin                                               President and Chief Executive             March 27, 2000
----------------------------------                               Officer and Director
W. Todd Coffin

/s/ R. D. Rose                                                   Chief Financial Officer                   March 27, 2000
----------------------------------                               (Principal Financial and
Richard D. Rose                                                  Accounting Officer)

/s/ Charles W. Albo                                              Director                                  March 27, 2000
----------------------------------
Charles W. Albo

/s/ Nana Maraneli                                                Director                                  March 27, 2000
----------------------------------
Nana Maraneli

/s/ Raleigh Coffin                                               Director                                  March 27, 2000
----------------------------------
Raleigh Coffin

/s/ John Theodoracopulus                                         Director                                  March 27, 2000
----------------------------------
John Theodoracopulus

/s/ Ronald Frankum                                               Director                                  March 27, 2000
----------------------------------
Ronald Frankum
</TABLE>



                                       29
<PAGE>   32



                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S>                                                                        <C>
Independent Auditors' Report...................................................F-2
Financial Statements:
            Consolidated Balance Sheets........................................F-3
            Consolidated Statements of Operations..............................F-4
            Statement of Changes in Stockholders' Equity.......................F-5
            Consolidated Statements of Cash Flows..............................F-6
Notes to Financial Statements..................................................F-7
</TABLE>



                                      F-1
<PAGE>   33


                          INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Sonus Communication Holdings, Inc.
Arlington, Virginia

We have audited the consolidated balance sheets of Sonus Communication Holdings,
Inc. and subsidiary as of December 31, 1999 and 1998 and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the years then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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 that our
audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Sonus Communication Holdings, Inc. and
subsidiary as of December 31, 1999 and 1998 and the results of their operations
and their cash flows for the years then ended in conformity with generally
accepted accounting principles.

                                                        LAZAR LEVINE & FELIX LLP

New York, New York
February 10, 2000


                                      F-2
<PAGE>   34

                SONUS COMMUNICATION HOLDINGS, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                            December 31,
                                                                                    ------------------------------
                                                  ASSETS                               1999                1998
                                                                                    -----------        -----------
<S>                                                                             <C>                    <C>
CURRENT ASSETS:
        Cash and cash equivalents                                                   $   234,688        $     1,263
        Accounts receivable, less allowance for doubtful
            accounts of $20,223 in 1999                                                  31,936             41,244
        Installment sales receivable, net of unearned
            profit of $106,134 in 1999 and $ 131,340 in 1998                            187,430            231,090
        Loan receivable                                                                 150,000                  -
        Prepaid expenses                                                                166,572                  -
                                                                                    -----------        -----------
TOTAL CURRENT ASSETS                                                                    770,626            273,597

PROPERTY AND EQUIPMENT, net                                                             721,905            231,615
OTHER ASSETS                                                                             62,062                  -
                                                                                    -----------        -----------
TOTAL ASSETS                                                                        $ 1,554,593        $   505,212
                                                                                    ===========        ===========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
        Accounts payable                                                            $   382,045        $   212,039
        Vendor equipment payable                                                        364,666            356,273
        Lease obligation, current portion                                                87,399
        Due to shareholders                                                             113,000                  -
        Accrued expenses                                                                 42,510             17,496
                                                                                    -----------        -----------
TOTAL CURRENT LIABILITIES                                                               989,620            585,808
                                                                                    -----------        -----------
        Due to shareholder                                                                    -             99,969
        Lease obligation, net of current portion                                        109,550                  -
        Other noncurrent liabilities                                                     43,000                  -
                                                                                    -----------        -----------
TOTAL LIABILITIES                                                                     1,142,170            685,777
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
        Common stock, $.0001 par value; authorized 100,000,000 shares; issued
            and outstanding 4,598,850 shares in 1999
             and 3,597,954 shares in 1998                                                   460                360
        Additional paid-in capital                                                    2,476,488            267,334
        Subscriptions received                                                          135,000                  -
        Accumulated deficit                                                          (2,199,525)          (448,259)
                                                                                    -----------        -----------
TOTAL STOCKHOLDERS' EQUITY                                                              412,423           (180,565)
                                                                                    -----------        -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                          $ 1,554,593        $   505,212
                                                                                    ===========        ===========
</TABLE>

                 See notes to consolidated financial statements



                                      F-3
<PAGE>   35



                 SONUS COMMUNICATION HOLDINGS INC AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS

  <TABLE>
  <CAPTION>

                                               Year ended December 31,
                                           ------------------------------
                                               1999                 1998
                                           -----------        -----------
<S>                                        <C>                <C>
OPERATING INCOME:
   Telecommunication services              $ 1,635,042        $   225,840
   Consulting services                           -                 61,450
   Installment sales                            69,014               -
                                           -----------        -----------
Total                                        1,704,056            287,290

OPERATING EXPENSES
   Direct expenses                           1,951,519            267,946
   General & administrative                  1,237,092             93,752
                                           -----------        -----------
                                             3,188,611            361,698

LOSS FROM OPERATIONS                        (1,484,555)           (74,408)

OTHER EXPENSE
  Interest, net                                 (5,100)            (6,998)
  Merger related costs                        (261,611)              -
                                           -----------        -----------
                                              (266,711)            (6,998)

LOSS BEFORE INCOME TAXES                    (1,751,266)           (81,406)

   Provision for income taxes                     -                  -
                                           -----------        -----------

NET LOSS                                   $(1,751,266)       $   (81,406)
                                           ===========        ===========

Basic loss per common share                $     (0.44)       $     (0.02)
                                           ===========        ===========
Shares used in per share calculation         3,965,071          3,488,298
                                           ===========        ===========
</TABLE>



                 See notes to consolidated financial statements



                                      F-4
<PAGE>   36


                SONUS COMMUNICATION HOLDINGS, INC. AND SUBSIDIARY
                    STATEMENT CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                             Common Stock
                                     --------------------------       Paid-in       Subscription    Accumulated
                                        Shares         Amount         Capital         Received        Deficit           Total
                                     ----------     -----------     -----------       ---------     -----------     -----------
<S>                                <C>              <C>             <C>               <C>           <C>             <C>
Balance, January 1, 1998              3,378,512     $       338     $   238,211       $    -        $  (366,853)    $  (128,304)
Split shares issued for rounding            129           -               -                -               -               -
Conversion of loans                     162,877              16          21,629            -               -             21,645
Sale of common shares                    56,436               6           7,494            -               -              7,500
Net loss                                  -               -               -                -            (81,406)        (81,406)
                                     ----------     -----------     -----------       ---------     -----------     -----------
Balance, December 31, 1998            3,597,954     $       360     $   267,334       $    -        $  (448,259)    $  (180,565)

Sale of common shares                   750,000              75         626,559                                         626,634
Shares issued for merger related
     consulting fees                    150,000              15          89,985                                          90,000
Shares returned by founders          (1,100,000)           (110)            110                                               -
Shares issued to consultant              50,000               5          37,495                                          37,500
Conversion on shareholder note           44,431               4          99,965                                          99,969
Repurchase from shareholders           (150,000)            (15)       (224,985)                                       (225,000)

Sale of common shares in Unit
     equity offering                    250,000              25         434,914                                         434,939
Conversion of convertible
     debentures                         588,325              59         530,766                                         530,825
Sale of common shares                   418,140              42         502,345                                         502,387

Waiver of compensation payable                                          112,000                                         112,000
Received for January 2000
     financing                                                                          135,000                         135,000
Net loss                                  -               -               -               -          (1,751,266)     (1,751,266)
                                     ----------     -----------     -----------       ---------     -----------     -----------
Balance, December 31, 1999            4,598,850     $       460     $ 2,476,488       $ 135,000     $(2,199,525)    $   412,423
                                     ==========     ===========     ===========       =========     ===========     ===========
</TABLE>


                 See notes to consolidated financial statements



                                      F-5
<PAGE>   37


                SONUS COMMUNICATION HOLDINGS, INC AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                      Year ended December 31,
                                                                    --------------------------
                                                                        1999           1998
                                                                    ----------      ----------
<S>                                                                <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net loss                                                     $(1,751,266)    $   (81,406)
      Adjustments to reconcile net loss to net cash provided by
      (used in) operating activities:
           Depreciation                                                 98.529          25,735
           Common shares issued for services rendered                  127,500            -
           Time contributed in lieu of salary                          112,000            -
      Changes in assets and liabilities:
           Accounts receivable                                           9,308         (41,244)
           Installment sales receivable                                 43,660        (231,090)
           Prepaid expenses                                           (166,572)          2,018
           Accounts payable                                            170,006         209,890
           Vendor equipment payable                                      8,393         356,273
           Accrued expenses                                             25,014           5,316
                                                                    ----------      ----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                 (1,323,428)        245,492

CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchase of equipment                                           (379,417)       (257,350)
      Loan to Empire One Telecomm                                     (150,000)           -
      Deposits for equipment and circuits                              (19,062)           -
                                                                    ----------      ----------
NET CASH USED IN INVESTING ACTIVITIES                                 (548,479)       (257,350)

CASH FLOWS FROM FINANCING ACTIVITIES:
      Private placement of common shares, net                        2,094,785           7,500
      Subscriptions received                                           135,000            -
      Repurchase of founder shares                                    (112,000)           -
      Payment of lease obligation for network equipment                (12,453)           -
                                                                    ----------      ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES                            2,105,332           7,500

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                   233,425           (4358)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR             $     1,263     $     5,621
                                                                    ----------      ----------
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR                   $   234,688     $     1,263
                                                                    ==========      ==========
SUPPLEMENTAL INFORMATION
      Cash payments for interest                                   $    13,289     $      -
                                                                    ==========      ==========
      Cash payments for taxes                                      $      -        $      -
                                                                    ==========      ==========
</TABLE>

                 See notes to consolidated financial statements



                                      F-6
<PAGE>   38


                SONUS COMMUNICATION HOLDINGS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1999 AND 1998

NOTE 1 - DESCRIPTION OF BUSINESS

       The accompanying consolidated financial statements include the accounts
       of Sonus Communication Holdings, Inc. (the "Company" or "Holdings") and
       Sonus Communications, Inc. ("Sonus"), the Company's wholly owned
       subsidiary. The Company was incorporated in April 1999 as part of the
       merger between Sonus Communications Inc and The Park Group ("Park") and
       re-incorporation of The Park Group in Delaware (see Note 3 for details).
       Holdings is an inactive company whose only asset currently is Sonus.

       Sonus is a provider of low-cost, high-quality international telephone and
       Internet services. Sonus secures access to international destinations
       that offer the opportunity for large call volumes and high margins. The
       company establishes Internet connectivity and uses the circuit to provide
       voice, facsimile, Internet, and e-commerce services to US and foreign
       telephone and Internet Service Providers. In general, Sonus' destinations
       are in developing countries characterized by high international telephone
       rates, poor Internet connectivity and little access to U.S. e-commerce or
       business-to-business services.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

       The consolidated financial statements include the accounts of the Company
       and its wholly owned subsidiary Sonus Communications, Inc. All
       significant intercompany balances and transactions have been eliminated
       in consolidation.

USE OF ESTIMATES

       The preparation of financial statements in conformity with generally
       accepted accounting principles requires management to make estimates and
       assumptions that affect the amounts reported in the financial statements
       and accompanying notes. Actual results may differ from those estimates.

REVENUE RECOGNITION

       Revenue from telecommunications services is recognized as the service is
       provided. In connection with the sale of equipment, the related
       receivable is collected over extended periods based on usage of the
       equipment and consequently the revenue and profit is recognized on the
       installment method as the receivable is collected (see Note 4 for
       details).



                                      F-7
<PAGE>   39

DIRECT OPERATING EXPENSES

       Direct operating expenses consist primarily of telecommunications costs,
       connectivity costs and the cost of equipment sold to customers.

PROPERTY AND EQUIPMENT

       Network equipment and furniture and fixtures are recorded at cost and
       depreciated using the following estimated useful lives:

                        Computers and other              2 - 7 years
                        Network equipment                  5   years

CASH AND CASH EQUIVALENTS

       The Company considers all highly liquid investments with a maturity of
       three months or less when purchased to be cash equivalents. Cash and cash
       equivalents are carried at cost which approximates market value.

       The Company maintains its cash balances primarily in one financial
       institution. These balances are insured by the Federal Deposit Insurance
       Corporation up to $100,000. Management periodically monitors the credit
       worthiness of its bank to lower its risk.

INCOME TAXES

       The Company accounts for income taxes using the asset and liability
       approach as per FASB Statement no. 109, Accounting for Income Taxes
       ("FASB 109"). Under this method, deferred tax assets and liabilities are
       determined based on the differences between the financial reporting and
       tax bases of assets and liabilities using expected tax rates in effect
       for the year in which the differences are expected to reverse. Under FASB
       109, the effect on deferred tax assets and liabilities of a change in tax
       rates is recognized in the period that includes the enactment date of the
       rate change.

STOCK BASED COMPENSATION

       FASB Statement No. 123 Accounting for Stock Based Compensation, requires
       the Company to either record compensation expense or to provide
       additional disclosures with respect to stock awards and stock option
       grants. Such disclosure is included in Note 8 below. No compensation
       expense is recognized pursuant to the Company's stock option plan under
       FASB 123, which is consistent with prior treatment under APB 25.

EARNINGS (LOSS) PER SHARE

       Earnings (loss) per share is calculated in accordance with FASB Statement
       No. 128, Earnings per Share. Basic earnings (loss) per share is computed
       by dividing the net income (loss) applicable to common shares by the
       weighted average number of common



                                      F-8
<PAGE>   40

       shares outstanding during the period. Diluted earnings (loss) per share
       adjusts basic earnings (loss) per share for the effects of convertible
       securities, stock options and other potentially dilutive financial
       instruments, only in the periods in which such effect is dilutive.

CREDIT RISK

       Financial instruments that potentially subject the Company to
       concentrations of credit risk consist principally of cash, cash
       equivalents, trade receivables and property. Concentration of credit risk
       with respect to trade receivables is limited as a result of the customer
       base being mostly in the United States and the property risk limited
       because most equipment in foreign countries is owned by the Company's
       vendor in that country.

 STATEMENT OF COMPREHENSIVE INCOME

       SFAS 130, Reporting Comprehensive Income prescribes standards for
       reporting comprehensive income and its components. Since the Company
       currently does not have any items of other comprehensive income, a
       statement of comprehensive income is not required.

NOTE 3 - MERGER & ACQUISITION

       MERGER: In January 1999, Sonus entered into merger discussions with Park.
       In anticipation of the merger, Park formed Sonus Park Acquisition, Inc.
       as a wholly owned subsidiary of Park. On March 4, 1999, Park Acquisition
       merged with and into Sonus leaving Sonus as the surviving corporation and
       a wholly owned subsidiary of Park. The former shareholders of Sonus
       received 92% of the capital stock of Park. The merger was accomplished
       via a reverse acquisition accounted for as a pooling of interests.

       On April 7, 1999, Park organized Sonus Communication Holdings, Inc. as a
       Delaware corporation and wholly owned subsidiary of Park. On April 16,
       1999, Holdings merged with and into Park leaving Holdings as the
       surviving corporation. As a consequence of the merger, Sonus became a
       wholly owned subsidiary of Holdings. Shares of Park were exchanged for
       shares of Holdings on a one-for-one basis in the merger. The sole purpose
       of the merger was to re-incorporate in the state of Delaware.

       SUBSEQUENT ACQUISITION: On November 15, 1999, the Company signed a
       definitive merger agreement, subject to regulatory and EOT shareholder
       approval, to acquire Empire One Telecommunications, Inc. ("EOT") for
       1,065,857 shares of common stock of the Company in exchange for all the
       outstanding common shares of EOT plus assumption of debt. The shares were
       valued at $3.00 per share. The Company has received Federal Communication
       Commission and New York State Public Service Commission approval with the
       remaining regulatory approvals anticipated before the end of the first
       quarter of 2000. EOT has scheduled the shareholder meeting on March 6,
       2000 to vote on the merger.



                                      F-9
<PAGE>   41

       EOT is a domestic Competitive Local exchange Carrier ("CLEC"),
       Interexchange Carrier and Internet Service Provider that offers a full
       range of services including local, long-distance, internet access and web
       hosting services to approximately 12,000 subscribers. EOT's 1999 revenues
       were approximately $4.9 million.

NOTE 4 - INSTALLMENT SALES

       During 1998, the Company purchased telecommunications equipment from a
       vendor at a cost of $231,090 which was sold to Egrisi Joint Stock
       Company, Ltd., an entity in the Republic of Georgia for $362,430. The
       payment terms are based on the usage of the equipment and consequently
       the collection period may be extended. As a result, the Company has
       recorded this sale under the installment method. Each payment collected
       is allocated to cost and profit in the same ratio that these two elements
       existed at the time of the sale. No installment sales were recorded in
       1998. During 1999, the Company recorded installment sales of $69,014 with
       a margin of $ 25,206. At December 31, 1999, the remaining receivable on
       the installment sale was $187,430 net of unearned profit of $106,134.

NOTE 5 - PROPERTY AND EQUIPMENT

       Property and equipment consist of the following:

<TABLE>
<CAPTION>
                                                                December 31
                                                          -----------------------
                                                             1999          1998
                                                          ---------     ---------
                    <S>                                  <C>           <C>
                    Network equipment                     $ 619,754     $ 257,350
                    Computers & other office equipment       17,013         -
                    Assets held under capital lease         209,402         -
                                                          ---------     ---------
                                                            846,169       257,350
                    Accumulated depreciation               (124,264)      (25,735)
                                                          ---------     ---------
                    Property and equipment, net           $ 721,905     $ 231,615
                                                          =========     =========
</TABLE>

NOTE 6 - STOCKHOLDERS EQUITY

       On January 20, 1999, in connection with the merger with Park (see Note
       3), the shareholders of the Company approved a 1 for 262.154216 reverse
       stock split of the Company's common stock. Additional shares were issued
       to round up each shareholder's fractional shares, and as a result of this
       split, 347,954 shares became outstanding immediately after the reverse
       split. The financial statements have been retroactively adjusted to
       account for this transaction.

NOTE 7 - FINANCING

       On January 21, 1999, Sonus completed the sale of 750,000 shares of common
       stock at $1.00 per share in a private placement to accredited investors.
       The aggregate offering price was $750,000 with Sonus netting cash
       proceeds of $627,000. L. Flomenhaft & Co.("Flomenhaft"), acting as
       investment banker, received $75,000 in cash and a five year



                                      F-10
<PAGE>   42

       common stock purchase warrant for 112,500 shares for its services. The
       investors in the private placement received piggyback registration rights
       in connection with the sale.

       In May 1999, the Company issued an aggregate principal amount of $575,000
       of its 10% convertible debentures ("Debentures"). The Debentures were
       automatically converted under the terms of the agreement to common stock
       with the sale of the Equity Unit offering in August 1999 as described
       below. Debenture holders were also entitled to an "equity kicker" equal
       to one-half the number of shares of common stock into which the
       Debentures were converted. The Company converted the Debentures into
       common stock at $1.50 per share and, in accordance with the terms of the
       Debentures, provided the additional shares as part of the equity kicker
       thereby effectively making the price of the common shares $1.00 per
       share. Flomenhaft provided the investment banking services for this
       offering. By the terms of the Debentures, all investment banking fees
       were deferred until the Debentures were converted. In August, with the
       conversion of the Debentures into shares of common stock, the cash fees
       of $57,500 and the five-year warrants were issued to Flomenhaft.

       In August 1999, the Company sold $500,000 of its equity Units, consisting
       of an aggregate of 250,000 shares of common stock and 250,000 common
       stock purchase warrants. Each warrant is exercisable at $3.00 per share
       of common stock. The sale resulted in net proceeds to the Company of
       $435,000 after investment banking fees and other expenses. The investment
       banking fees resulted in a cash payment to Flomenhaft of $50,000 and the
       issuance to Flomenhaft and a nominee of Flomenhaft five-year common stock
       purchase warrants.

       In conjunction with the acquisition of Empire One Telecommunications, the
       Company completed the sale of 1,851,504 shares of common stock at $1.35
       per share. The aggregate offering price was $2.5 million with the Company
       realizing $2,246,000 in cash proceeds. The offering was completed in
       three pieces with the first closing occurring on November 22, 1999 for
       418,140 shares resulting in gross proceeds of $564,000 and net proceeds
       to the Company of $502,000, the second closing occurring on January 5,
       2000 for 1,088,939 shares resulting in gross proceeds of $1,470,000 and
       net proceeds to the Company of $1,327,000, and the final closing
       occurring on January 27, 2000 for 344,425 shares resulting in gross
       proceeds of $465,000 and net proceeds to the Company of $417,157. The
       difference between gross proceeds and net proceeds reflect expenses of
       approximately $11,000 with the remaining difference being the cash
       portion of the investment banking fees. The closing that occurred on
       November 22, 1999 is included in the issued and outstanding common stock
       of the Company at December 31, 1999. At December 31, 1999, the Company
       had received $135,000 from investors in anticipation of the closing that
       occurred on January 5, 2000. These proceeds are shown in the equity
       section on the accompanying Consolidated Balance Sheet as subscriptions
       received.

       In the third quarter of 1999, the Company entered into an equipment
       leasing arrangement with its network equipment supplier. The agreement
       provides for a total available facility of $2.2 million. Under the
       arrangement, the Company leased $209,000 of network equipment in the
       third quarter recording the transaction as a capital lease. Subsequent to




                                      F-11
<PAGE>   43


       December 31, 1999, the Company converted the outstanding vendor equipment
       payable of $365,000 into a lease under this leasing agreement. If the
       lease had been converted at December 31, 1999, $219,000 of the vendor
       equipment payable would have been classified as a long-term obligation.

NOTE 8 - WARRANTS AND OPTIONS

       FINANCING WARRANTS: In conjunction with the financing completed on
       January 21, 1999 See Note 7 for a discussion of financing activity),
       Flomenhaft received 112,500 stock purchase warrants as a portion of the
       fees for acting as Sonus' investment banker. The exercise price was set
       at $1.00 per share, the per share sales price of the related private
       placement. Of the 112,500 warrants, Sonus issued 90,000 warrants to
       Flomenhaft and a warrant for the remaining 22,500 shares to a nominee of
       Flomenhaft. The warrants have piggyback registration rights associated
       with them.

       In May 1999, Flomenhaft acted as investment banker for the Company's 10%
       Convertible Debentures. As part of the fees for managing this offering,
       Flomenhaft earned common stock purchase warrants to acquire shares of the
       Company equal to 15% of the shares into which the Debentures converted at
       the effective conversion price of the Debentures. Under the terms of the
       Debenture Agreement, the Company had the right to either pay off the
       Debentures or to convert the Debentures to common shares, therefore the
       number of warrants and the exercise price of such warrants could only be
       determined upon conversion. Consequently, by agreement, the issuance to
       Flomenhaft of the warrants associated with the Debentures was deferred
       until the actual date of conversion. The Company chose to convert the
       entire Debenture to common shares and therefore Flomenhaft received the
       maximum number of warrants when the Debentures converted in August 1999.
       The exercise price was equal to the effective offering price of $1.00 per
       share.

       As part of the investment banking fees in conjunction with the Company's
       Unit Equity offering in August 1999, Flomenhaft earned a common stock
       purchase warrant for 37,500 shares at an exercise price of $2.00 per
       share, the price of each Unit in the offering. Of the shares earned,
       32,812 were issued to Flomenhaft with the remaining 4,688 issued to a
       nominee of Flomenhaft.

       In conjunction with the financing traunch closed in November 1999,
       Flomenhaft and a nominee of Flomenhaft received five-year common stock
       purchase warrants to acquire a total of 62,720 shares of the Company's
       common stock at an exercise price of $1.35 per share, the price paid by
       investors for each share in the offering. As indicated above, the Company
       closed the remaining portion of this offering in January 2000. Flomenhaft
       and Hudson Allen (both investment bankers of the Company) received as the
       non-cash portion of the investment banking fee for the two January 2000
       closings, common stock purchase warrants to acquire respectively, 162,162
       and 32,875, shares of the Company's common stock at an exercise price of
       $1.35.



                                      F-12
<PAGE>   44

       CONSULTING WARRANTS: On January 14, 1999, Sonus Communications entered
       into a two year consulting arrangement with L. Flomenhaft & Co.
       ("Consultant") whereby the Consultant is to provide strategic financial,
       business planning and business development services. The Agreement became
       effective January 21, 1999 when the first private placement was
       completed. To compensate Consultant for his efforts, Sonus issued a
       five-year warrant for 487,500 shares of common stock of the Company with
       an exercise price of $1.00 per share.

       Effective April 1, 1999, the Company entered into a consulting agreement
       with Coffin & Sons, Inc., a consulting firm owned by Mr. W. Todd Coffin,
       the Company's President and CEO. The agreement provided that Mr. Coffin
       serve as CEO for a term of six months and 15 days and that Mr. Coffin
       serve on the Board of Directors of the Company during the consulting
       period. For the services of Mr. Coffin, Coffin & Sons received cash
       compensation of $10,000 per month of which $2,000 per month was deferred
       until after the successful completion of the next private placement
       completed after the effective date of the agreement. The private
       placement was completed and the deferred payment was subsequently paid.
       In addition to the cash compensation, Coffin & Sons, Inc was issued
       50,000 shares of common stock in May 1999 and is entitled to receive (i)
       50,000 shares upon the successful completion of the private placement of
       common shares at a per share price of at least $1.50 and gross proceeds
       of at least $1 million; (ii) 50,000 shares following the registration of
       shares issued in the private placement and the shares trade at or above
       $3.00 per share for 20 consecutive trading days; and (iii) 50,000 shares
       following the installation of a new chief executive officer identified by
       Coffin & Sons, Inc and acceptable to the Company. The agreement expired
       October 15, 1999. Mr. Coffin and the Company agreed to extend the
       Agreement on a month-to-month basis until a new CEO can be found.

       On April 20, 1999 the Company entered into a three-month consulting
       agreement with Hudson Capital, a consulting firm owned by Mr. Raleigh
       Coffin, a director of the Company and the father of Mr. W. Todd Coffin.
       The agreement provided for Mr. R. Coffin to help the Company develop a
       comprehensive business plan along with an institutional investor
       presentation. Compensation to Hudson Capital consisted of $10,000 per
       month of which $5,000 per month was deferred until after the successful
       completion of the next private placement and a five-year warrant for
       100,000 shares with an exercise price of $1.00 per share. The remaining
       balance of $10,000 remaining at December 31, 1999 was paid in January
       2000. The warrant vests as to: (i) 25,000 shares upon the signing of the
       agreement; (ii) 25,000 shares upon the completion of the business plan;
       (iii) 25,000 shares upon successful completion of the private placement
       noted above and (iv) 25,000 shares when the stock publicly trades at
       $3.00 per share for at least 20 consecutive days.

       OTHER WARRANTS: In April 1999, Mr. Charles Albo, Chairman, and Ms.
       Maraneli, Executive Vice President each transferred 550,000 shares of
       common stock to the Company for cancellation by the Company. In exchange
       for the shares, the Company issued Mr. Albo and Ms Maraneli each a five
       year warrant to purchase 125,000 shares of




                                      F-13
<PAGE>   45

       the Company's common stock at an exercise price of $1.50 per share. Mr.
       Albo and Ms. Maraneli are the original founders of Sonus Communications,
       Inc.

       Additionally, the Company in May 1999 redeemed from each of Mr. Albo and
       Ms Maraneli 75,000 shares at $1.50 per share (the "Redemption Price").
       Mr. Albo and Ms. Maraneli agreed that payment of the Redemption Price be
       deferred until the closing of a private placement resulting in gross
       proceeds to the Company of at least $1 million. In exchange for the
       deferral of the Company's payment obligations, the Company agreed to
       advance each of Mr. Albo and Ms. Maraneli up to $7,000 per month not to
       exceed the total Redemption Price. All amounts advanced will be deducted
       from the redemption price when paid. Although the repayment was required
       to be made at the time of the Unit Equity sale in August, Mr. Albo and Ms
       Maraneli have continued to accept advances from the Company in lieu of
       full payment until the Company's cash position is better able to support
       the remaining amounts due. As of December 31, 1999, $112,000 had been
       paid leaving a balance due for the redemption of $113,000.

       Pursuant to employment contracts, the Company has issued warrants to Mr.
       Stephen Albo, the Company's Chief Technical Officer and to Mr. Richard
       Rose, the Company's Chief Financial Officer. Initially, Mr. Albo received
       in lieu of a salary, a five-year warrant to acquire 75,000 shares of
       common stock that was fully vested at the time of issuance. At the time
       Mr. Albo became a full time employee, a second five year warrant to
       purchase 75,000 shares of common stock of the Company was issued which
       vests over three years. Mr. Rose received upon execution of an employment
       agreement, a five-year warrant to purchase 75,000 shares of common stock
       of the Company which vests over three years. All of the above employment
       warrants were issued with an exercise price of $1.00 per share, the price
       at which the last shares of common stock had been sold prior to the
       issuance of the warrants.

       In conjunction with the hiring of an investment relations firm, the
       Company issued a five year warrant to purchase 150,000 shares of common
       stock of the Company at $2.50 per share, the market value on the date of
       the agreement as determined based on the closing price of the Company's
       common stock on the NASDAQ Bulletin board on the day prior to the date of
       the agreement.

       EMPLOYEE STOCK OPTION PLAN: On June 10, 1999, the Company adopted the
       1999 Stock Incentive Plan (the "1999 Plan") which was approved by a
       majority of the stockholders on July 12, 1999. Under the terms of the
       1999 Plan, which expires on June 10, 2009, employees of the Company and
       its subsidiaries may be granted incentive stock options, non-statutory
       stock options and restricted stock awards. The option price of shares of
       common stock generally will not be less than 100% of the fair market
       value on the date of grant or 110% of fair market value in the case of a
       grant to a 10% shareholder. No option will be exercisable more than ten
       years from the date of grant. The Company has reserved 500,000 shares for
       issuance under the 1999 Plan. At December 31, 1999, employees had been
       granted 306,000 shares at prices ranging from $1.00 to $1.50, the fair
       market value on the date of grant based on the most recent private
       placement of the Company's common stock prior to the date of issuance of
       the options.



                                      F-14
<PAGE>   46

       Options typically vest quarterly over a three-year period unless the
       Board of Directors in its discretion provides otherwise. Options issued
       during 1999 were issued with provisions for the option to vest quarterly
       over three years from the date of grant. Options shall become fully
       vested upon a "change of control" as defined in the 1999 Plan.

       DIRECTORS OPTION PLAN: On June 10, 1999, the Company adopted the 1999
       Director Stock Incentive Plan (the "Director Plan") which was approved by
       a majority of the stockholders on July 12, 1999. Under the terms of the
       Director Plan, which expires on June 10, 2009, non-employee directors of
       the Company may be granted non-statutory stock options at an exercise
       price equal to 100% of the fair market value on the date of grant. No
       option will be exercisable more than ten years from the date of grant.
       The Company has reserved 350,000 shares for issuance under the 1999 Plan.
       At September 30, 1999, the Company had granted to a new director an
       option for 50,000 shares at an exercise price of $2.00 per share, the
       fair market value on the date of grant, under the Director Plan.

       A summary of stock option transactions from the beginning of the plans
       through December 31, 1999 is as follows:

<TABLE>
<CAPTION>
                                                  Employees' Plan         Directors' Plan
                                              ---------------------    --------------------
                                              Number        Average    Number       Average
                                                of         Price Per     of        Price Per
                                              Shares         Share     Shares        Share
                                              -------      --------    ------      --------
<S>                                           <C>          <C>        <C>         <C>
Outstanding January 1, 1999                      -         $    -                  $    -
Granted                                       306,000      $   1.42    50,000          2.00
Exercised                                        -              -        -              -
Canceled                                         -              -        -              -
                                              -------      --------    ------      --------
Outstanding December 31, 1999                 306,000      $   1.42    50,000      $   2.00
                                              =======      ========    ======      ========

Exercisable Options at December 31, 1999       64,417      $   1.40     4,167      $   2.00
                                              =======      ========    ======      ========
</TABLE>

       The Company accounts for stock options under APB 25, under which no
       compensation cost has been recognized. Had compensation cost for these
       options been determined consistent with Statement of Financial Accounting
       Standards No. 123, Accounting for Stock-Based Compensation (FASB 123),
       the net loss would have increased to $1,828,640 ($0.46 per share)
       compared to $1,751,266 ($0.44 per share) as reported for the year ended
       December 31, 1999. There would have been no impact in 1998 since the
       plans were not established until June 1999.

       For purposes of calculating the above required disclosure, the fair value
       of each option is estimated on the date of grant using a Black-Scholes
       option pricing model with the following weighted-average assumptions used
       for grants in 1999: risk-free interest rate of 6.84%, no expected
       dividend yield, a volatility factor of the expected market price of the
       Company's common stock of 75% and a expected life of seven years.



                                      F-15
<PAGE>   47

       The Black-Scholes option valuation model was developed for use in
       estimating the fair value of traded options which have no vesting
       restrictions and are fully transferable. In addition, option valuation
       models require the input assumptions including the expected stock price
       volatility. Because the Company's employee and director stock options
       have characteristics significantly different form those of traded options
       and because changes in the subjective input assumptions can materially
       affect the fair value estimate, in management's opinion, the existing
       models do not necessarily provide a reliable single measure of the fair
       value of its stock options.

       The weighted average fair value of options granted during the year ended
       December 31, 1999 was $1.77 with the actual exercise prices for options
       outstanding as of December 31, 1999 ranging from $1.00 to $2.00 per
       share.

NOTE 9 - INCOME TAXES

       No provision for federal and state incomes has been recorded since the
       Company has incurred losses through December 31, 1999 aggregating
       $2,208,000. The use of the losses of the Company will be limited in the
       future as a result of the merger with Sonus Communications which resulted
       in a change of control under the rules of the Internal Revenue Service.
       The losses of Sonus Communications expire beginning in 2013. Deferred tax
       assets at December 31, 1999 and 1998 which consist primarily of the tax
       effect of the net operating loss carryforwards noted above, amount to
       approximately $750,000 and $60,000, respectively. The Company has
       provided a valuation reserve to reduce this asset to zero at both
       December 31, 1999 and 1998 since there is no assurance the Company will
       generate future taxable income to utilize the asset.

NOTE 10 - GEOGRAPHIC AREA

       The Company derives most of its telecommunications revenue from customers
       located in the United States. Revenues from customers located outside the
       United States are less than 10% of revenues. Revenues are derived by
       selling communications services to points of presence located in the
       following geographic areas:

<TABLE>
<CAPTION>
                       Year Ended December 31,
                       -----------------------
                       1999               1998
                       ----               ----
<S>                    <C>                <C>
United States              4%              -      %
Europe                    61%                 100 %
Asia                      35%              -      %
</TABLE>

NOTE 11 - TRANSACTIONS WITH THE FOUNDERS

       At December 31, 1998, the Company had a note to a shareholder with a
       principal balance of $99,969 plus accrued interest. Interest accrued at
       an annual rate of 7%. In conjunction with an agreement made with the
       shareholder effective April 16, 1999, the principal was converted into
       44,431 shares of common stock of the Company. Accrued interest, which


                                      F-16
<PAGE>   48


       totaled $19,509 at the time of the principal conversion, remains unpaid
       at December 31, 1999 and is included in other accrued expenses.

       In May 1999, in conjunction with the agreement noted above, the Company
       agreed to redeem from each of Mr. Albo and Ms Maranelli (the "Founders")
       75,000 shares of common stock at $1.50 per share (the Redemption Price").
       The Founders agreed that payment of the Redemption Price would be
       deferred until the closing of a private placement resulting in gross
       proceeds to the Company of at least $1 million. In exchange for the
       deferral of the Company's payment obligations, the Company agreed to
       advance each of the Founders $7,000 per month not to exceed the total
       Redemption Price. All amounts advanced would be deducted from the
       Redemption Price when paid. Although the repayment was required to be
       made at the time of the Unit Equity sale in August 1999, the Founders
       have continued to accept advances from the Company in lieu of full
       payment until the Company's cash position is better able to support the
       remaining amounts due. At December 31, 1999, $112,000 had been paid
       leaving a balance due for the redemption of $113,000.

       The Agreement further called for the Founders beginning on May 1, 1999 to
       devote all their time to the Company and to take no compensation for one
       year. Beginning May 1, 2000, the Founders will be paid an annual salary
       commensurate with that paid to similarly situated members of senior
       management of the Company. As a result of this agreement, the Company has
       recorded $112,000 in 1999 as salary expense with a corresponding
       contribution to capital for the fair value of the time devoted by the
       Founders to the Company.

NOTE 12 - RELATED PARTY TRANSACTION

       During 1998, the Company provided consulting services to Goodwill
       Communications USA, Inc. ("Goodwill"), a corporation 90% owned by the
       Company's two founders. Income earned for such services aggregated
       $37,450. No such services were provided in 1999. As of December 31, 1998,
       amounts payable to Goodwill amounted to $100,461 which were paid in 1999.

NOTE 13 - RETIREMENT PLAN

       The Company's Retirement Plan (the "Plan"), which was establish in 1999,
       is a defined contribution plan including provisions of section 401(k) of
       the Internal Revenue Code. Employees of Holdings who have completed 30
       days of service ("Participants") are eligible to participate in the Plan.
       The Plan permits, but does not require, the Company to match employee
       contributions. In addition, Holdings may make discretionary contributions
       to the Plan which will be allocated to each participant based on the
       ration of such Participant's eligible compensation to the total of all
       Participants' eligible compensation. Amounts contributed by Holdings vest
       evenly over three years based on years of service. Participants may elect
       to direct the investment of their contributions in accordance with the
       provisions of the Plan. The Company made no contributions to the Plan
       during 1999.



                                      F-17
<PAGE>   49

NOTE 14 - COMMITMENTS AND CONTINGENCIES

       Leased facilities: The Company leases office space, certain equipment and
       co-location space under lease agreements certain of which are renewable
       at the Company's option and/or provide for increase in rent over the life
       of the lease. Rent expense for 1999 was $44,749. During 1998, the Company
       operated from an office located in the house of one of the founders at no
       charge to the Company. The value of such space is not considered material
       and therefore no rent expense has been recorded for such space.

       Approximate aggregate future minimum rentals applicable to operating
       leases in effect at December 31, 1999 are as follows:

<TABLE>
<CAPTION>
                        Year Ending December 31,
                        <S>                                      <C>
                                    2000                                  $ 68,427
                                    2001                                    74,098
                                    2002                                    12,903
                                    2003                                         0
                                    2004                                         0
                                    After 2004                                   0
                                                                     -------------
                        Total minimum rental                              $155,428
                                                                     =============
</TABLE>

       Other Contingencies:

              A/     The Company is dependent on certain primary providers of
                     leased-line network capacity and internet access and upon
                     third-parties to provide telecommunications services it
                     provides to its customers.

              B/     In 1998, the Company had one customer to which it provided
                     telecommunications services. In 1999, the Company had two
                     customers that provided approximately 71% of the Company's
                     revenue.

              C/     The Company is a long-distance telecommunications
                     facilities-based carrier licensed by the Federal
                     Communications Commissions under Section 214 of the
                     Communications Act of 1934 and consequently is subject to
                     regulation by the FCC.

       Employment contracts:

       The Company entered into a one year employment contract with each of Mr.
       Steven Albo, CTO, and Mr. Richard Rose, CFO, whereby each was given
       warrants as described more fully in Footnote no. 8 above with each
       receiving a salary of $84,000 per year and a payment at December 31, 1999
       of an additional $31,000 providing each was employed by the Company at
       that time. The contracts are renewable upon the mutual consent of The
       Company and each of Mr. Albo and Mr. Rose. The employment agreements also
       contain provisions pursuant to which they have agreed not to compete with
       the Company.





                                      F-18
<PAGE>   50

       The Company entered into three-year employment agreements with Charles W.
       Albo and Nana Maraneli as of April 15, 1999. The agreements provide that
       Mr. Albo will serve as Executive Vice President and Chairman of Sonus
       Communication Holdings, Inc. and Ms. Maraneli will serve as Executive
       Vice President and Vice Chairman. Each has agreed to forgo any salary
       during the first year of the term (through May 1, 2000) but will become
       entitled to receive salary thereafter equivalent to that of similarly
       situated executives, to be not less than $84,000 per year. The agreement
       also provides that both shall be entitled to participate in benefit
       programs available to similarly situated senior management employees from
       and after April 15, 2000. The Company may terminate the employment
       agreements for cause or upon a finding of disability under the
       agreements. The employment agreements also contain provisions pursuant to
       which both have agreed not to compete with the Company.




                                      F-19