<PAGE>
                                   FORM 10-KSB

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE
    ACT OF 1934.

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

                               NORSTAR GROUP, INC.

        (EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)

            UTAH                                                  59-1643698
-------------------------------                               ----------------
(STATE OR OTHER JURISDICTION OF                               (I.R.S. EMPLOYER
 INCORPORATION OR ORGANIZATION)                              IDENTIFICATION NO.)

         4101 RAVENSWOOD ROAD, SUITE 128, FORT LAUDERDALE, FLORIDA 33312
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)

         ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: (954) 772-0240

      SECURITIES REGISTERED UNDER SECTION 12 (B) OF THE EXCHANGE ACT: NONE

         SECURITIES REGISTERED UNDER SECTION 12 (G) OF THE EXCHANGE ACT:

                          COMMON STOCK $ .01 PAR VALUE
                                (TITLE OF CLASS)

                 CHECK WHETHER THE ISSUER (1) FILED ALL REPORTS
               REQUIRED TO BE FILED BY SECTION 13 OR 15 (D) OF THE
                SECURITIES EXCHANGE ACT DURING THE PAST 12 MONTHS
            (OR 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 IS THERE IS NO 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 DEFINITIVE PROXY OR
INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-KSB
                    OR ANY AMENDMENT TO THIS FORM 10-KSB [X]

            STATE ISSUER'S REVENUES FOR ITS MOST RECENT FISCAL YEAR:
                                      NONE

              AT, MARCH 15, 2003 THERE WERE ISSUED AND OUTSTANDING
               25,793,825 SHARES OF COMMON STOCK. THE APPROXIMATE
                    AGGREGATE MARKET VALUE OF THE VOTING AND
             NON-VOTING COMMON EQUITY HELD BY NON-AFFILIATES OF THE
                REGISTRANT, BASED UPON THE LAST SALE PRICE OF THE
                  COMMON STOCK REPORTED ON THE OVER-THE-COUNTER
               BULLETIN BOARD WAS $1,029,593 AS OF MARCH 15, 2002

     INCLUDED IN THIS COMPUTATION ARE SHARES HELD BY DIRECTORS AND EXECUTIVE
  OFFICERS OF THE COMPANY AND THEIR ASSOCIATES AS A GROUP. SUCH INCLUSION DOES
   SIGNIFY THAT MEMBERS OF THIS GROUP ARE "AFFILIATES" OF OR CONTROLLED BY THE
                                    COMPANY.

                  TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT
                                   YES__ NO X

<PAGE>

                                TABLE OF CONTENTS

PART I ...................................................................    3
Item 1. Business .........................................................    3
Item 2. Properties .......................................................    4
Item 102 (a) 1. Small Business Issuer engaged in significant mining
operations: ..............................................................    4
Item 3. Legal Proceedings ................................................    4
Item 4. Submission of Matters to a Vote of Security Holders ..............    4

PART II ..................................................................    5
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters ......................................................    5
Item 6. Management's Discussion and Analysis or Plan of
Operations................................................................    5
Item 7. Financial Statements .............................................    8
Item 8. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure .................................................   21

PART III..................................................................   21
Item 9. Directors and Executive Officers of the Registrant ...............   21
Item 10. Executive Compensation ..........................................   21
Item 11. Security Ownership of Certain Beneficial Owners and
Management ...............................................................   21
Item 12. Certain Relationships and Related Transactions ..................   21
Item 13. Exhibits and Financial Statements ...............................   22
Item 14. Controls and Procedures
SIGNATURES ...............................................................   23

                                       2
<PAGE>

PART I

Item 1. Business

We were originally incorporated in the State of Utah in March 1961 as Florist
Accounting Services, Inc., a finance company that was primarily engaged in
factoring accounts receivables for florists in Utah. The name Florist Accounting
Services, Inc. was changed to Luxor Group N.S. during 1971 and to Norstar Group,
Inc. during 1992. The Company was unable to develop a profitable operation and
became inactive until April 1992. During the period from April 1992 through
December 31, 1999, the Company acquired and/or began to develop and dispose of,
several businesses and certain other investments. In 1998, the Company began the
development of its Internet business which involves the creation of a portal to
a cyber-city, an on-line community of "One Stop Shopping" for products,
entertainment, education and business services. The on-line community is being
developed through its two subsidiaries VeeAreCity.com, Inc. and VeeAre City the
Burbs.com, Inc. The portal is designed to provide subscriber/member with access
to several web browsers, a directory to thousands of stores, three dimensional
virtual reality ("VR") chat rooms, forums and game rooms, a VR dating service,
VR business conference room, specialty advertising rooms with VR activities and
global e-mails that can be accessed through the web anywhere in the world. The
Company also holds mineral rights attributable to 17 claims that were acquired
for gold mines located in the Gold Mountain mining district of Esmeralda County
Nevada. However, management does not expect mining operations to become one of
the Company's core businesses. Management is attempting to find a joint venture
partner to assist the Company in developing these claims. Presently management
is also evaluating an alternative where it would suspend the operations of the
company's Internet technology, at least temporarily, and shall look for another
company that has had ongoing commercial operations, that would merge with the
company and continue its business operation.

Item 2. Description of Property

NorStar's place of business is located at 4101 Ravenswood Road, Suite 128, Ft.
Lauderdale, Florida 33312. The premises is described as a CBS and steel class A
building/shared executive suite.

Item 102 (a) 1. Small Business Issuer engaged in significant mining operations:
NorStar acquired 680 acres (17 gold mining claims) in Nevada and is seeking a
joint venture partner to work the claims.* Description of Property pursuant to
Guide 7, Section 229.801(g) and Section 229.802(g) The seventeen (17) lode
claims are located in the Gold Mountain Mining District of Esmeralda County,
Nevada. Esmeralda County is noted only for its mining industry. The mines
located on the edge of Goldfield, Nevada have continued to operate on a limited
basis until the end of March 1992 when the Black Hawk mine closed its
underground operations. There continues to be several leach operations in full
swing.

Claim Location
The seventeen (17) unpatented claims are located 180 miles north of Las Vegas,
Nevada on state Highway 95 to Lida Junction, south to Gold Point then south by
southeast approximately 8 miles. The claims are situated in Township 8S, Range
41, Sections 11, 14, and 22. The Eastern Group (7 claims) is located at the
elevation of 6,500 to 7,000 feet and is the most mountainous area. The Western
Group (10 claims) is located on a gentle rolling terrain for the most part. In
either case walking is the only way to gain access to the greatest portion of
the claims.

Geology
The rock is primarily Tertiary age quartz monzonite. There are several visible
fault zones and you find that they contain quartz veins and stringers.
Mineralization is easily located on most of the claims and there appear to be
several areas that should be excellent prospects for geologic exploration. There
exists on the claims one (1) 250 foot adit with mineralization showing and four
(4) shafts. The deepest shaft is located on the Western Group of claims and has
been plumbed to 185 feet. Some of the underground workings have been mapped
prior to it filling with water.

Climate
The climate is arid, dry and hot in summertime and windy and cold in November
through January. However, snowfall is limited and in most cases would not
interfere with mining operations.

Ore Dumps
There is a 2500 ton dump located near the main shaft. Sampling of this dump
shows that the ore lends itself to the leaching process for recovery of gold and
silver. The gold in this area runs .997 fine. There are also several other
smaller ore dumps scattered among the claims. Since ore is not complex it can be
easily extracted by the leaching method or can be transported to a mill for
crushing and processing. Conclusions

Over the years estimates of ore reserves have been made by several geologists
and mining engineers. Donald R. McGregor stated in his report that by just
stripping the mountain on which the main shaft is located would open up
approximately three and one-half million (3,500,000) tons of ore with an average
grade of .116 ounces gold per ton and .23 ounces of silver per ton. The gross
value of this area alone

                                       3
<PAGE>

calculates out to over $146,000,000. Using $350.00/oz. gold and $5.00/oz silver.
This does not take into account the eastern group of claims. The assays from
this area range from .43 ounces gold and 2.26 ounces silver per ton to .83
ounces gold and 14.06 ounces silver per ton. An extensive core drilling program
in this area could easily produce triple the values calculated for the western
group of claims. The recovery cost for strip mining and heap leach is about $180
per ounce. Custom milling would run approximately $220 per ounce. A mining
operation is deemed feasible particularly since the ore is not complex.

*The aforementioned investments in gold mining are for investment purposes only
and should not be construed as the core business or core business activity of
NorStar.

Item 3. Legal Proceedings

NorStar is not involved in any legal proceedings.

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders of NorStar Group, Inc.
during the fiscal year ended December 31, 2002.

PART II

Item 5. Market for Registrants Common Equity and Related Stockholder Matters:

Our common stock is currently trades on the Over-The-Counter Bulletin
Board("OTCBB") under the symbol "NSTG." The following table indicates the high
and low bid sales prices for the equity for each full quarterly period within
the two most recent fiscal years and any subsequent interim period for which
financial statements are included are as follows:

<TABLE>
<CAPTION>
Year Quarter High Bid Low Bid
<S>  <C> <C>   <C>
2002 1st 0.240 0.095
2002 2nd 0.200 0.060
2002 3rd 0.125 0.042
2002 4th 0.060 0.031
--------------------------------------------
2001 1st 0.85  0.43
2001 2nd 13/16 0.20
2001 3rd 7/16  0.24
2001 4th 0.85  0.85
</TABLE>

(b) Holders
As of December 31,2002, the approximate number of shareholders of record of
NorStar Common Stock is 269. This information was obtained from the Company's
transfer agent.

(c) Dividend
NorStar has not paid dividends on its capital stock and does not anticipate that
it will do so in the foreseeable future. NorStar intends to retain any future
earnings for reinvestment in its business. Payments of dividends in the future
will depend upon NorStar's growth, profitability, financial condition and other
factors that NorStar's Board of Directors may deem relevant.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The following discussion regarding NorStar and its business and operations
contains "forward-looking statements" within the meaning of Private Securities
Litigation Reform Act of 1995. Such statements consists of any statement other
than a recitation of historical fact and can be identified by the use of
forward-looking terminology such as "may," "expect," "anticipate," "estimate" or
"continue" or the negative thereof of other variations thereon or comparable
terminology. The reader is cautioned that all forward-looking statements are
necessarily speculative and there are certain risks and uncertainties that could
cause actual events or results to differ materially from those referred to in
such forward-looking statements. NorStar does not have a policy of updating or
revising forward-looking statements and thus it should not be assumed that
silence by management of NorStar over time means that actual events are bearing
out as estimated in such forward-looking statements.

                                       4
<PAGE>

CRITICAL ACCOUNTING POLICIES AND ESTIMATES:

Our consolidated financial statements have been prepared in accordance with
accounting principals generally accepted in the United States of America. The
preparation of these consolidated financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues, and expenses, and related disclosure of contingent assets and
liabilities. On an on-going basis, we evaluate our estimates. We base our
estimates on historical experience and on other assumptions that are believed to
be reasonable under the circumstances. Accordingly, actual results could differ
from these estimates under different assumptions or conditions. This section
summarizes the critical accounting policies and the related judgments involved
in their application.

Web site and development costs:
We account for costs incurred in connection with the development of a web site
in accordance with Statement of Position 98-1, "Accounting for Costs of Computer
Software Developed or Obtained for Internal Use" and Emerging Issues Task Force
Issue No. 00-2, "Accounting for Web Site Development Costs." Accordingly, all
costs incurred in planning the development of a web site are expensed as
incurred. Costs, other than general and administrative and overhead costs,
incurred in the web site application and infrastructure development stage, which
involves acquiring or developing hardware and software to operate the web site,
are capitalized. Fees paid to an Internet service provider for hosting a web
site on its server(s) connected to the Internet are expensed over the estimated
period of benefit. Other costs incurred during the operating stage, such as
training, administration and maintenance costs, are expensed as incurred. Costs
incurred during the operating stage for upgrades and enhancements of a web site
are capitalized if it is probable that they will result in added functionality.
Capitalized web site and development costs are amortized on a straight-line
basis over their estimated useful life.

We previously capitalized costs of approximately $238,000 that were incurred
prior to 2001 in connection with the acquisition and development of software in
the application and infrastructure development stage and the enhancement of our
web site. As of December 31, 2002, we had not been able to generate any revenues
from our web site and management was uncertain as to whether we would be able to
obtain sufficient resources to sustain its operations and fully develop our web
services as initially planned. Accordingly, management reviewed the carrying
value of our capitalized web site and development costs for impairment as of
December 31, 2002 and determined the entire remaining carrying value was
impaired. Accordingly, the accompanying 2002 consolidated statement of
operations includes a noncash charge of $238,391 for the write-off of the
carrying value of the impaired web site and development costs.

Impairment of long-lived assets:
Impairment losses on long-lived assets, such as capitalized web site and
development costs, are recognized when events or changes in circumstances
indicate that the undiscounted cash flows estimated to be generated by such
assets are less than their carrying value and, accordingly, all or a portion of
such carrying value may not be recoverable. Impairment losses are then measured
by comparing the fair value of assets to their carrying amounts.

Stock-based compensation:
In accordance with the provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25"), we will recognize
compensation costs as a result of the issuance of stock options granted to
employees based on the excess, if any, of the fair value of the underlying stock
at the date of grant or award (or at an appropriate measurement date) over the
amount the employee must pay to acquire the stock. Therefore, we will not be
required to recognize compensation expense as a result of any grants of stock
options to employees at an exercise price that is equivalent to or greater than
fair value. We will also make pro forma disclosures, as required by Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"), of net income or loss as if a fair value based
method of accounting for stock options granted to employees had been applied
instead if such amounts differ materially from the historical amounts.

In accordance with SFAS 123, we will also recognize the cost of shares, options,
warrants and other equity instruments issued to non-employees as consideration
for services as expense over the periods in which the related services are
rendered by a charge to compensation cost or another appropriate expense or
prepaid expense, and a corresponding credit to additional paid-in capital.
Generally, cost will be determined based on the fair value of the equity
instruments at the date of issuance. The fair value of options, warrants and
similar equity instruments will be estimated based on the Black-Scholes
option-pricing model, which meets the criteria set forth in SFAS 123, and the
assumption that all of the options or other equity instruments will ultimately
vest. The effect of actual forfeitures will be recognized as they occur. As a
result, depending on how the market perceives any news regarding us or our
earnings, as well as market conditions in general, it could have a material
impact on the volatility we use in computing the value we place on these
instruments.

Valuation of deferred tax assets:
We regularly evaluate our ability to recover the reported amount of our deferred
income taxes considering several factors, including our estimate of the
likelihood that we will generate sufficient taxable income

                                       5
<PAGE>

in future years in which temporary differences reverse. Due to the uncertainties
related to, among other things, the extent and timing of future taxable income,
we offset net deferred tax assets by an equivalent valuation allowance as of
December 31, 2002.

RESULTS OF OPERATIONS:
Year ended December 31, 2002 as compared to year ended December 31, 2001.

The Company did not have any revenues during either year ended December 31,
2001 or 2002. Management estimates that the Company will not begin to generate
revenues from sales of memberships to subscribers for the near future.

During the year ended December 31, 2002, our operating expenses decreased by
approximately $35,000 to approximately $348,000 from approximately $383,000 for
2001. The primary cause of the decrease was non-cash charges of approximately
$98,000 relating to (i) amortization of unearned compensation which resulted
from the issuance of stock options to consultants relating to the agreements
described below and (ii) services, compensation and other expenses paid through
the issuance of common stock.

On April 17, 2000, we entered into agreements with three consultants. Under
these agreements, the consultants will, among other things, assist us in finding
businesses located primarily in England, other European countries and the
Northeastern section of the United States of America that will advertise in
and/or link to the Company's on-line community. The three consultants received
options to purchase a total of 1,300,000 shares of the Company's common stock
that will be exercisable at $.40 per share at any time during the term of the
consulting agreements as consideration for their services.

The aggregate fair value of the options granted to the consultants of $377,000
as of the date of grant, as determined based on the Black-Scholes option-pricing
model, was recorded as unearned compensation, which will be amortized to expense
over the periods in which the related services are rendered, as required by
generally accepted accounting principles in the United States of America.

On July 25, 2002, we entered into new agreements with certain of these
consultants as well as additional agreements with other consultants. Under these
agreements, the consultants will be required to, among things, assist the
Company in finding businesses located primarily in Europe that would advertise
in and/or link to the Company's online community in addition to performing web
site development services. These agreements will expire on July 25, 2003. As
consideration for their services, the consultants received a total of 5,050,000
shares of common stock with an aggregate fair market value of $101,000. We
recorded the aggregate fair market value as unearned compensation, which will
amortize to expense over the period from July 25, 2002 to July 25, 2003.

In addition, during 2001, we issued 2,000,000 shares of our common stock for
professional and other services having a fair value of $80,000. The decrease in
the aforementioned non-cash charges was offset by us writing off approximately
$238,000 of previously capitalized web site and development costs.

In addition to the aforementioned non-cash items, our operating expenses also
were impacted by a reduction in corporate overhead and research and development
costs of approximately $28,000 and $67,000, respectively, due to our cash
position.

LIQUIDITY AND CAPITAL RESOURCES:

Our consolidated financial statements have been prepared assuming that we will
continue as a going concern. However, we have not generated any significant
revenues on a sustained basis from its current operations. As shown in the
consolidated financial statements, we have continued to incur net losses,
although a substantial portion of the losses was attributable to noncash charges
for the fair value of shares and stock options issued for services, compensation
and other expenses. As of December 31, 2002, we had a cash balance of only $200,
a working capital deficiency of approximately $273,000 and an accumulated
deficit of $6,745,000. Management believes that we will continue to incur net
losses through at least December 31, 2003 and that the Company will need
additional equity and/or debt financing of at least $2,000,000 to enable it to
fully develop its web services and development of its proprietary virtual
reality products as initially planned and sustain its operations until it can
achieve profitability and generate cash flows from its operating activities on a
recurring basis. These matters raise substantial doubt about our ability to
continue as a going concern. Management is also evaluating an alternative where
it would suspend the operations of the Company's Internet technology, at least
temporarily, and shall look for another Company that has had ongoing commercial
operations, that would merge with the Company and continue its business
operation.

Management is attempting to obtain additional financing for us through the
issuance of equity securities, loans from financial institutions and/or
agreements with strategic partners. Management is also

                                       6
<PAGE>

evaluating an alternative where it would suspend the operations of our Internet
technology, at least temporarily, and shall look for another company that has
had ongoing commercial operations, that would merge with us and continue its
business operation.

However, management cannot assure that we will be able to sell equity
securities, obtain loans from financial institutions and/or form strategic
alliances that will generate financing for the further development of our
Internet technology or enter into a merger agreement with an operating company
on acceptable terms. If we are not able to obtain adequate financing, it may
have to curtail or terminate some or all of its operations. During 2002, we
financed our operations from its existing cash reserves and/or the proceeds
generated from the sale of notes to its stockholders of approximately $64,500.

We do not believe that our business is subject to seasonal trends or inflation.
On an ongoing basis we will attempt to minimize any effect of inflation on our
operating results by controlling operating costs and whenever possible, seeking
to insure that subscription rates and usage fees reflect increases in costs due
to inflation

Item 7. Financial Statements

                      NorStar Group, Inc. and Subsidiaries

                          Index to Financial Statements
                          -----------------------------

                                                                          PAGE
                                                                          ----

Report of Independent Public Accountants                                   F-2

Consolidated Balance Sheet
     December 31, 2002                                                     F-3

Consolidated Statements of Operations
     Years Ended December 31, 2002 and 2001                                F-4

Consolidated Statements of Stockholders' Equity (Deficiency)
     Years Ended December 2002 and 2001                                    F-5

Consolidated Statements of Cash Flows
     Years Ended December 31, 2002 and 2001                                F-6

Notes to Consolidated Financial Statements                                F-7/14

                                      * * *

                                      F-1
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                    ----------------------------------------

To the Board of Directors and Stockholders
NorStar Group, Inc.

We have audited the accompanying consolidated balance sheet of NorStar Group,
Inc. and Subsidiaries as of December 31, 2002, and the related consolidated
statements of operations, stockholders' equity (deficiency) and cash flows for
the years ended December 31, 2002 and 2001. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of NorStar Group, Inc.
and Subsidiaries as of December 31, 2002, and their results of operations and
cash flows for the years ended December 31, 2002 and 2001, in conformity with
accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As further discussed in Note
2 to the consolidated financial statements, the Company's operations have
generated recurring losses and negative net cash flows from operating
activities, and it had a working capital deficiency and an accumulated deficit
as of December 31, 2002. Such matters raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans concerning
these matters are also described in Note 2. The consolidated financial
statements do not include any adjustments that might result from the outcome of
these uncertainties.

                                         J.H. Cohn LLP

Roseland, New Jersey
April 7, 2003

                                      F-2
<PAGE>

                      NorStar Group, Inc. and Subsidiaries

                           Consolidated Balance Sheet
                                December 31, 2002

<TABLE>
<CAPTION>
                                     Assets
                                     ------
<S>                                                                         <C>
Current assets - cash                                                       $       222
Equipment, net of accumulated depreciation of $3,495                                699
Capitalized web site and development costs, at estimated
    net realizable value                                                           --
Mineral rights, at estimated net realizable value                                  --
                                                                            -----------
          Total                                                             $       921
                                                                            ===========

                    Liabilities and Stockholders' Deficiency
                    ----------------------------------------

<S>                                                                         <C>
Current liabilities:
    Noninterest bearing demand notes payable to stockholders                $   228,444
    Accounts payable and accrued expenses                                        44,932
                                                                            -----------
          Total                                                                 273,376
                                                                            -----------

Commitments and contingencies

Stockholders' deficiency:
    Class A convertible preferred stock, par value $10 per
       share; 1,000,000 shares authorized; none issued                             --
    Class B preferred stock, par value $10 per share;
       1,000,000 shares authorized; none issued                                    --
    Common stock, par value $.01 per share; 150,000,000
       shares authorized; 25,793,825 shares issued and outstanding              257,938
    Additional paid-in capital                                                6,273,090
    Accumulated deficit                                                      (6,745,355)
    Unearned compensation                                                       (58,128)
                                                                            -----------
          Total stockholders' deficiency                                       (272,455)
                                                                            -----------

          Total                                                             $       921
                                                                            ===========
</TABLE>

See Notes to Consolidated Financial Statements.

                                      F-3
<PAGE>

                      NorStar Group, Inc. and Subsidiaries

                      Consolidated Statements of Operations
                     Years Ended December 31, 2002 and 2001

<TABLE>
<CAPTION>
                                                                   2002            2001
                                                              ------------    ------------
<S>                                                           <C>             <C>
Revenues                                                      $       --      $       --
                                                              ------------    ------------

Operating expenses:
    Selling                                                         42,872         142,375
    General and administrative                                      61,960         168,404
    Research and development                                         4,641          71,799
    Write-off of capitalized web site and development costs        238,391
                                                              ------------    ------------
        Totals                                                     347,864         382,578
                                                              ------------    ------------

Net loss                                                      $   (347,864)   $   (382,578)
                                                              ============    ============

Basic net loss per common share                               $       (.02)   $       (.02)
                                                              ============    ============

Basic weighted average common shares outstanding                22,099,715      18,924,647
                                                              ============    ============
</TABLE>

See Notes to Consolidated Financial Statements.

                                      F-4
<PAGE>

                      NorStar Group, Inc. and Subsidiaries

          Consolidated Statements of Stockholders' Equity (Deficiency)
                     Years Ended December 31, 2002 and 2001

<TABLE>
<CAPTION>
                                           Common Stock
                                    --------------------------      Additional
                                     Number of                        Paid-in       Accumulated       Unearned
                                       Shares         Amount          Capital         Deficit       Compensation        Total
                                    ----------     -----------     -----------     ------------     ------------     -----------
<S>                                 <C>            <C>             <C>             <C>              <C>              <C>
Balance, January 1, 2001            18,743,825     $   187,438     $ 6,162,590     $(6,014,913)     $  (141,375)     $   193,740

Issuance of shares for payment
    of professional and other
    services                         2,000,000          20,000          60,000                                            80,000

Amortization of unearned com-
    pensation                                                                                           141,375          141,375

Net loss                                                                              (382,578)                         (382,578)
                                    ----------     -----------     -----------     -----------      -----------      -----------

Balance, December 31, 2001          20,743,825         207,438       6,222,590      (6,397,491)            --             32,537

Issuance of shares for payment
    of consultants                   5,050,000          50,500          50,500                         (101,000)

Amortization of unearned com-
    pensation                                                                                            42,872           42,872

Net loss                                                                              (347,864)                         (347,864)
                                    ----------     -----------     -----------     -----------      -----------      -----------

Balance, December 31, 2002          25,793,825     $   257,938     $ 6,273,090     $(6,745,355)     $   (58,128)     $  (272,455)
                                    ==========     ===========     ===========     ===========      ===========      ===========
</TABLE>

See Notes to Consolidated Financial Statements.

                                      F-5
<PAGE>

                      NorStar Group, Inc. and Subsidiaries

                      Consolidated Statements of Cash Flows
                     Years Ended December 31, 2002 and 2001

<TABLE>
<CAPTION>
                                                                          2002           2001
                                                                       ---------      ---------
<S>                                                                    <C>            <C>
Operating activities:
     Net loss                                                          $(347,864)     $(382,578)
     Adjustments to reconcile net loss to net cash
        used in operating activities:
        Services, compensation and other expenses
           paid through the issuance of common stock                                     80,000
        Amortization of unearned compensation                             42,872        141,375
        Depreciation                                                       1,398          1,398
        Write-off of capitalized web site and development costs          238,391
        Changes in operating liabilities - accounts payable
           and accrued expenses                                           (1,561)       (19,136)
                                                                       ---------      ---------
               Net cash used in operating activities                     (66,764)      (178,941)

Financing activities - proceeds from notes payable to stockholders        64,500        163,944
                                                                       ---------      ---------

Net decrease in cash                                                      (2,264)       (14,997)

Cash, beginning of year                                                    2,486         17,483
                                                                       ---------      ---------

Cash, end of year                                                      $     222      $   2,486
                                                                       =========      =========

Supplemental disclosure of cash flow information:
     Income taxes paid                                                 $    --        $    --
                                                                       =========      =========

     Interest paid                                                     $    --        $    --
                                                                       =========      =========
</TABLE>

See Notes to Consolidated Financial Statements.

                                      F-6
<PAGE>

                      NorStar Group, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

Note 1 - Business:

               NorStar Group, Inc. ("NorStar") was originally incorporated in
               the State of Utah during March 1961 as Florist Accounting
               Services, Inc. (the name Florist Accounting Services, Inc. was
               changed to Luxor Group N.S. Inc. during 1971 and to NorStar
               Group, Inc. during 1992). As of December 31, 2002, NorStar had
               two subsidiaries, VeeAreCity.com, Inc. ("VeeAreCity") and
               VeeAreCity The Burbs.com, Inc. ("The Burbs"), both of which were
               wholly-owned. As used herein, the "Company" refers to NorStar or
               NorStar together with VeeAreCity, The Burbs and/or certain other
               subsidiaries that had been acquired and disposed of by NorStar
               prior to December 31, 2002.

               The Company was originally organized as a finance company that
               was primarily engaged in factoring accounts receivable for
               florists in Utah. However, the Company was unable to develop
               profitable financing operations, and it became substantially
               inactive until April 1992. During the period from April 1992
               through December 31, 1999, the Company acquired and/or began to
               develop, and disposed of, several businesses and certain other
               investments.

               As of December 31, 2002 and during the years ended December 31,
               2002 and 2001, the Company was primarily engaged, through
               VeeAreCity and The Burbs, in an attempt to develop an Internet
               business that it started in 1998. The Internet business involves
               the creation of a portal to a cyber-city, online community of
               "One Stop Shopping" for products, entertainment, education and
               business services. The portal is intended to provide the
               subscriber/member with access to several web browsers, a
               directory of thousands of stores, three dimensional virtual
               reality ("VR") chat rooms, forums and game rooms, a VR dating
               service, VR business conference rooms, specialty advertising
               rooms with VR activities and global e-mail services that can be
               accessed through the web anywhere in the world. The Company
               intends to generate revenues from this business primarily through
               usage fees from certain of its activities and the sale of annual
               memberships to consumers who will be offered discounts on
               products and services through a provider network to be developed
               by the Company.

               As of December 31, 2002, the Company also held the mineral rights
               attributable to 17 claims that were acquired on April 29, 1992
               for gold mines located in the Gold Mountain mining district of
               Esmeralda County, Nevada (see Note 3). However, management does
               not expect mining operations to become one of the Company's core
               businesses. Management is attempting to find a joint venture
               partner to assist the Company in developing these claims. If a
               joint venture partner cannot be found, management expects that
               the Company will continue to hold the claims as an investment.

                                      F-7
<PAGE>

                      NorStar Group, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

Note 2 - Summary of significant accounting policies:
           Basis of presentation:

               The accompanying consolidated financial statements have been
               prepared assuming that the Company will continue as a going
               concern. However, the Company has not generated any significant
               revenues on a sustained basis from its current operations. As
               shown in the accompanying consolidated financial statements, the
               Company incurred net losses of approximately $348,000 and
               $383,000 and negative net cash flows from operating activities of
               $67,000 and $179,000 in 2002 and 2001, respectively, although a
               substantial portion of the losses and negative net cash flows
               were attributable to noncash charges for the write-off of
               previously capitalized web site and development costs and the
               fair value of shares and stock options issued for services,
               compensation and other expenses. As of December 31, 2002, the
               Company had a cash balance of only $200, a working capital
               deficiency of approximately $273,000 and an accumulated deficit
               of $6,745,000. Management believes that the Company will continue
               to incur net losses through at least December 31, 2003 and that
               it will need additional equity and/or debt financing of at least
               $2,000,000 to enable it to fully develop its web services as
               initially planned and sustain its operations until it can achieve
               profitability and generate cash flows from its operating
               activities on a recurring basis. These matters raise substantial
               doubt about the Company's ability to continue as a going concern.

               Management is attempting to obtain additional financing for the
               Company through the issuance of equity securities, loans from
               financial institutions and/or agreements with strategic partners.
               However, management cannot assure that the Company will be able
               to sell equity securities, obtain loans from financial
               institutions and/or form strategic alliances that will generate
               financing on acceptable terms. Management is also evaluating an
               alternative whereby it would suspend the development of the
               Company's internet technology, at least temporarily, and search
               for another company that has had ongoing commercial operations
               that would merge with the Company and continue its business
               operations. However, management cannot assure that the Company
               will be able to sell equity securities, obtain loans from
               financial institutions and/or form strategic alliances that will
               generate financing for the further development of the Company's
               internet technology or enter into a merger agreement with an
               operating company on acceptable terms. If the Company is not able
               to obtain adequate financing or consummate a merger, it may have
               to curtail or terminate some or all of its operations.

               The accompanying consolidated financial statements do not include
               any adjustments related to the recoverability and classification
               of assets or the amounts and classification of liabilities that
               might be necessary should the Company be unable to continue its
               operations as a going concern.

                                      F-8
<PAGE>

                      NorStar Group, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

Note 2 - Summary of significant accounting policies (continued):
          Principles of consolidation:
               The accompanying consolidated financial statements include the
               accounts of NorStar and its subsidiaries. All significant
               intercompany accounts and transactions have been eliminated in
               consolidation.

          Use of estimates:
               The preparation of financial statements in conformity with
               accounting principles generally accepted in the United States of
               America requires management to make estimates and assumptions
               that affect certain reported amounts and disclosures.
               Accordingly, actual results could differ from those estimates.

          Equipment:
               Equipment is stated at cost, net of accumulated depreciation.
               Depreciation is provided using the straight-line method over the
               estimated useful lives of the assets and amounted to $1,398 in
               both 2002 and 2001.

          Web site and development costs:
               The Company accounts for costs incurred in connection with the
               development of a web site in accordance with Statement of
               Position 98-1, "Accounting for Costs of Computer Software
               Developed or Obtained for Internal Use" and Emerging Issues Task
               Force Issue No. 00-2, "Accounting for Web Site Development
               Costs." Accordingly, all costs incurred in planning the
               development of a web site are expensed as incurred. Costs, other
               than general and administrative and overhead costs, incurred in
               the web site application and infrastructure development stage,
               which involves acquiring or developing hardware and software to
               operate the web site, are capitalized. Fees paid to an Internet
               service provider for hosting a web site on its server(s)
               connected to the Internet are expensed over the estimated period
               of benefit. Other costs incurred during the operating stage, such
               as training, administration and maintenance costs, are expensed
               as incurred. Costs incurred during the operating stage for
               upgrades and enhancements of a web site are capitalized if it is
               probable that they will result in added functionality.
               Capitalized web site and development costs are amortized on a
               straight-line basis over their estimated useful life.

               The Company capitalized costs of approximately $238,000 that were
               incurred prior to 2001 in connection with the acquisition and
               development of software in the application and infrastructure
               development stage and the enhancement of its web sites. As of
               December 31, 2002, the Company had not been able to generate any
               revenues from its web site and management was uncertain as to
               whether the Company would be able to obtain sufficient resources
               to sustain its operations and fully develop its web services as
               initially planned. Accordingly, management reviewed the carrying
               value of the Company's capitalized web site and development costs
               for impairment as of December 31, 2002 and determined the entire
               remaining carrying value was impaired. Accordingly, the ac-
               companying 2002 consolidated statement of operations includes a
               noncash charge of $238,391 for the write-off of the carrying
               value of the impaired web site and development costs.

                                      F-9
<PAGE>

                      NorStar Group, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

Note 2 - Summary of significant accounting policies (continued):
          Impairment of long-lived assets:
               Impairment losses on long-lived assets, such as capitalized web
               site and development costs, are recognized when events or changes
               in circumstances indicate that the undiscounted cash flows
               estimated to be generated by such assets are less than their
               carrying value and, accordingly, all or a portion of such
               carrying value may not be recoverable. Impairment losses are then
               measured by comparing the fair value of assets to their carrying
               amounts.

          Advertising:
               The Company expenses the cost of advertising and promotions as
               incurred. Advertising costs, which are included in selling
               expenses and charged to operations, were immaterial during 2002
               and 2001.

          Income taxes:
               The Company accounts for income taxes pursuant to the asset and
               liability method which requires deferred income tax assets and
               liabilities to be computed annually for temporary differences
               between the financial statement and tax bases of assets and
               liabilities that will result in taxable or deductible amounts in
               the future based on enacted tax laws and rates applicable to the
               periods in which the differences are expected to affect taxable
               income. Valuation allowances are established when necessary to
               reduce deferred tax assets to the amount expected to be realized.
               The income tax provision or credit is the tax payable or
               refundable for the period plus or minus the change during the
               period in deferred tax assets and liabilities.

          Net earnings (loss) per share:
               The Company presents "basic" earnings (loss) per share and, if
               applicable, "diluted" earnings per share pursuant to the
               provisions of Statement of Financial Accounting Standards No.
               128, "Earnings per Share" ("SFAS 128"). Basic earnings (loss) per
               share is calculated by dividing net income or loss by the
               weighted average number of shares outstanding during each period.
               The calculation of diluted earnings per share is similar to that
               of basic earnings per share, except that the denominator is
               increased to include the number of additional common shares that
               would have been outstanding if all potentially dilutive common
               shares, such as those issuable upon the exercise of stock
               options, were issued during the period. Diluted per share amounts
               have not been presented in the accompanying consolidated
               statements of operations because the Company had a net loss in
               2002 and 2001 and, accordingly, the assumed effects of the
               exercise of options that were granted to consultants in April
               2000 and expired in April 2001 (see Note 8) would have been
               anti-dilutive.

                                      F-10
<PAGE>

                      NorStar Group, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

Note 2 - Summary of significant accounting policies (continued):
          Stock-based compensation:
               In accordance with the provisions of Accounting Principles Board
               Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB
               25"), the Company will recognize compensation costs as a result
               of the issuance of stock options to employees based on the
               excess, if any, of the fair value of the underlying stock at the
               date of grant or award (or at an appropriate subsequent
               measurement date) over the amount the employee must pay to
               acquire the stock. Therefore, the Company will not be required to
               recognize compensation expense as a result of any grants of stock
               options to employees at an exercise price that is equivalent to
               or greater than fair value. The Company will also make pro forma
               disclosures, as required by Statement of Financial Accounting
               Standards No. 123, "Accounting for Stock-Based Compensation"
               ("SFAS 123"), of net income or loss as if a fair value based
               method of accounting for stock options granted to employees had
               been applied instead if such amounts differ materially from the
               historical amounts.

               In accordance with SFAS 123, the Company will also recognize the
               cost of shares, options, warrants and other equity instruments
               issued to nonemployees as consideration for services as expense
               over the periods in which the related services are rendered by a
               charge to compensation cost (or another appropriate expense or
               prepaid expense account) and a corresponding credit to additional
               paid-in capital. Generally, cost will be determined based on the
               fair value of the equity instruments at the date of issuance. The
               fair value of options, warrants and similar equity instruments
               will be estimated based on the Black-Scholes option-pricing
               model, which meets the criteria set forth in SFAS 123, and the
               assumption that all of the options or other equity instruments
               will ultimately vest. The effect of actual forfeitures will be
               recognized as they occur.

          Recent accounting pronouncements:
               In August 2001, the Financial Accounting Standards Board (the
               "FASB") issued Statement of Financial Accounting Standards No.
               144, "Accounting for the Impairment or Disposal of Long-Lived
               Assets" ("SFAS 144"). SFAS 144 addresses financial accounting and
               reporting for the impairment or disposal of long-lived assets.
               Among other things, SFAS 144 provides guidance on the
               implementation of Statement of Financial Accounting Standards No.
               121, "Accounting for the Impairment of Long-Lived Assets and for
               Long-Lived Assets to be Disposed of" and other previous
               pronouncements related to when and how to measure impairment
               losses and how to account for discontinued operations. The
               adoption of SFAS 144 by the Company as of January 1, 2002 did not
               have a material impact on the Company's consolidated financial
               position or results of operations.

                                      F-11
<PAGE>

                      NorStar Group, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

Note 2 - Summary of significant accounting policies (concluded):
          Recent accounting pronouncements (concluded):
               In June 2002, the FASB issued Statement of Financial Accounting
               Standards No. 146, "Accounting for Costs Associated with Exit or
               Disposal Activities" ("SFAS 146"). SFAS 146 addresses accounting
               and reporting costs associated with exit or disposal activities.
               This statement requires that a liability for a cost associated
               with an exit or disposal activity shall be recognized and
               measured initially at its fair value in the period in which the
               liability is incurred. SFAS 146 is effective for exit or disposal
               activities that are initiated after December 31, 2002. The
               Company does not believe that the adoption of SFAS 146 will have
               a significant impact on its consolidated financial statements.

               The Financial Accounting Standards Board and the Accounting
               Standards Executive Committee of the American Institute of
               Certified Public Accountants had issued certain other accounting
               pronouncements as of December 31, 2002 that will become effective
               in subsequent periods; however, management of the Company does
               not believe that any of those pronouncements would have
               significantly affected the Company's financial accounting
               measurements or disclosures had they been in effect during 2002
               and 2001, and it does not believe that any of those
               pronouncements will have a significant impact on the Company's
               consolidated financial statements at the time they become
               effective.

Note 3 - Investment in mineral rights:
               The Company acquired the mineral rights attributable to its gold
               mining claims (see Note 1) on April 29, 1992 for shares of common
               stock with a fair value of $400,000. Subsequently, the Company
               also paid total fees of $200,000 to the former owner for
               consulting services related to the development of the claims.
               Although, as explained in Note 1, management is still attempting
               to find a joint venture partner to assist the Company in
               developing these claims, it has not been able to find one. Based
               on the inability to find a joint venture partner and the
               uncertainties related to the Company's ability to generate
               profitable mining operations, the Company wrote off the carrying
               value of the investment prior to January 1, 2001.

Note 4 - Income taxes:
               As of December 31, 2002, the Company had net operating loss
               carryforwards of approximately $6,745,000 available to reduce
               future Federal taxable income which will expire at various dates
               through 2022. The Company had no other material temporary
               differences as of that date. Due to the uncertainties related to,
               among other things, the changes in the ownership of the Company,
               which could subject those loss carryforwards to substantial
               annual limitations, and the extent and timing of its future
               taxable income, the Company offset the deferred tax assets
               attributable to the potential benefits of approximately
               $2,698,000 from the utilization of those net operating loss
               carryforwards by an equivalent valuation allowance as of December
               31, 2002.

                                      F-12
<PAGE>

                      NorStar Group, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

Note 4 - Income taxes (concluded):
               The Company had also offset the potential benefits of
               approximately $2,559,000 and $2,406,000 from net operating loss
               carryforwards by equivalent valuation allowances as of December
               31, 2001 and 2000, respectively. As a result of the increases in
               the valuation allowance of $139,000 and $153,000 in 2002 and
               2001, respectively, the Company did not recognize any credits for
               income taxes in the accompanying consolidated statements of
               operations to offset its pre-tax losses in those years.

Note 5 - Concentrations of credit risk:
               Financial instruments which subject the Company to concentrations
               of credit risk consist primarily of cash. The Company maintains
               cash in bank deposit and other accounts the balances of which, at
               times, may exceed Federal insurance limits. At December 31, 2002,
               such cash balances did not exceed Federal insurance limits.
               Exposure to credit risk is reduced by placing such deposits in
               major financial institutions and monitoring their credit ratings.

Note 6 - Preferred stock:
               The Company's Articles of Incorporation authorize the issuance of
               up to 1,000,000 shares of Class A preferred stock and 1,000,000
               shares of Class B preferred stock. No shares of preferred stock
               had been issued as of December 31, 2002. Each share of Class A
               and Class B preferred stock is nonvoting; is entitled to an
               annual dividend, as may be declared by the Company's board of
               directors, of 10% that is cumulative; has a par value of $10 per
               share; and has a preference in liquidation equal to its par value
               plus all declared but unpaid dividends. Each share of Class A
               preferred stock is convertible at any time into five shares of
               the Company's common stock.

Note 7 - Stock option plan:
               On April 17, 2000, the Board of Directors approved a Stock Option
               Plan (the "Plan"), subject to ratification by the Company's
               stockholders, whereby up to 2,000,000 shares of the Company's
               common stock may be granted to key personnel in the form of
               incentive stock options and nonstatutory stock options, as
               defined under the Internal Revenue Code. Key personnel eligible
               for these awards may include all present and future employees of
               the Company and individuals who are consultants to the Company as
               well as nonemployee directors of the Company. Under the Plan, the
               exercise price of options must be at least 100% of the fair
               market value of the common stock on the date of grant (the
               exercise price of an incentive stock option for an optionee that
               holds more than 10% of the combined voting power of all classes
               of stock of the Company must be at least 110% of the fair market
               value on the date of grant). The maximum term of any stock option
               granted may not exceed ten years (or five years of an optionee
               that holds 10% or more of the Company stock) from the date of
               grant.

               As of April 7, 2003, no stock options had been awarded under the
               Plan.

                                      F-13
<PAGE>

                      NorStar Group, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

Note 8 - Consulting agreements:
               On April 17, 2000, the Company entered into agreements with three
               consultants that expired on April 17, 2001. Under these
               agreements, the consultants were, among other things, assisting
               the Company in finding businesses located primarily in England,
               other European countries and the Northeastern section of the
               United States that would advertise in and/or link to the
               Company's online community.

               As consideration for their services, the three consultants
               received options to purchase a total of 1,300,000 shares of the
               Company's common stock that were exercisable at $.40 per share at
               any time during the terms of the consulting agreements. The
               options expired on April 17, 2001. The aggregate fair value of
               the options granted to the consultants of $377,000 as of the date
               of grant, as determined based on the Black-Scholes option-pricing
               model, which was recorded as unearned compensation and amortized
               to expense over the period from April 17, 2000 to April 17, 2001,
               as required by SFAS 123.

               On July 25, 2002, the Company entered into new agreements with
               certain of these consultants as well as additional agreements
               with other consultants. Under these agreements, the consultants
               will be required to, among other things, assist the Company in
               finding businesses located primarily in Europe that would
               advertise in and/or link to the Company's online community in
               addition to performing web site development services. These
               agreements will expire on July 25, 2003. As consideration for
               their services, the consultants received a total of 5,050,000
               shares of common stock with an aggregate fair market value of
               $101,000. The Company recorded the aggregate fair value as
               unearned compensation which it is amortizing to expense over the
               period from July 25, 2002 to July 25, 2003.

Note 9 - Fair value of financial instruments:
               The Company's material financial instruments at December 31, 2002
               for which disclosure of estimated fair value is required by
               certain accounting standards consisted of cash, accounts payable
               and notes payable to stockholders. In the opinion of management,
               cash and accounts payable were carried at fair values because of
               their liquidity and/or short-term maturities. Because of the
               relationship of the Company and its stockholders, there is no
               practical method that can be used to determine the fair value of
               the notes payable to stockholders.

                                      * * *

                                      F-14
<PAGE>

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
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

<TABLE>
<CAPTION>
NAME                    AGE          TITLE DIRECTORSHIP                           FIVE YEARS BUSINESS EXPERIENCE
--------------------    ---   --------------------------------                    ------------------------------
<S>                     <C>                                         <C>
Harry F. DiFrancesco    76    President Chairman of Bd              *In 1965 Mr. DiFrancesco was Chairman, CEO and President of
                                                                    DiFrancesco Construction Company. From 1970 to 1975,
                                                                    Mr.DiFrancesco established and operated a shoe manufacturing
                                                                    company in Brazil. From 1979 to 1988, Mr. DiFrancesco was
                                                                    Chairman of the Board of International Jewelry Manufacturing
                                                                    Corp. an importer and wholesaler of diamonds. Mr.DiFrancesco
                                                                    has more than 40 years of business experience in real estate
                                                                    development, importing and jewelry manufacturing and sales

Andrew S. Peck          57    V.P. of Finance Dir. & Secretary      *Since 1990, Mr. Peck has served as President and Senior
                                                                    Financial Specialist for Financial Support Services, Inc.
                                                                    Mr. Peck has more than 20 years of experience in corporate
                                                                    finance, planning, project analysis and systems development.
</TABLE>

                                                               7
<PAGE>

<TABLE>
<CAPTION>
<S>                     <C>                                         <C>
Jay Sanet               53    CEO & Director                        *Mr. Sanet has served as a Director since December, 1998.
                                                                    From 1996 to 1998, Mr. Sanet was a branch manager for First
                                                                    National Equity Group. In 1995 Mr. Sanet was a branch
                                                                    manager for Vision Investment Group. From 1994 to 1995 Mr.
                                                                    Sanet was a registered representative for Myers, Pollack &
                                                                    Robin. He actively assists the Company in identifying and
                                                                    exploring merger candidates.

Maynard Neil Aboguv     58    VP of Sales Mgmt Director*            *Mr. Aboguv has over 15 years of experience as a sales
                                                                    representative and manager for various companies
                                                                    representing several industries.

</TABLE>

*    Each Director shall hold office until the next annual meeting of
     stockholders and until his successor shall have been elected and qualified.
     The directors of NorStar hold no other directorship in any other reporting
     company. There are no family relationships among the directors, executive
     officers or persons nominated or chosen by the Company to become directors
     or executive officers.

Item 10. Executive Compensation.

The following table sets forth certain information concerning the annual and
long-term compensation for services as officers to the Company for the fiscal
year ended December 31, 2002.

<TABLE>
<CAPTION>

  Fiscal    Name of              Capacity in          Salaries, Fees               Deferred       Shares of
  Year      Individual           which served         & Commissions    Bonuses   Compensation    Common Stock
--------    ------------------   ------------------   --------------   -------   ------------    ------------
2001
<S>         <C>                  <C>                      <C>                                     <C>
            Harry DiFrancesco*   Pres. & Dir              $0.00                                   1,500,000
            Jay Sanet*           V.P. & Dir.              $0.00                                     125,000
            Andrew S. Peck*      Sect, Treas. & Dir       $0.00                                     200,000
            Maynard N. Abguv*    V.P. & Dir.              $0.00                                      50,000
2002
           Harry DiFrancesco*    Pres. & Dir              $0.00                                   1,500,000
           Jay Sanet*            V.P. & Dir.              $0.00                                     125,000
           Andrew S. Peck*       Sect, Treas. & Dir       $0.00                                     200,000
           Maynard N. Abguv*     V.P. & Dir.              $0.00                                      50,000
</TABLE>


*    The Company has paid no compensation to any of its named executive officers
     and directors. In lieu of compensation the officers and directors received
     shares of NorStar Common Stock.

**   The level of compensation for the Company's named executive officers and
     directors will be determined following the next shareholders meeting of the
     Company.

Item 11. Security Ownership of Certain Beneficial Owners and Management
(b) Security Ownership of Management


                                       8
<PAGE>

<TABLE>
<CAPTION>

Title of class   Name and address                  Amount and nature            Percentage of class
                 of beneficial owners              of beneficial ownership
--------------   ---------------------             -----------------------      -------------------
<S>              <C>                                   <C>                      <C>
Common Stock     Harry F. DiFrancesco                  1,500,000 shares         0.05%
                 4101 Ravenswood Road, Suite 128
                 Fort Lauderdale, Fl 33312
---------------------------------------------------------------------------------------------------
Common Stock     Andrew Peck                             200,000 shares         0.01%
                 4101 Ravenswood Road, Suite 128
                 Fort Lauderdale, Fl 33312
---------------------------------------------------------------------------------------------------
Common Stock     Jay Sanet                               125,000 shares         0.00%
                 4101 Ravenswood Road, Suite 128
                 Fort Lauderdale, Fl 33312
---------------------------------------------------------------------------------------------------
Common Stock     Maynard Neil Aboguv                      50,000 shares         0.00%
                 4101 Ravenswood Road, Suite 128
                 Fort Lauderdale, Fl 33312
</TABLE>

(c) Change in Control

There are no arrangements, including any pledge by any person of securities of
NorStar or any of its parents, the operation of which may at a subsequent date
result in a change in control of the registrant.

Item 12. Certain Relationships and Related Transactions

None

Item 13. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a) The exhibits listed below are incorporated by reference as previously filed
with the Form 10-SB:

<TABLE>
<CAPTION>
Exhibit No.    Description
-----------    -----------
<S>            <C>
3.1            Articles of Incorporation as filed with the Utah Secretary of State
3.1(i)         By-laws
3.1 (ii)       Specimen Stock Certificate
4(a)           Certificate of Existence and Good Standing Status
4(b)           Certificate to do business as a Foreign Corporation in the State of Florida

</TABLE>

Item 14. Control and Procedures

(a)  Evaluation of disclosure controls and procedures. We maintain disclosure
     controls and procedures designed to provide reasonable assurance that
     information required to be disclosed in the reports filed with the SEC is
     recorded, processed, summarized and reported within the time periods
     specified in the rules of the SEC. Within 90 days prior to the filing of
     this Annual Report on form 10-KSB, we carried out an evaluation, under the
     supervision and the participation of our management including our Chief
     Executive Officer of the design and operation of these disclosure controls
     and procedures pursuant to Exchange Act Rule 13a-14. Based upon that
     evaluation, our Chief Executive Officer concluded that our disclosure
     controls and procedures are effective in alerting them on a timely basis to
     material information relating to the Company required to be in our periodic
     SEC filings.

(b)  Changes in internal controls. There were no significant changes in internal
     controls or other factors that could significantly affect our internal
     controls subsequesnt to the date of our evaluation.



                                       9
<PAGE>

                                                                    EXHIBIT 99.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002

                                 CERTIFICATIONS

I, Jay Sanet, certify that:

     1.   I have reviewed this annual report on Form 10-KSB of Norstar Group,
          Inc.

     2.   Based on my knowledge, this annual report does not contain any untrue
          statement of a material fact, or omit to state a material fact
          necessary to make the statements made in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this annual report.

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this annual report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this annual report.

     4.   The registrant's other certifying officer and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and have:

          a)   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               annual report is being prepared;

          b)   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this quarterly report ("Evaluation Date"); and

          c)   presented in this quarterly report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors (or persons
          performing the equivalent functions):

          a)   all significant deficiencies in the design or operation of
               internal codes which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

          b)   any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls; and

     6.   The registrant's other certifying officers and I have indicated in
          this annual report whether or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weaknesses.

Date: April 15, 2003

/s/ Jay Sanet

-----------------------
    CEO


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                                                                    EXHIBIT 99.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002

                                 CERTIFICATIONS

I, Andrew S. Peck, certify that:

     1.   I have reviewed this annual report on Form 10-KSB of Norstar Group,
          Inc.

     2.   Based on my knowledge, this quarterly report does not contain any
          untrue statement of a material fact, or omit to state a material fact
          necessary to make the statements made in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this quarterly report.

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this annual report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this quarterly report.

     4.   The registrant's other certifying officer and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and have:

          a.   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               annual report is being prepared;

          b.   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this annual report ("Evaluation Date"); and

          c.   presented in this quarterly report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors (or persons
          performing the equivalent functions):

          a.   all significant deficiencies in the design or operation of
               internal codes which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

          b.   any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls; and

     6.   The registrant's other certifying officers and I have indicated in
          this annual report whether or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weaknesses.

Date: April 15, 2003

/s/ Andrew S. Peck
----------------------
   CFO


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                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

NORSTAR GROUP, INC.

(Registrant) By:

Harry DiFrancesco, President and
Chairman of the Board
Date

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the 15 day of April 2003.

Signature                                 Title

/s/ Harry DiFrancesco
----------------------------------        President and Chairman of the
Harry DiFrancesco Board

/s/ Andrew S. Peck
----------------------------------        Vice President of Finance, Director
Andrew S. Peck and Secretary

/s/ Jay Sanet
----------------------------------
Jay Sanet                                 CEO, Director

/s/ Maynard Neil Aboguv
----------------------------------        Vice President Sales Management,

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