U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-KSB
                    [X] Annual report pursuant to Section 13
                       or 15(d) of the Securities Exchange
                         Act of 1934. For the year ended
                                December 31, 2001

                                       OR

     [ ]Transition report pursuant to Section 13 or 15 (d) of the Securities
   Exchange Act of 1934. For the transition period from ________ to ________.


                         Commission File Number 33-95796

                               LECSTAR CORPORATION
                      -------------------------------------

                 (Name of small business issuer in its charter)


          Texas                                            76-0406417
         --------                                          ---------
 (State or other jurisdiction                            (IRS Employer
of incorporation or organization)                       Identification No.)
    4501 Circle 75 Parkway,
      Building D-4210                                       30339-3025
      Atlanta, Georgia                                       (Zip Code)

                    (Address of principal executive offices)

                    Issuer's telephone number: (404) 659-9500

 Securities registered pursuant to                    Name of exchange on which
 Section 12(b) of the Exchange Act:                           registered:
           None                                                   None

      Securities registered pursuant to Section 12(g) of the Exchange Act:

                          Common Stock, $.01 par value
                    Series A Preferred Stock, $1.00 par value
                         Common Stock Purchase Warrants
              Redeemable Series A Preferred Stock Purchase Warrants
                 -----------------------------------------------
                                (Title of class)




         Check  whether the issuer:  (1) filed all reports  required to be filed
by  Section  13 or 15(d) of the  Exchange  Act during the past 12 months (or for
such shorter period that the issuer 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  there  is  no disclosure of delinquent filers in response to
Item 405 of  Regulation  S-B contained in this Form,  and no disclosure  will be
contained,  to the  best of the  issuer'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|.

         LecStar's revenues for its most recent fiscal year were $4,950,006.

         As  of  March  8,  2002,  the  aggregate   market   value  of   LecStar
Corporation's voting common stock held by non-affiliates, based upon the average
bid and  asked  price of such  common  equity  on the OTC  Bulletin  Board,  was
$1,776,695.  As of March 8, 2002,  112,641,792  shares of LecStar  Corporation's
common stock were outstanding.

         The  following  documents  are  incorporated  by reference: Portions of
LecStar  Corporation's  definitive  proxy  statement for their annual meeting of
Shareholders  for their 2001 fiscal year are incorporated by reference into Part
III, Items 9 through 12 of this annual report on Form 10-KSB.


<PAGE>

                                Table Of Contents

                                     PART I

ITEM 1.     DESCRIPTION OF BUSINESS........................................... 1
     Financing And Credit Agreements.......................................... 1
     Marketing Agreements..................................................... 2

     HISTORY OF LECSTAR CORPORATION........................................... 2

     CURRENT BUSINESS OPERATIONS OF LECSTAR CORPORATION....................... 3

     Overview................................................................. 3
     Business Strategy........................................................ 4
     Telecommunications Services.............................................. 6
          Offered Services.................................................... 6
     Competition and Industry Position........................................ 7
     Specific Competitors..................................................... 8
     Government Approval And Regulation....................................... 9
          Overview............................................................ 9
          Federal Regulation.................................................. 9
          Universal Service.................................................. 12
          Forbearance........................................................ 12
          Access Charge Reform............................................... 13
          Interconnection.................................................... 13
          Reciprocal Compensation............................................ 13
          Tariff Requirements................................................ 14
          Regional Bell Operating Company Entry into Long Distance........... 14
          Advanced Services and Collocation.................................. 14
          Pricing Flexibility................................................ 15
          State Regulation................................................... 15
          Local Regulation................................................... 16
     Compliance.............................................................. 17
     Intellectual Property................................................... 17
     Principal Suppliers For LecStar Communications.......................... 17

     EMPLOYEES............................................................... 18

ITEM 2.     DESCRIPTION OF PROPERTY.......................................... 18

ITEM 3.     LEGAL PROCEEDINGS................................................ 19

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE
            OF SECURITY HOLDERS.............................................. 19

                                     PART II

ITEM 5.     MARKET FOR COMMON EQUITY AND RELATED
            STOCKHOLDER MATTERS.............................................. 20

     Market for Common Stock................................................. 20
     Holders of Record....................................................... 20
     Dividends............................................................... 20
     Recent Sales of Unregistered Securities................................. 21


<PAGE>



ITEM 6.     MANAGEMENT'S DISCUSSION AND ANALYSIS
            OR PLAN OF OPERATION............................................. 22

     Overview................................................................ 22
     Results of Operations for the Year Ended December 31, 2001,
        Compared to the Year Ended December 31, 2000......................... 22
     Liquidity and Capital Resources......................................... 22

ITEM 7.     FINANCIAL STATEMENTS............................................. 23

ITEM 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
            ON ACCOUNTING AND FINANCIAL DISCLOSURE........................... 23

                                    PART III

ITEM 9.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
            CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE
            EXCHANGE ACT..................................................... 24

ITEM 10.    EXECUTIVE COMPENSATION........................................... 24

ITEM 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
            OWNERS AND MANAGEMENT............................................ 24

ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANACTIONS.................... 24

ITEM 13.    EXHIBITS AND REPORTS ON FORM 8-K................................. 24

            SIGNATURES....................................................... 25

<PAGE>



                           Forward-Looking Statements

         The  following  discussions  contain,   in   addition   to   historical
information,  forward-looking  statements that involve risks and  uncertainties.
These forward-looking  statements include all statements that are not statements
of  historical  fact and are often  identifiable  by their use of words  such as
"may,"  "expect,"  "believe,"   "anticipate,"   "intend,"  "could,"  "estimate,"
"continue,"  "plans" or the negative or other  variations of these or comparable
terms.  Some of  these  statements  include  discussions  regarding  our  future
business strategy and our ability to generate revenue,  income and cash flow. We
wish to caution you that all forward-looking statements contained in this annual
report are only  estimates  and  predictions.  Our actual  results  could differ
materially  from  those  anticipated  as a result  of risks  facing us or actual
events   differing  from  the   assumptions   underlying  such  forward  looking
statements.  Some factors that could affect our results  include those discussed
in Item 6 "Management's Discussion and Analysis or Plan of Operation" as well as
elsewhere in this annual report.

         Readers  are  cautioned  not   to   place   undue   reliance   on   any
forward-looking  statements contained in this report. We undertake no obligation
to publish the results of any  adjustments to these  forward-looking  statements
that may be made to reflect events on or after the date of this annual report or
to reflect the occurrence of unexpected events.


<PAGE>

                                     PART I

ITEM 1.           DESCRIPTION OF BUSINESS

         LecStar  Corporation  ("LecStar", or the "Company")  conducts  business
through   its   operating   subsidiaries   as  a   facilities-based   Integrated
Communications Carrier (ICC), certified by the FCC and by eight states including
Georgia as a Competitive  Local  Exchange  Carrier  (CLEC) to provide  regulated
local, long distance,  and international  telecommunications  services. In close
alliance with its local electric  utility company  partners and agents,  LecStar
offers a full array of  fixed-wire-line  voice,  data, and Internet  services to
business  and  residential  customers  in  BellSouth's   southeastern  operating
territory.

         LecStar  serves  small-to-medium  sized  businesses   and   residential
customers  with  a  balanced  focus  on  high-density   metropolitan  areas  and
under-served smaller communities. Services are offered at moderate discounts off
BellSouth prices and delivered  through the most cost effective use of LecStar's
own network facilities,  Unbundled Network Elements (UNEs) leased from BellSouth
and/or  resold  services  acquired  through  wholesale   agreements  with  other
carriers.   LecStar's   provisioning  systems  are  electronically  bonded  with
BellSouth enabling the efficient ordering of services in real-time.

         LecStar's subsidiaries have entered into interconnection agreements
with major incumbent carriers throughout the Southeast, including BellSouth,
Verizon, and Sprint, allowing LecStar efficiently to collocate network
facilities with these carriers, lease UNEs, resell their services, and utilize
the carriers' provisioning, installation and maintenance services at favorable
costs. Interconnection and resale agreements have been entered with UUNet
(Worldcom), Qwest and Sprint for access to other network and wholesale access
services so LecStar may market a full suite of communications solutions on par
with those of other major carriers.

         LecStar has implemented a marketing and distribution channel strategy
that it believes to be one of the most cost efficient in the industry. Strategic
partnerships with local electric utilities throughout the region market
co-branded voice and data services to residential and business customers. The
Company has developed marketing partnerships with interconnect companies and
value-added agents that market more complex telecommunication services to medium
and large businesses.

Financing and Credit Agreements

         LecStar has a credit agreement with Sherman LLC that provides us with
up to $5,000,000 in revolving credit. Pursuant to the terms of the credit
agreement, upon each borrowing we will issue to Sherman a warrant to purchase
our common stock equal to 19% of the amount borrowed divided by the average of
the closing bid price of our common stock for the five trading days immediately
prior to the date of the loan. Borrowings under the credit agreement are secured
by our accounts receivable and certain fixed and other assets, and those of each
of our significant subsidiaries, and accrue interest at the rate of 15% per
year. At December 31, 2001, the Company was in compliance with all covenants of
the credit agreement or had received appropriate waivers.

                                       1
<PAGE>

         We also have a $25,000,000 Equity Line Financing Agreement with Pima
Capital Management Limited. Upon our request, Pima Capital has committed to
purchase up to $25,000,000 of our common stock over a thirty-six month period.
The purchase price per share will be determined by dividing the dollar amount we
request by 92% of the simple average of the closing bid prices of our common
stock over the ten trading days immediately following a draw request from us.
Under the equity line financing agreement, we are obligated to register the
shares of common stock to be purchased by Pima before we may deliver a draw
request to Pima. To date, we have not drawn funds under this equity line of
credit because of conditions to funding.

         Inability to draw funds under either the financing or credit agreement
could result in a material adverse effect on our business, financial condition,
and results of operation. Furthermore, we may need to raise additional funding
through either debt or equity instruments. If we are not successful in these
efforts, lack of additional funding would result in a material adverse effect on
the Company and its viability as an ongoing concern.

Marketing Agreements

         We have executed joint marketing agreements with Cobb EMC, Marietta
Fibernet, Allied Utility Network LLC and Energy United. Cobb EMC is the
country's second largest electric management cooperative and serves over 143,000
customers directly and almost 300,000 customers indirectly by its provision of
billing services for other utilities. Marietta Fibernet is the
telecommunications subsidiary of the Marietta, Georgia city government and
serves over 42,000 customers. Allied Utility is a full service utility marketing
firm providing research, marketing and other support service to utilities.
Energy United provides energy services in central North Carolina and is the
third largest provider of electricity to residential customers in North
Carolina. Cobb, Marietta Fibernet and Energy United have launched marketing
programs aimed at the promotion of traditional local and long distance
telecommunication services to residential and business customers. If any of
these joint marketing agreements terminates, it could result in a material
adverse effect on our business, financial condition and results of operation.
Marketing agreements and/or letters of understanding have also been executed
with third party telecom agents who operate throughout the southeastern United
States. We hope to utilize these marketing agreements to facilitate the
expansion of our customer base.

                         HISTORY OF LECSTAR CORPORATION

         LecStar Corporation traces its inception to Empire Communications
Services Corporation ("Empire"), which was incorporated in May of 1998 as a C
Corporation in the State of Delaware to enter the telecommunications market
offering enhanced services resulting from deregulation and new technologies. Two
subsidiaries were formed in August of 1999 to facilitate Empire's operations:
Empire Telecom Services, Inc. and Empire DataNet Services, Inc. Empire changed
its name to LecStar Communications Corporation ("LCC") in May 2000. In January
2001 LCC merged with a newly formed wholly owned subsidiary of Corzon, Inc., a
publicly traded Texas Corporation, and became the surviving corporation.

                                       2
<PAGE>

         LCC was acquired in a stock-for-stock transaction in which Corzon, Inc.
issued 400,000,000 shares of common stock and 10 shares of Series F Preferred
Stock to the former LCC shareholders, who then held approximately 82% of Corzon,
Inc. outstanding common stock on a non-diluted basis. The consideration paid to
the former LCC stockholders was based on the then applicable fair market value
of Corzon, Inc. common stock.

         Effective March 30, 2001, holders of a majority of Corzon, Inc.'s
outstanding shares executed written consents to rename Corzon, Inc. to LecStar
Corporation and to effect a reverse split of the common stock whereby Corzon,
Inc. would exchange one share of Corzon, Inc. common stock for each sixty or
fewer shares of Corzon, Inc. common stock then issued and outstanding.

         LecStar  Corporation now trades under the symbol LCST.  LecStar and the
two  subsidiaries,  LecStar  Telecom,  Inc. and LecStar  DataNet,  Inc.  have 73
employees  and conduct  operations  from  facilities  at 4501 Circle 75 Parkway,
Suite D-4210, Atlanta, Georgia 30339-3025.

         Any reference in this annual report to Corzon, Inc. refers to the
company that existed before the LCC merger. Any reference to LCC refers to the
entity that LecStar Corporation acquired by merger and that is now a
wholly-owned subsidiary of LecStar. Otherwise any reference to us refers to the
entity formerly known as Corzon, Inc. and now, after the acquisition of LCC and
after the name change, is known as LecStar, unless the context demands a
different meaning.

               CURRENT BUSINESS OPERATIONS OF LECSTAR CORPORATION

         LecStar conducts its business through two operating subsidiaries:
LecStar Telecom, Inc. and LecStar DataNet, Inc.

Overview

         Through our operating subsidiaries, we seek to become a leading
provider of telecommunications services for small and mid-sized business and
residential subscribers in each of the markets we serve. We provide an array of
switched and dedicated offerings that include:

         o   local and long distance telephone service;

         o   dedicated data and Internet access;

         o   web hosting;

         o   e-mail; and

         o   related premise equipment.

         We provide our services through traditional and enhanced carrier class
technologies over network facilities that we own or lease from other carriers.
Our network architecture has been designed to capitalize on increased market
demand for affordable broadband communications. We plan to expand our
collocation of equipment with BellSouth and other incumbent carriers to
thirty-four other southeastern markets. We also provide routing of domestic and
international traffic for retail and wholesale customers through our switch
facilities located in Atlanta, Georgia.

                                       3
<PAGE>

         We believe that the Telecommunications Act of 1996 opened local
exchange markets to competition and created an attractive opportunity for us as
a competitive carrier to convert existing customers from incumbent local
exchange carriers and to capture a share of business in the growing data and
Internet segments of the market. Of significant importance are provisions of the
Telecommunications Act that require incumbent local exchange carriers to make
available various elements of their networks, which are necessary for the
cost-effective provision of service. This aspect of the Telecommunications Act
is referred to as unbundling. Unbundling allows us to:

         o   deploy and collocate our network equipment with the incumbent local
             exchange carriers;

         o   lease copper and fiber optic circuits as well as switch ports and
             calling features from the incumbent local exchange carriers and
             other carriers; and

         o access incumbent local exchange carrier databases and provisioning
systems to serve our customers.

Business Strategy

         We provide traditional and enhanced telecommunication services,
tailored to meet targeted customer requirements. We are positioned as a single
source for all of a customer's telecommunication requirements, offering
feature-rich services, value, consolidated customer billing and excellent
customer support. Most of these services are priced less than comparable
services provided by a customer's incumbent carrier.

         We intend to be a primary competitor in southeastern major cities, and
second and third tier cities that are generally under-served by incumbent and
competitive carriers. In all of our markets, we intend to target both
residential and small to mid-sized businesses, as well as wholesale and retail
niche markets that we believe are not significantly challenged by competitors.

         Our operating support systems enable us to deliver responsive and
accurate customer provisioning, support, billing and reporting. Our operating
support systems utilize platforms that are cost effective in meeting existing
volume requirements, while expandable to meet future volume demands. We employ
electronic systems that are integrated with the incumbent telephone company to
provide real-time customer data and order provisioning support. Our customer
service center may be linked to our marketing partners to enable an immediate
transfer of incoming customer calls from the partner to us. Likewise our billing
systems have been linked with a strategic partner whose consolidated customer
invoices include our charges. Our network management systems provide individual
call management and detailed call records that are integrated with our billing
systems for more efficient billing and administrative management. We have
implemented Web based customer interfaces and interactive voice response systems
designed to improve customer support responsiveness, while also reducing our
requirement for customer service representatives.

                                       4
<PAGE>

         Our network infrastructure is composed of advanced carrier class
platforms that integrate local, national, international and Internet service
provider networks into a single "meshed" network architecture. We utilize Cisco
Systems, Compaq, AdTran, and TelTronics technologies to support traditional and
broadband applications. We utilize unbundled network elements that we lease from
incumbent carriers at wholesale costs to construct our own local access circuits
connecting customers to our facilities. These unbundled network elements include
digital and analog local loops, local circuit switching, interoffice transport,
network interface devices, signaling and call-related databases, and operational
support systems.

         We deploy dedicated, high capacity circuits between our facilities that
are supplemented by low or no cost Internet transport for certain types of
international traffic. We have also entered into interconnection agreements with
public telephone network providers that allow us to implement low cost routing
of international traffic. Management adheres to a second-generation "smart
build" strategy whereby investment in expansion of our network facilities is
based on measurable near-term operational economics.

         We currently utilize three principal marketing channels:

             o  internal sales resources that are directed at larger and more
                complex customer opportunities;

             o agents that provide value-added solutions to mid-sized business
                while also addressing niche market opportunities; and

             o  partnerships with utility companies which address higher volume
                opportunities in the high-end residential and small business
                segments.

         Management balances the use of these channels to effectively pursue
opportunities while maintaining marketing expense at predictable planned ratios.
We have also established relationships with both incumbent telephone companies
and third party integrators for the installation and support of customer
circuits, equipment and services.

         We are currently authorized by the Federal Communications Commission to
market long distance services worldwide and are certified by eight state public
service commissions:

        o   Alabama;                                    o   Mississippi;
        o   Florida;                                    o   North Carolina;
        o   Georgia;                                    o   South Carolina; and
        o   Kentucky;                                   o   Tennessee.

         Certification is pending in Louisiana. We have agreements in place with
major incumbent telephone companies operating in the Southeast United States,
including BellSouth, Verizon, and Sprint, which allow us to interconnect,
collocate, resell and obtain unbundled network elements that are necessary to
our operations. Our current marketing efforts are focused in Georgia, where our
network facilities currently are installed. We have pre-paid operations in five
states.

                                       5
<PAGE>

         We plan to further penetrate Georgia markets and expect to expand our
operations into the following additional southeastern cities:

        o   Miami, Florida                        o   Chattanooga, Tennessee
        o   New Orleans, Louisiana                o   Jackson, Mississippi
        o   Charlotte, North Carolina             o   Daytona Beach, Florida
        o   Orlando, Florida                      o   Pensacola, Florida
        o   Nashville, Tennessee                  o   Shreveport, Louisiana
        o   Memphis, Tennessee                    o   Montgomery, Alabama
        o   Louisville, Kentucky                  o   Huntsville, Alabama
        o   Greensboro, North Carolina            o   Tallahassee, Florida
        o   Birmingham, Alabama                   o   Lafayette, Louisiana
        o   Jacksonville, Florida                 o   Tampa, Florida
        o   Raleigh, North Carolina               o   Gainesville, Florida
        o   Greenville, South Carolina            o   Biloxi, Mississippi
        o   Knoxville, Tennessee                  o   Asheville, North Carolina
        o   Charleston, South Carolina            o   Panama City, Florida
        o   Mobile, Alabama                       o   Wilmington, North Carolina
        o   Columbia, South Carolina              o   Florence, South Carolina
        o   Winchester, Kentucky                  o   Owensboro, Kentucky

Telecommunications Services

         Offered Services. Our traditional and enhanced telecommunications
services are designed, packaged and priced competitively to address
opportunities in the high-end residential, small and mid-sized business and
defined niche markets. We believe that we can attract and retain customers by
offering a comprehensive selection of services from a single supplier with
simplified subscription packages that provide a cost savings to customers.

         Our services may be classified in three broad categories:

                  Voice Services:
                  --------------

                  o   single line local access for residential and business;

                  o   trunked local access for business;

                  o   local access subscriber features;

                  o   voice mail;

                  o   dial-up intrastate, interstate and international long
                      distance;

                  o   dedicated intrastate, interstate and international long
                      distance; and

                  o   travel cards.


                                       6
<PAGE>



                  Data and Internet Services:
                  --------------------------

                  o   dedicated high-speed Internet access;

                  o   dedicated point-to-point data;

                  o   collocation;

                  o   web hosting; and

                  o   e-mail.

                  Integrated Services:
                  -------------------

                  o   high-speed Internet; and

                  o   local access, high-speed Internet with switched long
                      distance.

Competition and Industry Position

         We operate in a highly competitive market with a large number of
competitors. Several of our key competitors have significantly greater financial
resources, well-established brand names and reputations, larger customer bases
and diverse strategic plans and technologies. Often, telecommunication services
companies will compete for consumers based on price. The dominant providers
conduct extensive advertising campaigns to capture market share. Competitors
with greater financial resources may also be able to provide more attractive
incentive packages to agents to encourage them to carry products that compete
with our services. In addition, competitors with greater resources than ours may
be better situated to negotiate more favorable contracts with agents and have
the capital to rapidly deploy or leverage existing communications equipment and
broadband networks.

         In the provision of local access services, long distance services and
data and integrated services, we face competition from incumbent local exchange
carriers, competitive local exchange carriers, integrated communications
providers and inter-exchange carriers who may have a more substantial marketing
presence or possess their own network facilities and may offer services similar
to ours at more favorable prices. In addition, we face competition from Internet
service providers and others who offer domestic and long distance service over
the Internet at greatly reduced prices.

         Both our competitors and we rely substantially on independent agents to
market and sell our services to their respective customer bases. Competitors may
offer agents greater commissions, better terms or other incentives that hinder
our use of these agents. In addition, agents may enter into exclusive
arrangements with competitors, which could hinder our ability to attract and
retain agents.

         We believe that various legislative initiatives including the
Telecommunications Act have removed many of the remaining regulatory barriers to
local exchange competition. Nevertheless, legislators and regulators are likely
to provide incumbent local exchange carriers with increased pricing flexibility
as competition increases. If incumbent local exchange carriers are permitted to
lower their rates substantially or engage in excessive volume or term discount
pricing practices for their customers, the net income or cash flow of integrated
communications providers and competitive local exchange carriers such as ours,
could be materially adversely affected. In addition, while we currently compete
with AT&T, MCI Worldcom and others in the inter-exchange services market, the
Telecommunications Act permits the regional Bell operating companies to provide
inter-exchange services once various criteria are met. Once BellSouth
Telecommunications begins to provide such services, it will be in a position to
offer single source services similar to those offered by us. Furthermore, AT&T
and MCI Worldcom have entered local exchange services markets. We cannot predict
the number of competitors that will emerge as a result of currently existing or
potential federal and state regulatory or legislative actions. Competition from
the regional Bell operating companies with respect to inter-exchange services or
from AT&T, MCI Worldcom and others with respect to local exchange services could
have a materially adverse effect on our business.

                                       7
<PAGE>

         Existing competitors are likely to continue to expand their service
offerings to appeal to agents and consumers and new competitors are likely to
enter the telecommunications market and attempt to market services similar to
ours which will result in greater competition. If our existing competitors or
new competitors devote significant additional resources to the provision of
international or national long distance telecommunications services to our
customer base, such actions could have a material adverse effect on our
business, financial condition and results of operations, and there we can make
no assurance that we will be able to compete successfully against such existing
or new competitors.

Specific Competitors

         We compete against many similar communications companies which also
provide individual or bundled services. We expect competition to intensify in
the future and expect significant competition from both traditional and new
communications companies. Competitors in our targeted markets include:

        o   Mpower                                         o   XO Communications
        o   TalkAmerica                                    o   BellSouth
        o   Verizon                                        o   Sprint
        o   Birch                                          o   NuVox
        o   New South                                      o   C Beyond

         We also face strong competition from long distance companies. Many of
the leading long distance carriers offer substantial competition in targeted
market areas, including AT&T and MCI WorldCom. The newer national long distance
carriers are building and managing high speed fiber-based national voice and
data networks, partnering with Internet service providers, and may extend their
networks by installing competitive types of equipment. Examples include Level 3,
Qwest and Williams Communications. Incumbent local exchange carriers also
present strong competition, including Sprint, Verizon and the regional Bell
operating companies.

         Fixed wireless service providers can provide high speed communications
services using microwave or other facilities or satellite earth stations on
building rooftops. Some of these providers have targeted small and medium-sized
business customers and have a business strategy that is similar to ours. These
providers include MCI WorldCom, XO Communications, Sprint, Teligent and Winstar.

                                       8
<PAGE>

         Internet service providers, digital subscriber line companies and
cable-based service providers provide services that may be used by our targeted
customers rather than our services. Internet service providers provide Internet
access to residential and business customers, generally using the existing
communications infrastructure, such as Concentric Networks, EarthLink, Sprint,
the UUNET subsidiary of MCI WorldCom, AT&T Broadband and Verizon. Digital
subscriber line companies and/or their Internet service provider customers
typically provide broadband Internet access, such as BellSouth.Net and Rhythms
NetConnections. "Excite" at Home and its "Work" subsidiary and Road Runner are
Cable-based service providers that also provide broadband Internet access.

Government Approval and Regulation

         The following summary of regulatory developments and legislation does
not describe all present and proposed federal, state and local regulation and
legislation affecting the telecommunications industry. Existing federal and
state regulations are currently subject to judicial proceedings, legislative
hearings and administrative proposals that could change, in varying degrees, the
manner in which our industry operates. We cannot predict the outcome of these
proceedings or their impact on us or the telecommunications industry in general.

         Overview. Our services are subject to varying degrees of federal, state
and local regulation. The Federal Communications Commission exercises
jurisdiction over all the facilities of and services offered by
telecommunications common carriers to the extent facilities are used to provide,
originate or terminate interstate or international communications. State
regulatory commissions retain jurisdiction over most of the same facilities and
services to the extent they are used to provide, originate or terminate
intrastate communications. The decisions of these regulatory bodies are often
subject to judicial review, which makes it difficult for us to predict outcomes
in this area.

         Federal Regulation. We must comply with the requirements of common
carriage under the Communications Act of 1934. Comprehensive amendments to the
Communications Act of 1934 were made by the Telecommunications Act of 1996,
which substantially altered both federal and state regulation of the
telecommunications industry. The purpose of the Telecommunications Act was to
deregulate the telecommunications industry to a significant degree, thereby
fostering increased competition among carriers. Because implementation of the
Telecommunications Act is subject to numerous federal and state policy
rule-making and judicial review, we cannot predict with any degree of certainty
what its ultimate effect on us will be. Under the Telecommunications Act, any
entity may enter a telecommunications market, subject to reasonable state
safety, quality and consumer protection regulations.

                                       9
<PAGE>

         The Telecommunications Act makes local markets accessible by requiring
the incumbent local exchange carrier to permit interconnection to its network
and the establishment of incumbent local exchange carrier obligations with
respect to:

         o   collocation of equipment that allows companies like us to install
             and maintain our own network equipment, including asynchronous
             transfer mode switches and fiber optic equipment, in incumbent
             local exchange carrier central offices;

         o   interconnection that requires the incumbent local exchange carriers
             to permit their competitors to interconnect with incumbent local
             exchange carrier facilities at any technically feasible point in
             the incumbent local exchange carriers' networks;

         o   reciprocal compensation that requires the incumbent local exchange
             carriers and competitive local exchange carriers to compensate each
             other for telecommunications traffic that originates on the network
             of one carrier and is sent to the network of the other;

         o   resale of service offerings that requires the incumbent local
             exchange carrier to establish wholesale rates for services it
             provides to end-users at retail rates to promote resale by
             competitive local exchange carriers;

         o   access to unbundled network elements that requires the incumbent
             local exchange carriers to unbundle and provide access to some
             components of their local service network to other local service
             providers. Unbundled network elements are portions of an incumbent
             local exchange carrier's network, such as copper lines or "loops,"
             that competitive local exchange carriers can lease to create their
             own facilities networks;

         o   number portability that requires the incumbent local exchange
             carriers and competitive local exchange carriers to allow a
             customer to retain an existing phone number within the same local
             area even if the customer changes telecommunications services
             providers; number portability removes one barrier to entry faced by
             new competitors, who would otherwise have to persuade customers to
             switch local service providers despite having to change telephone
             numbers; number portability is available in all of LecStar's
             current markets;

         o   dialing parity that requires the incumbent local exchange carriers
             and competitive local exchange carriers to establish dialing parity
             so that customers do not perceive a quality difference between
             networks when dialing; and

         o   access to rights-of-way that requires the incumbent local exchange
             carriers and competitive local exchange carriers to establish
             non-discriminatory access to telephone poles, ducts, conduits and
             rights-of-way.

         Incumbent local exchange carriers are required to negotiate in good
faith with other carriers that request any or all of the arrangements discussed
above. If a requesting carrier is unable to reach agreement with the incumbent
local exchange carrier within a prescribed time, either carrier may request
arbitration by the applicable state commission. If an agreement still cannot be
reached, carriers are forced to abide by the obligations established by the
Federal Communications Commission and the applicable state commission.

                                       10

<PAGE>



         The Federal Communications Commission is charged with establishing
guidelines to implement the Telecommunications Act. In August 1996, the Federal
Communications Commission released a decision that established rules for the
interconnection requirements outlined above and provided guidelines for
interconnection agreements by state commissions. The U.S. Court of Appeals for
the Eighth Circuit vacated portions of that decision. On January 25, 1999, the
U.S. Supreme Court reversed the Eighth Circuit and upheld the Federal
Communications Commission's authority to issue regulations governing pricing of
unbundled network elements provided by the incumbent local exchange carriers in
interconnection agreements, which are discussed in more detail below. In
addition, the Supreme Court affirmed an Federal Communications Commission rule
that allows requesting carriers to pick and choose the most attractive portions
of existing interconnection agreements with other carriers. The Supreme Court
did not address other challenges raised about the Federal Communications
Commission's rules at the Eighth Circuit because those challenges were not
decided by the Eighth Circuit. In addition, the Supreme Court disagreed with the
standard applied by the Federal Communications Commission to determine whether
an incumbent local exchange carrier should be required to provide a competitor
with particular unbundled network elements.

         The Federal Communications Commission adopted a new standard in
November 1999 for analyzing unbundled network elements as required by the
Supreme Court's order. Applying this standard to the existing network elements,
the Federal Communications Commission concluded that incumbent local exchange
carriers would no longer be required to provide directory assistance and
operator services as network elements, though they will continue to be available
pursuant to tariff at different prices. The Federal Communications Commission
also removed unbundled switching as an element in urban areas where the
incumbent local exchange carriers are also providing certain other combinations
of elements in a non-discriminatory fashion. The Federal Communications
Commission declined to require incumbent local exchange carriers to unbundle
certain facilities used to provide high speed Internet access and other data
services, except in limited circumstances.

         The Federal Communications Commission has prescribed a forward-looking
economic cost approach for pricing interconnection and the separate, unbundled
network elements that together constitute what a carrier needs to provide
telecommunications services. Pursuant to the Federal Communications Commission's
pricing rules, the state commissions have significant responsibility for the
implementation of those rules, including the actual setting of rates. In July
2000, the U.S. Court of Appeals for the Eighth Circuit vacated the Federal
Communications Commission methodology for pricing unbundled network elements and
the methodology for determining wholesale rates for retail services. The order
also affirmed the previous decision of the Eighth Circuit that vacated Federal
Communications Commission rules that required incumbent local exchange carriers
to combine previously uncombined elements for requesting carriers. In January
2001, the U.S. Supreme Court agreed to hear in October 2001 several appeals from
the order of the U.S. Court of Appeals. The Supreme Court's decision is still
pending.

                                       11

<PAGE>



         The Eighth Circuit's vacation of the Federal Communications Commission
pricing methodology creates uncertainty as to how these pricing issues might be
enforced by the states. The resulting uncertainty makes it difficult to predict
whether we will be able to continue to rely on our existing interconnection
agreements or have the ability to negotiate acceptable interconnection
agreements in the future.

         In addition to the requirement that the incumbent local exchange
carriers open their networks to competitors and the reduction of the level of
regulation applicable to competitive local exchange carriers, the
Telecommunications Act also reduces the level of regulation that applies to the
incumbent local exchange carriers, thereby increasing their ability to respond
quickly in a competitive market. For example, the Federal Communications
Commission has applied streamlined tariff regulation of the incumbent local
exchange carriers, which shortens the requisite waiting period before which
tariff changes may take effect. These developments enable the incumbent local
exchange carriers to change rates more quickly in response to competitive
pressures. The Federal Communications Commission has also adopted heightened
price flexibility for the incumbent local exchange carriers, subject to
specified caps. If exercised by the incumbent local exchange carriers, this
flexibility may decrease our ability to effectively compete with the incumbent
local exchange carriers in our markets.

         Universal Service. The Federal Communications Commission has adopted
rules implementing the universal service requirements of the Telecommunications
Act. Pursuant to those rules, all telecommunications providers must contribute a
small percentage of their telecommunications revenues to a newly established
Universal Service Fund. The Universal Service Fund provides support to carriers
serving low-income customers and customers who live in areas where the cost of
providing telecommunications services is high. In addition, the Federal
Communications Commission established new subsidies for telecommunications and
some information services provided to qualifying schools and libraries and for
services provided to rural health care providers. Providers of interstate
telecommunications services, as well as other entities, such as private carriers
offering excess capacity to end user customers, must pay for these programs. Our
contribution to the federal support funds would be calculated based on a
percentage of our gross end-user interstate and international telecommunications
revenues. Our assessment rate for the first quarter 2002 was 6.81% of interstate
and international end-user telecommunications revenues. The contribution factor
issued by the Federal Communications Commission varies quarterly. The amounts
contributed may be billed to customers. Currently, the Federal Communications
Commission is calculating assessments based on the prior year's revenues. We are
currently unable to quantify the amount of any contributions that we will be
required to make in the future or the effect that these required contributions
will have on our financial condition.

         Forbearance. The Telecommunications Act also gives the Federal
Communications Commission authority to determine not to regulate carriers if it
believes regulation would not serve the public interest. The Federal
Communications Commission is charged with the review of its regulations for
continued relevance on a regular basis. As a result of this mandate, a number of
regulations that apply to competitive local exchange carriers have been and may
in the future continue to be eliminated. We cannot, however, guarantee that any
regulations that are now or will in the future be applicable to us will be
eliminated.

                                       12
<PAGE>

         Access Charge Reform. Historically, network access charges paid by
other carriers were set at levels that subsidized the cost of the provision of
local residential service. The Telecommunications Act requires the Federal
Communications Commission to identify and remove the historical implicit local
service subsidy from network access rates. Federal policies in implementation by
the Federal Communications Commission strongly favor access charge reform,
whereby the historical subsidy for local service that is contained in network
access charges paid by long distance carriers will be eliminated.

         Interconnection. We have entered into interconnection agreements with
BellSouth, ALLTEL, Verizon and Sprint, the incumbent local exchange carriers in
our markets. We plan to enter into additional agreements as our build-out of our
network progresses. Most of these agreements will expire within the next two
years. The expiration of these agreements will require that we negotiate new
interconnection terms with these incumbent local exchange carriers and any
additional incumbent local exchange carriers. Pending conclusion of these
negotiations, several existing interconnection agreements should continue to
govern the interconnection terms while other renegotiated agreements will be
given retroactive effect from the expiration date of the superceded agreement
following the conclusion of negotiations or arbitrations.

         Reciprocal Compensation. The Telecommunications Act also requires
incumbent local exchange carriers to enter into mutual compensation arrangements
with new local telephone companies for transport and termination of local calls
on each others' networks. Reciprocal compensation is the compensation paid by
one carrier to complete particular calls on another local exchange carrier's
network. Most state public utility commissions have ruled that traffic to
Internet service providers is covered by this requirement. In 1999, the Federal
Communications Commission decided that calls to Internet service providers could
be jurisdictionally interstate. However, the U.S. Court of Appeals for the DC
Circuit vacated the Federal Communications Commission's determination and
remanded the matter to the Federal Communications Commission for further
analysis. On April 27, 2001, the Federal Communications Commission released an
order addressing intercarrier compensation for dial-up connections of
Internet-bound traffic. The Federal Communications Commission found that
Internet-bound traffic is interstate and subject to its jurisdiction. Moreover,
the Federal Communications Commission found that Internet-bound traffic is not
subject to reciprocal compensation under section 251(b)(5) of the
Telecommunications Act. Instead, the Federal Communications Commission
established federal rates for this traffic that decline over a three year
period. The Federal Communications Commission also set caps on the total minutes
of this traffic that may be subject to any intercarrier compensation and
required that incumbent local exchange carriers must offer to pay reciprocal
compensation for local traffic at the same rate as they are required to pay on
Internet-bound traffic. Several competing carriers and state regulators appealed
this order to the U.S. Court of Appeals for the D.C. Circuit. The court denied a
motion to stay the Federal Communications Commission's order, and the order went
into effect. The appeals remain pending.

                                       13

<PAGE>



         Tariff Requirements. We are classified by the Federal Communications
Commission as a non-dominant carrier with respect to both our domestic
interstate and international long-distance carrier services and our competitive
local exchange carrier services. As a non-dominant carrier, our rates presently
are not regulated by the Federal Communications Commission. Carriers must file
informational tariffs with the Federal Communications Commission that describe
their operator services. The Federal Communications Commission has ordered
mandatory detariffing of non-dominant carriers' interstate long distance
services, and carriers that have not already done so must withdraw their Federal
Communications Commission interstate long distance tariffs by July 31, 2001.
Carriers that provide international long distance are still required to file
informational tariffs of those rates. However, the Federal Communications
Commission has commenced a proceeding to consider mandatory detariffing of
international long distance services as well. During the pendency of that
proceeding, long distance carriers may file tariffs with the Federal
Communications Commission that describe both their international and interstate
long distance rates, but any such tariff must state that the interstate rates
are provided for informational purposes only. We have filed an informational
tariff for our international long distance services with the Federal
Communications Commission.

         Regional Bell Operating Company Entry into Long Distance. The
Telecommunications Act also established standards for regional Bell operating
companies and their affiliates to provide long-distance telecommunications
services between a local access and transport area and points outside that area.
Local access and transport areas are geographical regions in the United States
within which a local telephone company may offer local telephone service. In
1997, BellSouth filed applications with the Federal Communications Commission
for authority to offer in-region inter-local access and transport area services
in South Carolina and Louisiana. In 1998, BellSouth filed a second application
with the Federal Communications Commission for authority to offer such services
in Louisiana. In December 1997, the Federal Communications Commission rejected
the South Carolina application. The Louisiana applications were rejected in
February 1998 and October 1998, respectively, Notwithstanding these decisions,
BellSouth likely will file additional applications to offer inter-local access
and transport area services for other states in its territory, including states
in which we provide these services. Because of its existing base of local
telephone service customers and its extensive telecommunications network, we
anticipate that BellSouth will be a significant competitor in each of the states
in which it obtains in-region, inter-local access and transport authority from
the Federal Communications Commission.

         Advanced Services and Collocation. The Telecommunications Act requires
the Federal Communications Commission to encourage the deployment of advanced
telecommunications capabilities to all Americans through the promotion of local
telecommunications competition. The Federal Communications Commission adopted
rules designed to improve competitor access to incumbent local telephone
carriers collocation space and to reduce the delays and costs associated with
collocation, and has sought additional public comment on certain collocation
rules vacated and remanded by the U.S. Court of Appeals for the D.C. Circuit, as
well as additional collocation and network architecture issues. Collocation is
the placement of equipment by a telephone company alongside another telephone
company's equipment along a network.

                                       14
<PAGE>

         The Federal Communications Commission has taken steps to facilitate
competitors' access to lines connecting customer premises to the operator for
purposes of digital subscriber line deployment. Specifically, the Federal
Communications Commission required incumbent local exchange carriers, like
BellSouth, to permit unaffiliated providers of digital subscriber line services
to use a portion of the lines connecting customer premises to the operator used
for basic telephone service rather than purchasing new lines. In related
proceedings, the Federal Communications Commission adopted rules requiring
incumbent carriers to allow competing carriers access to a number of listing
network elements, including local loops, sub loops, and local circuit switching.
Also in related proceedings, the Federal Communications Commission adopted rules
requiring incumbent carriers to allow competing carriers to access space in the
incumbent's central office, which will enable competitors to collocate all
equipment necessary for interconnection or access to unbundled network elements.
Portions of these proceedings were remanded to the Federal Communications
Commission from a U.S. Court of Appeals. Thereafter, in August 2001, the Federal
Communications Commission released an order revising certain of its collocation
rules, and, in December 2001, the Federal Communications Commission initiated an
inquiry into certain of its rules regarding line sharing. Better collocation
arrangements at incumbent local exchange carriers' main facilities housing
telephone network equipment benefits our operations.

         Pricing Flexibility. In August 1999, the Federal Communications
Commission released an order regarding pricing flexibility for certain
interstate services. Under these rules, local exchange carriers operating under
price caps can obtain pricing flexibility relief on a Metropolitan Statistical
Area basis for switched access and special access services once the carrier
demonstrates that certain competitive triggers have been satisfied. To the
extent these regulatory initiatives enable or require incumbent local exchange
carriers to offer selectively reduced rates for some access services, the rates
we may charge for these access services will likely be constrained.

         State Regulation. Most states regulate entry into the markets for local
exchange and other intrastate services, and states' regulation of competitive
local exchange carriers vary in their regulatory intensity. Most states require
that companies seeking to provide local exchange and other intrastate services
to apply for and obtain the requisite authorization from a state regulatory
body, such as a state commission. This authorization process generally requires
the carrier to demonstrate that it has sufficient financial, technical and
managerial capabilities and that granting the authorization will serve the
public interest. As of December 31, 2001, we are authorized to provide
intrastate local telephone, long-distance telephone and operator services in:

        o   Alabama;                                 o   Mississippi;
        o   Florida;                                 o   North Carolina;
        o   Georgia;                                 o   South Carolina; and
        o   Kentucky;                                o   Tennessee.

                                       15
<PAGE>

         As of December 31, 2001, we also had an application pending for local
exchange certification in Louisiana. To the extent that an area within a state
in which we provide service is served by a small or rural exchange carrier not
currently subject to competition, we may not currently have authority to provide
service in those areas at this time. As a competitive local exchange carrier, we
are and will continue to be subject to the regulatory directives of each state
in which we are and will be certified. Most states require that competitive
local exchange carriers charge just and reasonable rates and not discriminate
among similarly situated customers. Some other state requirements include:

         o   the filing of periodic reports;

         o   the payment of various regulatory fees and surcharges;

         o   compliance with service standards; and

         o   consumer protection rules.

         States also often require prior approvals or notifications for certain
transfers of assets, customers, or ownership of a competitive local exchange
carrier and for issuances by certified carriers of equity securities, notes or
indebtedness. States generally retain the right to sanction a carrier or to
revoke certifications if a carrier violates relevant laws and/or regulations.
Delays in receiving required regulatory approvals could also have a material
adverse effect on us. We cannot assure you that regulators or third parties will
not raise material issues with regard to our compliance or non-compliance with
applicable laws or regulations.

         As we expand our telecommunications services into new states, we will
probably be required to obtain certificates of authority to operate and be
subject to similar ongoing regulatory requirements.

         In addition, the states have authority under the Telecommunications Act
to approve or reject agreements for the interconnection of telecommunications
carriers' facilities with those of the local exchange carrier and to arbitrate
disputes arising in negotiations for interconnection. We have executed local
network interconnection agreements with BellSouth for the transport and
termination of local telephone traffic. These agreements have been filed with,
and approved by, the applicable regulatory authority in each state in which we
conduct our operations.

         In most states, certificated carriers like us are required to file
tariffs setting forth the terms, conditions, and prices for services which are
classified as intrastate. In some states, the required tariff may list a range
of prices for particular services, and in others, such prices can be set on an
individual customer basis. However, we may be required to file tariff addenda of
the contract terms. Under the Telecommunications Act, implementation of our
plans to compete in local markets is and will continue to be, to a certain
extent, controlled by the individual states. The states in which we operate or
intend to operate have taken regulatory and legislative action to open local
communications markets to various degrees of local exchange competition.

         Local Regulation. We are also subject to numerous local regulations,
such as building code requirements, franchise and local public rights of way.
These regulations may vary greatly from state to state and from city to city.
The Telecommunications Act requires municipalities to manage public
rights-of-way in a competitively neutral and non-discriminatory manner.

                                       16

<PAGE>



         Other Matters. The Federal Communications Commission has implemented
so-called anti-slamming rules, which protect consumers whose presubscribed
carriers have been switched without their consent. Under the rules, a carrier
found to have slammed a customer is subject to substantial fines and other
penalties. We do not engage in these practices.

         The regulatory status of telephone service over the Internet is
presently uncertain. Specific statutes and regulations addressing these services
have not been adopted at this time and the extent to which current laws and
regulations at the state and federal levels will be interpreted to include such
internet telephone services has not been determined. We cannot predict what
regulations may be adopted in the future or to what extent existing laws and
regulations may be found by state and federal authorities to be applicable to
such services or the impact such new or existing laws and regulations may have
on our business.

Compliance

         We have obtained all material permits, licenses, authorizations and
approvals and have materially complied with all federal, state and local
government regulations in all of the jurisdictions in which we currently conduct
business. In many of those areas there are various reports or filings we must
file to remain in compliance with the applicable government regulations and to
maintain the current status of our licenses and permits. We fully intend and
expect to make all necessary and required filings needed to remain timely and
current. If we fail to comply with all applicable regulations or experience
delays in obtaining required approvals or permits though, our business could be
harmed. Additionally, compliance with these regulatory requirements may be
costly. Regulations governing communications services also change from time to
time in ways that are difficult to predict. Such changes may harm our business
by increasing competition, decreasing revenue, increasing costs or impairing our
ability to offer services.

Intellectual Property

         We are committed to obtain and maintain proprietary rights in the
technology and information we use. These rights can take the form of patents,
trademarks agreements or licenses. We currently have applied for two service
mark registrations and we have one patent pending. Our business though could
suffer a material adverse affect if we are unable to maintain our current rights
in these intellectual properties or are not able to obtain rights to other
intellectual properties in the future.

Principal Suppliers for LecStar Communications

         We have four major suppliers for the services and equipment we use in
the operation of our business. Those four suppliers are: 1) BellSouth, 2) Qwest,
3) TelTronics, and AdTran.

         We have not experienced any availability problems with respect to the
services and equipment and material from these suppliers and do not anticipate
any availability problems in the near future.

                                       17
<PAGE>

                                    EMPLOYEES

         As of March 8, 2002, we employed 73 people. We currently have seven
executive officers and three directors. We also regularly use the services of
contract technicians for the installation and maintenance of our networks,
equipment and facilities. We believe that our future success will depend in
large part on our continued ability to attract and retain highly skilled and
qualified people. We believe that the relationship we have with our employees is
healthy and stable.

ITEM 2.           DESCRIPTION OF PROPERTY

         We lease 16,883 square feet of space for our executive offices in
Atlanta, Georgia, for $24,328 per month.

<TABLE>
<CAPTION>

                       Location                         Form of Ownership    Lease Expiration
                                                                                                     Monthly Rent
<S>                                                           <C>            <C>                     <C>
Executive Offices:
4501 Circle 75 Parkway,...........................            Lease          February 28, 2005        $24,328
Building D-4210
Atlanta, Georgia 30039-3025

</TABLE>


         We also own or lease telecommunications property in our operating
territories that include:

         o   switches;

         o high capacity digital lines that interconnect our network with
incumbent local exchange carrier networks;

         o   high capacity digital lines that connect our switching equipment to
             our transmission equipment located in incumbent local exchange
             carrier central offices;

         o   local loop lines which connect our customers to our network; and

         o leasing space in incumbent local exchange carrier central offices for
collocating our transmission equipment.

         We believe that our owned and leased facilities and equipment are
adequate and suitable to meet all of our current business needs and that
adequate additional facilities are available to meet our development and
expansion needs for the foreseeable future. We feel that our properties, the
contents therein and our equipment are adequately covered by insurance.

                                       18

<PAGE>



ITEM 3.           LEGAL PROCEEDINGS

         The Company is a defendant in the action McIntosh & Associates, Inc. v.
LecStar Corporation filed in the district county of Dallas County, Texas. The
Plaintiff alleges breach of contract and is seeking $151,143.18 in actual
damages plus legal and equitable interests of reasonable and necessary attorney
fees. On February 8, 2002, the Plantiff received a final judgment by default.

         The Company is a defendant in the action James D. Grenfell v. LecStar
Corporation filed with the American Arbitration Association on September 27,
2001. The Plaintiff alleges breach of contract and is seeking in excess of
$900,000 in actual damages plus legal and equitable interests of reasonable and
necessary attorney fees.

         We are not currently a party to any other legal proceeding other than
various claims and lawsuits arising in the normal course of business. We do not
believe that these lawsuits would individually or in the aggregate, have a
material adverse effect on our business, financial condition or results of
operations.

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

         No matters were submitted to a vote of security holders during the
fourth quarter of fiscal 2001.

                                       19
<PAGE>

                                     PART II

ITEM 5.           MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market for Common Stock

         Our common stock is quoted on the OTC Bulletin Board under the symbol
"LCST." Previously and until April 2, 2001, our common stock had traded under
the symbol "CRZN." Previous to that and from September 17, 1998, until September
8, 2000, our common stock had traded under the symbol "ROTI." The range of high
and low bid prices as quoted on the OTC Bulletin Board are listed below for the
periods indicated. The quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions. All
quotations below give retroactive effect to a 1 for 60 reverse split effective
March 30, 2001.

<TABLE>
<CAPTION>
                                                                                                   Price
                                                             Quarter Ended:               High              Low

<S>                                                     <C>                            <C>                 <C>
Fiscal Year 2000:
First Quarter.........................................  April 16, 2000                 $15.00              $.936
Second Quarter........................................  July 9, 2000                   $12.186             $.936
Third Quarter.........................................  October 1, 2000                $ 5.628             $.936
Fourth Quarter........................................  December 31,2000               $ 3.75              $.936

On February 1, 2001, we changed our fiscal year from a 52/53 week fiscal year
ending on the last Sunday in December to a fiscal year ending on December 31.
Associated with the change in our year end, we changed our fiscal quarters from
a 13/14 week quarter to a three month calendar quarter ending March 31, June 30,
September 30, and December 31.

Calendar Year 2001:
First Quarter.........................................  March 31, 2001                 $2.812              $.9375
Second Quarter........................................  June 30, 2001                  $  .95              $.0938
Third Quarter.........................................  September 30, 2001             $  .55              $.30
Fourth Quarter........................................  December 31, 2001              $  .83              $.25

</TABLE>


Holders of Record

         We had approximately 950 holders of record of our common stock as of
March 8, 2002.

Dividends

         We have never paid cash or any dividends on our common stock and do not
foresee that we will have earnings with which to pay dividends in the
foreseeable future. If we do accumulate earnings from which a dividend could be
paid, our strategy at this time is to retain these earnings to finance the
development and expansion of our business. However, in the event we would pay a
dividend, our board of directors would determine the amount of such a dividend
out of funds legally available therefore and based upon our earnings, financial
condition, capital requirements and other conditions. In addition, the terms of
our outstanding indebtedness and preferred stock restrict the payment of
dividends on our common stock until certain conditions are met. The payment of
dividends on our common stock is also subject to the preference applicable to
the outstanding certain shares of our preferred stock and to the preference that
may be applicable to any shares of the preferred stock issued by us in the
future.

                                       20
<PAGE>

Recent Sales of Unregistered Securities

         During our 2001, we issued the following securities which were not
registered under the Securities Act of 1933.

         On January 25, 2001, Corzon, Inc. acquired LCC by merger with one of
Corzon, Inc.'s subsidiaries and issued 400,000,000 shares of our common stock
and 10 shares of our Series F preferred stock to the former shareholders of LCC.
These shares were issued in reliance on the exemptions from registration
provided by Section 4(2) of the Securities Act, as a transaction by an issuer
not involving a public offering.

         On March 30, 2001, LecStar issued 25,333,333 shares of common stock in
exchange for 10 shares of Series F convertible preferred stock, and effected a 1
for 60 reverse stock split.

         On September 29, 2001, LecStar issued 77,726,078 shares of common stock
in exchange for 8,367.8 shares of Series D redeemable convertible preferred
stock, $1,543,403 of accrued and unpaid dividends, $9,033,652 of debt and
$846,612 of accrued interest.

         On October 23, 2001, LecStar issued 196,474 shares of common stock in
exchange 40 shares of Series D redeemable converted preferred stock and $7,763
of accrued and unpaid dividends.

         On November 7, 2001, LecStar issued 113,032 shares of common stock in
exchange for $20,000 of the convertible debenture plus $5,723 of accrued and
unpaid interest.

         On November 30, 2001, LecStar issued 188,444 shares of common stock in
exchange for 45,788 shares of Series E redeemable convertible preferred stock
and $104,932 of accrued and unpaid dividends.

         For information concerning unregistered securities issued during
calendar year 2000, reference is made to our Form 10-KSB for year ended December
31, 2000.

                                       21
<PAGE>

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

Overview

         The following discussion should be read in connection with the
consolidated financial statements and related notes thereto beginning on page
F-1 of this report.

Results of Operations

Year Ended December 31, 2001 Compared with Year Ended December 31, 2000

         Total net revenues increased 168% to $4,950,006 in 2001 from $1,847,988
in 2000. The increase was driven through expansion into traditional residential
and business local and long distance services in 2001. Revenues were derived
primarily from residential prepaid services in 2000. The Company expects
continued growth of its revenue base by capitalizing on its strategic marketing
and support channels, while continuing to expand geographically and to develop
its data, Internet, and integrated services presence in the competitive
marketplace.

         Cost of sales as a percentage of revenues were 64% or $3,172,017 in
2001 compared to 86% or $1,588,892 for 2000. Management believes that this will
continue to improve as provisioning processes and operations support systems
continue to be refined, and as overall product mix shifts with the growth of
improved margin services. We periodically evaluate the costs we incur in
delivering services to our customers. As a result of this process, we seek to
identify more cost-efficient procedures for delivering our services or may
decide to discontinue offering of some products.

         Selling, general and administrative expenses were $10,295,309 for the
year ended December 31, 2001 compared to $7,217,521 for the corresponding period
in 2000. Expenses include salaries and related personnel costs, facilities
expenses, legal and professional services, and sales and marketing costs. Costs
increased primarily due to increase in employees and other costs associated with
the expansion of services throughout target markets.

         Depreciation and amortization expense increased to $8,589,274 in 2001
from $1,297,721 in 2001, primarily due to amortization of goodwill related to
the merger of $6,079,727, and additional depreciation associated with placement
in service of additional telecommunications network assets and related
equipment. In 2001, the Company recorded a write-down of net property and
equipment of $679,295. The Company also recorded intangibles impairment relating
to goodwill of $4,651,334 during 2001.

         Interest expense for the year ended December 31, 2001 was $7,470,623 of
which $6,915,351 was non-cash interest related to warrants and debt that was
converted to common stock, and $561,472 was related to unconverted borrowings
under credit facilities, other notes, and capital leases. Interest expense for
the year ended December 31, 2000 was $5,412,773 of which $4,848,678 was non-cash
interest related to warrants and debt that was converted to common stock, and
$564,095 was related to unconverted borrowings under credit facilities, other
notes, and capital leases.

Liquidity and Capital Resources

         We have incurred operating losses since our inception and as of
December 31, 2001, we had an accumulated deficit of $(47,588,545) and a working
capital deficit of $(5,508,797).

         LecStar has a credit agreement with Sherman LLC that provides us with
up to $5,000,000 in revolving credit. Pursuant to the terms of the credit
agreement, upon each borrowing we will issue to Sherman a warrant to purchase
our common stock equal to 19% of the amount borrowed divided by the average of
the closing bid price of our common stock for the five trading days immediately
prior to the date of the loan. Borrowings under the credit agreement are secured
by our accounts receivable and certain fixed and other assets, and those of each
of our significant subsidiaries, and accrue interest at the rate of 15% per
year. At December 31, 2001, the Company was in compliance with all covenants of
credit agreement or had received appropriate waivers.

                                       22
<PAGE>

         We also have a $25,000,000 Equity Line Financing Agreement with Pima
Capital Management Limited. Upon our request, Pima Capital has committed to
purchase up to $25,000,000 of our common stock over a thirty-six month period.
The purchase price per share will be determined by dividing the dollar amount we
request by 92% of the simple average of the closing bid prices of our common
stock over the ten trading days immediately following a draw request from us.
Under the equity line financing agreement, we are obligated to register the
shares of common stock to be purchased by Pima before we may deliver a draw
request to Pima. To date, we have not drawn funds under this equity line of
credit because of conditions to funding.

         Inability to draw funds under either the financing or credit agreement
could result in a material adverse effect on our business, financial condition,
and results of operation. Furthermore, we may need to raise additional funding
through either debt or equity instruments. If we are not successful in these
efforts, lack of additional funding would result in a material adverse effect on
the Company and its viability as an ongoing concern.

         Our cash and cash equivalents decreased $90,481 during 2001. The
principal source of funds consisted of $6,675,000 received from borrowings under
the Sherman LLC credit agreement. The primary uses of funds were cash used in
operations of $6,347,898.

         We have not paid dividends on the Series A preferred stock since June
1998 and we are currently analyzing our alternatives for addressing these
arrearages totaling $1,947,418. At December 31, 2001, we were in default on
$1,139,489 of lease obligations. Default under lease obligations could have a
materially adverse impact on our business.

ITEM 7.           FINANCIAL STATEMENTS

         See "Index to Financial Statements" and our consolidated financial
statements and related notes thereto beginning on page F-1 of this booklet.

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

         We filed a 8-K date of report April 25, 2001 wherein we indicated
dismissal of Feldman  Sherb & Co., P.C. and engaged Ernst & Young LLP
as independent accountants.

         Effective January 23, 2002, we dismissed Ernst & Young LLP and engaged
Feldman Sherb & Co., P.C. as the Company's independent
accountants as indicated on 8-K filed January 28, 2002.

                                       23


                               LECSTAR CORPORATION

                    AUDITED CONSOLIDATED FINANCIAL STATEMENTS

                     Years ended December 31, 2001 and 2000



                                    CONTENTS


Report of Independent Auditors............................................F-2

Audited Consolidated Financial Statements

Consolidated Balance Sheet ...............................................F-3

Consolidated Statements of Operations.....................................F-4

Consolidated Statement of Stockholders' Equity (Deficit)..................F-5

Consolidated Statements of Cash Flows.....................................F-6

Notes To Consolidated Financial Statements................................F-7,19



<PAGE>



                         REPORT OF INDEPENDENT AUDITORS




The Board of Directors and Stockholders
LecStar Corporation


We  have  audited  the  accompanying   consolidated  balance  sheet  of  LecStar
Corporation as of December 31, 2001 and the related  consolidated  statements of
operations,  stockholders'  equity  (deficit) and cash flows for the years ended
December  31, 2001 and December 31, 2000.  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. 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 LecStar Corporation
at December  31, 2001 and the results of its  operations  and its cash flows for
the years  ended  December  31, 2001 and  December  31,2000 in  conformity  with
accounting principles generally accepted in the United States.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company  will  continue as a going  concern.  The Company has  incurred
significant  losses  and as  more  fully  described  in  Note  1Q,  the  Company
anticipates  that additional  funding will be necessary to sustain the Company's
operations  through the fiscal year ending December 31, 2002.  These  conditions
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern.  Management's  plans in regard to these  matters are also  described in
Note 1Q. The  consolidated  financial  statements do not include any adjustments
that might result from the outcome of this uncertainty.


February 8, 2002
New York, New York

                                                    /s/Feldman Sherb & Co., P.C.
                                                       Feldman Sherb & Co., P.C.


<PAGE>



                               LECSTAR CORPORATION

                           CONSOLIDATED BALANCE SHEET

                                December 31, 2001



ASSETS
Current assets:
   Cash and cash equivalents                                         $   55,193
   Accounts receivable, net of allowance for doubtful accounts
     of $55,826                                                         548,417
   Prepaid expenses and other current assets                            157,538
                                                                      ----------
Total current assets                                                    761,148
                                                                      ----------
Long term investments                                                   250,000
                                                                      ----------
Property and equipment:
   Furniture and fixtures                                               326,241
   Network equipment                                                  2,188,273
   Software                                                             586,638
   Leasehold improvements                                               125,189
                                                                      ----------
                                                                      3,226,341
   Accumulated depreciation                                          (1,133,397)
                                                                      ----------
Net property and equipment                                            2,092,944

Restricted cash                                                          45,000
Other assets                                                            357,953
                                                                      ----------
Total assets                                                         $3,507,045
                                                                      ==========


                     LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
   Accounts payable                                                  $2,267,342
   Accrued expenses                                                   2,387,330
   Unearned revenue                                                     155,600
   Current portion of notes payable                                      88,649
   Current portion of convertible debentures                            180,000
   Current portion of capital lease obligations                          51,535
   Capital lease obligations in default                               1,139,489
                                                                      ----------
Total current liabilities                                             6,269,945
                                                                      ----------
Long-term portion of notes payable                                    2,940,487
                                                                      ----------

Stockholders' deficit:
   Cumulative Preferred Stock
       Issued and outstanding - 1,147,249                             1,147,249
   Common stock, $.01 par value:
     Authorized - 500,000,000 shares
     Issued and outstanding - 111,932,768                             1,119,328
   Deferred compensation                                               (193,951)
   Additional paid-in capital                                        40,362,532
   Net unrealized loss on securities                                   (550,000)
   Accumulated deficit                                              (47,588,545)
                                                                      ----------
Total stockholders' deficit                                          (5,703,387)
                                                                      ----------
Total liabilities and stockholders' deficit                          $3,507,045
                                                                      ==========



                 See notes to consolidated financial statements.

                                      F-3
<PAGE>

LECSTAR CORPORATION

                      CONSOLDIATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                     YEAR ENDED DECEMBER 31
                                                                   2001                  2000
                                                               ------------          ------------

<S>                                                            <C>                   <C>
Revenues                                                       $  4,950,006          $  1,847,988
                                                                -------------         -------------
Operating expenses:
   Cost of sales                                                  3,172,017             1,588,892
   Selling, general and administrative expenses                  10,295,309             7,217,521
   Depreciation and amortization                                  8,589,274             1,297,721
   Write-down of net property and equipment                         679,295                     -
   Impairment of intangibles                                      4,651,334                     -
                                                                -------------          ------------
Total operating expenses                                         27,387,229            10,104,134
                                                                -------------          ------------
Loss from operations                                            (22,437,223)           (8,256,146)

Other income (expense):
   Interest expense                                              (7,470,623)           (5,412,773)
   Other income                                                           -                 6,778
                                                                ------------          ------------
Net loss                                                        (29,907,846)          (13,662,141)
Preferred stock dividends                                        (1,974,849)                    -
                                                                ------------          ------------

Net loss attributable to common stockholders                   $(31,882,695)         $(13,662,141)
                                                                ============          ============
Basic and diluted net loss per common share                    $      (0.72)          $     (0.65)
                                                                ============          ============

Weighted-average shares outstanding used in computing basic and
   diluted net loss per common share                             44,149,145            21,035,400
                                                                ============          ============

</TABLE>


                 See notes to consolidated financial statements.


                                      F-4

<PAGE>
<TABLE>
<CAPTION>
                               LECSTAR CORPORATION
            CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

                                        Preferred                        Common                    Additional
                                        Stock         Preferred          Stock        Common        Paid-in
                                        Shares        Stock              Shares       Stock         Capital
                                       -----------   -----------     ------------   ----------    ------------
<S>                  <C> <C>                         <C>               <C>           <C>           <C>
Balances at December 31, 1999                -       $     -           20,553,000    $ 205,530     $ 6,328,427
  Issuance of stock options
    to employees                             -             -                    -            -         165,000
  Issuance of common stock for cash
    at $2.50 per share less issuance
    costs of $128,500                        -             -              594,000        5,940       1,350,560
  Issuance of warrants in connection
    with the sale of convertible
    debentures                               -             -                    -            -         650,000
  Issuance of preferred stock for
    cash at $1,000 per share less
    issuance costs of $60,750              850       789,250                    -            -               -
  Conversion of debt to common
    stock                                    -             -            3,454,036       34,540       9,189,138
  Issuance of restricted stock in
    exchange for employee services           -             -              174,555        1,746         434,641
  Amortization of deferred
    compensation                             -             -                    -            -               -
  Net loss                                   -             -                    -            -               -
                                         -----       --------         ------------    ---------     -----------
Balances at December 31, 2000              850       789,250           24,775,591      247,756      18,117,766

Conversion of Preferred Series A
   to common stock                        (850)     (789,250)             212,500        2,125         787,125
Issuance of common stock
   dividend to preferred                     -             -              127,500        1,275         317,475
Assumption of preferred
   stock in merger                   1,201,444    11,724,910                    -            -               -
Cancellation of pre-merger
   LecStar common shares                     -             -          (25,115,591)    (251,155)    (19,222,365)
Issuance of common stock in
   merger and 1 for 60 reverse
   split                                     -             -           33,683,740      336,838      12,409,599
Amortization of deferred
   compensation                              -             -                    -            -               -
Beneficial conversion feature
   on convertible note                       -             -                    -            -         100,000
Preferred Series D and dividends
   converted to common stock            (8,368)  (10,531,834)          28,578,938      285,789      11,789,447
Debenture and interest
  converted to common stock                  -             -           16,360,317      163,603       5,191,429
Notes and interest converted
   to common stock                           -             -           32,386,823      323,868       8,392,524
Issuance of common stock                     -             -              425,000        4,250         127,000
Preferred Series D and dividends
   converted to common                     (40)          (40)             196,474        1,965           5,837
Preferred Series E and dividends
   converted to common                 (45,787)      (45,787)             188,444        1,884         148,834
Warrants repriced
   after conversion                          -             -                    -            -       1,370,859
Debentures and interest
   converted to common stock                 -             -              113,032        1,130          24,592
Net unrealized loss on
securities                                   -             -                    -            -               -
Issuance of warrants in
   connection with credit line               -             -                    -            -         802,410
Net loss                                     -             -                    -            -               -
                                     ---------    -----------         ------------  -----------    ------------
Balance at December 31, 2001         1,147,249    $1,147,249          111,932,768   $1,119,328    $ 40,362,532
                                     =========    ===========         ============  ===========    ============
</TABLE>
                 See notes to consolidated financial statements.

                                       F-5
<PAGE>

                              LECSTAR CORPORATION
            CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
                                                          Claim            Other
                                                         Receivable      Comprehensive                          Total
                                        Deferred         Received for     Income           Accumulated      Stockholders'
                                       Compensation      Stock            (Loss)            Deficit          Equity (Deficit)
                                     ---------------    ------------     -------------     --------------    ----------------
<S>                  <C> <C>           <C>              <C>              <C>               <C>               <C>
Balances at December 31, 1999          $ (191,667)      $ (269,877)      $          -      $  (2,043,713)    $   4,028,700
  Issuance of stock options
    to employees                                -                -                  -                  -           165,000
  Issuance of common stock for cash
    at $2.50 per share less issuance
    costs of $128,500                           -                -                  -                  -         1,356,500
  Issuance of warrants in connection
    with the sale of convertible
    debentures                                  -                -                  -                  -           650,000
  Issuance of preferred stock for
    cash at $1,000 per share less
    issuance costs of $60,750                   -                -                  -                  -           789,250
  Conversion of debt to common
    stock                                       -                -                  -                  -         9,223,678
  Issuance of restricted stock in
    exchange for employee services       (339,413)               -                  -                  -            96,974
  Amortization of deferred
    compensation                          100,000                -                  -                  -           100,000
  Net loss                                      -                -                  -        (13,662,141)      (13,662,141)
                                     ---------------    ------------     -------------     --------------    ----------------
Balances at December 31, 2000           (431,080)         (269,877)                 -        (15,705,854)        2,747,961

Conversion of Preferred Series A
   to common stock                             -                 -                  -                  -                 -
Issuance of common stock
   dividend to preferred                       -                 -                  -           (318,750)                -
Assumption of preferred
   stock in merger                             -                 -                  -                  -        11,724,910
Cancellation of pre-merger
   LecStar common shares                       -                 -                  -                  -       (19,473,520)
Issuance of common stock in
   merger and 1 for 60 reverse
   split                                       -           269,877                  -                  -        13,016,314
Amortization of deferred
   compensation                          237,129                 -                  -                  -           237,129
Beneficial conversion feature
   on convertible note                         -                 -                  -                  -           100,000
Preferred Series D and dividends
   converted to common stock                   -                 -                  -         (1,543,402)                -
Debenture and interest
  converted to common stock                    -                 -                  -                  -         5,355,032
Notes and interest converted
   to common stock                             -                 -                  -                  -         8,716,392
Issuance of common stock                       -                 -                  -                  -           131,250
Preferred Series D and dividends
   converted to common                         -                 -                  -             (7,762)                -
Preferred Series E and dividends
   converted to common                         -                 -                  -           (104,931)                -
Warrants repriced
   after conversion                            -                 -                  -                  -         1,370,859
Debentures and interest
   converted to common stock                   -                 -                  -                  -            25,722
Net unrealized loss on
securities                                     -                 -           (550,000)                 -          (550,000)
Issuance of warrants in
   connection with credit line                 -                 -                  -                  -           802,410
Net loss                                       -                 -                  -        (29,907,846)      (29,907,846)
                                     ---------------    ------------     -------------     --------------    ---------------
Balance at December 31, 2001           $(193,951)       $        -       $   (550,000)     $ (47,588,545)    $  (5,703,387)
                                     ===============    ============     =============     ==============    ===============
</TABLE>
                 See notes to consolidated financial statements.

                                      F-5A
<PAGE>


                               LECSTAR CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                     YEAR ENDED DECEMBER 31
                                                                                    2001                2000
                                                                                 -----------        -----------

OPERATING ACTIVITIES
<S>                                                                             <C>                <C>
Net loss                                                                        $(29,907,846)      $(13,662,141)
Adjustments to reconcile net loss to net cash used in operating activities:
   Depreciation                                                                    1,065,437            650,621
   Write-down of net fixed assets                                                    679,295                  -
   Management fee expense                                                                  -            647,100
   Amortization of intangible assets and impairment                               12,175,171          1,633,277
   Stock option compensation                                                         368,380            361,974
   Non-cash interest expense                                                       6,915,351          4,848,678
   Other non-cash items                                                                    -             12,568
   Changes in operating assets and liabilities:
     Note receivable                                                                       -             30,000
     Accounts receivable                                                            (432,416)          (128,570)
     Accounts payable                                                              1,248,265            468,994
     Accrued expenses                                                              1,651,353            479,759
     Unearned revenue                                                                 60,216             47,913
     Prepaid and other assets                                                       (171,104)          (168,021)
                                                                                ------------        -----------
Net cash used in operating activities                                             (6,347,898)        (4,777,848)
                                                                                ------------        -----------
INVESTING ACTIVITIES
Purchases of property and equipment                                                 (434,093)        (1,309,501)
Decrease in restricted cash                                                                -             10,000
Cash acquired in Corzon merger                                                        81,357                  -
Purchase of certificate of deposit                                                         -            (55,000)
                                                                                ------------        -----------
Net cash used in investing activities                                               (352,736)        (1,354,501)
                                                                                ------------        -----------
FINANCING ACTIVITIES
Proceeds from the issuance of common stock                                                 -          1,485,000
Proceeds from the issuance of preferred stock                                              -            850,000
Payment of offering costs                                                                  -           (189,250)
Proceeds from borrowing                                                            7,125,000          5,250,000
Payment of long term debt                                                           (149,134)        (2,564,395)
Payment of capital lease obligations                                                (365,713)          (380,376)
                                                                                ------------        -----------
Net cash provided by financing activities                                          6,610,153          4,450,979
                                                                                ------------        -----------
Decrease in cash and cash equivalents                                                (90,481)        (1,681,370)
Cash and cash equivalents at beginning of year                                       145,674          1,772,044
                                                                                ------------        -----------
Cash and cash equivalents at end of year                                        $     55,193        $    90,674
                                                                                ============        ===========

NON-CASH INVESTING AND FINANCING ACTIIVITIES
Acquisition of property and equipment via capital lease and notes payable       $ (1,202,022)       $ 2,097,002
Issuance of common stock for deferred compensation                              $          -        $   339,413
Issuance of ILD stock to purchase equipment                                     $          -        $   375,000
Issuance of common stock to convert debentures and interest                     $  5,380,753        $ 5,025,000
Issuance of common stock to convert notes and interest                          $  8,847,641        $         -
Issuance of common stock to convert preferred stock & dividends                 $ 12,233,759        $         -

Acquisition of Corzon:
 Liabilities assumed                                                            $  7,149,501
 Assets acquired                                                                $    241,919
 Goodwill recorded                                                              $ 12,165,101

</TABLE>


                 See notes to consolidated financial statements.

                                      F-6

<PAGE>


                               LECSTAR CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2001



1.       Description Of Business And Significant Accounting Policies

     A.  Description Of Business - LecStar Communications Corporation ("LCC")
         was incorporated on May 18, 1998 in the state of Delaware for the
         purpose of becoming a Competitive Local Exchange Carrier (CLEC) which
         markets on a region-wide basis, a full scope of advanced
         telecommunications services that include local access dial tone,
         national and international long distance, enhanced subscriber services,
         high-speed data and Internet services and network management.

         In late November of 1999, LCC entered into an agreement to purchase a
         prepaid telecommunications business which accelerated its entry into
         the CLEC market. Simultaneously, LCC entered into a management
         agreement that provided LCC the ability to operate network and
         management systems which allowed LCC to begin offering subscriber
         services in late 1999. In September of 2000, LCC closed on the purchase
         of the business. See Note 2.

         On January 25, 2001, Corzon, Inc., a Texas corporation ("Corzon"),
         completed its acquisition by merger (the "Acquisition") of LCC,
         according to the terms of an Agreement and Plan of Merger that was
         executed on January 5, 2001, whereby, LCC became a wholly-owned
         subsidiary of Corzon. LCC was acquired by Corzon in a stock-for-stock
         transaction in which the former shareholders of LCC would own
         approximately 92% of Corzon's outstanding common stock assuming the
         conversion of the outstanding convertible securities of each Company.
         Accordingly the transaction has been accounted for as a
         recapitalization of LCC pursuant to which LCC is treated as the
         continuing entity. The shares issued in connection with the Acquisition
         were recorded at their fair market value. LCC recorded total assets in
         the amount of $241,919 and total liabilities of $7,149,501. The excess
         of the purchase price of $5,257,519, which was calculated as the fair
         value of the securities exchanged plus the net liabilities assumed in
         the acquisition, over the fair value of the net assets acquired, was
         allocated to goodwill and was $12,165,101 at January 25, 2001.

         In connection with the Acquisition, Corzon's Board of Directors (the
         "Board") voted to change the Company name to LecStar Corporation (the
         "Company"). In addition, the Board approved a 1-for-60 reverse split of
         the outstanding common stock of Corzon. Subsequent to the merger and
         stock split, the former shareholders of LCC and Corzon held 32,225,000
         and 1,458,740 shares of common stock of the Company respectively.

         In connection with the Acquisition, the Company entered into an equity
         line financing agreement whereby an institutional investor has
         committed to purchase up the $25,000,000 of the Company's common stock,
         upon the registration covering the resale of such stock, over a
         thirty-six month period, at the sole discretion of the Company. As of
         December 31, 2001 no shares have been sold under the equity line.

         Additionally, the Company has entered into a credit agreement with
         Sherman LLC that will provide up to $5,000,000 in revolving credit.
         Pursuant to the terms of the credit agreement, upon each borrowing the
         Company will issue to Sherman a warrant to purchase common stock equal
         to 19% of the amount borrowed divided by the average of the closing bid
         price of the common stock for the five trading days immediately prior
         to the date of the loan. Borrowings under the credit agreement are
         secured by accounts receivable and certain fixed and other assets, and
         those of significant subsidiaries, and accrue interest at the rate of
         15% per year. As of December 31, 2001, $3,175,000 is outstanding under
         this facility and warrants to purchase 2,076,479 shares of our common
         stock at exercise prices ranging from $0.15 to $0.81 per share have
         been issued.

                                      F-7

<PAGE>


                               LECSTAR CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                DECEMBER 31, 2001



     B.  Use Of Estimates - The preparation of the financial statements in
         conformity with accounting principles generally accepted in the United
         States requires management to make estimates and assumptions that
         affect the amounts reported in the financial statements and
         accompanying notes. Actual results could differ from those estimates.

     C.  Revenue Recognition - The Company's revenues are derived principally
         from monthly service fees to customers for usage of their
         telecommunications services. The service fees are charged to customers
         at a fixed rate per month. Service fees are billed one month in advance
         but recognized when earned, in the period in which the service is
         provided.

     D.  Cash And Cash Equivalents - The Company considers all highly liquid
         investments with an original maturity of three months or less to be
         cash equivalents. The Company's cash and cash equivalents consist
         primarily of an operating checking account and certificate of deposit.
         The carrying amount reported in the balance sheet approximates fair
         value.

     E.  Restricted Cash - At December 31, 2001, $45,000 of cash was pledged as
         collateral on an outstanding letter of credit related to a guarantee
         required in conjunction with the Company's telephone equipment
         operating lease. The amount is classified as restricted cash on the
         balance sheet.

     F.  Property And Equipment - Property and equipment is stated at cost.
         Depreciation is computed on a straight-line basis for financial
         reporting purposes over the following estimated useful lives.
         Depreciation expense includes depreciation of assets recorded under
         capital leases.


                  Furniture                                   7 years

                  Leasehold improvements                      Term of lease

                  Network equipment and software              3-5 years


     G.   Goodwill - Goodwill,   representing   the  excess of the cost over the
          net  tangible   and   identifiable   intangible   assets  of  acquired
          businesses,  is stated  at cost and is  amortized  on a  straight-line
          basis over a two year period.  On an annual basis the Company  reviews
          the  recoverability  of goodwill  based  primarily upon an analysis of
          undiscounted cash flows from the acquired cash flows from the acquired
          businesses.  All Corzon  related  revenue  producing  activity  ceased
          during  year 2001,  therefore,  at  December  31,  2001,  the value of
          Goodwill  relating  to the  Corzon  merger  was  determined  to be not
          recoverable  and the net carrying  value of goodwill of $4,651,334 was
          recognized as impairment expense.

     H.  Advertising Costs - The Company accounts for advertising costs in
         accordance with the American Institute of Certified Public Accountants
         Statement of Position No. 93-7, Reporting on Advertising Costs. The
         cost of print and other advertising is expensed when such costs are
         incurred. Advertising expenses amounted to approximately $42,000 and
         $58,000 for the years ended December 31, 2001 and 2000, respectively.


                                      F-8
<PAGE>



                               LECSTAR CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                DECEMBER 31, 2001



     I.  Impairment of Long Lived Assets - The Company reviews long-lived assets
         to assess recoverability from future operations using undiscounted cash
         flows. When necessary, charges for impairments of long-lived assets are
         recorded for the amount by which the present value of future cash flows
         exceeds the carrying value of these assets. The Company believes that
         the balance of long-lived assets in the accompanying consolidated
         balance sheet is appropriately valued.

     J.  Stock  Based  Compensation  -  The  Company  accounts  for  stock
         transactions  in accordance  with  APB Opinion No. 25,  "Accounting For
         Stock Issued To Employees." In  accordance  with Statement of Financial
         Accounting  Standards No. 123  ("SFAS"),  "Accounting  Fro  Stock-Based
         Compensation,"   the  Company   adopted   the  pro  forma   disclosure
         requirements of SFAS 123.

     K.  Fair Value of Financial Instruments - The Company's financial
         instruments consist of cash and cash equivalents, accounts receivable,
         accounts payable, accrued expenses, notes payable and capital lease
         obligations. As of December 31, 2001, the fair value of these
         instruments approximated their financial statement carrying amount.

     L.  Deferred Compensation - The deferred compensation represents $200,000
         of deferred compensation expense for an individual and $436,388 for a
         financial advisor to the Company, each of which are being amortized
         over a two year period. The amortization expense of the deferred
         compensation is included as a component of selling, general and
         administrative expenses. As of December 31, 2001, accumulated
         amortization was $442,437.

     M.  Income Taxes - The Company accounts for income taxes in accordance with
         Statement of Financial Accounting Standards No. 109, Accounting for
         Income Taxes ("SFAS 109"), which provides for an asset and liability
         approach to accounting for income taxes. Under this method, deferred
         tax assets and liabilities are recorded for future tax effects of
         temporary differences between the financial reporting and tax basis of
         assets and liabilities, and are measured using current tax rates and
         laws that are expected to be in effect when the underlying assets or
         liabilities are anticipated to be recovered or settled.

     N.  Net Loss Per Common Share - Basic net loss per common share and diluted
         net loss per common share are presented in conformity with SFAS No.
         128, "Earnings Per Share," for all periods presented. In accordance
         with SFAS No. 128, basic net loss per common share has been computed
         using the weighted-average number of shares of common stock outstanding
         during the period.

         The following table presents the calculation of basic and diluted net
         loss per common share:
<TABLE>
<CAPTION>

                                                                  DECEMBER 31
                                                        --------------------------------
                                                           2001                  2000
                                                        -----------          -----------

<S>                                                    <C>                 <C>
         Net loss attributable to common stockholders  $(31,882,695)       $(13,662,141)
                                                        -----------          -----------
         Basic and diluted:
         Weighted-average shares used in
           computing basic and diluted net
           loss per common shares                        44,149,145           21,035,400
                                                        ===========          ===========
         Basic and diluted net loss per
           common share                                $     (0.72)         $     (0.65)
                                                        ===========          ===========

</TABLE>
                                      F-9
<PAGE>


                               LECSTAR CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                DECEMBER 31, 2001



         The Company has excluded all convertible preferred stock, warrants, and
         outstanding stock options from the calculation of diluted loss per
         common share because all such securities are anti-dilutive for all
         periods presented. The total number of shares excluded from the
         calculation of diluted loss per share was 28,149,453 in 2001, and
         5,679,500 in 2000.

     O.  Principles of Consolidation - The consolidated financial statements
         include the accounts of the Company and its wholly-owned subsidiaries.
         All significant  intercompany balances and transactions are eliminated
         in consolidation.

     P.  Recent Accounting Pronouncements - In July 2001, the Financial
         Accounting Standards Board (FASB) issued SFAS 141, Business
         Combinations. SFAS 141 supersedes APB 16,Business Combinations, and
         SFAS 38, Accounting for Preacquisition Contingencies of Purchased
         Enterprises. SFAS 141 requires the purchase method of accounting for
         all business combinations initiated after June 30, 2001 and eliminates
         the pooling-of-interests method. The Company does not expect the
         adoption of SFAS 141 to have a material effect on its financial
         condition or results of operations.

         In July 2001, the FASB issued SFAS 142, Goodwill and Other Intangible
         Assets. SFAS 142 supersedes APB 17, Intangible Assets, and requires the
         discontinuance of goodwill amortization. In addition, SFAS 142 includes
         provisions regarding the reclassification of certain existing
         recognized intangibles as goodwill, reassessment of the useful lives of
         existing recognized intangibles, reclassification of certain
         intangibles out of previously reported goodwill and the testing for
         impairment of existing goodwill and other intangibles. SFAS 142 is
         required to be applied for fiscal years beginning after December 15,
         2001, with certain early adoption permitted. The Company expects to
         adopt SFAS 142 for its first fiscal quarter of 2002, and does not
         expect the adoption to have a material effect on its financial
         condition or results of operations.

         In August 2001, the FASB issued SFAS 143, Accounting for Asset
         Retirement Obligations. SFAS 143 addresses financial accounting and
         reporting for obligations associated with the retirement of tangible
         long-lived assets and the associated retirement costs. The Company is
         in the process of assessing the effect of adopting SFAS 143.

         In October 2001, the FASB issued SFAS 144, Accounting for the
         Impairment or Disposal of Long-Lived Assets, which supersedes SFAS 121,
         Accounting for the Impairment of Long-Lived Assets to be Disposed Of.
         SFAS 144 addresses financial accounting and reporting for the
         impairment of long-lived assets and for long-lived assets to be
         disposed of. However, SFAS 144 retains the fundamental provisions of
         SFAS 121 for: 1) recognition and measurement of the impairment of
         long-lived assets to be held and used; and 2) measurement of long-lived
         assets to be disposed of by sale. SFAS 144 is effective for fiscal
         years beginning after December 15, 2001. The Company is in the process
         of assessing the effect of adopting SFAS 144.

     Q.  Basis of Presentation - The Company had a working capital deficiency of
         approximately $5,509,000 for the year ended December 31, 2001, and
         recorded net losses of approximately $29,908,000. This raises
         substantial doubt about the Company's ability to continue as a going
         concern. The Company's continued existence is dependent on its ability
         to obtain additional debt or equity financing and to generate profits
         from operations.


                                      F-10
<PAGE>

 LECSTAR CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                DECEMBER 31, 2001



         The Company is continuing to pursue additional equity and debt
         financing.

         There are no assurances that the Company will receive the additional
         equity and debt financing. The accompanying consolidated financial
         statements do not include any adjustments that might result from the
         outcome of these uncertainties.


2.       Significant Transactions

     A.  Stock Redemption Agreement

         On November 22, 1999, the Company entered into a Stock Redemption
         Agreement (the "Agreement") to acquire the CLEC prepaid telephone
         service business including telecommunications equipment and a customer
         base from ILD Telecommunications. Simultaneously, the Company entered
         into a Stock Purchase Agreement (the "Purchase") with an ILD
         shareholder to temporarily acquire his 4,700 shares of ILD common stock
         to be held to secure the proposed transaction with ILD. In connection
         with the Purchase, the Company issued to the shareholder $500,000 cash,
         a $2.5 million note payable and 2,000,000 shares of its common stock
         valued at $1.00 per share. Pursuant to the Purchase, an additional
         200,000 shares were placed in an escrow account and are contingent upon
         a two-year employment arrangement with the former shareholder of ILD.
         The fair value of these escrowed shares is recorded as deferred
         compensation expense and is being amortized over the two-year
         employment agreement. In addition, the Company entered into a
         Management Agreement with ILD for the use of the telecommunications
         assets until the anticipated transaction closing date on December 15,
         1999. The Agreement contemplated that the 4,700 shares of ILD stock
         would transfer back to ILD at closing, subject to certain management
         representations and warranties.

         The Company originally recorded the business combination on December 1,
         1999 as the consideration was paid and the transaction was valued as of
         the announcement date, in accordance with EITF No. 95-19,
         "Determination of the Measurement Date for the Market Price of
         Securities Issued in a Purchase Business Combination".

         The originally contemplated transaction closing date was postponed due
         to ILD's unsuccessful transfer of title to the Company related to the
         telecommunications equipment. The transaction closed on September 21,
         2000 after clear title to the assets was obtained. In anticipation of
         the closing, the two parties revised the Agreement whereby the Company
         was required to exchange 1,500 of the original 4,700 shares of ILD
         stock for the CLEC prepaid telephone service business.

         As the transaction did not close until September 21, 2000, the Company
         has restated the December 31, 1999 balance sheet to record the fair
         market value of the ILD common stock received and an intangible asset
         related to deferred compensation for the employment of the former
         shareholder. In addition, the Company recorded a management agreement
         asset to reflect the use of the telecommunications equipment from
         December 1, 1999 to September 21, 2000. The management agreement was
         amortized over the ten month period ending September 21, 2000.

         On September 21, 2000, the Company exchanged 1,500 shares of ILD common
         stock with a fair market value of $375,000, based on management's
         estimates, for the purchase of the CLEC prepaid telecommunication
         service business. As a result, the purchase price was allocated to the
         telecommunications equipment and is depreciated over its three-year
         economic useful life.

                                      F-11

<PAGE>



                               LECSTAR CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                DECEMBER 31, 2001



         At December 31, 2001, the Company determined the fair market value of
         the remaining 3,200 shares of ILD common stock to be $250,000. The
         unrealized loss on securities of $550,000 was reported in the
         stockholders' deficit section of the consolidated balance sheet.

     B.  Exchange Agreement


         On September 29, 2001 the Company entered into an Exchange Agreement
         with certain investors, whereby such investors exchanged Series D
         Convertible Preferred Stock owned by them and certain debt issued by
         the Company. This exchange of preferred stock, debt, and accrued
         dividends resulted in the issuance of 77,726,078 shares of the
         Company's common stock. Sherman LLC was issued 48,716,835 shares
         pursuant to the Exchange Agreement, becoming a 43.5% holder of the
         common stock currently outstanding. The remaining 29,009,243 shares
         were issued to six other debenture or preferred stock holders. Before
         the execution of the Exchange Agreement, Dominion Capital Fund Limited
         was the Company's single largest shareholder, being the beneficial
         owner of 6,767,009 shares of common stock. Such ownership represented
         approximately 20.1% of the then-outstanding common stock of the
         Company.


         As a result of this exchange, the Company recognized $4,191,160 of
         non-cash interest expense, which represents the value of premium shares
         given to Sherman LLC as part of this transaction. The Exchange
         Agreement contains a provision whereby the holders shall return 10% of
         their shares issued under the Exchange Agreement, if within 18 months
         the closing price of the Company's common stock on the NASDAQ Stock
         Market, the OTC Bulletin Board, or any other national securities
         exchange on which the stock is listed remains at or above $3.00 per
         share for 50 consecutive trading days. An additional 5% of the shares
         issued under the Exchange Agreement shall be returned if the closing
         price remains at or above $4.00 per share for 50 consecutive trading
         days. As a result of this contingency, the Company has excluded
         28,149,453 shares of common stock from the denominator in computing
         basic earnings per share.


         In connection with this exchange, the Company issued 425,000 shares of
         common stock to consultants, resulting in the recognition of $131,250
         of expense.



3.       Long-Term Debt And Line Of Credit Agreements

         At December 31, 2001, long-term debt consists of the following:

         Convertible debenture:

         Aggregate principal amount of $180,000 together with interest at 6% per
         annum, due June 7, 2002; any of the principal amount of the loan is
         convertible at the option of the payee into the common stock of the
         Company at 75% of the average of the 5 lowest closing bid prices during
         the preceding 20 trading days.
                                                                      $  180,000
                                                                      ==========
         Notes payable:

            Aggregate principal amount of $50,000 together with
              interest due on demand                                  $   50,000

            Aggregate principal amount of $210,000 together with
              interest at 12.25% per annum, due April 30, 2002            38,649


                                      F-12
<PAGE>



                               LECSTAR CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                DECEMBER 31, 2001



         Revolving line of credit:

            Maximum aggregate principal amount not to exceed
              $5,000,000 bearing interest at 15% per annum,
              due June 30, 2003                                       2,940,487
                                                                      ----------
                                                                      3,029,136

         Less: current portion of long-term debt                        (88,649)
                                                                      ----------
         Total long-term debt                                       $ 2,940,487
                                                                      ==========


         The debentures issued entitle the holder to convert all or a portion of
         the debentures into shares of common stock, at a conversion price which
         is the lower of $.75 per share or a variable conversion price of
         seventy-five percent (75%) of the average of the five lowest closing
         prices of stock during the twenty preceding trading days immediately
         prior to the date of conversion. The amount attributable to this
         beneficial conversion feature, $1,517,884, was charged to interest
         expense in 2000. The maximum number of shares of common stock into
         which the holder of the debenture may convert is capped at 4.9% of the
         total number of outstanding shares of common stock, as determined in
         accordance with Section 13 (d) of the Securities Exchange Act of 1934,
         as amended. The holder of the debenture may convert into additional
         shares of common stock only to the extent that previously converted
         shares are sold in the open market, so that the amount beneficially
         owned by the holder never exceeds 4.9%. The debenture holders and the
         Company agreed to waive this 4.9% limitation in the Exchange Agreement
         described in 2B.

         The outstanding balance on the Sherman LLC credit line at December 31,
         2001 was $3,175,000. This balance was reduced by $234,513, which
         represents the unamortized value of the warrants issued in connection
         with the credit line. The amortization is treated as non-cash interest
         expense. At December 31, 2001, the Company was in compliance with all
         covenants of the credit agreement or had received appropriate waivers.

         Scheduled maturities of long-term debt as of December 31, 2001 are as
         follows:


              2002       $    88,649
              2003         2,940,487


                                      F-13

<PAGE>


                               LECSTAR CORPORATION


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                DECEMBER 31, 2001



4.       Stockholders' Equity (Deficit)

         On June 17, 2000, the Company's shareholders voted to amend its
         articles of incorporation to increase the number of authorized shares
         of common stock from 200,000,000 to 500,000,000.


                  Series A Preferred Stock: The Company has designated 3,000,000
         shares out of a total of 5,000,000 authorized shares of its $1.00 par
         value preferred stock as Series A Redeemable Convertible Preferred
         Stock ("Series A Preferred Stock"). Dividends of the Series A Preferred
         Stock are cumulative and payable quarterly in arrears at a quarterly
         rate of $0.30 per share, representing a yield of 12% per year.
         Dividends may be paid in cash or an equivalent value of common stock.
         The Series A Preferred Stock has no voting rights and has a liquidation
         preference of $10 per share. At December 31, 2001 dividends in arrears
         on this preferred stock totaled $1,947,418. The Series A Preferred
         Stock is convertible at the option of the holder into shares of the
         Company's common stock. The initial conversion rate is 2.7 shares of
         common stock for each share of Series A Preferred Stock, subject to
         adjustment in certain events. The Series A Preferred Stock will
         automatically convert into the Company's common stock if the closing
         price of the Series A Preferred Stock exceeds $20 per share for ten
         consecutive days. The Series A Preferred Stock may also be redeemed by
         the Company upon 30 days written notice at 110% of the average bid
         price for the twenty trading days prior to the redemption date. The
         Company has the option to pay the redemption in either cash or common
         stock. At December 31, 2001, 446,410 shares of Series A Preferred Stock
         are outstanding.


                 Series D Preferred Stock: The Company has designated 10,534
         shares out of a total of 5,000,000 authorized shares of its $1.00 par
         value preferred stock as Series D Redeemable Convertible Preferred
         Stock ("Series D Preferred Stock"). The original issue price of the
         Series D Preferred Stock was $1,000 per share. Dividends on the Series
         D Preferred Stock accrue at an annual rate of 7% of the original issue
         price, or $70 per share, and are payable in cash or common stock, as
         determined by the holders, only at the time of conversion of such
         shares. Dividends are cumulative from the date of issue. Unless full
         cumulative dividends have been or are contemporaneously paid on the
         Series D Preferred Stock, the Company may not declare or pay cash
         dividends on the common stock, nor may it redeem, purchase, or
         otherwise acquire common stock, nor may is make any other distribution
         with respect to the common stock or any class of capital stock on a
         parity with or junior to the Series D Preferred Stock.


                  The Series D Preferred Stock is convertible at the option of
         the holder into shares of common stock for up to three years after
         initial issuance. After three years, the Series D Preferred Stock will
         automatically convert into shares of common stock. The conversion rate
         is equal to $1,000 divided by 80% of the five-day average closing bid
         price of the common stock on the NASDAQ Stock Market, the OTC Bulletin
         Board, or any other national securities exchange on which the common
         stock is listed at the time of conversion. Holders of Series D
         Preferred Stock are allowed to convert the aggregate amount of such
         holder's Series D Preferred Stock into common stock. The holders of the
         Series D Preferred Stock have no preemptive rights or other rights to
         subscribe for any other shares or securities of the Company. During the
         year 2001, 8,408 shares of Series D Preferred Stock were converted to
         common stock, as described in Note 2 "Exchange Agreement" above. At
         December 31, 2001, 2,126 shares of Series D Preferred Stock are
         outstanding, with related dividends in arrears of $232,499.

                                      F-14

<PAGE>

  LECSTAR CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                DECEMBER 31, 2001




                  Series E Preferred Stock: The Company has designated 745,000
         shares out of a total of 5,000,000 authorized shares of its $1.00 par
         value preferred stock as Series E Redeemable Convertible Preferred
         Stock ("Series E Preferred Stock"). The original issue price of the
         Series E Preferred Stock was $10.00 per share. Dividends on the Series
         E Preferred Stock accrue at an annual rate of 8% of the original price,
         or $0.80 per share, and are payable in cash or common stock, as
         determined by the Company, only at the time of conversion of such
         shares. Dividends are cumulative from the date of issue. Unless full
         cumulative dividends have been or are contemporaneously paid on Series
         E Preferred Stock, the Company may not declare or pay cash dividends on
         the common stock, nor may it redeem, purchase or otherwise acquire
         common stock, nor may it make any other distribution with respect to
         the common stock or any class of capital stock on a parity with or
         junior to the Series E Preferred Stock.


                  The Series E Preferred Stock is redeemable at the option of
         the Company at any time after six months of issuance, in whole or in
         part, for $0.01 per share, if the average closing bid price of the
         Company's common stock, as quoted on any national securities exchange,
         NASDAQ, or the OTC Bulletin Board exceeds $3.50 per share for five
         consecutive trading days. Each share of Series E Preferred Stock is
         convertible at the option of the holder into four shares of common
         stock at any time after six months from the date of issuance, subject
         to adjustment. The Series E Preferred Stock is non-voting, and it is
         ranked junior to the Company's Series A Preferred Stock and Series D
         Preferred Stock. The holders of the Series E Preferred Stock have no
         preemptive rights or other rights to subscribe for any other shares or
         securities of the Company. During year 2001, 45,788 shares of Series E
         Preferred Stock were converted to common stock. At December 31, 2001,
         698,712 shares of Series E Preferred Stock are outstanding, with
         related dividends in arrears of $1,647,813.



5.       Stock Options and Purchase Warrants

         The Company granted to employees 3,690,602 and 2,132,000 options for
         shares of its common stock during 2001 and 2000 respectively. The
         options granted in 2001 have varying vesting schedules, but typically
         vest either immediately or over a four-year period. The options granted
         during 2001 expire in the year 2006 or 2011.

         A summary of employee stock option activity for 2001 and 2000 follows:
<TABLE>
<CAPTION>

                                                                          WEIGHTED AVERAGE
                                                         OPTIONS           EXERCISE PRICE
                                                        ----------        ----------------
<S>                              <C> <C>                   <C>                     <C>
         Outstanding at December 31, 1999                  877,500                 $1.00
            Granted during 2000                          2,132,000                  3.06
            Exercised during 2000                                -                     -
            Forfeited during 2000                                -                     -
                                                        ----------            ----------

         Outstanding at December 31, 2000                3,009,500                 $2.46

            Granted during 2001                          3,690,602                 $0.76
            Exercised during 2001                                -                     -
            Forfeited during 2001                         (833,950)                $2.51
                                                        ----------            ----------
         Outstanding at December 31, 2001                5,866,152                 $0.91
                                                        ==========            ==========
</TABLE>

                                      F-15

<PAGE>



                               LECSTAR CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                DECEMBER 31, 2001



         The following table summarizes information regarding options and
         warrants outstanding and exercisable at December 31, 2001:

<TABLE>
<CAPTION>

                                WEIGHTED AVERAGE
         EXERCISE            NUMBER          REMAINING CONTRACTURAL         NUMBER
         PRICE             OUTSTANDING          LIFE (IN YEARS)          EXERCISABLE
         --------         -----------       -----------------------       ----------
         <C>                  <C>                    <C>                     <C>
         $0.22                529,180                4.67                    529,180
          0.24                588,960                4.42                    588,960
          0.39             11,659,904                2.04                 11,641,942
          0.42              1,000,000                9.92                  1,000,000
          0.45                627,060                4.17                    627,060
          0.46                331,279                4.92                    331,279
          0.50                620,705                9.33                    178,300
          0.60                  2,866                0.50                      2,866
          0.97              1,436,960                3.92                  1,436,960
          1.56                 12,830                3.50                     12,830
          2.34                833,950                8.08                    833,950
          2.40                  2,916                2.83                      2,916
          2.51                975,080                8.25                    975,080
                           ----------                                     ----------
                           18,621,690                                     18,161,323
                           ==========                                     ==========
</TABLE>


         In 2000, the Company issued warrants to acquire 500,000 shares of
         common stock in conjunction with the issuance of $5,000,000 of
         convertible debentures. The Company determined the fair value of these
         warrants using the Black-Scholes valuation model. The fair value of the
         warrants of $650,000 was recognized as interest expense for the year
         ended December 31, 2000.

         During 2001, the Company issued 8,596,038 warrants according to terms
         of our credit agreement with Sherman LLC, and through re-pricing of
         existing warrants pursuant to the Exchange Agreement. The Company
         determined the fair value of these warrants using the Black-Scholes
         valuation model. The fair value of the re-priced warrants of $1,370,859
         was recognized as interest expense in 2001.

         The Company has elected to follow APB 25 and related interpretations in
         accounting for its stock options issued to employees rather than the
         alternative fair value accounting provided for under SFAS 123. Under
         APB 25, when the exercise price of the Company's stock options granted
         to employees equals or exceeds the market price of the underlying stock
         on the date of grant, no compensation expense is recognized.

         Pro forma information regarding net income is required by SFAS 123,
         which also requires that the information be determined as if the
         Company had accounted for its employee stock options granted under the
         fair value method. The effects of applying SFAS 123 for providing pro
         forma information is not likely to be representative of the effects on
         reported net income for future periods. If the Company had elected to
         account for its employee stock options under the fair value method of
         SFAS 123, the Company's net loss would have increased to the pro forma
         amount below:

                                                           DECEMBER 31
                                              ----------------------------------
                                                    2001                 2000
                                              -------------         ------------
                As reported                  $ (29,907,846)        $(13,662,141)
                Pro forma                    $ (32,711,304)        $(14,377,500)


                                      F-16
<PAGE>



                               LECSTAR CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                DECEMBER 31, 2001



         The fair value of these options was estimated at the date of grant
         using the Black-Scholes Method with the following weighted-average
         assumptions for 2001: risk-free interest rate of 6.5%, no dividend
         yield, and an 1.0 volatility factor.

         The weighted average fair value of the employee stock options granted
         during the year ended December 31, 2001 and 2000 is $0.40 and $2.26 per
         share, respectively.


6.       Income Taxes

         At December 31, 2001, the Company had net operating loss carryforwards
         for federal income tax purposes of approximately $20,000,000, which
         begin to expire in 2019. The Company's net operating loss carryforwards
         may be subject to certain limitations on annual utilization in the
         event of changes in ownership of the Company. These limitations could
         significantly reduce the amount of the net operating loss carryforwards
         available to the Company in the future.

         A reconciliation of the provision for income taxes (benefit) to the
         federal statutory rate is as follows:

                                                 2001                   2000
                                             -----------            -----------

         Tax at statutory rate             $(10,168,667)          $ (4,645,128)
         State taxes                         (1,196,314)              (546,486)
         Permanent differences                7,095,917              1,696,279
         Valuation allowance                  4,269,064              3,495,335
                                             -----------            -----------
                                           $          -          $          -
                                             ===========            ===========

         Deferred income taxes reflect the net tax effects of temporary
         differences between the carrying amounts of assets and liabilities for
         financial reporting purposes and the amounts used for income tax
         purposes. Significant components of the Company's deferred tax assets
         and liabilities at December 31, 2001 are as follows:

         Assets:
         Start-up costs                                             $   242,039
         Net operating loss                                           7,678,153
                                                                      ----------
         Total deferred tax assets                                    7,920,192

         Liabilities:
                                                                      ----------
         Total deferred tax liabilities                                       -

         Valuation allowance                                         (7,920,192)
                                                                      ----------
         Net deferred tax assets (liabilities)                      $         -
                                                                      ==========

                                      F-17
<PAGE>

  LECSTAR CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                DECEMBER 31, 2001



         The temporary differences and carryforwards, which give rise to
         significant portions of the Company's deferred income tax assets,
         relate primarily to start-up costs and amortization of intangible
         assets. The Company has elected under IRC Section 195(d) to capitalize
         its start-up costs for income tax purposes. All capitalized start-up
         costs will be amortized over a 60-month period commencing with the date
         business begins. Business began in late November 1999.

         For financial reporting purposes, the Company has recorded a valuation
         allowance against deferred tax assets as management has determined that
         it is not more likely than not that the deferred tax assets for which
         the allowance has been established will materialize.


7.       Commitments and Contingencies


     A.  Lease Commitments


         Property and equipment includes the following amounts for leases that
         have been capitalized:

                                                            DECEMBER 31, 2001
                                                            -----------------

         Network equipment                                      $ 453,395
         Less accumulated depreciation                           (142,109)
                                                                ----------
                                                                $ 311,286
                                                                ==========


         Future minimum lease payments under capital leases consist of the
         following:

                                                            DECEMBER 31, 2001
                                                            -----------------

         Minimum lease payments due in year 2002                   56,276
                                                                ----------
         Total minimum lease payments                              56,276
         Less amounts representing interest                        (4,741)
                                                                ----------
         Present value of net minimum lease payments               51,535
         Less current portion                                     (51,535)
                                                                ----------
         Long term capital lease obligations                     $      -
                                                                ==========


         At December 31, 2001, the Company was in default on various capital
         lease obligations. These capital lease obligations plus interest on the
         payments in arrears of $1,139,489, are shown in current liabilities as
         capital lease payments in default.


                                      F-18
<PAGE>



                              LECSTAR CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                DECEMBER 31, 2001



         Total rent expense for all operating leases was $514,733 and $181,925
         during the years ended December 31, 2001 and 2000, respectively. Future
         minimum lease payments under the non-cancelable operating leases as of
         December 31, 2001, with initial lease terms of at least one year at the
         time of inception, are as follows:

                     2002                                 $  410,346
                     2003                                    373,726
                     2004                                    334,605
                     2005                                     60,590
                     Thereafter                                    -
                                                          ----------
                     Total                                $1,179,267
                                                          ==========


     B.  Legal Matters


         Other than the claim described below, the Company is not currently a
         party to any legal proceeding other than various claims and lawsuits
         arising in the normal course of business. The Company does not believe
         that these lawsuits would individually or in the aggregate, have a
         material adverse effect on our business, financial condition or results
         of operations. Furthermore, the Company believes that adequate coverage
         of these claims has been recorded in accounts payable or accrued
         liabilities.

         The Company is a defendant in a claim initiated by a former officer,
         which is being arbitrated by the American Arbitration Association. The
         former officer claims that he is entitled to severance benefits in
         excess of $900,000. The Company is vigorously defending this claim. The
         likelihood of an unfavorable outcome or estimate of any possible loss
         cannot be determined at this time.

         The Company was the defendant in an action whereby the plaintiff
         received a judgment by default for $151,143, which was included in
         accounts payable at December 31, 2001.


     C.  Employment Agreements


         The Company has entered into employment agreements with certain
         officers, expiring no later than 2004, which require the Company to pay
         minimum compensation in aggregate of approximately $600,000 per year.
         Compensation may be increased annually at the discretion of the
         Company's Board of Directors.

                                      F-19
<PAGE>



<PAGE>



                                    PART III

ITEM 9.           DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
                  COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         The information required by this item is contained in our proxy
statement related to our 2002 Annual Meeting of Stockholders, to be filed
pursuant to Section 14 of the Securities Exchange Act of 1934 and is
incorporated herein by reference.

ITEM 10.          EXECUTIVE COMPENSATION

         The information required by this item is contained in our proxy
statement related to our 2002 Annual Meeting of Stockholders, to be filed
pursuant to Section 14 of the Securities Exchange Act of 1934 and is
incorporated herein by reference.

ITEM 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required by this item is contained in our proxy
statement related to our 2002 Annual Meeting of Stockholders, to be filed
pursuant to Section 14 of the Securities Exchange Act of 1934 and is
incorporated herein by reference.

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by this item is contained in our proxy
statement related to our 2002 Annual Meeting of Stockholders, to be filed
pursuant to Section 14 of the Securities Exchange Act of 1934 and is
incorporated herein by reference.

ITEM 13.          EXHIBITS AND REPORTS ON FORM 8-K

         (a)      See "Index to Exhibits" set forth beginning on page E-1.

         (b) During the fourth quarter of 2001, we filed on October 11, 2001, a
current report on Form 8-K to report change of control. On January 28, 2002, we
filed a current report on Form 8-K to report the change in independent
accountants and filed as amendment thereto on February 7, 2002.

                                       24

<PAGE>




                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Securities Exchange Act,
LecStar Corporation has caused this annual report on Form 10-KSB to be signed on
its behalf by the undersigned, thereunto duly authorized, on March 12, 2002.

                                                     LECSTAR CORPORATION



                                                     By:   /s/    W. DALE SMITH
                                                         -----------------------
                                                                  W. Dale Smith
                                                                   President

         In accordance with the Securities Exchange Act, this annual report on
Form 10-KSB has been signed below by the following persons on behalf of LecStar
Corporation and in the capacities and on the dates indicated.

         Signature                     Title                           Date

/s/WILLIAM S. WOULFIN    Director, Chairman of the Board and CEO  March 12, 2002
-----------------------
   William S. Woulfin    (Principal Executive Officer)

/s/W. DALE SMITH         Director, President                      March 12, 2002
-----------------------
   W. Dale Smith

/s/JOHN C. CANOUSE       Director                                 March 12, 2002
-----------------------
   John C. Canouse

/s/JAMES E. MALCOM       Vice President, Chief Financial Officer  March 12, 2002
-----------------------
   James E. Malcom       and Treasurer (Principal Financial
                         Officer)

/s/DONALD G. SANTAVICCA  Vice President, Chief Accounting         March 12, 2002
-----------------------
   Donald G. Santavicca  Officer, Controller and Assistant
                         Treasurer (Principal Accounting
                         Officer)

/s/WILLIAM C. SMITH      Secretary                                March 12, 2002
----------------------
   William C. Smith

                                       25

<PAGE>





                                  EXHIBIT INDEX

         The exhibits listed on the accompanying Exhibit Index are filed as part
of this report. Exhibits required by Item 601 of Regulation S-B which are not
listed are not applicable.

<TABLE>
<CAPTION>

             Exhibit
               No.                  Title
               <S>         <C>
               2.1         ------   Agreement and Plan of Merger by and among Harvest Restaurant Group, Inc., a
                                    Texas corporation, Hartan, Inc., a Texas
                                    corporation and TRC Acquisition Corporation,
                                    a Georgia corporation, dated December 27,
                                    1998 incorporated by reference to exhibit
                                    2.1 to our Current Report on Form 8-K, filed
                                    on January 21, 1999.
               2.2         ------   Asset Purchase Agreement by and among Hartan, Inc., certain of its
                                    subsidiaries, and Restaurant Teams International, Inc., dated February 2, 2000
                                    incorporated by reference to exhibit 2.1 to our Current Report on Form 8-K,
                                    filed on February 25, 2000.
               2.3         ------   Agreement and Plan of Merger dated as of January 5, 2001, among Corzon, Inc.,
                                    LecStar Communications Corporation and LecStar Acquisition Corporation
                                    incorporated by reference to exhibit 2.1 to our Current Report on Form 8-K as
                                    filed on February 5, 2001.
               3.1         ------   Articles of Incorporation, as amended incorporated by reference to exhibit 3.01
                                    to our Registration Statement on Form SB-2/A, file No. 33-47856, as filed on
                                    November 14, 2000.
               3.2         ------   Resolution Establishing and Designating Series F Convertible Preferred Stock
                                    incorporated by reference to annex A of exhibit 2.1 to our Current Report on
                                    Form 8-K as filed on February 5, 2001.
               3.3         ------   Articles of Amendment to the Articles of Incorporation, as amended.
               3.4         ------   Bylaws incorporated by reference to exhibit 3.03 to our Registration Statement
                                    on Form SB-2, file No. 33-95796, declared effective on July 9, 1996.
               4.1         ------   Loan Agreement by and among TRC Acquisition Corporation and Sirrom Capital
                                    Corporation, dated October 22, 1996 incorporated by reference to exhibit 4.01
                                    to our Annual Report on Form 10-KSB as filed on March 29, 1999.
               4.2         ------   Assumption Agreement, Consent and First Amendment to Loan Agreement, dated
                                    January 14, 1999, by and among Hartan, Inc., Harvest Restaurant Group, Inc.,
                                    and Sirrom Capital Corporation incorporated by reference to exhibit 4.02 to our
                                    Annual Report on Form 10-KSB as filed on March 29, 1999.
               4.3         ------   Guaranty Agreement, dated January 14, 1999, Harvest Restaurant Group, Inc., and
                                    Sirrom Capital Corporation incorporated by reference to exhibit 4.03 to our
</TABLE>

* Filed herewith
#Management contracts or compensatory plans

                                      E-1
<PAGE>

<TABLE>
<CAPTION>


                                    Annual Report on Form 10-KSB as filed on March 29, 1999.
               <S>         <C>
               4.4         ------   Amended and Restated Secured Promissory Note dated January 14, 1999, executed
                                    by Hartan, Inc. for the benefit of Sirrom Capital Corporation incorporated by
                                    reference to exhibit 4.04 to our Annual Report on Form 10-KSB as filed on March
                                    29, 1999.
               4.5         ------   Amended and Restated Stock Purchase Warrant, dated January 14, 1999
                                    incorporated by reference to exhibit 4.05 to our Annual Report on Form 10-KSB
                                    as filed on March 29, 1999.
               4.6         ------   Second Amended to 11% Subordinated Debenture Due January 30, 1999 dated
                                    November 2, 1999, between Tanner's Restaurant Group, Inc. and Ralph C. DiIorio
                                    incorporated by reference to exhibit 4.1 t6o our Quarterly Report on Form
                                    10-QSB as filed on November 17, 1999.
               4.7         ------   Stock Purchase Warrant dated November 2, 1999, between Tanner's Restaurant
                                    Group, Inc. and Ralph C. DiIorio incorporated by reference to exhibit 4.2 to
                                    our Quarterly Report on Form 10-QSB as filed on November 17, 1999.
               4.8         ------   Second Amendment to $350,000 12.5% Promissory Note Dated April 1, 1998 and Due
                                    SECA VII, LLC incorporated by reference to exhibit 4.3 to our Quarterly Report
                                    on Form 10-QSB as filed on November 17, 1999.
               4.9         ------   Stock Purchase Warrant dated November 2, 1999, between Tanner's Restaurant
                                    Group, Inc. and SECA VV, LLC incorporated by reference to exhibit 4.4 to our
                                    Quarterly Report on Form 10-QSB as filed on November 17, 1999.
               4.10        ------   Form of Debenture incorporated by reference to Annex I to exhibit 10.1 to our
                                    Current Report on Form 8-K as filed on June 19, 2000.
               10.1        ------   Incentive Stock Option Plan incorporated by reference to our definitive
                                    Registration Statement on Form SB-2, file number 33-95796, declared effective
                                    on July 9, 1996.
               10.2        ------   TRC Acquisition Corporation 1996 Employee Stock Option Plan incorporated by
                                    reference to exhibit 10.02 to our Annual Report on Form 10-KSB as filed on
                                    March 29, 1999.
               10.3        ------   Proposed LecStar Corporation 2001 Stock Incentive Plan (to be voted upon by our
                                    shareholders at the 2001 Annual Meeting of Shareholders).
* Filed herewith
#Management contracts or compensatory plans
</TABLE>

                                       E-2
<PAGE>

<TABLE>
<CAPTION>


               <S>         <C>
               10.4        ------   Form of Subscription Agreement for Series D Convertible Preferred Stock
                                    incorporated by reference to exhibit 10.06 to our Annual Report on Form 10-KSB
                                    as filed on March 29, 1999.
               10.5        ------   Form of Registration Rights Agreement for Series D Convertible Preferred Stock
                                    incorporated by reference to exhibit 10.07 to our Annual Report on Form 10-KSB
                                    as filed on March 29, 1999.
               10.6        ------   Form of Warrant Agreement for Series D Convertible Preferred Stock incorporated
                                    by reference to exhibit 10.08 to our Annual Report on Form 10-KSB as filed on
                                    March 29, 1999.
               10.7        ------   Letter Amendment dated January 12, 1999, among J.P. Carey, Inc. and Southridge
                                    Capital Management incorporated by reference to exhibit 10.09 to our Annual
                                    Report on Form 10-KSB as filed on March 29, 1999.
               10.8        ------   Letter Amendment dated January 13, 1999, among all subscribers of Series D
                                    Preferred Stock and Harvest Restaurant Group incorporated by reference to
                                    exhibit 10.10 to our Annual Report on Form 10-KSB as filed on March 29, 1999.
               10.9        ------   Subordinated Debenture dated January 30, 1998, among TRC Acquisition Corp. and
                                    Ralph C. DiIorio incorporated by reference to exhibit 10.13 to our Registration
                                    Statement on Form SB-2 as filed on May 7, 1999.
              10.10        ------   First Amendment to Subordinated Debenture dated January 30, 1999, among Harvest
                                    Restaurant Group, Inc. and Ralph C. DiIorio incorporated by reference to
                                    exhibit 10.13(a) to our Registration Statement on Form SB-2 as filed on May 7,
                                    1999.
              10.11        ------   Promissory Note dated March  31, 1998, executed by TRC Acquisition Corp. in
                                    favor of SECA VII, LLC incorporated by reference to exhibit 10.14 to our
                                    Registration Statement on Form SB-2 as filed on May 7, 1999.
              10.12        ------   First Amendment to Promissory Note dated January 30, 1999, among Hartan, Inc.
                                    and SECA VII, LLC -- incorporated by reference to exhibit 10.14(a) to our
                                    Registration Statement on Form SB-2 as filed on May 7, 1999.
              10.13        ------   Purchase and Sale Agreement, dated May 11, 1999, by and between CB Acquisition,
                                    Inc. and, for purposes of Section 5.2 of the Purchase and Sale Agreement,
                                    Tanner's Restaurant Group, Inc., and Pacific Ocean Restaurants, Inc., and
                                    Crabby Bob's Seafood, Inc. -- incorporated by reference to exhibit 10.15 to our
                                    Registration Statement on Form SB-2, file number 33-78111, as filed on July 26,
                                    1999.
</TABLE>

* Filed herewith
#Management contracts or compensatory plans

                                       E-3
<PAGE>

<TABLE>
<CAPTION>


              <S>         <C>
              10.14        ------   Letter Agreement, dated April 6, 1999, by and between Pacific Ocean
                                    Restaurants, Inc. and Tanner's Restaurant Group -- incorporated by reference to
                                    exhibit 10.16 to our Registration Statement on Form SB-2, file number 33-78111,
                                    as filed on July 26, 1999.
              10.15        ------   Stock Purchase Agreement dated May 31, 2000, between Tanner's Restaurant Group,
                                    Inc. and DCI Telecommunications -- incorporated by reference to exhibit 2.1 to
                                    our Current Report on Form 8-K as filed on June 19, 2000.
              10.16        ------   Securities Purchase Agreement dated June 7, 2000, among Tanner's Restaurant
                                    Group, Inc., Sherman L.L.C. and Triton Private Equities Fund, L.P. --
                                    incorporated by reference to exhibit 10.1 to our Current Report on Form 8-K as
                                    filed on June 19, 2000.
              10.17        ------   Registration Rights Agreement dated June 7, 2000, among Tanner's Restaurant
                                    Group, Inc., Sherman L.L.C. and Triton Private Equities Fund, L.P. --
                                    incorporated by reference to Annex IV to exhibit 10.01 to our Current Report on
                                    Form 8-K as filed June 19, 2000.
              10.18        ------   Security Interest and Pledge Provisions dated June 7, 2000, acknowledged by
                                    Tanner's Restaurant Group, Inc. and Fone.com Limited -- incorporated by
                                    reference to Annex VI of Exhibit 10.1 of our Current Report on Form 8-K as
                                    filed on June 19, 2000.  Lease Agreement dated June 9, 2000, between John
                                    Broadcannon, LLC, as landlord, and Corzon, Inc., as tenant -- incorporated by
                                    reference to exhibit 10.4 to our Quarterly Report on Form 10-QSB.
              10.19        ------   filed on August 28, 2000.
              10.20        ------   Master Service Agreement dated February 22, 2000, between Viatel UK, Ltd. and
                                    Fone.com, Ltd. -- incorporated by reference to exhibit 10.5 to our Quarterly
                                    Report on Form 10-QSB filed on August 28, 2000.
              10.21        ------   International Message Telephone Service Agreement dated January 14, 2000,
                                    between Pacific Gateway Exchange (UK) Limited and Fone.com, Ltd. --
                                    incorporated by reference to exhibit 10.6 to our Quarterly Report on Form
                                    10-QSB filed on August 28, 2000.
              10.22        ------   Letter Agreement by and between Tanner's Restaurant Group, Inc. and Strategic
                                    Services Group of Morrow & Co., Inc. dated August 14, 2000.
              10.22        ------   Stock Purchase Agreement by and between Corzon, Inc., Dharnesh Patel and The
                                    Simple Card Limited dated November 29, 2000 -- incorporated by reference to
                                    exhibit 2.2 to our Current Report on Form 8-K filed on January 8, 2001.

</TABLE>

* Filed herewith
#Management contracts or compensatory plans

                                       E-4
<PAGE>

<TABLE>
<CAPTION>


              <S>         <C>
              10.23        ------   Settlement Agreement dated November 7, 2000, among Finova Mezzanine Capital,
                                    Inc., Hartan, Inc. and Corzon, Inc. -- incorporated by reference to exhibit
                                    10.7 to our Current Report on Form 8-K as filed on November 7, 2000.
              10.24        ------   Equity Line Financing Agreement dated as of January 25, 2001, between Corzon,
                                    Inc. and Pima Capital Management Limited -- incorporated by reference to exibit
                                    10.1 to our Current Report on Form 8-K as filed on February 5, 2001.
              10.25        ------   Credit Agreement dated as of January 25, 2001, between Corzon, Inc. and Sherman
                                    LLC -- incorporated by reference to exhibit 10.2 to our Current Report on Form
                                    8-K as filed on February 5, 2001.
              10.26        ------   Guaranty dated as of January 25, 2001, executed by LecStar Communications
                                    Corporation and B4B Communications, Ltd. in favor of Sherman LLC --
                                    incorporated by reference to exhibit 10.3 to our Current Report on Form 8-K as
                                    filed on February 5, 2001.
              10.27        ------   Security Agreement dated as of January 25, 2001, among Corzon, Inc., LecStar
                                    Communications Corporation, LecStar Datanet, Inc., LecStar Telecom, Inc., B4B
                                    Communications, Ltd. and Sherman LLC -- incorporated by reference to exhibit
                                    10.4 to our Current Report on Form 8-K as filed on February 5, 2001.
              10.28        ------   8% Amended and Restated Secured Convertible Debenture Due January 25, 2003 dated as
                                    of January 25, 2001, executed by Corzon, Inc. in favor of Sherman LLC --
                                    incorporated by reference to exhibit 10.5 to our Current Report on Form 8-K as filed
                                    on February 5, 2001.
              10.29        ------   Employment Agreement by and between Empire Technology Corporation and
                                    Reginald P. McFarland dated as of November 22, 1999.
              10.30        ------   Employment Agreement by and between Empire Technology Corporation and W. Dale
                                    Smith dated as of December 22, 1999.
              10.31        ------   Employment Agreement by and between Empire Technology Corporation and
                                    William S. Woulfin dated as of December 22, 1999.
              10.32        ------   Employment Agreement by and among Empire Technology Corporation, Empire Telecom
                                    Services, Inc. and Michael E. Britt, Jr. dated as of May 15, 2000.
</TABLE>

* Filed herewith
#Management contracts or compensatory plans

                                       E-5
<PAGE>

<TABLE>
<CAPTION>


              <S>          <C>
              10.33        ------   Employment Agreement by and between Empire Technology Corporation and James D.
                                    Grenfell dated as of May 8, 2000.
              10.34        ------   Employment Agreement by and between Corzon, Inc. and Larry Shatsoff dated as of
                                    January 3, 2001.
             *#10.35       ------   Employment Agreement by and between LecStar Corporation and James E. Malcom
                                    dated as of November 6, 2001.
                21         ------   Subsidiaries.

</TABLE>

* Filed herewith
#Management contracts or compensatory plans

                                       E-6