<PAGE>   1

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


                                  FORM 10-KSB/A
              [X] Annual report pursuant to Section 13 or 15(d) of
                  the Securities Exchange Act of 1934. For the
                       fiscal year ended December 31, 2000

                                       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 Identification No.)
     of incorporation or organization)

          4501 Circle 75 Parkway,
              Building D-4210
              Atlanta, Georgia                             30339-3025
  (Address of principal executive offices)                  --------
                                                           (Zip Code)

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

 Securities registered pursuant to        Name of exchange on which registered:
Section 12(b) of the Exchange Act:
                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 a net loss of
$3,858,555.

         As of April 3, 2001, the aggregate market value of LecStar
Corporation's voting common stock held by non-affiliates was approximately
$17,733,132 based upon a closing sales price of $0.53 per share of common stock
on the OTC Bulletin Board.


         As of April 3, 2001, 33,458,740 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 fiscal year 2000, as filed with the Securities and Exchange
Commission on April 5, 2001, are incorporated by reference into Part III, Items
9, 10 and 12 of this annual report on Form 10-KSB/A.



<PAGE>   2
                              LECSTAR CORPORATION
              Form 10-KSB/A Annual Report for the 2000 Fiscal Year
                               Table of Contents

<TABLE>
<S>                                                                                                            <C>
ITEM 1.  DESCRIPTION OF BUSINESS.................................................................................1

         RECENT BUSINESS DEVELOPMENTS............................................................................1

                  Acquisition of LecStar Communications Corporation..............................................1

                  Board of Directors.............................................................................2

                  Financing and Credit Agreements................................................................2

                  Marketing Agreements...........................................................................3


         HISTORY OF LECSTAR CORPORATION..........................................................................3

                  History of Corzon, Inc.........................................................................3

                  History of LecStar Communications Corporation..................................................5

         CURRENT BUSINESS OPERATIONS OF LECSTAR CORPORATION......................................................5

                  LecStar Communications Corporation.............................................................5

                           Overview..............................................................................5

                           Business Strategy.....................................................................6

                           Telecommunications Services...........................................................9

                           Competition and Industry Position....................................................10

                           Specific Competitors.................................................................12

                           Government Approval and Regulation...................................................13

                           Compliance...........................................................................21

                           Intellectual Property................................................................22

                           Principal Suppliers for LecStar Communications.......................................22

                  B4B Communications Ltd. and The Simple Card Ltd...............................................22

                           General History and Background.......................................................22

                           Competition, Strategy and Outlook....................................................23

                           Future of the Prepaid Phone Card Market..............................................25

                           Diversification......................................................................25

                           Distributors, Suppliers and Government Regulation....................................26

                  Subsequent Events.............................................................................26

         EMPLOYEES..............................................................................................27

ITEM 2.  DESCRIPTION OF PROPERTY................................................................................27

ITEM 3.  LEGAL PROCEEDINGS......................................................................................28
</TABLE>




                                       i
<PAGE>   3
<TABLE>
<S>                                                                                                           <C>
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS....................................................28

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS...............................................29

                  Market for Common Stock.......................................................................29

                  Holders of Record.............................................................................29

                  Dividends.....................................................................................29

                  Recent Sales of Unregistered Securities.......................................................30

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION...................31

                  Overview......................................................................................31

                  Results of Operations for the Year Ended December 31, 2000, Compared to the Date of
                           Inception of June 2, 1999 to December 31, 1999.......................................32

                  Liquidity and Capital Resources...............................................................32

ITEM 7.  FINANCIAL STATEMENTS...................................................................................33

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE...................33

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION
               16(a) OF THE EXCHANGE ACT........................................................................33

                  Subsequent Events.............................................................................33

ITEM 10. EXECUTIVE COMPENSATION.................................................................................33

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.........................................33

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.........................................................37

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.......................................................................37
</TABLE>



                                       ii
<PAGE>   4

                           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 of Financial Condition and
Results 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.



                                      iii
<PAGE>   5

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

                          RECENT BUSINESS DEVELOPMENTS

ACQUISITION OF LECSTAR COMMUNICATIONS CORPORATION.

         Corzon, Inc. is a Texas corporation. On January 25, 2001, Corzon, Inc.
completed its acquisition by merger of LecStar Communications Corporation,
according to the terms of an Agreement and Plan of Merger executed on January 5,
2001. LecStar Communications merged into LecStar Acquisition Corp. with LecStar
Communications surviving as a wholly-owned Delaware subsidiary of Corzon. As a
result of this acquisition, we are now a provider of integrated communications
on a region-wide basis, including local access dial-tone, national and
international long distance, enhanced subscriber services, high-speed data and
Internet services and network management.

         LecStar Communications was acquired in a stock-for-stock transaction in
which we issued 400,000,000 shares of our common stock and 10 shares of our
Series F Preferred Stock to the former shareholders of LecStar Communications
that resulted in the former shareholders of LecStar Communications owning
approximately 80% of our outstanding common stock on a non-diluted basis. The
consideration paid to the former stockholders of LecStar Communications was
based on the then applicable fair market value of Corzon's common stock. The
purchase price and terms for the transaction were determined in arms-length
negotiations.

         On February 16, 2001, and March 9, 2001, holders of a majority of
Corzon's outstanding shares executed written consents and voted to change our
name from Corzon, Inc. to LecStar Corporation and voted to effect a reverse
split of the common stock of Corzon whereby Corzon would exchange one share of
Corzon common stock for each sixty or fewer shares of Corzon common stock then
issued and outstanding. The name change and reverse split became effective on
March 30, 2001. A Schedule 14C information statement describing these events was
filed with the Securities and Exchange Commission on March 9, 2001, and mailed
to our shareholders.

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



<PAGE>   6

BOARD OF DIRECTORS.

         Effective as of the date of the acquisition of LecStar Communications
by Corzon, the number of directors of our board of directors was expanded from
three to five in accordance with our Bylaws. Three representatives of LecStar
Communications, William S. Woulfin, W. Dale Smith and John C. Canouse, were
appointed to our five person board of directors, with Mr. Woulfin being named
Chairman of the Board. Jose A. Auffant resigned from our board to afford LecStar
Communications a majority of the board. Lawrence Shatsoff and Clifford Postelnik
continued as board members at that time. Mr. Postelnik has since resigned
effective February 1, 2001, and as of March 15, 2001, the board position left
vacant by Mr. Postelnik remains unfilled.

         Our newly appointed Board then elected:

         o   William S. Woulfin -- Chairman of the Board and Chief Executive
             Officer;

         o   W. Dale Smith -- President;

         o   James D. Grenfell -- Vice President, Chief Financial Officer and
             Treasurer;

         o   Reginald P. McFarland -- Vice President, Chief Technology Officer;

         o   Michael Britt -- Vice President, Operations;

         o   Lawrence Shatsoff -- Vice President, Secretary; and

         o   Donald G. Santavicca -- Vice President, Chief Accounting Officer,
             Controller and Assistant Treasurer.

FINANCING AND CREDIT AGREEMENTS.

         In connection with our acquisition of LecStar Communications, we
entered into a $25,000,000 Equity Line Financing Agreement with Pima Capital
Management Limited on January 25, 2001. 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.

         We have also entered into a credit agreement with Sherman LLC that will
provide us with up to $3,500,000 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 10% 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 each of our significant subsidiaries
and accrue interest at the rate of 24% per year.



                                       2
<PAGE>   7

         Both the financing and credit agreements will provide us with working
capital, enable us to fund ongoing operations and various capital expenditures
and further our growth and expansion into new markets.

MARKETING AGREEMENTS.

         We have executed joint marketing agreements with Cobb EMC and Marietta
Fibernet. 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. Both Cobb and Marietta have
launched significant marketing programs aimed at the promotion of traditional
local and long distance telecommunication services to high use residential and
business customers. If either of these joint marketing agreements terminates, it
could result in a material adverse effect on our business, financial condition
and results of operation. We recently executed an agreement for the sale of our
services to customers of Inter-Tel Technologies, Inc., a business
telecommunications equipment manufacturer that has an active sales force in the
markets we serve. Marketing agreements and/or letters of understanding have also
been executed with third party telecom agents who operate throughout the
Southeast US and who have the experience to launch a marketing effort focused on
our broadband service offerings. We hope to utilize these marketing agreements
to facilitate the expansion of our customer base.

                         HISTORY OF LECSTAR CORPORATION

HISTORY OF CORZON, INC.

         Corzon, Inc. was originally incorporated in Texas in June of 1993 under
the name "Clucker's Tex-Mex Venture, Inc." and operated as an area developer for
Clucker's Wood Roasted Chicken, Inc. By 1996, Clucker's decided to focus on the
development, operation and franchising of its own line of restaurants and in
October 1997 changed its name to Harvest Restaurant Group, Inc. In 1997, Harvest
attempted to grow this concept but by the first quarter of 1998 all restaurants
franchised under this program had been closed, and by August 1998 all
company-owned restaurants were closed. That left Harvest Restaurant Group with
no ongoing business operations.

         On January 14, 1999, Harvest acquired TRC Acquisition Corporation
through the merger of TRC into Hartan, Inc. with Hartan the surviving entity. As
a result of the merger, Harvest then owned and franchised the "Rick Tanner's
Original Grill" restaurants, formerly owned and franchised by TRC. Subsequently,
we were renamed Tanner's Restaurant Group, Inc.

         In early 1999, we entered into a letter of intent to acquire the assets
of two Crabby Bob's restaurants and in anticipation of that acquisition, opened
a Crabby Bob's restaurant in May 1999 under a license agreement with Crabby
Bob's. In November 1999, we determined that we would not be able to complete the
Crabby Bob's transaction and the letter of intent was terminated. Also in 1999,
three of our restaurants were closed, and one franchisee also closed its
restaurant. In addition, one of our restaurants and our catering operations were
sold to franchisees.



                                       3
<PAGE>   8

         On January 28, 2000, Hartan filed a voluntary petition under Chapter 11
of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the
Northern District of Georgia, Atlanta Division. Six of Hartan's wholly-owned
subsidiaries also filed voluntary petitions under Chapter 11 in the same
jurisdiction. Hartan and these six subsidiaries owned substantially all of our
assets. On February 9, 2000, the Bankruptcy Court approved a Sale of Assets
Outside the Ordinary Course of Business Free and Clear of All Liens, pursuant to
Section 363(b) of the Bankruptcy Code by Hartan and its subsidiaries. On
February 10, 2000, Hartan and its subsidiaries sold substantially all of the
assets used in the operation of the Rick Tanner's Original Grill restaurants
with all proceeds from the sale paid to creditors of Hartan and its
subsidiaries.

         On May 11, 2000, a group of holders of our Series D preferred stock,
converted a portion of their shares of Series D preferred stock into shares of
common stock in transactions that resulted in a change in control. After
conversion, the group owned or controlled 51.2% of the outstanding shares of our
common stock.

         Effective June 2, 2000, we acquired from DCI Telecommunications, Inc.
all of the common stock of Fone.com, Limited, a company organized under the laws
of England and Wales. Fone.com was subsequently renamed B4B Communications,
Limited. The acquisition was made in exchange for 40,000,000 shares of our
common stock and the assumption of $3,453,652 of debt of DCI. This acquisition
was accounted for as a recapitalization of B4B with B4B treated as the
continuing entity. For that reason, inception of our business for purposes of
our financial statements is June 2, 2000.

         On June 7, 2000, we received a net investment of $900,000 in exchange
for 6% secured convertible debentures. We issued the debentures in an aggregate
principal amount of $4,553,652, of which $4,353,652 were issued to Sherman LLC
and $200,000 were issued to Triton Private Equities Fund, LP. The debentures
issued to Triton were issued to refinance existing indebtedness owed to Triton.
The debentures issued to Sherman were issued in exchange for an investment of
$900,000 by Sherman, the payment of $200,000 of our existing indebtedness by
Sherman, and to refinance another $3,653,652 of existing indebtedness owed by
us.

         At our annual meeting on September 8, 2000, our stockholders voted to
change our name to Corzon, Inc.

         On November 29, 2000, we purchased from Dharmesh Patel, an individual
residing in the United Kingdom, all of the outstanding shares of The Simple Card
Limited, a United Kingdom Corporation, in exchange for 12,500,000 shares of our
common stock. The Simple Card Limited distributes telecommunication products,
mainly prepaid phone cards in the United Kingdom.

         After the acquisition of LecStar Communications and the change in name
from Corzon, Inc. to LecStar Corporation, we moved our executive offices from
Bridgeport, Connecticut to Atlanta, Georgia. Our executive offices are now
located at 4501 Circle 75 Parkway, Building D-4210, Atlanta, Georgia 30339-3025,
and our telephone number is (404) 659-9500.



                                       4
<PAGE>   9

HISTORY OF LECSTAR COMMUNICATIONS CORPORATION.

         LecStar Communications was originally incorporated in Delaware as
Empire Technology Corporation in May of 1998 to enter the telecommunications
market and offer enhanced services brought about by new technologies. Empire
Technology Corporation changed its name to LecStar Communications Corporation in
May of 2000 and conducted all operations from its main facilities in Atlanta,
Georgia. LecStar Communications continues to achieve milestone objectives by the
implementation of its plan to profitably deliver a full spectrum of traditional
and advanced communication services to wholesale and retail markets throughout
the Southeast. The operations and main facilities of LecStar Communications
continue to be located in Atlanta, Georgia, along with our executive offices.

               CURRENT BUSINESS OPERATIONS OF LECSTAR CORPORATION

         We have three primary operating subsidiaries:

         o   LecStar Communications Corporation;

         o   B4B Communications, Limited; and

         o   The Simple Card Limited.

LECSTAR COMMUNICATIONS CORPORATION.

Overview

         Through our operating subsidiaries, we are a rapidly growing integrated
communications carrier that seeks 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   Internet access;

         o   web hosting;

         o   e-mail;

         o   integrated voice and high-speed data services; and

         o   related premise equipment.



                                       5
<PAGE>   10

         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 believe we are one of the
first to offer dynamic allocation non-channelized bandwidth that supports voice
and data traffic convergence with SS7 and Class 5 switch features support. We
have completed deployment and collocation of our network equipment in Georgia.
We plan to expand our collocation of equipment with BellSouth and other
incumbent carriers to thirty-five 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 and London, England.

         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 from the incumbent local
             exchange carriers and other carriers; and

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

Business Strategy

         We believe that we are well positioned to expand our business through a
combination of favorable market conditions and an experienced management team
able to execute a focused business strategy. The key elements of this strategy
include:

         Provide Complete Package of Competitive Services. 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. Our
services include:

         o   local and long distance voice;

         o   Internet access;

         o   broadband data; and

         o   integrated voice and data applications and web related services.



                                       6
<PAGE>   11

         Most of these services are priced less than comparable services
provided by a customer's incumbent carrier.

         Focus on Underserved Markets. 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 specialized service offerings include:

         o   voice over Internet protocol providing US dial tone to users in
             foreign countries;

         o   virtual modem port rentals targeted to Internet service providers;
             and

         o   packaged prepaid local and long distance targeted to a growing
             market segment of transient or credit challenged users.

         Implement Scalable and Effective Operating Support Systems. 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 strategic partners 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.

         Capitalize on Advanced Network Architecture. 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 Lucent Technologies, Cisco Systems, Harris and
Jetstream Communications technologies to support traditional and broadband
applications using asynchronous transfer mode and voice over Internet protocol
to take advantage of converged voice and data capabilities and traffic
compression techniques that improve communications performance, efficiency and
economics. 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:

         o   digital and analog local loops;

         o   local circuit switching;

         o   interoffice transport;

         o   network interface devices;



                                       7
<PAGE>   12

         o   signaling and call-related databases; and

         o   operational support systems.

We deploy redundant, 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.

         Build Effective Marketing and Support Channels. 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 predicable 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.

         Expand our Geographic Operations. 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 all
major incumbent telephone companies throughout 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 and in the United Kingdom.



                                       8
<PAGE>   13

         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   operator services;

                  o   directory assistance;

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

                  o   dedicated intrastate, interstate and international long
                      distance; and



                                       9
<PAGE>   14

                  o   travel cards.

                  Data and Internet Services:

                  o   dial-up internet access;

                  o   dedicated high-speed internet access;

                  o   dedicated point-to-point data;

                  o   modem port rental;

                  o   collocation;

                  o   web hosting; and

                  o   e-mail.

                  Integrated Services:

                  o   high-speed internet with switched long distance;

                  o   local access, high-speed internet with switched long
                      distance; and

                  o   single-line local access and long distance via internet
                      access

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 posses 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.



                                       10
<PAGE>   15

         Both our competitors and us 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.

         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.



                                       11
<PAGE>   16

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   Intermedia                    o   XO Communications

         o   Teligent                      o   BellSouth

         o   Verizon                       o   Sprint

         o   Birch                         o   Trivergent

         o   New South                     o   Allegiance

         o   Winstar                       o   Net2000

         o   Mpower                        o   Talk.com

         o   Lightyear

         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, MCI WorldCom and Sprint. 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 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.

         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, Prodigy,
PSINet, Sprint, the UUNET subsidiary of MCI WorldCom, and Verizon. Digital
subscriber line companies and/or their Internet service provider customers
typically provide broadband Internet access, such as Covad and Rhythms
NetConnections. "Excite" at Home and its "Work" subsidiary and Road Runner are
Cable-based service providers that also provide broadband Internet access.



                                       12
<PAGE>   17

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 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.

         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;



                                       13
<PAGE>   18

         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.



                                       14
<PAGE>   19

         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. However, 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 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.



                                       15
<PAGE>   20

         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 2001 was 6.68% 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.



                                       16
<PAGE>   21

         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 will 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 and 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. Although the Federal Communications Commission requested public
comments in response to the Court's remand the Federal Communications Commission
has not issued a further order clarifying the applicability of the transport,
termination and reciprocal compensation provisions of the Telecommunications Act
to Internet service providers. Some states in which our current and planned
markets are located have ordered the incumbent local exchange carriers to pay
reciprocal compensation for Internet-related calls.



                                       17
<PAGE>   22

         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.



                                       18
<PAGE>   23

         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 are currently on remand from a U.S. Court of
Appeals, and petitions for reconsideration are pending before the Federal
Communications Commission concerning the collocation and line sharing
proceedings. Hence, the Federal Communications Commission is reviewing these
rules, and these rules are subject to change. 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, 2000, 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.



                                       19
<PAGE>   24

         As of December 31, 2000, 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.



                                       20
<PAGE>   25

         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.

         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. While we do not engage in these practices, a slamming fine could have
a material impact on our business in the future.

         The regulatory status of telephone service over the Internet is
presently uncertain. Specific statutes and regulations addressing this 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.

         Another difficulty that we face is the exhaustion of available local
telephone numbers. Generally, as a competitive local exchange carrier, we must
obtain blocks of telephone numbers to provide our telecommunications services.
We have had difficulties obtaining numbers in certain states in which we
operates due to the exhaustion of such numbers. Both the Federal Communications
Commission and certain state public service commissions are in the process of
reviewing issues related to this problem. An inability to obtain necessary local
telephone numbers could have a material impact on our business in the future.

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.



                                       21
<PAGE>   26

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 equipment and material we use in
the operation of our business. Those four suppliers are:

        o   Lucent Technologies;             o   Jetstream Communications; and

        o   Cisco Systems;                   o   Taqua Systems.

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

B4B COMMUNICATIONS LTD. AND THE SIMPLE CARD LTD.

General History and Background.

         Fone.com, Limited is a company organized under the laws of England and
Wales and was established in June of 1999 as a London-based provider of
telecommunications services. On June 1, 2000, we acquired from DCI
Telecommunications, Inc. all of the common stock of Fone.com. Fone.com was
subsequently renamed B4B Communications, Limited. B4B provides local and long
distance telecommunications but to date has specialized in the provision of call
time via prepaid calling cards to distributors of such calling cards. These
distributors then in turn sell the prepaid calling cards to primarily
expatriates living within the United Kingdom and to persons who cannot otherwise
obtain telephone services.

         Prepaid phone cards permit users to place local, long distance and
international telephone calls at a fixed per minute cost without the need for
coins, operator assistance, collect or other third-party billed services.
Prepaid calling cards provide customers with a single point of access to
convenient, easy-to-use and cost-effective telecommunications products and
services. The card user, who has paid in advance for a specific number of
telephone minutes, simply dials an access number that connects the user to B4B's
services.

         B4B's services currently include domestic calling in the United Kingdom
and outbound international calling from the United Kingdom to more than 204
countries, including the United States and Canada. B4B's international products
will have multiple language prompts to enable the card user to receive
instructions in its preferred language. Generally, B4B's prepaid phone card
rates are less expensive than the long distance rates offered by conventional
long-distance carriers in the United Kingdom.



                                       22
<PAGE>   27

         B4B's distributors sell prepaid phone cards at a variety of locations
throughout the United Kingdom, including confectionery, tobacco and news stores.
Prepaid phone cards offering B4B's services are currently sold exclusively in
the United Kingdom, but B4B has obtained access to capacity and network
infrastructure that it believes will enable it to offer services for a prepaid
phone card that can also be used in Germany, France, the Netherlands, Belgium
and Spain. B4B intends to use its prepaid phone card business as a base from
which to expand into other telecommunications services.

Competition, Strategy and Outlook.

         The prepaid calling card industry is intensely competitive, rapidly
evolving and subject to constant technological change. In the year 2000, calling
cards accounted for approximately 54 percent or $3.5 billion dollars of the
total worldwide prepaid market. The exact number of competitors to B4B is not
presently known but there are a large number of providers both worldwide and in
the UK markets that compete directly with one or more of the services offered by
B4B. We expect this competition to increase in the future.

         Some of our competitors dominate the telecommunications industry and
have the financial resources to enable them to withstand substantial price
competition, which is expected to increase significantly, and we cannot assure
you that we will be able to compete successfully in the future. Moreover, there
can be no assurance that our competitors will not be better situated to
negotiate contracts with suppliers of telecommunications services which are more
favorable than contracts we have negotiated. In addition, there can be no
assurance that competition from existing or new competitors or a decrease in the
rates charged for communications services by the major long distance carriers or
other competitors would not materially adversely affect us. We believe however
that the principal competitive factors affecting the market for
telecommunications services are price, quality of service, reliability of
service, degree of service integration, ease of use, service features and name
recognition. We believe that we can and do compete effectively in these areas.

         The prepaid card market is heavily influenced by end user retail rates
and discounts offered to distributors and the retailers. Other factors that
affect merchantability of the product relate to the quality of service, call
completion ratios and the pricing policies of the card. Consumers seek to avoid
products that have first minute surcharges, connection fees or maintenance fees.

         B4B has completed market surveys to identify core markets of consumers
who have a greater than average tendency to place international long distance
calls to specific foreign destinations using prepaid calling cards.
Consequently, B4B has successfully negotiated competitive buy rates to these
particular foreign destinations with underlying carriers known for their above
average call completion ratios to the popular foreign destinations. B4B then in
turn uses these carriers above average call completion ratios and/or answer
seizure ratios in promoting its products. B4B currently focuses on those prepaid
telephone card distributors who retail to the Middle East, Far East and Central
European (Balkan area) ethnic communities. B4B's buy rates and service levels
are such that B4B can compete advantageously in these markets.



                                       23
<PAGE>   28

         We also believe that our negotiating experience enables B4B to route
traffic into third party countries on routes that are of above-average quality
and at rates that are below spot market prices available on the market within
the United Kingdom. We believe that this in turn will enable us to command even
lower purchase rates and establish even greater prominence in selected markets
provided that B4B is able to generate a greater volume of call traffic on those
direct routes.

         Governmental regulation of the prepaid calling card market in the
United Kingdom is at best lax and this has resulted in other operators and
providers following questionable pricing policies, meaning that the price on the
card is not always the price that the caller is being charged per minute. B4B
however provides transparent pricing, i.e. "what you see on the card is what you
get," and management has every indication from its distributors and the end
users that following this policy will enable B4B to make serious market
penetration into the niche markets that it is concentrating on.

         In October 2000, we acquired The Simple Card Limited, a prepaid card
distributor and a United Kingdom corporation. The Simple Card has gained market
share in the United Kingdom by advertising its transparent pricing policies.
From November 2000 to February 2001, Simple has established 350 points of
distribution for its products generally, with news agents and tobacco retailers
who account for approximately 85% of the total sales of prepaid calling cards in
the United Kingdom. There are approximately 35,000 such retailers within the
United Kingdom. In conjunction with B4B, Simple's management is forming
additional strategic alliances with these retailers.

         We hope that several trends that we have noticed will open new markets
for us such as the use of prepaid calling cards by businesses for the purpose of
controlling telephone costs by outside sales and service personnel and the use
of prepaid calling cards on a wholesale basis for advertising and promotional
purposes. To analyze these potential markets, B4B also focuses on the corporate
and advertising applications of our products.

         We have engaged two advertising firms to evaluate the advisability of
running television commercials, radio spots and print media advertisements to
create public awareness of our products and services and to distinguish B4B's
prepaid calling cards from those of our competitors. Some of our distributors
are also engaging media consultants and public relations experts.

         It is our belief that American technology and marketing policies are
more advanced, by approximately two to four years, and more sophisticated than
those employed in the European market. We intend to implement strategies and
techniques that have been used successfully in the United States to establish
B4B as a market leader and innovator in the European market.

         Another market that B4B is targeting is the mobile phone market. B4B is
currently developing a product for users of mobile phones. Mobile network
providers in Europe often block the use of prepaid calling cards on their
networks, but we believe that B4B's technology is compatible with all existing
network providers and we hope to gain access to the mobile networks with this
technology.



                                       24
<PAGE>   29

Future of the Prepaid Phone Card Market.

         In 2000, the total value of industry sales in the United States was
estimated to exceed $4 billion. We are not able to estimate the overall value of
the European prepaid calling card market. However, given the endorsement of such
carriers as British Telecom, Telecom Italia, Telecom de France, Deutche Telecom
and others, we believe that the prepaid calling card is more commonly used in
the European market than in the United States. We are excited about the
potential prospects of expansion and market filtration of B4B in the European
prepaid calling card market.

         Given that B4B now has the capacity to offer services throughout the
United Kingdom and in France, Belgium, the Netherlands, Germany and Spain, we
hope to target market segments in those countries similar to those we target in
the United Kingdom. In addition to increasing our geographic scope, we hope that
such expansion will enable B4B to become less dependent upon its existing
distributors and position B4B to attract new agents, resellers and distributors
in a number of different countries.

         We believe that B4B's pan-European agreement with a major international
carrier makes it one of very few companies in the United Kingdom that can
provide prepaid platforms for cards that can be used in the United Kingdom as
well as in France, the Netherlands, Belgium, Germany and Spain.

         One of the challenges that B4B will be facing is the shift in the use
of prepaid calling cards to prepaid wireless applications. Market studies
suggest that calling cards presently account for approximately 54 percent of the
total prepaid market while prepaid wireless and wireline represent 40 percent
and 6 percent respectively. By 2004 it is anticipated that prepaid calling cards
will account for only 27 percent of the total prepaid market while wireless will
represent approximately 65 percent. B4B will need to adjust to this shift to
maintain a significant presence in the prepaid market. Failure to make necessary
adjustments or the inability to create a significant presence in the wireless
and wireline prepaid markets after making these adjustments could result in a
material adverse effect on our business, financial condition and results of
operation.

Diversification.

         B4B desires to expand and diversify beyond the prepaid calling card
market. It has recently entered into strategic alliances with a select group of
carriers who have demonstrated their willingness to provide B4B with quality
routes and above average answer seizure ratios that will assure the reliability
of the service that the B4B provides. As a result of these strategic alliances,
B4B is now in a position to diversify its business.



                                       25
<PAGE>   30

         B4B has commissioned its own networking equipment and telecommunication
switching facilities such that it can now focus on providing quality service to
the small to medium enterprises corporate market. Through this equipment and
these facilities, B4B will be able to provide service through its own switching
facilities for public arcades or "call shops" which the company was unable to do
before because of limitations inherent in the switching equipment that it was
using prior to March of 2001. With its own switching facilities B4B can now
expand into other areas of the lucrative telecommunications market and diversify
its customer base and client mix. The net effect is that B4B will no longer be
subject to market vagaries that are associated with dependency upon a sole
product or single client mix.

         B4B also has the ability to provide access to its telecommunication
services by means of a carrier pre-select number, the equivalent to the
"1010xxx" type numbers used in the United States for dial-around access to long
distance providers such that B4B will be able to program corporate switchboards
to provide low cost competitive service to the corporate market.

Distributors, Suppliers and Government Regulation.

         B4B is wholly dependent upon a limited number of distributors for its
revenues. For this reason, as mentioned above, we have initiated direct
marketing programs through our sales team to expand our base of distributors.
The loss though of any one of these distributors could have a materially
significant impact on our revenues and affect B4B on a going forward basis.

         B4B is also dependent on the long distance carriers over whose phone
lines B4B's calls are carried. We negotiate with these carriers to obtain rates
that are based, in large part, on commitments by us to generate minimum monthly
call volumes to specific destinations. Negotiating the lowest possible price
with these carriers is in accordance with our strategy of employing the lowest
practical cost structure to enable us to price our products competitively.

         B4B is subject to regulation by various jurisdictions throughout the
world. Many of the countries in which B4B provides, or intends to provide,
services prohibit or limit the services and the transmission methods by which we
can provide such services. We cannot assure you that our services and
transmission methods will not continue to be or will not become prohibited in
these jurisdictions. Such prohibition could materially affect B4B's business,
financial condition and results of operations. Local laws and regulations differ
significantly among the various jurisdictions in which we operate and the
interpretation and enforcement of laws and regulations in these various foreign
jurisdictions can be unpredictable. Our services in Europe might also be
affected if any European Union member state imposes greater restrictions on
non-European Union international service than on such service within the
European Union. Future foreign regulatory, judicial or legislative changes could
have a material adverse effect on B4B's business, financial condition and
results of operations.


SUBSEQUENT EVENTS

         Subsequent to the filing of our Annual Report on Form 10-KSB with the
Securities and Exchange Commission on April 2, 2001, in May of 2001 we
discontinued the operations of both B4B Communications, Limited, and The Simple
Card Limited.



                                       26
<PAGE>   31

                                    EMPLOYEES

         As of March 15, 2001, we employed approximately 85 people on a
full-time basis. We currently have seven executive officers and four directors
as Mr. Postelnik recently resigned from our board of 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 approximately 16,700 square feet of space for our executive
offices in Atlanta, Georgia, for $23,419 per month. We lease approximately 1,640
square feet of space for $2,400 per month at our former corporate office in
Bridgeport, Connecticut. We desire to find a third party to sub-lease this space
as it is no longer required. In addition, B4B leases approximately 2,160 square
feet of office space in London, England, for $3,500 per month.

<TABLE>
<CAPTION>
                       LOCATION                         FORM OF OWNERSHIP    LEASE EXPIRATION        MONTHLY RENT
                       --------                         -----------------    ----------------        ------------
<S>                                                     <C>                  <C>                     <C>
EXECUTIVE OFFICES:                                                                                       $23,419
4501 Circle 75 Parkway,...........................            Lease          February 28, 2005
Building D-4210
Atlanta, Georgia 30039-3025
FORMER EXECUTIVE OFFICES:                                                                                $ 2,400
1087 Broad Street,................................            Lease            June 9, 2005
Bridgeport, CT 06604
SUBSIDIARIES:                                                                                            $ 3,500
B4B Communications, Ltd...........................            Lease           August 19, 2003
15-17 St.  Cross Street Suite 4C
London EC1N 8UW
United Kingdom
</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.



                                       27
<PAGE>   32

         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.

ITEM 3. LEGAL PROCEEDINGS

         On January 28, 2000, Hartan, a wholly owned subsidiary, and six of
Hartan's subsidiaries filed voluntary petitions under Chapter 11 of the U.S.
Bankruptcy Code in the United States Bankruptcy Court for the Northern District
of Georgia, Atlanta Division, Case Numbers 00-61323 through 00-61329. At the
time of bankruptcy filing, Hartan and these six subsidiaries owned substantially
all of our assets. On February 9, 2000, the Bankruptcy Court approved a Sale of
Assets Outside the Ordinary Course of Business Free and Clear of All Liens
pursuant to Section 363(b) of the Bankruptcy Code by Hartan and its
subsidiaries. On February 10, 2000, Hartan and its subsidiaries sold
substantially all of the assets used in their operation with all proceeds paid
to creditors of Hartan and its subsidiaries.

         We are not currently a party to any 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 2000.



                                       28
<PAGE>   33

                                     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.

<TABLE>
<CAPTION>
                                                                                    PRICE
                                                                              -----------------
                                                QUARTER ENDED:                HIGH          LOW
                                                --------------                ----          ---
<S>                                             <C>                           <C>          <C>
FISCAL YEAR 1999:
First Quarter...............................    April 18, 1999                $.5625       $.2188
Second Quarter..............................    July 11, 1999                 $.3438       $.1562
Third Quarter...............................    October 3, 1999               $.2344       $.0469
Fourth Quarter..............................    December 26, 1999             $.0625       $.0156

FISCAL YEAR 2000:
First Quarter...............................    April 16, 2000                $.25         $.0156
Second Quarter..............................    July 9, 2000                  $.2031       $.0156
Third Quarter...............................    October 1, 2000               $.0938       $.0156
Fourth Quarter..............................    December 31, 2000             $.0625       $.0156
</TABLE>

HOLDERS OF RECORD.

         We had approximately 163 holders of record of our common stock as of
March 15, 2001.

DIVIDENDS.

         We have never paid cash 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.



                                       29
<PAGE>   34

RECENT SALES OF UNREGISTERED SECURITIES.

         During our fiscal year 2000, we issued the following securities which
were not registered under the Securities Act of 1933.

         In May of 2000, we issued 12,191,018 shares of our common stock to a
number of holders of our Series D Preferred Convertible Stock upon their
conversion of 290.6 shares of Series D Preferred held by them. 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 June 5, 2000, we issued 40,000,000 shares of our common stock to DCI
Telecommunications, Inc. in connection with our acquisition of B4B. 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 August 14, 2000, we entered into a consulting agreement with
Strategic Services Group of Morrow & Co., Inc. The services provided by Morrow
to us pursuant to the agreement commenced on September 1, 2000, and are to
continue for a two year period ending August 31, 2002, and consist of Morrow
serving as an advisor to us with respect to stock watching, investor relations,
corporate governance and proxy related matters. Pursuant to the agreement, we
issued 1,275,000 shares of our common stock to Morrow and 1,275,000 shares to
William Poudrier, an employee of Morrow. The shares were valued at $0.0625 per
share at the time they were issued. 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.

         In September of 2000, 66,098 and 234,183 shares of our common stock
were issued to two holders of our Series D Preferred due to their conversion of
1.5 and 6 shares of their Series D Preferred, respectively. 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 September 13, 2000, we issued 2,105,263 shares of our common stock
to Sysco Food Service of Atlanta, L.L.C. in connection with the settlement of a
lawsuit. 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 November 7, 2000 we issued 1,700 shares of our Series D convertible
preferred stock to Finova Mezzanine Capital in connection with the settlement of
a lawsuit. In addition we credited or waived the $.01 per share exercise price
for the warrant held by Finova Mezzanine Capital against the amount owed by us
in connection with the settlement with respect to an exercise for 756,331 shares
of our common stock under such warrant. 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.



                                       30
<PAGE>   35

         On November 29, 2000, we purchased from Dharmesh Patel, an individual,
all of the outstanding shares of The Simple Card Limited in exchange for
12,500,000 shares of our common stock. 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 December 11, 2000 we issued 764,706 shares of our common stock to
Lin Chin Liu Ho and Chi Oen Ho along with 764,706 shares of our common stock to
C. M. Henkel III in settlement of an outstanding judgment against us. 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 January 25, 2001, we acquired LecStar Communications by merger with
one of our 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 LecStar
Communications. 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.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        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.

         On March 31, 2000, we acquired Fone.com via a stock for stock purchase.

         On January 25, 2001, we acquired LecStar Communications by merger with
one of our subsidiaries.

         On February 1, 2001, we determined to change 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. Since the fiscal year 2000 ended on Sunday, December 31,
2000, the change described above will not result in a transition period.
Therefore, we will not file a report covering the transition period.

         On March 30, 2001, we filed an amendment to our Articles of
Incorporation with the Texas Secretary of State by which we changed our name
from Corzon, Inc. to LecStar Corporation and effected a sixty to one reverse
split of our common stock. In conjunction with our name change, on April 2,
2001, our common stock began trading on the NASDAQ OTC Bulletin Board under the
symbol "LCST."



                                       31
<PAGE>   36

RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000, COMPARED TO THE DATE
OF INCEPTION OF JUNE 2, 1999 TO DECEMBER 31, 1999.

         Total net revenues increased $414,139 during the year ended December
31, 2000, compared to the period from June 2, 1999, to December 31, 1999.
General and administrative expenses increased to $1,530,826 in 2000 from
$111,161 in the 1999, primarily due to a full year's worth of expenses and
increases in expenses in the corporate office.

         Interest expense increased to $1,665,787 in 2000 from $0 in 1999. We
incurred a net loss of $3,858,555 for 2000 compared to $135,367 in 1999.
Included in interest expense for 2000 is a beneficial conversion amount of
$1,517,884.

LIQUIDITY AND CAPITAL RESOURCES.

         We have incurred operating losses since our inception at June 2, 1999,
and as of December 31, 2000, we had an accumulated deficit of $3,993,922 and a
working capital deficit of $2,454,081.

         In connection with our acquisition of LecStar Communications, we
entered into a $25,000,000 Equity Line Financing Agreement with Pima Capital
Management Limited on January 25, 2001. Upon our request and at our sole
discretion, 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. However, we may
not be able to draw funds under this equity line of credit for some time due to
the conditions to funding under the equity line. Inability to draw these funds
could result in a material adverse effect on our business, financial condition
and results of operation.

         We have also entered into a credit agreement with Sherman LLC that will
provide us with up to $3,500,000 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 10% 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 each of our significant subsidiaries
and accrue interest at the rate of 24% per year. As of March 15, 2001, we have
not borrowed any funds under this facility.

         Both the financing and credit agreements will provide us with working
capital, enable us to fund ongoing operations and various capital expenditures
and further our growth and expansion into new markets.

         Our cash and cash equivalents increased $73,944 during 2000. The
principal source of funds consisted of $1,520,751 received from outside
investors The primary uses of funds were cash used in operations of $1,389,365.



                                       32
<PAGE>   37

         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.

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

         None.

                                    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 2001 Annual Meeting of Stockholders, filed pursuant to
Section 14 of the Securities Exchange Act of 1934 on April 5, 2001, and is
incorporated herein by reference.


SUBSEQUENT EVENTS

         Subsequent to the filing of our Annual Report on Form 10-KSB with the
Securities and Exchange Commission on April 2, 2001, in June of 2001 Mr. James
Grenfell resigned as our Chief Financial Officer and Treasurer. Mr. James Malcom
was then appointed as our new Chief Financial Officer and Treasurer, joining us
on June 25, 2001. In April of 2001 Mr. Larry Shatsoff resigned as one of our
Vice Presidents and as Secretary. Following Mr. Shatsoff's resignation, we
entered into a Consulting Agreement with Business Analysis Group, LLC. Mr.
Shatsoff is the President of Business Analysis Group.


ITEM 10. EXECUTIVE COMPENSATION

         The information required by this item is contained in our proxy
statement related to our 2001 Annual Meeting of Stockholders, filed pursuant to
Section 14 of the Securities Exchange Act of 1934 on April 5, 2001, and is
incorporated herein by reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth information as of April 3, 2001,
regarding our common stock that was beneficially owned by:

         o   each of our current directors;

         o   all of our current directors and executive officers, as a group;



                                       33
<PAGE>   38

         o   all individuals who served as our chief executive officer during
             our last completed fiscal year and our most highly compensated
             executive officers during our last completed fiscal year, as a
             group; and

         o   each person or entity that beneficially owned, directly or together
             with affiliates, more than 5% of our common stock. The 5% threshold
             was based on information available to us and based upon a review of
             statements filed with the Securities and Exchange Commission
             pursuant to the Securities Act.

         On March 30, 2001, we effected a 60 to 1 reverse split whereby the
number of shares of our common stock outstanding immediately before the reverse
split were converted into a number of "new" shares of common stock equal to the
quotient of 1 divided by 60. The following table represents the beneficial
ownership of our common stock on a post-split basis.

         Based on information provided to us by the following beneficial owners,
each person or entity listed has sole voting and investment power over the
shares beneficially owned by them. Each person's address is c/o LecStar
Corporation, 4501 Circle 75 Parkway, Building D-4210, Atlanta, Georgia
30339-3025.



                                       34
<PAGE>   39

                    AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP

<TABLE>
<CAPTION>
                                                                                    AMOUNT AND NATURE OF       PERCENT OF CLASS
NAME OF BENEFICIAL OWNER                             POSITIONS HELD                 BENEFICIAL OWNERSHIP           OWNERSHIP
------------------------                             --------------                 --------------------       ----------------
<S>                                     <C>                                         <C>                        <C>
William S. Woulfin                      Director, Chairman of the Board and CEO           2,886,797                   8.5%

W. Dale Smith                                     Director, President                     2,492,275                   7.4%

John C. Canouse                                         Director                          2,822,620                   7.0%

Lawrence Shatsoff                        Director, Vice President and Secretary              25,000                     0%

Alan B. Thomas, Jr.                      Vice President, Regulatory Affairs and           2,566,052                   7.7%
                                                  Governmental Relations

Dominion Capital                                      Shareholder                         6,767,009                  20.1%

Sovereign Partners, L.P.                              Shareholder                         3,083,488                   9.1%

Atlantis Capital Fund Ltd.                            Shareholder                         2,929,267                   8.7%

Four Life Trust                                       Shareholder                         2,630,167                   7.5%

First Empire Corporation                              Shareholder                         2,455,699                   7.2%

Canadian Advantage, L.P.                              Shareholder                         2,396,323                   7.2%

Greenfield Capital Partners, LLC                      Shareholder                         2,324,526                   6.7%

All current directors and executive                                                      10,132,373                  27.7%
officers as a group (8 persons)
</TABLE>

         The percentage of class ownership column is based on 33,458,828 shares
of common stock outstanding as of April 3, 2001. Each person's or entity's
percentage also reflects the number of shares of our common stock issuable to
that person or entity upon the exercise or conversion of options and warrants
exercisable on or within 60 days of April 3, 2001.

         Mr. Woulfin's shares include warrants to purchase 577,350 shares
exercisable at $0.78 with expiration dates ranging from May 10, 2002, to June
12, 2005.

         Mr. Smith's shares include warrants to purchase 182,828 shares
exercisable at $0.78 with an expiration date of October 25, 2004.



                                       35
<PAGE>   40

         Mr. Canouse's shares are held as follows:

             o    Mr. Canouse is a beneficiary of The Four Life Trust, which
                  owns 833,967 shares of our common stock and warrants to
                  purchase 1,796,200 shares with an exercise price of $0.78 per
                  share and expiration dates of May 10, 2002, for 641,500
                  warrants and October 25, 2004, for 1,154,700 warrants;

             o    Mr. Canouse's three minor children own 192,453 shares of our
                  common stock;

             o    Mr. Canouse is a member of J.P. Carey Asset Management, LLC,
                  the general partner of Cache Capital (USA) L.P. Cache Capital
                  owns 451,625 shares of our common stock and 101 shares of our
                  Series D Convertible preferred stock. Our Series D preferred
                  stock is convertible into our common stock but Cache Capital
                  is contractually unable to convert these shares if, after
                  conversion, Cache Capital would hold more than 4.99% of our
                  then outstanding shares of common stock. Mr. Canouse disclaims
                  beneficial ownership of any stock held be Cache Capital,
                  accordingly, the shares of common stock issuable upon
                  conversion of the shares of our Series D preferred stock and
                  the shares of common stock owned outright by Cache Capital
                  have not been included in Mr. Canouse's total beneficial
                  ownership; and

             o    Mr. Canouse is a Senior Vice President of J.P. Carey
                  Enterprises, Inc. which owns 160,378 shares of our common
                  stock. Mr. Canouse disclaims beneficial ownership of any stock
                  held be J.P. Carey Enterprises, Inc., accordingly, these
                  shares of our common stock have not been included in Mr.
                  Canouse's total beneficial ownership.

         Dominion Capital's holdings include warrants to purchase 272,638 shares
exercisable at $1.95 with expiration dates ranging from March 31, 2003, to
December 8, 2003, and warrants to purchase 3,126 shares exercisable at $120.00
with an expiration date of December 23, 2003. In addition, Dominion owns 1,791
shares of our Series D preferred stock. Our Series D preferred stock is
convertible into our common stock but Dominion is contractually unable to
convert these shares if, after conversion, Dominion would hold more than 4.99%
of our then outstanding shares of common stock. Accordingly, the shares of
common stock issuable upon conversion of the shares of Series D have not been
included in Dominion's total beneficial ownership.

         Atlantis Capital Fund's holdings include warrants to purchase 64,150
shares exercisable at $1.95 with an expiration date of July 31, 2003, and
warrants to purchase 2,574 shares exercisable at $120.00 with an expiration date
of December 23, 2003. In addition, Atlantis owns 1,482 shares of our Series D
preferred stock. Our Series D preferred stock is convertible into our common
stock but Atlantis is contractually unable to convert these shares if, after
conversion, Atlantis would hold more than 4.99% of our then outstanding shares
of common stock. Accordingly, the shares of common stock issuable upon
conversion of the shares of Series D have not been included in Atlantis's total
beneficial ownership.



                                       36
<PAGE>   41

         Sovereign Partner's holdings include warrants to purchase 304,713
shares exercisable at $1.95 with expiration dates ranging from March 31, 2003,
to December 8, 2003 and warrants to purchase 7,550 shares exercisable at $120.00
with an expiration date of December 23, 2003. In addition, Sovereign owns 4,284
shares of our Series D preferred stock. Our Series D preferred stock is
convertible into our common stock but Sovereign is contractually unable to
convert these shares if, after conversion, Sovereign would hold more than 4.99%
of our then outstanding shares of common stock. Accordingly, the shares of
common stock issuable upon conversion of the shares of Series D have not been
included in Sovereign's total beneficial ownership.

         Four Life Trust's holdings include warrants to purchase 1,796,200
shares with an exercise price of $0.78 per share and expiration dates of May 10,
2002, for 641,500 warrants and October 25, 2004, for 1,154,700 warrants.

         First Empire Corporation's holdings include warrants to purchase
641,500 shares exercisable at $0.78 per share with an expiration date of May 10,
2002.

         Greenfield Capital Partners, L.L.C.'s holdings include warrants to
purchase 641,500 shares exercisable at $0.78 per share with an expiration date
of May 10, 2002. We are also currently obligated to issue 400,000 shares of our
common stock to Greenfield as an advising fee pursuant to the terms of the
Agreement and Plan of Merger between us, our subsidiary and LecStar
Communications, dated January 25, 2001. We have not yet issued these shares but
intend to do so in the near future.

         Three of our current executive officers not named in the beneficial
ownership table hold 160,375, 160,375 and 128,300 options exercisable at $2.34,
$2.34 and $0.78 respectively. One of these executive officers also owns 400
shares of our common stock and an additional 160,375 warrants to purchase our
common stock with an exercise price of $0.78 and an expiration date of October
25, 2004. Another of our executive officers not named in the Beneficial
Ownership table owns 1,295,856 shares of our common stock. Other than as set
forth in the beneficial ownership table, no former chief executive officer or
executive officer from our previous fiscal year beneficially owns shares of our
common stock.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by this item is contained in our proxy
statement related to our 2001 Annual Meeting of Stockholders, filed pursuant to
Section 14 of the Securities Exchange Act of 1934 on April 15, 2001, 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 I-1.

         (b) During the fourth quarter of 2000, we filed on November 7, 2000, a
current report on Form 8-K to report the settlement of two lawsuits.



                                       37
<PAGE>   42

                                   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/A to be signed
on its behalf by the undersigned, thereunto duly authorized, on July 3, 2001.

                                       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/A has been signed below by the following persons on behalf of
LecStar Corporation and in the capacities and on the dates indicated.


<TABLE>
<CAPTION>
           SIGNATURE                                        TITLE                                 DATE
           ---------                                        -----                                 ----
<S>                                  <C>                                                      <C>
      /s/ WILLIAM S. WOULFIN         Director, Chairman of the Board and CEO (Principal       July 3, 2001
----------------------------------                    Executive Officer)
        William S. Woulfin

         /s/ W. DALE SMITH                           Director, President                      July 3, 2001
----------------------------------
           W. Dale Smith

        /s/ JOHN C. CANOUSE                               Director                            July 3, 2001
----------------------------------
          John C. Canouse

        /s/ JAMES MALCOM                 Vice President, Chief Financial Officer and          July 3, 2001
----------------------------------         Treasurer (Principal Financial Officer)
           James Malcom

     /s/ DONALD G. SANTAVICCA        Vice President, Controller and Assistant Treasurer       July 3, 2001
----------------------------------            (Principal Accounting Officer)
       Donald G. Santavicca
</TABLE>



                                       38
<PAGE>   43

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                                 PAGE
                                                                                                                 ----
<S>                                                                                                              <C>
CORZON, INC.
      Independent Auditors' Report........................................................................        F-2
      Consolidated Balance Sheet -- December 31, 2000.....................................................        F-3
      Consolidated Statements of Operations...............................................................        F-4
      Consolidated Statements of Stockholders' Deficit....................................................        F-5
      Statements of Cash Flows............................................................................        F-6
      Notes To Consolidated Financial Statements..........................................................        F-7
</TABLE>



                                      F-1
<PAGE>   44

                          INDEPENDENT AUDITORS' REPORT

Board of Directors
Corzon, Inc and Subsidiaries
New York, New York

         We have audited the accompanying consolidated balance sheet of Corzon,
Inc. and Subsidiaries as of December 31, 2000, and the related consolidated
statements of operations, stockholders' deficit and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

         In our opinion, the financial statements referred to above present
fairly, the financial position of Corzon, Inc. and Subsidiaries as of December
31, 2000, and the results of its operations and its cash flows for the year then
ended, in conformity with generally accepted accounting principles.

         The accompanying 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 3M, the Company
anticipates that additional funding will be necessary to sustain the Company's
operations through the fiscal year ending December 31, 2001. 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 3M. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.


                                       /s/ Feldman Sherb Ehrlic & Co., P.C.
                                       ------------------------------------
                                       FELDMAN SHERB EHRLICH & CO., P.C.
                                       Certified Public Accountants

New York, New York
July 3, 2001



                                      F-2
<PAGE>   45

                                  CORZON, INC.
                    (FORMERLY TANNERS RESTAURANT GROUP, INC.)

                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2000

<TABLE>
<S>                                                                  <C>
                                     ASSETS

CURRENT ASSETS
     Cash ........................................................   $     81,357
     Prepaid expenses and other current assets ...................         18,322
                                                                     ------------
         TOTAL CURRENT ASSETS ....................................         99,679
PROPERTY AND EQUIPMENT ...........................................         55,107
OTHER ASSETS .....................................................         87,133
                                                                     ------------
                                                                     $    241,918
                                                                     ============


                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
     Accounts payable ............................................   $    308,188
     Accrued expenses and taxes ..................................        153,242
     Current portion of long-term debt and notes in default ......      1,471,578
     Notes payable ...............................................        620,751
                                                                     ------------
         TOTAL CURRENT LIABILITIES ...............................      2,553,759
ACCOUNTS PAYABLE .................................................         42,089
CONVERTIBLE DEBENTURES ...........................................      4,553,652
STOCKHOLDERS' DEFICIT:
     Cumulative Preferred Stock ..................................     11,724,910
     Common stock, $.01 par value; authorized 500,000,000
     shares; issued and outstanding 87,524,410 shares ............        875,244
     Additional paid-in capital ..................................    (15,370,909)
     Deferred compensation .......................................       (132,723)
     Other comprehensive .........................................        (10,182)
     Accumulated deficit .........................................     (3,993,922)
                                                                     ------------
         TOTAL STOCKHOLDERS' DEFICIT .............................     (6,907,582)
                                                                     ------------
                                                                     $    241,918
                                                                     ============
</TABLE>

                 See notes to consolidated financial statements.



                                      F-3
<PAGE>   46

                                  CORZON, INC.
                    (FORMERLY TANNERS RESTAURANT GROUP, INC.)

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                                   FROM JUNE 2,
                                                                                                       1999
                                                                                                   (INCEPTION)
                                                                                    YEAR ENDED          TO
                                                                                   DECEMBER 31,    DECEMBER 31,
                                                                                       2000            1999
                                                                                   ------------    ------------
<S>                                                                                <C>             <C>
NET SALES ......................................................................   $    417,614    $      3,475
COST OF SALES ..................................................................        321,507          27,681
                                                                                   ------------    ------------
GROSS PROFIT ...................................................................         96,107         (24,206)
SELLING, GENERAL AND ADMINISTRATIVE ............................................      1,530,825         111,161
IMPAIRMENT OF LONG-LIVED ASSETS ................................................        789,251
                                                                                   ------------    ------------
LOSS FROM OPERATIONS ...........................................................     (2,223,969)       (135,367)
INTEREST EXPENSE ...............................................................      1,665,787
                                                                                   ------------    ------------
NET LOSS FROM CONTINUING OPERATIONS BEFORE EXTRAORDINARY ITEM ..................     (3,889,756)       (135,367)
EXTRAORDINARY GAIN ON FORGIVENESS OF DEBT ......................................         31,201
                                                                                   ------------    ------------
NET LOSS .......................................................................   $ (3,858,555)   $   (135,367)
                                                                                   ============    ============
NET LOSS PER COMMON SHARE -- BASIC AND DILUTED:
     CONTINUING OPERATIONS .....................................................   $      (0.09)   $      (0.03)
     EXTRAORDINARY GAIN ........................................................           0.00
                                                                                   ------------    ------------
LOSS PER SHARE -- BASIC AND DILUTED ............................................   $      (0.09)   $      (0.03)
                                                                                   ============    ============
WEIGHTED AVERAGE NUMBER OF SHARES USED IN CALCULATION OF BASIC AND DILUTED
     LOSS PER SHARE ............................................................     64,735,630      52,012,525
                                                                                   ============    ============
</TABLE>

                 See notes to consolidated financial statements.



                                      F-4
<PAGE>   47

                                  CORZON, INC.
                    (FORMERLY TANNERS RESTAURANT GROUP, INC.)

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>
                                       PREFERRED STOCK                   COMMON STOCK
                                  --------------------------       -------------------------    ADDITIONAL PAID-IN      DEFERRED
                                     SHARES         AMOUNT            SHARES        AMOUNT            CAPITAL          COMPENSATION
                                  ----------    ------------       -----------    ----------    ------------------     ------------
<S>                                <C>          <C>                 <C>           <C>            <C>                   <C>
Balance June 2, 1999
  (inception)...................   1,198,608    $  8,888,910        11,375,111    $  113,751     $ (12,349,583)
  Issuance of Series D
     Preferred Stock ...........       1,500       1,500,000
  Conversion of Series D
     Preferred Stock ...........         (59)        (59,000)        2,888,705        28,887            30,113
  Net loss .....................
                                   ---------    ------------        ----------    ----------      ------------          ---------
Balance December 31,
  1999 .........................   1,200,049      10,329,910        14,263,816       142,638       (12,319,470)
  Conversion Series D
     Preferred Stock ...........        (305)       (305,000)       12,893,662       128,937           176,063
  Acquisition of B4B
     Communications,
     Ltd. ......................                                    40,000,000       400,000        (5,477,483)
  Beneficial conversion
     feature on convertible
     debentures ................                                                                     1,517,884
  Issuance of common
     stock for services ........                                     2,550,000        25,500           133,875          $(159,375)
  Issuance of Series D
     Preferred Stock for
     legal settlement ..........       1,700       1,700,000
  Exercise of warrants                                                 756,331         7,563             4,236
  Issuance of common
     stock for legal
     settlement ................                                     4,560,601        45,606           143,894
  Common stock issued
     for acquisition of
     Simple Card, Ltd. .........                                    12,500,000       125,000           450,092
  Amortization of
  deferred compensation ........                                                                                           26,652
 COMPREHENSIVE LOSS:
  Net loss .....................
  Other comprehensive
  loss net of taxes $-0- .......
 TOTAL COMPREHENSIVE ...........
                                   ---------    ------------        ----------    ----------      ------------          ---------
Balance December 31,
  2000 .........................   1,201,444    $ 11,724,910        87,524,410    $  875,244      $(15,370,909)         $(132,723)
                                   =========    ============        ==========    ==========      ============          =========

<CAPTION>
                                       OTHER                                  TOTAL
                                   COMPREHENSIVE     ACCUMULATED           SHAREHOLDER'S
                                       LOSS            DEFICIT               DEFICIT
                                   -------------   -------------           -------------
<S>                                <C>             <C>                     <C>
Balance June 2, 1999
  (inception)...................    $              $                       $(3,346,922)
  Issuance of Series D
     Preferred Stock ...........                                             1,500,000
  Conversion of Series D
     Preferred Stock ...........
  Net loss .....................                        (135,367)             (135,367)
                                    --------       -------------           -----------
Balance December 31,
  1999 .........................                        (135,367)           (1,982,289)
  Conversion Series D
     Preferred Stock ...........
  Acquisition of B4B
     Communications,
     Ltd........................                                            (5,077,483)
  Beneficial conversion
     feature on convertible
     debentures ................                                             1,517,884
  Issuance of common
     stock for services ........
  Issuance of Series D
     Preferred Stock for
     legal settlement ..........                                             1,700,000
  Exercise of warrants .........                                                11,799
  Issuance of common
     stock for legal
     settlement ................                                               189,500
  Common stock issued
     for acquisition of
     Simple Card, Ltd. .........                                               575,092
  Amortization of
  deferred compensation ........                                                26,652
 COMPREHENSIVE LOSS:
  Net loss .....................                      (3,858,555)           (3,858,555)
  Other comprehensive
  loss net of taxes $-0- .......     (10,182)                                  (10,182)
                                                                           -----------
 TOTAL COMPREHENSIVE                                                        (3,868,737)
                                    --------       -------------           -----------
Balance December 31,
  2000 .........................    $(10,182)      $   (3,993,92)          $(6,907,582)
                                    ========       =============           ===========
</TABLE>

                 See notes to consolidated financial statements.



                                      F-5
<PAGE>   48

                                  CORZON, INC.
                    (FORMERLY TANNERS RESTAURANT GROUP, INC.)

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                           YEAR ENDED DECEMBER 31,
                                                                                        ----------------------------
                                                                                            2000            1999
                                                                                        ------------    ------------
<S>                                                                                     <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss .......................................................................   $ (3,858,555)   $   (135,367)
                                                                                        ------------    ------------
     Adjustments to reconcile net loss to net cash used in operating activities:
         Depreciation and amortization ..............................................         30,604
         Impairment of long-lived assets ............................................        575,092
         Beneficial conversion ......................................................      1,517,884
     Changes in assets and liabilities:
         (Increase) decrease in accounts receivable .................................         46,366         (46,366)
         (Increase) decrease in prepaid expenses ....................................         28,364         (46,686)
         Increase in other assets ...................................................        (87,133)
         Increase in accounts payable and accrued expenses ..........................        358,013          91,155
                                                                                        ------------    ------------
                                                                                           2,469,190          (1,897)
                                                                                        ------------    ------------
NET CASH USED IN OPERATING ACTIVITIES ...............................................     (1,389,365)       (137,264)
                                                                                        ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of equipment ..........................................................        (59,059)
                                                                                        ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
         Increase in notes payable ..................................................        620,751
         Proceeds from long-term debt ...............................................        900,000         144,677
         Exercise of warrants .......................................................         11,799
                                                                                        ------------    ------------
NET CASH PROVIDED B FINANCING ACTIVITIES ............................................      1,532,550         144,677
                                                                                        ============    ============
EFFECT OF EXCHANGE RATE ON CASH .....................................................        (10,182)
                                                                                        ------------    ------------
INCREASE IN CASH ....................................................................         73,944           7,413
CASH -- BEGINNING OF YEAR ...........................................................          7,413
                                                                                        ------------    ------------
CASH -- END OF YEAR .................................................................   $     81,357    $      7,413
                                                                                        ============    ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Cash paid for interest and taxes ...............................................   $               $
                                                                                        ============    ============
SUPPLEMENTAL NON-CASH FINANCING ACTIVITIES:
     Acquisition of B4B Communications, Ltd. ........................................   $ 16,850,140    $
                                                                                        ============    ============
     Common stock issued for services ...............................................   $    159,375    $
                                                                                        ============    ============
     Issuance of preferred stock for legal settlement ...............................   $  1,700,000    $
                                                                                        ============    ============
     Issuance of common stock for legal settlement ..................................   $    189,500    $
                                                                                        ============    ============
</TABLE>

                 See notes to consolidated financial statements.



                                      F-6
<PAGE>   49

                                  CORZON, INC.
                   (FORMERLY TANNER'S RESTAURANT GROUP, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         YEAR ENDED DECEMBER 31, 2000 AND FROM JUNE 2, 1999 (INCEPTION)
                              TO DECEMBER 31, 1999

1. DESCRIPTION OF BUSINESS

         On January 14, 1999 Harvest Restaurant Group, Inc. ("Harvest") and TRC
Acquisition Corporation ("TRC") completed a forward triangular merger (the
"Merger") where Harvest acquired TRC. In the Merger, shareholders of TRC
received a majority of the shares of common stock of Harvest. The Merger was
accounted for as a reverse acquisition under the purchase method for business
combinations. On March 12, 1999, the company's shareholders voted to change the
name of the Company to Tanner's Restaurant Group, Inc. ("Tanner's")

         Effective May 31, 2000, (closing date June 2, 2000), Tanner's acquired
all of the common stock of B4B Communications Limited ("B4B"), a company
organized under the laws of England and Wales, from DCI Telecommunications, Inc.
("DCI") in exchange for 40,000,000 shares of common stock and the assumption of
$3,453,652 of debt of DCI. The acquisition has been accounted for as a reverse
acquisition under the purchase method for business combinations. Accordingly,
the combination of the two companies is recorded as a recapitalization of B4B,
pursuant to which B4B is treated as the continuing entity. On September 8, 2000
the Company changed its name to Corzon, Inc. (the "Company")

         B4B provides long distance telephone service to businesses and
individuals, through a multi-switched-based, private leased network and the sale
of prepaid phone cards.

         On January 25, 2001, the Company, completed its acquisition by merger
(the "Acquisition") of LecStar Communications Corporation, a Delaware
corporation ("LecStar"), according to the terms of an Agreement and Plan of
Merger that was executed on January 5, 2001. LecStar is now a wholly-owned
subsidiary of Corzon. LecStar was acquired by Corzon in a stock-for stock
transaction in which the former shareholders of LecStar now own approximately
80% of Corzon's outstanding common stock on a non-diluted basis and 10 shares of
Series F Preferred Stock. The acquisition will be treated as a reverse
acquisition by LecStar under the purchase method of accounting. Accordingly, the
combination of the two companies is recorded as a recapitalization of LecStar to
which is treated as the continuing entity. On March 30, 2001 the Company changed
its name to LecStar Corporation.

2. BANKRUPTCY PROCEEDINGS AND SALE OF ASSETS

         On January 28, 2000, Hartan Inc. ("Hartan"), a wholly owned subsidiary
of the Company filed a voluntary petition under Chapter 11 of the U.S.
Bankruptcy Code in the United States Bankruptcy Court for the Northern District
of Georgia. In addition, six wholly owned operating subsidiaries of Hartan filed
voluntary petitions under Chapter 11 in the same jurisdiction. Hartan and these
six subsidiaries owned substantially all of assets of the Company.



                                      F-7
<PAGE>   50

         As part of the bankruptcy proceedings, the court granted an order to
hold a sale of the assets of Hartan and its subsidiaries. On February 9, 2000,
the United States Bankruptcy Court for the Northern District of Georgia approved
a Sale of Assets Outside the Ordinary Course of Business Free and Clear of All
Liens pursuant to Section 363(b) of the Bankruptcy Code by Hartan, Inc., and all
six of Hartan's subsidiaries. Pursuant thereto, on February 10, 2000, Hartan and
its subsidiaries sold substantially all of the assets used in the operation of
the Rick Tanner's Original Grill restaurants to Restaurant Teams International,
Inc. ("RTI") for cash consideration of approximately $275,000. All proceeds of
the sale were paid to creditors of Hartan and its subsidiaries. In addition, RTI
forgave Hartan's repayment of $50,000 of debtor-in-possession financing that RTI
had extended in connection with the bankruptcy, forgave any management fees owed
to RTI by Hartan and its subsidiaries, and assumed certain liabilities
pertaining to certain leases of Hartan and its subsidiaries. In addition, RTI
agreed to indemnify the acting Chief Executive Officer of the Company, and
certain other former and current officers and employees of the Company and its
subsidiaries against any claims relating to the failure of the Company and its
subsidiaries to pay certain taxes, with the maximum aggregate amount of such
indemnification to be $125,000. As a result of the sale of these assets to RTI,
neither the Company nor any of its subsidiaries owned any operating assets as of
February 10, 2000.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         A. Principles of Consolidation -- The accompanying consolidated
financial statements include the accounts of the Company and its wholly owned
subsidiaries. All material inter-company transactions have been eliminated in
consolidation.


         B. Revenue Recognition -- The Company follows the guidelines of SEC
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements." Revenues are recorded at the time merchandise is shipped and risk
of ownership is transferred or when services are rendered. Wireline service
revenue is recognized based upon minutes of traffic processed. Deferred revenue
on prepaid phone cards is recognized when the retailers and distributors are
invoiced. Revenue is recognized when the end user utilizes calling time and upon
expiration of such cards.


         C. Property and Equipment -- Property and equipment are carried at
cost. Depreciation is computed using the straight-line method over the estimated
useful lives of the asset which range from 5 to 7 years.

         D. Fiscal Year -- The Company had operated on a 52/53-week fiscal year
ending last Sunday in December. Effective December 31, 2000 the Company has
adopted a calendar year end. All references in the financial statements have
been conformed to a calendar year end. No transitional financial information has
been presented because the difference in year ends was immaterial.

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



                                      F-8
<PAGE>   51

         F. Income Taxes -- The Company follows Statement of Financial
Accounting Standards No. 109 -- Accounting for Income Taxes, which requires
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred tax assets and liabilities are based on
the differences between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.

         G. Impairment of Long Lived Assets -- In the event that facts and
circumstances indicate that the cost of an asset may be impaired, an evaluation
of recoverability would be performed. If an evaluation is required, the
estimated future undiscounted cash flows associated with the asset would be
compared to the asset's carrying amount to determine if a write-down to market
value is required. At December 31, 2000, the Company wrote off $789,251 due to
impairment. The Company believes that the balance of long-lived assets in the
accompanying balance sheet is appropriately valued.

         H. Earnings Per Share -- The Company has adopted SFAS, No. 128,
Earnings per Share. Net income (loss) per common share has been restated for all
periods presented to conform to the provisions of SFAS No. 128. Basic earnings
(loss) per share is computed by dividing net income (loss) available to common
stockholders by the weighted average number of common shares outstanding during
the period. Diluted earnings per share reflects the per share amount that would
have resulted if diluted potential common stock had been converted to common
stock, as prescribed by SFAS No. 128.

         I. New Accounting Pronouncements -- In June 1998 and June 2000, the
FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities" and SFAS No. 138, "Accounting for Certain Derivative Instruments and
Certain Hedging Activities." These statements establish accounting and reporting
standards requiring that every derivative instrument be recorded on the balance
sheet as either an asset or liability measured at its fair value. SFAS Nos. 133
and 138 also require that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. SFAS
Nos. 133 and 138 are effective for fiscal years beginning after June 15, 2000.
The Company does not expect that the adoption of these new standards will have a
material impact on the Company's earnings or financial position.


         Revenue Recognition: In December 1999, the Securities and Exchange
Commission ("SEC") issued Staff Accounting Bulletin No. 101, "Revenue
Recognition in Financial Statements" ("SAB 101"), which is effective January 1,
2000 and which clarified certain existing accounting principles for the timing
of revenue recognition and its classification in the financial statements. In
the June 26, 2000 Staff Accounting Bulletin No. 101B, the SEC delayed the
required implementation date of SAB 101 to no later than the fourth fiscal
quarter of fiscal years beginning after December 15, 1999. The Company has
changed its applicable accounting policies to reflect implementation of SAB 101.
The implementation of SAB 101 had no effect on the consolidated cash flows of
the Company.




                                      F-9
<PAGE>   52

         In September 2000, the FASB issued SFAS No. 140 "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities
-- a replacement of FASB Statement No. 125" ("SFAS 140"). SFAS 140 revises the
standards for accounting for securitizations and other transfers of financial
assets and collateral and requires certain disclosures, but it carries over most
of SFAS 125's provisions without reconsideration. This Statement is effective
for transfers and servicing of financial assets and extinguishments of
liabilities occurring after March 31, 2001. This Statement is effective for
recognition and reclassification of collateral and for disclosures relating to
securitization transactions and collateral for fiscal years ending after
December 15, 2000. The Company is currently analyzing this new standard.

         J. Fair Value of Financial Instruments -- The respective carrying value
of certain on-balance-sheet financial instruments approximated their fair
values. Fair value estimates discussed herein are based upon certain market
assumptions and pertinent information available to management. These financial
instruments include cash, accounts receivable, accounts payable and accrued
expenses. Fair values were assumed to approximate carrying values for these
financial instruments since they are short term in nature and their carrying
amounts approximate fair values or they are receivable or payable on demand. The
fair value of the Company's long-term debt, which approximates its carrying
value, is estimated based upon the quoted market prices for the same or similar
debt instruments or on the current rates offered to the Company for debt of the
same remaining maturities.

         K. Stock Based Compensation -- The Company adopted Statement of
Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock Based
Compensation." SFAS 123 encourages the use of a fair-value-based method of
accounting for stock-based awards under which the fair value of stock options is
determined on the date of grant and expensed over the vesting period. Under SFAS
123, companies may, however, measure compensation costs for those plans using
the method prescribed by Accounting Principles Board Opinion No. 25, ("APB No.
25"), "Accounting for Stock Issued to Employees." Companies that apply APB No.
25 are required to include pro forma disclosures of net earnings and earnings
per share as if the fair-value-based method of accounting had been applied. The
Company elected to account for such plans under the provisions of APB No. 25.

         L. Foreign Currency Translation -- Assets and liabilities of
subsidiaries operating in foreign countries are translated into U.S. dollars
using both the exchange rate in effect at the balance sheet date or historical
rate, as applicable. Results of operations are translated using the average
exchange rates prevailing throughout the year. The effects of exchange rate
fluctuations on translating foreign currency assets and liabilities into U.S.
dollars are included in stockholders equity (Accumulated other comprehensive
loss), while gains and losses resulting from foreign currency transactions are
included in operations.

         M. Basis of Presentation -- The Company had a working capital
deficiency of approximately $2,454,000 for the year ended December 31, 2000, and
they recorded net losses of approximately $3,859,000, 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>   53

         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.

4. ACQUISITIONS

         Effective May 31, 2000, (closing date June 2, 2000), the Company
acquired all of the common stock of B4B Communications Limited, from DCI in
exchange for 40,000,000 shares of Corzon and the assumption of $3,453,652 of
debt of DCI. The acquisition has been accounted for as a reverse acquisition
under the purchase method for business combinations. Accordingly, the
combination of the two companies is recorded as a recapitalization of B4B,
pursuant to which B4B is treated as the continuing entity.

         On June 7, 2000, the Company received a net investment of $900,000 in
exchange for 6% secured convertible debentures ("debentures"). Corzon issued
debentures in an aggregate principal amount of $4,553,652, The debentures issued
were issued in exchange for the investment of $900,000 the payment of $200,000
for existing indebtedness of the Company and to refinance $3,453,652 of existing
indebtedness assumed from DCI.

         On November 29, 2000, the Company purchased all of the outstanding
shares of The Simple Card Limited ("Simple") in exchange for 12,500,000 shares
of the Company's common stock valued at $500,000 and the assumption of net
liabilities of $75,092. Simple is in the business of the distribution of
telecommunication products, mainly prepaid phone cards, in the United Kingdom.
The acquisition has been accounted for as a purchase and accordingly the
acquired assets and liabilities have been recorded at their estimated fair
values. The $575,089 excess of purchase price over net assets acquired was
recorded as goodwill. Goodwill is being amortized over two years. No pro forma
financial information is presented as the operations of Simple were immaterial.



                                      F-11
<PAGE>   54

5. EARNINGS PER SHARE

         The following table represents the calculation of basic and diluted
earnings per share:

<TABLE>
<CAPTION>
                                                     FROM JUNE 2, 1999
                                                      (INCEPTION) TO
                                                     DECEMBER 31, 1999    DECEMBER 31, 2000
                                                     -----------------    -----------------
<S>                                                  <C>                  <C>
Net loss before extraordinary ....................   $        (135,637)   $      (3,858,555)
Less: Dividends on Series A Preferred Stock ......            (533,744)            (535,692)
      Dividends on Series D Preferred Stock ......            (522,712)            (649,591)
      Dividends on Series E Preferred Stock ......            (564,597)            (595,600)
                                                     -----------------    -----------------
Net loss attributable to common shareholder ......   $      (1,776,690)          (5,639,438)
Weighted average common share outstanding ........          52,012,525           64,735,630
</TABLE>

6. PROPERTY AND EQUIPMENT

         Property and equipment, at cost, consist of the following:

<TABLE>
<S>                                   <C>
Leasehold improvements ............   $16,153
Computer equipment ................    19,144
Machinery and equipment ...........    23,762
                                      -------
                                       59,059
Less accumulated depreciation .....     3,952
                                      -------
                                      $55,107
                                      =======
</TABLE>

         Depreciation and amortization expense, for property and equipment, for
the years ended December 31, 2000 and 1999 were $3,952 and $0 respectively.

7. DEBT OF BANKRUPT SUBSIDIARIES

         Debt of bankrupt subsidiaries (See Note 2) includes accounts payable of
$374,909, accrued expenses of $134,230 and notes payable in default.

         Notes payable in default at December 31, 2000 consist of the following:

<TABLE>
<S>                                                                            <C>
Note payable to First Union, bearing interest at 8.8% and maturing in
     December 2000 .........................................................   $ 92,469
Note payable to shareholder, bearing interest at 12.5%,  maturing on
    January 31, 2001 .......................................................    350,000
Note payable to an individual, bearing interest at 11.0%,  maturing on
    January 31, 2001 .......................................................    306,617
Note payable to Colonial Bank, bearing interest at 8.0% and  maturing in
    June 2005 ..............................................................    213,353
                                                                               --------
                                                                               $962,439
                                                                               ========
</TABLE>

         The Company has defaulted on all of these notes. Accordingly, all of
the notes are included in current liabilities in the consolidated balance sheet.

         The two unsecured notes totaling $656,617 matured in 1999. On November
2, 1999, the Company reached an agreement with these two lenders to extend the
maturity dates on these loans until January 31, 2001. As consideration for the
extension, the Company issued fully vested warrants to purchase 175,000 shares
of its common stock at an exercise price of $0.04 per share with an expiration
date of October 31, 2004.



                                      F-12
<PAGE>   55

8. NOTES PAYABLE

         Notes payable at December 31, 2000 consist of the following:

<TABLE>
<S>                                                                                     <C>
Note payable to Sherman LLC, bearing interest at 9%,  maturing on June 30, 2001 .....   $580,000
Note payable to former shareholder of Simple ........................................     40,751
                                                                                        --------
                                                                                        $620,751
                                                                                        ========
</TABLE>

         The note payable to Sherman is due on June 31, 2001 and is secured by
all the outstanding stock of B4B and all accounts receivables and intangibles of
B4B.

9. CONVERTIBLE DEBENTURES

         Convertible debentures consist of the following:

<TABLE>
<S>                                                                        <C>
Convertible debenture dated June 7, 2000 and due June 7, 2002 with
    interest at 6% per annum ...........................................   $4,353,652
Convertible debenture dated June 7, 2000 and due June 7, 2002 with
    interest at 6% per annum ...........................................      200,000
                                                                           ----------
                                                                           $4,553,562
                                                                           ==========
</TABLE>

         The debentures issued entitle the holder to convert all or a portion of
the debentures into shares of Corzon 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.
In addition, the conversion price of Corzon common stock is reduced by a further
10% discount if, before October 5, 2000, Corzon sells common stock, without
consent of each of the holders of the debenture, at a price that is lower than
either the market price of the common stock on June 7, 2000 or $.75 per share.
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 that holder never exceeds
4.9%. The debentures are secured by all of the assets and property of Corzon
including a pledge of all outstanding shares of B4B. In addition, Corzon has
agreed to file a registration statement with the SEC within 150 days of June 7,
2000 covering resale of the common stock issuable upon conversion of debentures.

10. STOCKHOLDERS' DEFICIT

         On March 12, 1999, the Company's shareholders voted to amend its
articles of incorporation to increase the number of authorized shares of common
stock from 20,000,000 to 200,000,000 and on June 17, 2000 further increased the
number of authorized shares to 500,000,000.



                                      F-13
<PAGE>   56

         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 $.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, 2000 dividends in arrears on this
preferred stock totaled $1,411,726. 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, 2000, 446,410 shares of Series A
Preferred Stock are outstanding.

         Series D Preferred Stock: The Company has designated 9,200 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 is $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 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 D Preferred Stock.



                                      F-14
<PAGE>   57

         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. The Company is not
required to convert any shares if such conversion would result in issuance of
20% or more of the issued and outstanding common stock to the holders of the
Series D Preferred Stock, unless shareholder approval of such conversion is
obtained. In the event that such a conversion is requested and the Company does
not convert the Series D Preferred Stock, the Company will pay the holder of the
Series D Preferred Stock 125% of the principal amount of the issued and
outstanding Series D Preferred Stock plus accrued interest. Holders of Series D
Preferred Stock are allowed to convert the aggregate amount of such holder's
Series D Preferred Stock into common stock. However, a holder of Series D
Preferred Stock may not convert those shares into shares of common stock if and
to the extent that upon conversion such holder would own more than 4.99% of the
outstanding 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. The third party investors who purchased Series D
Preferred Stock will be issued common stock purchase warrants, as described
below. The third party investors who purchased Series D Preferred Stock were
issued common stock purchase warrants, as described below. At December 31, 2000,
dividends in arrears on this preferred stock totaled $1,206,084. At December 31,
2000, 10,534 shares of Series D Preferred Stock are outstanding.

         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").
In connection with the Merger, the Company issued a total of 744,500 shares of
Series E Preferred Stock. The original issue price of the Series E Preferred
Stock is $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. At
December 31, 2000, dividends in arrears on this preferred stock totaled
$1,160,197. At December 31, 2000, 744,500 shares of Series E Preferred Stock are
outstanding.



                                      F-15
<PAGE>   58

11. REDEEMABLE PREFERRED STOCK PURCHASE WARRANTS

         At December 31, 2000 1,723,400 Redeemable Preferred Stock Purchase
Warrants were outstanding ("Preferred Warrants"). Each Preferred Warrant
represents the right to purchase one share of Series A Preferred Stock at an
exercise price of $10.50 per share until June 11, 2002, subject to adjustment.
Preferred Warrants may be redeemed, in whole or in part, at the Company's
option, upon 30-day's notice, at a redemption price equal to $0.01 per Preferred
Warrant if the closing price of the Series A Preferred Stock on the NASDAQ Small
Cap Market averages at least $11.00 per share for a period of 20 consecutive
trading days or if the Company redeems the Series A Preferred Stock.

12. COMMON STOCK PURCHASE WARRANTS

         At December 31, 2000 there where 2,300,000 Common Stock Purchase
Warrants outstanding (the "IPO Warrants"), plus an additional 300,000 warrants
issued to the underwriters of the offering of the IPO Warrants, plus an
additional 250,000 warrants issued in connection with other transactions. Each
IPO Warrant entitles the holder to purchase one share of common stock at $4.00
per share until July 9, 2001, subject to adjustment. IPO Warrants may be
redeemed, in whole or in part, at the option of the Company, upon 30-day's
notice, at a redemption price equal to $0.01 per IPO Warrant if the closing
price of the common stock on the NASDAQ Small Cap Market averages at least $8.00
per share for a period of 20 consecutive trading days. The other warrants are
exercisable at prices ranging from $2.00 per share to $6.60 per share. No
options were granted, exercised or canceled during the year.

         Through December 31, 2000, 171,939 stock options with an exercise price
of $0.01 and 175,000 stock options with an exercise price of $0.04 are
outstanding. No options were granted, exercised or canceled during the year.

         In connection with the issuance of the $2,000,000 collateralized
promissory note, the Company issued to Finova Mezzanine Capital, Inc. ("Finova")
a stock warrant to purchase shares of the Company's common stock. The warrant is
exercisable at any time until November 30, 2001 at an exercise price of $0.01
per share. At December 26, 1999 the lender has the right to purchase 699,259
shares. The warrant provides for an increase in the number of common shares
available for purchase to 756,331 shares in October 2000.

         On November 2, 2000, the Company settled the collateralized promissory
note with Finova by issuing 1,700 shares of Series D Preferred Stock and
converting the warrant into 756,331 shares of common stock at no cost.

         Additionally, the third party investors who purchased Series D
Preferred Stock have been issued common stock purchase warrants to purchase
919,800 shares of common stock at a price of $2.00 per share. Such warrants are
exercisable for five years and expire on January 14, 2004. The Company is
required to register the shares underlying the warrants in a registration
statement filed with the SEC, the shares of common stock reasonably anticipated
to be issuable upon conversion of the Series D Preferred Stock.



                                      F-16
<PAGE>   59

COMMITMENTS AND CONTINGENCIES

         Legal -- The Company is a party to a number of lawsuits arising out of
the normal conduct of its business. While there can be no assurance as to their
ultimate outcome, management does not believe these lawsuits will have a
material adverse effect on the Company's financial condition, operating results
or cash flows.

         Leases -- The Company leases its London office under a lease expiring
in 2003. The Company leases its corporate office in Connecticut under a lease
expiring in 2005. Rent expense for the year ended December 31, 2000 was $76,865.
Minimum rental commitments for the London and Connecticut facilities over the
next five years are as follows:

<TABLE>
<S>                                                                         <C>
         2001............................................................   $54,626
         2002............................................................    52,126
         2003............................................................    40,999
         2004............................................................    23,746
         2005............................................................    11,873
</TABLE>

         The Company leases various rental properties under operating lease
agreements expiring through July 2005. The facilities lease agreements provide
for a base monthly payment of $2,400 per month. Rent expense for the year ended
December 31, 2000 was $76,865. Future minimum annual lease payments, based on
the exchange rate in effect on December 31, 2000, under the facilities lease
agreements are as follows: 2001 $28,746, 2002 $28,746, 2003 $23,746, 2004
$23,746, and 2005 $23,746.

14. INCOME TAXES

         At December 31, 2000, the Company had a net operating loss carryover of
approximately $955,000 available as offsets against future taxable income, if
any, which expire at various dates through 2015. The Company has a deferred tax
asset of $325,000 arising from such net operating loss deductions.

         The Company has recorded a 100% valuation allowance on the net deferred
tax asset since the ability of the Company to utilize the deferred tax asset is
uncertain. The difference between the statutory tax rate of 34% and the
effective rate of 0% reflected in the accompanying financial statements is due
to the increase in the valuation allowance and due to the nondeductibility of
certain interest charges primarily related to the beneficial conversion features
of convertible notes and the write off of goodwill associated with the Simple
acquisition and assets associated with bankrupt subsidiaries.



                                      F-17
<PAGE>   60

                                  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 that are not
listed are not applicable.

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                 DESCRIPTION
       -------                                -----------
<S>                        <C>
          2.1              Agreement and Plan of Merger, dated December 27,
                           1998, by and among Harvest Restaurant Group, Inc.,
                           Hartan, Inc. and TRC Acquisition Corporation -
                           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, dated February 2, 2000,
                           among Hartan, Inc., certain of its subsidiaries, and
                           Restaurant Teams International, Inc. - 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 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, 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 - incorporated by reference
                           to exhibit 3.3 to our Annual Report on Form 10-KSB
                           filed on April 2, 2001.

          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.

         *3.5              Amendment to Bylaws.

          4.1              Form of Warrant Agreement relating to our common
                           stock purchase warrants -- incorporated by reference
                           to our Registration Statement on Form SB-2, file
                           no. 33-95796, declared effective on July 9, 1996.

          4.2              8% Amended and Restated Secured Convertible Debenture
                           Due January 25, 2003 dated 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.

          4.3              6% Secured Convertible Debenture due June 6, 2002,
                           dated June 7, 2000, executed by Tanner's Restaurant
                           Group, Inc. in favor of 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.

          4.4              Form of Subscription Agreement for Series D
                           Convertible Preferred Stock -- incorporated by
                           reference to exhibit 10.6 to our Annual Report
                           on Form 10-KSB as filed on March 30, 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              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 30, 1999.

         10.1              Equity Line Financing Agreement dated January 25,
                           2001, between Corzon, Inc. and Pima Capital
                           Management Limited - incorporated by reference to
                           exhibit 10.1 to our Current Report on Form 8-K as
                           filed on February 5, 2001.

         10.2              Credit Agreement dated 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.

</TABLE>
----------
* Filed herewith



                                       I-1
<PAGE>   61

<TABLE>
<S>                        <C>
         10.3              Guaranty dated 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.

         10.4              Security Agreement dated 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 filed on February 5, 2001.

       #*10.5              Empire Technology Corporation 2000 Stock Incentive
                           Plan.

        #10.6              LecStar Corporation 2001 Stock Incentive Plan -
                           incorporated by reference to exhibit 10.3 to our
                           Annual Report on Form 10-KSB, as filed on April 2,
                           2001.

         10.7              Subordinated Debenture dated January 30, 1998,
                           between TRC Acquisition Corp. and Ralph C. Dilorio --
                           incorporated by reference to exhibit 10.13 to our
                           Registration Statement on Form SB-2 as filed on
                           May 7, 1999.

         10.8              First Amendment to Subordinated Indenture dated
                           January 30, 1998, between Harvest Restaurant Group
                           and Ralph C. Dilorio -- incorporated by reference to
                           exhibit 10.13(a) to our Registration Statement on
                           Form SB-2 as filed on May 7, 1999.

         10.9              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 30, 1999.

         10.10             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
                           February 5, 2001.

         10.11             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.

         10.12             $500,000 11% Subordinated Debenture Due January 30,
                           1999 and dated January 30, 1998, among TRC
                           Acquisition Corp. and Ralph C. DiLorio - incorporated
                           by reference to exhibit 10.13 to our Registration
                           Statement on Form SB-2 filed on May 7, 1999.

         10.13             First Amendment, dated January 28, 1999, to that
                           certain $500,000 11% Subordinated Debenture Due
                           January 30, 1999, between Harvest Restaurant Group,
                           Inc. and Ralph C. DiLorio - incorporated by reference
                           to exhibit 10.13(a) to our Registration Statement on
                           Form SB-2 filed on May 7, 1999.

         10.14             Second Amendment, dated November 2, 1999, to that
                           certain 11% Subordinated Debenture Due January 30,
                           1999, between Tanner's Restaurant Group, Inc. and
                           Ralph C. DiLorio - incorporated by reference to
                           exhibit 4.1 to our Quarterly Report on Form 10-QSB as
                           filed on November 17, 1999.
</TABLE>

----------
# Management contracts or compensatory plans

* Filed herewith



                                       I-2
<PAGE>   62

<TABLE>
<S>                        <C>
         10.15             $350,000 12.5% Promissory Note dated April 1, 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.

         10.16             First Amendment to $350,000 12.5% 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.

         10.17             Second Amendment to $350,000 12.5% Promissory Note,
                           Dated April 1, 1998, between Tanner's Restaurant
                           Group, Inc. and SECA VII, LLC - incorporated by
                           reference to exhibit 4.3 to our Quarterly Report on
                           Form 10-QSB as filed on November 17, 1999.

         10.18             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.

         10.19             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.

         10.20             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.

         10.21             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.

         10.22             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.

         10.23             Letter Agreement by and between Tanner's Restaurant
                           Group, Inc. and Strategic Services Group of Morrow &
                           Co., Inc. dated August 14, 2000 - incorporated by
                           reference to exhibit 10.22 to our Annual Report on
                           Form 10-KSB, as filed on April 2, 2001.
</TABLE>

----------
* Filed herewith



                                       I-3
<PAGE>   63

<TABLE>
<S>                        <C>
          10.24            Stock Purchase Agreement by and between Corzon, Inc.,
                           Dharmesh 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.

         #10.25            Employment Agreement by and between Empire Technology
                           Corporation and Reginald P. McFarland dated as of
                           November 22, 1999 - incorporated by reference to
                           exhibit 10.29 to our Annual Report on Form 10-KSB, as
                           filed on April 2, 2001.

         #10.26            Employment Agreement by and between Empire Technology
                           Corporation and W. Dale Smith dated as of December
                           22, 1999 - incorporated by reference to exhibit 10.30
                           to our Annual Report on Form 10-KSB, as filed on
                           April 2, 2001.

         #10.27            Employment Agreement by and between Empire Technology
                           Corporation and William S. Woulfin dated as of
                           December 22, 1999 - incorporated by reference to
                           exhibit 10.31 to our Annual Report on Form 10-KSB, as
                           filed on April 2, 2001.

         #10.28            Employment Agreement by and among Empire Technology
                           Corporation, Empire Telecom Services, Inc. and
                           Michael E. Britt, Jr. dated as of May 15, 2000 -
                           incorporated by reference to exhibit 10.32 to our
                           Annual Report on Form 10-KSB, as filed on April 2,
                           2001.

         *10.29            Consultant Agreement dated April 30, 2001, by and
                           between Business Analysis Group, LLC and LecStar
                           Corporation.

         *10.30            Marketing Agreement by and between LecStar Telecom,
                           Inc. and Cobb Energy Management Corporation dated
                           November 30, 2000.

         *10.31            Marketing Agreement by and between LecStar
                           Communications Corporation and the Marietta Board of
                           Lights and Water dated July 1, 2000.

         *10.32            Authorized Enhanced Solution Agent Agreement by and
                           between LecStar Telecom, Inc. and Inter-Tel
                           Technologies dated March 27, 2001.

         *10.33            Office Lease between Empire Technology Corporation
                           and Exodus Realty, L.P., dated March 1, 2000.

          21               Subsidiaries - incorporated by reference to exhibit
                           21 to our Annual Report on Form 10-KSB filed on April
                           2, 2001.

         *23               Consent of Feldman Sherb & Co., P.C.
</TABLE>

----------
# Management contracts or compensatory plans

* Filed herewith



                                       I-4