UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-KSB
              Annual report pursuant to Section 13 or 15(d) of the
                   Securities Exchange Act of 1934, as amended
                  For the fiscal year ended September 30, 2001

                         Commission File Number 0-27842

                                  Colmena Corp.
               (Name of Small Business Registrant in its charter)

    Delaware: (State or other jurisdiction of incorporation or organization)

               54-1778587: (I.R.S. Employer Identification Number)

               2500 North Military Trail, Suite 225-D; Boca Raton,
                  Florida 33431 (Address of principal executive
                           offices including zip code)

                 (561) 998-2031 (Registrant's telephone number)

                 Not Applicable (Former address of our Company)

           Securities registered under Section 12(b) of the Act: None

    Title of each class: None Name of each exchange on which registered: None

              Securities Registered under Section 12(g) of the Act:
                 Common Stock, $0.01 par value (Title of Class)

     Check whether the Registrant (1) filed all reports  required to be filed by
Section 13 or 15(d) of the Securities  Exchange Act of 1934, as amended,  during
the past  twelve  months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports,  and  (2)  has  been  subject  to such  filing
requirements  for the past 90 days: All reports prior to report date  (September
30, 2001) have been filed. 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  Registrant's  knowledge,  in definitive proxy or
information  statements  incorporated  by  reference,  in Part III of this  Form
10-KSB or any amendment to this Form 10-KSB: []

     State Registrant's  revenues for its most recent fiscal year: $ 0 (for year
ended September 30, 2001)

     State the aggregate market value of the voting stock held by non-affiliates
computed by reference  to the price at which the stock was sold,  or the average
bid and asked  prices of such stock,  as of a specified  date within the past 60
days:  $440,323  based on a last  transaction  price of $0.04 as of November 15,
2001, there being  11,008,064  shares of common stock held by persons other than
officers, directors or control persons of the Registrant on such date.

     State the number of shares outstanding of each of the Registrant's  classes
of equity, as of the latest practicable  date:20,000,000 shares of common stock,
as of November 15, 2001.



<PAGE>

                             Available Information.

     The public  may read and copy any  materials  filed by  Colmena  Corp.("our
Company") with the Securities and Exchange  Commission (the "Commission") at the
Commission's Public Reference Room at 450 Fifth Street,  Northwest,  Washington,
D.C.  20549.  The public may obtain  information  on the operation of the Public
Reference  Room by calling the  Commission  at  1-800-SEC-0330.  The  Commission
maintains  an  Internet  site  that  contains  reports,  proxy  and  information
statements,  and other information  regarding our Company and other issuers that
file reports electronically with the Commission, at http://www.sec.gov.

                       Documents Incorporated by Reference

     Portions of the following  documents  previously  filed by our Company with
the Commission  are  incorporated  by reference in this report,  as permitted by
Rule 12b-23 promulgated under authority of the Securities  Exchange Act of 1934,
as amended ("Commission Rule 12b-23" and the "Exchange Act," respectively).

1. Form 10-KSB for the year ended September 30, 1998, Item 1.

2. Form 10-QSB for the fiscal quarter ended  December 31, 1998,  Part II, Item 1


                 Caveat Pertaining to Forward Looking Statements

     The  Private  Securities  Litigation  Reform  Act of 1995  provides a "safe
harbor" for  forward-looking  statements.  Certain of the  statements  contained
herein,  which are not historical  facts,  are  forward-looking  statements with
respect to events,  the  occurrence of which  involve  risks and  uncertainties.
These  forward-looking   statements  may  be  affected,   either  positively  or
negatively,  by various factors.  Information  concerning potential factors that
could affect our Company is detailed from time to time in our Company's  reports
filed with the  Commission.  This  report  contains  forward-looking  statements
relating to our  Company's  current  expectations  and  beliefs.  These  include
statements   concerning   operations,   performance,   financial  condition  and
anticipated  growth.  For this purpose,  any  statements  contained in this Form
10-KSB  that  are  not  statements  of  historical   fact  are   forward-looking
statements.  Without  limiting the  generality of the  foregoing,  words such as
"may", "will", "expect", "believe", "anticipate", "intend", "could", "estimate",
or  "continue",  or the  negative  or  other  variation  thereof  or  comparable
terminology,   are  intended  to  identify  forward-looking  statements.   These
statements by their nature involve  substantial risks and uncertainties that are
beyond our Company's control. Should one or more of these risks or uncertainties
materialize  or should our Company's  underlying  assumptions  prove  incorrect,
actual outcomes and results could differ  materially from those indicated in the
forward-looking statements.

                                     Context

     The information in this report is qualified in its entirety by reference to
the entire report; consequently,  this report must be read in its entirety. This
is  especially  important  in light of  material  subsequent  events  disclosed.
Information  may  not  be  considered  or  quoted  out  of  context  or  without
referencing  other  information  contained in this report  necessary to make the
information considered not misleading.

                                     Page 1


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                                Table of Contents

Part    Item    Page
Number  Number  Number   Caption

I         1     2   Description of Business
          2     6   Description of Property
          3     7   Legal Proceedings
          4     7   Submission of Matters to a Vote of Security Holders

II        5     8   Market for Common Equity and Related Stockholder Matters
          6     18  Management's Discussion and Analysis and Plan of Operation
          7     21  Financial Statements
          8     39  Changes In and Disagreements With Accountants on Accounting
                      and Financial Disclosure

III       9     40  Directors,Executive Officers, Promoters and Control Persons;
                      Compliance With Section 16(a) of the Exchange Act
         10     44  Executive Compensation
         11     48  Security   Ownership  of  Certain   Beneficial  Owners   and
                       Management
         12     51  Certain Relationships and Related Transactions
         13     51  Exhibits and Reports on Form 8-K

                55   Signatures

                56   Additional Information

                57   Exhibits

                                     PART I

ITEM 1.           DESCRIPTION OF BUSINESS

Organization

     Colmena Corp., a Delaware corporation,  was originally incorporated on July
11,  1994,  in  the  State  of  Virginia  under  the  name  Sports-Guard,   Inc.
("Sports-Guard"). Its corporate domicile was changed to the state of Delaware on
July 26,  1995.  On  November  10,  1997,  our  Company  changed  its name  from
Sports-Guard to Colmena Corp.

     As of November  10,  1997,  our Company  became  engaged in the business of
marketing and distributing long- distance telephone service calling cards and in
the manufacture and  distribution of premium  hand-rolled  cigars,  in each case
through wholly-owned  subsidiaries.  Those subsidiaries are described more fully
in Part I, Item 1, of our Company's Form 10-KSB for the year ended September 30,
1998,  which is  incorporated  herein by reference  pursuant to Commission  Rule
12b-23.

     In September  1998, the company  responsible for the billing and collection
of our  Company's  long-distance  telephone  services,  International  Telemedia
Associates,  Inc. ("ITA"), defaulted in its payment obligations and subsequently
entered  into  Chapter  7  bankruptcy.  At  that  time,  ITA  owed  our  Company
approximately $5.6 million, which represented approximately 95% of our Company's
accounts  receivable.  As a  result  of  ITA's  default,  our  Company  and  its
subsidiaries were forced to discontinue day-to-day business operations.

     In March 1999, our Company's  board of directors  determined that it was in
the best  interests  of our  Company to divest  itself of all  ownership  in its
subsidiaries  in order to position it to undertake new business  endeavors or to
become a more attractive acquisition  candidate.  On March 25, 1999, our Company
entered  into a  reorganization  agreement  with  Richard C.  Peplin,  Jr. ("Mr.
Peplin"), the principal stockholder and former president of our Company,

                                     Page 2


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pursuant to which all the  subsidiaries  then-owned by our Company were conveyed
to Mr. Peplin. A copy of the reorganization agreement was filed as an exhibit to
our  Company's  Form 10-KSB for the year ended  September  30, 1998.  On July 6,
2001, our Company  entered into a  clarification  agreement with Mr. Peplin,  to
include the name of Tio Mariano Cigar Corp.,  which had  inadvertently  not been
listed in the original March 25, 1999,  reorganization  agreement. A copy of the
clarification agreement was filed as an exhibit to our Company's Form 10-KSB for
the year ended September 30, 1999.

     Our  Company  has not been  involved in any  bankruptcy,  receivership,  or
similar proceeding.

Business

     As a result of the  reorganization  described above, our Company's business
operations since then have consisted of (1) a strategic consulting  relationship
with The Yankees Companies, Inc. ("Yankees"), (2) a telecommunications agreement
with BellSouth, and (3) recently initiated consulting activities.

1.   Consulting  Relationship  &  Material  Agreements  Between  Our Company and
     Yankees

     During  January  of 1999,  our  Company  retained  Yankees to assist in the
development and  implementation  of new strategic plans. A consulting  agreement
was  established  for a term of 730 days from the effective  date, to be renewed
automatically  on a continuing  annual  basis,  unless  terminated by one of the
parties 30 days prior to the expiration of the then-current  term. A copy of the
agreement  was filed as an exhibit  to our  Company's  Form  10-KSB for the year
ended September 30, 1998. The services provided by Yankees were agreed to be the
services, on a reasonable,  as required,  basis,  consistent with Yankees' other
business  activities.  Yankees'  areas of  expertise  are  mainly  comprised  of
corporate structure, organization, and reorganization, mergers, acquisitions and
divestitures,  strategic corporate  development,  corporate financial and equity
analysis,  and  other  corporate  matters.  Furthermore,  Yankees  agreed  to be
responsible for  administering  the  expenditure of the proceeds  derived by our
Company  from the  exercise of options that were given to Yankees as part of its
compensation  for the services  rendered  (see below) in order to implement  the
strategic  plans  developed by Yankees and to settle and discharge the corporate
obligations of our Company.

     As consideration  for the first 200 hours of services  provided (in lieu of
document license fees and required cash payments valued at $20,000), our Company
agreed  to issue to  Yankees  options  (designated  as the Class A  Options)  to
purchase shares of our Company's common stock at an aggregate  exercise price of
$40,000.  The  amount  of  underlying  shares  were  to be  equal  to 51% of our
Company's common stock at such time as exercise is completed. At the date of the
consulting agreement, 8,066,326 shares of common stock would have been issuable,
had the Class A Options  been  exercised  in full on such date.  Any increase or
decrease in the  outstanding or reserved  shares would result in a corresponding
adjustment of the options'  quantity and exercise  price per share.  The options
were originally  exercisable from the 10th day until the 365th day following the
effective date of the consulting agreement.  The term of the Class A Options was
amended  on  January  2, 2000 to extend  the term for  exercise  to the later of
December  31,  2002 or the  100th  day after  our  Company  registers  the stock
underlying any unexercised warrants.



                                     Page 3

<Page>

 For  additional  services  provided,  during the initial term,  our Company
agreed to pay the following consideration:

     (a)  If  Yankees  arranges  or  provides  funding  for our  Company on more
          beneficial  terms  than  those  reflected  in  our  Company's  current
          principal  financing  agreements,  Yankees  will be  entitled,  at its
          election, to either:

          (i)       a fee of 25% of the savings achieved, on a continuing basis;
                    or

          (ii)      if  equity  funding  is  provided  through  Yankees  or  its
                    affiliates,  a  discount  of 10% from the bid  price for the
                    subject  equity  securities,  if  issuable  as  free  tradin
                    securities,  or a discount of 50% from the bid price for the
                    subject  equity   securities,   if  issuable  as  restricted
                    securities (the "Discounts"); or

          (iii)     an introduction fee of 5% of the aggregate proceeds obtained
                    if funding is  provided  by any  persons  introduced  to our
                    Company by Yankees (the " Introduction Fee");


     (b)  If Yankees generates business for our Company,  Yankees is entitled to
          a  commission  of 10% of  the  gross  income  derived  by our  Company
          therefrom on a continuing basis;

     (c)  If Yankees  arranges  for an  acquisition  by our  Company,  Yankees i
          entitled to 10% of the consideration paid for such acquisition.

     In addition,  our Company is  responsible  for the payment of all costs and
disbursements  associated with Yankees' services subject to certain  limitations
and/or approvals, as stipulated in the Agreement.

     On January 2, 2000,  the  consulting  agreement  was amended to: modify the
required  payments  to Yankees  based on  Yankees'  standard  hourly  rates,  by
permitting  Yankees to accept payment in capital stock at the conversion rate of
50% of the fair market value of such stock;  increase  Yankees'  ownership after
full exercise of its warrants to 75% from 51% and the aggregate  exercise  price
to  $80,000  from  $40,000;  and to  clarify  Yankees'  preferential  rights  to
subscribe  for  additional  securities.  A copy of the agreement was filed as an
exhibit to our Company's Form 10-KSB for the year ended September 30, 1998.

     On January 4, 2001,  a further  amendment  changed  the  consulting  fee to
$10,000 per month, eliminating hourly and document licensing fees (a substantial
reduction of historical fees accrued on a hourly basis).  It also eliminated the
5% Introduction Fee, and changed the Discounts in (a) (ii) above as follows:  if
equity funding is provided through Yankees or its affiliates,  a discount of 10%
from the lowest price at which such  securities  are offered to any other person
for the subject equity securities,  if issuable as free trading securities, or a
discount of 50% from the lowest  price at which such  securities  are offered to
any other person for the subject  equity  securities,  if issuable as restricted
securities.  A copy of the  agreement  was filed as an exhibit to our  Company's
Form 10-QSB for the quarter ended December 31, 1998.

     As of the date of this report,  Yankees has paid $40,000.00  pursuant to it
exercise  of its Class A Option on  18,274,970  shares of our  Company's  common
stock, of which 8,000,000 have been issued and 10,274,970 are issuable.  Yankees
is also owed consulting compensation of $90,000.

     After its initial  evaluation of our Company's needs,  Yankees  recommended
that  our  Company's  top  priority  be  the   preparation  and  filing  of  all
then-overdue reports to the Commission required under the Exchange Act, and that
our  Company  first  concentrate  on  completing  the  audit  of  its  financial
statements for the fiscal year ended September 30, 1998 (the "1998 Audit").  The
1998  Audit  was  not  completed  until  June  of 2000  due to  difficulties  in
reconstructing  poorly  documented  corporate  transactions and locating records
from  discontinued  operations.  Until Yankees was retained,  our Company lacked
funds to pay  either  for such audit or for  corporate  personnel  to assist the
auditors.  Immediately  following  completion  of the 1998  Audit,  our  Company
started preparation of the quarterly unaudited financial  statements required in
order to complete and file its overdue reports on Commission Form 10-QSB for the
calendar quarters ended December 31, 1998, March 31, 1999 and June 30, 1999, the
audit for our Company's fiscal year ended September 30, 1999 (during which there
was virtually no activity);  and our Company's  delinquent reports on Commission
Form 10-QSB for the calendar  quarters ended December 31, 1999,  March 31, 2000,
and June 30, 2000, Form 10-KSB for fiscal year ended September 30, 2000 and Form
10-QSB for the calendar  quarters ended  December 31, 2000,  March 31, 2001, and
June  30,  2001.  Our  Company  is now  current  in all  such  filings  with the
Commission.

                                     Page 4

<Page>



     Concurrently with activities pertaining to the 1998 Audit, Yankees assisted
our Company in identifying  persons with claims or potential  claims against our
Company and in negotiating amicable resolutions of such claims.  Almost all such
claims or potential  claims have now been  resolved,  as discussed more fully in
Part 1, Item 1 of Form 10-KSB for the year ended  September  30, 1998,  which is
incorporated herein by reference pursuant to Commission Rule 12b-23.

     Yankees is currently conducting  negotiations with other claimants,  and ou
Company has ratified the offers of settlement  negotiated by Yankees.  While our
Company's  management  believes that there is a reasonable  likelihood that such
offers will be  accepted,  no  assurances  to that effect can be  provided.  The
claims and settlement offers are as follows:

                          Basis for    Amount     Compromise    Offering
Claimant                  Claim        of Claim   Offered       Date
---------                 ---------    --------   ----------    -----------
Strategica Group          (1)         (Unknown)   stock         1999, 2000
Diners Club               (2)       $ 14,206.00   stock         August 2, 1999
Federal Express           (3)       $  7,298.99   stock         August 30, 1999
Arent Fox, et. al.        (4)       $ 27,489.48   stock         January 18, 2000
Deutsche Financial
  Services Corp.          (6)       $331,000.00   cash & stock  2001


(1)  May 5, 1998 "Investment Banking and Advisory Services Agreement"  discussed
     more fully in Part 1, Item 1 of Form  10-KSB  for the year ended  September
     30, 1998, which is incorporated  herein by reference pursuant to Commission
     Rule  12b-23.
(2)  On March 14, 2001, the circuit court for Palm Beach County, Florida entered
     a final judgement in favor of Citicorp Diners Club in the amount of $14,206
     for  expenses  incurred  by Madhu  Sethi,  a former  officer  of one of our
     Company's  former  subsidiaries.
(3)  Overnight  shipping costs.  See below,  Part I, Item 3.
(4)  Legal fees.
(5)  Telephone service.
(6)  The  arbitration  award in favor of Deutsche  Financial is  discussed  more
     fully in Part 1, Item 3 of Form  10-KSB  for the year ended  September  30,
     1998, which is incorporated herein by reference pursuant to Commission Rule
     12b-23.  Yankees has also  suggested  to our Company  that if the  Deutsche
     Financial  claim is not resolved,  our Company should  consider  filing for
     reorganization pursuant to Chapter 11 of the United States Bankruptcy Code,
     and aggressively  pursue any and all claims and counterclaims  available to
     our Company in such forum.

     The  following   creditors   have  thus  far  declined  to  participate  in
negotiations:

                                         Basis for         Amount
Claimant                                  Claim            of Claim
--------                                  -----            --------
Seymour Brown                              (1)            $  250.00
American Arbitration Association           (2)            $  800.00

(1)  Accounting  fees.
(2)  See Part 1, Item 3 of Form 10-KSB for the year ended  September  30,  1998,
     which is  incorporated  herein by  reference  pursuant to  Commission  Rule
     12b-23.

     Yankees has indicated  that it will assist our Company in either  obtaining
capital  required  to  resume  business  operations  pursuant  to the  BellSouth
agreement  (discussed  below),  or  in  acquiring  complementary  businesses  in
exchange  for  shares of our  Company's  common  stock and a  commitment  by our
Company,  with the assistance of Yankees, to provide required expansion capital.
No  assurances  can be  provided,  however,  that  such  business  plans  can be
attained.

Loan Agreement between our Company and Yankees

     Yankees has been a major  source of capital for our Company  since  January
1999 by making loans as needed for  operating  expenses.  At September 30, 2001,
our  Company's  loan  balance and related  accrued  interest  due to Yankees was
$109,200.64.  Additional  funding will be required for any  acquisitions and for
funding of our Company's future operations.  Accordingly, on September 25, 2001,
our Company  entered into a revolving loan  agreement  with Yankees  whereby our
Company  agreed to pledge all of its assets as collateral  and Yankees agreed to
loan our Company up to $150,000 (which includes the current  outstanding balance
of  $109,200.64),  on a revolving basis at an interest rate of 2% over the prime
rate of  Citibank,  N.A. A copy of the loan  agreement is filed as an exhibit to
this  report,  see "Part  III,  Item 13 (a),  Exhibits  Required  by Item 601 of
Regulation SB."


                                     Page 5
<Page>


2. BellSouth Agreement

     Our Company  currently  maintains a resale  agreement  for the  purchase of
telecommunications    services   from   BellSouth    Telecommunications,    Inc.
("BellSouth")  for resale to end users.  The  agreement was executed on November
22,  1999 for a term of two  years,  continuing  thereafter  on a month to month
basis,  and  pertains to Sections 251 and 252 of the  Telecommunications  Act of
1996, as amended. The agreement permits our Company to provide competitive local
telephone  exchange  services to  residential  and business  subscribers  in the
States of Alabama, Florida, Georgia,  Kentucky,  Louisiana,  Mississippi,  North
Carolina,  South Carolina and  Tennessee,  provided our Company also obtains the
necessary  regulatory  permits to operate in each of those  states.  Our Company
currently  has no  customers,  has not obtained  any of the required  regulatory
licenses, and is not conducting any business under the agreement with BellSouth.
Now that our  Company  has become  current in its filing  obligations  under the
Exchange Act, it hopes to obtain the capital required to implement such business
operations  pursuant  to the  BellSouth  agreement  and has begun the process of
renewing the  BellSouth  agreement  and applying  for the  necessary  regulatory
permits. No assurances can be provided, however, that such business plans can be
attained.

3. Our Company's Recent Consulting Activities

     During  August 2001,  in response to Yankees'  suggestions,  our  Company's
board of directors  authorized  our Company's  officers to negotiate  consulting
agreements  with third parties that desire to avail  themselves of our Company's
experience as a reporting  company  under the Exchange  Act. Such  assistance is
expected to involve the recruitment  and  supervision of  professional  advisors
such as attorneys,  auditors,  investment bankers, transfer agents, officers and
directors who have the desired  experience in operating  public  companies,  and
access to procedures and policies that Yankees has made available for use by our
Company in complying with federal and state securities and corporate laws.

     Our Company  expects,  in exchange for such  services,  that the consulting
client  will  register a  percentage  of its common  stock for  issuance  to our
Company's stockholders, as of an agreed-upon date following the execution of the
consulting  agreement.  The amount of such common stock will vary depending upon
the circumstances of each  transaction.  The issuance of shares to our Company's
stockholders will be conditioned on prior registration with the Commission,  and
the failure to conclude such registration would void the agreement.

     Registration of shares  directly to our Company's  stockholders is necessar
in order for our Company to avoid inadvertently  becoming an investment company,
and provides a major benefit to  consulting  clients in that they obtain a large
base of stockholders,  including all of our Company's  market makers.  The major
benefit of the consulting services to our Company is that it will be continually
exposed to  emerging  companies,  some of which  should  prove to be  attractive
acquisition   candidates  or  candidates  for  strategic   operating   alliances
(cooperative  business activities not involving shares of equity ownership) that
fit our Company's strategic objectives.

     Our  Company  does not yet  have any  consulting  clients,  although  it is
curently discussing such possibility with several candidates.

Employees

     Our  Company  currently  has Edward C.  Dmytryk  serving  as our  Company's
president  and chief  executive  officer;  Vanessa  H.  Lindsey  serving  as our
Company's vice-president, secretary, and chief administrative officer; and Kevin
W. Dornan, Esquire, serving as our Company's general counsel.


ITEM 2. DESCRIPTION OF PROPERTY.

     All of our Company's office facilities, equipment and clerical personnel at
the  following  addresses  (all located in the State of Florida)  have been made
available to our Company by Yankees on a resource-sharing, cost basis:

Administrative-Ocala:       1941 Southeast 51st Terrace, Suite 800;
                            Ocala, Florida 34471

Corporate-Boca Raton:       Crystal Corporate Center; 2500 North Military Trail,
                            Suite 225-D; Boca Raton, Florida 33431.

     Our Company  anticipates  that these  facilities  will be adequate  for its
needs unless it resumes business  operations under the BellSouth  Agreement,  at
which point required  facilities would be obtained,  or it engages in a material
acquisition,  in which case it is anticipated that adequate  facilities would be
included as a component of such acquisition or would otherwise be obtained.

                                     Page 6

<Page>

ITEM 3. LEGAL PROCEEDINGS.

     Pursuant to Commission Rule 12b-23,  our Company  incorporates by reference
its response to Part II, Item 1 in its Form 10-QSB for the fiscal  quarter ended
December 31, 1998, and supplements that response as follows:

     In the matter of Deutsche  Financial Services  Corporation,  our Company is
actively  pursuing  settlement  negotiations.  No  assurance  can  be  provided,
however, that such negotiations will be successful.

     In the matter of Prime Source Leasing,  Inc. vs. General  Electric  Capital
Corp. vs.  Colmena  Corp.,  et  al.,plaintiff  sued the defendant  under various
causes of action.  The defendant then sued our Company as a third-party under an
indemnification  claim,  alleging  that if the  defendant is found liable to the
plaintiff for a stopped-payment check in the amount of $80,000, then our Company
is liable to the defendant. The case was originally set for trial in August 2001
but was stricken from the calendar when plaintiff's counsel withdrew.  Plaintiff
has now amended its complaint to assert an additional  claim against our Company
alleging  goods  sold and  failure  to pay a  promissory  note  for  $85,605.07,
together with interest since November 30, 1998 and attorney's  fees. Our Company
has filed an answer and various  affirmative  defenses  and plans to  vigorously
contest this action. No trial date has yet been re-set.

     In the matter of Federal Express  Corporation vs. Colmena Corp.  (Palm Beac
County Court, No.  MC-00-6064- RL), seeking payment of overnight delivery costs,
judgment was entered in favor of the plaintiff on October 30, 1998 for $7,298.99
togther with 10% interest through the date of the judgment.  Collection  efforts
have been pursued by the plaintiff and settlement  discussions are taking place.
As of the filing of this report,  however,  the judgment has not been  satisfied
and the matter has not been  settled.  No  assurance  can be provided  that such
settlement negotiations will be successful.

     In the matter of the FTC vs. T2U Co. (a former  subsidiary  of our Company)
the Consent Decree signed by T2U was approved by the FTC and filed with the U.S.
District Court for the Northern District of Ohio (Eastern  Division) on April 4,
2001.  The Court entered final  judgment on May 9, 2001,  concluding the matter.
Our  Company  was  not a party  to that  proceeding  and,  consequently,  is not
expected to be affected by the proceeding or its disposition.

     In the  matter of the  People of the State of  Illinois  vs.  RCP (a former
subsidiary of our Company),  the court entered a consent  decree in January 2000
and the case has been  closed.  Our Company  was not a party to that  proceeding
and,  consequently,  is not  expected to be affected  by the  proceeding  or its
disposition.

     In the matter of the Louisiana  Public  Service  Commission vs. RCP and T2U
(former  subsidiaries of our Company),  the Louisiana Public Service  Commission
formally  abandoned the proceedings as of August 23,  2001,because no action was
ever taken during the applicable time limit.

ITEM 4  SUBMISSION OF MATTERS TO SECURITY HOLDERS

     Our Company did not submit any matter to a vote of security  holders during
its fiscal year ended  September 30, 2001.  Our Company's next annual meeting of
stockholders  is  scheduled  for  January 4, 2002,  and it is  expected  that no
proxies will be requested by our Company's management.


                                      Page 7

<PAGE>


PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information.

     During the report  period,  our  Company's  common  stock was traded in the
over-the-counter  market and quoted in what are  commonly  referred to as on the
"Electronic  Pink  Sheets,"  which  report  quotations  by brokers or dealers in
particular  securities,  and on the  over-the-counter  electronic bulletin board
operated by NASD (the "OTC Bulletin Board").  Bid, offer and transaction  report
prices for our Company's  common stock were  available  through the OTC Bulletin
Board under the symbol CLME until the fiscal  calendar  quarter  that started on
October 1, 1999. On October 29, 1999,  due to the failure of our Company to file
periodic  reports with the  Commission  on a timely  basis,  the NASD  precluded
brokers or dealers in  securities  from using the OTC Bulletin  Board to publish
quotes for our  Company's  securities.  Now that our Company is again current in
its filing obligations with the Commission, our Company has filed an application
with NASD to resume trading on the OTC Bulletin Board.

     Because of the lack of readily available quotations and the limited trading
volume  frequently  associated  with  over-the-counter  securities,  there  is a
greater risk of market  volatility of such securities than for securities traded
on  national  exchanges.  The  following  over-the-counter   quotations  reflect
inter-dealer prices, without retail mark-up, mark- down, or commissions, and may
not necessarily  represent actual  transactions.  The range of the reported high
and low bid quotations have been derived  primarily from  information  quoted on
the OTC Bulletin Board and the Electronic Pink Sheets.  The following table sets
forth the  quarterly  high and low bid  prices  (to the  nearest  $0.125) of our
Company's  common stock for the years ended September 30, 2000 and September 30,
2001.

Year Ended September 30, 2000
-----------------------------
                                                    High               Low
                                                 Transaction       Transaction
                         High       Low             Price             Price
                        -----       ---          -----------       -----------
First Quarter           $0.09      $0.01           $0.09              $0.01
Second Quarter          $0.09      $0.02           $0.09              $0.015
Third Quarter           $0.08      $0.03           $0.08              $0.03
Fourth Quarter          $0.31      $0.02           $0.31              $0.02


Year Ended September 30, 2001
-----------------------------
                                                    High               Low
                                                 Transaction       Transaction
                         High       Low             Price             Price
                        -----       ---          -----------       -----------
First Quarter           $0.24      $0.03           $0.24              $0.03
Second Quarter          $0.10      $0.03           $0.10              $0.05
Third Quarter           $0.12      $0.03           $0.12              $0.035
Fourth Quarter          $0.20      $0.05           $0.12              $0.06


     As of  September  30,  2001,  eight NASD member firms were listed as market
makers in our Company's  common stock:  Knight  Securities,  LP.; Schwab Capital
Markets LP.; Hill,  Thompson Magid, & Co.; Wien, & Malkin Securities Corp.; M.H.
Meyerson & Co.; Herzog, Heine, Geduld, Inc.; Fleet Securities, Inc.; William. V.
Frankel & Co. The  transfer  agent for our  Company's  common  stock is American
Stock Transfer & Trust Company, 59 Maiden Lane; New York, New York 10007.

Penny Stock Rules

     Our  Company's  securities  are, as of the date of this report,  subject to
regulation  as  "Penny  Stocks."  While  our  Company  hopes  that  its  planned
acquisition  program and funds from the sale of its  securities  will remove its
shares from such  category,  it can provide no assurances  that its efforts will
prove successful.


                                     Page 8

<PAGE>


     Exchange  Act  Section  15(g)  requires  brokers  and  dealers to make risk
disclosures to customers before effecting any transactions in "penny stocks." It
also directs the  Commission to adopt rules setting forth  additional  standards
for disclosure of information concerning transactions in penny stocks.

     Penny stocks are low-priced,  over-the-counter  securities that are prone t
manipulation  because of their price and a lack of reliable  market  information
regarding  them.  Under  Section  3(a)(51)(A)  of the  Exchange  Act, any equity
security is considered to be a "penny stock," unless that security is:

          (i)       registered  and  traded on a  national  securities  exchange
                    meeting specified Commission criteria:

          (ii)      authorized  for  quotation  on the National  Association  of
                    Securities Dealers,  Inc.'s ("NASD") automated  inter-dealer
                    quotation system ("NASDAQ"):

          (iii)     issued by a registered investment company:

          (iv)      excluded, on the basis of price or the issuer's net tangible
                    assets,  from the  definition of the term by Securities  and
                    Exchange Commission rule: or

          (v)       excluded from the  definition by the Securities and Exchange
                    Commission.

     Pursuant to Section  3(a)(51)(B),  securities  that  normally  would not be
considered penny stocks because they are registered on an exchange or authorized
for quotation on NASDAQ may be designated as penny stocks by the  Securities and
Exchange  Commission  if the  securities  are  traded  off  the  exchange  or if
transactions  in the  securities  are  effected  by market  makers  that are not
entering quotations in NASDAQ.

     Rule 3a51-1 was adopted by the Securities  and Exchange  Commission for the
purpose of  implementing  the  provisions  of  Section  3(a)(51).  Like  Section
3(a)(51),  it defines penny stocks by what they are not. Thus, the rule excludes
from the definition of penny stock any equity security that is:

(A)  a "reported" security:

(B)  issued by an investment company registered under the 1940 Act:

(C)  a put or call option issued by the Options Clearing Corporation:

(D)  priced at five dollars or more:

(E)  subject to last sale reporting: or

(F)  whose issuer has assets above a specified amount.

     Rule  3a51-1(a)  excludes  from the  definition  of penny  stock any equity
security that is a "reported security" as defined in Rule 11Aa3-1(a). A reported
security is any exchange-listed or NASDAQ security for which transaction reports
are  required  to  be  made  on a  real-time  basis  pursuant  to  an  effective
transaction  reporting  plan.  Securities  listed on the New York Stock Exchange
(the "NYSE"), certain regional exchange-listed securities that meet NYSE or Amex
criteria,   and  NASDAQ  National  Market  System  ("NMS")  securities  are  not
considered  penny  stocks.   (Release  No.  30608,  Part  III.A.1).   Generally,
securities  listed on the American Stock  Exchange (the "Amex")  pursuant to the
Amex's original and junior tier or its "Emerging  Company  Marketplace"  listing
criteria,  are not  considered  penny  stocks.  Securities  listed  on the  Amex
pursuant  to its  Emerging  Companies  Market  ("ECM")  criteria,  however,  are
considered to be "penny stock" solely for purposes of Exchange Act 15(b)(6).

     Rule 3a51-1(d) excludes securities that are priced at five dollars or more.
Price, in most cases, will be the price at which a security is purchased or sold
in  a  particular  transaction,  excluding  any  broker  commission,  commission
equivalent,  mark-up, or mark-down.  In the absence of a particular transaction,
the five dollar price may be based on the inside bid  quotation for the security
as displayed on a Qualifying  Electronic  Quotation  System [i.e.,  an automated
inter- dealer quotation system as set forth in Exchange Act Section  17B(b)(2)].
"Inside bid quotation" is the highest bid quotation for the security displayed

                                     Page 9


<PAGE>


by a market  maker in the  security on such a system.  If there is no inside bid
quotation,  the average of at least three inter-dealer bid quotations  displayed
by three  or more  market  makers  in the  security  must  meet the five  dollar
requirement.  Broker-dealers  may not rely on  quotations  if they know that the
quotations  have been  entered for the  purpose of  circumventing  the rule.  An
inter-dealer  quotation system is defined in Rule  15c2-7(c)(1) as any system of
general   circulation  to  brokers  and  dealers  that  regularly   disseminates
quotations of identified brokers or dealers.

     In the case of a unit composed of one or more securities, the price divided
by the number of shares of the unit that are not  warrants,  options,  or rights
must be five dollars or more.  Furthermore,  the exercise  price of any warrant,
option,  or  right,  or of the  conversion  price of any  convertible  security,
included in the unit must meet the five dollar requirement.  For example: a unit
composed  of five shares of common  stock and five  warrants  would  satisfy the
requirements of the rule only if the unit price was twenty-five dollars or more,
and the warrant  exercise price was five dollars or more. Once the components of
the unit begin trading  separately on the  secondary  market,  they must each be
separately priced at five dollars or more.

     Securities that are registered, or approved for registration upon notice of
issuance,  on  a  national  securities  exchange  are  also  excluded  from  the
definition of penny stock [Rule  3a51-1(e)].  The exchange must make transaction
reports  available  pursuant to Rule  11Aa3-1  for the  exclusion  to work.  The
exclusion is further  conditioned  on the current  price and volume  information
with respect to  transactions  in that security  being reported on a current and
continuing  basis  and made  available  to  vendors  of market  information.  In
addition,  the exclusion is limited to exchange-listed  securities that actually
are purchased or sold through the  facilities  of the exchange,  or as part of a
distribution.  Exchange-listed  securities satisfying Rule 3a51-1(e),  but which
are not otherwise excluded under Rule 3a51-1(a)-(d), continue to be deemed penny
stocks for purposes of Exchange Act Section 15(b)(6).

     Securities that are registered, or approved for registration upon notice of
issuance,  on NASDAQ are  excluded  from the  definition  of penny  stock  [Rule
3a51-1(f)].  Similar to the exchange-registered exclusion of Rule 3a51-1(e), the
NASDAQ exclusion is conditioned on the current price and volume information with
respect  to  transactions  in that  security  being  reported  on a current  and
continuing basis and made available to vendors of market information pursuant to
the rules of NASD.  NASDAQ securities  satisfying Rule 3a51-1(e),  but which are
not otherwise  excluded  under Rule  3a51-1(a)-(d),  continue to be deemed penny
stocks for purposes of Exchange Act Section 15(b)(6).

     An exclusion is available  for the  securities of issuers that meet certain
financial standards. This exclusion pertains to:

          (i)       issuers that have been in continuous  operation for at least
                    thre  years  having  net  tangible  assets  in  excess of $2
                    million [Rule 3a51-1(g)(1)]:

          (ii)      issuers that have been in continuous operation for less than
                    three  years  having  net  tangible  assets  in excess of $5
                    million [Rule 3a51-1(g)(1)]:

          (iii)     issuers that have an average  revenue of at least $6 million
                    for the last three years [Rule 3a51-1(g)(2)].

     To satisfy this  requirement,  an issuer must have had total revenues of $1
million by the end of a three-year  period.  For domestic issuers,  net tangible
assets or revenues must be demonstrated  by financial  statements that are dated
no less than fifteen  months prior to the date of the related  transaction.  The
statements  must have been audited and reported on by an independent  accountant
in accordance with Regulation  S-X. For foreign  private  issuers,  net tangible
assets or revenues must be demonstrated  by financial  statements that are dated
no less than fifteen  months prior to the date of the related  transaction.  The
statements must be filed with the Securities and Exchange Commission pursuant to
Rule  12g3-2(b).  If the  issuer  has not been  required  to  furnish  financial
statements  during the previous  fifteen months,  the statements may be prepared
and audited in compliance with generally accepted  accounting  principles of the
country of incorporation.

     Whether the issuer is  domestic or foreign,  in all cases a broker or deale
must review the financial  statements and have a reasonable  basis for believing
that they were  accurate as of the date they were made (Rule  3a51-1[g][3]).  In
most  cases a  broker-dealer  need not  inquire  about or  independently  verify
information contained in the statements.

                                     Page 10


<PAGE>



     Brokers and dealers  must keep copies of the  domestic or foreign  issuer's
financial  statements for at least three years following the date of the related
transaction.

Our Company's Common Stock

     The  authorized   capital  stock  of  our  Company  currently  consists  of
20,000,000  shares of common stock,  $.01 par value. As of the close of business
on  September  30,  2001,  our Company  had  19,975,212  shares of common  stock
outstanding  and  held  of  record  by  approximately  854  persons.  Of  those,
approximately   40  were  holding  such   securities   pursuant  to   depository
arrangements with the actual beneficial owners (e.g.,  securities held in street
name for their clients by securities  brokers and dealers),  and our Company has
been advised that  approximately  333 persons were beneficial  owners under such
arrangements.  Consequently,  the total number of beneficial owners of more than
5% of our Company's  outstanding  securities  is four. As a material  subsequent
event,  as of the close of  business  on  November  15,  2001,  our  Company had
20,000,000 shares of common stock outstanding

     Each holder of shares of our Company's common stock is entitled to one vote
for  each  share  held on all  matters  to be  voted  upon  by the  stockholders
generally.  The shares do not have  cumulative  voting rights,  which means that
holders of more than 50% of the shares of our Company's  common stock voting for
the election of directors can elect all the directors, and that in such an event
the  holders  of the  remaining  shares  would  not be  able to  elect a  single
director.  The approval of  proposals  submitted  to  stockholders  at a meeting
requires the favorable  vote of a majority of the shares  voting,  except in the
case of certain  fundamental  matters where  Delaware law requires the favorable
vote of at least a majority of all outstanding shares.

     Shareholders are entitled to receive such dividends as may be declared from
time to time by the board of directors out of funds legally available  therefor,
and in the event of  liquidation,  dissolution  or winding up of our  Company to
share ratably in all assets remaining after payment of liabilities.  The holders
of shares of our  Company's  common  stock  have no  preemptive,  conversion  or
subscription rights.

     Our Company has not declared any dividends on its common stock and does not
expect to do so at any time in the  foreseeable  future.  There are currently no
restrictions on our Company's ability to declare dividends in the future,  other
than restrictions  applicable to all Delaware corporations  involving the source
of funds for payment of dividends and their  effects on our Company's  solvency.
In the  future,  our  Company  expects  that a  portion  of  its  expansion  and
development capital may be in the form of loans from financial institutions,  in
which case it is likely that such institutions would require restrictions on the
payment of dividends based on traditional  financial  ratios designed to predict
our Company's ability to repay such loans.  However, no specific  predictions as
to any such restrictions can be made at this time.

     Pursuant to  anticipated  consulting  services  that may be rendered by our
Company to third  parties (see "Part I, Item 1"), it is possible  that shares of
the  capital  stock  of our  Company's  clients  will  be  registered  with  the
Commission  and issued  directly to our  Company's  stockholders,  as a "defacto
third party stock  dividend";  however,  no assurances  can be provided that any
such distribution will ever take place, or as to the actual economic benefits of
any such distribution.

Amounts of Common Equity Subject to Outstanding Options or Warrants to Purchase,
or Securities Convertible Into Common Equity of our Company

Common Stock Purchase Warrants

     Since  January 1,  1999,  our  Company  has issued  common  stock  purchase
warrants to Yankees and to our Company's officers and directors, in lieu of cash
compensation  for their services.  Current details  concerning such warrants are
provided  below.  As of September  30, 2001,  3,877,212  shares of our Company's
common  stock were  reserved  for  issuance  pursuant to  existing  obligations,
including  common stock purchase  warrants held by its officers and directors in
lieu of cash  compensation for their services,  but excluding shares issuable to
Yankees  pursuant  to its current  warrant.  Yankees  recognizes  that the total
number of authorized  shares is not  sufficient to allow for  reservation of the
shares  subject to its warrant or  issuable  pursuant  to anti  dilutive  rights
associated with prior warrant  exercise;  however,  Yankees believes that it can
obtain  sufficient  director and  stockholder  votes to increase the  authorized
capital stock of our Company,  as required to permit exercise of its warrant and
assurance of additional shares to which it is entitled pursuant to the warrants'

                                    Page 11


<PAGE>



anti dilutive  provisions,  at such time as  stockholder  action can be taken in
compliance with applicable securities laws. Consequently,  Yankees has consented
to the issuance and reservation of our Company's  common stock in favor of other
persons, which would otherwise have been subject to Yankees' warrant.

Stock Options

     On February 27, 1998,  our  Company's  board of directors  adopted the 1998
stock option plan (the  "Plan") to provide  added  incentive  for high levels of
performance to its officers, directors, employees,  consultants, and independent
contractors.  Options  granted under the Plan were designed  either as incentive
stock options or as  non-qualified  stock  options.  The plan will  terminate on
February 27, 2008, unless previously terminated. The Plan authorizes our Company
to grant  options  to  purchase  up to an  aggregate  of  600,000  shares of our
Company's  common  stock.  Through the date of this report no stock options have
been  granted  pursuant  to the  Plan.  The Plan was  filed as an  exhibit  to a
registration statement on Form S-8, filed March 16, 1998.

     At Yankees'  recommendation,  on January 3, 2000,  our  Company's  board of
directors  adopted the  Non-qualified  Stock  Option & Stock  Incentive  Plan to
compensate  its directors  based on set quantities of options for service on the
board of directors and for services on committees of the board of directors, for
services  chairing the board of directors and its  committees;  with  forfeiture
provisions in the event of non-participation. The Plan authorizes our Company to
grant  options  to  purchase  up to an  aggregate  of  1,000,000  shares  of our
Company's  common  stock.  Through the date of this report no stock options have
been  granted  pursuant  to the Plan.  The Plan was filed as an  exhibit  to our
Company's report on Form 10-KSB for the year ended September 30, 1998.

     Because  the plans were not  ratified by the  stockholders  within one year
after their adoption,  no incentive stock options may be issued thereunder,  and
the plans are currently limited to issuance of non-qualified  stock options,  as
determined under the Internal Revenue Code.

Tabular Information

     As of  September  30,  2001,  our  Company  had  3,877,212  shares  of  its
authorized common stock reserved for issuance (excluding the number of shares to
be reserved for Yankees warrants and  anti-dilutive  rights) in conjunction with
current  obligations to issue  additional  shares or in the event that currently
outstanding  options or warrants are  exercised.  The following  table  provides
summary data concerning such options and warrants:

Designation         Nature of           Exercise or          Number of Shares
or Holder           The Security        Conversion Price     Currently Reserved
------------        -------------       -----------------    -------------------
Yankees             Warrant             $80,000 in total     (1)
(2)                 Warrant             $45,140 in total      1,102,000
(3)                 (3)                 (3)                   1,000,000
(4)                 (4)                 (4)                   1,600,000
Anthony Q. Joffe    (5)                 (5)                     175,212


(1)  The number of shares  cannot be  calculated  precisely for purposes of this
     table; rather, Yankees has the right, for an aggregate price of $80,000, to
     purchase shares of our Company's common stock equal to 75% of our Company's
     outstanding and reserved shares of common stock, measured immediately after
     exercise is completed.  The actual formula for determining the total number
     of Yankees' option shares issuable is: [the total shares outstanding at the
     time the final  option  exercise  payment is made less the number of shares
     issued  under the  option + the  shares  then  reserved  other than for the
     Yankees' option]  multiplied by 3 and rounded up or down based on proximity
     to the next whole number.

(2)  Represents  the  shares  issuable  to  members  of our  Company's  board of
     directors.

(3)  Represents  shares  reserved for issuance in the event offers of settlement
     by our Company are accepted by certain current  creditors,  as disclosed at
     Part I, Item 1,  Description of Business - New Strategic  Plans & Change in
     Control,  such disclosure is incorporated by reference herein, as permitted
     by Commission Rule 12b-23.


                                     Page 12


<PAGE>



(4)  Represents  the shares  authorized  pursuant to our Company's 1998 and 2000
     stock option plans, as disclosed above. Because the plans were not ratified
     by the stockholders within on year after their adoption, no incentive stock
     options may be issued  thereunder  and the plans are limited to issuance of
     non-qualified stock options, as determined under the Internal Revenue Code.
     As a material  subsequent event, our Company's board of directors  formally
     terminated the 1998 and 2000 plans as of November 14, 2001.

(5)  Represents  the  shares  issuable  to Mr.  Joffe  as  compensation  for his
     services as our Company's  president,  as disclosed below in Part III, Item
     10, Executive  Compensation;  (24,788 shares of the 200,000 shares which is
     due to Mr.  Joffe has been  issued)  such  disclosure  is  incorporated  by
     reference herein, as permitted by Commission Rule 12b-23.

Amounts  of Common  Equity  That  Could Be Sold  Pursuant  to Rule 144 under the
Securities Act

Reporting Period

     As of September 30, 2001,  19,975,212  shares of our Company's common stock
were outstanding, of which:

     *    3,097,593 are recognized as free trading by our Company;

     *    16,877,619  have been issued over the years pursuant to exemption from
          registration  and are thus  restricted  securities,  some of which are
          eligible for resale under Commission Rule 144 ("Rule 144").

     Of the shares that our Company has  instructed  its transfer agent to treat
as restricted:

     *    9,870,575 were issued prior to September 30, 2000,  and  consequently,
          may  currently  be sold under Rule 144,  subject to Rule 144's  volume
          limitations, notice, public information and manner of sale conditions.
          The volume limitations  restrict quantities sold ove 90 day periods to
          the  greater  of 1% of the  total  outstanding  common  stock,  or the
          average weekly trading  volume during the four-week  period  preceding
          the sale;

     *    7,901,692  were issued to persons that do not appear to be  affiliates
          of our Company prior to September 30, 1999,  and  consequently  may be
          sold by holders  that have not been  affiliates  of our  Company for a
          period of at least 90 days, under the more liberal  provisions of Rule
          144(k), which dispense with the volume,  public information and manner
          of sale conditions.

     Rule 144

     Pursuant to the provisions of Rule 144(e),  permissible sales of securities
thereunder are determined as follows:

Sales by  affiliates:

     If restricted or other  securities are sold for the account of an affiliate
of our Company (officers,  directors, other control persons or their affiliates,
and persons who have been affiliates within the preceding 9 days), the amount of
securities  sold,  together with all sales of restricted and other securities of
the same class for the account of such person within the preceding three months,
shall not exceed the greater of:

     *    one percent of the shares or other units of the class  outstanding  as
          show by the most recent report or statement  published by our Company,
          or

     *    the average weekly  reported  volume of trading in such  securities on
          all  national   securities   exchanges  and/or  reported  through  the
          automated  quotation  system of a  registered  securities  association
          during the four calendar weeks preceding the filing of notice required
          by Rule 144 (h), or if no such notice is required  the date of receipt
          of the order to execute the  transaction  by the broker or the date of
          execution of the transaction directly with a market maker, or

                                     Page 13


<PAGE>



     *    the  average  weekly  volume  of  trading i such  securities  reported
          through the consolidated  transaction reporting system contemplated by
          Rule  11Aa3-1  under the  Securities  Exchange  Act of 1934 during the
          four-week period specified above.

Sales by non-affiliates:

     The amount of restricted securities sold for th account of any person other
than an affiliate of our Company,  together  with all other sales of  restricted
securities  of the same class for the account of such person withi the preceding
three  months,  shall not exceed the amount  specified in  paragraphs  above for
affiliates,  unless the  conditions in Rule 144 (k) are satisfied  (two,  rather
than a one year holding period).

Determination  of  Amount:

     For the purpose of  determining  the amount of securities  specified  above
(the "Permitted Volume"), the following provisions apply:

     *    Where both  convertible  securities  and  securities of the class into
          which  they are  convertible  are  sold,  the  amount  of  convertible
          securities  sold is deemed to be the amount of securities of the class
          into which they are  convertible  for the purpose of  determining  the
          aggregate amount of securities of both classes sold;

     *    The amount of securities sold for the account of a pledgee thereof, or
          for the account of a purchaser of the pledged  securities,  during any
          period  of  three  months  within  one  year  after a  default  in the
          obligation  secured by the pledge,  and the amount of securities  sold
          during the same three- month period for the account of the pledgor may
          not exceed, in the aggregate, the Permitted Volume.

     *    The  amount of  securities  sold for the  account  of a donee  thereof
          during any period of three months  within one year after the donation,
          and the amount of securities sold during the same  three-month  period
          for the account of the donor,  shall not exceed in the aggregate,  the
          Permitted Volume.

     *    Where  securities  were  acquired  by a trust from the  settlor of the
          trust, the amount of such securities sold for the account of the trust
          during  any  period  of  three  months   within  one  year  after  the
          acquisition  of  the  securities  by  the  trust,  and  the  amoun  of
          securities sold during the same three-month  period for the account of
          the settlor, shall not exceed, in the aggregate, the Permitted Volume.

     *    The  amount of  securities  sold for the  account  of the  estate of a
          deceased  person,  or for the account of a beneficiary of such estate,
          during any period of three  months and the amount of  securities  sold
          during the same period for the account of the deceased person prior to
          his death shall not exceed,  in the  aggregate,  the Permitte  Volume;
          provided,  that no  limitation  on amount  shall apply if th estate or
          beneficiary thereof is not an affiliate of our Company;

     *    When two or more  affiliates  or other persons agree to act in concert
          for th purpose of selling  securities of a Registrant,  all securities
          of the same class sold for the account of all such persons  during any
          period  of  three  months  shall  be  aggregated  for the  purpose  of
          determining the limitation on the amount of securities sold;



                                     Page 14


<PAGE>

Securities excluded:

     The following  sales of securities  need not be included in determining the
amount of securities sold in reliance upon this section:


     *    Securities sold pursuant to an effective  registration statement under
          the Securities Act;

     *    Securities  sold  pursuant to an  exemption  provided by  Regulation A
          under the Securities Act; and

     *    Securities  sold in a transaction  exemp  pursuant to Section 4 of the
          Securities Act and not involving any public offering.

     Because a major theoretical component of securities pricing involves supply
and demand,  sales in reliance on Rule 144 will increase the supply and,  unless
there is a corresponding  increase in demand, can be expected to result in lower
prices.

Amount of Common  Equity  That Our  Company  Has  Agreed to  Register  Under the
Securities Act for Sale by Security Holders

     Our Company has not agreed to register any of its common  stock,  except in
conjunction with an obligation to include the common stock purchase warrants for
its officers and directors and the Yankees'  warrant in registration  statements
that it may otherwise file (commonly referred to as "piggyback" rights).

Amounts of Common Equity That Our Company Is  Considering  Publicly  Offering or
Privately  Placing  Other  than  Shares to Be Issued  (Pursuant  to an  Employee
Benefit Plan or Dividend  Reinvestment Plan), the Offering of Which Could Have a
Material Effect on the Market Price of Our Company's Common Equity.

During the Year Following the Reporting Period

     During  the  year  following  the  report  period,   our  Company  will  be
considering  material private placements in order to (1) engage in acquisitions,
(2) acquire  additional  funding for  operations,  and (3) settle any  remaining
creditor claims against our Company. In addition,  should Yankees fully exercise
its Class A Options under its warrant agreement,  our Company would be obligated
to  issue  approximately  36,549,939  such  shares.  No  additional  shares  are
currently  available for issuance by our Company pursuant to the  capitalization
provisions of the articles of incorporation; however, they may be amended at the
Annual  Meeting of  Stockholders  scheduled for January 4, 2002, to authorize an
increase in capitalization in order to carry out our Company's  strategic plans.
No  assurances  can be  provided,  however,  that  such  business  plans  can be
attained.

Recent Sales of Unregistered Securities

During The Three Year Period Preceding Reporting Date

     During the three year period ended  September 30, 2001,  our Company issued
the  securities  listed  in the  tables  below  without  registration  under the
Securities  Act in  reliance on the  exemption  from  registration  requirements
cited. Footnotes for all tables follow the last table.


                                    Page 15
<PAGE>

<Table>
<S>              <C>           <C>                        <C>             <C>            <C>

Common Stock:

               Amount of                                 Total                         Registration
               Securities                                Offering        Total         Exemption
Date           Sold          Subscriber                  Consideration   Discounts     Relied On
----           ----------    ----------                  -------------   ---------     -------------
1999:
February 22    2,000,000     The Yankee Companies, Inc.   (3)              (3)          (2)
April 14       2,000,000     The Yankee Companies, Inc.   (3)              (3)          (2)
June 23          250,000     Madhu & Ila Sethi            (4)              None         (1)
October 6      2,000,000     The Yankee Companies, Inc.   (3)              (3)          (2)


2000:
January 14        34,000     Jack Levine                  (4)              None         (1)
March 17         677,087     Oppenheimer Wolff & Donnelly (4)              None         (1)
May 11           136,147     Larry Van Etten              (4)              None         (1)
May 4            200,000     Anthony Q. Joffe             (5)              None         (2)
May 31           533,333     Troy D. Wiseman              (4)              None         (1)
September 7      200,000     Bell Entertainment           (6)              None         (1)
September 19   2,000,000     The Yankee Companies, Inc.   (3)              (3)          (2)
November 8       100,000     Patrick V. Graham            (7)              None         (1)

2001:
May 31         1,844,444     SBV Holdings, Inc.           (8)              None         (2)
June 30           21,055     Edward C. Dmytryk            (5)              None         (2)
June 30           56,818     Kevin W. Dornan              (5)              None         (2)
June 30           21,018     Vanessa H. Lindsey           (5)              None         (2)
July 31           70,000     Edward C. Dmytryk            (5)              None         (2)
July 31           31,250     Kevin W. Dornan              (5)              None         (2)
July 31           58,360     Vanessa H. Lindsey           (5)              None         (2)


Convertible Securities:

               Amount of                                 Total           Terms of      Registration
               Securities                                Offering        Conversion    Exemption
Date           Sold          Subscriber                  Consideration   or Exercise   Relied on
-----          ----------    -----------                 -------------   -----------   -------------
(10)             370,000     Directors/Officers          $0.05            (10)          (2)
 (9)           1,600,000     Stock Option Plan            (9)              (9)          (1)
(10)             732,000     Directors/Officers          (10)             (10)          (2)
(11)           1,000,000     (11)                        (11)             (11)          (1)

     As a material subsequent event, as of November 15, 2001, our Company issued
the following shares:

Common Stock:

               Amount of                                 Total
               Securities                                Offering        Total         Exemption
Date           Sold          Subscriber                  Consideration   Discounts     Relied on
-----          ----------    -----------                 -------------   ---------     ---------
2001:
November 15       24,788     Anthony Q. Joffe            (5)               None          (2)


</Table>

                                    Page 16


<PAGE>


(1)  Section  4(2) of the  Securities  Act.  In each case,  the  subscriber  was
     required  to  represent  that the  shares  were  purchased  for  investment
     purposes,  the  certificates  were legended to prevent  transfer  except in
     compliance with applicable  laws, and the transfer agent was instructed not
     to permit transfers unless directed to do so by our Company, after approval
     by its legal counsel.  In addition,  each subscriber was directed to review
     our Company's  filings with the  Commission  under the Exchange Act and was
     provided  with  access  to our  Company's  officers,  directors,  books and
     records, in order to obtain required information.

(2)  Section  4(6) of the  Securities  Act.  In each case,  the  subscriber  was
     required  to  represent  that the  shares  were  purchased  for  investment
     purposes,  the  certificates  were legended to prevent  transfer  except in
     compliance  with  applicable laws and the transfer agent was instructed not
     to permit transfers unless directed to do so by our Company, after approval
     by its legal counsel.  Each subscriber was directed to review our Company's
     filings with the  Commission  under the Exchange Act and was provided  with
     access t our Company's officers,  directors, books and records, in order to
     obtain  required  information;  and, a Form D reporting the transaction was
     filed with the Commission.

(3)  Option to purchase 75% of our  Company's  outstanding  and reserved  common
     stock  measured   immediately   following   exercise  of  the  option,   in
     consideration  for an  aggregate  price of  $80,000,  such  option  being a
     portion of consideration  granted to Yankees under its consulting agreement
     with our Company in exchange  for Yankees'  agreement to forego  hourly and
     document licensing fees for a period of approximately two years, see
     below "Part III: Item 11, Security  Ownership of Certain  Beneficial Owners
     and Management;" and, "Part III, Item 12, Certain Relationships and Related
     Transactions."

(4)  Terms of settlement for various services provided to our Company.

(5)  Represents the shares  issuable to officers  pursuant to the terms of their
     employment agreements,  as disclosed below at "Part III, Item 10, Executive
     Compensation." 24,788 shares of the 200,000 common shares due to Anthony Q.
     Joffe, for his services as president from May 2000 to May 2001 were issued.

(6)  Compensation  to Bell  Entertainment  for its  services  in  assisting  our
     Company to prepare its report on Form 10- KSB for year ended  September 30,
     1998.

(7)  Issued  pursuant to the settlement  agreement  approved by the court in the
     case of Patrick  Graham vs. Five Star  Cigar,  Inc.  and others,  including
     Colmena  Corp.,  case no.  99-121194,  Circuit  Court for  Broward  County,
     Florida.

(8)  On May 31, 2001, our Company  entered into a settlement  agreement with SBV
     Our Company issued 1,844,444 shares of its common stock to SBV.

(9)  Represents  the shares  issuable  pursuant to our  Company's  1998 and 2000
     stock option plans, as disclosed above. Because the plans were not ratified
     by the  stockholders  within one year after their  adoption,  no  incentive
     stock  options may  currently be issued  thereunder,  and the plans are now
     limited to issuance of non-qualified stock options, as determined under the
     Internal Revenue Code.

(10) Represents the shares issuable, from January 1999 to September 30, 2001, to
     directors and officers upon exercise of their warrants.

(11) Represents  shares  reserved for issuance in the event offers of settlement
     by our Company are accepted by certain current  creditors,  as disclosed in
     "Part I, Item 1,  Description o Business - New Strategic  Plans & Change in
     Control."

                                    Page 17
<PAGE>

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

OVERVIEW

     The following  discussion  should be read in conjunction with our Company's
audited financial statements included in Item 7 below. During November 1997, our
Company   became   engaged  in  the  business  of  marketing  and   distributing
long-distance  telephone  service  calling  cards  and  in the  manufacture  and
distribution of premium  hand-rolled  cigars,  in each case through wholly owned
subsidiaries.  In  September  1998,  following a default in payment  obligations
totaling  approximately $5.6 million by the company that handled the billing and
collection for our Company's long- distance telephone services,  our Company and
its  subsidiaries  were forced to discontinue  day-to-day  business  operations.
During March 1999, our Company's  board of directors  concluded  negotiations to
divest our Company of all of its wholly owned  subsidiaries  ,  positioning  our
Company to  undertake  new  business  endeavors  or to become a more  attractive
acquisition candidate.

     In January  1999,  our  Company's  board of  directors  signed a consulting
agreement with Yankees,  calling for Yankees to provide our Company with working
capital and assistance in development and implementation of new strategic plans.
Yankees has been  concentrating  on meeting  our  Company's  obligation  to file
periodic reports under the Exchange Act,  including  completing the audit of our
financial statements for the fiscal year ended September 30, 2001. Additionally,
Yankees  assisted our Company in  identifying  persons with claims and potential
claims against our Company and in negotiating with them to amicably resolve such
claims.

PLAN OF OPERATIONS

     Almost all claims and potential  claims  against our Company  identified by
Yankees  have been  amicably  resolved  through the  issuance  of  approximately
3,325,011 shares of common stock through August 2001, with the notable exception
of the arbitral award in Deutsche Financial Services Corporation,  which, unless
current  settlement  negotiations are successful,  our Company will contest (see
Item 3 above,  "Legal  Proceedings").  Yankees,  on  behalf of our  Company,  is
currently conducting  negotiations with certain remaining claimants and has made
offers of  settlement  for claims.  While  management  believes  that there is a
reasonable  likelihood that such offers will be accepted,  no assurances to that
effect can be provided.

     Except for recently initiated consulting  activities,  our Company currentl
has no  day-to-day  business  operations  other  than  those  pertaining  to the
maintenance of our corporate existence and the filing of reports required by the
Commission.

Consulting Activities

     During  August 2001,  in response to Yankees'  suggestions,  our  Company's
board of directors  authorized  our Company's  officers to negotiate  consulting
agreements  with third parties that desire to avail  themselves of our Company's
experience as a reporting  company  under the Exchange  Act. Such  assistance is
expected to involve the recruitment  and  supervision of  professional  advisors
such as attorneys,  auditors,  investment bankers, transfer agents, officers and
directors who have the desired  experience in operating  public  companies,  and
access to procedures and policies that Yankees has made available for use by our
Company in complying with federal and state securities and corporate laws.

                                    Page 18


<PAGE>


     Our Company  expects,  in exchange for such  services,  that the consulting
client  will  register a  percentage  of its common  stock for  issuance  to our
Company's stockholders, as of an agreed-upon date following the execution of the
consulting  agreement.  The amount of such common stock will vary depending upon
the circumstances of each  transaction.  The issuance of shares to our Company's
stockholders will be conditioned on prior registration with the Commission,  and
the failure to conclude such registration would void the agreement.

     Registration of shares  directly to our Company's  stockholders is necessar
in order for our Company to avoid inadvertently  becoming an investment company,
and provides a major benefit to  consulting  clients in that they obtain a large
base of stockholders,  including all of our Company's  market makers.  The major
benefit of the consulting services to our Company is that it will be continually
exposed to  emerging  companies,  some of which  should  prove to be  attractive
acquisition   candidates  or  candidates  for  strategic   operating   alliances
(cooperative  business activities not involving shares of equity ownership) that
fit our Company's strategic objectives.

     Our  Company  does not yet  have any  consulting  clients,  although  it is
discussing such possibility with several candidates.

     The foregoing plan of operation  contains  forward-looking  statements that
are subject to risks and  uncertainties,  which could  cause  actual  results to
differ  materially  from those discussed in the  forward-looking  statements and
from historical results of operations. Among the risks and uncertainties,  which
could cause such a difference,  are those  relating to our Company's  dependence
upon  certain key  personnel,  our ability to manage our growth,  our  Company's
success  in  implementing  our  business  strategy,  our  success  in  arranging
financing where required,  and the risk of economic and market factors affecting
our Company or our  customers.  Many of such risk factors are beyond the control
of our Company and its management.

YEAR ENDED SEPTEMBER 30, 2001 COMPARED TO YEAR ENDED SEPTEMBER 30, 2000

     Our  Company  reported  net  losses  from  operations  for the  year  ended
September 30, 2001 of $(912,917) and net loss from operations for the year ended
September 30, 2000 of $(601,676). This translates to a per-share loss of $(0.03)
for the year ended  September  30,  2001 and a per share loss of $(0.03) for the
year ended September 30, 2000.

     Our Company had no revenues for the year ended September 30, 2001 and 2000,
respectively.  Operating  expenses  increased  to  $833,062  for the year  ended
September  30, 2001 as compared to  $480,019  for the year ended  September  30,
2000. The increase was due to the increased  consulting  fees resulting from the
issuance of common stock  warrants  and the accrual of  consulting  fees,  which
aggregated $614,142 and $436,125 for the year ended September 30, 2001 and 2000,
respectively.  Additionally,  professional  fees were $48,235 for the year ended
September 30, 2001 as compared to $28,689 for the year ended September 30, 2000.

     The increase was primarily  attributable to increased costs associated with
the  completion of our SEC filings.  For the year ended  September 30, 2001, our
Company accrued $85,606 pertaining to a potential  contingent  liability related
to a lawsuit,  which has been  included in selling,  general and  administrative
expenses.

     No  additional  meaningful  comparisons  can be  made  for the  year  ended
September 30, 2001 as compared to the year ended September 30, 2000.

                                    Page 19


<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

     As of September 30, 2001, our Company had limited cash and cash equivalents
on hand to  meet  our  obligations.  Our  Company  has  financed  our  operating
activities through loans and advances from Yankees.

     At  September  30,  2001,  our Company had a  stockholders'  deficiency  of
approximately $930,936. Our Company's future operations and growth are dependent
on our ability,  with the assistance of Yankees,  to raise capital for expansion
and to implement our strategic plan. If our Company is not successful in raising
capital and in resolving the remaining  claims of certain  claimants,  or if the
arbitral award in Deutsche Financial Services Corporation were not to be settled
and  were  successfully  reduced  to  a  judgment,  our  Company  may  file  for
reorganization pursuant to Chapter 11 of the United States Bankruptcy Code.

     Net cash used in operations  was $(76,782) for the year ended  September 30
2001 as  compared  to  $(36,568)  for the year ended  September  30,  2000.  The
difference  is due to the increase in  professional  fees and other  expenses in
connection with our Commission filings.

     Net cash provided by financing  activities for the year ended  September 30
2001 was $74,726 as compared to net cash  provided by  financing  activities  of
$36,620 for the year ended  September 30, 2000. The difference was  attributable
to the increase in amounts due to a related party.

     We currently have no material commitments for capital  expenditures.  Other
than  advances  received by Yankees,  we have no external  sources of liquidity.
Accordingly,   we  may  not  have   sufficient  cash  flow  from  operations  to
sufficiently  meet all of our cash  requirements  for the  next 12  months.  Our
Company's  future  operations  and growth are  dependent on our ability to raise
capital for expansion,  and to seek additional  revenue sources.  If our Company
decides   to  pursue   any   acquisition   opportunities   or  other   expansion
opportunities, we may need to raise additional capital, although there can be no
assurance such capital-raising activities would be successful.

RECENT ACCOUNTING PRONOUNCEMENTS

     The Financial  Accounting  Standards  Board has recently issued several new
accounting pronouncements that may apply to our Company.

     Statement No. 133, as amended by Statement No. 137 and 138, "Accounting for
Derivative  Instruments  and Hedging  Activities,"  establishes  accounting  and
reporting standards for derivative instruments and related contracts and hedging
activities. This statement is effective for all fiscal quarters and fiscal years
beginning after June 15, 2000. The adoption of this pronouncement did not have a
material effect on our Company's  financial  position,  results of operations or
liquidity.

     Statement No. 141 "Business  Combinations"  ("SFAS 141") establishes revise
standards for accounting for business combinations.  Specifically, the statement
eliminates the pooling method,  provides new guidance for recognizing intangible
assets  arising  in  a  business  combination,   and  calls  for  disclosure  of
considerably  more information about a business  combination.  This statement is
effective  for business  combinations  initiated  on or after July 1, 2001.  The
adoption of this pronouncement on July 1, 2001 did not have a material effect on
our Company's financial position, results of operations or liquidity.

     Statement  No. 142  "Goodwill  and Other  Intangible  Assets"  ("SFAS 142")
provides  new  guidance   concerning  the  accounting  for  the  acquisition  of
intangibles,  except those acquired in a business combination,  which is subject
to SFAS  141,  and the  manner  in which  intangibles  and  goodwill  should  be
accounting for subsequent to their initial  recognition.  Generally,  intangible

                                     Page 20


<PAGE>

assets withb indefinite lives, and goodwill,  are no longer amortized;  they are
carried at lower of cost or market and subject to annual impairment  evaluation,
or interim impairment  evaluation if an interim triggering event occurs, using a
new fair market value method.  Intangible assets with finite lives are amortized
over  those  lives,  with  no  stipulated  maximum,  and an  impairment  test is
performed only when a triggering  event occurs.  This statement is effective for
all fiscal years  beginning  after December 15, 2001. The Company  believes that
the  future  implementation  of SFAS  142 on  January  1,  2002  will not have a
material effect on our Company's  financial  position,  results of operations or
liquidity.

     Statement No. 144  "Accounting  for the Impairment or Disposal of Long-Live
Assets" ("SFAS 144") supercedes Statement No. 121 "Accounting for the Impairment
of Long-Lived  Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121").
Although it retains the basic requirements of SFAS 121 regarding when and how to
measure  an  impairment  loss,  SFAS  144  provides  additional   implementation
guidance.  SFAS 144 excludes  goodwill and intangibles not being amortized among
other exclusions.  SFAS 144 also supercedes the provisions of APB 30, "Reporting
the Results of  Operations,"  pertaining to  discontinued  operations.  Separate
reporting of a discontinued  operation is still  required,  but SFAS 144 expands
the  presentation  to include a component of an entity,  rather than  strictly a
business  segment as  defined in SFAS 131,  "Disclosures  about  Segments  of an
Enterprise  and  Related  Information."  SFAS 144 also  eliminates  the  current
exemption  to  consolidation  when  control  over a  subsidiary  is likely to be
temporary.  This  statement is effective  for all fiscal years  beginning  after
December 15,  2001.  We believe  that the future  implementation  of SFAS 144 on
January  1, 2002 will not have a  material  effect  on our  Company's  financial
position, results of operations or liquidity.

Audit Committee Report

     Our Company's Audit Committee (the  "Committee")  has certified that (1) th
Committee  has reviewed and  discussed  with  management  the audited  financial
statements  for the  year  ended  September  30,  2001;  (2) the  Committee  has
discussed with the independent  auditors the matters required to be discussed by
SAS 61, as may be modified or  supplemented;  (3) the Committee has received the
written disclosures and the letter from the independent  accountants required by
Independence Standards Board Standard No. 1 (Independent  Discussions with Audit
Committees),  as may be modified or  supplemented,  and has  discussed  with the
independent accountants the independent accountant's independence; and (4) based
on the review and  discussion  referred to in paragraphs  (1) through (3) above,
the  Committee has  recommended  to our  Company's  board of directors  that the
audited financial  statements for the year ended September 30, 2001, be included
in this report.  The members of the Committee are Charles J.  Champion,  Jr. and
Robert S. Gigliotti. A copy of the Audit Committee letter is filed as an exhibit
to this  report,  see "Part III,  Item 13(a),  Exhibits  Required by Item 601 of
Regulation SB."

ITEM 7.         FINANCIAL STATEMENTS.

Index to Financial Statements and Financial Statement Schedules.

     The auditor's  report and audited balance sheet of our Company for the year
ended  September 30, 2001, and related  statements of operations,  stockholder's
equity,  cash flows for the years ended September 30, 2001 and 2000 and notes to
financial  statements  for such years,  including  indexes  therefor,  follow in
sequentially numbered pages numbered 22(F1) through 38(F16).


                                    Page 21
<PAGE>

                                  COLMENA CORP.

                              FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2001 AND 2000









                                  Colmena Corp.

                                    Contents


                                                                       Page(s)
                                                                 --------------

Independent Auditors' Report                                               F1

Balance Sheet                                                              F2

Statements of Operations                                                   F3

Statements of Changes in Stockholders' Deficiency                          F4

Statements of Cash Flows                                                   F5

Notes to Financial Statements                                          F6-F16




<PAGE>


                          Independent Auditors' Report


To the Board of Directors of:
Colmena Corp.

We have audited the accompanying  balance sheet of Colmena Corp. as of September
30, 2001 and the related  statements  of  operations,  changes in  stockholders'
deficiency and cash flows for the years ended September 30, 2001 and 2000. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  These  standards  require  that we plan and
perform the audits to obtain  reasonable  assurance  about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of Colmena Corp. as of September
30,  2001 and the  results  of its  operations  and its cash flows for the years
ended  September  30, 2001 and 2000 in  conformity  with  accounting  principles
generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in Note 10 to the
financial statements,  except for recently initiated consulting activities,  the
Company has no active business operations and has a stockholders' deficiency and
working capital  deficiency that raises  substantial  doubt about its ability to
continue as a going concern.  Management's plans in regards to these matters are
also  described  in  Note  10.  The  financial  statements  do not  include  any
adjustments that might result from the outcome of this uncertainty.


/s/ Salberg & Company
SALBERG & COMPANY, P.A.
Boca Raton, FL
October 24, 2001


                                    Page F1
<PAGE>




                                  Colmena Corp.
                                  Balance Sheet
                               September 30, 2001


                                     Assets

Assets
Cash                                                      $                22
                                                           ------------------

Total Current Assets                                      $                22
                                                           ==================


                    Liabilities and Stockholders' Deficiency


Liabilities
Accrued expenses                                          $           400,757
Guaranteed loan                                                       331,000
Loan and fees payable to related party                                199,201
                                                           ------------------
Total Current Liabilities                                             930,958
                                                           ------------------


Stockholders' Deficiency
Common stock, $0.01 par value; 20,000,000 shares
 authorized,  19,975,204 shares issued and outstanding                199,752

Common stock issuable, $0.01 par value (10,474,970 shares)            104,749
Additional paid-in capital                                         17,182,541
Accumulated deficit                                               (18,417,978)
                                                           ------------------

Total Stockholders' Deficiency                                       (930,936)
                                                           ------------------

Total Liabilities and Stockholders' Deficiency            $                22
                                                           ==================


                 See accompanying notes to financial statements.

                                    Page F2
<PAGE>




                                  Colmena Corp.
                            Statements of Operations
                     Years Ended September 30, 2001 and 2000

<Table>
       <S>                                                                     <C>                      <C>
                                                                              2001                     2000
                                                                       ------------------      -------------------

Operating Expenses
Compensation expense                                                $            73,056     $              7,323
Consulting                                                                      614,142                  436,125
Professional and legal fees                                                      48,235                   28,689
Selling, general and administrative                                              97,629                    7,882
                                                                       ------------------      -------------------

Total Operating Expenses                                                        833,062                  480,019
                                                                       ------------------      -------------------


Loss from Operations                                                           (833,062)                (480,019)
                                                                       ------------------      -------------------


Other Expenses
Settlement expense                                                              (15,000)                 (55,678)
Interest expense                                                                (64,855)                 (65,998)
                                                                       ------------------      -------------------

Total Other Expenses                                                            (79,855)                (121,676)
                                                                       ------------------      -------------------


Net Loss                                                            $          (912,917)    $           (601,695)
                                                                       ==================      ===================


Net Loss Per Common Share - Basic and Diluted                       $             (0.03)    $              (0.03)
                                                                       ==================      ===================

Weighted Common Shares Outstanding - Basic and Diluted                       26,505,535               20,480,684
                                                                       ==================      ===================

</Table>

                 See accompanying notes to financial statements.


                                    Page F3
<PAGE>



                                  Colmena Corp.
                Statements of Changes in Stockholders' Deficiency
                     Years Ended September 30, 2001 and 2000

<Table>
  <S>                                      <C>          <C>           <C>           <C>         <C>          <C>             <C>
                                             Common Stock           Common Stock Issuable
                                                                                             Additional
                                                                                               Paid-In    Accumulated
                                          Shares       Amount       Shares        Amount       Capital      Deficit        Total
                                       -----------   ----------   -----------   -----------  -----------  -----------    -----------


  Balance, September 30, 1999          13,991,692    $  139,917             -   $        -   $16,128,629  $(16,903,366)    (634,820)

  Common stock issued as settlement     1,380,567        13,806             -            -        41,873             -       55,679

  Common stock issued as consulting fee   200,000         2,000             -            -         2,000             -        4,000

  Common stock issued to employee         200,000         2,000             -            -         4,000             -        6,000

  Common stock options issued to directors      -             -             -            -         5,490             -        5,490

  Common stock warrants issued under
   consulting agreement                         -             -             -            -       432,125             -      432,125

  Common stock issuable pursuant to
   anti-dilutive rights of
   consultant warrants                          -             -     8,670,552       86,705       (75,505)            -       11,200


  Net loss, 2000                                -             -             -            -             -      (601,695)    (601,695)
                                       -----------   ----------   -----------   -----------  -----------  ------------   ----------

  Balance, September 30, 2000           15,772,259      157,723     8,670,552       86,705    16,538,612   (17,505,061)    (722,021)

  Common stock issued as settlement        100,000        1,000             -            -        14,000             -       15,000

  Common stock issuable as compensation          -            -       200,000        2,000        13,000             -       15,000

  Common stock issued as settlement      1,844,444       18,444             -            -       119,889             -      138,333

  Common stock options issued to directors       -            -             -            -         2,881             -        2,881

  Physical issuance of common stock to
   consultant                            2,000,000       20,000    (2,000,000)     (20,000)            -             -            -

  Common stock warrants issued under
   consulting agreement                          -            -             -            -       509,142             -      509,142

  Common stock issued in exchange for
   accrued compensation                    258,501        2,585             -            -        21,061             -       23,646

  Common stock issuable pursuant to
   anti-dilution rights of
   consultant warrants                           -            -     3,604,418       36,044       (36,044)            -            -


  Net loss, 2001                                 -            -             -            -             -      (912,917)    (912,917)
                                      ------------   ----------   -----------   -----------  -----------  -------------  ----------

 Balance, September 30, 2001            19,975,204   $  199,752    10,474,970   $  104,749   $17,182,541  $(18,417,978)    (930,936)
                                      ============   ===========  ===========   ===========  ===========  =============  ==========
</Table>

                 See accompanying notes to financial statements.


                                    Page F4
<PAGE>



                                  Colmena Corp.
                            Statements of Cash Flows
                     Years Ended September 30, 2001 and 2000

<Table>
 <S>                                                                                      <C>               <C>

                                                                                         2001              2000
                                                                                     -------------     -------------
                                                                                     -------------     -------------
Cash Flows From Operating Activities:
Net loss                                                                          $     (912,917)   $     (601,695)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock and options issued to consultants and employees                                    550,669           443,448
Stock based settlement expense                                                            15,000            55,679
Changes in operating assets and liabilities:
Increase (decrease) in:
Accounts payable and accrued expenses                                                    172,611            66,000
Due to related party                                                                      97,855              -

                                                                                     -------------     -------------
Total Adjustments                                                                        750,529           565,127
                                                                                     -------------     -------------

Net Cash Used in Operating Activities                                                    (76,782)          (36,568)
                                                                                     -------------     -------------


Cash Flows from Financing Activities:
Borrowings from related party                                                             74,726            25,420
Proceeds from issuance of common stock from warrant exercise                                -               11,200
                                                                                     -------------     -------------

Net Cash Provided By Financing Activities                                                 74,726            36,620
                                                                                     -------------     -------------


Net Increase (Decrease) in Cash                                                           (2,056)               52

Cash - Beginning of Year                                                                   2,078             2,026
                                                                                     -------------     -------------


Cash - End of Year                                                                $           22    $        2,078
                                                                                     =============     =============


Non-Cash Investing and Financing Activities:

In May 2001, the Company issued 1,844,444 common shares to settle a note payable
of $100,000 and related accrued interest of $38,333.

In  August  2001,   the  Company   issued  258,501  common  shares  for  accrued
compensation of $23,646.
</Table>

                 See accompanying notes to financial statements.


                                    Page F5
<PAGE>

                                  Colmena Corp.
                          Notes to Financial Statements
                               September 30, 2001



Note 1    Nature of Operations and Summary of Significant Accounting Policies

         (A)   Nature of Operations

               Colmena  Corp.  (the  "Company"),  a  Delaware  corporation,  was
               formerly  involved in the  telecommunications  industry and other
               industries  through  operating  subsidiaries  which  were sold in
               fiscal  1999 (see Note 2). The Company  currently  seeks to renew
               suspended  activities  as a  reseller  in the  telecommunications
               industry,  and to  serve as a  consultant  to  developing  public
               companies.

         (B)   Use of Estimates

               In  preparing  the  financial   statements  in  conformity   with
               accounting  principles  generally  accepted in the United States,
               management  is required to make  estimates and  assumptions  that
               affect the  reported  amounts of assets and  liabilities  and the
               disclosure of contingent  assets and  liabilities  at the date of
               the  financial  statements  and revenues and expenses  during the
               reported   period.   Actual   results  could  differ  from  those
               estimates.

         (C)   Cash and Cash Equivalents

               For purpose of the cash flow  statements,  the Company  considers
               all highly liquid  investments with original  maturities of three
               months or less at time of purchase to be cash equivalents.

         (D)   Stock Options

               In accordance  with Statement of Financial  Accounting  Standards
               Number 123, the Company has elected to account for stock  options
               and warrants  issued to  employees  under  Accounting  Principles
               Board Opinion Number 25 and related interpretations.  The Company
               accounts for stock options and warrants issued to consultants and
               other  non-employees  under the fair value method of Statement of
               Financial Accounting Standards 123.

         (E)   Income Taxes

               The  Company  accounts  for  income  taxes  under  the  Financial
               Accounting  Standards  Board  Statement of  Financial  Accounting
               Standards Number 109,  "Accounting for Income Taxes"  ("Statement
               No.109").  Under  Statement  No.  109,  deferred  tax  assets and
               liabilities  are  recognized  for  the  future  tax  consequences
               attributable  to  differences  between  the  financial  statement
               carrying  amounts of existing  assets and  liabilities  and their
               respective  tax basis.  Deferred tax assets and  liabilities  are
               measured  using  enacted  tax rates  expected to apply to taxable
               income in the years in which  those  assets  or  liabilities  are
               expected to be recovered  or settled.  Under  Statement  109, the
               effect on deferred tax assets and  liabilities of a change in tax
               rates is  recognized  in income in the period that  includes  the
               enactment date.

         (F)   Loss per Share

               Net income (loss) per common share for the years ended  September
               30,  2001 and 2000 is based  upon  the  weighted  average  common
               shares and dilutive common stock equivalents  outstanding  during
               the  year  as  defined  by  Statement  of  Financial   Accounting
               Standards,  Number 128 "Earnings Per Share." The assumed exercise
               of common  stock  equivalents  was not  utilized in 2001 and 2000
               since the effect was anti-dilutive.  At September 30, 2001, there
               were  1,102,000  shares of common  stock  underlying  outstanding
               options and 18,274,969 shares of common stock underlying warrants
               outstanding,  which could potentially  dilute future earnings per
               share.


                                    Page F6
<Page>

Note 2    Reorganization Agreement and Sale of Subsidiaries

On March 16, 1999, the Company sold all of its  subsidiaries but retained 10% of
Techtel Communications, Inc., a telecommunications company.

In November 1999,  the interest of all  stockholders  in TechTel,  including the
Company,  was acquired by FON Digital  Network,  Inc.  ("FON"),  an OTC Bulletin
Board company.  FON issued 50,000 shares to various  parties  including 5,000 to
the Company in exchange  for TechTel  shares.  The shares were  recorded at zero
cost due to the de minimis value.

Note 3    Property and Equipment

On  October  1,  1999,  the  Company  received  a notice of  proposal  to retain
collateral  pursuant  to a security  agreement  dated  August  14,  1998 in full
satisfaction  of the  obligation  secured  by the  security  agreement  totaling
$275,000 at September  30, 1999.  Equipment,  which had been  recorded at a book
value of $275,000, was repossessed.

Note 4    Note Settlement

On May 30,  2001, a $100,000  promissory  note and related  accrued  interest of
$38,333  from an  unrelated  party  was  settled  for  1,844,444  shares  of the
Company's common stock. (See Note 7(A))

Note 5    Guaranteed Loan and Accrued Expenses

         (A)   Guaranteed Loan

               On  or  about  February  26,  1997  (the  "Effective  Date"),  an
               agreement,   as  amended,  for  wholesale  financing  (the  "Loan
               Agreement") was entered into between Deutsche  Financial Services
               Corporation,  Business Technology Systems, Inc. (the "Borrower"),
               and Colmena Corp. and certain individuals (the "Guarantors"). The
               Loan Agreement provided for inventory financing for the Borrower.
               The loans made under the Loan  Agreement  were secured by a first
               priority   perfected  lien  and  security   interest  in  all  of
               Borrower's  assets,  rights,  and proceeds thereof,  owned at the
               Effective Date or thereafter acquired by the Borrower.

               On August  19,  1998,  an  extension  agreement  (the  "Extension
               Agreement")  was  entered  into  between  the  Borrower  and  the
               Guarantors.

               In 1999, Deutsche Financial Services  Corporation filed a consent
               arbitration  award  based upon  alleged  breach of the  extension
               agreement.  Due  to  matters  relating  to the  execution  of the
               consent  arbitration award, the Company repudiated its signing of
               the  extension  agreement  and has  taken the  position  that the
               consent  arbitration  award  entered  pursuant  to the  extension
               agreement is not legally binding (see Note 9(B)).

               Based on the  contingency to the Company  relating to the initial
               guarantee,  the Company has  recorded  the  liability of $331,000
               plus accrued  interest of $156,000 on its records as of September
               30, 2001.

         (B)   Accrued Expenses

               The  Company  is subject to  current  litigation  relating  to an
               alleged  promissory  note for  $85,606  allegedly  executed  by a
               former  officer of the Company.  The $85,606 has been included in
               general and administrative expenses for 2001 and accrued expenses
               at September 30, 2001 (see Note 9).

               Other  litigation  related  amounts  totaling  $101,300  are also
               included in accrued expenses at September 30, 2001 (see Note 9).


                                     Page F7
<Page>



Note 6    Commitments and Contingencies

         (A)   Consulting Agreement with Related Party

               Under a consulting  agreement with a principal  stockholder  (the
               "Consultant"),  who became a principal  stockholder  by virtue of
               the consulting  agreements discussed herein, as consideration for
               the first 200 hours of  services  provided  (in lieu of  document
               license fees and required cash payments  valued at $20,000),  the
               Company  agreed  to  issue  within  the  first  365  days  of the
               agreement  (the  "Initial   Term")  to  the  Consultant   options
               designated as Class A options to purchase shares of the Company's
               common stock at an  aggregate  exercise  price of $40,000,  in an
               amount  equal to 51% of the  Company's  common  stock at the time
               exercise was completed.

               At the date of the  consulting  agreement,  8,066,326  shares  of
               common  stock would have been  issuable,  had the Class A options
               been  exercised in full on such date. Any increase or decrease in
               the   outstanding   or  reserved   shares   would   result  in  a
               corresponding  adjustment  of the options'  quantity and exercise
               price per share.  The options were  exercisable from the 10th day
               until the 365th day following the effective date.

               For additional  services  provided,  during the initial term, the
               Company agreed to pay the following consideration:

              (a)   If the  Consultant  arranges  or  provides  funding  for the
                    Company on more beneficial terms than those reflected in the
                    Company's  current  principal  financing   agreements,   the
                    Consultant shall be entitled, at its election, to either

                   (i)    a fee  of 25% of the savings achieved, on a continuing

                   (ii)   if equity funding is  provided  through  Consultant or
                          its  affiliates, a  discount of 10% from the bid price
                          for the  subject equity securities if issuable as free
                          trading securities,  or a  discount of 50% if issuable
                          as restricted securities, or

                   (iii)  an  introduction fee  of 5% of the aggregate  proceeds
                          obtained  if  funding  is  provided   by  any  persons
                          introduced to the Company by the Consultant;

              (b)   If the Consultant  generates  business for the Company,  the
                    Consultant  shall be entitled to a commission  of 10% of the
                    gross  income   derived  by  the  Company   therefrom  on  a
                    continuing basis;

              (c)   If  the  Consultant  arranges  for  an  acquisition  by  the
                    Company,  the  Consultant  shall be  entitled  to 10% of the
                    compensation  paid for such  acquisition.  In addition,  the
                    Company will be responsible for the payment of all costs and
                    disbursements  associated  with  the  Consultant's  services
                    subject  to  certain   limitations   and/or  approvals,   as
                    stipulated in the Agreement.

               On January  2,  2000,  the  Agreement  was  amended to modify the
               required  payments to the  Consultant  based on the  Consultant's
               standard  hourly rates,  by permitting  the  Consultant to accept
               payment in  capital  stock at the  conversion  rate of 50% of the
               fair  market  value  of such  stock;  increase  the  Consultant's
               ownership  after exercise of the warrants to 75% from 51% and the
               aggregate exercise price to $80,000 from $40,000,  and to clarify
               the Consultant's  preferential rights to subscribe for additional
               securities  at a purchase  price of 50% of the fair market value.
               The term of the  warrants  was  extended to the later of December
               31, 2002 or the 100th day after the Company  registers  the stock
               underlying any unexercised warrants.


                                     Page F8
<Page>


               On  January  4,  2001,  an  additional   amendment   changed  the
               consulting  fee to  $10,000  per  month,  eliminating  hourly and
               document  licensing  fees,  and changed the discounts as noted in
               item (a)(ii)  above to a discount of 10% from the lowest price at
               which  such  securities  are  offered  to any  other  person,  if
               issuable  as free  trading  securities,  or a discount  of 50% if
               issuable  as  restricted  securities,  and it  eliminated  the 5%
               introduction fee. All provisions from prior agreements  regarding
               issuance  of warrants  remain  intact.  At  September  30,  2001,
               $90,000  was accrued  and  included  in the due to related  party
               balance. (See Note 11)

               See  Note  7  for  warrant   grants  and  exercise   under  these
               agreements.

         (B)   Employment Agreements

               The Company  entered into an employment  agreement on May 4, 1999
               expiring   May  3,  2000  and   automatically   renewing   unless
               terminated,  to employ  its  President.  Compensation  is 200,000
               common  shares of the  Company  each year  payable  only upon the
               365th  day  of  service  (the   "vesting   date"),   and  certain
               commissions or fees based on stipulated  criteria.  Based on this
               contingency the Company  recorded  compensation  expense over the
               one-year  service period based on the estimated fair market value
               on the vesting  date  resulting in the expense of $15,000 in 2001
               and $1,833 in 2000.  The  200,000  shares  issuable  for 2001 are
               based on the service  period  ending in May 2001.  The  agreement
               terminated in May 2001.

               The Company  entered into an employment  agreement on January 12,
               2000 with a term  through the later of  December  31, 2000 or the
               election of a new  Secretary,  to employ its corporate  secretary
               (the  "Secretary").  Compensation  is 24,000 common stock options
               pro rata each year  exercisable  at $0.02  per  share,  beginning
               January 1, 2001  through  December 31,  2001.  In  addition,  the
               Secretary  shall  receive  certain  commissions  or fees based on
               stipulated  criteria.  On January 29,  1999,  the  Secretary  was
               granted  20,000  options;  on January 3, 2000,  the Secretary was
               granted  24,000  options and in January  2001,  the Secretary was
               granted  24,000  options at an increase  exercise price of $0.05.
               The  stock   options  vest   immediately   and  are  recorded  as
               compensation  expense over the service period under the intrinsic
               value  method of APB 25, at the trading  price of the  underlying
               common stock on the vesting date, resulting in no expense in 2001
               and $655 in 2000.

               Effective June 14, 2001,  the Company  entered into an employment
               agreement with an individual (the "President")  pursuant to which
               he is  engaged as the  Company's  president  and chief  executive
               officer.  The  agreement is for a term of one year,  with renewal
               thereafter  from year to year  unless  either the  Company or the
               President  gives at least 60 days notice  prior to the end of the
               then  current  term of an  intention  not to renew,  and contains
               confidentiality and non-competition clauses. As consideration for
               the  President's  services,  the Company has agreed to compensate
               him at the rate of $50.00  per hour of  service  to the  Company,
               plus  reimbursement for all reasonable  expenses related thereto.
               This  compensation  is paid at the end of each month in shares of
               the  Company's  common  stock  calculated  by using  the  average
               closing transaction price of the stock for the month then ended.


                                     Page F9
<Page>



               Effective June 14, 2001,  the Company  entered into an employment
               agreement with an individual (the "Secretary")  pursuant to which
               she is engaged as the Company's vice president and secretary. The
               agreement is for a term of one year, with renewal thereafter from
               year to year unless either the Company or the Secretary  gives at
               least 60 days notice prior to the end of the then current term of
               an  intention  not to renew,  and  contains  confidentiality  and
               non-competition  clauses.  As  consideration  for the Secretary's
               services,  the Company has agreed to compensate  her according to
               the Company's pro rata share  (assuming a 40 hour work week) of a
               base salary of $5,000 per month, for time actually devoted to her
               duties on behalf of the Company. This compensation is paid at the
               end of each  month,  and is paid  partly in cash and partly in an
               amount of the  Company's  common  stock  calculated  by using the
               average closing transaction price of the stock for the month then
               ended.

               Effective June 18, 2001, the Company engaged an individual as its
               general counsel.  As consideration for his services,  the Company
               has agreed to compensate  him according to the Company's pro rata
               share  (based on the number of  Yankees'  clients  for whom he is
               providing  legal  services)  of (1) his  current  base  salary of
               $40,000  per year and (2) $2,500 per month in common  stock.  The
               stock portion is paid at the end of each month, and is paid by an
               equivalent  amount of the  Company's  common stock  calculated by
               using the average closing  transaction price of the stock for the
               month then ended.

         (C)   BellSouth Agreement

               In November 1999, the Company  entered into a two-year  agreement
               with BellSouth Telecommunications,  Inc. to become an alternative
               local exchange  telecommunications company ("CLEC") in stipulated
               states.  The  Company  has not  activated  its service and has no
               obligation  under the agreement  until usage begins.  The Company
               also  currently  does  not have  any of the  required  regulatory
               licenses to offer such  services.  The  agreement's  initial term
               ends  November  22, 2001 and then  continues  from month to month
               unless terminated.  The Company is in the process of renewing the
               BellSouth  agreement  and applying for the  requisite  regulatory
               permits.

Note 7    Stockholders' Deficiency

         (A)   Stock Issuances

               On January 14, 2000 (the "Settlement  Date"), the Company settled
               various  disputes with an individual who was owed legal fees from
               one of the  Company's  divested  subsidiaries  by issuing  34,000
               shares of its common  stock.  A $510  expense was recorded on the
               Settlement  Date based on the trading  price of the common stock.
               The expense  represents the write-off of the amount due from that
               subsidiary to settle its obligation.

               On March 17, 2000 (the "Settlement  Date"), a vendor who provided
               legal  services to a subsidiary of the Company was issued 677,087
               restricted  shares of common  stock of the  Company.  The Company
               recognized  an expense of $27,083  based on the trading  price of
               the common stock on the Settlement Date. The expense represents a
               write-off  of the  amount due from the  subsidiary  to settle its
               obligation.

               On May 4,  2000,  200,000  common  shares  were  issued  under an
               employment agreement (see Note 6).

               On May 11, 2000 (the  "Settlement  Date"),  the  Company  settled
               various  disputes with an  individual  by issuing  136,147 of its
               common shares. The Company recorded an expense of $4,086 based on
               the trading price of the common shares on the Settlement Date.

               On May 31, 2000 (the "Settlement Date"), the Company entered into
               a settlement with a creditor of one of its divested subsidiaries.
               The Company issued 533,333 shares of its common stock. An expense
               of  $24,000  was  recognized  based on the  trading  price of the
               common shares on the Settlement Date. The expense  represents the
               write-off  of the amount due from that  subsidiary  to settle its
               obligation.

               In  September  2000,  200,000  common  shares were issued under a
               consulting agreement. An expense of $4,000 was recognized in 2000
               based on the trading price on the vesting date.



                                    Page F10
<Page>



               On November 8, 2000 (the "Settlement  Date"),  the Company became
               obligated  to  issue   100,000  of  its  common  shares  under  a
               court-ordered  settlement  stipulation.  The  certificate for the
               shares was issued in February 2001 to settle an obligation of Tio
               Mariano Cigar Corp.,  a divested  subsidiary of the Company,  and
               any  other  unknown  obligations  of  the  Company.  The  Company
               recorded a $15,000  settlement expense based on the trading price
               of  the  common  stock  at  the  Settlement   Date.  The  expense
               represents  the write-off of the amount due from that  subsidiary
               to settle its obligation.

               On May 30, 2001 (the  "Settlement  Date"),  the Company settled a
               note  payable of  $100,000  plus  accrued  interest of $38,333 by
               issuing  1,844,444 of the Company's  common stock to the creditor
               who was also a consultant.  Based on the $0.075  trading price of
               the common stock on the Settlement  Date, the Company had no gain
               or  loss  on  settlement.  The  settlement  also  terminated  all
               potential obligations under the consulting  agreement.  (See Note
               4)

               As of May 2001,  the Company is obligated to issue 200,000 common
               shares to a former  president  and current  Chairman of the Board
               under his employment  agreement,  which has terminated  (see Note
               6). The shares are included in common stock issuable.

               In July 2001,  2,000,000 of the 8,670,552  common shares issuable
               at September 30, 2000 under the consultant warrants, were issued.

               In August 2001, 258,501 common shares were issued in exchange for
               accrued officer  compensation of $23,646 based on an average fair
               market  value of stock as  stipulated  in the related  employment
               agreements.  The effective  dates of election by the employees to
               convert  the  accrued  compensation  was June 30, 2001 for 98,891
               shares and July 31, 2001 for 159,610 shares.

               During 2001 and 2000,  7,208,835 and  21,014,574  common  shares,
               respectively,  became subject to the consultant warrants.  Of the
               total  36,549,939  shares of common stock underlying the warrants
               with an  aggregate  exercise  price of  $80,000,  18,274,970  are
               considered as having been issuable based on a $40,000 payment for
               exercise made through September 30, 2001, 8,000,000 of which have
               been issued,  leaving  10,274,970  issuable as of  September  30,
               2001.  The Company cannot issue such shares until its articles of
               incorporation  are  amended to  increase  the  authorized  common
               shares which is scheduled for the annual stockholders' meeting in
               December 2001 (see Notes 6 and 7(C)).

         (B)   Stock Option Plan

               On  February  27,  1998,  the Board of  Directors  of the Company
               adopted the 1998 Stock Option Plan (the "Plan") to provide  added
               incentive for high levels of performance to officers,  directors,
               employees,   consultants,  and  independent  contractors  of  the
               Company.  Options  granted under the plan are designed  either as
               incentive stock options or as  non-qualified  stock options.  The
               plan  will  terminate  on  February  27,  2008,   unless  earlier
               terminated.

               The Stock Option Plan  authorizes  options for the purchase of up
               to an aggregate of 600,000 shares of the Company's  common stock.
               The Company  grants  non-qualified  and incentive  stock options.
               Non-qualified  options  may be  granted to  officers,  employees,
               directors, consultants, independent contractors, or other service
               providers of the Company at an exercise  price  determined by the
               Stock Option Plan  Committee of the Company's  Board of Directors
               (the  "Committee")  which  shall be at least  equal to 85% of the
               fair market  value of the common  stock at the date of the grant.
               Incentive   stock  options  may  only  be  granted  to  officers,
               employees,  and directors,  who are also employees of the Company
               at an exercise price determined by the Committee, which shall not
               be less than 100% of the fair market value of the common stock at
               the  date of  grant  and may not be less  than  110% of the  fair
               market  value of the common stock at the date of grant if granted
               to an  individual  owning  more  than ten  percent  of the  total
               combined voting power.

               Options are exercisable at dates and conditions determined by the
               Committee  at the time of grant.  However,  an option  may not be
               exercised  after the  expiration  of 10 years from the date it is
               granted.  In the case of incentive stock options the term may not
               exceed five years if granted to an option holder owning more than
               ten percent of the total combined voting power.  Through the date
               of the  accompanying  audit  report,  no stock  options have been
               granted under the plan. The plan was terminated in November 2001.



                                    Page F11
<Page>



          (C)  Warrants and Options

               The Company granted options to purchase  296,000 shares of common
               stock to  directors  and  officers in January 2000 at an exercise
               price of $0.02 expiring December 31, 2002. A compensation expense
               of $4,440 was recognized in 2000 under the intrinsic value method
               of APB 25.

               The Company  granted  options to purchase 70,000 shares of common
               stock in March 2000 to a director at an  exercise  price of $0.05
               expiring  January 12, 2002. A compensation  expense of $1,050 was
               recognized in 2000 under APB 25.

               The Company granted options to purchase  400,000 shares of common
               stock to directors  and officers in January  2001, at an exercise
               price of $0.05 per share, for services.  These warrants expire on
               December 31, 2002. No compensation  expense was recognized  since
               the exercise price exceeded the fair market value of the stock on
               the grant date.

               The Company  granted  options to purchase 36,000 shares of common
               stock to two directors in July 2001 at an exercise price of $0.02
               for  services  performed  in  year  2000.  These  options  expire
               December   31,  2002.   An  expense  of  $2,881  was   recognized
               immediately based in the intrinsic value method under APB 25.

               A summary of the options  issued to officers and  directors as of
               September 30, 2001 is presented below:

                                              Number of         Weighted Average
                                               Options           Exercise Price
                                          -------------------   ----------------
          Stock Options
          Balance at beginning of year               666,000      $        .036
          Granted                                    436,000      $        .048
          Exercised                                        -      $           -
          Forfeited                                        -      $           -
                                          -------------------
          Balance at end of year                   1,102,000      $        .040
                                          ===================   ================

          Options exercisable at end of year       1,102,000      $        .040
          Weighted average fair value of options                  $        .034
            granted during the year
                                          ===================   ================



                                    Page F12
<Page>



          The  following  table  summarizes   information   about  officers  and
          directors stock options at September 30, 2001:

<Table>

               <S>               <C>                <C>            <C>                <C>                 <C>

                          Options Outstanding                                             Options Exercisable
          -------------------------------------------------------------------    -----------------------------------

            Range of            Number           Weighted        Weighted             Number            Weighted
            Exercise        Outstanding at       Average         Average           Exercisable at       Average
             Price          September 31,        Remaining        Exercise         September 31,        Exercise
                                2001             Contractual         Price             2001               Price
                                                    Life
          ------------    ------------------    -------------    ------------    -------------------    ------------
          $      0.02          332,000           0.77 Years     $      0.02             332,000         $      0.02
          $      0.05          770,000           1.25 Years            0.05             770,000         $      0.05

</Table>

               The  Company  issued  warrants  for the  purchase  of  8,326,530,
               21,014,574,  and 7,208,835 shares of common stock to a consultant
               in fiscal years 1999, 2000, and 2001,  respectively (see Note 6).
               A consulting  expense of $1,501,378,  $432,125,  and $509,142 was
               recognized in 1999,  2000, and 2001,  respectively,  based on the
               fair value options pricing method of SFAS 123 (see Notes 7(A) and
               6).

          (D)  Pro Forma Disclosures

               In accordance  with Statement of Financial  Accounting  Standards
               123, for options issued to employees,  the Company has elected to
               apply the intrinsic value method of Accounting  Principles  Board
               Opinion  Number  25  and  related  interpretations.  Accordingly,
               $2,881 and $7,323 were  charged to  compensation  during 2001 and
               2000,  respectively,  since the fair  market  value of the common
               stock based upon the trading price at the grant date exceeded the
               exercise price.  Had  compensation  cost been recognized based on
               the fair market value of the options on the grant date consistent
               with  Statement  of  Financial   Accounting  Standards  123,  the
               Company's  change in net loss for the years ended  September  30,
               2001 and 2000 would not have been material.

               The  effect  of  applying   Statement  of  Financial   Accounting
               Standards 123 is not likely to be  representative  of the effects
               on  reported  net income  (loss) for future  years due to,  among
               other things, the effects of vesting.



                                    Page 13
<Page>



Note 8   Income Taxes

There was no current income tax provision for the years ended September 30, 2001
and 2000 due to the Company's net loss.

The Company's tax expense  differs from the "expected" tax expense for the years
ended  September 30, 2001 and 2000  (computed by applying the Federal  Corporate
tax rate of 34 percent to loss before taxes), as follows:

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

Computed "expected" tax expense (benefit)       $   (310,391)      $   (204,576)
Non-deductible stock based compensation              187,227            150,772
Effect of net operating loss carry forwards          123,164             53,804
                                               --------------     --------------
                                                $          -       $          -
                                               ==============     ==============

The tax effects of temporary  differences that give rise to significant portions
of deferred tax assets and  liabilities  at  September  30, 2001 and 2000 are as
follows:




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

Deferred tax assets:
Net operating loss carryforward                 $  1,162,694      $   1,076,879
Stock based compensation                           5,099,419          4,912,192
                                               ---------------   ---------------
Total gross deferred tax assets                    6,262,113          5,989,089
Less valuation allowance                          (6,262,113)        (5,989,089)
                                               ---------------   ---------------
Net deferred tax assets                         $          -      $           -
                                               ===============    ==============

The valuation allowance at September 30, 2000 was 5,989,089. The increase during
2001 was $273,024.

At September  30, 2001,  the Company had net  operating  loss carry  forwards of
approximately  $3,419,688  for income tax  purposes,  available to offset future
taxable  income  expiring  on  various  dates  through  2021.  Usage  of the net
operating  losses may be limited if the Company  undergoes a change in ownership
or change in business.

In assessing the realizability of the deferred tax assets,  management considers
whether it is more likely than not that some portions or all of the deferred tax
assets will not be realized.  The ultimate realization of deferred tax assets is
dependent  upon the  generation of future taxable income or changes in ownership
or  business  during  the  periods  in which the  temporary  differences  become
deductible.  Due to the Company's reorganization (see Note 2) and the ceasing of
all  operations,  except for consulting  activities,  it is more likely than not
that; the deferred tax assets will not be realized.



                                    Page 14
<Page>



Note 9   Legal Matters

          (A)  The Company versus ITA

               In  September  1998,  ITA  defaulted  in its payments to T2U Co.,
               doing  business as RCP, for services  rendered to third  parties,
               payment of which was  collected by ITA.  Thereafter,  RCP and two
               other  corporations,  Psychic Discovery Network,  Inc. ("PDN"), a
               Delaware  corporation  affiliated with the Company through common
               ownership by the principal  shareholder of PDN's parent,  Viatech
               Communications  Group,  Inc.  and  BLJ  Communications,  Inc.,  a
               Florida  corporation,  all  creditors  of ITA,  filed a  petition
               seeking ITA'S involuntary bankruptcy pursuant to Chapter 7 of the
               United States Bankruptcy Code. It is management's  assertion that
               a favorable outcome for the Company is not likely.

          (B)  Filing of Litigation:  Deutsche  Financial  Services  Corporation
               versus BTS, Mr. Peplin, and the Company

               Subsequent  to the  balance  sheet  date,  on  October  8,  1999,
               Deutsche   Financial   Services   Corporation  caused  a  Consent
               Arbitration  Award in the amount of $348,858 plus interest at the
               per annum  rate of prime  plus 6.5% from  August 1, 1998 less any
               sums  received  pursuant to the Extension  Agreement  referred to
               below,  to be entered against the Company and others based on the
               Company's purportedly having consented to such award. The Company
               signed the Consent  Award after  having  signed a loan  extension
               agreement (the  "Extension  Agreement") in August of 1998,  along
               with the Company's  former  President (Mr.  Peplin).  Because the
               Company agreed to the terms of the Extension  Agreement,  and the
               accompanying  Consent Arbitration Award, on the express condition
               that two additional  parties (Mr. and Mrs. Sethi) would sign them
               both and be similarly bound by them, and because these additional
               parties did not sign the  Extension  Agreement by  September  15,
               1998,  the time that the  payment of  $348,858  was due under the
               Extension  Agreement,  the Company repudiated its signing of both
               the  Extension  Agreement  and  the  Consent  Arbitration  Award.
               Accordingly,  the Company has taken the position that the Consent
               Arbitration  Award exceeded the  jurisdiction  of the arbitration
               and consequently, is not binding and enforceable. (See Note 5 for
               contingent   liability   accrued  as  of  September   30,  2001.)
               Nonetheless, to eliminate the uncertainty of on-going litigation,
               the  Company  is  activity  engaged  in  settlement   discussions
               concerning  this matter,  the outcome of which the Company cannot
               predict.

          (C)  Ziff Davis, Inc. vs. BTS

               On  February  12,  1999,  Ziff-Davis  filed an action for damages
               against BTS. A material  judgment was entered against BTS on July
               26, 1999 for $133,348 plus  interest at 10% through  December 31,
               1999 and at the Florida legal rate thereafter. At the time of the
               judgment,  BTS  was  no  longer  a  subsidiary  of  the  Company.
               Management of the Company and its counsel believe that absent the
               ability   to  "pierce   the   corporate   veil"  no   liabilities
               attributable to BTS should affect the Company.

          (D)  Various Creditor Claims

               The  Company  has  judgments  and claims  against it  aggregating
               $186,906.  The  $101,300 was expensed in 1999 and $85,606 in 2001
               and the total of  $186,906  remains  accrued by the Company as of
               September 30, 2001 (See Note 5(B)).




                                    Page F15

<Page>


Note 10  Going Concern

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  Except  for  recently  initiated
consulting activities,  the Company has no other active business operations, has
recurring  losses,  had cash used in  operations  of  $76,782  in 2001 and had a
working capital deficiency of $930,936 and an accumulated deficit of $18,417,978
at September  30,  2001.  These  conditions  raise  substantial  doubt about the
Company's ability to continue as a going concern.

The  Company  maintains  an  agreement  as a  telephone  service  reseller  with
BellSouth  and  management  looks to  expand  on such  operations,  or  locate a
merger/acquisition candidate.


Note 11  Related Parties

During  2001,  the  Company  accrued  $90,000 in  consulting  fees  payable to a
principal stockholder under a consulting agreement. (See Note 6(A))

The Company owes its principal  stockholder $199,201 at September 30, 2001. That
balance consists of $101,346 principle and $7,855 accrued interest pursuant to a
promissory  note expiring  September  2002  (interest at prime plus 2%, 8.28% at
September 20, 2001) and $90,000 of accrued consulting fees (see Note 6(A)).

The  Company  is  employing  its  corporate  counsel  under a shared  employment
agreement with the Company's  principal  stockholder  and consultant  (see Notes
6(A) and 6(B)).  In the event of any conflict of interest,  under the agreement,
the corporate counsel represents the principal stockholder only.

Note 12  Subsequent Events

In November  2001,  24,788 of the shares  issuable at September  30, 2001,  were
issued.

The  Company's  vice-president,  corporate  secretary  and  director  is also an
officer of the consultant and principal stockholder(see Note 6(A)).

                                    Page F16
<Page>

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.

On June  17,  2001,  our  Company  changed  its  auditors  when  the  individual
supervising  our Company's  account left his prior  employer and founded his own
firm,  Salberg &  Company,  P.A.  Such  change  was based  solely on a desire to
maintain  continuity  with the person  most  familiar  with our  Company and its
financial  statements  who left his former  firm and  formed  Salbery & Company,
P.A..Our Company has not had any disagreements  with any accountants  concerning
required financial disclosure.

1.  (i)   The decision to change accountants was approved by our Company's board
          of directors; and

    (ii)  (A)  There were no disagreements with the former  accountant,  whether
               or not  resolved,  on any  matter  of  accounting  principles  or
               practices,  financial statement disclosure,  or auditing scope or
               procedure,  which,  if not  resolved  to the former  accountant's
               satisfaction,  would  have  caused  it to make  reference  to the
               subject  matter of the  disagreement(s)  in  connection  with its
               report; or

          (B)  The former accountant did not advise our Company that:

               1.   internal  controls  necessary to develop reliable  financial
                    statements did not exist; or

               2.   information   had  come  to  the  attention  of  the  former
                    accountant  which made the  accountant  unwilling to rely on
                    management's representations,  or unwilling to be associated
                    with the financial statements prepared by management; or

               3.   that the scope of an audit should be expanded significantly,
                    or that information had come to the  accountant's  attention
                    that the  accountant  had  concluded  would,  or if  further
                    investigated  might,   materially  impact  the  fairness  or
                    reliability  of a  previously  issued  audit  report  or the
                    underlyin financial statements,  or the financial statements
                    issued   or   to   be    issued    covering    the    fiscal
                    period(s)subsequent  to the date of the most recent  audited
                    financial  statements  (including   information  that  might
                    preclude the issuance of an unqualified  audit report),  and
                    the issue was not resolved to the accountant's  satisfaction
                    prior to our Company's decision to change auditors.

(2)  Our Company  provided our former auditors,  Weinberg & Company,  P.A., with
     copy of the report on Form 10-KSB for the year ended September 30, 1999 and
     requested that they furnish a letter  addressed to the  Commission  stating
     whether they agreed with the  statements  made herein and, if not,  stating
     the  respects  in which  they do not agree.  Such  letter  from  Weinberg &
     Company,  P.A.  was filed as an exhibit to our  Company's  Form 8-KSB filed
     with the Commission on June 25, 2001.


                                    Page 39
<PAGE>

PART III

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

Directors and Executive Officers

As of  September  30,  2001,  the  following  persons  served  as our  Company's
directors and executive officers:

Name                      Age (1)  Term (2)   Positions
----                      -------  --------   ---------
Anthony Q. Joffe            59       (3)      Director, chairman of the board of
                                               directors
Charles J. Champion, Jr.    34       (4)      Director, chairperson of the audit
                                               committee
Vanessa H. Lindsey          30       (5)      Vice- President,  Secretary and
                                               Director
Lawrence R. Van Etten       64       (6)      Director

Robert S.  Gigliotti        53       (7)      Director,  member of the  audit
                                               committee
Kevin W.  Dornan            49       (8)      General  Counsel
Edward C.  Dmytryk          55       (9)      President, Chief Executive Officer
                                               and Director

(1)  As of September 30, 2001.

(2)  All  directors  were  elected  for a term ending at such time as his or her
     successor  is  elected  at  the  next  annual   meeting  of  our  Company's
     stockholders  and is  qualified in office,  and all  officers  serve at the
     pleasure of the board of directors,  subject to any  contractual  rights to
     compensation tha may survive their  termination.

(3)  Mr.  Joffe was elected as a member of our  Company's  board of directors on
     January 12, 1999,  as the chairman of our  Company's  board of directors in
     March 1999,  and as our Company's  president on May 4, 1999. He resigned as
     President and Chief  Executive  Officer on May 14, 2001, but remains as its
     Chairman  and a director.

(4)  Mr. Champion was elected as a member of our Company's board of directors on
     January 12, 1999, and as the chairman of our Company's  audit  committee on
     November 4, 1999.

(5)  Mrs. Lindsey was elected as our Company's secretary on January 12, 1999, as
     a member of our Company's  board of directors  effective  February 1, 2000,
     and as our Company's  Vice - President on June 14, 2001.

(6)  Mr. Van Etten was elected as a member of our  Company's  board of directors
     on May 31, 2000.

(7)  Mr.  Gigliotti was elected as a member of our Company's  board of directors
     on December  11, 1997,  and a member of the audit  committee on October 27,
     2000.

(8)  Mr. Dornan was elected as our Company's  general counsel  effective June 18
     2001.

(9)  Mr. Dmytryk was elected as a member of our Company's board of directors and
     as its President and Chief Executive Officer on May 14, 2001.


                                      Page 40
<PAGE>

Biographies of Directors and Executive Officers

Anthony Q. Joffe,  Director and Chairman,  Former  President and Chief Executive
Officer.

     Anthony Q. Joffe,  age 59, has served as a member of our Company's  board o
directors  since  January  12,  1999.  In March 1999,  Mr.  Joffe was elected as
chairman  of the board of  directors  and in May  1999,  he was  elected  as our
Company's president. He resigned as president and chief executive officer on May
14, 2001, but remains as chairman of the board and a director. Mr. Joffe holds a
degree in Aeronautical  Engineering  Management from Boston University,  Boston,
Massachusetts.  Subsequent  to his  graduation,  Mr.  Joffe was  employed as the
Quality Control Manager for Cognitronics  Corporation,  a computer manufacturer,
where he was responsible  for overseeing the United States Air Force  compliance
testing program as well as normal day-to-day management.  In 1967, Mr. Joffe was
employed  by  General  Electric  as a  production  engineer  in  the  insulating
materials  field.  In 1970, Mr. Joffe was employed by King's  Electronics,  a RF
coaxial connector manufacturer,  where he was responsible for major accounts and
guided the field sales  force.  In 1973,  Mr.  Joffe was one of the founders and
vice-president  of J.S. Love  Associates,  Inc., a commodity  brokerage house no
longer in operation  (then  headquartered  in New York City). In 1976, Mr. Joffe
formed and served as president and chief  operating  officer of London  Futures,
Ltd., a commodity  broker with 275  employees in nine offices.  London  Futures,
Ltd.  was closed in 1979 and Mr.  Joffe moved to Florida.  From 1979 until 1986,
Mr.  Joffe was vice  president of Gramco  Holdings,  Inc.  (and its  predecessor
companies),  a firm  that  owned and  operated  a variety  of  companies.  These
companies included five cemeteries and funeral homes in Broward County, Florida,
a  33-acre  marina,  a  general  contracting  company,  a boat  title  insurance
underwriting  firm,  three  restaurants,  a real  estate  brokerage  company,  a
mortgage brokerage company and a leasing company. His responsibilities  included
supervision  of the day-to- day operations  and new business  development.  From
1986 to 1991,  Mr. Joffe served as consultant  and/or  principal to a variety of
small businesses in the South Florida area. In 1989 he became president of Windy
City  Capital  Corp.,  a  small  publicly  traded,  reported  company  that  was
originally  formed as a "blind  pool" for the  express  purpose  of  finding  an
acquisition  candidate.  Eventually,  a reverse  merger was  consummated  with a
computer software company from Pennsylvania. Mr. Joffe then took the position of
president of Rare Earth Metals,  Inc. (and its predecessor  companies),  a small
publicly traded company that purchased Spinecare,  Inc., a medical clinic in New
York.  Spinecare  changed its name to Americare  Health Group and  relocated its
legal domicile to Delaware. Since March 1993, Mr. Joffe has performed consulting
services for First Commodities, Inc., an Atlanta based commodities firm, and has
been involved in  fundraising  for the Multiple  Sclerosis  Foundation.  He also
assisted  Digital  Interactive  Associates and IVDS  Partnership  with financial
affairs in conjunction with their  successful bid to the Federal  Communications
Commission for licenses in the cities of Atlanta, Georgia, Minneapolis/St. Paul,
Minnesota,  and Kansas City, Missouri. Mr. Joffe served as the interim president
of Madison Sports & Entertainment  Group, Inc., a publicly held Utah corporation
then  headquartered in Fort Lauderdale,  Florida,  from September 1, 1994, until
February  16,  1996,  during  which time he became its vice  president  and vice
chairman,  chief operating officer,  treasurer and chief financial officer until
he  resigned.  Since 1996,  he has founded a boat  financing  company and joined
NorthStar Capital ("NorthStar") as Managing Director. NorthStar is an investment
banking firm with offices in Stamford,  Connecticut and Boca Raton, Florida that
specializes in assisting small to mid-size private and publicly traded companies
with business and financial  planning,  acquisition and  divestiture,  financial
public relations and market position advice,  and treasury  services.  Mr. Joffe
served  as a member  of the  Board of  Directors  of  AmeriNet  Group.com,  Inc.
(currently Fields Technologies, Inc.), a publicly held Delaware corporation from
November 1998 to June 2001.


                                     Page 41


<PAGE>


Edward C. Dmytryk, Director, President and Chief Executive Officer.

     Mr. Dmytryk, age 55, serves as a member of our Company's board of directors
and as the president and chief executive officer since May 14, 2001. Mr. Dmytryk
graduated  summa cum laude  from The  Citadel,  the  Military  College  of South
Carolina, in 1968 with a bachelor of science degree in business  administration.
From 1968 until 1973,  Mr.  Dmytryk  served in the United  States Air Force as a
fighter and  instructor  pilot,  attaining the rank of captain  (regular  United
States  Air  Force).  From 1973 until  1975,  he served as a sales  manager  for
Wulfsberg  Electronics,  Inc., a national avionics firm specializing in airborne
radio telephone  systems and headquartered in Overland Park,  Kansas.  From 1976
until 1981,  he served as a regional  sales  manager for Polaroid  Corporation a
multi faceted imaging company  headquartered in Cambridge,  Massachusetts.  From
1981 until 1985,  he was vice  president  of sales for West  Chemical,  Inc.,  a
company   involved  in  the   manufacture  of  animal  health  feed   additives,
pharmaceutical   products,   iodophor   concentrates  and  specialty  chemicals,
headquartered in Princeton,  New Jersey. From 1985 until 1986, he served as vice
president  for sales and  marketing  at  Animed,  Inc.,  a  veterinary  products
manufacturing  company specializing in sales to veterinarians,  headquartered in
Roslyn, New York. From 1987 until 1988, he was president of Mac's Snacks,  Inc.,
the world's  largest  processor of pork rinds,  headquartered  in Grand Prairie,
Texas.  From 1988  until  1995,  he served as the chief  operating  officer  for
Bollinger  Industries,  Inc., a fitness products  manufacturer  headquartered in
Irvine,  Texas.  Since  June  1990,  he has been the owner  and chief  executive
officer  of   Benchmark   Industries,   Inc.,  a  metal   fabrications   company
headquartered in Fort Worth,  Texas.  Since September 1999, he has served as the
president of GNR Health Systems, Inc., a physical therapy products sales company
located in Ocala,  Florida.  In addition,  he currently  serves as president and
chief financial officer of Sohn, Inc.,  located in Roswell,  Georgia,  a company
specializing  in  marketing,  sales,  and  installing  fitness  products  in the
hospitality  and  apartment  market  (fitness  centers  in  hotels,  condominium
complexes,  and apartments  throughout the United States.) From December 2000 to
June 2001,  he served as  president  and chief  executive  officer  of  AmeriNet
Group.com, Inc. (currently Fields Technologies,  Inc.), a publicly held Delaware
corporation, and as a member of its board of directors from 1999 to the present.

Charles J. Champion, Director, audit committee chairperson

     Charles J.  Champion,  Jr., age 34, has served as a member of our Company's
board of  directors  since  January 12,  1999,  and has the  chairperson  of our
Company's audit  committee  since January 29, 1999. Mr. Champion  graduated from
Florida State University in 1988 with a bachelor's degree in political  science.
Following graduation,  he joined the Champion Group of Companies, a family owned
enterprise  involved in the insurance and financial  industries.  In 1991, while
continuing his  association  with the Champion  Group of Companies,  he became a
vice president with Sunshine Securities Corporation, a licensed broker dealer in
securities and a member of the National Association of Securities Dealers,  Inc.
Mr. Champion purchased Sunshine Securities Corporation in 1996, at which time it
became  one  of the  Champion  Group  of  Companies.  He  then  became  Sunshine
Securities  Corporation's president, and its business capabilities were expanded
to include  practice as a registered  investment  advisor.  Sunshine  Securities
Corporation's  name was  changed to  Champion  Capital  Corporation  on or about
February  5, 2000.  Mr.  Champion  holds a number of  insurance  and  securities
licenses,  including  series 7 and series 24 securities  licenses.  Mr. Champion
served  as a member  of the  board of  directors  of  AmeriNet  Group.com,  Inc.
(currently  Fields  Technologies,  Inc.), a publicly held Delaware  corporation,
from December 2000 to June 2001.

Vanessa H. Lindsey, Vice-President, secretary and director.

Vanessa H. Lindsey,  age 30, was elected  vice-president  of our Company on June
14, 2001, has served as our Company's secretary and chief administrative officer
since  January  1999 and was  elected  as a  member  of its  board of  directors
effective  February  1, 2000.  Mrs.  Lindsey  was  employed  by Accell  Plumbing
Systems,  Inc.,  an Ohio  corporation,  as that  company's  office  manager  and
bookkeeper  from 1993 to 1995.  Since  1995 she has been  employed  as the chief
administrative  officer of Diversified  Corporate  Consulting  Group,  L.L.C., a
Delaware limited liability company engaged in providing  diversified  consulting
services and in filing EDGARized documents for clients with the Commission.

                                     Page 42


<PAGE>

Since 1996 she has been  employed by the  Southeast  Companies,  Inc., a Florida
corporation,  involved in the entertainment  industry, in business and political
consulting  and  as  a  licensed  mortgage  brokerage  company,   as  its  chief
administrative officer and currently serves as its vice president and secretary.
She is also the  secretary  and  chief  administrative  officer  for The  Yankee
Companies,  Inc.,  which serves as a strategic  consultant to our Company.  Mrs.
Lindsey held the position of secretary of The Marion  County  Libertarian  Party
and was the Campaign Treasurer for the Cyndi Calvo for State Senate,  District 8
Campaign from 1998 to 2000.  From November 11, 1999 to June 13, 2001, she served
as secretary for AmeriNet Group.com,  Inc.(currently Fields Technologies, Inc.),
a publicly  held  Delaware  corporation,  and served as a member of its board of
directors  from April 6, 2000 to June 13,  2001.  Since  January  2001,  she has
served  as the  secretary  and  as a  member  of  the  board  of  directors  for
Explorations Group, Inc., a Delaware corporation.

Robert S. Gigliotti, Director, audit committee member.

Robert S. Gigliotti, age 53, served as our Company's secretary from November 10,
1997 until January 12, 1999,  serves as a member of our board of directors since
December 11, 1997 and as a member of our Company's audit committee since May 30,
2000. In 1970, Mr. Gigliotti  received a bachelor's degree in business from Alma
College,  located in Alma, Michigan. He received his certified public accountant
license in 1972 and joined the firm of Perrin,  Fordree & Company, P.C. of Troy,
Michigan in 1976 after six years in the tax  department of the Detroit office of
Arthur Andersen & Company.  Mr.  Gigliotti  currently serves as the managing tax
partner of Perrin, Fordree & Company. Mr. Gigliotti's specialties include estate
and financial planning, franchising and corporate taxation.

Lawrence R. Van Etten, Director

Mr. Van Etten,  age 64,was elected as member of our Company's board of directors
on May 31,  2000.  Mr.  Van  Etten  graduated  from New York  Military  Academy,
Cornwall  On  Hudson,  New  York  in  1954  and  attended   Gettysburg  College,
Gettysburg,  Pennsylvania from 1954 -1956 and Marist College,  Poughkeepsie, New
York from 1981-1982,  He was employed by IBM from 1956 until 1987,  during which
time he held several senior  management  positions  including  Corporate Control
Operations  Manager,  Corporate  Scheduling  Manager and  Director of  Logistics
Special  Processes.  Since leaving IBM, Mr. Van Etten has served as an executive
with several companies in the United States and Canada (Vice President - Remtec,
Inc. Chambly, QC - Manufacturer of Refueling Vehicles 1987-1988;  Vice President
- The  Enterprise  Group -  Clearwater  Florida -  Development  of New  Business
Opportunities  1993-1994;  Vice President - International Digital Communications
Systems,  Inc. - Miami,  FL -  Telecommunications  Sales - 1996-1998;  President
Techtel  Communications,  Inc.,  Pompano Beach, FL- CLEC Service Provider 1998 -
1999; and he owned and managed his own consulting  company LVE & Associates - US
& Canada - Several long term  contracts  with Toyada  Gosei,  Best Glove Canada,
Remtec, Inc. Prestige Auto & Strategic Health Development Corporation).  Much of
Mr. Van  Etten's  recent  work  experience  has dealt with  business  management
systems,  materials  management,   management  development,   personal  computer
application  software  and the  Internet.  From May 22, 2000 until  December 22,
2000, Mr. Van Etten served as acting  president and chief operating  officer and
until June 13, 2001 as a member of the board of directors of AmeriNet Group.com,
Inc.   (currently   Fields   Technologies,   Inc.),  a  publicly  held  Delaware
corporation.

Kevin W. Dornan, Esquire, General Counsel

Kevin W. Dornan, age 49, was engaged as our Company's general counsel as of June
18, 2001.  He is a graduate of the Johns Hopkins  University  (Bachelor of Arts,
philosophy,  1973);  the  University of North Carolina at Chapel Hill (Master of
Arts,  philosophy,  1975);  the Catholic  University of America (Master of Arts,
religious  studies,  1979);  and the University of Maryland School of Law (Juris
Doctor,  1987),  where he served as  editor-in-chief of the 1986-87 Maryland Law
Review. During law school, he also served as a judicial intern for The Honorable
James R. Miller,  Jr., of the U.S.  District Court for the District of Maryland.
After practicing from 1987-1996 in Washington, DC and Maryland, primarily in the
areas of corporate and commercial transactions and litigation, Mr. Dornan became
the  general  counsel  for  DWA  Corp.  ,a  telecommunications  company  in  St.
Augustine,  Florida.  In June 2001, he became the general counsel for The Yankee
Companies,  Inc.  He is  admitted  to  practice  before  the Court of Appeals of
Maryland (1988),  the District of Columbia Court of Appeals (1993);  the Supreme
Court of Florida (1996); the U.S. Courts of Appeals for the District of Columbia
(1988), Second (1988), Fourth (1988), and Eleventh (1996) Circuits; and the U.S.
District  Courts for the  District of Maryland  (1988),  the Eastern and Western
Districts of Arkansas (1992),  the District of Columbia  (1994),  and the Middle
District  of Florida  (1997).  Mr.  Dornan  has served  since 1996 as an adjunct
professor  of  business  ethics  at Saint  Leo  University  in Saint Leo and St.
Augustine, Florida, and as  an  adjunct professor of management  and business at
Eckerd College in St. Petersburg, Florida. In 1998, he was named to Who's Who in
American Law.
                                     Page 43


<PAGE>


Other Material Personnel

In addition to our Company's directors and executive officers,  since January of
1999, William A. Calvo, III and Leonard Miles Tucker have also provided material
services to our Company  through  Yankees,  in which they serve as directors and
executive  officers and which they and their families own.  Because  Yankees has
the right to acquire up to 75% of our  Company's  securities,  it should also be
deemed a control person of our Company.

Family Relationships.

There are no family relationships among the current officers and director of our
Company.

Involvement in Certain Legal Proceedings.

Based on information provided in response to our Company's legal counsel, except
as otherwise  disclosed in this  report,  during the five year period  ending on
September 30, 2001, no current  director,  person nominated to become a director
or executive officer,  and no promoter or control person of our Company has been
a party to or the subject of:

(1)  Any  bankruptcy  petition  filed by or against  any  business of which such
     person was a general partner or executive officer either at the time of the
     bankruptcy or within two year prior to that time;

(2)  Any  conviction  in a criminal  proceeding or has been subject to a pending
     criminal   proceeding   (excluding   traffic  violations  and  other  minor
     offenses);

(3)  Any order,  judgment,  or decree, not subsequently  reversed,  suspended or
     vacated, of any court of competent jurisdiction, permanently or temporarily
     enjoining,  barring, suspending o otherwise limiting his or her involvement
     in any type of business, securities or banking activities; an

(4)  Been found by a court of competent  jurisdiction  (in a civil action),  the
     Commission or the Commodity  Futures Trading  Commission to have violated a
     federal or state  securities or  commodities  law, and the judgment has not
     been reversed, suspended, or vacated.

Compliance with Section 16(a) of the Exchange Act

To the best of our  Company's  knowledge,  no one subject to Section 16(a) o the
Exchange Act engaged in any  transactions  in our  Company's  securities  during
fiscal  year 2001,  except  with  reference  to receipt of  securities  from our
Company as described in this report.

ITEM 10. EXECUTIVE COMPENSATION.

Summary Compensation Table

<Table>

<S>             <C>      <C>       <C>     <C>       <C>           <C>              <C>        <C>
                Annual Compensation                 Awards                        Payouts
                                                                  Securities
                                          Other                   Underlying        Long         All
Name and                                  Annual    Restricted    Options &         Term
Principal                                 Compen-   Stock         Stock Apprecia-   Incentive    Compensation
Position        Year    Salary    Bonus   sation    Awards        tion Rights       Payouts
---------       ----    ------    -----   ------    ---------     --------------    ---------    -------------
Mr. Joffe (1)   2000    *         *       *         200,000 (3)   *                 *            *
Mr. Joffe (1)   2001    *         *       *         200,000 (3)   *                 *            *
Mr. Dmytryk     2001    (2)       *       *         *             *                 *            *
Mrs. Lindsey    2001    (2)       *       *         *             *                 *            *
Mr. Dornan      2001    (2)       *       *         *             *                 *            *


</Table>

                                    Page 44
<PAGE>


(1)  Mr.  Joffe was elected as a member of our  Company's  board of directors on
     January 12, 1999,  as the chairman of our  Company's  board of directors in
     March  1999,  as our  Company's  president  on May 4, 1999 and  resigned as
     president and chief executive officer on May 14, 2001.

(2)  See  Employment  Contracts,  Termination of Employment and Change in Contro
     Arrangements section below.

(3)  Shares of common stock.

 *   Not Applicable


Options and Stock Appreciation Rights Grants Table

For Fiscal Year Ended September 30, 2001:

              Quantity  of        Percentage  of  Total
              Securities          Options  or  Stock
              Underlying          Appreciation          Exercise
              Options & Stock     Rights Granted        or Base
              Appreciation        to Employees          Price Per  Expiration
Name          Rights  Granted     In Fiscal Year        Share      Date
----          ---------------     -----------------     --------   -----------
None

Aggregated  Option & Stock  Appreciation  Right  Exercises  and Fiscal  Year-End
Options & Stock Appreciation Rights Value Table

                                          Number of
                                          Securities
                                          Underlying
                                          Options &        Value of
                                          Stock            Unexercised
                                          Appreciation     In-the-Money
                Shares                    Rights at        Options & Stock
                Acquired      Value       Fiscal           Appreciation Rights
Name            On Exercise   Realized    Year End         at Fiscal Year End
----            -----------   --------    -------------    -------------------
None



Long Term Incentive Plan Awards Table

Long Term Incentive Plans - Awards in Last Fiscal Year

                                 Performance
                     Number      or Other
Name                 of Units    Period  Until
of                   or Other    Maturation
Executive Officer    Rights      or Payout       Threshold   Target  Maximum
-----------------    --------    -------------   ---------   ------  -------
Not Applicable


                                     Page 45


<PAGE>



Compensation of Directors

Standard Arrangements

During the fiscal  year that  started on October 1, 2000 and ended on  September
30,  2001,  the members of our  Company's  board of directors  were  compensated
through the grant of warrants to purchase shares of our Company's  common stock,
as disclosed in the following table:

Date of Expiration Exe

                               Date of    Expiration   Exercise     Underlying
Name & Category                Option     Date         Price        Shares
---------------                -------    ----------   --------     -----------
Anthony Q. Joffe (1)             (2)        (3)        $0.05        100,000
Charles J. Champion, Jr.(1)      (2)        (3)        $0.05        100,000
Robert S. Gigliotti (1)          (2)        (3)        $0.05        100,000
Vanessa H. Lindsey (1)           (2)        (3)        $0.05        100,000
David K. Cantley                 (4)        (3)        $0.02          8,000
Lawrence R. Van Etten            (4)        (3)        $0.02         28,000



(1)  Directors  who have served on the board for one or more years and  received
     additional compensation

(2)  January 11, 2001

(3)  December 31, 2002 (4) July 27, 2001.

Employment   Contracts,   Termination   of  Employment  and  Change  in  Control
Arrangements.

During the fiscal  year that  started on October 1, 2000 and ended on  September
30, 2001, our Company had no employment contracts,  termination of employment or
change in control arrangements with any of its executive officers, except as set
forth below.

Employment Agreements

Mr. Joffe

On May 4, 1999, our Company's board of directors  elected Anthony Q. Joff as its
president.  The  agreement was for a term of one year,  with renewal  thereafter
from year to year unless the  Company or Mr.  Joffe gave at least 60 days notice
prior to the end of the  then-current  term of an  intention  not to renew,  and
contained  confidentiality  & non-  competition  clauses.  Mr.  Joffe  was to be
compensated for his services with 200,000 shares of the Company's  common stock,
provided he remained  employed for 365 consecutive  days, was not discharged for
cause, and complied with all of his obligations under the employment  agreement.
Mr. Joffe served for a total of two years and was issued  224,788  common shares
and 175,212 common shares are issuable. A copy of the Joffe employment agreement
was filed as an  exhibit  to our  Company's  report on Form  10-KSB for the year
ended September 30, 1998.

Mrs. Lindsey

On January 12, 1999, our Company's board of directors elected Vanessa H. Lindsey
as its secretary. Our Company agreed to compensate Mrs. Lindsey for her services
as secretary  through  December 31, 1999 by granting her a common stock purchase
warrant to purchase  20,000 shares of our  Company's  common stock at a price of
$0.05 per share,  exercisable  during the period starting on January 1, 2000 and
ending on January 12,2002.  On January 3, 2000, our Company agreed to compensate
Mrs. Lindsey for her services as secretary through December 31, 2000 by granting
her a  non-qualified  stock option to purchase  24,000  shares of our  Company's
common  stock at a price of $0.02  per  share,  exercisable  during  the  period
starting  on January  1, 2001 and ending on  December  31,  2002.  A copy of the
agreement  to serve as  corporate  secretary  was  filed  as an  exhibit  to our
Company's report on Form 10-KSB for the year ended September 30, 1998.

Effective June 14, 2001, our Company  entered into an employment  agreement with
Mrs.  Lindsey  pursuant to which she is engaged as our Company's  vice president
and secretary. The agreement is for a term of one year, with renewal  thereafter

                                     Page 46


<PAGE>

from year to year unless  either our Company or Mrs.  Lindsey  gives at least 60
days' notice prior to the end of the  then-current  term of an intention  not to
renew,   and  contains   confidentiality   and   non-competition   clauses.   As
consideration for Mrs. Lindsey's services,  our Company has agreed to compensate
her according to our Company's pro rata share  (assuming a 40 hour work week) of
a base salary of $5,000.00 per month, for time actually devoted to her duties on
behalf of our Company.  This  compensation is paid at the end of each month, and
is paid  partly in cash and partly in an amount of our  Company's  common  stock
calculated by using the average closing  transaction  price of the stock for the
month then-ended.  A copy of Mrs. Lindsey's employment agreement was filed as an
exhibit to our Company's  report on Form 10-KSB for the year ended September 30,
1999.

Mr. Dmytryk

Effective June 14, 2001, our Company  entered into an employment  agreement with
Mr. Dmytryk pursuant to which he is engaged as our Company's president and chief
executive  officer.  The  agreement  is for a term  of one  year,  with  renewal
thereafter  from year to year unless either our Company or Mr.  Dmytryk gives at
least 60 days' notice prior to the end of the then-current  term of an intention
not to renew,  and contains  confidentiality  and  non-competition  clauses.  As
consideration for Mr. Dmytryk's  services,  our Company has agreed to compensate
him  at the  rate  of  $50.00  per  hour  for  services  to  our  Company,  plus
reimbursement for all reasonable expenses related thereto.  This compensation is
paid at the end of each month, and is currently paid by an equivalent  amount of
our Company's common stock  calculated by using the average closing  transaction
price of the stock for the month then-ended.  A copy of Mr. Dmytryk's employment
agreement was filed as an exhibit to our Company's report on Form 10-KSB for the
year ended September 30, 1999.

Mr. Dornan

Effective June 18, 2001, our Company  engaged Kevin W. Dornan,  Esquire,  as its
general counsel.  As consideration  for his services,  our Company has agreed to
compensate him according to our Company's pro rata share (based on the number of
Yankees'  clients for whom he is  providing  legal  services) of (1) his current
base salary of $40,000.00  per year and (2) $2,500.00 per month in common stock.
The stock portion is paid at the end of each month, and is paid by an equivalent
amount of our Company's  common stock  calculated  by using the average  closing
transaction price of the stock for the month then-ended.  A copy of Mr. Dornan's
engagement  agreement  was filed as an exhibit to our  Company's  report on Form
10-KSB for the year ended September 30, 1999.

Report of Re-Pricing of Options or Stock Appreciation Rights

During the report period,  to the best knowledge of our Company,  the management
did not re-price any options or stock appreciation  rights previously granted to
any of our Company's executive officers,  whether by amendment,  cancellation or
replacement grants, or any other means.

Except as disclosed  below, our Company has not adjusted or amended the exercise
price of stock options or stock appreciation rights previously awarded to any of
the  named  directors  or  executive   officers,   whether  through   amendment,
cancellation  or  replacement  grants,  or any  other  means,  nor are any  such
adjustments or amendments currently  contemplated.  During the period commencing
on January 1, 2001 and ending on the date of this  report,  our Company took the
following actions:

1.   On January 4, 2001,  our Company and Yankees  entered into a new  strategic
     consulting  agreement,  pursuant to which Yankees will bill at its standard
     hourly  rates  for all  work as t which a prior  written  arrangement  with
     different  terms has not been entered  into;  however,  no hourly  billable
     services will be provided except at the Client's specific request,  and the
     service of Yankees' directors,  Messrs.  William A. Calvo, III, and Leonard
     Miles Tucker,  will be provided at the fixed rate of $10,000 per month,  in
     the aggregate,  (a substantial  reduction in historical  fees accrued on an
     hourly basis) payment for which will be deferred and accrued until adequate
     funds  become  available.  The  agreement  also  permits  Yankees to accept
     payment in capital stock at the  conversion  rate of 50% of the fair market
     value of such stock.

2.   On or about January 12, 2001, the expiration date of the options granted to
     the members of our Company's board of directors and its executive  officers
     who  assumed  office on and after  January 12,  1999,  was  extended  until
     January 12, 2002.


                                     Page 47


<PAGE>

Item 11. Security Ownership of Certain Beneficial Owners and Management.

As of the end of the Report Period

     As of September 30, 2001, our Company's only currently  outstanding  voting
securities  were  19,975,212  shares of common  stock,  $0.01  par  value.  As a
material subsequent event, as of the close of business on November 15, 2001, our
Company had 20,000,000 shares of common stock outstanding.  The following tables
disclose  information  concerning  ownership  of our  Company's  common stock by
officers,  directors and principal  stockholders (holders of more than 5% of our
Company's common stock) as of November 15, 2001.  Because our Company  currently
has no additional shares available for issuance, the following two tables assume
that no person currently has the right to acquire  additional  securities of our
Company within sixty days as specified in Commission Rule 13(d)(1). Nonetheless,
the associated footnotes indicate the number of shares to which such persons may
become entitled in the event our Company's stockholders authorize an increase in
capitalization  at the Annual Meeting of  Stockholders  scheduled for January 4,
2002.

         All footnotes to the tables follow the second table.

Security Ownership of Certain Beneficial Owners

     As of November 15, 2001, the following persons (including any "group") are,
based on information  available to our Company,  beneficial  owners of more than
five  percent  of  our  Company's   common  stock  (its  only  class  of  voting
securities).

                                                Amount
                                                and Nature            Percent
                                                Of Beneficial         of
Name and Address of Beneficial Owner (1)        Ownership (2)         Class

Tucker Family Spendthrift Trust (3)             4,326,250             21.6%
2500 North Military Trail, Suite 225;
Boca Raton, Florida 33431.

The Yankee Companies, Inc.
and affiliates (3) (4) (5)                       (4)                  (4)
2500 North Military Trail, Suite 225;
Boca Raton, Florida 33431.

Calvo Family Spendthrift Trust (5)              3,756,250             18.8%
1941 Southeast 51st Terrace;
Ocala, Florida 34471

Richard C. Peplin and affiliates (13)           2,202,041             11%
25100 Detroit Road, Westlake, Ohio 44145

SBV Holdings, Inc.                              1,844,444              9.2%
3350 NW Boca Raton Blvd.,
Suite B38, Boca Raton, FL 33431


Security Ownership of Management

     As of November 15, 2001, the following Table discloses our Company's common
stock (the only  outstanding  class of equity  securities  for our Company,  its
parents or  subsidiaries  held by persons  other  than our  Company)  other than
directors' qualifying shares,  beneficially owned by all directors and nominees,
naming them each; each of the named executive officers as defined in Item 402(a)
of Commission  Regulation  S-B; and all directors and executive  officers of our
Company as a group,  without  naming them.  The table shows in the second column
the total number of shares  currently  owned and in the third column the percent
owned.


                                    Page 48
<PAGE>

Name and Address of                    Amount         Nature of         Percent
Beneficial                             Of Equity      Beneficial        of
Owner (1)                              Owned          Ownership         Class

Robert S. Gigliotti                    90,000           (6)              0.5%
901 Wilshire Drive,
Suite 400; Troy, Michigan 48084

Anthony Q. Joffe                      224,788           (7)              1.1%
101 Southwest 11th Avenue;
Boca Raton, Florida 33486

Edward C. Dmytryk                      91,055           (8)              0.5%
315 Premier Vista Way;
St. Augustine, Florida 32080

Kevin W. Dornan, Esquire               88,068           (9)              0.5%
5001 Southwest 20th Street;
Ocala, Florida 34474

Vanessa H. Lindsey                    279,378          (10)              1.4%
340 Southeast 55th Avenue;
Ocala, Florida 34471

Charles J. Champion                      (11)          (11)              (11)
Post Office Box 952259;
Lake Mary, Florida 32795

Lawrence R. Van Etten                 136,147          (12)              0.7%
1601 North 15th Terrace;
Hollywood, Florida 33020

All officers and directors
as a group                             909,436          (2)            4.5%(14)

               Footnotes to Tables of Principal Stockholders and
                   Tables of Executive Officers and Directors

The following footnotes apply to the preceding two tables:

(1)  This table pertains to common stock, our Company's only outstanding equity
     securities.

(2)  Beneficial and record.

(3)  The Tucker  family is comprised of Michelle  Tucker,  Leonard Miles Tucker,
     her husband,  Shayna and Montana, their minor daughters and Jerrold Tucker,
     Mr. Tucker's  father.  Mr. Jerrold Tucker holds 470,000 shares in trust for
     Shayna and Montana,  his minor  granddaughters;  100,000 shares are held by
     Blue Lake Capital Corp., a Florida  corporation  owned by Mrs. Tucker;  and
     3,756,250 shares are held by the Tucker Family Spendthrift Trust.

(4)  The Yankee Companies, Inc., is a Florida corporation, 50% of which is owned
     by members  of the  Tucker  family and 50% which is owned by members of the
     Calvo family.  Yankees  currently  holds no shares of our Company's  stock,
     having  distributed all shares it has acquired to date to its shareholders.
     At such time as a sufficient  increase in  capitalization  is authorized by
     our  Company's  stockholders,  Yankees  would  have the  right  to  acquire
     36,549,939 shares if it fully exercised its warrant.

(5)  The Calvo family is comprised  of Cyndi Calvo;  William A. Calvo,  III, her
     husband;  William,  Alexander and Edward,  their minor sons. All the shares
     are held by the Calvo Family Spendthrift Trust.

(6)  Mr.  Gigliotti has served as a member of our  Company's  board of directors
     since December 11, 1997, as a member of the audit  committee since November
     4, 1999,  and as its  secretary  from  November 10, 1997 until  January 12,
     1999. Mr.  Gigliotti  currently holds 90,000 shares,  and holds warrants to
     acquire  230,000  shares that would  become  exercisable  if our  Company's
     authorized capital is sufficiently increased.

(7)  Mr. Joffe has served as a member of our Company's  board of directors since
     January 12, 1999, and as its president and chief executive officer from May
     4, 1999 to May 14, 2001. Mr. Joffe currently  holds 224,788 shares,  and if
     our Company's authorized capital is sufficiently  increased,  would receive
     an  additional  175,212  shares for his services  through May 2001. He also
     holds warrants to acquire  242,000 shares that would become  exercisable if
     our Company's authorized capital is sufficiently increased.

(8)  Mr. Dmytryk was elected as a member of our Company's board of directors and
     as its president and chief  executive  officer on May 14, 2001. Mr. Dmytryk
     currently holds 91,055 shares,  and if our Company's  authorized capital is
     sufficiently  increased,  would  receive an additional  332,434  shares for
     services rendered to our Company to date.

                                     Page 49
<PAGE>



(9)  Mr. Dornan was elected as our Company's  general counsel effective June 18,
     2001.  Mr.  Dornan  currently  holds 88,068  shares,  and if our  Company's
     authorized capital is sufficiently  increased,  would receive an additional
     102,381 shares for services rendered to our Company to date.

(10) Mrs. Lindsey was elected as our Company's secretary on January 12, 1999, as
     a member of our Company's  board of directors  effective  February 1, 2000,
     and as its  Vice-President  on June 14, 2001. Mrs. Lindsey  currently holds
     279,378  shares,  and if our Company's  authorized  capital is sufficiently
     increased, would receive an additional 159,310 shares for services rendered
     to our Company to date. She also holds  warrants to acquire  242,000 shares
     that  would  become  exercisable  if our  Company's  authorized  capital is
     sufficiently increased.

(11) Mr.  Champion  has served as a member of our  Company's  board of directors
     since January 12, 1999. Mr.  Champion  currently owns no shares,  but holds
     warrants to acquire  242,000  shares that would become  exercisable  if our
     Company's authorized capital is sufficiently increased.

(12) Mr. Van Etten was elected as a member of our  Company's  board of directors
     on May 31, 2000.  Mr. Van Etten  currently  holds 136,147  shares and holds
     warrants to acquire  28,000  shares that would  become  exercisable  if our
     Company's authorized capital is sufficiently increased.

(13) Mr. Peplin served as our Company's president, chief executive officer, as a
     member of our  Company's  board of directors and as its chair from November
     10, 1997 until May 4, 1999 (except that he resigned as chairman on March 3,
     1999).  Lakewood  Mfg.  Co.  is an entity  controlled  by Mr.  Peplin,  and
     Lakewood Mfg. Co.'s 793,944 shares are therefore  included in Mr.  Peplin's
     total number of shares shown in the table.

(14) Upon a sufficient increase in our Company's capitalization, if all officers
     and  directors  were  issued  the  shares to which  they are  entitled  for
     services  rendered,  and if they  exercised all  warrants,  as a group they
     would own 2,629,773, which would represent approximately 4.4 % of the class
     at that time.

Changes in Control

     As of the end of the report period , material changes in control have taken
place (see "Part III,  Item 9,  Directors,  Executive  Officers,  Promoters  and
Control Persons ..." for a discussion of how current  management assumed control
of our  Company  starting  in  January  1999).  Based on Yankees  current  stock
ownership  and its option to acquire up to 75% of our  Company's  common  stock,
Yankees and its stockholders  should be deemed to currently  control our Company
and to have  the  capacity  to  pass  matters  to be  acted  on at  stockholders
meetings.  Except for the  foregoing,  to the best  knowledge  and belief of our
Company,  there are no arrangements,  understandings,  or agreements relative to
the disposition of our Company's  securities,  the operation of which would at a
subsequent date result in a change in control of our Company.

Parents of our Company

     As  defined  in  Rule  405 of  Commission  Regulation  C, a  "parent"  of a
specified person is an affiliate  controlling such person directly or indirectly
through one or more  intermediaries.  The same rule  defines an  affiliate  as a
person that directly or indirectly, through one or more intermediaries, controls
or is controlled by, or is under common control with, the person specified.

     The following  table  discloses all persons who were parents of our Company
as of November 15, 2001, showing the basis of control and as to each parent, the
percentage of voting securities owned or other basis of control by its immediate
parent if any.

                                       Basis for         Percentage of Voting
Name                                   Control           Securities Owned
Yankees and its stockholders             (1)                  40.4% (2)
---------

(1)  Stock  ownership,  options and  consulting  agreement.  The  discussion  of
     Yankees association with our Company is discussed in Part I, Item 1 of this
     report. Leonard Miles Tucker, a resident of Boca Raton, Florida,  serves as
     Yankees'  president and as a member of its board of  directors;  William A.
     Calvo, III, serves as Yankees' vice president, treasurer and as a member of
     its board of directors; Vanessa H. Lindsey (also an officer and director of
     our Company) serves as Yankees' secretary and chief administrative officer.
     Kevin W. Dornan (also our  Company's  general  counsel)  serves as Yankee's
     general  counsel.  Yankees  is owned  in equal  shares  by  members  of Mr.
     Tucker's family and Mr. Calvo's family.

(2)  This  figure   includes   the  current   ownership   interest  of  Yankees'
     stockholders.  Upon a sufficient increase in our Company's  capitalization,
     and if  Yankees  were to fully  exercise  its  warrant  at that  time,  the
     percentage of voting securities owned by Yankees and its stockholders would
     be approximately 75.4 %. See also footnote 4 to the preceding table.


                                     Page 50
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Materially Adverse Proceedings

Our Company is not aware of any proceedings  involving its executive officers or
directors adverse to our Company's interests.

Certain Business Relationships

As of the Report Date

As of the report date, none of our Company's directors or nominees for director:

(1)  Is, or during the last fiscal year has been,  an  executive  officer of, or
     owns, or during the last fiscal year has owned,  of record or  beneficially
     in excess of ten percent equity  interest in, any business or  professional
     entity  that has made  during  our  Company's  last full  fiscal  year,  or
     proposes to make during our Company's current fiscal year,  payments to our
     Company or its  subsidiaries  for  property  or  services in excess of five
     percent of (i) our Company's  consolidated gross revenues for its last full
     fiscal year, or (ii) the other entity's consolidated gross revenues for its
     last full fiscal year;

(2)  Is, or during the last fiscal year has been,  an  executive  officer of, or
     owns, or during the last fiscal year has owned,  of record or  beneficially
     in excess of ten percent equity  interest in, any business or  professional
     entity  to which  our  Company  or its  subsidiaries  has made  during  our
     Company's  last full fiscal year,  or proposes to make during our Company's
     current  fiscal  year,  payments for property or services in excess of five
     percent of (i) our Company's  consolidated gross revenues for its last full
     fiscal year, or (ii) the other entity's consolidated gross revenues for its
     last full fiscal year;

(3)  Is, or during the last fiscal year has been,  an  executive  officer of, or
     owns, or during the last fiscal year has owned,  of record or  beneficially
     in excess of ten percent equity  interest in, any business or  professional
     entity to which our Company or its  subsidiaries was indebted at the end of
     our  Company's  last full fiscal year in an  aggregate  amount in excess of
     five percent of our Company's total consolidated  assets at the end of such
     fiscal year;

(4)  Is, or during the last fiscal year has been, a member of, or of counsel to,
     a law firm that the issuer has  retained  during  the last  fiscal  year or
     proposes to retain during the current fiscal year, which has or is expected
     to result in payment of fees exceeding five percent of the law firm's gross
     revenue for that firm's last full fiscal year;

(5)  Is, or during the last fiscal year has been, a partner or executive officer
     of any investment banking firm that has performed services for our Company,
     other than as a participating  underwriter in a syndicate,  during the last
     fiscal year or that our Company  proposes to have perform  services  during
     the  current  year and the dollar  amount of  compensation  received  by an
     investment  banking firm  exceeded or is expected to exceed five percent of
     the investment  banking firm's  consolidated gross revenues for that firm's
     las full fiscal year; or

(6)  Is,  or  during  the  last  fiscal  year  has been  involved  in any  other
     relationships  that our Company is aware of between the nominee or director
     and our Company that is or was substantially similar in nature and scope to
     those relationships listed in paragraphs (1) through (5).

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

Exhibits Required by Item 601of Regulation S-B

The response to this Item as contained  in our  Company's  report on Form 10-KSB
for the year ended September 30, 1998 and 1999 and 2000, is hereby  incorporated
by reference,  as permitted by Commission Rule 12b-23, except as modified by the
disclosure  contained in our Company's:  reports on Form 10-QSB for the quarters
ended  December 31, 2000 and March 31, 2001 and June 30, 2001;  and, the current
reports  on Form 8-K filed with the  Commission  on June 25,  2001,  and for the
following  additional  exhibits filed  herewith.  The exhibits  listed below and
designated as filed herewith (rather than  incorporated by reference) follow the
signature page in sequential order.

                                     Page 51


<PAGE>


Designation      Page
of  Exhibit      Number
as Set Forth     or Source of
in Item 601 of   Incorporation
Regulation S-B   By Reference   Description
--------------   -------------  -----------
(1)              *              Underwriting Agreement

(2)                             Plan of acquisition, reorganization, arrangement
                                 liquidation  or succession

(3)    (i)                      Articles of incorporation:

       3.3       57             Certificate  of Renewal and Revival of  Charter,
                                 dated  August 13, 2001.

       (ii)                     Bylaws:

(4)                             Instruments  defining  the  rights  of  holders,
                                 including indentures:
       4.4       (1)            Our Company's 1998 Stock  Option  Plan and Forms
                                 of  Incentive  Stock Option Agreement and  Non-
                                 Qualified Stock Option Agreement.
       4.5       (3)            Yankees Warrant Agreement,  effective January 5,
                                 1999
       4.6       (3)            Common  Stock  Purchase  Warrants  between   the
                                 directors and officers  of  our Company,  dated
                                 January 29, 1999.
       4.7       (3)            Yankees  Amended   Warrant  Agreement,   dated
                                 December 30, 1999
       4.8       (3)            Amended Common Stock Purchase  Warrants  between
                                 the  directors  and  officers of  our  Company,
                                 dated January 3, 2000.
       4.9       (3)            Our Company's 2000  Non-qualified  Stock  Option
                                 & Stock Incentive Plan, dated January 3,  2000.

(5)    *                        Opinion re: legality

(6)    *

(8)    *                        Opinion re: tax matters

(9)                             Voting trust agreements

(10)                            Material Contracts:

       10.1      (3)            Yankee  Consulting  Agreement,  dated January 5,
                                 1999
       10.20     (3)            Supplemental Services  Agreement between Yankees
                                 and our Company,  dated   October  15,  1999
       10.21     (3)            Memorandum of  Acquisition  between Fon  Digital
                                 Network, Inc. and TechTel Communications, Inc.,
                                 dated November 1999.
       10.22     (3)            Agreement  between  Our  Company  and  BellSouth
                                 Telecommunications,  dated November 22, 1999.
       10.23     (3)            Yankees Second Amendment to Consulting Agreement
                                 dated  January 2, 2000
       10.24     (3)            Agreement  to  Serve   as  Corporate   Secretary
                                 between Vanessa Lindsey and our Company,  dated
                                 January 3, 2000.
       10.25     (3)            Employment  agreement  between  Anthony Q. Joffe
                                 and our Company, dated January 3, 2000.

                                     Page 52


<PAGE>


Designation      Page
of  Exhibit      Number
as Set Forth     or Source of
in Item 601 of   Incorporation
Regulation S-B   By Reference   Description
--------------   -------------  -----------

       10.26     (3)            Settlement  Agreement   between  Jack Levine and
                                 our Company,  dated  January  17,  2000.
       10.27     (3)            Settlement   Agreement   between  Lawrence   Van
                                 Etten and our  Company,  dated May 11,  2000.
       10.28     (3)            Settlement  Agreement between Troy D. Wiseman ,
                                 Richard C. Peplin, Jr.  and our Company,  dated
                                 May 31, 2000.
       10.29     (2)            Strategic  Consulting  Agreement  with  Yankees,
                                 dated January 4, 2001.
       10.30     (2)            Settlement Agreement between  Patrick Graham and
                                 our Company,  dated November 8,  2000.
       10.31     (5)            Clarification  Agreement,  dated  July  6, 2001,
                                 to the Reorganization Agreement with Richard C.
                                 Peplin, Jr., signed on March  25, 1999
       10.32     (5)            Settlement  Agreement  between SBV  Holdings and
                                 our Company,  dated May 31, 2001
       10.33     (5)            Strategic  Consulting Agreement between  Yankees
                                 and our  Company  dated,  January 4, 2001.
       10.34     (5)            Clarification  Agreement,  dated  July  23 2001,
                                 to  the  Employment Agreement  with  Richard C.
                                 Peplin,  Jr., signed on June 1, 1998.
       10.35     (5)            Employment  agreement  between Edward C. Dmytryk
                                 and our Company,  dated July 19, 2001.
       10.36     (5)            Employment  agreement between Vanessa H. Lindsey
                                 and our  Company,  dated July 19, 2001.
       10.37     (5)            Engagement agreement  between  Kevin  W.  Dornan
                                 and our  Company,  dated July 19,  2001.
       10.38     58             Loan Agreement,  Security  Agreement, Promissory
                                 Note between our  Company  and  Yankees,  dated
                                 September 24, 2001

(11)             F3            Statement re computation of per share earnings

(13)              *             Annual or quarterly reports, Form 10-Q

(15)              *            Letter on unaudited interim financial information

(16)                            Letter on change in certifying accountant
       16.3       (4)           Letter re Change in Certifying Accountant
                                Weinberg & Co.

(17)              **            Letter on director resignation

(18)              **            Letter re change in accounting principals

(19)              *             Reports furnished to security holders

(20)              **            Other  documents  or  statements   to   security
                                 holders   or  any  document   incorporated   by
                                 reference

(21)              **            Subsidiaries of our Company

(22)              **            Published  report regarding matters submitted to
                                    vote

(23)                            Consent of experts and counsel

                                     Page 53


<PAGE>


Designation      Page
of  Exhibit      Number
as Set Forth     or Source of
in Item 601 of   Incorporation
Regulation S-B   By Reference   Description
--------------   -------------  -----------
(24)             **             Power of attorney

(25)             *              Statement re eligibility of trustee

(26)             *              Invitation for competitive bids

(27)             **             Financial data schedule

(99)                            Additional Exhibits:

      99.5                      Audit Committee Report

*    Not applicable

**   None

(1)  Filed as an exhibit to our  Company's  registration  statement on Form S-8,
     registration  number  333-47999,  declared  effective by the Securities and
     Exchange  Commission on March 16, 1998, as exhibit 99.1; and,  incorporated
     by reference herein as permitted by Commission Rule 12b-23.

(2)  Filed as an exhibit to our  Company's  Report on Form 10-QSB for the quarte
     ended  December  31,  1998,  bearing the exhibit  designation  number shown
     above;  incorporated  by reference  herein as permitted by Commission  Rule
     12b-23.

(3)  Filed as an exhibit to our  Company's  Report on Form 10-KSB for the fiscal
     year ended September 30, 1998, bearing the exhibit designation number shown
     above;  incorporated  by reference  herein as permitted by Commission  Rule
     12b-23.

(4)  Filed as an  exhibit  to our  Company's  Report on Form 8-K dated  June 25,
     2001, bearing the exhibit  designation number shown above;  incorporated by
     reference herein as permitted by Commission Rule 12b-23.

(5)  Filed as an exhibit to our  Company's  Report on Form 10-KSB for the fiscal
     year ended September 30, 2000, bearing the exhibit designation number shown
     above;  incorporated  by reference  herein as permitted by Commission  Rule
     12b-23.

Reports on Form 8-K Filed During Quarter Ended September 30, 2000

During the calendar  quarters  ended  September 30, 2001,  our Company filed the
following reports on Form 8-K with the Commission:

                      Financial
Items Reported        Statements Included           Date Filed
--------------        -------------------           ----------
4, 5 and 7            No                            June 25, 2001


Signatures

In  accordance  with  Section 13 or 15(d) of the Exchange  Act, as amended,  our
Company  has  duly  caused  this  report  to be  signed  on  its  behalf  by the
undersigned hereunto duly authorized.

                                     Page 54


<PAGE>


Dated: November 19, 2001

                                  Colmena Corp.

                           By: /s/Edward C. Dmytryk/s/
                       President & Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the  following  persons on behalf of our Company and in
the capacities and on the dates indicated:


Signature                      Date                Title

/s/Edward C. Dmytryk/s/        November 19, 2001   President,  Chief   Executive
                                                    Officer,Director
/s/Vanessa H. Lindsey/s/       November 19, 2001   Vice President,  Secretary &
                                                    Director
/s/Charles J. Champion, Jr./s/ November 19, 2001   Director  &  Audit  Committee
                                                    Member
/s/Robert S.  Gigliotti/s/     November 19, 2001   Director  &  Audit  Committee
                                                    Member
/s/Lawrence  R. Van Etten/s/   November 19, 2001    Director

/s/Anthony Q. Joffe/s/         November 19, 2001   Director,  Chairman  of   the
                                                    Board

                                     Page 55


<PAGE>


                             Additional Information
                                  Colmena Corp.
                                   Registrant

  Crystal Corporate Center; 2500 North Military Trail, Suite 225-D;
                           Boca Raton, Florida 33431
   Telephone Number: (561) 998-3435; Facsimile Transmission (561) 998-3425;
                     E-mail administration@colmenacorp.com
                             Corporate Headquarters

             Edward C. Dmytryk, President & Chief Executive Officer;
  Vanessa H. Lindsey, Vice President, Secretary & Chief Administrative Officer;
                   Kevin W. Dornan, Esquire, General Counsel

                                   Officers

          Anthony Q. Joffe, Chairman of the Board; Robert S. Gigliotti;
                     Charles J. Champion, Jr.; Vanessa H. Lindsey;
                    Lawrence R. Van Etten; Edward C. Dmytryk
                               Board of Directors

      Salberg & Company, P.A. Certified Public Accountants and Consultants
                          20283 State Road 7, Suite 300
                            Boca Raton, Florida 33498
        Telephone (561) 995-8270: Facsimile Transmission (561) 995-1920;
                           E-mail info@salbergco.com
                         Independent Public Accountants

                     American Stock Transfer & Trust Company
                    59 Maiden Lane; New York, New York 10007
    Telephone (212) 936-5100: Facsimile Transmission (718) 921-8326; E-mail
                                info@amstock.com
                                 Transfer Agent

Exhibits to this Form 10-KSB are available on the  Commission's web site located
at  www.sec.gov  in the EDGAR  archives,  on our  Company's  website  located at
www.colmenacorp.com  and will be provided  without charge to stockholders of our
Company upon written request addressed to Vanessa H. Lindsey, Secretary; Colmena
Corp.; 1941 Southeast 51st Terrace; Ocala, Florida 34471.

The  Commission  has not approved or  disapproved of this Form 10-KSB and Annual
Report to Stockholders nor has it passed upon its accuracy or adequacy.

                                     Page 56


<PAGE>