LecStar Announces Update on Re-capitalization, Reverse Stock Split, and Future Business Strategy

Added : ( Tue May 14 2002 )

LecStar Announces Update on Re-capitalization, Reverse Stock Split, and Future Business Strategy

ATLANTA, May 14, 2002 (BUSINESS WIRE) -- LecStar Corporation (OTC BB: LCST), a rapidly growing Atlanta-based regional provider of integrated communications services to business and residential consumers, announced today progress on the pending re-capitalization plan, reverse stock split, and future business strategy. The Company stated today that it is close to finalizing an agreement that would eliminate more than 73 million shares of the company's common stock. The reverse stock split will take place in conjunction with listing on a national exchange. Based on operational and customer growth, the Company expects to be cash flow positive by the end of 2002 or early 2003.

The Company advises today that it anticipates closing shortly on an agreement with Sherman, LLC to eliminate more than 73 million shares of the company's common stock. Those common shares will be recapitalized into preferred stock convertible into common shares at a fixed rate of $0.75. The terms of the proposed deal also include redemption rights for LecStar.

According to LecStar's president and CEO Dale Smith, "This agreement with Sherman, LLC is expected to close very soon, and further enhances our position and clearly demonstrates a strong vote of confidence in our management team from Sherman, LLC. We anticipate that with this reduction of common shares available in the public market, our stock should appreciate at a faster pace."

Smith added, "In a short period of time, we have experienced rapid revenue growth, secured partnerships and corporate alliances with established Utility companies and have enhanced our relationship with Bell South. Our business strategy continues to gain acceptance as it significantly reduces upfront customer acquisition costs, giving us a competitive edge in the market."
As part of their commitment to strengthen the company's position in the financial market, several of LecStar's management team including W. Dale Smith, President and CEO and William S. Woulfin, Chairman have elected to investing 100% of their net proceeds of any recent sale of LecStar stock directly back into the Company.

The Company also announced today that it received shareholder approval for a potential reverse split. It has indicated today that it would likely elect to implement the reverse stock split only if the result would secure a listing on either the Nasdaq Small Cap Market or American Stock Exchange.

Smith added, "Our management team continues to remain focused and committed. We have demonstrated ongoing results and our products and services continue to gain acceptance in both the business and consumer marketplace. We are currently evaluating potential merger and acquisition candidates to accelerate growth. Additionally, we recently launched an aggressive marketing campaign to generate awareness among the international financial community in order to build a greater audience of potential investors as we move closer to achieving our strategic goal to be listed on either the Nasdaq Small Cap Market or American Stock Exchange."

About LecStar

LecStar Corporation is a facilities-based integrated communications carrier (ICC), certified by the Federal Communications Commission and by eight states - Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina and Tennessee - as a competitive local exchange carrier (CLEC) to provide regulated local, long distance and international telecommunications services. In close alliance with its agents and local electric utility company partners. LecStar offers a full array of fixed wire-line voice, data, Internet and operator services to business and residential customers throughout BellSouth's Southeastern operating territory. For more information regarding the LecStar Corporation, its products or services, please contact LecStar at 404-659-9500 or visit www.lecstar.com.

FORWARD-LOOKING STATEMENTS: This document includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Statements in this press release, which are not historical, may be deemed forward-looking statements. Although LecStar believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from LecStar's expectations include completion of pending investments, continued availability to originate new investments, the availability and cost of capital for future investments, competition within the industry, economic conditions and other risks detailed from time to time in LecStar's filing with the Securities and Exchange Commission.



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