##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-KSB

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the Fiscal Year ended December 31, 2000

Commission File No. 0-31363

Vocal Communications, Inc.
(Formerly known as Larsen International, Inc.)

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|Colorado                                 |  | 84-1365550                           
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|(State or other jurisdiction of          |  | I.R.S. Employer Identification Number
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|incorporation or organization)           |  |                                      
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|6359 E. Kathleen Road                   
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|Scottsdale, Arizona                      |  | 85253                                
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|(Address of Principal Executive Offices) |  | (Zip Code)                           

480-951-4897(Registrants telephone number, including area
code)

Securities Registered pursuant to section 12(b) of the act:
None

Securities Registered pursuant to section 12(g) of the act:
Common Stock, $0.001 par value per share

Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) if the Securities Exchange Act of
1934 during the preceding 12 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:

Yes - [  ]       No - [X]

Indicate by checkmark if disclosure of delinquent filers pursuant to item
405 of Regulation S-B is not contained herein, and will not be contained, to
the best of the registrants knowledge, in any definitive proxy or information
statements incorporated by reference in Part III if this form 10-K (SB) or any
amendment to this Form 10-K (SB):

[  ]

As of April 16, 2001, there was no market for the registrants common stock nor
had any public trading activity taken place. As of April 16, 2001, the
registrant had 7,200,000 shares of common stock outstanding.

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TABLE OF CONTENTS



|                                                                                                |  |  |  |  |  |  |  | 
|----------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|Part I                                                                                         
|Item 1  Business                                                                               
|Item 2   Property                                                                              
|Item 3   Legal Proceedings                                                                     
|Item 4.   Submission of Matters to a Vote of Security Voters                                   
|Part II                                                                                        
|Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters              
|Item 6.   Management's Discussion and Analysis of Financial Condition and Results of Operations
|Item 7.   Financial Statements                                                                 
|Item 8.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|Part III                                                                                       
|Item 9.   Directors and Executive Officers of the Registrant                                   
|Item 10.   Executive Compensation                                                              
|Item 11.   Security Ownership of Certain Beneficial Owners and Management                      
|Part IV                                                                                        
|Item 12.   Exhibits, Financial Statement Schedules and Reports on Form 8-K                     
|Signatures                                                                                     



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Vocal Communications, Inc.
2000 Annual Report on Form 10-KSB
Table of Contents

Part I

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|Item 1
    Business                                                                              |          | 3 
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|Item 2
    Property                                                                              |          | 13
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|Item 3
    Legal
Proceedings                                                                     |          | 13
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|Item 4
    Submission of Matters to a Vote of Security
Holders                                   |          | 13
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|                                                                                                 | Part II 
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|Item 5
    Market for Common Equity and Related
Stockholders Matters                            |          | 14
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|Item 6
    Managements Discussion and Analysis of
Financial Condition and Results of Operations |          | 14
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|Item 7
    Financial Statements                                                                  |          | 18
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|Item 8
    Changes in and Disagreements with Accountants
and Financial Disclosure                |          | 27
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|                                                                                                 | Part III
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|Item 9
    Directors, Executive Officers, Promoters, and
Control Persons                         |          | 27
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|Item 10
  Executive Compensation                                                                 |          | 29
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|Item 11
  Security Ownership of Certain Beneficial Owners and
Management                         |          | 30
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|                                                                                                 | Part IV 
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|Item 12
  Exhibits, Financial Statement Schedules and Reports on
Form 8-K                        |          | 31
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|                                                                                                
|Signatures                                                                                      

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Part I







Item 1. Business

We make many statements in this annual report, such as statements
regarding our plans, objectives, expectations and intentions, which are forward
looking statements within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act. We may identify these statements by the use of
words such as believe, expect, anticipate, intend, plan and similar
expressions. These forward-looking statements involve several risks and
uncertainties including our ability to obtain additional working
capital, our current year operating loss, the general slowdown in the
telecommunications industry and the uncertainty of the VoIP market.
Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of various factors,
including those we discuss in Risk Factors and elsewhere in this annual
report. These forward-looking statements speak only as of the date of this
annual report, and we caution you not to rely on these statements without also
considering the risks and uncertainties associated with these statements and
our business addressed in this annual report.

Overview

Vocal Communications, Inc.
(Vocal), the registrant, was previously known
as Larsen International, Inc. (Larsen), a Colorado corporation incorporated
in December of 1996. Vocal Investor Financial, Corp. (VIFC), a Nevada
corporation incorporated in July of 2000, acquired Larsen pursuant to an
acquisition agreement, (the Acquisition Agreement) dated
December 6, 2000, between VIFC, Larsen, the shareholders of
Larsen and Sandringham Investments Limited (Sandringham). In accordance with the
Acquisition Agreement, VIFC acquired all of the outstanding common
stock of Larsen, except for 100,000 shares of common stock provided to
Sandringham for services rendered in connection with the acquisition. As disclosed in Item-1 of Form 10-SB/a filed December 13, 2000, Larsen
had not commenced any operations prior to entering into the
Acquisition Agreement, and its business plan had been to acquire one or more
properties or businesses by purchase, merger, exchange of stock or
other means. Since its inception in July of 2000, VIFC has been a development stage
entity. Subsequent to the acquisition, VIFC merged with and into
Larsen, and in connection with the merger changed its name to Vocal
Communications, Inc.

Vocal is a communication
solutions company specializing in providing audio, voice enabled applications over the internet (VoIP), including direct pc to pc, pc to phone, and phone
to pc solutions. The products and services provided by Vocal give
corporations and organizations the ability to communicate financial reports,
executive and other staff changes, product updates, or other pertinent
marketing or corporate information in a personalized real-time interactive
format. Vocal is currently developing a suite of software applications designed
to enhance the internal and externally focused communication efforts of small
and medium enterprises (smes), and small and mid-cap public corporations. Our
Vocal Suite of products is being designed to contain full-duplexing technology, meaning that
two people may talk at the same time as in a standard telephone conversation. Vocals
VoIP technology is being designed to also be firewall-friendly allowing our products to operate
behind corporate firewalls thereby allowing anyone to talk to anyone at
anytime, including multi-party conversations.

Through strategic partnerships and alliances with key technology providers
and through the development of proprietary integration process applications, we
plan on offering a variety of tools designed to provide corporations with new and
innovative channels for the relay of time sensitive information to multiple
viewers and listeners. Companies wanting to reduce costs associated with
regulatory compliance, fair disclosure, investor relations, conferencing,
sales, distribution, employee training, corporate research, and interactive
marketing research are expected to be able to find genuine incremental value in the portfolio of
diversified services that are intended to be offered by Vocal.

Strategy

Initially we intend to
develop and offer a core group of internal and external focused
communication services to corporate clients. Our service offerings
are expected to be built
around the common goal of establishing solid recurring revenue streams.
These core services, initially focused on assisting corporations communicate in
the areas of sales & marketing, investor relations, public relations, internal
collaboration, and distance learning are currently being tested in a prototype
environment and include corporate event broadcasting, marketing & promotion
solutions, and interactive customer

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service solutions. We expect our services to be released in phases to correspond with
technology development and client demand.

|   |  |                           |  |                                                                                                                                                                                                                                                                                                     
|-- |  | ------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |  | Service Group             |  | Service Name & Corporate Application                                                                                                                                                                                                                                                                
|   |  |                           |  |                                                                                                                                                                                                                                                                                                     
|1. |  | Vocal Business Events     |  | VocalLIVE  Platform for live business events and presentations
VocalCAST  Broadcasting/webcasting solution  unlimited
listeners in a playerless environment
VocalROOMS  Interactive meeting and conference rooms
VocalTRAINING  Interactive platform for learning and product
training sessions
|  
|  
|  
|  
|2. |  | Vocal Marketing Solutions |  | VocalSITE  Investor Relations websites, profiling of companies
VocalPRESS  Text and voice dissemination service
VocalMARKETING  voice enhanced marketing collateral,
advertising solutions.                                                                                                      
|  
|  
|  
|  
|3. |  | Vocal Support             |  | VocalCONTACT  Interactive platform for customer service 
including ecalling and instant messaging applications                                                                                                                                                                                    

1. Vocal Business Events

Our
Vocal Business Event center is being designed to use the power of VoIP and streaming
media to provide corporations with cost effective solutions as they seek to
communicate with geographically dispersed vendors, customers, employees, and
investors. Our conferencing services are being designed to integrate seamlessly into existing
websites to provide live, archived, moderated or un-moderated environments for
internal and external focused communication events. Stand-alone services in
this grouping should include:



| |  |  | VocalLIVE  Platform for live business events and presentations                               
| | - |  | ----------------------------------------------------------------------------------------------
|
| |  |  | VocalCAST  Broadcasting/webcasting solution  unlimited listeners in a playerless environment
|
| |  |  | VocalROOMS  Interactive meeting and conference rooms                                         
|
| |  |  | VocalTRAINING  Interactive platform for learning and product training sessions               

Features of Vocal Business Events

Vocal Business Events are
intended to provide a more integrated, intuitive, and efficient
experience than a traditional conference call  participants can see who is
online, who is talking, and who would like to speak next. This firewall
friendly solution would appear optimal for corporate customer meetings, analyst calls,
press conferences, earnings reports, corporate updates, shareholder meetings,
sales presentations and many other corporate events.

Speakers are expected to be able to project slides, charts, pictures, and other visual
aids onto the screens of all members who are logged into the session. Audience
members should be able to hear the speaker and see presentation materials in real
time. Audience members that wish to ask questions would then be queued
by the Voice software and asked to speak by the moderator when the presenter is
ready. Vocal Business Events is being designed to give the speaker a captive audience and a direct
link with prospective investors, customers, suppliers, co-workers, etc.

Vocal intends that all meetings and live
presentations will have the ability to be recorded and
archived for future dissemination, and an opt-in process logs all event
participants to provide targeted follow-up data to corporate clients. In
addition, we feel the following benefits that are being designed into our business events will allow us
to provide a broad range of services to our selected market:

|                       |  |                                                                                                                                                     
|---------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|Anticipated Efficiency |  | Web interfaces which should allow host to run teleconference in a more efficient manner                                                            
|                      
|                      
|                      
|                      
|                       |  |  Host is expected to be able to moderate and control the conference by seeing who is
participating and   through the monitoring of question queues

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|                                            |  |                                                                                                        
|------------------------------------------- |  | -------------------------------------------------------------------------------------------------------
|                                           
|                                           
|                                           
|                                           
|Expected                                    |  |  Supports both PC and phone participants                                                              
|                                           
|                                           
|                                           
|                                           
|Flexibility                                 |  |  PC participants use single phone line for both Web and voice traffic                                 
|                                           
|                                           
|                                           
|                                           
|                                            |  |  PC participants quickly and easily join a conference without dialing a
phone number or   access code 
|                                           
|                                           
|                                           
|                                           
|Intended                                    |  |  Phone participant dial-in and conference host dial-out capabilities                                  
|                                           
|                                           
|                                           
|                                           
|Scalable and                                |  | Supports large-scale conferences                                                                      
|                                           
|                                           
|                                           
|                                           
|Archivable                                  |  | Conference record/playback using player-less technology                                               
|                                           
|                                           
|                                           
|                                           
|Functional
Versatility  other
applications |  | Virtual Presentations to anyone, anywhere using synched audio and visual
aids e.g.   PowerPoint slides
|                                           
|                                           
|                                           
|                                           
|                                            |  | Live demonstration of products and services with real time vocal client
interaction                   
|                                           
|                                           
|                                           
|                                           
|                                            |  |  Moderated corporate training and/or e-Learning                                                       
|                                           
|                                           
|                                           
|                                           
|                                            |  |  Application sharing and document editing capabilities                                                
|                                           
|                                           
|                                           
|                                           
|                                            |  |  Remote control web support and web tours                                                             
|                                           
|                                           
|                                           
|                                           
|                                            |  |  Teleconferencing to enhance the meeting environment                                                  
|                                           
|                                           
|                                           
|                                           
|                                            |  |  E-Learning solutions using push technology to facilitate training/education                          

2. Vocal Marketing Solutions

Vocal solutions are being
designed to specialize in direct pc to pc, pc to phone and phone to pc audio
and voice marketing applications. All solutions are intended to be hosted on our servers,
with statistics and results available in real-time via the Internet.
Stand-alone services in this group are expected to include:



| |  |  | VocalSITE  Investor Relations websites, profiling of companies                   
| | - |  | ----------------------------------------------------------------------------------
|
| |  |  | VocalPRESS  Text and voice dissemination service                                 
|
| |  |  | VocalMARKETING  voice enhanced marketing collateral, advertising, email solutions

Investor Relations Microsites

Corporations seeking to gain additional Investor Relations exposure are expected to
be provided with a 1-page micro-site showcasing their corporate profile,
current press releases, calendar of events, and other relevant information.
These sites should provide the platform for the sale of paid services including
vocal business events, marketing solutions, and customer service/IR
communication services.

Event Promotion, Press Related Services

We expect to develop a large investor network interested in hearing
messages about solid investment opportunities or newsworthy corporate events.
We intend to develop a facility by which corporations should be able to get their message(s) out to a list of interested investor
network members, and access the companys partner network through strategic 3rd
party relationships that we intend to develop.

Voice enabled advertising solutions

Our voice enabled advertising
banners and marketing collateral are intended to draw attention to an upcoming
corporate event or a particular product or service.

Voice enhanced email solutions

Company representatives are
intended to be able to quickly and easily personalize customer
support and facilitate client communication and investor inquiries with
recorded messages. They are intended to be able to route and manage voice-enhanced emails within their
existing backend infrastructures. Voice is added as a link, not an attachment,
to email correspondence from PC, phone or mobile phone. This functionality is
intended to be useful for internal and external corporate communications.

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3. Vocal Support

Our VoIP customer support
solutions is intended to provide cost-effective alternatives to
traditional communication methods, dramatically decreasing the need for costly
toll free telephone and courier services. Through the use of our one-to-one
solutions, customer service representatives are intended to have the capability to use real
voice over the Internet and push technology to support and educate clients in
need of assistance. Stand-alone services in this grouping include:



| |  |  | VocalCONTACT  Interactive platform for customer service
including ecalling and instant messaging applications
| | - |  | --------------------------------------------------------------------------------------------------------------

Ecalling applications

We intend to be able to provide Ecalling capabilities for customer service
professionals enabling one-click access to customers/Investors via landline
phones, mobile phones and PCs. The service is being designed to be flexible and add efficiency to
the communication process through the following benefits:



| |  |  | Facilitates on-demand multi-point conferencing                                               
| | - |  | ---------------------------------------------------------------------------------------------
|
| |  |  | Contains call-forwarding functionality                                                       
|
| |  |  | Presence detection feature lets users know if people are there and available BEFORE they call
|
| |  |  | Service is ideal for impromptu conferences and increased communication with remote offices   
|
| |  |  | No additional software needed by target contacts  only a standard Web browser required      

Instant Messaging 
Click2Chat Voice Rooms

Our click2chat messaging solution is intended to allow corporations to
provide critical real-time customer service to all investor inquiries through
the use of one-click voice rooms. With access directly from any webpage,
participants are intended to be able to join voice rooms while simultaneously using voice and
text chat features to make their inquiries. The system is being
designed to monitor the operators
availability and route the user to either the voice communicator for direct
contact or to an operator offline web page.

The voice rooms intended
to be customizable in style, are expected to be co-branded to reflect the
look and feel of the clients website, and allow unlimited users per individual
room. For privacy purposes, our voice rooms will be designed to give corporate partners complete
privacy and protection against any third party intruders through a secure login
procedures.

Sales and Marketing

Vocals sales efforts
are expected to be structured to target small and medium enterprises (smes) and
small and mid-cap public corporations. Management envisions that our marketing strategy will be
structured to incorporate a
traditional multi-tiered demand pull marketing strategy designed to be
transportable to and effective on both new and traditional media/channels.
Management is dedicated to pursuing aggressive sales and marketing strategies
in order to acquire corporate customers, and create brand awareness tied to our
capabilities. Initially, telemarketing, needs analysis identification,
consultative sales, revenue partnerships, networking, direct response, focus
groups, and direct e-mail are intended to be the primary vehicles for generating corporate
and organizational customers. In addition, we plan to participate in industry
conferences, trade shows and other events to gain exposure for our
communication services.

Fulfillment

Vocal service
offerings will be designed to be facilitated in a turn-key manner
through our corporate website using various automated processes designed to
reduce the implementation time and cost for participating public and private
corporations. These fulfillment processes are currently being developed by our
technical staff in cooperation with third party VoIP developers and technology
providers.

Through the use of application templates, companies are expected to be able to select
from a range of customization to offer company information, live events,
presentations, archived events, and voice (VoIP) enhanced marketing and
customer service solutions for their own web site or communication
applications. This private label approach can create a distinct
look and feel for any web site or application, and may provides a dynamic and
interactive environment customizable to each individual clients needs. The
Vocal technical staff will guide client implementation, providing consultative
assistance for all applications and communication services delivered to
clients.

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In an effort to maximize the exposure of our services, management has
decided to create fulfillment destinations for various segments of our target
market. Vocalinvestor.com, the first of such branded fulfillment centers,
is designed to utilize Vocals communication tools to demonstrate and sell software
applications to corporate clients as they seek to better communicate with the
investment community. In addition, all companies desiring enhanced market
exposure are expected to have the opportunity to be profiled on Vocalinvestor.com, giving
them access to our existing investor network and affiliated investment
related/co-hosted web sites. The site is also being designed to be accessible by the general
investment community, and is being designed to serve as a comprehensive resource for Investment
professionals seeking access to time sensitive information from North American,
Asian, and European markets.

Expansion Opportunities

Vocals goal is to become a global service provider of communications
solutions. We are planning future releases of German, Dutch and Cantonese
versions of our corporate solutions in order to maximize the utilization of our
VoIP licenses in any given period. In addition, we plan to develop proprietary
VoIP applications to reduce the overall cost structure of our technology,
launching additional product line extensions into our selected global markets.

Vocal expects the market to lead it to a division structure to address
specifically focused activities in a number of different market segments. We
have identified more than 10 related business activities in which we may offer
our core services of voice and audio enabled Broadcasting, Marketing and
Customer Service to corporate clients. We expect these follow-on opportunities
to significantly alter our business and revenue mix, with a material
diversification of the risk profile of the company.

Key Vendor Relationships

Vocal has aligned itself with several well-respected technology companies
to provide both infrastructure and implementation assistance as it seeks to
rapidly deploy its solutions to clients. In addition to solid relationships
with technology providers, we will seek to establish and leverage strategic
alliances with other content providers in an effort to offer complimentary
services to their clients, partners, and affiliates.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Hear Me                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | HearMe (Nasdaq: HEAR) develops and licenses next generation VoIP
technologies that deliver increased productivity and flexibility in
communication by integrating the capabilities of the telephone,
mobile devices, and the Internet. The Companys industry leading
PC-to-phone, phone-to-phone, and PC-to-PC VoIP application
technologies add value to a variety of business applications
including customer relationship management and eCalling for telecom
service providers.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Vision Critical Communications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | Vision Critical Communications offers a full range of e-business
consulting and design services to its diverse group of clients across
North America. Located in Vancouver, Canada, the firm builds and
manages customized web applications, secure e-commerce environments,
and virtual reality simulations, gaining a reputation for delivering
projects on time and on budget. Clients include Reebok, Del Monte,
Clearly Canadian, Discovery Capital Corporation, and Ipsos-Reid, a
world-leading market and public opinion research firm. Vision
Critical has completed all of Vocals technology development to date and is
in the process of building our core corporate communication services
solutions.



| |                                                                                                                                                                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Destiny Media Technologies                                                                                                                                                                                                                                                                                                                               
|
| | Established in 1991, Destiny (OTC:BB DSNY) began researching audio
streaming technology in 1996 and is now marketing a number of
streaming audio products using their proprietary streaming media
format .dny. Their focus is to become a leader in providing advanced
audio streaming technology for the general public. Their current
products include:



| |  |  | Destiny MPE             
| | - |  | -------------------------
|
| |  |  | Destiny Media Player    
|
| |  |  | RadioDestiny Broadcaster
|
| |  |  | Clipstream              
|
| |  |  | Destiny Repeater.       

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| |                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Destiny relationship gives Vocal the ability to archive and
stream live events for corporations and organizations wishing to
broadcast their message to a large audience base. In addition,
their playerless technology allows maximum listening exposure over
the Internet for all audio files.



| |                                                                                                                                                                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ADX Network                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | ADX Network is a leading provider of market data feeds, financial
information applications, and software tools for the institutional
and retail investor. They have developed numerous proprietary
applications in response to market demand for real-time, streaming
financial information. ADXs business encompasses a breadth of
applications and integration services. ADXs product
offering includes:



| |  |  | Reliable data connections to international markets;                           
| | - |  | ------------------------------------------------------------------------------
|
| |  |  | Desktop applications that deliver customized, streaming financial information;
|
| |  |  | Rapid integration services and superior customer support.                     



| |                                                                                                           
| | ----------------------------------------------------------------------------------------------------------
| | ADX will provide delayed and real-time news and data feeds for
Vocals Investor Relations focused clients.

Competition

Many of our current or potential competitors have longer operating
histories, significantly greater financial, technical and other resources, or
greater name recognition than we do. Our competitors may be able to respond
more quickly to new or emerging technologies and changes in customer
requirements.

Competition could seriously harm our ability to sell services on terms
favorable to us. Competitive pressures could reduce our market share or require
us to reduce the price of our services, any of which could harm our business,
financial condition and operating results. We believe that the principal
competitive factors in our market include:



| |  |  | service functionality, performance, ease of use, reliability, scalability, security
| | - |  | -----------------------------------------------------------------------------------
|
| |  |  | establishing a significant base of customers and revenue partners                  
|
| |  |  | ability to introduce new services to the market in a timely manner                 
|
| |  |  | customer service, support and pricing                                              

Although we believe our services compete favorably with respect to each of
these factors, the market for our services is new and rapidly evolving. We may
not be able to maintain our competitive position against current and potential
competitors, especially those with greater resources.

Intellectual Property

Our intellectual property includes trademarks, copyrights, trade secrets
and other proprietary rights. We rely on a combination of trademark, trade
secret and copyright law to protect our propriety rights. We have no patents,
nor do we currently have any confidentiality or similar agreements in place
with any of our employees. To date, we have sought to protect our copyright and
trademark rights by placing a standard trademark or copyright notice in the
appropriate places. We have also hired legal counsel to assist us in this
process.

Unauthorized parties may try to disclose, obtain or use our proprietary
information, which could harm our business. Others may also claim that we have
violated their proprietary rights. This could subject us to significant
liability for damages and invalidate our proprietary rights. Any efforts to
protect or defend our rights could be time-consuming and costly. Other parties
may also independently develop similar or competing technology.

8



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Employees

Prior to December 31, 2000 Vocal had no employees. All individuals working
on Vocal projects prior to that time were retained as consultants. As of
December 31, 2000, Vocal had 6 full-time employees excluding temporary
personnel and consultants. We have controlled expansion plans in place and
anticipate this number to grow to approximately 20 by December 31, 2001. None
of our employees are represented by a labor union, and we consider our
relations with our employees to be good. Our ability to achieve our financial
and operational objectives depends in large part upon the continued service of
our senior management and key technical personnel and our continuing ability to
attract and retain highly qualified technical and managerial personnel. Our
future success depends on our ability to attract, retain and motivate these
highly skilled employees.

Risk Factors

The risks described below are not the only ones facing our company.
Additional risks not presently known to us, or that we currently deem
immaterial, may also impair our business operations. Our business, financial
condition or results of operations could be seriously harmed by any of these
risks; and, the trading price of our common stock could also decline due to any
of these risks.

Need For Additional Capital

Since the inception of our
business, we have financed all of our business activities solely
through the private sales of equity. Vocal will need additional
capital from third parties to implement its plans. It is also possible that,
as we execute our sales initiatives, the revenues, if any, generated from the sales
of Vocal's products and services will not be sufficient to sustain
our operating needs. Should this occur, we would need to obtain operating capital
through the use of alternative means, including either equity or debt financing. We cannot make any
assumptions or provide any assurances regarding our ability to obtain alternative
sources of capital in the future.

We Have Incurred And Expect To Incur Operating Losses

Vocal commenced operations in July of 2000 and has incurred losses in its
initial year of operations. As of December 31, 2000 we had an accumulated
deficit of approximately $148,855, which includes the amortization of related
intangibles. In addition, we currently intend to increase capital expenditures
and operating expenses in order to expand our operating activities and increase
our selection of products and services to potential clients and customers. It
is possible that we will incur additional non-cash charges including those
relating to the acquisition of tangible and intangible assets in the future.
Therefore, we anticipate that we will incur additional losses in the future.

Our Quarterly Operating Results May Fluctuate Because Of A Number Of Factors

Our quarterly operating results may fluctuate significantly in the future
as a result of a variety of factors, many of which are outside of our control.
These factors include:



| |  |  | The level of usage of the Internet in
general, the level of adoption of VoIP Technology in general and use of our products and services in particular;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | General economic conditions;                                                                                                                          
|
| |  |  | Seasonal nature during the year of demand for our products and services;                                                                              
|
| |  |  | Timing of marketing expenditures to promote our products and services;                                                                                
|
| |  |  | The introduction of new products and services by our competitors;                                                                                     
|
| |  |  | The addition of loss of clients and customers;                                                                                                        
|
| |  |  | Costs incurred with respect to acquisitions and investments.                                                                                          

Due to all of the foregoing factors and other risks described in this
section, you should not rely on quarter-to-quarter comparisons of our results
of operations as an indication of future performance. It is possible that in
some future periods our results of operations may be below the expectations of
investors.

9



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The Telecommunications Industry Is Currently Experiencing An Economic Slowdown

A broad-based economic slowdown is affecting telecommunications industry.
The customers that Vocal is targeting may never materialize. Due to the difficulty of predicting how long this slowdown will
continue, Vocal may not be able to meet anticipated revenue levels on a
quarterly or annual basis.

Vocals Business Could Suffer if the VoIP Market Does Not Evolve As Expected.

The market for Vocals products is evolving rapidly. Packet-based
technology is not yet widely accepted as a platform for voice, and the market
for Vocals products may not continue to develop or be sustainable. Vocal may
not be able to generate product sales, if the market does not develop, or
develops more slowly than anticipated.

Uncertain Dynamics Of The VoIP Market

The success of Vocals Telephony product strategy assumes that
there will continue to be a future demand for VoIP products. In order for the
VoIP market to continue to grow, several things need to occur. Internet service
providers must continue to invest in the deployment of high speed broadband
networks to residential and commercial customers. ISPs must improve in order
to facilitate real-time communications and thereby manage effects such as
packet jitter, packet loss and unreliable bandwidth, so that top quality
service can be provided. Customers must also want to use VoIP technology and
thereby create a demand for existing as well as new and better VoIP products.
There can be no assurance that any or all of these will occur and a failure of
any or all of these to occur may have a material adverse effect on the
Companys business.

Government Regulation And Legal Uncertainties Relating To The Internet Could
Hinder The Popularity Of The Internet

New Internet and privacy
laws  There are currently few laws or regulations
that specifically regulate communications or commerce on the Internet. However,
laws and regulations may be adopted in the future that address issues such as
user privacy, pricing, content and the characteristic and quality of products
and services. For example:



| |  |  | The United States Federal government and various state governments
have proposed limitations on the collections and use of information
regarding Internet users. In October 1998, the European Union adopted a
directive that may result in limitations on our ability to collect and
use information regarding Internet users in Europe;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | A portion of the Telecommunications Act, which has since been ruled
unconstitutional, sought to prohibit transmitting certain types of
information and content over the Internet.                                                                                                                                                        

Moreover, it may take several years to determine the extent to which existing
laws relating to issues such as property ownership, libel, and personal privacy
are applicable to the Internet. Any new laws or regulations relating to the
Internet could harm our business.

Tax laws  The tax treatment of the Internet and electronic commerce is
currently unsettled. A number of proposals have been made at the federal, state
and local level that could impose taxes on the sale of goods and services and
certain other Internet activities. Our business may be harmed by the passage of
laws in the future imposing taxes or other burdensome regulation on online
commerce.

Other Jurisdictions  Because our services are
expected to be made available in multiple
states, these jurisdictions may claim that we are required to qualify to do
business as a foreign corporation in each of these states. If we fail to
qualify as a foreign corporation in a jurisdiction where we are required to do
so, we could be subject to taxes and penalties.

10



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Reliance On Partnerships For VoIP Products

The Company plans on entering into new market areas and its success is partly
dependent on its ability to forge new marketing and other strategic
partnerships. VoIP communications systems are complex and no single company
possesses all of the required technology components needed to build a complete
end-to-end solution. Partnerships will be required to augment the Companys
development programs and to assist it in marketing complete solutions to its
customer base. There can be no assurance that the Company will be capable of
developing such partnerships in the course of its product development. Even if
the Company does establish the necessary partnerships, there can be no
assurance that the Company will be able to adequately capitalize on these
partnerships to aid in the success of the Companys business.

Our Business Depends On The Continued Usage Of The
Internet And VoIP Technology

We intend to operate in a new and rapidly evolving market. Our business may be
adversely affected if usage of the Internet or VoIP services does not
continue to grow. This growth could be hindered by a number of factors
including the adequacy of the Internets infrastructure to meet increased usage
demand, privacy and security concerns and the availability of cost-effective
services.

We Must Develop And Maintain The Awareness Of Our Brands To Attract Customers

Developing, maintaining and strengthening our brands is critical to achieving
widespread acceptance of our prospective products and services by our
intended clients and
customers, particularly in light of the competitive nature of the market.
Promoting and positioning our brand will depend largely on the success of our
marketing efforts, and our ability to provide high quality services. We may
find it necessary to increase our marketing budget or otherwise increase our
financial commitment to creating and maintaining brand loyalty among our
clients and customers. If we fail to promote and maintain our brands or incur
excessive expenses in an attempt to promote and maintain our brands our
business could be harmed.

Rapid Technological Change And Dependence On New Products

VoIP technology is creating an emerging market that is characterized by
rapid changes in customer requirements, frequent introductions of new and
enhanced products, and continuing and rapid technological advancement. To
compete successfully, Vocal must, and must continue, to develop and sell new and enhanced
products that provide increasingly higher levels of performance and reliability
and lower cost, take advantage of technological advancements and changes, and
respond to new customer requirements. Vocals success in developing and selling
such products will depend on a variety of factors, including the identification
of market demand for new products, product selection, timely implementation of
product development, product performance, cost-effectiveness of products under
development and the success of promotional efforts.

Vocal could experience delays in the development of new products and the
enhancement of existing products, and such delays are likely to occur in the
future. If Vocal is unable, due to resource constraints or technological or
other reasons, to develop and introduce new or enhanced products in a timely
manner, if such new or enhanced products do not achieve sufficient market
acceptance or if such new product introductions decrease demand for existing
products, it would have a material adverse effect on the Companys business and
operating results.

11



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We May Be Liable For Our Links To Third-Party Web Sites

We could be exposed to liability with respect to the third-party web sites
that may be accessible through our services. These claims may allege, among
other things, that by linking to web sites operated by third parties, we may be
liable for copyright or trademark infringement or other unauthorized actions by
third parties through these web sites. Other claims may be based on errors or
false or misleading information provided by our services. Our business could be
harmed due to the cost of investigating and defending these claims, even to the
extent these types of claims do not result in liability.

We May Be Subject To Intellectual Property Infringement Claims That Are Costly
To Defend And Could Limit Our Ability To Use Certain Technologies In The Future

Many parties are actively
developing VoIP related technologies. We
believe that these parties will continue to take steps to protect these
technologies, including seeking patent protection. As a result, we believe that
disputes regarding the ownership of these technologies could arise in
the future. From time to time, parties may assert patent infringement claims
against us in the form of letters, lawsuits and other forms of communications.
In addition to patent claims, third parties may assert claims against us
alleging infringement of copyrights, trademark, rights, trade secret rights or
other proprietary rights or alleging unfair competition.

We may incur substantial expenses in defending against third-party infringement
claims regardless of the merit of the claims. In the event that there is a
determination that we have infringed on third-party proprietary rights we could
incur substantial monetary liability and be prevented from using the rights in
the future.

Protection Of Our Intellectual Property Rights Is Costly And Difficult

We regard our intellectual property, including our patents, copyrights,
trademark, trade secrets, and similar intellectual property as critical to our
success. We intend to rely upon patents, trademark and copyright law, trade secret
protection and confidentiality and license agreements to protect our
proprietary rights. We cannot guarantee that the steps that we have
taken and intend to take to
protect our proprietary rights will be adequate.

We Must Manage Our Growth

Our anticipated growth may
place a significant strain on our
managerial, operational, and financial resources. In addition, we plan to
continue to hire additional personnel. To manage our growth we must continue to
implement and improve our operational and financial systems and to expand,
train and manage our employee base. Any failure to manage our growth
effectively could harm our business.

Our Future Depends On Our Ability To Attract, Retain And Motivate Highly
Skilled Employees

Our future success depends on our ability to attract, retain and motivate

highly skilled employees. Competition for employees in the technology industry
is intense, particularly in Phoenix/Scottsdale where we are headquartered.
Additionally, it is often more difficult to attract employees once a companys
stock is publicly traded because the exercise price of equity awards such as
stock options are based on the public market, which is highly volatile. We may
be unable to attract, assimilate or retain other highly qualified employees in
the future. We may
experience difficulty in hiring and retaining highly skilled
employees with appropriate qualifications. Furthermore, certain key employees
possess marketing, technical and other expertise, which is important to the
operations of our business, and if these employees leave, we may not be able to
replace them with employees possessing comparable skills.

12



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Risks Related To Additional Investments Or
Acquisitions

We may pursue investment or acquisition opportunities in
the future. If we fail to integrate these investments and acquisitions, our
quarterly and annual results may be adversely affected. Integrating acquired
organizations, products and services could be expensive, time-consuming and a
strain on our resources. Risks we could face with respect to acquisitions
include:



| |  |  | The difficulty in integrating acquired technology and rights in our services;                                                  
| | - |  | -------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The difficulty of assimilating the personnel of the acquired companies;                                                        
|
| |  |  | The difficulty of coordinating and integrating geographically-disbursed operations;                                            
|
| |  |  | Our ability to retain customers of an acquired company;                                                                        
|
| |  |  | Future investments or acquisitions may not
yield any returns;                                                                  
|
| |  |  | The potential disruption of our ongoing business and distraction of management;                                                
|
| |  |  | The maintenance of brand recognition of acquired businesses;                                                                   
|
| |  |  | The failure to successfully develop acquired in-process technology;                                                            
|
| |  |  | The additional issuance of shares made in
conjunction with an investment or acquisition could be dilutive for
our shareholders;
|
| |  |  | Unanticipated expenses related to technology integration;                                                                      
|
| |  |  | The maintenance of uniform standards, corporate cultures, controls, procedures and policies;                                   
|
| |  |  | We may use cash or incur additional debt to
pay for potential investments or acquisitions;                                     
|
| |  |  | The impairment of relationships with employees and customers as a
result of the integration of new management personnel.       







Item 2. Property

We lease, on a month-to-month
basis, offices located in downtown Vancouver, Canada where our
programming initiatives are currently being managed. Also, our
Chairman and Chief Executive Officer currently maintains Vocal's
administrative offices at his personal residence located in
Scottsdale, Arizona at no expense to Vocal. This strategy is designed
to minimize our short-term cash burn rate. At such time, as our
needs dictate, we will obtain, through lease or purchase, a Phoenix,
Arizona office location which will be used to centralize our base of
operations. Any such prospective site will be adequate to accommodate
our anticipated growth needs within the near future.







Item 3. Legal Proceedings

Vocal was not involved in any legal proceedings during the period covered
by this filing.







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

The following matters were submitted to a vote of security holders and
approved in the quarter ending December 31, 2000:



| |  |  | To acquire, for cash, all of the common stock
of Larsen International, Inc., except for 100,000 shares held
by Sandringham;     
| | - |  | --------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | To accept the resignation of Larsens
officers and directors;                                                                   
|
| |  |  | To elect new officers and directors of Vocal
Communications, Inc.;                                                              
|
| |  |  | To retain the services of Titus, Bruckner and
Berry as corporate counsel;                                                       
|
| |  |  | To retain the services of Semple & Cooper
in conjunction with our annual audit and review of our quarterly
financial statements.

13



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Part II







Item 5.Market for the Registrants Common Equity and Related Stockholder
Matters

Market for the Registrants Common Equity

Vocals common stock is not currently traded on any Canadian or U.S.
exchange and there are no stock prices to report for the last two
years. As of December 31, 2000 there were 10 stockholders of record. We have
never declared or paid cash dividends on our common stock. We presently intend
to retain future earnings, if any, for use in our business, and therefore we do
not anticipate paying any cash dividends on our capital stock in the
foreseeable future.







Item 6.Managements Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with the financial
statements and related notes contained in Item 7 of this annual report. This
discussion contains forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act. We may identify
these statements by the use of words such as believe, expect, anticipate,
intend, plan and similar expressions. These forward-looking statements
involve several risks and uncertainties. Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of various factors, including those previously described under the
caption Risk Factors in  Item 1. Business above. These forward-looking
statements speak only as of the date of this annual report, and we caution you
not to rely on these statements without also considering the risks and
uncertainties associated with these statements and our business addressed in
this annual report.

Overview

Vocal is a communication
solutions company specializing in providing audio and
voice enabled applications over the Internet ("VoIP"), including direct pc to pc, pc to phone, and phone
to pc solutions. The products and services provided by Vocal give
corporations and organizations the ability to communicate financial reports,
executive and other staff changes, product updates, or other pertinent
marketing or corporate information in a personalized real-time interactive
format. Vocal is currently developing a suite of software applications designed
to enhance the internal and externally focused communication efforts of small
and medium enterprises (smes), and small and mid-cap public corporations. Our
Vocal "Suite" of products is being designed to contain full-duplexing technology, meaning that
two may talk at the same time as in a standard telephone conversation. Vocals
VoIP technology is being designed to be firewall friendly allowing our products to operate
behind corporate firewalls thereby allowing anyone to talk to anyone at
anytime, including multi-party conversations.

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We intend to offer a core group of internal and external focused communication
services to corporate clients. Our service offerings are intended to
be built around the
common goal of establishing solid recurring revenue streams. These core
services, initially focused on assisting corporations communicate in the areas
of sales & marketing, investor relations, public relations, internal
collaboration, and distance learning are currently being tested in a prototype
environment and include corporate event broadcasting, marketing & promotion
solutions, and interactive customer service solutions. Services are
expected to be
released in phases to correspond with technology development and client demand.

Vocals goal is to become a global service provider of communications
solutions. We are planning future releases of German, Dutch and Cantonese
versions of our corporate solutions in order to maximize the utilization of our
VoIP licenses in any given period. In addition, we plan to develop proprietary
VoIP applications to reduce the overall cost structure of our technology,
launching additional product line extensions into our selected global markets.

Vocal expects the market to lead it to a division structure to address
specifically focused activities in a number of different market segments. We
have identified more than 10 related business activities in which we
may offer
our core services of voice and audio enabled Broadcasting, Marketing and
Customer Service to corporate clients. We expect these follow-on opportunities
to significantly alter our business and revenue mix, with a material
diversification of the risk profile of the company.

Vocal Business Events

Our Vocal Business
Event center is being designed to use the power of VoIP and streaming
media to provide corporations with cost effective solutions as they seek to
communicate with geographically dispersed vendors, customers, employees, and
investors. Our conferencing services are being designed to integrate seamlessly into existing
websites to provide live, archived, moderated or un-moderated environments for
internal and external focused communication events. Stand alone services in
this grouping should include:



| |  |  | VocalLIVE  Platform for live business events and presentations                               
| | - |  | ----------------------------------------------------------------------------------------------
|
| |  |  | VocalCAST  Broadcasting/webcasting solution  unlimited listeners in a playerless environment
|
| |  |  | VocalROOMS  Interactive meeting and conference rooms                                         
|
| |  |  | VocalTRAINING  Interactive platform for learning and product training sessions               

Vocal Marketing Solutions

Vocal specializes in direct pc to pc, pc to phone and phone to pc audio
and voice marketing applications. All solutions are hosted on the our servers,
with statistics and results available in real-time via the Internet. Stand
alone services in this grouping should include:



| |  |  | VocalSITE  Investor Relations websites, profiling of companies                   
| | - |  | ----------------------------------------------------------------------------------
|
| |  |  | VocalPRESS  Text and voice dissemination service                                 
|
| |  |  | VocalMARKETING  voice enhanced marketing collateral, advertising, email solutions

Vocal Support

Our VoIP customer support
solutions are designed to provide cost-effective alternatives to
traditional communication methods, dramatically decreasing the need for costly
toll free telephone and courier services. Through the use of our one-to-one
solutions that are being developed, customer service representatives
will have the capability to use real
voice over the Internet and push technology to support and educate clients in
need of assistance. Stand alone services in this grouping should include:



| |  |  | VocalCONTACT  Interactive platform for customer service
 including ecalling and instant messaging applications
| | - |  | ----------------------------------------------------------------------------------------------------------------

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Strategic Partnerships

Vocal has aligned itself with several well-respected technology companies to
provide both infrastructure and implementation assistance as it seeks to
rapidly deploy its solutions to clients. In addition to solid relationships
with technology providers, we will seek to establish and leverage strategic
alliances with other content providers in an effort to offer complimentary
services to their clients, partners, and affiliates.

Recent Events:

Purchase of Larsen International, Incorporated:

Vocal Communications, Inc.
(Vocal), the registrant, was previously known
as Larsen International, Inc., (Larsen), a Colorado corporation incorporated
in December of 1996. Vocal Investor Financial, Corp. (VIFC), a Nevada
corporation incorporated in July of 2000, acquired Larsen pursuant to an
acquisition agreement (the Acquisition Agreement) dated
December 6, 2000, between VIFC, Larsen the shareholders of
Larsen and Sandringham Investments Limited (Sandringham). In accordance with the
Acquisition Agreement, VIFC acquired all of the common stock of
Larsen, except
for 100,000 shares of stock that was provided to Sandringham for
services rendered in connection with the acquisition. As disclosed in
Item-1 of Form 10-SB/a, filed December 31, 2000, Larsen
had not commenced any operations prior to entering into the
Acquisition Agreement. Its business plan had been to acquire one or more
properties or businesses by purchase, merger, exchange of stock or
other means. Since its inception in July of 2000, VIFC has been a development stage
entity. Subsequent to the acquisition, VIFC merged with and into
Larsen; and, in connection with the merger Larsen changed its name to Vocal
Communications, Inc. Vocal and Larsen consummated the merger
on April 12, 2001 and the articles of merger were filed on
April 16, 2001.

Private Offering:

Cash proceeds in the amount of $306,602 were generated from the sales of
VIFC common stock subscribed and warrants in a private offering at
$.50 per unit. The offering was made under Regulation S of the Securities and Exchange Commission. Pursuant to
the merger, each subscriber will receive common stock and
warrants in Vocal Communications, Inc. not VIFC.

Merger of VIFC into Vocal

Subsequent to
December 31, 2000, VIFC merged into Vocal with the shareholders
of VIFC thereby obtaining direct control of Vocal. Upon the effective
date of the merger, the separate existence of VIFC ceased and
Vocal became the surviving corporation, all of the real and personal
property of VIFC became the property of Vocal and Vocal assumed the
liabilities of VIFC. As of December 31, 2000, the assets of
VIFC, apart from its equity investment in Vocal, consisted primarily
of intellectual property. By virtue of the merger, Vocal
acquired title to all of the assets of VIFC.

In accordance with the merger,
holders of VIFC common stock converted their VIFC common stock into Vocal common stock at the conversion rate of one
share of Vocal for every share of VIFC. As disclosed in Item 1 of
Form 10-SB/a, filed as of December 31, 2000, prior to the merger,
Vocal had not commenced any operations and its business plan was to
acquire one or more properties or businesses whether by purchase,
merger, exchange of stock or otherwise. By virtue of the merger, the
assets of VIFC became vested in Vocal and the business plan of Vocal
was modified accordingly. Currently, Vocal intends to pursue the
business plan established by the founders of VIFC.

16



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Results of Operations:

Revenues

Vocal did not generate any revenues during the period from inception dated
July 14, 2000 through December 31, 2000. Revenue growth, if any, is based on
Vocals business plan, which is to grow based on products and services that it
offers in the marketplace.

General and Administrative Expenses

Total General and
Administrative expenses were $147,418 during the period
from inception dated July 14, 2000 through December 31, 2000. The general and
administrative expenses incurred during this period are primarily attributable
to the following factors in the proportions indicated:



| |  | Approximately $123,000 or 83% was incurred for outside consulting fees.
|- |  | -----------------------------------------------------------------------
| 
| |  | Approximately $9,600 or 7% was incurred for accounting and legal fees. 
| 
| |  | Approximately $5,200 or 4% was for software licensing fees.            
| 
| |  | Approximately $5,800 or 4% was for amortization related expenses.      

Other Income and Expense

Total Other Income and expense was $1,437 during the period from
inception dated July 14, 2000 through December 31, 2000. $1,381, approximately
the entire amount, consists of a Foreign exchange loss incurred based on the
conversion of Canadian denominated currency to U.S. denominated Currency.

Operating Activities

Net cash used by operating activities was $66,561 during the period from
inception dated July 14, 2000 through December 31, 2000. This amount consists
primarily of the net loss of $148,855 for the period ending December 31, 2000.
Included in the net loss are non-cash charges in the amounts of $5,825 and
$71,000 respectively relating to the amortization of intangibles and the
issuance of common stock. Net cash used by operations also includes the expense
for various other items that net to $5,469.

Investing Activities

Net cash used by investing activities was $122,993 during the period from
inception dated July 14, 2000 through December 31, 2000. This amount consists
of acquisition costs relating to the purchase of Larsen International, Inc.

Financing Activities

Net cash provided by investing activities was $306,602 during the period
from inception dated July 14, 2000 through December 31, 2000. This amount is
comprised of the purchase of common stock subscribed by investors for the
purchase common stock in Vocal Investor Financial Corporation.

Liquidity and Capital Resources

Since inception, we have financed our operations solely through private
sales of equity. Our principal source of liquidity was
approximately $117,048 in cash and cash equivalents at December 31, 2000. We
intend to issue additional private placements during the next fiscal year,
which will be used for operating capital and potential additional business
expansion. The amount of the cash proceeds raised in conjunction with the
proposed private offerings, together with our current available cash is
anticipated to sustain Vocals operating and investment activities for the next
12 months.

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Item 7. Financial Statements







VOCAL COMMUNICATIONS, CORP.
(A DEVELOPMENT STAGE COMPANY)

FINANCIAL STATEMENTS

For The Year Ended
December 31, 2000







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INDEPENDENT AUDITORS REPORT

To The Stockholders and Board of Directors of
Vocal Communications, Corp.

We have audited the accompanying balance sheet of Vocal Communications, Corp.
as of December 31, 2000, and the related statements of operation, changes in
stockholders deficit, and cash flows for the period from the date of inception
thru December 31, 2000. These financial statements are the responsibility of
the Companys management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatements. 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 our audit
provides 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 Vocal Communications, Corp. as
of December 31, 2000, and the results of its operations, changes in
stockholders deficit, and its cash flows for the year ended December 31, 2000
in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 8 to the
financial statements, the Companys significant operating losses raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

Semple & Cooper, LLP

Certified Public Accountants

Phoenix, Arizona
March 22, 2001

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Vocal Communications, Corp.

(A Development Stage Company)
BALANCE SHEET
DECEMBER 31, 2000

|                                                                                                                                         |                                         |                                              |                                      |         |          |   | 
|---------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------- | -------------------------------------------- | ------------------------------------ | ------- | -------- | - | 
|                                                                                                                                         |                                         |                                              | ASSETS                              
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|Current Assets:                                                                                                                         
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                         | Cash and cash equivalents (Note 1)      |                                              | $                                    | 117,048 |         
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                         | Prepaid expenses                        |                                              |                                      | 3,565   |         
|                                                                                                                                         |                                         |                                              |                                      |        
|                                                                                                                                         |                                         | Total Current Assets                         |                                      |         | 120,613  |  
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|Intangible assets, net (Note 2):                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                         | Goodwill                                |                                              |                                      | 250,000 |         
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                         | Software licenses and development costs |                                              |                                      | 92,168  |         
|                                                                                                                                         |                                         |                                              |                                      |        
|Total Assets                                                                                                                             |                                         | $                                            | 462,781                              |        
|                                                                                                                                         |                                         |                                              |                                      |        
|                                                                                                                                         |                                         |                                              | LIABILITIES AND STOCKHOLDERS EQUITY
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|Current Liabilities:                                                                                                                    
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                         | Accounts payable (Note 3)               |                                              |                                      | 9,034   |         
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                         | Accrued liability (Note 5)              |                                              |                                      | 175,000 |         
|                                                                                                                                         |                                         |                                              |                                      |        
|Total Current Liabilities                                                                                                                |                                         |                                              | 184,034                              |        
|                                                                                                                                         |                                         |                                              |                                      |        
|Commitments: (Note 6)                                                                                                                    |                                         |                                              |                                     |        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|Stockholders Equity: (Note 7)
Common stock, $.001 par value, 100,000,000 shares authorized,
    7,200,000 shares issued and outstanding |                                         |                                              | 7,200                                |        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                         |                                         | Additional paid in capital                   |                                      |         | 113,800  |  
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                         |                                         | Common stock subscribed                      |                                      |         | 306,602  |  
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                         |                                         | Deficit accumulated during development stage |                                      |         | (148,855 | )
|                                                                                                                                         |                                         |                                              |                                      |        
|Total Stockholders Equity                                                                                                               |                                         |                                              | 278,747                              |        
|                                                                                                                                         |                                         |                                              |                                      |        
|Total Liabilities and Stockholders Equity                                                                                               |                                         | $                                            | 462,781                              |        
|                                                                                                                                         |                                         |                                              |                                      |        

The Accompanying Notes are an Integral Part
of the Financial Statements

20



---



##### Table of Contents



Vocal Communications, Corp.

(A Development Stage Company)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM THE DATE OF INCEPTION, JULY 14, 2000,
THROUGH DECEMBER 31, 2000

|                                    |                                   |   |           |        |  
|----------------------------------- | --------------------------------- | - | --------- | ------ | -
|Revenues                            |                                   | $ |          |       
|                                   
|                                   
|                                   
|                                   
|Cost of Revenues                    |                                   |   |          |       
|                                    |                                   |   |          
|Gross Profit                        |                                   |   |          |       
|                                   
|                                   
|                                   
|                                   
|General and administrative expenses |                                   |   | 147,418   |       
|                                    |                                   |   |          
|Net Loss from Operations            |                                   |   | (147,418  | )     
|Other Income (Expense):            
|                                   
|                                   
|                                   
|                                   
|                                    | Interest expense                  |   |           | (73    | )
|                                   
|                                   
|                                   
|                                   
|                                    | Interest income                   |   |           | 17     |  
|                                   
|                                   
|                                   
|                                   
|                                    | Foreign currency transaction loss |   |           | (1,381 | )
|                                    |                                   |   |          
|Net Loss                            |                                   | $ | (148,855  | )     
|                                    |                                   |   |          
|Basic Loss Per Common Share         |                                   | $ | (0.03     | )     
|                                    |                                   |   |          
|Weighted Average Shares Outstanding |                                   |   | 5,400,000 |       
|                                    |                                   |   |          

The Accompanying Notes are an Integral Part
of the Financial Statements

21



---



##### Table of Contents



Vocal Communications, Corp.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
FOR THE PERIOD FROM THE DATE OF INCEPTION, JULY 14, 2000,
THROUGH DECEMBER 31, 2000

|                                |                                                   |  |           |              |  |             |       |       |         |   |            |            |  |   |         |         |  |             |          |          |               |   |         |          |  
|------------------------------- | ------------------------------------------------- |  | --------- | ------------ |  | ----------- | ----- | ----- | ------- | - | ---------- | ---------- |  | - | ------- | ------- |  | ----------- | -------- | -------- | ------------- | - | ------- | -------- | -
|                                |                                                   |  |           | Common Stock |  | Deficit     |      
|                                |                                                   |  |           |              |  | Accumulated |      
|                                |                                                   |  |           |              |  |             |       |       |         |   | Additional |            |  |   |         |         |  | During      |          |          | Total         |  
|                                |                                                   |  |           |              |  |             |       |       |         |   | Paid In    |            |  |   |         |         |  | Development |          |          | Stockholders' |  
|                                |                                                   |  | Shares    |              |  | Amount      |       |       | Capital |   |            | Subscribed |  |   | Stage   |         |  | Equity      |         
|                                |                                                   |  |           |              |  |             |       |       |         |   |            |            |  |   |         |         |  |             |         
|Date of inception July 14, 2000 |                                                   |  |           |              |  | $           |      |       |         | $ |           |            |  | $ |        |         |  | $           |         |          |               | $ |        |         
|                               
|                               
|                               
|                               
|                                | Issuance
of common stock for services             |  |           | 7,200,000    |  |             |       | 7,200 |         |   |            | 113,800    |  |   |         |        |  |             |          |         |               |   |         | 121,000  |  
|                               
|                               
|                               
|                               
|                                | Shares of common stock
subscribed, 613,204 shares |  |           |             |  |             |       |      |         |   |            |            |  |   |         | 306,602 |  |             |          |         |               |   |         | 306,602  |  
|                               
|                               
|                               
|                               
|                                | Net loss                                          |  |           |             |  |             |       |      |         |   |            |           |  |   |         |        |  |             |          | (148,855 | )             |   |         | (148,855 | )
|                                |                                                   |  |           |              |  |             |       |       |         |   |            |            |  |   |         |         |  |            
|Balance at December 31, 2000    |                                                   |  | 7,200,000 |              |  | $           | 7,200 |       |         | $ | 113,800    |            |  | $ | 306,602 |         |  | $           | (148,855 | )        |               | $ | 278,747 |         
|                                |                                                   |  |           |              |  |             |       |       |         |   |            |            |  |   |         |         |  |            

The Accompanying Notes are an Integral Part
of the Financial Statements

22



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##### Table of Contents



Vocal Communications, Corp.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM THE DATE OF INCEPTION JULY 14, 2000
TO DECEMBER 31, 2000

|                                                  |                                                                             |                                                                                                       |   |                                           |          |   |          |  
|------------------------------------------------- | --------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------- | - | ----------------------------------------- | -------- | - | -------- | -
|Increase (Decrease) in Cash and Cash Equivalents:
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Cash flows from operating activities:                                      
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Net Loss                                                                    |                                                                                                       | $ | (148,855                                  | )       
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Adjustments to reconcile net loss to net
cash used by operating activities:
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                             | Amortization                                                                                          |   |                                           | 5,825    |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                             | Issuance of stock for services                                                                        |   |                                           | 71,000   |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Changes in Assets and Liabilities:                                         
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                             | Prepaid expenses                                                                                      |   |                                           | (3,565   | )
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                             | Accounts payable                                                                                      |   |                                           | 9,034    |  
|                                                  |                                                                             |                                                                                                       |   |                                          
|                                                  |                                                                             |                                                                                                       |   | Net cash used by operating activities     |          |   | (66,561  | )
|                                                  |                                                                             |                                                                                                       |   |                                          
|                                                  | Cash flows from investing activities:                                      
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                             | Purchase of intangible assets                                                                         |   |                                           | (122,993 | )
|                                                  |                                                                             |                                                                                                       |   |                                          
|                                                  |                                                                             |                                                                                                       |   | Net cash used by investing activities     |          |   | (122,993 | )
|                                                  |                                                                             |                                                                                                       |   |                                          
|                                                  | Cash flows from financing activities:                                      
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                             | Proceeds from stock subscription receivable                                                           |   |                                           | 306,602  |  
|                                                  |                                                                             |                                                                                                       |   |                                          
|                                                  |                                                                             |                                                                                                       |   | Net cash provided by financing activities |          |   | 306,602  |  
|                                                  |                                                                             |                                                                                                       |   |                                          
|                                                  | Net change in cash and cash equivalents                                     |                                                                                                       |   | 117,048                                   |         
|                                                  | Cash and cash equivalents at beginning of period                            |                                                                                                       |   |                                          |         
|                                                  |                                                                             |                                                                                                       |   |                                          
|                                                  | Cash and cash equivalents at end of period                                  |                                                                                                       | $ | 117,048                                   |         
|                                                  |                                                                             |                                                                                                       |   |                                          
|                                                  | Supplemental disclosure of cash flow information:                          
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                             | Cash paid for:                                                                                       
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                             | Interest paid                                                                                         |   | $                                         | 73       |  
|                                                  |                                                                             |                                                                                                       |   |                                          
|                                                  |                                                                             | Non-cash Investing and Financing:                                                                    
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                             | Purchase
of goodwill through accrued liability                                                        |   | $                                         | 175,000  |  
|                                                  |                                                                             |                                                                                                       |   |                                          
|                                                  |                                                                             | Issuance of common stock as a commission on the
acquisition agreement with Larsen International, Inc. |   | $                                         | 50,000   |  
|                                                  |                                                                             |                                                                                                       |   |                                          

The Accompanying Notes are an Integral Part
of the Financial Statements

23



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##### Table of Contents



Note 1

Summary of Significant Accounting Policies, Nature of Operations and Use of Estimates:

Nature of Operations:

Vocal Communications, Corp., (formerly Vocal Investor Financial, Corp.) (the
Company), acquired Larsen International, Inc. (Larsen) pursuant to the
Acquisition Agreement, effective December 10, 2000. The Company will be merged
into Larsen International, Inc., with Larsen as the surviving corporation, and
Larsen will change its name to Vocal Communications, Corp. The accompanying
financial statements give effect to the merger as of December 31, 2000. The
stockholders of Vocal Investor Financial, Corp. hold approximately 98.6% of the
post-merger stock outstanding. As such, the accompanying financial statements
are treated as a recapitalization of Vocal Communications, Corp. The surviving
company was incorporated in the state of Colorado on December 11, 1996. The
principal business purpose of the Company is providing voice over the Internet
services for its clientele. Larsen was an inactive company prior to the time of
the acquisition. As such, no pro forma financial statements have been
presented.

The Company is currently in the development stage, as it has not yet commenced
its primary operations. Management believes that revenues should commence in
the second quarter of 2001.

Use of Estimates:

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Cash and Cash Equivalents:

Cash and cash equivalents are considered to be all highly liquid investments
purchased with an initial maturity of three (3) months or less.

Software Development Costs:

The Company capitalizes software development costs in accordance with Statement
of Financial Accounting Standards No. 86. Capitalization of software
development costs begins when the preliminary project stage is completed and
management authorizes and commits to funding the computer software project and
it is probable that the project will be completed and the software will be used
to perform the function intended. Upgrades and enhancements that result in
additional functionality are capitalized as incurred. The Company periodically
reviews the carrying value of software development costs. Amortization of
capitalized software development costs begins when all substantial testing is
complete, and the computer software is ready for its intended use. Software
development costs are amortized using the straight-line method with a useful
life of three years, which represents the estimated economic life of the
computer software.

Net Loss Per Share:

The computation of basic net loss per share is based on the weighted average
number of shares outstanding during the period. Diluted loss per share amounts
have not been presented as they are anti-dilutive. The 613,204 shares of common
stock subscribed have not been included in the weighted average shares
outstanding as they have not yet been issued, and their effect would be
anti-dilutive.

24



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##### Table of Contents



Note 1
Summary of Significant Accounting Policies, Nature of Operations and Use of Estimates (continued):

Income Taxes:

Deferred income taxes are provided on an asset and liability method, whereby
deferred tax assets are recognized for deductible temporary differences and
operating loss and tax credit carryforwards, and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their
tax basis. Deferred tax assets are reduced by a valuation allowance when, in
the opinion of management, there is uncertainty of the utilization of the
operating losses in future periods. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of
enactment.

Translation of Foreign Currencies:

Account balances and transactions denominated in foreign
currencies and the accounts of the Corporation's foreign operations
have been translated into United States funds, as follows:

Assets and liabilities at the rates of
exchange prevailing at the balance sheet date;

Revenue and expenses at average exchange
rates for the period in which the transaction occurred;

Exchange gains and losses arising from
foreign currency transactions are included in the determination of
net
      earnings for the period;

Exchange gains and losses, if
any, arising from the
translation of the Corporation's foreign operations are
      deferred
and included
as a separate component of stockholders' equity.

Note 2
Intangible Assets:

The intangible assets are made up of license fees, web site development costs,
and goodwill.

License Fees

The cost of the license fees and other assets are being amortized on
the straight-line method over their lives of one to three years. Accumulated
amortization and amortization expense was $5,825 at December 31, 2000.

Goodwill

Goodwill represents the costs associated with the acquisition of Larsen. The
goodwill is being amortized on the straight-line method over seven (7) years.
The Company periodically evaluates the carrying value of the goodwill by
determining whether amortization of the asset over its estimated useful life
could be recovered through estimated future undiscounted cash flows.

The Company periodically reviews the carrying values of the intangible
assets and records an impairment loss, if any, if anticipated future cash flows
do not equal or exceed the carrying value. If an impairment loss has occurred
the asset is reduced to its fair value.

Note 3
Related Party Transactions:

Included in accounts payable as of December 31, 2000 are amounts due to
officers totaling $1,207.

Note 4
Income Taxes:

As of December 31, 2000 long-term deferred tax assets (liabilities) consist of
the following:

|                                 |  |   |         |  
|-------------------------------- |  | - | ------- | -
|Net operating loss carryforwards |  | $ | 44,000  |  
|                                
|                                
|                                
|                                
|Less: valuation allowance        |  |   | (44,000 | )
|                                 |  |   |        
|                                 |  | $ |        |  
|                                 |  |   |        

25



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##### Table of Contents



Note 4
Income Taxes (continued):

The Company has established a valuation allowance equal to the full amount of
the net deferred tax asset primarily because of uncertainty in the utilization
of net operating loss carryforwards. The company has net operating losses in
the approximate amount of $135,000 available to offset future federal taxable
income expiring through 2020.

Note 5
Accrued Liability

Accrued Liability

The accrued liability recorded by the company is in relation to the Vocal
Investor-Acquisition Agreement with Larsen International, Inc. The payable is
due upon the closing, as defined in the agreement, which is scheduled to occur
subsequent to December 31, 2000. The liability is non-interest bearing and is
believed to be short-term in nature.

Note 6
Commitments:

Office Space

The Company currently leases office space on a month-to-month basis. The
monthly rent expense is approximately $865.

License agreements

The company has entered into a license agreement with a one-year term, which
automatically renews, and requires monthly maintenance fees of $1,500.

Note 7
Shareholders Equity:

Preferred Stock

The company has authorized the issuance of 10,000,000 shares of preferred stock
$.001 par value, with such rights and privileges as determined by the Board of
Directors. As of December 31, 2000, none of these shares have been issued.

Stock Subscriptions

The company has entered into various stock subscription agreements and has
received payments on those agreements. As of December 31, 2000 the Company has
an obligation to issue an additional 613,204 shares of its common stock.

Warrants

In conjunction with the stock subscriptions above, each share subscribed will
also be granted one warrant to purchase a share of common stock at $1.00 per
share. The warrants are exercisable for a period of 5 years.

26



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##### Table of Contents



Note 8
Going Concern:

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business. The company has experienced significant losses and negative cash
flows from operations for the period ended December 31, 2000.

There can be no assurances that the Company will be able to continue as a going
concern in view of its financial condition. The Companys continued existence
will depend upon its ability to obtain sufficient additional capital in a
timely manner to fund its operations and to further develop its long-term
business plan. Any inability to obtain additional financing will have a
material adverse effect on the Company, including possibly requiring the
Company to significantly reduce or cease its operations.

These factors raise substantial doubt about the ability of the Company to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.







Item 8.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

On December 31, 2000 Vocals Board of Directors approved a change in their
independent accountants. Vocal replaced Janet Loss, C.P.A., P.C. (Loss) as
their independent accountant and engaged Semple & Cooper, LLP. During the
audited period ending December 31, 2000, there were no disagreements with the
former accountant on any matter of accounting principles or practices,
financial statement disclosures, or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of the former accountant,
would have caused Semple & Cooper, LLP to make reference to the subject matter
of the disagreements in connection with their report. The predecessor
accountants report issued in connection with its audit of the financial
statements for the period ending June 30, 2000 did not contain any adverse
opinion or disclaimer of opinion, and was not qualified or modified as to any
uncertainty, audit scope or accounting principles. During this period, we have
not consulted Semple & Cooper, LLP regarding any matters requiring disclosure
under Regulation S-K, Item 304 (E)(2).







Part III







Item 9.Directors and Executive Officers of the Registrant

The following table shows the name, age and position of each of our executive
officers and directors as of December 31, 2000:

|                    |  |     |  |  |                                                    | 
|------------------- |  | --- |  |  | -------------------------------------------------- | 
|Name                |  | Age |  |  | Position                                          
|                    |  |     |  |  |                                                   
|C. Austin Burrell   |  | 54  |  |  | Chairman, President and Chief Executive Officer   
|                   
|                   
|                   
|                   
|Larry Richardson    |  | 57  |  |  | Chief Technology Officer                          
|                   
|                   
|                   
|                   
|Lyle A. Slaughter   |  | 44  |  |  | Chief Financial Officer                           
|                   
|                   
|                   
|                   
|Ryan Dyck           |  | 30  |  |  | Vice
President  Strategic Planning and Operations
|                   
|                   
|                   
|                   
|Blake Becher        |  | 24  |  |  | Vice President  Technology                       
|                   
|                   
|                   
|                   
|Christian Taliercio |  | 24  |  |  | Vice President  Sales                            

27



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##### Table of Contents



C. Austin (Bud) Burrell, Chairman, President, and CEO Bud is an
experienced technology and management generalist, with experience spanning
information sciences, the Internet, health care and pharmaceuticals, global
finance and banking, development stage funding, marketing, and strategic
planning. As the President and Founder of The Quantum Matrix Corp., (then a
wholly-owned subsidiary of Shearson-Lehman Bros.) Bud proposed, designed, and
consulted on the construction of the first intelligent (AI Expert) system at
Shearson, securing funding from the American Express Technology Superfund. He
also provided strategic and marketing planning assistance to several Shearson
departments including Capital Markets, Retail, Public Finance, and Systems.

Buds experience on Wall Street includes investment banking, pension fund
consulting, strategic planning, quantitative analysis, derivatives and indexes.
Bud has an extensive background in the areas of product development, corporate
finance, and administration. Buds primary objectives are to focus on corporate
governance, finance and regulatory issues, tapping into his large network of
contacts and providing general leadership in the areas of product development
and funding. During the past five years, Bud held the positions of
President, Chief Operating officer, and director of Whatsforfree
technologies, Inc., and through his own company, has provided
high-level consulting services to clients in technology related
fields.

Larry Richardson, CTO Larry has over 35 years experience in engineering,
deployment, operations, business development and management of domestic and
international telecommunications networks including Voice over IP (VoIP). His
executive profile includes work with the National Nuclear Emergency Search Team
as a Communications officer, and extensive international telecommunications
network and infrastructure work with the U.S. Army, Holmes and Narver and Black
and Veatch in wired and wireless media environments. His expertise also spans
wireless communications engineering, high tech infrastructure, IT, R&D, and
telecommunications with companies such as Holmes & Narver, SAIC, Lockheed
Martin, and EG&G.

Larry is fluent in written and spoken Spanish and Brazilian Portuguese, and he
has professional knowledge of written and spoken German having been in charge
of infrastructure engineering for Western Europe while serving in the U.S. Army
in Germany in the 1977-81 time frame. Larry is a decade member of IEEE, has a
nationwide telecommunications professional engineering certification with
N.A.R.T.E., a Masters degree in IT Systems Analysis and Design from Webster
University and a Bachelor of Science degree from Regents College, University of
the State of NY, Albany (now know as Excelsior College). Larry provides
oversight to the companys VoIP application technology development, including
all hardware infrastructure and software related issues and will serve as a
valuable resource in the areas of operational effectiveness, product
development and global expansion. During the past five years, Larry
has held the positions of President of Arroyo Wireless, Inc., Chief
Operating Officer Nominee of Telemex, Inc. and Consulting Engineer
for Black and Veatch.

Lyle Slaughter, CFO Lyle is a CPA with a financial and systems
background obtained during his tenure with Deloitte&Touche and
PriceWaterhouseCoopers. Lyles professional career has been focused on
companies situated in the hi-tech, e-commerce and real estate industries. His
industry background includes large company experience from companies such as
Rockwell International and The Capital Group, Inc., and mid-sized company
experience with several companies in the first and second stages of their
growth cycles. Most recently, Lyle was Vice-President and Controller of NHES,
Inc., an Inc-100 software developer based in Phoenix. Lyle has also
successfully completed several consulting engagements including Alanco
Technologies, Inc. (ALAN), Skymall, Inc. (SKYM), The Regency Group, Ltd.
(RGNC), and SalesRepCentral.com (SREP). Additionally, he played key roles in
the mergers of California Closet Company with Williams-Sonoma, Inc., National
Health Enhancement Systems, Inc. with HBOC and Arraid, Inc. with Alanco,
Technologies, Inc.

Lyle brings specific skills and expertise pertaining to technology
infrastructure, financial statement preparation and SEC reporting, Big-5
audits, internal controls, M&A due diligence and strategic planning. Lyle is
primarily responsible for conceptualizing and building the companys financial
management infrastructure and providing financial stability to facilitate
well-managed growth. He received his Bachelors and Masters degrees in
Accounting from the University of Arizona. During the past five
years, Lyle, has provided financial and systems related consulting
services to public companies involved in manufacturing and hi-tech,
and held the position of Vice-President and Controller of National
Health Enhancement Systems, Incorporated.

Ryan Dyck, VP Strategic Planning & Operations As founder and President of his own
private business development consulting firm Ryan providing strategic planning,
operations, and marketing planning to both development stage and established
corporations. He has assisted in the creation and development of a number of
Internet based startups focusing on the rapid deployment of organization wide
strategic and business process initiatives. As an objective thinker and
communicator, Ryan has specific skills and experience in problem solving,
corporate communications (public & private entitys), mediation, and project
management. He holds a B.Sc. in Business Administration from the University of
New Orleans, LA, and a BEd in Business Education from the University of British
Columbia.

28



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##### Table of Contents



Ryan interacts with each functional area of the company to establish and
achieve strategic business objectives. He also acts as liaison with outside
consultants to ensure controlled utilization of experienced professionals for
various Financial, Human Resource, Investor Relations and other required
functions. In addition, Ryan has a direct impact on the corporate
communications aspects of the company ensuring that a consistent message is
delivered to the general marketplace in a timely, accurate manner.
During the past five years, Ryan was the Vice-President of Strategic
Planning for Whatsforfree Technologies, Incorporated, and provided
information technology related consulting services through his
company, Strategicomm Consulting, Inc.

Blake Becher, Co-Founder, VP Technology & Client Solutions Blake comes
from a technical background including the development of multiple web-sites
ranging from e-commerce, database driven, VoIP enabled, and other leading edge
technology sites. Blake holds multi-media and Microsoft Systems Administrator
certificates from Vancouver Film School and the British Columbia Institute of
Technology. Blake has worked with over 30 companies since 1995 and brings 6
years of technical management and marketing experience to the management team.

Blake serves as the key technical liaison between the client and their
implementation of selected communication solutions. In this role, Blake uses
his extensive product knowledge and experience to ensure customer satisfaction
and rapid deployment of the Vocal brand of services. Blake is also involved
in process creation and documentation, business development, technology
planning, and product development as the company seeks to grow its service
offerings to its expanding client base. During the past five years,
Blake founded Vocal Investor Financial Corporation holding the
position of President, provided information technology related
consulting services through his own company and attended The United
Kingdom Sailing Academy earning his sailing certification as
Ocean Yacht Master.

Christian Taliercio, Co-Founder, VP Marketing & Corporate Development 
Christian has a business background with a degree in Commerce and Business
Administration from the University of British Columbia. He also worked for two
years with Warner-Lambert Canada inc. as an Account Business Manager in
Vancouver. A skilled team builder, Christian has multi-national operating
experience, and is a proven leader with an outstanding record of performance in
marketing, sales, service support, and operations.

Using his unique skill-set, Christian leads the overall marketing effort as the
company seeks to establish itself as a leader in the VoIP communications
market. Additionally, he participates in the corporate development activities
of the company, including shareholder relations, corporate communications, and
strategic relationship development. During the past five years,
Christian co-founded Vocal Investor Financial Corporation holding the
position of Vice-President of Marketing, was Provincial Account
Manager for Warner Lambert, Incorporated, and Earned a Bachelor of
Science Degree in Business Administration in the field of Accounting
at The University of British Columbia.

Compliance under Section 16(a) of the Securities Exchange Act of 1934.
Section 16 of the Exchange Act requires our directors and certain of our
officers, and persons who own more than 10% of our common stock, to file
initial reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission and the NASDAQ National Market. Such persons
are required by Securities and Exchange Commission regulation to furnish us
with copies of all Section 16(a) forms they file. Based solely on our review of
the copies of such forms furnished to us and written representation from these
officers and directors, we believe that all Section 16(a) filing requirements
were met during the year ended December 31, 2000.







Item 10.Executive Compensation

The following table provides compensation awarded to, earned by or paid
for services in all capacities for the year ended December 31, 2000 by our
President and other highly compensated executive officers and who were serving
as executive officers at the end of 2000. We did not grant any other
compensation, restricted stock awards or stock appreciation rights to these
individuals during the year ended December 31, 2000.

29



---



##### Table of Contents



Summary Compensation Table

|                     |  |      |      |  |        |              |       |       |              |        |         |  |            |              |       |           |  |  |        |    
|-------------------- |  | ---- | ---- |  | ------ | ------------ | ----- | ----- | ------------ | ------ | ------- |  | ---------- | ------------ | ----- | --------- |  |  | ------ | ---
|                     |  |      |      |  |        | Annual       |       |       | Long-Term    |       
|                     |  |      |      |  |        | Compensation |       |       | Compensation |       
|                     |  |      |      |  |        |              |       |       | Awards       |       
|                     |  |      |      |  |        |              |       |       |              |        |         |  |            | Securities   |      
|Name and             |  |      |      |  |        |              |       |       |              | Annual |         |  | Underlying |              |       | All other | 
|Principal Position * |  | Year |      |  | Salary |              |       | Bonus |              |        | Options |  |            | Compensation |      
|                     |  |      |      |  |        |              |       |       |              |        |         |  |            |              |      
|C. Austin Burrell    |  |      | 2000 |  |        |              | - 0 - |       |              |        | - 0 -   |  |            |              | - 0 - |           |  |  | 10,000 | (1)
|                    
|                    
|                    
|                    
|Blake Becher         |  |      | 2000 |  |        |              | - 0 - |       |              |        | - 0 -   |  |            |              | - 0 - |           |  |  | 30,000 | (2)
|                    
|                    
|                    
|                    
|Christian Taliercio  |  |      | 2000 |  |        |              | - 0 - |       |              |        | - 0 -   |  |            |              | - 0 - |           |  |  | 30,000 | (2)



---

|*   |  |  Vocal commenced operations in July of 2000               
|--- |  | -----------------------------------------------------------
|   
|   
|   
|   
|(1) |  |  Represents consulting services paid by Vocal             
|   
|   
|   
|   
|(2) |  |  Represents common stock issued by Vocal in lieu of salary

Stock Option Grants in 2000

Vocal did not grant any stock options in 1999 or 2000.







Item 11. Security Ownership of Certain Beneficial Owners and Management

The following table presents information as to the beneficial owners of
our common stock as of December 31, 2000 by:



| |  |  | Each stockholder known by us to be the beneficial owner of more than 5% of our common stock;
| | - |  | --------------------------------------------------------------------------------------------
|
| |  |  | Each of our directors;                                                                      
|
| |  |  | Each executive officer listed in the Summary Compensation Table,listed above;               
|
| |  |  | All of our executive officers and directors as a group.                                     

Beneficial ownership is determined under the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities. Unless indicated above, to our knowledge, the persons
and entities named in the table have sole voting and sole investment power with
respect to all shares beneficially owned, subject to community property laws
where applicable. Percentage ownership is based on 7.2 million shares of common
stock outstanding as of December 31, 2000.

Unless indicated above, the address for each executive officer and director is
listed below:

Vocal Communications, Incorporated
      6359 E. Kathleen Road
      Scottsdale, Arizona 85253

Beneficial Stock Ownership at December 31, 2000

|                |  |              |  |  |       |              |  |              |                  |  |  | 
|--------------- |  | ------------ |  |  | ----- | ------------ |  | ------------ | ---------------- |  |  | 
|                |  |              |  |  |       | Percentage   | 
|                |  |              |  |  |       | Common Stock |  |              | Percentage       | 
|Name            |  |              |  |  |       | Beneficially |  |              | Voting Rights of | 
|5% Shareholders |  | Common Stock |  |  | Owned |              |  | Common Stock |                 
|                |  |              |  |  |       |              |  |              |                 
|James Hinton(1) |  | 1,000,000    |  |  | 14%   |              |  | 14%         
|               
|               
|               
|               
|Sean Greer(2)   |  | 500,000      |  |  | 7%    |              |  | 7%          
|               
|               
|               
|               
|Rudy Mallant(3) |  | 500,000      |  |  | 7%    |              |  | 7%          
|               
|               
|               
|               
|John Kirk(4)    |  | 500,000      |  |  | 7%    |              |  | 7%          

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|                                                |  |           |  |  |  |     |  |  |  |    |   | 
|----------------------------------------------- |  | --------- |  |  |  | --- |  |  |  | -- | - | 
|                                               
|                                               
|                                               
|                                               
|Directors and Executive Officers               
|                                               
|                                               
|                                               
|                                               
|C. Austin Burrell                               |  | 2,000,000 |  |  |  | 28% |  |  |  | 28 | %
|                                               
|                                               
|                                               
|                                               
|Larry Richardson                                |  | - 0 -     |  |  |  | 0%  |  |  |  | 0  | %
|                                               
|                                               
|                                               
|                                               
|Lyle A. Slaughter                               |  | - 0 -     |  |  |  | 0%  |  |  |  | 0  | %
|                                               
|                                               
|                                               
|                                               
|Ryan Dyck                                       |  | 500,000   |  |  |  | 7%  |  |  |  | 7  | %
|                                               
|                                               
|                                               
|                                               
|Blake Becher                                    |  | 1,000,000 |  |  |  | 14% |  |  |  | 14 | %
|                                               
|                                               
|                                               
|                                               
|Christian Taliercio                             |  | 1,000,000 |  |  |  | 14% |  |  |  | 14 | %
|                                               
|                                               
|                                               
|                                               
|All directors and executive
officers as a group |  | 4,500,000 |  |  |  | 63% |  |  |  | 63 | %



---

|(1) |  | 3694 - 207B Street
Langley, BC
V3A 2G4                
|--- |  | ------------------------------------------------------
|   
|(2) |  | 36 S. Front Street; PO Box 36
New Freedom, PA 17349   
|   
|(3) |  | 23924 E. Lake Kayak Dr.
Monroe, WA 98272              
|   
|(4) |  | Suite 1705  1050 Burrard Street
Vancouver, BC
V6Z 2S3







Part IV







Item 12. Exhibits, Financial Statement Schedules and Reports on Form 8-K

|                                                                   |  |                           |  |  |        |      |  |        |         |  |      |        |  |  |  | 
|------------------------------------------------------------------ |  | ------------------------- |  |  | ------ | ---- |  | ------ | ------- |  | ---- | ------ |  |  |  | 
|                                                                   |  | Incorporated by Reference | 
|                                                                   |  |                           | 
|                                                                   |  |                           |  |  |        | File |  |        | Exhibit |  |      | Filing | 
|Exhibit Description                                                |  | Form                      |  |  | Number |      |  | Number |         |  | Date |       
|                                                                   |  |                           |  |  |        |      |  |        |         |  |      |       
|No filings were made during the period covered by this form 10-KSB







Signatures

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

|                     |  |  |  |                            
|-------------------- |  |  |  | ---------------------------
|Date: April 12, 2001 |  |  |  | VOCAL COMMUNICATIONS, INC. 
|                    
|                    
|                     |  |  |  | By:/s/ C. Austin Burrell   
|                    
|                    
|                    
|                    
|                     |  |  |  | C. Austin Burrell          
|                    
|                    
|                    
|                    
|                     |  |  |  | Chairman, President and CEO

31