UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-KSB

[X]      ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
         OF 1934

                   For the fiscal year ended December 31, 2002

                         Commission File No. 0005468

                          COMMUNICATIONS RESEARCH, INC.
                          -----------------------------
              (Exact name of small business issuer in its charter)

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                            NEVADA                                                     22-2991753
(State or other jurisdiction of incorporation or organization)            (I.R.S. Employer Identification No.)

          67 RAMAPO VALLEY RD, SUITE 103, MAHWAH, NJ                                      07430
          ------------------------------------------                                      -----
                (Address of principal offices)                                         (Zip Code)
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       Registrant's telephone number, including Area Code: (201 ) 684-0880

        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                     COMMON STOCK, PAR VALUE $.001 PER SHARE
                     ---------------------------------------
                                (Title of Class)

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months,
and (2) has been subject to such filing requirements for the past 90 days.
[x] Yes   [ ] No

Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

The issuer's revenues for the fiscal year ended December 31, 2002 were
$224,884.00.

Aggregate market value of voting stock (A Common only) held by non-affiliates of
registrant (deemed by registrant for this purpose to be neither a Director,
Officer or active employee of the registrants company) computed by reference to
the SB-2, AMENDMENT 4 dated May, 1, 2002, "DETERMINATION OF SHARE PRICE" sets
the per share value as .35 cents per share, with 10,083,091 non-affiliate shares
for an aggregate market value of $3,529,081.00

Number of shares outstanding of registrant's Common Stock, as of MARCH 15, 2003,
15,838,091 shares

DOCUMENTS INCORPORATED BY REFERENCE

Registrants SB2, AMENDMENT 4, dated May, 1, 2002, is herein incorporated by
reference throughout PART I, II and III of this report.

Transitional Small Business Disclosure Format (check one) Yes [x]   No [ ]


<PAGE>


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements as defined in Safe Harbor
under the Private Securities Litigation Reform Act of 1995. Forward-looking
statements may involve known and unknown risks, uncertainties and other factors
that may cause actual results and performance in future periods to be materially
different from any future results or performance suggested by these statements.
The company cautions investors not to place undue reliance on forward-looking
statements, which speak only to management's expectations on this date. The
Company does not undertake any obligation to publicly release any revisions to
these forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.

This discussion in this Annual Report regarding Communications Research and our
business and operations contains "forward-looking statements." These
forward-looking statements use words such as "believes," "intends," "expects,"
"may," "will," "should," "plan," "projected," "contemplates," "anticipates," or
similar statements. These statements are based on our beliefs, as well as
assumptions we have used based upon information currently available to us.
Because these statements reflect our current views concerning future events,
these statements involve risks, uncertainties and assumptions. Actual future
results may differ significantly from the results discussed in the
forward-looking statements. A reader, whether investing in our common stock or
not, should not place undue reliance on these forward-looking statements, which
apply only as of the date of this report.

When used in this Annual Report on Form 10-KSB, "Communications Research," "we,"
"our," and "us" refers to Communications Research, Inc., a Nevada corporation,
and our subsidiaries.

PART I

ITEM 1.  DESCRIPTION OF BUSINESS

OVERVIEW

         Our Company was incorporated in New Jersey on August 11, 1989. From our
inception until 1992, we had acted as consultants and engineers providing
research and development for manufacturers and clients using RF Broadband
technology for video and data products. In 1992, with data and video networking
migrating away from RF and CATV equipment to twisted pair cable and fiber
optics, we began to design and install Local Area Networked video and data
communication systems, primarily for the Health Care market. In 1994, we began
to design and install video conference and video presentation systems as well.
It was during that period, to meet the requirements of a military location, the
company developed a desktop video conference and distant learning system to meet
their anticipated training needs.

         We became a wholly owned subsidiary of Visual Telephone of New Jersey,
Inc., a publicly traded Delaware corporation ("Visual of New Jersey") on July
17, 1996. With the merger, Visual of New Jersey changed its name to Visual
Telephone International, Inc. ("Visual Telephone") in September of 1996. We
operated as a wholly owned subsidiary of Visual Telephone until May 21, 1999,
when our shares were distributed to the shareholders of Visual Telephone
pursuant to an Agreement and Plan of Reorganization dated May 14, 1999 (the
"Reorganization Agreement") by and among us, to the shareholders of record as of
close of business on May 21, 1999. Pursuant to the Reorganization Agreement: i)
International Voice Technologies, Corp., a privately held Delaware corporation
("IVT") merged with and into Visual Telephone; ii) we were to change our state
of incorporation from New Jersey to Nevada; iii) we authorized the issuance of
two classes of common stock and vesting of voting control of our shares in our
President, Carl R. Ceragno through the issuance of Class B shares; and iv)
ownership of our Class A shares was spun off to the shareholders of Visual
Telephone. Since May 21, 1999, we have operated as a separate and autonomous
entity. On July 15, 1999, we completed a change of domicile pursuant with merger
agreement which changed our state of domicile from New Jersey to Nevada.

         We presently design, develop, install and support communications
systems that process, display and transmit video, audio and data. We have two
autonomous internal divisions. Our Systems Integration Division designs,
develops and installs sophisticated data, audio and video systems and is our
core business. Our Special Systems Consulting Division provides clients with
design, development, bid specifications, cost consulting and project management
of audio, video, data, and communications systems.

                                       2
<PAGE>

         The diversity of technology we span lends itself to several
applications, both within a particular business and throughout an enterprise or
institution. Our ability spans the gamut of electronic communications. Our
customers need to communicate within their organization and/or reach a diverse
audience at many remote locations. Very often we begin working with a client to
provide a specific system or technology solution and find our scope of work
expand to include other technology systems.

          We have designed and installed electronic systems to be used as video
conferencing systems, distance learning systems, audio/visual presentation
systems, security/surveillance systems, and sophisticated campus distribution
systems. Our systems combine data, voice and video transmission in an efficient
and cost effective manner to meet client needs.

         This past year, the company decided to phase out our line of PC Based
desktop video conferencing products. Our line of video conferencing products
that featured our proprietary Visual-EZ and Communicator products will be frozen
and only existing client systems shall continue to be supported. This decision
was made as the cost to maintain compliance with new PC operating systems and
standards compliance was not justified by revenues generated from sales. The
company does own and will continue to support and develop the collaboration
software embedded into the Visual-EZ operating system, that being the TeleWRITER
AGS system and has made an agreement to resell and support the Polycom series of
products.

         The following sets forth a breakdown, by industry, segment of our sales
revenues to unaffiliated entities, sales to related entities, operating profit
or loss and identifiable assets.

INDUSTRY BACKGROUND

         Communication systems play a pivotal role in how industry utilizes
corporate information to satisfy its strategic goals. Networked resources allow
businesses to transmit and track information necessary to manage their
operations. Telecommunication connectivity is the backbone that allows the
transport of this information, in the form of data, voice or video between
employees, management and even customers. Multimedia presentations which utilize
data, voice and full motion video transmission have become an effective means
for communicating ideas, statistics and information at costs significantly lower
than long distance personal presentations.

         Communication technology has evolved in great leaps over the last
several years, yielding high quality digitally compressed, full motion video
capabilities at reduced costs for many applications other than the tradition
video conferencing and distant learning . Reduced costs have led to an increase
in options for users. Increased communications options lead to user confusion
and the need to provide guidance and expertise. We believes that the trends of
advancing technology and convergence of technology will continue, yielding
improved productivity and profitability for businesses that have planned their
communications strategies carefully, and we have positioned ourselves to provide
the knowledge and expertise necessary for the deployment of this ever advancing
technology.

DESCRIPTION OF OUR BUSINESS SEGMENTS

         SYSTEMS INTEGRATION DIVISION.
         -----------------------------

         We, through our Systems Integration Division, provide our clients with
sophisticated communications solutions designed to fulfill their strategic
needs. We provide the knowledge and experience necessary for the deployment of
digital, voice and video technology. We have been providing the development,
design, integration and support of large scale security, surveillance,
audio/visual, professional video and computer/network systems since 1989. Our
Systems Integration Division accounts for approximately 60% of our business.
This division has no foreign operations and no material foreign sales.

         Supplies, materials and testing equipment used by our System
Integration Division are supplied by various manufacturers and sources. We
believe that the various components, parts and equipment used by our Systems
Integration Division are readily available from a diverse assortment of
suppliers. The company strives to be vendor independent, allowing us to design
solutions that fit the clients needs and are right to meet project goals
defined. This eliminates the need for us to maintain an excessive level of
inventory. The elimination of any one supplier would not have a material effect
on our ability to design and install systems.

                                       3
<PAGE>

         SPECIAL SYSTEMS CONSULTING DIVISION.
         ------------------------------------

         We offer an array of consulting services as; full system
design/specification service, configuration, program development, cost
consulting, user training, installation management and technical support. Our
Communications Consulting operations begins with a discussion with the client's
management team to review the client's current communication systems and assess
their current and future needs. Existing systems are tested, documented and
mapped to aid in the diagnosis of problems, potential problem areas and to
determine what part of existing systems, if any, can be recovered and
incorporated into a client's new and improved design. A functional design and
implementation plan is established based upon the current and projected needs,
and budget, of the client.

         GOVERNMENT BUSINESS.
         --------------------

         We are qualified and registered to do business with all branches of the
federal government. Our location provides us with a strategic advantage when
bidding on projects for federal, state and local governments in the Middle
Atlantic region

         In June 1999, we were awarded a New Jersey State contract for
telecommunications consulting and technical services. In July, 2002, upon
performance review the per project cap was increased to $1,500,000.00 value per
project. This is an annual contract, renewable on or before expiration by July
31, 2003, upon review of performance and negotiation of rates. As of this date,
we have been awarded projects for engineering and technical services under this
contract. No assurances can be given that any additional projects will be
awarded to us pursuant to this contract.

         We are a qualified contractor for bidding in the Commonwealth of
Pennsylvania for video conferencing, distant learning, audio/visual, multimedia,
audio, graphic and image display system projects. This qualification is renewed
annually and is not subject to review or re-negotiation. This work is highly
competitive, requires installation and other personnel to be residents of
Pennsylvania.

         RECENTLY COMPLETED PROJECTS.
         ----------------------------

         Our Systems Special Systems Consulting or System Integration Division
is currently working on the following governmental or public projects:

                  Ramapo College of New Jersey, Mahwah, NJ
                  Passaic County Community College, Paterson, NJ
                  NJEdge, new Statewide College and University Network
                  Middlesex Community College, Edison, NJ

         In the past year, the Systems Integration Division has successfully
completed another High Definition screening room, with surround sound, for
Broadway Television Network, New York, NY, and a A/V media display system with
surround sound system in the Trustee Library of St John the Theologian
Cathedral, Tenafly, New Jersey.

         We have enjoyed business relationships with the following architectural
and engineering firms:

                  H2L2 Partners, Philadelphia, PA
                  GBQC Architects, Philadelphia, PA
                  LAN Associates, Inc. Midland Park, NJ
                  SNS Partnership, Montvale, NJ

         Current government, education and public projects represent
approximately 40 percent of our revenues. However, one large system project in
either the public or private sector could dramatically change this percentage.
Recently with the economic climate, many large projects have been suspended or
cancelled with reductions in funding for higher education in the State of New
Jersey.

         Recently the company made application for authorization to perform
consulting and project management for K-12 Schools throughout the state,
recently reorganized under New Jersey EDA. Currently, few companies have been
approved by the NJ EDA board for this certification. While we are in the
application and approval process no guaranty can be given that the State will
grant this authorization, required under new rules to provide services to K-12
schools.

                                       4
<PAGE>


MARKETING AND SALES STRATEGY.

         We focus our sales and marketing efforts on developing strategic
alliances with equipment manufacturers ("OEMs"), Architects and service
providers. This permits us to act as a vendor for the OEM, Architectural Firm or
service provider, sub-contracting our engineering, integration and installation
into the OEM's products, Architects Specifications or other service provider's
scope of work. We rely on the sales efforts of the sales professionals employed
by our business affiliates. This philosophy allows us to function without the
added burden of a large direct sales force. Additionally, we directly market our
services to Fortune 500 companies, federal, state and local governments, the
military, Department of Defense, courts and education institutions.

         We have enjoyed business relationships with the following equipment
manufacturers:

                  AutoPatch Division of XN Technology, Chency, WA
                  Crestron, Creskill, NJ
                  Extron Electronics, Anaheim, CA
                  Steward Filmscreen Corporation, Torrance, CA
                  Siemon Corporation, Waterbury, CT

         The company is a qualified System Consultant in the Siemon
Engineer/Contractor program. The term of the qualification expires on May 31,
2002. The company has registered to re-qualify for the program for an additional
two year term. Siemon Corporation has recommended and assigned projects to the
company under this agreement in the past two years.

         While we strive to maintain such relationships, no assurances are given
that it will be able to do so or whether it will be able to develop new
relationships with other manufacturers and suppliers.

        We do not believe that the business generated by our Systems Integration
Division is seasonal. While our Systems Integration Division does a significant
amount of business with agencies of federal, state and local governments, we are
not dependent upon the business of one or a few customers, the loss of any one
or more of which would have a material adverse effect upon our operations. No
single customer of our Systems Integration Division is responsible for 10% or
more of our aggregate sales. While our Systems Integration Division employs
pricing and payment terms that our management considers competitive, we do not
employ extended payment terms or liberal return policies that could have a
materially adverse effect on our operations. This division's sales varies with
the timing and scope of the projects booked. In most cases, backlog varies
between two weeks and four months.

ADVERTISING AND PROMOTION

         The Company shall launch an updated website in 2003 which provides
potential clients with detailed capability and historical information about the
company. The website will provide information on the Engineering, Systems
Integration and TeleWRITER divisions of the company.

         In addition, the website will offer, information for investors, new
releases, vendor/manufacturers represented and client specific log-in area for
e-mail, project scheduling and system updates. The Company will continue to make
improvements and expand its website. We will look into on-line ordering for
TeleWRITER products, when reasonable, as well as posting any product specials or
inventory closeouts for better client notification and easier ordering.

         The primary advertising medium used to attract new clients shall be
advertisement placement in trade publications placed in strategic issues, as
convention and exhibition issues. The Company will place increased emphasis in
2003 on expanding its advertising, public relations and investor relations
strategies. The Company will continue to expand its advertising efforts as we
anticipate our sales and marketing spending will grow dramatically in 2003. The
Company also plans to promote specific technologies or completed projects in
trade publications. The company has received a considerable amount of exposure
from recently being featured in System Contractor News. We plan to continue this
method of exposure and marketing.

                                       5
<PAGE>

DOCUMENTATION AND QUALITY ASSURANCE.

         Truly effective communications systems require easy and inexpensive
maintenance. Maintenance costs are reduced by employing accurate and easy to use
documentation. We identify, track, and map all cable runs and devices utilized
in a system. Cable test results and certification runs are compiled and
documented to provide quality assurance. We provide complete sets of prints
reflecting cable runs, equipment location and functional interconnect details
for all systems that it engineers and installs. Our mapping documentation
becomes a most useful maintenance tool. Documentation is supplied on CD's that
can be readily modified. When clients are unable to provide digitized floor
plans of their facility, we can scan and digitize any floor plan into an AutoCad
file for an additional fee. We believe that the use of our documentation and
quality assurance strategies will provide our clients with significant savings
as our mapping decreases the amount of time that technicians need to maintain
the systems that we design and install.

         We own and maintain an inventory of test and measurement equipment for
the daily requirements of our business. Additional testing equipment is acquired
to support special project requirements on a case by case basis. All such
testing and measurement equipment is re-calibrated every six months to traceable
National Bureau of Standards sources. In 2003, the company has plans to replace
all equipment greater than three years old and add additional test equipment to
meet current testing standards.

RESEARCH AND DEVELOPMENT.

         It is not anticipated that the Consulting Division or Systems
Integration Division will incur material research and development expenses and
we have not made any budgeting provisions for research and development. The
company will continue to be required to partake in advanced technology and
product training by manufacturers we represent and certification agencies
requiring continuing education and re-certification. The company will continue
to support these programs and re-certifications out of operating revenues.

         While some of the companies research and development costs are funded
from our operating revenues, much of our research and development costs are
performed under contract and paid for by our clients. In such events, we own the
rights to the fruits of such research and development and our clients have the
unlimited but non-exclusive use of the technology or design that we have
developed for them. Most development projects are to solve a specific client
problem, with no commercial viability, there is always the potential some
specific solutions could become reoccurring revenue streams.

MARKET SEGMENTS SERVED.

         We have offered our system integration and consulting services in
connection with video conference/distant learning, large scale
security/surveillance, audio/visual, professional video and
communications/networking projects. Our systems have been geared towards the
following applications:

         VIDEO CONFERENCING/DISTANCE LEARNING SYSTEMS.

         Corporations large and small have significantly increase their reliance
for corporate meetings and training since September 11th. With the perfection of
the H.323 IP network standard and the availability of reserve bandwidth in
corporate and educational networks video conferencing has matured and a new
generation of video conference products is being embraced by corporate and
educational users. The emphasis on locational convenience, together with the
availability of tuition reimbursement incentives offered by employers, have
contributed to an increase in demand for higher education and training at
off-campus locations. This allows educational institutions, businesses and
others to offer classes and training to remote locations far from the
traditional campus or home office.

         A number of national, economic, demographic and social trends,
including: i) employer and employee recognition of the need to have employees
advance their skills; ii) the shift from unskilled jobs to skilled jobs in the
United States due to the shift from an industrial to an information based
economy; iii) improvement in the student's financial prospects; and iv) the need
for colleges to increase their revenue base, are contributing to the growing
demand for career oriented education.

         We design and integrate video conferencing and distant learning systems
for corporations, educational institutions, private sector and governmental
agencies. Our marketing objectives for these systems are achieved by:

                                       6
<PAGE>

                  *Targeting major corporations, federal, state and local
                  governmental agencies and other organizations that are
                  distributed over large and medium geographic areas requiring
                  spontaneity of corporate meeting, corporate doctrine and job
                  related training for their personnel at diverse locations.

                  *Making alliances with colleges, universities and primary
                  education school boards to provide support, re-manufacturing
                  of existing systems and rollout new technology systems.

                  *Making alliances with equipment vendors and
                  telecommunications services providers to gain access to the
                  latest technology capable of providing quality, cost-effective
                  interactive video conferencing systems.

         COMPETITION - VIDEO CONFERENCING/DISTANCE LEARNING SYSTEMS
         ----------------------------------------------------------

         We face competition from a number of large and small companies, both
public and private. Many of the companies we compete with possess greater
financial and personnel resources than we possess and have greater leverage in
acquiring prospects, hiring personnel and marketing. A high degree of
competition in these areas is expected to continue. No assurance is given that
we will not be adversely affected by these factors.

                  SECURITY/SURVEILLANCE SYSTEMS.

         The use of video surveillance has aided the automation of the security
industry. Closed Circuit Television ("CCTV") surveillance is being relied upon
more heavily today to protect lives and property as an adjunct to classical
security alarm measures. Larger corporate, institutional and governmental
agencies require CCTV systems that utilize high quality industrial grade video,
elaborate control of cameras with pan/tilt/zoom capability, video matrix
switching of sources and archival recording for audit trails or submittal as
legal evidence.

         Competition in the small and medium surveillance system market is
intense as the levels of technical expertise and financial resources needed are
minimal. Large security system design and integration requires a high degree of
technical knowledge in a number of electronic systems areas. These systems are
usually distributed in a wide area making the need for multiplexing video and
control mandatory. Fiber optics are generally needed to support the wide
bandwidth multiplexing for transmittal of signals over greater distances than
copper cable will allow without equalization. Control of different pan/tilt/zoom
devices needed to meet various specifications must be designed for remote single
or multiple control. Video from multiple camera sources must be processed and
switched among numerous monitors and monitor locations.

         We have successfully designed and implemented high level
security/surveillance systems for museums, casinos and high security military
installations. Recently our services have been sought after by various local and
state agencies to provide a new generation of high end visual surveillance
system to meet objectives and directives as outlined in the Homelands Security
Bill, approved November 2002. While the events of September 11th have negatively
impacted business for us and most American companies, in its aftermath has
opened opportunity to provide 21st century Technology to meet expanded security
needs.

         Provisions of the Homeland Security Bill provides:

                  o        Establishment of new Transportation Security
                           Administration (TSA) within the Department of
                           Transportation under the Aviation and Transportation
                           Security Act. This Act significantly changes the way
                           transportation security will be performed and managed
                           in the United States. This new administration was
                           chartered to secure critical and strategic assets as
                           10,000 FAA facilities, pipelines, railroad and
                           highway bridges, Ports, highways and railroads. TSA's
                           initial budget for 2003 is 4.8 Billion dollars.

                  o        The Homeland Security Bill directly provides funding
                           to secure the 7500 miles of land and sea borders
                           shared with Canada and Mexico. Each year more than
                           500 million people are admitted into the United
                           States of which 330 million are non-citizens 10
                           Billion dollars is allocated securing Americas
                           borders, 700 Million dollars is allocated to "21st
                           century technology development for defending the
                           homeland, 5 billion for aviation security, 5 billion
                           for non-Department of Defense (DOD) Homeland security
                           and 4.6 billion allocated for physical security of
                           DOD facilities and personnel.

                                       7
<PAGE>

                  o        An additional 35 billion is expected to be spent for
                           Critical Infrastructure Protection (CIP) by private
                           industry to secure high risk facilities as nuclear
                           power plants, fossil fuel power plants, ports,
                           hydro-electric dams, telecommunications nodes and
                           chemical facilities.

         An advanced technology solution has been developed to meet the needs
and objectives of the Homeland Security initiative. The criteria for visual
security will provide the highest level of surveillance, merging video
compression technology with IP interfaces, over high speed networks, or the
internet, with real-time digital archive servers. Using IP video and control,
there is no distance limitations. The quality, performance and controls are the
same across a campus, county, state or country.

         The company has elected to become a reseller for Baxall USA, a British
manufacturer of digital cameras and has teamed with TBS-Network Intelligence
(TBS-NI), Rochelle Park, New Jersey, to provide a suitable solution to the
complex archive and retrieval issues of this program. An established and well
respected network video server company, TBS-Network Intelligence has worked to
enhance their I-View video server into a video archive and recording server that
can continuously record multiple video streams with associated audio, if needed,
into mass digital storage system. This system allows any camera or group of
cameras to be viewed in real time, or playback prerecorded cameras to recreate
past events.

         The highly advanced approach conceived by the company involves using
digital, full motion compressed video for visual surveillance. Existing data
network must be enhanced for higher bandwidth and quality of signal service,
needed for the digital camera signal transport.

         This new concept has many advantages to solve some high level
requirements of the Homeland Security Bill, allowing surveillance monitoring,
remote control and Command Centers to be distributed over large geographic
areas. To accomplish this, IP (Internet protocol) based digital cameras can be
connected by standard telephone/data cable to high speed data network backbone.
These cameras, monitors and recording devices also can be connected by wide area
networks, private virtual networks and even through the internet.

         The digital security cameras have what is termed a codec for
Coder/Decoder. The technology of digitally compressed full motion video and
audio was developed in the early 1980's and has advanced to international
standards for the interchange of audio and video signals. Currently, the
international H.261 video standard is most commonly used for what is known as
video teleconferencing and distant learning.

         The systems shall be capable of meeting international standards with
either Motion JPEG or H.261 compression standards. Presently, digital cameras,
transmission and archival storage are currently available with proprietary
protocols that are exclusive to only one manufacturer. CRI and TBS-NI elected to
use standards based IP networks and compression protocols for greater
flexibility now, with vendor independence for the future.

         COMPETITION - SECURITY/SURVEILLANCE SYSTEMS
         -------------------------------------------

         We face competition from a number of large and small manufacturers,
most possessing greater financial and personnel resources than we possess and
have greater leverage in acquiring prospects, hiring personnel and marketing.
The company approach is to continue co-development of a Network Video Recorder
with our strategic partner TBS-NI, that allows commercially available, standards
based digital cameras to be processed, controlled and archived. This will allow
a more open platform for vendor independence of peripheral equipment. Currently
there are a number of manufactures that offer digital recording of surveillance
cameras using their own proprietary algorithms and recording methods. A high
degree of competition in these areas is expected to continue. No assurance is
given that we will not be adversely affected by these factors.

                  AUDIO/VISUAL AND IMAGING.

         Audio Visual systems have grown in sophistication over the past five to
8 years and can generally be dubbed the work horse of the information age. The
convergence of technology has impacted the A/V industry in a positive way, which
has lead to a great deal of cross over technology being implemented, in a unique
way, to make presentations, training and entertainment more effective.

                                       8
<PAGE>

         Effective AV presentations are a blend of audio, video, computer,
graphic, large screen video display and network technologies integrated in a way
that meets the user requirements. These systems are used in many applications as
classrooms, lecture halls, corporate board rooms, meeting rooms, churches,
museums to name only a few. AV presentation are additionally being linked
between corporate, educational and government locations with audio and video
conferencing over a network to expand the reach of participants that potentially
will take part in meetings and class sessions.

         The highly specialized AV presentation systems require an engineering
approach and integration support that has a broad knowledge base of multiple
communications technologies. The company has been specializing and developing
large system solutions in all the allied fields and has an opportunity to
integrate special solutions bringing these special talents together to meet the
broad based needs of AV presentation system today. It is this ability, the
company believes, is what has expanded to new opportunities with our existing
client base and open new relationships with clients. Successful completion of
special system projects has opened market awareness to the value and broad base
technical expertise we be to a project.

         Typically a system includes multiple images with large screen video
projection, high resolution graphics, video media, audio sources, Surround
Sound, High Definition retrieval, computer data input, and remote access.
Systems the company is presently working on includes the normal classrooms,
meeting rooms, and conference rooms and beyond into large venue auditoriums,
churches, screening rooms, theaters, multi-purpose rooms and even home theaters.
While the scale of the project increases or decreases to meet the application,
the design, implementation, technology and quality are always to the highest
degree. As a human to information interface, Audio Video presentations provide
an effective tool to meet communicate knowledge, information and ideas.

         COMPETITION - AUDIO/VISUAL AND IMAGING
         --------------------------------------

         Competition among integrators and consultants is fierce but with the
high amount of opportunities, the growth for all the companies capable of
providing solutions for audio video presentation systems in on a steady rise.
There is significant competition in this market from small and large companies
as well as electrical contractors, retailers, and manufacturers. The company
recognizes this competition and prefers to address the market of specialty
systems with the greatest technical suffocation using multiple technologies for
meeting the presentation of clients. May competitors have greater resources and
financial backing than we have. There is no guaranty we can continue to make a
significant market impact with limited financial resources.

         PROFESSIONAL VIDEO.

         The company was founded on the belief the convergence of technology and
the Advanced Television system will create a huge market for replacement and new
installations of television equipment in broadcast support, post production and
corporate professional video users. Communications Research, having recognized
this potential over the past years has worked in technology markets to build
recognition in allied technology industries in preparation for the large scale
deployment of HD systems.

         The company recognizes, and has been carefully monitoring proceedings
of The Advanced Television Systems Committee, Inc. (ATSC), an international,
non-profit membership organization developing voluntary standards for the entire
spectrum of advanced television systems. ATSC is working to coordinate
television standards among different communications media focusing on digital
television, interactive systems, and broadband multimedia communications. ATSC
is also developing digital television implementation strategies and presenting
educational seminars on the ATSC standards.

         ATSC was formed in 1982 by the member organizations of the Joint
Committee on InterSociety Coordination (JCIC): the Electronic Industries
Association (EIA), the Institute of Electrical and Electronic Engineers (IEEE),
the National Association of Broadcasters (NAB), the National Cable Television
Association (NCTA), and the Society of Motion Picture and Television Engineers
(SMPTE). Currently, their membership is comprised of representatives of
broadcast, broadcast equipment manufacturers, motion picture, consumer
electronics, computer, cable, satellite, and semiconductor industries. ATSC
Digital TV Standards include digital high definition television (HDTV), standard
definition television (SDTV), data broadcasting, multichannel surround-sound
audio, and satellite direct-to-home broadcasting.

         The market for Digital Television Sets (DTV) is anticipated to reach 58
million units in 2007 according to the research firm of In-Stat/MDR. Although
DTV sets only began shipping in 1998, the anticipated growth is attributed to
the FCC mandating all TV sets sold in the US larger than 13" be equipped with
DTV tuners by 2007. Set manufacturers are anticipating providing these DTV sets
with IEEE 1394 and DVI connection capability and most are considering also
adding 802.11b and Ethernet connections. This proliferation is anticipated to
cause a surge of rebuilding and upgrading in the professional television market.
The technology shall require all program and content production facilities to
begin recording, distributing and transmitting in the DTV format.

                                       9
<PAGE>

         To this extent, the company has been successful in building a number of
advanced High Definition screening rooms for production companies and developing
systems for production and educational clients. We have been searching for a new
hire to head up the sales and engineering effort in this market. Supplemented
with the support our key employees can provide, we feel the company can make
sufficient progress into capturing a significant share of this market.
Additionally the company will look for strategic alliances with manufacturers
and distributors of digital video production equipment to have access to a broad
competitive line of products.

         COMPETITION - PROFESSIONAL VIDEO
         --------------------------------

While it is premature to fully evaluate the competitive market place, it is
reasonable to assume the greatest competition in deploying digital Television
systems will be from end users and their in house engineering and construction
staff. Smaller companies, low power television stations and production houses
will be most likely going outside to furnish and build there digital
infrastructure and new facilities. It is these opportunities that we expect to
pursue but there is no guarantee the company will have the resources to
effectively compete against equipment manufacturers and large system
integrators.

         COMMUNICATIONS/NETWORKING.

         We provide specialized system design, installation and support for
local area networks that support connecting data clients and display devices
with host computers and shared resources. Over the last ten years, we have seen
network technology change many times, as the need to transmit more data, voice
and video at faster rates increases. Data systems with fiber backbones running
at gigabit speeds are becoming common. A properly designed and carefully
installed system will require low maintenance and provide reliable operation
over the system's service life. Since our inception, we have successfully
designed and installed such systems.

         In a recent white paper, by Frost & Sullivan, they discuss the changing
enterprise telephony market and "all-in-one box" enterprise media exchange
solutions for organizations. According to the White Paper, "The new millennium
is expected to bring a profound change in the communications requirements for a
typical enterprise."

         Many corporations, institutions and schools are again faced with the
need to upgrade their data and or telephone network. With the convergence of
technologies formally autonomous video, voice and data networks are being
considered for replacement or restructuring to provide even higher data networks
speeds, IP telephony, media servers for information interchange, conferencing
and training. Corporate communications which is distributed between offices now
must face the reality of the ever growing dependence on their workers and
executives needs for mobility and ability to work at home.

         A new telecommunications system opportunity is expected to start in
2004, creating many opportunities for all communications industry participants.
This opportunity is being driven by those companies with aging telephone systems
and infrastructure that had little more than a band aid put on there system to
meet Y2K requirements.

         The need for employee mobile is on the rise. This mobility is taking
the form of off-premises mobility or offices. On premises wireless networks
frees the workers from being tied to one location for access to data or media
servers. IP telephony further frees the workers from accessing the corporate
network from their office, car, home or while traveling. People can have a
"follow me" communications system for messages, calls, e-mail and conferencing
anywhere around the country or world. Telephone features, corporate databases
and network applications can be retrieved remotely, creating virtual offices
anywhere, anytime.

         The company envisions new communications infrastructure to be an
merging of voice, data and video on a single integrated platform, with
efficiency greater than any singled ended solution. With telephones, media,
cameras, data, and many other communications sources becoming available with IP
interfaces, there has been a greater trend to utilize open standards in the
software and hardware in order to enable products and applications to
inter-operate among each other, and simplify the complexity associated with
applications and system design.

                                       10
<PAGE>

         The company has been successful in completing the design and providing
the specifications that meet the needs of a regional high school to replace its
aging telephone infrastructure with a unified system that immediately provides,
telephone, intercom, paging and master clock, with ability to transparently
include distributed data and video in all offices and classrooms. This solution
provided a cost effective unified system immediately with the capability to add
value added features at significantly reduced cost to the school district
compared to older systems. This advanced system provides automated operation,
300 telephone, 380 speakers and 250 clocks. Only a few years ago it would have
required the procurement and installation of three independent, autonomous
propriety systems that could not inter-operate seamlessly.

         COMPETITION - COMMUNICATIONS/NETWORKING.
         ----------------------------------------

         While the network and communications the company provides is cutting
edge, these advanced solutions utilize existing technology implemented in a
unique way. While the designs are covered by copyright their is no means of
patent or other protection of these designs. Many of the companies we compete
with possess greater financial and personnel resources than we possess and can
acquire the resources, hiring personnel and conceive systems of similar design.
A high degree of competition in these areas is expected. No assurance is given
that we will not be adversely affected by these factors.

VISUAL TELEPHONE PRODUCTS DIVISION.
-----------------------------------

         This past year, the company completed the phase out of our line of PC
Based desktop video conferencing products and Visual Telephone Products
Division. Our company shall maintain a suitable supply of replacement parts in
inventory to meet any servicing or repair needs of the existing client base. Our
proprietary Visual-EZ and Communicator products will be frozen and only existing
client systems shall continue to be supported at the level of system software of
the original system purchased.

         Competing technologies, emerging definitions of the current
international standard and the development of new industry standards have
rendered our video conferencing products non-competitive and obsolete. The
competitive nature of this industry mandates higher research and development
budgets in response to rapidly evolving standards and features with short
product life cycles and downward pricing trends. In recognition of the these
concerns, we have elected to provide Polycom equipment as our preferred vendor
of choice, for our video conferencing and distant learning systems. Polycom has
become the leading company in the market and purchasing these products for
inclusion into our video conferencing systems makes the company less susceptible
to the aforementioned competitive risks with fixed equipment costs.

         The company owns and will continue to support, and develop, the
collaboration software embedded into the Visual-EZ operating system, that being
the TeleWRITER AGS system.

          TELEWRITER-AGS OPERATING SYSTEM SOFTWARE. The TeleWRITER operating
system software was the custom operating interface for the Visual series of
products. This collaboration software was developed by Optel Communications,
Inc., Syosset, NY ("Optel"). We acquired all rights to the TeleWRITER-AGS system
software in 1999. This software was assigned by us, to a wholly owned
subsidiary, TeleWRITER CORPORATION, INC., in exchange for 51% of the common
stock in the subsidiary as well as a perpetual license to use the software as we
deem appropriate. The remainder of stock in TeleWRITER Corporation, incorporated
under the laws of the state of Nevada in September 1999, is independently held
by our President Carl Ceragno.

TELEWRITER CORPORATION
----------------------

          The TeleWRITER product has evolved for over fifteen years. TeleWRITER
was the first audio graphic collaboration software system and in the mid 1990's
captured almost 60% of the collaboration market. TeleWriter is a client based
product with a capability of having up to 32 uses share and access documents,
resources and computing programs. In a point to point environment the software
was capable of having in band face to face audio and camera video of
participants. In multipoint mode the audio conference required a simultaneous
multipoint bridge telephone conference with full graphic and annotation
functionality over an IP network. The principal feature TeleWRITER-AGS operating
system is its powerful white boarding, graphics and collaboration package. All
uses in a conference required the PC client software installed and operating on
the PC.

          The current version of the TeleWRITER-AGS operating system is nearing
the end of its life expectancy as it is based on Microsoft's Windows 95 and 98
and requires Version 2 series Microsoft NetMeeting for the T.120 and graphics
engine. With the release and wide spread acceptance of Microsoft's XP current
operating system, and their discontinuing support of Version 2 NetMeeting for
the current version 3.01, the salability of the software is dwindling.

                                       11
<PAGE>

          FUTURE PRODUCT DEVELOPMENT.
          ---------------------------

          We directed our efforts to further enhance and update the operating
system by looking to team with a corporation with the knowledge and ability to
revise the software to meet current operating system compatibility requirements.
We will need to retain the services of one or more programmers to further
develop the software to continue its commercially feasibility for us to license
it to others. No assurances can be given that this software can be developed by
us to the point that it is commercially viable as a product that we can license
to others, that we will have sufficient financial resources to develop it to the
point that it can be marketed to others on our own or that we possess the
marketing ability to sell it once it has been fully developed.

         COMPETITION - TELEWRITER CORPORATION
         ------------------------------------

         The data collaboration industry has meet and exceeded projections for
growth over the past five years. Frost and Sullivan reported "the recent
acquisition of PlaceWare by Microsoft could be exactly what the web conferencing
industry needs to reach $1 billion dollars by the end of 2004. With the high
visibility and awareness for collaboration that will likely result from
Microsoft's increasing focus on the collaborative industry, we feel web
conferencing vendors should be excited by this new venture rather than being
intimidated."

         This market has become highly competitive and relatively highly priced
with respect to product acquisition and other costs for needed computing
hardware as well as ongoing costs of operation and maintenance.

         We face competition from a number of large companies both public and
private with more expensive server based products that function with the new
operating systems and use a standard browser as the user interface in
collaborative mode. Our most significant competitors are Voyant, WebEx,
Placeware and NetMeeting. Many of the companies competing with us, with respect
to our TeleWriter products, possess greater financial and personnel resources
than we possess and have greater leverage in acquiring prospects, hiring
personnel and marketing.

EMPLOYEES

         As of December 31, 2002, we had 5 full-time employees, none of whom are
employed pursuant to the terms of an employment agreement. We also engage
independent contractors and contract workers on an as-needed basis for the
installation of the systems that we design and engineer. The number of
independent contracts utilized by us for the installation of our systems is
directly proportionate to the amount of business that our Systems Integration
Division is conducting. In 2003 we anticipate to increase the number of our
permanent employees, primarily in engineering, technical and marketing
positions. None of our employees or independent contractors are covered by a
collective bargaining agreement. We believe that our relationship with our
employees is satisfactory.

CASH REQUIREMENTS

         It is anticipated that we will require expenditures for salaries,
professional fees, office and facility lease payments and general operating
expenses over the next six months, which in the aggregate should not exceed
$175,000.00. We believe that we will be able to satisfy our cash requirements,
for both working capital and product development purposes, during the next six
months from funds generated from our operations. However, no assurance is given
that we will not be required to raise additional funds to satisfy our working
capital and other needs either privately or in a subsequent public offering of
our securities.

          When pricing a particular project, we usually require an advance
payment of 33% to 50% of the project's purchase price. Client's generally make
negotiated progress payments thereafter. Advance payments and ensuing progress
payments may not be sufficient to continuously fund our operations during the
course of large system integration projects that we undertake, resulting in gaps
in the cash flow necessary to complete the project. Internally generated cash
flow from our other projects may not be sufficient to fill these gaps. To insure
adequate cash flow and the ability to pursue larger projects, we have entered
into an asset based loan agreement with a commercial lender that permits us to
draw up to 80% of a client's purchase order up to $1,000,000.00. We cannot
undertake large system integration projects without this loan facility. While we
believe that we can continue to rely upon the availability of this loan
facility, we cannot give any assurances that this loan facility will be
available to us in the future or whether we will be able to replace it if it is
terminated.

                                       12
<PAGE>


RISK FACTORS

         An investment in the shares of common stock in the company involves a
high degree of risk and should be purchased only by those persons who can afford
to lose their investment and who have adequate liquid assets to be able to
afford a long-term illiquid investment. There can be no assurance that we will
have substantial sales or revenues, or that we will be able to sell our products
or services at a profit. Other risk factors include our reliance on a limited
in-house sales force and third-party independent distributors and wholesalers
for project sales. Prospective purchasers should, prior to purchase, carefully
consider the following risk factors, as well as other information set forth
elsewhere in this report.

RISKS RELATED TO OUR BUSINESS

OUR OPERATING LOSSES, OUR RELIANCE UPON LOANS FROM OUR OFFICERS, AND OUR
RELIANCE ON THE PROCEED OF ANY OFFERING RAISE SUBSTANTIAL DOUBT ABOUT OUR
ABILITY TO CONTINUE AS A GOING CONCERN.

         We currently estimate that we will require between $ 300,000.00 and
$350,000.00 in operating capital over the next 12 months to remain in business.
Substantial expenditures will be required to enable us to pursue large projects,
expand our services, further develop our proprietary software, and market our
services. The level of expenditures required for these activities will depend in
part upon changes in technology and whether we develop and market our products
and services independently or with others through collaborative arrangements.
Our future capital requirements will also depend on one or more of the following
factors: market acceptance of our products; the extent and progress of our
research and development programs; the costs involved in filing, protecting and
enforcing intellectual property claims; competing technological and market
developments; and the costs of marketing our services. Our capital requirements
will also depend largely on how aggressive we are in expanding our revenues and
managing our expenses.

FAILURE OF OUR OPERATING AND INTERNAL GROWTH STRATEGIES MAY AFFECT OUR ABILITY
TO EXECUTE OUR BUSINESS PLAN AND REMAIN IN BUSINESS

         We intend to grow our revenues and attain profitability by expanding
the range and markets of service we offer to customers, attracting new
customers, strategically aligning ourselves with larger business partners,
increasing the number of projects performed for existing customers, and reducing
operating and overhead expenses. Many of the factors affecting our ability to do
so may be beyond our control and we cannot be certain that our strategies will
be successful or that we will be able to generate cash flow sufficient to fund
our operations and to support internal growth. Our failure to do so could cause
us to curtail or cease our operations.

         While we strive to attain profitability, we are currently experiencing
a period of development and expansion which has placed, and could continue to
place, a significant strain on our management, customer service, support
operations, sales, administrative personnel and other resources. In order to
serve the needs of our existing and future customers, we will need to increase
our workforce, which will require us to attract, train, motivate and manage
qualified employees. Our ability to manage our planned growth will require us to
continue to expand our operating, management, information and financial systems,
all of which may significantly increase our operating expenses. Increased
operating expenses could frustrate our efforts to achieve sustained
profitability.

MOST OF OUR CONTRACTS CAN BE CANCELED ON SHORT NOTICE, WHICH MAKES IT DIFFICULT
FOR US TO FORECAST REVENUES AND EFFECTIVELY MANAGE OUR EXPENSES.

         A substantial number of our contracts can be canceled upon short
notice. Accordingly, we cannot be certain that our future revenues will
approximate our historical performance. Our inability to replace any canceled
contracts with contracts entered into with other customers could have a
significant negative effect on our business.

UNLESS CLIENTS REQUIRE OUR SERVICES AT MULTIPLE LOCATIONS OUR CONTRACTS DO NOT
PROVIDE FOR REPEAT BUSINESS, WHICH REQUIRES US TO SEEK NEW REVENUE SOURCES ON AN
ONGOING BASIS

         Many of our system integration projects are one time projects designed
to meet a specific customer need. The integrated systems that we install
generally have a long usable life expectancy. These projects do not promote long
term, repeat business with a particular customer unless that customer requires
our services at multiple locations. This requires us to maintain an ongoing
sales and marketing budget and requires our sales team to constantly attract
business from new customers.

                                       13
<PAGE>

OUR FAILURE TO ADJUST TO CHANGES IN TECHNOLOGY MAY RENDER OUR PRODUCTS AND
SYSTEMS OBSOLETE AND CAUSE A DRAMATIC REDUCTION IN OUR REVENUES.

         The telecommunication field, professional video, video conferencing and
systems networking industries are subject to rapid changes in technology.
Systems used for the transmission and display of video, voice and data as well
as the hardware which carries these systems, are subject to rapid changes in
technology. The expertise developed by our key personnel may no longer be
applicable to subsequent advancements in technology. In the future, our
customers may be able to receive enhanced services without a significant upgrade
of their existing information technology and communication systems thereby
minimizing the need for the type of services that we provide.

INTENSE COMPETITION COULD REDUCE OUR MARKET SHARE AND HARM OUR FINANCIAL
PERFORMANCE

         Our industry is highly competitive and is served by numerous small,
owner operated private companies, several public companies and several large
regional companies. There are no substantial barriers to entry in our industry
and we expect that competition will intensify in the future. Competition in the
industry depends upon a number of factors, including price. Our competitors may
have lower overhead cost structures and may, therefore, be able to provide their
services at more competitive prices. Many of our competitors have greater market
presence, engineering depth and marketing capabilities, as well as greater
financial, technological and personnel resources than we do. As a result, they
may be able to develop and expand their customer base more quickly, adapt more
swiftly to new or emerging technologies and changes in customer requirements,
take advantage of acquisition and other opportunities more readily, and devote
greater resources to the marketing and sale of their products and services than
we can. We cannot be certain that we will be able to maintain or enhance our
competitive position. We also face competition from in-house service departments
of our prospective and existing customer base and cannot be certain that our
existing or prospective customers will continue to outsource business to us in
the future.

         Current and potential competitors have established or may establish
cooperative relationships among themselves or directly with vendors to obtain
exclusive or semi-exclusive sources of products. Accordingly, it is possible
that new competitors or alliances among competitors and/or vendors may emerge
and rapidly acquire market share. Increased competition from any one of these
sources is likely to result in reduced operating margins, loss of market share
and a diminished brand franchise, any one of which could have a significant
negative affect on our business.

WE ARE SUBJECT TO LAWS GOVERNING INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
THAT MAY HAVE A NEGATIVE EFFECT ON OUR BUSINESS

         As the number of products in the telecommunication, teleconferencing
and professional video industries increases and the functionality of these
products further overlaps, companies may increasingly become subject to claims
of infringement or misappropriation of the intellectual property or proprietary
rights of others. We cannot be certain that third parties will not assert
infringement or misappropriation claims against us in the future with respect to
current or future products, or that any such assertion will not require us to
enter into royalty arrangements or litigation that would be costly to us. Any
claims or litigation, with or without merit, and any subsequent finding of
infringement would result in a diversion of our management's attention as well
as a diversion of our financial resources, and could have a significant negative
effect on our business. Adverse determinations in such claims or litigation
could have a material adverse effect on our business, financial condition and
results of operations.

         While we believe that our success will depend principally upon our
ability to design and effectively market them along with our integration and
installation services, our ability to compete is also dependent in part upon our
proprietary technology and intellectual property rights. Our inability to
protect our proprietary rights could have a significant negative effect on our
business. We have not filed for any federal copyrights, patents or trademarks to
protect our proprietary software, documentation and other proprietary
information. We cannot be certain that common law intellectual property rights
will be sufficient to protect our interests. Nor can we be certain that the
confidentiality agreements and other methods on which we may rely to protect our
trade secrets and proprietary information and rights will be adequate to prevent
competitors from developing similar technology. In the absence of patent
protection, our business may be adversely affected by competitors that develop


                                       14
<PAGE>

functionally equivalent technology and we may be subject to additional risk if
we enter into transactions in countries where intellectual property laws are not
well developed or enforced effectively. Litigation to defend and enforce our
intellectual property rights, regardless of the final outcome of such
litigation, would result in a diversion of our management's attention as well as
our financial resources, and could have a significant negative effect on our
business.

THE DEPARTURE OF MR. CERAGNO, OUR PRESIDENT, AND LACK OF QUALIFIED INSTALLATION
STAFF COULD DISRUPT OUR BUSINESS

         We depend upon the continued services of our president, Carl R.
Ceragno. Mr. Ceragno is not employed by us pursuant to the terms of an
employment contract. The loss of the services of Mr. Ceragno would have a
significant negative effect on our business as we have not hired management
personnel to perform his duties if he cannot carry them out on his own. In
addition, we do not carry key-person life insurance policies on Mr. Ceragno's
life. We do however intend to purchase such insurance in the future. However,
whether funds will be available for such purposes cannot be assured and will
depend upon our future budgeting needs. Even if insurance benefits are received
we cannot be certain that we will be able to effectively replace Mr. Ceragno or
other key employees at affordable rates.

         Our Systems Integration Division relies heavily upon the availability
of highly qualified and trained installation personnel and subcontractors for
the systems that it designs and installs. The competition for the services of
these individuals is intense. We cannot be certain that we will be successful in
attracting and retaining additional skilled installation personnel as needed.
Our failure to do so could have a significant negative effect on our business.

OUR OBLIGATION TO INDEMNIFY OFFICERS AND DIRECTORS MAY CAUSE SIGNIFICANT
OPERATIONAL EXPENSES

         Our Articles of Incorporation, Bylaws and laws of the State of Nevada
provide for the indemnification of our officers and directors. It is possible
that we may be required to pay judgments, fines, legal fees and expenses
incurred by our officers or directors in connection with their corporate
activities, provided that the officer or director acted in good faith.

CONTROL OF OUR MANAGEMENT BY OUR PRESIDENT COULD LIMIT THE ABILITY OF OTHER
STOCKHOLDERS TO GOVERN OUR AFFAIRS.

         Carl R. Ceragno, our president, owns all of our issued and outstanding
Class B shares as well as 3,300,000 of our Class A shares. He will have voting
control of our management. Mr. Ceragno will be able to continue to determine and
direct our affairs and policies and will effectively control virtually all
matters requiring approval by our stockholders, including the amendments of the
Articles of Incorporation, the election of directors, and the approval of
mergers or similar transactions. As a result, shareholders will not be able to
replace management even if they determine that we are being managed
ineffectively.

         This concentration of voting control in the hands of Mr. Ceragno may
have the effect of delaying, deferring or preventing a change in control of our
Board of Directors, impeding a merger, consolidation, takeover or other business
combination that we may otherwise consider or discouraging a potential acquirer
from making a tender offer or otherwise attempting to obtain control of our
Board of Directors. This could have a significant negative effect on the market
price of our common stock.

THE LOSS OF ONE OF OUR THREE MAJOR CUSTOMERS OR A DECREASE IN THE BUSINESS THAT
WE DO WITH ANY ONE OF THEM COULD NEGATIVELY AFFECT OUR BUSINESS

      We are dependent upon a small number of our customers as well as a small
number of systems sales for a substantial portion of our revenues. For the
fiscal year ending December 31, 1999, sales of integration services to 3 clients
accounted for 85% of our operating revenues. For the fiscal years ending
December 31, 2000 and December 31, 2001, sales of integration services to 1
client accounted for approximately 50% of our operating revenues. While our
client base has increased in 2002 the loss of any one of our larger clients or a
diminution in sales to any one of them could have a significant negative effect
on our business.

FUTURE ACQUISITIONS MAY DISRUPT OUR OPERATIONS AND DILUTE THE VALUE OF OUR
SHARES

      One of our business strategies is to pursue Strategic Alliances and
acquisition opportunities that complement our existing services, expand our
distribution channel or are compatible with our business philosophy and
strategic goals. Future acquisitions could be financed by internally generated
funds, bank borrowings, and/or public offerings or private placements of equity


                                       15
<PAGE>

or debt securities. We cannot be certain that we will be able to make
acquisitions on terms favorable to us or that funds to finance an acquisition
will be available or permitted under our financing instruments. If we complete
alliances or acquisitions, we will encounter various associated risks, including
the possible inability to integrate an acquired business into our operations,
potentially increased goodwill amortization, diversion of management's attention
and unanticipated problems or liabilities, some or all of which could have a
significant negative effect on our business. In addition, such acquisitions
could result in substantial equity dilution to existing stockholders if they are
paid for with our shares.

OUR FAILURE TO PAY DIVIDENDS COULD NEGATIVELY AFFECT OUR SHAREHOLDERS

         Investors seeking a regular cash return on their investment should know
that we have never paid dividends to our SHAREHOLDERS and do not anticipate
paying dividends to our shareholders in the foreseeable future. If our
operations become profitable, it is anticipated that earnings will be reinvested
in our operations to fund our growth.

OUR SECURITIES ARE SUBJECT TO PENNY STOCK REGULATIONS, WHICH MAY MAKE IT MORE
DIFFICULT TO SELL YOUR SHARES

         The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure relating to the market for penny stocks and their
associated risks. It is likely that our shares will be regulated as a penny
stock and will be subject to the additional disclosure requirements imposed by
this law.

         The impact of the regulations applicable to penny stocks on our
securities is a reduction in the market liquidity of our securities by limiting
the ability of broker/dealers to trade our securities and the ability of
purchasers of our securities to sell their securities in the secondary market.
The low price of our common stock also has a negative effect on the amount and
percentage of transaction costs paid by individual shareholders and our
potential ability to raise additional capital by issuing additional shares. The
primary reasons for these effects include the internal policies of many
institutional investors that prohibit the purchase of low-priced stocks, the
fact that many brokerage houses do not permit low-priced stocks to be used as
collateral for margin accounts or to be purchased on margin and brokerage house
policies and practices that tend to discourage individual brokers from dealing
in low-priced stocks. In addition, since broker's commissions on low-priced
stocks represent a higher percentage of the stock price than commissions on
higher priced stocks, the current low share price of the common stock results in
individual shareholders paying transaction costs that are a higher percentage of
their total share value than would be the case if the share price were
substantially higher. High transaction costs can erode an investor's return on
investment.

SHARES ELIGIBLE FOR FUTURE SALE MAY HAVE AN AVERSE EFFECT ON OUR STOCK PRICE

         Future sales of substantial amounts of common stock in the public
market could adversely affect market prices of our common stock. There are
approximately 15,838,091 Class A Shares issued from the authorized 40,000,000
authorized by the company. There will be approximately 10,083,091 non-affiliate
shares Class A Shares of common stock that will be freely tradeable without
restriction or further registration under the Securities Act, unless held by our
"affiliate" as that term is defined in Rule 144 under the Securities Act ("Rule
144"), which shares will be subject to the resale limitations of Rule 144. Of
the Class A Shares 5,755,000 of said shares will be deemed "restricted
securities" under Rule 144 and may not be sold unless they are registered under
the Securities Act or unless an exemption from registration, such as the
exemption provided by Rule 144, is available.

         No prediction can be made as to the effect, if any, that future sales,
or the availability of 144 stock for future sales, will have on the market price
of our stock from time to time. Sales of substantial amounts of 144 stock by us
or by stockholders who hold restricted securities, or the perception that such
sales may occur, could adversely affect market prices for our stock.

OUR ACTUAL RESULTS OF OPERATIONS MAY DIFFER MATERIALLY FROM THE FORWARD LOOKING
STATEMENTS THAT ARE CONTAINED IN THIS PROSPECTUS

         This report contains forward-looking statements that involve risks and
uncertainties. The words "anticipate", "believe", "estimate", "expect", "will",
"could", "may," and similar words are intended to identify forward-looking
statements. Our actual results could differ materially from those anticipated in
these forward-looking statements as a result of many factors, including the
risks described above and elsewhere in this report.

                                       16
<PAGE>

ADDITIONAL INFORMATION

         We have filed with the SEC a registration statement on Form SB-2 under
the Securities Act of 1933 with respect to the common stock that we are
registering. Our SEC registration became effective May 8, 2002. The SB-2
Registration expired by its terms on February, 8, 2003

         The Company is a reporting company and all filings and accompanying
exhibits, may be inspected and copied at the principal offices of the SEC, 450
Fifth Street, N.W., Washington, D.C. 20549, and at any of the 12 regional
offices of the SEC around the country. Copies of all or any part of this
registration statement may be obtained at prescribed rates from the SEC's Public
Reference Section at 450 Fifth Street, N.W., Washington, D.C. 20545 or by
calling the SEC at 1-800 SEC-0330. The SEC also maintains a World Wide Web site
on the Internet at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC.

        When we qualify statements in this document with the word "believe",
unless otherwise indicated, we are basing our belief on the knowledge and
experience of our personnel and advisors. Statistical information included in
this prospectus has been obtained by us from publications we deem reliable and
with which we have no relationship.

ITEM 2. DESCRIPTION OF PROPERTY

         We currently occupy approximately 2,850 square feet of space at 67
Ramapo Valley Road, Suite 103, Mahwah, New Jersey 07430 for our corporate and
administrative offices under a lease expiring on October 31, 2006 and requiring
$2,868.54 monthly rent subject to annual escalations. We believe that our
current space is suitable for our current and projected needs over the next ten
month period and have no current plans to lease additional space.

The leases requires the Company to bear, in addition to the basic rent, the
costs of insurance, and certain maintenance costs.

ITEM 3. LEGAL PROCEEDINGS

         There are no pending or threatened legal or governmental claims,
actions or proceedings against or relating to us which could, individually or in
the aggregate, have a materially adverse effect on us.

         Under the terms of the reorganization of Visual Telephone, which led to
the distribution of our shares to the shareholders of Visual Telephone, Visual
Telephone has assigned to us all of its rights to the lawsuit captioned Visual
Telephone International v. Michael O'Brien Pickens and the Pickens Venture
Group, Case No. 97-2969(JWB) and filed in the United States District Court in
and for the District of New Jersey. This lawsuit seeks monetary damages against
Mr. Pickens, The Pickens Venture Group, Inc. and The Pickens Group (collectively
"Pickens"). An order entering a default against the defendants in this case was
executed on August 26, 1999.

         On January 25, 2001 Michael O'Brien Pickens filled a petition of
personal bankruptcy under chapter 7 of the United States code in U.S. Bankruptcy
Court Northern District of Texas, Wichita Falls Division, C&H File No. 88761.
The Attorney on behalf of Mr. Pickens pleaded poverty on his behalf and stated
the only asset owned by Mr. Pickens is an interest in an irrevocable trust
created by his father, T. Boone Pickens, over which he has no control. Although
in the opinion of the District Court, Communications Research claims were
factually meritorious, upon review by the Bankruptcy Court in the Northern
District of Texas they denied a request for summary judgement and required
retrying issues specifically establishing the debt, fraud and breach of Mr.
Pickens fiduciary duties.

         On the basis of our understanding the Internal Revenue Service has
released it's tax liens against Mr. Pickens after performing their own
investigation, our counsel advised against pursuing the matter any further as
Mr. Pickens does not own any non-exempt property available for satisfaction of
the judgement if our case was again found to be meritorious. Upon assessment of
Communications Research, Inc. position was made, the company elected to drop the
case against Mr. Pickens personally. The United States Bankruptcy Court Northern
District of Texas Discharged the Debtor on June 18, 2001 with Order Granting
Motion to Dismiss Case By Communications Research, Inc entered September 24,
2001. A copy of the order was received in March 2002.


                                       17
<PAGE>

         We have incurred over $51,000.00 in legal fees and costs in connection
with this matter. Even with the personal bankruptcy of Mr. Pickens individually,
the company has recourse against The Pickens Venture Group, Inc. and The Pickens
Group, co-defendants in the lawsuit brought by Visual Telephone. We believe that
most of the legal fees and costs to be incurred in connection with this matter
are behind us. However, no assurances can be given that the remaining defendants
in this case can be located and would be able to satisfy any award of damages.

         We filed a lawsuit against iVoice.com, Inc, the company that merged
with our former parent company, alleging constructive eviction, trespass, breach
of contract, conversion, interference with economic relations and quantum merit.
This lawsuit, which was filed in the Bergen County Chancery Division on April 3,
2000 sought unspecified damages. On March 4, 2002, a judgment in the amount of
$31,977.89 was entered in our favor. Pursuant to that judgement, iVoice.com,
Inc. filed a Motion for Reconsideration which was denied. A final settlement in
the amount of $15,000 was agreed and paid by iVoice to Communications Research,
Inc. with $5,000.00 initial payment and $2,500.00 per month for four months. The
terms of the settlement agreement were completed in August, 2002.

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

         NOT APPLICABLE

                                     PART II

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

         Presently there is no market for our common stock.

Market Information:

         Our Class A shares have never traded on any recognized securities
exchange in 2002. On March 19, 2003 the company was given approval to trade its
securities on the National Association of Securities Dealers in the National
Quotations Bureau Pink Sheets under the symbol CRHI. The date of commencement of
trading is yet undetermined. We hope to establish a market for said shares. It
is anticipated the securities will commence trading at a value of .35 cents per
share as defined in our approved SB-2 Amendment 4.

         However, there can be no assurance that any recognized public market
will develop for our Class A shares. Holders of our common stock may not be
readily able to dispose of their interests in our common shares. Even if a
market develops for our shares, there can be no assurance as to the price that
our common shares will be traded.

HOLDERS.

         As of December 31, 2002, there were approximately 833 holders of record
of our common stock.

DIVIDENDS.

         We have not declared any cash dividends on our common stock since our
inception and do not anticipate paying such dividends in the foreseeable future.
We plan to retain any future earnings for use in our business. Any decisions as
to future payment of dividends will depend on our earnings and financial
position and such other factors, as the Board of Directors deems relevant.

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

         We have been principally focused upon our consulting and systems
integration operations. Management believes that our systems integration related
operations, which had been largely ignored while we had been a wholly owned
subsidiary of our former parent company, will be instrumental to increasing our
revenues. We believe that we are on the right path towards sustained
profitability as our revenues increase. However, we cannot be certain that we
will be able to do so. To the extent that we cannot achieve and maintain
profitability, we will require additional financing to continue our operations.

RESULTS OF OPERATIONS.

         Revenues We booked total revenues of $224,884.00 for the year ending
December 31, 2002, as compared to revenues $214,462 for the prior year. The
economic and business climate for the year made it difficult to perform at the
level projected. Resources normally used productively for income producing work
was redirected to sales and marketing to maintain project bookings and billings.


                                       18
<PAGE>

         We attribute the slight increase in revenues during 2002 to our ability
to successfully expand our marketing efforts and subsequently increase our
client base to replace clients lost following the terrorists attacks of
September 11, 2001. While the third quarter revenues increased sharply it was
insufficient to overcome unusually slow second quarter and below average fourth
quarter in 2002.

         Gross profit Our gross profit was approximately 67% for the year ended
December 31, 2002, as compared to approximately 95% for fiscal 2001. The
decrease in our gross profit was the result of system projects requiring
integration of manufactured equipment, procured and build into custom systems,
at a lessor overall markup than labor intensive consulting and engineering
projects performed solely with in-house labor and increased cost of sales.

         Operating Expenses While our revenues were essentially flat with an
increase slightly less than 5% overall, we were successfully able to manage
operating expenses, as they decreased again approximately 35% from $238,120 for
the year ending December 31, 2001 to $175,288 for the year ending December 31,
2002. The reductions in total operating expenses for 2002 reflect our continuing
effort to control operating costs and expenses, included a significant reduction
in general and administrative expenses and office salaries.

         Operating Loss We have not shown a net profit as an independent company
to date. While our operating losses have decreased significantly from $202,100
as of December 31, 2000 to $34,931 as of December 31, 2001, it increased in 2002
to $40,777.00 due largely to an increased cost of sales. Our executive officers
have been loaning us funds to finance our losses over the last several years.

         Cash and cash Equivalents Total cash as of December 31, 2001 was $4,158
as compared to $ $2,088 as of December 31, 2000. Accounts receivable increased
significantly to $22,027 as of December 31, 2002 from $12,277 as of December 31,
2001 reflecting credit terms that the Company has had to extend to promote
business. Total current assets increased to $32,554 as of December 31, 2001 from
$22,998 at December 31, 2000 as a result of our increased revenues and
associated accounts receivable.

         Current Liabilities Despite our improving operations, we are
technically insolvent as our current liabilities exceed our current assets. Our
current liabilities increased approximately 6 1/2% to $545,644 as of December
31, 2002 from $512,033 as of December 31, 2001. Our Total Liabilities increased
to $568,067 of which, as of December 31, 2002, $221,207 is currently due our
president and secretary.

         While we are taking measures to expand our revenues, improve our
liquidity and continue to trim our expenses, we cannot guaranty that we will be
able to operate profitably. Until we can do so, we are reliant upon the ongoing
loans from our executive officers or the proceeds of any stock offerings to
remain in business.

Future Expenditures

         Our future capital expenditures will depend upon our ability to
generate revenues or additional investment capital if our revenues are not
sufficient. If, and to the extent that we are successful in generating net
revenues or raising investment capital, our future expenditures will be applied
towards salaries and general working capital purposes.

         The company is in need of replacing aging office and data processing
equipment. Additionally we require additional technical testing equipment to
install and maintain sate of the art electronic systems and equipment. If the
company is unable to purchase this equipment it will be unable to effetely
compete in the markets it has defined.

LIQUIDITY AND CAPITAL RESOURCES

         We have incurred cumulative losses since being spun off as an
independent corporation. At December 31, 2002 we have an accumulated deficit of
$1,249,431, and the report from of our independent auditor on our audited
financial statements at December 31, 2002 contained a going concern statement.
We will continue to incur losses during the foreseeable future and have yet to
achieve revenues sufficient to offset direct expenses and corporate overhead. We
do not have any present commitments for capital expenditures. While we are
taking measures to expand our revenues, improve our liquidity and trim our
expenses, we cannot guaranty that we will be successful in our efforts.


                                       19
<PAGE>

         If we are unable to raise capital in the near future, we will continue
to be reliant on loans from our officers to provide additional working capital.
If our officers are unable to continue to loan us working capital, or we do not
raise working capital through our public offering, we cannot guarantee that we
will be successful in obtaining capital upon terms acceptable to us, if at all.
Our failure to secure necessary capital when needed could have a material
adverse effect on our financial condition and results of operations in future
periods.

CONTROLS AND PROCEDURES

         Our management, including Carl Ceragno our President and Chief
Financial Officer, has conducted an evaluation of the effectiveness of our
disclosure controls and procedures (as defined in Rule 13a-14(c) promulgated
under the Securities and Exchange Act of 1934, as amended) as of March 28, 2003
(the "Evaluation Date"), which is within 90 days prior to the filing date of
this report. Based upon that evaluation, our Chief Executive Officer and Chief
Financial Officer, Mr. Ceragno, has concluded that our disclosure controls and
procedures are effective for timely gathering, analyzing and disclosing the
information we are required to disclose in our reports filed under the
Securities Exchange Act of 1934, as amended. There have been no significant
changes made in our internal controls or in other factors that could
significantly affect our internal controls subsequent to the Evaluation Date.

ITEM 7. FINANCIAL STATEMENTS.

         SEE PAGES F-1 THRU F-15 - AUDITORS FINANCIAL STATEMENT


ITEM 8. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURES.

         NONE

                                    PART III

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

         The following table sets forth information regarding the executive
officers, directors and our control persons.

NAME                        AGE             POSITIONS HELD
----                        ---             --------------
Carl R. Ceragno             56              Director, President and Treasurer
Lawrence S. Hartman         37              Director and Vice President
Almajean O'Connor           53              Secretary

         The directors named above will serve until the next annual meeting of
our shareholders to be held within six (6) months of the close of our fiscal
year or until their successors shall have been elected and accepted their
positions. Directors are elected for one year terms. Mr. Ceragno and Ms.
O'Connor are our executive officers.

         Carl R. Ceragno. Carl R. Ceragno, who is our co-founder, has served as
our president and chief executive officer since our inception. His principal
responsibilities include system design engineering, project management, sales
and technical proposal preparation. From July 1969 through June of 1992, Mr.
Ceragno served as a studio engineer, project engineer, chief engineer, and
ultimately vice president of engineering for Tele-Measurements, Inc., an A/V
systems integration business located in Clifton, New Jersey.

         Mr. Ceragno received a bachelor of sciences degree in June of 1968 from
Emerson College, Boston, MA. At graduation, he was honored by receiving the
departmental award for excellence and service to the Emerson College
broadcasting department.

         Mr. Ceragno has given numerous network design and video conferencing
lectures, authored technology white papers and has authored numerous lectures
regarding telecommunications technology and integration.

         Since 1998, Mr. Ceragno has served as trustee and president of the New
York Susquehanna & Western Technical and Historical Society, is a delegate to
the United Railroad Historical Society of New Jersey, Director of NorthEast
RailCar Association (NERCA) and is active in railroad equipment restoration and
preservation.


                                       20
<PAGE>

         Lawrence S. Hartman. Lawrence S. Hartman has served as Vice
President-Corporate Counsel since May of 1999. Mr. Hartman does not devote his
full time efforts to our affairs. Rather, he provides his time on an "as needed"
basis. From June of 1999 to the present, Mr. Hartman has served as director,
president and secretary of Omega Ventures, Inc., which provides on-line
marketing services. From May of 1998 to June of 1999, Mr. Hartman had served as
a senior manager of the Ocwen Federal Bank, where his responsibilities were
devoted towards real estate asset management. From January 1996 to May of 1998,
Mr. Hartman served as Vice President, secretary and general counsel with
Terragon Realty Advisors, a real estate investment trust. From January of 1994
until January of 1996, Mr. Hartman was employed as an associate attorney with
the law firm of Coudert Brothers, where his area of practice was limited to real
estate law. Mr. Hartman earned a Bachelor of Arts degree from Albany University
in May of 1987. He earned his Juris Doctor degree from Columbia Law School in
May of 1990. Mr. Hartman is currently licensed to practice law in the State of
New York.

         Almajean M. O'Connor Almajean M. O'Connor has served as our corporate
secretary since May of 1999. She has been employed by us as our office manager
since November of 1996. From November of 1987 to November of 1996, Ms. O.'Connor
had been employed as a legal secretary and legal assistant with the law firm of
Hannoch Weisman, Roseland, New Jersey. While Ms. O'Connor has not earned a four
year degree, she has attended Atlantic County Community College, Mays Landing,
New Jersey, where she had taken computer science classes.

ITEM 10. EXECUTIVE COMPENSATION.

         The following table sets forth the compensation of our three (3)
officers for the last two (2) fiscal years and the first nine months of this
year:
<TABLE>
<CAPTION>

NAME AND                            ANNUAL COMPENSATION            LONG TERM COMPENSATION
PRINCIPAL POSITION         YEAR     SALARY       BONUS       OTHER    STOCK   SAR's   LTIP   OTHER
------------------         ----     ------       -----       -----    -----   -----   ----   -----
<S>                       <C>     <C>            <C>         <C>      <C>     <C>     <C>     <C>
Carl R. Ceragno           1999    $ 40,384.00    $0.00       $0.00    $0.00   $0.00   $0.00   $0.00
President & Treasurer     2000    $ 21,000.00    $0.00       $0.00    $0.00   $0.00   $0.00   $0.00
                          2001    $ 16,400.00    $0.00       $0.00    $0.00   $0.00   $0.00   $0.00
                          2002    $      0.00    $0.00       $0.00    $0.00   $0.00   $0.00
                                                                              $0.00
Lawrence S. Hartman       1999    $      NONE    $0.00       $0.00    $0.00   $0.00   $0.00   $0.00
Vice President            2000    $      NONE    $0.00       $0.00    $0.00   $0.00   $0.00   $0.00
                          2001    $      NONE    $0.00       $0.00    $0.00   $0.00   $0.00   $0.00
                          2002    $      NONE    $0.00       $0.00    $0.00   $0.00   $0.00   $0.00

Almajean O'Connor         1999    $ 31,538.43    $0.00       $0.00    $0.00   $0.00   $0.00   $0.00
Secretary                 2000    $  5,500.00    $0.00       $0.00    $0.00   $0.00   $0.00   $0.00
                          2001    $ 13,900.00    $0.00       $0.00    $0.00   $0.00   $0.00   $0.00
                          2002    $    800.00    $0.00       $0.00    $0.00   $0.00   $0.00   $0.00
</TABLE>

TERMS OF OFFICE.

         Our directors hold office until the next annual meeting of our
stockholders or until their successors are elected and duly qualified. All
officers serve at the discretion of the directors.

DIRECTORS' COMPENSATION

No compensation has been paid to any directors for service in such capacity in
the past. Directors may be reimbursed for expenses incurred while attending
Board and committee meetings. Board of Directors intends to adopt an appropriate
policy to compensate non-employee directors, in order to attract and retain the
services of qualified non-employee directors. Non-employee directors will be
issued 25,000 shares of common stock as compensation for their participation as
Board Members in 2003. Out of pocket expenses shall continue to be paid to all
independent directors to travel to Board and committee meetings.

STOCK OPTIONS

         NONE


                                       21
<PAGE>

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

         The following tables set forth the ownership, as of December 31, 2000,
of our common stock (i) by each person known by us to be the beneficial owner of
more than 5% of our outstanding common stock, (ii) by each of our directors,
(iii) by stockholders owning more than five percent (5%) of our shares, and (iv)
by all executive officers and our directors as a group. All persons named have
sole voting and investment power with respect to such shares, subject to
community property laws, and except as otherwise noted.

PERCENTAGE OF TOTAL SHARES

TITLE OF                                      NO. OF          Percentage of
CLASS              NAME & ADDRESS             SHARES            Ownership
-----              --------------             ------            ---------

Class A Common   Lawrence S. Hartman          550,000              3.47%

Class A Common   Almajean O'Connor            655,000              4.14%

Class A Common   Carl R. Ceragno            3,050,000             19.26%

Class B Common   Carl R. Ceragno              400,000             100.0%

All Officers and Directors as a Group
(3 Individuals)                             4,255,000             26.87%

         As our Class B shares are entitled to 100 votes per share at all
meetings at which shareholders are entitled to vote, Mr. Ceragno possesses
voting control over all matters that may come to a vote of our shareholders.

Changes in Control.

         There are currently no arrangements which would result in a change in
control of our management.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Carl R. Ceragno, our co-founder and President was a director, executive
officer and control person of Visual Telephone, our former parent company.
Pursuant to the Reorganization Agreement, we changed the state in which we had
been incorporated from New Jersey to Nevada and we were to issue two classes of
common stock and vest voting control of our shares with Mr. Ceragno.

         Carl R. Ceragno, our president, and Alma Jean O'Connor, our secretary,
have been funding our ongoing losses. Mr. Ceragno has outstanding loans to us in
the amount of $211,649 as of December 31, 2002 and Ms, O'Connor has outstanding
loans to us in the amount of $9,558, as of December 31, 2002. The loans from Mr.
Ceragno have been used to pay salaries and other operating expenses. These loans
are demand loans and are not evidenced by promissory notes and may be called by
Mr. Ceragno and Ms. O'Connor, as the case may be, at any time. Ms. O'Connor's
loan and $150,000 of Mr. Ceragno's loan accrue interest at the rate of 7% per
annum. The balance of Mr. Ceragno's loan does not accrue interest. Additionally,
we received loans of $7,050 from an entity controlled by Mr. Ceragno during
1999. A portion of that amount has been paid back and the remain outstanding
amount totals, $4,279.

         As of September 15, 2000, Omega Ventures, Inc., a corporation
controlled by Lawrence Hartman loaned us $6,600 to be applied towards the legal
fees needed to prepare the registration statement of which this prospectus is a
part. This loan bear interest at 8% per annum and is due on or before September
15, 2002. As additional consideration for making this loan, we issued this
lender 50,000 shares of our class A shares.

         We have been issued a line of credit in the amount of $1,000,000 by the
Brookdale Funding Group, none of which is currently drawn upon. We anticipate
that this loan facility would be used to help finance long term projects that
cannot be financed by other means. Repayment of this loan facility is personally
guarantied by our President, Carl R. Ceragno. The terms of this facility require
Mr. Ceragno to exercise voting control of our common stock so as to avoid a
change in our control.


                                       22
<PAGE>

         The following shares of common stock were acquired after May 14, 1999
by our executive officers and directors:
<TABLE>
<CAPTION>

      Name              Number and Class of Shares     Consideration            Date
      ----              --------------------------     -------------            ----
<S>                      <C>                         <C>                          <C>
Carl R. Ceragno          2,000,000 Class A shares    $  2,000.00             June 1, 1999
                           400,000 Class B shares    $    400.00             June 1, 1999

Alma Jean O'Connor         250,000 Class A shares    $    250.00             June 1, 1999

Lawrence Hartman           500,000 Class A shares    $     500.00            June 1, 1999
</TABLE>

         Pursuant to our agreement to acquired the Optel/TeleWriter AGS
software, we paid CSTI-Outreach Technology the sum of $150,000.00 of which
$15,000.00 was advanced by Carl R. Ceragno, our president and the balance of
$135,000.00 was paid in the form of a convertible promissory note.

RECENT DEVELOPMENTS

         The company was advised on March 18, 2003 by NASD it was cleared for an
unpriced quotation on the Pink Sheets L.L.C. for trading its Common Stock.

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

         (a) Exhibits

                  99.1     Certificate of Chief Executive Officer and Chief
                           Financial Officer

         (b) Reports on Form 8-K

                  The Company filed one (1) report on Form 8-K during 2002 as
                  follows:

                  November 5, 2002, For Registration of Certain Classes of
                  Securities Pursuant to Section 12(g) of the Securities
                  exchange Act of 1934

                                       23
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                              COMMUNICATIONS RESEARCH, INC.


Date: March 27, 2003                          By: /s/ Carl R. Ceragno
                                                 -------------------
                                                 Carl R. Ceragno



                                       24
<PAGE>



                  CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Carl Ceragno, certify that:

1. I have reviewed this annual report on Form 10-KSB of Communications Research,
Inc.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a. designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b. evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of the annual
report (the "Evaluation Date"); and

c. presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
function):

a. all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in the annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.



Date: March 27, 2003                           By: /s/ Carl R. Ceragno
                                                 -------------------
                                                 Carl R. Ceragno
                                                Principal Executive Officer


                                       25
<PAGE>


                  CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Carl Ceragno, certify that:

1. I have reviewed this annual report on Form 10-KSB of Communications Research,
Inc.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a. designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b. evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of the annual
report (the "Evaluation Date"); and

c. presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
function):

a. all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in the annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date: March 27, 2003                          By: /s/ Carl R. Ceragno
                                                 -------------------
                                                 Carl R. Ceragno


                                       26
<PAGE>



                          COMMUNICATIONS RESEARCH, INC.

                              Financial Statements

                           December 31, 2002 and 2001

                                 C O N T E N T S


Accountants' Report ..................................................... F-2

Balance Sheets .......................................................... F-3

Statements of Operations ................................................ F-5

Statements of Stockholders' Equity....................................... F-6

Statements of Cash Flows ................................................ F-7

Notes to the Financial Statements ....................................... F-8





                                      F-1
<PAGE>

                          INDEPENDENT AUDITOR'S REPORT



To the Board of Directors and Stockholders
of Communications Research, Inc.:


We have audited the accompanying balance sheets of Communications Research, Inc.
as of December 31, 2002 and 2001 and the related statements of operations,
stockholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Communications Research, Inc.
as of December 31, 2002 and 2001 and the results of its operations and cash
flows for the years then ended in conformity with generally accepted accounting
principles in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 7, the Company's
recurring operating losses and lack of working capital raise substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to those matters are also described in Note 7. The financial statements do not
include any adjustments that might result from outcome of this uncertainty.


Chisholm & Associates
North Salt Lake, Utah
March 4, 2003



                                      F-2
<PAGE>



                          Communications Research, Inc.
                                 Balance Sheets


                                     ASSETS
                                     ------

                                                                  December 31,
                                                             -------------------
                                                                2002       2001
                                                             --------   --------
CURRENT ASSETS

   Cash and Cash Equivalents                                 $  4,158   $  2,088
   Accounts receivable (net of allowance for doubtful
    accounts of  $0 and $0, respectively)                      22,027     12,277
   Inventory                                                    6,369      8,633
                                                             --------   --------

     Total Current Assets                                      32,554     22,998
                                                             --------   --------

PROPERTY & EQUIPMENT (Net)                                     97,452    144,379
                                                             --------   --------
OTHER ASSETS

    Deposits                                                    4,988      8,601
                                                             --------   --------

    Total Other Assets                                          4,988      8,601
                                                             --------   --------

     TOTAL ASSETS                                            $134,994   $175,978
                                                             ========   ========


   The accompanying notes are an integral part of these financial statements.



                                      F-3
<PAGE>


                          COMMUNICATIONS RESEARCH, INC.
                           Balance Sheets (Continued)

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

                                                             December 31,
                                                     --------------------------
                                                         2002          2001
                                                     -----------    -----------

CURRENT LIABILITIES

   Accounts payable                                  $    76,854    $    22,851
   Accounts payable - related party                        4,279          4,279
   Accrued expenses                                       97,182         78,801
   Convertible debenture                                 135,000        135,000
   Current portion of long-term liabilities              232,329        271,102
                                                     -----------    -----------

     Total Current Liabilities                           545,644        512,033
                                                     -----------    -----------

LONG-TERM LIABILITIES

   Notes payable - related party                         221,207        261,106
   Notes payable                                          33,535         43,155
   Less current portion                                 (232,329)      (271,102)
                                                     -----------    -----------

     Total Long-Term Liabilities                          22,413         33,159
                                                     -----------    -----------

     TOTAL LIABILITIES                                   568,057        545,192
                                                     -----------    -----------

STOCKHOLDERS' EQUITY

   Common stock, class A, 40,000,000 shares of par
    $0.001 authorized, 12,580,591 and 12,580,591
    issued and outstanding, respectively                  12,581         12,581
   Common stock, class B, 700,000 shares of no
    par authorized, 400,000 issued and outstanding            --             --
   Paid-In capital                                       807,037        807,037
   Subscriptions receivable                               (3,250)        (3,250)
   Retained earnings                                  (1,249,431)    (1,185,582)
                                                     -----------    -----------

     Total Stockholders' Equity                         (433,063)      (369,214)
                                                     -----------    -----------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $   134,994    $   175,978
                                                     ===========    ===========

   The accompanying notes are an integral part of these financial statements.


                                      F-4
<PAGE>

                          COMMUNICATIONS RESEARCH, INC.
                            Statements of Operations

                                                          December 31,
                                                 ------------------------------
                                                      2002             2001
                                                 ------------      ------------
REVENUES                                         $    224,884      $    214,462

COST OF SALES                                          90,373            11,273

GROSS PROFIT                                          134,511           203,189

OPERATING EXPENSES

   General and administrative expenses                 67,906            93,548
   Office salaries                                      6,665            43,861
   Rent                                                32,174            27,838
   Insurance                                           15,701            11,622
   Travel and lodging                                   3,740             7,033
   Payroll taxes                                        1,073             4,829
   Depreciation and amortization                       48,029            49,389
                                                 ------------      ------------

     Total Operating Expenses                         175,288           238,120
                                                 ------------      ------------

OPERATING INCOME (LOSS)                               (40,777)          (34,931)
                                                 ------------      ------------

OTHER INCOME AND (EXPENSES)

   Loss on disposal of assets                              --            (1,573)
   Interest expense                                   (23,072)          (34,664)
                                                 ------------      ------------

     Total Other Income and (Expenses)                (23,072)          (36,237)
                                                 ------------      ------------

INCOME (LOSS) BEFORE INCOME TAXES                     (63,849)          (71,168)

PROVISION FOR INCOME TAXES                                 --                --
                                                 ------------      ------------

NET INCOME (LOSS)                                $    (63,849)     $    (71,168)
                                                 ============      ============

NET INCOME (LOSS) PER SHARE                      $      (0.01)     $      (0.01)
                                                 ============      ============

WEIGHTED AVERAGE OUTSTANDING SHARES                12,580,591        12,580,591
                                                 ============      ============


   The accompanying notes are an integral part of these financial statements.



                                      F-5
<PAGE>

                          COMMUNICATIONS RESEARCH, INC.
                       Statements of Stockholders' Equity
                From December 31, 2000 through December 31, 2002
<TABLE>
<CAPTION>

                                                      Common Stock
                               ---------------------------------------------------------    Paid In       Retained
                                        Class A                     Class B                 Capital       Earnings
                                  Shares       Amount        Shares          Amount        (Discount)     (Deficit)
                               -----------   -----------   -----------   ---------------   -----------   -----------
<S>                             <C>          <C>               <C>       <C>               <C>           <C>
Balance on December 31, 2000    12,580,591   $    12,581       400,000   $            --   $   807,037   $(1,114,414)
                               -----------   -----------   -----------   ---------------   -----------   -----------

Net loss for the year ended
 December 31, 2001                      --            --            --                --            --       (71,168)

Balance on December 31, 2001    12,580,591        12,581       400,000                --       807,037    (1,185,582)
                               -----------   -----------   -----------   ---------------   -----------   -----------
Net loss for the year ended
 December 31,2002                       --            --            --                --            --       (63,849)
                               -----------   -----------   -----------   ---------------   -----------   -----------

Balance on December 31, 2002    12,580,591   $    12,581       400,000   $            --   $   807,037   $(1,249,431)
                               ===========   ===========   ===========   ===============   ===========   ===========
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                      F-6
<PAGE>

                          COMMUNICATIONS RESEARCH, INC.
                            Statements of Cash Flows

                                                               December 31,
                                                          --------------------
                                                            2002        2001
                                                          --------    --------
CASH FLOWS FROM OPERATING ACTIVITIES

   Net (loss)                                             $(63,849)   $(71,168)
   Non-cash items:
     Depreciation and amortization                          48,029      49,389
     Loss on sale of assets                                     --       1,573
   (Increase) decrease in current assets:
     Accounts receivable                                    (9,750)    (10,436)
     Inventory                                               2,264       3,223
   Increase (decrease) in current liabilities:
     Accounts payable                                       54,003        (329)
     Accounts payable - related party                           --      (2,171)
     Accrued expenses                                       18,381      33,733
                                                          --------    --------

       Net Cash Provided (Used) by Operating Activities     49,078       3,814
                                                          --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES

   Cash paid/received for deposits                           3,613      (5,401)
   Purchase of property and equipment                       (1,102)     (2,030)
                                                          --------    --------

       Net Cash Provided (Used) by Investing Activities      2,511      (7,431)
                                                          --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES

   Cash received from debt financing                        21,676      35,946
   Principal payments on long-term debt                    (71,195)    (33,361)
                                                          --------    --------

       Net Cash Provided (Used) by Financing Activities    (49,519)      2,585
                                                          --------    --------

INCREASE (DECREASE IN CASH                                   2,070      (1,032)

CASH AND CASH EQUIVALENTS AT BEGINNING
 OF PERIOD                                                   2,088       3,120
                                                          --------    --------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                $  4,158    $  2,088
                                                          ========    ========

Supplemental Cash Flow Information:
   Cash paid for interest                                 $  2,274    $  6,549
   Cash paid for income taxes                             $     --    $     --

Non-Cash Financing Transaction:
   Purchase of vehicles through lease                     $     --    $ 34,751



   The accompanying notes are an integral part of these financial statements.


                                      F-7
<PAGE>


                          COMMUNICATIONS RESEARCH, INC.
                        Notes to the Financial Statements
                           December 31, 2002 and 2001


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         a.  Organization

         The financial statements presented are those of Communications
         Research, Inc. (The Company). The Company was organized on August 11,
         1989 in the State of New Jersey. On July 17, 1996, the Company became a
         wholly owned subsidiary of Visual Telephone International (VTI), a
         publicly traded Delaware corporation. On May 21, 1999 shares of the
         Company were distributed to the shareholders of VTI pursuant to an
         agreement and Plan of Reorganization spin off. The Company has operated
         as a separate entity since that date. Effective July 15, 1999, the
         Company changed its domicile to the State of Nevada through the spin
         off reorganization. These financial statements are therefore
         unconsolidated with the Company's parent for all dates presented.

         The Company is engaged in the design and installation of sophisticated
         communications systems for data and audio visual systems integration.

         b.  Recognition of Revenue

         The Company recognizes income and expense on the accrual basis of
         accounting. Revenue is recorded upon sale and delivery of the Company's
         product, and/or the installation of the communication system.

         c.  Earnings (Loss) Per Share

         The computation of earnings per share of common stock is based on the
         weighted average number of shares outstanding at the date of the
         financial statements.
<TABLE>
<CAPTION>
                                                          Loss           Shares         Per Share
                                                       (Numerator)    (Denominator)      Amount
                                                       -----------    -------------      ------
<S>                                                     <C>             <C>            <C>
             For the year ended December 31, 2002:

                     Income (loss) to common
                     stockholders                       $  (63,849)     12,580,591     $   (0.01)
                                                        ==========      ==========     =========

             For the year ended December 31, 2001:

                     Income (loss) to common
                     stockholders                       $  (71,168)     12,580,591     $   (0.01)
                                                        ==========      ==========     =========
</TABLE>


                                      F-8
<PAGE>


                          COMMUNICATIONS RESEARCH, INC.
                        Notes to the Financial Statements
                           December 31, 2002 and 2001


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         c. Earnings (Loss) Per Share (continued)

         The following is the calculation for Weighted-average common shares
         used in basic and dilutive net loss per common share:
<TABLE>
<CAPTION>
                                                            For the Year Ended
                                                                December 31,
                                                      ------------------------------
                                                         2002                2001
                                                      ----------          ----------
<S>                                                   <C>                 <C>
         Common shares outstanding during
          the entire period                           12,580,591          12,580,591
         Weighted-average common shares
          issued during the period                            --                  --
                                                      ----------          ----------
         Weighted-average common shares
           used in basic EPS                          12,580,591          12,580,591
         Dilutive effects of potential
          common shares                                       --                  --
                                                      ----------          ----------
         Weighted-average number of
           common shares and dilutive
           potential common stock used
           in diluted EPS                             12,580,591          12,580,591
                                                      ----------          ----------
</TABLE>

         d.  Provision for Income Taxes

         No provision for income taxes has been recorded due to the net
         operating losses of the Company of approximately $1,294,000. The NOL
         carryforward will begin to expire in the year 2011. No tax benefit has
         been reported in the financial statements because the Company has yet
         to generate taxable income from operations, or show probability of
         taxable income. Some of the losses will be limited due to the
         acquisition and change of control.

         Deferred tax assets and the valuation account is as follows at December
         31, 2002 and 2001.
<TABLE>
<CAPTION>

                                                               December 31,
                                                  ----------------------------------
                                                       2002                 2001
                                                  -------------        -------------
<S>                                               <C>                  <C>
         Deferred tax asset:
            NOL carryforward                      $     440,000        $     402,900
            Valuation allowance                        (440,000)            (402,900)
                                                  -------------        -------------
         Total                                    $          --        $          --
                                                  =============        =============
</TABLE>


                                      F-9
<PAGE>


                          COMMUNICATIONS RESEARCH, INC.
                        Notes to the Financial Statements
                           December 31, 2002 and 2001

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         e.  Cash and Cash Equivalents

         The company considers all highly liquid investments with maturities of
         three months or less to be cash equivalents.

         f.  Property and Equipment

         Expenditures for property and equipment and for renewals and
         betterments, which extend the originally estimated economic life of
         assets or convert the assets to a new use, are capitalized at cost.
         Expenditures for maintenance, repairs and other renewals of items are
         charged to expense. When items are disposed of, the cost and
         accumulated depreciation are eliminated from the accounts, and any gain
         or loss is included in the results of operations.

         The provision for depreciation is calculated using the straight-line
         method over the estimated useful lives of the assets. Depreciation
         expense for the period ended December 31, 2002 and 2001 is $48,029 and
         $49,389, respectively.

         g.  Inventory

         Inventory is recorded at the lower of cost or market and consists
         primarily of computer components and parts.

NOTE 2 - Property and Equipment

         Property and Equipment consists of the following:
                                                 2002               2001
                                              ---------          ---------
         Leasehold Improvements               $      --          $   2,208
         Promotional Equipment                       --             21,880
         Furniture & Equipment                   34,523             34,523
         Lab & test equipment                    29,849             38,071
         Software                               150,000            150,000
         Vehicles                                51,711             51,711
                                              ---------          ---------
                Total                           266,083            298,393

           Accumulated Depreciation            (168,631)          (154,014)
                                              ---------          ---------
           Net Property & Equipment           $  97,452          $ 144,379
                                              =========          =========

                                      F-10
<PAGE>


                          COMMUNICATIONS RESEARCH, INC.
                        Notes to the Financial Statements
                           December 31, 2002 and 2001


NOTE 3 - RELATED PARTY TRANSACTIONS

         As part of being acquired by Visual Telephone International, Inc., the
         Company is indebted to Carl Ceragno an officer and director of the
         Company. The original balance owed was $150,000 bearing interest at 7%.
         During 2002, Mr Ceragno advanced an additional $20,876, and was paid
         back $26,709. The balance at December 31, 2002 and 2001 is $211,649 and
         $216,228, respectively.

         The Company received advances from RCP Enterprises, Inc. of $7,050
         during 1999. The balance due at December 31, 2002 and 2001 is $4,279,
         respectively.

         During the year ended December 31, 2000, Alma Jean O'Connor, an
         officer, loaned the Company $19,410. The note bears interest at 7% and
         is due upon demand. The balance due at December 31, 2002 and 2001 is
         $9,558 and $44,878, respectively.

NOTE 4 - LONG-TERM LIABILITIES

         Notes payable related party is detailed as follows:
<TABLE>
<CAPTION>
                                                                     2002      2001
                                                                  --------   --------
<S>                                                               <C>        <C>
               Note payable to a officer & director, bears
                 interest at 7%, payable upon demand,
                 unsecured note                                   $211,649   $216,228

               Note payable to a officer, bears interest at 7%,
                payable upon demand, unsecured note                  9,558     44,878
                                                                  --------   --------

               Total Notes payable related party                   221,207    261,106
                                                                  --------   --------
               Notes Payable are as follows:

               Note payable to a corporation, bears interest at
                1.9%, monthly payments due of $608 through
                October 2006, secured by a vehicle                  26,419     33,117

               Note payable to a bank, bears interest
               at 8.5%, installments due monthly of
               $331 through September 2004, secured
               by a vehicle                                       $  7,116   $ 10,038
                                                                  --------   --------

               Total Notes Payable                                  33,535     43,155
                                                                  --------   --------
</TABLE>


                                      F-11
<PAGE>

                          COMMUNICATIONS RESEARCH, INC.
                        Notes to the Financial Statements
                           December 31, 2002 and 2001

NOTE 4 - LONG-TERM LIABILITIES (Continued)
<TABLE>
<CAPTION>

<S>                                                                <C>        <C>
               Total Long-Term Liabilities                         254,742    304,261

               Less current portion of:
                 Notes payable - related party                     221,207    261,106
                 Notes payable                                      11,122      9,996
                                                                  --------   --------
               Total current portion                               232,329    271,102
                                                                  --------   --------
               Net Long Term Liabilities                          $ 22,413   $ 33,159
                                                                  ========   ========
</TABLE>

         Future minimum principal payments on notes payable related party are as
         follows:


                     2003                                              $ 221,207
                     ----                                              ---------

               Total notes payable-related party                       $ 221,207
                                                                       =========

         Future principal payments on Notes payable are as follows:

                     2003                                              $  11,122
                     2004                                                  9,863
                     2005                                                  7,120
                     2005                                                  5,430
                                                                       ---------
                            Total                                      $  33,535
                                                                       =========

NOTE 5 - USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

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


                                      F-12
<PAGE>

                          COMMUNICATIONS RESEARCH, INC.
                        Notes to the Financial Statements
                           December 31, 2002 and 2001

NOTE 6 - COMMITMENTS AND CONTINGENCIES

         The Company is committed to a lease agreement for their office and
         warehouse facilities. Monthly lease payments are due of $2,869 through
         November of 2006.

         Future minimum operating lease payments are as follows:

                     2003                                       $   34,428
                     2004                                           34,428
                     2005                                           34,428
                     2006                                           28,690
                                                                ----------
                                Total                           $  131,974
                                                                ==========
         Legal Proceedings
         -----------------

         Under the terms of the reorganization, VTI has assigned to the Company
         all of its rights to a lawsuit captioned VTI vs. Michael O'Brien
         Pickens and the Pickens Venture Group, Case No. 97-2969(JWB) and filed
         in the United States District Court. On August 26, 1999, the Company
         was granted a summary judgement against Pickens in the amount of
         $415,000 plus legal fees. On January 25, 2001, Michael O'Brien Pickens
         filled a petition of personal bankruptcy under chapter 7 of the United
         States cod in U.S. Bankruptcy Court. Upon review by the Bankruptcy
         Court , they denied a request for summary judgement in favor of the
         Company, and on June 18, 2001, the debt to the Company was discharged.
         The Company has recourse against the Pickens Venture Group, Inc. and
         the Pickens Group, co-defendants in the lawsuit, however no assurances
         can be given that the remaining defendants in this case can be located
         and would be able to satisfy any award of damages. The Company has
         therefore not recorded a receivable in connection with the judgement
         due to the uncertain ability to collect.

         The Company was the Plaintiff in a lawsuit involving IVoice.com ,
         wherein the Company was seeking reimbursement for office sharing
         expenses due. In March 2002 the Company was awarded a judgment in the
         amount of $31,977.89 in the Superior Court of New Jersey. The Company
         received $15,000 as a settlement in the suit and the case is closed.

NOTE 7 - GOING CONCERN

         The accompanying financial statements have been prepared assuming that
         the Company will continue as a going concern. The Company has had
         recurring operating losses for the past several years and is dependent
         upon financing to continue operations. The financial statements do not
         include any adjustments that might result from the outcome of
         uncertainty. It is management's plan to continue to implement their
         marketing strategy to generate the necessary revenue to support
         operations. The Company's revenues continue to increase, and management
         expects to report net income in the coming year. With the increase in
         revenues, management believes they


                                      F-13
<PAGE>

                          COMMUNICATIONS RESEARCH, INC.
                        Notes to the Financial Statements
                           December 31, 2002 and 2001


NOTE 7 - GOING CONCERN (Continued)

         will have sufficient funds to support operations for the coming year.
         Officers will continue to advance funds as needed for any shortfalls in
         cashflow.

NOTE 8 - FAIR VALUE OF FINANCIAL INSTRUMENTS

         Estimated fair values of the Company's financial instruments (all of
         which are held for non-trading purposes) are as follows:
<TABLE>
<CAPTION>

                                                   2002                     2001
                                           ------------------        ------------------
                                          Carrying      Fair        Carrying      Fair
                                           Amount       Value        Amount       Value
                                           ------       -----        ------       -----

<S>                                       <C>          <C>          <C>          <C>
         Cash and Cash Equivalents        $  4,158     $  4,158     $  2,088     $  2,088
         Long - Term Debt                  254,742      254,742      304,261      304,261
</TABLE>

         The carrying amount approximates fair value of cash and cash
         equivalents. The fair value of long-term debt is based on current rates
         at which the Company could borrow funds with similar remaining
         maturities.

NOTE 9 - STOCKHOLDERS EQUITY

         Pursuant to the reorganization and spin off agreement dated May 21,
         1999, the Company issued 9,233,092 shares of class A common stock to
         the shareholders of VTI, and 400,000 shares of class B common stock to
         a principal of the Company No value is placed on the stock issuance due
         to the nature of the issuance being similar to a forward stock split.
         The financial statements have been retroactively restated for the
         reorganization stock split as though it occurred at inception.

         Concurrent with the reorganization, the Company changed its domicile to
         the State of Nevada, and changed the authorized capital of the class A
         common to 40,000,000 shares of $.001 par value stock. The Company also
         authorized the creation of the 700,000 shares of class B common stock
         with no par value and 100 to 1 voting power as compared to class A
         common. The Company issued 400,000 shares of class B common to the
         Company's founder and president as part of the reorganization.

         On June 1, 1999, the Company authorized and issued 3,250,000 shares of
         class A common stock at $.001 per share, to various officers and
         employees for subscriptions receivable of $3,250. These subscriptions
         are to be paid to the Company once the shares are registered.

         During November 2000, the Company issued 97,500 shares of its common
         stock at $.31 per share for services valued at $30,225.


                                      F-14
<PAGE>

                          COMMUNICATIONS RESEARCH, INC.
                        Notes to the Financial Statements
                           December 31, 2002 and 2001


NOTE 10 - CONVERTIBLE DEBENTURES

          On November 17, 1999, the Company entered an agreement to purchase
          software from Communication Systems Technology, Inc.(CSTI). Pursuant
          to the purchase agreement the company paid $15,000 cash and became
          indebted to CSTI for $135,000. Principal and interest on the note is
          currently due, bears interest at 8%, and is secured by the software.
          The note is convertible into shares of common stock, upon registration
          of the Company's stock. The conversion rate is 80% of the average
          trading price for the common stock for the 10 trading days ending one
          day prior to the conversion election date

NOTE 11 - SUBSEQUENT EVENTS

          Effective March 19, 2003, the Company was accepted by the NASD for
          listing and received a trading symbol. The Company may now begin to
          issue shares for conversion of debt.


                                      F-15