SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (FEE REQUIRED)

For the fiscal year ended December 31, 2001 or

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED)

For the transition period from ____________ to ____________.

                         Commission file number 0-26548

                           Legal Research Center, Inc.
(Name of Small Business Issuer in Its Charter)

           Minnesota                                              41-1680384
  (State or Other Jurisdiction                                  (IRS Employer
of Incorporation or Organization)                            Identification No.)

310 Fourth Avenue South, Suite 1100, Minneapolis, MN                55415
(Address of Principal Executive Offices)                          (Zip Code)

Issuer's Telephone Number, Including Area Code:   612/332-4950

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

Securities registered under Section 12(g) of the Exchange Act:

                     Common Stock, par value $.01 per share
                                (Title of Class)

     Check whether the issuer filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes X No __

                            [Cover page 1 of 2 pages]


<PAGE>


     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  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 [X].

State issuer's revenues for its most recent fiscal year.  $5,562,323

     State the aggregate market value of the voting stock held by non-affiliates
computed by reference  to the price at which the stock was sold,  or the average
bid and ask prices of such  stock,  as of a  specified  date  within the past 60
days.  (See  definition  of  affiliate  in  Rule  12b-2  of the  Exchange  Act.)

                        $2,886,510 as of March 15, 2002


                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.

              3,520,392 shares of Common Stock as of March 15, 2002


                       DOCUMENTS INCORPORATED BY REFERENCE

     If the following documents are incorporated by reference,  briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated:  (1) any annual report to  security-holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933. The listed documents should be
clearly  described  for   identification   purposes  (e.g.,   annual  report  to
security-holders for fiscal year ended December 31, 1996).

     Definitive Proxy Statement of Legal Research Center,  Inc., relating to the
Annual  Meeting  of  Shareholders  to be held  in June  2002  (the  "2002  Proxy
Statement") (incorporated by reference into Part III of this Form 10-KSB).

                            [Cover page 2 of 2 pages]


<PAGE>


                         Item 1. DESCRIPTION OF BUSINESS

General

     Legal  Research  Center,  Inc.  (the  `Company' or `LRC') became a publicly
owned company in August 1995. The Company  provides  outsourced  legal research,
writing and  knowledge  management  services to U.S. and  Canadian  attorneys in
corporate and private  practice.  The Company also serves as a content developer
for  legal   publishers  and  creates   law-related   business-to-business   and
business-to-consumer content for Internet sites serving the legal profession and
consumers.  LRC  utilizes a carefully  selected  group of  attorneys  to provide
value-added services to its customers by (i) conducting  computerized and manual
legal and factual  information  research and analysis and (ii) preparing written
memoranda,  formal  court-ready legal briefs and surveys of the law. The Company
also markets and sells online  compliance  training products in partnership with
Integrity  Interactive  Corporation,  in  which  the  Company  holds  an  equity
interest,  and  provides  contract  attorneys  to law  firms and  corporate  law
departments on a temporary or permanent basis, and non-legal  research  services
to the general public.

Business Highlights

     The core product and service offerings of the Company's  business continued
to grow in 2001,  including  research  and  writing for  private  attorneys  and
multijurisdictional  surveys for  corporate  legal  counsel.  Additionally,  the
Company continued to author and edit publications for legal publishers and added
revenue  from the  sale of  online  compliance  products  developed  and sold in
partnership  with  Integrity  Interactive  Corporation.  The  revenue  from  the
Company's 10 largest customers accounted for approximately 85%, and one customer
71%, of total revenue in 2001, as compared to 60% in 2000.

     For the fiscal  year,  the Company  reported  revenue of $5.6  million,  an
increase of 8% over the previous  year's revenue of $5.1 million and an all-time
high for the Company.  Gross profit remained strong, at 52 cents for every $1 of
revenue,  the same as in 2000. The Company  reported net income of $403,291,  or
$.16 per share  (basic),  a 71% decrease  from the previous year end earnings of
$1,373,381,  or $.54 per share  (basic).  Adjusted for a one-time tax benefit to
reverse the valuation  allowance related to net operating losses carried forward
and to reflect a tax  provision  based on current tax rates,  the Company  would
have had net  income of  approximately  $480,000,  or $.19 per share  (basic) in
2000.

Industry Overview

     It is  estimated  that  over  $100  billion  is spent in the U.S.  on legal
services each year and that such expenditures have increased  significantly over
the past ten years.  In  advising  clients on the  routine  legal and  practical
aspects of their business transactions and dealings, and in advocating positions
in court on behalf of clients,  attorneys in corporate and private practice rely
on an analysis of applicable laws,  rules,  regulations and court decisions.  As
federal, state and local governmental authorities increasingly add to the myriad
of laws and as the  number of court  decisions  proliferate,  the  accurate  and
timely  analysis of the  controlling  law places  growing  burdens on practicing
private  and  corporate  attorneys.  Even  with the  evolutionary  expansion  of
computerized  legal  databases  such as West  Group's  WESTLAW  system  and Reed
Elsevier's  LEXIS/NEXIS  system, a significant portion of an attorney's billable
time is dedicated to legal research.

     In a large private law firm, an associate  attorney,  who typically is less
experienced  than the  attorney  having the primary  business  contact  with the
firm's client,  is usually  assigned the task of conducting all necessary  legal
and  factual  research  and of  writing  an  internal  memorandum  to the senior
attorney  related to the  client's  project or lawsuit.  The  memorandum,  which
usually  describes  the  controlling  laws and court  decisions  relevant to the
issues  presented,  may be shared with the client in connection  with  strategic
decision making on a business issue or in the ongoing litigation. If the project
involves   litigation,   the  associate   attorney  may  also  be  assigned  the
responsibility  to prepare a legal brief for  presentation to the court. A legal
brief  advocates a client's legal,  factual and business  reasons for prevailing
over the opposing party on the issues  presented to the court for  adjudication.
The Company  prepares legal memoranda and briefs for review and use by attorneys
in law firms as an alternative to internal preparation by law firm associates.


<PAGE>


     Corporations  with in-house  legal  counsel  usually rely on their staff to
advise management on core business and legal issues.  However,  in-house counsel
continue to rely on private law firm support for  expertise in areas  outside of
the  corporate  counsel's  knowledge  and  for the  conduct  of  litigation.  As
corporations  seek to improve  operating  efficiencies  and reduce  costs in all
areas of their  businesses,  their  in-house  legal  counsel also seek to reduce
overall outside legal expenses.  Increasingly,  corporate  clients have begun to
treat legal services as a commodity and have been carefully  reviewing the legal
fees  charged  by  private  law  firms  for  analytical  research  and  writing,
especially  since much of this work is performed  out of the  client's  view and
therefore  cannot easily be assessed as to its actual added value.  These trends
also have led  corporations  to outsource  their legal and factual  research and
writing  activities  to the  Company.  Management  believes  that  there will be
continued  growth in the  outsourcing of legal and factual  research and writing
activities by corporations and that such  corporations will increasingly use, or
require their outside counsel to use, the Company for such purposes.

     Individual attorney practitioners and small law firms often do not have the
professional  support  for the  conduct  of legal and  factual  research  or for
writing projects.  In order to accomplish  necessary legal research and writing,
yet at the same  time  focus  their  efforts  on  direct  client  contact,  solo
practitioners  and small law firms  increasingly are outsourcing their legal and
factual research and writing activities to the Company.

Business Overview and Initiatives

     LRC's core activities  consist of providing legal and factual  research and
writing and  knowledge  management  services to its  customers.  The Company may
receive  assignments from corporate in-house counsel or law firms requesting the
analysis of a single legal or factual issue or of complex,  interrelated issues.
Upon receipt of an assignment,  the Company assigns the project  directly to one
of the  Company's  research  attorneys  who  contacts the customer to obtain any
additional  information necessary to understand the scope of the project and the
customer's  needs.  The researcher  accesses  available legal and other computer
databases, such as WESTLAW,  LEXIS/NEXIS and DIALOG, to locate controlling laws,
rules and regulations and court  decisions  relevant to the customer's  research
request  and  conducts  research  manually,  in order to obtain the  information
necessary to complete the customer's project.

     In most cases,  the Company  provides its customers with a finished written
work product often in the form of (i) a memorandum  describing  the facts of the
customer's  project  and  setting  forth the legal and  factual  analysis of the
issues  presented,  (ii) a  court-ready  legal brief which  advocates the legal,
factual and business  reasons why the customer  should prevail over the opposing
party in the matter before the court for  adjudication  or (iii) a survey of the
applicable  laws,  rules and regulations in various  jurisdictions on the topics
selected by the customer.  In order to ensure the quality of the Company's  work
product,  the Company's managing research attorneys conduct a substantive and an
editorial review of legal memoranda,  briefs and  multi-jurisdictional  surveys,
and all documents are edited and checked for proper citations.

     LRC regularly seeks to create new products and value-added services for its
clients. For example, through its expanding  Multijurisdictional Survey Program,
the Company  prepares  written reports of the laws in various states on selected
topics for corporate customers. An important feature of this product offering is
that,  once  prepared,  it can be  resold  to  other  customers  who  need  this
information.  The Company  also adds value to the product by  converting  all or
portions of the document into electronic form - disk,  CD-ROM or Website - which
is easier to review, cross reference and update.

     The Company provides full or part-time  contract attorneys for temporary or
permanent  assignments to law firms and corporate law  departments.  The Company
also provides document  retrieval services for attorneys and the general public.
In 2001,  the Company  continued to expand its content  development  services to
legal publishers.


<PAGE>


Sales and Marketing

     LRC's  marketing  strategy  centers on  providing  customized,  value-added
solutions in response to each customer's  analytical research and writing needs.
Because of the Company's  historically  limited  marketing  budget,  the Company
relied primarily on its customers' own initiatives to provide repeat business to
LRC.  Since  its  initial  public  offering,  the  Company  has  been  targeting
opportunities  to  capture  an  increasing  share of its  customers'  analytical
research and writing  activities  by  increasing  its contacts with its existing
customers through direct mail,  telemarketing  and direct account services.  The
Company  continued  in 2001 to add to its  sales  staff  both for core  research
services  and for the sale of  online  compliance  training  products  through a
partnership with Integrity Interactive Corporation.

     The Company  maintains  strategic  marketing  relationships  with major law
associations  and  other  providers  of  legal  services.   LRC  believes  these
relationships  enhance the Company's  visibility to practitioners and reputation
for  quality  and  enable  its  marketing  partners  to offer  their  members  a
value-added service.  LRC has been the exclusive designated  outsourced provider
of research and writing  services to the 60,000  members of the  Association  of
Trail Lawyers of America since 1989. Since 1990, LRC has also served the members
of the American Corporate Counsel Association  (ACCA), the largest  organization
serving the nation's  corporate  counsel.  In 1998, the Company  entered into an
exclusive 4-year contract with ACCA.

     In addition to  expanding  the size and outreach of its sales team in 2001,
the Company  continued to promote its  services  and expand its market  presence
thorough  strategic   alliances  with  companies  like  West  Group,  and  trade
association  like the  American  Corporate  Counsel  Association,  the  National
Association of Realtors and the Association of Trial Lawyers of America.

Customer Relationships

     The  Company  generally  operates  under   project-by-project   contractual
agreements. The pricing component of a contract generally includes a fixed price
or an hourly rate for  analytical  research  and writing  services  and separate
charges for computer database and other ancillary charges. The Company generally
charges higher hourly rates for expedited service and offers discounted rates to
customers willing to commit to a specified usage of the Company's services.

     LRC developed,  researched  and now updates  quarterly a study of the legal
trends in the real estate  business for the National  Association of REALTORS(R)
(NAR). NAR is the largest and one of the oldest trade  organizations in the U.S.
The Company has a relationship with Risk Enterprise Management (REM) under which
the Company provides research and knowledge  management services directly to the
attorneys  and law firms serving REM. The Company has a  relationship  with West
Group, providing research on a variety of projects.


<PAGE>


Executive Officers of the Company

     The  following  sets forth  biographical  information  for  Christopher  R.
Ljungkull  and  James  R.  Seidl,   the  executive   officers  of  the  Company.
Biographical  information  for  directors  of the  Company  can be  found in the
Company's 2002 Proxy Statement, incorporated herein by reference.

     Christopher  R. Ljungkull has been Chief  Executive  Officer of the Company
since  rejoining  it on a full  time  basis in  1994.  From  1987 to  1994,  Mr.
Ljungkull  served  in  various  marketing  and  editorial  capacities  with West
Publishing Corporation, most recently as an editor. Mr. Ljungkull is an attorney
and co-founder of the Company and has been a director since its inception.

     James R. Seidl has been the  President of the Company since 1988 and served
as its Chief  Executive  Officer prior to Mr.  Ljungkull's  return in 1994.  Mr.
Seidl is an attorney  and  co-founder  of the Company and has been a director of
the Company since its inception.

Personnel

     As of March 15, 2002,  the Company had 25 employees,  including 9 full-time
research  attorneys and a pool of 21 contract  attorneys.  Many of the Company's
contract   attorneys  work  part-time.   No  Company   employees  are  currently
represented  by labor  unions and the  Company is not a party to any  collective
bargaining  agreement.  The Company  has never been  subject to any form of work
stoppage or strike and has not experienced any labor  difficulties.  The current
full-time staffing level is considered to be adequate.  The Company expects that
it will  continue to need more  contract  attorneys  as its  business  grows and
expects that it will be able to secure such attorneys as needed.

Competition

     The business of providing legal research services is highly competitive and
extremely fragmented. The Company competes in the corporate market with in-house
counsel and outside law firms and individual legal  practitioners,  who are also
customers of the Company.  For its major corporate clients, the Company competes
with larger law firms that have the financial ability to negotiate  flexible fee
arrangements  for their major  clients.  The Company  also  competes  with other
companies, such as the National Legal Research Group and Legal Research Network,
which also provide legal research services on an outsourced basis, both of which
may have significantly greater resources than the Company and therefore may also
have the ability to compete more effectively.

Government Regulation

     The Company  engages  attorneys as employees or independent  contractors to
provide  analytical  research  and  writing  services  for the  Company  and its
customers.  The practice of law is regulated by each state. The Company believes
that it is not engaged in the  practice  of law  because it provides  customized
research  and  writing  services  for other  lawyers to use in  connection  with
representation of their clients.  In addition,  the Standing Committee on Ethics
and  Professional  Responsibility  of the American Bar Association has taken the
position that performing legal research does not constitute the practice of law.
Although  the Company  believes  that it does not engage in the practice of law,
there  can be no  assurance  that a state  will not take the  position  that the
Company is improperly  engaged in the practice of law or that all of the persons
providing  legal  research  services  must be  licensed  in the state  where the
Company's customers are located.

Insurance

     The Company carries property damage,  workers' compensation,  and Directors
and  Officers  liability  insurance  coverage  in amounts  management  considers
sufficient to protect the Company.  Management does not believe that the Company
is  engaged  in the  practice  of law and  accordingly  does  not  maintain  any
professional malpractice insurance.


<PAGE>


                         Item 2. DESCRIPTION OF PROPERTY

     The Company moved its corporate  headquarters and administrative offices in
May,  2001. The new offices are located in  Minneapolis,  Minnesota in an office
building and consist of approximately 7,958 square feet leased office space. The
Company will lease the facility  under an operating  lease  expiring April 2008,
requiring average annual rent of approximately  $86,400 and a portion of the tax
and operating costs.  Because most of the Company's research attorneys generally
office in their homes or in public library facilities, the Company believes that
the  leased  premises  are  sufficient  for  its  current   operations  and  its
foreseeable needs.

                            Item 3. LEGAL PROCEEDINGS

     Except as  described  below,  the  Company is not  currently a party to any
litigation which would likely have a materially  adverse effect on the Company's
results of  operations  or  financial  condition,  if decided  adversely  to the
Company.

     In June of 1998 the Company was sued by Lawfinders Associates,  Inc. (LFA),
a Dallas  competitor,  based  on  LFA's  allegation  that  the  Company  usurped
proprietary  information learned in the context of preliminary  discussions of a
business  combination,  which did not materialize.  The lawsuit was based on the
Company's plan to offer customers for appellate briefs a 100% guarantee based on
results. This plan was halted when LFA obtained a temporary restraining order in
Texas state court  temporarily  ending  LRC's  program.  LFA sought  unspecified
damages and to enjoin LRC from offering a results-based  guarantee.  On November
4, 1998, a federal court in Dallas,  Texas granted LRC's request to dissolve the
state court order and  rejected  LFA's  claims that it had  exclusive  rights to
guaranteed  brief  writing  services.  The  Company  asked the court for summary
judgment  on all  counts,  and was it granted in all  meaningful  respects.  The
matter is now in the final stages of appeal and the Company  expects to continue
to prevail in the proceedings.

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

     No matters were  submitted  during the fourth quarter of the Company's 2001
fiscal year to a vote of security  holders,  through the solicitation of proxies
or otherwise.

PART II

        Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Price Range of Common Stock

     The Company's  Common Stock trades on the  Over-the-Counter  Bulletin Board
under the symbol  "LRCI".  As of March 15,  2001,  there were  approximately  68
recordholders  of its  Common  Stock.  The  Company  estimates  that  there  are
approximately 715 beneficial holders of its Common Stock.


<PAGE>


     The following  table sets forth the  quarterly  high and low bid prices for
the periods  indicated,  through  December 31, 2001, as reported by Nasdaq.  The
prices listed are  inter-dealer  quotations  without retail markup,  markdown or
commission  and  may  not  reflect  actual  transactions.  The  Company  has not
independently verified the prices listed.

            Period                     Low Bid               High Bid
            ------                     -------               --------
     01/01/00 - 03/31/00               $1.75                 $2.625

     04/01/00 - 06/30/00               $1.75                 $3.0625

     07/01/00 - 09/30/00               $2.125                $2.9688

     10/01/00 - 12/31/00               $1.4375               $2.25

     01/01/01 - 03/31/01               $1.38                 $2.38

     04/01/01 - 06/30/01               $1.55                 $2.00

     07/01/01 - 09/30/01               $1.50                 $1.89

     10/01/01 - 12/31/01               $1.26                 $1.55


        Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                                   OPERATIONS

General

     The  following  discussion  and  analysis  provides  information  that  the
Company's  management believes is relevant to an assessment and understanding of
the Company's  results of operations and financial  condition.  This  discussion
should be read in conjunction  with the financial  statements and footnotes that
appear elsewhere in this Report.

     In connection with the "safe harbor"  provisions of the Private  Securities
Litigation  Reform Act of 1995,  the Company  cautions  readers that  statements
contained herein, other than historical data, may be forward-looking and subject
to risks and  uncertainties  including,  but not limited to the  continuation of
revenue through the Company's strategic alliances and the successful development
of other new business. The following important factors could cause the Company's
actual  results to differ  materially  from those  projected in  forward-looking
statements made by or on behalf of the Company:

     Company's dependence on a major customer or customers.

     Failure of the Company or its  partners  successfully  to expand its market
     share and sell products and services.

     Company's  inability  to produce and deliver its  products  and services at
     margins sufficient to cover operating costs.

     Company's  inability  to continue  operating  due to  insufficient  cash or
     capital.

     The  Company's  revenue have  historically  been  derived  from  conducting
analytical research and writing on a non-recurring  basis for its customers.  In
2001, one customer accounted for approximately  71%, and 10 customers  accounted
for 85%, of the  Company's  revenue.  The loss of the Company's  major  customer
would have a material adverse impact on its financial  condition.  Historically,
the Company has  experienced a seasonal  fluctuation  in revenue with the second
and third quarters  being the slowest  quarters of the year and the last quarter
being the strongest.  For 2001,  the third and fourth  quarters were the slowest
due in part to the effect of the events of September 11.

<PAGE>

Results of Operations

Year ended December 31, 2001 compared to the year ended December 31, 2000

     Revenue:  Revenue  increased  by  $417,386  or 8% to  $5,562,323  for  2001
compared  to revenue  of  $5,144,937.  The  increase  in  revenue  is  primarily
attributable to increased sales to corporate and private attorneys.

     Direct Operating  Costs:  Direct operating costs for compensation and other
benefits include hourly contract fees for independent research attorneys, hourly
and salaried  compensation of staff research attorneys,  document production and
support  personnel.  Other direct  operating costs include outside research fees
and services, royalty fees for association referrals, computer database charges,
long distance and photocopying charges and document retrieval expenses.

     Total  direct  operating  costs  increased  $222,854  or 9%  to  $2,676,208
compared to 2000 direct operating costs of $2,453,354. This increase is directly
related to the  increase  in revenue  for 2001 with  compensation  and  benefits
comprising  143% of the  increase  offset  by a 43%  decrease  in  other  direct
operating costs.

     Gross  Profit:  Gross  profit  increased  $194,532  for  2001,  or  7%,  to
$2,886,115  compared to $2,691,583 for 2000.  This increase was primarily due to
the increase in revenue.  As a  percentage  of revenue,  gross  profit  remained
consistent with 2000 at 52%.

     Other  Operating  Costs:  Other  operating  costs include  compensation  of
officers,  sales and other corporate  staff,  advertising  and direct  marketing
expenditures  and  general  corporate  overhead,   including   depreciation  and
amortization.

     Other operating costs increased $315,520 or 16%, to $2,285,540  compared to
2000 costs of  $1,970,020.  The  increase is due to a 25%  increase in sales and
marketing  expenditures and a 3.4% increase in general and administrative costs.
The  increase in sales and  marketing  is due to the  recruitment  and hiring of
additional  experienced  sales  personnel.  Other operating costs increased as a
percentage of revenue from 38% in 2000 to 41% in 2001.

     Depreciation   and   Amortization:   The  Company  had   depreciation   and
amortization of $47,306 in 2001 compared to $122,667 in 2000.

     Earnings Before Interest,  Taxes,  Depreciation and Amortization:  Earnings
before interest,  taxes,  depreciation and amortization were $647,881or $.26 per
share for 2001, compared to $844,230 or $.33 per share for 2000.

     Other Income and  Expenses:  Interest  income  decreased  $7,002 or 8.5% to
$75,016 over interest income of $82,018 in 2000.

     Income Tax Expense (Benefit):  Income tax expense for 2001 was $272,300. In
2000,  the  Company  incurred a one-time  tax benefit of $569,800 to reverse the
valuation allowance related to net operating losses carried forward.

     Net Income:  The Company earned $403,291 or $.16 per share (basic) and $.15
per share  (diluted) for the year ended December 31, 2001,  compared to earnings
of  $1,373,381  or $.54 per share  (basic) and $.49 per share  (diluted) for the
comparable period in 2000.

<PAGE>

Year ended December 31, 2000 compared to the year ended December 31, 1999

     Revenue:  Revenue  increased  by  $750,786  or 17% to  $5,144,937  for 2000
compared  to revenue  of  $4,394,151.  The  increase  in  revenue  is  primarily
attributable to increased sales to corporate and private attorneys.

     Direct Operating  Costs:  Direct operating costs for compensation and other
benefits include hourly contract fees for independent research attorneys, hourly
and salaried  compensation of staff research attorneys,  document production and
support  personnel.  Other direct  operating costs include outside research fees
and services, royalty fees for association referrals, computer database charges,
long distance and photocopying charges and document retrieval expenses.

     Total  direct  operating  costs  increased  $342,869  or 16% to  $2,453,354
compared to 1999 direct operating costs of $2,110,485. This increase is directly
related to the  increase  in revenue  for 2000 with  compensation  and  benefits
comprising 98% of the increase.

     Gross  Profit:  Gross  profit  increased  $407,917  for  2000,  or 18%,  to
$2,691,583  compared to $2,283,666 for 1999.  This increase was primarily due to
the increase in revenue.  As a  percentage  of revenue,  gross  profit  remained
consistent with 1999 at 52%.

     Other  Operating  Costs:  Other  operating  costs include  compensation  of
officers,  sales and other corporate  staff,  advertising  and direct  marketing
expenditures  and  general  corporate  overhead,   including   depreciation  and
amortization.

     Other operating costs increased $466,465 or 31%, to $1,970,020  compared to
1999 costs of  $1,503,555.  The  increase is due to a 42%  increase in sales and
marketing  expenditures and a 18% increase in general and administrative  costs.
Other  operating  costs increased as a percentage of revenue from 34% in 1999 to
38% in 2000.

     Depreciation   and   Amortization:   The  Company  had   depreciation   and
amortization of $122,667 in 2000 compared to $134,069 in 1999.

     Earnings Before Interest,  Taxes,  Depreciation and Amortization:  Earnings
before interest,  taxes, depreciation and amortization were $844,230 or $.33 per
share for 2000, compared to $833,221 or $.35 per share for 1999.

     Other Income and  Expenses:  Interest  income  increased  $40,497 or 98% to
$82,018 over interest income of $41,521 in 1999.

     Income Tax Expense (Benefit):  In 2000, the Company incurred a one-time tax
benefit of $569,800 to reverse the valuation  allowance related to net operating
losses carried forward.

     Net Income:  The Company  earned  $1,373,381  or $.54 per share (basic) and
$.49 per share  (diluted)  for the year ended  December  31,  2000,  compared to
earnings of $716,172 or $.30 per share (basic) and $.28 per share  (diluted) for
the comparable period in 1999.


<PAGE>


Liquidity and Capital Resources

     At December 31, 2001, the Company had cash and cash equivalents of $750,550
and working  capital of  $2,719,804.  At the same time in 2000,  the Company had
cash and cash equivalents of $575,817 and working capital of $2,547,859.

     Net cash provided by operating  activities was $646,741 in 2001 compared to
$602,149 in 2000, or an increase of 7.4%.

     Investment  activities  used  $251,647  in  2001.  The  cash  was  used for
purchases of furniture and equipment and product  development costs. The Company
invested  $177,715  for  the  on-going  development  of  software  for  sale  to
customers.  The software is designed to help law firms and corporations  access,
store, reuse, and resell their intellectual  capital by establishing a Web-based
system that enable the exchange of knowledge  between in-house counsel and their
outside law firms.

     Financing  activities  used  $220,361  with  $237,814 used for payments for
stock redemption offset by $17,453 provided from the proceeds of exercised stock
options.

     The Company does not anticipate the payment of cash dividends on its Common
Stock in the foreseeable  future.  It is anticipated  that profits received from
operations will be devoted to the Company's future  operations.  Any decision to
pay dividends  will depend upon the Company's  profitability  at the time,  cash
availability and other factors.

Business Outlook

     The  Company  continues  to focus  its  marketing/sales  efforts  on direct
marketing  of its  traditionally-strong  products and  services,  as well as the
online  compliance  training  products it offers in  partnership  with Integrity
Interactive  Corporation.  The Company  believes  the market for the  outsourced
legal  research  and  writing  services it  provides  and for online  compliance
training to be growing and that it can continue to increase revenue.

     Additionally, the Company believes that it will continue to be able to find
researchers of sufficient  talent and in sufficient  numbers to meet the demands
of expected growth.

                          Item 7. FINANCIAL STATEMENTS

     The information  required by this item is incorporated  herein by reference
to pages F-1 through F-14, which follow this page.

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

     None

<PAGE>


                                 C O N T E N T S


                                                                       Page
                                                                       ----

INDEPENDENT AUDITOR'S REPORT                                           F - 1

FINANCIAL STATEMENTS

    Balance sheets                                                     F - 2

    Statements of income                                               F - 3

    Statements of stockholders' equity                                 F - 4

    Statements of cash flows                                           F - 5

    Notes to financial statements                                 F - 6 - F - 14


<PAGE>


                          INDEPENDENT AUDITOR'S REPORT


The Board of Directors and Stockholders
Legal Research Center, Inc.
Minneapolis, Minnesota


We have audited the accompanying  balance sheets of Legal Research Center,  Inc.
as of  December  31,  2001 and  2000,  and the  related  statements  of  income,
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 auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  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 Legal Research Center, Inc. as
of December 31, 2001 and 2000,  and the results of its  operations  and its cash
flows  for the  years  then  ended  in  conformity  with  accounting  principles
generally accepted in the United States of America.



Lurie Besikof Lapidus & Company, LLP
Minneapolis, Minnesota

February 14, 2002


<PAGE>


                                    - F - 2 -

                           LEGAL RESEARCH CENTER, INC.

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                              December 31,
                                                                     --------------------------
                                         ASSETS                          2001           2000
                                                                     -----------    -----------
<S>                                                                  <C>            <C>
CURRENT ASSETS
    Cash and cash equivalents                                        $   750,550    $   575,817
    Certificates of deposit                                              855,000        855,000
    Accounts receivable                                                  954,727        939,132
    Deferred income taxes                                                284,700        407,900
    Other                                                                101,016         93,289
                                                                     -----------    -----------
       TOTAL CURRENT ASSETS                                            2,945,993      2,871,138
                                                                     -----------    -----------
FURNITURE AND EQUIPMENT                                                  140,745        307,987
    Less accumulated depreciation                                         61,072        280,789
                                                                     -----------    -----------
                                                                          79,673         27,198
                                                                     -----------    -----------
OTHER ASSETS
    Development costs                                                    177,715         25,849
    Investment in Integrity Interactive Corporation                      500,000        500,000
    Deferred income taxes                                                 12,800        161,900
                                                                     -----------    -----------
                                                                         690,515        687,749
                                                                     -----------    -----------
                                                                     $ 3,716,181    $ 3,586,085
                                                                     ===========    ===========

<CAPTION>
                          LIABILITIES AND STOCKHOLDERS' EQUITY
<S>                                                                  <C>            <C>
CURRENT LIABILITIES
    Accounts payable                                                 $    46,852    $   114,381
    Accrued expenses:
       Compensation                                                      164,228        194,451
       Other                                                               6,890          5,847
    Client advances                                                        8,219          8,600
                                                                     -----------    -----------
       TOTAL CURRENT LIABILITIES                                         226,189        323,279
                                                                     -----------    -----------
DEFERRED RENT                                                             44,256           --
                                                                     -----------    -----------
STOCKHOLDERS' EQUITY
    Common stock, $0.01 par value (authorized - 20,000,000 shares;
       issued - 3,501,558 and 3,607,079)                                  35,016         36,071
    Additional paid-in capital                                         6,882,731      7,102,037
    Accumulated deficit                                               (1,505,761)    (1,909,052)
    Notes receivable from officers and former director                (1,966,250)    (1,966,250)
                                                                     -----------    -----------
                                                                       3,445,736      3,262,806
                                                                     -----------    -----------
                                                                     $ 3,716,181    $ 3,586,085
                                                                     ===========    ===========
</TABLE>


See notes to financial statements.


<PAGE>


                                    - F - 3 -

                           LEGAL RESEARCH CENTER, INC.

                              STATEMENTS OF INCOME

                                                       Year Ended December 31,
                                                     --------------------------
                                                         2001            2000
                                                     ----------     -----------
REVENUE                                              $5,562,323     $ 5,144,937
                                                     ----------     -----------

DIRECT OPERATING COSTS
    Compensation and benefits                         2,412,290       2,092,463
    Other                                               263,918         360,891
                                                     ----------     -----------
                                                      2,676,208       2,453,354
                                                     ----------     -----------

GROSS PROFIT                                          2,886,115       2,691,583
                                                     ----------     -----------

OTHER OPERATING COSTS
    Sales and marketing                               1,446,879       1,159,033
    General and administrative                          838,661         810,987
                                                     ----------     -----------
                                                      2,285,540       1,970,020
                                                     ----------     -----------
INCOME FROM OPERATIONS                                  600,575         721,563

INTEREST INCOME                                          75,016          82,018
                                                     ----------     -----------

INCOME BEFORE INCOME TAXES                              675,591         803,581

INCOME TAX EXPENSE (BENEFIT)                            272,300        (569,800)
                                                     ----------     -----------

NET INCOME                                           $  403,291     $ 1,373,381
                                                     ==========     ===========

NET INCOME PER COMMON SHARE
    Basic                                            $      .16     $       .54
                                                     ==========     ===========

    Diluted                                          $      .15     $       .49
                                                     ==========     ===========

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
    Basic                                             2,532,688       2,565,215

    Diluted                                           2,714,525       2,793,342


See notes to financial statements.



<PAGE>


                                   - F - 4 -

                           LEGAL RESEARCH CENTER, INC.

                       STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                       Common Stock        Additional
                                                  ---------------------      Paid-in      Accumulated      Notes
                                                    Shares       Amount      Capital        Deficit      Receivable        Total
                                                  ---------    --------    -----------    -----------    -----------    -----------
<S>                                               <C>          <C>         <C>            <C>            <C>            <C>
BALANCE AT DECEMBER 31, 1999                      3,602,454    $ 36,024    $ 7,095,661    $(3,282,433)   $(1,966,250)   $ 1,883,002

    Exercise of stock options, net of
       1,875 options utilized in
       cashless exercise                              4,625          47          6,376           --             --            6,423

    Net income                                         --          --             --        1,373,381           --        1,373,381
                                                  ---------    --------    -----------    -----------    -----------    -----------

BALANCE AT DECEMBER 31, 2000                      3,607,079      36,071      7,102,037     (1,909,052)    (1,966,250)     3,262,806

    Exercise of stock options, net of
       1,000 options utilized in
       cashless exercise                             28,200         282         17,171           --             --           17,453

    Stock repurchased                              (133,721)     (1,337)      (236,477)          --             --         (237,814)

    Net income                                         --          --             --          403,291           --          403,291
                                                  ---------    --------    -----------    -----------    -----------    -----------

BALANCE AT DECEMBER 31, 2001                      3,501,558    $ 35,016    $ 6,882,731    $(1,505,761)   $(1,966,250)   $ 3,445,736
                                                  =========    ========    ===========    ===========    ===========    ===========
</TABLE>


See notes to financial statements.


<PAGE>


                                    - F - 5 -

                           LEGAL RESEARCH CENTER, INC.

                            STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                                                                ------------------------
                                                                   2001           2000
                                                                ---------    -----------
<S>                                                             <C>          <C>
OPERATING ACTIVITIES
    Net income                                                  $ 403,291    $ 1,373,381
    Adjustments to reconcile net income to net cash
      provided by operating activities:
       Depreciation                                                21,457         19,269
       Amortization of development costs                           25,849        103,398
       Deferred income taxes                                      272,300       (569,800)
       Changes in operating assets and liabilities:
          Accounts receivable                                     (15,595)      (400,461)
          Other current assets                                     (7,727)       (63,950)
          Accounts payable                                        (67,529)        94,011
          Accrued expenses                                        (29,180)        57,357
          Client advances                                            (381)       (11,056)
          Deferred rent                                            44,256           --
                                                                ---------    -----------
             Net cash provided by operating activities            646,741        602,149
                                                                ---------    -----------

INVESTING ACTIVITIES
    Purchases of furniture and equipment                          (73,932)       (25,224)
    Development costs                                            (177,715)          --
    Purchases of certificates of deposit                             --         (855,000)
    Investment in Integrity Interactive Corporation                  --         (500,000)
                                                                ---------    -----------
             Net cash used by investing activities               (251,647)    (1,380,224)
                                                                ---------    -----------

FINANCING ACTIVITIES
    Proceeds from exercise of stock options                        17,453          6,423
    Payments for stock redemption                                (237,814)          --
                                                                ---------    -----------
             Net cash provided (used) by financing activities    (220,361)         6,423
                                                                ---------    -----------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                  174,733       (771,652)

CASH AND CASH EQUIVALENTS
    Beginning of year                                             575,817      1,347,469
                                                                ---------    -----------
    End of year                                                 $ 750,550    $   575,817
                                                                =========    ===========
</TABLE>


See notes to financial statements.

<PAGE>


                                    - F - 6 -

                           LEGAL RESEARCH CENTER, INC.

                          NOTES TO FINANCIAL STATEMENTS


1.   Description of the Business and Summary of Significant Accounting Policies

     The Business

     Legal  Research  Center,  Inc.  (the  Company)  provides  outsourced  legal
     research,  writing and knowledge  management  services to U.S. and Canadian
     attorneys in corporate and private  practice.  The Company also serves as a
     content   developer   for  legal   publishers   and   creates   law-related
     business-to-business  and  business-to-consumer  content for Internet sites
     serving the legal  profession and  consumers.  The Company grants credit to
     customers on terms established for each customer.

     Use of Estimates

     The preparation of these financial statements in conformity with accounting
     principles  generally  accepted  in the United  States of America  requires
     management  to make  estimates  and  assumptions  that may  affect  certain
     reported   amounts  and   disclosures  in  the  financial   statements  and
     accompanying notes. Actual results could differ from these estimates.

     Revenue Recognition

     Revenue is recognized as services are performed for hourly fee arrangements
     and upon project completion for fixed fee arrangements. The Company records
     a sales allowance for services estimated to be refunded under the Company's
     guaranteed appellate brief program.

     Cash, Cash Equivalents and Certificates of Deposit

     All  investments  purchased  with a  maturity  of three  months or less are
     considered  to be cash  equivalents.  Cash  and  cash  equivalents  include
     accounts at financial institutions located in Minnesota.  Deposits in these
     accounts  exceeded  the balance  insured by the Federal  Deposit  Insurance
     Corporation  (FDIC)  by  approximately   $900,200  at  December  31,  2001.
     Certificates of deposit are with an investment  company and are not insured
     by the FDIC.

     Fair Value of Financial Instruments

     The carrying  amounts of financial  instruments  consisting  of cash,  cash
     equivalents,  certificates of deposit,  receivables,  and accounts  payable
     approximate their fair values.

     Furniture and Equipment

     Furniture  and  equipment  are recorded at cost.  Depreciation  is computed
     using the straight-line method over three to five years.

     Advertising and Promotions

     Costs  associated with  advertising and promoting  products are expensed as
     incurred.  Advertising and promotion expenses were  approximately  $334,600
     and $431,000 in 2001 and 2000, respectively.


     (continued)


<PAGE>


                                    - F - 7 -

                           LEGAL RESEARCH CENTER, INC.

                          NOTES TO FINANCIAL STATEMENTS


1.   Description of the Business and Summary of Significant  Accounting Policies
     - (continued)

     Net Income Per Common Share

     Basic net income per share is computed using the weighted average number of
     common shares  outstanding.  Diluted net income per share is computed using
     the weighted average number of common shares outstanding plus stock options
     and the shares  subject to  subscription  if the inclusion of such items is
     dilutive.

     A reconciliation  of the shares used to compute net income per common share
     - basic and diluted is as follows:

                                                        Year Ended December 31,
                                                       -------------------------
                                                          2001          2000
                                                       ----------    ----------
     Weighted average common shares                     3,572,688     3,605,215
     Common shares financed by notes (Notes 6 and 8)   (1,040,000)   (1,040,000)
                                                       ----------    ----------
     Weighted average common shares - basic             2,532,688     2,565,215
     Effect of dilutive stock options                     181,837       228,127
                                                       ----------    ----------

     Weighted average common shares - diluted           2,714,525     2,793,342
                                                       ==========    ==========

     Accounting for Stock-Based Compensation

     The Company accounts for employee stock options under the method prescribed
     by Accounting  Principles Board Opinion No. 25, Accounting for Stock Issued
     to Employees,  and provides the pro forma disclosures required by Statement
     of Financial  Accounting  Standards  No. 123,  Accounting  for  Stock-Based
     Compensation.

     Recent Accounting Pronouncement

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


<PAGE>


                                    - F - 8 -

                           LEGAL RESEARCH CENTER, INC.

                          NOTES TO FINANCIAL STATEMENTS


2.   Sale of Subsidiaries and Investment in The Cyber Law Offices, Inc. (CLO) -

     The Company sold its subsidiary, The Law Office, Inc. (TLO) and CLO, to the
     Company's co-chairman in October 1999. On the date of sale, TLO and CLO had
     no  significant  net assets.  CLO and TLO common  stock was  exchanged  for
     convertible  preferred stock of CLO with a face value of $1.5 million.  The
     preferred  stock is  convertible  at the option of the Company  into common
     stock of CLO valued at $1.5 million.  The Company also received warrants to
     purchase $1.5 million of CLO common stock for approximately  $770,000.  The
     $1.5 million value of the preferred stock is fully reserved and the gain is
     deferred until such time as the  convertible  preferred  stock and warrants
     can be readily converted into cash.


3.   Accounts Receivable -

     Accounts receivable consist of the following:

                                                           December 31,
                                                      ---------------------
                                                          2001       2000
                                                      ----------   --------

          Trade                                       $  751,525   $879,382
          Trade - Integrity Interactive Corporation      258,202*   104,750
                                                      ----------   --------
                                                       1,009,727    984,132
          Less allowance for doubtful accounts            55,000     45,000
                                                      ----------   --------
                                                      $  954,727   $939,132
                                                      ==========   ========

     * In February  2002,  the Company  collected  approximately  $86,000 on the
     December 31, 2001 balance.


4.   Investment in Integrity Interactive Corporation -

     In July 2000, the Company  purchased 810,000 shares of Series A Convertible
     Preferred  Stock  of  Integrity  Interactive  Corporation  (Integrity),   a
     Delaware corporation, for $500,000. Integrity provides Web-based compliance
     training for corporations.

     The Company recorded its investment in and accounts for Integrity using the
     cost method. Dividends received from accumulated earnings subsequent to the
     date of the Company's  investment  in Integrity  are  recognized as income.
     Dividends  received  in excess of  earnings  subsequent  to the date of the
     Company's  investment are  considered a return of the Company's  investment
     and are recorded as a reduction of the Company's investment. The investment
     will be written down if it is considered  to be  permanently  impaired.  No
     dividends  have  been  received  by the  Company  from  its  investment  in
     Integrity.

     Management  believes  its  investment  in  Integrity  is not  impaired  and
     therefore the balance sheet  reflects the  investments  in Integrity at its
     original investment amount. In the event Integrity is unable to achieve its
     planned level of future  profits,  the carrying value on the investment may
     be reduced by a material amount in the near term.

<PAGE>


                                   - F - 9 -


                           LEGAL RESEARCH CENTER, INC.

                          NOTES TO FINANCIAL STATEMENTS


5.   Development Costs -

     Development costs including the following:

                                           December 31,
                                      ----------------------
                                        2001         2000
                                      ---------    ---------
          Costs:
             Software for sale        $ 177,715    $      --
             CADRE                      315,949      315,949
                                      ---------    ---------
                                        493,664      315,949
          Accumulated amortization:
             Software for sale               --           --
             CADRE                     (315,949)    (290,100)
                                      ---------    ---------

                                      $ 177,715    $  25,849
                                      =========    =========

     Software for Sale

     The Company  capitalized costs for the development of software for external
     use.  The software is designed to help law firms and  corporations  access,
     store,  reuse,  and resell their  intellectual  capital by  establishing  a
     Web-based  system that enables the exchange of knowledge  between  in-house
     counsel and their outside law firms.

     The capitalized software costs will be amortized,  upon completion,  by the
     greater of (a) the ratio  current  gross  revenues for the software bear to
     the total of current and anticipated future gross revenues for the software
     or (b) the  straight-line  method over the  estimated  economic life of the
     product,  currently  estimated  to be three  years  after the  software  is
     completed.  It is reasonably  possible that estimates of anticipated future
     gross revenues,  the remaining estimated economic life of the products,  or
     both will be  reduced  significantly  in the near  term.  As a result,  the
     carrying amount of the capitalized software costs may be reduced materially
     in the near term.

     Corporate Alternative Dispute Resolutions Enterprises (CADRE)

     The Company  capitalized  certain  costs for the  development  of the CADRE
     training  program.  Capitalized  costs  included  direct labor,  fees,  and
     expenses of  contractors  who assisted in the  development  of the product.
     CADRE  costs   capitalized   were   amortized   over  three  years  on  the
     straight-line method and were fully amortized at December 31, 2001.


6.   Notes Receivable From Officers and Former Director -

     The Company sold an aggregate of 1,040,000  shares of common stock to three
     officers  and/or  directors  at the  closing  price  of  $1.89 a  share  on
     September 4, 1996. The sales were financed with nonrecourse  notes with the
     shares pledged as collateral. The notes bear interest at 8.5% and cannot be
     prepaid anytime before September 2003,  except in connection with a merger,
     acquisition,  or sale of  substantially  all of the Company's  assets.  The
     shares are restricted and cannot be sold or otherwise  transferred  without
     repaying the notes.  The Company's  policy is to not accrue interest income
     on the notes until the cash is received in September 2003.

     These shares are not deemed to be outstanding  under accounting  principles
     generally accepted in the United States of America. Rather, such shares are
     treated as stock options and therefore potentially dilutive for purposes of
     calculating  weighted  average common shares  outstanding  and earnings per
     share.


<PAGE>
                                   - F - 10 -


                           LEGAL RESEARCH CENTER, INC.

                          NOTES TO FINANCIAL STATEMENTS


7.   Income Taxes -

     Income tax expense (benefit) consists of the following:

                                                      Year Ended December 31,
                                                      -----------------------
                                                        2001         2000
                                                      ---------    ----------
          Deferred:
             Federal                                  $ 217,300    $(481,800)
             State                                       55,000      (88,000)
                                                      ---------    ---------
                                                        272,300     (569,800)
                                                      ---------    ---------

                                                      $ 272,300    $(569,800)
                                                      =========    =========

     The Company  utilized  approximately  $619,000  and $500,000 of federal and
     state net operating loss  carryforwards,  respectively,  to reduce its 2001
     tax liabilities.  The Company utilized  approximately $820,000 and $657,000
     of federal and state net operating  loss  carryforwards,  respectively,  to
     reduce its 2000 tax liabilities.

     The significant  differences between income taxes at the statutory rate and
     the effective tax rates were as follows:

                                                      Year Ended December 31,
                                                      -----------------------
                                                         2001        2000
                                                      ----------   ----------

          Tax computed at the statutory federal rate   $ 230,000   $ 273,200
          State income tax, net of federal effect         35,200      42,500
          Net operating loss carryforward utilized            --    (321,500)
          Reversal of valuation allowance                     --    (567,500)
          Other                                            7,100       3,500
                                                       ---------   ---------

          Income tax expense (benefit)                 $ 272,300   $(569,800)
                                                       =========   =========

     Deferred taxes consist of the following:

<TABLE>
<CAPTION>
                                                                  December 31,
                                    ------------------------------------------------------------------------
                                                   2001                                  2000
                                    -----------------------------------    ---------------------------------
                                      Total       Federal       State        Total      Federal      State
                                    ---------    ---------    ---------    ---------   ---------   ---------
<S>                                 <C>          <C>          <C>          <C>         <C>         <C>
          Deferred tax assets:
             Allowance for doubt-
               ful accounts         $  23,100    $  18,700    $   4,400    $  16,700   $  13,600   $   3,100
             Intangible, other
               assets and accrued
               expenses                21,300       15,200        6,100       22,000      12,200       9,800
             Furniture and
               equipment               (9,200)      (7,500)      (1,700)      12,300      10,000       2,300
             Net operating loss
               carryforward           262,300      238,100       24,200      518,800     446,000      72,800
                                    ---------    ---------    ---------    ---------   ---------   ---------

                                    $ 297,500    $ 264,500    $  33,000    $ 569,800   $ 481,800   $  88,000
                                    =========    =========    =========    =========   =========   =========
</TABLE>

     In 2000, the Company reversed the valuation  allowance for the net deferred
     tax assets due to the  likelihood of their  realization.  The change in the
     valuation allowance was a decrease of $889,000 in 2000.

     (continued)


<PAGE>
                                   - F - 11 -


                           LEGAL RESEARCH CENTER, INC.

                          NOTES TO FINANCIAL STATEMENTS


7.   Income Taxes - (continued)

     At  December  31,  2001,   the  Company  has  federal  net  operating  loss
     carryforwards  totaling  $727,000  (state -  $247,000)  expiring  $656,000,
     $58,000 and $13,000, in 2012, 2018, and 2019 respectively.

     Realization of the deferred tax asset  relating to net operating  losses is
     dependent on generating  sufficient  taxable  income prior to expiration of
     the loss  carryforwards.  Although  realization is not assured,  management
     believes  it is more likely  than not that the  deferred  tax asset will be
     realized.  The  amount of the  deferred  tax asset  considered  realizable,
     however,  could be reduced in the near term if estimates of future  taxable
     income during the carryforward period are reduced.


8.   Stock Option Plans and Warrants -

     The Company has a 1995 Stock Option Plan and a 1997 Stock Option Plan which
     allow  for  the  granting  of  2,400,000   incentive   stock   options  and
     nonqualified  stock  options to purchase the Company's  common  stock.  The
     exercise  price of the  options  issued  under the plans may not exceed the
     fair market value of the stock on the date of grant.  The  exercise  period
     for incentive stock options may not exceed ten years.

     The Company also has the Legal Research  Center,  Inc.  Existing  Officer's
     Stock Option Plan.  Pursuant to the  Officers'  Plan,  the Company  granted
     options to two officers to each  purchase  180,000  shares of common stock.
     The options expired in 2000.

     Nonemployee  directors  are  compensated  with annual stock  option  grants
     (Director Options) of 5,000 shares, exercisable at fair market value on the
     date of grant, and which expire ten years after issuance.

     The fair value of each option grant is estimated on the date of grant using
     the Black-Scholes  option pricing model with the following weighted average
     assumptions  used for  grants  in 2001  and  2000,  respectively;  expected
     volatility  of 36% and 52%;  risk-free  interest  rates  of 4.4% and  6.2%,
     expected lives of 3.2 and 3.6 years, and no dividend yield.

     A summary of the status of the stock options  under these plans,  including
     the  1,040,000  shares of common stock  issued to officers  and  directors,
     which are treated as stock options, is as follows:

<TABLE>
<CAPTION>
                                          2001                         2000
                               ---------------------------  ---------------------------
                                          Weighted Average             Weighted Average
                                Options    Exercise Price    Options    Exercise Price
                               ---------  ----------------  ---------  ----------------
<S>                            <C>            <C>           <C>            <C>
Outstanding at
   beginning of year           1,716,175      $     2.47    1,902,667      $     2.55
Granted                          826,731            4.25      195,508            2.57
Exercised                        (29,200)            .60       (6,500)            .99
Forfeited                       (653,044)           4.90     (375,500)           2.94
                              ----------                   ----------
Outstanding at
   end of year                 1,860,662            2.43    1,716,175            2.47
                              ==========                   ==========

Weighted average grant date
   fair value of options
   granted during the year                    $      .19                   $      .77
</TABLE>

     (continued)


<PAGE>
                                   - F - 12 -


                           LEGAL RESEARCH CENTER, INC.

                          NOTES TO FINANCIAL STATEMENTS


8.   Stock Option Plans and Warrants - (continued)

     The following table summarizes  information about stock options outstanding
     as of December 31, 2001:

                                         Options Outstanding
                           ---------------------------------------------
                                      Weighted Average
             Range of                    Remaining      Weighted Average
          Exercise Prices  Options    Contractual Life   Exercise Price
          ---------------  ---------  ----------------  ----------------

           $ .21 - $ .25     149,843          1.8           $   .23
           $ .43 - $ .97       5,100           .2               .94
           $1.13 - $1.56     225,309          1.7              1.34
           $1.60 - $1.76      21,200          4.5              1.70
           $1.81 - $1.90      57,280          6.1              1.85
           $1.97 - $2.38     173,887          2.4              2.16
               $2.38          66,000          1.0              2.38
           $2.44 - $2.81      35,400          7.4              2.76
           $3.00 - $3.50   1,126,643          1.8              3.03
                           ---------

           $ .21 - $3.50   1,860,662
                           =========

     All of the above options are exercisable.

     The  Company  applies  APB  Opinion  25  and  related   interpretations  in
     accounting for stock option plans.  Accordingly,  no compensation  cost was
     recognized for options in 2001 or 2000 as the option exercise price did not
     exceed the market price on the date of grant. Had compensation cost for the
     stock-based  compensation  plans been determined based on the fair value at
     the grant dates for awards under those plans, consistent with the method of
     SFAS No.  123,  the pro forma net income and pro forma net income per share
     would be as follows:

                                                Year Ended December 31,
                                             -----------------------------
                                                 2001             2000
                                             -------------   -------------

          Net income:
             As reported                     $     403,291   $   1,373,381
             Pro forma                             307,122       1,644,508

          Net income per share:
             As reported - basic             $         .16   $         .54
                                 - diluted             .15             .49
             Pro forma - basic                         .12             .64
                              - diluted                .11             .59

     The pro forma effects of applying SFAS No. 123 are not indicative of future
     amounts since, among other reasons,  the pro forma requirements of the SFAS
     No. 123 were applied only to options granted after December 31, 1994.


<PAGE>
                                   - F - 13 -


                           LEGAL RESEARCH CENTER, INC.

                          NOTES TO FINANCIAL STATEMENTS


9.   Royalty Agreements -

     The Company has an  agreement  with one  association  that expires in 2002,
     which  requires  payment of  royalties  for  projects.  Royalty  rates vary
     according to the terms in the agreement.  Royalty expense for 2001 and 2000
     was approximately $2,460 and $31,500, respectively.


10.  Significant Customers -

     The Company had one  customer  that  comprised  71% and 60% of revenues for
     2001 and 2000,  respectively,  and 39% and 44% of  accounts  receivable  at
     December 31, 2001 and 2000, respectively.


11.  Transactions With Related Parties -

     The  Company  earned  fees  and  commissions  from  Integrity   Interactive
     Corporation   totaling   $243,991   and   $104,750,   for  2001  and  2000,
     respectively.


12.  Commitments and Contingencies -

     Lease

     The Company  entered into a new office  lease  agreement  beginning  May 1,
     2001. The lease has a 7-year term with a 5-year renewal option and requires
     monthly  payments  of base rent,  property  taxes and  operating  expenses,
     beginning  in  2002.  Rent  expense,   including  operating  expenses,  was
     approximately $101,100 and $72,800 for 2001 and 2000, respectively.

     Approximate  future  minimum lease payments for the new office lease are as
     follows:

              Year              Amount
          -------------       ----------

              2002            $   53,053
              2003                90,191
              2004               103,454
              2005               107,433
              2006               107,433
           Thereafter            143,244
                                --------

                              $  604,808
                                ========

     (continued)


<PAGE>
                                   - F - 14 -


                           LEGAL RESEARCH CENTER, INC.

                          NOTES TO FINANCIAL STATEMENTS


12.  Commitments and Contingencies - (continued)

     Lawsuit

     During 1997 and early 1998,  the Company had  discussions  with  Lawfinders
     Associates,  Inc. (Lawfinders) about a possible business  combination;  the
     discussions  failed to produce an agreement  between the  parties.  In June
     1998,   the  Company  was  sued  by  Lawfinders  who  alleged  the  Company
     misappropriated Lawfinder's proprietary information.  The Company asked the
     court to  dismiss  all of  Lawfinder's  claims.  The  trial  court  entered
     judgement  against  Lawfinders on all  substantive  claims.  Lawfinders has
     appealed  and the mater is currently  pending in the Count of Appeals.  The
     Company  believes  that it will prevail in the  litigation.  The  Company's
     general  liability  insurance  carrier has covered the  Company's  costs of
     defending  the action and the Company  believes all future  costs,  if any,
     will be similarly covered.

     Guaranteed Appellate Brief Services (GAB)

     The Company offers,  on a selective  basis,  guarantees for appellate brief
     services where amounts invoiced or collected by the Company may be credited
     or refunded to the customer.  There was no GAB revenue for 2001 and $33,100
     for 2000.


<PAGE>


PART III

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

     The information  contained  under the captions  "Election of Directors" and
"Compliance  with Section 16(a) of the  Securities  Exchange Act of 1934" in the
2002 Proxy Statement is incorporated herein by reference.

     Information concerning executive officers of the Company can be found under
the caption "Executive Officers of the Company" in Item 1 hereof.

                         Item 10. EXECUTIVE COMPENSATION

     The information  contained under the captions "Executive  Compensation" and
"Election of  Directors Board  of Directors and  Committees Remuneration  of
Directors" in the 2002 Proxy Statement is incorporated herein by reference.

     Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information contained under the caption "Principal Shareholders" in the
2002 Proxy Statement is incorporated herein by reference.

             Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information  contained  under the caption  "Certain  Relationships  and
Transactions" in the 2002 Proxy Statement is incorporated herein by reference.

                    Item 13. EXHIBITS AND REPORTS ON FORM 8-K

The following documents are filed as part of the report:

Financial  Statements.  Audited financial statements as of December 31, 2001 and
2000 and for the years  then  ended are filed as part of this Form  10-KSB.  See
Index to Financial Statements on Page F-1.

Exhibits. The following exhibits are being filed as part of this Form 10-KSB:


<PAGE>


Exhibit No.                           Title                     Method of Filing
----------- --------------------------------------------------- ----------------

3.1         Restated Articles of Incorporation                         1

3.2         Restated Bylaws                                            1

4           Form of Common Stock Certificate                           1

10.1        1995 Stock Option Plan                                     1

10.2        Existing Officer's Stock Option Plan                       1

10.3        Employment  Agreement  dated July 1, 1995 between
            the Company and Christopher R. Ljungkull                   1

10.4        Employment  Agreement  dated July 1, 1995 between
            the Company and James R. Seidl                             1

10.5        1997 Stock Option Plan                                     5

10.11       First Amendment to Net Office Lease Agreement dated
            June 1996                                                  2

10.14       Employment Agreement dated July 25, 1996 between
            The CyberLaw Office, Inc. and Arun K. Dube                 5

10.15       Sale of Common Stock to Officers  and  Directors
            on September 3, 1996                                       4

11          Subsidiaries of Legal Research Center, Inc.                5

00.1        News Release Plugged In Software                     Filed Herewith

00.2        News Release regarding Integrity Interactive         Filed Herewith

00.3        News Release regarding Medtronic                     Filed Herewith

1.   Incorporated  by reference to the same  numbered  Exhibit to the  Company's
     Registration Statement on Form SB-2, which was declared effective August 3,
     1995, pursuant to Rule 12b-32.

2.   Incorporated  by reference to the same  numbered  Exhibit to the  Company's
     Form 10-KSB, dated March 29, 1996.

3.   Incorporated by reference to Exhibits 2.1 and 2.2 to the Company's Form 8-K
     dated May 13, 1996.

4.   Incorporated  by reference to Exhibits 10.1, 10.2 and 10.3 to the Company's
     Form 8-K dated September 5, 1996.

5.   Incorporated  by reference to Exhibits  10.14 and 11 to the Company's  Form
     10-KSB (as amended) dated March 27, 1997.

     Reports on Form 8-K.

          None


<PAGE>


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) 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.

                                        LEGAL RESEARCH CENTER, INC.


                                        By:      /s/ Christopher R. Ljungkull
                                            ------------------------------------
                                            Christopher R. Ljungkull, CEO

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

       Name and Title                   Signature               Date
       --------------                   ---------               ----
Arun K. Dube                        /s/ Arun K. Dube       March 26, 2002
Co-Chairman of the Board            ----------------

Christopher R. Ljungkull
Co-Chairman of the Board
Chief Executive Officer            /s/ C.R. Ljungkull      March 26, 2002
(Principal Executive Officer)      ------------------

James R. Seidl                     /s/ James R. Seidl      March 26, 2002
President and Director             ------------------

Bruce J. Aho                        /s/ Bruce J. Aho       March 26, 2002
Director                            ----------------