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, 2000 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
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(State or Other Jurisdiction                               (IRS Employer
of Incorporation or Organization)                        Identification No.)

700 Midland Square Building, 331 Second Ave. So., Minneapolis, MN       55401
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(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. $5,144,937

     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.)

                         $4,290,967 as of March 15, 2001



                    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.

              3,614,379 shares of Common Stock as of March 15, 2001


                       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  2001  (the  "2001  Proxy
Statement") (incorporated by reference into Part III of this Form 10-KSB).

                            [Cover page 2 of 2 pages]


<PAGE>


PART I

                         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

     All core product and service offerings of the Company's  business continued
to  grow  in  2000,  including  research  and  writing  for  private  attorneys,
multijurisdictional  surveys for  corporate  legal  counsel,  and the  Company's
Guaranteed  Appellate  Brief  Service.  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  81%,  and one  customer  60%, of total
revenue in 2000, as compared to 75% in 1999.

     For the fiscal  year,  the Company  reported  revenue of $5.1  million,  an
increase of 17% over the previous year's revenue of $4.4 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 1999. The Company reported net income 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, the Company
had net income of $803,581,  or $.31 per share, a 12% increase from the previous
year-end earnings of $716,172 or $.30 per share (basic).

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.

     Corporations  with in-house  legal  counsel  usually rely on their staff to
advise management on core business

<PAGE>

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 and librarians
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 2000,  the Company  continued to expand its content
development  services  to legal  publishers.  Additionally,  the  Company  began
marketing and selling online  compliance  products in partnership with Integrity
Interactive Corporation.


<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.
Building on the increases in earnings starting in 1998, the Company continued in
2000 to  increase  expenditures  on  direct  mail  and to add to its  sales  and
telemarketing  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 1994, the Company entered into an agreement with West Publishing Company
- now West Group - pursuant to which West,  the leading  legal  publisher in the
U.S. and operator of the WESTLAW computer legal database, exclusively refers its
customers requests for analytical legal research and writing to the Company.

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 2001 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, 2001, the Company had 79 employees,  including 33 full-time
research  attorneys,  31 part-time  research attorneys and a pool of 36 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 will move 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 has asked the court for summary
judgment  on all counts,  and expects to continue to prevail in the  proceedings
and  expects  all its costs  related  to the  litigation  to be  covered  by its
insurer.

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

     No matters were  submitted  during the fourth quarter of the Company's 2000
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  55
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, 2000, 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
            ------                     -------              --------

     01/01/99 - 03/31/99               $  0.20              $ 0.938

     04/01/99 - 06/30/99               $ 0.625              $  3.00

     07/01/99 - 09/30/99               $  1.50              $  2.00

     10/01/99 - 12/31/99               $ 1.312              $ 2.563

     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




        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
2000, 10 customers accounted for approximately 81%, and one customer 60%, of the
Company's  revenue.  The  loss of one or more of  these  customers  without  the
Company generating  replacement business 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.


<PAGE>

Results of Operations

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 Expenses  (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.


Year ended December 31, 1999 compared to the year ended December 31, 1998

     Revenue:  Revenue  increased by $1,991,072  or 83% to  $4,394,151  for 1999
compared  to revenue  of  $2,403,079.  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,


<PAGE>

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  $965,997  or 84% to  $2,110,485
compared to 1998 direct operating costs of $1,144,488. This increase is directly
related to the  increase  in revenue  for 1999 with  compensation  and  benefits
comprising 97% of the increase.

     Gross  Profit:  Gross  profit  increased  $1,025,075  for 1999,  or 81%, to
$2,283,666  compared to $1,258,591 for 1998.  This increase was primarily due to
the increase in revenue.  As a  percentage  of revenue,  gross  profit  remained
consistent with 1998 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 $297,970 or 25%, to $1,503,555  compared to
1998 costs of  $1,205,585.  The  increase is due to a 66%  increase in sales and
marketing  expenditures  offset by a 4% decrease  in general and  administrative
costs.  Other  operating  costs decreased as a percentage of revenue from 50% in
1998 to 34% in 1999.

     Depreciation   and   Amortization:   The  Company  had   depreciation   and
amortization of $134,069 in 1999 compared to $155,081 in 1998.

     Earnings Before Interest,  Taxes,  Depreciation and Amortization:  Earnings
before interest,  taxes, depreciation and amortization were $833,221 or $.35 per
share for 1999, compared to $223,203 or $.10 per share for 1998.

     Other Income and Expenses:  Interest  income  increased  $26,405 or 175% to
$41,521 over interest income of $15,116 in 1998. The Company incurred a one-time
charge  of  $80,959  as a result of  determining  that  notes due from  American
Research Corporation were uncollectible.

     Net Income:  The Company earned $716,172 or $.30 per share (basic) and $.28
per share  (diluted) for the year ended December 31, 1999,  compared to earnings
of $55,240 or $.02 per share (basic and diluted)  for the  comparable  period in
1998


<PAGE>


Liquidity and Capital Resources

     At December 31, 2000, the Company had cash and cash equivalents of $575,817
and working  capital of  $2,547,859.  At the same time in 1999,  the Company had
cash and cash equivalents of $1,347,469 and working capital of $1,732,512.

     Net cash provided by operating  activities was $602,149 in 2000 compared to
$890,644 in 1999, or a decrease of 32%.

     Investment  activities  used  $1,380,224  in  2000.  The  cash was used for
purchases  of  certificates  of deposit,  investment  in  Integrity  Interactive
Corporation and purchases of furniture and equipment.

     Financing  activities  provided $6,423 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

CONSOLIDATED FINANCIAL STATEMENTS

    Consolidated balance sheets                                        F-2

    Consolidated statements of income                                  F-3

    Consolidated statements of stockholders' equity                    F-4

    Consolidated statements of cash flows                              F-5

    Notes to consolidated 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  consolidated  balance  sheets of Legal
Research  Center,  Inc.  as of  December  31,  2000 and  1999,  and the  related
consolidated statements of income,  stockholders' equity, and cash flows for the
years then ended. These consolidated financial statements are the responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these consolidated 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
consolidated  financial statements are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the  consolidated  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 consolidated  financial  statements  referred to above
present  fairly,  in all  material  respects,  the  financial  position of Legal
Research Center, Inc. as of December 31, 2000 and 1999, and the results of their
operations  and their 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 12, 2001




<PAGE>




                                     - F-2 -

                           LEGAL RESEARCH CENTER, INC.

                           CONSOLIDATED BALANCE SHEETS



                                                            December 31,
                                                      -----------------------
                                ASSETS                   2000         1999
                                                      ---------    ----------

CURRENT ASSETS
    Cash and cash equivalents                         $  575,817   $1,347,469
    Certificates of deposit                              855,000         --
    Accounts receivable                                  939,132      538,671
    Deferred income taxes                                407,900         --
    Other                                                 93,289       29,339
                                                      ----------   ----------
       TOTAL CURRENT ASSETS                            2,871,138    1,915,479
                                                      ----------   ----------

FURNITURE AND EQUIPMENT                                  307,987      282,763
    Less accumulated depreciation                        280,789      261,520
                                                      ----------   ----------
                                                          27,198       21,243
                                                      ----------   ----------
OTHER ASSETS

    Development costs                                     25,849      129,247
    Investment in Integrity Interactive Corporation      500,000         --
    Deferred income taxes                                161,900         --
                                                      ----------   ----------
                                                         687,749      129,247
                                                      ----------   ----------

                                                      $3,586,085   $2,065,969
                                                      ==========   ==========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Accounts payable                               $   114,381    $    20,370
    Accrued expenses:
       Compensation                                    194,451        129,863
       Other                                             5,847         13,078
    Client advances                                      8,600         19,656
                                                   -----------    -----------
       TOTAL CURRENT LIABILITIES                       323,279        182,967
                                                   -----------    -----------

STOCKHOLDERS' EQUITY
    Common stock, $0.01 par value
       (authorized - 20,000,000 shares;
       issued - 3,607,079 and 3,602,454)                36,071         36,024
    Additional paid-in capital                       7,102,037      7,095,661
    Accumulated deficit                             (1,909,052)    (3,282,433)
    Notes receivable from officers and directors    (1,966,250)    (1,966,250)
                                                   -----------    -----------
                                                     3,262,806      1,883,002
                                                   -----------    -----------
                                                   $ 3,586,085    $ 2,065,969
                                                   ===========    ===========



<PAGE>




                                     - F-3 -

                           LEGAL RESEARCH CENTER, INC.

                        CONSOLIDATED STATEMENTS OF INCOME



                                               Year Ended December 31,
                                             --------------------------
                                                 2000           1999
                                             -----------    -----------

REVENUE                                      $ 5,144,937    $ 4,394,151
                                             -----------    -----------

DIRECT OPERATING COSTS
    Compensation and benefits                  2,092,463      1,756,398
    Other                                        360,891        354,087
                                             -----------    -----------
                                               2,453,354      2,110,485
                                             -----------    -----------

GROSS PROFIT                                   2,691,583      2,283,666
                                             -----------    -----------

OTHER OPERATING COSTS
    Sales and marketing                        1,159,033        818,792
    General and administrative                   810,987        684,763
                                             -----------    -----------
                                               1,970,020      1,503,555
                                             -----------    -----------

INCOME FROM OPERATIONS                           721,563        780,111

OTHER INCOME (EXPENSE)
    Interest income                               82,018         41,521
    Write-off notes receivable                      --          (80,959)
    Interest expense                                --          (14,501)
                                             -----------    -----------
                                                  82,018        (53,939)
                                             -----------    -----------

INCOME BEFORE INCOME TAXES                       803,581        726,172

INCOME TAX EXPENSE (BENEFIT)                    (569,800)        10,000
                                             -----------    -----------

NET INCOME                                   $ 1,373,381    $   716,172
                                             ===========    ===========

NET INCOME PER COMMON SHARE
    Basic                                    $       .54    $       .30
                                             ===========    ===========

    Diluted                                  $       .49    $       .28
                                             ===========    ===========


WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
    Basic                                      2,565,215      2,368,302

    Diluted                                    2,793,342      2,587,282





<PAGE>


                                     - F-4 -

                           LEGAL RESEARCH CENTER, INC.

                 CONSOLIDATED 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, 1998              3,327,633   $    33,276   $ 6,870,007   $(3,998,605)   $(1,966,250)   $   938,428

    Exercise of stock options, net of
       10,183 options utilized in
       cashless exercises                    74,821           748        27,654          --             --           28,402

    Conversion of debt                      200,000         2,000       198,000          --             --          200,000

    Net income                                 --            --            --         716,172           --          716,172
                                        -----------   -----------   -----------   -----------    -----------    -----------

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
                                        ===========   ===========   ===========   ===========    ===========    ===========

</TABLE>



<PAGE>



                                     - F-5 -

                           LEGAL RESEARCH CENTER, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                          Year Ended December 31,
                                                                        --------------------------
                                                                            2000          1999
                                                                        -----------    -----------

<S>                                                                     <C>            <C>
OPERATING ACTIVITIES
    Net income                                                          $ 1,373,381    $   716,172
    Adjustments to reconcile net income to net cash
      provided by operating activities:
       Depreciation                                                          19,269         30,671
       Amortization of development costs                                    103,398        103,398
       Deferred income taxes                                               (569,800)          --
       Write-off notes receivable                                              --           80,959
       Changes in operating assets and liabilities:
          Accounts receivable                                              (400,461)       (80,948)
          Other current assets                                              (63,950)         3,282
          Accounts payable                                                   94,011        (23,865)
          Accrued expenses                                                   57,357         58,796
          Client advances                                                   (11,056)         2,179
                                                                        -----------    -----------
             Net cash provided by operating activities                      602,149        890,644
                                                                        -----------    -----------

INVESTING ACTIVITIES
    Purchases of certificates of deposit                                   (855,000)          --
    Investment in Integrity Interactive Corporation                        (500,000)          --
    Purchases of furniture and equipment                                    (25,224)        (7,687)
                                                                        -----------    -----------
          Net cash used by investing activities                          (1,380,224)        (7,687)
                                                                        -----------    -----------

FINANCING ACTIVITIES
    Proceeds from exercise of stock options                                   6,423         28,402
                                                                        -----------    -----------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                           (771,652)       911,359

CASH AND CASH EQUIVALENTS
    Beginning of year                                                     1,347,469        436,110
                                                                        -----------    -----------

    End of year                                                         $   575,817    $ 1,347,469
                                                                        ===========    ===========


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
    Cash paid for interest                                              $      --      $    14,501

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
    Conversion of notes payable to common stock                         $      --      $   200,000

</TABLE>



<PAGE>


                                     - F-6 -

                           LEGAL RESEARCH CENTER, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

     The Business

     Legal Research  Center,  Inc. (the Company)  provides  outsourced legal and
factual  research,  and  writing  and  support  services  to U.S.  and  Canadian
attorneys  in  corporate  and private  practice.  The Company  grants  credit to
customers on terms established for each customer.

     In October 1999, the Company sold The Law Office,  Inc. (TLO) and The Cyber
Law Office, Inc. (CLO) (Note 2).

     Principles of Consolidation

     The consolidated  financial  statements include the accounts of the Company
and,  prior  to  their  sale in  October  1999,  TLO and CLO  subsidiaries.  All
significant intercompany accounts and transactions are eliminated.

     Use of Estimates

     The preparation of these  consolidated  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 consolidated  financial  statements and
accompanying notes. Actual results could differ from these estimates.

     Revenue Recognition

     Revenue is  recognized  as the services are  performed.  Unbilled  services
relate to revenue recognized for services performed, but not billed. The Company
records a sales  allowance  for  services  estimated  to be  refunded  under the
Company's guaranteed appellate brief program.

     Cash and Cash Equivalents

     All  investments  purchased  with a  maturity  of three  months or less are
considered to be cash equivalents.  Cash and cash equivalents  includes accounts
at  financial  institutions  located in  Minnesota.  Deposits in these  accounts
exceeded the balance  insured by the Federal  Deposit  Insurance  Corporation by
approximately $632,100 at December 31, 2000.

     Fair Value of Financial Instruments

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

     (continued)


<PAGE>


                                     - F-7 -

                           LEGAL RESEARCH CENTER, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



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

     Furniture and Equipment

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

     Development Costs

     The Company  capitalized certain product costs incurred for the development
of the Corporate  Alternative  Dispute Resolution  Enterprises  (CADRE) training
program.   Capitalized  costs  include  direct  labor,  fees,  and  expenses  of
contractors  who  assisted  in the  development  of  the  product.  The  Company
completed  the  development  of CADRE during the first quarter of 1998 and began
amortizing the capitalized costs over three years on the  straight-line  method.
Accumulated  amortization  was  $290,100  and  $186,702 at December 31, 2000 and
1999, respectively.

     Advertising and Promotions

     Costs  associated with  advertising and promoting  products are expensed in
the  year  incurred.  Advertising  and  promotion  expenses  were  approximately
$431,000 and $396,300 in 2000 and 1999, respectively.

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

                                                    Year Ended December 31,
                                                  --------------------------
                                                     2000           1999
                                                  -----------    -----------

Net income as reported - basic                    $ 1,373,381    $   716,172
Effect of convertible notes                              --            2,056
                                                  -----------    -----------

Net income assuming full dilution                 $ 1,373,381    $   718,228
                                                  ===========    ===========
Weighted average common shares                      3,605,215      3,408,302
Common shares financed by notes (Notes 7 and 9)    (1,040,000)    (1,040,000)
                                                  -----------    -----------
Weighted average common shares - basic              2,565,215      2,368,302
Effect of dilutive securities:
   Stock options                                      228,127        187,522
   Convertible notes                                     --           31,458
                                                  -----------    -----------

Weighted average common shares - diluted            2,793,342      2,587,282
                                                  ===========    ===========

       (continued)



<PAGE>


                                     - F-8 -

                           LEGAL RESEARCH CENTER, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



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

     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 Pronouncements

     In June 1998,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement of Financial  Accounting  Standards No. 133, Accounting for Derivative
Instruments  and Hedging  Activities  (SFAS No. 133) in June 1999,  Statement of
Financial  Accounting  Standards No. 137, Accounting for Derivative  Instruments
and Hedging Activities - Deferral of the Effective Date of the FASB Statement No
133 (SFAS No. 137) and in June 2000, Statement of Financial Accounting Standards
No. 138,  Accounting  for Certain  Derivative  Instruments  and Certain  Hedging
Activities - an amendment of FASB Statement No. 133 (SFAS No. 138). SFAS No. 133
establishes  accounting and reporting  standards for derivatives and hedging. It
requires that all  derivatives  be recognized as either assets or liabilities at
fair value and establishes  specific  criteria for the use of hedge  accounting.
SFAS No. 137 defers the effective date of the SFAS No. 133 by one year to fiscal
years  beginning  after June 15, 2000.  SFAS No. 138 amends the  accounting  and
reporting  standards of the SFAS No. 133 for certain derivative  instruments and
certain hedging  activities.  The Company's required adoption date is January 1,
2001. The Company anticipates, due to its limited use of derivative instruments,
the  adoption  of the three  statements  will not have a material  impact on the
Company's consolidated financial statements.

     In December 1999, the  Securities  and Exchange  Commission  (SEC) released
Staff Accounting  Bulletin No. 101 - Revenue  Recognition (SAB No. 101). SAB No.
101 provides the SEC views in applying generally accepted accounting  principles
to selected  revenue  recognition  issues.  In June 2000, the SEC released Staff
Accounting  Bulletin No. 101B - Second  Amendment  (SAB No.  101B)  delaying the
implementation date of SAB No. 101 to no later than the fourth fiscal quarter of
registrants with fiscal years beginning after December 15, 1999. The adoption of
this pronouncement did not have a material effect on the Company's  consolidated
financial statements.


2.   Sale of Subsidiaries and Investment in CLO -

     The Company sold the TLO and CLO common stock to the Company's  co-chairman
in October 1999.  On the date of sale,  TLO and CLO had no current  assets,  had
fixed  assets of  approximately  $65,000  which were fully  depreciated  and had
current  liabilities of approximately  $5,185.  The CLO and TLO common stock was
exchanged for all the  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 being deferred until such time as the  convertible  preferred  stock
and warrants can be readily converted into cash.


<PAGE>




                                     - F-9 -

                           LEGAL RESEARCH CENTER, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


3.   Accounts Receivable -

     Accounts receivable consist of the following:

                                                       December 31,
                                                  ----------------------
                                                    2000          1999
                                                  --------      --------

       Trade                                      $951,569      $563,585
       Unbilled services                            32,563        27,086
                                                  --------      --------
                                                   984,132       590,671
       Less allowance for doubtful accounts         45,000        52,000
                                                  --------      --------
                                                  $939,132      $538,671
                                                  ========      ========

4.   Notes Receivable -

     Notes  totaling  $80,959 were due from American  Research  Corporation,  an
entity in which the Company held a 5% investment  through June 1997. The Company
wrote off the notes as uncollectible during 1999.

5.   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 accounts for its investment in Integrity using the cost method.
Under the cost  method,  the  investment  in  Integrity  was  recorded  at cost.
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.  No dividends were received by the Company from its
investment in Integrity.

6.   Notes Payable -

     During 1999,  the Company  converted  notes  payable,  at the option of the
holder, into 200,000 shares of common stock.

7.   Notes Receivable From Officers and Directors -

     In September  1996,  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 CONSOLIDATED FINANCIAL STATEMENTS


8.   Income Taxes -

     Income tax expense (benefit) consists of the following:

                                                    Year Ended December 31,
                                                -------------------------------
                                                  2000                 1999
                                                ----------           ----------
  Current:
     Federal                                    $     --             $    7,000
     State                                            --                  3,000
                                                ----------           ----------
                                                      --                 10,000
                                                ----------           ----------
  Deferred:
     Federal                                      (481,800)                --
     State                                         (88,000)                --
                                                ----------           ----------
                                                  (569,800)                --
                                                ----------           ----------
                                                $ (569,800)          $     --
                                                ==========           ==========

     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 Company utilized approximately $744,000 and $491,000 of federal
and state net operating loss carryforwards, respectively, to reduce its 1999 tax
liabilities.

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

                                                       Year Ended December 31,
                                                       -----------------------
                                                         2000          1999
                                                       ---------    ---------
  Tax computed at the statutory federal rate           $ 273,200    $ 247,000
  State income tax, net of federal effect                 42,500         --
  Net operating loss carryforward utilized              (321,500)    (253,000)
  Reversal of valuation allowance                       (567,500)        --
  Other                                                    3,500       16,000
                                                       ---------    ---------

  Income tax expense (benefit)                         $(569,800)   $  10,000
                                                       =========    =========

     Deferred taxes consist of the following:

<TABLE>
<CAPTION>

                                                      December 31,
                            --------------------------------------------------------------------
                                         2000                               1999
                            ------------------------------   -----------------------------------
                             Total      Federal    State       Total       Federal       State
                            --------   --------   --------   ---------    ---------    ---------
<S>                         <C>        <C>        <C>        <C>          <C>          <C>
  Deferred tax assets:
     Allowance for doubt-
       ful accounts         $ 16,700   $ 13,600   $  3,100   $  21,000    $  18,000    $   3,000
     Intangible, other
       assets and accrued

       expenses               22,000     12,200      9,800      36,000       30,000        6,000
     Furniture and

       equipment              12,300     10,000      2,300      23,000       19,000        4,000
     Net operating loss
       carryforward          518,800    446,000     72,800     809,000      681,000      128,000
                            --------   --------   --------   ---------    ---------    ---------
                             569,800    481,800     88,000     889,000      748,000      141,000
  Valuation allowance           --         --         --      (889,000)    (748,000)    (141,000)
                            --------   --------   --------   ---------    ---------    ---------
                            $569,800   $481,800   $ 88,000   $    --      $    --      $    --
                            ========   ========   ========   =========    =========    =========
</TABLE>

     (continued)


<PAGE>



                                    - F-11 -

                           LEGAL RESEARCH CENTER, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


8.   Income Taxes - (continued)

     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  and $496,000 in 2000 and 1999,
respectively.

     At  December  31,  2000,  the  Company  has a federal  net  operating  loss
carryforward   totaling   $1,338,000   (state  -  $748,000)   expiring  $71,000,
$1,196,000, $58,000 and $13,000, in 2011, 2012, 2018, and 2019 respectively.

9.   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 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.
During 2000,  the Company  increased the shares  reserved for issuance under the
plans from 1,400,000 shares to 2,400,000 shares.

     The Company also has the Legal Research  Center,  Inc.  Existing  Officer's
Stock Option Plan.  Pursuant to the  Officers'  Plan,  the Company  reserved and
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 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 2000 and 1999, respectively;  expected volatility
of 52% and 104%;  risk-free  interest rates of 6.2% and 5.5%,  expected lives of
3.6 and 2.4 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>

                                                     2000                               1999
                                          -------------------------------    --------------------------------
                                                        Weighted-Average                    Weighted-Average
                                            Options      Exercise Price        Options       Exercise Price
                                          ----------   ------------------    ----------    ------------------

<S>                                        <C>               <C>              <C>               <C>
          Outstanding at
             beginning of year             1,902,667         $2.55            1,793,471         $2.60
          Granted                            195,508          2.57              263,200          1.49
          Exercised                           (6,500)          .99              (85,004)          .34
          Forfeited                         (375,500)         2.94              (69,000)         2.61
                                          ----------                         ----------
          Outstanding at
             end of year                   1,716,175          2.47            1,902,667          2.55
                                          ==========                         ==========

          Weighted-average grant date
             fair value of options
             granted during the year                         $1.16                              $ .77

</TABLE>

       (continued)


<PAGE>




                                    - F-12 -

                           LEGAL RESEARCH CENTER, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



9.   Stock Option Plans and Warrants - (continued)

     The following table summarizes  information about stock options outstanding
as of December 31, 2000:

<TABLE>
<CAPTION>

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

<S>                              <C>                  <C>                  <C>
           $.19 - $.29             158,900            2.7                  $    .23
           $.30 - $.59               8,700             .7                       .31
           $.75 - $.97               7,000            1.5                       .92
          $        1.13             83,667            1.8                      1.13
          $1.41 - $1.75             96,038            3.9                      1.59
          $1.81 - $2.00             59,170            1.2                      2.00
          $2.13 - $2.38            169,200            2.8                      2.36
          $2.44 - $2.97             16,500            6.7                      2.72
          $3.00 - $3.50          1,117,000            2.8                      3.02
                                 ---------
          $.19 - $3.50           1,716,175
                                 =========
</TABLE>

     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 2000 or 1999 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:


<TABLE>
<CAPTION>
                                                         Year Ended December 31,
                                                    ----------------------------------
                                                       2000                   1999
                                                    -------------          -----------

<S>                                                 <C>                    <C>
          Net income:
             As reported                            $   1,373,381          $     716,172
             Pro forma                                  1,644,508                589,961

          Net income per share:
             As reported - basic                    $         .54          $        0.30
                                 - diluted                    .49                   0.28
             Pro forma - basic                                .64                   0.25
                              - diluted                       .59                   0.23
</TABLE>

     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 CONSOLIDATED FINANCIAL STATEMENTS


10.  Royalty Agreements -

     The Company has agreements with certain  associations which require payment
of royalties  for  projects.  Royalty  rates and terms vary  depending  upon the
agreement.  Royalty  expense  for 2000 and 1999 was  approximately  $31,500  and
$26,900, respectively.

11.  Significant Customers -

     The Company had the following transactions with significant customers:

<TABLE>
<CAPTION>
                                                   Percent                         Receivable
                  Customer                       of Revenue                      at December 31,
                  --------                   --------------------           --------------------------
                                              2000        1999                  2000           1999
                                             --------   ---------           ------------    ----------
<S>                                            <C>         <C>                <C>            <C>
                    A                          60%         55%                $412,100       $125,900
                    B                           4%         10%                  37,718         95,800
</TABLE>


12.  Transactions With Related Parties -

     During 2000, the Company earned fees and  commissions  from related parties
totaling  $104,750,  which are included in accounts  receivable  at December 31,
2000.

13.  Commitments and Contingencies -

     Lease

     The  Company  leases  its  office  space on a  month-to-month  basis.  Rent
expense, including operating expenses, was approximately $72,800 and $63,800 for
2000 and 1999, respectively.

     In February  2001,  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.

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

                Year           Amount
            ----------       -------------
                2001          $   --
                2002            53,000
                2003            90,000
                2004           103,000
                2005           107,000
            Thereafter         250,000
                              --------
                              $603,000
                              ========

     (continued)



<PAGE>



                                    - F-14 -

                           LEGAL RESEARCH CENTER, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



13.  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
Lawfinders' proprietary information.  The Company asked the court to dismiss all
of  Lawfinders'  claims.  The  Company  believes  that  it will  prevail  in the
litigation,  should it  continue.  The  Company's  general  liability  insurance
carrier has covered the Company's  costs of defending the action and the Company
believes that all future costs, if any, will be similarly covered.

     Guaranteed Appellate Brief Services

     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.  Revenue  related to such services were  approximately
$33,100 and $37,300 for 2000 and 1999, respectively.

14.  Subsequent Event -

     In January 2001,  the Company  authorized  the  repurchase of up to 500,000
shares of the Company's common stock.


<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
2001 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 2001 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
2001 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 2001 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, 2000
and 1999 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>


<TABLE>
<CAPTION>
              ----------------- -------------------------------------------------------------- ----------------------
                Exhibit No.                                 Title                                Method of Filing
              ----------------- -------------------------------------------------------------- ----------------------
<S>                             <C>                                                               <C>
              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
              ----------------- -------------------------------------------------------------- ----------------------
              99.1              News Release regarding Integrity Interactive                      Filed Herewith
              ----------------- -------------------------------------------------------------- ----------------------
              99.2              News Release regarding Heller Financial                           Filed Herewith
              ----------------- -------------------------------------------------------------- ----------------------
</TABLE>

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.


<PAGE>



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.

<TABLE>
<CAPTION>
------------------------------------ ------------------------------------- -------------------------------------
          Name and Title                          Signature                                Date
------------------------------------ ------------------------------------- -------------------------------------
<S>                                            <C>                                    <C>
Arun K. Dube
Co-Chairman of the Board                       /s/ Arun K. Dube                       March 26, 2001
                                               ----------------
------------------------------------ ------------------------------------- -------------------------------------
Christopher R. Ljungkull
Co-Chairman of the Board
Chief Executive Officer
(Principal Executive Officer)                 /s/ C.R. Ljungkull                      March 26, 2001
                                              ------------------
------------------------------------ ------------------------------------- -------------------------------------
James R. Seidl
President and Director                        /s/ James R. Seidl                      March 26, 2001
                                              ------------------
------------------------------------ ------------------------------------- -------------------------------------
Bruce J. Aho                                   /s/ Bruce J. Aho                       March 26, 2001
                                               ----------------
------------------------------------ ------------------------------------- -------------------------------------
</TABLE>