<PAGE>

                       U.S. SECURITIES AND EXCHANGE COMMISSION
                                 WASHINGTON, DC 20549
                                           
                                     FORM 10-KSB
                                           
[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act of
    1934

For the fiscal year ended March 31, 1997.

[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
    of 1934

For the transition period from          to          .
                               ---------   ---------


Commission  file number     0-19817
                          -----------



                            INTRANET SOLUTIONS, INC.
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            (Exact Name of Registrant as Specified in Its Chapter)


          Minnesota                                          41-1652566
---------------------------------                 ------------------------------
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
 Incorporation or Organization)


             9625 West 76th Street, Suite 150, Eden Prairie, Minnesota  55344
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                       (Address of Principal Executive Offices)

                                    (612) 903-2000
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                   (Issuer's Telephone Number, Including Area Code)


-------------------------------------------------------------------------------
                (Former Name, Former Address and Former Fiscal Year,
                            If Changed Since Last Report)


    Check whether the issuer: (1) 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     
     ---------        ---------

    Check if there is no disclosure of delinquent filers pursuant 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
     ---------

    The issuer had total revenues of  $20,010,006 for its fiscal year ended
March 31, 1997.

    As of June 24, 1997, assuming as market value the price of $4.50 per share
(the last sales price of the Company's Common Stock on the Nasdaq SmallCap
Market), the aggregate market value of shares held by non-affiliates was
$11,937,816.

    As of June 24, 1997 the Company had outstanding 7,535,003 shares of Common
Stock, $.01 par value.

    Documents Incorporated by Reference:  Portions of the Company's Proxy 
Statement for its Annual Meeting of Shareholders to be conducted on August 
21, 1997 (the "1997 Proxy Statement") are incorporated by reference into Part 
III of this Form 10-KSB, to the extent described in Part III.  The 1997 Proxy 
Statement will be filed within 120 days after the end of the fiscal year 
ended March 31, 1997.

<PAGE>
                                  TABLE OF CONTENTS

PART I                                                                      PAGE
                                                                            ----
Item 1.       Description of Business                                       1
Item 2.       Properties                                                    9
Item 3.       Legal Proceedings                                             9
Item 4.       Submission of Matters to a Vote of Security Holders           10

PART II

Item 5.       Market for Registrant's Common Equity        
                 and Related Stockholder Matters                            10
Item 6.       Management's Discussion and Analysis of Financial Condition
                 and Results of Operations                                  11
Item 7.       Financial Statements                                        15/F-1
Item 8.       Changes in and Disagreements with Accountants
                 on Accounting and Financial Disclosure                     15

PART III

Item 9.       Directors, Executive Officers, Promoters and Control Persons:
                 Compliance with Section 16(a) of the Exchange Act          16
Item 10.      Executive Compensation                                        16
Item 11.      Security Ownership of Certain Beneficial Owners        
                 and Management                                             16
Item 12.      Certain Relationships and Related Transactions                16
Item 13.      Exhibits and Reports on Form 8-K                              16


<PAGE>

                                        PART I

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL

    IntraNet Solutions, Inc. ("IntraNet" or the "Company")  provides 
integrated solutions for the creation, management and distribution of 
critical business information through the Internet, intranets and extranets.  
IntraNet offers its customers a variety of products, including proprietary 
intranet document management software, customized off-the-shelf software 
applications, hardware and software implementation, and electronic 
distribution and on-demand publishing services.  The evolution of Web 
technology as a tool for storing, managing and distributing information, 
coupled with the Company's experience in designing systems and creating 
custom software applications, has created an opportunity for the Company to 
develop a line of document management software products utilizing Web 
technology.   

    The Company's business strategy utilizes its proprietary Web-based 
technology to target the electronic document management market in addition 
to the on-demand publishing applications market. The Company's strategy is 
comprised of the following objectives: (i) offer its customers a complete, 
single source solution for their document management needs using direct and 
alternative marketing channels to sell its products; (ii) leverage Web 
technology in the development of additional intranet products; (iii) expand 
its line of proprietary software products; and (iv) cultivate strategic 
partnerships with leading industry participants.

    IntraNet recently released the Intra.DOC!-Registered Trademark- document 
management system, an intranet/Internet software application that utilizes 
Web technology to provide users with access to any document on their network, 
regardless of the document location or the original software application used 
to create it.  Because Intra.DOC!-Registered Trademark- places document 
management in a Web environment, system users have Web browser access to 
documents created on a multitude of computing platforms thereby offering the 
Company's customers a means of overcoming the data sharing compatibility 
problems inherent in systems operating without Web technology. 

INDUSTRY

    HISTORICAL DEVELOPMENT OF COMPUTER SYSTEMS.  For more than two decades, 
the U.S. computer industry has directed much of its innovation towards the 
evolution of data processing tasks from centralized computer systems 
(typically mainframe computers and minicomputers) to decentralized network 
systems, which are generally smaller and more cost-effective.  In a 
centralized computer system, users are connected to a large central computer 
which handles both data processing and storage functions.  Traditionally, the 
primary appeal of centralized computer systems has been their ability to 
provide large numbers of users with shared, centrally managed data.  Users of 
centralized computer systems, however, grew increasingly dissatisfied with 
the high cost of these systems and, as a result of advances in microprocessor 
performance and networking technology, network computing emerged as a 
promising alternative to the centralized computer system.   Network computing 
allows users to obtain both connectivity to shared data and the price and 
performance advantages of distributed processing.

    LOCAL AND WIDE AREA NETWORKS. During the 1980's, local area networks 
("LANs") and wide area networks ("WANs") proliferated as enterprise-wide 
computing solutions to take the place of centralized systems.  Advances in 
microprocessor performance also resulted in the development of multiple 
formats, including a range of different word processing, spreadsheet, CAD and 
other graphics applications which run on a variety of computing platforms 
with little data sharing compatibility.   The absence of compatibility 
between computing platforms and applications has greatly reduced the utility 
of LANs and WANs as mechanisms for sharing information among users of an 
enterprise computing system.  Without an effective means of creating, 
storing, and searching for information, workers have been forced to re-create 
documents from scratch, duplicating effort and increasing the margin for 
error.  Certain collaborative computing solutions, such as Lotus 
Notes-Registered Trademark-, were developed to alleviate the absence of 
widespread connectivity.  However, these products use proprietary database 
structures which fail to provide ready access to remote databases.  In 
addition, any new or upgraded software applications must be custom-integrated 
into the proprietary platform, involving significant outside expertise and 
expense. 

    THE INTERNET AND WORLD WIDE WEB.  The Internet is a global collection of 
computer networks that links thousands of public and private computer 
networks and millions of public and private computers around the world. 
Developed in 1969, the Internet acts as a "network of networks," allowing 
computers connected to the Internet to communicate with each other using the 
Internet protocol ("TCP/IP").  The Internet has historically been used 
primarily by academic institutions and government agencies to exchange 
information via electronic mail.  Recently, the Internet has experienced 
rapid growth in


                                       1
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use and increased internationalization as a result of, among other things, 
the growth in the number of commercial hosts, the expanded breadth of 
information content, an increase in the installed base of personal computers, 
improvements in telecommunications infrastructure supporting Internet use and 
technological advances such as improved graphical interfaces, all of which 
make the Internet more useful and easier to use.

    The World Wide Web (the "Web"), a client/server network of hyperlinked 
multimedia databases, was introduced in 1992.  The Web enables users to find, 
retrieve and link information on the Internet in a consistent way that makes 
the underlying complexities transparent to the user.  Electronic documents 
are published on Web servers in a common format described by the Hypertext 
Markup Language ("HTML").  The Web can be easily accessed using client 
software known as Web browsers that use a standard protocol called Hypertext 
Transfer Protocol ("HTTP").  The Web allows users to offer and retrieve 
textual, graphical and other information. 

    BUSINESS APPLICATIONS OF WEB TECHNOLOGY.  Initial business applications 
of Web technology focused on its utility as a new channel for direct selling. 
Although a few businesses are realizing revenues directly from Web sales, the 
majority of commercial users currently employ the Web for external 
communications about their products and services to potential customers.  
Only recently have enterprises commenced using Web technology as a means of 
internal communication and information management.  This technology offers 
these organizations a means of overcoming the same distributed and 
heterogeneous information problems the Internet and World Wide Web were 
designed to solve on a global basis.  Since many organizations already have 
an Internet system in operation, the application of Web technology to serve 
internal data sharing needs is both operationally intuitive and 
cost-effective.

    Private internets, or "intranets," are rapidly gaining acceptance among 
the corporate community. Corporate intranets use the infrastructure and 
standards of the Internet and World Wide Web, but are secured from access by 
general users of the public Internet through software programs commonly known 
as "firewalls." Through Web browsers, the same electronic information can be 
viewed by any person in the organization, regardless of the system he is 
using.  More importantly, the uniform presentation of information enables 
intranets to consolidate all computers, software and databases existing 
within the host organization into a single system, enabling users to find 
information wherever it resides.  

    A more recent trend in corporate intranets is the development of the 
external intranet, or "extranet."  An extranet exists when businesses allow 
customers, suppliers, or multiple global locations access to their internal 
systems via Internet connections.  Using Web technology for this type of 
collaborative system offers a great cost advantage over wide area networks, 
which use long distance and leased phone lines. 

    Web technology also has singular applicability to the on-demand 
publishing market.  Many organizations that rely on documents to communicate 
with their customers, vendors and other third parties are seeking solutions 
that offer timely, highly customized documents.  These documents often need 
to be produced in large quantity over limited runs, which traditional high 
speed electronic printing systems are not designed to handle.  Web technology 
offers businesses extensive flexibility in creating, storing, revising and 
publishing documents, particularly those that require continuous 
modification.  Combined with electronic storage, this technology permits 
publishing on-demand in response to orders placed from various locations.


                                       2
<PAGE>
BUSINESS STRATEGY

    The Company's objective is to expand the array of products and services 
surrounding the Intra.DOC!-Registered Trademark- Management System as a means 
of increasing its share of the document management market.  To achieve this 
objective, the Company has developed a strategy, which includes:

-   Offering its customers a single source solution for their document
    management needs using internal and alternative marketing channels to sell
    its products.

-   Leveraging Web technology in the development of intranet products.

-   Expanding its line of proprietary software products.

-   Cultivating strategic partnerships with leading industry participants

    SINGLE SOURCE SOLUTION.  The Company believes that its revenue growth is 
largely attributable to its ability to address any aspect of a customer's 
document management needs.  Customers are provided with the convenience and 
security of a "one stop solution" to their document creation, management and 
distribution requirements.  Moreover, the availability of products and 
services touching on each aspect of document management provides IntraNet 
with numerous vertical integration opportunities. 

    LEVERAGING WEB TECHNOLOGY.  Because Web technology has proven to be an 
efficient and cost effective way to manage and distribute information, the 
Company has focused on this technology as a core means of controlling and 
distributing this information, as well as providing a common interface to 
easily and inexpensively access external services.  The Company's products 
are designed specifically for Web technology, while the majority of 
LAN-designed document Management Systems have been retroactively ported to 
support the intranet.

    PROPRIETARY SOFTWARE PRODUCTS.  The Company is directing the majority of 
its research and development resources to the development of proprietary 
intranet software for the document management market.  Sales of the Company's 
proprietary software products have historically been at a relatively higher 
margin when compared to sales of nonproprietary software products and 
Print-on-Demand sales. The core product of the Company's proprietary line is 
the Intra.DOC!-Registered Trademark- Management System.

    STRATEGIC PARTNERSHIPS.  The Company seeks to enter into strategic 
partnerships with leading industry participants.  In connection with this 
strategy, IntraNet is developing an alternate channels marketing program for 
its software products, allowing third-party organizations to sell the 
Company's products in strategic market niches and geographic areas otherwise 
inaccessible to the Company.  For example, the Company has established a 
strategic relationship with Interleaf, Inc., a leading provider of 
enterprise-wide document management solutions, to expand the North American 
sales and marketing channels for Intra.DOC!-Registered Trademark-.  The 
Company also hopes to enter into possible alliances with commercial printers 
in an effort to increase the number of the Company's regional on-demand 
publishing facilities as part of a general expansion of its electronic 
document warehouse/distribution ("Print-on-Demand") business.  Management 
believes that expansion of the Company's Print-on-Demand business could 
provide the Company with a continuous source of revenue from customers that 
use these facilities on an ongoing basis.  The Company hopes to accomplish 
this by increasing its national presence with expansion into new cities 
through affiliate printer relationships. The Company believes that an 
increasing number of potential customers will discover the cost and 
efficiency advantages inherent in its electronic warehouse/distribution 
services. Moreover, a national presence should afford the Company an 
"electronically ship then print" approach to document distribution to provide 
customers with a faster time to market.

PRODUCTS AND SERVICES

    The Company believes that its current and future competitive position in 
the document management market is, and will be, largely dependent upon its 
ability to offer solutions for a wide variety of its  customers' document 
management needs.  Customers are provided with the convenience and security 
of a single source solution to their document creation, management and 
distribution requirements and also benefit from the synergy created when a 
single vendor is responsible for each aspect of document management 
applications. The following is a description of the products and services 
offered by the Company to provide its customers with effective document 
management solutions.
                                       3
<PAGE>

     THE Intra.DOC!-Registered Trademark- MANAGEMENT SYSTEM

     The Company recently released Intra.DOC!-Registered Trademark-, an 
intranet/Internet software application that  utilizes Web technology to 
provide users with access to any document on their systems, regardless of 
location or the software application used to create it.  
Intra.DOC!-Registered Trademark- offers the Company's customers a means of 
overcoming the data sharing compatibility problems inherent in traditional 
LAN/WAN systems.  Intra.DOC!-Registered Trademark- automatically places 
documents into a Web-ready format while preserving the formats in which the 
documents were created. Additionally, the software automatically creates and 
indexes the Web hyperlinks that make it possible to navigate through the 
information and further categorizes data in such a manner that permits full 
text searches by the user. Document-based data is not only viewable, but 
authorized users may access the documents in their native formats.  
Intra.DOC!-Registered Trademark- eliminates the need to generate manual links 
and navigational aids, continually updates the Web site with the most current 
information, permits secure file management and revision control, overcomes 
database querying limitations, allows diverse documents (including those in 
CAD formats) to be accessible and linked on a Web, allows  access to multiple 
repositories (libraries) of information, allows users to search for and view 
information from any location, and minimizes the cost of, and time required 
for both installation and day to day management of business information on a 
Web site.  All an authorized user needs to access the site is a standard Web 
browser and a Web document viewer.

    The Company believes that Intra.DOC!-Registered Trademark- fills the gap 
in current "common gateway interface" ("CGI") technology between the 
repository of business data, and the searching and viewing needs of Web site 
users.  CGI-only solutions are limited in their inability to use HTML menu 
hierarchies. Thus CGI users can view documents in the repository but often 
must do searches manually, depending on the limitations of the repository.  
Intra.DOC!-Registered Trademark- overcomes both concerns by generating HTML 
links automatically and providing Web access to the information repository.  
Intra.DOC!-Registered Trademark- refines the source documents directly into 
Web-ready formats using architecture that overcomes problems of volume, 
organization, and timely updates.  Widely diverse document types are 
automatically converted into one virtually universal format for information 
searching and sharing.

    Intra.DOC!-Registered Trademark- contains several features calculated 
both to expand access to, and increase the amount of information readily 
available on any organization's document management system:

-   Authorized users have access to the information which they require for
    decision-making, and general users of the public Internet are restricted
    from accessing the system.

-   All system users are able to generate and publish information for
    distribution throughout approved areas of the organization without having
    to go through a mediator.

-   System administrators may use existing firewall technology to grant varying
    levels of security access to different groups of users.

-   Barriers to entering the information-sharing system are extremely low. 
    Users require only a personal computer, a browser, and in some cases,
    generic document viewing software. 

-   Implicit barriers to usage are also very low.  Web sites can be created
    directly by end users who are able to view documents and author them
    without specialized skills or software systems.  Users can author documents
    in whichever form is convenient to them. 

-   System flexibility is high, which means the system can be adapted to the
    changing needs of people in the organization.

                                       4
<PAGE>

    Intra.DOC!-Registered Trademark- is designed to move information through 
a three-layer architecture that acts to store, structure and catalog the 
data, format the data for Web site publishing, and maintain the Web site with 
the most current version thereof.After a user has authored a document in any 
software application, the document is submitted to Intra.DOC!-Registered 
Trademark- through a Web interface.  In some instances, the document may 
require approval before publication and the approving parties are notified 
through a Web-based list of the status of the various documents awaiting 
publication.  Once documents have been approved, the document information in 
various formats is placed in repository called the IntraNet Web Library (the 
"Library"), where it is structured and organized.  Documents stored in the 
Library remain continuously accessible in their native software applications. 
 Authors are required to submit certain "metadata" (profile information) for 
each document, such as its title, subject, author and revision date.  This 
information is later used to organize the data and provide for ease in 
document retrieval.

    The refinement layer of Intra.DOC!-Registered Trademark- converts each 
document to Web-readiness.  The refinement layer contains three components: 
the Intra.DOC! Document Refinery-Registered Trademark-, the Intra.DOC! Web 
Refinery-Registered Trademark-, and the Intra.DOC! Full-Text 
Refinery-Registered Trademark-.  The Document Refinery-Registered Trademark- 
converts documents to Adobe PDF or HTML formats, or preserves them in their 
native format if conversion is not possible. The Full-Text 
Refinery-Registered Trademark- uses Intra.DOC!-Registered Trademark-'s Verity 
text search engine to index the document text and metadata to permit document 
searching after publication. The Web Refinery-Registered Trademark- then 
generates HTML links and menu hierarchies according to the Web site structure 
and metadata information, and then continually maintains the site to ensure 
that the most current information available is reflected there.

    The third and final layer of the Intra.DOC!-Registered Trademark- 
architecture allows users with Netscape-Registered Trademark-, Microsoft 
Explorer-Registered Trademark- and other common Internet browsers to use easy 
navigational menus to access necessary the information.  Any user on the 
system can view a document created in virtually any application without 
having the origin software loaded on their desktop.  Authorized users may 
even "check out" documents in order to modify them.  Full Web site search 
capabilities are provided, and documents are hierarchically structured to 
facilitate navigation.

    When maintaining a Web site with Intra.DOC!-Registered Trademark-, the 
labor-intensive tasks of making information Web-ready are automated. More 
importantly, the information itself becomes more accessible, up-to-date, and 
meaningful to the users, while the system preserves the controls necessary 
for data security.

    The Company believes that its customers' total investment in 
Intra.DOC!-Registered Trademark- document management software may be as 
little as one half the cost of known competing systems. The Company estimates 
that a substantial majority of most customers' investment in alternative 
document management systems is attributable to consulting services arising 
out of system installation.  Moreover, additional consulting services are 
frequently necessary to support advances in microprocessor technology or 
software applications that require customization of the existing system.  
Intra.DOC!-Registered Trademark- attempts to inverse the traditional 
relationship between acquisition costs and associated consulting services. By 
combining the ease of installing Intra.DOC!-Registered Trademark-  with an 
internal architecture that is specifically designed to provide for future 
volume increases in information, and new and diverse document types along 
with other advances in Web technology, Intra.DOC!-Registered Trademark- 
should reduce a customer's need for future consulting services as the 
business and the system grow in tandem. 

    Intra.DOC!-Registered Trademark- ORDER MANAGEMENT SYSTEM

    In November of 1996, the Company introduced its proprietary 
Intra.DOC!-Registered Trademark- Order Management System ("OMS").  This 
product allows customers to remotely store, revise, secure access to, and 
distribute documents, using the Internet or via traditional "dial-up" 
systems. Users of the Intra.DOC!-Registered Trademark- OMS system can send 
copies of documents, physically or electronically, to the Company for 
electronic warehousing.  Once the documents have been stored, customers may 
access them via the Internet or "dial-up," retrieving documents for revisions 
as needed. Customers of the Company's Distribution Group are able to order 
the Company's on-demand printing and electronic distribution services from 
various remote locations via modem or the Internet.  The security and 
integrity of the documents are ensured while warehoused: passwords are used 
to restrict access to unauthorized users, and offsite storage of valuable 
documents provides an added backup in case of a disaster.

    Over the Internet, customers use a common browser for access to the 
Intra.DOC!-Registered Trademark- OMS interface and to their documents.  
Documents are formally checked out of the Company's data vault system and 
retrieved to the user's desktop for revisions in their native applications.  
Once the revisions are complete, documents are checked back in to the 
Company's data vault system, where revision histories are controlled and 
maintained.  This feature permits customers to view and confirm documents 
prior to their being printed by the Company's Distribution Group.

                                       5
<PAGE>

    The Intra.DOC!-Registered Trademark- OMS, coupled with the Company's 
complete bindery and print support services, ensure that virtually every 
aspect of a printing job can be ordered remotely.  Printed documents can be 
shipped directly from the Company and electronic documents can be sent via 
the Internet. Using Intra.DOC!-Registered Trademark- OMS to access and revise 
documents over the Internet is ideal for businesses with remote locations, 
customer sites, or distribution channels.  Many businesses need a constant 
flow of training manuals, product brochures, operating manuals and similar 
documents throughout their organizations.  The use of traditional printing 
services requires significant investments of time and labor to place printing 
orders and deliver current versions of documents for reproduction. Moreover, 
traditional printing services frequently impose minimum order requirements 
for each printing job.  Such requirements usually result in excess quantities 
of documents that must be destroyed when revisions are made.  When used with 
the Company's Print-on-Demand service, Intra.DOC!-Registered Trademark- OMS 
enables customers to store documents electronically in the Company's data 
vault, access and revise them from remote locations, and order on-demand 
printing and shipping jobs remotely on an as-needed basis.

    Recent Intra.DOC!-Registered Trademark- OMS enhancements include an easy 
to use interface between any remote Intra.DOC!-Registered Trademark- OMS 
vault maintained by a customer and any Intra.DOC!-Registered Trademark- OMS 
vault located at an IntraNet Distribution Center, an affiliate printer, or 
the customer's own production facility.  This allows customers operating from 
any location to have quick and easy access to any intranet distribution 
facility for automated ordering and transfer of the electronic file to be 
on-demand printed and distributed to any location.  This provides 
Intra.DOC!-Registered Trademark- OMS users with the ability to produce and 
ship on-demand paper copies, in volume, from any Intra.DOC!-Registered 
Trademark- OMS facility , expanding the range of IntraNet services to all 
Intra.DOC!-Registered Trademark- users.

SALES, MARKETING AND DISTRIBUTION

    The Company believes that as the trend toward network-based computing 
environments and multiple platforms continues, the demand for its products 
and services, especially its proprietary intranet software products and 
on-demand publishing services, will increase.  Management believes that the 
breadth of the Company's line of products and services enables it to 
vertically integrate any one aspect of a customer's document management needs 
with all others.  The Company's marketing strategy also entails leveraging 
its competitive advantages with an aggressive direct sales approach, combined 
with seminar selling, media advertising, and regional direct mail campaigns. 
Additionally, the Company is developing an "alternate channels" marketing 
strategy for its software products, allowing third-party organizations to 
market its proprietary products in strategic niches and geographical areas.  
These alternate channels include vertically-oriented resellers, large system 
integrators, strategic industry relationships, and software distributors.

STRATEGIC PARTNERS AND SUPPLIERS

    To date, the majority of the hardware and software products sold by the
Company have been through reseller arrangements with Sun Microsystems, Inc.
("Sun") and Interleaf, Inc. ("Interleaf"). The Company maintains its own
internal development staff to provide the customization required by a
significant number of implementations for Sun and Interleaf products.

    The Company has established a strategic relationship with Interleaf to 
expand the North American sales and marketing channels for 
Intra.DOC!-Registered Trademark-. Interleaf, a leading provider of 
enterprise-wide document management solutions, will add the new NT-based 
Intra.DOC!-Registered Trademark- application to its current line of 
web-enabled document Management Systems.  IntraNet is currently the largest 
reseller of Interleaf software.

    Intra.DOC!-Registered Trademark- has already been configured for 
Interleaf's RDM system, which provides customers a smooth path from a 
departmental document management solution into a comprehensive enterprise 
system with configuration management, work flow, integrated batch output 
choices and hundreds of vertical application solutions.  
Intra.DOC!-Registered Trademark- is also compatible with Interleaf's 
authoring, electronic distribution, Web publishing and filter products.

    Sun, one of the leading providers of intranet hardware and software, is 
the industry's most popular platform for software development and other Unix 
applications. The Company has been named Sun's exclusive sales representative 
for all public and private educational institutions in Minnesota and 
Wisconsin, and is one of only two vendors with access to the entire Sun 
product line. IntraNet is the largest value added reseller of Sun products 
within Minnesota, Iowa, Wisconsin, North Dakota and South Dakota.  The 
Company also sells other Sun equipment for applications such as computational 
and analysis server platforms, high-end computer simulation and physical 
modeling, Internet services, and other advanced technologies.

                                       6
<PAGE>

PRODUCT DEVELOPMENT

    The Company has divided its software development personnel into two 
departments: Custom Applications, which concentrates on providing billable 
services, and Research and Development, which is concerned with proprietary 
intranet applications for resale.  Intra.DOC!-Registered Trademark- and 
related document management software products currently consume most of the 
Company's research and development resources.

    The Company recently released Intra.DOC!-Registered Trademark- version 
2.2, which enables users to publish documents to any Unix Web server, and 
features improved full text search capabilities.  Intra.DOC!-Registered 
Trademark- version 2.3 is scheduled for release in April of 1997.  It is 
anticipated that version 2.3 will offer enhanced Web security, support 
additional document formats, and provide for integration with external 
repositories, such as Interleaf's RDM, SDRC's Metaphase and Workgroup 
Technology's CMS.  Intra.DOC!-Registered Trademark- version 3.0 scheduled for 
release in late 1998, is expected to feature full Java GUI ease of use, 
various performance and volume enhancements, additional security features, a 
scanning module for hardcopy input, and the ability to integrate with 
additional external repositories.

    IntraNet also intends to release enhanced versions of the 
Intra.DOC!-Registered Trademark- Order Management System.  Each version is 
expected to provide additional integration features, including job ticketing 
and inventory modules, as well as full compatibility with the 
Intra.DOC!-Registered Trademark- Management System.

INTELLECTUAL PROPERTY

    The Company has applied for trademark registration for the following 
marks: INTRANET SOLUTIONS, DOCUMENT REFINERY, WEB REFINERY, WEB VAULT, and 
Intra.DOC!. There can be no assurance that any trademarks which have been 
applied for will be issued. In the absence of trademark registration 
protection, the Company may be unable to take advantage of the brand name 
recognition it is attempting to build. Further, even if all trademarks 
applied for are issued, there can be no assurance that such trademarks will 
prove valuable to the Company.

    In the absence of significant patent or copyright protection, the Company 
may be vulnerable to competitors who attempt to develop functionally 
equivalent products. Although the Company believes that it has all rights 
necessary to market its products without infringing upon any patents, 
copyrights or trademarks held by others, there can be no assurance that 
conflicting patent, copyright or trademark rights do not exist. The Company 
relies upon trade secret protection for its confidential and proprietary 
information. There can be no assurance that others will not independently 
develop substantially equivalent proprietary information and techniques or 
otherwise gain access to the Company's trade secrets or disclose such 
technology, or that the Company can meaningfully protect its trade secrets.

    It is the Company's policy to require its employees, consultants, and 
advisors to execute confidentiality agreements upon the commencement of 
employment or other relationships with the Company. These agreements include 
standard non-disclosure and non-competition provisions prohibiting employees 
or former employees from disclosing the Company's Confidential Information 
(as defined therein) and prohibiting employees, and former employees, for a 
period of one year following termination of their employment with the 
Company, from organizing or participating in a Competing Business (as defined 
therein) or developing or selling Competing Products (as defined therein).

COMPETITION

    Documentum, Inc., Open Text Corporation and PC Docs Group International, 
together with certain other competitors currently marketing products into the 
document management market are more established than the Company and have the 
benefit of pre-existing relationships with potential customers and greater 
name recognition in the industry. Some of the Company's present and potential 
future competitors have significantly greater technical, financial, and 
marketing resources than the Company. Although IntraNet believes it competes 
effectively notwithstanding these factors, there can be no assurance that the 
Company will have the financial resources, technical expertise or marketing, 
distribution or support capabilities to compete successfully in the future.

    The Company considers its ability to service any aspect of a customer's 
document creation, management and distribution requirements to be its primary 
competitive advantage.  Customers compelled to use multiple vendors to 
install or maintain a document Management System face an ongoing risk  that 
various components of their systems do not fit together conceptually, or 
simply will not work.  IntraNet's vertical integration allows it to deliver a 
 solution, or set of solutions, covering the entire spectrum of the document 
management life cycle.

                                       7
<PAGE>

    Within the document management market, the majority of products currently 
available were designed for specialized, high-volume line-of-business 
applications and require a substantial investment.  The Company believes that 
certain lower cost solutions offered by other document management vendors 
offer little more than file storage and viewing solutions.  IntraNet's 
proprietary software occupies a relatively unaddressed area of the market, 
offering substantial features at a low cost.  The Company's products are 
well-suited to businesses that do not have specialized or extraordinary 
document processing needs (e.g., line-of-business documents), but do require 
certain sophisticated features, such as checking in and out, security, and 
version control.  Also, the Company's commitment to Web standards stand out 
in contrast to its competition and enables it to offer its customers the most 
cost effective solutions available with current and developing technologies.

EMPLOYEES

    At June 1, 1997, the Company had approximately 112 employees. Ten 
employees working at the Company's Phoenix facilities are members of a 
collective bargaining unit.  The labor contract covering such employees will 
expire unless earlier renewed on June 25, 2000. No other employees of the 
Company are currently represented by a labor union.  Management considers its 
employee relations to be good.

CERTAIN FACTORS

    In addition to the matters discussed elsewhere in this Annual Report on 
Form 10-KSB, the following are important factors that could cause actual 
results of events to differ materially from those contained in any 
forward-looking statement made on or behalf of the Company

    SIGNIFICANT CAPITAL REQUIREMENTS; NEED FOR ADDITIONAL FINANCING.  The 
Company's capital requirements in connection with its research and 
development and marketing activities have been and will continue to be 
significant.  The Company has been dependent upon the proceeds from sales of 
its securities, as well as various private loans, to fund its development and 
marketing activities. The Company is not generating sufficient revenues from 
its operations to fund its activities and is, therefore, dependent on 
proceeds from the sale of its debt or equity securities to continue at its 
current level of operations.  Any additional equity financings may be 
dilutive to shareholders, and additional debt financing, if available, may 
involve restrictive covenants.  There can be no assurance that additional 
financing will be available to the Company on commercially reasonable terms, 
or at all.  The Company is evaluating several financing alternatives, 
including the sale of equity and debt securities.

    UNCERTAINTY OF FUTURE OPERATING RESULTS; FLUCTUATIONS IN FUTURE OPERATING 
RESULTS.  Prior growth rates in the Company's revenue and operating results 
are not necessarily indicative of future growth, if any, or of future 
operating results. The Company's future operating results may vary 
substantially from quarter to quarter and will depend on many factors, 
including the level of sales of its proprietary software products, continued 
profitable expansion of its print-on-demand business and continued expansion 
of the market for corporate intranets.  At its current stage of operations, 
the Company's quarterly revenues and results of operations may be materially 
affected by the timing of the development, introduction and market acceptance 
of the Company's and its competitors' products.  Product development and 
marketing costs are often incurred in periods before any revenues are 
recognized from the sales of products.  Operating expenses are higher during 
periods in which such product development costs are incurred and marketing 
efforts are commenced.  In addition, the timing of the Company's receipt of 
significant contracts could add to quarter to quarter variation in operating 
results.  Due to these and other factors, including the general economy, 
stock market conditions and announcements by the Company or its competitors, 
the market price of the securities offered hereby may be highly volatile.

    DEPENDENCE ON NARROW PRODUCT LINE; TECHNOLOGY RISKS; RISK OF MARKET 
ACCEPTANCE.  To date, the Company has marketed a limited line of its 
proprietary software products.  The Company's future success will depend, to 
a large extent, on its ability to increase sales from existing products and 
derive sales from new products.  There can be no assurance that the Company 
will be able to further penetrate the market with its existing products or 
introduce and gain acceptance of its new products.  The market for Internet 
software products is highly competitive and characterized by rapid innovation 
and technological change. The Company's products were specifically designed 
to meet the needs of the document management market, but other companies have 
also introduced or announced the development of products designed to address 
the same markets as the Company's products. In addition, technological 
advances that would make the Company's products less attractive to current 
and potential customers could adversely impact the business of the Company.  
The Company's plans with respect to the development of new products are 
subject to the risks inherent in the development and marketing of complex 
software products, including the risks that the release of the product may be 
delayed, errors may be found in the product after its release despite 
extensive testing, and discovered errors may not be corrected in a timely 
manner. Further,

                                       8
<PAGE>

the commercial success of the Company's products will depend on the 
willingness of potential customers to perform and accept the use of the 
Company's products to create, manage and distribute unstructured 
business-critical data. 

    DEPENDENCE ON DEVELOPMENT OF NEW PRODUCTS.  The Company's future success 
is dependent upon its continued introduction of new software products and its 
ability to develop enhancements and upgrades to its existing product line. 
The Company devotes significant resources to research and development and 
believes it will have sufficient resources to support its research and 
development efforts; however, the development of new, technologically 
advanced products is a complex and uncertain process requiring high levels of 
innovation, as well as the accurate anticipation of technological and market 
trends.  Delays in the introduction or shipment of new or enhanced products, 
the inability of such products to gain market acceptance or problems 
associated with new or enhanced products could adversely affect the Company's 
operating results.  The market for the Company's products is characterized by 
rapidly changing technology, frequent new product introductions and product 
enhancement and evolving industry standards.  The introduction or enhancement 
of products embodying new technology or the emergence of new industry 
standards could render the Company's current products, or any other products 
the Company may develop in the future, obsolete and unmarketable.  The 
Company's ability to anticipate changes in technology, products and industry 
standards and to successfully develop and introduce new and enhanced products 
on a timely basis will be a significant factor in the Company's ability to 
grow and remain competitive.  There can be no assurance that the Company will 
be successful in introducing new products to respond to emerging industry 
trends, and there can be no assurance that the level of research and 
development expenses necessary for the Company to remain competitive will be 
as currently anticipated or that the Company's revenues will be sufficient to 
cover its research and development costs.

    DEPENDENCE UPON KEY VENDOR RELATIONSHIPS.  The Company is materially 
dependent on Sun Microsystems, Inc. and Interleaf, Inc. for the supply of the 
hardware and non-proprietary software products sold as part of its systems. 
Any disruption in the relationship between the Company and either of Sun 
Microsystems, Inc. or Interleaf, Inc. would have an immediate and material 
adverse impact on the Company.  Although the Company believes that secondary 
sources are currently available for similar hardware products, there can be 
no assurance that suitable alternative vendor relationships could be 
established in a timely manner, if at all. The Company purchased 
approximately 54%, 68% and 67% of its total product resale requirements from 
Sun Microsystems, Inc. in each of the fiscal years ended 1995,1996 and 1997, 
respectively. 

ITEM 2.  PROPERTIES 

    The executive offices of the Company and its subsidiaries are located in
Eden Prairie, Minnesota, where the Company leases approximately 42,000 square
feet of office and warehouse space.  The Company also has office and warehouse
space in the following locations:


                                                        Approximate Square
      Facility Location                                  Footage of Space
      -----------------                                 ------------------
      Milwaukee, Wisconsin                                  14,000
      Denver, Colorado                                       6,000
      Boston, Massachusetts                                  3,000
      Phoenix Arizona                                       13,000

The Company has discontinued the use of its facilities in Milwaukee and Denver. 
(See Management's Discussion and Analysis of Financial Condition and Results of
Operations - Special Charges) The Company believes that the remaining facilities
are adequate and suitable for its needs.

ITEM 3.  LEGAL PROCEEDINGS

         The Company is not a party to any material legal proceeding.

                                       9
<PAGE>

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

    No matter was submitted to a vote of the Company's security holders 
during the fourth quarter of the fiscal year ended March 31, 1997.

    On June 19,  1997, the Company held a special meeting of shareholders to 
consider and vote upon the following proposal.  The tabulation of the votes 
in favor, against and abstaining with regard to the proposal is set forth 
below:


                                                                       BROKER
            PROPOSAL                      IN FAVOR  AGAINST  ABSTAIN  NON-VOTES
            --------                    ----------  -------  -------  --------
To approve an amendment to the           5,117,736  13,525    11,167        0
Amended And Restated Articles of                                             
Incorporation to increase the number
and nature of authorized shares from
12,500,000 shares of common Stock,
$.01 par value, to 25,000,000 shares of
undesignated capital stock


                                       PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

                             Price Range of Common Stock

    The Company's Common Stock and Redeemable Warrants trade separately in
the over-the counter market through NASDAQ under the symbols INRS and INSRW,
respectively.  Trading in the Redeemable Warrants will cease upon their
exercise in full or upon their earlier redemption.  The following table sets
forth the range of high and low bid prices for the Common Stock and
Redeemable Warrants for the periods indicated, as reported by NASDAQ.  The
quotes represent "Inter-Dealer" prices without adjustments or mark-ups,
mark-downs or commissions and may not necessarily present actual
transactions.  On June 24, 1997, the last bid prices of the Common Stock and
Redeemable Warrants were $4.38 and $1.25 respectively.  As of June 24, 1997,
the Company had approximately 118 record holders of Common Stock.

                                  COMMON STOCK        REDEEMABLE WARRANTS
                                  HIGH      LOW         HIGH        LOW
Fiscal 1996:
First Quarter ended 6/30/95       3.75      3.00        .38        .31
Second Quarter ended 9/30/95      6.00      3.00        .81        .25
Third Quarter ended 12/31/95     12.50      5.00       2.31        .63
Fourth Quarter ended 3/31/96     14.75      9.25       2.75       1.38

Fiscal 1997:
First Quarter ended 6/30/96      21.75     10.00       4.38       1.44
Second Quarter ended 9/30/96     19.00      8.00       3.69        .94
Third Quarter ended 12/31/96      9.50      5.50       3.25        .75
Fourth Quarter ended 3/31/97      8.25      4.38       3.75       1.25

                                       10
<PAGE>

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

INTRODUCTION

    IntraNet Solutions, Inc. ("IntraNet" or the "Company") provides 
integrated solutions for the creation, management and distribution of 
critical business information.  IntraNet offers its customers a variety of 
products, including proprietary intranet document management software, 
customized off-the-shelf software applications, hardware and software 
implementation, and electronic distribution and on-demand publishing 
services.  The evolution of Web technology as a tool for storing, managing 
and distributing information, coupled with the Company's experience in 
designing systems and creating custom software applications, has created an 
opportunity for the Company to develop a complete line of document management 
software products utilizing Web technology. 

    On July 31, 1996, the Company, then named MacGregor Sports and Fitness, 
Inc. ("MSF") and IntraNet Integration Group, Inc.("IIGI," formerly known as 
Technical Publishing Solutions, Inc. ("TPSI"), founded in 1990) completed a 
reorganization (the "Merger"), pursuant to which IIGI became a wholly-owned 
subsidiary of MSF.

    The Company's revenues are derived from (i) the sale of proprietary and 
non-proprietary software products, (ii) the sale of hardware products, (iii) 
the sale of maintenance and support contracts, (iv) the sale of technical and 
other services, and (v) the sale of on-demand publishing services. Revenue 
from the sale of software is recognized in accordance with AICPA Statement of 
Position 91-1 Software Revenue Recognition.  Accordingly, revenue is 
recognized at the time of product shipment if no significant Company 
obligations remain and collection of the resulting sale price is probable.  
Revenue from maintenance and support contracts is generally recognized 
ratable over the term of the contract.  Revenue from contracts with original 
durations of one year or less is recognized at the time of sale if the 
Company does not expect to have material future obligations to service the 
contracts.  Revenue from technical and other services are recognized as the 
related services are performed.  Revenue from the sale of all other products 
and services is recognized at the time of delivery to the customer.

RESULTS OF OPERATIONS

    The following table sets forth certain items from the Company's 
consolidated statements of operations as a percent of total revenues for the 
periods indicated.
                                                  Year Ended March 31,
                                                  --------------------
                                               1995        1996       1997
                                               ----        ----       ----
Revenues:
    Hardware integration                        48.0%       57.6%      52.3%
    Software, technical services and support    45.4        31.8       28.6
    Distribution services                        6.6        10.6       19.1
                                                -----------------------------
      Total revenues                            100.0%      100.0%     100.0%

Cost of revenues:

    Hardware integration                        41.6       47.7       43.9
    Software, technical services and support    27.6       19.7       16.7
    Distribution services                        3.6        7.8       15.0
                                                ----------------------------
      Total cost of revenues                    72.8       75.2       75.6
                                                ----------------------------
      Gross profit                              27.2       24.8       24.4

Operating expenses

    Sales and marketing                         11.9        12.8       15.1
    General and administrative                   9.8         9.5       18.5
    Research and development                     3.3         3.5        5.6
    Special charges                             --          --          2.3
                                                ----------------------------
       Total operating expenses                 25.0        25.8       41.5
                                                ----------------------------
    Operating Income (loss)                      2.2%       (1.0)%    (17.1)%
                                                -----------------------------
                                                -----------------------------
                                       11
<PAGE>

YEAR ENDED MARCH 31, 1997 COMPARED TO THE YEAR ENDED MARCH 31, 1996

    REVENUES

    Total revenues increased to $20.0 million for the year ended March 31, 
1997 from $14.2 million for the year ended March 31, 1996, or $5.8 million 
(40.6%).  This increase related to increases in all revenue product lines. 

    HARDWARE INTEGRATION. Hardware integration revenues increased a total of 
$2.3 million or 27.8% for the year ended March 31, 1997 compared to the  year 
ended March 31, 1996 ($10.5 million in 1997 compared to $8.2 million in 
1996). The increase in hardware integration revenue was principally due to 
the expansion of the Company's customer base and increased sales to existing 
customers.

    SOFTWARE, TECHNICAL SERVICES AND SUPPORT.  Software, technical services 
and support revenues increased a total of $1.2 million or 26.4% for the year 
ended March 31, 1997 compared to the year ended March 31, 1996 ($5.7 million  
in 1997 compared to $4.5 million in 1996).  Increases in software and 
services revenue each accounted for $500,000 of the total increase and 
support revenue accounted for $200,000 of the total increase.  The growth in 
software was primarily attributable to the introduction of the Company's 
proprietary software products during the year ended March 31, 1997, which 
accounted for $800,000 in software revenues.  The growth in support revenue 
was primarily attributable to growth in the installed base of hardware and 
software, and renewals of support contracts.

    DISTRIBUTION SERVICES.  Distribution services revenues increased  a total 
of $2.3 million for the year ended March 31, 1997 compared to the year ended 
March 31, 1996 ($3.8 million in 1997 compared to $1.5 million in 1996).  The 
increase in distribution services revenue was primarily attributable to the 
expansion of the customer base through the additions to the direct sales 
force and the opening of two new locations.

    COST OF REVENUES AND GROSS PROFIT 

    Total cost of revenues increased to $15.1 million for the year ended March 
31, 1997 from $10.7 million for the year ended March 31, 1996. Total cost of 
revenues as a percent of total revenues was 75.7% in 1997 compared to 75.2% 
in 1996. Gross profit increased to $4.9 million for the year ended March 31, 
1997 compared to $3.5 million for the year ended March 31, 1996. Total gross 
profit as a percent of total revenues was 24.3% in 1997 compared to 24.8% in 
1996. The increase in gross profit was primarily attributable to incremental 
revenue contributions in all product lines. 

    HARDWARE INTEGRATION.  Cost of hardware integration revenues increased to 
$8.8 million for the year ended March 31, 1997 from $6.8 million for the year 
ended March 31, 1996. Cost of hardware integration revenues as a percent of 
hardware integration revenues was 83.9% in 1997 compared to 82.9% in 1996. 
Gross profit from hardware integration was 16.1% for the year  ended March 
31, 1997 compared to 17.1% for the year ended March 31, 1996.  The reduction 
in gross profit margin was primarily attributable to larger integration 
projects with lower margins and increased competition.

    SOFTWARE, TECHNICAL SERVICES AND SUPPORT.  Cost of software, technical 
services and support revenues increased to $3.3 million for the year ended 
March 31, 1997 from $2.8 million for the year ended March 31, 1996.  Cost of 
software, technical services, and support revenues as a percent of software, 
technical services, and support revenue was 58.6% in 1997 compared to 61.9% 
in 1996. Gross profit on software, technical services and support was 41.4% 
for the year ended March 31, 1997 compared to 38.1% for the year ended March 
31, 1996.  The increase in gross profit was primarily attributable to the 
increase in sales of proprietary software.  Margins on proprietary software 
products were 71.6 percent.

    DISTRIBUTION SERVICES. Cost of distribution services revenue increased to 
$3.0 million for the year ended March 31, 1997 compared to $1.1 million for 
the year ended March 31, 1996.  Cost of distribution services revenues as a 
percent of distribution services revenue was 78.8% in 1997 compared to 73.5% 
in 1996. Gross profit on distribution services was 21.2% for the year ended 
March 31, 1997 compared to 26.5% for the year ended March 31, 1996. Lower 
margins on distribution services were primarily due to costs associated with 
additional high speed laser printing equipment and other printing devices and 
experiencing lower than optimal capacity utilization.

    OPERATING EXPENSES

    SALES AND MARKETING. Sales and marketing expenses increased to $3.0 
million for the year ended March 31, 1997 compared to $1.8 million for the 
year ended March 31, 1996.  Sales and marketing expenses as a percent of 
total revenues were 15.1% in 1997 compared to 12.8% in 1996.  Sales and 
marketing expenses increased as a percent of revenues primarily due to 
increases in staffing and marketing programs.

                                       12
<PAGE>

    GENERAL AND ADMINISTRATIVE.  General and administrative expenses 
increased to $3.7 million for the year ended March 31, 1997 compared to $1.3 
million for the year ended March 31, 1996.  General and administrative 
expenses as a percent of total revenue were 18.5% in 1997 compared to 9.5% in 
1996. General and administrative expenses increased primarily due to 
increases in staffing, expenses related to the relocation of corporate 
headquarters, and other related new facility and distribution services 
related start-up costs.

    RESEARCH AND DEVELOPMENT. Research and development expenses increased to 
$1.1 million for the year ended March 31,1997 compared to $500,000 for the 
year ended March 31, 1996.  Research and development expenses as a percent of 
total revenue were 5.6% in 1997 compared to 3.5% in 1996.  Total research and 
development expenses increased $600,000 in 1997 compared to 1996 due to a 
focus on development of proprietary software products and related expansion 
of the research and development staffing.

    SPECIAL CHARGES. During the quarter ended March 31, 1997, the Company 
formalized details of a change in strategic focus designed to increase 
emphasis on its higher margin proprietary software products, reduce future 
capital investment requirements associated with expansion of its digital 
distribution facilities, reduce operating costs, and improve operations. As a 
result of this change in strategic focus the Company recorded a one-time 
special charge against earnings in the fourth quarter totaling $456,000. 
Included in this change in strategy was the discontinuation of  certain 
distribution group operations in Denver and Milwaukee, primarily facility and 
equipment leases.  The discontinuation of these operations reflects a change 
in strategy toward leveraging its proprietary software development and 
technological expertise, resulting in more centralized growth of the 
Company's digital distribution services that incorporates strategic alliances 
with partner printers to perform remote production services rather than 
direct investment by the Company.  These actions resulted in an accrual for 
the remaining facility and equipment lease obligations (net of estimate for 
related sublease income.) of $219,400, and the write-off of $86,700 of 
goodwill related to the acquisition of these facilities. The accrual of 
$130,000 related to these special charges are included in other liabilities, 
net of $89,400 current portion, included in accrued expenses.

YEAR ENDED MARCH 31, 1996 COMPARED TO THE YEAR ENDED MARCH 31, 1995

    REVENUES 

    Total revenues increased to $14.2 million in fiscal year 1996 from $10.4 
million in fiscal year 1995, or $3.8 million (36.3%).  The increase related 
primarily to increases in hardware integration and distribution services 
revenues.

    HARDWARE INTEGRATION. Hardware integration revenues increased a total of 
$3.2 million or 63.5% in the fiscal year 1996 compared to the fiscal year 
1995 ($8.2 million in fiscal year 1996 compared to $5.0 million in fiscal 
year 1995). The increase in hardware integration revenue was principally due 
to the expansion of the Company's customer base and further penetration of 
its existing customers through leveraging its vendor relationships.

    SOFTWARE, TECHNICAL SERVICES AND SUPPORT. Software, technical services 
and support revenue decreased $200,000 in the fiscal year 1996 compared to 
the fiscal year 1995 ($4.5 million in fiscal year 1996 compared to $4.7 in 
fiscal year 1995).  Increases in software revenues of $100,000 were offset by 
decreases in support revenues of $300,000.

    DISTRIBUTION SERVICES.  Distribution services revenue increased a total 
of $800,000 or 118.8% in the fiscal year 1996 compared to the fiscal year 
1995 ($1.5 million in fiscal year 1996 compared to $700,000 in fiscal year 
1995). The increase in distribution services revenue was primarily attributed 
to the Company's on-demand publishing subsidiary being in operation for a 
complete year for fiscal year 1996 compared to eight months in fiscal year 
1995 and to the expansion of its customer base through additions to the 
direct sales face and the opening of a new location in fiscal year 1996.

    COST OF REVENUES AND GROSS PROFIT 

    Total cost of revenues increased to $10.7 million in fiscal year 1996 
from $7.6 million in fiscal year 1995. Total cost of revenues as a percent of 
total revenues was 75.2% in 1996 compared to 72.8% in 1995. Gross profit 
increased to $3.5 million in fiscal year 1996 compared to $2.8 million in 
fiscal year 1995. Total gross profit as a percent of total revenues was 24.8% 
in fiscal year 1996 compared to 27.2% in fiscal year 1995. The increase in 
gross profit was primarily attributable to incremental revenue contributions 
in hardware and distribution services. The decrease in total gross profit as 
a percent of total revenues was primarily attributable to a decline in 
margins achieved in distribution services.

                                       13
<PAGE>
    
    HARDWARE INTEGRATION. Cost of hardware integration revenues increased to 
$6.8 million in fiscal year 1996 from $4.4 million in fiscal year 1995. Cost 
of hardware integration revenues as a percent of hardware integration 
revenues was 82.9% in fiscal year 1996 compared to 86.7%  in fiscal year 
1995.  Gross profit on hardware integration was 17.1% in fiscal year 1996 
compared to 13.3% in fiscal year 1995.  Higher margins on hardware 
integration revenues were achieved primarily by taking advantage of larger 
vendor discounts and other volume incentives.
    
    SOFTWARE, TECHNICAL SERVICES AND SUPPORT.  Cost of software, technical 
services and support revenues decreased to $2.8 million in fiscal year 1996 
from $2.9 million in fiscal year 1995.  Cost of software, technical services, 
and support revenues as a percent of software, technical services, and 
support revenues was 61.9% in fiscal year 1996 compared to 60.8% in fiscal 
year 1995. Gross profit on software, technical services, and support was 
38.1% in fiscal year 1996 compared to 39.2% in fiscal year 1995.  Lower 
margins on software, technical services and support were primarily due to 
competitive pricing on non-proprietary software products and lower technical 
services billings.

    DISTRIBUTION SERVICES.  Cost of distribution services revenues increased 
to $1.1 million in fiscal year 1996 from $400,000 in fiscal year 1995.  Cost 
of distribution services revenues as a percent of distribution services 
revenues increased to 73.5% in fiscal year 1996 from 53.6% in fiscal year 
1995. Gross profit on distribution services was 26.5% in fiscal year 1996 
compared to 46.4% in fiscal year 1995.  Lower margins on-demand printing 
services were primarily due to larger fixed costs associated with a second 
high speed laser printing device added in January, 1995.
    
    OPERATING EXPENSES
    
    SALES AND MARKETING.  Sales and marketing expenses increased to $1.8 
million in fiscal year 1996 from $1.2 million in fiscal year 1995.  Sales and 
marketing expenses as a percent of total revenues increased to 12.8% in 
fiscal year 1996 compared to 11.9% in fiscal year 1995.  Sales and marketing 
expenses increased as a percent of revenues primarily due to increased in 
staffing and marketing programs.
    
    GENERAL AND ADMINISTRATIVE.  General and administrative expenses 
increased $300,000, to $1.3 million in fiscal year 1996 from $1.0 million in 
fiscal year 1995.  General and administrative expenses as a percent of total 
revenues declined to 9.5% in fiscal year 1996 from 9.8% in fiscal year 1995.  
The increase in general and administrative expenses was primarily 
attributable to growth in the business infrastructure including an overall 
increase in staffing.
    
    RESEARCH AND DEVELOPMENT. Research and development expenses increased to 
$500,000 in fiscal year 1996 from $300,000 in fiscal year 1995.  Research and 
development expenses as a percent of total revenues increased to 3.5% in 
fiscal year 1996 from 3.3% in fiscal 1995.  Total research and development 
expenses increased $200,000 in fiscal year 1996 compared to fiscal year 1995, 
due to a focus on development of proprietary software products and expansion 
of the research and development staff.

    LIQUIDITY AND CAPITAL RESOURCES  
 
    Since its inception and prior to the Merger, the Company has funded its 
operations primarily through revolving working capital and term loans from 
banking institutions together with capital and operating equipment leases.  
In December 1995, the Company issued $550,000 of unsecured convertible 
promissory notes to a limited number of accredited investors.  The unsecured 
notes accrued interest at a rate of 10%, and were converted into Common Stock 
immediately prior to the Merger at a rate of  $3.47 per share.  In December 
1996, the Company issued $1.0 million 9% promissory notes. During the fourth 
quarter of fiscal 1997 the Company issued an additional $500,000 9% 
promissory notes. The 9% promissory notes mature on January 15, 
1998 ($850,000) and April 15, 1998 ($650,000). In consideration of these 
borrowings, the Company issued each lender a warrant to acquire an aggregate 
of 300,000 shares of  Common Stock at a variable exercise price ranging from 
$4.00-$6.00 based upon the trading range of the Common Stock.  
 
    The Company's revolving working capital line of credit allows for 
borrowings of up to $3.1 million based on available collateral at the bank's 
base lending rate plus 2.5%.  At March 31, 1997, the Company had advances of 
$1.8 million, which are due on demand.  On June 25, 1997, the Company has 
$2.1 million in advances and $155,800 of availability on its working capital 
line of credit. At March 31, 1997, the Company also had term loans and 
promissory notes with financial institutions outstanding in the amount of $ 
1.1 million. The term loans require monthly principal payments of $38,400 
plus interest at the bank's base lending rate plus 2.5%. The Company has 
obtained a waiver from its primary lender with respect to a book net worth 
covenant violation. The waiver expires August 31, 1997 if not otherwise cured 
and, accordingly, term loans in place with the Company's primary lender 
totalling $825,100 at March 31, 1997 have been classified as short term. The 
notes issued in December 1996 are at a rate of 9% and mature on January 15, 
1998. At March 31, 1997 the Company also had a demand note payable to its 
principal stockholder in the amount of $27,500 which accrues interest at a 
rate of 12%. 

                                       14
<PAGE>
    
    As of March 31, 1997 the Company had cash of $121,798. Capital
expenditures for the year ended March 31, 1996 and 1997, including
equipment financed with capital lease obligations, were $457,700 and $1.0
million respectively.  During the year ended March 31, 1997 the Company acquired
substantially all the assets of a graphic communications and custom printing
business.  The purchase price consisted of cash of $675,800, a promissory note
of $267,800, and shares of the Company's common stock valued at $350,000.  The
promissory note bears interest at prime plus 1.5%.  The balance of $133,300
remaining on this note is due March 1, 1998.

    The Company acquired a portion of its distribution services production 
equipment with capital lease obligations.  These leases require total monthly 
payments of $28,400 and carry interest rates between 10.1% and 16.6%. In 
addition, the Company has also entered into certain operating leases for 
facilities and equipment.  These leases require total monthly payments of 
$51,900 for facilities and $58,100 for production and office equipment. 
During the year ended March 31, 1997, the Company acquired furniture and 
equipment of $506,700, and vehicles of  $34,900, and invested  $154,400 into 
leasehold improvements.  A significant portion of the equipment purchased was 
computers for research and development and sales and marketing. The Company 
also has a long-term consulting agreement with a former stockholder that 
requires monthly payments of $10,300 through July 2000.
 
    The accompanying financial statements have been prepared on the basis 
that the Company will continue as a going concern, which contemplates the 
realization of assets and satisfaction of liabilities in the normal course of 
business. The Company has experienced losses from operations during the 
fiscal years ended March 31, 1996 and 1997 and has generated an accumulated 
deficit from inception through March 31, 1997 of $3,744,833 and has a working 
capital deficit of $1,833,765 at March 31, 1997. These conditions give rise 
to the question about the Company's ability to generate positive cash flows 
and fund operations. The Company is not generating sufficient revenues from 
its operations to fund its activities and is, therefore, dependent on future 
financing activities to continue as a going concern. The Company is 
evaluating several financing alteratives, including the sale of equity and 
debt securities, however, there can be no assurance that the Conmpany will be 
successful in completing a financing transaction. Any equity financing may be 
dilutive to shareholders, and additional debt financings, if available, may 
involve restrictive covenants and terms.

    Because of uncertainties regarding the achievability of management's 
plans, no assurance can be given as to the Company's ability to continue in 
existence. The financial statements do not include any adjustments to reflect 
the possible future effects on the recoverability and classification of 
assets or the amount and classification of liabilities that may result from 
the possible inability of the Company to continue as a going concern.

PRIVATE SECURITIES LITIGATION REFORM ACT

    The Private Securities Litigation Reform Act of 1995 provides a "safe 
harbor" for forward-looking statements.  Certain information included in this 
Form 10-KSB and other materials filed or to be filed by the Company with the 
Securities and Exchange Commission (as well as information included in oral 
statements or other written statements made or to be made by the Company) 
contains statements that are forward-looking, such as statements relating to 
plans for future expansion, product development, market acceptance of new 
products, and other business development activities as well as other capital 
spending, financing sources and the effects of regulation and competition.  
Such forward-looking information involves important risks and uncertainties 
that could significantly affect anticipated results in the future and, 
accordingly, such results may differ from those expressed in any 
forward-looking statements made by or on behalf of the Company.  These risks 
and uncertainties include, but are not limited to, those relating to product 
development and market acceptance of new products, dependence on existing 
management, leverage and debt service (including sensitivity to fluctuations 
in interest rates), domestic or global economic conditions, changes in 
federal or state tax laws or the administration of such laws.

ITEM 7.  FINANCIAL STATEMENTS

         The Financial Statements of the Company are included herein 
         following the signatures, beginning at page F-1

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANT ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

    On February 26, 1997, the Company, with the approval of its Board of 
Directors, engaged Ernst & Young LLP as the independent accountants for the 
Company and its subsidiaries.  Prior to the engagement of Ernst & Young LLP, 
Lund Koehler Cox & Company, PLLP had served as the principal independent 
certified public accountants for the Company and it subsidiaries.  Lund 
Koehler Cox & Company, PLLP was replaced because of the Company's desire to 
engage an international accounting firm.  The reports on the Company's 
Consolidated Financial Statements prepared by Lund Koehler Cox & Company, 
PLLP for the years ended March 31, 1995 and 1996 contained no adverse opinion 
or disclaimer of opinion and were not qualified or modified as to 
uncertainty, auditing scope or accounting principles. In connection with the 
audits for the years ended March 31, 1995 and 1996 and through February 26, 
1997, there have been no disagreements, with Lund Koehler Cox & Company, PLLP 
on any matter of accounting principles or practices, financial statement 
disclosure or auditing scope or procedure, which disagreements, if not 
resolved to the satisfaction of Lund Koehler Cox & Company, PLLP to make 
reference to the subject matter of the disagreements in its reports.  During 
the years ended March 31, 1995 and 1996 and through February 26, 1997 the 
Company has not consulted with Ernst & Young LLP on items which  (1) were or 
should have been subject to Statement of

                                       15 
<PAGE>

Auditing Standards 50, or (2) concerned the subject matter of a disagreement 
or reportable event with the former independent public accountant.

                                   PART III

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

         Information in response to this Item is incorporated herein by 
reference to the Company's definitive proxy statement to be filed pursuant to 
Regulation 14A within 120 days after the end of the fiscal year covered by 
this form 10-KSB.

ITEM 10. EXECUTIVE COMPENSATION

         Information in response to this Item is incorporated herein by 
reference to the Company's definitive proxy statement to be filed pursuant to 
Regulation 14A within 120 days after the end of the fiscal year covered by 
this form 10-KSB.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information in response to this Item is incorporated herein by 
reference to the Company's definitive proxy statement to be filed pursuant to 
Regulation 14A within 120 days after the end of the fiscal year covered by 
this form 10-KSB.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information in response to this Item is incorporated herein by 
reference to the Company's definitive proxy statement to be filed pursuant to 
Regulation 14A within 120 days after the end of the fiscal year covered by 
this form 10-KSB.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

    (a)  Exhibits
                                   EXHIBIT INDEX

Number     Description
------     -----------

3.1        Amended and Restated Articles of Incorporation, (incorporated by 
           reference to Exhibit 3.1 of the Registrants registration statement
           on Form SB-2, File No. 333-14175)
3.2        By-laws (incorporated by reference to Exhibit 3.2 of the Registrant's
           registration statement on Form SB-2, File No. 333-14175)
3.3        Articles of Amendment to Articles of Incorporation, dated June 20,
           1997 (filed herewith)
10.1       Lease Agreement by and between CSM Investors, Inc. and the Company
           dated April 24, 1996 (incorporated by reference to exhibit 10.1 of
           the Registrant's registration statement on Form SB-2, File
           No. 333-14175)
10.2       Credit and Security Agreement by and between Diversified Business
           Credit, Inc. and the Company dated March 14, 1995 (incorporated by
           reference to exhibit 10.2 of the Registrant's registration statement
           on Form SB-2, File No. 333-14175)
10.3       Term Loan Supplement to Credit Agreement dated March 14, 1995 by and
           between the Company and Diversified Business Credit, Inc.
           (incorporated by reference to exhibit 10.3 of the Registrant's
           registration statement on Form SB-2, File No. 333-14175)
10.4       Company's 1994-1997 Stock Option Plan (incorporated by reference to
           exhibit 10.4 of the Registrant's registration statement on Form SB-2,
           File No. 333-14175)
10.5       Employment Agreement dated July 30, 1996 by and between the Company
           and Robert Olson (incorporated by reference to exhibit 10.5 of the
           Registrant's registration statement on Form SB-2, File No. 333-14175)
10.6       Employment Agreement dated July 30, 1996 by and between the Company
           an Jeffrey J. Sjobeck (incorporated by reference to exhibit 10.6 of
           the Registrant's registration statement on Form SB-2, File
           No. 333-14175)


                                       16
<PAGE>


10.7       Promissory Note by and between the Company and Circle F Ventures,
           LLC dated December 23,1996 (filed herewith)
10.8       Amendment dated March 4, 1997 to the Promissory Note by and between
           the Company and Circle F Ventures, LLC dated December 23, 1996
           (filed herewith)
10.9       Not used
10.10      Stock Purchase Warrant Agreement by and between the Company and
           Circle F Ventures, LLC dated December 23, 1996 (filed herewith)
10.11      Security Agreement by and between the Company and Circle F
           Ventures, LLC dated December 23, 1996 (filed herewith)
10.12      Subordination Agreement by and between the Company, Diversified
           Business Credit, Inc. and Circle F Ventures, LLC dated December 23,
           1996 (filed herewith)
10.13      Promissory Note by and between the Company and Circle F Ventures,
           LLC dated March 18 1997 (filed herewith)
10.14      Not used
10.15      Stock Purchase Warrant Agreement by and between the Company and
           Circle F Ventures, LLC dated March 18 1997 (filed herewith)
10.16      Schedule identifying certain material details of documents
           substantially identical to those set forth in exhibits 10.17, 10.18,
           10.19 and 10.20 (filed herewith)
10.17      Promissory Note by and between the Company and Rita M. Olson
           dated December 20, 1996 (filed herewith)
10.18      Amendment dated March 4, 1997 to the Promissory Note by and between
           the Company and Rita M. Olson dated December 20, 1996 (filed
           herewith)
10.19      Amendment dated June 5, 1997 by and between the Company and Rita
           M. Olson dated December 20, 1996 (filed herewith)
10.20      Stock Purchase Warrant Agreement by and between the Company and
           Rita M. Olson dated December 20, 1996 (filed herewith)
10.21      Note Conversion and Subscription Agreement by and between the 
           Company and Rita M. Olson dated June 6, 1997 (filed herwith)
10.22      Note Conversion and Subscription Areement by and between the 
           Company and Wayne W. Mills dated June 6,1997 (filed herewith)
21         Subsidiaries of Company (incorporated by reference to exhibit 21 of
           the Registrant's registration statement on Form SB-2, File
           No. 333-14175)
23.1       Consent of Lund Koehler Cox & Company, PLLP (filed herewith)
23.2       Consent of Ernst & Young LLP (filed herewith)
25.1       Powers of Attorney (set forth on signature page)
27         Financial Data Schedule (filed herewith)

(b)  Reports on Form 8-K

    On February 27, 1997, the Company filed a current report of Form 
8-K, announcing that the Company changed its independent accounting firm 
to Ernst & Young LLP.

                                       17
<PAGE>
                                      SIGNATURES
                                           
    In accordance with Section 13 or 15 (d) of the Securities Exchange Act of 
1934, the registrant caused this report to be signed on its behalf by the 
undersigned, thereunto duly authorized.                                   
                               IntraNet Solutions, Inc.
                               ("Registrant")

Dated:  June 30, 1997          BY  /s/ Robert F. Olson
                               -----------------------
                                         Robert F. Olson
                                         Chairman of the Board and
                                         Chief Executive Officer

    Pursuant to the requirements of the Securities and Exchange Act of 1934, 
this Report has been signed on June 30, 1997 by the following persons on 
behalf of the Registrant, in the capacities indicated.

    Each person whose signature appears below constitutes and appoints 
Jeffrey J. Sjobeck as his true and lawful attorney-in-fact and agent with the 
full power of substitution and resubstitution, for him and his name place and 
stead, in any all capacities, to sign any or all amendments to this Annual 
Report on Form 10-KSB and to file the same, with all exhibits thereto, and 
other documents in connection therewith, with the Securities and Exchange 
Commission, granting unto said attorney-in-fact and agent full power and 
authority to do and perform each and every act and thing requisite and 
necessary to be done in and about the premises, as fully to all intents and 
purposes as he might or could do in person, hereby ratifying and confirming 
all said attorney-in-fact and agent, each acting alone, or his substitute or 
substitutes, may lawfully do or cause to be done by virtue thereof.


                               By:  /s/ Robert F. Olson
                                   -----------------------------
                                   Robert F. Olson

                              Its: Chief Executive Officer
                                   ----------------------------- 
                                   (Principal Executive Officer)

                               By:  /s/ Jeffrey J. Sjobeck
                                   ------------------------------
                                   Jeffrey J. Sjobeck

                              Its: Chief Financial Officer
                                   -----------------------------
                                   (Principal Financial Officer)

                               By:  /s/ James G. Sippl
                                   -----------------------------
                                   James G. Sippl

                              Its: Chief Operating Officer
                                   -----------------------------
                                   (Principal Operating Officer)

                               By:  /s/ Ronald E. Eibensteiner
                                   -----------------------------
                                   Ronald E. Eibensteiner

                              Its: Director
                                   -----------------------------

                               By:  /s/ Henry Fong
                                   -----------------------------
                                   Henry Fong

                              Its: Director
                                   -----------------------------

                               By:  /s/ David D. Koentopf
                                   -----------------------------
                                   David D. Koentopf

                              Its: Director
                                   -----------------------------


                                       18
<PAGE>

                        INTRANET SOLUTIONS, INC.
                INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Report of Independent Accountants - Ernst & Young LLP .....................F-2

Report of Independent Accountants - Lund Koehler Cox & Company PLLP........F-3

Consolidated Balance Sheets as of March 31, 1996 and 1997..................F-4

Consolidated Statements of Operations for the years ended
  March 31, 1995, 1996 and 1997............................................F-5

Consolidated Statements of Stockholders' Equity (Deficit) for
  the years ended March 31, 1995, 1996 and 1997............................F-6

Consolidated Statements of Cash Flows for the years ended
  March 31, 1995, 1996 and 1997............................................F-7

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




                                      F-1
<PAGE>

                         REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
IntraNet Solutions, Inc.

     We have audited the accompanying consolidated balance sheet of IntraNet 
Solutions, Inc. as of March 31, 1997 and the related consolidated statements 
of operations, stockholders' equity (deficit) and cash flows for the year 
ended March 31, 1997. These financial statements are the responsibility of 
the Company's management. Our responsibility is to express an opinion on 
these financial statements based on our audit.

     We conducted our audit in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free 
of material 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 audit provides a 
reasonable basis for our opinion.

     In our opinion, the March 31, 1997 financial statements referred to 
above present fairly, in all material respects, the consolidated financial 
position of IntraNet Solutions, Inc. at March 31, 1997 and the consolidated 
results of its operations and its cash flows for the year then ended, in 
conformity with generally accepted accounting principles.

     The accompanying financial statements have been prepared assuming that 
IntraNet Solutions, Inc. will continue as a going concern. As more fully 
described in Note 1, the Company has incurred recurring operating losses and 
has net capital and working capital deficiencies. These conditions raise 
substantial doubt about the Company's ability to continue as a going concern. 
(Management's plan in regard to these matters are also described in Note 1). 
The financial statements do not include any adjustments to reflect the 
possible future effects on the recoverability and classification of assets or 
the amounts and classification of liabilities that may result from the 
outcome of this uncertainty.

                                              ERNST & YOUNG LLP

Minneapolis, Minnesota
June 30, 1997



                                      F-2
<PAGE>
                          REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
IntraNet Solutions, Inc.

     We have audited the consolidated balance sheet of IntraNet Solutions, 
Inc. as of March 31, 1996, and the related consolidated statements of 
operations, stockholders' equity (deficit) and cash flows for each of the two 
years in the period ended March 31, 1996. 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 have conducted our audits in accordance with generally accepted 
auditing standards. Those standards require that we plan and perform the 
audit to obtain reasonable assurance about whether the financial statements 
are free of material 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 consolidated financial statements referred to above 
present fairly, in all material respects, the financial position of IntraNet 
Solutions, Inc. at March 31, 1996, and the results of their operations and 
their cash flows for each of the two years in the period ended March 31, 1996 
in conformity with generally accepted accounting principles.

                                 LUND KOEHLER COX & COMPANY, PLLP

Minneapolis, Minnesota
May 14, 1996

                                     F-3
<PAGE>

                              INTRANET SOLUTIONS, INC.
                            CONSOLIDATED BALANCE SHEETS


                                       ASSETS
<TABLE>
<CAPTION>
                                                            MARCH 31,
                                                     ------------------------
                                                        1996          1997
                                                     ----------    ----------
<S>                                                 <C>            <C>
CURRENT ASSETS:
    Cash...........................................  $   37,513     $  121,798
    Accounts receivable, net.......................   3,102,394      3,612,803
    Note receivable................................          --        801,993
    Inventories....................................     324,523        495,960
    Prepaid expenses and other current assets......     418,438        523,703
                                                     ----------      ---------
      Total current assets.........................   3,882,868      5,556,257

PROPERTY AND EQUIPMENT, NET........................   1,539,318      2,615,224
INTANGIBLE ASSETS, NET.............................     290,680        841,511
                                                     ----------      ---------
                                                     $5,712,866     $9,012,992
                                                     ----------      ---------
                                                     ----------      ---------

               LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
    Revolving credit facility......................  $1,108,098     $1,809,086
    Convertible promissory notes...................     550,000             --
    Current portion of promissory notes payable,                              
     net of discount...............................          --        808,932
    Current portion of long-term debt..............     127,496      1,019,599
    Current portion of capital lease obligations...     148,045        233,097
    Accounts payable...............................   2,701,244      2,716,723
    Accrued expenses...............................     324,752        802,585
                                                     ----------     ----------
      Total current liabilities....................   4,959,635      7,390,022

LONG-TERM DEBT, NET OF CURRENT PORTION.............     108,341        812,930
CAPITAL LEASE OBLIGATIONS, NET OF CURRENT PORTION..     598,065        683,514
OTHER..............................................      68,008        199,887
                                                     ----------     ----------
      Total liabilities............................   5,734,049      9,086,353
                                                     ----------     ----------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIT):
    Common stock, $.01 par value, 12,500,000 shares
      authorized, 4,318,583 and 7,523,603 issued
      and outstanding, respectively................      43,186         75,236
    Additional paid-in capital.....................     (51,793)     3,827,356
    Retained earnings (deficit)....................       3,631     (3,744,833)
    Unearned compensation..........................     (16,207)      (231,120)
                                                     ----------     ----------
      Total stockholders' equity (deficit).........     (21,183)       (73,361)
                                                     ----------     ----------
                                                     $5,712,866     $9,012,992
                                                     ----------      ---------
                                                     ----------      ---------

</TABLE>

    The accompanying notes are an integral part of the Financial Statements.

                                 F-4
<PAGE>

                               INTRANET SOLUTIONS, INC.
                       CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                              YEAR ENDED
                                                               MARCH 31,
                                                 -------------------------------------
                                                     1995        1996         1997
                                                 -----------  -----------  -----------
<S>                                              <C>          <C>          <C>

REVENUES:
      Hardware integration...................... $ 5,015,758  $ 8,198,800  $10,476,702
      Software, technical services and support..   4,738,648    4,522,054    5,713,874
      Distribution services.....................     692,255    1,514,888    3,819,430
                                                 -----------  -----------  -----------
        Total revenues..........................  10,446,661   14,235,742   20,010,006
                                                 -----------  -----------  -----------

COST OF REVENUES:
      Hardware integration......................   4,350,199    6,795,594    8,792,240
      Software, technical services and support..   2,879,454    2,799,650    3,345,764
      Distribution services.....................     371,037    1,113,009    3,009,580
                                                 -----------  -----------  -----------
        Total cost of revenues..................   7,600,690   10,708,253   15,147,584
                                                 -----------  -----------  -----------
        Gross profit............................   2,845,971    3,527,489    4,862,422
                                                 -----------  -----------  -----------

OPERATING EXPENSES:
      Sales and marketing.......................   1,244,995    1,827,003    3,022,532
      General and administrative................   1,025,527    1,347,704    3,706,016
      Research and development..................     341,740      496,066    1,115,782
      Special charges...........................          --           --      456,080
                                                 -----------  -----------  -----------
        Total operating expenses................   2,612,262    3,670,773    8,300,410
                                                 -----------  -----------  -----------
        Income (loss) from operations...........     233,709     (143,284)  (3,437,988)

INTEREST EXPENSE, NET...........................      97,033      230,293      310,476
                                                 -----------  -----------  -----------
INCOME (LOSS) BEFORE INCOME TAXES...............     136,676     (373,577)  (3,748,464)
      Provision for (benefit of) income taxes...      64,553     (125,770)          --
                                                 -----------  -----------  -----------
NET INCOME (LOSS)............................... $    72,123  $  (247,807) $(3,748,464)
                                                 -----------  -----------  -----------
                                                 -----------  -----------  -----------
NET INCOME (LOSS) PER COMMON SHARE.............. $      0.01  $     (0.04) $     (0.58)
                                                 -----------  -----------  -----------
                                                 -----------  -----------  -----------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING......   8,637,166    5,762,055    6,418,111
                                                 -----------  -----------  -----------
                                                 -----------  -----------  -----------
</TABLE>

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

                                          F-5
<PAGE>

                                       INTRANET SOLUTIONS, INC.
                      CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
                                        COMMON STOCK      ADDITIONAL     RETAINED
                                    -------------------    PAID-IN       EARNINGS       UNEARNED  
                                     SHARES     AMOUNT     CAPITAL       (DEFICIT)    COMPENSATION      TOTAL 
                                    ---------   -------   ----------   ------------   ------------  -----------
<S>                                 <C>         <C>       <C>          <C>             <C>          <C>       
BALANCE - MARCH 31, 1994            8,637,166   $86,372   $  (86,372)   $   324,037    $       -    $   324,037

  Grant of compensatory
  stock options                             -         -       29,343              -      (29,343)             -

  Stock option compensation
  earned                                    -         -            -              -       11,564         11,564

  Net income                                -         -            -         72,123            -         72,123
                                    ---------   -------   ----------    -----------    ---------    -----------

BALANCE - MARCH 31, 1995            8,637,166    86,372      (57,029)       396,160      (17,779)       407,724

  Repurchase of common stock       (4,318,583)  (43,186)           -       (144,722)           -       (187,908)

  Grant of compensatory
  stock options                             -         -        5,236              -       (5,236)             -

  Stock option compensation
  earned                                    -         -            -              -        6,808          6,808

  Net loss                                  -         -            -       (247,807)           -       (247,807)
                                    ---------   -------   ----------    -----------    ---------    -----------

BALANCE - MARCH 31, 1996            4,318,583    43,186      (51,793)         3,631      (16,207)       (21,183)

  Grant of compensatory
  stock options                             -         -      241,222              -     (241,222)             -

  Exercise of stock options
  and warrants                         60,926       609       66,610              -            -         67,219

  Stock option compensation
  earned                                    -         -            -              -       26,309         26,309

  Conversion of
  promissory notes                    158,346     1,583      548,417              -            -        550,000

  Shares issued in
  reverse acquisition               2,940,587    29,406    2,583,352              -            -      2,612,758

  Shares issued in conjunction
  with acquisition                     45,161       452      349,548              -            -        350,000

  Warrants issued in conjunction
  with promissory notes                     -         -       90,000              -            -         90,000

  Net loss                                  -         -            -     (3,748,464)           -     (3,748,464)
                                    ---------   -------   ----------    -----------    ---------    -----------

BALANCE - MARCH 31, 1997            7,523,603   $75,236   $3,827,356    $(3,744,833)   $(231,120)   $   (73,361)
                                    ---------   -------   ----------    -----------    ---------    -----------
                                    ---------   -------   ----------    -----------    ---------    -----------
</TABLE>

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


                                                           F-6
<PAGE>

                                 INTRANET SOLUTIONS, INC.
                          CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                               YEAR ENDED MARCH 31,          
                                                     ----------------------------------------
                                                        1995          1996           1997
                                                     ----------   ------------   ------------
<S>                                                  <C>          <C>            <C>         
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                    $72,123      $(247,807)   $(3,748,464)
  Adjustments to reconcile net income (loss)
  to cash flows from operating activities -
   Depreciation and amortization                       158,160        327,221        613,704 
   Stock option compensation earned                     11,564          6,808         26,309 
   Deferred income taxes                                47,766        (66,000)             - 
   Non-cash special charges                                  -              -        306,080 
  Changes in operating assets and liabilities         (325,039)      (304,831)      (494,184)
                                                     ----------   ------------   ------------
  Cash flows from operating activities                 (35,426)      (284,609)    (3,296,555)
CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from note receivable                              -              -      1,114,169 
  Proceeds from sale of fixed assets                         -        126,286         20,875 
  Purchases of fixed assets                           (363,512)      (364,193)      (696,002)
  Purchase of businesses                                     -       (200,000)      (675,778)
  Acquisition of covenant-not-to-compete                     -       (200,000)             - 
                                                     ----------   ------------   ------------
  Cash flows from investing activities                (363,512)      (637,907)      (236,736)
                                                     ----------   ------------   ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net advances from revolving credit facility          103,162        874,936        638,411 
  Proceeds from convertible promissory notes                 -        550,000              - 
  Proceeds from long-term debt                         640,000              -      2,321,511 
  Payments on long-term debt                          (456,655)      (119,163)      (330,624)
  Payments on capital leases                           (16,074)      (204,983)      (188,341)
  Repurchase of treasury stock                               -       (150,000)        (8,800)
  Proceeds from stock options and warrants                   -              -         67,219 
  Proceeds from reverse merger                               -              -      1,118,200 
                                                     ----------   ------------   ------------
  Cash flows from financing activities                 270,433        950,790      3,617,576 
                                                     ----------   ------------   ------------
NET INCREASE (DECREASE) IN CASH                       (128,505)        28,274         84,285 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD         137,744          9,239         37,513 
                                                     ----------   ------------   ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                $9,239        $37,513       $121,798 
                                                     ----------   ------------   ------------
                                                     ----------   ------------   ------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
  Cash paid for interest                               $97,768       $226,533       $351,955 
  Cash paid for income taxes                           $22,387        $19,396           $600 

NONCASH FINANCING AND INVESTING ACTIVITIES:
  Equipment acquired with capital lease obligation    $758,817        $93,530       $328,460 
  Common stock redeemed with note payable, net               -        $37,908              - 
  Common stock issued on purchase of business                -              -       $350,000 

DETAIL OF CHANGES IN OPERATING ASSETS AND LIABILITIES:
  Accounts receivable                                $(748,428)   $(1,002,824)     $(280,350)
  Inventories                                         (199,530)       (67,889)       (20,853)
  Prepaid expenses and other current assets            (75,955)      (306,831)      (499,849)
  Accounts payable                                     628,468        969,949        (41,048)
  Accrued expenses                                      70,406        102,764        347,916 
                                                     ----------   ------------   ------------
  Net changes in operating assets and liabilities    $(325,039)     $(304,831)     $(494,184)
                                                     ----------   ------------   ------------
                                                     ----------   ------------   ------------
</TABLE>

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


                                                           F-7
<PAGE>

                                INTRANET SOLUTIONS, INC
                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) NATURE OF THE BUSINESS

     IntraNet Solutions, Inc. (the "Company") provides integrated solutions 
for the creation, management and distribution of critical business 
information, as a part of the document management business segment. The 
Company offers its customers a variety of products, including proprietary 
intranet document management software, customized off-the-shelf software 
applications, hardware and software implementation, and electronic 
distribution and on-demand publishing services. The evolution of Web 
technology as a tool for storing, managing and distributing information, 
coupled with the Company's experience in designing systems and creating 
custom software applications, has created an opportunity for the Company to 
develop a line of document management software products utilizing Web 
technology.

     On July 31, 1996, the Company's predecessor, MacGregor Sports and 
Fitness, Inc. ("MSF") and IntraNet Integration Group, Inc., a Minnesota 
corporation ("Integration", formerly known as Technical Publishing Solutions, 
Inc.) closed on a tax-free reorganization pursuant to which Integration 
became a wholly-owned subsidiary of the Company, and MSF changed its name to 
IntraNet Solutions, Inc. The transaction was accomplished through a tax-free 
reverse subsidiary merger whereby Integration merged with and into a wholly 
owned subsidiary of MSF, with the Company as the surviving corporation (the 
"Merger"). The Company recorded this transaction and the total consideration 
of approximately $2.6 million, including $1.1 million in cash and $1.9 
million in a note receivable, net of $400,000 in transaction costs, as an 
acquisition and recapitalization. Accordingly, historical financial 
statements presented are those of the Company.

GOING CONCERN

     The accompanying financial statements have been prepared on the basis 
that the Company will continue as a going concern, which contemplates the 
realization of assets and satisfaction of liabilities in the normal course of 
business. The Company has experienced losses from operations during the 
fiscal years ended March 31, 1996 and 1997 and has generated an accumulated 
deficit from inception through March 31, 1997 of $3,744,833 and has a working 
capital deficit of $1,833,765 at March 31, 1997. These conditions give rise 
to the question about the Company's ability to generate positive cash flows 
and fund operations. The Company is not generating sufficient revenues from 
its operations to fund its activities and is, therefore, dependent on future 
financing activities to continue as a going concern. The Company is 
evaluating several financing alternatives, including the sale of equity and 
debt securities, however, there can be no assurance that the Company will be 
successful in completing a financing transaction. Any equity financing may be 
dilutive to shareholders, and additional debt financings, if available, may 
involve restrictive covenants and terms.

     Because of uncertainties regarding the achievability of management's 
plans, no assurance can be given as to the Company's ability to continue in 
existence. The financial statements do not include any adjustments to reflect 
the possible future effects on the recoverability and classification of 
assets or the amount and classification of liabilities that may result from 
the possible inability of the Company to continue as a going concern.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of the 
Company and its wholly-owned subsidiaries. All significant intercompany 
transactions and balances have been eliminated.

REVENUE RECOGNITION

     The Company's revenues are derived from (i) the sale of proprietary and 
non-proprietary software products, (ii) the sale of hardware products, (iii) 
the sale of maintenance and support contracts, (iv) the sale of training, 
consulting and development services, and (v) the sale of on-demand publishing 
and other printing services. Revenue from the sale of software is recognized 
in accordance with AICPA Statement of Position 91-1 "Software Revenue 
Recognition." Accordingly, revenue is recognized at the time of product 
shipment if no significant Company obligations remain and collection of the 
resulting sale price is probable. Revenue from maintenance and support 
contracts is generally recognized ratably over the term of the contract. 
Revenue from contracts with original durations of one year or less is 
recognized

                                     F-8

<PAGE>

                                INTRANET SOLUTIONS, INC
                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

at the time of sale if the Company does not expect to have material future 
obligations to service the contract. Revenue from training, consulting and 
developmental services are recognized as the related services are performed. 
Revenue from the sale of all other products and services is recognized at the 
time of delivery to the customer.

CASH AND CASH EQUIVALENTS

     The Company considers all short-term, highly liquid investments that are 
readily convertible into known amounts of cash and have maturities of three 
months or less at the time of purchase to be cash equivalents.

INVENTORIES

     Inventories, consisting primarily of computer hardware and software and 
publishing supplies, are valued at the lower of cost (first-in, first-out) or 
market value. The Company's policy is to perform quarterly evaluations of 
inventory, based upon business trends, to specifically identify obsolete, 
slow-moving and nonsalable inventory. Inventory reserves are evaluated 
quarterly to ensure they continually reflect the current business environment 
and trends.

PROPERTY AND EQUIPMENT

     Property and equipment, including leasehold improvements, are recorded 
at cost. Depreciation is provided for using the straight-line method over the 
estimated useful lives of the assets, three to seven years, or the life of 
the lease, whichever is shorter. Maintenance, repairs and minor renewals are 
expensed when incurred. The carrying value of property and equipment is 
assessed annually and/or when circumstances indicating that their carrying 
value may be impaired or not recoverable. The Company determines such 
impairment by measuring undiscounted future cash flows. If an impairment is 
present, the assets are reported at the lower of carrying value or fair value.

INTANGIBLE ASSETS

     Intangible assets, consisting of goodwill and agreements not to compete, 
are recorded at cost and are presented net of accumulated amortization of 
$34,300 and $122,300 at March 31, 1996 and 1997, respectively. Goodwill is 
amortized on a straight-line basis over terms of eight to fifteen years. 
Agreements not to compete are amortized on a straight-line over basis their 
respective terms. Amortization expense was $0, $34,300 and $88,000 for the 
years ended March 31, 1995, 1996 and 1997, respectively. The carrying value 
of intangible assets is assessed periodically or when factors indicating an 
impairment are present. The Company employs an undiscounted cash flow method 
of assessment for these assets.

SOFTWARE DEVELOPMENT COSTS

     Software development costs generally are expensed as incurred as 
development expense. Statement of Financial Accounting Standards No. 86 
requires the capitalization of certain software development costs once 
technological feasibility is established. The capitalized cost is then 
amortized on a straight-line basis over the estimated product life, or on the 
ratio of current revenues to total projected product revenues, whichever is 
greater. To date, the period between achieving technological feasibility, 
that the Company has defined as the establishment of a working model, and the 
general availability of such software has been short and software development 
costs qualifying for capitalization have been insignificant. Accordingly, the 
Company has not capitalized any software development costs.

ADVANCED ROYALTIES

     The Company does not capitalize any nonrefundable advance royalties 
until its has an established market for its products. Nonrefundable advance 
royalties that qualify for capitalization are expensed at the contractual 
royalty rate based on actual product sales.

                                     F-9

<PAGE>

                            INTRANET SOLUTIONS, INC
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

INCOME TAXES

The Company has adopted Statement of Financial Accounting Standards No. 
109, ACCOUNTING FOR INCOME TAXES, under which deferred income tax assets and 
liabilities are recognized for the differences between financial and income 
tax reporting bases of assets and liabilities based on currently enacted 
rates and laws.

NET INCOME (LOSS) PER COMMON SHARE

Net income (loss) per common share is determined by dividing net income 
(loss) by the weighted average number of common share and common share 
equivalents outstanding during each period. Common share equivalents include 
the dilutive effects of options and warrants which are assumed to be 
exercised at the beginning of periods using the treasury stock method and the 
fair value of the Company's common shares. Common share equivalents are not 
included in the calculation if the effect is anti-dilutive. Primary and fully 
diluted net income (loss) per share are the same.

In February 1997, the Financial Accounting Standards Board issued Statement 
No. 128, EARNINGS PER SHARE, which is required to be adopted on December 31, 
1997. At that time, the Company will be required to change the method 
currently used to compute earnings per share and restate all prior periods. 
Under the new requirements for calculating primary earnings per share, the 
dilutive effect of stock options will be excluded. The impact of Statement 
No. 128 on the periods presented is not expected to be material.

USE OF ESTIMATES

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

DEFERRED FINANCING COSTS

     Costs incurred through March 31, 1997 of approximately $169,900, in 
connection with financing and registration costs, have been deferred. Such 
costs will be charged against the proceeds of the related offering upon 
completion, or expensed if the offering is not completed.

RECLASSIFICATIONS

     Certain accounts in the prior year financial statements have been 
reclassified for comparative purposes to conform with the presentation in the 
current year financial statements.

(3) SPECIAL CHARGES

     During the quarter ended March 31, 1997, the Company formalized details 
of a change in strategic focus designed to increase emphasis on its higher 
margin proprietary software products, reduce future capital investment 
requirements associated with expansion of its digital distribution 
facilities, reduce operating costs, and improve operations. As a result of 
this change in strategic focus the Company recorded a one-time special charge 
against earnings in the fourth quarter totaling $456,000. Included in this 
change in strategy was the discontinuation of certain distribution group 
operations in Denver and Milwaukee, primarily facility and equipment leases. 
The discontinuation of these operations reflects a change in strategy toward 
leveraging its proprietary software development and technological expertise, 
resulting in more centralized growth of the Company's digital distribution 
services that incorporates strategic alliances with partner printers to 
perform remote production services rather than direct investment by the 
Company. These actions resulted in an accrual for the remaining facility and 
equipment lease obligations (net of estimate for related sublease income) of 
$219,400, and the write-off of $86,700 of goodwill related to the 
acquisition of these facilities. The accrual of $130,000 related to these 
lease obligations are included in other liabilities, net of $89,400 current 
portion, included in accrued expenses.

                                    F-10


<PAGE>
                            INTRANET SOLUTIONS, INC
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(4) SUBSEQUENT EVENT

     On June 6, 1997, $250,000 of the Company's 9% promissory notes were 
converted into approximately 71,000 shares of the Company's Common Stock at a 
rate of $3.50 per share. The exercise price of the related warrants to 
purchase 50,000 shares of the Company's Common Stock was also adjusted to 
$3.50 per share.

(5) NOTE RECEIVABLE

     In conjunction with the reverse merger and recapitalization (see Note 1) 
the Company acquired a note receivable from the predecessor entity in the 
amount of $1,910,000. The note represents the balance due from Hutch Sports 
USA, Inc. for the sale of the rights to use the MacGregor trademark. The note 
requires monthly principal instalments of $159,200 plus interest at prime. At 
March 31, 1997, the remaining balance due on the note, including accrued 
interest, was $802,000. The note matures July 1997 and has accordingly been 
classified as a current asset. The fair value of the note receivable 
approximates its carrying value.

(6) BUSINESS ACQUISITIONS

On November 21, 1996, the Company acquired substantially all the assets and 
liabilities of a graphic communications and custom printing company based in 
Phoenix, Arizona for a total purchase price of $1,293,600. The purchase price 
consisted of cash of $675,800, a promissory note of $267,800, and shares of 
the Company's common stock valued at $350,000. The transaction has been 
accounted for using the purchase method of accounting and accordingly, the 
operations of the business are included in the Company's consolidated 
financial statements from the date of acquisition. The purchase price 
exceeded the fair value of the net assets acquired by $725,500, and the 
resulting goodwill is being amortized over fifteen years.

     The following unaudited pro forma financial information for the years 
ended March 31, 1996 and 1997 give effect to the acquisition as if they had 
occurred effective at the beginning of each respective period.

<TABLE>
<CAPTION>
                                            Year ended March 31,
                                    -------------------------------------------
                                       1996                           1997
                                       ----                           ----
<S>                                 <C>                           <C>

Revenue                             $17,135,817                   $21,679,340
Net loss                              $(315,834)                   (3,767,878)
Loss per share                            $(.05)                        $(.58)
Shares used in per share calculation  5,777,149                     6,446,940

</TABLE>

The unaudited pro forma financial information above does not purport to 
represent the results which would actually have been obtained if the 
acquisition had been in effect during the period covered or any future 
results which may in fact be realized.

(7) PROPERTY AND EQUIPMENT

     Property and equipment consisted of the following at:

<TABLE>
<CAPTION>
                                                   March 31,
                                        ---------------------------------------
                                         1996                           1997
                                        -----                           ----
<S>                                    <C>                           <C>

Equipment and furniture                 $2,007,626                   $3,372,067
Vehicles                                     -                           53,410
Leasehold improvements                      13,429                      167,799
                                        ----------                   -----------
Total property and equipment             2,021,055                    3,593,276

Less: accumulated depreciation             481,737                      978,052
                                     -------------                   ----------
  Total property and equipment, net     $1,539,318                   $2,615,224
                                     -------------                   ----------
                                     -------------                   ----------
</TABLE>

Property and equipment includes items under capital leases of, $852,300, and 
$1,216,300, net of accumulated depreciation of $147,800, and $305,900, as of 
March 31, 1996 and 1997, respectively. Depreciation expense was $158,200, 
$292,900 and $508,400 for the years ended March 31, 1995, 1996 and 1997, 
respectively.

                                    F-11
<PAGE>

                            INTRANET SOLUTIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(8) REVOLVING CREDIT FACILITY

The Company has a revolving credit agreement that provides for borrowings of 
up to $3.1 million based on available collateral. Advances of $1,108,100, and 
$1,809,100 were outstanding as of March 31, 1996 and 1997, respectively. 
Advances are due on demand and accrue interest at the bank's base lending 
rate plus 2.5% (the effective rate of interest was 10.75% as of March 31, 1995 
and 1996, and 11.0% on March 31, 1997). As of March 31, 1997 the Company had 
borrowing availability, based on available collateral, of approximately 
$34,000. The agreement is secured by substantially all Company assets, 
personally guaranteed by a stockholder, and requires the Company to meet 
various covenants including maintenance of minimum levels of net worth. 
During the year ended March 31, 1997, the Company violated its book net worth 
covenant. The Company has received a waiver of this violation through August 
31, 1997. Total debt underlying this agreement, including long-term debt, was 
$2.6 million as of March 31,1997.

(9) LONG TERM DEBT AND CAPITAL LEASES

LONG-TERM DEBT -

                                                        March 31,
                                                -------------------------
                                                  1996             1997
                                                --------         --------
Term loans - bank, monthly principal
installments of $35,400 plus interest at
the bank's base lending rate plus 2.5%
(effective rates of 10.75% at March 31,
1996 and 10.5% to 11.0% at March 31, 1997),
matures at various dates from April 1998
through December 2000, secured by
substantially all Company assets and
guaranteed by a stockholder.(1)                  $208,337         $825,141

Notes payable - stockholder, due on
demand, quarterly interest payments at
12%, unsecured and subordinated to
bank indebtedness.                                 27,500           27,500

Promissory notes - due January 15,
1998, and April 15, 1998 net of $72,473 
discount, interest at 9% due at maturity,
$750,000 secured by substantially all 
Company assets andsubordinated to bank
debt.(2)                                            --           1,427,527

Note Payable - LaFountain Corporation,
principal installment of $133,313 due on
March 1, 1998, quarterly interest
payments at prime plus 1.5%, unsecured.             --             133,313

Notes Payable - other, monthly principal
installments of $3,000 plus interest at
prime plus 2.0%, secured by equipment
and vehicles.                                       --             227,980
                                                ---------        ---------
Total long-term debt                              235,837        2,641,461
Less: current maturities                          127,496        1,828,531
                                                ---------        ---------
   Long-term debt, net                           $108,341       $  812,930
                                                ---------        ---------
                                                ---------        ---------

     (1) The Company has obtained a waiver from its primary lender with 
respect to a book net worth violation with respect to these term loans. The
waiver expires August 31, 1997 if not otherwise cured and, accordingly, the 
term loans have been classified as short term.

     (2) The Company has issued $1.5 million of promissory notes, $800,000 of 
which is secured and $250,000 of which was issued beneficially to the 
principal stockholder of the Company. Included in the $1.5 million promissory 
notes, the Company issued $150,000 to an officer of the Company and 
$125,000 beneficially to a member of the Board of Directors. The promissory 
notes bear interest at 9% plus 300,000 warrants with initial exercise prices 
of

                                    F-12

<PAGE>

                            INTRANET SOLUTIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


$6.00. The notes mature on January 15, 1998 ($850,000) and April 15, 1998 
($650,000). Interest is payable at maturity and the warrant exercise price 
may adjust to a floor of $4.00 based on the fair market value of the 
Company's common stock. The amounts outstanding at March 31, 1997 are 
recorded net of a discount of $72,473 which is the value ascribed to the 
warrants, or $1,427,527. Such amount will be accreted to its redemption value 
over the term of the debt, resulting in an effective rate of 16%.

On June 6, 1997, $250,000 of the 9% promissory notes were converted to Common 
Stock. (See Note 4)

Future maturities of long-term debt are as follows:

          1998                                     $1,869,599
          1999                                        684,056
          2000                                         34,509
          2001                                         35,010
          Thereafter                                   90,760
                                                   ----------
                                                    2,713,934
          Less: amount representing
          unamortized warrant discount                 72,473
                                                   ----------
                                                   $2,641,461
                                                   ----------
                                                   ----------

     The fair value of long-term debt approximates its carrying value, 
estimated using discounted cash flow analysis, based on the Company's 
incremental borrowing rate for similar types of securities.

CAPITAL LEASE OBLIGATIONS - The Company has certain assets under capital 
lease obligations. The leases require total monthly payments of $28,400 and 
carry interest rates between 10.1% and 16.6%.

The minimum lease payments required under the capital leases together with 
the present value of the minimum lease payments at March 31, 1997 are as 
follows:

          1998                                     $  342,155
          1999                                        340,173
          2000                                        285,147
          2001                                        120,332
          2002                                         63,768
                                                   ----------
          Total                                     1,151,575
          Less: amount representing interest          234,964
                                                   ----------
          Present value of future minimum lease       916,611
          payments
          Less: current portion                       233,097
                                                   ----------
            Long-term portion                      $  683,514
                                                   ----------
                                                   ----------

Total interest expense was $97,000, and $230,300 and $380,200 for the years 
ended March 31, 1995, 1996 and 1997, respectively.

(10) STOCKHOLDERS' EQUITY

     STOCK REDEMPTION - During July 1995, the Company agreed to acquire 50% 
of its outstanding common stock from a single stockholder for $200,000. The 
Company paid $150,000 at closing with the remaining $50,000 due in $10,000 
annual installments without interest. The Company has recorded the remaining 
payment obligation at its net present value and is accreting such amount to 
its redemption value over the term of the agreement.

     STOCK SPLITS - On June 2, 1995, the Company declared a 900-for-1 stock 
split, on November 6, 1995, the Company declared a 21.22-for-1 stock split, 
and on October 31, 1996, the Company declared a 1-for-4 reverse stock split. 
The effects of the stock splits have been retroactively applied in the 
financial statements.

                                    F-13
<PAGE>

                             INTRANET SOLUTIONS, INC
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     WARRANTS - As of March 31, 1997, the Company has 183,500 publicly traded 
redeemable warrants outstanding. Each warrant entitles the holder the right 
to purchase one share of the Company's common stock at an exercise price of 
$4.00. Unless extended, the warrants have an expiration date of October 31, 
1997. The Company may call the warrants for redemption at a price of $.05 per 
warrant upon thirty day written notice at any time. The Company also has 
770,180 non-redeemable stock purchase warrants with exercise prices of $0.29 
to $9.00, outstanding at March 31, 1997. The warrants expire on various dates 
through December, 2001.

     STOCK OPTIONS - On January 16, 1996, the Board of Directors approved the 
1994-1997 Stock Option Plan (the Plan), pursuant to which options and other 
awards to acquire an aggregate of 2,500,000 shares of the Company's common 
stock may be granted. The Company integrated all previously granted options 
into the Plan. The Plan is administered by the Board of Directors, which has 
the discretion to determine the number and purchase price of shares subject 
to stock options (which may be below the fair market value of the common 
stock on the date thereof), the term of each option, and the terms of 
exercisability.

     Certain options have exercise prices less than the fair market value of 
the Company's common stock on the date of the grant. The Company recognizes 
the compensation element of these grants over the vesting period of the 
related options, generally five years. The options generally vest over 
periods of one to five years.

     The Company has elected to follow Accounting Principles Board Opinion No 
25, Accounting for Stock Issued to Employees ("APB 25") and related 
Interpretations in accounting for its employee stock options because, as 
discussed below, the alternative fair value accounting provided for under 
FASB Statement No. 123, Accounting for Stock-Based Compensation ("Statement 
123"), requires use of option valuation models that were not developed for 
use in valuing employee stock options. Under APB 25, if the exercise price of 
the Company's employee stock options equals the market price of the 
underlying stock on the date of grant, no compensation expense is recognized.

     PRO FORMA information regarding net loss and net loss per share is 
required by Statement 123, and has been determined as if the Company had 
accounted for its employee stock options under the fair value method of 
Statement 123. The fair value for those options was estimated at the date of 
grant using the Black-Scholes option pricing model with the following 
weighted-average assumptions for the years ended March 31, 1996 and 1997: 
risk free interest rates of 6%, dividend yield of 0%; volatility factor of 
the expected market price of the Company's common stock of 65% and a 
weighted-average expected life of the options 8.5 years.

     The Black-Scholes option valuation model was developed for use in 
estimating the fair value of traded options which have no vesting 
restrictions and are fully transferable. In addition, option valuation models 
require the input of highly subjective assumptions. Because the Company's 
employee stock options have characteristics significantly different from 
those of traded options, and because changes in the subjective input 
assumptions can materially affect the fair value estimate, in management's 
opinion, the existing models do not necessarily provide a reliable single 
measure of the fair value of its employee stock options.

     For purposes of PRO FORMA disclosures, the estimated fair value of the 
options is amortized to expense over the options' vesting period. The 
Company's pro forma information is as follows:

                                        Year Ended           Year Ended
                                         March 31,            March 31,
                                           1996                 1997
                                      -------------        --------------
PRO FORMA net loss                      $(387,300)          $(4,231,100)
PRO FORMA net loss per common share       $(.07)               $(0.66)


                                       F-14


<PAGE>

                             INTRANET SOLUTIONS, INC
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The pro forma effect on net loss for the years ended March 31, 1996 and 
March 31, 1997 is not representative of the PRO FORMA effect on net loss in 
future years because it does not take into consideration pro forma 
compensation expense related to grants made prior to 1996.

     A summary of the Company's stock option activity, and related 
information through March 31, 1997 is as follows:

                                                                  Weighted-
                                                                   Average
                                                      Options   Exercise Price
                                                      -------   --------------

     Outstanding as of April 1, 1994                     --           --
     Granted                                           497,771      $ .22
                                                     ---------      -----
     Outstanding as of March 31, 1995                  497,771        .22
     Granted                                           934,166       4.25
                                                     ---------      -----
     Outstanding as of March 31, 1996                1,431,937       2.85
     Granted                                           353,500       6.29
     Exercised                                         (47,618)       .76
     Forfeited                                        (168,106)      3.15
                                                     ---------      -----
     Outstanding as of March 31, 1997                1,569,713      $3.66
                                                     ---------      -----
                                                     ---------      -----
     Weighted-average fair value of options granted                      
     during the year ended March 31, 1997                $6.44
                                                     ---------           
                                                     ---------           

     The following table summarizes information about the stock options 
outstanding at March 31, 1997:

<TABLE>
<CAPTION>
                               Options Outstanding                     Options Exercisable
                ----------------------------------------------     ------------------------------
                                   Weighted-         Weighted-
                                    Average           Average                         Weighted-  
  Range of        Number           Remaining          Exercise       Number            Average   
Exercise Price  Outstanding     Contractual Life       Price       Exercisable     Exercise Price
--------------  -----------     ----------------     ---------     -----------     --------------
<S>             <C>                   <C>             <C>            <C>               <C>       
 $.20-$.56         444,432            7.5             $  .27         229,161           $  .23    
   3.12            491,027            8.5               3.12         178,072             3.12    
$4.63-$5.87        252,205            8.8               4.95          79,044             4.84    
$6.00-6.50         273,750            9.5               6.30            --                --     
  10.36            108,299            8.9              10.36         108,299            10.36
                 ---------            ---             ------         -------           ------
$.20-$10.36      1,569,713            8.6             $ 3.38         594,576           $ 3.55
                 ---------            ---             ------         -------           ------
                 ---------            ---             ------         -------           ------
</TABLE>

(11) RETIREMENT SAVINGS PLAN

     The Company maintains a pre-tax salary reduction/profit sharing plan 
under the provisions of Section 401(k) of the Internal Revenue Code. The plan 
covers substantially all full-time employees who have reached the age of 21. 
Profit sharing contributions by the Company are discretionary. Contributions 
for the years ended March 31, 1995, 1996 and 1997 were $48,200, $0 and $0, 
respectively.


                                      F-15
<PAGE>

                          INTRANET SOLUTIONS, INC
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(12) INCOME TAXES

     The Company's provision for income taxes consisted of the following 
components:

<TABLE>
<CAPTION>

                            Years Ended March 31,
                      ---------------------------------
                        1995          1996         1997
                      ---------------------------------
<S>                   <C>          <C>             <C>
Current:
  Federal             $12,787       ($59,770)      $--
  State                 4,000          --           --
                      -------      ----------     -----
    Total              16,787        (59,770)       --
Deferred               47,766        (66,000)       --
                      -------      ----------     -----
    Total provision   $64,553      ($125,770)      $--
                      -------      ----------     -----
                      -------      ----------     -----

</TABLE>

     The tax effects of temporary differences giving rise to the deferred 
items consisted of the following at:

<TABLE>
<CAPTION>
                                                       March 31,
                                                  1996          1997
                                                ---------    ----------
<S>                                             <C>          <C>
Deferred tax liabilities:
  Depreciation and amortization                 $(118,000)    $(123,800)

Deferred tax assets:
  Deferred revenue                                     --        84,100
  Allowance for doubtful accounts and returns      12,000        72,600
  Inventory                                        12,000        11,800
  Special charge reserve                                         87,700
  Net operating loss carryforwards                 71,000     1,409,000
  Alternative minimum tax credit
  carryforwards                                     --           23,800
  Other                                             9,000        22,000
                                                ---------    ----------
                                                   14,000     1,587,200
Valuation allowance                                 --       (1,587,200)
                                                ---------    ----------
Net deferred tax (liability)                     $(14,000)      $--    
                                                ---------    ----------
                                                ---------    ----------
</TABLE>

     Deferred tax liabilities and deferred tax assets reflect the net tax 
effects of temporary differences between the approximate carrying amounts of 
assets and liabilities for financial reporting purposes and the amounts used 
for income tax purposes. At March 31, 1997, the Company had net operating 
loss (NOL) carryforwards of approximately $3.5 million which begin to expire 
in 2011. Included in the NOL is approximately $296,000 of deductions 
resulting from disqualifying dispositions of stock options. These deductions 
currently have full valuation allowance and when realized for financial 
statement purposes will not result in a reduction in income tax expense. 
Rather, the benefit will be recorded as additional paid-in capital. The 
Company also had alternative minimum tax credit carryovers at March 31, 1997 
of approximately $23,800. The valuation allowance at March 31, 1997 was 
recognized to completely reserve for the net deferred tax assets. The reserve 
has been established due to the uncertainty of future taxable income which is 
necessary to realize the benefits of the deferred tax assets.


                                    F-16

<PAGE>


                          INTRANET SOLUTIONS, INC
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(13) COMMITMENTS AND CONTINGENCIES

     OPERATING LEASES -- The Company has entered into certain noncancelable 
operating lease agreements related to office/warehouse space, equipment and 
vehicles. Total rent expense under operating leases was, $220,000, $254,700, 
and $874,100 for the years ended March 31, 1995, 1996, and 1997, respectively.

Minimum remaining rental commitments under operating leases as of March 31, 
1997 are as follows:

          1998                                             $1,293,582
          1999                                              1,246,690
          2000                                                938,528
          2001                                                591,105
          2002                                                397,300
          Thereafter                                          367,808
                                                           ----------
             Total                                         $4,835,013
                                                           ----------
                                                           ----------

     SOFTWARE ROYALTIES -- The Company has entered into several software 
royalty agreements whereby it is required to pay a royalty amount based upon 
actual sales of certain software products. At March 31, 1996 and 1997, the 
Company had advanced royalties of $50,000 and $51,500, respectively. 
Royalties earned during the year ended March 31, 1997 were $209,200. No 
royalties had been earned in previous periods.

     CONSULTING AGREEMENT -- The Company has a consulting agreement with a 
former stockholder that requires monthly payments of $10,300 through July 
2000.

(14) CONCENTRATION OF RISK

     MAJOR SUPPLIERS -- The Company utilizes a single supplier to provide the 
majority of its computer hardware sales. Purchases from this supplier were 
approximately 54%, 68%, and 67% of total product purchases during the years 
ended March 31, 1995, 1996 and 1997, respectively. The Company has a supply 
and resale agreement with this supplier that expires June 30, 1997 and is 
annually renewable.

     The Company utilizes a single supplier to provide the majority of its 
software and maintenance services. Purchases from this supplier were 
approximately 14%, 13% and 12% of total product purchases during the years 
ended March 31, 1995, 1996, and 1997, respectively. The Company has a supply 
and resale agreement with this supplier that expires March 31, 1999.

     ACCOUNTS RECEIVABLE -- Accounts receivable is presented net of an 
allowances of $6,600, $30,000 and $181,500 as of March 31, 1995, 1996 and 
1997, respectively. The Company sells its products and services principally 
to large United States customers. No customer has accounted for 10% or more 
of the Company's revenues in the years ended March 31, 1995, 1996 and 1997. 
Credit is extended based on an evaluation of the customer's financial 
condition and a cash deposit is generally not required. The Company estimates 
its potential losses on trade receivables on an ongoing basis and provides 
for anticipated losses in the period in which the revenues are recognized. 
Credit losses have historically been minimal and have been within 
management's expectations.


                                    F-17