U.S. SECURITIES AND EXCHANGE COMMISSION
                        Washington, DC 20549

                            FORM 10-KSB

    [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                         EXCHANGE ACT OF 1934
              For the fiscal year ended December 31, 2002
                                OR
[  ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
                         EXCHANGE ACT OF 1934

        For the transition period from ____________ to ____________

                     Commission File No.:  0-25958

INTEGRITY MUTUAL FUNDS, INC.
(exact name of Registrant as specified in its charter)

North Dakota                                     45-0404061
(State or other jurisdiction of                (IRS Employer
incorporation or organization               Identification Number)

1 North Main
Minot, North Dakota 58703
(Address of principal executive offices)

Registrant's telephone number, including area code:  (701) 852-5292

Securities registered pursuant to Section 12(d) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  Common
Stock, $.0001 par value

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 in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.  [  ]

The issuer's revenues for the year ended December 31, 2002 were $14,980,949.

On February 28, 2003, there were 12,970,480 shares of the Registrant's common
stock outstanding.

Aggregate market value of voting stock held by non-affiliates of the registrant
as of February 28, 2003: $4,131,142.

Documents Incorporated by Reference

Portions of the Company's definitive Proxy Statement for the Annual Meeting of
Shareholders to be held on May 30, 2003 are incorporated by reference in
certain sections of Part III.

Transitional Small Business Disclosure Format:    YES  _____    NO __X__

<PAGE>

                                 PART I

ITEM 1.  DESCRIPTION OF BUSINESS

DEVELOPMENT OF BUSINESS

Integrity Mutual Funds, Inc. ("the Company") is a holding company engaged,
through various subsidiaries, in providing investment management, distribution,
shareholder services, fund accounting and other related administrative services
to the open-end investment companies known as "Integrity Mutual Funds" and
"Ranson Managed Portfolios," hereinafter collectively referred to as "the
Funds."  Integrity Mutual Funds currently consists of five (5) open-end
investment companies including ND Tax-Free Fund, Inc.("ND Tax-Free Fund"),
Montana Tax-Free Fund, Inc.("Montana Tax-Free Fund"), South Dakota Tax-Free
Fund, Inc. ("South Dakota Tax-Free Fund"), Integrity Fund of Funds, Inc.
("Integrity Fund of Funds") and Integrity Small-Cap Fund of Funds, Inc.
("Integrity Small-Cap Fund of Funds").  Ranson Managed Portfolios consists of
one open-end investment company containing four (4) separate portfolios
including The Kansas Municipal Fund, The Kansas Insured Intermediate Fund,
The Nebraska Municipal Fund, and The Oklahoma Municipal Fund. Sales of Fund
shares are marketed principally in Montana, Kansas, Oklahoma, North Dakota,
Nebraska and South Dakota.  The Company also sells mutual funds and insurance
products through two other wholly-owned subsidiaries, ARM Securities
Corporation ("ARM Securities"), and Capital Financial Services, Inc. ("CFS").
The Company has also become involved as an internet provider with a majority
ownership in Magic Internet Services, Inc. ("Magic Internet"). The Company
continues to review acquisition opportunities in other industries involving
management services and information processing.

As of December 31, 2002, total assets under management/service in the Funds
was approximately $296.0 million, compared to approximately $318.3 million as
of December 31, 2001 and approximately $336.9 million as of December 31, 2000.

The Company has been engaged in the financial services business since 1987. The
Company was incorporated September 22, 1987 as a North Dakota corporation by
Robert E. Walstad, Chief Executive Officer of the Company.  The Company's
offices are at 1 North Main Street, Minot, North Dakota 58703.  As of December
31, 2002, the Company had 42 full-time employees and 6 part-time employees,
consisting of officers, investment management, securities distribution,
shareholder services, data processing, law, accounting and clerical support
staff.

On January 5, 1996, the Company consummated the acquisition (the "Ranson
Acquisition") of substantially all of the assets and liabilities of The Ranson
Company, Inc., a corporation organized under the laws of the state of Kansas
and based in Wichita, Kansas.  The Ranson Company, Inc. provided investment
management and related services to the Ranson Managed Portfolios through its
subsidiary, Ranson Capital Corporation ("Ranson"), a registered investment
advisor and registered broker-dealer.  Ranson Managed Portfolios is an open-end
investment company registered with the Securities and Exchange Commission (the
"SEC").  At the time of the Ranson Acquisition, Ranson Managed Portfolios
consisted of three funds:  The Kansas Municipal Fund, The Kansas Insured
Intermediate Fund and The Nebraska Municipal Fund, totaling approximately
$184 million in assets under management.  Subsequent to the Ranson Acquisition,
the Company has managed Ranson Managed Portfolios on a unified basis with its
other business.  The purchase price paid at the closing of the Ranson
Acquisition was $6.2 million and was funded through a combination of existing
cash on hand and bank debt in the amount of approximately $1.5 million. The
bank debt was paid in full as of March 1998.

On December 6, 1996, the Company acquired the accounts of the Heartland
Nebraska Tax-Free Fund for cash and merged them into the Ranson Managed
Portfolios, The Nebraska Municipal Fund, through an exchange of shares. The
Heartland Portfolio was $10,299,543 in size at the time of the transaction.

On May 21, 1999, the Company acquired the accounts of the Lancaster Nebraska
Tax-Free Fund for cash and merged them into the Ranson Managed Portfolios,
The Nebraska Municipal Fund, through an exchange of shares. The Lancaster
Portfolio was $12,877,367 in size at the time of the transaction.

<PAGE>

On October 1, 1999, the Company acquired for cash and common stock 51% control
of Magic Internet Services, Inc.  Magic Internet operates as an internet
service provider to individuals and businesses in the local calling area.

On May 25, 2000, the Company acquired for cash, ARM Securities Corporation, a
broker-dealer engaged primarily in the sale of mutual funds and insurance
products. The broker-dealer supports approximately 40 registered
representatives operating as independent contractors with 23 representatives
in a single office in Fresno, CA and the remainder in scattered locations in
Minnesota, Iowa and South Dakota.

On September 14, 2001, the Company acquired for common stock, North Dakota
Investment Advisors, Inc., a registered investment advisor authorized to
provide investment advisory services in the state of North Dakota for a fee.
As a result of failure of certain conditions of the purchase agreement, on
June 24, 2002, the Company rescinded the purchase dated September 14, 2001,
and obtained return and cancellation of the Company's common shares.

On January 15, 2002, the Company acquired for cash, common stock subject to a
put option, stock options, and convertible debentures, all the assets of
Capital Financial Services, Inc., a full-service brokerage firm based in
Madison, Wisconsin.  The broker-dealer specializes in providing investment
products and services to independent investment representatives, financial
planners, and investment advisors and currently supports approximately 90
investment representatives and investment advisors.

THE COMPANY'S SUBSIDIARIES

The Company derives most of its income from two lines of business, one being
the providing of investment management, distribution, shareholder services,
accounting and related services to the Funds and other clients. The other
provides order processing, regulatory oversight, concession processing, and
other related services to registered securities representatives transacting
securities business for their clients. As a result, the Company is economically
dependent on the Funds, the representatives and others for substantially all
of its revenue and income. These businesses are conducted through the wholly-
owned subsidiary companies described below. Revenues generated by the
subsidiaries supporting activities surrounding the Funds are derived primarily
from fees based on the level of assets under management. Revenues generated by
the support of securities sales are derived primarily through a sharing of
sales concessions paid by the products being sold to clients. Other business
opportunities have been considered.

ND Money  Management, Inc.

ND Money Management, Inc. ("ND Money Management") is registered as an
investment advisor with the SEC under the Investment Advisers Act of 1940
(the "Advisers Act").  ND Money Management provides investment advisory
services under investment advisory agreements with ND Tax-Free Fund, Montana
Tax-Free Fund, South Dakota Tax-Free Fund, Integrity Fund of Funds, and
Integrity Small-Cap Fund of Funds.  As of December 31, 2002, ND Money
Management managed approximately $120.4 million, representing approximately
41% of the Company's total assets under management/service.

ND Capital, Inc.

ND Capital, Inc. ("ND Capital") is registered with the SEC as a broker-dealer
and is a member of the National Association of Securities Dealers, Inc.
(the "NASD") and serves as principal underwriter and distributor for ND Tax-
Free Fund, Montana Tax-Free Fund, South Dakota Tax-Free Fund, and Integrity
Small-Cap Fund of Funds.  ND Capital earns Rule 12b-1 fees pursuant to Rule
12b-1 plans adopted by each such Fund and contingent deferred sales charges
("CDSCs") from shareholders of such Funds if they redeem their shares within 5
years after their purchase. As principal underwriter for Integrity Fund of
Funds, ND Capital earns CDSCs from shareholders of the Fund if they redeem
their shares within 5 years after their purchase.  ND Capital also earns
commission revenue in connection with sales of shares of outside mutual funds
and in connection with effecting other securities transactions.

<PAGE>

Ranson Capital Corporation

Ranson Capital Corporation ("Ranson") is registered with the SEC as an
investment advisor and a broker-dealer.  It is also a member of the NASD.
Ranson provides investment advisory services to the Ranson Managed Portfolios
under an investment advisory agreement.  As of December 31, 2002, Ranson
managed approximately $175.6 million in assets, representing approximately 59%
of the Company's total assets under management/service.  Ranson also serves as
principal underwriter for the Ranson Managed Portfolios and earns Rule 12b-1
fees pursuant to Rule 12b-1 plans adopted by certain of the Ranson Managed
Portfolios and the underwriter's portion of FESLs in connection with sales of
shares of the Ranson Managed Portfolios effected by other broker-dealers.

ND Resources, Inc.

ND Resources, Inc. ("ND Resources") is registered with the SEC as a transfer
agent under the Securities Exchange Act of 1934.  ND Resources provides
shareholder recordkeeping services and acts as transfer agent and dividend-
paying agent for the Funds.  ND Resources also provides business management
services, including fund accounting, compliance and other related
administrative activities for the Funds.  ND Resources is compensated for
providing these services under agreements with each Fund, and is reimbursed
for out-of-pocket expenses. ND Resources has provided services to one other
fund group. As of February 16, 2001, that relationship was terminated due to a
reorganization of the fund group.

Magic Internet Services, Inc.

Magic Internet Services, Inc. ("Magic Internet") operates as an internet
service provider offering service primarily to individuals and businesses in
the local calling area. Magic Internet provides subscribers with full support
including servicing hardware and technical support for software problems.
Magic Internet also provides DSL, wireless, satellite, national dial-up, and
website building and hosting services.

ARM Securities Corporation

ARM Securities Corporation ("ARM Securities") is registered with the SEC as a
broker-dealer and is registered with the NASD. Acquired from ARM Financial
Group, Inc., a Louisville, Kentucky corporation in May of 2000, the broker-
dealer offers mutual funds and insurance products to the public through
approximately 40 registered representatives. ARM Securities earns commission
revenue in connection with sales of these products and also 12b-1 fees paid by
the distributors of these products.

Integrity Investment Advisors, Inc.

Integrity Investment Advisors, Inc. ("Integrity Investment Advisors") is
registered with the SEC and the state of North Dakota as a registered
investment advisor. Acquired in September of 2001, Integrity Investment
Advisors is authorized to provide investment advisory services to individuals
or other entities. The registered investment advisor earns fee revenue in
connection with providing these services.  As a result of failure of certain
conditions of the purchase agreement, on June 24, 2002, the Company rescinded
the purchase dated September 14, 2001, and obtained return and cancellation of
the Company's common shares.

Capital Financial Services, Inc.

On January 15, 2002 the Company acquired all the assets of Capital Financial
Services, Inc. ("CFS"), a full-service brokerage firm based in Madison,
Wisconsin. CFS is registered with the SEC as an investment advisor and broker-
dealer and also with the NASD as a broker-dealer. The broker-dealer and
investment advisor specializes in providing investment products and services
to independent investment representatives, financial planners, and investment
advisors and currently supports approximately 90 investment representatives and
investment advisors.

<PAGE>

DESCRIPTION OF BUSINESS

Investment Advisory Services

ND Money Management and Ranson act as the investment advisor to the Integrity
Mutual Funds and Ranson Managed Portfolios, respectively, pursuant to
investment advisory agreements with such Funds.  ND Money Management and Ranson
generally supervise and implement the Funds' investment activities, including
deciding which securities to buy and sell. They also decide which broker-
dealers through, or with which, to effect Fund securities transactions.

Generally, each Fund pays ND Money Management or Ranson an investment advisory
fee payable monthly based on the Fund's net assets.  Annual investment advisory
fees under the various investment advisory agreements are 0.50% of assets under
management in the case of Ranson Managed Portfolios, 0.90% of assets under
management in the case of Integrity Fund of Funds and Integrity Small-Cap Fund
of Funds and 0.60% of assets under management for the remaining Funds managed
by ND Money Management. Investment advisory fees are generally voluntarily
waived or reduced, and other Fund expenses may be absorbed by the investment
advisor for a period of time to ensure that the Funds have competitive fee
structures.

The investment advisory agreements pursuant to which ND Money Management and
Ranson provide investment advisory services continue in effect for successive
annual periods as long as such continuance is approved annually by (a) either
(i) a majority vote cast in person at a meeting of the relevant Fund's Board of
Directors or Trustees called for that purpose, or (ii) a vote of the holders of
a majority of the relevant Fund's outstanding voting securities, and (b) a
majority of the relevant Fund's directors or trustees who are not parties to
the investment advisory agreement or interested persons of the Funds or the
Company within the meaning of the Advisers Act.

Either party may terminate the investment advisory agreement without penalty
after specified written notice.  Each investment advisory  agreement also
automatically terminates in the event of its "assignment" as defined in the
Advisers Act. The termination of one or more investment advisory agreements
between ND Money Management or Ranson and the Funds would have a material
adverse impact on the Company.  To date, no such investment advisory agreements
have been terminated.  Investment advisory fees constituted 12% of the
Company's consolidated revenues in 2002.

Transfer Agency, Dividend Disbursement and Administrative Services

Transfer agency, dividend disbursement and other shareholder administrative
services are provided to the Funds and other clients by ND Resources.  ND
Resources receives fees from the Funds and others for providing such services.
As of December 31, 2002 such fees ranged from 0.09% to 0.16% per annum of
assets under management/service, depending on the size of the Fund.  In
addition, ND Resources provides accounting services to the Funds for which it
charges a base fee and an asset based charge ranging from 0.01% to 0.05% per
annum of assets under management/service depending on the size of the Fund.
Transfer agency, dividend disbursement, and administrative services fees
constituted 5% of the Company's consolidated revenues in 2002.

Distribution of Fund Shares

ND Capital acts as the principal underwriter and distributor of shares of ND
Tax-Free Fund, Montana Tax-Free Fund, South Dakota Tax-Free Fund, Integrity
Fund of Funds, and Integrity Small-Cap Fund of Funds pursuant to distribution
agreements with such Funds.  Pursuant to distribution agreements, Ranson acts
as the principal underwriter and distributor of shares of the Ranson Managed
Portfolios.  The distribution agreements generally provide that ND Capital and
Ranson shall distribute Fund shares and pay the expenses thereof.  Fund shares
are sold primarily by broker-dealers with whom ND Capital and Ranson have
entered into dealer sales agreements.  ND Capital also sells a limited  number
of Fund shares directly to investors.  The Company markets its Funds primarily
to the residents of the rural states in which the Company's Funds invest in
local bond issues.

<PAGE>

Shares of Ranson Managed Portfolios are sold subject to FESLs ranging from
maximums of 2.75% (with respect to Kansas Insured Intermediate Fund) to 4.25%
(with respect to each of the other Ranson Managed Portfolios) of the public
offering price.  The applicable FESL is reduced as the amount invested
increases and is waived for certain categories of investors.  ND Capital or
Ranson (as applicable) earns the underwriter's portion of the FESL in
connection with sales of such Funds' shares effected by other broker-dealers.

Shares of ND Tax-Free Fund, Montana Tax-Free Fund, and South Dakota Tax-Free
Fund purchased as Class A shares, which were introduced in January 2000, are
subject to a maximum FESL of 4.25% of the public offering price. Shares of ND
Tax-Free Fund, Montana Tax-Free Fund, South Dakota Tax-Free Fund, Integrity
Fund of Funds, and Integrity Small-Cap Fund of Funds purchased as Class B
shares are not subject to a FESL at the time of purchase but are subject to a
maximum CDSC of 4%, with respect to all of such Funds (except for Integrity
Fund of Funds and Integrity Small-Cap Fund of Funds) and 1.5%, with respect
to Integrity Fund of Funds and Integrity Small-Cap Fund of Funds, of the amount
redeemed if shares are redeemed within 5 years after their purchase.  The
CDSC is not imposed on shares redeemed after such 5 year period.  The CDSC
imposed by ND Tax-Free Fund, Montana Tax-Free Fund and South Dakota Tax-Free
Fund ranges in steps from 4% during the first 2 years to 1% during the 5th
year after the purchase date.  The entire CDSC is earned by ND Capital in
connection with redemptions subject to the CDSC.

Shares subject to the CDSC (Class B shares) would automatically convert to
Class A shares (and would no longer be subject to the higher Rule 12b-1 fees)
approximately 8 years after the date on which such Class B shares were
purchased. The conversion would be made based on the relative net asset
values of Class A and Class B shares, without imposing any load, fee or other
charge. The fact that the new shares earn a lower 12b-1 fee could have an
adverse effect on revenues.

Each of the Funds (other than Kansas Insured Intermediate Fund and Integrity
Fund of Funds) has adopted a Rule 12b-1 plan pursuant to which ND Capital or
Ranson (as applicable) earns Rule 12b-1 fees in connection with its
distribution of Fund shares.  Rule 12b-1 fees are .25% per annum of the Fund's
average net assets (with respect to the applicable Ranson Managed Portfolios),
and .75% per annum of the Fund's average net assets (with respect to ND Tax-
Free Fund, Montana Tax-Free Fund, South Dakota Tax-Free Fund and Integrity
Small-Cap Fund of Funds). ND Capital and Ranson (as applicable) currently pay
other broker-dealers 12b-1 shareholder servicing fees of between .10% and .20%
per annum on shareholder accounts of such broker-dealers.  ND Capital retains
Rule 12b-1 fees in excess of such amounts.

The 12b-1 Plans are established for an initial term of one year.  Thereafter,
they must be approved annually by the Board of Directors or trustees, including
a majority of the disinterested directors or trustees of each Fund.  Each Plan
is subject to termination at any time by a majority of the Fund's disinterested
directors or trustees or by the Fund's shareholders.

FESL, CDSC and Rule 12b-1 plan revenues constituted 9% of the Company's
consolidated revenues in 2002.

Brokerage Commissions

ARM Securities and CFS's primary source of revenue is commission revenue in
connection with sales of shares of mutual funds and insurance products.

ND Capital and Ranson also earn commission revenue in connection with sales of
shares of outside mutual funds and when acting as a broker in effecting other
securities transactions. Commission revenues constituted 71% of the Company's
consolidated revenues in 2002.

<PAGE>


Internet Revenues

Magic Internet operates as an internet service provider offering service
primarily to individuals and businesses in the local calling area. Magic
Internet provides subscribers with full support including servicing hardware
and technical support for software problems. Magic Internet also provides DSL,
wireless, satellite, national dial-up, and website building and hosting
services. Internet revenues constituted 4% of the Company's consolidated
revenues in 2002.

REGULATION

Virtually all aspects of the Company's businesses are subject to various
complex and extensive federal and state laws and regulations.  Regulated
areas include, but are not limited to, the effecting of securities
transactions, the financial condition of the Company's subsidiaries,
recordkeeping and reporting procedures, relationships with clients, and
experience and training requirements for certain employees.  The Company's
subsidiaries are registered with various federal and state government agencies,
including the Securities and Exchange Commission (the "SEC"), as well as the
National Association of Securities Dealers (the "NASD"), a self-regulatory
industry organization.

ND Capital, Ranson and ARM Securities are registered broker-dealers, subject to
extensive regulation by the SEC, the NASD and state agencies in those states
in which ND Capital, Ranson and ARM Securities conduct business.  As broker-
dealers, ND Capital, Ranson and ARM Securities are subject to the Uniform Net
Capital Rule promulgated by the SEC under the Securities Exchange Act of 1934.
This rule requires that a broker-dealer must maintain certain minimum net
capital and that its aggregate indebtedness may not exceed specified
limitations.  ND Money Management and Ranson are registered with the SEC as
investment advisors under the Investment Advisers Act of 1940 and are subject
to regulation thereunder and certain state laws.  The Funds are also subject
to extensive regulation under the Investment Company Act of 1940 and, along
with ND Money Management, ND Capital, Ranson and ARM Securities, are subject
to periodic examinations by the SEC and NASD.

Federal and state laws and regulations, and the rules of the NASD, grant broad
powers to such regulatory agencies and organizations.  These include the power
to limit, restrict or prevent the Company from carrying on its business if it
fails to comply with such laws, regulations and rules.  Other possible
sanctions that may be imposed include the suspension of individual employees,
restrictions on the Company expanding its business or paying cash dividends,
the revocation of the investment advisor, broker dealer or transfer agent
registrations, expulsions, censures and/or fines.

On April 12, 2002, an Offer of Settlement previously submitted by ND Money
Management, Inc. and Ranson Capital Corporation, wholly owned investment
advisor subsidiaries of the Company, together with Robert Walstad and Monte
Avery (the "Respondents") with respect to pending SEC issues arising from a
routine 1997 SEC books and records audit, was accepted by the SEC.  Pursuant
to the terms of the order issued by the SEC in accordance with the settlement,
without admitting or denying liability, the Respondents agreed to pay civil
money penalties totaling $40,000, to accept censure, to cease and desist from
any current or future violations of certain provisions of the Advisors Act and
the Investment Company Act, and undertake remedial practices, including the
retaining of an independent consultant to provide a review and recommendations
regarding the Respondent's regulatory compliance procedures.

To the extent that existing or future regulations affecting the sale of Fund
shares or their investment strategies cause or contribute to reduced sales of
Fund shares or impair the investment performance of the Funds, the Company's
aggregate assets under management and its revenues might be adversely affected.

Since 1993, the NASD rules have limited the amount of aggregate sales charges
which may be paid in connection with the purchase and holding of investment
company shares sold through broker-dealers.  The effect of the rule might be to
limit the amount of fees that could be paid pursuant to a Fund's 12b-1 Plan in
a situation where a Fund has no, or limited, new sales for a prolonged period
of time.

<PAGE>

The officers, directors and employees of the Company may from time to time own
securities that are also owned by one or more of the Funds.  The Company's
internal policies with respect to individual investments by employees,
including officers and directors who are employed by the Company, require
prior clearance and reporting of some transactions and restrict certain
transactions so as to reduce the possibility of conflicts of interest.

COMPETITION

The financial services industry is highly competitive.  Industry sources
indicate that there are approximately 8,000 open-end investment companies
of varying sizes, investment objectives and policies which offer their
shares to the investing public in the United States.  Since its inception,
the Company has competed with numerous larger, more established mutual fund
management organizations.  The Company is also in competition with the
financial services and investment alternatives offered by stock brokerage
firms, insurance companies, banks, savings and loans associations  and other
financial institutions, as well as investment advisory firms.  The Company
sells Fund shares principally through third party broker-dealers.  The Company
competes for the services of such third party broker-dealers with other
sponsors of mutual funds who generally have substantially greater resources
than the Company.  Banks in particular have increased, and continue to
increase, their sponsorship of proprietary mutual funds distributed through
third party distributors.  Many broker-dealer firms also sponsor their own
proprietary mutual funds which may limit the Company's ability to secure the
distribution services of such broker-dealer firms.  In seeking to sell Fund
shares, the Company also competes with increasing numbers of mutual funds which
sell their shares without the imposition of sales loads.  No-load mutual funds
are attractive to investors because they do not have to pay sales charges on
the purchase or redemption of such mutual funds' shares. This competition may
place pressure on the Company to reduce the FESLs and CDSCs charged upon the
sale or redemption of Fund shares.  However, reduced sales loads would make
the sale of Fund shares less attractive to the broker-dealers upon whom the
Company depends for the distribution of Fund shares. In the alternative, the
Company might itself be required to pay additional fees, expenses, commissions
or charges in connection with the distribution of Fund shares which could have
a material adverse effect on the Company's earnings.

The Company also participates in two other highly competitive related sectors
of the financial services industry, retail brokerage and investment advisory
services. The Company competes directly with full-service stock brokerage
firms, registered investment advisors, banks, regional broker-dealers and other
independent broker-dealers. Each of these competitors offer to the public many
of the same investment products and services offered by the Company. Further,
other broker-dealers providing the same services heavily recruit the
representatives and advisors transacting business through the Company. This
competition forces the Company to maintain high levels of support services and
commission payouts for these representatives and advisors. These high levels
of services and payouts could have a material adverse effect on the Company's
earnings.

OTHER MATTERS

The Company's board of directors has approved an employee stock ownership plan
("ESOP") whereby up to 800,000 shares of the Company's stock would be granted.
The ESOP was effective January 1, 1999. Refer to Employee Benefit Plans in
Note 10 of the Audited Statements. In March of 2001, the Company loaned the
ESOP $100,000 to purchase future shares for distribution by the ESOP.

<PAGE>



ITEM 2    DESCRIPTION OF PROPERTY

The Company operates all of its business, except ARM Securities, out of its
location at 1 North Main, Minot, North Dakota in which it occupies
approximately 14,200 square feet of office space in a 28,000 square foot
building with an adjacent 100'x140' parking lot. The Company had leased the
office space until December 31, 1998 when it purchased the office building for
$700,000. As of December 31, 2002 the Company owed $461,311 on the 3 year loan.
The Company also leases two locations, 1,110 square feet at One South
Minnesota, New Ulm, Minnesota and 5,292 square feet at 1550 East Shaw Avenue,
Suite 120, Fresno, California for the ARM Securities broker-dealer operations.


ITEM 3    LEGAL PROCEEDINGS

None.

ITEM 4    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth
quarter ended December 31, 2002.

<PAGE>


                               PART II

ITEM 5    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Information About the Company's Common Stock

The Company's Common Stock is traded on the OTC Bulletin Board under the symbol
IMFD.  The Company's stock began trading on the OTC Bulletin Board on November
7, 1997.  On May 31, 2002, the shareholders of the Company approved a two for
one (2:1) forward stock split of the issued and outstanding common stock of the
Company which took effect on July 1, 2002.  The forward stock split increased
the number of issued and outstanding shares of common stock of the Company as
of July 1, 2002 from approximately 6,700,000 to approximately 13,400,000.
Except for changes in the number of shares of stock issued and outstanding, the
rights and privileges of holders of shares of common stock remain the same,
both before and after the forward stock split.  Commencing on July 1, 2002,
each currently outstanding common stock certificate was deemed for all
corporate purposes to evidence ownership of the increased number of shares
resulting from the forward stock split.  New stock certificates reflecting
the number of shares resulting from the stock split will be issued only as
currently outstanding certificates are transferred or upon request of
individual shareholders.  On December 31, 2002, the closing price of the
Company's Common Stock on the OTC Bulletin Board was $.25 per share. At
February 14, 2003, there were approximately 736 shareholders of record.
The Company estimates that there are approximately 340 beneficial
shareholders whose shares are held in street name and 396 registered
shareholders.


The following table sets forth the high and low bid prices for the Company's
Common Stock provided by The NASDAQ Stock Market, Inc.

<TABLE>
<CAPTION>
                                             2002                  2001
                                          Fiscal Year          Fiscal Year
                                      -------------------------------------
<S>                                     <C>        <C>        <C>        <C>
        Quarter                         High       Low        High       Low
        ---------------------------------------------------------------------
        First Quarter                    .460      .350        .594      .328
        Second Quarter                   .445      .310        .465      .313
        Third Quarter                    .450      .270        .460      .385
        Fourth Quarter                   .330      .250        .480      .350
</TABLE>

The quotations reflect inter-dealer prices, without retail mark-up, mark-down
or commission, and may not represent actual transactions.  The Company has not
paid a dividend with respect to its Common Stock nor does the Company
anticipate paying dividends in the foreseeable future.

ITEM 6    MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION

GENERAL

Integrity Mutual Funds, Inc. derives a portion of its revenues and net income
from providing investment management, distribution, shareholder services,
accounting and related services to the Funds and others.  ARM Securities and
CFS provide another substantial portion of revenue through sales of mutual
fund, variable insurance products and fixed insurance products.  The majority
of the Company's assets under management consist of single-state municipal
bond funds for the states of North Dakota, South Dakota, Montana, Kansas,
Nebraska, and Oklahoma.

Integrity Mutual Funds, Inc. is a holding company which operates in three
business segments, 1) as an investment advisor, distributor and provider of
administrative service to sponsored and non-proprietary mutual funds, 2) as
an internet service provider for Minot and surrounding areas and 3) as a
broker-dealer. Refer to Segment Information in Note 11 of the Audited
Statements.

<PAGE>

ASSETS UNDER MANAGEMENT/SERVICE
By Investment Objective
In Millions

As of December 31,                           2002      2001      2000
----------------------------------------------------------------------

FIXED-INCOME
Tax-Free                                   $ 286.7   $ 303.0   $ 301.0
Taxable (Corporate/Government)                 0.0       0.0       0.0
----------------------------------------------------------------------

TOTAL FIXED-INCOME                         $ 286.7   $ 303.0   $ 301.0
----------------------------------------------------------------------

EQUITY
Fund of Funds                              $   9.3   $  15.3   $  19.6
----------------------------------------------------------------------

TOTAL SPONSORED MUTUAL FUNDS               $ 296.0   $ 318.3   $ 320.6
----------------------------------------------------------------------
Investors Research Fund                    $   0.0   $   0.0   $  16.3
----------------------------------------------------------------------
TOTAL ASSETS UNDER MANAGEMENT/SERVICE      $ 296.0   $ 318.3   $ 336.9
======================================================================


A substantial portion of the Company's revenues depend upon the amount of
assets under its management/service.  Assets under management/service can
be affected by the addition of new funds to the group, the acquisition of
another investment management company, purchases and redemptions of mutual fund
shares and investment performance, which may depend on general market
conditions.  Assets under the Company's management/service decreased by $22.3
million (7.0%) in 2002 and decreased by $18.6 million (5.5%) in 2001.  Fixed
income assets decreased by 5.4% in 2002 compared to the 2001 increase of 0.7%.
Fixed income assets account for 96.9% of the total assets under management/
service in 2002 and 95.2% in 2001.  Equity assets decreased by 39.2% in 2002
compared to the 2001 decrease of 21.9%. Equity assets account for 3.1% of total
assets under management/service in 2002 and 4.8% in 2001.

<PAGE>

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, amounts included in
the Consolidated Statements of Operations of Integrity Mutual Funds, Inc. and
the percentage change in those amounts from period to period.

<TABLE>
<CAPTION>
      Variance  Variance
                                                                                         2002 to   2001 to
                                          2002              2001               2000        2001      2000
                                     ----------------------------------------------------------------------
<S>                                        <C>               <C>                <C>         <C>         <C>
OPERATING REVENUES
   Fee income                        $ 3,065,042        $ 2,970,581        $ 3,144,428       3.2 %     (5.5)%
   Commissions                        11,378,619          4,554,559          3,515,600     149.8 %     29.6 %
   Internet revenues                     537,288            642,584            668,980     (16.4)%     (3.9)%
                                     ----------------------------------------------------------------------
        Total revenue                $14,980,949        $ 8,167,724        $ 7,329,008      83.4 %     11.4 %
                                     ----------------------------------------------------------------------

OPERATING EXPENSES
   Compensation and benefits         $ 1,900,273        $ 1,833,715        $ 1,464,483       3.6 %     25.2 %
   Commission expense                  9,975,465          3,583,310          2,796,545     178.4 %     28.1 %
   General and administration          2,065,218          1,751,487          1,592,669      17.9 %     10.0 %
   Sales commissions amortized           490,206            613,738            587,740     (20.1)%      4.4 %
   Depreciation and amortization         202,584            578,534            601,824     (65.0)%     (3.9)%
                                     ----------------------------------------------------------------------
        Total operating expenses     $14,633,746        $ 8,360,784        $ 7,043,261      75.0 %     18.7 %
                                     ----------------------------------------------------------------------

OPERATING INCOME (LOSS)              $   347,203        $  (193,060)       $   285,747     279.8 %   (167.6)%
                                     ----------------------------------------------------------------------

OTHER INCOME (EXPENSES)
   Interest and other income         $   377,739        $   164,641        $   206,888     129.4 %    (20.4)%
   Interest expense                     (303,139)          (317,924)          (251,068)     (4.7)%     26.6 %
                                     ----------------------------------------------------------------------
         Net other income (expenses) $    74,600        $  (153,283)       $   (44,180)    148.7 %   (247.0)%
                                     ----------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME
TAX BENEFIT (EXPENSE)                $   421,803        $  (346,343)       $   241,567     221.8 %   (243.4)%

INCOME TAX BENEFIT (EXPENSE)             (61,999)            20,148           (232,830)   (407.7)%    108.7 %
                                     ----------------------------------------------------------------------

NET INCOME (LOSS) BEFORE MINORITY
INTEREST                             $   359,804        $  (326,195)       $     8,737     210.3 % (3,833.5)%

MINORITY INTEREST, NET OF TAX             38,507             26,367             31,667      46.0 %    (16.7)%
                                     ----------------------------------------------------------------------

NET INCOME (LOSS) AFTER MINORITY
INTEREST                             $   398,311        $  (299,828)        $    40,404    232.8 %   (842.1)%
                                     ======================================================================
Earnings (Loss) per share                    .03               (.02)                .00
</TABLE>

OPERATING REVENUES

Total operating revenues for 2002 were $15.0 million, an increase of 83.4%
from $8.2 million for 2001. The increase in commission revenues is primarily
attributable to revenues of $6,968,953 relating to CFS, acquired effective
January 1, 2002.

Total operating revenues for 2001 were $8.2 million, an increase of 11.4% from
$7.3 million for 2000. The increase in commission revenues is primarily
attributable to a full year of commissions in 2001 from ARM Securities, which
was acquired effective May 1, 2000.

<PAGE>


Fee income for 2002 was $3.1 million, a 3.2% increase from $3.0 million for
2001. The increase in fee income is due to fee income of $208,884 related to
CFS, acquired effective January 1, 2002, offset by a decrease in assets under
management/service and to a lesser extent from the reduction in fees charged to
Class A shares converted from Class B shares. Beginning January 2000, ND Tax-
Free Fund, Inc., Montana Tax-Free Fund, Inc., and South Dakota Tax-Free Fund,
Inc. issued another class of shares, Class A shares with FESLs. These shares
are subject to a maximum front-end sales load of 4.25% scaled down to .75%
minimum as the investment amount increases. Shares subject to the CDSC (Class B
shares) automatically convert to Class A shares (and would no longer be subject
to the higher Rule 12b-1 fees) approximately 8 years after the date on which
such Class B shares were purchased. The conversion would be made based on the
relative net asset values of Class A and Class B shares, without imposing any
load, fee or other charge. This trend will continue as more Class B shares are
converted to Class A shares. Fee income for 2001 was $3.0 million, a 5.5%
decrease from $3.1 million for 2000.

Commission income includes ARM Securities and CFS commissions and 12b-1 fees
associated with the sale of mutual funds and insurance products, ND Capital and
Ranson underwriting fees associated with sales of the FESL funds, commissions
earned by registered representatives of ND Capital, and commissions earned by
ND Capital acting as agent to the Funds for the purchase of certain investment
securities.  Commission income for December 31, 2002 was $11.4 million, a
149.8% increase over the $4.6 million for 2001. The primary reason for the
increase was $6,968,953 in commission revenues relating to CFS, acquired
effective January 1, 2002.  2001 commission income was a 29.6% increase over
2000 due to a full year of commissions earned in 2001 by ARM Securities,
acquired in May of 2000.

Internet revenues decreased 16.4% for 2002 compared to 2001 due to a decreased
customer base. Revenues decreased 3.9% for 2001 compared to 2000.  On
October 1, 1999, the Company formed a corporation called Magic Internet
Services, Inc. At the same time, the newly formed subsidiary of the Company
acquired all the assets of Magic Internet Services (a North Dakota
partnership). The corporation provides internet services to several businesses
as well as the general public for a fee. The acquisition of Magic Internet
allows for additional revenues, provides another source for internet service
in case of disruption of service (redundancy), assists in providing information
over the internet and provides a potential new delivery system of mutual fund
shares.

OPERATING EXPENSES

Total operating expenses increased 75.0% for 2002 compared to 2001. Total
operating expenses increased 18.7% for 2001 compared to 2000.  The variances
relate to several of the major expense categories as described in the
paragraphs that follow.

Compensation and benefits increased 3.6% in 2002 compared to 2001. The increase
in 2002 is primarily attributable to budgeted compensation and benefit
increases.

Compensation and benefits increased 25.2% in 2001 compared to 2000.
Compensation and benefits related to ARM Securities made up 59.0% of the
increase, due primarily to a full year of expenses recorded in 2001.  The
balance of the compensation and benefits increase relates to budgeted
compensation and benefit increases, and the recruitment of two key employees
to grow ARM Securities.

Commission expense for December 31, 2002 was a 178.4% increase over 2001.
Commission expense for December 31, 2001 was a 28.1% increase over 2000. The
commission expense increases for 2002 and 2001 are directly related to the
increases in commission income.

General and administrative expense for 2002 increased 17.9% over 2001. The
increase is due primarily to general and administrative expense relating to
CFS, acquired effective January 1, 2002. Total general and administrative
expenses for 2001 increased 10.0% compared to 2000. This increase is due
primarily to a full year of expenses recorded for 2001 for ARM Securities,
which was acquired in May of 2000.

<PAGE>

Sales commissions paid to brokers and dealers in connection with the sale of
shares of the Funds sold without a FESL are capitalized and amortized on a
straight line basis.  Effective January 1, 2001, the Company accelerated the
amortization life to eight years from nine years which best approximates
management's estimate of the average life of investor's accounts in the
Integrity Mutual Funds and Ranson Managed Portfolios and coincides with
conversion of Class B shares to Class A shares as previously stated. Contingent
deferred sales charges ("CDSC") received by the Company are recorded as a
reduction of unamortized deferred sales commissions.  Amortization of deferred
sales commissions decreased 20.1% in 2002 and increased 4.4% in 2001.

Depreciation and amortization decreased 65.0% in 2002 and decreased 3.9% in
2001. The primary reason for the decrease in 2002 is that effective January 1,
2002, the Company adopted Statement of Financial Accounting Standards (SFAS)
No. 142 - Goodwill and Other Intangible Assets.  Under SFAS 142, the Company no
longer amortizes its goodwill and certain other intangibles over their
estimated useful lives.  Rather, they will be subject to at least an annual
assessment for impairment by applying a fair value based test. The 2001
decrease is the result of assets becoming fully depreciated in 2000 and 2001.

For the year ended December 31, 2002, the Company obtained an independent
summary valuation analysis of the fair market value of its three reporting
business lines (mutual fund services, broker-dealer services, and internet
services).  The objective of the valuation analysis was to evaluate the
accounting value of the goodwill for each business line versus the estimated
fair market value of that goodwill as required by SFAS 142.  Based on the
independent valuation estimate, management believes that the net realizable
value of each of its three reporting business lines substantially exceeds the
carrying (book) value of the respective business lines and therefore, no
impairment adjustments were made during the quarter ended and year ended
December 31, 2002.

OTHER INCOME (EXPENSES)

2002 interest and other income increased 129.4% over 2001, the net effect of
$250,000 in Keyman insurance proceeds recorded in 2002, offset by decreased
interest income earned on cash invested.

2001 interest and other income decreased 20.4% from 2000 due to decreased
interest income earned on cash invested.

Interest expense for 2002 is a 4.7% decrease from 2001 due to the maturity
of the Company's outstanding debentures in September of 2002 as well as a
partial redemption of subordinate debentures in June of 2002.

Interest expense for 2001 is a 26.6% increase over 2000 due to interest owed
on subordinate debentures sold July 2000 through April 2001.

INCOME TAX (EXPENSE) BENEFIT

Effective for 2001, the Company is amortizing deferred sales commissions over
five years for income tax purposes. Previously, the Company was expensing
deferred sales commissions as incurred.  The Company will continue to
capitalize and amortize the commissions for financial reporting purposes over
eight years (exception Integrity Fund of Funds, which are expensed).  The
effects of the change will create timing differences between when the
commissions are deducted for income tax purposes and expensed as amortization
for financial reporting purposes.  Deferred tax assets or deferred tax
liabilities may result from these timing differences.


<PAGE>


FINANCIAL CONDITION

On December 31, 2002, the Company's assets aggregated $12.7 million, an
increase of 13.2% from $11.2 million in 2001, due to an increase in accounts
receivable and goodwill offset by a decrease in cash and cash equivalents,
securities available-for-sale, prepaids, and property and equipment.
Stockholders equity increased to $7.0 million on December 31, 2002 compared
to $6.9 million on December 31, 2001, primarily the result of the net income
of $398,311, offset by the repurchase of $161,744 of the company stock through
a stock buyback program, and the rescinded purchase of Integrity Investment
Advisors, Inc.

Cash provided by operating activities was $422,311 in 2002, a 31.9% decrease
from $620,361 in 2001. During the year ended December 31, 2002, the Company
used net cash of $1,207,140 for investing activities. $1,117,711 was related
to the purchases of CFS, $13,763 for the remodeling of the second floor of the
building for additional office space, and $74,607 for the purchase of computer
system equipment. Net cash flow used by financing activities during the year
was $42,235, the net effect of $561,000 in proceeds received from a
subordinated commercial note offering and $650,040 in proceeds received from a
short-term bank borrowing, offset by $107,512 for repayment of debt, $50,000
for a partial redemption of subordinate debentures, $940,000 for the maturity
of debentures, and $161,744 for the net purchase of the Company's common stock,
pursuant to a program approved by its Board of Directors in November 1997 to
repurchase up to $2,000,000 of its common stock from time to time in the open
market.

On December 31, 2001, the Company's assets aggregated $11.2 million, a decrease
of 12.1% from $12.8 million in 2000, due to a decrease in cash and cash
equivalents, securities available-for-sale, accounts receivable, and property
and equipment. Stockholders equity decreased to $6.9 million on December 31,
2001 compared to $8.4 million on December 31, 2000, primarily the result of the
net loss of $299,828, the purchase of $999,934 of the company stock through a
tender offer purchase, and the repurchase of $221,472 of the company stock
through a stock buyback program.

Cash provided by operating activities was $620,361 in 2001, an 47.9% decrease
from $1,189,867 in 2000. During the year ended December 31, 2001, the Company
used net cash of $114,063 for investing activities. $9,315 was related to the
purchase of ARM Securities and Integrity Investment Advisors, $50,554 for the
remodeling of the second floor of the building for additional office space,
and $74,947 for the purchase of equipment, offset by cash received for the
redemption of an investment in Class A shares of the Montana Tax-Free Fund. Net
cash flow used by financing activities during the year was $1,271,772, the net
effect of $120,000 in proceeds received from a subordinated debenture offering,
offset by $81,296 for repayment of debt, $97,093 net cash loaned to the ESOP,
and $1,251,997 for the net purchase of the Company's common stock, pursuant
to a program approved by its Board of Directors in November 1997 to repurchase
up to $2,000,000 of its common stock from time to time in the open market and
also through a tender offer purchase.

LIQUIDITY AND CAPITAL RESOURCES

On December 31, 2002, the Company's liquid assets totaled $1,117,075, including
$1,007,619 of cash and cash equivalents, as compared to $1,963,239 of which
$1,834,683 represented cash and cash equivalents, on December 31, 2001.  On
January 15, 2002 the Company paid out $1,140,000 to purchase CFS, pursuant to
the purchase agreement.

On December 31, 2001, the Company's liquid assets totaled $1,963,239, including
$1,834,683 of cash and cash equivalents, as compared to $2,744,999 of which
$2,600,157 represented cash and cash equivalents, on December 31, 2000. On
January 29, 2001 the Company paid out $999,934 for 799,947 shares of the
Company's common stock, pursuant to its self tender offer that commenced on
December 21, 2000.

<PAGE>


Although the Company has historically relied upon sales of its common stock and
debt instruments for liquidity and growth, management believes that the
Company's existing liquid assets, together with the expected continuing cash
flow from operations and the issuance of long-term subordinated commercial
notes, will provide the Company with sufficient resources to meet its cash
requirements during the next twelve months.  Management expects that the
principal needs for cash may be to advance sales commissions on Funds subject
to contingent deferred sales charges, acquire additional investment management
or financial services firms, repurchase shares of the Company's common stock,
and service debt.

On September 1, 2002, $940,000 of debentures matured.  This need for cash was
met by securing an interim bank loan agreement.  This bank loan is being
supplanted by the issuance of new long-term subordinated commercial notes.  As
of February 28, 2003, the Company had issued $561,000 in subordinated
commercial notes.

OTHER INFORMATION

On September 17, 2002, Richard Olson, President, Chief Operating Officer, and
Director of the Company, died in an automobile accident.  Robert Walstad, CEO,
Chairman of the Board, and former President, has reassumed Mr. Olson's duties
on an interim basis.  No additional director has been appointed to replace Mr.
Olson as Director of the Company.  There was, at the time of Mr. Olson's death,
a Keyman insurance policy in effect to the benefit of the Company.  The Company
received $250,000 in insurance proceeds in early 2003.  This amount has been
included in other income in the 2002 financial statements.

FORWARD-LOOKING STATEMENTS

When used herein, in future filings by the Company with the Securities and
Exchange Commission, in the Company's press releases and in other Company
authorized written or oral statements, the words and phrases "can be",
"expects," "anticipates," "may affect," "may depend," "believes," "estimates"
or similar expressions are intended to identify "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
The Company cautions readers not to place undue reliance on any such forward-
looking statements, which speak only as of the date made.  Such statements are
subject to certain risks and uncertainties, including those set forth in this
"Forward-Looking Statements" section, that could cause actual results for
future periods to differ materially from those presently anticipated or
projected.  The Company does not undertake and specifically disclaims any
obligation to update any forward-looking statement to reflect events or
circumstances after the date of such statements.

The Company derives substantially all of its revenues from two sources,
commission revenue earned in connection with sales of shares of mutual funds,
variable insurance products and fixed insurance products, and fees relating to
the management of, and provision of services to, the Funds and other clients.
The fees earned by the Company are generally calculated as a percentage of
assets under management/service.  If the Company's assets under management/
service decline, or do not grow in accordance with the Company's plans, fee
revenues and earnings would be materially adversely affected.  Assets under
management/service may decline because redemptions of Fund shares exceed
sales of Fund shares, or because of a decline in the market value of securities
held by the Funds, or a combination of both.

In seeking to sell Fund shares, and market its other services, the Company
operates in the highly competitive financial services industry.  The Company
competes with approximately 8,000 open-end investment companies which offer
their shares to the investing public in the United States.  In addition, the
Company also competes with the financial services and other investment
alternatives offered by stock brokerage and investment banking firms, insurance
companies, banks, savings and loan associations and other financial
institutions, as well as investment advisory firms.  Most of these competitors
have substantially greater resources than the Company.  The Company sells Fund
shares principally through third party broker-dealers.  The Company competes
for the services of such third party broker-dealers with other sponsors of
mutual funds who generally have substantially greater resources than the
Company.  Banks in particular have increased, and continue to increase, their
sponsorship of proprietary mutual funds distributed through third party
distributors.  Many broker-dealer firms also sponsor their own proprietary
mutual funds which may limit the Company's ability to secure the distribution
services of such broker-dealer firms.  In seeking to sell Fund shares, the
Company also competes with increasing numbers of mutual funds which sell their
shares without the imposition of sales loads.  No-load mutual funds are

<PAGE>

attractive to investors because they do not have to pay sales charges on the
purchase or redemption of such mutual funds' shares.  This competition may
place pressure on the Company to reduce the FESLs and CDSCs charged upon the
sale or redemption of Fund shares.  However, reduced sales loads would make the
sale of Fund shares less attractive to the broker-dealers upon whom the Company
depends for the distribution of Fund shares.  In the alternative, the Company
might itself be required to pay additional fees, expenses, commissions or
charges in connection with the distribution of Fund shares which could have a
materially adverse effect on the Company's earnings.  The ability of the
Company to sell Fund shares may also be affected by general economic
conditions including, amongst other factors, changes in interest rates and
the inflation rate. Interest and inflation rate changes may particularly
impact the flow of money into mutual funds which invest in fixed-income
securities. Each of the Funds except Integrity Fund of Funds and Integrity
Small-Cap Fund of Funds invests substantially all of its assets in fixed-
income securities.

General economic conditions, including interest and inflation rate changes,
may also adversely affect the market value of the securities held by the Funds,
thus negatively impacting the value of assets under management, and hence the
fees earned by the Company.  The fact that the investments of each Fund (except
Integrity Fund of Funds and Integrity Small-Cap Fund of Funds) are
geographically concentrated within a single state makes the market value of
such investments particularly vulnerable to economic conditions within such
state.  In addition, the states in which the investments of the Funds as a
group are concentrated are themselves concentrated in certain regions of the
United States.  The Company's fee revenues may therefore be adversely
affected by economic conditions within such regions.

Sales of Fund shares with FESLs provide current distribution revenue to the
Company in the form of the Company's share of the FESLs and distribution
revenue over time in the form of 12b-1 payments.  Sales of Fund shares with
CDSCs provide distribution revenue over time in the form of 12b-1 payments and,
if shares are redeemed within 5 years, CDSCs.  However, the Company pays
commissions on sales of Fund shares with CDSCs, reflects such commissions as
a deferred expense on its balance sheet and amortizes such commissions over a
period of up to eight years, thereby recognizing distribution expenses.
Therefore, to the extent that sales of Fund shares with CDSCs increases over
time relative to sales of shares with FESLs, current distribution expenses may
increase relative to current distribution revenues in certain periods, which
would negatively impact the Company's earnings in such periods.  In addition,
the Company may need to find additional sources of funding if existing cash
flow and debt facilities are insufficient to fund commissions payable to
selling broker-dealers on CDSC shares.

<PAGE>


ITEM 7    FINANCIAL STATEMENTS










            INTEGRITY MUTUAL FUNDS, INC. AND SUBSIDIARIES

                          MINOT, NORTH DAKOTA











                  CONSOLIDATED FINANCIAL STATEMENTS

                                AS OF

                  DECEMBER 31, 2002, 2001 AND 2000

                                 AND

                    INDEPENDENT AUDITOR'S REPORT

<PAGE>




           INTEGRITY MUTUAL FUNDS, INC. AND SUBSIDIARIES
                         TABLE OF CONTENTS



                                                                        Pages

INDEPENDENT AUDITOR'S REPORT                                              1


CONSOLIDATED FINANCIAL STATEMENTS

  Consolidated Balance Sheets                                            2-3

  Consolidated Statements of Operations                                   4

  Consolidated Statements of Stockholders' Equity                         5

  Consolidated Statements of Cash Flows                                  6-7

  Notes to Consolidated Financial Statements                             8-22


ADDITIONAL INFORMATION

  Independent Auditor's Report on Additional Information                 24

  Selected Financial Data                                                25

  Quarterly Results of Consolidated Operations (Unaudited)               26



<PAGE>





                        INDEPENDENT AUDITOR'S REPORT




To the Stockholders and Directors of
Integrity Mutual Funds, Inc. and Subsidiaries
Minot, North Dakota 58701

We have audited the accompanying consolidated balance sheets of Integrity
Mutual Funds, Inc. and Subsidiaries (a North Dakota Corporation) as of December
31, 2002 and 2001 and the related consolidated statements of operations,
stockholders' equity and cash flows for the years ended December 31, 2002,
2001 and 2000.  These consolidated financial statements are the responsibility
of the Company's management.  Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America.  Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated 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 consolidated financial position of
Integrity Mutual Funds, Inc. and Subsidiaries as of December 31, 2002 and 2001,
and the consolidated results of their operations and their cash flows for the
years ended December 31, 2002, 2001 and 2000 in conformity with accounting
principles generally accepted in the United States of America.




BRADY, MARTZ & ASSOCIATES, P.C.
Minot, North Dakota   USA

February 21, 2003



<PAGE>                              1



          INTEGRITY MUTUAL FUNDS, INC. AND SUBSIDIARIES
                    CONSOLIDATED BALANCE SHEETS
                    DECEMBER 31, 2002 AND 2001


<TABLE>
<CAPTION>
                                       ASSETS

                                                            2002            2001
                                                            ----            ----
<S>                                                         <C>             <C>
CURRENT ASSETS
  Cash and cash equivalents                           $   1,007,619   $   1,834,683
  Cash segregated for the exclusive
    benefit of customers                                    319,275         298,536
  Securities available-for-sale                             109,456         128,556
  Accounts receivable                                     1,111,989         509,490
  Prepaids                                                   90,604         111,678
                                                      -------------   -------------
  Total current assets                                $   2,638,943   $   2,882,943
                                                      -------------   -------------
PROPERTY AND EQUIPMENT                                $   2,134,719   $   2,049,236
  Less accumulated depreciation                            (730,093)       (607,597)
                                                      -------------   -------------
  Net property and equipment                          $   1,404,626   $   1,441,639
                                                      -------------   -------------
OTHER ASSETS
  Deferred sales commissions                          $   1,159,165   $   1,459,536
  Covenant not to compete (net of accumulated
    amortization of $177,125 for 2002 and
    of $122,624 for 2001)                                    40,875          95,376
  Goodwill                                                7,234,317       5,177,072
  Other Assets (net of accumulated amortization
    of $89,749 for 2002 and $64,382 for 2001)               215,983         158,226
                                                      -------------   -------------
  Total other assets                                  $   8,650,340   $   6,890,210
                                                      -------------   -------------
TOTAL ASSETS                                          $  12,693,909   $  11,214,792
                                                      =============   =============
</TABLE>



<PAGE>                              2


                  CONSOLIDATED BALANCE SHEETS (CONTINUED)

<TABLE>
<CAPTION>
                   LIABILITIES AND STOCKHOLDERS' EQUITY

                                                2002            2001
                                                ----            ----
<S>                                             <C>             <C>
CURRENT LIABILITIES
  Service fees payable                    $      77,723   $      89,525
  Accounts payable                               26,499          65,836
  Other current liabilities                   1,131,440         464,756
  Short-term borrowings                         555,592               0
  Deferred tax liability                        170,000         273,434
  Current portion of long-term debt              17,298         952,773
                                          -------------   -------------
  Total current liabilities               $   1,978,552   $   1,846,324
                                          -------------   -------------
LONG-TERM LIABILITIES
  Note payable                            $     461,311   $     474,375
  Subordinate debentures                        595,000         645,000
  Debentures                                          0         940,000
  Corporate notes                               962,000         962,000
  Subordinate commercial notes                  561,000               0
  Other long-term liabilities                   250,000               0
  Less current portion shown above              (17,298)       (952,773)
                                          -------------   -------------
  Total long-term liabilities             $   2,812,013   $   2,068,602
                                          -------------   -------------
TOTAL LIABILITIES                         $   4,790,565   $   3,914,926
                                          -------------   -------------
MINORITY INTEREST IN SUBSIDIARY           $     355,371   $     411,029
                                          -------------   -------------
TEMPORARY CAPITAL - 1,000,000 shares
  of common stock, $.0001 par value;
  put option price of $.50 per share;
  see Note 5                              $     500,000   $           0
                                          -------------   -------------
STOCKHOLDERS' EQUITY
  Common stock - 1,000,000,000 shares
    authorized, $.0001 par value;
    12,470,480 and 12,924,480 shares
    issued and outstanding, respectively,
    after the 2:1 forward stock split
    effective July 1, 2002                $   8,361,529   $   8,588,793
  Receivable - unearned ESOP shares             (88,845)        (97,093)
  Accumulated deficit                        (1,198,551)     (1,596,862)
  Accumulated other comprehensive
    income (loss)                               (26,160)         (6,001)
                                          -------------   -------------
  Total stockholders' equity              $   7,047,973   $   6,888,837
                                          -------------   -------------
TOTAL LIABILITIES AND
  STOCKHOLDERS' EQUITY                    $  12,693,909   $  11,214,792
                                          =============   =============
</TABLE>




     THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
            CONSOLIDATED FINANCIAL STATEMENTS


<PAGE>                             3


<TABLE>
<CAPTION>
                    INTEGRITY MUTUAL FUNDS, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000


                                                       2002            2001            2000
                                                       ----            ----            ----
<S>                                                    <C>             <C>             <C>
REVENUES
  Fee income                                     $   3,065,042   $   2,970,581   $   3,144,428
  Commissions                                       11,378,619       4,554,559       3,515,600
  Internet revenues                                    537,288         642,584         668,980
                                                 -------------   -------------   -------------
  Total revenue                                  $  14,980,949   $   8,167,724   $   7,329,008
                                                 -------------   -------------   -------------
OPERATING EXPENSES
  Compensation and benefits                      $   1,900,273   $   1,833,715   $   1,464,483
  General and administrative expenses                2,065,218       1,751,487       1,592,669
  Commission expense                                 9,975,465       3,583,310       2,796,545
  Sales commissions amortized                          490,206         613,738         587,740
  Depreciation and amortization                        202,584         578,534         601,824
                                                 -------------   -------------   -------------
  Total operating expenses                       $  14,633,746   $   8,360,784   $   7,043,261
                                                 -------------   -------------   -------------
OPERATING INCOME (LOSS)                          $     347,203   $    (193,060)  $     285,747
                                                 -------------   -------------   -------------
OTHER INCOME (EXPENSES)
  Interest and other income                      $     377,739   $     164,641   $     206,888
  Interest expense                                    (303,139)       (317,924)       (251,068)
                                                 -------------   -------------   -------------
  Net other income (expenses)                    $      74,600   $    (153,283)  $     (44,180)
                                                 -------------   -------------   -------------
INCOME (LOSS) BEFORE INCOME
  TAX BENEFIT (EXPENSE)                          $     421,803   $    (346,343)  $     241,567

INCOME TAX BENEFIT (EXPENSE)                           (61,999)         20,148        (232,830)
                                                 -------------   -------------   -------------
INCOME (LOSS) BEFORE MINORITY
  INTEREST                                       $     359,804   $    (326,195)  $       8,737

Minority interest, net of income taxes                  38,507          26,367          31,667
                                                 -------------   -------------   -------------
NET INCOME (LOSS) AFTER
  MINORITY INTEREST                              $     398,311   $    (299,828)  $      40,404
                                                 =============   =============   =============
EARNINGS (LOSS) PER COMMON SHARE:
  Basic                                          $         .03   $        (.02)  $         .00
  Diluted                                        $         .03   $        (.02)  $         .00

SHARES USED IN COMPUTING
  EARNINGS (LOSS) PER COMMON SHARE:
  Basic                                             13,919,746      12,938,050      15,014,290
  Diluted                                           14,503,079      12,938,050      15,014,290
</TABLE>



     THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
             CONSOLIDATED FINANCIAL STATEMENTS


<PAGE>                               4

<TABLE>
<CAPTION>
                             INTEGRITY MUTUAL FUNDS, INC. AND SUBSIDIARIES
                            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                           FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

                                                                                                    Accumulated
                                    Number of       Common          From                               Other
                                     Common         Stock       Accumulated            ESOP        Comprehensive
                                     Shares         Amount         Deficit          Receivable         Income         Total
                                     ------         ------         -------          ----------         ------         -----
<S>                                  <C>            <C>            <C>              <C>                <C>            <C>
BALANCE
  JANUARY 1, 2000                   15,230,374   $  9,858,309   $ (1,337,438)   $     (100,890)   $          0   $ 8,419,981

  Net income (loss)                          0              0         40,404                 0               0        40,404
  Change in unrealized gain
    (loss) on securities
    available-for-sale                       0              0              0                 0         (10,468)      (10,468)
                                                                                                                 -----------
  Comprehensive income (loss)                                                                                    $    29,936
                                                                                                                 -----------
  Purchase of common stock            (341,000)      (141,353)             0                 0               0      (141,353)
  Receivable - unearned
    ESOP shares                              0              0              0           100,890               0       100,890
                                    ----------   ------------   ------------   ---------------   -------------   -----------
BALANCE,
  DECEMBER 31, 2000                 14,889,374   $  9,716,956   $ (1,297,034)  $             0   $     (10,468)  $ 8,409,454

  Net income (loss)                          0              0       (299,828)                0               0      (299,828)
  Change in unrealized gain
    (loss) on securities
    available-for-sale                       0              0              0                 0           4,467         4,467
                                                                                                                 -----------
  Comprehensive income (loss)                                                                                    $  (295,361)
                                                                                                                 -----------
  Common stock issued                  200,000        123,834              0                 0               0       123,834
  Purchase of common stock          (2,164,894)    (1,251,997)             0                 0               0    (1,251,997)
  Receivable - unearned
    ESOP shares                              0              0              0          (100,000)              0      (100,000)
  Repayments from ESOP                       0              0              0             2,907               0         2,907
                                    ----------   ------------   ------------   ---------------   -------------   -----------
BALANCE,
  DECEMBER 31, 2001                 12,924,480   $  8,588,793   $ (1,596,862)  $       (97,093)  $      (6,001)  $ 6,888,837

  Net income (loss)                          0              0        398,311                 0               0       398,311
                                                                                                                 -----------
  Change in unrealized gain
    (loss) on securities
    available-for-sale                       0              0              0                 0         (20,159)      (20,159)
                                                                                                                 -----------
  Comprehensive income (loss)                                                                                    $   378,152

  Purchase of common stock            (454,000)      (227,264)             0                 0               0      (227,264)
  Repayments from ESOP                       0              0              0             8,248               0         8,248
                                    ----------   ------------   ------------   ---------------   -------------   -----------
BALANCE,
 DECEMBER 31, 2002                  12,470,480   $  8,361,529   $ (1,198,551)  $       (88,845)  $     (26,160)  $ 7,047,973
                                    ==========   ============   ============   ===============   =============   ===========
</TABLE>




     THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
            CONSOLIDATED FINANCIAL STATEMENTS


PAGE                               5

<TABLE>
<CAPTION>
                             INTEGRITY MUTUAL FUNDS, INC. AND SUBSIDIARIES
                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                          FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000


                                                                    2002            2001            2000
                                                                    ----            ----            ----
<S>                                                                 <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)                                           $     398,311   $    (299,828)  $      40,404
  Adjustments to reconcile net income (loss) to
    net cash provided by operating activities:
     Depreciation and amortization                                  202,464         578,534         601,824
     Sales commissions amortized/charged off                        487,971         613,738         587,740
     Consulting expense                                                   0          28,270               0
     Minority interest                                              (55,657)        (26,367)        (31,667)
     Loss on sale of assets                                               0             (28)              0
  Effects on operating cash flows due to changes in:
     Cash segregated for customers                                  (20,739)        (82,966)       (215,570)
     Accounts receivable                                           (602,499)         75,332        (234,556)
     Prepaids                                                        21,074         (39,210)        (26,342)
     Deferred sales commissions capitalized,
      net of CDSC collected                                        (187,600)       (185,589)         25,192
     Deferred tax                                                  (103,434)        (45,148)        232,830
     Other assets                                                   (83,124)        (16,227)        (17,127)
     Service fees payable                                           (11,802)          2,439         (18,861)
     Accounts payable                                               (39,337)         29,461         (11,546)
     Other liabilities                                              416,683         (12,050)        257,546
                                                              -------------   -------------   -------------
  Net cash provided by operating activities                   $     422,311   $     620,361   $   1,189,867
                                                              -------------   -------------   -------------
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property and equipment                          $     (88,370)  $    (125,501)  $    (365,425)
  Purchase of available-for-sale securities                          (1,059)         (1,730)        (55,310)
  Proceeds from sale of
    available-for-sale securities                                         0          22,483               0
  Purchase of goodwill                                           (1,117,711)         (9,315)       (364,761)
                                                              -------------   -------------   -------------
  Net cash used by investing activities                       $  (1,207,140)  $    (114,063)  $    (785,496)
                                                              -------------   -------------   -------------
</TABLE>




<PAGE>                             6

<TABLE>
<CAPTION>
                        CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                                                              2002             2001            2000
                                                              ----             ----            ----
<S>                                                           <C>              <C>             <C>
CASH FLOWS FROM FINANCING ACTIVITIES
  Reduction of short-term borrowing                    $      (94,448)  $            0   $    (200,000)
  Redemption of common stock                                 (164,011)      (1,251,997)       (141,355)
  Issuance of common stock                                          0           38,614               0
  Issuance of subordinate debentures                                0          120,000         525,000
  Issuance of subordinate commercial notes                    561,000                0               0
  Short-term borrowing                                        650,040                0               0
  Reduction of notes payable                                  (13,064)         (81,296)        (13,488)
  Redemption of subordinate debentures                        (50,000)               0               0
  Redemption of debentures                                   (940,000)               0         (10,000)
  ESOP loan                                                         0         (100,000)              0
  Repayments from ESOP                                          8,248            2,907         100,890
                                                       --------------   --------------   -------------
  Net cash provided (used) by financing
    activities                                         $      (42,235)  $   (1,271,772)  $     261,047
                                                       --------------   --------------   -------------
NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS                                          $     (827,064)  $     (765,474)  $     665,418

CASH AND CASH EQUIVALENTS
  AT BEGINNING OF YEAR                                      1,834,683        2,600,157       1,934,739
                                                       --------------   --------------   -------------
CASH AND CASH EQUIVALENTS
  AT END OF YEAR                                       $    1,007,619   $    1,834,683   $   2,600,157
                                                       ==============   ==============   =============
SUPPLEMENTARY DISCLOSURE OF
 CASH FLOW INFORMATION
  Cash paid during the year for:
    Interest                                           $      328,423   $      307,534   $     217,273


SUPPLEMENTAL SCHEDULE OF NONCASH
  INVESTING AND FINANCING ACTIVITIES
  Change in unrealized gain (loss) on
    securities available-for-sale                      $      (20,159)  $        4,467   $     (10,468)
  Purchase of goodwill with common stock               $            0   $       56,950   $           0
  Purchase of goodwill with temporary capital          $      500,000   $            0   $           0
  Purchase of goodwill with long-term liability        $      250,000   $            0   $           0
  Purchase of goodwill with short-term liability       $      250,000   $            0   $           0
  Shares exchanged for services                        $            0   $       28,270   $           0
  Reduction of notes payable                           $            0   $        4,988   $      38,899
  Reduction in other assets                            $      (63,254)  $            0   $           0
  Reduction in common stock                            $      (63,254)  $            0   $           0
</TABLE>




     THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
               CONSOLIDATED FINANCIAL STATEMENTS


<PAGE>                             7

                    INTEGRITY MUTUAL FUNDS, INC. AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001 AND 2000

NOTE 1 -  NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

          The nature of operations and significant accounting policies of
          Integrity Mutual Funds, Inc. and Subsidiaries are presented to assist
          in understanding the Company's consolidated financial statements.

          NATURE OF OPERATIONS - Integrity Mutual Funds, Inc. and Subsidiaries
          (the "Company," formerly known as ND Holdings, Inc.) was established
          in September 1987 as a North Dakota corporation.  The Company derives
          its revenue primarily from investment advisory, asset management,
          underwriting, and transfer agent services to sponsored mutual funds,
          and commissions earned as distributor for various mutual funds and
          insurance products.  Headquartered in Minot, North Dakota, the
          Company is marketing its services throughout the Midwestern United
          States and California.  On May 31, 2002, the shareholders of the
          Company approved a change in the Company name from ND Holdings, Inc.
          to Integrity Mutual Funds, Inc.

          PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
          include the accounts of Integrity Mutual Funds, Inc. and its wholly-
          owned subsidiaries, ND Money Management, Inc., ND Capital, Inc., ND
          Resources, Inc., Ranson Capital Corporation, ARM Securities
          Corporation, Capital Financial Services, Inc., and its majority owned
          subsidiary Magic Internet Services, Inc.  All significant
          intercompany transactions and balances have been eliminated in the
          accompanying consolidated financial statements.

          CONCENTRATIONS - The Company derives its revenue primarily from
          investment advisory and administrative services provided to sponsored
          mutual funds, a majority of which are state-specific municipal bond
          funds as well as revenues derived from retail brokerage activities.
          Company revenues are largely dependent on the total value and
          composition of assets under management, which include state-specific
          municipal bonds, as well as the sales activity of registered brokers
          operating as independent contractors.  Accordingly, fluctuations in
          financial markets and the composition of assets under management
          impact revenues and results of operations.

          USE OF ESTIMATES - The preparation of consolidated financial
          statements in conformity with accounting principles generally
          accepted in the United States of America 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 consolidated financial statements and the reported
          amounts of revenues and expenses during the reporting period.
          Actual results could differ from those estimates.

          REVENUE RECOGNITION - Investment advisory fees, transfer agent fees
          and service fees are recorded as revenues as the related services
          are provided by the Company to sponsored mutual funds. Commission
          income and the related clearing expenses are recorded on a trade-date
          basis as securities transactions occur. Internet fees are recorded
          as revenues as the related services are provided.

          CASH AND CASH EQUIVALENTS - The Company's policy is to record all
          liquid investments with original maturities of three months or less
          as cash equivalents.  Liquid investments with maturities greater
          than three months are recorded as investments.



<PAGE>                              8

NOTE 1 - (CONTINUED)

          INVESTMENTS - Investments in equity securities that have readily
          determinable fair values are classified and accounted for as
          available-for-sale.  Available-for-sale securities consist of
          investments in the Company's sponsored mutual funds and are recorded
          at fair value, with the change in fair value recorded as a component
          of other comprehensive income in the equity section of the balance
          sheet.  Cost of securities sold is recognized using the specific
          identification method.

          PROPERTY AND EQUIPMENT - Property and equipment is stated at cost
          less accumulated depreciation computed on straight-line and
          accelerated methods over estimated useful lives as follows:

                     Equipment              5-7 years
                     Building                40 years

          DEFERRED SALES COMMISSIONS - Sales commissions paid to brokers and
          dealers in connection with the sale of shares of the sponsored mutual
          funds sold without  a front-end sales charge(B shares), are
          capitalized and amortized on a straight line basis over a period not
          exceeding eight years, which approximates the period of time during
          which deferred sales commissions are expected to be recovered from
          distribution plan payments received from various sponsored mutual
          funds and potential contingent deferred sales charges received from
          shareholders of the various sponsored mutual funds.  Contingent
          deferred sales charges received by the Company are recorded as a
          reduction of unamortized deferred sales commissions. In accordance
          with Statement of Position 98-5, the commissions paid for the sale
          of Integrity Fund of Funds, Inc.'s shares have been expensed as
          incurred.  The contingent deferred sales charges received from early
          redemptions from Integrity Fund of Funds, Inc. have been recorded as
          revenue.  Effective January 1, 2001 the Company is amortizing sales
          commissions over 5 years for tax purposes.

          ADVERTISING - Costs of advertising and promotion of sponsored mutual
          funds are expensed as incurred.

          EARNINGS PER COMMON SHARE - Basic earnings per common share was
          computed using the weighted average number of shares outstanding of
          13,919,746 in 2002, 12,938,050 in 2001 and 15,014,290 in 2000.
          Diluted earnings per common share is computed using the weighted
          average number of shares outstanding adjusted for share equivalents
          arising from unexercised stock warrants, stock options, and written
          put options.  The weighted average shares outstanding used in
          computing diluted earnings per common share was 14,503,079 in 2002,
          12,938,050 in 2001 and 15,014,290 in 2000.

          The Company completed a 2 for 1 (2:1) forward stock split in July of
          2002.  All references in the consolidated financial statements to
          earnings per share and average number of shares outstanding have been
          restated to reflect the stock split for all periods presented.

          COVENANT NOT TO COMPETE - Covenant not to compete is carried on the
          books at cost less accumulated amortization computed using the
          straight-line method over the life of the covenant, which is four
          years.

          INCOME TAXES - The Company files a consolidated income tax return
          with its wholly-owned subsidiaries.  The amount of deferred tax
          benefit or expense is recognized as of the date of the consolidated
          financial statements, utilizing currently enacted tax laws and
          rates.  Deferred tax benefits are recognized in the financial
          statements for the changes in deferred tax assets between years.

<PAGE>                            9


NOTE 1 - (CONTINUED)

          RECLASSIFICATION - Certain amounts from 2001 and 2000 have been
          reclassified to conform with the 2002 presentation.  The assets that
          were previously classified as "Investment Adviser's Agreements" have
          been reclassified to "Goodwill."  These assets represent the "cost
          of a purchased subsidiary (The Ranson Company and its wholly-owned
          subsidiary, Ranson Capital Corporation) in excess of the amounts
          assigned to assets and liabilities."  The purchase of The Ranson
          Company and its wholly-owned subsidiary represents the purchase of
          the entire company and its operations, equipment, distribution
          network, management operations and rights related to the Ranson
          Managed Portfolios.  Therefore, these assets are goodwill and are
          accounted for as such.  These reclassifications, in the amount of
          $4,350,657, had no effect on the Company's net income.

NOTE 2 -  CASH AND CASH EQUIVALENTS

          Cash and cash equivalents at December 31, 2002 and 2001 consist of
          the following:
<TABLE>
<CAPTION>
                                                          Current
                                               Current    Interest                 Amount
                                                                                   ------
                                              Maturity      Rate            2002            2001
                                              --------      ----            ----            ----
<S>                                            <C>          <C>             <C>             <C>
     Cash in checking                         Demand         -     $     77,785    $     42,871
     Morgan Stanley Money
       Market Accounts                        Demand       0.93 %     1,249,109       2,090,348
     Less cash segregated for
       the exclusive benefit
       of customers                                                    (319,275)       (298,536)
                                                                   ------------    ------------
                                                                   $  1,007,619    $  1,834,683
                                                                   ============    ============
</TABLE>

NOTE 3 -  INVESTMENTS IN AND TRANSACTIONS WITH SPONSORED MUTUAL FUNDS

          The Company's investments in sponsored mutual funds held as
          available-for-sale at December 31, 2002 and 2001:

                                                     Gross
                                     Aggregate     Unrealized    Aggregate Fair
                                        Cost     Holding Losses      Value
                                        ----     --------------      -----
          2002 - Mutual Funds       $   135,616   $    (26,160)   $   109,456
                                    ===========   ============    ===========
          2001 - Mutual Funds       $   134,557   $     (6,001)   $   128,556
                                    ===========   ============    ===========

          Dividends earned on the Company's investments in sponsored mutual
          funds aggregated $1,059 in 2002, $1,730 in 2001 and $8,310 in 2000.

          The Company provides services to the Integrity Mutual Funds and
          Ranson Managed Portfolios which had aggregate net assets under
          management at December 31, 2002 of approximately $296 million.
          All services rendered by the Company are provided under contracts
          that definitively set forth the services to be provided and the fees
          to be charged.  The majority of these contracts are subject to
          periodic review and approval by each of the fund's Board of
          Directors, Trustees and Shareholders.  Revenues derived from services
          rendered to the sponsored mutual funds were $2,856,158 in 2002,
          $2,963,300 in 2001 and $3,088,928 in 2000.

          Accounts receivable from the sponsored mutual funds aggregated
          $246,000 and $255,000 at December 31, 2002 and 2001, respectively.


<PAGE>                            10

NOTE 4 -  PROPERTY AND EQUIPMENT

          Property and equipment at December 31 consists of:

                                                       2002           2001
                                                       ----           ----
              Office furniture and equipment       $   889,146    $   826,692
              Building and land                      1,245,573      1,222,544
                                                   -----------    -----------
                                                   $ 2,134,719    $ 2,049,236
              Accumulated depreciation and
                Amortization                          (730,093)      (607,597)
                                                   -----------    -----------
                                                   $ 1,404,626    $ 1,441,639
                                                   ===========    ===========

          Depreciation expense totaled $122,711, $142,317 and $175,332 in 2002,
          2001 and 2000, respectively.

NOTE 5 -  BUSINESS ACQUISITIONS

          PURCHASE COMBINATIONS - On January 15, 2002, the Company acquired
          100% of the equity stock of Capital Financial Services, Inc. ("CFS"),
          a full-service brokerage firm based in Madison, Wisconsin.  CFS is
          registered with the SEC as an investment advisor and broker-dealer
          and also with the NASD as a broker-dealer.  CFS specializes in
          providing investment products and services to independent investment
          representatives, financial planners, and investment advisors and
          currently supports approximately 90 investment representatives and
          investment advisors.

          The purchase consideration, taking into effect the 2 for 1 (2:1)
          forward stock split effective July 1, 2002, was composed of
          $1,140,000 in cash, 1,500,000 shares of the Company common stock to
          be issued in three (3) annual installments beginning at the date of
          purchase, a $250,000 convertible debenture to be issued one year
          from the purchase date, as well as 500,000 options to purchase common
          stock of the Company at an option strike price of $0.50 per share.
          Because there is no market for the Company's options and the strike
          price is above the market price, the options have been determined to
          have negligible value.

          Pursuant to the terms of the purchase agreement whereby CFS was
          acquired, 1,500,000 shares of $.0001 par value common stock of the
          Company will be issued in three (3) annual installments beginning at
          the date of purchase.  The shares will have a put right, whereby the
          installment shares may be put back to the Company at the rate of
          $0.50 per share.  The put right may be exercised at any time within
          the ninety (90) day period following the first, second, and third
          anniversaries of the purchase.  The put rights are non-accumulative
          and each installment will expire if not exercised during the
          scheduled redemption period.

          Also pursuant to the terms of the purchase agreement whereby CFS was
          acquired, on January 15, 2003, the Company will issue convertible
          debentures divided among the prior shareholders of CFS in the total
          amount of $250,000, subject to certain provisions of the Stock
          Purchase Agreement dated January 15, 2002, which may increase or
          decrease the amount of the debenture to reflect undisclosed or
          unknown liabilities of CFS, loss of producing broker revenue base,
          recovery from third parties, and the costs of such recovery.  The
          debenture principal will be payable January 15, 2006 and will pay
          interest on the principal sum from January 15, 2003 at the rate of
          four percent (4%) per annum on a semi-annual basis beginning on
          July 15, 2003 and thereafter on January 15th and July 15th of each
          year until the principal balance is paid.  All payments will be
          applied first to interest and any remainder to reduction of
          principal.  The debenture will be convertible as follows:  beginning
          on the date of issuance and until the principal is paid in accordance
          with the terms of this agreement, the holder of this convertible
          debenture shall have the option to convert all or any portion

<PAGE>                               11

NOTE 5 - (CONTINUED)

          of this convertible debenture to $.0001 per value common stock of the
          Company at the rate of two shares for each one dollar of convertible
          debenture (2 shares per $1.00 converted) issued by the debenture
          holder.

          The primary reasons for the acquisition were to acquire a full-
          service retail brokerage distribution system as well as to acquire
          the investment advisory service operations of CFS.  The primary
          factors contributing to the purchase price were the presence of an
          established group of approximately 90 investment representatives
          and investment advisors, the existing relationship with a reputable
          clearing firm, the fact that approximately 95% of the business of CFS
          is processed as packaged products, i.e. mutual funds and insurance
          products, and to capture the revenue stream of approximately $6.4
          million.  The estimated fair value of the equity of CFS was recorded
          at $78,392.  The excess of purchase price over the estimated fair
          value of the equity of CFS was $2,117,711, which has been recorded
          as goodwill.

          The operations and financial position of CFS were accounted for in
          the consolidated financial statements of the Company beginning
          January 1, 2002.

          The following unaudited proforma summary presents the consolidated
          results of operations of the Company as if the business combination
          had occurred on January 1, 2000.

                                             (Unaudited)         (Unaudited)
                                             Year Ended          Year Ended
                                         December 31, 2001   December 31, 2000
                                         -----------------   -----------------
          Revenues                         $  14,537,000       $  15,483,000
          Net earnings                          (185,000)            294,000
          Basic earnings per share                  (.01)                .02
          Diluted earnings per share                (.01)                .02

          On September 14, 2001, the Company acquired all the assets of North
          Dakota Investment Advisors, Inc. in exchange for 67,000 shares of
          the Company's common stock.  As a result of failure of certain
          conditions of the purchase agreement, on June 24, 2002, the Company
          rescinded the purchase dated September 14, 2001, and obtained return
          and cancellation of the Company's common shares.

          On May 25, 2000, the company acquired all the assets of ARM
          Securities Corporation (ARM).  The purchase price was $896,000, of
          which $566,000 was for cash, and the remaining $330,000 was for
          goodwill.  The consolidated financial statements include the
          operating results of the business from May 1, 2000.

          The following unaudited pro forma summary presents the consolidated
          results of operations of the Company as if the business combination
          had occurred on January 1, 2000.

                                                 (Unaudited)
                                                 Year Ended
                                             December 31, 2000
                                             -----------------
          Revenues                             $   8,621,000
          Net income (loss)                           20,000
          Basic earnings per share                       .00
          Diluted earnings per share                     .00

          The above amounts are based upon certain assumptions and estimates
          which the Company believes are reasonable.  The pro forma results do
          not necessarily represent results which would have occurred if the
          business combination had taken place at the date indicated or what
          the results of operations may be in any future period.

<PAGE>                             12


NOTE 5 - (CONTINUED)

          October 1, 1999, the Company formed a corporation called Magic
          Internet Services, Inc.  At the same time, the newly formed
          subsidiary of the Company acquired all the assets of Magic Internet
          Services (a North Dakota partnership).  The purchase price was
          $980,392, of which $260,000 was allocated to equipment, $218,000 was
          for a covenant not to compete, which is being amortized over 4 years,
          and the remaining balance of $502,392 was for goodwill, which is
          being amortized over 15 years.  The purchase price was funded by
          issuing a 49% ownership of the newly formed subsidiary to the
          partners of the acquired partnership (hereinafter referred to as the
          Minority Interest).  The parent received 51% of the stock of the
          newly formed corporation for its $500,000 payment to the partners of
          Magic Internet Services.  The $500,000 consisted of $400,000 cash
          and 200,000 shares of ND Holdings, Inc. stock at $.50 share price.
          The consolidated financial statements include the operating results
          of the business from the date of acquisition.

NOTE 6 -  LONG-TERM DEBT

          Long-term debt at December 31, 2002 and 2001 was as follows:
<TABLE>
<CAPTION>
                                                                 Current
                                                   Rate          Portion           2002           2001
                                                   ----          -------           ----           ----
          <S>                                      <C>             <C>             <C>            <C>
          Long-term debt:
           Debentures                              10.00%               0                0         940,000
           Corporate notes                         10.00%               0          962,000         962,000
           First Western Bank                       6.75%          17,298          461,311         474,375
           Subordinate debentures                  12.00%               0          595,000         645,000
           Subordinate commercial notes             9.00%               0          561,000               0
           Convertible debenture                    4.00%               0          250,000               0
                                                            -------------    -------------   -------------
           Totals                                           $      17,298    $   2,829,311   $   3,021,375
                                                            =============    =============   ==============
</TABLE>

          A summary of the terms of the current long-term debt agreements
          follow:

          DEBENTURES - The Company approved a $1 million intra-state debenture
          offering limiting the sale in North Dakota to North Dakota residents
          only.  The debentures do not represent ownership in the Company.
          The debentures carried an interest rate of 10% per annum, payable
          semi-annually, and matured September 1, 2002.  The Company could
          call the debentures at 2% over par.  On September 1, 2002, the
          liability matured and was paid in full.

          CORPORATE NOTES - The Company had an intra-state offering of
          corporate notes limiting the sale to North Dakota residents only.
          The notes do not represent ownership of the Company.  As of December
          31, 2002, $962,000 in notes were outstanding.  The notes carry an
          interest rate of 10% per annum, payable annually, and mature  June
          30, 2004.  The Company can call the notes at par anytime after
          January 1, 2001.

          FIRST WESTERN BANK - In June of 1999, the Company converted its
          outstanding balance of $500,000 borrowed on its bank line-of-credit
          to long-term debt.  The debt was refinanced in December of 2002.
          The debt carries an interest rate of 6.75%, with monthly payments
          of $4,105.  On January 1, 2006, the remaining balance will be due
          in full.


<PAGE>                             13


NOTE 6 - (CONTINUED)

          SUBORDINATE DEBENTURES - The company approved a $1 million intra-
          state subordinated debenture offering limiting the sale in North
          Dakota to North Dakota residents only.  The subordinated debentures
          do not represent ownership in the Company.  As of December 31, 2002,
          $595,000 in subordinate debentures were outstanding.  The subordinate
          debentures carry an interest rate of 12% per annum, payable semi-
          annually, and mature June 30, 2005.  The company can call the
          subordinate debentures at par anytime after July 1, 2001.

          SUBORDINATE COMMERCIAL NOTES - The Company approved a $1 million
          intra-state subordinated commercial note offering limiting the sale
          in North Dakota to North Dakota residents only.  The subordinated
          commercial notes do not represent ownership in the Company.  As of
          December 31, 2002, $561,000 in subordinate commercial notes were
          outstanding.  The subordinate commercial notes carry an interest
          rate of 9% per annum, payable semi-annually, and mature June 30,
          2008.  The company can call the subordinate commercial notes at par
          anytime after July 1, 2003.

          CONVERTIBLE DEBENTURES - As part of the acquisition of Capital
          Financial Services, Inc. (See Note 5) on January 15, 2003, the
          Company will issue convertible debentures divided among the prior
          shareholders of CFS in the total amount of $250,000, subject to
          certain provisions of the Stock Purchase Agreement dated January
          15, 2002, which may increase or decrease the amount of the debenture
          to reflect undisclosed or unknown liabilities of CFS, loss of
          producing broker revenue base, recovery from third parties, and the
          costs of such recovery.  The debenture principal will be payable
          January 15, 2006 and will pay interest on the principal sum from
          January 15, 2003 at the rate of four percent (4%) per annum on a
          semi-annual basis beginning on July 15, 2003 and thereafter on
          January 15th and July 15th of each year until the principal balance
          is paid.  All payments will be applied first to interest and any
          remainder to reduction of principal.  The debenture will be
          convertible as follows:  beginning on the date of issuance and
          until the principal is paid in accordance with the terms of this
          agreement, the holder of this convertible debenture shall have the
          option to convert all or any portion of this convertible debenture
          to $.0001 per value common stock of the Company at the rate of two
          shares for each one dollar of convertible debenture (2 shares per
          $1.00 converted) issued by the debenture holder.

          The aggregate amount of required future payments on the above long-
          term debt at December 31, 2002, is as follows:


                     Year ending December 31,
                            2003             $    17,298
                            2004                 981,460
                            2005                 616,174
                            2006                 653,379
                            2007                       0
                            2008                 561,000
                                             -----------
                            Total due        $ 2,829,311
                                             ===========


<PAGE>                             14

NOTE 7 -  INCOME TAXES

          The provision for income taxes is based on earnings before income
          taxes reported for financial statement purposes and consisted of
          the following:
<TABLE>
<CAPTION>
                                                  2002           2001          2000
                                                  ----           ----          ----
          <S>                                     <C>            <C>           <C>
          Current income taxes
            Federal                          $     98,000   $          0   $         0
            State                                  28,000              0             0
                                             ------------   ------------   -----------
            Total current payable            $    126,000   $          0   $         0

          Deferred tax benefit (expense)
            Federal and state                $     64,001   $    (20,148)  $   232,830
                                             ------------   ------------   -----------
          Total provision for income tax
            Benefit (expense)                $    (61,999)  $     20,148   $  (232,830)
                                             ============   ============   ===========
</TABLE>

          Deferred taxes arise because of different tax treatment between
          financial statement accounting and tax accounting, known as
          "temporary differences."  The Company records the tax effect of these
          temporary differences as "deferred tax assets" (generally items that
          can be used as a tax deduction or credit in future periods) and
          "deferred tax liabilities" (generally items for which the Company has
          received a tax deduction and have not yet been recorded in the
          consolidated statement of operations).  Deferred tax assets
          (liabilities) were comprised of the following:

                                                     2002           2001
                                                     ----           ----
          Deferred tax assets:
            Net operating loss carryforwards    $    101,000   $    223,000
            Other                                        500          5,500
                                                ------------   ------------
            Total deferred tax assets           $    101,500   $    228,500
                                                ------------   ------------
          Deferred tax liabilities:
            Accumulated depreciation            $     21,500   $      7,000
            Accumulated amortization                 250,000        456,000
            Other                                          0         38,934
                                                ------------   ------------
            Total deferred tax liabilities      $    271,500   $    501,934
                                                ------------   ------------
          Net deferred tax liability            $    170,000   $    273,434
                                                ============   ============

          A reconciliation of the difference between the expected income tax
          expense (benefit) is computed at the U.S. Statutory income tax rate
          of 35% and the Company's income tax expense is shown in the following
          table:

<TABLE>
<CAPTION>
                                                   2002            2001          2000
                                                   ----            ----          ----
          <S>                                      <C>             <C>           <C>
          Federal taxes (benefit)
            at statutory rates                $    147,000   $    (113,000)  $   111,000

          State taxes (benefit),
            net of federal tax effect               22,000         (18,000)       17,500

          Taxes on nondeductible amort-
            ization at federal
            statutory rates                              0          95,000       106,000

          Keyman life insurance proceeds           (87,500)              0             0

          Other                                    (19,501)         15,852        (1,670)
                                              ------------   -------------   -----------
          Actual tax (benefit) expense        $     61,999   $     (20,148)  $   232,830
                                              ============   =============   ===========
</TABLE>

<PAGE>                             15


NOTE 7 - (CONTINUED)

          Included in "other" are amounts separately allocated to stockholders'
          equity to recognize the related tax effect of the change in net
          unrealized gain or loss on securities available for sale and the
          ESOP plan activity for the years ended December 31, 2002, 2001 and
          2000.  In each of these years the amounts were insignificant.

NOTE 8 -  STOCK WARRANTS, STOCK SPLITS, AND STOCK OPTIONS

          The Company has authorized 2,100,000 perpetual warrants to certain
          organizers, directors, officers, employees and shareholders of the
          Company.  All warrants were issued between 1987 and 1990 and were
          accounted for in accordance with the provisions of Accounting
          Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued
          to Employees.  No compensation expense was recorded for these
          warrants as the exercise price exceeded the market price of the stock
          at the date of issue.  The Company plans to continue to apply APB
          Opinion No. 25 in accounting for its warrants.  In the event
          additional warrants are issued, appropriate results will be disclosed
          in accordance with the provisions of Statement of Financial
          Accounting Standard, No.  123.  These warrants, at the date of issue,
          allowed for the purchase of shares of stock at $2.00 per share.  The
          exercise price of the warrants will be adjusted to reflect stock
          splits of 2 for 1 in 2002, and 11 for 10 in 1990 and 1989.  2,000
          warrants (adjusted for the 2 for 1 stock split in 2002) were
          exercised in 1997 leaving an outstanding balance of 2,098,000
          warrants as of December 31, 2002.

          The Company has entered into employment agreements with several key
          employees of the Company.  Upon execution of these employment
          agreements, a one time granting of stock options took effect.  These
          options are considered to be fully vested and have a perpetual life.
          Each employment contract stated the strike price for which options
          were granted.  In addition, several of the contracts will grant
          options should the employee reach specified performance goals.  The
          number of shares authorized for granting of options under these
          employment agreements is limited only by continued employment and the
          ability to reach these performance goals.  As of December 31, 2002,
          no options have been granted as a result of an employee reaching
          these performance goals.  With the exception of the Chief Executive
          Officer's employment contract, there are no severance packages,
          buyout clauses, or other forms of commitments.  With regards to the
          Chief Executive Officer's employment contract, which will expire on
          September 1, 2004, in the event of termination or for certain other
          reasons stated in the employment agreement, the remaining portion
          of the contract shall be paid.  In the event of death or disability,
          the Company will continue to pay the Chief Executive Officer's
          estate for a six month period.

          As part of the acquisition of Capital Financial Services, Inc. (see
          Note 5), 500,000 options were granted at a strike price of $.50.
          These options are fully vested and expire ten years from the
          acquisition date.

          As permitted by SFAS No. 123, the Company elected to account for
          stock option plans under the provisions of APB Option No. 25.
          Accordingly, no compensation cost has generally been recognized for
          stock options granted.  Had the Company adopted SFAS No. 123, the pro
          forma effects on net earnings, basic earnings per share, and diluted
          earnings per share for the last two years would have been as follows:


<PAGE>                             16


2002             2001
                                                  ----             ----
          Net earnings (loss)
            As reported                       $   398,311     $   (299,828)
            Pro forma                             300,000         (456,000)
          Basic earnings (loss) per share
            As reported                       $       .03     $       (.02)
            Pro forma                                 .02             (.04)
          Diluted earnings (loss) per share
            As reported                       $       .03     $       (.02)
            Pro forma                                 .02             (.04)

          The fair value of each option was estimated on the date of the grant
          using the Black-Scholes option pricing model with the following
          assumptions:

                                                     2002              2001
                                                     ----              ----
          Risk-free interest rate                    4.39%            4.08%
          Expected dividend yield                       0%               0%
          Expected stock price volatility              70%              71%
          Expected life of options                 7 years          7 years

          Option activity for the last two years was as follows:

                                                              Weighted Average
                                                               Exercise Price
                                                      Shares     per Share
                                                      ------     ---------
          Outstanding on January 1, 2001                    0    $    .00
            Granted                                   800,000         .43
            Exercised                                       0         .00
            Canceled                                        0        .00
                                                    ---------    -------
          Outstanding on December 31, 2001            800,000        .43
            Granted                                   520,000        .50
            Exercised                                       0        .00
            Canceled                                        0        .00
                                                    ---------    -------
          Outstanding on December 31, 2002          1,320,000    $   .46
                                                    =========    =======

          Exercisable options at the end of 2002 and 2001 were 1,320,000 and
          800,000, respectively.  The following table summarizes information
          concerning options outstanding and exercisable as of December 31,
          2002:

<TABLE>
<CAPTION>
                                                   Weighted
                                                    Average        Weighted                        Weighted
                                                   Remaining        Average                         Average
              Range of                 Number     Contractual      Exercise           Number       Exercise
          Exercise Prices           Outstanding   Life (Years)       Price         Exercisable       Price
          -------------------------------------------------------------------------------------------------
          <S>                          <C>            <C>             <C>               <C>            <C>
          $  .00 to $  .49             820,000     Perpetual         $  .43           820,000        $  .43
          $  .50 to $ 1.00             500,000            10         $  .50           500,000        $  .50
          -------------------------------------------------------------------------------------------------
          $  .00 to $ 1.00           1,320,000            10*        $  .46         1,320,000        $  .46
<FN>
          * Excludes options with a perpetual life
</FN>
</TABLE>


NOTE 9 -  EMPLOYEE BENEFIT PLANS

          The Company sponsors a 401(K) plan for all its employees.  This plan
          is solely funded by employee elective deferrals.  The only expenses
          of the plan paid for by the Company are the trustees fees, which
          were insignificant in 2002, 2001 and 2000.

<PAGE>                              17

NOTE 9 - (CONTINUED)

          The Company established an employee stock ownership plan ("ESOP")
          effective January 1, 1999.  Pursuant to the ESOP, each year the
          Company will determine the amount to contribute to the plan.
          Contributions are made at the discretion of the Board of Directors.
          To be eligible to participate in the plan, an employee must have
          completed one year of service and have attained age 21.

          During 2001, the ESOP purchased 208,000 shares of the Company's
          common stock, at a weighted average price of $.48 per share.  The
          purchase was funded with a loan of $100,000 from the Company,
          which is collateralized by the unallocated Company shares owned
          by the ESOP.  The loan will be repaid primarily from contributions
          by the company.  The outstanding principal balance of the loan as
          of December 31, 2002 was $89,000 and the interest rate is 7% over a
          15 year life.  All previous loans to the ESOP have been paid in
          full and shares purchased by those loans have been allocated to
          employees.

          The shares owned by the ESOP are held by a third party trustee
          and released for allocation to participants as repayments of the
          loan are made.  The number of shares released for allocation in any
          year is based upon the ratio of current year principal and interest
          payments to the total current year and projected future year's
          principal and interest payments.  Shares of common stock are
          allocated to each employee based on the relationship of their total
          compensation to the total compensation of all participants.

          At December 31, 2002 and 2001, cumulative allocated shares remaining
          in the trust were 525,296 and 516,000 respectively, and unallocated
          shares were 198,704 and 208,000 respectively, of which 13,944 and
          9,296 respectively, were committed-to-be allocated.  Total ESOP
          contribution expense recognized was $6,362, $33,958 and $25,427 for
          the years ended December 31, 2002, 2001, and 2000 respectively.

NOTE 10 - NET CAPITAL REQUIREMENTS

          The Company's broker-dealer subsidiaries (ND Capital, Inc., Ranson
          Capital Corporation, ARM Securities Corporation, and Capital
          Financial Services, Inc.) are member firms of the National
          Association of Securities Dealers, Inc. and are registered with
          the Securities and Exchange Commission (SEC) as broker-dealers.
          Under the Uniform Net Capital Rule (Rule 15c3-1 under the
          Securities Exchange Act of 1934), the subsidiaries are required
          to maintain a minimum net capital and a ratio of aggregate
          indebtedness to net capital, as defined, of not more than 15 to 1.
          At December 31, 2002, these subsidiaries had net capital of
          $211,416, $171,763, $370,075 and $252,017; minimum net capital
          requirements of $25,000, $5,000, $25,000 and $25,208; excess net
          capital of $186,416, $166,763, $345,075, and $226,809 and ratios of
          aggregate indebtedness to net capital of .09 to 1, .42 to 1, .
          45 to 1, and 1.5 to 1, respectively.  The subsidiaries are exempt
          from the reserve requirements of Rule 15c3-3.

NOTE 11 - OPERATING SEGMENTS

          Integrity Mutual Funds, Inc. and Subsidiaries, Inc., organizes its
          business units into three reportable segments: mutual fund services,
          internet services, and broker-dealer services. The mutual fund
          services segment acts as investment adviser, distributor and provider
          of administrative service to sponsored and nonproprietary mutual
          funds. The internet services segment provides internet service for
          the Minot and surrounding area. The broker-dealer segment distributes
          shares of nonproprietary mutual funds, and insurance products.


<PAGE>                              18

NOTE 11 - (CONTINUED)

          The company's reportable segments are strategic business units that
          offer different products and services. They are managed separately
          because each business requires different technology and marketing
          strategies. Most of the businesses were acquired as a unit, and the
          management at the time of the acquisition was retained.  The
          accounting policies are the same as those described in the summary
          of significant accounting policies.

As of, and for the year ended, December 31, 2002


<TABLE>
<CAPTION>
                                           Mutual Fund       Internet       Broker-Dealer
                                            Services         Services          Services          Total
                                            --------         --------          --------          -----
<S>                                           <C>              <C>               <C>               <C>
Revenue from
  external customers                      $  3,877,046     $    537,288     $ 10,566,615     $ 14,980,949
Intersegment revenues                                0            2,054                0            2,054
Interest revenue                                 8,765                0                0            8,765
Interest expense                               301,227                0            1,912          303,139
Depreciation and
  Amortization                                  99,516           98,539            4,529          202,584
Segment profit (loss)                          200,622          (40,079)         237,768          398,311
Segment assets                              11,938,606          698,696        1,340,621       13,977,923
Expenditure for
  segment assets                                79,516            6,807            2,047           88,370

As of, and for the year ended, December 31, 2001
                                           Mutual Fund       Internet       Broker-Dealer
                                            Services         Services          Services          Total
                                            --------         --------          --------          -----
<S>                                           <C>              <C>               <C>               <C>
Revenue from
  external customers                      $  3,666,483     $    642,584     $  3,858,657     $  8,167,724
Intersegment revenues                            1,800            2,773                0            4,573
Interest revenue                                   121                0                0              121
Interest expense                               317,857               67                0          317,924
Depreciation and
  Amortization                                 426,302          151,688              544          578,534
Segment profit (loss)                         (345,550)         (27,444)          73,166         (299,828)
Segment assets                              10,162,935          840,988        1,272,972       12,276,895
Expenditure for
  segment assets                                76,556           30,123           18,822          125,501

As of, and for the year ended, December 31, 2000
                                           Mutual Fund       Internet       Broker-Dealer
                                            Services         Services          Services          Total
                                            --------         --------          --------          -----
<S>                                           <C>              <C>               <C>               <C>
Revenue from
  external customers                      $  3,641,631     $    668,980     $  3,018,397     $  7,329,008
Intersegment revenues                            7,875            1,303                0            9,178
Interest revenue                                 2,147                0                0            2,147
Interest expense                               250,955              113                0          251,068
Depreciation and
  Amortization                                 428,536          168,885            4,403          601,824
Segment profit (loss)                         (117,337)         (33,021)         190,762           40,404
Segment assets                              11,737,269          946,334        1,334,984       14,018,587
Expenditure for
  segment assets                               293,256           46,835           25,334          365,425
</TABLE>

<PAGE>                               19


NOTE 11 - (CONTINUED)

<TABLE>
<CAPTION>
RECONCILIATION OF SEGMENT INFORMATION               2002           2001           2000
                                                    ----           ----           ----
<S>                                                 <C>            <C>            <C>
Revenues
--------
Total revenues for reportable segments         $ 14,983,003   $  8,172,297   $  7,338,186
Elimination of intersegment revenues                 (2,054)        (4,573)        (9,178)
                                               ------------   ------------   ------------
    Consolidated total revenue                 $ 14,980,949   $  8,167,724   $  7,329,008
                                               ============   ============   ============
Profit
------
Total reportable segment profit                $    398,311   $   (299,828)  $     40,404
                                               ============   ============   ============
Assets
------
Total assets for reportable segments           $ 13,977,923   $ 12,276,895   $ 14,018,587
Elimination of intercompany  receivables         (1,284,014)    (1,062,103)    (1,265,228)
                                               ------------   ------------   ------------
    Consolidated assets                        $ 12,693,909   $ 11,214,792   $ 12,753,359
                                               ============   ============   ============
</TABLE>


NOTE 12 - COMMITMENTS AND CONTINGENCIES

          The company entered into leases for office space as a result of
          purchasing ARM Securities Corporation (Note 5) in Minnesota and
          California.  The monthly lease payments are $900 and $7,409,
          respectively.  The leases will expire March 31, 2003 and January
          31, 2004, respectively.   Total rent expense for the two leases was
          $99,708 and $99,708 for the years ended December 31, 2002 and 2001,
          respectively.

          The company has several leases for various office equipment that
          expire over the next several years through 2006.  The total rent
          expense for these leases was $36,000, $33,000, and $22,000 for
          December 31, 2002, 2001, and 2000 respectively.

          The following is a schedule by years of future minimum rental
          payments on operating leases as of December 31, 2002.

                 Years ending December 31,
                            2003                           $   117,113
                            2004                                29,312
                            2005                                13,873
                            2006                                   822
                                                           -----------
                            Total minimum future rentals   $   161,120
                                                           ===========

NOTE 13 - ACQUIRED INTANGIBLE ASSETS

          Acquired intangible assets consisted of the following as of:

                                       December 31, 2002     December 31, 2001
                                       -----------------     -----------------
          Amortized Intangible Assets
          ---------------------------
          Carrying amount
              Covenant not to compete     $    218,000         $    218,000
                                          ------------         ------------
              Accumulated amortization         177,125              122,624
                                          ------------         ------------
          Aggregate Amortization Expense
          ------------------------------
          For the year ended
              December 31, 2002           $     54,500

          For the year ended
              December 31, 2001           $     54,500

          The remaining unamortized balance of $40,875 will be expensed in 2003.

<PAGE>                              20

NOTE 14 - GOODWILL

          The changes in the carrying amount of goodwill for the year ended
          December 31, 2002 are as follows:
<TABLE>
<CAPTION>
                                        Mutual Fund      Internet   Broker-Dealer
                                         Services        Services      Services          Total
                                         --------        --------      --------          -----
<S>                                        <C>             <C>           <C>              <C>
Balance as of January 1, 2002          $  4,411,123   $    427,034   $    338,916   $  5,177,073
Goodwill acquired during the period               -              -      2,117,711      2,117,711
Impairment losses                                 -              -              -              -
Removal of goodwill based on
    cancellation of prior purchase          (60,467)             -              -        (60,467)
Balance as of December 31, 2002        $  4,350,656   $    427,034   $  2,456,627   $  7,234,317
</TABLE>

          The above segments are tested for impairment on an annual basis in
          the second quarter and any impairment adjustments are reflected at
          that time.  The initial application of SFAS No. 142 and the
          transitional impairment test was completed in the second quarter of
          2002 and resulted in no impairment adjustment for all segments.

NOTE 15 - GOODWILL AND OTHER INTANGIBLE ASSETS - ADOPTION OF STATEMENT 142

          As of January 1, 2002, the Company adopted Statement of Financial
          Accounting Standards (SFAS) No. 142 - Goodwill and Other Intangible
          Assets.  In the following tables, net income, basic earnings per
          share, and diluted earnings per share are shown as if SFAS No.
          142 had been applied to those periods.


          NET INCOME:
                                                       2001           2000
                                                       ----           ----
          Reported net income (loss)            $     (299,828)  $     40,404
          Add back: goodwill amortization              358,103        353,132
          Adjusted net income (loss)            $       58,275   $    393,536

          BASIC EARNINGS PER SHARE:
                                                       2001           2000
                                                       ----           ----

          Reported net income (loss)            $         (.02)  $        .00
          Add back: goodwill amortization                  .02            .03
          Adjusted net income (loss)            $          .00   $        .03

          DILUTED EARNINGS PER SHARE:
                                                       2001           2000
                                                       ----           ----
          Reported net income (loss)            $         (.02)  $        .00
          Add back: goodwill amortization                  .02            .03
          Adjusted net income (loss)            $          .00   $        .03

NOTE 16 - MATERIAL CHANGES IN INSTRUMENTS DEFINING THE RIGHTS OF SHAREHOLDERS

          On May 31, 2002, the shareholders of the Company approved an
          amendment of the Company's Articles of Incorporation which increased
          the authorized common shares of the Company from 20,000,000 shares of
          no par common stock to 1,000,000,000 shares of $.0001 par value
          common stock.  On May 31, 2002, the shareholders also approved an
          amendment of the Company's Articles of Incorporation which authorized
          100,000,000 shares of $.0001 par value preferred stock.  Preferred
          shares have a preference over the common shares with respect to
          future dividends, voting rights, and liquidation in the event of
          dissolution.  The Board of Directors may establish a class or series,
          setting forth the designation of the class or series and fixing the
          relative rights and preferences of the class or series of the
          preferred shares.  The increase in the authorized shares of common
          stock and the authorization for preferred stock will not have any
          immediate effect on the rights of existing shareholders, however,
          the Board of Directors will have the authority to issue authorized
          shares of common stock and create classes of preferred stock within
          the authorized limits

<PAGE>                             21


NOTE 16 - (CONTINUED)

          of preferred stock without requiring future shareholder approval
          of such issuances, except as may be required by applicable law or
          regulations, the Company's governing documents or the rules of any
          stock exchange, Nasdaq, or any automated inter-dealer quotation
          system on which the Company's common stock may then be traded.  The
          Company's shareholders can, therefore, experience a reduction in
          their ownership interest in the Company with respect to earnings per
          share (if any), voting, liquidation value, and book and market value
          if the additional authorized shares are issued.  The holders of the
          Company's common stock have no preemptive rights, which means that
          current shareholders do not have a prior right to purchase any new
          issue of common stock in order to maintain their proportionate
          ownership in the Company.

          On May 31, 2002, the shareholders of the Company approved a two for
          one (2:1) forward stock split of the issued and outstanding common
          stock of the Company which took effect on July 1, 2002.  The forward
          stock split increased the number of issued and outstanding shares of
          common stock of the Company as of July 1, 2002 from approximately
          6,700,000 to approximately 13,400,000.  Except for changes in the
          number of shares of stock issued and outstanding, the rights and
          privileges of holders of shares of common stock remain the same,
          both before and after the forward stock split.  Commencing on July 1,
          2002, each currently outstanding common stock certificate was deemed
          for all corporate purposes to evidence ownership of the increased
          number of shares resulting from the forward stock split.  New stock
          certificates reflecting the number of shares resulting from the
          stock split will be issued only as currently outstanding certificates
          are transferred or upon request of individual shareholders.

NOTE 17 - SUBSEQUENT EVENTS

          In December of 2002, the Company received notification of intent to
          exercise put options in accordance with the purchase agreement to
          acquire Capital Financial Services, Inc. (see Note 5).  On January
          16, 2003, the Company received written notice of exercise along with
          the return of stock certificates representing the first of three
          installments of shares issued, and as a result, $250,000 was paid
          out.  This amount has been included as a current liability in the
          2002 financial statements.

NOTE 18 - NEW PRONOUNCEMENTS

          In July 2002, the FASB issued Statement of Financial Accounting
          Standards No. 146, "Accounting for Costs Associated with Exit or
          Disposal Activities" ("SFAS 146").  SFAS 146 requires that a
          liability for costs associated with an exit or disposal activity be
          recognized and measured initially at fair value only when the
          liability is incurred.  SFAS 146 is effective for exit or disposal
          activities that are initiated after December 31, 2002.  The Company
          does not expect the adoption of SFAS 146 to have a material impact
          on its operating results or financial position.

          In December 2002, the FASB issued Statement of Financial Accounting
          Standards No. 148, "Accounting for Stock-Based Compensation -
          Transition and Disclosure."  This statement amends FASB Statement
          No. 123, "Accounting for Stock-Based Compensation," to provide
          alternative methods of transition for a voluntary change to the
          fair value based method of accounting for stock-based employee
          compensation.  In addition, this Statement amends the disclosure
          requirements of Statement 123 to require prominent disclosures in
          both annual and interim financial statements about the method of
          accounting for stock-based employee compensation and the effect of
          the method used on reported results.  FASB Statement No. 148 is
          effective for years beginning after December 15, 2002.  The Company
          does not expect the adoption of SFAS No. 148 to have a material
          impact on its operating results or financial position.

<PAGE>                               22












ADDITIONAL INFORMATION













<PAGE>                             23


          INDEPENDENT AUDITOR'S REPORT ON ADDITIONAL INFORMATION






To the Stockholders and Directors of
Integrity Mutual Funds, Inc. and Subsidiaries
Minot, North Dakota


Our report on our audit of the basic consolidated financial statements of
Integrity Mutual Funds, Inc. and Subsidiaries for the years ended December 31,
2002, 2001 and 2000, appears on page 1.  Those audits were made for the
purpose of forming an opinion on such consolidated financial statements taken
as a whole.  The information on pages 25 and 26, related  to the 2002, 2001
and 2000 consolidated financial statements, is presented for purposes of
additional analysis and is not a required part of the basic consolidated
financial statements.  Such information, except for that portion marked
"unaudited", on which we express no opinion, has been subjected to the auditing
procedures applied in the audits of the basic consolidated financial
statements, and, in our opinion, the information is fairly stated in all
material respects in relation to the basic consolidated financial statements
for the years ended December 31, 2002, 2001 and 2000, taken as a whole.

We also have previously audited, in accordance with auditing standards
generally accepted in the United States of America, the consolidated balance
sheets of Integrity Mutual Funds, Inc. and Subsidiaries as of December 31,
1999 and 1998, and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the two years in the period
ended December 31, 1999, none of which is presented herein, and we expressed
unqualified opinions on those consolidated financial statements.  In our
opinion, the information on page 25 relating to the 1999 and 1998 consolidated
financial statements is fairly stated in all material respects in relation to
the basic consolidated financial statements from which it has been derived.




BRADY, MARTZ & ASSOCIATES, P.C.
Minot, North Dakota  USA


February 21, 2003


<PAGE>                              24


             INTEGRITY MUTUAL FUNDS, INC. AND SUBSIDIARIES
                       SELECTED FINANCIAL DATA
             FOR THE YEARS ENDED DECEMBER 31, AS INDICATED




<TABLE>
<CAPTION
                                       2002           2001           2000           1999           1998
                                       ----           ----           ----           ----           ----
<S>                                    <C>            <C>            <C>            <C>            <C>
Operating revenue                 $ 14,980,949   $  8,167,724   $  7,329,008   $  4,761,059   $  4,438,908

Income (loss) from
  Operations                      $    347,203   $   (193,060)  $    285,747   $    586,458   $    683,443

Income tax (expense) benefit      $    (61,999)  $     20,148   $   (232,830)  $   (326,833)  $   (405,240)

Basic earnings (loss)
  per share                       $        .03   $       (.02)  $        .00   $       (.01)  $        .02

Diluted earnings (loss)
  per share                       $        .03   $       (.02)  $        .00   $       (.01)  $        .02

Total assets                      $ 12,693,909   $ 11,214,792   $ 12,753,359   $ 12,072,973   $ 10,891,060

Long-term obligations             $  2,829,311   $  3,021,375   $  2,987,661   $  2,525,047   $  1,307,750

Shareholders' equity              $  7,047,973   $  6,888,837   $  8,409,454   $  8,419,984   $  9,083,188

Dividends paid                    $          0   $          0   $          0   $          0   $          0
</TABLE>



<PAGE>                             25


            INTEGRITY MUTUAL FUNDS, INC. AND SUBSIDIARIES
       QUARTERLY RESULTS OF CONSOLIDATED OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
                                                         QUARTER ENDED
                                                         -------------
                                      3-31-02        6-30-02        9-30-02       12-31-02
                                      -------        -------        -------       --------
<S>                                     <C>            <C>            <C>           <C>
Revenues                            $  3,649,847   $  3,861,871   $  3,879,800   $  3,589,431
Operating income (loss)                  119,066         27,615         56,572        143,950
Other income (expense)                   (59,302)       (39,903)       (55,672)       229,477
Income tax benefit
  (expense)                              (25,751)        12,255         14,627        (63,130)
Net income (loss)                         38,440          3,098         30,324        326,449

Per Share(1)
  Operating income (loss)                   0.01           0.00           0.00           0.01
  Other income (expense)                   (0.00)         (0.00)         (0.00)          0.02
  Income tax benefit
   (expense)                               (0.00)          0.00           0.00          (0.00)


                                                         QUARTER ENDED
                                                         -------------
                                      3-31-01        6-30-01        9-30-01       12-31-01
                                      -------        -------        -------       --------
<S>                                     <C>            <C>            <C>           <C>
Revenues                            $  2,149,123   $  2,043,524   $  1,971,967   $  2,003,110
Operating income (loss)                   (2,954)       (41,532)       (36,079)      (112,495)
Other income (expense)                   (31,204)       (25,854)       (44,516)       (51,709)
Income tax benefit
   (expense)                             (16,301)        (2,852)         3,713         35,588
Net income (loss)                        (46,905)       (65,764)       (67,886)      (119,273)

Per Share(1)
  Operating income (loss)                  (0.00)         (0.00)         (0.00)         (0.01)
  Other income (expense)                   (0.00)         (0.00)         (0.00)         (0.00)
  Income tax benefit
   (expense)                               (0.00)         (0.00)          0.00           0.00

                                                         QUARTER ENDED
                                                         -------------
                                      3-31-00        6-30-00        9-30-00       12-31-00
                                      -------        -------        -------       --------
<S>                                     <C>            <C>            <C>           <C>
Revenues                            $  1,084,761   $  2,004,073   $  2,158,754   $  2,081,420
Operating income (loss)                   63,444         94,913         78,905         48,485
Other income (expense)                   (15,969)        (2,640)       (13,026)       (12,545)
Income tax benefit
   (expense)                             (60,347)       (52,794)       (69,194)       (50,495)
Net income (loss)                         (1,810)        37,428          9,037         (4,251)

Per Share(1)
  Operating income (loss)                   0.00           0.01           0.01           0.00
  Other income (expense)                   (0.00)         (0.00)         (0.00)         (0.00)
  Income tax benefit
   (expense)                               (0.00)         (0.00)         (0.00)         (0.00)

<FN>
(1) For calculating per share amounts, basic and diluted earnings per common
share are   not materially different.

The above financial information is unaudited.  In the opinion of management,
all adjustments (which are of a normal recurring nature) have been included
for a fair presentation.
</FN>
</TABLE>

<PAGE>                              26

ITEM 8    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

None.


                               PART III

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

Incorporated herein by reference is the information under the heading
"Directors and Executive Officers", in the Registrant's Proxy Statement to
be filed on or about April 14, 2003.


ITEM 10    EXECUTIVE COMPENSATION

Incorporated herein by reference is the information appearing in the
Registrant's Proxy Statement which the Registrant anticipates filing on or
about April 14, 2003 under the headings "Directors and Executive Officers."

ITEM 11    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

Incorporated herein by reference is the information appearing under the heading
"Security Ownership of Principal Shareholders and Management", in the
Registrant's Proxy Statement which the Registrant anticipates filing on or
about April 14, 2003.

ITEM 12    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Incorporated herein by reference is the information appearing under the heading
"Directors and Executive Officers", in the Registrant's Proxy Statement which
the Registrant anticipates filing on or about April 14, 2003.


ITEM 13    EXHIBITS AND REPORTS ON FORM 8-K

(a)      The following exhibits are filed herewith or incorporated herein by
         reference as set forth below:

         3.1    Articles of Incorporation of the Company (incorporated by
                reference to Exhibit 3.1 contained in the Company's
                Registration Statement on Form S-1, as amended (File No. 33-
                96824), filed with the Commission on September 12, 1995).

         3.2    Bylaws of the Company (incorporated by reference to Exhibit
                3.2 contained in the Company's Registration Statement on Form
                S-1, as amended (File No. 33-96824), filed with the Commission
                on September 12, 1995).

         4.1    Specimen form of Common Stock Certificate (incorporated by
                reference to Exhibit 4.1 contained in the Company's
                Registration Statement on Form S-1, as amended (File No.
                33-96824), filed with the Commission on September 12, 1995).

         4.2    Instruments defining rights of holders of securities: See
                Exhibit 3.1

<PAGE>




         10.1   Management Advisory Contract - ND Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.1 contained in the
                Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 11 (File No. 33-63306), filed with the
                Commission on February 28, 1997).

         10.2   Management Advisory Contract - Montana Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.2 contained in the
                Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 6 (File No. 33-63306), filed with the
                Commission on February 28, 1997).

         10.3   Management Advisory Contract - South Dakota Tax-Free Fund,
                Inc. (incorporated by reference to Exhibit 10.3 contained in
                the Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 5 (File No. 33-63306), filed with the
                Commission on February 28, 1997).

         10.4   Management Advisory Contract - Integrity Fund of Funds, Inc.
                (incorporated by reference to Exhibit 10.4 contained in the
                Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 4 (File No. 33-85332), filed with the
                Commission on February 28, 1997).

         10.5   Transfer Agency Agreement - ND Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.5 contained in the
                Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 11 (File No. 33-63306), filed with the
                Commission on February 28, 1997).

         10.6   Transfer Agency Agreement - Montana Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.6 contained in the
                Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 6 (File No. 33-63306), filed with the
                Commission on February 28, 1997).

         10.7   Transfer Agency Agreement - South Dakota Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.7 contained in the
                Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 5 (File No. 33-63306), filed with the
                Commission on February 28, 1997).

         10.8   Transfer Agency Agreement - Integrity Fund of Funds, Inc.
                (incorporated by reference to Exhibit 10.8 contained in the
                Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 4 (File No. 33-85332), filed with the
                Commission on February 28, 1997).

         10.9  Distribution Agreement - ND Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.9 contained in the
                Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 11 (File No. 33-63306), filed with the
                Commission on February 28, 1997).

         10.10  Distribution Agreement - Montana Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.10 contained in the
                Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 6 (File No. 33-63306), filed with the
                Commission on February 28, 1997).

<PAGE>


         10.11  Distribution Agreement - South Dakota Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.11 contained in the
                Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 5 (File No. 33-63306), filed with the
                Commission on February 28, 1997).

         10.12  Distribution Agreement - Integrity Fund of Funds, Inc.
                (incorporated by reference to Exhibit 10.12 contained in the
                Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 4 (File No. 33-85332), filed with the
                Commission on February 28, 1997).

         10.13  Stock Purchase Agreement - ND Holdings, Inc. and
                Shareholders of Ranson Company, Inc. (incorporated by
                reference to Exhibit 10.13 contained in the Company's
                Registration Statement on Form S-1, as amended
                (File No. 33-96824), filed with the Commission on September
                12, 1995).

         10.14  Transfer Agency Agreement - Ranson Managed Portfolios
                (incorporated by reference in the Company's form 10KSB/A
                as amended(Commission File No. 0-25958), filed with the
                Commission on May 20, 1998).

         10.15  Transfer Agent Agreement - Investors Research Fund
                (incorporated by reference to Exhibit 10.15 contained in the
                Company's Registration Statement Form N-1A as amended
                (File No. 2-14675) filed with the Commission on January 22
                1999).

         10.16  Distribution Agreement - Investors Research Fund
                (incorporated by reference to Exhibit 10.16 contained in the
                Company's Registration Statement Form N-1A as amended
                (File No. 2-14675) filed with the Commission on January 22
                1999).

         10.17  Accounting Services Agreement - Investors Research Fund
                (incorporated by reference to Exhibit 10.17 contained in the
                Company's Registration Statement Form N-1A as amended
                (File No. 2-14675) filed with the Commission on January 22
                1999).

         10.18  Management and Investment Advisory Agreement - Ranson Managed
                Portfolios (incorporated by reference to Exhibit 10.18
                contained in the Portfolios' Registration Statement on Form
                N-1A, as amended on Post-Effective Amendment 43 (File No.
                33-36324), filed with the Commission on November 30, 1999).

         10.19  Distribution and Services Agreement - Ranson Managed
                Portfolios (incorporated by reference to Exhibit 10.19
                contained in the Portfolios' Registration Statement on
                Form N-1A, as amended on Post-Effective Amendment 43
                (File No. 33-36324), filed with the Commission on
                November 30, 1999).

         10.20  Management Advisory Contract - Integrity Small-Cap Fund of
                Funds, Inc. (incorporated by reference to Exhibit 10.20
                contained in the Registration Statement on Form N-1A,
                (File No. 333-64917), filed with the Commission on
                September 30, 1998).

<PAGE>


         10.21  Transfer Agency Agreement - Integrity Small-Cap Fund of Funds,
                Inc. (incorporated by reference to Exhibit 10.21 contained in
                the Registration Statement on Form N-1A (File No. 333-64917),
                filed with the Commission on September 30, 1998).

         10.22  Distribution Agreement - Integrity Small-Cap Fund of Funds,
                Inc. (incorporated by reference to Exhibit 10.22 contained in
                the Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 3 (File No. 333-64917), filed with the
                Commission on June 14, 2000).

         21.1   Subsidiaries of the Company: (incorporated by reference to
                Exhibit 21.1 contained in the Company's Registration Statement
                on Form S-1 as amended (File No. 33-96824), filed with the
                Commission on December 7, 1995).



 (b)      Reports on Form 8-K.

          None

<PAGE>


SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized on this 17th day of March.

                                                   ND HOLDINGS, INC.


Date:  March 17, 2003                              By /s/ Robert E. Walstad
                                                   ------------------------
                                                   Robert E. Walstad
                                                   Chief Executive Officer,
                                       President, and Director (Acting
                                                   Chief Financial Officer)

     In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

Date: March 17, 2003                               By /s/ Robert E. Walstad
                                                   ------------------------
                                                   Robert E. Walstad
                                                   Chief Executive Officer,
                                                   President, and Director
                                                  (Principal Executive Officer)
                                                  (Acting Chief Financial
                                                      Officer)

Date: March 17, 2003                               By /s/ Peter A. Quist
                                                   ------------------------
                                                   Peter A. Quist
                                                   Vice President and Director

Date: March 17, 2003                               By /s/ Vance A. Castleman
                                                   ------------------------
                                                   Vance A. Castleman
                                                   Director

Date: March 17, 2003                               By /s/ Myron D. Thompson
                                                   ------------------------
                                                   Myron D. Thompson
                                                   Director

Date: March 17, 2003                               By /s/ Richard H. Walstad
                                                   ------------------------
                                                   Richard H. Walstad
                                                   Director

<PAGE>

CERTIFICATION OF PERIODIC FINANCIAL REPORTS

In connection with the Annual Report on Form 10-KSB for the year ended
December 31, 2002 of Integrity Mutual Funds, Inc. (the "Company") as filed
with the U.S. Securities and Exchange Commission (the "Commission") on the
date hereof (the "Report") and pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Robert E.
Walstad, President and Director of the Company, certify that:

the Report fully complies with the requirements of Section 13(a) or 15 (d) of
the Securities Exchange Act of 1934, as amended; and

the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.



Date:  March 17, 2003                           By /s/ Robert E. Walstad
                                                ------------------------
    Robert E. Walstad
                                                Chief Executive Officer,
                                                President, and Director
                                               (Principal Executive Officer)
                                               (Acting Chief Financial Officer)