<PAGE>

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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   ----------
                                    FORM 10-K

(MARK ONE)

|X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934

                      For the Year Ended December 31, 2000

                                       OR

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                         Commission File number: 1-07149
                                   ----------

                           INTERNET LAW LIBRARY, INC.
             (Exact name of Registrant as specified in its charter)

                  DELAWARE                               82-0277987
      (State or other jurisdiction of                 (I.R.S. Employer
       incorporation or organization)                Identification no.)

              4301 WINDFERN ROAD, SUITE 200, HOUSTON, TEXAS, 77041
           (Address of principal executive offices including zip code)
                                 (281) 600-6000
              (Registrant's telephone number, including area code)

           Securities registered pursuant to Section 12(b) of the Act:

                                                   NAME OF EACH EXCHANGE
            TITLE OF EACH CLASS                     ON WHICH REGISTERED
            -------------------                    ---------------------
                   None                                     None

           Securities registered pursuant to Section 12(g) of the Act:

                    COMMON STOCK, PAR VALUE $0.001 PER SHARE
                                (Title of Class)
                                   ----------

Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes |X| No |_|

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K. |X|

The aggregate market value of the voting stock held by non-affiliates of
Registrant as of April 12, 2001 was $8,412,276 (based on the closing price of
$0.23 per share on April 16, 2001 as reported on the over-the-counter Bulletin
Board).

      As of April 12, 2001, 36,575,112 shares of Registrant's Common Stock were
outstanding.

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

<PAGE>

                            INTERNET LAW LIBRARY, INC
                                    Form 10-K
                      For the Year Ended December 31, 2000

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
                                     PART I
 1. Business ..............................................................    3
 2. Properties ............................................................   15
 3. Legal Proceedings .....................................................   15
 4. Submission of Matters to a Vote of Security Holders ...................   16

                                    PART II
 5. Market for Registrant's Common Equity and Related Stockholder Matters .   16
 6. Selected Consolidated Financial Data ..................................   17
 7. Management's Discussion and Analysis of Financial Condition
     and Results of Operations ............................................   18
7A. Quantitative and Qualitative Disclosures about Market Risk ............   23
 8. Consolidated Financial Statements and Supplementary Data ..............   23
 9. Changes in and Disagreements with Accountants on Accounting
      and Financial Disclosure ............................................   23

                                    PART III
10. Directors and Executive Officers of Registrant ........................   25
11. Executive Compensation ................................................   28
12. Security Ownership of Certain Beneficial Owners and Management ........   33
13. Certain Relationships and Related Transactions ........................   33

                                    PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8K ........   35
<PAGE>

                                     PART I

      This Report contains certain forward-looking statements of the intentions,
hopes, beliefs, expectations, strategies and predictions of Internet Law Library
or its management with respect to future activities or other future events or
conditions within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
These statements are usually identified by the use of words such as "believes,"
"will," "anticipates," "estimates," "expects," "projects," "plans," "intends,"
"should," "could" or similar expressions. Investors are cautioned that all
forward-looking statements involve risks and uncertainty, including, without
limitation, variations in quarterly results, volatility of Internet Law
Library's stock price, development by competitors of new or competitive products
or services, the entry into the market by new competitors, the sufficiency of
Internet Law Library's working capital and the ability of Internet Law Library
to retain management, to implement its business strategy, to assimilate and
integrate any acquisitions, to retain customers or attract customers from other
businesses and to successfully defend itself in ongoing and future litigation.
Although Internet Law Library believes that the assumptions underlying the
forward-looking statements contained in this Report are reasonable, any of the
assumptions could be inaccurate, and, therefore, there can be no assurance that
the forward-looking statements included in this Report will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included in this Report, the inclusion of such
information should not be regarded as a representation by Internet Law Library
or any other person that the objectives and plans of Internet Law Library will
be achieved. Except for its ongoing obligation to disclose material information
as required by the federal securities laws, Internet Law Library undertakes no
obligation to release publicly any revisions to any forward-looking statements
to reflect events or circumstances after the date of this report or to reflect
the occurrence of unanticipated events. Accordingly, the reader should not rely
on forward-looking statements because they are subject to known and unknown
risks, uncertainties and other factors that may cause our actual results to
differ materially from those contemplated by the forward-looking statements.

Item 1. Business

General

      Internet Law Library, formerly known as Planet Resources, is a Delaware
corporation that provides electronic publishing services and database content
through CD-Rom media and Internet sites with subscription access, licenses and
transaction fees for databases through our subsidiaries, National Law Library,
Inc., GoverNet Affairs, Inc., Brief Reporter, LLC and Compass Data Systems, Inc.
We also provide safety training, information and support with federal
regulations through our wholly owned subsidiary, Venco Compliance Inc., and
database content, software, hardware and other support through our subsidiary,
ITIS, Inc. The content of the databases consists of pending legislation,
statutory law, rules and case law at the federal and state levels. Legal briefs
from certain important cases before federal and state courts are also available,
as are litigation forms. This material can be useful to legislators, corporate
regulatory personnel, lobbyists, individual lawyers, judges, law firms,
corporate legal departments, government agencies, and businesses and individuals
involved in legislative efforts, litigation and corporate legal planning.
Interfacing with these databases are retrieval engines that are owned by us or
our subsidiaries. We also market a CD-Rom product and a Website that assists in
medical billing. Customers using these Internet sites pay subscription fees
under monthly, quarterly or annual subscription agreements or per-use licenses.

      Internet Law Library's common stock is traded on the over-the-counter
Bulletin Board under the symbol "ELAW.OB."

      Our board of directors has approved a name change to "ITIS, Inc." to
better describe the products of Internet Law Library as being information
technology and information services. The stockholders will be asked to approve
the name change at Internet Law Library's annual meeting, which is anticipated
to be held on September 11, 2001.

Corporate History

      Internet Law Library was originally incorporated as Allied Silver-Lead
Company in the State of Idaho in 1967 and, until 1992, operated as an
exploratory mining company. In January 1996, Internet Law Library was
reincorporated in Delaware as a result of a merger and the corporate name was
changed to Planet Resources, Inc. Between 1992 and our reverse acquisition by
National Law Library in March of 1999, Internet Law Library had no operations;
however, we maintained certain mining properties which were to be indirectly
distributed to those stockholders who were stockholders of Internet Law Library
prior to the reverse acquisition by National Law Library. Effective March 27,
2001, the foregoing mineral rights were indirectly distributed to the original
stockholders of Internet Law Library pursuant to an Amended and Restated
Agreement and Plan of Distribution dated March 13, 2001, whereby Planet
Resources, which was one of Internet Law Library's wholly owned subsidiaries,
was spun-off from Internet Law Library and acquired the mining and related
interests. Internet Law Library no longer maintains any interest in these
properties.


                                       3
<PAGE>

      National Law Library, a Texas corporation, was formed in November 1998 for
the purpose of developing and marketing an Internet destination to be used for
legal research. After its formation, National Law Library's then sole
stockholder, who is the current President, Chief Executive Officer and Chairman
of Internet Law Library, contributed to National Law Library all of his rights
and interests in the Litidex(R) search, retrieval and database software and
database content valued at $934,000 and $1,096,000, respectively, in exchange
for 15,152,500 shares of common stock of National Law. Commercial operations
began in January 1999, the same month in which National Law Library agreed in
principle to be acquired by Internet Law Library.

      Under the original Agreement and Plan of Distribution dated March 25,
1999, each share of National Law Library common stock was exchanged for one
share of the unregistered common stock of Internet Law Library. In contemplation
of this transaction, Internet Law Library's original stockholders agreed to a
one-for-two reverse stock split, which resulted in 2 million shares of Internet
Law Library's common stock being outstanding immediately prior to the merger.
After giving effect to these transactions, former National Law Library
stockholders owned 18 million shares of unregistered common stock of Internet
Law Library and the original stockholders of Internet Law Library owned 2
million shares of Internet Law Library common stock. Following the transaction,
the stockholders voted to change the name of Planet Resources, Inc. to "Internet
Law Library, Inc." Under the terms of an Agreement and Plan of Reorganization
dated March 25, 1999, the majority of our original board of directors resigned
and were replaced with directors elected by our new stockholders.

Recent Transactions

      Internet Law Library and ITIS, a company wholly owned until January 2000
by Hunter M. A. Carr, the Chairman of the Board, Chief Executive Officer, and
President of Internet Law Library, signed certain agreements under which ITIS
provided database content and various management, staffing and procurement
services and office space to National Law Library until Internet Law Library's
acquisition of ITIS on April 30, 2000. Mr. Carr was the sole stockholder of ITIS
during the period from National Law Library's inception on November 30, 1998 to
December 31, 1999. During the three months ended March 31, 2000, Mr. Carr sold
approximately 92% of his stock in ITIS to various individuals and entities, some
of whom are either directors or officers of Internet Law Library or are entities
controlled by directors of Internet Law Library. Apart from the content
agreement with ITIS, the service agreements with National Law Library were put
in place to provide an interim infrastructure until such time as additional
financing and cash from operations became available. On April 30, 2000, Internet
Law Library acquired all of the outstanding stock of ITIS. According to the
terms of the Stock Exchange Agreement dated April 30, 2000, Internet Law Library
exchanged 5,044,903 unregistered shares of its common stock for all of the
outstanding common stock of ITIS. While serving as one of Internet Law Library's
providers of case law content, ITIS also furnishes hardware, software, content
conversion technology and management support and expertise to other affiliates
of Internet Law Library. Internet Law Library anticipates using ITIS' expertise
in the future to provide similar products in other industries.

      Of the 5,044,903 shares of Internet Law Library common stock issued to
ITIS' stockholders, 1,721,003 shares were issued to five directors of Internet
Law Library or their beneficiaries and 332,300 shares were issued to five
officers of Internet Law Library as shown below:

                                                                       Number of
Name of Director/Officer                             Position           Shares
------------------------                             --------          ---------
Hunter M.A. Carr...........................  Director and officer       196,003
W. Paul Thayer (Thayer Investment Co.).....  Director                   750,000
Kelley V. Kirker...........................  Director and officer       500,000
Eugene A. Cernan...........................  Director                    25,000
George A. Roberts, ........................  Director                   250,000
Edward P. Stevens..........................  Officer                    150,000
Donald H. Kellam...........................  Officer                    150,000
David P. Harriman..........................  Officer                     25,000
Robert Sarlay..............................  Officer                      3,300
K. Charles Peterson........................  Officer                      4,000
                                                                      ---------

     Total.................................                           2,053,303
                                                                      =========


                                       4
<PAGE>

      On May 11, 2000, Internet Law Library entered into an intermediate
financing agreement with Cootes Drive LLC, and privately placed 300 shares of 5%
Series A Convertible Preferred Stock for $3 million. This preferred stock is
convertible into shares of Internet Law Library's common stock based on a price
equal to the lesser of (i) $3.2375 or (ii) 80% of the average of the three
lowest closing bid prices during a 20-day trading period prior to the date of
conversion. Internet Law Library is entitled to redeem the convertible preferred
stock at a cash price equal to 120% of the issue price, provided there is an
effective registration statement for the underlying shares of common stock. On
July 5, 2000, the SEC declared the registration statement filed by Internet Law
Library effective, which registered an amount of shares of its common stock then
sufficient to satisfy any conversion, warrant exercise, and dividend
requirements under the terms of this financing agreement. The convertible
preferred stock purchased by the investor is subject to mandatory redemption by
Internet Law Library upon the occurrence of a change in control or certain other
events. As part of this financing agreement and in consideration for negotiating
a $25 million equity line which was completed on November 20, 2000 and is
described below, Internet Law Library agreed to issue a five-year warrant to the
investor for the purchase of 500,000 shares of its common stock at an exercise
price of $3.56 per share. In the equity line agreement completed on November 20,
2000, this warrant was replaced with 2 five-year warrants for the purchase of
250,000 shares each at exercise prices of $3.56 and $.60 per share. The
estimated fair value of these warrants totals $710,397 and has been recorded in
stockholders' equity. Additionally, on May 11, 2000 Internet Law Library agreed
to issue a five-year warrant to a third party for the purchase of 200,000 common
shares at an exercise price of $3.3994 per share. The estimated fair value of
this warrant totals $448,817 and has been recorded in stockholders' equity. On
December 5, 2000 Internet Law Library agreed to issue a five-year warrant to the
investor for the purchase of 41,650 shares of its common stock at an exercise
price of $.288 per share. The estimated value of this warrant totals $8,158 and
has been recorded in stockholders' equity. A commission of $100,000 and legal
fees of $30,000 related to this financing arrangement were recorded net of
preferred stock proceeds in stockholders' equity. Due to recent litigation in
regard to the foregoing financing agreements, it is unlikely that any further
funding will occur from this private capital fund and that any more conversions
of preferred stock will occur.

      On July 27, 2000, Internet Law Library's board of directors approved the
purchase of a controlling interest in Compass Data Systems, Inc., a private
Nevada corporation, for up to $2.5 million in unregistered shares of Internet
Law Library's common stock. Stock purchase agreements by and between Internet
Law Library and certain stockholders of Compass Data Systems were signed with
each of the sellers effective as of October 1, 2000. Under the terms of these
stock purchase agreements, Internet Law Library agreed to issue an aggregate of
1,676,105 unregistered shares of its common stock, valued at approximately $2.3
million, for approximately 63% of the total outstanding shares of Compass Data
Systems common stock owned by Jeremiah Kane, John McHugh and Jack Ben Ezra. As
of April 12, 2001, 1,670,378 of these shares had been issued. These issuances
were made in reliance upon the Section 4(2) private placement exemption from
registration. None of these sellers received registration rights for the
Internet Law Library shares they received in this transaction. The remaining
5,727 shares will be issued when a selling shareholder surrenders the small
remaining Compass Data shares still in his possession.

      Compass Data Systems provides electronic information publishing services
in a completely searchable infobase to a wide variety of industries and
organizations. Compass Data Systems hosts an Internet site at
www.compassdata.com. Using Internet and CD technology, clients can search
through computer files that represent significant amounts of paper in seconds.
These infobases are quickly accessed through a hard drive, CD-Rom or the
Internet.

      On September 28, 2000, Internet Law Library's board of directors approved
the purchase of all of the stock of Venco Compliance, Inc., a private Texas
corporation, from Donald E. Tull and Cathryn V. Tull. In connection with this
acquisition, Internet Law Library issued an aggregate of 100,000 unregistered
shares of Internet Law Library's common stock at closing on October 1, 2000,
valued then at $90,600. Internet Law Library may issue an additional 25,000
unregistered shares each to Donald Tull and Cathryn Tull in the future for
consulting services with the last issuance occurring in the year 2003. Venco
Compliance has also entered into a consulting agreement with Cathryn Tull that
pays her $72,000 per year for a term of one year, with a renewal right for a
one-year term on each anniversary of the agreement. In addition, Ms. Tull is
eligible to receive a cash bonus based on Venco Compliance's revenues. These
issuances were made in reliance upon Section 4(2) private placement exemption
from registration. Neither of the two sellers received registration rights for
the Internet Law Library shares they received in this transaction.

      Venco Compliance is in the business of selling compliance and safety
training and information such as OSHA regulations to businesses such as dry
cleaners and others that deal with hazardous chemicals, biomaterials and other
regulated substances.

      In October 2000, Internet Law Library executed demand notes for $400,000
and $50,000 in favor of George A. Roberts and W. Allyn Hoaglund, members of its
board of directors. The notes bear interest at the rate of prime plus two
percent per year and are payable in cash on demand after one year. At the option
of the holder and with 30 days written notice, the notes may be repaid in common
stock of Internet Law Library at a discounted price based on the lowest price at
which Internet Law Library has sold its common stock during the one-year period
preceding the exercise of this option.


                                       5
<PAGE>

      On November 20, 2000, Internet Law Library entered into an equity line
financing arrangement with Cootes Drive. This arrangement is the successor to
the intermediate financing agreement of May 11, 2000. The financing arrangement
is in the form of a Securities Purchase Agreement providing for the purchase by
Cootes Drive of up to $25,000,000 worth of shares of common stock of Internet
Law Library over an 18-month period. Under the terms of the Securities Purchase
Agreement, Internet Law Library can deliver a put to Cootes Drive specifying the
dollar amount of shares Internet Law Library intends to sell on each put up to a
maximum of 150% of the product of the weighted average daily price of Internet
Law Library's common stock and the weighted average trading volume (closing bid
price multiplied by volume for a particular day) for the twenty trading day
period prior to the delivery of a put. The number of shares to be acquired by
the investor in each put is determined by dividing the dollar amount of the put
by 90% of the average of the two lowest closing bid prices for our stock during
the ten trading days preceding the date of the put. The maximum amount that
Internet Law Library can receive under the Securities Purchase Agreement is $25
million or a lesser amount depending on the limitation on the number of shares
Cootes Drive (and its affiliates) are permitted to hold at any one time, which
is 4.99% of the then outstanding common stock of Internet Law Library. The
following are certain conditions that must be met before Cootes Drive is
obligated to accept a put from Internet Law Library:

      (i)   the registration statement must be declared effective by the SEC and
            remain effective, which registration statement was declared
            effective by the SEC on January 11, 2001;

      (ii)  the closing bid price of Internet Law Library's common stock must be
            at least $1.50 and its weighted average daily trading volume must be
            at least $75,000 for the ten trading days preceding both the date of
            the put and the closing date of the put;

      (iii) the representations and warranties given by Internet Law in the
            Securities Purchase Agreement must be true and correct, and Internet
            Law Library must comply with the provisions of the agreement;

      (iv)  Cootes Drive must receive an opinion of counsel; and

      (v)   Internet Law Library's Common Stock must remain traded on the
            over-the-counter Bulletin Board or a more prestigious trading market
            or exchange.

There can be no guarantee that these conditions will be met or that Internet Law
Library will be able to draw down on any portion of this agreement. As of April
12, 2001, Internet Law Library did not meet certain of the funding conditions
listed in the agreement and was not able to obtain any funds under this
financing arrangement. On January 26, 2001, in order to protect Internet Law
Library and its stockholders, Internet Law Library filed a lawsuit in the United
States District Court against Cootes Drive and several other defendants for
damages resulting from alleged stock manipulation, SEC violations, civil RICO,
fraud, violations of Texas securities laws, and other Texas statutes and
conspiracy. Due to this recent litigation we believe it is highly unlikely that
any further funding will occur from this private capital fund, and that Cootes
Drive will not honor a put even if Internet Law Library meets the above
requirements in the future. For more information on this litigation, see Note
14.

      In connection with the equity line arrangement, Cootes Drive surrendered
for cancellation the five-year warrant for 500,000 shares at an exercise price
of $3.56 that was issued on May 11, 2000, and Internet Law Library issued:

      (i)   a five-year warrant No. 2 to Cootes Drive for the purchase of
            250,000 shares of common stock at an exercise price of $3.56 (issued
            in connection with the preferred stock offering);

      (ii)  a five-year warrant No. 3 to Cootes Drive for the purchase of
            250,000 shares of common stock at an exercise price of $0.60;

      (iii) a five-year warrant No. 4 to Cootes Drive for the purchase of 1,000
            shares for every $100,000 of puts delivered at an exercise price of
            120% of the average closing bid price of the common stock for the
            five trading days preceding the closing of a put (which shall vest
            in part each time a put is closed); and

      (iv)  a five-year warrant No. 5 to Cootes Drive which becomes exercisable
            only if Internet Law Library does not deliver puts in the aggregate
            amount of $10,000,000, at an exercise price equal to the average of
            the lowest three bid prices in the 90-day period preceding the
            exercise.

      On December 5, 2000, Internet Law Library executed a convertible
promissory note in the face amount of $500,000 in favor of Cootes Drive. The
note is a demand note, and accrues interest at the rate of 5% per annum. The
principal can be converted to


                                       6
<PAGE>

common stock of Internet Law Library based on a conversion price equal to the
lesser of (i) $0.288 or (ii) 80% of the average of the three lowest closing
prices during a 20 day period prior to the date of conversion. In connection
with this promissory note, Internet Law Library issued a warrant to the investor
for 41,650 shares at an exercise price of $0.228 per share. A commission of
$17,500 and legal fees of $30,000 related to the equity line financing
arrangement were paid from the proceeds of this note. On December 5, 2000,
Internet Law Library also entered into a side letter agreement that obligated
the same private capital fund to provide an additional $500,000 on January 14,
2001, in exchange for another convertible promissory note, on similar terms.
Funding of this note was contingent upon, among other things, the weighted
average daily trading volume for Internet Law Library's common stock averaging
$165,000 for the period between December 5, 2000 and January 14, 2001. Upon
closing of this second promissory note, Internet Law Library was to be obligated
to issue a five-year warrant for 41,650 shares with an exercise price equal to
the average of the closing bid prices of the common stock for the five trading
days prior to issuance of this note, and register the resale of such shares.
These conditions were not met and this additional funding never occurred.

      On December 5, 2000, Internet Law Library granted registration rights to
the investor for up to 17,541,650 shares of common stock it may acquire under
the equity line financing, the convertible promissory note financings and the
warrants granted in connection with all of these financings. Internet Law
Library filed a registration statement with the SEC on Form S-1 covering the
resale of these shares that was declared effective on January 11, 2001.

      In January 2001, Internet Law Library executed a demand promissory note in
the amount of $100,000 payable to an unaffiliated third party. The note bears
interest at 10% per year and is payable in cash on demand after one year. At the
option of the holder and with 30 days written notice, the note may be repaid in
common stock of Internet Law Library at a discounted price based on the lowest
price at which Internet Law Library has sold its common stock during the
one-year period preceding the exercise of this option.

      In February 2001, Internet Law Library executed demand notes for $190,000
and $50,000 in favor of George A. Roberts and W. Paul Thayer, members of its
board of directors. The notes bear interest at the rate of prime plus two
percent per year and are payable in cash on demand after one year. At the option
of the holder and with 30 days written notice, the notes may be repaid in common
stock of Internet Law Library at a discounted price based on the lowest price at
which Internet Law Library has sold its common stock during the one-year period
preceding the exercise of this option.

      On February 28, 2001, Internet Law Library executed a demand promissory
note in the amount of $25,000 payable to an unaffiliated third party. The note
bears interest at the rate of prime plus two percent per year and is payable in
cash on demand after one year. At the option of the holder and with 30 days
written notice, the note may be repaid in common stock of Internet Law Library
at a discounted price based on the lowest price at which Internet Law Library
has sold its common stock during the one-year period preceding the exercise of
this option.

      On April 5, 2001, Internet Law Library executed a demand promissory note
for $70,000 in favor of W. Paul Thayer, a member of our board of directors. The
note bears interest at the rate of prime plus two percent per year and is
payable in cash on demand after one year. At the option of the holder and with
30 days written notice, the note may be repaid in common stock of Internet Law
Library at a discounted price based on the lowest price at which Internet Law
Library has sold its common stock during the one-year period preceding the
exercise of this option.

      During the year ended December 31, 2000, Internet Law Library's cash and
cash equivalents decreased by $38,069 from the December 31,1999 balance of
$78,544 to $40,475 at December 31, 2000. Cash used in operating and investing
activities was $4,722,681, cash used in investment activities was $1,405,486,
and cash provided by financing activities was $6,090,098. During the year ended
December 31, 2000, Internet Law Library borrowed a total of $1,805,000 from
Hunter M.A. Carr, its CEO, to fund working capital requirements. Mr. Carr
advanced an additional $255,000 during January and February 2001, and $200,609
since March 1, 2001. The borrowings through February 28, 2001were evidenced by
unsecured promissory notes, each bearing an annual interest rate of 11.75% and
payable in full with accrued interest after six months. On February 28, 2001,
the notes through that date were consolidated into one demand note in the amount
of $2,060,000 bearing interest at the rate of prime plus two percent per year,
payable in cash on demand after one year. At Mr. Carr's option and with 30 days
written notice, the note may be repaid in common stock of Internet Law Library
at a discounted price based on the lowest price at which Internet Law Library
has sold its common stock during the one-year period preceding the exercise of
this option. On March 10, 2001, Internet Law Library retired $250,000 in
principal from this note by issuing 1,153,828 restricted shares of common stock
to Mr. Carr at a price of $.216667 per share. New promissory notes bearing the
same terms have been issued to Mr. Carr for the $200,609 advanced to Internet
Law Library since March 1, 2000. As of April 12, 2001, the total principal
amount and accrued but unpaid interest owed to Mr. Carr were $2,010,609 and
$239,081, respectively.


                                       7
<PAGE>

      As shown in the accompanying consolidated financial statements, Internet
Law Library has incurred significant losses from operations, maintains a working
capital deficit and has used significant cash in operations. During 2000 and the
first quarter of 2001, borrowings from Hunter M. A. Carr and other directors of
Internet Law in addition to an equity line financing agreement provided the cash
necessary to fund cash flow shortages. Internet Law Library will require
additional financing to fund its operations and execute its business plan. The
inability to obtain this additional financing will substantially impact Internet
Law Library's ability to continue as a going concern. In its report on Internet
Law Library's Financial Statements for the year ended December 31, 2000, Harper
& Pearson Company, Internet Law Library's independent auditors, state that
Internet Law Library's recurring losses from operations, negative working
capital and cash flows, and retained deficits derived from its continuing losses
raise substantial doubt about its ability to continue as a going concern.

Products and Services

      Brief Reporter offers more than 7,000 legal briefs on its Website
(www.briefreporter.com), making it one of the largest brief banks on the
Internet. Subscribers and transactional users can search among legal briefs from
actual cases. The Website offers featured briefs as well as notification of new
materials. Brief Reporter also earns some of its revenue from advertising.

      GoverNet Affairs offers subscribers a cost-effective legislative
information management service that uses the Internet to save time and money by
monitoring and reporting the progress of pending legislation in all 50 states
and the U.S. Congress. Using GoverNet Affairs' Website, subscribers may sign up
for the following services:

      o     customized daily, weekly or monthly reports showing the status of
            targeted legislation that may be summarized by topic or by
            legislator, and may be downloaded for internal use;

      o     e-mail alerts that can be sent when pending bills are revised;

      o     legislative tracking teams comprised of management, lobbyists and
            attorneys who may communicate with one another with
            password-protected privacy; and

      o     behind-the-scenes commentaries on pending bills that are available
            from a network of political consultants.

      GoverNet Affairs was built to be one of the most powerful online search
tools on the Internet for state and federal legislation. Using a multiple-matrix
database, nightly searches are conducted of every source of state and federal
legislation available on the Internet, and then this data is stored for
retrieval and processing. With this system, GoverNet Affairs performs text
comparisons and attaches information such as user notes and other user-specific
fields to any pending bill that is described over an Internet site. The system
is monitored to provide maximum coverage by jurisdiction and by topic. GoverNet
Affairs' legislative information is available at its Website,
www.govaffairs.com.

      ITIS hosts a Website at www.itisinc.com. With its predecessors, it has
been in business for 15 years, offering litigation support, data conversion and
other Internet-related services. At present, it is concentrating its efforts on
assisting National Law Library in content development.

      National Law Library provides a "virtual" law library that is designed for
performing legal research from offices, homes, or portable laptops. We believe
that National Law Library attracts people who need to conduct legal research,
and prefer to do so quickly, easily and inexpensively over the Internet. Built
upon Web-based architecture, National Law Library's virtual library enables
users to access a database providing core legal information at an attractive
price. National Law Library endeavors to grow by continuing to improve its
search engine, publishing accurate and current databases, adding to its forms
and legal articles libraries, maintaining its low cost, and developing
Internet-oriented editorial features, among other legal products.

      The Litidex(R) search engine used by National Law Library's subscribers
provides for high-speed data retrieval using Boolean, proximity and citation
search criteria. National Law Library's primary products are case law and
statutory law databases. National Law Library's legal information is available
through its Website at www.itislaw.com and can be searched, downloaded and
printed.

      Compass Data Systems provides electronic information publishing services
in a completely searchable infobase to a wide variety of industries and
organizations. Compass Data Systems hosts an Internet site at
www.compassdata.com. Using Internet and CD technology, clients can search
through computer files that represent significant amounts of paper in seconds.
These infobases are quickly accessed through a hard drive, CD-Rom or the
Internet.


                                       8
<PAGE>

      Venco Compliance is in the business of selling compliance and safety
training and information such as OSHA regulations to businesses such as dry
cleaners and others that deal with hazardous chemicals, biomaterials and other
regulated substances.

      In addition to our existing products and services, Internet Law Library
expects to provide a number of additional services in the future, which may
include the following:

      o     database content and similar products for additional industries and
            business endeavors;

      o     database inquiry, retrieval, and review of all state and federal
            case law;

      o     database inquiry and retrieval of all state and federal statutes,
            codes, constitutions, and rules and regulations;

      o     fast and frequent updating of all data;

      o     linking statutes to proposed and pending legislation;

      o     extensive linking of citations among databases;

      o     linking cases and briefs;

      o     citation service;

      o     additional forms;

      o     topical classification of legal information; and

      o     other such related legal research tools as needed by customers.

      Our ability to provide additional services and expand our market depends
upon a number of factors, many of which are beyond our control. These factors
include the rates of and costs associated with new customer acquisition,
customer retention, capital expenditures and other costs relating to the
expansion of operations, the timing of new product and service announcements,
changes in our pricing policies and those of our competitors, market acceptance
of our services, changes in operating expenses, strategy and personnel,
increased competition, and general economic factors including the financial and
operating condition of the Company. There can be no assurance that we will be
successful in selling our services or achieving profitability or positive cash
flow in the future.

Agreements with ITIS

      Mr. Carr founded ITIS in 1994 as a document management firm specializing
in litigation support. The databases used by National Law Library's subscribers
can be accessed and searched through a software retrieval engine known as
Litidex(R), which was developed by Mr. Carr through ITIS and other programmers.
The exclusive rights to use Litidex(R) were conveyed to Mr. Carr in November
1998 while Mr. Carr was the sole stockholder of ITIS. Mr. Carr then contributed
these rights, together with certain database content consisting primarily of
Texas case law, to National Law Library upon its formation on November 30, 1998.
Following National Law Library's formation, ITIS provided it with needed
infrastructure pursuant to certain agreements with ITIS, the material terms of
which are described below.

      Under a continuing services agreement dated effective December 1, 1998,
between National Law Library and ITIS, ITIS agreed to provide National Law
Library with data files containing case law and statutes as are in the public
domain, together with coding and proprietary editing services covering these
data files. National Law Library was charged $0.65 per 1,000 characters for
those data files that satisfied certain prescribed quality control requirements.
Under this continuing service agreement, National Law Library agreed for a
three-year period to provide ITIS with minimum orders for data files containing
an aggregate of 750 million characters per month. Despite the contract rate of
$0.65 per 1,000 characters, during the six months ended December 31, 1999,
National Law Library revised its accounting for its purchases of content from
ITIS due to the common control exercised over both entities by Mr. Carr. During
this period, 10,332,200,000 bytes of case law content were delivered by ITIS to
National Law Library at a contract value of $6,722,000. National Law Library,
however, recorded this content at ITIS' estimated cost of $987,594.


                                       9
<PAGE>

      Under a management and financial services agreement dated effective March
1, 1999, between National Law Library and ITIS, ITIS provided accounting,
staffing and procurement services, and office space to National Law Library.
National Law Library paid ITIS a monthly management fee of $3,600, plus $85 per
hour for accounting services, 125% of the cost of staffing services, 120% of the
cost of office supplies, equipment and telephone services and 115% of the cost
of office space rental.

      Under a separate agreement dated effective March 23, 1999, between
National Law Library and ITIS, ITIS also agreed to provide National Law Library
with software development and consulting services for National Law Library's
database and retrieval software. We now provide all of these aforementioned
services ourselves, as ITIS was acquired by Internet Law Library and became one
of our wholly owned subsidiaries on April 30, 2000.

Raw Materials

      Pending legislation, court opinions, and statutes are public information
that is not protected by copyright law. There are other vendors for this type of
information. In addition to obtaining such data internally, National Law Library
also obtains content for its databases from ITIS, which also formats and uploads
the content to National Law Library's Website. New content, including new or
pending legislation and recently decided case law, is acquired electronically at
no charge or purchased directly from the respective legislatures and courts or
other third parties.

Customers

      National Law Library has historically targeted its sales to small law
firms and solo practitioners who may find competitors' products too expensive.
Small firms and solo practitioners typically require legal information for the
states in which they practice. National Law Library intends to continue to
increase the number of state law databases available through its Website, and
also intends to continue to aggressively market its products and services to
additional small law firms and solo practitioners, as well as larger law firms
and corporate legal departments. However, there can be no assurance that
National Law Library will be successful in these efforts.

      The customers of GoverNet Affairs are primarily large law firms, trade
associations, and corporations doing business in many states, while Brief
Reporter's customers range from lawyers in sole practice to large nationally
recognized law firms.

      Compass Data Systems publishes legal data in Florida, Missouri, Kansas,
Illinois and Texas. Due to the low cost nature of the CD products, Compass has
historically sold information to small to mid-sized law firms, government
agencies, local governments and other small office professionals. Compass Data
Systems intends to continue its campaign to target these smaller customers, and
looks to increase revenue by adding new states to its product offering. Compass
Data Systems also publishes materials on CD-Rom that are marketed to members of
the American Medical Association.

      Customers of Venco Compliance include dry cleaning facilities, paint and
body shops, health service locations (including nursing homes), auto repair
shops and electroplating plants. Our target market for expansion includes
hotels/motels, convenience stores, school facilities and any other operation
governed by OSHA regulations. Through extensive research and onsite
installation, Venco has developed a program that meets and exceeds Federal
regulations for OSHA compliance, and enables small business owners to
economically ensure compliance with complex and changing Federal OSHA
regulations.

Business Strategy

      Although there can be no assurances that we will be successful in these
endeavors, our objective is to become one of the leading and most affordable
providers of database content resources. Our strategy to accomplish this
objective is to gain market share by:

      o     the innovative use of the Internet and other technology;

      o     offering our products and services at extremely competitive prices;

      o     the use of various media to attract and retain customers;

      o     enriching core legal information with Internet-focused editorial
            enhancements;

      o     providing excellent customer service and technical support; and


                                       10
<PAGE>

      o     adding content databases in fields outside of the legal and medical
            fields.

Internet and Technology

      We expect to remain competitive in the market for legal research through
the continued use of the Internet and other forms of technology. We believe that
National Law Library, GoverNet Affairs, Compass Data Systems and Brief Reporter
are at the forefront in the use of technology in the legal and legislative
research industry. In the case of National Law Library, this belief stems from
the portability of National Law Library's products and services, and because of
the speed of National Law Library's search engine, Litidex(R), that is not
available to our competitors. We believe that Litidex(R) is a superior product
to those used by our competitors.

      National Law Library, Compass Data Systems and Brief Reporter strive to be
at the forefront of cutting-edge technology in both hardware and software as it
relates to the needs of the legal profession, and to document automation and
data search and retrieval methods. Specifically, we intend to:

      o     keep our databases current with immediate updates to case law,
            statutes, and rules and regulations online;

      o     provide enhanced search capabilities including additional fielded
            and multiple database searching;

      o     retain staff who are experienced legal researchers;

      o     retain staff who are proficient in all phases of the Internet, not
            just from a user point of view, but also as an Internet provider and
            purveyor;

      o     develop extensive linking across databases and Websites to
            facilitate legal research;

      o     strengthen our Litidex(R)search engine by remaining current in
            software and hardware development; and

      o     combine word search and subject indexing to enhance search
            efficiency.

      GoverNet Affairs has developed a technology capable of crossing state and
federal jurisdictions and integrating related legislation in a manner that is
neither easily replicated nor available through a competitor. While there are
other single-state vendors of legislative tracking and reporting services, we
believe that GoverNet Affairs is without peer on a National basis.

      GoverNet Affairs intends to maintain its technological advantage by:

      o     hiring and retaining experienced staff with successful backgrounds
            in technology development; and

      o     maintaining system reliability by continually upgrading servers,
            data lines, and redundancy components.

      However, there can be no assurance that we will be successful in hiring
the necessary personnel who are qualified to use these new technologies
effectively, develop new services or enhance existing services on a timely basis
or that such new technologies or enhancements will achieve market acceptance. In
addition, there can be no assurance that services or technologies developed by
others will not render our services or technology non-competitive or obsolete.

      In addition, the market for Internet services is in an early stage of
growth. Our services will depend upon the continuing development and expansion
of the market for Internet services. If the demand for Internet services fails
to continue to grow, grows more slowly than anticipated or becomes saturated
with competitors, we will be materially adversely affected.

      We are also at risk to fundamental changes in the way Internet access is
delivered. As the Internet becomes accessible through other devices and
services, we will have to develop new technology or modify our existing
technology to accommodate these developments. There can be no assurance that we
will succeed in adapting our Internet access business to alternative devices and
conduits.

Competitive Pricing

      We expect to achieve our business strategy in part through competitive
pricing. National Law Library charges its subscribers a monthly fee for its
services as well as offers services on a transactional, or "per-use" basis. Upon
payment of the monthly fee,


                                       11
<PAGE>

subscribers receive unlimited search and retrieval services and related
products. Presently, aside from promotional and introductory discounts, National
Law Library's basic monthly fee is $34.00 for one state database and $75.00 for
all the states and the federal databases offered by National Law Library.
Monthly pricing will change as additional databases and enhanced features are
included in the National Law Library's library. National Law Library has also
developed transactional pricing for non-subscribers as an added revenue source.

      We believe the fees charged by National Law Library are significantly less
than most of our competitors. National Law Library expects to be able to
maintain this price advantage over its competitors because we believe that we
have relatively low overhead and infrastructure expenses relative to our
competition. National Law Library's goal is to remain substantially less
expensive than its major competitors.

      National Law Library's customers have the option of discontinuing their
service at the end of any month for any reason. If a significant number of
customers so elect, and we are unable to attract new customers, our financial
results will be materially adversely affected.

      GoverNet Affairs prices its services on an annual basis, and typically
bills its customers in December for the legislative sessions beginning in
January of the next year. Annual subscription amounts are based on the number of
legislative bodies covered, the number of legislative issues profiled, the
nature of this profiling and the extent and number of customer users requiring
access to the database. Annual fees can range from $600 for access to the
database with no downloading, tracking or reporting capability, to several
thousand dollars for access to profiled data that is tracked and reported daily
for one or more states and the U.S. Congress.

      Brief Reporter charges its customers on both a subscription and single
transaction basis.

      Venco Compliance sells its basic compliance program on a one to two year
basis for $520 per year, and offers expanded, customized programs at an
additional cost. Compliance consulting services are available at an hourly rate.

      Compass Data Systems prices its CD legal products based on the information
offered and the number of updates required. Prices range from $89 for Missouri
Statutes, which are updated annually, to $699 for Florida Administrative Code,
which is updated monthly. Compass also offers several products in the $199 to
$399 range which are updated quarterly. The medical branch of Compass Data
produces products for the American Medical Association (AMA) that are marketed
by the AMA to its members. Compass receives royalties from the AMA based on an
annual sales agreement. Compass Data Systems has found that all of its product
offerings are priced well below its competitors.

Sales and Marketing

      One of the ways National Law Library expects to gain market share is to
identify potential customers for its products and services, and employ a
marketing strategy to change potential customers into customers. There are over
one million active lawyers practicing in the United States. National Law Library
intends to focus on a very broad and expansive market, including:

      o     solo legal practitioners;

      o     local, state and National law firms;

      o     public libraries;

      o     judges and court personnel;

      o     legal assistants and paralegals; and

      o     other companies.

      In addition, in order to sell its products and services to lawyers and
other market participants, National Law Library plans to use a marketing
strategy that has several elements:

      o     telemarketing directly to licensed attorneys;

      o     trade show exhibits;


                                       12
<PAGE>

      o     mailings, flyers and electronic mail distributions;

      o     advertising with displays in target market magazines;

      o     Internet affiliate marketing programs;

      o     advertising on the Internet;

      o     direct selling via National Law Library's Website; and

      o     writing and publishing a regular monthly newsletter to current and
            interested customers.

      Brief Reporter, GoverNet Affairs and National Law Library offer their
services to each other's customers, and intend to conduct their sales and
marketing efforts on a mutual basis.

      GoverNet Affairs expects to gain sales in several significant markets,
including:

      o     corporate regulatory and governmental affairs departments;

      o     the lobbyist and legal communities;

      o     trade, professional and nonprofit associations;

      o     county and municipal governments and educational institutions; and

      o     the legislative community itself.

      GoverNet Affairs presently employs outside sales professionals who call
directly on potential customers and inside telephone sales professionals who
make presentations through phone call demonstrations. Additionally, our sales
representatives and executives appear at trade shows and present live
demonstrations. We do not anticipate that any significant amount of marketing
will be done by mail, flyers or direct print media campaigns.

Customer Service and Technical Support

      National Law Library strives to retain its customers and obtain new
customers through its dedication to customer service and technical support.
National Law Library employs customer service technicians whose primary job is
to help customers when they have questions or problems with its products or
services. One of National Law Library's goals is to keep customers informed of
coming enhancements to assure customers that they are staying current with its
products or services. Customer support is available 24 hours a day, 7 days a
week.

      GoverNet Affairs, Brief Reporter and Compass Data Systems maintain a
customer service and technical support staff adequate to meet current customer
needs. Available during normal working hours, such service and support is
generally needed only when customers undergo staff turnover and retraining is
necessary.

Intellectual Property Rights

      We regard our search engines, software technologies, databases and
database management software as proprietary. We depend on trade secrets for
protection of our software. We have entered into confidentiality agreements with
our management and key employees covering this software, and limit access to
this software and other proprietary information. There can be no assurance that
the steps taken by us will be adequate to prevent misappropriation of our
technology or that competitors will not independently develop technologies that
are equivalent or superior to our services or technologies.

Market/Industry

      Industry sources estimate the market for on-line legal information will
top $2.1 billion in 2001 and will grow to $3 billion by 2003. With the growth in
litigation (28% increase in civil lawsuits and 55% in criminal cases from
1984-97), the demand for the convenience of on-line legal research is increasing
as well. The number of licensed attorneys in the United States surpassed the 1


                                       13
<PAGE>

million mark in 2000, of which an estimated 500,000 to 700,000 are practicing
either as sole practitioners or in a small (2-10 attorney) legal office.
National Law Library is focusing its new business development efforts in the
sole practitioner/small legal office market, which we feel offers the greatest
potential to generate new subscription revenues. The increased popularity of the
Internet, both domestically and internationally, and the movement towards
conservation of natural resources by using less paper further strengthens our
belief in the future of on-line legal research. Although there can be no
assurance of its success, we anticipate that in the near future, we may be able
to significantly increase our number of customers and potentially generate
substantial monthly gross revenues.

      According to the Center for Responsive Politics in Washington, D.C., the
amount of money spent in 1999 by interest groups, primarily corporations, on
lobbying efforts in Washington, D.C., was more than $1.42 billion. Not included
in this amount are expenditures by unions and most trade associations for whom
rigid disclosure structures are not mandated. At the state level, there is
little consistent state-by-state publicly available information concerning
lobbying expenditures. Accordingly, we feel that there is a large untapped
market for the services provided by GoverNet Affairs.

Competition

      The competition in the legal research industry is intense. National Law
Library's principal competitors have significantly greater resources than it
does, and this competition may adversely affect Internet Law Library's
consolidated results of operations. The market for electronic legal information
is currently dominated by West Group, a division of The Thomson Corporation, a
Canadian company, and LEXIS/NEXIS(R), which is owned by Reed-Elsevier, an
Anglo-Dutch company. These competitors are both large, well-established
companies. They offer databases that are similar to and larger than the
databases that National Law Library offers. These competitors have longer
operating histories, greater name recognition, larger customer bases and
significantly greater financial, technical and marketing resources than us. They
can thus undertake more extensive marketing campaigns, respond more quickly to
new or emerging technologies and changes in customer requirements, and devote
greater resources to the development, promotion and sale of their products than
we can. West and LEXIS have significant penetration in the large law firm
market, a market in which Internet Law Library intends to compete. National Law
Library also competes with other companies that offer fee-based access to
selected legal databases over the Internet. Several of these companies have
recently been acquired by West and LEXIS. These companies may be more successful
than National Law Library in capturing market share. Compass Data Systems, which
provides legal information in CD-Rom format, has similar strong competition to
National Law Library.

      While many legal briefs are available from document retrieval services, we
believe that Brief Reporter is without competition in providing legal briefs to
attorneys and other interested parties in a searchable database format.

      We believe that GoverNet Affairs has a significant technological lead over
its competitors. With one known exception, GoverNet Affairs' current competitors
are computer-based, not Internet-based. The perceived newness and unproven
stature of the Internet is expected to make it difficult, though not impossible,
for these competitors to switch to an Internet-based delivery model. However,
there can be no assurance that GoverNet Affairs' competitors will choose not to
recognize the value of the Internet and elect not to revise their business model
accordingly. Should some of these competitors become Internet-based, it is very
possible, given their existing customer and revenue bases, that they could
experience greater success than GoverNet Affairs in capturing market share.

      We believe that Venco Compliance, in conducting customer specific on-site
installation and training of staff regarding safety and compliance issues as
well as producing related printed materials, offers a comprehensive service
exceeding that of their competition. While the services of known competitors are
limited exclusively to supplying printed materials, Venco also offers
consultation on an hourly basis to businesses with specific safety and
compliance needs.

      Due to their unique relationship with the American Medical Association,
the medical branch of Compass Data Systems is without competition in many
regards. The products "Medicare Fee Calculators" and "Code Manager" have only
one significant competitor, and Compass has priced these products well below the
prices of competitors.

Employees

      Internet Law Library and its subsidiaries had 85 full-time employees and 2
contract employees as of March 31, 2001. Our employees are not represented by
any collective bargaining organization, we have never experienced a work
stoppage, and we believe that our relationships with our employees are good.


                                       14
<PAGE>

Item 2. Properties

Facilities

      Our primary executive offices are at 4301 Windfern Road, Houston, Texas
77041. From July 1999 through June 2000, we paid allocated monthly charges of
approximately $3,100 under a lease commitment of our subsidiary ITIS. In July
2000, the building lease increased to $18,600 per month, and our allocated
monthly charges increased to $12,400. Venco Compliance's offices are now housed
in this space. GoverNet Affairs maintains its principal offices at 1600 Parkwood
Circle, Atlanta, Georgia 30339, where its monthly rent is approximately $3,400.
Brief Reporter, a subsidiary of National Law Library, maintains its principal
offices at 310 East Main St., Charlottesville, Virginia 22902, where its monthly
rent is approximately $3,900. Compass Data Systems maintains its principal
offices at 1182 West 2400 South, Salt Lake City, Utah 84119, where its monthly
rent is approximately $4,400.

      Management believes that our current facilities are adequate to meet our
needs through the next 12 months and that, if required, suitable additional
space will be available on commercially reasonable terms to accommodate
expansion of our operations.

Other Property

      We formerly owned subsurface mineral rights on approximately 190 acres
located in the City of Mullan, Idaho. We have no competitive economic position
in the mining industry as no mineral production has ever been realized. Further,
we have not received revenue from our mineral rights for the last several years.
At December 31, 1999, we recorded $10,000 as other current assets related to
these mineral rights. At December 31, 2000, we were advised that these mining
assets had no realizable value and accordingly we wrote off the $10,000 related
to this asset. Effective March 27, 2001, the foregoing mineral rights were
indirectly distributed to the original stockholders of Internet Law Library
pursuant to an Amended and Restated Agreement and Plan of Distribution dated
March 13, 2001, whereby Planet Resources., one of Internet Law Library's wholly
owned subsidiaries, was spun-off from Internet Law Library and acquired the
mining and related interests. Internet Law Library no longer maintains any
interest in these properties

Item 3. Legal Proceedings

      On September 9, 1999, Loislaw.com, Inc. filed a lawsuit in the District
Court of Harris County, Texas, 11th Judicial District (Case No. 1999-45563),
against ITIS, National Law Library and Internet Law Library. Loislaw.com, one of
our competitors, alleged that ITIS breached an agreement between Loislaw.com and
ITIS by allegedly providing certain materials to National Law Library for use on
National Law Library's Website, which allegations were denied by us and our
subsidiaries. On December 28, 2000, all parties entered into a confidential
agreement to settle the litigation. This lawsuit was dismissed with prejudice by
agreement of the parties on January 9, 2001.

      On January 26, 2001, in order to protect Internet Law Library and its
stockholders, Internet Law Library filed a lawsuit in United States District
Court for the Southern District of Texas, Houston Division, against Cootes Drive
and several other defendants for damages resulting from alleged stock
manipulation, federal securities law violations, civil RICO, fraud, violations
of Texas securities laws and other Texas statutes and conspiracy. The case also
alleges misrepresentations by co-conspirators in connection with certain funding
transactions with Internet Law Library. All defendants have filed a joint motion
to transfer this case to New York to be consolidated with the lawsuit filed
against us as described below. We intend to prosecute the case vigorously.
However, in the opinion of our litigation counsel the case is not sufficiently
advanced to permit a current evaluation of the likelihood of a successful
outcome.

      On February 5, 2001, in response to our lawsuit in Houston, Cootes Drive
LLC filed a suit against Internet Law Library in the Southern District of New
York alleging breach of one of the financing agreements with us for failure to
honor a conversion of its shares of convertible preferred stock. The suit seeks
monetary damages of $10,000 per day and seeks to compel Internet Law Library to
issue shares of common stock to Cootes Drive LLC. Internet Law Library's answer
to this lawsuit has been filed, and we intend to ask that this case be
transferred to Houston and consolidated with the previously filed case. We
intend to defend this case vigorously. Litigation counsel has advised us that
the case is not sufficiently advanced to permit an evaluation of the likelihood
of the outcome.

      John M. O'Quinn, our Texas-based litigation counsel in this matter, has
agreed to represent Internet Law Library and our directors, if necessary, in
both of these lawsuits on a 50% contingent fee basis with his law firm paying
all expenses of the litigation. The fee will be calculated after all expenses
have been reimbursed to Mr. O'Quinn's law firm.


                                       15
<PAGE>

Item 4. Submission of Matters to a Vote of Security Holders

      There were no matters submitted to Internet Law Library's security holders
during the fourth quarter of the fiscal year ended December 31, 2000.

                                     PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

Market Information

      Internet Law Library's common stock trades on the over-the-counter
Bulletin Board under the symbol "ELAW.OB" The following table shows the high and
low of closing bid prices for the common stock as reported by the
over-the-counter Bulletin Board. The closing bid price quotations reflect
inter-dealer prices, without retail mark-up, markdown or commission and may not
necessarily represent actual transactions.

                                                              High     Low
                                                              ----     ---
Six months ended June 30, 1998
Third quarter............................................     $0.75    $0.50
Fourth quarter...........................................     $0.50    $0.25
Fiscal year ended June 30, 1999
First quarter............................................    $0.125   $0.125
Second quarter...........................................     $0.25   $0.063
Third quarter............................................    $0.875   $0.063
Fourth quarter...........................................     $7.00   $0.469
Transition six months ended December 31, 1999
First quarter............................................    $5.125    $1.75
Second quarter...........................................    $4.063   $1.625

Fiscal year ended December 31, 2000
First quarter............................................   $7.9375  $3.1875
Second quarter...........................................    $6.625    $1.75
Third quarter............................................   $1.9375  $0.8438
Fourth quarter...........................................   $2.2812  $0.1562

Sales of Unregistered Securities

      During the three months ended December 31, 2000, Internet Law Library
issued unregistered shares of its common stock in the following transactions
that have not been previously disclosed by Internet Law Library:

1.    In October 2000, a transaction previously reported in connection with the
      acquisition of ITIS, was rescinded for nonpayment, and we therefore
      canceled 150,000 previously issued shares of common stock and reissued
      them to Hunter M. A. Carr.

2.    In October 2000, we issued 556,793 shares of common stock to Jeremiah Kane
      in exchange for his shares of Compass Data Systems, valued at $761,239.

3.    In October 2000, we issued 556,793 shares of common stock to John McHugh
      in exchange for his shares of Compass Data Systems, valued at $761,239.

4.    In October 2000, we issued 278,396 shares of common stock to Miller,
      Stratvert & Torgerson, P.A., Trustee, in exchange for shares of Compass
      Data Systems, valued at $380,620.

5.    In October 2000, we issued 100,000 shares of common stock to Donald E. and
      Cathryn V. Tull, in exchange for shares of Venco Compliance, valued at
      $90,600.


                                       16
<PAGE>

6.    In November 2000, we issued 77,951 shares of common stock to Orienstar
      Finance Ltd. In exchange for shares of Compass Data Systems, valued at
      $106,574.

7.    In November 2000, we issued 200,445 shares of common stock to Oriental New
      Investments Ltd. in exchange for shares of Compass Data Systems, valued at
      $274,046.

      None of the foregoing transactions involved any underwriters, underwriting
discounts or commissions, or any public offering, and Internet Law Library
believes that each transaction was exempt from the registration requirements of
the Securities Act by virtue of Section 4(2) thereof. The recipients in such
transactions represented their intention to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof, and appropriate legends were affixed to the share
certificates and instruments issued in such transactions. All recipients had
adequate access, through their relationships with Internet Law Library, to
information about Internet Law Library.

Holders

      At December 31, 2000, there were 1,502 holders of record of Internet Law
Library's common stock and 35,421,284 shares outstanding.

Dividends

      Internet Law Library has never declared any cash dividends on its common
stock. Internet Law Library does not anticipate paying any cash dividends on its
common stock in the foreseeable future and intends to retain its earnings, if
any, to finance the expansion of its business and for general corporate
purposes. Any payment of future dividends will be at the discretion of the board
of directors and will depend upon, among other things, Internet Law Library's
earnings, financial condition, capital requirements, level of indebtedness,
contractual restrictions and other factors that Internet Law Library's board of
directors deems relevant.

Item 6. Selected Consolidated Financial Data

      Pursuant to a merger agreement, the stockholders of National Law Library
became beneficial owners of 90% of the outstanding common stock of Internet Law
Library, a majority slate of new directors were elected by the new stockholders,
and the name of the company was changed from Planet Resources, Inc. to Internet
Law Library, Inc. In return, the original stockholders of Planet Resources, who
once owned 100% of a company with no operations and some mining assets, became
10% percent owners of Internet Law Library, National Law Library's parent
company. Because of these fundamental changes in the control and in the
operations of Internet Law Library, the selected financial data shown below and
the consolidated financial statements contained in Part IV of this Form 10-K are
presented as if National Law Library had acquired Planet Resources. Accordingly,
the selected financial data and the consolidated financial statements for the
period from inception (November 30, 1998) through June 30, 1999, and the six
month transition period ended December 31, 1999, reflect the consolidated
financial information of the business conducted by National Law Library for
those periods and by Internet Law Library's new subsidiary, New Planet, from the
date of the reverse acquisition through June 30, 1999, and through the six
months ended December 31, 1999.

      The historical financial data presented in the table below are derived
from the Consolidated Financial Statements of Internet Law Library. The
financial results are not necessarily indicative of Internet Law Library's
future operations or financial results. The data presented below should be read
in conjunction with Internet Law Library's Consolidated Financial Statements and
the notes thereto included elsewhere herein and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."


                                       17
<PAGE>

<TABLE>
<CAPTION>
                                        Year Ended       Six Months Ended      Period from
                                       December 31,         December 31,        Inception
                                           2000                 1999          (November 30,
                                                                              1998) to June
                                                                                 30, 1999
                                       ----------------------------------------------------
<S>                                    <C>                 <C>                 <C>
Consolidated Statement of
 Operations Data:

Revenues                               $  1,147,814        $    222,697        $     53,520
Operating expenses:
Sales and marketing                       1,425,100             372,324             244,775
General and administrative                4,230,073           1,108,645             211,891
Production and computer service             538,785              73,628              65,073
Amortization and depreciation             2,184,794             197,037             142,783
Impairment charge                           748,024                  --                  --
Interest income (expense)                  (155,029)              3,150              (1,212)
                                       ------------        ------------        ------------
Net loss                                 (8,133,991)         (1,525,787)           (612,214)
Deemed preferred stock dividends           (906,250)                 --                  --
                                       ------------        ------------        ------------
Net loss available to common
stockholders                           $ (9,040,241)       $ (1,525,787)       $   (612,214)
                                       ============        ============        ============

Net loss per common share              $      (0.31)       $      (0.07)       $      (0.06)
                                       ============        ============        ============

<CAPTION>
                                       December 31,        December 31,
                                           2000                1999           June 30, 1999
                                       ------------        ------------       -------------
                                                                                Restated
<S>                                    <C>                 <C>                 <C>
Consolidated Balance Sheet Data:

Cash(1)                                $     40,475        $     78,544        $     54,629
Working capital(1)                       (1,594,743)            341,745             118,409
Total assets                             19,592,854           5,920,651           2,424,070
Redeemable common stock                          --             125,000                  --
Stockholders' equity                   $ 15,441,026        $  5,454,130        $  2,140,806
</TABLE>

(1)   At December 31, 2000 and 1999, cash includes $1,761 and $20,235,
      respectively, that is to be indirectly distributed to New Planet's
      stockholders pursuant to a distribution agreement dated March 25, 1999. In
      addition, at December 31, 1999, working capital includes mining assets of
      $10,000 that were to be distributed under this agreement. At December 31,
      2000, these mining assets were deemed worthless. At December 31, 2000 and
      1999, Internet Law Library recorded a current liability in the amount of
      $1,761 and $30,235, respectively, representing its total obligation under
      the distribution agreement. As of March 27, 2001 these mining assets and
      cash were indirectly distributed to the original stockholders of Internet
      Law Library. Internet Law Library no longer maintains any interest in
      these properties.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

      The following discussion should be read in conjunction with the
Consolidated Financial Statements of Internet Law Library, which are included
elsewhere in this Form 10-K. Included in this discussion are certain
forward-looking statements regarding Internet Law Library's expectations for its
business and its capital resources. The reader should not rely on
forward-looking statements because they are subject to known and unknown risks,
uncertainties and other factors that may cause our actual results to differ
materially from those contemplated by the forward-looking statements. Internet
Law Library and its subsidiaries may experience high volatility in operating
results and cash flows from quarter to quarter and from year to year. Our
revenues depend on our ability to attract and retain customers. Most of the
customers of National Law Library, our largest operating subsidiary, have the
option of discontinuing their service at the end of their monthly subscription
period for any reason. Our expense levels are based, in part, on our
expectations as to future revenues. Also, Internet Law Library expects that its
operations often will require upfront expenses, but will result in trailing
revenues. To the extent that revenues are below expectations, we may be unable
or unwilling to reduce expenses proportionately, and operating results and cash
flows are likely to be adversely affected.

      The following is management's discussion and analysis of certain
significant factors that have affected Internet Law Library's financial
condition and results of operations during the periods ended December 31, 2000
and 1999.


                                       18
<PAGE>

RESULTS OF OPERATIONS

Comparison of Results for the year ended December 31, 2000 and the six months
ended December 31, 1999

Revenues. Revenue increased by $925,117 from $222,697 for the six months ended
December 31, 1999 to $1,147,814 for the year ended December 31, 2000. As a
result of the acquisitions of GoverNet Affairs and Brief Reporter during the
last calendar quarter of 1999, consolidated revenues increased $114,565 from
$10,478 for the six months ended December 31, 1999 to $125,043 for the year
ended December 31, 2000. The acquisitions of Compass Data Systems and Venco
Compliance in the last calendar quarter of 2000 resulted in a revenue increase
of $109,745 for the year ended December 31, 2000 over the six months ended
December 31, 1999. Our revenue increases are also due to growing subscriptions
to National Law Library's expanding databases, and to subscription price
increases and the addition of transactional pricing to National Law Library's
product availability.

Sales and Marketing Expense. Sales and marketing expense increased $1,052,776
from $372,324 for the six months ended December 31, 1999 to $1,425,100 for the
year ended December 31, 2000. During 1999, National Law Library was planning and
developing a sales and marketing program, which it began to implement in April
1999 with contract telemarketing personnel. During 2000, National Law Library
has continued to expand its telemarketing force and has also engaged a field
sales force. Additional sales and marketing expense has been incurred in placing
banner ads on Internet sites, increased print advertising in legal publications,
and participation in major legal industry meetings and conferences. Increased
selling and marketing expenses due to the acquisitions of GoverNet Affairs,
Brief Reporter, Compass Data Systems and Venco Compliance were not a significant
element of consolidated sales and marketing expense.

General and Administrative Expense. For the year ended December 31, 2000,
general and administrative expenses increased by $3,121,428 from $1,108,645 for
the six months ended December 31, 1999, to $4,230,073 for the year ended
December 31, 2000. In connection with internal expansion and acquisitions,
payroll and related costs at the administrative and management level increased
by $859,535 from $267,898 for the six months ended December 31, 1999 to
$1,127,433 for the year ended December 31, 2000. Included in general and
administrative expense is $764,753 of non-cash expense related to stock and
option awards for the year ended December 31, 2000, representing an increase of
$639,496 over the $125,257 reported for the six months ended December 31, 1999.
As a result of Internet Law Library's acquisitions of GoverNet Affairs, Brief
Reporter, ITIS, Compass Data Systems and Venco Compliance, general and
administrative expenses increased $694,883 from $55,015 for the six months ended
December 31, 1999 to $749,898 for the year ended December 31, 2000.
Additionally, due to increased consulting, auditing and legal expenses related
to securities law compliance, litigation, capital raising transactions, due
diligence and financial reporting obligations, professional fees increased by
$421,558 from $254,827 for the six months ended December 31, 1999 to $676,385
for the year ended December 31, 2000.

Production and Computer Service Expense. Production and computer service expense
increased $465,157 from $73,628 for the six months ended December 31, 1999 to
$538,785 for the year ended December 31, 2000. Ongoing updates of legislative
tracking information by Internet Law Library's subsidiary, GoverNet Affairs,
account for approximately $290,000 in production and computer service expense
for the year ended December 31, 2000, and Compass Data Systems, which was
acquired in the fourth quarter of 2000, accounts for approximately $61,000 in
production and computer service expense. Other expenses relate primarily to
Internet service provider co-location costs, contract programming expense and
ongoing maintenance of computer equipment and software for all subsidiaries.

Amortization and Depreciation Expense. For the year ended December 31, 2000,
amortization and depreciation expense increased $1,987,757 from $197,037 for the
six months ended December 31, 1999 to $2,184,794 for the year ended December 31,
2000. The increase is primarily attributable to amortization of intangible
assets relating to the acquisitions of GoverNet Affairs, Brief Reporter, ITIS,
Compass Data Systems and Venco Compliance, while the balance of the increase
relates to depreciation of fixed-asset acquisitions.

Impairment Charge. An impairment charge in the amount of $748,024 was recorded
in the fourth quarter of 2000 in accordance with Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of." Internet Law Library, with
the assistance of an independent appraisal firm, conducted a strategic review of
certain aspects of its business, and based on the results of this evaluation,
recorded a non-cash impairment charge by writing down capitalized database
content and software costs by $748,024.

Interest Expense. Interest expense of $193,588 incurred for the year ended
December 31, 2000 includes accrued interest payable to Mr. Carr and two
directors of Internet Law Library in the amount of $141,420 and non-cash
interest expense relating to the Series A Preferred Stock conversions in the
amount of $45,946. Internet Law Library calculated the interest based on the
terms of twelve


                                       19
<PAGE>

unsecured promissory notes payable to Mr. Carr in the total amount of $1,805,000
and promissory notes payable to George A. Roberts and W. Allyn Hoaglund,
directors of Internet Law Library, in the total amount of $400,000 and $50,000,
respectively. The balance of interest expense relates to other notes payable.

Comparison of Results for the six month transition period ended December 31,
1999, and the period from inception of National Law Library on November 30, 1998
to June 30, 1999 ("Inception to June 30, 1999")

Revenues. Total revenues increased 316% to $222,697 for the six months ended
December 31, 1999, from $53,520 for the period Inception to June 30, 1999. This
increase is primarily due to an increase in the number of subscribers to
National Law Library's databases. At December 31, 1999, National Law Library had
1,485 subscribers who were paying an average monthly subscription rate of
$47.03. This contrasts with 719 subscribers at June 30, 1999, who paid an
average monthly rate of $43.65. Primarily, the increase in revenues is
attributable to a growing subscriber base. The increase in revenue between
periods is also due to the increased number of months during which subscriptions
to National Law Library's databases were sold. During the Inception to June 30,
1999 period, National Law Library was in a start-up mode until early March 1999,
allowing for only four months of sales activity during the earlier period versus
six full months of activity ended December 31, 1999. Revenues from GoverNet
Affairs for two months amounting to $6,838, and from Brief Reporter for one
month amounting to $3,640 were not significant elements of consolidated revenues
during the six months ended December 31, 1999.

Selling and marketing. Selling and marketing expense increased by $127,549 or
52% to $372,324 for the six months ended December 31, 1999, from $244,775 for
the period Inception to June 30, 1999. Included within this expense category are
the hourly wages and salaries of telemarketing personnel and management directly
involved in National Law Library's selling and marketing efforts. During the six
months ended December 31, 1999, hourly wages and salaries of these personnel
increased by $181,090 over the preceding period due primarily to: (1) an
increase in the average monthly number of telemarketing personnel from 12
persons during the Inception to June 30, 1999 period to 20 persons during the
six month period, and (2) during the earlier period, the services of
telemarketing personnel were employed for only three months versus a full six
months during the latter period. This increase in telemarketing and sales
management was partially offset by a decrease of $75,400 related to the
termination on June 30, 1999, of a personal service contract with Mr. Carr,
National Law Library's President, during the period Inception to June 30, 1999.
Effective July 1, 1999, Mr. Carr became a salaried officer of Internet Law
Library and the related payroll expenses have been included in general and
administrative expense for the six months ended December 31, 1999. During the
earlier period, substantially all of Mr. Carr's efforts were dedicated to
building and directing National Law Library's early sales infrastructure. Also,
during the six months ended December 31, 1999, Internet Law Library's
consolidated selling and marketing expense increased by $21,660 due to
consolidating two months of GoverNet Affairs' selling and marketing expense.

General and administrative. General and administrative expense increased by
$896,755 from $211,891 during the period Inception to June 30, 1999, to
$1,108,645 during the six months ended December 31, 1999. This four-fold
increase is due to several factors. Additional payroll and allocated expenses
from ITIS for accounting and administrative personnel performing services on
behalf of Internet Law Library amounted to $297,778. During the six months ended
December 31, 1999, Internet Law Library employed several new officers and
employees including Mr. Carr as Internet Law Library's President and Chief
Executive Officer, a new corporate secretary, a new chief financial officer, and
a new vice president of mergers and acquisitions. In addition, two months of
compensation expenses related to GoverNet Affairs are included in consolidated
general and administrative expense during the six months ended December 31,
1999. Professional fees covering auditing and tax services, legal and compliance
services, litigation, financial consulting and media relations increased by
$265,322 in the six months ended December 31, 1999, over the period Inception to
June 30, 1999. The principle reason for this increase is Internet Law Library's
expanded financial reporting obligations as a full reporting company pursuant to
the rules and regulations of the SEC. In addition, Internet Law Library's
acquisitions of GoverNet Affairs and Brief Reporter resulted in additional
consulting and auditing expenses related to due diligence and financial
reporting related to Internet Law Library's decision to change its fiscal year
end from June 30 to December 31 requiring an additional audit of the transition
period. During the six months ended December 31, 1999, Internet Law Library also
incurred stock compensation expense amounting to $124,579, representing awards
of restricted stock and options to purchase restricted stock to certain officers
and employees of Internet Law Library and its subsidiaries.

Amortization and depreciation. During the six months ended December 31, 1999,
amortization and depreciation expense increased by $54,254, or 38%, to $197,037
from $142,783 for the period from Inception to June 30, 1999. During the
six-month period, Internet Law Library recognized $55,602 of amortization
expense related to specific intangible assets recorded in connection with its
acquisitions of GoverNet Affairs and Brief Reporter. In addition, depreciation
expense increased by $12,500 as a result of purchases of furniture and equipment
by National Law Library and the inclusion of depreciation expense for acquired
subsidiaries. Despite an increase of $987,594 in capitalized database content
during the six months ended December 31, 1999, related amortization expense
decreased from that of the preceding period because most of these additions
occurred late in the last quarter of the calendar year and


                                       20
<PAGE>

because the preceding period includes seven months of amortization of the
original content and software contributed at inception of National Law Library.

LIQUIDITY AND CAPITAL RESOURCES

      Internet Law Library's ability to execute its business strategy depends to
a highly significant degree on its ability to attract additional capital.
Internet Law Library's principal demands for liquidity are cash for operations
and funds for investment in new database content.

      During the year ended December 31, 2000, Internet Law Library's cash and
cash equivalents decreased by $38,069 from the December 31,1999 balance of
$78,544 to $40,475 at December 31, 2000. Cash used in operating and investing
activities was $4,722,681, cash used in investment activities was $1,405,486,
and cash provided by financing activities was $6,090,098. During the year ended
December 31, 2000, Internet Law Library borrowed a total of $1,805,000 from
Hunter M.A. Carr, its CEO, to fund working capital requirements. Mr. Carr
advanced an additional $255,000 during January and February 2001, and $200,609
since March 1, 2001. The borrowings through February 28, 2001were evidenced by
unsecured promissory notes, each bearing an annual interest rate of 11.75% and
payable in full with accrued interest after six months. On February 28, 2001,
the notes through that date were consolidated into one demand note in the amount
of $2,060,000 bearing interest at the rate of prime plus two percent per year,
payable in cash on demand after one year. At Mr. Carr's option and with 30 days
written notice, the note may be repaid in common stock of Internet Law Library
at a discounted price based on the lowest price at which Internet Law Library
has sold its common stock during the one-year period preceding the exercise of
this option. On March 10, 2001, Internet Law Library retired $250,000 in
principal from this note by issuing 1,153,828 restricted shares of common stock
to Mr. Carr at a price of $.216667 per share. New promissory notes bearing the
same terms have been issued to Mr. Carr for the $200,609 advanced to Internet
Law Library since March 1, 2001. On April 12, 2001, the total principal amount
and accrued but unpaid interest owed to Mr. Carr were $2,010,609 and $239,081,
respectively.

      On May 11, 2000, Internet Law Library entered into an intermediate
financing agreement with Cootes Drive LLC, and privately placed 300 shares of 5%
Series A Convertible Preferred Stock for $3 million. This preferred stock is
convertible into shares of Internet Law Library's common stock based on a price
equal to the lesser of (i) $3.2375 or (ii) 80% of the average of the three
lowest closing bid prices during a 20-day trading period prior to the date of
conversion. Internet Law Library is entitled to redeem the convertible preferred
stock at a cash price equal to 120% of the issue price, provided there is an
effective registration statement for the underlying shares of common stock. On
July 5, 2000, the SEC declared the registration statement filed by Internet Law
Library effective, which registered an amount of shares of its common stock then
sufficient to satisfy any conversion, warrant exercise, and dividend
requirements under the terms of this financing agreement. The convertible
preferred stock purchased by the investor is subject to mandatory redemption by
Internet Law Library upon the occurrence of a change in control or certain other
events. As part of this financing agreement and in consideration for negotiating
a $25 million equity line completed on November 20, 2000, Internet Law Library
agreed to issue a five-year warrant to the investor for the purchase of 500,000
shares of its common stock at an exercise price of $3.56 per share. In the
equity line agreement completed on November 20, 2000, this warrant was replaced
with 2 five-year warrants for the purchase of 250,000 shares each at exercise
prices of $3.56 and $.60 per share. Additionally, at May 11, 2000 Internet Law
Library agreed to issue a five-year warrant to a third party for the purchase of
200,000 common shares at an exercise price of $3.3994 per share. A commission of
$100,000 and legal fees of $30,000 related to this financing arrangement were
recorded net of preferred stock proceeds in stockholders' equity. Due to recent
litigation in regard to the foregoing financing agreements, it is unlikely that
any further funding will occur from this private capital fund and that any more
conversions of preferred stock will occur.

      In October 2000 Internet Law Library executed demand notes for $400,000
and $50,000 in favor of George A. Roberts and W. Allyn Hoaglund, members of its
board of directors. The notes bear interest at the rate of prime plus two
percent per year and are payable on demand after one year. At the option of the
holder, the notes may be repaid in common stock of Internet Law Library at a
discounted price based on the lowest price at which Internet Law Library has
sold its common stock during the one-year period preceding the exercise of this
option.

      On November 20, 2000, Internet Law Library entered into an equity line
financing arrangement with Cootes Drive. This arrangement is the successor to
the intermediate financing agreement of May 11, 2000. The financing arrangement
is in the form of a Securities Purchase Agreement providing for the purchase by
Cootes Drive of up to $25,000,000 worth of shares of common stock of Internet
Law Library over an 18-month period. Under the terms of the Securities Purchase
Agreement, Internet Law Library can deliver a put to Cootes Drive specifying the
dollar amount of shares Internet Law Library intends to sell on each put up to a
maximum of 150% of the product of the weighted average daily price of Internet
Law Library's common stock and the weighted average trading volume (closing bid
price multiplied by volume for a particular day) for the twenty trading day
period prior to the delivery of a put. The number of shares to be acquired by
the investor in each put is determined by dividing the dollar amount of the put
by 90% of the


                                       21
<PAGE>

average of the two lowest closing bid prices for our stock during the ten
trading days preceding the date of the put. The maximum amount that Internet Law
Library can receive under the Securities Purchase Agreement is $25 million or a
lesser amount depending on the limitation on the number of shares Cootes Drive
(and its affiliates) are permitted to hold at any one time, which is 4.99% of
the then outstanding common stock of Internet Law Library. Certain conditions
must be met before Cootes Drive is obligated to accept a put from Internet Law
Library, and as of April 12, 2001, Internet Law Library did not meet these
conditions.

      On December 5, 2000, Internet Law Library executed a convertible
promissory note in the face amount of $500,000 in favor Cootes Drive. The note
is a demand note, and accrues interest at the rate of 5% per annum. The
principal can be converted to common stock of Internet Law Library based on a
conversion price equal to the lesser of (i) $0.288 or (ii) 80% of the average of
the three lowest closing prices during a 20 day period prior to the date of
conversion. In connection with this promissory note, Internet Law Library issued
a warrant to the investor for 41,650 shares at an exercise price of $0.228 per
share. A commission of $17,500 and legal fees of $30,000 related to the equity
line financing arrangement were paid from the proceeds of this note. On December
5, 2000, Internet Law Library also entered into a side letter agreement that
obligated the same private capital fund to provide an additional $500,000 on
January 14, 2001, in exchange for another convertible promissory note, on
similar terms. Funding of this note was contingent upon, among other things, the
weighted average daily trading volume for Internet Law Library's common stock
averaging $165,000 for the period between December 5, 2000 and January 14, 2001.
Upon closing of this second promissory note, Internet Law Library was to be
obligated to issue a five-year warrant for 41,650 shares with an exercise price
equal to the average of the closing bid prices of the common stock for the five
trading days prior to issuance of this note, and register the resale of such
shares. These conditions were not met and this additional funding never
occurred.

      On December 5, 2000, Internet Law Library granted registration rights to
the investor for up to 17,541,650 shares of common stock it may acquire under
the equity line financing, the convertible promissory note financings and the
warrants granted in connection with all of these financings. Internet Law
Library filed a registration statement with the SEC covering the resale of these
shares that was declared effective on January 11, 2001.

      Due to recent litigation in regard the foregoing financing agreements with
Cootes Drive LLC as discussed in detail on page 15 of this Report, it is
unlikely that any further funding will occur from this private capital fund.
Accordingly, Internet Law Library will require new financing to fund its
operations and execute its business plan. The inability to obtain additional
financing will substantially impact Internet Law Library's ability to continue
as a going concern. In its report on Internet Law Library's Financial Statements
for the year ended December 31, 2000, Harper & Pearson Company, Internet Law
Library's independent auditors, state that Internet Law Library's recurring
losses from operations, negative working capital and cash flows, and retained
deficits derived from its continuing losses raise substantial doubt about its
ability to continue as a going concern. To provide interim financing until
long-term financing becomes available, management plans to continue to utilize
additional loans from Mr. Carr and other directors and investors.

      On January 16, 2001, Internet Law Library executed a demand promissory
note in the amount of $100,000 payable to an unaffiliated third party. The note
bears interest at 10% per year and is payable in cash on demand after one year.
At the option of the holder and with 30 days written notice, the note may be
repaid in common stock of Internet Law Library at a discounted price based on
the lowest price at which Internet Law Library has sold its common stock during
the one-year period preceding the exercise of this option.

      In February 2001, Internet Law Library executed demand notes for $190,000
and $50,000 in favor of George A. Roberts and W. Paul Thayer, members of its
board of directors. The notes bear interest at the rate of prime plus two
percent per year and are payable in cash on demand after one year. At the option
of the holder and with 30 days written notice, the notes may be repaid in common
stock of Internet Law Library at a discounted price based on the lowest price at
which Internet Law Library has sold its common stock during the one-year period
preceding the exercise of this option.

      On February 28, 2001, Internet Law Library executed a demand promissory
note in the amount of $25,000 payable to an unaffiliated third party. The note
bears interest at the rate of prime plus two percent per year and is payable in
cash on demand after one year. At the option of the holder and with 30 days
written notice, the note may be repaid in common stock of Internet Law Library
at a discounted price based on the lowest price at which Internet Law Library
has sold its common stock during the one-year period preceding the exercise of
this option.

      On April 5, 2001, Internet Law Library executed a demand promissory note
for $70,000 in favor of W. Paul Thayer, a member of our board of directors. The
note bears interest at the rate of prime plus two percent per year and is
payable in cash on demand after one year. At the option of the holder and with
30 days written notice, the note may be repaid in common stock of


                                       22
<PAGE>

Internet Law Library at a discounted price based on the lowest price at which
Internet Law Library has sold its common stock during the one-year period
preceding the exercise of this option.

      Internet Law Library's financial statements are prepared using principles
applicable to a going concern, which contemplates the realization of assets and
liquidation of liabilities in the normal course of business. However, at this
time we do not have significant cash or other material liquid assets, nor do we
have an established source of revenues sufficient to cover operating costs and
to allow us to continue as a going concern. We may in the future experience
significant fluctuations in the results of our operations. Such fluctuations may
result in volatility in the price and/or value of Internet Law Library's common
stock. Shortfalls in revenues may adversely and disproportionately affect the
results of operations because a high percentage of the operating expenses are
relatively fixed. Accordingly, management believes that period-to-period
comparisons of results of operations should not be relied upon as an indication
of future results of operations.

      Internet Law Library will be required to obtain additional financing or
capital to maintain operations, and that capital may have provisions that could
suppress future stock prices or cause significant dilution to current
shareholders. Our internally generated cash flows from operations have
historically been and continue to be insufficient for our cash needs. As of
April 12, 2001 our sources of external and internal financing are very limited.
It is not expected that the internal source of liquidity will improve until
significant net cash is provided by operating activities (which may not be
achieved in the near term, if ever), and until such time, we will rely upon
external sources for liquidity. Management of Internet Law Library believes that
net proceeds of future anticipated securities offerings and projected revenues
from operations should be sufficient to fund ongoing operations and business
plans. However, the anticipated offerings may not be undertaken, and if
undertaken, may not be successful, or the proceeds derived from such offerings
may not be sufficient to fund operations and meet our needs. Further, our
revenues may not be realized as projected. Internet Law Library's current
working capital is not sufficient to cover cash requirements for the balance of
the current fiscal year or to bring us to a positive cash flow position.

      As of March 31, 2001, Internet Law Library's regular monthly cash
operating expenditures exceeded monthly cash receipts by approximately $250,000.
Integration of current and prior period acquisitions of GoverNet, Brief
Reporter, ITIS, Compass Data Systems and Venco Compliance as well as any
potential future acquisitions are critical to the success of our business plan.
We have already implemented plans to reduce administrative costs and to increase
revenues through increased marketing and increases in prices. While many factors
can impact future operations and these improvements cannot be assured of
success, the management of Internet Law Library intends to take all actions
deemed prudent and necessary.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

      During the period ended December 31, 1999, Internet Law Library's
short-term investments consisted of corporate debt securities supported by
letters of credit which are classified as "securities available for sale" and
are reported at their fair value with accrued interest expense and income
recorded when such securities are purchased and sold, respectively. As of
December 31, 2000, Internet Law Library no longer held such investments.

      Internet Law Library is exposed to interest rate risk because additional
financing will be required. The interest rate that Internet Law Library will be
able to obtain on debt financing will depend, among other things, on the
financial and operational condition of Internet Law Library and external market
conditions at the time such financing is sought.

Item 8. Financial Statements and Supplementary Data

      Included herein beginning on page F-1.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

      In January 2000, the board of directors voted to dismiss and replace
Harper & Pearson Company as Internet Law Library's independent accountants with
Arthur Andersen LLP. The Audit Committee of Internet Law Library's board of
directors recommended this action and it was approved by the board of directors
on February 28, 2000. Internet Law Library's consolidated financial statements
for the six months ended December 31, 1999, have been audited by Arthur Andersen
LLP.

      For the period from the inception of National Law Library on November 30,
1998, to June 30, 1999 ("Inception to June 30, 1999) and for the year ended June
30, 1998, Harper & Pearson's reports did not contain any adverse opinions or
disclaimers of opinion and were not qualified or modified as to uncertainty,
audit scope, or accounting principles. During the periods Inception to June 30,
1999, the one year ended June 30, 1998, and the subsequent interim period ended
April 5, 2000, there were no disagreements


                                       23
<PAGE>

with Harper & Pearson on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreement, if not resolved to the satisfaction of Harper & Pearson, would
have caused it to make reference to the subject matter of the disagreement in
connection with its reports on the financial statements of Internet Law Library
for such periods. Internet Law Library has authorized Harper & Pearson to
respond fully to the inquiries of Arthur Andersen LLP.

      On February 19, 2001, the board of directors voted to dismiss and replace
Arthur Andersen LLP as Internet Law Library's independent accountants with
Harper & Pearson Company. Internet Law Library's consolidated financial
statements for the fiscal year ended December 31, 2000 have been audited by
Harper & Pearson Company.

      For the period July 1, 1999 to December 31, 1999, Arthur Andersen LLP's
report did not contain any adverse opinions or disclaimers of opinion and was
not qualified or modified as to uncertainty, audit scope, or accounting
principles. During the period July 1, 1999 to December 31, 1999, and the
subsequent interim period through February 19, 2001, there were no disagreements
with Arthur Andersen LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreement, if not resolved to the satisfaction of Arthur Andersen LLP, would
have caused it to make reference to the subject matter of the disagreement in
connection with its reports on the financial statements of Internet Law Library
for such period. Internet Law Library has authorized Arthur Andersen LLP to
respond fully to the inquiries of Harper & Pearson Company.


                                       24
<PAGE>

                                    PART III

Item 10. Directors and Executive Officers of Registrant

      Effective March 30, 1999, Planet Resources, our predecessor, entered into
an agreement and plan of reorganization with National Law Library and the
stockholders of National Law Library. Under this agreement, National Law Library
and Planet Resources were merged, and each share of National Law Library common
stock was exchanged for one share of Planet Resources common stock. In
contemplation of this transaction, Planet Resources' stockholders agreed to a
one-for-two reverse stock split, which resulted in 2 million shares of its
common stock being outstanding immediately prior to the merger. A majority of
these shares were owned by A.W. Dugan, our former chairman of the board and
president, who may be deemed to have controlled Planet Resources before the
merger. Mr. Carr, our current chairman of the board, president and chief
executive officer, owned 15,152,500 shares of National Law Library's common
stock, and received an equal number of shares of Planet Resources' common stock
in the merger. On July 8, 1999, we changed our name from Planet Resources, Inc.
to Internet Law Library, Inc.

      Under the terms of this agreement, the majority of the members of Planet
Resources' board of directors resigned and were replaced by three of National
Law Library's designees, Mr. Carr, Kelley V. Kirker and Jonathan C. Gilchrist.
Mr. Gilchrist resigned as a director on June 15, 1999. Except for this
transaction, no arrangement or understanding exists between any director or
executive officer or any other person under which any director or executive
officer was selected as a director or executive officer.

      There are currently eight directors on our board of directors. Our board
of directors is divided into three classes with staggered three-year terms.

      The following table sets forth certain information concerning our
directors and executive officers who were either serving or had been chosen to
serve in this capacity as of April 12, 2001:

Name                              Age  Position with Internet Law Library
----                              ---  ----------------------------------
Hunter M.A. Carr...............   52   Chairman of the Board of Directors,
                                       President and Chief Executive Officer
Eugene A. Cernan, USN (Ret.)...   65   Director
W. Allyn Hoaglund..............   52   Director, Chairman of Audit Committee
Kelley V. Kirker...............   41   Director and Chief Operations Officer
George A. Roberts..............   80   Director and member of Compensation
                                       Committee
Donald W. Sapaugh..............   41   Director, Member of Audit Committee
W. Paul Thayer.................   80   Director and Chairman of Compensation
                                       Committee
David P. Harriman..............   52   Director and President of National Law
                                       Library
K. Charles Peterson............   56   General Counsel
Kara A. Kirker.................   38   Treasurer, and Chief Financial Officer
                                       and Treasurer of National Law Library
Joanna Hoover..................   51   Chief Financial Officer
Robert Sarlay..................   55   Vice President, Special Programs and
                                       Shareholder Relations; President of
                                       Venco Compliance, Inc.
Carol Ann Wilson...............   58   Corporate Secretary
Jeremiah Kane..................   26   President of GoverNet Affairs
John McHugh....................   26   President of Compass Data Systems

      Hunter M.A. Carr has been our chairman of the board of directors,
president and chief executive officer since March 30, 1999. Mr. Carr is the
founder of National Law Library and has served as chairman of the board and
president of National Law Library since its founding in November 1998. From
April 1994 until October 1999, Mr. Carr served as chairman of the board and
chief executive officer of ITIS, a company in which Mr. Carr was the sole
stockholder until January 2000. In October 1999, Mr. Carr resigned as chief
executive officer of ITIS. Mr. Carr has served as one of our directors since
March 30, 1999. His current term on the board began on February 28, 2000, and
will expire on February 27, 2003.

      Eugene A. Cernan, USN (Ret.), author of The Last Man on the Moon (St.
Martin's Press 1999), brings to us an unparalleled background of courage and
achievement. Mr. Cernan spent 20 years as a naval aviator, the last 13 of which
were with NASA. He served on three space missions, the last being as Commander
of Apollo XVII, and has received numerous decorations and honors for that
service. Mr. Cernan has served as chairman of Johnson Engineering Corporation,
which provides NASA with systems development for flight crews and crew station
design for the Space Shuttle, Spacelab, Space Station, Lunar Base and Mars
Outpost,


                                       25
<PAGE>

since 1994. From 1986 to 1992, Mr. Cernan was the executive vice president and
director of Coral Petroleum, Inc., where he was in charge of corporate
development of a worldwide supply and marketing strategy. From 1986 to 1992, he
was executive consultant for the government systems group of Digital Equipment.
He was enshrined in the National Aviation Hall of Fame in July 2000.

      Mr. Cernan's many honors range from the Navy Distinguished Flying Cross to
a television Emmy. His membership in professional societies includes the Society
of Experimental Test Pilots, the American Space Institute, and the Golden
Eagles. His directorships include Up with People, the Lone Star Flight Museum,
First Bank, and Alaska Aerospace Development Corp. Mr. Cernan's term as a
director began on January 1, 2000, with his appointment by the board, and it
will expire on December 31, 2002.

      W. Allyn Hoaglund, an experienced trial attorney in Houston, Texas, Mr.
Hoaglund concentrates his law practice on civil matters, including personal
injury, malpractice, products liability, condemnation law, and major commercial
litigation. He has been in solo practice since 1987, having previously been
associated with both Vinson & Elkins and Helm, Pletcher & Hogan. Mr. Hoaglund
holds a B.A. from Louisiana State University and a J.D. from the University of
Houston Law Center and is admitted to practice before the United States Supreme
Court. He is board certified in Civil Trial Law by the Texas Board of Legal
Specialization. He is a member of Phi Alpha Delta and the Order of the Barons,
and a Fellow of the Houston Bar Foundation.

      Kelley V. Kirker has been our Chief Operating Officer since April 30,
2000, and served as one of our vice presidents from June 15, 1999 until July 13,
1999. Mr. Kirker has also served as a director of National Law Library since
July 1, 1999. On October 1, 1999, Mr. Kirker was appointed chief executive
officer of ITIS. Since April 1994 Mr. Kirker has served as president and chief
operating officer of ITIS. From 1987 until 1994, Mr. Kirker was employed by
MLSI, Inc., a company engaged in litigation support service and owned by Mr.
Carr. Prior to 1987, Mr. Kirker was employed for approximately five years by
Texaco, Inc. in its computer information service area. Mr. Kirker has served as
one of our directors since March 30, 1999. His current term on the board began
on February 28, 2000, and will expire on February 27, 2003.

      George A. Roberts served Teledyne, Inc. in various positions from 1966
until his retirement in 1993. He began his service as president, became chief
executive officer and president in 1986, was elected vice chairman of the board
and chief executive officer in 1991, and became chairman of the board in 1991.
Prior to that time, from 1941 until 1966, Dr. Roberts was employed by the Vasco
Metals Corporation, first as research metallurgist, as chief metallurgist in
1945, as vice president-technology in 1953, and was elected president in 1961.

      Dr. Roberts is a member of the National Academy of Engineering, a fellow
of The American Society for Metals, The Metallurgical Society and The Society of
Manufacturing Engineers. He is also a life trustee of the Carnegie-Mellon
University. In 1980, he was awarded the Carnegie-Mellon University Distinguished
Achievement Award. In 1984, Dr. Roberts received an award from the National
Conference of Christians and Jews for distinguished service in the field of
human relations, and he also received the 1984 Americanism Award from the Boy
Scouts of America. Dr. Roberts was elected to the board on February 28, 2000,
and his term will expire on February 27, 2003.

      Donald W. Sapaugh has more than 20 years' health care management
experience as financial officer and President/Chief Executive Officer. From 1986
to 1996, he led Rapha Treatment Centers, one of the largest psychiatric
management service organizations in the United States. Currently President and
CEO of iExalt, Inc., Mr. Sapaugh founded what is now known as PremierCare in
1996, and he still serves as its President and CEO. He is a member of many
health-related organizations, including the National Association of Private
Health Systems and the American College of Hospital Administration. He served on
President Bush's Committee on Mental Retardation from 1990 to 1993 and as
Chairman of the President & Mrs. Bush Community Impact Award. He holds a BBA
from the University of Houston with an Accounting major and a Doctor of Divinity
from Louisiana Christian University.

      Paul Thayer's background provides a wealth of experience from which he can
draw as a director. From 1983 to 1984, he served in the Reagan Administration as
Deputy Secretary of Defense and received many awards for his service. Prior to
this time, from 1970 to 1983, Mr. Thayer served as chairman of Ling-Temco-Vought
in Dallas, Texas. Mr. Thayer graduated number one in his Navy Aviation Cadet
Class. He later served as a test pilot, combat ace, commercial airline pilot,
and he flew around the world in 1993. Mr. Thayer was a U.S. Navy combat ace in
World War II and an experimental test pilot. He was the first pilot to break the
sound barrier in a production Navy fighter. In 1994, he was inducted into the
Navy Experimental Test Pilots Hall of Fame, and he is a past recipient of the J.
H. Doolittle Award and the Kitty Hawk Award. Among his many other honors are the
Distinguished Flying Cross, two presidential citations, and the distinguished
Horatio Alger Award. Mr. Thayer's notable community service includes the Robert
M. Thompson Navy League Award for outstanding civilian leadership, the
University of Kansas Distinguished Service Citation for outstanding achievements
and service to mankind, and the Air Force Medal and Decoration for Exceptional
Civilian Service. In addition, Mr. Thayer is a past chairman of the Chamber of
Commerce of the United States and of the National Corporate


                                       26
<PAGE>

Advisory Board of the Vietnam Veterans Memorial Fund. Mr. Thayer's term as a
director began on January 1, 2000, with his appointment by the board, and it
will expire on December 31, 2002.

      David P. Harriman has served as the President of National Law Library
since December 1, 1999. In 1996, Mr. Harriman founded Brief Reporter as a
publishing start-up with a database of appellate briefs for attorneys on the
Internet. Prior to that time, Mr. Harriman served in various positions at The
Michie Company, most recently as president and chief executive officer from 1989
to 1996.

      K. Charles Peterson joined us as our general counsel in May 2000. He
graduated from Harvard College, Class of 1965, with an A.B. in Mathematics.
Peterson was a first lieutenant in the U.S. Army and was decorated for service
in Vietnam. In 1976 he graduated summa cum laude from South Texas College of
Law, where he received the Mary Moody Northen Award for Scholastic Excellence,
was on Law Review, and received numerous American Jurisprudence awards. A former
partner of the Reynolds, Allen & Cook Law Firm, Peterson has continued in
private practice since 1976. In recent years he co-founded the Trinity Life
Center, which provides services for more than 4,500 abused children each year.

      Kara A. Kirker has served as our Treasurer and as National Law Library's
Chief Financial Officer and Treasurer since October 1, 1999. Prior to joining
us, Ms. Kirker provided services to National Law Library on a contract basis as
an officer of ITIS. From January 1994 until National Law Library's inception in
November 1998, Ms. Kirker served as the controller and treasurer of ITIS, in
which positions she continues to serve. From 1981 to 1994, Ms. Kirker served as
assistant treasurer of Stone & Webster Oil Company, Inc. in the revenue
accounting area.

      Joanna Hoover joined us on May 1, 2000, after having served as outside
Certified Public Accountant for ITIS and its related entities since 1994. Ms.
Hoover has been in the practice of public accounting since 1973 and has been a
shareholder/partner in the Houston accounting firm of Nommensen, Hoover &
Williams, P.C., since 1985. In addition to being a CPA, she holds licenses in
the fields of insurance, securities and investments. On June 6, 2000, Ms. Hoover
became our Chief Financial Officer.

      Robert Sarlay has served as our Vice President for Special Programs and
Shareholder Relations since July 1, 1999. Prior to joining us, from October 1998
until July 1999, Mr. Sarlay was the manager of marketing for ITIS and provided
marketing and shareholder services on a contract basis to us and to National Law
Library. From August 1997 to October 1998, Mr. Sarlay was the owner/operator of
three restaurants in the Houston area. From 1993 to 1997, he served as the
president of Advanced Care Centers of America, LLC, an operator of nursing home
facilities in Texas. Mr. Sarlay was the vice president commercial division of
Asset Partners, Inc., an operator of commercial office buildings in the Houston
area. Prior to 1991, Mr. Sarlay served as an operations and executive officer of
various companies engaged in long-term care, medical management, apartment
development and management, and convenience store operations.

      Carol Ann Wilson joined us as Secretary and Vice President of Content and
Secretary for National Law Library in June 1999. Since July 2000 she has served
as Corporate Secretary for Internet Law Library and worked exclusively in the
Internet Law Library's executive offices. From September 1995 to April 1999, Ms.
Wilson served as the legal secretary and personal assistant to John M. O'Quinn,
P.C. From 1980 to 1995, she was the legal secretary to Joe H. Reynolds. Since
1985, Ms. Wilson has been an active member and speaker in various state and
national legal secretarial and paralegal organizations. She is the author of
Plain Language Pleadings (Prentice Hall 1996), and has been published in
national trade journals and other publications. She is active in Plain Language
Association International, Legal Secretaries International, Inc., and Gulf Coast
Mensa.

      Jeremiah Kane, previously the CEO of Compass Data Systems, now serves as
President of GoverNet Affairs. He led the spin-off of Compass Data Systems from
its parent and subsequent transition to the Internet. Previously, Mr. Kane
served as the head of Internet Advisory Services at Ben Ezra, Weinstein and Co.,
Inc. (BEW), where he assisted several companies in initial public offerings over
the Internet. He also led the development team in creating CapScape Financial, a
software program that walks the user through the documentation needed to offer
securities over the Internet. Mr. Kane also developed Private Placement Master,
the first software for creating a private placement memorandum. He assisted in
the development of Personal Market Analyst, a financial analysis tool
co-marketed by Inc. Magazine. Mr. Kane is a graduate of the University of
Pennsylvania's Wharton School of Business. He holds a degree in Economics with
concentrations in information systems and entrepreneurial management.

      John McHugh, previously the CFO of Compass Data Systems, now serves as its
President. Formerly Business Advisor for Ben Ezra, Weinstein and Co., Inc., he
was responsible for the financial preparations required by BEW's spin-off of
Compass Data Systems. Mr. McHugh led the BEW content team in the development of
Inc. Magazine's Personal Market Analyst, a financial analysis tool for novice
investors. He was responsible for developing financial projections for BEW, both
for shareholders and for the financial community. He assisted Jeremiah Kane in
the development of Private Placement Master. Mr. McHugh graduated Cum


                                       27
<PAGE>

Laude from the University of Pennsylvania with a Bachelor of Science degree in
BioEngineering, and from Wharton School of Business with a Bachelor of Science
degree in Economics concentrating in Finance.

Family Relationships

Kara A. Kirker is a niece by marriage of Hunter M.A. Carr. Kelley V. Kirker is
married to Ms. Kirker.

Section 16(a) Beneficial Ownership Reporting Compliance

      Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that Internet Law Library's executive officers and directors, and beneficial
owners of more than 10% of any class of equity security registered pursuant to
the Exchange Act, make certain filings with the SEC. Internet Law Library
believes, based solely on a review of the copies of such reports furnished to
Internet Law Library during the fiscal year ended December 31, 2000, that all
Section 16(a) filing requirements applicable to its directors, officers and 10%
beneficial owners were satisfied by each such person.

Item 11. Executive Compensation

      Each of Mr. Carr, Mr. Sarlay, and Ms. Kirker is currently an officer of
Internet Law Library or one of our subsidiaries, and was, until July 1, 1999, an
employee of ITIS. Effective beginning in March 1999, National Law Library and
ITIS operated under a management and financial services agreement under which
ITIS provided accounting, staffing, and procurement services and office space to
National Law Library. Under this agreement, National Law Library paid ITIS for
staffing services at 125% of cost. Under a personal service contract that became
effective in November 1998 between National Law Library and Mr. Carr, Mr. Carr
received $55,400 for services performed from the inception of National Law
Library on November 30, 1998 to June 30, 1999. This personal service contract
covered executive services, marketing and business development, public
relations, and general management.

      The following table summarizes the compensation paid by Internet Law
Library directly to certain executive officers during the six months ended
December 31, 1999 and the fiscal year ended December 31, 2000. Apart from these
executive officers, Internet Law Library did not pay any employee an annual
salary and bonus exceeding $100,000 during these two periods.

                           Summary Compensation Table
                 For the Six Months Ended December 31, 1999 and
                   For the Fiscal Year Ended December 31, 2000

<TABLE>
<CAPTION>
                                              Annual Compensation                                 Long Term Compensation
                                              -------------------                                 ----------------------
                                                                                         Securities
                                                           Other Annual    Restricted    underlying      LTIP       All other
Name and principal position       Year    Salary   Bonus   compensation   Stock Awards     options      payouts    compensation
---------------------------       ----    ------   -----   ------------   ------------     -------      -------    ------------
<S>                               <C>    <C>        <C>        <C>             <C>          <C>           <C>          <C>
Hunter M.A. Carr                  2000   $180,000   $-0-       $-0-            $-0-             -0-       $-0-         $-0-
    Chairman of the Board,        1999     90,000    -0-        -0-             -0-             -0-        -0-          -0-
    President and Chief
    Executive Officer

David P. Harriman,                2000   $106,667   $-0-       $-0-            $-0-             -0-       $-0-         $-0-
    Chief Operating Officer       1999      8,333    -0-        -0-             -0-         300,000        -0-          -0-
    and President Of National
    Law Library
</TABLE>

      During the year ended December 31, 2000, the six months ended December 31,
1999, and the period from inception of National Law Library on November 30,
1998, to June 30, 1999, Internet Law Library did not grant any stock
appreciation rights.

      The following table summarizes the compensation paid by Internet Law
Library directly to A.W. Dugan, who served as chief executive officer until
March 30, 1999, and either directly or indirectly to Mr. Carr under a personal
services contract as Internet Law Library's president and chief executive
officer since March 30, 1999. We did not pay any employee an annual salary and
bonus exceeding $100,000 during the period from inception of National Law
Library on November 30, 1998, to June 30, 1999.


                                       28
<PAGE>

                           Summary Compensation Table
   For the Period from Inception of National Law Library on November 30, 1998
                                to June 30, 1999

<TABLE>
<CAPTION>
                                              Annual Compensation                                 Long Term Compensation
                                              -------------------                                 ----------------------
                                                                                         Securities
                                                                                         ----------
                                                           Other Annual    Restricted    underlying      LTIP       All other
                                                           ------------    ----------    ----------      ----       ---------
Name and principal position       Year    Salary   Bonus   compensation   Stock Awards    options       payouts    compensation
---------------------------       ----    ------   -----   ------------   ------------    -------       -------    ------------
<S>                               <C>     <C>      <C>      <C>               <C>            <C>         <C>           <C>
Hunter M.A. Carr                  1999    $-0-     $-0-     $55,400(1)        $-0-           -0-         $-0-          $-0-
   Chairman of the Board,         1998     -0-      -0-            -0-         -0-           -0-          -0-           -0-
   President and Chief
   Executive Officer

A.W. Dugan                        1999    $-0-     $-0-           $-0-        $-0-           -0-         $-0-          $-0-
   Former Chairman of the         1998     -0-      -0-            -0-         -0-           -0-          -0-           -0-
   Board and President
</TABLE>

-----------
(1)   Mr. Carr was compensated pursuant to a personal service contract during
      the period from inception of National Law Library on November 30, 1998, to
      June 30, 1999.

      The following table sets forth the grants of stock options made to
employees of Internet Law Library or its subsidiaries during the period from
inception of National Law Library on November 30, 1998 to June 30, 1999 and for
the six months ended December 31, 1999. There were no grants of stock options
during the year ended December 31, 2000.

<TABLE>
<CAPTION>
                                                  Number of       Percent of total
                                                 securities      options granted to
                                                 underlying     employees during the    Exercise or Base   Expiration   Grant date
Name                                           options granted         period            price ($/share)      Date      value (2)
----                                           ---------------  --------------------     ---------------   ----------   ---------

                                                                     Individual Grants
                                                                     -----------------
<S>                                               <C>                    <C>               <C>                <C>        <C>
For the six months ended
December 31, 1999
   Ronald W. Hogan (3) ......................       166,250               31%              $    3.00          8/31/07    $ 295,835
   David P. Harriman (3) ....................       300,000               55%              $    3.00          8/31/07    $ 300,019
During the period from inception of
   National Law Library on November 30, 1998,
   to June 30, 1999
   Hunter M.A. Carr (1) .....................     1,250,000              100%              $    3.00          4/11/09    $ 847,047
</TABLE>

-----------
(1)   All such options were exercisable on April 12, 1999, the date of grant.

(2)   Grant date value was determined using the Black-Scholes option valuation
      model. The following assumptions were made in using this model: Assumed
      expected volatility factors ranging from 75% to 92%, a 6% risk-free rate
      of return, a dividend


                                       29
<PAGE>

      yield of zero, and terms for exercising the options of between three and
      10 years. The actual value, if any, a person may realize will depend on
      the excess of the stock price over the exercise price on the date the
      option is exercised.

(3)   Options issued to former officers of acquired companies. These individuals
      subsequently became officers of Internet Law Library or one of its
      subsidiaries. Before the options may vest, certain future subsidiary
      financial results or personal performance criteria must be satisfied. The
      earliest date on which one -third of these options may be exercised is
      August 31, 2000, and the latest date on which the last one -third of these
      options may be exercised is August 30, 2007. In the case of Mr. Hogan, the
      criteria for options scheduled to vest on August 30, 2000 was not
      satisfied, and 48,750 options were cancelled at that time. As of April 12,
      2001, 100,000 of Mr. Harriman's options were vested but have not been
      exercised.

      The following table sets forth information concerning the number and value
of securities underlying unexercised options held on December 31, 1999 and 2000
by Internet Law Library's executive officers.

                 Aggregate Options Exercisable and Option Values

<TABLE>
<CAPTION>
                                                    Number of securities           Value of unexercised
                                                   underlying unexercised      in-the-money options at end
                                                  options at end of period             of period(1)
                                                ---------------------------    ----------------------------
Name                                            Exercisable   Unexercisable    Exercisable    Unexercisable
----                                            -----------   -------------    -----------    -------------
<S>                                                <C>           <C>            <C>             <C>
December 31. 2000
   Hunter M. A. Carr.........................      1,250,000          --                --            --
   David P. Harriman.........................        100,000     200,000                --            --
   Jack I. Tompkins..........................      1,000,000          --                --            --
   Ronald W. Hogan...........................             --     117,500                --            --
   John R. Marsh.............................             --      50,000                --            --
December 31, 1999
   Hunter M. A. Carr.........................      1,250,000          --        $2,500,000            --
   Ronald W. Hogan...........................                    166,250                --      $342,475
   John R. Marsh.............................                     75,000                --      $154,500
   David P. Harriman.........................                    300,000                --      $600,000
</TABLE>

-----------
(1)   Based on the difference between the option exercise prices and the closing
      sale prices of $5.00 and $.1875 of our common stock as reported on the
      over-the-counter bulletin board on December 31, 1999 and 2000,
      respectively, multiplied by the number of shares underlying the options.

Compensation of Directors

      On March 26, 1999, our majority stockholders and our board of directors
adopted the 1999 Director Option Plan pursuant to which our outside directors
are granted options for the purchase of our common stock. Under the director
option plan, each outside director is automatically granted options to purchase
15,000 shares of common stock on the date he or she becomes a director.
Thereafter, each outside director who serves for six months or longer is awarded
options to purchase an additional 1,000 shares of common stock at our annual
meeting of stockholders. These options have a term of ten years, and carry an
exercise price of 100% of the fair market value of our common stock on the date
of grant.

      In April 1999, the board of directors approved a stock option grant to Mr.
Tompkins covering 1,000,000 shares of common stock. This option was exercisable
at $3.00 per share, and could be exercised in whole or in part over a term of 10
years from date of grant. The board approved this grant as an incentive for Mr.
Tompkins to serve as our first outside director. Mr. Tompkins became one of our
directors on August 31, 1999, and resigned on June 9, 2000.

      In December 1999, the board of directors approved outside director
compensation in the form of awards of our common stock. These awards will be for
25,000 shares of our common stock payable to each outside director at the
beginning of each year of service. In March 2000, we issued a total of 125,000
shares of our common stock, valued at $551,200, to our outside directors. In
July 2000, we issued 50,000 shares to two new outside directors. In addition,
the board voted in January 2000 to pay each director a


                                       30
<PAGE>

meeting fee of $1,000 per in-person meeting and $500 per telephone meeting. The
board agreed to hold monthly telephone meetings and quarterly in-person
meetings.

Compensation Committee Interlocks and Insider Participation

      Messrs. Carr, Kirker, Reynolds and Tompkins participated in the
deliberations of our board concerning executive officer compensation during the
six months ended December 31, 1999. Since January 2000, the Compensation
Committee has been composed of outside directors. None of our executive officers
has served as a member of the Compensation Committee of another entity whose
executive officers have served on our Compensation Committee.

Report of the Compensation Committee on Executive Compensation

      In accordance with the rules of the SEC, the following report of the
Compensation Committee of Internet Law Library shall not be deemed to be
"soliciting material" or to be "filed" with the SEC under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended. Such
information shall not be deemed to be incorporated by reference into any
statements or reports filed by Internet Law Library with the SEC that do not
specifically incorporate such information by reference.

      Compensation for our executive officers is administered under the
direction of the Compensation Committee with all recommendations of the
Compensation Committee being subject to approval by the board of directors. The
Chairman of the Compensation Committee meets personally with all executive
officers and their management team members each year and receives materials
describing their job performance for evaluation purposes. The following is the
Compensation Committee's report on compensation practices during the year 2000
for the executive officers of Internet Law Library.

      Base Salary. The Compensation Committee recommends base salaries for
executive officers and for officers of its subsidiaries:

      a.    by evaluating the responsibilities of each position held and the
            experience of the individual;

      b.    by reference to the competitive marketplace for executive talent,
            including a comparison to base salaries for comparable positions at
            other companies of similar size and location, to historical levels
            of salary paid, where available; and

      c.    by reference to recommendations of independent compensation
            consultants.

      Salary adjustments are based on periodic evaluation of the performance of
the Company, its subsidiaries and each officer, and added or changed
responsibilities as well as market place changes are considered. Some executives
perform duties for subsidiaries, and portions of their salaries are prorated.
There were no salary adjustments to the executive officers' base salaries for
the year 2000. Mr. Hunter M.A. Carr, who has served as president and chief
executive officer since the commencement of the Company, received a base salary
of $180,000 for the year 2000. Mr. David P. Harriman, who serves as president of
National Law Library, Internet Law Library's most productive subsidiary,
received a base salary of $120,000 for the year 2000. All other executive
officers received salaries of less than $100,000 for the year.

      Executive Incentives. The Compensation Committee has recommended an
executive incentive stock option plan, which has been approved by the board of
directors for the year 2001. To date, there has been no other performance-based
or other bonus plan put into place for Internet Law Library's executives.

      Other Compensation. Other compensation paid to executive officers includes
partial payment of insurance premiums on medical, dental, life, and long-tem
disability plans.


                                       31
<PAGE>

Stock Performance Graph

      SEC rules require presentation of a performance graph comparing the
performance of our common stock against a broad equity market index and against
either a published industry or line-of-business index or group of peer issuers
through the end of our latest fiscal year. We chose the NASDAQ Composite Index
(CCMP) as the relevant broad equity market index and Goldman Sachs Technology
Internet Index (GIN) as the relevant line-of-business index.

ELAW vs NASDAQ Composite Index (CCMP)

                   [GRAPHIC REPRESENTING ELAW STOCK PERFORMANCE
                       COMPARED TO NASDAQ COMPOSITE INDEX]

ELAW vs Goldman Sachs Technology Internet Index (GIN)

                   [GRAPHIC REPRESENTING ELAW STOCK PERFORMANCE
               COMPARED TO GOLDMAN SACHS TECHNOLOGY INTERNET INDEX]


                                       32
<PAGE>

Item 12. Security Ownership of Certain Beneficial Owners and Management

      The following table sets forth information as of April 12, 2001, regarding
the beneficial ownership of our common stock (i) by each person or group known
by our management to own more than 5% of the outstanding shares of common stock,
(ii) by each director, and (iii) by all directors and executive officers as a
group and by A.W. Dugan, who served as our chief executive officer until March
30, 1999. Unless otherwise noted, each person has sole voting and investment
power over the shares indicated below, subject to applicable community property
laws.

      The mailing address for each person identified below is c/o Internet Law
Library, Inc., 4301 Windfern Road, Suite 200, Houston, Texas, 77041.

<TABLE>
<CAPTION>
Name                                                      Shares             Percentage of
----                                                Beneficially Owned   Outstanding Shares(1)
                                                    ------------------   ---------------------

<S>                                                    <C>                         <C>
Hunter M.A. Carr.................................      16,777,281(2)               45.8%
Eugene A. Cernan.................................          50,000                   *
W. Allyn Hoaglund................................          75,000                   *
Kelley V. Kirker.................................         701,500(3)                1.9%
George A. Roberts................................         275,000                   *
Donald W. Sapaugh................................          50,000                   *
Paul Thayer......................................       1,210,000                   3.3%
A.W. Dugan.......................................         792,091                   2.2%
David P. Harriman                                         305,280(4)                *
All other executive officers (4 persons).........         103,288                   *
                                                       ----------                  ----
All executive officers and directors as a group
   (13 persons) .................................      20,339,440                  55.6%
                                                       ==========                  ====
</TABLE>

-----------
*     Less than 1%.

      (1)   Percentage of beneficial ownership is based on 36,575,112 shares of
            common stock outstanding as of April 12, 2001. In computing an
            individual's beneficial ownership, the number of shares of common
            stock subject to options held by that individual that are
            exercisable as of or within 60 days of April 12, 2001, are deemed
            outstanding. Such shares, however, are not deemed outstanding for
            the purpose of computing the beneficial ownership of any other
            person.

      (2)   Includes options to purchase 1,250,000 common shares that are
            currently exercisable and 400,000 shares held by a limited
            partnership of which Mr. Carr is the general partner, for the
            benefit of Mr. Carr's children.

      (3)   Includes 100,000 shares held by Mr. Kirker's spouse, as to which Mr.
            Kirker disclaims beneficial ownership.

      (4)   Includes options to purchase 100,000 common shares that are
            currently exercisable.

Item 13. Certain Relationships and Related Transactions

      Mr. Carr, our chairman of the board of directors, chief executive officer
and president, was also the sole stockholder of ITIS during the period from
National Law Library's inception on November 30, 1998, to December 31, 1999.
During the three months ended March 31, 2000, Mr. Carr sold approximately 92% of
his stock in ITIS to various individuals and entities, some of whom are either
directors or officers of Internet Law Library or are entities controlled by
directors of Internet Law Library. Under a stock exchange agreement dated April
30, 2000, we exchanged 5,044,903 shares of our common stock for all of the
outstanding common stock of ITIS. The closing price of our common stock at April
28, 2000 was $4.125 per share. Of the 5,044,903 shares so issued, 1,721,003
shares were issued to five of our directors or their beneficiaries and 332,300
shares were issued to five of our officers as shown below:


                                       33
<PAGE>

<TABLE>
<CAPTION>
                                                                               Number of
Name of Director/Officer                             Position                    Shares
------------------------                             --------                    ------

<S>                                                  <C>                        <C>
Hunter M.A. Carr...................................  Director and officer       196,003
W. Paul Thayer (Thayer Investment Co.).............  Director                   750,000
Kelley V. Kirker...................................  Director and officer       500,000
Eugene A. Cernan...................................  Director                    25,000
George A. Roberts, ................................  Director                   250,000
Edward P. Stevens..................................  Officer                    150,000
Donald H. Kellam...................................  Officer                    150,000
David P. Harriman..................................  Officer                     25,000
Robert Sarlay......................................  Officer                      3,300
K. Charles Peterson................................  Officer                      4,000
                                                                              ---------
     Total.........................................                           2,053,303
                                                                              =========
</TABLE>

      Prior to its acquisition by us, ITIS has provided National Law Library
with various executive, sales and marketing, and administrative services since
National Law Library's inception on November 30, 1998. In addition, ITIS was and
continues to be a primary provider of case law content to National Law Library.
Set forth below is a summary of the agreements between National Law Library and
ITIS.

      In December 1998, National Law Library and ITIS entered into a continuing
service agreement under which ITIS provided database content to National Law
Library. Under the terms of this agreement, ITIS provided National Law Library
with data files containing case law and statutes that are in the public domain
together with coding and proprietary editing services covering these data files.
National Law Library was charged $.65 per 1,000 characters for those data files
that satisfy certain prescribed quality control requirements. Under the
agreement, National Law Library was obligated for a three-year period to provide
ITIS with minimum orders for data files containing an aggregate of 750 million
characters per month. However, pricing under this agreement was to reflect
market prices for comparable work, and National Law Library had the option to
select another vendor should ITIS' prices not be competitive.

      Despite the contract rate of $0.65 per 1,000 characters, during the six
months ended December 31, 1999, National Law Library revised its method of
accounting for its purchases of content from ITIS due to the common control
exercised over both entities by Mr. Carr and due to the increasing materiality
of the transactions. During this period, approximately 10,332,200,000 bytes of
case law content was delivered by ITIS to National Law Library at a contract
value of $6,722,000. National Law Library, however, recorded this content at
ITIS' estimated cost of $987,594. In addition, Internet Law Library has restated
its case law content purchased from ITIS during the period from National Law
Library's inception on November 30, 1998, to June 30, 1999. As a result of this
revaluation, at June 30, 1999, case law content was revised from approximately
$1,787,000 to approximately $1,197,000, and the related payable to affiliated
company of $115,700 was revised to reflect a receivable from affiliated company
of approximately $474,300.

      Effective beginning in March 1999, National Law Library and ITIS operated
under a management agreement. Under this agreement, ITIS provided accounting,
staffing, and procurement services and office space to National Law Library.
Accounting services were charged at the rate of $85 per hour, staffing services
were charged at 125% of cost, office supplies, equipment, and telephone services
were charged at 120% of cost, and office space rental was based on 115% of cost.
In addition, ITIS was entitled to charge a $3,600 monthly management fee under
the agreement. During the six months ended December 31, 1999, and the period
from inception of National Law Library on November 30, 1998, National Law
Library incurred charges totaling approximately $342,800 and $298,800,
respectively, and, at December 31, 1999 and June 30, 1999, National Law Library
owed ITIS approximately $32,400 and $97,800, respectively, under this agreement.

      Effective in December 1998, National Law Library entered into an agreement
with ITIS to receive software development and consulting services for its
database and retrieval. During the six months ended December 31, 1999, National
Law Library incurred charges totaling approximately $34,600 and, at December 31,
1999, National Law Library owed ITIS approximately $3,800 under this agreement.
No charges were incurred through June 30, 1999.Effective in November 1998,
National Law Library and Mr. Carr


                                       34
<PAGE>

entered into a personal service contract. During the period from inception of
National Law Library on November 30, 1998, to June 30, 1999, National Law
Library incurred total charges of $55,400 under this agreement. The agreement
was terminated on July 1, 1999 when Mr. Carr became one of our salaried
officers.

      Prior to the reverse acquisition, Planet Resources paid approximately
$70,000 for accounting and management services and rent to a company controlled
by A.W. Dugan, the then chairman of the board of directors and president and a
significant stockholder of Planet Resources.

      During the year ended December 31, 2000, Internet Law Library borrowed a
total of $1,805,000 from Hunter M.A. Carr, its CEO, to fund working capital
requirements. Mr. Carr advanced an additional $255,000 during January and
February 2001, and $200,609 since March 1, 2001. The borrowings through February
28, 2001were evidenced by unsecured promissory notes, each bearing an annual
interest rate of 11.75% and payable in full with accrued interest after six
months. On February 28, 2001, the notes through that date were consolidated into
one demand note in the amount of $2,060,000 bearing interest at the rate of
prime plus two percent per year, payable in cash on demand after one year. At
Mr. Carr's option and with 30 days written notice, the note may be repaid in
common stock of Internet Law Library at a discounted price based on the lowest
price at which Internet Law Library has sold its common stock during the
one-year period preceding the exercise of this option. On March 10, 2001,
Internet Law Library retired $250,000 in principal from this note by issuing
1,153,828 restricted shares of common stock to Mr. Carr at a price of $.216667
per share. New promissory notes bearing the same terms have been issued to Mr.
Carr for the $200,609 advanced to Internet Law Library since March 1, 2001. As
of April 12, 2001, the total principal amount and accrued but unpaid interest
owed to Mr. Carr were $2,010,609 and $239,081, respectively.

      In October 2000, Internet Law Library executed demand notes for $400,000
and $50,000 in favor of George A. Roberts and W. Allyn Hoaglund, members of its
board of directors. The notes bear interest at the rate of prime plus two
percent per year and are payable in cash on demand after one year. At the option
of the holder and with 30 days written notice, the notes may be repaid in common
stock of Internet Law Library at a discounted price based on the lowest price at
which Internet Law Library has sold its common stock during the one-year period
preceding the exercise of this option.

      In February 2001, Internet Law Library executed demand notes for $190,000
and $50,000 in favor of George A. Roberts and W. Paul Thayer, members of its
board of directors. The notes bear interest at the rate of prime plus two
percent per year and are payable in cash on demand after one year. At the option
of the holder and with 30 days written notice, the notes may be repaid in common
stock of Internet Law Library at a discounted price based on the lowest price at
which Internet Law Library has sold its common stock during the one-year period
preceding the exercise of this option.

      On April 5, 2001, Internet Law Library executed a demand promissory note
for $70,000 in favor of W. Paul Thayer, a member of our board of directors. The
note bears interest at the rate of prime plus two percent per year and is
payable in cash on demand after one year. At the option of the holder and with
30 days written notice, the note may be repaid in common stock of Internet Law
Library at a discounted price based on the lowest price at which Internet Law
Library has sold its common stock during the one-year period preceding the
exercise of this option.

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)   The following documents are being filed as part of this Report:

      (1)   Consolidated Financial Statements

            See Index to Consolidated Financial Statements on page F-1.

      (2)   All other schedules are omitted because they are not applicable, not
            required or the required information is in the Consolidated
            Financial Statements or the notes thereto.

(3)   The following exhibits are filed or incorporated by reference as part of
      this report as required by Item 601 of Regulation S-K.


                                       35
<PAGE>

Exhibit
Number     Description
-------    -----------

   2.1      Agreement and Plan of Reorganization dated March 25, 1999, between
            Planet Resources, National Law Library and the stockholders of
            National (incorporated by reference to Exhibit A to Internet Law
            Library's Form 8-K filed on April 2, 1999).

   2.2      First Amendment to Agreement and Plan of Reorganization dated as of
            March 30, 1999, between Planet Resources, National Law Library and
            the stockholders of National Law Library (incorporated by reference
            to Exhibit 2.2 to Internet Law Library's Form 10-K filed on October
            13, 1999).

   2.3      Agreement and Plan of Distribution dated as of March 25, 1999,
            between Planet Resources, New Planet Resources, Inc. and National
            Law Library (incorporated by reference to Annex B to Internet Law
            Library's Information Statement Pursuant to Section 14(c) of the
            Securities Exchange Act of 1934 filed on April 19, 1999).

   2.4      Contract for Sale of Stock, dated November 8, 1999, by and between
            John R. Marsh, Ronald W. Hogan, and Charles E. Bowen, Jr., as
            Sellers, and Internet Law Library, as Buyer (incorporated by
            reference to Exhibit 2.1 to Internet Law Library's Form 8-K filed on
            November 30, 1999).

   2.5      Option Agreement to Purchase Stock, dated November 8, 1999, by and
            between Internet Law Library, as Seller, and Ronald W. Hogan, as
            Optionee (incorporated by reference to Exhibit 2.2 to Internet Law
            Library's Form 8-K filed on November 30, 1999).

   2.6      Option Agreement to Purchase Stock, dated November 8, 1999, by and
            between Internet Law Library, as Seller, and Charles E. Bowen, Jr.,
            as Optionee (incorporated by reference to Exhibit 2.3 to Internet
            Law Library's Form 8-K filed on November 30, 1999).

   2.7      Option Agreement to Purchase Stock, dated November 8, 1999, by and
            between Internet Law Library, as Seller, and John R. Marsh, as
            Optionee (incorporated by reference to Exhibit 2.4 to Internet Law
            Library's Form 8-K filed on November 30, 1999).

   2.8      Contract of Sale, dated December 8, 1999, by and between David P.
            Harriman, Andrew Wyszkowski, Eugene Meyung, Suzanne Meyung, and
            Christina Brown, as Sellers, and Internet Law Library, as Buyer
            (incorporated by reference to Exhibit 2.7 to Internet Law Library's
            Form 8-K filed December 23, 1999).

   2.9      Stock Exchange Agreement by and among Internet Law Library and the
            shareholders of ITIS relating to the acquisition of all of the
            outstanding stock of ITIS, dated April 30, 2000 (incorporated by
            reference to Exhibit 2.9 to Internet Law Library's Form 10-K/A filed
            on May 24, 2000).

   2.10     Stock Purchase Agreement by and between Internet Law Library and
            Jeremiah Kane, dated July 27, 2000, as amended by that amendment
            dated effective October 1, 2000 (Incorporated by reference to
            Exhibit 2.10 to the Registrant's Form 8-K filed with the SEC on
            October 16, 2000).

   2.11     Stock Purchase Agreement by and between Internet Law Library and
            John McHugh, dated July 27, 2000, as amended by that amendment dated
            effective October 1, 2000 (Incorporated by reference to Exhibit 2.11
            to the Registrant's Form 8-K filed with the SEC on October 16,
            2000).

   2.12     Stock Purchase Agreement by and between Internet Law Library and
            Jack Ben Ezra, dated July 27, 2000, as amended by that amendment
            dated effective October 1, 2000 (Incorporated by reference to
            Exhibit 2.12 to the Registrant's Form 8-K filed with the SEC on
            October 16, 2000).

   2.13     Stock Exchange Agreement by and among Internet Law Library and all
            of the shareholders of Venco Compliance, Inc., a Texas corporation,
            dated effective October 1, 2000 (Incorporated by reference to
            Exhibit 2.13 to the Registrant's Form 8-K filed with the SEC on
            October 16, 2000).

   2.14*    Amended and Restated Agreement and Plan of Distribution dated as of
            March 13, 2001, between Planet Resources, National Law Library and
            the stockholders of National Law Library.


                                       36
<PAGE>

Exhibit
Number     Description
-------    -----------

   3.1      Amended and Restated Certificate of Incorporation of Internet Law
            Library (incorporated by reference to the Annex A of Internet Law
            Library's Definitive Proxy Statement on Schedule 14A filed on
            January 31, 2000).

   3.2      Bylaws of Internet Law Library, as amended (incorporated by
            reference to Exhibit 3.2 to Internet Law Library's Form 10-K filed
            on October 13, 1999).

   3.3      Certificate of Designation for Internet Law Library's 5% Series A
            Convertible Preferred Stock (incorporated by reference to Exhibit
            3.3 to Internet Law Library's Form 10-K/A filed on May 24, 2000).

   3.4      2001 Executive Stock Option Plan dated effective March 15, 2001
            (incorporated by reference to Exhibit 4.4 to Internet Law Library's
            Registration Statement on Form S-8 filed on March 30, 2001).

   10.1     Stock Option Agreement between Internet Law Library and Hunter M.A.
            Carr (incorporated by reference to Exhibit D to Schedule 13D filed
            on October 12, 1999, by Hunter M.A. Carr).

   10.2     Stock Option Agreement between Internet Law Library and Jack I.
            Tompkins (incorporated by reference to Exhibit D to Schedule 13D
            filed on October 12, 1999, by Jack I. Tompkins).

   10.3     Consulting Agreement between National Law Library and Castle
            Development, Ltd. (incorporated by reference to Exhibit 4(A) to
            Internet Law Library's Registration Statement on Form S-8 filed on
            April 2, 1999).

   10.4     Continuing Service Agreement between National Law Library and ITIS,
            effective December 1, 1998 (incorporated by reference to Exhibit
            10.4 to Internet Law Library's Form 10-K filed on October 13, 1999).

   10.5     Management and Financial Services Agreement between National Law
            Library and ITIS, effective March 1, 1999 (incorporated by reference
            to Exhibit 10.5 to Internet Law Library's Form 10-K filed on October
            13, 1999).

   10.6     Software Development and Consulting Agreement between National Law
            Library and ITIS, dated March 24, 1999 (incorporated by reference to
            Exhibit 10.6 to Internet Law Library's Form 10-K filed on October
            13, 1999).

   10.7     Option Agreement to Purchase Stock, effective March 30, 1999, by and
            between Internet Law Library and Jonathan Gilchrist (incorporated by
            reference to Exhibit 10.7 to Internet Law Library's Form 10-K filed
            on October 13, 1999).

   10.8     Planet Resources 1999 Stock Option Plan (incorporated by reference
            to Exhibit 10.1 to Internet Law Library's Form 10-K/A filed on
            October 28, 1999).

   10.9     Planet Resources Employee Stock Purchase Plan (incorporated by
            reference to Exhibit 10.2 to Internet Law Library's Form 10-K/A
            filed on October 28, 1999).

   10.10    New Planet Resources, Inc. Stock Incentive Plan (incorporated by
            reference to Exhibit 10.3 to Internet Law Library's Form 10-K/A
            filed on October 28, 1999).

   10.11    Planet Resources 1999 Director Option Plan (incorporated by
            reference to Exhibit 10.4 to Internet Law Library's Form 10-K/A
            filed on October 28, 1999).

   10.12    Consulting and Option Agreement by and between ITIS, Frank Fisher
            and Steve Tebo, dated January 22, 2000, as amended (incorporated by
            reference to Exhibit 10.12 to Internet Law Library's Form 10-K/A
            filed on May 24, 2000).

   10.13    Convertible Preferred Stock Purchase Agreement by and among Internet
            Law Library and Cootes Drive LLC, dated May 11, 2000 (incorporated
            by reference to Exhibit 10.13 to Internet Law Library's Form 10-K/A
            filed on May 24, 2000).

   10.14    Registration Rights Agreement by and among Internet Law Library and
            Cootes Drive LLC, dated May 11, 2000 (incorporated by reference to
            Exhibit 10.15 to Internet Law Library's Form 10-K/A filed on May 24,
            2000).


                                       37
<PAGE>

Exhibit
Number     Description
-------    -----------

   10.15    Warrant to purchase 200,000 shares of Internet Law Library's common
            stock issued to Aspen Capital Partners, Inc., dated May 19, 2000
            (incorporated by reference to Exhibit 10.16 to Internet Law
            Library's Form 10-K/A filed on May 24, 2000).

   10.16    Securities Purchase Agreement by and between Internet Law Library
            and Cootes Drive LLC, dated November 20, 2000.

   10.17    Amended and Restated Registration Rights Agreement by and between
            Internet Law Library and Cootes Drive LLC, dated November 20, 2000.

   10.18    Warrant to purchase 250,000 shares of Internet Law Library's common
            stock issued to Cootes Drive LLC, dated May 11, 2000.

   10.19    Warrant to purchase 250,000 shares of Internet Law Library's common
            stock issued to Cootes Drive LLC, dated November 20, 2000.

   10.20    Minimum Commitment Warrant to purchase up to 100,000 shares of
            Internet Law Library's common stock issued to Cootes Drive LLC,
            dated November 20, 2000.

   10.21    Vesting Warrant to purchase 1,000 shares of Internet Law Library's
            common stock per $100,000 invested issued to Cootes Drive LLC, dated
            November 20, 2000.

   10.22    Convertible Promissory Note made by Internet Law Library in favor of
            Cootes Drive LLC in the principal amount of $500,000, dated December
            5, 2000.

   10.23    Warrant to purchase 41,650 shares of Internet Law Library's common
            stock issued to Cootes Drive, LLC, dated December 5, 2000.

   10.24    Side Letter Agreement dated December 5, 2000, by and between
            Internet Law Library and Cootes Drive LLC to enter into a
            convertible Promissory Note financing arrangement for $500,000.

   10.25    Consulting Agreement by and between Venco Compliance, Inc. and
            Kathryn Tull d/b/a First Choice Consulting, dated October 1, 2000
            (incorporated by reference to Exhibit 10.17 to the Registrant's Form
            8-K filed with the SEC on October 16, 2000).

   16.1     Letter, dated April 5, 2000, from Harper & Pearson Company to the
            Securities and Exchange Commission (incorporated by reference to
            Exhibit 16.1 to Internet Law Library's Form 8-K/A filed on April 5,
            2000).

   16.2     Letter, dated February 21, 2001, from Arthur Andersen LLP to the
            Securities and Exchange Commission (incorporated by reference to
            Exhibit 16.2 to Internet Law Library's Form 8-K filed on February
            23, 2001)

   21*      Subsidiaries of Internet Law Library.

   23.1*    Consent of Harper & Pearson Company

   23.2*    Consent of Arthur Andersen LLP

   24*      Power of Attorney (included on signature page)

* Filed herewith

(b)   Reports on Form 8-K

      The following reports on Form 8-K were filed during the last quarter of
      the period covered by this report:

      (1)   Form 8-K filed on October 16, 2000, reporting under Item 2, the
            acquisition of a major controlling interest in Compass Data Systems,
            Inc. and all of the outstanding stock of Venco Compliance, Inc.; and
            reporting under Item 5, the granting of a partial summary judgment
            against ITIS, Inc. in the case styled Loislaw.com, Inc., v. ITIS,
            Inc., National Law Library, Inc., and Internet Law Library, Inc.


                                       38
<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                            INTERNET LAW LIBRARY, INC.
                                            By: /s/ Hunter M.A. Carr
                                                --------------------------------
                                                     Hunter M.A. Carr,
                                           President, Chief Executive Officer
                                           and Chairman of the Board of
                                           Directors

Date: April 12, 2001

                                POWER OF ATTORNEY

      Each person whose signature appears below hereby authorizes and
constitutes Hunter M.A. Carr and Joanna Hoover, and each of them singly, his
true and lawful attorneys-in-fact with full power of substitution and
re-substitution, for him and in his name, place and stead, in any and all
capacities to sign and file any and all amendments to this report with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and he hereby ratifies and confirms all that
said attorneys-in-fact or any of them, or their substitutes, may lawfully do or
cause to be done by virtue hereof.

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


  /s/ Hunter M. A. Carr
-------------------------
     Hunter M.A. Carr       Chairman of the Board, President   April 12, 2001
                            and Chief Executive Officer
                            (Principal Executive Officer)


            *
-------------------------
     Eugene A. Cernan       Director                           April 12, 2001


   /s/Kelley V. Kirker
-------------------------
     Kelley V. Kirker       Director, Chief Operating          April 12, 2001
                            Officer of Internet
                            Law Library


   /s/Donald W. Sapaugh
-------------------------
    Donald W. Sapaugh       Director                           April 12, 2001


   /s/George A. Roberts
-------------------------
    George A. Roberts       Director                           April 12, 2001


    /s/W. Paul Thayer
-------------------------
      W. Paul Thayer        Director                           April 12, 2001


   /s/David P. Harriman
-------------------------
    David P. Harriman       Director, President of             April 12, 2001
                            National Law Library


  /s/ W. Allyn Hoaglund
-------------------------
    W. Allyn Hoaglund       Director                           April 12, 2001


    /s/ Joanna Hoover
-------------------------
      Joanna Hoover         Chief Financial Officer            April 12, 2001
                            (Principal Financial
                            and Accounting Officer)


* By: /s/ Hunter M. A. Carr
      ---------------------------
          Hunter M.A. Carr
          Attorney-in-fact


                                       39
<PAGE>

REPORTS OF INDEPENDENT PUBLIC ACCOUNTANTS AND
FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                   Page
                                                                                                   ----
<S>                                                                                            <C>
Reports of Independent Public Accountants....................................................    F-2 - F-4
Consolidated Balance Sheets as of December 31, 2000 and December 31, 1999....................   F-5 and F-6
Consolidated Statements of Operations for the year ended December 31, 2000, for the six
   months ended December 31, 1999, and for the period from inception (November 30, 1998)
   through June 30, 1999.....................................................................       F-7
Consolidated Statements of Stockholders' Equity for the year ended December 31, 2000, for the
   six months ended December 31, 1999, and for the period from inception (November 30, 1998)
   through June 30, 1999.....................................................................   F-8 and F-9
Consolidated Statements of Cash Flow for the year ended December 31, 2000, for the six months
   ended December 31, 1999, and for the period from inception (November 30, 1998) through
   June 30, 1999.............................................................................  F-10 and F-11
Notes to Consolidated Financial Statements...................................................      F-12
</TABLE>


                                      F-1
<PAGE>

                          INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Shareholders of Internet Law Library, Inc.

      We have audited the accompanying consolidated balance sheet of Internet
Law Library, Inc. and Subsidiaries as of December 31, 2000 and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for the year ended December 31, 2000 and the period November 30, 1998
(date of inception) through June 30, 1999. 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 audit. The accompanying consolidated financial
statements of Internet Law Library, Inc. and Subsidiaries as of December 31,
1999 and for the six months then ended, were audited by other auditors, whose
report thereon dated May 11, 2000, expressed an unqualified opinion on those
statements.

      We conducted our audits in accordance with generally accepted auditing
standards in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall 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 financial position of Internet Law
Library, Inc. and Subsidiaries at December 31, 2000 and the results of their
operations and their cash flows for the year ended December 31, 2000 and the
period November 30, 1998 (date of inception) through June 30, 1999, in
conformity with generally accepted accounting principles in the United States.

      The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As reflected in the
accompanying consolidated financial statements and more fully discussed in Note
13 to the consolidated financial statements, the Company's recurring losses from
operations, negative working capital and cash flows, and retained deficits raise
substantial doubt about its ability to continue as a going concern. Because the
Company does not have significant cash or other material liquid assets, nor an
established source of revenues sufficient to cover its operating expenses, the
Company will be required to obtain substantial additional financing or capital
or to dramatically reduce operating expenses in order to continue as a going
concern. As of April 12, 2001, the date of this report, the Company's sources of
an adequate supply of financing or capital are severely limited. In order to
remain in business during 2000 and the first quarter of 2001, the Company has
received substantial debt and equity financing from the Company's Chairman of
the Board and other directors. If additional expected equity or debt financings
are not timely consummated, projected revenues do not meet management's
expectations, or costs are not reduced and instead exceed projections, the
Company will be required to obtain additional equity or debt financings in
excess of those now deemed required in order to remain in business and to
continue as a going concern. Management's plans in regards to these matters are
also discussed in Note 13. If the Company is unable to remain in business and
continue as a going concern, assets as now reflected on the accompanying
consolidated balance sheet, will be severely impaired resulting in significant
charge offs and declines in values coupled with an increase in contingent
liabilities resulting from the Company's inability to timely and adequately
service its credit obligations as they become due. While an impairment charge of
$748,024 has been recognized at December 31, 2000, the consolidated financial
statements do not include any future adjustments relating to the recoverability
and classification of asset carrying amounts or the amounts and classification
of liabilities that might result should the Company be unable to remain in
business and continue as a going concern.

      As more fully discussed in Note 3 to the consolidated financial
statements, the Company incurred an impairment charge of $748,024 to capitalized
database content and software costs based on the results of an independent
appraisal.


                                      F-2
<PAGE>

      As more fully discussed in Note 8 to the consolidated financial
statements, the Company has entered into material financing agreements with the
Company's Chairman of the Board and other directors of the Company.

      As more fully discussed in Notes 10 and 14 to the consolidated financial
statements, the Company is involved in substantial litigation as both plaintiff
and defendant.


        /s/  HARPER & PEARSON COMPANY
             Harper & Pearson Company

Houston, Texas

April 12, 2001


                                      F-3
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Internet Law Library, Inc.:

      We have audited the accompanying consolidated balance sheet of Internet
Law Library, Inc. (formerly Planet Resources, Inc.) and subsidiaries, as of
December 31, 1999, and the related consolidated statements of operations,
stockholders' equity and cash flows for the six months ended December 31, 1999.
These 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 audit.

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

      In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Internet Law Library, Inc.,
and subsidiaries as of December 31, 1999 and the results of their operations and
their cash flows for the six months ended December 31, 1999 in conformity with
accounting principles generally accepted in the United States.


/s/ Arthur Andersen LLP

Houston, Texas
May 11, 2000


                                      F-4
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
December 31, 2000 and 1999

<TABLE>
<CAPTION>
                                                                                   2000            1999
                                                                              ------------    ------------
<S>                                                                           <C>             <C>
                                     ASSETS

Current assets:

   Cash and cash equivalents, including $1,761 and $20,235
      respectively, distributable to the stockholders of Planet
      Resources, Inc.                                                         $     40,475    $     78,544
   Short-term investments                                                               --         450,000
   Accounts receivable, net of allowance for doubtful accounts
      of $9,342 and $5,534, respectively                                           224,736          86,015
   Due from affiliated company                                                          --          55,423
   Refundable deposits                                                              22,216              --
   Deferred expenses                                                                39,108              --
   Other current assets                                                                500          13,284
                                                                              ------------    ------------
      Total current assets                                                         327,035         683,266
   Database content and software costs, net                                     15,523,173       3,658,027
   Furniture and equipment, net                                                    431,308         104,066
   Intangible assets, net                                                        3,311,338       1,475,292
                                                                              ------------    ------------

      Total assets                                                            $ 19,592,854    $  5,920,651
                                                                              ============    ============
</TABLE>


                                      F-5
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
December 31, 2000 and 1999


<TABLE>
<CAPTION>
                                                                                   2000            1999
                                                                              ------------    ------------
<S>                                                                           <C>             <C>
                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Notes payable-other                                                        $  1,010,048    $         --
   Accounts payable                                                                437,102         156,472
   Accrued liabilities                                                             301,402          72,414
   Deferred revenue                                                                171,465          82,400
   Assets distributable to stockholders                                              1,761          30,235
                                                                              ------------    ------------
      Total current liabilities                                                  1,921,778         341,521

   Long term notes payable and advance from Chairman                             2,230,050              --
                                                                              ------------    ------------

Total liabilities                                                                4,151,828         341,521
                                                                              ------------    ------------

   Commitments and contingencies
   Redeemable common stock                                                              --         125,000
                                                                              ------------    ------------

Stockholders' equity:
   Series A Convertible Preferred stock, par value $.001;
      50,000,000 shares authorized; 161.08 shares issued and
      outstanding at December 31, 2000                                           2,027,526              --
   Common stock, par value $.001, 100,000,000 shares
      authorized; 35,421,284 and 24,920,991 shares issued,
      respectively; 35,410,546 and 24,910,253 shares outstanding,
      respectively                                                                  35,422          24,921
   Warrants                                                                      1,167,372              --
   Additional paid in capital                                                   23,447,757       7,974,994
   Deferred compensation                                                           (15,625)       (364,600)
   Accumulated deficit                                                         (11,178,242)     (2,138,001)
   Treasury stock, at cost, 10,738 shares                                          (43,184)        (43,184)
                                                                              ------------    ------------
      Total stockholders' equity                                                15,441,026       5,454,130
                                                                              ------------    ------------

      Total liabilities and stockholders' equity                              $ 19,592,854    $  5,920,651
                                                                              ============    ============
</TABLE>


                                      F-6
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                    From
                                               For the Year    For the six       Inception
                                                  ended       months ended      (November 30,
                                               December 31,   December 31,      1998) to June
                                                   2000           1999             30, 1999
                                              ------------    ------------      -------------
<S>                                           <C>             <C>               <C>
REVENUE                                       $  1,147,814    $    222,697      $     53,520
OPERATING EXPENSES:
   Selling and marketing                         1,425,100         372,324           244,775
   General and administrative                    4,230,073       1,108,645           211,891
   Production and computer service                 538,785          73,628            65,073
   Amortization and depreciation                 2,184,794         197,037           142,783
   Impairment charge                               748,024              --                --
                                              ------------    ------------      ------------
   Total operating expenses                      9,126,776       1,751,634           664,522
                                              ------------    ------------      ------------
OPERATING LOSS                                  (7,978,962)     (1,528,937)         (611,002)
INTEREST INCOME (EXPENSE), net                    (155,029)          3,150            (1,212)
                                              ------------    ------------      ------------
NET LOSS                                        (8,133,991)     (1,525,787)         (612,214)
Deemed Preferred Stock Dividends                  (906,250)             --                --
                                              ------------    ------------      ------------
Net Loss Available to Common Stockholders     $ (9,040,241)   $ (1,525,787)     $   (612,214)
                                              ============    ============      ============

BASIC LOSS PER COMMON SHARE                   $      (0.31)   $      (0.07)     $      (0.06)
                                              ============    ============      ============

WEIGHTED AVERAGE SHARES USED IN
   COMPUTING BASIC LOSS PER
   COMMON SHARE                                 29,436,122      22,840,676        10,763,581
                                              ============    ============      ============
</TABLE>

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


                                      F-7
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

For the year ended December 31, 2000, for the six months ended December 31,
1999, and for the period from inception (November 30, 1998) through June 30,
1999

<TABLE>
<CAPTION>
                                                                Number of
                                                  Preferred       Common                                Additional Paid
                                                    Stock     Shares Issued  Common Stock     Warrants    in Capital
                                                  ----------------------------------------------------------------------
<S>                                                   <C>       <C>          <C>                <C>      <C>
Issuance of common stock to founding
   stockholder in exchange for contributed
   assets                                             --        15,152,500   $    15,153         --      $ 2,014,207
Pre-acquisition transactions:
   Issuance of common stock for cash                  --         2,337,500         2,338         --          403,987
   Issuance of common stock for services              --            10,000            10         --            6,990
   Conversion of convertible debentures               --           500,000           500         --          199,500
Reverse acquisition                                   --         2,010,738         2,010         --           98,944
Post-acquisition transactions:
   Issuance of common stock for cash                  --           130,050           130         --           25,635
   Issuance of common stock for services              --           991,500           992         --           25,809
Net Loss                                              --                --            --         --               --
                                                  ----------------------------------------------------------------------

Balance, June 30, 1999                                --        21,132,288        21,133         --        2,775,072
                                                  ----------------------------------------------------------------------

Exercise of common stock options                      --           600,000           600         --          179,400
Issuance of common stock for cash                     --         2,207,526         2,207         --        2,243,468
Issuance of common stock for services                 --            51,500            51         --          215,706
Issuance of variable common stock options             --                --            --         --          375,000
Amortization of deferred compensation                 --                --            --         --               --
Issuance of common stock for acquisitions
   net of redeemable common stock                     --           929,677           930         --        2,174,070
Change in assets distributable to stockholders        --                --            --         --           12,278
Net Loss                                              --                --            --         --               --
                                                  ----------------------------------------------------------------------

Balance December 31, 1999                             --        24,920,991        24,921         --        7,974,994
                                                  ----------------------------------------------------------------------

<CAPTION>
                                                    Deferred       Retained       Treasury
                                                   Compensation     Deficit         Stock          TOTAL
                                                  ----------------------------------------------------------
<S>                                                 <C>           <C>            <C>            <C>
Issuance of common stock to founding
   stockholder in exchange for contributed
   assets                                           $       --    $        --    $        --    $ 2,029,360
Pre-acquisition transactions:
   Issuance of common stock for cash                        --             --             --        406,325
   Issuance of common stock for services                    --             --             --          7,000
   Conversion of convertible debentures                     --             --             --        200,000
Reverse acquisition                                         --             --        (43,184)        57,770
Post-acquisition transactions:
   Issuance of common stock for cash                        --             --             --         25,765
   Issuance of common stock for services                    --             --             --         26,801
Net Loss                                                    --       (612,214)            --       (612,214)
                                                  ----------------------------------------------------------

Balance, June 30, 1999                                      --       (612,214)       (43,184)     2,140,807
                                                  ----------------------------------------------------------

Exercise of common stock options                            --             --             --        180,000
Issuance of common stock for cash                           --             --             --      2,245,675
Issuance of common stock for services                       --             --             --        215,757
Issuance of variable common stock options             (375,000)            --             --             --
Amortization of deferred compensation                   10,400             --             --         10,400
Issuance of common stock for acquisitions
   net of redeemable common stock                           --             --             --      2,175,000
Change in assets distributable to stockholders              --             --             --         12,278
Net Loss                                                    --     (1,525,787)            --     (1,525,787)
                                                  ----------------------------------------------------------

Balance December 31, 1999                             (364,600)    (2,138,001)       (43,184)     5,454,130
                                                  ----------------------------------------------------------
</TABLE>


                                      F-8
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY

For the year ended December 31, 2000, for the six months ended December 31,
1999, and for the period from inception (November 30, 1998) through June 30,
1999

<TABLE>
<CAPTION>
                                                           Number of
                                         Preferred           Common                                  Additional Paid
                                           Stock         Shares Issued  Common Stock     Warrants      in Capital
                                         ----------------------------------------------------------------------------
<S>                                      <C>              <C>           <C>            <C>            <C>
Issuance of common stock shares
   for 1999 compensation                 $         --          33,042   $         33   $         --   $        (33)
Change in assets distributable to                  --
   stockholders                                    --              --             --             --          1,761
Change in variable stock options                   --              --             --             --       (375,000)
Issuance of stock options for services             --              --             --             --        103,184
Issuance of Series A preferred stock        2,870,000              --             --             --             --
Issuance of common stock for
   acquisition-ITIS                                --       5,044,903          5,045             --     11,913,233
Issuance of common stock for
   acquisition-Compass                             --       1,670,378          1,670             --      2,292,754
Issuance of common stock for
   acquisition-Venco                               --         100,000            100             --         90,500
Issuance of common stock for services              --         514,825            515             --        707,583
Conversion of Series A preferred
   stock to common stock                   (1,748,724)      3,137,145          3,138             --      1,781,153
Issuance of common stock warrants                  --              --             --      1,167,372     (1,167,372)
Series A preferred stock deemed
   dividend                                   906,250              --             --             --             --
Lapse of redemption on common stock                --              --             --             --        125,000
Net Loss                                           --              --             --             --             --
                                         ----------------------------------------------------------------------------

Balance, December 31, 2000               $  2,027,526      35,421,284   $     35,422   $  1,167,372   $ 23,447,757
                                         ============================================================================

<CAPTION>

                                             Deferred      Retained       Treasury
                                           Compensation     Deficit         Stock          TOTAL
                                         -------------------------------------------------------------
<S>                                       <C>             <C>             <C>             <C>
Issuance of common stock shares
   for 1999 compensation                  $         --    $         --    $         --    $         --
Change in assets distributable to
   stockholders                                     --              --              --           1,761
Change in variable stock options               364,600              --              --         (10,400)
Issuance of stock options for services         (15,625)             --              --          87,559
Issuance of Series A preferred stock                --              --              --       2,870,000
Issuance of common stock for
   acquisition-ITIS                                 --              --              --      11,918,278
Issuance of common stock for
   acquisition-Compass                              --              --              --       2,294,424
Issuance of common stock for
   acquisition-Venco                                --              --              --          90,600
Issuance of common stock for services               --              --              --         708,098
Conversion of Series A preferred
   stock to common stock                            --              --              --          35,567
Issuance of common stock warrants                   --              --              --              --
Series A preferred stock deemed
   dividend                                         --        (906,250)             --              --
Lapse of redemption on common stock                 --              --              --         125,000
Net Loss                                            --      (8,133,991)             --      (8,133,991)
                                         -------------------------------------------------------------

Balance, December 31, 2000                $    (15,625)   $(11,178,242)   $    (43,184)   $ 15,441,026
                                         =============================================================
</TABLE>


                                      F-9
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW

<TABLE>
<CAPTION>
                                                                                     From
                                                   For the Year    For the six     Inception
                                                      ended       months ended    (November 30,
                                                   December 31,   December 31,    1998) to June
                                                       2000           1999           30, 1999
                                                  -----------    -----------      -----------
<S>                                               <C>            <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                       $(8,133,991)   $(1,525,787)     $  (612,214)
   Adjustments to reconcile net loss to net
      cash used in operating activities:
      Issuance of common stock for services           708,098        215,757           29,300
      Amortization of deferred compensation            87,559         10,400               --
      Amortization and depreciation                 2,184,794        197,037          142,783
      Provision for doubtful accounts                   3,808          5,534               --
      Change in variable stock options                (10,400)            --               --
      Conversion of Series A preferred stock to
         settle interest                               35,567             --               --
      Impairment Charge                               748,024             --               --
      Changes in:
      Due from stockholders                                --         11,295               --
      Accounts receivable                            (114,124)       (84,131)          (1,322)
      Other current assets                              4,741         (3,284)              --
      Accounts payable                               (374,001)        76,598           49,000
      Accrued liabilities                             211,318         67,523            4,891
      Deferred revenue                                (74,074)        74,061               --
                                                  -----------    -----------      -----------

   Net cash used in operating activities           (4,722,681)      (954,997)        (387,562)
                                                  ===========    ===========      ===========
CASH FLOWS FROM INVESTMENT ACTIVITIES:
   Purchases of short-term investments                     --       (450,000)              --
   Sales of short-term investments                    450,000             --               --
   Capital additions                               (1,902,525)    (1,098,933)        (124,451)
   Cash acquired in acquisitions                       47,039         35,166           90,275
                                                  -----------    -----------      -----------

      Net cash used in investment activities      $(1,405,486)   $(1,513,767)     $   (34,176)
                                                  ===========    ===========      ===========
</TABLE>

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


                                      F-10
<PAGE>

INTERNET LAW LIBRARY, INC.AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW

<TABLE>
<CAPTION>
                                                                                                      From
                                                              For the Year       For the six       Inception
                                                                 ended          months ended      (November 30,
                                                              December 31,      December 31,      1998) to June
                                                                  2000              1999             30, 1999
                                                             -----------        -----------        ------------
<S>                                                          <C>               <C>               <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
   Due to (due from) affiliated company                                --           269,004          (324,428)
   Net proceeds from sale of debentures                                --                --           200,000
   Proceeds from (payments on) notes payable                    3,220,098          (202,000)          180,000
   Proceeds from exercise of stock options                             --           180,000                --
   Issuance of common stock                                            --         2,245,675           420,795
   Issuance of preferred stock                                  2,870,000                --                --
                                                             ------------      ------------      ------------

      Net cash provided by financing activities                 6,090,098         2,492,679           476,367
                                                             ------------      ------------      ------------

NET INCREASE/(DECREASE) IN CASH
   AND CASH EQUIVALENTS                                           (38,069)           23,915            54,629
CASH AND CASH EQUIVALENTS, beginning of period                     78,544            54,629                --
                                                             ------------      ------------      ------------

CASH AND CASH EQUIVALENTS, end of period                     $     40,475      $     78,544      $     54,629
                                                             ============      ============      ============

SUPPLEMENTAL CASH FLOW INFORMATION:
   Cash paid for interest                                    $     23,721      $      6,693                --
   Cash paid for income taxes                                          --      $         --                --
   Non cash investing and financing transactions:
      Fair value of common stock issued for acquisitions     $ 14,300,000      $  2,300,000                --
      Lapse of redemption on common stock                    $    125,000                --                --
      Deemed preferred stock dividend                        $    906,250                --                --
      Conversion of preferred stock                          $  1,748,724                --                --
      Fair market value of warrants issued                   $  1,167,372
</TABLE>


                                      F-11
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1-BUSINESS:

      Internet Law Library, formerly known as Planet Resources, is a Delaware
corporation that provides electronic publishing services and database content
through CD-Rom media and Internet sites with subscription access, licenses and
transaction fees for databases through the Company's subsidiaries, National Law
Library, Inc., GoverNet Affairs, Inc., Brief Reporter, LLC and Compass Data
Systems, Inc. Internet Law Library also provides training and support with
federal regulations through the Company's wholly owned subsidiary, Venco
Compliance Inc., and database content, software, hardware and other support
through the Company's subsidiary, ITIS, Inc. The content of the databases
consists of pending legislation, statutory law, rules and case law at the
federal and state levels. Legal briefs from certain important cases before
federal and state courts are also available, as are litigation forms. This
material can be useful to legislators, corporate regulatory personnel,
lobbyists, individual lawyers, judges, law firms, corporate legal departments,
government agencies, and businesses and individuals involved in legislative
efforts, litigation and corporate legal planning. Interfacing with these
databases are retrieval engines that are owned by the Company or its
subsidiaries. The Company also markets a CD-Rom product and a Website that
assist in medical billing. Customers using these Internet sites pay subscription
fees under monthly, quarterly or annual subscription agreements or per-use
licenses.

      Internet Law Library's common stock is traded on the over-the-counter
Bulletin Board under the symbol "ELAW.OB."

      The board of directors has approved a name change to "ITIS, Inc." to
better describe the products of Internet Law Library as being information
technology and information services. The stockholders will be asked to approve
the name change at Internet Law Library's annual meeting, which is anticipated
to be held on September 11, 2001.

      Internet Law Library was originally incorporated as Allied Silver-Lead
Company in the State of Idaho in 1967 and, until 1992, operated as an
exploratory mining company. In January 1996, Internet Law Library was
reincorporated in Delaware as a result of a merger and, among other shareholder
actions taken at that time, the corporate name was changed to Planet Resources,
Inc. Between 1992 and the reverse acquisition by National Law Library in March
of 1999, Internet Law Library had no operations; however, the Company maintained
certain mining properties which were to be indirectly distributed to those
stockholders who were stockholders of Internet Law Library prior to the reverse
acquisition by National Law Library. Effective March 27, 2001, the foregoing
mineral rights and cash were indirectly distributed to the original stockholders
of Internet Law Library pursuant to an Amended and Restated Agreement and Plan
of Distribution dated March 13, 2001, whereby Planet Resources was spun-off from
Internet Law Library and acquired the mining and other interests. Internet Law
Library no longer maintains any interest in these properties.

      National Law Library, a Texas corporation, was formed in November 1998 for
the purpose of developing and marketing an Internet destination to be used for
legal research. Following its formation, National Law Library's then sole
stockholder, who is the current President, Chief Executive Officer and Chairman
of Internet Law Library, contributed to National Law Library all of his rights
and interests in the Litidex(R) search, retrieval and database software and
database content valued at $934,000 and $1,096,000, respectively, in exchange
for 15,152,500 shares of common stock of National Law Library. Commercial
operations began in January 1999, the same month in which National Law Library
agreed in principle to be acquired by Internet Law Library. Under the Agreement
and Plan of Distribution, each share of National Law Library common stock was
exchanged for one share of the unregistered common stock of Internet Law. In
contemplation of this transaction, Internet Law Library's original stockholders
agreed to a one-for-two reverse stock split, which resulted in 2 million shares
of Internet Law Library's common stock being outstanding immediately prior to
the merger. After giving effect to these transactions, former National Law
Library stockholders owned 18 million shares of unregistered common stock of
Internet Law Library and the original stockholders of Internet Law Library owned
2 million shares of Internet Law Library common stock. Following the
transaction, the stockholders voted to change the name of Planet Resources, Inc.
to "Internet Law Library, Inc." Under the terms of the agreement and plan of


                                      F-12
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

reorganization, the majority of the original board of directors resigned and
were replaced with directors elected by the new stockholders.

      As more fully disclosed in Note 13, Internet Law Library has incurred
significant losses from operations, maintains a working capital deficit and has
used significant cash in operations. Accordingly, Internet Law Library will
require additional financing to fund its operations and execute its business
plan. The inability to obtain additional financing will substantially impact
Internet Law Library's ability to continue as a going concern. To provide
interim financing until long-term financing becomes available, management plans
to continue to utilize additional loans from Mr. Carr and other directors and
investors.

NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

      Basis of Presentation-In January 2000, Internet Law Library's board of
directors approved a resolution changing Internet Law Library's fiscal year end
from June 30 to December 31. Accordingly, these consolidated financial
statements reflect the assets, liabilities, results of operations, and cash
flows of the business conducted by Internet Law Library from its inception on
November 30, 1998 to June 30, 1999; for the six-month transition period ended
December 31, 1999; and for the year ended December 31, 2000.

      Restatement of Financial Statements-As further discussed in Note 5,
Internet Law Library purchases database content from ITIS Inc., an affiliated
company, which was controlled by the majority shareholder, Chairman of the
Board, Chief Executive Officer, and President of Internet Law Library during the
periods ended June 30 and December 31, 1999. As required by generally accepted
accounting principles, transfers of assets between entities under common control
must be accounted for using the cost basis of the transferor. Internet Law
Library initially recorded the purchase of database content using the contracted
rate between Internet Law Library and ITIS. The database content balance as of
December 31, 1999 was revised to reflect purchases for the six months ended
December 31, 1999 at the cost basis of ITIS, which represents a revision from
the unaudited balances reported in Internet Law Library's quarterly report on
Form 10-Q as of September 30, 1999. The effect of this revision was to decrease
the database content balance and to record the excess of payments to ITIS over
the cost basis of the database content received as a due from affiliated company
totaling $55,423 as of December 31, 1999.

      Principles of Consolidation-The accompanying consolidated financial
statements include the accounts of Internet Law Library and its wholly owned
subsidiaries, National Law Library, GoverNet Affairs, Brief Reporter, ITIS,
Venco Compliance, and Planet Resources. The financial statements also include
the accounts of Compass Data Systems, of which Internet Law Library is majority
shareholder. All significant inter-company balances and transactions have been
eliminated in consolidation.

      Reclassification of Accounts. Certain reclassifications have been made to
prior year balances to conform to current year presentation.

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

      Cash, Cash Equivalents and Short-term Investments-Internet Law Library
considers all highly liquid investments with maturities of three months or less
at the time of purchase to be cash equivalents. Short-term investments are
classified as "securities available for sale" and are reported at their fair
value with accrued interest expense and income recorded when such securities are
purchased and sold, respectively. Unrealized gains and losses from short-term
investments are insignificant.


                                      F-13
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

      Revenue Recognition-Revenues consist of subscription and other fees
charged for access to Internet Law Library's databases, products and services
and are recognized in accordance with the provisions of Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial Statements, as follows:

      Product Revenue-Revenue from the sales of products (CD's and written
      materials) is recognized after shipment of the products and fulfillment of
      acceptance terms, if any.

      Services Revenue-Revenue from subscriptions, transactional fees, customer
      training, technical support and other services is recognized as the
      service is performed.

      Fair value of Financial Instruments-The fair values of financial
instruments approximate their reported carrying amounts at December 31, 2000 due
to their relative short lives for current assets and liabilities and long-term
liabilities are at interest rates comparable to current market rates.

      Database and development costs-Database and development costs include
content databases containing federal and state case law, statutory law, rules,
pending legislation, and database and retrieval software. The capitalized value
of a content database is determined from the cost of purchasing, verifying and
installing the database for release to Internet customers. Once a case law
database has been capitalized, the cost of updating the database with current
case law is expensed. The cost of updating statutory law and pending legislation
databases is capitalized.

      Internet Law Library applies SOP 98-1, "Software for Internal Use," which
provides guidance on accounting for the cost of computer software developed or
obtained for internal use. The capitalized value of software is derived from
programming expenses incurred directly in the application or development of the
database and retrieval software.

      Internet Law Library uses the straight-line method to amortize the
components of the content databases. Content and software development assets at
December 31, 2000 and 1999 consist of the following:

<TABLE>
<CAPTION>
                                         Useful life
                                          (in years)        2000            1999
                                          ----------   ------------    ------------
<S>                                           <C>      <C>             <C>
Database content and software costs .......   8-20     $ 17,051,810    $  3,935,995
Less:  Accumulated amortization ...........              (1,528,637)       (277,968)
                                                       ------------    ------------
                                                       $ 15,523,173    $  3,658,027
                                                       ============    ============
</TABLE>

      Furniture and Equipment-Furniture and equipment is stated at cost less
accumulated depreciation. Depreciation is computed using the straight-line
method over a five-year period. At December 31, 2000 and 1999 accumulated
depreciation was $118,512 and $15,288 respectively.

      Acquired Intangible Assets-Intangible assets consist of values associated
with goodwill, developed technologies, and other intangibles acquired in the
acquisitions of GoverNet, Brief Reporter, ITIS, Compass Data Systems and Venco
Compliance. Amortization of these intangibles is calculated on a straight-line
basis over one to eight years.

Internet Law Library has adopted Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of." SFAS No. 121 requires that long-lived
assets and certain identifiable intangibles to be held and used by an entity be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. If the sum of the
expected future cash flows from the use of the asset and its eventual
disposition is less than the


                                      F-14
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

less than the carrying amount of the asset, an impairment loss is recognized
based on the fair value of the asset. See Note 3.

      Income Taxes-Internet Law Library accounts for income taxes in accordance
with the liability method prescribed by SFAS No. 109, "Accounting for Income
Taxes." Under this method, deferred income taxes reflect the impact of temporary
differences between financial accounting and tax bases of assets and
liabilities. Such differences relate primarily to the capitalization,
amortization and write-off of certain intangibles, the deductibility of certain
accruals and reserves and the effect of tax loss and tax credit carry-forwards
not yet utilized. Deferred tax assets are evaluated for realization based on a
more-likely-than-not criteria in determining if a valuation allowance should be
provided.

      Stock-Based Compensation-Under SFAS No. 123, "Accounting for Stock-Based
Compensation," Internet Law Library has elected the method that requires
disclosure of stock-based compensation. Because of this election, Internet Law
Library accounts for its employee stock-based compensation plan under Accounting
Principles Board ("APB") Opinion No. 25 and the related interpretations.
Accordingly, deferred compensation is recorded for stock-based compensation
grants to employees based on the excess of the estimated fair value of the
common stock on the measurement date over the exercise price. The deferred
compensation is amortized over the vesting period of each unit of stock-based
compensation. If the exercise price of the stock-based compensation grant is
equal to the estimated fair value of Internet Law Library's stock on the date of
grant, no compensation expense is recorded. Additionally, for stock-based
compensation grants to consultants, Internet Law Library recognizes as
compensation expense the fair value of such grants as calculated pursuant to
SFAS No. 123, recognized over the related service period.

      Basic Loss Per Share-Basic loss per share has been computed by dividing
net loss by the weighted average number of shares outstanding. Shares of
Internet Law Library outstanding at the time of the reverse acquisition have
been treated as outstanding during the entire period, after adjustment for a 1
for 2 reverse stock split immediately preceding the reverse acquisition. Shares
of National Law Library outstanding before the reverse acquisition have been
included in weighted average shares outstanding since November 30, 1998, its
date of inception. All options outstanding at June 30,1999 and December 31,1999
and 2000 have not been included because they are anti-dilutive. Accordingly,
basic and diluted loss per share are the same for all periods presented.

NOTE 3 - IMPAIRMENT OF LONG-LIVED ASSETS

      Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of" requires that long-lived assets and certain identifiable intangibles to be
held and used by an entity be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable.

      In connection with its revised operating plan to restructure and stabilize
its business, Internet Law Library, with the assistance of an independent
appraisal firm, conducted a strategic review of certain aspects of its business
segments. The strategic review included review and evaluation of certain
long-lived assets including content, goodwill and other intangibles. The revised
projections by product line provided the basis for measurement of the asset
impairment charge. Accordingly, Internet Law Library recorded non-cash
impairment charges and wrote down capitalized database content and software
costs by $748,024 at December 31, 2000.

      The valuation, impairment study and write offs were based on an analysis
of current transactional evidence of a recent sale of a company operating in a
relatively similar line of business and other factors. The cash flow methodology
to determine impairment was not utilized due to significant volatility of such
projections and inherent difficulty in accurately predicting future operations
and cash flows of the Company.

      Management is of the opinion that no additional impairment of goodwill and
other intangibles exists; however, this opinion is dependent on Internet Law
Library's ability to generate enough funding from outside sources to continue
investment and expansion at current levels, or the elimination of substantial
operating expenses in the near term.


                                      F-15
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

      At this time, Internet Law Library has been unable to secure the
additional outside capital that will insure its ability to continue at its
current level of expansion and meet its operational forecasts. Management
believes that additional funding will be obtained; however, if it is not
obtained within the second quarter, it is reasonably possible that additional
impairment could result that would have a material impact on the consolidated
financial statements, asset values, and ongoing operations of Internet Law
Library. Management believes that the evaluation of potential future
impairment of content, goodwill, and other intangibles represents an estimate
made by management that is subject to impact in the near term in accordance
with the American Institute of Certified Public Accountant's Statement of
Position (SOP) 94-6 "Disclosure of Certain Significant Risks and
Uncertainties".

NOTE 4-REVERSE ACQUISITION:

      On March 30, 1999, Internet Law Library (then Planet Resources, Inc.) and
National Law Library completed a reorganization under the terms of the Merger
Agreement. Under this agreement, National Law Library's stockholders exchanged
all of their issued and outstanding shares of common stock, consisting of 18
million shares, for a like amount of new shares of common stock to be issued by
Internet Law Library. In contemplation of the merger, Internet Law Library's
original stockholders agreed to a 1 for 2 reverse stock split which resulted in
2 million issued and outstanding shares of common stock immediately prior to the
merger. These shares are to be retained by Internet Law Library's original
stockholders. In addition, under an Agreement and Plan of Distribution dated
March 25, 1999, Internet Law Library was obligated to distribute certain assets
consisting of cash and mining assets to its original stockholders. At December
31, 2000, the mining assets, valued at $10,000 at June 30 and December 31, 1999,
had been deemed worthless and accordingly were written off of Internet Law
Library's books. The remaining cash to be distributed at December 31, 2000
totaled $1,761. Also pursuant to the Distribution Agreement, Internet Law
Library formed the subsidiary New Planet Resources, Inc. (New Planet) for the
purpose of effecting this asset distribution. Two million shares of New Planet's
common stock is to be distributed to Internet Law Library's original
stockholders once New Planet's registration of these shares with the SEC is
complete. The registration statement to register this stock was filed and
accepted by the SEC on March 12, 2001, and pursuant to an Amended and Restated
Agreement and Plan of Distribution dated March 13, 2001, Planet Resources was
spun-off from Internet Law Library and acquired the mining and other interests.

      At the time of the reverse acquisition, Internet Law Library's authorized
shares of common stock were 10 million. The terms of the Merger Agreement
required that Internet Law Library's stockholders approve an amendment to its
articles of incorporation that would increase the authorized shares to 30
million and change the name of the company to Internet Law Library, Inc.
Internet Law Library's stockholders approved such an amendment on March 31,
1999, but it was not filed with the Secretary of State of Delaware until July 8,
1999. Because it was the intent of the parties to the Merger Agreement and
because the parties completed the reverse acquisition as contemplated in the
Merger Agreement, Internet Law Library's financial statements for the period
from Inception to June 30, 1999, have been prepared on the basis that Internet
Law Library was able to issue up to 30 million shares of common stock as of
March 31, 1999.

      Internet Law Library has accounted for the reverse acquisition under the
purchase method of accounting, whereby National Law Library is treated as the
accounting acquirer and Internet Law Library as the acquired entity. Using this
method, the retained deficit of Internet Law Library as of the acquisition date
and the par value of National Law Library's common stock were closed to Internet
Law Library's additional paid-in capital. This accounting reflects the intent of
the parties, specifically, that National Law Library as an operating entity
acquired Internet Law Library in order to implement a capital development
program from which both Internet Law Library's original stockholders and its new
stockholders expect to benefit.


                                      F-16
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

      Shown below is a reconciliation of balances in Internet Law Library's
stockholders' equity accounts from June 30, 1998, through the date of the
reverse acquisition:

<TABLE>
<CAPTION>
                                                                      Additional
                                                                       Paid-in
                                 Shares Issued      Common Stock       Capital    Retained Deficit   Treasury Stock       Total
                                 ------------       ----------       ----------   ----------------   -------------     ----------
<S>                                 <C>             <C>              <C>             <C>              <C>              <C>
Balances at June 30, 1998 ...       1,605,147       $    1,605       $  252,184      $  (92,249)      $  (43,184)      $  118,356
Sale of shares to an existing
    stockholder .............       2,394,853            2,395           57,460              --               --           59,855
Reverse 1 for 2 stock split .      (2,000,000)          (2,000)           2,000              --               --               --
Net loss through the reverse
    acquisition date ........              --               --               --        (120,441)              --         (120,441)
                                    ---------       ----------       ----------      ----------       ----------       ----------
Balances, as of the reverse
    acquisition date ........       2,000,000       $    2,000       $  311,644      $ (212,690)      $  (43,184)      $   57,770
                                    =========       ==========       ==========      ==========       ==========       ==========
</TABLE>

NOTE 5-TRANSACTIONS WITH AFFILIATED COMPANY:

      The content and software development assets of National Law Library were
sold to Internet Law Library by Hunter M.A. Carr, the Chairman of the Board,
Chief Executive Officer, President and largest stockholder of Internet Law
Library. Until January 2000, Mr. Carr was also the controlling stockholder of
ITIS, a Texas corporation formed in 1994 for the purpose of developing software
to be used in the area of litigation support. ITIS has provided a variety of
services to National Law Library as set forth below:

1.    In December 1998, National Law Library and ITIS entered into a continuing
      service agreement under which ITIS provided database content to National
      Law Library. Under the terms of this agreement, ITIS provided National Law
      Library with data files containing case law and statutes as are in the
      public domain together with coding and proprietary editing services
      covering these data files. Under the agreement, National Law Library was
      obligated for a three-year period to provide ITIS with minimum orders for
      data files containing an aggregate of 750 million characters per month.
      Pricing under this agreement was to reflect market prices for comparable
      work, and National Law Library had the right to select another vendor
      should ITIS' prices not be competitive. During the six months ended
      December 31, 1999, and the period from Inception to June 30, 1999,
      National Law Library was charged $987,594 and $101,052, respectively,
      representing estimated costs incurred by ITIS for data files created for
      National Law Library.

      Upon the divestiture of Mr. Carr's controlling interest in ITIS in January
      2000, and through the date of acquisition of ITIS (see Note 6) National
      Law Library recorded purchases of database content from ITIS in accordance
      with the contractual rate between ITIS and National Law Library. The
      effective rate recorded by National Law Library during its period under
      common control with ITIS is substantially less than the contractual rate.
      Prior to its acquisition, during the year ended December 31, 2000,
      National Law Library purchased $3,428,774 of case law content from ITIS,
      including $260,930 purchased at ITIS' estimated cost and $3,167,844
      purchased at the contractual rate of $0.65 per 1,000 characters of data.

2.    Effective in March 1999, National Law Library and ITIS operated under a
      management and financial services agreement under which ITIS provided
      accounting, staffing, and procurement services and office space to
      National Law Library. In addition, ITIS was entitled to charge a $3,600
      monthly management fee. Prior to its acquisition, during the year ended
      December 31, 2000, the six months ended December 31, 1999, and the period
      from Inception to June 30, 1999, charges totaling $123,185, $342,800 and
      $298,800, respectively, representing costs incurred by ITIS to provide
      these services were billed to National Law Library under this agreement.


                                      F-17
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3.    Effective in December 1998, National Law Library entered into an agreement
      with ITIS to receive software development and consulting services for its
      database and retrieval software. Prior to its acquisition, during the year
      ended December 31, 2000 and the six months ended December 31, 1999,
      charges totaling $29,312 and $34,600, respectively, were incurred by
      National Law Library under this agreement.

      Prior to its acquisition, National Law Library owed ITIS an aggregate
$3,015,835 at March 31, 2000, under various agreements, primarily from database
content purchases.

      Effective in November 1998, National Law Library and the CEO of Internet
Law Library entered into a personal service contract covering executive
services, marketing and business development, public relations and general
management. The agreement was terminated on July 1, 1999, when the CEO of
Internet Law Library became a salaried officer of Internet Law Library, on which
date National Law Library owed $40,440 to the CEO of Internet Law Library.
During the six months ended December 31, 1999, Internet Law Library remitted
this amount, together with reimbursable out-of-pocket expenditures totaling
$8,384, to the CEO of Internet Law Library.

NOTE 6-ACQUISITIONS:

GoverNet Affairs

      In November 1999, Internet Law Library acquired GoverNet Affairs, a
Georgia corporation that owns and operates an Internet site and connected
databases that provide subscribers with a tracking and monitoring system for
legislation pending before federal and state legislatures. Internet Law Library
issued 446,352 shares of common stock in exchange for all the outstanding stock
of GoverNet. The total purchase price of $1,341,400 includes the estimated fair
value of common stock issued at $1.3 million, $22,000 of promissory notes
payable to two stockholders, and $19,400 of other debt. The acquisition was
accounted for under the purchase method of accounting. Internet Law Library's
allocation to intangible assets for this acquisition includes $1,271,854 in
developed technology. The results of operations of GoverNet and the fair value
of the tangible and intangible assets acquired and liabilities assumed have been
included in Internet Law Library's consolidated financial statements as of the
acquisition date.

      In addition, options to purchase 320,000 shares of Internet Law Library's
common stock were granted to the former stockholders of GoverNet. These stock
options are exercisable over a five-year period beginning on August 31, 2000,
provided certain revenue and earnings targets are achieved in each of the three
years ending August 31 through 2002. The options are subject to an exercise
price of $2.94 per share. At December 31, 2000, 100,000 of these options have
been cancelled due to failure to meet revenue and earnings targets.

Brief Reporter

      In December 1999, Internet Law Library acquired Brief Reporter, a Virginia
limited liability company that owns and operates an Internet site and connected
databases containing appellate briefs written by attorneys for important cases
in all federal and state jurisdictions. Internet Law Library issued 483,325
shares of common stock in exchange for all of the members' interests in Brief
Reporter. The total purchase price of $1,000,000 consists of the estimated fair
value of the common stock issued by Internet Law Library. The acquisition was
accounted for under the purchase method of accounting and resulted in $960,206
of the purchase price being allocated to intangible assets. Internet Law
Library's allocation to intangible assets for this acquisition includes $250,000
to developed technology and $710,206 to database content. The results of
operations of Brief Reporter and the fair value of the tangible and intangible
assets acquired and liabilities assumed have been included in Internet Law
Library's consolidated financial statements as of the acquisition date.

                                      F-18
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

      Under the terms of the acquisition agreement with Brief Reporter, former
owners of Brief Reporter may have up to 25 percent of their shares of Internet
Law Library's common stock registered in a public offering prior to July 1,
2000. These shares were registered in a Registration Statement filed on June 16,
2000 and subsequently accepted by the SEC. Had there been no public offering or
if none of these shares had been registered in such an offering, Internet Law
Library was obligated to repurchase an aggregate of $125,000 worth of these
shares at the then prevailing market price. As this contingency was outside the
control of Internet Law Library, $125,000 was reflected as redeemable common
stock in the accompanying balance sheet at December 31, 1999. This amount has
been reversed in the December 31, 2000 balance sheet as the obligation to
register the shares has been satisfied.

ITIS

      On March 23, 2000, Internet Law Library's board of directors approved the
purchase of ITIS, Inc. subject to certain final reviews and negotiations that
were concluded in April 2000. According to the terms of a Stock Exchange
Agreement, effective April 30, 2000, Internet Law Library exchanged 5,044,903
shares of its common stock, of which all were unregistered shares, for all of
the shares of ITIS. In addition to the exchange of stock, Internet Law Library
assumed liabilities to Mr. Carr in the amount of $425,050. These liabilities
are non-interest-bearing and payable on demand.

      Since National Law Library's inception on November 30, 1998 until Internet
Law Library's acquisition of ITIS on April 30, 2000, ITIS served as one of
National Law Library's primary vendors of new case law content while also
providing various executive, sales, production, and administrative services.
During the period from National Law Library's inception to December 31, 1999,
Hunter M.A. Carr was the sole stockholder of ITIS. During the three months ended
March 31, 2000, Mr. Carr sold or otherwise conveyed approximately 92% of his
stock in ITIS to various individuals and entities, some of which are either
directors or officers of Internet Law Library or are entities controlled by
directors of Internet Law Library. Of the 5,044,903 shares issued to ITIS
stockholders, 1,721,003 shares were issued to five directors of Internet Law
Library or their beneficiaries and 332,300 shares were issued to five officers
of Internet Law Library. The results of operations of ITIS have been included in
Internet Law Library's consolidated financial statements as of the acquisition
date.

      The acquisition has been accounted for under the purchase method of
accounting. The total purchase price of $11,917,400 includes Internet Law
Library's allocation to intangible assets for this acquisition of $6.9 million
to database content and software costs and $2 million to contractual
agreements based on the results of an independent appraisal.

Compass Data Systems

      On July 27, 2000, Internet Law Library's board of directors approved the
purchase of a controlling interest in Compass Data Systems, Inc., a private
Nevada corporation that provides electronic information publishing services in a
completely searchable infobase to a wide variety of industries and
organizations. Stock purchase agreements by and between Internet Law Library and
certain stockholders of Compass Data Systems were signed with each of the
sellers effective as of October 1, 2000. Under the terms of these stock purchase
agreements, Internet Law Library agreed to issue an aggregate of 1,676,105
unregistered shares of Internet Law Library's common stock, valued at
approximately $2.3 million, for approximately 63% of the total outstanding
shares of Compass Data Systems common stock owned by Jeremiah Kane, John McHugh
and Jack Ben Ezra. As of December 31, 2000, 1,670,378 shares had been issued to
the selling shareholders. Compass had a negative net worth as of the date of
acquisition and has continued to incur net operating losses. Therefore, no
minority interest for the remaining 37% has been recorded in the financial
statements. The issuances of Internet Law Library stock were made in reliance
upon the Section 4(2) private placement exemption from registration. None of the
sellers received registration rights for the Internet Law Library shares they
received in this transaction. The results of operations of Compass and the fair
value of the tangible and intangible assets acquired and liabilities assumed
have been included in Internet Law Library's consolidated financial statements
as of the acquisition date.


                                      F-19
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

      The acquisition was accounted for under the purchase method of
accounting. The total purchase price of $2,294,425 includes Internet Law
Library's allocation of $1,294,425 to database content and software costs and
$1 million to a contractual agreement based on the results of an indepdent
appraisal.

      Venco Compliance

      On September 28, 2000, Internet Law Library's board of directors approved
the purchase of all of the stock of Venco Compliance, Inc., a private Texas
corporation that is in the business of selling compliance and safety training
and information to businesses such as dry cleaners and others that deal with
hazardous chemicals, biomaterials and other regulated substances. In connection
with this acquisition, Internet Law Library issued an aggregate of 100,000
unregistered shares of Internet Law Library's common stock at closing on October
1, 2000, valued then at $90,600, to Donald E. and Cathryn V. Tull. Internet Law
Library may issue an additional 25,000 unregistered shares each to Donald Tull
and Cathryn Tull in the future for consulting services with the last issuance
occurring in the year 2003. Venco Compliance has also entered into a consulting
agreement with Cathryn Tull that pays her $72,000 per year for a term of one
year, with a renewal right for a one-year term on each anniversary of the
agreement. In addition, Ms. Tull is eligible to receive a cash bonus based on
Venco Compliance's revenues. These issuances were made in reliance upon Section
4(2) private placement exemption from registration. Neither of the two sellers
received registration rights for the Internet Law shares they received in this
transaction. The results of operations of Venco Compliance and the fair value of
tangible and intangible assets acquired and liabilities assumed have been
included in Internet Law Library's consolidated financial statements as of the
acquisition date.

      The acquisition was accounted for under the purchase method of accounting
and resulted in $90,600 of the purchase price being allocated to goodwill.

        The following unaudited pro forma financial information for the six
months ended December 31, 1999, and for the year ended December 31, 2000,
assumes the acquisitions of GoverNet, Brief Reporter, ITIS, Compass and Venco
had occurred on July 1, 1999:

<TABLE>
<CAPTION>
                                                     Year Ended December  Six Months Ended
                                                          31, 2000        December 31, 1999
                                                     -------------------  ----------------
<S>                                                      <C>                <C>
Revenues..........................................       $  1,806,089       $   759,567
Net loss available to common stockholders.........       $(10,264,764)      $(5,286,157)
Loss per share....................................       $      (0.32)      $     (0.17)
</TABLE>

NOTE 7-INTANGIBLE ASSETS:

      Intangible assets as of December 31, 2000 and 1999 consist of the
following:

<TABLE>
<CAPTION>
                                        Estimated Useful
                                              lives
                                           (in years)           2000          1999
                                        ----------------    -----------   -----------
<S>                                       <C>               <C>           <C>
Developed technology...................         5           $ 1,521,854   $ 1,521,854
Goodwill...............................         5                90,600             0
Contractual agreements                    12-23 months        3,000,000             0
                                                            -----------   -----------
     Subtotal..........................                       4,612,454     1,521,854

Less: Accumulated amortization........                       (1,301,116)      (46,562)
                                                            -----------   -----------
     Total.............................                     $ 3,311,338   $ 1,475,292
                                                            ===========   ===========
</TABLE>


                                      F-20
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 8-NOTES PAYABLE AND FINANCING AGREEMENTS:

      In June 1999, Internet Law Library executed a demand promissory note in
the amount of $180,000 payable to a third party. The note was subject to an
annual interest rate of 10 percent, and was paid in full in October 1999. During
the six months ended December 31, 1999, Internet Law Library recognized interest
expense of $5,200 related to this note.

      In November 1999, with the acquisition of GoverNet, Internet Law Library
assumed two promissory notes made payable to two former stockholders of GoverNet
totaling $22,000. These notes, one for $15,000 dated in October 1999 and one for
$7,000 dated in November 1999, were both subject to an annual interest rate of
prime plus four percent. Internet Law Library paid both notes in full in
December 1999.

      During the year ended December 31, 2000, Internet Law Library borrowed a
total of $1,805,000 from Hunter M.A. Carr, its CEO, to fund working capital
requirements. Mr. Carr advanced an additional $255,000 during January and
February 2001, and $200,609 since March 1, 2001. The borrowings through February
28, 2001were evidenced by unsecured promissory notes, each bearing an annual
interest rate of 11.75% and payable in full with accrued interest after six
months. On February 28, 2001, the notes through that date were consolidated into
one demand note in the amount of $2,060,000 bearing interest at the rate of
prime plus two percent per year, payable in cash on demand after one year. At
Mr. Carr's option and with 30 days written notice, the note may be repaid in
common stock of Internet Law Library at a discounted price based on the lowest
price at which Internet Law Library has sold its common stock during the
one-year period preceding the exercise of this option. On March 10, 2001,
Internet Law Library retired $250,000 in principal from this note by issuing
1,153,828 restricted shares of common stock to Mr. Carr at a price of $.216667
per share. New promissory notes bearing the same terms have been issued to Mr.
Carr for the $200,609 advanced to Internet Law Library since March 1, 2001. As
of April 12, 2001, the total principal amount and accrued but unpaid interest
owed to Mr. Carr were $2,010,609 and $239,081, respectively.

      In connection with the acquisition of ITIS, Internet Law Library assumed
liabilities to Hunter M. A. Carr in the amount of $425,050. The liabilities are
non-interest-bearing and payable on demand.

      In October 2000, Internet Law Library executed demand notes for $400,000
and $50,000 in favor of George A. Roberts and W. Allyn Hoaglund, members of its
board of directors. The notes bear interest at the rate of prime plus two
percent per year and are payable in cash on demand after one year. At the option
of the holder and with 30 days written notice, the notes may be repaid in common
stock of Internet Law Library at a discounted price based on the lowest price at
which Internet Law Library has sold its common stock during the one-year period
preceding the exercise of this option.

      On November 20, 2000, Internet Law Library entered into an equity line
financing arrangement with Cootes Drive. This arrangement is the successor to
the intermediate financing agreement of May 11, 2000. The financing arrangement
is in the form of a Securities Purchase Agreement providing for the purchase by
Cootes Drive of up to $25,000,000 worth of shares of common stock of Internet
Law Library over an 18-month period. Under the terms of the Securities Purchase
Agreement, Internet Law Library can deliver a put to Cootes Drive specifying the
dollar amount of shares Internet Law Library intends to sell on each put up to a
maximum of 150% of the product of the weighted average daily price of Internet
Law Library's common stock and the weighted average trading volume (closing bid
price multiplied by volume for a particular day) for the twenty trading day
period prior to the delivery of a put. The number of shares to be acquired by
the investor in each put is determined by dividing the dollar amount of the put
by 90% of the average of the two lowest closing bid prices for the Company's
stock during the ten trading days preceding the date of the put. The maximum
amount that Internet Law Library can receive under the Securities Purchase
Agreement is $25 million or a lesser amount depending on the limitation on the
number of shares Cootes Drive (and its affiliates) are permitted to hold at any
one time, which is 4.99% of the then outstanding common stock of Internet Law
Library. The following are certain conditions that must be met before Cootes
Drive is obligated to accept a put from Internet Law Library:


                                      F-21
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

      (i)   the registration statement must be declared effective by the SEC and
            remain effective (the registration statement was declared effective
            by the SEC on January 11, 2001);

      (ii)  the closing bid price of Internet Law Library's common stock must be
            at least $1.50 and its weighted average daily trading volume must be
            at least $75,000 for the ten trading days preceding both the date of
            the put and the closing date of the put;

      (iii) the representations and warranties given by Internet Law Library in
            the Securities Purchase Agreement must be true and correct, and
            Internet Law Library must comply with the provisions of the
            agreement;

      (iv)  Cootes Drive must receive an opinion of counsel; and

      (v)   Internet Law Library's Common Stock must remain traded on the
            over-the-counter Bulletin Board or a more prestigious trading market
            or exchange.

There can be no guarantee that these conditions will be met or that Internet Law
Library will be able to draw down on any portion of this agreement. As of April
12, 2001, Internet Law Library did not meet certain of the funding conditions
listed in this agreement and was not able to obtain any funds under this
financing arrangement. Due to recent litigation in regard to the foregoing
financing agreement, it is unlikely that any further funding will occur from
this private capital fund. Additionally, it is highly unlikely that Cootes Drive
will honor a put even if Internet Law Library meets the above requirements in
the future.

      In connection with the equity line arrangement, Cootes Drive surrendered
for cancellation the five-year warrant for 500,000 shares at an exercise price
of $3.56 that was issued on May 11, 2000, and Internet Law Library issued:

      (i)   a five-year warrant No. 2 to Cootes Drive for the purchase of
            250,000 shares of common stock at an exercise price of $3.56 (issued
            in connection with the preferred stock offering);

      (ii)  a five-year warrant No. 3 to Cootes Drive for the purchase of
            250,000 shares of common stock at an exercise price of $0.60;

      (iii) a five-year warrant No. 4 to Cootes Drive for the purchase of 1,000
            shares for every $100,000 of puts delivered at an exercise price of
            120% of the average closing bid price of the common stock for the
            five trading days preceding the closing of a put (which shall vest
            in part each time a put is closed); and

      (iv)  a five-year warrant No. 5 to Cootes Drive which becomes exercisable
            only if Internet Law Library does not deliver puts in the aggregate
            amount of $10,000,000, at an exercise price equal to the average of
            the lowest three bid prices in the 90-day period preceding the
            exercise.

      On December 5, 2000, Internet Law Library executed a convertible
promissory note in the face amount of $500,000 in favor of Cootes Drive. The
note is a demand note, and accrues interest at the rate of 5% per annum. The
principal can be converted to common stock of Internet Law Library based on a
conversion price equal to the lesser of (i) $0.288 or (ii) 80% of the average of
the three lowest closing prices during a 20 day period prior to the date of
conversion. In connection with this promissory note, Internet Law Library issued
a warrant to the investor for 41,650 shares at an exercise price of $0.228 per
share. A commission of $17,500 and legal fees of $30,000 related to the equity
line financing arrangement were paid from the proceeds of this note. On December
5, 2000, Internet Law Library also entered into a side letter agreement that
obligated the same private capital fund to provide an additional $500,000 on
January 14, 2001, in exchange for another convertible promissory note, on
similar terms. Funding of this note was contingent upon, among other things, the
weighted average daily trading volume for Internet Law Library's


                                      F-22
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

common stock averaging $165,000 for the period between December 5, 2000 and
January 14, 2001. Upon closing of this second promissory note, Internet Law
Library was to be obligated to issue a five-year warrant for 41,650 shares with
an exercise price equal to the average of the closing bid prices of the common
stock for the five trading days prior to issuance of this note, and register the
resale of such shares. These conditions were not met and this additional funding
never occurred.

      On December 5, 2000, Internet Law Library granted registration rights to
the investor for up to 17,541,650 shares of common stock it may acquire under
the equity line financing, the convertible promissory note financings and the
warrants granted in connection with all of these financings. Internet Law
Library filed a registration statement with the SEC covering the resale of these
shares that was declared effective on January 11, 2001.

      Due to recent litigation in regard the foregoing financing agreements (see
note 14), it is highly unlikely that any further funding will occur from this
private capital fund. Accordingly, Internet Law Library will require new
financing or equity capital to fund its operations and execute its business
plan. The inability to obtain additional financing will substantially impact
Internet Law Library's ability to continue as a going concern. As of April 12,
2001, the date of this report, Internet Law's sources of an adequate supply of
financing or capital are severely limited. To provide interim financing until
long-term financing becomes available, management plans to continue to utilize
additional loans from Mr. Carr and other directors and investors.

NOTE 9-INCOME TAXES:

      Internet Law Library has had losses since inception and, therefore, has
not been subject to federal income taxes. As of December 31, 2000 and 1999,
Internet Law Library had accumulated net operating loss ("NOL") carryforwards
for income tax purposes of approximately $11.2 million and $2.1 million,
respectively, resulting in deferred tax asset amounts of $3,800,000 and
$707,000, respectively. These carryforwards begin to expire in 2018 through
2020. The Tax Reform Act of 1986 provided for an annual limitation on the use of
NOL and tax credit carryforwards following certain ownership changes that limit
Internet Law Library's ability to utilize these carryforwards. Additionally,
because U.S. tax laws limit the time during which NOL and tax credit
carryforwards may be applied against future taxable income and tax liabilities,
Internet Law Library may not be able to take full advantage of its NOL and tax
credits for federal income tax purposes. Since Internet Law Library has had a
net operating loss carry forward since inception and there is no assurance of
future taxable income, a valuation allowance has been established to fully
offset the deferred tax assets.

NOTE 10-COMMITMENTS AND CONTINGENCIES:

Lease for Office Space

      Internet Law Library leases its office space under a variety of operating
leases. Internet Law Library is committed to making monthly payments of at least
$12,400 under a lease agreement for office space that expires in June 2004. If
the Company is not successful in maintaining existing sub-leasing arrangements
with a third party tenant, this monthly obligation may increase to approximately
$18,600. GoverNet Affairs leases office space pursuant to a lease agreement
requiring monthly payments of approximately $3,400 through December 2001; Brief
Reporter leases office space pursuant to two lease agreements requiring monthly
payments of approximately $2,600 and $1,300 through August 2001 and December
2001, respectively; and Compass Data leases office space pursuant to a lease
agreement requiring monthly payments of approximately $4,000 through August
2004.


                                      F-23
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

      Future minimum lease payments under operating leases are:

                          2001                     $ 331,400
                          2002                       271,000
                          2003                       272,000
                          2004                       129,000
                                                  ----------

        Total                                     $1,003,400

        Less minimum receipts under subleases        (55,500)
                                                  ----------

        Net minimum lease payments                 $ 947,900
                                                  ==========

      Rent expense under operating leases was $188,916, $3,746, and $19,336 for
the year ended December 31, 2000, the six months ended December 31, 1999 and the
period November 30, 1998 (date of inception) through June 30, 1999,
respectively.

Employment Contracts

      Internet Law Library has signed employment agreements with certain
employees. At December 31, 2000, under these agreements, Internet Law Library is
obligated to pay compensation of $275,000 in 2001 and $231,667 in 2002. All
contracts in effect at December 31, 2000 will expire by the end of fiscal year
2002.

Litigation

      On September 9, 1999, Loislaw.com, Inc. filed a lawsuit in the District
Court of Harris County, Texas, 11th Judicial District (Case No. 1999-45563),
against ITIS, National Law Library and Internet Law Library. Loislaw.com, one of
the Company's competitors, alleged that ITIS breached an agreement between
Loislaw.com and ITIS by allegedly providing certain materials to National Law
Library for use on National Law Library's Website, which allegations were denied
by the Company and its subsidiaries. In December 2000, all parties entered into
a confidential agreement to settle the litigation. Settlement documents were
prepared and executed by all parties on December 28, 2000.

      Other than the litigation discussed above and in note 14, the Company is
not currently aware of any other pending litigation nor any material potential
litigation. While Internet Law Library is subject to claims, either asserted or
unasserted, arising in the normal course of business, management believes that
the outcome of any or all of these claims would not have a material effect on
the consolidated financial position or results of operations of Internet Law
Library.

NOTE 11-COMMON AND PREFERRED STOCK:

      Since inception, Internet Law Library has sold unregistered shares of its
common stock to a number of investors pursuant to Regulation D of the Securities
Act of 1933, as amended. During the six months ended December 31, 1999,
2,207,526 shares were sold at an average price of $1.02 per share for net cash
proceeds of $2,245,675, after commissions totaling $42,250. During the period
from Inception to June 30, 1999, Internet Law Library sold 2,467,550 shares for
an average price of $0.18 per share resulting in cash proceeds of $432,090.

During the six months ended December 31, 1999, Internet Law Library issued
51,500 shares of common stock for services rendered. Additionally, in December
1999, Internet Law Library approved a bonus to various employees and two board
members for services rendered in 1999. The bonus consisted of 33,042 aggregate
shares of common stock, which were issued in January 2000. The aggregate value
of the award, totaling $105,404, has been recorded to compensation expense and
additional paid-in capital as of December 31, 1999. Since the common


                                      F-24
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

shares were not issued until January 2000, no par value was recorded as of
December 31, 1999. Also in December 1999, the board of directors approved
outside directors' compensation in the form of annual awards of 25,000 shares of
Internet Law Library's common stock issuable to each outside director at the
beginning of each calendar year. In March 2000, Internet Law Library issued a
total of 125,000 shares of its common stock, valued at $551,200, to its outside
directors. In July 2000, Internet Law Library issued 50,000 shares of its common
stock, valued at $53,075, to new outside directors. The awards were recorded as
compensation expense in March and July 2000 respectively.

      In February 2000, Internet Law Library's stockholders approved an
amendment to the certificate of incorporation increasing the number of
authorized shares of preferred and common stock. Pursuant to this amendment,
shares of authorized preferred stock were increased from 1,000,000 shares to
50,000,000 shares, and shares of authorized common stock were increased from
30,000,000 shares to 100,000,000 shares.

      On April 30, 2000, Internet Law Library issued 5,044,903 shares of common
stock valued at approximately $21.4 million in connection with the acquisition
of ITIS, Inc. (See Notes 5and 6) Of the 5,044,903 shares issued to ITIS'
stockholders, 1,721,003 shares were issued to five directors of Internet Law
Library or their beneficiaries and 332,300 shares were issued to five officers
of Internet Law Library.

      On May 11, 2000, Internet Law Library entered into an intermediate
financing agreement with Cootes Drive LLC, and privately placed 300 shares of 5%
Series A Convertible Preferred Stock for $3 million. This preferred stock is
convertible into shares of Internet Law Library's common stock based on a price
equal to the lesser of (i) $3.2375 or (ii) 80% of the average of the three
lowest closing bid prices during a 20-day trading period prior to the date of
conversion. Internet Law Library is entitled to redeem the convertible preferred
stock at a cash price equal to 120% of the issue price, provided there is an
effective registration statement for the underlying shares of common stock. On
July 5, 2000, the SEC declared the registration statement filed by Internet Law
Library effective, which registered an amount of shares of its common stock then
sufficient to satisfy any conversion, warrant exercise, and dividend
requirements under the terms of this financing agreement. The convertible
preferred stock purchased by the investor is subject to mandatory redemption by
Internet Law Library upon the occurrence of a change in control or certain other
events. As part of this financing agreement and in consideration for negotiating
a $25 million equity line completed on November 20, 2000 (see Note 8) Internet
Law Library agreed to issue a five-year warrant to the investor for the purchase
of 500,000 shares of its common stock at an exercise price of $3.56 per share.
In the equity line agreement completed on November 20, 2000, this warrant was
replaced with 2 five-year warrants for the purchase of 250,000 shares each at
exercise prices of $3.56 and $.60 per share. The estimated fair value of these
warrants totals $710,397 and has been recorded in stockholders' equity.
Additionally, at May 11, 2000 Internet Law Library agreed to issue a five-year
warrant to a third party for the purchase of 200,000 common shares at an
exercise price of $3.3994 per share. The estimated fair value of this warrant
totals $448,817 and has been recorded in stockholders' equity. On December 5,
2000 Internet Law Library agreed to issue a five-year warrant to the investor
for the purchase of 41,650 shares of its common stock at an exercise price of
$.288 per share. The estimated value of this warrant totals $8,158 and has been
recorded in stockholders' equity. A commission of $100,000 and legal fees of
$30,000 related to this financing arrangement were recorded net of preferred
stock proceeds in stockholders' equity. As of April 12, 2001, Internet Law
Library did not meet certain funding conditions and was not able to obtain any
funds under this financing arrangement. On January 26, 2001, in order to protect
Internet Law Library and its stockholders, Internet Law Library filed a lawsuit
in the United States District Court against Cootes Drive and several other
defendants for damages resulting from alleged stock manipulation, SEC
violations, civil RICO, fraud, violations of Texas securities laws, and other
Texas statutes and conspiracy. Due to this recent litigation we believe it is
unlikely that any further funding will occur from this private capital fund, and
that Cootes Drive will not honor a put even if Internet Law Library meets the
requirements of the financing agreement in the future. For more information on
this litigation, see Note 14.


                                      F-25
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

      In connection with the issuance of the preferred stock, Internet Law
Library incurred a deemed dividend. Such dividends are calculated as the
discount from the fair market value as of the date the preferred stock was sold
to the investors. This aggregate discount amount of $906,250 for the Series A
Preferred Stock has been treated as dividends to the holders of the Series A
Preferred Stock and was recorded during the period from issuance through the
earliest available date of conversion, July 5, 2000.

      In May 2000, Internet Law Library entered into an agreement with a vendor
pursuant to which Internet Law Library agreed to issue an aggregate of 39,825
shares of common stock as consideration for services over the vendor's service
period. Upon completion of the service agreement in September 2000, total
expense of $55,988 was recorded for the aggregate fair value of the 39,825
shares issued.

      In August 2000, Internet Law Library entered into an agreement with a
vendor pursuant to which Internet Law Library issued an aggregate of 300,000
shares of common stock (valued at approximately $48,000 at December 31, 2000) as
consideration for services over the vendor's service period. The aggregate fair
value of the shares will be measured upon the date the services are completed
and estimated at interim periods until that time. The estimated fair value is
being recognized as expense over the interim service period through December 31,
2000.

      In October 2000 Internet Law Library issued 1,670,378 shares of common
stock valued at approximately $2.3 million in connection with the acquisition of
Compass Data Systems, Inc. and 100,000 shares of common stock valued at
approximately $90,600 in connection with the acquisition of Venco Compliance,
Inc. (See note 6)

      Through December 2000, holders of 138.92 shares of Series A convertible
preferred stock converted the preferred shares to 3,137,145 shares of common
stock. At December 31, 2000, 161.08 shares of Series A convertible preferred
stock remain outstanding.

NOTE 12-STOCK OPTIONS AND WARRANTS:

      On March 26, 1999, the board of directors and the majority stockholders of
Internet Law Library adopted the 1999 Stock Option Plan for Internet Law
Library. Under the Plan, the compensation committee of the board of directors,
consisting of at least two non-employee members of the board of directors, may
grant stock options to purchase common stock of Internet Law Library (either
incentive or non-qualified stock options) and stock appreciation rights to
officers and employees, including directors who are employees, of Internet Law
Library. The Compensation Committee has discretion to determine the terms and
conditions upon which the options may be exercised. Originally, the stockholders
approved 300,000 shares of common stock for the grant of options under the Plan,
subject to anti-dilution provisions. In February 2000, the stockholders approved
a resolution increasing this number to 3,000,000 shares.

      On March 26, 1999, the board of directors and the majority stockholders
approved the 1999 Director Option Plan. The Director Plan provides for automatic
grants of stock options to non-employee directors. Internet Law Library has
reserved 200,000 shares of common stock for the grant of options under the
Director Plan, subject to anti-dilution adjustments. As of December 31, 2000,
105,000 options were due to non-employee directors under the Director Option
Plan; however, no options had been issued under either the Stock Option Plan
or the Director Option Plan.

      Internet Law Library granted certain stock options and warrants outside
both the Stock Option Plan and the Director Option Plan during the year ended
December 31, 2000, the six months ended December 31, 1999, and the period from
Inception to June 30, 1999, as summarized below:


                                      F-26
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

<TABLE>
<CAPTION>
                                              Year Ended December 31, 2000        Six Months Ended December 31, 1999
                                              ----------------------------        ----------------------------------
                                                             Weighted Average                        Weighted Average
                                           Number of Shares   Exercise Price       Number of Shares   Exercise Price
                                           ----------------   --------------       ----------------   --------------
<S>                                           <C>              <C>                 <C>                  <C>
Options Outstanding, Beginning of Period      $     2.72       3,345,000           $     2.24           3,300,000
Options Granted                                     3.33         312,568                 2.93             645,000
Warrants Granted                                    3.51         700,000                   --                  --
Options Cancelled                                   3.00        (100,000)                  --                  --
Options Exercised                                     --              --                 0.30            (600,000)
                                                               ---------                                ---------
Options Outstanding, End of Period            $     2.89       4,257,568           $     2.72           3,345,000
                                                               =========                                =========
Options Exercisable, End of Period            $     3.12       3,167,568           $     3.00           2,250,000
                                                               =========                                =========

<CAPTION>
                                                Inception to June 30, 1999
                                                --------------------------
                                                               Weighted Average
                                             Number of Shares   Exercise Price
                                             ----------------   --------------
<S>                                              <C>             <C>
Options Outstanding, Beginning of Period         $    --                --
Options Granted                                     2.24         3,300,000
Warrants Granted                                      --                --
Options Cancelled                                     --                --
Options Exercised                                     --                --
                                                                 ---------
Options Outstanding, End of Period               $  2.24         3,300,000
                                                                 =========
Options Exercisable, End of Period               $  3.00         2,250,000
                                                                 =========
</TABLE>

      Other information regarding stock options outstanding as of December 31,
2000 is as follows:

<TABLE>
<CAPTION>
                                            Options Outstanding                            Options Exercisable
                                            -------------------                            -------------------
                                                                 Weighted Average                     Weighted Average
                                                                 ----------------                     ----------------
 Range of Exercise price      Shares    Remaining Life (Years)    Exercise price        Shares        Exercise price
 -----------------------      ------    ----------------------    --------------        ------        --------------
<S>   <C>     <C>           <C>                <C>  <C>               <C>             <C>                 <C>
      $2.12 - $3.56         4,145,000          .6 - 6.6               $2.84           3,125,000           $ 3.10
      $4.50 - $5.19           112,568          .8 - 6.6               $4.78              42,568           $ 4.77
                            ---------                                                 ---------
                            4,257,568                                                 3,167,568
                            =========                                                 =========
</TABLE>


      In January 1999, as partial consideration for arranging Internet Law
Library's acquisition of National Law Library, options were awarded to a
consulting firm for the purchase of 600,000 shares of common stock at an
exercise price of $.30 per share. The estimated fair value of these options was
immaterial. These options were exercisable for a period of ten days following
the first day on which the quoted market price of Internet Law Library's common
stock reached a price of $1.10 per share. Effective in April 1999, this option
agreement was amended to extend the exercise period from ten days to anytime on
or before December 31, 1999. The estimated fair market value incrementally
provided to the consulting firm as a result of changing the measurement date of
this stock option was approximately $12,500, which was not recorded due to its
immateriality. Pursuant to this award, as amended, two blocks of options, each
for 300,000 shares, were exercised in July 1999 and December 1999.

      In April 1999, the board of directors granted an option for 1,000,000
shares of common stock to a stockholder as an incentive for this person to join
the Board. This individual subsequently became a member of the board of
directors in August 1999. Both of these options were fully vested at the grant
date and may be exercised in whole or in part at any time for a period of 10
years at an exercise price of $3.00 per share.

      During December 1999, Internet Law Library granted stock options for the
purchase of an aggregate of 300,000 shares of common stock that are classified
as a variable award. Pursuant to APB Opinion No. 25, the initial compensation
expense related to these options was calculated based on the difference between
the market price of the underlying common stock on the grant date and the
exercise price of the option. The charge is recognized ratably over the expected
service period related to the variable award. Additionally, a periodic
adjustment to deferred compensation and related compensation expense is computed
at the end of each reporting period based on the difference between the then
current market price and the exercise price less previously recognized
compensation expense. In January 2000, Internet Law Library granted two officers
variable option awards for an aggregate of 105,000 shares of common stock
subject to terms similar to the above-described variable option.


                                      F-27
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

      In May 2000, Internet Law Library entered into a consulting agreement
pursuant to which an option was issued for common shares of Internet Law
Library. The option has an exercise price of $4.63 per share, vests on October
31, 2000, and is exercisable through October 2003. The shares under this option
are calculated as the number of shares aggregating $35,000 in value on the
exercise date. Upon completion of the service agreement at October 31, 2000
total expense of $8,150 was recorded relative to this option.

      Had the compensation cost for all stock options been determined under the
alternative method under SFAS No. 123, Internet Law Library's net loss for the
periods ended December 31, 2000 and 1999 would have changed to the following pro
forma amounts:

<TABLE>
<CAPTION>
                                                                             Six Months
                                                         Year ended       ended December
                                                     December 31, 2000       31, 1999
                                                     -----------------    --------------
<S>                                                      <C>                 <C>
Net loss available to common stockholders:
   As reported....................................       $ 9,040,241       $ 1,525,787
   Pro forma......................................       $ 9,374,790       $ 2,402,795
 Net loss per share:
   As reported....................................       $      0.31       $      0.07
   Pro forma......................................       $      0.32       $      0.11
</TABLE>

      For pro forma disclosures, the fair value of each option grant is
      estimated at the date of the grant using the Black-Scholes option pricing
      model with the following assumptions: no expected dividends, risk-free
      interest rate of six percent, price volatility of approximately 94% for
      the year ended December 31, 2000 and approximately 85% for the six months
      ended December 31, 1999, and an average expected life of 5 years.

NOTE 13-CONDITIONS AFFECTING ONGOING OPERATIONS:

      Internet Law Library's financial statements are prepared using principles
applicable to a going concern, which contemplates the realization of assets and
liquidation of liabilities in the normal course of business. However, at this
time Internet Law Library does not have significant cash or other material
liquid assets, nor, without significant reductions in operating costs, does the
Company have an established source of revenues sufficient to cover operating
costs and allow the Company to continue as a going concern. Internet Law Library
may in the future experience significant fluctuations in the results of their
operations. Such fluctuations may result in volatility in the price and/or value
of Internet Law Library's common stock. Shortfalls in revenues may adversely and
disproportionately affect the results of operations because a high percentage of
current operating expenses are relatively fixed. Accordingly, management
believes that period-to-period comparisons of results of operations should not
be relied upon as an indication of future results of operations.

      Internet Law Library will be required to obtain additional financing or
capital to attain profitable operations, and that capital may have provisions
that could suppress future stock prices or cause significant dilution to current
shareholders. Internally generated cash flows from operations have historically
been and continue to be insufficient for the Company's cash needs. As of April
12, 2001, sources of external and internal financing are very limited. It is not
expected that the internal source of liquidity will improve until significant
net cash is provided by operating activities (which may not be achieved), and
until such time, the Company will rely upon external sources for liquidity.
Management of Internet Law Library believes that net proceeds of future
anticipated securities offerings and projected revenues from operations should
be sufficient to fund ongoing operations and business plans. However, the
anticipated offerings may not be undertaken, and if undertaken, may not be
successful or the proceeds derived from such offerings may not, in fact, be
sufficient to fund operations and meet the Company's needs, and the Company's
revenues may not be realized as projected. Internet Law Library's current
working capital is not sufficient to cover cash requirements for the balance of
the current fiscal year or to bring the Company


                                      F-28
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

to a positive cash flow position. Internet Law Library may not ever become
profitable and could fail as a going concern.

      As of March 31, 2001, Internet Law Library's regular monthly cash
operating expenditures exceeded monthly cash receipts by approximately $250,000.
Integration of current and prior period acquisitions of GoverNet, Brief
Reporter, ITIS, Compass Data Systems and Venco Compliance as well as any
potential future acquisitions are critical to the success of the Company's
business plan. Management has already implemented plans to reduce administrative
costs and to increase revenues through increased marketing and increases in
prices. While many factors can impact future operations and these improvements
cannot be assured of success, the management of Internet Law Library intends to
take all actions deemed prudent and necessary.

NOTE 14-SUBSEQUENT EVENTS (UNAUDITED):

Spin-off of Planet Resources

      Under an Agreement and Plan of Distribution dated March 25, 1999 between
Internet Law Library (then Planet Resources, Inc.) and National Law Library,
Internet Law Library was obligated to distribute certain assets consisting of
cash and mining assets to its original stockholders. Effective March 27, 2001,
the foregoing mineral rights and cash were indirectly distributed to the
original stockholders of Internet Law Library pursuant to an Amended and
Restated Agreement and Plan of Distribution dated March 13, 2001, whereby Planet
Resources, one of Internet Law Library's wholly owned subsidiaries, was spun-off
from Internet Law Library and acquired the mining and other interests. Internet
Law Library no longer maintains any interest in these properties.

Notes Payable

      On January 16, 2001, Internet Law Library executed a demand promissory
note in the amount of $100,000 payable to an unaffiliated third party. The note
bears interest at 10% per year and is payable in cash on demand after one year.
At the option of the holder and with 30 days written notice, the note may be
repaid in common stock of Internet Law Library at a discounted price based on
the lowest price at which Internet Law Library has sold its common stock during
the one-year period preceding the exercise of this option.

      In February 2001, Internet Law Library executed demand notes for $190,000
and $50,000 in favor of George A. Roberts and W. Paul Thayer, members of its
board of directors. The notes bear interest at the rate of prime plus two
percent per year and are payable in cash on demand after one year. At the option
of the holder and with 30 days written notice, the notes may be repaid in common
stock of Internet Law Library at a discounted price based on the lowest price at
which Internet Law Library has sold its common stock during the one-year period
preceding the exercise of this option.

      On February 28, 2001, Internet Law Library executed a demand promissory
note in the amount of $25,000 payable to an unaffiliated third party. The note
bears interest at the rate of prime plus two percent per year and is payable in
cash on demand after one year. At the option of the holder and with 30 days
written notice, the note may be repaid in common stock of Internet Law Library
at a discounted price based on the lowest price at which Internet Law Library
has sold its common stock during the one-year period preceding the exercise of
this option.

      On April 5, 2001, Internet Law Library executed a demand promissory note
for $70,000 in favor of W. Paul Thayer, a member of the board of directors. The
note bears interest at the rate of prime plus two percent per year and is
payable in cash on demand after one year. At the option of the holder and with
30 days written notice, the note may be repaid in common stock of Internet Law
Library at a discounted price based on the lowest price at which Internet Law
Library has sold its common stock during the one-year period preceding the
exercise of this option.

      Advances made during February, 2001 by Internet Law's CEO, Mr. Carr, in
the amount of $255,000 were consolidated with earlier debt instruments due Mr.
Carr into one demand note in the amount of $2,060,000 bearing


                                      F-29
<PAGE>

INTERNET LAW LIBRARY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

interest at the rate of prime plus two percent per year, payable in cash on
demand after one year. At Mr. Carr's option and with 30 days written notice, the
note may be repaid in common stock of Internet Law Library at a discounted price
based on the lowest price at which Internet Law Library has sold its common
stock during the one-year period preceding the exercise of this option. On March
10, 2001, Internet Law Library retired $250,000 in principal from this note by
issuing 1,153,828 restricted shares of common stock to Mr. Carr at a price of
$.216667 per share. New promissory notes bearing the same terms have been issued
to Mr. Carr for advances since March 1, 2001 in the amount of $200,609. As of
April 12, 2001, the total principal amount and accrued but unpaid interest owed
to Mr. Carr were $2,010,609 and $239,081, respectively.

Contingencies

      On January 26, 2001, in order to protect Internet Law Library and its
stockholders, Internet Law Library filed a lawsuit in United States District
Court for the Southern District of Texas, Houston Division, against Cootes Drive
and several other defendants for damages resulting from alleged stock
manipulation, federal securities law violations, civil RICO, fraud, violations
of Texas securities laws and other Texas statutes and conspiracy. The case also
alleges misrepresentations by co-conspirators in connection with certain funding
transactions with Internet Law Library. All defendants have filed a joint motion
to transfer this case to New York to be consolidated with the lawsuit filed
against Internet Law Library as described below. The Company intends to
prosecute the case vigorously. However, in the opinion of the Company's
litigation counsel the case is not sufficiently advanced to permit a current
evaluation of the likelihood of a successful outcome.

      On February 5, 2001, in response to the lawsuit in Houston, Cootes Drive
LLC filed a suit against Internet Law Library in the Southern District of New
York alleging breach of one of the financing agreements with Internet Law
Library for failure to honor a conversion of the Company's shares of convertible
preferred stock. The suit seeks monetary damages of $10,000 per day and seeks to
compel Internet Law Library to issue shares of common stock to Cootes Drive LLC.
Internet Law Library's answer to this lawsuit has been filed, and the Company
intends to ask that this case be transferred to Houston and consolidated with
the previously filed case. The Company intends to defend this case vigorously.
Litigation counsel has advised the Company that the case is not sufficiently
advanced to permit an evaluation of the likelihood of the outcome.

      John M. O'Quinn, the Company's Texas-based litigation counsel in this
matter, has agreed to represent Internet Law Library and its directors, if
necessary, in both of these lawsuits on a 50% contingent fee basis with his law
firm paying all expenses of the litigation. The fee will be calculated after all
expenses have been reimbursed to Mr. O'Quinn's law firm.

Common Stock

      On March 10, 2001, in accordance with conversion terms in the February 28,
2001 demand note payable to Hunter M.A. Carr, Internet Law Library issued
1,153,828 restricted shares of common stock priced at $.216667 per share to Mr.
Carr, representing payment of $250,000 towards the note payable to Mr. Carr in
the original amount of $2,060,000.

Stock Options and Warrants

      On February 22, 2001 Internet Law Library issued warrants to James W.
Christian to purchase 300,000 shares of the Company's common stock at an
exercise price of $0.15 per share, at any time and from time to time from and
after February 22, 2001 and through and including February 22, 2006. These
warrants were issued in exchange for services provided to the Company, and have
an estimated value of $46,000.


                                      F-30
<PAGE>

                                  EXHIBIT INDEX

Exhibit
Number     Description
-------    -----------
   2.1      Agreement and Plan of Reorganization dated March 25, 1999, between
            Planet Resources, National Law Library and the stockholders of
            National (incorporated by reference to Exhibit A to Internet Law
            Library's Form 8-K filed on April 2, 1999).

   2.2      First Amendment to Agreement and Plan of Reorganization dated as of
            March 30, 1999, between Planet Resources, National Law Library and
            the stockholders of National Law Library (incorporated by reference
            to Exhibit 2.2 to Internet Law Library's Form 10-K filed on October
            13, 1999).

   2.3      Agreement and Plan of Distribution dated as of March 25, 1999,
            between Planet Resources, New Planet Resources, Inc. and National
            Law Library (incorporated by reference to Annex B to Internet Law
            Library's Information Statement Pursuant to Section 14(c) of the
            Securities Exchange Act of 1934 filed on April 19, 1999).

   2.4      Contract for Sale of Stock, dated November 8, 1999, by and between
            John R. Marsh, Ronald W. Hogan, and Charles E. Bowen, Jr., as
            Sellers, and Internet Law Library, as Buyer (incorporated by
            reference to Exhibit 2.1 to Internet Law Library's Form 8-K filed on
            November 30, 1999).

   2.5      Option Agreement to Purchase Stock, dated November 8, 1999, by and
            between Internet Law Library, as Seller, and Ronald W. Hogan, as
            Optionee (incorporated by reference to Exhibit 2.2 to Internet Law
            Library's Form 8-K filed on November 30, 1999).

   2.6      Option Agreement to Purchase Stock, dated November 8, 1999, by and
            between Internet Law Library, as Seller, and Charles E. Bowen, Jr.,
            as Optionee (incorporated by reference to Exhibit 2.3 to Internet
            Law Library's Form 8-K filed on November 30, 1999).

   2.7      Option Agreement to Purchase Stock, dated November 8, 1999, by and
            between Internet Law Library, as Seller, and John R. Marsh, as
            Optionee (incorporated by reference to Exhibit 2.4 to Internet Law
            Library's Form 8-K filed on November 30, 1999).

   2.8      Contract of Sale, dated December 8, 1999, by and between David P.
            Harriman, Andrew Wyszkowski, Eugene Meyung, Suzanne Meyung, and
            Christina Brown, as Sellers, and Internet Law Library, as Buyer
            (incorporated by reference to Exhibit 2.7 to Internet Law Library's
            Form 8-K filed December 23, 1999).

   2.9      Stock Exchange Agreement by and among Internet Law Library and the
            shareholders of ITIS relating to the acquisition of all of the
            outstanding stock of ITIS, dated April 30, 2000 (incorporated by
            reference to Exhibit 2.9 to Internet Law Library's Form 10-K/A filed
            on May 24, 2000).

   2.10     Stock Purchase Agreement by and between Internet Law Library and
            Jeremiah Kane, dated July 27, 2000, as amended by that amendment
            dated effective October 1, 2000 (Incorporated by reference to
            Exhibit 2.10 to the Registrant's Form 8-K filed with the SEC on
            October 16, 2000).

   2.11     Stock Purchase Agreement by and between Internet Law Library and
            John McHugh, dated July 27, 2000, as amended by that amendment dated
            effective October 1, 2000 (Incorporated by reference to Exhibit 2.11
            to the Registrant's Form 8-K filed with the SEC on October 16,
            2000).

   2.12     Stock Purchase Agreement by and between Internet Law Library and
            Jack Ben Ezra, dated July 27, 2000, as amended by that amendment
            dated effective October 1, 2000 (Incorporated by reference to
            Exhibit 2.12 to the Registrant's Form 8-K filed with the SEC on
            October 16, 2000).

   2.13     Stock Exchange Agreement by and among Internet Law Library and all
            of the shareholders of Venco Compliance, Inc., a Texas corporation,
            dated effective October 1, 2000 (Incorporated by reference to
            Exhibit 2.13 to the Registrant's Form 8-K filed with the SEC on
            October 16, 2000).

   2.14*    Amended and Restated Agreement and Plan of Distribution dated as of
            March 13, 2001, between Planet Resources, National Law Library and
            the stockholders of National Law Library.

   3.1      Amended and Restated Certificate of Incorporation of Internet Law
            Library (incorporated by reference to the Annex A of Internet Law
            Library's Definitive Proxy Statement on Schedule 14A filed on
            January 31, 2000).

<PAGE>

Exhibit
Number     Description
-------    -----------
   3.2      Bylaws of Internet Law Library, as amended (incorporated by
            reference to Exhibit 3.2 to Internet Law Library's Form 10-K filed
            on October 13, 1999).

   3.3      Certificate of Designation for Internet Law Library's 5% Series A
            Convertible Preferred Stock (incorporated by reference to Exhibit
            3.3 to Internet Law Library's Form 10-K/A filed on May 24, 2000).

   3.4      2001 Executive Stock Option Plan dated effective March 15, 2001
            (incorporated by reference to Exhibit 4.4 to Internet Law Library's
            Registration Statement on Form S-8 filed on March 30, 2001).

   10.1     Stock Option Agreement between Internet Law Library and Hunter M.A.
            Carr (incorporated by reference to Exhibit D to Schedule 13D filed
            on October 12, 1999, by Hunter M.A. Carr).

   10.2     Stock Option Agreement between Internet Law Library and Jack I.
            Tompkins (incorporated by reference to Exhibit D to Schedule 13D
            filed on October 12, 1999, by Jack I. Tompkins).

   10.3     Consulting Agreement between National Law Library and Castle
            Development, Ltd. (incorporated by reference to Exhibit 4(A) to
            Internet Law Library's Registration Statement on Form S-8 filed on
            April 2, 1999).

   10.4     Continuing Service Agreement between National Law Library and ITIS,
            effective December 1, 1998 (incorporated by reference to Exhibit
            10.4 to Internet Law Library's Form 10-K filed on October 13, 1999).

   10.5     Management and Financial Services Agreement between National Law
            Library and ITIS, effective March 1, 1999 (incorporated by reference
            to Exhibit 10.5 to Internet Law Library's Form 10-K filed on October
            13, 1999).

   10.6     Software Development and Consulting Agreement between National Law
            Library and ITIS, dated March 24, 1999 (incorporated by reference to
            Exhibit 10.6 to Internet Law Library's Form 10-K filed on October
            13, 1999).

   10.7     Option Agreement to Purchase Stock, effective March 30, 1999, by and
            between Internet Law Library and Jonathan Gilchrist (incorporated by
            reference to Exhibit 10.7 to Internet Law Library's Form 10-K filed
            on October 13, 1999).

   10.8     Planet Resources 1999 Stock Option Plan (incorporated by reference
            to Exhibit 10.1 to Internet Law Library's Form 10-K/A filed on
            October 28, 1999).

   10.9     Planet Resources Employee Stock Purchase Plan (incorporated by
            reference to Exhibit 10.2 to Internet Law Library's Form 10-K/A
            filed on October 28, 1999).

   10.10    New Planet Resources, Inc. Stock Incentive Plan (incorporated by
            reference to Exhibit 10.3 to Internet Law Library's Form 10-K/A
            filed on October 28, 1999).

   10.11    Planet Resources 1999 Director Option Plan (incorporated by
            reference to Exhibit 10.4 to Internet Law Library's Form 10-K/A
            filed on October 28, 1999).

   10.12    Consulting and Option Agreement by and between ITIS, Frank Fisher
            and Steve Tebo, dated January 22, 2000, as amended (incorporated by
            reference to Exhibit 10.12 to Internet Law Library's Form 10-K/A
            filed on May 24, 2000).

   10.13    Convertible Preferred Stock Purchase Agreement by and among Internet
            Law Library and Cootes Drive LLC, dated May 11, 2000 (incorporated
            by reference to Exhibit 10.13 to Internet Law Library's Form 10-K/A
            filed on May 24, 2000).

   10.14    Registration Rights Agreement by and among Internet Law Library and
            Cootes Drive LLC, dated May 11, 2000 (incorporated by reference to
            Exhibit 10.15 to Internet Law Library's Form 10-K/A filed on May 24,
            2000).

   10.15    Warrant to purchase 200,000 shares of Internet Law Library's common
            stock issued to Aspen Capital Partners, Inc., dated May 19, 2000
            (incorporated by reference to Exhibit 10.16 to Internet Law
            Library's Form 10-K/A filed on May 24, 2000).

   10.16    Securities Purchase Agreement by and between Internet Law Library
            and Cootes Drive LLC, dated November 20, 2000.

<PAGE>

Exhibit
Number     Description
-------    -----------
   10.17    Amended and Restated Registration Rights Agreement by and between
            Internet Law Library and Cootes Drive LLC, dated November 20, 2000.

   10.18    Warrant to purchase 250,000 shares of Internet Law Library's common
            stock issued to Cootes Drive LLC, dated May 11, 2000.

   10.19    Warrant to purchase 250,000 shares of Internet Law Library's common
            stock issued to Cootes Drive LLC, dated November 20, 2000.

   10.20    Minimum Commitment Warrant to purchase up to 100,000 shares of
            Internet Law Library's common stock issued to Cootes Drive LLC,
            dated November 20, 2000.

   10.21    Vesting Warrant to purchase 1,000 shares of Internet Law Library's
            common stock per $100,000 invested issued to Cootes Drive LLC, dated
            November 20, 2000.

   10.22    Convertible Promissory Note made by Internet Law Library in favor of
            Cootes Drive LLC in the principal amount of $500,000, dated December
            5, 2000.

   10.23    Warrant to purchase 41,650 shares of Internet Law Library's common
            stock issued to Cootes Drive, LLC, dated December 5, 2000.

   10.24    Side Letter Agreement dated December 5, 2000, by and between
            Internet Law Library and Cootes Drive LLC to enter into a
            convertible Promissory Note financing arrangement for $500,000.

   10.25    Consulting Agreement by and between Venco Compliance, Inc. and
            Kathryn Tull d/b/a First Choice Consulting, dated October 1, 2000
            (incorporated by reference to Exhibit 10.17 to the Registrant's Form
            8-K filed with the SEC on October 16, 2000).

   16.1     Letter, dated April 5, 2000, from Harper & Pearson Company to the
            Securities and Exchange Commission (incorporated by reference to
            Exhibit 16.1 to Internet Law Library's Form 8-K/A filed on April 5,
            2000).

   16.2     Letter, dated February 21, 2001, from Arthur Andersen LLP to the
            Securities and Exchange Commission (incorporated by reference to
            Exhibit 16.2 to Internet Law Library's Form 8-K filed on February
            23, 2001)

   21*      Subsidiaries of Internet Law Library.

   23.1*    Consent of Harper & Pearson Company

   23.2*    Consent of Arthur Andersen LLP

   24*      Power of Attorney (included on signature page)

*Filed herewith