ANNUAL REPORT FOR SMALL BUSINESS ISSUERS SUBJECT
                     TO THE 1934 ACT REPORTING REQUIREMENTS

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
(Mark One)
      [X]        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required)
                   For the fiscal year ended December 31, 2000

      [ ]        TRANSMISSION REPORT PURSUANT TO SECTION 13 OR 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)

                          Commission File No. 33-87024C

                          TAYLOR INVESTMENT CORPORATION
                 (Name of small business issuer in its charter)

          Minnesota                                    41-1373372
------------------------------------    ----------------------------------------
  (State or other jurisdiction of         (I.R.S. Employer Identification No.)
  incorporation or organization)

              43 Main Street S.E., Suite 506, Minneapolis, MN 55414
              -----------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                    Issuer's telephone number: (612) 331-6929
                                                     --------
        Securities registered pursuant to Section 12(b) of the Act: None
                                                                    ----

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

Check whether the issuer (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 the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes _X_ No ___

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

State issuer's revenues for its most recent fiscal year. $30,321,218
                                                         -----------

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days.

                       $1,224,637 as of December 31, 2000
                       ----------------------------------

State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practical date.

      Common Stock, $.01 Par Value - 484,129 shares as of December 31, 2000
      ---------------------------------------------------------------------

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of certain exhibits hereto are incorporated by reference to the
Company's Registration Statement on Form SB-2 (No. 33-87024C), effective January
12, 1995.

       Transitional Small Business Disclosure Format (check one): Yes __ No _X_


<PAGE>


                                TABLE OF CONTENTS

                                     PART I

ITEM 1.    BUSINESS............................................................1

           General.............................................................1

           Principal Business..................................................1

           Competition.........................................................3

           Regulation..........................................................3

           Employees...........................................................3

ITEM 2.    PROPERTIES..........................................................3

ITEM 3.    LEGAL PROCEEDINGS...................................................4

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

                                     PART II

ITEM 5.    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS............4

ITEM 6.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS...........................................4

ITEM 7.    FINANCIAL STATEMENTS...............................................11

ITEM 8.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
           AND FINANCIAL DISCLOSURE...........................................23

                                    PART III

ITEM 9.    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
           COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT..................23

ITEM 10.   EXECUTIVE COMPENSATION.............................................24

ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
           MANAGEMENT.........................................................25

ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.....................26

ITEM 13.   EXHIBITS AND REPORTS ON FORM 8-K...................................26

SIGNATURES ...................................................................27


                                       i
<PAGE>


                                     PART I
ITEM 1.      BUSINESS

             GENERAL

             Taylor Investment Corporation (the Company) was incorporated in
             1979 by its president, Philip C. Taylor, who then had 11 years of
             experience in the development and sale of rural recreational
             properties. The Company's principal business is the purchase,
             development and sale of previously undeveloped tracts of land
             within a reasonable driving distance of major metropolitan areas,
             primarily in Minnesota, Wisconsin, Georgia, Texas and Tennessee.
             The Company subdivides these tracts into lots and markets them
             through its Four Seasons sales offices for use as primary
             residences, vacation retreats, retirement residences, and
             investment. The size of lots sold by the Company typically ranges
             from 1.5 to 2 acres each, but on occasion may be as large as 40
             acres. Historically, the Company has not participated on a regular
             basis in the construction of homes on the lots, which it sells, but
             has contracted for the construction of homes on an isolated basis.
             The Company believes it is the largest developer of waterfront
             properties for the construction of primary and second homes in
             Minnesota and Wisconsin and is not aware of any other major
             developer in those states.

             To simplify and facilitate the purchasing process for its
             customers, the Company offers qualified customers loans
             collateralized by mortgages on the lots. Customers desiring
             financing must submit credit applications to the Sales and
             Marketing Department, which then has a credit analysis completed on
             such customers to determine their creditworthiness. Depending on
             the results of this analysis, the Sales and Marketing Department
             approves or disapproves the loan or submits the information to the
             Finance and Accounting Department for further analysis. The number
             of lot purchases financed with Company-originated mortgage loans
             depends on the availability and terms of alternative sources of
             credit to the customer.

             The Company believes it must position itself to take advantage of
             the current and expected future demand for rural properties for
             building primary and secondary homes. The Company's strategy is to
             expand the organization by exploring new markets outside its
             current locations.

             PRINCIPAL BUSINESS

             Taylor's operations are organized into four primary departments:
             Acquisitions, Development, Sales and Marketing, and Finance and
             Accounting.

             ACQUISITIONS - To locate potential quality properties for purchase,
             development, and sale, Taylor's Acquisition Department reviews plat
             maps for the areas served by its sales offices and identifies
             undeveloped tracts of land. The Acquisitions Department then
             obtains additional information regarding the property and any
             nearby amenities from such sources as topographical maps and
             reports from government agencies. Other due diligence activities
             conducted to determine the suitability of the property for purchase
             by the Company may include studies of local maps and development
             ordinances, reviews of zoning regulations, soil testing, water
             testing, trees and foliage typing, a study of local road access,
             and a consideration of potential lot layout. The Acquisitions
             Department also estimates the costs of development. If the results
             of these studies and estimates are favorable, an offer is made for
             the property in accordance with established pricing guidelines
             developed by the Company based on its past experience. Negotiations
             then typically commence and, if successful, a purchase agreement is
             entered into. The Company's obligations under a purchase agreement
             are generally conditioned upon Taylor obtaining the necessary
             subdivision approval from the local governmental authority.
             Negotiations may take as long as a year before a purchase can be
             concluded.

             DEVELOPMENT - After purchase negotiations are completed, the
             Company's Development Department is responsible for obtaining
             regulatory approval for the planned development. This process
             typically involves determining the layout of lots, or platting the
             property, attending public hearings, and


                                       1
<PAGE>


             conducting on-site inspections with governmental and regulatory
             personnel. To date, the Development Department has typically been
             successful in obtaining the necessary regulatory and governmental
             approvals; however, there can be no assurance that any particular
             transaction will be approved and ultimately consummated. The
             Development Department also works with a title insurance company in
             obtaining title abstracts, ordering title insurance, and preparing
             other facets of the acquisition for closing. After closing, the
             property is physically developed using road contractors, surveyors,
             and Company work crews. Lots are platted to maximize their
             attractiveness, privacy, and road and water access, taking into
             account view corridors and the layout of trees on the lot. Roads
             are installed, the property is prepared to receive telephone and
             electrical service, trails are cut, underbrush is removed,
             shorelines are cleared, and the property is otherwise prepared for
             marketing and sales to the buying public. The Company then assigns
             prices to each lot based on market prices for similar properties in
             the area. These sales prices generally range from $20,000 - $80,000
             per lot.

             SALES AND MARKETING - Taylor's strategy is to purchase and develop
             high quality properties and then market the lots to residents of
             metropolitan areas. Most properties developed by the Company are
             within reasonable driving distances of major metropolitan areas.
             The Company's lots are targeted toward buyers who desire property
             with many attractive features on which to build primary and
             secondary homes for use as primary residences, vacation retreats,
             retirement residences, or investments. The primary purchasers of
             the Company's vacation properties are individuals ranging from 30
             to 60 years old. The Company's strategy for remaining competitive
             in this market involves building on its reputation of offering
             quality properties; using its own regional sales offices and
             personnel; offering "on-the-spot" financing for qualified
             purchasers; and offering properties with many appealing features,
             such as trails, water access, creeks, attractive views and
             shorelines.

             The Company's sales and marketing activities are conducted
             principally through its Four Seasons subsidiaries in Minnesota,
             Wisconsin, Georgia, Texas and Tennessee. A principal element of the
             Company's strategy and success to date has been the establishment
             and use of regional sales offices in general location to the
             developed properties. The Company's seven existing regional sales
             offices are located near Brainerd, Minnesota; Spooner, Minocqua,
             and Stevens Point, Wisconsin; Jasper, Georgia; Austin, Texas; and
             Knoxville, Tennessee. The Company advertises in major metropolitan
             newspapers and other publications, television, radio and
             participates in home and garden, outdoors, and sports shows to
             attract potential customers. Sales personnel are compensated based
             on sales performance but are not permitted to use "hard" sales
             techniques or enticements to prospective purchasers (such as free
             products) to visit property sites. To consummate sales, the Company
             relies heavily upon the quality of its properties combined with the
             availability of "on-the-spot" financing for qualified buyers.

             FINANCE AND ACCOUNTING - The Finance and Accounting Department is
             responsible for maintaining records of account for each project
             developed by the Company and managing the Company's trade
             receivables and payables and mortgages receivable. This department
             prepares management information reports, prepares and services
             mortgage loans extended to lot purchasers, projects cash flow and
             capital needs for acquisition and lending activities, and performs
             collection activities.

             The Company regularly offers financing for the purchase of its
             properties. Upon execution of a purchase agreement, a customer may
             submit an application for credit, which, combined with a credit
             report from a credit rating agency, is given to the Sales Manager
             for approval. Applications from customers who have experienced
             credit problems in the past are submitted to the Controller for
             ultimate approval or rejection. Approved customers execute notes
             secured by first mortgages on the lots purchased.


                                       2
<PAGE>


             COMPETITION

             The Company operates in a highly competitive environment. It
             competes with other real estate development companies and real
             estate brokers in developing and selling its properties. In
             addition, and to a lesser extent, it competes with banks and other
             financial institutions and with several private companies and
             individual lenders in making mortgage loans. The Company's
             competitive factors in the market for developed lots include the
             ability to acquire quality inventory and the quality of the sales
             force, and the principal competitive factor in the mortgage loan
             market is the ability to offer favorable terms, including interest
             rates. The Company believes that it competes successfully in its
             market because of the quality of its product, access to capital
             (which enables it to purchase large tracts at more favorable prices
             than smaller industry participants), its dedicated sales staff, its
             reputation, and its financial strength. Management believes that
             the Company's ability to facilitate and simplify purchases by
             offering competitive financing to qualified lot purchasers offers
             another competitive advantage.

             REGULATION

             The Company's sales personnel, consisting primarily of those based
             in its sales offices, must be registered as real estate brokers and
             maintain such registration with the Minnesota Department of
             Commerce, the Wisconsin Department of Registration and Licensing
             and the Tennessee Real Estate Commission. Minnesota requires
             registration of subdivisions containing more than ten lots. The
             Minnesota Department of Commerce granted a waiver of the
             registration and in its stead requires notification of the sale of
             any subdivision containing more than ten lots, which will be
             offered to Minnesota residents. No registration is required in
             Wisconsin, Georgia, Texas or Tennessee. In addition, the
             development of properties requires compliance with state and local
             zoning laws and regulations and local laws and ordinances regarding
             such matters as the size of lots, the construction of roads, and
             the amount of setback required from roads and bodies of water.

             The Company is subject to the Interstate Land Sales Full Disclosure
             Act, which requires registration with the Department of Housing and
             Urban Development of any project that consists of 100 or more lots.
             The Company has received a Multiple Site Subdivision Exemption from
             the Department of Housing and Urban Development allowing it to sell
             projects consisting of no more than 99 lots in any given
             noncontiguous site without registration.

             The Company is also subject to consumer protection laws, such as
             the Truth in Lending Act, in connection with its mortgage lending
             activities.

             EMPLOYEES

             As of December 31, 2000, the Company has 86 full-time and 6
             part-time employees. None of the Company's employees are
             represented by a labor union or are covered by a collective
             bargaining agreement. The Company has not experienced any work
             stoppages and believes employee relations are good.


ITEM 2.      PROPERTIES

             The Company leases its administrative office located at 43 Main
             Street SE, Suite 506, in Minneapolis, Minnesota, consisting of
             3,276 square feet in an office/residential complex. The lease
             expires March 31, 2002.

             The Company leases regional sales, acquisition and development
             offices at various locations in Minnesota, Wisconsin, Georgia,
             Texas and Tennessee. These offices typically range from 1,000 to
             2,500 square feet and are leased on terms ranging from
             month-to-month to five years.


                                       3
<PAGE>


             Management believes that these facilities provide sufficient space
             to support its current activities, and that additional space will
             be available in the future as needed.

ITEM 3.      LEGAL PROCEEDINGS

             NONE

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

             There were no matters submitted to a vote of security holders
             during the year ended December 31, 2000.

                                     PART II

ITEM 5.      MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

             The Company's authorized capital stock consists of 10,000,000
             shares of common stock, $.01 par value, of which 484,129 shares
             were outstanding and held of record by 17 stockholders as of
             December 31, 2000. There is currently no public trading market for
             the Company's capital stock, and the Company does not expect such a
             market to develop in the foreseeable future. Holders of common
             stock have no preemptive or other rights to acquire stock or other
             securities of Taylor. Cumulative voting for directors is not
             permitted. Holders of common stock are entitled to one vote per
             share on matters submitted to a vote of stockholders. All shares of
             common stock presently outstanding are fully paid and
             non-assessable. The Company's Credit Agreement contains a covenant
             requiring the Company to obtain written approval for the
             declaration and payment of cash distributions. Distributions
             declared and paid in the future, if any, are subject to the
             discretion of the Board of Directors and will depend on the
             Company's earnings, financial condition, capital requirements, debt
             covenant limitations and other relevant factors. In addition, the
             Board of Directors is authorized to issue additional shares of
             common stock and to issue options and warrants for the purchase of
             such shares, the aggregate of which may not exceed the number of
             shares authorized by the Company's Articles of Incorporation.

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

             The following analysis of the consolidated results of operations
             and financial condition of the Company should be read in
             conjunction with the Company's consolidated financial statements
             and notes thereto included elsewhere in this document.

             OVERVIEW

             LAND AND STRUCTURE SALES - The Company's principal business is the
             purchase, development and sale of previously undeveloped tracts of
             land. The Company identifies, acquires and develops raw land
             inventory through its Acquisition and Development departments.
             Financing for the acquisition and development of real estate is
             provided primarily by a network of financial institutions located
             in proximity to the Company's properties as well as by an
             asset-based credit facility (the "Credit Agreement"). On average,
             75% of the purchase price of the acquired property is financed with
             loans from financial institutions, which are secured by mortgages
             on the acquired property. In addition, property sellers may also
             agree to provide financing for up to 70% of the purchase price.

             The Company records its inventory, which consists primarily of land
             held for sale, at the purchase price plus amounts expended for the
             acquisition, development and improvement of the land. The Company
             currently attempts to maintain its inventory at a level that, at
             any time, will meet its sales goals for the next twelve months.
             Inventory balances were $18.5 million and $9.9 million as of
             December 31, 2000 and 1999, respectively.


                                       4
<PAGE>


             Structure inventory consists of structures that existed on a
             property at the time of acquisition. Structure sales also include
             the proceeds from the sale of townhomes in the Company's
             Alexandria, Minnesota project. The construction of condominiums and
             townhomes is subcontracted through independent builders.

             Revenues from the sale of developed lots, and structures are
             recognized upon closing of the sale of the property and receipt of
             at least 10% of the purchase price.

             An environment of increased interest rates may adversely affect the
             Company's ability to successfully market and sell its properties.

             OTHER REVENUES - Other revenues consist primarily of interest
             income from the Company's financing operation. The Company records
             the finance receivables as contracts and mortgages receivable.
             Generally, mortgage loans on lots are originated for terms of up to
             ten years while loans on structures are offered for a maximum term
             of five years. The Company's underwriting parameters require a
             minimum down payment of 10%. Interest rates currently range from
             11.40% to 13.40% depending principally on the amount of the down
             payment. Company-financed sales were 31.1% and 26.4% of sales for
             the years ended December 31, 2000 and 1999, respectively. The
             increase in customer purchases financed by the Company is due to
             the Company offering competitive finance programs with low initial
             interest rates to customers. The weighted average interest rate on
             outstanding contracts and mortgages receivable was approximately
             11.2% and 11.1% as of December 31, 2000 and 1999, respectively.

             Other revenues also include closing fee income the Company collects
             for sales and equity in the income or loss of joint ventures.

             COMPARISON OF THE YEARS ENDED DECEMBER 31, 2000 AND 1999

             The Company reported a 22.6% increase in sales for the year ended
             December 31, 2000 to $28.8 million, including sales of structures
             of $.6 million, or 2.1% of sales. For the same period in 1999,
             sales were $23.5 million, including $1.4 million in sales of
             structures, or 6.0% of sales. The overall sales increase is
             attributable to superior quality inventory, a strong real estate
             market and a knowledgeable sales staff.

             The following table sets forth the sales, cost of sales and gross
             profit information for the years ended December 31, 2000 and 1999.
<TABLE>
<CAPTION>
                 2000                  Land                     Structures                    Total
<S>                                 <C>             <C>       <C>               <C>         <C>             <C>
             Sales                  $28,245,169     100.0%    $    592,830      100.0%      $28,837,999     100.0%
             Cost of sales           15,365,177      54.4%         508,598       85.8%       15,873,775      55.0%
                                   ------------   -------     ------------    -------     -------------   -------
             Gross profit          $ 12,879,992      45.6%    $     84,232       14.2%    $  12,964,224      45.0%

                 1999                  Land                     Structures                    Total

             Sales                 $ 22,104,045     100.0%    $  1,414,393      100.0%      $23,518,438     100.0%
             Cost of sales           11,344,516      51.3%       1,403,366       99.2%       12,747,882      54.2%
                                   ------------   -------     ------------    -------     -------------   -------
             Gross profit          $ 10,759,529      48.7%    $     11,027        0.8%    $  10,770,556      45.8%
</TABLE>

             For 2000, gross profit was $13.0 million or 45.0% of sales,
             compared to $10.8 million or 45.8% of sales for the same period in
             1999. Gross profit margin from the sale of lots was 45.6% for 2000
             and 48.7% in 1999. In 2000, gross profit margin from the sale of
             structures was 14.2%, while for the same period in 1999 gross
             profit margin from the sale of structures was 0.8%. The decrease in
             gross profit on land sales, as a percentage of sales, is
             principally due to the sell out of a few older projects at


                                       5
<PAGE>


             reduced prices. The Company also wrote down inventory $294,480 in
             1999, to reflect its net realizable value.

             Other revenues increased to $1,483,219 in 2000, from $1,455,166 for
             the same period in 1999, which is the net result of a $250,000
             development fee collected for work done on a joint venture, a
             $121,082 loss in equity in joint ventures and a reduction in
             closing fees collected. Closing fees decreased about 30% from the
             prior year, due to special incentive programs, waiving these fees
             for customers. Interest income increased to $1,057,980 in 2000 from
             $988,145 in 1999 as a result of an increase in the average balance
             of contracts and mortgages receivable.

             Selling, general and administrative expenses for 2000 were $9.3
             million or 32.4% of sales, compared to $8.0 million or 33.8% of
             sales for the same period in 1999. The decrease in selling, general
             and administrative expense, as a percent of sales, is attributable
             to increased sales and management's continued efforts to control
             expenses.

             Interest expense of $1.4 million in 2000 increased by 13.0% from
             $1.2 million in 1999. The increase in interest expense is due to an
             increase in contracts and mortgages payable in 2000 from 1999.

             LIQUIDITY AND CAPITAL RESOURCES

             OVERVIEW - The Company requires consistent access to capital to
             finance growth of its operations. Although the Company has
             generally operated profitably, its cash flow from operating
             activities alone has been, and is expected to continue to be,
             insufficient to fund the Company's capital needs for continued
             growth.

             The Company generates cash flow from operations as land inventory
             is sold unless the Company finances the sale and collections are
             made on its contracts and mortgages receivable. The Company's
             primary use of cash flow is for funding its ongoing acquisition of
             land and the subsequent customer mortgage financing. Secondarily,
             the Company uses cash to reduce the aggregate amount outstanding
             under its Credit Agreement and notes and mortgages payable. The
             following table sets forth the Company's net cash flows for
             operating, investing and financing activities for the years ended
             December 31, 2000 and 1999:

                                                       2000            1999
             Net cash provided by (used in):
               Operating activities               $  7,654,383    $ 12,151,270
               Investing activities                 (1,311,324)        (41,473)
               Financing activities                 (6,621,901)    (11,574,205)
                                                  -------------   -------------
               Net increase (decrease) in cash    $   (278,842)   $    535,592
                                                  =============   =============

             Cash provided by operating activities totaled $7,654,383 in 2000
             and $12,151,270 in 1999. Cash used for financing activities in 2000
             consisted primarily of principle payments on notes, contracts,
             mortgages payable and subordinated debt of $9.0 million, offset by
             $4.5 million in borrowings on lines of credit, and dividend
             payments to shareholders of $2.1, while cash used for financing
             activities in 1999 consisted primarily of principle payments on
             notes, contracts, and mortgages payable of $10.0 million and
             dividend payments to shareholders of $1.5. Cash used for investing
             activities in 2000 primarily related to investments in joint
             ventures of $500,000 and an increase in funds held by trustee of
             approximately $598,000.

             FINANCING SOURCES - The Company's financing sources consist of
             short-term financing under its Credit Agreement, seller financing,
             financing from a network of commercial banks, and sales of
             contracts and mortgages receivable. Permanent financing has been
             obtained through the issuance of $4.0 million of Senior
             Subordinated Debt. The source of repayment for the Company's
             working capital financing is the sale of lots and the receipt of
             payment on contracts and mortgages receivables. As a lot is sold, a


                                       6
<PAGE>


             portion of the proceeds is used to pay down the respective
             financing. On average, the Company finances 75% of the cost of land
             acquisitions and development. As a result, the loan is usually paid
             in full when approximately 70% of the lots in a development are
             sold. Payments received by the Company on customer contracts or
             mortgages receivable are applied to the outstanding balance under
             its Credit Agreement. The following table sets forth the Company's
             sources of financing and the amount of such financing at December
             31, 2000 and 1999.

             SOURCES OF FINANCING
<TABLE>
<CAPTION>
                                                    2000        Percentage         1999       Percentage
<S>                                             <C>                  <C>      <C>                 <C>
             Lines of credit                    $   8,261,038        38.6%    $    3,797,508      31.0%
             Notes payable (1)                      9,168,999        42.8          4,725,779      38.6
             Contracts and mortgages payable          486,326         2.3             46,041       0.4
             Senior subordinated debt               3,494,000        16.3          3,680,000      30.0
                                                -------------    --------     --------------      ----
                Total debt                      $  21,410,363       100.0%    $   12,249,328     100.0%
                                                =============    ========     ==============    ======
</TABLE>
             ----------------------
             (1)Notes payable includes the real estate line of credit in the
                amounts of $2,710,467 and $1,606,429 as of December 31, 2000 and
                1999, respectively.

             "CREDIT AGREEMENT" - The Company began its borrowing relationship
             in 1986 and may currently borrow a total aggregate of up to $15.0
             million under the Credit Agreement which includes the following
             four lines of credit:

             DESCRIPTION OF LINES OF CREDIT

                                                                  Balance
                                                   Amount of   Outstanding as of
                                                    Line(1)    December 31, 2000

             Mortgages and Contracts Receivable  $15,000,000         $ 7,361,038
             Real Estate Mortgage                  5,000,000           2,710,467
             Project                               1,000,000                   0
             Interim Financing                     3,000,000             900,000
                                                                     -----------
                                                                     $10,971,505
                                                                     ===========
             ----------------------
             (1)These totals are the maximum principal amounts that may be
             outstanding under each of the lines of credit; however, the maximum
             aggregate principal amount outstanding under all of the lines of
             credit cannot exceed $15.0 million.

             The amounts borrowed by the Company under the Mortgages and
             Contracts Receivable line of credit are at the discretion of the
             lender, are based on 90% of eligible contracts receivable, and are
             to be used to finance the development of properties. Borrowings
             under this credit line bear interest at the greater of 8.0% or the
             lender's base rate plus 1.0% (10.50% as of December 31, 2000). The
             lender's base rate is equal to the interest rate publicly announced
             by National City Bank of Minneapolis from time to time as its
             "Base" rate.

             The Company also may borrow up to $5,000,000 under the Real Estate
             Mortgage line of credit based on 90% of the purchase price of the
             real estate plus 80% of eligible development costs. Funds obtained
             by the Company under the Real Estate Mortgage credit line are to be
             used to purchase real estate pending development or sale.
             Borrowings under the Real Estate Mortgage line of credit bear
             interest at a rate equal to 1.0% over the lender's base. The
             Project line of credit of $1,000,000 is to be used to finance
             project development costs and the purchase of real estate in
             connection with a project in


                                       7
<PAGE>


             northern Minnesota. The assets of the project secure this line of
             credit. Borrowings of up to $3,000,000 under the Interim Financing
             line are available to the Company at the discretion of the lender
             to cover demand overages on the other lines of credit. Borrowings
             under the Project and Interim Financing lines of credit bear
             interest at a rate equal to 1.5% over the lender's base rate.

             All amounts borrowed by the Company under the Credit Agreement are
             due April 30, 2003 under an amendment to the Credit Agreement that
             changed the structure of the Agreement to a Committed Line. All
             funds advanced by the lender under the Credit Agreement are
             collateralized by an assignment by the Company of first mortgages,
             contracts for deed, security interests, or other rights or property
             interests acquired by the Company in connection with specific
             property development projects and a security interest in virtually
             all of the Company's assets. In addition, the Credit Agreement also
             contains a number of restrictive covenants and is personally
             guaranteed by the Company's president, Philip C. Taylor.

             NETWORK BANKS - Another recurring source of capital is a network of
             community banks, the majority of which Taylor has been utilizing as
             financing sources since the mid-1980s. These financial
             institutions, which are typically in proximity to the land being
             purchased, provide loans that are secured by a first mortgage on
             the land. Interest payments are made monthly and generally payments
             are made as the individual lots are sold. The Company's borrowings
             through the network of banks are shown as "Notes payable" in the
             table entitled "Sources of Financing."

             SELLER FINANCING - Seller financing or mortgages payable are
             equivalent to accounts payable that are due on resale and result
             from the Company's ordinary course of business. When the Company
             decides to acquire a parcel of land, the first source of financing
             it attempts to secure is financing from the seller. Seller
             financing typically consists of a purchase agreement evidencing the
             sale and outlining the terms of payment. The Company makes interest
             and principal payments on a scheduled amortization which varies by
             transaction, but which in no event extends beyond the sale of the
             property. The Company's use of seller financing is shown as
             "Contracts and mortgages payable" in the table entitled "Sources of
             Financing."

             SENIOR SUBORDINATED DEBT - In April 1994, the Company issued $1.0
             million of Senior Subordinated Notes, Series 1994 pursuant to Rule
             504 of Regulation D under the Securities Act of 1933, as amended.
             The proceeds were initially used to pay down existing debt.
             Ultimately the funds were used to acquire additional inventory. The
             Company issued an additional $3.0 million of Senior Subordinated
             Debt pursuant to a Registration Statement on Form SB-2, which
             became effective January 12, 1995. The proceeds of this offering
             were used to reduce existing debt, finance inventory, fund customer
             mortgage financing and open new offices during 1995.

             SALES OF CONTRACTS AND MORTGAGES RECEIVABLE - The general level of
             stability in its contracts and mortgages receivable portfolio has
             provided the Company with the opportunity to sell portfolios of
             receivables to raise cash when needed and to take advantage of
             positive interest rate spreads. Depending on the current interest
             rates, the sale can be at a discount or premium to par. The typical
             structure involves the Company selling the rights to payment on the
             contracts and mortgages with recourse, and also requires a small
             percentage of the sales price, approximately 5%, to be "held-back"
             and subsequently paid to the Company as the portfolio is paid down.
             In order to obtain more favorable pricing, the Company may retain
             servicing rights or grant put options to the purchasers in
             connection with the receivables sold. The put options typically
             require the Company to repurchase, at the option of the purchaser,
             the balance of the receivables within 60 days of the five-year
             anniversary of the sale. The sale of receivables with put options
             is accounted for as a financing transaction in the Company's
             consolidated financial statements. Future sales of contracts and
             mortgages receivable will depend on the Company's cash needs and
             prevailing interest rates.

             Put options were granted to three purchasers in 1996 on an initial
             aggregate amount of $5.6 million in contracts and mortgages


                                       8
<PAGE>


             receivable. As of December 31, 2000, $486,251 in contracts and
             mortgages receivable were outstanding with recourse, all of which
             had put options. Based on the scheduled amortization of these
             balances, the Company's potential liability, if the put features
             are exercised, is approximately zero in 2001, and $330,425 in 2002.
             Should all of the put options be exercised, the Company would
             expect to use amounts available under its Credit Agreement to
             repurchase the contracts and mortgages receivable.

             The following table lists as of December 31, 2000, and 1999 the
             balance of the Company's contracts and mortgages receivable
             outstanding, the amount of the portfolio 90 days past due, average
             portfolio term and weighted average interest rate. The table also
             sets forth the amounts foreclosed and the contracts and mortgages
             sold during the years ended December 31, 2000 and 1999.

                                                        2000            1999
             Contracts and mortgages receivable:
               Balance outstanding                  $10,452,589      $8,694,934
                 Amount 90 days past due                110,270         269,871
                 Percentage of Balance                     1.05%           3.10%
               Amount foreclosed during period          135,732         302,164
                 Percentage of balance                     1.29%           3.48%
             Average portfolio term                     4 years         4 years
             Weighted average interest rate                11.2%           11.1%

             The Company works aggressively and closely with its customers as
             soon as an account becomes overdue to attempt to avoid default and
             foreclosure. After the Company begins collection proceedings, most
             accounts are eventually made current and the Company receives full
             payment. On occasion, the Company must cancel the contract and
             begin foreclosure proceedings. During 2000, there were
             approximately $135,732 in contract and mortgage receivable balances
             where the foreclosure process was complete, and an additional
             $2,471 were in the process of foreclosure. Subsequent to a
             completed foreclosure, the Company returns the underlying property
             to inventory and begins re-marketing the lot. Properties that are
             foreclosed upon and returned to inventory are generally resold at a
             profit.

             Based on expected cash generated from operations in 2001 and the
             above available financing resources, management believes it has
             adequate sources of funds to finance its 2001 cash requirements.

             NEW ACCOUNTING STANDARDS - Statement of Financial Accounting
             Standards (SFAS) No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND
             HEDGING ACTIVITIES, is effective for all fiscal years beginning
             after June 15, 2000. SFAS 133, as amended, establishes accounting
             and reporting standards for derivative instruments, including
             certain derivative instruments embedded in other contracts and for
             hedging activities. Under SFAS 133, certain contracts that were not
             formally considered derivatives may now meet the definition of a
             derivative. The Company will adopt SFAS 133 effective January 1,
             2001. Management does not expect the adoption of SFAS 133 to have a
             significant impact on the financial position, results of
             operations, or cash flows of the Company.

             In December 1999, the Securities and Exchange Commission (SEC)
             released Staff Accounting Bulletin (SAB) No. 101, REVENUE
             RECOGNITION IN FINANCIAL STATEMENTS. SAB No. 101 provides the
             staff's views in applying generally accepted accounting principles
             to selected revenue recognition issues and was effective for the
             Company in the fourth quarter of 2000. There was no significant
             effect on the Company's financial positions or results of its
             operations as a result of adopting SAB No. 101.

             EFFECT OF INTEREST RATE ENVIRONMENT - The Company believes it can
             protect itself from sustained high interest rates by selling its
             contracts and mortgages receivable portfolio and increasing the
             rates it charges to customers who utilize Company financing, or by
             incurring fixed rate debt. Such increases in rates would, however,
             have an adverse impact on the Company's cost of carrying inventory.
             The Company believes the best defense against rising interest rates
             is to buy only the best property, which should remain in high
             demand. However, sustained increases in interest rates could impact
             future sales


                                       9
<PAGE>


             levels. If demand for product was to decline for an extended period
             of time, the Company believes it could minimize the impact by
             reducing the sales price of the product to stimulate sales and
             would discontinue purchasing properties until the level of
             inventory more closely matched customer demand.

             SAFE HARBOR DISCLOSURE - Various forms filed by the Company with
             the Securities and Exchange Commission, including the Company's
             Form 10-KSB and Form 10-QSB, and other written documents and oral
             statements released by the Company, may contain forward-looking
             statements. Forward-looking statements generally use words such as
             "expect," "anticipate," "believe," "project," "should," "estimate,"
             and similar expressions, and reflect the Company's expectations
             concerning the future. Such statements are based upon currently
             available information, but various risks and uncertainties may
             cause the Company's actual results to differ materially from those
             expressed in these statements. Among the factors which management
             believes could affect the Company's operating results are the
             following:

             o Changing economic conditions, including economic downturns or
               recessions;
             o The ability of the Company to maintain and enhance its market
               position relative to its competitors, realize productivity, and
               continue to control expenses;
             o The availability of suitable tracts of undeveloped land in
               proximity to the marketplace;
             o Changes in zoning and subdivision regulations;
             o The availability and cost of financing; and
             o Continuity of management.




                                       10
<PAGE>


ITEM 7.      FINANCIAL STATEMENTS

             Independent Auditors' Report.....................................12

             Consolidated Balance Sheets......................................13

             Consolidated Statements of Income................................14

             Consolidated Statements of Stockholders' Equity..................15

             Consolidated Statements of Cash Flows............................16

             Notes to Consolidated Financial Statements.......................17










                                       11
<PAGE>


INDEPENDENT AUDITORS' REPORT


Board of Directors
Taylor Investment Corporation
Minneapolis, Minnesota

We have audited the accompanying consolidated balance sheets of Taylor
Investment Corporation and Subsidiaries (the Company) as of December 31, 2000
and 1999 and the related consolidated statements of income, stockholders'
equity, and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Taylor Investment Corporation and
Subsidiaries at December 31, 2000 and 1999 and the results of their operations
and their cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States of America.


DELOITTE & TOUCHE LLP

February 23, 2001
Minneapolis, Minnesota





                                       12
<PAGE>


TAYLOR INVESTMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                            2000            1999
ASSETS
<S>                                                                     <C>             <C>
INVENTORY - Principally land held for sale                              $18,462,886     $ 9,938,693

CONTRACTS AND MORTGAGES RECEIVABLE                                       10,452,589       8,694,934

INVESTMENT IN JOINT VENTURES                                                376,631           6,713

OTHER ASSETS:
   Cash                                                                     690,467         969,309
   Tax increment financing receivable                                       575,864         568,977
   Other receivables                                                        753,145         252,511
   Prepaid expenses and earnest money deposits                              268,325         342,602
   Funds held by trustee                                                    638,000          40,500
   Land, buildings, and equipment, less accumulated
      depreciation of $1,075,695 and $869,594, respectively                 425,194         399,474
   Loan acquisition costs and debt issuance costs, less accumulated
      amortization of $411,230 and $332,480, respectively                   239,782         291,470
                                                                        -----------     -----------
                    Total other assets                                    3,590,777       2,864,843
                                                                        -----------     -----------
                                                                        $32,882,883     $21,505,183
                                                                        ===========     ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

LINES OF CREDIT                                                         $ 8,261,038     $ 3,797,508

NOTES PAYABLE                                                             9,168,999       4,725,779

CONTRACTS AND MORTGAGES PAYABLE                                             486,326          46,041

SENIOR SUBORDINATED DEBT                                                  3,494,000       3,680,000

OTHER LIABILITIES:
   Accounts payable                                                         737,531         365,619
   Accrued liabilities                                                    1,262,593         925,259
   Deposits on land sales and purchase agreements                            29,230          47,615
                                                                        -----------     -----------
                    Total other liabilities                               2,029,354       1,338,493

DEFERRED INCOME TAXES                                                       217,343         374,032

COMMITMENTS AND CONTINGENCIES (Notes 8 and 9)

STOCKHOLDERS' EQUITY:
   Common stock, $.01 par value; 10,000,000 shares authorized;
      484,129 shares issued and outstanding                                   4,841           4,841
   Additional paid-in capital                                               740,136         740,136
   Retained earnings                                                      8,480,846       6,798,353
                                                                        -----------     -----------
                    Total stockholders' equity                            9,225,823       7,543,330
                                                                        -----------     -----------
                                                                        $32,882,883     $21,505,183
                                                                        ===========     ===========
</TABLE>
See notes to consolidated financial statements.


                                       13
<PAGE>


TAYLOR INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                    2000              1999
REVENUES:
<S>                                                            <C>               <C>
   Sales                                                       $ 28,837,999      $ 23,518,438
   Interest income on contracts receivable                        1,057,980           988,145
   Equity in (loss) earnings of joint ventures                     (121,082)           57,653
   Other revenue                                                    546,321           409,368
                                                               ------------      ------------
          Total revenue                                          30,321,218        24,973,604

COSTS AND EXPENSES:

   Cost of sales                                                 15,873,775        12,453,402
   Reduction of inventory to net realizable value (Note 1)               --           294,480
   Selling, general, and administrative                           9,338,661         7,953,939
   Interest                                                       1,369,712         1,212,623
                                                               ------------      ------------
          Total costs and expenses                               26,582,148        21,914,444

NET INCOME                                                     $  3,739,070      $  3,059,160
                                                               ============      ============

NET INCOME PER COMMON SHARE
   OUTSTANDING                                                 $       7.72      $       6.32
                                                               ============      ============

AVERAGE NUMBER OF COMMON
  SHARES OUTSTANDING                                                484,129           484,129
                                                               ============      ============
</TABLE>

See notes to consolidated financial statements.







                                       14
<PAGE>


TAYLOR INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                    ADDITIONAL
                                           COMMON STOCK              PAIN-IN         RETAINED
                                      SHARES          AMOUNT         CAPITAL         EARNINGS         TOTAL
                                     ------------------------      -----------     -----------     -----------
<S>                                  <C>          <C>              <C>             <C>             <C>
BALANCE AT DECEMBER 31, 1998         484,129      $     4,841      $   740,136     $ 5,288,405     $ 6,033,382

  Dividends Paid                                                                    (1,549,212)     (1,549,212)
  Net Income                                                                         3,059,160       3,059,160
                                   ---------        ---------        ---------       ---------       ---------

BALANCE AT DECEMBER 31, 1999         484,129            4,841          740,136       6,798,353       7,543,330

  Dividends Paid                                                                    (2,056,577)     (2,056,577)
  Net Income                                                                         3,739,070       3,739,070
                                   ---------        ---------        ---------       ---------       ---------

BALANCE AT DECEMBER 31, 2000         484,129      $     4,841      $   740,136     $ 8,480,846     $ 9,225,823
                                   =========        =========        =========       =========     ===========
</TABLE>

See notes to consolidated financial statements.











                                       15
<PAGE>


TAYLOR INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                      2000                   1999
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                              <C>               <C>
     Net income                                                                  $  3,739,070      $  3,059,160
     Adjustments to reconcile net income to net cash provided by
           operating activities:
       Depreciation and amortization                                                  320,027           326,267
       Gain on sale of assets                                                            (907)           (4,613)
       Deferred income taxes                                                         (156,689)         (233,991)
       Equity in loss (earnings) of joint ventures                                    121,082           (57,653)
       Contracts and mortgages receivables funded                                  (7,856,127)       (5,293,516)
       Payments on contracts receivable                                             6,098,472         5,963,839
       Decrease in inventory - land held for sale                                   5,131,838         8,001,090
       (Increase) decrease in other receivables                                      (507,521)          137,105
       Decrease in income tax payable                                                      --          (241,664)
       Decrease (increase) in prepaid expenses                                         74,277          (180,615)
       Increase in accounts payable                                                   371,912           218,542
       Increase in accrued liabilities                                                337,334           444,062
       (Decrease) increase in deposits on land sales and purchase agreements          (18,385)           13,257
                                                                                 ------------      ------------
                      Net cash provided by operating activities                     7,654,383        12,151,270

CASH FLOWS FROM INVESTING ACTIVITIES:
       Purchase of land, buildings and equipment                                     (226,324)         (110,473)
       Proceeds from sale of land, buildings and equipment                              3,500            10,000
       Investment in and advances to joint ventures                                  (500,000)               --
       Proceeds from distribution of joint venture                                      9,000            62,000
       Increase in funds held by trustee                                             (597,500)           (3,000)
                                                                                 ------------      ------------
                      Net cash used in investing activities                        (1,311,324)          (41,473)

CASH FLOWS FROM FINANCING ACTIVITIES:
       Net borrowings (payments) on lines of credit                                 4,463,530        (2,022,925)
       Repayment of notes, contracts, and mortgage payables                        (8,807,615)       (7,819,844)
       Loan acquisition costs                                                         (35,239)          (30,224)
       Repayment of senior subordinated debt                                         (186,000)         (152,000)
       Dividends paid to shareholders                                              (2,056,577)       (1,549,212)
                                                                                 ------------      ------------
                      Net cash used in financing activities                        (6,621,901)      (11,574,205)
                                                                                 ------------      ------------

(DECREASE) INCREASE IN CASH                                                          (278,842)          535,592

CASH AT BEGINNING OF PERIOD                                                           969,309           433,717
                                                                                 ------------      ------------
CASH AT END OF PERIOD                                                            $    690,467      $    969,309
                                                                                 ============      ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
       Cash paid during the period for:
          Interest                                                               $  1,773,121      $  1,420,261
                                                                                 ============      ============
          Income taxes                                                           $    156,689      $    507,619
                                                                                 ============      ============
       Noncash financing activity - inventory and equipment
          purchased with notes, contracts and mortgages payable                  $ 13,691,120      $  6,495,723
                                                                                 ============      ============
</TABLE>

See notes to consolidated financial statements.


                                       16
<PAGE>


TAYLOR INVESTMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------

1.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        ORGANIZATION AND PRINCIPLES OF CONSOLIDATION - Taylor Investment
        Corporation (the Company) is a Minnesota corporation organized in 1979
        which is engaged in land development activities. The Company owns 100%
        of Four Seasons Realty of Minnesota, Inc. (FSM), Four Seasons Realty of
        Wisconsin, Inc. (FSW), Four Seasons Properties of Georgia, LLC (FSG),
        Four Seasons Properties of Tennessee, LLC (FST) and FSP Development of
        Texas (FSPT) and Laurentian Development Corporation. FSM and FSW are
        engaged in the sale of recreational property while FSG, FST, FSPT and
        Laurentian Development Corporation are engaged in both the development
        and sale of recreational and residential property. The Company also owns
        100% of Four Seasons Realty of Michigan, Inc., which was inactive in
        2000 and 1999.

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

        INVENTORY - PRINCIPALLY LAND HELD FOR SALE - Land held for sale is
        recorded at the purchase price plus amounts expended for development and
        improvement of the land but not at a price more than its net realizable
        value. Property sold and subsequently repossessed under the terms of a
        defaulted sales contract is recorded at the lower of the remaining
        unpaid contract balance or the net realizable value of the property.

        Total costs of a development are allocated to individual lots on the
        basis of the estimated selling price of each lot, as a percentage of the
        total estimated gross selling price of the entire development. In
        addition, development costs are allocated to individual lots for the
        purpose of recording cost of sales.

        Interest is capitalized on all projects during the development stage.
        Interest capitalized into inventory was $482,830 and $179,229 in 2000
        and 1999, respectively.

        During each period, the Company provides for identified, unsalable, and
        slow-moving inventory. As a result of a review of the carrying amount of
        this inventory, the Company determined that a reduction in the carrying
        value of land inventories of $294,480 in 1999, was necessary to reduce
        this inventory to net realizable value.

        LAND, BUILDING, AND EQUIPMENT - Depreciation of buildings and equipment
        is computed principally using the straight-line method on the cost of
        the assets, less allowance for salvage value where appropriate, based on
        their estimated useful lives, which range from three to thirty years.

        Land, buildings, and equipment consist of the following at December 31:

                                                     2000               1999
        Land                                    $       11,022    $       11,022
        Buildings and improvements                     122,666            70,104
        Equipment                                    1,367,201         1,187,942
                                                --------------    --------------
                                                     1,500,889         1,269,068
        Less accumulated depreciation                1,075,695           869,594
                                                --------------    --------------
        Land, buildings, and equipment, net     $      425,194    $      399,474
                                                ==============    ==============

        LOAN ACQUISITION AND DEBT ISSUANCE COSTS - Such costs are amortized over
        the term of the related loan using the straight-line method.


                                       17
<PAGE>


        REVENUE RECOGNITION - The Company recognizes revenue when a sale has
        closed and the buyer's cumulative down payment, principal, and interest
        paid total at least 10% of the sale price. Until 10% of the sale price
        is received, no revenue is recognized and all payments received are
        recorded as a current liability in the consolidated balance sheets under
        the caption "deposits on land sales and purchase agreements." During
        2000 and 1999, down payments on sales financed by the Company averaged
        12% and 15% of the sale price, respectively.

        EARNINGS PER COMMON SHARE (EPS) - As the Company has no dilutive items
        that would require disclosure of diluted EPS, the Company calculates
        basic EPS as net income or loss divided by the weighted average number
        of common shares outstanding during the year.

        INVESTMENT IN JOINT VENTURE - The Company owns 50% and 33% of two
        separate limited liability corporations, which were formed to acquire
        and develop specific plots of land. The Company accounts for its
        investments using the equity method of accounting.

        FUNDS HELD BY TRUSTEE - Amounts represent cash paid to trustee for the
        purpose of paying scheduled maturities on senior subordinated debt.

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

        EFFECT OF INTEREST RATE ENVIRONMENT - The Company protects itself from
        sustained high interest rates by selling its contracts and mortgages
        receivable portfolio and increasing the rates it charges to customers
        who utilize Company financing, or by incurring fixed rate debt. Such
        increases in rates would, however, have an adverse impact on the
        Company's cost of carrying inventory. The Company believes the best
        defense against rising interest rates is to buy only the best property,
        which should remain in high demand. Sustained increases in interest
        rates could, however, impact future sales levels if demand for product
        was to decline for an extended period of time. The Company believes it
        could minimize the impact by reducing the sales price of the product to
        stimulate sales and would discontinue purchasing properties until the
        level of inventory more closely matched customer demand.

        FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying values of contracts
        and mortgages receivable, note receivable from officer, lines of credit,
        notes payable, and contracts and mortgages payable are reasonable
        estimates of the fair value of these financial instruments based on the
        short-term nature of these instruments and, if applicable, the interest
        rates of these financial instruments. The fair value of the senior
        subordinated debt is estimated to be $3,494,000 and $3,620,000 at
        December 31, 2000 and 1999, respectively.

        IMPAIRMENT OF LONG-LIVED ASSETS - The Company periodically reviews the
        carrying amounts of all its long-lived assets and identifiable
        intangibles based on expected future cash flows from the use of those
        assets.

        NEW ACCOUNTING STANDARDS - Statement of Financial Accounting Standard
        (SFAS) No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
        ACTIVITIES, is effective for all fiscal years beginning after June 15,
        2000. SFAS 133, as amended, establishes accounting and reporting
        standards for derivative instruments, including certain derivative
        instruments embedded in other contracts and for hedging activities.
        Under SFAS 133, certain contracts that were not formerly considered
        derivatives may now meet the definition of a derivative. The Company
        will adopt SFAS 133 effective January 1, 2001. Management does not
        expect the adoption of SFAS 133 to have a significant impact on the
        financial position, results of operations, or cash flows of the Company.


                                       18
<PAGE>


        In December 1999, the Securities and Exchange Commission (SEC) released
        Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in
        Financial Statements." SAB No. 101 provides the staff's views in
        applying generally accepted accounting principles to selected revenue
        recognition issues and was effective for the Company in the fourth
        quarter of 2000. There was no significant effect on the Company's
        financial positions or results of its operations as a result of adopting
        SAB No. 101.

2.      CONTRACTS AND MORTGAGES RECEIVABLE

        Contracts and mortgages receivable result from the sale of land or land
        and structures. Generally, the receivables are collected in monthly
        installments, including interest, over ten years for land sales and over
        five years for land and property structure sales.
         The Company also has certain mortgage receivables which are amortized
        over eight years for land sales and ten years for property structure
        sales, with a balloon payment for the remaining unpaid principal at the
        end of four years. At December 31, 2000, the weighted average maturity
        of contracts and mortgages receivable was approximately four years, and
        the weighted average interest rate on outstanding contracts and
        mortgages receivable was approximately 11.2% and 11.1% as of December
        31, 2000 and 1999, respectively.

        Maturities of contracts and mortgages receivable at December 31, 2000
        are as follows:

        Year ending December 31:
        2001                                                      $    981,516
        2002                                                         1,063,862
        2003                                                           955,420
        2004                                                         1,078,282
        2005                                                           968,093
        Thereafter                                                   5,521,499
                                                                  ------------
                                                                    10,568,672
        Less allowance for uncollectable contracts
          and mortgages receivable                                     116,083
                                                                  ------------
                                                                  $ 10,452,589
                                                                  ============

3.      TAX INCREMENT FINANCING RECEIVABLES

        Several taxing authorities have established tax increment financing
        districts whereby the Company will be reimbursed for costs incurred in
        the development of community infrastructure to the extent the community
        improvements and related development increase property taxes collected
        by the taxing authority. The Company recognizes these receivables, which
        are generally non-interest bearing, upon the sale of the developed
        property or upon the completion of the structure by the owner. Estimated
        amounts receivable under these agreements were $575,864 and $568,977 at
        December 31, 2000 and 1999, respectively. Estimated maturity of these
        receivables at December 31, 2000 is as follows:

        Year ending December 31:
        2001                                                      $     95,799
        2002                                                            96,381
        2003                                                            96,968
        2004                                                            85,816
        2005                                                            67,994
        Thereafter                                                     658,643
                                                                  ------------
                                                                     1,101,601
        Less imputed interest at 10%                                   525,737
                                                                  ------------
            Net receivable                                        $    575,864
                                                                  ============


                                       19
<PAGE>


4.      LINES OF CREDIT

        The Company has a credit agreement that provides for total borrowings of
        up to $15,000,000 at the discretion of the lender. Although the credit
        agreement extends to April 30, 2003, amounts can be called on demand.
        The credit agreement provides for various lines of credit. Total
        borrowings outstanding under the credit agreement are secured by
        virtually all of the Company's assets and are guaranteed by the
        president of the Company. The credit agreement contains certain
        restrictive covenants, including such items as maintenance of minimum
        net worth (as defined), and limitation of capital expenditures. The
        Company was in compliance with these financial covenants in the credit
        agreement at December 31, 2000 and 1999.

        At December 31, 2000 and 1999, the Company had borrowings outstanding of
        $7,361,038 and $3,772,143 respectively, under the line of credit based
        on 90% of eligible contracts receivable. In addition, the Company may
        borrow up to $5,000,000 for real estate purchases. The real estate
        borrowings are at the discretion of the lender based on 90% of the
        purchase price of the real estate plus 80% of eligible development
        costs. At December 31, 2000 and 1999, the Company had borrowings of
        $2,710,467 and $1,606,429, respectively, which are included in real
        estate notes payable (see Note 5). Borrowings under the line of credit
        bear interest at the greater of 8% or the lender's "base" rate plus 1.0%
        (10.50% and 9.5% at December 31, 2000 and 1999, respectively).
        Borrowings under the real estate loan facility bear interest at the
        greater of 8% or the lender's "base" rate plus 1.0% (10.50% and 10.00%
        at December 31, 2000 and 1999, respectively). The "base" rate is equal
        to the interest rate publicly announced by National City Bank of
        Minneapolis from time to time as its "base" rate. At December 31, 2000
        the Company has unused availability of $278,945 under the credit
        agreements and real estate loan facility.

        Also, under the credit agreement, the Company has a $1,000,000 line to
        support financing of a major project. Borrowings under the project line
        bear interest at the lender's "base" rate plus 1.5% (11.00% and 10.00%
        at December 31, 2000 and 1999, respectively). Borrowings under the
        project line outstanding at December 31, 2000 and 1999 were $0 and
        $25,365, respectively, and are secured by a mortgage on the project.

        The credit agreement also provides the Company an over-line up to
        $3,000,000 at the discretion of the lender. Borrowings under the
        over-line facility at December 31, 2000 and 1999 were $900,000 and $0,
        respectively. Borrowings bear interest at the lender's "base" rate plus
        1.5% (11.00% and 10.00% at December 31, 2000 and 1999, respectively).

5.      NOTES PAYABLE

        Notes payable consisted of the following at December 31:

                                                            2000         1999
        Fixed rate notes payable, due through
          2005 at various rates of interest
          ranging from 8.50% to 9.60%                    $3,570,235   $2,368,672
        Real estate notes payable, due through
          2010 at various rates of interest
          ranging from 9.18% to 10.50%                    5,598,764    2,357,107
                                                         ----------   ----------
                                                         $9,168,999   $4,725,779
                                                         ==========   ==========

        At December 31, 2000, notes payable was secured by certain land held for
        sale, contracts and mortgages receivable, and equipment. The president
        of the Company personally guarantees the notes payable.


                                       20
<PAGE>


        Maturity requirements on notes payable at December 31, 2000 are as
        follows:

        Years ending December 31:
        2001                                                       $ 3,826,879
        2002                                                         2,714,814
        2003                                                         2,040,241
        2004                                                            95,747
        2005                                                            71,597
        Thereafter                                                     419,721
                                                                   -----------
                                                                   $ 9,168,999
                                                                   ===========

6.      CONTRACTS AND MORTGAGES PAYABLE

        The Company has entered into contracts for deed and mortgages for the
        purchase of land. At December 31, 2000, the agreements provide for
        interest rates from 0% to 8.0% and maturity dates through 2005. The
        contracts and mortgages payable are secured by land held for sale and
        land which has been sold and the related contracts receivable. Due to
        their short-term nature, imputed interest for relevant contracts with no
        stated interest rate is not significant.

        Maturity requirements on the contracts and mortgages payable at December
        31, 2000 are as follows:

        Years ending December 31:
        2001                                                       $   463,703
        2002                                                            12,794
        2003                                                             3,705
        2004                                                             3,816
        2005                                                             2,308
                                                                   -----------
                                                                   $   486,326
                                                                   ===========

7.     SENIOR SUBORDINATED DEBT

        The Company has $514,000 in senior subordinated notes outstanding which
        bear interest at 8% to 10% and are unsecured. In addition, the Company
        has $2,980,000 of senior subordinated debt that bears interest at 11% to
        12% and is unsecured. These notes contain certain restrictive covenants
        (as defined), including such items as maintenance of minimum net worth,
        limitation of dividend payments, maximum debt to equity ratio, and other
        financial ratios. The Company was in compliance with these financial
        covenants at December 31, 2000 and 1999. At December 31, 2000, principal
        maturities of senior subordinated debt are as follows:

        Years ending December 31:
        2001                                                       $   775,000
        2002                                                           774,000
        2003                                                           760,000
        2004                                                           595,000
        2005                                                           590,000
                                                                   -----------
                                                                   $ 3,494,000
                                                                   ===========

8.      COMMITMENTS AND CONTINGENCIES

        The Company has sold certain contracts receivable to financial
        institutions under recourse sales agreements. In the event of default
        under these contracts receivable, the Company is required to pay the
        outstanding balance of the contract, whereupon the Company will
        reacquire title to the underlying land. Put options that


                                       21
<PAGE>


        typically require the Company to repurchase, at the option of the
        purchaser, the balance of the receivables within 60 days of the
        five-year anniversary of the sale, were also granted for these contracts
        receivable. At December 31, 2000 and 1999, the balance on contracts and
        mortgages receivable under such recourse sales agreements was
        approximately $486,251 and $956,947, respectively. Based on the
        scheduled amortization of these balances, the Company's potential
        liability, if the put features are exercised, is approximately zero in
        2001 and $330,425 in 2002. Should all of the put options be exercised,
        the Company would expect to use amounts available under its Credit
        Agreement to repurchase the contracts and mortgages receivable.

        In 2000, the Company loaned $1,030,000, secured by a promissory note, to
        a limited liability company in which it has a 33% ownership interest.
        The Company has guaranteed the additional notes payable of $753,835 as
        of December 31, 2000 for the same limited liability company.

9.      OPERATING LEASES

        The Company has entered into non-cancelable leases for office space.
        Estimated payments under these lease agreements at December 31, 2000 are
        approximately as follows:

        Years ending December 31:
        2001                                                       $   229,349
        2002                                                            97,410
        2003                                                            56,877
        2004                                                            25,056
        2005                                                            10,452
                                                                   -----------
                                                                   $   419,144
                                                                   ===========

        Total rental expense for all operating leases was approximately $260,000
        and $230,000 for the years ended December 31, 2000 and 1999,
        respectively.

10.     INCOME TAXES

        In January 1999, the Company filed with the Internal Revenue Service and
        obtained status as a Subchapter S-Corporation. Accordingly, taxable
        income from operations is allocated to the individual shareholders with
        no income tax expense recorded in the financial statements. The Company
        will continue to pay "built-in-gain" taxes related to deferred tax
        liabilities existing at December 31, 1998 for installment sales, until
        all installments of such sales have been received.

        The Company's deferred tax liability at December 31, 2000 and 1999 of
        $217,343 and $374,032, respectively, consists entirely of
        "built-in-gains" on installment sales.

11.     EMPLOYEE 401(k) PLAN

        The Company's 401(k) plan covers substantially all employees meeting
        minimum eligibility requirements. The plan provides for employee
        contributions of up to a maximum of 15% of each employee's compensation,
        with the Company matching 50% of the first 6% of each employee's
        contribution. The Company's contributions to the plan totaled
        approximately $96,000 and $80,000 for the years ended December 31, 2000
        and 1999, respectively.

12.     TRANSACTIONS WITH OFFICER AND EMPLOYEES

        Included in contracts and mortgages receivable at December 31, 2000 and
        1999 are contracts receivable from employees of the Company in the
        amount of $69,158 and $71,700, respectively. During the years ended
        December 31, 2000 and 1999, the Company had sales to officers and
        employees of approximately $52,000 and $272,000, respectively.


                                       22
<PAGE>


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

             No changes in or disagreements with accountants have occurred
             during the two-year period ended December 31, 2000.

                                    PART III

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

             EXECUTIVE OFFICERS AND DIRECTORS

             The Company's executive officers and directors and their ages and
             positions with the Company are as follows:

                   Name                   Age            Positions with Company

             Philip C. Taylor             49           President, Chairman of
                                                         the Board, Secretary
                                                         and Treasurer
             Joel D. Kaul                 41           Vice President and Chief
                                                         Operating Officer
             W. John Driscoll             72           Director
             John H. Hooley               49           Director
             Charles J. McElroy           46           Director
             William R. Sieben            48           Director

             PHILIP C. TAYLOR is the founder, President, Chairman of the Board
             and majority shareholder of the Company. Mr. Taylor has been
             actively involved in real estate investment and development for
             over 20 years. Since 1979, management of the Company has been his
             full-time occupation. Mr. Taylor graduated in 1973 from the College
             of St. Thomas, St. Paul, Minnesota, with a Bachelor of Arts degree
             in Economics. In 1978, Mr. Taylor received his Juris Doctorate
             degree from William Mitchell College of Law, St. Paul, Minnesota.
             Mr. Taylor has been Chairman, President, Secretary, and Treasurer
             since the Company's formation.

             JOEL D. KAUL is Vice President and Chief Operating Officer. Mr.
             Kaul joined the Company in June 1995 and has over 10 years of
             experience in the real estate finance industry. From 1989-1995, Mr.
             Kaul served as senior asset manager for Dain Corporation. In this
             capacity, Mr. Kaul directed a staff of fifteen people in the
             management of a $300 million national real estate portfolio. Prior
             to joining Dain Corporation, Mr. Kaul spent four years employed as
             a CPA with Ernst and Young and Coopers and Lybrand. Mr. Kaul also
             served as the Chief Financial Officer for a Minnesota-based
             developer for four years. Mr. Kaul graduated cum laude in 1981 from
             the University of Wisconsin-LaCrosse, with a double major in
             finance and accounting.

             W. JOHN DRISCOLL has been a director of the Company since 1986. Mr.
             Driscoll is a director of Rock Island Company, a private investment
             firm where he served as Chairman of the Board from May 1993 to June
             1994 and as President prior to May 1993. Mr. Driscoll also serves
             as a member of the board of directors of Comshare, Inc.; John
             Nuveen & Co.; Northern States Power Company; The St. Paul
             Companies, Inc. and Weyerhaeuser Company.

             JOHN H. HOOLEY has been a director of the Company since 1986. Mr.
             Hooley is President of Cub Foods, a division of Super Valu, Inc. He
             received a Bachelor of Arts degree in economics in 1974 from St.
             John's University, Collegeville, Minnesota. In 1980, he received
             his Juris Doctorate degree from William Mitchell College of Law,
             St. Paul, Minnesota.


                                       23
<PAGE>


             CHARLES J. MCELROY has been a director of the Company since 1986.
             Mr. McElroy is a partner with the firm of Larson, Allen, Weishair &
             Company, a regional certified public accounting firm. He received
             his Bachelor of Arts degree in accounting from the College of St.
             Thomas, St. Paul, Minnesota, in 1976. Mr. McElroy is Mr. Philip C.
             Taylor's brother-in-law.

             WILLIAM R. SIEBEN has been a director of the Company since 1986.
             Mr. Sieben is a partner in the law firm of Schwebel, Goetz &
             Sieben, P.A., of Minneapolis, Minnesota. He received his Bachelor
             of Arts in 1972 from St. Cloud State University and a Juris
             Doctorate degree from William Mitchell College of Law in 1977. He
             is past President of the Minnesota Trial Lawyers Association and
             has written several legal publications.

             All members of the Board of Directors hold office until the next
             annual meeting of stockholders or until their successors are
             elected and qualified. The Company pays each director an annual fee
             of $4,500, plus reimbursement of out-of-pocket expenses.

             The Company does not have a class of equity securities registered
             pursuant to Section 12 of the Securities Exchange Act of 1934 (the
             "Exchange Act") and therefore is not subject to Section 16 of the
             Exchange Act.


ITEM 10.     EXECUTIVE COMPENSATION

             The following table sets forth the compensation paid or accrued by
             the Company for services rendered during the years ended December
             31, 2000 and 1999 with respect to the President (Chief Executive
             Officer) and all officers of the Company whose total annual salary
             and bonus for 2000 exceeded $100,000:

             SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                            Annual Compensation
                                                       -------------------------------------------------------------
                  Name and                                                                            Other Annual
             Principal Position                          Year         Salary         Bonus(1)         Compensation
<S>                                                      <C>         <C>             <C>                 <C>
             Philip C. Taylor, President                 2000        $150,000        $272,000            $4,500(2)
                                                         1999         150,000         220,853             4,500
             Joel D. Kaul, Vice President                2000         100,000         240,219                --
                                                         1999         100,000         274,506                --
</TABLE>
             --------------------
             (1)The amount of Mr. Taylor's bonus is approved by the Board of
                Directors and is related to the Company's profitability.
             (2)Annual fee paid to Mr. Taylor for serving as a member of the
                Company's Board of Directors.





                                       24
<PAGE>


ITEM 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

             The following table sets forth as of December 31, 2000, the number
             of shares of the Company's common stock beneficially owned by (i)
             each director of the Company, (ii) each executive officer of the
             Company named in the Summary Compensation Table, (iii) each person
             known by the Company to beneficially own more than five percent of
             the outstanding shares of the Company's common stock, and (iv) all
             executive officers and directors as a group. Unless otherwise
             indicated, each person has sole voting and dispositive power over
             such shares.

                                                                        Shares
                   Name and Address of              Outstanding     Beneficially
                    Beneficial Owner                  Shares(2)         Owned(1)

             Philip C. Taylor
               43 Main Street SE, Suite 506
               Minneapolis, Minnesota  55414         387,804(3)            80.1%
             Charles J. McElroy
               Pillsbury Center
               220 South Sixth Street
               Suite 1000
               Minneapolis, Minnesota 55402          120,000(4)            24.8
             Joel D. Kaul
               2821 Overlook Lane North
               Stillwater, Minnesota  55082            7,541                1.6
             John H. Hooley
               9770 Old Deer Trail
               Stillwater, Minnesota  55082            5,740                1.2
             William R. Sieben
               1201 Southview Drive
               Hastings, Minnesota  55033              5,740                1.2
             W. John Driscoll
               2090 First National Bank Building
               St. Paul, Minnesota  55101                  0(5)              *
             All executive officers and directors
               as a group (6 persons)                406,825               84.0

             ---------------------
             (1) Unless otherwise indicated, each person has sole voting and
                 dispositive power with respect to all outstanding shares
                 reported in the foregoing table.
             (2) Based on 484,129 shares of common stock outstanding at December
                 31, 2000.
             (3) Includes 132,573 shares owned by Mr. Taylor's wife, 120,000
                 shares held in trust for his children. The 120,000 shares held
                 in trust for Mr. Taylor's children have also been included in
                 the number of shares shown for Mr. Charles J. McElroy, the
                 trustee.
             (4) Includes 120,000 shares held by Mr. McElroy as trustee under
                 trusts for the benefit of Philip C. Taylor's children that have
                 also been included in the number of shares shown for Mr.
                 Taylor.
             (5) Does not include 35,700 shares held in a trust for which Mr.
                 Driscoll was the trustee or 7,140 shares held by Mr. Driscoll
                 as trustee as to which Mr. Driscoll disclaims beneficial
                 ownership.


                                       25
<PAGE>


ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

             Employees of the Company have from time to time purchased from the
             Company vacation property for their personal use. In connection
             with such purchases, the Company has provided, to such employees,
             mortgage financing on the same or similar terms it makes available
             to unaffiliated customers in the ordinary course of its business.
             In the opinion of management, the terms of such sales and financing
             are no more favorable to the employee(s) than those generally made
             available to its customers.

             Under the terms of the Subordinated Debt, the Company may not, and
             may not permit any subsidiary to, conduct any business or enter
             into any transaction or series of transactions with or for the
             benefit of any affiliate or any subsidiary of the Company, or any
             holder of 5% or more of any class of capital stock of the Company,
             except in good faith and on terms that are, in the aggregate, no
             less favorable to the Company or any subsidiary, as the case may
             be, than those that could have been obtained in a comparable
             transaction on an arm's length basis from a person not an affiliate
             of the Company or such subsidiary.

ITEM 13.     EXHIBITS AND REPORTS ON FORM 8-K

             (a)      Exhibits.

                 No.                                      Description

                 3.1       Articles of Incorporation of the Company, as amended*

                 3.2       Bylaws of the Company, as amended*

                 4.1       Form of Debenture (included as Article Two of
                           Indenture filed as Exhibit 4.2)*

                 4.2       Forms of Indenture by and between the Company and
                           American Bank National Association, as Trustee*

                 10.3      Redevelopment Agreement between the City of
                           Hillsboro, Illinois and the Company dated April 26,
                           1994*

                 10.5      Contract for Private Development between The Joint
                           East Range Economic Development Authority and
                           Laurentian Development Authority*

                 10.6      Second Contract for Private Development between The
                           Joint East Range Economic Development Authority and
                           Laurentian Corporation Authority*

                 10.8      Credit Agreement between Diversified Business
                           Credit, Inc. and the Company dated November 18, 1986,
                           as amended by Amendment to Credit Agreement dated
                           June 2, 1993*

                 10.9      Security Agreement between Diversified Business
                           Credit, Inc. and the Company dated November 18, 1986*

                 10.10     Agreement between the City of Coleraine, Minnesota
                           and the Company dated September 26, 1994*

                 22.1      Subsidiaries of the Company

             ----------------------------
              *  Incorporated by reference to the Company's registration
                 statement on Form SB-2 (No. 33-87024C), effective January 12,
                 1995.



             (a) REPORTS ON FORM 8-K.  No reports on Form 8-K were filed during
                 the last quarter of the period covered by this report.








                                       26
<PAGE>


                                   SIGNATURES

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

                                                   TAYLOR INVESTMENT CORPORATION
                                                   (Registrant)

Dated:   March 1, 2001                             By /S/ Philip C. Taylor
      ---------------------                           --------------------------
                                                   Philip C. Taylor
                                                   President and Chief Executive
Officer

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

SIGNATURE                      TITLE                               DATE
---------                      -----                               ----

/S/ Philip C. Taylor           Chairman of the Board, President    March 1, 2001
--------------------------     Secretary and Treasurer (Chief      -------------
Philip C. Taylor               Executive Officer)



/S/ W. John Driscoll          Director                             March 1, 2001
--------------------------                                         -------------
W. John Driscoll



/S/ John H. Hooley            Director                             March 1, 2001
--------------------------                                         -------------
John H. Hooley



/S/ Charles J. McElroy        Director                             March 1, 2001
--------------------------                                         -------------
Charles J. McElroy



/S/ William R. Sieben         Director                             March 1, 2001
--------------------------                                         -------------
William R. Sieben



/S/ Joel D. Kaul              Vice President and Chief             March 1, 2001
--------------------------    Operating Officer                    -------------
Joel D. Kaul


                                       27
<PAGE>


INDEX TO EXHIBITS

EXHIBIT
  NO.             DESCRIPTION                                               PAGE

    3.1           Articles of Incorporation of the Company, as amended....... *
    3.2           Bylaws of the Company, as amended.......................... *
    4.1           Form of Debenture (included as Article Two of
                  Indenture filed as Exhibit 4.2)............................ *
    4.2           Form of Indenture by and between the Company and
                  American Bank National Association, as Trustee............. *
   10.3           Redevelopment Agreement between the City of
                  Hillsboro, Illinois and the Company dated April 26,
                  1994....................................................... *
   10.5           Contract for Private Development between The Joint
                  East Range Economic Development Authority and
                  Laurentian Development Authority........................... *
   10.6           Second Contract for Private Development between
                  The Joint East Range Economic Development Authority
                  and Laurentian Corporation Authority....................... *
   10.8           Credit Agreement between Diversified Business
                  Credit, Inc. and the Company dated November 18,
                  1986, as amended by Amendment to Credit Agreement
                  dated June 2, 1993......................................... *
   10.9           Security Agreement between Diversified Business
                  Credit, Inc. and the Company dated November 18,
                  1986....................................................... *
   10.10          Agreement between the City of Coleraine, Minnesota
                  and the Company dated September 26, 1994................... *
   22.1           Subsidiaries of the Company............................... 32

   -----------------------

*  Incorporated by reference to the Company's registration statement on Form
   SB-2 (No. 33-87024C), effective January 12, 1995.





                                       28