<PAGE>   1
                         SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                   FORM 10-KSB


[X]      Annual Report Pursuant To Section 13 or 15 (d) of the Securities
         Exchange Act of 1934 (Fee required) for the Fiscal Year Ended June 30,
         1997

Commission File Number:  0-15692


                           TOTAL RESEARCH CORPORATION
               (Exact name of Registrant as specified in Charter)

                     Delaware                                  22-2072212
(State or other jurisdiction of incorporation                 (IRS Employer
or organization)                                          Identification Number)

                           Princeton Corporate Center
                           5 Independence Way, CN 5305
                        Princeton, New Jersey 08543-5305
                     (Address of principal executive office)

Registrant's telephone number including area code: (609) 520-9100


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

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

                         Common Stock, $.001 par value;
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that 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

The aggregate market value of the voting stock of the registrant held by
non-affiliates as of September 16, 1997 was approximately $17,000,000 based on
the average bid and asked prices for such Common Stock as reported on the NASDAQ
system.

The number of shares of Common Stock outstanding as of September 16, 1997 was
10,056,134.

Documents incorporated by reference:  None
<PAGE>   2
                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

(A)  GENERAL DEVELOPMENT OF BUSINESS

Total Research Corporation ("The Company"), is engaged in the business of
providing full-service marketing research in the form of information and
analyses for use in strategic and tactical marketing decisions.

The Company became operative in 1975 in the State of New Jersey, then, in 1986,
reincorporated in the State of Delaware and qualified to do business in the
State of New Jersey.

The Company became a Public Company by filing and registering with the
Securities and Exchange Commission effective on March 26, 1987.

In 1994, the Company acquired Business Marketing Services, Ltd., a marketing
research company based in London, England.

In 1995, the Company acquired the market research division of the Carlson
Companies, an organization based in Minneapolis, Minnesota.


(B)  NARRATIVE DESCRIPTION OF BUSINESS

The Company is a full-service marketing research firm that provides information
and analyses for use in strategic and tactical marketing decisions. The Company
uses advanced statistical techniques, proprietary software and information
systems to develop statistical data bases to develop market analyses. Its
clients use these analyses as the basis for strategies to enhance the market
performance of existing and proposed products and services. The Company believes
that it is one of the leading companies specializing in the development and
application of advanced statistical techniques to marketing information and
issues.

The Company emphasizes predictive market research, which is typically more
complex and offered at higher prices than other forms of market research. The
Company also performs a substantial volume of traditional market research. The
Company's ability to provide predictive market research has been an important
factor in obtaining contracts for more traditional market research. Traditional
market research makes up for the majority of market research products and
constitutes the primary business of most market research firms. Although the
current market for predictive market research using advanced statistical
techniques is smaller than that for research using more traditional techniques,
the Company believes that demand for market research using advanced statistical
methodologies has been increasing more rapidly.

The Company provides these analyses either through custom-designed studies for
specific clients, or through proprietary standardized packages of advanced
statistical research and analysis techniques that address certain frequently
encountered marketing concerns. Standardized packages currently offered by the
Company include systems for determining price elasticity, the effects of the
introduction or elimination of a particular brand on the market shares of
competing brands, and
<PAGE>   3
the effect of product attributes on customer purchase decisions. The Company has
used its standardized packages to conduct studies relating to products in a
number of different industries.

The Company has a substantial client base that is among the 500 largest
companies in the United States as well as industry leaders around the world.


INDUSTRY BACKGROUND

The market research industry is composed of a diverse group of marketing,
advertising, public opinion, and product development and positioning research
organizations that gather, process and analyze information. They obtain and
measure respondents' reactions and behavior concerning products and services,
promotions, pricing and distribution.

Market research organizations vary greatly in size and scope, ranging from local
field interviewing groups to full-service organizations offering extensive data
base and data collection capabilities providing a wide array of reports and
analyses to many industry groups. Many organizations conduct custom studies,
responding to the issues of a single client, and many conduct multi-client
studies, which typically provide information on issues for a specific industry.


PRODUCTS AND SERVICES

Custom-Designed Studies: The Company's primary business has been to provide
clients with custom-designed research in which the client retains the exclusive
use of the resulting study and the related database. These studies address both
long-term strategic and short-term tactical marketing considerations. These
include market positioning for new and existing products, projections of future
market potential, segmentation of markets, and identification of significant
brand attributes.

The development of a custom-designed study, as conducted by the Company,
involves a number of specific steps. The development of a proposal for a
research project begins with the formulation of study objectives. In a
single-client study, study objectives typically originate with the client,
although the Company typically assists in refining the objectives. Study design
includes selecting the universe of respondents to be studied and the sampling
techniques to be employed, establishing the information required, and deciding
the methods of statistical analysis and means of reporting.

The Company then begins the process of collecting, processing, and analyzing
data. The Company develops a database for each quantitative study it conducts.
Because of its extensive in-house facilities, the Company can readily provide
the client with several means of accessing this database, including storage
media from which the client can manipulate the data using software developed by
the Company.

The average base price of a custom-designed, single client study in fiscal 1997
was approximately $50,000. The time to complete such a study generally ranges
from 8 to 12 weeks, although studies involving ongoing data collection generally
require monthly or quarterly interim reporting.

Proprietary Packages: Based on its experience in conducting custom-designed,
single-client studies using statistical methodologies, the Company has been able
to identify certain marketing issues frequently encountered by clients in a
broad range of industries. In response, the Company has developed standardized
packages to address these marketing issues.
<PAGE>   4
The standardized packages are software which embed proprietary combinations of
various advanced statistical methodologies and algorithms that permit a client's
marketing management to compose and alter, on an ongoing basis, various
scenarios designed to explain and predict consumer behavior and product sales
levels. The design of the software allows the Company to tailor the study and
report to the needs of the individual client. The client may receive information
in the form of written reports, company presentations or by delivery of the
database and a customer version of the relevant proprietary software. The use of
standardized packages decreases the Company's cost of designing and implementing
a study for a potential client.

The Company's standardized packages include:

         -        Price Elasticity Measurement System ("PEMS(R)") permits the
                  evaluation of pricing strategies for different products and
                  services. PEMS is designed to enable the client to predict
                  sales of products and services under a broad range of possible
                  competitive pricing scenarios.

         -        Component Assessment ("COMPASS(TM)") is designed to enable
                  clients to analyze the structure of a competitive market and
                  to determine the effect that individual product attributes
                  have on a customer's purchase decision. This package can be
                  utilized in developing products or selecting attributes for
                  advertising messages for specific markets.

         -        Predictive Segmentation(R) is a technology that enables
                  marketers to identify the various segments and or sub-markets
                  of individual products and to differentiate the demands of
                  each segment. Predictive Segmentation is particularly powerful
                  as it combines demographic and usage and attitude factors in
                  determining the optimal segmentation.

         -        Total Research Bias Correction(TM) (TRBC(TM)) is a technology
                  that enables marketers to improve the accuracy and value of
                  any research by reducing fundamental sources of bias, error,
                  and distortion in market research data. This results in a
                  better understanding of marketing behavior and substantial
                  improvement of the predictive accuracy and value of market
                  research.

Multi-Client Studies: Multi-client studies are generally designed by a market
research firm to meet what the firm perceives to be an informational need shared
by a number of potential clients. The initial focus of the study and early study
design are usually developed by the research firm at its own expense before
client commitments are obtained. The completed study is sold to a number of
clients, each of whom obtains access to the study results on a non-exclusive
basis.
<PAGE>   5
EQUITREND(R): This product provides strategic guidance to improve brand equity.
Brand equity is defined as the inherent value in a particular brand name of
product or service, resulting from consumer experiences with, and perceptions
of, the brand. As such, it is based on actual usage, as well as the expectations
created by advertising, publicity, word-of-mouth, packaging, etc., and is best
measured as perceived quality.

Because of the nature of the data EQUITREND provides, subscribers tend to
contract for additional projects to provide further in-depth analysis or explore
other aspects of their brands' marketing. EQUITREND is highly compatible with
other proprietary technologies offered by the Company. To date, over 110 U.S.
corporations have invested in information through EQUITREND.

Other Products/Services:

CUSTOMER LOYALTY MANAGEMENT:

The Total Research Customer Loyalty Management Process was designed to provide
clients with a systematic means of improving its operating results and
marketplace performance through effective use of information from customers and
employees. The process provides clients with:


-     The ability to set priorities and allocate resources to optimize both
      customer loyalty and organizational performance

-     Insight into their competitive positions

-     Identification of the attributes that can set their organizations' apart
      from competitors by delivering superior value to customers

-     Opportunities for service and product innovations, beyond those currently
      offered

-     Tailored strategies for high-potential market segments

-     An action plan for implementation that reflects prioritized customer
      requirements, internal resources and industry environment

-     A proven means to evaluate the success of improvement initiatives

A typical Total Research Customer Loyalty Management Process is made up of the
following five distinct phases:

1.    OBJECTIVES AND COMMUNICATIONS DEVELOPMENT ensures organizational agreement
      and alignment on purposes and applications of the research by means of
      individual and group discussions with key management personnel. During
      this phase the Company will develop a plan to communicate with employees
      and customers throughout the process.

2.    DISCOVERY uses qualitative techniques with employees and customers to
      identify their perceptions of important attributes of satisfaction, value
      and loyalty.

3.    PERFORMANCE ASSESSMENT quantitatively measures customer perceptions of
      relative importance and competitive performance in areas affecting
      satisfaction, value, loyalty, and share of business.
<PAGE>   6
4.    ACTION PLANNING incorporates customer requirements for satisfaction and
      value into the quality and process improvement activities of the
      organization through the use of a wide range of tools, techniques and
      communications which support process improvement teams.

5.    SUCCESS MEASUREMENT provides the ongoing quantitative measurement
      necessary to determine improvement progress against Performance Assessment
      baseline data. Linkage of internal and external performance to
      organizational results is the goal. Qualitative monitoring is conducted to
      identify emerging issues.

Due to the specific experience required to address Customer Loyalty Management
research, the unit is organized as a division of the Company. The Division
enjoys a series of relationships and alliances with several prominent consulting
organizations, with expertise in specific industries and consulting
technologies, which constitute complimentary capabilities to those of the
Division staff. Members of the Division are frequently asked to speak at outside
conferences and seminars.

STUDY IMPLEMENTATION

The Company gathers information for its research projects in a variety of ways,
including telephone and personal interviews, focus groups, mail surveys, content
analysis of various types of communications, store audits and product-use tests.
The Company operates two telephone data collection centers in Tampa, Florida and
London, England. Both the Tampa and London facility have 80 fully computerized
interviewing stations. The Company has its own focus group facilities and has
access to other focus group facilities in major metropolitan areas. Focus groups
provide qualitative information through structured, in-depth discussions in a
controlled environment. The Company's Princeton focus group facility is fully
equipped with audio-visual equipment. In addition, the Company has developed a
nationwide network of several hundred independent field service organizations to
conduct personal interviews.

The Company maintains a national probability sample for use as a tool to collect
data to accurately project market and demographic information. This national
probability sample consists of approximately 250 scientifically selected
locations in 48 states which, taken together, provide a representative
cross-section of U.S. population demographics.

The Company uses both cross-tabular and multivariate statistical techniques to
analyze the collected data. Cross-tabulation is the arithmetic compilation of
the results of the data collected and is used for studies with descriptive
objectives, although cross-tabulation also can meet certain limited diagnostic
goals. Multivariate analysis recognizes the interdependence of multiple
variables and attempts to synthesize the results in a simple equation model or
graphic display. Multivariate analysis is usually used to meet both diagnostic
and predictive objectives. The Company believes it is an industry leader in the
utilization of multivariate analysis for predictive research, and often develops
its own software to interpret and enhance its study results.
<PAGE>   7
CLIENTS

The Company has directed its marketing efforts toward companies and institutions
with sophisticated and comprehensive statistical research and marketing
information needs. In fiscal 1997, approximately 81 percent of the Company's
full-service clients were among the 500 largest commercial and financial
companies in the United States and their equivalents internationally. The
Company currently serves approximately 210 commercial clients and several
government agencies. During fiscal 1997, approximately 74 percent of the dollar
value of contracts from full service clients were from recurring research
projects. For the fiscal years ended June 30, 1997, June 30, 1996 and June 30,
1995, the Company had no single client that contributed revenues of greater than
10 percent.

<TABLE>
<CAPTION>
                                           Fiscal Year Ended June 30,
                                        ---------------------------------
Industry                                1997          1996           1995         Representative Clients
--------                                ----          ----           ----         ----------------------
<S>                                     <C>           <C>            <C>         <C>
Health Care                              32.0%         28.6%          25.3%       Bristol-Myers Squibb, Amgen,
                                                                                  Genentech, Roche, Pfizer,
                                                                                  Abbott, Merck, SmithKline
                                                                                  Beecham, Ortho-McNeil, Eli
                                                                                  Lilly, Novartis

Telecommunications/
 Information Systems                     24.5          28.9           23.8        AT&T, IBM, Motorola,
                                                                                  Compaq, Hewlett Packard,
                                                                                  DEC, Sprint, Bell Atlantic, US
                                                                                  West, Microsoft

Manufacturing/Industrial                 11.1           7.2           14.8        FMC, Monsanto, Masonite,
                                                                                  Dow Chemical, Dow Corning,
                                                                                  DuPont

Consumer Products                        10.9          10.4           13.1        Bausch & Lomb, 3M,  Black
                                                                                  & Decker, Michelin, Eastman
                                                                                  Kodak

Financial Services                        7.4          13.8           10.8        Merrill Lynch, Prudential,
                                                                                  Fidelity Investments,  Alliance
                                                                                  & Leicester

Other                                    14.1          11.1           12.2        Mercedes-Benz, Mobil, BP Oil,
                                        -----         -----          -----          Ryder, USPS

Totals                                  100.0%        100.0%         100.0%
                                        =====         =====          =====
</TABLE>
<PAGE>   8
LICENSING

In August 1992, the Company entered into an agreement with Paradigma, s.a. of
Buenos Aires, Argentina, to license its products and the name "Total Research
Argentina." In May 1995, the Company renewed its agreement and alliance with
TRCA through April 30, 1998. The Company has given TRCA the right to represent
the Company in Argentina and to market the Company's proprietary products.

In consideration for the use of the name Total Research and its products, TRCA
will pay the Company royalties based on the gross TRCA revenues. For fiscal 1997
and fiscal 1996, TRCA's royalty obligations to the Company were approximately
$50,000 and $71,700 respectively. The Company has also been granted the
irrevocable option to acquire 25 percent of TRCA in exchange for $2,500 up to
and including April 30, 1998; the Company had not exercised these options as of
June 30, 1997.

INTERNATIONAL OPERATIONS

A significant percentage of projects that the Company carries out for its
clients involved conducting marketing research internationally. As a result, the
Company has carried out projects in over 50 countries including most European
countries, throughout South America, Canada and Mexico, China, Japan, Australia,
India and other countries. To do this, the Company has developed a network of
working relationships in key locations around the world with research firms
which it can depend on to provide quality support.

In May of 1996, the Company announced a strategic alliance with Asia Market
Intelligence, (AMI), the largest independent marketing services firm in Asia.
This alliance enables the Company to offer full, comprehensive service for the
Asia component of global studies that it undertakes for such clients as
Hewlett-Packard, IBM, and Motorola.

ACQUISITION OF BUSINESS MARKETING SERVICES

Effective July 1, 1994, the Company's wholly owned subsidiary, Total Research,
Ltd.("TR-UK") acquired BMS through a purchase of assets. The full management
team and research staff joined Total Research as part of the acquisition, and
the new subsidiary now conducts business under the name of Total Research
Corporation in Europe.

The Company enjoys a strong position in the European research market and a
strong franchise in the most rapidly growing segment of the European research
market, that of pan-European (multi-country) research projects for major
international companies. Total Research - Europe has substantial experience in
both business-to-business and consumer research throughout Europe: it markets
several multi-client products as well as continues to grow its health care
practice.

The Company's UK operations maintains a pool of interviewers who are European
nationals living in London, giving it the capability to conduct interviews in
the native languages of a wide variety of European countries. Operationally,
clients have one single, English-speaking point of contact which can provide
project updates, consistent translations, and multi-cultural analysis of
research results. This facilitates the development of stronger relationships
with major multi-national companies that conduct sophisticated marketing
research projects worldwide.
<PAGE>   9
ACQUISITION OF CARLSON RESEARCH COMPANY

In November of 1995, the Company acquired Carlson Research Company of
Minneapolis, Minnesota. As part of the terms of the acquisition, Total Research
entered into a strategic alliance with the Carlson Marketing Group to mutually
develop and service business. Revenues attributed to Carlson for June 30, 1997
and June 30, 1996 were approximately $2,650,000 and $1,300,000, respectively.

BACKLOG

The Company's backlog at June 30, 1997, was approximately $12,000,000 as
compared to approximately $9,600,000 as of June 30, 1996 and approximately
$7,300,000 as of June 30, 1995. The Company defines backlog as the unearned
portions of its existing contracts. The amount of backlog at any time may not be
indicative of intermediate or long-term trends in the Company's operations. The
increase from year to year can be attributed the continuing increase in business
serviced in the United States and United Kingdom.

FEE ARRANGEMENTS

Basic data collection and tabulation assignments generally are obtained by
competitive bidding at a fixed fee. Full-service and advanced-level research
assignments involve competitive bidding or fees payable on a negotiated basis.
Most contracts are negotiated on a fixed-price basis subject to adjustment for
specified criteria. Included in most current contracts are provisions to recover
certain unanticipated costs. The Company sells multi-client studies and can sell
EQUITREND at a quoted retail price. Enhancement services, to the extent
requested by a purchaser, are expected to be negotiated on an individual basis
or to be set at a fixed hourly rate for the particular level of the Company
employee providing the service.

The Company employs the percentage-of-completion method of accounting for
recognizing its revenues on individual projects. Clients are generally billed in
accordance with the terms of applicable contracts, which are not necessarily
indicative of the stage of completion of the project.

COMPETITION

The market research industry is highly competitive and is characterized by a
large number of relatively small organizations and a limited number of large
full-service organizations, many of which are believed to have financial
resources greater than those of the Company. Although the Company is not one of
the largest providers of general market research, management believes that it is
currently one of the leading providers of market research and analysis services
using advanced statistical techniques. In 1996, Total Research was listed as one
of the 50 largest companies in the marketing research industry by Marketing
News. The Company's primary competitors include: Burke Marketing Services, Inc.;
M/A/R/C, Inc.; Migilari/Kalpin; Market Facts, Inc.; National Analysts; and
Walker Research Incorporated.

The Company believes that the principal competitive factors for traditional
market research are the quality of data collection and validation, the ability
to design, implement and report on marketing research subjects in a short period
of time, and price. In addition the Company believes that the principal
competitive factors for market research using advanced statistical techniques
are the quality and experience in developing and implementing this type of
research and the reputation of
<PAGE>   10
its personnel. During economic downturns, the Company may experience increased
competition for research budgets, which are often vulnerable to cost-cutting
activities.

EMPLOYEES

As of June 30, 1997, the Company employed 190 full-time employees. The Company
uses approximately 250 part-time, hourly employees for data gathering and
processing purposes. All employees are non union. The Company believes that it
maintains a positive relationship with its employees.

ITEM 2. DESCRIPTION OF PROPERTY

The Company's headquarters and principal U.S. operating facility is located in
Princeton, New Jersey. As of June 30, 1997, the Company was leasing
approximately 48,663 square feet of office space for its Princeton operations;
the lease expires June 30, 2006. The Company leases a total of 7,559 square feet
for its Tampa, Florida office; the lease is currently under negotiation for
renewal. The Company leases a total of 1,926 square feet for its Chicago,
Illinois office; the lease expires on December 31, 1998. The Company leases
2,400 square feet for its Poughkeepsie, New York office; the lease expires on
June 30, 2000. The Company leases 4,800 square feet for its Chiswick, London
office space; the lease expires October 31, 2003 with a tenant break clause at
October 31, 1998. The Company leases approximately 6,000 square feet for its
Acton, London data collection facility; the lease expires on March 31, 1999. The
Company leases a total of 6,083 square feet for its Minneapolis, Minnesota
office; the lease expires April 30, 2001.

The Company has recently negotiated to sub-lease approximately 20,000 square
feet of space in its Princeton offices.

ITEM 3.  LEGAL PROCEEDINGS

As of June 30, 1997 there were no material legal actions, proceedings, or
litigation pending at that time, or, to the knowledge of the Company,
threatened, to which the property of the Company was subject, or to which the
Company was a party.

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

The Annual General Meeting of shareholders was held on may 13, 1997 at the
Company's headquarters in Princeton, New Jersey. The following were the
propositions considered and the votes cast:

1.    To elect the slate of directors, as proposed by management (Lorin Zissman,
      Hugh J. Devine, William N. Levy, J. Edward Shrawder, Anthony Galli, Albert
      Angrisani, Roger Thomas).

<TABLE>
<S>                                           <C>
                  For                         8,057,663
                  Against                        41,551
                  Abstentions                         0
</TABLE>

2.    To confirm the appointment of Amper, Politziner & Mattia as auditors to
      the Company.
<PAGE>   11
<TABLE>
<S>                                           <C>
                  For                         7,916,466
                  Against                        44,428
                  Abstentions                    56,690
</TABLE>

3.    Proposal to increase the options with respect to the 1995 Stock Incentive
      Plan (950,000 shares)

<TABLE>
<S>                                           <C>
                  For                         7,146,439
                  Against                       781,005
                  Abstentions                    90,140
</TABLE>

                                     PART II

ITEM 5.      MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The high-and low-bid prices of the Company's Common Stock, as reported by NASDAQ
for the Company's quarters from fiscal 1994 to date were as follows:

<TABLE>
<CAPTION>
                        1ST QUARTER               2ND QUARTER              3RD QUARTER                 4TH QUARTER
                     -------------------      --------------------      -------------------       --------------------
                      High         Low          High         Low          High        Low          High          Low
<S>                  <C>          <C>          <C>          <C>          <C>          <C>          <C>          <C>
Fiscal 1994
  Common Stock       $ .844       $ .531       $1.160       $ .656       $1.530       $ .813       $1.250       $ .875


Fiscal 1995
  Common Stock       $1.031       $ .656       $ .875       $ .656       $2.813       $ .781       $2.438       $1.719


Fiscal 1996
  Common Stock       $2.563       $1.750       $1.688       $1.438       $1.188       $ .938       $1.688       $1.375


Fiscal 1997
  Common Stock       $1.438       $ .875       $1.000       $ .625       $1.250       $0.813       $1.281       $ .813
</TABLE>

The high and low bid and asked prices of Registrant's Common Stock on September
16, 1997 were $1.688 and $1.625, respectively.

The above listed quotes reflect inter-dealer prices without retail mark-up,
mark-down or commissions and are not necessarily representative of actual
transactions or of the true value of the Common Stock.

As of September 16, 1997, the Company had 572 shareholders of record of its
Common Stock. However, the Company has reason to believe that its total
shareholders number in excess of 1,800. The Company has never declared a
dividend and does not plan to do so in the near future.
<PAGE>   12
ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

(A)     LIQUIDITY AND CAPITAL RESOURCES

During the end of fiscal 1996, Management established a committee to review and
improve the Company's operations. One of its key recommendations was to improve
the control and management of cash. As a result, the Company generated almost
$5.0 million in cash from operations during fiscal 1997. The cash was used to:

-     Repay over $3.5 million of its bank debt (leaving just over $200,000 from
      its UK subsidiary)

-     Paydown capital leases of approximately $100,000

-     Deposit almost $700,000 in its operating accounts

At June 30, 1997, the Company had a working capital deficiency of ($1,150,722),
a decrease of $987,933 from June 30, 1996, and the current ratio dropped to .87
from .98 at the same point in time. This was the result of management utilizing
cash to pay off bank term debt in advance. This enabled the company to increase
its financial flexibility.

On June 30, 1997, the Company renegotiated its agreement with Summit Bank
(formerly the United Jersey Bank of Princeton, New Jersey, "the Bank"). The
Agreement has been amended as follows:

-     A one year $2.5 million revolving line of credit at a variable interest
      rate based on certain financial ratios. As of June 30, 1997, the rate is
      prime plus one-half percent. As of June 30, 1997, the Company was in
      compliance with all of the financial ratios and has not borrowed against
      this line.

-     A three year $500,000 term line, secured by equipment, furniture and
      fixtures at an interest rate based on certain financial ratios. As of June
      30, 1997, the rate is prime plus one-half percent. As of June 30, 1997,
      the Company has not borrowed against this line.

In addition to the Summit Bank agreement discussed above, the Company has a bank
overdraft facility of pound sterling 300,000 with Coutts & Co in London, UK. The
borrowings against this facility are charged at a rate of 3 percent above the UK
Base Rate. At June 30, 1997, the borrowings were at pound sterling 129,262
(approximately U.S. $214,575) and the UK Base Rate was 6.75 percent. The Company
believes that its current sources of liquidity and capital resources will be
sufficient to fund its long-term obligations and working capital needs for the
foreseeable future.

Net Accounts Receivable totaled $5,101,596 at June 30, 1997, compared to
$4,166,486 at the prior year-end, for a net increase of $935,110. The increase
in receivables is primarily the result of the Company's increasing business.

Costs and estimated earnings in excess of billings on uncompleted contracts
totaled $1,240,852 at June 30, 1997, compared to $1,737,734 at the prior
year-end, for a net decrease of $496,882. This decrease is the result of normal
fluctuations in the business from period to period.

Current and long-term deferred tax assets decreased by $262,338 from $773,118 in
fiscal year 1996 to $510,780 in fiscal year 1997. Based on the Company's
expected earnings for the future,
<PAGE>   13
management has determined that the future operating income of the Company should
be sufficient to recognize fully these net deferred tax assets.

Capitalized Market Research Products decreased by $80,000 to $224,449, versus
$304,449 in fiscal 1996. The Company did not invest in developing any new
products during the fiscal year.

Deferred Data Accumulation Costs decreased by $80,000 from $347,436 in fiscal
1996 to $267,436 in fiscal 1997.

Accounts payable and accrued expenses totaled $4,661,785, an increase of
$1,011,255 during fiscal 1997 from $3,650,530 in fiscal 1996. Additionally, the
Company has $91,000 remaining from the $516,500 accrued in fiscal 1996 related
to the restructuring expense incurred during the last quarter of fiscal 1996.
The increase is primarily the result of the Company's increasing business.

Billings in excess of earnings totaled $3,887,372, an increase of $1,772,230
during fiscal 1997 from $2,115,142 in fiscal 1996. The increasing business and
the more aggressive billing policy of the Company have accounted for this
increase.

Income taxes payable totaled $166,474, an increase of $80,171 during fiscal 1997
from $86,303 in fiscal 1996. The increasing earnings of the Company accounted
for this increase.

Other long-term liabilities totaled $279,020, an increase of $40,957 during
fiscal 1996 from $238,063 in fiscal 1996. This increase is mainly the result of
the Company accruing rental expense for it renewed lease in its Princeton office
in accordance with FASB 13, Accounting for Leases.

Inflation had no material effect on the financial performance of the Company
during fiscal 1997.

(B) RESULTS OF OPERATIONS


<TABLE>
<CAPTION>
Statement of Income Data:
(Expressed as a percentage of revenues)                 Year Ended June 30
                                                 ------------------------------------
                                                  1997           1996           1995
                                                 ------         ------         ------
<S>                                               <C>            <C>            <C>
Revenues                                          100.0%         100.0%         100.0%
Direct costs                                       50.8%          46.4%          41.1%
                                                 ------         ------         ------
      Gross profit                                 49.2%          53.6%          58.9%
Operating expenses                                 44.9%          57.7%          50.8%
Unusual Costs                                        --            4.6%            --
                                                 ------         ------         ------
Income (loss) from operations                       4.3%          (8.7%)          8.1%
Interest expense                                    (.7%)         (1.4%)         (1.6%)
Other income (expense), net                         0.2%           0.4%           0.3%
                                                 ------         ------         ------
Income (loss) before income taxes                   3.8%          (9.8%)          6.8%

Provision for (benefit) from  income taxes          1.6%          (3.6%)          2.9%
                                                 ------         ------         ------
Net  income(loss)                                   2.2%          (6.3%)          3.9%
                                                 ======         ======         ======
</TABLE>


FISCAL YEAR ENDED JUNE 30, 1997 AS COMPARED TO FISCAL YEAR ENDED JUNE 30, 1996

During fiscal 1996, lower gross profits and unanticipated corporate expenses
resulted in the Company incurring losses. As a result, senior management
initiated a committee to analyze all
<PAGE>   14
operations of the Company. The specific goal was to significantly improve the
Company financially. Upon completion of its analysis, the Company announced and
immediately implemented a plan to restructure and consolidate operations which
included the re-organization of its existing six divisions into four. The
restructuring included the elimination of several senior positions and the
reduction of corporate overhead by close to $2 million annually, from ten to
five percent of revenue.

Going into fiscal 1997, the Company knew it had low-margin project work and
excessive operating commitments which would negatively effect its profitability
for the first six months. However, it began to sell business with improved
pricing and reduced bank debt through tighter invoicing and improved cash
collection procedures.

Management believed once it had completed the first six months of the fiscal
year, it would begin to see an improved bottom line. The following chart shows
key financial figures as a percentage of revenue by quarter versus fiscal year
1996:

<TABLE>
<CAPTION>
                         Fy '96       1st Qtr      2nd Qtr      3rd Qtr      4th Qtr
                         ------       -------      -------      -------      -------
<S>                      <C>           <C>          <C>          <C>          <C>
Revenues                 100.0%        100.0%       100.0%       100.0%       100.0%

Operating Expenses        57.7%         48.1%        46.9%        44.2%        42.5%

Interest Expense           1.4%          1.4%         1.2%         0.5%         0.0%

Net Income                (6.3%)         0.3%         1.1%         2.9%         3.5%
</TABLE>

Revenues for fiscal 1997 increased 24.2%, or $5,728,253 versus the prior year,
to $29,443,302. This increase was the result of a full fiscal year of revenues
the research division of Carlson Marketing Group it acquired in November 1995,
as well as growth in its Total Research/Customer Loyalty Management, Global
Health Care and newly formed Strategic Marketing Services divisions.

During fiscal 1997, the Company delivered a much greater percentage of
quantitative and international business which included substantial out-of-pocket
expenses for data collection, which had the effect of reducing gross profits. As
a result, the Company experienced an increase in direct costs of $3,940,386 from
$11,001,246 in fiscal 1996 to $14,941,632 in fiscal 1997. This had a negative
impact on Company's overall gross margins decreasing it from 53.6 percent in
fiscal 1996 to 49.3 percent in fiscal 1997.

Operating expenses for fiscal 1997 totaled $13,221,437, a decrease of 3.4
percent or $461,346 from the fiscal year 1996 total of $13,682,783. Expressed as
a percent of revenue, operating expenses decreased to 44.9 percent of revenue in
fiscal 1997, versus 57.7 percent in the prior year, for a reduction of 12.8
percent of revenue. This decrease can be attributed to the corporate expense
reduction initiated by the Company in late fiscal 1996.

Income from operations totaled $1,280,233 for fiscal 1997, an increase of
$3,350,712, versus a loss from operations of ($2,070,480) during fiscal 1996 for
all the reasons set forth above.
<PAGE>   15
The Company's interest expenses decreased from $342,024 in fiscal 1996 to
$202,133 in fiscal 1997 as a result of decreased borrowings, as discussed under
Liquidity and Capital Resources.

Other income totaled $50,050 for fiscal 1997, a decrease of $37,047 versus
income of $87,097 earned in fiscal 1996, due primarily to licensing income of
approximately $50,000 earned by the Company as the result of its licensing
arrangement with TRCA in Argentina.

Income before taxes totaled $1,128,150 for fiscal 1997, an increase $3,453,556
versus a loss before taxes of ($2,325,407) in fiscal year 1996 for the reasons
set forth above.

The income tax provision for fiscal 1997 was $489,955, versus an income tax
benefit of ($842,363) in fiscal 1996 for the reasons set forth above.

Net income for fiscal 1997 was $638,195, or $.06 per share, versus a net loss of
$1,483,044, or $.15 per share for fiscal 1996.

The Company defines backlog as the unearned portions of its existing contracts
at each balance sheet date. At June 30, 1997, backlog was approximately
$12,000,000 as compared to a backlog of approximately $9,600,000 at June 30,
1996. The amount of backlog at any time may not be indicative of intermediate or
long-term trends in the Company's operations.

FISCAL YEAR ENDED JUNE 30, 1996 AS COMPARED TO FISCAL YEAR ENDED JUNE 30, 1995

Beginning in fiscal 1996, the Company planned to aggressively increase revenues
through geographic expansion as well as through new product introduction. As a
result, the Company incurred significant planned as well as unanticipated
expenses beyond those normally incurred for recurring operations. Revenues for
fiscal 1996 increased 23 percent, or $4,464,606 versus the prior year, to
$23,715,049. This increase was the result of its acquisition of the research
division of Carlson Marketing Group, the growth of its Total Research - Europe
division, as well as growth in its Total Research/Customer Loyalty Management
and Health Care divisions. Its two other divisions, Consumer Research Services
and Information Technologies, generated total revenues less than the previous
fiscal year.

During fiscal 1996, the Company experienced a change in its business operations
which did not manifest itself until the fourth quarter. The Company delivered a
much greater percentage of quantitative and international business during fiscal
1996 which includes substantial out-of-pocket expenses for data collection,
which reduces gross profits. As a result, the Company experienced a major
increase of direct costs of $3,096,415 or 39.2 percent from $7,904,831 in fiscal
1995 to $11,001,246 in fiscal 1996. This had a negative impact on Company's
overall gross margins decreasing it from 58.9 percent in fiscal 1995 to 53.6
percent in fiscal 1996.

Operating expenses for fiscal 1996 totaled $13,682,783, an increase of 39.8
percent or $3,897,465 from the fiscal year 1995 total of $9,785,318. Expressed
as a percent of revenue, operating expenses increased to 57.7 percent of revenue
in fiscal 1996, versus 50.8 percent in the prior year. This increase can be
attributed to a number of factors.

      -     An increase in expense related to the operations and integration of
            the research division of Carlson Marketing Group and the expansion
            of the Company's UK subsidiary.
<PAGE>   16
      -     The Company's aggressive corporate development program to develop
            strategic alliances with firms in different countries to market its
            international EQUITREND product as well as the capability to perform
            market research on a global basis significantly increased its
            operating costs.

      -     Costs associated with enhancing the overall data processing and
            reporting capacity of the Company.

      -     The Company incurred increased salary and fringe benefit costs and
            increased sales expenses as the result of its increasing revenues.

      -     The demand for the EQUITREND product was less than anticipated which
            necessitated the reevaluation of it on the balance sheet. However,
            management still considers EQUITREND to be important to the current
            and future strategy of the Company.

Lower gross profits and unanticipated expenses resulted in reduced profitability
for the Company which necessitated action in the fourth quarter by senior
management to correct the problem. The Company announced and immediately
implemented a plan to restructure and consolidate operations which included the
re-organization of its six divisions into four. This plan resulted in a pre-tax
charge of $1,101,500.

The charge includes a write-down of capitalized market research products and
deferred data accumulation costs of $550,000, severance costs of $406,500, and
charges to develop and implement the plan of $145,000. Management does not
anticipate incurring additional charges such as these in the foreseeable future.

Loss from operations totaled $2,070,480 for fiscal 1996, a decrease of 232.7
percent or ($3,630,774), versus income from operations of $1,560,294 during
fiscal 1995 for all the reasons set forth above.

The Company's interest expenses increased from $307,460 in fiscal 1995 to
$342,024 in fiscal 1996 as a result of increased borrowings, as discussed under
Liquidity and Capital Resources. It is anticipated that interest expense will
continue to increase in fiscal year 1997 due to the new terms.

Other income totaled $87,097 for fiscal 1996, an increase of $27,805 versus
income of $59,292 earned in fiscal 1995, due primarily to licensing income of
approximately $68,000 earned by the Company as the result of its licensing
arrangement with TRCA in Argentina.

Loss before taxes totaled $2,325,407 for fiscal 1996, a decrease of 277.2
percent or $3,637,533 versus income before taxes of $1,312,126 in fiscal year
1995 for the reasons set forth above.

The income tax benefit for fiscal 1996 was $842,363, versus an income tax
provision of $552,626 in fiscal 1995 due to the loss of the Company. The income
tax benefit represents approximately 36.2 percent of pretax loss in fiscal 1996.

Net loss for fiscal 1996 was $1,483,044, or $.15 per share, versus net income of
$759,500, or $.08 per share for fiscal 1995.
<PAGE>   17
The Company defines backlog as the unearned portions of its existing contracts
at each balance sheet date. At June 30, 1996, backlog was approximately
$9,600,000 as compared to a backlog of approximately $7,300,000 at June 30,
1995. The amount of backlog at any time may not be indicative of intermediate or
long-term trends in the Company's operations.


(C) SELECTED FINANCIAL DATA FOR YEARS ENDED JUNE 30, 1997, 1996, 1995,
1994 AND 1993

The following data has been extracted from the annual financial statements
attached hereto as an exhibit:

<TABLE>
<CAPTION>
                                                                 Year Ended June 30,
                                       ------------------------------------------------------------------------
Statement of Income Data (000):          1997            1996            1995            1994            1993
                                       --------        --------        --------        --------        --------
<S>                                    <C>             <C>             <C>             <C>             <C>
Revenues                               $ 29,443        $ 23,715        $ 19,250        $ 13,688        $ 12,570
Direct Costs                             14,942          11,001           7,905           6,070           5,443
                                       --------        --------        --------        --------        --------
   Gross Profit                          14,501          12,714          11,345          7, 618           7,127
Operating Expenses                       13,221          13,683           9,785           6,842           6,494
Unusual Charges                              --           1,101              --              --              --
                                       --------        --------        --------        --------        --------
Income(Loss)from Operations               1,280          (2,070)          1,560             776             633
Interest Expense                           (202)           (342)           (307)            (38)            (68)
Other Income (Expense),net                   50              87              59             (52)             --
                                       --------        --------        --------        --------        --------
Income(Loss) Before Income Taxes          1,128          (2,325)          1,312             686             565

Provision (Benefit) for Income Taxes        490            (842)            552             291            (177)
                                       --------        --------        --------        --------        --------
Income(Loss) Before Accounting Change       638          (1,483)            760             395             742
                                       --------        --------        --------        --------        --------
FAS 109 Accounting Change                     0              --              --              65              --
                                       --------        --------        --------        --------        --------
Net Income (Loss)                      $    638          (1,483)       $    760        $    460        $    742
                                       ========        ========        ========        ========        ========
Net Income(Loss)Per Common Share       $    .06        ($  0.15)       $    .08        $    .05        $    .09
                                       ========        ========        ========        ========        ========
</TABLE>


<TABLE>
<CAPTION>
                                                             Year Ended June 30,
                                    -----------------------------------------------------------------
Balance Sheet Data (000):             1997            1996           1995         1994         1993
                                    --------        --------        -------       ------       ------
<S>                                 <C>             <C>             <C>           <C>          <C>
Working Capital.(Deficiency)        $ (1,151)       $    (17)       $   210       $1,573       $  658
Total Assets                          12,948          13,155         11,743        7,440        5,220
Capital Lease Obligations And
Notes Payable                            215           2,142          1,406          604           42
Shareholders' Equity                   3,648           2,821          4,323        3,419        2,552
</TABLE>

ITEM 7.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See annexed financial statements.
<PAGE>   18
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

The Financial Accounting Standards Board issued Statement No.128, "Earnings Per
Share" (SFAS No.128). Under this new standard, new guidelines must be followed
in computing earnings per share (EPS) to permit the result to be more compatible
with EPS standards of other countries and with that of the International
Accounting Standards Committee (IASC).

This Statement shall be effective for financial statements for both interim and
annual periods ending after December 15, 1997. The Company intends on complying
with the standard with the presentation of Second Quarter Fiscal Year 1998
results; the impact upon the Company's EPS is unknown at this time.
<PAGE>   19
                                    PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY AT JUNE 30, 1997

The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
                                         Director
Name                            Age      Since           Position Held with Company(1)
-------------------------   --------     -----           ------------------------------------------------
<S>                         <C>          <C>             <C>
Lorin Zissman(3)                66       1975            Chief Executive Officer, and Chairman of the
                                                         Board of Directors

Albert Angrisani(3)             47       1994            Director, Vice-Chairman

Eric C. Zissman(2), (3)         32       -               Chief Financial and Administrative Officer,
                                                         Treasurer

Theresa Flanagan(3)             36       -               President, Quality Management

Patti Hoffman(3)                48       -               President, U.S. Regional Offices

Mark Nissenfeld, Ph.D(3)        40       -               President, Global Health Care

Roger Thomas(3)                 52       1994            President, Strategic Marketing Services

William N. Levy, Esq.           56       1984            Secretary and Director

William Van Zandt               57       -               Executive Vice President, Global Health Care
                                                         Division

John Morton                     51       -               Senior Vice President, Strategic Marketing
                                                         Services

Dr. Bashir Datoo                55       -               Senior Vice President, Strategic Marketing
                                                         Services

J. Edward Shrawder              56       1993            Director

Anthony Galli                   70       1990            Director

Hugh Devine                     58       1978            Director
</TABLE>

(1)   All directors hold office until the next annual meeting of shareholders or
      until their successors are duly elected and qualified. Executive officers
      are elected annually by the Board of Directors and serve at the discretion
      of the Board.

(2)   Mr. Eric Zissman is the son of Mr. Lorin Zissman.

(3)   These individuals are members of the Company's Management Council.

(t)Upon review of Forms 3,4, and 5, there have been no delinquencies with filing
of same for any of the so stated officers and directors of the Company.
<PAGE>   20
LORIN ZISSMAN has been the Chairman of the Board of Directors and Chief
Executive Officer of the Company since it began operating in 1975. From 1974 to
1975, Mr. Zissman was the President of the Total Research Division of U.S.
Testing Corp. and from 1970 to 1974 he was the President of Total Research, Inc.
prior to its acquisition by U.S. Testing Corp. From 1969 to 1970, Mr. Zissman
was an officer and director of Response Analysis, a market research company.
From 1956 to 1969, he was employed by Opinion Research Corporation, and served
as the President of ORC Caravan Surveys, a subsidiary of Opinion Research
Corporation, from 1965 to 1969. Mr. Zissman has worked in market research from
1955 to the present. He graduated from Temple University in 1951.

WILLIAM N. LEVY, ESQ. has been the Secretary of the Company since 1978 and a
director since 1984. Since 1966, Mr. Levy has practiced law in New Jersey. He is
a principal of Levy & Levy, P.A., a law firm with offices in Voorhees, New
Jersey. Levy & Levy, P.A. acts as general and securities counsel to the Company.
Mr. Levy received a B.A. in 1963 and a J.D. in 1966, both from the University of
Pennsylvania.

ALBERT ANGRISANI is President of Princeton Management, which provides U.S.
corporations and public institutions with turn-key consulting and project
finance services, and he has recently been appointed by Governor Christine Todd
Whitman to Chair the New Jersey State Capital Partnership Fund. Mr. Angrisani
served as U.S. Assistant Secretary of Labor from 1980 to 1984. Subsequently, he
started the government services practice for the financial industries division
of Arthur D. Little Inc. Mr. Angrisani received a B.A. Degree from Washington
and Lee University and an MBA in finance and an MA in accounting from New York
University.

ERIC C. ZISSMAN joined the Company in 1988. In September 1996, he was named
Chief Financial Officer. In September 1993, he was named Vice President of
Accounting and Finance. Before joining Total Research, Mr. Zissman was a first
level manager at AT&T and a staff accountant at Margaretten & Company during the
years 1986 to 1988. Mr. Zissman graduated from Rider University in 1986.

J. EDWARD SHRAWDER was elected to the Company's Board of Directors in November
1993. Mr. Shrawder, former president of Elrick and Lavidge, a marketing research
firm, started his own marketing and marketing research consultancy in Illinois
in 1992. He was director of the Council of American Survey Research
Organizations (CASRO) in 1990 and 1991. He received his undergraduate degree in
economics from Oberlin College and his MBA in marketing and mathematical methods
from the University of Chicago.

ROGER THOMAS, a director of the Company since 1994, is also the President of
Strategic Marketing Services. He joined Business Marketing Services Ltd., the
predecessor company, in 1984 and became Managing Director in 1986. Prior to this
he worked for Industrial Market Research Ltd., a leading European
business-to-business research firm for six years, and the Ladbroke Group, a
major UK hotel and leisure company, where he was responsible for acquisitions
and new business development. Mr. Thomas is a graduate of the University of
Southampton with a degree in economics and accounting.
<PAGE>   21
THERESA FLANAGAN has been with Total Research in a number of positions of
increasing responsibility since 1983; she currently is President, Customer
Loyalty Division. Ms. Flanagan possesses an intimate understanding of both the
practical aspects of conducting Quality and Customer Loyalty Management
processes and the strategic issues involved in a company's decision to utilize
the QM approach. Ms. Flanagan has her B.A. in Economics and an MBA in Marketing
from Rutgers University.

MARK NISSENFELD, PH.D is the President, Global Health Care Division. Dr.
Nissenfeld has over 16 years experience conducting both qualitative and
quantitative research. During this time he has conducted a large number of
in-depth personal interviews as well as moderated focus groups. In addition, he
has conducted numerous quantitative research studies utilizing a variety of
multivariate techniques. In the past seven years, he has focused his energies on
the field of health care marketing research. Dr. Nissenfeld has a Ph.D. and M.S.
in Psychology from the University of Pennsylvania, and B.S. from Boston
University.

PATTI HOFFMAN joined the Company in 1995 as Vice President, Human Resources. In
addition to this responsibility, Ms. Hoffman is President, Regional Offices; she
has 20 plus years of professional experience working for four publicly-held
corporations. As a member of the Senior Management Committee at West America
Bank in California, Ms. Hoffman honed those skills which have been utilized in
re-organizing the U.S. Regional Division of Total Research Corporation. Ms.
Hoffman has a B.A. from the University of Tennessee.

WILLIAM VAN ZANDT has been an officer of the Company since it began operating in
1975. From 1974 to 1975, he was Vice President, Account Executive for the Total
Research Division of US Testing Corp. From 1970 to 1974, he was Vice President
of Total Research, Inc.

JOHN MORTON joined the Company in 1982 as a Vice President and Director of
Advanced Statistical Research. In 1995, he was promoted to Senior Vice
President, New Product Development. From 1981 to 1982, Mr. Morton was founder
and president of John L. Morton, Inc., a company engaged in advanced marketing
analysis and research. During that time he also provided consulting services to
the Company. From 1976 to 1981, Mr. Morton was the Executive Vice President of
Robinson Associates, Inc., where he was primarily responsible for project
direction and was technical supervisor of the research personnel. He served as
Vice President of Aulino/Baen (formerly a marketing research company) from 1974
to 1976, and held other market research positions at Prudential Insurance
Company and General Foods from 1967 to 1974. He received his B.S. in psychology
from Muhlenberg College.

DR. BASHIR DATOO joined the Company in 1977. In 1982, Dr. Datoo was appointed
Vice President and Director of Quantitative Research and, in 1989, was promoted
to Senior Vice President. From 1976 to 1977, he was a visiting scholar at
Princeton University. From 1973 to 1976, Dr. Datoo was an associate professor at
the University of Dar Es Salaam. Dr. Datoo received a B.A. from Makerere
University College, Uganda, in 1964, and a Ph.D. from the London School of
Economics in 1968.
<PAGE>   22
ANTHONY GALLI was elected to the Company's Board of Directors in October 1990.
Mr. Galli joined Total Research in 1995 from Galli Associates, Inc., an
affiliate of Hill & Knowlton, a large public relations firm. Mr. Galli ceased to
be employed with the Company in July, 1996. He is a former Vice President and
General Manager of the New Jersey-Delaware office of Hill & Knowlton. Before
joining Hill & Knowlton, Mr. Galli was Vice President and World Director of
Marketing for Business Wire, an international press relations wire service. Mr.
Galli graduated from Temple University, began his graduate work at Harvard and
completed it for his MBA degree at Pace University in New York.

HUGH DEVINE has been an officer of the Company since it began operating in 1975,
and became a director of the Company in 1978. In 1993, he was promoted to
President of the Company. Mr. Devine ceased to be employed in July, 1996. Mr.
Devine received a B.A. in Economics from Bethany College in 1961 and a Masters
degree in Marketing from the University of Bridgeport in 1971.
<PAGE>   23
ITEM 10.       EXECUTIVE COMPENSATION

(A)   CASH COMPENSATION

There were no directors' fees paid during this period. The following table sets
forth a summary of compensation paid by the Company with respect to services
rendered during fiscal 1995,1996 and 1997 to the Chief Executive Officer and
each of the other three most highly-compensated Officers who received at least
$100,000 in total annual compensation.

<TABLE>
<CAPTION>
                             Annual Compensation
                             -------------------
Name and Principal                                                          Other Annual        Restricted Stock
Position                      Year        Salary             Bonus           Compensation        Option Award(s)
----------------------------------------------------------------------------------------------------------------
<S>                           <C>          <C>                <C>            <C>                  <C>
Lorin Zissman, CEO            1997         $208,455                --             --                     --
                              1996          213,600                --             --                     --
                              1995          209,406           $19,500             --                     --

William Van Zandt             1997         $125,000           $83,302             --                     --
Executive VP                  1996          115,000            75,504             --                     --
Global Health Care            1995          110,000            18,482             --                     --

John Morton
Senior VP,                    1997         $152,987           $ 1,051             --                  1,500
Strategic Marketing           1996          153,692                --             --                     --
Services                      1995          145,372                --             --                     --

Roger Thomas                  1997         $130,400           $21,234             --                250,000
President, Strategic          1996          114,100            17,961
Marketing Services            1995          114,100            14,492
</TABLE>

(B) COMPENSATION PURSUANT TO PLANS

Included within Section A, above. No individual received more than 5 percent of
the total funds allocated and paid into the Company's 401(k) Plan.

For additional information see Notes to Financial Statements, Notes 9 and 10
concerning 401(k) and Stock Options respectively.


(C)  OTHER COMPENSATION

None other than the use of one (1) vehicle by the Chief Executive Officer.

(D)  COMPENSATION OF DIRECTORS

The Company has entered into a consulting agreement with a member of the Board
of Directors through June 30, 1999. The agreement contains provisions for a base
salary of $175,000 and $200,000 for the years ended June 30, 1998 and 1999. The
consultant will receive a bonus up to
<PAGE>   24
20% of the base salary based upon corporate financial goals. If the goals are
exceeded by more than $20,000, an additional 2% of the excess will be received.

(E)  TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS

None.


ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(A) (B) The following table sets forth as of September 16, 1997 certain
information with regard to the record and beneficial ownership of the company's
common stock by (i) each shareholder owning of record or beneficially 5 percent
or more of the Company's Common Stocks (ii) each Director individually, and
(iii) all Officers and Directors of the Company as a group:

<TABLE>
<CAPTION>
                      Name and Address of Beneficial       Shares                                        Percent of
Title of Class        Owner                                Owned(1)       Options         Total             Class
------------------------------------------------------------------------------------------------------------------
<S>                   <C>                                <C>               <C>             <C>              <C>
Common                Lorin Zissman                      2,039,100         70,000          2,109,100        21.00%
                      7F Marten Road
                      Princeton, NJ 08540

Common                Hugh Devine                          365,304              -            365,304         3.64
                      49 Krebs Road
                      Plainsboro, NJ 08536

Common                William N. Levy, Esq.                164,100        120,000            284,100         2.83
                      Suite 309, Plaza 1000
                      Voorhees, NJ  08043

Common                J. Edward Shrawder                    68,778         25,000             93,778         0.93
                      1716 Livingston Street
                      Evanston, IL. 60201

Common                Anthony Galli                         12,000         31,000             43,000         0.43
                      17 Exeter Court
                      Princeton, NJ 08540

Common                Roger Thomas                         150,000        300,000            450,000         4.47
                      27 Chesterman Court
                      Corney Reach Way
                      Chiswick, London  W4 2TP

Common                Albert Angrisani (2)                  15,000        400,000            415,000         4.27
                      55 Westcott Road
                      Princeton, NJ 08540

All Officers and Directors as a group (13 persons)                      3,261,722                           32.44%
</TABLE>


(1)The Company believes the beneficial owner has sole voting and investment
power over such shares.
<PAGE>   25
(C)  CHANGE IN CONTROL

There has been no change in control of the Company

ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company has entered into a consulting agreement with Albert Angrisani, a
member of the Board of Directors. Details are contained in Item 10, Part (D).

ITEM 13.  EXHIBITS, FINANCIAL STATEMENT SCHEDULED, AND REPORTS ON FORM 8K

(A) The following documents are filed as part of this Form 10-KSB at the page
indicated.

<TABLE>
<CAPTION>
                                                                                                             Page
                                                                                                             ----
<S>         <C>                                                                                              <C>
(a) (1)     Consolidated Financial Statements - Report of Independent Auditors .........................      F-1
            Consolidated Balance Sheets - June 30, 1997 and 1996 ........................................     F-2
            Consolidated Statements of Operations - Years ended June 30, 1997 and 1996 ..................     F-3
            Consolidated Statements of Shareholder's Equity - Years Ended June 30, 1997
            and 1996 ....................................................................................     F-4
            Consolidated Statements of Cash Flows - Years ended June 30, 1997 and 1996 ..................     F-5
            Notes to Consolidated Financial Statements ..................................................     F-6
(a) (2)     Exhibits
(b)         Reports on Form 8-K
            No reports were filed on Form 8-K during the last quarter of the
            fiscal year covered by this report.
</TABLE>

<TABLE>
<CAPTION>
                                   Sequential
Number            Description                                                         Page Number
------            -----------                                                         -----------
<S>               <C>                                                                 <C>
     3.1          Certificate of Incorporation of the Company                              *
     3.2          By-Laws of the Company                                                   *
    10.2          Lease for 5 Independence Way, Princeton, New Jersey                      *
    10.3          401(k) Savings Plan                                                      *
    10.4          1995 Stock Option Plan                                                   #
    10.5          1995 Stock Option Plan- TRC- Europe                                      #
    10.6          Employment Contracts                                                     +
</TABLE>

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

* Incorporated by reference from the like numbered exhibit to Form S-18
Registration Statement, SEC File No. 33-9078-NY.

# Items 10.4 and 10.5 are incorporated by reference from Proxy Statement for
1996 Shareholders Meeting.

+Item 10.6 is incorporated by reference from 10-K SEC submission of September
29, 1997
<PAGE>   26
                                    INDEX TO

                       CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
<S>                                                                        <C>
Independent Auditors Reports                                                F-2


Consolidated Balance Sheets as of June 30, 1997 and 1996                    F-3


Consolidated Statements of Operations for the Years ended
June 30, 1997, 1996 and 1995                                                F-4


Consolidated Statements of Shareholders' Equity                             F-5
for the Years ended June 30, 1997, 1996 and 1995


Consolidated Statements of Cash Flows for                                   F-6
the Years ended June 30, 1997, 1996 and 1995


Notes to the Consolidated Financial Statements                              F-7
</TABLE>


                                      F-1

<PAGE>   27
                          Independent Auditors Report


To the Board of Directors and
Shareholders of Total
Research Corporation and Subsidiary

We have audited the accompanying consolidated balance sheets of Total Research
Corporation and Subsidiary as of June 30, 1997 and 1996, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Total
Research Corporation and Subsidiary as of June 30, 1997 and 1996, and the
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.


Amper, Politziner & Mattia
Edison, New Jersey
September 23, 1997


                                      F-2
<PAGE>   28
                           TOTAL RESEARCH CORPORATION
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                          June 30,
ASSETS                                                                             1997               1996
                                                                                -----------       ------------
<S>                                                                             <C>               <C>
Current assets
   Cash and cash equivalents                                                    $   678,350       $      4,201
   Accounts receivable, less allowance for doubtful accounts
     of $110,000 at June 30, 1997 and June 30, 1996                               5,101,596          4,166,486
   Costs and estimated earnings in excess of billings on
     uncompleted contracts                                                        1,240,852          1,737,734
   Deferred taxes                                                                   281,900            482,478
   Income tax refund receivable                                                       8,505            850,000
   Other current assets                                                             559,281            695,328
                                                                                -----------       ------------
   Total current assets                                                           7,870,484          7,936,227

Fixed assets, less accumulated depreciation of $3,334,556
  at June 30, 1997 and $2,691,011 at June 30, 1996                                2,316,630          2,230,205
Capitalized market research products, less accumulated
  amortization of $591,947 at June 30, 1997 and $511,947 at June 30, 1996           224,449            304,449
Deferred data accumulation costs, net of accumulated depreciation of
   $1,530,300 at June 30, 1997 and $1,450,300 at June 30, 1996                      267,436            347,436
Goodwill, net of accumulated amortization of $223,493 at June 30, 1997            1,800,384          1,792,312
  and $145,641 at June 30,1996
Deferred taxes                                                                      228,880            290,640
Other assets                                                                        240,031            253,282
                                                                                -----------       ------------
Total assets                                                                    $12,948,294       $ 13,154,551
                                                                                ===========       ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
   Notes payable - bank                                                         $   214,575       $    985,000
   Current maturities of long term debt                                                  --            599,792
   Accounts payable                                                               2,106,555          1,948,404
   Accrued expenses and other current liabilities                                 2,555,230          1,702,126
   Accrued restructuring costs                                                       91,000            516,500
   Billings in excess of costs and estimated earnings                             3,887,372          2,115,142
   Income  taxes payable                                                            166,474             86,303
                                                                                -----------       ------------
   Total current liabilities                                                      9,021,206          7,953,267

Long-term liabilities
   Long term debt, net of current maturities                                             --          2,142,000
   Other long-term liabilities                                                      279,020            238,063
                                                                                -----------       ------------

       Total liabilities                                                          9,300,226         10,333,330
                                                                                -----------       ------------

Commitments and contingencies (Note 7)

Shareholders' equity
   Common stock-authorized 20,000,000 shares $.001 par value,
     10,044,108 shares issued and outstanding at June 30, 1997 and
     9,882,108 shares issued and outstanding at June 30, 1996                        10,044              9,882
   Additional paid-in capital                                                     3,576,545          3,505,835
   Cumulative translation  adjustment                                                27,095            (90,685)
   Retained earnings (accumulated deficit)                                           34,384           (603,811)
                                                                                -----------       ------------
       Total shareholders' equity                                                 3,648,068          2,821,221
                                                                                -----------       ------------

Total liabilities and shareholders' equity                                      $12,948,294       $ 13,154,551
                                                                                ===========       ============
</TABLE>


               See notes to the consolidated financial statements

                                      F-3
<PAGE>   29
                           TOTAL RESEARCH CORPORATION
                     CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                  YEAR ENDED JUNE 30
                                           --------------------------------
                                               1997                1996
                                           ------------        ------------
<S>                                        <C>                 <C>
Revenues                                   $ 29,443,302        $ 23,715,049
Direct costs                                 14,941,632          11,001,246
                                           ------------        ------------

Gross profit                                 14,501,670          12,713,803

Operating expenses                           13,221,437          13,682,783

Unusual Charges (See Note 11)                        --           1,101,500
                                           ------------        ------------

Income (loss) from operations                 1,280,233          (2,070,480)

Interest expense                               (202,133)           (342,024)
Other income, net                                50,050              87,097
                                           ------------        ------------

Income (loss) before taxes                    1,128,150          (2,325,407)

Provision (benefit) for income taxes            489,955            (842,363)
                                           ------------        ------------

Net income (loss)                          $    638,195        $ (1,483,044)
                                           ============        ============

Earnings (loss) per share                  $       0.06        ($      0.15)
                                           ============        ============

Weighted average common shares
outstanding                                  10,340,418           9,866,398
                                           ============        ============
</TABLE>


               See notes to the consolidated financial statements


                                      F-4
<PAGE>   30
                           TOTAL RESEARCH CORPORATION
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                           Common Stock
                                           ------------                                 Cumulative        Retained Earnings
                                                                    Additional          Translation          (Accumulated
                               Shares Issued         Amount       Paid-in Capital        Adjustment             Deficit)
                               -------------         -------      ---------------       -----------        --------------
<S>                            <C>                   <C>          <C>                   <C>                 <C>
Balances, June 30, 1995           9,822,708          $ 9,823          $3,470,429          ($ 36,799)          $   879,233

Exercise of Options                  59,400               59              35,406                 --                    --

Translation Adjustment                   --               --                  --            (53,886)                   --

     Net (Loss), 1996                    --               --                  --                 --            (1,483,044)
                                 ----------          -------          ----------          ---------           -----------

Balance, June 30, 1996            9,882,108            9,882           3,505,835            (90,685)             (603,811)

Exercise of Options                 162,000              162              70,710                 --                    --

Translation Adjustment                   --               --                  --            117,780                    --

     Net Income , 1997                   --               --                  --                 --               638,195
                                 ----------          -------          ----------          ---------           -----------

Balance, June 30, 1997           10,044,108          $10,044          $3,576,545          $  27,095           $    34,384
                                 ==========          =======          ==========          =========           ===========
</TABLE>


               See notes to the consolidated financial statements


                                      F-5
<PAGE>   31
                           TOTAL RESEARCH CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                        Year Ended June 30
                                                                 ---------------------------------
                                                                     1997                  1996
                                                                 -----------           -----------
<S>                                                              <C>                   <C>
Cash flows from operating activities:
     Net income (loss)                                           $   638,195           $(1,483,044)

     Adjustments to reconcile net income (loss) to cash
         from operating activities:
       Depreciation                                                  634,903               681,480
       Amortization                                                  237,844               967,585
       Accretion of warrants                                           8,000                16,000
       Deferred tax benefit                                          262,015               (69,558)
       Adjustment for foreign currency translation                    32,187               (53,886)
     (Increase) decrease in assets
       Accounts receivable                                          (935,110)             (367,294)
       Cost and estimated earnings in excess of billing
         on uncompleted contracts                                    496,882                41,974
       Income tax refund receivable                                  841,495              (850,000)
       Other current assets                                          136,047               (83,794)
       Other assets                                                   13,251               (48,362)
     Increase (decrease) in liabilities
       Accounts payable                                              158,151               407,960
       Accrued expenses and other current liabilities                942,376               365,219
       Accrued restructuring costs                                  (425,500)              516,500
       Billings in excess of costs and estimated
         earnings                                                  1,772,230               939,318
       Income taxes payable                                           80,171               (42,193)
       Other long-term liabilities                                    40,957              (136,286)
                                                                 -----------           -----------
                                                                   4,934,094               801,619
                                                                 -----------           -----------
     Cash flows from investing activities:
       Purchases of equipment                                       (721,328)             (775,338)
       Acquisition of certain assets, net of cash                       
         acquired                                                         --              (306,965)
       Cash expended for capitalized market research
         products                                                         --               (78,241)
       Cash expended for deferred data accumulation                       --              (455,538)
         costs                                                   -----------           -----------
        
                                                                    (721,328)           (1,616,082)
                                                                 -----------           -----------
     Cash flows from financing activities:
       Repayment of debt                                          (3,512,217)             (419,585)
       Proceeds from long-term debt                                       --             1,119,062
       Payment under capital lease obligations, net                  (97,272)              (44,350)
       Proceeds from issuance of common stock                         70,872                35,466
                                                                 -----------           -----------
                                                                  (3,538,617)              690,593
                                                                 -----------           -----------
     Net increase (decrease) in cash and cash
       equivalents                                                   674,149              (123,870)
     Cash and cash equivalents - beginning                             4,201               128,071
                                                                 -----------           -----------
     Cash and cash equivalents - end                             $   678,350           $     4,201
                                                                 ===========           ===========

     Supplemental disclosure of cash paid
       Income taxes                                              $    90,149           $   233,435
       Interest                                                  $   191,370           $   345,324
</TABLE>


               See notes to the consolidated financial statements


                                      F-6
<PAGE>   32
                           TOTAL RESEARCH CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1- THE COMPANY

Total Research Corporation ("TRC" or "the Company") was formed in 1975. The
Company performs market research for various Fortune 1000 companies in a broad
spectrum of industries.

The Company services these clients through its locations in Princeton,
Poughkeepsie, Minneapolis, Chicago, Tampa, and London.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.  Revenue Recognition

The Company employs the percentage of completion method of accounting for
reporting its revenues on its single-client studies, while on multi-client
studies it recognizes revenues when the results are delivered to its clients.
Clients are generally billed in accordance with the terms of the applicable
contracts, which are not necessarily indicative of the stage of completion of
the project.

For single-client studies, the stage of completion and earned revenues are
determined for each project for the applicable period. The amount by which the
value of work completed exceeds billings to clients is carried as a current
asset on the Company's balance sheet and is shown as "costs and estimated
earnings in excess of billings on uncompleted contracts." Billings to clients in
excess of the value of work completed are carried on the Company's balance sheet
as a current liability and are shown as "billings in excess of costs and
estimated earnings."

2.  Principles of Consolidation

The consolidated financial statements include the accounts of the Company and
its subsidiary, Total Research Limited, after elimination of material
intercompany accounts and transactions.

3.  Use of Estimates

The preparation of the 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.

                                      F-7
<PAGE>   33
                           TOTAL RESEARCH CORPORATION
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)


4.  Cash and Cash Equivalents

For the purpose of the statement of cash flows, cash equivalents include time
deposits, certificates of deposit and all highly-liquid debt instruments with
original maturities of three months or less.


5.  Fixed Assets

Fixed assets are stated at cost. Depreciation is computed using various methods
over the estimated useful lives of the assets: three years for transportation
equipment and five to ten years for office equipment and furnishings. Leasehold
improvements are amortized over the shorter of the economic lives or the
underlying lease term. Repairs and maintenance which do not extend the useful
lives of the related assets are expensed as incurred.


6.  Capitalized Market Research Products

The costs of producing the Company's Market Research Products are capitalized
and amortized using the straight-line method over five years or the estimated
remaining periods for which the products provide future economic benefits,
whichever is shorter.

Market Research Products are standardized packages and are comprised of certain
computer software and proven methodologies which are used to process and analyze
data for single-client or multi-client studies.

Capitalization of costs begins on establishment of technological feasibility and
the ongoing assessment of recoverability of capitalized costs; this requires
considerable judgment by management with respect to certain factors including
the anticipated future gross revenue, estimated economic life and changes in
technology. These factors are considered on a product-by-product basis. Total
amortization expense for Capitalized Market Research Products was approximately
$80,000 and $163,000 (which includes a write-down of $150,000 as discussed in
Note 11), for the years ended June 30, 1997 and 1996, respectively.

7.  Deferred Data Accumulation Costs

The Company accumulates data across a wide variety of products and industries
for use in its analysis of client-specific data. The costs of accumulating data
related to single-client studies are charged to client projects as incurred. The
costs of accumulating data for use in specific multi-client studies are
capitalized and amortized over five years or the estimated remaining periods for
which the data provides future economic benefits, whichever is shorter. The
assessment of recoverability of such costs requires considerable judgment by
management with respect to certain factors including anticipated future gross
revenue and estimated economic life. These factors are considered on a
database-by-database basis. Total amortization expense for deferred data
accumulation costs was approximately $80,000 and $730,000 (which includes a
write-down of $400,000 as discussed in Note 11), years ended June 30, 1997 and
1996, respectively.


                                      F-8
<PAGE>   34
                           TOTAL RESEARCH CORPORATION
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)


8.  Goodwill

Goodwill has been recorded in relation to the excess of the purchase price over
the fair values of the identified assets acquired. The Company amortizes
goodwill over twenty-five years. The carrying value of goodwill is evaluated
periodically in relation to the operating performance and future undiscounted
net cash flows of the underlying business. Adjustments are recorded if the sum
of expected future net cash flows is less than the book value of the goodwill.

9.  Stock Option Plan

The Company has elected to follow Accounting Principles Board Opinion No.25,
"Accounting for Stock issue to Employees," (APB 25) and related interpretations
in accounting for its employee stock options. Under this method, compensation
cost is measured as the amount by which the market price of the underlying stock
exceeds the exercise price of the stock option at the date which both the number
of options granted and the exercise price are known.

10.  Income Taxes

The provision for income taxes includes Federal, foreign, state and local income
taxes currently payable and receivable and those deferred because of temporary
differences between the financial statement and tax basis of assets and
liabilities. The unremitted earnings of the Company's foreign subsidiary are
considered to be permanently reinvested and are not expected to be remitted to
the parent company.

11.  Earnings Per Common Share

Earnings per common share are computed based on the weighted average number of
common shares and common share equivalents outstanding during each period.
Common share equivalents include the dilutive effect of certain stock options
under the treasury stock method. Fully diluted earnings per share have not been
separately presented for the year ended June 30, 1997 since they would not be
materially different.

For the year ended June 30, 1996, the Company experienced a loss per share. The
weighted average number of shares was not affected by stock options as they were
considered to be anti-dilutive due to the loss.


                                      F-9
<PAGE>   35
                           TOTAL RESEARCH CORPORATION
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)


12.  Foreign Operations

The assets and liabilities of TR-UK's operations are translated at current
exchange rates, and related translation adjustments are recorded as a separate
component of shareholders' equity. Income statement accounts are translated at
the weighted average rates during the period.

13.  Impairment of Long-Lived Assets

During the year ended June 30, 1996, the Company adopted SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of, which had no effect on its financial condition or results of
operations. The Company records impairment losses on long-lived assets used in
operations or expected to be disposed when events and circumstances indicate
that the assets might be impaired and the undiscounted cash flows estimated to
be generated by those assets are less than the carrying amounts of those assets.

14.  Presentation

Certain amounts for the year ended June 30, 1996 have been reclassified for
comparative purposes.

                                      F-10
<PAGE>   36
                           TOTAL RESEARCH CORPORATION
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

NOTE 3 - CONCENTRATION OF CASH BALANCE

At June 30, 1997, a cash balance of $848,000 was maintained in a bank account
insured by the Federal Deposit Insurance Corporation (FDIC). This balance
exceeds the insured amount of $100,000.


NOTE 4 - FIXED ASSETS

Fixed assets consist of the following:

<TABLE>
<CAPTION>
                                                         June 30,
                                                         --------
                                                 1997                1996
                                              ----------          ----------
<S>                                           <C>                 <C>
      Equipment                               $5,346,602          $4,645,145
      Leasehold Improvements                     304,584             276,071
                                              ----------          ----------
                                               5,651,186           4,921,216
      Less: accumulated depreciation
      and amortization                         3,334,556           2,691,011
                                              ----------          ----------
                                              $2,316,630          $2,230,205
                                              ==========          ==========
</TABLE>

Depreciation expense for the years ended June 30, 1997 and 1996 was
approximately $635,000 and $682,000, respectively.


NOTE 5 - NOTES PAYABLE

<TABLE>
<CAPTION>
                                                                                                   June 30,
                                                                                            1997              1996
                                                                                          --------          --------
<S>                                                                                       <C>               <C>
The Company has a revolving line of credit with an overall limitation of $2.5
million, not to exceed 60% of eligible receivables (including standby letters of
credit of $100,000). Borrowing under the line bear interest at a rate determined
by certain financial covenants. The line of credit expired on June 30, 1998.

The line of credit agreement includes financial covenants such as tangible net
worth, total liabilities to tangible net worth, debt service coverage ratio,
current ratio and quick ratio.                                                            $     --          $650,000

TR-UK has a bank overdraft facility of 300,000 with Coutts and Company, London,
England (approximately U.S. $498,000 and $467,000 at June 30, 1997 and 1996.)
The facility bears interest at a rate of 3 percent above the UK Base Rate. At
June 30, 1997 and 1996 the UK Base Rate was 6.5% and 6.75%.                                214,575           335,000
                                                                                          --------          --------
                                                                                          $214,575          $985,000
                                                                                          ========          ========
</TABLE>


                                      F-11
<PAGE>   37
                           TOTAL RESEARCH CORPORATION
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONT'D)


NOTE 6 - LONG-TERM DEBT

<TABLE>
<CAPTION>
                                                                                June 30,
                                                                                --------
                                                                         1997                 1996
                                                                         ----                 ----
<S>                                                                     <C>            <C>
A $3,000,000 term loan repaid in the year ending June 30, 1997          $  --          $ 2,750,000

Discount                                                                   --               (8,000)
                                                                        -----         -----------

Long-term debt, net of discount                                            --            2,742,000

Less:  current portion                                                     --              600,000
                                                                        -----         -----------

Long-term portion                                                       $  --          $ 2,142,000
                                                                                       ===========
</TABLE>

At June 30, 1997 the Company had a three year $500,000 term line collateralized
by equipment, furniture and fixtures. Interest is payable at various rates based
on certain financial ratios. At June 30, 1997, the Company has not borrowed
against this line.


                                      F-12
<PAGE>   38
                           TOTAL RESEARCH CORPORATION
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)


NOTE 7 - COMMITMENTS AND CONTINGENCIES

Operating leases

The Company is committed under various leases for office space. Approximate
future minimum rental payments under non-cancelable leases are as follows:

<TABLE>
<CAPTION>
                                                        For the Years Ending
                                                               June 30,
                                                        --------------------
<S>                                                     <C>
                        1998                              1,050,000
                        1999                                980,000
                        2000                              1,130,000
                        2001                              1,110,000
                        2002                              1,020,000
                        2003                              1,020,000
                        2004                              1,070,000
                        2005                              1,070,000
                        2006                              1,070,000
                                                         ----------
                        Total minimum payments
                        required                         $9,520,000
</TABLE>

In addition to the above minimum rentals, the leases are subject to escalation
clauses covering increases in real estate taxes and operating costs over the
base year. The leases provide for renewal options for periods from two to ten
years. Rental expense charged to operations was approximately $1,572,000 and
$1,030,000 for the fiscal years ended June 30, 1997 and 1996, respectively.

Employment agreements

The Company entered into employment agreements with key management personnel in
January 1997 that extend through June 30, 1999. The agreements contain
provisions for base salaries for the period July 1, 1997 to June 30, 1999 that
total $1,190,000. There is also a bonus arrangement for up to 20% of the base
salary if certain goals are met. If they exceed the goals by more than $20,000,
they will receive an additional 4% of the excess over the goal.

The Company has agreed to enter into a consulting agreement with a member of the
Board of Directors through June 30, 1999. The agreement contains provisions for
a base salary of $175,000 and $200,000 for the years ended June 30, 1998 and
1999. The consultant will receive a bonus based upon corporate financial goals.
If the goals are exceeded by more than $20,000, an additional 2% of the excess
will be received.


                                      F-13
<PAGE>   39
                           TOTAL RESEARCH CORPORATION
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)


NOTE 8 - INCOME TAXES

Deferred tax attributes resulting from differences between financial accounting
amounts and tax basis of assets and liabilities at June 30 are as follows:

<TABLE>
<CAPTION>
                                                            1997                1996
                                                         ---------           ---------
<S>                                                      <C>                 <C>
Current assets and liabilities
         Allowance for doubtful accounts                 $  44,000           $  44,000
         Accrued vacation                                   79,200             122,400
         Retirement plans                                   83,200              70,400
         Accrued royalties                                  39,100              39,078
         Accrued restructuring costs                        36,400             206,600
                                                         ---------           ---------

Net current deferred tax asset                           $ 281,900           $ 482,478
                                                         =========           =========


Non-current assets and liabilities
         Depreciation                                    ($214,320)          ($123,442)
         Deferred rental obligation                         62,000              14,113
         Capitalized market research products              178,800             251,136
         Goodwill                                           81,400              (3,200)
         State net operating loss carry forward            121,000             157,980
         Other                                                  --              (5,947)
                                                         ---------           ---------

Net non-current deferred tax asset                       $ 228,880           $ 290,640
                                                         =========           =========
</TABLE>


Based on the Company's history of prior operating earnings and its expectations
for the future, which include the Company's restructuring efforts to improve
performance, management has determined that the future operating income of the
Company will more likely than not be sufficient to recognize fully these net
deferred tax assets.

As of June 30,1997, the Company has available a New Jersey net operating loss
carry forward for tax purposes of approximately $2,000,000 that begins to expire
in 2003.

The source of income (loss) before income taxes for the year ended June 30 is as
follows:

<TABLE>
<CAPTION>
                                       1997                 1996
                                    ----------          -----------
<S>                                 <C>                 <C>
            United States           $  808,217          $(2,521,251)
            United Kingdom             319,933              195,844
                                    ----------          -----------
            Total                   $1,128,150          $(2,325,407)
                                    ==========          ===========
</TABLE>


                                      F-14
<PAGE>   40
                           TOTAL RESEARCH CORPORATION
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)



The components of the provision (benefit) for income taxes for the years ended
June 30 are as follows:

<TABLE>
<CAPTION>
                                                     June 30,
                                                     --------
                                              1997                1996
                                           ---------           ---------
<S>                                        <C>                 <C>
      Current expense (benefit):
           Federal                         $  99,600           $(850,000)
           State                                  --                  --
           United Kingdom                    128,340              77,195
                                           ---------           ---------
                                             227,940            (772,805)
      Deferred expense (benefit):            262,015             (69,558)
                                           ---------           ---------
                                           $ 489,955           $(842,363)
                                           =========           =========
</TABLE>

A reconciliation of the U.S. statutory tax rate to the effective tax rate for
the year ended June 30 is as follows:

<TABLE>
<CAPTION>
                                                             June 30,
                                                             --------
                                                      1997                1996
                                                   ---------           ---------
<S>                                                <C>                 <C>
      Computed (benefit) provision at the          $ 383,571
      statutory tax rate                                               $(790,638)

      Permanent differences                           42,904

      International rate differences                  17,118              15,667

      State income tax, net                           48,493            (151,275)

      Alternative minimum tax                        (40,000)             40,000

      Other                                           37,869              43,883
                                                   ---------           ---------
      Income tax (benefit) provision               $ 489,955           $(842,363)
                                                   =========           =========
</TABLE>

                                      F-15

<PAGE>   41
                           TOTAL RESEARCH CORPORATION
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)


NOTE 9 - EMPLOYEE BENEFIT AND DEFERRED COMPENSATION

The Company maintains a 401(k) Savings Plan for the benefit of all its
employees. The 401(k) Savings Plan is funded through the Company's and
participating employees' contributions and generally provides that employees may
contribute, through payroll reductions, from 1 percent to 15 percent of their
compensation. The Company made a matching contribution in an amount equal to 50
percent of each participating employee's contribution up to 3 percent of the
employee's compensation. Company contributions were approximately $213,000 and
$170,000, for fiscal years ended June 30, 1997 and 1996, respectively.

NOTE 10 - STOCK OPTION PLANS

The Company's 1986 Stock Option Plan has authorized the grant of options to
personnel for up to 1,800,000 shares of the Company's common stock. Under the
Plan, options may be granted at not less than fair market value on the date of
grant (85% of fair market value with respect to non-qualified options). Options
granted under the plan become exercisable immediately and expire five years
after the date of grant (five years and one day with respect to non-qualified
options). On April 16, 1996 the Company adopted the 1995 Stock Incentive Plan
and the 1995 Stock Incentive Plan for Total Research, Ltd. and froze the 1986
Stock Option Plan.

The 1995 Stock Incentive Plan has the authority to issue 1,750,000 options to
existing and future Officers, Directors, Employees and Consultants of the
Company. Incentive Stock Options or Non-Statutory Stock Options become
exercisable immediately and may be issued for a term of no more than five years
from the date of grant, at an option price not less than 100% of the fair market
value of the Company's common stock at the date of grant. In addition, any
non-employee director and/or advisory board director shall be automatically
granted an option to purchase 100,000 shares of common stock for each year that
such person serves as a director.

The 1995 Stock Incentive Plan for Total Research, Ltd. has the authority to
issue 245,000 options. This plan has similar terms and conditions to the 1995
Stock Incentive Plan.

Pro forma information regarding net income and earnings per share is required by
Statement 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of that Statement. The fair
value for these options was estimated at the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions for June 30, 1997 and 1996 respectively: risk-free interest rates of
6.50% and 6.88%; dividend yields of 0% and 0%; volatility factors of the
expected market price of the Company's common stock of .76 and .76; and a
weighted average expected life of the option of 5 years.

                                      F-16
<PAGE>   42
                           TOTAL RESEARCH CORPORATION
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)


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

For purposes of pro forma disclosures, the estimated fair value of the options
is recorded in expense in the year issued since most options vest when issued.
In accordance with provisions in certain employment and consulting agreements,
1,500,000 options were issued in the year ended June 30, 1997 that do not vest
until June 30, 1999 (the termination date of the agreements). Since we expect
these options to fully vest at that date, the compensation expense arising from
those stock options are recorded in the current year. The Company's pro forma
information follows:

<TABLE>
<CAPTION>
                                                         June 30,
                                                ----------------------------
                                                   1997            1996
                                                ------------    ------------
<S>                                             <C>             <C>
      Pro forma net income (loss)                     83,116      (1,640,911)
      Pro forma income(loss) per share                  0.01           (0.17)
</TABLE>

There was no compensation expense recorded from stock options for the years
ended June 30, 1997 and 1996.


A summary of the Company's stock option activity, and related information for
the years ended June 30, follows:

<TABLE>
<CAPTION>
                                                           1997                             1996
                                                 -------------------------        --------------------------
                                                              Weighted -                        Weighted -
                                               Options        Average            Options       Average
                                                 (000)      Exercise Price        (000)       Exercise Price
                                                 -----      --------------        -----       --------------
<S>                                              <C>             <C>              <C>             <C>
      Outstanding - beginning of year            1,411           $0.69            1,124           $0.57
          Granted                                1,696            0.82              352            1.12
          Exercised                               (162)          (0.44)             (41)          (0.67)
          Forfeited or Expired                    (258)          (0.87)             (24)          (1.06)
      Outstanding - end of year                  2,687           $0.77            1,411           $0.69
                                                ======           =====           ======           =====
      Exercisable - end of year                  1,187           $0.72            1,411           $0.69

      Weighted - average fair value of
      options granted during the year:

          Where exercise price equals
          stock price                            $0.55                            $0.75
</TABLE>

                                      F-17
<PAGE>   43
                           TOTAL RESEARCH CORPORATION
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)


Following is a summary of the status of stock options outstanding at June 30,
1997:

<TABLE>
<CAPTION>
                                           Outstanding Options                           Exercisable Options
                            ------------------------------------------------          --------------------------
                                             Weighted
                                             Average                Weighted                            Weighted
                                            Remaining               Average                             Average
      Exercise                             Contractual              Exercise                            Exercise
    Price Range             Number             Life                  Price            Number             Price
    -----------             ------         -----------              --------          ------            --------
<S>                      <C>               <C>                      <C>               <C>               <C>
$.00 - $.50                427,850          0.80 years               $0.43             427,850           $0.43

$.51 - $1.00             2,163,500          4.2 years                 0.81             663,500            0.80

$1.01 - $1.50               53,000          3.6 years                 1.23              53,000            1.23

$1.51 - $2.00               37,500          3.2 years                 1.77              37,500            1.77

$2.01 - $2.50                5,000          2.8 years                 2.13               5,000            2.13
</TABLE>


NOTE 11 - UNUSUAL CHARGES

During the fourth quarter of 1996, the Company announced a plan to restructure
and consolidate operations, concentrate resources, and better position itself to
achieve its strategic growth objectives. The plan resulted in a $1,101,500
pre-tax charge. The charge included a write-down of capitalized market research
products and deferred data accumulation costs of $550,000, severance costs of
$406,500 and charges to develop and implement a plan of $145,000.

                                      F-18
<PAGE>   44
                           TOTAL RESEARCH CORPORATION
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)


NOTE 12 - SEGMENT INFORMATION

The Company operates in one principal industry segment: market research
services. Geographic financial information for the year ended June 30 (in 000's)
is as follows:

<TABLE>
<CAPTION>
                                                                        June 30,
                                                                 1997               1996
                                                             --------           --------
<S>                                                          <C>                <C>
Revenue                        -          United States      $ 20,781           $ 18,210

                               -          Europe                8,662              6,236

                               -          Eliminations             --               (731)
                                                             --------           --------

                                          Totals             $ 29,443           $ 23,715
                                                             ========           ========

Operating Income (Loss)        -          United States      $    912           $ (2,320)

                               -          Europe                  368                250

                               -          Eliminations             --                 --
                                                             --------           --------

                                          Totals             $  1,280           $ (2,070)
                                                             ========           ========


Identifiable Assets            -          United States      $ 10,185           $ 11,231

                               -          Europe                5,111              3,790

                               -          Eliminations         (2,348)            (1,866)


                                          Totals             $ 12,948           $ 13,155
                                                             ========           ========
</TABLE>


                                      F-19
<PAGE>   45
                           TOTAL RESEARCH CORPORATION
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)



NOTE 13 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of the unaudited quarterly results of operations for
1997 and 1996 (in thousands, except for earnings per share):

<TABLE>
<CAPTION>
1997                        FIRST QTR.          SECOND QTR.         THIRD QTR.          FOURTH QTR.
----                        ---------           -----------         ----------          -----------
<S>                         <C>                 <C>                 <C>                 <C>
Revenue                     $6,561,501          $6,765,057          $7,470,957          $8,645,787

Gross Margin                $3,275,753          $3,407,130          $2,688,587          $5,130,200

Net Income                  $   21,957          $   78,350          $  219,833          $  318,055

Earnings per share          $      .00          $      .01          $      .02          $      .03
</TABLE>


<TABLE>
<CAPTION>
1996                        FIRST QTR.          SECOND QTR.         THIRD QTR.          FOURTH QTR.
----                        ----------          -----------         ----------          -----------
<S>                         <C>                 <C>                 <C>                 <C>
Revenue                     $5,305,127          $5,741,807          $6,262,864          $ 6,405,251

Gross Margin                $2,819,002          $2,574,202          $3,398,414          $ 3,922,185

Net Income                  $  175,098          $    6,903          $      945          $(1,665,990)

Earnings per share          $      .02          $      .00          $      .00          $      (.17)
</TABLE>

                                      F-20
<PAGE>   46
                           TOTAL RESEARCH CORPORATION
                                   SIGNATURES


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

Dated:  September 29, 1997          By: /s/ LORIN ZISSMAN
        ---------------------       -------------------------------------------
                                    LORIN ZISSMAN, Chief Executive Officer and
                                    Chairman of the Board of Directors


Dated:  September 29, 1997          By:  /s/ ERIC C. ZISSMAN
        ---------------------       -------------------------------------------
                                    ERIC C. ZISSMAN, Chief Financial Officer

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, this report has been signed on behalf of Total Research Corporation
and in the capacities and on the dates indicated.


Dated:  September 29, 1997          By: /s/ LORIN ZISSMAN
        ---------------------       -------------------------------------------

                                    LORIN ZISSMAN, Chief Executive Officer and
                                    Chairman of the Board of Directors


Dated:  September 29, 1997          By: /s/ AL ANGRISANI
        ---------------------       -------------------------------------------
                                    AL ANGRISANI, Director


Dated:  September 29, 1997          By: /s/ HUGH DEVINE
        ---------------------       -------------------------------------------
                                    HUGH DEVINE, Director


Dated:  September 29, 1997          By: /s/ WILLIAM N. LEVY
        ---------------------       -------------------------------------------
                                    WILLIAM N. LEVY, Esq., Director


Dated:  September 29, 1997          By: /s/ ANTHONY GALLI
        ---------------------       -------------------------------------------
                                    ANTHONY GALLI, Director


Dated:  September 29, 1997          By: /s/ J. EDWARD SHRAWDER
        ---------------------       -------------------------------------------
                                    J. EDWARD SHRAWDER, Director
<PAGE>   47
                           TOTAL RESEARCH CORPORATION
                                   SIGNATURES
                                  (CONTINUED)


Dated:  September 29, 1997          By: /s/ JOHN MORTON
        ---------------------       -------------------------------------------
                                    JOHN MORTON, Senior Vice President,
                                    Strategic Marketing Services


Dated:  September 29, 1997          By: /s/ DR. BASHIR DATOO
        ---------------------       -------------------------------------------
                                    DR. BASHIR DATOO, Senior Vice President,
                                    Strategic Marketing Services


Dated:  September 29, 1997          By: /s/ ROGER THOMAS
        ---------------------       -------------------------------------------
                                    ROGER THOMAS, Director, President, Strategic
                                    Marketing Services


Dated:  September 29, 1997          By: /s/ ERIC C. ZISSMAN
        ---------------------       -------------------------------------------
                                    ERIC C. ZISSMAN, Chief Financial Officer


Dated:  September 29, 1997          By: /s/ THERESA FLANAGAN
        ---------------------       -------------------------------------------
                                    THERESA FLANAGAN, President,
                                    Quality Management


Dated:  September 29, 1997          By: /s/ PATTI HOFFMAN
        ---------------------       -------------------------------------------
                                    PATTI HOFFMAN, President,
                                    U.S. Regional Offices


Dated:  September 29, 1997          By: /s/ MARK NISSENFELD
        ---------------------       -------------------------------------------
                                    MARK NISSENFELD, President,
                                    Global Health Care


Dated:  September 29, 1997          By: /s/ WILLIAM VAN ZANDT
        ---------------------       -------------------------------------------
                                    WILLIAM VAN ZANDT, Executive Vice President,
                                    Global Health Care


--------
(2) Mr. Devine retired as President of the Company in July, 1996.