SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1999 or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to ________________________
Commission file number 0-26548
Legal Research Center, Inc.
(Exact Name of Registrant as Specified in its Charter)
Minnesota 41-1680384
(State Or Other Jurisdiction (IRS Employer Identification No.)
Of Incorporation)
700 Midland Square Building, 331 Second Avenue So., Minneapolis, MN 55401
(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: 612/332-4950
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 [_]
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
3,369,113 shares of Common Stock as of June 30, 1999
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements:
Consolidated Balance Sheets
June 30, 1999 and December 31, 1998 ...................................2
Consolidated Statements of Operations
Six Months Ended June 30, 1999 and 1998 ...............................3
Consolidated Statements of Stockholders' Equity ..........................4
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1999 and 1998 ...............................5
Notes to Consolidated Financial Statements ...............................6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ............................................6
PART II. OTHER INFORMATION
Item 1. Legal Proceedings .....................................................8
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
================================================================================================
ITEM 1. FINANCIAL STATEMENTS
LEGAL RESEARCH CENTER, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
ASSETS 1999 1998
================================================================================================
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalent $ 848,705 $ 436,110
Accounts receivable 545,484 457,723
Note receivable 30,909 30,909
Other 49,632 33,121
----------- -----------
TOTAL CURRENT ASSETS 1,474,730 957,863
----------- -----------
FURNITURE AND EQUIPMENT 339,576 342,067
Less accumulated depreciation 314,418 (298,340)
----------- -----------
25,158 43,727
----------- -----------
OTHER ASSETS
Notes receivable, net allowance for
doubtful accounts 50,050 50,050
Intangible assets 180,946 232,645
----------- -----------
230,996 282,695
----------- -----------
$ 1,730,884 $ 1,284,285
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
================================================================================================
CURRENT LIABILITIES
Accounts payable $ 38,265 $ 44,235
Accrued expenses:
Compensation 131,763 80,990
Other 4,525 3,155
Client Advances 85,090 17,477
----------- -----------
TOTAL CURRENT LIABILITIES 259,643 145,857
----------- -----------
NOTES PAYABLE $ 200,000 $ 200,000
----------- -----------
STOCKHOLDER'S EQUITY
Common stock, $0.01 par value; (authorized 20,000,000 shares;
issued - 3,369,113 and 3,327,633 shares respectively) 33,691 33,276
Additional paid-in capital 6,879,322 6,870,007
Accumulated deficit (3,675,522) (3,998,605)
Notes receivable from officers and directors (1,966,250) (1,996,250)
----------- -----------
1,271,241 938,428
----------- -----------
$ 1,730,884 $ 1,284,285
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements (unaudited)
<PAGE>
LEGAL RESEARCH CENTER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------------------ -------------------------------
1999 1998 1999 1998
------------------------------ -------------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
REVENUES $ 1,107,593 $ 448,144 $ 1,927,264 $ 894,553
DIRECT OPERATING COSTS
Compensation and benefits 400,122 155,997 707,817 310,596
Other 77,861 46,421 163,137 107,705
----------- ----------- ----------- -----------
Total direct operating costs 477,983 202,418 870,954 418,301
----------- ----------- ----------- -----------
GROSS PROFIT 629,610 245,726 1,056,310 476,252
----------- ----------- ----------- -----------
OTHER OPERATING COSTS
Sales and marketing 209,354 206,988 391,409 479,342
General and administrative 178,919 103,926 345,689 168,453
----------- ----------- ----------- -----------
Total other operating costs 388,273 310,914 737,098 647,795
----------- ----------- ----------- -----------
PROFIT/LOSS FROM OPERATIONS 241,337 (65,188) 319,212 (171,543)
OTHER INCOME (EXPENSE)
Interest Income 7,707 2,291 13,787 4,295
Interest Expense (4,986) (2,500) (9,918) (2,628)
----------- ----------- ----------- -----------
NET PROFIT/LOSS FROM CONTINUING OPERATIONS $ 244,058 $ (65,397) $ 323,081 $ (169,875)
=========== =========== =========== ===========
NET GAIN/ LOSS PER COMMON SHARE $ 0.10 $ (0.03) $ 0.14 $ (0.07)
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 2,329,113 2,287,633 2,329,113 2,287,633
=========== =========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements (unaudited)
<PAGE>
LEGAL RESEARCH CENTER, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Additional
-------------------------- Paid-in Accumulated Notes
Shares Amount Capital Deficit Receivable Total
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE DECEMBER 31, 1996 3,297,633 32,976 6,765,307 (1,988,841) (1,966,250) 2,843,192
Expiration on repurchase option
on common stock 30,000 300 104,700 -- -- 105,000
Net Loss -- -- -- (2,065,004) -- (2,065,004)
----------- ----------- ----------- ----------- ----------- -----------
BALANCE DECEMBER 31, 1997 3,327,633 33,276 6,870,007 (4,053,845) (1,966,250) 883,188
Net Loss -- -- -- 55,240 -- 55,240
-----------
BALANCE DECEMBER 31, 1998 3,327,633 $ 33,276 $ 6,870,007 $(3,998,605) (1,966,250) $ 938,428
----------- ----------- ----------- ----------- ----------- -----------
Net Income $ 323,081 $ 323,081
Exercised Stock Options 41,480 $ 415 $ 9,315 $ 9,730
BALANCE, JUNE 30, 1999 3,369,113 33,691 6,879,322 $(3,675,523) (1,966,250) $ 1,271,240
</TABLE>
See Notes to Consolidated Financial Statements (unaudited)
<PAGE>
LEGAL RESEARCH CENTER, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
Six Months Ended
June 30
----------------------
1999 1998
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net profit (loss) $ 323,083 $(104,478)
Adjustments to reconcile net profit (loss) to net
cash used by operating activities:
Depreciation 19,069 23,027
Amortization and write-off of intangible assets and
capitalized development costs 51,699 3,431
(Gain) loss on disposal of furniture and equipment (500) (50)
Change in assets and liabilities
Trade accounts receivable and unbilled services (87,761) (82,819)
Other current assets (16,511) (25,001)
Accounts payable (5,970) 97,362
Accrued expenses 52,143 11,070
Client advances 67,613 15,770
--------- ---------
Net cash provided (used) in operating activities 402,865 (61,688)
--------- ---------
INVESTING ACTIVITIES
Proceeds from the sale of furniture and equipment 500 50
Capitalized development costs
Cash received on notes receivable 15,000
--------- ---------
Net cash provided (used) by investing activities 15,050
--------- ---------
FINANCING ACTIVITIES
Common Stock 415
Proceeds from exercise of stock options 9,315
--------- ---------
Increase (Decrease) in cash and cash equivalents 412,595 (46,638)
--------- ---------
Cash and cash equivalents
Beginning of period 436,110 165,924
--------- ---------
End of period $ 848,705 $ 119,286
========= =========
</TABLE>
<PAGE>
LEGAL RESEARCH CENTER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(unaudited)
BASIS OF PRESENTATION: The interim financial statements are unaudited, but in
the opinion of management reflect all adjustments necessary for a fair
presentation of results of such periods. All such adjustments are of a normal
recurring nature. The results of operations for any interim period are not
necessarily indicative of results for a full fiscal year. These financial
statements should be read in conjunction with the audited financial statements
and notes thereto, for the year ended December 31, 1998.
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiary, The Law Office, Inc.
(TLO) and its eighty-five percent owned subsidiary, The CyberLaw Office, Inc.
(CLO). All significant inter company accounts and transactions have been
eliminated.
USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
NET GAIN (LOSS) PER COMMON SHARE: Net gain (loss) per common share is computed
on the basis of the weighted average number of common shares outstanding during
the respective periods.
MAJOR CUSTOMERS: Two customers accounted for 57%, and 10% respectively, of the
Company's total revenues for the quarter ended June 30, 1999. One of these
customers accounted for 26% of the Company's total revenues for the quarter
ended June 30, 1998.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis provides information that the Company's
management believes is relevant to an assessment and understanding of the
Company's results of operations and financial condition. This discussion should
be read in conjunction with the financial statements and footnotes which appear
elsewhere in this Report and the Company's annual report for 1998 on Form
10-KSB.
In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company cautions readers that statements
contained herein, other than historical data, may be forward-looking and subject
to risk and uncertainties including, but not limited to the continuation of
revenues through the Company's strategic alliances and the successful
development of other new business. The following important factors could cause
the Company's actual results to differ materially from those projected in
forward-looking statements made by or on behalf of, the Company:
o Failure of the Company or its partners to successfully expand its
market share and sell products and services.
o Company's inability to produce and deliver its products and services
at margins sufficient to cover operating costs.
o Company's inability to continue operating due to insufficient cash or
capital and losses.
o Company's dependence on a major customer or customers.
In addition, as a result of the delisting of the Company's common stock from the
Nasdaq SmallCap Market, described below, investors may suffer a loss of
liquidity in the shares and the Company may have difficulty raising funds in the
<PAGE>
capital markets. Although the Company anticipates that its common stock will
trade on the Nasdaq "bulletin board" or in the local over-the-counter market,
there can be no assurance that such a market will develop or be maintained.
The Company's revenues have historically been derived from conducting analytical
research and writing on a non-recurring basis for its customers. Historically,
the Company has experienced a seasonal fluctuation in revenues with second and
third quarters being the slowest quarters of the year and the last quarter being
the strongest. The Company has developed and implemented programs designed to
attract customers to enter into long term relationships to provide greater
consistency in quarterly revenues.
RESULTS OF OPERATIONS
Revenues: Revenues increased by $659,449 or 147.2%, to $1,107,593 for the three
month period ended June 30, 1999, over the same period of 1998. For the six
month period, revenues increased by $1,032,711 or 115.4%. The increase is
primarily attributable to an increase in traditional research and writing
services and document retrieval revenues offset by a decrease in
multi-jurisdictional survey revenue.
Direct Operating Costs: Direct operating costs for compensation and other
benefits include hourly contract fees for independent research attorneys as well
as salaries and hourly compensation of staff research attorneys, document
production and support personnel. Other direct operating costs include outside
research fees and services, royalty fees for association referrals, computer
database charges, project data conversion fees, photocopying, and document
retrieval expense.
Total direct operating costs increased $275,565, or 136.1%, for the three months
ended June 30, 1999, from the same period in 1998. For the six month period,
direct operating costs increased $452,653 or 108.2%. The increase in operating
costs is due to the increase in revenue.
Direct operating costs, expressed as a percentage of revenues decreased 2% from
45.2% to 43.2% for the three months ended June 30, 1999, from the same period in
1998. For the six month period, direct operating costs as a percentage of
revenue decreased from 46.8% to 45.2%.
Gross Profit: Gross profit for the three months ended June 30, 1999, increased
by $383,884 or 156.2% to $629,610 from gross profits of $245,726 for the
comparable period for 1998. As a percentage of revenue, gross profit increased
from 54.8% to 56.8% for the three months ended June 30, 1999, from the same
period in 1998, primarily as a result of the continued control of direct
operating costs.
For the six months ended June 30, 1998, gross profit increased by $580.058 or
121.8% from the comparable 1998 period. As a percentage of revenue, gross profit
increased from 53.2% to 54.8% for the six months ended June 30, 1999 from the
same period in 1998.
Other Operating Costs: Other operating costs include compensation of officers,
sales and corporate staff, advertising and direct marketing expenditures and
general corporate overhead, including depreciation. Other operating costs
increased by $77,359 or 24.9% for the three months ended June 30, 1999, from the
same period in 1998. Of these other operating costs, sales and marketing
expenses increased by $2,366, or 1.1% and general and administrative costs
increased by $74,993 or 72.24%. The change in Sales and Marketing costs and
General and Administrative costs is due to a reclassification of expenses.
Other Income and Expense: Interest income increased $5,416 for the three months
ended June 30, 1999, from the comparable period in 1998. The increase is a
result of increased cash invested in interest bearing accounts. Interest expense
increased $2,486 for the three months ended June 30, 1999 from the comparable
periods in 1998. The increase is a result of interest expense on convertible
notes received in 1998.
<PAGE>
Net Profit/Loss: The Company posted a net profit of $244,058 or $.10 per share
for the three months ended June 30, 1999, compared to a loss of $65,397 or $.03
per share for the comparable period in 1998. The increase in the revenue per
share was the result of an 147.2% increase in revenues offset by a 136.1%
increase in direct operating costs, and a 24.9% increase in general and
administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
On June 30, 1999, the Company had cash and cash equivalents of $848,705 and
working capital of $1,215,087.
Cash generated in operating activities was $402,865 in the six months ended June
30, 1999. This was primarily the result of a $393,851 net gain before
depreciation and other non-cash charges, an $87,761 increase in accounts
receivable and unbilled services, and a $67,613 increase in client advances.
There were no investing activities in second quarter 1999.
The Company received $9,315 in financing activities due to the proceeds from the
exercise of stock options.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
LAWFINDERS LITIGATION
On June 29, 1998, the Company was sued in Dallas, Texas by Lawfinders, Inc.
("Lawfinders"), a competitor of the Company, which alleged that the Company had
misappropriated Lawfinders's proprietary information. Lawfinders sought
injuctive relief and unspecified damages
Commencing in the summer of 1997 and ending in early 1998, the Company was
engaged in discussions with Lawfinders about a possible business combination.
Those discussions failed to produce an agreement between the parties.
Lawfinders commenced suit in state court and obtained a temporary restraining
order restraining the Company from engaging in certain practices in connection
with its appellate brief business. The Company removed the action to federal
court and, on November 4, 1998, after consideration of the evidence and the
parties' briefs, the federal court dissolved the temporary restraining order and
because it found that is unlikely that Lawfinders would be successful on the
merits of its action, denied Lawfinders a preliminary injunction.
The Company believes that it will prevail in the litigation, should it continue.
The Company's costs of defending the action, including attorneys' fees, have
been covered by the Company's general liability insurance carrier and the
Company believes that all future costs of defending the litigation, if any, will
be similarly covered.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
LEGAL RESEARCH CENTER, INC.
Dated: August 4, 1999 BY: /S/ CHRISTOPHER R. LJUNGKULL
-----------------------------
Christopher R. Ljungkull
Chief Executive Officer
<PAGE>
Legal Research Center, Inc. Contacts: Christopher Ljungkull,
700 Midland Square Building CEO, 612 / 332-4950
331 Second Avenue South
Minneapolis, MN 55401
LEGAL RESEARCH CENTER REPORTS
SECOND QUARTER RESULTS
Minneapolis, MN - Legal Research Center, Inc. (OTC:LRCI) announced revenues
of $448,144 for its second quarter ended June 30, 1998, a decrease of 22.9
percent from the same period in 1997. The company posted a net loss of $65,397
or 3 cents a share, compared to a net loss of $1,040,275 or 46 cents a share,
over the same period in 1997.
The 93% decrease in the loss per share was the result of a 39% decrease in
direct operating costs, a 37% decrease in general and administrative expenses
through the continued downsizing of the Company's infrastructure, and
discontinuation of operations of The Law Office. The decrease in total revenue
is primarily attributable to a decrease in research and writing revenue in
second quarter and the elimination of on-site library services in second quarter
1997.
Christopher Ljungkull, chief executive officer of Legal Research Center,
commented, "LRC is now virtually cashflow break-even and should show positive
cashflow as revenues begin to rise during the next quarters. Even though we had
a decrease in revenue this quarter, we believe that is the temporary result of a
diminished sales force. The current sales force contributes 25% more revenue per
person. All in all, we achieved roughly the same gross margin on 23% less
revenue and, of course, a tremendously improved bottom line, reducing our loss
per share to 3 cents, most of which is non-cash depreciation and amortization."
Legal Research Center (http://www.lrci.com), offers legal research and
writing services to attorneys in corporate and private practice throughout the
world. LRC has repeatedly been recognized as the leading supplier of legal
research services in the United States. In 1989, and each year thereafter, the
Association of Trial Lawyers of America (ATLA) selected LRC as the exclusive
provider of research and writing services to its 60,000 members. From 1990
through 1995, the American Corporate Counsel Association partnered with LRC as
the exclusive provider of research and writing services to its 10,000 members,
honoring LRC in 1996, 1997 and 1998 with ACCA's Prestigious President's Award.
In 1994 and following years, West Publishing (now West Group) selected LRC on an
exclusive basis to provide analytical research and writing services to West
customers.
Statements contained here, other than historical data, may be forward-looking
and subject to risks and uncertainties including, but not limited to the
continuation of revenues through the company's strategic alliances and the
successful development of other new business, as well as those set forth in the
company's 10-KSB, 10-QSB and other SEC filings.
<PAGE>
LEGAL RESEARCH CENTER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
-------------------------- --------------------------
<S> <C> <C> <C> <C>
Revenues $ 448,144 $ 580,977 $ 894,553 $ 1,113,512
Operating (loss) income (65,188) (242,461) (169,543) (486,611)
Net loss $ (65,397) $(1,040,275) $ (169,875) $(1,487,173)
Net loss per share $ (0.03) $ (0.46) $ (0.08) $ (0.66)
Weighted average common and common
equivalent shares outstanding 2,257,633 2,257,633 2,257,633 2,257,633
</TABLE>
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
1998 1997
---------- ------------
Current assets $ 638,799 $ 546,467
Furniture & equipment, net 71,348 116,615
Other assets 320,302 374,583
Total assets $1,030,449 $1,037,665
Current liabilities $ 317,136 $ 154,477
Long-term liabilities -- --
Stockholders' equity 713,313 883,188
Total liabilities and shareholders' equity $1,030,449 $1,037,665
<PAGE>
NEWS RELEASE
Media Contacts: Christopher Ljungkull, CEO Daryn Teague
Legal Research Center Teague Communications
(800) 776-9377 (661) 297-5292
[email protected] [email protected]
Legal Research Center Strengthens
Account Management Team with New Hire
Minneapolis - 7 June 99 - In another move to support the growth of their core
business, Minneapolis-based Legal Research Center (LRC) has appointed Aaron A.
Rose to the position of account manager at the company.
LRC is in the business of providing legal research and writing services on
an outsourced basis to attorneys in corporate and private practice. In the newly
created position, Rose will be responsible for promoting LRC's services small
and mid-sized law firms, as well as corporate law departments. He will focus on
the growth of LRC's existing customer base and the development of new accounts.
"We are delighted to have Aaron join our sales team," said James Seidl,
president of LRC. "His blend of sales, marketing, finance and legal experience
provides a unique skill set that will be extremely valuable to us as we continue
to grow LRC's core business."
Rose comes to LRC after serving as sales director for The Law Registry, a
company in the temporary legal staffing business and a subsidiary of Kelly
Services, Inc. Prior to that, he was a marketing manager for Amicus Legal
Management, a legal software developer in Brooklyn Park, Minn.
Rose graduated cum laude from William Mitchell College of Law in St. Paul,
Minn., and earned his bachelor of business administration degree from the
University of Iowa.
"LRC is renown in the legal industry as the best-in-class provider of legal
research services," said Rose. "The company's obsession with quality and
customer service are what attracted me. I believe LRC is poised for explosive
growth and I look forward to contributing to its continuing success in the
marketplace."
<PAGE>
Founded in 1978, Legal Research Center was one of the first companies in
the world to offer legal research and writing services to attorneys in corporate
and private practice. LRC's work products include electronic knowledgebases and
multijurisdictional surveys, office memoranda, and formal court-ready documents
such as trial and appellate briefs. A staff of highly credentialed attorneys --
honor graduates who are carefully selected for their research, analytical,
writing and client-service skills -- prepares all of LRC's legal research
products.
LRC (OTC:LRCI) is headquartered at 331 Second Avenue South, Minneapolis,
Minn. 55401; (800) 776-9377. The company's Web site address is
http://www.lrci.com.
<PAGE>
NEWS RELEASE
Media Contacts: Christopher Ljungkull, Ceo Daryn Teague
Legal Research Center Teague Communications
(800) 776-9377 (805) 297-5292
[email protected] [email protected]
Legal Research Center Introduces
Appellate Brief Service with 100%
Money-back Guarantee
MINNEAPOLIS - 6 APRIL 99 - Rejecting the notion that nothing in law is
guaranteed, Minneapolis-based Legal Research Center (LRC) today announced the
introduction of an appellate brief service that comes with a 100% money-back
guarantee that the lawyer using the service will win their case.
With LRC's Guaranteed Appellate Brief Service, the lawyer preparing an
appeal simply provides one of LRC's appellate specialists with the relevant
facts needed to understand the case. LRC then performs a no-cost evaluation and
presents a fixed-price estimate to prepare the appellate brief.
Cases qualify for the guarantee as long as the merits of the appeal are
compelling, the success probabilities are sufficiently high, and the preliminary
research is sufficiently supportive.
"If we accept the case under LRC's guarantee plan, we assure that our
client will have a winning result or refund every cent of their cost for the
brief," said Christopher Ljungkull, chief executive officer of LRC. "With this
bold offer, we are literally eliminating the investment risk for any lawyer who
retains our company to prepare their appellate brief by guaranteeing both the
quality and result of our work."
LRC is willing to assume this risk because its brief writers are highly
experienced attorneys who are nationally renown for their research, writing and
appellate advocacy skills. Additionally, the company has a 21-year track record
of preparing winning appellate briefs for lawyers in private and corporate
practice across the country.
<PAGE>
"The very idea of offering a 100% money-back guarantee that our client will
win their case will undoubtedly surprise many," said Ljungkull. "What it
illustrates, however, is the extraordinary confidence we have in our company's
ability to evaluate a case effectively and deliver winning results."
Ljungkull pointed out that LRC would also work for lawyers on those cases
that do not qualify for LRC's guarantee, typically on a fixed-fee or hourly
basis, and will make arrangements for special financing on certain types of
appeals.
Founded in 1978, Legal Research Center was one of the first companies in
the world to offer legal research and writing services to attorneys in corporate
and private practice. LRC's work products include electronic knowledgebases and
multijurisdictional surveys, office memoranda, and formal court-ready documents
such as trial and appellate briefs. A staff of highly credentialed attorneys --
honor graduates who are carefully selected for their research, analytical,
writing and client-service skills -- prepares all of LRC's legal research
products.
LRC differs from some of its competitors in how the company views issues of
conflict of interest, confidentiality and client interaction. LRC approaches
conflicts exactly as a law firm would, with every matter referred for research
being reviewed for internal conflicts and the assigned researcher being
thoroughly screened to assure that no professional conflict exists. Moreover, to
ensure the highest level of quality on each assignment, the assigned researcher
is personally introduced to the lawyer ordering the research and works
face-to-face with that client throughout the entire research process.
LRC (OTC:LRCI) is headquartered at 331 Second Avenue South, Minneapolis,
Minn. 55401; (800) 776-9377. The company's Web site address is
http://www.lrci.com.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM QUARTER
ENDED AND SIX MONTHS ENDED JUNE 30, 1999 FINANCIAL STATEMENTS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 848,705
<SECURITIES> 0
<RECEIVABLES> 576,393
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,474,730
<PP&E> 339,576
<DEPRECIATION> 314,418
<TOTAL-ASSETS> 1,730,884
<CURRENT-LIABILITIES> 259,643
<BONDS> 0
0
0
<COMMON> 33,691
<OTHER-SE> 1,237,550
<TOTAL-LIABILITY-AND-EQUITY> 1,730,884
<SALES> 0
<TOTAL-REVENUES> 1,107,593
<CGS> 0
<TOTAL-COSTS> 477,983
<OTHER-EXPENSES> 388,272
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,986
<INCOME-PRETAX> 244,058
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 244,058
<EPS-BASIC> .10
<EPS-DILUTED> .10
</TABLE>
