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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

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

                    For the fiscal year ended March 31, 2003

             [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
             For the transition period from __________ to __________

                         Commission File Number 1-13524

                                 TIMELINE, INC.
        (Exact name of small business issuer as specified in its charter)


           Washington                                     91-1590734
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

                        3055 112th Avenue N.E., Ste. 106
                               Bellevue, WA 98004
                    (Address of principal executive offices)
                                 (425) 822-3140
                           (Issuer's telephone number)

         Securities registered under Section 12(b) of the Exchange Act:
                          Common Stock,$.01 par value

     Securities registered under Section 12(g) of the Exchange Act: (none)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]

The issuer's revenues for its most recent fiscal year were: $4,328,275.

As of May 31, 2003, 4,178,498 shares of the Registrant's common stock were
outstanding and the aggregate market value of such common stock held by
nonaffiliates was approximately $3,788,501 based on the average of the bid
($1.15) and ask ($1.30) prices on May 30, 2003 of $1.225.

                       DOCUMENTS INCORPORATED BY REFERENCE

The Company's definitive proxy statement for its 2003 annual meeting of
shareholders (the "Proxy Statement"), which will be filed with the Securities
and Exchange Commission within 120 days after the close of the fiscal year 2003,
is incorporated by reference in Part III hereof.

Transitional Small Business Disclosure Format (Check One):  Yes         No  X
                                                                ---        ---
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                                EXPLANATORY NOTE

     Unless otherwise indicated or the context otherwise requires, all
references in this Annual Report on Form 10-KSB to "we," "us," and the "Company"
are to Timeline, Inc., a Washington corporation, and its wholly-owned
subsidiaries, including WorkWise Software, Inc. and Analyst Financials Limited.

             CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS

     This Annual Report on Form 10-KSB includes a number of forward-looking
statements that reflect our current views with respect to our business,
strategies, products, future events and financial performance. These
forward-looking statements are subject to certain risks and uncertainties,
including those discussed below, that could cause actual results to differ
materially from historical results or those anticipated. All statements other
than statements of historical fact, including future results of operations or
financial position, made in this Annual Report on Form 10-KSB are forward
looking. In particular, the words "predict," "anticipate," "believe," "intend,"
"may," "will," "expect," "would," "could," and similar expressions as they
relate to the Company are intended to identify such forward-looking statements,
but are not the exclusive means of identifying such statements. The Company's
actual results, performance or achievements could differ materially from the
results expressed in, or implied by, these forward-looking statements. We do not
undertake any obligation to revise these forward-looking statements to reflect
any future events or circumstances. In addition, the disclosures under the
caption "Other Factors that May Affect Operating Results," consist principally
of a brief discussion of risks which may affect future results and are thus, in
their entirety, forward-looking in nature. To facilitate readers in identifying
forward-looking statements in the other sections of this document, we have
attempted to mark sentences containing such statements with a single asterisk
and paragraphs containing only forward looking statements with double asterisks.
However, no assurance can be made all such statements have been identified and
marked. Therefore, readers are urged to carefully review and consider the
various disclosures made in this report and in the Company's other reports
previously filed with the Securities and Exchange Commission (the "SEC"),
including periodic reports on Forms 10-KSB and 10-QSB, and those described from
time to time in our press releases and other communications, which attempt to
advise interested parties of the risks and factors that may affect our business.


                                     PART I

ITEM 1:  DESCRIPTION OF BUSINESS

Our Business

     Our business consists of two separate activities. To date, the most
important has been the development, licensing, maintenance, and consulting with
respect to the implementation and use of our propriety software applications.
Since 1998 we have also been actively pursuing licensing of our patent portfolio
to other software manufacturers and users.

     Software: We develop, market and support company-wide financial reporting,
budgeting and management software, and event-based notification, application
integration, and process automation software applications that streamline key
business activities for workplace efficiency. Our software products enable
customers to access automatically and distribute business and accounting
information in a secure environment and with full accounting controls, integrate
software programs developed at different times, and automate notification
messages pertaining to specific events and business processes. Our marketing and
development strategy is focused on products that report financial data in
meaningful and flexible formats, and on systems for notification of critical
information, integration of applications and transaction automation. Our
reporting products allow our customers to gather and distribute business
information throughout their companies while maintaining maximum flexibility in
determining the types of transaction processing systems they will use. We allow
the end-user to receive information through a web browser, distributed
Microsoft(R) Excel workbooks, data marts or actual reports delivered via e-mail.
In addition, our


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WorkWise products allow customers to monitor databases automatically,
consolidate data entry, automate tasks and communicate with the appropriate
people.

     Many financial and management reporting products are focused on the
presentation, either electronically or on paper, of processed data in formatted
reports. While our reporting products can present information in formatted
reports, our technology can also distribute an actual database of information (a
"data mart") to an end-user's computer. These databases or data marts are built
through selective criteria that limit the data mart to relevant data for each
particular end-user. This design is intended to allow for the distribution of
manageable packets of data over networks or the Internet while maintaining
corporate security. Each database can be arranged in a unique "view," or
"orientation," as desired by the end-user. The end-user may then view the data
in a standard corporate report format or through a personal library of
customized report formats. Additionally, the data resides in Microsoft(R)
Office, which makes it automatically available for use in Microsoft Excel
spreadsheets and all other Microsoft Office tools.

     We believe that our proprietary technology allows customers to avoid
time-consuming, error-prone and expensive data entry, and improve business
communications and processes. Our products allow customers to avoid data entry
by facilitating an efficient exchange of information between the desktop
computer and the underlying hardware platform and enterprise resource planning
(ERP) systems. Our specialty is working with the accounting functions embodied
in both new and old ERP or accounting systems.

     Many customers' systems are "client/server" systems that store information
on a server that in turn makes the information available to a desktop computer
(the "client"). Our products facilitate an efficient exchange of information
between the client and server. Other businesses have elected to retain or
upgrade centralized server-based systems. Our business strategy is focused on
meeting the financial management needs of customers with both types of
accounting and ERP systems by providing products that accept and report on data
from both centralized or client/server systems.

     Our Timeline(R) Analyst and Timeline(R) Data Server (formerly Timeline
Server) product lines are designed to gather data from multiple operating
systems and hardware platforms, old and new, for translation into a Microsoft
environment. Our WorkWise(R) Business Alerts(R) product automates and
synchronizes notification messages pertaining to specific events and business
processes. Our WorkWise(R) Data Agent Server integrates software programs
developed at different times by different people using different database
structures. Our products enable our customers to:

     o    perform financial reporting and management functions;
     o    connect to multiple types of operating systems;
     o    efficiently distribute data to desktop computers;
     o    perform consolidations;
     o    perform budgeting functions;
     o    coordinate the update of business records in multiple modules through
          a single transaction entry; and
     o    automate the notification of responsible parties of events monitored
          by the WorkWise engine.

     The flexibility of our Timeline and WorkWise products makes it possible for
our customers to deliver data for reporting, analysis and record update or
monitoring throughout their business enterprise without purchasing a new,
expensive computer system.

     In addition to providing an infrastructure to deliver data, Timeline
products provide a number of processes to enhance or augment sophisticated
financial reporting. These include budgeting, consolidations, foreign currency
conversion and security.

     We believe that our products can improve the transaction processing
systems, particularly accounting and reporting software, of other software
vendors.* Our products are designed to enhance


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existing software by adding functions and flexibility that the software may not
have. As a result, our products can overcome weaknesses or competitive
disadvantages in other transaction-based software. Our preferred method of
product distribution is through transaction-based software vendors that bundle
our products or distribute our products in conjunction with their systems. We
believe that a majority of our software license fee revenue in fiscal year 2004
will be generated by licensing and distribution agreements with these
third-party vendors.*

     Patent Licensing: As discussed in Our Technology below, Timeline holds a
number of patents that arose from our work using data marts as a means to
provide our software products. We have been granted four patents by the U.S.
Patent and Trademark Office on our technology and have a total of 81 issued
claims. We have also been granted patents in Australia, Israel, Singapore, and
Mexico. We have a number of pending patent applications, and believe additional
U.S. and international patents may be granted during fiscal 2004.* These patents
are on inventions that have broad application, not only in financial reporting,
but in many other areas of data warehousing and data mart creation, use,
enhancement, and publishing. We determined the broad application of this
technology would allow for licensing of the patents to a wider community. These
efforts have generated substantial, although sporadic, revenue. We believe that
there remain many organizations that would benefit from a license to this
technology and are actively marketing patent licenses as a distinct line of
business.

Our Technology

     Our Timeline Analyst software product family, including Timeline Data
Server, works with a customer's entire computing infrastructure to create a
reporting engine that can accept and organize data, with full accounting
controls, from both new and old accounting systems. Our proprietary
architecture, in conjunction with our proprietary generation engine, is designed
to accomplish this task. The compatibility of our software with older legacy
accounting systems allows a customer to preserve existing computer hardware and
software systems or transition to a client/server environment while providing
enhanced reporting capabilities. If a customer is already using client/server
systems, our technology provides distributed packets of data that enhance the
productivity of reporting, budgeting and analysis professionals throughout the
enterprise. Our products use patent-protected driver technology that not only
automates the transfer of data from accounting and information systems into
desktop databases, but can automate rebuilding databases to reflect changes in
the underlying accounting information. This eliminates the costly process of
maintaining databases in both our software and the underlying accounting system.

     The following is a brief discussion of our three primary proprietary
technologies:

     o    Timeline Architecture. Our architecture contains a multi-dimensional
          data segmentation capacity that exceeds the capacity of all accounting
          data structures known to us. This capacity enables our reporting
          products to accept data from multiple transaction processing systems
          concurrently, to combine data into a single database and to add
          reporting relationships not present in the source system(s). For
          example, we can (a) take data from a customer's general ledger, human
          resources/payroll, sales and order processing systems, (b) combine all
          of the data in one database, and (c) allow the customer to use the
          combined data for payroll and sales analysis.

     o    Generation Engine. Our generation engine enables our products to
          automate the building of Microsoft-compatible databases. Prior
          technologies required substantial human intervention to manually build
          tables, input forms and manipulate other attributes of the data. The
          generation engine allows a customer to build a wide range of databases
          for distribution throughout the business enterprise.

     o    Interface Technology. Our interface technology allows our products to
          (a) discern the structure of existing transaction-based systems, (b)
          extract data from one or more


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          transaction processing systems, and (c) feed data to the generation
          engine. Our product is tied directly to the underlying accounting
          systems and changes made in these underlying systems (such as adding a
          new accounting relationship for a newly purchased company) are
          automatically reflected in our data marts. Prior technologies required
          substantial human intervention to manually maintain structures in both
          the transaction and reporting systems, and maintain the
          synchronization of the accounting and information systems.

     Our WorkWise Business Alerts and Data Agent Server products are deployed as
a set of user-defined "business rule(s)" contained in a software package that
also allows particular fields of other data base systems to be monitored for
change. When a monitored field is updated with a transaction or series of
transactions, an associated business rule may trigger an event. The event so
triggered can cause any number of previously established activities to occur
automatically. Examples are the sending of an informational e-mail or the
running of another software program (or "agent"). Our distribution partners
usually market the WorkWise products prepackaged with a number of agents
specific to the needs of the users of the monitored systems licensed by the
distributor.

Our Products

     Our products make it possible to distribute information and data marts from
an underlying accounting system to the desktop. Our primary products, Timeline
Analyst and Timeline Data Server, consist of a set of client/server software
applications based on Microsoft(R) Windows(R)/Windows(R) NT and Microsoft Office
operating systems. Once data is contained in a local Microsoft Office database,
the data is available for each end-user to develop his or her own analysis or
personal reports using Microsoft or Timeline-enhanced technology. The
personalized data on the desktop is as accurate as is the data in the underlying
accounting system.

     Timeline Data Server is the central warehouse of financial and management
reporting data structured in a multi-dimensional relational database. The
Timeline Data Server is simply the first instance of a Timeline Analyst database
drawing data from the source. It includes filter and manager capabilities
allowing initial extraction of data from source systems. It includes traditional
financial reporting features including foreign currency conversion and
consolidations. The various Timeline Data Server functions provide desktop and
network reporting based on information contained in one or more underlying
accounting systems. Our market focus is to use Timeline Data Server as a data
warehouse to handle large volumes of data in conjunction with Timeline Analyst.

     Timeline Analyst is a stand alone "data mart," which enables the user to
view, create and distribute reports in Microsoft Excel based on data from one or
more underlying accounting systems. Timeline Analyst also works with our
server-based software to distribute reporting databases to desktop end-users
throughout a business enterprise.

     Timeline Manager is a product designed for the "mid-level" market
(businesses with from 6 to 100 desktop users). This product completes the
Timeline Analyst suite by allowing Timeline Analyst users to distribute packets
of information and assign new reporting relationships at the desktop level.

     Timeline Budgeting consists of applications and tools that access and
manipulate the underlying Timeline information and data marts. Timeline
Budgeting offers our customers a combination of Microsoft Excel interfaces and
flexible access to and manipulation of information. The functions offered by
Timeline Budgeting include automatic dissemination of budget templates,
consolidation of budget input, and multiple spread methods.

     WorkWise Data Agent Server is a process automation application consisting
of a set of programs that allows the monitoring of other databases for change,
the definition of business rules to apply to any changes


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in the monitored database, and the triggering of an event in response to the
detected change. A number of previously defined events are available as part of
the product's optional configuration. Additionally, new events can be easily
added to the product without writing additional lower level software code
through a user interface designed for such purpose.

     WorkWise Business Alerts is the most popular event triggered by the Data
Agent Server and is packaged and sold as a stand-alone product. It monitors data
fields for a specified activity and then automatically communicates that
activity to the appropriate customer or employee via email.

Our Services

     Our revenue-generating services, which consist primarily of consulting and
software maintenance, relate to our family of products. We do not provide any
general consulting, but rather focus on the installation, training, enhancement,
and use of our products by our licensees. These services are provided by our
employees who are highly skilled in the use of our products and are billed on a
fee for service basis. Many of our consulting engagements require our
consultants to provide the services on the customer's site.

     Historically, our software maintenance service is provided via telephonic
diagnostics and instruction by our technical support personnel, backed by our
product managers and developers, under annually renewable agreements (first tier
maintenance). As our strategy of using third party reseller relationships to
market our products has evolved, we have also entered into agreements to provide
second tier maintenance where the responsibility for telephonic support rests
with the reseller, and we provide software patches, updates and more
sophisticated diagnostics to the reseller. As with first tier maintenance,
second-tier is typically provided under annually renewable agreements.

Our Research and Development

     Our research and development efforts are primarily focused on enhancing our
products to work with additional underlying systems, to incorporate changing
technologies in underlying operating systems and platforms, and to allow greater
ease of use. We have no current plans to develop applications for markets
different than those in which we are currently providing products; i.e.
financial and process automation.

Our Sales and Marketing

     Our sales and marketing focus is on the recruitment, training, and
continued involvement with resellers to represent our products. These
relationships are generally entities that have transaction systems software of
their own that potentially would be improved by use in conjunction with our
products (original equipment manufacturers or "OEMs"). We also pursue reseller
relationships with service providers who want to provide services to end users
based upon the installation, training and use of our products (Value Added
Resellers or VARS). The VAR strategy is of particular importance in order to
market our products for use with software applications where we have little
prospect of forming an OEM relationship. This would be the case, for instance,
when the manufacturers of the underlying transaction systems are owned by
competitors, have pre-existing relationships with competitors, or have a
business model that is not conducive to the representation of third party
products. Finally, in certain instances we pursue direct sales activities,
particularly through our London subsidiary, Analyst Financials Limited. However,
we expect a majority of our new license activity to be through reseller
agreements.*

Our Employees

     At March 31, 2003, we employed 18 full-time and 3 part-time employees in
the U.S. Our London subsidiary, Analyst Financials, employed seven full-time
employees and one part-time employee at March 31, 2003. We believe our relations
with our employees are good.


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Other Factors That May Affect Operating Results

     We have a working capital deficit and may need to raise additional capital
     to fund operations during fiscal 2004, and we have received a "going
     concern" opinion from our independent auditors.

     At March 31, 2003, we had cash, cash equivalents, and marketable securities
totaling $187,394, a net working capital deficit of $192,709, and our net
working capital (excluding deferred revenue of $608,301) was $415,592. We
believe that our current cash, cash equivalents, marketable securities, and any
net cash provided by operations may be sufficient to meet anticipated cash needs
for working capital and capital expenditures through fiscal 2004. However, our
revenue is unpredictable; a revenue shortfall could deplete our limited
financial resources and require us to reduce operations substantially or to seek
to raise additional funds through equity or debt financings.

     Our future capital requirements depend upon many factors, including, but
not limited to:

     o    the success of our third-party software licensing and distribution
          arrangements, and the amount of revenues generated from those software
          licenses;
     o    our ability to license our patents, and the amount of revenues
          generated from those licenses;
     o    the scope and degree of market recovery and performance, particularly
          in the software sector;
     o    our ability to develop and maintain sustained maintenance and support
          revenue;
     o    market acceptance of our products and any other new products we
          develop;
     o    the rate at which we are able to further reduce expense levels;
     o    the scope of any reduction of any of our business activities;
     o    the liquidity and market prices for the marketable securities held by
          us; and
     o    other business and economic factors that may occur from time to time.

None of these factors can be predicted with certainty.

     We anticipate that the Company may need substantial additional debt or
equity financing in the future for which we have no current commitments,
discussions or arrangements. We cannot assure you that any additional financing,
if required, will be available in amounts or at times when needed, or, even if
it is available that it will be on terms acceptable to us. If we raise
additional funds by selling equity or equity-based securities, the ownership of
our existing shareholders will be diluted. Our plans which may or may not occur
for financing may include, but are not limited to, any one or more of the
following:

     o    engaging a financial advisor to explore strategic alternatives, which
          may include a merger, asset sale, joint venture or another comparable
          transaction;
     o    raising additional capital to fund continuing operations by private
          placements of equity or debt securities or through the establishment
          of other funding facilities, which may be on terms unfavorable to us;
     o    forming a joint venture with one or more strategic partners to provide
          additional capital resources to fund operations; and
     o    loans from management or employees, salary deferrals or other cost
          cutting mechanisms.

     Our inability to secure additional financing could have a material adverse
effect on whether we would be able to successfully implement our proposed
business plan and our ability to continue as a going concern. Our independent
accountants have issued a "going concern" emphasis paragraph in their report on
our financial statements for the fiscal year ended March 31, 2003, stating that
the Company has suffered recurring losses and has a net working capital deficit.
Accordingly, those conditions raise substantial doubt about our ability to
continue as a going concern. If additional financing is not available and if we
cannot generate sufficient revenue from operations, we may need to change our
business plan, significantly reduce


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or suspend our operations (which may include further reducing our operating
expenses, downsizing our staff and closing offices), sell or merge our business,
or file a petition in bankruptcy.

     We face intense competition in our businesses.

     The business information software market is highly competitive. We believe
that our primary competition for our Timeline Analyst and Timeline Data Server
products is software vendors such as FRx Software Corporation, Cognos
Corporation, Hyperion Solutions, Inc., Comshare, Inc., and various budgeting
vendors such as Adaytum, Inc., Microsoft Corporation, and Pillar by Hyperion.
For our WorkWise Business Alerts and Data Agent Server software, we compete with
companies such as Categoric Software Corporation, Orbis Software, and Metagon
Technologies. Many of our competitors in the software and consulting arenas have
substantially greater financial, management, marketing and technical resources
than we do. Because there are minimal barriers to entry into these markets, we
believe that competition will continue to proliferate. The market for our
products and services is characterized by significant price competition, and we
expect that our products and services will face increasing pricing pressures.

     Many of our current and potential competitors have well-established
relationships with our potential customers, have extensive knowledge of the
markets serviced by our customers, and more extensive development, sales and
marketing resources. As a result, our competitors may be able to respond more
quickly to new or emerging technologies and changes in customer requirements, or
to devote greater resources to the development, promotion and sale of their
products than are we. Such competition could seriously harm our ability to sell
products on favorable terms. We cannot assure you that we will be able to
compete successfully against current and future competition, and the failure to
do so would negatively impact our business and financial condition.

     A slow economy and reductions in information technology spending may
     negatively affect our revenues.

     Our revenues may be negatively affected by the uncertain economic
conditions both in the market generally and in our industry. As the economy
continues to be slow, many companies are hesitant to increase their budgets for
spending on information technology and business software, and in fact some
companies may further reduce their budgets. As a consequence, our sales cycle
may become longer with some customers, and other prospective customers may
postpone, reduce, or even forego the purchase of our products and services,
which could negatively affect our revenues.

     We rely extensively on licensing and distribution relationships, and direct
     sales to a lesser degree.

     We rely on agreements with third-party licensees and distributors for sales
and licensing of our products, and believe that a majority of our software
license fee revenue in fiscal year 2004 will be generated from these third-party
partners. Our agreements with licensees and distributors are generally not
exclusive, may be terminated at any time on 90 days' notice by either party
without cause, and generally do not impose minimum licensing or purchase
requirements. The effectiveness of third-party licensing and distribution
agreements depends in part on:

     o    market acceptance and distribution channels of our third-party
          licensees' and distributors' products and services;
     o    our ability to integrate our products with those of the third party;
     o    the performance and efforts of our third-party partners; and
     o    the continued viability and financial stability of such third parties,
          which, in turn, depends on the overall economic health of the software
          industry.

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     We cannot assure you that these licensees and distributors will perform
their contractual obligations as expected or that we will derive any additional
revenue from these licensing and distribution arrangements. Also, we can give no
assurances that we will successfully develop new relationships or maintain
existing relationships with third-party licensees and distributors. For
instance, in fiscal 2003, we lost two of our major distribution partners, one of
whom was acquired by Microsoft and the other selected a competitive product to
represent. Our ability to maintain our distribution network and attract
additional distributors will depend on a number of factors, many of which are
outside our control. Finally we cannot assure you that such licensees and
distributors will be able to market our products effectively, or that any
existing licensee or distributor will continue to represent our products. A
failure of any of these events to occur could materially adversely affect our
results of operations. To the extent that our distributors are distracted from
selling or promoting our products or do not employ sufficient efforts in
managing and selling our products, our sales and profitability will be adversely
affected.

     Our subsidiary, Analyst Financials, is also heavily reliant on distribution
alliances in Europe and is subject to risk factors similar to those described
immediately above. In addition, Analyst Financials also relies in part on its
direct sales force for some of its sales and licensing efforts, especially in
the greater London area. We expect to continue this direct sales effort through
Analyst Financials. Over the last several years, we have moved away from the
direct sales model in the U.S. and have relied more on licensing through our
third-party distribution channels. There are no assurances that we will be able
to profitably or successfully maintain the direct sales model through Analyst
Financials.

     Finally, during the last two fiscal years we have relied on substantial
fees generated by licensing of our various patents. These revenues tend to be
sporadic and generally do not provide for ongoing revenue subsequent to the
initial licensing fees. We can give no assurance that additional fees will be
generated in the future.

     If we do not keep pace with technological change our products may be
     rendered obsolete and our business may fail.

     Our industry is subject to rapid technological change. To remain
competitive, we must develop new software products while enhancing and improving
our existing software programs. The development of software products is
characterized by rapid technological change, changes in user and customer
requirements and preferences, frequent new product and service introductions
embodying new technologies and the emergence of new industry standards and
practices that could render our existing proprietary technology and systems
obsolete. Our success will depend on our ability to maintain compatibility with
existing and future Microsoft Windows, Windows NT, Windows 2000, Windows XP and
other operating environments, database systems and development tools. There will
be a material adverse effect on our results of operations if we fail to
anticipate or respond promptly and adequately to changes in technology and
customer preferences, or if there are any significant delays in our product
development or introductions. We cannot assure you that we will be successful in
developing new products or enhancing our existing products on a timely basis, or
that such new products or product enhancements will achieve market acceptance.

     Our ability to operate profitably is uncertain.

     Our historical operations have not been consistently profitable. We had an
accumulated deficit of $9,989,318 as of March 31, 2003 and a net loss of
$365,319 for the fiscal year then-ended. Our license revenues have fluctuated
substantially from quarter to quarter in the past and are likely to continue to
fluctuate substantially in the future. To become profitable, we must do some
combination of:

     o    increasing the licensing and maintenance revenues of our existing
          products;
     o    increasing the licensing of patented technology to third parties;
     o    developing new products; and

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     o    controlling our expenses.

We cannot assure you that we will meet these objectives or achieve profitability
or, even if we do achieve profitability, that we will be able to sustain
profitability. We expect to incur losses in the near future. Beginning in early
fiscal 2002, we have significantly decreased operating expenses and, as a
result, will need to maintain our level of revenues with fewer personnel in
order to achieve profitability. We can give no assurances that sufficient
license or other revenues will be generated or that sufficient financing will be
obtained to enable us to obtain or sustain profitability. This could have a
detrimental effect on the market price of our stock.

     Our profitability depends on the success of our products.

     Our future profitability will depend upon the successful development,
marketing and licensing of our existing product line and other new products. We
cannot give you any assurances that:

     o    our products will achieve or sustain revenue growth;
     o    enhancements to our products and other applications can be
          successfully developed;
     o    demand for and market acceptance of our products and enhancements will
          grow or continue; or
     o    our products will successfully compete with the products of others.

     To the extent demand for our products does not develop or continue due to
competition, poor product performance, negative assessments by our customers of
our financial resources and expertise, technological change or other factors,
our results of operations may be materially and adversely affected.

     Our operating results may vary significantly.

     Our results of operations have historically varied substantially from
period to period (quarterly or otherwise), and we expect they will continue to
do so. Fluctuations in our operating results have resulted, and may result in
the future, from many factors, including the following:

     o    varying size, timing and contractual terms of product licensing
          agreements and customer orders for our products;
     o    customers' decisions to defer orders or implementations, particularly
          large orders or implementations, from one quarter to the next;
     o    the success of our distribution and licensing partners to market and
          sell our products, as well as our direct sales efforts;
     o    lengthy negotiation and integration cycles associated with
          establishing new distributorships;
     o    the timing of the introduction and customer acceptance of new products
          or product enhancements by us or our competitors;
     o    our ability to timely complete our service obligations related to
          product sales;
     o    changes in pricing policies by us or our competitors;
     o    the size, timing and contractual terms of any patent licensing
          agreements;
     o    changes in the mix of revenue attributable to higher-margin product
          license revenue as opposed to substantially lower-margin service
          revenue;
     o    changes in demand for our business and accounting software and
          applications generally;
     o    software defects and other product quality problems;
     o    our ability to hire, train and retain sufficient consulting, training
          and sales staff; and
     o    changes in general economic conditions.

     Over the past several years, we have made great efforts to reduce our
operating and other expenses. We cannot assure you that these expense reductions
will have the desired result of enabling us to achieve profitability or that
they will not have adverse effects on us. In addition, we are currently more
reliant on licensing and distribution arrangements and less on direct sales, and
accordingly we expect that

                                     Page 9
<PAGE>

timing of revenues will fluctuate from quarter to quarter. If we increase our
direct sales and marketing efforts or undertake research and development not
funded by third parties, our operating expenses would increase and may have an
adverse impact on our results of operations. Any of these fluctuations may cause
significant variations in periodic results of operations. We do not take any
actions specifically designed to limit fluctuations in our periodic results of
operations. Because a significant portion of our expenses, particularly
personnel costs and rent, are relatively fixed in advance of any particular
quarter, shortfalls in revenue caused by a fluctuation of licensing, maintenance
and consulting revenue may cause significant variation in operating results in
any particular quarter.

     We may be subject to pending legal proceedings.

     From time to time we have been, and expect to continue to be, subject to
legal proceedings and claims in the ordinary course of our business. Such legal
proceedings could expose us to liability and require the expenditure of
significant financial and managerial resources, which could harm our business.

     We may not be able to enforce our intellectual property rights, and others
     may claim that we are infringing their intellectual property rights.

     We rely on a combination of patents, copyright, trademark and trade secrecy
laws, confidentiality procedures and contractual provisions to protect our
intellectual property rights. We attempt to protect our software, documentation
and other written materials under patent, trade secret and copyright laws, which
afford only limited protection. We have received four U.S. patents and have been
granted patent protection in certain foreign countries. We have additional U.S.
and international patent applications pending. Despite our efforts to protect
our intellectual property rights:

     o    laws and contractual restrictions may not be sufficient to prevent
          misappropriation of our technology or deter others from developing
          similar technologies;
     o    current federal laws that prohibit unauthorized copying and
          distribution of software provide only limited protection from software
          "pirates", and effective patent, trademark, copyright and trade secret
          protection may be unavailable or limited in foreign countries;
     o    other companies may claim common law trademark rights based upon state
          or foreign laws that precede the federal registration of our
          trademarks; and
     o    policing the unauthorized use of our products and trademarks is
          difficult, expensive and time-consuming, and we may be unable to
          determine the extent of this unauthorized use.

     Spending additional resources on research and development could adversely
affect our financial condition and results of operation. We intend to protect
our patent rights against infringement through negotiation and litigation, if
necessary. Such litigation is costly and there is no assurance it will be
successful.

     We cannot assure you that our intellectual property protections will be
adequate or that third parties will not independently develop substantially
similar products, services and technology. Although we believe our products,
services and technology do not infringe on any proprietary rights of others, as
the number of software products available in the market increases and the
functions of these products further overlap, we may become increasingly subject
to infringement claims. These claims, with or without merit, could result in
costly litigation or might require us to enter into royalty or licensing
agreements, which may not be available on terms acceptable to us.

     We rely on license revenue from a limited line of products.

     Product-license revenues and related services from our Timeline Analyst and
Timeline Data Server products accounted for a significant portion of our total
revenues during fiscal 2003 (exclusive of patent license revenues). We expect
revenues from our Timeline Analyst, Timeline Data Server, Business Alerts and


                                    Page 10
<PAGE>

Data Agent Server, Budgeting and Consolidation products to account for a
significant part of our future revenues. As a result, factors adversely
affecting the demand for these products, such as competition, pricing or
technological change, could materially adversely affect our business, financial
condition and operating results. Our future financial performance will
substantially depend on our ability to sell current versions, and our ability to
develop and sell enhanced versions, of our products, as well as our ability to
provide on-going maintenance and support for those products.

     We rely on Microsoft products.

     We have developed all of our products to function in the Microsoft Windows
and/or Windows NT environments. We anticipate that our future products will also
be designed for use in connection with Microsoft software products. In light of
this product strategy, sales of our new products would be materially and
adversely affected by market developments adverse to Microsoft Windows, Windows
NT, Windows XP, Windows 2000, Windows ME, Excel or other future Microsoft
software products or operating systems. Our success in developing products for
use with Microsoft software products depends on our ability to gain timely
access to, and to develop expertise in, current and future Microsoft software
products. We cannot assure you that we will be able to develop expertise in, and
continue to develop products for, Microsoft software products. Moreover, the
abandonment by Microsoft of, or any adverse change to, its current operating
system product line, strategy or business operations would materially and
adversely affect our business. We cannot predict the impact, if any, that the
current anti-trust lawsuit against Microsoft will have on our business or
products.

     Our ability to manage successfully is uncertain.

     If planned revenue stability does not materialize, our business, financial
condition and results of operation will be materially harmed. To manage
operations effectively, we must continue to improve our operational, financial
and other management processes and systems. Our success also depends largely on
our ability to maintain high levels of employee utilization, project and
instructional quality and competitive pricing for our services. We cannot assure
you that we will be successful in maintaining the required levels of revenue
with the current number of employees.

     We may be subject to liabilities associated with our software products.

     Software products frequently contain errors or defects, especially when
first introduced or when new versions or enhancements are released. Although we
intend to subject our existing and future software products and new versions and
enhancements to vigorous testing prior to their release, our products may
contain errors or defects. These errors or defects may result in unexpected
re-programming costs, shipping costs and other expenses. Although our license
agreements with our customers contain provisions designed to limit our exposure
to potential product liability claims, any errors or defects could also result
in liability claims against us by the consumers of our products. Also,
Microsoft, our competitors, or we may announce new products, capabilities or
technologies which have the potential to replace or shorten life cycles of our
existing products and which may cause customers to defer purchasing our existing
products. Delays or difficulties associated with new product introductions or
product enhancements could have a material adverse effect on our results of
operations. Any of the foregoing events could have a negative impact on our
business or financial condition.

     Our success depends on our ability to retain and, as needed, recruit
     qualified information technology professionals and sales and marketing
     personnel.

     Our future success depends in large part on our ability to attract, develop
and retain highly skilled information technology professionals, particularly
project managers, consultants, software engineers and programmers. As a result
of our focus on reducing operating expenses over the past several years, we are
dependent for our operations on a smaller number of employees. If we are unable
to keep our current

                                    Page 11
<PAGE>

technical employees, we may be unable to adequately service current projects or
bid for new projects. If we are unable to recruit additional technical employees
as and when needed, we may not be able to expand or grow our business. We
compete for the services of information technology professionals with other
consulting firms, software vendors and consumers of information technology
services, many of which have greater financial resources than we have. We may
not be successful in retaining and, as needed, hiring a sufficient number of
information technology professionals to staff our consulting projects. To
attract qualified technical employees, we may need to substantially increase the
compensation, bonuses, stock options or other benefits we offer to employees.
These additional costs may negatively affect our business and operating results.

     The future success of our business is heavily dependent on the continued
     services of certain key employees.

     Our future success depends to a significant extent on the skills,
experience and efforts of our senior management. In particular, we depend on
Charles Osenbaugh, our Chief Executive Officer and Chief Financial Officer,
Michael G. Evans, our Vice President of World-Wide Sales, and Craig R. Perkins,
our Vice President of Product and Technology. Additionally, Mark Gray serves as
Managing Director of Analyst Financials Limited which now is responsible for
approximately 40% of worldwide software revenue. None of these executive
officers is subject to an employment agreement and we have not obtained key
person life insurance or disability insurance policies on any of them. If any of
these officers ends his employment with us or Analyst Financials, or becomes
incapacitated and unable to perform his duties, then our business and financial
condition could be seriously harmed.

     We also depend on the services of qualified and experienced information
technology professionals, creative personnel, and sales and marketing personnel.
We typically do not enter into employment agreements with these individuals,
however we do have proprietary technology agreements with them. Any of these
employees could leave their employment with us at any time. Our business and
financial condition could be negatively impacted if any of these events occur.

     The market and liquidity for our shares is limited.

     Our common stock is currently listed for trading on the OTC Bulletin Board,
and as a result, an investor may find it more difficult to dispose of, or to
obtain accurate quotations as to the price of, our securities than if the
securities were traded on the Nasdaq Stock Market or another national exchange.
In addition, our common stock is also listed for trading on the Boston Stock
Exchange. If we were to experience significant or prolonged losses or otherwise,
we may be unable to maintain the standards for continued listing on the Boston
Stock Exchange. As a result, an investor would find it more difficult to dispose
of, or to obtain accurate quotations for, our securities. In addition, pending
approval from the Securities and Exchange Commission, the OTC Bulletin Board
will be replaced by the Bulletin Board Exchange ("BBX"), a new U.S. listed
market for small companies. The BBX is currently scheduled to be launched in the
first quarter of 2004. The BBX will have qualitative listing standards and many
of the corporate governance standards required by the Nasdaq Stock Market. Once
the OTC Bulletin Board ceases operations, if we have not met the BBX listing
standards or have not transitioned the listing of our securities to the BBX, we
might have to quote our securities on the "Pink Sheets", which are less liquid
than the OTC Bulletin Board.

     Our common stock is subject to certain rules and regulations relating to
"penny stock" (generally defined as any equity security that is not quoted on
the Nasdaq Stock Market and that has a price less than $5.00 per share, subject
to certain exemptions). Broker-dealers who sell penny stocks are subject to
certain "sales practice requirements" for sales in certain nonexempt
transactions (i.e., sales to persons other than established customers and
institutional "accredited investors"), including requiring delivery of a risk
disclosure document relating to the penny stock market and monthly statements
disclosing recent price information for the penny stock held in the account, and
certain other restrictions. For as long as our


                                    Page 12
<PAGE>

securities are subject to the rules on penny stocks, the market liquidity for
such securities could be significantly limited. This lack of liquidity may also
make it more difficult for us to raise capital in the future.

     Our stock price is volatile.

     The trading price of our common stock has fluctuated significantly in the
past. The future trading price of our common stock may continue experiencing
wide price fluctuations in response to such factors as:

     o    actual or anticipated fluctuations in revenues or operating results;
     o    changing information technology spending habits of our clients and
          prospective clients;
     o    failure to meet expectations of performance;
     o    announcements of technological innovations or new products by our
          competitors;
     o    developments in or disputes regarding copyrights, trademarks, patents
          and other proprietary rights;
     o    product and services pricing, discounts and margins; and
     o    general economic conditions.

     We do not intend to pay dividends.

     We have not declared dividends on our common stock in the past, and do not
intend to declare dividends on our common stock in the foreseeable future.

     There are a number of state law provisions that could delay or prevent an
     acquisition of our company.

     We are subject to the provisions of Chapter 23B.19 of the Washington
Business Corporation Act, which prohibit a corporation registered under the
Securities Exchange Act of 1934, as amended, from engaging in certain
significant transactions with a 10% shareholder. Significant transactions
include, among others, a merger with or disposition of assets to the 10%
shareholder. These provisions have the effect of making it more difficult for a
third party to acquire a majority of our outstanding voting stock, or delaying
such an acquisition, even if the takeover by a third party would be beneficial.


ITEM 2.  DESCRIPTION OF PROPERTY

     We lease approximately 12,354 square feet of office space at 3055 112th
Ave. N.E., Bellevue, Washington, under a lease that expires April 30, 2004. Of
this amount, 3,000 square feet are subleased to a third party for the remainder
of the term of the lease beginning April 1, 2003. In addition, we lease 1,900
square feet of office space in London for our Analyst Financials office under a
lease that expires in March 2004. We do not own any real estate.


ITEM 3.  LEGAL PROCEEDINGS

     In July 1999, we were served a complaint by Microsoft Corporation in the
Superior Court of Washington for King County alleging breach of contract
regarding a Patent License Agreement signed by both companies in June 1999. In
December 2000, the Court issued a Memorandum Decision and in January 2001 issued
a Final Judgment in the lawsuit holding the language of the agreement would
support Microsoft's right to sublicense to its customers the right to use
Microsoft's SQL Server by adding code or software products to it so long as the
added code or software does not itself independently infringe our patents. We
filed an appeal of the lower court's Final Judgment in the Washington State
Court of Appeals, and in March 2002 the Appellate Court remanded the case to the
Superior Court and ordered it to enter a judgment in our favor. Microsoft filed
a motion for review requesting the Washington Supreme Court to hear


                                    Page 13
<PAGE>

an appeal of the case. In December 2002, review was denied. On February 14,
2003, the Superior Court entered a new Final Judgment in accord with the Court
of Appeals mandate, upholding our interpretation of the Agreement that Microsoft
has only very limited rights to sublicense. The time to file any further appeals
expired prior to March 31, 2003.

     From time to time, we may pursue litigation against other third parties to
enforce or protect our rights under these patents or our intellectual property
rights generally.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

     No matters were submitted to a vote of shareholders during the fourth
quarter of the fiscal year.


                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

Common Stock

     Timeline's common stock is traded on the OTC Bulletin Board and the Boston
Stock Exchange ("BSE") under the symbol "TMLN".

     We initiated trading of our common stock on January 18, 1995, the effective
date of our initial public offering of common stock, and our common stock traded
on the Nasdaq SmallCap Market (Nasdaq) from its effective date until November
1997, following which time it has been quoted on the OTC Bulletin Board. The
following table contains the high and low bid information as reported by OTC
Bulletin Board, for each quarter of fiscal 2002 and 2003, and reflect
inter-dealer prices without retail mark-up, mark-down, or commissions and may
not represent actual transactions.

<TABLE>
<CAPTION>
                                      Fiscal 2002                                 Fiscal 2003
                      ------------------------------------------   ----------------------------------------
                         1st         2nd       3rd        4th         1st       2nd        3rd       4th
                       Quarter     Quarter   Quarter    Quarter     Quarter   Quarter    Quarter   Quarter
                       -------     -------   -------    -------     -------   -------    -------   -------
<S>                     <C>         <C>       <C>        <C>         <C>       <C>        <C>       <C>
Common Stock
     High               $0.91       $0.85     $0.25      $0.40       $0.37     $0.35      $1.15     $2.00
     Low                $0.55       $0.45     $0.16      $0.17       $0.24     $0.17      $0.25     $0.54
</TABLE>


     In addition, the Nasdaq Stock Market has announced the proposed launch of
the Bulletin Board Exchange ("BBX"), pending approval of the BBX from the
Securities and Exchange Commission, in the first quarter of 2004. The BBX is
designed to replace the OTC Bulletin Board. Once the BBX is approved, it is
expected that the NASD will terminate the OTC Bulletin Board six months after
the launch of the BBX. We are evaluating the criteria to be listed on the BBX
and currently intend to apply for listing of the common stock on the BBX.*

Holders

     As of May 15, 2003, there were 4,178,498 shares of common stock outstanding
held by approximately 90 holders of record and 620 beneficial holders.

Dividends

     We have never declared or paid any cash dividends on our common stock. We
anticipate that we will retain future earnings for use in the operation and
expansion of our business and do not anticipate paying cash dividends on the
shares in the foreseeable future.* Any future determination with regard to the


                                    Page 14
<PAGE>

payment of dividends will be at the discretion of the Board of Directors and
will be dependent upon our future earnings, financial condition, applicable
dividend restrictions and capital requirements and other factors deemed relevant
by the Board of Directors.

Recent Sales of Unregistered Securities

     In March 2002, two of our officers, Fred Dean and Michael Evans each
received a performance-based award of 6,250 shares of Timeline common stock,
which were issued in April 2002. In March 2003, Messrs. Dean and Evans each
received an additional performance based award of 6,250 shares of Timeline
common stock, which were issued in April 2003. These stock issuances were made
in reliance on the exemption from registration provided by Section 4(2) under
the Securities Act of 1933, as amended.

Equity Compensation Plan Information

     The following table gives information as of March 31, 2003, the end of the
our most recently completed fiscal year, about shares of our common stock that
may be issued upon the exercise of options, warrants and rights under our equity
compensation plans described in the footnotes following the table below. See
also Note 11, "Shareholders' Equity," to the Company's Consolidated Financial
Statements for the fiscal year ended March 31, 2003 included in this report for
additional information on our stock option plans.

<TABLE>
<CAPTION>
                                      (a)                     (b)                  (c)                        (d)
                                                       Weighted Average
                              No. of Shares to be      Exercise Price of
                            Issued Upon Exercise of       Outstanding          No. of Shares            Total of Shares
                              Outstanding Options,     Options, Warrants       Available for             Reflected in
      Plan Category           Warrants and Rights          and Rights       Future Issuance (1)       Columns (a) and (c)
      -------------         -----------------------    -----------------    -------------------       -------------------
<S>                                 <C>                      <C>                  <C>                       <C>
Equity Compensation
Plans Approved by
Shareholders (2)                    362,175                  $1.51                244,375                   606,550

Equity Compensation
Plans Not Approved by
Shareholders (3)                    252,104                  $1.29                  --                      252,104
                            -----------------------                         -------------------       -------------------
   TOTAL                            614,279                  $1.42                244,375                   858,654
                            =======================                         ===================       ===================
</TABLE>

(1)  Excludes from this calculation the number of shares reflected in Column
     (a).
(2)  Consists of our Amended and Restated 1993 Stock Option Plan, 1994 Stock
     Option Plan, and Directors' Nonqualified Stock Option Plan.
(3)  Consists of:
     (i)    options to purchase 35,104 shares of common stock granted to the
            directors of the Company in April 1993;
     (ii)   a performance-based option to purchase 75,000 shares of common stock
            granted to Mr. Osenbaugh in November 1997, 50% of which vested when
            the closing price of our common stock was at $2.00 or more for 10
            consecutive days, and 50% of which vested when the closing price of
            our common stock was at $3.00 or more for 10 consecutive days;
     (iii)  a performance-based option to purchase 50,000 shares of common stock
            granted to Mr. Osenbaugh in February 1999 which vests on the earlier
            of when the closing price of our common stock is $5.00 or more for
            10 consecutive days, or February 2006, if Mr. Osenbaugh is then in
            our employment;
     (iv)   a performance-based option to purchase 50,000 shares of common stock
            granted to Mr. Osenbaugh in November 1999 which vests on the earlier
            of when the closing price of our common stock is $5.00 or more for
            10 consecutive days, or November 2006, if Mr. Osenbaugh is then in
            our employment;

                                    Page 15
<PAGE>

     (v)    warrants to purchase 21,000 shares of common stock granted to
            various of our service providers in September 1998 in consideration
            for services performed, exercisable at $1.00 per share and which
            expire in September 2003; and
     (vi)   warrants to purchase 21,000 shares of common stock granted to
            various of our service providers in April 1999 in consideration for
            services performed, exercisable at $1.00 per share and which expire
            in April 2004.


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

     You should read the following discussion and analysis in conjunction with
our consolidated financial statements and related notes included elsewhere in
this Report. Except for historical information, the following discussion
contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. See "Cautionary Notice Regarding Forward Looking
Statements" on page one.

     Our consolidated financial statements for the fiscal year ended March 31,
2003 have been prepared on a going concern basis, which contemplates the
realization of assets and the settlement of liabilities in the normal course of
business. We incurred a net loss of $365,319 for the 2003 fiscal year and have
incurred recurring net losses from operations over the past several fiscal
years. As of March 31, 2003, we have negative net working capital of $192,709.
These factors raise substantial doubt about our ability to continue as a going
concern.

     We believe that our current cash, cash equivalents, marketable securities,
and any net cash provided by operations may be sufficient to meet anticipated
cash needs for working capital and capital expenditures through fiscal 2004.
However, our revenue is unpredictable, and a revenue shortfall could deplete our
limited financial resources and require us to reduce operations substantially or
to raise additional funds through equity or debt financings. See "Liquidity and
Capital Resources" below.**

Critical Accounting Estimates and Policies

     The discussion and analysis of our financial condition and results of
operations is based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. On an on-going basis, we evaluate our estimates including, among
others, those affecting revenues, the allowance for doubtful accounts, and the
useful lives of tangible and intangible assets. The discussion below is intended
as a brief discussion of some of the judgments and uncertainties that can impact
the application of these policies and the specific dollar amounts reported on
our financial statements. We base our estimates on historical experience and on
various other assumptions that we believe to be reasonable under the
circumstances, the results of which form our basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions, or if management made different judgments or utilized
different estimates. Our estimates or judgments are based in part on anticipated
future events or performance, and as such are forward-looking in nature, and are
subject to many risks and uncertainties, including those discussed below and
elsewhere in this Report. We do not undertake any obligation to update or revise
this discussion to reflect any future events or circumstances.

     We have identified the policies below as critical to our business
operations and the understanding of our results of operations. The impact and
any associated risks related to these policies on our business operations is
discussed throughout Management's Discussion and Analysis or Plan of Operation
where such policies affect our reported and expected financial results. For a
detailed discussion on the application of these and other accounting policies,
see the Notes to Consolidated Financial Statements. Note that our


                                    Page 16
<PAGE>

preparation of this Annual Report on Form 10-KSB requires us to make estimates
and assumptions that affect the reported amount of assets and liabilities,
disclosure of contingent assets and liabilities at the date of our financial
statements and the reported amounts of revenue and expenses during the reporting
period. There can be no assurance that actual results will not differ from those
estimates.*

                               Revenue Recognition

     We recognize revenue when persuasive evidence of an arrangement exists and
delivery has occurred, provided the fee is fixed or determinable, collectibility
is probable and the arrangement does not require significant customization of
the software. We assess whether the fee is fixed and determinable based on the
payment terms associated with the transaction. If a fee is based upon a variable
such as a minimum level of distribution or is subject to acceptance by the
customer, we account for the fee as not being fixed and determinable. In these
cases, we defer revenue and recognize it when it becomes due and payable. We
assess the probability of collection based on a number of factors, including
past transaction history with the customer and the current financial condition
of the customer. We do not request collateral from our customers. If we
determine that collection of a fee is not reasonably assured, we defer revenue
until the time collection becomes reasonably assured.

     For all software licenses, we use either a binding purchase order or signed
agreement, depending on the nature of the transaction, as evidence of an
arrangement. Licenses through our resellers are evidenced by a master agreement
governing the relationship. For software license fees which do not include
customization or consulting services, delivery typically occurs when the product
is shipped to a customer. We offer a 90 day money-back warranty if the software
does not perform in accord with our published specifications. However, within
the 90 days, we have the right to correct any valid issues. Historically the
Company has had few or no warranty claims resulting in a refund. However, if our
belief that the software will work in accordance with published standards proved
to be inaccurate, we could be subject to refund claims which, on average, would
equal 25% of our annual license fee revenue.

     Consulting revenue is recognized in the month the work is performed and
invoiced on payment terms of net 30 days. Nonpayment of an invoice could occur
in the event of disagreement on the amount billed, dissatisfaction with the work
performed, or an unforeseen inability to pay on the part of the customer.
However, because consulting projects are typically preapproved by the customer,
historically we have experienced very few invoice disputes. Revenue from support
agreements is recognized on a straight-line basis over the life of the contract,
although the fee is due and payable at the time the agreement is signed or upon
annual renewal.

     We recognize revenue from nonrefundable minimum royalty agreements from
distributors or resellers upon delivery of product to the distributor or
reseller, provided no significant obligations remain outstanding, the fee is
fixed and determinable, and collectibility is probable. Once minimum royalties
have been received, additional royalties are recognized as revenue when earned,
based on the distributor's or reseller's contractual reporting obligations.

                         Allowance for Doubtful Accounts

     We estimate the uncollectibility of our accounts receivable by analyzing
historical bad debts, customer concentrations, customer credit-worthiness,
current economic trends and changes in our customer payment terms in order to
evaluate the adequacy of the allowance for doubtful accounts. Historically, we
have experienced a minimal rate of doubtful accounts and therefore provide for
an allowance of a set percentage based on aging of the receivable, i.e., 1% for
receivables within 60 days of due date and 5% for those 61 days or more past the
due date. However, material differences may result in the amount and timing of
our bad debt expenses for any period if we had an increase in unpaid accounts,
which could reduce our total current assets. At March 31, 2002, we accrued an
additional allowance of $58,000 due to a disputed account with one of our
resellers. This account was paid in part during fiscal 2003, and the


                                    Page 17
<PAGE>

remaining balance was written off. Additionally, if we underestimated the
collectibility of our accounts receivable, it would have a negative impact on
our reported net receivables, net loss and our cash flow.*

                               Capitalized Patents

     We capitalize the direct out-of-pocket costs to obtain patents on our
technology. Such costs are amortized over the life of the patent, which have
typical contractual lives of 20 years. Should we determine that we will not be
able to generate future revenues as a result of these patents, we would need to
write off the patent in the period we determine that the patent is impaired.* At
March 31, 2003, such a write-off would reduce our total assets by $223,725. It
would have no effect on cash. Costs of defending our patents are expensed as
incurred, which, depending on the nature and complexity of the legal defense
strategy, could materially impact our results of operations in any given
period.*

                    Capitalized Internally Developed Software

     We capitalize internally developed software costs subsequent to
establishing technological feasibility of a project. Such costs are amortized
over the projects useful lives using the greater of the ratio of current gross
revenues to total current and projected future gross revenues for the product or
the straight line method. Useful lives are based on our estimates of the period
that the assets will generate revenue, which we have determined to be 3 years.
Material differences may result in the amount and timing of our amortization
expense for any period if we made different judgments or utilized different
estimates.* In the event our estimate of the useful life of our software was
incorrect, the current balance of $185,524 of capitalized software may be
reduced which would reduce our total assets reflected on our balance sheet.*

                         Impairment of Long-Lived Assets

     Long-lived assets, including property and equipment, capitalized software,
capitalized patents, and acquired identifiable amortizable intangibles are
amortized over their useful lives. We assess the impairment of these assets
whenever events or changes in circumstances indicate that the carrying value may
not be recoverable based on estimated undiscounted cash flows attributable to
that asset. The amount of any impairment is measured as the difference between
the carrying value and the fair value of the impaired asset. Our judgments
regarding the existence of impairment indicators are based on legal factors,
market conditions and operational performance of our acquired businesses. Future
events could cause us to conclude that impairment indicators exist and that
certain assets are impaired.* Such an adjustment would have no effect on our
cash.*

                             Impairment of Goodwill

     The Company evaluates its goodwill, or the excess of acquisition cost over
the fair value of net identifiable assets acquired in a business combination, in
accordance with Statement of Financial Accounting Standards No. 142, "Goodwill
and Other Intangible Assets" (SFAS No. 142). SFAS No. 142 requires that goodwill
no longer be amortized, but instead be tested for impairment at least annually
at the reporting unit level in accordance with the provisions of SFAS No. 142.
The Company determined that it has two reporting units consisting of operations
in the United States (Timeline) and Europe (Analyst Financials, Ltd.). All
goodwill is attributable to the Analyst Financials, Ltd. reporting unit. Future
events could cause us to conclude that impairment indicators exist and that
goodwill is impaired, which would reduce the $70,183 currently reported on our
balance sheet as of March 31, 2003.* Such an adjustment would have no effect on
cash.*

                                    Page 18
<PAGE>

Results of Operations

                                    Revenues

<TABLE>
<CAPTION>
                                    Years Ended March 31,
                                   2003              2002            Change
------------------------------------------------------------------------------
(Dollars in Thousands)
<S>                               <C>               <C>               <C>
Software license                  $1,209            $1,552            (22%)
Patent license                     1,074             1,550            (31%)
Maintenance                        1,143               922             24%
Consulting and other                 902               769             17%
                              ------------------------------
Total revenues                    $4,328            $4,793            (10%)
------------------------------------------------------------------------------
</TABLE>

     For the fiscal year ended March 31, 2003, our total operating revenues were
$4,328,000 compared to $4,793,000 for fiscal 2002, representing a decrease of
10%. The decrease in total revenues in fiscal 2003 from fiscal 2002 is primarily
attributable to a decrease in patent license revenue.

     Our patent license revenue decreased to $1,074,000 from $1,550,000 in
fiscal 2003 compared to fiscal 2002 (a 31% decrease). The patent license revenue
in fiscal 2003 consisted of a one-time license fee from Hyperion Solutions, Inc.
of $1,050,000, and payments on an ongoing royalty from Noetix, Inc. The patent
license revenue in fiscal 2002 included a one-time $450,000 license fee from
Lawson Software and a one-time license fee of $1,100,000 from Oracle
Corporation. Throughout all of fiscal 2002 and the first 10 months of fiscal
2003, we were subject to a court judgment in Microsoft Corporation vs. Timeline,
Inc. that greatly restricted our ability to pursue patent licenses. Furthermore,
substantial costs and time were dedicated to contesting Microsoft's lawsuit. In
February 2003, a final judgment was entered which is favorable to Timeline, and
we intend to increase the activity aimed at pursuing new patent licenses.* We
cannot predict the outcome of ongoing and future negotiations.* There are no
assurances we will be successful in entering into additional patent licenses, or
the timing of any such licenses.*

     Software license revenue decreased 22% in fiscal 2003 to $1,209,000 from
$1,552,000 for fiscal 2002. The decrease is primarily attributable to the loss
of revenue from two major distribution partner relationships; one of whom was
acquired by Microsoft and the other selected a competitive product to represent.
Continued weakness in the software market in general also impacted results,
presumably due to the general decline in economic conditions. Our sales tend to
reflect the strength and weakness of our distribution partners' new license
activity as we are generally licensed as part of their package of software.
Currently, we have relationships and strategic alliances with more than 30
national and international distribution partners. We believe there is continued
weakness in the enterprise resource planning (ERP) and accounting software
markets, which directly affects the sale and distribution of our products as an
additional module on their products or as an "after-market" add-on. We have
continued to release new products in conjunction with national and international
distribution partners. While we were successful in signing new reseller
relationships during fiscal 2003, in the current economic uncertainty,
particularly in the United States, it is impossible to predict if our
distribution channels will increase software licenses during fiscal 2004 over
fiscal 2003.*

     A portion of our software license revenue is generated as a result of
direct sales to end users. This type of sale occurs more often in European sales
through our London subsidiary, Analyst Financials. Although Analyst Financials
has historically used the direct sales model, it also is developing a network of
distribution partners, which now accounts for the majority of our new license
revenue.

     Maintenance revenue increased by 24%, to $1,143,000 from $922,000 for the
comparable fiscal years, a result of maintenance fees from new customers who
have installed and are using our software. Maintenance revenue from our software
product lines continues to increase as more sites are installed and maintenance
agreements commence. Our software maintenance service is provided either
directly to end users of our products (first tier maintenance) or to third party
reseller (second tier maintenance). In first tier


                                    Page 19
<PAGE>

maintenance, we provide telephonic response and diagnosis to end users where in
second tier maintenance this function is provided to end-users by the reseller.
We provide software patches, updates and technical diagnostics under either
approach. Both first and second-tier maintenance is typically provided under
annually renewable agreements. We receive a smaller portion of the annual
support fees for second tier support than we do for first tier support. Most of
our customers sign maintenance agreements and renew them on an annual basis
until such time as they no longer use our software products.

     Consulting and other revenue increased 17%, to $902,000 from $769,000, for
the 2003 fiscal year from fiscal 2002. The increase in consulting revenue
resulted from an increase in the billable time generated per consultant and an
increase in the number of consulting projects. The level of consulting revenue
varies according to the mix of systems directly licensed by Timeline either as a
direct sale or through a reseller that does not provide installation and
consulting on our products, compared to software provided through those
resellers that provide direct installation services to end-users, thereby
requiring less of our consulting. Due to our emphasis on working through
resellers who provide installation and consulting, we do not foresee a
significant increase in consulting projects in fiscal 2004 and, therefore,
expect consulting revenue to remain fairly stable as between fiscal 2003 and
fiscal 2004.*

                                Cost of Revenues

                                          Years Ended March 31,
                                          2003            2002          Change
------------------------------------------------------------------------------
(Dollars in Thousands)

Software license                          $207            $222            (7%)
Patent license                              15              11            36%
Maintenance, consulting and other          402             604           (33%)
                                     ----------------------------
Total cost of revenues                    $624            $837           (25%)
Percentage of operating revenues            14%             17%
------------------------------------------------------------------------------

     Cost of revenues decreased 25% for the 2003 fiscal year over fiscal 2002.
Software license costs decreased as certain capitalized software modules were
fully amortized in fiscal 2002 and early fiscal 2003, and therefore were not
reflected in the second and third quarter of fiscal 2003 costs. This more than
offset the increase in this category for the fourth quarter due to the
reclassifications noted below. Patent licensing expenses increased in fiscal
2003 due to attorney's fees incurred. Additionally, staff and salary reductions
affecting consulting personnel helped reduce costs for maintenance and
consulting in fiscal 2003 compared to fiscal 2002.

     In the fourth quarter of fiscal 2003, we also reclassified certain acquired
technology from intangible assets to capitalized software. This was the result
of this technology now being incorporated in a commercial product release
announced in December 2002 and which became part of new license deliverables
beginning in the fourth quarter of fiscal 2003. The effect of this change caused
amortization of these assets to be included in cost of revenues rather than
amortization of intangibles under operating expenses. These assets were acquired
as part of the December 2000 acquisition of WorkWise Software, Inc. The original
amount of the acquisition costs allocated to this asset was $554,000 and has
been amortized over a useful life of three years starting in December 2000
($15,000 per month) as part of amortization of intangibles and goodwill. The net
remaining amount included in intangible assets of $185,000 as of December 31,
2002 and then reclassified to capitalized software continued to be amortized at
the same rate during the fourth quarter of fiscal 2003 and will be fully
amortized during the first three quarters of fiscal 2004.*


                                    Page 20
<PAGE>

                                  Gross Profit

<TABLE>
<CAPTION>
                                       Years Ended March 31,
                                        2003            2002          Change
------------------------------------------------------------------------------
(Dollars in Thousands)
<S>                                    <C>             <C>             <C>
Gross profit                           $3,704          $3,957          (7%)
Percentage of operating revenues           86%             83%
------------------------------------------------------------------------------
</TABLE>

     Our gross profit for fiscal 2003 was $3,704,000, representing a 7% decrease
from fiscal 2002. Gross profit for the two fiscal years is not directly
comparable because of the relative mix of high-margin patent license revenue in
each period ($1,074,000 in fiscal 2003 compared to $1,550,000 in fiscal 2002).
Also, revenues decreased by 10%, but cost of revenue decreased by 25% due to
salary and headcount reductions. We expect to see continued variations in gross
profit.* Margins are affected by the volume of business as recorded in total
revenues, and the mix among various revenue bearing activities, our ability to
control costs associated with the generation of those activities, and the level
of amortization of acquired technologies as reflected in cost of revenues.
Additionally, because patent licenses to date have tended to be driven by legal
actions and/or negotiated settlements of threatened legal actions, the costs of
securing patent licenses vary greatly from license to license. As patent
licensing is expected to continue to be both relevant and widely different
between reporting periods, substantial fluctuations in comparative margins may
continue to occur.*

                           Sales and Marketing Expense

<TABLE>
<CAPTION>
                                       Years Ended March 31,
                                        2003            2002          Change
------------------------------------------------------------------------------
(Dollars in Thousands)
<S>                                     <C>            <C>             <C>
Sales and marketing                     $690           $1,251          (45%)
Percentage of operating revenues          16%              26%
------------------------------------------------------------------------------
</TABLE>

     Sales and marketing expenses in actual dollar amounts decreased by 45% and
also decreased as a percentage of operating revenue between the fiscal years
ended March 31, 2003 and 2002. The decrease in actual dollar amounts in fiscal
2003 was primarily due to a reduction of staffing, salary roll-backs, and
reduced commission schedules affecting sales and marketing personnel. The
significant decrease in sales and marketing expense as a percentage of operating
revenue also reflects not only the decreased costs of a smaller sales and
marketing staff, but also changes in the amounts and sources of revenue between
the comparable periods relating to patent license fees in both fiscal years.
Patent license-related expenses are typically not included in sales and
marketing expense due to the nature of the licensing process.

                        Research and Development Expense
<TABLE>
<CAPTION>
                                       Years Ended March 31,
                                        2003            2002          Change
------------------------------------------------------------------------------
(Dollars in Thousands)
<S>                                     <C>            <C>             <C>
Research and development                $789           $1,332          (41%)
Percentage of operating revenues          18%              28%
------------------------------------------------------------------------------
</TABLE>

     Research and development expenses decreased to $789,000 from $1,332,000, or
a 41% decrease for the fiscal years ended March 31, 2003 and 2002. This decrease
in research and development expenses was primarily attributable to a decrease of
personnel employed in development which occurred throughout fiscal 2002. We
entered fiscal 2003 with 13 fewer personnel in development than we had at the
beginning of fiscal 2002. Consequently, the actual dollar amount of research and
development expenses in fiscal 2003 was less than fiscal 2002 expenses.
Additionally, market acceptance of the Universal Data Access module,


                                    Page 21
<PAGE>

introduced in fiscal 2002 and enhanced in later versions, has significantly
decreased the amount of development resources required to configure interfaces
for new OEM relationships. It is more difficult to project the level of expense
throughout the upcoming year, but we anticipate a slight increase.* We do not
anticipate any staff reductions in development and have instituted a
compensation scheme that could cause the compensation of the current staff to
increase.* Additionally, changes in the economy or the signing of new channel
partners could lead to hiring additional development resources.*

                           General and Administrative

<TABLE>
<CAPTION>
                                       Years Ended March 31,
                                        2003            2002          Change
------------------------------------------------------------------------------
(Dollars in Thousands)
<S>                                    <C>             <C>             <C>
General and administrative             $1,602          $1,938          (17%)
Percentage of operating revenues           37%             40%
------------------------------------------------------------------------------
</TABLE>

     General and administrative expenses decreased in actual dollar amounts by
17% to $1,602,000 from $1,938,000 for the comparable fiscal years ended March
31, 2003 and 2002. This decrease is due to salary roll-backs, reduced head
count, and general cost cutting measures in fiscal 2003. We believe that general
and administrative costs may vary greatly from quarter to quarter in fiscal
2004, based in part on increased staffing in Europe and the introduction of
salary schemes that may cause salaries to vary dependant on gross revenue and
net income.*

                                 Patent Expense

<TABLE>
<CAPTION>
                                       Years Ended March 31,
                                        2003            2002          Change
------------------------------------------------------------------------------
(Dollars in Thousands)
<S>                                     <C>             <C>            <C>
Patents                                 $375            $511           (27%)
Percentage of operating revenues           9%             11%
------------------------------------------------------------------------------
</TABLE>

     Patent expenses include the costs of litigation and negotiations with
respect to patent licenses. They tend to vary significantly between periods
depending on the level of activity and the efforts required to manage cases. We
expect these costs to be further impacted by greater use of contingency fees in
litigated cases.* In conjunction with counsel, we have continued to monitor a
number of other software products which we believe may, subject to further due
diligence, present embodiments of the Timeline patents. Consequently, there is a
significant possibility that we may decide to pursue additional litigation to
defend our property rights.* We cannot express an opinion on the cost, timing or
arrangement with counsel that may result from these additional actions, if any.*

                          Depreciation and Amortization

     Depreciation expense decreased in fiscal 2003 to $46,000 from $53,000 in
fiscal 2003. This decrease is due to an increasing portion of the Company's
property and equipment being fully depreciated, and to a relatively small number
of new capital expenditures that would increase expense. Additionally,
amortization of intangible assets due primarily to the acquisitions of Analyst
Financials and WorkWise decreased by $143,000 from $602,000 in fiscal 2002 to
$459,000 in the fiscal 2003. As described in "Cost of Revenues" above,
amortization of acquired intangibles from the acquisition of WorkWise are
presented as cost of revenues beginning with the fiscal 2003 quarter ended March
31, 2003. Future amortization of intangible assets included in cost of revenue
is expected to be $83,539 all of which will be incurred in fiscal 2004*.
Further, we adopted SFAS 142 on April 1, 2002 and accordingly we ceased
amortization of goodwill, which totaled $71,000 in fiscal 2002 and $0 in fiscal
2003 (see Note 2 to Notes to Consolidated Financial Statements).


                                    Page 22
<PAGE>

                                  Other Expense

     Other expense for fiscal 2003 was $91,000 compared to an expense of
$556,000 in fiscal 2002. The improvement in fiscal 2003 over fiscal 2002 is
primarily the result of the fiscal 2002 loss of $298,000 on sales of securities
and a $279,000 write-down reflecting the decrease in the value of shares we own
of Sagent Technology. Comparatively, in fiscal 2003 we realized a loss of only
$6,000 on sales of Sagent shares, and a second write-down of $123,000. Other
improvements between these periods were due to lower interest costs and
increased benefits from foreign currency exchange fluctuations.

                                   Income Tax

     Income taxes are provided in the statement of operations in accordance with
the asset and liability method. We have determined that the tax assets generated
by the net operating losses and research and experimentation credits do not
satisfy the recognition criteria set forth under the asset and liability method.
Accordingly, a valuation allowance is recorded against the applicable deferred
tax assets and therefore no tax benefit is recorded for fiscal 2002 or fiscal
2003. A reclassification of assets as between amortizable intangible assets and
non-amortizable goodwill which occurred at the beginning of fiscal 2003 to
comply with Financial Accounting Standards Board (FASB) Statement of Financial
Accounting Standards No. 141, "Business Combinations" (SFAS No. 141), and No.
142, "Goodwill and Other Intangible Assets" (SFAS No. 142) caused a charge of
$18,000 in tax expense during fiscal 2003.

     In connection with our initial public offering in January 1995, we
experienced a significant change in ownership, which limits the amount of net
operating loss carry forwards and credits that may be used in any given year.
However, we do not expect this to be a factor in fiscal 2004 as we have a large
carryforward of net operating losses that are not restricted.*

                         Liquidity and Capital Resources

     Balances of our cash and cash equivalents at March 31, 2003 stood at
approximately $168,000 compared to approximately $83,000 at March 31, 2002.
Additionally, available for sale securities at March 31, 2003 stood at
approximately $19,000 compared to approximately $203,000 at March 31, 2002.

     The increase in cash was provided from operations, which provided net cash
of approximately $110,000. We used approximately $30,000 for investing
activities and had no impact from financing activities. Reported operational
losses included non-cash expenses attributable to the amortization of assets
from the acquisitions of two companies during fiscal 2001. The decrease in the
total amount of our marketable securities balances is attributable to the sale
of 53,000 shares of Sagent stock during fiscal 2003 and a decrease in the value
per share of the remaining shares of Sagent stock.

     Total liabilities, excluding deferred revenue of $608,000 and $570,000 at
March 31, 2003 and 2002, respectively, were approximately $510,000 at March 31,
2003 compared to approximately $944,000 at March 31, 2002. This decrease is
attributed to normal fluctuations in payables and accruals.

     We believe that our current cash, cash equivalents, marketable securities,
and any net cash provided by operations may be sufficient to meet anticipated
cash needs for working capital and capital expenditures through fiscal 2004. Our
revenue is unpredictable, and a revenue shortfall could deplete our limited
financial resources. Accordingly, if results of operations do not improve, we
may be required to reduce operations substantially or to raise additional funds
through equity or debt financings. There is substantial doubt about our ability
to continue as a going concern. We must achieve substantially greater revenue
from operations than we did in the last several quarters of fiscal 2003. We have
witnessed significant diminution of license revenue by several key distribution
partners, due to a change in business relationships and the general


                                    Page 23
<PAGE>

decline in economic conditions. Our sales tend to reflect the strength and
weakness of our distribution partners' new license activity as we are generally
licensed as part of their package of software.**

     Many companies in the software industry have experienced difficulty in
raising additional financing in the current economic climate. Our strategies for
financing may include, but are not limited to, any one or more of the following:

     o    engaging a financial advisor to explore strategic alternatives, which
          may include a merger, asset sales, the shut down of assets or
          divisions, joint ventures or another comparable transaction;
     o    raising additional capital to fund continuing operations by private
          placements of equity and/or debt securities or through the
          establishment of other funding facilities;
     o    forming a joint venture with one or more strategic partners to provide
          additional capital resources to fund operations; and
     o    loans from management or employees, salary deferrals or other cost
          cutting measures.

Additional financing may not be available to us on favorable terms, or at all.
If additional financing is not available and if we cannot generate sufficient
revenue from operations, we may need to change our business plan, sell or merge
our business, or file a petition in bankruptcy. In addition, any issuance of
additional equity or equity-related securities will dilute the ownership
interest of existing shareholders and our issuance of debt securities could
increase the risk or perceived risk of our company. The results of any of these
measures could materially affect our business, results of operations and
financial position. We are exploring strategies for financing, however,
currently we do not have any commitment for any of the foregoing.**

     During fiscal 2004, we anticipate generating cash from operations from
software license revenues as well as potential additional licenses of our
patented technology. We expect that our primary uses of cash will be salaries
and other controllable expenses associated with research and development, sales
and marketing, and general and administrative activities. We intend to continue
to monitor new license activity closely and may have to reduce staff, and/or
seek outside financing or a sale or merger of the Company if patent and software
licenses do not substantially increase quarter-to-quarter during fiscal 2004.**

Impact of Recently Issued Accounting Standards

     In June 2001, The Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 143, "Accounting for Asset
Retirement Obligations," (SFAS No. 143) which addresses financial accounting and
reporting for legal obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. SFAS No. 143 is
effective for fiscal years beginning after June 15, 2002. The Company adopted
SFAS No. 143 on April 1, 2003, and has no legal obligations that are affected by
SFAS No. 143.

     In July 2002, the FASB issued Statement of Financial Accounting Standards
No. 146, "Accounting for Costs Associated with Exit or Disposal Activities,"
(SFAS No. 146) which is effective for exit or disposal activities that are
initiated after December 31, 2002. SFAS No. 146 nullifies Emerging Issues Task
Force Issue No. 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit and Activity," (EITF 94-3). The Company adopted
SFAS No. 146 on January 1, 2003 and has not undertaken any transactions that are
affected by SFAS No. 146.

     In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others, an interpretation of FASB Statements No.
5, 57 and 107 and a rescission of FASB Interpretation No. 34" (FIN No. 45). This
Interpretation elaborates on the disclosures to be made by a guarantor in its
interim and annual financial statements about its obligations under guarantees
issued. The Interpretation also clarifies that a guarantor is required to
recognize, at inception of a guarantee, a liability for the fair value of the
obligation undertaken. The initial recognition and measurement provisions of the
Interpretation are applicable to


                                    Page 24
<PAGE>

guarantees issued or modified after December 31, 2002 and are not expected to
have a material effect on the Company's financial statements. The disclosure
requirements are effective for financial statements of interim or annual periods
ending after December 15, 2002 and are included in the notes to these
consolidated financial statements.

     In May 2003, the FASB issued Statement of Financial Accounting Standards
No. 150, "Accounting for Certain Financial Instruments with Characteristics of
Both Liabilities and Equity" (SFAS No. 150). This statement requires issuers to
classify as liabilities (or assets in some circumstances) three classes of
freestanding financial instruments that embody obligations for the issuer.
Generally the statement is effective for financial instruments entered into or
modified after May 31, 2003 and is otherwise effective at the beginning of the
first interim period beginning after June 15, 2003. The Company plans to adopt
the provisions of this Statement effective July 1, 2003, which are not expected
to have a material effect on its consolidated financial statements.


                                    Page 25
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS


                          Independent Auditors' Report


The Board of Directors of
Timeline, Inc.:

We have audited the accompanying consolidated balance sheets of Timeline, Inc.
and subsidiaries (the Company) as of March 31, 2003 and 2002, and the related
consolidated statements of operations, shareholders' equity and comprehensive
loss, and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Timeline, Inc. and
subsidiaries as of March 31, 2003 and 2002, and the results of their operations
and their cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has suffered recurring losses and
has a net working capital deficit of $192,709 at March 31, 2003. These factors
raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

As discussed in Note 2 to the consolidated financial statements, the Company
changed its method of accounting for goodwill and other intangible assets upon
adoption of Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets," for the fiscal year ended March 31, 2003.


                                            /s/ KPMG LLP
May 9, 2003
Seattle, Washington


                                    Page 26
<PAGE>

                                 TIMELINE, INC.
                           CONSOLIDATED BALANCE SHEETS
                             MARCH 31, 2003 AND 2002

                                     ASSETS

<TABLE>
<CAPTION>
                                                                     2003               2002
                                                                 ----------         ----------
<S>                                                              <C>                <C>
CURRENT ASSETS:
  Cash and cash equivalents                                      $  167,908         $   82,956
  Marketable securities - available for sale                         19,486            203,130
  Accounts receivable net of allowance of
    $10,164 and $73,599                                             590,859            636,201
  Prepaid expenses and other                                        147,239            142,492
                                                                 ----------         ----------

                  Total current assets                              925,492          1,064,779

PROPERTY AND EQUIPMENT, net of accumulated
  depreciation of $818,906 and $772,873                             100,099            120,464

CAPITALIZED SOFTWARE, net of accumulated
  amortization of $817,341 and $435,755                             185,524            208,037

CAPITALIZED PATENTS, net of accumulated
  amortization of $41,229 and $26,056                               223,725            187,375

INTANGIBLE ASSETS, net of accumulated amortization
  of $886,442 and $872,678                                           83,539            781,760

GOODWILL, net of accumulated amortization of
  $123,938 and $48,105                                               70,183             34,432
                                                                 ----------         ----------

                  Total assets                                   $1,588,562         $2,396,847
                                                                 ==========         ==========


                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                                               $   32,844         $  474,133
  Accrued expenses                                                  477,056            469,758
  Deferred revenues                                                 608,301            569,825
                                                                 ----------         ----------

                  Total current liabilities                       1,118,201          1,513,716
                                                                 ----------         ----------

SHAREHOLDERS' EQUITY:
  Common stock, $.01 par value, 20,000,000 shares authorized,
    4,165,998 and 4,153,498 issued and outstanding                   41,660             41,535
  Additional paid-in capital                                     10,465,478         10,448,488
  Accumulated other comprehensive (loss) income                     (47,459)            17,107
  Accumulated deficit                                            (9,989,318)        (9,623,999)
                                                                 ----------         ----------

                  Total shareholders' equity                        470,361            883,131
                                                                 ----------         ----------

                  Total liabilities and shareholders' equity     $1,588,562         $2,396,847
                                                                 ==========         ==========
</TABLE>

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


                                    Page 27
<PAGE>

                                 TIMELINE, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                   FOR THE YEARS ENDED MARCH 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                                                          2003                 2002
                                                                       -----------          -----------
<S>                                                                    <C>                  <C>
REVENUE:
   Software license                                                    $ 1,208,881          $ 1,551,638
   Patent license                                                        1,074,000            1,550,000
   Maintenance                                                           1,143,027              922,488
   Consulting and other                                                    902,367              769,229
                                                                       -----------          -----------
         Total revenues                                                  4,328,275            4,793,355

COST OF REVENUES:
   Software license                                                        207,332              221,724
   Patent license                                                           15,172               10,928
   Maintenance, consulting and other                                       402,190              604,093
                                                                       -----------          -----------
         Total cost of revenues                                            624,694              836,745
                                                                       -----------          -----------
         Gross profit                                                    3,703,581            3,956,610
                                                                       -----------          -----------
OPERATING EXPENSES:
   Sales and marketing                                                     690,116            1,251,297
   Research and development                                                788,694            1,332,371
   General and administrative                                            1,601,570            1,937,996
   Patents                                                                 374,625              510,988
   Depreciation                                                             45,733               52,544
   Amortization of intangibles and goodwill                                459,235              602,206
                                                                       -----------          -----------
         Total operating expenses                                        3,959,973            5,687,402
                                                                       -----------          -----------
         Loss from operations                                             (256,392)          (1,730,792)
                                                                       -----------          -----------
OTHER INCOME (EXPENSE):
   Realized loss on marketable securities - available for sale              (6,040)            (298,377)
   Impairment of marketable securities - available for sale               (123,204)            (279,263)
   Interest income and other                                                38,733               21,500
                                                                       -----------          -----------
         Total other expense                                               (90,511)            (556,140)
                                                                       -----------          -----------
         Loss before income taxes                                         (346,903)          (2,286,932)

   Income tax provision                                                    (18,416)                  --
                                                                       -----------          -----------
         Net loss                                                      $  (365,319)         $ (2,286,932)
                                                                       ===========          ============

Basic and diluted net loss per share                                       $ (0.09)              $ (0.57)
                                                                       ===========          ============

Shares used in calculation of basic and diluted net loss
  per share                                                              4,127,236             4,044,080
                                                                       ===========          ============
</TABLE>

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


                                    Page 28
<PAGE>

                                 TIMELINE, INC.

     CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE LOSS
                   FOR THE YEARS ENDED MARCH 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                                                                    Accumulated
                                             Common Stock          Additional          Other                             Total
                                         ----------------------      Paid-in       Comprehensive      Accumulated    Shareholders'
                                           Shares       Amount       Capital       (Loss) Income        Deficit         Equity
                                         ----------------------------------------------------------------------------------------
<S>                                      <C>           <C>         <C>              <C>              <C>             <C>
BALANCE, March 31, 2001                  4,038,498     $ 40,385    $10,424,703      $ (410,451)      $(7,337,067)    $ 2,717,570

   Stock-based compensation                115,000        1,150         23,785              -                 -           24,935
   Net loss                                     -            -              -               -         (2,286,932)     (2,286,932)
   Change in unrealized gain (loss) on
     available for sales securities, net        -            -              -          401,835                -          401,835
   Foreign currency translation
     adjustment                                 -            -              -           25,723                -           25,723
                                                                                                                     -----------
       Total comprehensive loss                 -            -              -               -                 -       (1,859,374)
                                         ---------     --------    -----------      ----------       -----------     -----------

BALANCE, March 31, 2002                  4,153,498       41,535     10,448,488          17,107        (9,623,999)        883,131

   Stock-based compensation                 12,500          125         16,990               -                -           17,115
   Net loss                                     -            -              -                -          (365,319)       (365,319)
   Change in unrealized gain (loss) on
     available for sales securities, net        -            -              -           (7,540)               -           (7,540)
   Foreign currency translation
     adjustment                                 -            -              -          (57,026)               -          (57,026)
                                                                                                                     -----------
       Total comprehensive loss                 -            -              -                -                -         (429,885)
                                         ---------     --------    -----------      ----------       -----------     -----------

BALANCE, March 31, 2003                  4,165,998     $ 41,660    $10,465,478      $  (47,459)      $(9,989,318)    $   470,361
                                         =========     ========    ===========      ==========       ===========     ===========
</TABLE>

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


                                    Page 29
<PAGE>

                                 TIMELINE, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   FOR THE YEARS ENDED MARCH 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                                                              2003                 2002
                                                                           ----------          -----------
<S>                                                                        <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                                $ (365,319)         $(2,286,932)
   Adjustments to reconcile net loss to net cash used in
   operating activities:
     Depreciation and amortization                                            727,472              862,642
     Loss on disposal of property and equipment                                    -                 1,536
     Stock-based compensation                                                  17,115               24,935
     Realized loss on sale of marketable equity securities                      6,040              298,377
     Impairment of available for sale securities                              123,204              279,263
     Income taxes                                                              18,416                   -
     Changes in operating assets and liabilities:
       Accounts receivable                                                     66,353              140,719
       Prepaid expenses and other                                                 611               24,774
       Accounts payable                                                      (490,306)              28,921
       Accrued expenses and other                                              (6,219)             (49,706)
       Deferred revenues                                                       12,413               38,324
                                                                           ----------          -----------
           Net cash provided by (used in) operating activities                109,780             (637,147)
                                                                           ----------          -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of property and equipment                                         (24,956)              (7,738)
   Proceeds from sale of property and equipment                                    -                 1,035
   Investment in patents                                                      (51,522)             (41,288)
   Proceeds from sale of marketable securities - available for sale            46,860              744,848
                                                                           ----------          -----------
       Net cash (used in) provided by investing activities                    (29,618)             696,857
                                                                           ----------          -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuance of notes payable to related parties                      -               172,580
   Repayment of notes payable to related parties                                   -              (172,580)
                                                                           ----------          -----------
       Net cash used in financing activities                                       -                    -
                                                                           ----------          -----------
EFFECT OF FOREIGN EXCHANGE RATE FLUCTUATIONS                                    4,790               23,246

NET CHANGE IN CASH AND CASH EQUIVALENTS                                        84,952               82,956

CASH AND CASH EQUIVALENTS, beginning of year                                   82,956                  -
                                                                           ----------          -----------
CASH AND CASH EQUIVALENTS, end of year                                     $  167,908          $    82,956
                                                                           ==========          ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash paid for interest                                                  $   13,042          $    32,932
</TABLE>


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


                                    Page 30
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 MARCH 31, 2003

1.  THE COMPANY:

Organization

     The accompanying consolidated financial statements are for Timeline, Inc.
and subsidiaries (the Company). The Company, which is headquartered in Bellevue,
Washington and also has operations in the United Kingdom, develops, markets and
supports enterprise-wide financial management, budgeting and reporting software
and event-based notification, application integration and process automation
systems. Timeline's software products are designed to automatically access and
distribute business information with full accounting control. Additionally, the
Company licenses its patent library to other software vendors.

Operations

     The Company has historically suffered recurring operating losses and
negative cash flows from operations. As of March 31, 2003, the Company had a net
working capital deficit of $192,709 and had an accumulated deficit of
$9,989,318, with total shareholders' equity of $470,361. These consolidated
financial statements have been prepared in accordance with accounting principles
generally accepted in the United States, assuming that the Company will continue
as a going concern. While management believes that current cash and cash
equivalent balances, along with the ability to sell marketable securities, and
any net cash provided by operations, may provide adequate resources to fund
operations at least until March 31, 2004, this may not be adequate. Management
is therefore contemplating a number of alternatives to enable the Company to
continue operating including, but not limited to:

     o    engaging a financial advisor to explore strategic alternatives, which
          may include a merger, asset sale, joint ventures or another comparable
          transaction;
     o    raising additional capital to fund continuing operations by private
          placements of equity or debt securities or through the establishment
          of other funding facilities, which may be on terms unfavorable to the
          Company;
     o    forming a joint venture with a strategic partner or partners to
          provide additional capital resources to fund operations; and
     o    loans from management or employees, salary deferrals or other cost
          cutting mechanisms.

     There can be no assurance that any of these alternatives will be
successful. If the Company is unable to obtain sufficient cash when needed to
fund its operations, it may be forced to seek protection from creditors under
the bankruptcy laws.

     The Company's inability to obtain additional cash as needed could have a
material adverse effect on its financial position, results of operations and its
ability to continue in existence. The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Presentation

     All subsidiaries of the Company are wholly-owned. The accompanying
consolidated financial statements include the accounts and operations of these
subsidiaries. All intercompany balances and transactions have been eliminated in
consolidation. Reclassifications have been made to the fiscal 2002 amounts to
conform to the fiscal 2003 presentation.


                                    Page 31
<PAGE>

Foreign Currency Translation

     The functional currency of the Company's foreign subsidiary is the local
currency of the country in which the subsidiary is located. Assets and
liabilities in foreign operations are translated to U.S. dollars using rates of
exchange in effect at the end of the reporting period. Income and expense
accounts are translated into U.S. dollars using average rates of exchange for
the period. The net gain or loss resulting from translation is shown as a
translation adjustment and included in other comprehensive income (loss) in
shareholders' equity. Gains and losses from foreign currency transactions are
included in the consolidated statements of operations.

Significant Use of Estimates

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities. Actual results could differ from these estimates.
Changes in these estimates and assumptions may have a material impact on the
financial statements. Critical estimates include assessments impacting revenue
recognition, the nature of declines in the value of marketable securities,
collectibility of accounts receivable, valuation of capitalized software and
capitalized patents, and valuation of intangible assets and goodwill.

Cash and Cash Equivalents

     The Company considers all highly liquid investments with a purchased
maturity of three months or less to be cash equivalents. Cash equivalents are
valued at cost, which approximates fair value, due to the short-term nature of
these investments.

Marketable Securities - Available for Sale

     In December 2000, the Company settled a patent infringement lawsuit filed
against Sagent Technology, Inc. (Sagent). As part of the settlement, the Company
licensed certain patented technology to Sagent in exchange for $600,000 and
600,000 shares of Sagent common stock with a fair market value of $1,425,000 at
the date of the settlement. There are no restrictions on the sale of these
securities.

     The total value of the remaining 150,800 shares of Sagent common stock was
$19,486 at March 31, 2003. During fiscal 2003, the Company sold 52,300 of the
Sagent shares resulting in realized losses of $6,040. Subsequent to year-end,
the Company has not sold any additional shares. The Company has accounted for
these shares as available for sale securities as required under Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments:
Debt and Equity Securities" (SFAS No. 115). Accordingly, these securities are
stated at fair market value, based on quoted market prices, with unrealized
gains and losses excluded from results of operations and reported as a component
of accumulated other comprehensive (loss) income on the Company's balance sheet.
Realized gains and losses on sales of these securities are determined on the
specific identification method and included in results of operations.

     During the fourth quarter of fiscal 2002, the Company determined, after
considering a number of factors, that the decline in the fair value of these
securities was other than temporary. These factors include the time period and
extent for which the quoted market price was less than the accounting basis, the
issuing company's financial condition and overall industry health. As a result,
the Company recognized a loss on the impairment of available for sale securities
of $279,263. This established a new accounting basis in the securities.

     The Company subsequently determined that further declines in the fair value
of the securities from such new accounting basis in the second quarter of fiscal
2003 were other than temporary. Accordingly, the


                                    Page 32
<PAGE>

Company recorded a loss on the impairment of the available for sale securities
of an additional $123,204 in the second fiscal quarter of 2003, and established
another new accounting basis.

     The net change in the unrealized loss on available for sale securities of
$7,540 is composed of the following:

<TABLE>
<S>                                                             <C>
 Unrealized holding losses during the period                    $(136,784)
 Reclassification adjustment for losses included in net loss        6,040
 Impairment of available for sale securities                      123,204
                                                                ---------
                                                                $  (7,540)
                                                                =========
</TABLE>

     As of March 31, 2002, an unrealized loss of $7,540 on these securities was
included as a component of accumulated comprehensive loss in the Company's
balance sheet.

Accounts Receivable

     Accounts receivable are recorded at the invoiced amount and do not bear
interest. The allowance for doubtful accounts is the Company's best estimate of
the amount of probable credit losses in the Company's existing accounts
receivable. Management determines the allowance for doubtful accounts based on
known troubled accounts and historical experience. Account balances are
written-off against the allowance when the Company deems specific customer
amounts to be uncollectible.

Property and Equipment

     Property and equipment are stated at historical cost. Improvements and
replacements are capitalized. Maintenance and repairs are expensed when
incurred. The provision for depreciation is determined by the straight-line
method, which allocates the cost of property and equipment additions, over their
estimated useful lives of three to seven years.

Capitalized Software Costs and Research and Development Costs

     The Company capitalizes certain internally generated software development
costs, which consist primarily of salaries, in accordance with Statement of
Financial Accounting Standards No. 86, "Accounting for the Costs of Computer
Software to be Sold, Leased, or otherwise Marketed" (SFAS No. 86). Amounts
capitalized relate to software development costs incurred after the
technological feasibility of a product has been established. Amortization is
recognized using the greater of the ratio of current gross revenues to total
current and projected future gross revenues for the product or the straight-line
method over the product's estimated economic life of three years. Amortization
starts when the product is available for general release to customers. During
fiscal 2002 and 2003, the Company did not capitalize any software development
costs. Amortization expense for fiscal 2003 and 2002 was $207,332 and $221,724,
respectively. This amortization is included in cost of revenues in the
accompanying statements of operations.

     At January 1, 2003, the Company reclassified an asset from intangible
assets to capitalized software. This reclassification reflects the release of a
version of the Company's Analyst software that incorporated the core technology
obtained in the December 2000 acquisition of WorkWise, Inc. During the year
ended March 31, 2003, such release met the criteria to establish technological
feasibility. Consequently, effective January 1, 2003, $554,457 in cost and
$415,842 of accumulated amortization were reclassified as capitalized software
and accumulated amortization of capitalized software, respectively. The
remaining unamortized balance will continue to be amortized on a straight line
basis over the remaining term of the original estimated life of 36 calendar
months.

     All research and development costs are expensed as incurred.


                                    Page 33
<PAGE>

Patents

     The Company capitalizes the costs to obtain and maintain patents on its
technology. Such costs are amortized over the life of the patent. Costs to
defend patents are expensed as incurred.

Intangible Assets and Goodwill

     Intangible assets historically consisted primarily of acquired technology,
customer lists, skilled workforce and goodwill related to acquisitions accounted
for under the purchase method of accounting. Amortization of these purchased
intangibles is provided on the straight-line basis over the respective useful
lives of the assets, primarily three years. Goodwill represents the excess of
acquisition cost over the fair value of net identifiable assets acquired.

     In June 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 141, "Business Combinations"
(SFAS No. 141), and No. 142, "Goodwill and Other Intangible Assets" (SFAS No.
142). SFAS No. 141 requires that the purchase method of accounting be used for
all business combinations initiated after June 30, 2001 as well as all purchase
method business combinations completed after June 30, 2001. SFAS No. 141 also
specifies criteria intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from goodwill. SFAS
No. 142 requires that goodwill and intangible assets with indefinite useful
lives no longer be amortized, but instead tested for impairment at least
annually in accordance with the provisions of SFAS 142. SFAS No. 142 also
requires that intangible assets with definite useful lives be amortized over
their respective estimated useful lives to their estimated residual values, and
reviewed for impairment in accordance with Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-lived
Assets " (SFAS No. 144).

     The provisions of SFAS No. 141 were adopted effective June 30, 2001. No
business combinations have been completed since July 1, 2001. The Company
adopted the provisions of SFAS No. 142 on April 1, 2002.

     Upon adoption of SFAS No. 142 on April 1, 2002, that the Company was
required to evaluate its existing intangible assets and goodwill that were
acquired in a prior purchase business combination. Any reclassifications
necessary to conform with the new criteria in SFAS No. 141 for recognition apart
from goodwill also had to be made. Likewise, SFAS No. 142 required the Company
to reassess the useful lives and residual values of all intangible assets
acquired in purchase business combinations, and make any necessary amortization
period adjustments by the end of the first interim reporting period after
adoption. Finally, to the extent an intangible asset was identified as having an
indefinite useful life, the Company was required to test the intangible asset
for impairment in accordance with SFAS No. 142 within the first quarter of
fiscal 2003. Any impairment loss would have been measured as of April 1, 2002
and recognized as the cumulative effect of a change in accounting principle in
the first quarter of fiscal 2003.

     In connection with the transitional goodwill impairment evaluation, SFAS
No. 142 required the Company to perform an assessment of whether there was an
indication that goodwill was impaired at the reporting unit level as of April 1,
2002. The Company determined that it has two reporting units consisting of
operations in the United States (Timeline) and Europe (Analyst Financials,
Ltd.). All goodwill is attributable to the Analyst Financials Ltd. reporting
unit. The Company completed the transitional goodwill impairment test and
determined that it did not have a transitional impairment loss to record.

     Upon adoption of SFAS No. 142 on April 1, 2002, the Company reclassified a
workforce-in-place intangible asset with an unamortized balance of $54,167 to
goodwill. As a result of the reclassification of the workforce-in-place
intangible asset to goodwill and the corresponding reduction in the related
deferred tax liability, the Company's valuation allowance for deferred tax
assets was increased resulting in income tax


                                    Page 34
<PAGE>

expense of $18,416. The Company has also reviewed the useful lives of its
identifiable intangible assets and determined that the original estimated lives
remain appropriate.

     As required by SFAS No. 142, the Company has ceased amortization of
goodwill effective as of April 1, 2002.

     The Company performed its annual goodwill impairment test as required by
SFAS No. 142 during its fiscal fourth quarter. The results of this test did not
give any indication that goodwill was potentially impaired, and accordingly no
amounts have been recorded for goodwill impairment in fiscal 2003.

     Net loss and net loss per share for the years ended March 31, 2003 and
2002, adjusted to exclude goodwill amortization are as follows:

<TABLE>
<CAPTION>
                                                                 2003                    2002
                                                              ------------            ------------
<S>                                                           <C>                     <C>
Net loss:
  Reported net loss                                              $(365,319)            $(2,286,932)
  Goodwill amortization                                                -                    70,879
                                                              ------------            ------------
    Adjusted net loss                                            $(365,319)            $(2,216,053)
                                                              ============            ============

Basic and diluted net loss per share:
 Reported basic and
  diluted net loss per share                                        $(0.09)                 $(0.57)
 Goodwill amortization                                               (0.00)                   0.02
                                                              ------------            ------------
   Adjusted basic and
   diluted net loss per share                                       $(0.09)                 $(0.55)
                                                              ------------            ------------
Basic and diluted weighted average
  number of shares                                               4,127,236               4,044,080
                                                              ============            ============
</TABLE>

     Carrying amounts as of March 31 are as follows:

<TABLE>
<CAPTION>
                                                                   2003                    2002
                                                              ------------            ------------
<S>                                                           <C>                     <C>
Gross carrying amount:
  Goodwill                                                    $    194,121            $     82,537
  Acquired technology                                              649,981               1,204,438
  Customer/distributor contracts                                   320,000                 320,000
  Skilled workforce                                                    -                   130,000
                                                              ------------            ------------
    Total                                                     $  1,164,102            $  1,736,975
                                                              ============            ============

Accumulated amortization:
  Goodwill                                                    $    123,938            $     48,105
  Acquired technology                                              620,216                 633,609
  Customer/distributor contracts                                   266,226                 163,236
  Skilled workforce                                                    -                    75,833
                                                              ------------            ------------
    Total                                                     $  1,010,380            $    920,783
                                                              ============            ============
Net book value                                                $    153,722            $    816,192
                                                              ============            ============
</TABLE>

     Each class of intangible assets has a weighted average amortization period
of three years.

     Amortization of intangible assets was $459,235 and $531,327 (excluding
goodwill amortization in fiscal 2002) in the fiscal years ended March 31, 2003
and March 31, 2002, respectively.

     Expected future amortization expense related to identifiable intangible
assets through the fiscal year ending March 31, 2004 is $83,539.


                                    Page 35
<PAGE>

Impairment of Long-lived Assets

     In August 2001, the FASB issued Statement of Financial Accounting Standards
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS
No. 144), which supersedes certain provisions of APB Opinion No. 30, "Reporting
the Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions" (APB No. 30) and supersedes Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" (SFAS No. 121). The Company adopted SFAS
No. 144 on April 1, 2002. In accordance with SFAS No. 144, the Company evaluates
long-lived assets, including intangible assets other than goodwill, for
impairment whenever events or changes in circumstances indicate that the
carrying value of an asset may not be recoverable based on estimated
undiscounted cash flows attributable to that asset. The amount of any impairment
is measured as the difference between the carrying value and the fair value of
the impaired asset. The Company does not currently believe that any of its
long-lived assets are impaired.

Fair Value of Financial Instruments

     The Company's financial instruments include cash and cash equivalents,
receivables, accounts payable and accrued liabilities. The fair value of these
financial instruments approximates their carrying amounts based on current
market indicators or their short-term nature.

Revenue Recognition

     The Company recognizes revenue pursuant to the requirements of Statement of
Position No. 97-2, "Software Revenue Recognition" (SOP 97-2), as amended by
Statement of Position No. 98-9, "Software Revenue Recognition with Respect to
Certain Arrangements." Under SOP 97-2, revenue attributable to an element in a
customer arrangement is recognized when persuasive evidence of an arrangement
exists and delivery has occurred, provided the fee is fixed or determinable,
collectibility is probable and the arrangement does not require significant
customization of the software.

     For all sales, the Company uses either a binding purchase order or signed
agreement, depending on the nature of the transaction, as evidence of an
arrangement. Sales through its resellers are evidenced by a master agreement
governing the relationship.

     For software license fees in single element arrangements and multiple
element arrangements which do not include customization or consulting services,
delivery typically occurs when the product is shipped to customers and a license
key is issued.

     At the time of each transaction, the Company assesses whether the fee
associated with its revenue transactions is fixed and determinable and whether
or not collection is reasonably assured. The Company assesses whether the fee is
fixed and determinable based on the payment terms associated with the
transaction. If a fee is based upon a variable matrix such as a minimum level of
distribution or is subject to refund, the Company accounts for the fee as not
being fixed and determinable. In these cases, it defers revenue and recognizes
it when it becomes due and payable.

     The Company assesses the probability of collection based on a number of
factors, including past transaction history with the customer and the current
financial condition of the customer. It does not request collateral from its
customers. If the Company determines that collection of a fee is not reasonably
assured, it defers revenue until the time collection becomes reasonably assured.

     For multiple element arrangements, when Company-specific objective evidence
of fair value exists for all of the undelivered elements of the arrangement, but
does not exist for one or more of the delivered elements in the arrangement, the
Company recognizes revenue under the residual method.


                                    Page 36
<PAGE>

     Under the residual method, at the outset of the arrangement with a
customer, the Company defers revenue for the fair value of its undelivered
elements such as consulting services and product support and upgrades, and
recognizes the revenue for the remainder of the arrangement fee attributable to
the elements initially delivered, such as software licenses, when the criteria
in SOP 97-2 have been met. Company-specific objective evidence is established
for support and upgrades of standard products for which no installation or
customization is required based upon the amounts charged when support and
upgrades are sold separately. Company-specific objective evidence is established
for consulting and installation services based on the hourly rates charged for
its employees when they are performing these services provided the Company has
the ability to accurately estimate the hours required to complete a project
based upon its experience with similar projects. For multiple element
arrangements involving installation or customization, company-specific objective
evidence is established for support and maintenance arrangements if its
customers have an optional annual renewal rate specified in the arrangement and
the rate is substantive.

     The Company recognizes revenue from nonrefundable minimum royalty
agreements from distributors or resellers upon delivery of product to the
distributor or reseller, provided no significant obligations remain outstanding
and the conditions of SOP 97-2 have been met. Additional royalties are
recognized as revenue to the extent the minimums are exceeded when earned, based
on the distributor or reseller's contractual reporting obligations.

     In all other cases, the Company recognizes revenue when delivery to the end
user has occurred and the amount due from the reseller is fixed and
determinable. Most resellers are required to contact Timeline directly to
request Timeline provide a "key" to the reseller's customer that allows the
software to operate. In those situations, Timeline invoices the reseller at the
time the key is released to the customer indicating the software has been loaded
on a unique customer machine. Some resellers have the right to distribute keys
to their own customers, in which case the reseller distributes a copy of the
software and then provides a "key" to the end user. The reseller is
contractually required to have a binding license or purchase order in place with
the end user before the end user is allowed to physically load the Timeline
software on a unique machine. These resellers report to Timeline on a monthly or
quarterly basis the number and dollar amount of licenses they have distributed
in the prior period; i.e. the `keys' utilized. Based upon that report, Timeline
then invoices the reseller. Timeline records revenue at the time of invoice for
the period covered. There are no return rights offered to either the reseller or
the end user.

     Revenue from support agreements is recognized on a straight-line basis over
the life of the contract.

     The Company also enters into separately priced consulting agreements with
its customers to provide installation, training and other consulting services.
These agreements are generally priced on a time and materials basis and revenues
are recognized as the services are performed. The nature of the services does
not significantly alter the licensed software.

     With regard to revenue generated from the licensing of patents, the Company
recognizes revenue when a patent license agreement is signed, collectibility is
probable and the amount of payment is fixed and determinable, consistent with
SOP 97-2 and Staff Accounting Bulletin No. 101, "Revenue Recognition" (SAB No.
101).

Stock-Based Compensation

     The Company applies the intrinsic value based method of accounting
prescribed by APB Opinion No. 25, "Accounting for Stock Issued to Employees"
(ABP No. 25), and related interpretations including FASB Interpretation No. 44,
"Accounting for Certain Transactions involving Stock Compensation, an
interpretation of APB Opinion No. 25" (FIN No. 44), to account for its fixed
plan stock options. Under this method, compensation expense is recorded on the
date of grant only if the current market price of the underlying stock exceeded
the exercise price. Compensation costs for fixed awards with pro rata vesting
are recognized

                                    Page 37
<PAGE>

using the straight-line method. SFAS No. 123, "Accounting for Stock Based
Compensation" (SFAS No. 123), established accounting and disclosure requirements
using a fair value based method of accounting for stock based employee
compensation plans. As allowed by SFAS No. 123, the Company has elected to
continue to apply the intrinsic-value-based method of accounting described
above, and has adopted only the disclosure requirements of SFAS No. 123. The
following table illustrates the effect on net loss if the fair-value-based
method had been applied to all outstanding and unvested awards in each period:

<TABLE>
<CAPTION>
                                                                     2003                  2002
                                                                 -----------            -----------
<S>                                                                <C>                  <C>
Net loss, as reported                                              $(365,319)           $(2,286,932)
Add stock-based employee compensation expense
  included in reported net loss                                       17,115                 38,697
Deduct total stock-based employee compensation
  expense determined under fair-value-based method
  for all awards                                                     (73,767)              (131,991)
                                                                   ---------            -----------
Pro forma net loss                                                 $(421,971)           $(2,380,226)
                                                                   =========            ===========
Basic and diluted net loss per share - as reported                    $(0.09)                $(0.57)
                                                                   =========            ===========
Basic and diluted net loss per share - pro forma                      $(0.10)                $(0.59)
                                                                   =========            ===========
</TABLE>

     Options and warrants issued to non employees are accounted for using the
fair value method of accounting as prescribed by SFAS No. 123, using the
Black-Scholes option-pricing model.

     The fair value of each option grant is established on the date of grant
using the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants during 2003 and 2002: zero dividend yield; expected
volatility of 98%; risk-free interest rates of 4.00%, respectively; and expected
lives of five years. All options granted during fiscal 2003 and 2002 were done
so at prices above fair market value on the date of grant. The weighted-average
grant date fair value of options granted during fiscal 2003 and 2002, was $0.32
and $0.75, respectively.

Net Loss per Common Share

     Basic and diluted loss per share is the net loss divided by the weighted
average number of shares outstanding during the period. The calculation of
weighted average shares excludes 39,231 outstanding shares which were subject to
vesting conditions for the fiscal year ended March 31, 2002 and for fiscal 2003
until the shares vested. These shares vested on March 22, 2003, and have been
included in the calculation from that date forward. The effect of including
outstanding options and warrants is anti-dilutive for all periods presented.

     Shares issuable pursuant to stock options and warrants that have not been
included in the calculation of net loss per share because they are antidilutive
totaled 614,279 and 642,129 options and warrants in fiscal 2003 and 2002,
respectively.

Comprehensive Loss

     Accumulated other comprehensive (loss) income consisted of the following at
March 31, 2003 and 2002:

<TABLE>
<CAPTION>
                                              2003              2002
                                           --------           -------
<S>                                        <C>                <C>
Unrealized (loss) gain on available
  for sale securities                      $ (7,540)               -
Foreign currency translation                (39,919)          $17,107
                                           --------           -------
                                           $(47,459)          $17,107
                                           ========           =======
</TABLE>

                                    Page 38
<PAGE>

Recent Accounting Pronouncements

     In June 2001, The Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 143, "Accounting for Asset
Retirement Obligations," (SFAS No. 143) which addresses financial accounting and
reporting for legal obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. SFAS No. 143 is
effective for fiscal years beginning after June 15, 2002. The Company adopted
SFAS No. 143 on April 1, 2003, and has no legal obligations that are affected by
SFAS No. 143.

     In July 2002, the FASB issued Statement of Financial Accounting Standards
No. 146, "Accounting for Costs Associated with Exit or Disposal Activities,"
(SFAS No. 146) which is effective for exit or disposal activities that are
initiated after December 31, 2002. SFAS No. 146 nullifies Emerging Issues Task
Force Issue No. 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit and Activity," (EITF 94-3). The Company adopted
SFAS No. 146 on January 1, 2003 and has not undertaken any transactions that are
affected by SFAS No. 146.

     In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others, an interpretation of FASB Statements No.
5, 57 and 107 and a rescission of FASB Interpretation No. 34" (FIN No. 45). This
Interpretation elaborates on the disclosures to be made by a guarantor in its
interim and annual financial statements about its obligations under guarantees
issued. The Interpretation also clarifies that a guarantor is required to
recognize, at inception of a guarantee, a liability for the fair value of the
obligation undertaken. The initial recognition and measurement provisions of the
Interpretation are applicable to guarantees issued or modified after December
31, 2002 and are not expected to have a material effect on the Company's
financial statements. In the ordinary course of business, the Company is not
subject to potential obligations under guarantees that fall within the scope of
FIN No. 45 except for standard indemnification and warranty provisions that are
contained within many of its customer license and service agreements.The
disclosure requirements are effective for financial statements of interim or
annual periods ending after December 15, 2002 and are included in the notes to
these consolidated financial statements.

     Indemnification and warranty provisions contained within the Company's
customer license and service agreements are generally consistent with those
prevalent in its industry. The duration of the Company's product warranties
generally does not exceed 90 days following delivery of its products. The
Company has not incurred significant obligations under customer indemnification
or warranty provisions historically and does not expect to incur significant
obligations in the near future. Accordingly, the Company does not maintain
accruals for potential customer indemnification or warranty-related obligations.

     In May 2003, the FASB issued Statement of Financial Accounting Standards
No. 150, "Accounting for Certain Financial Instruments with Characteristics of
Both Liabilities and Equity" (SFAS No. 150). This statement requires issuers to
classify as liabilities (or assets in some circumstances) three classes of
freestanding financial instruments that embody obligations for the issuer.
Generally the statement is effective for financial instruments entered into or
modified after May 31, 2003 and is otherwise effective at the beginning of the
first interim period beginning after June 15, 2003. The Company plans to adopt
the provisions of this Statement effective July 1, 2003, which is not expected
to have a material effect on its consolidated financial statements.

3.  MAJOR CUSTOMERS:

     During fiscal 2003, two customers combined comprised approximately 15% of
the Company's total revenue. During fiscal 2002, one customer comprised
approximately 25% of the Company's total revenue and another customer comprised
23% of the Company's total revenue. At March 31, 2003, approximately


                                    Page 39
<PAGE>

29% of the Company's accounts receivable balance was due from two of the
Company's customers. At March 31, 2002, approximately 24% of the accounts
receivable balance was due from the Company's largest customer.

4.  VALUATION AND QUALIFYING ACCOUNTS:

<TABLE>
<CAPTION>
                                 Balance at        Charged to                   Balance at
      Allowance for             Beginning of       Costs and                      End of
    Doubtful Accounts                Year           Expenses      Writeoffs        Year
-------------------------       ------------       ----------     ----------    ----------
<S>                                <C>              <C>            <C>           <C>
Year ended March 31, 2002          $ 4,902          $94,805        $(26,108)     $73,599
Year ended March 31, 2003           73,599            5,484         (68,919)      10,164
</TABLE>

5.  PROPERTY AND EQUIPMENT:

     Property and equipment consists of the following at March 31:

<TABLE>
<CAPTION>
                                                                2003                 2002
                                                              --------            ---------
<S>                                                           <C>                 <C>
Computer equipment                                            $742,142            $ 716,474
Office equipment                                               176,863              176,863
                                                              --------            ---------
                                                               919,005              893,337
Less - accumulated depreciation                               (818,906)            (772,873)
                                                              --------            ---------
Total property and equipment, net of
  accumulated depreciation                                    $100,099            $ 120,464
                                                              ========            =========
</TABLE>


6.  Accrued Expenses:

     Accrued expenses consist of the following:

<TABLE>
<CAPTION>
                                                                2003                 2002
                                                              --------            ---------
<S>                                                           <C>                 <C>
Compensation and benefits                                     $742,142            $ 249,579
Other                                                          212,298              220,179
                                                              --------            ---------
Total accrued expenses                                        $477,056            $ 469,758
                                                              ========            =========
</TABLE>


7.  FEDERAL INCOME TAXES:

     The Company has determined that the deferred tax assets do not satisfy the
more likely than not criteria set forth in Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS No. 109). Accordingly, a
valuation allowance has been recorded against the applicable deferred tax assets
and therefore no tax benefit has been recorded in the accompanying statement of
operations. The Company's deferred tax assets (liabilities) are as follows as of
March 31:

                                    Page 40
<PAGE>

<TABLE>
<CAPTION>
                                                         2003                  2002
                                                     -----------           -----------
<S>                                                  <C>                   <C>
Net operating loss carryforward                      $ 2,465,000           $ 2,504,000
Research and experimentation credit                      250,000               250,000
Deferred revenues                                        207,000               194,000
Capitalized software costs                                 3,000               (71,000)
Impairment of available for sale securities              136,000                95,000
Other                                                     23,000                53,000
                                                     -----------           -----------
                                                       3,084,000             3,025,000
Less - valuation allowance                            (3,084,000)           (3,025,000)
                                                     -----------           -----------
     Net deferred tax assets                         $        -            $        -
                                                     ===========           ============
</TABLE>

     The net operating loss carryforwards of approximately $6.0 million and
research and experimentation credit carryforwards of approximately $250,000
begin expiring in 2005.

     The valuation allowance increased by $59,000 during the year ended March
31, 2003 and increased by $744,000 during the year ended March 31, 2002.

     We recorded tax expense of $18,416 and $0 in fiscal 2003 and fiscal 2002,
respectively.

     The difference between the expected benefit computed using the statutory
tax rate of approximately 34% in 2003 and tax expense of $18,416 disclosed above
is the result of (1) a non-cash charge to increase our valuation allowance in
connection with our adoption of SFAS No. 142, which resulted in our not being
able to utilize the deferred tax liability related to skilled workforce which
was reclassified to goodwill, and (2) the full valuation allowance against our
net deferred tax assets.

     The difference between the statutory tax of approximately 34% in 2002 and
the tax benefit of zero is primarily due to our full valuation allowance against
the net deferred tax assets.

     In connection with its initial public offering in 1995, the Company
experienced a significant change in ownership, which limits the amount of
previously generated net operating loss carryforwards and research and
experimentation credits of $1,753,000 and $221,000, respectively, which may be
used in any given year to approximately $300,000. As a result of other ownership
changes, the utilization of net operating losses against future taxable income
may be limited.

8.  401(k) SAVINGS AND PROFIT SHARING PLAN:

     All employees of the Company over 21 years of age have the option of
participating in a company-sponsored 401(k) savings and profit sharing plan.
Employees can contribute up to 80% of their gross pay subject to statutory
maximums. At its discretion, the Company may make contributions to the plan
based on a percentage of participants' contributions. Employer contributions
vest over a period of six years. The Company made contributions of $7,609 and
$15,718 to the plan during the years ended March 31, 2003 and 2002,
respectively.

9.  EMPLOYEE STOCK OWNERSHIP PLAN:

     During March 1996, the Company established an Employee Stock Ownership Plan
(ESOP) that covers substantially all U.S. employees. The Company made matching
and discretionary contributions totaling $2,912 and $41,229 to the ESOP during
fiscal 2003 and 2002, respectively.

     In March 2002, the Company issued 100,000 shares of Timeline common stock
as a discretionary contribution to the ESOP. These shares were divided among all
eligible employees on December 31, 2002,


                                    Page 41
<PAGE>

according to the discretionary distribution terms of the ESOP. The Company
recorded a charge totaling $35,000 related to this issuance representing the
fair value of the shares on the issuance date in March 2002.

10.  COMMITMENTS AND CONTINGENCIES:

Litigation

     In July 1999, the Company was served a complaint by Microsoft Corporation
in the Superior Court of Washington for King County alleging breach of contract
regarding a Patent License Agreement signed by both companies in June 1999. In
December 2000, the Court issued a Memorandum Decision and in January 2001 issued
a Final Judgment in the lawsuit holding the language of the agreement would
support Microsoft's right to sublicense its customers to use Microsoft's SQL
Server by adding code or software products to it so long as the added code or
software does not itself independently infringe Timeline's patent. The Company
filed an appeal of the lower court's Final Judgment in the Washington State
Court of Appeals, and in March 2002 the Appellate Court remanded the case to the
Superior Court and ordered it to enter a judgment in the Company's favor.
Microsoft filed a motion for review requesting the Washington Supreme Court to
hear an appeal of the case. In December 2002, review was denied. On February 14,
2003, the Superior Court entered a new Final Judgment in accord with the Court
of Appeals mandate. The time to file any further appeals expired prior to March
31, 2003.

     In June 2001, the Company filed and subsequently served a complaint against
Hyperion Solutions, Inc. in the Federal District Court for the Western District
of Washington, alleging infringement of certain of its patents. On August 29,
2002, the Company entered into a settlement agreement with Hyperion in which it
granted to Hyperion a license to its patented technology and Hyperion agreed to
pay a license fee of $1,050,000 over a period of 4 months. The total amount was
recognized as patent licenses revenue in the quarter ended September 30, 2002
and is reflected in Patent license revenue for the year-ended March 31, 2003.
During January 2003, Hyperion made the final license fee payment of $250,000.

     From time to time, the Company may pursue litigation against other third
parties to enforce or protect its rights under this patent or its intellectual
property rights generally.

Leases

     The Company has entered into noncancelable operating lease agreements
involving equipment and office space. The following is a schedule of future
minimum lease payments under these leases as of March 31, 2003:

<TABLE>
         <S>                                                <C>
         Fiscal Year ending March 31,
            2004                                            $560,541
            2005                                              48,290
            2006                                               5,704
                                                            --------
            Total minimum lease payments                    $614,535
                                                            ========
</TABLE>

     Rent expense amounted to $546,743 and $574,442 for the years ended March
31, 2003 and 2002, respectively. The Company expects to receive income under
subleased facilities totaling $36,563 in fiscal 2004. The Company did not
receive sublease income in either fiscal year 2003 or 2002.


                                    Page 42
<PAGE>


11.  SHAREHOLDERS' EQUITY:

Stock Options and Warrants

     The Company has two plans: The 1994 Stock Option Plan (the "1994 Plan") and
the Directors' Nonqualified Stock Option Plan (the "Directors' Plan"). An
aggregate of 600,000 shares of common stock are collectively reserved for
issuance upon exercise of options granted to the Company's employees, directors
and consultants under the 1994 Plan and the Directors' Plan (collectively, the
"Stock Option Plans") and 244,375 shares are available for grant as of March 31,
2003. The exercise price of any options to be granted is typically equal to or
greater than the fair market value of the common stock at the date of grant. The
Company also has a 1993 Stock Option Plan (the "Old Plan"). A total of 132,000
shares of common stock have been reserved for issuance under the Old Plan. As of
March 31, 2003, no further option grants are available under the Old Plan. At
March 31, 2003, the Company had granted options to purchase 572,279 shares of
common stock, including those described in the following paragraphs which are
not part of these option plans. Options under these plans generally vest ratably
over three or four-year periods. The term of the options is for a period of 10
years or less. Options automatically expire 90 days after termination of
employment.

     In February 1999, the Company granted a performance-based stock option to
the President/CEO to purchase 50,000 shares of common stock at an exercise price
of $1.00 per share. This option will vest in full when the Company's common
stock closes trading at a price of $5.00 or more per share for a period of 10
consecutive days. In any event, this option will vest, if not otherwise vested,
seven years from the date of grant provided that this individual is then
employed by the Company. This option had not vested as of March 31, 2003.

     In November 1999, the Company granted a performance-based stock option to
the President/CEO to purchase 50,000 shares of common stock at an exercise price
of $1.875 per share. This option will vest in full when the Company's common
stock closes trading at a price of $5.00 or more per share for a period of 10
consecutive days. In any event, this option will vest, if not otherwise vested,
seven years from the date of grant provided that this individual is then
employed by the Company. This option had not vested as of March 31, 2003.

     In January 2001, the Company granted a performance-based stock option under
the 1994 Stock Option Plan to the President/CEO to purchase 25,000 shares of
common stock at an exercise price of $1.156 per share. This option will vest in
full when the Company's common stock closes trading at a price of $7.50 or more
per share for a period of 10 consecutive days. In any event, this option will
vest, if not otherwise vested, seven years from the date of grant provided that
this individual is then employed by the Company. This option had not vested as
of March 31, 2003.

     In June 2002, the Company granted a performance-based stock option under
the 1994 Stock Option Plan to the President/CEO to purchase 25,000 shares of
common stock at an exercise price of $1.00 per share. This option will vest in
full when the Company's common stock closes trading at a price of $7.50 or more
per share for a period of 10 consecutive days. In any event, this option will
vest, if not otherwise vested, seven years from the date of grant provided that
this individual is then employed by the Company. This option had not vested as
of March 31, 2003.

                                    Page 43
<PAGE>

     Options outstanding as of each period are as follows:

<TABLE>
<CAPTION>
                                        Options Granted                             Options Granted
                                        Under the Plans                            Outside the Plans
                               ------------------------------------         ----------------------------------
                                                       Weighted                                   Weighted
                                Number of               Average              Number of             Average
                                 Options            Exercise Price            Options          Exercise Price
                               ----------           ---------------         -----------        ---------------
<S>                              <C>                     <C>                 <C>                   <C>
Balance, March 31, 2001          419,213                 $1.56               282,629               $1.54
    Granted                        7,500                  1.00                     -                   -
    Canceled                     (67,213)                 1.48                     -                   -
                                 -------                 -----               -------               -----
Balance, March 31, 2002          359,500                 $1.57               282,629               $1.54
    Granted                       35,000                  1.00                     -                   -
    Canceled                     (32,325)                 1.62               (30,525)               3.64
                                 -------                 -----               -------               -----
Balance, March 31, 2003          362,175                 $1.51               252,104               $1.29
                                 =======                 =====               =======               ======
</TABLE>

     In September 1998 and March 1999, the Company issued warrants to purchase
21,000 and 21,000 shares of common stock, respectively, with an exercise price
of $1.00 per share, to outside consultants in exchange for services rendered.
These warrants have a term of 5 years.

     In April 2003, Fidelity National Information Solutions (Nasdaq:FNIS)
obtained a license to use and sublicense Timeline products to provide financial
reporting and analytics for real estate, lenders and settlement companies.
Additionally, FNIS may sublicense Timeline products and build its own private
label derivative products for its customers. As part of this agreement, FNIS was
issued a warrant to buy up to 100,000 shares of Timeline stock at $1.62 per
share and, upon appropriate notice, to appoint either an observer or member to
the Timeline Board of Directors. The warrants were fully vested upon issuance.
The fair value of each warrant was established on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions: zero dividend yield; expected volatility of 91%; risk-free interest
rate of 2.78%, and a contractual life of 4 years. These warrants expire if not
exercised by April 2007. The aggregate fair value of these warrants was
approximately $84,000 and will be recognized as a reduction to license revenue
recognized in the first quarter of fiscal 2004.

     Information relating to stock options outstanding and stock options
exercisable at March 31, 2003 is as follows:

<TABLE>
<CAPTION>
                                          Options Outstanding                     Options Exercisable
                                  ------------------------------------           ---------------------
                                              Weighted        Weighted                         Weighted
                                  Number       Average         Average           Number        Average
                                    of        Remaining       Exercise             of          Exercise
 Range of Exercise Prices         Shares    Life in Years       Price            Shares          Price
 ------------------------         ------    -------------     --------           ------        --------
<S>                               <C>            <C>             <C>             <C>             <C>
$1.00-$2.88                       577,604        5.3             $1.27           391,520         $1.23
$3.57-$6.75                        36,675        0.6              3.76            36,675          3.76
                                                                 -----           -------         -----
Totals                            614,279        5.0             $1.42           428,195         $1.45
                                  =======        ===             =====           =======         =====
</TABLE>

     At March 31, 2003 and 2002, options to purchase 428,195 and 443,962,
respectively, were exercisable at weighted average exercise prices of $1.45 and
$1.61 per share, respectively.


                                    Page 44
<PAGE>

12.  RELATED PARTY TRANSACTIONS:

     The Company's transactions with related parties are as follows:

     In December 2001, two of the Company's officers, Frederick Dean and Michael
Evans, each received a performance-based award of 6,250 shares of Timeline
common stock. Mr. Dean and Mr. Evans each earned a second performance based
award of 6,250 shares of Timeline common stock in March 2002, which were issued
in April 2002. The Company recognized $4,500 of compensation expense in fiscal
2003 related to these awards. In March 2003, Messrs. Dean and Evans each
received a third performance based award of 6,250 shares of Timeline common
stock, which were issued in April 2003.

     In March 2002, two of the Company's officers, Michael Evans and Craig
Perkins, each borrowed funds from the Company ($6,881 and $6,882, respectively).
These funds were used to purchase Timeline common stock from a third party
shareholder. The loans were granted as part of the officers' compensation
package, and were forgiven in full on March 22, 2003. The Company accounted for
the stock purchase on a variable basis over the one-year term of the note, and
recognized a total of $12,615 and $1,147 of compensation expense in fiscal years
2003 and 2002, respectively, related to this note.

     In May 2001, three of the Company's directors loaned the Company a total of
$172,580 to fund operations. These loans bore interest at 12% per annum.
Principal and interest of $2,290 under these loans was paid in full in July
2001.

13.  SEGMENT INFORMATION:

     The Company follows the requirements of Statement of Financial Accounting
Standards No. 131, "Disclosures About Segments of an Enterprise and Related
Information" (SFAS 131). As defined in SFAS 131, the Company operates in two
reportable segments that are based on geographic business units in the United
States (Timeline) and Europe (Analyst Financials Ltd.). Both segments generate
revenues from the license and support of the Company's software products.
Revenues from other licenses and patent licenses are included in the Timeline
segment. The accounting policies of the segments are the same as those described
in the summary of significant accounting policies included herein and in the
Company's annual financial statements for the year ended March 31, 2002. During
the year ended March 31, 2003 and 2002, the Timeline segment included
intersegment revenues and the Analyst Financials segment included intersegment
expenses that totaled $481,253 and $361,435, respectively. These intersegment
transactions are recorded at market rates as if the transactions occurred with
third parties. The following table summarizes operations by segment during the
twelve months ended March 31, 2003 and March 31, 2002.

<TABLE>
<CAPTION>

                                                                 Year Ended 3/31/03
                                         ---------------------------------------------------------------------
                                                                Analyst
                                            Timeline           Financials       Eliminations         Total
                                            --------           ----------       ------------         -----

<S>                                       <C>                   <C>               <C>            <C>
Revenues                                  $   3,342,129         1,467,399         (481,253)      $   4,328,275
Operating (loss) income                   $     136,269          (392,661)              -        $    (256,392)
Depreciation and amortization             $     163,485           341,483               -        $     504,968
Long lived assets                         $     502,847           160,223               -        $     663,070
Total assets                              $   1,023,731           564,831               -        $   1,588,562

                                                                 Year Ended 3/31/02
                                          ---------------------------------------------------------------------
                                                                Analyst
                                            Timeline           Financials       Eliminations         Total
                                            --------           ----------       ------------         -----

Revenues                                  $   3,787,802         1,366,988         (361,435)      $   4,793,355
Operating (loss) income                   $    (526,676)       (1,204,116)              -        $  (1,730,792)
Depreciation and amortization             $     234,072           420,678               -        $     654,750
Long lived assets                         $     835,817           496,251               -        $   1,332,068
Total assets                              $   1,583,755           813,092               -        $   2,396,847

</TABLE>

                                    Page 45
<PAGE>

                                    Part III

     The information called for by Items 9 through 12 of Part III is included in
the Registrant's Proxy Statement and is incorporated herein by reference. The
information appears in the Proxy Statement under the captions "Proposal 1.
Election of Directors," "Continuing Directors and Executive Officers," "Security
Ownership of Directors and Executive Officers," "Executive Compensation,"
"Section 16(a) Beneficial Ownership Reporting Compliance" and "Certain
Transactions."

ITEM 13.      EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits

<TABLE>
<CAPTION>
   Exhibit
    Number                                             Description
-------------      ---------------------------------------------------------------------------------------
  <S>              <C>
   3.1 (1)         Articles of Incorporation, as amended and in effect
   3.2 (1)         Bylaws
   4.1 (1)         Specimen Common Stock Certificate
  10.1.A (1)       Amended and Restated 1993 Stock Option Plan
  10.1.B (1)       Form of Employee Stock Option Agreement
  10.2 (1)         1994 Stock Option Plan
  10.3 (1)         Directors' Nonqualified Stock Option Plan
  10.4 (2)         Employee Stock Ownership Plan
  10.5 (1)         Form of Indemnification Agreement with directors and officers
  10.6 (6)         Form of Distributorship Agreement
  10.7 (1)         Solution Provider Agreement with Microsoft Corporation dated September 23, 1994
  10.8A (3)        Lease Agreement dated September 8, 1995, as amended, with G&W Investment Partners
  10.8B (4)        Amendment to Lease Agreement dated March 20, 1999, with G&W Investment Partners
  10.8C (5)        Amendment to Lease Agreement dated March 10, 2000 with MONY Life Insurance Company
  10.9 (6)         Form of WorkWise Reseller Marketing Agreement
  21.1 (6)         Subsidiaries of Timeline, Inc
  23.1             Consent of Independent Auditors
  99.1             Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
                   the Sarbanes-Oxley Act of 2002.
</TABLE>
________________
1   Incorporated herein by reference from Item 27 of Company's Registration
    Statement on Form SB-2 filed on October 18, 1994.
2   Incorporated herein by reference from the Company's Registration Statement
    on Form S-8 filed on March 11, 1996.
3   Incorporated herein by reference from Item 13 of Company's Form 10-KSB for
    the year ended March 31, 1997.
4   Incorporated herein by reference from Item 13 of Company's Form 10-KSB for
    the year ended March 31, 1999.
5   Incorporated herein by reference from Item 13 of Company's Form 10-KSB for
    the year ended March 31, 2000.
6   Incorporated herein by reference from Item 27 of the Company's Registration
    Statement on Form SB-2 filed on June 15, 2001.

     (b) No reports on Form 8-K were filed during the quarter ended March 31,
2003.


                                    Page 46
<PAGE>

ITEM 14: CONTROLS AND PROCEDURE

     Within the 90 days prior to the filing date of this Report, we carried out
an evaluation, under the supervision and with the participation of the Company's
management, including the Chief Executive Officer/Chief Financial Officer, of
the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, our
Chief Executive Officer/Chief Financial Officer concluded that our disclosure
controls and procedures are effective. Disclosure controls and procedures are
controls and procedures that are designed to ensure that information required to
be disclosed in Company reports filed or submitted under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms.

     There have been no significant changes in our internal controls or in other
factors that could significantly affect internal controls subsequent to the date
we carried out this evaluation. However, in response to the Sarbanes-Oxley Act
of 2002, we are continuing a comprehensive review of our disclosure procedures
and internal controls and expect to make minor modifications and enhancements to
these controls and procedures. In particular, we have created a disclosure
practices committee and have reviewed and implemented additional internal
controls with respect to our UK operations.


                                    Page 47
<PAGE>

                                   SIGNATURES

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



                                        Timeline, Inc.


                                        By: /s/ Charles R. Osenbaugh
                                            -------------------------------
                                            Charles R. Osenbaugh, President
                                        Dated:  June 25, 2003


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

<TABLE>
<CAPTION>
            Signature                                   Capacities                            Date
            ---------                                   ----------                            -----
<S>                                               <C>                                     <C>
                                                         Director
     /s/ Charles R. Osenbaugh                            President                        June 25, 2003
-----------------------------------               Chief Executive Officer
        Charles R. Osenbaugh                      Chief Financial Officer
                                                       and Treasurer


                                                         Director
       /s/ Frederick W. Dean                      Executive Vice President                June 25, 2003
-----------------------------------
         Frederick W. Dean


       /s/ Donald K. Babcock                             Director                         June 25, 2003
-----------------------------------
          Donald K. Babcock


       /s/ Kent L. Johnson                               Director                         June 25, 2003
-----------------------------------
         Kent L. Johnson


        /s/ Terry Harvey                                 Director                         June 25, 2003
-----------------------------------
           Terry Harvey


       /s/ Robert B. Wallace                             Director                         June 25, 2003
-----------------------------------
         Robert B. Wallace
</TABLE>


                                    Page 48
<PAGE>


                                  CERTIFICATION

I, Charles R. Osenbaugh, certify that:

1.   I have reviewed this annual report on Form 10-KSB of Timeline, Inc.

2.   Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report.

3.   Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report.

4.   The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          a.   designed such disclosure controls and procedures to ensure that
     material information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this annual report is being
     prepared;

          b.   evaluated the effectiveness of the registrant's disclosure
     controls and procedures as of a date within 90 days prior to the filing
     date of this annual report (the "Evaluation Date"); and

          c.   presented in this annual report our conclusions about the
     effectiveness of the disclosure controls and procedures based on our
     evaluation as of the Evaluation Date.

5.   The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and to the audit
committee of the registrant's board of directors (or persons performing the
equivalent function):

          a.   all significant deficiencies in the design or operation of
     internal controls which could adversely affect the registrant's ability to
     record, process, summarize and report financial data and have identified
     for the registrant's auditors any material weaknesses in internal controls;
     and

          b.   any fraud, whether or not material, that involves management or
     other employees who have a significant role in the registrant's internal
     controls.

6.   The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date: June 25, 2003
                                          /s/ Charles R. Osenbaugh
                                          ------------------------
                                          Charles R. Osenbaugh
                                          President, CEO and CFO


                                    Page 49
<PAGE>

Exhibit 23.1

                          Independent Auditors' Consent

The Board of Directors
Timeline, Inc.:

We consent to the incorporation by reference in the registration statements
(Nos. 333-4386 and 333-2190) on Form S-8 of Timeline, Inc. of our report dated
May 9, 2003, with respect to the consolidated balance sheets of Timeline, Inc.
and subsidiaries as of March 31, 2003 and 2002, and the related consolidated
statements of operations, shareholders' equity and comprehensive loss, and cash
flows for the years then ended, which report appears in the March 31, 2003,
annual report on Form 10-KSB of Timeline, Inc.

Our report dated May 9, 2003 contains an explanatory paragraph that states that
the Company has suffered recurring losses and has a net working capital deficit
of $192,709 at March 31, 2003. These factors raise substantial doubt about its
ability to continue as a going concern. The consolidated financial statements do
not include any adjustments that might result from the outcome of that
uncertainty. Our report also states that the Company changed its method of
accounting for goodwill and other intangible assets upon the adoption of
Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets," for the fiscal year ended March 31, 2003.


/s/ KPMG LLP

Seattle, Washington
June 25, 2003


                                    Page 50
<PAGE>


Exhibit 99.1


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


     In connection with the Annual Report of Timeline, Inc. (the "Company") on
Form 10-KSB for the period ended March 31, 2003 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Charles R. Osenbaugh,
President and Chief Financial Officer of the Company, certify, pursuant to 18
U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of
2002, that:

     (1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

     (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.

     A signed original of this written statement required by Section 906 has
been provided to Timeline, Inc. and will be retained by Timeline, Inc. and
furnished to the Securities and Exchange Commission or its staff upon request.


      /s/ Charles R. Osenbaugh                         Date:  June 25, 2003
      ------------------------------------
      Charles R. Osenbaugh,
      President and Chief Financial Officer


                                    Page 51