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

AMENDMENT NO. 1
FORM 10-KSB/A

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

For the fiscal year ended March 31, 2005

o
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                                                         
|(State or   other jurisdiction of 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
xNo
o

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.
o

The issuers revenues for its most recent fiscal year were:  $3,531,209.

As of June 14, 2005, 4,190,998 shares of the Registrants common stock were outstanding and the aggregate market value of such common stock held by nonaffiliates was approximately $1,397,295 based on the average of the bid ($0.30) and ask ($0.55) prices on such date of $0.425.

DOCUMENTS INCORPORATED BY REFERENCE

The information required by Part III of this Report, to the extent not set forth herein, is incorporated in this Report by reference to the Companys definitive proxy statement relating to its 2005 annual meeting of shareholders.  The definitive proxy statement will be filed with the Securities and Exchange Commission within 120 days after the end of the 2005 fiscal year.

Transitional Small Business Disclosure Format (Check One):     Yes
oNo
x

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EXPLANATORY NOTE:

We are filing this Amendment No. 1 to our Annual Report on Form 10-KSB/A for the fiscal year ended March 31, 2005, originally filed on June 29, 2005 (Original Report), for the following purposes:

1.          To include the audit report and consent of our prior independent registered public accounting firm with respect to the fiscal year ended March 31, 2004;

2.          To add disclosure under Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure with respect to the change in our independent registered public accounting  firm during fiscal 2005;

3.          To make certain revisions to the audited consolidated financial statements and notes as follows:

| | The   Consolidated Statement of Shareholders Equity and Comprehensive Loss was   revised to include comprehensive loss totals for fiscal year 2004, consistent   with the presentation and disclosure in the as-filed 10-KSB for fiscal   2004.  Similar totals were added for   fiscal 2005.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The   Consolidated Statements of Cash Flows for fiscal 2005 was revised to place   line of credit borrowings and repayments under financing activities rather   than investing activities.                                                                                                  
| | Note   2 - Marketable Securities was revised to include disclosures made in our   as-filed 10-KSB for fiscal 2004 regarding marketable securities held in   Sagent Technology, Inc.                                                                                                           
| | Note   11  Shareholders Equity was revised to be consistent with the presentation   and disclosures in the as-filed 10-KSB for fiscal 2004.                                                                                                                                                 
| | Note   12 - Related Party Transactions was added, to be consistent with the   disclosure in the as-filed 10-KSB for fiscal 2004.                                                                                                                                                              
| | Note   13 - Line of Credit was added to the 2005 financial statement disclosures.                                                                                                                                                                                                             

This Form 10-K/A includes all of the information contained in the Original Report, and we have made no attempt in this Form 10-K/A to modify or update the disclosures presented in the Original Report, except as identified above.  The disclosures in this Form 10-K/A continue to speak as of the date of the Original Report, and do not reflect events occurring after the filing of the Original Report.  Accordingly, this Form 10-K/A should be read in conjunction with our other filings made with the Securities and Exchange Commission subsequent to the filing of the Original Filing, including any amendments to those filings.  The filing of this Form 10-K/A shall not be deemed an admission that the Original Report when made included any untrue statement of a material fact or omitted to state a material fact necessary to make a statement not misleading.



TIMELINE, INC. Form 10-KSB Annual Report

Table of Contents

|           |                                                                                                        |    | Page
|---------- | ------------------------------------------------------------------------------------------------------ | -- | ----
|           |                                                                                                        |    |     
|           | PART I                                                                                                 |    |     
|           |                                                                                                        |    |     
|Item 1.    | Our Business                                                                                           |    | 2   
|           |                                                                                                        |    |     
|Item 2.    | Property                                                                                               |    | 22  
|           |                                                                                                        |    |     
|Item 3.    | Legal Proceedings                                                                                      |    | 22  
|           |                                                                                                        |    |     
|Item 4.    | Submission of Matters to a Vote of Shareholders                                                        |    | 22  
|           |                                                                                                        |    |     
|           | PART II                                                                                                |    |     
|           |                                                                                                        |    |     
|Item 5.    | Market for Common Stock and Related Shareholder   Matters                                              |    | 22  
|           |                                                                                                        |    |     
|Item 6.    | Managements Discussion and Analysis of Financial   Condition and Results of Operations                |    | 23  
|           |                                                                                                        |    |     
|Item 7.    | Financial Statements                                                                                   |    | 31  
|           |                                                                                                        |    |     
|Item 8.    | Changes in and Disagreements with Accountants on   Accounting and Financial Disclosure                 |    | 32  
|           |                                                                                                        |    |     
|Item 8A.   | Controls and Procedures                                                                                |    | 32  
|           |                                                                                                        |    |     
|Item 8B.   | Other Information                                                                                      |    | 32  
|           |                                                                                                        |    |     
|           | PART III                                                                                               |    |     
|           |                                                                                                        |    |     
|Item 9.    | Directors, Executive Officers and Control Persons;   Compliance with Section 16(a) of the Exchange Act |    | 32  
|           |                                                                                                        |    |     
|Item 10.   | Executive Compensation                                                                                 |    | 33  
|           |                                                                                                        |    |     
|Item 11.   | Security Ownership of Certain Beneficial Owners and   Management and Related Shareholder Matters       |    | 33  
|           |                                                                                                        |    |     
|Item 12.   | Certain Relationships and Related Transactions                                                         |    | 34  
|           |                                                                                                        |    |     
|Item 13.   | Exhibits                                                                                               |    | 34  
|           |                                                                                                        |    |     
|Item 14.   | Principal Accountant Fees and Services                                                                 |    | 35  
|           |                                                                                                        |    |     
|SIGNATURES |                                                                                                        | 36 |     

|  
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|**

Page 1



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 and including the discussion in the section Recent Developments  Non-Binding Letter of Intent with Global Software, 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 us are intended to identify such forward-looking statements, but are not the exclusive means of identifying such statements.  Our 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 primarily 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 our 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.  Our first line of business consists of 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.  We entered into a non-binding letter of intent in May 2005 and as revised in June 2005, for the potential sale of our software licensing business.  See Recent Developments  Non-Binding Letter of Intent with Global Software below.  The proposed Transactions with Global Software may not close.  See Certain Factors Relating to the Proposed Transactions with Global Software below for a discussion of some of the risks and other factors related to the two Transactions.

Software: 
We develop, market, license and support financial reporting, budgeting, and
consolidations 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 that allow
validation by going back to the detail transactions, 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® Excel workbooks, data marts or actual reports delivered via
e-mail.  In addition, our WorkWise® products allow
customers to monitor databases automatically, consolidate data entry, automate
tasks and communicate with the appropriate people.

Page 2



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.

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

| |  | perform financial reporting and management   functions;                                                
| | - | -------------------------------------------------------------------------------------------------------
| |  | connect to multiple types of operating systems;                                                        
| |  | efficiently distribute data to desktop computers;                                                      
| |  | perform consolidations;                                                                                
| |  | perform budgeting functions;                                                                           
| |  | coordinate the update of business records in   multiple modules through a single transaction entry; and
| |  | 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 updating 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 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 2006 will be generated by licensing and distribution agreements with these third-party vendors.*

Page 3



Patent Licensing:  As discussed in Our Technology below, we hold a number of patents that arose from our work using data marts as a means to provide our software products.  We have been granted six patents by the U.S. Patent and Trademark Office on our technology and have a total of 136 issued claims.  We have also been granted patents in Australia, Canada, China, Hong Kong, Israel, Singapore, and Mexico.  We have a number of pending patent applications, and believe additional international patents may be granted during fiscal 2006.*  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.  Since March 1998, we have licensed our patents to ten organizations for total license fees of approximately $14,000,000.  We believe that there remain many organizations that would benefit from a license to this technology.  In fiscal 2005, however, we made a decision to not initiate any litigation with regard to patent licensing in order to facilitate any negotiations with regard to a sale or merger of our software licensing business.  Although we did not actively market patent licenses in fiscal 2005, we believe this will be an important line of business line of business in fiscal 2006.*  In June 2005, we filed an action in the Federal District Court for the Western District of Washington against ProClarity Corporation alleging patent infringement.  See Item 3, Legal Proceedings below.

Our Technology

Our Timeline Analyst family of products works with a customers 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 or LAN-based 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:

| |  | Timeline   Architecture.  Our   architecture contains a multi-dimensional data segmentation capacity that   exceeds the capacity of all other 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 systems.  For example, our software applications 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.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | Generation   Engine. Our generation engine enables our products to   automate the building of Microsoft, Oracle or IBM-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.                                                                                                                                                                                                                                                                                                

Page 4



| |  | 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 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 Software Products

We develop and license data management and reporting software products, consisting of our Timeline Analyst reporting and financial analytics products, and our WorkWise alerting and process automation software.

Timeline Analyst

Our products
make it possible to distribute information and data marts from an underlying
accounting system to the desktop.  Our primary product, Timeline Analyst
(Analyst),consists of a set of client/server software
applications based on Microsoft
® Windows
®/Windows
® NT operating systems.  Once data is contained in a
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.

Analyst includes the central warehouse of financial and management reporting data structured in a multi-dimensional relational database.  This central warehouse 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 functions provide desktop and network reporting based on information contained in one or more underlying accounting systems.

Analysts data marts, enable the user to view, create and distribute reports in Microsoft Excel based on data from one or more underlying accounting systems.  Analystalso distributes reporting databases to desktop end-users throughout a business enterprise.

Analyst Managerallows Analyst users to distribute packets of information and assign new reporting relationships at the desktop level.

Analyst Budgeting

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

Page 5



Analyst Consolidations

Analyst Consolidations is another module that works with our Analyst software.  Consolidations builds a multi-dimensional consolidations database into which general ledger data can be imported and mapped directly to the accounts dimension.Consolidationsmerges the reporting processes of both statutory and management reporting, allowing our customers to deliver financial statements that illustrate both financial and non-financial critical performance measures.

WorkWise Data Agent Server

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 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

WorkWise Business Alertsis the most popular event triggered by 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 software products.

Consulting

We do not provide general consulting services, 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.  The amount of consulting services we perform varies according to the mix of systems licensed directly by us or through a reseller.  Many of our resellers provide their own direct installation services to end-users, requiring less of our consulting.

Maintenance

We provide software maintenance services either directly to end users of our products (first-tier maintenance) or to third party resellers (second-tier maintenance).  In first-tier maintenance, we provide telephonic diagnostics and instruction by our technical support personnel, backed by our product managers and developers, under annually renewable agreements.  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.  We receive a smaller portion of the annual support fees for second-tier support than we do for first-tier support.  As with first-tier maintenance, second-tier is typically provided under annually
renewable agreements.

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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.   For example, in March 2004 we released our new Version 2.9 to our Analyst suite of applications.  These enhancements allow for the deployment of target analytical data marts on Oracle 8 or 9i and IBMs DB2 Universal Data Bases Versions 7 & 8, as well as Microsoft SQL Server.  Previous versions allowed marts to be generated from source transaction systems housed on all of these database management systems.  This version, however, allowed target data marts on which Timelines reporting, budgeting and consolidation applications reside to be built on these three different platforms.  Additionally, Version 2.9
provided some measurable improvements in performance, error tracking, and other technical enhancements.

Our Sales and Marketing

Our sales and marketing focus for our software products 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.  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.  We currently have relationships with approximately 53 OEMs, VARs and other resellers in approximately 6 countries.

In addition, 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.*

Patent Rights and Licensing

We have been granted six patents by the U.S. Patent and Trademark Office on our technology and have a total of 136 issued claims.  We have also been granted patents in Australia, Canada, China, Hong Kong, Israel, Singapore, and Mexico.  In May 2004, our wholly-owned subsidiary, WorkWise Software, Inc. was granted a patent by the U.S. Patent and Trademark Office on its process automation technology.  We have a number of pending patent applications, and believe additional international patents may be granted during fiscal 2006.*

Our patents cover certain processes, or series of processes, involved in accessing data and establishing database structures or formats automatically.  These patented processes are not limited to the functionality represented by our software products, but rather apply to many different types of software applications.  It is our responsibility to protect these patent rights either by prohibiting the use of the patented processes or licensing the right to use them.  We prefer to license the patents, and to date have been successful in negotiating license agreements or through court action with each of the organizations we have identified as being in violation of our patent rights.  We consider our patent rights to be of considerable value and importance to our business. See  Other Factors That May Affect Future Results, below.

Page 7



Competition for our Software Products

The business information software market is highly competitive.  We believe that our primary competition for our suite of Analystproductsare software vendors such as FRx Software Corporation, Cognos Corporation, Hyperion Solutions Corporation, and various budgeting vendors such as Microsoft Corporation, and SRC Corporation.  For our WorkWise Business Alerts and Data Agent Server software, we compete with companies such as Categoric Software Corporation, Orbis Software, and Innovalink Corporation.  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.*

Our Employees

At March 31, 2005, we employed 15 full-time and 2 part-time employees in the U.S.  Our London subsidiary, Analyst Financials, employed 6 full-time employees and 1 part-time employee at March 31, 2005.  We believe our relations with our employees are good.

Recent Developments  Non-Binding Letter of Intent with Global Software

In May 2005, as amended in June 2005, we entered into a non-binding letter of intent with Global Software, Inc. for the proposed sale to Global Software of our software licensing operations over two stages, consisting of (1) the sale of 100% of stock in our U.K. subsidiary, Analyst Financials Limited, with the first intended closing occurring on or before July 15, 2005, and (2) the sale of our other software assets, with the second closing occurring on or before August 31, 2005 (the Transactions).  The two Transactions are independent of the other.  There are no assurances that either or both of the Transactions will be consummated and the terms of the Transactions may change materially from the terms set forth in the non-binding letter of intent.  The letter of intent is a non-binding obligation of Timeline and Global Software, and the actual terms of the Transactions will be
contained in a definitive purchase agreement to be negotiated between the parties.  The parties have not yet entered into a definitive purchase agreement for the Transactions.  There will be many conditions to closing of each the two Transactions, many of which are outside of the parties control, including obtaining approval of Timelines shareholders to the second Transaction.  There are no assurances when or if either Transaction will close, even if the parties successfully negotiate and sign a definitive purchase agreement.  See Certain Factors Relating to the Proposed Transactions with Global Software below.

Summary of Proposed Transactions

The following is a summary of the proposed Transactions and other material terms of the proposed Transactions and the non-binding letter of intent.  The Transactions are structured over two stages, consisting of (1) the sale of 100% of stock in our U.K. subsidiary, Analyst Financials Limited, with the first intended closing occurring on or before July 15, 2005, and (2) the sale of our other software assets, with the second closing occurring on or before August 31, 2005.

First Transaction  Sale of 100% Stock in Analyst Financials Limited.  The non-binding letter of intent contemplates the following actions with respect to the first Transaction:

| |  | Timeline to sell to Global Software the following:
| | - | --------------------------------------------------
| |   |                                                   
| |   |                                                  
| |   |                                                  
| |   |                                                  
| |   |                                                  

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| |  | Timeline to grant to Global Software a non-exclusive   license to the source code of our Analyst Financials software product and our   related patents, including the right to sublicense to OEMs, VAR, resellers   and other distributors, in connection with the worldwide sale and   distribution of our Analyst Financials product, but not including sales to   any of our existing customer accounts;                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | Global Software to pay to Timeline $1,100,000, of   which (i) $620,000 (less the outstanding principal and interest under   the bridge note, as described below) will be paid in cash at the first   closing, (ii) $240,000 will be payable 18 months after the first closing   (bearing simple interest at a rate of 6% per annum), and (iii) $240,000   will be payable 36 months after the first closing (bearing simple interest at   a rate of 6% per annum).  The amount   of the second deferred payment may be reduced to $220,000 if shareholder   approval of the second Transaction is not obtained by August 31, 2005 (see   Closing Conditions below);
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | Global Software to assume certain liabilities of the   U.K subsidiary, including the office lease in Chiswick, U.K., ongoing   obligations with respect to prepaid maintenance fees, and accrued vacation   time for any employees hired by Global Software at the first closing; and                                                                                                                                                                                                                                                                                                                                                                                
| |  | Global Software to hire up to six employees of our   U.K subsidiary, and up to two of our U.S.-based employees.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

Second Transaction  Sale of Our Other Software Assets.  The non-binding letter of intent contemplates the following actions with respect to the second Transaction:

| |  | Timeline to sell to Global Software the following:
| | - | --------------------------------------------------
| |   |                                                  
| |   |                                                  
| |   |                                                  
| |   |                                                  
| |   |                                                   

| |  | Timeline to grant to Global Software a non-exclusive   perpetual, fully paid license to our patents, including the right to   sublicense to OEMs, VAR, resellers and other distributors, in connection with   the worldwide sale and distribution of the WorkWise and Analyst Financials   products;                                                                        
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                             
| |  | Global Software to pay to Timeline $900,000, of   which (i) $380,000 will be payable in cash at the second closing,   (ii) $260,000 will be payable 18 months after the second closing (bearing   simple interest at a rate of 6% per annum), and (iii) $260,000 will be   payable 36 months after the second closing (bearing simple interest at a rate   of 6% per annum);
| |   |                                                                                                                                                                                                                                                                                                                                                                             
| |  | Global Software to assume certain liabilities of   Timeline, including the office lease in Bellevue, WA, ongoing obligations   with respect to prepaid maintenance fees, and accrued vacation time for any   employees hired by Global Software at the second closing;                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                                                                             
| |  | Timeline to enter into a non-competition agreement,   agreeing not to compete with the business being sold to Global Software for a   period of 4 years.                                                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                                             
| |  | Global Software to enter into a patent royalty   agreement to cooperate with us, at our request, with respect to the   prosecution of any patent infringement claim, and Timeline to pay a 3%   royalty to Global Software on those licenses where Global Software has   provided assistance; and                                                                           
| |   |                                                                                                                                                                                                                                                                                                                                                                             
| |  | Global Software to hire up to six of our employees.                                                                                                                                                                                                                                                                                                                         

Page 9



Closing Conditions

There will be many conditions to closing of each Transaction, many of which are outside of the parties control, and Timeline cannot predict whether these conditions will be satisfied.  The final list of closing conditions will be set forth in the definitive purchase agreement to be negotiated.  The closing conditions currently listed in the non-binding letter of intent include the following:

| |  | Closing Conditions to First Transaction (Sale of   100% Stock in U.K. Subsidiary):
| | - | ----------------------------------------------------------------------------------
| |   |                                                                                   
| |   |                                                                                  
| |   |                                                                                  
| |   |                                                                                  
| |   |                                                                                  
| |   |                                                                                  
| |   |                                                                                  

In the event that the first Transaction does not close by July 15, 2005, either Timeline or Global Software has the right to terminate the non-binding letter of intent and the definitive purchase agreement, in which case both Transactions would be terminated.

| |  | Closing Conditions to Second Transaction (Sale of   Our Other Software Assets):
| | - | -------------------------------------------------------------------------------
| |   |                                                                                
| |   |                                                                               
| |   |                                                                               
| |   |                                                                               
| |   |                                                                               

In the event that the second Transaction does not close by August 31, 2005, either Timeline or Global Software has the right to terminate the non-binding letter of intent and the definitive purchase agreement, in which case the second Transaction would be terminated.  However, if the only condition to closing the second Transaction that has not been satisfied is the approval by our shareholders, then, at our sole option, (a) the August 31 date shall be extended until September 30, 2005 and (b) the amount of the second deferred payment from the first Transaction (payable by Global Software on the 36-month anniversary of the closing of the first Transaction) will be reduced from $240,000 to $220,000.

Page 10



The two Transactions are independent of the other.  If the first Transaction occurs, but the second Transaction does not close, we will have sold to Global Software our U.K. operations and granted license rights to our software and patents to sell our Analyst Financials products, and we would continue to operate our software license business in the U.S.

Definitive Purchase Agreement

Global Software is currently engaged in its due diligence review, and we have not yet finalized or entered into a definitive purchase agreement for the Transactions.

Nature of Our Business if both Transactions Close

If we complete both Transactions, we will have sold our software licensing business, but we will continue to own our patents.  We intend to continue our business of prosecuting outstanding and new patent infringement claims against third parties, and seeking patent licensing arrangements.  We will continue to be a public company.  We also intend to evaluate and potentially explore all available alternatives.  We will continue to work to maximize shareholder interests with a goal of returning value to our shareholders.  Although our board of directors has not yet made any determination, such alternatives may include ultimate dissolution and liquidation of Timeline, a going private transaction effected through a reverse stock split or otherwise in order to reduce the costs associated with being a public company, a share repurchase, an extraordinary dividend or other transactions to
maximize shareholder value and manage our outstanding liabilities.

We intend to use the proceeds from the two Transactions to pay off our accounts payable and other liabilities.  The remaining amounts would be used to fund our ongoing operations, including employee expense, costs and expenses (including attorneys fees) associated with prosecuting patent infringement cases, and ongoing costs of being a public company.  Because the size of our continuing patent operations would be substantially less than needed for our current software licensing business, we would significantly downsize our office space and would expect to employ only two employees going forward.  In addition, we anticipate that in March 2006 our board of directors will consider whether to pay a dividend to shareholders from the proceeds of the sale.

Note and Security Agreement with Global Software

In connection with the non-binding letter of intent on June 1, 2005, we entered into a security agreement and secured promissory note with Global Software, providing for a $250,000 loan to us.  The discussion below is summary of material terms of the secured promissory note and security agreement and is qualified in its entirety to the complete text of the each document.

Principal amounts owing under the note bear interest at a fixed rate of 6% per annum.  The maturity date of the note is the earlier of (i) July 15, 2005, (ii) closing of the first Transaction contemplated by the non-binding letter of intent, or (iii) the termination of either the non-binding letter of intent or the definitive purchase agreement.  Upon the maturity date, we have the right to elect to repay the note either in full or in four successive and equal quarterly payments, with each payment being made on the final business day of each fiscal quarter following the maturity date.  After the maturity date, interest on the outstanding principal balance on the note accrues at the rate of 8% per annum.

Upon an event of default under the note, all outstanding principal and interest under the note will be immediately due and payable.  Events of default consist of the following:

| |  | our failure to pay any amounts owed under the note   when due, if not cured within 10 days after the due date;                                                                      
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | an event of default or material breach by us under   the non-binding letter of intent or the definitive purchase agreement   contemplated thereby, which is not cured after 30 days;

Page 11



| |  | a material breach by us of our obligations under the   security agreement;                                                                                        
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the filing of a petition by or against (which has   not been stayed or dismissed within 60 days following the filing of such   petition) us under bankruptcy laws;
| |  | the appointment of a receiver, trustee, custodian or   liquidator of or for any part of our assets or property;                                                   
| |  | the execution by us of a general assignment for the   benefit of creditors; or                                                                                    
| |  | our insolvency or our generally not paying our debts   as they become due.                                                                                        

Our obligations under the note are secured by a first priority security interest in all of our software assets.

Exclusivity; Non-Competition Provisions

As part of the non-binding letter of intent, we agreed to an exclusivity provision in favor of Global Software through the earlier of (a) July 15, 2005 or (b) the termination by Global Software of negotiations for the Transactions.  We specifically agreed that we would not:

| |  | directly or indirectly through any other party   engage in any negotiations with or provide any information to any other   person, firm or corporation with respect to an acquisition transaction   involving us or our assets;                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | directly or indirectly through any other party   solicit any proposal relating to the acquisition of, or other major   transaction involving, us or our assets and we will notify Global Software   promptly of the receipt of any unsolicited offer therefor; or
| |  | dispose of any assets that would constitute a part   of the assets to be acquired by Global Software other than in the ordinary   course of business.                                                                                                            

The non-binding letter of intent also provides for a break-up fee, in the event (a) we breach our exclusivity obligation described above, (b) the non-binding letter of intent or the definitive purchase agreement is terminated due to a material breach by either party, or (c) either party fails to diligently proceed in good faith with the consummation of the Transactions.  The break up fee payable by the breaching party would be in an amount equal to $200,000, plus reasonable attorneys fees, accountants fees and appraisers fees incurred by the non-breaching party in connection with its due diligence, negotiation and documentation of the Transactions.  In addition, we would be required to repay to Global Software all outstanding and principal amounts under the note.

Other Factors That May Affect Operating Results

The following discussion in this Annual Report on Form 10-KSB contains forward-looking statements regarding our business, prospects and results of operations that involve risks and uncertainties.  Our actual results could differ materially from the results that may be anticipated by such forward-looking statements and discussed elsewhere in this Report.  Factors that could cause or contribute to such differences include, but are not limited to, those discussed below, those discussed under the captions Business and Managements Discussion and Analysis or Plan of Operations as well as those discussed elsewhere in this Report.  In evaluating our business, prospects and results of operations, readers should carefully consider the following factors in addition to other information presented in this Report and in our other reports filed with the Securities and
Exchange Commission that attempt to advise interested parties of the risks and factors that may affect our business, prospects and results of operations.  See Cautionary Notice Regarding Forward Looking Statements above.

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Factors Relating to Our Company and Our Business

| | We have limited   financial resources and if we fail to increase our revenues it will have a   significant adverse impact on our cash and working capital position.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

At March 31, 2005, we had cash and cash equivalents totaling $162,355, and our net working capital was a negative $336,205 (excluding deferred revenue of $681,325, it was $345,120).  We believe that our current cash and cash equivalents and any net cash provided by operations may not be sufficient to meet anticipated cash needs for working capital and capital expenditures through fiscal 2006.  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:

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

None of these factors can be predicted with certainty.  Our independent accountants have issued a going concern emphasis paragraph in their report on our financial statements for the fiscal year ended March 31, 2005, stating that we have suffered recurring losses and have an accumulated deficit.  Accordingly, those conditions raise substantial doubt about our ability to continue as a going concern.

| | We   must raise additional capital to fund continuing operations.  If our financing efforts are not   successful, we may need to explore alternatives to continue operations, which   may include a merger, asset sale, joint venture, loans or further expense   reductions.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our efforts to increase revenue and improve our working capital position may not be successful.  We anticipate that we may need substantial additional debt or equity financing in the future for which we have no current commitments, discussions or arrangements.  Any additional financing may not 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, for example, any one or more of the following:

| |  | engaging a financial advisor to explore strategic   alternatives, which may include a merger, asset sale, joint venture or   another comparable transaction;                                                        
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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;
| |  | forming a joint venture with one or more strategic   partners to provide additional capital resources to fund operations; and                                                                                       
| |  | 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.  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 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.

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| | We rely   extensively on third-party licensing and distribution relationships.  To the extent that these relationships are   not effective in selling our products, our revenues and results of operations   will be adversely affected.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We rely on agreements with third-party licensees and distributors for sales and licensing of our products, and believe that a significant portion of our software license fee revenue in fiscal year 2006 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:

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

These licensees and distributors may not perform their contractual obligations as expected, and we may not derive any additional revenue from these licensing and distribution arrangements.  Also, we may not be able to successfully develop new relationships or maintain existing relationships with third-party licensees and distributors.  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.  In addition, our licensees and distributors may be unable to market our products effectively, or may decide to stop representing our products.  Any of these events 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, however their emphasis will be on reseller relationships.  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.  We may not be able to profitably or successfully maintain the direct sales model through Analyst Financials.

| | Our patent   license revenue is sporadic, and a decrease in patent revenue could   materially affect our profitability and cash flow.
| | -------------------------------------------------------------------------------------------------------------------------------------

Since 1998, we  have relied on substantial fees generated by licensing of our various patents.  These patent revenues tend to be sporadic and the patent licenses generally do not provide for ongoing revenue subsequent to the initial licensing fees.  Future patent licenses may not occur and we may be unable to generate additional patent fees.  Any inability to generate additional patent revenue could have a material impact on our profitability and working capital.  For example, in fiscal 2005, we received only about $1,000 from licensing our patents which contributed to a net loss.

Page 14



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

Product-license revenues and related services from our Analyst suite of products accounted for a significant portion of our total revenues during fiscal 2005.  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.

| | Our ability to   operate profitably is uncertain.
| | -------------------------------------------------

Our historical operations have not been consistently profitable and we may not be able to sustain profitability for any fiscal period into the future.  We had an accumulated deficit of $10,422,587 as of March 31, 2005.  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 and maintain profitability, we must do some combination of:

| |  | increasing the licensing and maintenance revenues of   our existing products;
| | - | -----------------------------------------------------------------------------
| |  | increasing the licensing of patented technology to   third parties;          
| |  | developing new products; and                                                 
| |  | controlling our expenses.                                                    

We may not meet these objectives.  We currently have budgeted to incur losses during the first half of fiscal 2006, and our efforts to increase our revenue to cover expenses by mid-year fiscal 2006 may not be successful.  Over the past several years, we have significantly decreased operating expenses and, as a result, we believe our profitability will depend on generating sufficient license and other revenues.  Any lack of profitability would have a detrimental effect on our working capital position, as well as the market price of our stock.

| | Our profitability   depends on the success of our products.
| | -----------------------------------------------------------

Our future profitability depends in part on the successful development, marketing and licensing of our existing product line and other new products.  However,

| |  | our products may not achieve or sustain revenue   growth;                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------
| |  | enhancements to our products and other applications   may not be successfully developed;                                       
| |  | demand for and market acceptance of our products and   enhancements may not grow or continue;                                  
| |  | our sales and marketing efforts, whether direct   sales or through our reseller distribution channel, may not be effective; and
| |  | our products may not 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 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 may not be successful in maintaining the required levels of revenue with the current number of employees.

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| | 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:

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

We are currently more reliant on licensing and distribution arrangements and less on direct sales, and accordingly we expect that 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 need 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 well as creative personnel, and sales and marketing personnel.  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 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.

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| | The future   success of our business is also heavily dependent on the continued services   of our senior management.
| | --------------------------------------------------------------------------------------------------------------------

Our future success also depends to a significant extent on the skills, experience and efforts of our senior management.  In particular, we depend on Charles R. Osenbaugh, our Chief Executive Officer and Chief Financial Officer, and Craig R. Perkins, our Vice President of Product and Technology.  Neither of these executive officers is subject to an employment agreement and we have not obtained key person life insurance or disability insurance policies on either of them.  If either of these officers ends his employment with us, or becomes incapacitated and unable to perform his duties, then our business and financial condition could be seriously harmed.

| | 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 six U.S. patents and have been granted patent protection in certain foreign countries.  We have additional international patent applications pending.  Despite our efforts to protect our intellectual property rights:

| |  | laws and contractual restrictions may not be   sufficient to prevent misappropriation of our technology or deter others from   developing similar technologies;                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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;
| |  | other companies may claim common law trademark   rights based upon state or foreign laws that precede the federal registration   of our trademarks; and                                                                                                                       
| |  | 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 may not be successful.

Our intellectual property protections may not be adequate and third parties may 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   Microsoft products.
| | --------------------------------

We have developed all of our products to function in the Microsoft Windows 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 may not 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.

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| | We may be subject   to 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.

Certain Factors Relating to Our Industry

| | 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.  Additionally we must stay current with Oracle, IBM and Microsoft database platforms.  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 may not be successful in developing new products or enhancing our existing products on a timely basis, and any new products or product enhancements may not achieve market acceptance.

| | We face intense   competition in our businesses.
| | ------------------------------------------------

The business information software market is highly competitive.  We believe that our primary competition for our Analyst product line is software vendors such as FRx Software Corporation, Cognos Corporation, Hyperion Solutions Corporation, and various budgeting vendors such as Microsoft Corporation, and SRC Corporation.  For our WorkWise Business Alerts and Data Agent Server software, we compete with companies such as Categoric Software Corporation, Orbis Software, and Innovalink Corporation.  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 may not be able to compete successfully against current and future competition, and the failure to do so would negatively impact our business and financial condition.

Page 18



| | An uncertain   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 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 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.

Certain Factors Relating to the Proposed Transactions with Global Software

| | Our business may be harmed if the Transactions disrupt the operations   of our business and prevents us from realizing intended benefits.
| | -----------------------------------------------------------------------------------------------------------------------------------------

Either Transaction may disrupt our business and prevent us from realizing intended benefits as a result of a number of obstacles, such as:

| |  | loss of key employees or   customers;                                  
| | - | -----------------------------------------------------------------------
| |  | failure to adjust or   implement our business model;                   
| |  | additional expenditures   required to facilitate this sale; and        
| |  | the diversion of   managements attention from our day-to-day business.

| | The failure to complete both Transactions may result in a decrease in   the market value of our common stock.
| | -------------------------------------------------------------------------------------------------------------

The Transactions are subject to a number of contingencies, including approval by our shareholders and other customary closing conditions.  We cannot predict whether we will succeed in obtaining the approval of our shareholders, or that the other conditions to either closing will be satisfied.  As a result, either Transaction may not be completed.  If we close the first Transaction, but our shareholders fail to approve the second Transaction or if the second Transaction is not completed for any other reason, the market price of our common stock may decline.

| | If our shareholders do not approve and authorize the second   Transaction, there may not be any other offers from potential acquirers.
| | --------------------------------------------------------------------------------------------------------------------------------------

If our shareholders do not approve the second Transaction, we may seek another strategic transaction, including the sale of all or part of our remaining business.  Although we have had such discussions with various parties in the past, none of these parties may now have an interest in a strategic transaction with Timeline or be willing to offer a reasonable purchase price.

Page 19



| | If we do not complete the Transactions, we will continue to face   challenges and uncertainties in our ability to achieve business success.
| | -------------------------------------------------------------------------------------------------------------------------------------------

We have faced challenges and uncertainties surrounding our ability to successfully execute our business plan, such as our inability to maintain profitability from our software licensing operations, our reliance on agreements with third-party licensees and distributors for sales and licensing of our products, the scope and degree of market recovery and performance particularly in the software sector, the uncertainty of securing license agreements and of developing and maintaining sustained maintenance and support revenue.  We have faced other uncertainties such as market acceptance of our products and any other new products we develop, as well as products and services of our third-party licensees and distributors, our ability to integrate our products with those of the third party, the performance and efforts of our third-party partners, the uncertainty of having sufficient resources to continue
development of new technologies to compete with new offerings from competitors with significantly greater resources.  In addition, factors adversely affecting the demand for our software products, such as competition, pricing or technological change, could materially adversely affect our business, financial condition and operating results.

If we do not complete the Transactions, we will continue to face these challenges and uncertainties.

| | We will be unable to compete with the software licensing business for   four years from the date of the closing.
| | ----------------------------------------------------------------------------------------------------------------

We have agreed in the letter of intent that the definitive purchase agreement will include a non-competition and non-solicitation obligation for a period of four years from the closing of the second Transaction.  Under this provision, we will not be able to compete with the software licensing business being sold to Global, nor will be able to solicit either the customers of the software licensing business or our employees hired by Global.

Certain Factors Related to Our Common Stock

| | Because our   common stock is traded on the OTC Bulletin Board and is a penny stock, a   shareholders ability to sell shares in the secondary trading market may be   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.  We are currently operating under notice that we may be delisted by the Boston Stock Exchange if we are unable to meet the shareholders equity requirements of the Exchange during the waiver period.

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 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.

Page 20



| | Our quarterly   operating results may vary, and these fluctuations could affect the market   price of our stock.
| | ----------------------------------------------------------------------------------------------------------------

Our operating results may vary significantly from quarter to quarter and are influenced by such factors as:

| |  | the commencement, completion or cancellation of   large contracts,
| | - | ------------------------------------------------------------------
| |  | the results of patent licensing activity,                         
| |  | other changes in the mix of our services.                         

We believe that operating results for any particular quarter are not necessarily a meaningful indication of future results. While fluctuations in our quarterly operating results could negatively or positively affect the market price of our common stock, these fluctuations may not be related to our future overall operating performance.

| | The price of our   common stock may be volatile, and a shareholders investment in our common   stock could suffer a decline in value.
| | --------------------------------------------------------------------------------------------------------------------------------------

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:

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

| | We may not pay   dividends, so any return on your investment must come from   appreciation.
| | -------------------------------------------------------------------------------------------

We have not declared dividends on our common stock in the past, and may not declare dividends on our common stock in the foreseeable future.  As a result, any return on your investment in our common stock must come from increases in the fair market value and trading price of our common stock.  However, in the event the proposed Transaction with Global Software is completed, we anticipate that in March 2006 our board of directors will consider whether to pay a dividend to shareholders from the proceeds of the sale.

| | We are subject to   a number of provisions under state law and our Articles of Incorporation 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.  In addition, under our current Articles of Incorporation, the super-majority approval of holders of at least 75% of our outstanding common stock is required to approve a merger, sale of all or substantially all of our assets or our dissolution.  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.

Page 21



|ITEM   2. | DESCRIPTION   OF PROPERTY
|--------- | -------------------------

We lease approximately 8,704 square feet of office space at 3055 112th Ave. N.E., Bellevue, Washington.  The original term of the lease was due to expire on April 30, 2005.  On January 26, 2005, we and the landlord agreed to a three month hold-over, through July 31, 2005.  Subsequently, in May 2005, the landlord agreed to further extend the term through October 31, 2005.  In consideration for these extensions, we agreed to increase the monthly lease rate to the current market rate, resulting in rent of $15,623.68 per month.

In addition, we rent on a monthly basis 900 square feet of office space in London for our Analyst Financials office.  We do not own any real estate.

|ITEM   3. | LEGAL   PROCEEDINGS
|--------- | -------------------

In June 2005, we filed an action in the Federal District Court for the Western District of Washington against ProClarity Corporation alleging infringement of certain of our patents.  We intend to seek monetary damages and an injunction against ProClarity licensing certain of its products.  No trial date has been set at this time.

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

Our common stock is traded on the OTC Bulletin Board and the Boston Stock Exchange under the symbol TMLN.  On December 15, 2004, we were notified by the Boston Stock Exchange that they had suspended trading of our stock until we meet the shareholder equity requirements of the Exchange.  If we are unable to meet those requirements, we may be delisted from the Boston Stock Exchange.

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 closing sales prices as reported by the OTC Bulletin Board, for each quarter of fiscal 2004 and 2005, and reflects inter-dealer prices without retail mark-up, mark-down, or commissions and may not represent actual transactions.

Page 22



|             |  | Fiscal   2004 |      | Fiscal   2005 |  
|------------ |  | ------------- | ---- | ------------- | -
|             |  |               |      |               |  
|             |  | 1st   Quarter |      | 2nd   Quarter |  
|             |  |               |      |               |  
|Common Stock |  |               |      |               |  
|High         |  | $             | 1.40 |               | $
|Low          |  | $             | 0.55 |               | $

Holders

As of May 16, 2005, there were 4,190,998 shares of common stock outstanding held by approximately 93 holders of record.

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.*  However, in the event the proposed Transaction with Global Software is completed, we anticipate that in March 2006 our board of directors will consider whether to pay a dividend to shareholders from the proceeds of the sale.*  Any future determination with regard to the 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.

|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.  See Cautionary Notice Regarding Forward Looking Statements on page 1.

Overview

Our business consists of two separate activities.  Our first line of business consists of 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.

Our first
line of business is in the development and licensing of data management and
reporting software products.  Our Timeline ®Analystproduct line is designed to gather data from multiple operating
systems and hardware platforms, old and new, for translation into a Microsoft
environment.  Our WorkWise
®Business Alerts
®product automates and synchronizes notification messages
pertaining to specific events and business processes.  Our WorkWise
®Data Agent Serverintegrates software programs
developed at different times by different people using different database
structures.  During fiscal 2005, we received approximately $1.4 million in
software license revenue from these products.  We also provide consulting
and maintenance services in support of these software applications.

Page 23



Our second line of business is licensing our patent portfolio to other software manufacturers and users.  We have been granted six patents by the U.S. Patent and Trademark Office on our technology and have a total of 136 issued claims.  Our wholly-owned subsidiary, WorkWise Software, Inc., holds one U.S. patent.  We have also been granted patents in Australia, Canada, China, Hong Kong, Israel, Mexico and Singapore.  We have a number of pending patent applications, and believe additional international patents may be granted during fiscal 2006.*  During fiscal 2005, we entered into only one new agreement to license our patents which will generate a royalty on licensing of a connectivity product.  Due to the limited number of historical and forecasted licenses of this product, we do not expect to generate any significant income during its term.*  For fiscal 2006, we intend
to more aggressively pursue licensing of our patents.*  In June 2005, we filed a patent infringement lawsuit against ProClarity Corporation.  Although we cannot predict if we will be successful in entering into additional patent licenses, nor the timing or amount of any such licenses, we believe that a majority of our operating revenue in fiscal 2006 will be generated through patent license fees.*

Our consolidated financial statements for the fiscal years ended March 31, 2004 and 2005 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 approximately $476,000 for the 2005 fiscal year and had incurred recurring net losses from operations over the previous several fiscal years.  As of March 31, 2005, we have an accumulated deficit of approximately $10,442,000.  These factors raise substantial doubt about our ability to continue as a going concern.

If we do not complete the proposed Transaction with Global Software described above, we believe that our current cash and cash equivalents, and any net cash provided by operations may not be sufficient to meet anticipated cash needs for working capital and capital expenditures through fiscal 2006.  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, which may be on unfavorable terms or may not be available.  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 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.  Actual results may differ from those
estimates.*

Page 24



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 we have had few or no warranty claims resulting in a refund.  However, if our software fails to work in accordance with our published standards, 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.  Additionally, if we overestimated the collectibility of our accounts receivable, it would have a negative impact on our reported net receivables, net
loss and our cash flow.*

Page 25



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, 2005, such a write-off would reduce our total assets by approximately $266,000.  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.*

Impairment of Long-Lived Assets

Long-lived assets, including property and equipment, 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 business.  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.  We determined we have two reporting units consisting of operations in the United States (Timeline) and Europe (Analyst Financials Limited).  All goodwill is attributable to the Analyst Financials Limited reporting unit.  Future events could cause us to conclude that impairment indicators exist and that goodwill is impaired, which would reduce the approximately $70,000 currently reported on our balance sheet
as of March 31, 2005.*  Such an adjustment would have no effect on cash.*

Results of Operations for the Fiscal Year Ended March 31, 2005

Revenues

|                       |  | Years   Ended March 31, |       |      |   |       
|---------------------- |  | ----------------------- | ----- | ---- | - | ------
|                       |  |                         |       |      |   |       
|                       |  | 2005                    |       | 2004 |   | Change
|                       |  |                         |       |      |   |       
|(Dollars in Thousands) |  |                         |       |      |   |       
|Software license       |  | $                       | 1,420 |      | $ | 1,419 
|Patent license         |  |                         | 1     |      |   | 1,900 
|Maintenance            |  |                         | 1,483 |      |   | 1,272 
|Consulting and other   |  |                         | 627   |      |   | 850   
|                       |  |                         |       |      |   |       
|Total revenues         |  | $                       | 3,531 |      | $ | 5,441 

For the fiscal year ended March 31, 2005, our total operating revenues were approximately $3,531,000 compared to $5,441,000 for fiscal 2004, representing a decrease of 35%.  Of this decrease of $1,910,000 in total revenues, $1,899,000 was directly attributable to the decrease in revenue from patent licenses in fiscal 2005.  We decided not to undertake any litigation during fiscal 2005 until and unless we had negotiated a merger or sale of the software operations.  Our belief was that such litigation could be a deterrent to potential purchasers.  The resulting decrease of patent license revenue is indicative of how difficult it is to secure patent licensing revenue without actually bringing alleged infringement issues before the appropriate courts.  Patent license revenue in fiscal 2004 consisted of a one-time license fee in February 2004 of $1,750,000 from Cognos, Inc. and a
one-time fee in the second quarter of fiscal 2004 of $150,000 to consent to the assignment of a license from Sagent Technology to Group 1.

Page 26



We intend to continue to actively pursue new patent licenses through various means in fiscal 2006, including filing suit in federal courts.  We cannot predict the outcome of ongoing and future negotiations or lawsuits.  We cannot predict if we will be successful in entering into additional patent licenses, nor the timing or amount of any such licenses.**

Software license revenue was flat between fiscal 2005 and fiscal 2004.  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 50 national and international distribution partners.  There is tremendous consolidation occurring throughout this market and we have experienced the loss of several reseller accounts due to their acquisition by parties who are not our clients.  Consequently, it is impossible to predict if our distribution channels will maintain or increase software licenses during fiscal 2006 over fiscal 2005.*

Maintenance revenue increased by 17%, to $1,483,000 from $1,272,000 for the comparable fiscal years ended March 31, 2005 and 2004.  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 resellers (second-tier maintenance).  In first-tier 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 are typically provided under annually renewable agreements.  We receive approximately 70% of the annual support revenue for second-tier
support and 30% for first-tier support.  Most of our customers sign maintenance agreements and our experience has been that in excess of 80% of our customers with maintenance agreements renew their agreements annually.   Cancellations typically occur at the time the customer is no longer using the software.

Consulting and other revenue decreased 26%, to $627,000 from $850,000 for the 2005 fiscal year from fiscal 2004.  The level of our consulting revenue has decreased as the proportion of new licenses sold through reseller channels that provide their own installation and consulting on our products has increased.  This allows our resellers to provide the services and obtain the consulting revenue associated with installations.  Due to our emphasis on working through resellers who provide installation and consulting, we do not foresee a significant change in consulting projects in fiscal 2006 and, therefore, expect consulting revenue to remain fairly stable through fiscal 2006.*

Cost of Revenues

|                                  |  | Years   Ended March 31, |     |      |   |       
|--------------------------------- |  | ----------------------- | --- | ---- | - | ------
|                                  |  |                         |     |      |   |       
|                                  |  | 2005                    |     | 2004 |   | Change
|                                  |  |                         |     |      |   |       
|(Dollars in Thousands)            |  |                         |     |      |   |       
|Software license                  |  | $                       |    |      | $ | 186   
|Patent license                    |  |                         | 22  |      |   | 19    
|Maintenance, consulting and other |  |                         | 505 |      |   | 486   
|                                  |  |                         |     |      |   |       
|Total cost of revenues            |  | $                       | 527 |      | $ | 691   
|Percentage of operating revenues  |  |                         | 15  | %    |   | 13    

Cost of revenues decreased 24% for the 2005 fiscal year over fiscal 2004.  Software license costs decreased due to the elimination in the amortization expense associated with certain capitalized software modules either built or acquired in prior periods.  As of the third quarter of fiscal 2004 all such costs had been fully amortized.  Patent licensing expenses increased in fiscal 2005 by approximately $3,000 solely due

Page 27



to increased amortization against the capitalized costs of procuring and retaining our various patents.  The amount expended on acquiring and retaining the patents has increased as the number of patents held has increased.  Maintenance and consulting expenses increased slightly due primarily to an internal change in the cost allocation of a portion of one employees costs to consulting and away from administration.

Gross Profit

|                                 |  | Years   Ended March 31, |       |      |   |       
|-------------------------------- |  | ----------------------- | ----- | ---- | - | ------
|                                 |  |                         |       |      |   |       
|                                 |  | 2005                    |       | 2004 |   | Change
|                                 |  |                         |       |      |   |       
|(Dollars in Thousands)           |  |                         |       |      |   |       
|Gross profit                     |  | $                       | 3,004 |      | $ | 4,750 
|Percentage of operating revenues |  |                         | 85    | %    |   | 87    

Our gross profit for fiscal 2005 was approximately $3,004,000 as compared to $4,750,000 in fiscal 2004, representing a 37% decrease.  Gross profit for the two fiscal years is not directly comparable because of the relative mix of high-margin patent license revenue in 2004 of $1,900,00 and $1,000 in patent revenue in fiscal 2005.  Exclusive of patents, revenue for 2005 decreased by only $10,000 and cost of revenue decreased by $167,208.  This reflects the fact that the software line of business was very flat and we have kept costs within very strict bounds; in part because all U.S. employees have been on reduced salaries throughout both fiscal years.  There can be no assurance that we will be able to keep qualified and experienced employees throughout fiscal 2006 because of the reduced salary restraints.*  It is our opinion that revenues in fiscal 2006 will not allow reinstatement
of prior salary levels unless there is substantial activity in the patent licensing line of business.*  Furthermore, to secure patent licenses will likely require relatively significant costs prior to any possible revenue generation, which in turn requires additional working capital.*  In the event working capital restraints would allow increased efforts aimed at procuring patent licensing, it would likely generate widely different results between reporting periods, causing substantial fluctuations in comparative margins to occur.*  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 our patents and technologies as reflected in cost of revenues.

Sales and Marketing Expense

|                                 |  | Years   Ended March 31, |     |      |   |       
|-------------------------------- |  | ----------------------- | --- | ---- | - | ------
|                                 |  |                         |     |      |   |       
|                                 |  | 2005                    |     | 2004 |   | Change
|                                 |  |                         |     |      |   |       
|(Dollars in Thousands)           |  |                         |     |      |   |       
|Sales and marketing              |  | $                       | 901 |      | $ | 1,131 
|Percentage of operating revenues |  |                         | 26  | %    |   | 21    

Sales and marketing expense decreased by 20% from approximately $1,131,000 in fiscal 2004 to $901,000 in fiscal 2005.  However, sales and marketing expense increased as a percentage of operating revenue between the comparable fiscal years.  The decrease in expense in fiscal 2005 was due in part to internal cost allocation of the salary for one individual who undertook substantial administrative duties.  This required management to charge a portion of his salary to administration expenses and away from cost of sales and marketing.  In addition, there was a reduction in sales staff in Analyst Financials Limited between fiscal 2004 and fiscal 2005.  The expenses for fiscal 2004 include one-time payments of significant bonus compensation based on exceeding budget goals in the fourth quarter of fiscal 2004, for which there was no comparable payment in fiscal 2005.  Patent license
related expenses are typically not included in sales and marketing expense due to the nature of the licensing process.  The increase in expense as a percentage of revenue was due to the decrease in total revenues between the fiscal years.

Page 28



Research and Development Expense

|                                 |  | Years   Ended March 31, |     |      |   |       
|-------------------------------- |  | ----------------------- | --- | ---- | - | ------
|                                 |  |                         |     |      |   |       
|                                 |  | 2005                    |     | 2004 |   | Change
|                                 |  |                         |     |      |   |       
|(Dollars in Thousands)           |  |                         |     |      |   |       
|Research and development         |  | $                       | 837 |      | $ | 1,222 
|Percentage of operating revenues |  |                         | 24  | %    |   | 22    

Research and development expense decreased 32% from approximately $1,222,000 in fiscal 2004 to $837,000 in fiscal 2005.  This decrease in research and development expense was primarily attributable to the payment in fiscal 2004 of bonus compensation to personnel employed in development in 2004 based upon exceeding budget goals, for which there was no comparable payment in fiscal 2005.  Additionally, the number of staff assigned to research and development was less in fiscal 2005 by one employee.  We currently anticipate additional reductions in staffing of the development group in fiscal 2006.*  Nevertheless, our efforts to control costs through reduced wages, changes in the economy or the signing of new channel partners could lead to an increase or decrease in our development resources and the resulting expenses.*

General and Administrative

|                                 |  | Years   Ended March 31, |       |      |   |       
|-------------------------------- |  | ----------------------- | ----- | ---- | - | ------
|                                 |  |                         |       |      |   |       
|                                 |  | 2005                    |       | 2004 |   | Change
|                                 |  |                         |       |      |   |       
|(Dollars in Thousands)           |  |                         |       |      |   |       
|General and administrative       |  | $                       | 1,631 |      | $ | 1,765 
|Percentage of operating revenues |  |                         | 46    | %    |   | 32    

General and administrative expense decreased by 8% from approximately $1,765,000 in fiscal 2005 to $1,631,000 in fiscal 2004.  This decrease is due in large part to bonus compensation based on exceeding budget goals paid in the fourth quarter of fiscal 2004, for which there was no comparable payment in fiscal 2005.  We believe that general and administrative costs may vary greatly from quarter to quarter in fiscal 2006, based in part on the compensation plans that may cause salaries to vary dependant on gross revenue and net income.*

Patent Expense

|                                 |  | Years   Ended March 31, |    |      |   |       
|-------------------------------- |  | ----------------------- | -- | ---- | - | ------
|                                 |  |                         |    |      |   |       
|                                 |  | 2005                    |    | 2004 |   | Change
|                                 |  |                         |    |      |   |       
|(Dollars in Thousands)           |  |                         |    |      |   |       
|Patents                          |  | $                       | 76 |      | $ | 498   
|Percentage of operating revenues |  |                         | 2  | %    |   | 9     

Patent expense includes the costs of litigation and negotiations with respect to patent licenses, and tends to vary significantly between periods depending on the level of activity and the efforts required to manage cases.  The costs associated with licensing patents decreased by 85% from approximately $498,000 in fiscal 2004 to $76,000 in fiscal 2005.  As previously stated, in fiscal 2005 there was no litigation activity and very little due diligence expense in investigating parties of interest.  Nevertheless, we have continued to monitor a number of other software products which we believe may, subject to further due diligence, present embodiments of our patents.  In June 2005, we filed a patent infringement lawsuit against ProClarity Corporation and there is a significant possibility that we may 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.*

Page 29



Depreciation and Amortization

Depreciation expense decreased in fiscal 2005 to approximately $32,000 from $65,000 in fiscal 2004.  This decrease is the result of retiring or fully depreciating previously acquired equipment while acquiring new equipment at a slower rate.  In the third quarter of fiscal 2004, we fully amortized our intangible assets from the prior acquisitions of Analyst Financials and WorkWise, and amortization expense since the third quarter of fiscal 2004 now consists solely of amortization of our capitalized patents.  This cost will continue to grow due to a larger number of patents, but due to the remaining life in excess of ten years, the amount of increase on a year-by-year basis should not be material.*  Depreciation expense for fiscal 2006 is not expected to vary significantly from that experienced in fiscal 2005.

Other Income and Expense

We had other expense of approximately $3,000 in fiscal 2005 compared with other income for fiscal 2004 of $36,000.  The decrease in fiscal 2005 over fiscal 2004 is primarily the result of the effect of changes in the exchange rate between the United Kingdom and United States on intercompany accounts.

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, we recorded a valuation allowance against the applicable deferred tax assets and therefore did not record a tax benefit for fiscal 2004 or fiscal 2005.

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 2006 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, 2005 stood at approximately $162,000 compared to $511,000 at March 31, 2004.  The decrease in cash and cash equivalents was primarily the result of operating losses incurred during the year.  During fiscal 2005, we used approximately $50,000 in investing activities.

Total liabilities, excluding deferred revenue of approximately $681,000 and $619,000 at March 31, 2005 and 2004, respectively, were $510,000 at March 31, 2005 compared to $344,000 at March 31, 2004.  This increase is attributed to normal fluctuations in payables and accruals.

We believe that our current cash and cash equivalents, and any net cash provided by operations may not be sufficient to meet anticipated cash needs for working capital and capital expenditures through fiscal 2006.  For that reason, we are actively seeking outside investors, merger partners, or acquirers of the software operations.  Furthermore, we may undertake to sell source code licenses or outsource a significant portion of our programming, maintenance and consulting in an effort to achieve efficiencies by consolidated efforts with third parties.  Our revenue is unpredictable, and a revenue shortfall could deplete our limited financial resources.  We currently have budgeted to incur losses during the first half of fiscal 2006, and our efforts to increase our revenue to cover expenses by mid-year fiscal 2006 may not be successful.*  Over the past several years, we have
significantly decreased operating expenses and, as a result, we believe our profitability will depend on generating sufficient license and other revenues.*  Accordingly, if we experience a significant revenue decline, 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.  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.**

Page 30



In connection with the non-binding letter of intent with Global Software (see Recent Developments  Non-Binding Letter of Intent with Global Software, Inc. above), on June 1, 2005, we entered into a $250,000 loan from Global.  The loan is secured by a first priority security interest on the assets covered by the non-binding letter of intent, and is intended to cover our working capital needs through the proposed first closing of the transaction.  The loan bears interest at an initial fixed rate of 6% per annum, and is due and payable on the earlier of (i) July 15, 2005, (ii) the closing of the first Transaction contemplated by the non-binding letter of intent, or (iii) termination of either the non-binding letter of intent or the definitive purchase agreement.  Assuming we close the first Transaction, the loan will be paid from the proceeds from that
closing.  If the closing does not occur, we may not have sufficient working capital to repay the loan when due.  We do not have in place any other credit facility with a bank or other lender to cover any cash flow shortfalls.  We used the proceeds from the $250,000 loan to pay off and terminate our accounts receivable credit facility with Silicon Valley Bank, which we had put in place in September 2004.

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:

| |  | 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;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | raising additional capital to fund continuing   operations by private placements of equity or debt securities or through the   establishment of other funding facilities;                           
| |  | forming a joint venture with one or more strategic   partners to provide additional capital resources to fund operations; and                                                                       
| |  | 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 2006, 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 our company if patent and software licenses do not substantially increase quarter-toquarter during fiscal 2006.**

|ITEM   7. | FINANCIAL   STATEMENTS.
|--------- | -----------------------

Financial Statements are listed in the Index to Financial Statements and filed and included elsewhere herein as a part of this Annual Report on Form 10-KSB.

Page 31



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

On June 29, 2004, we notified KPMG LLP that KPMG LLP would be dismissed upon completion and filing of our proxy statement for the fiscal year ended March 31, 2004.  We entered into an engagement agreement with Williams & Webster P.S. (Williams & Webster) to serve as our new independent registered public accountants for the fiscal year ending March 31, 2005.  Williams & Webster commenced its engagement with its review of our financial statements for the quarter ended June 30, 2004.  The change in independent registered public accounting firms was made subsequent to the filing of our Annual Report on Form 10-KSB for the year ended March 31, 2004.

During our two fiscal years prior to fiscal 2005 and the subsequent interim period through June 30, 2004, there were no disagreements between the Company and KPMG LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to KPMG LLPs satisfaction, would have caused KPMG LLP to make reference to the subject matter of the disagreement in connection with its reports.

|ITEM   8A. | CONTROLS   AND PROCEDURE
|---------- | ------------------------

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in our filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms.  As of the end of the period covered by this Annual Report on Form 10-KSB, we carried out an evaluation, under the supervision and with the participation of management, including our 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, management and our Chief Executive Officer/Chief Financial Officer concluded that our disclosure controls and procedures are effective.

During the fourth quarter of fiscal 2005, there have been no changes in our internal controls over financial reporting or in other factors that could significantly affect internal controls over financial reporting.  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 had in place a disclosure practices committee since early 2003, and have reviewed and implemented additional internal controls with respect to our U.K. operations.

|ITEM   8B. | OTHER   INFORMATION
|---------- | -------------------

None.

PART III

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

We have a Code of Ethics that applies to our principal executive officer/principal financial officer, and others performing similar functions.  We previously filed a copy of the Code of Ethics with the SEC as an exhibit to our annual report on Form 10-KSB for our fiscal year ended March 31, 2004.

Page 32



The other information called for by Part III, Item 9, will be included in our proxy statement relating to our 2005 annual meeting of shareholders, and is incorporated herein by reference.  The proxy statement will be filed within 120 days of March 31, 2005, our fiscal year end.

|ITEM 10. | EXECUTIVE   COMPENSATION
|-------- | ------------------------

Information called for by Part III, Item 10, will be included in our proxy statement relating to our 2005 annual meeting of shareholders, and is incorporated herein by reference.

|ITEM   11. | SECURITY   OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER   MATTERS
|---------- | --------------------------------------------------------------------------------------------------

Certain information called for by Part III, Item 11, will be included in our proxy statement relating to our 2005 annual meeting of shareholders, and is incorporated herein by reference.

Equity Compensation Plan and Warrant Grant Information

The following table gives information as of March 31, 2005, 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 and rights under our equity compensation plans and option and warrant grants not covered under our equity compensation plans, described in the footnotes following the table below.  For additional information on our stock option plans, see Note 11, Shareholders Equity, to our Consolidated Financial Statements for the fiscal year ended March 31, 2005 included in this report.

|                                                                                |  | (a)                                                                                              |         | (b)                                                                                   |   | (c)                                                   |  | (d)                                                    |        
|------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------ | ------- | ------------------------------------------------------------------------------------- | - | ----------------------------------------------------- |  | ------------------------------------------------------ | -------
|Plan   Category                                                                 |  | No. of   Shares   to be Issued   Upon Exercise of   Outstanding   Options, Warrants   and Rights |         | Weighted   Average   Exercise Price of   Outstanding   Options, Warrants   and Rights |   | No. of   Shares   Available for   Future Issuance (1) |  | Total of   Shares   Reflected in   Columns (a) and (c) |        
|                                                                                |  |                                                                                                  |         |                                                                                       |   |                                                       |  |                                                        |        
|Equity Compensation Plans Approved by Shareholders   (2)                        |  |                                                                                                  | 270,000 |                                                                                       | $ | 1.36                                                  |  |                                                        | 304,375
|Equity Compensation Plans and Warrant Grants Not   Approved by Shareholders (3) |  |                                                                                                  | 282,500 |                                                                                       | $ | 1.37                                                  |  |                                                        |       
|                                                                                |  |                                                                                                  |         |                                                                                       |   |                                                       |  |                                                        |        
|TOTAL                                                                           |  |                                                                                                  | 552,500 |                                                                                       | $ | 1.37                                                  |  |                                                        | 304,375
|                                                                                |  |                                                                                                  |         |                                                                                       |   |                                                       |  |                                                        |        

|   
|---
|(1)
|(2)
|(3)
|   
|   

Page 33



| | (iii) | a currently unvested 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;
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (iv)  | fully-vested warrants to purchase 100,000 shares of   common stock granted to one of our development partners in March 2003 in   consideration for an $84,000 payment, exercisable at $1.62 per share and   which expire in March 2007; and                                                                               
| | (v)   | fully-vested warrants to purchase 7,500 shares of   common stock granted to Silicon Valley Bank in September 2004 as part of a   financing agreement, exercisable at $0.80 per share and which expire in   September 2011.                                                                                                

|ITEM   12. | CERTAIN   RELATIONSHIPS AND RELATED TRANSACTIONS
|---------- | ------------------------------------------------

Information called for by Part III, Item 12, will be included in our proxy statement relating to our 2005 annual meeting of shareholders, and is incorporated herein by reference.

|ITEM   13. | EXHIBITS
|---------- | --------

|Exhibit   Number |     | Description                                                                                                                                                                          
|---------------- | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                 |     |                                                                                                                                                                                      
|3.1              | (1) | Articles of Incorporation, as amended and in effect                                                                                                                                  
|3.2              | (1) | Bylaws                                                                                                                                                                               
|4.1              | (1) | Specimen Common Stock Certificate                                                                                                                                                    
|10.1             | (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) | Office Lease Agreement dated September 8, 1995, as   amended, with G&W Investment Partners                                                                                           
|10.8B            | (4) | Amendment to Office Lease Agreement dated March 20,   1999, with G&W Investment Partners                                                                                             
|10.8C            | (5) | Amendment to Office Lease Agreement dated March 10,   2000 with MONY Life Insurance Company                                                                                          
|10.9             | (6) | Form of WorkWise Reseller Marketing Agreement                                                                                                                                        
|10.10            | (7) | Secured Promissory Note,   dated June 1, 2005, between Timeline, Inc. and Global Software, Inc.                                                                                      
|10.11            | (7) | Security Agreement, dated   June 1, 2005, between Timeline, Inc. and Global Software, Inc.                                                                                           
|10.12            | (9) | Non-Binding Letter of Intent, dated June 27, 2005,   between Timeline, Inc. and Global Software, Inc.                                                                                
|14               | (8) | Code of Ethics for Financial Officers                                                                                                                                                
|21.1             | (6) | Subsidiaries of Timeline, Inc                                                                                                                                                        
|23.1             | **  | Consent of Williams & Webster P.S., Independent   Registered Public Accounting Firm                                                                                                  
|23.2             | **  | Consent of KPMG LLP, Independent Registered Public   Accounting Firm                                                                                                                 
|31.1             | **  | Certification by Charles R. Osenbaugh, Chief   Executive Officer and Chief Financial Officer, pursuant to Rule 13a-14(a),   pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Page 34



|32.1 | ** | Certification by Charles R. Osenbaugh, Chief   Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section   1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|---- | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|   
|---
|** 
|(1)
|(2)
|(3)
|(4)
|(5)
|(6)
|(7)
|(8)
|(9)

|ITEM 14: | PRINCIPAL ACCOUNTANT FEES AND   SERVICES
|-------- | ----------------------------------------

Information called for by Part III, Item 14, will be included in our proxy statement relating to our 2005 annual meeting of shareholders, and is incorporated herein by reference.

Page 35



SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this Amendment No. 1 to Form 10-KSB to be signed on its behalf by the undersigned, thereunto duly authorized.

| | TIMELINE, INC.
| | --------------
| |               
| |               
| | By:           
| |               
| |               
| |               
| | Dated:        

In accordance with the Exchange Act, this Amendment No. 1 to Form 10-KSB has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

|Signature                  |  | Capacities                                                      |  | Date            
|-------------------------- |  | --------------------------------------------------------------- |  | ----------------
|                           |  |                                                                 |  |                 
|                           |  |                                                                 |  |                 
|/s/ Charles R.   Osenbaugh |  | Director, President                                             |  | October 20, 2005
|                           |  | Chief Executive Officer   Chief Financial Officer and Treasurer |  |                 
|Charles R. Osenbaugh       |  |                                                                 | 
|                           |  |                                                                 | 
|                           |  |                                                                 | 
|                           |  |                                                                 |  |                 
|                           |  |                                                                 |  |                 
|/s/ Donald K. Babcock      |  | Director                                                        |  | October 20, 2005
|                           |  |                                                                 |  |                 
|Donald K. Babcock          |  |                                                                 |  |                 
|                           |  |                                                                 |  |                 
|                           |  |                                                                 |  |                 
|/s/ Kent L. Johnson        |  | Director                                                        |  | October 20, 2005
|                           |  |                                                                 |  |                 
|Kent L. Johnson            |  |                                                                 |  |                 
|                           |  |                                                                 |  |                 
|                           |  |                                                                 |  |                 
|                           |  | Director                                                        |  |                 
|                           |  |                                                                 |  |                 
|Terry Harvey               |  |                                                                 |  |                 

Page 36



TIMELINE, INC.

Form 10-KSB Annual Report

Index to Financial Statements

|                                                                                                                       |  | Page
|---------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                       |  |     
|Report of Independent Registered   Public Accounting Firm for the year ended March 31, 2005                            |  | F-2 
|                                                                                                                       |  |     
|Report of Independent Registered   Public Accounting Firm for the year ended March 31, 2004                            |  | F-3 
|                                                                                                                       |  |     
|Consolidated Financial Statements:                                                                                     |  |     
|                                                                                                                       |  |     
|Consolidated   balance sheets as of March 31, 2005 and 2004                                                            |  | F-4 
|                                                                                                                       |  |     
|Consolidated   statements of operations for the years ended March 31, 2005 and 2004                                    |  | F-5 
|                                                                                                                       |  |     
|Consolidated   statements of shareholders equity and comprehensive loss for the years ended   March 31, 2005 and 2004 |  | F-6 
|                                                                                                                       |  |     
|Consolidated   statements of cash flows for the years ended March 31, 2005 and 2004                                    |  | F-7 
|                                                                                                                       |  |     
|Notes to Consolidated Financial   Statements                                                                           |  | F-8 

Page F-1



Board of Directors
Timeline, Inc. Bellevue, WA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited the accompanying consolidated balance sheet of Timeline, Inc., as of March 31, 2005 and the related consolidated statements of operations, shareholders equity and cash flows for the year then ended.  These financial statements are the responsibility of the Companys management.  Our responsibility is to express an opinion on these financial statements based on our audit.  The consolidated financial statements of Timeline, Inc. as of March 31, 2004, were audited by other auditors whose report dated May 9, 2004, included an explanatory paragraph that described the conditions present which raised substantial doubt about the Companys ability to continue as a going concern, as discussed in Note 1 to the consolidated financial statements.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Timeline, Inc., as of March 31, 2005 and the results of its operations, shareholders equity and its cash flows for the year 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 an accumulated deficit at March 31, 2005. 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.

|/s/ Williams & Webster,   P.S. | 
|------------------------------ | 
|                               | 
|Williams & Webster,   P.S.     | 
|                               | 
|Certified Public Accountants   | 
|Spokane, Washington            | 
|June 27, 2005                  | 

Page F-2



Report of Independent Registered Public Accounting Firm

The Board of Directors of Timeline, Inc.:

We have audited the accompanying consolidated balance sheet of Timeline, Inc. and subsidiaries (the Company) as of March 31, 2004, and the related consolidated statements of operations, shareholders equity and comprehensive loss, and cash flows for the year 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 audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 audit provides 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, 2004, and the results of their operations and their cash flows for the year then ended in conformity with U.S. generally accepted accounting principles.

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 an accumulated deficit at March 31, 2004. 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.

| | /s/   KPMG LLP
| | --------------
| |               

May 9, 2004 Seattle, Washington

Page F-3



TIMELINE, INC.CONSOLIDATED BALANCE SHEETS MARCH 31, 2005 AND 2004

|                                                                                                             |  | 2005 |             | 2004 |  
|------------------------------------------------------------------------------------------------------------ |  | ---- | ----------- | ---- | -
|                                                                                                             |  |      |             |      |  
|ASSETS                                                                                                       |  |      |             |      |  
|CURRENT ASSETS:                                                                                              |  |      |             |      |  
|Cash and cash equivalents                                                                                    |  | $    | 162,355     |      | $
|Accounts receivable, net of allowance of $17,613 and $12,326                                                 |  |      | 643,324     |      |  
|Prepaid expenses and other current assets                                                                    |  |      | 48,989      |      |  
|                                                                                                             |  |      |             |      |  
|Total current assets                                                                                         |  |      | 854,668     |      |  
|PROPERTY AND EQUIPMENT,   net of accumulated depreciation of $447,495 and $875,625                           |  |      | 58,630      |      |  
|CAPITALIZED PATENTS, net   of accumulated amortization of $82,786 and $60,069                                |  |      | 265,911     |      |  
|GOODWILL, net of   accumulated amortization of $123,938 and $123,938                                         |  |      | 70,183      |      |  
|                                                                                                             |  |      |             |      |  
|Total assets                                                                                                 |  | $    | 1,249,392   |      | $
|                                                                                                             |  |      |             |      |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                         |  |      |             |      |  
|CURRENT LIABILITIES:                                                                                         |  |      |             |      |  
|Accounts payable                                                                                             |  | $    | 109,503     |      | $
|Accrued expenses                                                                                             |  |      | 338,718     |      |  
|Line of credit                                                                                               |  |      | 61,327      |      |  
|Deferred revenues                                                                                            |  |      | 681,325     |      |  
|                                                                                                             |  |      |             |      |  
|Total current liabilities                                                                                    |  |      | 1,190,873   |      |  
|                                                                                                             |  |      |             |      |  
|SHAREHOLDERS EQUITY:                                                                                        |  |      |             |      |  
|Common stock, $.01 par value, 20,000,000 shares authorized, 4,190,998   and 4,178,498 issued and outstanding |  |      | 41,910      |      |  
|Additional paid-in capital                                                                                   |  |      | 10,578,447  |      |  
|Accumulated other comprehensive loss                                                                         |  |      | (119,251    | )    |  
|Accumulated deficit                                                                                          |  |      | (10,442,587 | )    |  
|                                                                                                             |  |      |             |      |  
|Total shareholders equity                                                                                   |  |      | 58,519      |      |  
|                                                                                                             |  |      |             |      |  
|Total liabilities and shareholders equity                                                                   |  | $    | 1,249,392   |      | $
|                                                                                                             |  |      |             |      |  

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

Page F-4



TIMELINE, INC.CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED MARCH 31, 2005 AND 2004

|                                                                         |  | 2005 |           | 2004 |  
|------------------------------------------------------------------------ |  | ---- | --------- | ---- | -
|                                                                         |  |      |           |      |  
|REVENUE:                                                                 |  |      |           |      |  
|Software license                                                         |  | $    | 1,420,148 |      | $
|Patent license                                                           |  |      | 1,000     |      |  
|Maintenance                                                              |  |      | 1,483,347 |      |  
|Consulting and other                                                     |  |      | 626,714   |      |  
|                                                                         |  |      |           |      |  
|Total revenues                                                           |  |      | 3,531,209 |      |  
|COST OF REVENUES:                                                        |  |      |           |      |  
|Software license                                                         |  |      |          |      |  
|Patent license                                                           |  |      | 22,717    |      |  
|Maintenance, consulting   and other                                      |  |      | 504,780   |      |  
|                                                                         |  |      |           |      |  
|Total cost of revenues                                                   |  |      | 527,497   |      |  
|                                                                         |  |      |           |      |  
|Gross profit                                                             |  |      | 3,003,712 |      |  
|                                                                         |  |      |           |      |  
|OPERATING EXPENSES:                                                      |  |      |           |      |  
|Sales and marketing                                                      |  |      | 900,887   |      |  
|Research and   development                                               |  |      | 837,246   |      |  
|General and   administrative                                             |  |      | 1,630,675 |      |  
|Patents                                                                  |  |      | 76,316    |      |  
|Depreciation                                                             |  |      | 31,634    |      |  
|Amortization of   intangibles                                            |  |      |          |      |  
|                                                                         |  |      |           |      |  
|Total operating   expenses                                               |  |      | 3,476,758 |      |  
|                                                                         |  |      |           |      |  
|Loss from operations                                                     |  |      | (473,046  | )    |  
|                                                                         |  |      |           |      |  
|OTHER INCOME (EXPENSE):                                                  |  |      |           |      |  
|Loss on and impairment   of marketable   securities available   for sale |  |      |          |      |  
|Interest (expense) income   and other                                    |  |      | (2,547    | )    |  
|                                                                         |  |      |           |      |  
|Total other (expense)   income                                           |  |      | (2,547    | )    |  
|                                                                         |  |      |           |      |  
|(Loss) income before   income taxes                                      |  |      | (475,593  | )    |  
|Income tax provision                                                     |  |      |          |      |  
|                                                                         |  |      |           |      |  
|Net (loss) income                                                        |  | $    | (475,593  | )    | $
|                                                                         |  |      |           |      |  
|Basic net (loss) income per share                                        |  | $    | (0.11     | )    | $
|                                                                         |  |      |           |      |  
|Diluted net (loss) income per share                                      |  | $    | (0.11     | )    | $
|                                                                         |  |      |           |      |  
|Shares used in calculation of basic net (loss)   income per share        |  |      | 4,190,998 |      |  
|                                                                         |  |      |           |      |  
|Shares used in calculation of diluted net (loss)   income per share      |  |      | 4,190,998 |      |  
|                                                                         |  |      |           |      |  

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

Page F-5



TIMELINE, INC.CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE LOSS FOR THE YEARS ENDED MARCH 31, 2005 AND 2004

|                                                                   |  |                |           |                                |   |                       |  |   |                                |  | Accumulated   Other   Comprehensive   (Loss Income) |          |   |   |             |  
|------------------------------------------------------------------ |  | -------------- | --------- | ------------------------------ | - | --------------------- |  | - | ------------------------------ |  | --------------------------------------------------- | -------- | - | - | ----------- | -
|                                                                   |  | Common   Stock |           | Additional   Paid-in   Capital |   |                       |  |   | Total   Shareholders   Equity | 
|                                                                   |  |                |           |                                |   | Accumulated   Deficit |  |  
|                                                                   |  | Shares         |           | Amount                         |   |                       |  |   |                               
|                                                                   |  |                |           |                                |   |                       |  |   |                                |  |                                                     |          |   |   |             |  
|BALANCE, March 31, 2003                                            |  |                | 4,165,998 |                                | $ | 41,660                |  | $ | 10,465,478                     |  | $                                                   | (47,459  | ) | $ | (9,989,318  | )
|                                                                   |  |                |           |                                |   |                       |  |   |                                |  |                                                     |          |   |   |             |  
|Stock-based   compensation                                         |  |                | 12,500    |                                |   | 125                   |  |   | 14,875                         |  |                                                     |         |   |   |            |  
|Warrants issued                                                    |  |                |          |                                |   |                      |  |   | 83,994                         |  |                                                     |         |   |   |            |  
|Net income                                                         |  |                |          |                                |   |                      |  |   |                               |  |                                                     |         |   |   | 22,324      |  
|Change in unrealized   gain on available for sales securities, net |  |                |          |                                |   |                      |  |   |                               |  |                                                     | 7,540    |   |   |            |  
|Foreign currency   translation adjustment                          |  |                |          |                                |   |                      |  |   |                               |  |                                                     | (57,514  | ) |   |            |  
|                                                                   |  |                |           |                                |   |                       |  |   |                                |  |                                                     |          |   |   |             |  
|Total comprehensive loss                                           |  |                |           |                                |   |                       |  |   |                                |  |                                                     |          |   |   |             |  
|                                                                   |  |                |           |                                |   |                       |  |   |                                |  |                                                     |          |   |   |             |  
|BALANCE, March 31, 2004                                            |  |                | 4,178,498 |                                |   | 41,785                |  |   | 10,564,347                     |  |                                                     | (97,433  | ) |   | (9,966,994  | )
|                                                                   |  |                |           |                                |   |                       |  |   |                                |  |                                                     |          |   |   |             |  
|Stock-based   compensation                                         |  |                | 12,500    |                                |   | 125                   |  |   | 9,375                          |  |                                                     |         |   |   |            |  
|Warrants issued                                                    |  |                |          |                                |   |                      |  |   | 4,725                          |  |                                                     |         |   |   |            |  
|Net loss                                                           |  |                |          |                                |   |                      |  |   |                               |  |                                                     |         |   |   | (475,593    | )
|Change in unrealized gain   on available for sales securities, net |  |                |          |                                |   |                      |  |   |                               |  |                                                     |         |   |   |            |  
|Foreign currency   translation adjustment                          |  |                |          |                                |   |                      |  |   |                               |  |                                                     | (21,818  | ) |   |            |  
|                                                                   |  |                |           |                                |   |                       |  |   |                                |  |                                                     |          |   |   |             |  
|Total comprehensive   loss                                         |  |                |           |                                |   |                       |  |   |                                |  |                                                     |          |   |   |             |  
|                                                                   |  |                |           |                                |   |                       |  |   |                                |  |                                                     |          |   |   |             |  
|BALANCE, March 31, 2005                                            |  |                | 4,190,998 |                                | $ | 41,910                |  | $ | 10,578,447                     |  | $                                                   | (119,251 | ) | $ | (10,442,587 | )
|                                                                   |  |                |           |                                |   |                       |  |   |                                |  |                                                     |          |   |   |             |  

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

Page F-6



TIMELINE, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED MARCH 31, 2005 AND 2004

|                                                                                           |  | 2005 |          | 2004 |  
|------------------------------------------------------------------------------------------ |  | ---- | -------- | ---- | -
|                                                                                           |  |      |          |      |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                      |  |      |          |      |  
|Net (loss) income                                                                          |  | $    | (475,593 | )    | $
|Adjustments to   reconcile net (loss) income to net cash provided by operating activities: |  |      |          |      |  
|Depreciation and   amortization                                                            |  |      | 54,351   |      |  
|Loss on disposal of   property and equipment                                               |  |      |         |      |  
|Stock-based   compensation                                                                 |  |      | 9,500    |      |  
|Realized loss on and   impairment of marketable securities     available for sale         |  |      |         |      |  
|Changes in operating   assets and liabilities:                                             |  |      |          |      |  
|Accounts receivable                                                                        |  |      | (197,018 | )    |  
|Prepaid expenses and   other current assets                                                |  |      | 108,486  |      |  
|Accounts payable                                                                           |  |      | 46,980   |      |  
|Accrued expenses                                                                           |  |      | 36,421   |      |  
|Deferred revenues                                                                          |  |      | 51,277   |      |  
|                                                                                           |  |      |          |      |  
|Net cash (used in)   provided by operating activities                                      |  |      | (365,596 | )    |  
|                                                                                           |  |      |          |      |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                      |  |      |          |      |  
|Purchase of property   and equipment                                                       |  |      | (15,009  | )    |  
|Proceeds from sale of   property and equipment                                             |  |      |         |      |  
|Investment in patents                                                                      |  |      | (34,696  | )    |  
|                                                                                           |  |      |          |      |  
|Net cash used in   investing activities                                                    |  |      | (49,705  | )    |  
|                                                                                           |  |      |          |      |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                      |  |      |          |      |  
|Warrants issued to FNIS                                                                    |  |      | 4,725    |      |  
|Line of credit   borrowings                                                                |  |      | 201,715  |      |  
|Line of credit   repayments                                                                |  |      | (140,388 | )    |  
|                                                                                           |  |      |          |      |  
|Net cash provided by   financing activities                                                |  |      | 66,052   |      |  
|                                                                                           |  |      |          |      |  
|EFFECT OF FOREIGN EXCHANGE RATE FLUCTUATIONS                                               |  |      | 121      |      |  
|NET CHANGE IN CASH AND CASH EQUIVALENTS                                                    |  |      | (349,128 | )    |  
|CASH AND CASH EQUIVALENTS, beginning of year                                               |  |      | 511,483  |      |  
|                                                                                           |  |      |          |      |  
|CASH AND CASH EQUIVALENTS, end of year                                                     |  | $    | 162,355  |      | $
|                                                                                           |  |      |          |      |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                          |  |      |          |      |  
|Cash paid for interest                                                                     |  | $    | 2,986    |      | $

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

Page F-7



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2005

1.  THE COMPANY:

Organization

The accompanying consolidated financial statements are for Timeline, Inc. and its subsidiaries Analyst Financials Limited and WorkWise Software, Inc. (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, 2005, the Company had negative working capital of $336,205 and had an accumulated deficit of $10,442,587, with total shareholders equity of $58,519.  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.  Management believes that current cash and cash equivalent balances, and any net cash provided by operations, may not provide adequate resources to fund operations at least until March 31, 2006.  Management is therefore contemplating a number of alternatives to enable the Company to continue operating including, but not limited to:

| |  | a merger, asset sale, joint ventures or another   comparable transaction;                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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;
| |  | forming a joint venture with a strategic partner or   partners to provide additional capital resources to fund operations; and                                                                                               
| |  | 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.

Page F-8



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 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 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 and cash equivalents.  Cash equivalents are valued at cost, which approximates fair value, due to the short-term nature of these investments.  Cash equivalents as of March 31, 2005 and 2004 were $162,355 and $425,112, respectively, and consisted entirely of money market fund 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.

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 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 fiscal 2003, the Company sold 52,300 of the Sagent shares resulting in realized losses of $6,040.  As of March 31, 2003, unrealized losses excluded from results of operations and reported as a component of accumulated other
comprehensive loss were $7,540.  The Company accumulated $2,334 of additional unrealized holding losses during fiscal 2004.  During the fourth quarter of fiscal 2004, the Company determined, subsequent to the distribution discussed below, that the securities had no longer any value to the Company and all unrealized losses on securities were eliminated and recorded as a component of realized loss on and impairment of marketable securities  held for sale in the consolidated statement of operations.

In fiscal 2003, the Company determined that declines in the fair value of the securities from a new accounting basis as established in fiscal 2002 were other than temporary.  Accordingly, the Company recorded a loss on the impairment of the available for sale securities of $123,204 in the second fiscal quarter of 2003, and established another new accounting basis.

Page F-9



The Company subsequently determined in fiscal 2004, upon announcement of Sagents liquidation, that further declines in the fair value of the securities from such new accounting basis as established in the second fiscal quarter of 2003 were other than temporary.  Accordingly, the Company recorded a loss on the impairment of available for sale securities of $11,834 in the fourth quarter of fiscal 2004.

The Company received notification of a distribution of $15,080 for its remaining shares held as of the record date of March 31, 2004, which distribution was received subsequent to year-end.  The Company has recorded this distribution receivable in prepaid expenses and other current assets in the consolidated balance sheet as of December 31, 2004.

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 using 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.  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 2004 and 2005, the Company did not capitalize any software development costs.  Amortization expense for
fiscal 2005 and 2004 was $0 and $185,524, respectively.  This amortization is included in cost of revenues in the accompanying statements of operations. At March 31, 2004, the capitalized software was fully amortized.

All research and development costs are expensed as incurred.

Patents

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

Intangible Assets and Goodwill

Intangible assets historically consisted primarily of acquired technology, customer lists, and goodwill related to acquisitions accounted for under the purchase method of accounting.  Amortization of these purchased intangibles was historically 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.

Page F-10



Amortization of intangible assets other than patents was $0 and $83,539 in the fiscal years ended March 31, 2005 and March 31, 2004, respectively.

The Company performed its annual goodwill impairment test as required by Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS No. 142) during its fiscal fourth quarter of 2005 and 2004.  The results of these tests did not give any indication that goodwill was potentially impaired, and accordingly no amounts have been recorded for goodwill impairment in fiscal 2005 or fiscal 2004.

Carrying amounts of goodwill as of March 31 are as follows:

|                         |  | 2005 |         | 2004 |  
|------------------------ |  | ---- | ------- | ---- | -
|                         |  |      |         |      |  
|Gross carrying amount    |  | $    | 194,121 |      | $
|Accumulated amortization |  |      | 123,938 |      |  
|                         |  |      |         |      |  
|Net book value           |  | $    | 70,183  |      | $
|                         |  |      |         |      |  

Impairment of Long-lived Assets

In accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (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.

Page F-11



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.

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.

Page F-12



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. 104, Revenue Recognition (SAB No. 104).

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 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:

|                                                                                                                 |  | 2005 |          | 2004 |  
|---------------------------------------------------------------------------------------------------------------- |  | ---- | -------- | ---- | -
|                                                                                                                 |  |      |          |      |  
|Net (loss) income, as reported                                                                                   |  | $    | (475,593 | )    | $
|Add stock-based employee compensation expense   included in reported net (loss) income                           |  |      |         |      |  
|Deduct total stock-based employee compensation   expense determined under fair-value-based method for all awards |  |      | (16,109  | )    |  
|                                                                                                                 |  |      |          |      |  
|Pro forma net loss                                                                                               |  | $    | (491,702 | )    | $
|                                                                                                                 |  |      |          |      |  
|Basic and diluted net loss per share  as reported                                                               |  | $    | (0.11    | )    | $
|                                                                                                                 |  |      |          |      |  
|Basic and diluted net loss per share  pro forma                                                                 |  | $    | (0.11    | )    | $
|                                                                                                                 |  |      |          |      |  

Options and warrants issued to nonemployees 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.  For fiscal 2005, the following weighted-average assumptions were used:  zero dividend yield; expected volatility of 98%; risk-free interest rates of 6.38%, and expected lives of ten years.  No options were granted in fiscal 2005 or fiscal 2004.

Net Income (Loss) per Common Share

Basic and diluted income (loss) per share is the net income (loss) divided by the weighted average number of shares outstanding during the period.  Shares issuable pursuant to stock options and warrants that have not been included in the calculation of net income (loss) per share because they are antidilutive totaled 552,500 and 607,129 in fiscal 2005 and 2004, respectively.

Page F-13



Comprehensive Loss

Accumulated other comprehensive loss consisted of foreign currency translation adjustments of negative $119,251 at March 31, 2005 and negative $97,433 at March 31, 2004.

New Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 153.  This statement addresses the measurement of exchanges of nonmonetary assets.  The guidance in APB Opinion No. 29, Accounting for Nonmonetary Transactions, is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged.  The guidance in that opinion; however, included certain exceptions to that principle.  This statement amends Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance.  A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the
exchange.  This statement is effective for financial statements for fiscal years beginning after June 15, 2005.  Earlier application is permitted for nonmonetary asset exchanges incurred during fiscal years beginning after the date this statement is issued.  Management believes the adoption of this statement will have no impact on the financial statements of the Company.

In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 152, which amends FASB statement No. 66, Accounting for Sales of Real Estate, to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real Estate Time-Sharing Transactions.  This statement also amends FASB Statement No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, to state that the guidance for (a) incidental operations and (b) costs incurred to sell real estate projects does not apply to real estate time-sharing transactions.  The accounting for those operations and costs is subject to the guidance in SOP 04-2.  This statement is effective for financial statements for fiscal years
beginning after June 15, 2005.  Management believes the adoption of this statement will have no impact on the financial statements of the Company.

In December 2004, the Financial Accounting Standards Board issued a revision to Statement of Financial Accounting Standards No. 123R, Accounting for Stock Based Compensations.  This statement supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance.  This statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services.  It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entitys equity instruments or that may be settled by the issuance of those equity instruments.  This statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions.  This statement does
not change the accounting guidance for share based payment transactions with parties other than employees provided in Statement of Financial Accounting Standards No. 123.  This statement does not address the accounting for employee share ownership plans, which are subject to AICPA Statement of Position 93-6, Employers Accounting for Employee Stock Ownership Plans. The Company has not yet determined the impact to its financial statements from the adoption of this statement.

In November 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 151, Inventory Costs  an amendment of ARB No. 43, Chapter 4. This statement amends the guidance in ARB No. 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that . . . under some circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges. . . . This statement requires that those items be recognized as

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current-period charges regardless of whether they meet the criterion of so abnormal. In addition, this statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. This statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Management does not believe the adoption of this statement will have any immediate material impact on the Company.

3.  MAJOR CUSTOMERS:

During fiscal 2005, no customer contributed more than 10% of the Companys total revenue.  During fiscal 2004, one customer comprised approximately 10% of the Companys total revenue, other than revenue generated by licensing its patents.  At March 31, 2005, approximately 35% of the Companys accounts receivable balance was due from two customers.  At March 31, 2004, approximately 21% of the Companys accounts receivable balance was due from three of the Companys customers.

4.  VALUATION AND QUALIFYING ACCOUNTS:

|Allowance for   Doubtful Accounts |  | Balance at   Beginning of   Year |        | Charged to   Costs and   Expenses |   | Writeoffs |  | Balance at   End   of Year |  
|--------------------------------- |  | -------------------------------- | ------ | --------------------------------- | - | --------- |  | -------------------------- | -
|                                  |  |                                  |        |                                   |   |           |  |                            |  
|Year ended March 31, 2004         |  | $                                | 10,164 |                                   | $ | 2,162     |  | $                          | 
|Year ended March 31, 2005         |  | $                                | 12,326 |                                   | $ | 5,287     |  | $                          | 

5.  PROPERTY AND EQUIPMENT:

Property and equipment consists of the following at March 31:

|                                                                |  | 2005 |          | 2004 |  
|--------------------------------------------------------------- |  | ---- | -------- | ---- | -
|                                                                |  |      |          |      |  
|Computer equipment                                              |  | $    | 391,537  |      | $
|Office equipment                                                |  |      | 124,588  |      |  
|                                                                |  |      |          |      |  
|                                                                |  |      | 506,125  |      |  
|Less  accumulated depreciation                                 |  |      | (447,495 | )    |  
|                                                                |  |      |          |      |  
|Total property and equipment, net of accumulated   depreciation |  | $    | 58,630   |      | $
|                                                                |  |      |          |      |  

6.  ACCRUED EXPENSES:

Accrued expenses consist of the following at March 31:

|                          |  | 2005 |         | 2004 |  
|------------------------- |  | ---- | ------- | ---- | -
|                          |  |      |         |      |  
|Compensation and benefits |  | $    | 204,973 |      | $
|Other                     |  |      | 133,745 |      |  
|                          |  |      |         |      |  
|Total accrued expenses    |  | $    | 338,718 |      | $
|                          |  |      |         |      |  

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7.  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:

|                                      |  | 2005 |            | 2004 |  
|------------------------------------- |  | ---- | ---------- | ---- | -
|                                      |  |      |            |      |  
|Deferred tax assets:                  |  |      |            |      |  
|Net operating loss   carryforwards    |  | $    | 2,506,000  |      | $
|Research and   experimentation credit |  |      | 224,000    |      |  
|Deferred revenues                     |  |      | 62,000     |      |  
|Other                                 |  |      | 55,000     |      |  
|                                      |  |      |            |      |  
|Gross deferred tax assets             |  |      | 2,847,000  |      |  
|Less - valuation allowance            |  |      | (2,847,000 | )    |  
|                                      |  |      |            |      |  
|                                      |  |      |           |      |  
|Deferred tax liabilities:             |  |      |            |      |  
|Capitalized   software/patent costs   |  |      |           |      |  
|                                      |  |      |            |      |  
|Net deferred tax assets               |  | $    |           |      | $
|                                      |  |      |            |      |  

The net operating loss carryforwards of approximately $5.5 million and research and experimentation credit carryforwards of approximately $224,000 in the United States begin expiring in 2005.  The net operating loss carryforwards of approximately 1.5 million British pounds can be carried forward indefinitely.

The valuation allowance increased by $231,000 during the year ended March 31, 2005 and decreased by $330,000 during the year ended March 31, 2004.  The fiscal 2004 decrease is attributable to an adjustment to net operating loss carryforwards.  An amended filing was made for fiscal years 2001 through 2003 to remove tax amortization erroneously taken for acquisitions that occurred in fiscal 2001.  Additionally, in fiscal 2004, taxable income was generated and offset by carryforwards.

The Company recorded tax expense of $0 in both fiscal 2005 and fiscal 2004, respectively.

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 $8,345 and $8,631 to the plan during the years ended March 31, 2005 and 2004, 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 $1,650 and $2,982 to the ESOP during fiscal 2005 and 2004, respectively.

10.  COMMITMENTS AND CONTINGENCIES:

Litigation

On September 17, 2003, the Company filed an action in the Federal District Court for the Western District of Washington against Cognos Inc. and its U.S. subsidiary, Cognos Corporation, alleging patent

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infringement in the United States.  On February 12, 2004, the Company entered into a settlement agreement with Cognos in which it granted to Cognos a license to its patented technology and Cognos agreed to pay a license fee of $1,750,000.  The total amount was recognized as patent license revenue in the quarter ended March 31, 2004 and is reflected in patent license revenue for the year-ended March 31, 2004.

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, 2005:

Fiscal Year ending March 31,

|                             |  |   |        | 
|---------------------------- |  | - | ------ | 
|2006                         |  | $ | 65,883 | 
|2007                         |  |   |       | 
|                             |  |   |        | 
|Total minimum lease payments |  | $ | 65,883 | 
|                             |  |   |        | 

Rent expense amounted to $361,661 and $571,222 for the years ended March 31, 2005 and 2004, respectively.  The Company received income under subleased facilities totaling $7,300 in fiscal 2005 and $41,113 in fiscal 2004.

11.  SHAREHOLDERS EQUITY:

At March 31, 2005, the Company had granted options and warrants to purchase 552,500 shares of common stock, including those described below.

Stock Options

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 304,375 shares are available for grant as of March 31, 2005.  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.  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, 2005.

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, 2005.

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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, 2005.

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, 2005.

Options outstanding as of each period are as follows:

|                        |  | Options   Issued to   Employees Under the Plans |         | Options   Issued to   Employees Outside the Plans |  
|----------------------- |  | ----------------------------------------------- | ------- | ------------------------------------------------- | -
|                        |  |                                                 |         |                                                   |  
|                        |  | Number of   Options                             |         | Weighted   Average   Exercise Price               |  
|                        |  |                                                 |         |                                                   |  
|Balance, March 31, 2003 |  |                                                 | 362,175 |                                                   | $
|Granted                 |  |                                                 |        |                                                   |  
|Canceled                |  |                                                 | (43,175 | )                                                 |  
|                        |  |                                                 |         |                                                   |  
|Balance, March 31, 2004 |  |                                                 | 319,000 |                                                   | $
|Granted                 |  |                                                 |        |                                                   |  
|Canceled                |  |                                                 | (49,000 | )                                                 |  
|                        |  |                                                 |         |                                                   |  
|Balance, March 31, 2005 |  |                                                 | 270,000 |                                                   | $
|                        |  |                                                 |         |                                                   |  

Information relating to stock options outstanding and stock options exercisable at March 31, 2005 is as follows:

|                         |  | Options   Outstanding |         | Options   Exercisable                          | 
|------------------------ |  | --------------------- | ------- | ---------------------------------------------- | 
|                         |  |                       |         |                                                | 
|Range of Exercise Prices |  | Number   of Shares    |         | Weighted   Average   Remaining   Life in Years | 
|                         |  |                       |         |                                                | 
|$1.00-$2.88              |  |                       | 440,500 |                                                | 
|$3.57-$6.75              |  |                       | 4,500   |                                                | 
|                         |  |                       |         |                                                | 
|Totals                   |  |                       | 445,000 |                                                | 
|                         |  |                       |         |                                                | 

At March 31, 2005 and 2004, options to purchase 295,000 and 360,125, respectively, were exercisable at weighted average exercise prices of $1.32 and $1.25 per share, respectively.

Page F-18



Warrants

In fiscal 1999, the Company issued warrants to purchase 42,000 shares of common stock, with an exercise price of $1.00 per share, to outside consultants in exchange for services rendered.  These warrants had a term of 5 years and 21,000 expired during fiscal 2004 and 21,000 expired during fiscal 2005.

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 was recognized as a reduction to license revenue recognized in the first quarter of fiscal 2004.

In September 2004, the Company issued Silicon Valley Bank a warrant to purchase 7,500 shares of common stock with an exercise price of $0.80 per share, as part of a financing agreement.  The warrant has a term of seven years, expiring on September 23, 2011.  The aggregate fair value of these warrants was approximately $6,000 and was recognized as interest expense.

12.  RELATED PARTY TRANSACTIONS:

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

In March 2003, 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, which were issued in April 2003.  The Company recognized $15,000 of compensation expense in fiscal 2004 related to these awards.  In March 2004, Mr. Dean and Mr. Evans each received another performance based award of 6,250 shares of Timeline common stock, which were issued in May 2004.  The Company recognized $9,500 of compensation expense in fiscal 2005 related to these awards.

13.  LINE OF CREDIT

On September 23, 2004, the Company entered into an Accounts Receivable Financing Agreement with Silicon Valley Bank.  Under the terms of the financing, the Company was able to borrow up to a maximum of $350,000, limited to 80% of its then qualified receivables.  Qualified receivables were generally trade receivables from U.S. customers not outstanding more than 90 days.  The interest rate varied dependent upon the Companys then quick ratio.  The rate was the greater of a fixed rate of six to eight percent or a variable rate of prime plus one and one-half to three and one-half percentage points.  In connection with the Financing Agreement, the Company granted the lender a security interest in all of the Companys assets and also granted the lender a warrant to purchase 7,500 shares of the Companys common stock.  Subsequent to fiscal 2005 year end, on June 2,
2005, the line of credit and security interest was terminated.

14.  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 Limited).  Both segments generate revenues from

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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.  During the year ended March 31, 2005 and 2004, the Timeline segment included intersegment revenues and the Analyst Financials segment included intersegment expenses that totaled $558,500 and $488,988, 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 fiscal years ended March 31, 2005 and 2004.

|                              |  | Year Ended   3/31/05 |          
|----------------------------- |  | -------------------- | ---------
|                              |  |                      |          
|                              |  | Timeline             |          
|                              |  |                      |          
|Revenues                      |  | $                    | 2,363,900
|Operating (loss) income       |  | $                    | (481,059 
|Depreciation and amortization |  | $                    | 24,683   
|Long lived assets             |  | $                    | 304,492  
|Total assets                  |  | $                    | 730,253  

|                              |  | Year Ended   3/31/04 |          
|----------------------------- |  | -------------------- | ---------
|                              |  |                      |          
|                              |  | Timeline             |          
|                              |  |                      |          
|Revenues                      |  | $                    | 4,246,723
|Operating (loss) income       |  | $                    | (49,575  
|Depreciation and amortization |  | $                    | 140,785  
|Long lived assets             |  | $                    | 315,503  
|Total assets                  |  | $                    | 1,147,623

15. Subsequent Events:

In May 2005, as amended in June 2005, the Company entered into a non-binding letter of intent with Global Software, Inc. for the proposed sale to Global of its software licensing operations over two stages, consisting of (1) the sale of 100% of stock in the Companys U.K. subsidiary, Analyst Financials Limited, with the first intended closing occurring on or before July 15, 2005, and (2) the sale of the Companys other software assets, with the second closing occurring on or before August 31, 2005.  The aggregate cash consideration for both transactions is $2.0 million, consisting of $1.1 million for the first transaction and $0.9 million for the second transaction, each to be paid over a three year period, plus assumption of certain liabilities.

In connection with the non-binding letter of intent, on June 1, 2005, the Company entered into a security agreement and secured promissory note with Global, providing for a $250,000 loan to the Company.  Principal amounts owing under the note bear interest at a fixed rate of 6% per annum.  The Note is due and payable (Maturity Date) on the earlier of (i) July 15, 2005, (ii) closing of the transactions contemplated by the non-binding letter of intent, or (iii) the termination of either the non-binding letter of intent or the definitive purchase agreement.

In June 2005, the Company filed an action in the Federal District Court for the Western District of Washington against ProClarity Corporation alleging infringement of certain of our patents.  The Company intends to seek monetary damages and an injunction against ProClarity licensing certain of its products.  No trial date has been set at this time.

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