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

                                  FORM 10 - QSB



               QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003

                         COMMISSION FILE NUMBER 0-25159

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

          WASHINGTON                                     91-2094375
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

    4700-42ND AVE. SW, SUITE 430, SEATTLE, WA                98116
      (Address of principal executive offices)            (Zip code)

                                 (206) 577-1440
                          (Issuer's telephone number)

                                       NA
              (Former name, former address and former fiscal year,
                         if changed since last report)


     As of May 6, 2003, approximately 31,649,978 shares of the Company's common
stock were outstanding.

<PAGE>


                                   LION, Inc.
                                  Form 10 - QSB
                      For the Quarter Ended March 31, 2003


                                                                           PAGE
                                      INDEX                               NUMBER

PART I     FINANCIAL INFORMATION

Item 1     Financial Statements

           Balance Sheets at March 31, 2003 (unaudited)
           and December 31, 2002                                               3

           Statements of Operations for the three months
           ended March 31, 2003 and 2002 (unaudited)                           4

           Statements of Cash Flows for the three months
           ended March 31, 2003 and 2002 (unaudited)                           5

           Notes to Financial Statements                                       6

Item 2     Management's Discussion and Analysis of Financial Condition
           and Results of Operations                                           7


Item 3     Controls and Procedures                                            20

PART II    OTHER INFORMATION

Item 1     Legal Proceedings                                                  20

Item 2     Changes in Securities and Use of Proceeds                          21

Item 6     Exhibits and Reports on Form 8 - K                                 21

           Signatures                                                         21

                                       2
<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

                                   LION, Inc.
                                 BALANCE SHEETS

                                     ASSETS

                                                     March 31,
                                                        2003       December 31,
                                                    (Unaudited)        2002
                                                   ------------    ------------

CURRENT ASSETS
    Cash and cash equivalents                      $    585,605    $    403,917
    Accounts receivable, less allowance for
       doubtful accounts of $49,500 and
       $62,400 in 2003 and 2002, respectively           425,787         347,661
    Prepaid expenses and other                          105,470          71,388
                                                   ------------    ------------

         Total current assets                         1,116,862         822,966

PROPERTY AND EQUIPMENT - net                            989,970         940,372

OTHER ASSETS
    Goodwill - net                                      273,955         273,955
    Other assets                                         37,908          37,908
                                                   ------------    ------------

                                                   $  2,418,695    $  2,075,201
                                                   ============    ============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Accounts payable                               $    184,309    $    111,340
    Accrued liabilities                                 381,872         329,671
    Current maturities of long-term obligations          47,711          35,330
    Deferred revenue                                    320,521         295,497
                                                   ------------    ------------

         Total current liabilities                      934,413         771,838

LONG-TERM OBLIGATIONS, less current maturities           67,092          52,495

COMMITMENTS AND CONTINGENCIES                                --              --

STOCKHOLDERS' EQUITY
    Preferred stock - authorized, 5,000,000
       shares of $.001 par value, liquidation
       value $900,000                                     1,500           1,500
    Common stock - authorized, 50,000,000 shares
       of $.001 par value                                31,604          31,442
    Additional contributed capital                   11,751,558      11,741,101
    Accumulated deficit                             (10,367,472)    (10,523,175)
                                                   ------------    ------------
                                                      1,417,190       1,250,868
                                                   ------------    ------------

                                                   $  2,418,695    $  2,075,201
                                                   ============    ============


The accompanying notes are an integral part of these statements.

                                       3
<PAGE>


                                   LION, Inc.

                            STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                   Three months ended March 31,
                                                   ----------------------------
                                                       2003            2002
                                                   ------------    ------------

Revenues                                           $  1,786,720    $  1,510,963

Expenses
    Direct costs                                        315,556         219,350
    Selling and marketing                               573,468         482,024
    General and administrative                          539,653         638,637
    Research and development                             87,401          89,805
    Depreciation and amortization                       111,002         119,682
                                                   ------------    ------------
                                                      1,627,080       1,549,498
                                                   ------------    ------------

         Operating income (loss)                        159,640         (38,535)

Other income (expense)
    Interest expense                                     (4,046)         (3,202)
    Interest income                                         109             841
                                                   ------------    ------------

         NET INCOME (LOSS)                         $    155,703    $    (40,896)
                                                   ============    ============

Net income (loss) per common share, basic
   and diluted                                     $         --    $         --
                                                   ============    ============


The accompanying notes are an integral part of these statements.

                                       4
<PAGE>


                                   LION, Inc.

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                   Three months ended March 31,
                                                   ----------------------------
                                                       2003            2002
                                                   ------------    ------------
Cash flows from operating activities
  Net income (loss)                                $    155,703    $    (40,896)
  Adjustments to reconcile net income (loss)
    to net cash provided by
      operating activities
      Depreciation and amortization                     111,002         119,682
      Stock options issued for services
        received                                            961           3,566
      Common stock issued in lieu of cash
        compensation                                      9,658           4,629
      Changes in assets and liabilities
        Accounts receivable                             (78,126)          2,628
        Prepaid expenses and other                      (34,082)        (42,616)
        Accounts payable                                 72,969          47,546
        Accrued liabilities                              52,201          86,054
        Deferred revenue                                 25,024          12,445
                                                   ------------    ------------

            Net cash provided by operating
              activities                                315,310         193,038

Cash flows from investing activities
  Capitalized software development costs                (80,911)        (94,317)
  Purchase of property and equipment                    (41,995)        (56,170)
                                                   ------------    ------------

            Net cash used in investing activities      (122,906)       (150,487)

Cash flows from financing activities
  Payments on notes payable and long-term
    obligations                                         (10,716)        (24,503)
  Proceeds from issuance of common stock and
    exercise of stock options                                --             900
                                                   ------------    ------------

            Net cash used in financing activities       (10,716)        (23,603)
                                                   ------------    ------------

Net increase in cash and cash equivalents               181,688          18,948

Cash and cash equivalents at beginning of period        403,917         480,910
                                                   ------------    ------------

Cash and cash equivalents at end of period         $    585,605    $    499,858
                                                   ============    ============


Supplemental non-cash investing
  and financing activities:
    Assets acquired under capital leases           $     37,694    $         --






The accompanying notes are an integral part of these statements.

                                       5
<PAGE>


                                   LION, Inc.

                                  Form 10 - QSB

                          NOTES TO FINANCIAL STATEMENTS


NOTE 1.  FINANCIAL STATEMENTS

         The unaudited financial statements and related notes are presented as
permitted by Form 10 - QSB, and do not contain certain information included in
the Company's audited financial statements and notes for the fiscal year ended
December 31, 2002. The information furnished reflects, in the opinion of
management, all adjustments, consisting of normal recurring accruals, necessary
for a fair presentation of the results of the interim periods presented. The
results of operations for the interim periods are not necessarily indicative of
the results to be expected for the entire fiscal year ending December 31, 2003.
The accompanying unaudited financial statements and related notes should be read
in conjunction with the audited financial statements and the Form 10 - KSB of
LION, Inc. and notes thereto, for its fiscal year ended December 31, 2002.


NOTE 2.  NET INCOME (LOSS) PER COMMON SHARE

         Basic net income (loss) per common share is based on the average number
of shares outstanding during each period. The weighted average number of common
shares outstanding was 31,489,489 and 31,055,111 for the three months ended
March 31, 2003 and 2002, respectively.

         Preferred shares outstanding were included in the computation of
diluted EPS for the three month period ended March 31, 2003 but excluded in the
three month period ended 2002 as their effect was anti-dilutive. Warrants and
options to purchase 6,600,567 and 7,143,667 shares of common stock outstanding
at March 31, 2003 and 2002, respectively, were not included in the computation
of diluted earnings per share because their exercise price was greater than the
average market price of the common shares.


NOTE 3.  STOCK-BASED COMPENSATION

         Effective January 1, 2003, the Company adopted the fair value
recognition provision of FASB Statement No. 123, "Accounting for Stock-Based
Compensation," prospectively, to all employee awards granted on or after January
1, 2003, pursuant to FASB Statement No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure."

         During the quarter ended March 31, 2003, the Company issued options to
purchase 100,000 shares under the 1998 Stock Option Plan (the "Plan").
Compensation expense will be based on the fair value of the options at the
respective grant dates utilizing the Black-Scholes model for estimating fair
value. The Company will recognize compensation expense of approximately $6,120
ratably over the vesting period for these options granted. Under the intrinsic
value method reported previously, no compensation expense had been recognized on
options granted through December 31, 2002, as the exercise price of the options
granted equaled the market price on the date of grant for all prior grants.

                                       6
<PAGE>


         The following table illustrates the effect on net income (loss) and on
net income (loss) per common share as if the fair value based method had been
applied to all outstanding and unvested awards in each period:

                                                        Three months ended
                                                             March 31,
                                                   ----------------------------
                                                       2003            2002
                                                   ------------    ------------

Net income (loss), as reported                     $    155,703    $    (40,896)

Add: Stock-based employee compensation
expense included in reported net income                     195              --

Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards*                    (195)             --
                                                   ------------    ------------

Pro forma net income (loss)                        $    155,703    $    (40,896)
                                                   ============    ============

Net income (loss) per share:
Basic and diluted - as reported                    $         --    $         --
                                                   ============    ============
Basic and diluted - pro forma                      $         --    $         --
                                                   ============    ============


* ALL AWARDS refers to awards granted, modified, or settled in fiscal periods
beginning after December 15, 1994 - awards for which the fair value was required
to be measured under Statement 123.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.

         The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the Financial
Statements and the related Notes included elsewhere in this document. Any
statistical information provided in this report is as of March 31, 2003 unless
otherwise noted.

         IN ADDITION TO HISTORICAL INFORMATION, THE FOLLOWING DISCUSSION AND
ANALYSIS OF MANAGEMENT CONTAINS FORWARD-LOOKING STATEMENTS. ALL STATEMENTS THAT
LOOK FORWARD IN TIME OR INCLUDE ANYTHING OTHER THAN STATEMENTS OF HISTORICAL
FACT ARE FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS INVOLVE
RISKS, UNCERTAINTIES AND ASSUMPTIONS. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY
FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF MANY
FACTORS, INCLUDING BUT NOT LIMITED TO: SUBSTANTIAL DEPENDENCE ON MORTGAGE
BROKERS AND THE MORTGAGE BROKER INDUSTRY; MORTGAGE MARKET TRENDS; INTEREST RATE
CHANGES; HOUSING AND CONSUMER TRENDS EFFECTING HOME PURCHASES; THE EFFECTIVENESS
OF OUR JOINT-MARKETING AND SALES AGREEMENTS; OUR NEED FOR ADDITIONAL FINANCING;
OUR ABILITY TO ATTRACT AND RETAIN HIGH QUALITY EMPLOYEES; CHANGES IN THE OVERALL
ECONOMY AND IN INTERNET TECHNOLOGY; THE NUMBER AND SIZE OF OUR INTERNET
COMPETITORS, AND OTHER RISKS FACED BY US DESCRIBED BELOW IN THE SECTION ENTITLED
"RISK FACTORS" AND ELSEWHERE IN THIS REPORT, AND IN OTHER DOCUMENTS WE FILE WITH
THE SECURITIES AND EXCHANGE COMMISSION. YOU SHOULD NOT PLACE UNDUE RELIANCE ON
THESE FORWARD-LOOKING STATEMENTS, WHICH ARE BASED ON INFORMATION AVAILABLE TO
THE COMPANY AS OF THE DATE OF THIS REPORT AND WHICH REFLECT MANAGEMENT'S
OPINIONS ONLY. LION UNDERTAKES NO OBLIGATION TO REVISE OR PUBLICLY RELEASE THE
RESULTS OF ANY REVISION TO THESE FORWARD-LOOKING STATEMENTS.

                                       7
<PAGE>


OVERVIEW

         LION provides marketing and website technology to help mortgage
originators attract customers and originate loans more efficiently and cost
effectively. With proven online strategies, the LION mortgage solution delivers
a competitive advantage that generates more originator business, saves time and
money, increases loan production and streamlines the approval process.

          LION's "consumer to business" and "business to business" portals
connect the originator to a large marketplace of customers seeking home
mortgages and to a powerful network of lenders and vendors in the mortgage
industry. The Company's "consumer to business" portal, www.mortgage101.com, is
one of the nations leading consumer mortgage portals. Accessible through a
variety of leading search engines, Mortgage 101 and its network of LION
affiliate Internet sites attract over 1,000,000 unique visitors each month. Its
content is co-branded to approximately 22,500 realtor sites, over 2,400
originator websites, and a variety of developer direct and association websites.
The Company's "business to business" portal, www.lioninc.com, allows members to
search for the best mortgage for their customers by checking and comparing
lender pricing from one of the largest wholesale lender databases in the
country, locking the rate and sending the loan application file to a number of
lenders electronically through an advanced loan origination software system.
LION also provides this complete software package to large originator companies
under a private label license allowing them to customize their own services
under their own brand.

         In LION's business model, there are four distinct revenue categories
from its mortgage broker/originator and lender customers. The categories are
membership, marketing, technology and software.

         MEMBERSHIP FEES are generated from LION's subscription-based products
and services. They are LION Pro, Mortgage 101 and Free Mortgage Dot Com.

         LION PRO, used by approximately 5,800 mortgage brokers nationwide,
consists of LION Loan Search, LoanLink, News Now and Ratesheets on Demand.
Through this password protected product, originators can access one of the
nation's largest databases of wholesale mortgage rate, fee, and program
information to instantly price any mortgage loan. This database is updated daily
in 77 regions in the country. There are over 120 participating lenders and
nearly 70,000 regionalized wholesale and correspondent loan programs in the loan
search database. The LoanLink feature is a subprime loan exchange platform where
originators can submit hard to place loans to participating lenders. The News
Now feature of LION Pro allows originators to make informed decisions with
high-value content and market data featuring mortgage backed securities, real
time market information, financial market analysis, economic indicators,
business/service directories and calendars. Finally, the Ratesheets on Demand
service allows members to request ratesheets from all participating lenders and
receive them by either fax or email.

         MORTGAGE 101 consists of hundreds of mortgage information pages, home
buying articles, economic and market data, prequalification tools, interactive
calculators, live interest rates displayed from LION's Multi-Lender Rate Feed
and prequalification and application tools. Mortgage 101 content educates
consumers about the mortgage process and connects them to a large network of
local originators that can provide a competitive loan product. Through the
Mortgage 101 brand, the Company has grown its co-branded real estate sites to
approximately 22,500 which consist of realtors, real estate offices, relocation
sites, associations, and city portals. In addition, the Mortgage 101 brand
includes approximately 2,400 mortgage companies that have their web sites hosted
by LION. LION also has a Spanish translation of Mortgage101.com located at
Hipoteca101.com.

                                       8
<PAGE>


         Originators also pay a fee for MORTGAGE 101 ORIGINATOR TOOLS which
include a suite of back-end tools used to manage and customize rates, leads and
content. This valuable management tool is integrated into their company's
existing website. This service is provided to over 2,700 mortgage brokers
nationwide.

         FREE MORTGAGE DOT COM is a template web site using Mortgage101
technology with the mortgage originator's logo and colors delivered with no set
up fees and free one-year domain name registration. Users pay a monthly hosting
fee for this entry level service. In many cases this product becomes the first
step before moving into a series of upgrades toward larger more comprehensive
enterprise websites. There are approximately 1,150 mortgage brokers using this
template web site.

         MARKETING FEES are generated through both of LION's portal web sites;
www.lioninc.com and www.mortgage101.com. Consumers visiting the mortgage101.com
web site, check live interest rates, use pre-qualification tools, and submit
"1003" loan applications through links connecting them to LION's network of
advertisers. Originator advertisers attract customers by paying marketing fees
for ad banners, directory listings, interest rate display, web site promotion,
and lead generation. Originators visit the lioninc.com web site to check daily
wholesale rates, submit loans, and access mortgage specific news and content.
Wholesale lenders and industry vendors attract these customers by paying
marketing fees for ad banners, web site promotion, and lead generation.

         TECHNOLOGY FEES are generated through the sale of website development
and hosting to mortgage originators and wholesale/retail lenders. LION web sites
offer both template and custom design solutions that deliver a combination of
standard and custom content which feature calculators to deliver valuable
information to the user, integrated consumer tools, distinct user access
modules, a preferred lender selection, business document publishing and loan
file management accessible from any business location.

         For the wholesale and/or retail lender, LION has developed technology
under the LoanCAT brand. This technology allows lenders to electronically submit
rate pricing, receive rate lock requests and "1003" loan application files.

         SOFTWARE FEES, in conjunction with the Company's alliance with ABC
Virtual, are generated from the sale of the ECLoanPro(R) loan origination and
processing system. See "LOAN ORIGINATION SOFTWARE" below under "PRODUCTS AND
SERVICES INITIATIVES FOR 2003."


PRODUCTS AND SERVICES INITIATIVES FOR 2003

         LION's current subscription based business model performs well in a
competitive market with higher interest rates. This more competitive market
forces mortgage brokers to compete aggressively for loan volume. They use LION's
products and services as creative ways to attract and capture more customers.
This model however, does not effectively capture larger revenue opportunities
for LION when loan volumes increase during low interest rate cycles. LION is in
the process of developing a new performance/transaction based business model
that will accelerate the Company's growth potential. LION's new model will be a
blend between both the subscription based and performance/transaction based
models.

         LEAD GENERATION. To leverage the growing traffic to its consumer
marketplace, LION has improved the conversion of its consumer traffic into
higher quality leads by enhancing profiling,

                                       9
<PAGE>


filtering and routing to its mortgage originator customers. The Company will be
introducing additional improvements throughout 2003 by incorporating more
advanced qualifying criteria.

         PRODUCTIVITY TOOLS FOR BROKERS. The Company is developing an
office-based version of its LION Pro product. This product offers productivity
software for both small offices (LION Pro Office) and multi-user larger
customers (LION Pro Corporate). The product will include a private database that
features a comprehensive searchable database of each broker company's specific
group of lenders. It will feature new loan program search parameters, management
tools and an advanced version of the News Now content. This improved high-value
content and market data section will feature real time market information,
financial market analysis, economic indicators combined with the broker
company's current business/service directories and calendars. LION has delivered
this private database product and management software to several large
originator companies and anticipates wider scale launches of the full product
throughout the second and third quarters of 2003.

         SUBPRIME DECISION ENGINE. Plans are also under way to improve LION's
LoanLink subprime exchange platform. In November 2002, LION signed a strategic
alliance agreement that will introduce a subprime decision engine to its network
of mortgage originators and lenders. This technology will enable LION members to
submit a file and receive instantly priced, conditional loan approvals from some
of the nation's top subprime lenders. In addition, LION is planning to offer a
private label version of this product engine to the nation's wholesale and
retail lending institutions.

         LOAN LOCKING WITH LENDERS. Through a strategic agreement, LION has also
introduced broker approval, online loan program and product search, real-time
pricing, lock processing and file submission between mortgage brokers and
wholesale lenders. This is mostly for conforming loans, but there is also
subprime loan functionality that is beginning to be used.

         LOAN ORIGINATION SOFTWARE. In October 2002, through a key strategic
alliance with ABC Virtual, LION introduced an advanced loan origination software
(LOS) product known as ECLoanPro(R). This new LOS offers a revolutionary
straight-through processing software system that leverages the Internet and
wireless devices to allow origination teams to easily prospect and process
mortgage loans. With this product, originators are empowered to access and share
files with others anytime, anywhere, without having to re-key data, and without
traditional hardware and software expenses. Through this alliance, LION will be
able to offer a complete "lead to loan" package that will begin to streamline
the entire loan process for its members by bundling the software with its online
advertising, lead generation, website and membership services. This software is
the vehicle that delivers the loan application to the lender and lies at the
heart of driving increased loan production to the lender. This LOS functionality
will be one of the keys to the success of LION's new performance/transaction
based business model. The integration of this LOS functionality will occur
throughout 2003 and into 2004.

                                       10
<PAGE>


SUMMARIZED RESULTS OF OPERATIONS

CONDENSED RESULTS

                                                    Three months ended
                                                         March 31,
                                               ----------------------------
                                                   2003            2002
                                               ------------    ------------

Revenues                                       $  1,786,720    $  1,510,963
Operating expenses                                1,627,080       1,549,498
                                               ------------    ------------
    Operating income (loss)                         159,640         (38,535)
Other expense - net                                  (3,937)         (2,361)
                                               ------------    ------------
    Net income (loss)                          $    155,703    $    (40,896)
                                               ============    ============


         For the first quarter of 2003, revenue was $1.79 million, up 18% from
$1.51 million for the first quarter of 2002. Net income for the quarter improved
to approximately $156,000 compared to a net loss of approximately $41,000 for
the same quarter in the prior year.

         Growth in revenues came primarily from our broker customers who
comprise 85% of all revenues with the remainder coming from our lender
customers. Most of the growth came from the Company's marketing segment,
primarily lead generation for our broker and lender customers, besides
contributions also coming from the membership, technology and software segments.

         Towards the end of 2002, the Company began ramping up its resources in
order to support on-going and new initiatives along with supporting its alliance
partnerships. Cost increases during the first quarter of 2003 compared to the
same quarter in the prior year came primarily from expanding and supporting the
Company's large database of wholesale and correspondent loan programs along with
increases in our commissioned broker sales force and related customer support.
The Company was able to keep its costs in line with its revenue base and appears
positioned to do the same during the remainder of 2003.


DETAILED RESULTS OF OPERATIONS

REVENUES

                                                   Three months ended
                                                        March 31,
                                               ---------------------------
                                                   2003           2002
                                               ------------   ------------
     REVENUES BY CATEGORY:
        Membership fees                        $    764,310   $    740,314
        Marketing fees                              700,164        512,105
        Technology fees                             272,460        258,514
        Software fees                                46,942             --
        Other fees                                    2,844             30
                                               ------------   ------------

           Total revenues                      $  1,786,720   $  1,510,963
                                               ============   ============


         Revenues increased to $1,786,720 from $1,510,963 for the three months
ended March 31, 2003 and 2002, respectively. This represents an increase of
$275,757 or 18%. Total revenues of $1,786,720 for the three months ended March
31, 2003 were comprised of mortgage broker fees of $1,521,130 or 85% and lender
fees of $265,590 or 15%. Total revenues of $1,510,963 for the three

                                       11
<PAGE>


months ended March 31, 2002 were comprised of mortgage broker fees of $1,274,728
or 84% and lender fees of $236,235 or 16%.

         Fees from mortgage brokers increased to $1,521,130 from $1,274,728 for
the three months ended March 31, 2003 and 2002, respectively. This represents an
increase of $246,402 or 19%. The increase was due primarily to growth in
membership fees (LION Pro - Loan Search, Mortgage 101 - originator tools, and
Free Dot Com - template websites) totaling $23,996, marketing fees (lead
generation and advertising) totaling $153,291, technology fees (website
development and hosting) totaling $19,359, software fees (ECLoanPro loan
origination software setup and related fees) totaling $46,942 and other revenues
totaling $2,814.

         Fees from lenders increased to $265,590 from $236,235 for the three
months ended March 31, 2003 and 2002, respectively. This represents an increase
of $29,355 or 12%. The increase was due to an increase in marketing fees (lead
generation and advertising) totaling $34,768 which were offset by a decrease in
technology fees (website development and hosting) totaling $5,413.


DIRECT COSTS

         Direct costs are comprised primarily of web site fulfillment,
technology infrastructure support, project management, quality control, and
salaries related to the daily updates to rates, fees, and other loan program
information in the mortgage lender database. Direct costs increased to $315,556
from $219,350 for the three months ended March 31, 2003 and 2002, respectively.
This represents an increase of $96,206 or 44%. Direct costs as a percentage of
revenues increased to 18% from 15% for the three months ended March 31, 2003 and
2002, respectively. The increase in expense is due to (i) database support
functions as LION continues to expand its database of wholesale and
correspondent loan programs, (ii) additional resources to support the
development of broker websites and (iii) expanded telecommunications
infrastructure to support new services and increased volumes through the
Company's consumer and business facing web portals.


SELLING AND MARKETING

         Marketing and selling expenses are comprised of marketing and
advertising costs, sales salaries and related support costs. Marketing and
selling expenses increased to $573,468 from $482,024 for the three months ended
March 31, 2003 and 2002, respectively. This represents an increase of $91,444 or
19%. These expenses as a percentage of revenues were 32% for both of the three
month periods ended March 31, 2003 and 2002. The increase is due to growth in
the commissioned broker sales force, customer support costs, and trade show
participation.


GENERAL AND ADMINISTRATIVE

         General and administrative expenses are comprised of management and
administrative salaries and related costs, legal and audit fees, outside
consulting services, telecommunications expenses, occupancy costs, and other
administrative related expenses. General and administrative expenses decreased
to $539,653 from $638,637 for the three months ended March 31, 2003 and 2002,
respectively. This represents a decrease of $98,984 or 15%. General and
administrative expenses as a percentage of revenues were 30% and 42% for the
three months ended March 31, 2003 and 2002, respectively. The decrease in costs
was due primarily to an improvement in the bad debt experience

                                       12
<PAGE>


and lower legal fees. The overall decrease was offset by additional
telecommunications and other administrative support expenses.


RESEARCH AND DEVELOPMENT

         Research and development expenses are comprised primarily of
engineering salaries and related costs. Research and development expenses
decreased slightly to $87,401 from $89,805 for the three months ended March 31,
2003 and 2002, respectively. This represents a decrease of $2,404 or 3%.
Research and development expenses as a percentage of revenues decreased to 5%
from 6% for the three months ended March 31, 2003 and 2002, respectively. The
Company continues to focus on various key initiatives including but not limited
to the enhancement of core online services for brokers and the conversion of
consumer traffic into higher-value lead generation.


DEPRECIATION AND AMORTIZATION

         Depreciation and amortization expense decreased to $111,002 from
$119,682 for the three months ended March 31, 2003 and 2002, respectively. This
represents a decrease of $8,680 or 7%. The decrease is due to equipment,
computers and software which became fully depreciated at the beginning of 2003.


INTEREST EXPENSE

         Interest expense increased to $4,046 from $3,202 for the three months
ended March 31, 2003 and 2002, respectively. Interest expense is primarily
related to capitalized lease financing on computer hardware, software, and
furniture.


LIQUIDITY AND CAPITAL RESOURCES

         During the first quarter of 2003, the Company primarily funded its
activities through operations and lease financing. At March 31, 2003, we had
approximately $586,000 in cash and cash equivalents.

                                                    Three months ended
                                                        March 31,
                                               ----------------------------
                                                   2003            2002
                                               ------------    ------------
     NET CASH PROVIDED BY (USED IN)
     Operating activities                      $    315,310    $    193,038
     Investing activities                          (122,906)       (150,487)
     Financing activities                           (10,716)        (23,603)
                                               ------------    ------------

     Net increase                              $    181,688    $     18,948
                                               ============    ============

OPERATING ACTIVITIES

         During the first quarter of 2003, operating activities provided net
cash of $315,310 compared to $193,038 for the same quarter in 2002. The net cash
provided by operating activities for 2003 was primarily attributable to (i)
revenue growth, primarily from our mortgage broker customers, (ii) improved bad
debt experience, and (iii) a reduction in legal fees. The increase was offset by
additional


                                       13
<PAGE>


(i) database support costs related to increased wholesale and correspondent loan
programs, (ii) telecommunications infrastructure costs to support new services
and increased volumes through the Company's consumer and business web portals,
(iii) resources to support the development of broker websites and (iv) growth in
the commissioned broker sales force and related customer support costs.

         The net cash provided in operating activities for the first quarter of
2002 was primarily attributable to (i) revenue growth, primarily from our
mortgage broker customers, (ii) improved bad debt experience, (iii) and a
reduction in occupancy costs and other related costs due to moving the company
headquarters to a smaller, more efficient location in Seattle, Washington. This
was offset by additional legal expenses during the quarter.

INVESTING ACTIVITIES

         During the first quarter of 2003, we used net cash of $122,906 for our
investing activities which was primarily for (i) the capitalized portion of
software development costs related to the enhancement of core online services
for brokers and the conversion of consumer traffic into higher-value lead
generation and (ii) upgrades to computer hardware and software.

         During the first quarter of 2002, we used net cash of $150,487 for our
investing activities which was primarily for (i) the capitalized portion of
software development costs related to the Company's three initiatives;
enhancement of core online services for brokers, the conversion of consumer
traffic into high-value business generation, and new online management tools for
lenders and (ii) upgrades to hardware and software for the data center that
delivers the Company's products and services.

FINANCING ACTIVITIES

         During the first quarter of 2003, the net use of cash for financing
activities was $10,716. Cash used was primarily related to notes payable and
capitalized lease obligations on the acquisition of application and database
software, computers, servers, furniture and telecommunications systems upgrades.

         During the first quarter of 2002, the net use of cash for financing
activities was $23,603. Cash used was primarily related to notes payable and
capitalized lease obligations on the acquisition of application and database
software for the Company's data center.


2003 PLANS

         The Company is continuing to implement its business plan which includes
enhancing core products and services through internal research and development
projects and strategic alliances with companies providing "best of breed"
products and services. In addition, the Company is in the process of moving to a
blend of its existing subscription based business model combined with a
performance/transaction based model which will allow the Company to take
advantage of cyclical swings in mortgage loan volumes. See additional comments
under the heading "PRODUCTS AND SERVICES INITIATIVES FOR 2003" in Item 2 above.

         To ensure operational success of our plans for 2003, the Company
expects to make greater investments in marketing, personnel, and professional
services. It is management's belief that working capital from operations will be
adequate to fund the Company's initiatives, integrate with its strategic
alliance partners, and enhance core business.

                                       14
<PAGE>


         During 2002 and again during the first quarter of 2003, we were able to
fund our initiatives from operations. Management anticipates positive cash flow
from operations and profitability during the remainder of 2003.


CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         LION's financial statements and accompanying notes are prepared in
accordance with U.S. GAAP. Preparing financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses. These estimates and assumptions are affected
by management's application of accounting policies. Critical accounting policies
for LION include revenue recognition, goodwill, accounting for
internally-developed software, accounting for research and development costs,
and accounting for income taxes.

REVENUE RECOGNITION

         Subscription and service fees are recognized as revenue over the
respective subscription periods or at the time the services are provided.
Deferred revenue is recorded on prepaid subscriptions for periods ranging from 3
to 12 months and on advance billings for the subsequent months' subscriptions
and services provided. Large web development contracts expected to span greater
than 30 days are recognized over the production period, which approximates the
percentage of completion method of revenue recognition.

GOODWILL

         LION accounts for goodwill in accordance with SFAS 142, GOODWILL AND
OTHER INTANGIBLE ASSETS, which requires that goodwill be tested for impairment
at the reporting unit level on an annual basis and between annual tests in
certain circumstances. Application of the goodwill impairment test requires
judgment, including the identification of reporting units, assigning assets and
liabilities to reporting units, assigning goodwill to reporting units, and
determining the fair value of each reporting unit. Significant judgments
required to estimate the fair value of reporting units include estimating future
cash flows, determining appropriate discount rates and other assumptions.
Changes in these estimates and assumptions could materially affect the
determination of fair value for each reporting unit.

ACCOUNTING FOR INTERNALLY DEVELOPED SOFTWARE AND RESEARCH AND DEVELOPMENT

         LION accounts for research and development costs in accordance with
several accounting pronouncements, including SFAS 2, ACCOUNTING FOR RESEARCH AND
DEVELOPMENT COSTS, and SFAS 86, ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE TO
BE SOLD, LEASED, OR OTHERWISE MARKETED. SFAS 86 specifies that costs incurred
internally in creating a computer software product should be charged to expense
when incurred as research and development until technological feasibility has
been established for the product. Once technological feasibility is established,
all software costs should be capitalized until the product is available for
internal use by the Company. Judgment is required in determining when the
technological feasibility of a product is established. The Company expenses all
research and development costs when incurred.

                                       15
<PAGE>


INCOME TAXES

         SFAS 109, ACCOUNTING FOR INCOME TAXES, establishes financial accounting
and reporting standards for the effect of income taxes. The objectives of
accounting for income taxes are to recognize the amount of taxes payable or
refundable for the current year and deferred tax liabilities and assets for the
future tax consequences of events that have been recognized in an entity's
financial statements or tax returns. Judgment is required in assessing the
future tax consequences of events that have been recognized in the Company's
financial statements or tax returns. Fluctuations in the actual outcome of these
future tax consequences could materially impact the Company's financial position
or its results of operations.


NEW ACCOUNTING PRONOUNCEMENTS

         In December 2002, the FASB issued Statement of Financial Accounting
Standards 148, "Accounting for Stock-Based Compensation Transition and
Disclosure," ("SFAS 148"). This statement amends Statement of Financial
Accounting Standards 123 ("SFAS 123"), "Accounting for Stock-Based
Compensation," and establishes three alternative methods of transition from the
intrinsic value method to the fair value method of accounting for stock-based
employee compensation. In addition, SFAS 148 requires prominent disclosure about
the effects on reported net income and requires disclosure of these effects in
interim financial reporting. See "NOTE 3" to the financial statements regarding
the Company's adoption of the fair value recognition provision of SFAS 123
pursuant to SFAS 148.


RISK FACTORS

         Set forth below and elsewhere in this Quarterly Report and in the other
documents we file with the SEC are risks and uncertainties that could cause
actual results to differ materially from the results contemplated by the
forward-looking statements contained in this Quarterly Report. You should
carefully consider the risks before you decide to buy shares of our common
stock. If any of the following risks actually occur, our business, results of
operations or financial condition would likely suffer. In such case, the trading
price of our common stock could decline, and you may lose all or part of the
money you paid to buy our stock.


WE HAVE NO HISTORY OF SUSTAINED PROFITS AND OUR FUTURE PROFITABILITY REMAINS
UNCERTAIN. IN ADDITION, FINANCIAL RESULTS FOR ANY PARTICULAR PERIOD WILL NOT
PREDICT RESULTS FOR FUTURE PERIODS.

         We are working toward a goal of revenue growth and sustained
profitability. Annual revenues increased to $6,410,000 from $6,011,000 for 2002
and 2001, respectively. Revenues for the first quarter of 2003 were $1,787,000
and appear on track to exceed the 2002 results. While we did achieve
profitability for 2001 totaling $42,000, we sustained a loss in 2002 totaling
$109,000. The Company has once again achieved profitability during the first
quarter of 2003 totaling $156,000.

         We currently anticipate that 2003 will be a profitable year, however,
our prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in new and rapidly evolving
markets, including uncertainty of revenues, markets, profitability and the need
to raise capital to fund our ongoing operations. We cannot assure you that we
will be successful in addressing these risks or that we can be operated
profitably, which depends on many factors, including the success of our
marketing program, the control of expense levels and the success of our business


                                       16
<PAGE>


activities. Our future operating results will depend on a variety of factors,
including those discussed in the other risk factors set forth below.


WE WILL NEED ADDITIONAL FINANCING; OUR CURRENT FUNDS ARE INSUFFICIENT TO FINANCE
OUR PLANS FOR GROWTH AND OUR OPERATIONS AT THE DESIRED RAPID PACE.

         Our existing working capital is not sufficient to allow us to execute
our business plan as fast as we would like. We are planning to fund internally
the development and implementation of our initiatives and the integration of our
strategic alliances through funds generated from Company operations.

         While the Company did grow its cash reserves during the first and
second quarters of 2002, we had to pay out $340,000 in early July 2002 related
to a judgment on a lawsuit. During the fourth quarter of 2002 and again in the
first quarter of 2003, we were able to increase our cash reserves while
continuing to fund our initiatives and integration with strategic alliances. We
will continue to grow our cash reserves and fund the development and
implementation of our plans through operations, but additional resources are
needed to grow at our desired pace. If we are unable to obtain adequate capital
financing through equity or other financings, we may not be able to successfully
implement our short-term or long-term plans for expansion or to meet our working
capital requirements. However, even if we succeed in our business plans, we may
experience rapid growth requiring additional funds to expand our operations and
organization.

         We do not have current commitments for financing sufficient to fund our
expansion and marketing plans at our desired pace. In order to provide adequate
working capital, we intend to explore a number of options to secure financing.
We might not succeed, however, in raising equity capital or in negotiating and
obtaining additional and acceptable financing when we need it. Our ability to
obtain additional capital may depend on market conditions (including the market
for Internet stocks), national and global economies and other factors beyond our
control. If adequate capital were not available or were not available on
acceptable terms at a time when we needed it, our ability to execute our
business plans, develop or enhance our services or respond to competitive
pressures would be significantly impaired.


WE ARE SUBSTANTIALLY DEPENDENT ON MORTGAGE BROKERS AND THE MORTGAGE BROKER
INDUSTRY.

         LION's most critical customer continues to be the mortgage broker.
Mortgage broker fees comprised of memberships, website services, lead generation
and ad banners were 85% of our total revenues during the first quarter of 2003.
Customer agreements are short-term and renewable. There can be no assurance that
these subscribers will continue to participate in the LION marketplace, or that
we will be able to attract new mortgage brokers at rates sufficient to maintain
a stable or growing revenue base. We cannot assure you that the market for our
products and services will continue to develop as expected. If the mortgage
broker market develops more slowly than expected or becomes saturated with
competitors, or if our products and services do not continue to achieve market
acceptance, our business operating results and financial condition may be
materially adversely affected.

         During the last 15 years, the mortgage brokerage industry has grown
from infancy to capturing a significant portion of the mortgage origination
market, and the current trend shows continued gains. While there are no clear
threats that would cause one to conclude today that the industry will not
continue to thrive, the health of the industry is important to LION's future,
and there are potential

                                       17
<PAGE>


risks. These include potential lawsuits over broker and wholesale lender
compensation systems, increased regulation that may add costs or limit
profitability, and possible changes in how consumers obtain mortgages, possibly
driven by technology or by efforts to standardize and automate the mortgage
process. In addition, the overall volume of business is directly related to
interest rates and overall economic conditions. Recessionary economic conditions
or a rise in interest rates may adversely affect the ability of prospective
consumers to obtain financing required for construction and refinance. Any of
these may reduce the overall share of the market handled by mortgage brokers,
which could materially adversely affect our business.


WE ARE LARGELY DEPENDENT ON KEY PERSONNEL WHO MAY NOT CONTINUE TO WORK FOR US.

         We are substantially dependent on the continued services of our key
personnel, including our officers, engineers and other significant employees.
These individuals have acquired specialized knowledge and skills with respect to
LION and its operations. With respect to our proprietary software, while backup
has been provided by the other full-time company engineers, currently there are
portions of the database management and development that rely solely on Sam
Ringer who is a co-author of the LION Pro software. We are continuing to create
the engineering redundancy that will reduce the reliance on this individual, but
have not completed this task and will not for some time. Furthermore, we have
not entered into employment agreements with these significant employees except
for our CEO/President, CFO and COO. If any of these individuals were to leave
LION unexpectedly, we could face substantial difficulty in hiring qualified
successors and could experience a loss in productivity while any such successor
obtains the necessary training and experience. We provide stock options, which
currently serve to retain and motivate key employees as they become vested in
their initial stock option grants. While management personnel are typically
granted additional stock options, which will usually vest over a period of four
years, subsequent to their hire date to provide additional incentive to remain
at LION, the initial option grant is typically the largest and an employee may
be more likely to leave our employ upon completion of the vesting period for the
initial option grant. We expect that we will need to attract, train, retain and
motivate additional technical, managerial, marketing and customer support
personnel. Competition for these personnel may be intense, particularly for
individuals with suitable experience. We face the risk that if we are unable to
attract and integrate new personnel, or retain and motivate existing personnel,
our business will be adversely affected.


OUR OPERATIONS MAY BE VULNERABLE TO DISRUPTION PROBLEMS.

         We have in place comprehensive data tape backup procedures for our
operational and administrative databases. Our replication software provides a
high level of hardware backup for the database by duplicating our database
across several powerful servers. However, despite protective measures, our
operations could be vulnerable to damage from floods, fire, earthquakes, power
loss, telecommunications failures, break-ins, terrorism, and similar events. In
addition, the majority of our network infrastructure is located in Seattle,
Washington, in a co-location site north of the city and at our corporate
headquarters, an area susceptible to earthquakes. The prospect of such
unscheduled interruptions is quite possible in the foreseeable future, and we
are unable to predict their occurrence, duration or cessation. We do not have
multiple site capacity for all of our services in the event of any such
occurrence.

         Despite the implementation of security measures, our systems may be
vulnerable to unauthorized access, computer viruses and other disruptive
problems. We could experience interruptions in service as a result of the
accidental or intentional actions of Internet users, current and


                                       18
<PAGE>


former employees or others. Unauthorized access might lead to interruptions,
delays or cessation in service to subscribers or deter potential subscribers.
Although we intend to constantly update industry-standard security measures,
these measures have been circumvented in the past, and there can be no assurance
that measures we adopt will not be circumvented in the future. We do not carry
sufficient business interruption insurance to compensate us for losses that may
occur as a result of any of these events. Eliminating computer viruses and
alleviating other security problems may require interruptions, delays or
cessation of service to our subscribers, which could have a materially adverse
affect on our business, operating results and financial condition.


OUR STOCK TRADES ON THE OTC BULLETIN BOARD. OUR STOCK PRICE HAS BEEN VOLATILE
HISTORICALLY, WHICH MAY MAKE IT MORE DIFFICULT FOR YOU TO RESELL SHARES WHEN YOU
WANT AT PRICES YOU FIND ATTRACTIVE.

         The trading price of our common stock has been and may continue to be
subject to wide fluctuations. During 2002, the closing sale prices of our common
stock on the OTC Bulletin Board ranged from $.03 to $.10 per share and the sale
price of our common stock closed at $.065 per share on May 6, 2003. Our stock
price may fluctuate in response to a number of events and factors, such as
quarterly variations in operating results, announcements of technological
innovations or new products by us or our competitors, changes in financial
estimates and recommendations by securities analysts, the operating and stock
price performance of other companies that investors may deem comparable, and
news reports relating to trends in our markets. In addition, the stock market in
general, and the market prices for Internet-related companies in particular,
have experienced extreme volatility that often has been unrelated to the
operating performance of these companies. These broad market and industry
fluctuations may adversely affect the price of our stock, regardless of our
operating performance.

         The OTC Bulletin Board is an electronic quotation medium used by
subscribing broker dealers to reflect dealer quotations on a real-time basis.
This over-the-counter market provides significantly less liquidity than the
NASDAQ Stock Market. Quotes for stocks included on the OTC Bulletin Board are
not listed in the financial sections of newspapers as are those for The NASDAQ
Stock Market. Shares that are thinly traded on the Bulletin Board often trade
only infrequently and experience a significant spread between the market maker's
bid and asked prices. Therefore, prices for securities traded solely on the OTC
Bulletin Board may be difficult to obtain and holders of common stock may be
unable to resell their securities at or near their original offering price or at
any price. Furthermore, volatility or a lack of positive performance in our
stock price may adversely affect our ability to retain key employees, all of
whom have been granted stock options. In the event our securities are not
included on the OTC Bulletin Board and do not qualify for the NASDAQ, quotes for
the securities may be included in the electronic "pink sheets" for the
over-the-counter market.


VOLUME OF SHARES ELIGIBLE FOR SALE COULD IMPAIR OUR STOCK PRICE AND HINDER
FUTURE FINANCING EFFORTS.

         As of December 31, 2002, a substantial majority of the 31,441,978
outstanding shares of common stock and 1,500,000 shares of convertible preferred
stock held by existing shareholders were issued and sold by the Company in
private transactions in reliance on exemptions from the registration provisions
of the Securities Act and are restricted securities within the meaning of Rule
144 under the Securities Act. Of the outstanding shares, including shares held
by affiliates, 32,401,978 or 98% were issued on or before December 31, 2001, and
may be currently eligible for resale in the open market, if any, subject to the
volume and other conditions of Rule 144. There are no contractual restrictions
on the resale of the outstanding common stock. The sale in the public market of
these shares of restricted

                                       19
<PAGE>


common stock, or the perception that these sales may occur, may depress
prevailing market prices of the common stock.


OUTSTANDING OPTIONS AND WARRANTS, WHEN EXERCISED, WILL FURTHER DILUTE COMMON
SHAREHOLDERS.

         As of December 31, 2002, there were outstanding stock options to
purchase an aggregate of 5,803,900 shares of common stock at exercise prices
ranging from $.05 to $2.00 per share, and warrants to purchase 1,471,667 shares
of common stock at exercise prices ranging from $.40 to $.78 per share. Employee
options are subject to a restriction whereby option holders have agreed to not
sell or otherwise transfer or dispose of shares of the common stock issued upon
exercise of options in an amount which shall exceed 250,000 shares during any
three-month period. The exercise of these outstanding options and warrants will
dilute the percentage ownership of common stockholders, and any sales in the
public market of shares of common stock underlying such securities may adversely
affect prevailing market prices for the common stock. Furthermore, the terms
upon which we will be able to obtain additional equity capital may be adversely
affected since the holders of these outstanding securities can be expected to
exercise their respective rights therein at a time when we would, in all
likelihood, be able to obtain any needed capital on terms more favorable to the
Company than those provided in such securities.


ITEM 3.  CONTROLS AND PROCEDURES

         Within 90 days prior to the date of this report, we carried out an
evaluation, under the supervision and with the participation of our principal
executive officer and principal financial officer, of the effectiveness of the
design and operation of our disclosure controls and procedures. Based on this
evaluation, our principal executive officer and principal financial officer
concluded that our disclosure controls and procedures are effective in timely
alerting them to material information required to be included in our periodic
SEC reports. It should be noted that the design of any system of controls is
based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions, regardless of how remote.

         In addition, there have been no significant changes in our internal
controls or in other factors that could significantly affect those controls
subsequent to the date of their last evaluation.


                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         The Company has initiated a lawsuit against its insurance carrier,
Great American Insurance Company, seeking reimbursement of defense costs and
payments made by way of settlement related to the action initiated against the
Company by a former director on December 21, 2000. The lawsuit has been filed in
Superior Court of Washington For King County, Case No. 02-2-34891-2SEA, (LION,
INC., A WASHINGTON CORPORATION (F/K/A PLENUM COMMUNICATIONS, INC., A MINNESOTA
CORPORATION); AND ALLEN RINGER AND JANE DOE RINGER, INDIVIDUALLY AND AS A
MARITAL COMMUNITY VS. GREAT AMERICAN INSURANCE CO., AN OHIO CORPORATION). The
Company is seeking for judgment against Great American in the amount of $392,820
for costs of defense; for the amount of $340,000 for the indemnity payment to
the former director, for an amount no less than $57,600 for prejudgment interest
on amounts paid, and for all of the Company's attorney's fees and costs. The
Company is further seeking an award of

                                       20
<PAGE>


damages under the Washington Consumer Protection Act and an award of
consequential damages incurred and sustained by LION as a result of the alleged
bad faith conduct of Great American. The action was commenced on April 1, 2003,
by service on the Insurance Commissioner of the State of Washington as agent for
the defendant.


ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         During the first quarter of 2003, common stock totaling 162,000 shares
at prices ranging from $.055 to $.072 per share totaling $9,658 were issued to
two employees in lieu of cash for deferred compensation. The recipients were
accredited, had access to all material information concerning the Company, and
acquired the securities for investment. Appropriate legends were affixed to the
certificates issued in the transactions. The issuances were deemed to be exempt
from registration under the Securities Act in reliance on Section 4(2) of the
Securities Act as transactions by an issuer not involving any public offering.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits to Part II:

99.1     Certification by 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

(b)      Reports on Form 8-K

         There were no reports on Form 8-K filed during the quarter ended March
         31, 2003, however, a report on Form 8-K was filed on May 1, 2003, in
         which a press release announcing LION's preliminary financial results
         for the first quarter ended March 31, 2003 was furnished.


                                   SIGNATURES

         In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


                                   LION, INC.
                                  (Registrant)

         Date: May 15, 2003                          By: /s/ David Stedman
                                                         -----------------
                                                         David Stedman
                                                         President and
                                                         Chief Executive Officer

                                       21
<PAGE>


                                  CERTIFICATION

I, David Stedman, certify that:

1.     I have reviewed this quarterly report on Form 10-QSB of LION, Inc.;

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

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

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

          a.   designed such  disclosure  controls and procedures to ensure that
               material information relating to the registrant, is made known to
               us by others  within the  organization,  particularly  during the
               period in which this quarterly report is being prepared;

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

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

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

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

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

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

Date:  MAY 15, 2003                               /s/ David Stedman
                                                  -----------------
                                                  David Stedman
                                                  President and
                                                  Chief Executive Officer

                                       22
<PAGE>


                                                   CERTIFICATION

I, Steve Thomson, certify that:

1.     I have reviewed this quarterly report on Form 10-QSB of LION, Inc.;

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

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

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

          a.   designed such  disclosure  controls and procedures to ensure that
               material information relating to the registrant, is made known to
               us by others  within the  organization,  particularly  during the
               period in which this quarterly report is being prepared;

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

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

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

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

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

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

Date:  MAY 15, 2003                               /s/ Steve Thomson
                                                  -----------------
                                                  Steve Thomson
                                                  Chief Financial Officer

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<PAGE>


EXHIBIT INDEX

EXHIBIT NO.       DESCRIPTION
-----------       -----------


99.1   Certification  by 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


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