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

                                   FORM 10-QSB

         [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
             EXCHANGE ACT OF 1934 For the quarterly period ended September
             30, 2002

         [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
             ACT

      For the transition period from _________________ to _________________

                         Commission file number 0-49783

                               TCI Solutions, Inc.
        (Exact name of small business issuer as specified in its charter)

          Delaware                                 33-0537151
  (State of incorporation)               (IRS Employer Identification No.)

                        17752 Skypark Circle, Suite 160,
                            Irvine, California 92614
                                 (949) 476-1122
          (Address and telephone number of principal executive offices)


         Indicate by check mark whether the registrant (1) has filed all reports
required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the last 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.

                                  Yes[X] No[ ]


         The number of shares outstanding of the Registrant's Common Stock,
$0.001 par value, was 12,722,063 as of October 31, 2002.


                                       1
<PAGE>


PART I -- FINANCIAL INFORMATION

Item 1. Financial Statements.

                              TCI Solutions, Inc.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)

<TABLE>


                              September 30,                 December 31,
                                  2002                          2001
                              -------------                 ------------
<S>                            <C>                         <C>
ASSETS
Current assets:
  Cash and cash
    equivalents                $ 5,155,059                 $  5,904,839
  Accounts receivable,
    net of allowances of
    $655,193 at 9/30/02
    and $239,626 at
    12/31/01                     7,951,226                    5,201,437
  Prepaid expenses and
    other current assets           478,846                      267,888
                              ------------                  -----------
    Total current assets        13,585,131                   11,374,164
Property and equipment, net      1,603,538                    1,105,654
Goodwill                           529,031                      529,031
Other assets                        50,143                      120,740
                              ------------                 ------------
Total assets                  $ 15,767,843                 $ 13,129,589
                              ============                 ============

Liabilities and
  Stockholders'
  Equity

Current liabilities:
  Accounts payable           $     595,795                 $  1,311,797
  Accrued expenses               2,267,421                    1,394,365
  Current portion of
    long-term debt                  17,427                       35,014
  Deferred revenue               1,909,909                      346,997
                              ------------                 ------------
  Total current liabilities      4,790,552                    3,088,173
                              ------------                 ------------
Long-term debt, net of
  current portion                   23,613                            0
                              ------------                 ------------
Commitment and
  contingencies


Stockholders' equity:
  Convertible preferred
    stock                       17,999,631                   13,205,092
  Common stock                  37,478,792                   37,478,686
  Warrants to purchase
    common stock                    29,238                      285,865
  Accumulated deficit          (44,553,983)                 (40,928,227)

</TABLE>

                                       2
<PAGE>


<TABLE>


                              ------------                 ------------
<S>                           <C>                          <C>
    Net stockholders'
      equity                    10,953,678                   10,041,416
                              ------------                 ------------
Total liabilities and
  stockholders'equity         $ 15,767,843                 $ 13,129,589
                              ============                 ============

</TABLE>


     See accompanying notes to condensed consolidated financial statements.

                               TCI Solutions, Inc.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>


                                      Three Months Ended                Nine Months Ended
                                         September 30,                    September 30,
                                 -------------------------------------------------------------
                                      2002           2001               2002          2001

<S>                              <C>               <C>               <C>            <C>
Revenues:
  Software Licenses              $2,808,541       $1,372,568         $6,540,551     $5,044,491
        Maintenance                 814,048          890,334          2,462,245      2,421,247
           Services               2,088,309        1,781,635          5,295,301      4,938,968
              Other                 389,710          746,950          1,541,137      1,602,172
                                 ----------        ---------          ---------      ---------

     Total revenues               6,100,608        4,791,487         15,839,234     14,006,878
  Cost of revenues:
  Software Licenses                 152,052           94,200            405,655        321,146
        Maintenance                 366,353          335,306          1,165,956        885,753
           Services               1,030,599          932,137          2,761,286      3,008,445
              Other                 203,757          489,630            831,281      1,082,424
                                 ----------        ---------         ----------     ----------

      Total cost of
           revenues               1,752,761        1,851,273          5,164,178      5,297,768

       Gross profit               4,347,847        2,940,214         10,675,056      8,709,110


Operating expenses:
Product Development               1,153,215        1,091,938          3,545,334      3,227,294
Sales and marketing               1,801,140        1,303,152          5,625,424      4,356,232
        General and
     administrative               2,208,995        1,316,755          5,178,915      3,995,744
                                 ----------        ---------         ----------     ----------

    Total operating
           expenses               5,163,350        3,711,845         14,349,673     11,579,270
                                 ----------        ---------         ----------     ----------

          Loss from
         operations                (815,503)        (771,631)        (3,674,617)    (2,870,160)
       Other income
      expense), net                  12,160          (61,633)            48,861        (87,145)
                                 ----------        ---------         ----------     ----------

 Loss before income
              taxes                (803,343)        (833,264)        (3,625,756)    (2,957,305)
      Provision for
       income taxes                   --                --                --            --
                                 ----------        ---------         -----------    ----------

           Net loss               ($803,343)       ($833,264)       ($3,625,756)   ($2,957,305)
                                 ==========        =========         ==========     ==========

</TABLE>

                                       3
<PAGE>


<TABLE>
<S>                    <C>           <C>              <C>           <C>
Net loss per share -
   basic and diluted       ($0.06)       ($0.07)          ($0.28)       ($0.23)
    Weighted average
       common shares
 outstanding - basic
         and diluted   12,722,058    12,721,963       12,722,031    12,721,278

</TABLE>


     See accompanying notes to condensed consolidated financial statements.



                               TCI Solutions, Inc.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>

                                                   Nine Months Ended
                                                     September 30,
                                     ----------------------------------------------
                                           2002                          2001
                                     ----------------             -----------------
<S>                                    <C>                            <C>
Operating activities
                 Net loss              $(3,625,756)                   $(2,957,305)
 Adjustments to reconcile
     net loss to net cash
                  used in
    operating activities:
         Depreciation and
             amortization               283,554                        285,386
            Provision for
        doubtful accounts               797,000                        300,000
     Changes in operating
               assets and
             liabilities:
      Accounts receivable               (3,546,789)                    (1,369,661)
         Prepaid expenses
        and other current
                   assets               (181,720)                      37,193
             Other assets               70,597                         (2,478)
         Accounts payable               (716,002)                      594,635
         Accrued expenses               905,526                        482,314
         Deferred revenue               1,562,912                      613,195
                                        -----------                    -----------

         Net cash used in
     operating activities               (4,450,678)                    (1,916,721)
     Investing activities
    Purchases of property
            and equipment               (740,878)                      (301,487)
     Financing activities
        Net proceeds from
    issuance of preferred
                    stock               4,476,204                      (26,256)
    Proceeds from sale of               -----------                    ----------
             common stock               106                            12,937
    Proceeds from line of
                   credit               0                              1,385,159
    Principal payments on
           long-term debt               (34,534)                       (98,380)
                                        ----------                     -----------
     Net cash provided by
     financing activities               4,441,776                      1,273,460
                                        ----------                     -----------

 Net decrease in cash and
         cash equivalents               (749,780)                      (944,748)
            Cash and cash
           equivalents at
      beginning of period               5,904,839                      1,684,515

</TABLE>

                                       4
<PAGE>


<TABLE>
<S>                                   <C>                             <C>
                                       ----------                     -----------
Cash and cash
  equivalents at end of
  period                              $ 5,155,059                     $   739,767
                                      ===========                     ===========

</TABLE>



NONCASH INVESTING AND FINANCING ACTIVITIES:

During the nine months ended September 30, 2002, we entered into the following
noncash investing activities:
         Obtained $40,560 of equipment under capital lease arrangements.
         Converted $32,470 of accrued interest related to bridge loans to 64,940
         share of Series B preferred stock.
         Canceled warrants to purchase common stock with a recorded value of
         $285,865, resulting in an increase in preferred stock.
         Recorded warrants to purchase common stock with a recorded value of
         $29,238.

     See accompanying notes to condensed consolidated financial statements.

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

                               TCI Solutions, Inc.
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2002

1. Nature of Operations and Summary of Accounting Policies

The accompanying unaudited condensed consolidated financial statements included
herein have been prepared by us in conformity with accounting principles
generally accepted in the United States of America and pursuant to the rules and
regulations of the Securities and Exchange Commission (the SEC) for interim
financial information for reporting on Form 10Q-SB. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted pursuant to such rules and regulations.
Our unaudited condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in our Form 10-SB for the year ended December 31, 2001.

In the opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation of our financial position,
results of operations and cash flows.

The results of operations for the three months and nine months ended September
30, 2002, are not necessarily indicative of the results of operations that may
be reported for any other interim period or for the entire year ending December
31, 2002. The balance sheet at December 31, 2001 has been derived from the
audited financial statements at that date, but does not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements, as permitted
by SEC rules and regulations for interim reporting.

Revenue Recognition

We license software products under non-cancelable agreements and provide related
services, including consulting and customer support. We recognize revenue in
accordance with Statement of Position (SOP) 97-2, Software Revenue Recognition,
as amended and interpreted by SOP 98-9, Modification of SOP 97-2, Software
Revenue Recognition, with respect to certain transactions, as well as Technical
Practice Aids issued from time to time by the American Institute of Certified
Public Accountants and guidance of Staff Accounting Bulletin (SAB) No. 101,
Revenue Recognition in Financial Statements, which provides further interpretive
guidance for public reporting companies on the recognition, presentation, and
disclosure of revenue in financial statements.

Software license revenue is generally recognized when a license agreement has
been signed, the software product has been delivered, there are no uncertainties
surrounding product acceptance, the fees are fixed


                                       5
<PAGE>


and determinable, and collection is considered probable. If a software license
contains an undelivered element, the fair value of the undelivered element is
deferred and the revenue recognized once the element is delivered. In addition,
if a software license contains customer acceptance criteria or a cancellation
right, the software revenue is recognized upon the earlier of customer
acceptance or the expiration of the acceptance period or cancellation right.

Services are separately priced, are generally available from a number of
suppliers, and are not essential to the functionality of our software products.
Services, which include project management, system planning, design and
implementation, customer configurations and training, are billed on an hourly
basis. Services revenue billed on an hourly basis is recognized as the work is
performed. Customer support services include post contract support and the
rights to unspecified upgrades and enhancements, when and if available.
Maintenance revenues from ongoing customer support services are recorded on
January 1 of each year with the revenue being deferred and recognized ratably
over the maintenance period, generally one year.

2. Basic and Diluted Net Loss Per Share

Net loss per share is calculated in accordance with SFAS No. 128, "Earnings Per
Share." Under the provisions of SFAS No. 128, basic net income (loss) per share
is computed by dividing the net income (loss) for the period by the weighted
average number of common shares outstanding during the period. Diluted net
income (loss) per share is computed by dividing net income (loss) for the period
by the weighted average number of common and common equivalent shares
outstanding during the period if their effect is dilutive. Common equivalent
shares of 55,380 and 237,205 for the three months ended September 30, 2002 and
2001 and 55,380 and 862,703 for the nine months ended September 30, 2002 and
2001, respectively, have been excluded from diluted weighted average common
shares as the effect would be anti-dilutive.

3. Segment Information and Customer Concentration

Operating segments are defined as components of an enterprise about which
separate financial information is available that is evaluated regularly by our
chief operating decision-maker, or decision-making group, in deciding how to
allocate resources and in assessing performance. Our operating segments are
managed separately because each segment represents a strategic business unit
that offers different products or services.

Our reportable operating segments include software licenses, services, and
other. The software licenses operating segment develops and markets our software
products and includes after-sale support for software products. The services
segment provides fee-based training and implementation services related to our
products. The other segment represents third party hardware and software
products.

We do not separately allocate operating expenses to these segments, nor do we
allocate specific assets to these segments. Therefore, segment information
reported includes only revenues, cost of sales, and gross profit, as this is the
only information provided to the chief operating decision-maker.

Operating segment data for the three months and nine months ended September 30,
2002 and 2001 is as follows:

<TABLE>


                                               Licenses        Services       Other          Total
<S>                                          <C>             <C>            <C>           <C>

Three months-ended September 30, 2002
  Revenues                                   $ 3,622,589     $ 2,088,309    $ 389,710     $  6,100,608
  Cost of revenues                               518,405       1,030,599      203,757        1,752,761
                                             -----------     -----------    ---------     ------------

    Gross profit                             $ 3,104,184     $ 1,057,710    $ 185,953     $  4,347,847
                                             ===========     ===========    =========     ============

</TABLE>

                                       6
<PAGE>


<TABLE>
<S>                                          <C>             <C>            <C>           <C>
Three months-ended September 30, 2001
  Revenues                                   $ 2,262,902     $ 1,781,635    $   746,950    $  4,791,487
  Cost of revenues                               429,506         932,137        489,630       1,851,273
                                             -----------     -----------    -----------    ------------

    Gross profit                             $ 1,833,396     $   849,498    $   257,320    $  2,940,214
                                             ===========     ===========    ===========    ============



Nine months-ended September 30, 2002
  Revenues                                   $ 9,002,796     $ 5,295,301    $ 1,541,137    $ 15,839,234
  Cost of revenues                             1,571,611       2,761,286        831,281       5,164,178
                                             -----------     -----------    -----------    ------------

    Gross profit                             $ 7,431,185     $ 2,534,015    $   709,856    $ 10,675,056
                                             ===========     ===========    ===========    ============



Nine months-ended September 30, 2001
  Revenues                                   $ 7,465,738     $ 4,938,968    $ 1,602,172   $ 14,006,878
  Cost of revenues                             1,206,899       3,008,445      1,082,424      5,297,768
                                             -----------     -----------    -----------   ------------

    Gross profit                             $ 6,258,839     $ 1,930,523    $   519,748   $  8,709,110
                                             ===========     ===========    ===========   ============

</TABLE>

We provide credit in the normal course of business to all credit worthy
customers. One customer accounted for 31.7% and 31.3% of revenues for the three
and nine months ended September 30, 2002 and 21.1% of revenues for the nine
months ended September 30, 2001. Additionally three customers accounted for
45.2% of revenues for the three months ended September 30, 2001. Approximately
28.2% and 12.0% of accounts receivable was due from two customers as of
September 30, 2002. All of our customers are in the retail industry.

4. Convertible Preferred Stock

During the nine months ended September 30, 2002, we raised $4,476,204 from the
sale of an additional 9,453,094 shares of Series B Convertible Preferred Stock
(Series B Preferred Stock) at $0.50 per share, net of offering costs of
$217,871. Series B Preferred Stock shares sold during the nine months ended
September 30, 2002 have the same rights and preferences as those sold during
December 2001.

In connection with the issuance of the Series B Preferred Stock, we are
obligated to grant warrants to purchase 675,757 shares of common stock at an
exercise price of $0.25 per share to a third party in consideration for
investment banking services. These warrants have not been granted. On the grant
date, the fair value of these warrants using the Black-Scholes pricing model
will be recorded as a reduction to the preferred stock financing and an increase
in warrants to purchase common stock.

We also agreed to cancel warrants to purchase 396,783 shares of common stock
held by the same third party which were previously granted during fiscal 1999.
These warrants had an estimated fair market value of $285,865 at the date of
grant using the Black Scholes pricing model. These warrants have been cancelled
and recorded as an increase in preferred stock.

5. Employee/Director Option Plans


                                       7
<PAGE>


On August 27, 2002, the board of directors authorized the future grant of
options to purchase an aggregate of 6,197,886 shares of our common stock to
certain employees under our 2001 Equity Incentive Plan and options to purchase
an aggregate of 6,000 shares to certain non-employee directors under our 2001
Non-Employee Director's Stock Option Plan (collectively, the "2001 Plans"). All
options will be granted at the fair market value on the date of grant. We expect
to grant these options upon the completion of the Security Exchange Commission's
(SEC) review of our Form 10-SB that was filed on April 30, 2002 and all
amendments thereto.

6.  Credit Facility

On August 6, 2002, we entered into a $4 million credit facility with a financial
institution comprised of a $1 million equipment line of credit and a $3 million
revolving line of credit. Each advance under the equipment line of credit is
payable in 36 equal monthly installments, plus interest at 1.0% above the prime
rate (4.75% at September 30, 2002). The equipment line of credit expires in
March 2006. The revolving line of credit expires in August 2004 and bears
interest at 0.5% above the prime rate. Borrowings under the revolving line of
credit are limited to 80% of eligible accounts receivable, as defined. As of
September 30, 2002, eligible borrowings under the revolving line of credit were
approximately $3 million. To date, we have not borrowed any amounts against our
credit facility.

Borrowings under the credit facility are secured by substantially all of our
assets and we are required to comply with certain financial covenants and
conditions, including quick ratio percentages. As of September 30, 2002, we were
in compliance with all covenants included in the terms of the credit agreement.

In connection with our credit facility, we granted warrants to purchase 125,000
shares of common stock at an exercise price of $0.25 per share to the financial
institution. The warrant is immediately exercisable and expires on August 6,
2009. The fair value of these warrants using the Black-Scholes pricing model of
$29,238 was recorded as a prepaid financing charge and an increase in warrants
to purchase common stock and will be amortized by charges to interest expense
over a two-year period.

Our calculation using the Black-Scholes pricing model used the following
assumptions: expected life equal to contractual life of the warrants or 7 years,
135% volatility, risk-free interest rate of 4.00% and no dividends during the
expected term.

7. Commitments and Contingencies

We lease certain facilities and equipment under agreements that expire at
various times through October 2006, which are accounted for as operating leases.

Future minimum lease payments, under operating leases, consist of the
following:


    Year ending December 31:
    2002                           $ 1,079,856
    2003                             838,754
    2004                             636,824
    2005                             660,255
    2006                             400,355
                                   -----------
    Future minimum lease payments  $ 3,616,044
                                   ===========


Litigation - In the normal course of business, we are subject to various legal
matters. In the opinion of management, the resolution of these matters will not
have a material adverse effect on our consolidated operations, cash flows and
financial position.

8. Recent Accounting Developments

In June 2001, the FASB issued SFAS No. 141, Business Combinations, and SFAS No.
142, Goodwill and Other Intangible Assets. In August 2001, the FASB also issued
SFAS No. 144, Accounting for the


                                       8
<PAGE>


Impairment or Disposal of Long-Lived Assets. In July 2002, the FASB issued SFAS
No. 146, Accounting for Costs Associated with Exit or Disposal Activities.

On January 1, 2002 we adopted SFAS No. 141, which requires that all business
combinations initiated after June 30, 2001 be accounted for under the purchase
method. SFAS No. 141 superseded APB Opinion No. 16, Business Combinations, and
SFAS No. 38, Accounting for Preacquisition Contingencies of Purchased
Enterprises, and is effective for all business combinations initiated after June
30, 2001. The adoption had no effect on our financial statements.

SFAS No. 142 addresses the financial accounting and reporting requirements for
acquired goodwill and other intangible assets. We adopted the provisions of SFAS
No. 142 in January 2002. Under SFAS No. 142, we are no longer required to
amortize goodwill and other intangible assets with indefinite lives. Instead,
SFAS 142 requires that goodwill and intangible assets deemed to have an
indefinite useful life be reviewed for impairment upon adoption of SFAS No. 142
and annually thereafter.

In accordance with SFAS No. 142, we were required to perform a two-step
transitional impairment test. The first step of this test was completed by June
30, 2002 with the determination of the fair value of our reporting units in
order to identify whether the fair value of each reporting unit is less than its
carrying amount. Our reporting units are generally consistent with the operating
segments defined in Note 3. In the event that the fair value of the reporting
unit is less than the carrying amount, the second step of the test would be
required to determine if the carrying value of goodwill exceeds the implied fair
value. We determined that there was no transitional impairment of goodwill. The
adoption of SFAS No. 142 in January 2002 did not have a material impact on our
consolidated results of operations and financial position. Amortization expense
for the three months and nine months ended September 30, 2001was $22,238 and
$66,714, respectively or less than or equal to $0.01 per share.

SFAS No. 144 establishes a single accounting model for the impairment or
disposal of long-lived assets and new standards for reporting discontinued
operations. SFAS No. 144 superseded SFAS No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and APB
Opinion No. 30, Reporting the results of Operations - Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual, and
Infrequently Occurring Events and Transactions. We adopted the provisions of
SFAS No. 144 on January 1, 2002. The adoption of SFAS No. 144 did not have a
material impact on our consolidated results of operations and financial
position.

SFAS No. 146 addresses financial accounting and reporting for costs associated
with exit or disposal activities, SFAS No. 146 supercedes Emerging Issues Task
Force (EITF) Issue 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred
in a Restructuring)." SFAS 146 requires that a liability for a cost associated
with an exit or disposal activity be recognized when the liability is incurred.
Under Issue 94-3, a liability for an exit cost as defined in EITF 94-3 was
recognized at the date of an entity's commitment to an exit plan. SFAS No. 146
also establishes that the liability should initially be measured and recorded at
fair value. We will adopt the provisions of SFAS No. 146 for exit or disposal
activities that are initiated after December 31, 2002.

Reclassification of Reimbursed Out-of-Pocket Expenses. We have adopted the
guidance of Financial Accounting Standards Board Emerging Issues Task Force
Issue No. 01-14 ("EITF No. 01-14"), Income Statement Characterization of
Reimbursements Received for Out-of-Pocket Expenses Incurred. EITF No. 01-14
requires the reclassification of reimbursed expenses in both service revenues
and cost of service revenues in our consolidated statements of operations
beginning January 1, 2002. We previously classified reimbursed expenses as a
reduction in the cost of consulting services. The adoption of EITF No. 01-14
does not impact our total gross profit or operating income, but it will increase
total revenues and as a result, slightly reduce our gross profit and operating
margin percentages. Reimbursed expenses were $161,359 and $440,890 for the three
months and nine months ended September 30, 2002. In addition, we have increased
service revenues and cost of service revenues by $154,661 and $574,705 during
the three months and nine months ended September 30, 2001.


Item 2. Management's Discussion and Analysis or Plan of Operation.


                                       9
<PAGE>


         This Quarterly Report on Form 10-QSB contains forward-looking
statements reflecting management's current forecast of our future. It is based
on current information that we have assessed but which, by its nature, is
dynamic and subject to rapid and even abrupt changes. Forward-looking statements
include statements regarding future operating results, liquidity, capital
expenditures, product development and enhancements, number of personnel,
strategic relationships with third parties, acquisitions and strategy. The
forward-looking statements are generally accompanied by words such as "plan,"
"estimate," "expect," "intend," "believe," "should," "would," "could,"
"anticipate," or other words that convey the uncertainty of future events or
outcomes. In particular, we provide our outlook for revenues, gross profits,
operating expenses, and bad debt provision, in each case for the fourth quarter
2002. Our actual results could differ materially from those stated or implied by
our forward-looking statements due to risks and uncertainties associated with
our business. These risks are described throughout this Quarterly Report on Form
10-QSB, which you should read carefully. We would particularly refer you to the
section under the heading "Certain Risks That May Affect Future Results" for an
extended discussion of the risks confronting our business. The forward-looking
statements in this Quarterly Report on Form 10-QSB should be considered in the
context of these risk factors.


Critical Accounting Policies

Our discussion and analysis of results of operations and financial condition are
based upon consolidated financial statements that we prepared in accordance with
generally accepted accounting principles of the United States of America.

We have identified the following policies as critical to the understanding of
our financial statements and results of operations. The impact and any
associated risks related to these policies on our business operations is
discussed throughout our Results of Operations and Financial Condition where
such policies affect our reported and expected financial results. For a detailed
discussion on the application of these and other accounting policies, see Note 1
in the Notes to Consolidated Financial Statements, which are included in our
Form 10-SB for the year ended December 31, 2001. The preparation of our
financial statements 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 consolidated financial statements, and the
reported amounts of revenue and expenses during the reporting period. Actual
results may differ from those estimates.

Revenue recognition - We follow specific and detailed guidelines in measuring
revenue; however, certain judgments affect the application of our revenue
policy. Additionally, our revenue recognition determines the timing of certain
expenses such as commissions.

We license software under perpetual, non-cancelable agreements and provide
related services, including consulting and customer support. We recognize
revenue in accordance with Statement of Position 97-2 ("SOP 97-2"), Software
Revenue Recognition, as amended and interpreted by Statement of Position 98-9,
Modification of SOP 97-2, Software Revenue Recognition, with respect to certain
transactions, as well as Technical Practice Aids issued from time to time by the
American Institute of Certified Public Accountants. We follow the Securities and
Exchange Commission's guidance of Staff Accounting Bulletin No. 101 ("SAB 101"),
Revenue Recognition in Financial Statements, which provides further interpretive
guidance for public reporting companies on the recognition, presentation, and
disclosure of revenue in financial statements.

Software license revenue is generally recognized when a license agreement has
been signed, the software product has been delivered to the customer, there are
no uncertainties surrounding product acceptance, the fees are fixed and
determinable, and collection is considered probable. If a software license
contains an undelivered element, the fair


                                       10
<PAGE>


value of the undelivered element is deferred and the revenue recognized once the
element is delivered. In addition, if a software license contains customer
acceptance criteria or a cancellation right, the software revenue is recognized
upon the earlier of customer acceptance or the expiration of the acceptance
period or cancellation right.

Professional services are separately priced, are generally available from a
number of suppliers, and are not essential to the functionality of our software
products. Professional services, which include project management, system
planning, design and implementation, customer configurations, and training are
billed on both an hourly basis. Professional services revenue billed on an
hourly basis is recognized as the work is performed. Customer support services
include post contract support and the rights to unspecified upgrades and
enhancements. Maintenance revenues from ongoing customer support services are
billed on an annual basis with the revenue being deferred and recognized ratably
over the maintenance period.

Accounts Receivable - We typically extend credit to our customers. Software
licenses are generally due within 30 to 90 days; however, larger software
contracts may include payment terms with installments due within twelve months
from the date of delivery. Billings for customer support and professional
services performed on a time and material basis are due on net 30-day terms. We
estimate the probability of collection of the receivable balances and provide an
allowance for doubtful accounts based upon an evaluation of our customers'
ability to pay and general economic conditions. While our losses have
historically been within our estimates, we cannot guarantee that we will
continue to experience the same collection experience. A loss of any significant
customer could have a material adverse effect on our operations. We expect that
revenues from a limited number of new customers will continue to account for a
large percentage of total revenues in future quarters. If actual bad debts are
greater than the reserves calculated based on historical trends and known
customer issues, we may be required to record additional bad debt expense which
could have a material adverse impact on our results of operations and financial
position for the periods in which such additional expense occurs.

Income Taxes - We recognize deferred tax assets and liabilities based on the
differences between the financial statement carrying amounts and the tax bases
of assets and liabilities. We regularly review our deferred tax assets for
recoverability and establish a valuation allowance based on historical taxable
income, projected future taxable income and the expected timing of the reversals
of existing temporary differences. If we operate at a profit in the future and
generate sufficient future taxable income, we could be required to reverse the
current valuation allowance against the deferred tax assets which would result
in a substantial decrease in our effective tax rate.

Overview

         We offer retailers a variety of integrated applications and
professional services to help enhance revenues, better manage their merchandise,
pricing, workforce, financial, customer functions and information systems at
both headquarters and store locations. Our architecture and data model provide
infrastructure capabilities that automate and support electronic data exchange
throughout the enterprise and supply chain.
        Retail Information Systems News recognizes us as an industry leader,
known for producing high return on investment software that leads the
competition in meeting the overall expectations of our customers as reported in
the December 2000 and December 2001 RIS News Survey "Retail Software
Leaderboard".

Significant Trends and Developments in Our Business

         Economic Conditions in the Retail Industry. We believe that the
negative economic conditions and disruption resulting from the September 11th
attacks affected the demand for our products in the United States during 2001
and 2002 will continue and an economic recovery may still be several months
away. We also believe that negative consumer confidence has inhibited economic
recovery in the United States and may continue for the foreseeable future. As a
result, we continue to be concerned about weak and uncertain economic
conditions, consolidations and the disappointing results of retailers. The
retail industry will be adversely impacted if negative consumer confidence and
economic conditions persist for an extended period of time. Weak and uncertain
economic conditions have in the past, and may in the future, negatively impact
our revenues, elongate our selling cycles, delay, suspend or reduce the demand
for our


                                       11
<PAGE>


products and adversely impact our business, operating results and financial
condition. In addition, our customers' ability to pay for our products or
services could be impaired, and we may experience an increased number of
bankruptcy filings in our customer base.

         New Products and Expanded Markets. We invested $3.5 million for the
nine months ended September 30, 2002 and a total $18.0 million since 1996 toward
new product development efforts. We have released enhanced versions of our core
software products for the past two years and expanded the breadth of our product
portfolio. Although we continue to focus on the "Tier 2" retail market, we have
recently experienced increased sales activity with "Tier 1" customers with
annual sales in excess of $1 billion, which we expect will contribute to revenue
in future periods. We believe our strategy of expanding our product portfolio
and increasing the scalability of our products has been the key element in
attracting "Tier 1" customers and has resulted in a steady pattern of new
customers licensing multiple products as well as enhanced add-on selling
opportunities in our existing install base.

         Services Outlook. Service revenue, including the reclassification of
reimbursed expenses, increased $307 thousand and $356 thousand for the three and
nine months ended September 30, 2002 compared to the same periods in the prior
year. The increase is primarily a result of increased utilization of our
internal services group which resulted in greater services revenue than in prior
periods. Services revenue typically lags the sale of software licenses by as
much as six months. Furthermore, much of the growth in demand for our products
is derived from increased sales activity in the Tier 1 market where the sales
cycle and resources needed to close new contracts are significantly greater.


Three and Nine Months Ended September 30, 2002 Compared to Three and Nine Months
Ended September 30, 2001

         Revenues consist of software license revenues, maintenance, services
and other revenues, including reimbursed expenses, which represents 46.0%,
13.4%, 34.2% and 6.4%, respectively, of total revenues for the three months
ended September 30, 2002 compared to 28.6%, 18.6%, 37.2% and 15.6%, respectively
for the three months ended September 30, 2001. Additionally, revenues from these
sources represented 41.3%, 15.5%, 33.5%, and 9.7%, respectively, of total
revenues for the nine months ended September 30, 2002 compared to 36.0%, 17.3%,
35.3%, and 11.4% respectively for the nine months ended September 30, 2001.
Total revenues for the three months ended September 30, 2002 were $6.1 million,
an increase of $1.3 million, or 27.3%, over the $4.8 million reported for the
three months ended September 30, 2001. Additionally, total revenues for the nine
months ended September 30, 2002 were $15.8 million, an increase of $1.8 million,
or 13.1% over the $14.0 million reported for the nine months ended September 30,
2001.

Product Revenues

         Software Licenses. Software license revenue for the three and nine
months ended September 30, 2002 increased 104.6% and 29.7% respectively, from
the same periods in the prior year. For the three month periods, software
license revenue increased to $2.8 million from $1.4 million and for the nine
month periods, software license revenue increased to $6.5 million from $5.0
million. In general, the retail industry does not appear to have maintained its
level of investment in information technology during the current economic cycle;
however, we added two new tier 1 customers that contributed $1.7 million and
$500 thousand respectively to software license revenue during the three months
ended September 30, 2002. Software license revenue represented 46.0 % of total
revenues in the three months ended September 30, 2002 compared to 28.6% for the
three months ended September 30, 2001. Additionally, software license revenue
represented 41.3% and 36.0% respectively for the nine months ended September 30,
2002 and 2001.

         Maintenance. Maintenance revenue for the three and nine months ended
September 30, 2002 and 2001 decreased 8.6% and increased 1.7% respectively to
$814 thousand and $2.5 million from $890 thousand and $2.4 million. The increase
in maintenance revenue for the nine month period primarily results from $12.1
million in new software licenses sold for the eighteen-month period ended
September 30, 2002. Maintenance revenue


                                       12
<PAGE>


represented 13.4% and 15.5% of total revenues for the three and nine months
ended September 30, 2002 compared to 18.6% and 17.3% for the three and nine
months ended September 30, 2001.

         Services. Services revenue, including the reclassification of
reimbursed expenses, for the three and nine months ended September 30, 2002 and
2001 increased 17.2% and 7.2% respectively to $2.1 million and $5.3 million from
$1.8 million and $4.9 million. Services revenue, including the reclassification
of reimbursed expenses, represented 34.2% and 33.5% of total revenues in the
three and nine months ended September 30, 2002 compared to 37.2% and 35.3% for
the three and nine months ended September 30, 2001.

         Other. Other revenue for the three and nine months ended September 30,
2002 decreased 47.8% and 3.8% respectively to $389 thousand and $1.5 million
from $747 thousand and $1.6 million for the three and nine months ended
September 30, 2001. The decrease in other revenue is attributed to decreased
sales of third party components. Other revenue represented 6.4% and 9.7% of
total revenues in the three and nine months ended September 30, 2002 compared to
15.6% and 11.4% for the three and nine months ended September 30, 2001.

Cost of Product Revenues

         Cost of Software Licenses. Cost of software licenses was $152 thousand
or 2.5% of total revenues and $406 thousand or 2.6% of total revenues for the
three and nine months ended September 30, 2002 compared to $94 thousand, or 2.0%
of total revenues and $321 thousand or 2.3% for the three and nine months ended
September 30, 2001. The increase in cost of software license for the three month
period ended September 30, 2002 is a result of an increase in software sales
occurring through reseller channel.

         Cost of Maintenance. Cost of maintenance increased 9.3% to $366
thousand or 6.0% of maintenance revenues and increased 31.6% to $1.2 million or
7.4% of maintenance revenues for the three and nine months ended September 30,
2002 from $335 thousand and $886 thousand, or 7.0% and 6.3% of maintenance
revenue, for the three and nine months ended September 30, 2001. The increase
primarily results from the maintenance services we provide the reseller channel
and the additional personnel employed in the customer support function to
support our growing installed base.

         Cost of Services. Cost of services, including the reclassification of
reimbursed expenses, increased 10.6% to $1.0 million and decreased 8.2% to $2.8
million for the three and nine months ended September 30, 2002 from $932
thousand and $ 3.0 million in the three and nine months ended Septeber 30, 2001.
The increase is directly attributed to the 17.2% and 7.2% increase in services
revenue for the three and nine month period ending September 30, 2002.

         Cost of Other. Cost of other revenue was $204 thousand or 3.3% of total
revenues and $831 thousand or 5.2% of total revenues for the three and nine
months ended September 30, 2002 compared to $490 thousand or 10.2% and $1.1
million or 7.7% of total revenues for the three and nine months ended September
30, 2001.


Operating Expenses

         Operating expenses increased 39.1% to $5.2 million, or 84.6% of total
revenues, for the three months ended September 30, 2002 from $3.7 million, or
77.5% of total revenues, for the three months ended September 30, 2001.
Additionally, operating expenses increased 23.9% to $14.3 million, or 90.6% of
total revenues, for the nine months ended September 30, 2002 from $11.6 million
or 82.7% of total revenues for the same period in 2001. This increase is
attributed to additional investments in personnel and other related expenses in
our sales and marketing and product development organizations.

         Product Development. Product development expenses for the three and
nine months ended September 30, 2002 increased 5.6% and 9.9% to $1.2 million and
$3.5 million from $1.1 million and $3.2


                                       13
<PAGE>


million for the three and nine months ended September 30, 2001. Product
development expense as a percentage of total revenues was 18.9% and 22.4% for
the three and nine months ended September 30, 2002 compared to 22.8% and 23.0%
for the three and nine months ended September 30, 2001. The increase in product
development expense primarily results from the addition of new employees hired
to enhance and expand our portfolio of software solutions. In order to continue
to extend the breadth of our product suite, we need to continue to add new
employees to develop new value-added products.

         Sales and Marketing. Sales and marketing expense for the three and nine
months ended September 30, 2002 increased 38.2% and 29.1% to $1.8 million and
$5.6 million from $1.3 million and $4.4 million for the three and nine months
ended September 30, 2001. Sales and marketing expense as a percentage of total
revenues was 29.5% and 35.5% for the three and nine months ended September 30,
2002 compared to 27.2% and 31.1% in the three and nine months ended September
30, 2001. The increase in sales and marketing expenses primarily results from a
10% increase in our direct channel sales representatives and the addition of new
marketing efforts. We expect to continue to expand our sales and marketing
efforts in order to continue our growth and penetration of new markets.

         General and Administrative. General and administrative expenses for the
three and nine months ended September 30, 2002 increased 67.8% and 29.6 % to
$2.2 million and $5.2 million from $1.3 million and $4.0 million for the three
and nine months ended September 30, 2001. General and administrative expense, as
a percentage of total revenues, was 36.2 % and 32.7% for the three and nine
months ended September 30, 2002 compared to 27.5% and 28.5% for the three and
nine months ended September 30, 2001. The increase in general and administrative
expense results from the addition of new administrative employees necessary to
support the increased revenue and overall expansion of our operations and an
additional accrual of $400,000 for estimated bad debts.

Liquidity and Capital Resources

         We continue to finance our operations primarily through private sales
of equity securities. We had working capital of $8.7 million at September 30,
2002 compared with $8.3 million at December 31, 2001. Cash and cash equivalents
at September 30, 2002 were $5.2 million, a decrease of $750 thousand from the
$5.9 million reported at December 31, 2001. Cash balances decreased in the nine
months ended September 30, 2002 primarily as a result of the increased
investment of product development and sales and marketing activities and from a
$4.5 million usage of cash for operations.

         Operating activities used cash of $4.5 million and $1.9 million in the
nine months ended September 30, 2002 and 2001, respectively. Cash used from
operating activities in the nine months ended September 30, 2002 results
primarily from a net loss of $3.6 million, a $3.5 million increase in accounts
receivable, offset by an increase in deferred revenue of $1.5 million, and an
increase in accrued expenses of $905 thousand. We had net receivables of $8.0
million at September 30, 2002 compared to $5.2 million at December 31, 2001
primarily due to increased sales volume.

         Investing activities utilized cash of $741 thousand in the nine months
ended September 30, 2002 and utilized cash of $301 thousand in the nine months
ended September 30, 2001. Cash utilized by investing activities in both periods
results from capital expenditures.

         Financing activities provided cash of $4.4 million and $1.3 million
during the nine months ended September 30, 2002 and 2001, respectively. The
activity for the period ending September 30, 2002 primarily includes proceeds
from the sale of Series B Convertible Preferred Stock.

         We believe there are opportunities to grow our business through the
acquisition of complementary businesses, products and technologies. We look for
acquisitions that can be readily integrated and accretive to earnings, although
we may pursue non-accretive acquisitions that will shorten our time to market
with new technology. Any material acquisition could result in a decrease to our
working capital depending on the amount, timing and nature of the consideration
to be paid. In addition, any material acquisitions of complementary businesses,
products or technologies could require that we obtain additional equity


                                       14
<PAGE>


financing. There can be no assurance that such additional financing will be
available or that, if available, such financing will be obtained on terms
favorable to us and would not result in additional dilution to our stockholders.

         We believe that our cash and cash equivalents, investments in
marketable securities, and funds generated from operations will provide adequate
liquidity to meet our anticipated operating requirements for at least the next
twelve months.

Recent Accounting Developments

In June 2001, the FASB issued SFAS No. 141, Business Combinations, and SFAS No.
142, Goodwill and Other Intangible Assets. In August 2001, the FASB also issued
SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. In
July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities.

On January 1, 2002 we adopted SFAS No. 141, which requires that all business
combinations initiated after June 30, 2001 be accounted for under the purchase
method. SFAS No. 141 superseded APB Opinion No. 16, Business Combinations, and
SFAS No. 38, Accounting for Preacquisition Contingencies of Purchased
Enterprises, and is effective for all business combinations initiated after June
30, 2001. The adoption had no effect on our financial statements.

SFAS No. 142 addresses the financial accounting and reporting requirements for
acquired goodwill and other intangible assets. We adopted the provisions of SFAS
No. 142 in January 2002. Under SFAS No. 142, we are no longer required to
amortize goodwill and other intangible assets with indefinite lives. Instead,
SFAS 142 requires that goodwill and intangible assets deemed to have an
indefinite useful life be reviewed for impairment upon adoption of SFAS No. 142
and annually thereafter.

In accordance with SFAS No. 142, we are required to perform a two-step
transitional impairment test. The first step of this test was completed by June
30, 2002 with the determination of the fair value of our reporting units in
order to identify whether the fair value of each reporting unit is less than its
carrying amount. Our reporting units are generally consistent with the operating
segments defined in Note 3 to the unaudited condensed consolidated financial
statements. In the event that the fair value of the reporting unit is less than
the carrying amount, the second step of the test would be required to determine
if the carrying value of goodwill exceeds the implied fair value. We determined
that there was no transitional impairment of goodwill. The adoption of SFAS No.
142 in January 2002 did not have a material impact on our consolidated results
of operations and financial position. Amortization expense for the three months
and nine months ended September 30, 2001was $22,238 and $66,714, respectively
equal or less than $0.01 per share.

SFAS No. 144 establishes a single accounting model for the impairment or
disposal of long-lived assets and new standards for reporting discontinued
operations. SFAS No. 144 superseded SFAS No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and APB
Opinion No. 30, Reporting the results of Operations - Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual, and
Infrequently Occurring Events and Transactions. We adopted the provisions of
SFAS No. 144 on January 1, 2002. The adoption of SFAS No. 144 did not have a
material impact on our consolidated results of operations and financial
position.

SFAS No. 146 addresses financial accounting and reporting for costs associated
with exit or disposal activities, SFAS No. 146 supercedes Emerging Issues Task
Force (EITF) Issue 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred
in a Restructuring)." SFAS 146 requires that a liability for a cost associated
with an exit or disposal activity be recognized when the liability is incurred.
Under Issue 94-3, a liability for an exit cost as defined in EITF 94-3 was
recognized at the date of an entity's commitment to an exit plan. SFAS No. 146
also establishes that the liability should initially be measured and recorded at
fair value. We will adopt the provisions of SFAS No. 146 for exit or disposal
activities that are initiated after December 31, 2002.

Reclassification of Reimbursed Out-of-Pocket Expenses. We have adopted the
guidance of Financial Accounting Standards Board Emerging Issues Task Force
Issue No. 01-14 ("EITF No. 01-14"), Income Statement Characterization of
Reimbursements Received for Out-of-Pocket Expenses Incurred. EITF No. 01-14
requires the reclassification of reimbursed expenses in both service revenues
and cost of service revenues in our consolidated statements of operations
beginning January 1, 2002. We previously classified


                                       15
<PAGE>


reimbursed expenses as a reduction in the cost of consulting services. The
adoption of EITF No. 01-14 does not impact our total gross profit or operating
income, but it will increase total revenues and as a result, slightly reduce our
gross profit and operating margin percentages. Reimbursed expenses were $161,359
and $440,890 for the three months and nine months ended September 30, 2002. In
addition, we have increased service revenues and cost of service revenues by
$154,661 and $574,705 during the three months and nine months ended September
30, 2001.

Certain Risks That May Affect Future Results

Factors that May Impact Future Results of Operations
----------------------------------------------------


Investors evaluating our business should carefully consider the factors
described below and all other information contained in this Form 10-QSB. While
management is optimistic about our long-term prospects, any of the following
factors could materially harm our business, operating results and financial
condition. Additional factors and uncertainties not currently known to us or
that we currently consider immaterial could also harm our business, operating
results and financial condition. Investors could lose all or part of their
investment as a result of these factors.


Quarterly Fluctuations and Economic Conditions Could Impair Our Ability to
Execute Our Business Plan and Thereby, Negatively Impact Our Financial Condition
--------------------------------------------------------------------------------


Our quarterly operating results have fluctuated in the past and are expected to
continue to fluctuate in the future. Significant fluctuations in our quarterly
operating results may harm our business operations by making it difficult to
implement our budget and business plan. Factors, many of which are outside of
our control, which could cause our operating results to fluctuate include:

         o  the size and timing of customer orders, which can be affected by
            customer budgeting and purchasing cycles;
         o  the demand for and market acceptance of our software solutions;
         o  competitors' announcements or introductions of new software
            solutions, services or technological innovations;
         o  our ability to develop, introduce and market new products on a
            timely basis;
         o  customer deferral of material orders in anticipation of new releases
            or new product introductions;
         o  our success in expanding our sales and marketing programs;
         o  technological changes or problems in computer systems; and
         o  general economic conditions which may affect our customers' capital
            investment levels.

Additionally, our market activity in target markets has increased in recent
years and we have made more large sales than in past periods. Because of this,
sales we expect to make in a particular period, that do not occur, or sales made
in a particular period that were not expected, can affect our results of
operations in a given period more so now than in the past when the size of the
average order was smaller. As a result of these and other factors,
period-to-period comparisons of financial results may not be meaningful.
Historical results of operations are not necessarily indicative of future
results, and interim results are not necessarily indicative of future annual
results. Although our primary market of grocery and drug store retailers may be
less susceptible to cyclical shifts in the economy, this segment of the retail
industry may experience downturns due to macroeconomic pressures that could, in
turn, have a material adverse effect on our business, results of operations or
financial condition.

Changes in Market Size and Dynamics Could Have a Material Adverse Effect on Our
Ability to Generate Sales and Our Future Prospects for Growth.
-------------------------------------------------------------------------------

The recent slowdown of the U.S. economy, which was increased by the terrorist
attacks of September 11, 2001 may have a long-lasting, detrimental effect to the
market for our products as retailers scale back on


                                       16
<PAGE>


their expenditures or are forced to go out of business. In addition, reductions
or allocations of retail Information Technology budgets, due to current economic
conditions could affect retailers' demand for our products. A significant
reduction in the number of customers or purchases made by customers as a result
of these conditions could have a material adverse effect on our sales and
prospects for growth.

Decreases in Demand From Grocery Retailers Will Hurt Our Ability to Generate
Revenues
----------------------------------------------------------------------------

Historically, we have derived almost 100% of our revenues from the licensing of
software products and the performance of related services to the grocery retail
industry. Our future growth is critically dependent on increased sales to
grocery and other retail sectors within the retail industry. The success of our
customers is directly linked to economic conditions in the retail industry,
which in turn are subject to intense competitive pressures and are affected by
overall economic conditions. In addition, we believe that the license of our
software products generally involves a large capital expenditure, which is often
accompanied by large-scale hardware purchases or commitments. As a result,
demand for our products and services could decline in the event of instability
or downturns such as that currently being experienced in the retail industry.
Such downturns may cause customers to exit the industry or delay, cancel or
reduce any planned expenditure for information management systems and software
products.

Consolidation in the Retail Industry and Weak Economic Conditions Could
Negatively Impact Revenues for Products and Services
-----------------------------------------------------------------------

We also believe that the retail industry may be consolidating and that the
industry is, from time to time, subject to increased competition and weakening
economic conditions that could negatively impact the industry and our customers'
ability to pay for our products and services which have and could potentially
lead to an increased number of bankruptcy filings. Such consolidation and
weakening economic conditions have in the past, and may in the future,
negatively impact our revenues, reduce the demand for our products and may
negatively impact our business, operating results and financial condition.

The Rapid Pace of Change in our Industry Could Render our Technology
Unmarketable and Result in a Decrease in Revenue
--------------------------------------------------------------------

If we are unable to develop new software solutions or enhancements to our
existing products on a timely and cost-effective basis, or if new products or
enhancements do not achieve market acceptance, our sales may decline. The life
cycles of our products are difficult to predict because the market for our
products is characterized by rapid technological change and changing customer
needs. The introduction of products employing new technologies could render our
existing products or services obsolete and unmarketable.


In developing new products and services, we may:

         o  fail to respond to technological changes in a timely or
            cost-effective manner;
         o  encounter products, capabilities or technologies developed by others
            that render our products and services obsolete or noncompetitive or
            that shorten the life cycles of our existing products and services;
         o  experience difficulties that could delay or prevent the successful
            development, introduction and marketing of these new products and
            services; or
         o  fail to achieve market acceptance of our products and services.

Competition Could Seriously Impede Our Ability to Profitably Sell Our Solutions
-------------------------------------------------------------------------------

The markets for our software products are highly competitive. Competition could
seriously impede our ability to sell additional products and services on
favorable terms. Competitive pressures could reduce our market share or require
us to reduce prices, which could reduce our revenues and/or operating margins.
Many of our competitors have substantially greater financial, marketing or other
resources, and greater


                                       17
<PAGE>


name recognition than us. In addition, these companies may adopt aggressive
pricing policies that could compel us to reduce the prices of our products and
services in response. Our competitors may also be able to respond more quickly
than we can to new or emerging technologies and changes in customer
requirements. Our current and potential competitors may:

         o  Develop and market new technologies that render our existing or
            future products obsolete, unmarketable or less competitive;
         o  Make strategic acquisitions or establish cooperative relationships
            among themselves or with other solution providers, which could
            increase the ability of their products to address the needs of our
            customers; and
         o  Establish or strengthen cooperative relationships with our current
            or future strategic partners, which could limit our ability to sell
            products through these channels.

Changes in Technology Could Render Our Products Obsolete and Negatively Impact
Our Results of Operations
------------------------------------------------------------------------------

Technological changes in computer operating systems and hardware could render
our products obsolete or unmarketable and may require us to modify existing
applications to be marketable or develop new applications to be competitive with
products from competitors. These changes may cause us to have to make changes to
existing applications or to create new applications, resulting in additional
development and other costs beyond those currently anticipated. There can
provide no assurances that our software applications will be compatible with new
or modified operating systems or hardware, or that we will be able to modify its
applications or create new applications to keep pace with new or changed
operating systems or hardware that may be purchased by our customers. In
addition, if we are unable to modify existing applications or develop new
applications on a timely and cost effective basis, or if new applications or
enhancements do not achieve market acceptance, our sales may decline.

The Sales Cycle for Our RetailSuite Products is Long and Costly and May Not
Result in Revenues
---------------------------------------------------------------------------

The licensing of our products is often an enterprise-wide decision by our
customers that involves a significant commitment of resources by the customer
and us. Prospective customers generally consider a wide range of issues and
competitive products before committing to purchase our products. These issues
may include product benefits, cost, time of implementation, ability to operate
with existing and future computer systems, ability to accommodate increased
transaction volume and product reliability. The period between initial contact
with a prospective customer and sale of our products and services varies, but
typically ranges from three months to twenty-four months. As part of the sales
process, we spend a significant amount of resources informing prospective
customers about the use and benefits of our products, and these sales efforts
may not result in a sale.

In instances where the terms of delivery for our software does not conform with
revenue recognition criteria, we record as deferred revenues, advance payments
from our customers. Since only a portion of our revenue each quarter is
recognized from deferred revenues, our quarterly results will depend primarily
upon entering into new contracts that generate revenues for that quarter. New
contracts may not result in revenues in the quarter in which the contract is
signed, and we may not be able to predict accurately when revenues from these
contracts will be recognized.

Generating the Appropriate Mix of Revenues from Software and Services is
Critical to Generating Acceptable Profit Margins and Operating Results
------------------------------------------------------------------------

Because our gross margins on product revenues (software licenses and maintenance
services) are significantly greater than our gross margins on services and
hardware, our combined gross margin has fluctuated from quarter to quarter, and
it may continue to fluctuate significantly based on revenue mix and service
utilization rates. Services revenues are to a significant extent dependent upon
new software license sales and effective utilization of professional service
resources. Although there can be no assurance, we


                                       18
<PAGE>


expect that our utilization rates and service margins will gradually improve if
we experience a substantial increase in demand for our software products.
However, in the event that software license revenues fail to meet our
expectations or there is a decline in demand for our software or services, our
consulting service revenue would be adversely impacted.

Expected Increases in Operating Expenses Could be Detrimental to our Financial
Condition and Results of Operations
------------------------------------------------------------------------------

We intend to significantly increase operating expenses as we:

         o  increase research and development activities;
         o  increase sales and marketing activities, including expanding our
            direct sales force;
         o  expand our distribution channels; and
         o  increase service activities.

We will incur expenses before we generate additional revenue from this increase
in spending. If we do not significantly increase revenue from these efforts, our
business and operating results could be seriously harmed.

We May Not be able to Generate Positive Cash Flows or Profits Sufficient to
Sustain Our Operations
---------------------------------------------------------------------------

We have experienced net losses and negative cash flows from operating activities
for the last three fiscal years. Although our long-term business strategy is
intended to turn such net losses into net profits, net losses and negative cash
flows are expected to occur for at least the next year. In the long-term, if we
are unable to generate positive cash flows and net income, we may be required to
change our business plan and/or seek additional financing. If unsuccessful in
either case, we may be required to sell our assets, discontinue operations or
dissolve.

A Loss of Important Customers May Result in a Loss of Revenues
--------------------------------------------------------------

For the three and nine months ended September 30, 2002, Winn-Dixie, Inc.
accounted for 31.7% and 31.3% of total revenue, while no other single customer
accounted for more than 10% of the nine months ended September 30, 2002 total
revenues. A loss of any significant customer could have a material adverse
effect on our operations. We expect that revenues from a limited number of new
customers will continue to account for a large percentage of total revenues in
future quarters. Our ability to attract new customers will depend on a variety
of factors, including the performance, quality, features and price of our
current and future products. A failure to add new customers that make
significant purchases of our products and services could impair future revenues.

An Inability to Build Relationships with Systems Integrators Could Result in a
Damaged Reputation that could Negatively Impact Our Ability to Generate Future
Revenues
------------------------------------------------------------------------------

Systems integrators assist our customers with the installation and deployment of
our products, in addition to those of our competitors, and perform custom
integration of computer systems and software. In the future, we intend to
increase our reliance on system integrators to help customers with the
implementation of our products. If we are unable to develop and maintain
relationships with systems integrators, we would be required to hire additional
personnel to install and maintain products, which would result in lower margins
due to the higher expenses associated with systems integrators. Additionally, in
the event that system's integrators are not able to provide an adequate level of
services, we may be required to deploy unexpected resources to provide
integration services and avoid potential damage to our reputation.

A Loss of Existing Resellers Could Harm Our Financial Position and Results of
Operation
-----------------------------------------------------------------------------

                                       19
<PAGE>


A portion of our product sales are driven or influenced by the recommendation of
marketing partners, consulting firms and other third parties. Our inability to
obtain the support of these third parties may limit our ability to penetrate
existing and targeted markets. These third parties are under no obligation to
recommend or support our products and could recommend or give higher priority to
the products and services of other companies or to their own products. A
decision by these companies to favor competing products could negatively affect
our software and service revenues.

If we are unable to establish relationships with marketing partners, we will
have to devote substantially more resources to the sales and marketing of our
products. In many cases, these parties have extensive relationships with our
existing and potential customers and influence the decisions of these customers.
A number of our competitors have long and established relationships with these
same systems integrators, and as a result, these marketing partners may be more
likely to recommend competitors' products and services.

If We Lose Key Personnel or are Unable to Attract and Retain Additional
Personnel, Our Ability to Grow Our Business Could be Harmed.
-----------------------------------------------------------------------

Our performance depends in large part on the continued performance of our
executive officers and other key employees, particularly the performance and
services of Lance Jacobs, Chief Executive Officer; Stephen DeSantis, Chief
Financial Officer and David Berg, our Chief Technology Officer. We currently
only maintain key-man term life insurance on the life of Mr. Jacobs. All of our
key personnel have employment contracts with us. The contracts are generally
described in Item 6, Executive Compensation, in our Form 10-SB filed with the
Security and Exchange Commission on April 30, 2002 (see Form 10SB).. The loss of
the services of these executive officers or other significant employees could
negatively impact our business.

We must also attract, integrate and retain skilled sales, research and
development, marketing and management personnel. Competition for these types of
employees is intense, particularly in our industry. Failure to hire and retain
qualified personnel would harm our ability to grow the business.

If We Fail to Obtain Additional Capital, Should the Need Arise, Our Business
Could be Harmed
----------------------------------------------------------------------------

We have expended and will continue to expend substantial funds on the
development of our products and services. Consequently, we may require
additional funds to finance our operations. The precise amount and timing of our
funding needs cannot be determined at this time, and will depend upon a number
of factors, including the market demand for our products and services, the
progress of our development efforts and our management of cash, accounts payable
and other working capital items. There can be no assurance that if required by
us, funds will be available on terms satisfactory to us, if at all. If
additional funds are raised through the issuance of equity or convertible debt
securities, the percentage ownership of our existing stockholders will be
reduced, the existing stockholders may experience additional dilution and such
securities may have rights, preferences or privileges senior to those of the
holders of our common stock. An inability to obtain needed funding on
satisfactory terms may require us to terminate our operations and sell our
assets and dissolve. No assurances can be made that we will be able to obtain
financing for our future operations.

Shareholders Cannot Expect to be Able to Liquidate Any or All of Their
Investment
----------------------------------------------------------------------

No public market exists for our common stock. Common shareholders must be
prepared to hold their investment indefinitely and cannot expect to be able to
liquidate any or all of their investment even in case of an emergency. All of
our outstanding shares of common stock are subject to rights of first refusal in
our favor, pursuant to our bylaws. The right of first refusal is triggered in
the event a stockholder desires to sell or otherwise transfer any shares of our
stock to a third party upon which we will have 30 days from receipt of the
notice of the proposed transaction to purchase all of the shares proposed to be
sold at the price and upon the terms proposed to be sold. Certain exceptions
exist to this right of first refusal including the


                                       20
<PAGE>


transfer of shares to members of a stockholder's immediate family or to a
trustee for the account of a stockholder or such stockholder's immediate family.

An Inability for Us to Protect Our Intellectual Property Rights Could Negatively
Impact Our Business and Operating Results
--------------------------------------------------------------------------------

We depend on our ability to develop and maintain the proprietary aspects of our
technology. To protect proprietary technology, we rely on a combination of
copyright, trade secret, patent and trademark laws, common law rights and
license agreements in attempting to protect these rights. We enact our rights
under these protections through contractual terms of our license agreements and
electronic software license files. We also seek to protect our software
documentation and other written materials under trade secret and copyright laws,
which afford only limited protection.

Despite our efforts to protect our proprietary rights, unauthorized parties may
attempt to copy aspects of our products or obtain and use information that we
regard as proprietary. Policing unauthorized use of our products is difficult
and expensive. There can be no assurance that the steps taken by us to protect
our proprietary technology will be adequate to prevent misappropriation of our
technology or to provide an adequate remedy in the event of a breach by others.
In addition, the laws of some foreign countries do not protect our proprietary
rights to the same extent as do the laws of the United States. We intend to
vigorously protect intellectual property rights through litigation and other
means. However, such litigation can be costly to prosecute and we cannot be
certain that we will be able to enforce our rights or prevent other parties from
developing similar technology, duplicating our products or designing around our
intellectual property.

Errors/Defects in Products and/or Integration Could Negatively Impact Our
Ability to Meet Our Customers Needs and Thereby, Negatively Impact Our Financial
Position and Results of Operations
--------------------------------------------------------------------------------

Our products are complex and, accordingly, may contain undetected errors or
failures when we first introduce them or as we release new versions. This may
result in loss of, or delay in, market acceptance of our products and could
cause us to incur significant costs to correct errors or failures or to pay
damages suffered by customers as a result of such errors or failures. In the
past, we have discovered software errors in new releases and new products after
their introduction. We have incurred costs during the period required to correct
these errors, although to date such costs, including costs incurred on specific
contracts, have not been material. We may in the future discover errors in new
releases or new products after the commencement of commercial shipping.

In addition, implementation of our products may involve customer-specific
configuration by third parties, or us and my involve integration with systems
developed by third parties. Errors in the product or integration process may not
be discovered until the implementation is complete.

Errors in our products may be caused by defects in third-party software
incorporated into our products. If so, we may not be able to fix these defects
without the cooperation of these software providers. Since these defects may not
be as significant to the software provider as they are to us, we may not receive
the rapid cooperation that it requires. We may not have the contractual right to
access the source code of third-party software and, even if we have the right to
access the source code, we may not be able to fix the defect. Our customers
could seek significant compensation from us for their losses resulting from
defects in our products. Even if unsuccessful, a product liability claim brought
against us could be time consuming and costly.

Infringement Claims May Allow Competitors to Gain Access To Our Technology and
We May Lose Customers
------------------------------------------------------------------------------

We do not have any knowledge that our products infringe on the proprietary
rights of any other parties. However, there can be no assurance that other
parties will not assert infringement claims against us in the


                                       21
<PAGE>


future with respect to current or future products. Assertion of an infringement
claim may result in costly litigation or may require us to obtain license or
royalty agreements to use another party's intellectual property. There can be no
assurance that any such license or royalty agreement would be available on
reasonable terms, if available at all. As the number of our software products in
our segment of the software industry increases and the functionality of these
products increasingly overlaps, we believe that software developers may become
increasingly subject to infringement claims. Any such claims, with or without
merit, could be time-consuming and expensive to defend.

Litigation Could be Costly and Impair our Results of Operations
---------------------------------------------------------------

We are not currently involved in any material litigation. Future litigation,
with or without merit, that we may become involved in could have a material
adverse effect on our business, results of operations or financial condition and
could result in significant expenses, even if we ultimately prevail in such
litigation.

Fluctuations in Our Operating Results Could Cause Investors to Lose All of Their
Investment and We Provide No Assurance of Future Share Values
--------------------------------------------------------------------------------

We provide no assurances regarding the value of our outstanding capital stock.
Investors in our capital stock may lose all or part of their investment in our
capital stock.

We Are Controlled by Institutional Investors Who May Not Act in the Best
Interests of Our Other Shareholders
------------------------------------------------------------------------

Institutional investors hold 99.8% of our outstanding Series A Preferred Stock
and in excess of 95.8% of our outstanding Series B Preferred Stock. The
preferred stock votes on an as-converted to common stock basis and the preferred
stock and common stock vote together as a single class. Currently, the
outstanding preferred stock held by institutional investors represents
approximately 73% of our outstanding capital stock on an as-converted basis. As
a result, the institutional investors, as a group, hold controlling interests in
us and will be able to make decisions in their own interest which may not be in
the best interests of other stockholders. This would include decisions to sell
some or all of our assets, merge with another entity, commence an initial public
offering or dissolve. Our institutional investors have certain anti-dilutive and
preemptive rights, as more particularly described in Item 8, "Description of
Securities" of Form 10-SB. Our institutional investors also have senior rights
in the event of our liquidation. Please see Item 7, "Certain Relationships" of
Form 10-SB.

Item 3. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Within the 90 days prior to the date of this report, our management, including
our Chief Executive Officer and Chief Financial Officer, conducted an evaluation
of the effectiveness of our disclosure controls and procedures as defined in
Exchange Act Rule 13a-14(c). Based on that evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and
procedures are effective to ensure that material information is recorded,
processed, summarized and reported by our management on a timely basis in order
to comply with our disclosure obligations under the Securities Exchange Act of
1934 and the rules promulgated thereunder.

Changes in Internal Controls

There have been no significant changes in our internal controls, or in other
factors that could significantly affect our internal controls (including any
corrective actions with regard to significant deficiencies and material
weaknesses), subsequent to the date our Chief Executive Officer and Chief
Financial Officer completed their evaluation.


PART II -- OTHER INFORMATION


                                       22
<PAGE>


Item 1. Legal Proceedings: None

Item 2.  Changes in Securities:

Recent Sales of Unregistered Securities
The following lists all transactions involving sales of our securities for the
three months ended September 30, 2002. None of the securities listed were sold
in a public offering or through or with the assistance of any underwriter or
broker-dealer.

Employee Director Option Plans - On August 27, 2002, the board of directors
authorized the future grant of options to purchase an aggregate of 6,197,886
shares of our common stock to certain employees under our 2001 Equity Incentive
Plan and options to purchase an aggregate of 6,000 shares to certain
non-employee directors under our 2001 Non-Employee Director's Stock Option Plan
(collectively, the "2001 Plans"). All options will be granted at the fair market
value upon as of the date of grant. We expect to grant these options upon the
completion of the SEC's review of our Form 10-SB that was filed on April 30,
2002 and all amendments thereto. The grants will be registered on a Form S-8, to
be filed with the SEC.

Warrant - In connection with the extension of a line of credit by Comerica to us
under the Loan and Security Agreement dated August 6, 2002, we issued warrants
to Comerica to purchase 125,000 shares of our common stock at an exercise price
of $0.25 a share. The warrant is exercisable through August 6, 2009 and provides
for adjustments to the warrant price, the number of shares issued thereunder in
the event of certain dilutive transactions. The warrant also provides the
warrant holder with certain "piggyback" registration rights with respect to the
common stock issuable under the warrant equal to those granted under our Second
Amended and Restated Registration Rights Agreement dated April 10, 2002. The
offer and sale of the warrants were exempt from registration under the
Securities Act of 1933 pursuant to Section 4(2) thereunder. We received written
representations from Comerica that it is an accredited investor as such term is
defined as Rule 501 of Regulation D and that Comerica was acquiring the
securities for investment and for Comerica's own account and not with a view to,
or for resale in connection with, any distribution thereof. The sale of the
warrants was made without any general solicitation or advertising.

Item 3. Defaults Upon Senior Securities: None

Item 4. Submission of Matters to a Vote of Security Holders: None

Item 5. Other Information:

On August 6, 2002, we entered into a Loan and Security Agreement Comerica
Bank-California, which provided us with a revolving line of credit of up to $3.0
million and a separate line of credit for equipment purchases of up to $1.0
million. Borrowings are collateralized by substantially all of our assets,
including our intellectual property. Borrowings under the revolving line bear
interest at .5% above Comerica's prime rate and borrowings under the equipment
line 1.0% above Comerica's prime rate. To date, we have not borrowed any amounts
against our credit facility. Under the Loan and Security Agreement, we agreed to
issue to Comerica a warrant for the purchase of a 125,000 shares of our common
stock at an exercise price of $0.25 per share. The warrant is exercisable
through August 6, 2009. The warrant provides that the warrant exercise price and
the number of shares issuable upon exercise of the warrant will be adjusted in
the event of certain dilutive transactions. The warrant also provides the
warrant holder with "piggyback" registration rights with respect to the common
stock issuable under the warrant equal to those granted under the Second Amended
and Restated Registration Rights Agreement dated April 10, 2002.

Item 6(a).      Exhibits

Exhibit No.     Name and/or Identification of Exhibit
-----------     -------------------------------------

4.1             Warrant to purchase a 125,000 shares of Common Stock of TCI
                Solutions, Inc. in favor


                                       23
<PAGE>


                of Comerica Bank-California dated August 6, 2002

10.1            Loan and Security Agreement dated August 6, 2002 between TCI
                Solutions, Inc. and Comerica Bank-California

10.2            Agreement and Release dated June 24, 2002 with David Auerbach,
                as amended by Amendment dated September 26, 2002

99.1            Certification Pursuant to 18 U.S.C. 1350, as Adopted Pursuant to
                Section 906 of the Sarbanes-Oxley Act of 2002.

99.2            Certification Pursuant to 18 U.S.C. 1350, as Adopted Pursuant to
                Section 906 of the Sarbanes-Oxley Act of 2002.

Item 6(b). Reports on Form 8-K: None


                                       24
<PAGE>


                                    SIGNATURE

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




                                                    TCI SOLUTIONS, INC.


Dated: November 14, 2002                       By:  /s/ Lance C. Jacobs
      ------------------------                      ---------------------------
                                                    Lance C. Jacobs
                                                    Chief Executive Officer

Dated: November 14, 2002                       By:  /s/ Stephen P. DeSantis
      ------------------------                      ---------------------------
                                                    Stephen P. DeSantis
                                                    Chief Financial Officer





                                       25
<PAGE>


                           CERTIFICATIONS PURSUANT TO
                                 SECTION 302 OF
                         THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION
-------------

I, Lance C. Jacobs, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of TCI Solutions, 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 officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this 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 officers 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
functions):

         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 officers 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.



                                       26
<PAGE>


Date: November 14, 2002

/s/ Lance C. Jacobs
-----------------------
Lance C. Jacobs
Chief Executive Officer



CERTIFICATION
-------------

I, Stephen P. DeSantis, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of TCI Solutions, 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 officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this 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 officers 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
functions):

         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 officers 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


                                       27
<PAGE>


controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

Date: November 14, 2002

/s/ Stephen P. DeSantis
------------------------
Stephen P. DeSantis
Chief Financial Officer


                                       28

<PAGE>

                                 EXHIBIT INDEX
                                 -------------


Exhibit No.     Name and/or Identification of Exhibit
-----------     -------------------------------------

4.1             Warrant to purchase a 125,000 shares of Common Stock of TCI
                Solutions, Inc. in favor of Comerica Bank-California dated
                August 6, 2002

10.1            Loan and Security Agreement dated August 6, 2002 between TCI
                Solutions, Inc. and Comerica Bank-California

10.2            Agreement and Release dated June 24, 2002 with David Auerbach,
                as amended by Amendment dated September 26, 2002

99.1            Certification Pursuant to 18 U.S.C. 1350, as Adopted Pursuant to
                Section 906 of the Sarbanes-Oxley Act of 2002.

99.2            Certification Pursuant to 18 U.S.C. 1350, as Adopted Pursuant to
                Section 906 of the Sarbanes-Oxley Act of 2002.