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 March 31, 2004

      |_| 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)


         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 12,819,263 as of April 26, 2004.


                                       1
<PAGE>

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

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

<TABLE>
<CAPTION>


                                               March 31, 2004                        December 31, 2003
                                      --------------------------------        --------------------------------
<S>                                                <C>                                    <C>

ASSETS
Current assets:
   Cash and cash equivalents                       $         3,221,174                    $          3,679,331
   Accounts receivable, net
      of allowances of $362,041
      at 3/31/04 and $630,404 at
      12/31/03                                               4,469,165                               3,254,155
Prepaid expenses and other
   current assets                                              461,934                                 245,584

                                      --------------------------------        --------------------------------
        Total current assets                                 8,152,273                               7,179,070
Property and equipment, net                                  1,662,817                               1,722,700
Goodwill                                                       529,031                                 529,031
Other assets                                                    19,765                                  19,765
                                      --------------------------------        --------------------------------
Total assets                                       $        10,363,886                    $          9,450,566
                                      ================================        ================================

LIABILITIES AND
   STOCKHOLDERS'
   EQUITY
Current liabilities:
   Accounts payable                                $         1,297,784                    $          1,244,847
   Accrued expenses                                          1,130,604                               1,037,585
   Line of credit                                            1,587,001                               1,604,911
   Current portion of captial
      lease obligations                                         24,270                                  24,270
   Deferred revenue                                          3,224,856                                 765,440

                                      --------------------------------        --------------------------------
        Total current liabilities                            7,264,515                               4,677,053

                                      --------------------------------        --------------------------------
Captial lease obligation, net
   of current portion                                           29,309                                  34,873
                                      --------------------------------        --------------------------------
</TABLE>


                                       2
<PAGE>


<TABLE>
<S>                                                <C>                                    <C>

Commitments and
   contingencies (Note 4)


Stockholders' equity:
   Convertible preferred stock                             17,850,739                                17,850,739
   Common stock                                            37,480,012                                37,479,292
   Warrants to purchase
      common stock                                            178,129                                   178,129
   Accumulated deficit                                    (52,438,818)                              (50,769,520)

                                      --------------------------------        --------------------------------
         Net stockholders' equity                           3,070,062                                 4,738,640

                                      --------------------------------        --------------------------------
Total liabilities and
   stockholders' equity                             $      10,363,886                     $           9,450,566

                                      ================================        ================================
</TABLE>


            See accompanying notes to condensed financial statements


                                       3
<PAGE>

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

<TABLE>
<CAPTION>


                                                                       Three Months Ended
                                                                            March 31,

                                                                     2004                             2003
                                                -------------------------------- --------------------------------
<S>                                                                  <C>                              <C>

Revenues:
   Software licenses                                                 $1,066,625                       $1,013,990
   Maintenance                                                        1,256,296                          925,400
   Services                                                           2,477,626                        2,051,564
   Other                                                                243,574                          521,664

                                                -------------------------------- --------------------------------
                            Total revenues                            5,044,121                        4,512,618
Cost of revenues:
   Software licenses                                                     41,083                           14,828
   Maintenance                                                          308,459                          353,780
   Services                                                           1,844,108                        1,267,075
   Other                                                                164,635                          257,004

                                                -------------------------------- --------------------------------
                    Total cost of revenues                            2,358,285                        1,892,687

Gross profit                                                          2,685,836                        2,619,931

Operating expenses:
   Product development                                                1,013,281                        1,099,660
   Sales and marketing                                                1,920,194                        1,996,090
   General and administrative                                         1,403,050                        1,525,485

                                                -------------------------------- --------------------------------
Total operating expenses                                              4,336,525                        4,621,235

                                                -------------------------------- --------------------------------
Loss from operations                                                 (1,650,689)                      (2,001,304)

Other expense, net                                                      (18,609)                          (8,009)

                                                -------------------------------- --------------------------------
Loss before income taxes                                             (1,669,298)                      (2,009,313)
Provision for income taxes                                                   --                               --

                                                -------------------------------- --------------------------------
Net loss                                                            ($1,669,298)                     ($2,009,313)

                                                ================================ ================================
Net loss per share - basic                                               ($0.13)                          ($0.16)
   and diluted
Weighted average common
shares outstanding - basic and
diluted                                                              12,820,245                       12,724,063
</TABLE>


           See accompanying notes to condensed financial statements.


                                       4
<PAGE>

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

<TABLE>
<CAPTION>


                                                                       Three Months Ended
                                                                            March 31,

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

                                                             2004                             2003
                                                -------------------------------- --------------------------------
<S>                                                        <C>                              <C>


Operating activities
Net loss                                                   $          (1,669,298)            $         (2,009,313)
Adjustments to reconcile net
   loss to net cash used in
operating activities:
Depreciation and amortization                                            169,602                          137,256
Provision for doubtful accounts                                                0                           90,000
Changes in operating assets
   and liabilities:
Accounts receivable                                                   (1,215,010)                         243,982
Prepaid expenses and other
   current assets                                                       (216,350)                         (95,048)
Other assets                                                                   0                          (53,021)
Accounts payable                                                          52,937                          (52,904)
Accrued expenses                                                          93,019                         (839,305)
Deferred revenue                                                       2,459,416                        2,422,677

                                                -------------------------------- --------------------------------
Net cash used in
   operating activities                                                 (325,684)                        (155,676)
Investing activities
Purchases of property and
   equipmen                                                             (109,719)                        (249,296)
Financing activities
Proceeds from line of credit                                                   0                          500,000
Repayments on line of credit                                             (17,910)                         (23,881)
Principal payments on
   capital lease obligations                                              (5,564)                          (1,588)
Proceeds from issuance of                                                    720                                0
   common stock

                                                -------------------------------- --------------------------------
Net cash provided by (used in)
   financing activities                                                  (22,754)                         474,531

                                                -------------------------------- --------------------------------
Net increase (decrease) in
   cash and cash equivalents                                            (458,157)                          69,559
Cash and cash equivalents at
   beginning of period                                                 3,679,331                        5,122,913

                                                -------------------------------- --------------------------------
Cash and cash equivalents at                               $           3,221,174             $          5,192,472
   end of period
                                                ================================ ================================
</TABLE>


           See accompanying notes to condensed financial statements.


                                       5
<PAGE>



================================================================================
                               TCI Solutions, Inc.
                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
                   Three Months Ended March 31, 2004 and 2003

1. Nature of Operations and Summary of Accounting Policies

The accompanying unaudited condensed 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 10-QSB. 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 financial statements should be read in conjunction with the financial
statements and notes thereto included in our Form 10-KSB for the year ended
December 31, 2003.

In our opinion, the accompanying unaudited condensed 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 ended March 31, 2004, 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, 2004. The
balance sheet at December 31, 2003 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.

Reclassifications--Certain amounts previously reported have been reclassified to
conform with the presentation for the three months ended March 31, 2004.

Revenue Recognition

We license software products under non-cancelable perpetual license agreements
and provide related services, including consulting and customer support. We
recognize revenue in accordance with 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 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 and determinable and collection is
considered reasonably assured. 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. Revenues attributable to undelivered
elements, including consulting services and post-contract support, are based on
the average sales price of those elements when sold separately. 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. We
do not offer rights of return. In certain cases, we do offer extended payment
terms to customers, which do not exceed one year from shipment.

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



                                       6
<PAGE>



available. 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.

Other revenue consists of the sales of third-party hardware and software
products and is recognized upon delivery and passage of title.

Basic and Diluted Net Income (Loss) Per Share

Net income (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 55,080 and 55,380 for the three months ended March 31, 2004
and 2003 respectively, have been excluded from diluted weighted average common
shares as the effect would be anti-dilutive.

Stock-Based Compensation

We account for employee stock-based compensation in accordance with the
provisions of Accounting Principles Board ("APB") Opinion No. 25, Accounting for
Stock Issued to Employees, and related interpretations and have adopted the
disclosure provisions of SFAS No. 123, Accounting for Stock-Based Compensation.

SFAS No. 123, Accounting for Stock-Based Compensation, requires the disclosure
of pro forma net income (loss) had we adopted the fair value method. Under SFAS
No. 123, the fair value of stock-based awards to employees is calculated through
the use of option-pricing models, even though such models were developed to
estimate the fair value of freely tradable, fully transferable options without
vesting restrictions, which significantly differ from our stock option awards.
These models also require subjective assumptions, including expected life, which
greatly affect the calculated values. Our calculations were made using the
Black-Scholes option-pricing model (minimum value method) with the following
weighted-average assumptions: expected life of six years; stock volatility, 1%;
risk-free interest rates, 4.0% for the three months ended March 31, 2004 and
2003, respectively; and no dividends during the expected term. Our calculations
are based on an option valuation approach, and forfeitures are recognized as
they occur. The effects of applying SFAS No. 123 in this pro forma disclosure
are not necessarily indicative of future amounts.

Had compensation costs been determined based on the fair value of the options
and warrants at the grant dates consistent with the minimum value method of SFAS
No. 123, our net loss would have been the following in the three months ended
March 31, 2004 and 2003:

<TABLE>
<CAPTION>


Three months-ended March 31,                                                    2004                       2003
<S>                                                                         <C>                        <C>
Net loss:
  As reported                                                               $(1,669,298)               $(2,009,313)
  Add:  Total stock-based employee compensation expense
        determined under fair value based method for all awards             $   (98,205)               $    (1,853)
                                                                            -----------                -----------
  Pro forma                                                                 $(1,767,503)               $(2,011,166)
                                                                            ===========                ===========

Net loss per share--basic and diluted:
  As reported                                                                 ($0.13)                    ($0.16)
  Pro forma                                                                   ($0.14)                    ($0.16)
</TABLE>



                                       7
<PAGE>



New Accounting Pronouncements


In January 2003, the FASB issued FIN 46, Consolidation of Variable Interest
Entities. In general, a variable interest entity is a corporation, partnership,
trust or any other legal structure used for business purposes that either (a)
does not have equity investors with voting rights or (b) has equity investors
that do not provide sufficient financial resources for the entity to support its
activities. FIN 46 requires a variable interest entity to be consolidated by a
company if that company is subject to a majority of the risk of loss from the
variable interest entity's activities or entitled to receive a majority of the
entity's residual returns or both. The consolidation requirements of FIN 46
apply immediately to variable interest entities created after January 31, 2003.
With respect to variable interest entities created before January 31, 2003, in
December 2003, the FASB issued FIN 46R, which, among other things, revised the
implementation date to first fiscal years or interim periods ending after March
15, 2004, with the exception of Special Purpose Entities ("SPE"). The
consolidation requirements apply to all SPE's in the first fiscal year or
interim period ending after December 15, 2003. As we have determined that we do
not have any SPE's to which these interpretations apply, the adoption of FIN 46R
did not have a material impact on our financial statements.


In May 2003, the FASB issued Statement of Financial Accounting Standards No.
150, Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity (SFAS 150). SFAS 150 establishes standards for how an
issuer classifies and measures certain financial instruments with
characteristics of both debt and equity and requires an issuer to classify the
following instruments as liabilities in it balance sheet:

    o   A financial instrument issued in the form of shares that is mandatorily
        redeemable and embodies an unconditional obligation that requires the
        issuer to redeem it by transferring its assets at a specified or
        determinable date or upon an event that is certain to occur;

    o   A financial instrument, other than an outstanding share, that embodies
        an obligation to repurchase the issuer's equity shares, or is indexed to
        such an obligation, and requires the issuer to settle the obligation by
        transferring assets; and

    o   A financial instrument that embodies an unconditional obligation that
        the issuer must settle by issuing a variable number of its equity shares
        if the monetary value of the obligation is based solely on predominantly
        on (1) a fixed monetary amount, (2) variations in something other than
        the fair value of the issuer's equity shares, or (3) variations
        inversely related to changes in the fair value of the issuer's equity
        shares.


In November 2003, the FASB issued FASB Staff Position (FSB) No. 150-3, which
deferred the effective dates for the applying certain provisions of SFAS No. 150
related to mandatorily redeemable financial instruments of certain nonpublic
entities and certain mandatorily redeemable non-controlling interests for public
and nonpublic entities.


For public entities, SFAS No. 150 is effective for mandatorily redeemable
financial instruments entered into or modified after May 31, 2003 and is
effective for all other financial instruments as of the first interim period
beginning after June 15, 2003.


For mandatorily redeemable non-controlling interests that would not have to be
classified as liabilities by a subsidiary under the exception in paragraph 9 of
SFAS No. 150, but would be classified as liabilities by the parent, the
classification and measurement provisions of SFAS No. 150 are deferred
indefinitely. For other mandatorily redeemable non-controlling interests that
were issued before November 5, 2003, the measurement provisions of SFAS No. 150
are deferred indefinitely. For those instruments, the measurement guidance for
redeemable shares and non-controlling interests in other literature shall apply
during the deferral period.


SFAS No. 150 is to be implemented by reporting the cumulative effect of a change
in accounting principle. We do not believe that the adoption of SFAS No. 150
will have a material impact on our financial statements.



                                       8
<PAGE>



2.  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, maintenance,
services, and other. The software licenses operating segment develops and
markets our software products. The maintenance operating segment includes
post-sale support for software products. The services segment provides fee-based
implementation and training 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
information is the only information provided to the chief operating
decision-maker.

Operating segment data for the three months ended March 31, 2004 and 2003 is as
follows:

<TABLE>
<CAPTION>
                                          Software
                                          Licenses            Maintenance          Services            Other              Total
<S>                                     <C>                 <C>                 <C>                 <C>               <C>
Three months-ended March 31, 2004:
  Revenues                              $    1,066,625      $    1,256,296      $    2,477,626      $    243,574      $    5,044,121
  Cost of revenues                              41,083             308,459           1,844,108           164,635      $    2,358,285
                                        --------------      --------------      --------------      ------------      --------------

    Gross profit                        $    1,025,542      $      947,837      $      633,518      $     78,939      $    2,685,836
                                        ==============      ==============      ==============      ============      ==============

Three months-ended March 31, 2003:
  Revenues                              $    1,013,990      $      925,400      $    2,051,564      $    521,664      $    4,512,618
  Cost of revenues                              14,828             353,780           1,267,075           257,004           1,892,687
                                        --------------      --------------      --------------      ------------      --------------

    Gross profit                        $      999,162      $      571,620      $      784,489      $    264,660      $    2,619,931
                                        ==============      ==============      ==============      ============      ==============
</TABLE>

Three customers accounted for 26.3%, 20.8% and 11.9%, respectively of revenues
for the three months ended March 31, 2004. Two customers accounted for 19.0% and
18.9%, respectively of revenues for the three months ended March 31, 2003.
Approximately 46% of accounts receivable was due from two customers as of March
31, 2004. All of our customers are in the retail industry.



3.  Credit Facility

We have an existing credit facility, which as amended, provides for a $3,000,000
revolving line of credit and a $500,000 equipment line of credit. Borrowings
under the revolving line of credit are limited to 80% of eligible accounts
receivable, as defined, and bear interest at 0.50% above the prime rate (4.00%
at March 31, 2004). The revolving line of credit matures in February 2005.

The equipment line of credit bears interest at 0.75% above the prime rate and is
payable monthly. On November 27, 2004, outstanding borrowings under the
equipment line of credit shall be payable in 30 equal monthly installments, plus
interest at 0.75% above the prime rate through the maturity date in June 2007.
At the time of maturity, all outstanding borrowings shall be immediately due and
payable.

As of March 31, 2004, we have outstanding borrowings against the credit facility
of $1,587,001, consisting of $113,431 under the equipment line of credit and
$1,473,570 under the revolving line of credit. As of March 31, 2004, available
unused borrowings under the revolving line of credit was $1,526,431.



                                       9
<PAGE>



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 March 31, 2004, we were in
compliance with all covenants included in the terms of the credit facility.


4.  Commitments and Contingencies

We lease certain facilities and equipment under non-cancelable agreements that
expire at various times through October 2007, which are accounted for as
operating leases.

Future minimum lease payments under non-cancelable operating leases consist of
the following:

           Year ending December 31:
              2004 (April 1 through December 31)                   $606,352
              2005                                                  825,916
              2006                                                  695,243
              2007                                                  145,690
                                                                    -------
           Future minimum lease payments                         $2,273,201

Guarantees and Indemnifications - During our normal course of business, we have
made certain indemnities, commitments and guarantees under which it may be
required to make payments in relation to certain transactions. These indemnities
include intellectual property indemnities to our customers in connection with
the sales of our products, indemnities to various lessors in connection with
facility leases for certain claims arising from such facility or lease, and
indemnities to our directors and officers. The duration of these indemnities,
commitments and guarantees varies and, in certain cases, is indefinite. The
majority of these indemnities, commitments and guarantees do not provide for any
limitation of the maximum potential future payments we could be obligated to
make. Generally, a maximum obligation arising out of these types of agreements
is not explicitly stated, and therefore, the overall maximum amount of these
obligations cannot be reasonably estimated. Historically, we have not been
obligated to make significant payments for these obligations and thus no
liabilities have been recorded for these obligations on our balance sheet at
March 31, 2004.

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 operations, cash flows and financial
position.



                                       10
<PAGE>



Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operation.

We begin Management's Discussion and Analysis of Financial Condition and Results
of Operations (MD&A) with "Our Strategy" to give the reader an overview of
business goals and the direction in which our business and products are moving.
This is followed by a discussion of the "Critical Accounting Policies" that we
believe are important to understanding the assumptions and judgments
incorporated in this quarterly report for the period ended March 31, 2004,
beginning with an "Overview". We then provide an analysis of the financial
results for the three months ended March 31, 2004 compared to the three months
ended March 31, 2003. We conclude this MD&A with our "Business Outlook" section
wherein we discuss the outlook for the remainder of 2004.


Forward Looking Statements


This MD&A should be read in conjunction with the other sections of this
Quarterly Report on Form 10-QSB, including "Item 1: Financial Statements". The
various sections of this MD&A contain a number of forward-looking statements,
all of which are based on our current expectations and could be affected by
uncertainties and risk factors described throughout this filing and particularly
in the "Business Outlook" section. Forward-looking statements generally can be
identified by the use of forward-looking terminology such as "may," "will,"
"expect," "intend," "estimate," "anticipate," "plan," "seek," or "believe". We
believe that the expectations reflected in such forward-looking statements are
accurate. However, we can not assure you that such expectations will occur. Our
actual results may differ materially, and you should not unduly rely on these
forward-looking statements, which speak only as of the date of this report.
These forward-looking statements do not reflect the potential impact of any
business activities not completed as of May 14, 2004.


Our Strategy


We provide strategic pricing and inventory management solutions that enable
grocers to increase top and bottom lines by speeding decisions into action. By
helping grocers to automate complex pricing strategies, streamline inventory
management processes, and execute consistently across the retail enterprise -
from Headquarters to the Store - we empower grocery retailers and wholesalers to
connect with their customers, respond rapidly to market changes and dramatically
improve customer image. Our customers gain competitive advantage in their
markets using our strategic pricing and inventory management solutions, while
growing top-line revenues and improving chain and store profits. We service more
than 400 chains and have over 15,000 installations worldwide. TCI is a market
leader for strategic pricing and inventory management solutions within grocery
retail.


We intend to solidify our presence in grocery retail and wholesale, broaden our
product offering with new and complimentary products developed internally and
through partnerships, and focus on the critical elements of operational
execution. Our goal is to enhance retail operations and execution with high
quality solutions to add and retain valuable customers. Key elements of our
strategy to fulfill our vision are outlined in the points that follow:

    o   Operational Efficiency - Subsequent to a strategic review launched
        earlier this year by management, we reorganized in order to increase the
        allocation of resources to critical markets and products. Additionally,
        we more clearly defined our business strategy and core business
        activities. As a result, we have developed a new operating structure
        designed to help boost software license revenues and shrink operating
        costs in order to improve operational efficiency and enhance customer
        satisfaction. The actions we have taken include:

           o   New Market Definitions - Our focus began with clearly defining
               our targeted customer base within grocery retail and the related
               alignment of resources with the following market definitions:



                                       11
<PAGE>



               Mainstream & Enterprise Marketplace - For this marketplace, we
               focus on delivering a high quality, strategic pricing and
               inventory management solutions that deliver rich and flexible
               functionality. This marketplace also has the following
               attributes:

                   o   Retailers with greater than or equal to 10 stores.

                   o   Sophisticated functional requirements.

                   o   Sales occur primarily through our direct sales force.

                   o   Implementations range from simplistic to sophisticated
                       and may be supported through strategic implementation
                       partners.

               Packaged Marketplace - Within this marketplace we offer a
               competitively priced solution with the benefits of pre-defined
               functionality, rapid implementation and minimal support
               requirements. Additionally, this marketplace has the following
               characteristics:

                   o   Retailers with less than 10 stores.

                   o   Minimal functional requirements.

                   o   Dealers are our primary sale and delivery mechanism for
                       product sales.

           o   Develop and Leverage Strategic Relationships - We continue to
               establish strategic business relationships that enhance the
               delivery of our products, professional services and the
               development of our products that complement our current software
               solutions. We believe these relationships can provide greater
               market presence, greater opportunity to increase sales, improve
               operational efficiencies and provide greater access to other
               retail sectors and international markets. Additionally, within
               our packaged marketplace, software is now primarily going to be
               sold and serviced through our reseller and point-of-sale dealer
               networks.

    o   Customer Satisfaction - We are continuing to further develop initiatives
        designed to focus the organization on delivering more value to both our
        new and existing customer base by improving quality, satisfaction and
        the efficiency of our customers' experience with us. The initiatives we
        are cultivating for the benefit of our customers are as follows:

           o   Product Development Process - We continue to implement new
               processes for operational improvement around product development.
               Initially addressing the product management process and market
               requirements definition, the Product Development Process includes
               formality around functional and technical specifications. These
               processes and procedures insure that we remain in touch with
               delivering high quality solutions that meet the functional needs
               of our customers.

           o   Engagement Management - Engagement Management is an initiative
               complete with governances and processes that have aided in the
               creation of great customer experiences both during and beyond our
               software implementations. Our goal is to optimize the project and
               satisfy our customer. It begins with understanding our customer's
               expectations. Engagement management transcends the implementation
               and improves the depth of our win-win customer relationships
               throughout our organization.

           o   Quality and Customer Centricity - A critical component to our
               success as a developer of technology products starts with
               listening to user concerns and understanding their requirements
               from the beginning. We put the customer at the center of our
               organizational structure and it is very important to us that the
               customer always has a single integrated view of our company. Our
               quality and customer centricity initiatives are focused on
               continuously improving in these areas.


                                       12
<PAGE>



Critical Accounting Policies


Our discussion and analysis of results of operations and financial condition are
based upon financial statements that we prepared in accordance with accounting
principles generally accepted in 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 Management's Discussion and Analysis 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 our Financial Statements which are included elsewhere herein.
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 financial
statements, and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates. The
significant accounting policies which we believe are the most critical to aid in
fully understanding and evaluating our reported financial results include the
following:


Revenue recognition - Our revenue recognition policy is significant because our
revenue is a key component to our results of operations. In addition, our
revenue recognition determines the timing of certain expenses such as
commissions and royalties. We follow specific detailed guidelines in measuring
revenue; however, certain judgments affect the application of our revenue
policy.


We license software products under non-cancelable perpetual license agreements
and provide related services, including consulting and customer support. We
recognize revenue in accordance with 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 and determinable and
collection is considered reasonably assured. If a software license contains an
undelivered element, the fair value of the undelivered element is deferred and
that revenue is recognized once the element is delivered. Revenues attributable
to undelivered elements, including services and post-contract support, are based
on the average sales price of those elements when sold separately. 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. We
do not offer rights of return.


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 billed on an annual or
quarterly basis with the revenue being deferred and recognized ratably over the
maintenance period.


Other revenue is recognized when the third-party hardware and software products
have been shipped and title has passed.




                                       13
<PAGE>



Accounts Receivable - We typically extend credit to our customers. Payments for
software licenses generally include payment terms with installments due within
ninety days from the date of shipment. Billings for customer support and
professional services performed on a time and material basis are due on net
30-day terms. We review past due accounts and provide specific reserves based
upon the information we gather from sources including customers, subsequent cash
receipts, professional services, and credit rating services such as Dunn &
Bradstreet. 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 periods. 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.


Goodwill - Our business combinations have resulted in goodwill. We review the
recoverability of the carrying value of goodwill on an annual basis or more
frequently when an event occurs or circumstances change to indicate that an
impairment of goodwill has possibly occurred. While we have not experienced
impairment of goodwill assets in prior periods, we cannot guarantee that there
will not be impairment in the future.


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 income tax benefit.


Stock-Based Compensation - We do not record compensation expense for options
granted to our employees as all options granted under our stock option plans
have an exercise price equal to the estimated fair market value of the
underlying common stock on the date of grant. As permitted under Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation
("SFAS No. 123"), we have elected to continue to apply the provisions of
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, and provide pro forma disclosure on a quarterly and annual basis of
net income (loss) and net income (loss) per common share for employee stock
option grants made, and shares issued under our employee stock purchase plan, as
if the fair-value method defined in SFAS No. 123 had been applied. If proposals
currently under consideration by various accounting standard organizations are
adopted, such as the Financial Accounting Standards Board Proposed Statement of
Financial Accounting Standard, "Share-Based Payment, an amendment of FASB
Statements No. 123 and 95", we may be required to treat the value of stock-based
awards granted to employees as compensation expense in the future, which could
have a material adverse effect on our reported operating results.

Significant Trends and Developments in Our Business

Revenue Trends - We see signs of domestic economic recovery and currently have a
strong software sales pipeline. We believe there are a significant number of
sales opportunities that will support a sustained level of activity and we
anticipate increases in software license revenues and related services revenues
throughout 2004. The preponderance of the business in the near term continues to
be for our TCI Retail solutions. Our strategy to organize the company around our
two primary market definitions, Packed Solutions and Enterprise/Mainstream
Solutions is enhancing our capabilities of delivering market specific products
and services that we believe will lead towards increased software license
revenue and improve our overall growth rate for total revenue.




                                       14
<PAGE>



New Products and Distribution to Markets. We invested $1.0 million for the three
months ending March 31, 2004 and a total of $26.9 million since the creation of
TCI Retail in 1996 toward new product development efforts. We have released
enhanced versions of our core software products for the past three years and
expanded the breadth of our product portfolio. Our recent efforts include the
development of new TCI Retail products such as TCI thinStore, TCI inStore and
TCI inStore Host along with Integration Workbench. Additional development
focused on the release of industry compliant software for the 'GTIN' or Global
Trade Item Number data standard. Our goal in 2004 is to continue aligning our
product development with the Packaged and Enterprise/Mainstream marketplaces by
specifically developing applications that serve these retailers needs.
Additionally, we are currently focusing development resources on integration to
third party vendors that can deliver value-added functionality in the form of
analytics, movement analysis and computer assisted ordering for our TCI Retail
product.


Three Months Ended March 31, 2004 Compared to Three Months Ended March 31, 2003.

Revenues consist of software license revenues, maintenance, services and other
revenues, which represents 21.2%, 24.9%, 49.1% and 4.8%, respectively, of total
revenues for the three months ended March 31, 2004 compared to 22.5%, 20.5%,
45.5% and 11.6%, respectively, for the three months ended March 31, 2003. Total
revenues for the three months ended March 31, 2004 were $5.0 million, an
increase of $0.5 million, or 11.8%, from the $4.5 million reported for the three
months ended March 31, 2003.

Revenues

Software Licenses. Software license revenue for the three months ended March 31,
2004 and 2003 increased 5.2% to $1.1 million from $1.0 million. Software license
revenue represented 21.2% of total revenues, for the three months ended March
31, 2004 compared to 22.5% for the three months ended March 31, 2003. Our
pipeline for software licenses is strong and the buying cycles of customers
appear to have stabilized and thus, we are optimistic that we will see software
license growth throughout the year.

Maintenance. Maintenance revenue for the three months ended March 31, 2004
increased 35.8% to $1.3 million from $0.9 million for the three months ended
March 31, 2003. The increase in maintenance revenue primarily results from $6.6
million in new software licenses sold for the fifteen-month period ended March
31, 2004, resulting in an increase in the number of customers under maintenance
contracts. Maintenance revenue represented 24.9% of total revenues, for the
three months ended March 31, 2004 compared to 20.5% for the three months ended
March 31, 2003.

Services. Services revenue for the three months ended March 31, 2004 increased
20.8% to $2.5 million from $2.1 million for the three months ended March 31,
2003. The increase in services revenue is directly attributed to implementation
services associated with the increased sales of our TCI Retail products. We
anticipate growth in services revenue for the year due to our expected growth in
software sales. Services revenue represented 49.1% of total revenues, for the
three months ended March 31, 2004 compared to 45.5% for the three months ended
March 31, 2003.

Other. Other revenue for the three months ended March 31, 2004 decreased 53.3%
to $0.2 million from $0.5 million for the three months ended March 31, 2003. The
decrease in other revenue results from delivering less hardware. We are in the
process of developing relationships that will deliver more of what our customers
have asked for - complimentary software applications that can be integrated with
our TCI Retail product. In the near term, we believe that other revenues will
remain steady as a percentage of our overall revenues during this transition,
but as this transition and focus on complimentary software grows, these
relationships will enable greater revenue growth in the future. Other revenue
represented 4.8% of total revenues, for the three months ended March 31, 2004
compared to 11.6% for the three months ended March 31, 2003.







                                       15
<PAGE>



Gross Profit

Gross profit dollars for the three months ended March 31, 2004 increased 2.5% to
$2.7 million. The increase in gross profit dollars is primarily from the
increase in maintenance revenues, partially offset by decreases in other
revenues and in margins for services for the three months ended March 31, 2004.
Gross profit percent for the three months ended March 31, 2004 decreased 4.9% to
53.2% from 58.1% for the three months ended March 31, 2003. The decrease in
gross profit percentage for the three months ended March 31, 2004 versus 2003 is
primarily due to a decrease in gross margin earned in other revenue and an
increase in the cost of delivering services.

Software License Margins. Software license margins for the three months ended
March 31, 2004 increased marginally by 2.6% from March 31, 2003. The increase in
software license margins for the three months ended March 31, 2004 is primarily
due to increased software sales offset by an increase in direct selling expenses
paid to a reseller. Software license margins as a percentage of software license
revenue were 96.2% for the three months ended March 31, 2004, compared to 98.5%
for the three months ended March 31, 2003.

Maintenance Margins. Maintenance revenue margins for the three months ended
March 31, 2004 increased 65.8% to $0.9 million from $0.6 million for the three
months ended March 31, 2003. Maintenance revenue margins as a percentage of
maintenance revenue were 75.5% for the three months ended March 31, 2004,
compared to 61.8% for the three months ended March 31, 2003. The increase in
maintenance revenue margins as a percentage of maintenance revenue for the three
months ended March 31, 2004 is primarily due to an increase in maintenance
revenue of 35.7%, resulting from $6.6M in new software licenses sold and an
increase in the number of customers under maintenance contracts for the 15 month
period ended 3/31/04. Maintenance costs decreased in the same period due to the
closure of a regional office used for customer support that will now be housed
within our Tucson facility.


Services Margins. Services revenue margins for the three months ended March 31,
2004 decreased 19.2% to $0.6 million from $0.8 million for the three months
ended March 31, 2003. The decrease in services revenue margins for the three
months ended March 31, 2004 is primarily due to the increases in services
revenues of $0.5 million offset by increased headcount and related expenses of
$0.4 million and $0.2 million invested in internal training and certification
programs to increase customer satisfaction. Services revenue margins as a
percentage of services revenue were 25.6% for the three months ended March 31,
2004, compared to 38.2% for the three months ended March 31, 2003.


Other Margins. Other revenue margins for the three months ended March 31, 2004
and 2003 decreased 70.2% to $0.1 million from $0.3 million for the three months
ended March 31, 2003. Other revenue margins as a percentage of other revenue
were 32.4% for the three months ended March 31, 2004, compared to 50.7% for the
three months ended March 31, 2003. The decrease in other revenue margins as a
percentage of other revenue for the three months ended March 31, 2004 was
primarily related to variances in third party vendor pricing over the same
period in 2003. This decrease in other revenue related to lower hardware sales
within our packaged marketplace. We believe that other revenues will stabilize
and eventually grow as a percentage of our overall revenues, due in part to our
transition to focus on third party software revenue opportunities that add value
to our customer's product portfolio and produce greater margins through third
party software license sales.


Operating Expenses

Operating expenses for the three months ended March 31, 2004 and 2003 decreased
6.2% to $4.3 million from $4.6 million. Operating expenses represented 86.0% of
total revenues, for the three months ended March 31, 2004 compared to 102.4% for
the three months ended March 31, 2003.



                                       16
<PAGE>



Product Development. Product development expenses for the three months ended
March 31, 2004 decreased 7.9% to $1.0 million from $1.1 million for the three
months ended March 31, 2003. The decrease in product development expense
primarily results from efforts to increase development efficiencies through
process improvement and through the reduction of expenses associated with lower
development resources needed to support our heritage product, IMS. Product
development expenses represented 20.1% of total revenues for the three months
ended March 31, 2004 compared to 24.4% for the three months ended March 31,
2003.

Sales and Marketing. Sales and marketing expenses for the three months ended
March 31, 2004 decreased 3.8% to $1.9 million from $2.0 million for the three
months ended March 31, 2003. The decrease in sales and marketing expenses during
the three months ended March 31, 2004 is primarily due to decreased activity
levels for marketing coupled with focused cost control efforts. Sales and
marketing expenses represented 38.1% of total revenues, for the three months
ended March 31, 2004 compared to 44.2% for the three months ended March 31,
2003.

General and Administrative. General and administrative expenses for the three
months ended March 31, 2004 decreased 8.0% to $1.4 million from $1.5 million for
the three months ended March 31, 2003. The decrease in general and
administrative expenses during the three months ended March 31, 2004 is due to a
focused cost control efforts and a decrease in bad debt expense. General and
administrative expenses represented 27.8% of total revenues for the three months
ended March 31, 2004 compared to 33.8% for the three months ended March 31,
2003.


Liquidity and Capital Resources

Historically, we have financed our operations primarily through private sales of
equity securities. We expect to finance future operations through existing cash,
working capital and private sales of equity securities. We had working capital
of $0.9 million at March 31, 2004 compared with $2.5 million at December 31,
2003. The decrease in working capital is primarily due to an increase in
deferred revenue. Cash and cash equivalents at March 31, 2004 were $3.2 million,
a decrease of $0.5 million from the $3.7 million reported at December 31, 2003.
Cash balances decreased in the three months ended March 31, 2004 primarily as a
result of a net loss and an increase in accounts receivable, partially offset by
the increase in deferred revenue attributed to our annual maintenance billing
recorded in the three months ended March 31, 2004.

Operating activities used cash of $0.3 million in the three months ended March
31, 2004. Cash used by operating activities in the three months ended March 31,
2004 results primarily from a net loss of $1.7 million, a $1.2 million increase
in accounts receivable resulting from a $0.3 million increase in sales and a
$0.3 million decrease in allowances and an increase in deferred revenue of $2.5
million relating to our annual maintenance billing. We had net receivables of
$4.5 million at March 31, 2004 compared to $3.3 million at December 31, 2003.

Investing activities used cash of $0.1 million in the three months ended March
31, 2004. Cash used by investing activities in the three months ended March 31,
2004 results from the purchase of computer equipment and office furnishings. We
expect capital expenditures to be approximately $0.4 million for the remainder
of 2004, which will be paid using existing cash and cash equivalents and our
equipment line of credit.

Financing activities used cash of $23 thousand during the three months ended
March 31, 2004. Cash used by financing activities for the period ending March
31, 2004 results from the repayment of our line of credit and capital lease
obligations.

We believe that our cash and cash equivalents, collections of annual maintenance
billings, and cash generated from operations, will provide adequate liquidity to
meet our anticipated operating requirements for at least the next twelve months.



                                       17
<PAGE>



Business Outlook


As we look ahead to the rest of 2004, we are planning for growth. Our financial
results, however, are substantially dependent upon sales of TCI Retail software.
Revenue is partly a function of the mix of software, services, maintenance and
other third party hardware and software sales. Our margins are highest for
software and maintenance and significantly lower for our services and other
revenue categories. Our margins are also affected by the product mix within the
various markets we serve. Margins are higher in the Enterprise/Mainstream market
than in Packaged due to the fact that the overall sale in the
Enterprise/Mainstream market is weighted towards our higher margin offerings of
software and maintenance. Our gross margin as a result, varies with revenue
levels from the various markets and the revenue mix.


We further believe that we have the product offerings, personnel, competitive
and financial resources for continued business success. Future revenues, gross
margins and profits however, are all influenced by a number of factors,
including those discussed above, all of which are inherently difficult to
forecast. As a result, there are no assurances that we will achieve these
objectives. See 'Certain Risks that May Affect Future Results' herein for a more
detailed discussion of the risks that may affect our business.


New Accounting Pronouncements


In January 2003, the FASB issued FIN 46, Consolidation of Variable Interest
Entities. In general, a variable interest entity is a corporation, partnership,
trust or any other legal structure used for business purposes that either (a)
does not have equity investors with voting rights or (b) has equity investors
that do not provide sufficient financial resources for the entity to support its
activities. FIN 46 requires a variable interest entity to be consolidated by a
company if that company is subject to a majority of the risk of loss from the
variable interest entity's activities or entitled to receive a majority of the
entity's residual returns or both. The consolidation requirements of FIN 46
apply immediately to variable interest entities created after January 31, 2003.
With respect to variable interest entities created before January 31, 2003, in
December 2003, the FASB issued FIN 46R, which, among other things, revised the
implementation date to first fiscal years or interim periods ending after March
15, 2004, with the exception of Special Purpose Entities ("SPE"). The
consolidation requirements apply to all SPE's in the first fiscal year or
interim period ending after December 15, 2003. As we have determined that we do
not have any SPE's to which these interpretations apply, the adoption of FIN 46R
did not have a material impact on our financial statements.


In May 2003, the FASB issued Statement of Financial Accounting Standards No.
150, Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity (SFAS 150). SFAS 150 establishes standards for how an
issuer classifies and measures certain financial instruments with
characteristics of both debt and equity and requires an issuer to classify the
following instruments as liabilities in it balance sheet:

    o   A financial instrument issued in the form of shares that is mandatorily
        redeemable and embodies an unconditional obligation that requires the
        issuer to redeem it by transferring its assets at a specified or
        determinable date or upon an event that is certain to occur;



                                       18
<PAGE>



    o   A financial instrument, other than an outstanding share, that embodies
        an obligation to repurchase the issuer's equity shares, or is indexed to
        such an obligation, and requires the issuer to settle the obligation by
        transferring assets; and

    o   A financial instrument that embodies an unconditional obligation that
        the issuer must settle by issuing a variable number of its equity shares
        if the monetary value of the obligation is based solely on predominantly
        on (1) a fixed monetary amount, (2) variations in something other than
        the fair value of the issuer's equity shares, or (3) variations
        inversely related to changes in the fair value of the issuer's equity
        shares.


In November 2003, the FASB issued FASB Staff Position (FSB) No. 150-3, which
deferred the effective dates for the applying certain provisions of SFAS No. 150
related to mandatorily redeemable financial instruments of certain nonpublic
entities and certain mandatorily redeemable non-controlling interests for public
and nonpublic entities.


For public entities, SFAS No. 150 is effective for mandatorily redeemable
financial instruments entered into or modified after May 31, 2003 and is
effective for all other financial instruments as of the first interim period
beginning after June 15, 2003.


For mandatorily redeemable non-controlling interests that would not have to be
classified as liabilities by a subsidiary under the exception in paragraph 9 of
SFAS No. 150, but would be classified as liabilities by the parent, the
classification and measurement provisions of SFAS No. 150 are deferred
indefinitely. For other mandatorily redeemable non-controlling interests that
were issued before November 5, 2003, the measurement provisions of SFAS No. 150
are deferred indefinitely. For those instruments, the measurement guidance for
redeemable shares and non-controlling interests in other literature shall apply
during the deferral period.

SFAS No. 150 is to be implemented by reporting the cumulative effect of a change
in accounting principle. We do not believe that the adoption of SFAS No. 150
will have a material impact on our financial statements.


Certain Risks That May Affect Future Results


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, we do operate in a
dynamic and rapidly changing environment that involves numerous risks and
uncertainties that we believe may adversely affect 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. This section
should be read in conjunction with the audited Financial Statements and Notes
thereto for the periods ended March 31, 2004 and 2003 contained elsewhere in
this Form 10-QSB.


Changes in Economic, Political and Market Conditions Could Cause Decreases in
Demand for Our Software and Related Services Which Could Negatively Affect Our
Revenue and Operating Results and The Market Price of Our Stock. Our revenue and
profitability depend on the overall demand for our software and related
services. A regional and/or global change in the economy and financial markets
could result in delay or cancellation of customer purchases. If demand for our
software and related services decrease, our revenues would decrease and our
operating results would be adversely affected.


Our Quarterly Operating Results May Fluctuate Significantly and Economic
Conditions Could Impair Our Ability to Execute Our Business Plan and Thereby,
Negatively Impact Our Financial Condition. Our quarterly operating results have
varied in the past and are expected to continue to vary in the future.
Significant fluctuations in our quarterly operating results may harm our
business operations by making it



                                       19
<PAGE>



difficult to implement our business plan. Factors, many of which are outside of
our control, which could cause our operating results to fluctuate include:

    o   the demand for and market acceptance of our software solutions;

    o   changes in the length of our sales cycle;

    o   the size and timing of customer orders, which can be affected by
        customer budgeting and purchasing cycles;

    o   lower than anticipated consumption and/or utilization of our
        professional services group as a result of reduced levels of software
        sales, reduced implementation times for our products, changes in the mix
        of demand for our software products;

    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 contracts 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. A sluggish U.S.
economy, consolidations and the entry of large mass merchants such as Wal-Mart
may have a long-lasting, detrimental effect on the market for our products as
retailers scale back on their expenditures or are forced to go out of business.
In addition, reductions or allocations of retail information technology budgets,
due to 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.


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.


Decreases in Demand From Grocery Retailers Could 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



                                       20
<PAGE>



event of instability or downturns. Such downturns may cause customers to exit
the industry or delay, cancel or reduce any planned expenditure for information
management systems and software products.


The Industries Rapid Pace of Change 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.


We May Introduce New Lines of Business and Channel Distribution Strategies Where
We are Less Experienced and Unable to Successfully Sell That Could Result
Negatively Impact Revenues and Our Results of Operations. We may introduce new
lines of business and channel sale/distribution strategies that are outside our
traditional focus on software licenses, related maintenance and professional
services. Introducing new lines of business involves a number of uncertainties,
including a lack of internal resources and expertise to operate and grow new
lines of business, manage new distribution systems, immature internal processes
and controls, predicting revenues and expenses for the new lines of business,
and the possibility that such new lines of business will divert management
attention and resources from our traditional business. The inability of
management to effectively develop and operate these new lines of business could
have a material adverse effect on our business, operating results and financial
condition. Moreover, we may not be able to gain acceptance of any new lines of
business in our markets or channel strategies or obtain the anticipated or
desired benefits of such new lines or channel sale/distribution strategies.


It May Be Difficult to Profitably Identify, Adopt and Develop Product
Architecture That is Compatible With Emerging Industry Standards That Could
Negatively Impact Our Ability to Generate Future Revenues. The markets for our
software products are characterized by rapid technological change, evolving
industry standards, changes in customer requirements and frequent new product
introductions and enhancements. If we fail in our product development efforts to
accurately address evolving industry standards or important third-party
interfaces or product architectures, sales of our products and services will
suffer.


Our software products can be licenses with a variety of popular industry
standard platforms, and are authored in various development environments using
different programming languages and underlying architectures. There may be
future or existing platforms that achieve popularity in the marketplace that may
not be compatible with our software product design. Developing and maintaining
consistent software product performance across various technology platforms
could place a significant strain on our resources and product release schedules,
which could adversely affect our results of operations.


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. We 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



                                       21
<PAGE>



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.


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.


The Sales Cycle for Our TCI Retail 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 to
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 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.


Competition Could Seriously Impede Our Ability to Profitably Sell Our Solutions.
The markets for our software products are highly competitive. We believe the
principal competitive factors in our markets are feature and functionality,
product reputation and reference accounts, grocery retail expertise, total
solution cost and quality of customer support. We believe that pricing pressure
has increased in response to market and macroeconomic factors, which could cause
us to offer more significant discounts, or in some cases to lose potential
business to competitors willing to offer what we believe to be overly aggressive
discounts. 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 name recognition than us.
Our competitors may also be able to respond more



                                       22
<PAGE>



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.


It is Difficult for Us to Accurately Predict the Timing of Software Licenses
Revenue and Our Results of Operations Could be Negatively Impacted. Software
license revenues in any quarter depend substantially upon contracts signed and
the related shipment and transfer of title of software in that quarter. It is
therefore difficult for us to accurately predict software license revenues.
Because of the timing of our sales, we typically recognize the substantial
majority of our software license revenues in the last weeks or days of the
quarter, and we may derive a significant portion of our quarterly software
license revenues from a small number of relatively larger sales. In addition, it
is difficult to forecast the timing of large individual software license sales
with a high degree of certainty due to the extended length of the sales cycle
and generally more complex contractual terms that may be associated with such
licenses that could result in the deferral of some or all of the revenue to
future periods. Accordingly, large individual sales have sometimes occurred in
quarters subsequent to when we anticipate. We expect these aspects of our
business to continue. If we receive any significant cancellation or deferral of
customer contracts, or we are unable to continue license negotiations by the end
of a fiscal quarter, our operating results may be lower than planned. In
addition, any weakening or uncertainty in the economy may make it more difficult
for us to predict quarterly results in the future, and could negatively impact
our business, operating results and financial condition for an indefinite
period.


A Loss of Important Customers May Result in a Loss of Revenues. Three customers
accounted for 26.3%, 20.8% and 11.9%, respectively of revenues for the three
months ended March 31, 2004. For the three months ended March 31, 2003, two
customers accounted for 19.0% and 18.9%, respectively. No other single customer
accounted for more than 10% of the three months ended March 31, 2004 or 2003. 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.


A Loss of Existing Resellers Could Harm Our Financial Position and Results of
Operations. 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.


There May Be an Increase in Customer Bankruptcies Due to Weak Regional Economic
Conditions and Result in Uncollectible Accounts Receivable Balances. We have in
the past and may in the future be impacted by customer bankruptcies that occur
in periods subsequent to the software license sale. During



                                       23
<PAGE>



weak economic conditions, such as those being experienced in some geographic
regions we serve, there is an increased risk that certain of our customer will
file bankruptcy. When our customers file bankruptcy, we may be required to
forego collection of pre-petition amounts owed and to repay amounts remitted to
us during the 90-day preference period preceding the filing. Accounts receivable
balances related to pre-petition amounts may in certain of these instances be
large due to extended payment terms for software license fees, and significant
billings for professional services on large projects. The bankruptcy laws, as
well as the specific circumstances of each bankruptcy, may severely limit our
ability to collect pre-petition amount, and may force us to disgorge payments
made during the preference period. We also face risk from international
customers that file for bankruptcy protection in foreign jurisdictions, in that
the application of foreign bankruptcy laws may be less certain or harder to
predict. Although we believe that we have sufficient reserves to cover
anticipated customer bankruptcies, there can be no assurance that such reserves
will be adequate, and if they are not adequate, our business, operating results
and financial condition would be adversely affected.


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 four 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 six
months. 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.


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. All of our key personnel have employment contracts with us.
The contracts are generally described in Item 6, Executive Compensation, below.
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.


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. 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.


We May Face Liability If Our Products Are Defective Or If We Make Errors
Implementing Our Products That Could Negatively Impact Our Ability to Meet Our
Customers Needs and Thereby, Negatively Impact Our Financial Position and
Results of Operations. Our products are highly complex and sophisticated. As a
result, they may occasionally contain design defects or software errors that
could be difficult to detect and correct. This may result in loss of, or delay
in, market acceptance of our products and could cause us to



                                       24
<PAGE>



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.


We believe that significant investments in research and development are required
to remain competitive, and that speed to market is critical to our success. Our
future performance will depend in large part on our ability to enhance our
existing products through internal development and strategic partnering,
internally develop new products which leverage both our existing customers and
sales force, and strategically acquire complimentary retail point and
collaborative solutions that add functionality for specific business purposes to
an enterprise-wide system. If clients experience significant problems with
implementation of our products or are otherwise dissatisfied with their
functionality or performance or if they fail to achieve market acceptance for
any reason, our business, operating results and financial condition would
suffer.


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 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.


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 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.


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.




                                       25
<PAGE>



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 privilege s 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.


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 Part I, Item 8, "Description of Securities" Registration Statement
on our Form 10-SB as amended. Our institutional investors also have senior
rights in the event of our liquidation. In the event a liquidation were to
occur, common stockholders would not be entitled to any proceeds of such
liquidation until the liquidation rights of our institutional investors were
fully satisfied. As a result, we can provide no assurances that common
stockholders will receive any proceeds in the event of our liquidation or sale
to the extent that the liquidation rights of our institutional investors are not
fully paid.

Item 3.  Controls and Procedures.

Evaluation of Disclosure Controls and Procedures - We maintain a system of
disclosure controls and procedures that are designed for the purposes of
ensuring that information required to be disclosed in our SEC reports is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms, and that such information is accumulated and
communicated to our Chief Executive Officer (CEO) and Chief Financial Officer
(CFO) as appropriate to allow timely decisions regarding required disclosures.


As of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of our CEO and CFO,
of the effectiveness of our disclosure controls and procedures as defined in
Exchange Act Rule 13a-14(c). Based on that evaluation, our CEO and CFO concluded
that our disclosure controls and procedures are effective and timely in alerting
them to material information related to us that is required to be included in
our annual and periodic SEC filings.


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 subsequent to the date of our CEO and CFO completing their
evaluation.




                                       26
<PAGE>



Item 4. Submission of Matters to a Vote of Security Holders.


On February 18, 2004, a majority of our stockholders took action by written
consent in lieu of a special meeting and approved (i) an amendment to increase
the authorized number of shares of our common stock from 65,000,000 to
67,000,000, (ii) an amendment to our 2001 Equity Incentive Plan to increase the
number of shares of common stock available for issuance by 1,126,919 shares, and
(iii) an amendment to our 2001 Non-Employee Directors' Stock Option Plan to
increase the number of shares of common stock available for issuance by 150,000
shares. A total of 37,828,940 shares of voting stock (which includes common
stock and shares of preferred stock that vote on an as-converted to common stock
basis) approved each of the above matters submitted.

                          PART II -- OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------
Exhibit No.                                  Description
-------------------------------------------------------------------------------------------
<S>         <C>
3.1***      Certificate of Amendment of the Fourth Amended and Restated Certificate of
            Incorporation of TCI Solutions, Inc.
-------------------------------------------------------------------------------------------
3.2*        Fourth Amended and Restated Certificate of Incorporation of TCI Solutions, Inc.
-------------------------------------------------------------------------------------------
3.3*        Bylaws of TCI Solutions, Inc. and Amendments thereto
-------------------------------------------------------------------------------------------
4.1*        Amended and Restated Stockholders Agreement dated December 21, 2001 among TCI
            Solutions, Inc. and the Stockholders listed on Schedule I thereto
-------------------------------------------------------------------------------------------
4.2*        First Amendment to Amended and Restated Stockholders Agreement dated April 10,
            2002 among TCI Solutions, Inc. and the Stockholders listed on Schedule I
            thereto
-------------------------------------------------------------------------------------------
4.3*        Second Amendment to Amended and Restated Stockholders Agreement dated April
            2002, among TCI Solutions, Inc. and the Stockholders listed on Schedule I
            thereto.
-------------------------------------------------------------------------------------------
4.4*        Second Amended and Restated Registration Rights Agreement dated April 10, 2002
            among TCI Solutions, Inc. and the persons identified on Schedule I thereto
-------------------------------------------------------------------------------------------
4.5*        Management Rights Letter in favor of InnoCal II, L.P. dated December 21, 2001
-------------------------------------------------------------------------------------------
4.6*        Management Rights Letter in favor of Productivity Fund IV dated December 21,
            2001
-------------------------------------------------------------------------------------------
4.7**       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, N.A.
-------------------------------------------------------------------------------------------
10.2***     First Amendment to Loan and Security Agreement dated August 5, 2003 between
            TCI Solutions, Inc. and Comerica Bank, N.A.
-------------------------------------------------------------------------------------------
10.3***     Second Amendment to Loan and Security Agreement dated January 28, 2004 between
            TCI Solutions, Inc. and Comerica Bank, N.A.
-------------------------------------------------------------------------------------------
10.4***     Third Amendment to Loan and Security Agreement dated February 28, 2004 between
            TCI Solutions, Inc. and Comerica Bank-California
-------------------------------------------------------------------------------------------
10.5***     Warrant to Purchase 35,000 shares of Common Stock of TCI Solutions, Inc. in
            favor of Comerica Bank-California dated February 27, 2004
-------------------------------------------------------------------------------------------
10.6***     Employment Agreement dated January 1, 2003 between TCI Solutions, Inc. and
            Lance Jacobs
-------------------------------------------------------------------------------------------
10.7***     Employment Agreement dated January 1, 2003 between TCI Solutions, Inc. and
            Stephen DeSantis
-------------------------------------------------------------------------------------------
10.8***     Employment Agreement dated January 1, 2003 between TCI Solutions, Inc. and
            David Berg
-------------------------------------------------------------------------------------------
10.9*       2001 Equity Incentive Plan of TCI Solutions, Inc. and Amendments thereto
-------------------------------------------------------------------------------------------
10.10*      2001 Non-Employee Directors' Stock Option Plan of TCI Solutions, Inc.
-------------------------------------------------------------------------------------------
10.11*      1993 Equity Incentive Plan of TCI Management, Inc. (now TCI Solutions, Inc.)
-------------------------------------------------------------------------------------------
10.12*      1993 Non-Employee Directors' Stock Option Plan of TCI Management, Inc. (now
            TCI Solutions, Inc.)
-------------------------------------------------------------------------------------------

</TABLE>

                                       27
<PAGE>

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------
Exhibit No.                                  Description
-------------------------------------------------------------------------------------------
<S>                 <C>
31.1        Section 302 Certification of Chief Executive Officer Pursuant to Rule
            13a-14(a)/15d-a4(a) under the Securities Exchange Act of 1934 as adopted
            pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
-------------------------------------------------------------------------------------------
31.2        Section 302 Certification of Chief Financial Officer Pursuant to Rule
            13a-14(a)/15d-a4(a) under the Securities Exchange Act of 1934 as adopted
            pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
-------------------------------------------------------------------------------------------
32.1****    Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350, as
            adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
-------------------------------------------------------------------------------------------
32.2****    Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350, as
            adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
-------------------------------------------------------------------------------------------

</TABLE>

* Incorporated by reference to the registrant's Form 10-SB filed with the
Commission on April 30, 2002.


** Incorporated by reference to the registrant's Quarterly Report on Form 10-QSB
filed on November 14, 2003.


*** Incorporated by reference to the registrant's Annual Report on Form 10-KSB
filed on March 30, 2004.



**** Pursuant to Commission Release No. 33-8238, this certification will be
treated as 'accompanying' this Quarterly Report on Form 10-QSB and not 'filed'
as part of such report for purposes of Section 18 of the Exchange Act, or
otherwise subject to the liability of Section 18 of the Exchange Act and this
certification will not be deemed to be incorporated by reference into any filing
under the Securities Act of 1933, as amended, or the Exchange Act, except to the
extent that the registrant specifically incorporates by reference.



Reports on Form 8-K


None


                                       28
<PAGE>


                                   SIGNATURES

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




                                               TCI SOLUTIONS, INC.


Dated: May 14, 2004                       By:  /s/ Lance C. Jacobs
                                               ---------------------------------
                                               Lance C. Jacobs
                                               Chief Executive Officer

Dated: May 14, 2004                       By:  /s/ Stephen P. DeSantis
                                               ---------------------------------
                                               Stephen P. DeSantis
                                               Chief Financial Officer


                                       29