================================================================================

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

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

                                   FORM 10-QSB

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

                  For the Quarterly Period Ended June 30, 2003

                         Commission File Number 1-13524

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

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

                        3055 112th Avenue N.E., Suite 106
                               Bellevue, WA 98004
                    (Address of principal executive offices)

                                 (425) 822-3140
                           (Issuer's telephone number)

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

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:

                                                              Outstanding at
           Class                                              July 30, 2003
Common Stock, $.01 Par Value                                    4,178,498

================================================================================


                                       1
<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                                 TIMELINE, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                      As of              As of
                                                                     June 30,          March 31,
                                 ASSETS                               2003               2003
                                                                  ------------       ------------
<S>                                                               <C>                <C>
CURRENT ASSETS:
  Cash and cash equivalents                                       $    112,904       $    167,908
  Marketable securities                                                 23,710             19,486
  Accounts receivable, net of allowance for doubtful
    accounts of $11,678 and $10,164                                    658,314            590,859
  Prepaid expenses and other                                           145,527            147,239
                                                                  ------------       ------------
                  Total current assets                                 940,455            925,492

PROPERTY AND EQUIPMENT, net of accumulated
  depreciation of $836,292 and $818,906                                 86,763            100,099

CAPITALIZED SOFTWARE, net of accumulated
  amortization of $887,001 and $817,341                                115,864            185,524

CAPITALIZED PATENTS, net of accumulated
  amortization of $45,661 and $41,229                                  232,102            223,725

INTANGIBLE ASSETS, net of accumulated
  amortization of $969,981 and $886,442                                     --             83,539

GOODWILL, net of accumulated
  amortization of $123,938                                              70,183             70,183
                                                                  ------------       ------------
                  Total assets                                    $  1,445,367       $  1,588,562
                                                                  ============       ============

         LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable                                                $     68,135       $     32,844
  Accrued expenses                                                     466,675            477,056
  Deferred revenues                                                    631,320            608,301
                                                                  ------------       ------------
                  Total current liabilities                          1,166,130          1,118,201
                                                                  ------------       ------------

SHAREHOLDERS' EQUITY:
  Common stock, $.01 par value, 20,000,000 shares
    authorized, 4,178,498 and 4,165,998 shares issued
    and outstanding                                                     41,785             41,660
  Additional paid-in capital                                        10,564,347         10,465,478
  Accumulated other comprehensive loss                                 (71,601)           (47,459)
  Accumulated deficit                                              (10,255,294)        (9,989,318)
                                                                  ------------       ------------
                  Total shareholders' equity                           279,237            470,361
                                                                  ------------       ------------
                  Total liabilities and shareholders' equity      $  1,445,367       $  1,588,562
                                                                  ============       ============
</TABLE>

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


                                       2
<PAGE>

                                 TIMELINE, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                For the Three Months Ended June 30, 2003 and 2002
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                      2003              2002
                                                                  -----------       -----------
<S>                                                               <C>               <C>
REVENUES:
  Software license                                                $   440,523       $   271,321
  Patent license                                                           --            25,000
  Maintenance                                                         291,717           270,699
  Consulting and other                                                210,079           333,725
                                                                  -----------       -----------
      Total revenues                                                  942,319           900,745

COST OF REVENUES:
  Software license                                                     69,660            50,848
  Patent license                                                        4,432             3,105
  Maintenance, consulting and other                                   106,869           115,289
                                                                  -----------       -----------
      Total cost of revenues                                          180,961           169,242
                                                                  -----------       -----------
      Gross profit                                                    761,358           731,503

OPERATING EXPENSE:
  Sales and marketing                                                 275,281           183,410
  Research and development                                            199,926           207,140
  General and administrative                                          458,061           428,338
  Patents                                                              19,691            72,157
  Depreciation                                                         17,107            12,511
  Amortization                                                         83,539           127,037
                                                                  -----------       -----------
      Total operating expenses                                      1,053,605         1,030,593
                                                                  -----------       -----------
      Loss from operations                                           (292,247)         (299,090)
                                                                  -----------       -----------

OTHER  INCOME:
  Realized loss on marketable securities available                         --            (6,040)
    for sale
  Interest income and other                                            26,271            22,980
                                                                  -----------       -----------
      Total other income                                               26,271            16,940
                                                                  -----------       -----------

      Loss before income taxes                                       (265,976)         (282,150)
Provision for income tax                                                   --           (18,416)
                                                                  -----------       -----------

      Net loss                                                    $  (265,976)      $  (300,566)
                                                                  ===========       ===========

Basic and diluted net loss per share                              $     (0.06)      $     (0.07)
                                                                  ===========       ===========
Shares used in calculation of basic and diluted net
  loss per share                                                    4,174,652         4,125,029
                                                                  ===========       ===========
</TABLE>

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


                                       3
<PAGE>

                                 TIMELINE, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                For the Three Months Ended June 30, 2003 and 2002
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                2003            2002
                                                             ---------       ---------
<S>                                                          <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net cash used in operating activities                      $(127,195)      $ (84,784)
                                                             ---------       ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment                            (3,488)             --
  Capitalized patent acquisition costs                         (12,809)        (10,149)
  Proceeds from sale of short-term investments                      --          46,861
                                                             ---------       ---------
    Net cash (used in) provided by investing activities        (16,297)         36,712
                                                             ---------       ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Warrants issued to FNIS                                       83,994              --
                                                             ---------       ---------
    Net cash provided by financing activities                   83,994              --
                                                             ---------       ---------

EFFECT OF FOREIGN EXCHANGE RATE FLUCTUATIONS                     4,494           2,601

NET CHANGE IN CASH AND CASH EQUIVALENTS                        (55,004)        (45,471)

CASH AND CASH EQUIVALENTS, beginning of period                 167,908          82,956
                                                             ---------       ---------

CASH AND CASH EQUIVALENTS, end of period                     $ 112,904       $  37,485
                                                             =========       =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
  Cash paid for interest                                     $     991       $   3,674
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                       4
<PAGE>

                                 TIMELINE, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                  June 30, 2003

1. THE COMPANY

Organization

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

Operations

The Company has historically suffered recurring operating losses and negative
cash flows from operations. As of June 30, 2003, the Company had negative net
working capital of approximately $225,000 and had an accumulated deficit of
approximately $10,255,000 with total stockholders' equity of approximately
$279,000. These condensed consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of America, assuming that the Company will continue as a going concern. Our
auditors added an explanatory paragraph to their opinion on our 2003 financial
statements stating that there was substantial doubt about our ability to
continue as a going concern. Management believes that current cash and cash
equivalent balances, along with the ability to sell marketable securities, and
any net cash provided by operations, will provide adequate resources to fund
operations through March 31, 2004. Management is contemplating a number of
alternatives to enable the Company to continue operating including, but not
limited to:

      o     engaging a financial advisor to explore strategic alternatives,
            which may include a merger, asset sale, joint venture or another
            comparable transaction;

      o     raising additional capital to fund continuing operations by private
            placements of equity or debt securities or through the establishment
            of other funding facilities;

      o     forming a joint venture with a strategic partner or partners to
            provide additional capital resources to fund operations; and

      o     loans from management or employees, salary deferrals or other cost
            cutting mechanisms.

None of these potential alternatives may be available to the Company, or may
only be available on unfavorable terms. There can be no assurance that any of
these alternatives will be successful. If the Company is unable to obtain
sufficient cash when needed to fund its operations, it may be forced to seek
protection from creditors under the bankruptcy laws and/or cease operations.

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


                                       5
<PAGE>

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Interim Financial Statements

The accompanying condensed consolidated financial statements of the Company are
unaudited. In the opinion of the Company's management, the financial statements
include all adjustments, consisting only of normal recurring adjustments,
necessary to state fairly the financial information set forth in this Report in
conformity with accounting principles generally accepted in the United States of
America. Results of operations for the three-month period ended June 30, 2003
are not necessarily indicative of future financial results.

Certain notes and other information have been condensed or omitted from the
interim financial statements presented in this Quarterly Report on Form 10-QSB.
Accordingly, these financial statements should be read in conjunction with the
Company's annual financial statements for the year ended March 31, 2003, as
previously reported in the Company's Form 10-KSB.

Basis of Presentation

All subsidiaries of the Company are wholly-owned. The accompanying consolidated
financial statements include the accounts and operations of these subsidiaries.
All intercompany balances and transactions have been eliminated in
consolidation. Reclassifications have been made to the fiscal 2003 amounts to
conform to the fiscal 2004 presentation.

Marketable Securities

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

The Company has accounted for these securities as available for sale securities
under Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities" (SFAS 115). Accordingly,
these securities are stated at fair value, based on quoted market prices, with
unrealized gains and losses excluded from results of operations and reported as
a component of accumulated other comprehensive loss on the Company's balance
sheet. Realized gains and losses on sales of these securities are determined on
the specific identification method and included in results of operations. At
June 30, 2003 and March 31, 2003, the Company owned 150,800 shares of Sagent
common stock, which had a fair market value of $23,710 and $19,486,
respectively.

The Company periodically reviews the carrying value of its available for sale
securities to determine if declines in the fair value of securities are other
than temporary. Factors considered by the Company in its review include the time
period and extent for which the quoted market prices were less than the
accounting basis, the issuing company's financial condition and overall industry
health. In performing its review in the second quarter of fiscal 2003, the
Company determined that declines in the fair value of the securities from such
new accounting basis in the second quarter of fiscal 2003 were other than
temporary. Accordingly, the Company recorded a loss on the impairment of the


                                       6
<PAGE>

available for sale securities of $123,204 in the second fiscal quarter and
established a new accounting basis in the securities.

The net three month change in the unrealized loss on available for sale
securities of a $4,224 gain in the quarter ended June 30, 2003 is composed
solely of unrealized holding gains arising during this period. As of June 30,
2003, an unrealized loss of $3,316 on these securities was included as a
component of accumulated comprehensive loss in the Company's balance sheet.

Revenue Recognition

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

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

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

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

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

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

Under the residual method, at the outset of the arrangement with a customer, the
Company defers revenue for the fair value of its undelivered elements such as
consulting services and product support and upgrades, and recognizes the revenue
for the remainder of the arrangement fee attributable to the elements initially
delivered, such as software licenses, when the criteria in SOP 97-2 have been
met. Company-specific objective evidence is established for support and upgrades
of standard products for which no installation or customization is required
based upon the amounts charged when support and upgrades are sold separately.
Company-specific objective evidence is established for


                                       7
<PAGE>

consulting and installation services based on the hourly rates charged for its
employees when they are performing these services provided the Company has the
ability to accurately estimate the hours required to complete a project based
upon its experience with similar projects. For multiple element arrangements
involving installation or customization, Company-specific objective evidence is
established for support and maintenance arrangements if its customers have an
optional annual renewal rate specified in the arrangement and the rate is
substantive.

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

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

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

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

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

Net Loss per Common Share

Basic and diluted net loss per share is the net loss divided by the weighted
average number of shares outstanding during the period. The effect of including
outstanding options and warrants is anti-dilutive for all periods presented.

Shares issuable pursuant to stock options and warrants that have not been
included in the calculation of net loss per share because they are antidilutive
totaled 679,175 and 672,129 for the three-month periods ended June 30, 2003 and
2002, respectively.


                                       8
<PAGE>

Comprehensive Loss

Comprehensive loss for the three months ended June 30, 2003 and 2002 was as
follows:

                                                June 30, 2003     June 30, 2002
                                                -------------     -------------

Foreign currency translation                      $ (28,366)        $ (40,108)
Change in unrealized gain (loss) on
  available for sale securities                       4,224           (49,764)
Net loss                                           (265,976)         (300,566)
                                                  ---------         ---------
Total comprehensive loss                          $(290,118)        $(390,438)
                                                  =========         =========

Accumulated other comprehensive loss consisted of the following at June 30, 2003
and March 31, 2003:

                                                 June 30, 2003    March 31, 2003
                                                 -------------    --------------
Unrealized loss on available for sale
  securities                                        $ (3,316)        $ (7,540)
Foreign currency translation adjustment              (68,285)         (39,919)
                                                    --------         --------
                                                    $(71,601)        $(47,459)
                                                    ========         ========

Stock-Based Compensation

The Company applies the intrinsic value based method of accounting prescribed by
APB Opinion No. 25, "Accounting for Stock Issued to Employees" (APB No. 25), and
related interpretations including FASB Interpretation No. 44, "Accounting for
Certain Transactions involving Stock Compensation, and interpretation of APB
Opinion No. 25" (FIN No. 44), to account for its fixed plan stock options. Under
this method, compensation expense is recorded on the date of grant only if the
current market price of the underlying stock exceeded the exercise price.
Compensation costs for fixed awards with pro rata vesting are recognized using
the straight-line method. SFAS No. 123, "Accounting for Stock Based
Compensation" (SFAS No. 123), established accounting and disclosure requirements
using a fair value based method of accounting for stock based employee
compensation plans. As allowed by SFAS No. 123, the Company has elected to
continue to apply the intrinsic-value-based method of accounting described
above, and has adopted only the disclosure requirements of SFAS No. 123. The
following table illustrates the effect on net loss if the fair-value-based
method ad been applied to all outstanding and unvested awards in each
three-month period ended June 30, 2003 and 2002, respectively:


                                       9
<PAGE>

<TABLE>
<CAPTION>
                                                                   Three months ended
                                                            -------------------------------
                                                            June 30, 2003     June 30, 2002
                                                            -------------     -------------
<S>                                                          <C>               <C>
Net loss, as reported                                        $  (265,976)      $  (300,566)

Add stock-based employee compensation expense
  included in reported net loss                                   15,000             7,941

 Deduct total stock-based employee compensation
  expense determined under fair-value-based method
  for all awards                                                 (27,638)          (23,432)
                                                             -----------       -----------

    Pro forma net loss                                       $  (278,614)      $  (316,057)
                                                             ===========       ===========

Shares used in the calculation of basic and diluted net
  Loss per share:                                              4,174,652         4,125,029
                                                             ===========       ===========

Basic and diluted net loss per share - as reported:          $     (0.06)      $     (0.07)
                                                             ===========       ===========

Basic and diluted net loss per share - pro forma:            $     (0.07)      $     (0.08)
                                                             ===========       ===========
</TABLE>

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

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

Intangible Assets and Goodwill

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

In June 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 142, "Goodwill and Other Intangible
Assets" (SFAS No. 142). SFAS No. 142 requires that goodwill and intangible
assets with indefinite useful lives no longer be amortized, but instead tested
for impairment at least annually in accordance with the provisions of SFAS 142.
SFAS No. 142 also requires that intangible assets with definite useful lives be
amortized over their respective estimated useful lives to their estimated
residual values, and reviewed for impairment in


                                       10
<PAGE>

accordance with Statement of Financial Accounting Standards No. 144, "Accounting
for the Impairment or Disposal of Long-lived Assets " (SFAS No. 144).

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

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

Upon adoption of SFAS No. 142 on April 1, 2002, the Company reclassified a
workforce-in-place intangible asset with an unamortized balance of $54,167 to
goodwill. As a result of the reclassification of the workforce-in-place
intangible asset to goodwill and the corresponding reduction in the related
deferred tax liability, the Company's valuation allowance for deferred tax
assets was increased resulting in income tax expense of $18,416. The Company has
also reviewed the useful lives of its identifiable intangible assets and
determined that the original estimated lives remain appropriate.

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

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


                                       11
<PAGE>

Carrying amounts as of June 30, 2003 and March 31, 2003 are as follows:

                                                June 30, 2003     March 31, 2003
                                                -------------     --------------
Gross carrying amount:
  Goodwill                                       $  194,121         $  194,121
  Acquired technology                               649,981            649,981
  Customer/distributor contracts                    320,000            320,000
                                                 ----------         ----------
    Total                                        $1,164,102         $1,164,102
                                                 ==========         ==========

Accumulated amortization:
  Goodwill                                       $  123,938         $  123,938
  Acquired technology                               649,981            620,216
  Customer/distributor contracts                    320,000            266,226
                                                 ----------         ----------
    Total                                        $1,093,919         $1,010,380
                                                 ==========         ==========
Net book value                                   $   70,183         $  153,722
                                                 ==========         ==========

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

Amortization of intangible assets was $83,539 and $127,037 in the quarters ended
June 30, 2003 and June 30, 2002, respectively. Identifiable intangible assets
were fully amortized as of June 30, 2003.

Impairment of Long-lived Assets

In accordance with Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS No. 144),
the Company evaluates long-lived assets, including intangible assets other than
goodwill, for impairment whenever events or changes in circumstances indicate
that the carrying value of an asset may not be recoverable based on estimated
undiscounted cash flows attributable to that asset. The amount of any impairment
is measured as the difference between the carrying value and the fair value of
the impaired asset. The Company does not currently believe that any of its
long-lived assets are impaired.

Recent Accounting Pronouncements

In November, 2002, the Emerging Issues Task Force (EITF) reached a consensus on
Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables" (EITF 00-21).
EITF 00-21 addresses certain aspects of the accounting by a vendor for
arrangements under which the vendor will perform multiple revenue generating
activities. EITF 00-21 became effective for periods beginning after June 15,
2003. The Company does not expect the adoption of EITF 00-21 to have a material
impact on its financial position or results of operations.

In May 2003, the Financial Accounting Standards Board (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 measure certain
financial instruments with characteristics of both liabilities and equity. SFAS
150 is effective for financial instruments entered into or modified after May
31, 2003, and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003. SFAS 150 is to be implemented by reporting
the cumulative effect of a change in an accounting principle for financial


                                       12
<PAGE>

instruments created before the issuance date of the statement and still existing
at the beginning of the interim period of adoption. The Company does not expect
the adoption of SFAS 150 to have a material impact on its financial position or
results of operations.

3. MAJOR CUSTOMERS

During the quarter ended June 30, 2003, one customer comprised approximately 12%
of the Company's total revenue and another customer comprised 10% of the
Company's total revenue. During the quarter ended June 30, 2002, no customer
contributed 10% or more of the Company's total revenue. At June 30, 2003, no
customer comprised more than 10% of the Company's accounts receivable balance.
At March 31, 2003, approximately 29% of the Company's accounts receivable
balance was due from two of the Company's customers.

4. SEGMENT INFORMATION

The Company follows the requirements of Statement of Financial Accounting
Standards No. 131, "Disclosures About Segments of an Enterprise and Related
Information" (SFAS 131). As defined in SFAS 131, the Company operates in two
reportable segments that are based on geographic business units in the United
States (Timeline) and Europe (Analyst Financials Ltd.). Both segments generate
revenues from the license and support of the Company's software products.
Revenues from other licenses and patent licenses are included in the Timeline
segment. The accounting policies of the segments are the same as those described
in the summary of critical accounting policies included herein and in the
Company's annual financial statements for the year ended March 31, 2003. During
the three months ended June 30, 2003 and 2002, the Timeline segment included
intersegment revenues and the Analyst Financials segment included intersegment
expenses that totaled $120,643 and $141,805, respectively. These intersegment
transactions are recorded at market rates as if the transactions occurred with
third parties. The following tables summarize operations by segment during the
three months ended June 30, 2003 and June 30, 2002:

<TABLE>
<CAPTION>
                                                      Three Months Ended 6/30/03
                                   ----------------------------------------------------------------
                                                         Analyst
                                     Timeline           Financials      Eliminations       Total
                                   -----------          ----------      ------------    -----------
<S>                                <C>                   <C>             <C>            <C>
Revenues                           $   632,850           430,112         (120,643)      $   942,319
Operating loss                     $  (305,371)           13,124               --       $  (292,247)
Depreciation and amortization      $    15,677            84,969               --       $   100,646
Long lived assets                  $   429,376            75,536               --       $   504,912
Total assets                       $   863,603           581,764               --       $ 1,445,367
<CAPTION>
                                                      Three Months Ended 6/30/03
                                   ----------------------------------------------------------------
                                                         Analyst
                                     Timeline           Financials      Eliminations       Total
                                   -----------          ----------      ------------    -----------
<S>                                <C>                   <C>             <C>            <C>
Revenues                           $   690,921           351,629         (141,805)      $   900,745
Operating (loss) income            $  (303,825)            4,735               --       $  (299,090)
Depreciation and amortization      $    58,203            81,345               --       $   139,548
Long lived assets                  $   733,808           396,725               --       $ 1,130,533
Total assets                       $ 1,244,981           682,083               --       $ 1,927,064
</TABLE>

5. GUARANTEES

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness to Others, an interpretation of FASB Statements No. 5, 57 and 107
and a rescission of FASB Interpretation No. 34"


                                       13
<PAGE>

(FIN No. 45). FIN 45 provides expanded accounting guidance surrounding liability
recognition and disclosure requirements related to guarantees, as defined by
this Interpretation. In the ordinary course of business, the Company is not
subject to potential obligations under guarantees that fall within the scope of
FIN 45 except for standard indemnification and warranty provisions that are
contained within many of its customer license and service agreements, and give
rise only to the disclosure requirements prescribed by FIN 45.

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

6. LITIGATION

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

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

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


                                       14
<PAGE>

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

This Quarterly Report on Form 10-QSB includes a number of forward-looking
statements that reflect our current views with respect to business strategies,
products, future events and financial performance. These forward-looking
statements are subject to certain risks and uncertainties, including those
discussed below, that could cause actual results to differ materially from
historical results or those anticipated, including the risks and uncertainties
described below, as well as in our annual report on Form 10-KSB for the year
ended March 31, 2003, under the respective caption "Other Factors that May
Affect Operating Results." When used in this Report, the words "anticipate,"
"believe," "predict," "intend," "may," "could," "should," "will," "expect,"
"future," "continue," "estimate," "judgment" and variations of such words and
similar expressions as they relate to the Company are intended to identify such
forward-looking statements, but are not the exclusive means of identifying such
statements. Our actual results, performance or achievements could differ
materially from the results expressed in, or implied by, these forward-looking
statements. We do not undertake any obligation to revise these forward-looking
statements to reflect any future events or circumstances. In addition, the
disclosures under the caption "Other Factors that May Affect Operating Results"
consist principally of a brief discussion of risks which may affect future
results and are thus, in their entirety, forward-looking in nature. To
facilitate readers in identifying forward-looking statements in this Report, we
have attempted to mark sentences containing such statements with a single
asterisk and paragraphs containing only forward-looking statements with double
asterisks. However, no assurance can be made all such statements have been
identified and marked. Therefore, readers are urged to carefully review and
consider the various disclosures made in this report and in our other reports
previously filed with the Securities and Exchange Commission (the "SEC"),
including our periodic reports on Forms 10-KSB and 10-QSB, and those described
from time to time in our press releases and other communications, which attempt
to advise interested parties of the risks and factors that may affect the
Company's business.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We have identified below some of our accounting policies that we consider
critical to our business operations and the understanding of our results of
operations. This is not a complete list of all of our accounting policies, and
there may be other accounting policies that are significant or critical to the
Company. The impact and any associated risks related to these policies on our
business operations are discussed throughout Management's Discussion and
Analysis or Plan of Operation where such policies affect our reported and
expected financial results. For a detailed discussion on the application of
these and our other accounting policies, see the Notes to Condensed Consolidated
Financial Statements of this Form 10-QSB and Note 2 to the Consolidated
Financial Statements in our Annual Report on Form 10-KSB for the year ended
March 31, 2003.

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. The discussion below is intended as a brief discussion of some of the
judgments and uncertainties that can impact the application of these policies
and the specific dollar amounts reported on our financial statements. There can
be no assurance that actual results will not differ from those estimates.*
Material differences could result in the amount and timing of our results
reported on our financial statements for any period if management made different
judgments or utilized different estimates.* Many of our estimates or judgments
are based on anticipated future events or performance, and as such are
forward-looking in nature, and are subject to many risks and


                                       15
<PAGE>

uncertainties, including those discussed below and elsewhere in this Report,
including under the caption "Other Factors that May Affect Operating Results."
We do not undertake any obligation to update or revise this discussion to
reflect any future events or circumstances.

Revenue Recognition

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

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

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

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

Allowance for Doubtful Accounts

Our management must estimate the collectibility of our accounts receivable.
Management analyzes accounts receivable and analyzes historical bad debts,
customer concentrations, customer credit-worthiness, current economic trends and
changes in our customer payment terms when evaluating the adequacy of the
allowance for doubtful accounts. In general, we have historically and continue
today to accrue a bad debt reserve equal to 1% of any balance less than 60 days
since invoice and


                                       16
<PAGE>

an additional 5% on any balance over 60 days from invoice. Additionally, if we
receive notice of a disputed receivable balance, we accrue such additional
amount as management determines is reflective of the risk of non-collection. To
date, we have not incurred material write offs of accounts receivable. In
considering the amount of bad debt allowance, we rely heavily on our history of
no material write-offs and that our revenue is not dependent on one or several
customers, but is spread among a number of customers. However, other factors
which could cause management to change its estimates would be a downturn in the
economy that management determines has the potential to affect collectibility of
receivables or if we see a greater concentration of our receivables from fewer
customers. In such events, we may be required to record additional charges to
cover this exposure.* Material differences may result in the amount and timing
of our bad debt expenses for any period if management made different judgments
or utilized different estimates.*

Capitalized Patents

We capitalize the direct out-of-pocket costs to obtain patents on our
technology. Such costs are amortized over the life of the patent, which have
typical lives of 20 years from the date of the original patent application.
Should we determine that we will not be able to generate future revenues as a
result of these patents, we would need to write off the patent in the period we
determine that the patent is impaired.* We currently do not consider our patents
impaired.

Capitalized Internally Developed Software

We capitalize internally developed software costs subsequent to establishing
technological feasibility of a project. Such costs are amortized over the
project's useful life using the greater of the ratio of current gross revenues
to total current and projected future gross revenues for the product or the
straight line method. Useful lives are based on our estimates of the period that
the assets will generate revenue, which we have determined to be 3 years. This
estimated life is based in large part on our estimates of future cash flows and
revenues from those products and intangibles. Material differences may result in
the amount and timing of our amortization expense for any period if we made
different judgments or utilized different estimates. For example, if we
determined the estimate of a useful life of three years is no longer reasonable
because either the products and other intangibles were no longer commercially
viable or the products and other intangibles were not of significant use in
developing and licensing products and generating revenue, we would have to
reduce the useful life estimate, thereby increasing quarterly amortization
expense.

Impairment of Long-Lived Assets

Long-lived assets, including property and equipment, capitalized software,
capitalized patents, and acquired identifiable amortizable intangibles are
amortized over their useful lives. We assess the impairment of these assets
whenever events or changes in circumstances indicate that the carrying value may
not be recoverable based on estimated undiscounted cash flows attributable to
that asset. The amount of any impairment is measured as the difference between
the carrying value and the fair value of the impaired asset. Our judgments
regarding the existence of impairment indicators are based on legal factors,
market conditions and operational performance of our acquired businesses. Future
events could cause us to conclude that impairment indicators exist and that
certain assets are impaired.


                                       17
<PAGE>

Impairment of Goodwill

The Company evaluates its goodwill, or the excess of acquisition cost over the
fair value of net indentifiable assets acquired in a business combination, in
accordance with Statement of Financial Accounting Standards No. 142, "Goodwill
and Other Intangible Assets" (SFAS No. 142). SFAS No. 142 requires that goodwill
no longer be amortized, but instead be tested for impairment at least annually
at the reporting unit level in accordance with the provisions of SFAS No. 142.
The Company determined that it has two reporting units consisting of operations
in the United States (Timeline) and Europe (Analyst Financials, Ltd.). All
goodwill is attributable to the Analyst Financials, Ltd. reporting unit. Future
events could cause us to conclude that the impairment indicators exist and that
goodwill is impaired.*

RESULTS OF OPERATIONS

Our consolidated financial statements for the first quarter of fiscal 2004 have
been prepared on a going concern basis, which contemplates the realization of
assets and the settlement of liabilities in the normal course of business. We
incurred a net loss of $265,976 for the first quarter of fiscal 2004 and have
incurred recurring net losses from operations over the past several fiscal
years. As of June 30, 2003, we had negative net working capital of $226,000.
These factors raise substantial doubt about our ability to continue as a going
concern.

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

Revenues

                                                       Three Months
                                                          Ended
                                                         June 30,
                                                      --------------
                                                      2003      2002      Change
--------------------------------------------------------------------------------
(Dollars in Thousands)

Software license                                      $440      $271        62%
Patent licenses                                         --        25       N/M
Maintenance                                            292       271         8%
Consulting and other                                   210       334       (37%)
                                                     ----------------
Total Revenues                                        $942      $901         5%
--------------------------------------------------------------------------------

For the quarter ended June 30, 2003, our total operating revenues were $942,000
compared to $901,000 for the quarter ended June 30, 2002. This represents an
increase of approximately 5%. Excluding $25,000 of Patent license revenues in
the first quarter of fiscal 2003, total revenues increased by 8% for the quarter
ended June 30, 2003 when compared with the quarter ended June 30, 2002. The
increase quarter to quarter was mainly due to a 62% increase in software license
revenue. However, maintenance revenue also increased by 8%. This was sufficient
to offset lower consulting revenue and the fact there was no patent license
revenue in the quarter ended June 30, 2003.

The increase in software license revenue was driven by increases in European
license fees received through Analyst Financials of 67% while U.S. based
operations posted a gain of 58%. We believe this increase is due to several
factors. In Europe, we appear to be reaping the benefits of having signed and
trained a number of new resellers over the prior year. In U.S.-based operations,
we had


                                       18
<PAGE>

one large license fee in the amount of $92,000 from FNIS arranged through a
single Value Added Reseller which tended to mask continuing weakness in new
licenses generated by our OEM resellers. An additional $24,000 received from
FNIS was recorded to deferred revenue and is credited to new license revenue at
the rate of $2,000 per month. During the quarter ended June 30, 2003 a total of
$6,000 was so credited.

Our sales tend to reflect the strength and weakness of our distribution
partners' new license activity as we are generally licensed as part of their
package of software. Currently, we have relationships and strategic alliances
with more than 30 national and international distribution partners. We believe
there is continued weakness in the enterprise resource planning (ERP) and
accounting software markets, which directly affects the sale and distribution of
our products as an additional module on their products or as an "after-market"
add-on. We have continued to release new products in conjunction with national
and international distribution partners. Additionally, we intend to expand our
geographic marketplace through international partners who can assist in
translating our products into additional languages and generate sales in new
markets. While we were successful in signing new reseller relationships during
fiscal 2003, in the current economic uncertainty, particularly in the United
States, it is impossible to predict if our distribution channels will increase
software licenses during fiscal 2004 over fiscal 2003.*

Patent license revenue is very sporadic. The timing of fees usually corresponds
to the settlement of litigation and, therefore is unpredictable. There was no
patent license revenue for the quarter ended June 30, 2003, and $25,000 in the
quarter ended June 30, 2002. While we intend to continue to pursue additional
patent license agreements, we cannot predict the outcome of ongoing and future
negotiations and there are no assurances that we will be successful in entering
into additional patent licenses, or the timing or amount of any such licenses.*

Maintenance revenue increased 8% to $292,000 for the first quarter of fiscal
2004 as compared to $271,000 for the first quarter of fiscal 2003. The increase
in maintenance revenue is primarily due to fees from new customers who have
installed and are using our software. Our software maintenance service is
provided either directly to end users of our products (first tier maintenance)
or to third party reseller (second tier maintenance). In first tier maintenance,
we provide telephonic response and diagnosis to end users where in second tier
maintenance this function is provided to end-users by the reseller. We provide
software patches, updates and technical diagnostics under either approach. Both
first and second-tier maintenance is typically provided under annually renewable
agreements. We receive a smaller portion of the annual support fees for second
tier support than we do for first tier support. Most of our customers sign
maintenance agreements and renew them on an annual basis until such time as they
no longer use our software products. Future fiscal 2004 quarters may show mixed
results depending upon the commencement of new maintenance agreements and the
expiration of existing maintenance agreements.*

The decrease in consulting revenue in comparable quarters ending June 30, 2003
as compared to 2002 is almost entirely due to a decrease in U.S. consulting
(decrease of approximately $117,000 out of a total decline of approximately
$137,000). In the quarter ended June 30, 2002 we experienced an unusually high
demand for consulting due to scheduled upgrades to a new version of Analyst. The
consulting revenue in the first quarter of fiscal 2004 is more in line with the
amounts generated in quarters two, three and four of fiscal 2003. The level of
consulting revenue varies according to the mix of systems directly licensed by
Timeline either as a direct sale or through a reseller that does not provide
installation and consulting on our products, compared to software provided
through those resellers that provide direct installation services to end-users,
thereby requiring less of our consulting. Due to our emphasis on working through
resellers who provide installation and


                                       19
<PAGE>

consulting, we do not foresee a significant increase in consulting projects in
fiscal 2004 and, therefore, expect consulting revenue to remain fairly stable
for the balance of fiscal 2004.*

Cost of Revenues

                                                     Three Months
                                                         Ended
                                                       June 30,
                                                    ---------------
                                                    2003       2002       Change
--------------------------------------------------------------------------------
(Dollars in Thousands)

Software license                                    $ 70       $ 51         37%
Patent licenses                                        4          3         33%
Maintenance, consulting and other                    107        115         (7%)
                                                   -----------------
Total Cost of Revenues                              $181       $169          7%
Percentage of revenues                                19%        19%
--------------------------------------------------------------------------------

Cost of revenues increased 7% for the comparable quarters. However, cost as a
percentage of revenue was stable at 19% of revenues in both fiscal 2004 and
fiscal 2003. However, where the costs were incurred shifted dramatically between
software licensing and consulting. The cost associated with software licensing
consists entirely of the amortization of capitalized and acquired software
development capitalized costs. This increase reflects the reclassifications
noted below. The decrease in costs associated with consulting is reflective of
the fact that incentive compensation in consulting causes the costs to trend
somewhat in relationship to revenue.

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

Gross Profit

                                                    Three Months
                                                       Ended
                                                      June 30,
                                                   ---------------
                                                   2003       2002       Change
--------------------------------------------------------------------------------
(Dollars in Thousands)

Gross profit                                       $761       $732          4%
Percentage of revenues                               81%        81%
--------------------------------------------------------------------------------

Gross profit for the first quarter of fiscal 2004 increased by 4% from the
comparable period in fiscal 2003, generally in line with the increase in gross
revenue. Margins are affected by the volume of business as recorded in total
revenue, and the mix among various revenue bearing activities, our ability to
control costs associated with the generation of those activities, and the level
of amortization of acquired technologies as reflected in cost of revenues.


                                       20
<PAGE>

Sales and Marketing Expense

                                                    Three Months
                                                        Ended
                                                       June 30,
                                                   ---------------
                                                   2003       2002       Change
--------------------------------------------------------------------------------
(Dollars in Thousands)

Sales and marketing                                $275       $183         50%
Percentage of revenues                               29%        20%
--------------------------------------------------------------------------------

Sales and marketing expenses in actual dollar amounts increased by 50% between
the three months ended June 30, 2003 and June 30, 2002. The largest increase was
due to a payment to a reseller of approximately $65,000 for its efforts in
securing the FNIS license.

Our plans to continue to expand our Value Added Reseller (VAR) accounts, which
require management of a greater number of relationships per dollar of revenue,
will necessitate hiring from one to three additional sales personnel during
fiscal 2004.* If accomplished, these additional hires will cause an increase in
sales and marketing expense. Sales and marketing expenses quarter-to-quarter for
the remainder of fiscal 2004 will also be directly impacted by commissions
payable with respect to new licenses. Additionally, sales and marketing expenses
as a percentage of revenue may vary widely in future quarters based upon the
level and type of gross revenue in each quarter.*

Research and Development Expense

                                                     Three Months
                                                        Ended
                                                       June 30,
                                                    --------------
                                                    2003      2002       Change
--------------------------------------------------------------------------------
(Dollars in Thousands)

Research and development                             200       207        (3%)
Percentage of revenues                                21%       23%
--------------------------------------------------------------------------------

Research and development expenses decreased during the quarter ended June 30,
2003 in actual dollar amounts by 3% compared to the quarter ended June 30, 2002.

Research and development expenses during both periods were primarily
attributable to the enhancement of the functionality of the current product
lines and to integration of our products with various accounting packages. We
anticipate such efforts will continue throughout the remainder of the 2004
fiscal year, and research and development head count quarter-to-quarter for the
remainder of fiscal 2004 to remain relatively stable.* However, we have
instituted a compensation plan that could cause the compensation of the current
staff to increase.* All U.S.-based employees may participate in a bonus pool in
an amount subject to specified adjustments, that represents 50% of the amount by
which U.S. revenue exceeds U.S. internal budgets for each quarter of fiscal
2004. No bonus is to be paid for the results of the first fiscal quarter of
2004.


                                       21
<PAGE>

General and Administrative Expense

                                                    Three Months
                                                       Ended
                                                      June 30,
                                                   --------------
                                                   2003       2002       Change
--------------------------------------------------------------------------------
(Dollars in Thousands)

General and administrative                         $458       $428          7%
Percentage of revenues                               49%        48%
--------------------------------------------------------------------------------

General and administrative expenses increased by 7% between the comparable
three-month periods ended June 30, 2003 and 2002. Increases in rents, travel,
insurance and professional fees all contributed in part to the increase.

We expect general and administrative expenses to remain relatively steady
throughout the remainder of fiscal 2004 unless the economy and new license
revenue numbers improve to a level where salary reductions instituted in the
fourth quarter of fiscal 2002 are no longer deemed necessary or compensation
based on reaching gross revenue and net income targets is triggered.**

Patents Expense

                                                     Three Months
                                                         Ended
                                                       June 30,
                                                    --------------
                                                    2003      2002       Change
--------------------------------------------------------------------------------
(Dollars in Thousands)

Patent                                               $20       $72       (72%)
Percentage of revenues                                 2%        8%
--------------------------------------------------------------------------------

Patent expenses for the quarter ended June 30, 2003 decreased significantly from
the June 30, 2002 quarter. These expenses vary dramatically depending upon the
level of activity required from legal counsel and experts. During the June 30,
2002 quarter, significant discovery was being conducted in the patent litigation
against Hyperion Solutions, Inc. that was settled in the September 30, 2002
quarter. For the comparable period of fiscal 2004, no patent litigation was
pending and, therefore, legal and expert fees were significantly less. We
anticipate undertaking new litigation during fiscal 2004 to protect our patent
rights.* Consequently, we expect significant swings in patent costs will
result.*

Depreciation and Amortization

Depreciation expense increased in the quarter ended June 30, 2003 to $17,000
from $13,000 in the quarter ended June 30, 2002. Alternatively, amortization of
intangible assets due primarily to the acquisitions of Analyst Financials and
WorkWise decreased from $127,000 to $84,000 due to reclassification of certain
intangible assets to capitalized software causing a portion of the amortization
to be treated as cost of revenue. As of June 30, 2003 all remaining intangible
assets acquired have either been fully amortized or reclassified to capitalized
software.

Other Income

Other income was $26,000 in the first fiscal quarter of 2004, compared to
$17,000 in fiscal 2003. In both quarters the major component of income was from
foreign currency exchange fluctuations, offset in part by interest expense.


                                       22
<PAGE>

Income Tax

We recorded income tax expense of approximately $18,000 in the first quarter of
fiscal 2003, which resulted from the reclassification of our workforce-in-place
intangible asset to goodwill upon adoption of SFAS 142 on April 1, 2002. As a
result of the reclassification, we reduced the deferred tax liability related to
the acquired identifiable intangibles with a corresponding decrease in goodwill.
Due to the reduction in the deferred tax liability, the valuation allowance for
deferred tax assets was increased resulting in income tax expense of
approximately $18,000.

No income tax expense was recorded in the first quarter of fiscal 2004. All
income or loss is offset by appropriate adjustments to the valuation allowance
of the Company's net operating loss carry-forwards.

Recent Accounting Pronouncements

In November, 2002, the Emerging Issues Task Force (EITF) reached a consensus on
Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables" (EITF 00-21).
EITF 00-21 addresses certain aspects of the accounting by a vendor for
arrangements under which the vendor will perform multiple revenue generating
activities. EITF 00-21 became effective for periods beginning after June 15,
2003. The Company does not expect the adoption of EITF 00-21 to have a material
impact on its financial position or results of operations.

In May 2003, the Financial Accounting Standards Board (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 measure certain
financial instruments with characteristics of both liabilities and equity. SFAS
150 is effective for financial instruments entered into or modified after May
31, 2003, and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003. SFAS 150 is to be implemented by reporting
the cumulative effect of a change in an accounting principle for financial
instruments created before the issuance date of the statement and still existing
at the beginning of the interim period of adoption. The Company does not expect
the adoption of SFAS 150 to have a material impact on its financial position or
results of operations.

LIQUIDITY AND CAPITAL RESOURCES

We have historically suffered recurring operating losses and negative cash flows
from operations. As of June 30, 2003, we had negative net working capital of
$226,000 (positive working capital position of $406,000 when excluding deferred
revenue). In addition, as of June 30, 2003, our cash and cash equivalents were
$113,000 and our marketable securities were $24,000, compared to cash and cash
equivalents of $168,000 and marketable securities of $19,000 as of March 31,
2003. Total obligations, excluding deferred revenue, totaled approximately
$535,000 as of June 30, 2003 compared to approximately $510,000 as of March 31,
2003.

The decrease in our cash and cash equivalents is attributable to losses from
operations during the June 30, 2003 quarter. Cash flow was positive for the most
recent fiscal year ended March 31, 2003.

During the balance of fiscal 2004, we expect to generate cash from increased
maintenance revenues and software license revenues and, possibly, additional
licenses of our patented technology.* We expect that our primary uses of cash
will be salaries and other expenses associated with general and administrative,
research and development, and sales and marketing activities.* We intend to


                                       23
<PAGE>

continue to monitor new license activity closely and may have to reduce staff,
and/or seek outside financing or a sale or merger of the Company if consulting
and maintenance revenues and patent and software licenses do not increase
quarter-to-quarter during fiscal 2004 and beyond.* By taking this cautious
approach combined with our current cash and cash equivalent balances, we believe
we have adequate resources to fund operations, as well as continued costs and
expenses of litigation, through the balance of fiscal 2004.* Our auditors added
an explanatory paragraph to their opinion on our fiscal 2003 consolidated
financial statements stating that there was substantial doubt about our ability
to continue as a going concern.

There can be no assurance that our efforts to monitor expenses and generate
revenue will be successful.* Accordingly, we need to contemplate other
alternatives to enable the Company to fund continuing operations, including, but
not limited to, engaging a financial advisor to explore strategic alternatives,
which may include a merger, asset sale, joint venture or another comparable
transaction, loans from management or employees, salary deferrals or other cost
cutting mechanisms, or raising additional capital by private placements of
equity or debt securities or through the establishment of other funding
facilities.* None of these potential alternatives may be available to the
Company, or may only be available on unfavorable terms.* If we are unable to
obtain sufficient cash to continue to fund our operations, we may be forced to
seek protection from creditors under the bankruptcy laws or cease operations.*
Our inability to obtain additional cash as needed could have a material adverse
effect on our financial position, results of operations and our ability to
continue in existence.* The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

Other Factors That May Affect Operating Results

Our operating results may fluctuate due to a number of factors, including, but
not limited to, the following factors:

      o     the ability of our third-party distributors and licensees in
            selling and marketing our products,
      o     market acceptance of our products,
      o     changes in the size or volume of consulting or maintenance contracts
            with existing clients and potential clients,
      o     our ability to develop and expand distribution channels and to
            develop relationships with third-party distributors and licensees of
            our products, both internationally and domestically,
      o     our decreased emphasis on direct sales, and increased reliance on
            OEMs and VARs
      o     competition from existing or new product offerings,
      o     our ability to motivate and retain our existing employees, including
            sales and marketing personnel, as well as to attract and hire new
            employees in the future,
      o     our ability to integrate our products with those of our third-party
            distributors and licensees,
      o     our patent licensing strategies and ability to pursue further patent
            licenses,
      o     the availability of additional financing or capital resources,
      o     the volume and timing of systems sales and licenses,
      o     changes in the level of operating expenses, and
      o     general economic conditions in the software industry.

All of the above factors are difficult for us to forecast, and can materially
adversely affect our business and operating results for one quarter or a series
of quarters.**


                                       24
<PAGE>

Item 3 Controls and Procedure

(a) Evaluation of Disclosure Controls and Procedures

Based on their evaluation as of the end of the period covered by this report,
the Company's principal executive officer and principal financial officer have
concluded that the Company's disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the
"Exchange Act")) are effective to ensure that information required to be
disclosed by the Company in reports that it files or submits under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms.

(b) Changes in Internal Controls

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.


                                       25
<PAGE>

                          PART II. - OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently a party to any material legal proceedings. From time to
time, we may pursue litigation against other third parties to enforce or protect
our rights under these patents or our intellectual property rights generally.

Item 2. Changes in Securities and Use of Proceeds

In March 2003, two of our officers, Frederick W. Dean and Michael Evans each
received a performance-based award of 6,250 shares of Timeline common stock,
which were issued in April 2003. These shares were issued without registration
under the Securities Act of 1933, as amended, in reliance on the exemption
provided by Section 4(2) of the Securities Act.

In April 2003, in connection with a software license agreement, the Company
granted to Fidelity National Information Solutions (FNIS) a warrant to buy up to
100,000 shares of Timeline common stock at $1.62 per share. The warrants were
fully vested upon issuance and expire if not exercised by April 2007. These
warrants were issued without registration under the Securities Act of 1933, as
amended, in reliance on the exemption provided by Section 4(2) of the Securities
Act.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits:

31.1  Certification of Charles R. Osenbaugh, President, Chief Executive Officer
      and Chief Financial Officer of Timeline, Inc. pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002.

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

(b) Reports on Form 8-K:

A report on Form 8-K was filed on May 29, 2003, reporting that a news release
was issued on May 28, 2003 announcing the Company's financial results for its
2003 fiscal year and fourth quarter ended March 31, 2003.


                                       26
<PAGE>

                                    SIGNATURE

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

                                        Timeline, Inc.
                                        (Registrant)


Date:  August 13, 2003                  By: /s/ Charles R. Osenbaugh
                                           -------------------------------------
                                           Charles R. Osenbaugh
                                           President/Chief Financial Officer

                                           Signed on behalf of registrant and
                                           as principal financial officer.


                                       27