BELLEVUE, Wash., Feb. 10, 2005 (PRIMEZONE) -- Timeline, Inc. (OTCBB:TMLN) today reported that strong growth in license and maintenance fees and lower operating costs contributed to its profitable fiscal third quarter and produced positive operating cash flow for the quarter. The company generated net income of $51,000, or $0.01 per share, in its fiscal 2005 third quarter ended December 31, 2004, compared to a loss of $201,000, or $0.05 per share, in the third quarter of fiscal 2004. Total revenue increased 10% to $947,000, compared to $863,000 for the year ago quarter on higher license and maintenance fees. For the first nine months of fiscal 2005, the company lost $477,000, or $0.11 per share, compared to a loss of $471,000, or $0.11 per share, in the year ago period.
"We had a strong third quarter with virtually all revenue generated by software operations and negligible patent licensing business," said Charles Osenbaugh, President. "The fact this quarter produced a profit, however lean, almost solely on software operations is a step in the right direction. Obviously, patent licensing revenue is welcome at any time; however, software license revenue in particular tends to signal a new source of ongoing revenue where, historically, license revenue from patents is likely a one time event." Year-to-date revenues were down 15% to $2.5 million, with negligible patent license fees, compared to $2.9 million including $150,000 in patent licensing, a year ago. Lower consulting and software licenses fees in the first part of the year were partially offset by strong growth in maintenance revenues during the first nine months of the year versus the same period of fiscal 2004.
"We have not abandoned our program of seeking patent licenses despite the lack of activity over the last three quarters," said Osenbaugh. "During this fiscal year we decided to focus our efforts on seeking a partner to restructure our software operations through merger, recapitalization, or joint operating scenarios. And, in that pursuit, we felt any ongoing patent litigation might be a hindrance. That having been said, in the absence of forming a third party alliance by fiscal year end, we plan to revitalize our program of aggressively pursuing patent licensing."
Cost of revenues and total operating expenses combined declined by 14% in both the third quarter and nine-month periods compared to the year ago periods. The elimination of the amortization of capitalized software, which was completed last year, lower patent enforcement expenditure and careful cost controls contributed to the overall drop in expenses during the quarter. "Because most of our costs are now incurred for salaries and benefits, and because the allocation for headcount may change based on employees' activities during a quarter, the fluctuations within the various expense categories is not as meaningful as the changes in overall costs," Osenbaugh noted.
Research and development continues to be an important part of asset allocation with 22% of third quarter revenues and 25% of year-to-date revenues going to product development. The two major product development efforts in the pipeline are for the ASP (Application Service Provider) application and the .Net application. "Both new products in development are important to our competitive position in the market," Osenbaugh commented.
Timeline's balance sheet remains weak. However, deferred revenues, a liability under GAAP but one that reflects future business, increased 14% to $731,000 from $640,000 at December 31, 2004. "We remain committed to operating within our means, while seeking to capitalize on the underlying value of our intellectual property and knowledge base in the company. The new emphasis on internal controls and financial reliability in the public sector should drive demand for integrated, easy-to-use financial analytics and business alert automation solutions. Our software products provide important tools for our resellers and our customers in meeting reporting requirements," Osenbaugh concluded.
About Timeline
Timeline develops, markets and supports proven financial management reporting software suitable for complex applications such as those found in medium to large, multinational corporations. Timeline Analyst was developed for Windows and Office and takes full advantage of Microsoft's latest operating systems. Version 2.9 allows for the deployment of target analytical data marts on Oracle 8 or 9i and IBM's DB2 Universal Data Bases Versions 7 & 8 as well as Microsoft SQL Server. The Analyst Suite of products allows target data marts on which Timeline's reporting, budgeting and consolidation applications reside to be built on all of these three of the most popular computing platforms. Timeline can be reached at 800-342-3365 or on the web at www.timeline.com . WorkWise Software, Inc., a subsidiary of Timeline, is the leading provider of event-based notifications, application integration and process automation systems to the mid-market. The WorkWise solutions are exclusively available through authorized OEM and Reseller Business Partners. For more information on WorkWise Software, Inc., visit its website at www.workwise.com . Analyst Financials Ltd., a London-based subsidiary of Timeline, markets, licenses and provides consulting for Timeline Analyst products in Europe and Africa.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Statements in this news release looking forward in time involve risks and uncertainties, including the ability of third party partners and direct sales to generate sales, market acceptance of products introduced by the company, corporate spending patterns, the company's ability to realize value from patented technology, the ability of the company to control and reduce expenses and increase working capital, and other risk factors detailed in the Company's Securities and Exchange Commission filings. Use of the words "signal," "tend," and "plan" in this news release is intended to identify these forward-looking statements, although it is not the exclusive means of doing so.
CONDENSED CONSOLIDATED BALANCE SHEETS
As of
December 31, As of,
2004 March 31,
(Unaudited) 2004
------------ ------------
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 99,555 $ 511,483
Accounts receivable, net of allowance
for doubtful accounts of
$13,221 and $12,326 593,821 423,085
Prepaid expenses and other 41,502 171,456
------------ ------------
Total current assets 734,878 1,106,024
PROPERTY AND EQUIPMENT, net of
accumulated depreciation
of $457,980 and $875,625 66,646 74,761
CAPITALIZED PATENTS, net of
accumulated amortization of
$76,753 and $60,069 265,473 253,932
GOODWILL, net of accumulated
amortization of $123,938 70,183 70,183
------------ ------------
Total assets $ 1,137,180 $ 1,504,900
============ ============
LIABILITIES AND
SHAREHOLDERS' EQUITY
--------------------
CURRENT LIABILITIES:
Accounts payable $ 60,307 $ 46,589
Accrued expenses 282,665 297,570
Line of credit 26,168 --
Deferred revenues 730,723 619,036
------------ ------------
Total current liabilities 1,099,863 963,195
------------ ------------
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value,
20,000,000 shares authorized,
4,190,998 and 4,178,498 shares
issued and outstanding 41,910 41,785
Additional paid-in capital 10,578,447 10,564,347
Accumulated other comprehensive loss (139,542) (97,433)
Accumulated deficit (10,443,498) (9,966,994)
------------ ------------
Total shareholders' equity 37,317 541,705
------------ ------------
Total liabilities and
shareholders' equity $ 1,137,180 $ 1,504,900
============ ============
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
Three Months Ended Nine Months Ended
December 31, December 31,
---------------------- ----------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
REVENUES:
Software license $ 354,890 $ 301,509 $ 925,275 $1,191,628
Patent license 1,000 -- 1,000 150,000
Maintenance 403,377 327,384 1,103,087 918,156
Consulting and other 187,871 233,806 471,048 684,296
---------- ---------- ---------- ----------
Total revenues 947,138 862,699 2,500,410 2,944,080
---------- ---------- ---------- ----------
COST OF REVENUES:
Software license -- 46,205 -- 185,524
Patent license 5,794 4,831 16,684 13,905
Maintenance,
consulting and other 140,231 102,490 337,262 317,326
---------- ---------- ---------- ----------
Total cost of
revenues 146,025 153,526 353,946 516,755
---------- ---------- ---------- ----------
Gross profit 801,113 709,173 2,146,464 2,427,325
---------- ---------- ---------- ----------
OPERATING EXPENSE:
Sales and marketing 190,553 285,774 763,917 811,958
Research and
development 209,613 212,323 632,437 654,398
General and
administrative 352,935 379,251 1,159,730 1,267,885
Patents 20,049 31,992 57,947 76,742
Depreciation 9,461 16,060 25,855 49,348
Amortization of
intangibles -- -- -- 83,540
---------- ---------- ---------- ----------
Total operating
expenses 782,611 925,400 2,639,886 2,943,871
---------- ---------- ---------- ----------
Income (loss) from
operations 18,502 (216,227) (493,422) (516,546)
---------- ---------- ---------- ----------
OTHER INCOME OR
(EXPENSE):
Net interest expense
and other income 32,824 15,586 16,918 45,821
---------- ---------- ---------- ----------
Total other income 32,824 15,586 16,918 45,821
---------- ---------- ---------- ----------
Income (loss)
before income
taxes
51,326 (200,641) (476,504) (470,725)
Provision for income
tax -- -- -- --
---------- ---------- ---------- ----------
Net income (loss) $ 51,326 $ (200,641) $ (476,504) $ (470,725)
========== ========== ========== ==========
Basic and diluted net
income (loss) per
common share $ 0.01 $ (0.05) $ (0.11) $ (0.11)
========== ========== ========== ==========
Shares used in
calculation of basic
and diluted income
(loss) per share 4,190,998 4,178,498 4,188,543 4,177,225
========== ========== ========== ==========
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
2004 2003
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash used in operating activities $(398,396) $ (59,758)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (16,517) (20,559)
Capitalized patent & software
development costs (28,225) (27,023)
Line of credit borrowings 115,285 --
Line of credit repayments (89,116) --
--------- ---------
Net cash used in investing activities (18,574) (47,582)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock warrants 4,725 83,994
--------- ---------
Net cash provided by financing activities 4,725 83,994
--------- ---------
EFFECT OF FOREIGN EXCHANGE RATE 317 (2,730)
NET CHANGE IN CASH AND CASH EQUIVALENTS (411,928) (26,076)
CASH AND CASH EQUIVALENTS,
beginning of period 511,483 167,908
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 99,555 $ 141,832
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest during year $ 1,848 $ 6,142
Non-cash transactions:
Unrealized loss on available for sale
securities $ -- $ 1,390
Safe Harbor Statement under the Private Securities Litigation Reform
Act of 1995: Statements in this news release looking forward in time
involve risks and uncertainties, including the ability of third party
partners and direct sales to generate sales, market acceptance of
products introduced by the company, corporate spending patterns, the
company's ability to realize value from patented technology, the
ability of the company to control and reduce expenses and increase
working capital, and other risk factors detailed in the Company's
Securities and Exchange Commission filings. Use of the words
"signal," "tend," and "plan" in this news release is intended to
identify these forward-looking statements, although it is not the
exclusive means of doing so.