BELLEVUE, Wash., June 15 2005 (PRIMEZONE) -- Timeline, Inc. (OTCBB:TMLN), today reported results for its fiscal year ended March 31, 2005. Revenue from software operations in fiscal 2005 was relatively flat compared to fiscal 2004, varying only slightly and totaling $3,531,000 compared to $3,542,000 in fiscal 2004. However, patent licensing revenue was negligible in fiscal 2005 as opposed to patent revenue of $1,900,000 in fiscal 2004. The company had previously announced it would refrain from filing any new infringement actions during fiscal 2005 while it explored the possible sale or merger of its software operations with a third party. As a result, the company had a net loss of $476,000 in fiscal 2005 compared to net income of $22,000 for fiscal 2004.
The source of revenues during fiscal 2005 varied from fiscal 2004 by category, with maintenance fees increasing by 17%, consulting fees decreasing by 26% and software license fees increasing by less than $2,000, or zero percent in total.
In the fourth quarter of fiscal 2005, net income was $1,000, or less than .01 cent per share, on revenue of $1,031,000, compared to net income of $493,000, or $0.12 per share, on revenues of $2,497,000 in the fourth quarter of fiscal 2004. Fourth quarter fiscal 2004 revenue included $1.75 million of patent license revenues compared to no patent licensing revenue during the fourth quarter of fiscal 2005. Fiscal 2005 fourth quarter profitability was negatively affected by a charge of approximately $31,000 for professional fees relating to a transaction, which was subsequently terminated, for the possible sale of a portion of the software business.
"During the first two quarters of fiscal 2005, we incurred substantial losses due in large part to a decline in new software license fees in Europe when our then largest marketing partner acquired and promoted its own branded products in competition with our own. We recovered by implementing aggressive cost controls and expanding our reseller channel to make a profit in each of the last two quarters," said Charles R. Osenbaugh, President and CEO.
"Nevertheless, the results for fiscal 2005 are indicative of the importance of patent licensing revenue; or in this case, the lack thereof. We continue to believe the two business units (software and patent licensing) are often in conflict. To remedy this conflict, we have taken two courses of action. In May 2005, we signed a Letter of Intent to sell the software licensing operations of the Company, and in June 2005 we filed a patent infringement lawsuit against a third party. It has become more and more difficult to operate the software licensing operations profitably due to the consolidation in the industry reducing the number of potential and existing OEM and reseller relationship opportunities. We believe focusing our resources on the licensing of our patents is in the best interest of our shareholders. This line of business has brought in significant revenue over the past six years."
Operating expenses decreased 27% in fiscal 2005, approximately 7% of which was due to a decrease in costs of patent enforcement. However, after eliminating this category of expense, operating expenses still came in 20% lower than in fiscal 2004. Likewise, costs of revenue decreased by 24% in fiscal 2005 versus fiscal 2004. These cost reductions in fiscal 2005 were due in part to a decrease in depreciation and amortization expenses in the year and higher costs related to the incentive bonus program in the prior fiscal year.
"With respect to the Letter of Intent to sell our software licensing operations, due diligence is still ongoing and a definitive purchase agreement has not been finalized or signed. However, it is our intent to move quickly to file for proxy solicitation to seek shareholder approval for the sale of the assets of the software licensing business," said Osenbaugh. "Then we can turn our full attention to generating revenue from our library of patents."
The Timeline, Inc. logo is available at: http://www.primezone.com/newsroom/prs/?pkgid=1295
About Timeline
Timeline develops, markets and supports proven, Microsoft Windows-based 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 and 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 shareholder acceptance of the sale of certain assets of the corporation, 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 "believe", "intent" and "can" in this news release is intended to identify these forward-looking statements, although it is not the exclusive means of doing so.
CONSOLIDATED BALANCE SHEETS
---------------------------
Unaudited
---------
($ in 000's)
ASSETS
------
March 31, March 31,
2005 2004
-------- --------
CURRENT ASSETS:
Cash and cash
equivalents $ 162 $ 511
Accounts receivable net
of allowance of $17
and $12 643 423
Prepaid expenses and
other 50 172
-------- --------
Total current assets 855 1,106
PROPERTY AND EQUIPMENT,
net of accumulated
depreciation of $447
and $876 58 75
CAPITALIZED PATENTS, net
of accumulated
amortization of $83
and $60 266 254
GOODWILL, net of
accumulated amortization
of $124 and $124 70 70
-------- --------
Total assets $ 1,249 $ 1,505
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 110 $ 47
Accrued expenses 339 297
Line of credit 61 --
Deferred revenues 681 619
-------- --------
Total current
liabilities 1,191 963
-------- --------
SHAREHOLDERS' EQUITY:
Common stock, $.01 par
value, 20,000,000
shares authorized,
4,178,498 and
4,165,998 issued and
outstanding 42 42
Additional paid-in
capital 10,578 10,564
Accumulated other
comprehensive loss (119) (97)
Accumulated deficit (10,443) (9,967)
-------- --------
Total shareholders'
equity 58 542
-------- --------
Total liabilities and
shareholders' equity $ 1,249 $ 1,505
======== ========
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
Unaudited
---------
($ in 000's except EPS)
-----------------------
Fourth Quarter Ended Year Ended
------------------------ ------------------------
March 31, March 31, March 31, March 31,
2005 2005 2005 2004
----------- ----------- ----------- -----------
REVENUE:
Software license $ 494 $ 227 $ 1,420 $ 1,419
Patent license -- 1,750 1 1,900
Maintenance 380 354 1,483 1,272
Consulting and
other 157 166 627 851
----------- ----------- ----------- -----------
Total revenues 1,031 2,497 3,531 5,442
----------- ----------- ----------- -----------
COST OF REVENUES:
Software license -- -- -- 186
Patent license 6 5 23 19
Maintenance,
consulting and
other 168 169 505 486
----------- ----------- ----------- -----------
Total cost of
revenues 174 174 528 691
----------- ----------- ----------- -----------
Gross profit 857 2,323 3,003 4,751
----------- ----------- ----------- -----------
OPERATING
EXPENSES:
Sales and
marketing 137 319 901 1,131
Research and
development 205 568 837 1,222
General and
administrative 471 497 1,631 1,765
Patents 17 421 76 498
Depreciation 6 16 32 65
Amortization of
intangibles -- -- -- 84
----------- ----------- ----------- -----------
Total operating
expenses 836 1,821 3,477 4,765
----------- ----------- ----------- -----------
Income/(loss)
from
operations 21 502 (474) (14)
----------- ----------- ----------- -----------
OTHER INCOME
(EXPENSE):
Loss on sales and
impairments of
available for
sale securities -- (12) -- (12)
Interest income/
(expense) and
other (20) 3 (2) 48
----------- ----------- ----------- -----------
Total other
income/
(expense) (20) (9) (2) 36
----------- ----------- ----------- -----------
Income/(loss)
before income
taxes 1 493 (476) 22
Provision for
income tax -- -- -- --
----------- ----------- ----------- -----------
Net income/
(loss) $ 1 $ 493 $ (476) $ 22
=========== =========== =========== ===========
Basic net income/
(loss) per share $ 0.00 $ 0.12 $ (0.11) $ 0.01
=========== =========== =========== ===========
Diluted net
income/(loss)
per share $ 0.00 $ 0.12 $ (0.11) $ 0.01
=========== =========== =========== ===========
Shares used in
calculation of
basic net income/
(loss) per share 4,190,998 4,178,498 4,190,998 4,177,542
=========== =========== =========== ===========
Shares used in
calculation of
diluted net
income/(loss)
per share 4,190,998 4,178,498 4,189,183 4,186,038
=========== =========== =========== ===========
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
($ in 000's)
Year Ended
-------------------------
March 31, March 31,
2005 2004
--------- ---------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net (loss) income $ (476) $ 22
Adjustments to reconcile
net (loss) income to net
cash used in
operating activities:
Depreciation and
amortization 54 353
Loss on disposal of
property and equipment -- --
Stock-based compensation 10 15
Realized loss on sale of
marketable equity
securities -- 12
Changes in operating
assets and liabilities:
Accounts receivable (197) 199
Prepaid expenses and
other 109 (2)
Accounts payable 47 (43)
Accrued expenses and
other 36 (200)
Deferred revenues 51 (36)
--------- ---------
Net cash (used in)
provided by
operating activities (366) 320
--------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of property and
equipment (15) (38)
Proceeds from sale of
property and equipment -- --
Investment in patents (35) (49)
Line of credit borrowings 202 --
Line of credit repayments (140) --
--------- ---------
Net cash provided by
(used in) investing
activities 12 (87)
--------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Warrants issued 5 84
--------- ---------
Net cash provided by
financing activities 5 84
--------- ---------
EFFECT OF FOREIGN EXCHANGE
RATE FLUCTUATIONS -- 26
NET CHANGE IN CASH AND
CASH EQUIVALENTS (349) 343
CASH AND CASH EQUIVALENTS,
beginning of period 511 168
--------- ---------
CASH AND CASH EQUIVALENTS,
end of period $ 162 $ 511
========= =========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid for interest $ 3 $ 6