<PAGE> 1
================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): July 3, 1997
TIMELINE, INC.
(Exact name of Registrant as specified in its charter)
WASHINGTON 1-13524 91-1590734
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
3055 112TH AVENUE N.E., STE. 106
BELLEVUE, WA 98004
(Address of principal executive offices)
(206) 822-3140
(Registrant's telephone number)
================================================================================
<PAGE> 2
This amendment to the Registrant's Current Report on Form-8/A amends
Item 7 to add the pro forma financial statement information required to be
filed.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 3, 1997, the Registrant finalized the sale of a majority
interest in its European subsidiary, Timeline Europe Limited ("Timeline
Europe"), for $609,000. Michael Evans, the managing director of Timeline Europe,
formed an investment group for the purpose of the transaction and, together with
an outside investor, acquired a majority ownership in Timeline Europe. The
Registrant retains a 12.5 percent ownership interest in Timeline Europe. The
parties entered into a Subscription Agreement to effect the transaction, a copy
of which has previously been filed as an exhibit to the Registrant's Current
Report on Form 8-K filed July 17, 1997.
In connection with the transaction and pursuant to the Subscription
Agreement, the parties entered into a Distributorship Agreement and Source Code
License, pursuant to which the Registrant granted to Timeline Europe licenses to
certain intellectual property rights of the Registrant. In connection with such
licenses, Timeline Europe is obligated to pay certain license, distribution and
maintenance fees to the Registrant and the Registrant has retained a license to
certain derivatives of its technology which may be created by Timeline Europe.
In addition, Timeline Europe has issued a debenture to the Registrant which
evidences and secures the repayment of certain debts owed by Timeline Europe to
the Registrant and the Registrant has also entered into a tax indemnity
agreement whereby it has agreed to indemnify Timeline Europe from certain taxes
or claims against Timeline Europe that occurred prior to the closing of the
transaction. The Registrant has given certain warranties regarding the status of
Timeline Europe as of the closing, which warranties have been secured by a
pledge of the Registrant's interest in its Timeline Europe shares, made in favor
of the principal investor.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro Forma Financial Information.
(i) Pro forma consolidated balance sheet as of June 30, 1997
(ii)Pro forma consolidated statement of operations for the
three months ended June 30, 1997 (iii) Notes to pro forma
consolidated balance sheet and pro forma consolidated
statement of operations
(c) Exhibits.
**Subscription Agreement by and among Timeline, Inc., Timeline
Europe Limited, Jean Harvey, and the Managers (as defined in
the Subscription Agreement)
** Incorporated by reference to Form 8-K filed on July 17,
1997
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated the 25th day of August, 1997.
TIMELINE, INC.
By: /s/ Charles R. Osenbaugh
----------------------------------------
Charles R. Osenbaugh
President, Chief Executive Officer
and Chief Financial Officer
3
<PAGE> 4
TIMELINE, INC.
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma consolidated balance sheet as of June
30, 1997 and the pro forma consolidated statement of operations for the three
months ended June 30, 1997 give effect to the disposition by the Registrant of a
majority ownership interest in Timeline Europe Limited on July 3, 1997, as if
the disposition had occurred on June 30, 1997.
The pro forma statements have been prepared by management of the
Registrant based on the historical financial statements of the Registrant. The
unaudited pro forma financial statements are provided for informational purposes
only and do not purport to represent what the Registrant's financial condition
and results of operations would have been as of, and for the three months ended,
June 30, 1997, respectively, had the disposition taken place on the dates
indicated above, or to project the Registrant's financial position or results of
operations of any future date or period. The pro forma statements reflect all
adjustments that are, in the opinion of management of the Registrant, reasonable
and necessary for a fair statement of the results for the periods presented. In
information should be read in conjunction with the Registrant's Form 10-KSB for
the year ended March 31, 1997 and the Registrant's Form 10-QSB for the quarter
ended June 30, 1997.
4
<PAGE> 5
TIMELINE, INC.
PRO FORMA CONSOLIDATED BALANCE SHEETS
As of June 30, 1997
<TABLE>
<CAPTION>
Pro forma
June 30, 1997 June 30, 1997
(unaudited) (unaudited)
------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 53,581 $ 52,809
Short-term investments -- --
Accounts receivable, net of allowance of $81,092 1,014,290 840,202
Prepaid expenses and other 219,335 131,808
Note receivable -- 608,198
----------- -----------
Total current assets 1,287,206 1,633,017
PROPERTY AND EQUIPMENT, net of accumulated depreciation of
$1,577,960 and $1,568,086 674,942 653,512
CAPITALIZED SOFTWARE COSTS, net of accumulated amortization
of $529,938 and $529,938 712,607 678,995
OTHER ASSETS 34,206 26,351
INVESTMENT IN TIMELINE EUROPE -- 254,360
----------- -----------
TOTAL ASSETS $ 2,708,961 $ 3,246,235
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 771,733 $ 430,110
Accrued expenses 534,534 333,505
Line of credit 448,172 287,420
Deferred revenue 449,381 399,328
Current portion of long-term debt 559,054 521,870
Current portion of capital lease 41,346 41,346
----------- -----------
Total current liabilities 2,804,220 2,013,579
Total liabilities 2,804,220 2,013,579
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock 32,165 32,165
Additional paid-in capital 9,285,463 9,285,463
Unearned ESOP shares (390,834) (390,834)
Stock subscription receivable (95,603) (95,603)
Foreign currency adjustment (71,986) --
Accumulated deficit (8,854,464) (7,598,535)
----------- -----------
Total stockholders' equity (95,259) 1,232,656
----------- -----------
Total liabilities & stockholders' equity $ 2,708,961 $ 3,246,235
=========== ===========
</TABLE>
5
<PAGE> 6
TIMELINE, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 1997
<TABLE>
<CAPTION>
Pro forma
June 30, 1997 June 30, 1997
(unaudited) (unaudited)
------------- -------------
<S> <C> <C>
REVENUES:
Software license $ 202,141 $ 202,141
Software development 120,800 120,800
Maintenance 234,317 234,317
Consulting 269,444 269,444
Other 8,061 8,061
----------- -----------
Total revenues 834,763 834,763
COST OF REVENUES: 459,922 459,922
----------- -----------
Gross profit 374,841 374,841
OPERATING EXPENSES:
Sales and marketing 319,671 319,671
Research and development 163,678 163,678
General and administrative 476,583 476,583
Depreciation 62,305 62,305
----------- -----------
Total operating expenses 1,022,237 1,022,237
----------- -----------
Income (loss) from operations (647,396) (647,396)
GAIN ON DISPOSITION OF MAJORITY INTEREST IN TIMELINE EUROPE
-- 1,327,914
OTHER INCOME (EXPENSE):
Interest income 906 906
Interest expense (36,345) (36,345)
----------- -----------
Net income (loss) $ (682,835) $ 645,079
=========== ===========
Net income per common and common equivalent share $ (0.22) $ 0.21
=========== ===========
Weighted average common and common equivalent shares
outstanding 3,140,953 3,140,953
=========== ===========
</TABLE>
6
<PAGE> 7
NOTES TO PRO FORMA FINANCIAL STATEMENTS OF TIMELINE, INC.:
On July 3, 1997, the Registrant finalized the sale of a majority
ownership interest in its European subsidiary, Timeline Europe Limited. The
effect of this transaction is to cause Timeline Europe to no longer be
consolidated with the Registrant for financial reporting purposes. Consequently,
previously recognized losses of Timeline Europe are no longer consolidated and
intercompany transactions are no longer eliminated in consolidation. The pro
forma financial statements reflect the following adjustments:
Pro Forma Consolidated Balance Sheets:
(a) Elimination of all assets and liabilities of Timeline Europe in
consolidation;
(b) Recognition of intercompany accounts receivable of $68,590;
(c) Recognition of notes receivable in the amount of $608,198,
reflecting monies due Registrant from Timeline Europe; said amounts reflecting
previous advances to Timeline Europe which were historically eliminated in
consolidation;
(d) Recognition of an asset "Investment in Timeline Europe" which
represents previous amounts advanced by Registrant to Timeline Europe and which
were forgiven in exchange for the issuance of additional shares of stock in
Timeline Europe;
(e) Elimination of $71,986 of foreign currency adjustments previously
required in consolidation;
(f) Adjustment to Accumulated Deficit in the amount of $1,255,928 to
recognize the income effect of the transaction, other than the foreign currency
adjustment.
Pro Forma Consolidated Statements of Operations:
The result of no longer consolidating the financial statements of
Timeline Europe is shown under "Gain on Disposition of Majority Interest in
Timeline Europe" on the pro forma consolidated statements of operations.
