Lines Overseas Management 2005 profit declined 65 percent to $725,016 or 11 cents per share compared with $2.1 million or 32 cents per share for 2004, the financial services company reported this week.

Revenues for the group were $12.9 million, a 26 percent decline compared with $17.4 million in 2004.

Brokerage fees declined 35 percent and other divisions reported little or no revenue growth.

For almost two years, LOM has been engaged in a court battle with the US Securities and Exchange Commission over the enforcement of administrative subpoenas for information related to alleged securities fraud linked to bulletin board listed securities SHEP Technologies Inc. and Sedona Software Solutions Inc.

LOM, which denies any wrongdoing, revealed it had paid some $1.7 million in 2004 for legal costs related to the probe bringing the cumulative cost to $2.75 million.

In Wednesday?s release, president Scott Lines did not update the figure but only said high professional fees, specifically legal fees, continued to impact LOM?s performance in 2005.

While a US court decision on the subpoenas is pending, the Bermuda Monetary Authority concluded its own inspection into the transaction under investigation by the SEC last November. LOM?s decision to substantively withdraw from the US OTC Bulletin board market has impacted the part of its customer base that focused on that market.

?Additionally the negative publicity surrounding the SEC?s investigation of a transaction in 2003 has resulted in some loss of business. This ongoing investigation has limited the group?s ability to attract new business,? said LOM president Scott Lines.

Management embarked on a series of cost cutting measures in June, 2005 in anticipation of the company?s revenue slowdown. As a result, overall expenses for the group fell 20 percent year on year to $12.2 million.

?As many of the cost savings were initiated in the second half of the year we expect these cost savings to continue in 2006,? he said.

Despite the withdrawal of assets, LOM?s subsidiaries? overall assets under administration grew almost 8 percent to $932 million at year end 2005. On March 21, 2006 LOM?s subsidiaries? assets under administration exceeded the $1 billion mark which Mr. Lines said demonstrated that most customers and employees remained loyal to the organisation.

Mr. Lines? brother and former LOM president, Brian, stepped down from the company last year to assist in obtaining a settlement with the SEC.

He will receive a severance package through June, 2010 as part of his severance and non-compete agreement. The amount has been accounted for in LOM?s financial plans moving forward.

?Going forward, we will continue to seek cost efficiencies where we can. Building the company?s assets and revenue lines will continue to present significant challenges.

?However we will continue to focus on winning new customers, assets and keeping our performance standards at ?best in market? levels,? said Mr. Lines.

While the strength of the global markets, especially the commodity markets, has had a very positive effect on revenues during the first part of 2006, the markets are due a correction and LOM expects to witness a slowdown in customer activity this summer.

At the end of 2005 LOM?s balance sheet had shareholders equity of US$25.3 million of which 59 percent was in cash.