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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of August, 2000
724 SOLUTIONS INC.
4101 Yonge Street, Suite 702
Toronto, Ontario, Canada M2P 1N6
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F
Form 20-F X Form 40-F
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Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934
Yes No X
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If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b):
82- N.A.
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724 SOLUTIONS INC.
Form 6-K
TABLE OF CONTENTS
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724 Solutions Inc. Press Release regarding Second Quarter Results 3
Signatures 8
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FOR FURTHER INFORMATION, PLEASE CONTACT:
Ray McManus Stephen Rouse Monica Zaied
724 Solutions Inc. Maverick PR for 724 Solutions 724 Solutions Inc
Public Relations 416-640-5518 Investor Relations
416-228-8191 [email protected] 416-228-2369
[email protected] ----------------------- [email protected]
724 SOLUTIONS INC. REPORTS RECORD SECOND QUARTER REVENUE
TORONTO, ON (JULY 26, 2000) - 724 Solutions Inc. (NASDAQ: SVNX and TSE:
SVN), a leading Internet infrastructure software developer for financial
services providers, today reported revenue for the second quarter ended June 30,
2000, of $4.0 million - a 28 per cent increase from the first quarter. For the
six months ended June 30, 2000, revenue was $7.1 million, compared to $63,000 in
the same period last year. (All financial information is expressed in U.S.
dollars.)
Services revenue was $1.4 million, a 131 per cent increase on the previous
quarter. Included in services revenue, consulting revenue increased five fold
and reflects customers' demand for consulting and customer support services as
they undertake deployment of 724 Solutions' wireless banking and brokerage
software solution.
"Our continued revenue growth reflects our customers' adoption of the 724
Solutions Financial Services Platform," said Greg Wolfond, chairman and chief
executive officer of 724 Solutions. "In the quarter, we significantly broadened
our product offering with the closing of the ezlogin.com acquisition and
strengthened our sales and distribution capability through a strategic
investment and joint-marketing strategy with Corillian to offer medium-sized
financial services providers a seamless wired and wireless Internet banking
services solution. In addition, through SITEL, we introduced a new value-added
service and revenue stream -Web-based customer service and technical support
from contact centers throughout the world. Taken together, these offerings have
broadened our customers' banking and brokerage functionality while enlarging the
scope of 724 Solutions' business."
Building on its global expansion, the company continued to increase expenditures
for research and development, sales and marketing, and general and
administrative expenses. Total operating expenses for the quarter rose to $21.3
million from $12.2 million in the previous quarter. The increase in total costs
was primarily related to employee growth of 34 per cent over the previous
quarter from 315 employees to 421 employees as a result of the company's
continued focus on research and development and the strengthening of its sales
team worldwide.
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EBITDA* in the second quarter was a loss of $13.8 million, compared with a loss
of $7.6 million in the previous quarter. The company's net loss was $14.8
million in the second quarter, compared with a loss of $6.9 million in the first
quarter of 2000. The net loss per share was $0.40 compared with a net loss per
share of $0.20 in the first quarter 2000.
Average shares outstanding were 36.7 million in the second quarter of 2000, and
34.0 million in the first quarter of 2000.
The company is in a very strong cash position with cash and cash equivalents and
short-term deposits of $199.3 million at June 30, 2000.
Subsequent to the quarter end, the company made a number of significant
announcements, including licensing agreements with Mexico's largest bank, BBVA
Bancomer, and Wachovia Corporation (NYSE: WB), a leading U.S. regional bank,
principally serving Florida, Georgia, North Carolina, South Carolina and
Virginia. These deals extend 724 Solutions' potential reach to its banks'
customer base by 13 million to 165 million. In addition, the company joined
forces with CheckFree to offer bill presentment and electronic billing via its
Financial Services Platform, and with Certicom to develop the first open and
standards-based, wireless Public Key Infrastructure (PKI) solution for the
financial services industry. PKI protects sensitive data through encryption
software and two keys: a public key for distribution to other users, and a
private key, which is kept and protected by the owner.
"Moving forward, we are looking to mirror our North American success
internationally, and BBVA Bancomer represents that first milestone," said
Wolfond. "We have a strong sales pipeline and we continue to sign significant
financial institutions around 724 Solutions' recurring revenue model. We believe
this strategy will position 724 Solutions to deliver on its business plan in the
years ahead."
724 SOLUTIONS - SUMMARY RESULTS OF OPERATIONS (UNAUDITED)
(IN 000'S OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)
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Three Months Ended Six Months Ended
Fiscal 2000 June 30,
June 30 March 31 2000 1999
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Revenue:
Product $ 2,591 $ 2,762 $ 5,353 $ 931
Less: Stock-based compensation
related to product -- (248) (248) (902)
Services 1,377 597 1,974 34
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Net revenue 3,968 3,111 7,079 63
Operating expenses:
Cost of services revenue 2,550 1,953 4,503 20
Research and development 6,545 4,423 10,968 2,418
Sales and marketing 3,315 2,449 5,764 509
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General and administrative 5,395 2,218 7,613 835
Depreciation and amortization 2,034 317 2,351 228
Stock-based compensation
related to stock options 1,456 843 2,299 54
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Total operating expenses 21,295 12,203 33,498 4,064
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Loss from operations (17,327) (9,092) (26,419) (4,001)
Interest income 2,772 2,237 5,010 89
Equity in losses of affiliate (213) (66) (279) --
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Net income (loss) $(14,768) $ (6,921) $(21,688) $(3,912)
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Basic and diluted net
loss per share $ (0.40) $ (0.20) $ (0.61) $ (0.34)
Weighted-average shares used in
computing basic and diluted net
loss per share (in thousands) 36,717 34,037 35,380 11,518
EBITDA* $(13,837) $ (7,584) $(21,521) $(2,817)
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* Earnings (loss) before interest, taxes and non-cash items, such as,
depreciation and amortization, amortization of stock-based compensation, and
equity in losses of affiliate. EBITDA is presented here to provide additional
information about our ability to meet our future capital expenditures and
working capital requirements. EBITDA is not a measure of financial performance
under generally accepted accounting principles.
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SUMMARY BALANCE SHEET: JUNE 30, 2000 DECEMBER 31, 1999
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(unaudited)
Cash and cash equivalents $189,235 $65,287
Short-term deposits 10,110 -
Total assets 281,053 73,242
Total liabilities 18,050 11,074
Shareholders' equity 263,003 62,168
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SECOND QUARTER HIGHLIGHTS
- Acquisition of ezlogin.com is closed.
- Three new independent directors - Holger Kluge, a former executive at
CIBC; Barry J. Reiter, chairman of the Technology Group at New
York/Toronto law firm, Torys; and Heather Reisman, founder and chief
executive officer of Indigo Books - are appointed to 724 Solutions'
board.
- Entered into an agreement with Neomar to use its WAP infrastructure
solution, which includes a WAP Microbrowser and WAP Gateway, to
speed-up delivery of WAP-based wireless financial services applications
for personal digital assistants.
- Corillian Corp. teams up with 724 Solutions to develop a seamless wired
and wireless Internet banking services solution based on the 724
Solutions Financial Services Platform.
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- The company announces plans to develop location-based services in
collaboration with Maptuit, a leading supplier of wireline and
wireless Internet location-based services - maps, directions, and
points of interest.
- The 724 Solutions Financial Services Platform software is demonstrated
on next-generation handheld devices for Microsoft's Windows-powered
Pocket PC platform.
- Veev, Bank of Montreal's wireless banking and brokerage service
developed based on 724 Solutions technology, is offered in French. Bank
of Montreal and Telus announce the launch of Veev in British Columbia
and Alberta.
- Multiple-language contact centre services are to be offered through a
partnership with SITEL Corporation.
- The 724 Solutions Financial Services Platform is General Packet Radio
Services- (GPRS) compliant and ready for live trials.
- President Chris Erickson and Chief Technology Officer Andre Boysen are
awarded Canada's Top 40 Under 40 Award for outstanding achievement as
Canadian entrepreneurs under the age of 40.
RECENT HIGHLIGHTS
- BBVA Bancomer, Mexico's largest bank, licenses 724 Solutions' wireless
banking offering.
- Wachovia licenses banking and brokerage applications and announces
plans to develop unique commercial wireless banking applications in
partnership with 724 Solutions.
- Joined forces with CheckFree to offer bill presentment and electronic
billing via the 724 Solutions Financial Services Platform.
- 724 Solutions and Certicom team to develop the first open and
standards-based, wireless PKI solution for the financial services
industry. Trials will commence in the fourth quarter, 2000.
ABOUT 724 SOLUTIONS INC.
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724 Solutions provides an Internet infrastructure solution to financial
institutions that enables them to offer personalized and secure online banking,
brokerage and e-commerce services across a wide range of Internet-enabled
wireless and consumer electronic devices. The company's solution currently
enables consumers to access online banking and brokerage services through
network service providers using digital mobile phones, personal digital
assistants, two-way pagers and personal computers. Its subsidiary, ezlogin.com,
is a leading provider of Internet infrastructure and aggregation tools for
user-driven personalization. 724 Solutions' customers include Citigroup, Bank of
America, Bank of Montreal, Harris Bank, Wells Fargo, Claritybank.com, BBVA
Bancomer and Wachovia. 724 Solutions' common shares are listed on the NASDAQ
National Market (SVNX) and The Toronto Stock Exchange (SVN). Headquartered in
Toronto, Canada, the company has offices in London, San Francisco, Sydney,
Tokyo, Mountainview California and Paris. For additional information visit
WWW.724.COM.
This press release contains statements of a forward-looking nature.
These statements are made under the "safe harbor" provisions of the U.S. Private
Securities Litigation Reform Act of 1995. You can identify these forward-looking
statements by terminology such as "will," "expects," "anticipates," "future,"
"intends," "plans," "believes," "estimates" and similar expressions. The
accuracy of these statements may be impacted by a number of business risks and
uncertainties that could cause actual results to differ materially from those
projected or anticipated, including risks related to: the risk that technologies
for the delivery of financial or e-commerce services over the Internet and
wireless networks will not be developed or be attractive to consumers as
anticipated; the risk that 724 Solutions will not successfully deploy or operate
services based upon the 724 Solutions Financial Services Platform; and other
risks outlined in 724 Solutions' SEC filings, and filings with Canadian
Securities Administrators, including but not limited to 724 Solutions'
registration statement on Form F-1, prospectuses, material change reports,
Annual Information Form, Form 20-F, Management Information Circular, or filings
on Form 6-K. 724 Solutions does not undertake any obligation to update this
forward-looking information, except as required under applicable law.
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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, thereunto duly authorized.
724 SOLUTIONS INC.
By: /s/ KAREN BASIAN
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Name: Karen Basian
Title: Chief Financial Officer
Date: August 3, 2000
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