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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 April, 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
Page
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724 Solutions Inc. Summary Financial Information for the Three Months
Ended March 31, 2000 2
Signatures
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FOR IMMEDIATE RELEASE
FOR FURTHER INFORMATION, PLEASE CONTACT:
Ray McManus Stephen Rouse
724 Solutions Inc. Maverick for 724 Solutions
416-228-8191 416-640-5518
[email protected] [email protected]
724 SOLUTIONS INC. REPORTS GAINS IN FIRST QUARTER REVENUE
TORONTO, ON. (APRIL 25, 2000) - 724 Solutions Inc. (NASDAQ: SVNX and TSE:
SVN), a leading internet infrastructure developer whose technology enables
financial institutions to offer their customers secure, personalized financial
services on a wide range of wireless devices, today reported results for the
three months ended March 31, 2000. All financial information is expressed in
U.S. dollars.
Net revenue, after stock-based compensation, increased to $3.1 million in the
quarter, from $0.4 million in the fourth quarter of 1999 and $51,000 in the
first quarter of 1999. The main component of this revenue growth, license fees
from the use of its software product by its bank customers, increased to $2.8
million compared with $0.4 million in the previous quarter and $0.5 million in
the first quarter of 1999. During the quarter, the Company began to recognize
license fees from Bank of America, Citigroup and Wells Fargo, in addition to
Bank of Montreal, its first customer. In addition, the Company began to see
meaningful services revenue growth for its consulting, implementation and
maintenance services.
Greg Wolfond, Chairman and CEO of 724 Solutions, said: "From our perspective, a
key achievement was the continuation of strong sequential revenue growth. We
continue to aggressively market our unique technology to other leading financial
institutions, on a worldwide basis, and have rapidly built an international
infrastructure to accomplish this. Q1 has been a milestone for us - we acquired
ezlogin.com adding powerful value added services to our Financial Services
Platform and entered new markets with Claritybank.com, we cemented key
relationships with Ericsson and Motorola, and formed a relationship with
MasterCard to jointly develop secure payment solutions and standards."
In order to further its growth, 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 $12.2 million from
$7.4 million in the previous quarter and from $1.7 million in the first quarter
of 1999. Because of the Company's revenue growth and efficiencies gained from
this growth, each of these of types of expenses declined as a percentage of net
revenue.
EBITDA* was a loss of $7.9 million, compared with a loss of $6.4 million in the
previous quarter and a loss of $1.5 million for first quarter 1999. The
Company's net loss was $6.9 million, compared with a loss of $6.3 million in the
fourth quarter of 1999 and a loss of $1.6 million in the first quarter of 1999.
The net loss per share was $0.20, compared with a loss per share of $0.23 and
$0.14 for the fourth quarter and first quarter of 1999, respectively. Average
shares
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outstanding were 34.0 million in the first quarter of 2000, 27.6 million in the
fourth quarter of 1999, and 11.4 million in the first quarter of 1999.
At the end of the first quarter the Company had $229.4 million of cash on hand,
including $166.9 million net proceeds from its initial public offering, which is
expected to be sufficient to meet its working capital and capital expenditure
needs for at least the next 12 months.
724 SOLUTIONS - SUMMARY RESULTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three months ended March 31, 2000
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March 31, December 31, March 31,
2000 1999 1999
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(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
Revenue:
Product $ 2,762 $ 383 $ 548
Less stock-based compensation
related to product (248) (371) (531)
Services 597 381 34
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3,111 393 51
Operating expenses:
Cost of revenue 1,953 1,037 -
Research and development 4,423 2,598 1,093
Sales and marketing 2,449 1,468 207
General and administrative 2,218 1,726 283
Depreciation and amortization 317 507 100
Stock-based compensation
related to stock options 843 41 27
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12,203 7,377 1,710
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Loss from operations (9,092) (6,984) (1,659)
Interest income 2,237 703 61
Equity in losses of affiliate (66) - -
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Net loss $ (6,921) $ (6,281) $ (1,598)
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Basic and diluted net loss per share $ (0.20) $ (0.23) $ (0.14)
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Weighted average shares used in computing basic
and diluted net loss per share (in thousands) 34,037 27,557 11,429
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EBITDA* $ (7,932) $ (6,436) $ (1,532)
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</TABLE>
* Earnings before interest, taxes, depreciation and amortization, stock-based
compensation relating to stock options, and before equity losses in 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.
<TABLE>
<CAPTION>
SUMMARY BALANCE SHEET:
<S> <C> <C> <C>
Cash $224,902 $65,287 $3,473
Total assets 235,177 73,242 4,462
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Current liabilities 14,479 11,074 1,368
Shareholders equity 220,698 62,168 3,094
</TABLE>
NOTE TO EDITORS: Attached is a summary of recent developments germane to a more
complete understanding of the Company's present growth mode. First quarter
highlights included:
- On February 2, 2000, we completed an initial public offering of
6,900,000 shares, which are listed on the NASDAQ National Market
(SVNX) and The Toronto Stock Exchange (SVN).
- We opened offices in London, Sydney and Tokyo.
- Our focus on strategic alliances and supporting industry standards
continued in the first quarter. We are working with:
- Motorola to enable 724 Solutions to deploy our financial software
applications in a variety of Internet-enabled Motorola wireless
devices;
- Ericsson on devices, wireless infrastructure and standards, and
secure payment between financial institutions, merchants and
consumers;
- Baltimore Technologies to extend e-security to mobile
transactions, and Mobile Commerce and WAP Security Seminars;
- MasterCard to join their Global Mobile Commerce Team to jointly
develop secure payment solutions and standards to facilitate
mobile transactions, and to incorporate payment transaction
functionality based on MasterCard's family of payment programs
into the 724 Solutions Financial Services Platform.
- Bank of Montreal continues to rollout its Veev service to its
affiliates, most recently offering the service to its online trading
arm, Investorline. Also, following the December 1999 launch of a
controlled market trial of Harris Bank's wireless banking services,
saw Harris Bank enter its second phase of the market trial by
enrolling its first customers in March 2000.
- In a continuation of our work with Bank of Montreal and its Veev
service, 724 Solutions announced in March that Indigo.ca would offer
wireless shopping capability to its customers. The service went live
in April and Indigo.ca customers can now browse reviews and purchase
books from a series of bestseller lists using their Bell Mobility
mobile phones. We expect that, within the next six months, Indigo.ca
will be able to offer its entire online inventory on wireless
Internet-enabled devices.
- We announced a series of firsts with Claritybank.com. Not only is it
the first exclusively online bank to deploy our technology,
Claritybank.com is also one of the first U.S. national banks planning
to offer wireless service to its entire customer base, and our first
customer to utilise our application hosting services. This marks the
beginning of our relationship with Exodus Communications to offer
application-hosting services to our customers.
- We purchased a one-third interest in Maptuit.com Inc. for US$750,000
in cash. Maptuit is a privately held Canadian company that develops
directional mapping software and provides on-line directional
services, mapping services and spatial relational search services to
its customers. We intend to offer Maptuit's services as additional
content for users of our 724 Solutions Financial Services Platform.
- On March 24, we acquired Internet messaging gateway developer Yrless
Internet Corporation of Oakville, Ontario, for approximately US$ 5.7
million payable over three years. Yrless' software will help speed up
our customers' deployment of the 724 Solutions Financial Services
Platform.
- Consistent with our goal of bringing easy to use personalized value
added services for our customers and reducing turn-on time, we entered
into an agreement to acquire
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ezlogin.com Inc., a leading provider of Internet infrastructure tools
for user-driven personalization. The acquisition is expected to be
completed by the end of the second quarter of 2000. We believe that
ezlogin.com's aggregation technology will enhance the functionality of
our Financial Services Platform, reducing turn-on time for banks and
allowing users to view all of their financial information from various
Web sites in one neat, easy-to-retrieve, consolidated page that
requires only one sign-on and password.
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 forms, information circulars 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/ Christopher Erickson
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Name: Christopher Erickson
Title: President
Date: April 26, 2000
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