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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 QUARTERLY PERIOD AND THE FISCAL YEAR ENDING
DECEMBER 31, 1999
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
724 Solutions Inc. Summary Financial Information for the Quarterly 6
Period and the Fiscal Year Ended December 31, 1999
Signatures
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FOR IMMEDIATE RELEASE
FOR FURTHER INFORMATION CONTACT:
Ray McManus
(416) 228-8191
[email protected]
724 SOLUTIONS INC. REPORTS FOURTH QUARTER AND
FISCAL YEAR END 1999 RESULTS
TORONTO, CANADA, (FEBRUARY 21, 2000) -- 724 Solutions Inc. (TSE -- SVN,
NASDAQ -- SVNX) today announced its financial results for the fourth quarter
and year ended December 31, 1999 (all results are reported in U.S. dollars).
Net revenue in the fourth quarter was $393,000, compared to net revenue of
$19,000 in the fourth quarter ended December 31, 1998, and $766,000 recorded
in the third quarter ended September 30, 1999. The decline in net revenue in
the fourth quarter of 1999 compared to the third quarter of 1999 was due to a
reduction in services revenue primarily as a result of the Y2K implementation
restrictions imposed by the Company's bank customers.
<TABLE>
<CAPTION>
US$ Q4'99 Q3'99
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<S> <C> <C>
Revenue
Software development $383,000 $383,000
Services 381,000 754,000
Less: stock based compensation (371,000) (371,000)
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Net Revenue $393,000 $766,000
</TABLE>
For the year ended December 31, 1999, 724 Solutions reported net revenue of
$1.2 million, an increase of 149% over net revenue of $491,000 in the year
ended December 31, 1998. 724 Solutions' net revenue includes software
development revenue earned from license agreements, and services revenue
including implementation, customer service and maintenance fees, and is net
of stock-based compensation related to software development revenue.
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The Company continued to invest heavily in its development of an Internet
infrastructure solution for financial institutions that enables them to offer
personalized and secure on-line banking, brokerage and e-commerce services
across a wide range of Internet-enabled wireless and consumer electronic
devices. This resulted in a net loss for the quarter ended December 31, 1999
of $6.3 million, or $0.23 per share, compared to a loss of $1.6 million, or
$0.17 per share, in the same quarter of 1998, and a loss of $3.7 million, or
$0.22 per share, in the third quarter of 1999. For the year, the net loss was
$13.8 million, or $0.82 per share, compared to a loss of $2.7 million, or
$0.47 per share, in the prior year. The per share figures in all periods
reflect the two for one stock split which took place on December 30, 1999.
The weighted average number of shares outstanding in the quarter ended
December 31, 1999 was 27,335,198 compared to 9,286,000 in the fourth quarter
of 1998. The weighted average number of shares outstanding for the year ended
December 31, 1999 was 16,887,000, compared to 5,784,000 in the prior year.
During 2000, 724 Solutions will generate revenue from:
- license agreements
- services (including implementation, customer service and maintenance fees)
- fees from operation of its application hosting service.
While the Company's two initial licensing agreements used a fixed fee license
model, it expects that subsequent agreements will primarily use a variable
fee license model, based on the concept of a fee per user per month. Also,
724 Solutions will continue to invest heavily in its financial services
platform and grow its operations in order to keep pace with its customers'
needs worldwide.
"For 724 Solutions, 1999 was an important year. Our technology went live with
Bank of Montreal's Veev service, and we sold our financial services platform
to market-leading financial institutions that included Bank of America,
Citigroup and Wells Fargo," said Greg Wolfond, Chairman and Chief Executive
Officer of 724 Solutions. "We established a global presence with offices
opening in London, San Francisco and Tokyo, and continued to rapidly grow our
employee base, reaching 183 employees by December 1999. We also established
relationships that will help turn our service on with additional financial
institutions and put our product in front of more end-users by signing
strategic cooperation agreements with Sprint, Phone.com, Nokia and Bell South
and building strong relationships with Qualcomm, Palm Computing and Neopoint."
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This press release contains forward-looking statements based on the Company's
current expectations. These forward-looking statements can generally be
identified as such because the statement contains words and phrases such as
the Company or management "anticipates," "believes," "plans," "estimates,"
"expects," "intends" and words of similar import. The statements are subject
to certain risks, uncertainties and assumptions relating to the Company's
operations and financial performance, including risks associated with
competition, demand for the Company's products and services, the costs of
product development, the Company's development of the capability to provide
an application hosting service, the Company's dependence upon a small number
of customers, uncertainties with respect to changes or developments in
economic, business, industry, market and regulatory circumstances and other
risks and uncertainties, including the risks and uncertainties identified in
the Company's filings with the Securities and Exchange Commission and the
Ontario Securities Commission. Actual results or outcomes accordingly may
vary materially from those anticipated, believed, planned, estimated,
expected, or intended. The Company disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
ABOUT 724 SOLUTIONS
724 Solutions provides an Internet infrastructure solution to financial
institutions that enables them to offer personalized and secure on-line
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 on-line banking and brokerage
services through network service providers using digital mobile phones,
personal digital assistants, two-way pagers and personal computers. 724
Solutions' customers include Citigroup, Bank of America, Bank of Montreal and
Wells Fargo. 724 Solutions common shares are listed on the NASDAQ (SVNX) and
TSE (SVN) stock exchanges. Headquartered in Toronto, Canada, the company has
offices in London, U.K., San Francisco, U.S., and Tokyo, Japan. For
additional information visit www.724.com
# # #
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724 Solutions Inc.
SUMMARY FINANCIAL INFORMATION
(in thousands of U.S. Dollars, except per share amounts)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31 1999 1998
<S> <C> <C>
REVENUE
Software development $ 1,697 $ 1,678
Services 1,169 208
Less stock-based compensation related
to software development (1,644) (1,395)
Net revenue 1,222 491
Operating expenses:
Cost of services revenue 1,890 61
Research and development 7,536 2,277
Selling and marketing 2,688 412
General and administrative 3,983 547
Loss from operations (14,875) (2,806)
Interest income 1,044 107
Net loss (13,831) (2,699)
EBITDA (12,914) (2,430)
Loss per share $ (0.82) $ (0.47)
Common shares outstanding (000s)
Weighted average 16,887 5,784
Outstanding at year end 29,402 11,429
Cash used in operating activities (5,500) (4)
Cash provided by financing activities 70,069 2,608
Cash used in investing activities (2,258) (927)
As at December 31 1999 1998
Cash and cash equivalents 65,287 2,976
Total assets 73,242 3,892
Total current liabilities 11,074 699
Shareholders' equity 62,168 3,193
</TABLE>
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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
--------------------------------
Name: Karen Basian
Title: Chief Financial Officer
Date: FEBRUARY 21, 2000
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