724 Solutions' Third Quarter Takes Significant Steps Towards Profitability; Records Second Consecutive Quarter of Revenue Growth.Business Editors/High-Tech Writers TORONTO--(BUSINESS WIRE)--Oct. 23, 2002 724 Solutions (Nasdaq:SVNX) (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :SVN SVN Subversion (version control system) SVN Slovenia (international traffic code) SVN Social Venture Network SVN South Vietnam SVN Secure Virtual Network SVN Supervised Visitation Network ), a leading provider of next generation IP-based networks and data services, today reported results for the third fiscal quarter ended September September: see month. 30, 2002. All figures are represented in US dollars. 724 Solutions' total revenue in the third fiscal quarter was $5.6 million compared to $5.0 million in the previous quarter and $10 million for the same period last year. Revenue from the sale of services accounted for $3.8 million and revenue from the sale of products accounted for $1.8 million. Pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. , which is earnings before interest, taxes, depreciation, amortization and stock-based compensation expense (EBITDASO EBITDASO Earnings Before Interest, Tax, Depreciation, Amortization and Stock Options ), excluding certain non-recurring and restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). expenses, equity in loss of affiliate, write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of long term investments and fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → write-offs, was a loss of $2.6 million or $0.04 per share compared to a loss of $15.7 million or $0.27 per share in the same period last year. The net loss for the third fiscal quarter of 2002, computed using generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "), was $21.5 million or $0.36 per share, compared to $387.3 million or $6.64 per share in third quarter 2001. On a comparable basis, the loss for the three months ended September 30, 2001 would have been $363 million or $6.23 per share after adjustment to remove amortization of goodwill which commencing January January: see month. 1, 2002 no longer needs to be amortized. The company ended the quarter with $43.8 million in cash, cash equivalents, short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments and restricted cash. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net operating cash burn was $2.6 million versus $7.3 million in the prior quarter. "Our priority is clear, we are moving the company aggressively towards profitability through continued growth and prudent cost management," said John Sims John Sims (1749–1831) was a taxonomist who classified various species of plants. He was the first editor of The Botanical Magazine after the founder, William Curtis.[1] References 1. ^ John Sims, 1749–1831. Darwin Project. , Chief Executive Officer, 724 Solutions. "The new X-treme Mobility Suite of products, our partnership with HP and the success of the implementation of our X-treme Pull Gateway within Sprint's PCS (1) (Personal Communications Services) Refers to wireless services that emerged after the U.S. government auctioned commercial licenses in 1994 and 1995. This radio spectrum in the 1. Vision network demonstrates that our focus on next generation data networks is gaining real traction Traction Definition Traction is the use of a pulling force to treat muscle and skeleton disorders. Purpose Traction is usually applied to the arms and legs, the neck, the backbone, or the pelvis. ." Conference Call Information The company will host a conference call to discuss the results on October October: see month. 24, 2002 at 8:30 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . The conference call will be available over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the through the company's Web site at www.724.com or by telephone at 416/641-6685. A replay will be available for 48 hours following the conference call and can be accessed by dialing 800/558-5253, pass code 20958273.
724 Solutions Inc. -- Summary of Operations (unaudited)
(In 000's of U.S. dollars, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
-------------------- --------------------
2002 2001 2002 2001
Revenue:
Product $1,743 $6,614 $5,870 $24,717
Services 3,809 3,427 9,203 13,251
-------------------- --------------------
Total Revenue 5,552 10,041 15,073 37,968
Cost of revenue(a) 1,225 4,232 5,597 14,968
-------------------- --------------------
Gross Margin 4,327 5,809 9,476 23,000
Operating expenses:
Research and development(a) 3,761 9,308 13,619 32,225
Sales and marketing(a) 3,819 9,751 14,537 29,374
General and
administrative(a) 1,708 2,416 5,654 12,999
Depreciation 1,334 2,422 4,494 6,319
Amortization of intangibles 1,011 26,964 3,175 78,209
Stock-based compensation
Cost of revenue 54 (171) 254 266
Research and development 1,879 8,326 8,876 22,427
Sales and marketing 662 2,804 3,129 8,148
General and administrative 482 2,757 2,275 6,643
Restructuring costs 3,662 -- 20,649 3,433
Write down of intangible
and other assets 2,205 321,461 6,339 321,461
-------------------- --------------------
Total operating expenses 20,577 386,038 83,001 521,504
-------------------- --------------------
Loss from operations (16,250) (380,229) (73,525) (498,504)
Interest income 60 1,101 585 5,182
Equity in loss of affiliate -- (420) -- (1,178)
Write-down of long-term
investments (5,280) (7,750) (5,280) (14,000)
-------------------- --------------------
Net loss for the period $(21,470) $(387,298) $(78,220) $(508,500)
-------------------- --------------------
Basic and diluted net loss
per share $(0.36) $(6.64) $(1.32) $(8.98)
Weighted-average number of
shares used in computing
basic and diluted net loss
per share (in thousands) 59,647 58,317 59,295 56,624
-------------------- --------------------
724 Solutions Inc. -- Summary of Pro Forma Adjustments (unaudited)
(In 000's of U.S. dollars, except per share amounts)
PROFORMA ADJUSTMENTS
Net loss for the period $(21,470) $(387,298) $(78,220) $(508,500)
Adjustments for EBITDASO
Depreciation 1,334 2,422 4,494 6,319
Amortization of
intangibles 1,011 26,964 3,175 78,209
Stock- based compensation 3,077 13,716 14,534 37,484
Interest Income (60) (1,101) (585) (5,182)
--------------------- --------------------
EBITDASO for the period (16,108) (345,297) (56,602) (391,670)
Proforma adjustments
Restructuring costs 3,662 -- 20,649 3,433
Write down of intangible
and other assets 2,205 321,461 6,339 321,461
Equity in loss of
affiliate -- 420 -- 1,178
Write-down of long term
investments 5,280 7,750 5,280 14,000
Non-recurring charges 2,396 -- 7,039 5,175
--------------------- --------------------
Pro forma net loss for the
period $(2,565) $(15,666) $(17,295) $(46,423)
--------------------- --------------------
Proforma net loss per share $(0.04) $(0.27) $(0.29) $(0.82)
(a) The proforma numbers are as follows
Cost of revenue 1,225 4,232 5,130 14,472
Research and development 2,655 9,308 10,579 29,413
Sales and Marketing 2,853 9,751 12,052 28,443
General and administrative 1,384 2,416 4,607 12,064
724 Solutions Inc.
Consolidated Balance Sheets
(in thousands of U.S. dollars)
September 30, December 31,
2002 2001
(unaudited)
--------------- --------------
Assets
Current assets:
Cash and cash equivalents $26,103 $60,279
Short-term investments 16,709 28,857
Restricted cash 962 --
Accounts receivable-trade net of
allowance of $105
(December 31, 2001 -- nil) 2,304 8,335
Prepaid expenses and other receivables 1,485 2,630
--------------- --------------
47,563 100,101
Restricted cash -- --
Fixed assets 2,157 12,525
Investments 67 5,347
Goodwill on business combinations 9,097 9,097
Other intangible assets 6,042 8,760
--------------- --------------
Total assets $64,926 $135,830
--------------- --------------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $845 $2,728
Accrued liabilities 12,811 15,667
Notes payable 1,472 3,394
Deferred revenue 1,254 1,386
Deferred consideration 1,414 1,414
--------------- --------------
17,796 24,589
Leasehold inducements 8 284
Notes payable, net of current portion -- 296
Deferred consideration, net of current
portion -- 1,415
Shareholders' equity:
Share capital
Authorized:
Unlimited common shares
Unlimited preferred shares
Issued and outstanding:
59,646,642 common shares
(December 31, 2001 - 58,375,761) 764,429 763,033
Deferred stock-based compensation (4,885) (19,582)
Accumulated deficit (712,373) (634,153)
Cumulative translation adjustment (49) (52)
--------------- --------------
47,122 109,246
--------------- --------------
Total liabilities and shareholders'
equity $64,926 $135,830
--------------- --------------
About 724 Solutions Inc. 724 Solutions Inc. (Nasdaq:SVNX) (TSX:SVN) delivers reliable, scalable technology and solutions that allow mobile network operators to rapidly deploy flexible and open next generation IP-based networks and related services. Additionally, the company provides a series of actionable Giving sufficient legal grounds for a lawsuit; giving rise to a Cause of Action. An act, event, or occurrence is said to be actionable when there are legal grounds for basing a lawsuit on it. alerting solutions to financial institutions to assist them in increasing revenue, lowering operating costs operating costs npl → gastos mpl operacionales and improving customer satisfaction and retention. 724 Solutions is a global company with development operations in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Switzerland Switzerland (swĭt`sərlənd), Fr. Suisse, Ger. Schweiz, Ital. Svizzera, officially Swiss Confederation, federal republic (2005 est. pop. 7,489,000), 15,941 sq mi (41,287 sq km), central Europe. and Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). and headquarters in Toronto, Canada. For more information, visit www.724.com. This press release contains statements of a forward-looking nature. These statements are made under the "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the U.S. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements include the statements herein regarding: the services and products that will be offered by 724 Solutions, the benefits that businesses will obtain from these services and products and future demand for these services and products. 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 the risk that 724 Solutions will be unable to deploy the solutions and products stated herein, the risk that the demand for these solutions and products, or for 2.5G and 3G networks, will not increase as presently anticipated and other risks described in 724 Solutions' Securities and Exchange Commission filings, including its annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . These risks are also described in 724 Solutions' filings with the Canadian Securities Administrators Canadian Securities Administrators(CSA) is a forum for the 13 securities regulators of Canada's provinces and territories to coordinate and harmonize regulation of the Canadian capital markets. . 724 Solutions does not undertake any obligation to update this forward-looking information, except as required under applicable law. |
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