724 Solutions Reports Fourth Quarter and Year End 2002 Results; Company Ends Fiscal Year With Third Consecutive Quarter of Revenue Growth.Business Editors/High-Tech Writers TORONTO--(BUSINESS WIRE)--Jan. 22, 2003 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 fourth fiscal quarter and year ended December December: see month. 31, 2002. All amounts appear in U.S. dollars. Revenue for the fourth quarter was $5.7 million compared to $5.8 million for the same period last year. 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 loss for the fourth quarter was $2.4 million, or $0.04 per share, compared to $12.9 million, or $0.22 per share, in the same period of the previous year, an 81 percent improvement. The net loss for the fourth 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 $9.2 million or $0.15 per share compared to $45.7 million, or $0.78 per share in the same period last year. On a comparable basis the net loss for the three months ended December 31, 2001, would have been $45.1 million or $0.77 per share after adjustment to remove amortization of goodwill, which commencing January January: see month. 1, 2002, no longer needed to be amortized. For the year ended December 31, 2002, revenue was $20.7 million, compared to $43.8 million for the prior year. Pro forma net loss was $19.7 million or $0.33 per share, compared to $59.3 million, or $1.04 per share, in the previous year. The net loss for the year ended December 31, 2002, computed using GAAP, was $87.4 million or $1.47 per share compared to $554.2 million, or $9.72 per share in the previous year. On a comparable basis the net loss for year ended December 31, 2001, would have been $484.2 million or $8.49 per share after adjustment to remove amortization of goodwill, which commencing January 1, 2002, no longer needed to be amortized. The company ended the year with $38.7 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. "We are pleased with our performance during the fourth quarter of 2002," 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. "724 Solutions has continued to make progress on our cost levels, we experienced another consecutive quarter of revenue growth, and we had the lowest quarterly operating cash burn since the company went public." Conference Call Information The company will host a conference call to discuss the results January 23, 2003, at 8:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy . 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 416/641-6440. A replay will be available for 48 hours following the conference call and can be accessed by dialing 800/558-5253, reservation A clause in a deed of real property whereby the grantor, one who transfers property, creates and retains for the grantor some right or interest in the estate granted, such as rent or an Easement ,a right of use over the land of another. no. 21091275.
724 Solutions Inc. -- Summary of Operations (unaudited)
(In 000's of U.S. dollars, except per share amounts)
Three months ended Twelve months ended
December 31, December 31,
------------------ --------------------
2002 2001 2002 2001
Revenue:
Product $2,953 $2,337 $8,823 $27,054
Services 2,702 3,512 11,905 16,763
------------------ --------------------
Total Revenue 5,655 5,849 20,728 43,817
Cost of revenue(a) 1,680 4,318 7,277 19,286
------------------ --------------------
Gross Margin 3,975 1,531 13,451 24,531
Operating expenses:
Research and development(a) 3,017 6,827 16,636 39,052
Sales and marketing(a) 2,704 7,433 17,241 36,807
General and administrative(a) 1,319 2,905 6,973 15,904
Depreciation 574 1,823 5,068 8,142
Amortization of intangibles 1,243 1,963 4,418 80,172
Stock-based compensation
Cost of revenue 57 145 311 411
Research and development 1,996 5,303 10,872 27,730
Sales and marketing 704 2,929 3,833 11,077
General and administrative 512 1,308 2,787 7,951
Restructuring costs -- 13,055 20,649 16,488
Write down of fixed assets,
goodwill and other intangible
assets 1,285 3,156 7,624 324,617
------------------ --------------------
Total operating expenses 13,411 46,847 96,412 568,351
------------------ --------------------
Loss from operations (9,436) (45,316) (82,961) (543,820)
Interest income 166 591 751 5,773
Equity in loss of affiliate -- (413) -- (1,591)
Write-down of long-term
investments, net 83 (566) (5,197) (14,566)
------------------ --------------------
Net loss for the period $(9,187) $(45,704) $(87,407) $(554,204)
------------------ --------------------
Basic and diluted net loss per
share $(0.15) $(0.78) $(1.47) $(9.72)
Weighted-average number of
shares used in computing basic
and diluted net loss per share
(in thousands) 59,784 58,317 59,419 57,015
------------------ --------------------
724 Solutions Inc. -- Summary of Pro Forma Adjustments (unaudited)
(In 000's of U.S. dollars, except per share amounts)
Three months ended Twelve months ended
December 31, December 31,
------------------ --------------------
2002 2001 2002 2001
PRO FORMA ADJUSTMENTS
Net loss for the period $(9,187) $(45,704) $(87,407) $(554,204)
Adjustments for EBITDASO
Depreciation 574 1,823 5,068 8,142
Amortization of intangibles 1,243 1,963 4,418 80,172
Stock-based compensation 3,269 9,685 17,803 47,169
Interest Income (166) (591) (751) (5,773)
------------------ --------------------
EBITDASO for the period (4,267) (32,824) (60,869) (424,494)
Pro forma adjustments
Restructuring costs -- 13,055 20,649 16,488
Write-down of fixed assets,
goodwill and other intangible
assets 1,285 3,156 7,624 324,617
Equity in loss of affiliate -- 413 -- 1,591
Write-down of long-term
investments, net (83) 566 5,197 14,566
Non-recurring charges 694 2,784 7,733 7,959
------------------ --------------------
Pro forma net loss for the
period $(2,371) $(12,850) $(19,666) $(59,273)
------------------ --------------------
Pro forma net loss per share $(0.04) $(0.22) $(0.33) $(1.04)
(a) The pro forma numbers are as
follows
Cost of revenue 1,615 2,834 6,745 17,306
Research and development 2,796 6,027 13,375 35,440
Sales and marketing 2,355 7,233 14,407 35,676
General and administrative 1,260 2,605 5,867 14,668
(a) EBITDASO -- Earnings before interest, taxes, depreciation,
amortization, and stock-based compensation
724 Solutions Inc.
Consolidated Balance Sheets
(in thousands of U.S. dollars)
December 31, December 31,
2002 2001
(unaudited)
Assets
Current assets:
Cash and cash equivalents $19,129 $60,279
Short-term investments 18,562 28,857
Restricted cash 962 --
Accounts receivable-trade net of allowance
of $150
(December 31, 2001 -- nil) 2,211 8,335
Prepaid expenses and other receivables 819 2,630
---------------------------
41,683 100,101
Fixed assets 1,418 12,525
Investments -- 5,347
Goodwill on business combinations 9,097 9,097
Other intangible assets 3,468 8,760
---------------------------
Total assets $55,666 $135,830
---------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $1,254 $2,728
Accrued liabilities 9,892 15,667
Notes payable 600 3,394
Deferred revenue 1,217 1,386
Deferred consideration 1,414 1,414
---------------------------
14,377 24,589
Leasehold inducements -- 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:
59,833,492 common shares
(December 31, 2001 - 58,375,761) 764,508 763,033
Deferred stock-based compensation (1,616) (19,582)
Accumulated deficit (721,560) (634,153)
Cumulative translation adjustment (43) (52)
---------------------------
41,289 109,246
---------------------------
Total liabilities and shareholders' equity $55,666 $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 network and data 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 North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , 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). with headquarters in Toronto Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing , Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of . For more information, visit www.724.com. This press release contains statements of a forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. 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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