Welcome!

News Feed Item

Wave Reduces Q1 Net Loss on Revenue of $5.3M

LEE, MA -- (Marketwired) -- 05/08/14 -- Wave Systems Corp. (NASDAQ: WAVX), an enterprise security software provider, today reported first quarter (Q1 '14) results for the period ended March 31, 2014. Wave will host a live webcast http://www.media-server.com/m/p/cz93i98z and conference call (415-226-5357 or 212-231-2930) today at 4:30 p.m. ET to review its Q1 results and progress to date in 2014.

Q1 Financial Highlights

  • Wave's Q1 '14 net loss was $3.3 million, or ($0.09) per basic share, compared to a net loss of $10.2 million, or ($0.39) per basic share in Q1 '13. The Q1 '14 net loss included one-time severance expenses of $0.4 million related to Wave's former CFO while the Q1 '13 net loss included $4.2 million in non-cash impairment charges. The Q1 '13 net loss per basic share has been adjusted for a 1-for-4 reverse stock split effective July 1, 2013.

  • Q1 '14 combined SG&A and R&D expenses declined by 25% to $8.3 million versus Q1 '13 as a result of management's ongoing cost reduction initiatives. Excluding the severance expenses noted above, Wave's Q1 '14 SG&A and R&D expenses would have decreased by 29% as compared to Q1 '13.

  • Licensing and maintenance net revenues rose 7% in Q1 '14 to $5.3 million compared to $5.0 million in Q1 '13. The increase in licensing and maintenance revenue was due primarily to an increase in revenue recognized on Wave's license upgrade sales. Services revenue decreased by $0.8 million as this amount earned during Q1 '13 was related to a contract with the United States Department of Defense that was completed during 2013.

  • Q1 '14 total billings declined 17% to $4.9 million vs. Q1 '13 total billings of $5.9 million. This was due primarily to a decrease in services billings of $0.8 million and a decrease in OEM billings of $0.4 million offset by an increase in licensing and maintenance billings of $0.2 million. The decrease in OEM billings consisted primarily of a decrease in Dell-related OEM bundling billings due to a continued decline in total units shipped.

Working Capital and Fundraising

  • At March 31, 2014, Wave's total current assets were $8.0 million, while total current liabilities were $13.6 million, including $6.9 million in deferred revenue. Cash and cash equivalents rose to $4.3 million at March 31, 2014 compared to $2.1 million at December 31, 2013 and $1.8 million at March 31, 2013.

  • During Q1 '14 Wave sold 5.4 million common shares at an average price of $1.02 per share, for net proceeds of $5.3 million, through its At-The-Market (ATM) share sale facility. Subsequent to March 31, 2014 Wave has not raised any additional capital thorough the ATM facility but will continue to evaluate its financing needs.

CEO Commentary:
"The first quarter of 2014 saw modest but welcome increases in software license billings and revenues over Q1 2013. Combined with significant reductions in our operating expenses from a year ago, the execution of multiple new licensing and marketing agreements with partners that are leading to new revenue streams and the replacement of several key members of the Wave management team, Wave is now showing visible signs of progress in implementing our strategic transition plan. As I said during our last quarterly call, our objectives won't be accomplished in a single quarter or two -- this will be a longer-term proposition -- but I believe we are on track to achieve our goals," said Wave CEO Bill Solms.

"One of the more significant developments came with the addition of a new CFO, the promotion of one of our executives to head up our APAC business and global business development, along with key additions to the North American sales team. We also strengthened our board with the addition of Lorraine Hariton and David Côté, each with first-rate credentials, relevant experience and fresh new perspective.

"I am encouraged by the progress we are making with our OEM partners, including our development activities with Micron and our joint efforts to develop solutions to protect IP-connected embedded devices from malware and our expanded development partnership with Samsung. In January we announced our support for Samsung's new line of flash self-encrypting drives, followed by news of the first shipments of the new Samsung Trusted Platform Module security chips that include Wave's management software -- the culmination of several years of development work.

"On the sales side, we're introducing a growing number of prospects to our Virtual Smart Card solution, one that we believe offers significant cost and implementation advantages over external security tokens that command a significant market today. We also received positive responses at marquee events such as the RSA Conference in February and the Gartner Identity and Access Management Conference held in London during March.

"There is substantial work in front of us. But we are making progress in building a solid foundation for future quarters, and we are working toward our objective of improving our operating results as we progress throughout the rest of the year."

Recent Corporate Developments:

About Wave Systems
Wave Systems Corp. reduces the complexity, cost and uncertainty of data protection by starting inside the device. Unlike other vendors who try to secure information by adding layers of software for security, Wave leverages the security capabilities built directly into endpoint computing platforms themselves. Wave is a leading expert in this growing trend and is leading the way with first-to-market solutions and helped shape standards through its board seat on the Trusted Computing Group.

Safe Harbor for Forward-Looking Statements
This press release may contain forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), including all statements that are not statements of historical fact regarding the intent, belief or current expectations of the company, its directors or its officers with respect to, among other things: (i) the company's financing plans; (ii) trends affecting the company's financial condition or results of operations; (iii) the company's growth strategy and operating strategy; and (iv) the declaration and payment of dividends. The words "may," "would," "will," "expect," "estimate," "anticipate," "believe," "intend" and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the company's ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Wave assumes no duty to and does not undertake to update forward-looking statements.

All brands are the property of their respective owners.


                     WAVE SYSTEMS CORP. AND SUBSIDIARIES
                    Consolidated Statements of Operations
                                 (Unaudited)

                                                     Three Months Ended
                                                          March 31,
                                                     2014        2013 (1)
                                                 ------------  ------------
Net revenues:
  Licensing and maintenance                      $  5,332,539  $  4,993,726
  Services                                                  -       800,000
                                                 ------------  ------------
Total net revenues                                  5,332,539     5,793,726
                                                 ------------  ------------
Operating expenses:
  Licensing and maintenance - cost of net
   revenues                                           312,828     2,225,599
  Services - cost of net revenues                           -       107,361
  Selling, general and administrative               5,201,968     7,179,003
  Research and development                          3,064,673     3,848,982
  Impairment of goodwill and intangible assets              -     2,590,000
                                                 ------------  ------------
Total operating expenses                            8,579,469    15,950,945
                                                 ------------  ------------
Operating loss                                     (3,246,930)  (10,157,219)
                                                 ------------  ------------
Other income (expense):
  Net currency transaction (loss) gain                 (1,711)        1,631
  Net interest expense                                (44,864)      (58,167)
                                                 ------------  ------------
Total other income (expense), net                     (46,575)      (56,536)
                                                 ------------  ------------
Net loss                                         $ (3,293,505) $(10,213,755)
                                                 ============  ============

Loss per common share - basic and diluted (2)    $      (0.09) $      (0.39)
                                                 ============  ============
Weighted average number of common shares
 outstanding (2)                                   38,486,897    26,347,688

(1) Year-ago Q1 period reflects non-cash impairment charges totaling $4.2M
    for the write down of goodwill and intangible assets attributed to
    Wave's Safend subsidiary, of which $1.6M is included in licensing and
    maintenance - cost of net revenues and $2.6M is reflected as an
    impairment of goodwill and intangible assets.

(2) All shares and per share data presented in these consolidated financial
    statements have been retroactively adjusted to reflect the 1-for-4
    reverse stock split.



                     WAVE SYSTEMS CORP. AND SUBSIDIARIES
                     Consolidated Supplemental Schedule
                                 (Unaudited)

                                                     Three Months Ended
                                                          March 31,
                                                     2014          2013
                                                 ------------  ------------
Total net revenues                               $  5,332,539  $  5,793,726
Increase (decrease) in deferred revenue              (426,699)       97,388
                                                 ------------  ------------

Total billings (Non-GAAP)                        $  4,905,840  $  5,891,114
                                                 ============  ============


Net loss as reported                             $ (3,293,505) $(10,213,755)
Net interest expense                                   44,864        58,167
Income tax expense                                          -             -
Depreciation and amortization                         236,648       315,909
Stock-based compensation expense                      414,283       437,706
Impairment of goodwill and intangible assets                -     4,205,000
                                                 ------------  ------------

EBITDAS (Non-GAAP)                               $ (2,597,710) $ (5,196,973)
                                                 ============  ============


Non-GAAP Financial Measures:
As supplemental information, we provide the non-GAAP performance measures that we refer to as total billings and EBITDAS. Total billings are provided in addition to, but not as a substitute for, GAAP total net revenues. Total billings means the sum of total net revenues determined in accordance with GAAP, plus the increase or minus the decrease in deferred revenue. We consider total billings an important measure of our financial performance, as we believe it best represents the continued increase in our software license upgrades. Total billings are not a measure of financial performance under GAAP and, as calculated by us, may not be consistent with computations of total billings by other companies.

EBITDAS is defined as net income (loss) before interest income (expense), income taxes, depreciation, amortization and stock-based compensation. EBITDAS should not be construed as a substitute for net income (loss) or net cash provided by (used in) operating activities (all as determined in accordance with GAAP) for the purpose of analyzing our operating performance, financial position and cash flows, as EBITDAS is not defined by GAAP. However, we regard EBITDAS as a complement to net income (loss) and other GAAP financial performance measures, including an indirect measure of operating cash flow.


                     WAVE SYSTEMS CORP. AND SUBSIDIARIES
                         Consolidated Balance Sheets
                                 (Unaudited)

                                                 March 31,     December 31,
                                                    2014           2013
                                               -------------  -------------
Assets
Current Assets:
  Cash and cash equivalents                    $   4,343,604  $   2,120,102
  Accounts receivable, net of allowance for
   doubtful accounts of $-0- at March 31, 2014
   and December 31, 2013, respectively             2,586,640      2,730,077
  Pledged receivables                                526,765      1,683,188
  Prepaid expenses                                   482,451        488,656
                                               -------------  -------------
  Total current assets                             7,939,460      7,022,023
  Property and equipment, net                        530,603        596,820
  Amortizable intangible assets, net               2,445,246      2,590,920
  Goodwill                                         1,448,000      1,448,000
  Other assets                                       168,281        167,146
                                               -------------  -------------
Total Assets                                      12,531,590     11,824,909
                                               =============  =============

Liabilities and Stockholders' Deficit
Current Liabilities:
  Secured borrowings                                 447,750      1,430,710
  Accounts payable and accrued expenses            6,195,125      6,789,274
  Deferred revenue                                 6,944,706      6,996,239
                                               -------------  -------------
  Total current liabilities                       13,587,581     15,216,223
  Other long-term liabilities                         66,838         78,618
  Royalty liability                                4,434,043      4,509,629
  Long-term deferred revenue                         981,808      1,003,614
                                               -------------  -------------
    Total Liabilities                             19,070,270     20,808,084
                                               -------------  -------------

Stockholders' Deficit:
Common stock, $.01 par value. Authorized
 150,000,000 shares as Class A; 40,385,524
 shares issued and outstanding at March 31,
 2014 and 35,019,740 at December 31, 2013            403,855        350,197
Common stock, $.01 par value. Authorized
 13,000,000 shares as Class B; 8,885 shares
 issued and outstanding at March 31, 2014 and
 December 31, 2013                                        89             89
Capital in excess of par value                   413,591,361    407,907,019
Accumulated deficit                             (420,533,985)  (417,240,480)
                                               -------------  -------------
    Total Stockholders' Deficit                   (6,538,680)    (8,983,175)
                                               -------------  -------------
Total Liabilities and Stockholders' Deficit    $  12,531,590  $  11,824,909
                                               =============  =============


All shares and per share data presented in these consolidated financial statements have been retroactively adjusted to reflect the 1-for-4 reverse stock split.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Silver Spring Networks, Inc. (NYSE: SSNI) extended its Internet of Things technology platform with performance enhancements to Gen5 – its fifth generation critical infrastructure networking platform. Already delivering nearly 23 million devices on five continents as one of the leading networking providers in the market, Silver Spring announced it is doubling the maximum speed of its Gen5 network to up to 2.4 Mbps, increasing computational performance by 10x, supporting simultaneous mesh communic...
Predictive analytics tools monitor, report, and troubleshoot in order to make proactive decisions about the health, performance, and utilization of storage. Most enterprises combine cloud and on-premise storage, resulting in blended environments of physical, virtual, cloud, and other platforms, which justifies more sophisticated storage analytics. In his session at 18th Cloud Expo, Peter McCallum, Vice President of Datacenter Solutions at FalconStor, will discuss using predictive analytics to ...
Let’s face it, embracing new storage technologies, capabilities and upgrading to new hardware often adds complexity and increases costs. In his session at 18th Cloud Expo, Seth Oxenhorn, Vice President of Business Development & Alliances at FalconStor, will discuss how a truly heterogeneous software-defined storage approach can add value to legacy platforms and heterogeneous environments. The result reduces complexity, significantly lowers cost, and provides IT organizations with improved effi...
The cloud promises new levels of agility and cost-savings for Big Data, data warehousing and analytics. But it’s challenging to understand all the options – from IaaS and PaaS to newer services like HaaS (Hadoop as a Service) and BDaaS (Big Data as a Service). In her session at @BigDataExpo at @ThingsExpo, Hannah Smalltree, a director at Cazena, will provide an educational overview of emerging “as-a-service” options for Big Data in the cloud. This is critical background for IT and data profes...
Father business cycles and digital consumers are forcing enterprises to respond faster to customer needs and competitive demands. Successful integration of DevOps and Agile development will be key for business success in today’s digital economy. In his session at DevOps Summit, Pradeep Prabhu, Co-Founder & CEO of Cloudmunch, covered the critical practices that enterprises should consider to seamlessly integrate Agile and DevOps processes, barriers to implementing this in the enterprise, and pr...
SYS-CON Events announced today that Men & Mice, the leading global provider of DNS, DHCP and IP address management overlay solutions, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. The Men & Mice Suite overlay solution is already known for its powerful application in heterogeneous operating environments, enabling enterprises to scale without fuss. Building on a solid range of diverse platform support,...
Sensors and effectors of IoT are solving problems in new ways, but small businesses have been slow to join the quantified world. They’ll need information from IoT using applications as varied as the businesses themselves. In his session at @ThingsExpo, Roger Meike, Distinguished Engineer, Director of Technology Innovation at Intuit, showed how IoT manufacturers can use open standards, public APIs and custom apps to enable the Quantified Small Business. He used a Raspberry Pi to connect sensors...
The principles behind DevOps are not new - for decades people have been automating system administration and decreasing the time to deploy apps and perform other management tasks. However, only recently did we see the tools and the will necessary to share the benefits and power of automation with a wider circle of people. In his session at DevOps Summit, Bernard Sanders, Chief Technology Officer at CloudBolt Software, explored the latest tools including Puppet, Chef, Docker, and CMPs needed to...
One of the bewildering things about DevOps is integrating the massive toolchain including the dozens of new tools that seem to crop up every year. Part of DevOps is Continuous Delivery and having a complex toolchain can add additional integration and setup to your developer environment. In his session at @DevOpsSummit at 18th Cloud Expo, Miko Matsumura, Chief Marketing Officer of Gradle Inc., will discuss which tools to use in a developer stack, how to provision the toolchain to minimize onboa...
Data-as-a-Service is the complete package for the transformation of raw data into meaningful data assets and the delivery of those data assets. In her session at 18th Cloud Expo, Lakshmi Randall, an industry expert, analyst and strategist, will address: What is DaaS (Data-as-a-Service)? Challenges addressed by DaaS Vendors that are enabling DaaS Architecture options for DaaS
DevOps is not just last year’s buzzword. Companies with DevOps practices are 2.5x more likely to exceed profitability, market share, and productivity goals. But how do you enable high performance? What can you do right now to start? Find out from DevOps experts including Gene Kim, co-author of "The Phoenix Project," and the Dynatrace Center of Excellence.
SYS-CON Events announced today that Avere Systems, a leading provider of enterprise storage for the hybrid cloud, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Avere delivers a more modern architectural approach to storage that doesn’t require the overprovisioning of storage capacity to achieve performance, overspending on expensive storage media for inactive data or the overbuilding of data centers ...
SYS-CON Events announced today that Catchpoint Systems, Inc., a provider of innovative web and infrastructure monitoring solutions, has been named “Silver Sponsor” of SYS-CON's DevOps Summit at 18th Cloud Expo New York, which will take place June 7-9, 2016, at the Javits Center in New York City, NY. Catchpoint is a leading Digital Performance Analytics company that provides unparalleled insight into customer-critical services to help consistently deliver an amazing customer experience. Designed...
With the proliferation of both SQL and NoSQL databases, organizations can now target specific fit-for-purpose database tools for their different application needs regarding scalability, ease of use, ACID support, etc. Platform as a Service offerings make this even easier now, enabling developers to roll out their own database infrastructure in minutes with minimal management overhead. However, this same amount of flexibility also comes with the challenges of picking the right tool, on the right ...
SYS-CON Events announced today that Alert Logic, Inc., the leading provider of Security-as-a-Service solutions for the cloud, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Alert Logic, Inc., provides Security-as-a-Service for on-premises, cloud, and hybrid infrastructures, delivering deep security insight and continuous protection for customers at a lower cost than traditional security solutions. Ful...