SYS-CON MEDIA Authors: Elizabeth White, Liz McMillan, Pat Romanski, Esmeralda Swartz, Kevin Jackson

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
“This win means a great deal to us because it is decided by the readers – the people who understand how use of our technology enables new insights that drive the business,” said Matt Davies, senior director, EMEA marketing, Splunk. “Splunk Enterprise enables organizations to improve service levels, reduce operations costs, mitigate security risks, enhance DevOps collaboration, create new product and service offerings and obtain deeper insight into customer behavior. Being named Best Business App...
The Industrial Internet revolution is now underway, enabled by connected machines and billions of devices that communicate and collaborate. The massive amounts of Big Data requiring real-time analysis is flooding legacy IT systems and giving way to cloud environments that can handle the unpredictable workloads. Yet many barriers remain until we can fully realize the opportunities and benefits from the convergence of machines and devices with Big Data and the cloud, including interoperability, ...
The move in recent years to cloud computing services and architectures has added significant pace to the application development and deployment environment. When enterprise IT can spin up large computing instances in just minutes, developers can also design and deploy in small time frames that were unimaginable a few years ago. The consequent move toward lean, agile, and fast development leads to the need for the development and operations sides to work very closely together. Thus, DevOps become...
SYS-CON Media announced that Cisco, a worldwide leader in IT that helps companies seize the opportunities of tomorrow, has launched a new ad campaign in Cloud Computing Journal. The ad campaign, a webcast titled 'Is Your Data Center Ready for the Application Economy?', focuses on the latest data center networking technologies, including SDN or ACI, and how customers are using SDN and ACI in their organizations to achieve business agility. The Cisco webcast is available on-demand.
Datapipe has acquired GoGrid, a provider of multi-cloud solutions for Big Data deployments. GoGrid’s proprietary orchestration and automation technologies provide 1-Button deployment for Big Data solutions that speed creation and results of new cloud projects. “GoGrid has made it easy for companies to stand up Big Data solutions quickly,” said Robb Allen, CEO, Datapipe. “Datapipe customers will achieve significant value from the speed at which we can now create new Big Data projects in the clou...
IoT is still a vague buzzword for many people. In his session at @ThingsExpo, Mike Kavis, Vice President & Principal Cloud Architect at Cloud Technology Partners, discussed the business value of IoT that goes far beyond the general public's perception that IoT is all about wearables and home consumer services. He also discussed how IoT is perceived by investors and how venture capitalist access this space. Other topics discussed were barriers to success, what is new, what is old, and what th...
The Internet of Things (IoT) is rapidly in the process of breaking from its heretofore relatively obscure enterprise applications (such as plant floor control and supply chain management) and going mainstream into the consumer space. More and more creative folks are interconnecting everyday products such as household items, mobile devices, appliances and cars, and unleashing new and imaginative scenarios. We are seeing a lot of excitement around applications in home automation, personal fitness,...
Security can create serious friction for DevOps processes. We've come up with an approach to alleviate the friction and provide security value to DevOps teams. In her session at DevOps Summit, Shannon Lietz, Senior Manager of DevSecOps at Intuit, will discuss how DevSecOps got started and how it has evolved. Shannon Lietz has over two decades of experience pursuing next generation security solutions. She is currently the DevSecOps Leader for Intuit where she is responsible for setting and driv...
Dale Kim is the Director of Industry Solutions at MapR. His background includes a variety of technical and management roles at information technology companies. While his experience includes work with relational databases, much of his career pertains to non-relational data in the areas of search, content management, and NoSQL, and includes senior roles in technical marketing, sales engineering, and support engineering. Dale holds an MBA from Santa Clara University, and a BA in Computer Science f...
The Internet of Things (IoT) promises to evolve the way the world does business; however, understanding how to apply it to your company can be a mystery. Most people struggle with understanding the potential business uses or tend to get caught up in the technology, resulting in solutions that fail to meet even minimum business goals. In his session at @ThingsExpo, Jesse Shiah, CEO / President / Co-Founder of AgilePoint Inc., showed what is needed to leverage the IoT to transform your business. ...
SYS-CON Media announced today that PagerDuty has launched a popular blog feed on DevOps Journal. DevOps Journal is focused on this critical enterprise IT topic in the world of cloud computing. DevOps Journal brings valuable information to DevOps professionals who are transforming the way enterprise IT is done.
Things are being built upon cloud foundations to transform organizations. This CEO Power Panel at 15th Cloud Expo, moderated by Roger Strukhoff, Cloud Expo and @ThingsExpo conference chair, addressed the big issues involving these technologies and, more important, the results they will achieve. Rodney Rogers, chairman and CEO of Virtustream; Brendan O'Brien, co-founder of Aria Systems, Bart Copeland, president and CEO of ActiveState Software; Jim Cowie, chief scientist at Dyn; Dave Wagstaff, VP ...
SYS-CON Events announced today that CodeFutures, a leading supplier of database performance tools, has been named a “Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. CodeFutures is an independent software vendor focused on providing tools that deliver database performance tools that increase productivity during database development and increase database performance and scalability during production.
SYS-CON Events announced today Isomorphic Software, the global leader in high-end, web-based business applications, will exhibit at SYS-CON's DevOps Summit 2015 New York, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Isomorphic Software is the global leader in high-end, web-based business applications. We develop, market, and support the SmartClient & Smart GWT HTML5/Ajax platform, combining the productivity and performance of traditional desktop software ...
Cloud Technology Partners on Wednesday announced it has been recognized by the Modern Infrastructure Impact Awards as one of the Best Amazon Web Services (AWS) Consulting Partners. Selected by the editors of TechTarget's SearchDataCenter.com, and by votes from customers and strategic channel partners, the companies acknowledged by the Modern Infrastructure Impact Awards represent the top providers of cloud consulting services for AWS including application migration, application development, inf...