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alea, despite all the near claims of coolness etc, the degree with which is outside the box is remarkable to me.
WEM will sell other Wave products.
WES will sell other Wave products.
TDM will sell other Wave products.
Other Wave products will sell WEM, WES, and TDM.
So, you going to go buy ERAS because you use scrabls???
Zip in the synergy column. Could the eggs piggy back onto Wave's core business at some point? Sure. So could any multitude of cool ideas. Methinks the core business requires the 110% of attention and resources.
If the core business succeeds, the eggs will be a trivial portion. If the core business fails, the eggs are a blatant waste of resources and attention.
and like two weeks ago, a decent sized presence sits on the bid, apparently putting a floor under this meager volume coast.
Wave transited from cash-flow positive to cash-flow negative, in part by disappointing with the size of the BP contract. While closer examination indicates this appears to be a first installment representing apparently 22% of the planned deployment, this factoid lies well below the common radar.
Wave dramatically increased both SGA and R&D expenses throughout the year while landing only two larger orders (post-GM) over the duration. While these R&D expenditures contribute to the development of products central to Wave’s business (WEM, WES) such efforts also include spending on an app designed to layer trust onto the untrusted backbone of the likes of Facebook. While this software layer on top of a notoriously untrusted web-soft outlet may have promise, it clearly in this incarnation falls well outside the Wave’s core enterprise of building and enabling a hardware-based trust infrastructure from boot, platform and data storage management. Such a development in the face of the current cash-flow situation must make even the most casual investor take pause.
On top of this Wave used significant equity financing to acquire Safend, an almost necessary move bringing control over FIPS certification for removable media, DLP applications, and some level of legacy file/folder encryption.
Finally Wave has enabled an ATM facility as a means to draw against the previous Shelf Registration return after a two-year respite from equity financing of daily operations. Considering that all of these truths have emerged largely emerged in the last 6 months, it may be fair to say that Wave’s share-price has been remarkably resilient.
alea, yes there are those numbers,
but as I cannot understand them,
I made a different digest.
The numbers you link to use e.g booked income which opens the whole can of DefRev worms and so on. Then they start talking depreciation ..., screw that, they are selling software.
I'm simply looking at the balance in the bank at the end of the quarter and the balance in the bank at the beginning of the quarter and call the difference cash flow (after zeroing out AR-AP and removing any cash derived from dilution).
That I can understand, its 'honey what did you spend at the store math'. What was in the wallet when you left for the store minus what was in your wallet when you got back minus any checks written and cash out at the ATM (the ATM pun rather suiting). I do not e.g., depreciate use of the car.
I fear I am making accountants blood boil at this point.
Some Wave numbers:
I'm using the following equasion for "cash flow from operations": cash-flow = (cash at beginning or Q)-AP + AR - (cash from financing activities) - cash at end of Q).
cash flow from operations:
Q2-09: -$6.2m
Q3-09: -$5.1m
Q4-09: -$2.0m
Q1-10: -$1.1m
Q2-10: -$2.1m
Q3-10: -$1.1m
Q4-10: +$5.5m
Q1-11: -0$.4m
Q2-11: +$4.8m
Q3-11: -$5.1m
If one prefers some smoothing then trailing 12 months cash flow from operations is as follows:
Q1-10ttm: -$14.4m
Q2-10ttm: -$10.3m
Q3-10ttm: -$6.3m
Q4-10ttm: +$1.1m
Q1-11ttm: +$1.8m
Q2-11ttm: +$8.7m
Q3-11ttm: +$4.8m
The following is Revs-SGA-COS (what numbers would look like if Wave did not invest in future product development (no R&D).
Q1-09: +$0.3m
Q2-09: +$1.8m
Q3-09: +$1.6m
Q4-09: +$0.8m
Q1-10: +$1.4m
Q2-10: +$1.4m
Q3-10: +$1.9m
Q4-10: +$1.4m
Q1-11: +$1.0m
Q2-11: +$1.5m
Q3-11: +$2.0m
allad,
I don't know, IWM gapped down, formed an island off the Feb3 gap-up, not the sort of thing one would call a bullish environment, but hey, it made a golden cross on Feb 7, not at all dissimlar to Oct25-Nov16 of 2010 gloden-cross-bearish-island and what followed is pretty clear, so who knows.
alea, Acer business,
Yes i think they are essentially a consumer outfitter, I'm looking at them as a BYOD-TPM play were I could imagine they may do well.
On Credant, it seems very likely that the royalty was pretty slim, but the contract doesn't last forever (presumably). Again, as noted by Gartner, Safend's pricing power was apparently pretty lame.
While bundling is largely poo-pooed in these parts, it is still the ultra-high margin engine that pays the bills and to the extent it grows, safford additional investment.
In the shadows,
1. It'd be great to know what the volumes are or are becomming for Acer-TPM-ProShield devices. Acer ships a lot of units in general Q4 estimates in the 9-10m total. Dell estimates are for 11-12m units, and Wave will likely book $5.7m from Dell in Q4 9I can't make the math add up, seems like half of Dells volume would have ETS). But if Proshield numbers approach anything like Dell ETS numbers, Acer should emerge as a 10% customer.
2. Credant experienced rapid growth at first then went flat 2008-2009. They (like Wave) were resurrected by Dell, and their Dell contract is apparently doubling their revs, and perhaps doubling again. Credant was hampered in FDE by the performance cost of soft-FDE on many of the platforms they shipped on (according to Gartner) but presumably that will heal some as platforms have become more robust. Point is, part of Credant's product for Dell is WaveProtector. Is there money there?
go-kite, Nice post. /e
Wave's Roots are in silicon,
unlike say the antivirus vendors gone wild whose roots are in the soft world, Wave was founded to build a chip (the PeterMeter) and use it as a vehicle for secure content distribution. They couldn't push that rock up the hill, and broadened the scope (or vision or whatever) to another chip, a secure execution platform E2100, and they couldn't push that rock up the hill.
Their founding and expertise has been in silicon, secure processor silicon, and now the secure vault lite-version that they (and others) did manage to push up the hill, the TPM. (Peter was at NSM, their last name being semiconductor).
While their patent portfolio is thin at best, their IP in designing, managing, using, and integrating security chips is substantial.
They seek to be the bridge between a requisite secure element and that diverse soft world out there.
As it is incumbent on the chip makers to at least provide some firmware, and even though those are to a standard spec, individualties emerge. Wave's first successful project (weak from the revs side) was to build a cryptographic servive provider (CSP) to abstract away TPM peculiarities and provide a simple tool-kit addressable by other tools familiar to the soft world like MS-CAPI. Layer on ETS, abstract away bios peculiarities, add in ERAS and other goodies designed to interact with other security hardware (SED cryptoelement) and one has a company that interfaces between TPMs/secure-elements and the soft world. Hence they need TPMs. TPMs are to Wave as known oil reserves are to Exxon. Wave must still execute, gain access in a mineral rights sort of way (Samsung e.g.) drill the oil (write the code for Samsung's secure elements) and sell it to Samsung. Same for Seagate and SEDs, and so on. Finally they need to execute in selling the management utilites to the folks that actually end up buying these Samsung thingy's (or Dell thingy's, or WOA thingy's).
TPM deployment = Wave's potential market size
Currently they are the goto in making the TPM more than a obscure piece of silicon.
Thery could get bumped, there will be others, but they are pushing hard, currently lead, and if they execute in this window they will enjoy incumbent status.
I cannot imagine the TPM-facilitator-incumbent-company being worth less than a billion dollars in a year or so as TPMs (and their use) goes mainstream. There are just too many bloody devices.
Concerning Goog,
at least with Chromebook they have already spoken.
It would nice to see the $2.x door close, rather than the ATM functionally provide the liquidity for the pent-up demand of short interest to resolve itself.
Whether it 8-ks is borderline trivial,
The Army presumably means business with the FBCB2 thingy (google this thingy, they are spending Billions), that Wave is apparently being Soled to support what is apparently Wave ERAS-TDM is what folks in business call execution.
There is no bad way to spin it. Mil is huge and getting in is getting in, mil has been very clear they are pushing hard to get the most IT into the trenches they can.
As memory serves $1.7bn has already been spent, when I combine that with the notion that some 100k+ seats have been deployed, it seems to me there is room for 8-k level secure drive management regardless of how it bills.
In the end I would not be surprised to see nothing from Wave in Feb on this, and I would not be surprised to see an 8-k and a PR for $10m. That's my range, something between no news and $10 million.
(I realize none of anything matters unless one records a GAAP-profit within a vague yet specific time frame that has apparently long passed, but my thinking is there are enough fools out there that buy stocks for me to make money in any event).
rwk, there are certainly some ifs,
If one adopts the notion that this would involve the sale of ERAS-TDM, the customizing of it, and that the scale is at the 100k seats or more as one could speculate from this:
http://peoc3t.army.mil/fbcb2/fbcb2.php
and if the Army essentially P.O.s the thing in one blob up front, or otherwise enters into an agreement for the whole thing regardless of how it is billed, then yup, that's an 8-k.
So far what we see from Wave is incrimentalism.
GM gave Wave Gm part 1 (which was big) and then GM part 2.
PwC was incremental to the point of no 8-k, the reproting of which was relegated to the normal kinetics of a quarterly report and only later road-showed. While PwC has stated the plan is for some 100k+ seats of this CSP deployemnt, it was done in the 10k seats here and 10k seat there fashion.
BP is clearly following the same route, we've seen part one, the linkdin stuff portends parts 2 or 3 or so.
I'm inclined to think that the mil has tested and piloted the matter fair bit on this, they have settled on the criteria, settled on a vendor, and are likely to enter into a contract that when all added up is well into 8-k land (and that assumes that the software itself isn't routing through NG).
But in the end I'm staying conservative and figuring an 8-k is a coin toss in Feb on this matter.
accepting that you may be being facetious,
the Army issued a Notice of Sole which represents the last opportunity to formally object or insert oneself into a Sole opportunity, and the window for such insertion ends today according to the link:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=71380876
The speculation is that upon clearing the Sole Notification requirement the Army may proceed to a P.O., and as P.O.s are material events one may speculate that Wave either elects to 8-k the material definitive agreement or feels compelled to 8-k given either the size of the agreement or the degree with which such activity falls outside of Wave's "normal" order of business.
Of course this assumes the Army P.O.s and does so promptly, which is generally the case, I mean the secretary may be sick that day, that sort of thing, but folks
'Don't Notice a Sole,
unless they plan to P.O.'
(I'm thinking Rev. Jackson here)
What Gartner thinks
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=71766208
MDP is an established market with two primary purposes — first and foremost, to safeguard stored data on mobile devices by means of encryption and authentication; and second, to provide evidence that the protection is working.
Encryption offered as a managed cloud service (software as a service [SaaS]): Gartner believes that MDP offered as a trusted service makes sense and can reduce barriers to entry, particularly for smaller companies. Historically, MDP vendors have been unsuccessful at growing SaaS offerings. In this model, theentire management function moves to the cloud so that companies do not need to purchase and install theconsole, and can easily outsource help desk tasks. SaaS currently represents a small percentage of earningsfor the majority of vendors tracked in this Magic Quadrant. The critical technical success factor for cloud-based MDP will include validated distribution of the encryption agent and robust private key management, because this is the basis for building buyer trust.
Government security certifications: The 140 series of U.S. Federal Information Processing Standards (FIPS) and Common Criteria (CC) are generally recognized by all buyers as signs of competence and commitment by an MDP vendor. FIPS 140-2 is the current standard for robust cryptographic engines in the MDP market, and is a requirement for federal government purchases. CC certification is a true international moniker that documents product specifications in a standard format. Gartner recommends FIPS-certified products for all purchases.
Hardware subsystems: Buyers have an increasingly interesting set of tools available to improve the performance of MDP investments. These include Trusted Computing Group's (TCG's) Trusted Platform Module (TPM), a motherboard chip that can securely store certificates and encryption keys; Intel Advanced Encryption Standard New Instructions (AES-NI) to accelerate software-based AES encryption engines; Intel Anti-Theft (AT), asset tracking, remote control and remote lock toolsets built into Intel motherboards; Extensible Firmware Interface (EFI), which enhances the basic input/output system (BIOS) with new 32-bit and 64-bit boot and runtime features; and self-encrypting drives (SEDs) based on Seagate's legacy DriveTrust technology and TCG's open-industry standard, usually referred to as Opal. Among these subsystems, only TPM and Opal have demonstrable sway. TPMs are preferred to augment key management in very high-security implementations, and SEDs are valued by users that try them; however, availability was limited through 2010, and SEDs may continue to be scarce in 2011, hampering the attempts of many companies to standardize on them.
Key management, storage and destruction methods: Key issues are frequently on buyers' minds because of valid concerns regarding the misuse of user/system key/access credentials resulting from inside attacks, loss, theft and hacking. Poorly managed key methods can result in loss of keys and, therefore, loss of access to critical data. Lax administration controls may allow key access to unauthorized people. Poorly architected or weakly configured encryption products may be vulnerable to brute force or dictionary key recovery on the client device. A well-managed and crafted key system not only avoids these problems but also provides disposal protection tantamount to drive wiping, and is essential to defend against data breaches on lost systems. Buyers are advised to perform thorough evaluations on all applicable use cases.
Wave Systems
Wave Systems is the most experienced supplier of SED management, having pioneered the use of Seagate self-encrypting hard drives as the basis for managed FDE, and was first to ship MDP products to support TCG encrypting drives from Hitachi and Samsung.
Strengths
¦ Wave Systems increased its earnings by nearly 40% in 2010, following on the success of doubling its earnings in 2009.
¦ A dedicated TPM key management server helps companies back up TPM keys to an existing platform, and migrate keys to new platforms for recovery or migration.
¦ A free stand-alone version of the product is included on qualified Dell PCs, and is upgradable to an enterprise managed platform. Additional bundling is available with HP. Embedded system support includes Intel vPro, Seagate encrypting drives, and all commercially available TCG encrypting drives and TPMs.
Cautions
¦ Wave Systems' pure-play reliance on SEDs has limited sales over the years because many buyers struggled with SED availability.
¦ LOB revenue is on par for a niche company. Primary distribution is performed by an OEM-embedded standalone client on selected PC platforms. Users can deploy embedded client-bundled software without upgrading to enterprise management. Unmanaged OEM seats do not generate significant revenue. Trackable and reportable seat sales are at the bottom of the range of vendors, seemingly at variance to revenue.
¦ Wave Systems relies on the SED security architecture, which, at this point, does not map directly to FIPS 140-2. In the case of removable media, it relies on FIPS certifications from its OEM partner, Safend.
Safend
Safend is a file/folder encryption provider that also resells removable media protection to several vendors in the Magic Quadrant, and it is qualified for inclusion based on sales revenue and non-OEM seat sales.
Strengths
¦ Safend has a feature to expose a single application on a locked PC. This means that the PC can display a selected application, but no other access to the PC is allowed. This could be used, for example, to allow a courier to circulate a tablet PC with a sign-off form without exposing access to the system desktop or start menu.
¦ Safend's price for a suite of MDP features with full management is less than average. The price is affordable for small numbers of seats.
¦ Certifications include FIPS 140-2 and CC EAL2.
¦ Platform support is provided for Windows XP through 64-bit Windows 7. Embedded system support is included for Intel vPro.
Cautions
¦ File/folder pure-play vendors are decreasing in the market, and the majority of buyers want FDE as part of the package, even if they don't need it.
¦ Safend's low starting prices for the MDP suite affect its ability to generate revenue. On the other hand, this makes it an attractive purchase; however, its relatively low visibility is a barrier.
¦ Safend has added data loss prevention (DLP) capabilities to the product, but the filtering options are not sufficiently rich to compete on vision with other players in the MDP market that offer DLP.
alea, linkedin and doughnut,
I'm afraid I already had BP doing another tranche as i could never make the last deal add up from a previous surfacing of one of those linkedin bios:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=68939049
This latest one from awk adds a lot more clarity.
So was BP $95/seat? /e
wm, I have 2012
revenue growth (PER SHARE) assuming 9m shares from the ATM and a million shares of warrants for a total outstanding of 100m shares to be between +24% and +60%.
The doubling of reported revs (gross or per share) just ain't gonna happen without some fundamental changes to the way Wave reports revenues and expenses.
The 24-60% represents revenues from $50m to $67m.
I do not think there is a reasonable chance of exceeding $67m booked revs.
Sure, mil could ink a 100m deal, but that would be a multi year deal indefinite-this-and-that that simply would never get on the books in a way that would generate a reported rev number like that.
Revenue and dilution,
I assume for the foreseeable future for WAVX valuation to track top-line growth (or contraction). If one does not think valuation will track top-line growth, then stop reading this. That is the premise.
tracking top-line growth is complicated in a world of dilution.
In a triple-toe-loop/double-axel fit of abacus employment I remind folks of a simple mathematical truth:
Revenue per Share (dilution is thus factored in)
Revenue per share growth WAVX year over year:
2009: +69%
2010: +28%
2011(est): +29%
2011 estimate uses $37m for reported fy 2011 revs.
Analysts,
a recent (Sept 7) Gartner report described Wave as a niche player dependent on SED volumes, hence suffering from low SED volumes, lacking a removable media solution and depending on a partner for FIPS certification and that these things hinder Wave success.
FWIW I don't think Wave is a niche player dependent on SED volumes, but if one accepted the Gartner report then these matters are largely addressed
1. SED volumes are ramping up by anybody's estimate
2. and 3. They now own Safend (DLP and FIPS issues).
There is ETS Acer Edition if one interGoogs, sounds like it is likely rebranded ETS, but hard to tell (along w/ Gateway Edition, NEC edition etc).
AcerPro Shield question,
does anybody know what of Wave is actually in Acer ProShield and what the seat fee is?
Dell bundles ETS for 90 cents or whatever it is, and presumably its more or less the same offering with Acer?
escrow, nice read,
Wave Systems takes an apparent ding due to its reliance on the OEM partner Safend, presumably that matter has been adequately addressed.
unix, In some ways that captures a significant component of the shift (and to your credit you did mention keyfobs etc previously) ... much of the notion of the shift in security bandied about with Wave is that of significant increase in the role of the known device component to that blend. To that end the argument is that the TCG-standard TPM will be a central component to that shift in the blend, and Wave has blanketed the TPM with its product suite. The TPM has been around for a while, Wave has pulled in several 10s of millions of dollars from a few early adopters and enablers (GM, Dell e.g.) and to the extent that TPM adopters (DIB, gov e.g.) and enablers (Samsung e.g.) are on the rise, the blanket of Wave's portfolio of products and expertise surrounding the TPM will in all likelihood result in significant growth for the company. Exactly how much, exactly when, and at what cost (dilution) is not known and forms the basis of speculation in WAVX.
unix
TPT, perhaps more importantly, its not just that big players are getting involved ... they have been involved for a long time. ARM, MSFT, INTC, and users like BA and PwC having been kicking this can for a long time. If they were just getting started it'd be another 5 years. I think we are at the back-end of the 3-5 years that weby mentioned, and that is the time that the machine lurches forward. In the second of the lurch some are suddenly drivers, others are suddenly crushed, and all roles are redefined.
I am inclined to think Wave has positioned itself as best they can for the lurch when the fault line goes active and look forward to the animation.
weby, I prefer underthink
(and wd, I would certainly revel in pointing out the less than obvious, but for my brain I just find more gold in obvious things)
Weby, I misunderstood the "one line" to which you referred. Certainly that one line meant 'c ya Dell' to me as far as pole position for leading customers for Wave, but not today.
It was said here that Wave was shocked at the lack of response to the Samsung announcement. Samsung partnering with Wave as their goto for TC is no small matter (IMO). While I'm not surprised at the tepid response, I've come to expect that as often as not the wrong things get the most response.
It seems there is some frustration at Wave right now (window trimming to their considerable optimism). Ed Green's taking the moment to state that Wave co-authored the NIST reg in that blog piece seems a bit of 'seriously folks, don't you see what's going on here?'
I imagine during the pre-event times at the Manhattan Project that estimates of yield when chain-reaction was ultimately manifest were over quite a range. Nevertheless, I do not doubt they were wearing ruts on the rods of their abaci. There was no doubt a low end boundary, if critical mass is achieved ... there was likely little doubt they would be able to power a light bulb. I generally dwell in lower boundary land and leave all the uber-exponenty stuff to the who knows.
I think the single issue dwelling (e.g. Win8) is at this point entirely missing the point. The breadth of the migration to TC has entirely eclipsed the notion of a requisite leadership move by Wintel. All must accommodate TC to maintain relevance. NIST et al are requiring it (and having Wave help write the regs), Dell has been leaning on Wave for TC for years (and paying 10s of millions of dollars to them for it), Samsung has selected Wave as their TC guru across their product lines (really no Wintel here at all at this juncture), component manufactures like Micron give 250k to make sure their stuff is TC compliant and that it is Wave-TC. The rate that these efforts: Wave, MSFT, Dell, Samsung, ARM, DoD, All.gov, DIBs, and the whole mobile-multi-consortia megopoly actually transition is unknown, but certainly getting closer.
Trying to speculate about what this will mean to Wave is early Manhattan Project stuff, but by my estimate they will definitely be able to power a light bulb.
While "IT'S COMING!", "it" is a box with a lot of logos on the outside the contents of which in terms of what those logos end up really meaning is still guesswork. A well-illuminated, well-advertised, well-labelled black box.
weby, I'm afraid I'm a bit lost.
Kisamura IMO asserted a notion that this board is a blob of monomorphic groupthink that migrates from one false savior to the next.
I disagreed.
Wavedreamer then lectured me about the emerging TC paradigm.
Something you are apparently clarifying.
Yup, Yes, (more or less).
wavedreamer, yes. (more or less) /e
kisamura, depending on what one calls "all about",
It was as well argued that INTC wasn't going to amount to a hill of beans as they, well, they don't build computers. On "used to be Dell", Dell is about $20m a year which for me doesn't belong in the past tense. I'm very high on Samsung and feel Samsung can displace Dell for pole position customer, you know, next year. Samsung, like Dell, builds things that they sell to people instead of just components that they sell to businesses (INTC). I don't expect a dime from MSFT, never have, likely never will. Again, they don't build devices that they sell to people. They build software that goes on devices, and mostly software that they bundle with those that build devices to sell to people. Seeing that Wave is about known devices, I expect Wave to derive most of its revenue directly from or in close association with those that build COTS end-user devices, not their parts. While Samsung does a lot of both, the various BRCM, ATML and whatever deals have shown that supporting code for those bits of parts don't seem to add up to much. You got me on Compaq, I as many bought the secure uber-reader effort as one that would pay off. Nope. The Samsung deal IMO is more akin to the Dell deal, but that does remain to be seen. While some point to MSFT as a direct source of revenue, as many or more point to it more as a climate-ecosystem thingy. Multi-platform management of TPM aware thingys does require there be multiple TPM aware platforms. I have no idea where news next week notions are coming from, although I think there is a 50/50 chance of something related to the Army's Sole the following week, but I seriously doubt anything that would move SP to 3 bucks much less up a couple of bucks.
unix, "doesn't appear to be using it",
If you look at the bios is the TPM owned/enabled? I certainly do not expect any Wave bundled in Win8, I think the notion at this stage isn't tenable based on what is known, but whether/how Win8 is activating the TPM and its TPM management interface which I thought got a new wrapper in Win8 would be interesting.
WaveXpress, ... the debacle
Certainly I, and others, have pounded Xpress as a pit into which $50m or something was thrown for nuttin.
Awk (again, if I can be so bold) has it seems indicated that this is not true, and the Xpress development is a valuable asset for future growth.
I am none of: a software engineer, a silicon guy, a satellite guru, an accountant, nor stock technofundamentalist extrodinarie ... so bear with me ...
but in reading what I could about the Army's Sole, the FBCB2, thinking about drones landing safely in the wrong countries, and what it seems the Army wants to do with FBCB2 ... it seems the plan is for an awful lot of secure digital bit-packs to get thrown around in space interactively with a lot of end-points and tethered to a internet behemoth here there and everywhere.
It seems that perhaps the well applauded WinTel-TPM-becometh-Droid-iOS-whatever-TPM technosphere where Wave is gaining traction and the "failed' Xpress endevour digital secure bits through space may see some convergence. At least the expertise of working with that whole Sarnoff thingy puts some IP in Wave's camp to help the mil solve some of its challenges.
player1234, oops,
somewhere I morphed you into permit_guy, a reflection of my deliberately short-term memory, which is reflected in my posts, which rarely end in the same Post Code where they started.
In summary according to my math current cash flow circumstances may well require Wave to sell 25-30k shares a week. That's not going to plow through the ATM very quickly at all. Additional investment by Wave above and beyond current investment rates (after adding continued growth in these expenses) will certainly move through it faster.
permit (and NW)(and unix) comparing an arbitrary value to another arbitrary value doesn't make it any less arbitrary. "Days to cover" may be among the most useless pieces of data available. In the days of people calling brokers on telephones to trade based on quotes of yesterdays closing prices read in a newspaper "days to cover" meant something. Today, with HFT blasting through the whole float of an equity before lunch when the silicon feels like it, I'm a bit surprised that arbitrary artifact is given any consideration by anybody. So in a sense I agree with you, the "9+ m share overhang" factoid has as much value as whatever the "days to cover" for WAVX has.
I'm not trying to pick a fight with you permit, I'm simply trying to illustrate that measuring overhang in terms of how much of the 9 million shares (which is an arbitrary vale) has been worked through is malarky.
I'm not making a case for whether the whole ATM facility will or will not be used per se, or at least I didn 't intend to ... because its not enough.
For months I've been pining that Wave was going to PIPE about now. They didn't, they did this ATM thingy. I figured that PIPE about $10m, more than they need to cover any doughnut hole I percieve. That was never meant to imply Wave would not seek additional capital, but my thinking was later and for more ... several tens of millions of dollars after the SP and rev stream was well established.
The ATM is intriguing in that while it dwarfs the nearer term doughnut whole as i see it, it falls short of the knid of capital dump I imagine for some sort of M.A or whatever. All of that is past my foggy specs, but who knows.
The May 19th 2013 date is simply an illustration that accommodating current cash flow needs is a drip drip drip of dilution, not a flood (as things currently stand). Greater use of the ATM will represent de novo investment above and beyond that on the table now and well beyond the significant QtoQ growth of SGA and RD built into my numbers.
I welcome additional investment hoping all the while that such investments are wonderful and happy and all those things.
Alea's point, if I can be so bold and butcher to no end, ... that ... RD investment is asset creation which as currently formulated hits the books simply as an expense, and I like asset creation, GAAP books be damned.
Unix, I recommend checking out Safenet, public for many years, steadily increasing mktcap (that's shareholder value) never made a dime, taken private 2007 amid some options/warrants scandal stuff, filed for an IPO a year and a half ago, broadly figured to be worth at least a billion dollars (I think perhaps they have made a penny somewhere, not sure) 1/3 of budget has durably been R&D, always short of "profits" and always worth more than they were the day before (within reason). Singularly focusing on "profits" overlooks much of a companies valuation. Right now Wave's valuation will track top-line.
brant, yes something it seems a few of us have considered this point, to the extent that short interest represents inevitable demand and to the extent that the ATM represent inevitable supply, the ATM could essentially provide the share liquidity for covering ... with a catch ... the ATM is for a fixed amount of money, should circumstances take the SP lets say $5, then that's $50m of covering against a fixed dollar supply of shares.
As the SP goes up the ATM loses its effectiveness in providing share liquidity as it represents a fixed dollar amount whereas the short interest is a fixed share obligation.
That coupled with the comparative discretion afforded in tapping the ATM facility versus the comparative urgency of broker issued calls in a squeeze it would seem that a reasonable amount of discomfort could in theory occur.
I'mnot much of a squeeze guy as the event by its nature is transient and I am unlikely to seize the rocket so speak, but for those who dream of such fireword the current coincidental alignment of the short:AMT ratio is just that, a current coincidence.
And FWIW on the ATM and overhang,
should Wave find a need to sell the shares as I outlined (135k shares a week at $2.2 a share to make cash flow break even, in the absence of any of the typical larger cash infusions ) then the overhang will be worked through somewhere around May 19th ... of 2013, which hopefully illustrates the truly artificial notion of some fixed overhang to be worked through.
player, I beg to differ.
To me AP and AR determine cash need.
Cash need determines ATM use.
ATM use presumably represents the "9+ million share overhang"
I cannot take any one of the three (AR, AP, ATM) and consider it moot in relation to any of the others.
I can tell we're just going to have to agree to disagree on this, but at least recognize that the notion of "9+ million shares" is rather arbitrary and depends significantly on full ATM use and rather static share prices. I expect neither.
player, obviously it all depends on what one calls overhang.
edit AMT=ATM
WAVX has a Class A authorization limit of 150m shares, the current shelf had about $20m dollars (not shares) for which an AMT facility was set up (again, set up in dollars, not shares).
Recently 5+m shares were authorized drawn against the shelf for Safend. Some call that overhang ... others might call out-of-the-money options overhand (as they would become live as the SP transited their exercise price).
Wave has basically printed about 110m shares as I recall (my numbers are more like 105, but somebody said there is another 5 I'm somehow missing), about 90m of them issued, about 15-20m in options and warrants many of which are in the money, many of which are not.
At current share prices the AMT amount in dollars converts to about 9m shares.
Add it all up, subtract it from 150m authorization limit and one gets to something like 30 million shares left.
I'm not sure which of those is specifically the overhand at this juncture but I presume you are referring to the AMT facility, which if fully leveraged represents a number of shares that changes by the minute depending on market prices (hence the at-the-market notion).
If what you are looking for is a weekly update on how many shares MLV sold for Wave through the AMT, I seriously doubt that's in the cards.
I figure Wave had about $2.7m in cash at the end of the year and they lose about $300k or so a week (very roughly, likely less). One could bust out an abacus and do the math and if they arbitrarily say Wave wants to always have $1m in the bank then somewhere around Feb 11th Wave needs to sell about 135k shares a week at $2.20 (or about 27k shares per trading day) to keep the cash balance steady.
That's all back of the napkin, but getting weekly updates on revenue, AMT use, AP and AR just ain't gonna happen.
It is important to realize that Wave mgmnt has no incentive to sell these shares through the AMT. It dilutes their holdings and depresses the price for their annual option exercise/dump. It is only reasonable to assume that the facility will be used only as needed and as needs are determined largely by revenue ... who knows what will happen, whether AR-AP will be made straight (as my modeling does) and so on.
player, expect updates to shareholder equity to be included in quarterly reports,
see e.g.:
http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=8233117-15601-21795&type=sect&dcn=0001104659-11-062733
So while the Annual Report will not have any data for the AMT, the Q1 report early May will likely have a line item added for the AMT facility.
The Annual Report will likely show the exercise of Warrants from previous PIPEs (IMO) such as closing out the Series K which was due to expire (unless that had already been done and it slipped under my radar).
I propose a Poll Question in late April to guess how many shares Wave sold via AMT in Q1, the winner gets to feel like a smartypants.