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I think MMBG recently posted that the Safend assets were bought out of BK by an outfit called Supercom in Isreal.
You know damn well the Safend guys and the Supercom guys know each other. Well, read a few excerpts from the class action suit pending against Supercom and see if anything looks vaguely familiar to you. Bolds are mine, italics are either italicized in the original file or indicate quotes from co. rep. Seriously, do these all read the same arvard Business Review articles, hang out at the same cigar bars, and plot how to screw naive investors out of their life savings??
...defendant Arie Trabelsi, who had joined SuperCom as its
Chief Executive Officer... In addition to Arie Trabelsi, SuperCom executives also include his wife, Tsviya Trabelsi, who serves as Chairperson of the SuperCom Board of Directors, his son Ordan Trabelsi, who serves as President of SuperCom in the United States, and his other son Barak Trabelsi, who serves as Vice President of the Company’s M2M division.
4. Unfortunately for investors, SuperCom has fallen far short of its "aim" of "increasing [its] transparency" with "new investors." Instead, the family-dominated Company has employed subterfuge to raise capital from the U.S. capital markets at fraud-inflated prices.
When SuperCom finally disclosed its preliminary third quarter 2015 results for the period ended September 30, 2015 on November 30, 2015, two months after the end of that quarter , the Company acknowledged once again significantly missing its own revenue target, this time disclosing that the Company only expected third quarter 2015 revenues to come in at $5.5-$6.1 million, less than half of the $13.38 million the Company had led the investment community to expect, and also acknowledging that it would be forced to slash its fiscal year 2015 revenue and earnings guidance. Once again the Company blamed the miss on purported revenue that it claimed could not be recognized during the quarter – despite its prior adamant claims to having a strong and
broadening pipeline – disclosing that its "financial performance in the third quarter and full-year were impacted by [its] inability to recognize more than $10 million of revenues that were expected
this year, mainly due to delays associated with foreign government customers," and acknowledging that the Company would not see the $10 million until 2016, if ever . The Company also disclosed that its newly appointed Acting CFO would need until at least December 2015 to reconcile the Company's financial reporting and formally report its third quarter 2015 financial results. 12. On this news, the price of SuperCom common stock plummeted by more than $3 per share, or 40%, from its close of $7.70 per share on November 27, 2015 .
Later that day, SuperCom held a conference call with analysts and investors to discuss the earnings release and the Company’s operations. During the conference call, defendants Arie Trabelsi, Ordan Trabelsi and Simona Green made positive statements about the strength of the Company's ongoing business metrics and financial prospects. Specifically referencing the status of the signing of new government contracts during his opening remarks, defendant Ordan Trabelsi emphasized that the Company was on track in those negotiations to meet its annual targets, stating in pertinent part as follows:
We continue to be encouraged by the number, quality, stage, size and time of opportunities we have in our sales pipeline. Today we have a large amount of open proposals in various stages in many countries around the globe and we believe we are well positioned to achieve our stated goal to secure at least one to three new deployment contracts a year also in 2015 . The number of advanced paged tenders in our pipeline increased during the first quarter which adds to our confidence. In addition, and as a result of successful integration of SuperCom and the SmartID division in 2014, the current deployment of multiple, significant new projects in parallel and our healthy balance sheet and growth prospects, we are now well positioned to work on larger tenders, which as two standalone businesses were not previously in the position to handle. Based on our success in 2014 and our current visibility following the close of the first quarter, we remain optimistic about SuperCom's future in our fast growing market .
Later on in the conference call, responding to an analyst's inquiry as to why SuperCom was not raising its guidance in light of the "very bullish" comments its executives were then making concerning its purportedly having "more contract wins coming in," defendant Ordan Trabelsi stated that the Company’s guidance was "conservative," stating in pertinent part as follows:
Our guidance is on a conservative nature. We like to take in account that we have very high visibility for like wins in 2014 that are being deployed, recurrent revenues and other things . There are very large vendors out there and some were performing very well off and when those are, if and when those are finalized we will announce those and that will exceed our guidance first, so we don’t take guidance into account at this stage .
...SuperCom issued a press release announcing that it intended
to offer and sell an undisclosed number of its ordinary shares in an underwritten public offering. In its press release, SuperCom stated that the offering would be completed pursuant to a previously filed shelf registration statement and that "[t]he Company intend[ed] to use the net proceeds from th[e] offering for general corporate purposes, including working capital," and that it might "also use a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions or businesses that complement its business"
golpe I'm puzzled
by some of your comments on Home Base. You're aware that both Solms and Shephard have resigned from the company, aren't you? And that the BoD members have all resigned as well? Maybe I misinterpreted but it sounded like you thought BS & WS could still have an interest in making the company successful. Such is not the case; they no longer have any affiliation. All stock options, as well as ordinary shares, are essentially worthless. MBFG now controls all collateral. The only items of any worth are things like laptops, office furniture, maybe a box of t-shirts in the storage closet.
Oh by the way---
Read the MBFG contract. Wave was required to give them 10 days advance notice of any bankruptcy filing. That means the BoD, Solms, Shephard, MBFG, and undoubtedly other Wave employees and insiders, likely the most frequent and upbeat posters of the Home Base, have known about it for several days. Wouldn't it be interesting to compare what some of those guys were posting against what they knew was actually about to happen.
Golpe, Player
"Why was the investment bank retained so late in the game"
Answer: The investment bank was retained as part of the strategy to provide MBFG a clear path to ownership of all Wave assets in a bankruptcy. Here’s why it was done this way:
MBFG was obviously aware that bankruptcy was Wave’s likely fate; Wave was already insolvent when it came to MBFG. Therefore MBFG wrote several insurance clauses into the contract. First, it got a secured, first right to all receivables. Second, it got a secured first right to all the IP (read the exhibits in the SEC filing of the deal – I think it’s 10.1; look what’s included in Collateral—essentially everything). Third, it conditioned the deal on Wave engaging the investment group to explore a sale of any valuable part of Wave, whether that was a patent, a program, a contract, or the entire company. All parties knew going in that there was little or nothing of value, but by engaging the “neutral third party” and failing to find a buyer for anything, MBFG now had a solid, legitimate case for smooth sailing through the bankruptcy process.
The bankruptcy trustee is charged with making sure that no one “steals” a valuable asset out from underneath the creditors as a group. But the trustee can’t just take MBFG’s word that they aren’t sneaking off with a hidden gem. Now, however, MBFG can simply point to the investment bank and say “See, Wave hired these pros to shop their assets, they scoured the planet, but they couldn’t find any takers. The best offer they got was $XXX. By contract, we own everything and you can see for yourself that “everything” will just barely cover what we’re owed.” For his part, the trustee can point to the investment bank as independent due diligence on the (lack of) value of the company.
So as of now, Paul Candau and Cal McGinnis are the owners of Wave Systems.
No wonder it's so easy to take investors' money
"As part of that, I just looked at the historical listing of our price on the NASDAQ site. We have been above a dollar when the numbers are adjusted for 15 days now. I don't know whether that eliminates that issue for the NASDAQ or not, but I'm wondering if it wasn't part of the plan."
After all these years, at this age, after all the previous rounds of discussions during reverse splits of this stock, to still have such a fundamental misunderstanding. It is simply beyond words.
As for things that "are a given", let me tell you what is a given: there will be no Nationz revenue. There will be no DB revenue. There will be no MS revenue.
There. Now you've been given some truly useful information.
OMG, WAVX must have announced another 1:100 RS!?
Yeah I can't figure it out.
I agree with you that he probably didn't exercise out of the money options. If he had, I think that would have showed up in a Form 4. Likewise, if he'd been granted additional options, it should have showed up in a filing. I can only think of 2 mechanisms: 1, which i mentioned previously, would be an ESPP buy, but by my estimation it would only account for about half the delta, and why would he hold onto those shares vs disposing of them immediately in July? 2) would be some kind of weird shares-in lieu-of salary, given Wave's cash constraints but, again, if I were being given shares, I would unload them as fast as I possibly could.
Maybe someone could ask Shephard to explain it on the Q3CC.
These are new lows, even for WAVX
This Master License Agreement has the infamous IBM PR written all over it. The way it was presented, it sure sounded like a sale, with money coming in the door. But when you go over it carefully, it’s every bit as big a pile of nuthin as the IBM announcement was. This is nothing more than an agreement on pricing. Here’s the ubiquitous tell-tale phrase: “While there are no minimum order requirements under the agreement, discussions for additional orders are underway.” Rest assured the revenue from this contract will be minimal. And you know that for a fact based on the statement in the subsequent factoring agreement with MBFG—in the 8K they stated that paying off the $500k bridge loan was still a serious concern; if this contract was going to be worth even the paltry sum of a couple hundred thousand $, Wave could get an advance against it and pay off a chunk of the bridge loan. Solms even referred to it as “a large scale contract” instead of invoking the word “deployment” (or “sale”) because the deployment will be too small to matter. And he added that Wave “will remain engaged with” the company. That’s terminology you use when you’re trying to make a sale, not when you’re working with them to complete an install. And when you think about it, it answers the question of why any reputable company would buy product form a small company on the verge of bankruptcy. The answer is, THEY DIDN’T buy anything. They merely put the screws to Wave to get them to agree to ultra-cheap terms in case they ever do want to buy anything, which will likely be never.
I hope it’s obvious to everyone that the volume of the last few days was to allow warrant holders (especially MBFG) to sell short or get out before Wave finally goes belly up. Imagine—Wave gave them warrants for almost 10% of the company just for an ADVANCE AGAINST INVOICES. Actually, it’s even more desperate than that—the deal allows ADVANCES AGAINST PURCHASE ORDERS!!! And apparently all the money will go to pay the finder’s fee to the advisor group that is trying to find a buyer for the company. And, on top of that, Wave is simply packing up and walking away from Cupertino. Care to guess how much back rent they’re being sued for?
Oh, the kicker--- have you realized who effectively owns Wave now? Here you go, from the 8k: “Wave has granted MBFG a first-priority, all-assets lien to secure its obligations under the Facility.” There you have it. MBFG, first priority, secured creditor, all assets. Everyone else goes to the back of the line.
I think I see what you mean.
It is pretty baffling and I don’t have a solid answer for you, but I did come up with one SWAG: remember how Solms and Shephard got some of their options rescinded because the grants violated something-or-other. Then they were granted new options that were to comply with the new long-term incentive plan, which essentially replaced the rescinded options. Well, in the April 2015 filing, there is this paragraph:
“Since these stock options are subject to stockholder approval of proposal 3, the amendment to the Wave Systems Corp. Amended and Restated 1994 Employee Stock Option Plan increasing the 162(m) Individual Award Limit and expanding the class of eligible participants, for accounting purposes, these stock options are not deemed to be granted until that approval is obtained and, therefore, no amount relating to these stock options is reported in the Summary Compensation Table for the fiscal year ended December 31, 2014. If proposal 3 is approved by our stockholders, these stock options will be reported in the Summary Compensation Table for the fiscal year ending December 31, 2015”
So my theory is that the April numbers were low because the vested rescinded shares weren’t included in the tally. Now, however, since Proposal 3 passed at the ASM, those shares have been included in the summary. Ballpark it seems like the additional vesting blocks might account for the difference.
First of all
The “rag tag group of opportunists” includes a group of stock-flipping dirtbags who participated in at least one previous deal and made out like bandits at shareholder expense, AND, I believe, a Wavoid pumper who, until his very recent disappearance, was a frequent poster on this and other boards, consistently downplaying and dismissing the risks and putting the most positive spin possible on every WAVX announcement (or lack of one). REALLY SLEAZY.
Now, what was your question about BS’ share count? I have to admit I never paid much attention to those because they’ve been out of the money for so many years that I never considered them as significant pieces of executive comp. I looked at the latest 14A and it said BS had something like 377k shares, 183k of which were vested (exercisable) options. So maybe the balance of ~194k is unvested options?? In the 2014 14A (published April of this year) it says BS was given 2 grants, late 2013 and early 2014, totaling 500k shares. It’s hard to believe he exercised-and-sold many because the share price was back down near his grant price by the time of his initial vesting date. (But maybe he did.) Surely he was granted more in late 2014 or early 2015, but perhaps none of those have vested yet. Is that the disagreement you’re talking about—500k shares granted, but only 377k owned today? Who knows, maybe some of them could even be ESPP shares! If he had contributed 10% of his gross salary, PLUS 10% of his bonus in the first half of 2015, that could have been an ESPP purchase of ~$28,000. The ESPP purchase price for 1H 2015 would have been ~43cents. That would have been a ~60,000 share purchase. But why would he hold on to them? I’m just circle jerking here. You’ll have to fill me in on what the problematic numbers are.
that would be an ingenious way
for B holders to swamp out the A holders, but I don't think it is allowed. I think the proposals are joined at the hip. From the revised proxy:
Please note that the implementation and effectiveness of the Class A Common Stock Amendment is conditioned upon the approval of the Class B Common Stock amendment by shareholders at the Special Meeting and the implementation and effectiveness of the Class B Common Stock Amendment by our Board of Directors thereafter. In addition, the implementation and effectiveness of the Class B Common Stock Amendment is conditioned upon the approval of the Class A Common Stock amendment by shareholders at the Special Meeting and the implementation and effectiveness of the Class A Common Stock Amendment by our Board of Directors thereafter.
As I read it, a proposal needs to be approved by the shareholders AND implemented by the BoD in order for the other to effective, and vice versa.
good points
Also, I can't square the change in outstanding shares between the time of the loan announcement and the late 10Q, which was only about a million shares, which wouldn't be enough if they had to sell shares at ~$0.16 to raise $500k. So I'm probably wrong. But maybe they're in the process of selling them. It will be interesting to see what number appears in the 14A this week. It will also be interesting to see if they stick with 5, 10 and 20.
Player, about that "debt"
I think you (and some others) may be mistaken about the status of the $588k bridge loan. In late September Wave announced the loan. Then in early November they filed a form D for the issuance of new securities (shares) which stated that $490k of securities were already sold and $0 in securities remain to be sold. I interpret that filing to mean that unregistered shares were already sold in an amount sufficient to cover the principal of the loan. Therefore, I assume the bridge participants have likely already been repaid their principal, although (a) I could be misinterpreting the form D or (b) the amounts could be coincidental and Wave could have kept the $490k and the bridge participants have not received any repayment yet. However, if I'm correct, the participants are owed only the interest, so the debt is not that large. It's unclear to me how many shares they could receive if Wave defaults only on the interest payment, and not on the principal. If my interpretation is correct, the participants got a pretty decent deal-- quick principal repayment (downside gone) and interest/cheap shares on the horizon (only upside remains).
Oh, and for whoever the Wavoid was that posted "sure wish we knew who participated in the loan": It's in the S3, under "beneficial owners." As always, Wavoids never read the most important documents. Here's a paste of the table.
Name of Beneficial Owner
Number of Shares Beneficially Owned Prior to Offering
Maximum Number of Shares that May be Sold Under this Prospectus
Number of Shares Beneficially Owned After Offering (assuming the sale of all shares that may be sold hereunder)
Percentage of Beneficial Ownership After Offering (assuming the sale of all shares that may be sold hereunder)
Anson Investments Master Fund, LP(1)
6,328,674(2)
5,369,095(3)
959,579(4)
1.6%
Apryl Waldman
805,365(5)
805,365(5)
0
0.0%
Kevin Gusinow
1,775,795(6)
1,610,729(7)
165,066(8)
0.3%
Pinz Capital International LP(9)
2,684,548(10)
2,684,548(10)
0
0.0%
Walton Rutherford
1,947,674(11)
1,342,274(12)
605,400(13)
1.0%
William J. Garner
536,910(14)
536,910(14)
0
0.0%
ZSP Capital LLC(15)
805,365(16)
805,365(16)
0
0.0%
mymoney-- it's 240, not 32
Maybe i misunderstood your post, but 3 reverse splits -- 1/3, 1/4 and 1/20, cumulatively are equivalent to a 1/240 reverse split. The stock will need to rise to $2.40 to be worth 1 cent in circa 2000 shares.
not that it matters...
But I think Wave doesn't meet the 45 day filing deadline due to the postponement til Monday. I hope this will help the naz feel extra good about delisting them.
Does anyone know why Wave security blog still dead?
Is this a sign? Are there any blog contributors still employed? When will the entire site go dark?
Why no tweets in all of August from our savior Bill Solms? Could it be the lawyers told him to shut up? Does he even go in to work anymore?
The proverbial coiled spring.
Over $5000 in shares traded yesterday and almost $9000 traded today! Come on Barge, dredge up some fresh comparisons to Apple and Microsoft! WAVX is obviously a gorilla ready to break out of its cage!
Another happy employee
Latest review:
“Inside Account Executive ”
Current Employee - Inside Account Executive in Austin, TX
Doesn't Recommend
Negative Outlook
Disapproves of CEO
I have been working at Wave Systems (Less than a year)
Pros
5 days remote role; great people
Cons
financially unstable company with a horrible CEO
Advice to Management
Hire a new CEO
I dreamed about Wave last night.
Of all the things to dream about! But then I did have pizza for dinner. I seem to dream more after pizza for whatever reason. Anyway, I was attending an investment conference and walked into a room where Wave executives were presenting their pitch to sell the company. They were asking for $1 million dollars for a 51% stake in the company. I went over to talk to Solms and he started pitching me. His pitch had nothing to do with tech or business plan or anything like that. He kept saying that I should invest because "they really needed the money." He was willing to take individual investments as little as $250k, hoping to get 4 buyers. He seemed so sincere I was tempted, but I turned him down. I hung around the room for a while to see if they would get any takers. The afternoon wore on and they just seemed to be getting more and more desperate. then I woke up, and I felt really good.
someone please refresh my memory
When did scrambls.com website go dead? Was it a long time ago or just recently?
Also, I notice the Wave blog site is down. I wonder if they are deleting all the contributors (except Solms) because they don't work for Wave anymore?
Here's the damning admission from Collins himself:
" Why we have not closed deals- ...the lack of real benefit for taking the risk of being first in deploying this very new solution...."
What he means:
a) the solution itself is risky; ie it may not provide a significant or sufficient improvent in the level of security
b) the implementation of the solution is risky; ie, the software is kludgy, buggy, difficult to use, easy for users to experience problems
c) the company is risky; ie Wave may not be around to support the product
and most importantly:
d) there is a "lack of real benefit" - the product actually doesn't do much, and doesn't provide any benefit over what you could buy from a more mature, stable, proven, reputable company.
Thanks for the candor David!
copy/paste from Wavinator
"And btw, there wlll probably be no conference call this month."
He seems to be attributing this to Collins.
If that statement is true, and Wave is planning not to hold a Q2 call (I assume they're still on the hook for a 10Q), then it appears they are getting ready to close up shop. Or, perhaps they are confident that they can sell the company, or have sold it already.
Milking the last blood from the turnip.
An honest man would have filed an 8k notifying everyone that Wave had filed for bankruptcy. But no, Solms is going to keep this thing going as long as he can wring a paycheck out of it. He might be able to string things along for another quarter or two with the reduced opex. Those other guys who were calling Solms a charlatan more than a year ago turned out to be 100% right! I'm guessing they're getting a lot of satisfaction out of recent events.
I'll bet Peter will be one of the last guys still sucking down a paycheck from this sham of a company.
And the travesty is it seems they're giving up on scrambls! Can you believe it? But didn't awk swear that scrambls was going to be Wave's big moneymaker? We're only a couple of days away from the 1 year anniversary of the last post on scrambls Facebook page. Hard to believe Solms is giving up on something that has so much buzz surrounding it.
Indeed.
It seems New Wave has spoken. Based on his past statements, he clearly provides a service of psychologically preparing Wavoids for impending but unannounced developments. He just cleared the way for a partial or full takeout of the company. I'm guessing a no-cash stock swap with another small player in a related space (albeit larger than Wave). In such a scenario Wavoids will end up with shares of another company. Also, in that case, hopes for wave would not be "wiped out" but would be replaced with analogous champagne wishes/caviar dreams of success of the acquiring company.
Exciting times!
This would be very cool
if it weren't so chillingly terrifying:
http://www.zerohedge.com/news/2015-07-21/470000-vehicles-risk-after-hackers-take-control-crash-jeep-cherokee-sofa-10-miles-aw
I think we can safely assume GM cars are OK since they're protected by Wave.
sarc off
Yours may be the most finely honed
sense of humor on the board.
Wave paid (and when I use the word 'paid' I mean OVERpaid) $11 million for Safend, then proceeded to write down somewhere in the neighborhood of $7 million of it. Safend sales are not demonstrably higher today than when Wave bought them. Rest assured, Safend is nowhere near profitable.
Then again, I do know of one investor group that would pay $20 million for something worth about 20% of that. The group's name starts with a "W".
The wording of the PR and 8k are ominous
Prior to the last RS, Wave was prompt in announcing that they would try for the extension, or had been granted it, by virtue of their proposal to cure it with the RS. This time, Wave knew a RS wouldn't solve it because of the market cap deficiency. Thus the "company is considering its options" language in the latest filing.
My guess is they will forego requesting a hearing because they know they cannot present a convincing plan. I think Solms sees the writing on the wall. The only question is whether they will try to sell more shares at the market in order to keep the doors open a few weeks longer. In fact, it wouldn't surprise me if they are doing that right now.
tomorrow might be interesting
Presumably, Wave hears from the NASDAQ today regarding the extension. I assume it will be granted but, given the market cap, it might not be a slam dunk. Either way I'd expect an announcement by Friday night.
It will be interesting.
Either way it seems like I can look forward to sharing a bottle of Manishevitz with BMB, maybe with some nice gefilte fish, and perhaps top it off with some palette cleansing halvah. Yum.
BMS
Cypher, with all due respect,
I agree with BMB on this one. The old BoD never cared about shareholders or whether the company was successful or embarrassing or anything else. They were Friends of Peter and nothing more. Heck, Gilder went out of his way to publicly praise SKS on several occasions. To use the parachute analogy, SKS knew full well that the financial altitude was dropping fast, and he pulled his golden rip cord just in time to be able to claw $1 million in severance as the TERRAIN!! alarm was going off. Solms even had to do a placement just to pay SKS off. If you have info to the contrary, I'd love to hear it.
Again, I appreciate your perspectives and opinions and contributions to the board. But in this case I respectfully agree to disagree.
PS, and OT: Does anyone know what happened to Sibble? He sure didn't last long. Does he have too much class, or did he not like working pro bono?