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SigniaDocs Office Locations:
The "Houston office" is a co-location datacenter:
http://www.citoc.com/location-hours.html
The "Florida office" is a house:
http://maps.google.com/maps?f=q&hl=en&geocode=&q=265+North+Bartram+Trail&sll=37.0625,-95.677068&sspn=74.701266,99.140625&ie=UTF8&ll=30.058694,-81.663373&spn=0.005144,0.006051&t=h&z=17
http://www.signiadocs.com/contact.html
If this product is so valuable after years of development, why does it never generate any cashflow? Why does cash burn ramp with revenue? Why does every conference call sound like a long winded excuse? Why has the share count grown at a 20% CAGR?
The so called PP "investors" are shorting against the shares they just bought. It's a great racket, buy at $2.05 and short all the way down from yesterday's close. Its riskless money.
these are not investors, but arbitrateurs.
more dilution to wave, breakeven wont happen in Q2, option count will explode, spragues will continue to soak up all this cash and anyone long is just going to keep getting diluted.
http://cygnuscap.blogspot.com/
Shareholder dilution, round 2. The registration statemetn that became active today means the company could sell $25M in stock at any time. Since there are few interested strategic buyers, the broker is being allowed to short the stock to match off against stock sales from the company.
The underwriters in an offering of securities may also create a “short position” for their account by selling more securities in connection with the offering than they are committed to purchase from us. In that case, the underwriters could cover all or a portion of the short position by either purchasing securities in the open market following completion of the offering of these securities or by exercising any over-allotment option granted to them by us. In addition, the managing underwriter may impose “penalty bids” under contractual arrangements with other underwriters, which means that they can reclaim from an underwriter (or any selling group member participating in the offering) for the account of the other underwriters, the selling concession for the securities that are distributed in the offering but subsequently purchased for the account of the underwriters in the open market. Any of the transactions described in this paragraph or comparable transactions that are described in any accompanying prospectus supplement may result in the maintenance of the price of the securities at a level above that which might otherwise prevail in the open market. None of the transactions described in this paragraph or in an accompanying prospectus supplement are required to be taken by any underwriters and, if they are undertaken, may be discontinued at any time.
If we so indicate in the prospectus supplement, we may authorize agents, underwriters or dealers to solicit offers from certain types of institutions to purchase securities from us at the public offering price under delayed delivery contracts. These contracts would provide for payment and delivery on a specified date in the future. The contracts would be subject only to those conditions described in the prospectus supplement. The prospectus supplement will describe the commission payable for solicitation of those contracts.
All filings for all companies can be listed here:
http://www.sec.gov/edgar/searchedgar/companysearch.html
Who was the new hire? An 8-K would have to be filed if it was a senior manager or director. The is the only CTO I could find for the company is Len Veil, who looks like he's been around since at least 2000.
Then, this guy, but he must have left some time ago.
http://www.brightspeedtech.com/who.php
If you all would take the time to read the filings, its all there in relatively plain English. Not be pedantic here, but with the seemingly thousands of dollars tied up in this stock, I'd be reading the filings word for word.
In any event, there are lots of additional nuggests in the filing:
As of 12/31/2006, there are 1.9M shares remaining that could be issued across 5 existing options plans. 1.072M were left in the 1994 plan. this is the plan that mgmt wants to expand from 6.8M to 22.5M.
However, as of 4/9/2007 there were only 254,397 options left in this plan (of the 1.072M). So between 12/31/2006 and 4/9/2007, 818,300 options were granted to someone. Given that in 2006, options grants were made in March, it is likely that the 2007 grants were made then as well. However, mgmt does not have to disclose these grants until the filing of the 14A for 2007 (which will be about this time next year). The old max per person was 166K per year. So existing management must have received substancial grants, since there were no announced significant hires. Still at this point there still remains ~0.81M in old plans and 254K in the 1994 plan, so plenty of options to hire employees if that is needed.
In any event, what is a reasonable about of options to attract good talent? 1/3 of the company? With $3M in quarterly SG&A burn, one would hope that the salesforce is completely stacked to the gills. That's $12M a year or 100 people fully loaded at $120K or 50 at $240K or just 10 heavy hitters making $1.2M each. Thats on top of the ~$1.5M in quarterly R&D.
So more options are what is needed to take this over the top? I guess we'll see... but my bet is that it is more of the same.
a vested option is the same thing as share ownership. That is why the SEC requires the "beneficial ownership" clause. any options that vest within 60 days of the filing are considered shares. i.e. one could exercise them and make them full shares. Mgmt. may argue that many of their options are underwater so that they "deserve" to get grossed up as a future incentive. But this argument is not really fair in that if they get the stock to rise, then their existing options go in the money and have value. At the end of the day, options are just another form of compensation. If shareholders want to carve out a third of the company and give it to management and future employees, so be it. Its just an unusual (and not very good) deal for existing shareholders.
I do note that the shorting against the PP is an opinion built through conversations with lawyers and PIPE hedge funds. I do not know if it is true at WAVX. It is certainly a grey area with the SEC.
I posted today because the 14A came out last night, no other reason. I don't have a clue when the PP will be done. But cash is obviously getting low, so it could happen any time in the next month or two -- depending on what has been sold and collected this year.
On the larger issue of stock manipulation, it is my opinion that Wave has found a clever way to use PIPEs in coordination with PIPE hedge funds to continue to fund the company. I will credit SKS on that.
My research leads me to believe that b/c of the ample disclosure provided by Wave in their filings that the recent fundings are being completed in a grey area of SEC law. i.e. that PIPE funds are shorting the stock before each PP. normally this would not be allowed. But b/c of the going concern warnings and out of cash declarations by X date, some aggressive PIPE funds are OK stepping into grey area with the SEC. Another new "innovation" is have an investment bank create a derivate instrument that is a basket of stocks (with a large, ~70% WAVX holding) -- then short that against a PP raise.
Anyway, the funding tap probably stays open until the SEC makes some rulings to the contrary -- which may never happen. Or alternatively, wave gets profitable on it own.
I don't have any specific benchmarks, but I have reviewed other company's 14A filings. For example, Microsoft is one of the higher ones -- their directors g0t $200,000. McAfee (40x Wave's size in market cap) directors only get $40,000. Berkshire Hathaway directors got $3,000 or $7,000 last year depending if they were on a committee or not.
Clearly it makes sense to pay enough compensation (cash and/or options) to retain good employees. And it is correct that dilution doesn't occur until the shares are granted. But the day after this motion passes, it is legally possible for the company to grant the entire 22M balance proposed. By voting for this proposal a shareholder is accepting this dilution will likely happen. A much more rational amount might be 5 or 10% dilution.
As a shareholder, ideally the corporation would pay cash compensation instead of options. Many great companies do this. Buffet included.
And FYI, comments like "I've reported him to the SEC" or leaving harassing phone messages on my personal phone are not called for. I'm posting on a public forum just like anyone else. So lets keep the dialog grounded in facts, not slander.
Everyone is entitled to invest however they choose. And I believe this board is an open forum. Or are other opinions not allowed? I've previously stated I'm short. But beyond any financial interests, I do think rational investors should read all the facts, filings and management statements and see if they hold water. Dilution of ~35% due to an option pool is unique -- I've never seen a public company try to pull that over on shareholders. With the upcoming funding for financing, dilution will be over 50% this year by mid July. So the stock will have to double by then to make shareholders whole.
I think everyone here would learn a lot by taking the time to read the SEC filings. Like the 14A that came out yesterday. But in any event, SKS and Jerry own 2.1% and 1.1% of the company respectively. Their employment contracts are structured such that the hurdle for getting their bonuses is just showing up to work. The board is also receiving compensation far above what a normal company of this size would normally pay.
Beneficial Owner (1)
Number of Shares
of Class A Common
Stock Owned(2)
Percent
of
Class
Number of Shares
of Class B Common
Stock Owned
Percent of
Class
Percent
of All
Outstanding
Common
Stock(3)
Steven Sprague(4)
915,115
2.1
%
14,034
35.8
%
2.1
%
John E. Bagalay, Jr.(5)
55,330
*
—
—
*
Nolan Bushnell(6)
27,331
*
—
—
*
George Gilder(7)
96,997
*
667
1.7
%
*
John E. McConnaughy, Jr.(8)
69,081
*
—
—
*
Gerard T. Feeney(9)
469,494
1.1
%
—
—
1.1
%
All executive officers and directors
as a group (6 persons) (10)
1,633,348
3.8
%
14,701
37.5
%
3.8
%
they're asking for it, b/c they can get it and no one is standing up to the dilution. This can't be spun as a positive. Take it this way, if you just owned $1.00, after this passes, you own $0.65. And the person that was managing your $1.00 -- just gave himself a big raise.
And to afford that raise, more stock has to be sold -- which will be more dilution, maybe 25% for the year, so that $1.00 is now worth $0.48.
Established companies rarely have option pools >10% of the share count and never grant more than 1-3% per year. The high end of that being very rare. Ebay touched 3% a few years back and it set of a fire storm. Now they want the right to grant over 1% of the company to a single person in a single grant.
The company has plenty of shares in the existing pool and management already a sizeable slug of equity. There's a difference between what is fair and getting one's pocket picked.
This is a MASSIVE dilution. The total outstanding share count is ~43M and they want to add >22M ADDITIONAL shares for the option plan. No company I've ever heard of creates an option pool that is ~35% of the value of the company. It is just unheard of. Oh, and by the way, they raised their salaries at your expense too. 50k more for SKS and 65K for Jerry. +50% locked in bonus. So SKS is pulling down >$500,000 in 2007 from the company.
Jim Cramer is a trader, not an investor. He is also acutely aware of what makes (to many) "entertaining" television -- ranting and raving and actingly like nut. His stock picks since he left his fund have been poor as chronicled by a number of websites.
His comments about shorting are just one type of trade -- specifically momentum funds that chase directions and try to use any number of vehicles to follow (or create) trends.
Fundamental investing (long or short) is quite different. As Buffet said, the stock market is a voting maching in the short term and a weighing machine in the long term. Fundamental investors will (and do) hold short positions a long time. Fundamental investors who short are not part of some grand conspiracy to push stocks down. It's just not their game -- they'll certainly outline facts to back up what they believe, but they are not running around Cramer-style like an idiot.
All that said, the Wave stock does seem to be manipulated during periods where financings need to get done. The last 5-6 deals have followed a similar pattern. Positive PRs start flowing, volume increases, the stock price rises, SKS (usually) states there are "no plans" for a funding on a conference call, the number of posts accelerate on these various boards, the stock continues to climb, THEN the funding is announced at a discount to the most recent traded price. If I were Wave management, I might help fuel this too, b/c it limits dilution. However, what appears to be borderline legal is how the PIPEs are getting done. Typically, the stock price would immediately collaspse to the price the stock was issued at to the PIPE "investors/traders" -- leaving little time to capture the spread. In the last 5-6 PIPEs with Wave, this has not happened. Discussions with knowledgeable PIPE attorneys has indicated to me that some PIPE funds are using the disclosure statements in public filings by many small companies to argue that fundings are material, but public knowledge -- a technical definition, but one that allows them to short actively in the days before a raise -- hence removing most, if not all of buying the PIPE deal. Speculation on my part whether that his happening with Wave, but the volume patterns and timeline of fundings seem to support such a theory. Other less legal ways to hedge a PIPE include "naked shorting" offshore (mostly clamped down on), shorting a derivative created by a broker that contains a basket of stocks (including the one being bought in the PIPE), arranging for a "pre-borrow" of stock in advance of a PIPE deal, but not actually going short until the deal is announced, using two funds with different managers one short and one long--but in reality they roll up to the same entitity, etc. etc. In summary, most people putting money in PIPEs are finding ways to reduce or eliminate the risk of the investment -- in most cases, they don't care what the company does--just whether they can find a good way to hedge that the SEC won't jump all over.
I've reviewed all the patents before. I don't believe they directly protect any of Wave's products, nor has Wave started any patent litigation to fend off existing competitors.
When I look for differentiated businesses I ideally look for:
-patented technologies
-businesses protected by scale or scope
-unique products/designs that can't be replicated easily
Typically, these criteria are hard to find, especially in technology. An innovation is made, a number of competitors quickly follow, prices come down and margins fall.
In Wave's case not only is there a question of market size, but of value creation. A centralized password management system is really not that complex a piece of software. The TPM itself is complex, but that's a standard -- managing the admin and back-up of the password for TPM or other add on utilities is fairly low value or easily replicated by anyone who saw enough of a market there to mess with it. Right now the market seems to be about ~$800K/quarter.
Again, everyone is entitled to their own opinion about the growth rate, Wave's share of that market and the ulitmate profitability on that share. I don't see it. And the posts trying to "out" me are silly. I'm personally short this stock and my comments are my own, not my employers. I make long and short investments both as my profession and for my own account. If you want to call me and debate Wave as investment feel free -- my cell is 917-407-7971. Otherwise, I'll try to stick to factual debate and would appreciate not being bullied or harassed for my projections of Wave's future value.
The point of most discussion boards is for discussion. I obviously hold a negative opinion of Wave and have a vested interest in making my case -- as do those invested long.
That said, all good investors should always look at all facts available and try to make reasonable judgements about the future.
I look at Wave and see a high cash burn, a high valuation, a a management team that never delivers and little differentiation in their products.
Others may see a pot of gold.
Yes, I agree, the $11.5M could come from internally generated cash or externally generated cash.
For at least the last several years, the burn rate has been about $1.5M/quarter. Operating expenses on the income statement have increased for each of the last two quarters sequentially and ~30% Y/Y on a year on year basis. Assuming no incremental costs (unlikely), Wave would need $18.9M to breakeven using the trailing four quarters expense rate as a proxy. Using last quarter as a base, revenues would have to increase 550% to get to $18.9M on an annualized basis. I ran a screen of ~13000 publicly traded companies looking for the following attributes:
-Market Cap >$100M
-Previous year revenue <$3M, >$0
-Subsequent year revenue >$19M (e.g. 550% growth)
In 2006 this happened once out of 13,000 stocks.
In 2005 this happened twice out of 13,000 stocks.
In 2004 no results.
Taking off the revenue size restriction and screening on growth rates only 2, 4 and 3 companies achieved growth rates of >500% respectively in those years coming from a non-zero base.
These are historical facts.
The future is unknown.
But the historical facts should not be overlooked by anyone considering or currently invested in Wave.
There have been three $25M shelf filings filed since May 2004. One in December 2005 which has been entirely used up and one in May 2004 that has $2,506,000 in gross proceeds left. The third $25M shelf filed today was required as the company still projects burning ~$1.5M/month. The company projects needing to raise $11.5M to fund operations from May 2007 to the end of 2007.
At $2/share, raising $11.5M will result in ~16% dilution. At $1.50/share it would be ~22% dilution.
Dilution over time
2003 - 9.3%
2004 - 23.7%
2005 - 20.5%
2006 - 32.5%
12/31/2002 - 12/31/2006 - 115.6%
12/31/2002 - 12/31/2007 (projected) - 149.1%
Direct payments to family members in 2006 disclosed in filings (which excludes benefits and other non-cash items) ~$950,000.
********************************************
Sales of Common Stock
On October 30, 2006, Wave entered into subscription agreements, pursuant to which Wave agreed to sell and issue 3,517,230 shares of Class A Common Stock, par value $0.01 per share, to certain purchasers for an aggregate purchase price of $9,602,038. These shares were priced at $2.73 per share. Securities Research Associates, Inc. (“SRA”) entered into a placement agency agreement with Wave in which they agreed to act as placement agent in connection with the offering. Wave agreed to pay SRA a fee equal to 5.0% of the gross proceeds of this offering. Wave also agreed to issue a warrant to SRA to purchase up to 175,861 shares of Class A common stock at an exercise price of $2.73 per share. The Warrant expires on November 30, 2007. Wave realized net proceeds of approximately $9,101,224 after deducting the placement agent fees of $484,000 and additional legal and other fees associated with the issuance of these securities which totaled $16,814. The shares sold on October 30, 2006 were offered and issued pursuant to a shelf registration statement which was filed by Wave on December 16, 2005 and declared effective by the Commission on January 13, 2006.
On August 4, 2006, Wave entered into subscription agreements, pursuant to which Wave agreed to sell and issue 2,336,752 shares of Class A Common Stock, par value $.01 per share, to certain purchasers for an aggregate purchase price of $4,790,342. These shares were priced at $2.05 per share. Securities Research Associates, Inc. (“SRA”) entered into a placement agency agreement with Wave in which they agreed to act as placement agent in connection with the offering. Wave agreed to pay SRA a fee equal to 5.0% of the gross proceeds of this offering. Wave also agreed to issue a warrant to SRA to purchase up to 116,837 shares of Class A common stock at an exercise price of $2.05 per share. The Warrant expires on September 3, 2007. Wave realized net proceeds of approximately $4,528,376 after deducting the placement agent fees of $239,517 and additional legal and other fees associated with the issuance of these securities which totaled $22,449. The shares sold on August 4, 2006 were offered and issued pursuant to a shelf registration statement which was filed by Wave on December 16, 2005 and declared effective by the Commission on January 13, 2006.
On May 3, 2006, Wave entered into subscription agreements, pursuant to which Wave agreed to sell and issue 2,012,500 shares of Class A Common Stock to certain purchasers for an aggregate purchase price of $4,830,000. The shares were priced at $2.40 per share. SRA entered into a placement agency agreement with Wave in which they agreed to act as placement agent in connection with the offering. Wave agreed to pay SRA a fee equal to 5.0% of the gross proceeds of this offering. Wave also agreed to issue a warrant to SRA to purchase up to 100,625 shares of Class A common stock at an exercise price of $2.40. The Warrant will be exercisable for a period of thirteen months following the date of the transaction. Wave realized net proceeds of approximately $4,548,439 after deducting the placement agent fees of $241,500 and additional legal and other fees associated with the issuance of these securities of $40,061. The shares were offered and issued pursuant to the shelf registration statement referred to above.
On February 15, 2006, Wave entered into a securities purchase agreement, pursuant to which Wave agreed to sell and issue 2,782,866 shares of Class A Common Stock for $1.605 per share, to certain purchasers for an aggregate purchase price of $4,466,500. The purchasers were also granted warrants (the “Warrants”) to purchase up to 516,956 shares of Class A common stock at an exercise price of $2.16. The Warrants were exercisable for a period of six months following the date of issuance. All unexercised warrants granted in connection with the February 15, 2006 securities purchase agreement expired on August 16, 2006. Each Warrant was subject to cancellation if the closing bid price of Wave’s common stock exceeded $2.58 for 10 out of 20 consecutive trading days and the Warrant had not been exercised by the close of business on the trading day after the 10th trading day on which the closing bid price exceeded $2.58. The placement agent, JPC Capital Partners, Inc. (formerly Corpfin, Inc.) (the “Placement Agent”) had entered into a placement agency agreement with Wave in which they agreed to act as placement agent
38
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in connection with the offering. Wave agreed to pay the Placement Agent a fee equal to 4.0% of the gross proceeds of this offering. Wave realized net proceeds of $4,250,212 after deducting the placement agent fees of $216,289 and additional legal and other fees associated with the issuance of these securities. The shares were issued pursuant to the shelf registration statement referred to above.
On December 5, 2005, Wave sold and issued 1,994,302 shares of Class A Common Stock for $1.755 per share, for gross proceeds of $3,500,000, for which it received net proceeds of $3,340,890 after paying underwriter and other fees, which totaled $159,110. The purchasers were also issued warrants to purchase 364,583 shares of Common Shares within six months at an exercise price of $2.40 per share. All of these warrants expired unexercised on May 5, 2006.
On August 5, 2005, Wave sold and issued 1,333,333 shares of Class A Common Stock for $2.70 per share, for gross proceeds of $3,600,000, for which it received net proceeds of $3,389,205 after paying underwriter and other fees, which totaled $210,795.
On March 15, 2005, Wave sold 1,553,030 shares of Class A Common Stock for $2.64 per share, for gross proceeds of $4,100,000, for which it received $3,891,959, after paying underwriter and other fees.
On December 16, 2004, Wave sold and issued 1,828,263 shares of Class A Common Stock for an aggregate purchase price of $5,759,030. The Common Shares were priced at $3.15. Wave realized net proceeds of $5,474,728 after deducting placement agent and other fees associated with the issuance of these securities.
On July 30, 2004, Wave sold and issued 1,176,471 shares of Class A Common Stock for an aggregate purchase price of $3,000,000. The shares of Class A Common Stock were priced at $2.55. Wave realized net proceeds of $2,777,897 after deducting placement agent and other fees associated with the issuance of these securities. In addition, a total of 1,176,471 shares were offered in connection with this sale and issuance of these shares, in the form of an additional investment right with an exercise price of $3.00 per share and warrants for 1,470,588 shares at exercise prices ranging from $3.4284 to $3.846 per share. The additional investment right expired on November 2, 2004. All of the warrants expired unexercised during the period January 30, 2005 through January 30, 2006
Exercise of Warrants to Purchase Class A Common Stock
On May 8, 2006, Wave received gross proceeds of $625,000 less placement agent fees of $25,000 for net proceeds of $600,000, in connection with the issuance of 276,620 shares of Class A Common Stock upon the exercise of two warrants that were granted to an investor as part of Wave’s December 5, 2005 financing and February 15, 2006 financing. The warrant issued to this investor in connection with the December 5, 2005 financing was exercised in full for 114,583 shares of Class A Common Stock at an exercise price of $2.40 per share. The warrant issued to the investor in connection with the February 15, 2006 financing was exercised in full for 162,037 shares of Class A Common Stock at an exercise price of $2.16 per share.
On August 1, 2005, Wave received gross proceeds of $2,260,000 less placement agent fees of $90,400 for net proceeds of $2,169,600, for the issuance of 666,667 shares of Class A Common Stock upon partial exercise of a warrant that was granted to an accredited investor as part of a securities purchase agreement with the accredited investor, dated July 30, 2004. The warrants were exercised at a price of $3.39 per share.
Known Trends and Uncertainties affecting future cash flows
Because Wave does not have sufficient cash to fund operations for the year ending December 31, 2007, and there is uncertainty as to whether Wave will generate sufficient revenues to fund its operations over this time period, Wave has been, and will likely continue to be, actively engaged in financing activities in order to generate additional funding to cover its operating costs for the year ending December 31, 2007. These activities have included the filing of a $25,000,000 S-3 shelf registration with the SEC on December 16, 2005, which was declared effective on January 13, 2006; and the sale of 2,782,866 shares of common stock at $1.605 per share for gross proceeds of $4,466,500 in an initial round of financing under this shelf registration on February 15, 2006, for which we received approximately $4,250,000 in net proceeds. We also granted warrants as part of the February 15 financing that allowed the purchasers to acquire an additional 516,956 shares of Wave common stock for $2.16 per share. On May 8, 2006 an investor exercised one of these warrants for 162,037 shares, at an exercise price of $2.16 per share. Wave received $336,000 from this warrant exercise after subtracting the 4% placement agent fee. The remaining warrants granted in connection with the February 16, 2006 financing, expired on August 15, 2006.
Pursuant to a financing entered into on May 3, 2006 under the same shelf registration statement, we also sold 2,012,500 shares of Wave’s Class A common stock at $2.40 per share for gross proceeds of $4,830,000, for which we received approximately $4,548,439 in net proceeds. In connection with that financing, we also agreed to issue a warrant to the placement agent (as part of the fees paid to the placement agent) that will allow the placement agent to acquire 100,625 shares of Wave Class A common stock for $2.40 per share. The warrant expires on June 3, 2007.
On May 8, 2006, an investor also exercised a warrant issued by Wave to that investor in connection with Wave’s December 5, 2005 financing. The warrant was exercised in full for 114,583 shares of Wave Class A Common Stock, at an exercise price of $2.40 per share. Wave received $264,000 from the exercise of this warrant after subtracting the 4% placement agent fee.
Also, pursuant to a financing entered into on August 4, 2006, under the same shelf registration statement, we sold 2,336,752 shares of Wave’s Class A common stock at $2.05 per share for gross proceeds of $4,790,342, for which we have received $4,528,375 in net proceeds. In connection with that financing, we also agreed to issue a warrant to the placement agent (as part of the fees paid to the placement agent) that will allow the placement agent to acquire 116,837 shares of Wave Class A common stock for $2.05 per share. The warrant expires on September 3, 2007.
In addition, under the same shelf registration statement, on October 30, 2006, we sold and issued 3,517,240 shares of Wave’s Class A common stock for $2.73 per share. We received gross proceeds from the sales of these shares of $9,602,038. We expect to realize net proceeds of $9,101,224 after paying all transaction costs. In connection with that financing, we also agreed to issue a warrant to the placement agent (as part of the fees paid to the placement agent) that will allow the placement agent to acquire 175,861 shares of Wave Class A common stock for $2.73 per share. The warrant expires on November 30, 2007.
It is likely that we will be required to sell additional shares of common stock, preferred stock, obtain debt financing or engage in a combination of these financing alternatives, to raise additional capital to continue to fund our operations for the year ending December 31, 2007. The availability and amount of any such financings are unknown at this time. Wave may also be required to reduce expenses which may significantly impede its ability to meet its sales, marketing and development objectives. Given the available cash currently on hand and our expenditure forecast for the year ending December 31, 2007, we estimate
42
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that we will need to generate at least $11,500,000, in order to continue as a going concern for the next twelve months ending December 31, 2007
From 10-K. More financing likely needed in ~60 days. At current burn rate of $1.5M and current market capitalization, one quarter of cash = 5% dilution or ~22% annual dilution.
************************************************
Considering our current cash balance and Wave’s projected operating cash requirements, we anticipate that our existing capital resources will be adequate to satisfy our cash flow requirements through mid-May 2007.
Wave has begun market introduction of its security and broadband media distribution software products and has signed initial distribution contracts for these applications. However, due to the early stage nature of this market, it is unlikely that Wave will generate sufficient revenue to cover all of its cash flow needs to fund its operating requirements for the year ending December 31, 2007.
Because Wave does not have sufficient cash to fund operations for the year ending December 31, 2007; and given the uncertainties described above with respect to Wave’s revenue outlook for 2007, Wave has been and will continue to be actively engaged in financing activities in order to generate additional funding to cover its operating costs for the year ending December 31, 2007.
It is likely that we will be required to sell additional shares of common stock, preferred stock, obtain debt financing or engage in a combination of these financing alternatives, to raise additional capital to continue to fund our operations for the year ending December 31, 2007. The availability and amount of any such financings are unknown at this time. Wave may also be required to reduce expenses which may significantly impede its ability to meet its sales, marketing and development objectives. Given the available cash currently on hand and our expenditure forecast for the year ending December 31, 2007, we estimate that we will need to generate at least $11,500,000, in order to continue as a going concern for the next twelve months ending December 31, 2007.
**************************************************
the 10K is out, after the close:
The Sprague family received >$900,000 in direct compensation (excluding options) from shareholders in 2006, not including option grants or other benefits.
In March 2003, Mr. Peter Sprague, who is the former Chairman of Wave, was appointed Chairman and Chief Executive Officer of Wavexpress. Mr. Sprague was paid $129,000 for each of the years ended December 31, 2006, 2005 and 2004, respectively in salary as an officer of Wavexpress. Mr. Peter Sprague is the father of Wave’s President and Chief Executive Officer, Steven Sprague.
On August 1, 1997, Michael Sprague became an employee of Wave and was paid a salary of $150,000, $150,000 and $150,000 for the years ended December 31, 2006, 2005 and 2004, respectively. In addition, lease payments were made to Michael Sprague in the amount of $48,750 for the year ended December 31, 2006. These payments were for property occupied by Wavexpress and owned by Michael Sprague. This lease agreement was in effect for the period of April 15, 2006 through October 31, 2006. This lease agreement has since been terminated. Michael Sprague is the brother of Steven Sprague and the son of Wave’s former Chairman, Peter Sprague.
Long-Term
Compensation
Awards
Number of
Shares
Annual Compensation
Underlying
Name and Principal Position
Year
Salary($)
Bonus($)
Options(#)
Steven Sprague(1)
2005
250,000
231,250
250,000
President and Chief Executive Officer
2004
250,000
168,750
262,500
2003
250,000
200,000
225,000
Gerard T. Feeney(2)
2005
185,000
150,000
150,000
Senior Vice President, Chief Financial Officer and Secretary
2004
185,000
35,000
162,750
2003
185,000
281,399
135,000
While you may not agree with my blog, the facts presented are true. Perhaps some humor thrown in, but I couldn't resist. The "World Headquarters" were just too funny. SKS talks a good game, but the revenue growth is just not there. Meanwhile the dilution is just huge.
http://cygnuscap.blogspot.com/