Wave Systems Corp. (fka WAVXQ)

[RootOfTrust]

I think they've been taking a larger chunk of deferred as revenue from the $2.3m sale over the first four quarters following the transaction than the $191k you are allowing.

It's my understanding the perpetual license part of a greater than 5000 license sale is taken over four q's whereas sales less than 5000 licenses are taken fully in the q of the transaction. The maintenance portion of any size sale is taken over the contract period, therefore maintenance sales of all sizes are treated differently than the sale of the license itself. My estimation is that the larger piece of the $2.3m sale is perpetual licenses and the revenue from it is booked over the first four q's.

Deferred increased $1.92m Q1 of which a big piece has to be the $2.3m sale. Q2 deferred decreased $675k which is far more than other preceding periods which again has to be related to the $2.3m sale. I can only assume Q3 had a similar decrease in deferred since we are still in the four q period following the transaction.

If one takes Q3 revenue $2.56m and deducts $675k deferred similar to Q2, an approximation of the money in the door part or Q3 revenues= $1.885m.

My Q2/Q3 cash-ending/Q3 op ex analysis (allowing for the bridge loan funding) indicates Q3 billings= $2.23m

I don't where the discrepancy is.