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Re: Fullmoon post# 226803

Thursday, 08/09/2012 4:07:48 PM

Thursday, August 09, 2012 4:07:48 PM

Post# of 249121
LEE, MA, Aug 09 (Marketwire) --
Wave Systems Corp. (NASDAQ: WAVX) today reported financial results for
its second quarter (Q2) ended June 30, 2012 and highlighted recent
progress in the expansion of its PC & mobile OEM distribution
relationships.

"Wave has had a productive yet challenging first half of 2012," said Wave
CEO Steven Sprague. "Enthusiasm remains strong for the benefits of
trusted computing technology within important industry sectors. However,
converting interest into steady sales growth remains one of our biggest
challenges. Q2 revenues were slightly better than those in the first
quarter of this year, but were not as strong compared to Q2 '11, which
benefitted from revenue recognized from two large enterprise orders.
Expenses have also increased as a result of the substantial investment
Wave has made to grow its sales infrastructure throughout Europe, expand
its sales force in the US and consolidate the personnel and resources
from the Q3 '11 acquisition of Safend.

"Wave's disclosures over the past several months demonstrate the progress
we have made in expanding the reach of our distribution channel. Our
channel partners are on the front lines learning about the threats that
many end-customers face and are seeking to address, including lost
laptops, employee credentials being phished and corporate network
vulnerabilities. Wave is very focused on supporting the channel to
educate enterprises on how Trusted Computing technology can mitigate
these threats at a competitive total cost of ownership. Ultimately, we
believe our OEM channel partners serve as the foundation for our efforts
to expand our Wave sales globally.

"In this vein, we were proud to announce a worldwide distribution
agreement with Lenovo, the world's second largest PC manufacturer. Lenovo
has tested and approved Wave's client and server software and is now able
to promote and sell our solutions to enterprises and governments around
the world. Also of significance was our license agreement with Samsung
which permits the distribution of our EMBASSY Security Center and
middleware on devices that include a Trusted Platform Module (TPM)
security chip, for which Wave will receive a per unit royalty. In
addition, Wave secured an approved vendor arrangement with NATO, enabling
NATO's 28 member countries, including the United States European Command,
to access our security portfolio.

"I am also pleased to report that we are realizing benefits from our
investment in Safend. During the second quarter we completed the
integration of Safend's products, staff and operations into Wave. The
Safend portfolio is a robust addition to our product suite and extends
security capabilities into future Cloud-based services. Safend's
performance has been in-line with our expectations so far this year, and
we are working toward continued improvements in the subsidiary's sales
contributions.

"Finally, our continued investments in research and development will
yield a series of new product enhancements and offerings that will be
announced in the next few months. We believe these innovations will
further improve our competitive position by addressing new security
threats and trends such as Bring Your Own Device (BYOD) and Cloud
services that are shaping the way business is conducted."

Recent Developments:


-- Samsung Software License and Distribution Agreement For Devices
Including a TPM


-- Global Software Distribution Agreement with Lenovo, World's 2nd
Largest PC Maker


-- NATO Communications and Information Agency Names Wave as Approved
Vendor





Financial Review
In Q2 '12, Wave reported total net revenues of
$7.8 million, including $0.4 million in services revenues and $1.6
million in licensing revenues from its Safend subsidiary. Wave's Q2 '12
performance represents an 11% increase over Q1 '12 total net revenues of
$7.0 million, but a 4% decline from total net revenues of $8.1 million in
Q2 '11.

Year-ago second quarter revenues benefitted from two "large"
enterprise-customer licenses that were recorded ratably during 2011 and
amounted to an additional $2 million in the period compared to Q2 '12 or
Q1 '12. Total billings were $6.9 million in Q2 '12, a 27% decline from
the $9.4 million total in Q2 '11 which included a $3.5 million enterprise
order from BASF. Total billings for Q2 '12 and Q1 '12 included $1.4
million and $1.8 million, respectively, from Safend, versus no
contribution in Q2 '11. Q2 '12 billings also reflect approximately $0.4
million in professional services billed on a time and materials basis
during the quarter.

Wave's Q2 '12 combined SG&A and R&D expenses decreased by roughly $1.1
million to $13.7 million from Q1 '12, but rose $3.9 million over Q2 '11.
The year-over year increase in SG&A and R&D expenses reflects an increase
of approximately 60 new team members resulting from the Safend
acquisition, as well as expanded staffing in engineering, sales &
marketing and administration. The increased staffing & expenses support
the development of new products and product features for the PC and
mobile device markets. Additionally, higher overhead reflects increased
sales and marketing and administrative staffing and programs required to
support the geographical expansion of Wave's marketing efforts and the
support of an expanding base of OEM partners. The decrease in SG&A and
R&D expenses versus Q1' 12 reflects a variety of factors including lower
professional services fees and lower salary and related expense from a
modest decrease in employee headcount. Principally as a result of the
Safend acquisition in Q3 '11, depreciation and amortization expense rose
to $0.5 million in Q2 '12 versus $0.1 million in Q2 '11 and $0.5 million
in Q1 '12.

Wave recorded a Q2 '12 net loss of $6.5 million, or $0.07 per basic and
diluted share, as compared to a Q2 '11 net loss of $1.8 million, or $0.02
per basic and diluted share, and a Q1 '12 net loss of $8.3 million, or
$0.09 per basic and diluted share. Per share figures are based on a
weighted average number of basic shares outstanding during Q2 '12, Q2 '11
and Q1'12 of 92.5 million, 82.9 million and 90.2 million, respectively.

Wave reports EBITDAS, a non-GAAP measure defined as earnings before
interest income (expense), income taxes, depreciation and amortization
and stock-based compensation expense, in order to highlight its
operational performance on a cash-flow basis. Wave recorded negative
EBITDAS of $4.6 million in Q2 '12, compared with negative EBITDAS of $0.3
million in Q2 '11 and negative EBITDAS of $6.4 million in Q1 '12.

As of June 30, 2012, Wave's total current assets were $6.9 million and
total current liabilities, including the current portion of deferred
revenue of $5.1 million, were $13.9 million. Cash and cash equivalents
were $1.6 million at June 30, 2012, as compared to $2.3 million at March
31, 2012. Wave continues to utilize a variety of approaches to fund its
working capital needs. In addition to its At The Market Issuance (ATM)
structure and active working capital management methods, Wave has also
established a receivables financing relationship that enables it to more
readily monetize its largest receivables.

During the second quarter and to date in Q3 '12, Wave has raised net
proceeds of approximately $3.8 million through the issuance of
approximately 4.1 million shares of its Class A common stock at an
average price of $0.97 per share through its At The Market Issuance (ATM)
structure; share sales to date in Q3 '12 represent approximately $1.0
million of the net proceeds. Since inception of the ATM in January 2012,
Wave has raised total net proceeds of $6.4 million through the issuance
of 5.2 million shares of Class A common stock at an average price of
$1.23 per share. The share sales are completed at market prices, with a
3% commission and without any warrant issuance.

Additionally, Wave announced earlier today that it has agreed to raise an
additional $1.66 million through the sale of Class A common stock
pursuant to its effective shelf registration statement.

About Wave Systems
Wave Systems Corp. reduces the complexity, cost and
uncertainty of data protection by starting inside the device. Unlike
other vendors who try to secure information by adding layers of software
for security, Wave leverages the security capabilities built directly
into endpoint computing platforms themselves. Wave has been a leading
expert in this growing trend, leading the way with first-to-market
solutions and helping shape standards through its work as a board member
for the Trusted Computing Group.

Safe Harbor for Forward-Looking Statements
This press release may
contain forward-looking information within the meaning of the Private
Securities Litigation Reform Act of 1995 and Section 21E of the
Securities Exchange Act of 1934, as amended (the Exchange Act), including
all statements that are not statements of historical fact regarding the
intent, belief or current expectations of the company, its directors or
its officers with respect to, among other things: (i) the company's
financing plans; (ii) trends affecting the company's financial condition
or results of operations; (iii) the company's growth strategy and
operating strategy; and (iv) the declaration and payment of dividends.
The words "may," "would," "will," "expect," "estimate," "anticipate,"
"believe," "intend" and similar expressions and variations thereof are
intended to identify forward-looking statements. Investors are cautioned
that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, many of which are beyond
the company's ability to control, and that actual results may differ
materially from those projected in the forward-looking statements as a
result of various factors. Wave assumes no duty to and does not undertake
to update forward-looking statements.

All brands are the property of their respective owners.

WAVE SYSTEMS CORP. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)

Three months ended Six months ended
June 30, June 30, June 30, June 30,
2012 2011 2012 2011
------------ ------------ ------------ ------------
Net revenues:
Licensing $ 7,361,102 $ 8,094,126 $ 14,019,369 $ 15,358,245
Services 400,372 - 724,242 212,117
------------ ------------ ------------ ------------
Total net revenues 7,761,474 8,094,126 14,743,611 15,570,362
------------ ------------ ------------ ------------

Operating expenses:
Licensing - cost
of net revenues 458,237 382,060 921,867 680,941
Services - cost of
net revenues 74,760 - 136,590 74,047
Selling, general,
and
administrative 8,624,691 6,222,036 18,398,474 12,282,943
Research and
development 5,050,625 3,548,726 10,068,104 6,847,513
------------ ------------ ------------ ------------
Total operating
expenses 14,208,313 10,152,822 29,525,035 19,885,444
------------ ------------ ------------ ------------
Operating loss (6,446,839) (2,058,696) (14,781,424) (4,315,082)
------------ ------------ ------------ ------------
Other income
(expense):
Net currency
transaction gain
(loss) (13,812) 231,368 9,788 231,368
Net interest
expense (60,504) (753) (62,609) (2,054)
------------ ------------ ------------ ------------
Total other income
(expense) (74,316) 230,615 (52,821) 229,314
------------ ------------ ------------ ------------
Net loss $ (6,521,155) $ (1,828,081) $(14,834,245) $ (4,085,768)
============ ============ ============ ============

Loss per common
share - basic and
diluted $ (0.07) $ (0.02) $ (0.16) $ (0.05)

Weighted average
number of common
shares outstanding
during the period 92,483,493 82,939,649 91,358,548 82,547,321

WAVE SYSTEMS CORP. AND SUBSIDIARIES
Consolidated Supplemental Schedules
(Unaudited)

Three months ended Six months ended
June 30, June 30, June 30, June 30,
2012 2011 2012 2011
------------ ------------ ------------ ------------
Total net revenues $ 7,761,474 $ 8,094,126 $ 14,743,611 $ 15,570,362
Increase (decrease)
in deferred revenue (820,021) 1,258,300 (895,599) (640,559)
------------ ------------ ------------ ------------

Total billings (Non-
GAAP) $ 6,941,453 $ 9,352,426 $ 13,848,012 $ 14,929,803
============ ============ ============ ============

Net loss as reported $ (6,521,155) $ (1,828,081) $(14,834,245) $ (4,085,768)
Net interest expense 60,504 753 62,609 2,054
Depreciation and
amortization 545,731 137,053 1,072,520 260,861
Stock-based
compensation
expense 1,288,326 1,389,622 2,644,078 2,583,505
------------ ------------ ------------ ------------

EBITDAS (Non-GAAP) $ (4,626,594) $ (300,653) $(11,055,038) $ (1,239,348)
============ ============ ============ ============



Non-GAAP Financial Measures:
As supplemental information, we provide
the non-GAAP performance measures that we refer to as total billings and
EBITDAS. Total billings is provided in addition to, but not as a
substitute for, GAAP total net revenues. Total billings means the sum of
total net revenues determined in accordance with GAAP, plus the increase
or minus the decrease in deferred revenue. We consider total billings an
important measure of our financial performance, as we believe it best
represents the continued increase in our software license upgrades. Total
billings is not a measure of financial performance under GAAP and, as
calculated by us, may not be consistent with computations of total
billings by other companies. EBITDAS is defined as net income (loss)
before interest income (expense), income taxes, depreciation and
amortization and stock-based compensation. EBITDAS should not be
construed as a substitute for net income (loss) or net cash provided by
(used in) operating activities (all as determined in accordance with
GAAP) for the purpose of analyzing our operating performance, financial
position and cash flows, as EBITDAS is not defined by GAAP. However, we
regard EBITDAS as a complement to net income (loss) and other GAAP
financial performance measures, including an indirect measure of
operating cash flow.

WAVE SYSTEMS CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)

June 30, December 31,
2012 2011
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 1,570,573 $ 3,385,035
Accounts receivable, net of allowance for
doubtful accounts of $-0-
June 30, 2012 and December 31, 2011 3,521,934 7,198,645
Pledged receivables 1,009,430 -
Prepaid expenses 758,306 823,761
------------- -------------
Total current assets 6,860,243 11,407,441
Property and equipment, net 1,076,726 1,236,844
Amortizable intangible assets, net 10,116,206 10,925,306
Goodwill 6,216,059 6,216,059
Other assets 327,010 336,607
------------- -------------
Total Assets 24,596,244 30,122,257
============= =============

Liabilities and Stockholders' Equity
Current liabilities:
Secured borrowings 852,948 -
Accounts payable and accrued expenses 7,785,449 6,701,026
Current portion of capital lease payable 74,883 72,074
Deferred revenue 5,146,640 6,619,257
------------- -------------
Total current liabilities 13,859,920 13,392,357
Long-term portion of capital lease payable 6,502 44,659
Other long-term liabilities 96,324 66,283
Royalty liability 4,121,397 4,043,163
Long-term deferred revenue 1,185,587 1,035,220
------------- -------------
Total liabilities 19,269,730 18,581,682
------------- -------------

Stockholders' Equity:
Common stock, $.01 par value. Authorized
150,000,000 shares as Class A; 94,371,623
shares issued and outstanding in 2012 and
89,574,385 in 2011 943,716 895,744
Common stock, $.01 par value. Authorized
13,000,000 shares as Class B; 35,556 shares
issued and outstanding in 2012 and 2011 355 355
Capital in excess of par value 382,170,356 373,598,144
Accumulated deficit (377,787,913) (362,953,668)
------------- -------------
Total Stockholders' Equity 5,326,514 11,540,575
------------- -------------
Total Liabilities and Stockholders' Equity $ 24,596,244 $ 30,122,257
============= =============

Conference call: Today, August 9, 2012 at 4:30 p.m. ET
Webcast / Replay URL: www.wave.com/news/webcasts
Dial-in numbers: 415-226-5361 or 212-231-2915





Contact:
Wave Systems Corp.
Gerard T. Feeney
CFO
413-243-1600

Investor Relations
David Collins, Eric Lentini
212-924-9800
wavx@catalyst-ir.com

Copyright 2012, Marketwire, All rights reserved.

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Category Codes:
Americas(R=AMR), North America(R=NAMR), United States of America(R=US), Computer Services(I=TSX), Software & Computer Services(I=SS), Technology (Supersector)(I=ET), Electronic Office Equipment(I=OFF), Technology Hardware & Equipment(I=TH), Technology (Industry)(I=TEC), English(L=EN)


Companies:
WAVE SYSTEMS CORPORATION(WAVX)

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