Replies to post #20380 on Wave Systems Corp. (fka WAVXQ)

[88Carrera]

Wow SPIN, we didn't know you felt this way!! LOL

[SPIN]

SKS: "And on a short term basis we think we can reach the point where the company gets to cash flow breakeven sometime in 2004."

[SPIN]

SKS: "So, the company now has access to the resources that we need in order to operate. The recent exercise of options has brought in additional cash was something that really helped to strengthen our balance sheet. We continue to work towards strengthening the overall company, and the ultimate way to do that is to drive the revenue base so this company reaches a cash flow break even position. And we think that's very achievable in 2004."

[SPIN]

SKS: "I haven't been really specific on the numbers for that.What I can say is that the market begins to engage in fourth quarter in volumeon a number of different platforms. We expect to realize revenue from shipmentsin fourth quarter/first quarter. Because it will some time to realize, for theprocess to flow through as to how many units shipped, etc., and get the royaltycheck actually mailed to you."

[SPIN]

SKS: "So, I think I can help provide clarity to the … So, aswe said before we think sort of the driving revenue of the company starts infourth quarter. That you'll see the actually recognition of the beginnings ofthat revenue in first quarter of next year. It's our hope that in calendar 2004we reach a point of cash flow breakeven for the corporation."

[TonyMcFadden]

Between Q2 and Q3 the following changes were made to the 10-Q:
(bracketed terms removed)

The EMBASSY Trust Suite is a set of secure services or applications that enable accelerated functionality and user value to the TPM. These products include Document Manager Vault, Private Information Manager (PIM), SmartSignature, Attestation Credential Manager (ACM) and Key Transfer Manager (KTM). Document Manager Vault provides document encryption, decryption and client side storage of documents. The vault, which integrates with Microsoft Office secures documents against unauthorized users and hackers. PIM uses the TPM to securely store user information such as user names, passwords, credit card numbers and other personal information. It retrieves login information to efficiently fill in web forms and web login information. Data stored using the PIM utilizes the security of the TPM to protect against unauthorized access. SmartSignature is a digital signing application that utilizes the signing keys generated by the TPM. The ACM works with any application to insure that it is interacting with a trusted platform. This is a critical function for managing Trusted Platforms. The KTM is a server application capable of securely storing and/or migrating TCG-specific keys from one TPM enabled system to another according to various security policies defined on the server. KTM allows an IT manager to provide services to individual TPM users such as recovery services in the event of system malfunctions. Wave plans to continue to develop and enhance the current products being developed within this product group and will develop new applications and services as the trusted computing market continues to evolve. Current planned development costs for this product group are expected to exceed $8,000,000.

There was no corresponding value in the 2Q10-Q

In addition, Wave has begun expanding the marketing of this product to enterprises as a solution to distribute digital video content over any IP network to select users. The anticipated cost of these additional features and functionality is expected to (be approximately $350,000.) exceed $2,000,000.

...an increase of 1.65 million...

SmartSignature Version 3.0 and SmartSAFE Version 3.0 were commercially released in the first quarter of 2003. SmartIdentity, an optional service to verify a signer's identity through strong authentication methods, including issuing encrypted digital certificates based on public key infrastructure technology, was completed in January 2003. These products are currently undergoing modifications for additional features and functionality. The anticipated cost of these additional features and functionality is expected to be approximately ($50,000.) $200,000.

...another 150 k. we're up to 9.8 million additional costs identified between 2nd and 3rd quarter...

Either SKS, as COO, did an awfully crappy job estimating, for 2Q, the costs involved in further development of these utilities, or (and I think this is more likely) customers, or potential customers have identified key areas and functionalities that need development, and a cost for these developments estimated for the Q3 report.

[edit], this all from the inimitable Uncle Vern, at http://www.unclever.com/wavx/3Q03Item2.html

[24601]

SPIN: credibility and cliff

In my exchange with Larry Dudash I wrote a single sentence about you:

"SPIN seems to think Wave gets screwed under RAND licensing."

You write that that's an "outright lie" and that I'm "beyond the pale." That seems a bit shrill.

I was recalling your allusion to the TCG's RAND-licensing policy as "(seemingly) equitable" and your statement as follows:

"IMO a bigger concern is that w/RAND, other TPM players could catch up while the market ramps & it may be in a Gorilla's (or three) best interest to stall deployment for a Q or 2 to allow their R&D to close the gap & permit them to establish rival offerings."

If I read that passage incorrectly, I apologize. I admit that I have a little trouble with your style of presentation.

Best wishes,
John