Replies to post #180825 on Wave Systems Corp. (fka WAVXQ)

[Snackman]

LOL. You are right. Survey has been changed to just profit or loss.

[Weby]

Ispro

Actually, as it's been explained to me, b/e and profitability are more than just a few pennies apart. They are two different accounting constructs and profitability includes covering things that are not included in cash flow break even. Perhaps it's time for one of our CPAs to splain it.

Your point is well taken nonetheless, and the next point is when do we make a penny a share. For the sake of this quarter, I think the poll should be interpreted by SKS's proposition that we'd be within $250,000 dollars of B/E either way. I'd guess that in 3 months we will be polling whether THE number will go from -2 to + 2. And we are still all the way at the left of the curve.

[tkc]

Ispro, I think Snackman meant Cash Flow Break Even(CFBE). The point at which WAVX stops burning cash, which is very significant because it "should" mean the end of dillution and that profitability is "likely." With Wave, CFBE is affected mostly by "Net Billings" (i.e. new business for the Q),non-cash operating expenses (share based compensation and depreciation is most or all of that) and Accounts Recievable Delta and Accounts Payable Delta.

EOQ1 A/R was $1,452M, 36.3% of "Net Billings." If that % holds and Q2 "Net Billings" is $5.1M then A/R would be around $1850; a delta of $400K. That's $400K in business that Wave didn't get cash for. As Business increases, that A/R delta will increase with it. Holding A/R to 33% of Sales is 30 days or only one month outstanding; that's really pretty good.

Anyway, say Q2 Net billings is $5.1M, w/ Gross Margins of 90% (COGS- Cost of Goods Sold is 10%), Gross Profit is $4.590M. Say Operating Expenses are $4.850M, then WAVX has a $260 LOSS. But, non - cash Op Ex was $62.5K for Depreciation and $422K for Share Based Comp; while A/R delta is + $400K and A/P delta is unchanged. Then $260K Loss,- $62.5K -$422K + $400K leaves $175.5 in negative Cash Flow for the Q.

I'd be way happy w/ that. Ispro, this wasn't in response to you. Just to attempt to clarify CFBE vs. B/E for those who might be interested.

[player1234]

Since the financials report in $1,000s of dollars, it would be a higher number. But you are essentially correct.