Replies to post #183919 on Wave Systems Corp. (fka WAVXQ)

[player1234]

It was not Wave's decision. It is the decision of the outside auditors. Wave solicited their opinion to avoid problems during the annual audit and then Wave followed their advice.

If they decided to do it using another accounting method, they ran the risk of not having their financials certified.

This may change in the future, but it would probably require a change in auditing firms.

[RootOfTrust]

No idea, but the current method of amortizing upgrades revenue over 12 months will matter less and less as the billings continue to scale up...ie. when the previous three q's of upgrades billings are significantly higher than they currently are, the more amortized revenue will be due from them each successive q.

Here is a breakdown of revenues against billings since Wave began noting net billings beginning q3 2008:

Q3 2008: revenue= $1.8m (billings= $2.3m)

Q4 2008: revenue= $3.3m (billings= $3.7m)

Q1 2009: revenue= $4.0m (billings= $4.0m)

Q2 2009: revenue= $4.8m (billings= $4.6m)

Q3 2009: revenue= $4.8m (billings= $5.2m)

Note in two cases billings are equal to or less than revenues (q1/q2 2009 respectively), probably because of the amount of deferred revenue converted to revenue those q's, a matter completely independent from upgrades billings.

In any case what matters most is the continuing q to q increase in billings. Billings= cash in the door (cash flow). Bear in mind some of the billings reported in q3 may still be in accounts receivable if Wave hasn't been fully paid yet.