Replies to post #87574 on Wave Systems Corp. (fka WAVXQ)

[TonyMcFadden]

As I understand deferred revenues, anything shipped by STM would not be deferred revenues...it would be invoiceable at STM's shipment. (Wave may not be able to recognise it until July, but that's not a problem, as far as I'm concerned.)

However, if STM paid Wave in advance for software for 5 million TPM (not that I'm suggesting that happened) then the remaining 3 million+ of revenues would be deferred until STM actually shipped their product, and that deferred revenue would a) be cash in hand that could be spent and b) identified in the 2Q financials.

[1stnflight]

Ramsey: Accrual accounting for revenue

Deferred revenues = Cash from STM or customer in bank plus Wave still owing the customer a service or product. Meaning Wave has not earned the cash/revenue. Revenue is booked in a future period(s) when it is earned.

Accrued Revenues - Wave has received the cash (terms Cash due upon receipt/shipment), or has not received cash and gives customer open credit terms of say Net 30 days. An Accounts Receivable is set up and revenue booked in same period because Wave has fullfilled its obligation (provided or shipped the service/product) thus has earned the revenue.

Like Eamonshute, I feel it is likely Wave is in the accrued revenue scenario thus what is shipped in Q2 is booked in Q2. This will not be true if Waves has not fullfilled its obligation in Q2. Payment is different and is independent of when the revenue is booked.

Without seeing the contract and or purchase orders with/from STM we are only guessing when revenues are earned then booked, and terms for payment.