Wave Q3 Revenues Rise over 150% to $846,000.Driven by Sequential and Year-over-Year Growth in License Revenue LEE, Mass. -- Wave Systems Corp. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : WAVX):
Conference call: Today, Thursday, November 9, 2006 at
4:30 P.M. EST
Webcast / Replay URL: http://www.wave.com
Dial-in numbers: 212-231-6010 or 415-537-1888
Wave Systems Corp. (NASDAQ: WAVX; www.wave.com) today reported results for the third quarter (Q3) and nine months ended September 30, 2006 and reviewed recent corporate progress and developments. Principally reflecting a 155% increase in license revenues in Q3 2006 versus last year, Wave's Q3 2006 net revenues rose over 150% to $846,000, compared to Q3 2005 net revenues of $335,000. The increase in license revenues was principally due to royalties earned from increased shipments of Wave software by Wave's OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and partners. Wave's services revenues were $19,000 in Q3 2006, an increase over services revenue of $11,000 in the year ago period. Wave's Q3 2006 services revenue reflects a more normalized level than during Q1 and Q2 2006 (with services revenues of $185,000 and $228,000 respectively), during which periods Wave was completing a service contract for the U.S. Government. Gross profit rose to $643,000, or 76% of net revenues, in Q3 2006, versus gross profit of $150,000, or 45% of net revenues, in Q3 2005, and gross profit of $554,000, or 61% of net revenues, in Q2 2006. The increase in gross profit is a function of the increase in higher-margin licensing revenues. For Q3 2006 Wave reported a net loss of $4.5 million, or $0.12 per basic share, including non-cash, share-based compensation expense of $381,000, or $0.01 per basic share, recorded in accordance with the implementation of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123(R) for "Share-based Payment," effective January 1, 2006. Wave's Q3 2005 net loss of $4.4 million, or $0.15 per basic share, did not include any share-based compensation expense. Per share figures are based on a weighted average number of basic shares outstanding in the third quarters of 2006 and 2005 of 37,800,000 and 28,367,000, respectively. Wave's shares outstanding and loss per share figures have been adjusted to reflect the Company's 1-for-3 reverse stock split that went into effect on July 26, 2006. For the first nine months of 2006, Wave's net revenues rose by 235% to $2.2 million, compared to net revenues of $671,000 in the year-ago nine-month period. For the first nine months of 2006 Wave reported a net loss of $14.0 million, or $0.40 per basic share, including non-cash, share-based compensation expense of $1,142,000, or $0.03 per basic share. Wave's net loss of $13.1 million, or $0.48 per basic share, in the first nine months of 2005 did not include any share based compensation expense. The weighted average number of basic shares outstanding in the first nine months of 2006 and 2005 were 35,279,000 and 27,058,000, respectively. Both the basic loss per share and weighted average number of basic shares outstanding in the 2006 and 2005 nine-month periods have been retroactively adjusted to reflect the impact of the 1-for-3 reverse split. As of September 30, 2006 Wave had total current assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. of $4 million and no long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. . On October 30, 2006, Wave completed the sale of approximately 3.5 million shares of common stock at a price of $2.73 per share, yielding net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of $9.1 million to be used to fund Wave's operations into 2007. Steven Sprague, Wave's president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , commented, "Wave continued to make solid financial and corporate progress during the third quarter and year-to-date periods, highlighted by a sequential increase in license revenues from our OEM partners as well as the initiation of modest upgrade revenue as enterprises begin to beta test A test of new or revised hardware or software that is performed by users at their facilities under normal operating conditions. Beta testing follows alpha testing. Vendors of packaged software often offer their customers the opportunity of beta testing new releases or versions, and the and implement our full EMBASSY[R] Trust Suite (ETS ETS Educational Testing Service (nonprofit private educational testing and measurement organization) ETS Emergency Telecommunications Service ETS Electronic Trading System ETS Engineering (&) Technical Services ) version 5.1 as well as the related server infrastructure. "We believe momentum is gaining for the trusted computing Trusted Computing (also abbreviated TC) is a technology developed and promoted by the Trusted Computing Group. The term is taken from the field of trusted systems and has a specialized meaning. standard, as reflected in accelerating Trusted Platform Module In computing, Trusted Platform Module (TPM) is both the name of a published specification detailing a microcontroller that can store secured information, as well as the general name of implementations of that specification, often called "TPM chip" or "TPM Security Device" (Dell). (TPM (1) See TP monitor. (2) (Transactions Per Minute) The number of transactions processed within one minute. See TPS. (3) (Trusted Platform M ) chip shipments across all PC OEMs; the adoption of the TPM as a required feature in PC procurements and the coming launch of the new Vista operating system operating system (OS) Software that controls the operation of a computer, directs the input and output of data, keeps track of files, and controls the processing of computer programs. which requires a TPM as part of its logo compliance for business PCs. In our view, the dialogue regarding trusted computing is gaining in volume within industry, enterprise customer and media circles. We are very focused on supporting PC OEM and distribution partners in converting prospects into EMBASSY Trust Suite customers. We continue to be very active in communicating the Trusted Computing and Wave value propositions before industry and investment community audiences at a variety of conferences and conventions in the U.S. and abroad. "We have also seen increased interest by enterprise customers in upgrading their infrastructure to take full advantage of the Wave products and have recorded initial revenue from a modest number of initial enterprise license upgrades. These customers and opportunities are across the spectrum of business in Europe, Asia and North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. ." Summary of recent progress/developments: (for more details, please visit www.wave.com): * Trusted Computing PKI (Public Key Infrastructure) A framework for creating a secure method for exchanging information based on public key cryptography. The foundation of a PKI is the certificate authority (CA), which issues digital certificates that authenticate the identity of Enhancement: In late October, Wave and Operational Research Consultants, Inc. (ORC) launched an enhancement to the federal public key infrastructure (PKI) platform that strengthens the security of ORC's ACES (Access Certificate for Electronic Services) and ECA ECA See: Export Credit Agency (U.S. Government External Certificate Authority) certificates. The new solution is designed to allow the private key for ACES and ECA certificates to be automatically generated and protected by the PC's trusted platform module (TPM). * Ingram Micro Ingram Micro, Inc. NYSE: IM a Fortune 100 company founded in 1979 and based in Santa Ana, California. It is the world’s largest technology distributor and a leading technology sales, marketing and logistics company. Europe Agreement: In late October, Wave completed an agreement with Ingram Micro Europe, Inc., appointing them as a non-exclusive distributor of Wave's products in Europe, the Middle East and Africa Europe, the Middle East and Africa, usually abbreviated to EMEA, is a regional designation used for government, marketing and business purposes. It is particularly common amongst North American based companies, who often divide their international operations into the . Though there are no minimum commitments or quantities under this agreement, Wave expects businesses throughout these territories to have greater access to its EMBASSY line of enterprise security software, the business security features of which include policy management, data protection, password management and strong pre-boot authentication. * Wave Customer Named As Network World Enterprise All-Star Winner: In late September, Wave customer Papa Gino's Papa Gino's is a restaurant chain based in Dedham, Massachusetts specializing in American-style pizza along with pasta, subs, salads, and a variety of appetizers. There are over 200 Papa Gino's locations in Connecticut, Maine, Massachusetts, New Hampshire, and Rhode Island. Inc./D'Angelo Sandwich Shop Inc. was named a winner in the 2006 Network World Enterprise All-Star Awards for their use and advancement of the Trusted Platform Module (TPM) security chip found in every Dell laptop or desktop the company buys. When the chip is used with Wave Systems' ETS it allows Papa Gino's/D'Angelo Sandwich Shop to successfully execute its strategically architected security plan right out of the box. * Trusted Computing Group's (TCG (Trusted Computing Group, Beaverton, OR, www.trustedcomputinggroup.org) The successor to the Trusted Computer Platform Alliance (TCPA), announced in 2003 by founding members AMD, HP, IBM, Intel and Microsoft. ) Mobile Phone Security Specifications: In mid September, Wave announced plans to extend its EMBASSY[R] Trust Suite software to support of the newly published TCG security specifications for mobile phones. The open, non-proprietary security specifications called Mobile Trusted Module (MTM MTM Medication Therapy Management MTM Minutes to Midnight (Linkin Park album) MTM Mary Tyler Moore (actress) MTM Made to Measure MTM Motoren-Technik-Mayer MTM Methods Time Measurement ) will enable users to strongly authenticate their mobile devices to their PCs in order to replicate sensitive personal information, such as address books and digital wallets, as well as to determine the "trustworthiness" of a given mobile phone. The specifications also call for the use of a common key management infrastructure for the protection and backup of passwords and important data. * Amendment to Intel[R] Software License and Distribution Agreement: In late July, Wave Systems Corp. executed an amendment to its Software License and Distribution Agreement with Intel. The amendment permits Intel to ship the next version of Wave's EMBASSY[R] Trust Suite with Intel's new Intel P965 Express Chipset-based Intel Desktop Boards: DQ965WC, DQ965CO and DQ965GF to provide a final layer of security. Giving effect to shipment of these new units, the number of Intel Desktop Boards on which Wave's products ship increased to 15. The agreement does not provide for guaranteed minimum or maximum shipped quantities or royalties. * Wave 1-for-3 Reverse Stock Split: In late July, Wave effected a 1-for-3 reverse split of its Common Stock. The reverse split was implemented to regain compliance with the $1.00 per share minimum closing bid price requirement for continued listing on the Nasdaq Global Market (previously known as the Nasdaq National Market). For each three (3) shares held, Wave shareholders received in exchange one new share of Wave Systems common stock. * Trust Company of America: In early July, Wave was selected to provide a server-based e-signature and secure document vaulting solution for Trust Company of America, a specialized provider of custody and back office services to the financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. industry. Wave's TCG compatible eSign Transaction Management Suite[TM] will be deployed with Efficient Forms' iForms Product Suite[TM], to enable Trust Company of America to automate its new account and account maintenance processes. * NTT NTT Nippon Telegraph and Telephone Corporation NTT New Technology Telescope NTT National Technology Transfer, Inc NTT Name That Tune (TV game show) NTT National Tree Trust NTT Number Theoretic Transform Data Corporation: In July, Wave executed a software reseller agreement with NTT DATA Corporation of Japan, a leading systems integrator. Pursuant to the agreement NTT DATA is authorized to resell and provide support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services for Wave's EMBASSY Trust Suite technology and solutions for the trusted computing market in Japan, including financial services, government, health care and consumer market segments. The agreement does not provide for guaranteed minimum or maximum shipped quantities or royalties. About Wave Systems Consumers and businesses are demanding a computing environment that is more trusted, private, safe and secure. Wave is a leader in delivering trusted computing applications and services with advanced products, infrastructure and solutions across multiple trusted platforms from a variety of vendors. Wave holds a portfolio of significant fundamental patents in security and e-commerce applications and employs some of the world's leading security systems architects and engineers. For more information about Wave, visit http://www.wave.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. for Forward-Looking Statements Except for the statements of historical fact, the information presented herein constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include general economic and business conditions, the ability to fund operations, the ability to forge partnerships required for deployment, changes in consumer and corporate buying habits, chip development and production, the rapid pace of change in the technology industry and other factors over which Wave Systems Corp. has little or no control. Wave Systems assumes no obligation to publicly update or revise any forward-looking statements. All brands are the property of their respective owners. [TABLE OMITTED] [TABLE OMITTED] |
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