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Wave Systems Reports Improved Q4 Results and Highlights Progress in Addressing Growing Trusted Computing Marketplace
Lee, MA -- March 15, 2005 -- Wave Systems Corp. (NASDAQ: WAVX -- www.wave.com) today reviewed recent corporate progress and reported results for its fourth quarter (Q4) and year ended December 31, 2004.
Wave's Q4 2004 net revenue related to technology licensing and related support services was $108,000, compared to Q4 2003 net revenue of $59,000. Reflecting ongoing management of sales, marketing, administrative and R&D expenses, Wave reported a net loss to common stockholders of $3.0 million, or $0.04 per basic share, for the fourth quarter of 2004, compared to a net loss to common stockholders of $4.3 million, or $0.07 per basic share, in Q4 2003. The weighted average number of basic shares outstanding in the fourth quarters of 2004 and 2003, was 71,793,000 and 65,203,000, respectively.
For the year ended December 31, 2004, Wave Systems reported net revenue of $209,000, compared to revenue of $189,000 in the prior year. Wave reported a net loss to common stockholders of $14.5 million, or $0.21 per basic share, for the full 2004 year, compared to a net loss to common stockholders of $25.3 million, or $0.45 per basic share, in 2003. The weighted average number of basic shares outstanding in 2004 and 2003, was 69,041,000 and 55,887,000, respectively.
As of December 31, 2004, Wave had total current assets of $6.8 million, working capital of $3.5 million and no long-term debt.
Steven Sprague, Wave's president and CEO, said, "During 2004 and into this year, Wave made significant progress as a leader in the development and delivery of software and services to enable trusted computing. This occurred in an environment where many PC brands made the commitment to offer trusted computers and the Trusted Computing Group grew to more than 90 members globally.
"As trusted PCs become more mainstream, Wave believes there will be a significant business opportunity in delivering trusted computing products that address the typical challenges facing businesses and governments today - implementing secure solutions that fit into existing infrastructure, that reduce costs and that improve communications and customer service.
"As we evaluate our progress, Wave continues to establish itself as an important member of the trusted computing ecosystem: Our software ships with the global leader of PC motherboards; our software is available for sale on the web site of one of the global leaders in PC sales; we have contracts to have our products bundled with two other leading silicon suppliers, and our reseller partners continue to grow.
"Given the challenges and opportunities inherent in our market, we remain optimistic that trusted computing will continue to grow and generate demand for our EMBASSY® Trust Suite secure software client and server solutions."
Summary of 2004 and year-to-date developments:
(for more details, please visit www.wave.com ):
- Dell: On February 1, 2005, Wave's ETS Enterprise Security Dell Edition 1.0 was made available for purchase on www.Dell.com.
- Intel: Wave's EMBASSY® Trust Suite 3.1 began shipping with Intel desktop board models D915GEV and D915GUX in June 2004, targeting business users of next generation PCs.
- Microsoft: In January 2005, Wavexpress commenced offering its TVTonic video service to Media Center PC users via Microsoft's Online Spotlight. Online Spotlight is a selection of featured services within Microsoft Windows XP Media Center Edition 2005 that offers users a fast, simple way to access compatible services directly from the main navigation screen.
- Seagate Technology: In March 2005, at the Intel Developers Forum, Wave and Seagate conducted a technology demonstration showing the data protection benefits of linking the security of a Trusted Platform Module (TPM) to a Seagate-trusted disc drive.
- a la mode, inc. In October, Wave and a la mode agreed to incorporating Wave's eSign Transaction Management Suite in a la mode's comprehensive solution for securely managing real estate and mortgage transactions online.
- U.S. Military Academy: In December, Wave received an order from the United States Military Academy's Information Technology Operations Center for Wave to provide trusted computing products associated with the academy's Secure Content Dissemination and Data Retrieval Computer System project.
- Operational Research Consultants (ORC): In January, 2005, Wave and ORC forged a strategic partnership to jointly market trusted computing and certified credentialing to provide identity management solutions to federal, state and local governments.
- Groupement des Cartes Bancaires (CB): In January 2005, Wave announced that CB, the French banking authority for payment systems involving bank cards and terminals, will use Wave's secure software development tools to evaluate the potential of TCG-compliant computing solutions.
- Sonex ISG: In February 2005, Sonex Infrastructure Solutions Group (Sonex ISG) agreed to distribute Wave's ETS software and infrastructure to enterprises. Sonex's distribution will encompass the Eastern European countries of Lithuania, Latvia and Estonia.
- Giesecke & Devrient (G&D): In March 2005, Wave demonstrated its ETS software with G&D at the CeBIT 2005 trade show. G&D is a leading global supplier of smart cards.
- Quadra Media LA: In March 2005, Quadra Media licensed TVTonic Direct from Wave's Wavexpress subsidiary for use in the delivery of Spanish language content to Spanish speaking households in the U.S.
Auditor's Opinion Letter - Disclosure:
Pursuant to Rule 4350 of the NASD Marketplace Rules, Wave is also announcing that its auditors' opinion letter (dated March 15, 2005 and which will be contained in Wave's Form-10-K for the year ended December 31, 2004) raises "substantial doubt" about Wave's ability to continue as a going concern given its recurring losses from operations, working capital position and its accumulated deficit.
About Wave Systems Corp.
Wave is a pioneer in hardware-based PC security that provides software to help solve critical enterprise PC security challenges such as data protection, strong authentication, network access control and the management of these enterprise functions. Wave is a founding member of the Trusted Computing Group (TCG), a consortium of more than 100 companies that forged open standards for hardware security. Wave’s EMBASSY® line of client- and server-side software leverages and manages the security functions of the TCG’s industry standard hardware security chip, the Trusted Platform Module (TPM) as well as hard drives that comply with TCG’s “Opal” self-encrypting drive (SED) standard. Self-encrypting drives are a growing segment of the data protection market, offering increased security and better performance than most existing software-based encryption solutions. TPMs are standard equipment on many enterprise-class PCs shipping today and have shipped on an estimated 300 million PCs worldwide. Using TPMs and/or SEDs and Wave software, enterprises can substantially and cost-effectively strengthen their current security solutions. Visit http://www.wave.com for more information.
Safe Harbor for Forward Looking Statements
Under the Private Securities Litigation Reform Act of 1995. This press release may contain forward-looking information within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), including all statements that are not statements of historical fact regarding the intent, belief or current expectations of the company, its directors or its officers with respect to, among other things: (i) the company's financing plans; (ii) trends affecting the company's financial condition or results of operations; (iii) the company's growth strategy and operating strategy; and (iv) the declaration and payment of dividends. The words "may," "would," "will," "expect," "estimate," "anticipate," "believe," "intend" and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the company's ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors.
All brands are the property of their respective owners.
For more information please contact:
|
Wave Investor Relations Contact
David Collins, Richard Land Jaffoni & Collins 212-835-8500 wavx@jcir.com |
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Wave Systems Corp. and Subsidiaries |
|||
|
December 31, 2004 |
December 31, 2003 |
||
| Assets | |||
|
Current Assets: |
|||
|
Cash and cash equivalents |
$ 5,806 |
$ 8,818 |
|
|
Cash collected on behalf of charities |
- |
212 |
|
|
Marketable securities |
722 |
6,325 |
|
|
Prepaid expenses and other receivables |
272 |
205 |
|
|
Total current assets |
6,800 |
15,560 |
|
|
Property & equipment, net |
1,435 |
2,287 |
|
|
Other assets |
219 |
313 |
|
|
Total assets |
8,454 |
18,160 |
|
|
Liabilities and Stockholders' Equity |
|||
|
Current Liabilities: |
|||
|
Accounts payable and accrued expenses |
2,900 |
2,837 |
|
|
Due to charities |
- |
243 |
|
|
Deferred revenue |
351 |
74 |
|
|
Total current liabilities |
3,251 |
3,154 |
|
|
Liability for warrants containing cash settlement provisions |
493 |
992 |
|
|
Total liabilities |
3,744 |
4,146 |
|
|
Total stockholders' equity |
4,710 |
14,014 |
|
|
Total Liabilities and Stockholders' Equity |
$ 8,454 |
$ 18,160 |
|
Wave Systems Corp. and Subsidiaries
(a development stage corporation)
Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
|
Three Months Ended |
Year Ended |
|||||
|
December 31, |
December 31, |
|||||
|
2004 |
2003 |
2004 |
2003 |
|||
| Revenues | $ 108 | $ 59 | $ 209 | $ 189 | ||
| Cost of Sales |
86 |
15 |
151 |
55 |
||
|
|
|
|
|
|||
| Gross Margin |
22 |
44 |
58 |
134 |
||
| Operating Expenses: | ||||||
| Selling, general and administrative |
2,560 |
3,164 |
12,255 |
12,699 |
||
| Research and development |
1,724 |
1,546 |
6,853 |
7,385 |
||
| Inventory Provision |
-- |
-- |
-- |
1,114 |
||
| Write-off of impaired assets |
-- |
-- |
302 |
-- |
||
|
|
|
|
|
|||
|
4,284 |
4,710 |
19,410 |
21,198 |
|||
| Net Interest income |
6 |
9 |
25 |
75 |
||
| Gain on sale of marketable securities |
1,423 |
240 |
4,330 |
235 |
||
|
Liquidated damages |
-- |
(156) |
-- |
(156) |
||
|
Unrealized gain (loss) in value of warrant liability |
(135) |
263 |
499 |
263 |
||
| Recovery of officer note receivable |
-- |
-- |
-- |
1,000 |
||
| Other income (expense) |
-- |
-- |
-- |
52 |
||
|
|
|
|
|
|||
|
1,294 |
356 |
4,854 |
1,469 |
|||
| Net loss |
(2,968) |
(4,310) |
(14,498) |
(19,595) |
||
|
Accrued dividends on preferred stock (including $5,485 accretion of discount in 2003) |
-- |
1 |
-- |
5,697 |
||
| Net loss to common stockholders |
(2,968) |
(4,311) |
(14,498) |
(25,292) |
||
| Net loss per share - basic |
($0.04) |
($0.07) |
($0.21) |
($0.45) |
||
|
Weighted average shares outstanding - basic |
71,793 |
65,203 |
69,041 |
55,887 |
||
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