Wednesday August 20 11:21 AM EDT
Company Press Release
Wave Systems Corp. Reports Second Quarter And Six Months Results
LEE, Mass.--(BUSINESS WIRE)--August 20, 1997--
- $1 Million License Fee Payment and First OEM Agreement
Highlight Growing Acceptance For Wave's Proprietary Electronic
Commerce Solution -
Wave Systems Corp. (Nasdaq: WAVX; wave.com), provider of distribution and transaction-enabling services for electronic content for consumer entertainment and education applications, today reported results for the second quarter and six months ended June 30, 1997. The Company also highlighted recent endorsements of its electronic commerce solution (for more details on each agreement, please refer to the news announcements posted on Wave's web site: wave.com):
Berlin-based ACOTEC GmbH agreed to bundle Wave's proprietary WaveMeter(R) technology with ISDN modems and routers that incorporate ACOTEC's technology. ACOTEC projects it will add over 300,000 users of Wave technology in Europe with the first products scheduled to ship in the first quarter of 1998. - (August 8th) An initial $1 million license fee payment received by Wave as consideration in the formation of ``Global Wave,'' a joint venture with Internet Technology Group plc, the parent company of United Kingdom Internet service provider, Global Internet. Upon the achievement of certain milestones, Wave will be entitled to an additional $4 million in license fees. Global Wave plans to launch a high-speed electronic content distribution service in Europe based on Wave technology. - (July 17th) United Kingdom-based ADSL (asymmetrical digital subscriber line) modem designer, EPL Ltd. agreed to bundle WaveMeter(R) technology with its DMT ADSL modems, slated for testing by European telecommunications providers beginning in the Fall. The agreement represented Wave's first OEM relationship. - (July 7th) Aladdin Knowledge Systems Ltd. (Nasdaq:ALDNF) and Wave entered an investment and technology licensing partnership whereby Wave has licensed Aladdin's software execution control technology to enhance the security of Wave's electronic content distribution and metering system for software rental and rent-to-own transactions. - (June 30th) Ziff-Davis' Yahoo! Internet Life magazine agreed to a cooperative relationship providing co-registration benefits with Wave's Great Stuff Network(SM). - (June 25th)
For the three months ended June 30, 1997, Wave's revenues rose to $2,133 compared to $310 in the year-ago period and $415 in the first quarter of 1997, reflecting a gradual ramp-up of awareness and usage of the Company's electronic commerce solution for the Internet. During the second quarter of 1997, Wave's investment in research and development increased as a result of costs related to the continued development of the Wave System(SM) and its Internet-based transaction enabling system. SG&A expenses increased slightly during the second quarter, primarily due to an increase in personnel and the Company's accelerated sales and marketing efforts aimed at securing relationships with hardware providers to bundle Wave's proprietary WaveMeter(R) processing chip in future product shipments. For the second quarter of 1997 Wave reported a net loss to common stockholders (after accrued dividends on preferred stock of $321,324 and including non-cash accretion of assured incremental yield on preferred stock of $401,267, together totaling $722,591) of $3,308,994, or $0.17 per share, compared to a year-ago net loss to common stockholders (including accrued dividends on preferred stock of $29,702) of $2,437,581, or $0.17 per share. The weighted average number of shares outstanding in the second quarter of 1997 was 19,202,817 compared to 14,332,435 in the year-ago period.
Revenues for the six months ended June 30, 1997 were $2,540 versus revenues of $1,450 in the year-ago period. For the six months period ended June 30, 1997, the Company reported a net loss to common stockholders (after accrued dividends on preferred stock of $734,725 and including non-cash accretion of assured incremental yield on preferred stock of $1,122,743, together totaling $1,857,468) of $7,022,131, or $0.38 per share, compared to a net loss of $4,276,845,or $0.30 per share, during the same period last year. The weighted average number of shares outstanding in the first six months of 1997 and 1996 was 18,549,189 and 14,295,594, respectively.
At June 30, 1997, the Company had total current assets of $922,661 and total current liabilities of $985,321. Subsequent to June 30, 1997, the Company received $1 million in license revenue related to the Global Wave joint venture.
Commenting on the Company's progress, Steven Sprague, President and Chief Operating Officer, stated, ``After several years of development and marketing, we are now seeing broad and growing interest, among an expanding base of hardware and electronic content providers, in our proprietary, secure turnkey electronic content distribution service. Agreements in the past few months are the most tangible sign of this building interest, though Wave remains in active negotiations with several leading personal computer and peripheral manufacturers regarding the installation and large-scale deployment of WaveMeters in the consumer marketplace. While Wave is unable to guarantee the outcome of these negotiations, we are encouraged by the interest being shown by these original equipment manufacturers (OEMs).''
The Company also reported that all items presented for stockholder approval at the annual stockholders' meeting had been approved by voting stockholders, including the election of all directors, the appointment of auditors, and proposals to increase the number of authorized shares of Class A Common Stock, to approve the Company's 1996 Performance Stock Option Plan and to amend the Company's 1994 Employee Stock Option Plan. Due to a calculation error, stockholders at the annual meeting were erroneously informed that the latter two proposals had not been approved.
Wave, headquartered in Lee, MA, produces a distributed information metering and transaction service, the Wave System, for use in consumer entertainment and education applications. This year, Wave introduced the ``Great Stuff Network'' for individual and corporate content creators to securely sell and distribute their products through the Internet via the Wave System. The Wave System permits micro-transactions as low as fractions of a penny. Wave is also developing electronic commerce solutions that will provide electronic content providers with secure distribution as well as new marketing and pricing options that include rental, rent-to own, purchase and pay-per-use transactions. The Wave System gives consumers the convenience and control of obtaining content via the Internet, and eventually CD-ROM and broadband transmissions. For more information about Wave, please see Wave's home page at wave.com.
WaveNet and WaveMeter are registered trademarks, and Wave System is a service mark of Wave Systems Corp.
Safe Harbor 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 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 loss of market share, changes in consumer buying habits and other factors over which Wave Systems Corp. has little or no control.
Wave Systems Corp. and Subsidiaries
(a development stage corporation)
Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Revenues $ 2 $ -- $ 3 $ 1
Operating expenses:
Selling, general and administrative 1,678 1,647 3,267 2,632
Research and development 910 811 1,915 1,721
2,588 2,458 5,182 4,353
Interest income, net -- 49 15 115
Net loss 2,586 2,408 5,165 4,237
Accrued dividends on preferred
stock (including non-cash accretion
of assured incremental
yield on preferred stock
of $401,267 and $1,122,743
for the three and six month
periods ended June 30, 1997,
respectively) 723 30 1,857 40
Net loss to common stockholders 3,309 2,438 7,022 4,277
Net loss per share $0.17 $0.17 $0.38 $0.30
Weighted average shares
outstanding 19,203 14,332 18,549 14,296
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Contact:
Investor Relations Contact:
David C. Collins
Jaffoni & Collins, 212/505-3015
dccollins@earthlink.net
or
Media Contact:
Michael Terpin
The Terpin Group
650/344-4944
mterpin@terpin.com
or
Company Contact:
Mark Marinovich
Wave Systems Corp.
408/261-9510
mmarinovich@wavesys.com
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More news for referenced ticker symbols: ALDNF, WAVX, and related industries: computer, internet.
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