Wave Systems Reports Third Quarter Results and Highlights Recent Progress
October "Trusted-Client" System Announcement with H-P Represents Major Step
SAN JOSE, Calif.--(BUSINESS WIRE)--Nov. 20, 1998-- Wave Demonstrating EMBASSY Technology at
Comdex/Fall '98 in Las Vegas
Wave Systems Corp. (OTC BB:WAVX; wave.com), which provides electronic commerce, content distribution and security services, today reported results for the third quarter and nine months ended September 30, 1998. The Company also reported that it has been exhibiting its EMBASSY technology this week at Comdex/Fall '98 (booth No.L4122 in North Hall at the Las Vegas Convention Center).
Wave also highlighted recent progress (for more details on each agreement, please refer to Wave's corporate web site wave.com):
Wave unveiled its EMBASSY (EMBedded Application Security SYstem) e-commerce system in October. EMBASSY will support a robust application environment for creating secure applications and e-commerce solutions and is based on the first ''trusted-client'' system designed for a wide range of client devices such as PCs, set-top boxes, hand held devices and peripheral cards. The EMBASSY system, jointly developed with Hewlett-Packard Company's VerSecure product team, will be implemented on motherboard chip sets manufactured by Standard MicroSystems Corporation and ITE. Other partners include Aladdin Knowledge Systems, RSA Data Security, Sun Microsystems and VeriSign.
Wave and Sarnoff Corporation of Princeton, NJ, are working together to create metering solutions and services for the broadcast distribution of digital content. Sarnoff's leadership in satellite, High Definition Television (HDTV) and other digital broadcast technologies combined with extensive experience in the development and commercialization of digital video technologies offers a strong complement to Wave's patented metering architecture. The companies plan to pursue joint marketing and new product development activities, initially focused on the economical delivery of digital content through a variety of broadcast media. Wave and Integrated Technology Express (ITE) entered a license agreement whereby ITE will incorporate Wave's EMBASSY technology into a variety of ITE's integrated circuit products. Engineering and integration efforts are already underway, with prototypes expected in the second quarter of 1999.
Revenues for the quarter ended September 30, 1998 were $3,066 versus $4,097 in the third quarter of 1997. Research and development expenses were $1,177,000 in the third quarter of 1998 compared to $2,163,000 in the third quarter of 1997. The decrease in research and development expenses was primarily attributable to a reduction in the costs associated with non-recurring engineering costs and prototype purchases in 1997 offset by an increase in headcount during the first nine months of 1998.
For the third quarter ended September 30, 1998 Wave reported a net loss to common stockholders of $2,780,360, or $0.09 per basic share, compared to a net loss of $4,409,764, or $0.20 per basic share, in the third quarter of 1997. The 1997 third quarter net loss included approximately $1.1 million in non-recurring costs, recorded in SG&A, for the acquisition of a license to Aladdin Knowledge System, Ltd.'s proprietary HASP technology, as well as a $769,886 non-recurring, non-cash write-off of goodwill related to the acquisition of Wave Interactive Network. The weighted average number of basic shares outstanding in the third quarter of 1998 and 1997 was 30,290,056 and 21,539,324, respectively.
At September 30, 1998, Wave had total current assets of $3,633,591 and total current liabilities of $4,493,207.
Revenues for the nine months ended September 30, 1998 were $15,581 versus revenues of $6,645 in the year-ago period. For the nine months ended September 30, 1998, the Company reported a net loss to common stockholders of $7,385,869, or $0.26 per basic share, compared to a net loss of $11,431,896, or $0.58 per basic share, during the same period last year. The weighted average number of basic shares outstanding in the first nine months of 1998 and 1997 was 28,638,389 and 19,560,212, respectively.
Commenting on the Company's progress, Steven Sprague, President, stated, ''The creation of the trusted-client platform and EMBASSY system represents a major milestone for Wave Systems and the distributed computing world and highlights the value being created through Wave's ongoing investments in R&D and sales and marketing. These investments will continue and likely accelerate as we work to expand and support PC OEM and other industry interest and prepare for expected PC deployment of EMBASSY in the second half of 1999.
''Though our financial results will continue to reflect these growing investments in the coming years, we expect Wave will begin to be valued based on the size and expected growth rate of the network of installed EMBASSY users and later by the actual cash flows generated by content use or purchases using our metering capabilities and from licensing revenues for use of the EMBASSY security platform.''
In addition to its EMBASSY technology, Wave will also be displaying a model of the WinTV® television PC tuner card, including Wave's metering technology, from Hauppauge Computer Works, Inc., a subsidiary of Hauppauge Digital, Inc. (NASDAQ:HAUP - news). |
