SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
ý QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
OR
o TRANSITION REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-24752
Wave Systems Corp.
(Exact name of registrant as specified in its charter)
|
Delaware |
|
13-3477246 |
|
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
|
|
|
|
|
480
Pleasant Street |
||
|
(Address of principal executive offices) |
||
|
(Zip code) |
||
|
|
|
|
|
(413) 243-1600 |
||
|
(Registrant’s telephone number, including area code) |
||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ý No o
The number of shares outstanding of each of the issuer’s classes of common stock as of July 31, 2002: 51,766,918 shares of Class A Common Stock and 324,225 shares of Class B Common Stock.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
WAVE SYSTEMS CORP. AND SUBSIDIARIES
(a development stage corporation)
Consolidated Balance Sheets
|
|
|
As of |
|
||||
|
|
|
June 30, |
|
December
31, |
|
||
|
Assets |
|
|
|
|
|
||
|
Current assets: |
|
|
|
|
|
||
|
Cash and cash equivalents |
|
$ |
21,859,060 |
|
$ |
40,437,119 |
|
|
Cash Collected on Behalf of Charities |
|
— |
|
358,531 |
|
||
|
Marketable securities |
|
2,160 |
|
10,366 |
|
||
|
Notes Receivable from Officers |
|
1,417,464 |
|
1,380,050 |
|
||
|
Inventories |
|
1,538,108 |
|
581,912 |
|
||
|
Prepaid expenses and other receivables |
|
436,291 |
|
624,535 |
|
||
|
Total current assets |
|
25,253,083 |
|
43,392,513 |
|
||
|
Marketable Equity Securities |
|
4,316,316 |
|
11,160,758 |
|
||
|
Property and equipment, net |
|
3,297,570 |
|
4,291,228 |
|
||
|
Other assets |
|
688,993 |
|
1,389,803 |
|
||
|
Total Assets |
|
33,555,962 |
|
60,234,302 |
|
||
|
Liabilities and Stockholders’ equity |
|
|
|
|
|
||
|
Current liabilities: |
|
|
|
|
|
||
|
Accounts payable and accrued expenses |
|
3,857,627 |
|
5,807,878 |
|
||
|
Due to Charities |
|
— |
|
423,053 |
|
||
|
Deferred Revenue |
|
— |
|
197,965 |
|
||
|
Total current liabilities |
|
3,857,627 |
|
6,428,896 |
|
||
|
|
|
|
|
|
|
||
|
Common stock, $.01 par value. Authorized 75,000,000 shares as Class A; 50,066,918 shares issued and outstanding in 2002 and 49,996,506 in 2001 |
|
500,669 |
|
499,965 |
|
||
|
Common stock, $.01 par value. Authorized 13,000,000 shares as Class B; 324,225 shares issued and outstanding in 2002 and 357,083 in 2001 |
|
3,242 |
|
3,571 |
|
||
|
Capital in excess of par value |
|
244,623,196 |
|
244,330,985 |
|
||
|
Deficit accumulated during the development stage |
|
(210,556,033 |
) |
(189,624,123 |
) |
||
|
Other Comprehensive Income (Loss) – unrealized loss on marketable securities |
|
(4,872,739 |
) |
(1,404,992 |
) |
||
|
Total stockholders’ equity |
|
29,698,335 |
|
53,805,406 |
|
||
|
Total Liabilities and Stockholders’ Equity |
|
$ |
33,555,962 |
|
$ |
60,234,302 |
|
See accompanying notes to unaudited consolidated financial statements.
2
WAVE SYSTEMS CORP. AND SUBSIDIARIES
(a development stage corporation)
Consolidated Statements of Operations
(Unaudited)
|
|
|
Three Months ended |
|
Six Months ended |
|
Period from |
|
|||||||||
|
|
|
June 30, 2002 |
|
June 30, 2001 |
|
June 30, 2002 |
|
June 30, 2001 |
|
June 30, 2002 |
|
|||||
|
Net Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Product |
|
$ |
74,997 |
|
$ |
186,511 |
|
$ |
99,997 |
|
$ |
186,511 |
|
$ |
464,137 |
|
|
Services |
|
2,795 |
|
4,739 |
|
223,410 |
|
23,819 |
|
654,134 |
|
|||||
|
Licensing and Other |
|
— |
|
448 |
|
— |
|
54,806 |
|
491,858 |
|
|||||
|
Total Net Revenues |
|
77,792 |
|
191,698 |
|
323,407 |
|
265,136 |
|
1,610,129 |
|
|||||
|
Cost of sales: |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Product |
|
36,941 |
|
129,384 |
|
53,366 |
|
129,384 |
|
269,652 |
|
|||||
|
Services |
|
1,572 |
|
2,210 |
|
94,133 |
|
4,791 |
|
321,257 |
|
|||||
|
Licensing and Other |
|
— |
|
— |
|
— |
|
— |
|
130,780 |
|
|||||
|
Total Cost of Sales |
|
38,513 |
|
131,594 |
|
147,499 |
|
134,175 |
|
721,689 |
|
|||||
|
Gross margin |
|
39,279 |
|
60,104 |
|
175,908 |
|
130,961 |
|
888,440 |
|
|||||
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Selling, general and administrative |
|
4,712,019 |
|
6,489,035 |
|
10,126,765 |
|
13,084,443 |
|
118,598,678 |
|
|||||
|
Research and development |
|
3,232,472 |
|
4,863,511 |
|
6,272,887 |
|
10,794,579 |
|
78,225,863 |
|
|||||
|
Write-off of Intangibles and other impaired assets |
|
— |
|
— |
|
905,390 |
|
1,562,500 |
|
2,667,307 |
|
|||||
|
Restructuring Costs and other special charges |
|
— |
|
— |
|
726,280 |
|
— |
|
726,280 |
|
|||||
|
Amortization of goodwill |
|
— |
|
430,158 |
|
— |
|
860,316 |
|
2,294,176 |
|
|||||
|
Write-off of goodwill |
|
— |
|
— |
|
— |
|
— |
|
3,054,456 |
|
|||||
|
In process research and development expense |
|
— |
|
— |
|
— |
|
— |
|
2,176,000 |
|
|||||
|
Acquisition Costs |
|
— |
|
— |
|
— |
|
— |
|
1,494,000 |
|
|||||
|
Aladdin license expense |
|
— |
|
— |
|
— |
|
— |
|
3,889,000 |
||||||