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 March 31, 2004
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 |
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13-3477246 |
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(State or other jurisdiction of |
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(I.R.S. Employer |
480 Pleasant Street
Lee, Massachusetts 01238
(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
Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Exchange Act).
Yes o No ý
The number of shares outstanding of each of the issuer’s classes of common stock as of May 1, 2004: 67,163,415 shares of Class A Common Stock and 205,725 shares of Class B Common Stock.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
WAVE SYSTEMS CORP. AND SUBSIDIARIES
(a development stage corporation)
Consolidated (Unaudited) Balance Sheets
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As of |
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March 31, |
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December 31, |
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Assets |
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Current assets: |
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|
|
|
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Cash and cash equivalents |
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$ |
5,207,321 |
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$ |
8,818,305 |
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Cash collected on behalf of charities |
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— |
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211,717 |
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||
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Marketable securities |
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5,876,699 |
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6,325,310 |
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Prepaid expenses and other receivables |
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196,688 |
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205,472 |
|
||
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Total current assets |
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11,280,708 |
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15,560,804 |
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Property and equipment, net |
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2,241,492 |
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2,286,876 |
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Other assets |
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308,301 |
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312,750 |
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Total Assets |
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13,830,501 |
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18,160,430 |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable and accrued expenses |
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2,402,849 |
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2,836,524 |
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Due to charities |
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— |
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243,197 |
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Deferred revenue |
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68,335 |
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74,222 |
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Total current liabilities |
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2,471,184 |
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3,153,943 |
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Liability for warrants containing cash settlement provisions |
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544,450 |
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991,851 |
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Total Liabilities |
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3,015,634 |
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4,145,794 |
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Common stock, $.01 par value. Authorized 75,000,000 shares as Class A; 67,133,415 shares issued and outstanding in 2004 and 67,128,106 in 2003 |
|
671,334 |
|
671,281 |
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Common stock, $.01 par value. Authorized 13,000,000 shares as Class B; 205,725 shares issued and outstanding in 2004 and 2003 |
|
2,057 |
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2,057 |
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Capital in excess of par value |
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262,436,064 |
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262,387,155 |
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Deficit accumulated during the development stage |
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(256,095,090 |
) |
(252,686,326 |
) |
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Accumulated other Comprehensive Income – unrealized gain on marketable securities |
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3,800,502 |
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3,640,469 |
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Total stockholders’ equity |
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10,814,867 |
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14,014,636 |
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Total Liabilities and Stockholders’ Equity |
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$ |
13,830,501 |
|
$ |
18,160,430 |
|
See accompanying notes to unaudited consolidated financial statements.
1
WAVE SYSTEMS CORP. AND SUBSIDIARIES
(a development stage corporation)
Consolidated Statements of Operations
(Unaudited)
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Period
from |
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March 31, |
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March 31, |
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Net Revenues: |
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Product |
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$ |
6,660 |
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$ |
163 |
|
$ |
496,124 |
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Services |
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— |
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12,549 |
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806,640 |
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Licensing and other |
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43,783 |
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3,692 |
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670,352 |
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Total Net Revenues |
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50,443 |
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16,404 |
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1,973,116 |
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Cost of Sales: |
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Product |
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4,647 |
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1,855 |
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288,572 |
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Services |
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— |
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1,149 |
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372,654 |
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Licensing and other |
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22,487 |
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1,404 |
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197,485 |
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Total Cost of sales |
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27,134 |
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4,408 |
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858,711 |
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Gross margin |
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23,309 |
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11,996 |
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1,114,405 |
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Operating expenses: |
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Selling, general and administrative |
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3,304,791 |
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3,844,350 |
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143,663,432 |
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Research and development |
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1,756,269 |
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2,635,134 |
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93,103,666 |
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Inventory Provision |
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— |
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— |
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1,114,442 |
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Write-off of intangibles and other impaired assets |
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— |
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— |
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3,332,948 |
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Restructuring costs and other special charges |
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— |
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— |
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726,280 |
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Amortization of goodwill |
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— |
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— |
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2,294,176 |
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Write-off of goodwill |
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— |
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— |
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3,054,456 |
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In-process research and development expense |
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— |
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— |
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2,176,000 |
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Acquisition costs |
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— |
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— |
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1,494,000 |
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Aladdin license expense |
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— |
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— |
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3,889,000 |
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5,061,060 |
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6,479,484 |
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254,848,400 |
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Other income (expense): |
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Interest income |
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6,701 |
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23,859 |
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10,272,824 |
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Interest expense |
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— |
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— |
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(1,695,461 |
) |
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Equity in net losses of Global Wave |
|
— |
|
— |
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(5,738,650 |
) |
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Loss on other than temporary decline in marketable equity securities |
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— |
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— |
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(13,249,781 |
) |
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Gain on sale of marketable securities |
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1,174,885 |
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— |
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1,952,101 |
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Liquidated Damages |
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— |
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— |
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(155,716 |
) |
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Unrealized gain on decrease in value of warrant liability |
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447,401 |
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— |
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710,498 |
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License fee |
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— |
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— |
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5,000,000 |
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License warrant cost |
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— |
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— |
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(1,100,000 |
) |
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Gain on termination of development contract |
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— |
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— |
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1,818,000 |
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