<PAGE>
FORM 10 - Q
SECURITIES AND EXCHANGE COMMISSION
Washington D.C 20549
---------------------------
[X] Quarterly report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 for the
quarterly period ended September 30, 1997 or
[_] 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: 0-20789
OneWave, Inc.
-------------
(Exact name of registrant as specified in its charter)
Delaware 04-3249618
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Arsenal Marketplace, Second Floor, Watertown, Massachusetts 02172
---------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (617) 923-6500
--------------
----------------------------
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 [X] NO [_]
As of October 31, 1997 there were 14,368,451 shares of Common Stock outstanding.
1
<PAGE>
OneWave, Inc.
Table of Contents
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page
----
<S> <C>
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at December 31, 1996 and September 30, 1997. 3
Condensed Consolidated Statements of Operations for the three and nine months ended
September 30, 1996 and 1997. 4
Condensed Consolidated Statements of Cash Flows for the nine months ended
September 30, 1996 and 1997. 5
Notes to Condensed Consolidated Financial Statements. 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations. 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Default Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
</TABLE>
2
<PAGE>
OneWave, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
Part I. Financial Information
- -----------------------------
<TABLE>
<CAPTION>
Item 1. Condensed Consolidated Financial Statements.
Unaudited
December 31, September 30,
1996 1997
------------ -------------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 12,868 $ 15,700
Marketable securities 27,181 17,365
Accounts receivable, net 1,784 1,263
Inventories 304 -
Prepaid expenses and other current assets 747 560
-------- --------
Total current assets 42,884 34,888
Property and Equipment, net 3,009 1,758
Other Assets 257 -
-------- --------
Total assets $ 46,150 $ 36,646
======== ========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 1,454 $ 1,001
Other current liabilities 4,411 1,502
Deferred revenue 548 545
-------- --------
Total current liabilities 6,413 3,048
Stockholders' Equity:
Common stock 15 15
Additional paid-in capital 58,505 58,972
Treasury stock, at cost - (1,998)
Note receivable from former chief executive officer (2,560) -
Accumulated deficit (16,223) (23,391)
-------- --------
Total stockholders' equity 39,737 33,598
Total liabilities and stockholders' equity $ 46,150 $ 36,646
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
3
<PAGE>
OneWave, Inc.
Condensed Consolidated Statements of Operations
(In thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ------------------
1996 1997 1996 1997
------- ------- ---- ----
<S> <C> <C> <C> <C>
Revenues
Software license and maintenance $ 3,961 $ 443 $ 6,888 $ 991
Consulting and education services 1,373 1,265 3,979 3,146
------- ------- -------- -------
Total revenues 5,334 1,708 10,867 4,137
Cost of Revenues:
Software license and maintenance 386 39 996 557
Consulting and education services 1,459 1,189 3,277 3,361
------- ------- -------- -------
Total cost of revenues 1,845 1,228 4,273 3,918
------- ------- -------- -------
Gross profit 3,489 480 6,594 219
Operating Expenses:
Selling, general and administrative 3,371 1,013 7,493 4,922
Research and development 1,073 371 2,425 1,858
Restructuring charge - - - 1,782
Compensation to former chief
executive officer (109) - 6,794 227
------- ------- -------- -------
Total operating expenses 4,335 1,384 16,712 8,789
------- ------- -------- -------
Operating loss (846) (904) (10,118) (8,570)
Interest Income (Expense), net 467 431 431 1,417
------- ------- -------- -------
Net loss before taxes (379) (473) (9,687) (7,153)
Income Tax Expense - - - 15
------- ------- -------- -------
Net loss $ (379) $ (473) $ (9,687) $(7,168)
======= ======= ======== =======
Net Loss per Common and Common
Equivalent Share $(0.03) $(0.03) $(0.71) $(0.49)
======= ======= ======== =======
Weighted Average Number of Common
and Common Equivalent Shares
Outstanding 14,729 14,165 13,670 14,626
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
4
<PAGE>
OneWave, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------------------------------------
1996 1997
---------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (9,687) $ (7,168)
Adjustments to reconcile net loss to net cash used in
operating activities:
Compensation expense to former chief
executive officer 6,794 227
Loss on restructuring items - 1,395
Deferred compensation expense 41 -
Depreciation and amortization 393 898
Change in operating assets and liabilities:
Accounts receivable (3,327) 520
Inventories (4) -
Prepaid expenses and other current assets (390) 164
Due from affiliates - 55
Accounts payable 1,942 (453)
Other current liabilities (1,360) (625)
Deferred revenue 102 (3)
-------- --------
Net cash used in operating activities (5,496) (4,990)
Cash Flows from Investing Activities:
Sales of marketable securities, net - 9,816
Purchases of marketable securities, net (30,896) -
Loan to former chief executive officer - (2,507)
Purchases of property and equipment (2,911) (236)
Capitalized software development costs (265) -
-------- --------
Net cash (used in) provided by investing activities (34,072) 7,073
Cash Flows from Financing Activities:
Payments on notes payable to stockholders (1,000) -
Proceeds from issuance of redeemable convertible preferred
stock 6,780 -
Proceeds from issuance of common stock 43,340 -
Proceeds from common stock issuance for employee stock
purchase plan - 126
Net proceeds from issuance of convertible preferred stock 5,970 -
Retirement of Common Stock (6,000) -
Proceeds from the exercise of stock options 141 623
-------- --------
Net cash provided by financing activities 49,231 749
Net Increase in Cash and Cash Equivalents 9,663 2,832
Cash and Cash Equivalents, beginning of period 105 12,868
-------- --------
Cash and Cash Equivalents, end of period $ 9,768 $ 15,700
======== ========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 92 $ 8
======== ========
Cash paid for income taxes $ - $ 15
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
5
<PAGE>
OneWave, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation:
The condensed consolidated financial statements included herein are unaudited
and reflect all adjustments, consisting of normal recurring adjustments, which
are, in the opinion of management, necessary for a fair presentation of the
results for the interim periods. These financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996
as filed with the Securities and Exchange Commission.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates and would impact
future results of operations and cash flows.
The results of operations for the reported 1997 periods are not necessarily
indicative of the results to be achieved for the entire year ending December 31,
1997.
2. Computation of Net Loss Per Common and Common Equivalent Share
For the three month and nine month periods ended September 30, 1996 and 1997 net
loss per common share was computed based upon the weighted average number of
common shares. In accordance with the Securities and Exchange Commission Staff
Accounting Bulletin No. 83 (" SAB No. 83"), all common and common equivalent
shares and other potentially dilutive instruments (including stock options,
redeemable convertible preferred stock and convertible preferred stock ) issued
during the twelve month period prior to the date of the Company's initial public
offering ("IPO") have also been included in the calculation of weighted average
common and common equivalent shares outstanding for the three month and nine
month periods ended September 30, 1996.
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards 128, Earnings Per Share. This pronouncement is
effective for fiscal years ending after December 15, 1997. The more significant
changes are the replacement of primary earnings per share with "basic" earnings
per share. Basic earnings per share is computed by dividing reported earnings
available to common stockholders by weighted average shares outstanding, with no
consideration given for any potentially dilutive securities. Fully diluted
earnings per share, now called "diluted" earnings per share, is still required.
As net losses were presented for the 1997 and 1996 periods in the accompanying
consolidated financial statements, the pro forma loss per share, computed under
the new statement, is the same as the loss per share presented.
3. Marketable Securities
Marketable securities primarily consist of government bonds and commercial paper
with original maturities at date of purchase beyond three months and less than
twelve months. In accordance with Statement of Financial Accounting Standards
No. 115, the Company classifies its marketable securities as "held-to-maturity"
and therefore reports such assets at amortized cost, which approximates market.
6
<PAGE>
4. Treasury Stock
In April 1997, the Company funded $2,507,000 under a loan agreement with its
former Chief Executive Officer. The loan was secured by a first priority pledge
of 960,000 shares of the Company's common stock. In June 1997, the former Chief
Executive Officer resigned from the Company and surrendered these shares in
satisfaction of the loan agreement. The market price of $2.375 on the date the
shares were surrendered was used to determine the cost of the treasury stock.
The 960,000 shares have been classified as treasury stock with a total cost of
$2,280,000. The $277,000 difference between the amount of the loan and the cost
of the treasury stock was recorded as a charge to operations and is classified
as compensation to former chief executive officer. As of September 30, 1997, the
Company has distributed approximately 119,000 shares from treasury for the
Company's employee stock option and the employee stock purchase plans.
5. Restructuring Charge
On June 9, 1997, the Company announced that it had implemented a plan (the
"Plan") to restructure the Company's operations. The Plan included write-offs
and writedowns of certain assets and included accruing the costs related to a
significant reduction in the Company's work force. The implementation of the
Plan resulted in a one time charge of $1,782,000. Included in other current
liabilities at September 30, 1997 is $277,000 relating to the restructuring
charge.
The following are the significant components of the charge for restructuring:
<TABLE>
<CAPTION>
<S> <C>
Write-off and writedown of assets to net realizable value $1,117
Employee severance, benefits and related costs 650
Other 15
------
$1,782
------
</TABLE>
7
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following information should be read in conjunction with the Company's
condensed consolidated financial statements and notes thereto, and the risk
factors contained in the section entitled "Certain Factors That May Affect
Future Results" below and on page 16 of the Company's Annual Report on Form 10-K
dated March 28, 1997.
This Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. The Company's actual results could differ materially from those set
forth in the forward-looking statements. Factors that might cause such a
difference are discussed in the section entitled "Certain Factors That May
Affect Future Results" below.
OVERVIEW:
OneWave is an Internet software and services company dedicated to unifying
disparate information systems and building integrated business solutions
utilizing Internet technologies. The Company is organized into two distinct
business groups; Software Products and Consulting Services. In October 1997,
the Company promoted the senior vice president for the Software Products group
to president of that organization. The Company is currently searching for a
president for the Consulting Services group. While the Company believes that in
the long term these changes will improve Company performance, in the short term
revenues will be uncertain while the Company continues through a transition
period. It is premature for the Company to determine whether its new strategy
and approach to sales will be successful, and the Company's plans and strategies
are likely to continue to evolve. Further, there can be no assurances that the
Company will be able to obtain, maintain and retain the resources, employees,
executives and assets necessary for the Company to effectively pursue its
strategy. The competition and market for the Company's services and technology
are quickly changing, and may develop in ways not anticipated by the Company.
RESULTS OF OPERATIONS:
Revenues:
- ---------
Total revenues decreased $3,626,000 to $1,708,000 for the three months ended
September 30, 1997 from $5,334,000 for the comparable quarter in 1996. The
decrease was due primarily to reductions in the volume of software licenses as a
result of the Company's transition to a new product sales strategy during the
first quarter of 1997. Additionally, software and maintenance revenue decreased
by $3,518,000 to $443,000 for the three months ended September 30, 1997 from
$3,961,000 for the comparable quarter in 1996. Consulting and education services
revenue decreased by $108,000 to $1,265,000 for the three months ended September
30, 1997 from $1,373,000 for the comparable quarter in 1996. For the three
months ended September 30, 1997, software license and maintenance revenues
represented 26% of total revenues with the remaining 74% from consulting and
education services, compared with 74% and 26%, respectively for the comparable
prior year period.
Total revenues decreased $6,730,000 to $4,137,000 for the nine months ended
September 30, 1997 from $10,867,000 for the comparable period in 1996. The
decrease was due primarily to the Company's change in product sales strategy in
the first quarter and the subsequent change in management during the second
quarter, resulting in an effort to redefine the Company's product and services
strategies. Software and maintenance decreased by $5,897,000 to $991,000 for
the nine months ended September 30, 1997 from $6,888,000 for the comparable
quarter in 1996. Consulting and education services decreased by $833,000 to
$3,146,000 for the nine months ended September 30, 1997 from $3,979,000 for the
comparable quarter in 1996. For the nine months ended September 30, 1997,
software license and maintenance revenues represented 24% of total revenues with
the remaining 76% from consulting and education services compared with 63% and
37%, respectively, for the comparable prior year period.
8
<PAGE>
Gross profit:
- -------------
Cost of software license and maintenance revenues consists of the cost of
software and maintenance purchased for resale from a former related party,
distribution costs and product support costs. The cost of consulting and
education services consists primarily of consulting and education personnel
salaries, related costs and fees to third-party service providers. For the three
months ended September 30, 1997, the gross margins for license and maintenance
revenues and consulting and education services were 91% and 6%, respectively.
For the comparable prior year quarter, the gross margin for license and
maintenance was 90% and consulting and education services generated a gross loss
percentage of 6%. The decrease in gross margin for license and maintenance
revenues compared to prior year is primarily attributable to reduced sales
volume. The decrease in gross margin for consulting and education services from
the comparable prior year quarter is primarily attributable to the reduction in
consulting and educational services provided during the period.
For the nine months ended September 30, 1997, the gross margin for license and
maintenance revenues and consulting and education services was a profit of 44%
and a loss of 7%, respectively. For the comparable prior year nine month
period, the gross margin for license and maintenance revenues and consulting and
education services was 86% and 18%, respectively. The decrease in gross margin
for license and maintenance revenues compared to prior year is directly
attributable to the lower volume of license and maintenance revenues compared to
prior year period. The decrease in gross margin for consulting and education
services from the comparable prior year nine month period is attributable to a
decrease in consulting and education services revenue while headcount and
related costs remained level.
Selling, General and Administrative Expenses:
- ---------------------------------------------
Selling, general and administrative expenses consist primarily of payroll costs
related to executive management, finance, administration, sales and marketing
personnel, and costs for advertising, marketing and related administrative
support. Selling, general and administrative expenses decreased to $1,013,000
for the three months ended September 30, 1997 from $3,371,000 for the comparable
prior year period, representing 59% and 63% of total revenues, respectively.
Selling, general and administrative expenses decreased to $4,922,000 for the
nine months ended September 30, 1997 from $7,493,000 for the comparable prior
year period, representing 119% and 69% of total revenues, respectively. The
total dollar decrease for the three and nine month periods reflects the effects
of the restructuring occurring late in the second quarter of 1997.
Specifically, there have been decreases in headcount and related costs and
decreases in expenditures related to marketing and advertising programs.
Research and Development Expenses:
- ----------------------------------
Research and development expenses primarily consist of payroll-related costs,
fees to independent contractors and purchases of technology. Research and
development expenses decreased to $371,000 for the three months ended September
30, 1997 from $1,073,000 for the comparable prior year period, representing 22%
and 20% of total revenues, respectively. The total dollar decrease for the
three month period is directly attributable to the Company's restructuring which
occurred during the second quarter of 1997. Reductions in the costs associated
with headcount account for the majority of the decline in research and
development expenses. Research and development expenses decreased to
$1,858,000 for the nine months ended September 30, 1997 from $2,425,000 for the
comparable prior year period, representing 45% and 22% of total revenues,
respectively. The total dollar decrease for the nine month period is
attributable to a decrease in average headcount and related costs.
Restructuring Charge:
- ---------------------
On June 9, 1997, the Company announced that it had implemented a plan (the
"Plan") to restructure the Company's operations. The Plan included write-offs
and writedowns of certain assets and included accruing the costs related to a
significant reduction in the Company's work force. The implementation of the
Plan resulted in a one time charge of $1,782,000.
Compensation to Former Chief Executive Officer:
- -----------------------------------------------
During the three months ended March 31, 1996, certain of the Company's
controlling stockholders sold 960,000 shares of common stock to the Company's
former Chief Executive Officer (CEO) for an aggregate purchase price of
$1,440,000, and agreed to make certain payments to the former CEO to secure his
services as the Company's CEO. In accordance with generally accepted accounting
principles, the Company recorded a non-cash expense of $7,515,000
9
<PAGE>
related to these transactions. This non-cash expense consists of: (i)
$5,760,000, which represents the difference between the purchase price paid by
the former CEO for the shares of common stock that he purchased and the fair
market value of those shares at that time; (ii) $1,000,000, relating to a
payment received by the former CEO from one of the Company's controlling
stockholders; and (iii) $755,000, representing the then current value of a
payment guaranty that such stockholder made to the former CEO in the event of a
decline in the value of certain stock appreciation rights held by the former CEO
on capital stock of his former employer. During the three months ended
September 30, 1996, the value of the guaranty declined due to an increase in the
value of the stock appreciation rights. As a result, the Company recorded a
favorable credit of $109,000 for the quarter. In September 1996, the former CEO
exercised the stock appreciation rights. Accordingly, the financial results for
the three and nine months ended September 30, 1997 were not affected by the
guaranty.
In connection with the shares purchased by the former CEO, the Company agreed
to loan the former CEO up to $2,560,000 for payment of his anticipated income
tax liability resulting from his purchase. The Company funded $2,507,000 under
the loan agreement in April 1997. The loan was secured by a first priority
pledge of the purchased shares. In June 1997, the former CEO surrendered the
purchased shares in satisfaction of the loan. For the nine months ended
September 30, 1997, the Company has recorded an expense of $227,000 to reflect
the difference between the amount of the loan and the market value of the shares
surrendered to the Company. The Company classified the shares acquired as
treasury stock.
Interest Income (Expense), Net:
- -------------------------------
For the three and nine months ended September 30, 1997 the Company recorded net
interest income of $431,000 and $1,417,000, respectively. The interest income
is a result of interest earned on the net proceeds received by the Company from
its initial public offering in July 1996. For the comparable prior year
periods, the Company recorded net interest income of $467,000 and $431,000,
respectively. The income during the 1996 periods was primarily generated from
the interest earned from the proceeds from the initial public offering. The
income during the 1996 periods was reduced by interest expense related to
interest on notes payable to stockholders which has been repaid in full by the
Company.
Liquidity and Capital Resources:
- --------------------------------
The Company's operating activities utilized cash and cash equivalents of
approximately $4,990,000 for the nine month period ended September 30, 1997,
resulting primarily from the net losses for the nine month period.
The Company's investing activities, which primarily consisted of the realization
of certain of the Company's short-term marketable securities at maturity,
provided cash and cash equivalents of approximately $7,073,000 for the nine
month period ended September 30, 1997. In April 1997, the Company funded
$2,507,000 under its loan agreement with the former CEO.
The Company's financing activities, which consisted of the sale of stock
pursuant to the exercise of employee stock options and the issuance of common
stock for the employee stock purchase plan, provided cash and cash equivalents
of approximately $749,000 for the nine month period ended September 30, 1997.
The Tax Reform Act of 1986 contains provisions that limit the amount of net
operating loss carryforwards that a company may utilize in any one year in the
event of certain cumulative changes in ownership over a three year period in
excess of 50%, as defined. As a result of the change in the Company's ownership
disclosed in the Current Report on Form 8-K as filed with the Securities and
Exchange Commission on May 6, 1997 as described, the Company believes that its
annual net operating loss deduction will be limited in accordance with the
provisions defined under the Tax Reform Act of 1986. The extent of the annual
limitation has not yet been determined, although management believes it will
significantly impair any such benefit.
The Company currently anticipates that at its current rate of expenditures,
existing cash balances will be sufficient to meet its anticipated working
capital and capital expenditure requirements through December 31, 1998.
Thereafter, the Company may need to raise additional funds. The Company may in
the future seek to expand its business through possible acquisitions. The
Company, however, has no commitments or agreements with respect to any future
acquisition and no assurances can be given with respect to the likelihood or
financial or business effect, of any future acquisition. Future acquisitions
could be financed by internally generated funds, bank borrowings, public
offerings or private
10
<PAGE>
placements of equity or debt securities, or a combination of the foregoing.
There can be no assurance that additional financing will be available when
needed on terms favorable to the Company or at all.
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
This Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. The Company's actual results could differ materially from those set
forth in the forward-looking statements and may fluctuate between operating
periods. Certain factors that might cause such differences and fluctuations
include the following: ability to implement and achieve market acceptance of the
Company's evolving strategy and approach to sales, changes in the Company's
strategy, the Company's ability to attract, train and retain qualified
personnel, changes in technology and industry standards, potential fluctuations
in quarterly results, recent introduction of OneWave(TM) products, delays in
development or product releases, changes in the market for the Company's
products and services, slowdown in the rate of acceptance of the Company's
products, dependence of the Company's business on the Internet, increased
competition, development of competing products and services, risk of software
defects, reliance on certain strategic relationships, difficulties in management
of growth and in the management of two distinct business groups within a single
organization, dependence on and difficulties in retaining key personnel,
evolving distribution strategy, proprietary technology and the inherent
difficulties in protecting intellectual property, dependence on third-party
technology, exposure for product and services liability, and those factors which
are discussed in the section entitled "Certain Factors That May Affect Future
Results" on page 16 of the Company's Annual Report on Form 10-K dated March 28,
1997. Upon request, the Company will provide a copy of the Annual Report
without charge.
11
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In the normal course of operations, the Company is subject to
performance under contracts and has certain legal actions and
contingencies pending. However, in Management's opinion, any such
outstanding matters would not have a material, adverse effect on the
Company's financial position, results of operations or cash flows.
Item 2. Changes in Securities
None
Item 3. Default Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
On August 22, 1997, John Coviello, the Vice President of Technology
resigned from OneWave to pursue new opportunities.
On August 13, 1997, Manuel Diaz resigned as a member of the Company's
Board of Directors.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11 Statement regarding computation of net loss per share
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
Dated: November 13, 1997
OneWave, Inc.
(Registrant)
/s/ David W. Chapman
---------------------------------------------
David W. Chapman, duly authorized officer and
Principal Financial Officer
13
<PAGE>
ONEWAVE, INC.
STATEMENT REGARDING COMPUTATION OF NET LOSS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
EXHIBIT 11
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------ ----------------------------
SEPTEMBER 30, September 30, September 30, September 30,
1996 1997 1996 1997
------------------------------ ----------------------------
<S> <C> <C> <C> <C>
Net loss $ 379 $ 473 $ 9,687 $ 7,168
Weighted average shares outstanding
during the period (1) 14,677 14,165 12,050 14,626
Common stock equivalent shares (1) 52 - 1,620 -
------- ------- ------- -------
Weighted average number of common and
common stock equivalents 14,729 14,165 13,670 14,626
Net loss per common and common equivalent
share $ (0.03) $ (0.03) $ (0.71) $ (0.49)
======= ======= ======= =======
</TABLE>
(1) In accordance with the Securities and Exchange Commission Staff Accounting
Bulletin No.83 ("SAB 83") all common and common equivalent shares and other
potentially dilutive instruments (including stock options, redeemable
convertible preferred stock and convertible preferred stock) issued during
the twelve month period prior to the date of the IPO have been included in
the calculation as if they were outstanding for the periods ended September
30, 1996.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIALS IN THE COMPANY'S 9/30/97 10-Q AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-START> JUL-01-1997 JAN-01-1997
<PERIOD-END> SEP-30-1997 SEP-30-1997
<CASH> 15,700 15,700
<SECURITIES> 17,365 17,365
<RECEIVABLES> 1,343 1,343
<ALLOWANCES> 80 80
<INVENTORY> 0 0
<CURRENT-ASSETS> 34,888 34,888
<PP&E> 2,834 2,834
<DEPRECIATION> 1,076 1,076
<TOTAL-ASSETS> 36,646 36,646
<CURRENT-LIABILITIES> 3,048 3,048
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 36,646 36,646
<SALES> 1,708 4,137
<TOTAL-REVENUES> 1,708 4,137
<CGS> 1,228 3,918
<TOTAL-COSTS> 1,228 3,918
<OTHER-EXPENSES> 1,384 8,789
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 431 1,417
<INCOME-PRETAX> (473) (7,153)
<INCOME-TAX> 0 15
<INCOME-CONTINUING> (473) (7,168)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (473) (7,168)
<EPS-PRIMARY> (0.03) (0.49)
<EPS-DILUTED> (0.03) (0.49)
</TABLE>
