Wavve Warns of Uncertain Future
Company says it must raise more cash or may cease operations

May 23, 2001 -- Just two weeks after opening its new data center, colocation and managed services provider Wavve Telecommunications said yesterday that it may cease operations if it cannot raise additional funding.
The warning came yesterday as the company reported financial results for the quarter ended Dec. 31, 2000. Wavve had issued a similar warning last December, but then received $42 million in funding from a complex financing agreement with Capital Lease Funding, enough to complete construction on its Sacramento data center.
But ongoing financial pressures have forced Wavve to cut costs in recent weeks, and it is "actively" pursuing additional funding. Since April 1, the company has cut its staff by 50 percent, trimmed expenses and consolidated its headquarters operations in the 92,000 square foot Sacramento data center.
While not establishing any timetables or deadlines, Wavve said it was pursuing numerous avenues to raise cash, including the sale of assets.
"However, there is no assurance that the company will be successful in securing additional financing and in the event that it is unable to do so, it may be required to cease operations," Wavve said in a press release.
Even as it warned of financial risks, Wavve said it was hopeful that the May 4 appointment of David Furnas as president and chief operating officer would begin a change in its fortunes.
"We see an opportunity to grow the company on this newly leveled playing field in light of the recent demise of several competitors," chairman Bob Ingraham said in a letter to shareholders.
The company has not reported results for the first quarter of 2001, but said yesterday that it recorded a $45.4 million loss in 2000, including a $37.9 million loss in the fourth quarter.
More than $11 million of the 2000 loss was attributed to Wavve's write-off of efforts to develop operational support system (OSS) software, which were halted when the company ran short of cash.
At year-end, Wavve reported assets of $23.2 million and liabilities of $22.8 million. As of Dec. 31, the company had a "working capital deficiency" of $7.4 million.