Wave Systems (WAVX) 10-Q 8 Nov 13 2013 Q3 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Nov. 06, 2013	Nov. 06, 2013
		Class A Common Stock	Class B Common Stock
Entity Registrant Name	'WAVE SYSTEMS CORP	'	'
Entity Central Index Key	'0000919013	'	'
Document Type	'10-Q	'	'
Document Period End Date	30-Sep-13	'	'
Amendment Flag	'false	'	'
Current Fiscal Year End Date	'--12-31	'	'
Entity Current Reporting Status	'Yes	'	'
Entity Filer Category	'Accelerated Filer	'	'
Entity Common Stock, Shares Outstanding	'	33,330,615	8,885
Document Fiscal Year Focus	'2013	'	'
Document Fiscal Period Focus	'Q3	'	'

Consolidated_Balance_Sheets

Consolidated Balance Sheets (USD $)	Sep. 30, 2013	Dec. 31, 2012
Current Assets:	'	'
Cash and cash equivalents	$1,845,550	$2,112,769
Accounts receivable, net of allowance for doubtful accounts of $-0- at September 30, 2013 and December 31, 2012	3,875,367	5,034,422
Pledged receivables	622,938	1,801,683
Prepaid expenses and other current assets	594,297	421,769
Total current assets	6,938,152	9,370,643
Property and equipment, net	676,325	871,568
Amortizable intangible assets, net	2,736,596	4,028,333
Goodwill	1,448,000	4,038,000
Other assets	236,107	324,614
Total Assets	12,035,180	18,633,158
Current Liabilities:	'	'
Secured borrowings	529,497	1,537,710
Accounts payable and accrued expenses	6,306,378	7,570,723
Current portion of capital lease payable	'	44,658
Deferred revenue	7,063,806	5,949,087
Total current liabilities	13,899,681	15,102,178
Other long-term liabilities	81,036	97,996
Royalty liability	4,489,279	4,486,129
Long-term deferred revenue	1,355,940	1,812,312
Total liabilities	19,825,936	21,498,615
Stockholders' Deficit:	'	'
Capital in excess of par value	405,446,657	393,788,150
Accumulated deficit	-413,564,091	-396,916,216
Total Stockholders' Deficit	-7,790,756	-2,865,457
Total Liabilities and Stockholders' Deficit	12,035,180	18,633,158
Class A Common Stock	'	'
Stockholders' Deficit:	'	'
Common Stock	326,589	262,520
Class B Common Stock	'	'
Stockholders' Deficit:	'	'
Common Stock	$89	$89

Consolidated_Balance_Sheets_Pa

Consolidated Balance Sheets (Parenthetical) (USD $)	9 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Accounts receivable, allowance for doubtful accounts (in dollars)	$0	$0
Reverse stock split ratio	0.25	'
Class A Common Stock	'	'
Common stock, par value (in dollars per share)	$0.01	$0.01
Common stock, Authorized shares	150,000,000	150,000,000
Common stock, shares issued	32,658,879	26,251,968
Common stock, shares outstanding	32,658,879	26,251,968
Class B Common Stock	'	'
Common stock, par value (in dollars per share)	$0.01	$0.01
Common stock, Authorized shares	13,000,000	13,000,000
Common stock, shares issued	8,885	8,885
Common stock, shares outstanding	8,885	8,885

Consolidated_Statements_of_Ope

Consolidated Statements of Operations (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Net revenues:	'	'	'	'
Licensing and maintenance	$5,851,325	$6,930,724	$16,978,355	$20,950,093
Services	400,000	39,539	1,808,938	763,781
Total net revenues	6,251,325	6,970,263	18,787,293	21,713,874
Operating expenses:	'	'	'	'
Licensing and maintenance - cost of net revenues	406,051	729,688	3,105,961	2,212,055
Services - cost of net revenues	65,149	7,521	277,665	144,111
Selling, general and administrative	6,181,802	7,513,373	20,043,524	25,351,347
Research and development	2,493,354	4,793,453	9,254,464	14,861,557
Impairment of goodwill	'	'	2,590,000	'
Total operating expenses	9,146,356	13,044,035	35,271,614	42,569,070
Operating loss	-2,895,031	-6,073,772	-16,484,321	-20,855,196
Other income (expense):	'	'	'	'
Net currency transaction gain (loss)	-5,626	1,965	-12,358	11,753
Net interest expense	-43,166	-36,685	-151,196	-99,294
Total other income (expense)	-48,792	-34,720	-163,554	-87,541
Net loss	($2,943,823)	($6,108,492)	($16,647,875)	($20,942,737)
Loss per common share - basic and diluted (in dollars per share)	($0.09)	($0.25)	($0.58)	($0.90)
Weighted average number of common shares outstanding during the period (in shares)	31,132,377	24,496,793	28,609,207	23,396,431

Consolidated_Statements_of_Ope1

Consolidated Statements of Operations (Parenthetical)	0 Months Ended	9 Months Ended
	Jun. 28, 2013	Sep. 30, 2013
Consolidated Statements of Operations	'	'
Reverse stock split ratio	0.25	0.25

Consolidated_Statement_of_Stoc

Consolidated Statement of Stockholders' Deficit (USD $)	Total	Capital in Excess of Par Value	Accumulated Deficit	Class A Common Stock	Class B Common Stock
				Common Stock	Common Stock
Balance at Dec. 31, 2012	($2,865,457)	$393,788,150	($396,916,216)	$262,520	$89
Balance (in shares) at Dec. 31, 2012	'	'	'	26,251,968	8,889
Increase (Decrease) in Stockholders' Equity	'	'	'	'	'
Net loss	-16,647,875	'	-16,647,875	'	'
Issuance of Class A Common Stock at prices ranging from $1.00 to $2.90 per share, less issuance costs of $137,696	4,152,203	4,124,224	'	27,979	'
Issuance of Class A Common Stock at prices ranging from $1.00 to $2.90 per share, less issuance costs of $137,696 (in shares)	'	'	'	2,797,929	'
Issuance of Class A Common Stock at $2.00 per share, less issuance costs of $250,200	2,919,800	2,903,950	'	15,850	'
Issuance of Class A Common Stock at $2.00 per share, less issuance costs of $250,200 (in shares)	'	'	'	1,585,000	'
Issuance of Class A Common Stock at $1.27 per share, less issuance costs of $121,781	1,407,896	1,395,851	'	12,045	'
Issuance of Class A Common Stock at $1.27 per share, less issuance costs of $121,781 (in shares)	'	'	'	1,204,470	'
Private placement of Class A Common Stock at $3.32 per share, less issuance costs of $90,000	910,001	906,989	'	3,012	'
Private placement of Class A Common Stock at $3.32 per share, less issuance costs of $90,000 (in shares)	'	'	'	301,205	'
Employee stock options exercised at $3.24 per share	42,039	41,909	'	130	'
Employee stock options exercised at $3.24 per share (in shares)	'	'	'	12,983	'
Issuance of Class A Common Stock pursuant to the Wave Employee Stock Purchase Plan at $1.29	171,796	170,467	'	1,329	'
Issuance of Class A Common Stock pursuant to the Wave Employee Stock Purchase Plan at $1.29 (in shares)	'	'	'	132,970	'
Issuance of Class A Common Stock for developed technology at $1.34	500,000	496,274	'	3,726	'
Issuance of Class A Common Stock for developed technology at $1.34 (in shares)	'	'	'	372,578	'
Fractional shares paid out in connection with reverse stock split	-274	-272	'	-2	'
Fractional shares paid out in connection with reverse stock split (in shares)	'	'	'	-224	-4
Stock based compensation	1,619,115	1,619,115	'	'	'
Balance at Sep. 30, 2013	($7,790,756)	$405,446,657	($413,564,091)	$326,589	$89
Balance (in shares) at Sep. 30, 2013	'	'	'	32,658,879	8,885

Consolidated_Statement_of_Stoc1

Consolidated Statement of Stockholders' Deficit (Parenthetical) (USD $)	9 Months Ended
	Sep. 30, 2013
Issuance of Class A Common Stock, per share, Lower range	$1
Issuance of Class A Common Stock, per share, Upper range	$2.90
Issuance of Class A Common Stock, issuance costs (in dollars)	$137,696
Issuance of Class A Common Stock, per share	$2
Issuance of Class A Common Stock, issuance cost (in dollars)	250,200
Issuance of Class A Common Stock, per share	$1.27
Issuance of Class A Common Stock, issuance costs (in dollars)	121,781
Private placement of Class A Common Stock, per share	$3.32
Private placement of Class A Common Stock, issuance costs (in dollars)	$90,000
Employee stock options exercised	$3.24
Shares of Class A Common Stock Issued pursuant to the Wave Employee Stock Purchase Plan, per share	$1.29
Issuance of Class A Common Stock for developed technology, per share	$1.34
Reverse stock split ratio	0.25

Consolidated_Statements_of_Cas

Consolidated Statements of Cash Flows (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Cash flows from operating activities:	'	'
Net loss	($16,647,875)	($20,942,737)
Adjustments to reconcile net loss to net cash used in operating activities:	'	'
Depreciation and amortization	763,840	1,611,521
Compensation associated with issuance of stock options	1,619,115	3,987,588
Impairment of goodwill and intangible assets	4,205,000	'
Accretion of royalty liability	61,050	'
Changes in assets and liabilities:	'	'
Decrease in accounts receivable	1,329,587	4,434,808
Increase in prepaid expenses and other current assets	-172,528	-63,158
Decrease in other assets	88,507	11,214
(Decrease) increase in accounts payable and accrued expenses	-1,218,345	622,443
Increase (decrease) in deferred revenue	658,347	-1,975,963
(Decrease) increase in royalty liability	-103,900	116,103
(Decrease) increase in other long-term liabilities	-16,960	27,686
Net cash used in operating activities	-9,434,162	-12,170,495
Cash flows from investing activities:	'	'
Acquisition of property and equipment	-165,860	-145,197
Internal-use software development costs	-226,000	'
Net cash used in investing activities	-391,860	-145,197
Cash flows from financing activities:	'	'
Payments on capital lease obligation	-44,658	-53,536
Proceeds from employee stock purchase plan	171,796	474,233
Proceeds from exercise of warrants	'	320,500
Proceeds from employee stock option exercises	42,039	79,503
Net proceeds from issuance of common stock	9,389,626	10,273,003
Net cash provided by financing activities	9,558,803	11,093,703
Net decrease in cash and cash equivalents	-267,219	-1,221,989
Cash and cash equivalents at beginning of period	2,112,769	3,385,035
Cash and cash equivalents at end of period	1,845,550	2,163,046
Non-cash financing activities:	'	'
Issuance of common stock for developed technology	500,000	'
Cashless exercise of warrants	'	404
Cash paid during the period for:	'	'
Interest	$97,308	$89,100

Critical_Accounting_Policies

Critical Accounting Policies	9 Months Ended
	Sep. 30, 2013
Critical Accounting Policies	'
Critical Accounting Policies	'
	1.              Critical Accounting Policies
	The preparation of the Company’s consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, management evaluates its estimates and judgments, including those related to depreciation and amortization, revenue recognition, accounts receivable reserves, valuation of long-lived and intangible assets, goodwill, software development, contingencies and share based compensation. Management bases its estimates on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
	A detailed description of the accounting policies deemed critical to the understanding of the consolidated financial statements is included in the notes to Wave’s audited financial statements for the year ended December 31, 2012, included in its Form 10-K filed with the Securities and Exchange Commission on March 18, 2013.
	Revenue Recognition — Wave’s business model targets revenues from various sources including: licensing of the EMBASSY Trust Suite, Safend’s endpoint data loss protection suite, eTMS software products and development contracts.  Many of these sales arrangements include multiple-elements and/or require significant modification or customization of Wave’s software.
	Wave recognizes revenue when it is realized or realizable and earned. Wave considers revenue realized or realizable and earned when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured.  In addition to the aforementioned general policy, the following are the specific revenue recognition policies for each major category of revenue.
	Licenses
	Wave receives revenue from licensing its EMBASSY Trust Suite software through distribution arrangements with its OEM partners, software development and other services.  Wave’s distribution arrangements also gives rise to separate software license upgrade agreements with the end users of the products distributed by the OEMs.  Wave applies software revenue recognition guidance to all transactions except those where no software is involved.  Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is reasonably assured.  Persuasive evidence is generally a binding purchase order or license agreement.  Delivery occurs when product is shipped, for its OEM distribution arrangements, or delivered via a license key, for our license upgrade agreements.
	Wave enters into perpetual software license agreements, through direct sales to customers and indirect sales through its OEM partners, distributors and resellers with the end users of the products distributed by the OEMs.  Wave has defined its two classes of end user customers as large and small based on those with orders in excess of 5,000 licenses and those with less than 5,000 licenses, respectively.  These license upgrade agreements generally include a maintenance component.  For arrangements with multiple elements, including software licenses, maintenance and/or services, revenue is allocated and deferred in amounts equivalent to the vendor specific objective evidence (“VSOE”) of fair value for the undelivered elements and the difference between the total arrangement fee and the amount deferred for the undelivered elements is recognized as license revenue.  VSOE of fair value is based upon the price for which the undelivered element is sold separately.
	Beginning in the quarter ended March 31, 2011, Wave had sufficient independent maintenance renewals to establish VSOE of fair value of maintenance for its small class of customers.  Through September 30, 2013, Wave continues to lack sufficient independent maintenance renewals to establish VSOE for its large customer class.  As a result, beginning in the quarter ended March 31, 2011, for the small customer class, Wave has allocated the arrangement consideration to the elements in multi-element arrangements using the residual method.  Under the residual method, the VSOE of the undelivered elements is deferred and the remaining portion of the arrangement fee for perpetual licenses is recognized as revenue upon delivery of the software, assuming all other revenue recognition criteria are met.
	When VSOE of fair value for the undelivered elements does not exist, as is still the case for Wave’s large customer class, the entire arrangement fee is recognized ratably over the performance period as licensing and maintenance revenue.  At September 30, 2013, Wave’s deferred revenue consists of the unamortized maintenance for sales to its small class of customers and bundled license and maintenance arrangements where VSOE does not exist.
	Safend receives revenue from licensing its endpoint data loss protection products and services through its distribution channels.  Safend applies software revenue recognition guidance to all transactions except those where no software is involved.  Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is reasonably assured.  Persuasive evidence is generally a binding purchase order or license agreement.  Delivery occurs when product is delivered via a license key.
	Safend enters into perpetual software license agreements through direct sales to customers and indirect sales through its OEM partners, distributors and resellers.  These license arrangements, generally also include a maintenance component.  For arrangements with multiple elements, including software licenses, maintenance and/or services, revenue is allocated and deferred in amounts equivalent to the VSOE of fair value for the undelivered elements and the difference between the total arrangement fee and the amount deferred for the undelivered elements is recognized as licensing revenue.  VSOE of fair value is based upon the price for which the undelivered element is sold separately.
	Safend has VSOE of fair value of maintenance for its Encryptor and Protector products.  As a result Safend allocates the arrangement consideration among the elements in its multi-element arrangements using the residual method.  Under the residual method, the VSOE of the undelivered elements is deferred and the remaining portion of the arrangement fee for perpetual licenses is recognized as revenue upon delivery of the software, assuming all other revenue recognition criteria are met.  When VSOE of fair value for the undelivered elements does not exist, as is still the case for maintenance for its Safend’s Inspector, Discover, Reporter and Auditor products, the entire arrangement fee is recognized ratably over the performance period as licensing and maintenance revenue.
	Licensing and maintenance - cost of net revenues includes customer support personnel costs, foreign tax withholdings, amortization expense of the developed technology intangible asset, costs associated with providing consulting services and related share-based compensation expense.
	Services
	Revenue from time and material service contracts is recognized as the services are provided. Revenue from fixed price, long-term service or development contracts is recognized using the percentage of completion method. The Company measures the percentage of completion by reference to the proportion of contract hours incurred for work performed to date to the estimated total contract hours expected to be incurred.  Losses on fixed price contracts are recognized during the period in which the loss first becomes apparent.
	Services - cost of net revenues includes non-recurring government time and materials costs incurred in connection with a contract with the United States Department of Defense and related share-based compensation expense.
	Capitalized internal-use software development costs - The Company follows the provisions of ASC Topic 350-40, Intangibles Goodwill and Other—Internal Use Software.  ASC Topic 350-40 provides guidance for determining whether computer software is internal-use software and also provides guidance on capitalization of the costs incurred for computer software developed or obtained for internal use.  These capitalized costs are related to Wave’s cloud platform that is hosted by the Company and accessed by its clients on a subscription basis.  The Company expenses all costs incurred during the preliminary project stage of development and capitalizes the costs incurred during the application development stage. Costs incurred relating to upgrades and enhancements to the software are capitalized if it is determined that these upgrades or enhancements add additional functionality to the software. Costs incurred to improve and support products after they become available are charged to expense as incurred.  The Company records amortization of the software on a straight-line basis over five years, which is the estimated useful life of the software.  At each balance sheet date, management evaluates the unamortized capitalized software costs for potential impairment by comparing the balance to the net realizable value of the products. The Company capitalized $726,000 of software development costs during the nine-months ended September 30, 2013.  Amortization expense associated with capitalized internal-use software development costs was $1,210 for the three and nine-months ended September 30, 2013.
	Share-based Compensation — We recognize compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to the Employee Stock Purchase Plan. Share-based compensation expense recognized is based on the value of the portion of share-based payment award that is ultimately expected to vest and has been reduced for estimated forfeitures.  We value share-based payment awards at grant date using an option-pricing model.  Our determination of the fair value of the share-based payment award on the date of grant using the option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables.  These variables include, but are not limited to, our expected stock price volatility over the term of the award and actual and projected employee stock option exercise behaviors.
	Reclassifications - Certain amounts in the Company’s prior period consolidated financial statements have been reclassified to conform to the current period presentation.  These reclassifications include:  (i) $105,000 and $210,000 reclassifications of support expense from selling, general and administrative expense to licensing and maintenance – cost of net revenue for the three and nine-months ended September 30, 2012, respectively and (ii) $229,500 and $685,000 reclassifications of amortization on the developed technology intangible asset from selling, general and administrative expense to licensing and maintenance – cost of net revenues for the three and nine-months ended September 30, 2012, respectively.
	All references to common shares and per common share amounts of the Company have been adjusted to give effect to the implementation of a 1-for-4 reverse stock split of the Company’s authorized and issued common stock which was effected on July 1, 2013.  See Note 2 below.

Reverse_Stock_Split

Reverse Stock Split	9 Months Ended
	Sep. 30, 2013
Reverse Stock Split	'
Reverse Stock Split	'
	2.              Reverse Stock Split
	On June 28, 2013, our Board of Directors approved a reverse stock split of our common stock at a ratio of 1-for-4, causing each four outstanding shares of Class A common stock and Class B common stock to convert automatically into one share of Class A common stock or Class B common stock, respectively. The par value of Class A common stock and Class B common stock remains $0.01 per share. The reverse split became effective on July 1, 2013.  Stockholders’ equity has been restated to give retroactive recognition to the reverse split for all periods presented by reclassifying the excess par value resulting from the reduced number of shares from common stock to paid-in capital. Except as otherwise noted, all references to common share and per common share amounts (including warrant shares, shares reserved for issuance and applicable exercise prices) for all periods presented have been retroactively restated to reflect this reverse split.

Liquidity

Liquidity	9 Months Ended
	Sep. 30, 2013
Liquidity	'
Liquidity	'
	3.              Liquidity
	The accompanying consolidated financial statements have been prepared assuming that Wave will continue as a going concern.  Wave has had substantial operating losses since its inception, and as of September 30, 2013, had an accumulated deficit of $413,564,091.  We also expect Wave will incur an operating loss for the fiscal year 2013.  As of September 30, 2013, we had negative working capital of $6,961,529.
	Wave does not expect to generate enough revenue to fund its cash flow requirements for the twelve-months ending September 30, 2014.  As of September 30, 2013, we had approximately $1,846,000 of cash on hand.  Given Wave’s forecasted capital requirements for the twelve-months ending September 30, 2014, and our cash balance as of September 30, 2013, Wave will be required to raise additional capital prior to September 30, 2014 to continue to fund its operations.  Wave’s ability to raise additional capital is primarily based on three sources:
	·            Sales of registered Class A Common Stock under shelf registration statements including a $30,000,000 shelf registration statement filed with the SEC on June 21, 2011 and declared effective by the Commission on July 22, 2011 (“2011 shelf registration statement”) and a $20,000,000 shelf registration statement filed with the SEC on August 9, 2013 and declared effective by the Commission on September 12, 2013 (“2013 shelf registration statement”);
	·            Sales of registered Class A Common Stock via the At the Market Sales Agreement with MLV & Co. LLC (“MLV”) entered into during January, 2012.  The At the Market Sales Agreement was amended on September 19, 2013 to authorize the issuance and sale of shares of the Company’s Class A Common Stock under the At the Market Sales Agreement for aggregate gross sales proceeds of up to $15,000,000 in connection with the 2013 shelf registration statement ; and
	·            Sales of Class A Common Stock through private placements.
	During the nine-month period ended September 30, 2013, Wave sold 2,797,929 shares of its Class A common stock through it’s At the Market Sales Agreement with MLV at an average price of $1.53 per share, for net proceeds of approximately $4,152,000 after deducting offering costs of approximately $138,000.   Subsequent to September 30, 2013, Wave sold 671,736 shares of its Class A common stock through MLV at an average price of $1.37 per share, for net proceeds of approximately $892,000 after deducting offering costs of approximately $30,000.   As of November 6, 2013, Wave has sold a total of approximately 5.4 million shares of its common stock through MLV, raising net proceeds of approximately $14.1 million after deducting offering costs of approximately $457,000.
	On July 25, 2013, Wave sold 1,204,470 shares of Class A Common Stock at $1.27 per share for gross proceeds of $1,529,677.  This financing was completed under the 2011 shelf registration statement. Security Research Associates, Inc. (“SRA”) entered into a placement agency agreement with Wave in which they agreed to act as placement agent in connection with the offering.  Wave agreed to pay SRA a fee equal to 6% of the gross proceeds of this offering.  We realized approximately $1,408,000 in net proceeds after deducting the placement agent fees of approximately $92,000 and additional legal and other fees associated with the issuance of these securities totaling approximately $30,000.  In connection with the financing, we also issued warrants to SRA to purchase up to 72,268 shares of Wave Class A Common Stock for $1.27 per share.  These warrants expire on July 25, 2016.
	On April 23, 2013, Wave sold 1,585,000 shares of Class A Common Stock at $2.00 per share for gross proceeds of $3,170,000. This financing was completed under the 2011 shelf registration statement.  Dawson James Securities, Inc. (“Dawson”) entered into a placement agency agreement with Wave in which they agreed to act as placement agent in connection with the offering.  Wave agreed to pay Dawson a fee equal to 6% of the gross proceeds of this offering.  We realized approximately $2,920,000 in net proceeds after deducting the placement agent fees of $190,200 and additional legal and other fees associated with the issuance of these securities totaling approximately $60,000. In connection with the financing, we also issued warrants to the subscribers to purchase up to 792,500 shares of Wave Class A Common Stock for $2.48 per share. These warrants expire on October 23, 2018.
	On March 13, 2013, Wave entered into agreements with certain institutional investors for a private placement of 301,205 shares of its Class A common stock at a price of $3.32 per share, yielding gross proceeds of $1,000,000.  Wave agreed to pay the placement agent a fee equal to 6% of the gross proceeds of this offering. Wave realized approximately $910,000 in net proceeds after deducting the placement agent fees of $60,000 and additional legal and other fees associated with the issuance of these securities totaling approximately $30,000.  Wave also issued warrants to the subscribers to purchase 150,603 shares of Class A common stock at an exercise price of $3.32 per share.  These warrants expire in October 2018.
	As of November 6, 2013 there are no gross proceeds available under the 2011 shelf registration statement.  As of November 6, 2013, approximately $19,276,000 in gross proceeds are available under the 2013 shelf registration statement including approximately $14,276,000 allocated to the At the Market Sales Agreement with MLV, which may be utilized for future financings.
	Due to our current cash position, our forecasted capital needs over the next twelve months and beyond, the fact that we will require additional financing and uncertainty as to whether we will achieve our sales forecast for our products and services, substantial doubt exists with respect to our ability to continue as a going concern.

Secured_Borrowings_and_Pledged

Secured Borrowings and Pledged Receivables	9 Months Ended
	Sep. 30, 2013
Secured Borrowings and Pledged Receivables	'
Secured Borrowings and Pledged Receivables	'
	4.              Secured Borrowings and Pledged Receivables
	Pursuant to an agreement entered into on April 23, 2012 with The Receivables Exchange (“TRE”), an unrelated third party, we have transferred certain accounts receivable to buyers which are accounted for as secured borrowings. The transferred receivables are classified as pledged receivables and our obligation to repurchase the transferred receivables is presented as secured borrowings on the consolidated balance sheet. The carrying value of each secured borrowing approximates 85% of each associated pledged receivable and takes into consideration a 15% holdback provision per the TRE agreement.  The customers’ payment of the pledged receivables constitutes the repayment of the related amounts borrowed. The interest rate on the secured borrowings was approximately 1.20% for every thirty days outstanding.
	With our approval, TRE establishes arrangements with buyers providing for borrowings that are secured by our accounts receivable, and for which recourse exists against us. We can be required to repurchase the receivables under certain circumstances in case of specific defaults by our customers as set forth in the program terms.  TRE acts as the servicing agent for receivables transferred to buyers.  TRE collects the pledged receivables from our customers and makes the repayment to the buyers on our behalf once the receivables are collected.
	At September 30, 2013 and December 31, 2012, receivables totaling $622,938 and $1,801,683, respectively, were transferred to buyer, remain uncollected and are subject to repurchase. The secured borrowings totaled $529,497 and $1,537,710 as of September 30, 2013 and December 31, 2012, respectively. We recognized $88,996 and $35,244 of interest expense associated with the secured borrowings for the nine-months ended September 30, 2013 and 2012, respectively and $22,775 and $35,244 of interest expense for the three-months ended September 30, 2013 and 2012, respectively.  Proceeds from the transfer of receivables are included in cash provided by operating activities in the consolidated statements of cash flows.  Proceeds from the transfer of pledged receivables were $6,886,188 and $7,171,367 for the nine months ended September 30, 2013 and 2012, respectively.  TRE collected $6,356,691 and $6,499,260 of pledged receivables in the nine months ended September 30, 2013 and 2012, respectively, which thereby reduced our repurchase obligation and were accounted for as reductions of pledged receivables and secured borrowings on the consolidated balance sheet.  No pledged receivables were repurchased by the Company in the three and nine-months ended September 30, 2013 and 2012.

Loss_per_Share

Loss per Share	9 Months Ended
	Sep. 30, 2013
Loss per Share	'
Loss per Share	'
	5.              Loss per Share
	Basic net loss per common share has been calculated based upon the weighted-average number of shares of common stock outstanding during the period.  Diluted net loss per share is also computed using the weighted average number of common shares and excludes dilutive potential common shares outstanding, as their effect is anti-dilutive.  Dilutive potential common shares consist primarily of employee stock options and stock warrants.  Diluted net loss per share is equal to basic net loss per share and is therefore not presented separately in the financial statements.  The weighted average number of potential common shares that would have been included in diluted loss per share, had their effect not been anti-dilutive for each of the three-month and nine-month periods ended September 30, 2013, were approximately 4,000 shares and 141,000 shares, respectively, versus 342,000 shares and 814,000 shares for the three-month and nine-month periods ended September 30, 2012, respectively.  Employee stock options and other stock warrants to purchase a weighted average of approximately 5,983,000 and 5,486,000 shares were outstanding for the three-month and nine-month periods ended  September 30, 2013, respectively, versus 2,625,000 and 1,981,000 shares for the three-month and nine-month periods ended September 30, 2012, respectively, but have not been included in the computation of diluted loss per share because their exercise price was greater than the average share price of Wave’s common shares and, therefore, their effect would have been anti-dilutive.

Sharebased_Compensation

Share-based Compensation	9 Months Ended
	Sep. 30, 2013
Share-based Compensation	'
Share-based Compensation	'
	6.              Share-based Compensation
	Wave recognized $512,569 and $1,343,510 of share-based compensation during the three-months ended September 30, 2013 and 2012, respectively, and $1,619,115 and $3,987,588 for the nine-month periods ended September 30, 2013 and 2012, respectively.  During the three-month period ended September 30, 2013, Wave granted 14,910 stock options at a weighted-average estimated fair value of $0.92.  During the three-month period ended September 30, 2012, Wave granted 25,275 stock options at a weighted-average estimated fair value of $1.76.
	The following table summarizes the effect of share based compensation in Wave’s statement of operations, for the three-month and nine-month periods ended September 30, 2013 and 2012:
		Three months ended				Nine months ended
		September 30,				September 30,
		2013		2012		2013		2012
	Cost of Sales	$	6,494	$	12,115	$	21,583	$	36,181
	Selling, General & Administrative	368,358		951,452		1,202,756		2,806,040
	Research & Development	137,717		379,943		394,776		1,145,367
	Total	$	512,569	$	1,343,510	$	1,619,115	$	3,987,588

Goodwill_and_Amortizable_Intan

Goodwill and Amortizable Intangible Assets	9 Months Ended
	Sep. 30, 2013
Goodwill and Amortizable Intangible Assets	'
Goodwill and Amortizable Intangible Assets	'
	7.              Goodwill and Amortizable Intangible Assets
	The following schedule presents the changes in the carrying amount of goodwill during the period ended September 30, 2013:
	Balance as of December 31, 2012	$	4,038,000
	Impairment loss	(2,590,000		)
	Balance as of September 30, 2013	$	1,448,000
	Wave tests goodwill for impairment annually on September 30 and during interim periods whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable.  Wave uses a fair value approach in testing goodwill for impairment in accordance with the provisions of ASC Topic 350, Intangibles—Goodwill and Other. The goodwill impairment test involves a two-step process. In the first step, we compare the fair value of each reporting unit to its carrying value. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair value of the reporting unit is less than the carrying value, we must perform the second step of the impairment test to measure the amount of impairment loss. In the second step, the reporting unit’s fair value is allocated to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination. If the implied fair value of the reporting unit’s goodwill is less than the carrying value, the difference is recorded as an impairment loss.
	During the first quarter of fiscal 2013 the Company determined that sufficient indicators of potential impairment existed to require an interim goodwill impairment analysis for the Safend reporting unit. These indicators included, among others, significantly lower than expected revenue and billings during the first quarter of 2013, and downward revisions to management’s short-term and long-term forecast for Safend. The revised forecast reflected changes related to revenue growth rates, current market trends and other expectations impacting the anticipated short-term and long-term operating results of Safend. Due to the aforementioned indicators, the Company concluded that there were qualitative factors for the Safend unit that indicated it is more likely than not that the fair value of the Safend reporting unit was less than its carrying amount.
	The Company estimates the fair value of its reporting units using the income approach. Under the income approach, the Company calculates the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on management’s estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the business’s ability to execute on the projected cash flows. The inputs used for the income approach are significant unobservable inputs, or Level 3 inputs, as described in ASC Topic 820, Fair Value Measurement.
	When indicators of impairment are present, such as those noted above, the Company tests long-lived assets (other than goodwill) for recoverability by comparing the carrying value of an asset group to its undiscounted cash flows. Based on the results of the recoverability test, the Company determined that the carrying value of the Safend asset group exceeded its undiscounted cash flows and was therefore not recoverable. The Company estimated the fair value of the intangible assets under an income approach as described above. Based on the analysis, the Company recorded an impairment charge of $1,615,000 on the developed technology intangible asset during the three-months ended March 31, 2013.  The decline in the fair value of the Safend intangible assets is attributable to the same factors as discussed above for the fair value of the Safend reporting unit.
	After adjusting the carrying value of the reporting unit for the impairment of the intangibles noted above, the Company completed the two step goodwill impairment test for the Safend reporting unit. The step two goodwill impairment test resulted in an implied fair value of goodwill substantially below the carrying value of the goodwill. As a result, the Company recorded a goodwill impairment charge of approximately $2.6 million during the three-months ended March 31, 2013, which resulted in a $1.4 million remaining carrying value of Safend goodwill. The goodwill impairment charge is included in the impairment of goodwill line item in the consolidated statements of operations for the nine-months ended September 30, 2013. The developed technology impairment charge of $1,615,000 is included in the licensing and maintenance - cost of net revenues line item in the consolidated statements of operations for the nine-months ended September 30, 2013.
	The following schedule presents the details of intangible assets as of September 30, 2013 and December 31, 2012:
	September 30, 2013
	Intangible Asset	Gross			Accumulated			Accumulated			Net		Weighted
		Carrying			Amortization			Impairment					Average
		Amount						Loss					Remaining
													Useful Life
													(in years)
	Developed Technology	$	6,426,000		$	(1,260,429	)	$	(5,038,100	)	$	127,471	4.9
	In-Process Technology	90,000			—			(90,000		)	—		—
	Customer Relationships	3,972,000			(649,326		)	(1,786,673		)	1,536,001		7.9
	Trade Name	90,000			(90,000		)	—			—		—
	Internal-use software	726,000			(1,210		)	—			724,790		4.9
	Acquired Patents	1,100,000			(751,666		)	—			348,334		1.5
		$	12,404,000		$	(2,752,631	)	$	(6,914,773	)	$	2,736,596
	December 31, 2012
	Intangible Asset	Gross			Accumulated			Accumulated			Net		Weighted
		Carrying			Amortization			Impairment					Average
		Amount						Loss					Remaining
													Useful Life
													(in years)
	Developed Technology	$	6,426,000		$	(1,167,900	)	$	(3,423,100	)	$	1,835,000	5.8
	In-Process Technology	90,000			—			(90,000		)	—		—
	Customer Relationships	3,972,000			(505,327		)	(1,786,673		)	1,680,000		8.8
	Trade Name	90,000			(90,000		)	—			—		—
	Acquired Patents	1,100,000			(586,667		)	—			513,333		2.4
		$	11,678,000		$	(2,349,894	)	$	(5,299,773	)	$	4,028,333
	The acquired patents were purchased for $1,100,000 on May 7, 2010 from a company owned by Robert Thibadeau, Ph. D., a noted computer security expert who joined Wave in February 2010 as Senior Vice President and Chief Scientist.  The patents were issued in 2006 and 2008 and are valid until 2021.  Both patents concern the methods and systems for promoting security in a computer employing attached storage devices.  The patents are being amortized on a straight-line basis over 5 years based upon their estimated useful life.
	Amortization expense associated with intangible assets was $111,794 and $402,740 for the three and nine months ended September 30, 2013, respectively and $405,300 and $1,213,400 for the three and nine months ended September 30, 2012, respectively. The estimated amortization expense for intangible assets for the next five years and thereafter is as follows (in thousands):
	Period	Estimated
		Amortization
		Expense
	Remainder of 2013	$	146
	2014	583
	2015	436
	2016	363
	2017	363
	Thereafter	846
	Total	$	2,737

Income_Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2013
Income Taxes	'
Income Taxes	'
	8.       Income Taxes
	Wave has not recorded any income tax expense due to the net loss incurred for all periods presented.  Wave has federal and state net operating loss carryforwards of approximately $286.9 million, which expire beginning in 2013 through 2032 and include approximately $7.7 million of net operating loss carryforwards of Safend, Inc., a wholly owned US-based subsidiary of Safend.  Pursuant to Section 382 of the Internal Revenue Code, the annual utilization of Wave’s net operating and capital loss carryforwards may be substantially limited if a cumulative change in ownership of more than 50% occurs within any three-year period.  Wave has not determined whether there have been such cumulative changes in ownership or the impact on the utilization of the loss carryforwards if such changes have occurred.  However, in considering Section 382 of the Internal Revenue Code, Wave believes that it is likely that such a change in ownership occurred prior to or following Wave’s initial public offering in September 1994 and in periods following, thus raising the likelihood that such net operating and capital loss carryforwards are subject to annual limitations.  In addition, the Company maintains approximately $17 million of operating loss carryforwards associated with Safend, Ltd., an entity in Israel.

Segment_Reporting

Segment Reporting	9 Months Ended
	Sep. 30, 2013
Segment Reporting	'
Segment Reporting	'
	9.     Segment Reporting
	Wave’s products include the Wave EMBASSY® digital security products and services (“EMBASSY®”) and Safend’s endpoint data loss protection products and services.  These products and services constitute Wave’s reportable segments as of September 30, 2013.
	Net losses for reportable segments exclude net interest income (expense) and net currency transaction gains and losses.  These items are not reported by segment since they are excluded from the measurement of segment performance reviewed by Wave’s Chief Financial Officer.
	The following sets forth reportable segment data:
		Three months ended						Nine months ended
		September 30,						September 30,
		2013			2012			2013			2012
	Net Revenues:
	EMBASSY® digital security products and services	$	4,976,696		$	5,492,296		$	15,224,606		$	17,457,256
	Safend endpoint data loss protection products and services	1,274,629			1,477,967			3,562,687			4,256,618
	Total Net Revenues	$	6,251,325		$	6,970,263		$	18,787,293		$	21,713,874
	Operating Income (Loss):
	EMBASSY® digital security products and services	$	(3,117,522	)	$	(5,735,569	)	$	(11,522,799	)	$	(18,750,127	)
	Safend endpoint data loss protection products and services	222,491			(338,203		)	(4,961,522		)	(2,105,069		)
	Total Segments Operating Loss	(2,895,031		)	(6,073,772		)	(16,484,321		)	(20,855,196		)
	Net currency transaction gain (loss)	(5,626		)	1,965			(12,358		)	11,753
	Net interest expense	(43,166		)	(36,685		)	(151,196		)	(99,294		)
	Net Loss	$	(2,943,823	)	$	(6,108,492	)	$	(16,647,875	)	$	(20,942,737	)
	Impairment of Goodwill:
	EMBASSY® digital security products and services	$	—		$	—		$	—		$	—
	Safend endpoint data loss protection products and services	—			—			2,590,000			—
	Total Impairment of Goodwill	$	—		$	—		$	2,590,000		$	—
	Depreciation and Amortization Expense:
	EMBASSY® digital security products and services	$	152,884		$	180,276		$	496,967		$	526,131
	Safend endpoint data loss protection products and services	63,686			358,725			266,873			1,085,390
	Total Depreciation and Amortization Expense	$	216,570		$	539,001		$	763,840		$	1,611,521
	Capital Expenditures:
	EMBASSY® digital security products and services	$	21,150		31,129			$	146,654		113,104
	Safend endpoint data loss protection products and services	8,562			10,766			19,206			32,093
	Total Capital Expenditures	$	29,712		$	41,895		$	165,860		$	145,197
		September 30,			December 31,
		2013			2012
	Assets:
	EMBASSY® digital security products and services	$	7,711,035		$	9,695,864
	Safend endpoint data loss protection products and services	4,324,145			8,937,294
	Total Assets	$	12,035,180		$	18,633,158
	The following table details Wave’s sales by geographic area for the three and nine-month periods ended September 30, 2013 and 2012. Geographic area is based on the location of where the products were shipped or services rendered.
		United States			Europe			Asia			Total
		of America
	Three months ended September 30, 2013:
	EMBASSY® digital security products and services	$	3,561,621		$	1,061,969		$	353,106		$	4,976,696
	Safend endpoint data loss protection products and services	561,648			616,707			96,274			1,274,629
	Total	$	4,123,269		$	1,678,676		$	449,380		$	6,251,325
	% of Total Revenue	66		%	27		%	7		%	100		%
	Three months ended September 30, 2012:
	EMBASSY® digital security products and services	$	4,313,354		$	1,025,554		$	153,388		$	5,492,296
	Safend endpoint data loss protection products and services	756,670			629,442			91,855			1,477,967
	Total	$	5,070,024		$	1,654,996		$	245,243		$	6,970,263
	% of Total Revenue	73		%	24		%	3		%	100		%
	Nine months ended September 30, 2013:
	EMBASSY® digital security products and services	$	11,363,297		$	2,989,228		$	872,081		$	15,224,606
	Safend endpoint data loss protection products and services	1,533,564			1,766,108			263,015			3,562,687
	Total	$	12,896,861		$	4,755,336		$	1,136,096		$	18,787,293
	% of Total Revenue	69		%	25		%	6		%	100		%
	Nine months ended September 30, 2012:
	EMBASSY® digital security products and services	$	14,492,598		$	2,672,470		$	292,188		$	17,457,256
	Safend endpoint data loss protection products and services	1,803,580			1,853,512			599,526			4,256,618
	Total	$	16,296,178		$	4,525,982		$	891,714		$	21,713,874
	% of Total Revenue	75		%	21		%	4		%	100		%
	Approximately 90% of all long-lived assets of Wave are located within the United States of America and approximately 10% are located in the State of Israel.
	Customers, by segment, from which Wave derived revenue in excess of 10% for the three and nine-month periods ended September 30, 2013 and 2012 are as follows:
				Three months ended						Nine months ended
				September 30,						September 30,
			2013			2012			2013			2012
Customer	Segment		Revenue						Revenue
Dell, Inc.	EMBASSY®		$	2,963,995		$	3,840,386		$	8,647,857		$	12,130,484
% of Total Revenue			47		%	55		%	46		%	56		%

Issuance_of_Common_Stock

Issuance of Common Stock	9 Months Ended
	Sep. 30, 2013
Issuance of Common Stock	'
Issuance of Common Stock	'
	10.   Issuance of Common Stock
	During the three-month period ended September 30, 2013, Wave received net proceeds of $2,508,576 after deducting offering costs of approximately $84,000, in connection with the issuance of 1,862,360 shares of Class A Common Stock in it’s at the market offerings through MLV.  The shares were sold at prices ranging from $1.00 - $1.71 per share.
	On September 16, 2013 Wave entered into a Software Development and License Agreement (“the Development Agreement”) with EXO5, LLC (“EXO5”).  EXO5 is a company owned by Richard Lee, an experienced software project manager who joined Wave in September 2011 as Project Manager for Cloud Services.  Pursuant to the Development Agreement, Wave issued EXO5 372,578 shares of Class A Common Stock valued at $500,000 to acquire a perpetual license for EXO5’s Cloud Application Platform (“the Platform”).  Wave also entered into separate statements of work with EXO5 to develop a SED Management Feature to incorporate with the licensed Platform to allow for the management of SED’s in the cloud.  The cost associated with the issuance of Class A Common Stock and the development costs, which were paid in cash, have been accounted for in accordance with ASC Topic 350-40 Internal-Use Software and these costs have led to the creation of Wave’s hosted cloud platform.  Customers can access Wave’s cloud platform on a subscription basis.
	On July 25, 2013, Wave sold 1,204,470 shares of Class A Common Stock at $1.27 per share for gross proceeds of $1,529,677.  This financing was completed under the 2011 shelf registration statement. SRA entered into a placement agency agreement with Wave in which they agreed to act as placement agent in connection with the offering.  Wave agreed to pay SRA a fee equal to 6% of the gross proceeds of this offering.  We realized approximately $1,408,000 in net proceeds after deducting the placement agent fees of approximately $92,000 and additional legal and other fees associated with the issuance of these securities totaling approximately $30,000.  In connection with the financing, we also issued warrants to SRA to purchase up to 72,268 shares of Wave Class A Common Stock for $1.27 per share.  These warrants expire on July 25, 2016.
	On April 23, 2013, Wave sold 1,585,000 shares of Class A Common Stock at $2.00 per share for gross proceeds of $3,170,000. This financing was completed under the 2011 shelf registration statement.  Dawson entered into a placement agency agreement with Wave in which they agreed to act as placement agent in connection with the offering.  Wave agreed to pay Dawson a fee equal to 6% of the gross proceeds of this offering.  We realized approximately $2,920,000 in net proceeds after deducting the placement agent fees of $190,200 and additional legal and other fees associated with the issuance of these securities totaling approximately $60,000. In connection with the financing, we also issued warrants to the subscribers to purchase up to 792,500 shares of Wave Class A Common Stock for $2.48 per share. These warrants expire on October 23, 2018.
	During the three-month period ended June 30, 2013, Wave received net proceeds of $1,380,682 after deducting offering costs of approximately $45,000, in connection with the issuance of 840,581 shares of Class A Common Stock in it’s at the market offerings through MLV.  The shares were sold at prices ranging from $1.52 - $2.68 per share.
	On June 1, 2013, Wave issued 132,970 shares of Class A common stock to Wave employees for $1.29 per share, pursuant to the Wave 2004 Employee Stock Purchase Plan.  Wave received proceeds of $171,796 from the sale of these shares.
	On March 13, 2013, Wave entered into agreements with certain institutional investors for a private placement of 301,205 shares of its Class A Common Stock at a price of $3.32 per share, yielding gross proceeds of $1,000,000.  Wave agreed to pay Dawson, the placement agent, a fee equal to 6% of the gross proceeds of this offering. Wave realized approximately $910,000 in net proceeds after deducting the placement agent fees of $60,000 and additional legal and other fees associated with the issuance of these securities totaling approximately $30,000.  Wave also issued warrants to the subscribers to purchase 150,603 shares of Class A common stock at an exercise price of $3.32 per share.  These warrants expire in October 2018.
	During the three-month period ended March 31, 2013, Wave received net proceeds of $262,945 after deducting offering costs of approximately $8,700, in connection with the issuance of 94,988 shares of Class A Common Stock in it’s at the market offerings through MLV.  The shares were sold at prices ranging from $2.80 - $2.92 per share.
	During the three-month period ended March 31, 2013, Wave received gross proceeds of $42,039 in connection with the issuance of 12,983 shares of Class A Common Stock upon the exercise of employee stock options.  The employee stock options were exercised at $3.24 per share.

Fair_Value_Measurement

Fair Value Measurement	9 Months Ended
	Sep. 30, 2013
Fair Value Measurement	'
Fair Value Measurement	'
	11.   Fair Value Measurement
	As of September 30, 2013, Wave’s financial assets that are measured at fair value on a recurring basis are comprised of overnight money market fund investments.  Wave invests excess cash from its operating cash accounts in overnight money market funds and reflects these amounts ($781,699 at September 30, 2013) within cash and cash equivalents on the consolidated balance sheet using quoted prices in active markets for identical assets (Level 1) at a net value of 1:1 for each dollar invested.
	Financial instruments not measured or recorded at fair value in the accompanying unaudited consolidated financial statements consist of accounts receivable, collateralized receivables, accounts payable and secured borrowings. The estimated fair value of accounts receivable, collateralized receivables, accounts payable and secured borrowings approximates their carrying value.
	Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.  These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.

Subsequent_Events

Subsequent Events	9 Months Ended
	Sep. 30, 2013
Subsequent Events	'
Subsequent Events	'
	12.   Subsequent Events
	On October 8, 2013, Mr. William M. Solms, Vice President of North American Sales, was appointed by the Board of Directors as Acting CEO, replacing Steven Sprague. The appointment is effective as of October 6, 2013.  Mr. Sprague’s employment with the Company is terminated as of November 7, 2013.  Mr. Sprague continues to serve as a member of the Company’s Board of Directors.  Per an employment agreement with the Company, Mr. Sprague is entitled a lump sum severance payment of $1,012,500, consisting of three years’ annual base salary.  As of the filing of this quarterly report on Form 10-Q, the Company is discussing with Mr. Sprague a potential arrangement to pay this severance over time (rather than in a lump sum).
	CERTAIN FORWARD-LOOKING INFORMATION:
	This Quarterly Report on 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.  These statements include, but are not limited to, statements regarding contingencies, future prospects, liquidity and capital expenditures herein under “Part I Financial Information—Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  The words “may,” “would,” “will,” “expect,” “estimate,” “anticipate,” “believe,” “intend” and similar expressions and variations thereof are intended to identify forward-looking statements.  Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond our ability to control.  Actual results could differ materially from those projected in the forward-looking statements as a result of the risk factors set forth below and detailed in our other filings with the Commission during the past 12 months.  Wave assumes no duty to and does not undertake to update any forward-looking statements.

Critical_Accounting_Policies_P

Critical Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2013
Critical Accounting Policies	'
Revenue Recognition	'
	Revenue Recognition — Wave’s business model targets revenues from various sources including: licensing of the EMBASSY Trust Suite, Safend’s endpoint data loss protection suite, eTMS software products and development contracts.  Many of these sales arrangements include multiple-elements and/or require significant modification or customization of Wave’s software.
	Wave recognizes revenue when it is realized or realizable and earned. Wave considers revenue realized or realizable and earned when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured.  In addition to the aforementioned general policy, the following are the specific revenue recognition policies for each major category of revenue.
	Licenses
	Wave receives revenue from licensing its EMBASSY Trust Suite software through distribution arrangements with its OEM partners, software development and other services.  Wave’s distribution arrangements also gives rise to separate software license upgrade agreements with the end users of the products distributed by the OEMs.  Wave applies software revenue recognition guidance to all transactions except those where no software is involved.  Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is reasonably assured.  Persuasive evidence is generally a binding purchase order or license agreement.  Delivery occurs when product is shipped, for its OEM distribution arrangements, or delivered via a license key, for our license upgrade agreements.
	Wave enters into perpetual software license agreements, through direct sales to customers and indirect sales through its OEM partners, distributors and resellers with the end users of the products distributed by the OEMs.  Wave has defined its two classes of end user customers as large and small based on those with orders in excess of 5,000 licenses and those with less than 5,000 licenses, respectively.  These license upgrade agreements generally include a maintenance component.  For arrangements with multiple elements, including software licenses, maintenance and/or services, revenue is allocated and deferred in amounts equivalent to the vendor specific objective evidence (“VSOE”) of fair value for the undelivered elements and the difference between the total arrangement fee and the amount deferred for the undelivered elements is recognized as license revenue.  VSOE of fair value is based upon the price for which the undelivered element is sold separately.
	Beginning in the quarter ended March 31, 2011, Wave had sufficient independent maintenance renewals to establish VSOE of fair value of maintenance for its small class of customers.  Through September 30, 2013, Wave continues to lack sufficient independent maintenance renewals to establish VSOE for its large customer class.  As a result, beginning in the quarter ended March 31, 2011, for the small customer class, Wave has allocated the arrangement consideration to the elements in multi-element arrangements using the residual method.  Under the residual method, the VSOE of the undelivered elements is deferred and the remaining portion of the arrangement fee for perpetual licenses is recognized as revenue upon delivery of the software, assuming all other revenue recognition criteria are met.
	When VSOE of fair value for the undelivered elements does not exist, as is still the case for Wave’s large customer class, the entire arrangement fee is recognized ratably over the performance period as licensing and maintenance revenue.  At September 30, 2013, Wave’s deferred revenue consists of the unamortized maintenance for sales to its small class of customers and bundled license and maintenance arrangements where VSOE does not exist.
	Safend receives revenue from licensing its endpoint data loss protection products and services through its distribution channels.  Safend applies software revenue recognition guidance to all transactions except those where no software is involved.  Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is reasonably assured.  Persuasive evidence is generally a binding purchase order or license agreement.  Delivery occurs when product is delivered via a license key.
	Safend enters into perpetual software license agreements through direct sales to customers and indirect sales through its OEM partners, distributors and resellers.  These license arrangements, generally also include a maintenance component.  For arrangements with multiple elements, including software licenses, maintenance and/or services, revenue is allocated and deferred in amounts equivalent to the VSOE of fair value for the undelivered elements and the difference between the total arrangement fee and the amount deferred for the undelivered elements is recognized as licensing revenue.  VSOE of fair value is based upon the price for which the undelivered element is sold separately.
	Safend has VSOE of fair value of maintenance for its Encryptor and Protector products.  As a result Safend allocates the arrangement consideration among the elements in its multi-element arrangements using the residual method.  Under the residual method, the VSOE of the undelivered elements is deferred and the remaining portion of the arrangement fee for perpetual licenses is recognized as revenue upon delivery of the software, assuming all other revenue recognition criteria are met.  When VSOE of fair value for the undelivered elements does not exist, as is still the case for maintenance for its Safend’s Inspector, Discover, Reporter and Auditor products, the entire arrangement fee is recognized ratably over the performance period as licensing and maintenance revenue.
	Licensing and maintenance - cost of net revenues includes customer support personnel costs, foreign tax withholdings, amortization expense of the developed technology intangible asset, costs associated with providing consulting services and related share-based compensation expense.
	Services
	Revenue from time and material service contracts is recognized as the services are provided. Revenue from fixed price, long-term service or development contracts is recognized using the percentage of completion method. The Company measures the percentage of completion by reference to the proportion of contract hours incurred for work performed to date to the estimated total contract hours expected to be incurred.  Losses on fixed price contracts are recognized during the period in which the loss first becomes apparent.
	Services - cost of net revenues includes non-recurring government time and materials costs incurred in connection with a contract with the United States Department of Defense and related share-based compensation expense.
Capitalized internal-use software development costs	'
	Capitalized internal-use software development costs - The Company follows the provisions of ASC Topic 350-40, Intangibles Goodwill and Other—Internal Use Software.  ASC Topic 350-40 provides guidance for determining whether computer software is internal-use software and also provides guidance on capitalization of the costs incurred for computer software developed or obtained for internal use.  These capitalized costs are related to Wave’s cloud platform that is hosted by the Company and accessed by its clients on a subscription basis.  The Company expenses all costs incurred during the preliminary project stage of development and capitalizes the costs incurred during the application development stage. Costs incurred relating to upgrades and enhancements to the software are capitalized if it is determined that these upgrades or enhancements add additional functionality to the software. Costs incurred to improve and support products after they become available are charged to expense as incurred.  The Company records amortization of the software on a straight-line basis over five years, which is the estimated useful life of the software.  At each balance sheet date, management evaluates the unamortized capitalized software costs for potential impairment by comparing the balance to the net realizable value of the products. The Company capitalized $726,000 of software development costs during the nine-months ended September 30, 2013.  Amortization expense associated with capitalized internal-use software development costs was $1,210 for the three and nine-months ended September 30, 2013.
Share-based Compensation	'
	Share-based Compensation — We recognize compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to the Employee Stock Purchase Plan. Share-based compensation expense recognized is based on the value of the portion of share-based payment award that is ultimately expected to vest and has been reduced for estimated forfeitures.  We value share-based payment awards at grant date using an option-pricing model.  Our determination of the fair value of the share-based payment award on the date of grant using the option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables.  These variables include, but are not limited to, our expected stock price volatility over the term of the award and actual and projected employee stock option exercise behaviors.
Reclassifications	'
	Reclassifications - Certain amounts in the Company’s prior period consolidated financial statements have been reclassified to conform to the current period presentation.  These reclassifications include:  (i) $105,000 and $210,000 reclassifications of support expense from selling, general and administrative expense to licensing and maintenance – cost of net revenue for the three and nine-months ended September 30, 2012, respectively and (ii) $229,500 and $685,000 reclassifications of amortization on the developed technology intangible asset from selling, general and administrative expense to licensing and maintenance – cost of net revenues for the three and nine-months ended September 30, 2012, respectively.
	All references to common shares and per common share amounts of the Company have been adjusted to give effect to the implementation of a 1-for-4 reverse stock split of the Company’s authorized and issued common stock which was effected on July 1, 2013.  See Note 2 below.

Sharebased_Compensation_Tables

Share-based Compensation (Tables)	9 Months Ended
	Sep. 30, 2013
Share-based Compensation	'
Summary of effect of share based compensation in the entity's statement of operations	'
		Three months ended				Nine months ended
		September 30,				September 30,
		2013		2012		2013		2012
	Cost of Sales	$	6,494	$	12,115	$	21,583	$	36,181
	Selling, General & Administrative	368,358		951,452		1,202,756		2,806,040
	Research & Development	137,717		379,943		394,776		1,145,367
	Total	$	512,569	$	1,343,510	$	1,619,115	$	3,987,588

Goodwill_and_Amortizable_Intan1

Goodwill and Amortizable Intangible Assets (Tables)	9 Months Ended
	Sep. 30, 2013
Goodwill and Amortizable Intangible Assets	'
Schedule of changes in the carrying amount of goodwill	'
	Balance as of December 31, 2012	$	4,038,000
	Impairment loss	(2,590,000		)
	Balance as of September 30, 2013	$	1,448,000
Schedule of the details of intangible assets	'
	September 30, 2013
	Intangible Asset	Gross			Accumulated			Accumulated			Net		Weighted
		Carrying			Amortization			Impairment					Average
		Amount						Loss					Remaining
													Useful Life
													(in years)
	Developed Technology	$	6,426,000		$	(1,260,429	)	$	(5,038,100	)	$	127,471	4.9
	In-Process Technology	90,000			—			(90,000		)	—		—
	Customer Relationships	3,972,000			(649,326		)	(1,786,673		)	1,536,001		7.9
	Trade Name	90,000			(90,000		)	—			—		—
	Internal-use software	726,000			(1,210		)	—			724,790		4.9
	Acquired Patents	1,100,000			(751,666		)	—			348,334		1.5
		$	12,404,000		$	(2,752,631	)	$	(6,914,773	)	$	2,736,596
	December 31, 2012
	Intangible Asset	Gross			Accumulated			Accumulated			Net		Weighted
		Carrying			Amortization			Impairment					Average
		Amount						Loss					Remaining
													Useful Life
													(in years)
	Developed Technology	$	6,426,000		$	(1,167,900	)	$	(3,423,100	)	$	1,835,000	5.8
	In-Process Technology	90,000			—			(90,000		)	—		—
	Customer Relationships	3,972,000			(505,327		)	(1,786,673		)	1,680,000		8.8
	Trade Name	90,000			(90,000		)	—			—		—
	Acquired Patents	1,100,000			(586,667		)	—			513,333		2.4
		$	11,678,000		$	(2,349,894	)	$	(5,299,773	)	$	4,028,333
Summary of estimated amortization expense for intangible assets	'
	The estimated amortization expense for intangible assets for the next five years and thereafter is as follows (in thousands):
	Period	Estimated
		Amortization
		Expense
	Remainder of 2013	$	146
	2014	583
	2015	436
	2016	363
	2017	363
	Thereafter	846
	Total	$	2,737

Segment_Reporting_Tables

Segment Reporting (Tables)	9 Months Ended
	Sep. 30, 2013
Segment Reporting	'
Schedule of reportable segment data	'
		Three months ended						Nine months ended
		September 30,						September 30,
		2013			2012			2013			2012
	Net Revenues:
	EMBASSY® digital security products and services	$	4,976,696		$	5,492,296		$	15,224,606		$	17,457,256
	Safend endpoint data loss protection products and services	1,274,629			1,477,967			3,562,687			4,256,618
	Total Net Revenues	$	6,251,325		$	6,970,263		$	18,787,293		$	21,713,874
	Operating Income (Loss):
	EMBASSY® digital security products and services	$	(3,117,522	)	$	(5,735,569	)	$	(11,522,799	)	$	(18,750,127	)
	Safend endpoint data loss protection products and services	222,491			(338,203		)	(4,961,522		)	(2,105,069		)
	Total Segments Operating Loss	(2,895,031		)	(6,073,772		)	(16,484,321		)	(20,855,196		)
	Net currency transaction gain (loss)	(5,626		)	1,965			(12,358		)	11,753
	Net interest expense	(43,166		)	(36,685		)	(151,196		)	(99,294		)
	Net Loss	$	(2,943,823	)	$	(6,108,492	)	$	(16,647,875	)	$	(20,942,737	)
	Impairment of Goodwill:
	EMBASSY® digital security products and services	$	—		$	—		$	—		$	—
	Safend endpoint data loss protection products and services	—			—			2,590,000			—
	Total Impairment of Goodwill	$	—		$	—		$	2,590,000		$	—
	Depreciation and Amortization Expense:
	EMBASSY® digital security products and services	$	152,884		$	180,276		$	496,967		$	526,131
	Safend endpoint data loss protection products and services	63,686			358,725			266,873			1,085,390
	Total Depreciation and Amortization Expense	$	216,570		$	539,001		$	763,840		$	1,611,521
	Capital Expenditures:
	EMBASSY® digital security products and services	$	21,150		31,129			$	146,654		113,104
	Safend endpoint data loss protection products and services	8,562			10,766			19,206			32,093
	Total Capital Expenditures	$	29,712		$	41,895		$	165,860		$	145,197
		September 30,			December 31,
		2013			2012
	Assets:
	EMBASSY® digital security products and services	$	7,711,035		$	9,695,864
	Safend endpoint data loss protection products and services	4,324,145			8,937,294
	Total Assets	$	12,035,180		$	18,633,158
Schedule of sales by geographic area	'
		United States			Europe			Asia			Total
		of America
	Three months ended September 30, 2013:
	EMBASSY® digital security products and services	$	3,561,621		$	1,061,969		$	353,106		$	4,976,696
	Safend endpoint data loss protection products and services	561,648			616,707			96,274			1,274,629
	Total	$	4,123,269		$	1,678,676		$	449,380		$	6,251,325
	% of Total Revenue	66		%	27		%	7		%	100		%
	Three months ended September 30, 2012:
	EMBASSY® digital security products and services	$	4,313,354		$	1,025,554		$	153,388		$	5,492,296
	Safend endpoint data loss protection products and services	756,670			629,442			91,855			1,477,967
	Total	$	5,070,024		$	1,654,996		$	245,243		$	6,970,263
	% of Total Revenue	73		%	24		%	3		%	100		%
	Nine months ended September 30, 2013:
	EMBASSY® digital security products and services	$	11,363,297		$	2,989,228		$	872,081		$	15,224,606
	Safend endpoint data loss protection products and services	1,533,564			1,766,108			263,015			3,562,687
	Total	$	12,896,861		$	4,755,336		$	1,136,096		$	18,787,293
	% of Total Revenue	69		%	25		%	6		%	100		%
	Nine months ended September 30, 2012:
	EMBASSY® digital security products and services	$	14,492,598		$	2,672,470		$	292,188		$	17,457,256
	Safend endpoint data loss protection products and services	1,803,580			1,853,512			599,526			4,256,618
	Total	$	16,296,178		$	4,525,982		$	891,714		$	21,713,874
	% of Total Revenue	75		%	21		%	4		%	100		%
Schedule of customers by segment, from which Wave derived revenue in excess of 10%	'
				Three months ended						Nine months ended
				September 30,						September 30,
				2013			2012			2013			2012
	Customer	Segment		Revenue						Revenue
	Dell, Inc.	EMBASSY®		$	2,963,995		$	3,840,386		$	8,647,857		$	12,130,484
	% of Total Revenue			47		%	55		%	46		%	56		%

Critical_Accounting_Policies_D

Critical Accounting Policies (Details) (USD $)	0 Months Ended	3 Months Ended		9 Months Ended
	Jun. 28, 2013	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
		item		item
Revenue Recognition	'	'	'	'	'
Number of classes of end user customers	'	2	'	2	'
Minimum order of licenses of end user customers defined as large	'	5,000	'	5,000	'
Maximum order of licenses of end user customers defined as small	'	5,000	'	5,000	'
Capitalized internal-use software development costs	'	'	'	'	'
Amortization expense	'	$111,794	$405,300	$402,740	$1,213,400
Reclassifications	'	'	'	'	'
Reclassifications of support expense	'	'	105,000	'	210,000
Reclassifications of amortization on the developed technology intangible asset	'	'	229,500	'	685,000
Reverse stock split ratio	0.25	'	'	0.25	'
Capitalized internal-use software development costs	'	'	'	'	'
Capitalized internal-use software development costs	'	'	'	'	'
Estimated useful life	'	'	'	'5 years	'
Capitalized costs	'	'	'	726,000	'
Amortization expense	'	$1,210	'	$1,210	'

Reverse_Stock_Split_Details

Reverse Stock Split (Details) (USD $)	0 Months Ended	9 Months Ended	0 Months Ended			0 Months Ended
	Jun. 28, 2013	Sep. 30, 2013	Jun. 28, 2013	Sep. 30, 2013	Dec. 31, 2012	Jun. 28, 2013	Sep. 30, 2013	Dec. 31, 2012
			Class A Common Stock	Class A Common Stock	Class A Common Stock	Class B Common Stock	Class B Common Stock	Class B Common Stock
Reverse stock split	'	'	'	'	'	'	'	'
Reverse stock split ratio	0.25	0.25	0.25	'	'	0.25	'	'
Common stock, par value (in dollars per share)	'	'	$0.01	$0.01	$0.01	$0.01	$0.01	$0.01

Liquidity_Details

Liquidity (Details) (USD $)

9 Months Ended

0 Months Ended

3 Months Ended

9 Months Ended

1 Months Ended

0 Months Ended

0 Months Ended

0 Months Ended

0 Months Ended

Sep. 30, 2013

Sep. 30, 2012

Dec. 31, 2012

Dec. 31, 2011

Mar. 13, 2013

Nov. 06, 2013

Nov. 06, 2013

Sep. 30, 2013

Jun. 30, 2013

Mar. 31, 2013

Sep. 30, 2013

Sep. 30, 2013

Sep. 30, 2013

Sep. 30, 2013

Sep. 30, 2013

Jun. 30, 2013

Mar. 31, 2013

Sep. 19, 2013

Nov. 06, 2013

Jun. 21, 2011

Jul. 25, 2013

Apr. 23, 2013

Jul. 25, 2013

Apr. 23, 2013

Nov. 06, 2013

Nov. 06, 2013

Aug. 09, 2013

Mar. 13, 2013

Class A Common Stock

At the Market Sales Agreement

At the Market Sales Agreement

At the Market Sales Agreement

At the Market Sales Agreement

At the Market Sales Agreement

At the Market Sales Agreement

At the Market Sales Agreement

At the Market Sales Agreement

At the Market Sales Agreement

At the Market Sales Agreement

At the Market Sales Agreement

At the Market Sales Agreement

At the Market Sales Agreement

2011 shelf registration statement

2011 shelf registration statement

2011 shelf registration statement

2011 shelf registration statement

2011 shelf registration statement

2011 shelf registration statement

2013 shelf registration statement

2013 shelf registration statement

2013 shelf registration statement

Equity issuance

Warrants Issued, March 2013

Subsequent event

Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Common Stock

Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Subsequent event

Common Stock

Common Stock

Class A Common Stock

Subsequent event

Subsequent event

Average

Average

Maximum

Maximum

Maximum

Funding plan

Funding plan

Funding plan

Warrants - July 2013 financing - Subscribers

Warrants - April 2013 financing - Subscribers

Funding plan

Funding plan

Subsequent event

Maximum

Liquidity

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Accumulated deficit

$413,564,091

'

$396,916,216

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Negative working capital

6,961,529

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Cash on hand

1,845,550

2,163,046

2,112,769

3,385,035

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Liquidity

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Shelf registration statement, amount

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

30,000,000

'

'

'

'

'

'

20,000,000

'

Number of shares sold

'

'

'

'

'

'

5,400,000

1,862,360

840,581

94,988

2,797,929

671,736

'

'

'

'

'

'

'

'

1,204,470

1,585,000

'

'

'

'

'

301,205

Share price (in dollars per share)

'

'

'

'

'

'

'

'

'

'

'

'

$1.53

$1.37

$1.71

$2.68

$2.92

'

'

'

$1.27

$2

'

'

'

'

'

$3.32

Gross proceeds from issuance of common stock

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

15,000,000

'

'

1,529,677

3,170,000

'

'

19,625,000

'

'

1,000,000

Placement agent fees equal to gross proceeds from offering (as a percent)

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

6.00%

6.00%

'

'

'

'

'

6.00%

Net proceeds from issuance of common stock

9,389,626

10,273,003

'

'

'

'

14,100,000

2,508,576

1,380,682

262,945

4,152,000

892,000

'

'

'

'

'

'

'

'

1,408,000

2,920,000

'

'

'

'

'

910,000

Offering costs

'

'

'

'

'

'

457,000

84,000

45,000

8,700

138,000

30,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Placement agent fees

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

92,000

190,200

'

'

'

'

'

60,000

Legal and other fees

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

30,000

60,000

'

'

'

'

'

30,000

Common stock agreed to be issued against warrants (in shares)

'

'

'

'

150,603

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

72,268

792,500

'

'

'

'

Exercise price of warrants (in dollars per share)

'

'

'

'

$3.32

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

$1.27

$2.48

'

'

'

'

Gross proceeds available under the shelf registration statement

'

'

'

'

'

$14,276,000

'

'

'

'

'

'

'

'

'

'

'

'

$0

'

'

'

'

'

'

$19,276,000

'

'

Secured_Borrowings_and_Pledged1

Secured Borrowings and Pledged Receivables (Details) (Secured borrowings collateralized by receivables, USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Secured borrowings collateralized by receivables	'	'	'	'	'
Secured Borrowings and Collateralized Receivables	'	'	'	'	'
Carrying value of secured borrowing as a percentage of associated pledged receivable	'	'	85.00%	'	'
Percentage of holdback provision as per the TRE agreement	'	'	15.00%	'	'
Interest rate on secured borrowings for every thirty days outstanding (as a percent)	1.20%	'	1.20%	'	'
Receivables transferred to buyer and remain uncollected	$622,938	'	$622,938	'	$1,801,683
Secured borrowings	529,497	'	529,497	'	1,537,710
Interest expense associated with the secured borrowings	22,775	35,244	88,996	35,244	'
Proceeds from the transfer of pledged receivables	'	'	6,886,188	7,171,367	'
Amount of pledged receivables collected by TRE	'	'	6,356,691	6,499,260	'
Pledged receivables repurchased	$0	$0	$0	$0	'

Loss_per_Share_Details

Loss per Share (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Weighted average potential common shares	'	'	'	'
Loss per Share	'	'	'	'
Antidilutive securities excluded from earnings per share	4,000	342,000	141,000	814,000
Weighted average employee stock options and other stock warrants	'	'	'	'
Loss per Share	'	'	'	'
Antidilutive securities excluded from earnings per share	5,983,000	2,625,000	5,486,000	1,981,000

Sharebased_Compensation_Detail

Share-based Compensation (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Share-based Compensation	'	'	'	'
Stock options granted (in shares)	14,910	25,275	'	'
Weighted average grant date fair value (in dollars per share)	$0.92	$1.76	'	'
Share-based Compensation	'	'	'	'
Share-based Compensation expense	$512,569	$1,343,510	$1,619,115	$3,987,588
Cost of Sales	'	'	'	'
Share-based Compensation	'	'	'	'
Share-based Compensation expense	6,494	12,115	21,583	36,181
Selling, General & Administrative	'	'	'	'
Share-based Compensation	'	'	'	'
Share-based Compensation expense	368,358	951,452	1,202,756	2,806,040
Research & Development	'	'	'	'
Share-based Compensation	'	'	'	'
Share-based Compensation expense	$137,717	$379,943	$394,776	$1,145,367

Goodwill_and_Amortizable_Intan2

Goodwill and Amortizable Intangible Assets (Details) (USD $)

3 Months Ended

9 Months Ended

3 Months Ended

9 Months Ended

12 Months Ended

9 Months Ended

12 Months Ended

3 Months Ended

9 Months Ended

1 Months Ended

9 Months Ended

12 Months Ended

Sep. 30, 2013

Mar. 31, 2013

Sep. 30, 2012

Sep. 30, 2013

Sep. 30, 2012

Dec. 31, 2012

Mar. 31, 2013

Sep. 30, 2013

Dec. 31, 2012

Sep. 30, 2013

Dec. 31, 2012

Sep. 30, 2013

Dec. 31, 2012

Sep. 30, 2013

Dec. 31, 2012

Sep. 30, 2013

Sep. 30, 2013

31-May-10

Sep. 30, 2013

Dec. 31, 2012

Mar. 31, 2013

Developed Technology

Developed Technology

Developed Technology

In-Process Technology

In-Process Technology

Customer Relationships

Customer Relationships

Trade Name

Trade Name

Internal-use software

Internal-use software

Acquired Patents

Acquired Patents

Acquired Patents

Safend

Changes in the carrying amount of goodwill

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Balance at the beginning of the period

'

$4,038,000

'

$4,038,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

$1,400,000

Impairment loss

'

2,600,000

'

-2,590,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Balance at the end of the period

1,448,000

'

'

1,448,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

1,400,000

Impairment charge on intangible assets

'

'

'

'

'

'

1,615,000

1,615,000

'

'

'

'

'

'

'

'

'

'

'

'

'

Intangible Asset

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Gross Carrying Amount

12,404,000

'

'

12,404,000

'

11,678,000

'

6,426,000

6,426,000

90,000

90,000

3,972,000

3,972,000

90,000

90,000

726,000

726,000

'

1,100,000

1,100,000

'

Accumulated Amortization

-2,752,631

'

'

-2,752,631

'

-2,349,894

'

-1,260,429

-1,167,900

'

'

-649,326

-505,327

-90,000

-90,000

-1,210

-1,210

'

-751,666

-586,667

'

Accumulated Impairment loss

-6,914,773

'

'

-6,914,773

'

-5,299,773

'

-5,038,100

-3,423,100

-90,000

-90,000

-1,786,673

-1,786,673

'

'

'

'

'

'

'

'

Net

2,736,596

'

'

2,736,596

'

4,028,333

'

127,471

1,835,000

'

'

1,536,001

1,680,000

'

'

724,790

724,790

'

348,334

513,333

'

Weighted Average Remaining Useful Life

'

'

'

'

'

'

'

'4 years 10 months 24 days

'5 years 9 months 18 days

'

'

'7 years 10 months 24 days

'8 years 9 months 18 days

'

'

'

'4 years 10 months 24 days

'

'1 year 6 months

'2 years 4 months 24 days

'

Patents acquired

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

1,100,000

'

'

'

Estimated useful life

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'5 years

'

'5 years

'

'

Intangible assets amortization expense

$111,794

'

$405,300

$402,740

$1,213,400

'

'

'

'

'

'

'

'

'

'

$1,210

$1,210

'

'

'

'

Goodwill_and_Amortizable_Intan3

Goodwill and Amortizable Intangible Assets (Details 2) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Estimated Amortization Expense	'	'
Remainder of 2013	$146,000	'
2014	583,000	'
2015	436,000	'
2016	363,000	'
2017	363,000	'
Thereafter	846,000	'
Net	$2,736,596	$4,028,333

Income_Taxes_Details

Income Taxes (Details) (USD $)	Sep. 30, 2013
In Millions, unless otherwise specified
Income Taxes	'
Net operating loss	$286.90
Safend, Inc.	'
Income Taxes	'
Net operating loss	7.7
Safend	'
Income Taxes	'
Net operating loss	$17

Segment_Reporting_Details

Segment Reporting (Details) (USD $)	3 Months Ended			9 Months Ended
	Sep. 30, 2013	Mar. 31, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Segment Reporting	'	'	'	'	'	'
Net Revenues	$6,251,325	'	$6,970,263	$18,787,293	$21,713,874	'
Segments Operating Loss	-2,895,031	'	-6,073,772	-16,484,321	-20,855,196	'
Net currency transaction gain (loss)	-5,626	'	1,965	-12,358	11,753	'
Net interest expense	-43,166	'	-36,685	-151,196	-99,294	'
Net loss	-2,943,823	'	-6,108,492	-16,647,875	-20,942,737	'
Impairment of Goodwill	'	-2,600,000	'	2,590,000	'	'
Depreciation and Amortization Expense	216,570	'	539,001	763,840	1,611,521	'
Capital Expenditures	29,712	'	41,895	165,860	145,197	'
Assets	12,035,180	'	'	12,035,180	'	18,633,158
EMBASSY digital security products and services	'	'	'	'	'	'
Segment Reporting	'	'	'	'	'	'
Net Revenues	4,976,696	'	5,492,296	15,224,606	17,457,256	'
Segments Operating Loss	-3,117,522	'	-5,735,569	-11,522,799	-18,750,127	'
Depreciation and Amortization Expense	152,884	'	180,276	496,967	526,131	'
Capital Expenditures	21,150	'	31,129	146,654	113,104	'
Assets	7,711,035	'	'	7,711,035	'	9,695,864
Safend endpoint data loss protection products and services	'	'	'	'	'	'
Segment Reporting	'	'	'	'	'	'
Net Revenues	1,274,629	'	1,477,967	3,562,687	4,256,618	'
Segments Operating Loss	222,491	'	-338,203	-4,961,522	-2,105,069	'
Impairment of Goodwill	'	'	'	2,590,000	'	'
Depreciation and Amortization Expense	63,686	'	358,725	266,873	1,085,390	'
Capital Expenditures	8,562	'	10,766	19,206	32,093	'
Assets	$4,324,145	'	'	$4,324,145	'	$8,937,294

Segment_Reporting_Details_2

Segment Reporting (Details 2) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Segment Reporting	'	'	'	'
Total net revenues	$6,251,325	$6,970,263	$18,787,293	$21,713,874
United States of America	'	'	'	'
Segment Reporting	'	'	'	'
Total net revenues	4,123,269	5,070,024	12,896,861	16,296,178
Europe	'	'	'	'
Segment Reporting	'	'	'	'
Total net revenues	1,678,676	1,654,996	4,755,336	4,525,982
Asia	'	'	'	'
Segment Reporting	'	'	'	'
Total net revenues	449,380	245,243	1,136,096	891,714
Revenue | Geographic area	'	'	'	'
Segment Reporting	'	'	'	'
% of Total Revenue	100.00%	100.00%	100.00%	100.00%
Revenue | Geographic area | United States of America	'	'	'	'
Segment Reporting	'	'	'	'
% of Total Revenue	66.00%	73.00%	69.00%	75.00%
Revenue | Geographic area | Europe	'	'	'	'
Segment Reporting	'	'	'	'
% of Total Revenue	27.00%	24.00%	25.00%	21.00%
Revenue | Geographic area | Asia	'	'	'	'
Segment Reporting	'	'	'	'
% of Total Revenue	7.00%	3.00%	6.00%	4.00%
Long-lived assets | Geographic area | United States of America	'	'	'	'
Segment Reporting	'	'	'	'
% of Total Revenue	'	'	90.00%	'
Long-lived assets | Geographic area | ISRAEL	'	'	'	'
Segment Reporting	'	'	'	'
% of Total Revenue	'	'	10.00%	'
EMBASSY digital security products and services	'	'	'	'
Segment Reporting	'	'	'	'
Total net revenues	4,976,696	5,492,296	15,224,606	17,457,256
EMBASSY digital security products and services | United States of America	'	'	'	'
Segment Reporting	'	'	'	'
Total net revenues	3,561,621	4,313,354	11,363,297	14,492,598
EMBASSY digital security products and services | Europe	'	'	'	'
Segment Reporting	'	'	'	'
Total net revenues	1,061,969	1,025,554	2,989,228	2,672,470
EMBASSY digital security products and services | Asia	'	'	'	'
Segment Reporting	'	'	'	'
Total net revenues	353,106	153,388	872,081	292,188
Safend endpoint data loss protection products and services	'	'	'	'
Segment Reporting	'	'	'	'
Total net revenues	1,274,629	1,477,967	3,562,687	4,256,618
Safend endpoint data loss protection products and services | United States of America	'	'	'	'
Segment Reporting	'	'	'	'
Total net revenues	561,648	756,670	1,533,564	1,803,580
Safend endpoint data loss protection products and services | Europe	'	'	'	'
Segment Reporting	'	'	'	'
Total net revenues	616,707	629,442	1,766,108	1,853,512
Safend endpoint data loss protection products and services | Asia	'	'	'	'
Segment Reporting	'	'	'	'
Total net revenues	$96,274	$91,855	$263,015	$599,526

Segment_Reporting_Details_3

Segment Reporting (Details 3) (EMBASSY digital security products and services, Dell, Inc., USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
EMBASSY digital security products and services | Dell, Inc.	'	'	'	'
Major customers, by segment	'	'	'	'
Revenue	$2,963,995	$3,840,386	$8,647,857	$12,130,484
% of Total Revenue	47.00%	55.00%	46.00%	56.00%

Issuance_of_Common_Stock_Detai

Issuance of Common Stock (Details) (USD $)

9 Months Ended

0 Months Ended

3 Months Ended

3 Months Ended

9 Months Ended

0 Months Ended

0 Months Ended

Sep. 30, 2013

Sep. 30, 2012

Jun. 02, 2013

Mar. 31, 2013

Mar. 13, 2013

Sep. 30, 2013

Jun. 30, 2013

Mar. 31, 2013

Sep. 30, 2013

Sep. 30, 2013

Jun. 30, 2013

Mar. 31, 2013

Sep. 30, 2013

Jun. 30, 2013

Mar. 31, 2013

Sep. 19, 2013

Mar. 13, 2013

Jul. 25, 2013

Apr. 23, 2013

Jul. 25, 2013

Apr. 23, 2013

Jun. 21, 2011

Sep. 16, 2013

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Class A Common Stock

Common Stock

EXO5

2004 Employee Stock Purchase Plan

Stock Options

Warrants Issued, March 2013

At the market offerings through MLV

At the market offerings through MLV

At the market offerings through MLV

At the market offerings through MLV

At the market offerings through MLV

At the market offerings through MLV

At the market offerings through MLV

At the market offerings through MLV

At the market offerings through MLV

At the market offerings through MLV

At the market offerings through MLV

Equity issuance

2011 shelf registration statement

2011 shelf registration statement

2011 shelf registration statement

2011 shelf registration statement

2011 shelf registration statement

Class A Common Stock

Minimum

Minimum

Minimum

Maximum

Maximum

Maximum

Maximum

Warrants - July 2013 financing - Subscribers

Warrants - April 2013 financing - Subscribers

Funding plan

Funding plan

Common Stock

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Net proceeds from issuance of common stock

$9,389,626

$10,273,003

'

'

'

$2,508,576

$1,380,682

$262,945

$4,152,000

'

'

'

'

'

'

'

$910,000

$1,408,000

$2,920,000

'

'

'

'

Offering costs

'

'

'

'

'

84,000

45,000

8,700

138,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Number of shares sold

'

'

'

'

'

1,862,360

840,581

94,988

2,797,929

'

'

'

'

'

'

'

301,205

1,204,470

1,585,000

'

'

'

'

Share price (in dollars per share)

'

'

$1.29

'

'

'

'

'

'

$1

$1.52

$2.80

$1.71

$2.68

$2.92

'

$3.32

$1.27

$2

'

'

'

'

Number of shares issued to acquire a perpetual license under the agreement

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

372,578

Value of shares issued to acquire a perpetual license under the agreement

500,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

500,000

Gross proceeds from issuance of common stock

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

15,000,000

1,000,000

1,529,677

3,170,000

'

'

'

'

Shelf registration statement, amount

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

30,000,000

'

Placement agent fees equal to gross proceeds from offering (as a percent)

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

6.00%

6.00%

6.00%

'

'

'

'

Placement agent fees

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

60,000

92,000

190,200

'

'

'

'

Legal and other fees

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

30,000

30,000

60,000

'

'

'

'

Number of shares under warrants

'

'

'

'

150,603

'

'

'

'

'

'

'

'

'

'

'

'

'

'

72,268

792,500

'

'

Exercise price of warrants (in dollars per share)

'

'

'

'

$3.32

'

'

'

'

'

'

'

'

'

'

'

'

'

'

$1.27

$2.48

'

'

Proceeds from employee stock option exercises

42,039

79,503

'

42,039

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Issuance of shares upon exercise of employee stock options

'

'

'

12,983

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Exercise price of employee stock options exercised (in dollars per share)

'

'

'

$3.24

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Issuance of shares

'

'

132,970

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Proceeds from employee stock purchase plan

$171,796

$474,233

$171,796

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Fair_Value_Measurement_Details

Fair Value Measurement (Details) (Recurring basis, Level 1, USD $)	Sep. 30, 2013
Recurring basis | Level 1	'
Disclosures about the Fair Value of Financial Instruments	'
Overnight money market funds	$781,699
Ratio for the net value of money market funds for each dollar invested based on quoted prices in active markets for identical assets (level 1)	1

Subsequent_Events_Details

Subsequent Events (Details) (Subsequent event, Steven Sprague, USD $)	0 Months Ended
	Oct. 08, 2013
Subsequent event | Steven Sprague	'
Subsequent events	'
Lump sum severance payment	$1,012,500
Period of annual base salary used to compute severance payment	'3 years