XML 58 R10.htm IDEA: XBRL DOCUMENT

Liquidity

6 Months Ended

Jun. 30, 2012

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 June 30, 2012, had an accumulated deficit of $377,787,913. We also expect Wave will incur an operating loss for the fiscal year 2012.

Due to the early stage nature of its market category, Wave is unable to predict with a high enough level of certainty whether enough revenue will be generated to fund its cash flow requirements for the twelve-months ending June 30, 2013. As of June 30, 2012, we had approximately $1.6 million of cash on hand and negative working capital of approximately $7.0 million. Given Wave’s forecasted capital requirements for the twelve-months ending June 30, 2013, our cash balance as of June 30, 2012, and the uncertainty as to whether we will generate sufficient revenue, Wave will be required to raise additional capital to continue to fund its operations. On August 8, 2012, Wave sold 2,587,824 shares of Class A Common Stock at $0.6425 per share for gross proceeds of $1,662,677. This financing was completed under a shelf registration filed with the SEC on June 21, 2011. We realized approximately $1,533,000 in net proceeds after deducting the placement agent fees of $99,761 and additional legal and other fees associated with the issuance of these securities totaling approximately $30,000. In connection with the financing, we also agreed to issue warrants to the subscribers to purchase up to 1,293,912 shares of Wave Class A Common Stock for $0.58 per share. These warrants expire on August 8, 2015. We also agreed to issue a warrant to the placement agent (as part of the fees paid to the placement agent) that will allow the placement agent to acquire up to 155,269 shares of Wave Class A Common Stock for $0.58 per share. This warrant expires on August 8, 2015. We expect to obtain additional funding as needed from further sales of newly issued shares of Class A Common Stock, including the sale of Class A Common Stock under the remaining availability of our $30,000,000 shelf registration statement that we filed on June 21, 2011. As of August 9, 2012, approximately $19,210,000 in gross proceeds are available under the June 21, 2011 shelf registration statement, which may be utilized for future financings. We can provide no assurances as to whether, if necessary, we will be successful in raising the needed capital to continue as a going concern.

During January 2012, we entered into an At the Market Sales Agreement with MLV & Co. LLC (“MLV”) under which we are able to sell shares of our common stock for aggregate gross proceeds of $20,000,000 from time to time through MLV. During the six-month period ended June 30, 2012, Wave sold 3,593,742 shares of its Class A common stock through MLV at an average price of $1.48 per share, for net proceeds of approximately $5.1 million after deducting offering costs of approximately $164,000. As of August 3, 2012, Wave has sold a total of approximately 5.2 million shares of its common stock through MLV, raising net proceeds of $6.2 million after deducting offering costs of approximately $196,000.

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.

Disclosure of accounting policy for reporting when there is a substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time (generally a year from the balance sheet date). Disclose: (a) pertinent conditions and events giving rise to the assessment of substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time, (b) the possible effects of such conditions and events, (c) management's evaluation of the significance of those conditions and events and any mitigating factors, (d) possible discontinuance of operations, (e) management's plans (including relevant prospective financial information), and (f) information about the recoverability or classification of recorded asset amounts or the amounts or classification of liabilities. If management's plans alleviate the substantial doubt about the entity's ability to continue as a going concern, disclosure of the principal conditions and events that initially raised the substantial doubt about the entity's ability to continue as a going concern would be expected to be considered. Disclose whether operations for the current or prior years generated sufficient cash to cover current obligations, whether waivers were obtained from creditors relating to the company's default under the provisions of debt agreements and possible effects of such conditions and events, such as: whether there is a possible need to obtain additional financing (debt or equity) or to liquidate certain holdings to offset future cash flow deficiencies. Disclose appropriate parent company information when parent is dependent upon remittances from subsidiaries to satisfy its obligations.

+ References+ Details