Liquidity

The accompanying consolidated financial statements have been prepared assuming that Wave will continue as a going concern. Wave has incurred substantial operating losses since its inception, and as of December 31, 2014, has an accumulated deficit of approximately $430,121,000. We also expect Wave will incur an operating loss for the fiscal year 2015. As of December 31, 2014, Wave had negative working capital of approximately $5,048,000.

If Wave is not successful in executing its business plan, Wave will not generate enough revenue to fund its cash flow requirements for the year ended December 31, 2015. As of December 31, 2014, we had approximately $1,777,000 of cash on hand. Given Wave's forecasted cash requirements for the twelve-months ending December 31, 2015, and our cash balance as of December 31, 2014, Wave will be required to raise additional capital prior to December 31, 2015 if its sales and operating performance do not meet expectations. Wave's ability to raise additional capital is primarily based on two sources:


•	Sales of registered Class A Common Stock under a $15,000,000 shelf registration statement filed with the U.S. Securities and Exchange Commission ("SEC") on December 18, 2014 and declared effective by the SEC on January 7, 2015 ("2015 shelf registration statement"); and


•	Sales of Class A Common Stock through private placements.

On January 26, 2015, Wave sold 5,513,044 shares of Class A Common Stock at $0.65 per share for gross proceeds of $3,583,479. This financing was completed under the 2015 shelf registration statement. Wave also issued warrants to the subscribers to purchase 2,205,216 shares of Class A Common Stock at an exercise price of $0.70 per share. These warrants expire on July 26, 2020. 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. Wave realized approximately $3,338,000 in net proceeds after deducting the placement agent fees of approximately $215,000 and additional legal and other fees associated with the issuance of these securities totaling approximately $30,000. In connection with the financing, Wave also issued warrants to SRA to purchase up to 330,783 shares of Wave Class A Common Stock for $0.70 per share. These warrants expire on July 26, 2018.

For registered offerings, Wave is required to calculate the amount of capital the Company is allowed to raise in accordance with the General Instruction I.B.6. on Form S-3 (“the one-third rule”). The one-third rule restricts the amount of capital that can be raised in a 12-month period provided that the registrant’s aggregate market value of the common equity held by non-affiliates is less than $75 million. As a result of the application of the one-third rule, the funds available on the 2015 shelf registration statement are reduced. Until Wave attains an aggregate market value of $75 million or more for shares held by non-affiliates, its available funds under the 2015 shelf registration statement will remain restricted to the one-third rule computation. To determine the amount available under the one-third rule for future financings, the aggregate market value of the common equity is calculated using the price at which the common equity was last sold, or the average of the bid and asked prices of the common equity as of a date within 60 days prior to the date of filing. As of March 2, 2015, approximately $9,872,000 in gross proceeds remains under the 2015 shelf registration statement, however Wave is restricted to $9,203,000 as of such date due to the one-third rule.

Wave will be required to sell shares of common stock, preferred stock, obtain debt financing or engage in a combination of these financing alternatives, to raise additional capital to continue to fund its operations for the twelve months ending December 31, 2015. If Wave is not successful in executing its business plan, it will be required to sell additional shares of common stock, preferred stock, obtain debt financing or engage in a combination of these financing alternatives or it could be forced to reduce expenses which may significantly impede its ability to meet its sales, marketing and development objectives, cease operations or merge with another company. No assurance can be provided that any of these initiatives will be successful. Due to its current cash position, cash needs over the next year and beyond, and the uncertainty as to whether it will achieve its sales forecast for its products and services, substantial doubt exists with respect to Wave's ability to continue as a going concern.