Issuance of Common Stock, Convertible Debt and Warrants

9 Months Ended

Sep. 30, 2015

Stockholders' Equity Note [Abstract]

Issuance of Common Stock, Convertible Debt and Warrants

Issuance of Common Stock, Convertible Debt and Warrants

Nine-Months Ended September 30, 2015

On September 23, 2015, the Company entered into a Convertible Bridge Instrument and Warrant Subscription Agreements with certain investors, consisting of a $490,000 unsecured bridge instrument that is required to be repaid on or before December 24, 2015 with an aggregate repayment amount of $588,000 and warrants to purchase up to 1,225,000 shares of Wave's Class A common stock at an exercise price of $0.18 per share. The warrants are exercisable six months after the issuance date and expire after five years. If the Company fails to pay the bridge instrument repayment amount by the repayment date of December 24, 2105, holders may (but are not required to) elect to convert the bridge instrument into shares of our Class A common stock at a conversion rate based on the applicable repayment amount divided by an amount equal to the lesser of $0.168 per share and 80% of Wave's variable weighted average stock price ("VWAP") for the five trading day period prior to the date on which the conversion election is made. The bridge instrument may not be converted into more than 19.9% of the outstanding common shares immediately preceding the transaction, unless a shareholder approval is obtained by the Company.

The Company assessed the classification of warrants as of the date of the transaction and determined that such instruments meet the criteria for equity classification. The warrants are reported on the consolidated balance sheet as a component of additional paid in capital within stockholders equity. At the time of issuance, the relative fair value of the warrants was estimated at $84,000 using the Black-Scholes model and the relative fair value of the convertible debt was estimated at $406,000 using a Monte Carlo simulation.

On May 21, 2015, Wave sold 7,300,000 units with each unit consisting of one share of Class A Common Stock and a warrant to purchase 0.5 shares of Class A Common Stock, at a public offering price of $0.65 per unit. The underwriter, Roth Capital, fully exercised its option to purchase an additional 1,095,000 shares of Class A Common Stock and warrants to purchase up to 547,500 shares of Class A Common Stock. The original exercise price of the warrants was $0.81 per share and they expire on May 21, 2020. On September 23, 2015, the issuance of convertible bridge instruments and warrants resulted in the reset of the exercise price of the warrants to $0.07. Wave agreed to pay Roth Capital a fee equal to 7% of the gross proceeds of this public offering. Wave realized approximately $4,868,000 in net proceeds after deducting the underwriter fees of approximately $382,000 and additional legal and other fees associated with the issuance of these securities totaling approximately $207,000. This financing was completed under the 2015 shelf registration statement together with the related registration statement on Form S-3 filed pursuant to Rule 462(b). A prospectus supplement related to the offering was filed with the SEC on May 26, 2015.

The warrants issued in the May public offering contain a change in control feature that allow the warrant holders to require the successor entity to purchase the warrants by paying the warrant holder cash in an amount equal to the fair value of the remaining unexercised portion of the warrants on the change in control date. The warrants also contain a down round feature that adjusts the exercise price of the warrants to equal the price of common stock or convertible securities offered in a future financing if the price of a future financing is below $0.81 per share. The terms of the warrants require classification as a liability and the Company has therefore recorded the fair value as a liability as of the date of issuance for an aggregate fair value of $1,846,900. See Note 10 for more information on the fair value model used to value the warrants.

On January 26, 2015, Wave entered into agreements with certain investors for a private placement of 5,513,044 shares of its Class A Common Stock at a price of $0.65 per share yielding gross proceeds of $3,583,479. This financing was completed under the 2015 shelf registration statement together with the related registration statement on Form S-3 filed pursuant to Rule 462(b). 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. 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. The warrants associated with this financing have been accounted for as equity. A prospectus supplement related to the offering was filed with the SEC on January 27, 2015. 

On June 1, 2015, Wave issued 75,773 shares of Class A Common Stock to Wave employees for $0.56 per share, pursuant to the Wave 2004 Employee Stock Purchase Plan. Wave received proceeds of $42,508 from the sale of these shares.

Nine-Months Ended September 30, 2014

On June 11, 2014, Wave entered into agreements with certain institutional investors for a private placement of 5,225,560 shares of its Class A Common Stock at a price of $1.90 per share yielding gross proceeds of $9,928,564. This financing was completed under the 2013 shelf registration statement together with the related registration statement on Form S-3 filed pursuant to Rule 462(b). Craig-Hallum Capital Group LLC ("Craig-Hallum") 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 Craig-Hallum a fee equal to 7% of the gross proceeds of this offering. We realized approximately $9,075,000 in net proceeds after deducting the placement agent fees of $695,000 and additional legal and other fees associated with the issuance of these securities totaling approximately $159,000. In connection with the financing, we also issued warrants to the subscribers to purchase up to 2,090,224 shares of Wave Class A Common Stock for $1.90 per share. These warrants expire on June 11, 2019. The warrants have been accounted for as equity. A prospectus supplement related to the offering was filed with the SEC on June 13, 2014.

During the nine-months ended September 30, 2014, Wave received proceeds of $5,383,009 after deducting offering costs of approximately $172,000, in connection with the issuance of 5,410,450 shares of Class A Common Stock in its at the market offerings through MLV & Co. LLC ("MLV"). The shares were sold at prices ranging from $0.90 - $1.39 per share.

During the nine-months ended September 30, 2014, Wave received gross proceeds of $121,862 in connection with the issuance of 133,914 shares of Class A Common Stock upon the exercise of warrants that were granted to investors as part of Wave's December 2013 financing. The warrants were exercised at $0.91 per share.

On June 1, 2014, Wave issued 105,454 shares of Class A Common Stock to Wave employees for $0.94 per share, pursuant to the Wave 2004 Employee Stock Purchase Plan. Wave received proceeds of $99,495 from the sale of these shares.