On July 28, 2015, Wave initiated a global restructuring of the Company's business in conjunction with a review of Wave's options for raising capital and pursuing customer transactions and other strategic alternatives. Wave's restructuring involved immediate steps to reduce the Company's global workforce by approximately 60% to a core team of employees spread across all functional areas. Therefore the Company has continued to evaluate and manage headcount taking into account its very limited financial resources. Since we initiated the restructuring, we have also experienced a significant number of employee departures. The Company has been unable to remain current with many of its vendors, and have received notices that certain services, including leased facilities, could be discontinued which will have a material impact on our ability to continue operations. Unless Wave is able to raise additional financing in the near term, we will be required to cease operations or pursue other alternatives.
On September 16, 2015, the Company received correspondence from NASDAQ stating that the Company had been granted its request for an extension through January 12, 2016 to evidence compliance with the $1.00 minimum closing bid price requirement.
On August 11, 2015, The Company received notice from the NASDAQ Listings Qualifications Staff indicating that the Company no longer satisfies the minimum $35 million market value of listed securities requirement as required for continued listing on The NASDAQ Capital Market and set forth in NASDAQ Listing Rule 5550(b)(2) (the "Rule"). In accordance with the NASDAQ Listing Rules, the Company has been provided a grace period of 180 calendar days, through February 8, 2016, to evidence compliance with the Rule. In order to satisfy the Rule, the Company must evidence a market value of listed securities of at least $35 million for a minimum of 10 consecutive business days. The notice has no effect on the listing or trading of the Company's common stock on The NASDAQ Capital Market during the 180 day grace period.
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.
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 November 11, 2015, approximately $1,016,000 in gross proceeds remains under the 2015 shelf registration statement. However, based on the price of Wave's common equity over the applicable 60 day period and the one-third rule computation, none of the remaining gross proceeds are available for future financings as of November 11, 2015.
Wave will be required to continue to sell shares of common stock, preferred stock, obtain debt or other financing or engage in a combination of these financing alternatives, to raise additional capital to continue to fund its operations. If Wave is not successful in raising additional financing in the near term, it will be required to cease operations or pursue other alternatives. If Wave is able to raise additional financing, it will continue to explore strategic alternatives which could include additional capital raising transactions or a merger or other sale of Wave's business or assets. No assurance can be provided that any of these initiatives will be successful. Due to the foregoing, substantial doubt exists with respect to Wave's ability to continue as a going concern.
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