F-1/A: Wearable Devices Amends Warrants, Faces Dilution Risks

Wearable Devices Ltd. filed an amendment to its F-1 registration statement, detailing the resale of up to 1,670,000 ordinary shares by a selling shareholder and recent financing activities, including warrant amendments and significant potential shareholder dilution.

Summary

• The filing is Amendment No. 2 to Form F-1, submitted on December 17, 2025, by Wearable Devices Ltd.
• It relates to the resale of up to 1,670,000 Ordinary Shares by a selling shareholder, Armistice Capital, LLC, which are issuable upon the exercise of September 12 Warrants (1,000,000 shares) and September 15 Warrants (670,000 shares).
• The original exercise prices for these warrants were $4.00 and $6.00 per share, respectively, but are proposed to be reduced to $2.67 per share, subject to shareholder approval.
• If the reduced exercise price is approved, the company expects to receive approximately $4.46 million in cash from the full exercise of these warrants, down from an estimated $8.02 million at original exercise prices.
• The company will not receive any proceeds from the sale of Ordinary Shares by the Selling Shareholder, only from the exercise of the underlying warrants.
• As of December 16, 2025, there were 8,648,406 Ordinary Shares outstanding.
• Potential dilution is significant: if all outstanding warrants (September 12, September 15, October Offering, November 2025 Warrants) are exercised and shares from abeyance are released, the number of outstanding Ordinary Shares could increase by approximately 123.7% to 19,342,906.
• Wearable Devices Ltd. is an Israeli corporation developing a non-invasive neural input interface (Mudra platform) for controlling digital devices via subtle finger gestures and hand movements.
• The company is transitioning from research and development to commercialization of B2B products and has commenced shipment of B2C products like the Mudra Band and Mudra Link.
• Revenues were $522 thousand in 2024 and $82 thousand in 2023. Comprehensive and net losses were $7.9 million in 2024 and $7.8 million in 2023.
• For the six months ended June 30, 2025, revenues were $294 thousand, a decrease from $394 thousand for the same period in 2024. Comprehensive and net losses were $3.7 million in H1 2025, compared to $4.2 million in H1 2024.
• Over 100 companies, including 30 multinational technology companies, have purchased the Mudra Development Kit, but no licensing agreements have been signed yet, with an estimated 3-5 year period from introduction to agreement.
• Cash and cash equivalents as of June 30, 2025, were $2,064 thousand on an actual basis, increasing to $28,379 thousand on a pro forma as adjusted basis (assuming full warrant exercise at original prices).
• Shareholders' equity as of June 30, 2025, was $3,813 thousand on an actual basis, increasing to $30,128 thousand on a pro forma as adjusted basis.
• The company's auditor's report contains an explanatory paragraph regarding substantial doubt about its ability to continue as a going concern.

Sentiment

Score: 3

Explanation: The company is actively pursuing capital raises and developing innovative technology in a growing market. However, it faces severe financial challenges, including consistent losses, declining revenue, and a 'going concern' warning from its auditors. The need to significantly reduce warrant exercise prices and the substantial potential for shareholder dilution indicate a precarious financial position and high investment risk.

Positives

• The company is actively transitioning from research and development to commercialization, launching both B2B development kits and B2C consumer products like the Mudra Band and Mudra Link.
• Over 100 companies, including 30 multinational technology companies, have purchased the Mudra Development Kit, indicating significant industry interest in the underlying technology.
• Recent financing activities, including warrant exercises and offerings, have substantially increased the company's pro forma cash and shareholders' equity, providing capital for operations.
• The company is expanding its brand into new verticals such as neurotech, brain-computer interface sensors, Industry 4.0, digital health, and sport analytics, broadening its market potential.

Negatives

• The company has incurred significant and consistent net losses, totaling $7.9 million in 2024, $7.8 million in 2023, and $3.7 million for the first six months of 2025.
• Revenues for the six months ended June 30, 2025, decreased to $294 thousand from $394 thousand in the same period of 2024, indicating a decline in recent sales performance.
• The auditor's report includes an explanatory paragraph regarding substantial doubt about the company's ability to continue as a going concern, highlighting significant financial instability.
• The proposed reduction in warrant exercise prices from $4.00/$6.00 to $2.67 per share suggests a need to incentivize warrant exercise, likely due to the current share price ($1.54 on December 16, 2025) being significantly below original exercise prices, resulting in lower potential cash proceeds for the company.
• Shareholders face substantial potential dilution, with outstanding Ordinary Shares potentially increasing by up to 123.7% if all warrants are exercised and shares from abeyance are released.
• Despite sales of the Mudra Development Kit to over 100 companies, no licensing agreements have been signed yet, and the estimated commercialization period is 3-5 years, indicating a long and uncertain path to significant B2B revenue.

Risks

• Shareholders may experience significant dilution as a result of potential future financings and the exercise of existing warrants, including those subject to shareholder approval.
• Future issuances or sales of Ordinary Shares, or the perception of such sales, may cause the trading price of Ordinary Shares to decline and could impair the company's ability to raise capital through subsequent equity offerings.
• The market price of Ordinary Shares could decline due to sales, or announcements of proposed sales, of a large number of shares by large shareholders, including those held in abeyance.
• Existing shareholders have no preemptive rights, meaning their pro rata ownership can be diluted by new share offerings.
• An active trading market for Ordinary Shares may not be sustained, which could impair investors' ability to sell shares and reduce the fair market value.
• The company does not anticipate paying any cash dividends in the foreseeable future, making capital appreciation the sole source of gain for shareholders.
• There is substantial doubt about the company's ability to continue as a going concern, which could prevent it from obtaining new financing on reasonable terms or at all.
• Uncertainty exists regarding whether Surface Nerve Conductance (SNC) technology will become the industry standard input method for wearable computing and consumer electronics.
• The company's ability to maintain and expand its existing customer base and ensure compatibility of its devices with a broad range of mobile devices and operating systems is crucial.
• The company's ability to correctly predict market growth and remediate material weaknesses in its internal control over financial reporting are significant challenges.
• The company faces risks related to retaining its founders and maintaining, protecting, and enhancing its intellectual property.
• The impact of competition, new technologies, general market, political, and economic conditions, including tariffs, trade restrictions, and geopolitical shifts (e.g., Israel-Gaza Strip war, conflicts in the Middle East), could adversely affect operations.
• The company must comply with Nasdaq listing requirements to maintain its public trading status.
• Litigation is a potential risk that could impact the company's business, financial condition, or results of operations.

Future Outlook

The company's vision is to create a world where the user's hand becomes a universal input device for touchlessly interacting with technology, aiming to set the standard input interface for the Metaverse. They anticipate neural-based interfaces becoming as ubiquitous as touchscreens for interacting with wearable computing and digital devices. For B2B commercialization, they estimate a three-to-five-year period from initial customer introduction to signing a licensing agreement.

Management Comments

• Our company's vision is to create a world in which the user's hand becomes a universal input device for touchlessly interacting with technology.
• We believe that our technology is setting the standard input interface for the Metaverse.
• We intend to transform interaction and control of digital devices to be as natural and intuitive as real-life experiences.
• We imagine a future in which humans can share skills, thoughts, emotions, and movements with each other and with computers, using wearable interfaces and devices.
• We believe that neural-based interfaces will become as ubiquitous to interact with wearable computing and digital devices in the near future as the touchscreen is a universal input method for smartphones.

Industry Context

The company operates in the rapidly evolving and highly competitive wearable technology, neurotech, and brain-computer interface sectors. Its focus on gesture control and touchless interaction aligns with broader industry trends towards more intuitive and immersive digital experiences, particularly relevant for augmented reality (AR), virtual reality (VR), and the emerging Metaverse. The engagement with over 100 companies, including 30 multinational technology firms, for its Mudra Development Kit suggests a recognized potential for its technology within the industry, though the long estimated sales cycle for licensing agreements (3-5 years) indicates the nascent stage of widespread commercial adoption for such advanced input methods.

Comparison to Industry Standards

• The company's Mudra platform, utilizing surface nerve conductance (SNC) for gesture control, represents a distinct technological approach compared to other input methods in the wearable and digital device markets.
• The Mudra Band, an aftermarket accessory for Apple Watch, directly competes with existing wearable input solutions and native functionalities offered by established players like Apple.
• The Mudra Link, a universal gesture control wristband, positions the company against other general-purpose wearable input devices, requiring strong differentiation to gain market share.
• While the sale of Mudra Development Kits to over 100 companies, including 30 multinational technology firms, demonstrates industry interest, the absence of signed licensing agreements suggests a longer adoption curve or potential challenges in commercializing the technology compared to more mature industry standards.
• The company's financial performance, characterized by significant and ongoing losses and declining interim revenue, is not indicative of a market leader or a company with established, profitable industry-standard solutions.

Corporate Governance

Related Party Transactions

• Armistice Capital, LLC, identified as the 'Selling Shareholder,' has been involved in multiple recent financing transactions with the company, including purchasing and exercising warrants and pre-funded warrants in September, October, and November 2025. This includes the September 12 Warrants, September 15 Warrants, October Offering warrants, and November 2025 Warrants, as well as exercising existing warrants for 3,322,000 Ordinary Shares on December 1, 2025.

Stakeholder Impact

• Shareholders face significant potential dilution of their ownership interests, with the number of outstanding Ordinary Shares potentially increasing by over 120% from various warrant exercises and shares held in abeyance.
• Existing shareholders' proportionate ownership and relative voting strength will decrease due to future share issuances.
• The market price of Ordinary Shares is highly susceptible to decline due to the large volume of shares that may be sold by the Selling Shareholder and other future offerings.
• The company will receive crucial cash proceeds from warrant exercises, which are intended for working capital and general corporate purposes, but these proceeds are lower than originally anticipated for some warrants due to price reductions.
• Investors are warned that investing in the company's securities is highly speculative and involves a high degree of risk, with capital appreciation being the sole source of gain as no cash dividends are anticipated.
• Employees, directors, and consultants holding options and restricted share units (RSUs) may see the value of their equity incentives impacted by share price volatility and dilution.

Next Steps

• Obtain shareholder approval for the reduction of exercise prices for the September 12 and September 15 Warrants to $2.67 per share.
• Obtain shareholder approval for the issuance of 5,813,500 Ordinary Shares related to the November 2025 warrant inducement agreement.
• Obtain shareholder approval for the issuance of 1,230,000 Ordinary Shares related to the October Offering warrants.
• Continue efforts to commercialize Mudra technology by securing licensing agreements with B2B customers.
• Proceed with further sales of Ordinary Shares under the At-the-Market (ATM) Agreement.
• The registration statement must become effective before the Selling Shareholder can sell the registered securities.

Key Dates

Recommendation

The company is in a highly precarious financial position, evidenced by consistent and substantial net losses, declining revenue in the most recent period, and an explicit 'going concern' warning from its auditors. While it is aggressively raising capital, the terms of these raises, particularly the significant reduction in warrant exercise prices, indicate a desperate need for funds and are highly dilutive to existing shareholders. The potential for over 120% dilution, coupled with the current share price being significantly below many warrant exercise prices, suggests substantial downside risk. The long and unproven commercialization timeline for its B2B products, without any signed licensing agreements, adds to the uncertainty. Given these severe financial and operational challenges, a seasoned investor would likely recommend selling to mitigate further losses.

Keywords

Wearable Devices, Mudra, neural interface, gesture control, SEC filing, F-1/A, warrants, dilution, capital raise, Nasdaq, WLDS, B2B, B2C, neurotech, brain-computer interface, Industry 4.0, risk factors, going concern