F-1/A: Wearable Devices Ltd. Announces Public Offering of Ordinary Shares and Pre-Funded Warrants

Wearable Devices Ltd. is offering up to 10,600,000 ordinary shares and pre-funded warrants in a firm commitment public offering.

Summary

• Wearable Devices Ltd. is conducting a firm commitment public offering of up to 10,600,000 ordinary shares.
• The offering also includes pre-funded warrants for purchasers who would otherwise exceed beneficial ownership limits of 4.99% or 9.99%.
• Each pre-funded warrant is immediately exercisable for one ordinary share at an exercise price of $0.001 per share.
• The purchase price of each pre-funded warrant will equal the price per share at which the ordinary shares are being sold to the public in this offering, minus $0.001.
• The company's ordinary shares and IPO warrants are listed on the Nasdaq Capital Market under the symbols WLDS and WLDSW, respectively.
• On May 7, 2024, the last reported sale price of the company's ordinary shares and IPO warrants on Nasdaq was $0.3306 per share and $0.065 per warrant, respectively.
• The company has granted the underwriters a 45-day option to purchase up to an additional 1,590,000 ordinary shares and/or pre-funded warrants to cover over-allotments.
• The company intends to use the net proceeds from this offering for working capital and general corporate purposes.
• In 2023 and 2022, the company had revenues of $82 thousand and $45 thousand, respectively, and comprehensive and net loss of $7.8 million and $6.5 million, respectively.

Sentiment

Score: 4

Explanation: The document presents a mixed sentiment. While there are positive developments like collaborations and online distribution, the significant net losses, going concern warning, and Nasdaq compliance issues weigh heavily, resulting in a cautious outlook.

Positives

• The company has a collaboration agreement with Qualcomm Technologies, Inc.
• The company has a reseller agreement with WisePlus to scale its licensing program reach in South Korea and China.
• The Mudra Band is available for purchase on Amazon.

Negatives

• The company has incurred net losses of $7.8 million in 2023 and $6.5 million in 2022.
• The company's auditor included an explanatory paragraph in its report regarding the company's ability to continue as a going concern.
• The company has been notified by Nasdaq of its failure to comply with certain continued listing requirements.
• The market price of the company's ordinary shares may be highly volatile and fluctuate substantially.
• If you purchase Ordinary Shares and/or Pre-Funded Warrants in this offering, you will incur immediate and substantial dilution in the book value of your investment.

Risks

• The company's current officers and directors and holders of more than 5% of the company's Ordinary Shares currently beneficially own an aggregate of approximately 32.3% of the company's Ordinary Shares.
• The market price of the company's Ordinary Shares may be highly volatile and fluctuate substantially, which could result in substantial losses for purchasers of the company's Ordinary Shares and Pre-Funded Warrants in this offering.
• Future sales of the company's Ordinary Shares could reduce the market price of the company's Ordinary Shares.
• The company has never paid cash dividends on its share capital, and it does not anticipate paying any cash dividends in the foreseeable future.
• If you purchase Ordinary Shares and/or Pre-Funded Warrants in this offering, you will incur immediate and substantial dilution in the book value of your investment.
• The company has been notified by The Nasdaq Stock Market LLC of its failure to comply with certain continued listing requirements and, if the company is unable to regain compliance with all applicable continued listing requirements and standards of Nasdaq, the company's Ordinary Shares could be delisted from Nasdaq.
• The company may need to raise additional capital required to grow its business, and the company may not be able to raise capital on terms acceptable to the company or at all.
• There is no established public trading market for the Pre-Funded Warrants being offered in this offering, and the company does not expect a market to develop for the Pre-Funded Warrants.
• The company conducts its operations in Israel. Conditions in Israel, including conditions affected by the recent attack by Hamas and other terrorist organizations and Israel's war against them, may affect the company's operations.

Future Outlook

The company intends to achieve a leading brand position for neural input technology and expand its operations to digital and wearable computers. Key elements of its growth strategy include offering a broad range of platform devices, introducing new features, use-cases, software applications, and services, integrating its Mudra technology into existing devices, further penetrating additional markets, expanding brand awareness, global distribution and drive sales of its products and services, and data monetization.

Management Comments

• The company's vision is to create a world in which the user's hand becomes a universal input device for touchlessly interacting with technology.
• The company believes that its technology is setting the standard input interface for the Metaverse.
• The company intends to transform interaction and control of digital devices to be as natural and intuitive as real-life experiences.
• The company imagines a future in which humans can share skills, thoughts, emotions, and movements with each other and with computers, using wearable interfaces and devices.
• The company believes 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 growing market of wearable technology and neural interfaces. The company believes 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.

Comparison to Industry Standards

• It is difficult to directly compare Wearable Devices Ltd. to industry standards due to its unique focus on neural input interfaces.
• However, comparable companies in the wearable technology space include Fitbit (now owned by Google), Apple (Apple Watch), and Samsung (Galaxy Watch).
• These companies primarily focus on fitness tracking and smartwatch functionalities, while Wearable Devices Ltd. is focused on gesture control and neural interfaces.
• In the brain-computer interface (BCI) space, companies like Neuralink and Kernel are developing more invasive technologies, while Wearable Devices Ltd. offers a non-invasive solution.
• Compared to these companies, Wearable Devices Ltd. is at an earlier stage of commercialization and has significantly lower revenue.

Stakeholder Impact

• Shareholders will experience potential dilution due to the offering of new shares and pre-funded warrants.
• Employees may be affected by the company's ability to continue as a going concern and its compliance with Nasdaq listing requirements.
• Customers may benefit from the company's growth strategy and the introduction of new features and services.
• Suppliers and creditors may be affected by the company's financial condition and its ability to meet its obligations.

Next Steps

• The company intends to monitor the closing bid price of its Ordinary Shares and may, if appropriate, consider implementing available options to regain compliance with the minimum bid price requirement, including initiating a reverse share split.
• The company intends to increase its marketing efforts to further expand global awareness of its brand and drive greater sales of its products and services.
• The company intends to increase its focus on building relationships with corporations in Industry 4.0, wellness and digital health, and sports analytics.
• The company intends to monetize data derived from a combination of gestures that authenticates a user, identification of patterns of daily behavior, and monitoring of metrics and identification.

Key Dates

Keywords

public offering, ordinary shares, pre-funded warrants, wearable devices, Nasdaq, Mudra Band, equity financing, dilution, risk factors, Israel