F-1: Wearable Devices Ltd. Files for Resale of Up to 24.6 Million Ordinary Shares Under Standby Equity Purchase Agreement

Wearable Devices Ltd. has filed a registration statement for the resale of up to 24,574,209 ordinary shares by YA II PN, LTD., under a Standby Equity Purchase Agreement (SEPA) for up to $10 million.

Summary

• Wearable Devices Ltd. has filed a registration statement for the offer and sale of up to 24,574,209 ordinary shares by the selling shareholder, YA II PN, LTD.
• The shares are to be sold under a Standby Equity Purchase Agreement (SEPA) entered into on June 6, 2024, with YA, which provides for the sale of up to $10.0 million of the company's ordinary shares.
• As of the date of the prospectus, the company has not sold any ordinary shares under the SEPA.
• The company may request pre-paid advances of the commitment amount, up to $3.0 million, evidenced by promissory notes with a 6% interest rate, increasing to 18% upon an event of default.
• As of the date of the prospectus, the company has requested and received a Pre-Paid Advance in the amount of $2.0 million, which was paid to it on June 6, 2024.
• The company will not receive any proceeds from the sale of ordinary shares by the selling shareholder but may receive up to $10.0 million in aggregate gross proceeds from sales of its ordinary shares to the selling shareholder under the SEPA.
• The company intends to use any proceeds received under the SEPA for working capital and general corporate purposes.
• The ordinary shares are listed on the Nasdaq Capital Market under the symbol WLDS, and on June 10, 2024, the last reported sale price was $0.411 per share.

Sentiment

Score: 5

Explanation: The document presents a mixed sentiment. While it highlights the potential for funding through the SEPA, it also acknowledges the company's history of net losses, the risks associated with the offering, and the potential impact of the political and military situation in Israel. The going concern warning is also a significant negative factor.

Positives

• The SEPA provides Wearable Devices Ltd. with access to up to $10.0 million in funding over a three-year period.
• The company retains control over the timing and amount of any sales of ordinary shares to YA under the SEPA.
• The SEPA does not impose any restrictions on the company's operating activities.
• YA and its affiliates are prohibited from engaging in any short selling or hedging transactions related to the ordinary shares during the term of the SEPA.

Negatives

• The company will not receive any proceeds from the sale of ordinary shares by the selling shareholder.
• The company's financial statements for the year ended December 31, 2023, contained an explanatory paragraph regarding substantial doubt about its ability to continue as a going concern.
• The company has incurred net losses in recent years, with a comprehensive and net loss of $7.8 million in 2023 and $6.5 million in 2022.
• The company has not signed a license agreement with any of the over 100 companies that have purchased its Mudra Inspire development kit as of June 13, 2024.

Risks

• The company may not be able to predict the actual number of shares it will sell under the SEPA or the actual gross proceeds resulting from those sales.
• The purchase price per share to be paid by YA for the ordinary shares may fluctuate based on the market prices of the ordinary shares.
• The company may require additional financing to sustain its operations.
• Future sales and issuances of the company's ordinary shares or other securities might result in significant dilution and could cause the price of its ordinary shares to decline.
• The company's management will have broad discretion as to the use of the proceeds from the SEPA or any potential pre-paid advance.
• Political, economic, and military conditions in Israel may directly affect the company's business.
• The ongoing conflict between Israel and Hamas may disrupt the company's business and operations and adversely affect its ability to raise additional funds or sell its securities.

Future Outlook

The company intends to transform interaction and control of digital devices to be as natural and intuitive as real-life experiences and 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 is positioning its Mudra platform as a standard input interface for the Metaverse, aiming to transform interaction and control of digital devices to be as natural and intuitive as real-life experiences.

Comparison to Industry Standards

• The document does not contain specific comparisons to industry standards or comparable companies.
• The document mentions the company's vision to create a world in which the user's hand becomes a universal input device for touchlessly interacting with technology, which aligns with the broader trend of developing more intuitive and natural user interfaces in the tech industry.
• The document also mentions the company's expansion into neurotech and brain-computer interface sensors, which is a growing area of interest in the tech industry.

Stakeholder Impact

• Shareholders may experience dilution if the company issues and sells a substantial number of ordinary shares under the SEPA.
• The market price of the company's ordinary shares could be affected by sales of shares by the selling shareholder.
• The company's ability to execute its business plan and achieve its objectives will depend on its ability to secure funding and manage its operations effectively.

Next Steps

• The selling shareholder, YA II PN, LTD., may offer and sell the ordinary shares from time to time under the prospectus.
• The company may elect to sell ordinary shares to YA under the SEPA, subject to market conditions and other factors.
• The company intends to use any proceeds received under the SEPA for working capital and general corporate purposes.

Key Dates

Keywords

Wearable Devices Ltd., Standby Equity Purchase Agreement, SEPA, YA II PN, LTD., Ordinary Shares, Resale, Funding, Mudra Band, Wearable Technology, Israel