Wearable Devices Ltd. Announces Closing of $2.5 Million Public Offering

Rhea-AI Summary

Wearable Devices (WLDS) has completed a $2.5 million public offering with a single institutional investor. The offering included 345,000 ordinary shares, 2,155,000 pre-funded warrants, and warrants to purchase up to 2,500,000 ordinary shares at a combined price of $1.00 per share and accompanying warrant.

The warrants have an exercise price of $1.00 per share, are immediately exercisable, and expire in five years. Additionally, the company amended existing warrants previously issued to the same investor, reducing the exercise price from $2.50 to $1.00 per share for up to 822,000 ordinary shares. A.G.P./Alliance Global Partners served as the sole placement agent. The company plans to use the proceeds for working capital and general corporate purposes.

Positive

• Secured immediate funding of $2.5 million
• Potential additional capital through warrant exercises worth up to $2.5 million

Negative

• Significant dilution potential with 2.5 million new warrant shares
• Reduced warrant exercise price from $2.50 to $1.00 for existing warrants
• Low offering price of $1.00 per share indicates weak market position

Insights

Financial Analyst

This $2.5M capital raise reveals several critical insights about Wearable Devices' current position and future prospects. The offering's structure is particularly telling - combining ordinary shares, pre-funded warrants and standard warrants at a $1.00 price point signals significant pressure to secure funding, likely due to cash burn concerns.

The deal's mechanics warrant careful scrutiny. The heavy reliance on warrants (2,155,000 pre-funded and 2,500,000 standard warrants) versus only 345,000 ordinary shares suggests a complex negotiation to make the deal attractive to the institutional investor. The amendment of existing warrants from $2.50 to $1.00 represents a 60% reduction in exercise price, indicating substantial concessions to secure this financing.

The potential dilution impact is significant:

• Immediate dilution from the 345,000 new shares
• Near-term dilution from the 2,155,000 pre-funded warrants
• Future dilution potential of up to 2,500,000 additional shares from warrants
• Additional dilution risk from the 822,000 amended warrants

The single institutional investor structure suggests market interest, while the "reasonable best efforts" basis indicates challenges in securing more favorable terms. The relatively modest raise amount points to this being a bridge financing rather than a transformative capital injection, raising questions about future funding needs.

Yokneam Illit, Israel, Jan. 30, 2025 (GLOBE NEWSWIRE) -- Wearable Devices Ltd. (the “Company” or “Wearable Devices”) (Nasdaq: WLDS, WLDSW), an award-winning pioneer in artificial intelligence (“AI”)-based wearable gesture control technology, today announced the closing of its previously announced "reasonable best efforts" public offering with a single institutional investor for the purchase and sale of 345,000 ordinary shares, 2,155,000 pre-funded warrants, and warrants to purchase up to 2,500,000 ordinary shares, at a combined offering price of $1.00 per share and accompanying warrant (the “Offering”). The Company received aggregate gross proceeds of approximately $2.5 million, before deducting placement agent fees and other offering expenses and assuming no exercise of the warrants. The warrants have an exercise price of $1.00 per share, are exercisable immediately and expire five years from the issuance date.

The Company intends to use the net proceeds from the Offering for working capital and general corporate purposes.

A.G.P./Alliance Global Partners acted as the sole placement agent for the Offering.

In connection with the Offering, the Company also agreed to amend existing warrants that were previously issued to the investor participating in the Offering to purchase up to 822,000 ordinary shares of the Company, with an exercise price of $2.50 per share. Such existing warrants have been amended to reduce the exercise price to $1.00 per share and expire five years following the closing of the Offering.

The securities described above were offered pursuant to a registration statement on Form F-1, as amended (File No. 333-284023), previously filed with the Securities and Exchange Commission ("SEC"), which was declared effective on January 28, 2025. The Offering was made only by means of a prospectus forming part of the effective registration statement. Copies of the preliminary prospectus and the final prospectus relating to the Offering may be obtained on the SEC’s website located at http://www.sec.gov. Electronic copies of the final prospectus relating to the Offering may be obtained from A.G.P./Alliance Global Partners, 590 Madison Avenue, 28th Floor, New York, NY 10022, or by telephone at (212) 624-2060, or by email at prospectus@allianceg.com.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in this Offering, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

About Wearable Devices Ltd.

Wearable Devices Ltd. is a pioneering growth company revolutionizing human-computer interaction through its AI-powered neural input technology for both consumer and business markets. Leveraging proprietary sensors, software, and advanced AI algorithms, the Company’s innovative products, including the Mudra Band for iOS and Mudra Link for Android, enable seamless, touch-free interaction by transforming subtle finger and wrist movements into intuitive controls. These groundbreaking solutions enhance gaming, and the rapidly expanding AR/VR/XR landscapes. The Company offers a dual-channel business model: direct-to-consumer sales and enterprise licensing. Its flagship Mudra Band integrates functional and stylish design with cutting-edge AI to empower consumers, while its enterprise solutions provide businesses with the tools to deliver immersive and interactive experiences. By setting the input standard for the XR market, Wearable Devices is redefining user experiences and driving innovation in one of the fastest-growing tech sectors. Wearable Devices’ ordinary shares and warrants trade on the Nasdaq under the symbols “WLDS” and “WLDSW,” respectively.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be covered by the “safe harbor” created by those sections. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as “believe,” “expect,” “may,” “should,” “could,” “seek,” “intend,” “plan,” “goal,” “estimate,” “anticipate,” “will” or other comparable terms. For example, we are using forward-looking statements when we discuss the expected use of proceeds from this Offering. All statements other than statements of historical facts included in this press release regarding our strategies, prospects, financial condition, operations, costs, plans and objectives are forward-looking statements. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: the trading of our ordinary shares or warrants and the development of a liquid trading market; our ability to successfully market our products and services; the acceptance of our products and services by customers; our continued ability to pay operating costs and ability to meet demand for our products and services; the amount and nature of competition from other security and telecom products and services; the effects of changes in the cybersecurity and telecom markets; our ability to successfully develop new products and services; our success establishing and maintaining collaborative, strategic alliance agreements, licensing and supplier arrangements; our ability to comply with applicable regulations; and the other risks and uncertainties described in our annual report on Form 20-F for the year ended December 31, 2023, filed on March 15, 2024 and our other filings with the SEC, including the registration statement on Form F-1, as amended (File No. 333-284023). We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Investor Relations Contact

Michal Efraty
IR@wearabledevices.co.il

FAQ

How much did Wearable Devices (WLDS) raise in its January 2025 public offering?

Wearable Devices raised $2.5 million in gross proceeds through its January 2025 public offering.

What is the exercise price and expiration of WLDS warrants issued in January 2025?

The warrants have an exercise price of $1.00 per share and expire five years from the issuance date.

How many ordinary shares and warrants were included in WLDS's January 2025 offering?

The offering included 345,000 ordinary shares, 2,155,000 pre-funded warrants, and warrants to purchase up to 2,500,000 ordinary shares.

What was the amendment made to WLDS's existing warrants in January 2025?

Existing warrants for 822,000 ordinary shares had their exercise price reduced from $2.50 to $1.00 per share and expiration extended to five years.

How will WLDS use the proceeds from its January 2025 offering?

The company intends to use the net proceeds for working capital and general corporate purposes.