WORK Medical Technology Group LTD Announces Closing of Registered Offering

Rhea-AI Summary

WORK Medical Technology Group (Nasdaq: WOK) has successfully closed its registered offering of 10 million ordinary units at $0.50 per unit, raising gross proceeds of $5.0 million. Each unit includes one Class A ordinary share and two warrants (Series A and B) to purchase additional shares at $1.00 exercise price. Series A warrants expire in 12 months, while Series B warrants expire in 3 months.

The company plans to use the proceeds for upgrading production equipment, R&D investments, improving internal control systems, ensuring compliance with U.S. GAAP and Sarbanes-Oxley Act, and working capital. Univest Securities served as the sole book-running manager for this firm commitment offering.

Positive

• Secured $5.0 million in gross proceeds for business development
• Funds allocated for upgrading production equipment and R&D investments
• Investment in improving internal controls and U.S. GAAP compliance

Negative

• Significant dilution potential with 10 million new units issued
• Low offering price of $0.50 per unit suggests weak market position
• Short-term warrant expiration (3 months for Series B) may create selling pressure

Insights

Financial Analyst

WORK Medical secured $5M through equity offering, diluting shares while gaining capital for operations and compliance improvements.

WORK Medical has completed a $5 million registered offering by selling 10 million ordinary units at $0.50 per unit. Each unit includes one Class A ordinary share and two warrants that could potentially lead to significant dilution if exercised. These warrants have exercise prices of $1.00 each with relatively short expiration periods of 3 and 12 months.

The structure of this offering is particularly telling. The $0.50 unit price indicates the company needed to offer a substantial discount with additional warrant sweeteners to attract investors. This suggests possible cash flow challenges or difficulty securing traditional financing. The short-term nature of the warrants (3 and 12 months) creates near-term potential dilution if the share price exceeds $1.00, but also provides the company with a possible additional capital injection if exercised.

Looking at the use of proceeds, WORK Medical is allocating funds toward production equipment upgrades, R&D investments in China, strengthening internal controls, and improving compliance with U.S. financial regulations. The focus on improving systems for internal control and compliance with U.S. GAAP and Sarbanes-Oxley suggests potential deficiencies in these areas that require immediate attention.

While the capital raise provides needed operational runway, the company has essentially sold 10 million shares with the potential for 20 million more shares to be issued if all warrants are exercised. This represents substantial dilution for existing shareholders, though the actual impact depends on the company's total outstanding shares prior to the offering.

Hangzhou, China, May 22, 2025 (GLOBE NEWSWIRE) -- WORK Medical Technology Group LTD (Nasdaq: WOK) (“WORK Medical” or the “Company”), a supplier of medical devices in China, through its subsidiary, Work (Hangzhou) Medical Treatment Equipment Co., Ltd. and its subsidiaries in China, today announced the closing of a registered offering (the “Offering”) of 10,000,000 ordinary units (the “Ordinary Units”) at an offering price of $0.50 per Ordinary Unit.

Each Ordinary Unit consists of one Class A ordinary share, par value $0.0005 (a “Class A Ordinary Share”), one Series A warrant to purchase one Class A Ordinary Share at an exercise price of $1.00 (a “Series A Warrant”), and one Series B warrant to purchase one Class A Ordinary Share at an exercise price of $1.00 (a “Series B Warrant”). The Series A Warrants and Series B Warrants are immediately exercisable upon issuance, with the Series A Warrants expiring in 12 months, and Series B Warrants expiring in 3 months.

The Company received aggregate gross proceeds of US$5.0 million from the Offering, before deducting underwriting discounts and other related expenses.

Proceeds from the Offering will be used for upgrading production equipment and investing in the Company’s PRC subsidiaries’ research and development; hiring experienced employees to improve the systems of internal control and compliance with U.S. GAAP and the Sarbanes-Oxley Act of 2002; and working capital and general corporate purposes.

The Offering was conducted on a firm commitment basis. Univest Securities, LLC acted as the sole book-running manager for the Offering.

The securities described above were offered by the Company pursuant to a registration statement on Form F-1 (File No. 333-284006), as amended (the “Registration Statement”), previously filed with and declared effective by the U.S. Securities and Exchange Commission (the “SEC”). This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. The Offering was made only by means of a prospectus forming part of the effective Registration Statement. A final prospectus related to the Offering was filed with the SEC and is available on the SEC’s website at www.sec.gov. Electronic copies of the final prospectus may be obtained from Univest Securities, LLC at info@univest.us or by calling +1 (212) 343-8888.

About WORK Medical Technology Group LTD

WORK Medical Technology Group LTD, through its subsidiary, Work (Hangzhou) Medical Treatment Equipment Co., Ltd. and its subsidiaries in China, is a supplier of medical devices that develops and manufactures Class I and II medical devices and sells Class I and II disposable medical devices through operating subsidiaries in China. The Company has a diverse product portfolio comprising 21 products, including customized and multifunctional masks and other medical consumables. All the products have been sold in 34 provincial-level administrative regions in China, with 15 of them sold in more than 30 countries worldwide. The Company has received a number of quality-related manufacturing designations and has registered 17 products with the U.S. Food and Drug Administration allowing their products to enter the U.S. market. For more information, please visit the Company’s website: https://www.workmedtech.com/corporate.

Forward-Looking Statements

This press release contains forward-looking statements, including statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements may be identified by words such as “aims,” “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “plans,” “possible,” “potential,” “seeks,” “will,” and variations of these words or similar expressions that are intended to identify forward-looking statements. Any such statements in this press release that are not statements of historical fact may be deemed to be forward-looking statements.

Any forward-looking statements in this press release are based on the Company’s current expectations, estimates and projections only as of the date of this release and are subject to a number of risks and uncertainties that could cause actual results to differ materially and adversely from those set forth in or implied by such forward-looking statements. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results set forth in the Company’s annual report on Form 20-F for the fiscal year ended September 30, 2024, the Registration Statement and other documents filed by the Company with the SEC. The Company explicitly disclaims any obligation to update any forward-looking statements except to the extent required by law.

For more information, please contact:

WORK Medical Technology Group LTD

Investor Relations Department

Email: ir@workmedtech.com

Ascent Investor Relations LLC

Tina Xiao

Phone: +1 646-932-7242

Email: investors@ascent-ir.com

FAQ

What is the size and price of WORK Medical's (WOK) 2025 offering?

WORK Medical's offering consists of 10 million ordinary units priced at $0.50 per unit, raising total gross proceeds of $5.0 million.

What are the terms of WOK's warrant offering in May 2025?

Each unit includes two warrants: Series A warrants expire in 12 months and Series B warrants expire in 3 months, both with an exercise price of $1.00 per share.

How will WORK Medical (WOK) use the proceeds from its 2025 offering?

The proceeds will be used for upgrading production equipment, R&D investments, improving internal controls and U.S. GAAP compliance, and working capital purposes.

Who was the underwriter for WORK Medical's (WOK) May 2025 offering?

Univest Securities, LLC acted as the sole book-running manager for the offering on a firm commitment basis.