Wearable Devices .(WLDS) - 2022 Q4 - Annual Report

2022 Financial Results and Business Update Wearable Devices reported a wider net loss in 2022, driven by strategic investments and IPO expenses, while significantly strengthening its cash position and advancing neural interface technology Financial Performance Wearable Devices' 2022 financial performance saw a widened net loss to $6.5 million from $2.6 million in 2021, driven by increased operating expenses and IPO costs, despite a substantial increase in cash to $10.4 million from IPO proceeds Key Financial Metrics (in thousands USD, except per share data) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Revenues | $45 | $142 | | Net Loss | $(6,496) | $(2,614) | | Net Loss Per Share (diluted) | $(0.53) | $(0.27) | | Cash Balance (Year-End) | $10,400 | $1,300 | Statement of Comprehensive Loss The company's net loss significantly widened to $6.5 million in 2022, primarily due to increased operating expenses across R&D, sales, and general administration, alongside one-time IPO costs, while revenues declined Consolidated Statements of Comprehensive Loss (in thousands USD) | Account | 2022 | 2021 | | :--- | :--- | :--- | | Revenues | $45 | $142 | | Research and development, net | $(2,271) | $(1,411) | | Sales and marketing expenses, net | $(1,370) | $(665) | | General and administrative expenses | $(1,948) | $(628) | | Initial public offering expenses | $(904) | $(97) | | OPERATING LOSS | $(6,458) | $(2,669) | | COMPREHENSIVE AND NET LOSS | $(6,496) | $(2,614) | Balance Sheet As of December 31, 2022, the company's balance sheet significantly strengthened post-IPO, with total assets growing to $11.2 million and cash to $10.4 million, substantially increasing shareholders' equity to $10.0 million Consolidated Balance Sheet Highlights (in thousands USD) | Account | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $10,373 | $1,274 | | TOTAL ASSETS | $11,224 | $1,445 | | TOTAL LIABILITIES | $1,244 | $638 | | TOTAL SHAREHOLDERS' EQUITY | $9,980 | $807 | Statement of Cash Flows In 2022, increased cash usage in operations was significantly offset by $14.9 million in net cash from financing activities, primarily from $14.3 million in IPO proceeds, resulting in a $9.1 million net cash increase Consolidated Cash Flow Highlights (in thousands USD) | Cash Flow Source | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(5,714) | $(2,103) | | Net cash used in investing activities | $(66) | $(36) | | Net cash provided by financing activities | $14,879 | $2,938 | | Net increase in cash | $9,099 | $799 | - The primary source of financing cash flow in 2022 was the $14.3 million net proceeds from the issuance of ordinary shares and warrants in connection with the initial public offering[12] Business and Operational Highlights The company is strategically investing in neural interface technology for AI and Metaverse markets, pursuing a dual B2B and B2C strategy with early traction for 'Mudra Inspire' and 'Mudra Band', and securing key post-year-end partnerships and grants - The company's vision is to make the user's hand a universal input device for touchless interaction, targeting the AI and Metaverse markets[5][7] - The CEO stated that the increased net loss is a result of strategic investments in R&D to refine technology, with the expectation of driving future shareholder returns[5] - The CEO believes 2023 is positioned to be a transformative year for the company as it continues to showcase its technology and bring products to market[5] Business-to-Business (B2B) Operations The company's B2B strategy, centered on the 'Mudra Inspire' development kit, has gained early traction with over 100 companies across diverse sectors, indicating a broad addressable market - The 'Mudra Inspire' development kit has been purchased by over 100 companies, indicating strong initial interest in the B2B market[5] - Customers for the development kit span a wide range of industries, including consumer electronics manufacturers, IT services, software development, industrial companies, and utility providers[5] Business-to-Consumer (B2C) Operations The B2C focus is the 'Mudra Band' for Apple Watch, which has garnered considerable interest through robust preorder activity and recently introduced the 'Mudra Air-Touch' AI feature for seamless device control - The 'Mudra Band' for the Apple Watch is the company's flagship B2C product, showing considerable interest through robust preorder activity[5] - A new feature, 'Mudra Air-Touch', has been introduced to allow users to toggle and switch between connected Apple devices, enhancing the user experience[5] Financing Activities and Subsequent Events In September 2022, the company closed its IPO, raising approximately $16 million in gross proceeds, and subsequently secured a strategic partnership with a Fortune 500 company and a $900,000 grant for manufacturing advancement - In September 2022, the company closed its IPO, raising gross proceeds of approximately $16 million before expenses[5] - Post year-end, the company entered a strategic partnership with a Fortune 500 communications equipment company to embed Mudra technology into the partner's chipset[6] - Received a $900,000 grant from the Israel Innovation Authority to finance further development of the 'Mudra Band' manufacturing process[6]