Wearable Devices .(WLDS) - 2023 Q2 - Quarterly Report

Financial Statements This section presents the interim condensed consolidated financial statements and their accompanying notes for Wearable Devices Ltd Interim Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2023, reflects a decrease in total assets and shareholders' equity, primarily due to reduced cash and accumulated losses, alongside an increase in total liabilities Consolidated Balance Sheet Summary (in thousands USD) | Account | June 30, 2023 | December 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Assets | | | | | Cash and cash equivalents | $5,954 | $10,373 | ($4,419) | | Total Current Assets | $8,689 | $10,976 | ($2,287) | | Total Assets | $9,369 | $11,224 | ($1,855) | | Liabilities & Equity | | | | | Total Current Liabilities | $1,526 | $1,150 | $376 | | Total Liabilities | $1,728 | $1,244 | $484 | | Accumulated losses | ($17,305) | ($13,409) | ($3,896) | | Total Shareholders' Equity | $7,641 | $9,980 | ($2,339) | | Total Liabilities and Equity | $9,369 | $11,224 | ($1,855) | Interim Condensed Consolidated Statements of Comprehensive Loss For the six months ended June 30, 2023, the company reported a net loss of $3.90 million, significantly higher than the $2.05 million loss in the prior year, driven by decreased revenues and increased operating expenses Statement of Comprehensive Loss Summary (in thousands USD, except per share data) | Metric | Six months ended June 30, 2023 | Six months ended June 30, 2022 | | :--- | :--- | :--- | | Revenues | $12 | $28 | | Research and development, net | ($1,560) | ($944) | | Sales and marketing expenses | ($1,050) | ($471) | | General and administrative expenses | ($1,453) | ($587) | | Operating Loss | ($4,054) | ($2,053) | | Comprehensive and Net Loss | ($3,896) | ($2,051) | | Net loss per ordinary share | ($0.26) | ($0.18) | Interim Condensed Consolidated Statements of Changes in Shareholders' Equity (Deficit) Shareholders' equity decreased to $7.64 million by June 30, 2023, from $9.98 million at year-end 2022, primarily due to a comprehensive loss, partially offset by option exercises and share-based compensation - Total shareholders' equity decreased by $2.34 million during the first six months of 2023[10] Changes in Shareholders' Equity (in thousands USD) | Description | Amount | | :--- | :--- | | Balance as of Dec 31, 2022 | $9,980 | | Exercise of options | $1,448 | | Share based compensation | $109 | | Comprehensive loss | ($3,896) | | Balance as of June 30, 2023 | $7,641 | Interim Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2023, the company experienced a net decrease in cash of $4.42 million, driven by significant cash usage in operating and investing activities, partially offset by financing inflows Cash Flow Summary (in thousands USD) | Category | Six months ended June 30, 2023 | Six months ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($3,719) | ($1,439) | | Net cash used in investing activities | ($2,148) | ($15) | | Net cash provided by financing activities | $1,448 | $500 | | Net Decrease in Cash | ($4,419) | ($954) | | Cash at beginning of period | $10,373 | $1,274 | | Cash at end of period | $5,954 | $320 | Notes to the Interim Condensed Consolidated Financial Statements These notes provide essential context on the company's business, accounting policies, and significant events, including its going concern status, related-party transactions, equity changes, and recent operational developments NOTE 1 – GENERAL This note outlines Wearable Devices Ltd.'s business as a developer of human-machine interface solutions and highlights substantial doubt about its going concern ability due to accumulated losses and funding dependency - The company is in the development stage, focusing on human-machine interface solutions for the smart wearables industry[13] - The company's dependency on external funding and its accumulated losses of $17.3 million raise substantial doubt about its ability to continue as a going concern[14][17] NOTE 2 – BASIS FOR PREPARATION These unaudited interim financial statements are prepared in accordance with U.S. GAAP for interim reporting, with no significant changes to accounting policies during the period - Financial statements are prepared according to U.S. GAAP for interim reporting and do not include all disclosures required for complete annual statements[15] NOTE 3 – RELATED PARTIES Employment expenses for the company's co-founders significantly increased to $174 thousand for the first half of 2023, up from $71 thousand in the prior year period - Employment expenses for the three co-founders totaled $174 thousand for the first six months of 2023, compared to $71 thousand for the same period in 2022[18] NOTE 4 – EQUITY This note details the company's equity structure, including warrant exercises, outstanding options, and new option grants to employees and consultants during the reporting period - In June 2023, 724,139 warrants were exercised, generating proceeds at an exercise price of $2.00 per share[21] - As of June 30, 2023, 1,053,264 options were outstanding for employees under the 2015 Share Option Plan[24] - In the first half of 2023, the company granted 65,000 options to new employees and 100,000 options to a consultant[24][25][26] NOTE 5 – SIGNIFICANT EVENTS IN THE REPORTING PERIOD Significant events include a new lease agreement, a development program with the Israeli Innovation Authority for approximately $900 thousand, and regaining Nasdaq minimum bid price compliance - The Israeli Innovation Authority approved a program to finance 60% of a ~$900 thousand project for the company's manufacturing process development[29] - On June 9, 2023, the company regained compliance with the Nasdaq minimum bid price requirement[29] NOTE 6 – SUBSEQUENT EVENTS Subsequent events include the Board's approval on August 23, 2023, to grant 406,500 new options and increase the shares available under the 2015 Share Option Plan by 931,139 - On August 23, 2023, the Board approved granting 406,500 new options at an exercise price of $1.32 per share[29] - The Board increased the number of shares available for grant under the 2015 Share Option Plan by 931,139[29]