Wearable Devices .(WLDS) - 2023 Q4 - Annual Report

Full Year 2023 Financial Results and Corporate Update Corporate Update and CEO's Remarks In 2023, Wearable Devices focused on strategic capital allocation, leading to an increased net loss due to investments in sales, marketing, and R&D. Key achievements included the first shipment of the Mudra Band for Apple Watch and establishing significant B2B partnerships, such as with Qualcomm and a major defense contractor. The company is advancing both its B2B offerings with the Mudra Developer Kit (MDK) and its B2C product, the Mudra Band, and anticipates a transformative year in 2024 with a focus on increasing production and market presence - The net loss increased in 2023 due to strategic investments in sales & marketing and research & development to support innovation and business development[3] - The company successfully completed the delivery of its first manufacturing batch of the B2C Mudra Band for Apple Watch to preorder customers[3][5] - B2B partnerships are a key part of the growth strategy, highlighted by the launch of the Mudra Developer Kit (MDK) and collaboration agreements with Qualcomm and a leading global defense company[4] - The company is intently focused on increasing production capacity to meet the anticipated demand for the Mudra Band[5] 2023 and Recent Business Highlights Throughout 2023 and into early 2024, the company achieved significant operational milestones, including signing a collaboration with Qualcomm, launching the B2B Mudra Developer Kit (MDK), delivering the first batch of Mudra Bands, and expanding its U.S. presence with a Silicon Valley office, while also advancing its technology by filing a patent for pinch-to-zoom and introducing spatial depth control - Signed a collaboration agreement with Qualcomm to enhance XR experiences and received a purchase order for the MDK from a leading Japanese industrial automation company[9] - Successfully delivered the first manufacturing batch of the Mudra Band for Apple Watch[9] - Opened a new office in Silicon Valley to expand its U.S. presence and foster relationships in the tech market[9] - Filed a U.S. patent application for touchless pinch-to-zoom technology for AR/VR and introduced a new spatial depth control feature[9] Full Year 2023 Financial Highlights For the full year 2023, Wearable Devices experienced significant growth in operating expenses, with R&D costs rising 46% to $3.3 million and Sales & Marketing expenses increasing 47% to $2.0 million, leading to a wider net loss of $7.8 million from $6.5 million in 2022, ending the year with $4.9 million in cash and deposits and $1.0 million in inventory to support planned B2C business growth Full Year 2023 Key Financial Metrics | Metric | FY 2023 | FY 2022 | Change | | :--- | :--- | :--- | :--- | | Research and Development Expenses | $3.3 million | ~$2.3 million | +46% | | Sales and Marketing Expenses | $2.0 million | ~$1.4 million | +47% | | Net Loss | $(7.8 million) | $(6.5 million) | Increased Loss | | Net Loss per Diluted Share | $(0.48) | $(0.53) | - | | Cash and Deposits (at Dec 31, 2023) | $4.9 million | N/A | N/A | | Inventory (at Dec 31, 2023) | $1.0 million | N/A | N/A | Consolidated Financial Statements The consolidated financial statements for the year ended December 31, 2023, reflect a period of heavy investment, with total assets decreasing to $7.6 million from $11.2 million in 2022 due to a reduction in cash, a widened net loss of $7.8 million from $6.5 million in the prior year due to increased R&D and S&M spending, and an increased use of cash from operations at $8.4 million Consolidated Balance Sheets As of December 31, 2023, the company's total assets stood at $7.6 million, down from $11.2 million in 2022, primarily due to a significant decrease in cash and cash equivalents, while total liabilities increased to $2.1 million from $1.2 million, and inventory substantially increased to over $1.0 million from $6 thousand in 2022, reflecting the transition to production Consolidated Balance Sheet Data (in thousands USD) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Current Assets | $6,752 | $10,976 | | Cash and cash equivalents | $810 | $10,373 | | Inventories | $1,032 | $6 | | Total Assets | $7,592 | $11,224 | | Total Liabilities | $2,066 | $1,244 | | Total Shareholders' Equity | $5,526 | $9,980 | Consolidated Statements of Comprehensive Loss For the fiscal year 2023, the company generated revenues of $82 thousand and reported a net loss of $7.8 million, or ($0.48) per share, representing a larger loss compared to the $6.5 million net loss, or ($0.53) per share, in 2022, primarily driven by higher operating expenses, including a 46% rise in R&D and a 47% rise in sales and marketing costs Statement of Comprehensive Loss (in thousands USD, except per share amounts) | Account | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Revenues | $82 | $45 | $142 | | Research and development, net | $(3,316) | $(2,271) | $(1,411) | | Sales and marketing expenses, net | $(2,008) | $(1,370) | $(665) | | Operating Loss | $(8,186) | $(6,458) | $(2,669) | | Net Loss | $(7,814) | $(6,496) | $(2,614) | | Net loss per ordinary share, diluted | $(0.48) | $(0.53) | $(0.27) | Consolidated Statements of Cash Flows In 2023, net cash used in operating activities was $8.4 million, a significant increase from $5.7 million in 2022, while investing activities used $4.2 million primarily for bank deposits, and financing activities provided $3.1 million from share issuances and warrant exercises, resulting in a $9.6 million decrease in cash and cash equivalents, ending the year at $810 thousand Statement of Cash Flows Highlights (in thousands USD) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(8,434) | $(5,714) | | Net cash used in investing activities | $(4,248) | $(66) | | Net cash provided by financing activities | $3,119 | $14,879 | | Net (decrease) increase in cash | $(9,563) | $9,099 | | Cash and cash equivalents at end of year | $810 | $10,373 |