Wearable Devices Ltd 20-F for FY2022

Wearable Devices Ltd. (WLDS)

20-F 2023-03-22 For: 2022-12-31

Added on April 08, 2026

About this 20-F

Wearable Devices Ltd filed this 20-F on March 22, 2023, covering the fiscal year ended December 31, 2022 (FY2022).

Headline figures

Fiscal year ended December 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $45K; down 68.3% from $142K a year earlier
Net loss: $6.5M; compared with a net loss of $2.61M a year earlier
Diluted EPS: -$0.53; compared with -$0.27 a year earlier

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Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer	☒
		Emerging growth company	☒

		Page
INTRODUCTION		ii
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		iii

PART I

ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS.	1
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE.	1
ITEM 3.	KEY INFORMATION.	1
A.	[Reserved]	1
B.	Capitalization and Indebtedness.	1
C.	Reasons for the Offer and Use of Proceeds.	1
D.	Risk Factors.	1
	Summary Risk Factors	1
ITEM 4.	INFORMATION ON THE COMPANY.	35
A.	History and Development of the Company.	35
B.	Business Overview.	35
C.	Organizational Structure.	55
D.	Property, Plants and Equipment.	55
ITEM 4A.	UNRESOLVED STAFF COMMENTS.	55
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS.	55
A.	Operating Results.	56
B.	Liquidity and Capital Resources.	59
C.	Research and development, patents and licenses, etc.	64
D.	Trend information.	64
E.	Critical Accounting Estimates.	64
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.	66
A.	Directors and Senior Management.	66
B.	Compensation.	69
C.	Board Practices.	71
D.	Employees.	85
E.	Share Ownership.	85
ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.	86
A.	Major Shareholders.	86
B.	Related Party Transactions.	87
C.	Interests of Experts and Counsel.	89
ITEM 8.	FINANCIAL INFORMATION.	89
A.	Consolidated Statements and Other Financial Information.	89
B.	Significant Changes.	89
ITEM 9.	THE OFFER AND LISTING.	90
A.	Offer and Listing Details.	90
B.	Plan of Distribution.	90
C.	Markets.	90
D.	Selling Shareholders.	90
E.	Dilution.	90
F.	Expenses of the Issue.	90
ITEM 10.	ADDITIONAL INFORMATION.	90
A.	Share Capital.	90
B.	Memorandum and Articles of Association.	90
C.	Material Contracts.	91
D.	Exchange Controls.	91
E.	Taxation.	92
F.	Dividends and Paying Agents.	101
G.	Statement by Experts.	101
H.	Documents on Display.	101
I.	Subsidiary Information.	101
J.	Annual Report to Security Holders.	101
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	101
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.	102
A.	Debt Securities.	102
B.	Warrants and rights.	102
C.	Other Securities.	102
PART II

ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.	103
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS.	103
ITEM 15.	CONTROLS AND PROCEDURES.	103
ITEM 16.	[RESERVED]	104
ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT.	104
ITEM 16B.	CODE OF ETHICS.	104
ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES.	104
ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.	105
ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.	105
ITEM 16F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT.	105
ITEM 16G.	CORPORATE GOVERNANCE.	105
ITEM 16H.	MINE SAFETY DISCLOSURE.	107
ITEM 16I	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.	107

PART III

ITEM 17.	FINANCIAL STATEMENTS.	108
ITEM 18.	FINANCIAL STATEMENTS.	108
ITEM 19.	EXHIBITS.	108
SIGNATURES		109

	●	Surface Nerve Conductance, or SNC, becoming the industry standard input method for wearable computing and consumer electronics;

	●	our ability to maintain and expand our existing customer base;

	●	our ability to maintain and expand compatibility of our devices with a broad range of mobile devices and operating systems;

	●	our ability to maintain our business models;

	●	our ability to correctly predict the market growth;

	●	our ability to remediate material weaknesses in our internal control over financial reporting;

	●	our ability to retain our founders;

	●	our ability to maintain, protect, and enhance our intellectual property;

	●	our ability to raise capital through the issuance of additional securities;

	●	the impact of COVID-19 and resulting government actions on us;

	●	the impact of competition and new technologies;

	●	general market, political and economic conditions in the countries in which we operate;

	●	projected capital expenditures and liquidity;

	●	changes in our strategy;

	●	litigation; and

	●	other risks and uncertainties, including those factors referred to in “Item 3. Key Information – D. Risk Factors,” “Item 4. Information on the Company,” and “Item 5. Operating and Financial Review and Prospects”, as well as in this annual report on Form 20-F generally.

	●	There is no assurance that wrist SNC will be the dominant input method in the wearable computing and consumer electronics industry;

	●	If we are unable to successfully develop and timely introduce new products and services or enhance existing products and services, our business may be affected;

	●	If we are unable to develop and introduce new gesture input functions and improve existing functions in a cost-effective and timely manner, our business, results of operations and financial condition would be adversely affected;

	●	Our current and future products and services may experience quality problems from time to time that can result in adverse publicity, product recalls, litigation, regulatory proceedings, and warranty claims resulting in significant direct or indirect costs, decreased revenue and operating margin, and harm to our brand;

	●	The period of time from a license agreement to implementation of our technology is long and we are subject to the risks of cancellation or postponement of the contract or unsuccessful implementation;

	●	We rely on a limited number of suppliers, contract manufacturers, and logistics providers, and each of our products is manufactured by a single contract manufacturer;

	●	We are a growth company with limited operating history. We may never be able to effectuate our business plan or achieve sufficient revenue or reach profitability;

	●	We invest effort and money into seeking validation of our technology and products with B2B companies. There can be no assurance that we will enter into license agreements, which could adversely affect our future business, results of operations and financial condition.

	●	Our actual or perceived failure to comply with legal obligations with respect to personal information and customer data could harm our business.

	●	The market for wearable computing devices is still in the early stages of growth and if it does not continue to grow, grows more slowly than we expect, or fails to grow as large as we expect, our business and operating results would be harmed;

	●	If we do not compete effectively, our prospects, operating results, and financial condition could be adversely affected.

	●	We may need to raise additional capital required to grow our business. We may not be able to raise capital on terms acceptable to us or at all, and the sale of additional shares, equity or debt securities could result in additional dilution to our shareholders;

	●	If we have a going concern opinion in the future, as we did in 2021, this could materially limit our ability to raise additional funds, which could prevent us from obtaining new financing on reasonable terms or at all;

	●	Our operating results could be materially harmed if we are unable to accurately forecast consumer demand for our products and services and adequately manage our inventory.

	●	Our current officers and directors and holders of more than 5% of our Ordinary Shares currently beneficially own an aggregate of approximately 55.1% of our Ordinary Shares and are able to exert significant control over matters submitted to our shareholders for approval;

	●	Our Warrants, which are speculative in nature, are listed on Nasdaq separately and may provide investors with an arbitrage opportunity that could adversely affect the trading price of our Ordinary Shares;

	●	Certain warrant holders may be entitled to receive additional Ordinary Shares, to the extent we engage in future dilutive issuances;

	●	We do not know whether a market for the Ordinary Shares or Warrants will be sustained or what the trading price of the Ordinary Shares or Warrants will be. As a result it may be difficult for you to sell your securities;

	●	If we are unable to regain compliance with all applicable continued listing requirements and standards of Nasdaq, our Ordinary Shares could be delisted from Nasdaq.

	●	We may not be able to adequately protect or enforce our intellectual property rights. Our efforts to do so may be costly;

	●	If we are unable to protect our domain names, our brand, business, and operating results could be adversely affected;

	●	We may become subject to litigation brought by third parties claiming infringement by us of their intellectual property rights;

	●	Our use of “open source” software could negatively affect our ability to sell our products and subject us to possible litigation.

	●	Conditions in Israel affect our operations and may limit our ability to produce or sell our products and our ability to raise additional funds;

	●	We may be subject to the limitations resulting from our receipt of Israeli government grants for certain of our research and development activities, the terms of which may require us to pay royalties and to satisfy specified conditions;

	●	Provisions of Israeli law and our amended and restated articles of association may delay, prevent or otherwise impede a merger with, or an acquisition of, us, which could prevent a change of control, even when the terms of such a transaction are favorable to us and our shareholders.

	●	design new innovative, intuitive natural and accurate gestures to suit a large variety of wearable computing devices, operating system platforms and form factors, that differentiate our products from those of our competitors;

	●	integrate successfully the hardware and the software into consumer electronics companies’ products;

	●	respond effectively to technological changes or product announcements by our competitors; and

	●	adjust to changing market conditions and consumer preferences quickly and cost-effectively.

	●	inability to satisfy demand for our products;

	●	reduced control over delivery timing and product reliability;

	●	reduced ability to oversee the manufacturing process and components used in our products;

	●	reduced ability to monitor compliance with our product manufacturing specifications;

	●	reduced ability to develop comprehensive manufacturing specifications that take into account materials shortages, materials substitutions, and variance in the manufacturing capabilities of our third-party contract manufacturers;

	●	price increases;

	●	the failure of a key supplier, contract manufacturer, or logistics provider to perform its obligations to us for technical, market, or other reasons;

	●	difficulties in establishing additional contract manufacturing relationships if we experience difficulties with our existing contract manufacturers;

	●	shortages of materials or components;

	●	misappropriation of our intellectual property;

	●	exposure to natural catastrophes, political unrest, terrorism, labor disputes, and economic instability resulting in the disruption of trade from foreign countries in which our products are manufactured;

	●	changes in local economic conditions in countries where our suppliers, contract manufacturers, or logistics providers are located;

	●	the imposition of new laws and regulations, including those relating to labor conditions, quality and safety standards, imports, duties, taxes, and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds; and

	●	insufficient warranties and indemnities on components supplied to our contract manufacturers.

	●	the level of demand for our neural input devices and our ability to maintain or increase the size and engagement of our users;

	●	the demand and volume of our licensing agreements with third-party companies such as computer electronics manufacturers;

	●	the continued market acceptance of, and the growth of the market for, neural input technology for wearable computing devices;

	●	the timing and success of new product and service introductions by us or our competitors or any other change in the competitive landscape of our market;

	●	pricing pressure as a result of competition or otherwise;

	●	delays or disruptions in our supply, manufacturing, or distribution chain;

	●	errors in our forecasting of the demand for our products, which could lead to lower revenue or increased costs, or both;

	●	the mix of products sold in a reported period;

	●	seasonal buying patterns of consumers;

	●	increases in and timing of sales and marketing and other operating expenses that we may incur to grow and expand our operations and to remain competitive;

	●	insolvency, credit, or other difficulties confronting our suppliers, contract manufacturers, or logistics providers leading to disruptions in our supply or distribution chain;

	●	levels of product returns, stock rotation, and price protection rights;

	●	adverse litigation judgments, settlements, or other litigation-related costs;

	●	changes in the legislative or regulatory environment, such as with respect to privacy, information security, consumer product safety, and advertising;

	●	product recalls, regulatory proceedings, or other adverse publicity about our products;

	●	fluctuations in foreign exchange rates;

	●	costs related to the acquisition of businesses, talent, technologies, or intellectual property, including potentially significant amortization costs and possible write-downs; and

	●	the provisions of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requiring that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting;

	●	Section 107 of the JOBS Act, which provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. This means that an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are electing not to delay such adoption of new or revised accounting standards. Our election not to use this extended transition period for complying with new or revised accounting standards is irrevocable;

	●	exemption from compliance with any requirement that may be adopted by the Public Company Accounting Oversight Board with respect to mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., critical audit matters); and

	●	our ability to present only two years of audited financial statements and only two years of related disclosure in certain SEC filings.

	●	increased operating expenses and cash requirements;

	●	the assumption of additional indebtedness or contingent liabilities;

	●	the issuance of our equity securities;

	●	assimilation of operations, intellectual property and products of an acquired company, including difficulties associated with integrating new personnel;
	●	the diversion of our management’s attention from our existing product programs and initiatives in pursuing such a strategic merger or acquisition;

	●	retention of key employees, the loss of key personnel and uncertainties in our ability to maintain key business relationships;
	●	risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing products or product candidates and marketing approvals; and
	●	our inability to generate revenue from acquired technology and/or products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs.

	●	whether we achieve our anticipated corporate objectives;
	●	actual or anticipated fluctuations in our quarterly or annual operating results;
	●	changes in our financial or operational estimates or projections;
	●	our ability to implement our operational plans;
	●	termination of the lock-up agreement or other restrictions on the ability of our shareholders to sell shares;
	●	changes in the economic performance or market valuations of companies similar to ours; and
	●	general economic or political conditions in the United States or elsewhere.

	-	A proprietary sensor to capture neural signals. Our proprietary Mudra SNC sensor can be utilized to decipher signal patterns for gesture control as input for digital devices, and it can also be utilized to monitor and track the neural activity of the hand motor neurons for short and long-term diagnosis.
	-	Natural, intuitive operation using subtle finger movements. By making communication with computers much easier, we intend to empower users to interact with computers and work, enjoy entertainment, and live better. Our stylish, elegant devices have a small size and shape, and support natural, intuitive, and subtle finger movements and gestures.
	-	Human-centered design that optimizes user experience. Our products are designed around our customers’ user experience. Our large global network of consumers and business customers provides highly useful feedback and insights, which we use to constantly improve our products and the value we offer to our users.
	-	A large hand and finger gesture database. Through anonymized data from cloud-based calibrations and mobile apps, we are building a large database of finger and hand gestures. This will allow us to gain unparalleled insights on trends, behaviors, and usage.
	-	Flexible gestures and user-interaction choices. Our platform supports the development and implementation of a large variety of new gestures. We can tailor gestures for each use-case per user requests or our own internal insights. Defining the right gesture and binding it with the correct function is important for high adoption of our input solution for wearable computing, and for our platform solution to become ubiquitous in multiple digital devices.

	●	Handheld devices such as computer mice, presentation clickers, gaming controllers, and styluses.
	●	Touch based devices such as the touchpad or touchscreen.
	●	Keyboard technology devices or digital displays which contain alphanumeric symbols to input text and for navigation.
	●	Voice assistant devices and services which interpret human speech to digital commands and speech-to-text input.
	●	Gesture detection sensors such as gesture detection cameras, LiDar, Radar and additional optional technologies that sense the finger and hand movements.
	●	Wearable input devices such as smart gloves, wearable keyboards, wearable computer mice, smart rings, and smart wearable clickers.
	●	Neural interface devices that are based on capturing bio-potential signals and transforming signal patterns to input commands, in invasive implant and in non-invasive wearable methods.

	●	The “Metaverse” is widely considered to become the future of the internet. Instead of just viewing content - users will be in it, experiencing it all around. Users will remotely create and explore with other users as if they are present with them - socialize, work, play, learn, shop, and more. Accessible across multiple computing platforms such as VR, AR, mobile devices and computers, the Metaverse will offer rich immersive experiences and reach content. Already termed as “the next computing platform,” it is becoming the major catalyst to adopting wearable computing. We believe that our technology is setting the standard input interface for the Metaverse.
	●	Wearable computing is reshaping business processes and consumer entertainment patterns: The use of wearable technology makes it easier for frontline and assembly line workers to operate more efficiently and provide better service. It boosts labor efficiency, reduces quality defects and revisions, and improves safety. Wearable consumer products are already an integral part of consumers’ lives. Wearables like the Fitbit and Apple watch monitor health and fitness metrics, are used as alarm clocks in the morning as a wrist band vibrates, and provide vast amounts of information quickly and efficiently, as well as virtual entertainment.
	●	The human wrist is a highly valuable tool for sensing the human body: Nerve bundles and arteries pass directly beneath the skin making it possible to sense the electrical conductance of nerves and other bodily functions and to collect valuable data. Today, physical tools are being replaced with digital accessories such as wristbands and smartwatches. These devices measure wrist movement, heartbeat, electroencephalography, rhythm, skin temperature, hydration, and blood oxygen. Recent advancements in sensors and signal processing combined with artificial intelligence algorithms have enabled the emergence of wrist-based wearable neural input technology, thus opening a wide range of applications in HCI and bio-potential signals monitoring.
	●	Wearable computer devices are expanding now and are expected to continue to expand in the foreseeable future: According to an article “Wearable Technology Market to Hit $186.14 Billion by 2030: Grand View Research, Inc.” published in November 2022 by Grand View Research, Inc., the global wearable technology market size is expected to reach $186.14 billion by 2030, growing at a CAGR of 14.9% over the forecast period 2020-2030. Wearable technology is gaining importance among consumers owing to its diverse applications in the industrial sector, healthcare, and consumer electronics, among others.
	●	Neurotech market and brain-computer interfaces are gaining traction: The neurotech industry is based on connecting human brains to computers, so that brain-computer interfaces open up a new area of economic enterprise. Brain-computer interfaces and neural inputs are starting to move beyond the confines of academia and toward industry and the consumer market. The market segments include invasive, non-invasive, and partially invasive devices. The Market Research Future Group predicts in its report “Brain Computer Interface Market Research Report,” published in January 2023, that the brain-computer interface market industry is projected to grow from $1,912.2 million in 2022 to $6,045.2 million by 2030, exhibiting a CAGR of 15.5% during the forecast period.

	●	Offer a touchless input operation method feature for the smartwatch;
	●	Diversify their product line offering by introducing new hardware products, software applications, and user service;
	●	Integrate touchless interaction into existing applications;
	●	Enable developers to introduce exciting new applications in entertainment, gaming, fitness, digital health, using a gesture-based watch OS; and
	●	Increase eco-system products connectivity by controlling multiple connected devices from the watch, using gestures.

	●	Turn the phone to a content-hub by streaming video, music, games and applications to larger screens, and input provided using a mudra wristband;
	●	Establish a strong products eco-system integration, where connected devices work together and are controlled using a common interface;
	●	Create an additional input method for mobile phones, with interactions beyond the touchscreen; and
	●	Increase their market differentiation and add revenue streams by providing additional value to their phone users by providing ambient computing features.

	●	Manufacture a stylish, light weight, and smaller form factor pair of glasses, by removing the gesture recognition hardware from the device;
	●	Reduce research and development costs related to the development of hardware and software for the gesture camera;
	●	Increase device battery life by eliminating central processing units and sensor gesture recognition related power consumption;
	●	Offer a natural and intuitive interaction experience which does not block real-world view and is discrete and socially acceptable; and
	●	Provide an input solution that works well indoors and outdoors, is not dependent on a line of sight or limited by field of view, not affected by ambient light conditions, and is robust to environmental conditions.

	●	Diversify after-market input solutions, alongside existing controllers and input methods;
	●	Support multiple additional natural and exciting interactions with video games, where the user can use the hands to grab, hold and manipulate digital objects;
	●	Enrich digital content by turning daily simple physical objects to smart digital peripherals, for example, turn any pencil into a stylus to capture and input digital data such as handwriting;
	●	Reduce the user’s loss of proprioception (kinesthesia) by using natural hand and finger movements where the finger is not clenched around handheld controllers; and
	●	Reduce costs by integrating hand and finger tracking without developing expensive sensor hardware and the accompanying software and algorithms.

	○	Push-Pull strategy all along the value chain and creating a blue ocean business environment. We have strong relationships with consumer electronics companies, and we also communicate directly with consumers. Thus, we gain meaningful insights on the market and consumer needs, and constantly improve our products along the value chain. We aim towards a “blue ocean” strategy, where we do not compete with established market solutions, but rather we create a whole new arena where multiple input methods can co-exist together to provide the best user experience for the consumer.

	○	We seek to work with multiple consumer electronics companies and consumer electronics brands. We seek to integrate elements of our Mudra technology – sensors, electronics, software, and user experience - with multiple consumer electronics manufacturers and companies. We believe in our Push-Pull strategy approach of working directly with consumers to validate demand and we are working with companies to customize our technology integrated into their specific needs. Because we provide the hardware specification and the actual software and user-experience, each company can tailor our technology to fit its own wrist-worn device or watch band, form factor, appearance and style, material, user experience and gesture set. We have a very strong track record of connecting with global leading companies and our positioning leverages us to familiarize ourselves with their needs, requirements, limitations, and use-cases; thus, we can tailor the right product specification and user-experience.

	○	Advanced, purpose-built hardware and software technologies. Our devices leverage industry-standard technologies, such as Bluetooth low energy, as well as proprietary technologies, such as our SNC sensors, and our algorithms that more accurately track and decipher user intent and action. Our technology layers are interdependent and are optimized to the wrist area from the start, focusing first on device style, form factor, gestures, and user experience. Thus, we’ve created a significant moat – a key advantage that sets us apart from our competitors. There is a very high interdependency between each layer to adjacent layers, and developing similar solutions requires expertise in each individual layer. New entrants that move from the forearm or the wrist back to the inner wrist area will need to develop all these layers, reduce the number of sensors to fit the wrist area size, re-design device form factor and electronics, collect and train algorithms using new biopotential signals patterns, re-design their data communication protocol, and define the gestures and user interaction, as if they are developing a new device altogether.

	○	Broad mobile, API, and algorithms compatibility. Our broad mobile compatibility means our users will be able to sync their Mudra devices with multiple mobile phone models, including iOS, Android, and Windows products. Our API allows access and exploration of our Mudra technology to various industry sectors in consumer electronics, industry, IT and software solutions, academia, and software development. Our cross-platform software engine supports real-time signal processing and supports cross-platform algorithms mitigation on multiple operating systems. This allows us to activate our software on low compute power wearables and digital devices, and to mitigate algorithms across platforms without the need to re-write the algorithms for each operating system.

	○	Agile go-to-market strategy for consumer products. We are launching our products after communicating product benefits, receiving meaningful and valuable feedback from our users and then implementing the feedback into the design phase, while generating demand to the product before it has been manufactured. This strategy ensures that we only produce and market products that are suitable to the market and to customers’ demand.

	○	First mover advantage. We are in the final phases of serial production of the world’s first consumer wrist neural controller. This enables us to gain a competitive advantage by being the first to market with a neural input device. This supports us to establish strong brand recognition and customer loyalty before other competitors enter the market. This advantage also allows us additional time to perfect the product, define our interactions and gestures as industry standard, and set pricing points. We plan to establish sufficient market share and a solid customer base to maintain a majority of market share.

	●	Integrate our Mudra technology into existing devices. We intend to leverage our strong relationships with multiple consumer electronics companies and brands to sign software and hardware licenses and royalty contracts to make ourselves a fundamental input component for all digital devices and platforms. We also believe our superior software and hardware integration ability to work with companies will enable us to sign agreements with leading global and smaller companies for consumer devices and industry use-cases.

	●	Further penetrate the additional markets. We intend to increase our focus on building relationships with corporations in Industry 4.0, wellness and digital health, and sports analytics. Our main advantage is the ability to continuously and securely track the user’s engagement over lengthened periods of times and supply meaningful insights for employee performance and safety and the user’s physiology.

	●	Expand brand awareness, global distribution and drive sales of our products and services. We intend to increase our marketing efforts to further expand global awareness of our brand and drive greater sales of our products and services. The international markets represent a significant growth opportunity for us, and we intend to expand sales of our products and services globally through select retailers and strategic partnerships.

	●	Data monetization. Once we have a sufficiently large database, we intend to monetize data derived from a combination of gestures that authenticates a user, identification of patterns of daily behavior, and monitoring of metrics and identification. This will expand our offerings related to data and user behavior, which can open multiple new markets and opportunities.

	Year Ended December 31,
U.S. dollars in thousands	2022			2021
Revenues	$	45		$	142
Cost of materials	$	(10	)	$	(10	)
Research and development expenses, 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	)
Finance (expense) income, net	$	(38	)	$	55
Comprehensive and net loss	$	(6,496	)	$	(2,614	)

	●	the progress and costs of our research and development activities;

	●	the costs of manufacturing our products;

	●	the time that we will be able to generate significant revenues;

	●	the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights;

	●	the potential costs of contracting with third parties to provide marketing and distribution services for us or for building such capacities internally; and

	●	the magnitude of our general and administrative expenses.

	For the Year Ended December 31,
U.S. dollars	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 (decrease) in cash and cash equivalents	$	9,099		$	799

	●	the amount allocated to the delivered items is recognized upon delivery,

	●	the amount allocated to API is recognized over the API period, and

	●	the amount allocated to the technical support is recognized over the service period (pilot period).

Name	Age	Position	Class
Asher Dahan	44	Chief Executive Officer, Chairman of the Board of Directors	Class III⁽⁶⁾

Alon Mualem	55	Chief Financial Officer	N/A

Tamar Fleisher	42	Chief Operating Officer	N/A

Guy Wagner	45	Chief Scientific Officer, President and Director	Class III⁽⁶⁾

Leeor Langer	41	Chief Technology Officer	N/A

Shmuel Barel	47	Chief Marketing Officer	N/A

Offir Remez	52	Executive Vice President of Business Development	N/A

Eli Bachar^(1)(2)(3)	39	Director	Class II⁽⁵⁾

Barry Kaplan	49	Executive Vice President of the U.S. Operations	N/A

Yaacov Goldman^(1)(2)(3)	67	Independent Director	Class II⁽⁵⁾

Ilana Lurie^(1)(2)(3)	48	Independent Director	Class I⁽⁴⁾

(1)	Member of the Compensation Committee

(2)	Member of the Audit Committee and Financial Statement Examination Committee

(3)	Independent Director (as defined under Nasdaq Stock Market rules)

(4)	Class I directors shall hold office until the annual general meeting to be held in 2023 and until their successors shall have been elected and qualified.

(5)	Class II directors shall hold office until the annual general meeting to be held in 2024 and until their successors shall have been elected and qualified.

(6)	Class III directors shall hold office until the annual general meeting to be held in 2025 and until their successors shall have been elected and qualified.

		Salary, bonuses and Related Benefits				Pension, Retirement and Other Similar Benefits				Share Based Compensation⁽¹⁾
All directors and senior management as a group, consisting of 10 persons as of December 31, 2022		$	1,940,500			$	285,483			$	574,818

Executive Officer	Salary and Related Benefits⁽¹⁾⁽³⁾		Bonus Payments, Benefits and Perquisites⁽³⁾		Share-Based Compensation ⁽²⁾		Total⁽³⁾

Asher Dahan	$	208,049	$	125,015	$	-	$	333,064

Guy Wagner	$	206,381	$	125,015	$	-	$	331,396

Leeor Langer	$	203,934	$	125,015	$	-	$	328,949

Alon Mualem	$	256,866	$	160,733	$	189,824	$	607,424

Offir Remez	$	185,554	$	89,296	$	306,868	$	581,718

(1)	Represents the directors’ and senior management’s gross salary plus payment of mandatory social benefits made by the company on behalf of such persons. Such benefits may include, to the extent applicable to the executive, payments, contributions and/or allocations for savings funds, education funds (referred to in Hebrew as “Keren Hishtalmut”), pension, severance, risk insurances (e.g., life or work disability insurance) and payments for social security.

(2)	Computed based on Black-Scholes option pricing model.

(3)	Cash compensation amounts denominated in NIS were converted into U.S. dollars at the rate of NIS 3.36 per $1.00 (the average exchange rate in 2022).

	●	determining whether there are deficiencies in the business management practices of our company, and making recommendations to the board of directors to improve such practices;

	●	determining whether to approve certain related party transactions (including transactions in which an office holder has a personal interest and whether such transaction is extraordinary or material under Companies Law) and establishing the approval process for certain transactions with a controlling shareholder or in which a controlling shareholder has a personal interest (see “Item 6.C. Board Practices—Approval of Related Party Transactions under Israeli law”);

	●	determining the approval process for transactions that are “non-negligible” (i.e., transactions with a controlling shareholder that are classified by the audit committee as non-negligible, even though they are not deemed extraordinary transactions), as well as determining which types of transactions would require the approval of the audit committee, optionally based on criteria which may be determined annually in advance by the audit committee;

	●	examining our internal controls and internal auditor’s performance, including whether the internal auditor has sufficient resources and tools to dispose of its responsibilities;

	●	examining the scope of our auditor’s work and compensation and submitting a recommendation with respect thereto to our board of directors or shareholders, depending on which of them is considering the appointment of our auditor;

	●	establishing procedures for the handling of employees’ complaints as to deficiencies in the management of our business and the protection to be provided to such employees; and

	●	where the board of directors approves the working plan of the internal auditor, examining such working plan before its submission to the board of directors and proposing amendments thereto.