UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED September 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER: 001-40254

MOVANO INC.

(Exact name of registrant as specified in its charter)

Delaware		26-0579295
(State of incorporation)		(I.R.S. Employer Identification No.)

6800 Koll Center Parkway, Pleasanton, CA 94566

(Address of principal executive office) (Zip code)

(415) 651-3172

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		MOVE		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 11, 2021, there were 32,772,060 shares of our common stock, par value $0.0001 per share, outstanding.

MOVANO INC.

FORM 10-Q

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021

INDEX

	PAGE
PART I - FINANCIAL INFORMATION	1

Item 1. Financial Statements	1

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3. Quantitative and Qualitative Disclosure About Market Risk	31

Item 4. Controls and Procedures	32

PART II – OTHER INFORMATION	33

Item 1. Legal Proceedings	33

Item 1A. Risk Factors	33

Item 2. Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities	53

Item 3. Defaults Upon Senior Securities	53

Item 4. Mine Safety Disclosures	53

Item 5. Other Information	53

Item 6. Exhibits	54

SIGNATURES	55

EXHIBIT INDEX

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Movano Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(Unaudited)

	September 30,			December 31,
	2021			2020
ASSETS
Current assets:
Cash and cash equivalents	$	17,133		$	5,710
Short-term investments		22,169			—
Payroll tax credit, current portion		546			500
Prepaid expenses and other current assets		1,166			691
Total current assets		41,014			6,901
Property and equipment, net		500			38
Payroll tax credit, noncurrent portion		—			134
Other assets		57			10
Total assets	$	41,571		$	7,083

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	502		$	246
Paycheck Protection Program loan, current portion		—			248
Other current liabilities		2,288			666
Total current liabilities		2,790			1,160
Noncurrent liabilities:
Convertible promissory notes, net		—			11,342
Accrued interest		—			292
Paycheck Protection Program loan, noncurrent portion		—			103
Warrant liability		—			1,549
Derivative liability		—			121
Early exercised stock option liability		335			417
Other noncurrent liabilities		64			161
Total noncurrent liabilities		399			13,985
Total liabilities		3,189			15,145

Commitments and contingencies (Note 13)

Series A redeemable convertible preferred stock, $0.0001 par value, no and 2,692,253 shares authorized at September 30, 2021 and December 31, 2020; no and 2,692,253 shares issued and outstanding at September 30, 2021 and December 31, 2020; liquidation preference of $0 and $15,170 at September 30, 2021 and December 31, 2020		—			13,856

Series B redeemable convertible preferred stock, $0.0001 par value, no and 5,238,095 shares authorized at September 30, 2021 and December 31, 2020; no and 4,942,319 shares issued and outstanding at September 30, 2021 and December 31, 2020; liquidation preference of $0 and $21,858 at September 30, 2021 and December 31, 2020		—			18,962

Stockholders' equity (deficit):
Preferred stock, $0.0001 par value, 5,000,000 and no shares authorized at September 30, 2021 and December 31, 2020; no shares issued and outstanding at September 30, 2021 and December 31, 2020		—			—
Common stock, $0.0001 par value, 75,000,000 and 22,069,652 shares authorized at September 30, 2021 and December 31, 2020; 32,772,060 and 6,393,069 shares issued and outstanding at September 30, 2021 and December 31, 2020		3			1
Additional paid-in capital		96,845			—
Accumulated other comprehensive loss		(3	)		—
Accumulated deficit		(58,463	)		(40,881	)
Total stockholders' equity (deficit)		38,382			(40,880	)
Total liabilities, redeemable convertible preferred stock, and stockholders' equity (deficit)	$	41,571		$	7,083

See accompanying notes to condensed consolidated financial statements.

Movano Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share data)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
OPERATING EXPENSES:
Research and development	$	3,803		$	2,637		$	8,928		$	6,460
General and administrative		1,376			546			4,563			1,477
Total operating expenses		5,179			3,183			13,491			7,937

Loss from operations		(5,179	)		(3,183	)		(13,491	)		(7,937	)

Other income (expense), net:
Interest expense		—			(377	)		(883	)		(552	)
Change in fair value of warrant liability		—			(1	)		(1,581	)		8
Change in fair value of derivative liability		—			219			121			354
Forgiveness of Paycheck Protection Program Loan		—			—			351			—
Interest and other income, net		6			1			15			22
Other income (expense), net		6			(158	)		(1,977	)		(168	)

Net loss		(5,173	)		(3,341	)		(15,468	)		(8,105	)

Accretion and dividends on redeemable convertible preferred stock		—			(2,322	)		(2,489	)		(6,396	)
Net loss attributable to common stockholders	$	(5,173	)	$	(5,663	)	$	(17,957	)	$	(14,501	)

Net loss	$	(5,173	)	$	(3,341	)	$	(15,468	)	$	(8,105	)
Other comprehensive loss:
Change in unrealized loss on available-for-sale securities		(2	)		—			(3	)		—
Total comprehensive loss	$	(5,175	)	$	(3,341	)	$	(15,471	)	$	(8,105	)

Net loss per share attributable to common stockholders, basic and diluted	$	(0.16	)	$	(1.87	)	$	(0.74	)	$	(5.22	)

Weighted average shares used in computing net loss per share attributable to common stockholders, basic and diluted		32,268,890			3,029,765			24,200,475			2,777,510

See accompanying notes to condensed consolidated financial statements.

Movano Inc.

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands, except share data)

(Unaudited)

	Redeemable Convertible																			Accumulated
	Preferred Stock																Additional			Other						Total
	Series A						Series B						Common Stock				Paid-In			Comprehensive			Accumulated			Stockholders'
Three Months Ended September 30, 2021	Shares			Amount			Shares			Amount			Shares		Amount		Capital			Loss			Deficit			Equity (Deficit)
Balance at June 30, 2021		—		$	—			—		$	—			32,772,060	$	3	$	96,258		$	(1	)	$	(53,290	)	$	42,970
Stock-based compensation		—			—			—			—			—		—		552			—			—			552
Vesting of early exercised stock options		—			—			—			—			—		—		35			—			—			35
Other comprehensive loss		—			—			—			—			—		—		—			(2	)		—			(2	)
Net loss		—			—			—			—			—		—		—			—			(5,173	)		(5,173	)
Balance at September 30, 2021		—		$	—			—		$	—			32,772,060	$	3	$	96,845		$	(3	)	$	(58,463	)	$	38,382

	Redeemable Convertible																			Accumulated
	Preferred Stock																Additional			Other						Total
	Series A						Series B						Common Stock				Paid-In			Comprehensive			Accumulated			Stockholders'
Nine Months Ended September 30, 2021	Shares			Amount			Shares			Amount			Shares		Amount		Capital			Loss			Deficit			Equity (Deficit)
Balance at December 31, 2020		2,692,253		$	13,856			4,942,319		$	18,962			6,393,069	$	1	$	—		$	—		$	(40,881	)	$	(40,880	)
Stock-based compensation		—			—			—			—			—		—		1,247			—			—			1,247
Accretion of Series A and Series B redeemable convertible preferred stock		—			686			—			1,803			—		—		(2,489	)		—			—			(2,489	)
Issuance of common stock upon exercise of options		—			—			—			—			134,541		—		49			—			—			49
Vesting of early exercised stock options		—			—			—			—							109			—			—			109
Reclassification of negative additional paid-in capital		—			—			—			—			—		—		2,114			—			(2,114	)		—
Conversion of preferred stock to common stock upon initial public offering		(2,692,253	)		(14,542	)		(4,942,319	)		(20,765	)		11,436,956		1		35,306			—			—			35,307
Issuance of common stock upon initial public offering, net of issuance costs		—			—			—			—			9,775,000		1		41,924			—			—			41,925
Issuance of underwriter warrants upon initial public offering		—			—			—			—			—		—		2,349			—			—			2,349
Reclassification of liability-classified warrants upon initial public offering		—			—			—			—			—		—		3,130			—			—			3,130
Conversion of convertible promissory notes and accrued interest upon initial public offering		—			—			—			—			5,015,494		—		12,550			—			—			12,550
Issuance of common stock for nonemployee services		—			—			—			—			17,000		—		85			—			—			85
Beneficial conversion feature upon issuance of convertible promissory note		—			—			—			—			—		—		471			—			—			471
Other comprehensive loss		—			—			—			—			—		—		—			(3	)		—			(3	)
Net loss		—			—			—			—			—		—		—			—			(15,468	)		(15,468	)
Balance at September 30, 2021		—		$	—			—		$	—			32,772,060	$	3	$	96,845		$	(3	)	$	(58,463	)	$	38,382

	Redeemable Convertible																			Accumulated
	Preferred Stock																Additional			Other						Total
	Series A						Series B						Common Stock				Paid-In			Comprehensive			Accumulated			Stockholders'
Three Months Ended September 30, 2020	Shares			Amount			Shares			Amount			Shares		Amount		Capital			Loss			Deficit			Equity (Deficit)
Balance at June 30, 2020		2,692,253		$	12,461			4,942,319		$	15,517			4,539,584	$	—	$	—		$	—		$	(28,655	)	$	(28,655	)
Stock-based compensation for stock grant		—			—			—

SEC Form 10-Q filed by Movano Inc.